Boeing 2012 Annual Report Download - page 59

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47
pre-tax earnings would not be significant. The investors in our fixed-rate debt obligations do not generally
have the right to demand we pay off these obligations prior to maturity. Therefore, exposure to interest
rate risk is not believed to be material for our fixed-rate debt.
Foreign Currency Exchange Rate Risk
We are subject to foreign currency exchange rate risk relating to receipts from customers and payments
to suppliers in foreign currencies. We use foreign currency forward and option contracts to hedge the price
risk associated with firmly committed and forecasted foreign denominated payments and receipts related
to our ongoing business. Foreign currency forward and option contracts are sensitive to changes in foreign
currency exchange rates. At December 31, 2012, a 10% increase in the exchange rate in our portfolio of
foreign currency contracts would have decreased our unrealized gains by $194 million and a 10% decrease
in the exchange rate would have increased our unrealized gains by $221 million. Consistent with the use
of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains
would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying
transactions being hedged. When taken together, these forward currency contracts and the offsetting
underlying commitments do not create material market risk.