Contracts in Process

9 Months Ended

Sep. 30, 2011

Contracts in Process [Abstract]

Contracts in Process

5.  Contracts in Process

The components of contracts in process are presented in the table below.

	September 30,			December 31,
	2011			2010
	(in millions)
Unbilled contract receivables, gross	$	2,887		$	2,769
Unliquidated progress payments		(1,033	)		(1,007	)
Unbilled contract receivables, net		1,854			1,762
Inventoried contract costs, gross		1,046			882
Unliquidated progress payments		(117	)		(96	)
Inventoried contract costs, net		929			786
Total contracts in process	$	2,783		$	2,548

Inventoried Contract Costs. In accordance with contract accounting standards, the Company accounts for the portion of its general and administrative (G&A), independent research and development (IRAD) and bid and proposal (B&P) costs that are allowable and reimbursable indirect contract costs under U.S. Government procurement regulations on its U.S. Government contracts (revenue arrangements) as inventoried contract costs. G&A, IRAD and B&P costs are allocated to contracts for which the U.S. Government is the end customer and are charged to costs of sales when sales on the related contracts are recognized. The Company’s unallowable portion of its G&A, IRAD and B&P costs for its U.S. Government contractor businesses are expensed as incurred and are not included in inventoried contract costs.

The table below presents a summary of G&A, IRAD and B&P costs included in inventoried contract costs and the changes to them, including amounts charged to cost of sales by the Company’s U.S. Government contractor businesses for the periods presented.

	Third Quarter Ended						Year-to-Date Ended
	September 30,			September 24,			September 30,			September 24,
	2011			2010			2011			2010
	(in millions)
Amounts included in inventoried contract costs at beginning of the period	$	112		$	93		$	97		$	77
Add: IRAD and B&P costs		88			87			267			260
Other G&A costs		238			245			711			727
Total contract costs incurred		326			332			978			987
Less: Amounts charged to cost of sales		(332	)		(317	)		(969	)		(956	)
Amounts included in inventoried contract costs at end of the period	$	106		$	108		$	106		$	108

The table below presents a summary of selling, general and administrative expenses and research and development expenses for the Company’s commercial businesses, which are expensed as incurred and not included in inventoried contract costs.

	Third Quarter Ended				Year-to-Date Ended
	September 30,		September 24,		September 30,		September 24,
	2011		2010		2011		2010
	(in millions)
Selling, general and administrative expenses	$	67	$	68	$	219	$	200
Research and development expenses		19		19		57		51
Total	$	86	$	87	$	276	$	251