Boeing 2014 Annual Report Download - page 70

58
determination is made. Tax-related interest and penalties are classified as a component of Income tax
expense.
Postretirement Plans
The majority of our employees are earning benefits under defined benefit pension plans. In 2014, we
announced changes to our retirement plans whereby nonunion and the majority of union employees
currently participating in defined benefit pension plans will transition in 2016 to a company-funded defined
contribution retirement savings plan. We also provide postretirement benefit plans other than pensions,
consisting principally of health care coverage to eligible retirees and qualifying dependents. Benefits under
the pension and other postretirement benefit plans are generally based on age at retirement and years of
service and, for some pension plans, benefits are also based on the employee’s annual earnings. The net
periodic cost of our pension and other postretirement plans is determined using the projected unit credit
method and several actuarial assumptions, the most significant of which are the discount rate, the long-
term rate of asset return, and medical trend (rate of growth for medical costs). A portion of net periodic
pension and other postretirement income or expense is not recognized in net earnings in the year incurred
because it is allocated to production as product costs, and reflected in inventory at the end of a reporting
period. Actuarial gains and losses, which occur when actual experience differs from actuarial assumptions,
are reflected in Shareholders’ equity (net of taxes). If actuarial gains and losses exceed ten percent of the
greater of plan assets or plan liabilities we amortize them over the average future service period of
employees. The funded status of our pension and postretirement plans is reflected on the Consolidated
Statements of Financial Position.
Postemployment Plans
We record a liability for postemployment benefits, such as severance or job training, when payment is
probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or
accumulated.
Environmental Remediation
We are subject to federal and state requirements for protection of the environment, including those for
discharge of hazardous materials and remediation of contaminated sites. We routinely assess, based on
in-depth studies, expert analyses and legal reviews, our contingencies, obligations, and commitments for
remediation of contaminated sites, including assessments of ranges and probabilities of recoveries from
other responsible parties and/or insurance carriers. Our policy is to accrue and charge to current expense
identified exposures related to environmental remediation sites when it is probable that a liability has been
incurred and the amount can be reasonably estimated. The amount of the liability is based on our best
estimate or the low end of a range of reasonably possible exposure for investigation, cleanup, and
monitoring costs to be incurred. Estimated remediation costs are not discounted to present value as the
timing of payments cannot be reasonably estimated. We may be able to recover a portion of the remediation
costs from insurers or other third parties. Such recoveries are recorded when realization of the claim for
recovery is deemed probable.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, time deposits,
and other money market instruments, which have original maturities of three months or less. We aggregate
our cash balances by bank where conditions for right of set-off are met, and reclassify any negative
balances, consisting mainly of uncleared checks, to Accounts payable. Negative balances reclassified to
Accounts payable were $241 and $108 at December 31, 2014 and 2013.