Boeing 2008 Annual Report Download - page 51

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we initially contributed net assets of $914 million at December 1, 2006. The book value of our
investment exceeds our proportionate share of ULA’s net assets. This difference will be expensed
ratably in future years. Based on the adjusted contributions and the conformed accounting policies
established by ULA, this amortization is expected to be approximately $15 million annually for the next
16 years.
In connection with the formation of ULA, we and Lockheed each committed to provide up to $25 million in
additional capital contributions and we each have agreed to extend a line of credit to ULA of up to $200
million to support its working capital requirements. We and Lockheed transferred performance
responsibility for certain U.S. government contracts to ULA as of the closing date. We and Lockheed
agreed to jointly guarantee the performance of those contracts to the extent required by the U.S.
government. ULA made a $100 million earnings distribution to each partner during the fourth quarter of
2008. In conjunction with the distribution, we and Lockheed committed to provide ULA with additional
capital contributions up to the amount of such distributions in the event ULA does not have sufficient
funds to make a required payment to us under the inventory supply agreement. See Note 6 and Note 10.
We agreed to indemnify ULA through December 31, 2020 against potential non-recoverability of
$1,375 million of Boeing Delta inventories included in contributed assets plus $1,860 million of
inventory subject to an inventory supply agreement which ends on March 31, 2021. Since inception,
ULA sold $548 million of inventories that were contributed by us. As part of its integration, ULA is
continuing to assess the future of the Delta II program beyond what is currently on contract. Future
decisions regarding the Delta II program could reduce our earnings by up to $90 million.
We agreed to indemnify ULA in the event ULA is unable to obtain re-pricing of certain contracts which
we contributed to ULA and to which we believe ULA is entitled. We will be responsible for any shortfall
and may record up to $386 million in pre-tax losses related to these contracts.
Sea Launch The Sea Launch venture, in which we are a 40% partner, provides ocean-based launch
services to commercial satellite customers.
We issued credit guarantees to creditors of the Sea Launch venture to assist it in obtaining financing
and other support. In the event we are required to perform on these guarantees, we believe we can
recover a portion of the cost (estimated at $271 million) through guarantees from the other venture
partners. We have also made loans directly to Sea Launch in the past. In the event that Sea Launch is
unable to repay those loans, we believe we can recover a portion of the cost (estimated at $203
million) from the other venture partners. The components of this exposure are as follows:
(Dollars in Millions)
Estimated
Maximum
Exposure
Established
Reserves
Estimated
Proceeds
from
Recourse
Estimated
Net
Exposure
Credit guarantees $ 451 $180 $271
Partner Loans (principal and interest) 508 305 203
Trade receivable from Sea Launch 385 377 8
Subcontract termination 7 7
Other receivables and Inventory 62 41 21
$1,413 $903 $474 $36
We made no additional capital contributions to the Sea Launch venture during the year ended
December 31, 2008. Our trade receivable increased from $337 million at December 31, 2007 to $385
37