CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

9 Months Ended

Sep. 30, 2018

CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

NOTE 8—CONTRACTS IN PROGRESS AND ADVANCE BILLINGS ON CONTRACTS

Our contract assets and liabilities at September 30, 2018 and December 31, 2017 were as follows:

	September 30, 2018 ⁽¹⁾		December 31, 2017
	(In millions)
Costs incurred less costs of revenues recognized ⁽¹⁾	$	8	$	98
Revenues recognized less billings to customers ⁽²⁾		715		523
Contracts in progress	$	723	$	621

Costs incurred less costs of revenues recognized ⁽¹⁾	$	35	$	(14	)
Billings to customers less revenues recognized ⁽²⁾		1,698		46
Advance billings on contracts	$	1,733	$	32

⁽¹⁾

Costs incurred in excess of costs recognized (assets) and costs recognized in excess of costs incurred (liabilities) resulted from the exclusion of certain costs when measuring progress toward completion under the cost-to-cost method, prior to our adoption of ASC Topic 606. These remaining amounts will be recognized in Cost of operations as the underlying projects progress.

⁽²⁾

During the nine months ended September 30, 2018, the change in the asset and liability balances includes $341 million and $2.3 billion, respectively, resulting from acquired balances in the Combination. Revenues recognized for the nine-months periods ended September 30, 2018 with respect to amounts included in our contract liability balance as of December 31, 2017 were $45 million, realized during the first half of 2018.

For the three months ended September 30, 2018, revenues recognized from changes in transaction prices associated with performance obligations satisfied in prior periods were not material. For the nine months ended September 30, 2018, we recognized $81 million of revenues primarily resulting from changes in transaction prices during the first half of 2018 associated with performance obligations satisfied in prior periods, primarily in our APAC and MENA segments. The change in transaction prices primarily related to reimbursement of costs incurred in prior periods.