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The following is the expected maturity of commercial aero- space industry assets and commitments as of December 31, 2012: 

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Other commercial aerospace commitments include amounts related to our agreement with Embraer, which we announced on January 8, 2013, to power the next generation Embraer E-Jet family. 

In exchange for the increased ownership and collaboration interests and intellectual property license, Pratt & Whitney paid Rolls-Royce $1.5 billion at closing with additional payments due to Rolls-Royce contingent upon each hour flown by the V2500- powered aircraft in service as of June 29, 2012 during the fifteen year period following closing of the purchase. These payments will be capitalized as a collaboration intangible asset and amortized in relation to the economic benefits received over the projected remaining 30 year life of the V2500 program. The flight hour pay- ments are included in other commercial aerospace commitments in the table above. 

Our financing obligations with customers are contingent upon maintenance of certain levels of financial condition by the customers. In addition, we have residual value and other guaran- tees of $346 million as of December 31, 2012. 

We have long-term aftermarket maintenance contracts with commercial aerospace industry customers for which revenue is recognized in proportion to actual costs incurred relative to total expected costs to be incurred over the respective contract periods. Billings, however, are typically based on factors such as engine flight hours. The timing differences between the billings and the maintenance costs incurred generates both deferred assets and deferred revenues. Deferred assets under these long-term after- market contracts totaled $391 million and $235 million at December 31, 2012 and 2011, respectively, and are included in “Other assets” in the accompanying Consolidated Balance Sheet. Deferred revenues generated totaled $2,760 million and $1,708 mil- lion at December 31, 2012 and 2011, respectively, and are included in “Accrued liabilities” and “Other long-term liabilities” in the accompanying Consolidated Balance Sheet. 

The increases reflected above as of December 31, 2012, as compared to December 31, 2011, primarily reflect the impacts of the Goodrich acquisition and our consolidation of IAE. See Note 2 for further discussion related to acquisitions. 

Reserves related to aerospace receivables and financing assets were $210 million and $169 million at December 31, 2012 

and 2011, respectively. Reserves related to financing commitments and guarantees were $67 million and $73 million at December 31, 2012 and 2011, respectively. 

## NOTE 6: INVENTORIES & CONTRACTS IN PROGRESS 

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Raw materials, work-in-process and finished goods are net of valuation reserves of $866 million and $884 million as of December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, inventory also includes capitalized contract devel- opment costs of $823 million and $776 million, respectively, related to certain aerospace programs. These capitalized costs will be liquidated as production units are delivered to the customer. The capitalized contract development costs within inventory principally relate to capitalized costs on Sikorsky’s CH-148 contract with the Canadian Government. The CH-148 is a derivative of the H-92, a military variant of the S-92 helicopter. 

Contracts in progress principally relate to elevator and escalator contracts and include costs of manufactured compo- nents, accumulated installation costs and estimated earnings on incomplete contracts. 

Our sales contracts in many cases are long-term contracts expected to be performed over periods exceeding twelve months. At both December 31, 2012 and 2011, approximately 66% of total inventories and contracts in progress have been acquired or manu- factured under such long-term contracts, a portion of which is not scheduled for delivery within the next twelve months. 

