Boeing 2010 Annual Report Download - page 25

therefore possible that the amount of our insurance coverage may not cover all claims or liabilities, and
we may be forced to bear substantial costs. For example, liabilities arising from the use of certain of
our products, such as aircraft technologies, missile systems, border security systems, and/or air traffic
management systems may not be insurable on commercially reasonable terms. While many of these
products are shielded from liability within the U.S. under the SAFETY Act provisions of the 2002
Homeland Security Act, no such protection is available outside the U.S., potentially resulting in
significant liabilities. The amount of insurance coverage we are able to maintain may be inadequate to
cover these or other claims or liabilities.
Business disruptions could seriously affect our future sales and financial condition or increase
our costs and expenses.
Our business may be impacted by disruptions including threats to physical security, information
technology attacks or failures, damaging weather or other acts of nature and pandemics or other public
health crises. Any of these disruptions could affect our internal operations or services provided to
customers, and could impact our sales, increase our expenses or adversely affect our reputation or our
stock price.
Some of our and our suppliers' workforces are represented by labor unions, which may lead to
work stoppages.
Approximately 57,400 employees, which constitute 36% of our total workforce, are union represented
as of December 31, 2010. We experienced a work stoppage in 2008 when a labor strike halted
commercial aircraft and certain BMA program production and we may experience additional work
stoppages in the future, which could adversely affect our business. We cannot predict how stable our
relationships, currently with 14 different U.S. labor organizations and 7 different non-U.S. labor
organizations, will be or whether we will be able to meet the unions’ requirements without impacting
our financial condition. The unions may also limit our flexibility in dealing with our workforce. Union
actions at suppliers can also affect us. Work stoppages and instability in our union relationships could
delay the production and/or development of our products, which could strain relationships with
customers and cause a loss of revenues which would adversely affect our operations.
Significant changes in discount rates, actual investment return on pension assets and other
factors could affect our earnings, equity, and pension contributions in future periods.
Our earnings may be positively or negatively impacted by the amount of income or expense we record
for our pension and other postretirement benefit plans. Generally Accepted Accounting Principles in
the United States of America (GAAP) require that we calculate income or expense for the plans using
actuarial valuations. These valuations reflect assumptions relating to financial market and other
economic conditions. Changes in key economic indicators can change the assumptions. The most
significant year-end assumptions used to estimate pension or other postretirement income or expense
for the following year are the discount rate, the expected long-term rate of return on plan assets and
expected future medical inflation. In addition, we are required to make an annual measurement of plan
assets and liabilities, which may result in a significant change to Shareholders’ equity. For a discussion
regarding how our financial statements can be affected by pension and other postretirement plan
accounting policies, see “Management’s Discussion and Analysis—Critical Accounting Policies—
Postretirement Plans” on pages 46–47 of this Form 10-K. Although GAAP expense and pension or
other postretirement contributions are not directly related, the key economic factors that affect GAAP
expense would also likely affect the amount of cash or common stock we would contribute to the
pension or other postretirement plans. Potential pension contributions include both mandatory amounts
required under federal law Employee Retirement Income Security Act (ERISA) and discretionary
contributions to improve the plans’ funded status.
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