Commitments And Contingencies

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 8 – Commitments and Contingencies

Financing Commitments

Financing commitments totaled $15,624 and $9,865 as of September 30, 2011 and December 31, 2010. The estimated earliest potential funding dates for these commitments as of September 30, 2011 are as follows:

	Total
October through December 2011	$	202
2012		1,483
2013		1,786
2014		2,872
2015		3,319
Thereafter		5,962
	$	15,624

Standby Letters of Credit and Surety Bonds

We have entered into standby letters of credit agreements and surety bonds with financial institutions primarily relating to the guarantee of our future performance on certain contracts. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $7,250 and $7,599 as of September 30, 2011 and December 31, 2010.

Commercial Aircraft Commitments

In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into specified-price trade-in commitments with certain customers that give them the right to trade in used aircraft upon the purchase of Sale Aircraft. The total contractual trade-in value was $287 and $295 as of September 30, 2011 and December 31, 2010. We anticipate that a significant portion of these commitments will not be exercised by customers.

The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is continually assessed, taking into consideration the current economic environment. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer. The fair value of trade-in aircraft related to probable contractual trade-in commitments was $27 and $30 as of September 30, 2011 and December 31, 2010. Trade-in commitment agreements have expiration dates from 2012 through 2023.

Commitments to ULA

In connection with the formation of ULA, we and Lockheed Martin Corporation (Lockheed) each committed to provide up to $200 to support ULA's working capital requirements through December 1, 2011. ULA did not request any funds under the commitment as of September 30, 2011. We and Lockheed have also each committed to provide ULA with up to $327 of additional capital contributions in the event ULA does not have sufficient funds to make a required payment to us under an inventory supply agreement. See Note 4.

Product Warranties

The following table summarizes product warranty activity recorded during the nine months ended September 30, 2011 and 2010.

	2011			2010
Beginning balance – January 1	$	1,076		$	999
Additions for current year deliveries		104			101
Reductions for payments made		(196	)		(177	)
Changes in estimates		7			128
Ending balance – September 30	$	991		$	1,051

Environmental

The following table summarizes environmental remediation activity recorded during the nine months ended September 30, 2011 and 2010:

	2011			2010
Beginning balance – January 1	$	721		$	706
Reductions for payments made		(54	)		(51	)
Changes in estimates		120			88
Ending balance – September 30	$	787		$	743

The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years. It is reasonably possible that we may incur charges that exceed these recorded amounts because of regulatory agency orders and directives, changes in laws and/or regulations, higher than expected costs and the discovery of additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios which include highest cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. At September 30, 2011 and December 31, 2010, our reasonably possible highest cost estimate for all remediation sites exceeded our recorded liabilities by $1,045 and $957.

C-17

At September 30, 2011, our backlog included 5 C-17 aircraft currently under contract with the U.S. Air Force (USAF) as well as international orders for 2 C-17 aircraft. We believe that 18 additional orders beyond the 7 in backlog are probable. Probable orders include 13 aircraft for international orders and 5 aircraft for the USAF funded in the Fiscal Year 2010 Defense Appropriations Act which are not currently under contract. At September 30, 2011, we had approximately $735 of inventory expenditures and potential termination liabilities to suppliers associated with probable orders. The Fiscal Year 2011 Appropriations Budget and the President's Fiscal Year 2012 budget request did not include any additional C-17 aircraft. We completed the planned production rate decrease from 15 aircraft per year to 10 per year during the third quarter of 2011. The associated reduction in headcount resulted in pension curtailment charges of $34 in the first quarter of 2011. Should additional orders not materialize, it is reasonably possible that we will decide in 2012 to end production of the C-17 at a future date. We are still evaluating the full financial impact of a potential production shut-down, including additional pension curtailment charges, and any recovery that would be available from the U.S. government. Such recovery from the U.S. government would not include the costs incurred by us resulting from our direction to suppliers to begin working on aircraft beyond those currently under contract with the USAF.

F-15

At September 30, 2011, we had approximately $1,735 of inventory expenditures and potential termination liabilities to suppliers related to a probable international order. Should this order not materialize, we could incur losses to write off inventory and settle termination liabilities.

BDS Fixed-Price Development Contracts

Fixed-price development work is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work. Significant Boeing Defense, Space & Security (BDS) fixed-price development contracts include Airborne Early Warning and Control, P-8I, KC-46A Tanker, KC-767 International Tanker and commercial and military satellites. The operational and technical complexities of these contracts create financial risk, which could trigger termination provisions, order cancellations or other financially significant exposure. Changes to cost and revenue estimates could also result in lower margins or a material charge for reach-forward losses during the next 12 months.

Commercial Airplane Development Programs

The development and initial production phases of new commercial airplanes and new commercial airplane derivatives entail significant commitments to customers and suppliers, as well as substantial investments in working capital, infrastructure and research and development. Performance issues or cost overruns on these programs, which currently include the 787 and 747-8, could have a material impact on our consolidated results and financial position during the next 12 months.