Boeing 2007 Annual Report Download - page 64

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Notes to Consolidated Financial Statements
As part of our estimating process, we develop a range of rea-
sonably possible alternate scenarios which include highest
cost estimates for all remediation sites based on our experi-
ence and existing laws and regulations. At December 31, 2007
and 2006 our reasonably possible highest cost estimate for all
remediation sites exceeded our recorded liabilities by $1,191
and $939, excluding the impacts of any potential recoveries.
Discontinued Operations
As part of the 2004 purchase and sale agreement with General
Electric Capital Corporation related to the sale of BCC’s
Commercial Financial Services business, BCC is involved in a
loss sharing arrangement for losses that may exist at the end
of the initial and subsequent financing periods of transferred
portfolio assets, or, in some instances, prior to the end of the
financing term, such as certain events of default and reposses-
sion. As of December 31, 2007, our maximum exposure to
loss associated with the loss sharing arrangement was $224.
As of December 31, 2007 and 2006, the accrued liability under
the loss sharing arrangement was $59 and $78.
Future Lease Commitments
As of December 31, 2007 and 2006, future lease commit-
ments on aircraft and other commitments not recorded on the
Consolidated Statements of Financial Position totaled $240
and $323. These lease commitments extend through 2020,
and our intent is to recover these lease commitments through
sublease arrangements. As of December 31, 2007, the future
lease commitments on aircraft for each of the next five years
were as follows: $43 in 2008, $20 in 2009, $18 in 2010, $19
in 2011, and $19 in 2012. As of December 31, 2007 and
2006, Accounts payable and other liabilities included $42 and
$65 attributable to adverse commitments under these lease
arrangements.
Termination Liability
Due to lack of demand for the 717 and 757 airplanes, we have
concluded production of these airplanes. The last 717 and 757
airplanes were delivered in the second quarter of 2006 and
2005 respectively. The following table summarizes the termina-
tion liability remaining in Accounts payable and other liabilities.
Purchase Obligations
As of December 31, 2007 and 2006 we had $104,023 and
$86,254 of production related purchase obligations not record-
ed on the Consolidated Statement of Financial Position. Such
obligations include agreements for production goods, tooling
costs, electricity and natural gas contracts, property, plant and
equipment, inventory procurement contracts, and other miscel-
laneous production related obligations. As of December 31,
2007, the amounts of production related purchase obligations
for each of the next five years were as follows: $37,922 in
2008, $23,704 in 2009, $17,081 in 2010, $10,976 in 2011,
and $7,305 in 2012.
Commercial Aircraft Commitments
In conjunction with signing a definitive agreement for the sale
of new aircraft, we have entered into specified-price trade-in
commitments with certain customers that give them the right
to trade in their used aircraft for the purchase of Sale Aircraft.
The total contractual trade-in value was $924 and $1,162 as of
December 31, 2007 and 2006. We anticipate that a significant
portion of these commitments will not be exercised by cus-
tomers. There were no probable contractual trade-in commit-
ments as of December 31, 2007. These trade-in commitment
agreements have expiration dates from 2008 through 2015.
Potential C-17 Shut-Down
As of December 31, 2007, we delivered 171 of the 190 C-17
aircraft ordered by the U.S. Air Force, with final deliveries
scheduled for 2009. In June 2007, based upon continued
bipartisan congressional support, including the House Armed
Services Committee addition of $2.4 billion for 10 C-17s in
their mark of the 2008 budget, and U.S. Air Force testimony to
Congress reflecting interest in additional C-17 aircraft, we
directed key suppliers to begin work on 10 aircraft beyond the
190 currently on order. As of December 31, 2007, inventory
expenditures and potential termination liabilities to suppliers
for work performed related to anticipated orders for 10 C-17
aircraft to the U.S. Air Force and anticipated international
orders for 3 additional aircraft totaled approximately $215. It
2006 2007
Termination Liability
January 1,
2006 Other*
Change in
estimate Payments
December 31,
2006
Change in
estimate
December 31,
Payments 2007
Supplier termination
Production disruption
and shutdown related
Pension/postretirement related
Severance
$239
3
43
19
$(47)
$(4)
4
1
$(190)
(11)
$45
3
9
$(15) $««(18)
(1)
$12
3
8
Total $304 $(47) $«1 $(201) $57 $(15) $(19) $23
*Represents transfer to prepaid pension expense
The above liability was determined based on available infor-
mation and we make revisions to our estimates accordingly
as new information becomes available.
The Boeing Company and Subsidiaries