Boeing 2012 Annual Report Download - page 94

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notice of appeal before the ASBCA, seeking to re-price the third mission. A hearing before the ASBCA has
been scheduled for November 18, 2013. If ULA is unsuccessful in obtaining additional pricing, we may be
responsible for a portion of the shortfall and may record up to $279 in pre-tax losses associated with the
three missions, representing up to $261 for the indemnification payment and up to $18 for our portion of
additional contract losses incurred by ULA.
Potential payments for Other Delta contracts include $85 related to deferred support costs. In June 2011,
the Defense Contract Management Agency (DCMA) notified ULA that it had determined that $271 of
deferred support costs are not recoverable under government contracts. In December 2011, the DCMA
notified ULA of the potential non-recoverability of an additional $114 of deferred production costs. The
DCMA has not yet issued a final decision related to the recoverability of the $114. ULA and Boeing believe
that all costs are recoverable and in November 2011, ULA filed a certified claim with the USAF for collection
of deferred support and production costs. The USAF issued a final decision denying ULA’s certified claim
in May 2012. On June 14, 2012, Boeing and ULA filed a suit in the Court of Federal Claims seeking recovery
of the deferred support and production costs from the U.S. government. On November 9, 2012, the U.S.
government filed an answer to our claim and asserted a counterclaim for credits that it alleges were offset
by deferred support cost invoices. We believe that the U.S. government’s counterclaim is without merit,
and have filed an answer challenging it on multiple grounds. On February 14, 2013, the Court will convene
a scheduling conference to discuss the next stages of the litigation. If, contrary to our belief, it is determined
that some or all of the deferred support or production costs are not recoverable, we could be required to
record pre-tax losses and make indemnification payments to ULA for up to $317 of the costs questioned
by the DCMA.
Other Indemnifications As part of the 2004 sale agreement with General Electric Capital Corporation
related to the sale of Boeing Capital’s (BCC) Commercial Financial Services business, BCC is involved
in a loss sharing arrangement for losses on transferred portfolio assets, such as asset sales, provisions
for loss or asset impairment charges offset by gains from asset sales. At December 31, 2012 and 2011,
our maximum future cash exposure to losses associated with the loss sharing arrangement was $137 and
$212 and our accrued liability under the loss sharing arrangement was $32 and $51.
In conjunction with our sales of the Electron Dynamic Devices, Inc. and Rocketdyne Propulsion and Power
businesses and the sale of our Commercial Airplanes facilities in Wichita, Kansas and Tulsa and McAlester,
Oklahoma in 2005, we agreed to indemnify, for an indefinite period, the buyers for costs relating to pre-
closing environmental contamination and certain other items. As it is impossible to assess whether there
will be damages in the future or the amounts thereof (if any), we cannot estimate the maximum potential
amount of future payments under these indemnities. Therefore, no liability has been recorded. There have
been no claims submitted to date.
Residual Value Guarantees We have issued various residual value guarantees principally to facilitate
the sale and financing of certain commercial aircraft. Under these guarantees, we are obligated to make
payments to the guaranteed party if the related aircraft or equipment fair values fall below a specified
amount at a future time. These obligations are collateralized principally by the underlying commercial
aircraft and expire within the next 6 years.
Industrial Revenue Bonds
Industrial Revenue Bonds (IRB) issued by the City of Wichita were used to finance the purchase and/or
construction of real and personal property at our Wichita site. Tax benefits associated with IRBs include
a ten-year property tax abatement and a sales tax exemption from the Kansas Department of Revenue.
We record the property on our Consolidated Statements of Financial Position, along with a capital lease
obligation to repay the proceeds of the IRB. We have also purchased the IRBs and therefore are the
bondholders as well as the borrower/lessee of the property purchased with the IRB proceeds.