INVENTORIES

Inventoried costs contain amounts relating to long-term contracts and programs with long production cycles, a portion of which will not be realized within one year. Inventories are valued at the lower of cost (principally average cost) or market. The composition of inventories is as follows:



	(In thousands)
	June 30, 2013			December 31, 2012
Raw materials	$	230,208		$	224,613
Work-in-process	104,246			92,761
Finished goods and component parts	116,547			107,173
Inventoried costs related to long-term contracts	51,360			38,000
Gross inventories	502,361			462,547
Less: Inventory reserves	(54,846		)	(50,333		)
Progress payments applied	(11,224		)	(14,743		)
Inventories, net	$	436,291		$	397,471

As of June 30, 2013 and December 31, 2012, inventory also includes capitalized contract development costs of $26.7 million and $23.8 million, respectively, related to certain aerospace and defense programs. These capitalized costs will be liquidated as production units are delivered to the customer. As of June 30, 2013 and December 31, 2012, $2.3 million and $5.4 million, respectively, are scheduled to be liquidated under existing firm orders.