Boeing 2007 Annual Report Download - page 77

74
Notes to Consolidated Financial Statements
was reportedly recently resolved. Thuraya has reserved its
rights to seek uninsured losses that could increase the total
amount disputed to $365. We believe these claims lack merit
and intend to vigorously defend against them.
We have insurance coverage to respond to this arbitration
request and have notified responsible insurers. On May 26,
2006, a group of these insurers filed a declaratory judgment
action in the Circuit Court of Cook County asserting certain
defenses to coverage and requesting a declaration of their
obligation under our insurance and reinsurance policies relating
to the Thuraya ICC arbitration. We believe the insurers’ position
lacks merit. On May 25, 2007, the court stayed further pro-
ceedings in the coverage action pending completion of the
arbitration but insurers have appealed that order.
BSSI/Telesat Canada
On November 9, 2006, Telesat Canada (Telesat) and a group
of its insurers served BSSI with an arbitration demand alleging
breach of contract, gross negligence and willful misconduct
in connection with the constructive total loss of Anik F1, a
model 702 satellite manufactured by BSSI. Telesat and its
insurers seek over $385 in damages and $10 in lost profits.
We believe that the claims asserted by Telesat and its insurers
lack merit but have nonetheless notified our insurance carriers
of the demand.
On April 26, 2007, a group of our insurers filed a declaratory
judgment action in the Circuit Court of Cook County asserting
certain defenses to coverage and requesting a declaration of
their obligation under our insurance and reinsurance policies
relating to the threatened Telesat Anik F1 arbitration. We
believe the insurers’ position lacks merit and intend to vigor-
ously litigate the coverage issue.
BSSI/Superbird-6 Litigation
On December 1, 2006, BSSI was served with an arbitration
demand in subrogation brought by insurers for Space
Communications Corporation alleging breach of warranty,
breach of contract and gross negligence relating to the
Superbird-6 communications satellite, which suffered a low
perigee event shortly after launch in April 2004. The low orbit
allegedly damaged the satellite, and a subsequent decision to
de-orbit the satellite was made less than 12 months after
launch. The model 601 satellite was manufactured by BSSI
and delivered for launch by International Launch Services on
an Atlas launch vehicle. The insurers seek to recover in excess
of $240 from BSSI. We believe the insurers’ claims lack merit
and intend to vigorously defend against them. The arbitration
hearing is scheduled to begin in October 2008.
Note 22 – Segment Information
We operate in five principal segments: Commercial Airplanes;
Precision Engagement and Mobility Systems, Network and
Space Systems, and Support Systems, collectively IDS; and
BCC. All other activities fall within the Other segment, princi-
pally made up of Engineering, Operations and Technology,
Connexion by BoeingSM and our Shared Services Group. On
August 17, 2006, we announced that we would exit the
Connexion by BoeingSM high speed broadband communica-
tions business having completed a detailed business and mar-
ket analysis. See Note 7. See page 44 for Summary of
Business Segment Data, which is an integral part of this note.
Our Commercial Airplanes operation principally involves devel-
opment, production and marketing of commercial jet aircraft
and providing related support services, principally to the com-
mercial airline industry worldwide.
Our IDS operations principally involve research, development,
production, modification and support of the following products
and related systems: military aircraft, both land-based and air-
craft-carrier-based, including fighter, transport and attack air-
craft with wide mission capability, and vertical/short takeoff
and landing capability; helicopters and missiles, space sys-
tems, missile defense systems, satellites and satellite launching
vehicles, and information and battle management systems.
Although some IDS products are contracted in the commercial
environment, the primary customer is the U.S. government.
Our Precision Engagement and Mobility Systems segment pro-
grams include AH-64 Apache, CH-47 Chinook, C-17, EA-18G,
F/A-18E/F, F-15, F-22, Joint Direct Attack Munition, P-8A
Poseidon, Small Diameter Bomb, V-22 Osprey, 737 Airborne
Early Warning and Control, and 767 Tanker.
Our Network and Space Systems segment programs include
Future Combat Systems, Joint Tactical Radio System, and
Family of Beyond Line-of-Sight Terminals, which are helping
our military customers network enable their operations; Future
Rapid Effects Systems and SBInet, which provide integrated
intelligence and security solutions; launch exploration and
satellite products and services including the Space Shuttle,
International Space Station, Ares, and Delta launch services;
and missile defense programs including Ground-based
Midcourse Defense and Airborne Laser. Also included are
military satellite programs and Proprietary programs.
Our Support Systems segment programs include Integrated
Logistics (AH-64 Apache, C-17, CH-47 Chinook, E-6, F/A-18),
Maintenance, Modifications and Upgrades (B-52, C-130
Avionics Modernization Program, KC-10, KC-135, T-38), and
Training Systems and Services (AH-64 Apache, C-17, F/A-18,
F-15, T-45).
Effective January 1, 2007, the B-1 bomber program (formerly
included in Precision Engagement and Mobility Systems) and
certain Boeing Australia Limited programs (formerly included in
Network and Space Systems) are included in Support
Systems. Business segment data for all periods presented
have been adjusted to reflect the realignment.
Our BCC segment is primarily engaged in supporting our major
operating units by facilitating, arranging, structuring and provid-
ing selective financing solutions to our customers and manag-
ing our overall financial exposures.
Engineering, Operations and Technology is an advanced
research and development organization focused on innovative
technologies, improved processes and the creation of new
products. Financing activities other than BCC, consisting
principally of four C-17 transport aircraft under lease to the
UKRAF, are included within the Other segment classification.
The Boeing Company and Subsidiaries