UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2022


☐						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 Drive

~~Chicago,~~Arlington,

ILVA

~~60606-1596~~22202

(Address of principal executive offices)

(Zip Code)


			~~(312)~~(703)			~~544-2000~~414-6338

(Registrant’s telephone number, including area code)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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. (Check one):

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $5.00 Par Value

New York Stock Exchange

As of ~~April~~July 20, 2022, there were ~~591,635,833~~593,811,169 shares of common stock, $5.00 par value, issued and outstanding.

THE BOEING COMPANY

FORM 10-Q

For the Quarter Ended ~~March 31,~~June 30, 2022

INDEX


Part I. Financial Information (Unaudited)		Page

Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Equity	5
	Summary of Business Segment Data	67
	Note 1 - Basis of Presentation	78
	Note 2 - Earnings Per Share	89
	Note 3 - Income Taxes	910
	Note 4 - Allowance for Losses on Financial Assets	1011
	Note 5 - Inventories	1112
	Note 6 - Contracts with Customers	1213
	Note 7 - Customer Financing	1213
	Note 8 - Investments	1415
	Note 9 - Commitments & Contingencies	1415
	Note 10 - Arrangements with Off-Balance Sheet Risk	1819

	Note 11 - Postretirement Plans	1920
	Note 12 - Share-Based Compensation and Other Comprehensive Arrangements	1921
	Note 13 - Shareholders' Equity	2022
	Note 14 - Derivative Financial Instruments	2023
	Note 15 - Fair Value Measurements	2225
	Note 16 - Legal Proceedings	2427
	Note 17 - Segment and Revenue Information	2427
	Report of Independent Registered Public Accounting Firm	2831

Forward-Looking Statements		2932

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3134
	Consolidated Results of Operations and Financial Condition	3134
	Commercial Airplanes	3841
	Defense, Space & Security	4245
	Global Services	4548
	Boeing Capital	4548
	Liquidity and Capital Resources	4650
	Contingent Obligations	4851
	Non-GAAP Measures	4851
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4953

Item 4.	Controls and Procedures	5054

Part II. Other Information

Item 1.	Legal Proceedings	5155

Item 1A.	Risk Factors	5155

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5155

Item 3.	Defaults Upon Senior Securities	5155

Item 4.	Mine Safety Disclosures	5155

Item 5.	Other Information	5155

Item 6.	Exhibits	5256

Signature		5357

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


(Dollars in millions, except per share data)	(Dollars in millions, except per share data)	Three months ended March 31		(Dollars in millions, except per share data)	Six months ended June 30				Three months ended June 30
			2022			2021		2022	2021	2022	2021
Sales of products	Sales of products		$11,427			$12,518	Sales of products	$25,436	$26,672	$14,009	$14,154
Sales of services	Sales of services		2,564			2,699	Sales of services	5,236	5,543	2,672	2,844
Total revenues	Total revenues		13,991			15,217	Total revenues	30,672	32,215	16,681	16,998

Cost of products	Cost of products		(11,412)			(11,632)	Cost of products	(23,696)	(23,895)	(12,284)	(12,263)
Cost of services	Cost of services		(2,226)			(2,167)	Cost of services	(4,495)	(4,483)	(2,269)	(2,316)
Boeing Capital interest expense	Boeing Capital interest expense		(7)			(9)	Boeing Capital interest expense	(13)	(18)	(6)	(9)
Total costs and expenses	Total costs and expenses		(13,645)			(13,808)	Total costs and expenses	(28,204)	(28,396)	(14,559)	(14,588)
			346			1,409		2,468	3,819	2,122	2,410
(Loss)/income from operating investments, net	(Loss)/income from operating investments, net		(20)			37	(Loss)/income from operating investments, net	(3)	75	17	38
General and administrative expense	General and administrative expense		(863)			(1,032)	General and administrative expense	(1,531)	(2,072)	(668)	(1,040)
Research and development expense, net	Research and development expense, net		(633)			(499)	Research and development expense, net	(1,331)	(996)	(698)	(497)
Gain on dispositions, net	Gain on dispositions, net		1			2	Gain on dispositions, net	2	114	1	112

Loss from operations			(1,169)			(83)
(Loss)/earnings from operations							(Loss)/earnings from operations	(395)	940	774	1,023
Other income, net	Other income, net		181			190	Other income, net	434	389	253	199
Interest and debt expense	Interest and debt expense		(630)			(679)	Interest and debt expense	(1,280)	(1,352)	(650)	(673)
Loss before income taxes			(1,618)			(572)
Income tax benefit			376			11
(Loss)/earnings before income taxes							(Loss)/earnings before income taxes	(1,241)	(23)	377	549
Income tax benefit/(expense)							Income tax benefit/(expense)	159	29	(217)	18

Net loss			(1,242)			(561)
Net (loss)/earnings							Net (loss)/earnings	(1,082)	6	160	567
Less: net loss attributable to noncontrolling interest	Less: net loss attributable to noncontrolling interest		(23)			(24)	Less: net loss attributable to noncontrolling interest	(56)	(44)	(33)	(20)
Net loss attributable to Boeing Shareholders			($1,219)			($537)
Net (loss)/earnings attributable to Boeing Shareholders							Net (loss)/earnings attributable to Boeing Shareholders	($1,026)	$50	$193	$587

Basic loss per share			($2.06)			($0.92)
Basic (loss)/earnings per share							Basic (loss)/earnings per share	($1.73)	$0.09	$0.32	$1.00

Diluted loss per share			($2.06)			($0.92)
Diluted (loss)/earnings per share							Diluted (loss)/earnings per share	($1.73)	$0.09	$0.32	$1.00

Weighted average diluted shares (millions)	Weighted average diluted shares (millions)		591.7			585.4	Weighted average diluted shares (millions)	592.8	588.6	596.4	590.2

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in millions) Three months ended March 31
2022 2021
Net loss ($1,242) ($561)
Other comprehensive income, net of tax:
Currency translation adjustments 24 (36)
Unrealized gain on derivative instruments:
Unrealized gain arising during period, net of tax of ($28) and ($3) 94 11
Reclassification adjustment for losses/(gains) included in net loss, net of tax of ($9) and $0 35 (2)
Total unrealized gain on derivative instruments, net of tax 129 9
Defined benefit pension plans and other postretirement benefits:
Amortization of prior service credits included in net periodic pension cost, net of tax of $6 and $6 (23) (23)
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($40) and ($65) 159 228
Settlements included in net loss, net of tax of $0 and $0 0 1
Pension and postretirement cost related to our equity method investments, net of tax of $0 and ($1) 0 2
Total defined benefit pension plans and other postretirement benefits, net of tax 136 208
Other comprehensive income, net of tax 289 181
Comprehensive loss, net of tax (953) (380)
Less: Comprehensive loss related to noncontrolling interest (23) (24)
Comprehensive loss attributable to Boeing Shareholders, net of tax ($930) ($356)


(Dollars in millions)	Six months ended June 30		Three months ended June 30
	2022	2021	2022	2021
Net (loss)/earnings	($1,082)	$6	$160	$567
Other comprehensive income/(loss), net of tax:
Currency translation adjustments	(52)	(22)	(76)	14

Unrealized (loss)/gain on derivative instruments:
Unrealized (loss)/gain arising during period, net of tax of $21, ($17), $49 and ($14)	(74)	65	(168)	54
Reclassification adjustment for losses/(gains) included in net loss, net of tax of ($8), $0, $1 and $0	30	(2)	(5)	0
Total unrealized (loss)/gain on derivative instruments, net of tax	(44)	63	(173)	54
Defined benefit pension plans and other postretirement benefits:

Amortization of prior service credits included in net periodic pension cost, net of tax of $12, $12, $6 and $6	(46)	(45)	(23)	(22)
Net actuarial gain arising during the period, net of tax of $0, ($2), $0 and ($2)	0	7	0	7
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($84), ($122), ($44) and ($57)	314	463	155	235
Settlements included in net (loss)/earnings, net of tax of $0, ($1), $0 and ($1)	0	3	0	2
Pension and postretirement cost related to our equity method investments, net of tax of $0, ($1), $0 and $0	0	3	0	1
Total defined benefit pension plans and other postretirement benefits, net of tax	268	431	132	223
Other comprehensive income/(loss), net of tax	172	472	(117)	291

Comprehensive (loss)/income, net of tax	(910)	478	43	858
Less: Comprehensive loss related to noncontrolling interest	(56)	(44)	(33)	(20)
Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax	($854)	$522	$76	$878

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Financial Position

(Unaudited)


(Dollars in millions, except per share data)	(Dollars in millions, except per share data)	March 31 2022	December 31 2021	(Dollars in millions, except per share data)	June 30 2022	December 31 2021
Assets	Assets			Assets
Cash and cash equivalents	Cash and cash equivalents	$7,409	$8,052	Cash and cash equivalents	$10,090	$8,052
Short-term and other investments	Short-term and other investments	4,873	8,192	Short-term and other investments	1,358	8,192
Accounts receivable, net	Accounts receivable, net	2,407	2,641	Accounts receivable, net	2,996	2,641
Unbilled receivables, net	Unbilled receivables, net	8,991	8,620	Unbilled receivables, net	9,394	8,620
Current portion of customer financing, net	Current portion of customer financing, net	157	117	Current portion of customer financing, net	159	117
Inventories	Inventories	79,819	78,823	Inventories	79,917	78,823
Other current assets, net	Other current assets, net	2,356	2,221	Other current assets, net	2,086	2,221
Total current assets	Total current assets	106,012	108,666	Total current assets	106,000	108,666
Customer financing, net	Customer financing, net	1,580	1,695	Customer financing, net	1,542	1,695
Property, plant and equipment, net of accumulated depreciation of $20,759 and $20,538		10,755	10,918
Property, plant and equipment, net of accumulated depreciation of $20,971 and $20,538				Property, plant and equipment, net of accumulated depreciation of $20,971 and $20,538	10,617	10,918
Goodwill	Goodwill	8,065	8,068	Goodwill	8,055	8,068
Acquired intangible assets, net	Acquired intangible assets, net	2,492	2,562	Acquired intangible assets, net	2,431	2,562
Deferred income taxes	Deferred income taxes	91	77	Deferred income taxes	106	77
Investments	Investments	992	975	Investments	981	975
Other assets, net of accumulated amortization of $1,024 and $975		5,814	5,591
Other assets, net of accumulated amortization of $864 and $975				Other assets, net of accumulated amortization of $864 and $975	5,747	5,591
Total assets	Total assets	$135,801	$138,552	Total assets	$135,479	$138,552
Liabilities and equity	Liabilities and equity			Liabilities and equity
Accounts payable	Accounts payable	$8,779	$9,261	Accounts payable	$9,575	$9,261
Accrued liabilities	Accrued liabilities	17,864	18,455	Accrued liabilities	17,752	18,455
Advances and progress billings	Advances and progress billings	52,458	52,980	Advances and progress billings	52,066	52,980
Short-term debt and current portion of long-term debt	Short-term debt and current portion of long-term debt	2,591	1,296	Short-term debt and current portion of long-term debt	5,406	1,296
Total current liabilities	Total current liabilities	81,692	81,992	Total current liabilities	84,799	81,992
Deferred income taxes	Deferred income taxes	158	218	Deferred income taxes	38	218
Accrued retiree health care	Accrued retiree health care	3,471	3,528	Accrued retiree health care	3,413	3,528
Accrued pension plan liability, net	Accrued pension plan liability, net	8,719	9,104	Accrued pension plan liability, net	8,335	9,104
Other long-term liabilities	Other long-term liabilities	1,879	1,750	Other long-term liabilities	1,891	1,750
Long-term debt	Long-term debt	55,150	56,806	Long-term debt	51,794	56,806
Total liabilities	Total liabilities	151,069	153,398	Total liabilities	150,270	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 issued	Common stock, par value $5.00 — 1,200,000,000 shares authorized; 1,012,261,159 shares issued	5,061	5,061	Common stock, par value $5.00 — 1,200,000,000 shares authorized; 1,012,261,159 shares issued	5,061	5,061
Additional paid-in capital	Additional paid-in capital	9,295	9,052	Additional paid-in capital	9,475	9,052
Treasury stock, at cost - 420,886,484 and 423,343,707 shares		(51,573)	(51,861)
Treasury stock, at cost - 418,809,934 and 423,343,707 shares				Treasury stock, at cost - 418,809,934 and 423,343,707 shares	(51,319)	(51,861)
Retained earnings	Retained earnings	33,189	34,408	Retained earnings	33,382	34,408
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(11,370)	(11,659)	Accumulated other comprehensive loss	(11,487)	(11,659)
Total shareholders’ deficit	Total shareholders’ deficit	(15,398)	(14,999)	Total shareholders’ deficit	(14,888)	(14,999)
Noncontrolling interests	Noncontrolling interests	130	153	Noncontrolling interests	97	153
Total equity	Total equity	(15,268)	(14,846)	Total equity	(14,791)	(14,846)
Total liabilities and equity	Total liabilities and equity	$135,801	$138,552	Total liabilities and equity	$135,479	$138,552

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30
		2022	2021		2022	2021
Cash flows – operating activities:	Cash flows – operating activities:			Cash flows – operating activities:
Net loss		($1,242)	($561)
Adjustments to reconcile net loss to net cash used by operating activities:
Net (loss)/earnings				Net (loss)/earnings	($1,082)	$6
Adjustments to reconcile net (loss)/earnings to net cash used by operating activities:				Adjustments to reconcile net (loss)/earnings to net cash used by operating activities:
Non-cash items –	Non-cash items –			Non-cash items –
Share-based plans expense	Share-based plans expense	203	321	Share-based plans expense	352	493
Treasury shares issued for 401(k) contribution	Treasury shares issued for 401(k) contribution	329	306	Treasury shares issued for 401(k) contribution	612	628
Depreciation and amortization	Depreciation and amortization	486	536	Depreciation and amortization	984	1,087
Investment/asset impairment charges, net	Investment/asset impairment charges, net	72	16	Investment/asset impairment charges, net	72	38
Customer financing valuation adjustments	Customer financing valuation adjustments	48	0	Customer financing valuation adjustments	42	(1)

Gain on dispositions, net	Gain on dispositions, net	(1)	(2)	Gain on dispositions, net	(2)	(114)
Other charges and credits, net	Other charges and credits, net	175	35	Other charges and credits, net	260	(1)

Changes in assets and liabilities –	Changes in assets and liabilities –			Changes in assets and liabilities –
Accounts receivable	Accounts receivable	237	(394)	Accounts receivable	(350)	(523)
Unbilled receivables	Unbilled receivables	(356)	(790)	Unbilled receivables	(758)	(1,207)
Advances and progress billings	Advances and progress billings	(522)	421	Advances and progress billings	(907)	251
Inventories	Inventories	(1,203)	(680)	Inventories	(1,260)	413
Other current assets	Other current assets	140	153	Other current assets	144	324
Accounts payable	Accounts payable	(369)	(819)	Accounts payable	395	(2,035)
Accrued liabilities	Accrued liabilities	(594)	(1,615)	Accrued liabilities	(835)	(2,613)
Income taxes receivable, payable and deferred	Income taxes receivable, payable and deferred	(403)	(34)	Income taxes receivable, payable and deferred	(238)	(130)
Other long-term liabilities	Other long-term liabilities	96	(84)	Other long-term liabilities	(64)	(127)
Pension and other postretirement plans	Pension and other postretirement plans	(371)	(265)	Pension and other postretirement plans	(695)	(576)
Customer financing, net	Customer financing, net	18	46	Customer financing, net	50	83
Other	Other	41	23	Other	145	134
Net cash used by operating activities	Net cash used by operating activities	(3,216)	(3,387)	Net cash used by operating activities	(3,135)	(3,870)
Cash flows – investing activities:	Cash flows – investing activities:			Cash flows – investing activities:
Payments to acquire property, plant and equipment	Payments to acquire property, plant and equipment	(349)	(291)	Payments to acquire property, plant and equipment	(612)	(513)
Proceeds from disposals of property, plant and equipment	Proceeds from disposals of property, plant and equipment	8	2	Proceeds from disposals of property, plant and equipment	16	51

Contributions to investments	Contributions to investments	(1,732)	(9,688)	Contributions to investments	(2,471)	(20,108)
Proceeds from investments	Proceeds from investments	5,037	12,738	Proceeds from investments	9,296	24,989

Other	Other	1	3	Other	2	4
Net cash provided by investing activities	Net cash provided by investing activities	2,965	2,764	Net cash provided by investing activities	6,231	4,423
Cash flows – financing activities:	Cash flows – financing activities:			Cash flows – financing activities:
New borrowings	New borrowings	2	9,814	New borrowings	15	9,826
Debt repayments	Debt repayments	(396)	(9,847)	Debt repayments	(1,013)	(9,882)

Stock options exercised	Stock options exercised	30	23	Stock options exercised	34	29

Employee taxes on certain share-based payment arrangements	Employee taxes on certain share-based payment arrangements	(32)	(38)	Employee taxes on certain share-based payment arrangements	(34)	(40)

Net cash used by financing activities	Net cash used by financing activities	(396)	(48)	Net cash used by financing activities	(998)	(67)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(3)	(18)	Effect of exchange rate changes on cash and cash equivalents	(71)	(14)
Net decrease in cash & cash equivalents, including restricted		(650)	(689)
Net increase in cash & cash equivalents, including restricted				Net increase in cash & cash equivalents, including restricted	2,027	472
Cash & cash equivalents, including restricted, at beginning of year	Cash & cash equivalents, including restricted, at beginning of year	8,104	7,835	Cash & cash equivalents, including restricted, at beginning of year	8,104	7,835
Cash & cash equivalents, including restricted, at end of period	Cash & cash equivalents, including restricted, at end of period	7,454	7,146	Cash & cash equivalents, including restricted, at end of period	10,131	8,307
Less restricted cash & cash equivalents, included in Investments	Less restricted cash & cash equivalents, included in Investments	45	87	Less restricted cash & cash equivalents, included in Investments	41	36
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$7,409	$7,059	Cash and cash equivalents at end of period	$10,090	$8,271

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the six months ended June 30, 2022 and 2021

(Unaudited)


	Boeing shareholders
(Dollars in millions)	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss	Non- controlling Interests	Total
Balance at January 1, 2021	$5,061	$7,787	($52,641)	$38,610	($17,133)	$241	($18,075)
Net earnings				50		(44)	6
Other comprehensive income, net of tax of ($131)					472		472
Share-based compensation		493					493

Treasury shares issued for stock options exercised, net		(19)	48				29
Treasury shares issued for other share-based plans, net		(76)	38				(38)
Treasury shares issued for 401(k) contribution		296	332				628




Balance at June 30, 2021	$5,061	$8,481	($52,223)	$38,660	($16,661)	$197	($16,485)

Balance at January 1, 2022	$5,061	$9,052	($51,861)	$34,408	($11,659)	$153	($14,846)
Net loss				(1,026)		(56)	(1,082)
Other comprehensive income, net of tax of ($59)					172		172
Share-based compensation		352					352

Treasury shares issued for stock options exercised, net		(21)	56				35
Treasury shares issued for other share-based plans, net		(72)	38				(34)

Treasury shares issued for 401(k) contribution		164	448				612



Balance at June 30, 2022	$5,061	$9,475	($51,319)	$33,382	($11,487)	$97	($14,791)

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the three months ended ~~March 31,~~June 30, 2022 and 2021

(Unaudited)


		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 Interests	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, 2021		$5,061	$7,787	($52,641)	$38,610	($17,133)	$241	($18,075)
Net loss					(537)		(24)	(561)
Other comprehensive income, net of tax of ($63)						181		181
Balance at April 1, 2021									Balance at April 1, 2021	$5,061	$8,155	($52,395)	$38,073	($16,952)	$217	($17,841)
Net earnings									Net earnings				587		(20)	567
Other comprehensive income, net of tax of ($68)									Other comprehensive income, net of tax of ($68)					291		291
Share-based compensation	Share-based compensation		321					321	Share-based compensation		172					172

Treasury shares issued for stock options exercised, net	Treasury shares issued for stock options exercised, net		(16)	39				23	Treasury shares issued for stock options exercised, net		(3)	9				6
Treasury shares issued for other share-based plans, net	Treasury shares issued for other share-based plans, net		(73)	37				(36)	Treasury shares issued for other share-based plans, net		(3)	1				(2)
Treasury shares issued for 401(k) contribution	Treasury shares issued for 401(k) contribution		136	170				306	Treasury shares issued for 401(k) contribution		160	162				322

Balance at March 31, 2021		$5,061	$8,155	($52,395)	$38,073	($16,952)	$217	($17,841)
Balance at June 30, 2021									Balance at June 30, 2021	$5,061	$8,481	($52,223)	$38,660	($16,661)	$197	($16,485)

Balance at January 1, 2022		$5,061	$9,052	($51,861)	$34,408	($11,659)	$153	($14,846)
Net loss					(1,219)		(23)	(1,242)
Other comprehensive income, net of tax of ($71)						289		289
Balance at April 1, 2022									Balance at April 1, 2022	$5,061	$9,295	($51,573)	$33,189	($11,370)	$130	($15,268)
Net earnings									Net earnings				193		(33)	160
Other comprehensive loss, net of tax of $12									Other comprehensive loss, net of tax of $12					(117)		(117)
Share-based compensation	Share-based compensation		203					203	Share-based compensation		149					149

Treasury shares issued for stock options exercised, net	Treasury shares issued for stock options exercised, net		(19)	49				30	Treasury shares issued for stock options exercised, net		(2)	7				5
Treasury shares issued for other share-based plans, net	Treasury shares issued for other share-based plans, net		(67)	36				(31)	Treasury shares issued for other share-based plans, net		(5)	2				(3)

Treasury shares issued for 401(k) contribution	Treasury shares issued for 401(k) contribution		126	203				329	Treasury shares issued for 401(k) contribution		38	245				283

Balance at March 31, 2022		$5,061	$9,295	($51,573)	$33,189	($11,370)	$130	($15,268)
Balance at June 30, 2022									Balance at June 30, 2022	$5,061	$9,475	($51,319)	$33,382	($11,487)	$97	($14,791)

See Notes to the Condensed Consolidated Financial Statements.

Table of Contents

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Business Segment Data

(Unaudited)


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30				Three months ended June 30
			2022			2021		2022	2021	2022	2021
Revenues:	Revenues:						Revenues:
Commercial Airplanes	Commercial Airplanes		$4,161			$4,269	Commercial Airplanes	$10,380	$10,284	$6,219	$6,015
Defense, Space & Security	Defense, Space & Security		5,483			7,185	Defense, Space & Security	11,674	14,061	6,191	6,876
Global Services	Global Services		4,314			3,749	Global Services	8,612	7,816	4,298	4,067
Boeing Capital	Boeing Capital		46			60	Boeing Capital	98	138	52	78
Unallocated items, eliminations and other	Unallocated items, eliminations and other		(13)			(46)	Unallocated items, eliminations and other	(92)	(84)	(79)	(38)
Total revenues	Total revenues		$13,991			$15,217	Total revenues	$30,672	$32,215	$16,681	$16,998
Earnings/(loss) from operations:	Earnings/(loss) from operations:						Earnings/(loss) from operations:
Commercial Airplanes	Commercial Airplanes		($859)			($856)	Commercial Airplanes	($1,101)	($1,328)	($242)	($472)
Defense, Space & Security	Defense, Space & Security		(929)			405	Defense, Space & Security	(858)	1,363	71	958
Global Services	Global Services		632			441	Global Services	1,360	972	728	531
Boeing Capital	Boeing Capital		(36)			21	Boeing Capital	(9)	57	27	36
Segment operating (loss)/earnings	Segment operating (loss)/earnings		(1,192)			11	Segment operating (loss)/earnings	(608)	1,064	584	1,053
Unallocated items, eliminations and other	Unallocated items, eliminations and other		(260)			(364)	Unallocated items, eliminations and other	(354)	(662)	(94)	(298)
FAS/CAS service cost adjustment	FAS/CAS service cost adjustment		283			270	FAS/CAS service cost adjustment	567	538	284	268
Loss from operations			(1,169)			(83)
(Loss)/earnings from operations							(Loss)/earnings from operations	(395)	940	774	1,023
Other income, net	Other income, net		181			190	Other income, net	434	389	253	199
Interest and debt expense	Interest and debt expense		(630)			(679)	Interest and debt expense	(1,280)	(1,352)	(650)	(673)
Loss before income taxes			(1,618)			(572)
Income tax benefit			376			11
(Loss)/earnings before income taxes							(Loss)/earnings before income taxes	(1,241)	(23)	377	549
Income tax benefit/(expense)							Income tax benefit/(expense)	159	29	(217)	18

Net loss			(1,242)			(561)
Net (loss)/earnings							Net (loss)/earnings	(1,082)	6	160	567
Less: Net loss attributable to noncontrolling interest	Less: Net loss attributable to noncontrolling interest		(23)			(24)	Less: Net loss attributable to noncontrolling interest	(56)	(44)	(33)	(20)
Net loss attributable to Boeing Shareholders			($1,219)			($537)
Net (loss)/earnings attributable to Boeing Shareholders							Net (loss)/earnings attributable to Boeing Shareholders	($1,026)	$50	$193	$587

This information is an integral part of the Notes to the Condensed Consolidated Financial Statements. See Note 17 for further segment results.

Table of Contents

The Boeing Company and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Dollars in millions, except otherwise stated)

(Unaudited)

Note 1 – Basis of Presentation

The condensed consolidated interim financial statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing”, the “Company”, “we”, “us”, or “our”). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. The results of operations for the period ended ~~March 31,~~June 30, 2022 are not necessarily indicative of the operating results for the full year. The interim financial statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, included in our 2021 Annual Report on Form 10-K.

Liquidity Matters

During the first ~~three~~six months of 2022, net cash used by operating activities was ~~$3.2~~$3.1 billion. Our operating cash flows continue to be impacted by lower commercial airplane deliveries and concessions paid to 737 MAX customers. We expect a negative impact on our operating cash flows until commercial deliveries ramp up. As a result, our cash and short-term investment balance was ~~$12.3~~$11.4 billion at ~~March 31,~~June 30, 2022, down from $16.2 billion at December 31, ~~2021, while our~~2021. Our debt balance ~~was $57.7~~of $57.2 billion at ~~March 31,~~June 30, 2022 is down from $58.1 billion at December 31, 2021. Short-term debt and the current portion of long-term debt increased to ~~$2.6~~$5.4 billion at ~~March 31,~~June 30, 2022 from $1.3 billion at December 31, 2021. The current portion of long-term debt includes term notes of ~~$0.9~~$0.3 billion maturing in ~~2022.~~the fourth quarter of 2022, $1.7 billion maturing in the first quarter of 2023, and $3.4 billion maturing in the second quarter of 2023.

As of ~~March 31,~~June 30, 2022, our unused borrowing capacity on revolving credit agreements is $14.7 billion, unchanged from December 31, 2021. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs. Our borrowing capacity includes $6.3 billion scheduled to expire in October 2022, of which $3.1 billion has a one-year term out option that allows us to extend the maturity of any borrowings one additional year.

Our short-term and long-term credit ratings remained unchanged during the first ~~quarter~~half of 2022. There is risk for future downgrades.

At ~~March 31,~~June 30, 2022 and December 31, 2021, trade payables included ~~$2.1~~$2.4 billion and $2.3 billion payable to suppliers who have elected to participate in supply chain financing programs. We do not believe that future changes in the availability of supply chain financing will have a significant impact on our liquidity.

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.

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

~~Table of~~ ~~Contents~~

that the accounting estimates and assumptions are appropriate, however, given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic actual results could differ from those estimates.

Table of Contents

Long-term Contracts

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 sales and costs for a long-term contract, and/or contractual options that are probable of exercise, indicate a loss, a provision for the entire ~~reach-forward~~ loss ~~on the long-term contract~~ is recognized.

Net cumulative catch-up adjustments to prior periods' revenue and earnings, including certain ~~reach-forward~~ losses, across all long-term contracts were as follows:


(In millions - except per share amounts)	(In millions - except per share amounts)	Three months ended March 31		(In millions - except per share amounts)	Six months ended June 30				Three months ended June 30
			2022			2021		2022	2021	2022	2021
(Decrease)/increase to Revenue	(Decrease)/increase to Revenue		($612)			$7	(Decrease)/increase to Revenue	($885)	$230	($273)	$223
Increase to Loss from operations			($1,130)			($176)
Decrease to Diluted EPS			($1.47)			($0.29)
(Decrease)/increase to (Loss)/earnings from operations							(Decrease)/increase to (Loss)/earnings from operations	($1,541)	$58	($411)	$234
(Decrease)/increase to Diluted EPS							(Decrease)/increase to Diluted EPS	($2.27)	($0.03)	($0.29)	$0.41

Note 2 – 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.

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.

Table of Contents

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)	Three months ended March 31		(In millions - except per share amounts)	Six months ended June 30				Three months ended June 30
			2022			2021		2022	2021	2022	2021
Net loss attributable to Boeing Shareholders			($1,219)			($537)
Net (loss)/earnings attributable to Boeing Shareholders							Net (loss)/earnings attributable to Boeing Shareholders	($1,026)	$50	$193	$587
Less: earnings available to participating securities	Less: earnings available to participating securities		0			0	Less: earnings available to participating securities	0	0	0	0
Net loss available to common shareholders			($1,219)			($537)
Net (loss)/earnings available to common shareholders							Net (loss)/earnings available to common shareholders	($1,026)	$50	$193	$587
Basic	Basic						Basic
Basic weighted average shares outstanding	Basic weighted average shares outstanding		591.7			585.4	Basic weighted average shares outstanding	592.8	586.4	594.0	587.5
Less: participating securities(1)	Less: participating securities(1)		0.3			0.4	Less: participating securities(1)	0.3	0.4	0.3	0.4
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding		591.4			585.0	Basic weighted average common shares outstanding	592.5	586.0	593.7	587.1
Diluted	Diluted						Diluted
Basic weighted average shares outstanding	Basic weighted average shares outstanding		591.7			585.4	Basic weighted average shares outstanding	592.8	586.4	594.0	587.5
Dilutive potential common shares(2)	Dilutive potential common shares(2)		0			0	Dilutive potential common shares(2)	0	2.2	2.4	2.7
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding		591.7			585.4	Diluted weighted average shares outstanding	592.8	588.6	596.4	590.2
Less: participating securities(1)	Less: participating securities(1)		0.3			0.4	Less: participating securities(1)	0.3	0.4	0.3	0.4
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding		591.4			585.0	Diluted weighted average common shares outstanding	592.5	588.2	596.1	589.8
Net loss per share:
Net (loss)/earnings per share:							Net (loss)/earnings per share:
Basic	Basic		($2.06)			($0.92)	Basic	($1.73)	$0.09	$0.32	$1.00
Diluted	Diluted		(2.06)			(0.92)	Diluted	(1.73)	0.09	0.32	1.00

(1)Participating securities include certain instruments in our deferred compensation plan.

(2)Diluted earnings per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.

As a result of incurring a net loss for the ~~three~~six months ended ~~March 31,~~June 30, 2022, ~~and 2021,~~3.0 million potential common shares ~~of 3.6 million and 1.7 million~~ were excluded from diluted loss per share because the effect would have been antidilutive. In addition, the following table includes the number of shares that may be dilutive potential common shares in the future. These shares were not included in the computation of diluted loss per share because the effect was either antidilutive or the performance condition was not met.


(Shares in millions)	(Shares in millions)	Three months ended March 31		(Shares in millions)	Six months ended June 30				Three months ended June 30
			2022			2021		2022	2021	2022	2021
Performance awards	Performance awards		1.6			2.6	Performance awards	1.9	2.7	2.3	2.8
Performance-based restricted stock units	Performance-based restricted stock units		0.4			0.7	Performance-based restricted stock units	0.4	0.8	0.4	0.8
Restricted stock units	Restricted stock units		0.4			1.4	Restricted stock units	1.2	0.7	2.0	0
Stock options	Stock options		0.6			0.2	Stock options	0.7	0.3	0.8	0.3

Note 3 – Income Taxes

Our ~~effective~~income tax ~~rates were 23.2% and 1.9%~~expense or benefit for ~~the three months ended March 31, 2022 and 2021. The 2022 estimated~~interim periods is normally determined using an estimate of our annual effective tax rate, ~~reflects~~adjusted for discrete items. In the ~~21%~~second quarter of 2022, we determined that we could not make a reliable estimate of the annual effective tax rate primarily due to the sensitivity of the estimated annual tax rate to changes in forecasted pre-tax earnings in relation to significant permanent differences. As a result, the effective tax rate for the six months ended June 30, 2022 was calculated based on 2022 year-to-date results. We recorded a tax benefit of $159 for the six months ended June 30, 2022 primarily reflecting the 2022 operating losses. The difference between the 2022 year-to-date effective tax rate of 12.8% and the current federal tax rate ~~and an increase~~of 21% is primarily driven by increases to the valuation allowance in 2022, which ~~is partially offset by research and development~~reduced our recorded income tax credits. The 2021 rate also reflected the 21% federal tax rate which was largely offset by discrete tax expenses recorded in the first quarter of 2021 primarily related to an increase in the valuation allowance.benefit.

910

Table of Contents

As of December 31, 2021, the Company had recorded valuation allowances of $2,423 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss and tax 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 estimate 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.

Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service (IRS) began 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 2008-2020 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

Note 4 – Allowances for Losses on Financial Assets

The changes in allowances for expected credit losses for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 consisted of the following:


		Accounts receivable	Unbilled receivables	Other current assets	Customer financing	Other assets	Total		Accounts receivable	Unbilled receivables	Other current assets	Customer financing	Other assets	Total
Balance at January 1, 2021	Balance at January 1, 2021	($444)	($129)	($72)	($17)	($140)	($802)	Balance at January 1, 2021	($444)	($129)	($72)	($17)	($140)	($802)
Changes in estimates	Changes in estimates	10	(1)	(6)	0	(42)	(39)	Changes in estimates	16	0	(3)	1	(36)	(22)
Write-offs	Write-offs	1					1	Write-offs	15		1			16

Balance at March 31, 2021		($433)	($130)	($78)	($17)	($182)	($840)
Balance at June 30, 2021								Balance at June 30, 2021	($413)	($129)	($74)	($16)	($176)	($808)

Balance at January 1, 2022	Balance at January 1, 2022	($390)	($91)	($62)	($18)	($186)	($747)	Balance at January 1, 2022	($390)	($91)	($62)	($18)	($186)	($747)
Changes in estimates	Changes in estimates	(7)	15	5	(48)	(22)	(57)	Changes in estimates	(5)	18	1	(42)	(27)	(55)
Write-offs	Write-offs	6					6	Write-offs	242	47			133	422

Recoveries	Recoveries	1					1	Recoveries	5					5
Balance at March 31, 2022		($390)	($76)	($57)	($66)	($208)	($797)
Balance at June 30, 2022								Balance at June 30, 2022	($148)	($26)	($61)	($60)	($80)	($375)

1011

Table of Contents

Note 5 – Inventories

Inventories consisted of the following:


		March 31 2022	December 31 2021		June 30 2022	December 31 2021
Long-term contracts in progress	Long-term contracts in progress	$821	$872	Long-term contracts in progress	$637	$872
Commercial aircraft programs	Commercial aircraft programs	69,239	68,106	Commercial aircraft programs	69,481	68,106
Commercial spare parts, used aircraft, general stock materials and other	Commercial spare parts, used aircraft, general stock materials and other	9,759	9,845	Commercial spare parts, used aircraft, general stock materials and other	9,799	9,845
Total	Total	$79,819	$78,823	Total	$79,917	$78,823

Commercial spare parts, used aircraft, general stock materials and other includes capitalized precontract costs of ~~$710~~$763 at ~~March 31,~~June 30, 2022 and $648 at December 31, 2021 primarily related to KC-46A Tanker and Commercial Crew. See Note 9.

Commercial Aircraft Programs

The increase in commercial aircraft programs inventory during 2022 reflects a continued buildup of 787 aircraft, as well as growth in 777X inventory. Commercial aircraft programs inventory includes approximately ~~320~~290 737 MAX aircraft and ~~115~~120 787 aircraft at ~~March 31,~~June 30, 2022 as compared with 335 737 MAX aircraft and 110 787 aircraft at December 31, 2021.

A number of customers have requested to defer deliveries or to cancel orders. We are currently remarketing certain aircraft and may have to remarket additional aircraft in future periods. If we are unable to successfully remarket the aircraft, determine further production rate 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 ~~March 31,~~June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of ~~$1,753~~$1,594 and $1,296 and unamortized tooling and other non-recurring costs of ~~$600~~$649 and $617. At ~~March 31,~~June 30, 2022, ~~$2,343~~$2,230 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 ~~$10~~$13 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

At ~~March 31,~~June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 777X program: deferred production costs of ~~$1,091~~$1,194 and $652 and ~~$3,572~~$3,625 and $3,521 of unamortized tooling and other non-recurring costs. In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023. ~~We expect that the~~The production pause ~~will result~~is resulting in abnormal production costs that ~~will be period~~are being expensed ~~in future periods and continue~~as incurred until 777X-9 production resumes. We expensed abnormal production costs of $102 during the three months ended June 30, 2022. The 777X program has near break-even margins at ~~March 31,~~June 30, 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 our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, any 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.

During the fourth quarter of 2021, we determined that estimated costs to complete the 787 program plus costs already included in 787 inventory exceeded estimated revenues from the program. The resulting reach-forward loss of $3,460 was recorded as a reduction to deferred production costs. At ~~March 31,~~June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of ~~$11,753~~$12,056 and $11,693, ~~$1,861~~$1,931 and $1,907 of supplier advances, and ~~$1,818~~$1,822 and $1,815 of unamortized tooling and other non-recurring costs. At ~~March 31,~~June 30, 2022, ~~$8,901~~$9,018 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

1112

Table of Contents

~~orders~~ and ~~$4,670~~$4,860 is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We expensed abnormal production costs of ~~$312~~$595 during the ~~three~~six months ended ~~March 31,~~June 30, 2022.

Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling ~~$3,383~~$3,354 and $3,290 at ~~March 31,~~June 30, 2022 and December 31, 2021.

Note 6 – Contracts with Customers

Unbilled receivables increased from $8,620 at December 31, 2021 to ~~$8,991~~$9,394 at ~~March 31,~~June 30, 2022, primarily driven by revenue recognized at Defense, Space & Security (BDS) and Global Services (BGS) in excess of billings.

Advances and progress billings decreased from $52,980 at December 31, 2021 to ~~$52,458~~$52,066 at ~~March 31,~~June 30, 2022, primarily driven by revenue recognized at BDS, Commercial Airplanes (BCA), and BGS and the return of BCA customer advances, partially offset by advances on orders received.

Revenues recognized during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were ~~$3,401~~$6,814 and ~~$4,718.~~$7,315. Revenues recognized during the three months ended June 30, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $3,413 and $2,597.

Note 7 – Customer Financing

Customer financing primarily relates to the Boeing Capital (BCC) segment. Financing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate leases. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price.

Customer financing consisted of the following:


		March 31 2022	December 31 2021		June 30 2022	December 31 2021
Financing receivables:	Financing receivables:			Financing receivables:
Investment in sales-type/finance leases	Investment in sales-type/finance leases	$886	$944	Investment in sales-type/finance leases	$875	$944
Notes	Notes	410	412	Notes	403	412
Total financing receivables	Total financing receivables	1,296	1,356	Total financing receivables	1,278	1,356
Less allowance for losses on receivables	Less allowance for losses on receivables	(66)	(18)	Less allowance for losses on receivables	(60)	(18)
Financing receivables, net	Financing receivables, net	1,230	1,338	Financing receivables, net	1,218	1,338
Operating lease equipment, at cost, less accumulated depreciation of $62 and $58		507	474
Operating lease equipment, at cost, less accumulated depreciation of $72 and $58				Operating lease equipment, at cost, less accumulated depreciation of $72 and $58	483	474

Total	Total	$1,737	$1,812	Total	$1,701	$1,812

At ~~March 31,~~June 30, 2022 and December 31, 2021, ~~$412~~$406 and $378 were determined to be uncollectible financing receivables and placed on non-accrual status. The increase in the allowance for losses on receivables during the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily due to impacts of the war in Ukraine. Customer financing interest income received was $6 and $3 for the six and ~~$6 the~~ three months ended ~~March 31,~~June 30, 2022 and $11 and $5 for the six and three months ended June 30, 2021.

~~Customer financing receivables past due as of March 31, 2022 were $1.~~

1213

Table of Contents

Our financing receivable balances at ~~March 31,~~June 30, 2022 by internal credit rating category and year of origination consisted of the following:


Rating categories	Rating categories	Current	2021	2020	2019	2018	Prior	Total	Rating categories	Current	2021	2020	2019	2018	Prior	Total
BBB	BBB						$98	$98	BBB						$82	$82
BB	BB	$9	$231	$118	$42	$13	121	534	BB	$26	$227	$116	$41	$13	118	541
B	B		35				188	223	B		35				187	222
CCC	CCC			7	24		410	441	CCC			7	22		404	433

Total carrying value of financing receivables	Total carrying value of financing receivables	$9	$266	$125	$66	$13	$817	$1,296	Total carrying value of financing receivables	$26	$262	$123	$63	$13	$791	$1,278

At ~~March 31,~~June 30, 2022, our allowance for losses related to receivables with ratings of CCC, B, BB, and BBB. We applied default rates that averaged ~~88.1%~~90.9%, ~~26.8%~~25.8%, ~~3.4%~~3.0%, and 0.1%, respectively, to the exposure associated with those receivables.

Customer Financing Exposure

The majority of our customer financing portfolio is concentrated in the following aircraft models:


		March 31 2022	December 31 2021		June 30 2022	December 31 2021
717 Aircraft ($58 and $62 accounted for as operating leases)		$589	$603
717 Aircraft ($55 and $62 accounted for as operating leases)				717 Aircraft ($55 and $62 accounted for as operating leases)	$580	$603
747-8 Aircraft (accounted for as sales-type finance leases)	747-8 Aircraft (accounted for as sales-type finance leases)	394	435	747-8 Aircraft (accounted for as sales-type finance leases)	394	435
737 Aircraft ($186 and $145 accounted for as operating leases)		204	163
777 Aircraft ($221 and $225 accounted for as operating leases)		229	233
737 Aircraft ($184 and $145 accounted for as operating leases)				737 Aircraft ($184 and $145 accounted for as operating leases)	196	163
777 Aircraft ($211 and $225 accounted for as operating leases)				777 Aircraft ($211 and $225 accounted for as operating leases)	218	233
MD-80 Aircraft (accounted for as sales-type finance leases)	MD-80 Aircraft (accounted for as sales-type finance leases)	140	142	MD-80 Aircraft (accounted for as sales-type finance leases)	139	142
757 Aircraft (accounted for as sales-type finance leases)	757 Aircraft (accounted for as sales-type finance leases)	121	126	757 Aircraft (accounted for as sales-type finance leases)	118	126
747-400 Aircraft ($0 and $1 accounted for as operating leases)	747-400 Aircraft ($0 and $1 accounted for as operating leases)	48	50	747-400 Aircraft ($0 and $1 accounted for as operating leases)	48	50

Operating lease equipment primarily includes large commercial jet aircraft.

Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2022 and 2021 included $36 and $25 from sales-type/finance leases, and $32 and $37 from operating leases, of which $5 and $5 related to variable operating lease payments. Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended ~~March 31,~~June 30, 2022 and 2021 included $18 and ~~$13~~$12 from sales-type/finance leases, and ~~$15~~$17 and ~~$18~~$19 from operating leases, of which $4$1 and $2$3 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the six months ended June 30, 2022 and 2021 in the amount of $12 and $36. Profit at the commencement of sales-type leases was recorded in revenue for the three months ended ~~March 31,~~June 30, 2022 and 2021 in the amount of $4$8 and ~~$16.~~$20.

1314

Table of Contents

Note 8 – Investments

Our investments, which are recorded in Short-term and other investments or Investments, consisted of the following:


		March 31 2022	December 31 2021		June 30 2022	December 31 2021
Equity method investments (1)	Equity method investments (1)	$947	$930	Equity method investments (1)	$942	$930
Time deposits	Time deposits	4,331	7,676	Time deposits	869	7,676
Available for sale debt instruments	Available for sale debt instruments	497	464	Available for sale debt instruments	447	464
Equity and other investments	Equity and other investments	45	45	Equity and other investments	40	45
Restricted cash & cash equivalents(2)	Restricted cash & cash equivalents(2)	45	52	Restricted cash & cash equivalents(2)	41	52
Total	Total	$5,865	$9,167	Total	$2,339	$9,167

(1)Dividends received were ~~$27~~$43 and $5$16 during the six and three months ended ~~March 31,~~June 30, 2022 and ~~2021.~~$43 and $38 during the same periods in the prior year.

(2)Reflects amounts restricted in support of our property sales, workers’ compensation 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 ~~March 31,~~June 30, 2022.

Note 9 – Commitments and Contingencies

737 MAX Grounding

Over ~~185~~190 countries have approved the resumption of 737 MAX operations. The 737 MAX has yet to return to service in China and a small number of other countries. The Civil Aviation Administration of China issued an airworthiness directive in the fourth quarter of 2021 outlining actions required for airlines to return to service. ~~The 737 MAX has yet to return to service in China.~~ While we expect 737 MAX deliveries to our customers in China to resume in 2022, subject to final regulatory approvals, risk remains around the timing and rate of those deliveries. ~~The 737 MAX remains grounded in a small number of non-U.S. jurisdictions.~~

We ~~have gradually~~ increased ~~production rates since 2020 and expect to increase~~ the production rate to 31 per month ~~during the second quarter of~~in 2022, ~~as well as~~and expect to implement further gradual production rate increases ~~in subsequent periods~~ based on market demand and supply chain capacity.

We ~~continued to produce at abnormally low production rates through the first quarter of 2022 and~~ expensed abnormal production costs of $188 ~~and $568~~ during the three months ended March 31, ~~2022 and 2021. We do not expect the remaining abnormal costs related to the 737 MAX to be significant.~~2022.

~~In the first quarter of 2022, we delivered 81 aircraft.~~ We have approximately ~~320~~290 airplanes in inventory as of ~~March 31,~~June 30, 2022 and we anticipate delivering most of these aircraft by the end of 2023. 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. Approximately half the aircraft in inventory are designated for customers in China. In the event that we are unable to resume aircraft deliveries in China and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing and our expectation regarding future gradual production rate increases could be impacted.

1415

Table of Contents

The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021.


		2022	2021		2022	2021
Beginning balance – January 1	Beginning balance – January 1	$2,940	$5,537	Beginning balance – January 1	$2,940	$5,537

Reductions for payments made	Reductions for payments made	(550)	(1,172)	Reductions for payments made	(844)	(1,538)
Reductions for concessions and other in-kind considerations	Reductions for concessions and other in-kind considerations	(5)	(25)	Reductions for concessions and other in-kind considerations	(5)	(27)
Changes in estimates	Changes in estimates	34	30	Changes in estimates	17	(8)
Ending balance – March 31		$2,419	$4,370
Ending balance – June 30				Ending balance – June 30	$2,108	$3,964

The liability balance of ~~$2.4~~$2.1 billion at ~~March 31,~~June 30, 2022 includes ~~$1.8~~$1.7 billion of contracted customer concessions and other liabilities and ~~$0.6~~$0.4 billion that remains subject to negotiation with customers. The contracted amount includes ~~$0.8~~$0.9 billion expected to be liquidated by lower customer delivery payments, ~~$0.8~~$0.6 billion expected to be paid in cash and $0.2 billion in other concessions. Of the cash payments to customers, we expect to pay ~~$0.6~~$0.5 billion in 2022. The type of consideration to be provided for the remaining ~~$0.6~~$0.4 billion will depend on the outcomes of negotiations with customers.

Environmental

The following table summarizes environmental remediation activity during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021.


		2022	2021		2022	2021
Beginning balance – January 1	Beginning balance – January 1	$605	$565	Beginning balance – January 1	$605	$565
Reductions for payments made, net of recoveries	Reductions for payments made, net of recoveries	0	(13)	Reductions for payments made, net of recoveries	(11)	(24)
Changes in estimates	Changes in estimates	48	15	Changes in estimates	131	41
Ending balance – March 31		$653	$567
Ending balance – June 30				Ending balance – June 30	$725	$582

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 ~~March 31,~~June 30, 2022 and December 31, 2021, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $1,015 and $1,094.

Product Warranties

The following table summarizes product warranty activity recorded during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021.


		2022	2021		2022	2021
Beginning balance – January 1	Beginning balance – January 1	$1,900	$1,527	Beginning balance – January 1	$1,900	$1,527
Additions for current year deliveries	Additions for current year deliveries	35	17	Additions for current year deliveries	89	48
Reductions for payments made	Reductions for payments made	(118)	(44)	Reductions for payments made	(220)	(100)
Changes in estimates	Changes in estimates	149	234	Changes in estimates	261	293
Ending balance – March 31		$1,966	$1,734
Ending balance – June 30				Ending balance – June 30	$2,030	$1,768

1516

Table of Contents

Commercial Aircraft 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 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 ~~March 31,~~June 30, 2022 have expiration dates from 2022 through 2029. At ~~March 31,~~June 30, 2022 and December 31, 2021 total contractual trade-in commitments were ~~$1,289~~$1,270 and $612. As of ~~March 31,~~June 30, 2022 and December 31, 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 ~~$379~~$349 and $283 and the fair value of the related trade-in aircraft was ~~$379~~$346 and $283.

Financing Commitments

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled ~~$12,761~~$13,081 and $12,905 as of ~~March 31,~~June 30, 2022 and December 31, 2021. The estimated earliest potential funding dates for these commitments as of ~~March 31,~~June 30, 2022 are as follows:


		Total		Total
April through December 2022		$1,759
July through December 2022			July through December 2022	$1,209
2023	2023	3,287	2023	3,700
2024	2024	2,501	2024	2,277
2025	2025	2,148	2025	2,666
2026	2026	1,183	2026	1,327
Thereafter	Thereafter	1,883	Thereafter	1,902
		$12,761		$13,081

As of ~~March 31,~~June 30, 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.

Funding Commitments

We have commitments to make additional capital contributions of ~~$244~~$243 to joint ventures over the next five 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. Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately ~~$3,647~~$3,410 and $3,634 as of ~~March 31,~~June 30, 2022 and December 31, 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 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.

Table of Contents

Fixed-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 Company’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 first ~~quarter~~half of 2022, the ~~cumulative~~ reach-forward loss on the contract increased by ~~$660 to $1,146,~~$686 driven by higher

~~Table of~~ ~~Contents~~

supplier costs, higher costs to finalize certain technical requirements and schedule delays. Risk remains that we may be required to 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. In the first ~~quarter~~half of 2022, we recorded an earnings ~~charge~~charges of ~~$67~~$103 related to the T-7A Red Hawk fixed-price EMD contract, which has ~~close to break-even gross margins~~a reach-forward loss at ~~March 31,~~June 30, 2022, primarily due to customer testing requirements, ~~and~~ supply chain ~~delays.~~delays and hardware qualification issues. 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 be exercised in 2023. The estimated loss increased by ~~$300 to $700~~$351 during the first ~~quarter~~half of 2022 primarily driven by ongoing supply chain negotiations which are impacted by supply chain constraints, COVID-19, and inflationary pressures. Risk remains that we may be required to 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 competition, we recognized a reach-forward loss of $291 in the third quarter of 2018. The period of performance runs from 2018 through 2024. During the first ~~quarter~~half of 2022, we ~~recorded a $78 increase to~~increased the MQ-25 reach-forward loss by $225 primarily driven by additional ~~customer~~ testing ~~requirements~~ and certification activities, supplier quality, and engineering design challenges. Risk remains that we may be required to record additional losses in future periods.

KC-46A Tanker

In 2011, we were awarded a contract from the USAF to design, develop, manufacture, and deliver four next generation aerial refueling tankers. This EMD contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration. Since 2016, the USAF has authorized seven low rate initial production (LRIP) lots for a total of 94 aircraft. The EMD contract and authorized LRIP lots total approximately $19 billion as of ~~March 31,~~June 30, 2022. As of ~~March 31,~~June 30, 2022, we had approximately ~~$276~~$295 of capitalized precontract costs and ~~$609~~$866 of potential termination liabilities to suppliers. During the first ~~quarter~~half of 2022, we ~~recorded an increase to~~increased the reach-forward loss on the KC-46A Tanker program ~~of $165~~by $209 primarily reflecting higher supply chain and ~~other~~production disruption costs. Risk remains that we may be required to record additional losses in future periods.

~~Fixed-Price Contracts~~

Substantially all contracts at BDS and the majority of contracts at BGS are long-term contracts. Long-term contracts that are contracted on a fixed-price basis could result in losses in future periods. Fixed-price development work is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work. The operational and technical complexities of fixed-price contracts create financial risk, which could trigger additional earnings charges, termination provisions, order cancellations, or other financially significant exposure.

~~Recoverable Costs on Government Contracts~~

1718

Table of Contents

Note 10 – 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,” 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			Maximum Potential Payments		Estimated Proceeds from Collateral/Recourse		Carrying Amount of Liabilities
		March 31 2022	December 31 2021	March 31 2022	December 31 2021	March 31 2022	December 31 2021		June 30 2022	December 31 2021	June 30 2022	December 31 2021	June 30 2022	December 31 2021
Contingent repurchase commitments	Contingent repurchase commitments	$548	$548	$548	$548	0		Contingent repurchase commitments	$545	$548	$545	$548	0

Credit guarantees	Credit guarantees	90	90	0	28	$46	$24	Credit guarantees	90	90	0	28	$46	$24

Contingent Repurchase Commitments 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.

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. We record a liability for the fair value of guarantees and the expected contingent loss amount, which is reviewed quarterly. Current outstanding credit guarantees expire through 2036.

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 9.

1819

Table of Contents

Note 11 – Postretirement Plans

The components of net periodic benefit (income)/cost ~~for the three months ended March 31~~ were as follows:

Pension Postretirement
2022 2021 2022 2021
Service cost $1 $1 $18 $22
Interest cost 520 498 24 23
Expected return on plan assets (947) (966) (2) (2)
Amortization of prior service credits (20) (20) (9) (9)
Recognized net actuarial loss/(gain) 227 310 (28) (17)
Settlement/curtailment loss 0 1 0 0
Net periodic benefit (income)/cost ($219) ($176) $3 $17
Net periodic benefit cost included in Loss from operations $1 $1 $19 $22
Net periodic benefit income included in Other income, net (220) (177) (15) (5)
Net periodic benefit (income)/cost included in Loss before income taxes ($219) ($176) $4 $17


	Six months ended June 30		Three months ended June 30
Pension Plans	2022	2021	2022	2021
Service cost	$2	$2	$1	$1
Interest cost	1,041	995	521	497
Expected return on plan assets	(1,895)	(1,931)	(948)	(965)
Amortization of prior service credits	(41)	(40)	(21)	(20)
Recognized net actuarial loss	454	620	227	310
Settlement/curtailment loss	0	4	0	3
Net periodic benefit income	($439)	($350)	($220)	($174)

Net periodic benefit cost included in (Loss)/earnings from operations	$2	$2	$1	$1
Net periodic benefit income included in Other income, net	(441)	(352)	(221)	(175)
Net periodic benefit income included in (Loss)/earnings before income taxes	($439)	($350)	($220)	($174)


	Six months ended June 30		Three months ended June 30
Other Postretirement Plans	2022	2021	2022	2021
Service cost	$36	$44	$18	$22
Interest cost	49	45	25	22
Expected return on plan assets	(5)	(3)	(3)	(1)
Amortization of prior service credits	(17)	(17)	(8)	(8)
Recognized net actuarial gain	(56)	(35)	(28)	(18)

Net periodic benefit cost	$7	$34	$4	$17

Net periodic benefit cost included in (Loss)/earnings from operations	$39	$44	$20	$22
Net periodic benefit cost included in Other income, net	(29)	(10)	(14)	(5)
Net periodic benefit cost included in (Loss)/earnings before income taxes	$10	$34	$6	$17

Table of Contents

Note 12 – Share-Based Compensation and Other Compensation Arrangements

Stock Options

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. The stock options 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 depending on certain age and service conditions. The fair value of the stock options granted was $83.04 per unit and was estimated using a Monte-Carlo simulation model using the following assumptions: expected life 6.76 years, expected volatility 36.6%, risk free interest rate 2.0% and no expected dividend yield.

Restricted Stock Units

On February 16, 2022, we granted 1,804,541 restricted stock units (RSU) to our executives as part of our long-term incentive program. The RSUs granted under this program have a grant date fair value of $217.48 per unit. 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 executive (or beneficiary) may receive some or all of their stock units depending on certain age and service conditions. In all other cases, the RSUs will not vest and all rights to the stock units will terminate.

1921

Table of Contents

Note 13 – Shareholders' Equity

Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss (AOCI) by component for the six and three months ended ~~March 31,~~June 30, 2022 and 2021 were as follows:


		Currency Translation Adjustments	Unrealized Gains and Losses on Certain Investments	Unrealized Gains and Losses on Derivative Instruments		Defined Benefit Pension Plans & Other Postretirement Benefits		Total (1)		Currency Translation Adjustments	Unrealized Gains and Losses on Certain Investments	Unrealized Gains and Losses on Derivative Instruments		Defined Benefit Pension Plans & Other Postretirement Benefits		Total (1)
Balance at January 1, 2021	Balance at January 1, 2021	($30)	$1	($43)		($17,061)		($17,133)	Balance at January 1, 2021	($30)	$1	($43)		($17,061)		($17,133)
Other comprehensive (loss)/income before reclassifications	Other comprehensive (loss)/income before reclassifications	(36)		11		2		(23)	Other comprehensive (loss)/income before reclassifications	(22)		65		10		53
Amounts reclassified from AOCI	Amounts reclassified from AOCI			(2)		206	(2)	204	Amounts reclassified from AOCI			(2)		421	(2)	419
Net current period Other comprehensive (loss)/income	Net current period Other comprehensive (loss)/income	(36)		9		208		181	Net current period Other comprehensive (loss)/income	(22)		63		431		472
Balance at March 31, 2021		($66)	$1	($34)		($16,853)		($16,952)
Balance at June 30, 2021									Balance at June 30, 2021	($52)	$1	$20		($16,630)		($16,661)

Balance at January 1, 2022	Balance at January 1, 2022	($105)	$1	$6		($11,561)		($11,659)	Balance at January 1, 2022	($105)	$1	$6		($11,561)		($11,659)
Other comprehensive loss before reclassifications									Other comprehensive loss before reclassifications	(52)		(74)				(126)
Amounts reclassified from AOCI									Amounts reclassified from AOCI			30	(3)	268	(2)	298
Net current period Other comprehensive (loss)/income									Net current period Other comprehensive (loss)/income	(52)		(44)		268		172
Balance at June 30, 2022									Balance at June 30, 2022	($157)	$1	($38)		($11,293)		($11,487)

Balance at March 31, 2021									Balance at March 31, 2021	($66)	$1	($34)		($16,853)		($16,952)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	24		94				118	Other comprehensive income before reclassifications	14		54		8		76
Amounts reclassified from AOCI	Amounts reclassified from AOCI			35	(3)	136	(2)	171	Amounts reclassified from AOCI			0		215	(2)	215
Net current period Other comprehensive income	Net current period Other comprehensive income	24		129		136		289	Net current period Other comprehensive income	14		54		223		291
Balance at June 30, 2021									Balance at June 30, 2021	($52)	$1	$20		($16,630)		($16,661)

Balance at March 31, 2022	Balance at March 31, 2022	($81)	$1	$135		($11,425)		($11,370)	Balance at March 31, 2022	($81)	$1	$135		($11,425)		($11,370)

Other comprehensive loss before reclassifications									Other comprehensive loss before reclassifications	(76)		(168)		0		(244)
Amounts reclassified from AOCI									Amounts reclassified from AOCI			(5)		132	(2)	127
Net current period Other comprehensive (loss)/income									Net current period Other comprehensive (loss)/income	(76)		(173)		132		(117)
Balance at June 30, 2022									Balance at June 30, 2022	($157)	$1	($38)		($11,293)		($11,487)

(1) Net of tax.

(2) Primarily relates to amortization of actuarial losses for the six and three months ended ~~March 31,~~June 30, 2022 of $314 and ~~2021 of $159 and $228~~$155 (net of tax of ($~~40)~~84) and ($~~65)~~44)) and the six and three months ended June 30, 2021 totaling $463 and $235 (net of tax of ($122) and ($57)). These are included in the net periodic pension cost.

(3) Includes losses of $39 (net of tax of ($11)) from cash flow hedges reclassified to Other income, net because the forecasted transactions are no longer probable of occurring.

Table of Contents

Note 14 – 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 2031. We use commodity derivatives, such as fixed-price purchase commitments and swaps to hedge against potentially unfavorable price changes for commodities used in production. Our commodity contracts hedge forecasted transactions through 2029.

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.

~~Table of~~ ~~Contents~~

Notional Amounts and Fair Values

The notional amounts and fair values of derivative instruments in the Condensed Consolidated Statements of Financial Position were as follows:


		Notional amounts (1)		Other assets		Accrued liabilities			Notional amounts (1)		Other assets		Accrued liabilities
		March 31 2022	December 31 2021	March 31 2022	December 31 2021	March 31 2022	December 31 2021		June 30 2022	December 31 2021	June 30 2022	December 31 2021	June 30 2022	December 31 2021
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:							Derivatives designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts	$2,686	$2,630	$53	$30	($35)	($52)	Foreign exchange contracts	$2,550	$2,630	$14	$30	($112)	($52)

Commodity contracts	Commodity contracts	593	500	190	88	(7)	(18)	Commodity contracts	388	500	75	88	(9)	(18)
Derivatives not receiving hedge accounting treatment:	Derivatives not receiving hedge accounting treatment:							Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	Foreign exchange contracts	708	361	3	2	(52)	(3)	Foreign exchange contracts	688	361	12	2	(50)	(3)
Commodity contracts	Commodity contracts	1,059	760	19	8	(12)	(7)	Commodity contracts	670	760	9	8	(2)	(7)
Total derivatives	Total derivatives	$5,046	$4,251	$265	$128	($106)	($80)	Total derivatives	$4,296	$4,251	$110	$128	($173)	($80)
Netting arrangements	Netting arrangements			(46)	(30)	46	30	Netting arrangements			(31)	(30)	31	30
Net recorded balance	Net recorded balance			$219	$98	($60)	($50)	Net recorded balance			$79	$98	($142)	($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:


		Three months ended March 31		Six months ended June 30				Three months ended June 30
			2022		2021		2022	2021	2022	2021
Recognized in Other comprehensive income, net of taxes:	Recognized in Other comprehensive income, net of taxes:					Recognized in Other comprehensive income, net of taxes:
Foreign exchange contracts	Foreign exchange contracts		($8)		($19)	Foreign exchange contracts	($104)	($6)	($96)	$13
Commodity contracts	Commodity contracts		102		30	Commodity contracts	30	71	(72)	41

Table of Contents

Gains/(losses) associated with our hedging transactions and forward points reclassified from AOCI to earnings are presented in the following table:


		Three months ended March 31		Six months ended June 30				Three months ended June 30
			2022		2021		2022	2021	2022	2021
Foreign exchange contracts	Foreign exchange contracts					Foreign exchange contracts

Costs and expenses	Costs and expenses		$5			Costs and expenses	$10	$3	$5	$3
General and administrative			(1)		$3
General and administrative expense						General and administrative expense	(7)	9	(6)	6
Commodity contracts	Commodity contracts					Commodity contracts

Costs and expenses	Costs and expenses		1		(3)	Costs and expenses	7	(13)	6	(10)
General and administrative expense	General and administrative expense		1		2	General and administrative expense	2	3	1	1

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 ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~ 2021. Losses related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were insignificant for the six and three months ended ~~March 31,~~June 30, 2022 and 2021.

Based on our portfolio of cash flow hedges, we expect to reclassify gains of ~~$53~~$25 (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. For foreign exchange contracts with original maturities of at least five years, our derivative counterparties could require

~~Table of~~ ~~Contents~~

settlement if we default on our five-year credit facility. For certain 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 ~~March 31,~~June 30, 2022 was ~~$1.~~$25. At ~~March 31,~~June 30, 2022, there was no collateral posted related to our derivatives.

Table of Contents

Note 15 – 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.


		March 31, 2022			December 31, 2021				June 30, 2022				December 31, 2021
		Total	Level 1	Level 2		Total	Level 1	Level 2			Total	Level 1	Level 2	Total	Level 1	Level 2
Assets	Assets									Assets
Money market funds	Money market funds	$978	$978			$1,370	$1,370			Money market funds	$1,573	$1,573		$1,370	$1,370
Available-for-sale debt investments:	Available-for-sale debt investments:									Available-for-sale debt investments:
Commercial paper	Commercial paper	233		$233		225		$225		Commercial paper	301		$301	225		$225
Corporate notes	Corporate notes	254		254		262		262		Corporate notes	178		178	262		262
U.S. government agencies	U.S. government agencies	10		10		1		1		U.S. government agencies	20		20	1		1
Other equity investments	Other equity investments	20	19	1		20	20			Other equity investments	13	13	0	20	20
Derivatives	Derivatives	219		219		98		98		Derivatives	79		79	98		98
Total assets	Total assets	$1,714	$997	$717		$1,976	$1,390	$586		Total assets	$2,164	$1,586	$578	$1,976	$1,390	$586
Liabilities	Liabilities									Liabilities
Derivatives	Derivatives	($60)		($60)		($50)		($50)		Derivatives	($142)		($142)	($50)		($50)
Total liabilities	Total liabilities	($60)		($60)		($50)		($50)		Total liabilities	($142)		($142)	($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.

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). The following table presents the nonrecurring losses recognized for the ~~three~~six months ended ~~March 31~~June 30 due to long-lived asset impairment and the fair value and asset classification of the related assets as of the impairment date:

2022 2021
Total Total
Losses Total Total
Losses
Investments ($31) ($7)
Customer financing assets $44 (2) $18 (9)
Property, plant and equipment (19)
Other Assets and Acquired intangible assets 1 (20)
Total $45 ($72) $18 ($16)

~~Table of~~ ~~Contents~~


	2022		2021
	Total	Total Losses	Total	Total Losses
Investments		($31)		($7)
Customer financing assets	$44	(2)	$15	(12)
Property, plant and equipment		(19)	28	(19)
Other Assets and Acquired intangible assets	1	(20)
Total	$45	($72)	$43	($38)

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. 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.

Table of Contents

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 period ended ~~March 31,~~June 30, 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 Input

Range
Median or Average

Customer financing assets

$44

Market approach

Aircraft value publications

$34 - $43(1)

Median $39

Aircraft condition adjustments

$0 - $5(2)

Net $5

(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.

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 Condensed Consolidated Statements of Financial Position were as follows:

March 31, 2022

June 30, 2022

Carrying
Amount

Total Fair
Value

Level 1

Level 2

Level 3

Carrying
Amount

Total Fair
Value

Level 1

Level 2

Level 3

Assets

Notes receivable, net

$410

$448

Notes receivable, net

$403

$420

Liabilities

Debt, excluding finance lease obligations

(57,559)

(59,428)

Debt, excluding finance lease obligations

(57,009)

(52,730)

December 31, 2021

Carrying
Amount

Total Fair
Value

Level 1

Level 2

Level 3

Assets

Notes receivable, net

$412

$485

Liabilities

Debt, excluding finance lease obligations

(57,921)

(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

~~Table of~~ ~~Contents~~

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

Table of Contents

receivable, Unbilled receivables, Other current assets, Accounts payable and long-term payables. The carrying values of those items, as reflected in the Condensed Consolidated Statements of Financial Position, approximate their fair value at ~~March 31,~~June 30, 2022 and December 31, 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 16 – 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, 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. During the fourth quarter of 2021, we entered into a proposed settlement with plaintiffs in a shareholder derivative lawsuit. In March 2022, the court entered an order approving the proposed settlement and the Company committed to making certain governance changes. As a result of the settlement, the Company ~~expects to receive approximately $200~~received $219 in the second quarter of 2022. Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX. Among these is an ongoing investigation by the Securities and Exchange Commission, the outcome of which may be material. 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.

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.

Note 17 – Segment and Revenue Information

Our primary profitability measurements to review a segment’s operating results are Earnings/(loss) from operations and operating margins. We operate in 4 reportable segments: BCA, BDS, BGS, and BCC. All other activities fall within Unallocated items, eliminations and other. See page 67 for the Summary of Business Segment Data, which is an integral part of this note.

~~Table of~~ ~~Contents~~

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.

Table of Contents

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 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.

BCC facilitates, arranges, structures and provides selective financing solutions for our customers.

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.

BCA revenues by customer location consist of the following:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31			(Dollars in millions)	Six months ended June 30						Three months ended June 30
			2022				2021			2022		2021		2022		2021
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Europe	Europe		$1,025				$873		Europe	$2,233		$1,553		$1,208		$680

Latin America and Caribbean	Latin America and Caribbean		828				531		Latin America and Caribbean	1,136		868		308		337
Asia	Asia		728				363		Asia	2,025		1,772		1,297		1,409
Middle East	Middle East		318				129		Middle East	1,088		513		770		384
Other			181				45
Other non-U.S.									Other non-U.S.	568		131		387		86
Total non-U.S. revenues	Total non-U.S. revenues		3,080				1,941		Total non-U.S. revenues	7,050		4,837		3,970		2,896
United States	United States		1,102				2,353		United States	3,314		5,418		2,212		3,065
Estimated potential concessions and other considerations to 737 MAX customers, net	Estimated potential concessions and other considerations to 737 MAX customers, net		(34)				(30)		Estimated potential concessions and other considerations to 737 MAX customers, net	(17)		8		17		38
Total revenues from contracts with customers	Total revenues from contracts with customers		4,148				4,264		Total revenues from contracts with customers	10,347		10,263		6,199		5,999
Intersegment revenues eliminated on consolidation	Intersegment revenues eliminated on consolidation		13				5		Intersegment revenues eliminated on consolidation	33		21		20		16
Total segment revenues	Total segment revenues		$4,161				$4,269		Total segment revenues	$10,380		$10,284		$6,219		$6,015

Revenue recognized on fixed-price contracts	Revenue recognized on fixed-price contracts		100	%			100	%	Revenue recognized on fixed-price contracts	100	%	100	%	100	%	100	%

Revenue recognized at a point in time	Revenue recognized at a point in time		100	%			100	%	Revenue recognized at a point in time	100	%	100	%	100	%	100	%

2528

Table of Contents

BDS revenues on contracts with customers, based on the customer's location, consist of the following:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31			(Dollars in millions)	Six months ended June 30						Three months ended June 30
			2022				2021			2022		2021		2022		2021
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
U.S. customers	U.S. customers		$4,148				$5,520		U.S. customers	$8,782		$10,631		$4,634		$5,111
Non U.S. customers(1)			1,335				1,665
Non-U.S. customers(1)									Non-U.S. customers(1)	2,892		3,430		1,557		1,765
Total segment revenue from contracts with customers	Total segment revenue from contracts with customers		$5,483				$7,185		Total segment revenue from contracts with customers	$11,674		$14,061		$6,191		$6,876

Revenue recognized over time	Revenue recognized over time		99	%			99	%	Revenue recognized over time	99	%	99	%	99	%	99	%

Revenue recognized on fixed-price contracts	Revenue recognized on fixed-price contracts		63	%			70	%	Revenue recognized on fixed-price contracts	62	%	69	%	61	%	68	%

Revenue from the U.S. government(1)	Revenue from the U.S. government(1)		89	%			90	%	Revenue from the U.S. government(1)	89	%	89	%	89	%	89	%

(1)Includes revenues earned from foreign military sales through the U.S. government.

BGS revenues consist of the following:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31			(Dollars in millions)	Six months ended June 30						Three months ended June 30
			2022				2021			2022		2021		2022		2021
Revenue from contracts with customers:	Revenue from contracts with customers:								Revenue from contracts with customers:
Commercial	Commercial		$2,276				$1,625		Commercial	$4,637		$3,431		$2,361		$1,806
Government	Government		1,968				2,070		Government	3,810		4,272		1,842		2,202
Total revenues from contracts with customers	Total revenues from contracts with customers		4,244				3,695		Total revenues from contracts with customers	8,447		7,703		4,203		4,008
Intersegment revenues eliminated on consolidation	Intersegment revenues eliminated on consolidation		70				54		Intersegment revenues eliminated on consolidation	165		113		95		59
Total segment revenues	Total segment revenues		$4,314				$3,749		Total segment revenues	$8,612		$7,816		$4,298		$4,067

Revenue recognized at a point in time	Revenue recognized at a point in time		49	%			43	%	Revenue recognized at a point in time	49	%	44	%	49	%	45	%

Revenue recognized on fixed-price contracts	Revenue recognized on fixed-price contracts		88	%			87	%	Revenue recognized on fixed-price contracts	88	%	87	%	88	%	86	%

Revenue from the U.S. government(1)	Revenue from the U.S. government(1)		35	%			43	%	Revenue from the U.S. government(1)	34	%	42	%	33	%	41	%

(1)Includes revenues earned from foreign military sales through the U.S. government.

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, primarily based on the cost incurred or at delivery and acceptance of products, depending on the applicable revenue recognition model.

Our backlog at ~~March 31,~~June 30, 2022 was ~~$370,835.~~$371,730. We expect approximately ~~34%~~29% to be converted to revenue through 2023 and approximately ~~86%~~81% through 2026, with the remainder thereafter. There is significant uncertainty regarding the timing of when backlog will convert into revenue due to 787 production issues and associated rework, timing of 737 MAX delivery resumption in China, timing of entry into service of the 777X, 737 MAX 7 and/or 737 MAX 10, and the lingering effects of the COVID-19 ~~impacts.~~pandemic.

2629

Table of Contents

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~~sold to our BCC segment that are leased by BCC to customers under operating leases and considered transferred to the BCC segment. We generally allocate costs to business segments based on the U.S. federal cost accounting standards (CAS). Components of Unallocated items, eliminations and other (expense)/income are shown in the following table.


		Three months ended March 31		Six months ended June 30				Three months ended June 30
			2022		2021		2022	2021	2022	2021
Share-based plans	Share-based plans		($83)		($128)	Share-based plans	($108)	($142)	($25)	($14)
Deferred compensation	Deferred compensation		42		(52)	Deferred compensation	166	(94)	124	(42)
Amortization of previously capitalized interest	Amortization of previously capitalized interest		(23)		(22)	Amortization of previously capitalized interest	(47)	(44)	(24)	(22)
Research and development expense, net	Research and development expense, net		(52)		(42)	Research and development expense, net	(118)	(85)	(66)	(43)

Eliminations and other unallocated items	Eliminations and other unallocated items		(144)		(120)	Eliminations and other unallocated items	(247)	(297)	(103)	(177)
Unallocated items, eliminations and other	Unallocated items, eliminations and other		($260)		($364)	Unallocated items, eliminations and other	($354)	($662)	($94)	($298)

Pension FAS/CAS service cost adjustment	Pension FAS/CAS service cost adjustment		$208		$193	Pension FAS/CAS service cost adjustment	$413	$384	$205	$191
Postretirement FAS/CAS service cost adjustment	Postretirement FAS/CAS service cost adjustment		75		77	Postretirement FAS/CAS service cost adjustment	154	154	79	77
FAS/CAS service cost adjustment	FAS/CAS service cost adjustment		$283		$270	FAS/CAS service cost adjustment	$567	$538	$284	$268

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 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.

Assets

Segment assets are summarized in the table below:


		March 31 2022	December 31 2021		June 30 2022	December 31 2021
Commercial Airplanes	Commercial Airplanes	$76,784	$75,863	Commercial Airplanes	$76,860	$75,863
Defense, Space & Security	Defense, Space & Security	14,952	14,974	Defense, Space & Security	15,491	14,974
Global Services	Global Services	16,238	16,397	Global Services	16,347	16,397
Boeing Capital	Boeing Capital	1,656	1,735	Boeing Capital	1,628	1,735
Unallocated items, eliminations and other	Unallocated items, eliminations and other	26,171	29,583	Unallocated items, eliminations and other	25,153	29,583
Total	Total	$135,801	$138,552	Total	$135,479	$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 4 principal business segments and intercompany eliminations.

2730

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

The Boeing Company

~~Chicago, Illinois~~Arlington, Virginia

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of ~~March 31,~~June 30, 2022, the related condensed consolidated statements of operations, comprehensive income, and equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the ~~three-month~~six-month periods ended ~~March 31,~~June 30, 2022 and 2021, and the related notes (collectively referred to as the "condensed consolidated interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB"), the consolidated statement of financial position of the Company as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated January 31, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

Basis for Review Results

This condensed consolidated interim financial information is the responsibility of the Company's management. 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 reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

Chicago, Illinois

~~April~~July 27, 2022

2831

Table of Contents


FORWARD-LOOKING STATEMENTS
This report contains “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.

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 could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to:

(1)			the COVID-19 pandemic and related industry impacts, including with respect to our operations and access to suppliers, our liquidity, the health of our customers and suppliers, and future demand for our products and services;

(2)			the 737 MAX, including the timing and conditions of remaining 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, and additional considerations to customers and suppliers;

(3)			general conditions in the economy and our industry, including those due to regulatory changes;

(4)			our reliance on our commercial airline customers;

(5)			the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards;

(6)			changing budget and appropriation levels and acquisition priorities of the U.S. government;

(7)			our dependence on U.S. government contracts;

(8)			our reliance on fixed-price contracts;

(9)			our reliance on cost-type contracts;

(10)			uncertainties concerning contracts that include in-orbit incentive payments;

(11)			our dependence on our subcontractors and suppliers as well as the availability of raw materials;

(12)			changes in accounting estimates;

(13)			changes in the competitive landscape in our markets;

(14)			our non-U.S. operations, including sales to non-U.S. customers;

(15)			threats to the security of our, our customers' and/or our suppliers' information;

(16)			potential adverse developments in new or pending litigation and/or government investigations;

(17)			customer and aircraft concentration in our customer financing portfolio;

2932

Table of Contents


(18)			changes in our ability to obtain debt financing on commercially reasonable terms and at competitive rates;

(19)			realizing the anticipated benefits of mergers, acquisitions, joint ventures, strategic alliances or divestitures;

(20)			the adequacy of our insurance coverage to cover significant risk exposures;

(21)			potential business disruptions, including those related to physical security threats, information technology or cyber attacks, epidemics, sanctions or natural disasters;

(22)			work stoppages or other labor disruptions;

(23)			substantial pension and other postretirement benefit obligations;

(24)			potential environmental liabilities; and

(25)			effects of climate change and legal, regulatory or market responses to such change.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking information 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.

3033

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations and Financial Condition

Overview

The lingering effects of the COVID-19 pandemic, 787 production issues and associated rework, and the residual impacts 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. 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 commercial aerospace manufacturing and services sector. The latest International Air Transport Association (IATA) release reported that passenger traffic in 2021 recovered to approximately 40% of 2019 levels, as international markets saw continued reopening challenges. Travel restrictions and global economic activity were improving at the end of 2021, but improvements were delayed by the global outbreak of the Omicron variants. Governments continue to change travel policy and restrictions due to the virus as well as the war in Ukraine, with global sanctions and economic effects raising energy and other costs. We continue to expect that the recovery will remain uneven as travel restrictions and varying regional travel protocols continue to ease and lessen their impact on air travel.

~~Generally, we continue to~~We expect domestic travel to continue to recover faster than international ~~travel. As a result,~~travel, and we expect the narrow-body market to continue to recover faster than the wide-body market. ~~Also, the~~The pace of the commercial market recovery ~~will be~~is heavily dependent on COVID-19 infection ~~rates, vaccination~~ rates and resultant government restrictions. We are seeing a strong recovery in travel demand for our airline customers in North and South America, the Middle East, and Europe. Demand for dedicated freighters continues to be strong, underpinned by a strong recovery in global trade and overall air cargo growth. ~~Overall cargo capacity remains challenged given~~

In addition, we and our suppliers are experiencing supply chain disruptions as a result of the ~~large impact that~~impacts of COVID-19, ~~has had on international passenger~~global supply chain constraints, and labor shortages. 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 measures and disruptions have reduced overall productivity and adversely impacted our financial position, results of operations ~~which also carry cargo.~~and cash flows.

Airline financial performance, which influences demand for new capacity, has been adversely impacted by the COVID-19 pandemic. According to ~~IATA,~~the International Air Transport Association (IATA), net losses for the airline industry were $138 billion in 2020 and are ~~expected~~estimated to be ~~approximately $52~~$42 billion in 2021. IATA also forecasts ~~$11.5~~$9.7 billion of losses for the industry globally in 2022, with approximately ~~$10~~$8.8 billion of profits in North America driven by the robust domestic market being more than offset by losses in other regions. Our customers are taking actions 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 payments to suppliers, deferrals of deliveries, reduced spending on services and, in some cases, cancellation of orders. While the outlook continues to improve, we continue to face a challenging environment in the near- to medium-term as airlines ~~have adjusted to reduced traffic, which in turn has resulted in lower demand for commercial aerospace products~~are 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 continue to expect commercial air travel to return to 2019 levels in 2023 to 2024. We expect it will take a few years beyond that for the industry to return to balanced market conditions. As we managed through the effects of the COVID-19 pandemic, we reduced the production rates of several of our Commercial Airplanes (BCA) programs. These rate decisions continue to be based on our ongoing assessments of the demand environment and availability of aircraft financing. There is uncertainty with respect to when commercial air traffic capacity will return to and/or exceed pre-COVID-19 levels. We closely monitor the key factors that affect backlog and future demand for each of our commercial aircraft programs, including customers’ evolving fleet plans, the wide-body replacement cycle and the cargo market. We have implemented appropriate production rate adjustments in response to these factors, but risk remains that we will decide to implement further rate reductions in future quarters. Additionally, if we are unable to make timely deliveries of the large number of aircraft in inventory as of March 31, 2022, future revenues, earnings and cash flows will be adversely impacted.

~~Table of~~ ~~Contents~~

During the first quarter of 2022, we made adjustments to our estimates regarding timing of 777X-9 entry into service. We now anticipate that the first 777X-9 delivery will be delayed until 2025, based on an updated assessment of the time required to meet certification requirements. During the first quarter of 2022, we launched the 777X-8 freighter, and we expect first delivery to be in 2027.

The 737 MAX 7 and MAX 10 models are also currently going through Federal Aviation Administration (FAA) certification activities. The 737 MAX 7 ~~completed FAA certification flight testing in 2021 and~~ is expected to be certified in 2022 and enter service ~~later~~ in ~~2022.~~2023. The 737 MAX 10 is expected to begin FAA certification flight testing later in 2022 and enter service in 2023. Section 116 of the December 2020 Aircraft Certification, Safety and Accountability Act (ACSAA) prohibits the FAA from issuing a type certificate to aircraft after December 27, 2022 unless the aircraft’s flight crew alerting system meets certain requirements. ~~As a result, if the MAX 7 and MAX 10 aircraft are not certified before December 27, 2022 we may encounter further certification delays.~~ We are working closely with the FAA on implementation of ACSAA legislation and expect any necessary actions to be defined later this year. If we are unable to achieve certification and/or entry into service consistent with our current assumptions, future revenues, earnings and cash flows will be adversely impacted.

Deliveries of the 737 MAX resumed in the fourth quarter of 2020, when the FAA rescinded the order that grounded 737 MAX aircraft in the U.S. Over ~~185~~190 countries have approved the resumption of 737 MAX operations. The 737 MAX has yet to return to service in China and a small number of other countries. The Civil Aviation Administration of China issued an airworthiness directive in the fourth quarter of 2021 outlining actions required for airlines to return to service. ~~The 737 MAX has yet to return to service in China.~~ While we expect 737 MAX deliveries to our customers in China to resume in 2022, subject to final regulatory approvals, risk remains around the timing and rate of those deliveries. ~~Orders to suspend operations~~

Table of ~~737 MAX aircraft from non-U.S. civil aviation authorities are still in effect in a small number of countries.~~Contents

Deliveries and production have also been impacted by production issues and associated rework. For example, deliveries of the 787 are currently paused and the production rate has been reduced while we focus on rework of undelivered aircraft and continue to engage in detailed discussions with the FAA regarding required actions for resuming deliveries. Risk remains that these issues may continue to impact the timing of airplane deliveries in inventory and/or our ability to achieve planned production rates. Revenues, earnings and cash flows will continue to be impacted until we are able to resume timely deliveries.

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 our~~Our Commercial Market Outlook forecast projects a 4%3.8% growth rate for passenger and cargo traffic over a 20 year period. Based on long-term global economic growth projections of ~~2.7%~~2.6% average annual gross domestic product (GDP) growth, we project demand for approximately ~~43,610~~41,170 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.

AtWhile commercial services volume at Global Services (BGS)~~, while~~ is recovering, it remains below pre-pandemic levels. We expect the ~~outlook is improving, we are continuing~~impacts of the COVID-19 pandemic to ~~see a direct~~continue to have an adverse impact on ~~our~~BGS commercial ~~supply chain business as fewer flights and more aircraft parked result~~revenues 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 forfuture quarters until the commercial ~~services business.~~airline industry fully recovers. The demand outlook for our government services business remains ~~stable; government services comprises approximately half of BGS revenue, which is unchanged from pre-pandemic levels.~~stable.

At Defense, Space & Security (BDS), we continue to see stable 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 as governments prioritize security, defense technology and global cooperation given evolving threats. ~~However, we~~We continue to experience near-term production disruptions and inefficiencies due to COVID-19 ~~impacts.~~impacts, supplier disruption and factory performance.

~~Table~~On July 24, 2022, employees represented by the International Association of ~~Contents~~

Machinists and Aerospace Workers (IAM) District 837 voted to reject Boeing’s compensation and benefits offer. The Collective Bargaining agreement expired on July 25, 2022. The IAM District 837, which represents approximately 2,500 of Boeing’s employees, announced that the employees plan to go on strike effective August 1, 2022. While we currently do not expect a material impact to our business, a prolonged strike could disrupt our St. Louis based operations and adversely impact revenues, earnings and cash flows.

As a result of the war in Ukraine, we recorded earnings charges totaling $212 million during the first quarter of 2022, primarily related to asset impairments. We have ~~temporarily~~ closed our facilities in Ukraine and ~~Russia and~~Russia. We are focused on ~~supporting~~the safety of our employees ~~in those~~and retaining the strength of our engineering talent through voluntary transfers to other 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 supply chain are possible. The war in Ukraine ~~is also impacting~~continues to impact our airline and lessor customers. We ~~are closely monitoring~~continue to monitor developments and potential Boeing impacts, and ~~will continue to~~ take mitigating actions as appropriate.

~~In addition, we and our suppliers are experiencing supply chain disruptions as a result~~

Table of the impacts of COVID-19, global supply chain constraints, and labor shortages. 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 measures and disruptions have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.Contents

We continue to transform and improve our business processes. 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.

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)	Three months ended March 31				(Dollars in millions, except per share data)	Six months ended June 30				Three months ended June 30
		2022		2021					2022		2021		2022		2021
Revenues	Revenues	$13,991		$15,217				Revenues	$30,672		$32,215		$16,681		$16,998

GAAP	GAAP							GAAP
Loss from operations		($1,169)		($83)
(Loss)/earnings from operations								(Loss)/earnings from operations	($395)		$940		$774		$1,023
Operating margins	Operating margins	(8.4)	%	(0.5)	%			Operating margins	(1.3)	%	2.9	%	4.6	%	6.0	%
Effective income tax rate	Effective income tax rate	23.2	%	1.9	%			Effective income tax rate	12.8	%	126.1	%	57.6	%	(3.3)	%

Net loss attributable to Boeing Shareholders		($1,219)		($537)
Diluted loss per share		($2.06)		($0.92)
Net (loss)/earnings attributable to Boeing Shareholders								Net (loss)/earnings attributable to Boeing Shareholders	($1,026)		$50		$193		$587
Diluted (loss)/earnings per share								Diluted (loss)/earnings per share	($1.73)		$0.09		$0.32		$1.00

Non-GAAP (1)	Non-GAAP (1)							Non-GAAP (1)
Core operating loss		($1,452)		($353)
Core operating (loss)/earnings								Core operating (loss)/earnings	($962)		$402		$490		$755
Core operating margins	Core operating margins	(10.4)	%	(2.3)	%			Core operating margins	(3.1)	%	1.2	%	2.9	%	4.4	%
Core loss per share		($2.75)		($1.53)
Core (loss)/earnings per share								Core (loss)/earnings per share	($3.11)		($1.12)		($0.37)		$0.40

(1)These measures exclude certain components of pension and other postretirement benefit expense. See pages ~~48-49~~51-53 for important information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.

~~Table of~~ ~~Contents~~

Revenues

The following table summarizes Revenues:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30			Three months ended June 30
		2022	2021				2022	2021	2022	2021
Commercial Airplanes	Commercial Airplanes	$4,161	$4,269			Commercial Airplanes	$10,380	$10,284	$6,219	$6,015
Defense, Space & Security	Defense, Space & Security	5,483	7,185			Defense, Space & Security	11,674	14,061	6,191	6,876
Global Services	Global Services	4,314	3,749			Global Services	8,612	7,816	4,298	4,067
Boeing Capital	Boeing Capital	46	60			Boeing Capital	98	138	52	78
Unallocated items, eliminations and other	Unallocated items, eliminations and other	(13)	(46)			Unallocated items, eliminations and other	(92)	(84)	(79)	(38)
Total	Total	$13,991	$15,217			Total	$30,672	$32,215	$16,681	$16,998

Revenues for the ~~three~~six months ended ~~March 31,~~June 30, 2022 decreased by ~~$1,226~~$1,543 million compared with the same period in 2021 driven by lower revenues at ~~BCA and~~ BDS, partially offset by higher revenues at ~~BGS. BCA revenues decreased by $108 million primarily driven by lower wide-body deliveries, partially offset by higher 737 MAX deliveries.~~BGS and Commercial Airplanes (BCA). BDS revenues decreased by ~~$1,702~~$2,387 million primarily due to ~~net unfavorable effects of cumulative contract catch-up adjustments,~~ lower revenue on the KC-46A Tanker program ~~resulting~~ from new orders for 27 aircraft received during the first quarter of 2021, ~~and~~ lower P-8 volume ~~resulting from~~as production was reduced ~~production rates.~~to one per month, and timing of material receipts. BDS revenues for the six months ended June 30, 2022 also decreased due to charges on development programs discussed below, unfavorable performance across other programs, and the absence of revenue recorded in the second quarter of 2021 related to a favorable adjustment on a non-U.S. contract. BGS revenues increased by ~~$565~~$796 million primarily due to higher commercial services volume, partially offset by lower government services volume. ~~While~~BCA revenues increased by $96 million primarily driven by higher 737 MAX deliveries, partially offset by lower 787 deliveries.

Revenues for the three months ended June 30, 2022 decreased by $317 million compared with the same period in 2021 driven by lower revenues at BDS, partially offset by higher revenues at BGS and BCA. BDS revenues decreased by $685 million due to charges on development programs discussed below,

Table of Contents

unfavorable performance across other programs, lower P-8 volume, and the absence of revenue recorded in the prior year quarter related to a favorable adjustment on a non-U.S. contract. BGS revenues increased by $231 million due to higher commercial services volume, ~~is recovering, it remains below pre-pandemic levels.~~partially offset by lower government services volume. BCA revenues increased by $204 million driven by higher 737 MAX deliveries, partially offset by lower 787 deliveries.

Revenues will continue to be significantly impacted until the global supply chain stabilizes, labor shortages diminish, deliveries ramp up, and the commercial ~~airlines recover~~airline industry recovers from the lingering impacts of ~~COVID-19.~~the COVID-19 pandemic.

~~Loss~~Loss/Earnings From Operations

The following table summarizes ~~Loss~~(Loss)/earnings from operations:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30			Three months ended June 30
		2022	2021				2022	2021	2022	2021
Commercial Airplanes	Commercial Airplanes	($859)	($856)			Commercial Airplanes	($1,101)	($1,328)	($242)	($472)
Defense, Space & Security	Defense, Space & Security	(929)	405			Defense, Space & Security	(858)	1,363	71	958
Global Services	Global Services	632	441			Global Services	1,360	972	728	531
Boeing Capital	Boeing Capital	(36)	21			Boeing Capital	(9)	57	27	36
Segment operating (loss)/earnings	Segment operating (loss)/earnings	(1,192)	11			Segment operating (loss)/earnings	(608)	1,064	584	1,053
Pension FAS/CAS service cost adjustment	Pension FAS/CAS service cost adjustment	208	193			Pension FAS/CAS service cost adjustment	413	384	205	191
Postretirement FAS/CAS service cost adjustment	Postretirement FAS/CAS service cost adjustment	75	77			Postretirement FAS/CAS service cost adjustment	154	154	79	77
Unallocated items, eliminations and other	Unallocated items, eliminations and other	(260)	(364)			Unallocated items, eliminations and other	(354)	(662)	(94)	(298)
Loss from operations (GAAP)		($1,169)	($83)
(Loss)/earnings from operations (GAAP)						(Loss)/earnings from operations (GAAP)	($395)	$940	$774	$1,023
FAS/CAS service cost adjustment *	FAS/CAS service cost adjustment *	(283)	(270)			FAS/CAS service cost adjustment *	(567)	(538)	(284)	(268)
Core operating loss (Non-GAAP) **		($1,452)	($353)
Core operating (loss)/earnings (Non-GAAP) **						Core operating (loss)/earnings (Non-GAAP) **	($962)	$402	$490	$755

* 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 earnings/(loss) is a Non-GAAP measure that excludes the FAS/CAS service cost adjustment. See pages ~~48-49.~~51-53.

Loss from operations for the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~increased by $1,086~~was $395 million compared with earnings of $940 million during the same period in 2021. BDS had a loss from operations ~~for the three months ended March 31, 2022 was $929~~of $858 million, compared with earnings ~~from operations~~ of ~~$405~~$1,363 million during the same period in 2021,

~~Table of~~ ~~Contents~~

primarily due to charges on the VC-25B, T-7A Red Hawk, KC-46A Tanker, and MQ-25 programs totaling $1,270 million recorded in the first quarter of ~~2022.~~2022 as well as the year over year decrease in second quarter earnings of $887 million discussed below. BGS earnings from operations increased by ~~$191~~$388 million primarily due to higher commercial services volume and favorable mix. BCA loss from operations decreased by $227 million primarily due to higher 737 MAX 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.

Earnings from operations for the three months ended June 30, 2022 decreased by $249 million compared with the same period in 2021. BDS earnings from operations decreased by $887 million. The year over year decrease reflects a number of factors including charges in the second quarter of 2022 on MQ-25 ($147 million), Commercial Crew ($93 million), T-7A Red Hawk Production Options ($51 million), and T-7A Red Hawk Engineering, Manufacturing, and Development (EMD) ($36 million). Other programs recorded lower earnings during the second quarter of 2022 due to lower volumes, supplier disruption and factory performance. BCA loss from operations decreased by $230 million due to higher 737 MAX deliveries and lower abnormal production costs, partially offset by higher research and development spending and other period expenses.BGS earnings from operations increased by $197 million due to higher commercial services volume and favorable mix.

Table of Contents

Core operating losses for the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~increased by $1,099~~were $962 million compared towith core operating earnings of $402 million for the same period in ~~2021,~~2021. Core operating earnings for the three months ended June 30, 2022 decreased by $265 million compared with the same period in 2021. The changes in core operating (loss)/earnings were primarily due to changes in Segment operating (loss)/earnings as described above.

For discussion related to Postretirement Plans, see Note 11 to our Condensed Consolidated Financial Statements.

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)	Three months ended March 31		(Dollars in millions)	Six months ended June 30			Three months ended June 30
		2022	2021				2022	2021	2022	2021
Share-based plans	Share-based plans	($83)	($128)			Share-based plans	($108)	($142)	($25)	($14)
Deferred compensation	Deferred compensation	42	(52)			Deferred compensation	166	(94)	124	(42)
Amortization of previously capitalized interest	Amortization of previously capitalized interest	(23)	(22)			Amortization of previously capitalized interest	(47)	(44)	(24)	(22)
Research and development expense, net	Research and development expense, net	(52)	(42)			Research and development expense, net	(118)	(85)	(66)	(43)

Eliminations and other unallocated items	Eliminations and other unallocated items	(144)	(120)			Eliminations and other unallocated items	(247)	(297)	(103)	(177)
Unallocated items, eliminations and other	Unallocated items, eliminations and other	($260)	($364)			Unallocated items, eliminations and other	($354)	($662)	($94)	($298)

Share-based plans expense for the ~~three~~six months ended ~~March 31,~~June 30, 2022 decreased by ~~$45~~$34 million compared with the same period in 2021 due to expenses incurred in 2021 associated with a grant of restricted stock units to most employees in December 2020. Share-based plans expense for the three months ended June 30, 2022 was consistent with the same period in 2021.

Deferred compensation income was ~~$42~~$166 million and $124 million for the six and three months ended ~~March 31,~~June 30, 2022 compared with expense of ~~$52~~$94 million and $42 million in the same ~~period~~periods in 2021 primarily driven by broad market conditions and changes in our stock price.

Unallocated research and development expense for the six and three months ended ~~March 31,~~June 30, 2022 ~~was largely consistent~~increased by $33 million and $23 million compared with the same ~~period~~periods in ~~2021.~~2021 due to higher enterprise investments in product development.

Other Earnings Items

(Dollars in millions) Three months ended March 31
2022 2021
Loss from operations ($1,169) ($83)
Other income, net 181 190
Interest and debt expense (630) (679)
Loss before income taxes (1,618) (572)
Income tax benefit 376 11
Net loss from continuing operations (1,242) (561)
Less: Net loss attributable to noncontrolling interest (23) (24)
Net loss attributable to Boeing Shareholders ($1,219) ($537)


(Dollars in millions)	Six months ended June 30		Three months ended June 30
	2022	2021	2022	2021
(Loss)/earnings from operations	($395)	$940	$774	$1,023
Other income, net	434	389	253	199
Interest and debt expense	(1,280)	(1,352)	(650)	(673)
(Loss)/earnings before income taxes	(1,241)	(23)	377	549
Income tax benefit/(expense)	159	29	(217)	18
Net (loss)/earnings from continuing operations	(1,082)	6	160	567
Less: Net loss attributable to noncontrolling interest	(56)	(44)	(33)	(20)
Net (loss)/earnings attributable to Boeing Shareholders	($1,026)	$50	$193	$587

3538

Table of Contents

For the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, non-operating pension income included in Other income, net was ~~$220~~$441 million and ~~$177~~$352 million. ~~Non-operating pension~~The increased income ~~increased $43 million during the three months ended March 31, 2022 compared with the same period in 2021~~was primarily due to lower amortization of net actuarial losses, partially offset by higher interest cost and lower expected return on plan assets. Non-operating postretirement income was ~~$15~~$29 million and $10 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~compared with $5 million of expense during the same period in~~and 2021.

Other income, net also included losses of $50 million during the ~~three~~six months ended ~~March 31,~~June 30, 2022 reclassified in the first quarter of 2022 from Accumulated other comprehensive loss (AOCI) associated with certain cash flow hedges because it is probable the forecasted transactions will not occur.

For the three months ended June 30, 2022 and 2021, non-operating pension income included in Other income, net was $221 million and $175 million. The increased income was primarily due to lower amortization of net actuarial losses, partially offset by higher interest cost and lower expected return on plan assets. Non-operating postretirement income was $14 million and $5 million during the three months ended June 30, 2022 and 2021.

Interest and debt expense for the six and three months ended ~~March 31,~~June 30, 2022 was lower compared with the same period in the prior year primarily as a result of lower debt balances.

For discussion related to Income Taxes, see Note 3 to our Condensed 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 airplane 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. Costs on these contracts are recorded as incurred. Cost of sales for commercial spare parts is recorded at average cost.

The following table summarizes cost of sales:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31						(Dollars in millions)	Six months ended June 30				Three months ended June 30
		2022		2021		Change					2022			2021		Change		2022		2021		Change
Cost of sales	Cost of sales	$13,645		$13,808		($163)				Cost of sales	$28,204			$28,396		($192)		$14,559		$14,588		($29)
Cost of sales as a % of Revenues	Cost of sales as a % of Revenues	97.5	%	90.7	%	6.8	%			Cost of sales as a % of Revenues	92.0	%		88.1	%	3.9	%	87.3	%	85.8	%	1.5	%

Cost of sales for the ~~three~~six months ended ~~March 31,~~June 30, 2022 decreased by ~~$163~~$192 million, or 1% compared with the same period in 2021, primarily due to lower revenues at ~~BCA and~~ BDS in 2022, partially offset by charges recorded at BDS ~~in 2022 and higher revenues at BGS~~ in 2022. Cost of sales as a percentage of Revenues increased during the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared with the same period in 2021 primarily due to higher charges recorded at BDS in 2022 than in 2021.

Cost of sales for the three months ended June 30, 2022 was consistent with the same period in 2021. Cost of sales as a percentage of Revenues increased during the three months ended June 30, 2022 compared with the same period in 2021 primarily due to higher charges recorded at BDS in 2022 than in 2021, partially offset by lower abnormal production costs at BCA.

Table of Contents

Research and Development

Research and development expense, net is summarized in the following table:


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30			Three months ended June 30
		2022	2021				2022	2021	2022	2021
Commercial Airplanes	Commercial Airplanes	$321	$269			Commercial Airplanes	$693	$524	$372	$255
Defense, Space & Security	Defense, Space & Security	233	163			Defense, Space & Security	466	337	233	174
Global Services	Global Services	27	25			Global Services	54	50	27	25
Other	Other	52	42			Other	118	85	66	43
Total	Total	$633	$499			Total	$1,331	$996	$698	$497

Research and development expense increased by ~~$134~~$335 million and $201 million during the six and three months ended ~~March 31,~~June 30, 2022 compared to the same ~~period~~periods in 2021. The increase at BCA is due to higher spending on ~~product development.~~the 777X Freighter. The increase at BDS reflects higher ~~bid~~research and ~~proposal costs and timing of~~ product development expenditures.

Backlog


(Dollars in millions)	(Dollars in millions)	March 31 2022	December 31 2021	(Dollars in millions)	June 30 2022	December 31 2021
Commercial Airplanes	Commercial Airplanes	$290,930	$296,882	Commercial Airplanes	$297,044	$296,882
Defense, Space & Security	Defense, Space & Security	59,739	59,828	Defense, Space & Security	55,401	59,828
Global Services	Global Services	19,822	20,496	Global Services	18,960	20,496
Unallocated items, eliminations and other	Unallocated items, eliminations and other	344	293	Unallocated items, eliminations and other	325	293
Total Backlog	Total Backlog	$370,835	$377,499	Total Backlog	$371,730	$377,499

Contractual backlog	Contractual backlog	$348,414	$356,362	Contractual backlog	$351,242	$356,362
Unobligated backlog	Unobligated backlog	22,421	21,137	Unobligated backlog	20,488	21,137
Total Backlog	Total Backlog	$370,835	$377,499	Total Backlog	$371,730	$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 decrease in contractual backlog at BDS and BGS during the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~primarily due to changes in orders that in our assessment do not meet the accounting requirements of Accounting Standards Codification (ASC) 606 for inclusion in backlog and cancellations,~~ partially offset by ~~reclassifications from unobligated~~an increase in contractual backlog ~~and orders in excess of deliveries. During 2022, we have had higher ASC 606 adjustments of 737 MAX and 777X aircraft partially offset by 787 aircraft.~~at BCA. If 787 aircraft deliveries continue to be paused, we remain unable to deliver 737 MAX aircraft in China for an extended period of time, and/or entry into service of the 777X, 737 MAX 7 and/or 737 MAX 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 ~~increase~~decrease in unobligated backlog during the ~~three~~six months ended ~~March 31,~~June 30, 2022 was primarily due to ~~contract awards, partially offset by~~ reclassifications to contractual backlog related to BDS and BGS ~~contracts.~~contracts, partially offset by contract awards.

~~Table of~~ ~~Contents~~

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.

The global economy continues to experience 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 deal 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.

~~The~~ current state of U.S.-China relations remains ~~a significant~~an ongoing watch item. China is a ~~very~~ significant market for commercial ~~airplanes and represents~~airplanes. Boeing has long-standing relationships with our Chinese customers, who represent a ~~significant~~key component of our commercial airplanes backlog. Since 2018, the U.S. and China have imposed ~~an escalating series~~

Table of Contents

tariffs on each other’s imports. Certain aircraft parts and components that Boeing procures are subject to these tariffs. ~~The U.S.~~Overall, the U.S.-China trade relationship remains stalled as economic and ~~China entered into~~national security concerns continue to be a Phase I agreement in January 2020. However, as of the December 31, 2021 deadline, implementation of this agreement is incomplete and overall diplomatic relations between the U.S. and China have deteriorated. challenge. We continue monitoring developments for ~~potential~~any adverse impacts to the Company.

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. Government, Mexico and Canada reached an agreement to end the steel and aluminum tariffs between these countries. Implementation of the U.S./Mexico/Canada Free Trade Agreement (USMCA) will also result in lower tariffs. The U.S. Government has also reached agreements to ease steel and/or aluminum tariffs with the United Kingdom, the European Union (EU) and Japan. We continue to monitor the potential for any extra costs that may result from the remaining global tariffs.

We are complying with all U.S. and other government export control restrictions and sanctions imposed on certain businesses and individuals in Russia. We continue to monitor and evaluate additional sanctions and export restrictions that may be imposed by the U.S. Government or other governments, as well as any responses from Russia that could affect our supply chain, business partners or customers, for any additional impacts to our business.

Segment Results of Operations and Financial Condition

Commercial Airplanes

Business Environment and Trends

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.

~~Table of~~ ~~Contents~~

Results of Operations


(Dollars in millions)	(Dollars in millions)	Three months ended March 31				(Dollars in millions)	Six months ended June 30				Three months ended June 30
		2022		2021					2022		2021		2022		2021
Revenues	Revenues	$4,161		$4,269				Revenues	$10,380		$10,284		$6,219		$6,015
Loss from operations	Loss from operations	($859)		($856)				Loss from operations	($1,101)		($1,328)		($242)		($472)
Operating margins	Operating margins	(20.6)	%	(20.1)	%			Operating margins	(10.6)	%	(12.9)	%	(3.9)	%	(7.8)	%

Revenues

BCA revenues ~~decreased~~increased by ~~$108~~$96 million and $204 million for the six and three months ended ~~March 31,~~June 30, 2022 compared with the same ~~period~~periods in 2021 primarily due to ~~lower wide-body~~higher 737 MAX deliveries partially offset by ~~higher 737 MAX~~lower 787 deliveries.

We resumed deliveries of 737 MAX aircraft in December 2020 following rescission by the FAA of its grounding order. While most non-U.S. jurisdictions have approved return to service of the 737 MAX, the 737 MAX has yet to return to service in China and deliveries have not yet resumed. Labor shortages and supplier issues contributed to lower ~~first quarter 2022 deliveries.~~deliveries of both stored and produced aircraft during the six months ended June 30, 2022. 787 deliveries have been paused since May 2021. Revenues will continue to be impacted until deliveries of the 737 MAX further ramp up, deliveries of the 787 resume and the commercial airline industry recovers from the lingering effects of impacts of COVID-19.

Table of Contents

Commercial airplane deliveries, including intercompany deliveries, were as follows:

737 * 747 767 * 777 787 Total
Deliveries during the first three months of 2022 86 (5) 1 5 (3) 3 0 95
Deliveries during the first three months of 2021 63 (5) 1 5 (1) 6 2 77
Cumulative deliveries as of 3/31/2022 7,831 1,568 1,243 1,680 1,006
Cumulative deliveries as of 12/31/2021 7,745 1,567 1,238 1,677 1,006


	737	*	747	767	*	777	787	Total
Deliveries during the first six months of 2022	189	(8)	3	12	(7)	12		216
Deliveries during the first six months of 2021	113	(8)	2	13	(4)	14	14	156
Deliveries during the second quarter of 2022	103	(3)	2	7	(4)	9		121
Deliveries during the second quarter of 2021	50	(3)	1	8	(3)	8	12	79
Cumulative deliveries as of 6/30/2022	7,934		1,570	1,250		1,689	1,006
Cumulative deliveries as of 12/31/2021	7,745		1,567	1,238		1,677	1,006

* Intercompany deliveries identified by parentheses.

Loss From Operations

BCA loss from operations was ~~$859~~$1,101 million for ~~three~~the six months ended ~~March 31,~~June 30, 2022 compared with ~~$856~~$1,328 million in the same period in ~~2021. The 2022 loss reflects~~2021 reflecting higher 737 MAX deliveries and lower ~~wide-body deliveries~~abnormal production costs, partially offset by higher ~~737 MAX deliveries.Period expense for the three months ended March 31, 2022 included abnormal production costs totaling $500 million including $312 million related to the 787 program~~research and $188 million related to 737 MAX. Period expense for abnormal production costs for the three months ended March 31, 2021 comprised of $568 million related to 737 MAX. Period expenses in the first quarter of 2022 were also higher due todevelopment spending, charges related to the war in Ukraine and other period expenses.Abnormal production costs for the six months ended June 30, 2022 were $885 million including $595 million related to the 787 program, $188 million related to 737 MAX and $102 million related to the 777X program. Abnormal production costs for the six months ended June 30, 2021 were $1,083 million related to 737 MAX.

BCA loss from operations was $242 million for the three months ended June 30, 2022 compared with $472 million in the same period in 2021 reflecting higher 737 MAX deliveries and lower abnormal production costs, partially offset by higher research and development ~~spending.~~spending and other period expenses.

Abnormal production costs for the three months ended June 30, 2022 were $385 million, including $283 million related to the 787 program and $102 million related to the 777X program. Abnormal production costs for the three months ended June 30, 2021 were $515 million related to 737 MAX

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 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. Backlog excludes options and Boeing Capital (BCC) 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

~~Table of~~ ~~Contents~~

adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of ~~ASC~~Accounting Standards Codification (ASC) 606.

BCA total backlog ~~decreased~~increased from $296,882 million as of December 31, 2021 to ~~$290,930~~$297,044 million at ~~March 31,~~June 30, 2022 reflecting new orders in excess of deliveries and price escalation, offset by order cancellations and by an increase in the ~~number~~value of existing orders that in our assessment do not meet the accounting requirements of ASC 606 for inclusion in ~~backlog and~~backlog. Aircraft order cancellations ~~partially offset by new orders in excess of deliveries.~~during the six months ended June 30, 2022 totaled $7,524 million and primarily relate to 737 MAX and 787 aircraft. The net ASC 606 adjustments for the ~~three~~six months ended ~~March 31,~~June 30, 2022 resulted in a decrease to backlog of ~~$12,737~~$4,916 million primarily due to a net increase of 777X aircraft in the ASC 606 reserve, partially offset by net decreases in 737 MAX and ~~777X~~787 aircraft ~~partially offset by 787 aircraft.~~in the ASC 606 reserve. ASC 606 adjustments include consideration of aircraft orders where a customer controlled contingency may exist, as well as an assessment of whether the customer is committed to perform, impacts of geopolitical events or related sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is

Table of Contents

due. If 787 aircraft deliveries continue to be paused, we are unable to ramp up deliveries of 737 MAX aircraft, and/or if entry into service of the 777X, 737 MAX 7 and/or 737 MAX 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 following table provides details of the accounting quantities and firm orders by program. 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.


		Program								Program
As of 3/31/2022		737	747	767	777	777X	787	†
As of 6/30/2022									As of 6/30/2022	737	747	767	777	777X	787	†
Program accounting quantities	Program accounting quantities	10,800	1,574	1,255	1,780	400	1,500		Program accounting quantities	10,800	1,574	1,255	1,790	400	1,500
Undelivered units under firm orders	Undelivered units under firm orders	3,365	5	103	74	224	405	(11)	Undelivered units under firm orders	3,431	3	96	71	231	407	(11)
Cumulative firm orders	Cumulative firm orders	11,196	1,573	1,346	1,754	224	1,411		Cumulative firm orders	11,365	1,573	1,346	1,760	231	1,413

As of 12/31/2021	As of 12/31/2021	737	747	767	777	777X	787	†	As of 12/31/2021	737	747	767	777	777X	787	†
Program accounting quantities	Program accounting quantities	10,400	1,574	1,243	1,750	350	1,500		Program accounting quantities	10,400	1,574	1,243	1,750	350	1,500
Undelivered units under firm orders	Undelivered units under firm orders	3,414	6	108	58	253	411	(14)	Undelivered units under firm orders	3,414	6	108	58	253	411	(14)
Cumulative firm orders	Cumulative firm orders	11,159	1,573	1,346	1,735	253	1,417		Cumulative firm orders	11,159	1,573	1,346	1,735	253	1,417

† Aircraft ordered by BCC are identified in parentheses.

Program Highlights

737 Program The accounting quantity for the 737 program increased by 400 units during the three months ended March 31, 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes. See further discussion of the 737 MAX in Note 9 to our Condensed Consolidated Financial Statements.

747 Program We are currently producing at a rate of 0.5 aircraft per month. We expect to complete production of the 747 in the fourth quarter of 2022. We believe that ending production of the 747 will 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 12 units during the three months ended March 31, 2022 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 tanker program. The commercial program has near break-even gross margins. We are currently producing at a rate of 3 aircraft per month.

~~Table of~~ ~~Contents~~

777 and 777X Programs During the first quarter of 2022, we launched the 777X-8 freighter with first delivery expected in 2027. The accounting quantity for the 777X program increased by 50 units during the three months ended March 31, 2022 reflecting the launch of the 777X-8 freighter.

During the first quarter of 2022, we revised the estimated first delivery date of the 777X-9, previously expected in late 2023, and now expect it will occur in 2025, based on an updated assessment of the time required to meet certification requirements. We are working towards Type Inspection Authorization (TIA) which will enable us to begin FAA certification flight testing. The timing of TIA and certification will ultimately be determined by the regulators, and further determinations with respect to anticipated

Table of Contents

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 ~~expect that~~implemented the production pause ~~will~~during the second quarter of 2022, and it is expected to result in abnormal production costs of approximately $1.5 billion ~~beginning in the second quarter of 2022 and continue~~that are being expensed as incurred until 777X-9 production resumes.

The 777X program has near break-even gross margins at ~~March 31,~~June 30, 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 our supply chain and customers, 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.

The accounting quantity for the 777 program increased by 3040 and 10 units during the six and three months ended ~~March 31,~~June 30, 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes. The production rate for the combined 777/777X program is expected to increase from 2 per month to 3 per month in the second half of 2022.

787 Program At ~~March 31,~~June 30, 2022 we have approximately ~~115~~120 aircraft in inventory. Deliveries remain paused due to production quality issues. We continue to conduct inspections and rework on undelivered aircraft and engage in detailed discussions with the FAA regarding required actions for resuming delivery of the 787. We are currently producing at very low rates and expect that to continue until deliveries resume, gradually returning to 5 per month over time. In the third quarter of 2021, we determined that in the current environment production rates below 5 per month represent abnormally low production rates and result in abnormal production costs, and that inspections and rework costs on inventoried aircraft are excessive and should also be accounted for as abnormal production costs that are required to be expensed as incurred. As a result of these impacts, we continue to expect to incur approximately $2 billion of abnormal production costs on a cumulative basis with most being incurred by the end of 2023. We continue to work with customers and suppliers regarding timing of future deliveries and production rate changes. We are also continuing to implement changes in the production process designed to ensure that newly-built airplanes meet our specifications and do not require further inspections and rework.

During the fourth quarter of 2021, we recorded a loss of $3.5 billion on the 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.

The timing of the resumption of deliveries and future production rates will depend upon rework, ongoing customer and supplier engagement, production stability and our activities with the FAA. China is a significant market for the 787 program, and if the program is unable to obtain additional orders from China in future quarters, we may be required to further adjust production rate assumptions. If we are required to further reduce the accounting quantity and/or production rates, experience further delivery delays or experience other factors that result in lower margins, the program could record additional losses and higher abnormal production costs in future periods.

~~Table of~~ ~~Contents~~

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, such as the 787 production issues and associated rework. In addition, the introduction of new aircraft and derivatives, such as the 777X and 737 MAX derivatives, involves increased risks associated with meeting development, production and certification schedules. These challenges include increased global regulatory scrutiny of all development

Table of Contents

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 necessary or scheduled delivery dates could be extended, which could trigger termination provisions, order cancellations or other financially significant exposure.

Defense, Space & Security

Business Environment and Trends

United States Government Defense Environment Overview

The Consolidated Appropriations Act, 2022, enacted in March 2022, provided ~~FY22~~fiscal year 2022 (FY22) appropriations for government departments and agencies, including $742.3 billion for the ~~U.S. DoD~~United States Department of Defense (U.S. DoD) and $24 billion for ~~NASA.~~the National Aeronautics and Space Administration (NASA). The enacted FY22 appropriations included funding for Boeing’s major programs, including the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A tanker, and the Space Launch System.

In April 2022, the U.S. government released ~~certain~~ details of the President’s budget request for fiscal year 2023 (FY23), which included requests for $773 billion in funding for the U.S. DoD and $26 billion for NASA. The FY23 defense budget requests funding for many of Boeing’s programs, but does not request funding for F/A-18, CH-47F Block II, V-22, or P-8 production aircraft. These programs also continue to pursue non-U.S. sales opportunities. There is ongoing uncertainty with respect to program-level appropriations for U.S. DoD, NASA and other government agencies for FY23 and beyond. 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.

~~Table of~~ ~~Contents~~

Results of Operations


(Dollars in millions)	(Dollars in millions)	Three months ended March 31				(Dollars in millions)	Six months ended June 30				Three months ended June 30
		2022		2021					2022		2021		2022		2021
Revenues	Revenues	$5,483		$7,185				Revenues	$11,674		$14,061		$6,191		$6,876
(Loss)/earnings from operations	(Loss)/earnings from operations	($929)		$405				(Loss)/earnings from operations	($858)		$1,363		$71		$958
Operating margins	Operating margins	(16.9	%)	5.6	%			Operating margins	(7.3	%)	9.7	%	1.1	%	13.9	%

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.

Table of Contents

Deliveries of units for new-build production aircraft, including remanufactures and modifications, were as follows:


		Three months ended March 31		Six months ended June 30			Three months ended June 30
		2022	2021			2022	2021	2022	2021
F/A-18 Models	F/A-18 Models	4	4		F/A-18 Models	8	11	4	7
F-15 Models	F-15 Models	1	3		F-15 Models	5	8	4	5

CH-47 Chinook (New)	CH-47 Chinook (New)	4	3		CH-47 Chinook (New)	9	6	5	3
CH-47 Chinook (Renewed)	CH-47 Chinook (Renewed)	3	3		CH-47 Chinook (Renewed)	4	4	1	1
AH-64 Apache (New)	AH-64 Apache (New)	7	9		AH-64 Apache (New)	13	15	6	6
AH-64 Apache (Remanufactured)	AH-64 Apache (Remanufactured)	15	15		AH-64 Apache (Remanufactured)	28	31	13	16

P-8 Models	P-8 Models	3	3		P-8 Models	6	6	3	3
KC-46 Tanker	KC-46 Tanker	4	2		KC-46 Tanker	8	4	4	2

Total	Total	41	42		Total	81	85	40	43

Revenues

BDS revenues for the ~~three~~six months ended ~~March 31,~~June 30, 2022 decreased by ~~$1,702~~$2,387 million compared with the same period in 2021, primarily due to lower revenue on the KC-46A Tanker program from new orders for 27 aircraft received during the first quarter of 2021, lower P-8 volume as production was reduced to one per month, and timing of material receipts. BDS revenues for the six months ended June 30, 2022 also decreased due to charges on development programs discussed below, unfavorable performance across other programs, and the absence of revenue recorded in the second quarter of 2021 related to a favorable adjustment on a non-U.S. contract. Cumulative contract catch-up adjustments for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were ~~$570~~$1,018 million more unfavorable than the comparable period in the prior year largely due to charges on VC-25B, KC-46A Tanker, and ~~MQ-25.~~MQ-25 and the prior year favorable contract adjustment.

BDS revenues for the three months ended June 30, 2022 decreased by $685 million compared with the same period in 2021, due to charges on development programs discussed below, unfavorable performance across other programs, lower P-8 volume, and the absence of revenue recorded in the prior year quarter related to a favorable adjustment on a non-U.S. contract. Cumulative contract catch-up adjustments were $448 million more unfavorable than the comparable period in the prior year largely due to charges on development programs, the prior year favorable contract adjustment and other program performance.

Loss/Earnings From Operations

BDS loss from operations was ~~$929~~$858 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared with earnings from operations of ~~$405~~$1,363 million in the same period in 2021 primarily due to charges on the VC-25B, T-7A Red Hawk, KC-46A Tanker, and MQ-25 programs ~~in the first quarter of 2022. During the first quarter of 2022, we~~totaling $1,270 million recorded ~~a $660 million earnings charge on VC-25B compared to $318 million in the same period in 2021. The charge~~ in the first quarter of 2022 was primarily due to higher supplier costs, higher costs to finalize certain technical requirements and schedule delays. We recorded earnings charges of $367 million related to the T-7A Red Hawk program including a $300 million increase to the estimated losses associated with future production aircraft lots that we believe are probable of being exercised as well as ~~$67~~the year over year decrease in second quarter earnings of $887 million ~~related to the T-7A Red Hawk Engineering, Manufacturing, and Development (EMD) contract.~~discussed below. The ~~increase to the losses associated with future production aircraft is~~

~~Table of~~ ~~Contents~~

primarily due to ongoing supply chain negotiations which are impacted by supply chain constraints, COVID-19, and inflationary pressures. The KC-46A Tanker program recorded earnings charges of $165 million primarily reflecting higher supply chain and other costs. MQ-25 also increased its anticipated loss by $78 million due to additional customer testing requirements and supplier quality challenges. As a result of the earnings charges above, the net unfavorable cumulative contract catch-up adjustments for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were ~~$890~~$1,510 million higher than the comparable period in the prior year.

BDS ~~loss~~earnings from operations was $71 million for the three months ended June 30, 2022 compared with earnings from operations of $958 million in the same period in 2021. The year over year decrease reflects a number of factors including charges in the second quarter of 2022 on MQ-25 ($147 million), Commercial Crew ($93 million), T-7A Red Hawk Production Options ($51 million), and T-7A Red Hawk EMD ($36 million). Other programs recorded lower earnings during the second quarter of 2022 due to lower volumes, supplier disruption and factory performance. Net unfavorable cumulative contract catch-up adjustments for the three months ended June 30, 2022 were $620 million higher than the comparable period in the prior year reflecting the charges and performance issues described above. The year over

Table of Contents

year decrease also reflects the absence of gains recorded in the prior year quarter largely related to a favorable adjustment on a non-U.S. contract.

See further discussion of fixed-price contracts in Note 9 to our Condensed Consolidated Financial Statements.

BDS loss/earnings from operations includes equity earnings of ~~$27~~$40 million and $13 million for the six and three months ended ~~March 31,~~June 30, 2022 compared with $7equity earnings of $37 million and $30 million for the same ~~period~~periods in 2021. The year over year variances reflect changes in earnings from our United Launch Alliance joint venture.

Backlog

BDS backlog decreased from $59,828 million as of December 31, 2021 to ~~$59,739~~$55,401 million at ~~March 31,~~June 30, 2022, primarily due to revenue recognized on contracts awarded in prior periods.

Additional Considerations

Our BDS business includes a variety of development programs which have complex design and technical challenges. Many 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. 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. 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, quality or ~~quality~~similar issues in the supply chain 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 for reach-forward losses if our estimated costs exceed our estimated contract revenues.

4447

Table of Contents

Global Services

Results of Operations


(Dollars in millions)	(Dollars in millions)	Three months ended March 31				(Dollars in millions)	Six months ended June 30				Three months ended June 30
		2022		2021					2022			2021		2022		2021
Revenues	Revenues	$4,314		$3,749				Revenues	$8,612			$7,816		$4,298		$4,067
Earnings from operations	Earnings from operations	$632		$441				Earnings from operations	$1,360			$972		$728		$531
Operating margins	Operating margins	14.6	%	11.8	%			Operating margins	15.8	%		12.4	%	16.9	%	13.1	%

Revenues

BGS revenues for the ~~three~~six months ended ~~March 31,~~June 30, 2022 increased by ~~$565~~$796 million compared with the same period in 2021 primarily due to higher commercial services volume, partially offset by lower government services volume. ~~While commercial~~The decrease in government services volume is ~~recovering, it remains below pre-pandemic levels. We expect~~partly driven by the ~~impacts~~discontinuation of an engine distribution agreement in the ~~COVID-19 pandemic to continue to have an adverse impact on BGS commercial revenues in future quarters until the commercial airline industry fully recovers.~~second quarter of 2022. The net favorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2022 was $97 million lower than the comparable period in the prior year.

BGS revenues for the three months ended ~~March 31,~~June 30, 2022 increased by $231 million compared with the same period in 2021 primarily due to higher commercial services volume, partially offset by lower government services volume. The decrease in government services volume is partly driven by the discontinuation of an engine distribution agreement. The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended June 30, 2022 was ~~$49~~$48 million ~~lower~~higher than the comparable period in the prior year.

Earnings From Operations

BGS earnings from operations for the six months ended June 30, 2022 increased by $388 million compared with the same period in 2021, primarily due to higher commercial services volume and favorable mix. The net favorable impact of cumulative contract catch-up adjustments for the six months ended June 30, 2022 was $89 million lower than the comparable period in the prior year.

BGS earnings from operations for the three months ended ~~March 31,~~June 30, 2022 increased by ~~$191~~$197 million compared with the same period in 2021, primarily due to higher commercial services volume and favorable mix. The net favorable impact of cumulative contract catch-up adjustments for the three months ended ~~March 31,~~June 30, 2022 was ~~$64~~$25 million lower than the comparable period in the prior year.

Backlog

BGS backlog decreased from $20,496 million as of December 31, 2021 to ~~$19,822~~$18,960 million at ~~March 31,~~June 30, 2022, primarily due to revenue recognized on contracts awarded in prior years.

Boeing Capital

Results of Operations


(Dollars in millions)	(Dollars in millions)	Three months ended March 31				(Dollars in millions)	Six months ended June 30				Three months ended June 30
		2022		2021					2022		2021		2022		2021
Revenues	Revenues	$46		$60				Revenues	$98		$138		$52		$78
(Loss)/earnings from operations	(Loss)/earnings from operations	($36)		$21				(Loss)/earnings from operations	($9)		$57		$27		$36
Operating margins	Operating margins	(78.3)	%	35.0	%			Operating margins	(9.2)	%	41.3	%	51.9	%	46.2	%

Table of Contents

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 for the six and three months ended ~~March 31,~~June 30, 2022 decreased by ~~$14~~$40 million and $26 million compared with the same ~~period~~periods in 2021 primarily due to lower gains on re-lease of ~~assets.~~assets and lower commitment fee income.

Loss/Earnings From Operations

BCC’s ~~loss~~earnings from operations is presented net of interest expense, provision for (recovery of) losses, asset impairment expense, depreciation on leased equipment and other operating expenses. ~~Loss~~For the six months ended June 30, 2022, BCC had a loss from operations ~~for the three months ended March 31, 2022 was $36~~of $9 million, compared with earnings from

~~Table of~~ ~~Contents~~

operations of ~~$21~~$57 million induring the same period in 2021, primarily due to an increase in the allowance for losses on receivables as a result of the war in ~~Ukraine.~~Ukraine and lower revenues. Earnings from operations during the three months ended June 30, 2022 and 2021 were $27 million and $36 million due to lower revenues.

Financial Position

The following table presents selected financial data for BCC:


(Dollars in millions)	(Dollars in millions)	March 31 2022	December 31 2021	(Dollars in millions)	June 30 2022	December 31 2021
Customer financing and investment portfolio, net	Customer financing and investment portfolio, net	$1,641	$1,720	Customer financing and investment portfolio, net	$1,613	$1,720
Other assets, primarily cash and short-term investments	Other assets, primarily cash and short-term investments	339	462	Other assets, primarily cash and short-term investments	418	462
Total assets	Total assets	$1,980	$2,182	Total assets	$2,031	$2,182

Other liabilities, primarily deferred income taxes	Other liabilities, primarily deferred income taxes	$173	$347	Other liabilities, primarily deferred income taxes	$203	$347
Debt, including intercompany loans	Debt, including intercompany loans	1,525	1,525	Debt, including intercompany loans	1,525	1,525
Equity	Equity	282	310	Equity	303	310
Total liabilities and equity	Total liabilities and equity	$1,980	$2,182	Total liabilities and equity	$2,031	$2,182

Debt-to-equity ratio	Debt-to-equity ratio	5.4-to-1	4.9-to-1	Debt-to-equity ratio	5-to-1	4.9-to-1

BCC’s customer financing and investment portfolio at ~~March 31,~~June 30, 2022 decreased ~~$79~~$107 million from December 31, 2021 primarily due to an increase in the allowance for losses and portfolio run-off, partially offset by new volume.

BCC enters into certain intercompany transactions with other Boeing segments, 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.

Table of Contents

Liquidity and Capital Resources

Cash Flow Summary


(Dollars in millions)	(Dollars in millions)	Three months ended March 31		(Dollars in millions)	Six months ended June 30
		2022	2021		2022	2021
Net loss		($1,242)	($561)
Net (loss)/earnings				Net (loss)/earnings	($1,082)	$6
Non-cash items	Non-cash items	1,312	1,212	Non-cash items	2,320	2,130
Changes in assets and liabilities	Changes in assets and liabilities	(3,286)	(4,038)	Changes in assets and liabilities	(4,373)	(6,006)
Net cash used by operating activities	Net cash used by operating activities	(3,216)	(3,387)	Net cash used by operating activities	(3,135)	(3,870)
Net cash provided by investing activities	Net cash provided by investing activities	2,965	2,764	Net cash provided by investing activities	6,231	4,423
Net cash used by financing activities	Net cash used by financing activities	(396)	(48)	Net cash used by financing activities	(998)	(67)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(3)	(18)	Effect of exchange rate changes on cash and cash equivalents	(71)	(14)
Net decrease in cash & cash equivalents, including restricted		(650)	(689)
Net increase in cash & cash equivalents, including restricted				Net increase in cash & cash equivalents, including restricted	2,027	472
Cash & cash equivalents, including restricted, at beginning of year	Cash & cash equivalents, including restricted, at beginning of year	8,104	7,835	Cash & cash equivalents, including restricted, at beginning of year	8,104	7,835
Cash & cash equivalents, including restricted, at end of period	Cash & cash equivalents, including restricted, at end of period	$7,454	$7,146	Cash & cash equivalents, including restricted, at end of period	$10,131	$8,307

Operating Activities Net cash used by operating activities was ~~$3.2~~$3.1 billion during the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared with ~~$3.4~~$3.9 billion during the same period in 2021. Net loss ~~increased by $0.7~~for the six months ended June 30, 2022 was $1.1 billion compared with net earnings of $6 million during the same period in ~~2022, which was more than offset by $0.8 billion of reductions to cash used by~~2021. Changes in assets and liabilities for the six months ended June 30, 2022 were $4.4 billion compared with $6.0 billion during the same period in ~~2022. The year-over-year improvement to cash used by Changes in assets and liabilities was~~2021 driven by ~~improvements~~changes in ~~receivables, payables,~~Accounts payable and ~~accrued liabilities. Cash used~~Accrued liabilities, partially offset by Inventories and Advances and progress ~~billings was $0.5 billion in 2022, as compared with $0.4 billion of cash provided in 2021. Cash used by Inventories was $1.2 billion in 2022, as compared with $0.7 billion of cash used in 2021.~~billings. Compensation payments to 737 MAX customers totaled ~~$0.6~~$0.8 billion and ~~$1.2~~$1.5 billion during the

~~Table of~~ ~~Contents~~

~~three~~ six months ended ~~March 31,~~June 30, 2022 and 2021. 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. Cash used by Advances and progress billings was $0.9 billion in 2022, as compared with $0.3 billion of cash provided in 2021. Cash used by Inventories was $1.3 billion in 2022, as compared with $0.4 billion of cash provided in 2021 primarily reflecting the continued build-up of 787 aircraft, as well as growth in 777X inventory. The pause in 787 deliveries and the residual impacts of the 737 MAX grounding are expected to continue to have a significant negative impact on our operating cash flows until 787 deliveries resume and 737 MAX deliveries ramp up.

Payables to suppliers who elected to participate in supply chain financing programs ~~decreased~~increased by ~~$0.2~~$0.1 billion during the ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~remained flat~~decreased by $0.4 billion during the ~~three~~six months ended ~~March 31,~~June 30, 2021. Supply chain financing is not material to our overall liquidity.

Investing Activities Cash provided by investing activities was ~~$3.0~~$6.2 billion during the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared with ~~$2.8~~$4.4 billion during the same period in 2021, primarily due to net proceeds from investments of ~~$3.3~~$6.8 billion in 2022 compared to ~~$3.1~~$4.9 billion in 2021. In the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, capital expenditures were ~~consistent at $0.3~~$0.6 billion and $0.5 billion. We expect capital expenditures in 2022 to be higher than in 2021.

Financing Activities Cash used by financing activities was ~~$0.4~~$1.0 billion during the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared with ~~$48.0~~$67 million during the same period in 2021. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, net repayments were ~~$0.4~~$1.0 billion compared with ~~$33~~$56 million in the same period in 2021.

As of ~~March 31,~~June 30, 2022 the total debt balance was ~~$57.7~~$57.2 billion, down from $58.1 billion at December 31, 2021. At ~~March 31,~~June 30, 2022, ~~$2.6~~$5.4 billion of debt was classified as short-term. Debt, including intercompany loans, attributable to BCC totaled $1.5 billion, $0.3 billion of which was classified as short-term.

Capital Resources The impacts of the COVID-19 pandemic, 787 production issues and associated rework, and residual impacts of the 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

Table of Contents

significant actions to manage and preserve our liquidity. For further discussion see Liquidity Matters in Note 1 to our Condensed Consolidated Financial Statements.

At ~~March 31,~~June 30, 2022, we had ~~$7.4~~$10.1 billion of cash and ~~$4.9~~$1.4 billion of short-term investments. At ~~March 31,~~June 30, 2022, we had $14.7 billion of unused borrowing capacity on revolving credit line agreements, of which $6.3 billion expires in October 2022, $5.3 billion expires in March 2023, and $3.2 billion expires in October 2024. Of the $6.3 billion scheduled to expire in October 2022, $3.1 billion has a one-year term out option that allows us to extend the maturity of any borrowings one additional year. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs.

Any future borrowings may affect our credit ratings and are subject to various debt covenants. At ~~March 31,~~June 30, 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). When considering debt covenants, we continue to have substantial borrowing capacity.

Customer Financing commitments totaled ~~$12.8~~$13.1 billion and $12.9 billion at ~~March 31,~~June 30, 2022 and December 31, 2021. The ~~decrease~~increase relates to the ~~expiration~~addition of new financing ~~commitments.~~commitments in excess of expirations. 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.

Off-Balance Sheet Arrangements

We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 10 to our Condensed Consolidated Financial Statements.

~~Table of~~ ~~Contents~~

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 16 to our Condensed Consolidated Financial Statements.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of ~~$653~~$725 million at ~~March 31,~~June 30, 2022. For additional information, see Note 9 to our Condensed Consolidated Financial Statements.

Non-GAAP Measures

Core Operating Earnings, Core Operating Margin and Core Earnings Per Share

Our unaudited condensed consolidated interim financial statements are prepared in accordance with Generally Accepted Accounting Principles in the United States of America (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/CAS service cost adjustment represents the difference between the ~~FAS~~Financial 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~~non-

Table of Contents

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 adjustments recognized in ~~Loss~~(Loss)/earnings from operations were benefits of ~~$208~~$413 million and ~~$193~~$205 million for the six and three months ended ~~March 31,~~June 30, 2022, compared with benefits of $384 million and $191 million for the same periods in 2021. The higher benefits in 2022 were primarily due to increases in allocated pension cost year over year. The non-operating pension expenses included in Other income, net were benefits of ~~$220~~$441 million and ~~$177~~$221 million for the six and three months ended ~~March 31,~~June 30, 2022, compared with benefits of $352 million and $175 million for the same periods in 2021. The higher benefits ~~for the three months ended March 31,~~in 2022 were primarily due to lower amortization of actuarial losses, partially offset by higher interest cost and lower expected return on plan assets.

For further discussion of pension and other postretirement costs see the Management’s Discussion and Analysis on page 3639 of this Form 10-Q and on page 29 of our 2021 Annual Report on Form 10-K. 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 costs primarily represent costs driven by market factors and costs not allocable to U.S. government contracts.

4852

Table of Contents

Reconciliation of GAAP Measures to Non-GAAP Measures

The table below reconciles the non-GAAP financial measures of core operating earnings/(loss), core operating margin and core earnings/(loss) per share with the most directly comparable GAAP financial measures of earnings/(loss) from operations, operating margins and diluted earnings/(loss) per share.


(Dollars in millions, except per share data)	(Dollars in millions, except per share data)	Three months ended March 31				(Dollars in millions, except per share data)	Six months ended June 30				Three months ended June 30
		2022		2021					2022		2021		2022		2021
Revenues	Revenues	$13,991		$15,217				Revenues	$30,672		$32,215		$16,681		$16,998
Loss from operations, as reported		($1,169)		($83)
(Loss)/earnings from operations, as reported								(Loss)/earnings from operations, as reported	($395)		$940		$774		$1,023
Operating margins	Operating margins	(8.4)	%	(0.5)	%			Operating margins	(1.3)	%	2.9	%	4.6	%	6.0	%

Pension FAS/CAS service cost adjustment (1)	Pension FAS/CAS service cost adjustment (1)	($208)		($193)				Pension FAS/CAS service cost adjustment (1)	($413)		($384)		($205)		($191)
Postretirement FAS/CAS service cost adjustment (1)	Postretirement FAS/CAS service cost adjustment (1)	(75)		(77)				Postretirement FAS/CAS service cost adjustment (1)	(154)		(154)		(79)		(77)
FAS/CAS service cost adjustment (1)	FAS/CAS service cost adjustment (1)	($283)		($270)				FAS/CAS service cost adjustment (1)	($567)		($538)		($284)		($268)
Core operating loss (non-GAAP)		($1,452)		($353)
Core operating (loss)/earnings (non-GAAP)								Core operating (loss)/earnings (non-GAAP)	($962)		$402		$490		$755
Core operating margins (non-GAAP)	Core operating margins (non-GAAP)	(10.4)	%	(2.3)	%			Core operating margins (non-GAAP)	(3.1)	%	1.2	%	2.9	%	4.4	%

Diluted loss per share, as reported		($2.06)		($0.92)
Diluted (loss)/earnings per share, as reported								Diluted (loss)/earnings per share, as reported	($1.73)		$0.09		$0.32		$1.00
Pension FAS/CAS service cost adjustment (1)	Pension FAS/CAS service cost adjustment (1)	(0.35)		(0.33)				Pension FAS/CAS service cost adjustment (1)	(0.70)		(0.65)		(0.35)		(0.32)
Postretirement FAS/CAS service cost adjustment (1)	Postretirement FAS/CAS service cost adjustment (1)	(0.13)		(0.13)				Postretirement FAS/CAS service cost adjustment (1)	(0.26)		(0.26)		(0.13)		(0.13)
Non-operating pension expense (2)	Non-operating pension expense (2)	(0.37)		(0.30)				Non-operating pension expense (2)	(0.74)		(0.60)		(0.37)		(0.30)
Non-operating postretirement expense (2)	Non-operating postretirement expense (2)	(0.02)		(0.01)				Non-operating postretirement expense (2)	(0.05)		(0.02)		(0.02)		(0.01)
Provision for deferred income taxes on adjustments (3)	Provision for deferred income taxes on adjustments (3)	0.18		0.16				Provision for deferred income taxes on adjustments (3)	0.37		0.32		0.18		0.16
Core loss per share (non-GAAP)		($2.75)		($1.53)
Core (loss)/earnings per share (non-GAAP)								Core (loss)/earnings per share (non-GAAP)	($3.11)		($1.12)		($0.37)		$0.40

Weighted average diluted shares (in millions)	Weighted average diluted shares (in millions)	591.7		585.4				Weighted average diluted shares (in millions)	592.8		588.6		596.4		590.2

(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 earnings/(loss) (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~~earnings/(loss) per share (non-GAAP).

(3) The income tax impact is calculated using the U.S. corporate statutory tax rate.

Item 3. Quantitative and Qualitative Disclosures About Market 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. As of ~~March 31,~~June 30, 2022, we do not have any significant floating-rate debt obligations. Historically, we have not experienced material gains or losses on our customer financing assets and liabilities due to interest rate changes.

There have been no significant changes to our foreign currency exchange rate or commodity price risk since December 31, 2021.

4953

Table of Contents

Item 4. 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 ~~March 31,~~June 30, 2022 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)Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the ~~first~~second quarter of 2022 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

5054

Table of Contents

Part II. Other Information

Item 1. Legal Proceedings

Currently, we are involved in a number of legal proceedings. For a discussion of contingencies related to legal proceedings, see Note 16 to our Condensed Consolidated Financial Statements, which is hereby incorporated by reference.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about purchases we made during the quarter ended ~~March 31,~~June 30, 2022 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

(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
1/1/2022 thru 1/31/2022 2,726 $211.48
2/1/2022 thru 2/28/2022 127,137 201.37
3/1/2022 thru 3/31/2022 32,418 200.86
Total 162,281 $201.44

(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

4/1/2022 thru 4/30/2022

7,197

$197.00

5/1/2022 thru 5/31/2022

2,068

146.60

6/1/2022 thru 6/30/2022

1,285

136.28

Total

10,550

$179.72

(1)A total of ~~159,636~~10,550 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 ~~repurchased 2,645 shares in swap transactions. We~~ did not purchase any shares of our common stock in the open market pursuant to a repurchase program.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

5155

Table of Contents

Item 6. Exhibits


~~10.1~~3.2			~~U.S. Notice~~By-Laws of Terms of Non-Qualified Premium-Priced Stock Option for CEO, dated February 16, 2022*The Boeing Company, as amended and restated, effective J une 28, 2022

~~10.2~~			U.S. Notice of Terms of Long-Term Incentive Restricted Stock Units for CEO, dated February 16, 2022*

~~10.3~~			Form of U.S. Notice of Terms of Non-Qualified Premium-Priced Stock Option*

~~10.4~~			Form of U.S. Notice of Terms of Long-Term Incentive Restricted Stock Units*

~~10.5~~			Form of International Notice of Terms of Non-Qualified Premium-Priced Stock Option*

~~10.6~~			Form of International Notice of Terms of Long-Term Incentive Restricted Stock Units*

15			Letter from Independent Registered Public Accounting Firm regarding unaudited interim financial information

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~June 30, 2022, has been formatted in Inline XBRL.

* Management contract or compensatory plan

5256

Table of Contents

Signature

Pursuant to the requirements 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.


						THE BOEING COMPANY
						(Registrant)




~~April~~July 27, 2022						/s/ Carol J. Hibbard
(Date)						Carol J. Hibbard
						Senior Vice President and Controller

5357


	Pension		Postretirement
	2022	2021		2022	2021
Service cost	$1	$1		$18	$22
Interest cost	520	498		24	23
Expected return on plan assets	(947)	(966)		(2)	(2)
Amortization of prior service credits	(20)	(20)		(9)	(9)
Recognized net actuarial loss/(gain)	227	310		(28)	(17)
Settlement/curtailment loss	0	1		0	0
Net periodic benefit (income)/cost	($219)	($176)		$3	$17

Net periodic benefit cost included in Loss from operations	$1	$1		$19	$22
Net periodic benefit income included in Other income, net	(220)	(177)		(15)	(5)
Net periodic benefit (income)/cost included in Loss before income taxes	($219)	($176)		$4	$17


	737	*	747	767	*	777	787	Total
Deliveries during the first three months of 2022	86	(5)	1	5	(3)	3	0	95
Deliveries during the first three months of 2021	63	(5)	1	5	(1)	6	2	77


Cumulative deliveries as of 3/31/2022	7,831		1,568	1,243		1,680	1,006
Cumulative deliveries as of 12/31/2021	7,745		1,567	1,238		1,677	1,006



	(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
1/1/2022 thru 1/31/2022	2,726	$211.48
2/1/2022 thru 2/28/2022	127,137	201.37
3/1/2022 thru 3/31/2022	32,418	200.86
Total	162,281	$201.44