For the Years Ended December 31, 2011, 2010 and 2009
Inventories consist of the following:
| At December 31, | ||
| In thousands | 2011 | 2010 |
| Merchandise for resale | $ 129,345 | $ 113,841 |
| Contracts in process: | ||
| U.S. Government, net of progress payments of $44,156 and $39,541 in 2011 and 2010, respectively |
76,863 | 66,109 |
| Commercial and other government contracts | 25,690 | 44,097 |
| Other work in process (including certain general stock materials) | 92,746 | 74,004 |
| Finished goods | 15,202 | 18,848 |
| Total | $ 339,846 | $ 316,899 |
The increase in merchandise for resale is partially attributable to the acquisitions in the Industrial Distribution segment.
General and administrative costs charged to inventory by the Aerospace segment during 2011 and 2010 were $51.1 million and $45.0 million, respectively. The estimated amounts of general and administrative costs remaining in contracts in process at December 31, 2011 and 2010 are $9.1 million and $9.3 million, respectively. These estimates are based on the ratio of such costs to total costs of production.
The Company had inventory of $6.9 million and $6.1 million as of December 31, 2011 and 2010, respectively, on consignment at customer locations, the majority of which is located with Industrial Distribution segment customers.
Inventories include amounts associated with matters such as contract changes, negotiated settlements and claims for unanticipated contract costs, which totaled $7.4 million and $10.4 million at December 31, 2011 and 2010, respectively. The reduction in this balance is associated with the settlement of the FMU-143 matter. See Note 16, Commitments and Contingencies, for further discussion of this matter. The Company records costs associated with these matters in inventory only when recovery can be estimated reliably and realization is probable.
K-MAX® inventory of $20.3 million and $23.7 million as of December 31, 2011 and 2010, respectively, is included in contracts and other work in process inventory and finished goods. The decrease in this balance reflects inventory being used on our contract for K-MAX® unmanned aircraft systems. Management believes that a significant portion of this K-MAX® inventory will be sold after December 31, 2012, based upon the anticipation of supporting the fleet for the foreseeable future.
SH-2G(I), formerly SH-2G(A), inventory of $52.7 million and $53.7 million at December 31, 2011 and 2010, respectively, is included in contracts and other work in process inventory. Management believes that a significant portion of this inventory will be sold after December 31, 2012, based upon the time needed to market the aircraft and prepare them for sale. For more information on the SH-2G(I) inventory, see Note 16, Commitments and Contingencies.