Boeing 2005 Annual Report Download - page 67

Notes to Consolidated Financial Statements
sciences; and creates new products and services for space,
telecommunications, defense and automotive applications. We
have a 45% ownership of APB Winglets Company, LLC, which
was established for the purposes of designing, developing,
manufacturing, installing, certifying, retrofitting, marketing, sell-
ing, and providing after-sales support with respect to winglets
for retrofit aircraft.
We have a 50% partnership with ATA in BATA, which was
established to acquire aircraft and market and lease the aircraft
to third-parties. During 2003, we finalized an amendment to the
partnership, which gave us majority control in the management
of the business and affairs of BATA. As a result, BATA is now
consolidated in our financial statements.
The Sea Launch venture, in which we are a 40% partner with
RSC Energia (25%) of Russia, Kvaerner ASA (20%) of Norway,
and KB Yuzhnoye/PO Yuzhmash (15%) of Ukraine, provides
ocean-based launch services to commercial satellite cus-
tomers. The venture conducted four successful launches for
the year ended December 31, 2005. The venture also con-
ducted three successful launches in each of the years ended
December 31, 2004 and 2003. Our investment in this venture
reflects the recognition of our share of losses reported by Sea
Launch in prior years. The venture incurred losses in 2005,
2004 and 2003, due to the relatively low volume of launches,
driven by a depressed commercial satellite market. We have
financial exposure with respect to the venture, which relates to
guarantees by us provided to certain Sea Launch creditors,
performance guarantees provided by us to a Sea Launch cus-
tomer and financial exposure related to advances and other
assets reflected in the consolidated financial statements.
We suspended recording equity losses after writing our invest-
ment in and direct loans to Sea Launch down to zero and
accruing our obligation for third-party guarantees on Sea
Launch indebtedness. We are not committed to provide any
further financial support to the Sea Launch venture. However,
in the event that we do extend additional financial support to
Sea Launch in the future, we will recognize suspended losses
as appropriate.
During 2003, we recorded a charge of $55 related to Resource
21, a partnership entered into with three other parties several
years ago to develop commercial remote sensing and ground
monitoring. The charge resulted from a decision by NASA to
not award an imagery contract to Resource 21. During 2003,
we also recorded adjustments to equity investments in Ellipso,
SkyBridge and Teledesic resulting in the net write down of $27.
Note 13 - Accounts Payable and Other Liabilities
Accounts payable and other liabilities at December 31 con-
sisted of the following:
2005 2004
Accounts payable $ 5,124 $ 4,563
Accrued compensation and employee
benefit costs 4,165 3,360
Legal, environmental, and
other contingencies(c) 1,792 1,774
Other accrued insurance liability(a) 801 666
Forward loss recognition(b) 1,114 1,218
Pension liabilities 649 744
Product warranty liabilities 781 781
Lease and other deposits 431 362
Dividends payable 241 210
Deferred income and guarantee
residual values 207 195
Accrued interest 194 285
Other 1,014 711
$16,513 $14,869
(a) Accrued insurance liabilities relating to our wholly-owned captive
insurance agencies, Astro Inc. and Astro Ltd.
(b) Forward loss recognition relates primarily to launch and satellite
contracts.
(c) Represents items deemed probable and estimable as discussed in
Note 24.
Accounts payable included $204 and $344 at December 31,
2005 and 2004, attributable to checks written but not yet
cleared by the bank.
Payments associated with these liabilities may occur in periods
significantly beyond the next twelve months.
Note 14 - Advances and Billings in Excess of Related
Costs
We receive advance payments, performance based payments
and progress payments from our commercial and government
customers. Performance based payments and progress pay-
ments have historically been recorded as Inventories, net of
advances and progress billings. In 2005, we began classifying
performance based payments and progress payments in
excess of inventoriable cost in Advances and billings in excess
of related costs on the Consolidated Statements of Financial
Position and reclassified prior years to conform with our new
presentation. As of December 31, 2004, we reclassified $2,261
of performance based payments and progress payments in
excess of inventoriable costs from Inventories to Advances and
billings in excess of related costs. See Note 25 for reclassified
asset and liability balances as of December 31, 2004 for our
IDS segment.
Note 15 - Deferred Lease Income
During 2003 and 2004, we delivered a total of five 767 aircraft
to a joint venture named TRM Aircraft Leasing Co. Ltd (TRM),
which was established in order to provide financing and
arrange for such aircraft to be leased to Japan Airlines. We
provided financing of approximately $42 related to the five air-
craft, which in combination with an expense sharing arrange-
ment with TRM, caused us to retain substantial risk of
ownership in the aircraft. As a result, we accounted for the
The Boeing Company and Subsidiaries 65