Boeing 2006 Annual Report Download - page 58

56 The Boeing Company and Subsidiaries
Notes to Consolidated Financial Statements
Note 7– Accounts Receivable
Accounts receivable at December 31 consisted of the following:
2006 2005
U.S. Government contracts $2,667 $2,620
Commercial and customers 1,423 1,155
Other 1,278 1,561
Less valuation allowance (83)(90)
$5,285 $5,246
The following table summarizes our accounts receivable under
long-term contracts that were not billable or related to out-
standing claims as of December 31: 2006 2005
Unbillable
Current $«««830 $«««687
Expected to be collected after one year 705 404
$1,535 $1,091
Claims
Current $«««««10 $«««««15
Expected to be collected after one year 84 90
$«««««94 $«««105
Unbillable receivables on long-term contracts arise when the
sales or revenues based on performance attainment, though
appropriately recognized, cannot be billed yet under terms of
the contract as of the balance sheet date. Accounts receivable
related to claims are items that we believe are earned, but are
subject to uncertainty concerning their determination or ultimate
realization. Accounts receivable, other than those described
above, expected to be collected after one year are not material.
As of December 31, 2006 and 2005, other accounts receivable
included $538 and $621 of reinsurance receivables held by
Astro Ltd., a wholly-owned subsidiary, which operates as a
captive insurance company. Other also included $308 and
$650 at December 31, 2006 and 2005, related to non-U.S.
military contracts.
Note 8 – Inventories
Inventories at December 31 consisted of the following:
2006 2005
Long-term contracts in progress $«12,329 $«14,194
Commercial aircraft programs 8,743 7,745
Commercial spare parts, used aircraft,
general stock materials and other 2,888 2,235
23,960 24,174
Less advances and progress billings (15,855)(16,296)
$«««8,105 $«««7,878
Included in long-term contracts in progress inventories at
December 31, 2006, are Delta launch program inventories of
$1,860 that will be sold at cost to United Launch Alliance L.L.C.
(ULA) under an inventory supply agreement that terminates on
March 31, 2021. We have agreed to indemnify ULA in the event
that these inventories are not recoverable from existing and
future orders; however, based on our assessment of the mis-
sion manifest for the Delta launch program, we believe ULA will
recover these costs. (See Note 19).
As a normal course of our Commercial Airplanes segment
production process, our inventory may include a small
quantity of airplanes that are completed but unsold. As of
December 31, 2006 and 2005, the value of completed but
unsold aircraft in inventory was insignificant. Inventory balances
included $234 subject to claims or other uncertainties relating
to the A-12 program as of December 31, 2006 and 2005.
(See Note 22).
Commercial aircraft program inventory includes amounts
credited in cash or other consideration (early issued sales
consideration), to airline customers totaling $1,375 and $1,140
as of December 31, 2006 and 2005. As of December 31, 2006
and 2005, early issued sales consideration, net of advance
deposits, included $151 and $194 related to one financially
troubled customer, which we believe is fully recoverable as of
December 31, 2006.
Deferred production costs represent commercial aircraft
programs and integrated defense programs inventory production
costs incurred on in-process and delivered units in excess of
the estimated average cost of such units to be produced. As
of December 31, 2006 and 2005, the balance of deferred
production costs and unamortized tooling related to commercial
aircraft programs, except the 777 program, was insignificant
relative to the programs’ balance-to-go estimates. As of
December 31, 2006 and 2005, all significant excess deferred
production costs or unamortized tooling costs are recoverable
from existing firm orders for the 777 program. The deferred
production costs and unamortized tooling are summarized in
the following table:
2006 2005
Deferred production costs:
777 program $871 $683
Delta II & IV programs 271
Unamortized tooling:
777 program 329 411
Delta II & IV programs 194
During 2002, we were selected by the US Air Force (USAF)
to supply 100 767 Tankers and entered into a preliminary
agreement with the USAF for the procurement of the 100
Tankers. During 2004, we recognized pre-tax charges totaling
$275 related to the USAF 767 Tanker program. The charge
reflected our updated assessment of securing the specific
USAF 767 Tanker contract that was being negotiated, given
the continued delay and then likely re-competition of the
contract. The charge included inventory write-downs of $179
(Commercial Airplanes) and $47 (IDS).