Boeing 2012 Annual Report Download - page 39

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Accounting Quantity The accounting quantity is our estimate of the quantity of airplanes that will be
produced for delivery under existing and anticipated contracts. The determination of the accounting quantity
is limited by the ability to make reasonably dependable estimates of the revenue and cost of existing and
anticipated contracts. It is a key determinant of the gross margins we recognize on sales of individual
airplanes throughout a program’s life. Estimation of each program’s accounting quantity takes into account
several factors that are indicative of the demand for that program, including firm orders, letters of intent
from prospective customers and market studies. We review our program accounting quantities quarterly.
The accounting quantity for each program may include units that have been delivered, undelivered units
under contract, and units anticipated to be under contract in the reasonable future (anticipated orders). In
developing total program estimates, all of these items within the accounting quantity must be considered.
The following table provides details of the accounting quantities and firm orders by program as of
December 31. Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries
plus undelivered firm orders.
Program
737 747 767 777 787
2012
Program accounting quantities 6,600 1,574 1,103 1,450 1,100
Undelivered units under firm orders 3,074 67 68 365 799
Cumulative firm orders 7,367 1,525 1,108 1,431 848
2011
Program accounting quantities 6,200 1,549 1,084 1,350 1,100
Undelivered units under firm orders 2,365 97 72 380 857
Cumulative firm orders 6,243 1,524 1,086 1,363 860
2010
Program accounting quantities 5,000 1,524 1,048 1,150 *
Undelivered units under firm orders 2,186 107 50 253 847
Cumulative firm orders 5,692 1,525 1,044 1,163 847
* The initial accounting quantity for the 787 program was established in the third quarter of 2011.
737 Program The accounting quantity for the 737 program increased by 400 units during 2012 due to the
program’s normal progress of obtaining additional orders and delivering airplanes. As planned, production
increased from 31.5 to 35 airplanes per month during 2012. We continue to expect to increase production
from 35 to 38 airplanes per month beginning in 2013 and a further increase to 42 airplanes per month
beginning in 2014. The majority of the 737 orders during 2012 related to the 737 MAX, the new engine
variant of the 737. The accounting quantity for the 737 program includes NG and MAX units. First delivery
of the 737 MAX is expected in 2017.
747 Program The accounting quantity for the 747 program increased by 25 units in 2012, reflecting the
normal process of estimating planned production under existing and anticipated contracts. We continue
to incorporate changes identified during flight testing into previously completed airplanes. First delivery of
the 747-8 Intercontinental occurred in February 2012.
The production rate increased from 1.5 to 2 airplanes per month in May 2012. Ongoing weakness in the
air cargo market and lower-than-expected demand for large commercial passenger aircraft have resulted
in pricing pressures and fewer orders than anticipated in 2012. We have a number of unsold Freighter and
Intercontinental production positions beyond 2013. If we are unable to obtain orders for multiple Freighter
aircraft in 2013 consistent with our near-term production plans, we may be required to take actions including