The fair value of our Level 2 securities is calculated using a weighted average market price for each security. Market prices are obtained from a variety of industry standard data providers, security master files from large financial institutions,  and other third-party sources. These multiple market prices are used as inputs into a distribution-curve-based algorithm to  determine the daily market value of each security. Our municipal variable rate demand notes have a structure that implies a standard expected market price. The frequent  interest rate resets make it reasonable to expect the price to stay at par. These securities are priced at the expected market price. We have certain international customers who are billed in their local currency. Changes in the monetary exchange rates may adversely affect our results of operations and financial condition. When appropriate, we enter into various derivative  transactions to enhance our ability to manage the volatility relating to these typical business exposures. We do not hold or issue derivative instruments for trading or other speculative purposes. Our derivative instruments are recorded in the Consolidated Balance Sheets at their fair values. Our derivative instruments do not qualify for hedge accounting, and accordingly, all changes in the fair value of the instruments are recognized as other income (expense) in the Consolidated  Statements of Income. The maximum contractual period for our derivatives is currently less than twelve months. Our derivative instruments are not subject to master netting arrangements and are not offset in the Consolidated Balance Sheets. As of December 31, 2013, we had forward contracts outstanding with notional amounts totaling €18.5 million ($25.5 million), which mature through 2014.  The fair values of our derivative instruments recorded in the Consolidated Balance Sheet as of December 31, 2013 were as follows: (In thousands) The change in the fair values of our derivative instruments recorded in the Consolidated Statements of Income during the year ended December 31, 2013 were as follows: At December 31, 2013 and 2012, inventory was comprised of the following: We establish reserves for estimated excess, obsolete, or unmarketable inventory equal to the difference between the cost of the inventory and the estimated fair value of the inventory based upon assumptions about future demand and market  conditions. At December 31, 2013 and 2012, raw materials reserves totaled $16.9 million and $9.9 million, respectively, and  finished goods inventory reserves totaled $6.1 million and $2.1 million, respectively. 5  Derivative Instruments and Hedging Activities 6 Inventory Financial Results 55 (In thousands)  2013 2012 Raw materials $44,093 $47,054 Work in process 3,484 3,262 Finished goods 42,534 51,061 Total Inventory, net $90,111 $101,377 (In thousands)  Income Statement Location 2013 Derivatives Not Designated as Hedging Instruments: Foreign exchange contracts Other income (expense) $750 Balance, December 31, 2013 Balance Sheet Location Fair Value Derivatives Not Designated as Hedging Instruments (Level 2): Foreign exchange contracts – asset derivatives Other receivables $18 Foreign exchange contracts – liability derivatives Accounts payable $(15)