Boeing 2010 Annual Report Download - page 87

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At December 31, 2010, we had no impaired financing receivables. Impaired financing receivables,
unpaid principal balances, and the allowance for losses on those receivables consisted of the following
at December 31, 2009:
No specific impairment allowance $ 1
Specific impairment allowance 144
Carrying value of impaired receivables $145
Unpaid principal balance $145
Allowance for losses on impaired receivables 2
The average recorded investment in impaired financing receivables as of December 31, 2010, 2009
and 2008, was $88, $162 and $197, respectively. Income recognition is generally suspended for
financing receivables at the date full recovery of income and principal becomes not probable. Income is
recognized when financing receivables become contractually current and performance is demonstrated
by the customer. Interest income recognized on such receivables was $9, $9 and $14 for the years
ended December 31, 2010, 2009 and 2008, respectively.
The change in the allowance for losses on financing receivables for the years ended December 31,
2010, 2009 and 2008, consisted of the following:
2010 2009 2008
Beginning balance – January 1 $(302) $(269) $(195)
Customer financing valuation benefit/(provision) (51) (45) (84)
Reduction in customer financing assets 12 10
Ending balance – December 31 $(353) $(302) $(269)
Specifically evaluated for impairment $ (2) $ (8)
Collectively evaluated for impairment $(353) (300) (261)
We assign internal credit ratings for all customers and determine the creditworthiness of each
customer based upon public information and information obtained directly from our customers. We
utilize these credit ratings as one of the factors in assessing the adequacy of our allowance for losses
on receivables. Our rating categories are comparable to those used by the major credit rating
agencies. Credit risk profile by internally assigned ratings, consisted of the following at December 31:
Rating categories 2010 2009
B$ 207 $ 510
CCC 2,432 2,746
Other 113 143
Total carrying value of financing receivables $2,752 $3,399
At December 31, 2010 and 2009, all of our receivables were related to customers we believe have less
than investment-grade credit. For the year ended December 31, 2010, we applied default rates, on
average, of 11% and 51% for customers with internally assigned B and CCC ratings.
Declines in collateral values are a significant driver of our allowance for losses. Generally,
out-of-production aircraft have had greater percentages of collateral value declines than in-production
aircraft. Our portfolio is primarily comprised of financing receivables for out-of-production aircraft.
As of December 31, 2010, we had no past due receivables. As of December 31, 2009, total financing
receivables past due thirty days or more was $1.
75