Boeing 2011 Annual Report Download - page 112

Fair Value Disclosures
The fair values and related carrying values of financial instruments that are not required to be
remeasured at fair value on the Consolidated Statement of Financial Position at December 31 were as
follows:
2011 2010
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Assets
Accounts receivable, net $ 5,793 $ 5,690 $ 5,422 $ 5,283
Notes receivable, net 792 836 480 501
Liabilities
Debt, excluding capital lease obligations (12,136) (14,099) (12,234) (13,525)
Accounts payable (8,406) (8,396) (7,715) (7,704)
Residual value and credit guarantees (8) (9) (12) (11)
Contingent repurchase commitments (7) (4) (7) (84)
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 other financial instruments
with off-balance sheet risk, it is not practicable to estimate the fair value of our indemnifications
because the amount and timing of those arrangements are uncertain. Items not included in the above
disclosures include cash and cash equivalents, restricted cash, time deposits and other deposits,
commercial paper and long-term payables. The carrying values of those items, as reflected in the
Consolidated Statements of Financial Position, approximate their fair value at December 31, 2011 and
2010.
Note 21 – 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 effect on our financial position, results
of operations, or cash flows, except as set forth below. Where it is reasonably possible that we will
incur losses in excess of recorded amounts in connection with any of the matters set forth below, we
have disclosed either the amount or range of reasonably possible losses in excess of such amounts or,
where no such amount or range can be reasonably estimated, the reasons why no such estimate can
be made.
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