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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                          to                         
Commission file number 1-442
THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 91-0425694
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer Identification No.)
100 N. Riverside Plaza,929 Long Bridge DriveChicago,Arlington,ILVA 60606-159622202
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (312)-544-2000(703)-414-6338

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $5.00 Par ValueBANew York Stock Exchange
(Title of each class)(Trading Symbol)(Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer 
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2020,2022, there were 564,420,221593,451,225 common shares outstanding held by nonaffiliates of the registrant, and the aggregate market value of the common shares (based upon the closing price of these shares on the New York Stock Exchange) was approximately $103.5$81.1 billion.

The number of shares of the registrant’s common stock outstanding as of January 25, 202120, 2023 was 582,996,860.598,239,585.

DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference to the registrant’s definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2020.2022.


Table of Contents
THE BOEING COMPANY
Index to the Form 10-K
For the Fiscal Year Ended December 31, 20202022
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Table of Contents
PART I
Item 1. Business
The Boeing Company, together with its subsidiaries (herein referred to as “Boeing,” the “Company,” “we,” “us,” “our”), is one of the world’s major aerospace firms.
We are organized based on the products and services we offer. We operate in four reportable segments:
Commercial Airplanes (BCA);
Defense, Space & Security (BDS);
Global Services (BGS);
Boeing Capital (BCC).
Commercial Airplanes Segment
This segment develops, produces and markets commercial jet aircraft and provides fleet support services, principally to the commercial airline industry worldwide. We are a leading producer of commercial aircraft and offer a family of commercial jetliners designed to meet a broad spectrum of global passenger and cargo requirements of airlines. This family of commercial jet aircraft in production includes the 737 narrow-body model and the 747, 767, 777 and 787 wide-body models. We ended production of the 747 wide-body model in 2022. Development continues on the 777X program and certain 737 MAXthe 737-7 and 737-10 derivatives.
Defense, Space & Security Segment
This segment engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility, including fighter and trainer aircraft; vertical lift, including rotorcraft and tilt-rotor aircraft; and commercial derivative aircraft, including anti-submarine and tanker aircraft. In addition, this segment engages in the research, development, production and modification of the following products and related services: strategic defense and intelligence systems, including strategic missile and defense systems, command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR), cyber and information solutions, and intelligence systems;systems, satellite systems, including government and commercial satellites and space exploration.
BDS' primary customer is the United States Department of Defense (U.S. DoD). Revenues from the U.S. DoD, including foreign military sales through the U.S. government, accounted for approximately 83% of its 2020 revenues. Other significant BDS customers include the National Aeronautics and Space Administration (NASA) and customers in international defense, civil and commercial satellite markets.
This segment's primary products include the following fixed-wing military aircraft: F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker, and T-7A Red Hawk. This segment produces rotorcraft and rotary-wing programs, such as CH-47 Chinook, AH-64 Apache, and V-22 Osprey. Unmanned vehicles include the MQ-25, QF-16, and Insitu’s Scan Eagle aircraft. In addition, this segment's products include space and missile systems including: government and commercial satellites, NASA’s Space Launch System (SLS), the International Space Station, Commercial Crew, missile defense and weapons programs, and Joint Direct Attack Munition, as well as the United Launch Alliance joint venture.
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Global Services Segment
This segment provides services to our commercial and defense customers worldwide. BGS sustains aerospace platforms and systems with a full spectrum of products and services, including supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare parts, pilot and maintenance training systems and services, technical and maintenance documents, and data analytics and digital services.
Boeing Capital Segment
BCC seeks to ensure that Boeing customers have the financing they need to buy and take delivery of their Boeing product, while managing overall financing exposure. BCC’s portfolio consists of equipment under operating leases, sales-type/finance leases, notes and other receivables, assets held for sale or re-lease and investments.
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Intellectual Property
We own numerous patents and have licenses for the use of patents owned by others, which relate to our products and their manufacture. In addition to owning a large portfolio of intellectual property, we also license intellectual property to and from third parties. For example, the U.S. government has licenses in our patents that are developed in performance of government contracts, and it may use or authorize others to use the inventions covered by such patents for government purposes. Unpatented research, development and engineering skills, as well as certain trademarks, trade secrets and other intellectual property rights, also make an important contribution to our business. While our intellectual property rights in the aggregate are important to the operation of each of our businesses, we do not believe that our business would be materially affected by the expiration of any particular intellectual property right or termination of any particular intellectual property patent license agreement.
Human Capital
The COVID-19 pandemic continues to impact lives and businesses around the world. We have taken proactive steps to help protect the health and safety of our employees and maintain business continuity. A vast majority of our office workers continue to telecommute. Within our production and office areas we have established a number of safety protocols, including face covering and physical distance requirements, enhanced cleaning, encouraging daily self-health checks, voluntary temperature screening stations, and access to virtual primary care physicians at no cost. We have also implemented a coronavirus hotline with direct access to our Health Services group to report COVID-19 tests due to illness or exposure and positive COVID-19 tests. As part of that reporting process, we have developed a robust contact tracing program to identify employees who were in close contact with the ill employee in the workplace. We are also actively planning for the time when COVID-19 vaccines will be available for our employees, including reaching out to county public health departments to learn more about their plans to distribute vaccines and monitoring information from vaccine manufacturers about when vaccines will be available. All of the actions above are overseen by Boeing’s Crisis Management Working Group, a multi-functional, multi-discipline team tasked with integrating all aspects of Boeing’s COVID-19 response.
Additionally, we are adapting to the market impacts of COVID-19 and positioning the company for the future. One of these measures includes reducing the size of our workforce. As of December 31, 2020,2022 and 2021, Boeing’s total workforce was approximately 141,000,156,000 and 142,000 with 11%13% and 12% located outside of the U.S. We expect to reduce the size of our workforce in 2021 through additional workforce actions as well as natural attrition.

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As of December 31, 2020,2022, our workforce is composed ofincluded approximately 47,00050,000 union members. Our principal collective bargaining agreements were withand their current status are summarized in the following unions:table:
UnionPercent of our Employees RepresentedStatus of the Agreements with Major Union
The International Association of Machinists and Aerospace Workers (IAM)20%We have two major agreements; one expiring in July 2022September 2024 and one in September 2024.July 2025.
The Society of Professional Engineering Employees in Aerospace (SPEEA)10%We have two major agreements expiring in October 2026.
The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)1%We have one major agreement expiring in October 2022.April 2027.
We aspire to be the most equitable, diverse and inclusive company. Guided by our values, we are committed to creating a company where everyone is included and respected, and where we support each other in reaching our full potential. We are committed to diverse representation across all levels of our workforce to reflect the vibrant and thriving diversity of the communities in which we live and work. In June of 2022, we released our second Global Equity, Diversity and Inclusion report with our workforce composition. As of December 2021, our U.S. workforce was comprised of approximately 23% women, 33% U.S. racial and ethnic minorities and 15% U.S. veterans. We also support Business Resource Groups open to all employees with more than 15,000 participants across 170 chapters globally that focus on gender, race & ethnicity, generations, gender identity, sexual orientation, disability or veteran status. These groups help foster inclusion among all teammates, build awareness, recruit and retain a diverse workforce and support the company in successfully operating in a global, multicultural business environment. We are committed to increased transparencyreleasing an annual Global Equity, Diversity and Inclusion report in 2023 which will publicly sharebe updated with the latest year’s information. Our 2022 report can be found on our diversity metrics annually, beginning in 2021.website.
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To attract and retain the best-qualified talent, we offer competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development, leadership development and rotation programs. In 2020,2022, our voluntary resignation rate was approximately 3%4%. Additionally, we hired approximately 8,00023,000 new employees in 20202022 for critical skills and had an offer acceptance rate of 82%78%.
Employees are encouraged to provide feedback about their experience through ongoing employee engagement activities. Boeing actively listens to its employees via surveys ranging from pre-hire to exiting the company. These voluntary surveys provide aggregate trend reports for the company to address in real time and ensure Boeing maintains an employee-focused experience and culture. We also invest in rewarding performance and have established a multi-level recognition program for the purpose of acknowledging the achievements of excellent individual or team performance.
We are committed to supporting our employeesemployees’ continuous development of professional, technical and leadership skills through access to digital learning resources and through partnerships with leading professional/technical societies and organizations around the world. For 2020,2022, Boeing employees consumedcompleted approximately 45.8 million hours of learning. We offer the ability for our people to pursue degree programs, professional certificates and individual courses in strategic fields of study from more than 300 accredited colleges and universities, online and across the globe through our tuition assistance program. Over 12,0009,000 Boeing employees leverage these programs every year.
Safety, quality, integrity and integritysustainability are at the core of how Boeing operates. We aspire to achieve zero workplace injuries and provide a safe, open and accountable work environment for our employees. Employees are also required on an annual basis to sign the Boeing Code of Conduct to reaffirm their commitment to do their work in a compliant and ethical manner. We provide several channels for all employees to speak up, ask for guidance and report concerns related
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to ethics or safety violations. We address employee concerns and take appropriate actions that uphold our Boeing values.
Competition
The commercial jet aircraft market and the airline industry remain extremely competitive. We face aggressive international competitors who are intent on increasing their market share, such as Airbus and other entrants from Russia, China and Japan.China. We are focused on improving our products and processes and continuing cost reduction efforts. We intend to continue to compete with other airplaneaircraft manufacturers by providing customers with greaterairplanes and services that deliver superior design, safety, efficiency and value products.to customers around the world.
BDS faces strong competition in all market segments, primarily from Lockheed Martin Corporation, Northrop Grumman Corporation, Raytheon Technologies Corporation, General Dynamics Corporation and SpaceX. Non-U.S. companies such as BAE Systems and Airbus Group continue to build a strategic presence in the U.S. market by strengthening their North American operations and partnering with U.S. defense companies. In addition, certain competitors have occasionally formed teams with other competitors to address specific customer requirements. BDS expects the trend of strong competition to continue into 2021.2023.
The commercial and defense services markets are extremely challenging and are made up of many of the same strong U.S. and non-U.S. competitors facing BCA and BDS along with other competitors in those markets. BGS leverages our extensive services network offering products and services which span the life cycle of our defense and commercial airplaneaircraft programs: training, fleet services and logistics, maintenance and engineering, modifications and upgrades, - as well as the daily cycle of gate-to-gate operations. BGS expects the market to remain highly competitive in 2021,2023, and intends to grow market share by leveraging a high level of customer satisfaction and productivity.
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Regulatory Matters
Our businesses are heavily regulated in most of our markets. We dealwork with numerous U.S. government agencies and entities, including but not limited to, all of the branches of the U.S. military, NASA,the National Aeronautics and Space Administration (NASA), the Federal Aviation Administration (FAA) and the Department of Homeland Security. Similar government authorities exist in our non-U.S. markets.
Government Contracts. The U.S. government, and other governments, may terminate any of our government contracts at their convenience, as well as for default based on our failure to meet specified performance requirements. If any of our U.S. government contracts were to be terminated for convenience, we generally would be entitled to receive payment for work completed and allowable termination or cancellation costs. If any of our government contracts were to be terminated for default, generally the U.S. government would pay only for the work that has been accepted and could require us to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted from the original contract. The U.S. government can also hold us liable for damages resulting from the default.
Commercial Aircraft. In the U.S., our commercial aircraft products are required to comply with FAA regulations governing production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety. New aircraft models and new derivative aircraft are required to obtain FAA certification prior to entry into service. Outside the U.S., similar requirements exist for airworthiness, installation and operational approvals. These requirements are generally administered by the national aviation authorities of each country and, in the case of Europe, coordinated by the European Union Aviation Safety Agency.
Environmental. We are subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and
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remediation of hazardous substances and wastes. We could also be affected by laws and regulations relating to climate change, including laws limiting or otherwise related to greenhouse gas emissions. These laws and regulations could lead to increased environmental compliance expenditures, increased energy and raw materials costs and new and/or additional investment in designs and technologies. We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. Investigation, remediation and operation and maintenance costs associated with environmental compliance and management of sites are a normal, recurring part of our operations. These costs often are allowable costs under our contracts with the U.S. government. It is reasonably possible that costs incurred to ensure continued environmental compliance could have a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of investigations.
A Potentially Responsible Party (PRP) has joint and several liability under existing U.S. environmental laws. Where we have been designated a PRP by the Environmental Protection Agency or a state environmental agency, we are potentially liable to the government or third parties for the full cost of remediating contamination at our facilities or former facilities or at third-party sites. If we were required to fully fund the remediation of a site for which we were originally assigned a partial share, the statutory framework would allow us to pursue rights to contribution from other PRPs. For additional information relating to environmental contingencies, see Note 13 to our Consolidated Financial Statements.
Non-U.S. Sales. Our non-U.S. sales are subject to both U.S. and non-U.S. governmental regulations and procurement policies and practices, including regulations relating to import-export control, tariffs, investment, exchange controls, anti-corruption and repatriation of earnings. Non-U.S. sales are also subject to varying currency, political and economic risks.
Raw Materials, Parts and Subassemblies
We are highly dependent on the availability of essential materials, parts and subassemblies from our suppliers and subcontractors. The most important raw materials required for our aerospace products
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are aluminum (sheet, plate, forgings and extrusions), titanium (sheet, plate, forgings and extrusions) and composites (including carbon and boron). Although alternative sources generally exist for these raw materials, qualification of the sources could take a year or more. During 2022, as a result of the Russia Ukraine war, we suspended purchasing titanium from Russia. This has not disrupted our operations as we have been able to use inventory on hand and identify alternative sources. Many major components and product equipment items are procured or subcontracted on a sole-source basisbasis. We continue to work with a small number of companies.sole-source suppliers to ensure continuity of supply for certain items.
Suppliers
We are dependent upon the ability of a large number of U.S. and non-U.S. suppliers and subcontractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs. While we maintain an extensive qualification and performance surveillance system to control risk associated with such reliance on third parties, failure of suppliers or subcontractors to meet commitments could adversely affect production schedules and program/contract profitability, thereby jeopardizing our ability to fulfill commitments to our customers. We are also dependent on the availability of energy sources, such as electricity, at affordable prices.
Seasonality
No material portion of our business is considered to be seasonal.
Executive Officers of the Registrant
See “Item 10. Directors, Executive Officers and Corporate Governance” in Part III.
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Other Information
Boeing was originally incorporated in the State of Washington in 1916 and reincorporated in Delaware in 1934. Our principal executive offices are located at 100 N. Riverside Plaza, Chicago, Illinois 60606929 Long Bridge Drive, Arlington, Virginia 22202, and our telephone number is (312) 544-2000.(703) 465-3500.
General information about us can be found at www.boeing.com. The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the Securities and Exchange Commission (SEC). Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants, including Boeing.
Forward-Looking Statements
This report, as well as our annual report to shareholders, quarterly reports and other filings we make with the SEC, press and earnings releases and other written and oral communications, contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact.
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Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors, including those set forth in the “Risk Factors” section below and other important factors disclosed in this report and from time to time in our other filings with the SEC, could cause actual results to differ materially and adversely from these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law.
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Item 1A. Risk Factors
An investment in our common stock or debt securities involves risks and uncertainties and our actual results and future trends may differ materially from our past or projected future performance. We urge investors to consider carefully the risk factors described below in evaluating the information contained in this report.
Risks Related to COVID-19
We face significant risks related to the spread of the COVID-19 virus and developments surrounding the global pandemic have had, and will continue to have, significant effects on our business, financial condition, results of operations, and cash flows. We also face significant risks related to the global economic downturn and severe reduction in commercial air traffic caused by the pandemic. These risks include materially reduced demand for our products and services, increased instability in our supply chain, and challenges to the ongoing viability of some of our customers. We may face similar risks in connection with any future public health crises, including resurgences in the spread of COVID-19.
The COVID-19 pandemic has subjected our business, operations, financial performance, cash flows and financial condition to a number of risks, including, but not limited to those discussed below.
Operations-related risks: As a result of the COVID-19 pandemic, we are facing increased operational challenges from the need to protect employee health and safety. These challenges have included, and may in the future include production site shutdowns, and workplace disruptions and restrictions on the movement of people, raw materials and goods, both at our own facilities and those of our customers and suppliers.
For example, during the second quarter of 2020, we temporarily suspended operations in Puget Sound, South Carolina, and Philadelphia, as well as at several other key production sites. We had not previously experienced a complete suspension of our operations at these production sites. While we have resumed operations at all of our production sites we cannot predict whether or where further production disruptions could be required or what the ongoing impact of COVID-19-related operating restrictions will be. For example, we continue to experience additional operating costs due to social distancing requirements and other factors related to COVID-19 restrictions. We cannot predict the impact that future production disruptions may have on our business, operations, financial performance and financial condition. We continue to monitor federal, state, and municipal health authorities for new or modified guidance and requirements concerning the COVID-19 pandemic, and we may be required to impose additional operational restrictions and/or suspend operations at key production sites based on these requirements and recommendations and/or workplace disruptions caused by COVID-19.
Many of our suppliers also were required to suspend operations during the second quarter of 2020, and they may experience additional disruptions in 2021. Any such disruptions could have severe adverse impacts on our production costs, delivery schedule and/or ability to meet customer commitments.
Any prolonged suspension of operations or delayed recovery in our operations, and/or any similar suspension of operations or delayed recovery at one or more of our key suppliers, or the failure of any of our key suppliers, would result in further challenges to our business, leading to a further material adverse effect on our business, financial condition, results of operations, and cash flows.
Liquidity risks:The COVID-19 pandemic has also had a significant impact on our liquidity and overall debt levels. During the year ended December 31, 2020, net cash used by operating activities was $18.4 billion. At December 31, 2020, cash and short-term investments totaled $25.6 billion. Our debt balance totaled $63.6 billion at December 31, 2020, up from $27.3 billion at December 31, 2019. We expect negative operating cash flows in future quarters until deliveries begin to return to historical levels, and if
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the pace and scope of the recovery are worse than we currently contemplate, we may need to obtain additional financing in order to fund our operations and obligations. If we were to need to obtain additional financing, uncertainty related to COVID-19 and its impact on us and the aerospace industry, as well as continued uncertainty with respect to our credit rating could limit our access to credit markets and we may have difficulty obtaining financing on terms acceptable to us or at all. In addition, certain of our customers may also be unable to make timely payments to us. Factors that could limit our access to additional liquidity include further disruptions in the global capital markets and/or additional declines in our financial performance, outlook or credit ratings. The occurrence of any or all of these events could adversely affect our ability to fund our operations and/or meet outstanding debt obligations and contractual commitments. In addition, further downgrades in our credit ratings could adversely affect our cost of funds and related margins, liquidity, competitive position and access to capital markets, and a significant downgrade could have an adverse impact on our businesses.
Customer-related risks: Commercial air traffic has fallen dramatically due to the COVID-19 pandemic. This trend has impacted passenger traffic most severely. Near-term cargo traffic has also fallen, but to a lesser extent as global trade has begun to recover. Most airlines have significantly reduced their capacity, and many could implement further reductions in the near future. Many airlines are also implementing significant reductions in staffing. These capacity changes are causing, and are expected to continue to cause, negative impacts to our customers’ revenue, earnings, and cash flow, and in some cases may threaten the future viability of some of our customers, potentially causing defaults within our customer financing portfolio, which was $2.0 billion as of December 31, 2020 and/or requiring us to remarket aircraft that have already been produced and/or are currently in backlog. If we are unable to successfully remarket these aircraft and/or the narrow-body and wide-body markets do not recover as soon as we are currently assuming, or if we are required to further reduce production rates and/or contract the accounting quantity on any of our commercial programs, we could experience material reductions in earnings and/or be required to recognize a reach-forward loss on one or more of our programs. For example, in the fourth quarter of 2020, we recognized a reach-forward loss on the 777X program in part due to impacts related to the COVID-19 pandemic. In addition, if 737 MAX aircraft in one or more jurisdictions remain grounded for an extended period of time, we may experience additional reductions to backlog and/or significant order cancellations. Additionally, we may experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand. Our customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic. We are also observing a significant increase in the number of requests for payment deferrals, contract modifications, lease restructurings and similar actions, and these trends may lead to additional charges, impairments and other adverse financial impacts in our business over time. In addition, to the extent that customers have valid rights to cancel undelivered aircraft, we may be required to refund pre-delivery payments, putting additional constraints on our liquidity.
In addition to the near-term impact, there is risk that the industry implements longer-term strategies involving reduced capacity, shifting route patterns, and mitigation strategies related to impacts from COVID-19 and the risk of future public health crises. In addition, airlines may experience reduced demand due to reluctance by the flying public to travel due to travel restrictions and/or social distancing requirements.
As a result, there is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, which could put negative pressure on cargo traffic levels. Any of these factors would have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines. In addition, a lengthy period of reduced industry-wide demand for commercial aircraft would put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption. To
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the extent that the COVID-19 pandemic or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.
Other risks: The magnitude and duration of the global COVID-19 pandemic is uncertain and continues to adversely affect our business and operating and financial results. For example, during the fourth quarter of 2020, due in part to the prolonged adverse impact of the pandemic on our earnings, we recorded an increase of $2.5 billion to the valuation allowance associated with deferred income tax assets. The pandemic also is expected to heighten many of the other risks described below. Further, the COVID-19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our operations or financial results.
Risks Related to Our Business and Operations
We are subject to a number of risks and uncertainties related to the 737 MAX. These risks include uncertainties regarding the timing and conditions of 737 MAX regulatory approvals, in certain non-U.S. jurisdictions, lower than planned production rates and/or delivery rates, increased considerations to customers, increased supplier costs and supply chain health, changes to the assumptions and estimates made in our financial statements regarding the 737 program, and potential outcomes of various 737 MAX-related legal proceedings and government investigations.
On March 13, 2019, the Federal Aviation Administration (FAA) issued an order to suspend operations of all 737 MAX aircraft in the U.S. and by U.S. aircraft operators following two fatal 737 MAX accidents. Non-U.S. civil aviation authorities issued directives to the same effect. Deliveries of the 737 MAX were suspended until December 2020. The grounding has reduced revenues, operating margins, and cash flows, and will continue to do so until production rates return to pre-grounding levels. In connection with the effort to return the 737 MAX to service, we developed software updates for the 737 MAX, together with an associated pilot training and supplementary education program. We continue to work with certain non-U.S. civil aviation authorities to complete remaining steps toward certification and readiness for return to service worldwide. Any delays in certification in one or more jurisdictions and/or the ramp-up of deliveries or other liabilities associated with the accidents or grounding could have a material adverse effect on our financial position, results of operations, and/or cash flows. In addition, multiple legal actions have been filed against us related to the 737 MAX. We also are fully cooperating with U.S. government investigations related to the accidents and the 737 MAX, including investigations by the Securities and Exchange Commission. In January 2021, we entered into a Deferred Prosecution Agreement with the U.S. Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the FAA. We expensed $744 in the fourth quarter of 2020 related to this agreement. Any further adverse impacts related to any such litigation or investigation could have a further material impact on our financial position, results of operations and/or cash flows.
During 2019, we announced plans to reduce, and ultimately to suspend 737 production. Impacts related to these actions significantly increased costs to produce aircraft included in the current accounting quantity and have resulted in reduced 737 program and overall BCA segment operating margins. We have also made significant assumptions regarding estimated costs expected to be incurred in 2021 that should be included in program inventory and those estimated costs that will be expensed when incurred as abnormal production costs. If we are unable to return the 737 MAX aircraft to service in one or more jurisdictions or deliver 737 aircraft to customers on the schedule and/or at a pace consistent with our expectations, we will incur significant additional costs and/or delay the planned ramp-up of 737 production. These delays would also result in significant additional disruption to the 737 production system and further delay efforts to restore and/or implement previously planned increases in the 737
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production rate. Cash flows continue to be negatively impacted by delayed payments from customers, higher costs and inventory levels, and payments made to customers in connection with disruption to their operations. In addition, we have experienced claims and assertions from customers in connection with the grounding, and we recorded an earnings charge of $8,259 million, net of insurance recoveries of $500 million, in 2019, in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the grounding and associated delivery delays.
Any further delays in regulatory approval of the 737 MAX in one or more jurisdictions, further disruptions to suppliers and/or the long-term health of the production system, supplier claims or assertions, or changes to estimated concessions or other considerations we expect to provide to customers could have a material adverse effect on our financial position, results of operations, and/or cash flows. In the event of unanticipated additional training requirements in one or more jurisdictions, delays in regulatory approval, and/or delays in our ability to resume deliveries to one or more customers, we may be required to take actions with longer-term impact, such as further changes to our production plans, employment reductions and/or the expenditure of significant resources to support our supply chain and/or customers.
We have made significant estimates with respect to the 737 program regarding the number of units to be produced, the period during which those units are likely to be produced, and the units’ expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs. In addition to the estimated timing of the resumption of deliveries, we have made assumptions regarding outcomes of accident investigations and other government inquiries, timing of future 737 production rate increases, timing and sequence of future deliveries, supply chain health as we implement our production plans, as well as outcomes of negotiations with customers. Any changes in these estimates and/or assumptions with respect to the 737 program could have a material impact on our financial position, results of operations, and/or cash flows. For additional information, see our discussion under “Management’s Discussion and Analysis-Critical Accounting Policies and Estimates-737 MAX Grounding” on pages 55 - 56.
In addition to the impact of COVID-19 described above, our Commercial Airplanes and Global Services businesses depend heavily on commercial airlines, and are subjectsubjecting us to unique risks.
Market conditions have a significant impact on demand for our commercial aircraft and related services. The commercial aircraft market is predominantly driven by long-term trends in airline passenger and cargo traffic. The principal factors underlying long-term traffic growth are sustained economic growth and political stability both in developed and emerging markets. Demand for our commercial aircraft is further influenced by airline profitability, availability of aircraft financing, world trade policies, government-to-government relations, technological advances, price and other competitive factors, fuel prices, terrorism, pandemics, epidemics and environmental regulations. Traditionally,Historically, the airline industry has been cyclical and very competitive and has experienced significant profit swings and constant challenges to be more cost competitive. Significant deterioration in the global economic environment, the airline industry generally or the financial stability of one or more of our major customers could result in fewer new orders for aircraft or services, or could cause customers to seek to postpone or cancel contractual orders and/or payments to us, which could result in lower revenues, profitability and cash flows and a reduction in our contractual backlog. In addition, because our commercial aircraft backlog consists of aircraft scheduled for delivery over a period of several years, any of these macroeconomic, industry or customer impacts could unexpectedly affect deliveries over a long period.
We enter into firm fixed-price aircraft sales contracts with indexed price escalation clauses, which could subject us to losses if we have cost overruns or if increases in our costs exceed the applicable escalation rate. Commercial aircraft sales contracts are often entered into years before the aircraft are delivered. In order to help account for economic fluctuations between the contract date and delivery date, aircraft pricing generally consists of a fixed amount as modified by price escalation formulas
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derived from labor, commodity and other price indices. Our revenue estimates are based on current expectations with respect to these escalation formulas, but the actual escalation amounts are outside of our control. Escalation factors can fluctuate significantly from period to period. Changes in escalation amounts can significantly impact revenues and operating margins in our Commercial Airplanes business.
We derive a significant portion of our revenues from a limited number of commercial airlines. We can make no assurance that any customer will exercise purchase options, fulfill existing purchase commitments or purchase additional products or services from us. In addition, fleet decisions, airline consolidations or financial challenges involving any of our major commercial airline customers could significantly reduce our revenues and limit our opportunity to generate profits from those customers.
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Airlines also are experiencing increased fuel and other costs, and the global economy is experiencing high inflation.
Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to our exacting specifications, achieve planned production rate targets, successfully develop and certify new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.
The commercial aircraft business is extremely complex, involving extensive coordination and integration with U.S and non-U.S. suppliers, highly-skilled labor fromperformed by thousands of employees of ours and other partners, and stringent and evolving regulatory requirements including the risk of evolving standards for commercial aircraft certification, and performance and reliability standards. The FAA has been working to implement safety reforms such as the 2018 FAA Reauthorization Act and the 2020 Aircraft Certification, Safety and Accountability Act (ACSAA). One of these, section 116 of the ACSAA prohibited the FAA from issuing a type certificate to aircraft after December 27, 2022 unless the aircraft’s flight crew alerting system met certain specifications. The Consolidated Appropriations Act, 2023 amended Section 116 of the ACSAA, such that applications for original or amended type certifications that were submitted to the FAA prior to December 27, 2020, including those of the 737-7 and 737-10, are no longer subject to the crew alerting specifications of Section 116. Additionally, beginning one year after the FAA issues the type certificate for the 737-10, any new 737 MAX aircraft must include certain safety enhancements to be issued an original airworthiness certification by the FAA. These enhancements are included in Boeing’s application for the certification for the 737-10, and the sufficiency of these enhancements will be determined by the FAA. Beginning three years after the issuance of a type certificate for the 737-10, all previously delivered 737 MAX aircraft must be retrofitted with these safety enhancements. As the holder of the type certificate, Boeing is required to bear any costs of these safety enhancement retrofits. We have provisioned for the estimated costs associated with the safety enhancements and do not expect those costs to be material. If we experience delays in achieving certification and/or incorporating safety enhancements, future revenues, cash flows and results of operations could be adversely impacted. Comparable agencies in other countries may adopt similar changes. To the extent the FAA or similar regulatory agencies outside the U.S. implement more stringent regulations, we may incur additional compliance costs. In addition, the introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, involves increased risks associated with meeting development, testing, certification and production and certification schedules. The 737 program has also
In addition, we have experienced significant disruption dueproduction quality issues, including in our supply chain, which have contributed to the grounding of the 737 MAX and associatedlower 787 deliveries, including a suspension of 737 MAX production for part of 2020. As a result, our ability787 deliveries from May 2021 to deliver aircraftAugust 2022. We continue to conduct inspections and rework on time, satisfy regulatorybuilt and customer requirements, and achieve or maintain, as applicable, program profitability is subject to significant risks. For example, astored 787 aircraft. A number of our customers may have contractual remedies, including compensation for late deliveries or rights to reject individual airplane deliveries if the actualbased on delivery date is significantly later than the contractual delivery date.delays. Delays on the 737, MAX777X and 777X787 programs have resulted in, and may continue to result in, customers having the right to terminate orders, and be compensated for late deliveries and/or substitute orders for other Boeing aircraft.
We must minimize disruption caused by production changes, achieve operational stability and achieveimplement productivity improvements in order to meet customer demand and maintain our profitability. We have previously announced plans to adjust production rates on several of our commercial aircraft programs. We continueThe 787 program is currently producing at low rates and we expect to engagegradually increase to 5 per month in significant ongoing development, testing and production2023. Production of the 777X aircraft.is currently paused and is expected to resume in 2023. The 737 program has experienced operational and supply chain challenges stabilizing production at 31 per month. We plan to gradually increase 737 production rates based on market demand and supply chain capacity. In addition, we continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory. If production rate changes at any of our
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commercial aircraft assembly facilities are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.
Operational challenges impacting the production system for one or more of our commercial aircraft programs could result in additional production delays and/or failure to meet customer demand for new aircraft, either of which would negatively impact our revenues and operating margins. Our commercial aircraft production system is extremely complex. Operational issues, including delays or defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, could result in significantadditional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet support costs. For example, inWe and our suppliers are experiencing supply chain disruptions as a result of the fourth quarterlingering impacts of 2020,COVID-19, global supply chain constraints, and labor instability. We and our suppliers are also experiencing inflationary pressures. We continue to monitor the health and stability of the supply chain as we expanded the scoperamp up production. These factors have reduced overall productivity and adversely impacted our financial position, results of production inspections on the 787 program,operations and those inspections and associated rework are delaying scheduled deliveries and resulting in additional 787 aircraft in inventory.cash flows.
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If our commercial airplanesaircraft fail to satisfy performance and reliability requirements and/or potentially required sustainability standards, we could face additional costs and/or lower revenues. Developing and manufacturing commercial aircraft that meet or exceed our performance and reliability standards and/or potentially required sustainability standards, as well as those of customers and regulatory agencies, can be costly and technologically challenging. These challenges are particularly significant with newer aircraft programs. Any failure of any Boeing aircraft to satisfy performance or reliability requirements could result in disruption to our operations, higher costs and/or lower revenues.
Changes in levels of U.S. government defense spending or overall acquisition priorities could negatively impact our financial position and results of operations.
We derive a substantial portion of our revenue from the U.S. government, primarily from defense related programs with the U.S. DoD.United States Department of Defense (U.S. DoD). Levels of U.S. defense spending are very difficult to predict and may be impacted by numerous factors such as the evolving nature of the national security threat environment, U.S. national security strategy, U.S. foreign policy, the domestic political environment, macroeconomic conditions and the ability of the U.S. government to enact relevant legislation such as authorization and appropriations bills.
Although FY21 appropriations have been enacted, long-term uncertainty remains with respect to overall levelsThe timeliness of defense spending beyond FY21,FY24 and it is likely that U.S. government discretionary spending, including defense spending, will continue to be subject to pressure. In addition, the timeliness of future appropriations for government departments and agencies remains a recurrent risk. A lapse in appropriations for government departmentdepartments or agencies would result in a full or partial government shutdown, which could impact the Company’s operations. Alternatively, Congress may fund government departments and agencies with one or more Continuing Resolutions; however, this couldwould restrict the execution of certain program activities and delay new programs or competitions. In addition, long-term uncertainty remains with respect to overall levels of defense spending in FY24 and beyond. U.S. government discretionary spending, including defense spending, is likely to continue to be subject to pressure.
There continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S. DoD and other government agencies (including NASA), including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities. Future investment priority changes or budget cuts, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations, and/or delays of existing contracts or programs, or future program opportunities. Any of these impacts could have a material effect on the results of the Company’s operations, financial position, results of operations and/or cash flows.
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In addition, as a result of the significant ongoing uncertainty with respect to both U.S. defense spending and the evolving nature of the national security threat environment, we also expect the U.S. DoD to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes. If we can no longerprocesses, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared. We and our suppliers will need to continue to adjust successfully to these changing acquisition priorities and policies or our revenues and market share could be impacted.
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Our ability to deliver products and services that satisfy customer requirements is heavily dependent on the performance and financial stability of our subcontractors and suppliers, as well as on the availability of highly skilled labor, raw materials and other components.
We rely on other companies, including U.S. and non-U.S. subcontractors and suppliers, to provide and produce raw materials, integrated components and sub-assemblies, and production commodities and to perform some of the services that we provide to our customers. Many of our suppliers are experiencing inflationary pressures, as well as disruptions due to the lingering impacts of COVID-19, global supply chain constraints, and labor instability. If one or more of our suppliers or subcontractors experiencescontinue to experience financial difficulties, delivery delays or other performance problems, we may be unable to meet commitments to our customers or incur additional costs.and our financial position, results of operations and cash flows may continue to be adversely impacted. In addition, if one or more of the raw materials on which we depend (such as aluminum, titanium or composites) becomes unavailable to us or our suppliers, or is available only at very high prices, we may be unable to deliver one or more of our products in a timely fashion or at budgeted costs. For example, we suspended purchasing titanium from Russia during 2022 as a result of the Russia Ukraine war. We believe we have sufficient material and parts to avoid production disruptions in the near-term, but future impacts to our production from disruptions in our supply chain are possible. In some instances, we depend upon a single source of supply. Any service disruption from one of these suppliers, either due to circumstances beyond the supplier’s control, such as geopolitical developments, or as a result of performance problems or financial difficulties, could have a material adverse effect on our ability to meet commitments to our customers or increase our operating costs.
Competition within our markets and with respect to the products we sell may reduce our future contracts and sales.
The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. In our Commercial AirplanesBCA business, we anticipateface aggressive international competition intent on increasing competition among non-U.S. aircraft manufacturers of commercial jet aircraft.market share. In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, and continued cost pressure at our U.S. DoD and non-U.S. customers will intensify competition for many of our BDS products. Our BGS segment faces competition from many of the same strong U.S. and non-U.S. competitors facing BCA and BDS. Furthermore, we are facing increased international competition and cross-border consolidation of competition.competition, and U.S. procurement and compliance requirements that could limit our ability to be cost-competitive in the international market. There can be no assurance that we will be able to compete successfully against our current or future competitors or that the competitive pressures we face will not result in reduced revenues and market share.
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We derive a significant portion of our revenues from non-U.S. sales and are subject to the risks of doing business in other countries.
In 2020,2022, non-U.S. customers, which includes foreign military sales (FMS), accounted for approximately 37%41% of our revenues. We expect that non-U.S. sales will continue to account for a significant portion of our revenues for the foreseeable future. As a result, we are subject to risks of doing business internationally, including:
changes in regulatory requirements;requirements or other executive branch actions, such as Executive Orders;
changes in the global trade environment, including disputes with authorities in non-U.S. jurisdictions, including international trade authorities, that could impact sales and/or delivery of products and services outside the U.S. and/or impose costs on our customers in the form of tariffs, duties or penalties attributable to the importation of Boeing products and services;
changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements;
fluctuations in international currency exchange rates;
volatility in international political and economic environments and changes in non-U.S. national priorities and budgets, which can lead to delays or fluctuations in orders;
the complexity and necessity of using non-U.S. representatives and consultants;
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the uncertainty of the ability of non-U.S. customers to finance purchases, including the availability of financing from the Export-Import Bank of the United States;
uncertainties and restrictions concerning the availability of funding credit or guarantees;
imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions (such as those imposed on Russia) and other trade restrictions;
the difficulty of management and operation of an enterprise spread over many countries;
compliance with a variety of non-U.S. laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and
unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.
While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future. For example, since 2018, the U.S. and China have imposed tariffs on each other’s imports. Certain aircraft parts and components that Boeing procures are subject to these tariffs. We are mitigating import costs through Duty Drawback Customs procedures. Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge. China is a very significant market for commercial airplanes and representsaircraft. Boeing has long-standing relationships with our Chinese customers, who represent a significantkey component of our commercial airplanesaircraft backlog. In addition,For the U.S. and European Union (EU) have been engaged737 MAX, there is uncertainty regarding timing of resumption of deliveries in two long-running disputes at the World Trade Organization (WTO) relatingChina which is still subject to large civil aircraft, including one that has resultedfinal regulatory approvals. If we are unable to obtain additional orders from China in the impositionfuture, our market share could be adversely affected. Furthermore, following Russia’s invasion of tariffs on certain ofUkraine, we suspended our products.operations in Russia due to sanctions and export controls, and the war has negatively impacted, and could continue to adversely impact, our business and financial results. Impacts from these or future potential tariffs, or deterioration in trade relations between the U.S. and one or more other countries, could have a material adverse impact on our revenues, operating earnings,financial position, results of operations and/or cash flows.
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We use estimates and make assumptions in accounting for many contracts and programs. Changes in our estimates and/or assumptions could adversely affect our future financial results.
Contract and program accounting require judgment relative to assessing risks, estimating revenues and costs and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts and programs, the estimation of total revenues and cost at completion is complicated and subject to many variables. Assumptions have to be made regarding the length of time to complete the contract or program because costs also include expected increases in wages and employee benefits, material prices and allocated fixed costs. Incentives or penalties related to performance on contracts are considered in estimating sales and profit rates and are recorded when there is sufficient information for us to assess anticipated performance. SupplierCustomer and supplier claims and assertions are also assessed and considered in estimating revenues, costs and profit rates. Estimates of future award fees are also included in salesrevenues and profit rates.
With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts. A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for delivery under existing and anticipated contracts limited by the ability to make reasonably dependable estimates. To establish the relationship of sales to cost of sales, program accounting requires estimates of (a) the number of units to be produced and sold in a program, (b) the period over which the units can reasonably be expected to be produced and (c) the units’ expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs for the total program. Several factors determine accounting quantity, including firm orders, letters of intent from prospective customers and market studies. Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates. In addition, on development programs such as the 777X, 737-7 and 737-10 we are subject to risks with respect to the timing and conditions of aircraft certification, including potential gaps between when aircraft are certified in various jurisdictions, changes in certification processes and our estimates with
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respect to timing of future certifications, which could have an impact on overall program status. Any such change in estimates relating to program accounting may adversely affect future financial performance.
Because of the significance of the judgments and estimation processes described above, materially different salesrevenues and profit amounts could be recorded if we used different assumptions, revised our estimates, or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect future period financial performance. For additional information on our accounting policies for recognizing sales and profits, see our discussion under “Management’s Discussion and Analysis – Critical Accounting Policies & Estimates Contract Accounting/Accounting for Long-term Contracts/Program Accounting” on pages 53 – 5548 - 49 and Note 1 to our Consolidated Financial Statements on pages 68 – 8159 - 69 of this Form 10-K.
We may not realize the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures.
As part of our business strategy, we may merge with or acquire businesses and/or form joint ventures and strategic alliances. Whether we realize the anticipated benefits from these acquisitions and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations. Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit
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guarantees, partner performance and indemnifications. Consolidations of joint ventures could also impact our reported results of operations or financial position. While we believe that we have established appropriate and adequate procedures and processes to mitigate these risks, there is no assurance that these transactions will be successful. We also may make strategic divestitures from time to time. These transactions may result in continued financial involvement in the divested businesses, such as through guarantees or other financial arrangements, following the transaction. Nonperformance by those divested businesses could affect our future financial results through additional payment obligations, higher costs or asset write-downs.
Risks Related to Our Contracts
We conduct a significant portion of our business pursuant to U.S. government contracts, which are subject to unique risks.
In 2020, 51%2022, 40% of our revenues were earned pursuant to U.S. government contracts, which include FMS through the U.S. government. Business conducted pursuant to such contracts is subject to extensive procurement regulations and other unique risks.
Our sales to the U.S. government are subject to extensive procurement regulations, and changes to those regulations could increase our costs.New procurement regulations or climate or cyber-related contractual disclosures, or changes to existing requirements, could increase our compliance costs or otherwise have a material impact on the operating margins of our BDS and BGS businesses. These requirements may also result in increased compliance costs, and we could be subject to additional costs in the form of withheld payments and/or reduced future business if we fail to comply with these requirements in the future.comply. For example, proposals to raise domestic content thresholds for our U.S. government contracts could have negative impacts on our business. Compliance costs attributable to current and potential future procurement regulations such as these could negatively impact our financial condition and operating results.position, results of operations and/or cash flows.
The U.S. government may modify, curtail or terminate one or more of our contracts. The U.S. government contracting party may modify, curtail or terminate its contracts and subcontracts with us, without prior notice and either at its convenience or for default based on performance. In addition, funding pursuant to our U.S. government contracts may be reduced or withheld as part of the U.S.
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Congressional appropriations process due to fiscal constraints, changes in U.S. national security strategy and/or priorities or other reasons. Further uncertainty with respect to ongoing programs could also result in the event that the U.S. government finances its operations through temporary funding measures such as “continuing resolutions” rather than full-year appropriations. Any loss or anticipated loss or reduction of expected funding and/or modification, curtailment or termination of one or more large programs could have a material adverse effect on our earnings,financial position, results of operations and/or cash flow and/or financial position.flows.
We are subject to U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under U.S. government contracts. U.S. government agencies, including the Defense Contract Audit Agency and the Defense Contract Management Agency, routinely audit government contractors. These agencies review our performance under contracts, cost structure and compliance with applicable laws, regulations and standards, as well as the adequacy of and our compliance with our internal control systems and policies. Any costs found to be misclassified or inaccurately allocated to a specific contract will be deemed non-reimbursable, and to the extent already reimbursed, must be refunded. Any inadequacies in our systems and policies could result in withholds on billed receivables, penalties and reduced future business. Furthermore, if any audit, inquiry or investigation uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the U.S. government. We also
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could suffer reputational harm if allegations of impropriety were made against us, even if such allegations are later determined to be false.
We enter into fixed-price contracts which could subject us to losses if we have cost overruns.
Our BDS and BGS defense businesses generated approximately 69%60% and 72%69% of their 20202022 revenues from fixed-price contracts. While fixed-price contracts enable us to benefit from performance improvements, cost reductions and efficiencies, they also subject us to the risk of reduced margins or incurring losses if we are unable to achieve estimated costs and revenues. If our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results. For example, in 2020, weduring the year ended December 31, 2022, BDS recorded additional reach-forward losses on several fixed price development programs. We continue to experience near-term production disruptions and inefficiencies due to supplier disruption, labor instability and factory performance. These factors have contributed to significant earnings charges on a number of $1,320 million on the KC-46A Tanker contract reflecting $551 million of costs associated with the agreement signedfixed-price development programs which are expected to adversely affect cash flows in April 2020 with the U.S. Air Force to developfuture periods, and integrate a new Remote Vision System,may result in future earnings charges and the remaining costs reflect production inefficiencies including impacts of COVID-19 disruption.adverse cash flow effects. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. For example, in 2018, in connection with winning the T-7A Red Hawk and MQ-25 competitions, we recorded a loss of $400 million associated with options for 346 T-7A Red Hawk aircraft and a loss of $291 million related to the MQ-25 Engineering, Manufacturing and Development (EMD) contract. The long term nature of many of our contracts makes the process of estimating costs and revenues on fixed-price contracts inherently risky. Fixed-price contracts often contain price incentives and penalties tied to performance, which can be difficult to estimate and have significant impacts on margins. In addition, some of our contracts have specific provisions relating to cost, schedule and performance.
Fixed-priceEstimating costs to complete fixed-price development contracts areis generally subject to more uncertainty than fixed-price production contracts. Many of these development programs have highly complex designs. In addition, technical or quality issues that arise during development could lead to schedule delays and higher costs to complete, which could result in a material charge or otherwise adversely affect our financial condition. Examples of significant BDS fixed-price development contracts include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B Presidential Aircraft, MQ-25, and commercial and military satellites.
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We enter into cost-type contracts, which also carry risks.
Our BDS and BGS defense businesses generated approximately 31%40% and 28%31% of their 20202022 revenues from cost-type contracting arrangements. Some of these are development programs that have complex design and technical challenges. These cost-type programs typically have award or incentive fees that are subject to uncertainty and may be earned over extended periods. In these cases the associated financial risks are primarily in reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Programs whose contracts are primarily cost-type include Ground-based Midcourse Defense, (GMD), Proprietary and SLSSpace Launch System programs.
We enter into contracts that include in-orbit incentive payments that subject us to risks.
Contracts in the commercial satellite industry and certain government satellite contracts include in-orbit incentive payments. These in-orbit payments may be paid over time after final satellite acceptance or paid in full prior to final satellite acceptance. In both cases, the in-orbit incentive payment is at risk if the satellite does not perform to specifications for up to 15 years after acceptance. The net present value of in-orbit incentive fees we ultimately expect to realize is recognized as revenue in the construction period. If the satellite fails to meet contractual performance criteria, customers will not be obligated to continue making in-orbit payments and/or we may be required to provide refunds to the customer and incur significant charges.
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Risks Related to Cybersecurity and Business Disruptions
Unauthorized access to our, our customers’ and/or our customers’suppliers’ information and systems could negatively impact our business.
We face certainrely extensively on information technology systems and networks to operate our company and meet our business objectives. As cyber threats increase in volume and sophistication, the risk to the security threats, including threatsof these systems and networks – and to the confidentiality, integrity, and availability of the data they house – continues to evolve, requiring constant vigilance and integrityconcerted, company-wide risk management efforts.
A cyberattack or security breach, whether experienced directly or through our supply chain, could, among other serious consequences, result in loss of our data and systems. Weintellectual property; unauthorized access to various categories of sensitive, proprietary or customer data; disruption or degradation of business operations, or compromise of products or services. To address these risks, we maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management oversight in orderoversight. We also have established a Cybersecurity Governance Council to address these threats.strengthen governance and coordination of cybersecurity activities. While these measures are designed to prevent, detect and respond to unauthorized activity, inthere is no guarantee that they will be sufficient to prevent or mitigate the risk of a cyberattack or the potentially serious reputational, operational, or financial impacts that may result. In November 2022, we discovered a cybersecurity incident that impacted certain systems of Jeppesen, a wholly owned Boeing subsidiary that provides flight planning and navigation services. We determined that the incident posed no risk to flight safety. We promptly notified law enforcement, regulatory authorities and customers, launched an investigation, and took additional steps to protect the integrity of our systems, certain types of attacks, including cyber-attacks,systems. While this incident has not had a material impact on us, future incidents like this one could result in significant financial or information losses and/or reputational harm. have material impact on our business, operations, and reputation.
In addition, we manage information and information technology systems for certain customers.customers and/or suppliers. Many of these customers and/or suppliers face similar security threats. If we cannot preventwere unable to protect against the unauthorized access, release and/or corruption of our customers’ and/or suppliers’ confidential, classified or personally identifiable information, our reputation could be damaged, and/or we could face financial or other losses.
Business disruptions could seriously affect our future sales and financial condition or increase our costs and expenses.
Our business may be impacted by disruptions including threats to physical security or our information technology or cyber-attacks or failures, damagingsystems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises. Any of these disruptions could affect our internal operations or our ability to deliversuppliers’ operations and delay delivery of products and services to our customers. Any significant production delays, or any destruction, manipulation or improper use of Boeing’s or our suppliers’ data, information systems or networks could impact our sales, increase our expenses and/or have an adverse effect on the reputation of Boeing and of our products and services.
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Risks Related to Legal and Regulatory Matters
The outcome of litigation and of government inquiries and investigations involving our business is unpredictable and an adverse decision in any such matter could have a material effect on our financial position and results of operations.
We are involved in a number of litigation matters. These matters may divert financial and management resources that would otherwise be used to benefit our operations. No assurances can be given that the results of these matters will be favorable to us. An adverse resolution of any of these lawsuits, or future lawsuits, could have a material impact on our financial position and results of operations. In addition, we
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are subject to extensive regulation under the laws of the United States and its various states, as well as other jurisdictions in which we operate. As a result, we are sometimes subject to government inquiries and investigations of our business due, among other things, to our business relationships with the U.S. government, the heavily regulated nature of our industry, and in the case of environmental proceedings, our current or past ownership of certain property. Any such inquiry or investigation could potentially result in an adverse ruling against us, which could have a material impact on our financial position, and results of operations.operations and/or cash flows.
Our operations expose us to the risk of material environmental liabilities.
We are subject to various U.S. federal, state, local and non-U.S. laws and regulations related to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, as well as third-party claims for property damage or personal injury, if we were to violate or become liable under environmental laws or regulations. In some cases, we may beare subject to such costs due to environmental impacts attributable to our current or past manufacturing operations or the operations of companies we have acquired. In other cases, we may becomeare subject to such costs due to an indemnification agreement between us and a third party relating to such environmental liabilities. In addition, newall cases, our current liabilities and ongoing cost assessments are based on current laws and regulations. New laws and regulations, more stringent enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new remediation requirements could result in additional costs. For additional information relating to environmental contingencies, see Note 13 to our Consolidated Financial Statements.
We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, emerging ESG regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives. Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position. Increasing aircraft performance standards, increasing sustainability disclosure requirements in the U.S. and globally, and requirements on manufacturing and product air pollutant emissions, especially greenhouse gas (GHG) emissions, may result in increased costs or reputational risks and could limit our ability to manufacture and/or market certain of our products at acceptable costs, or at all. Physical impacts of climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.
Finally, from time to time, in alignment with our sustainability priorities, we establish and publicly announce goals and commitments to improve our environmental performance, such as our recent operational goals in areas of GHG emissions, energy, water and waste. If we fail to achieve or improperly report on our progress toward achieving our sustainability goals and commitments, the resulting negative publicity could adversely affect our reputation and/or our access to capital.
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Risks Related to Financing and Liquidity
We may be unable to obtain debt to fund our operations and contractual commitments at competitive rates, on commercially reasonable terms or in sufficient amounts.
We depend, in part, upon the issuance of debt to fund our operations and contractual commitments. In addition, our debt balances have increased significantly since 2019, driven primarily by impacts related to the 737 MAX grounding and the COVID-19 pandemic, and we expect to continue to actively manage our liquidity. Our increased debt balance has also resulted in downgrades to our credit ratings. As of December 31, 2020,2022, our debt totaled $63.6$57.0 billion of which approximately $20.4$14.5 billion of principal payments on outstanding debt will become due over the next three years. In addition, as of December 31, 2020,2022, our airplane financing commitments totaled $11,512 million.$16.1 billion. Our increased debt balance resulted in downgrades to our credit ratings in 2020, and our ratings remained unchanged in 2022 and 2021. If we require additional funding in order to pay off existing debt, address further impacts to our business related to the 737 MAX, COVID-19, or broader market developments, fund outstanding financing commitments or meet other business requirements, our market liquidity may not be sufficient. These risks will be particularly acute if we are subject to further credit rating downgrades. A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt. These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings including impacts described above related to the
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COVID-19 pandemic and/or associated changes in demand for our products and services. The occurrence of any or all of these events may adversely affect our ability to fund our operations and contractual or financing commitments.
Substantial pension and other postretirement benefit obligations have a material impact on our earnings, shareholders’ equity and cash flows from operations, and could have significant adverse impacts in future periods.
Many of our employees have earned benefits under defined benefit pension plans. Potential pension contributions include both mandatory amounts required under the Employee Retirement Income Security Act and discretionary contributions to improve the plans' funded status. The extent of future contributions depends heavily on market factors such as the discount rate and the actual return on plan assets. We estimate future contributions to these plans using assumptions with respect to these and other items. Changes to those assumptions could have a significant effect on future contributions as well as on our annual pension costs and/or result in a significant change to shareholders' equity. For U.S. government contracts, we allocate pension costs to individual contracts based on U.S. Cost Accounting Standards which can also affect contract profitability. We also provide other postretirement benefits to certain of our employees, consisting principally of health care coverage for eligible retirees and qualifying dependents. Our estimates of future costs associated with these benefits are also subject to assumptions, including estimates of the level of medical cost increases. For a discussion regarding how our financial statements can be affected by pension and other postretirement plan accounting policies, see “Management's Discussion and Analysis-CriticalAnalysis – Critical Accounting Policies-PensionPolicies & Estimates – Pension Plans” on pages 57 - 58page 50 of this Form 10-K. Although under Generally Accepted Accounting Principles in the United States of America (GAAP) the timing of periodic pension and other postretirement benefit expense and plan contributions are not directly related, the key economic factors that affect GAAP expense would also likely affect the amount of cash or stock we would contribute to our plans.
Our insurance coverage may be inadequate to cover all significant risk exposures.
We are exposed to liabilities that are unique to the products and services we provide. We maintain insurance for certain risks and, in some circumstances, we may receive indemnification from the U.S. government. The amount of our insurance coverage may not cover all claims or liabilities, and we may be forced to bear substantial costs. For example, liabilities arising from the use of certain of our products, such as aircraft technologies, space systems, spacecraft, satellites, missile systems,
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weapons, cyber security,cybersecurity, border security systems, anti-terrorism technologies and/or air traffic management systems may not be insurable on commercially reasonable terms. While some of these products are shielded from liability within the U.S. under the SAFETY Act provisions of the 2002 Homeland Security Act, no such protection is available outside the U.S., potentially resulting in significant liabilities. See Note 21 of the Consolidated Financial Statements for discussion of legal proceedings resulting from the October 29, 2018 accident of Lion Air Flight 610 and the March 10, 2019 accident of Ethiopian Airlines Flight 302. The amount of insurance coverage we maintain may be inadequate to cover these or other claims or liabilities.
A significant portion of our customer financing portfolio is concentrated among certain customers and in certain types of Boeing aircraft, which exposes us to concentration risks.
A significant portion of our customer financing portfolio is concentrated among certain customers and in distinct geographic regions. Our portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft, and among customers that we believe have less than investment-grade credit. If one or more customers holding a significant portion of our portfolio assets experiences financial difficulties or otherwise defaults on or does not renew its leases with us at their expiration, and we are unable to redeploy the aircraft on reasonable terms, or if the types of
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aircraft that are concentrated in our portfolio suffer greater than expected declines in value, our earnings,financial position, results of operations and/or cash flows and/or financial position could be materially adversely affected.
Risks Related to Labor
Some of our and our suppliers’ workforces are represented by labor unions, which may lead to work stoppages.
Approximately 47,00050,000 employees, which constitute 33%32% of our total workforce, were union represented as of December 31, 2020.2022. We experienced a work stoppage in 2008 when a labor strike halted commercial aircraft and certain BDS program production. We may experience additional work stoppages in the future, which could adversely affect our business. We cannot predict how stable our union relationships, currently with 1011 U.S. labor organizations and 12 non-U.S. labor organizations, will be or whether we will be able to meet the unions’ requirements without impacting our financial condition. The unions may also limit our flexibility in dealing with our workforce. Union actions at suppliers can also affect us. Work stoppages and instability in our union relationships could delay the production and/or development of our products, which could strain relationships with customers and cause a loss of revenues which would adversely affect our operations.result in lower revenues.
Item 1B. Unresolved Staff Comments
Not applicable
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Item 2. Properties
We occupiedhad approximately 8687 million square feet of floor space on December 31, 20202022 for manufacturing, warehousing, engineering, administration and other productive uses, of which approximately 93%88% was located in the United States. The following table provides a summary of the floor space by business as of December 31, 2020:2022:
(Square feet in thousands)(Square feet in thousands)OwnedLeased
Government Owned(1)
Total(Square feet in thousands)OwnedLeasedGovernment OwnedTotal
Commercial AirplanesCommercial Airplanes40,444 2,303 42,747 Commercial Airplanes39,586 6,673 46,259 
Defense, Space & SecurityDefense, Space & Security23,109 6,335 29,444 Defense, Space & Security22,643 5,090 27,733 
Global ServicesGlobal Services683 7,303 348 8,334 Global Services1,201 7,591 8,792 
Other(2)(1)
Other(2)(1)
2,385 2,343 318 5,046 
Other(2)(1)
1,821 2,476 315 4,612 
TotalTotal66,621 18,284 666 85,571 Total65,251 21,830 315 87,396 
(1)Excludes rent-free space furnished by U.S. government landlord of 49 square feet.
(2) Other includes sites used for BCC,corporate offices, enterprise research and development and common internal services and our Corporate Headquarters.services.
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At December 31, 2020, we occupied in excess of 77.4 million2022, the combined square feet of floor spacefootage at the following major locations:locations totaled more than 81 million square feet:
Commercial Airplanes – Greater Seattle, WA; China; Greater Charleston, SC; Greater Portland, OR; Greater Los Angeles, CA; Greater Salt Lake City, UT; Canada;Australia and AustraliaCanada
Defense, Space & Security – Greater St. Louis, MO; Greater Seattle, WA; Greater Los Angeles, CA; Philadelphia, PA; Mesa, AZ; Huntsville, AL; Oklahoma City, OK; Heath, OH; Greater Washington, DC; Australia; Greater Portland, OR; Houston, TX; and Houston, TXKennedy Space Center
Global Services – San Antonio, TX; Greater Miami, FL; Dallas, TX; Great Britain; China; Jacksonville, FL; Germany; Mesa, AZ; and Greater Denver, COGermany
Other – Chicago, IL; Greater Seattle, WA;India; Greater Los Angeles, CA ;CA; Greater St. Louis, MO; and Greater Washington, DC.
Most runways and taxiways that we use are located on airport properties owned by others and are used jointly with others. Our rights to use such facilities are provided for under long-term leases with municipal, county or other government authorities. In addition, the U.S. government furnishes us certain office space, installations and equipment at U.S. government bases for use in connection with various contract activities.
To support business needs, property requirements are being evaluated to align with previously announced staffing reductions, utilization studies, and strategic growth investments to optimize footprint.
Item 3. Legal Proceedings
Currently, we are involved in a number of legal proceedings. For a discussion of contingencies related to legal proceedings, see Note 21 to our Consolidated Financial Statements, which is hereby incorporated by reference.
Item 4. Mine Safety Disclosures
Not applicable
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The principal market for our common stock is the New York Stock Exchange where it trades under the symbol BA. As of January 25, 2021,20, 2023, there were 99,38388,322 shareholders of record.
Issuer Purchases of Equity Securities
The following table provides information about purchases we made during the quarter ended December 31, 20202022 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:
(Dollars in millions, except per share data)
(a)(b)(c)(d)
Total Number
of Shares
Purchased(1)
Average
Price Paid per
Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares That May Yet
be Purchased Under the
Plans or Programs(2)
10/1/2020 thru 10/31/20204,707$168.15 
11/1/2020 thru 11/30/20203,072152.35 
12/1/2020 thru 12/31/202016,683212.42 
Total24,462$196.36 
(a)(b)(c)(d)
Total Number
of Shares
Purchased(1)
Average
Price Paid per
Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares That May Yet
be Purchased Under the
Plans or Programs(2)
10/1/2022 thru 10/31/20224,578$138.33 
11/1/2022 thru 11/30/20222,371142.24 
12/1/2022 thru 12/31/202218,793181.13 
Total25,742$169.94 
(1)A total of 24,38525,742 shares were transferred to us from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock units during the period. We did not purchase any shares of our common stock in the open market pursuant to oura repurchase program. We purchased 77 shares in swap transactions.
(2)On March 21, 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock. Share repurchases under this plan hadopen market repurchase program have been suspended since April 2019.
Item 6. [Reserved]
22
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Item 6. Selected Financial Data
Five-Year Summary (Unaudited)
(Dollars in millions, except per share data)20202019201820172016
Revenues$58,158 $76,559 $101,127 $94,005 $93,496 
Net (loss)/earnings($11,941)($636)$10,460 $8,458 $5,034 
Basic (loss)/earnings per share($20.88)($1.12)$18.05 $14.03 $7.92 
Diluted (loss)/earnings per share(20.88)(1.12)17.85 13.85 7.83 
Dividends declared per share (1)
 8.22 7.19 5.97 4.69 
Cash and cash equivalents$7,752 $9,485 $7,637 $8,813 $8,801 
Short-term and other investments17,838 545 927 1,179 1,228 
Total assets152,136 133,625 117,359 112,362 109,076 
Total debt63,583 27,302 13,847 11,117 9,952 
Operating cash flow($18,410)($2,446)$15,322 $13,346 $10,496 
Investing cash flow($18,366)($1,530)($4,621)($2,058)($3,378)
Financing cash flow$34,955 $5,739 ($11,722)($11,350)($9,587)
Total backlog$363,404 $463,403 $490,481 $474,640 $473,492 (2)
Year-end workforce141,000 161,100 153,000 140,800 150,500 
(1) In March 2020, the Board of Directors suspended the declaration and/or payment of cash dividends until further notice.
(2) 2016 Backlog does not reflect impact of the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).


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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Results of Operations and Financial Condition
Overview
We are a global market leader in the design, development, manufacture, sale, service and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. We are one of the two major manufacturers of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the U.S. While our principal operations are in the U.S., we conduct operations in an expanding number of countries and rely on an extensive network of non-U.S. partners, key suppliers and subcontractors.
Our strategy is centered on successful execution in healthy core businesses – Commercial Airplanes (BCA), Defense, Space & Security (BDS), and Global Services (BGS) – supplemented and supported by Boeing Capital (BCC). Taken together, these core businesses have historically generated substantial earnings and cash flow that permit us to investenable our investments in new products and services. We focus on producing the products and providing the services that the market demands, and continue to find new ways to improve efficiency and quality to provide a fair return for our shareholders. BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, efficiency and value to customers around the world. BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers at reduced costs. Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets, underscored by an intense focus on growth and productivity. BGS provides support for commercial and defense through innovative, comprehensive and cost-competitive product and service solutions. BCC facilitates, arranges, structures and provides selective financing solutions for our Boeing customers.
Business Environment and Trends
The global outbreak of COVID-19 andDomestic travel continues to recover from the residual impactslingering effects of the 737 MAX grounding continue to have significant adverse impacts on our business and are expected to continue to negatively impact revenue, earnings and operating cash flow in future quarters. They are also having a significant impact on our liquidity - see Liquidity Matters in Note 1 to our Consolidated Financial Statements for a further discussion of liquidity and additional actions we are taking in response to these challenges.
The COVID-19 pandemic has caused an unprecedented shock to demand for airbefore international travel creating a tremendous challenge for our customers, our business and the entire commercial aerospace manufacturing and services sector. Global economic growth, a primary driver for air travel, is expected to have declined to between -4% and -5% in 2020. The latest International Air Transport Association (IATA) forecast projected full-year 2020 passenger traffic to be down more than 60% compared to 2019 as global economic activity slows due to COVID-19, and governments severely restricted travel to contain the spread of the virus. The recovery remains slow and uneven as travel restrictions and varying regional travel protocols continue to impact air travel. Generally, we expect domestic travel to recover faster than international travel. As a result, we expect the narrow-body market continues to recover faster thanfollow domestic travel recovery, while the wide-body market. Also, themarket continues to be paced by international travel recovery. The pace of the commercial market recovery will be heavily dependent onremains impacted by government restrictions related to COVID-19, infection rates, progress on testing, governmentespecially China. We are seeing a strong recovery in travel restrictions,demand for our airline customers in North and timingSouth America, the Middle East, and availability of a vaccine. Air cargo traffic levels contracted this year due to weak global trade growthEurope, and capacity limitations given the large impact that COVID-19 has had on international passenger operations, which also carry cargo. Demanddemand for dedicated freighters is developing better relativecontinues to cargo traffic trends.be underpinned by a strong recovery in global trade.
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TableWe and our suppliers are experiencing supply chain disruptions as a result of Contents
the lingering impacts of COVID-19, global supply chain constraints, and labor instability. We and our suppliers are also experiencing inflationary pressures. We continue to monitor the health and stability of the supply chain as we ramp up production. These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.
Airline financial performance, which also plays a role in theinfluences demand for new capacity, has been adversely impacted by the COVID-19 pandemic. According to IATA,the International Air Transport Association (IATA), net losses in 2020 for the airline industry are expected to be approximately $118 billion, compared to net profits of $26were $138 billion in 2019. Our customers are taking actions2020 and $42 billion in 2021. IATA also forecasts $6.9 billion of losses for the industry globally in 2022, with approximately $9.9 billion of profits in North America driven by the robust domestic market being more than offset by losses in other regions. For 2023, IATA is forecasting $4.6 billion in profits for the industry globally. While the outlook continues to combat the effects of the COVID-19 pandemic on the market by preserving liquidity. This comes in many forms such as deferrals of advances and other paymentsimprove, we continue to suppliers, deferrals of deliveries, reduced spending on services, and, in some cases, cancellation of orders. We face a challenging environment in the nearnear- to medium termmedium-term as airlines adjust to reduced traffic which in turn will lower demand for commercial aerospace productsare facing increased fuel and services.other costs, and the global economy is experiencing high inflation. The current environment is also affecting the financial viability of some airlines.
We currently expect it will take approximately three years for world-wide travel to return to 2019 levels and a few years beyond that for the industry to return to long-term trend growth
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Table of approximately 5%. To balance the supply and demand given the COVID-19 shock and to preserve our long-term potential and competitiveness, we have reduced the production rates of several of our BCA programs. These rate decisions are based on our ongoing assessments of the demand environment and availability of aircraft financing. There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether, and at what point, capacity will return to and/or exceed pre-COVID-19 levels. During the fourth quarter of 2020, we made adjustments to our estimates regarding timing of 777X entry into service and market demand. We now anticipate that the first 777X delivery will occur in late 2023. We will closely monitor the key factors that affect backlog and future demand including customers’ evolving fleet plans, the wide-body replacement cycle and the cargo market. We will maintain a disciplined rate management process, and make adjustments as appropriate in the future. Notwithstanding the changes we have made to production rates, risk remains that further reductions will be required. Additionally, if we are unable to make timely deliveries of the large number of aircraft in inventory as of December 31, 2020, future revenues, earnings and cash flows will be adversely impacted.Contents
The long-term outlook for the industry remains positive due to the fundamental drivers of air travel demand: economic growth, increasing propensity to travel due to increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries. The shock from COVID-19 has reduced the near to medium term demand, but ourOur Commercial Market Outlook forecast projects a 4%3.8% growth rate for passenger and cargo traffic over a 20 year20-year period. Based on long-term global economic growth projections of 2.5%2.6% in average annual GDP growth,gross domestic product, we project demand for approximately 43,00041,170 new airplanes over the next 20 years. The industry remains vulnerable to exogenous developments including fuel price spikes, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.
Deliveries of the 737 MAX resumedDuring 2022, commercial services volume at BGS recovered to pre-pandemic levels. We expect BGS commercial revenues to remain strong in the fourth quarter of 2020, when the FAA rescinded the order that grounded 737 MAX aircraft in the U.S. Orders to suspend operations of 737 MAX aircraft from certain non-U.S. civil aviation authorities, including the Civil Aviation Administration of China, are still in effect. The grounding has had a significant adverse impact on our operations and creates significant uncertainty. We are focused on safely returning the 737 MAX to service for all of our customers.
At BGS, we are seeing a direct impact on our commercial supply chain businessfuture quarters as fewer flights and more aircraft retirements result in a decreased demand for our parts and logistics offerings. Additionally, our commercial customers are curtailing discretionary spending, such as modifications and upgrades and focusing on required maintenance. Similar to BCA, we expect a multi-year recovery period for the commercial services business.airline industry continues to recover. The demand outlook for our government services business which in 2019 accounted for just under half of BGS revenue, remains stable.
At BDS, we continue to see a healthy market withstable demand reflecting the important role our products and services have in ensuring our national security. Outside of the U.S., we are seeing similar solid demand for our major platformsas governments prioritize security, defense technology and programs both domestically and internationally. However, we experiencedglobal cooperation given evolving threats. We continue to experience near-term production impacts associated with our temporary suspensiondisruptions and inefficiencies due to supplier disruption, labor instability and factory performance. These factors have contributed to significant earnings charges on a number of operations at various locationsfixed-price development programs which are expected to adversely affect cash flows in 2020 .future periods.
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In March and April of 2020, asAs a result of COVID-19,the war in Ukraine, we temporarily suspended operations at multiple locations including the Puget Sound area, South Carolina and Philadelphia. Operations in Puget Sound and Philadelphia resumedrecorded earnings charges totaling $212 million during the weekfirst quarter of April 20, while operations in South Carolina resumed beginning on May 3.2022, primarily related to asset impairments. We have implemented proceduresclosed our facilities in Russia. We are focused on the safety of our employees and retaining the strength of our engineering talent through voluntary transfers to promote employee safetyother countries. We have also suspended our business in Russia, including parts, maintenance and technical support for Russian airlines, and purchases from Russian suppliers. We are complying with U.S. and international sanctions and export control restrictions. We have sufficient material and parts to avoid production disruptions in the near-term, but future impacts to our production from disruptions in our facilities, including more frequent and enhanced cleaning and adjusted schedules and work flows to support physical distancing. These actions have resulted, and will continue to result, in increased operating costs. In addition, a number of our suppliers have suspended or otherwise reduced their operations, and we are experiencing some supply chain shortages. Our suppliers are also experiencing liquidity pressurespossible. The war in Ukraine continues to impact our airline and disruptions to their operations as a result of COVID-19. We also continue to have large numbers of employees working from home. These measures and disruptions have reduced overall productivity and adversely impacted our financial position, results of operations, and cash flows in 2020. We expect further adverse impacts in future quarters.
In July 2020, we announced our business transformation efforts to assess our business across five key pillars – infrastructure, overhead and organization, portfolio and investments, supply chain health and operational excellence.lessor customers. We continue to make progress across all five key pillarsmonitor developments and potential Boeing impacts, and take mitigating actions as we utilize a lower production rate environment to transform and improve our business processes.Within the infrastructure pillar we are assessing our overall facility requirements in light of reduced demand in our commercial businesses and remote and virtual work opportunities for large numbers of our workforce. The consolidation of the 787 production in South Carolina is an example of this. We also anticipate a reduction of approximately 30% in office space needs compared to our current capacity. During 2020, we made certain reductions to our footprint and are planning to implement further reductions over the next few years. However, as we consolidate our footprint, we may incur near term adverse impacts to earnings. The overhead and organization pillar is focused on our cost structure and how we are organized so we can right size our workforce and simplify and reduce management layers and bureaucracy. During 2020, we recorded severance costs for approximately 26,000 employees, of which approximately 18,000 have left the Company as of December 31, 2020, and the remainder are expected to leave in 2021. The portfolio and investments pillar includes aligning our portfolio and investments to focus on our core business and the changes in market conditions. Through our portfolio and investment prioritization, we reduced research and development and capital expenditures during 2020 by $1.3 billion from the prior year.The supply chain pillar is focused on supply chain health and stability, reducing indirect procurement spend and streamlining our transportation, logistics and warehousing approach. We reduced indirect spend in 2020, by reducing expenditures in areas such as freight and logistics, purchased services and others. The operational excellence pillar is focused on improving performance, enhancing quality and reducing rework. For example, our information technology teams are evaluating opportunities to form or expand strategic partnerships with vendors that allow us to simplify and optimize our operations, and reduce overall costs.These activities are not intended to constrain our capacity, but to enable the Company to emerge stronger and be more resilient when the market recovers. We expect that successful execution of these measures will improve near term liquidity and long term cost competitiveness.

appropriate.
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Consolidated Results of Operations
The following table summarizes key indicators of consolidated results of operations:
(Dollars in millions, except per share data)(Dollars in millions, except per share data)(Dollars in millions, except per share data)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
RevenuesRevenues$58,158 $76,559 $101,127 Revenues$66,608 $62,286 $58,158 
GAAPGAAPGAAP
(Loss)/earnings from operations($12,767)($1,975)$11,987 
Loss from operationsLoss from operations($3,547)($2,902)($12,767)
Operating marginsOperating margins(22.0)%(2.6)%11.9 %Operating margins(5.3)%(4.7)%(22.0)%
Effective income tax rateEffective income tax rate17.5 %71.8 %9.9 %Effective income tax rate(0.6)%14.8 %17.5 %
Net (loss)/earnings attributable to Boeing Shareholders($11,873)($636)$10,460 
Diluted (loss)/earnings per share($20.88)($1.12)$17.85 
Net loss attributable to Boeing ShareholdersNet loss attributable to Boeing Shareholders($4,935)($4,202)($11,873)
Diluted loss per shareDiluted loss per share($8.30)($7.15)($20.88)
Non-GAAP (1)
Non-GAAP (1)
Non-GAAP (1)
Core operating (loss)/earnings($14,150)($3,390)$10,660 
Core operating lossCore operating loss($4,690)($4,075)($14,150)
Core operating marginsCore operating margins(24.3 %)(4.4 %)10.5 %Core operating margins(7.0 %)(6.5 %)(24.3 %)
Core (loss)/earnings per share($23.25)($3.47)$16.01 
Core loss per shareCore loss per share($11.06)($9.44)($23.25)
(1)These measures exclude certain components of pension and other postretirement benefit expense. See pages 5145 - 5247 for important information about these non-GAAP measures and reconciliations to the most directly comparable GAAP measures.
Revenues
The following table summarizes Revenues:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Commercial AirplanesCommercial Airplanes$16,162 $32,255 $57,499 Commercial Airplanes$25,867 $19,493 $16,162 
Defense, Space & SecurityDefense, Space & Security26,257 26,095 26,300 Defense, Space & Security23,162 26,540 26,257 
Global ServicesGlobal Services15,543 18,468 17,056 Global Services17,611 16,328 15,543 
Boeing CapitalBoeing Capital261 244 274 Boeing Capital199 272 261 
Unallocated items, eliminations and otherUnallocated items, eliminations and other(65)(503)(2)Unallocated items, eliminations and other(231)(347)(65)
TotalTotal$58,158 $76,559 $101,127 Total$66,608 $62,286 $58,158 
Revenues decreasedincreased by $18,401$4,322 million in 20202022 compared with 2019 primarily due to lower revenues in our commercial airplanes and commercial services businesses. Revenues for each of our segments have been adversely impacted by COVID-19. BCA revenues decreased by $16,093 million due to lower deliveries2021 driven by the impacts of the COVID-19 pandemic, 787 production issues,higher revenues at BCA and the 737 MAX grounding,BGS, partially offset by lower charges related to estimated potential concessions and other considerations to 737 MAX customers. BDSrevenues at BDS. BCA revenues increased by $162$6,374 million primarily driven by higher 737 and 787 deliveries. BGS revenues increased by $1,283 million primarily due to higher fighter aircraft and othercommercial services volume, partially offset by the impact of higher unfavorable cumulative contract catch-up adjustments, largely due to the KC-46A Tanker charges in 2020. BGSlower government services volume and performance. BDS revenues decreased by $2,925$3,378 million primarily due to charges on development programs, unfavorable performance across other defense programs, and lower commercial services revenueP-8 and weapons volume.
Revenues increased by $4,128 million in 2021 compared with 2020 driven by impactshigher revenues at BCA, BDS and BGS. BCA revenues increased by $3,331 million primarily driven by higher 737 MAX deliveries due to recertification and return to service in most jurisdictions and the absence of the COVID-19 pandemic. The changes in Unallocated items, eliminations and other primarily reflect the timing$498 million of eliminations for intercompany aircraft deliveries, as well as reserves related to cost accounting litigation recorded in 2019. We expect the impacts of the COVID-19 pandemic to continue to significantly impact737 MAX customer considerations which reduced revenues in future quarters until2020, partially offset by lower 787 deliveries in 2021. BDS revenues increased by $283 million primarily from higher revenue on the commercial airline industry recovers.
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Revenues decreasedKC-46A Tanker program and lower charges in 2021. BGS revenues increased by $24,568$785 million in 2019 compared with 2018 primarily due to lower revenues at BCA, partially offset by higher revenues at BGS. Lower BCA revenues are primarily driven by lower 737 MAXcommercial and government services volume.
Revenues will continue to be significantly impacted until the global supply chain stabilizes, labor instability diminishes, and deliveries and a revenue reduction of $8,259 million recorded in 2019 for estimated potential concessions and other considerations to customers for disruptions and associated delivery delays related to the 737 MAX grounding, net of insurance recoveries. The changes in Unallocated items, eliminations and other primarily reflect the timing of eliminations for intercompany aircraft deliveries and the sale of aircraft previously leased to customers.ramp up.
Loss/EarningsLoss From Operations
The following table summarizes (Loss)/earningsLoss from operations:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Commercial AirplanesCommercial Airplanes($13,847)($6,657)$7,830 Commercial Airplanes($2,370)($6,475)($13,847)
Defense, Space & SecurityDefense, Space & Security1,539 2,615 1,692 Defense, Space & Security(3,544)1,544 1,539 
Global ServicesGlobal Services450 2,697 2,536 Global Services2,727 2,017 450 
Boeing CapitalBoeing Capital63 28 79 Boeing Capital29 106 63 
Segment operating (loss)/profit(11,795)(1,317)12,137 
Segment operating lossSegment operating loss(3,158)(2,808)(11,795)
Pension FAS/CAS service cost adjustmentPension FAS/CAS service cost adjustment1,024 1,071 1,005 Pension FAS/CAS service cost adjustment849 882 1,024 
Postretirement FAS/CAS service cost adjustmentPostretirement FAS/CAS service cost adjustment359 344 322 Postretirement FAS/CAS service cost adjustment294 291 359 
Unallocated items, eliminations and otherUnallocated items, eliminations and other(2,355)(2,073)(1,477)Unallocated items, eliminations and other(1,532)(1,267)(2,355)
(Loss)/earnings from operations (GAAP)($12,767)($1,975)$11,987 
Loss from operations (GAAP)Loss from operations (GAAP)($3,547)($2,902)($12,767)
FAS/CAS service cost adjustment *FAS/CAS service cost adjustment *(1,383)(1,415)(1,327)FAS/CAS service cost adjustment *(1,143)(1,173)(1,383)
Core operating (loss)/earnings (Non-GAAP) **($14,150)($3,390)$10,660 
Core operating loss (Non-GAAP) **Core operating loss (Non-GAAP) **($4,690)($4,075)($14,150)
*    The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.
**    Core operating earningsloss is a Non-GAAPnon-GAAP measure that excludes the FAS/CAS service cost adjustment. See pages 5145 - 52.47.
Loss from operations increased by $10,792$645 million in 20202022 compared with 20192021. BDS had a loss from operations of $3,544 million compared with earnings of $1,544 million during 2021, primarily due to charges on development programs. BCA loss from operations decreased by $4,105 million primarily due to the absence in 2022 of the $3,460 million reach-forward loss taken on the 787 program in 2021, higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses. BGS earnings from operations increased by $710 million in 2022 compared with 2021 primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance.
Loss from operations decreased by $9,865 million in 2021 compared with 2020 primarily due to lower losses at BCA and decreasedhigher earnings at BGS and BDS.BGS. BCA loss from operations increaseddecreased by $7,190 million. The loss in 2020$7,372 million primarily reflectsdue to the absence of a $6,493 million reach-forward loss recorded in the fourth quarter of $6,493 million on the 777X program. Theprogram recorded in 2020, lower period expenses, lower 737 MAX customer considerations and higher 737 MAX deliveries, partially offset by a $3,460 million reach-forward loss reflects a number of factors, including an updated assessment of global certification requirements informedon the 787 program in 2021. BGS earnings from operations increased by continued discussions$1,567 million in 2021 compared with regulators and resulting in a management decision2020 primarily due to make modifications to the aircraft’s design, an updated assessment of COVID-19 impacts on market demand, and discussions with our customers with respect to aircraft delivery timing. These factors resulted in adjustments to production rates and the program accounting quantity, increased change incorporation costs, and associated customer and supply chain impacts. The losscharges incurred in 2020 also reflects the absenceas a result of MAX deliveries during the first three quarters of the year, lower wide-body deliveries and lower program margins resulting from the COVID-19 pandemic, and 787 production issues, abnormal production costs, 737NG frame fitting component repair costs, severance costs and 737 MAX customer considerations.as well as higher commercial services volume.
TheCore operating loss increased by $615 million in 2019 primarily reflects the absence of 737 MAX deliveries in the second, third2022 compared with 2021 and fourth quarters, and charges of $8,259 million for estimated 737 MAX customer considerations. BDS earnings decreased by $1,076$10,075 million in 20202021 compared with 2019,2020 primarily due to higher unfavorable cumulative contract catch-up adjustments, including charges of $1,320 million on KC-46A Tanker and $168 million on VC-25Bchanges in 2020, offset by $489 million of charges on Commercial Crew in 2019. TheSegment operating loss as described above.
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lower earnings were also driven by lower gains on property sales compared to 2019. BGS earnings from operations decreased by $2,247 million in 2020 compared with 2019 primarily due to lower commercial services revenue, as well as asset impairments and severance costs resulting from the COVID-19 market environment. We expect the impacts of the COVID-19 pandemic to continue to reduce earnings in future quarters until the commercial airline industry recovers.
Loss from operations was $1,975 million in 2019 compared with earnings from operations of $11,987 million in 2018. The decrease of $13,962 million is primarily due to a loss from operations at BCA of $6,657 million in 2019 compared to earnings from operations of $7,830 million in 2018, partially offset by higher earnings at BDS and BGS in 2019 compared with 2018. BCA results decreased by $14,487 million due to lower 737 deliveries and the earnings charges for estimated 737 MAX grounding customer considerations of $8,259 million, net of insurance recoveries. BDS earnings from operations increased by $923 million primarily due to lower charges in 2019 for development programs. BGS earnings from operations increased by $161 million primarily due to higher revenues, which was partially offset by less favorable performance and mix.
During 2020, 2019 and 2018, we recorded reach-forward losses on the KC-46A Tanker program of $1,320 million, $148 million, and $736 million, respectively.
Core operating loss increased by $10,760 million in 2020 compared with 2019 primarily due to higher losses at BCA and lower earnings at BGS and BDS.
Core operating earnings decreased by $14,050 million in 2019 compared with 2018 primarily due to a loss from operations at BCA in 2019, partially offset by higher earnings at BDS and BGS.
Unallocated Items, Eliminations and Other The most significant items included in Unallocated items, eliminations and other are shown in the following table:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Share-based plansShare-based plans($120)($65)($76)Share-based plans($114)($174)($120)
Deferred compensationDeferred compensation(93)(174)(19)Deferred compensation117 (126)(93)
Amortization of previously capitalized interestAmortization of previously capitalized interest(95)(89)(92)Amortization of previously capitalized interest(95)(107)(95)
Research and development expense, netResearch and development expense, net(240)(401)(144)Research and development expense, net(278)(184)(240)
Customer financing impairment(250)
Litigation(109)(148)
Eliminations and other unallocated itemsEliminations and other unallocated items(1,807)(985)(998)Eliminations and other unallocated items(1,162)(676)(1,807)
Unallocated items, eliminations and otherUnallocated items, eliminations and other($2,355)($2,073)($1,477)Unallocated items, eliminations and other($1,532)($1,267)($2,355)
Share-based plans expense decreased by $60 million in 2022 and increased by $55$54 million in 2020, and decreased by $11 million2021. The lower expense in 2019. The increase in 20202022 compared to 2021 was due to increaseddecreased grants of RSUsrestricted stock units (RSUs) and other share-based compensation. See Note 17.The higher expense in 2021 compared to 2020 was primarily related to a one-time grant of RSUs to most employees in December 2020.
Deferred compensation expense decreased by $81$243 million in 20202022, primarily driven by changes in broad stock market conditions, and increased by $155$33 million in 2019,2021, primarily driven by changes in broad stock market conditions and our stock price.
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Research and development expense increased by $94 million in 2022 and decreased by $161$56 million in 2020 and increased by $257 million in 20192021 primarily due to spending by Boeing NeXt onenterprise investments in product development.
In 2019, we recorded a $250 million charge related to the impairment of lease incentives with one customer that experienced liquidity issues, and a $109 million charge related to ongoing litigation associated with recoverable costs on U.S. government contracts. In 2018, we recorded a $148 million charge related to the outcome of the Spirit litigation.
Eliminations and other unallocated expense increased by $822$486 million in 20202022 primarily due to a $200 million settlement with the Securities and Exchange Commission related to the 737 MAX accidents, lower income from operating investments, and an increase in environmental remediation expense. Eliminations and other unallocated expense decreased by $1,131 million in 2021 primarily due to earnings charges of $744 million in the fourth quarter of 2020 related to anin anticipation of the agreement between Boeing and the U.S. Department of Justice that was finalized in January 2021. See Note 13.Eliminations2021 and other unallocated expense decreased by $13 millionhigher income from operating investments in 2019 primarily due to timing of expense allocations.2021.
Net periodic pension benefit costs included in (Loss)/earningsLoss from operations were as follows:
(Dollars in millions)(Dollars in millions)Pension(Dollars in millions)Pension
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Allocated to business segmentsAllocated to business segments($1,027)($1,384)($1,318)Allocated to business segments($852)($885)($1,027)
Pension FAS/CAS service cost adjustmentPension FAS/CAS service cost adjustment1,024 1,071 1,005 Pension FAS/CAS service cost adjustment849 882 1,024 
Net periodic benefit cost included in (Loss)/earnings from operations($3)($313)($313)
Net periodic pension benefit cost included in Loss from operationsNet periodic pension benefit cost included in Loss from operations($3)($3)($3)
The pension FAS/CAS service cost adjustment recognized in (Loss)/earningsLoss from operations in 2022 decreased by $33 million compared with 2021 and decreased by $142 million in 2021 compared with 2020 2019, and 2018 was largely consistent across all periods. The decreasedue to reductions in netallocated pension cost year over year. Net periodic benefit cost included in (Loss)/earningsLoss from operations in 20202022 was primarily due to prior year service cost that was included in earnings in 2019. The net periodic benefit cost included in (Loss)/earnings from operations in 2019 waslargely consistent with 2018, as reductions in current year service cost were offset by higher amortization of prior year service costs.2021 and 2020.
For additional discussion related to Postretirement Plans, see Note 16 to our Consolidated Financial Statements.
Other Earnings Items
(Dollars in millions)
Years ended December 31,202020192018
(Loss)/earnings from operations($12,767)($1,975)$11,987 
Other income, net447 438 92 
Interest and debt expense(2,156)(722)(475)
(Loss)/earnings before income taxes(14,476)(2,259)11,604 
Income tax benefit/(expense)2,535 1,623 (1,144)
Net loss from continuing operations(11,941)(636)10,460 
Less: net loss attributable to noncontrolling interest(68)
Net (loss)/earnings attributable to Boeing Shareholders($11,873)($636)$10,460 
Other income, net increased by $9 million in 2020 primarily due to lower non-operating postretirement expense, partially offset by lower non-operating pension income, lower interest income and higher foreign exchange losses. Other income, net increased by $346 million in 2019 primarily due to higher non-operating pension income.
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Other Earnings Items
(Dollars in millions)
Years ended December 31,202220212020
Loss from operations($3,547)($2,902)($12,767)
Other income, net1,058 551 447 
Interest and debt expense(2,533)(2,682)(2,156)
Loss before income taxes(5,022)(5,033)(14,476)
Income tax (expense)/benefit(31)743 2,535 
Net loss from continuing operations(5,053)(4,290)(11,941)
Less: net loss attributable to noncontrolling interest(118)(88)($68)
Net loss attributable to Boeing Shareholders($4,935)($4,202)($11,873)
Non-operating pension income included in Other income, net was $881 million in 2022, $528 million in 2021, and $340 million in 2020, $374 million in 2019, and $143 million in 2018. The decreased income in 2020 compared to 2019 was due to higher amortization of actuarial losses and lower asset returns, partially offset by lower interest cost.2020. The increased income in 20192022 compared to 20182021 was primarily due to lower amortization of net actuarial losses in 2022 and a settlement loss recorded in 2021. The increased income in 2021 compared to 2020 was primarily due to lower interest cost and higher expected return on plan assets, partially offset by higher amortization of net actuarial losses and higher settlement charges.
Non-operating postretirement income included in Other income, net was $58 million in 2022, compared with income of $1 million in 2021 and expense of $16 million in 2020. The increased income in 2022 and 2021 was due to lower amortization of net actuarial losses, partially offset by lower asset returns and higher interest cost.
Non-operating postretirement expense included in Other income, net was $16 million in 2020, $107 million in 2019, and $101 million in 2018. The decreased expense in 2020 compared to 2019 was due to lower interest cost. The expense in 2019 was largely consistent with 2018.losses.
Interest and debt expense increaseddecreased by $1,434$149 million in 20202022 primarily due to lower average debt balances and increased by $247$526 million in 20192021 as a result of higher average debt balances.
In August 2022, the President signed into law the Inflation Reduction Act of 2022, which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows. For additional discussion related to Income Taxes, see Note 4 to our Consolidated Financial Statements.
Total Costs and Expenses (“Cost of Sales”)
Cost of sales, for both products and services, consists primarily of raw materials, parts, sub-assemblies, labor, overhead and subcontracting costs. Our BCA segment predominantly uses program accounting to account for cost of sales. Under program accounting, cost of sales for each commercial airplaneaircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program. For long-term contracts, the amount reported as cost of sales is recognized as incurred. Substantially all contracts at our BDS segment and certain contracts at our BGS segment are long-term contracts with the U.S. government and other customers that generally extend over several years. Cost of sales for commercial spare parts is recorded at average cost.
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The following table summarizes cost of sales:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31Years ended December 3120202019Change20192018ChangeYears ended December 3120222021Change20212020Change
Cost of salesCost of sales$63,843 $72,093 ($8,250)$72,093 $81,490 ($9,397)Cost of sales$63,106 $59,269 $3,837 $59,269 $63,843 ($4,574)
Cost of sales as a % of revenues109.8 %94.2 %15.6 %94.2 %80.6 %13.6 %
Cost of sales as a % of RevenuesCost of sales as a % of Revenues94.7 %95.2 %(0.5)%95.2 %109.8 %(14.6)%
Cost of sales decreasedincreased by $8,250$3,837 million in 20202022 compared with 2019,2021, primarily due to lower revenue in 2020, partially offset bycharges recorded at BDS and higher charges in 2020 related to the 777X program, COVID-19 impacts, KC-46A Tanker program, abnormal production costsrevenues at BCA and severance costs.BCA. Cost of sales as a percentage of Revenues increasedremained largely consistent in 20202022 compared to 2019 primarily due to the reach-forward loss on the 777X program, impacts of the 737 MAX grounding and the COVID-19 pandemic, as well as severance costs.2021.
Cost of sales decreased by $9,397$4,574 million in 20192021 compared with 2018,2020, primarily due to lower revenuehigher earnings charges at BCA, BDS and lowerBGS in 2020, partially offset by higher costs as a result of higher revenues in 2021 and the reach-forward losses.loss on the 787 program. Cost of sales as a percentage of Revenues increaseddecreased in 20192021 compared to 2020 primarily due to the 737 MAX grounding.
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higher earnings charges at BCA and BGS in 2020 and higher revenues in 2021.
Research and Development The following table summarizes our Research and development expense:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Commercial AirplanesCommercial Airplanes$1,385 $1,956 $2,188 Commercial Airplanes$1,510 $1,140 $1,385 
Defense, Space & SecurityDefense, Space & Security713 741 776 Defense, Space & Security945 818 713 
Global ServicesGlobal Services138 121 161 Global Services119 107 138 
OtherOther240 401 144 Other278 184 240 
TotalTotal$2,476 $3,219 $3,269 Total$2,852 $2,249 $2,476 
Research and development expense decreasedincreased by $743$603 million in 20202022 compared with 20192021 primarily due to lower spending athigher research and development expenditures on 777X, 737 MAX, as well as BCA and at Boeing NeXt onenterprise investments in product development.
Research and development expense decreased by $50$227 million in 20192021 compared with 20182020 primarily due to lower BCA and enterprise investments in product development and lower spending on the 777X and 737 MAX, partially offset by higher spending on product development at BCA and Boeing NeXt.program.
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Backlog
Our backlog at December 31 was as follows:
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,20202019Years ended December 31,20222021
Commercial AirplanesCommercial Airplanes$281,588 $376,593 Commercial Airplanes$329,824 $296,882 
Defense, Space & SecurityDefense, Space & Security60,847 63,691 Defense, Space & Security54,373 59,828 
Global ServicesGlobal Services20,632 22,902 Global Services19,338 20,496 
Unallocated items, eliminations and otherUnallocated items, eliminations and other337 217 Unallocated items, eliminations and other846 293 
Total BacklogTotal Backlog$363,404 $463,403 Total Backlog$404,381 $377,499 
Contractual backlogContractual backlog$339,309 $436,473 Contractual backlog$381,977 $356,362 
Unobligated backlogUnobligated backlog24,095 26,930 Unobligated backlog22,404 21,137 
Total BacklogTotal Backlog$363,404 $463,403 Total Backlog$404,381 $377,499 
Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive contracts have not been executed, orders where customers have the unilateral right to terminate, and unobligated U.S. and non-U.S. government contract funding. The decreaseincrease in contractual backlog during 20202022 was primarily due to an increase in BCA backlog that was partially offset by a reduction for orders thatdecrease in our assessment no longer meet the accounting requirements of Accounting Standards Codification (ASC) 606 for inclusion in backlog primarily dueBDS backlog. If we remain unable to 737 MAX and 777X, deliveries in excess of new orders, aircraft order cancellations and changes in projected price escalation. We are experiencing fewer new 737 MAX orders than we were receiving prior to the grounding. Ifdeliver 737 MAX aircraft remain grounded in certain jurisdictionsChina for an extended period of time, and/or if entry into service of the 777X, 737 MAX 7737-7 and/or 737 MAX 10737-10 is further delayed, we may experience additional reductions to backlog and/or significant order cancellations. Additionally, we may continue to experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand.
Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has not been authorized. The decreaseincrease in unobligated backlog in 20202022 was primarily due to contract awards, partially offset by reclassifications to contractual backlog related to BDS and BGS and BDS contracts, partially offset by contract awards.contracts.
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Additional Considerations
Global Trade We continually monitor the global trade environment in response to geopolitical economic developments, as well as changes in tariffs, trade agreements or sanctions that may impact the company.Company.
The global economy is currently experiencing significant adverse impacts due to the COVID-19 pandemic, including a decline in overall trade in general and in aerospace in particular. There is a great dealcurrent state of uncertainty regarding the duration, scale, and localization of these impacts to the global economy and governments are enacting a wide range of responses to mitigate the unfolding economic impacts. We are closely monitoring the current impact and potential future economic consequences of COVID-19 to the global economy, the aerospace sector, and our Company. These adverse economic impacts have resulted in fewer orders than previously anticipated for our commercial aircraft.
China is a very significant market for commercial airplanes and represents a significant component of our commercial airplanes backlog.U.S.-China relations remains an ongoing watch item. Since 2018, the U.S. and China have imposed an escalating series of tariffs on each other’s imports. Certain aircraft parts and components that Boeing procures are subject to these tariffs. The U.S.We are mitigating import costs through Duty Drawback Customs procedures. China is a significant market for commercial aircraft. Boeing has long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog. Overall, the U.S.-China trade relationship remains stalled as economic and China entered intonational security concerns continue to be a Phase I agreement in January 2020. However, implementation of this agreement is incomplete and overall diplomatic relations between the U.S. and China have deteriorated. We continue monitoring developments for potential adverse impacts to the Company.challenge.
Beginning in June 2018, the U.S. Government has imposed tariffs on steel and aluminum imports. In response to these tariffs, several major U.S. trading partners have imposed, or announced their intention to impose, tariffs on U.S. goods. In May 2019,The U.S. has subsequently reached agreements with Mexico, Canada, the U.S. Government, MexicoUnited Kingdom, the European Union, and Canada reached an agreementJapan to end theease or remove tariffs on steel and aluminum tariffs between these countries. Implementation of the U.S./Mexico/Canada Free Trade Agreement (USMCA) will also result in lower tariffs.and/or aluminum. We continue to monitor the potential for any extra costs that may result from the remaining global tariffs.
TheWe are complying with all U.S. Government continues to impose and/or consider imposingand other government export control restrictions and sanctions imposed on certain businesses and individuals in Russia. Although our operations or sales in Russia have not been impacted to date, weWe continue to monitor and evaluate additional sanctions and export restrictions that may be imposed by the U.S. Government andor other governments,
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as well as any responses from Russia that could affect our supply chain, business partners or customers.
The U.S. and European Union (EU) have been engaged in two long-running disputes at the World Trade Organization (WTO) relatingcustomers, for any additional impacts to large civil aircraft. As part of those disputes, in October 2019, the WTO authorized the U.S. to impose approximately $7.50 billion in annual tariffs on EU products in connection with the EU’s provision of eight instances of launch aid subsidies to Airbus. The U.S. is currently imposing 15% tariffs on new Airbus airplanes imported into the U.S. as well as fuselages that Airbus manufactures in Europe and imports into the U.S. In October 2020, the WTO authorized the EU to impose approximately $3.99 billion in annual tariffs on U.S. products in connection with a tax incentive used by Boeing in Washington state that has since been repealed. The EU is currently imposing 15% tariffs on Boeing airplanes imported into the EU. We will continue to assess and work with our customers on the possible impact of these tariffs, as deliveries to European customers are expected to increase in 2021.business.

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Segment Results of Operations and Financial Condition
Commercial Airplanes
Business Environment and Trends
Airline Industry Environment See Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the impacts of COVID-19 on the airline industry environment.
Industry Competitiveness The industry continues to adjust torecover from the unprecedentedlingering effects of the COVID-19 shock and subsequent economic impact, government restrictions, and new regulations.pandemic. The commercial airplaneaircraft market and the airline industry both remain extremely competitive. While the impacts and responses have varied globally, the reduction of demand and disruption in production has adversely impacted most manufacturers in the commercial airplaneaircraft industry.
Continued access to global markets remains vital to our ability to fully realize our sales potential and long-term investment returns. Approximately 80%70% of Commercial Airplanes’ total backlog, in dollar terms, is with non-U.S. airlines. We face aggressive international competitors who are intent on increasing their market share. They offer competitive products and have access to most of the same customers and suppliers. The grounding of the 737 MAX in 2019 and the associated suspension of 737 MAX deliveries in multiple jurisdictions significantly reduced our market share with respect to deliveries of single aisle aircraft in 2019 and 2020 and may provide competitors with an opportunity to obtain more orders and increase market share. With government support, Airbus has historically invested heavily to create a family of products to compete with ours. After the acquisition of a majority share of Bombardier’s C Series (now A220) in 2018, Airbus continues to expand in the 100-150 seat transcontinental market. Other competitors are also in different phases of developing commercial jet aircraft.aircraft, including Commercial Aircraft Corporation of China, Ltd. (COMAC), which delivered its first C919 aircraft in 2022. Some of these competitors have historically enjoyed access to government-provided financial support, including “launch aid,” which greatly reduces the cost and commercial risks associated with airplane development activities. This has enabled the development of airplanes without broad commercial viability; others to be brought to market more quickly than otherwise possible; and many offered for sale below market-based prices. Competitors continue to make improvements in efficiency, which may result in funding product development, gaining market share and improving earnings. This market environment has resulted in intense pressures on pricing and other competitive factors, and we expect these pressures to continue or intensify in the coming years.
We are focused on improving our products and services and continuing our business transformation efforts, which enhances our ability to compete and positions us for market recovery. We are also focused on taking actions to ensure that Boeing is not harmed by unfair subsidization of competitors.
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Results of Operations
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
RevenuesRevenues$16,162 $32,255 $57,499 Revenues$25,867 $19,493 $16,162 
% of total company revenues% of total company revenues28 %42 %57 %% of total company revenues39 %31 %28 %
(Loss)/earnings from operations($13,847)($6,657)$7,830 
Loss from operationsLoss from operations($2,370)($6,475)($13,847)
Operating marginsOperating margins(85.7)%(20.6)%13.6 %Operating margins(9.2)%(33.2)%(85.7)%
Research and developmentResearch and development$1,385 $1,956 $2,188 Research and development$1,510 $1,140 $1,385 
Revenues
BCA revenues decreasedincreased by $16,093$6,374 million in 20202022 compared with 20192021 primarily due to lowerhigher 737 and 787 deliveries in 2022.
BCA revenues increased by $3,331 million in 2021 compared with 2020 primarily due to higher 737 MAX deliveries driven by the impacts of the COVID-19 pandemic, 787 production issuesrecertification and return to service in most jurisdictions and the absence of charges for 737 MAX grounding. This wascustomer considerations which reduced revenues in 2020, partially offset by lower charges related to estimated potential concessions and other considerations to 737 MAX customers of $498 million787 deliveries in 2020 compared with $8,259 million in 2019.2021.
BCA revenues decreased by $25,244 million in 2019 compared with 2018 driven by lower 737 MAX deliveries, and a revenue reduction of $8,259 million that was recorded in 2019 for estimated potential concessions and other considerations to customers related to the 737 MAX grounding, net of $500 million of insurance recoveries.
While we resumed deliveries of 737 MAX aircraft in December 2020, the 737 MAX grounding is still in effect in certain non-U.S. jurisdictions. The 737 MAX grounding will continue to have a significant impact on future revenues until deliveries ramp up, and COVID-19 will continue to have a significant impact on future revenues until the commercial airline industry recovers.
Commercial Airplanesincluding intercompany deliveries, as of December 31 were as follows:
737 *747 767 *777 787 Total737 *747 767 *777 787 Total
20222022
Cumulative deliveriesCumulative deliveries8,1321,5721,2711,7011,037
DeliveriesDeliveries387(13)533(15)2431480
20212021
Cumulative deliveriesCumulative deliveries7,7451,5671,2381,6771,006
DeliveriesDeliveries263(16)732(13)2414340
202020202020
Cumulative deliveriesCumulative deliveries7,4821,5601,2061,653992Cumulative deliveries7,4821,5601,2061,653992
DeliveriesDeliveries43(14)530(11)2653157Deliveries43(14)5

30(11)26

53157
2019
Cumulative deliveries7,4391,5551,1761,627939
Deliveries127(19)743(23)45(2)158380
2018
Cumulative deliveries7,3121,5481,1331,582781
Deliveries580(18)6

27(10)48145806
* Intercompany deliveries identified by parentheses
† Aircraft accounted for as revenues by BCA and as operating leases in consolidation identified by parentheses
Loss/EarningsLoss From Operations
BCA loss from operations was $2,370 million in 2022 compared with $6,475 million in 2021 reflecting higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses. The 2021 loss also reflects a reach-forward loss on the 787 program of $3,460 million. Abnormal production costs in 2022 were $1,753 million, including $1,240 million related to the 787 program, $325 million related to the 777X program, and $188 million related to the 737 program.
BCA loss from operations was $6,475 million in 2021 compared with $13,847 million in 2020 compared with2020. The 2021 loss reflects the reach-forward loss on the 787 program of $3,460 million, abnormal production costs related to the 737 program of $1,887 million, and abnormal production costs related to the 787 program of $468 million resulting from operations of $6,657 million in 2019.continued production issues, inspections and rework, partially offset by higher 737 MAX deliveries. The 2020 loss reflects the reach-forward loss on the 777X program of $6,493 million, lower deliveries and lower program margins resulting from the COVID-19 pandemic, and 787 production issues and associated rework, $2,567 million of abnormal production costs related to 737 MAX, $623 million of
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$2,567 million of abnormal production costs related to the 737 program, $623 million of severance cost, $498 million of 737 MAX customer considerations, $336 million related to 737NG frame fitting component repair costs and $270 million of abnormal production costs in the first half of 2020 from the temporary suspension of operations in response to COVID-19, partially offset by lower research and development spending. Lower 787 margins reflecting a reduction in the accounting quantity in the first quarter of 2020 also contributed to lower earnings. The 2019 loss primarily reflects the absence of 737 MAX deliveries in the second, third and fourth quarters of 2019 and charges of $8,259 million for estimated 737 MAX customer considerations.
BCA loss from operations was $6,657 million in 2019 compared with earnings from operations of $7,830 million in 2018. The decrease of $14,487 million is primarily due to lower 737 deliveries and earnings charges related to the 737 MAX.
The 737 MAX grounding and the COVID-19 pandemic will continue to have a significant adverse impact on future earnings and margins until 737 MAX deliveries ramp up and wide-body deliveries return to historical levels.
Backlog
Our total backlog represents the estimated transaction prices on unsatisfied and partially satisfied performance obligations to our customers where we believe it is probable that we will collect the consideration due and where no contingencies remain before we and the customer are required to perform. Backlog does not include prospective orders where customer controlledcustomer-controlled contingencies remain, such as the customer receiving approval from its board of directors, shareholders or government or completing financing arrangements. All such contingencies must be satisfied or have expired prior to recording a new firm order even if satisfying such conditions is highly certain.probable. Backlog excludes options and BCC orders.orders as well as orders where customers have the unilateral right to terminate. A number of our customers may have contractual remedies, including rights to reject individual airplane deliveries if the actual delivery date is significantly later than the contractual delivery date. We address customer claims and requests for other contractual relief as they arise. The value of orders in backlog is adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of TopicASC 606.
BCA total backlog of $281,588$329,824 million at December 31, 2020 decreased2022 increased from $376,593$296,882 million at December 31, 2019,2021, reflecting a reduction fornew orders in excess of deliveries and price escalation, offset by order cancellations and by an increase in the value of existing orders that in our assessment no longerdo not meet the accounting requirements of ASC 606 for inclusion in backlog, aircraft order cancellations, changes in projected price escalation and deliveries in excess of new orders.backlog. Aircraft order cancellations during the year ended December 31, 20202022 totaled $34,618$11,251 million and primarily relate to 737 MAXand 787 aircraft. The net ASC 606 adjustments for the year ended December 31, 2020 totaled $54,4502022 resulted in a decrease to backlog of $4,675 million primarily due to a net increase of 777X aircraft in the ASC 606 reserve, partially offset by net decreases in 737 and primarily relate to 737 MAX787 aircraft and 777X aircraft. Thein the ASC 606 reserve. ASC 606 adjustments include consideration of aircraft orders where a customer controlledcustomer-controlled contingency now exists,may exist, as well as orders where we can no longer assert thatan assessment of whether the customer is committed to perform, impacts of geopolitical events or thatrelated sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is due. If we remain unable to deliver 737 MAX aircraft remain grounded in certain jurisdictionsChina for an extended period of time, and/or if entry into service of the 777X, 737 MAX 7737-7 and/or 737 MAX 10737-10 is further delayed, we may experience additional reductions to backlog and/or significant order cancellations. Additionally, we may continue to experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result the COVID-19 pandemic and associated impacts on demand.
Accounting Quantity The accounting quantity is our estimate of the quantity of airplanes that will be produced for delivery under existing and anticipated contracts. The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates of the revenue and cost of existing and anticipated contracts. It is a key determinant of the gross margins we recognize on sales of individual airplanes throughout a program’s life. Estimation of each program’s accounting quantity takes into account several factors that are indicative of the demand for that program, including firm orders,
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letters of intent from prospective customers and market studies. We review our program accounting quantities quarterly.
The accounting quantity for each program may include units that have been delivered, undelivered units under contract and units anticipated to be under contract in the reasonable future (anticipated orders). In developing total program estimates, all of these items within the accounting quantity must be considered.
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The following table provides details of the accounting quantities and firm orders by program as of December 31. Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries plus undelivered firm orders. Firm orders include military derivative aircraft that are not included in program accounting quantities. All revenues and costs associated with military derivative aircraft production are reported in the BDS segment.
ProgramProgram
737 747*767 777 777X787 737 747 767 777 777X787 
20222022
Program accounting quantitiesProgram accounting quantities10,8001,5741,2671,790400 1,600
Undelivered units under firm ordersUndelivered units under firm orders3,653110669244505(8)
Cumulative firm ordersCumulative firm orders11,7851,5731,3771,7702441,542
20212021


Program accounting quantitiesProgram accounting quantities10,4001,5741,2431,7503501,500
Undelivered units under firm ordersUndelivered units under firm orders3,414610858253411(14)
Cumulative firm ordersCumulative firm orders11,1591,5731,3461,7352531,417
202020202020
Program accounting quantitiesProgram accounting quantities10,0001,5741,2071,700350 1,500Program accounting quantities10,0001,5741,2071,7003501,500
Undelivered units under firm ordersUndelivered units under firm orders3,28287541191458(22)Undelivered units under firm orders3,28287541191458(22)
Cumulative firm ordersCumulative firm orders10,7641,5681,2811,6941911,450Cumulative firm orders10,7641,5681,2811,6941911,450
2019


Program accounting quantities10,4001,5741,1951,690**1,600
Undelivered units under firm orders4,398179468309520(29)
Cumulative firm orders11,8371,5721,2701,6953091,459
2018
Program accounting quantities10,4001,5741,1951,680**1,600
Undelivered units under firm orders4,708(75)24111100(2)326604(30)
Cumulative firm orders12,0201,5721,2441,6823261,385
Aircraft ordered by BCC are identified in parentheses.
* At December 31, 2020, the 747 accounting quantity includes one already completed aircraft that has not been sold and is being remarketed.
** See 777 and 777X Programs for discussion of the 777X accounting quantity.
Program Highlights
737 Program We reduced the programThe accounting quantity from 10,400 at December 31, 2019 to 10,000 at March 31, 2020. This reflects a slower than previously planned production rate ramp-up causedfor the 737 program increased by commercial airline industry uncertainty400 units during 2022 due to the impactprogram's normal progress of COVID-19. obtaining additional orders and delivering airplanes.
We increased the production rate to 31 per month in 2022, and expect to implement further gradual production rate increases based on market demand and supply chain capacity. We expensed abnormal production costs of $188 million and $1,887 million during the years ended December 31, 2022 and 2021.
Over 190 countries have approved the resumption of 737 MAX operations. The first 737 MAX passenger flight in China since 2019 occurred on January 13, 2023. There is uncertainty regarding timing of resumption of deliveries in China, which are still subject to final regulatory approvals. We continue to work with a small number of customers who have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory.
We have approximately 250 aircraft in inventory as of December 31, 2022, including approximately 140 aircraft in inventory that are designated for customers in China. We are remarketing some of these aircraft to other customers. We anticipate delivering most of the aircraft in inventory by the end of 2024. In the event that we are unable to resume aircraft deliveries in China or remarket those aircraft and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing could be impacted.
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The 737-7 and 737-10 models are currently going through FAA certification. The Consolidated Appropriations Act, 2023 amended Section 116 of the ACSAA, such that applications for original or amended type certifications that were submitted to the FAA prior to December 27, 2020, including those of the 737-7 and 737-10, are no longer subject to the crew alerting specifications of Section 116. Additionally, beginning one year after the FAA issues the type certificate for the 737-10, any new 737 MAX aircraft must include certain safety enhancements to be issued an original airworthiness certification by the FAA. These enhancements are included in Boeing’s application for the certification for the 737-10, and the sufficiency of these enhancements will be determined by the FAA. Beginning three years after the issuance of a type certificate for the 737-10, all previously delivered 737 MAX aircraft must be retrofitted with these safety enhancements. As the holder of the type certificate, Boeing is required to bear any costs of these safety enhancement retrofits. We have provisioned for the estimated costs associated with the safety enhancements and do not expect those costs to be material.
We are following the lead of the FAA as we work through the certification process, and currently expect the 737-7 to be certified and delivered in 2023, and the 737-10 to begin FAA certification flight testing in 2023 with first delivery in in 2024. At December 31, 2022, we had 27 737-7 and 3 737-10 aircraft in inventory and 236 737-7 and 720 737-10 aircraft in backlog and have delivered a total of 1,033 737 MAX aircraft. If we experience delays in achieving certification and/or incorporating safety enhancements, future revenues, cash flows and results of operations could be adversely impacted.
See further discussion of the 737 MAX Groundingin Note 7 and COVID-19 Impacts and Product Warranties in Note 13 to our Consolidated Financial Statements.
747 Program We are currently producing at a rate of 0.5 aircraft per month. We will completecompleted production of the 747 in 2022. We believe that endingthe fourth quarter of 2022 and delivery of the last aircraft is expected to occur in early 2023. Ending production of the 747 willdid not have a material impact on our financial position, results of operations or cash flows.
767 Program The accounting quantity for the 767 program increased by 1224 units during 20202022 due to the program's normal progress of obtaining additional orders and delivering airplanes. The 767 assembly line includes the commercial program and a derivative to support the tankerKC-46A Tanker program. The commercial program has near break-even gross margins. We are currently producing at a combined rate of 3 aircraft per month.
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777 and 777X Programs The accounting quantity for the 777 program increased by 1040 units during 20202022 due to the program’sprogram's normal progress of obtaining additional orders and delivering airplanes. TheWe are currently producing at a combined production rate expectationof 3 per month for the combined 777/777X programs. The accounting quantity for the 777X program remains at 2 per month in 2021.
In 2013, we launchedincreased by 50 units during 2022 reflecting the launch of the 777X-8 and 777X-9, which feature new composite wings, new engines and folding wing-tips. The first flight of the 777X was completedfreighter during the first quarter of 2020.2022. First delivery of the 777X-8 freighter is expected in 2027.
During the first three quartersquarter of 2020,2022, we made adjustments to our estimates regarding timing of 777X entry into service and market demand. As previously disclosed, market uncertainties driven primarily byrevised the impacts of COVID-19 resulted in lower planned production rates and created significant pressure on the 777X program’s revenue and cost estimates. While the 777X program did not have a reach-forward loss asestimated first delivery date of the third quarter of 2020 based on our assessment of the probable range of initial accounting quantities777X-9, previously expected in late 2023, and other factors at that time, we noted that future levels of 777X profitability would be subject to a number of factors, including continued market uncertainty, the impacts of COVID-19 on our production system as well as on our supply chain and customers, subsequent production rate reductions for both 777X and other commercial programs, and potential risks associated with the testing program and the timing of 777X certification.
We now anticipate that the first 777X deliveryexpect it will occur in late 2023. We also recorded a $6.5 billion reach-forward loss2025, based on the 777X program in the fourth quarter of 2020. The revised schedule and the reach-forward loss reflect a number of factors, including an updated assessment of globalthe time required to meet certification requirements informed by continued discussions with regulators and resulting in a management decisionrequirements. We are working towards Type Inspection Authorization (TIA) which will enable us to make modifications to the aircraft’s design, an updated assessment of COVID-19 impacts on market demand, and discussions with our customers with respect to aircraft delivery timing. These factors resulted in adjustments to production rates and the program accounting quantity, increased change incorporation costs, and associated customer and supply chain impacts.
begin FAA certification flight testing. The timing of theTIA and certification will ultimately be determined by the regulators, and further determinations with respect to anticipated certification requirements could result in additional delays in entry into service and/or additional cost increases.
In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023. We implemented the production pause during the second quarter of 2022, and it is expected to result in abnormal production costs of approximately $1.5 billion that are being expensed as incurred until 777X-9 production resumes. During the year ended December 31, 2022, $0.3 billion of abnormal costs were period expensed.
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The 777X program had near break-even gross margins at December 31, 2022. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on ourdisruption due to labor instability and supply chain and customers,disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.
787 Program During 2020, we experienced significant reductions in deliveries due to the impacts of COVID-19 on our customers as well as production issues and associated rework. The 787 program delivered four airplanes during the fourth quarter of 20202022, we increased the accounting quantity for the 787 program by 100 units due to the program’s normal progress of obtaining additional orders and has a large number of undelivered airplanesdelivering aircraft. The increase in inventory at December 31, 2020. the accounting quantity improved the program’s profit margin.
We expanded the scope of production inspections during the fourth quarter of 2020, and those inspections and associated rework are delaying scheduled deliveries and resulting in additional 787 aircraft in inventory. At December 31, 2020, we had approximately 80 787 aircraft in inventory. We expect deliveriesreceived FAA authorization to resume at a slow pacedelivery on July 28, 2022 and deliveries resumed in early 2021, with the majority of theAugust. During 2022, we delivered 31 aircraft in inventory expected to be delivered by the end of 2021.customers. We continue to work with customersconduct inspections and rework on undelivered aircraft. During 2021, we delivered 14 aircraft between March and May 2021 prior to facilitate deliveries.deliveries being paused in May 2021 due to production quality issues including in our supply chain. We are implementinghave implemented changes in the production process designed to ensure that newly-built airplanes meet our specifications and do not require further inspections. Pre-COVID-19,inspections and rework. At December 31, 2022, and 2021, we werehad approximately 100 and 110 aircraft in inventory. Most of the aircraft in inventory at December 31, 2022 are expected to deliver by the end of 2024.
We are currently producing at a rate of 14 per monthlow rates and had plannedexpect to adjust the 787 production rate to 12 per month in late 2020 and to 10 per month in early 2021. Due to the impacts of COVID-19 on customer demand, we now plan to reducegradually return to 5 per month in 2021. As a result of the planned production rate changes, we reduced the accounting quantity for the 787 program by 100 units during the first quarter of 2020. The 787 program has near breakeven gross margins due to the
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reductions in the production rates and the reduction in the program accounting quantity. If we are required to further reduce the accounting quantity and/or production rates, experience further delivery delays, or experience other factors that could result in lower margins, the program could record a reach-forward loss in future periods. We made the decision during2023. In the third quarter of 20202021, we determined that production rates below 5 per month represented abnormally low production rates and result in abnormal production costs. We also determined that the inspections and rework costs on inventoried aircraft are excessive and should also be accounted for as abnormal production costs that are required to consolidate 787be expensed as incurred. Cumulative abnormal costs recorded through December 31, 2022 totaled $1.7 billion. During the fourth quarter of 2022 we adjusted the total estimate of abnormal production costs up to $2.8 billion with most being incurred by the end of 2023. At December 31, 2021, we were expecting to incur approximately $2 billion of abnormal production costs on a cumulative basis. The increase was primarily driven by a decision in South Carolina inthe fourth quarter of 2022 to slow down near-term production due to supply chain constraints and increased inspection and rework costs. We continue to work with customers and suppliers regarding timing of future deliveries and production rate changes.
During the fourth quarter of 2021, which did not havewe recorded a significant financial impactloss of $3.5 billion on the program.program primarily due to the additional rework, as well as other actions required to resume 787 deliveries, taking longer than expected. These impacts have resulted in longer than expected delivery delays and associated customer considerations.
Fleet Support We provide the operators of our commercial airplanesaircraft with assistance and services to facilitate efficient and safe airplane operation. Collectively known as fleet support services, these activities and services begin prior to airplane delivery and continue throughout the operational life of the airplane. They include flight and maintenance training, field service support, engineering services, information services and systems and technical data and documents. The costs for fleet support are expensed as incurred and have historically been approximately 1% of total consolidated costs of products and services.
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Program Development The following chart summarizes the time horizon between go-ahead and planned initial delivery for major Commercial Airplanes derivatives and programs.
Go-ahead and Initial Delivery
737 MAX 720112021
737 MAX 1020172023
777X20132023
Go-ahead and Initial Delivery
737-720112023
737-1020172024
777X-920132025
777X-8F20222027
Reflects models in development during 20202022
We launched the 737 MAX 7 in August 2011 and the 737 MAX 10 in June 2017. We launched the 777X in November 2013. We now anticipate that the first 737 MAX 10 and 777X delivery will occur in 2023. This schedule reflectsThe development schedules shown above are subject to a number of factors,uncertainties, including an updated assessmentchanges in certification requirements. The timing of global certification requirements informedcertifications will ultimately be determined by continued discussions with regulators and resulting in a management decision to make modifications to the aircraft’s design.

regulators.
Additional Considerations
The development and ongoing production of commercial aircraft is extremely complex, involving extensive coordination and integration with suppliers and highly-skilled labor from employees and other partners. Meeting or exceeding our performance and reliability standards, as well as those of customers and regulators, can be costly and technologically challenging.challenging, such as the 787 production issues and associated rework. In addition, the introduction of new aircraft and derivatives, such as the 777X, 737-7 and 737 MAX derivatives,737-10, involves increased risks associated with meeting development, production and certification schedules. These challenges include increased global regulatory scrutiny of all development aircraft in the wake of the 737 MAX accidents. As a result, our ability to deliver aircraft on time, satisfy performance and reliability standards and achieve or maintain, as applicable, program profitability is subject to significant risks. Factors that could result in lower margins (or a material charge if an airplane program has or is determined to have reach-forward losses) include the following: changes to the program accounting quantity, customer and model mix, production costs and rates, changes to price escalation factors due to changes in the inflation rate or other economic indicators, performance or reliability issues involving completed aircraft, capital expenditures and other costs associated with increasing or adding new production capacity, learning curve, additional change incorporation, achieving anticipated cost reductions, the addition of regulatory requirements in connection with certification in one or more jurisdictions, flight test and certification schedules, costs, schedule and demand for new airplanes and derivatives and status of customer claims, supplier claims or assertions and other contractual negotiations. While we believe the cost and revenue estimates incorporated in the consolidated financial statements are appropriate, the technical complexity of our airplane programs creates financial risk as additional completion costs may become
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necessary or scheduled delivery dates could be extended, which could trigger termination provisions, order cancellations or other financially significant exposure.
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Defense, Space & Security
Business Environment and Trends
United States Government Defense Environment Overview
The Omnibus appropriations acts for FY21,Consolidated Appropriations Act, 2023, enacted in December 2020,2022, provided FY21fiscal year 2023 (FY23) appropriations for government departments and agencies, including $817 billion for the United States Department of Defense (U.S. DoD), the National AeronauticsU.S. DoD and Space Administration (NASA) and the Federal Aviation Administration.
$25.4 billion for NASA. The enacted FY21FY23 appropriations included funding for Boeing’s major programs, such asincluding the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, P-8 PoseidonMQ-25, and the Space Launch System. However, thereThe FY23 appropriations support F/A-18 production further into calendar year 2025. The FY23 appropriations did not include funding for additional P-8 aircraft. The P-8 program continues to bepursue additional sales opportunities to extend production beyond 2024.
There is ongoing uncertainty with respect to future program-level appropriations for the U.S. DoD, NASA and other government agencies for fiscal year 2024 and beyond. U.S. government discretionary spending, including NASA.defense spending, is likely to continue to be subject to pressure. Future budget cuts or investment priority changes, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs. Any of these impacts could have a material effect on our results of operations, financial position and/or cash flows.
Non-U.S. Defense Environment Overview The non-U.S. market continues to be driven by complex and evolving security challenges and the need to modernize aging equipment and inventories. BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats. At the end of 2020, 31.8%2022, 28% of BDS backlog was attributable to non-U.S. customers.
Results of Operations
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
RevenuesRevenues$26,257 $26,095 $26,300 Revenues$23,162 $26,540 $26,257 
% of total company revenues% of total company revenues45 %34 %26 %% of total company revenues35 %43 %45 %
Earnings from operations$1,539 $2,615 $1,692 
(Loss)/earnings from operations(Loss)/earnings from operations($3,544)$1,544 $1,539 
Operating marginsOperating margins5.9 %10.0 %6.4 %Operating margins(15.3)%5.8 %5.9 %
Since our operating cycle is long-term and involves many different types of development and production contracts with varying delivery and milestone schedules, the operating results of a particular period may not be indicative of future operating results. In addition, depending on the customer and their funding sources, our orders might be structured as annual follow-on contracts, or as one large multi-year order or long-term award. As a result, period-to-period comparisons of backlog are not necessarily indicative of future workloads. The following discussions of comparative results among periods should be viewed in this context.
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Deliveries of units for new-build production aircraft,units, including remanufactures and modifications, were as follows:
Years ended December 31,202020192018
F/A-18 Models20 23 17 
F-15 Models4 11 10 
C-17 Globemaster III
CH-47 Chinook (New)27 13 13 
CH-47 Chinook (Renewed)3 22 17 
AH-64 Apache (New)19 37 
AH-64 Apache (Remanufactured)52 74 23 
KC-46A Tanker14 28 
P-8 Models15 18 16 
C-40A
Total154 229 96 
New-build satellite deliveries were as follows:
Years ended December 31,202020192018
Commercial and civil satellites21
Military satellites1
Years ended December 31,202220212020
F/A-18 Models14 21 20 
F-15 Models12 16 
CH-47 Chinook (New)19 15 27 
CH-47 Chinook (Renewed)9 
AH-64 Apache (New)25 27 19 
AH-64 Apache (Remanufactured)50 56 52 
MH-139 Grey Wolf4 
KC-46 Tanker15 13 14 
P-8 Models12 16 15 
Commercial Satellites4 
Military Satellites1 
Total165 169 154 
Revenues
BDS revenues in 2020 increased2022 decreased by $162$3,378 million compared with 2019 reflecting higher revenues from fighter aircraft, Space Launch System, B-52 upgrades, proprietary2021 primarily due to charges on development programs. Unfavorable performance across other defense programs and MQ-25, partially offset by reducedlower P-8 and weapons volume also contributed to the decrease in missile defense. These net increases were offset by the unfavorable impact of cumulativerevenue. Cumulative contract catch-up adjustments which was $312in 2022 were $1,858 million higher than the comparable period in the prior year, largely due to the KC-46A Tanker charges during 2020.
BDS revenues in 2019 decreased by $205 million compared with 2018 primarily due to timing associated with non-U.S. contract awards for fighters and the final C-17 sale occurring in 2018; in addition, themore unfavorable impact of cumulative contract catch-up adjustments was $163 million higher than the prior year, reflecting increased unfavorable adjustments on the Commercial Crew contract and less favorable performance. These were partially offset by increases from new programs, including E-7 early warning aircraft, VC-25B, T-7A Red Hawk, and MQ-25, as well as from satellites and weapons.
Earnings From Operations
BDS earnings from operations in 2020 decreased by $1,076 million compared with 2019 primarily due to the unfavorable impact of cumulative contract catch-up adjustments, which was $828 million higher than the prior year largely due to charges of $1,320on development programs.
BDS revenues in 2021 increased by $283 million compared with 2020 primarily due to higher revenue on the KC-46A Tanker program due to new orders for 27 aircraft received during the first quarter of 2021 and $168 million on VC-25B,lower charges in 2021. This was partially offset by $489lower revenues on rotorcraft programs, Commercial Crew and VC-25B. Cumulative contract catch-up adjustments in 2021 were $56 million less unfavorable than the prior year, largely due to the lower charges described below.
(Loss)/earnings From Operations
BDS loss from operations in 2022 of $3,544 million decreased by $5,088 million compared with earnings from operations of $1,544 million in charges on2021 primarily due to unfavorable impacts of cumulative contract catch-up adjustments ($4,284 million more unfavorable in 2022 than 2021). Volume and mix and higher research and development also contributed to the year over year earnings decline. Charges of fixed price development programs in 2022 included VC-25B ($1,452 million), KC-46A Tanker ($1,374 million), MQ-25 ($579 million), T-7A Red Hawk Production Options ($552 million), T-7A Red Hawk Engineering, Manufacturing and Development (EMD) ($203 million), and Commercial Crew in the prior period. The lower earnings in 2020 also reflect lower gains on property sales compared to the same period in 2019.($288 million). These current period decreases were partially offset by charges on the volume increases described above.
The KC-46A Tanker reach-forward loss($402 million), VC-25B ($318 million), and Commercial Crew ($214 million) recognized in 2021. The net unfavorable cumulative contract catch-up adjustments represent losses incurred on these development and other programs. See further discussion of $1,320fixed-price contracts in Note 13 to our Consolidated Financial Statements.
BDS earnings from operations in 2021 of $1,544 million reflects $551increased by $5 million compared with earnings from operations of costs associated with$1,539 million in 2020 primarily due to less unfavorable impacts from cumulative contract catch-up adjustments, which improved $219 million from the agreement signedprior year, largely due to lower KC-46A Tanker charges in April2021 compared to 2020 with the U.S. Air Force to develop and integrate a new Remote Vision System,other charges on development programs. The $219 million change in cumulative contract catch-up adjustments was offset primarily by lower volume and the remaining costs reflect production inefficiencies including impacts of COVID-19 disruption. The $168 million reach-forward lossmix on rotorcraft programs and lower equity earnings for United Launch Alliance (ULA). During 2020, BDS recorded charges on KC-46A Tanker ($1,320 million) and VC-25B recorded in the first quarter was associated($168 million).
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with engineering inefficiencies from the COVID-19 environment. We believe these inefficiencies will result in staffing challenges, schedule inefficiencies, and higher costs in the upcoming phases of the program.
BDS (loss)/earnings from operations in 2019 increased by $923includes our share of income from equity method investments of $13 million, compared with 2018 primarily due to the absence of $691 million related to losses on the T-7A Red Hawk and MQ-25 contracts. The unfavorable impact of cumulative contract catch-up adjustments in 2019 was $62 million lower than the prior year. In 2019, BDS recorded charges of $489 million related to Commercial Crew and $148 million related to KC-46A Tanker compared with $736 million in 2018.
BDS earnings from operations include equity earnings of $141 million, $128$53 million and $147$141 million primarily from our ULA and non-U.S. joint ventures in 2022, 2021 and 2020, 2019 and 2018, respectively. Earnings from our ULA joint venture increased in 2022, partially offset by losses on other operating investments.
Backlog
Total backlog of $60,847$54,373 million at December 31, 20202022 was $2,844$5,455 million lower than December 31, 20192021 due to the timing of awards and revenue recognized.recognized on contracts awarded in prior years.
Additional Considerations
Our BDS business includes a variety of development programs which have complex design and technical challenges. ManySome of these programs have cost-type contracting arrangements. In these cases, the associated financial risks are primarily in reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Examples of these programs include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.
Some of our development programs are contracted on a fixed-price basis, and BDS customers are increasingly seeking fixed-price proposals for new programs.basis. Examples of significant fixed-price development programs include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites. A number of our ongoing fixed-price development programs have reach-forward losses. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. Many development programs have highly complex designs. As technical or quality issues arise during development, we may experience schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition. These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions the loss of satellite in-orbit incentive payments, or other financially significant exposure. These programs have risk forRisk remains that we may be required to record additional reach-forward losses if our estimated costs exceed our estimated contract revenues.in future periods.
Global Services
Business Environment and Trends
The aerospace markets we serve include parts distribution, logistics and other inventory services; maintenance, engineering and upgrades; training and professional services; and informationdata analytics and digital services. Prior to COVID-19, we had expected the market to grow by around 3.5% annually, however the pandemic is having a direct impact on ourDuring 2022, commercial services business. See Overviewvolume at BGS recovered to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion ofpre-pandemic levels. We expect BGS commercial revenues to remain strong in future quarters as the impacts of COVID-19 on thecommercial airline industry environment.continues to recover.
Over the long-term, as the size of the worldwide commercial airline fleet continues to grow, so does demand for aftermarket services designed to increase efficiency and extend the economic lives of
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airplanes. aircraft. Airlines are using data analytics to plan flight operations and predictive maintenance to improve their productivity and efficiency. Airlines continue to look for opportunities to reduce the size and cost of their spare parts inventory, frequently outsourcing spares management to third parties.
The demand outlook for our government services business has remained stable in 2020.2022. Government services market segments are growing on pace with related fleets, but vary based on the utilization and age of the aircraft. The U.S. government services market is the single largest individual market, comprising over 50 percent of the government services markets served. Over the next decade, we
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expect U.S. growth to remain flat and non-U.S. fleets, led by Middle East and Asia Pacific customers, to add rotorcraft and commercial derivative aircraft at the fastestfaster rates. We expect less than 20 percent of the worldwide fleet of military aircraft to be retired and replaced over the next ten years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.
BGS’ major customer, the U.S. government, remains subject to the spending limits and uncertainty described on page 40,35, which could restrict the execution of certain program activities and delay new programs or competitions.
Industry Competitiveness Aviation services is a competitive market with many domestic and international competitors. This market environment has resulted in intense pressures on pricing, and we expect these pressures to continue or intensify in the coming years. Continued access to global markets remains vital to our ability to fully realize our sales growth potential and long-term investment returns.
Results of Operations
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
RevenuesRevenues$15,543 $18,468 $17,056 Revenues$17,611 $16,328 $15,543 
% of total company revenues% of total company revenues27 %24 %17 %% of total company revenues26 %26 %27 %
Earnings from operationsEarnings from operations$450 $2,697 $2,536 Earnings from operations$2,727 $2,017 $450 
Operating marginsOperating margins2.9 %14.6 %14.9 %Operating margins15.5 %12.4 %2.9 %
Revenues
BGS revenues in 2020 decreased2022 increased by $2,925$1,283 million compared with 20192021 primarily due to lowerhigher commercial services revenuevolume, partially offset by lower government services volume and performance. The decrease in government services volume is partly driven by impactsthe discontinuation of an engine distribution agreement in the COVID-19 pandemic.second quarter of 2022. The net favorable impact of cumulative contract catch-up adjustments in 20202022 was $101$137 million lower than the comparable period in the prior year. We expect the impacts of the COVID-19 pandemic to continue to reduce BGS commercial revenues in future quarters until the commercial airline industry environment recovers.

year.
BGS revenues in 20192021 increased by $1,412$785 million compared with 20182020 due to growth across our services portfolio, primarily driven by higher parts revenue, including the acquisition of KLX in the fourth quarter of 2018commercial and government services revenue, partially offset by lower commercial services revenue.volume. The net favorable impact of cumulative contract catch-up adjustments in 20192021 was $80$37 million higherlower than the comparable period in the prior year.
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Earnings From Operations
BGS earnings from operations in 2022 increased by $710 million compared with 2021, primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance. The net unfavorable impact of cumulative contract catch-up adjustments in 2022 was $148 million worse than the net favorable impact in the prior year.
BGS earnings from operations in 2020 decreased2021 increased by $2,247$1,567 million compared with 2019,2020, primarily due to lower commercial services revenuecharges incurred in 2020 driven by impacts of the COVID-19 pandemic as well as earnings chargeshigher commercial services volume in 2021, partially offset by an inventory write-down of $220 million recognized in the fourth quarter of 2021 driven by revised cost estimates on certain customer contracts. Charges in 2020 includingincluded $531 million of inventory write-downs, $178 million of related impairments of distribution rights primarily driven by airlines'airlines’ decisions to retire certain aircraft, $398 million for higher expected credit losses primarily driven by customer liquidity issues, $115 million of contract termination and facility impairment charges, as well asand $72 million of severance costs. These charges reflect the significant impacts of the COVID-19 pandemic on commercial airline customers’ liquidity and demand for certain products as customers' fleet plans evolve to adapt to the sharp reduction in demand for air travel. The net favorable impact of cumulative contract catch-up adjustments in 20202021 was consistent with$98 million lower than the prior year.
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BGS earnings from operations in 2019 increased by $161 million compared with 2018 primarily due to higher revenues, partially offset by less favorable performance and mix. Earnings from operations for 2019 also includes a divestiture gainTable of $395 million and a charge of $293 million related to our decision in the fourth quarter to retire the Aviall brand and trade name. The favorable impact of cumulative contract catch-up adjustments in 2019 was $21 million higher than the comparable period in the prior yearContents.
Backlog
BGS total backlog of $20,632$19,338 million at December 31, 20202022 decreased by 10%6% from $22,902$20,496 million at December 31, 2019,2021, primarily due to a reduction for commercial orders that,revenue recognized on contracts awarded in our assessment, no longer meet the accounting requirements of ASC 606 for inclusion in backlog.prior years.
Boeing Capital
Business Environment and Trends
BCC’s gross customer financing and investment portfolio at December 31, 20202022 totaled $1,974$1,549 million. A substantial portion of BCC’s portfolio is related tocomposed of customers that we believe have less than investment-grade credit. BCC’s portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft.
BCC provided customer financing of $14 million and $419$96 million during 20202022 and 2019.none during 2021. While we may be required to fund a number of new aircraft deliveries in 20212023 and/or provide refinancing for existing bridge debt, we expect alternative financing will be available at reasonable prices from broad and globally diverse sources.
Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of service. Approximately 7,3004,950 western-built commercial jet aircraft (29.4%(18.3% of current world fleet) were parked at the end of 2020,2022, including both in-production and out-of-production aircraft types. Of these parked aircraft, a larger portion are expected to be retired compared to the pre-COVID-19 period, which directly impacts the Company in terms of number of new aircraft deliveries and financing opportunities, the ability of existing customers to meet current payment obligations and the value of aircraft in its portfolio. We continue to work closely with our customers to mitigate the risk. At the end of 20192021 and 2018, 8.5%2020, 20.5% and 6.7%29.4% of the western-built commercial jet aircraft were parked. Aircraft valuations could decline if significant numbers of additional aircraft, particularly types with relatively few operators, are placed out of service. See Overview to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the impacts of COVID-19 on the airline industry environment.
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Results of Operations
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
RevenuesRevenues$261 $244 $274 Revenues$199 $272 $261 
Earnings from operationsEarnings from operations$63 $28 $79 Earnings from operations$29 $106 $63 
Operating marginsOperating margins24 %11 %29 %Operating margins15 %39 %24 %
Revenues
BCC segment revenues consist principally of lease income from equipment under operating lease, interest income from financing receivables and notes, and other income. BCC’s revenues in 2020 increased2022 decreased by $17$73 million compared with 2019 primarily due to gains on re-lease of assets. BCC’s revenues in 2019 decreased by $30 million compared with 20182021 primarily due to lower gains on the salere-lease of assets.
Earnings From Operations
BCC’s earnings from operations areis presented net of interest expense, provision for (recovery of) losses, asset impairment expense, depreciation on leased equipment and other operating expenses. In 2022, earnings from operations decreased by $77 million compared with 2021, primarily due to an increase in the allowance for losses on receivables as a result of the war in Ukraine and lower revenues. Earnings from operations in 20202021 increased by $35$43 million compared with 20192020 primarily due to higher revenues, lower asset impairment expensesprovision for losses, and lower interest expenses. Earnings from operations in 2019 decreased by $51 million compared with 2018 primarily due to lower revenues and higher asset impairment expenses.
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Financial Position
The following table presents selected financial data for BCC as of December 31:
(Dollars in millions)(Dollars in millions)20202019(Dollars in millions)20222021
Customer financing and investment portfolio, netCustomer financing and investment portfolio, net$1,961 $2,251 Customer financing and investment portfolio, net$1,494 $1,720 
Other assets, primarily cash and short-term investmentsOther assets, primarily cash and short-term investments402 535 Other assets, primarily cash and short-term investments460 462 
Total assetsTotal assets$2,363 $2,786 Total assets$1,954 $2,182 
Other liabilities, primarily deferred income taxes$392 $432 
Other liabilities, primarily income taxesOther liabilities, primarily income taxes$239 $347 
Debt, including intercompany loansDebt, including intercompany loans1,640 1,960 Debt, including intercompany loans1,425 1,525 
EquityEquity331 394 Equity290 310 
Total liabilities and equityTotal liabilities and equity$2,363 $2,786 Total liabilities and equity$1,954 $2,182 
Debt-to-equity ratioDebt-to-equity ratio5-to-15-to-1Debt-to-equity ratio4.9-to-14.9-to-1
BCC’s customer financing and investment portfolio at December 31, 20202022 decreased $226 million from December 31, 2019,2021, primarily due to $321 million of note payoffs and portfolio run-off.run-off, partially offset by new volume.
BCC enters into certain intercompany transactions, with Boeing, reflected in Unallocated items, eliminations and other, in the form of intercompany guarantees and other subsidies that mitigate the effects of certain credit quality or asset impairment issues on the BCC segment.
Leased aircraft with a carrying value of approximately $57 million are scheduled to be returned off lease during 2021. We are seeking to remarket these aircraft or have the leases extended.
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Liquidity and Capital Resources
Cash Flow Summary
(Dollars in millions)(Dollars in millions)(Dollars in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Net (loss)/earnings($11,941)($636)$10,460 
Net lossNet loss($5,053)($4,290)($11,941)
Non-cash itemsNon-cash items10,866 2,819 2,578 Non-cash items4,426 7,851 10,866 
Changes in working capital(17,335)(4,629)2,284 
Net cash (used)/provided by operating activities(18,410)(2,446)15,322 
Net cash used by investing activities(18,366)(1,530)(4,621)
Net cash provided/(used) by financing activities34,955 5,739 (11,722)
Changes in assets and liabilitiesChanges in assets and liabilities4,139 (6,977)(17,335)
Net cash provided/(used) by operating activitiesNet cash provided/(used) by operating activities3,512 (3,416)(18,410)
Net cash provided/(used) by investing activitiesNet cash provided/(used) by investing activities4,370 9,324 (18,366)
Net cash (used)/provided by financing activitiesNet cash (used)/provided by financing activities(1,266)(5,600)34,955 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents85 (5)(53)Effect of exchange rate changes on cash and cash equivalents(73)(39)85 
Net (decrease)/increase in cash & cash equivalents, including restricted(1,736)1,758 (1,074)
Net increase/(decrease) in cash & cash equivalents, including restrictedNet increase/(decrease) in cash & cash equivalents, including restricted6,543 269 (1,736)
Cash & cash equivalents, including restricted, at beginning of yearCash & cash equivalents, including restricted, at beginning of year9,571 7,813 8,887 Cash & cash equivalents, including restricted, at beginning of year8,104 7,835 9,571 
Cash & cash equivalents, including restricted, at end of yearCash & cash equivalents, including restricted, at end of year$7,835 $9,571 $7,813 Cash & cash equivalents, including restricted, at end of year$14,647 $8,104 $7,835 
Operating Activities Net cash usedprovided by operating activities was $18.4$3.5 billion during 2020,2022, compared with net cash used by operating activities of $2.4$3.4 billion during 2019 and net2021. The $6.9 billion improvement in cash provided by operating activities of $15.3 billion in 2018. The decrease in operating cash flows in 20202022 is primarily driven by our net loss in 2020 andimproved changes in working capital,assets and liabilities of $11.1 billion, partially offset by an increase in non-cash items. Non-cash items include the $6.5 billion reach-forward loss on the 777X program in 2020, which was recorded as a reduction to inventory. The year-over-year increase inlower non-cash items also reflects higher inventory write-downsof $3.4 billion and higher allowancesnet loss of $0.8 billion. Changes in assets and liabilities for expected credit losses in 2020. The2022 improved by $11.1 billion compared with 2021 primarily driven by favorable changes in working capital reflect increasesAccrued liabilities ($6.6 billion), Accounts payable ($4.6 billion) and Inventories ($1.5 billion), partially offset by a decrease in commercial airplane inventory due to the large number of undelivered aircraft in 2019 resulting from the 737 MAX grounding, and in 2020 due to the 737 MAX grounding, 787 production issues and COVID-19 impacts. Cash used by Advances and progress billings was $1.1 billion($2.4 billion) in 2020, as compared with $0.7 billion provided2022. The increase in Accrued liabilities is primarily driven by Advances and progress billings in 2019. The changes in working capital in 2020 also reflectthe accrued losses on BDS fixed-price development programs, lower accounts payable due to reductions in commercial purchases from suppliers and lower supply chain financing. Compensation payments to 737 MAX customers totaled $2.2in 2022, and a $0.7 billion during 2020 and $1.2 billion during 2019. The accrued liability for 737 MAX customer considerations at December 31, 2019 resulted
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payment in a $7.4 billion favorable change to working capital in 2019. The impacts2021 consistent with the terms of the COVID-19 pandemicDeferred Prosecution Agreement between Boeing and the 737 MAX grounding are expected to continue to have a significant negative impact on our operating cash flows during 2021.
The decrease in operating cash flows in 2019 compared to 2018 primarily reflected the impactsU.S. Department of the 737 MAX grounding resulting in lower earnings, higher inventory and lower advances and progress payments. In addition, compensation paymentsJustice. Concessions paid to 737 MAX customers of $1.2totaled $1.0 billion for disruption to their operations also reduced 2019 cash from operating activities. Cash used to fund inventory was $12.4and $2.5 billion during 2019 as2022 and 2021. Growth in Accounts Payable in 2022 is a source of cash while reductions in Accounts Payable in 2021 were a use of cash generally reflecting increases in production rates. Inventory improvements were driven by higher 737 MAX deliveries and resumption of 787 deliveries in 2022. Additionally, in 2022 and 2021 we continued to produce aircraft while deliveries were suspended.received income tax refunds of $1.5 billion and $1.7 billion. Cash provided by Advances and progress billings was $0.1 billion in 2022, as compared with $2.5 billion of cash provided in 2021. The $3.4 billion reduction in non-cash items in 2022 is primarily driven by the $3.5 billion reach-forward loss on the 787 program that was recorded in 2021. Net loss for 2022 was $5.1 billion compared with net loss of $4.3 billion in 2021. The $0.8 billion year-over-year increase in the net loss is primarily driven by the absence of an income tax benefit in 2022.
The reduction in cash used by operating activities in 2021 compared with 2020 is primarily driven by lower net loss and improved changes in assets and liabilities. Non-cash items in 2021 include the $3.5 billion reach-forward loss on the 787 program which was recorded as a reduction to inventory, as well as $1.2 billion of treasury shares issued to fund Company contributions to the 401(k) plan and $0.8 billion of share-based plans expense reflecting a one-time stock grant to most employees in lieu of 2021 salary increases.The changes in assets and liabilities reflect the significant increase in commercial aircraft inventory in 2020 driven by lower deliveries due to the COVID-19 pandemic and the 737 MAX grounding. In 2021, inventory growth slowed as the continued buildup of 787 aircraft caused by production issues and 777X inventory growth was partially offset by a decrease in 737 MAX inventory following the resumption of deliveries. Compensation payments to 737 MAX customers totaled $2.5 billion in 2021 and $2.2 billion in 2020. In the first quarter of 2021, we paid $0.7 billion consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S. Department of Justice. Additionally, in 2019,2021, we received income tax refunds of $1.7 billion. Cash provided by Advances and progress billings was $2.5 billion in 2021, as compared with $2.6Cash used by Advances and progress billings of $1.1 billion in 2018.2020.
At December 31, 2022 and 2021, Accounts payable included $2.5 billion and $2.3 billion payable to suppliers who have elected to participate in supply chain financing programs. Payables to suppliers who elected to participate in supply chain financing programs increased by $0.2 billion in 2022 and declined by $1.5 billion and $1.9 billion for the year ended December 31, 2020,in 2021 and increased by $2.6 billion and $0.6 billion for the same period in 2019 and 2018.2020. Supply chain financing is not material to our overall liquidity. The decline for the year ended December 31,declines in 2021 and 2020 waswere primarily due to reductions in commercial purchases from suppliers. The increase for the years ended December 31, 2019 and 2018 reflects a combination of higher purchases, an extension of payment terms with certain suppliers, and increased utilization of our supply chain financing programs.
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Investing Activities Cash provided by investing activities during 2022 was $4.4 billion, compared with cash provided by investing activities of $9.3 billion during 2021 and cash used by investing activities during 2020, 2019 and 2018 wasof $18.4 billion $1.5during 2020. The decrease in cash inflows in 2022 compared to 2021 is primarily due to $5.6 billion and $4.6 billion.of net proceeds from investments compared to $9.8 billion in 2021. The increase in cash outflowsinflows in 20202021 compared to 20192020 is primarily due to $17.4$27.1 billion of higher net contributions toproceeds from investments. The reduction in cash outflows in 2019 compared with 2018 is primarily due to acquisitions completed in the second half of 2018 and the timing of investments. Acquisitions net of cash acquired were $0.5 billion in 2019, primarily related to the acquisition of KLX. Proceeds from dispositions was $0.5 billion in 2019 as a result of the divestiture of two businesses. Capital expenditures totaled $1.2 billion in 2022, compared with $1.0 billion in 2021 and $1.3 billion in 2020, compared with $1.8 billion in 2019 and $1.7 billion 2018.2020. We expect capital expenditures in 20212023 to be relatively consistent with 2020. Net contributions to investments were $17.3 billionhigher than in 2020, compared with net proceeds from investments of $0.1 billion in 2019 and $0.3 billion in 2018.2022.
Financing Activities Cash providedused by financing activities was $1.3 billion during 2022, compared with $5.6 billion during 2021 and cash provided of $35.0 billion during 2020, compared with cash provided by financing activitiesin 2020. The decrease of $5.7 billion in 2019 and cash used by financing activities of $11.7 billion in 2018. The increase of $29.3$4.3 billion compared with 20192021 primarily reflects higher net debt repayments in 2021. During 2021, debt repayments net of new borrowings lower share repurchases, and lower dividend payments. Cash provided by financing activities increased $17.5were $5.6 billion, compared with 2018 primarily due to higher net borrowings and lower share repurchases,$13.8 billion of repayments of our two-year delayed draw term loan credit agreement, partially offset by higher dividend payments$9.8 billion of fixed rate senior notes issued in 2019.the first quarter of 2021. During the twelve monthsyear ended December 31, 2020, new borrowings net of repayments were $36.3 billion, compared with $13.2 billion and $1.4 billion in the same period in 2019 and 2018. The increase in 2020 is primarily due to $29.9 billion of fixed rate senior notes issued in 2020 and $13.8 billion of new borrowings under a two-year delayed draw term loan agreement entered into in the first quarter of 2020. For further discussion see Liquidity Matters in Note 1 to our Consolidated Financial Statements.
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At December 31, 20202022 and 2019 the recorded balance of2021 debt was $63.6balances totaled $57.0 billion and $27.3$58.1 billion, of which $1.7$5.2 billion and $7.3$1.3 billion were classified as short-term. This included $1.6$1.4 billion and $2.0$1.5 billion of debt attributable to BCC at December 31, 20202022 and 2019,2021, of which $0.9$0.2 billion and $0.5$0.3 billion were classified as short-term.
During the yearyears ended December 31, 2022, 2021 and 2020, we did not repurchase any shares through our open market share repurchase program compared to repurchases of 6.9 million and 26.1 million shares in 2019 and 2018 totaling $2.7 billion and $9.0 billion.program. Share repurchases under this plan hadprogram have been suspended since April 2019. In March 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock.stock in the open market. We had 0.60.2 million, 0.60.3 million and 0.70.6 million shares transferred to us from employee tax withholdings in 2022, 2021 and 2020, 2019, and 2018, respectively. During the twelve months ended December 31, 2020 we paid dividends of $1.2 billion compared with $4.6 billion and $3.9 billion in the same period in 2019 and 2018. In March 2020, we announced the Company announced thatsuspension of our dividend will be suspended until further notice. In December 2018As a result, we increased our quarterly dividend from $1.71 to $2.055, which resulteddid not pay any dividends in $684 million of higher dividend payments in 20192022 and 2021 compared with 2018.$1.2 billion paid in 2020.
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Capital Resources
The following table summarizes certain cash requirements for known contractual and other obligations as of December 31, 2022, and the estimated timing thereof. See Note 12 for future operating lease payments.
(Dollars in millions)CurrentLong-termTotal
Long-term debt (including current portion)$5,197 $52,338 $57,535 
Interest on debt2,266 31,397 33,663 
Pension and other postretirement519 8,133 8,652 
Purchase obligations62,025 59,515 121,540 
737 MAX customer concessions and consideration(1)
100 600 700 
Capital Resources The impacts of the COVID-19 pandemic and 737 MAX grounding are having a significant negative impact on our liquidity and ongoing operations and creating significant uncertainty. We have and are continuing to take significant actions to manage and preserve our liquidity.(1)    For further discussion, see Liquidity Matters in Note 113 to our Consolidated Financial Statements.
We expect to be able to fund our cash requirements through cash and short-term investments and cash provided by operations, as well as continued access to capital markets. At December 31, 2020,2022, we had $7.8$14.6 billion of cash, and $17.8$2.6 billion of short term investments. At December 31, 2020, we had $9.5short-term investments, and $12.0 billion of unused borrowing capacity on revolving credit line agreements. In the third quarter of 2022, we entered into a $5.8 billion 364-day revolving credit agreement expiring in August 2023, a $3 billion three-year revolving credit agreement expiring in August 2025, and amended our $3.2 billion five-year revolving credit agreement, which expires in October 2024, primarily to incorporate a LIBOR successor rate. The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings one year beyond the aforementioned expiration date. We anticipate that these credit lines will remain undrawn and primarily serve as backupback-up liquidity to support our general corporate borrowing needs. The $9.5 billion of unused borrowing capacity includes a $3.1 billion 364-day revolving credit facility, which expires in October 2021. We had no commercial paper borrowings at December 31, 2020, compared to commercial paper borrowings of $6.1 billion and $1.9 billion at December 31, 2019 and 2018, which were supported by unused commitments under the revolving credit agreement.
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Our debt balances have increased significantly since 2019, and we are continuing to actively manage our liquidity.Scheduled principal payments for debt for the next five years are as follows:
20212022202320242025
Debt$1,630 $14,976 $3,776 $2,001 $4,301 
Our increased debt balance has also resulted in downgrades to our credit ratings.ratings in 2020, and our ratings remained unchanged in 2022 and 2021. We expect to be able to access capital markets when we require additional funding in order to pay off existing debt, address further impacts to our business related to market developments, fund outstanding financing commitments or meet other business requirements. A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt. These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings, including impacts described above related to the COVID-19 pandemic and/or associated changes in demand for our products and services. These risks will be particularly acute if we are subject to further credit rating downgrades. The occurrence of any or all of these events may adversely affect our ability to fund our operations and financing or contractual commitments.
Any future borrowings may affect our credit ratings and are subject to various debt covenants. At December 31, 2020,2022, we were in compliance with the covenants for our debt and credit facilities. The most restrictive covenants include a limitation on mortgage debt and sale and leaseback transactions as a percentage of consolidated net tangible assets (as defined in the credit agreements), and a limitation on consolidated debt as a percentage of total capital (as defined)defined in the credit agreements). When considering debt covenants, we continue to have substantial borrowing capacity.
Customer financing commitments totaled $11.5 billion
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Pension and $13.4 billion at December 31, 2020 and 2019. The decrease primarily relates to financing commitment amendments and expirations. We anticipate that we will not be required to fund a significant portionOther Postretirement Benefits Pension cash requirements are based on an estimate of our financing commitments asminimum funding requirements, pursuant to Employee Retirement Income Security Act (ERISA) regulations, although we continuemay make additional discretionary contributions. Estimates of other postretirement benefits are based on both our estimated future benefit payments and the estimated contributions to work with third party financiers to provide alternative financing to customers. Historically, we have not been required to fund significant amounts of outstanding commitments. However, there can be no assurancesplans that we will not be required to fund greater amounts than historically required.are funded through trusts.
At December 31, 20202022 and 2019,2021, our pension plans were $13.7$5.3 billion and $15.9$7.8 billion underfunded as measured under GAAP.Generally Accepted Accounting Principles in the United States of America (GAAP). On an Employee Retirement Income Security Act (ERISA)ERISA basis our plans are more than 100% funded at December 31, 2020.2022. We do not expect to make significant contributions to our pension plans in 2021.2023. We may be required to make higher contributions to our pension plans in future years.
In the fourth quarter of 2020, we contributed $3 billion of our common stock to our pension fund. In the fourth quarter of 2020, we also began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans for the foreseeable future, which we estimate will conserve approximately $1 billion of cash over the next 12 months.future. Under this approach, common stock is contributed to our 401(k) plans following each pay period. We expect this measure toThis further enableenables the Company to conserve cash. We have retained an independent fiduciary to manage and liquidate stock contributed to these plans at its discretion.
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Contractual Obligations
The following table summarizes our known obligations to make future payments pursuant to certain contracts as of December 31, 2020, and the estimated timing thereof.
(Dollars in millions)TotalLess
than 1
year
1-3
years
3-5
years
After 5
years
Long-term debt (including current portion)$63,963 $1,630 $18,752 $6,302 $37,279 
Interest on debt37,614 2,271 4,274 3,852 27,217 
Pension and other postretirement cash requirements5,077 610 1,163 1,073 2,231 
Finance lease obligations228 68 84 20 56 
Operating lease obligations1,781 307 432 240 802 
Purchase obligations not recorded on the Consolidated Statements of Financial Position93,928 36,540 29,933 16,367 11,088 
Purchase obligations recorded on the Consolidated Statements of Financial Position19,621 19,502 99 13 
Total contractual obligations (1)
$222,212 $60,928 $54,737 $27,861 $78,686 
(1)    Excludes income tax matters. As of December 31, 2020, we have uncertain tax positions of $966 million. We are not able to reasonably estimate the timing of future cash flows related to uncertain tax positions. For further discussion of income taxes, see Note 4 to our Consolidated Financial Statements.
Pension and Other Postretirement Benefits Pension cash requirements are based on an estimate of our minimum funding requirements, pursuant to ERISA regulations, although we may make additional discretionary contributions. Estimates of other postretirement benefits are based on both our estimated future benefit payments and the estimated contributions to plans that are funded through trusts.
Purchase Obligations Purchase obligations represent contractual agreements to purchase goods or services that are legally binding; specify a fixed, minimum or range of quantities; specify a fixed, minimum, variable or indexed price provision; and specify approximate timing of the transaction. Purchase obligations include amounts recorded as well as amounts that are not recorded on the Consolidated Statements of Financial Position.
Purchase Obligations Not Recorded on the Consolidated Statements of Financial PositionPurchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, tooling costs, electricity and natural gas contracts, property, plant and equipment, customer financing equipment and other miscellaneous production related obligations. The most significant obligation relates to inventory procurement contracts. We have entered into certain significant inventory procurement contracts that specify determinable prices and quantities, and long-term delivery timeframes. In addition, we purchase raw materials on behalf of our suppliers. These agreements require suppliers and vendors to be prepared to build and deliver items in sufficient time to meet our production schedules. The need for such arrangements with suppliers and vendors arises from the extended production planning horizon for many of our products. A significant portion of these inventory commitments is supported by firm contracts with customers and/or has historically resulted in settlement through reimbursement from customers for penalty payments to the supplier should the customer not take delivery. These amounts are also included in our forecasts of costs for program and contract accounting. Some inventory procurement contracts may include escalation adjustments. In these limited cases, we have included our best estimate of the effect of the escalation adjustment in the amounts disclosed in the table above.
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Purchase Obligations Recorded on the Consolidated Statements of Financial PositionPurchase obligations recorded on the Consolidated Statements of Financial Position primarily include accounts payable and certain other current and long-term liabilities including accrued compensation.
Industrial Participation AgreementsWe have entered into various industrial participation agreements with certain customers outside of the U.S. to facilitate economic flow back and/or technology or skills transfer to their businesses or government agencies as the result of their procurement of goods and/or services from us. These commitments may be satisfied by our local operations there, placement of direct work or vendor orders for supplies, opportunities to bid on supply contracts, transfer of technology or other forms of assistance. However, in certain cases, our commitments may be satisfied through other parties (such as our vendors) who purchase supplies from our non-U.S. customers. In certain cases, penalties could be imposed if we do not meet our industrial participation commitments. During 2020,2022, we incurred no such penalties. As of December 31, 2020,2022, we havehad outstanding industrial participation agreements
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totaling $26.4$24.8 billion that extend through 2034. Purchase order commitments associated with industrial participation agreements are included in purchase obligations in the table above.obligations. To be eligible for such a purchase order commitment from us, a non-U.S. supplier must have sufficient capability to meet our requirements and must be competitive in cost, quality and schedule.
Off-Balance Sheet Arrangements We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 14 to our Consolidated Financial Statements.
Commercial Commitments
The following table summarizes our commercial commitments outstanding as of December 31, 2020.2022.
(Dollars in millions)(Dollars in millions)Total Amounts
Committed/Maximum
Amount of Loss
Less than
1 year
1-3
years
4-5
years
After 5
years
(Dollars in millions)Total Amounts
Committed/Maximum
Amount of Loss
Less than
1 year
1-3
years
4-5
years
After 5
years
Standby letters of credit and surety bondsStandby letters of credit and surety bonds$4,238 $1,680 $1,621 $735 $202 Standby letters of credit and surety bonds$5,070 $3,859 $1,036 $10 $165 
Commercial aircraft financing commitmentsCommercial aircraft financing commitments11,512 2,329 4,061 3,504 1,618 Commercial aircraft financing commitments16,105 3,084 5,989 4,075 2,957 
Total commercial commitmentsTotal commercial commitments$15,750 $4,009 $5,682 $4,239 $1,820 Total commercial commitments$21,175 $6,943 $7,025 $4,085 $3,122 
Commercial aircraft financing commitments include commitments to provide financing related to aircraft on order, under option for deliveries or proposed as part of sales campaigns or refinancing with respect to delivered aircraft, based on estimated earliest potential funding dates. Based on historical experience, weCustomer financing commitments totaled $16.1 billion and $12.9 billion at December 31, 2022 and 2021. The increase relates to new financing commitments. We anticipate that we will not be required to fund a significant portion of our financing commitments as we continue to work with third party financiers to provide alternative financing to customers. Historically, we have not been required to fund significant amounts of outstanding commitments. However, there can be no assurances that we will not be required to fund greater amounts than historically required. See Note 13 to our Consolidated Financial Statements.
Contingent Obligations
We have significant contingent obligations that arise in the ordinary course of business, which include the following:
Legal Various legal proceedings, claims and investigations are pending against us. Legal contingencies are discussed in Note 21 to our Consolidated Financial Statements.
Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $565$752 million at December 31, 2020.2022. For additional information, see Note 13 to our Consolidated Financial Statements.
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Off-Balance Sheet Arrangements
We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 14 to our Consolidated Financial Statements.
Non-GAAP Measures
Core Operating Earnings,Loss, Core Operating Margin and Core EarningsLoss Per Share
Our Consolidated Financial Statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP)GAAP which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Core operating earnings, core operating margin and core earnings per share exclude the FAS/CAS service cost adjustment. The FAS/
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CAS service cost adjustment represents the difference between the FASFinancial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core earnings per share excludes both the FAS/CAS service cost adjustment and non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to BCA and certain BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid.
The Pension FAS/CAS service cost adjustmentadjustments recognized in (loss)/earningsLoss from operations during 2020 was a benefitwere benefits of $849 million in 2022, $882 million in 2021 and $1,024 million largely consistent with a benefit of $1,071 million in 20192020. The lower benefits in 2022 and $1,005 million2021 were primarily due to reductions in 2018.allocated pension cost year over year. The non-operating pension expense included in Other income, net was a benefit of $881 million in 2022, $528 million in 2021 and $340 million in 2020, $374 million in 2019 and $143 million in 2018.2020. The higher benefits in 2020, 2019, and 2018 reflect expected returns in excess of interest cost and2022 were primarily due to lower amortization of net actuarial losses. 
losses and a settlement loss that was recorded in 2021. For further discussion of pension and other postretirement costs, see the Management’s Discussion and Analysis on pages 30 - 31page 24 of this Form 10-K and see Note 22 to our Consolidated Financial Statements.
Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as unallocated pension and other postretirement benefit cost primarily represent costs driven by market factors and costs not allocable to U.S. government contracts.
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Reconciliation of GAAPNon-GAAP Measures to Non-GAAPGAAP Measures
The table below reconciles the non-GAAP financial measures of core operating earnings,loss, core operating marginmargins and core earningsloss per share with the most directly comparable GAAP financial measures of earningsloss from operations, operating margins and diluted earningsloss per share.
(Dollars in millions, except per share data)(Dollars in millions, except per share data)(Dollars in millions, except per share data)
Years ended December 31,
Years ended December 31,
202020192018
Years ended December 31,
202220212020
RevenuesRevenues$58,158 $76,559 $101,127 Revenues$66,608 $62,286 $58,158 
(Loss)/earnings from operations, as reported($12,767)($1,975)$11,987 
Loss from operations, as reportedLoss from operations, as reported($3,547)($2,902)($12,767)
Operating marginsOperating margins(22.0)%(2.6)%11.9 %Operating margins(5.3)%(4.7)%(22.0)%
Pension FAS/CAS service cost adjustment(1)
Pension FAS/CAS service cost adjustment(1)
($1,024)($1,071)($1,005)
Pension FAS/CAS service cost adjustment(1)
($849)($882)($1,024)
Postretirement FAS/CAS service cost adjustment(1)
Postretirement FAS/CAS service cost adjustment(1)
($359)($344)($322)
Postretirement FAS/CAS service cost adjustment(1)
(294)(291)(359)
FAS/CAS service cost adjustment(1)
FAS/CAS service cost adjustment(1)
($1,383)($1,415)($1,327)
FAS/CAS service cost adjustment(1)
($1,143)($1,173)($1,383)
Core operating (loss)/earnings (non-GAAP)($14,150)($3,390)$10,660 
Core operating loss (non-GAAP)Core operating loss (non-GAAP)($4,690)($4,075)($14,150)
Core operating margins (non-GAAP)Core operating margins (non-GAAP)(24.3)%(4.4)%10.5 %Core operating margins (non-GAAP)(7.0)%(6.5)%(24.3)%
Diluted (loss)/earnings per share, as reported($20.88)($1.12)$17.85 
Diluted loss per share, as reportedDiluted loss per share, as reported($8.30)($7.15)($20.88)
Pension FAS/CAS service cost adjustment(1)
Pension FAS/CAS service cost adjustment(1)
($1.80)($1.89)($1.71)
Pension FAS/CAS service cost adjustment(1)
(1.43)(1.50)(1.80)
Postretirement FAS/CAS service cost adjustment(1)
Postretirement FAS/CAS service cost adjustment(1)
($0.63)($0.61)($0.55)
Postretirement FAS/CAS service cost adjustment(1)
(0.49)(0.49)(0.63)
Non-operating pension expense(2)
Non-operating pension expense(2)
($0.60)($0.66)($0.24)
Non-operating pension expense(2)
(1.47)(0.91)(0.60)
Non-operating postretirement expense(2)
Non-operating postretirement expense(2)
$0.03 $0.19 $0.17 
Non-operating postretirement expense(2)
(0.10) 0.03 
Provision for deferred income taxes on adjustments (3)
Provision for deferred income taxes on adjustments (3)
$0.63 $0.62 $0.49 
Provision for deferred income taxes on adjustments (3)
0.73 0.61 0.63 
Core (loss)/earnings per share (non-GAAP)($23.25)($3.47)$16.01 
Core loss per share (non-GAAP)Core loss per share (non-GAAP)($11.06)($9.44)($23.25)
Weighted average diluted shares (in millions)Weighted average diluted shares (in millions)569.0 566.0 586.2 Weighted average diluted shares (in millions)595.2 588.0 569.0 
(1)FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. This adjustment is excluded from Core operating (loss)/earningsloss (non-GAAP).
(2)Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, net and are excluded from Core (loss)/earningsloss per share (non-GAAP).
(3)The income tax impact is calculated using the U.S. corporate statutory tax rate.
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Critical Accounting Policies & Estimates
Accounting for long-term contractsLong-term Contracts
Substantially all contracts at BDS and certain contracts at BGS are long-term contracts. Our long-term contracts typically represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods and/or services and the significant service of integration that we provide.
Accounting for long-term contracts involves a judgmental process of estimating the total sales, costs, and profit for each performance obligation. Cost of sales is recognized as incurred, and revenue is determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales.
Due to the size, duration and nature of many of our long-term contracts, the estimation of total sales and costs through completion is complicated and subject to many variables. Total sales estimates are based on negotiated contract prices and quantities, modified by our assumptions regarding contract options, change orders, incentive and award provisions associated with technical performance, and price adjustment clauses (such as inflation or index-based clauses). The majority of these long-term contracts are with the U.S. government where the price is generally based on estimated cost to produce the product or service plus profit. Federal Acquisition Regulations provide guidance on the types of cost that will be reimbursed in establishing contract price. Total cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends, business base and other economic projections. Factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, COVID-19 disruptions, asset utilization, and anticipated labor agreements.

agreements, and lingering impacts of COVID-19.
Revenue and cost estimates for all significant long-term contract performance obligations are reviewed and reassessed quarterly. Changes in these estimates could result in recognition of cumulative catch-up adjustments to the performance obligation’s inception to date revenues, cost of sales and profit in the period in which such changes are made. Changes in revenue and cost estimates could also result in a reach-forward loss or an adjustment to a reach-forward loss which would be recorded immediately in earnings. For the years ended December 31, 2020, 2019 and 2018 net unfavorableNet cumulative catch-up adjustments including reach-forward losses,for changes in estimated revenues and costs at completion across all long-term contracts, decreased Earningsincluding the impact of increases in estimated losses on unexercised options, increased Loss from operations by $5,253 million, $880 million and $942 million $111 millionin 2022, 2021 and $190 million,2020, respectively. The cumulative catch-up adjustments in 20202022 were primarily due to reach-forward losses incurredrecognized on the VC-25B, KC-46A Tanker, program.

MQ-25, Commercial Crew and T-7A Red Hawk programs. These are all fixed-price development programs, and there is ongoing risk that similar losses may have to be recognized in future periods on these and/or other programs.
Due to the significance of judgment in the estimation process described above, it is likely that materially different earnings could be recorded if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions/estimates, internal and supplier performance, inflationary trends, or other circumstances may adversely or positively affect financial performance in future periods. If the combined gross marginmargins for allour profitable long-term contract performance obligations for all of 2020contracts had been estimated to be higher or lower by 1%, during 2022, it would have increased or decreased pre-tax income for the year by approximately $330$300 million. In addition, a number of our fixed price development contracts are in a reach-forward loss position. Changes to estimated losses are recorded immediately in earnings.
Program Accounting
Program accounting requires the demonstrated ability to reliably estimate the relationship of sales torevenues, costs and gross profit margin for the defined program accounting quantity. A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for
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delivery under existing and anticipated contracts. The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates of the revenue and cost of existing and
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anticipated contracts. For each program, the amount reported as cost of sales is determined by applying the estimated cost of sales percentage for the total remaining program to the amount of sales recognized for airplanes delivered and accepted by the customer.estimates.
Factors that must be estimated include program accounting quantity, sales price, labor and employee benefit costs, material costs, procured part costs, major component costs, overhead costs, program tooling and other non-recurring costs, and warranty costs. Estimation of the accounting quantity for each program takes into account several factors that are indicative of the demand for the particular program, such as firm orders, letters of intent from prospective customers and market studies. Total estimated program sales are determined by estimating the model mix and sales price for all unsold units within the accounting quantity, added together with the sales prices for all undelivered units under contract. The sales prices for all undelivered units within the accounting quantity include an escalation adjustment for inflation that is updated quarterly. Cost estimates are based largely on negotiated and anticipated contracts with suppliers, historical performance trends, and business base and other economic projections. Factors that influence these estimates include production rates, internal and subcontractor performance trends, learning curve, change incorporation, regulatory requirements in connection with certification, flight test and certification schedules, performance or reliability issues involving completed aircraft, customer and/or supplier claims or assertions, asset utilization, anticipated labor agreements, COVID-19 disruptions, and inflationary or deflationary trends.trends, and lingering impacts of COVID-19.
To ensure reliability in our estimates, we employ a rigorous estimating process that is reviewed and updated on a quarterly basis. This includes reassessing the accounting quantity. Changes in estimates of program gross profit margins are normally recognized on a prospective basis; however, when estimated costs to complete a program plus costs already included in inventory exceed estimated revenues from undelivered units in the accounting quantity,program, a loss provision is recorded in the current period for the estimated loss on all undelivered units in the accounting quantity.

The program method of accounting allocates tooling and other non-recurring and production costs over the accounting quantity for each program. Because of the higher unit production costs experienced at the beginning of a new program and substantial investment required for initial tooling and other non-recurring costs, new commercial aircraft programs, typically have lower initial margins than established programs and a higher risk for reach-forward loss. Actual costs incurred for earlier units in excess of the estimated average cost of all units in the program accounting quantity are included within program inventory as deferred production costs. Deferred production, unamortized tooling and other non-recurring costs are expected to be fully recovered when all units in the accounting quantity are delivered as the expected unit cost for later deliveries is below the estimated average cost as learning curve and other improvements are realized.
Wenow anticipate that the first 777X delivery will occur in late 2023. We also recorded a $6.5 billion reach-forward loss on the 777X program in the fourth quarter of 2020. The revised schedule and the reach-forward loss reflect a number of factors, including an updated assessment of global certification requirements informed by continued discussions with regulators and resulting in a management decision to make modifications to the aircraft’s design, an updated assessment of COVID-19 impacts on market demand, and discussions with our customers with respect to aircraft delivery timing. These factors resulted in adjustments to production rates and the program accounting quantity, increased change incorporation costs, and associated customer and supply chain impacts.
Absent changes in the estimated revenues or costs, deliveries which are expected to begin in 2023 will be recorded at zero margin.period. Reductions to the estimated loss are included in subsequent periods are spread over allthe gross profit margin for undelivered units in the accounting quantity whereas increases to the estimated loss are recorded immediately.as an earnings charge in the period in which the loss is determined.
The 767, 777X, and 787 programs had near break-even or single digit margins at December 31, 2022. Adverse changes to the revenue and/or cost estimates for these programs could result in earnings charges in future periods.
777X Program The 777X program had near break-even gross margins at December 31, 2022. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on ourdisruption due to labor instability and supply chain and customers,disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors
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could result in additional reach-forward losses on the 777X program in future periods, which may be material.
Due to787 Program During the impactsfourth quarter of COVID-192021, we recorded a loss of $3.5 billion on our customers as well as production issues and associated rework, the 787 program has near breakeven gross margins at December 31, 2020. The margins reflect reductions inprimarily due to rework driving longer delivery delays than were previously expected and associated customer considerations. During the production rate andfourth quarter of 2022, we increased the 787 program accounting quantity during 2020. Ifby 100 units due to the program’s normal progress of obtaining additional orders and delivering aircraft. The increase in the accounting quantity improved the program’s profit margin.
Our program revenue and cost assumptions reflect our current best estimate. However, if we are required to further reduce the accounting quantity and/or production rates, experience further delivery delays, incur additional customer considerations, or experience higher than anticipated costs or delays addressing production issues and associated rework, or other factors that could result in lower margins, the 787 program could record a reach-forward loss in future periods which may be material.
The 747 and 767 programs also have near breakeven gross margins at December 31, 2020. If we are unable to mitigate risks associated with these programs, or if our assumptions with respect to items such as pricing, cost, accounting quantity or future production rates were to change, we could be required to record reach-forwardadditional losses in future periods, which may be material.
737 MAX Grounding
In 2019, following two fatal 737 MAX accidents, the Federal Aviation Administration (FAA) and non-U.S. civil aviation authorities issued orders suspending commercial operations of 737 MAX aircraft. Deliveries of the 737 MAX were suspended following these orders. Deliveries resumed in late 2020 following rescission by the FAA of its grounding order.
Multiple legal actions have been filed against us as a result of the accidents. In addition, we are fully cooperating with U.S. government investigations related to the accidents and the 737 MAX program, including an investigation by the Securities and Exchange Commission, the outcome of which may be material. On January 6, 2021, we entered into a Deferred Prosecution Agreement with the U.S. Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the FAA. Other than with respect to the U.S. Department of Justice, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the lawsuits, investigations and inquiries related to the 737 MAX.
In the preparation of our financial statements, we have made assumptions regarding outcomes of accident investigations and other government inquiries, timing and conditions of return to service, the timing of future 737 production rate increases, supplier readiness to support production rate changes, timing and sequence of future customer deliveries as well as outcomes of negotiations with customers impacted by the grounding. We have also made significant assumptions regarding estimated costs expected to be incurred in 2021 that should be included in program inventory and those costs that should be expensed when incurred as abnormal production costs. While these assumptions reflect our best estimate at this time, they are highly uncertain and significantly affect the estimates inherent in our financial statements.
In December 2020, we delivered 27 aircraft, in compliance with the FAA regulatory requirements. We have assumed that the remaining non-U.S. regulatory approvals will occur and enable deliveries during the first half of 2021. We have approximately 425 airplanes in inventory as of December 31, 2020. A number of customers have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory. We now expect to deliver about half of the 737 MAX aircraft in inventory by the end of 2021. In the event that we are unable to resume aircraft deliveries in non-U.S. jurisdictions consistent with our assumptions of regulatory approval timing, our expectation of delivery timing could be impacted.
Due to the grounding and associated suspension of 737 MAX deliveries, we temporarily suspended 737 MAX production beginning in January 2020. We resumed early stages of 737 MAX production in May 2020 and continued to produce at low rates through the end of 2020.
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In addition, we reduced the number of aircraft included in the accounting quantity by 400 units in the first quarter of 2020 as a result of reductions to planned production rates due to COVID-19 driven market uncertainties.As we are producing at abnormally low production rates in 2020 and 2021, we expect to incur approximately $5.0 billion of abnormal production costs that are being expensed as incurred. The slowdown in the planned production rate ramp-up increased expected abnormal costs however this increase was offset by adjustments to the determination of the normal production level due to COVID-19 impacts on customer demand, as well as cost reduction activities, including significant reductions in employment levels. We expensed approximately $2.6 billion of abnormal production costs during the year ended December 31, 2020.
In addition to impacts related to the 737 MAX accidents and subsequent grounding, the 737 program continues to be significantly impacted by the COVID-19 pandemic and its effect on aircraft demand. These impacts have resulted in lower production and delivery rate assumptions. We currently expect to gradually increase the production rate to 31 per month by early 2022. We currently assume that we will implement further gradual production rate increases in subsequent periods based on market demand. The ongoing impacts of COVID-19 on market demand have also created significant uncertainty around the timing of deliveries of 737 MAX aircraft in inventory. We may need to recognize additional costs associated with remarketing and/or reconfiguring aircraft in inventory, which may reduce revenue and/or earnings in future periods.
We are working with our customers to minimize the impact to their operations from grounded and undelivered aircraft. We continue to reassess the liability for estimated potential concessions and other considerations to customers on a quarterly basis. This reassessment includes updating estimates to reflect revisions to return to service, delivery and production rate assumptions driven by timing of regulatory approvals, as well as latest information based on engagements with 737 MAX customers. The remaining liability of $5.5 billion at December 31, 2020 represents our current best estimate of future concessions and other considerations to customers, and is necessarily based on a series of assumptions. It is subject to change in future quarters as negotiations with customers mature and timing and conditions of return to service are better understood.
Our assumptions reflect our current best estimate, but actual timing and conditions of return to service and resumption of deliveries could differ from this estimate, the effect of which could be material. We are unable at this time to reasonably estimate potential future additional financial impacts or a range of loss, if any, due to continued uncertainties related to the timing and conditions of return to service, uncertainties related to the impacts of COVID-19 on our operations, supply chain and customers, future changes to the production rate, supply chain impacts, and/or the results of negotiations with particular customers. Any such impacts, including any changes in our estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows. For example, we expect that, in the event that we are unable to resume aircraft deliveries in non-U.S. jurisdictions consistent with our assumptions, the continued absence of revenue, earnings, and cash flows associated with 737 MAX deliveries would continue to have a material impact on our operating results. In the event that future production rate increases occur at a slower rate or take longer than we are currently assuming we expect that the growth in inventory and other cash flow impacts associated with production would decrease. However, while any prolonged production suspension or delays in planned production rate increases could mitigate the impact on our liquidity, it could significantly increase the overall expected costs to produce aircraft included in the accounting quantity, which would reduce 737 program margins and/or increase abnormal production costs in the future.
Goodwill Impairments
We test goodwill for impairment by performing a qualitative assessment or quantitative test. If we choose to perform a qualitative assessment, we evaluate economic, industry and company-specific factors as an initial step in assessing the fair value of operations. If we determine it is more likely than
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not that the carrying value of the net assets is more than the fair value of the related operations, then a quantitative test is performed; otherwise, no further testing is required. For operations where the quantitative test is used, we compare the carrying value of net assets to the estimated fair value of the related operations. If the fair value is determined to be less than carrying value, the shortfall up to the carrying value of the goodwill represents the amount of goodwill impairment.
We generally estimate the fair values of the related operations using a combination of discounted cash flows and market-based valuation methodologies such as comparable public company trading values. Forecasts of future cash flows are based on our best estimate of future sales, operating costs, and changes in working capital. These forecasts reflect existing firm orders, expected future orders, expected production rates and delivery profiles, contracts with suppliers, labor agreements, and general market conditions. Changes in these forecasts could significantly change the amount of impairment recorded, if any. The cash flow forecasts are adjusted by an appropriate discount rate derived from our market capitalization plus a suitable control premium at the date of evaluation. Therefore, changes in the stock price may also affect the amount of impairment recorded, if any.
We completed our annual assessment of goodwill as of April 1, 2020 and determined that there was no impairment of goodwill.
As a result of the continuing significant adverse impacts of the COVID-19 pandemic on our Commercial Airplanes and Commercial Services businesses, we concluded it is a triggering event for testing whether goodwill recorded by our Commercial Airplanes and Commercial Services reporting units is impaired. At December 31, 2020, Commercial Airplanes has $1,316 million of goodwill and Commercial Services has $3,087 million. We performed a quantitative test and determined the fair values of our Commercial Airplane and Commercial Services reporting units substantially exceeded their carrying values as of December 31, 2020. As of December 31, 2020, we also estimated the fair values of our other reporting units significantly exceeded their corresponding carrying values.
We will continue to monitor the impacts of the COVID-19 pandemic in future quarters. Changes in our forecasts, discount rates, or decreases in the value of our common stock could cause book values to exceed their fair values which may result in goodwill impairment charges in future periods.
Pension Plans
Many of our employees have earned benefits under defined benefit pension plans. Nonunion and theThe majority of union employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan in 2016. Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.plan. Accounting rules require an annual measurement of our projected obligation and plan assets. These measurements are based upon several assumptions, including the discount rate and the expected long-term rate of asset return. Future changes in assumptions or differences between actual and expected outcomes can significantly affect our future annual expense, projected benefit obligation and Shareholders’ equity.
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The projected benefit obligation is sensitive to discount rates. The projected benefit obligation would decrease by $2,591$1,270 million or increase by $2,930$1,415 million if the discount rate increased or decreased by 25 basis points. A 25 basis point change in the discount rate would not have a significant impact on pension cost. However, net periodic pension cost is sensitive to changes in the expected long-term rate of asset return. A decrease or increase of 25 basis points in the expected long-term rate of asset return would have increased or decreased 20202022 net periodic pension cost by $145$158 million. See Note 16 of the Notes to our Consolidated Financial Statements, which includes the discount rate and expected long-term rate of asset return assumptions for the last three years.
Deferred Income Taxes – Valuation Allowance
The Company hashad deferred income tax assets of $11,600$12,301 million at December 31, 2020,2022 that can be used in future years to offset taxable income and reduce income taxes payable. The Company hashad deferred income tax liabilities of $9,430$9,306 million at December 31, 2020,2022 that will partially offset deferred income tax assets and result in higher taxable income in future years and increase income taxes payable. Tax law determines whether future reversals of temporary differences will result in taxable and deductible amounts that offset each other in future years. The particular years in which temporary differences result in taxable or deductible amounts generally are determined by the timing of the recovery of the related asset or settlement of the related liability. The deferred income tax assets and liabilities relate primarily to U.S. federal and state tax jurisdictions.
On a quarterly basis, we assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of such assets will not be realized.
This assessment which is completed on a taxing jurisdiction basis, takes into account both positive and negative evidence. A recent history of financial reporting losses is heavily weighted as a source of objectively verifiable negative evidence. Cumulative pre-tax losses in the three-year period ending with the current quarter is consideredDue to be significant negative evidence regarding future profitability. If cumulative pre-tax losses adjusted for non-recurring items result in positive normalized earnings that would be considered an objectively verifiable source of positive evidence of the ability of the company to generate positive earnings in the future. When there is aour recent history of operating losses, and negative normalizedwe determined we could not include future projected earnings and a return to operating profitability has not yet been demonstrated, we cannot rely on projections of future earnings for purposes of assessing recoverability ofin our deferred tax assets. In such cases,analysis. Rather, we use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. The selection of methodologies and assessment of when temporary differences will result in taxable or deductible amounts involves significant management judgment and is inherently complex and subjective. We believe that the methodologies we use are reasonable and can be replicated on a consistent basis in future periods.
As described above, a recent history of financial reporting losses is heavily weighted as a source of objectively verifiable negative evidence of the Company’s ability to generate future taxable income to recover deferred tax assets. During 2019 and 2020 the Company generated significant losses and in the fourth quarter of 2020 the Company reached a three-year cumulative pre-tax loss position. We expect cumulative three-year losses to grow in 2021 as record earnings in 2018 are replaced by 2021 results. We also normalized earnings and other comprehensive income for certain non-recurring items and expect to reach a three-year cumulative loss position in 2021 as record earnings in 2018 are replaced with 2021 results. For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.
Deferred tax liabilities represent the assumed source of future taxable income and the majority are assumed to generate taxable amounts during the next five years. Deferred tax assets include amounts
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related to pension and other postretirement benefits that are assumed to generate significant deductible amounts beyond five years. The Company’s valuation allowance of $3,094$3,162 million at December 31, 20202022 primarily relates to pension and other postretirement benefit obligation deferred tax assets, tax credits and other carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur. Because the pension and other postretirement benefit obligations are recorded to both continuing operations and other comprehensive income (OCI),During 2022, the Company recorded a portion of the fourth quarter increase inincreased the valuation allowance by $739 million primarily due to income tax expensecredits and other carryforwards generated in continuing operations ($2,513 million) and a portion to OCI ($196 million).2022 that
If
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cannot be realized in 2022, partially offset by favorable pension remeasurement. Until the Company continues to generate losses and negative normalized earnings in future periods,generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI. When income generation returns to more normal levels we can expect to see the allowance reverse and increase reported earnings and/or OCI.other comprehensive income.
For additional information regarding income taxes, see Note 4 of the Notes to the Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We have financial instruments that are subject to interest rate risk, principally fixed- and floating-rate debt obligations, and customer financing assets and liabilities. The investors in our fixed-rate debt obligations do not generally have the right to demand we pay off these obligations prior to maturity. Therefore, exposure to interest rate risk is not believed to be material for our fixed-rate debt. In the first quarterAs of 2020,December 31, 2022, we entered into a $13.8 billion two-year delayed draw floating-rate term loan credit agreement. An increase or decrease of 100 basis points in interest rates on thisdo not have any significant floating-rate debt would increase or decrease our pre-tax earnings by $138 million over the next 12 months.obligations. Historically, we have not experienced material gains or losses on our customer financing assets and liabilities due to interest rate changes.
Foreign Currency Exchange Rate Risk
We are subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. We use foreign currency forward contracts to hedge the price risk associated with firmly committed and forecasted foreign denominated payments and receipts related to our ongoing business. Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates. At December 31, 2020,2022, a 10% increase or decrease in the exchange rate in our portfolio of foreign currency contracts would have increased or decreased our unrealized losses by $245$232 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments do not create material market risk.
Commodity Price Risk
We are subject to commodity price risk relating to commodity purchase contracts for items used in production that are subject to changes in the market price. We use commodity swaps and commodity purchase contracts to hedge against these potentially unfavorable price changes. Our commodity purchase contracts and derivatives are both sensitive to changes in the market price. At December 31, 2020,2022, a 10% increase or decrease in the market price in our commodity derivatives would have increased or decreased our unrealized losses by $38$70 million. Consistent with the use of these contracts
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to neutralize the effect of market price fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these commodity purchase contracts and the offsetting swaps do not create material market risk.

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Item 8. Financial Statements and Supplementary Data
Index to the Consolidated Financial Statements
 Page
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The Boeing Company and Subsidiaries
Consolidated Statements of Operations
(Dollars in millions, except per share data)(Dollars in millions, except per share data)   (Dollars in millions, except per share data)   
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Sales of productsSales of products$47,142 $66,094 $90,229 Sales of products$55,893 $51,386 $47,142 
Sales of servicesSales of services11,016 10,465 10,898 Sales of services10,715 10,900 11,016 
Total revenuesTotal revenues58,158 76,559 101,127 Total revenues66,608 62,286 58,158 
Cost of productsCost of products(54,568)(62,877)(72,922)Cost of products(53,969)(49,954)(54,568)
Cost of servicesCost of services(9,232)(9,154)(8,499)Cost of services(9,109)(9,283)(9,232)
Boeing Capital interest expenseBoeing Capital interest expense(43)(62)(69)Boeing Capital interest expense(28)(32)(43)
Total costs and expensesTotal costs and expenses(63,843)(72,093)(81,490)Total costs and expenses(63,106)(59,269)(63,843)
(5,685)4,466 19,637 3,502 3,017 (5,685)
Income/(loss) from operating investments, net9 (4)111 
(Loss)/income from operating investments, net(Loss)/income from operating investments, net(16)210 
General and administrative expenseGeneral and administrative expense(4,817)(3,909)(4,567)General and administrative expense(4,187)(4,157)(4,817)
Research and development expense, netResearch and development expense, net(2,476)(3,219)(3,269)Research and development expense, net(2,852)(2,249)(2,476)
Gain on dispositions, netGain on dispositions, net202 691 75 Gain on dispositions, net6 277 202 
(Loss)/earnings from operations(12,767)(1,975)11,987 
Loss from operationsLoss from operations(3,547)(2,902)(12,767)
Other income, netOther income, net447 438 92 Other income, net1,058 551 447 
Interest and debt expenseInterest and debt expense(2,156)(722)(475)Interest and debt expense(2,533)(2,682)(2,156)
(Loss)/earnings before income taxes(14,476)(2,259)11,604 
Income tax benefit/(expense)2,535 1,623 (1,144)
Loss before income taxesLoss before income taxes(5,022)(5,033)(14,476)
Income tax (expense)/benefitIncome tax (expense)/benefit(31)743 2,535 
Net (loss)/earnings(11,941)(636)10,460 
Net lossNet loss(5,053)(4,290)(11,941)
Less: net loss attributable to noncontrolling interestLess: net loss attributable to noncontrolling interest(68)00Less: net loss attributable to noncontrolling interest(118)(88)(68)
Net (loss)/earnings attributable to Boeing Shareholders($11,873)($636)$10,460 
Net loss attributable to Boeing ShareholdersNet loss attributable to Boeing Shareholders($4,935)($4,202)($11,873)
Basic (loss)/earnings per share($20.88)($1.12)$18.05 
Basic loss per shareBasic loss per share($8.30)($7.15)($20.88)
Diluted (loss)/earnings per share($20.88)($1.12)$17.85 
Diluted loss per shareDiluted loss per share($8.30)($7.15)($20.88)
See Notes to the Consolidated Financial Statements on pages 67 – 131.59 - 114.

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The Boeing Company and Subsidiaries
Consolidated Statements of Comprehensive Income
(Dollars in millions)
Years ended December 31,2020 2019 2018 
Net (loss)/earnings($11,941)($636)$10,460 
Other comprehensive income/(loss), net of tax:
Currency translation adjustments98 (27)(86)
Unrealized gain on certain investments, net of tax of $0, $0 and ($1)0
Derivative instruments:
Unrealized gain/(loss) arising during period, net of tax of ($4), $13, and $4014 (48)(146)
Reclassification adjustment for loss included in net earnings, net of tax of ($7), ($7), and ($8)27 26 30 
Total unrealized gain/(loss) on derivative instruments, net of tax41 (22)(116)
Defined benefit pension plans & other postretirement benefits:
Net actuarial (loss)/gain arising during the period, net of tax of $111, $405, and ($105)(1,956)(1,413)384 
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($52), ($133), and ($242)917 464 878 
Settlements and curtailments included in net income, net of tax of $0, $0, and ($2)5 0
Pension and postretirement benefit related to our equity method investments, net of tax $0, ($5), and ($6)017 22 
Amortization of prior service credits included in net periodic pension cost, net of tax of $6, $25, and $39(112)(89)(143)
Prior service cost/(credit) arising during the period, net of tax of ($2), $0, and ($94)27 (1)341 
Total defined benefit pension plans & other postretirement benefits, net of tax(1,119)(1,022)1,490 
Other comprehensive (loss)/income, net of tax(980)(1,070)1,290 
Comprehensive loss related to noncontrolling interests(41)(21)
Comprehensive (loss)/income, net of tax(12,921)(1,747)11,729 
Less: Comprehensive loss related to noncontrolling interest(68)(41)(21)
Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax($12,853)($1,706)$11,750 
(Dollars in millions)
Years ended December 31,2022 2021 2020 
Net loss($5,053)($4,290)($11,941)
Other comprehensive income/(loss), net of tax:
Currency translation adjustments(62)(75)98 
Unrealized loss on certain investments, net of tax of $0, $0 and $0(1)
Derivative instruments:
Unrealized (loss)/gain arising during period, net of tax of $12, ($16) and ($4)(40)55 14 
Reclassification adjustment for loss/(gain) included in net earnings, net of tax of ($3), $2 and ($7)10 (6)27 
Total unrealized (loss)/gain on derivative instruments, net of tax(30)49 41 
Defined benefit pension plans & other postretirement benefits:
Net actuarial gain/(loss) arising during the period, net of tax of ($22), ($32) and $1111,533 4,262 (1,956)
Amortization of actuarial loss included in net periodic pension cost, net of tax of ($11), ($8) and ($52)791 1,155 917 
Settlements included in net (loss)/income, net of tax of $0, ($2) and $0(4)191 
Amortization of prior service credits included in net periodic pension cost, net of tax of $2, $1 and $6(114)(114)(112)
Prior service (credit)/cost arising during the period, net of tax of $0, $0 and ($2)(1)27 
Pension and postretirement (cost)/benefit related to our equity method investments, net of tax of $0, ($2) and $0(3)
Total defined benefit pension plans & other postretirement benefits, net of tax2,202 5,500 (1,119)
Other comprehensive income/(loss), net of tax2,109 5,474 (980)
Comprehensive (loss)/income, net of tax(2,944)1,184 (12,921)
Less: Comprehensive loss related to noncontrolling interest(118)(88)(68)
Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax($2,826)$1,272 ($12,853)
See Notes to the Consolidated Financial Statements on pages 67 – 131.59 - 114.

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The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Dollars in millions, except per share data)(Dollars in millions, except per share data)  (Dollars in millions, except per share data)  
December 31,December 31,20202019December 31,20222021
AssetsAssetsAssets
Cash and cash equivalentsCash and cash equivalents$7,752 $9,485 Cash and cash equivalents$14,614 $8,052 
Short-term and other investmentsShort-term and other investments17,838 545 Short-term and other investments2,606 8,192 
Accounts receivable, netAccounts receivable, net1,955 3,266 Accounts receivable, net2,517 2,641 
Unbilled receivables, netUnbilled receivables, net7,995 9,043 Unbilled receivables, net8,634 8,620 
Current portion of customer financing, netCurrent portion of customer financing, net101 162 Current portion of customer financing, net154 117 
InventoriesInventories81,715 76,622 Inventories78,151 78,823 
Other current assets, netOther current assets, net4,286 3,106 Other current assets, net2,847 2,221 
Total current assetsTotal current assets121,642 102,229 Total current assets109,523 108,666 
Customer financing, netCustomer financing, net1,936 2,136 Customer financing, net1,450 1,695 
Property, plant and equipment, netProperty, plant and equipment, net11,820 12,502 Property, plant and equipment, net10,550 10,918 
GoodwillGoodwill8,081 8,060 Goodwill8,057 8,068 
Acquired intangible assets, netAcquired intangible assets, net2,843 3,338 Acquired intangible assets, net2,311 2,562 
Deferred income taxesDeferred income taxes86 683 Deferred income taxes63 77 
InvestmentsInvestments1,016 1,092 Investments983 975 
Other assets, net of accumulated amortization of $729 and $5804,712 3,585 
Other assets, net of accumulated amortization of $949 and $975Other assets, net of accumulated amortization of $949 and $9754,163 5,591 
Total assetsTotal assets$152,136 $133,625 Total assets$137,100 $138,552 
Liabilities and equityLiabilities and equityLiabilities and equity
Accounts payableAccounts payable$12,928 $15,553 Accounts payable$10,200 $9,261 
Accrued liabilitiesAccrued liabilities22,171 22,868 Accrued liabilities21,581 18,455 
Advances and progress billingsAdvances and progress billings50,488 51,551 Advances and progress billings53,081 52,980 
Short-term debt and current portion of long-term debtShort-term debt and current portion of long-term debt1,693 7,340 Short-term debt and current portion of long-term debt5,190 1,296 
Total current liabilitiesTotal current liabilities87,280 97,312 Total current liabilities90,052 81,992 
Deferred income taxesDeferred income taxes1,010 413 Deferred income taxes230 218 
Accrued retiree health careAccrued retiree health care4,137 4,540 Accrued retiree health care2,503 3,528 
Accrued pension plan liability, netAccrued pension plan liability, net14,408 16,276 Accrued pension plan liability, net6,141 9,104 
Other long-term liabilitiesOther long-term liabilities1,486 3,422 Other long-term liabilities2,211 1,750 
Long-term debtLong-term debt61,890 19,962 Long-term debt51,811 56,806 
Total liabilitiesTotal liabilities170,211 141,925 Total liabilities152,948 153,398 
Shareholders’ equity:Shareholders’ equity:Shareholders’ equity:
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issuedCommon stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued5,061 5,061 Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued5,061 5,061 
Additional paid-in capitalAdditional paid-in capital7,787 6,745 Additional paid-in capital9,947 9,052 
Treasury stock, at costTreasury stock, at cost(52,641)(54,914)Treasury stock, at cost(50,814)(51,861)
Retained earningsRetained earnings38,610 50,644 Retained earnings29,473 34,408 
Accumulated other comprehensive lossAccumulated other comprehensive loss(17,133)(16,153)Accumulated other comprehensive loss(9,550)(11,659)
Total shareholders’ deficitTotal shareholders’ deficit(18,316)(8,617)Total shareholders’ deficit(15,883)(14,999)
Noncontrolling interestsNoncontrolling interests241 317 Noncontrolling interests35 153 
Total equityTotal equity(18,075)(8,300)Total equity(15,848)(14,846)
Total liabilities and equityTotal liabilities and equity$152,136 $133,625 Total liabilities and equity$137,100 $138,552 
See Notes to the Consolidated Financial Statements on pages 67 – 131.59 - 114.
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The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions)(Dollars in millions)   (Dollars in millions)   
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Cash flows – operating activities:Cash flows – operating activities:Cash flows – operating activities:
Net (loss)/earnings($11,941)($636)$10,460 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net lossNet loss($5,053)($4,290)($11,941)
Adjustments to reconcile net loss to net cash used by operating activities:Adjustments to reconcile net loss to net cash used by operating activities:
Non-cash items –Non-cash items –Non-cash items –
Share-based plans expenseShare-based plans expense250 212 202 Share-based plans expense725 833 250 
Treasury shares issued for 401(k) contributionTreasury shares issued for 401(k) contribution195 Treasury shares issued for 401(k) contribution1,215 1,233 195 
Depreciation and amortizationDepreciation and amortization2,246 2,271 2,114 Depreciation and amortization1,979 2,144 2,246 
Investment/asset impairment charges, netInvestment/asset impairment charges, net410 443 93 Investment/asset impairment charges, net112 98 410 
Customer financing valuation adjustmentsCustomer financing valuation adjustments12 250 (3)Customer financing valuation adjustments37 12 
Gain on dispositions, netGain on dispositions, net(202)(691)(75)Gain on dispositions, net(6)(277)(202)
777X reach-forward loss6,493 
787 and 777X reach-forward losses787 and 777X reach-forward losses3,460 6,493 
Other charges and credits, netOther charges and credits, net1,462 334 247 Other charges and credits, net364 360 1,462 
Changes in assets and liabilities –Changes in assets and liabilities –Changes in assets and liabilities –
Accounts receivableAccounts receivable909 603 (795)Accounts receivable142 (713)909 
Unbilled receivablesUnbilled receivables919 982 (1,826)Unbilled receivables6 (586)919 
Advances and progress billingsAdvances and progress billings(1,060)737 2,636 Advances and progress billings108 2,505 (1,060)
InventoriesInventories(11,002)(12,391)568 Inventories420 (1,127)(11,002)
Other current assetsOther current assets372 (682)98 Other current assets(591)345 372 
Accounts payableAccounts payable(5,363)1,600 Accounts payable838 (3,783)(5,363)
Accrued liabilitiesAccrued liabilities1,074 7,781 1,117 Accrued liabilities2,956 (3,687)1,074 
Income taxes receivable, payable and deferredIncome taxes receivable, payable and deferred(2,576)(2,476)(180)Income taxes receivable, payable and deferred1,347 733 (2,576)
Other long-term liabilitiesOther long-term liabilities(222)(621)87 Other long-term liabilities(158)(206)(222)
Pension and other postretirement plansPension and other postretirement plans(794)(777)(153)Pension and other postretirement plans(1,378)(972)(794)
Customer financing, netCustomer financing, net173 419 120 Customer financing, net142 210 173 
OtherOther235 196 610 Other307 304 235 
Net cash (used)/provided by operating activities(18,410)(2,446)15,322 
Net cash provided/(used) by operating activitiesNet cash provided/(used) by operating activities3,512 (3,416)(18,410)
Cash flows – investing activities:Cash flows – investing activities:Cash flows – investing activities:
Property, plant and equipment additions(1,303)(1,834)(1,722)
Property, plant and equipment reductions296 334 120 
Payments to acquire property, plant and equipmentPayments to acquire property, plant and equipment(1,222)(980)(1,303)
Proceeds from disposals of property, plant and equipmentProceeds from disposals of property, plant and equipment35 529 296 
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired(455)(3,230)Acquisitions, net of cash acquired(6) 
Proceeds from dispositions464 
Contributions to investmentsContributions to investments(37,616)(1,658)(2,607)Contributions to investments(5,051)(35,713)(37,616)
Proceeds from investmentsProceeds from investments20,275 1,759 2,898 Proceeds from investments10,619 45,489 20,275 
Purchase of distribution rights(127)(69)
OtherOther(18)(13)(11)Other(11)(18)
Net cash used by investing activities(18,366)(1,530)(4,621)
Net cash provided/(used) by investing activitiesNet cash provided/(used) by investing activities4,370 9,324 (18,366)
Cash flows – financing activities:Cash flows – financing activities:Cash flows – financing activities:
New borrowingsNew borrowings47,248 25,389 8,548 New borrowings34 9,795 47,248 
Debt repaymentsDebt repayments(10,998)(12,171)(7,183)Debt repayments(1,310)(15,371)(10,998)
Contributions from noncontrolling interests35 
Stock options exercisedStock options exercised36 58 81 Stock options exercised50 42 36 
Employee taxes on certain share-based payment arrangementsEmployee taxes on certain share-based payment arrangements(173)(248)(257)Employee taxes on certain share-based payment arrangements(40)(66)(173)
Common shares repurchased(2,651)(9,000)
Dividends paidDividends paid(1,158)(4,630)(3,946)Dividends paid (1,158)
Other(15)
Net cash provided/(used) by financing activities34,955 5,739 (11,722)
Net cash (used)/provided by financing activitiesNet cash (used)/provided by financing activities(1,266)(5,600)34,955 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents85 (5)(53)Effect of exchange rate changes on cash and cash equivalents(73)(39)85 
Net (decrease)/increase in cash & cash equivalents, including restricted(1,736)1,758 (1,074)
Net increase/(decrease) in cash & cash equivalents, including restrictedNet increase/(decrease) in cash & cash equivalents, including restricted6,543 269 (1,736)
Cash & cash equivalents, including restricted, at beginning of yearCash & cash equivalents, including restricted, at beginning of year9,571 7,813 8,887 Cash & cash equivalents, including restricted, at beginning of year8,104 7,835 9,571 
Cash & cash equivalents, including restricted, at end of yearCash & cash equivalents, including restricted, at end of year7,835 9,571 7,813 Cash & cash equivalents, including restricted, at end of year14,647 8,104 7,835 
Less restricted cash & cash equivalents, included in InvestmentsLess restricted cash & cash equivalents, included in Investments83 86 176 Less restricted cash & cash equivalents, included in Investments33 52 83 
Cash and cash equivalents at end of yearCash and cash equivalents at end of year$7,752 $9,485 $7,637 Cash and cash equivalents at end of year$14,614 $8,052 $7,752 
See Notes to the Consolidated Financial Statements on pages 67 – 131.59 - 114.
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The Boeing Company and Subsidiaries
Consolidated Statements of Equity
Boeing shareholders  Boeing shareholders 
(Dollars in millions, except per share data)(Dollars in millions, except per share data)Common
Stock
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interest
Total(Dollars in millions, except per share data)Common
Stock
Additional
Paid-In
Capital
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
Total
Balance at January 1, 2018$5,061 $6,804 ($43,454)$49,618 ($16,373)$57 $1,713 
Net earnings/(loss)10,460 (21)10,439 
Other comprehensive income, net of tax of ($379)1,290 1,290 
Share-based compensation and related dividend equivalents238 (36)202 
Treasury shares issued for stock options exercised, net(45)126 81 
Treasury shares issued for other share-based plans, net(229)(20)(249)
Common shares repurchased(9,000)(9,000)
Cash dividends declared ($7.19 per share)(4,101)(4,101)
Changes in noncontrolling interests35 35 
Balance at December 31, 2018$5,061 $6,768 ($52,348)$55,941 ($15,083)$71 $410 
Net loss(636)(41)(677)
Other comprehensive loss, net of tax of $298(1,070)(1,070)
Share-based compensation and related dividend equivalents245 (33)212 
Treasury shares issued for stock options exercised, net(47)104 57 
Treasury shares issued for other share-based plans, net(221)(19)(240)
Common shares repurchased(2,651)(2,651)
Cash dividends declared ($8.22 per share)(4,628)(4,628)
Changes in noncontrolling interests287 287 
Balance at December 31, 2019$5,061 $6,745 ($54,914)$50,644 ($16,153)$317 ($8,300)
Impact of ASU 2016-13(162)(162)
Balance at January 1, 2020Balance at January 1, 2020$5,061 $6,745 ($54,914)$50,482 ($16,153)$317 ($8,462)Balance at January 1, 2020$5,061 $6,745 ($54,914)$50,482 ($16,153)$317 ($8,462)
Net lossNet loss(11,873)(68)(11,941)Net loss(11,873)(68)(11,941)
Other comprehensive loss, net of tax of $52Other comprehensive loss, net of tax of $52(980)(980)Other comprehensive loss, net of tax of $52(980)(980)
Share-based compensationShare-based compensation250 250 Share-based compensation250 250 
Treasury shares issued for stock options exercised, netTreasury shares issued for stock options exercised, net(26)63 37 Treasury shares issued for stock options exercised, net(26)63 37 
Treasury shares issued for other share-based plans, netTreasury shares issued for other share-based plans, net(214)47 (167)Treasury shares issued for other share-based plans, net(214)47 (167)
Treasury shares contributed to pension plansTreasury shares contributed to pension plans952 2,048 3,000 Treasury shares contributed to pension plans952 2,048 3,000 
Treasury shares issued for 401(k) contributionTreasury shares issued for 401(k) contribution80115 195 
Changes in noncontrolling interestsChanges in noncontrolling interests(8)(8)
OtherOther1
Balance at December 31, 2020Balance at December 31, 2020$5,061 $7,787 ($52,641)$38,610 ($17,133)$241 ($18,075)
Net lossNet loss(4,202)(88)(4,290)
Other comprehensive income, net of tax of ($57)Other comprehensive income, net of tax of ($57)5,474 5,474 
Share-based compensationShare-based compensation833 833 
Treasury shares issued for stock options exercised, netTreasury shares issued for stock options exercised, net(28)70 42 
Treasury shares issued for other share-based plans, netTreasury shares issued for other share-based plans, net(98)35 (63)
Treasury shares issued for 401(k) contributionTreasury shares issued for 401(k) contribution80 115 195 Treasury shares issued for 401(k) contribution558 675 1,233 
Changes in noncontrolling interests(8)(8)
Other1 1 
Balance at December 31, 2020$5,061 $7,787 ($52,641)$38,610 ($17,133)$241 ($18,075)
Balance at December 31, 2021Balance at December 31, 2021$5,061 $9,052 ($51,861)$34,408 ($11,659)$153 ($14,846)
Net lossNet loss(4,935)(118)(5,053)
Other comprehensive income, net of tax of ($22)Other comprehensive income, net of tax of ($22)2,109 2,109 
Share-based compensationShare-based compensation725 725 
Treasury shares issued for stock options exercised, netTreasury shares issued for stock options exercised, net(31)81 50 
Treasury shares issued for other share-based plans, netTreasury shares issued for other share-based plans, net(94)46 (48)
Treasury shares issued for 401(k) contributionTreasury shares issued for 401(k) contribution295 920 1,215 
Balance at December 31, 2022Balance at December 31, 2022$5,061 $9,947 ($50,814)$29,473 ($9,550)$35 ($15,848)
See Notes to the Consolidated Financial Statements on pages 67 – 131.59 - 114.
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The Boeing Company and Subsidiaries
Notes to the Consolidated Financial Statements
Summary of Business Segment Data
(Dollars in millions)(Dollars in millions) (Dollars in millions) 
Years ended December 31,
Years ended December 31,
202020192018
Years ended December 31,
202220212020
Revenues:Revenues:Revenues:
Commercial AirplanesCommercial Airplanes$16,162 $32,255 $57,499 Commercial Airplanes$25,867 $19,493 $16,162 
Defense, Space & SecurityDefense, Space & Security26,257 26,095 26,300 Defense, Space & Security23,162 26,540 26,257 
Global ServicesGlobal Services15,543 18,468 17,056 Global Services17,611 16,328 15,543 
Boeing CapitalBoeing Capital261 244 274 Boeing Capital199 272 261 
Unallocated items, eliminations and otherUnallocated items, eliminations and other(65)(503)(2)Unallocated items, eliminations and other(231)(347)(65)
Total revenuesTotal revenues$58,158 $76,559 $101,127 Total revenues$66,608 $62,286 $58,158 
(Loss)/earnings from operations:(Loss)/earnings from operations:(Loss)/earnings from operations:
Commercial AirplanesCommercial Airplanes($13,847)($6,657)$7,830 Commercial Airplanes($2,370)($6,475)($13,847)
Defense, Space & SecurityDefense, Space & Security1,539 2,615 1,692 Defense, Space & Security(3,544)1,544 1,539 
Global ServicesGlobal Services450 2,697 2,536 Global Services2,727 2,017 450 
Boeing CapitalBoeing Capital63 28 79 Boeing Capital29 106 63 
Segment operating (loss)/earnings(11,795)(1,317)12,137 
Segment operating lossSegment operating loss(3,158)(2,808)(11,795)
Unallocated items, eliminations and otherUnallocated items, eliminations and other(2,355)(2,073)(1,477)Unallocated items, eliminations and other(1,532)(1,267)(2,355)
FAS/CAS service cost adjustmentFAS/CAS service cost adjustment1,383 1,415 1,327 FAS/CAS service cost adjustment1,143 1,173 1,383 
(Loss)/earnings from operations(12,767)(1,975)11,987 
Loss from operationsLoss from operations(3,547)(2,902)(12,767)
Other income, netOther income, net447 438 92 Other income, net1,058 551 447 
Interest and debt expenseInterest and debt expense(2,156)(722)(475)Interest and debt expense(2,533)(2,682)(2,156)
(Loss)/earnings before income taxes(14,476)(2,259)11,604 
Income tax benefit/(expense)2,535 1,623 (1,144)
Loss before income taxesLoss before income taxes(5,022)(5,033)(14,476)
Income tax (expense)/benefitIncome tax (expense)/benefit(31)743 2,535 
Net (loss)/earnings(11,941)(636)10,460 
Net lossNet loss(5,053)(4,290)(11,941)
Less: net loss attributable to noncontrolling interestLess: net loss attributable to noncontrolling interest(68)Less: net loss attributable to noncontrolling interest(118)(88)(68)
Net (loss)/earnings attributable to Boeing Shareholders($11,873)($636)$10,460 
Net loss attributable to Boeing ShareholdersNet loss attributable to Boeing Shareholders($4,935)($4,202)($11,873)
This information is an integral part of the Notes to the Consolidated Financial Statements. See Note 22 for further segment results.

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The Boeing Company and Subsidiaries
Notes to the Consolidated Financial Statements
Years ended December 31, 2020, 20192022, 2021 and 20182020
(Dollars in millions, except otherwise stated)
Note 1 – Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The Consolidated Financial Statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing,” the “Company,” “we,” “us,”“us” or “our”). These statements include the accounts of all majority-owned subsidiaries and variable interest entities that are required to be consolidated. All significant intercompany accounts and transactions have been eliminated. As described in Note 22, we operate in 4four reportable segments: Commercial Airplanes (BCA);, Defense, Space & Security (BDS), Global Services (BGS), and Boeing Capital (BCC). Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other. Amounts in prior periods have been reclassified to conform to the current year presentation.
Liquidity Matters
The global outbreak of COVID-19 and the grounding of the 737 MAX airplane are having a significant adverse impact on our business and are expected to continue to negatively impact revenue, earnings and operating cash flow in future quarters. The COVID-19 pandemic has caused an unprecedented shock to demand for air travel, creating a tremendous challenge for our customers, our business and the entire aerospace manufacturing and services sector. We currently expect it will take approximately three years for travel to return to 2019 levels and a few years beyond that for the industry to return to long-term trend growth. There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels.
During 2020, net cash used by operating activities was $18.4 billion, and we expect negative operating cash flows in future quarters until commercial deliveries ramp up. In the first quarter of 2020, we entered into and fully drew on a $13.8 billion two-year delayed draw term loan credit agreement (delayed draw term loan facility). In the second quarter of 2020, we issued $25 billion of fixed rate senior notes that mature between 2023 and 2060. In the fourth quarter of 2020, we issued $4.9 billion of fixed rate senior notes that mature between 2024 and 2031. As a result, our cash and short-term investment balance was $25.6 billion and our debt balance was $63.6 billion at December 31, 2020.
The major credit rating agencies downgraded our short term and long term credit ratings during 2020, and there is risk for further downgrades. At December 31, 2020, our debt balance includes no commercial paper borrowings compared to $6.1 billion at December 31, 2019. In the current environment, we may have limited future access to the commercial paper market. In addition, we have term notes of $1.5 billion maturing in 2021.
At December 31, 2020, trade payables included $3.8 billion payable to suppliers who have elected to participate in supply chain financing programs. While access to supply chain financing has been reduced due to our current credit ratings and debt levels, we do not believe that these or future changes in the availability of supply chain financing will have a significant impact on our liquidity.
At December 31, 2020, we had $9.5 billion of unused borrowing capacity on revolving credit agreements. We anticipate that these credit lines will primarily serve as back-up liquidity to support our general corporate borrowing needs. Our borrowing capacity includes a $3.1 billion 364-day revolving credit facility, which is set to expire in October 2021.
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In addition to our debt issuances, we have taken a number of actions to improve liquidity. During the first quarter of 2020, our Board of Directors terminated its prior authorization to repurchase shares of the Company’s outstanding common stock and suspended the declaration and/or payment of dividends until further notice. We have also reduced production rates in our commercial business to reflect the impact of COVID-19 on the industry. We are executing on our plans to reduce our workforce through a combination of voluntary and involuntary layoffs and natural turnover. During 2020, we recorded severance costs for approximately 26,000 employees, of which approximately 18,000 have left the Company as of December 31, 2020, and the remainder are expected to leave in 2021. In the fourth quarter of 2020, we began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans. In December 2020, we awarded most of our employees a one-time stock grant that will vest in three years in lieu of merit increases. We expect these actions to further enable the Company to conserve cash.
We are also working with our customers and supply chain to accelerate receipts and conserve cash. For example, the United States Department of Defense (U.S. DoD) has taken steps to work with its industry partners to increase liquidity in the form of increased progress payment rates and reductions in withholds among other initiatives. We are also deferring certain tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
We have reduced discretionary spending, including reducing or deferring research and development and capital expenditures.
In July 2020, we announced our business transformation efforts to assess our business across five key pillars – infrastructure, overhead and organization, portfolio and investments, supply chain health and operational excellence. Within the infrastructure pillar we are assessing our overall facility requirements in light of reduced demand in our commercial businesses and remote and virtual work opportunities for large numbers of our workforce. We also anticipate a reduction in office space needs compared to our current capacity. However, as we consolidate our footprint, we may incur near term adverse impacts to earnings. The overhead and organization pillar is focused on our cost structure and how we are organized so we can right size our workforce and simplify and reduce management layers and bureaucracy. The portfolio and investments pillar includes aligning our portfolio and investments to focus on our core business and the changes in market conditions. The supply chain pillar is focused on supply chain health and stability, reducing indirect procurement spend and streamlining our transportation, logistics and warehousing approach. The operational excellence pillar is focused on improving performance, enhancing quality and reducing rework. These activities are not intended to constrain our capacity, but to enable the Company to emerge stronger and be more resilient when the market recovers.
Based on our current best estimates of market demand, planned production rates, timing of cash receipts and expenditures, our ability to successfully implement further actions to improve liquidity as well as our ability to access additional liquidity, if needed, we believe it is probable that we will be able to fund our operations for the foreseeable future.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that the accounting estimates and assumptions are appropriate given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic, however actualActual results could differ from those estimates.
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Operating Cycle
For classification of certain current assets and liabilities, we use the duration of the related contract or program as our operating cycle, which is generally longer than one year.
Standards Issued and Implemented
In the first quarter of 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using a modified retrospective method, which resulted in the recognition of allowances for credit losses on our Consolidated Statement of Financial Position as of January 1, 2020 and a $162 cumulative-effect adjustment to retained earnings to align our credit loss methodology with the new standard. The standard replaces the incurred loss impairment methodology under Topic 310 with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and certain other financial assets. See Notes 5, 6, 9 and 14 for additional disclosures.
In the first quarter of 2020, we also adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The standard simplifies the quantitative impairment test from a two-step process to a one-step process. The quantitative test is performed by comparing the carrying value of net assets to the estimated fair value of the related operations. If the fair value is determined to be less than carrying value, the shortfall up to the carrying value of the goodwill represents the amount of goodwill impairment. The standard continues to permit a company to test goodwill for impairment by performing a qualitative assessment or using the quantitative test.
Revenue and Related Cost Recognition
Commercial aircraft contracts The majority of our BCA segment revenue is derived from commercial aircraft contracts. For each contract, we determine the transaction price based on the consideration expected to be received. We allocate the transaction price to each commercial aircraft performance obligation based on relative standalone selling prices adjusted by an escalation formula as specified in the customer agreement. Revenue is recognized for each commercial aircraft performance obligation at the point in time when the aircraft is completed and accepted by the customer. We use program accounting to determine the amount reported as cost of sales.
In certain situations, where an aircraft is still in our possession, and title and risk of loss has passed to the customer (known as a bill-and-hold arrangement), revenue will be recognized when all specific requirements for transfer of control under a bill-and-hold arrangement have been met.
Payments for commercial aircraft sales are received in accordance with the customer agreement, which generally includes a deposit upon order and additional payments in accordance with a payment schedule, with the balance being due immediately prior to or at aircraft delivery. Advances and progress billings (contract liabilities) are normal and customary for commercial aircraft contracts and not considered a significant financing component as they are intended to protect us from the other party failing to adequately complete some or all of its obligations under the contract.
Long-term contracts Substantially all contracts at BDS and certain contracts at BGS are long-term contracts with the U.S. government and other customers that generally extend over several years. Products sales under long-term contracts primarily include fighter jets, rotorcraft, cybersecurity products, surveillance suites, advanced weapons, missile defense, military derivative aircraft, satellite systems and modification of commercial passenger aircraft to cargo freighters. Services salesSales of services under long-term contracts primarily include support and maintenance agreements associated with our commercial and defense products and space travel on Commercial Crew.
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For each long-term contract, we determine the transaction price based on the consideration expected to be received. We allocate the transaction price to each distinct performance obligation to deliver a good or service, or a collection of goods and/or services, based on the relative standalone selling prices. A long-term contract will typically represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods and/or services and the significant service of integration that we provide. While the scope and price on certain long-term contracts may be modified over their life, the transaction price is based on current rights and obligations under the contract and does not include potential modifications until they are agreed upon with the customer. When applicable, a cumulative adjustment or separate recognition for the additional scope and price may result. Long-term contracts can be negotiated with a fixed price or a price in which we are reimbursed for costs incurred plus an agreed upon profit. The Federal Acquisition Regulations provide guidance on the types of cost that will be reimbursed in establishing the price for contracts with the U.S. government. Certain long-term contracts include in the transaction price variable consideration, such as incentive and award fees, if specified targets are achieved. The amount included in the transaction price represents the expected value, based on a weighted probability, or the most likely amount.
Long-term contract revenue is recognized over the contract term (over time) as the work progresses, either as products are produced or as services are rendered. We generally recognize revenue over time as we perform on long-term contracts because of continuous transfer of control to the customer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. Similarly, for non-U.S. government contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment of the transaction price associated with work performed to date on products or services that do not have an alternative use to the Company.
The accounting for long-term contracts involves a judgmental process of estimating total sales, costs and profit for each performance obligation. Cost of sales is recognized as incurred. The amount reported as revenues is determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales. Recognizing revenue as costs are incurred provides an objective measure of progress on the long-term contract and thereby best depicts the extent of transfer of control to the customer.
ChangesFor long-term contracts for which revenue is recognized over time, changes in estimated revenues, cost of sales and the related effect on operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a long-term contract’s percentage-of-completion. When the current estimates of total salesrevenues and costs at completion for a long-term contract indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.
NetThe table below reflects the impact of net cumulative catch-up adjustments to prior years' revenuefor changes in estimated revenues and earnings, including certain reach-forward losses,costs at completion across all long-term contracts were as follows:including the impact to Loss from operations from increases in estimated losses on unexercised options for the years ended December 31:
202020192018
(Decrease)/Increase to Revenue($359)$54 $137 
Increase to Loss/decrease to Earnings from operations($942)($111)($190)
Decrease to Diluted EPS($1.37)($0.06)($0.29)
202220212020
Decrease to Revenue($2,335)($379)($359)
Increase to Loss from operations($5,253)($880)($942)
Decrease to Diluted EPS($8.88)($1.28)($1.37)
Significant adjustments during the three years ended December 31, 20202022 included reach-forward losses of $953, $148 and $736 on VC-25B, KC-46A Tanker, recorded during 2020, 2019, and 2018, as well as reach-forward losses onMQ-25, Commercial Crew of $489 during 2019.and T-7A Red Hawk programs.
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Due to the significance of judgment in the estimation process, changes in underlying assumptions/estimates, internal and supplier performance, inflationary trends, or other circumstances may adversely or positively affect financial performance in future periods.
Payments under long-term contracts may be received before or after revenue is recognized. The U.S. government customer typically withholds payment of a small portion of the contract price until contract completion. Therefore, long-term contracts typically generate Unbilled receivables (contract assets) but may generate Advances and progress billings (contract liabilities). Long-term contract Unbilled receivables and Advances and progress billings are not considered a significant financing component because they are intended to protect either the customer or the Company in the event that some or all of the obligations under the contract are not completed.
Commercial spare parts contracts Certain contracts at our BGS segment include sales of commercial spare parts. For each contract, we determine the transaction price based on the consideration expected to be received. The spare parts have discrete unit prices that represent fair value. We generally consider each spare part to be a separate performance obligation. Revenue is recognized for each commercial spare part performance obligation at the point in time of delivery to the customer. We may provide our customers with a right to return a commercial spare part where a customer may receive a full or partial refund, a credit applied to amounts owed, a different product in exchange, or any combination of these items. We consider the potential for customer returns in the estimated transaction price. The amount reported as cost of sales is recorded at average cost. Payments for commercial spare parts sales are typically received shortly after delivery.
Other service revenue contracts Certain contracts at our BGS segment are for sales of services to commercial customers including maintenance, training, data analytics and information-based services. We recognize revenue for these service performance obligations over time as the services are rendered. The method of measuring progress (such as straight-line or billable amount) varies depending upon which method best depicts the transfer of control to the customer based on the type of service performed. Cost of sales is recorded as incurred.
Concession Sharing Arrangementssharing arrangements We account for sales concessions to our customers in consideration of their purchase of products and services as a reduction of the transaction price and the revenue that is recognized for the related performance obligations. The sales concessions incurred may be partially reimbursed by certain suppliers in accordance with concession sharing arrangements. We record these reimbursements, which are presumed to represent reductions in the price of the vendor’s products or services, as a reduction in Cost of products.
Unbilled Receivablesreceivables and Advancesadvances and Progress Billingsprogress billings Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which cannot yet be billed under terms of the contract with the customer. Advances and progress billings (contract liabilities) arise when the Company receives payments from customers in advance of recognizing revenue. The amount of Unbilled receivables or Advances and progress billings is determined for each contract.
Financial Services Revenueservices revenue We record financial services revenue associated with sales-type/finance leases, operating leases and notes receivable.
Lease and financing revenue arrangements are includedloans in Sales of services on the Consolidated Statements of Operations. For sales-type/sales-type leases, we recognize selling profit or loss at lease inception if collection of the lease payments is probable. For sales-type and direct finance leases, we record customer financing receivables at lease inception. A customer financing receivable is recorded at the aggregate of future minimum lease payments, estimated residual value of the leased equipment, and any deferred incremental direct costs less unearned income. Income is recognized over the life of the lease to approximate a level rate of return on the net investment. For notes receivable, we record customer financing receivables net of any unamortized discounts and deferred incremental direct costs. Interest income and amortization of any discounts are recorded ratably over the related term of the note.
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Income recognition is generally suspended for customer financing receivables that are uncollectible. Wedetermine that a customer financing receivable is uncollectible when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms. We determine a customer financing receivable is past due when cash has not been received upon the due date specified in the contract.
We evaluate the collectability of customer financing receivables at the date full recovery of incomecommencement and principal becomes not probable. Incomeon a recurring basis. If a customer financing receivable is recognized when financing receivables become contractually current and performance is demonstrated bydetermined to be uncollectible, the customer is categorized as non-accrual status. When a customer is in non-accrual status at commencement, sales-type lease revenue is deferred until substantially all cash has been received or the customer is removed from non-accrual status. If we have a direct finance lease and/or a note receivable with a customer that is in non-accrual status, or a sales-type lease with a customer that changes to non-accrual status after commencement, we recognize contractual interest income as payments are received to the extent there is sufficient collateral and payments exceed past due principal payments.
. Residual
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Residual values, which are reviewed periodically, represent the estimated amount we expect to receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. Declines in estimated residual value that are deemed other-than-temporary are recognized in the period in which the declines occur.

For operating leases, revenue on leased aircraft and equipment is recorded on a straight-line basis over the term of the lease. Operating lease assets, included in Customer financing, net, are recorded at cost and depreciated to an estimated residual value using the straight-line method over the period that we project we will hold the asset to an estimated residual value, using the straight-line method.asset. We periodically review our estimates of residual value and recognize forecasted changes by prospectively adjusting depreciation expense.
For notes receivable, notes are We record assets held for sale at the lower of carrying value or fair value less costs to sell. We evaluate for impairment assets under operating leases when events or changes in circumstances indicate that the expected undiscounted cash flow from the asset may be less than the carrying value. When we determine that impairment is indicated for an asset, the amount of impairment expense recorded netis the excess of any unamortized discounts and deferred incremental direct costs. Interest income and amortization of any discounts are recorded ratablythe carrying value over the related termfair value of the note.asset.
Reinsurance Revenuerevenue Our wholly-owned insurance subsidiary, Astro Ltd., participates in a reinsurance pool for workers’ compensation. The member agreements and practices of the reinsurance pool minimize any participating members’ individual risk. Reinsurance revenues were $129, $151$126 and $145$129 during 2020, 20192022, 2021 and 2018,2020, respectively. Reinsurance costs related to premiums and claims paid to the reinsurance pool were $136, $150$134, $129 and $136 during 2020, 20192022, 2021 and 2018,2020, respectively. Revenues and costs are presented net in Cost of sales in the Consolidated Statements of Operations.
Fleet Support
We provide assistance and support to facilitate efficient and safe aircraft operation to the operators of all our commercial airplane models. Collectively known as fleet support, these activities and support services include flight and maintenance training, field service support, engineering support, and technical data and documents. Fleet support activity begins prior to aircraft delivery as the customer receives training, manuals, and technical consulting support. This activity continues throughout the aircraft’s operational life. Services provided after delivery include field service support, consulting on maintenance, repair, and operational issues brought forth by the customer or regulators, updating manuals and engineering data, and the issuance of service bulletins that impact the entire model’s fleet. Field service support involves our personnel located at customer facilities providing and coordinating fleet support activities and requests. The costs for fleet support are expensed as incurred as Cost of services.
Research and Development
Research and development includes costs incurred for experimentation, design and testing, as well as bid and proposal efforts related to government products and services, which are expensed as incurred unless the costs are related to certain contractual arrangements with customers. Costs that are incurred pursuant to such contractual arrangements are recorded over the period that revenue is recognized, consistent with our long-term contract accounting policy. We have certain research and development arrangements that meet the requirement for best efforts research and development accounting. Accordingly, the amounts funded by the customer are recognized as an offset to our research and development expense rather than as contract revenues. Research and development expense included bid and proposal costs of $217, $213 and $224 $214in 2022, 2021 and $234 in 2020, 2019 and 2018, respectively.
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Share-Based Compensation
We provide various forms of share-based compensation to our employees. For awards settled in shares, we measure compensation expense based on the grant-date fair value net of estimated forfeitures. For awards settled in cash, or that may be settled in cash, we measure compensation
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expense based on the fair value at each reporting date net of estimated forfeitures. The expense is recognized over the requisite service period, which is generally the vesting period of the award.
Income Taxes
Provisions for U.S. federal, state and local, and non-U.S. income taxes are calculated on reported (Loss)/earningsLoss before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes. Significant judgment is required in determining income tax provisions and evaluating tax positions.
The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. We record a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. Tax-related interest and penalties are classified as a component of Income tax benefit/(expense)./benefit.
We also assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not that all or a portion of such assets will not be realized. Changes in our estimates and judgments regarding realization of deferred tax assets may result in an increase or decrease to our tax expense and/or other comprehensive income, which would be recorded in the period in which the change occurs.
Postretirement Plans
Many of our employees have earned benefits under defined benefit pension plans. Nonunion and theThe majority of union employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan in 2016. Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.plan. We also provide postretirement benefit plans other than pensions, consisting principally of health care coverage to eligible retirees and qualifying dependents. Benefits under the pension and other postretirement benefit plans are generally based on age at retirement and years of service and, for some pension plans, benefits are also based on the employee’s annual earnings. The net periodic cost of our pension and other postretirement plans is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate, the long-term rate of asset return and medical trend (rate of growth for medical costs). A portion of the service cost component of net periodic pension and other postretirement income or expense is not recognized in net earnings in the year incurred because it is allocated to production as product costs, and reflected in inventory at the end of a reporting period. Actuarial gains and losses, which occur when actual experience differs from actuarial assumptions, are reflected in Shareholders’ equity (net of taxes). If actuarial gains and losses exceed ten percent of the greater of plan assets or plan liabilities, we amortize them over the average expected future lifetime of participants. The funded status of our pension and postretirement plans is reflected on the Consolidated Statements of Financial Position.
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Postemployment Plans
We record a liability for postemployment benefits, such as severance or job training, when payment is probable, the amount is reasonably estimable, and the obligation relates to rights that have vested or accumulated.
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Environmental Remediation
We are subject to federal and state requirements for protection of the environment, including those for discharge of hazardous materials and remediation of contaminated sites. We routinely assess, based on in-depth studies, expert analyses and legal reviews, our contingencies, obligations and commitments for remediation of contaminated sites, including assessments of ranges and probabilities of recoveries from other responsible parties and/or insurance carriers. Our policy is to accrue and charge to current expense identified exposures related to environmental remediation sites when it is probable that a liability has been incurred and the amount can be reasonably estimated. The amount of the liability is based on our best estimate or the low end of a range of reasonably possible exposure for investigation, cleanup and monitoring costs to be incurred. Estimated remediation costs are not discounted to present value as the timing of payments cannot be reasonably estimated. We may be able to recover a portion of the remediation costs from insurers or other third parties. Such recoveries are recorded when realization of the claim for recovery is deemed probable.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid instruments, such as commercial paper, time deposits, and other money market instruments, which have original maturities of three months or less. We aggregate our cash balances by bank where conditions for right of set-off are met, and reclassify any negative balances, consisting mainly of uncleared checks, to Accounts payable. Negative balances reclassified to Accounts payable were $74$102 and $101$47 at December 31, 20202022 and 2019.2021.
Inventories
Inventoried costs on commercial aircraft programs and long-term contracts include direct engineering, production and tooling and other non-recurring costs, and applicable overhead, which includes fringe benefits, production related indirect and plant management salaries and plant services, not in excess of estimated net realizable value. To the extent a material amount of such costs are related to an abnormal event or are fixed costs not appropriately attributable to our programs or contracts, they are expensed in the current period rather than inventoried. Inventoried costs include amounts relating to programs and contracts with long-term production cycles, a portion of which is not expected to be realized within one year. Included in inventory for federal government contracts is an allocation of allowable costs related to manufacturing process reengineering.
Commercial aircraft programs inventory includes deferred production costs and supplier advances. Deferred production costs represent actual costs incurred for production of early units that exceed the estimated average cost of all units in the program accounting quantity. Higher production costs are experienced at the beginning of a new or derivative airplaneaircraft program. Units produced early in a program require substantially more effort (labor and other resources) than units produced later in a program because of volume efficiencies and the effects of learning. We expect that these deferred costs will be fully recovered when all units included in the accounting quantity are delivered as the expected unit cost for later deliveries is below the estimated average cost of all units in the program. Supplier advances represent payments for parts we have contracted to receive from suppliers in the future. As parts are received, supplier advances are amortized to work in process.
The determination of net realizable value of long-term contract costs is based upon quarterly reviews that estimate costs to be incurred to complete all contract requirements. When actual contract costs and
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the estimate to complete exceed total estimated contract revenues, a loss provision is recorded. The determination of net realizable value of commercial aircraft program costs is based upon quarterly program reviews that estimate revenue and cost to be incurred to complete the program accounting quantity. When estimated costs to complete exceed estimated program revenues to go, a program loss provision is recorded in the current period for the estimated loss on all undelivered units in the accounting quantity.
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Used aircraft purchased by the Commercial Airplanes segment and general stock materials are stated at cost not in excess of net realizable value. See ‘Aircraft Valuation’ within this Note for a discussion of our valuation of used aircraft. Spare parts inventory is stated at lower of average unit cost or net realizable value. We review our commercial spare parts and general stock materials quarterly to identify impaired inventory, including excess or obsolete inventory, based on historical sales trends, expected production usage, and the size and age of the aircraft fleet using the part. Impaired inventories are charged to Cost of products in the period the impairment occurs.
Included in inventory for commercial aircraft programs are amounts paid or credited in cash, or other consideration to certain airline customers, that are referred to as early issue sales consideration. Early issue sales consideration is recognized as a reduction to revenue when the delivery of the aircraft under contract occurs. If an airline customer does not perform and take delivery of the contracted aircraft, we believe that we would have the ability to recover amounts paid. However, to the extent early issue sales consideration exceeds advances and is not considered to be otherwise recoverable, it would be written off in the current period.
Precontract Costs
We may, from time to time, incur costs in excess of the amounts required for existing contracts. If we determine the costs are probable of recovery from future orders, then we capitalize the precontract costs we incur, excluding start-up costs which are expensed as incurred. Capitalized precontract costs are included in Inventories in the accompanying Consolidated Statements of Financial Position. Should future orders not materialize or we determine the costs are no longer probable of recovery, the capitalized costs would be written off.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, including applicable construction-period interest, less accumulated depreciation and are depreciated principally over the following estimated useful lives: new buildings and land improvements, from 10 to 40 years; and new machinery and equipment, from 4 to 20 years. The principal methods of depreciation are as follows: buildings and land improvements, 150% declining balance; and machinery and equipment, sum-of-the-years’ digits. Capitalized internal use software is included in Other assets and amortized using the straight line method over 5 years. Capitalized software as a service is included in Other assets and amortized using the straight line method over the term of the hosting arrangement, which is typically no greater than 10 years. We periodically evaluate the appropriateness of remaining depreciable lives assigned to long-lived assets, including assets that may be subject to a management plan for disposition.
Long-lived assets held for sale are stated at the lower of cost or fair value less cost to sell. Long-lived assets held for use are subject to an impairment assessment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.
Leases We determine if an arrangement is, or contains, a lease under which we are the lessee at the inception date. Operating leaseslease assets are included in Other assets, with the related liabilities included in Accrued liabilities and Other long-term liabilities. Assets under finance leases, which primarily represent computer equipment, are included in Property, plant and equipment, net, with the related
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liabilities included in Short-term debt and current portion of long-term debt and Long-term debt on the Consolidated Statements of Financial Position.
Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present
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value of lease payments over the lease term. We use our estimated incremental borrowing rate in determining the present value of lease payments. Variable components of the lease payments such as fair market value adjustments, utilities and maintenance costs are expensed as incurred and not included in determining the present value. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
We have real property lease agreements with lease and non-lease components which are accounted for as a single lease component.
Asset Retirement Obligations
We record all known asset retirement obligations for which the liability’s fair value can be reasonably estimated, including certain asbestos removal, asset decommissioning and contractual lease restoration obligations. Recorded amounts are not material.
We also have known conditional asset retirement obligations, such as certain asbestos remediation and asset decommissioning activities to be performed in the future, that are not reasonably estimable due to insufficient information about the timing and method of settlement of the obligation. Accordingly, these obligations have not been recorded in the Consolidated Financial Statements. A liability for these obligations will be recorded in the period when sufficient information regarding timing and method of settlement becomes available to make a reasonable estimate of the liability’s fair value. In addition, there may be conditional asset retirement obligations that we have not yet discovered (e.g. asbestos may exist in certain buildings but we have not become aware of it through the normal course of business), and therefore, these obligations also have not been included in the Consolidated Financial Statements.
Goodwill and Other Acquired Intangibles
Goodwill and other acquired intangible assets with indefinite lives are not amortized, but are tested for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist. Our annual testing date is April 1.
We test goodwill for impairment by performing a qualitative assessment or using a quantitative test. If we choose to perform a qualitative assessment and determine it is more likely than not that the carrying value of the net assets is more than the fair value of the related operations, the quantitative test is then performed; otherwise, no further testing is required. For operations where the quantitative test is used, we compare the carrying value of net assets to the estimated fair value of the related operations. If the fair value is determined to be less than carrying value, the shortfall up to the carrying value of the goodwill represents the amount of goodwill impairment.
Indefinite-lived intangibles consist of a brand and trade name and in-process research and development (IPR&D) acquired in business combinations. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. IPR&D is reclassified to finite-lived acquired intangible assets when a project is completed and then amortized on a straight-line basis over the asset’s estimated useful life. We test these intangibles for impairment by comparing the carrying values to current projections of related discounted cash flows. Any excess carrying value over the amount of discounted cash flows represents the amount of the impairment.
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Our finite-lived acquired intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: developed technology, from 4 to 14 years; product know-how, from 6 to 30 years; customer base, from 3 to 17 years; distribution rights, from 3 to 27 years; and other, from 1 to 32 years. We evaluate the potential impairment of finite-lived acquired intangible assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying
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value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.
Investments
Time deposits are held-to-maturity investments that are carried at cost.
Available-for-sale debt securities include commercial paper, U.S. government agency securities and corporate debt securities. Available-for-sale debt securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income. Realized gains and losses on available-for-sale debt securities are recognized based on the specific identification method. Available-for-sale debt securities are assessed for impairment quarterly.
The equity method of accounting is used to account for investments for which we have the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if we have an ownership interest in the voting stock of an investee of between 20% and 50%. The cumulative earnings approach is used for cash flow classification of distributions received from equity method investments.
Other Equity investments are recorded at fair value, with gains and losses recorded through net earnings. Equity investments without readily determinable fair value are measured at cost, less impairments, plus or minus observable price changes. Equity investments without readily determinable fair value are assessed for impairment quarterly.
We classify investment income and loss on our Consolidated Statements of Operations based on whether the investment is operating or non-operating in nature. Operating investments align strategically and are integrated with our operations. Earnings from operating investments, including our share of income or loss from equity method investments, dividend income from other equity investments, and any impairments or gain/loss on the disposition of these investments, are recorded in (Loss)/Income from operating investments, net. Non-operating investments are those we hold for non-strategic purposes. Earnings from non-operating investments, including interest and dividends on marketable securities, and any impairments or gain/loss on the disposition of these investments are recorded in Other income/(loss),income, net.
Derivatives
All derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent of holding them. We use derivative instruments to principally manage a variety of market risks. For our cash flow hedges, the derivative’s gain or loss is initially reported in comprehensive income and is subsequently reclassified into earnings in the same period or periodsperiod(s) during which the hedged forecasted transaction affects earnings.
We have agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and internationalnon-U.S. business requirements. We also hold certain other derivative instruments for economic purposes. These aluminum purchase and sale agreements and other derivative instruments are derivatives for accounting purposes but are not designated as hedges for hedge accounting treatment. We also hold certain derivative instruments for economic purposes that are not designated for hedge accounting treatment.purposes. For these aluminum agreements and for other derivative instruments not designated for hedge accounting treatment, the changes in their fair value are recorded in earnings immediately.
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Allowances for lossesLosses on certain financial assetsCertain Financial Assets
We establish allowances for credit losses on accounts receivable, unbilled receivables, customer financing receivables and certain other financial assets. The adequacy of these allowances areis assessed quarterly through consideration of factors including, but not limited to,such as customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates
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and collateral exposures. Collateral exposure is the excess of the carrying value of a financial asset over the fair value of the related collateral. We assign internal credit ratings for all customers and determine the creditworthiness of each customerour customers by assigning internal credit ratings based upon publicly available information and information obtained directly from ourthe customers. Our rating categories are comparable to those used by major credit rating agencies.
Customer financing receivables are collateralized by security in the related asset. We use a median calculated from published collateral values from multiple third-party aircraft value publications based on the type and age of the aircraft to determine the fair value of aircraft collateral. Under certain circumstances, we apply judgment based on the attributes of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by outside publications.
We have entered into agreements with certain customers that would entitle us to look beyond the specific collateral underlying the receivable for purposes of determining the collateral exposure. Should the proceeds from the sale of the underlying collateral asset resulting from a default condition be insufficient to cover the carrying value of our receivable (creating a shortfall condition), these agreements would, for example, permit us to take the actions necessary to sell or retain certain other assets in which the customer has an equity interest and use the proceeds to cover the shortfall.
Commercial Aircraft ValuationTrade-in Commitments
Used aircraft under trade-in commitments and aircraft under repurchase commitments In conjunction with signing a definitive agreement for the sale of new commercial aircraft (Sale Aircraft), we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price upon the purchase of Sale Aircraft. Additionally, we have entered into contingent repurchase commitments with certain customers wherein we agree to repurchase the Sale Aircraft at a specified price, generally 10 to 15 years after delivery of the Sale Aircraft. Our repurchase of the Sale Aircraft is contingent upon a future, mutually acceptable agreement for the sale of additional new aircraft. If we execute an agreement for the sale of additional new aircraft, and if the customer exercises its right to sell the Sale Aircraft to us, a contingent repurchase commitment would become a trade-in commitment. Our historical experience is that contingent repurchase commitments infrequently become trade-in commitments.price.
Exposure related to trade-in commitments may take the form of:
(1)adjustments to revenue for the difference between the contractual trade-in price in the definitive agreement and our best estimate of the fair value of the trade-in aircraft as of the date of such agreement, which would be recognized upon delivery of the Sale Aircraft, and/or
(2)charges to cost of products for adverse changes in the fair value of trade-in aircraft that occur subsequent to signing of a definitive agreement for Sale Aircraft but prior to the purchase of the used trade-in aircraft. Estimates based on current aircraft values would be included in Accrued liabilities.
The fair value of trade-in aircraft is determined using aircraft-specific data such as model, age and condition, market conditions for specific aircraft and similar models, and multiple valuation sources. This process uses our assessment of the market for each trade-in aircraft, which in most instances begins years before the return of the aircraft. There are several possible markets in which we continually pursue opportunities to place used aircraft. These markets include, but are not limited to, the resale market, which could potentially include the cost of long-term storage; the leasing market, with the potential for refurbishment costs to meet the leasing customer’s requirements; or the scrap market. Trade-in aircraft valuation varies significantly depending on which market we determine is most likely for each aircraft. On a quarterly basis, we update our valuation analysis based on the actual activities associated with placing each aircraft into a market or using current published third-party aircraft valuations based on the type and age of the aircraft, adjusted for individual attributes and known conditions.
Used aircraft acquired by the Commercial Airplanes segment are included in Inventories at the lower of cost or net realizable value as it is our intent to sell these assets. To mitigate costs and enhance marketability, aircraft may be placed on operating lease. While on operating lease, the assets are included in Customer financing.
Customer financing Customer financing includes operating lease equipment, notes receivable, and sales-type/finance leases. Sales-type/finance leases are treated as receivables, and allowances for losses are established as necessary.
We assess the fair value of the assets we own, including equipment under operating leases, assets held for sale or re-lease, and collateral underlying receivables, to determine if their fair values are less
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than the related assets’ carrying values. Differences between carrying values and fair values of sales-type/finance leases and notes and other receivables, as determined by collateral value, are considered in determining the allowance for losses on receivables.
We use a median calculated from published collateral values from multiple third-party aircraft value publications based on the type and age of the aircraft to determine the fair value of aircraft. Under certain circumstances, we apply judgment based on the attributes of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by outside publications.
Impairment review for assets under operating leases and held for sale or re-lease We evaluate for impairment assets under operating lease or assets held for sale or re-lease when events or changes in circumstances indicate that the expected undiscounted cash flow from the asset may be less than the carrying value. We use various assumptions when determining the expected undiscounted cash flow, including our intentions for how long we will hold an asset subject to operating lease before it is sold, the expected future lease rates, lease terms, residual value of the asset, periods in which the asset may be held in preparation for a follow-on lease, maintenance costs, remarketing costs and the remaining economic life of the asset. We record assets held for sale at the lower of carrying value or fair value less costs to sell.
When we determine that impairment is indicated for an asset, the amount of impairment expense recorded is the excess of the carrying value over the fair value of the asset.
Allowance for losses on customer financing receivables We record the potential impairment of customer financing receivables in a valuation account, the balance of which is an accounting estimate of expected but unconfirmed losses. The allowance for losses on receivables relates to two components of receivables: (a) receivables that are evaluated individually for impairment and (b) all other receivables.
We determine a receivable is impaired when, based on current information and events, it is expected that we will be unable to collect amounts due according to the original contractual terms of the receivable agreement, without regard to any subsequent restructurings. Factors considered in assessing collectability include, but are not limited to, a customer’s extended delinquency, requests for restructuring and filings for bankruptcy. We determine a specific impairment allowance based on the difference between the carrying value of the receivable and the estimated fair value of the related collateral we would expect to realize.
We review the adequacy of the allowance attributable to the remaining receivables (after excluding receivables subject to a specific impairment allowance) by assessing both the collateral exposure and the applicable cumulative default rate. Collateral exposure for a particular receivable is the excess of the carrying value of the receivable over the fair value of the related collateral. A receivable with an estimated fair value in excess of the carrying value is considered to have no collateral exposure. The applicable cumulative default rate is determined using two components: customer credit ratings and weighted average remaining contract term. Internally assigned credit ratings, our credit quality indicator, are determined for each customer in the portfolio. Those ratings are updated based upon public information and information obtained directly from our customers.
We have entered into agreements with certain customers that would entitle us to look beyond the specific collateral underlying the receivable for purposes of determining the collateral exposure as described above. Should the proceeds from the sale of the underlying collateral asset resulting from a default condition be insufficient to cover the carrying value of our receivable (creating a shortfall condition), these agreements would, for example, permit us to take the actions necessary to sell or retain certain other assets in which the customer has an equity interest and use the proceeds to cover the shortfall.
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Each quarter we review customer credit ratings, published historical credit default rates for different rating categories, and multiple third-party aircraft value publications as a basis to validate the reasonableness of the allowance for losses on receivables. There can be no assurance that actual results will not differ from estimates or that the consideration of these factors in the future will not result in an increase or decrease to the allowance for losses on receivables.
Warranties
In conjunction with certain product sales, we provide warranties that cover factors such as non-conformance to specifications and defects in material and design. The majority of our warranties are issued by our Commercial AirplanesBCA segment. Generally, aircraft sales are accompanied by a 3 to 4-year standard warranty for systems, accessories, equipment, parts, and software manufactured by us or manufactured to certain standards under our authorization. These warranties are included in the programs’ estimate at completion. On occasion we have made commitments beyond the standard warranty obligation to correct fleet-wide major issues of a particular model, resulting in additional accrued warranty expense. Warranties issued by our BDS segment principally relate to sales of military aircraft and weapons systems. These sales are generally accompanied by a six month to two-year warranty period and cover systems, accessories, equipment, parts and software manufactured by us to certain contractual specifications. Estimated costs related to standard warranties are recorded in the period in which the related product delivery occurs. 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. Estimated costs of these additional warranty issues are considered changes to the initial liability estimate.
We provide guarantees to certain commercial airplaneaircraft customers which include compensation provisions for failure to meet specified aircraft performance targets. We account for these performance guarantees as warranties. The estimated liability for these warranties is based on known and anticipated operational characteristics and forecasted customer operation of the aircraft relative to contractually specified performance targets, and anticipated settlements when contractual remedies are not specified. Estimated payments are recorded as a reduction of revenue at delivery of the related aircraft. We have agreements that require certain suppliers to compensate us for amounts paid to customers for failure of supplied equipment to meet specified performance targets. Claims against suppliers under these agreements are included in Inventories and recorded as a reduction in Cost of products at delivery of the related aircraft. These performance warranties and claims against suppliers are included in the programs’ estimate at completion.
Supplier Penalties
We record an accrual for supplier penalties when an event occurs that makes it probable thatwe will incur a supplier penalty will be incurred and the amount is reasonably estimable. Until an event occurs, we fully anticipate accepting all products procured under production-related contracts.
Guarantees
WeAt the inception of a guarantee, we record a liability in Accrued liabilities for the fair value of guarantees.the guarantee. For credit guarantees, the liability is equal to the present value of the expected loss. We determine the expected loss by multiplying the creditor’s default rate by the guarantee amount reduced by the expected recovery, if applicable. At inception of a guarantee, and adjusted each quarter, weWe also recognize a liability for the expected contingent loss.loss at inception and adjust it each quarter.
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Note 2 – Goodwill and Acquired Intangibles
Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other. Changes in the carrying amount of goodwill for the years ended December 31, 20202022 and 20192021 were as follows:
Commercial
Airplanes
Defense, Space & SecurityGlobal ServicesOtherTotal
Balance at January 1, 2019$1,241 $3,229 $3,345 $25 $7,840 
KLX acquisition adjustments(51)(51)
Acquisitions72 0188 62 322 
Dispositions(49)(49)
Goodwill adjustments(10)(2)
Balance at December 31, 2019$1,313 $3,219 $3,441 $87 $8,060 
Goodwill adjustments3 5 13 21 
Balance at December 31, 2020$1,316 $3,224 $3,454 $87 $8,081 
Commercial
Airplanes
Defense, Space & SecurityGlobal ServicesOtherTotal
Balance at December 31, 2020$1,316 $3,224 $3,454 $87 $8,081 
Goodwill adjustments(11)(2)(13)
Balance at December 31, 2021$1,316 $3,224 $3,443 $85 $8,068 
Goodwill adjustments(11)(11)
Balance at December 31, 2022$1,316 $3,224 $3,432 $85 $8,057 
As of December 31, 20202022 and 2019,2021, we had indefinite-lived intangible assets with carrying amounts of $197 relating to trade names. During 2019, we recorded an impairment of $293 within Cost of Sales, as a result of our decision to retire the Aviall brand and trade name. As of December 31, 20202022 and 2019,2021, we had an indefinite-lived intangible asset with a carrying amount of $202 related to in process research and development for a next-generation air vehicle.
The gross carrying amounts and accumulated amortization of our acquired finite-lived intangible assets were as follows at December 31:
2020201920222021
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
Distribution rightsDistribution rights$2,812 $1,427 $2,989 $1,262 Distribution rights$2,546 $1,443 $2,554 $1,321 
Product know-howProduct know-how553 384 553 354 Product know-how552 441 553 413 
Customer baseCustomer base1,373 672 1,364 599 Customer base1,356 777 1,360 721 
Developed technologyDeveloped technology626 502 653 485 Developed technology621 545 626 526 
OtherOther303 238 280 200 Other276 233 301 250 
TotalTotal$5,667 $3,223 $5,839 $2,900 Total$5,351 $3,439 $5,394 $3,231 
During 2020, we recorded impairments of $178 within Cost of Sales related to our distribution rights, primarily driven by airlines' decisions to retire certain aircraft. Amortization expense for acquired finite-lived intangible assets for the years ended December 31, 20202022 and 20192021 was $317$241 and $331.$284. Estimated amortization expense for the five succeeding years is as follows:
20212022202320242025
Estimated amortization expense$284 $245 $234 $220 $196 
During 2019, we acquired $563 of finite-lived intangible assets, of which $30 related to non-cash investing and financing transactions.
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20232024202520262027
Estimated amortization expense$234 $219 $194 $190 $172 

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Note 3 – Earnings Per Share
Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings.
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Basic earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the basic weighted average common shares outstanding.
Diluted earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the diluted weighted average common shares outstanding.
The elements used in the computation of basic and diluted earnings per share were as follows:
(In millions - except per share amounts)
(In millions - except per share amounts)
(In millions - except per share amounts)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Net (loss)/earnings attributable to Boeing Shareholders($11,873)($636)$10,460 
Less: earnings available to participating securities00
Net (loss)/earnings available to common shareholders($11,873)($636)$10,453 
Net loss available to common shareholdersNet loss available to common shareholders($4,935)($4,202)($11,873)
BasicBasicBasic
Basic weighted average shares outstandingBasic weighted average shares outstanding569.0 566.0 579.9 Basic weighted average shares outstanding595.2 588.0 569.0 
Less: participating securities0.4 0.6 0.7 
Less: participating securities(2)
Less: participating securities(2)
0.3 0.4 0.4 
Basic weighted average common shares outstandingBasic weighted average common shares outstanding568.6 565.4 579.2 Basic weighted average common shares outstanding594.9 587.6 568.6 
DilutedDilutedDiluted
Basic weighted average shares outstandingBasic weighted average shares outstanding569.0 566.0 579.9 Basic weighted average shares outstanding595.2 588.0 569.0 
Dilutive potential common shares(1)
Dilutive potential common shares(1)
006.3 
Dilutive potential common shares(1)
Diluted weighted average shares outstandingDiluted weighted average shares outstanding569.0 566.0 586.2 Diluted weighted average shares outstanding595.2 588.0 569.0 
Less: participating securities0.4 0.6 0.7 
Less: participating securities(2)
Less: participating securities(2)
0.3 0.4 0.4 
Diluted weighted average common shares outstandingDiluted weighted average common shares outstanding568.6 565.4 585.5 Diluted weighted average common shares outstanding594.9 587.6 568.6 
Net (loss)/earnings per share:
Net loss per share:Net loss per share:
BasicBasic($20.88)($1.12)$18.05 Basic($8.30)($7.15)($20.88)
DilutedDiluted(20.88)(1.12)17.85 Diluted(8.30)(7.15)(20.88)
(1)Diluted (loss)/earningsloss per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.
(2)Participating securities include certain instruments in our deferred compensation plan.
As a result of incurring a net loss for the years ended December 31,in 2022, 2021 and 2020, and 2019, potential common shares of 3.5 million, 2.6 million and 1.6 million, and 4.1 millionrespectively, were excluded from diluted loss per share because the effect would have been antidilutive. In addition, theThe following table includesrepresents all shares that were excluded from the numbercalculation of shares thatdiluted loss per share during the respective period but may be dilutive potential common shares in the future. Thesefuture periods. This includes potential common shares that were not included in the computation of
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diluted (loss)/earnings per shareexcluded because the effect was either antidilutive or the performance condition was not met.
(Shares in millions)(Shares in millions)(Shares in millions)
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Performance awardsPerformance awards5.7 2.8 2.5 Performance awards 2.9 5.7 
Performance-based restricted stock unitsPerformance-based restricted stock units1.3 0.6 0.3 Performance-based restricted stock units0.4 0.8 1.3 
Restricted stock unitsRestricted stock units1.0 Restricted stock units1.0 0.4 1.0 
Stock optionsStock options0.8 0.3 
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Note 4 – Income Taxes
The components of (Loss)/earningsLoss before income taxes were:
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
U.S.U.S.($14,882)($2,792)$11,166 U.S.($5,457)($5,475)($14,882)
Non-U.S.Non-U.S.406 533 438 Non-U.S.435 442 406 
TotalTotal($14,476)($2,259)$11,604 Total($5,022)($5,033)($14,476)
Income tax (benefit)/expense consisted of the following:
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Current tax (benefit)/expenseCurrent tax (benefit)/expenseCurrent tax (benefit)/expense
U.S. federalU.S. federal($3,968)($308)$1,873 U.S. federal($58)($89)($3,968)
Non-U.S.Non-U.S.148 169 169 Non-U.S.142 147 148 
U.S. stateU.S. state21 (161)97 U.S. state(42)42 21 
Total currentTotal current(3,799)(300)2,139 Total current42 100 (3,799)
Deferred tax (benefit)/expenseDeferred tax (benefit)/expenseDeferred tax (benefit)/expense
U.S. federalU.S. federal652 (953)(996)U.S. federal(62)(855)652 
Non-U.S.Non-U.S.0(3)(4)Non-U.S.(3)(12) 
U.S. stateU.S. state612 (367)U.S. state54 24 612 
Total deferredTotal deferred1,264 (1,323)(995)Total deferred(11)(843)1,264 
Total income tax (benefit)/expense($2,535)($1,623)$1,144 
Total income tax expense/(benefit)Total income tax expense/(benefit)$31 ($743)($2,535)
Net income tax (refunds)/payments were ($1,317), ($1,480) and $37 $837in 2022, 2021 and $1,326 in 2020, 2019 and 2018, respectively.
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The following is a reconciliation of the U.S. federal statutory tax to actual income tax (benefit)/expense:
Years ended December 31,202020192018
AmountRateAmountRateAmountRate
U.S. federal statutory tax($3,039)21.0 %($474)21.0 %$2,437 21.0 %
Valuation allowance2,603 (18.0)25 (1.1)22 0.2 
Impact of CARES Act (1)
(1,175)8.1 
Audit settlements(2)
(587)4.1 (371)16.4 (412)(3.6)
Research and development credits(284)2.0 (382)16.9 (207)(1.8)
Other provision adjustments234 (1.7)66 (3.0)91 1.0 
State income tax provision, net of effects on U.S. federal tax(168)1.2 (45)2.0 75 0.6 
Excess tax benefits(3)
(82)0.6 (180)8.0 (181)(1.6)
Foreign derived intangible income(4)
(31)0.2 (229)10.1 (549)(4.7)
Tax deductible dividends(13)0.1 (53)2.4 (48)(0.4)
Tax on non-US activities7 (0.1)20 (0.9)27 0.2 
Impact of Tax Cuts and Jobs Act(5)
(111)(1.0)
Income tax (benefit)/expense($2,535)17.5 %($1,623)71.8 %$1,144 9.9 %

Years ended December 31,202220212020
AmountRateAmountRateAmountRate
U.S. federal statutory tax($1,054)21.0 %($1,057)21.0 %($3,039)21.0 %
Valuation allowance1,199 (23.9)512 (10.2)2,603 (18.0)
Research and development credits(204)4.1 (189)3.8 (284)2.0 
State income tax provision, net of effects on U.S. federal tax(90)1.8 (94)1.9 (168)1.2 
Tax on non-U.S. activities64 (1.3)47 (0.9)(0.1)
Impact of CARES Act (1)
(5)0.1 (0.1)(1,175)8.1 
Other provision adjustments121 (2.4)35 (0.8)108 (0.8)
Audit settlements(2)
(587)4.1 
Income tax expense/(benefit)$31 (0.6)%($743)14.7 %($2,535)17.5 %
(1)    On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES)CARES Act was enacted, which includes a five year net operating loss (NOL) carryback provision which enabled us to benefit from certain losses and re-measure certain deferredthe 2020 U.S. federal tax assets and liabilitiesNOL at the former federal tax rate of 35%. In 2022, 2021, and 2020, we recorded tax benefits of $5, tax expense of $3, and tax benefits of $1,175 related to the NOL carryback provision.
(2)    In the fourth quarter of 2020, we recorded a tax benefit of $587 related to the settlement of the 2015-2017 federal tax audit. In the fourth quarter of 2019, we recorded a tax benefit of $371 related to the settlement of state tax audits spanning 15 tax years. In the third quarter of 2018, we recorded a tax benefit of $412 related to the settlement of the 2013-2014 federal tax audit.
(3)    In 2020, 2019 and 2018, we recorded excess tax benefits related to employee share-based payments of $82, $180 and $181, respectively.
(4)    In 2020, 2019 and 2018, we recorded tax benefits related to foreign derived intangible income of $31, $229 and $549, respectively which effectively apply a lower U.S. tax rate to intangible income derived from serving non-U.S. markets.
(5)    During the fourth quarter of 2018 and in accordance with U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118, the Company completed its accounting for the provisional amounts recognized at December 31, 2017 and recorded an incremental benefit related to refinements to these provisional amounts which was not significant.

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Significant components of our deferred tax assets/(liabilities) at December 31 were as follows:
2020201920222021
Inventory and long-term contract methods of income recognitionInventory and long-term contract methods of income recognition($4,313)($6,048)Inventory and long-term contract methods of income recognition($4,369)($3,827)
Federal net operating loss, credit, interest and other carryovers(1)
Federal net operating loss, credit, interest and other carryovers(1)
2,082 1,522 
Fixed assets, intangibles and goodwillFixed assets, intangibles and goodwill(1,641)(1,657)
Research expendituresResearch expenditures1,464 
Pension benefitsPension benefits3,029 3,495 Pension benefits1,146 1,739 
Fixed assets, intangibles and goodwill(1,645)(1,544)
Other employee benefitsOther employee benefits1,095 991 
State net operating loss, credit, interest and other carryovers(2)
State net operating loss, credit, interest and other carryovers(2)
1,021 929 
Accrued expenses and reservesAccrued expenses and reserves933 763 
Other postretirement benefit obligationsOther postretirement benefit obligations660 913 
737 MAX customer concessions and other considerations737 MAX customer concessions and other considerations1,253 1,626 737 MAX customer concessions and other considerations425 682 
Net operating loss, credit and capital loss carryovers(1)
1,182 696 
Other postretirement benefit obligations1,023 1,120 
Other employee benefits957 849 
Accrued expenses and reserves808 628 
Customer and commercial financing(180)(268)
OtherOther56 (166)Other179 227 
Gross deferred tax assets/(liabilities) before valuation allowanceGross deferred tax assets/(liabilities) before valuation allowance$2,170 $388 Gross deferred tax assets/(liabilities) before valuation allowance$2,995 $2,282 
Valuation allowanceValuation allowance(3,094)(118)Valuation allowance(3,162)(2,423)
Net deferred tax assets/(liabilities) after valuation allowanceNet deferred tax assets/(liabilities) after valuation allowance($924)$270 Net deferred tax assets/(liabilities) after valuation allowance($167)($141)
(1)     Of the deferred tax asset for federal net operating loss, credit, interest and creditother carryovers, $793$742 expires on or before December 31, 20402042 and $389$1,340 may be carried over indefinitely.
(2)     Of the deferred tax asset for state net operating loss, credit, interest and other carryovers, $514 expires on or before December 31, 2042 and $507 may be carried over indefinitely.
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Net deferred tax assets/(liabilities) at December 31 were as follows:
2020201920222021
Deferred tax assetsDeferred tax assets$11,600 $10,722 Deferred tax assets$12,301 $11,258 
Deferred tax liabilitiesDeferred tax liabilities(9,430)(10,334)Deferred tax liabilities(9,306)(8,976)
Valuation allowanceValuation allowance(3,094)(118)Valuation allowance(3,162)(2,423)
Net deferred tax assets/(liabilities)Net deferred tax assets/(liabilities)($924)$270 Net deferred tax assets/(liabilities)($167)($141)
The Company’s deferred income tax assets of $11,600$12,301 can be used in future years to offset taxable income and reduce income taxes payable. The Company’s deferred income tax liabilities of $9,430$9,306 will partially offset deferred income tax assets and result in higher taxable income in future years and increase income taxes payable. Tax law determines whether future reversals of temporary differences will result in taxable and deductible amounts that offset each other in future years. The particular years in which temporary differences result in taxable or deductible amounts generally are determined by the timing of the recovery of the related asset or settlement of the related liability. The deferred income tax assets and liabilities relate primarily to U.S. federal and state tax jurisdictions. From a U.S. federal tax perspective, the Company does not have any significant net operating loss carryforwards nor does it have any significant federal tax credits that are at risk of expiring. The Company generated taxable income in 2018 and 2019 and expects to have a tax net operating lossNOL in 2020 that will bewas carried back to prior years when the tax rate was 35% due to the CARES Act benefit as described above.
During 2019 and 2020 the The Company generated significant pre-tax lossestax NOL in 2021 and interest carryovers in 2021 and 2022 that can be carried forward indefinitely and federal research and development credits that can be carried forward 20 years.
In the fourth quarter of 2020 and throughout 2021 and 2022, the Company reachedwas in a three-year cumulative pre-tax loss position. We also normalized earnings and other comprehensive income (OCI) for certain non-recurring items includingand reached a normalized three-year cumulative loss position in 2021. Adjustments to normalize earnings included non-recurring items for certain 737 MAX expenses, an agreement with the Department of Justice, severance costs and remeasurement gains and losses from the annual remeasurement of pension and other postretirement benefit obligations. On a normalized basis the Company expects to reach a three-year cumulative loss position in 2021 as record earnings in 2018 are replaced by 2021 results. For purposes of assessing the recoverability of deferred
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tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.
As of December 31, 20202022 and 2021, the Company has recorded valuation allowances of $3,094$3,162 and $2,423 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss carryforwards, and state tax credits.credit carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to determineestimate the reversal patterns. Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets. Because the pension and other postretirement benefit obligations are recorded to both continuing operations and other comprehensive income (OCI), the Company recorded a portion of the fourth quarter
The increase in the valuation allowance during 2022 is primarily due to incometax credits and other carryforwards generated in 2022 that cannot be realized in 2022. During 2022, the Company increased the valuation allowance by $739. This reflects a tax expense of $1,199 recorded in continuing operations ($2,513) and an increase of $18 related to the associated federal benefit of state impacts. This was partially offset by a portiontax benefit of $478 included in OCI primarily due to OCI ($196). Ifthe net actuarial gains that resulted from the annual remeasurement of pension assets and liabilities.
Until the Company continues to generate losses and negative normalized earnings in future periods,generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI. When income generation returns to more normal levels we can expect to see the allowance reverse
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The Tax Cuts and increase reported earnings and/or OCI.
The TCJAJobs Act (TCJA) one-time repatriation tax and Global Intangible Low Tax Income liabilities effectively taxed the undistributed earnings previously deferred from U.S. income taxes.We have not provided for foreign withholding taxdeferred income taxes on the undistributed earnings from ourcertain non-U.S. subsidiaries because such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any foreign withholding taxdeferred income taxes would not be significant.
As of December 31, 20202022 and 2019,2021, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant. The amounts of interest included in the Consolidated Statements of Operations were not significant for the years ended December 31, 2020, 20192022, 2021 and 2018.

2020.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
202020192018202220212020
Unrecognized tax benefits – January 1Unrecognized tax benefits – January 1$1,476 $2,412 $1,736 Unrecognized tax benefits – January 1$858 $966 $1,476 
Gross increases – tax positions in prior periodsGross increases – tax positions in prior periods44 100 87 Gross increases – tax positions in prior periods17 64 44 
Gross decreases – tax positions in prior periodsGross decreases – tax positions in prior periods(581)(1,418)(410)Gross decreases – tax positions in prior periods(51)(245)(581)
Gross increases – current period tax positionsGross increases – current period tax positions136 344 1,208 Gross increases – current period tax positions91 73 136 
Gross decreases – current period tax positionsGross decreases – current period tax positions(1)Gross decreases – current period tax positions
SettlementsSettlements(109)39 (206)Settlements(109)
Statute Lapse(3)
Unrecognized tax benefits – December 31Unrecognized tax benefits – December 31$966 $1,476 $2,412 Unrecognized tax benefits – December 31$915 $858 $966 
As of December 31, 2020, 20192022, 2021 and 2018,2020, the total amount of unrecognized tax benefits was $966, $1,476include $878, $790 and $2,412,$734, respectively, of which $734, $1,287 and $1,405that would affect the effective tax rate, if recognized. As of December 31, 2020,2022, these amounts are primarily associated with the amount of research tax credits claimed and uncertainties in the TCJA.various other matters.
Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service (IRS) is expected to beginbegan the 2018-2019 federal tax audit in the first quarter of 2021 and added tax year 2020 to the audit in the fourth quarter of 2021. We are also subject to examination in major state and international jurisdictions for the 2007-20192008-2021 tax years. We
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believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.
Note 5 – Accounts Receivable, net
Accounts receivable at December 31 consisted of the following:
2020201920222021
U.S. government contracts(1)
U.S. government contracts(1)
$811 $1,121 
U.S. government contracts(1)
$800 $1,180 
Commercial AirplanesCommercial Airplanes17 29 Commercial Airplanes293 279 
Global Services(2)
Global Services(2)
1,437 1,967 
Global Services(2)
1,390 1,456 
Defense, Space, & Security(2)
Defense, Space, & Security(2)
120 220 
Defense, Space, & Security(2)
145 111 
OtherOther14 Other5 
Less valuation allowanceLess valuation allowance(444)(73)Less valuation allowance(116)(390)
TotalTotal$1,955 $3,266 Total$2,517 $2,641 
(1)Includes foreign military sales through the U.S. government
(2)Excludes U.S. government contracts
Our valuation allowance was increased from $73 to $138 on January 1, 2020 upon adoption
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Note 6 – Allowances for Losses on Financial Assets
Upon adoption of ASU 2016-13, we recorded a $162 cumulative-effect adjustment to retained earnings to increase our allowances for credit losses, resulting in a balance of $337 as of January 1, 2020. The change in allowances for expected credit losses for the yearyears ended December 31, 20202022 and 2021 consisted of the following:
Accounts receivable, netUnbilled receivables, netOther Current Assets, netCustomer financing, netOther Assets, netTotalAccounts receivableUnbilled receivablesOther Current AssetsCustomer financingOther AssetsTotal
Balance at January 1, 2020($138)($81)($38)($5)($75)($337)
Balance at January 1, 2021Balance at January 1, 2021($444)($129)($72)($17)($140)($802)
Changes in estimatesChanges in estimates(314)(48)(34)(12)(66)(474)Changes in estimates(24)(11)(1)(59)(89)
Write-offsWrite-offs8 8 Write-offs77 49 13 143 
RecoveriesRecoveries1 1 Recoveries
Balance at December 31, 2020($444)($129)($72)($17)($140)($802)
Balance at December 31, 2021Balance at December 31, 2021(390)(91)(62)(18)(186)(747)
Balance at January 1, 2022Balance at January 1, 2022(390)(91)(62)(18)(186)(747)
Changes in estimatesChanges in estimates2 21 (27)(37)(35)(76)
Write-offsWrite-offs260 47 4 133 444 
RecoveriesRecoveries12 12 
Balance at December 31, 2022Balance at December 31, 2022($116)($23)($85)($55)($88)($367)
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Note 7 – Inventories
Inventories at December 31 consisted of the following:
2020201920222021
Long-term contracts in progressLong-term contracts in progress$823 $1,187 Long-term contracts in progress$582 $872 
Commercial aircraft programsCommercial aircraft programs70,153 66,016 Commercial aircraft programs67,702 68,106 
Capitalized precontract costs(1)
Capitalized precontract costs(1)
794 648 
Commercial spare parts, used aircraft, general stock materials and otherCommercial spare parts, used aircraft, general stock materials and other10,739 9,419 Commercial spare parts, used aircraft, general stock materials and other9,073 9,197 
TotalTotal$81,715 $76,622 Total$78,151 $78,823 
Long-term contracts in progress includes Delta launch program inventory that is being sold at cost to United Launch Alliance (ULA) under an inventory supply agreement that terminates on March 31, 2021. The inventory balance was $17 and $176(1)    Capitalized precontract costs at December 31, 2020 and 2019. See indemnifications to ULA in Note 14.
Commercial spare parts, used aircraft, general stock materials and other2022 includes capitalized precontract costs of $733 at December 31, 2020 and $711 at December 31, 2019 primarilyamounts related to KC-46A Tanker, Commercial Crew, and Commercial Crew.T-7 Production Options. See Note 13.
Commercial Aircraft Programs
The increasedecrease in commercial aircraft programs inventory during 20202022 reflects the large number of undelivered aircraft due to thea decrease in 737 MAX grounding, lower wide-body deliveries driven by the impacts of the COVID-19 pandemic and 787 production issues and associated rework, partiallyinventory, offset by a reach-forward loss of $6,493 on thegrowth in 777X program. At December 31, 2020, commercialinventory. Commercial aircraft programs inventory includes approximately 425 undelivered250 737 MAX aircraft and 80 undelivered100 787 aircraft.
We are currently remarketing certainaircraft at December 31, 2022 as compared with 335 737 aircraft and may have to remarket additional110 787 aircraft in future periods. If we are unable to successfully remarket the aircraft, determine further production rates reductions are necessary, and/or contract the program accounting quantities, future earnings may be reduced and/or additional reach-forward losses may have to be recorded.at December 31, 2021.
At December 31, 20202022 and 2019,2021, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $2,159$2,955 and $1,313$1,296 and unamortized tooling and other non-recurring costs of $480$626 and $521.$617. At December 31, 2020, $2,5602022, $3,555 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders, and $79$26 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.
At December 31, 20202022 and 2019,2021, commercial aircraft programs inventory included the following amounts related to the 777X program: $4,059 and $3,363 of work in process, $1,330 and $652 of
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deferred production costs, and $3,774 and $3,521of unamortized tooling and other non-recurring costs. In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023. The production pause is resulting in abnormal production costs that are being expensed as incurred until 777X-9 production resumes. We expensed abnormal production costs of $3,295 and $2,914. $325 during the year ended December 31, 2022. The 777X program has near break-even margins at December 31, 2022.
During the fourth quarter of 20202021, we determined that estimated costs to complete the 777X787 program plus costs already included in 777X787 inventory exceed estimated revenues from the program. The resulting reach-forward loss of $6,493$3,460 was recorded as a reduction to deferred production costs. As a result, 777X deferred production costs were immaterial at December 31, 2020. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.
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At December 31, 20202022 and 2019,2021, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $14,976$12,689 and $18,716, $1,865$11,693, $1,831 and $2,202$1,907 of supplier advances, and $1,863$1,722 and $2,092$1,815 of unamortized tooling and other non-recurring costs. At December 31, 2020, $12,1652022, $9,881 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders, and $4,674$4,530 is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We are currently producing at abnormally low rates resulting in abnormal production costs that are being expensed as incurred. We expensed abnormal production costs of $1,240 and $468 during the years ended December 31, 2022 and 2021.
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling $2,992$3,586 and $2,863$3,290 at December 31, 20202022 and 2019.2021.
Note 8 – Contracts with Customers
Unbilled receivables decreasedincreased from $9,043$8,620 at December 31, 20192021 to $7,995$8,634 at December 31, 2020, primarily driven by an increase in billings at BDS and BGS, as well as an increase in allowances for expected credit losses at BGS.
Advances and progress billings decreased from $51,551 at December 31, 2019 to $50,488 at December 31, 2020,2022, primarily driven by revenue recognized in excess of advances on orders receivedbillings at BGS, partially offset by billings in excess of revenue recognized at BDS.
Advances and return of BCA customer advances, partially offsetprogress billings increased from $52,980 at December 31, 2021 to $53,081 at December 31, 2022, primarily driven by advances on orders received at BCA, partially offset by revenue recognized at BDS and BGS.
Revenues recognized for the years ended December 31, 20202022 and 20192021 from amounts recorded as Advances and progress billings at the beginning of each year were $10,360$12,087 and $16,778.
Certain commercial airplane customers are experiencing liquidity issues and seeking additional capital. Should these customers fail to address their liquidity issues, accounts receivable, unbilled receivables and certain inventory could become impaired. In addition we would have to remove contracts related to these customers from backlog and remarket any undelivered aircraft.$11,336.
The following table summarizes our contract assets under long-term contracts that were unbillable or related to outstanding claims as of December 31:
UnbilledClaims
2020201920202019
Current$5,628 $6,931 $9 
Expected to be collected after one year2,496 2,112 18 14 
Less valuation allowance(1)
(129)
Total$7,995 $9,043 $18 $23 
(1)In the first quarter of 2020, we adopted ASU 2016-13, refer to Note 6.
UnbilledClaims
2022202120222021
Current$6,478 $5,870 $4 
Expected to be collected after one year2,179 2,841 $16 $11 
Less valuation allowance(23)(91)
Total$8,634 $8,620 $16 $15 
Unbilled receivables related to commercial customer incentives expected to be collected after one year were $178$117 and $211$131 at December 31, 20202022 and 2019.2021. Unbilled receivables related to claims are items that we believe are earned, but are subject to uncertainty concerning their determination or ultimate realization.
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Note 9 – Customer Financing
Customer financing primarily relates to our BCC segment. Customer financing consisted of the following at December 31:
20202019
Financing receivables:
Investment in sales-type/finance leases$919 $1,029 
Notes420 443 
Total financing receivables1,339 1,472 
Operating lease equipment, at cost, less accumulated depreciation of $209 and $235715 834 
Gross customer financing2,054 2,306 
Less allowance for losses on receivables(17)(8)
Total$2,037 $2,298 
We acquire aircraft to be leased to customers through trades, lease returns, purchases in the secondary market, and new aircraft transferred from our BCA segment. LeasingFinancing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate the lease. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price. A minority
Customer financing consisted of leases contain variable lease payments based on actual aircraft usage and are paid in arrears.the following at December 31:
20222021
Financing receivables:
Investment in sales-type/finance leases$804 $944 
Notes385 412 
Total financing receivables1,189 1,356 
Less allowance for losses on receivables55 18 
Financing receivables, net1,134 1,338 
Operating lease equipment, at cost, less accumulated depreciation of $76 and $58470 474 
Total$1,604 $1,812 
The components of investment in sales-type/finance leases at December 31 were as follows:
2020201920222021
Minimum lease payments receivableMinimum lease payments receivable$756 $799 Minimum lease payments receivable$924 $1,099 
Estimated residual value of leased assetsEstimated residual value of leased assets299 393 Estimated residual value of leased assets86 110 
Unearned incomeUnearned income(136)(163)Unearned income(206)(265)
TotalTotal$919 $1,029 Total$804 $944 
Operating lease equipment primarily includes large commercial jet aircraft.
Financing receivable balances evaluated for impairment at December 31 were as follows:
20202019
Individually evaluated for impairment$391 $400 
Collectively evaluated for impairment948 1,072 
Total financing receivables$1,339 $1,472 
We determine a receivable is impaired when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms. At December 31, 20202022 and 2019, we individually evaluated for impairment customer financing receivables of $3912021, $405 and $400, of which $380 and $388$378 were determined to be impaired. We recorded nouncollectible financing receivables and placed on non-accrual status. The increase in allowance for losses on these impaired receivables asduring the collateral values exceeded the carrying valuesyear ended December 31, 2022 was primarily due to impacts of the receivables.war in Ukraine. Customer financing interest income received for the years ended December 31, 2022 and 2021 was $13 and $18.
We determine a receivable is past due when cash has not been received upon the due date specified in the contract. There were no past due customer financing receivables as of December 31, 2020.2022.
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We evaluate the collectability of customer financing receivables at commencement and on a recurring basis. If a customer financing receivable is deemed uncollectible, the customer is categorized as non-accrual status. When a customer is in non-accrual status at commencement, sales-type lease revenue is deferred until substantially all cash has been received or the customer is removed from non-accrual status. If a customer status changes to non-accrual after commencement or is a direct finance lease and sufficient collateral is available, we recognize contractual interest income as payments are received to the extent payments exceed past due principal payments. If there is not sufficient collateral, then revenue is not recognized until payments exceed the principal balance. Receivables in non-accrual status as of December 31, 2020 and December 31, 2019 were $380 and $388. Interest income received for the twelve and three months ended December 31, 2020 was $34 and $8.
The adequacy of the allowance for losses is assessed quarterly. Four primary factors influencing the level of our allowance for losses on customer financing receivables are customer credit ratings, default rates, expected loss rate and collateral values, which may be adversely affected by impacts that COVID-19 has on our customers. We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers. Our rating categories are comparable to those used by the major credit rating agencies.
Our allowance for losses on receivables decreased from $8 to $5 on January 1, 2020 upon adoption of ASU 2016-13. See Note 6 – Allowances for Losses on Financial Assets.
Our financing receivable balances at December 31, 2022 by internal credit rating category and year of origination consisted of the following:
Rating categoriesRating categoriesCurrent2019201820172016PriorTotalRating categoriesCurrent2021202020192018PriorTotal
BBBBBB$307 $307 BBB$68 $68 
BBBB$135 $49 $15 143 342 BB$35 $218 $112 $39 $12 63 479 
BB$52 167 219 B35 218 253 
CCCCCC7 33 242 $177 12 471 CCC19 370 389 
Total carrying value of financing receivablesTotal carrying value of financing receivables$142 $82 $15 $294 $177 $629 $1,339 Total carrying value of financing receivables$35 $253 $112 $58 $12 $719 $1,189 
At December 31, 2020,2022, our allowance for losses related to receivables with ratings of CCC, B, BB and BBB. We applied default rates that averaged 26.0%100.0%, 7.4%31.5%, 3.0%2.9% and 0.2%0.1%, respectively, to the exposure associated with those receivables.
Customer Financing Exposure
Customer financing is collateralized by security in the related asset. The value of the collateral is closely tied to commercial airline performance and overall market conditions and may be subject to reduced valuation with market decline. Certain collateral values are being adversely impacted by the changes in market conditions driven by the COVID-19 pandemic. Declines in collateral values could result in asset impairments, reduced finance lease income, and an increase in the allowance for losses. Our customer financing collateral is concentrated in out-of-production aircraft and 747-8 aircraft. Generally, out-of-production aircraft have experienced greater collateral value declines than in-production aircraft.
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The majority of our customer financing carrying values areportfolio is concentrated in the following aircraft models at December 31:
20202019
717 Aircraft ($98 and $124 accounted for as operating leases)$637 $736 
747-8 Aircraft ($121 and $130 accounted for as operating leases)480 475 
737 Aircraft ($214 and $240 Accounted for as operating leases)235 263 
777 Aircraft ($216 and $236 accounted for as operating leases)225 240 
MD-80 Aircraft (Accounted for as sales-type finance leases)167 186 
757 Aircraft ($4 and $22 accounted for as operating leases)147 182 
747-400 Aircraft ($19 and $31 Accounted for as operating leases)71 90 
20222021
717 Aircraft ($45 and $62 accounted for as operating leases)$563 $603 
747-8 Aircraft (Accounted for as sales-type/finance leases)394 435 
737 Aircraft ($174 and $145 accounted for as operating leases)186 163 
777 Aircraft ($209 and $225 accounted for as operating leases)209 233 
MD-80 Aircraft (Accounted for as sales-type/finance leases)96 142 
757 Aircraft (Accounted for as sales-type/finance leases)107 126 
747-400 Aircraft ($0 and $1 accounted for as operating leases)46 50 
ChargesOperating lease equipment primarily includes large commercial jet aircraft.
Impairment charges related to customer financing asset impairmentoperating lease assets for the years ended December 31 were as follows:
202020192018202220212020
Boeing CapitalBoeing Capital$32 $53 $1 Boeing Capital$2 $23 $32 
Other BoeingOther Boeing(8)217 38 Other Boeing5 (8)
TotalTotal$24 $270 $39 Total$7 $31 $24 
Lease income recorded in Revenue on the Consolidated Statements of Operations for the years ended December 31, 20202022 and 20192021 included $57$69 and $62$54 from sales-type/finance leases, and $118$65 and $139$68 from operating leases. Profit at the commencement of which $9sales-type leases was recorded in revenue for the years ended December 31, 2022 and $8 related to variable operating lease payments.2021 in the amount of $28 and $78.
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As of December 31, 2020,2022, undiscounted cash flows for notes receivable, sales-type/finance and operating leases over the next five years and thereafter are as follows:
Notes receivableSales-type/finance leasesOperating leasesNotes receivableSales-type/finance leasesOperating leases
Year 1Year 1$149 $164 $85 Year 1$201 $239 $61 
Year 2Year 253 150 75 Year 218 161 50 
Year 3Year 334 141 72 Year 319 131 47 
Year 4Year 418 121 56 Year 421 118 43 
Year 5Year 519 83 34 Year 522 116 43 
ThereafterThereafter147 97 66 Thereafter104 159 61 
Total lease receipts420 756 388 
Total financing receiptsTotal financing receipts385 924 305 
Less imputed interestLess imputed interest(136)Less imputed interest(206)
Estimated unguaranteed residual valuesEstimated unguaranteed residual values299 Estimated unguaranteed residual values86 
TotalTotal$420 $919 $388 Total$385 $804 $305 
At December 31, 20202022 and December 31, 20192021, unguaranteed residual values were $299$86 and $393.$110. Guaranteed residual values at December 31, 20202022 were not significant.
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Note 10 – Property, Plant and Equipment
Property, plant and equipment at December 31 consisted of the following:
2020201920222021
LandLand$512 $527 Land$376 $377 
Buildings and land improvementsBuildings and land improvements14,415 14,288 Buildings and land improvements14,404 14,152 
Machinery and equipmentMachinery and equipment16,060 15,723 Machinery and equipment15,844 15,692 
Construction in progressConstruction in progress1,340 1,306 Construction in progress1,368 1,235 
Gross property, plant and equipmentGross property, plant and equipment32,327 31,844 Gross property, plant and equipment31,992 31,456 
Less accumulated depreciationLess accumulated depreciation(20,507)(19,342)Less accumulated depreciation(21,442)(20,538)
TotalTotal$11,820 $12,502 Total$10,550 $10,918 
Depreciation expense was $1,396, $1,488 and $1,533 $1,567for 2022, 2021 and $1,556 for the years ended December 31, 2020, 2019 and 2018, respectively. Interest capitalized during the years ended December 31,in 2022, 2021 and 2020 2019 and 2018 totaled $81, $83$89, $76 and $81, respectively.
During 20202022 and 2019,2021, we acquired $47$101 and $128$46 of property, plant and equipment through non-cash investing and financing transactions. Accounts payable related to purchases of property, plant and equipment were $182$396 and $256$295 for the years ended December 31, 20202022 and 2019.2021.
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Note 11 – Investments
Our investments, which are recorded in Short-term and other investments or Investments, consisted of the following at December 31:
2020 20192022 2021
Equity method investments (1)
Equity method investments (1)
$936 $1,031 
Equity method investments (1)
$948 $930 
Time depositsTime deposits17,154 50 Time deposits2,093 7,676 
Available for sale debt instrumentsAvailable for sale debt instruments596 405 Available for sale debt instruments479 464 
Equity and other investmentsEquity and other investments85 65 Equity and other investments36 45 
Restricted cash & cash equivalents (2)
Restricted cash & cash equivalents (2)
83 86 
Restricted cash & cash equivalents (2)
33 52 
TotalTotal$18,854 $1,637 Total$3,589 $9,167 
(1)Dividends received were $149$111 and $164$77 during 20202022 and 2019.2021. Retained earnings at December 31, 20202022 include undistributed earnings from our equity method investments of $148.$141. During the third quarter of 2021, Boeing and AE Industrial Partners announced a strategic partnership to establish a dedicated aerospace venture fund. This transaction resulted in the deconsolidation of HorizonX and generated a gain of $117 which is included in (Loss)/income from operating investments, net.
(2)Reflects amounts restricted in support of our property sales, workers’ compensation programs, employee benefit programs and insurance premiums.
Allowance for losses on available for sale debt instruments are assessed quarterly. All instruments are considered investment grade and as such, we have not recognized an allowance for credit losses as of December 31, 2020.
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2022.
Equity Method Investments
Our equity method investments consisted of the following as ofat December 31:
SegmentOwnership PercentagesInvestment BalanceSegmentOwnership PercentagesInvestment Balance
2020 20192022 2021
United Launch AllianceUnited Launch AllianceBDS50%$735 $771 United Launch AllianceBDS50%$587 $617 
OtherOtherBCA, BDS, BGS and Other201 260 OtherBCA, BDS, BGS and Other361 313 
Total equity method investmentsTotal equity method investments$936 $1,031 Total equity method investments$948 $930 
Note 12 – Leases
Our operating lease assets primarily represent manufacturing and research and development facilities, warehouses and offices. Total operating lease expense was $360$421 and $326$380 for the years ended December 31, 20202022 and 2019,2021, of which $71$75 and $55$73 was attributable to variable lease expenses.
For the years ended December 31, 20202022 and 2019,2021, cash payments against operating lease liabilities totaled $299$294 and $277$301 and non-cash transactions totaled $371$245 and $371$443 to recognize operating assets and liabilities for new leases.
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Supplemental Consolidated Statement of Financial Position information related to leases consisted of the following at December 31:
20202019
Operating leases:
Operating lease right-of-use assets$1,252$1,182
Current portion of lease liabilities268252
Non-current portion of lease liabilities1,084978
Total operating lease liabilities$1,352$1,230
Weighted average remaining lease term (years)
99
Weighted average discount rate3.43%3.35%
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20222021
Operating leases:
Operating lease right-of-use assets$1,451$1,437
Current portion of lease liabilities276268
Non-current portion of lease liabilities1,3051,271
Total operating lease liabilities$1,581$1,539
Weighted average remaining lease term (years)
1213
Weighted average discount rate4.13%3.82%
Maturities of operating lease liabilities for the next five years are as follows:
Operating leasesOperating leases
2021$307 
2022241 
20232023191 2023$316 
20242024135 2024259 
20252025105 2025224 
20262026191 
20272027151 
ThereafterThereafter802 Thereafter1,039 
Total lease paymentsTotal lease payments1,781 Total lease payments2,180 
Less imputed interestLess imputed interest(429)Less imputed interest(599)
TotalTotal$1,352 Total$1,581 
As of December 31, 2020,2022, we have entered into a leaseleases that hashave not yet commenced of $226,$420, primarily for a maintenance, repair and overhaul hangar that will support military aircraft programs. This leaseThese leases will commence in 2023 with a lease termterms of 3 years to 25 years.
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Note 13 – Liabilities, Commitments and Contingencies
Accrued Liabilities
Accrued liabilities at December 31 consisted of the following:
2020201920222021
Accrued compensation and employee benefit costsAccrued compensation and employee benefit costs$7,121 $5,582 Accrued compensation and employee benefit costs$6,351 $6,037 
737 MAX customer concessions and other considerations5,537 7,389 
Department of Justice agreement liability744 
737 MAX grounding customer concessions and other considerations737 MAX grounding customer concessions and other considerations1,864 2,940 
Other customer concessions and considerationsOther customer concessions and considerations1,102 240 
EnvironmentalEnvironmental565 570 Environmental752 605 
Product warrantiesProduct warranties1,527 1,267 Product warranties2,275 1,900 
Forward loss recognitionForward loss recognition1,913 1,681 Forward loss recognition4,060 2,014 
Dividends payable1,159 
Income taxes payable43 670 
Accrued interest payableAccrued interest payable599 641 
Current portion of lease liabilitiesCurrent portion of lease liabilities268 252 Current portion of lease liabilities276 268 
Current portion of retiree healthcare and pension liabilitiesCurrent portion of retiree healthcare and pension liabilities494 536 
OtherOther4,453 4,298 Other3,808 3,274 
TotalTotal$22,171 $22,868 Total$21,581 $18,455 
737 MAX Grounding and COVID-19 Impacts
In 2019, following two fatal 737 MAX accidents, the Federal Aviation Administration (FAA) and non-U.S. civil aviation authorities issued orders suspending commercial operations of 737 MAX aircraft. Deliveries of the 737 MAX were suspended following these orders. Deliveries in the U.S. resumed in late 2020 following rescission by the FAA of its grounding order.
Multiple legal actions have been filed against us as a result of the accidents. In addition, we are fully cooperating with U.S. government investigations related to the accidents and the 737 MAX program, including an investigation by the Securities and Exchange Commission, the outcome of which may be material. Other than as described below with respect to the U.S. Department of Justice, we cannot
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reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the lawsuits, investigations and inquiries related to the 737 MAX.
On January 6, 2021, we entered into a Deferred Prosecution Agreement with the U.S. Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the FAA. Under the terms of the Deferred Prosecution Agreement, we agreed to the filing of a criminal information charging the Company with one count of conspiracy to defraud the United States, based on the conduct of two former 737 MAX program technical pilots; the criminal information will be dismissed after three years, provided that we comply with our obligations under the agreement. The Deferred Prosecution Agreement requires that we make payments totaling $2.51 billion, which consist of (a) a $243.6 million criminal monetary penalty; (b) $500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents; and (c) $1.77 billion to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement. The agreement also requires that we review our compliance program and undertake continuous improvement efforts with respect to it, and implement enhanced compliance reporting and internal controls mechanisms. Of the payments described above, $1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations. We expensed $743.6 million in the fourth quarter of 2020 related to this agreement.
During the fourth quarter of 2020, the FAA rescinded the order that grounded 737 MAX aircraft and issued an Airworthiness Directive specifying requirements that must be met before U.S. carriers can resume service, including installing software enhancements, completing wire separation modification, conducting pilot training and performing maintenance steps to prepare parked aircraft to fly again. The FAA also issued a Continued Airworthiness Notification to the International Community, and published the 737 MAX training requirements. The FAA must approve 737 MAX pilot training program revisions for each U.S. airline operating the aircraft and has indicated its intent to retain its authority to issue airworthiness certificates and export certificates of airworthiness for all new 737 MAX aircraft manufactured subsequent to the grounding order. The Brazilian National Civil Aviation Agency approved return of operations in the fourth quarter of 2020, and Transport Canada and the European Union Aviation Safety Agency (EASA)approved return of operations in the first quarter of 2021.
In December 2020, we delivered 27 aircraft, in compliance with the FAA regulatory requirements described above. We have assumed that the remaining non-U.S. regulatory approvals will occur and enable deliveries during the first half of 2021. We have approximately 425 airplanes in inventory as of December 31, 2020. A number of customers have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory. We now expect to deliver about half of the 737 MAX aircraft in inventory by the end of 2021. In the event that we are unable to resume aircraft deliveries in non-U.S. jurisdictions consistent with our assumptions of regulatory approval timing, our expectation of delivery timing could be impacted.
Due to the grounding and associated suspension of 737 MAX deliveries, we temporarily suspended 737 MAX production beginning in January 2020. We resumed early stages of 737 MAX production in May 2020 and continued to produce at low rates through the end of 2020.
In addition, we reduced the number of aircraft included in the accounting quantity by 400 units in the first quarter of 2020 as a result of reductions to planned production rates due to COVID-19 driven market uncertainties. As we are producing at abnormally low production rates in 2020 and 2021, we expect to incur approximately $5 billion of abnormal production costs that are being expensed as incurred. The slowdown in the planned production rate ramp-up increased expected abnormal costs, however this increase was offset by adjustments to the determination of the normal production level due to COVID-19 impacts on customer demand, as well as cost reduction activities, including significant
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reductions in employment levels. We expensed $2,567 of abnormal production costs during the year ended December 31, 2020.
In addition to impacts related to the 737 MAX accidents and subsequent grounding, the 737 program continues to be significantly impacted by the COVID-19 pandemic and its effect on aircraft demand. These impacts have resulted in lower production and delivery rate assumptions. We currently expect to gradually increase the production rate to 31 per month by early 2022. We currently assume that we will implement further gradual production rate increases in subsequent periods based on market demand. The ongoing impacts of COVID-19 on market demand have also created significant uncertainty around the timing of deliveries of 737 MAX aircraft in inventory. We may need to recognize additional costs associated with remarketing and/or reconfiguring aircraft in inventory, which may reduce revenue and/or earnings in future periods.
We have also recorded additional expenses of $416 and $328 due to the 737 MAX grounding during 2020 and 2019, which include costs related to storage, inventory impairment, pilot training, and software updates.
The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during 2020.2022 and 2021.
2020201920222021
Beginning balance – January 1Beginning balance – January 1$7,389 Beginning balance – January 1$2,940 $5,537 
Initial liability recorded in the second quarter of 2019$6,110 
Reductions for payments madeReductions for payments made(2,188)(1,237)Reductions for payments made(1,031)(2,535)
Reductions for concessions and other in-kind considerationsReductions for concessions and other in-kind considerations(162)(133)Reductions for concessions and other in-kind considerations(29)(48)
Changes in estimatesChanges in estimates498 2,649 Changes in estimates(16)(14)
Ending balance – December 31Ending balance – December 31$5,537 $7,389 Ending balance – December 31$1,864 $2,940 
We are working with our customers to minimize the impact to their operations from grounded and undelivered aircraft. We continue to reassess the liability for estimated potential concessions and other considerations to customers on a quarterly basis. This reassessment includes updating estimates to reflect revisions to return to service, delivery and production rate assumptions driven by timing of regulatory approvals, as well as latest information based on engagements with 737 MAX customers. The liability represents our current best estimate of future concessions and other considerations to customers, and is necessarily based on a series of assumptions. It is subject to change in future quarters as negotiations with customers mature and timing and conditions of return to service are better understood. The liability balance of $5.5$1.9 billion at December 31, 20202022 includes $2.3$1.6 billion of contracted customer concessions and other liabilities and $0.3 billion that remains subject to negotiation with customers. The contracted amount includes $0.8 billion expected to be liquidated by lower customer delivery payments, $0.6$0.7 billion expected to be paid in cash and $0.1 billion in other concessions. Of the cash payments to customers, we expect to pay $0.3$0.1 billion in 20212023 and $0.3the remaining $0.6 billion in 2022.future years. The type of consideration to be provided for the remaining $2.5$0.3 billion will depend on the outcomes of negotiations with customers.
The 737 MAX remains grounded in certain non-U.S. jurisdictions. The civil aviation authorities in those jurisdictions will determine the timing and conditions of return to service. Our assumptions reflect our current best estimate, but actual timing and conditions of return to service and resumption of deliveries could differ from this estimate, the effect of which could be material. We are unable at this time to reasonably estimate potential future additional financial impacts or a range of loss, if any, due to continued uncertainties related to the timing and conditions of return to service, uncertainties related to the impacts of COVID-19 on our operations, supply chain and customers, future changes to the production rate, supply chain impacts, and/or the results of negotiations with particular customers. Any such impacts, including any changes in our estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows. For example, we expect that, in the event
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that we are unable to resume aircraft deliveries in non-U.S. jurisdictions consistent with our assumptions, the continued absence of revenue, earnings, and cash flows associated with 737 MAX deliveries would continue to have a material impact on our operating results. In the event that future production rate increases occur at a slower rate or take longer than we are currently assuming, we expect that the growth in inventory and other cash flow impacts associated with production would decrease. However, while any prolonged production suspension or delays in planned production rate increases could mitigate the impact on our liquidity, it could significantly increase the overall expected costs to produce aircraft included in the accounting quantity, which would reduce 737 program margins and/or increase abnormal production costs in the future.
Commercial air traffic has fallen dramatically due to the COVID-19 pandemic. While this trend has impacted passenger traffic most severely, near-term cargo traffic has also fallen significantly due to the global economic downturn and the reduction in cargo capacity on passenger airplanes. Airlines have significantly reduced their capacity, and many could implement further reductions in the near future. Many airlines are also implementing significant reductions in staffing. These capacity changes are causing, and are expected to continue to cause, negative impacts to our customers’ revenue, earnings, and cash flow, and in some cases may threaten the future viability of some of our customers, potentially causing defaults within our customer financing portfolio and/or requiring us to remarket aircraft that have already been produced and/or are currently in backlog. If 737 MAX aircraft remain grounded for an extended period of time in non-U.S. jurisdictions, we may experience additional reductions to backlog and/or significant order cancellations. Additionally, we may experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand. Our customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic. We are also observing a significant increase in the number of requests for payment deferrals, contract modifications, lease restructurings and similar actions, and these trends may lead to additional earnings charges, impairments and other adverse financial impacts in our business over time. In addition, to the extent that customers have valid rights to cancel undelivered aircraft, we may be required to refund pre-delivery payments, putting additional constraints on our liquidity. There is risk that the industry implements longer-term strategies involving reduced capacity, shifting route patterns, and mitigation strategies related to impacts from COVID-19 and the risk of future public health crises. In addition, airlines may experience reduced demand due to reluctance by the flying public to travel.
As a result, there is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels. The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, putting significant negative pressure on cargo traffic. Any of these factors would have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines. In addition, a lengthy period of reduced industry-wide demand for commercial aircraft would put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption. To the extent that the COVID-19 pandemic or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.
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Environmental
The following table summarizes environmental remediation activity during the years ended December 31, 20202022 and 2019.2021.
2020201920222021
Beginning balance – January 1Beginning balance – January 1$570 $555 Beginning balance – January 1$605 $565 
Reductions for payments made(42)(47)
Reductions for payments made, net of recoveriesReductions for payments made, net of recoveries(43)(59)
Changes in estimatesChanges in estimates37 62 Changes in estimates190 99 
Ending balance – December 31Ending balance – December 31$565 $570 Ending balance – December 31$752 $605 
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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/or the discovery of new or additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios that includes the high end of a range of reasonably possible cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. At December 31, 20202022 and 2019,2021, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $1,095$1,058 and $1,077.$1,094.
Product Warranties
The following table summarizes product warranty activity recorded during the years ended December 31, 20202022 and 2019.2021.
20202019
Beginning balance – January 1$1,267 $1,127 
Additions for current year deliveries65 188 
Reductions for payments made(260)(249)
Changes in estimates455 201 
Ending balance – December 31$1,527 $1,267 
The increase in the product warranty reserve during the years ended December 31, 2020 and 2019 is primarily driven by charges related to “pickle forks” on 737NG aircraft. During 2019, we detected cracks in the "pickle forks", a frame fitting component of the structure connecting the wings to the fuselages of 737NG aircraft. We notified the FAA, which issued a directive requiring that certain 737NG airplanes be inspected. We have estimated the number of aircraft that will have to be repaired in the future and provisioned for the estimated costs of completing the repairs. We recognized charges of $135 in 2019 for current and projected future aircraft repairs. During the first quarter of 2020, we recognized additional charges of $336 based on revised engineering and fleet utilization estimates as well as updated repair cost estimates. We cannot estimate a range of reasonably possible losses, if any, in excess of amounts recognized due to the ongoing nature of the inspections and repairs and pending the completion of investigations into the cause of the condition.
20222021
Beginning balance – January 1$1,900 $1,527 
Additions for current year deliveries202 116 
Reductions for payments made(403)(241)
Changes in estimates576 498 
Ending balance – December 31$2,275 $1,900 
Commercial Aircraft Trade-In Commitments
In conjunction with signing definitive agreements for the sale of new aircraft, (Sale Aircraft), we have entered into trade-in commitments with certain customers that give them the right to trade in used
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aircraft at a specified price upon the purchase of Sale Aircraft.price. 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 assessed quarterly, or as events trigger a change, and takes into consideration the current economic and airline industry environments. 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.
Trade-in commitment agreements at December 31, 20202022 have expiration dates from 20212023 through 2028.2029. At December 31, 20202022 and 2019,2021, total contractual trade-in commitments were $950$1,117 and $1,407.$612. As of December 31, 20202022 and 2019,2021, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $599$286 and $711$283, and the fair value of the related trade-in aircraft was $580$286 and $678.$283.
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Financing Commitments
Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $11,512$16,105 and $13,377$12,905 as of December 31, 20202022 and 2019.2021. The estimated earliest potential funding dates for these commitments as of December 31, 20202022 are as follows:
TotalTotal
2021$2,329 
20222,384 
202320231,677 2023$3,084 
202420241,677 20242,608 
202520251,827 20253,381 
202620262,555 
202720271,520 
ThereafterThereafter1,618 Thereafter2,957 
$11,512 $16,105 
As of December 31, 2020,2022, all of these financing commitments relate to customers we believe have less than investment-grade credit. We have concluded that no reserve for future potential losses is required for these financing commitments based upon the terms, such as collateralization and interest rates, under which funding would be provided.
FundingOther Financial Commitments
We have financial commitments to make additional capital contributions of $243totaling $270 related to certain joint ventures over the next sevenfive years.
Standby Letters of Credit and Surety Bonds
We have entered into standby letters of credit and surety bonds with financial institutions primarily relating to the guarantee of our future performance on certain contracts.contracts and security agreements. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $4,238$5,070 and $3,769$3,634 as of December 31, 20202022 and 2019.2021.
Company Owned Life Insurance
McDonnell Douglas Corporation insured its executives with Company Owned Life Insurance (COLI), which are life insurance policies with a cash surrender value. Although we do not use COLI currently, these obligations from the merger with McDonnell Douglas are still a commitment at this time. We have loans in place to cover costs paid or incurred to carry the underlying life insurance policies. As of
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December 31, 20202022 and 2019,2021, the cash surrender value was $395$376 and $448$374 and the total loans were $382$346 and $431.$360. As we have the right to offset the loans against the cash surrender value of the policies, we present the net asset in Other assets on the Consolidated Statements of Financial Position as of December 31, 20202022 and 2019.2021.
United States Government Defense Environment OverviewAssistance
In 2022, we adopted Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic 832), which requires certain disclosures for those government assistance transactions for which we have applied a grant accounting model. Certain states and localities in which we operate offer or have offered various business incentives related to investment and/or job creation.
Between 2010 and 2016, we received cash grants totaling $346 related to our investment in operations in South Carolina. The Omnibus appropriations acts for FY21, enactedgrants were recorded in Other liabilities and are being amortized, primarily to
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inventory, over the useful life of the Property, plant and equipment extending through 2052. During 2022, we amortized $11 to Inventory, and recorded a benefit of $5 in Cost of Sales. At December, 2020, provided FY21 appropriations for government departments31, 2022, inventory included a benefit of $64 and agencies,Accrued liabilities included a balance of $106.
We are eligible to claim tax refunds from the State of Missouri and City of Irving, Texas primarily related to job creation and retention through 2031. During 2022, we received $30 in cash and recorded a benefit of $21 in Cost of sales. At December 31, 2022, Other current assets includes receivables of $20. As of December 31, 2022, $56 of refunds, plus interest, is subject to clawback if we fail to meet certain conditions, including employment levels.
We are eligible to claim cash grants through 2032 of up to $62, related to operations in Queensland, Australia. During 2022, $7 cash was received and recorded as a benefit in Cost of Sales. At December 31, 2022, $4 is subject to clawback if we fail to meet certain conditions, including employment levels.
Industrial Revenue Bonds (IRB) issued by St. Louis County were used to finance the United States Departmentpurchase and/or construction of Defense (U.S. DoD),real and personal property at our St. Louis site. Tax benefits associated with IRBs include a twelve-year property tax abatement and sales tax exemption from St. Louis County. We record these properties on our Consolidated Statements of Financial Position. We have also purchased the National AeronauticsIRBs and Space Administration (NASA) andtherefore are the Federal Aviation Administration.
The enacted FY21 appropriations included funding for Boeing’s major programs, suchbondholders as well as the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, P-8 Poseidonborrower/lessee of the properties purchased with the IRB proceeds. The liabilities and Space Launch System. However, there continues to be uncertainty with respect to future program-level appropriations forIRB assets are equal and are reported net in the U.S. DoDConsolidated Statements of Financial Position. As of December 31, 2022 and other government agencies, including NASA. Future budget cuts or investment priority changes, including changes2021, the assets and liabilities associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs. Any of these impacts could have a material effect on our results of operations, financial position and/or cash flows.IRBs were $271.
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. BDS fixed-price contracts with significant development work include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, 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 result in lower margins or material charges for reach-forward losses. For example, we have recorded an increase in the reach-forward loss of $1,320 on KC-46A Tanker in 2020. The KC-46A Tanker reach-forward loss reflects $551 of costs associated with the agreement signed in April 2020 with the U.S. Air Force (USAF) to develop and integrate a new Remote Vision System, and the remaining costs reflect production inefficiencies including impacts of COVID-19 disruption. Moreover, our fixed-price development programs remain subject to additional reach-forward losses if we experience further production, technical or quality issues, schedule delays, or increased costs.
KC-46A Tanker
In 2011, we were awarded a contract from the U.S. Air Force (USAF) to design, develop, manufacture and deliver four next generation aerial refueling tankers. This Engineering, Manufacturing and Development (EMD) contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration. Since 2016, the USAF has authorized five low rate initial production (LRIP) lots for a total of 67 aircraft. The EMD contract and authorized LRIP lots are valued at approximately $15 billion as of December 31, 2020.
At December 31, 2020, we had approximately $463 of capitalized precontract costs and $1,281 of potential termination liabilities to suppliers. These values were primarily related to 12 aircraft in lot 6 and 15 aircraft in lot 7 for which we received contract awards in January 2021.
Recoverable Costs on Government Contracts
Our final incurred costs for each year are subject to audit and review for allowability by the U.S. government, which can result in payment demands related to costs they believe should be disallowed. We work with the U.S. government to assess the merits of claims and where appropriate reserve for
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amounts disputed. If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S. government.
SeveranceFixed-Price Contracts
Substantially all contracts at BDS and the majority of contracts at BGS Government are long-term contracts. Long-term contracts that are contracted on a fixed-price basis could result in losses in future periods. Certain of the fixed-price contracts are for the development of new products, services and related technologies. This development work scope is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work by us and our suppliers. The operational and technical complexities of fixed-price development contracts create financial risk, which could trigger additional earnings charges, termination provisions, order cancellations, or other financially significant exposure.
VC-25B Presidential Aircraft
The following table summarizesCompany’s firm fixed-price contract for the Engineering, Manufacturing, and Development (EMD) effort on the U.S. Air Force’s (USAF) VC-25B Presidential Aircraft, commonly known as Air Force One, is a $4.3 billion program to develop and modify two 747-8 commercial aircraft. During the year ended December 31, 2022, we increased the reach-forward loss on the contract by $1,452 primarily driven by increases to cost estimates associated with factory modification labor and support engineering resources due to labor instability and inefficiencies that we now estimate will persist longer than previously anticipated, higher supplier cost estimates based on ongoing supplier negotiations and higher levels of engineering design changes due to technical requirements which are driving increased rework and schedule delays. Risk remains that we may record additional losses in future periods.
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KC-46A Tanker
In 2011, we were awarded a contract from the severance liability during 2020:
2020
Initial liability recorded in the second quarter of 2020$652
Reductions for payments made(658)
Changes in estimates289
Ending balance – December 31$283
During 2020,USAF to design, develop, manufacture, and deliver four next generation aerial refueling tankers as well as priced options for 13 annual production lots totaling 179 aircraft. This EMD contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration. Since 2016, the Company recorded severance costsUSAF has authorized eight low rate initial production (LRIP) lots for a total of 109 aircraft. The EMD contract and authorized LRIP lots total approximately 26,000 employees expected to leave the Company through a combination$21 billion as of voluntary and involuntary terminations. The severance packages are consistent with the Company’s ongoing compensation and benefits plans.December 31, 2022. As of December 31, 2020,2022, we had approximately 18,000$209 of capitalized precontract costs and $292 of potential termination liabilities to suppliers related to unexercised future lots.
During the year ended December 31, 2022, we increased the reach-forward loss on the KC-46A Tanker program by $1,374 primarily reflecting higher production and supply chain costs partially driven by labor instability and supply chain disruption, most of which was recorded during the third quarter of 2022. The increase in production costs was primarily driven by factory unit time performance expectations that assume continued production disruption due to labor instability and supply chain disruption. Factory unit time estimates also reflect reduced benefits from prior investments in productivity enablers and higher factory unit time to produce aircraft for the remaining life of the 26,000 employees have leftprogram. The current year losses also reflect increased estimated change incorporation costs for flight test aircraft as well as schedule delays to complete the Company,Remote Vision System. Risk remains that we may record additional losses in future periods.
MQ-25
In the third quarter of 2018, we were awarded the MQ-25 EMD contract by the U.S. Navy. The contract is a fixed-price contract that now includes development and delivery of seven aircraft and test articles at a contract price of $890. In connection with winning the remaindercompetition, we recognized a reach-forward loss of $291 in the third quarter of 2018. During the year ended December 31, 2022, we increased the MQ-25 reach-forward loss by $579 primarily driven by higher than anticipated costs to manufacture the EMD units reflecting recent performance which is resulting in additional factory resources and increased engineering costs to address design and supplier quality issues. We also increased costs associated with engineering design challenges, additional testing and certification activities, and flight test support. Risk remains that we may record additional losses in future periods.
T-7A Red Hawk EMD Contract & Production Options
In 2018, we were awarded the T-7A Red Hawk program. The EMD portion of the contract is a $860 fixed-price contract and includes five aircraft and seven simulators. During the year ended December 31, 2022, we recorded earnings charges of $203 related to the T-7A Red Hawk fixed-price EMD contract, which has a reach-forward loss at December 31, 2022. Current year losses were primarily due to supply chain and hardware qualification issues, as well as schedule delays in achieving Military Flight Release and additional cost growth to resolve technical issues and other engineering design changes identified during 2022. EMD aircraft flight testing is now estimated to start in 2023.
The production portion of the contract includes 11 production lots for aircraft and related services. In 2018, we recorded a loss of $400 associated with the 11 production lots and associated support options for 346 T-7A Red Hawk aircraft that we believe are probable of being exercised. The first production and support contract option is expected to leavebe exercised in 2021.2024. We increased the estimated reach-forward loss by $552 during the year ended December 31, 2022 primarily driven by ongoing supply chain negotiations (which are impacted by supply chain constraints and inflationary pressures), and design revisions, as well as an increase in the number of expected units in the initial production lots. Risk remains that we may record additional losses in future periods. At December 31, 2022, we had approximately $56 of capitalized precontract costs and $283 of potential termination liabilities to suppliers related to future production lots.
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Commercial Crew
NASA has contracted us to design and build the CST-100 Starliner spacecraft to transport crews to the International Space Station. During the second quarter of 2022 we successfully completed the uncrewed Orbital Flight Test. A crewed flight test is now expected to be completed in 2023. During the year ended December 31, 2022, we increased the reach-forward loss by $288 primarily reflecting increases to estimated costs related to completing the crewed flight tests and revised schedules for both the crewed flight test and three post certification missions. Most of this increase was recorded in the third quarter of 2022, primarily driven by timing of the three future post certification missions which are now assumed to be completed by 2026 based on NASA’s revised launch plans. We had previously assumed that the post certification missions would be completed by 2024. Risk remains that we may record additional losses in future periods. At December 31, 2022, we had approximately $180 of capitalized precontract costs and $159 of potential termination liabilities to suppliers related to unauthorized future missions.
Note 14 – Arrangements with Off-Balance Sheet Risk
We enter into arrangements with off-balance sheet risk in the normal course of business, primarily in the form of guarantees.
The following table provides quantitative data regarding our third party guarantees. The maximum potential payments represent a “worst-case scenario,”scenario” and do not necessarily reflect amounts that we expect to pay. Estimated proceeds from collateral and recourse represent the anticipated values of assets we could liquidate or receive from other parties to offset our payments under guarantees. The carrying amount of liabilities represents the amount included in Accrued liabilities.
Maximum
Potential
Payments
Estimated
Proceeds from
Collateral/
Recourse
Carrying
Amount of
Liabilities
December 31,202020192020201920202019
Contingent repurchase commitments$1,452 $1,570 $1,452 $1,570 
Indemnifications to ULA:
Contributed Delta inventory15 30 
Inventory supply agreement17 34 
Questioned costs317 $48 
Credit guarantees90 92 28 36 $24 16 
Maximum
Potential
Payments
Estimated
Proceeds from
Collateral/
Recourse
Carrying
Amount of
Liabilities
December 31,202220212022202120222021
Contingent repurchase commitments$514 $548 $514 $548 
Credit guarantees45 90 28 $27 $24 
Contingent Repurchase Commitments In conjunction with signing a definitive agreement for the sale of commercial aircraft, we have entered into contingent repurchase commitments with certain customers wherein we agree to repurchase the sold aircraft at a specified price, generally 10 to 15 years after delivery. Our repurchase of the aircraft is contingent upon entering into a mutually acceptable agreement for the sale of additional new aircraft in the future. The commercial aircraft repurchase price specified in contingent repurchase commitments is generally lower than the expected fair value at the specified repurchase date. Estimated proceeds from collateral/recourse in the table above represent the lower of the contracted repurchase price or the expected fair value of each aircraft at the specified repurchase date.
IndemnificationsIf a future sale agreement is reached and a customer elects to ULAexercise its right under a contingent repurchase commitment, the contingent repurchase commitment becomes a trade-in commitment. Our historical experience is that contingent repurchase commitments infrequently become trade-in commitments.
Credit Guarantees During the first quarter of 2020, the USAF and ULA reachedWe have issued credit guarantees where we are obligated to make payments to a settlement regarding previously questioned deferred support and deferred production costs. As part of the settlement the USAF agreed to reimburse ULA for $307 of those costs, which was received by ULAguaranteed party in the second quarter. Our indemnification to ULA associatedevent that the original lessee or debtor does not make payments or perform certain specified services. Generally, these guarantees have been extended on behalf of guaranteed parties with the recoverability of contributed assetsless than investment-grade credit and are collateralized by certain assets. Current outstanding credit guarantees expire through 2036.
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expired on December 31, 2020, resulting in a $33 payment to the partnership. This settlement retires our indemnification risks to ULA.
Other Indemnifications In conjunction with our sales of Electron Dynamic Devices, Inc. and Rocketdyne Propulsion and Power businesses and our BCA 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. We are unable 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 13.
Credit Guarantees We have issued credit guarantees where we are obligated to make payments to a guaranteed party in the event that the original lessee or debtor does not make payments or perform certain specified services. Generally, these guarantees have been extended on behalf of guaranteed parties with less than investment-grade credit and are collateralized by certain assets. Current outstanding credit guarantees expire through 2036.
Industrial Revenue Bonds
Industrial Revenue Bonds (IRB) issued by St. Louis County were used to finance the purchase and/or construction of real and personal property at our St. Louis site. Tax benefits associated with IRBs include a twelve-year property tax abatement and sales tax exemption from St. Louis County. We record these properties on our Consolidated Statements of Financial Position. We have also purchased the IRBs and therefore are the bondholders as well as the borrower/lessee of the properties purchased with the IRB proceeds. The liabilities and IRB assets are equal and are reported net in the Consolidated Statements of Financial Position.
As of December 31, 2020 and 2019, the assets and liabilities associated with the IRBs were $271.
Note 15 – Debt
In the firstthird quarter of 2020,2022, we entered into a $13,825, two-year delayed draw term loan facility, which includes additional commitments made subsequent to the initial closing date. As of December 31, 2020, we have fully drawn on the 13,825 delayed draw term loan facility, with February 6, 2022 as the final maturity date. Borrowings outstanding bear interest at the Eurodollar rate (determined in accordance with the delayed draw term loan facility agreement) plus between 0.75% and 1.25%, depending on our credit rating.
In the second quarter of 2020, we issued $25,000 of fixed rate senior notes consisting of $3,000 due May 1, 2023 that bear an annual interest rate of 4.508%, $3,500 due May 1, 2025 that bear an annual interest rate of 4.875%, $2,000 due May 1, 2027 that bear an annual interest rate of 5.04%, $4,500 due May 1, 2030 that bear an annual interest rate of 5.15%, $3,000 due May 1, 2040 that bear an annual interest rate of 5.705%, $5,500 due May 1, 2050 that bear an annual interest rate of 5.805%, and $3,500 due May 1, 2060 that bear an annual interest rate of 5.93%. The notes are unsecured senior obligations and rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness. The net proceeds of the issuance totaled $24,802, after deducting underwriting discounts, commissions, and offering expenses.
In the fourth quarter of 2020, we issued $4,900 of fixed rate senior notes consisting of $1,000 due February 1, 2024 that bear an annual interest rate of 1.95%, $1,400 due February 1, 2026 that bear an annual interest rate of 2.75%, $1,100 due February 1, 2028 that bear an annual interest rate of 3.25%, and $1,400 due February 1, 2031 that bear an annual interest rate of 3.625%. The notes are unsecured
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senior obligations and rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness. The net proceeds of the issuance totaled $4,870, after deducting underwriting discounts, commissions, and offering expenses.
Interest incurred, including amounts capitalized, was $2,280, $867 and $624 for the years ended December 31, 2020, 2019 and 2018, respectively. Interest expense recorded by BCC is reflected as Boeing Capital interest expense on our Consolidated Statements of Operations. Total Company interest payments were $1,925, $973 and $616 for the years ended December 31, 2020, 2019 and 2018, respectively.
We have $9,473 currently available under credit line agreements, of which $3,073 is a$5,800 364-day revolving credit facilityagreement expiring in October 2021,August 2023, a $3,000 three-year revolving credit agreement expiring in August 2025, and amended our $3,200 five-year revolving credit agreement, which expires in October 2022, and $3,200 expires in October 2024.2024, primarily to incorporate a LIBOR successor rate. The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings one year beyond the aforementioned expiration date. As of December 31, 2022, we had $12,000 currently available under credit line agreements. We continue to be in full compliance with all covenants contained in our debt or credit facility agreements.
Interest incurred, including amounts capitalized, was $2,650, $2,790 and $2,280 for the years ended December 31, 2022, 2021 and 2020, respectively. Interest expense recorded by BCC is reflected as Boeing Capital interest expense on our Consolidated Statements of Operations. Total Company interest payments were $2,572, $2,583 and $1,925 for the years ended December 31, 2022, 2021 and 2020, respectively.
Short-term debt and current portion of long-term debt at December 31 consisted of the following:
2020201920222021
Unsecured debtUnsecured debt$1,448 $1,099 Unsecured debt$5,103 $1,155 
Non-recourse debt and notes15 21 
Finance lease obligationsFinance lease obligations65 71 Finance lease obligations65 61 
Commercial paper6,109 
Other notesOther notes165 40 Other notes22 80 
TotalTotal$1,693 $7,340 Total$5,190 $1,296 
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Debt at December 31 consisted of the following:
20202019
Unsecured debt
Variable rate: Eurodollar plus 0.75% - 1.25% due 2022$13,819 
1.45% - 3.20% due through 203010,645 $8,600 
3.25% - 3.90% due through 20599,555 7,073 
3.95% - 5.15% due through 205913,917 1,731 
5.71% - 6.63% due through 206013,005 1,129 
6.88% - 8.75% due through 20432,252 2,250 
Commercial paper6,109 
Non-recourse debt and notes
6.98% notes due through 202115 37 
Finance lease obligations due through 2044203 229 
Other notes172 144 
Total debt$63,583 $27,302 
At December 31, 2020, we had no commercial paper borrowings. At December 31, 2019, commercial paper borrowings totaling $6,109, with a weighted-average interest rate of 2.2%, were supported by unused commitments under the revolving credit agreement.
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Total debt at December 31 is attributable to:
20202019
BCC$1,640 $1,960 
Other Boeing61,943 25,342 
Total debt$63,583 $27,302 
At December 31, 2020, $15 of debt (non-recourse debt) was collateralized by customer financing assets totaling $167.
20222021
Unsecured debt
1.17% - 2.50% due through 2026$11,846 12,404 
2.60% - 3.20% due through 20306,412 7,001 
3.25% - 3.90% due through 20599,576 9,570 
3.95% - 5.15% due through 205914,035 13,993 
5.71% - 6.63% due through 206013,011 13,008 
6.88% - 8.75% due through 20431,854 1,853 
Other debt and notes
Finance lease obligations due through 2044206 180 
Other notes61 93 
Total debt$57,001 $58,102 
Scheduled principal payments for debt and minimum finance lease obligations for the next five years are as follows:
2021202220232024202520232024202520262027
DebtDebt$1,630 $14,976 $3,776 $2,001 $4,301 Debt$5,128 $5,081 $4,306 $7,966 $3,300 
Minimum finance lease obligationsMinimum finance lease obligations$68 $53 $31 $14 $6 Minimum finance lease obligations$69 $52 $41 $22 $5 
Note 16 – Postretirement Plans
Many of our employees have earned benefits under defined benefit pension plans. Nonunion and theThe majority of union employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan in 2016. Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.plan.
We fund our major pension plans through trusts. Pension assets are placed in trust solely for the benefit of the plans’ participants and are structured to maintain liquidity that is sufficient to pay benefit obligations as well as to keep pace over the long-term with the growth of obligations for future benefit payments.
We also have other postretirement benefits (OPB) other than pensions which consist principally of health care coverage for eligible retirees and qualifying dependents, and to a lesser extent, life insurance to certain groups of retirees. Retiree health care is provided principally until age 65 for approximately two-thirdsthree-fourths of those participants who are eligible for health care coverage. Certain employee groups, including employees covered by most United Auto Workers bargaining agreements, are provided lifetime health care coverage.
The funded status of the plans is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO). We have recognized the aggregate of all overfunded plans in Other assets and the aggregate of all underfunded plans in either Accrued retiree health care or Accrued pension plan liability, net. The portion of the amount by which the actuarial present value of benefits included in the PBO exceeds the fair value of plan assets, payable in the next 12 months, is reflected in Accrued liabilities.
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The components of net periodic benefit (income)/cost were as follows:
PensionOther Postretirement BenefitsPensionOther Postretirement Benefits
Years ended December 31,Years ended December 31,202020192018202020192018Years ended December 31,202220212020202220212020
Service costService cost$3 $2 $430 $89 $77 $94 Service cost$3 $3 $3 $72 $87 $89 
Interest costInterest cost2,455 2,925 2,781 130 196 194 Interest cost2,080 1,988 2,455 98 97 130 
Expected return on plan assetsExpected return on plan assets(3,756)(3,863)(4,009)(9)(8)(8)Expected return on plan assets(3,789)(3,848)(3,756)(10)(7)(9)
Amortization of prior service creditsAmortization of prior service credits(80)(79)(56)(38)(35)(126)Amortization of prior service credits(81)(80)(80)(35)(35)(38)
Recognized net actuarial loss/(gain)Recognized net actuarial loss/(gain)1,032 643 1,130 (63)(46)(10)Recognized net actuarial loss/(gain)913 1,219 1,032 (111)(56)(63)
Settlement/curtailment loss/(gain)9 44 (4)
Settlement/curtailment (gain)/lossSettlement/curtailment (gain)/loss(4)193 (4)
Net periodic benefit (income)/costNet periodic benefit (income)/cost($337)($372)$320 $105 $184 $144 Net periodic benefit (income)/cost($878)($525)($337)$14 $86 $105 
Net periodic benefit cost included in (Loss)/earnings
from operations
$3 $313 $313 $91 $88 $84 
Net periodic benefit cost included in Loss from operationsNet periodic benefit cost included in Loss from operations$3 $3 $3 $79 $90 $91 
Net periodic benefit (income)/cost included in Other income, netNet periodic benefit (income)/cost included in Other income, net(340)(374)(143)16 107 101 Net periodic benefit (income)/cost included in Other income, net(881)(528)(340)(58)(1)16 
Net periodic benefit (income)/cost included in (Loss)/earnings before income taxes($337)($61)$170 $107 $195 $185 
Net periodic benefit (income)/cost included in Loss before income taxesNet periodic benefit (income)/cost included in Loss before income taxes($878)($525)($337)$21 $89 $107 
The following tables show changes in the benefit obligation, plan assets and funded status of both pensions and OPB for the years ended December 31, 20202022 and 2019.2021. Benefit obligation balances presented below reflect the PBO for our pension plans and accumulated postretirement benefit obligations (APBO) for our OPB plans.
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PensionOther Postretirement BenefitsPensionOther Postretirement Benefits
20202019202020192022202120222021
Change in benefit obligationChange in benefit obligationChange in benefit obligation
Beginning balanceBeginning balance$77,645 $71,424 $5,080 $5,114 Beginning balance$75,635 $82,415 $4,092 $4,693 
Service costService cost3 89 77 Service cost3 72 87 
Interest costInterest cost2,455 2,925 130 196 Interest cost2,080 1,988 98 97 
AmendmentsAmendments(29)Amendments1  
Actuarial loss/(gain)7,759 8,695 (218)127 
Settlement/curtailment/other(68)(756)55 
Actuarial (gain)/lossActuarial (gain)/loss(17,605)(3,249)(914)(401)
Settlement/otherSettlement/other (870)
Gross benefits paidGross benefits paid(5,386)(4,658)(450)(474)Gross benefits paid(4,971)(4,653)(406)(411)
SubsidiesSubsidies36 36 Subsidies 39 26 
Exchange rate adjustmentExchange rate adjustment7 13 Exchange rate adjustment(26)(3)
Ending balanceEnding balance$82,415 $77,645 $4,693 $5,080 Ending balance$55,117 $75,635 $2,978 $4,092 
Change in plan assetsChange in plan assetsChange in plan assets
Beginning balance at fair valueBeginning balance at fair value$61,711 $56,102 $149 $132 Beginning balance at fair value$67,813 $68,696 $172 $160 
Actual return on plan assetsActual return on plan assets9,275 10,851 21 26 Actual return on plan assets(13,141)4,477 (27)21 
Company contributionCompany contribution3,013 16 Company contribution2 11 
Plan participants’ contributionsPlan participants’ contributions6 Plan participants’ contributions 6 
Settlement paymentsSettlement payments(68)(756)Settlement payments (870)
Benefits paidBenefits paid(5,241)(4,514)(16)(16)Benefits paid(4,824)(4,502)(11)(15)
Exchange rate adjustmentExchange rate adjustment6 12 Exchange rate adjustment(25)
Ending balance at fair valueEnding balance at fair value$68,696 $61,711 $160 $149 Ending balance at fair value$49,825 $67,813 $140 $172 
Amounts recognized in statement of financial position at December 31 consist of:Amounts recognized in statement of financial position at December 31 consist of:Amounts recognized in statement of financial position at December 31 consist of:
Other assetsOther assets$837 $484 Other assets$987 $1,426 $21 
Accrued liabilitiesAccrued liabilities(148)(142)($396)($391)Accrued liabilities(138)(144)(356)($392)
Accrued retiree health careAccrued retiree health care(4,137)(4,540)Accrued retiree health care(2,503)(3,528)
Accrued pension plan liability, netAccrued pension plan liability, net(14,408)(16,276)Accrued pension plan liability, net(6,141)(9,104)
Net amount recognizedNet amount recognized($13,719)($15,934)($4,533)($4,931)Net amount recognized($5,292)($7,822)($2,838)($3,920)
Amounts recognized in Accumulated other comprehensive loss at December 31 were as follows:
PensionOther Postretirement BenefitsPensionOther Postretirement Benefits
20202019202020192022202120222021
Net actuarial loss/(gain)Net actuarial loss/(gain)$24,324 $23,124 ($735)($625)Net actuarial loss/(gain)$17,448 $19,031 ($1,862)($1,092)
Prior service creditsPrior service credits(1,387)(1,467)(110)(122)Prior service credits(1,224)(1,306)(41)(76)
Total recognized in Accumulated other comprehensive lossTotal recognized in Accumulated other comprehensive loss$22,937 $21,657 ($845)($747)Total recognized in Accumulated other comprehensive loss$16,224 $17,725 ($1,903)($1,168)

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The accumulated benefit obligation (ABO) for all pension plans was $80,694$54,481 and $75,787$74,199 at December 31, 20202022 and 2019.2021. Key information for our plans with ABO and PBO in excess of plan assets as of December 31 was as follows:
2020201920222021
Accumulated benefit obligationAccumulated benefit obligation$74,337 $70,466 Accumulated benefit obligation$48,134 $66,406 
Fair value of plan assetsFair value of plan assets61,502 55,907 Fair value of plan assets42,491 58,593 
2020201920222021
Projected benefit obligationProjected benefit obligation$76,057 $72,325 Projected benefit obligation$48,770 $67,841 
Fair value of plan assetsFair value of plan assets61,502 55,907 Fair value of plan assets42,491 58,593 
Assumptions
The following assumptions, which are the weighted average for all plans, are used to calculate the benefit obligation at December 31 of each year and the net periodic benefit cost for the subsequent year.
December 31,December 31,202020192018December 31,202220212020
Discount rate:Discount rate:Discount rate:
PensionPension2.50 %3.30 %4.20 %Pension5.40 %2.80 %2.50 %
Other postretirement benefitsOther postretirement benefits2.00 %3.00 %4.00 %Other postretirement benefits5.30 %2.50 %2.00 %
Expected return on plan assetsExpected return on plan assets6.50 %6.80 %6.80 %Expected return on plan assets6.00 %6.30 %6.50 %
Rate of compensation increaseRate of compensation increase4.30 %4.30 %5.30 %Rate of compensation increase4.30 %4.30 %4.30 %
Interest crediting rates for cash balance plansInterest crediting rates for cash balance plans5.00 %5.15 %5.15 %Interest crediting rates for cash balance plans5.00 %5.00 %5.00 %
The discount rate for each plan is determined based on the plans’ expected future benefit payments using a yield curve developed from high quality bonds that are rated as Aa or better by at least half of the four rating agencies utilized as of the measurement date. The yield curve is fitted to yields developed from bonds at various maturity points. Bonds with the ten percent highest and the ten percent lowest yields are omitted. The present value of each plan’s benefits is calculated by applying the discount rates to projected benefit cash flows.
The pension fund’s expected return on plan assets assumption is derived from a review of actual historical returns achieved by the pension trust and anticipated future long-term performance of individual asset classes. While consideration is given to historical returns, the assumption represents a long-term, prospective return. The expected return on plan assets component of the net periodic benefit cost for the upcoming plan year is determined based on the expected return on plan assets assumption and the market-related value of plan assets (MRVA). Since our adoption of the accounting standard for pensions in 1987, we have determined the MRVA based on a five-year moving average of plan assets. As of December 31, 2020,2022, the MRVA was approximately $6,805 less$10,131 more than the fair market value of assets.
Assumed health care cost trend rates were as follows:
December 31,December 31,202020192018December 31,202220212020
Health care cost trend rate assumed next yearHealth care cost trend rate assumed next year4.50 %5.00 %5.50 %Health care cost trend rate assumed next year5.50 %4.50 %4.50 %
Ultimate trend rateUltimate trend rate4.50 %4.50 %4.50 %Ultimate trend rate4.50 %4.50 %4.50 %
Year that trend reached ultimate rate202120212021
Year that trend reaches ultimate rateYear that trend reaches ultimate rate202820212021
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Plan Assets
Investment Strategy The overall objective of our pension assets is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and address other cash requirements of the pension fund. Specific investment objectives for our long-term investment strategy include reducing the volatility of pension assets relative to pension liabilities, achieving a competitive total investment return, achieving diversification between and within asset classes and managing other risks. Investment objectives for each asset class are determined based on specific risks and investment opportunities identified.
We periodically update our long-term, strategic asset allocations. We use various analytics to determine the optimal asset mix and consider plan liability characteristics, liquidity characteristics, funding requirements, expected rates of return and the distribution of returns. A key element of our strategy is to de-risk the plan as the funded status of the plan increases. During 2022, the funded status of the plans increased as compared to 2021, and additional assets were reallocated to fixed income. The changes in the asset allocation are reflected in the table below. We identify investment benchmarks to evaluate performance for the asset classes in the strategic asset allocation that are market-based and investable where possible. Actual allocations to each asset class vary from target allocations due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions, and the timing of benefit payments and contributions. Short-term investments and exchange-traded derivatives are used to rebalance the actual asset allocation to the target asset allocation. The asset allocation is monitored and rebalanced frequently. The actual and target allocations by asset class for the pension assets at December 31 were as follows:
Actual AllocationsTarget AllocationsActual AllocationsTarget Allocations
Asset ClassAsset Class2020201920202019Asset Class2022202120222021
Fixed incomeFixed income49 %49 %49 %47 %Fixed income63 %61 %63 %63 %
Global equityGlobal equity30 29 29 29 Global equity14 16 20 20 
Private equityPrivate equity6 5 Private equity8 4 
Real estate and real assetsReal estate and real assets7 9 Real estate and real assets8 7 
Hedge fundsHedge funds8 8 10 Hedge funds7 6 
TotalTotal100 %100 %100 %100 %Total100 %100 %100 %100 %
Fixed income securities are invested primarily in a diversified portfolio of long duration instruments as well as Emerging Market, Structured, High Yield and Private Debt. Global equity securities are invested in a diversified portfolio of U.S. and non-U.S. companies, across various industries and market capitalizations.

Private equity investment vehicles are primarily limited partnerships (LPs) that mainly invest in U.S. and non-U.S. leveraged buyout, venture capital, growth and special situation strategies. Real estate and real assets include global private investments that may be held through investments in a limited partnership (LP)LPs or other fund structures and publicly traded investments (such as Real Estate Investment Trusts (REITs) in the case of real estate).structures. Real estate includes, but is not limited to, investments in office, retail, apartment and industrial properties. Real assets include, but are not limited to, investments in natural resources (such as energy, farmland and timber), commodities and infrastructure.
Hedge fund investments seek to capitalize on inefficiencies identified across and within different asset classes or markets. Hedge fund strategy types include, but are not limited to, directional, event driven, relative value long-short and multi-strategy.long-short.
Investment managers are retained for explicit investment roles specified by contractual investment guidelines. Certain investment managers are authorized to use derivatives, such as equity or bond futures, swaps, options and currency futures or forwards. Derivatives are used to achieve the desired
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market exposure of a security or an index, transfer value-added performance between asset classes,
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achieve the desired currency exposure, adjust portfolio duration or rebalance the total portfolio to the target asset allocation.
As a percentage of total pension assets, derivative net notional amounts were 8.3%37.1% and 4.3%33.4% for fixed income, including to-be-announced mortgage-backed securities and treasury forwards, and 0.4%(5.6%) and 3.6%(5.4%) for global equity and commodities at December 31, 20202022 and 2019.2021.
In November 2020, the Company contributedelected to contribute $3,000 of our common stock to the pension fund. An independent fiduciary was retained to manage and liquidate the stock over time at its discretion. Plan assets included $3,298$1,782 and $0$1,883 of our common stock as of December 31, 20202022 and 2019.2021.
Risk Management In managing the pension assets, we review and manage risk associated with funded status risk, interest rate risk, market risk, counterparty risk, liquidity risk and operational risk. Liability matching and asset class diversification are central to our risk management approach and are integral to the overall investment strategy. Further, asset classes are constructed to achieve diversification by investment strategy, by investment manager, by industry or sector and by holding. Investment manager guidelines for publicly traded assets are specified and are monitored regularly through the custodian. Credit parameters for counterparties have been established for managers permitted to trade over-the-counter derivatives. Valuation is governed through several types of procedures, including reviews of manager valuation policies, custodian valuation processes, pricing vendor practices, pricing reconciliation and periodic, security-specific valuation testing.
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Fair Value Measurements The following table presents our plan assets using the fair value hierarchy as of December 31, 20202022 and 2019.2021. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.
December 31, 2020December 31, 2019
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Fixed income securities:
Corporate$20,841 $20,801 $40 $19,341 $19,336 $5 
U.S. government and agencies5,170 5,168 2 5,759 5,759 
Mortgage backed and asset backed786 666 120 1,181 720 461 
Municipal1,176 1,104 72 1,317 1,317 
Sovereign1,040 1,038 2 1,076 1,076 
Other19 $18 1 55 $7 48 
Derivatives:
Assets6 6 
Liabilities(17)(17)(143)(143)
Cash equivalents and other short-term investments1,081 1,081 769 769 
Equity securities:
U.S. common and preferred stock5,013 5,013 4,866 4,866 
Non-U.S. common and preferred stock5,577 5,575 2 5,529 5,527 
Boeing company stock3,298 3,298 
Derivatives:
Assets10 10 
Liabilities(9)(9)(5)(5)
Private equity
Real estate and real assets:
Real estate351 351 454 454 
Real assets786 723 61 2 810 649 157 
Derivatives:
Assets6 6 
Liabilities(2)(2)(2)(2)
Total$45,132 $14,978 $29,914 $240 $41,018 $11,504 $29,042 $472 
Fixed income common/collective/pooled funds$2,345 $959 
Fixed income other604 512 
Equity common/collective pooled funds6,947 6,301 
Private equity4,013 3,184 
Real estate and real assets3,359 3,605 
Hedge funds5,745 5,688 
Total investments measured at NAV as a practical expedient$23,013 $20,249 
Cash$267 $207 
Receivables992 383 
Payables(708)(146)   
Total$68,696 $61,711 
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December 31, 2022December 31, 2021
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Fixed income securities:
Corporate$15,095 $15,025 $70 $20,573 $20,520 $53 
U.S. government and agencies7,827 7,827 11,285 11,285 
Mortgage backed and asset backed664 502 162 777 675 102 
Municipal843 811 32 1,064 1,035 29 
Sovereign706 706 1,135 1,126 
Other8 $8 $3 
Derivatives:
Assets36 36 62 62 
Liabilities(87)(87)(48)(48)
Cash equivalents and other short-term investments571 571 448 448 
Equity securities:
U.S. common and preferred stock2,931 2,931 4,463 4,463 
Non-U.S. common and preferred stock2,023 2,023 3,345 3,340 
Boeing company stock1,782 1,782 1,883 1,883 
Derivatives:
Assets
Liabilities(1)(1)(1)(1)
Private equity
Real estate and real assets:
Real estate413 413 
Real assets362 310 47 5 784 749 35 
Derivatives:
Assets1 1 
Liabilities(8)(7)(1)(2)(2)
Total$32,753 $7,054 $25,431 $268 $46,193 $10,851 $35,144 $198 
Fixed income common/collective/pooled funds$1,511 $1,712 
Fixed income other832 747 
Equity common/collective/ pooled funds2,757 4,561 
Private equity4,239 5,100 
Real estate and real assets3,525 3,952 
Hedge funds3,391 4,717 
Total investments measured at NAV as a practical expedient$16,255 $20,789 
Cash$409 $520 
Receivables541 454 
Payables(133)(143)   
Total$49,825 $67,813 
Fixed income securities are primarily valued upon a market approach, using matrix pricing and considering a security’s relationship to other securities for which quoted prices in an active market may be available, or an income approach, converting future cash flows to a single present value amount.
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Inputs used in developing fair value estimates include reported trades, broker quotes, benchmark yields and base spreads.
Common/collective/pooled funds are typically common or collective trusts valued at their net asset values (NAVs) that are calculated by the investment manager or sponsor of the fund and have daily or monthly liquidity.
Derivatives included in the table above are over-the-counter and are primarily valued using an income approach with inputs that include benchmark yields, swap curves, cash flow analysis, rating agency data and interdealer broker rates. Exchange-traded derivative positions are reported in accordance with changes in daily variation margin which is settled daily and therefore reflected in the payables and receivables portion of the table.
Cash equivalents and other short-term investments (which are used to pay benefits) are held in a separate account which consists of a commingled fund (with daily liquidity) and separately held short-term securities and cash equivalents. All of the investments in this cash vehicle are valued daily using a market approach with inputs that include quoted market prices for similar instruments. In the event a market price is not available for instruments with an original maturity of one year or less, amortized cost is used as a proxy for fair value. Common and preferred stock equity securities are primarily valued using a market approach based on the quoted market prices of identical instruments.
Private equity and private debt NAV valuations are based on the valuation of the underlying investments, which include inputs such as cost, operating results, discounted future cash flows and market based comparable data. For those investments reported on a one-quarter lagged basis (primarily LPs) we use NAVs, adjusted for subsequent cash flows and significant events.
Real estate and real asset NAV valuationsNAVs are based on the valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data. For those investments reported on a one-quarter lagged basis (primarily LPs), NAVs are adjusted for subsequent cash flows and significant events. Publicly traded REITs and infrastructure stocks are valued using a market approach based on quoted market prices of identical instruments. Exchange-traded commodities futures positions are reported in accordance with changes in daily variation margin which is settled daily and therefore reflected in the payables and receivables portion of the table.
Hedge fund NAVs are generally based on the valuation of the underlying investments. This is primarily done by applying a market or income valuation methodology depending on the specific type of security or instrument held.
Investments in private equity, private debt, real estate, real assets and hedge funds are primarily calculated and reported by the General Partner, (GP), fund manager or third partythird-party administrator. Additionally, some investments in fixed income and equity are made via commingled vehicles and are valued in a similar fashion. Pension assets invested in commingled and limited partnershipLP structures rely on the NAV of these investments as the practical expedient for the valuations.
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The following tables present a reconciliationsummarizes the changes of Level 3 assets, reconciled by asset class, held during the years ended December 31, 20202022 and 2019.2021. Transfers into and out of Level 3 are reported at the beginning-of-year values.
January 1
2020 Balance
Net Realized and Unrealized Gains/(Losses)Net Purchases, Issuances and SettlementsNet Transfers Into/(Out of) Level 3December 31
2020 Balance
January 1
2022 Balance
Net Realized and Unrealized Gains/(Losses)Net Purchases, Issuances and SettlementsNet Transfers Into/(Out of) Level 3December 31
2022 Balance
Fixed income securities:Fixed income securities:Fixed income securities:
CorporateCorporate$5 $1 $18 $16 $40 Corporate$53 ($19)$3 $33 $70 
U.S. government and
agencies
2 2 
Mortgage backed and
asset backed
Mortgage backed and
asset backed
461 (1)(93)(247)120 
Mortgage backed and
asset backed
102 (11)16 55 162 
MunicipalMunicipal3 2 67 72 Municipal29 (14)9 8 32 
SovereignSovereign(1)2 1 2 Sovereign9 (9) 
Equity securities:Equity securities:Equity securities:
Non-U.S. common and
preferred stock
Non-U.S. common and
preferred stock
2 2 Non-U.S. common and
preferred stock
5 (45)(2)42 
Real assetsReal assets4 0(2)2 Real assets (1)5 4 
TotalTotal$472 $2 ($71)($163)$240 Total$198 ($90)$31 $129 $268 
January 1
2019 Balance
Net Realized and Unrealized GainsNet Purchases, Issuances and SettlementsNet Transfers Into Level 3December 31
2019 Balance
January 1
2021 Balance
Net Realized and Unrealized Gains/(Losses)Net Purchases, Issuances and SettlementsNet Transfers Into/(Out of) Level 3December 31
2021 Balance
Fixed income securities:Fixed income securities:Fixed income securities:
Corporate Corporate$2 $3 0$5  Corporate$40 ($1)$5 $9 $53 
U.S. government and agenciesU.S. government and agencies(2)
Mortgage backed and asset backedMortgage backed and asset backed312 $11 137 $1 461 Mortgage backed and asset backed120 (17)(1)102 
MunicipalMunicipal72 (50)29 
SovereignSovereign(8)15 
Equity securities:Equity securities:Equity securities:
Non-U.S. common and preferred stockNon-U.S. common and preferred stockNon-U.S. common and preferred stock(3)
Real assetsReal assets0Real assets(2)
TotalTotal$318 $11 $141 $2 $472 Total$240 ($7)$5 ($40)$198 
For the year ended December 31, 2020,2022, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 20202022 were $2($16) for corporate $1fixed income securities, ($11) for mortgage backed and asset backed fixed income securities, $3($14) for municipal bondsfixed income securities, and ($1) for sovereign.real asset securities. For the year ended December 31, 2019,2021, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 20192021 were $10($1) for mortgage backed and asset backed fixed income securities and ($1)8) for non-U.S. common and preferred stock equity securities.sovereign.
OPB Plan Assets The majority of OPB plan assets are invested in a balanced index fund which is comprised of approximately 60% equities and 40% debt securities. The index fund is valued using a
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market approach based on the quoted market price of an identical instrument (Level 1). The expected rate of return on these assets does not have a material effect on the net periodic benefit cost.
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Cash Flows
Contributions Required pension contributions under the Employee Retirement Income Security Act (ERISA), as well as rules governing funding of our non-US pension plans, are not expected to be significant in 2021.2023. During the fourth quarter of 2020, we contributed $3,000 in common stock to the pension fund. We do not expect to make discretionary contributions to our pension plans in 2021.2023.
Estimated Future Benefit Payments The table below reflects the total pension benefits expected to be paid from the plans or from our assets, including both our share of the benefit cost and the participants’ share of the cost, which is funded by participant contributions. OPB payments reflect our portion only.
Year(s)Year(s)202120222023202420252026-2030Year(s)202320242025202620272028-2032
PensionsPensions$4,959 $4,825 $4,720 $4,657 $4,581 $21,383 Pensions$5,348 $4,473 $4,404 $4,325 $4,221 $19,560 
Other postretirement benefits:Other postretirement benefits:Other postretirement benefits:
Gross benefits paidGross benefits paid462 452 435 415 394 1,606 Gross benefits paid381 371 353 334 310 1,176 
SubsidiesSubsidies(32)(32)(32)(31)(30)(139)Subsidies(11)(11)(11)(12)(12)(63)
Net other postretirement benefitsNet other postretirement benefits$430 $420 $403 $384 $364 $1,467 Net other postretirement benefits$370 $360 $342 $322 $298 $1,113 
Termination Provisions
Certain of the pension plans provide that, in the event there is a change in control of the Company which is not approved by the Board of Directors and the plans are terminated within five years thereafter, the assets in the plan first will be used to provide the level of retirement benefits required by ERISA, and then any surplus will be used to fund a trust to continue present and future payments under the postretirement medical and life insurance benefits in our group insurance benefit programs.
Should we terminate certain pension plans under conditions in which the plan’s assets exceed that plan’s obligations, the U.S. government will be entitled to a fair allocation of any of the plan’s assets based on plan contributions that were reimbursed under U.S. government contracts.
Defined Contribution Plans
We provide certain defined contribution plans to all eligible employees. The principal plans are the Company-sponsored 401(k) plans. The expense for these defined contribution plans was $1,260, $1,268 and $1,351 $1,533in 2022, 2021 and $1,480 in 2020, 2019 and 2018, respectively.
Note 17 – Share-Based Compensation and Other Compensation Arrangements
Share-Based Compensation
Our 2003 Incentive Stock Plan, as amended and restated, permits awards of incentive and non-qualified stock options, stock appreciation rights, restricted stock or units, performance shares, performance restricted stock or units, performance units and other stock and cash-based awards to our employees, officers, directors, consultants, and independent contractors. The aggregate number of shares of our stock authorized for issuance under the plan is 87,000,000.
Shares issued as a result of stock option exercises or conversion of stock unit awards will be funded out of treasury shares, except to the extent there are insufficient treasury shares, in which case new shares will be issued. We believe we currently have adequate treasury shares to satisfy these issuances during 2021.2023.
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Share-based plans expense is primarily included in Total costs and expenses and General and administrative expense, as well as a portion allocated to production as inventoried costs. The share-based plans expense and related income tax benefit were as follows:
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Restricted stock units and other awardsRestricted stock units and other awards$243 $217 $213 Restricted stock units and other awards$726 $840 $243 
Income tax benefit$53 $47 $46 
Income tax benefit (before consideration of valuation allowance)Income tax benefit (before consideration of valuation allowance)$178$148 $53 
Stock Options
We discontinued grantingOptions have been granted to our executive officers that are scheduled to vest and become exercisable three years after the grant date and expire ten years after the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) may receive some or all of their stock options in 2014, replacing them with performance-based restricteddepending on certain age and service conditions. The fair values of the stock units. options granted were estimated using a Monte-Carlo simulation model using the assumptions presented below. The model includes no expected dividend yield.
On February 16, 2022, we granted 348,769 premium-priced stock options to our executive officers as part of our long-term incentive program. These stock options have an exercise price equal to 120% of the fair market value of our stock on the date of grant. If certain performance measures are met, the exercise price is reduced to 110% of the grant date fair market value of our stock.
On February 17, 2021, we granted 342,986 premium-priced stock options to our executive officers as part of our long-term incentive program. These stock options have an exercise price equal to 120% of the fair market value of our stock on the date of grant. During 2021, we also granted 148,322 stock options to certain executives to encourage retention or to award various achievements, of which 40,322 had an exercise price equal to 120% of the fair market value of our stock on the date of grant, and the remaining 108,000 had an exercise price equal to the fair market value on the date of grant. The grant date fair market values of these awards were not significant.
Grant YearGrant DateExpected LifeExpected VolatilityRisk Free Interest RateGrant Date Fair Value Per Option
20222/16/20226.8 years36.6 %2.0 %$83.04 
20212/17/20216.6 years37.8 %1.3 %$74.63 
Options granted through January 2014 had an exercise price equal to the fair market value of our stock on the date of grant and expire 10 years after the date of grant. TheThese stock options vested over a period of three years and were fully vested as of December 31, 2017.
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Stock option activity for the year ended December 31, 2020 is2022 was as follows:
SharesWeighted Average Exercise Price Per ShareWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic ValueSharesWeighted Average Exercise Price Per OptionWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Number of shares under option:Number of shares under option:Number of shares under option:
Outstanding at beginning of yearOutstanding at beginning of year2,375,583$74.79 Outstanding at beginning of year1,709,379$121.83 
GrantedGranted362,450259.77 
ExercisedExercised(515,063)71.47 Exercised(663,348)75.85 
ExpiredExpired(664)130.72 
ForfeitedForfeited(17,048)246.21 
Outstanding at end of yearOutstanding at end of year1,860,520$75.71 1.65$257 Outstanding at end of year1,390,769$178.18 5.0$68 
Exercisable at end of yearExercisable at end of year1,860,520$75.71 1.65$257 Exercisable at end of year598,983$77.22 0.2$68 
The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 2019was $75, $84 and 2018 was $90, $279 and $320, with a related tax benefit of $17, $19 and $32, $61 and $70, respectively. At December 31, 2022, there was $23 of total unrecognized compensation cost related to options which is expected to be recognized over a weighted average period of 1.9 years. No options vested during the years ended December 31, 2020, 20192022, 2021 and 2018.2020.
Restricted Stock Units
In February 2020, 20192022, 2021 and 2018,2020, we granted to our executives 325,108, 233,5821,804,541, 980,077 and 260,730325,108 restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of $319.04, $428.22$217.48, $215.70 and $361.13319.04 per unit, respectively. In December 2020,On July 29, 2022, we also granted to our executives 721,7342,568,112 RSUs with a grant date fair value of $157.69 per unit as part of our long-term incentive program, with a grant date fair value of $233.00 per unit.accelerating awards planned for 2023 to retain executives. The RSUs granted under this program will generally vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the employeeexecutive (or beneficiary) willmay receive a prorationsome or all of their stock units baseddepending on active employment during the three-year service period, except in the case of the December 2020 grant, which will vest in full for executives that terminate employment due to retirement after attaining certain age and service conditions. In all other cases, the RSUs will not vest and all rights to the stock units will terminate. These RSUs are labeled executive long-term incentive program in the table below.
In December 2020, we granted to our employees (excluding executives and certain union-represented employees), a one-time grant of 5,163,425 RSUs with a grant date fair value of $233.00 per unit. The RSUs granted under this program will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an employee terminates employment because of retirement, layoff, disability or death, the employee (or beneficiary) willmay receive a proration of stock units based on active
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employment during the three-year service period. In all other cases, the RSUs will not vest and all rights to the stock units will terminate. These RSUs are labeled employee long-term incentive program in the table below.
In addition to RSUs awarded under our long-term incentive program,programs, we grantgranted RSUs to certain executives and employees to encourage retention or to reward various achievements. These RSUs are labeled other RSUs in the table below.
The fair values of all RSUs are estimated using the average of the high and low stock prices on the date of grant.
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RSU activity for the year ended December 31, 20202022 was as follows:
Executive Long-Term Incentive ProgramEmployee Long-Term Incentive ProgramOther
Number of units:
Outstanding at beginning of year905,025 908,321 
Granted1,103,608 5,163,425 196,818 
Dividends7,091 7,303 
Forfeited(104,374)(33,896)
Distributed(487,749)(329,227)
Outstanding at end of year1,423,601 5,163,425 749,319 
Unrecognized compensation cost$237 $973 $102 
Weighted average remaining contractual life (years)
2.53.02.0
The number of vested but undistributed RSUs at December 31, 2020 was not significant.
Executive Long-Term Incentive ProgramEmployee Long-Term Incentive ProgramOther
Number of units:
Outstanding at beginning of year2,049,695 4,780,724 698,866 
Granted4,527,189 595,122 
Forfeited(282,488)(269,380)(67,441)
Distributed(176,496)(137,537)(267,853)
Outstanding at end of year6,117,900 4,373,807 958,694 
Undistributed vested units426,652 1,454,414 18,914 
Unrecognized compensation cost$683 $240 $87 
Weighted average remaining amortization period (years)
2.11.02.1
Performance-Based Restricted Stock Units
Performance-Based Restricted Stock Units (PBRSUs) are stock units that pay out based on the Company’s total shareholder return (TSR) as compared to a group of peer companies over a three-year period. The award payout can range from 0% to 200% of the initial PBRSU grant. The PBRSUs granted under this program will vest at the payout amount and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive terminates employment because of retirement, layoff, disability or death, the employee (or beneficiary) remains eligible under the award and, if the award is earned, will receive a proration of stock units based on active employment during the three-year service period. In all other cases, the PBRSUs will not vest and all rights to the stock units will terminate.
In February 2020, 2019 and 2018, we granted to our executives 290,202 214,651 and 241,284 PBRSUs as part of our long-term incentive program. Compensation expense for the award is recognized over the three-year performance period based upon the grant date fair value. The grant date fair values were estimated using a Monte-Carlo simulation model with the assumptions presented below. The model includes no expected dividend yield as the units earn dividend equivalents.yield.
Grant YearGrant DatePerformance PeriodExpected VolatilityRisk Free Interest RateGrant Date Fair Value
20202/24/20203 years27.04 %1.21 %$357.38 
20192/25/20193 years23.88 %2.46 %466.04 
20182/26/20183 years22.11 %2.36 %390.27 
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Grant YearGrant DatePerformance PeriodExpected VolatilityRisk Free Interest RateGrant Date Fair Value Per Unit
20202/24/20203 years27.0 %1.2 %$357.38 
PBRSU activity for the year ended December 31, 20202022 was as follows:
Executive Long-Term Incentive Program
Number of units:
Outstanding at beginning of year826,126383,401 
Granted290,202 
Performance based adjustment(1)
293,203 
Dividends27,299 
Forfeited(83,055)(162,548)
DistributedForfeited(732,216)(10,647)
Outstanding at end of year621,559210,206 
Unrecognized compensation cost$934 
Weighted average remaining contractual lifeamortization period (years)
1.80.2
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(1)Represents net incremental number of units issued at vesting based on TSRadjustment to 0% payout for units granted in 2017.2019.
Performance Awards
During 2020, 2019 and 2018, we granted Performance Awards to our executives, which are cash units that pay out based on the achievement of long-term financial goals at the end of a three-year period. Each unit hashad an initial value of $100 dollars. The amount payable at the end of the three-year performance period may be anywhere from $0 to $200 dollars per unit for the 2019 and 2018 Performance Awards and $0 to $150 dollars for 2020 Performance Awards, depending on the Company’s performance against plan for a three-year period. The Compensation Committee has the discretion to pay these awards in cash, stock or a combination of both after the three-year performance period. Compensation expense, based on the estimatedAs of December 31, 2022 these performance awards have expired with a payout is recognized ratably over the performance period.
The minimum payout amount is $0 and the maximum amount we could be required to pay out for the 2020, 2019 and 2018 Performance Awards is $274, $341 and $331, respectively.of $0.
Deferred Compensation
The Company has deferred compensation plans which permit certain employees and executives to defer a portion of their salary, bonus, certain other incentive awards and retirement contributions. Participants can diversify these amounts among 23 investment funds including a Boeing stock unit account.
Total (income)/expense related to deferred compensation was ($117), $126 and $93 $174in 2022, 2021 and $19 in 2020, 2019 and 2018, respectively. As of December 31, 20202022 and 2019,2021, the deferred compensation liability which is being marked to market was $1,718$1,499 and $1,779.$1,703.
Note 18 – Shareholders’ Equity
On December 17, 2018, the Board approved a repurchase plan for up to $20,000 of common stock. In March 2020, the Board of Directors terminated its prior authorization to repurchase shares under this plan.
As of December 31, 20202022 and 2019,2021, there were 1,200,000,000 shares of common stock and 20,000,000 shares of preferred stock authorized. No preferred stock has been issued.
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Changes in Share Balances
The following table shows changes in each class of shares:
Common
Stock
Treasury
Stock
Common
Stock
Treasury
Stock
Balance at January 1, 20181,012,261,159 421,222,326 
Issued(3,409,330)
Acquired26,806,974 
Balance at December 31, 20181,012,261,159 444,619,970 
Issued(2,797,002)
Acquired7,529,437 
Balance at December 31, 20191,012,261,159 449,352,405 
Balance at January 1, 2020Balance at January 1, 20201,012,261,159 449,352,405 
IssuedIssued(19,986,868)Issued(19,986,868)
AcquiredAcquired575,484 Acquired575,484 
Balance at December 31, 2020Balance at December 31, 20201,012,261,159 429,941,021 Balance at December 31, 20201,012,261,159 429,941,021 
IssuedIssued(6,904,556)
AcquiredAcquired307,242 
Balance at December 31, 2021Balance at December 31, 20211,012,261,159 423,343,707 
IssuedIssued(8,877,047)
AcquiredAcquired204,723 
Balance at December 31, 2022Balance at December 31, 20221,012,261,159 414,671,383 
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Accumulated Other Comprehensive Loss
Changes in Accumulated other comprehensive loss (AOCI) by component for the years ended December 31, 2020, 20192022, 2021 and 20182020 were as follows:
Currency Translation AdjustmentsUnrealized Gains and Losses on Certain InvestmentsUnrealized Gains and Losses on Derivative InstrumentsDefined Benefit Pension Plans & Other Postretirement Benefits
Total (1)
Currency Translation AdjustmentsUnrealized Gains and Losses on Certain InvestmentsUnrealized Gains and Losses on Derivative InstrumentsDefined Benefit Pension Plans & Other Postretirement Benefits
Total (1)
Balance at January 1, 2018($15)($2)$54 ($16,410)($16,373)
Balance at January 1, 2020Balance at January 1, 2020($128)$1 ($84)($15,942)($16,153)
Other comprehensive income/(loss) before reclassificationsOther comprehensive income/(loss) before reclassifications98 14 (1,929)(2)(1,817)
Amounts reclassified from AOCIAmounts reclassified from AOCI27 810 (3)837 
Net current period Other comprehensive income/(loss)Net current period Other comprehensive income/(loss)98 41 (1,119)(980)
Balance at December 31, 2020Balance at December 31, 2020($30)$1 ($43)($17,061)($17,133)
Other comprehensive (loss)/income before reclassificationsOther comprehensive (loss)/income before reclassifications(86)(146)747 517 Other comprehensive (loss)/income before reclassifications(75)55 4,268 (2)4,248 
Amounts reclassified from AOCIAmounts reclassified from AOCI30 743 (2)773 Amounts reclassified from AOCI(6)1,232 (3)1,226 
Net current period Other comprehensive (loss)/incomeNet current period Other comprehensive (loss)/income(86)(116)1,490 1,290 Net current period Other comprehensive (loss)/income(75)49 5,500 5,474 
Balance at December 31, 2018($101)$0 ($62)($14,920)($15,083)
Other comprehensive income/(loss) before reclassifications(27)(48)(1,397)(1,471)
Amounts reclassified from AOCI26 375 (2)401 
Net current period Other comprehensive (loss)/income(27)(22)(1,022)(1,070)
Balance at December 31, 2019($128)$1 ($84)($15,942)($16,153)
Balance at December 31, 2021Balance at December 31, 2021($105)$1 $6 ($11,561)($11,659)
Other comprehensive (loss)/income before reclassificationsOther comprehensive (loss)/income before reclassifications98 014 (1,929)(1,817)Other comprehensive (loss)/income before reclassifications(62)(1)(40)1,529 (2)1,426 
Amounts reclassified from AOCIAmounts reclassified from AOCI0027 810 (2)837 Amounts reclassified from AOCI10 (4)673 (3)683 
Net current period Other comprehensive (loss)/incomeNet current period Other comprehensive (loss)/income98 0041 (1,119)(980)Net current period Other comprehensive (loss)/income(62)(1)(30)2,202 2,109 
Balance at December 31, 2020($30)$1 ($43)($17,061)($17,133)
Balance at December 31, 2022Balance at December 31, 2022($167) ($24)($9,359)($9,550)
(1)    Net of tax.
(2)    Primarily relatesrelated to remeasurement of assets and benefit obligations related to the Company's pension and other postretirement benefit plans resulting in an actuarial gain/(loss) of $1,533, $4,262 and ($1,956) (net of tax of ($22), ($32) and $111) for the years ended December 31, 2022, 2021 and 2020. See Note 16.
(3)    Primarily related to amortization of actuarial losses for the years ended December 31, 2022, 2021 and 2020 2019,totaling $791, $1,155 and 2018 totaling $917 $464, and $878 (net of tax of ($52)11), ($133),8) and ($242)52)), respectively. These are included in the net periodic pension cost. See Note 16.
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(4)    Included losses of $39 (net of tax of ($11)) from cash flow hedges reclassified to Other income, net because the forecasted transactions are probable of not occurring.

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Note 19 – Derivative Financial Instruments
Cash Flow Hedges
Our cash flow hedges include foreign currency forward contracts, commodity swaps and commodity purchase contracts. We use foreign currency forward contracts to manage currency risk associated with certain transactions, specifically forecasted sales and purchases made in foreign currencies. Our foreign currency contracts hedge forecasted transactions through 2025.2031. We use commodity derivatives, such as fixed-price purchase commitments and swaps to hedge against potentially unfavorable price changes for itemscommodities used in production. Our commodity contracts hedge forecasted transactions through 2029.
We continue to monitor the effects
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Table of the COVID-19 pandemic on our cash flow hedges, including reductions in our forecasted purchases of certain commodities. As of December 31, 2020, the impact of the COVID-19 pandemic on our cash flow hedges was not significant.Contents
Derivative Instruments Not Receiving Hedge Accounting Treatment
We have entered into agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and non-U.S. business requirements. These agreements are derivative instruments for accounting purposes. The quantities of aluminum in these agreements offset and are priced at prevailing market prices. We also hold certain foreign currency forward contracts and commodity swaps which do not qualify for hedge accounting treatment.
Notional Amounts and Fair Values
The notional amounts and fair values of derivative instruments in the Consolidated Statements of Financial Position as of December 31 were as follows:
Notional
 amounts(1)
Other assetsAccrued
liabilities
Notional
 amounts(1)
Other assetsAccrued
liabilities
202020192020201920202019202220212022202120222021
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Foreign exchange contractsForeign exchange contracts$2,594 $2,590 $81 $29 ($24)($60)Foreign exchange contracts$2,815 $2,630 $23 $30 ($122)($52)
Commodity contractsCommodity contracts404 645 4 (43)(72)Commodity contracts602 500 115 88 (9)(18)
Derivatives not receiving hedge accounting treatment:Derivatives not receiving hedge accounting treatment:Derivatives not receiving hedge accounting treatment:
Foreign exchange contractsForeign exchange contracts769 285 22 (16)(6)Foreign exchange contracts462 361 5 (42)(3)
Commodity contractsCommodity contracts904 1,644 (17)Commodity contracts412 760 2(1)(7)
Total derivativesTotal derivatives$4,671 $5,164 107 34 (100)(138)Total derivatives$4,291 $4,251 145 128 (174)(80)
Netting arrangementsNetting arrangements(31)(20)31 20 Netting arrangements(33)(30)33 30 
Net recorded balanceNet recorded balance$76 $14 ($69)($118)Net recorded balance$112 $98 ($141)($50)
(1)Notional amounts represent the gross contract/notional amount of the derivatives outstanding.
Gains/(losses) associated with our hedging transactions and forward points recognized in Other comprehensive income are presented in the following table:
Years ended December 31,20202019
Recognized in Other comprehensive income, net of taxes:
Foreign exchange contracts$44 $15 
Commodity contracts(30)(63)
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Years ended December 31,20222021
Recognized in Other comprehensive income, net of taxes:
Foreign exchange contracts($118)($47)
Commodity contracts78 102 
Gains/(losses) associated with our hedging transactions and forward points reclassified from AOCI to earnings are presented in the following table:
Years ended December 31,Years ended December 31,20202019Years ended December 31,20222021
Foreign exchange contractsForeign exchange contractsForeign exchange contracts
RevenuesRevenues($3)0Revenues$1 
Costs and expensesCosts and expenses(14)($26)Costs and expenses7 $13 
General and administrativeGeneral and administrative(6)(9)General and administrative(12)
Commodity contractsCommodity contractsCommodity contracts
Costs and expensesCosts and expenses($10)$1 Costs and expenses$31 ($18)
General and administrative expenseGeneral and administrative expense(1)General and administrative expense10 
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Losses from cash flow hedges reclassified from AOCI to Other income, net because it is probable the forecasted transactions will not occur were $50 and $0 for the years ended December 31, 2022 and 2021. Gains/(losses) related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were insignificant for the years ended December 31, 20202022 and December 31, 2019.2021.
Based on our portfolio of cash flow hedges, we expect to reclassify gains of $2$14 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months.
We have derivative instruments with credit-risk-related contingent features. ForIf we default on our five-year credit facility, our derivative counterparties could require settlement for foreign exchange and certain commodity contracts with original maturities of at least five years, our derivative counterparties could require settlement if we default on our five-year credit facility.years. The fair value of those contracts in a net liability position at December 31, 2022 was $33. For certainother particular commodity contracts, our counterparties could require collateral posted in an amount determined by our credit ratings. The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a net liability position at December 31, 2020 was $3. At December 31, 2020,2022, there was no collateral posted related to our derivatives.
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Note 20 – Fair Value Measurements
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant unobservable inputs. The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.
December 31, 2020December 31, 2019December 31, 2022December 31, 2021
TotalLevel 1Level 2TotalLevel 1Level 2TotalLevel 1Level 2TotalLevel 1Level 2
AssetsAssetsAssets
Money market fundsMoney market funds$2,230 $2,230 $2,562 $2,562 Money market funds$1,797 $1,797 $1,370 $1,370 
Available-for-sale debt investments:Available-for-sale debt investments:Available-for-sale debt investments:
Commercial paperCommercial paper149 $149 108 $108 Commercial paper256 $256 225 $225 
Corporate notesCorporate notes333 333 242 242 Corporate notes195 195 262 262 
U.S. government agenciesU.S. government agencies114 114 55 55 U.S. government agencies47 47 
Other equity investmentsOther equity investments54 54 33 33 Other equity investments10 10 20 20 
DerivativesDerivatives76 76 14 $14 Derivatives112 112 98 98 
Total assetsTotal assets$2,956 $2,284 $672 $3,014 $2,650 $364 Total assets$2,417 $1,807 $610 $1,976 $1,390 $586 
LiabilitiesLiabilitiesLiabilities
DerivativesDerivatives($69)($69)($118)($118)Derivatives($141)($141)($50)($50)
Total liabilitiesTotal liabilities($69)($69)($118)($118)Total liabilities($141)($141)($50)($50)
Money market funds, available-for-sale debt investments and equity securities are valued using a market approach based on the quoted market prices or broker/dealer quotes of identical or comparable instruments.
Derivatives include foreign currency and commodity contracts. Our foreign currency forward contracts are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the present value of the commodity index prices less the contract rate multiplied by the notional amount.
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Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3).basis. The following table presents the nonrecurring losses recognized for the years ended December 31 due to long-lived asset impairment, and the fair value and asset classification of the related assets as of the impairment date:
2020201920222021
Fair ValueTotal LossesFair ValueTotal LossesTotalLevel 2Level 3Total LossesTotalLevel 2Level 3Total Losses
InvestmentsInvestments$22 ($81)$27 ($109)Investments ($31) ($8)
Customer financing assetsCustomer financing assets105 (24)$111 (20)Customer financing assets$47 $47 (7)$110 $110 (31)
Other assets and Acquired intangible assets298 (221)(310)
Property, plant and equipmentProperty, plant and equipment79 (84)41 (4)Property, plant and equipment (19)(50)
Other Assets and Acquired intangible assetsOther Assets and Acquired intangible assets15 15 (55)(9)
TotalTotal$504 ($410)$183 ($443)Total$62  $62 ($112)$120  $120 ($98)
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Level 3 Investments, Property, plant and equipment, Other assets and Acquired intangible assets were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets. Level 2 Property, plant and equipment were valued based on a third party valuation using a combination of income and market approaches that considered estimates of net operating income, capitalization rates and adjusted for as-is condition. The fair value of the impaired customer financing assets includes operating lease equipment and investments in sales type-leases/finance leases and is derived by calculating a median collateral value from a consistent group of third party aircraft value publications. The values provided by the third party aircraft publications are derived from their knowledge of market trades and other market factors. Management reviews the publications quarterly to assess the continued appropriateness and consistency with market trends. Under certain circumstances, we adjust values based on the attributes and condition of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by third party publications, or on the expected net sales price for the aircraft.
For Level 3 assets that were measured at fair value on a nonrecurring basis during the year ended December 31, 2020,2022, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets.
Fair
Value
Valuation
Technique(s)
Unobservable InputRange
Median or Average
Customer financing assets$10547Market approachAircraft value publications
$8540 - $169$51(1)
Median $116$46
Aircraft condition adjustments
($14)4) - $3$5(2)
Net ($11)$1
(1)The range represents the sum of the highest and lowest values for all aircraft subject to fair value measurement, according to the third party aircraft valuation publications that we use in our valuation process.
(2)The negative amount represents the sum, for all aircraft subject to fair value measurement, of all downward adjustments based on consideration of individual aircraft attributes and condition. The positive amount represents the sum of all such upward adjustments.
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Fair Value Disclosures
The fair values and related carrying values of financial instruments that are not required to be remeasured at fair value on the Consolidated Statements of Financial Position at December 31 were as follows:
December 31, 2020December 31, 2022
Carrying AmountTotal Fair ValueLevel 1Level 2Level 3Carrying AmountTotal Fair ValueLevel 1Level 2Level 3
AssetsAssetsAssets
Notes receivable, netNotes receivable, net$420 $488 $488 Notes receivable, net$385 $403 $403 
LiabilitiesLiabilitiesLiabilities
Debt, excluding finance lease obligationsDebt, excluding finance lease obligations(63,380)(72,357)(72,342)($15)Debt, excluding finance lease obligations(56,794)(52,856)(52,856)
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December 31, 2019December 31, 2021
Carrying AmountTotal Fair ValueLevel 1Level 2Level 3Carrying AmountTotal Fair ValueLevel 1Level 2Level 3
AssetsAssetsAssets
Notes receivable, netNotes receivable, net$443 $444 $444 Notes receivable, net$412 $485 $485 
LiabilitiesLiabilitiesLiabilities
Debt, excluding finance lease obligations and commercial paper(20,964)(23,119)(23,081)($38)
Debt, excluding finance lease obligationsDebt, excluding finance lease obligations(57,921)(65,724)(65,724)
The fair values of notes receivable are estimated with discounted cash flow analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit quality. The fair value of our debt that is traded in the secondary market is classified as Level 2 and is based on current market yields. For our debt that is not traded in the secondary market, the fair value is classified as Level 2 and is based on our indicative borrowing cost derived from dealer quotes or discounted cash flows. The fair values of our debt classified as Level 3 are based on discounted cash flow models using the implied yield from similar securities. With regard to other financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of our indemnifications and financing commitments because the amount and timing of those arrangements are uncertain. Items not included in the above disclosures include cash, restricted cash, time deposits and other deposits, commercial paper, money market funds, Accounts receivable, Unbilled receivables, Other current assets, Accounts payable and long-term payables. The carrying values of those items, as reflected in the Consolidated Statements of Financial Position, approximate their fair value at December 31, 20202022 and 2019.2021. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash (Level 1).
Note 21 – Legal Proceedings
Various legal proceedings, claims and investigations related to products, contracts, employment and other matters are pending against us.
In addition, we are subject to various U.S. government inquiries and investigations from which civil, criminal or administrative proceedings could result or have resulted in the past. Such proceedings involve or could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company, or one or more of its operating divisions or subdivisions, can also be suspended or debarred from government contracts, or lose its export privileges, based on the results of investigations. Except as described below, we believe,
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based upon current information, that the outcome of any such legal proceeding, claim, or government dispute and investigation will not have a material effect on our financial position, results of operations or cash flows. Where it is reasonably possible that we will incur losses in excess of recorded amounts in connection with any of the matters set forth below, we will disclose either the amount or range of reasonably possible losses in excess of such amounts or, where no such amount or range can be reasonably estimated, the reasons why no such estimate can be made.
Multiple legal actions have been filed against us as a result of the October 29, 2018 accident of Lion Air Flight 610 and the March 10, 2019 accident of Ethiopian Airlines Flight 302. Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX, including an investigation by the Securities and Exchange Commission, the outcome of which may be material. Other than with respect to the agreement described below with the U.S. Department of Justice, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the pending lawsuits, investigations, and inquiries related to the 737 MAX.
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On January 6,During 2021, we entered into (i) a Deferred Prosecution Agreement with the U.S. Department of Justice that resolvesresolved the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the Federal Aviation Administration. UnderAdministration (FAA) as well as (ii) a proposed settlement with plaintiffs in a shareholder derivative lawsuit that resulted in the termsCompany receiving $219 in the second quarter of 2022. In September 2022, we settled a previously disclosed investigation by the Deferred Prosecution Agreement, we agreedSecurities and Exchange Commission related to the filing of a criminal information charging the Company with one count of conspiracy to defraud the United States, based on the conduct of two former 737 MAX program technical pilots; the criminal information will be dismissed after three years, providedaccidents and consented to a civil penalty, which resulted in an earnings charge of $200 that was paid in October 2022. We cannot reasonably estimate a range of loss, if any, not covered by available insurance that we comply with our obligations under the agreement. The Deferred Prosecution Agreement requires that we make payments totaling $2.51 billion, which consist of (a) a $243.6 million criminal monetary penalty; (b) $500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents; and (c) $1.77 billion to the Company’s airline customers for harm incurredmay incur as a result of any remaining pending lawsuits or other matters related to the grounding ofaccidents and the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement. The agreement also requires that we review our compliance program and undertake continuous improvement efforts with respect to it, and implement enhanced compliance reporting and internal controls mechanisms. Of the payments described above, $1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations. We incurred earnings charges equal to the remaining $743.6 million in the fourth quarter of 2020 related to this agreement.MAX.
During 2019, we entered into agreements with Embraer S.A. (Embraer) to establish joint ventures that included the commercial aircraft and services operations of Embraer, of which we were expected to acquire an 80 percent ownership stake for $4,200, as well as a joint venture to promote and develop new markets for the C-390 Millennium. In 2020, we exercised our contractual right to terminate these agreements based on Embraer’s failure to meet certain required closing conditions. Embraer has disputed our right to terminate the agreements, and the dispute is currently in arbitration. We cannot reasonably estimate a range of loss, if any, that may result from the arbitration.arbitration, which we currently expect to be completed in late 2023 or early 2024.
Note 22 – Segment and Revenue Information
Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other. Business segment data for 2019 and 2018 has been adjusted to reflect the realignment.
Our primary profitability measurements to review a segment’s operating results are Earnings/(loss) from operations and operating margins. We operate in 4four reportable segments: BCA, BDS, BGS and BCC. All other activities fall within Unallocated items, eliminations and other. See page 6758 for the Summary of Business Segment Data, which is an integral part of this note.
BCA develops, produces and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer.
BDS engages in the research, development, production and modification of the following products and related services: manned and unmanned military aircraft and weapons systems, surveillance and engagement, strategic defense and intelligence systems, satellite systems and space exploration. BDS revenue is generally recognized over the contract term (over time) as costs are incurred.
BGS provides parts, maintenance, modifications, logistics support, training, data analytics and information-based services to commercial and government customers worldwide. BGS segment revenue and costs include certain products and services provided to other segments. Revenue on commercial spare parts contracts is recognized at the point in time when a spare part is delivered to the customer. Revenue on other contracts is generally recognized over the contract term (over time) as costs are incurred.
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BCC facilitates, arranges, structures and provides selective financing solutions for our customers.
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While our principal operations are in the United States, Canada and Australia, some key suppliers and subcontractors are located in Europe and Japan. Revenues, including foreign military sales, are reported by customer location and consisted of the following:
Years ended December 31,202020192018
Europe$7,961 $10,366 $12,976 
Asia, other than China4,128 10,662 12,141 
Middle East5,308 9,272 9,745 
China1,803 5,684 13,764 
Canada1,302 2,019 2,583 
Oceania832 2,006 2,298 
Africa114 1,113 1,486 
Latin America, Caribbean and other229 1,015 1,458 
Total non-U.S. revenues21,677 42,137 56,451 
United States36,979 42,681 44,676 
Estimated potential concessions and other considerations to 737 MAX customers, net(1)
(498)(8,259)
Total revenues$58,158 $76,559 $101,127 
(1)Net of insurance recoveries
Years ended December 31,202220212020
Asia$8,393 $5,845 $5,931 
Europe7,916 8,967 7,961 
Middle East5,047 4,653 5,308 
Canada1,612 969 1,302 
Oceania1,576 1,147 832 
Africa418 239 114 
Latin America, Caribbean and other2,412 1,376 229 
Total non-U.S. revenues27,374 23,196 21,677 
United States39,218 39,076 36,979 
Estimated potential concessions and other considerations to 737 MAX customers16 14 (498)
Total revenues$66,608 $62,286 $58,158 
Revenues from the U.S. government (including foreign military sales through the U.S. government), primarily recorded at BDS and BGS, represented 51%40%, 39%,49% and 31%51% of consolidated revenues for 2020, 2019,2022, 2021 and 2018,2020, respectively. Approximately 4% of operating assets were located outside the United States as of December 31, 20202022 and 2019.2021.
The following tables present BCA, BDS and BGS revenues from contracts with customers disaggregated in a number of ways, such as geographic location, contract type and the method of revenue recognition. We believe these best depict how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.
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BCA revenues by customer location consisted of the following:
Years ended December 31,
202020192018
Revenue from contracts with customers:
Europe$3,872 $5,829 $9,719 
Middle East1,647 5,761 5,876 
Asia, other than China1,408 7,395 8,274 
China1,271 5,051 13,068 
Other513 3,450 5,185 
Total non-U.S. revenues8,711 27,486 42,122 
United States7,899 12,676 15,347 
Estimated potential concessions and other considerations to 737 MAX customers, net(1)
(498)(8,259)0
Total revenues from contracts with customers16,112 31,903 57,469 
Intersegment revenues, eliminated on consolidation50 352 30 
Total segment revenues$16,162 $32,255 $57,499 
Revenue recognized on fixed-price contracts100 %100 %100 %
Revenue recognized at a point in time100 %100 %100 %
(1)Net of insurance recoveries
Years ended December 31,
202220212020
Revenue from contracts with customers:
Asia$4,484 $2,792 $2,679 
Europe4,038 4,334 3,872 
Middle East2,003 1,098 1,647 
Other non-U.S.3,042 1,681 513 
Total non-U.S. revenues13,567 9,905 8,711 
United States12,167 9,472 7,899 
Estimated potential concessions and other considerations to 737 MAX customers16 14 (498)
Total revenues from contracts with customers25,750 19,391 16,112 
Intersegment revenues, eliminated on consolidation117 102 50 
Total segment revenues$25,867 $19,493 $16,162 
Revenue recognized on fixed-price contracts100 %100 %100 %
Revenue recognized at a point in time100 %100 %100 %
BDS revenues on contracts with customers, based on the customer's location, consisted of the following:
Years ended December 31,
Years ended December 31,
202020192018
Years ended December 31,
202220212020
Revenue from contracts with customers:Revenue from contracts with customers:Revenue from contracts with customers:
U.S. customersU.S. customers$19,662 $19,465 $19,488 U.S. customers$17,144 $19,869 $19,662 
Non-U.S. customers(1)
Non-U.S. customers(1)
6,595 6,630 6,812 
Non-U.S. customers(1)
6,018 6,671 6,595 
Total segment revenue from contracts with customersTotal segment revenue from contracts with customers$26,257 $26,095 $26,300 Total segment revenue from contracts with customers$23,162 $26,540 $26,257 
Revenue recognized over timeRevenue recognized over time98 %98 %98 %Revenue recognized over time99 %99 %98 %
Revenue recognized on fixed-price contractsRevenue recognized on fixed-price contracts69 %70 %70 %Revenue recognized on fixed-price contracts60 %68 %69 %
Revenue from the U.S. government(1)
Revenue from the U.S. government(1)
89 %89 %88 %
Revenue from the U.S. government(1)
89 %89 %89 %
(1)Includes revenues earned from foreign military sales through the U.S. government.
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BGS revenues consisted of the following:
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Revenue from contracts with customers:Revenue from contracts with customers:Revenue from contracts with customers:
CommercialCommercial$6,936 $10,167 $9,227 Commercial$9,560 $7,527 $6,936 
GovernmentGovernment8,368 8,107 7,658 Government7,681 8,553 8,368 
Total revenues from contracts with customersTotal revenues from contracts with customers15,304 18,274 16,885 Total revenues from contracts with customers17,241 16,080 15,304 
Intersegment revenues eliminated on consolidationIntersegment revenues eliminated on consolidation239 194 171 Intersegment revenues eliminated on consolidation370 248 239 
Total segment revenuesTotal segment revenues$15,543 $18,468 $17,056 Total segment revenues$17,611 $16,328 $15,543 
Revenue recognized at a point in timeRevenue recognized at a point in time47 %55 %54 %Revenue recognized at a point in time50 %45 %47 %
Revenue recognized on fixed-price contractsRevenue recognized on fixed-price contracts87 %90 %90 %Revenue recognized on fixed-price contracts88 %86 %87 %
Revenue from the U.S. government(1)
Revenue from the U.S. government(1)
41 %34 %36 %
Revenue from the U.S. government(1)
33 %40 %41 %
(1)Includes revenues earned from foreign military sales through the U.S. government.
Earnings in Equity Method Investments
We recorded EarningsFor the year ended December 31, 2022, our share of income from operations associated with our equity method investments of $86, $90was $56, primarily driven by investments held in Unallocated items, eliminations and $167, primarily in our BDS segment, forother. For the years ended December 31, 2021 and 2020, 2019our share of income from equity method investments was $40 and 2018, respectively.$86, primarily in our BDS segment.
Backlog
Our total backlog includes contracts that we and our customers are committed to perform. The value in backlog represents the estimated transaction prices on performance obligations to our customers for which work remains to be performed. Backlog is converted into revenue, in future periods as work is performed, primarily based on the cost incurred or at delivery and acceptance of products, depending on the applicable accounting method.revenue recognition model.
Our backlog at December 31, 20202022 was $363,404.$404,381. We expect approximately 20%17% to be converted to revenue through 20212023 and approximately 66%71% through 2024,2026, with the remainder thereafter. There is significant uncertainty regarding the timing of when backlog will convert into revenue due to thetiming of 787 deliveries from inventory, timing of 737 MAX groundingdelivery resumption in non-U.S. jurisdictions,China, timing of entry into service of the 777X, 737 MAX 7737-7 and/or 737 MAX 10,737-10, and the lingering effects of the COVID-19 impacts.pandemic.

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Unallocated Items, Eliminations and other
Unallocated items, eliminations and other include common internal services that support Boeing’s global business operations, intercompany guarantees provided to BCC and eliminations of certain sales between segments. Such sales include airplanes accounted for as operating leasesaircraft sold to our BCC segment that are leased by BCC to customers and considered transferred to the BCC segment. We generally allocate costs to business segments based on the U.S. federal cost accounting standards. Components of Unallocated items, eliminations and other (expense)/income are shown in the following table.
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Share-based plansShare-based plans($120)($65)($76)Share-based plans($114)($174)($120)
Deferred compensationDeferred compensation(93)(174)(19)Deferred compensation117 (126)(93)
Amortization of previously capitalized interestAmortization of previously capitalized interest(95)(89)(92)Amortization of previously capitalized interest(95)(107)(95)
Research and development expense, netResearch and development expense, net(240)(401)(144)Research and development expense, net(278)(184)(240)
Customer financing impairment(250)
Litigation(109)(148)
Eliminations and other unallocated itemsEliminations and other unallocated items(1,807)(985)(998)Eliminations and other unallocated items(1,162)(676)(1,807)
Unallocated items, eliminations and otherUnallocated items, eliminations and other($2,355)($2,073)($1,477)Unallocated items, eliminations and other($1,532)($1,267)($2,355)
Pension FAS/CAS service cost adjustmentPension FAS/CAS service cost adjustment$1,024 $1,071 $1,005 Pension FAS/CAS service cost adjustment$849 $882 $1,024 
Postretirement FAS/CAS service cost adjustmentPostretirement FAS/CAS service cost adjustment359 344 322 Postretirement FAS/CAS service cost adjustment294 291 359 
FAS/CAS service cost adjustmentFAS/CAS service cost adjustment$1,383 $1,415 $1,327 FAS/CAS service cost adjustment$1,143 $1,173 $1,383 
Pension and Other Postretirement Benefit Expense
Pension costs, comprising GAAP service and prior service costs, are allocated to BCA and the commercial operations at BGS. Pension costs are allocated to BDS and BGS businesses supporting government customers using U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. These costs are allocable to government contracts. Other postretirement benefit costs are allocated to business segments based on CAS, which is generally based on benefits paid. FAS/CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, net.
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Assets
Segment assets are summarized in the table below.
December 31,December 31,20202019December 31,20222021
Commercial AirplanesCommercial Airplanes$77,973 $73,995 Commercial Airplanes$75,212 $75,863 
Defense, Space & SecurityDefense, Space & Security14,256 15,757 Defense, Space & Security14,426 14,974 
Global ServicesGlobal Services17,399 18,605 Global Services16,149 16,397 
Boeing CapitalBoeing Capital1,978 2,269 Boeing Capital1,510 1,735 
Unallocated items, eliminations and otherUnallocated items, eliminations and other40,530 22,999 Unallocated items, eliminations and other29,803 29,583 
TotalTotal$152,136 $133,625 Total$137,100 $138,552 
Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, tax assets, capitalized interest, and assets managed centrally on behalf of the four principal business segments and intercompany eliminations. From December 31, 2019 to December 31, 2020, assets in BCA increased primarily due to higher inventory balances and assets in Unallocated items, eliminations, and other increased due to higher cash and short-term investment balances from debt issued throughout 2020.
Capital Expenditures
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Commercial AirplanesCommercial Airplanes$322 $433 $604 Commercial Airplanes$218 $177 $322 
Defense, Space & SecurityDefense, Space & Security172 189 201 Defense, Space & Security202 199 172 
Global ServicesGlobal Services127 218 231 Global Services130 94 127 
Unallocated items, eliminations and otherUnallocated items, eliminations and other682 994 686 Unallocated items, eliminations and other672 510 682 
TotalTotal$1,303 $1,834 $1,722 Total$1,222 $980 $1,303 
Capital expenditures for Unallocated items, eliminations and other relate primarily to assets managed centrally on behalf of the four principal business segments.
Depreciation and Amortization
Years ended December 31,Years ended December 31,202020192018Years ended December 31,202220212020
Commercial AirplanesCommercial Airplanes$559 $580 $565 Commercial Airplanes$508 $535 $559 
Defense, Space & Security
Defense, Space & Security
251 256 270 Defense, Space & Security
238 233 251 
Global ServicesGlobal Services408 424 348 Global Services346 414 408 
Boeing Capital CorporationBoeing Capital Corporation66 64 58 Boeing Capital Corporation46 59 66 
Centrally Managed Assets (1)
Centrally Managed Assets (1)
962 947 873 
Centrally Managed Assets (1)
841 903 962 
TotalTotal$2,246 $2,271 $2,114 Total$1,979 $2,144 $2,246 
(1)Amounts shown in the table represent depreciation and amortization expense recorded by the individual business segments. Depreciation and amortization for centrally managed assets are included in segment operating earnings based on usage and occupancy. In 2022, $643 was included in the primary business segments, of which $360, $230 and $53 was included in BCA, BDS and BGS, respectively. In 2021, $668 was included in the primary business segments, of which $386, $222 and $60 was included in BCA, BDS and BGS, respectively. In 2020, $689 was included in the primary business segments, of which $397, $236 and $56 was included in BCA, BDS and BGS, respectively. In 2019, $717 was included in the primary business segments, of which $407, $257, and $53 was included in BCA, BDS and BGS, respectively. In 2018, $692 was included in the primary business segments, of which $417, $213, and $62 was included in BCA, BDS and BGS, respectively.
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Note 23 – Quarterly Financial Data (Unaudited)
20202019
4th3rd2nd1st4th3rd2nd1st
Total revenues$15,304 $14,139 $11,807 $16,908 $17,911 $19,980 $15,751 $22,917 
Total costs and expenses(20,992)(13,105)(12,978)(16,768)(18,708)(16,930)(17,810)(18,645)
(Loss)/earnings from operations(8,049)(401)(2,964)(1,353)(2,204)1,259 (3,380)2,350 
Net (loss)/earnings attributable to Boeing Shareholders(8,420)(449)(2,376)(628)(1,010)1,167 (2,942)2,149 
Basic (loss)/earnings per share(14.65)(0.79)(4.20)(1.11)(1.79)2.07 (5.21)3.79 
Diluted (loss)/earnings per share(14.65)(0.79)(4.20)(1.11)(1.79)2.05 (5.21)3.75 
Gross profit is calculated as Total revenues minus Total costs and expenses. Total costs and expenses includes Cost of products, Cost of services and Boeing Capital interest expense.
During the first quarter of 2020, we recorded $797 of abnormal production costs related to 737 MAX, $336 related to 737NG frame fitting component repair costs, $137 of abnormal production costs from the temporary suspension of Puget Sound production in response to COVID-19, and a $168 reach-forward loss on VC-25B. During the first quarter of 2019, we concluded that lease incentives granted to a customer that experienced liquidity issues were impaired and recorded a charge of $250.
During the second quarter of 2020, we recorded $859 of charges at BGS related to asset impairments, $712 of abnormal production costs related to the 737 MAX, $652 of severance costs, and $133 of abnormal production costs from the temporary suspension of Puget Sound production in response to COVID-19. During the second quarter of 2019, we recorded a charge of $109 related to ongoing litigation associated with recoverable costs on U.S. government contracts.
During the third quarter of 2020, we recorded $590 of abnormal production costs related to the 737 MAX and $328 of severance costs.
During the fourth quarter of 2020, we recorded a reach-forward loss on the 777X program of $6,493, abnormal production costs related to the 737 MAX of $468 and asset impairments of $290 at BGS. Additionally, we recorded an increase to our valuation allowances and a tax benefit of $587 related to the settlement of the 2015-2017 federal tax audit. See Note 4. During the fourth quarter of 2019, we recorded a divestiture gain of $395 and a tax benefit of $371 related to the settlement of state tax audits spanning 15 tax years. Additionally, we recorded an impairment of $293 as a result of our decision to retire the Aviall brand and trade name, and an increase to the reach-forward loss on Commercial Crew of $410.
We recorded a reduction to revenue in the second and fourth quarters of 2020 of $551 and $128 for 737 MAX customer considerations. In the third quarter of 2020, we recorded an increase to revenue of $151 for 737 MAX customer considerations. During the second and fourth quarters of 2019, we recorded a reduction to revenue of $5,610 and $2,619 for 737 MAX customer considerations, net of insurance recoveries.
We recorded an increase to the reach-forward loss on KC-46A Tanker in the first, second, third, and fourth quarters of 2020 of $827, $151, $67 and $275, respectively. In the fourth quarter of 2019, we recorded an increase to the reach-forward loss on KC-46A Tanker of $108.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The Boeing Company
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of The Boeing Company and subsidiaries (the "Company") as of December 31, 20202022 and 2019,2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2020,2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020,2022, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020,2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 1, 2021,January 27, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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Cost Estimates for Fixed-Price Development Contracts Refer to Notes 1 and 13 to the financial statements
Critical Audit Matter Description
As more fully described in Notes 1 and 13 to the consolidated financial statements, the Company recognizes revenue over time for long-term contracts as goods are produced or services are rendered. The Company uses costs incurred as the method for determining progress, and revenue is recognized based on costs incurred to date plus an estimate of margin at completion. The process of estimating margin at completion involves estimating the costs to complete production of goods or rendering of services and comparing those costs to the estimated final revenue amount. Fixed-priceMargins on fixed-price development contracts are inherently uncertain in that revenue is fixed while the estimates of costs required to complete these contracts are subject to significant variability. Due toThe operational and technical complexities of fixed-price development contracts create financial risk, which could increase the technical performance requirements in manyestimates of these contracts, changes to cost estimates could occur, resultingcosts and result in lower margins or material reach-forward losses. The ongoing effects of macroeconomic challenges, including supply chain disruption, labor shortages, and inflationary pressures compound these complexities and related financial risks.
Given the complexitycomplexities of certain of the Company’s fixed-price development contracts, including the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft, T-7A Redhawk, and MQ-25 contracts, the limited amount of historical data available in certain instances and significant judgments necessary to estimate future costs at completion, auditing these estimates involved extensive audit effort, and a high degree of auditor judgment, and required audit professionals with specialized industry experience.
How the Critical Audit Matter Was Addressed in the Audit
Our auditingaudit procedures related to the cost estimates for the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft, T-7A Redhawk, and MQ-25 fixed-price development contracts included the following, among others:
We evaluated the appropriateness and consistency of management’s methods used in developing its estimates.
We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key cost and schedule estimates, including the rangeeffects of supply chain disruptions, labor shortages, and probabilityinflationary pressures. We also evaluated the ranges and probabilities of reasonably possible outcomes.outcomes, and where management set its point estimate within the range.
We performed inquiriesevaluated the appropriateness of the Company’stiming of changes to key estimates, including evaluating the timeline of key events and knowledge points that led to management’s determination that a change in estimate was necessary.
We inquired of project managers, engineers, supply chain leadership, and others directly involved with the execution of contracts to evaluate management’s ability to achieve the key cost and schedule estimates, as well as evaluate project status and project challenges which may affect total estimated costs to complete.
We also observed the project work site when key estimates related to tangible or physical progress of the project.
We tested the accuracy and completeness of the key data used in developing key estimates. We
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developed independent expectations of likelyreasonable outcomes using, in part, the program’s data and compared our expectations to management’s estimates.
We performed retrospective reviews when evaluating the thoroughness and precision of management’s estimation process and effectiveness of the related internal controls by comparing actual outcomes to previous estimates and the related financial statement impact, and evaluating key judgments made by management when determining the timing of changes to key estimates.
We tested the effectiveness of internal controls including, those over the review of significant judgments made and significant assumptions used to develop key estimates, including controls over thekey data used in developing the estimates and the mathematical extrapolation of such data.
We performed retrospective reviews, comparing actual performance to estimated performance and the related financial statement impact, when evaluating the thoroughness and precision of management’s estimation process and effectiveness of related internal controls.
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Program Accounting Estimates for the 777X Program Refer to Notes 1, 7, and 722 to the financial statements
Critical Audit Matter Description
The introduction of new aircraft programs involves increased risk associated with meeting development, certification and production schedules. The Company uses program accounting in order to compute cost of sales and margin for each commercial airplane sold. The use of program accounting requires estimating and demonstrating customer demand for the number of units included in the program (program accounting quantity) and estimating the sales and costs over the expected life of each program. In particular, estimating the sales and costs associated with the initial program accounting quantity and revenue forthe unsold units within the program accounting quantity involvesinvolve measurement uncertainty resulting in a range of possiblereasonable outcomes. Additionally, the level of effort to meet regulatory requirements and achieve certification may be challenging to predict, resulting inincluding potential delays in the timing of entry into service and corresponding increases in estimated costs. Changes to the revenue and cost estimates related to the program accounting quantity or revenue and cost estimatesregulatory requirements to achieve certification could occur, resulting in lower margins or material reach-forward losses. Auditing the estimated revenues and costs for the 777X program involved extensive audit effort, a high degree of auditor judgment, and required audit professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.experience.
How the Critical Audit Matter Was Addressed in the Audit
Our auditingaudit procedures overrelated to the estimated revenues and costs for the anticipated 777X initial program accounting quantity included the following, among others:
We inquired of the Company’s management, including individuals responsible for sales and pricing, to evaluate the status of current sales campaigns, short and long-term market demand, and status of negotiations with individual sold firm customers.
We compared management’s estimate of market demand to external industry sources of expected demand.
We evaluated the appropriateness and consistency of management’s methods and significant assumptions used in developing its estimates related to the initial program accounting quantity and revenue for unsold units.
We evaluated management’s ability to estimate program revenue by comparison to historical estimates and actual results on similarother commercial programs.
We evaluated the consistency of management’s methods and the appropriateness of significant assumptions used in developing its revenue estimates related to the initial program accounting quantity and unsold units within the program accounting quantity.
We evaluated the appropriateness and consistency of management’s methods used in developing its cost estimates.
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Performed inquiriesWe inquired of those directly involved with the certification of the aircraft to evaluate project statusthe challenges and challengestimeline to achieve certification, which may affect total estimated costs to certify the aircraft.costs.
We evaluated communications with regulatory bodies for information contradictory with management’s certification timeline assumptions.
We tested the effectiveness of internal controls, including those over the review of significant judgments made and assumptions used to develop key estimates, key data used in developing the estimates and the mathematical extrapolation of such data, and management’s judgment regardingdata.
Program Accounting Revenue Estimates for the range of possible outcomes relating to the specific estimates.

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Liabilities related to the 737 MAX Grounding –787 Program — Refer to Notes 131, 7, and 2122 to the financial statements
Critical Audit Matter Description
In 2019, following two fatal 737 MAX accidents,
Production quality issues and supply chain disruption for the Federal Aviation Administration (FAA)787 program have resulted in increased risk associated with forecasted revenue estimates primarily due to the difficulty in assessing the value of consideration expected to be provided to customers as a result of delivery delays. The Company uses program accounting to compute cost of sales and non-U.S. civil aviation authorities issued orders suspendingmargin for each commercial operationsairplane sold. The use of 737 MAXprogram accounting requires estimating the revenue expected to be earned upon delivery of the aircraft (the “737 MAX Grounding”). Deliveries resumedincluded in the U.S.program’s accounting quantity. While the 787 program resumed deliveries in late 2020 following rescission by2022, the FAA of its grounding order. The 737 MAX remains grounded in certain non-U.S. jurisdictions. In addition, multiple legal actions have been filed against the Company following the fatal accidents and various governmental and regulatory investigations and inquiries continue relating to the accidentsforecasted delivery schedule and the 737 MAX aircraft.
During 2019,value of the Company recorded an initial liability in connection with estimated payments, concessions and other in-kind consideration it intendsexpected to providebe provided to customers for disruptionsdelivery delays continue to be key factors that affect estimated revenue. There is estimation uncertainty related to the 737 MAX Grounding and associatedrevenue forecasts of aircraft which have reached or are expected to reach a delivery delays. This liability totaled $5.5 billion at December 31, 2020 and is reflecteddelay period that provides the customer with a contractual termination right. Changes to the expected delivery schedule could result in the financial statements in Accrued liabilities. This represents the Company’s best estimate of future concessions and otheradditional consideration to its customers, and is necessarily based on individual negotiations with customers andcustomers. This could result in lower margins or material reach-forward losses. Auditing the substance of such negotiations.
Significant judgment isestimated revenues for the 787 program involved in management’s ability to assess and reasonably estimate potential additional financial statement effects or a range of loss, if any, resulting from the outcome of 737 MAX-related litigation and the results of the various ongoing governmental and regulatory investigations and inquiries related to the 737 MAX.
The subjectivity of the liability associated with providing consideration to customers resulting from the 737 MAX Grounding and the complexity of assessing the outcome of the ongoing litigation and investigations related to the 737 MAX requiredextensive audit effort, a high degree of auditor judgment, and increased audit effort.required professionals with specialized industry experience.
How the Critical Audit Matter Was Addressed in the Audit
Our auditingaudit procedures associated with liabilities related to the 737 MAX Groundingestimated revenues for the 787 program included the following, among others:
We inquired of management, including operational and supply chain leadership, to understand developments withassess the 737 MAX Grounding,assumptions related to the supply chain disruption impacts on the delivery schedule and the estimated timeline for completion of rework.
We evaluated the appropriateness and consistency of management’s method used in developing the delivery schedule assumptions, including the impact of production quality issues and supply chain disruption.
We inquired of management, including individuals responsible for sales and pricing, to evaluate the status of regulatory approval for returncurrent contracts with customers and estimated consideration to service in various foreign jurisdictions and the status of consideration negotiations with individualbe provided to customers.
We obtained written representations from management concerning its intent to provide consideration to customersevaluated the consistency of management’s methods and the extentappropriateness of that consideration.significant assumptions used in developing its estimates related to forecasted revenue for aircraft which have or are expected to have delivery delays.
We tested the effectiveness of internal controls, related to nonrecurring itemsincluding those over the review of significant judgments made and loss contingencies associated with litigation, claims and assessments.
We evaluated the significant assumptions used by management to estimatedevelop key estimates, key data used in developing the liability for customer consideration, includingestimates and the timing and conditionsmathematical extrapolation of 737 MAX return to service in various foreign jurisdictions, and, where possible, we corroborated the significant assumptions with management outside of the accounting and finance organizations.
We reviewed the terms of customer contracts and correspondence with customers concerning potential consideration as a result of the 737 MAX Grounding.such data.
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We evaluated the terms of settlement agreements with customers for the allocation of value provided between consideration as a result of the 737 MAX Grounding and for consideration related to the impact of current economic conditions resulting from COVID-19.
We evaluated delivery documents for 737 MAX deliveries for incremental value provided at delivery as potential consideration as a result of the 737 MAX Grounding.
We inquired of internal and external legal counsel to understand developments related to contractual obligations to customers, litigation and other claims relating to the 737 MAX Grounding and progression in potential settlement discussions.
We read minutes of meetings of the Board of Directors and its committees for evidence of unrecorded loss contingencies.
We evaluated the Company’s disclosures for consistency with our knowledge of matters related to the 737 MAX Grounding.
Income Taxes – Realizability of Deferred Tax Assets– Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
As more fully described in Notes 1 and 4 to the consolidated financial statements, the Company recognizes deferred income taxes for differences between the financial statement carrying amount and tax basis of assets and liabilities, measured using enacted statutory rates in effect for the years in which the basis differences are expected to reverse. A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Future realization of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character. Sources of taxable income typically include future reversals of deferred tax liabilities, future taxable income exclusive of reversals of deferred tax liabilities, and tax planning strategies. During 2020 the Company determined that it is not more likely than not that sufficient taxable income of the appropriate character will be generated in the future to realize all of its deferred tax assets; therefore, a valuation allowance has been recorded.
We identified the Company’s determination that it is not more likely than not that sufficient taxable income will be generated in the future to realize all of its deferred tax assets as a critical audit matter because of the significant judgments and estimates made related to the timing of future reversals of deferred tax assets and liabilities. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s methodologies and estimates.
How the Critical Audit Matter Was Addressed in the Audit
Our auditing procedures related to the timing of future reversals of deferred tax assets and liabilities included the following, among others:
With the assistance of our income tax specialists, we evaluated the reasonableness of the methods, significant assumptions, and judgments used by management to determine whether it was more likely than not that the Company would be able to realize its deferred tax assets.
We tested the Company’s methodologies for scheduling the reversal of existing taxable and deductible temporary differences.
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We evaluated whether the estimates considered when determining future taxable income were consistent with the evidence obtained in other areas of the audit.
We tested the effectiveness of controls over deferred tax assets and liabilities, including management’s controls over determining the pattern of the reversals of deferred tax assets and liabilities.

/s/ Deloitte & Touche LLP
Chicago, Illinois
February 1, 2021January 27, 2023

We have served as the Company's auditor since at least 1934; however, an earlier year could not be reliably determined.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The Boeing Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of The Boeing Company and subsidiaries (the “Company”) as of December 31, 2020,2022, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2022, based on criteria established in Internal Control Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 20202022 of the Company, and our report dated February 1, 2021January 27, 2023 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 1, 2021January 27, 2023
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of December 31, 20202022 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b)Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.2022.
Our internal control over financial reporting as of December 31, 2020,2022, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in Item 8 of this report and is incorporated by reference herein.
(c)Changes in Internal Controls Over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the fourth quarter of 20202022 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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Part III

Item 10. Directors, Executive Officers and Corporate Governance
Our executive officers and their ages as of February 1, 2021,January 27, 2023, are as follows:
NameAgePrincipal Occupation or Employment/Other Business Affiliations
Bertrand-Marc Allen
4749Chief Strategy Officer and Senior Vice President, Strategy and Corporate Development since October 2020. Mr. Allen previously served as Senior Vice President and President, Embraer Partnership and Group Operations from April 2019 to October 2020,2020; Senior Vice President and President, Boeing International from February 2015 to April 2019; President of Boeing Capital Corporation from March 2014 to February 2015; Corporate Vice President, Boeing International and Chairman and President of Boeing (China) Co., Ltd. from March 2011 to March 2014; and Vice President, Global Law Affairs from May 2007 to March 2011. Mr. Allen serves on the board of directors of Procter & Gamble Co.
Michael A. ArthurBrian R. Besanceney7050Chief Communications Officer and Senior Vice President, Communications since August 2022. Prior to joining Boeing, Mr. Besanceney served as Senior Vice President and President, Boeing International sinceChief Communications Officer for Walmart Inc. from April 2019. Mr. Arthur previously served as2016 to August 2022. Prior to that he held executive-level positions for The Walt Disney Company including Senior Vice President of Boeing EuropePublic Affairs from March2010 to 2016 and Vice President of Public Affairs and Business Development for Disney’s Parks and Resorts division from 2009 to April 2019 and as Managing Director of Boeing United Kingdom and Ireland from September 2014 to April 2019.2010.
David L. Calhoun6365President and Chief Executive Officer since January 2020 and a member of the Board of Directors since June 2009. Previously, Mr. Calhoun served as Senior Managing Director & Head of Private Equity Portfolio Operations at The Blackstone Group from January 2014 to January 2020. Prior to that, Mr. Calhoun served as Chairman of the Board of Nielsen Holdings plc from January 2014 to January 2016, as Chief Executive Officer of Nielsen Holdings plc from May 2010 to January 2014, and as Chairman of the Executive Board and Chief Executive Officer of The Nielsen Company B.V. from August 2006 to January 2014. Prior to joining Nielsen, he served as Vice Chairman of General Electric Company and President and Chief Executive Officer of GE Infrastructure. During his 26-year tenure at GE, he ran multiple business units including GE Transportation, GE Aircraft Engines, GE Employers Reinsurance Corporation, GE Lighting and GE Transportation Systems. Mr. Calhoun also serves on the board of directors of Caterpillar Inc.
Leanne G. Caret54Executive Vice President, President and Chief Executive Officer, Boeing Defense, Space & Security since March 2016. Ms. Caret joined Boeing in 1988, and her previous positions include President of Global Services & Support from February 2015 to March 2016; Chief Financial Officer and Vice President, Finance, for BDS from March 2014 to February 2015; Vice President and General Manager, Vertical Lift from November 2012 to February 2014; and Vice President and Program Manager, Chinook from November 2009 to October 2012.
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NameAgePrincipal Occupation or Employment/Other Business Affiliations
Theodore Colbert III4749Executive Vice President, President and Chief Executive Officer, Boeing Defense, Space & Security since April 2022. Mr. Colbert previously served as Executive Vice President, President and Chief Executive Officer, Boeing Global Services sincefrom October 2019. Mr. Colbert previously served as2019 to March 2022; Chief Information Officer and Senior Vice President, Information Technology & Data Analytics from April 2016 to October 2019; Chief Information Officer and Vice President of Information Technology from November 2013 to April 2016; Vice President of Information Technology Infrastructure from December 2011 to November 2013; and Vice President of IT Business Systems from September 2010 to December 2011. Mr. Colbert serves on the board of directors of Archer-Daniels-Midland Company.
Michael D’Ambrose6365Chief Human Resources Officer and Executive Vice President, Human Resources since July 2020.June 2021. Prior to joining Boeing in July 2020 as Executive Vice Present, Human Resources, Mr. D'Ambrose served as Senior Vice President and Chief Human Resources Officer for Archer-Daniels-Midland Company from October 2006 to June 2020. Previously, he served in a series of executive-level business and human resources positions, including chief human resources officer at Citigroup, First Data Corporation and Toys 'R' Us, Inc.
Edward L. Dandridge56Senior Vice President, Communications since September 2020. Mr. Dandridge’s prior experience includes serving as Global Chief Marketing and Communications Officer of AIG General Insurance from April 2018 to September 2020; Chief Marketing and Communications Officer of Marsh & McLennan Companies from March 2014 to April 2018; and Chief Marketing Officer of Collective from February 2013 to February 2014.
Stanley A. Deal5658Executive Vice President, President and Chief Executive Officer, Boeing Commercial Airplanes since October 2019. Mr. Deal joined Boeing in 1986, and his previous positions include Executive Vice President, President and Chief Executive Officer, Boeing Global Services from November 2016 to October 2019; Senior Vice President of Commercial Aviation Services from March 2014 to November 2016; Vice President and General Manager of Supply Chain Management and Operations for Commercial Airplanes from September 2011 to February 2014; Vice President of Supplier Management from February 2010 to August 2011; and Vice President of Asia Pacific Sales from December 2006 to January 2010.
Susan Doniz5153Chief Information Officer and Senior Vice President, Information Technology & Data Analytics since May 2020. Prior to joining Boeing, Ms. Doniz served as Global Chief Information Officer of Qantas Airways Limited from January 2017 to April 2020; as strategic advisor to the Global CEO of SAP SE on transformation and technology issues in support of customers from September 2015 to DecemberJanuary 2017; and Global Product, Digital Strategy and Chief Information Officer of AIMIA Inc. from June 2011 to January 2015.
Brett C. Gerry4951Chief Legal Officer and Executive Vice President, Global Compliance since May 2020. Mr. Gerry previously served as Senior Vice President and General Counsel from May 2019 to May 20202020; President of Boeing Japan from February 2016 to May 2019; Vice President and General Counsel, Boeing Commercial Airplanes from March 2009 to March 2016; and Chief Counsel, Network and Space Systems from September 2008 to March 2009.
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NameAgePrincipal Occupation or Employment/Other Business Affiliations
Gregory L. Hyslop6264Chief Engineer and Executive Vice President, Engineering, Test and& Technology since December 2020. Dr. Hyslop's previous positions include Chief Engineer and Senior Vice President, Engineering, Test and& Technology from August 2019 to December 2020;Chief Technology Officer and Senior Vice President, Engineering, Test and& Technology from March 2016 to August 2019; Vice presidentPresident and General Manager of Boeing Research and Technology from February 2013 to March 20162016; and Vice President and General Manager of Boeing Strategic Missile & Defense Systems from March 2009 to February 2013.
TimothyBrendan J. KeatingNelson5964Senior Vice President and President, Boeing International since January 2023. Dr. Nelson previously served as President of Boeing Australia, New Zealand and South Pacific from February 2020 to January 2023. Prior to joining Boeing, he served as the Director of the Australian War Memorial from December 2012 to December 2019 and as the Australian Ambassador to Belgium, Luxembourg, the European Union and NATO from February 2010 to November 2012.
Ziad S. Ojakli56Executive Vice President, Government Operations since FebruaryOctober 2021. Prior to joining Boeing, Mr. Ojakli served as a managing partner and Senior Vice President of Global Government Affairs at SoftBank Group Corp. from August 2018 to September 2020. Prior to that, he served as Group Vice President, Government & Community Relations at Ford Motor Company from January 2004 to July 2018. Mr. Keating
Stephanie F. Pope50Executive Vice President, President and Chief Executive Officer, Boeing Global Services since April 2022. Ms. Pope joined Boeing in June 2008 as Senior1994, and her previous positions include Vice President Government Operations. From October 2002and Chief Financial Officer of Boeing Commercial Airplanes from December 2020 to May 2008 he served as SeniorMarch 2022; Vice President and Chief Financial Officer of Boeing Global Government Relations at Honeywell International Inc. Prior thereto, Mr. Keating was ChairmanServices from January 2017 to December 2020; Vice President of the BoardFinance and Managing Partner of TimmonsController for Boeing Defense, Space & Security from August 2016 to December 2016; and Company (a Washington, D.C. lobbying firm).Vice President, Financial Planning & Analysis from February 2013 to July 2016.

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Gregory D. SmithNameAgePrincipal Occupation or Employment/Other Business Affiliations
Brian J. West53Executive Vice President Enterprise Operations and Chief Financial Officer since May 2020. He previouslyAugust 2021. Prior to joining Boeing, Mr. West served as Chief Financial Officer of Refinitiv Holdings (a London Stock Exchange Group business and provider of financial markets data and infrastructure) from November 2018 to June 2021. Prior to that, he served as Chief Financial Officer and Executive Vice President Enterprise Performanceof Operations of Oscar Insurance Corporation from January 2016 to October 2018. Mr. West served as Chief Operating Officer of Nielsen Holdings plc from March 2014 to December 2015 and Strategy from July 2017 to May 2020; Interim President and Chief Executive Officer from December 2019 to January 2020;as Chief Financial Officer and Executive Vice President, Corporate Development and Strategyof Nielsen Holdings plc (or its predecessor) from February 20152007 to June 2017; Executive Vice President,March 2014. Prior to joining Nielsen, Mr. West was employed by the General Electric Company as the Chief Financial Officer of its GE Aviation division from February 2012June 2005 to February 2015; Vice President2007 and Chief Financial Officer of Finance and Corporate Controllerits GE Aviation Services division from February 2010March 2004 to February 2012; and Vice President of Financial Planning & Analysis from June 2008 to February 2010. From August 2004 until June 2008, he served as Vice President of Global Investor Relations at Raytheon Company.2005. Prior to that, heMr. West held a number ofseveral senior financial positions at Boeingacross General Electric Company businesses, including CFO, Shared Services Group; Controller, Shared Services Group; Senior Director, Internal Audit;Plastics, NBC, Energy and leadership roles in supply chain, factory operations and program management. Mr. Smith serves on the board of Intel Corporation.Transportation.
Information relating to our directors and nominees will be included under the caption “Election of Directors” in our proxy statement involving the election of directors, which will be filed with the SEC no later than 120 days after December 31, 2020 and is incorporated by reference herein. Information required by Items 405, 407(d)(4) and 407(d)(5) of Regulation S-K will be included under the captions “Stock Ownership Information” and “Board Committees” in the 2021 Proxy Statement, and that information is incorporated by reference herein.
Codes of Ethics. We have adopted (1) The Boeing Company Code of Ethical Business Conduct for the Board of Directors; (2) The Boeing Company Code of Conduct for Finance Employees which is applicable to our Chief Executive Officer (CEO), Chief Financial Officer (CFO), Controller and all finance employees; and (3)(2) The Boeing Code of Conduct that applies to all employees, including our CEO (collectively, the Codes of Conduct). The Codes of Conduct are posted on our website, www.boeing.com/company/general-info/corporate-governance.page, and printed copies may be obtained, without charge, by contacting the Office of Internal Governance, The Boeing Company, 100
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N. Riverside Plaza, Chicago, IL 60606.corporate-governance.page. We intend to disclose promptly on our website any amendments to, or waivers of, the Codes of Conduct covering our CEO, CFO and/or Controller.
No family relationships exist among any of the executive officers, directors or director nominees.
Additional information required by this item will be included under the captions “Election of Directors,” “Stock Ownership Information” and “Board Committees” in our proxy statement, which will be filed with the SEC no later than 120 days after December 31, 2022 and that information is incorporated by reference herein (the “2023 Proxy Statement”).
Item 11. Executive Compensation
The information required by Item 402 of Regulation S-Kthis item will be included under the captions “Compensation Discussion and Analysis,” “Compensation of Executive Officers,” and “Compensation of Directors”Directors,” in the 2021 Proxy Statement, and that information is incorporated by reference herein. The information required by Item 407(e)(4) and 407(e)(5) of Regulation S-K will be included under the captions “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the 20212023 Proxy Statement, and that information is incorporated by reference herein.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by Item 403 of Regulation S-K will be included under the caption “Stock Ownership Information” in the 2021 Proxy Statement, and that information is incorporated by reference herein.
Equity Compensation Plan Information
We currently maintain twoOur equity compensation plans thatapproved by our shareholders provide for the issuance of common stock to officers and other employees, directors and consultants. Each of these compensation plans was approved by our shareholders. The following table sets forth information regarding outstanding options and units, and shares available for future issuance under these plans as of December 31, 2020:2022:
Plan CategoryPlan CategoryNumber of shares
to be issued upon exercise of outstanding
options, warrants
and rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
shares reflected
in column (a))
Plan CategoryNumber of shares
to be issued upon exercise of outstanding
options and units
Weighted-average
exercise price of
outstanding
options
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
shares reflected
in column (a))
(a)(b)(c)(a)(b)(c)
Equity compensation plans approved by shareholdersEquity compensation plans approved by shareholdersEquity compensation plans approved by shareholders
Stock optionsStock options1,860,520 $75.71 Stock options1,390,769 $178.18 
Deferred compensationDeferred compensation1,365,292 Deferred compensation671,837 
Other stock units(1)
Other stock units(1)
8,579,463 
Other stock units(1)
11,870,813 
Equity compensation plans not approved by shareholdersEquity compensation plans not approved by shareholdersNoneNoneNoneEquity compensation plans not approved by shareholdersNoneNoneNone
Total(2)
Total(2)
11,805,275 $75.71 8,367,025 
Total(2)
13,933,419 $178.18 3,918,585 
(1)    Includes 1,243,118420,412 shares issuable in respect of PBRSUsPerformance-Based Restricted Stock Units subject to the satisfaction of performance criteria and assumes payout at maximum levels.
(2)    Excludes the potential performance awardsPerformance Awards which the Compensation Committee has the discretion to pay in cash, stock or a combination of both after the three-year performance periodsperiod which end in 2020, 2021 andended December 31, 2022.
For further information, see Note 17 to our Consolidated Financial Statements.
The additional information required by this item will be included under the caption “Stock Ownership Information” in the 2023 Proxy Statement, and that information is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 404 of Regulation S-Kthis item will be included under the captioncaptions “Related Person Transactions” and “Director Independence” in the 20212023 Proxy Statement, and that information is incorporated by reference herein.
The information required by Item 407(a) of Regulation S-K will be included under the caption “Director Independence” in the 2021 Proxy Statement, and that information is incorporated by reference herein.
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Item 14. Principal AccountingAccountant Fees and Services
Our independent registered public accounting firm is Deloitte & Touche LLP (PCAOB ID No. 34).
The information required by this Itemitem will be included under the caption “Independent Auditor Fees” in the 20212023 Proxy Statement, and that information is incorporated by reference herein.

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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)List of documents filed as part of this report:
1.Financial Statements
Our consolidated financial statements are as set forth under Item 8 of this report on Form 10-K.
2.Financial Statement Schedules
All schedules are omitted because they are not applicable, not required or the information is included in the consolidated financial statements.
3.Exhibits
3.1
3.2
4.1
10.1
10.2
10.3
10.310.4
10.4
10.5
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10.6
10.7
10.8
10.9
10.10
10.11
10.1210.11
10.1310.12
10.1410.13
10.1510.14
10.1610.15
10.1710.16
10.1810.17
10.18
10.19
10.20
10.21
10.21
10.22
10.23
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10.2310.24
10.25
10.2410.26
10.2510.27
10.2610.28
10.2710.29
10.2810.30
10.2910.31
10.3010.32
10.3110.33
10.3210.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41

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23
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31.1
31.2
32.1
32.2
99.1
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101
* Management contract or compensatory plan
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In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the Company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.
Item 16. Form 10-K Summary
None.
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Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 1, 2021.January 27, 2023.
THE BOEING COMPANY
(Registrant)
By: /s/ Robert E. VerbeckCarol J. Hibbard
 Robert E. VerbeckCarol J. Hibbard – Senior Vice President and Controller


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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 1, 2021.January 27, 2023.
/s/ David L. Calhoun/s/ Lynn J. GoodStayce D. Harris
David L. Calhoun – President and Chief Executive Officer and DirectorLynn J. GoodStayce D. Harris – Director
(Principal Executive Officer)
/s/ Gregory D. SmithBrian J. West/s/ Akhil Johri
Gregory D. SmithBrian J. West – Executive Vice President Enterprise Operations and Chief Financial OfficerAkhil Johri – Director
(Principal Financial Officer)
/s/ Robert E. VerbeckCarol J. Hibbard/s/ Lawrence W. KellnerDavid L. Joyce
Robert E. VerbeckCarol J. Hibbard – Senior Vice President and ControllerLawrence W. KellnerDavid L. JoyceChairman of the BoardDirector
(Principal Accounting Officer)
/s/ Robert A. Bradway/s/ Lawrence W. Kellner
Robert A. Bradway – DirectorLawrence W. Kellner – Chair of the Board
/s/ Lynne M. Doughtie/s/ Steven M. Mollenkopf
Robert A. BradwayLynne M. Doughtie – DirectorSteven M. Mollenkopf – Director
/s/ Arthur D. Collins, Jr.David L. Gitlin/s/ John M. Richardson
Arthur D. Collins, Jr.David L. Gitlin – DirectorJohn M. Richardson – Director
/s/ Lynne M. Doughtie/s/ Susan C. Schwab
Lynne M. Doughtie – DirectorSusan C. Schwab – Director
/s/ Edmund P. Giambastiani, Jr.Lynn J. Good/s/ Ronald A. Williams
Edmund P. Giambastiani, Jr.Lynn J. Good – DirectorRonald A. Williams – Director
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