Boeing 2011 Annual Report Download - page 110

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Note 19 – Significant Group Concentrations of Risk
Credit Risk
Financial instruments involving potential credit risk are predominantly with commercial aircraft
customers and the U.S. government. Of the $10,688 in gross accounts receivable and gross customer
financing included in the Consolidated Statements of Financial Position as of December 31, 2011,
$4,968 related predominantly to commercial aircraft customers ($660 of accounts receivable and
$4,308 of customer financing) and $2,950 related to the U.S. government.
Of the $4,842 in gross customer financing, $2,817 related to customers we believe have less than
investment-grade credit including American Airlines, United/Continental Airlines, and Hawaiian Airlines
who were associated with 14%, 9% and 8%, respectively, of our financing portfolio. Financing for
aircraft is collateralized by security in the related asset and in some instances security in other assets
as well.
As of December 31, 2011, there was $15,866 of financing commitments related to aircraft on order
including options and proposed as part of sales campaigns described in Note 12, of which $14,697
related to customers we believe have less than investment-grade credit.
BDS Fixed-Price Development Contracts
Fixed-price development work is inherently uncertain and subject to significant variability in estimates
of the cost and time required to complete the work. Significant BDS fixed-price development contracts
include Airborne Early Warning and Control (AEW&C), India P-8I, USAF KC-46A Tanker and
commercial and military satellites. The operational and technical complexities of these contracts create
financial risk, which could trigger termination provisions, order cancellations or other financially
significant exposure. Changes to cost and revenue estimates could also result in lower margins or a
material charge for reach-forward losses in 2012.
Commercial Airplane Development Programs
The development and initial production of new commercial airplanes and new commercial airplane
derivatives entail significant commitments to customers and suppliers as well as substantial
investments in working capital, infrastructure and research and development. Performance issues or
cost overruns on these programs, which currently include the 787 and 747-8, could have a material
impact on our consolidated results and financial position in 2012.
Other Risk
As of December 31, 2011, approximately 37% of our total workforce was represented by collective
bargaining agreements and approximately 13% of our total workforce was represented by agreements
expiring during 2012.
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