Boeing 2008 Annual Report Download - page 60

through reimbursement from customers for penalty payments to the supplier should the customer not
take delivery. These amounts are also included in our forecasts of costs for program and contract
accounting. Some inventory procurement contracts may include escalation adjustments. In these
limited cases, we have included our best estimate of the effect of the escalation adjustment in the
amounts disclosed in the table above.
Industrial Participation Agreements We have entered into various industrial participation
agreements with certain customers outside of the U.S. to facilitate economic flow back and/or
technology transfer to their businesses or government agencies as the result of their procurement of
goods and/or services from us. These commitments may be satisfied by our placement of direct work
or vendor orders for supplies, opportunities to bid on supply contracts, transfer of technology or other
forms of assistance. However, in certain cases, our commitments may be satisfied through other
parties (such as our vendors) who purchase supplies from our non-U.S. customers. We do not commit
to industrial participation agreements unless a contract for sale of our products or services is signed. In
certain cases, penalties could be imposed if we do not meet our industrial participation commitments.
During 2008, we incurred no such penalties. As of December 31, 2008, we have outstanding industrial
participation agreements totaling $9 billion that extend through 2024. Purchase order commitments
associated with industrial participation agreements are included in the table above. To be eligible for
such a purchase order commitment from us, a foreign supplier must have sufficient capability to meet
our requirements and must be competitive in cost, quality and schedule.
Purchase Obligations Recorded on the Consolidated Statement of Financial Position Purchase
obligations recorded on the Consolidated Statement of Financial Position primarily include accounts
payable and certain other liabilities including accrued compensation and dividends payable.
Commercial Commitments The following table summarizes our commercial commitments
outstanding as of December 31, 2008.
(Dollars in millions)
Total Amounts
Committed/Maximum
Amount of Loss
Less than
1 year
1-3
years
4-5
years
After 5
years
Standby letters of credit and surety
bonds $ 5,763 $5,027 $ 616 $ 120
Commercial aircraft financing
commitments 10,145 2,445 2,621 $3,054 2,025
Total commercial commitments $15,908 $7,472 $3,237 $3,054 $2,145
Commercial aircraft financing commitments include commitments to arrange or provide financing
related to aircraft on order, under option for deliveries or proposed as part of sales campaigns based
on estimated earliest funding dates. Based on historical experience, we currently do not anticipate that
all of these commitments will be exercised by our customers, see Note 11.
Industrial Revenue Bonds We utilize Industrial Revenue Bonds (IRB) to finance the purchase and/or
construction of real and personal property, see Note 12.
Contingent Obligations
We have significant contingent obligations that arise in the ordinary course of business, which include
the following:
Legal Various legal proceedings, claims and investigations are pending against us. Legal
contingencies are discussed in Note 20, including our contesting the default termination of the A-12
aircraft, employment and benefits litigation brought by several of our employees, and litigation/
arbitration involving BSSI programs.
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