Inventories

12 Months Ended

Dec. 31, 2023

Inventories consisted of the following (in millions):


	2023		2022
Materials, spares and supplies	$	606	$	599
Work-in-process	2,338		2,297
Finished goods	188		192
Total inventories	$	3,132	$	3,088

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 determine that 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). These advanced procurement costs are generally incurred in order to enhance our ability to achieve schedule and certain customer milestones. 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 December 31, 2023 and 2022, $989 million and $791 million of pre-contract costs were included in inventories. The increase in pre-contract costs as of December 31, 2023 is primarily driven by our Aeronautics business segment (primarily classified contracts).