5. 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)	2017			2016
Raw material	$	191,855		$	189,228
Work-in-process	73,937			73,843
Finished goods	114,307			112,478
Inventoried costs related to U.S. Government and other long-term contracts	65,150			57,516
Gross inventories	445,249			433,065
Less: Inventory reserves	(54,638		)	(54,988		)
Progress payments applied, principally related to long-term contracts	(11,745		)	(11,103		)
Inventories, net	$	378,866		$	366,974

As of December 31, 2017 and 2016, inventory also includes capitalized contract development costs of $35.0 million and $28.8 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 December 31, 2017 and 2016, $5.4 million and $3.9 million, respectively, are scheduled to be liquidated under existing firm orders.