Boeing 2011 Annual Report Download - page 90

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The liabilities recorded represent our best estimate or the low end of a range of reasonably possible
costs expected to be incurred to remediate sites, including operation and maintenance over periods of
up to 30 years. It is reasonably possible that we may incur charges that exceed these recorded
amounts because of regulatory agency orders and directives, changes in laws and/or regulations,
higher than expected costs and the discovery of additional contamination. As part of our estimating
process, we develop a range of reasonably possible alternate scenarios which include the high end of
a range of reasonably possible cost estimates for all remediation sites for which we have sufficient
information based on our experience and existing laws and regulations. There are some potential
remediation obligations where the costs of remediation cannot be reasonably estimated. At
December 31, 2011 and 2010, the high end of the estimated range of reasonably possible remediation
costs exceeded our recorded liabilities by $1,003 and $957.
Product Warranties
The following table summarizes product warranty activity recorded for the years ended December 31,
2011 and 2010.
2011 2010
Beginning balance – January 1 $1,076 $ 999
Additions for current year deliveries 232 141
Reductions for payments made (269) (234)
Changes in estimates 7170
Ending balance – December 31 $1,046 $1,076
Commercial Aircraft Commitments
In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have
entered into specified-price trade-in commitments with certain customers that give them the right to
trade in used aircraft upon the purchase of Sale Aircraft. The total contractual trade-in value was $273
and $295 as of December 31, 2011 and 2010. We anticipate that a significant portion of these
commitments will not be exercised by customers.
The probability that trade-in commitments will be exercised is determined by using both quantitative
information from valuation sources and qualitative information from other sources. The probability of
exercise is assessed quarterly, or as events trigger a change, and take into consideration the current
economic environment. Trade-in commitments, which can be terminated by mutual consent with the
customer, may be exercised only during the period specified in the agreement, and require advance
notice by the customer. The fair value of trade-in aircraft related to probable contractual trade-in
commitments was $27 and $30 as of December 31, 2011 and 2010. Trade-in commitment agreements
have expiration dates from 2012 through 2023.
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