BOEING CAPITAL CORP

CIK:0000711513|SEC Filings

Discontinued Operations

12 Months Ended

Dec. 31, 2012

Note 16 – Discontinued Operations

On May 24, 2004, we entered into a purchase and sale agreement with General Electric Capital Corporation (GECC) to sell substantially all of the assets related to our Commercial Financial Services business. The final asset sale closed December 27, 2004.

Part of the purchase and sale agreement with GECC includes a loss sharing arrangement for losses that may exist at the end of the initial and subsequent financing periods of the transferred portfolio assets, or in some instances, prior to the end of the financing period. Such losses may result from asset sales, provisions for loss or asset impairment charges offset by gains from asset sales. The loss sharing arrangement provides that cumulative net losses (if any) are to be shared between us and GECC. At December 31, 2012, our maximum future cash exposure to losses associated with the loss sharing arrangement, which considers the impact of the portfolio reduction, was $137 for which we have accrued a liability of $32.

The following table reconciles the reserve under the loss sharing arrangement, which is included in Other liabilities for the years ended December 31:


	2012			2011
Reserve at beginning of period	$	53		$	82
Increase (decrease) in reserve		2			(8	)
Payments to GECC		(23	)		(21	)
Reserve at end of period	$	32		$	53

Operating results of the discontinued operations were as follows for the years ended December 31:


	2012			2011		2010
Net gain (loss) on disposal of discontinued operations	$	(2	)	$	8	$	(7	)
Provision (benefit) for income tax		(1	)		3		(3	)
Net gain (loss) on disposal of discontinued operations, net of tax	$	(1	)	$	5	$	(4	)

Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
OPERATING ACTIVITIES
Net income	$ 48	$ 76	$ 92
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	144	143	192
Net (gain) loss on disposal of assets	1	(16)	2
Provision for (recovery of) losses	(7)	(23)	16
Net gain on investments and derivative instruments			(4)
Asset impairment expense and other charges	73	117	85
Share-based plans expense	1	1	2
Net (gain) loss on disposal of discontinued operations, net of tax	1	(5)	4
Decrease in deferred income taxes	(128)	(139)	(83)
Other charges and credits, net	(4)
Change in assets and liabilities:
Other assets	(8)	15	19
Accrued interest and rents	7	7	1
Accounts payable and accrued expenses	(22)	(21)	5
Other liabilities	(69)	(53)	(41)
Accounts with Boeing	4	8	(17)
Net cash provided by operating activities	41	110	273
INVESTING ACTIVITIES
Purchase of investments	(3)
Purchase of short-term investments	(300)	(1,200)	(1,300)
Proceeds from maturities of short-term investments	600	1,800	900
Proceeds from available-for-sale investments	1	2	25
Purchase of equipment for operating leases		(34)
Payment for capitalizable costs in process	(16)	(8)	(54)
Proceeds from disposition of equipment	35	70	126
Payments of leases, notes and other receivables	354	262	612
Origination of leases, notes and other receivables	(340)	(205)
Net cash provided by investing activities	331	687	309
FINANCING ACTIVITIES
Proceeds from issuance of debt		745
Repayment of debt (including intercompany)	(879)	(798)	(645)
Payment of dividends (including return of capital)	(89)	(228)	(108)
Net cash used in financing activities	(968)	(281)	(753)
Net increase (decrease) in cash and cash equivalents	(596)	516	(171)
Cash and cash equivalents at beginning of year	941	425	596
Cash and cash equivalents at end of year	345	941	425
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Net transfer to (from) assets held for sale or re-lease	(102)	(19)	324
Net transfer to notes receivable		193	24
Net transfer to (from) equipment under operating leases	107	(161)	(283)
Net transfer from finance leases	22	(40)	6
Transfer from other assets	(27)		(71)
Release of allowance upon sale of receivables		11
Transfer to accounts with Boeing		2
Transfer to other liabilities		12
Transfer to accounts payable and accrued expenses		2
(Increase)/decrease in debt due to fair value hedge derivatives	$ 3	$ (14)	$ (26)

Off-Balance Sheet Arrangements	12 Months Ended
Dec. 31, 2012
Off-Balance Sheet Arrangements	Note 13 – *Off-Balance Sheet Arrangements* We are a party to off-balance sheet arrangements consisting of variable interests in unconsolidated entities. We have an investment in the form of an EETC which was acquired in 1999. EETCs are interests in a trust that passively holds investments in aircraft or pools of aircraft. EETCs provide investors with a collateral position in the related assets and tranched rights to cash flows from a financial instrument. Our investment in the form of EETC does not require consolidation. At December 31, 2012, our maximum exposure to economic loss from our EETC is $4.

Off-Balance Sheet Arrangements

12 Months Ended

Dec. 31, 2012

Off-Balance Sheet Arrangements

Note 13 – Off-Balance Sheet Arrangements

We are a party to off-balance sheet arrangements consisting of variable interests in unconsolidated entities.

We have an investment in the form of an EETC which was acquired in 1999. EETCs are interests in a trust that passively holds investments in aircraft or pools of aircraft. EETCs provide investors with a collateral position in the related assets and tranched rights to cash flows from a financial instrument. Our investment in the form of EETC does not require consolidation. At December 31, 2012, our maximum exposure to economic loss from our EETC is $4.