Inventories

6 Months Ended

Jul. 03, 2022

INVENTORIES

The majority of our inventories are for business jet aircraft. Our inventories are stated at the lower of cost or net realizable value. Work in process represents largely labor, material and overhead costs associated with aircraft in the manufacturing process and is based primarily on the estimated average unit cost in a production lot. Raw materials are valued primarily on the first-in, first-out method. We record pre-owned aircraft acquired in connection with the sale of new aircraft at the lower of the trade-in value or the estimated net realizable value.

Inventories consisted of the following:


	July 3, 2022		December 31, 2021
Work in process	$	4,287	$	3,654
Raw materials	1,715		1,651
Finished goods	143		22
Pre-owned aircraft	13		13
Total inventories	$	6,158	$	5,340

The increase in total inventories during the six-month period ended July 3, 2022, was due primarily to increased production of in-service aircraft reflecting strong customer demand, as well as the ramp-up in production of new Gulfstream aircraft models announced in the last three years. Customer deposits associated with firm orders for these aircraft, which are reflected in customer advances and deposits and other noncurrent liabilities on the Consolidated Balance Sheet, have correspondingly increased.

The increase in total inventories also included four Gulfstream aircraft that were not delivered in the second quarter due to an airworthiness directive (AD) issued by the U.S. Federal Aviation Administration (FAA) that placed limitations on permissible landing conditions for the G500 and G600 aircraft models. These four aircraft are expected to deliver in the third quarter. A software update has been developed to address the AD limitations and is undergoing FAA review.