INVENTORIES

9 Months Ended

Sep. 27, 2020

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

Inventories consisted of the following (in millions):

	September 27, 2020		December 31, 2019
Materials, spares and supplies	$	567	$	532
Work-in-process	2,462		2,783
Finished goods	264		304
Total inventories	$	3,293	$	3,619

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 27, 2020 and December 31, 2019, $557 million and $493 million of pre-contract costs were included in inventories.