Segment and Revenue Information

Our primary profitability measurements to review a segment’s operating results are Earnings from operations and operating margins. We operate in four reportable segments: BCA, BDS, BGS, and BCC. All other activities fall within Unallocated items, eliminations and other. See page 6 for the Summary of Business Segment Data, which is an integral part of this note.

BCA develops, produces and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer. Revenue on certain military derivative aircraft contracts is recognized over time as costs are incurred.

BDS is engaged in the research, development, production and modification of the following products and related services: manned and unmanned military aircraft and weapons systems, surveillance and engagement, strategic defense and intelligence systems, satellite systems and space exploration. BDS revenue is generally recognized over the contract term (over time) as costs are incurred.

BGS provides parts, maintenance, modifications, logistics support, training, data analytics and information-based services to commercial and government customers worldwide. Revenue on commercial spare parts contracts is recognized at the point in time when a spare part is delivered to the customer. Revenue on other contracts is generally recognized over the contract term (over time) as costs are incurred.

BCC facilitates, arranges, structures and provides selective financing solutions for our Boeing customers.

The following tables present BCA, BDS and BGS revenues from contracts with customers disaggregated in a number of ways, such as geographic location, contract type and the method of revenue recognition. We believe these best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.

BCA revenues by customer location consist of the following:



(Dollars in millions)	Three months ended March 31
Revenue from contracts with customers:	2018			2017
Europe		$3,199			$2,132
China	2,047			1,179
Asia, other than China	1,731			1,235
Middle East	461			2,398
Other	1,494			1,058
Total non-U.S. revenues	8,932			8,002
United States	4,339			4,421
Total revenues from contracts with customers	13,271			12,423
Intersegment revenues, eliminated on consolidation	381			530
Total segment revenues		$13,652			$12,953

Revenue recognized on fixed price contracts	100		%	100		%

For the three months ended March 31, 2018 and 2017, approximately 95% and 93% of revenue from BCA contracts with customers was recognized at the point-in-time when an aircraft is completed and accepted by the customer.

BDS revenues on contracts with customers, based on the customer's location, consist of the following:



(Dollars in millions)	Three months ended March 31
	2018			2017
Revenue from contracts with customers:
U.S. customers		$4,226			$3,974
Non U.S. customers⁽¹⁾	1,536			1,138
Total segment revenue from contracts with customers		$5,762			$5,112

Revenue recognized over time	98		%	96		%

Revenue recognized on fixed price contracts	67		%	64		%

Revenue from the U.S. government⁽¹⁾	87		%	87		%


⁽¹⁾	Includes revenues earned from foreign military sales through the U.S. government.

BGS revenues consist of the following:



(Dollars in millions)	Three months ended March 31
	2018			2017
Revenue from contracts with customers:
Commercial		$2,102			$1,848
Government	1,782			1,792
Total revenues from contracts with customers	3,884			3,640
Intersegment revenues eliminated on consolidation	59			13
Total segment revenues		$3,943			$3,653

Revenue recognized at a point in time	54		%	48		%

Revenue recognized on fixed price contracts	88		%	88		%

Revenue from the U.S. government⁽¹⁾	37		%	42		%


⁽¹⁾	Includes revenues earned from foreign military sales through the U.S. government.

Backlog

Our total backlog represents the estimated transaction prices on performance obligations to our customers for which work remains to be performed. Backlog is converted into revenue in future periods as work is performed, primarily based on the cost incurred or at delivery and acceptance of products, depending on the applicable accounting method.

Our backlog at March 31, 2018 was $486,245. We expect approximately 30% to be converted to revenue through 2019 and approximately 71% through 2022, with the remainder thereafter.

Unallocated Items, Eliminations and other

Unallocated items, eliminations and other include common internal services that support Boeing’s global business operations, intercompany guarantees provided to BCC and eliminations of certain sales between segments. We generally allocate costs to business segments based on the U.S. federal cost accounting standards. Components of Unallocated items, eliminations and other are shown in the following table.



	Three months ended March 31
	2018			2017
Share-based plans		($18	)		($21	)
Deferred compensation	(29		)	(50		)
Amortization of previously capitalized interest	(25		)	(24		)
Eliminations and other unallocated items	(239		)	(126		)
Unallocated items, eliminations and other		($311	)		($221	)

Pension FAS/CAS service cost adjustment		$283			$262
Postretirement FAS/CAS service cost adjustment	82			84
FAS/CAS service cost adjustment		$365			$346

Pension and Other Postretirement Benefit Expense

Pension costs, comprising GAAP service and prior service costs, are allocated to BCA and the commercial operations at BGS. Pension costs are allocated to BDS and BGS businesses supporting government customers using U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. These costs are allocable to government contracts. Other postretirement benefit costs are allocated to business segments based on CAS, which is generally based on benefits paid. FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, net.

Assets

Segment assets are summarized in the table below:



	March 31 2018		December 31 2017
Commercial Airplanes		$64,846		$64,647
Defense, Space & Security	19,460		18,476
Global Services	12,636		12,491
Boeing Capital	3,007		3,156
Unallocated items, eliminations and other	13,600		13,592
Total		$113,549		$112,362

Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, Deferred tax assets, capitalized interest and assets held centrally as well as intercompany eliminations.