Boeing 2008 Annual Report Download - page 114

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Other income, net, as a result of discontinuance of cash flow hedge designation based on the
probability that the original forecasted transactions will not occur by the end of the originally specified
time period. Such reclassifications were not significant for the years ended December 31, 2008 and
2007. Ineffectiveness for cash flow hedges was insignificant for the years ended December 31, 2008,
2007 and 2006.
At December 31, 2008 and 2007, net (losses)/gains of ($101) and $92 (net of tax) were recorded in
Accumulated other comprehensive loss associated with our cash flow hedging transactions. Based on
our current portfolio of cash flow hedges, we expect to reclassify to cost of products and services a
loss of $13 (net of tax) during 2009.
Fair Value Hedges
Interest rate swaps under which we agree to pay variable rates of interest are designated as fair value
hedges of fixed-rate debt. The net change in fair value of the derivatives and the hedged items is
reported in Interest and debt expense. Ineffectiveness related to the interest rate swaps was
insignificant for the years ended December 31, 2008, 2007 and 2006.
For the years ended December 31, 2008, 2007 and 2006, $9, $5, and $8 of gains related to the basis
adjustment of certain terminated interest rate swaps were amortized to earnings.
Derivative Financial Instruments Not Receiving Hedge Accounting Treatment
We also hold certain non-hedging instruments, such as interest exchange agreements, interest rate
swaps, warrants, and foreign currency forward contracts. The changes in fair value of these
instruments are recorded in Other income, net. For the years ended December 31, 2008, 2007 and
2006, these non-hedging instruments resulted in a net gain/(losses) of $3, ($47), and ($6),
respectively.
Note 18 – Significant Group Concentrations of Risk
Credit Risk
Financial instruments involving potential credit risk are predominantly with commercial aircraft
customers and the U.S. government. Of the $12,207 in Accounts receivable and Customer financing
included in the Consolidated Statements of Financial Position as of December 31, 2008, $6,243 related
to commercial aircraft customers ($462 of Accounts receivable and $5,781 of Customer financing) and
$2,741 related to the U.S. government. Of the $6,551 of customer financing, $5,717 related to
customers we believe have less than investment-grade credit. AirTran Airways, American Airlines and
Hawaiian Airlines were associated with 23%, 15% and 7%, respectively, of our financing portfolio.
Financing for aircraft is collateralized by security in the related asset. As of December 31, 2008, there
was $10,145 of financing commitments related to aircraft on order including options and proposed as
part of sales campaigns described in Note 11, of which $9,006 related to customers we believe have
less than investment-grade credit.
Other Risk
As of December 31, 2008, approximately 37% of our total workforce were represented by collective
bargaining agreements and approximately 2% of our total workforce were represented by agreements
expiring during 2009.
100