The Boeing Company (BA) 10-Q 21 Apr 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 16, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Trading Symbol	BA
Entity Registrant Name	BOEING CO
Entity Central Index Key	0000012927
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		759,036,516

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Sales of products	$12,316	$13,835
Sales of services	2,900	2,667
Total revenues	15,216	16,502
Cost of products	(9,822)	(11,579)
Cost of services	(2,281)	(2,119)
Boeing Capital Corporation interest expense	(41)	(47)
Total costs and expenses	(12,144)	(13,745)
Gross Profit, Total	3,072	2,757
Income from operating investments, net	59	32
General and administrative expense	(953)	(791)
Research and development expense, net	(1,000)	(970)
Loss on dispositions, net	(4)	(3)
Earnings from operations	1,174	1,025
Other expense, net	(2)	(36)
Interest and debt expense	(122)	(57)
Earnings before income taxes	1,050	932
Income tax expense	(531)	(317)
Net earnings from continuing operations	519	615
Net loss on disposal of discontinued operations, net of taxes of $3		(5)
Net earnings	$519	$610
Basic earnings per share from continuing operations	0.71	0.88
Net loss on disposal of discontinued operations, net of taxes		-0.01
Basic earnings per share	0.71	0.87
Diluted earnings per share from continuing operations	0.7	0.87
Net loss on disposal of discontinued operations, net of taxes		-0.01
Diluted earnings per share	0.7	0.86
Cash dividends paid per share	0.42	0.42
Weighted average diluted shares (millions)	740.1	707.4

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Operations (Parenthetical) (USD $)
In Millions	3 Months Ended Mar. 31, 2009
Net loss on disposal of discontinued operations, taxes	$3

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Financial Position (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Assets
Cash and cash equivalents	$4,517	$9,215
Short-term investments	5,845	2,008
Accounts receivable, net	6,359	5,785
Current portion of customer financing, net	274	368
Deferred income taxes	1,030	966
Inventories, net of advances and progress billings	18,773	16,933
Total current assets	36,798	35,275
Customer financing, net	5,273	5,466
Property, plant and equipment, net of accumulated depreciation of $13,028 and $12,795	8,693	8,784
Goodwill	4,317	4,319
Other acquired intangibles, net	2,878	2,877
Deferred income taxes	2,754	3,062
Investments	1,030	1,030
Pension plan assets, net	21	16
Other assets, net of accumulated amortization of $441 and $492	1,206	1,224
Total assets	62,970	62,053
Liabilities and shareholders' equity
Accounts payable	7,469	7,096
Other accrued liabilities	12,267	12,822
Advances and billings in excess of related costs	11,857	12,076
Income taxes payable	412	182
Short-term debt and current portion of long-term debt	1,479	707
Total current liabilities	33,484	32,883
Accrued retiree health care	7,043	7,049
Accrued pension plan liability, net	6,392	6,315
Non-current income taxes payable	896	827
Other long-term liabilities	652	537
Long-term debt	11,464	12,217
Shareholders' equity:
Common shares issued, par value $5.00 - 1,200,000,000 authorized; 1,012,261,159 shares issued	5,061	5,061
Additional paid-in capital	4,264	3,724
Treasury shares, at cost - 253,748,666 and 256,406,709 shares	(15,744)	(15,911)
Retained earnings	23,265	22,746
Accumulated other comprehensive loss	(11,747)	(11,877)
ShareValue Trust shares - 29,747,123 and 29,563,324	(2,157)	(1,615)
Total Boeing shareholders' equity	2,942	2,128
Noncontrolling interest	97	97
Total shareholders' equity	3,039	2,225
Total liabilities and shareholders' equity	$62,970	$62,053

3_Condensed Consolidated Statem

Condensed Consolidated Statements of Financial Position (Parenthetical) (USD $)
In Millions, except Share data	Mar. 31, 2010	Dec. 31, 2009
Property, plant and equipment, accumulated depreciation	$13,028	$12,795
Other assets, accumulated amortization	$441	$492
Common shares, par value	$5	$5
Common shares, authorized	1,200,000,000	1,200,000,000
Common shares, shares issued	1,012,261,159	1,012,261,159
Treasury shares, shares	253,748,666	256,406,709
ShareValue Trust shares, shares	29,747,123	29,563,324

4_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows - operating activities:
Net earnings	$519	$610
Non-cash items -
Share-based plans expense	66	60
Depreciation	350	335
Amortization of other acquired intangibles	55	49
Amortization of debt discount/premium and issuance costs	5	2
Investment/asset impairment charges, net	15	21
Customer financing valuation provision	12	9
Loss on disposal of discontinued operations		8
Loss on dispositions, net	4	3
Other charges and credits, net	30	63
Excess tax benefits from share-based payment arrangements	(8)	(5)
Changes in assets and liabilities -
Accounts receivable	(572)	(869)
Inventories, net of advances and progress billings	(1,833)	(82)
Accounts payable	225	644
Other accrued liabilities	(136)	(169)
Advances and billings in excess of related costs	(221)	(1,210)
Income taxes receivable, payable and deferred	429	534
Other long-term liabilities	246	(51)
Pension and other postretirement plans	355	304
Customer financing, net	221	21
Other	(47)	(84)
Net cash (used)/provided by operating activities	(285)	193
Cash flows - investing activities:
Property, plant and equipment additions	(186)	(442)
Property, plant and equipment reductions	3	25
Acquisitions, net of cash acquired	(24)	(30)
Contributions to investments	(4,744)	(200)
Proceeds from investments	910	49
Net cash used by investing activities	(4,041)	(598)
Cash flows - financing activities:
New borrowings	19	1,827
Debt repayments	(51)	(71)
Repayments of distribution rights financing	(13)
Stock options exercised, other	23
Excess tax benefits from share-based payment arrangements	8	5
Employee taxes on certain share-based payment arrangements	(15)	(15)
Common shares repurchased		(50)
Dividends paid	(318)	(305)
Net cash (used)/provided by financing activities	(347)	1,391
Effect of exchange rate changes on cash and cash equivalents	(25)	(17)
Net (decrease)/increase in cash and cash equivalents	(4,698)	969
Cash and cash equivalents at beginning of year	9,215	3,268
Cash and cash equivalents at end of period	$4,517	$4,237

5_Condensed Consolidated Statem

Condensed Consolidated Statement of Shareholders' Equity (USD $)
In Millions	Common Stock	Additional Paid-In Capital	Treasury Stock	Share-Value Trust	Retained Earnings	Accumulated Other Comprehensive Loss	Non-controlling Interest	Total
Beginning Balance at Dec. 31, 2008	$5,061	$3,456	($17,758)	($1,203)	$22,675	($13,525)	$152	($1,142)
Net earnings					610		1	611
Unrealized loss on derivative instruments, net of tax of $5 in 2010 and $26 in 2009						(45)		(45)
Unrealized loss on certain investments, net of tax of $9						(14)		(14)
Reclassification adjustment for (gains) losses realized in net earnings, net of tax of $2 in 2010 and $(5) in 2009						8		8
Currency translation adjustment						(29)		(29)
Postretirement liability adjustment, net of tax of $(113) in 2010 and $(73) in 2009						94		94
Comprehensive income								625
Share-based compensation and related dividend equivalents		63			(1)			62
ShareValue Trust activity		(174)		174
Excess tax pools		1						1
Treasury shares issued for other share-based plans, net		(57)	52					(5)
Treasury shares repurchased			(50)					(50)
Ending Balance at Mar. 31, 2009	5,061	3,289	(17,756)	(1,029)	23,284	(13,511)	153	(509)
Beginning Balance at Dec. 31, 2009	5,061	3,724	(15,911)	(1,615)	22,746	(11,877)	97	2,225
Net earnings					519			519
Unrealized loss on derivative instruments, net of tax of $5 in 2010 and $26 in 2009						(9)		(9)
Reclassification adjustment for (gains) losses realized in net earnings, net of tax of $2 in 2010 and $(5) in 2009						(4)		(4)
Currency translation adjustment						(40)		(40)
Postretirement liability adjustment, net of tax of $(113) in 2010 and $(73) in 2009						183		183
Comprehensive income								649
Share-based compensation and related dividend equivalents		66						66
ShareValue Trust activity		542		(542)
Excess tax pools		(11)						(11)
Treasury shares issued for stock options exercised, net		(14)	38					24
Treasury shares issued for other share-based plans, net		(45)	36					(9)
Treasury shares issued for 401(k) contribution		2	93					95
Ending Balance at Mar. 31, 2010	$5,061	$4,264	($15,744)	($2,157)	$23,265	($11,747)	$97	$3,039

6_Condensed Consolidated Statem

Condensed Consolidated Statement of Shareholders' Equity (Parenthetical) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Unrealized loss on derivative instruments, tax	$5	$26
Unrealized loss on certain investments, tax		9
Reclassification adjustment for (gains) losses realized in net earnings, tax	2	(5)
Postretirement liability adjustment, tax	($113)	($73)

Summary of Business Segment Dat

Summary of Business Segment Data
	3 Months Ended Mar. 31, 2010
Summary of Business Segment Data	Summary of Business Segment Data (Unaudited) (Dollars in millions) Threemonthsended March31 2010 2009 Revenues: Commercial Airplanes $ 7,468 $ 8,554 Boeing Defense, Space Security: Boeing Military Aircraft 3,241 3,067 Network Space Systems 2,323 2,678 Global Services Support 2,049 1,975 Total Boeing Defense, Space Security 7,613 7,720 Boeing Capital Corporation 162 163 Other segment 36 39 Unallocated items and eliminations (63 ) 26 Total revenues $ 15,216 $ 16,502 Earnings from operations: Commercial Airplanes $ 679 $ 417 Boeing Defense, Space Security: Boeing Military Aircraft 267 288 Network Space Systems 174 207 Global Services Support 223 214 Total Boeing Defense, Space Security 664 709 Boeing Capital Corporation 46 37 Other segment (50 ) (23 ) Unallocated items and eliminations (165 ) (115 ) Earnings from operations 1,174 1,025 Other expense, net (2 ) (36 ) Interest and debt expense (122 ) (57 ) Earnings before income taxes 1,050 932 Income tax expense (531 ) (317 ) Net earnings from continuing operations 519 615 Net loss on disposal of discontinued operations, net of taxes of $3 (5 ) Net earnings $ 519 $ 610 Research and development expense, net: Commercial Airplanes $ 698 $ 711 Boeing Defense, Space Security: Boeing Military Aircraft 162 139 Network Space Systems 106 86 Global Services Support 34 25 Total Boeing Defense, Space Security 302 250 Other segment 9 Total research and development expense, net $ 1,000 $ 970 This information is an integral part of the Notes to Condensed Consolidated Financial Statements. See Note13 for further segment results.

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 31, 2010
Basis of Presentation	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 March31, 2010, 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 2009 Annual Report on Form 10-K. Certain amounts have been reclassified to conform to the current periods presentation.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 31, 2010
Earnings Per Share	Note 2 Earnings Per Share The weighted average number of shares outstanding used to compute earnings per share were as follows: (Shares in millions) Threemonthsended March31 2010 2009 Weighted average shares outstanding 731.1 701.9 Participating securities 3.7 3.4 Basic weighted average shares outstanding 734.8 705.3 Dilutive potential common shares 5.3 2.1 Diluted weighted average shares outstanding 740.1 707.4 Basic earnings per share is calculated by the sum of (1)net earnings less declared dividends and dividend equivalents related to share-based compensation divided by the basic weighted average shares outstanding and (2)declared dividends and dividend equivalents related to share-based compensation divided by the weighted average shares outstanding. The weighted average number of shares outstanding, included in the table below, was excluded from the computation of diluted earnings per share because the average market price did not exceed the exercise/threshold price. However, these shares may be dilutive potential common shares in the future. (Shares in millions) Threemonthsended March31 2010 2009 Stock options 18.0 23.1 ShareValue Trust 13.3 12.9 Performance Awards 3.0 5.9 Performance Shares 0.8 Stock units 0.3

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes	Note 3 Income Taxes The effective tax rates were 50.6% and 34.0% for the three months ended March31, 2010 and 2009. The increase in the effective tax rate as compared with the prior year was primarily due to an income tax charge of $150 recorded during the first quarter of 2010 as a result of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act of 2010. As a result of this legislation, beginning in 2013, we will no longer be able to claim an income tax deduction related to prescription drug benefits provided to retirees and reimbursed under the Medicare Part D retiree drug subsidy. The increase in the effective tax rate was also due to U.S. research and development tax credit benefits that existed in 2009, but do not exist in 2010. The research and development tax credit reduced the 2009 tax rate by 3.2% in the first quarter of 2009. The research and development credit expired on December31, 2009. Congress is currently considering bills that will extend the credit. If the research and development credit is legislatively extended there will be a favorable impact on our 2010 effective income tax rate. The 1998-2009 tax years are subject to examination by the Internal Revenue Service (IRS). We are also subject to examination in major state and international jurisdictions for the 2001-2009 tax years. We believe appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. Audit outcomes and the timing of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next 12 months we will resolve some or all of the matters presently under consideration for 1998-2006 with the IRS. Depending on the timing and outcomes of the audit settlements, unrecognized tax benefits that affect the effective tax rate could increase earnings by up to $650 based on current estimates.

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories	Note 4 Inventories Inventories consisted of the following: March31 2010 December31 2009 Long-term contracts in progress $ 14,630 $ 14,673 Commercial aircraft programs 20,551 18,568 Commercial spare parts, used aircraft, general stock materials and other 5,488 5,004 40,669 38,245 Less advances and progress billings (21,896 ) (21,312 ) $ 18,773 $ 16,933 Long-Term Contracts in Progress Long-term contracts in progress inventories include Delta launch program inventories that will be sold at cost to United Launch Alliance (ULA) under an inventory supply agreement that terminates on March31, 2021. At March31, 2010 and December31, 2009, the inventory balance was $1,626 and $1,685 (net of $180 and $120 of payments received under the inventory supply agreement). As of March31, 2010, $1,070 of this inventory relates to yet unsold launches. ULA is continuing to assess the future of the Delta II program. In the event ULA is unable to sell additional Delta II inventory, earnings could be reduced by up to $70. See Note7. Inventory balances included $235 subject to claims or other uncertainties relating to the A-12 program as of March31, 2010 and December31, 2009. See Note12. Commercial Aircraft Programs As of March31, 2010 and December31, 2009, commercial aircraft program inventory included $4,897 and $3,885 of work in process (including deferred production costs), $2,220 and $2,187 of supplier advances, and $1,241 and $1,231 of tooling and other non-recurring costs related to the 787 program. Commercial aircraft program inventory included $409 and $510 of deferred production cost, and $202 and $211 of unamortized tooling for the 777 program, at March31, 2010 and December31, 2009.

Investments

Investments
	3 Months Ended Mar. 31, 2010
Investments	Note 5 Investments Our investments, which are recorded in Short-term investments or Investments, consisted of the following: March31 2010 December31 2009 Time deposits $ 5,844 $ 1,900 Equity method investments 974 974 Available-for-sale investments 32 139 Other investments 25 25 Total investments $ 6,875 $ 3,038 Available-For-Sale Investments Our investments in available-for-sale debt and equity securities consisted of the following: March31, 2010 December31, 2009 Cost or Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cost or Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Debt: Residential mortgage- backed securities $ 107 $ 107 Other debt obligations $ 6 $ 6 6 $ (1 ) 5 Equity 29 $ 1 $ (4 ) 26 40 $ 1 (14 ) 27 Total $ 35 $ 1 $ (4 ) $ 32 $ 153 $ 1 $ (15 ) $ 139 Gross realized gains and losses on available-for-sale investment securities were not material for the three months ended March31, 2010 and 2009.

Liabilities, Commitments and Co

Liabilities, Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Liabilities, Commitments and Contingencies	Note 6 Liabilities, Commitments and Contingencies Environmental The following table summarizes environmental activity recorded during the three months ended March31, 2010 and 2009: 2010 2009 Beginning balance January1 $ 706 $ 731 Reductions for payments made (8 ) (20 ) Changes in estimates 18 5 Ending balance March31 $ 716 $ 716 The liabilities recorded represent our best estimate of costs expected to be incurred to remediate, operate, and maintain sites over periods of up to 30 years. It is reasonably possible that we may incur additional charges because of regulatory complexities, higher than expected costs and the risk of unidentified contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios which include highest cost estimates for all remediation sites based on our experience and existing laws and regulations. At March31, 2010 and December31, 2009, our reasonably possible highest cost estimate for all remediation sites exceeded our recorded liabilities by $952 and $948. Product Warranties The following table summarizes product warranty activity recorded during the three months ended March31, 2010 and 2009. 2010 2009 Beginning balance January1 $ 999 $ 959 Additions for current year deliveries 33 41 Reductions for payments made (55 ) (62 ) Changes in estimates 105 108 Ending balance March31 $ 1,082 $ 1,046 Discontinued Operations As part of the 2004 purchase and sale agreement with General Electric Capital Corporation related to the sale of Boeing Capital Corporations (BCC) Commercial Financial Services business, BCC is involved in a loss sharing arrangement for losses on transferred portfolio assets, such as asset sales, provisions for loss or asset impairment charges offset by gains from asset sales. As of March31, 2010 and December31, 2009, our maximum future cash exposure to losses associated with the loss sharing arrangement was $234 and our accrued liability under the loss sharing arrangement was $77. Commercial Aircraft Commitments In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into specified-price trade-in commitments with certain customers that give them the right to trade in used aircraft upon the purchase of Sale Aircraft. The total contractual trade-in value was $385 and $427 as of March31, 2010 and December31, 2009. We anticipate that a significant portion of these commitments will not be exercised by customers. 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 continually assessed, taking into consideration the current economic environment. 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. The estimated fa

Arrangements with Off-Balance S

Arrangements with Off-Balance Sheet Risk
	3 Months Ended Mar. 31, 2010
Arrangements with Off-Balance Sheet Risk	Note 7 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. Third-Party Guarantees The following tables provide quantitative data regarding our third-party guarantees. The maximum potential payments represent a worst-case scenario, and do not necessarily reflect our expected results. 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. As of March31, 2010 Maximum Potential Payments Estimated Proceeds from Collateral/ Recourse Carrying Amount of Liabilities* Contingent repurchase commitments $ 3,865 $ 3,846 $ 7 Indemnifications to ULA 634 23 Other credit guarantees 114 105 5 Residual value guarantees 51 44 10 As of December31, 2009 Maximum Potential Payments Estimated Proceeds from Collateral/ Recourse Carrying Amountof Liabilities* Contingent repurchase commitments $ 3,958 $ 3,940 $ 7 Indemnifications to ULA 682 23 Other credit guarantees 119 109 2 Residual value guarantees 51 44 10 * Amounts included in Other accrued liabilities. Contingent Repurchase Commitments We have entered into contingent repurchase commitments with certain customers in conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft). Under these commitments, we agreed to repurchase the Sale Aircraft at a specified price, generally 10 years after delivery of the Sale Aircraft. Our repurchase of the Sale Aircraft is contingent upon a future, mutually acceptable agreement for the sale of additional new aircraft, and the subsequent exercise by the customer of its right to sell the Sale Aircraft to us. The 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. Indemnifications to ULA We agreed to indemnify ULA against losses in the event that costs associated with $1,360 of Delta launch program inventories included in contributed assets and $1,860 of Delta program inventories subject to an inventory supply agreement are not recoverable and allowable from existing and future orders. The term of the inventory indemnification extends to December31, 2020. Since inception, ULA has consumed $1,165 of inventories that were contributed by us and has made payments of $180 to us under the inventory supply agreement. The table above includes indemnifications to ULA for contributed Delta launch program inventory of $222 and $277, plus $348 related to the pricing of certain contracts and $64 and $57 related to miscellaneous Delta contracts at March31, 2010 and December31

Postretirement Plans

Postretirement Plans
	3 Months Ended Mar. 31, 2010
Postretirement Plans	Note 8 Postretirement Plans The components of net periodic benefit cost were as follows: Pension Other Postretirement Benefits Three months ended March31, 2010 2009 2010 2009 Components of net periodic benefit cost Service cost $ 294 $ 273 $ 30 $ 33 Interest cost 751 741 101 116 Expected return on plan assets (962 ) (934 ) (1 ) (1 ) Amortization of prior service costs 62 61 (20 ) (23 ) Recognized net actuarial loss 194 162 14 24 Settlement/curtailment loss 6 2 Net periodic benefit cost $ 345 $ 305 $ 124 $ 149 Net periodic benefit cost included in Earnings from operations $ 284 $ 219 $ 123 $ 157 A portion of net periodic benefit cost is allocated to production as product costs and may remain in inventory at the end of the reporting period. We did not make any discretionary pension contributions during the three months ended March31, 2010 and 2009. During the three months ended March31, 2010 and 2009, we made contributions to our other postretirement benefit plans of $4 and $5.

Share-Based Compensation and Ot

Share-Based Compensation and Other Compensation Arrangements
	3 Months Ended Mar. 31, 2010
Share-Based Compensation and Other Compensation Arrangements	Note 9 Share-Based Compensation and Other Compensation Arrangements Stock Options On February22, 2010, we granted to our executives 5,932,806 options with an exercise price equal to the fair market value of our stock on the date of grant. The stock options vest over a period of 3 years, with 34% vesting after the first year, 33% vesting after the second year and the remaining 33% vesting after the third year. The options expire 10 years after the date of grant. The fair value of stock options granted was estimated using the Black-Scholes option-pricing model with the following assumptions: GrantDate Expected Life Expected Volatility Expected Dividend Yield RiskFree Interest Rate Weighted-Average Grant Date FairValue Per Share 2/22/2010 6years 31.5 % 3.0 % 2.9 % $ 15.70 We determined the expected lifeof the 2010 stock option grant to be 6 years, calculated using the simplified method in accordance with the Securities and Exchange Commission Staff Accounting Bulletin 107, Valuation of Share-Based Payment Arrangements for Public Companies. We used the simplified method because we have insufficient historical data to provide a reasonable basis upon which to estimate the expected life. Restricted Stock Units On February22, 2010, we granted to our executives 1,459,256 restricted stock units (RSUs) with a grant date fair value of $63.83 per share. The RSUs will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. Performance Awards On February22, 2010, we also granted to our executives Performance Awards with the payout based on the achievement of financial goals for the three-year period ending December31, 2012. The minimum amount is $0 and the maximum amount we could be required to payout for the 2010 Performance Awards is $256.

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Mar. 31, 2010
Derivative Financial Instruments	Note 10 Derivative Financial Instruments Cash Flow Hedges Our cash flow hedges include foreign currency forward contracts, foreign currency option contracts, commodity swaps, and commodity purchase contracts. We use foreign currency forward and option contracts to manage currency risk associated with certain transactions, specifically forecasted sales and purchases made in foreign currencies. Our foreign currency forward contracts hedge forecasted transactions principally occurring within five years in the future, with certain contracts hedging transactions up to 2021. We use commodity derivatives, such as swaps and fixed-price purchase commitments, to hedge against potentially unfavorable price changes for items used in production. These include commitments to purchase electricity at fixed prices through 2015. Fair Value Hedges Interest rate swaps under which we agree to pay variable rates of interest are designated as fair value hedges of fixed-rate debt. The net change in fair value of the derivatives and the hedged items is reported in Boeing Capital Corporation interest expense. Derivative Instruments Not Receiving Hedge Accounting Treatment We also hold certain derivative instruments, primarily foreign currency forward contracts, for risk management purposes but without electing any form of hedge accounting. 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 amounts1 Other assets Otheraccruedliabilities March31 2010 December31 2009 March31 2010 December31 2009 March31 2010 December31 2009 Derivatives designated as hedging instruments Foreign exchange contracts $ 2,326 $ 2,353 $ 239 $ 233 $ (28 ) $ (22 ) Interest rate contracts 1,475 1,475 28 32 (8 ) (18 ) Commodity contracts 127 189 1 (114 ) (88 ) 3,928 4,017 268 265 (150 ) (128 ) Derivatives not receiving hedge accounting treatment Foreign exchange contracts 506 693 24 32 (107 ) (99 ) Total derivatives 4,434 4,710 292 297 (257 ) (227 ) Netting arrangements (127 ) (119 ) 127 119 Net recorded balance $ 165 $ 178 $ (130 ) $ (108 ) 1 Notional amounts represent the gross contract/notional amount of the derivatives outstanding. Gains/(losses) associated with our cash flow and undesignated hedging transactions and its effect on Accumulated other comprehensive loss or earnings were as follows: Threemonthsended March31 2010 2009 Effective portion recognized in other comprehensive loss, net of taxes: Foreign exchange contracts1 $ 10 $ (19 ) Commodity contracts1 (19 ) (28 ) Undesignated derivatives: Foreign exchange contracts2 (14 )

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements	Note 11 Fair Value Measurements The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. 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 non-observable inputs. FairValueMeasurements at March31, 2010 Total Level1 Level2 Level3 Assets Money market funds $ 1,104 $ 1,104 Available-for-sale investments: Debt 6 $ 6 Equity 26 26 Derivatives 165 $ 165 Total assets $ 1,301 $ 1,130 $ 165 $ 6 Liabilities Derivatives $ (130 ) $ (130 ) Total liabilities $ (130 ) $ (130 ) FairValueMeasurementsatDecember31,2009 Total Level 1 Level 2 Level 3 Assets Money market funds $ 3,575 $ 3,575 Available-for-sale investments: Debt: Residential mortgage-backed securities 107 $ 107 Other debt obligations 5 $ 5 Equity 27 27 Derivatives 178 178 Total assets $ 3,892 $ 3,602 $ 285 $ 5 Liabilities Derivatives $ (108 ) $ (108 ) Total liabilities $ (108 ) $ (108 ) Money market funds and equity securities are valued using a market approach based on the quoted market prices of identical instruments. The other debt securities are primarily valued using a market approach based on benchmark yields, reported trades and broker/dealer quotes. Derivatives include foreign currency, commodity and interest rate 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. The fair value of our interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve. Certain assets have been measured at fair value on a non-recurring basis using significant unobservable inputs (Level 3). The table below presents the non-recurring losses recognized for the three months ended March31, and the carrying value and asset classification of the related assets still held as of March31: 2010 2009 Carrying Value Total Losses Carrying Value Total Losses Operating lease equipment $ 56 $ (11 ) $ 24

Legal Proceedings

Legal Proceedings
	3 Months Ended Mar. 31, 2010
Legal Proceedings	Note 12 Legal Proceedings Various legal proceedings, claims and investigations related to products, contracts and other matters are pending against us. Potentially material contingencies are discussed below. We are subject to various U.S. government investigations, from which civil, criminal or administrative proceedings could result or have resulted. 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. We believe, based upon current information, that the outcome of any such government disputes and investigations will not have a material adverse effect on our financial position, results of operations, or cash flows, except as set forth below. A-12 Litigation In 1991, the U.S. Navy notified McDonnell Douglas Corporation (now merged into The Boeing Company) and General Dynamics Corporation (together, the Team) that it was terminating for default the Teams contract for development and initial production of the A-12 aircraft. The Team had full responsibility for performance of the contract and both contractors are jointly and severally liable for any potential liabilities resulting from the termination. The Team filed a legal action to contest the Navys default termination, to assert its rights to convert the termination to one for the convenience of the government, and to obtain payment for work done and costs incurred on the A-12 contract but not paid to date. As of March31, 2010, inventories included approximately $585 of recorded costs on the A-12 contract, against which we have established a loss provision of $350. The amount of the provision, which was established in 1990, was based on McDonnell Douglas Corporations belief, supported by an opinion of outside counsel, that the termination for default would be converted to a termination for convenience, and that the best estimate of possible loss on termination for convenience was $350. On August31, 2001, the U.S. Court of Federal Claims issued a decision after trial upholding the governments default termination of the A-12 contract. In 2003, the Court of Appeals for the Federal Circuit, finding that the trial court had applied the wrong legal standard, vacated the trial courts 2001 decision and ordered the case sent back to that court for further proceedings. On May3, 2007, the U.S. Court of Federal Claims issued a decision upholding the governments default termination of the A-12 contract. We filed a Notice of Appeal on May4, 2007 with the Court of Appeals for the Federal Circuit. On June2, 2009, the Court of Appeals rendered an opinion affirming the trial courts 2007 decision sustaining the governments default termination. On August14, 2009, we filed a Combined Petition for Panel Rehearing and for Rehearing En Banc in the Court of Appeals for the Federal Circuit. On November24, 2009, the Court denied our Combined Petition. We believe that the ruling

Business Segment Data

Business Segment Data
	3 Months Ended Mar. 31, 2010
Business Segment Data	Note 13 Business Segment Data Effective January1, 2010,certain programs and assets were realigned between BDS, Commercial Airplanes and Other segment. Business segment data for all periods presented have been adjusted to reflect the realignment. Our primary profitability measurements to review a segments operating results are earnings from operations and operating margins. See page 5 for a Summary of Business Segment Data, which is an integral part of this note. Intersegment revenues, eliminated in Unallocated items and eliminations, are shown in the following table. Threemonthsended March31 2010 2009 Commercial Airplanes $ 98 $ 191 Boeing Capital Corporation 16 23 Total $ 114 $ 214 Unallocated items and eliminations includes costs not attributable to business segments as well as intercompany profit eliminations. This includes Unallocated pension and other postretirement expense which represents the difference between costs recognized under Generally Accepted Accounting Principles in the United States of America in the consolidated financial statements and federal cost accounting standards required to be utilized by our business segments for U.S. government contracting purposes. The most significant items not allocated to segments are shown in the following table. Threemonthsended March31 Unallocated items and eliminations 2010 2009 Share-based plans $ (47 ) $ (57 ) Deferred compensation (expense)/income (81 ) 23 Pension 21 23 Postretirement (11 ) (23 ) Capitalized interest (10 ) (15 ) Other unallocated items and eliminations (37 ) (66 ) Total $ (165 ) $ (115 ) Assets March31 2010 December31 2009 Commercial Airplanes $ 22,507 $ 20,353 Boeing Defense, Space Security: Boeing Military Aircraft 6,357 6,075 Network Space Systems 7,444 7,434 Global Services Support 3,690 3,716 Total Boeing Defense, Space Security 17,491 17,225 Boeing Capital Corporation 6,093 6,178 Other segment 911 949 Unallocated items and eliminations 15,968 17,348 Total $ 62,970 $ 62,053 Liabilities Commercial Airplanes $ 18,637 $ 18,616 Boeing Defense, Space Security: Boeing Military Aircraft 3,926 4,041 Network Space Systems 931 1,023 Global Services Support 1,439 1,510 Total Boeing Defense, Space Security 6,296 6,574 Boeing Capital Corporation 4,461 4,538 Other segment 857 872 Unallocated items and eliminations 29,680 29,228 Total $ 59,931 $ 59,828