Boeing 2011 Annual Report Download - page 93

March 31, 2021. Since inception, ULA has consumed $1,211 of inventory that was contributed by us.
ULA has made advance payments of $720 to us and we have recorded revenues and cost of sales of
$483 under the inventory supply agreement through December 31, 2011. ULA is continuing to assess
the future of the Delta II program beyond what is currently on contract. In the event ULA is unable to
sell additional Delta II inventory, our earnings could be reduced by up to $58.
In June 2011, the Defense Contract Management Agency (DCMA) notified ULA that it had determined
that $271 of deferred support costs are not recoverable under government contracts. In December
2011, the DCMA notified ULA of the potential non-recoverability of an additional $114 of deferred
production costs. The DCMA has not yet issued a final decision related to the recoverability of the
$114. ULA and Boeing believe that all costs are recoverable and in November 2011, ULA filed a
certified claim with the USAF for collection of deferred support and production costs. ULA has until
June 2012 to file a suit with the Court of Federal Claims for collection of deferred support costs. If,
contrary to our belief, it is determined that some or all of the deferred support or production costs are
not recoverable, we could be required to record pre-tax losses and make indemnification payments to
ULA for up to $317 of the costs questioned by the DCMA.
We agreed to indemnify ULA against potential losses that ULA may incur in the event ULA is unable to
obtain certain additional contract pricing from the USAF for four satellite missions. We believe ULA is
entitled to additional contract pricing. In December 2008, ULA submitted a claim to the USAF to
re-price the contract value for two satellite missions. In March 2009, the USAF issued a denial of that
claim. In June 2009, ULA filed a notice of appeal, and in October 2009, ULA filed a complaint before
the Armed Services Board of Contract Appeals (ASBCA) for a contract adjustment for the price of the
two satellite missions. In September 2009, the USAF exercised its option for a third satellite mission.
During the third quarter of 2010, ULA submitted a claim to the USAF to re-price the contract value of
the third mission. The USAF did not exercise an option for a fourth mission prior to the expiration. In
March 2011, ULA filed a notice of appeal before the ASBCA, seeking to re-price the third mission. A
hearing before the ASBCA has been scheduled for May 6, 2013. If ULA is unsuccessful in obtaining
additional pricing, we may be responsible for a portion of the shortfall and may record up to $279 in
pre-tax losses associated with the three missions, representing up to $261 for the indemnification
payment and up to $18 for our portion of additional contract losses incurred by ULA.
Credit Guarantees We have issued credit guarantees, principally to facilitate the sale and/or financing
of commercial aircraft. Under these arrangements, we are obligated to make payments to a
guaranteed party in the event that lease or loan payments are not made by the original lessee or
debtor or certain specified services are not performed. A substantial portion of these guarantees has
been extended on behalf of original lessees or debtors with less than investment-grade credit. Our
commercial aircraft credit guarantees are collateralized by the underlying commercial aircraft and
certain other assets. Current outstanding credit guarantees expire within the next nine years.
Residual Value Guarantees We have issued various residual value guarantees principally to facilitate
the sale and financing of certain commercial aircraft. Under these guarantees, we are obligated to
make payments to the guaranteed party if the related aircraft or equipment fair values fall below a
specified amount at a future time. These obligations are collateralized principally by the underlying
commercial aircraft and expire within the next seven years.
Other Indemnifications As part of the 2004 sale agreement with General Electric Capital Corporation
related to the sale of Boeing Capital Corporation’s (BCC) Commercial Financial Services business,
BCC is involved in a loss sharing arrangement for losses on transferred portfolio assets, such as asset
sales, provisions for loss or asset impairment charges offset by gains from asset sales. At
December 31, 2011 and 2010, our maximum future cash exposure to losses associated with the loss
sharing arrangement was $212 and $232 and our accrued liability under the loss sharing arrangement
was $51 and $82.
81