Segment and Revenue Information

3 Months Ended

Mar. 31, 2019

Effective at the beginning of 2019, all revenues and costs associated with military derivative aircraft production are reported in the BDS segment. Revenues and costs associated with military derivative aircraft production were previously reported in the BCA and BDS segments. Business segment data for 2018 reflects the realignment for military derivative aircraft, as well as the realignment of certain programs from BDS to BGS.

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.

BDS engages 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. BGS Segment revenue and costs include certain services provided to other segments 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)	Three months ended March 31
	2019			2018
Revenue from contracts with customers:
Europe		$1,661			$3,199
China	1,546			2,047
Asia, other than China	1,628			1,731
Middle East	1,110			461
Other	1,538			1,494
Total non-U.S. revenues	7,483			8,932
United States	4,170			4,000
Total revenues from contracts with customers	11,653			12,932
Intersegment revenues, eliminated on consolidation	169			13
Total segment revenues		$11,822			$12,945

Revenue recognized on fixed-price contracts	100		%	100		%

Revenue recognized at a point in time	100		%	100		%

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



(Dollars in millions)	Three months ended March 31
	2019			2018
Revenue from contracts with customers:
U.S. customers		$4,907			$4,945
Non U.S. customers⁽¹⁾	1,704			1,536
Total segment revenue from contracts with customers		$6,611			$6,481

Revenue recognized over time	98		%	98		%

Revenue recognized on fixed-price contracts	69		%	70		%

Revenue from the U.S. government⁽¹⁾	88		%	89		%


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

BGS revenues consist of the following:



(Dollars in millions)	Three months ended March 31
	2019			2018
Revenue from contracts with customers:
Commercial		$2,585			$2,079
Government	1,997			1,812
Total revenues from contracts with customers	4,582			3,891
Intersegment revenues eliminated on consolidation	37			59
Total segment revenues		$4,619			$3,950

Revenue recognized at a point in time	57		%	54		%

Revenue recognized on fixed-price contracts	89		%	88		%

Revenue from the U.S. government⁽¹⁾	33		%	37		%


⁽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 March 31, 2019 was $486,849. We expect approximately 33% to be converted to revenue through 2020 and approximately 76% through 2023, 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. Such sales include airplanes accounted for as operating leases and considered transferred to the BCC segment. 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.



	Three months ended March 31
	2019			2018
Share-based plans		($14	)		($18	)
Deferred compensation	(102		)	(29		)
Amortization of previously capitalized interest	(24		)	(25		)
Research and development expense, net	(74		)	2
Customer financing impairment	(250		)
Eliminations and other unallocated items	(243		)	(256		)
Unallocated items, eliminations and other		($707	)		($326	)

Pension FAS/CAS service cost adjustment		$274			$283
Postretirement FAS/CAS service cost adjustment	90			82
FAS/CAS service cost adjustment		$364			$365

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, net.

Assets

Segment assets are summarized in the table below:



	March 31 2019		December 31 2018
Commercial Airplanes		$67,366		$64,788
Defense, Space & Security	19,628		19,594
Global Services	18,360		17,921
Boeing Capital	2,544		2,809
Unallocated items, eliminations and other	12,311		12,247
Total		$120,209		$117,359

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.