Boeing 2008 Annual Report Download - page 97

We have entered into standby letters of credit agreements and surety bonds with financial institutions
primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on
outstanding letters of credit agreements and surety bonds aggregated approximately $5,763 and
$4,973 as of December 31, 2008 and 2007.
Satellites
In certain launch and satellite sales contracts, we include provisions that specify that we bear risk of
loss associated with the launch phase through acceptance in orbit by the customer. We have
historically purchased insurance to cover these exposures when allowed under the terms of the
contract and when economically advisable. The current insurance market reflects high premium rates
and also suffers from a lack of capacity to handle all insurance requirements. We make decisions on
the procurement of insurance based on our analysis of risk. There is a contractual launch scheduled
for early 2009 and a second scheduled for 2010 for which full insurance coverage may not be available
or, if available, could be prohibitively expensive. We will continue to review this risk. We estimate that
the potential uninsured amount for each launch could approach $350 depending on the nature of the
uninsured event.
Company Owned Life Insurance
McDonnell Douglas Corporation insured its executives with Company Owned Life Insurance (COLI),
which are life insurance policies with a cash surrender value. Although we do not use COLI currently,
these obligations from the merger with McDonnell Douglas are still a commitment at this time. We have
loans in place to cover costs paid or incurred to carry the underlying life insurance policies. As of
December 31, 2008 and 2007, the cash surrender value was $331 and $310 and the total loans were
$317 and $298. As we have the right to offset the loans against the cash surrender value of the
policies, we present the net asset in Other assets on the Consolidated Statements of Financial Position
as of December 31, 2008 and 2007.
Note 12 – Arrangements with Off-Balance Sheet Risk
We enter into arrangements with off-balance sheet risk in the normal course of business, primarily in
the form of guarantees.
Third-Party Guarantees
The following tables provide quantitative data regarding our third-party guarantees. The maximum
potential payments represent a “worst-case scenario,” and do not necessarily reflect our expected
results. Estimated proceeds from collateral and recourse represent the anticipated values of assets we
could liquidate or receive from other parties to offset our payments under guarantees.
As of December 31, 2008
Maximum
Potential
Payments
Estimated
Proceeds
from
Collateral/
Recourse
Carrying
Amount of
Liabilities*
Contingent repurchase commitments $4,024 $4,014 $ 7
Indemnifications to ULA** 1,184 7
Residual value guarantees 51 47 10
Credit guarantees related to the Sea Launch venture 451 271 180
Other credit guarantees 158 145 11
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