*Amounts included in accounts payable and other liabilities

The Company has issued various asset-related guarantees, principally to facilitate the sale of certain commercial aircraft. Under these arrangements, the Company is obligated to make payments to a guaranteed party in the event the related aircraft fair values fall below a specified amount at a future point in time. These obligations are collateralized principally by commercial aircraft, and expire within the next 16 years. No aircraft have been delivered with these types of guarantees in several years.

The Company has issued credit guarantees to creditors of the Sea Launch venture, of which the Company is a 40% owner, to assist the venture in obtaining financing. In the event the Company is required to perform on these guarantees, it has the right to recover a portion of the loss from another venture partner, and has collateral rights to certain assets of the venture. In addition, the Company has issued credit guarantees, principally to facilitate the sale of certain commercial aircraft. Under these arrangements, the Company is obligated to make payments to a guaranteed party in the event that lease or loan payments are not made by the original debtor or lessee. The Company’s commercial aircraft credit-related guarantees are collateralized by the underlying commercial aircraft. A substantial portion of these guarantees have been extended on behalf of original debtors or lessees with less than investment-grade credit. Current outstanding credit guarantees expire within the next 13 years.

As a liquidity provider for ETC pass-through arrangements, the Company has certain obligations to investors in the trusts, which requires funding to the trust to cover interest due to such investors resulting from an event of default by United Airlines. In the event of funding, the Company receives a first priority position in the ETC collateral in the amount of the funding. On February 7, 2003, the Company advanced $101 to the trust perfecting its collateral position and terminating its liquidity obligation. The trust currently has collateral value that significantly exceeds the amount due to the Company.

Also relating to its ETC investments, the Company has potential obligations relating to shortfall interest payments in the event that the interest rates in the underlying agreements are reset below a certain level according to the terms of these agreements. These obligations would cease if United Airlines were to default on its interest payments to the trust. These guarantees will expire within the next 12 years.

The Company has outstanding performance guarantees issued in conjunction with joint venture investments. Pursuant to these guarantees, the Company would be required to make payments in the event a third-party fails to perform specified services. Current performance guarantees expire within the next 15 years.

Product warranties The Company provides product warranties in conjunction with certain product sales.

The majority of the Company’s warranties are issued by the Commercial Airplanes segment. Generally, aircraft sales are accompanied by a 3 to 4 year standard warranty for systems, accessories, equipment, parts, and software manufactured by the Company or manufactured to certain standards under its authorization. These warranties cover factors such as nonconformance to specifications and defects in material and design. Warranties issued by the Space and Communications and Military Aircraft and Missile Systems segments principally relate to sales of military aircraft and weapons hardware. These sales are generally accompanied by a six to twelve-month warranty period and cover systems, accessories, equipment, parts, and software manufactured by the Company to certain contractual specifications. These warranties cover factors such as non-conformance to specifications and defects in material and workmanship.

Estimated standard warranty costs are recorded in the period in which the related product sales occur. The warranty liability recorded at each balance sheet date reflects the estimated number of months of warranty coverage outstanding for products delivered times the average of historical monthly warranty payments, as well as additional amounts for certain major warranty issues that exceed a normal claims level. The following table summarizes product warranty activity recorded during 2002.

Material variable interests in unconsolidated entities The Company is currently assessing the application of FIN 46 as it relates to its variable interests. While the Company is currently not required to consolidate the full amount of the ETCs, EETCs or the Sea Launch venture in which it has invested, it is unable to definitively conclude at this time whether consolidation or disclosure will be required for these investments upon full adoption of FIN 46. The Company’s investment in ETCs and EETCs aggregated $455 at December 31, 2002. The Company’s total maximum exposure to loss from ETCs and EETCs is $637, comprised of the $455 investment balance, rights to collateral estimated at $101 related to liquidity obligations satisfied in February 2003, and a maximum potential exposure of $81 relating to potential shortfall interest payments. During the year ended December 31, 2002, the Company recorded revenues of $25, cash inflows of $41, and impairment expense of $79 relating to these investments. As of December 31, 2002, the VIE (ETCs and EETCs) in which the Company has invested have total assets of approximately $4,200 and total debt (which is nonrecourse to the Company) of approximately $3,700. Related to the Sea Launch venture, the Company’s total maximum exposure to loss is $621 assuming no estimated proceeds from collateral or recourse from other venture partners, comprised of $335 of exposure related to guarantees to certain Sea Launch creditors ($535 net of $200 in established reserves), $33 of exposure related to performance guarantees provided by the Company to a Sea Launch customer and $253 of financial exposure related to accounts receivable/inventory reflected in the consolidated financial statements. The total assets and total liabilities of the Sea Launch venture each represent less than 4% of the Company’s consolidated total assets and total liabilities as of December 31, 2002. The Company made no additional capital contributions to the Sea Launch venture during the year ended December 31, 2002.