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. Long-term contract inventory includes an immaterial amount of claims or other similar items subject to uncertainty concerning their determination or realization. Inventories are valued at the lower of cost or market. The composition of inventories is as follows:



	(In thousands)
	September 30, 2014			December 31, 2013
Raw materials	$	204,542		$	231,219
Work-in-process	104,588			114,372
Finished goods and component parts	98,493			117,444
Inventoried costs related to long-term contracts	62,011			58,796
Gross inventories	469,634			521,831
Less: Inventory reserves	(53,788		)	(54,400		)
Progress payments applied	(11,922		)	(15,344		)
Inventories, net	$	403,924		$	452,087

As of September 30, 2014 and December 31, 2013, inventory also includes capitalized contract development costs of $43.9 million and $37.1 million, respectively, related to certain aerospace and defense programs. These capitalized costs will be liquidated as production units are delivered to the customers. As of September 30, 2014 and December 31, 2013, $13.0 million and $13.8 million, respectively, are scheduled to be liquidated under existing firm orders.