5. INVENTORIES Inventories, net consisted of the following: December 31, 2018 2017 (Amounts in thousands) Raw materials $ 310,204 $ 358,827 Work in process(1) 191,660 548,250 Finished goods(2) 205,814 215,849 Less: Progress billings — (160,044) Less: Excess and obsolete reserve (73,807 ) (78,609 ) Inventories, net $ 633,871 $ 884,273 (1) In the second quarter of 2017, we recorded a $16.9 million charge for costs incurred related to a contract to supply oil and gas platform equipment to an end user in Latin America. This charge was primarily related to our IPD reporting segment and resulted in a decrease to work in process. (2) In the second quarter of 2018, we recorded a $7.7 million charge related to the divestiture of two IPD locations and related product lines, which resulted in a decrease to finished goods. Refer to Note 3 for further discussion. During 2018, 2017 and 2016, we recognized expenses of $16.2 million, $22.9 million and $14.6 million, respectively, for excess and obsolete inventory. These expenses are included in COS in our consolidated statements of income. As part of the adoption of the New Revenue Standard, certain work in process inventory and progress billings associated with POC contracts were recognized as cost of sales or reclassified to contract assets or contract liabilities. Refer to Note 2 for further discussion. We maintain the Flowserve Corporation Equity and Incentive Compensation Plan (the "2010 Plan"), which is a shareholder-approved plan authorizing the issuance of up to 8,700,000 shares of our common stock in the form of incentive stock options, non-statutory stock options, restricted shares, restricted share units and performance-based units (collectively referred to as "Restricted Shares"), stock appreciation rights and bonus stock. Of the 8,700,000 shares of common stock authorized under the 2010 Plan, 2,089,079 were available for issuance as of December 31, 2018. The long-term incentive program was amended to allow Restricted Shares granted after January 1, 2016 to employees who retire and have achieved at least 55 years of age and ten years of service to continue to vest over the original vesting period ("55/10 Provision"). Stock Options  — Options granted to officers, other employees and directors allow for the purchase of common shares at the market value of our stock on the date the options are granted. Options generally become exercisable after three years. Options generally expire ten years from the date of the grant or within a short period of time following the termination of employment or cessation of services by an option holder. No stock options were granted during the year ended December 31, 2018, compared to the 114,943 stock options granted for the same period in 2017. No stock options were granted for the same period in 2016. As of December 31, 2018, 114,943 stock options were outstanding, with a grant date fair value of $2.0 million, which is expected to be recognized over a weighted-average period of approximately one year. No stock options were vested during years ended December 31, 2018, 2017 or 2016. 6. STOCK-BASED COMPENSATION PLANS 81