Inventories

Inventories at December 31, 2018 and 2017 were as follows (in millions):



	2018			2017
Raw materials and supplies	$	191.5		$	162.8
Work-in-process	914.1			955.5
Finished goods	191.1			165.0
Total inventories at current cost	1,296.7			1,283.3
Adjustment from current cost to LIFO cost basis	2.9			43.1
Inventory valuation reserves	(88.5		)	(121.5		)
Progress payments	—			(28.8		)
Total inventories, net	$	1,211.1		$	1,176.1

Inventories, before progress payments, determined on the LIFO method were $794.3 million at December 31, 2018, and $821.2 million at December 31, 2017. The remainder of the inventory was determined using the FIFO and average cost methods, and these inventory values do not differ materially from current cost. Due to deflationary impacts primarily related to raw materials, the carrying value of the Company’s inventory as valued on LIFO exceeds current replacement cost, and based on a lower of cost or market value analysis, the Company maintains net realizable value (NRV) inventory valuation reserves to adjust carrying value of LIFO inventory to current replacement cost. These NRV reserves were $8.0 million and $47.5 million at December 31, 2018 and 2017, respectively. In applying the lower of cost or market principle, market means current replacement cost, subject to a ceiling (market value shall not exceed net realizable value) and a floor (market shall not exceed net realizable value reduced by an allowance for a normal profit margin). Impacts to cost of sales for changes in the LIFO costing methodology and associated NRV inventory reserves were as follows (in millions):



	Fiscal year ended December 31,
	2018			2017			2016
LIFO benefit (charge)	$	(28.6	)	$	(54.2	)	$	(39.1	)
NRV benefit (charge)	27.9			54.0			39.9
Net cost of sales impact	$	(0.7	)	$	(0.2	)	$	0.8

During 2018, inventory usage resulted in liquidations of LIFO inventory quantities, decreasing cost of sales by $0.8 million. During 2017 and 2016, inventory usage resulted in liquidations of LIFO inventory quantities, increasing cost of sales by $4.6 million and $61.5 million, respectively. These inventories were carried at differing costs prevailing in prior years as compared with the cost of current manufacturing cost and purchases.

The results for fiscal year 2016 included $17.7 million in inventory valuation charges related to the market-based valuation of titanium products. Additionally, in the third quarter of 2016, in conjunction with the indefinite idling of the Company’s Rowley, UT titanium sponge facility (see Note 17 for further explanation), an additional $11.3 million charge was taken to revalue titanium sponge inventory based on revised assessments of industrial grade titanium market conditions and expected utilization of this inventory.

As a result of the adoption of ASC 606 on revenue recognition on January 1, 2018, progress payments were reclassified on the consolidated balance sheet from inventories to contract liabilities. In addition, a cumulative effect adjustment for the ASC 606 adoption relating to contracts requiring over-time revenue recognition resulted in a $34.2 million reduction to work-in-process inventory at the January 1 adoption date. A portion of that inventory is valued utilizing the LIFO costing methodology. As such, an $11.8 million reduction to the LIFO valuation balance was required, with an offsetting $11.8 million adjustment to the NRV reserve, resulting in no retained earnings impact. See Note 2 for further explanation of the ASC 606 adoption.