Boeing 2008 Annual Report Download - page 87

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Delta launch program inventories that will be sold at cost to United Launch Alliance (ULA) under an
inventory supply agreement that terminates on March 31, 2021 are included in long-term contracts in
progress inventories. At December 31, 2008 and December 31, 2007, the inventory balance was
$1,822 and $1,827. As part of its integration ULA is continuing to assess the future of the Delta II
program. Future decisions regarding the Delta II program could reduce our earnings by up to $90 (see
Note 12).
As a normal course of our Commercial Airplanes segment production process, our inventory may
include a small quantity of airplanes that are completed but unsold. As of December 31, 2008 and
2007, the value of completed but unsold aircraft in inventory was insignificant. Inventory balances
included $235 and $234 subject to claims or other uncertainties relating to the A-12 program as of
December 31, 2008 and December 31, 2007 (See Note 20).
Commercial aircraft program inventory includes amounts credited in cash or other consideration (early
issued sales consideration), to airline customers totaling $1,271 and $1,355 as of December 31, 2008
and 2007.
Deferred production costs represent commercial aircraft programs production costs incurred on
in-process and delivered units in excess of the estimated average cost of such units. As of
December 31, 2008 and 2007, the balance of deferred production costs and unamortized tooling
related to commercial aircraft programs in production, except the 777 program, was insignificant
relative to the programs’ balance-to-go estimates. As of December 31, 2008 and 2007, all significant
excess deferred production costs or unamortized tooling costs are recoverable from existing firm
orders for the 777 program. The deferred production costs and unamortized tooling for the 777
program are summarized in the following table:
2008 2007
Deferred production costs $1,223 $1,043
Unamortized tooling 255 256
Note 7 – Business Shutdowns
During August 2006, we decided that we would exit the Connexion by Boeing high speed broadband
communications business. Our decision resulted in a pre-tax charge of $320, which has been
recognized in Loss/(gain) on dispositions/business shutdown, net during 2006 as outlined below:
Contract termination costs1$ 142
Write-off of assets2492
Early contract terminations3(314)
Total $ 320
1Included termination fees associated with operating leases as well as supplier and customer costs
2Primarily included write-off of capital lease assets
3Primarily early terminations of capital lease obligations
As of December 31, 2006, $52 was recorded in Accounts payable and other liabilities related to
contract termination costs, which was substantially paid out during 2007 to complete the business
shutdown. The exit of the Connexion by Boeing business resulted in cash expenditures of $177 during
2006. We have not reached final settlements with all customers or suppliers. We do not believe the
final settlements will have a material effect on our financial position, results of operations or cash flow.
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