Boeing 2010 Annual Report Download - page 112

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Fair Value Disclosures
The following table presents our financial assets and liabilities that are not measured at fair value on a
recurring basis. The carrying amounts and estimated fair values were as follows at December 31:
2010 2009
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Assets
Accounts receivable, net $ 5,422 $ 5,283 $ 5,785 $ 5,658
Notes receivable 480 501 1,045 1,072
Liabilities
Debt, excluding capital lease obligations (12,234) (13,525) (12,848) (13,809)
Accounts payable (7,715) (7,704) (7,096) (7,063)
Residual value, credit and other guarantees (35) (15) (35) (20)
Contingent repurchase commitments (7) (84) (7) (63)
The fair values of the Accounts receivable and Accounts payable are based on current market rates for
loans of the same risk and maturities. The fair values of our variable rate notes receivable that reprice
frequently approximate their carrying amounts. The fair values of fixed rate notes receivable are
estimated using discounted cash flow analysis using interest rates currently offered on loans with
similar terms to borrowers of similar credit quality. The fair value of our debt is based on current market
yields for our debt traded in the secondary market. The fair values of the residual value guarantees and
contingent repurchase commitments are determined using a Black Futures Options formula and
include such assumptions as the expected value of the aircraft on the settlement date, volatility of
aircraft prices, time until settlement and the risk free discount rate. The fair value of the credit
guarantees is estimated based on the expected cash flows of those commitments, given the creditor’s
probability of default, and discounted using the risk free rate. With regard to financial instruments with
off-balance sheet risk, it is not practicable to estimate the fair value of future financing commitments
because the amount and timing of funding those commitments are uncertain.
Note 20 – Legal Proceedings
Various legal proceedings, claims and investigations related to products, contracts and other matters
are pending against us. Potentially material contingencies are discussed below.
We are subject to various U.S. government investigations, from which civil, criminal or administrative
proceedings could result or have resulted. Such proceedings involve or could involve claims by the
government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures.
Under government regulations, a company, or one or more of its operating divisions or subdivisions,
can also be suspended or debarred from government contracts, or lose its export privileges, based on
the results of investigations. We believe, based upon current information, that the outcome of any such
government disputes and investigations will not have a material adverse effect on our financial
position, results of operations, or cash flows, except as set forth below. Unless otherwise indicated
below, a range of loss associated with any individual legal proceeding set forth below cannot be
estimated.
A-12 Litigation
In 1991, the Department of the Navy (the Navy) notified McDonnell Douglas Corporation (now merged
into The Boeing Company) and General Dynamics Corporation (together, the Team) that it was
terminating for default the Team’s contract for development and initial production of the A-12 aircraft.
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