Boeing 2013 Annual Report Download - page 95

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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. The litigation proceeds, with no trial date
having yet been set. 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, 2013 and 2012,
our maximum future cash exposure to losses associated with the loss sharing arrangement was $106 and
$137 and our accrued liability under the loss sharing arrangement was $28 and $32.
In conjunction with our sales of Electron Dynamic Devices, Inc. and Rocketdyne Propulsion and Power
businesses and our Commercial Airplanes facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma,
we agreed to indemnify, for an indefinite period, the buyers for costs relating to pre-closing environmental
conditions and certain other items. It is impossible to assess the potential number of future claims that
may be asserted under these indemnifications, nor the amounts thereof (if any). As a result, we cannot
estimate the maximum potential amount of future payments under these indemnities and therefore, no
liability has been recorded. To the extent that claims have been made under these indemnities and/or are
probable and reasonably estimable, liabilities associated with these indemnities are included in the
environmental liability disclosure in Note 11.
Credit Guarantees We have issued credit guarantees, principally to facilitate the sale and/or financing of
commercial aircraft. Under these arrangements, we are obligated to make payments to a guaranteed party
in the event that lease or loan payments are not made by the original lessee or debtor or certain specified
services are not performed. A substantial portion of these guarantees has been extended on behalf of
original lessees or debtors with less than investment-grade credit. Our commercial aircraft credit guarantees
are collateralized by the underlying commercial aircraft and certain other assets. Current outstanding credit
guarantees expire within the next seven 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.
The capital lease obligation and IRB asset are recorded net in the Consolidated Statements of Financial
Position. As of December 31, 2013 and 2012, the assets and liabilities associated with the City of Wichita
IRBs were $690 and $738.