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	2013			2012
Raw materials	$	15,174		$	26,013
Work-in-process		30,719			22,309
Finished goods		82,441			88,750

Total		128,334			137,072
Adjust to LIFO cost		(63,831	)		(73,416	)
Lower of cost or market adjustment		—			—

Inventory, net	$	64,503		$	63,656

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 quarter of 2013, the Company liquidated a portion of the layer established in 2011 and built some of that layer back in the second quarter of 2013. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs. This activity impacted net income positively in the second quarter of 2013 by $481,000 and negatively by $903,000 for the first six months of 2013. During the first six months of 2012, the Company liquidated a portion of the layer established in 2011. As a result, under the LIFO method, this inventory layer was liquidated at historical costs that were higher than current costs, which negatively impacted net income for the second quarter and the first six months of 2012 by $383,000.