INVENTORIES

Inventories consisted of the following (in millions):



	September 30, 2018		December 31, 2017
Materials, spares and supplies	$	470	$	563
Work-in-process	2,089		1,823
Finished goods	491		492
Total inventories	$	3,050	$	2,878

Costs incurred to fulfill a contract in advance of the contract being awarded are included in inventories as work-in-process if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs). Pre-contract costs that are initially capitalized in inventory are generally recognized as cost of sales consistent with the transfer of products and services to the customer upon the receipt of the anticipated contract. All other pre-contract costs, including start-up costs, are expensed as incurred. As of September 30, 2018 and December 31, 2017, $554 million and $466 million of pre-contract costs were included in inventory.