. 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 as of December 31 is as follows:



(In thousands)	2016			2015
Raw material	$	189,228		$	196,684
Work-in-process	73,843			79,406
Finished goods	112,478			114,931
Inventoried costs related to U.S. Government and other long-term contracts	57,516			51,774
Gross inventories	433,065			442,795
Less: Inventory reserves	(54,988		)	(48,904		)
Progress payments applied, principally related to long-term contracts	(11,103		)	(14,300		)
Inventories, net	$	366,974		$	379,591

As of December 31, 2016 and 2015, inventory also includes capitalized contract development costs of $28.8 million and $29.7 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 December 31, 2016 and 2015, $3.9 million and $2.5 million, respectively, are scheduled to be liquidated under existing firm orders.