Note 5: Inventories and Contracts in Progress

12 Months Ended

Dec. 31, 2011

Notes to Consolidated Financial Statements [Abstract]

Note 5: Inventories and Contracts in Progress

Note 5: Inventories & Contracts in Progress

(Dollars in millions)	2011		2010
Raw materials	$	1,321	$	1,221
Work-in-process		3,175		3,259
Finished goods		3,078		3,026
Contracts in progress		6,899		6,340
		14,473		13,846
Less:
Progress payments, secured by lien, on U.S. Government contracts		(422)		(275)
Billings on contracts in progress		(6,254)		(5,805)
	$	7,797	$	7,766

Raw materials, work-in-process and finished goods are net of valuation reserves of $884million and$799 million as of December 31, 2011 and 2010, respectively. As of December 31, 2011 and 2010, inventory also includes capitalized contract development costs of $776 million and $804 million, respectively, related to certain aerospace programs. These capitalized costs will be liquidated as production units are delivered to the customer. The capitalized contract development costs within inventory principally relate to capitalized costs on Sikorsky's CH-148 contract with the Canadian government. The CH-148 is a derivative of the H-92, a military variant of the S-92.

Contracts in progress principally relate to elevator and escalator contracts and include costs of manufactured components, accumulated installation costs and estimated earnings on incomplete contracts.

Our sales contracts in many cases are long-term contracts expected to be performed over periods exceeding twelve months. At both December 31, 2011 and 2010, approximately 75% of total inventories and contracts in progress have been acquired or manufactured under such long-term contracts, a portion of which is not scheduled for delivery within the next twelve months.