Boeing 2010 Annual Report Download - page 92

Future Lease Commitments
As of December 31, 2010 and 2009, future lease commitments on aircraft and other commitments not
recorded on the Consolidated Statements of Financial Position totaled $17 and $159. These lease
commitments extend through 2015, and our intent is to recover these lease commitments through
sublease arrangements. As of December 31, 2010, the future lease commitments on aircraft for each
of the next five years were as follows: $3 in 2011, $3 in 2012, $3 in 2013, $3 in 2014, and $3 in 2015.
As of December 31, 2010 and 2009, Other accrued liabilities included $12 and $14 attributable to
adverse commitments under these lease arrangements.
Financing Commitments
Financing commitments totaled $9,865 and $10,409 as of December 31, 2010 and 2009. We anticipate
that a significant portion of these commitments will not be exercised by the customers as we continue
to work with third party financiers to provide alternative financing to customers. However, there can be
no assurances that we will not be required to fund greater amounts than historically required.
We have entered into standby letters of credit agreements and surety bonds with financial institutions
primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on
outstanding letters of credit agreements and surety bonds aggregated approximately $7,599 and
$7,052 as of December 31, 2010 and 2009.
In connection with the formation of ULA, we and Lockheed Martin Corporation (Lockheed) each
committed to provide up to $200 to support its working capital requirements through December 1,
2011. ULA did not request any funds under the commitment as of December 31, 2010. We and
Lockheed have also each committed to provide ULA with up to $232 of additional capital contributions
in the event ULA does not have sufficient funds to make a required payment to us under an inventory
supply agreement. See Note 7.
C-17
At December 31, 2010, our backlog included 6 C-17 aircraft currently under contract with the U.S. Air
Force (USAF) as well as international orders for 6 C-17 aircraft. At December 31, 2010, we have
approximately $620 of inventory expenditures and potential termination liabilities to suppliers
associated primarily with 10 aircraft funded in the Fiscal Year 2010 (FY10) Defense Appropriations Act
which are not currently under contract. The President’s Fiscal Year 2011 budget announced during the
first quarter of 2010 did not include any additional C-17 aircraft. During the first quarter of 2010 we
announced plans to reduce the production rate from 15 per year to 10 per year and expect the
transition to be complete by mid-2011. The lower production rate is intended to bridge the gap between
existing orders and potential future orders. Should additional orders not materialize, it is reasonably
possible that we will decide in 2011 to end production of the C-17 at a future date. We are still
evaluating the full financial impact of a potential production shut-down, including any recovery that
would be available from the U.S. government. Such recovery from the U.S. government would not
include the costs incurred by us resulting from our direction to suppliers to begin working on aircraft
beyond those currently under contract with the USAF.
Company Owned Life Insurance
McDonnell Douglas Corporation insured its executives with Company Owned Life Insurance (COLI),
which are life insurance policies with a cash surrender value. Although we do not use COLI currently,
these obligations from the merger with McDonnell Douglas are still a commitment at this time. We have
loans in place to cover costs paid or incurred to carry the underlying life insurance policies. As of
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