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| Notes
to Consolidated Financial Statements | | |
|
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| Other
Arrangements As of December 31, 2001, future lease commitments on aircraft
not recorded on the Consolidated Statements of Financial Position totaled $323.
These lease commitments extend through 2015, and the Company’s intent is
to recover these lease commitments through sublease arrangements. As of December
31, 2001 and 2000, accounts payable and other liabilities included $116 ($1 related
to the events of September 11, 2001) and $114 attributable to adverse commitments
under these lease arrangements. | | As of December 31, 2001, the
Company has commitments to purchase used aircraft under trade-in agreements totaling
$1,340. As of December 31, 2001, accounts payable and other liabilities included
$189 ($140 related to the events of September 11, 2001) attributable to adverse
purchase commitments. | | The Company holds various Enhanced Equipment
Trust Certificates (EETCs) totaling $128 as of December 31, 2001, relating to
aircraft lease receivables. The maximum exposure is generally limited to the amount
of the asset recorded on the Consolidated Statements of Financial Position. Under
one EETC arrangement, however, the Company has a maximum potential exposure of
$103 in excess of its asset value due to certain liquidity obligations of the
Company to other parties in the event of default by the lessee. In the event of
payment under this liquidity obligation, the Company would receive a preferred
collateral position in the underlying asset. | | Note
25 – Significant Group Concentrations of Credit Risk | | Financial
instruments involving potential credit risk are predominantly with commercial
aircraft customers and the U.S. Government. As of December 31, 2001, off-balance-sheet
financial instruments described in Note 24 predominantly related to commercial
aircraft customers. Of the $15,554 in accounts receivable and customer financing
included in the Consolidated Statements of Financial Position, $7,235 related
to commercial aircraft customers ($366 of accounts receivable and $6,869 of customer
financing) and $2,597 related to the U.S. Government. AMR Corporation and UAL
Corporation were associated with 23% and 13% of all financial instruments related
to customer financing. Financing for aircraft is collateralized by security in
the related asset, and historically the Company has not experienced a problem
in accessing such collateral. | | Of the $6,869 of aircraft customer
financing, $6,440 related to customers the Company believes have less than investment-grade
credit. Similarly, of the $7,508 of irrevocable financing commitments related
to aircraft on order including options, $7,113 related to customers the Company
believes have less than investment-grade credit. | | Note
26 – Disclosures about Fair Value of Financial Instruments |
| As of December 31, 2001 and 2000, the carrying amount of accounts receivable
was $5,156 and $5,519, and the fair value of accounts receivable was estimated
to be $5,054 and $5,355. The lower fair value reflects a discount due to deferred
collection for certain receivables that will be collected over an extended period.
The carrying value of accounts payable is estimated to approximate fair value. |
| The carrying amount of notes receivable, net of valuation allowance,
is estimated to approximate fair value. Although there are generally no quoted
market prices available for customer financing notes receivable, the valuation
assessments were based on the respective interest rates, risk-related rate spreads
and collateral considerations. | | As of December 31, 2001 and
2000, the carrying amount of debt, net of capital leases and non-recourse debt,
was $11,198 and $8,410 and the fair value of debt, based on current market rates
for debt of the same risk and maturities, was estimated at $11,669 and $8,866.
The Company’s debt, however, is generally not callable until maturity. |
| With regard to financial instruments with off-balance-sheet risk, it
is not practicable to estimate the fair value of future financing commitments
because there is not a market for such future commitments, and all other offbalance-
sheet financial instruments are estimated to have only a nominal fair value. The
terms and conditions reflected in the outstanding guarantees and commitments for
financing assistance are not materially different from those that would have been
negotiated as of December 31, 2001. | | Note
27 – Contingencies | | Various legal proceedings, claims and
investigations related to products, contracts and other matters are pending against
the Company. Most significant legal proceedings are related to matters covered
by insurance. Major contingencies are discussed below. | | The
Company is subject to federal and state requirements for protection of the environment,
including those for discharge of hazardous materials and remediation of contaminated
sites. Due in part to their complexity and pervasiveness, such requirements have
resulted in the Company being involved with related legal proceedings, claims
and remediation obligations since the 1980s. | | The Company routinely
assesses, based on in-depth studies, expert analyses and legal reviews, its contingencies,
obligations and commitments for remediation of contaminated sites, including assessments
of ranges and probabilities of recoveries from other responsible parties who have
and have not agreed to a settlement and of recoveries from insurance carriers.
The Company’s policy is to immediately accrue and charge to current expense
identified exposures related to environmental remediation sites based on estimates
of investigation, cleanup and monitoring costs to be incurred. | |
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