(4) INVENTORIES

Inventories, stated at the lower of cost (last-in, first-out method ("LIFO") for the U.S. operations, and the first-in, first-out method ("FIFO") for the Canadian operation and for U.S. supplies and printed and converted and certain Webster finished goods) or market, include material, labor and manufacturing overhead costs, less vendor rebates. The Company establishes a reserve in those situations in which cost exceeds market value.

Inventories are comprised of the following:


	April 30, 2012		October 31, 2011
	(in thousands)
Raw materials	$	37,830	$	41,858
Finished goods		60,199		56,059
Supplies		5,341		5,264

		103,370		103,181
Less: Inventory reserve		122		89

Inventories, net	$	103,248	$	103,092

The LIFO method was used for determining the cost of approximately 86% of total inventories at April 30, 2012 and October 31, 2011, respectively. Inventories would have increased by $41.4 million and $32.5 million at April 30, 2012 and October 31, 2011, respectively, if the FIFO method had been used exclusively. Since the actual valuation of inventory under the LIFO method can only be made at the end of the fiscal year based on inventory levels and costs at that time, the interim LIFO calculations are based on management's best estimate of expected fiscal year-end inventory levels and costs. Due to the volatility of resin pricing, the Company consistently uses current pricing as its estimate of fiscal year-end costs. Therefore, interim LIFO calculations are subject to the final fiscal year-end LIFO inventory valuation. Because of the Company's continuous manufacturing process, there is no significant work in process at any point in time.