NOTE 2 — INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories consist of the following:


	June 30,			December 31,
In Thousands of Dollars	2011			2010

Raw materials	$	18,465		$	27,092
Work-in-process		31,673			19,889
Finished goods		93,244			81,940

		143,382			128,921
Adjust to LIFO cost		(88,227	)		(86,817	)
Lower of cost or market adjustment		—			—

	$	55,155		$	42,104

LIFO pools are established at the end of each fiscal year. During the first three quarters of every year, LIFO calculations are based on the inventory levels and costs at that time. Accordingly, interim LIFO balances will fluctuate up and down in tandem with inventory levels and costs.

During the first six months of 2011, the Company did not liquidate any LIFO inventory layers established in prior years. During the first six months of 2010, the Company liquidated a portion of the layer established in 2005. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were less than current costs, which favorably impacted net income for the second quarter of 2010 by $644,000 and the first six months of 2010 by $1,480,000.