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)	Six months ended June 30						Three months ended June 30
	2018			2017			2018			2017
Revenue from contracts with customers:
Europe		$5,307			$4,765			$2,108			$2,633
China	4,756			3,494			2,709			2,315
Asia, other than China	4,080			3,083			2,349			1,848
Middle East	2,333			4,580			1,872			2,182
Other	2,500			2,172			1,006			1,114
Total non-U.S. revenues	18,976			18,094			10,044			10,092
United States	8,349			8,248			4,010			3,827
Total revenues from contracts with customers	27,325			26,342			14,054			13,919
Intersegment revenues, eliminated on consolidation	808			891			427			361
Total segment revenues		$28,133			$27,233			$14,481			$14,280

Revenue recognized on fixed price contracts	100		%	100		%	100		%	100		%

Revenue recognized at a point-in-time	96		%	94		%	96		%	95		%

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



(Dollars in millions)	Six months ended June 30						Three months ended June 30
	2018			2017			2018			2017
Revenue from contracts with customers:
U.S. customers		$8,023			$8,007			$3,797			$4,033
Non U.S. customers⁽¹⁾	3,332			2,247			1,796			1,109
Total segment revenue from contracts with customers		$11,355			$10,254			$5,593			$5,142

Revenue recognized over time	98		%	98		%	99		%	100		%

Revenue recognized on fixed price contracts	65		%	64		%	63		%	64		%

Revenue from the U.S. government⁽¹⁾	86		%	89		%	85		%	91		%


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

BGS revenues consist of the following:



(Dollars in millions)	Six months ended June 30						Three months ended June 30
	2018			2017			2018			2017
Revenue from contracts with customers:
Commercial		$4,845			$3,732			$2,743			$1,884
Government	3,095			3,447			1,313			1,655
Total revenues from contracts with customers	7,940			7,179			4,056			3,539
Intersegment revenues eliminated on consolidation	93			26			34			13
Total segment revenues		$8,033			$7,205			$4,090			$3,552

Revenue recognized at a point in time	53		%	48		%	52		%	48		%

Revenue recognized on fixed price contracts	89		%	89		%	90		%	90		%

Revenue from the U.S. government⁽¹⁾	31		%	41		%	26		%	39		%


⁽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 June 30, 2018 was $488,036. We expect approximately 27% to be converted to revenue through 2019 and approximately 70% 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.



	Six months ended June 30						Three months ended June 30
	2018			2017			2018			2017
Share-based plans		($36	)		($46	)		($18	)		($25	)
Deferred compensation	(56		)	(96		)	(27		)	(46		)
Amortization of previously capitalized interest	(48		)	(46		)	(23		)	(22		)
Eliminations and other unallocated items	(570		)	(350		)	(331		)	(224		)
Unallocated items, eliminations and other		($710	)		($538	)		($399	)		($317	)

Pension FAS/CAS service cost adjustment		$520			$540			$237			$278
Postretirement FAS/CAS service cost adjustment	162			163			80			79
FAS/CAS service cost adjustment		$682			$703			$317			$357

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/(loss), net.

Assets

Segment assets are summarized in the table below:



	June 30 2018		December 31 2017
Commercial Airplanes		$64,592		$64,647
Defense, Space & Security	18,475		18,476
Global Services	12,884		12,491
Boeing Capital	3,046		3,156
Unallocated items, eliminations and other	14,198		13,592
Total		$113,195		$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.