
5.	INVENTORIES

We state our inventories at the lower of cost or net realizable value. The cost of our inventories is determined using the first-in first-out method. When we determine that our gross inventories exceed usage requirements, or if inventories become obsolete or otherwise not saleable, we record a provision for such loss as a component of our inventory accounts.

Inventories consist of the following:



	June 30, 2017			December 31, 2016
	(in millions)

Raw materials and work-in-progress	$	322.9		$	163.3
Finished goods	86.4			33.8
Gross inventories	409.3			197.1
Inventory valuation reserves	(24.8		)	(14.8		)
Inventories, net	$	384.5		$	182.3

Effective April 1, 2017, we changed our method of accounting for indirect inventory from capitalizing and recording as expense when the inventory was consumed to now expensing indirect inventory at the time of purchase. Based on the guidance in ASC 250 Accounting Changes and Error Corrections, we have adjusted retained earnings to reflect the retrospective application of this change in accounting principle. Refer to Note 1 - Organization and Basis of Presentation for further detail. Based on this change in accounting principle, Raw materials and work-in-progress and Inventory valuation reserves, as of December 31, 2016, reflect a decrease of $49.4 million and a decrease of $12.2 million, respectively.