Boeing 2009 Annual Report Download - page 85

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Sea Launch management continues to operate the business and has obtained debtor-in-possession
financing to address cash needs. In October 2009, the bankruptcy court granted Sea Launch a three
month extension to file a reorganization plan, and Sea Launch’s motion requesting an additional
extension through April 14, 2010 is scheduled to be heard on March 4, 2010.
Note 7 – Inventories
Inventories at December 31 consisted of the following:
2009 2008
Long-term contracts in progress $ 14,673 $ 14,051
Commercial aircraft programs 18,568 19,309
Commercial spare parts, used aircraft, general stock materials and other 5,004 4,340
38,245 37,700
Less advances and progress billings (21,312) (22,088)
$ 16,933 $ 15,612
Long-Term Contracts in Progress
Delta launch program inventories that will be sold at cost to United Launch Alliance (ULA) under an
inventory supply agreement that terminates on March 31, 2021 are included in long-term contracts in
progress inventories. At December 31, 2009, and 2008, the inventory balance was $1,685 (net of $120
of advances received under the inventory supply agreement) and $1,822, of which $1,070 relates to
yet unsold launches at December 31, 2009. ULA is continuing to assess the future of the Delta II
program. In the event ULA is unable to sell additional Delta II inventory, earnings could be reduced by
up to $62.
Commercial Aircraft Programs
Inventory includes deferred production costs which represent commercial aircraft programs production
costs incurred on in-process and delivered units in excess of the estimated average cost of such units.
As of December 31, 2009 and 2008, the balance of deferred production costs and unamortized tooling
related to commercial aircraft programs in production, except the 777 and 787 programs, was
insignificant relative to the programs’ balance-to-go estimates. As of December 31, 2009 and 2008, all
significant excess deferred production costs or unamortized tooling costs are recoverable from existing
firm orders for the 777 program.
For the 777 program, inventory included $510 and $1,223 for deferred production cost, and $211 and
$255 of unamortized tooling at December 31, 2009 and 2008.
For the 787 program, inventory included $3,885 and $3,021 of work in process (including deferred
production costs), $2,187 and $2,548 of supplier advances, and $1,231 and $755 of tooling and other
non-recurring costs at December 31, 2009 and 2008. In August 2009, we concluded that the first three
flight-test airplanes for the 787 program will not be sold as previously anticipated due to the inordinate
amount of rework and unique and extensive modifications made to those aircraft. Therefore, $2,481 in
costs previously recorded for the first three flight-test airplanes were reclassified from program
inventory to Research and development expense during the third quarter of 2009. Additionally,
production costs incurred from August to December 2009 of $212 related to these flight-test airplanes
were also included in research and development expense.
Commercial aircraft program inventory included amounts credited in cash or other consideration (early
issue sales consideration), to airline customers totaling $1,577 and $1,271 at December 31, 2009 and
2008.
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