Boeing 2009 Annual Report Download - page 54

property, plant and equipment, and other miscellaneous production related obligations. The most
significant obligation relates to inventory procurement contracts. We have entered into certain
significant inventory procurement contracts that specify determinable prices and quantities, and long-
term delivery timeframes. In addition, we purchase raw materials on behalf of our suppliers. These
agreements require suppliers and vendors to be prepared to build and deliver items in sufficient time to
meet our production schedules. The need for such arrangements with suppliers and vendors arises
from the extended production planning horizon for many of our products. A significant portion of these
inventory commitments is supported by firm contracts and/or has historically resulted in settlement
through reimbursement from customers for penalty payments to the supplier should the customer not
take delivery. These amounts are also included in our forecasts of costs for program and contract
accounting. Some inventory procurement contracts may include escalation adjustments. In these
limited cases, we have included our best estimate of the effect of the escalation adjustment in the
amounts disclosed in the table above.
Purchase Obligations Recorded on the Consolidated Statement of Financial Position Purchase
obligations recorded on the Consolidated Statement of Financial Position primarily include accounts
payable and certain other liabilities including accrued compensation and dividends payable.
Industrial Participation Agreements We have entered into various industrial participation
agreements with certain customers outside of the U.S. to facilitate economic flow back and/or
technology transfer to their businesses or government agencies as the result of their procurement of
goods and/or services from us. These commitments may be satisfied by our placement of direct work
or vendor orders for supplies, opportunities to bid on supply contracts, transfer of technology or other
forms of assistance. However, in certain cases, our commitments may be satisfied through other
parties (such as our vendors) who purchase supplies from our non-U.S. customers. We do not commit
to industrial participation agreements unless a contract for sale of our products or services is signed. In
certain cases, penalties could be imposed if we do not meet our industrial participation commitments.
During 2009, we incurred no such penalties. As of December 31, 2009, we have outstanding industrial
participation agreements totaling $11 billion that extend through 2024. Purchase order commitments
associated with industrial participation agreements are included in the table above. To be eligible for
such a purchase order commitment from us, a foreign supplier must have sufficient capability to meet
our requirements and must be competitive in cost, quality and schedule.
Income Tax Obligations As of December 31, 2009, our total liability for income taxes payable,
including uncertain tax positions, was $1,009 million, of which $182 million we expect to pay in the next
twelve months. We are not able to reasonably estimate the timing of future cash flows related to the
remaining $827 million. Our income tax obligations are excluded from the table above. See Note 5.
Commercial Commitments
The following table summarizes our commercial commitments outstanding as of December 31, 2009.
(Dollars in millions)
Total Amounts
Committed/Maximum
Amount of Loss
Less than
1 year
1-3
years
4-5
years
After 5
years
Standby letters of credit and surety
bonds $ 7,052 $5,944 $ 770 $ 3 $ 335
Commercial aircraft financing
commitments 10,409 1,873 1,313 2,753 4,470
Total commercial commitments $17,461 $7,817 $2,083 $2,756 $4,805
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