Inventories

6 Months Ended

Jun. 30, 2011

Note 3 — Inventories


	June 30,		December 31,
	2011		2010

Inventories, net:
Manufacturing supplies	$	59.0	$	57.9
Work in process and raw materials		425.9		371.9
Finished products		444.0		398.7

Inventories, net	$	928.9	$	828.5

An actual valuation of the inventory under the last-in, first-out (LIFO) method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected year-end inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation. The LIFO reserve at June 30, 2011 and December 31, 2010 was $280.3 million and $264.6 million, respectively. The Company recognized an increase in its LIFO reserve of $9.7 million and $15.7 million during the second quarter and first six months of 2011 compared to an increase in its LIFO reserve of $0.5 million and $6.6 million during the second quarter and first six months of 2010.

Based on current expectations of inventory levels and costs, the Company expects to recognize approximately $32 million in LIFO expense for the year ended December 31, 2011. The expected increase in the LIFO reserve for 2011 is a result of higher costs, especially scrap steel costs, as well as higher quantities. A 1.0% increase in costs would increase the current LIFO expense estimate for 2011 by approximately $5.9 million. A 1.0% increase in inventory quantities would only have a minor effect on the current LIFO expense estimate for 2011.