What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-01-31 compared with 2021-02-01 · 393 added, 556 removed, 1636 unchanged (37% of the section changed)

29 unchanged sentences

Note 22 - Segment and Revenue Information

Note 23 - Quarterly Financial Data

Reports of Independent Registered Public Accounting Firm

15 unchanged sentences

Gain on dispositions, net 277 202 691

(Loss)/earnings from operations ( 12,767 ) ( 1,975 ) 11,987

Loss from operations ( 2,902 ) ( 12,767 ) ( 1,975 )

Other income, net 551 447 438

Interest and debt expense ( 2,682 ) ( 2,156 ) ( 722 )

(Loss)/earnings before income taxes ( 14,476 ) ( 2,259 ) 11,604

Income tax benefit/(expense) 2,535 1,623 ( 1,144 )

Net (loss)/earnings ( 11,941 ) ( 636 ) 10,460

Loss before income taxes ( 5,033 ) ( 14,476 ) ( 2,259 )

Income tax benefit 743 2,535 1,623

Net loss ( 4,290 ) ( 11,941 ) ( 636 )

net loss attributable to noncontrolling interest ( 88 ) ( 68 )

Net (loss)/earnings attributable to Boeing Shareholders ($ 11,873 ) ($ 636 ) $ 10,460

Basic (loss)/earnings per share ($ 20.88 ) ($ 1.12 ) $ 18.05

Diluted (loss)/earnings per share ($ 20.88 ) ($ 1.12 ) $ 17.85

Net loss attributable to Boeing Shareholders ($ 4,202 ) ($ 11,873 ) ($ 636 )

Basic loss per share ($ 7.15 ) ($ 20.88 ) ($ 1.12 )

Diluted loss per share ($ 7.15 ) ($ 20.88 ) ($ 1.12 )

See Notes to the Consolidated Financial Statements on pages 64 – 123.

3 unchanged sentences

Years ended December 31, 2021 2020 2019

Net (loss)/earnings ($ 11,941 ) ($ 636 ) $ 10,460

Net loss ($ 4,290 ) ($ 11,941 ) ($ 636 )

Other comprehensive income/(loss), net of tax:

3 unchanged sentences

Unrealized gain/(loss) arising during period, net of tax of ($ 16 ), ($ 4 ) and $ 13

14 ( 48 ) ( 146 )

Reclassification adjustment for loss included in net earnings, net of tax of ($ 7 ), ($ 7 ), and ($ 8 )

Reclassification adjustment for (gain)/loss included in net earnings, net of tax of $ 2 , ($ 7 ) and ($ 7 )

Total unrealized gain/(loss) on derivative instruments, net of tax 49 41 ( 22 )

Defined benefit pension plans & other postretirement benefits:

Net actuarial (loss)/gain arising during the period, net of tax of $ 111 , $ 405 , and ($ 105 )

Net actuarial gain/(loss) arising during the period, net of tax of ($ 32 ), $ 111 and $ 405

4,262 ( 1,956 ) ( 1,413 )

Amortization of actuarial losses included in net periodic pension cost, net of tax of ($ 8 ), ($ 52 ) and ($ 133 )

Settlements and curtailments included in net income, net of tax of $ 0 , $ 0 , and ($ 2 )

Pension and postretirement benefit related to our equity method investments, net of tax $ 0 , ($ 5 ), and ($ 6 )

1,155 917 464

Settlements included in net income, net of tax of ($ 2 ), $ 0 and $ 0

Amortization of prior service credits included in net periodic pension cost, net of tax of $ 1 , $ 6 and $ 25

1 unchanged sentence

Prior service cost/(credit) arising during the period, net of tax of $ 0 , ($ 2 ) and $ 0

Pension and postretirement benefit related to our equity method investments, net of tax of ($ 2 ), $ 0 and ($ 5 )

Total defined benefit pension plans & other postretirement benefits, net of tax 5,500 ( 1,119 ) ( 1,022 )

Other comprehensive (loss)/income, net of tax ( 980 ) ( 1,070 ) 1,290

Other comprehensive income/(loss), net of tax 5,474 ( 980 ) ( 1,070 )

Comprehensive loss related to noncontrolling interests ( 41 )

Comprehensive (loss)/income, net of tax ( 12,921 ) ( 1,747 ) 11,729

Comprehensive income/(loss), net of tax 1,184 ( 12,921 ) ( 1,747 )

Comprehensive loss related to noncontrolling interest ( 88 ) ( 68 ) ( 41 )

Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax ($ 12,853 ) ($ 1,706 ) $ 11,750

Comprehensive income/(loss) attributable to Boeing Shareholders, net of tax $ 1,272 ($ 12,853 ) ($ 1,706 )

See Notes to the Consolidated Financial Statements on pages 64 – 123.

48 unchanged sentences

Cash flows – operating activities:

Net (loss)/earnings ($ 11,941 ) ($ 636 ) $ 10,460

Adjustments to reconcile net earnings to net cash provided by operating activities:

Net loss ($ 4,290 ) ($ 11,941 ) ($ 636 )

Adjustments to reconcile net loss to net cash used by operating activities:

Non-cash items –

5 unchanged sentences

Gain on dispositions, net ( 277 ) ( 202 ) ( 691 )

777X reach-forward loss 6,493

787 and 777X reach-forward losses 3,460 6,493

Other charges and credits, net 360 1,462 334

12 unchanged sentences

Other 304 235 196

Net cash (used)/provided by operating activities ( 18,410 ) ( 2,446 ) 15,322

Net cash used by operating activities ( 3,416 ) ( 18,410 ) ( 2,446 )

Cash flows – investing activities:

Property, plant and equipment additions ( 1,303 ) ( 1,834 ) ( 1,722 )

Property, plant and equipment reductions 296 334 120

Payments to acquire property, plant and equipment ( 980 ) ( 1,303 ) ( 1,834 )

Proceeds from disposals of property, plant and equipment 529 296 334

Acquisitions, net of cash acquired ( 6 ) ( 455 )

4 unchanged sentences

Other 5 ( 18 ) ( 13 )

Net cash used by investing activities ( 18,366 ) ( 1,530 ) ( 4,621 )

Net cash provided/(used) by investing activities 9,324 ( 18,366 ) ( 1,530 )

Cash flows – financing activities:

6 unchanged sentences

Dividends paid ( 1,158 ) ( 4,630 )

Net cash provided/(used) by financing activities 34,955 5,739 ( 11,722 )

Net cash (used)/provided by financing activities ( 5,600 ) 34,955 5,739

Effect of exchange rate changes on cash and cash equivalents ( 39 ) 85 ( 5 )

Net (decrease)/increase in cash & cash equivalents, including restricted ( 1,736 ) 1,758 ( 1,074 )

Net increase/(decrease) in cash & cash equivalents, including restricted 269 ( 1,736 ) 1,758

Cash & cash equivalents, including restricted, at beginning of year 7,835 9,571 7,813

14 unchanged sentences

Balance at January 1, 2019 $ 5,061 $ 6,768 ($ 52,348 ) $ 55,941 ($ 15,083 ) $ 71 $ 410

Net earnings/(loss) 10,460 ( 21 ) 10,439

Other comprehensive income, net of tax of ($ 379 )

Share-based compensation and related dividend equivalents

238 ( 36 ) 202

Treasury shares issued for stock options exercised, net

( 45 ) 126 81

Treasury shares issued for other share-based plans, net

( 229 ) ( 20 ) ( 249 )

Common shares repurchased

( 9,000 ) ( 9,000 )

Cash dividends declared ($ 7.19 per share)

( 4,101 ) ( 4,101 )

Changes in noncontrolling interests 35 35

Balance at December 31, 2018 $ 5,061 $ 6,768 ($ 52,348 ) $ 55,941 ($ 15,083 ) $ 71 $ 410

( 636 ) ( 41 ) ( 677 )

Net loss ( 636 ) ( 41 ) ( 677 )

Other comprehensive loss, net of tax of $ 298

26 unchanged sentences

Balance at December 31, 2020 $ 5,061 $ 7,787 ($ 52,641 ) $ 38,610 ($ 17,133 ) $ 241 ($ 18,075 )

( 4,202 ) ( 88 ) ( 4,290 )

Other comprehensive income, net of tax of ($ 57 )

Share-based compensation 833 833

Treasury shares issued for stock options exercised, net

Treasury shares issued for other share-based plans, net

( 98 ) 35 ( 63 )

Treasury shares issued for 401(k) contribution 558 675 1,233

Balance at December 31, 2021 $ 5,061 $ 9,052 ($ 51,861 ) $ 34,408 ($ 11,659 ) $ 153 ($ 14,846 )

See Notes to the Consolidated Financial Statements on pages 64 – 123.

11 unchanged sentences

Total revenues $ 62,286 $ 58,158 $ 76,559

(Loss)/earnings from operations:

Earnings/(loss) from operations:

Commercial Airplanes ($ 6,475 ) ($ 13,847 ) ($ 6,657 )

2 unchanged sentences

Boeing Capital 106 63 28

Segment operating (loss)/earnings ( 11,795 ) ( 1,317 ) 12,137

Segment operating loss ( 2,808 ) ( 11,795 ) ( 1,317 )

Unallocated items, eliminations and other ( 1,267 ) ( 2,355 ) ( 2,073 )

FAS/CAS service cost adjustment 1,173 1,383 1,415

(Loss)/earnings from operations ( 12,767 ) ( 1,975 ) 11,987

Loss from operations ( 2,902 ) ( 12,767 ) ( 1,975 )

Other income, net 551 447 438

Interest and debt expense ( 2,682 ) ( 2,156 ) ( 722 )

(Loss)/earnings before income taxes ( 14,476 ) ( 2,259 ) 11,604

Income tax benefit/(expense) 2,535 1,623 ( 1,144 )

Net (loss)/earnings ( 11,941 ) ( 636 ) 10,460

Loss before income taxes ( 5,033 ) ( 14,476 ) ( 2,259 )

Income tax benefit 743 2,535 1,623

Net loss ( 4,290 ) ( 11,941 ) ( 636 )

net loss attributable to noncontrolling interest ( 88 ) ( 68 )

Net (loss)/earnings attributable to Boeing Shareholders ($ 11,873 ) ($ 636 ) $ 10,460

Net loss attributable to Boeing Shareholders ($ 4,202 ) ($ 11,873 ) ($ 636 )

This information is an integral part of the Notes to the Consolidated Financial Statements.

10 unchanged sentences

As described in Note 22, we operate in four reportable segments:

Commercial Airplanes (BCA);

Defense, Space & Security (BDS), Global Services (BGS), and Boeing Capital (BCC).

Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other.

Amounts in prior periods have been reclassified to conform to the current year presentation .

Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS) and Boeing Capital (BCC).

Liquidity Matters

The global outbreak of COVID-19 and the grounding of the 737 MAX airplane are having a significant adverse impact on our business and are expected to continue to negatively impact revenue, earnings and operating cash flow in future quarters.

The COVID-19 pandemic has caused an unprecedented shock to demand for air travel, creating a tremendous challenge for our customers, our business and the entire aerospace manufacturing and services sector.

We currently expect it will take approximately three years for travel to return to 2019 levels and a few years beyond that for the industry to return to long-term trend growth.

The global outbreak of COVID-19, 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.

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 long-term trend growth.

There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether, and at what point capacity will return to and/or exceed pre-COVID-19 levels.

During 2020, net cash used by operating activities was $ 18.4 billion, and we expect negative operating cash flows in future quarters until commercial deliveries ramp up.

In the first quarter of 2020, we entered into and fully drew on a $ 13.8 billion two-year delayed draw term loan credit agreement (delayed draw term loan facility).

In the second quarter of 2020, we issued $ 25 billion of fixed rate senior notes that mature between 2023 and 2060.

In the fourth quarter of 2020, we issued $ 4.9 billion of fixed rate senior notes that mature between 2024 and 2031.

During 2021, net cash used by operating activities was $ 3.4 billion.

Our operating cash flows continue to be impacted by lower commercial airplane deliveries and concessions paid to 737 MAX customers.

We expect negative operating cash flows until commercial deliveries ramp up.

In 2021, we issued $ 9.8 billion of fixed rate senior notes that mature between 2023 and 2026.

We used the net proceeds of these note issuances to repay the $ 13.8 billion outstanding under our two-year delayed draw term loan credit agreement.

In 2021, we also repaid $ 1.5 billion of term notes.

As a result, our cash and short-term investment balance was $ 16.2 billion and our debt balance was $ 58.1 billion at December 31, 2021.

The major credit rating agencies downgraded our short term and long term credit ratings during 2020, and there is risk for further downgrades.

At December 31, 2020, our debt balance includes no commercial paper borrowings compared to $ 6.1 billion at December 31, 2019.

In the current environment, we may have limited future access to the commercial paper market.

In addition, we have term notes of $ 1.2 billion maturing in 2022.

At December 31, 2020, trade payables included $ 3.8 billion payable to suppliers who have elected to participate in supply chain financing programs.

While access to supply chain financing has been reduced due to our current credit ratings and debt levels, we do not believe that these or future changes in the availability of supply chain financing will have a significant impact on our liquidity.

At December 31, 2020, we had $ 9.5 billion of unused borrowing capacity on revolving credit agreements.

We anticipate that these credit lines will primarily serve as back-up liquidity to support our general corporate borrowing needs.

As of December 31, 2021, our unused borrowing capacity on revolving credit agreements is $ 14.7 billion.

We anticipate that these revolving credit lines will remain undrawn and primarily serve as backup liquidity to support our general corporate borrowing needs.

Our borrowing capacity includes a $ 3.1 billion 364-day revolving credit facility, which is set to expire in October 2022.

In 2021, our short-term and long-term credit ratings by the major credit rating agencies remained unchanged from 2020.

There is risk for further downgrades.

At December 31, 2021 and 2020, trade payables included $ 2.3 billion and $ 3.8 billion payable to suppliers who have elected to participate in supply chain financing programs.

In addition to our debt issuances, we have taken a number of actions to improve liquidity.

During the first quarter of 2020, our Board of Directors terminated its prior authorization to repurchase shares of the Company’s outstanding common stock and suspended the declaration and/or payment of dividends until further notice.

During 2020, our Board of Directors terminated its prior authorization to repurchase shares of the Company’s outstanding common stock and suspended the declaration and/or payment of dividends until further

We have also reduced production rates in our commercial business to reflect the impact of COVID-19 on the industry.

We are executing on our plans to reduce our workforce through a combination of voluntary and involuntary layoffs and natural turnover.

During 2020, we recorded severance costs for approximately 26,000 employees, of which approximately 18,000 have left the Company as of December 31, 2020, and the remainder are expected to leave in 2021.

We rationalized our workforce through a combination of voluntary and involuntary layoffs and natural turnover.

In the fourth quarter of 2020, we began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans.

In December 2020, we awarded most of our employees a one-time stock grant that will vest in three years in lieu of merit increases.

In December 2020, we awarded most of our employees a one-time stock grant that will vest in three years in lieu of merit pay increases.

We have reduced discretionary spending, including reducing or deferring research and development and capital expenditures.

We expect these actions to further enable the Company to conserve cash.

2 unchanged sentences

DoD) has taken steps to work with its industry partners to increase liquidity in the form of increased progress payment rates and reductions in withholds among other initiatives.

We are also deferring certain tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

We have reduced discretionary spending, including reducing or deferring research and development and capital expenditures.

In July 2020, we announced our business transformation efforts to assess our business across five key pillars – infrastructure, overhead and organization, portfolio and investments, supply chain health and operational excellence.

Within the infrastructure pillar we are assessing our overall facility requirements in light of reduced demand in our commercial businesses and remote and virtual work opportunities for large numbers of our workforce.

We also anticipate a reduction in office space needs compared to our current capacity.

However, as we consolidate our footprint, we may incur near term adverse impacts to earnings.

The overhead and organization pillar is focused on our cost structure and how we are organized so we can right size our workforce and simplify and reduce management layers and bureaucracy.

The portfolio and investments pillar includes aligning our portfolio and investments to focus on our core business and the changes in market conditions.

The supply chain pillar is focused on supply chain health and stability, reducing indirect procurement spend and streamlining our transportation, logistics and warehousing approach.

The operational excellence pillar is focused on improving performance, enhancing quality and reducing rework.

In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act included a five-year net operating loss carryback provision which enabled us to benefit from certain 2020 losses and resulted in tax refunds of $ 1.7 billion in 2021.

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.

3 unchanged sentences

generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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

We believe 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.

Operating Cycle

For classification of certain current assets and liabilities, we use the duration of the related contract or program as our operating cycle, which is generally longer than one year.

Standards Issued and Implemented

In the first quarter of 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, using a modified retrospective method, which resulted in the recognition of allowances for credit losses on our Consolidated Statement of Financial Position as of January 1, 2020 and a $ 162 cumulative-effect adjustment to retained earnings to align our credit loss methodology with the new standard.

The standard replaces the incurred loss impairment methodology under Topic 310 with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and certain other financial assets.

See Notes 5, 6, 9 and 14 for additional disclosures.

In the first quarter of 2020, we also adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The standard simplifies the quantitative impairment test from a two-step process to a one-step process.

The quantitative test is performed by comparing the carrying value of net assets to the estimated fair value of the related operations.

If the fair value is determined to be less than carrying value, the shortfall up to the carrying value of the goodwill represents the amount of goodwill impairment.

The standard continues to permit a company to test goodwill for impairment by performing a qualitative assessment or using the quantitative test.

Revenue and Related Cost Recognition

29 unchanged sentences

Recognizing revenue as costs are incurred provides an objective measure of progress on the long-term contract and thereby best depicts the extent of transfer of control to the customer.

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 indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.

For long-term contracts for which revenue is recognized over time, changes in estimated revenues, cost of sales and the related effect on operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a long-term contract’s percentage-of-completion.

When the current estimates of

total sales and costs for a long-term contract 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 years' revenue and earnings, including certain reach-forward losses, across all long-term contracts were as follows:

2021 2020 2019

(Decrease)/Increase to Revenue ($ 359 ) $ 54 $ 137

Increase to Loss/decrease to Earnings from operations ($ 942 ) ($ 111 ) ($ 190 )

Increase/(Decrease) to Revenue ($ 379 ) ($ 359 ) $ 54

Increase to Loss from operations ($ 880 ) ($ 942 ) ($ 111 )

Decrease to Diluted EPS ($ 1.28 ) ($ 1.37 ) ($ 0.06 )

Significant adjustments during the three years ended December 31, 2020 included reach-forward losses of $ 953 , $ 148 and $ 736 on KC-46A Tanker recorded during 2020, 2019, and 2018, as well as reach-forward losses on Commercial Crew of $ 489 during 2019.

Significant adjustments during the three years ended December 31, 2021 included losses on KC-46A Tanker, Commercial Crew and VC-25B.

Due to the significance of judgment in the estimation process, changes in underlying assumptions/estimates, supplier performance or circumstances may adversely or positively affect financial performance in future periods.

19 unchanged sentences

We record these reimbursements, which are presumed to represent reductions in the price of the vendor’s products or services, as a reduction in Cost of products.

Unbilled Receivables and Advances and Progress Billings Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which cannot yet be billed under terms of the contract with the customer.

Unbilled Receivables and Advances and Progress Billings Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which cannot yet be billed under terms of the

contract with the customer.

Advances and progress billings (contract liabilities) arise when the Company receives payments from customers in advance of recognizing revenue.

The amount of Unbilled receivables or Advances and progress billings is determined for each contract.

Financial Services Revenue We record financial services revenue associated with sales-type/finance leases, operating leases, and notes receivable.

Lease and financing revenue arrangements are included in Sales of services on the Consolidated Statements of Operations.

For sales-type/finance leases, we record financing receivables at lease inception.

A financing receivable is recorded at the aggregate of future minimum lease payments, estimated residual value of the leased equipment, and deferred incremental direct costs less unearned income.

Financial Services Revenue We record financial services revenue associated with sales-type/finance leases, operating leases and loans in Sales of services on the Consolidated Statements of Operations.

For sales-type leases, we recognize revenue if collection of the lease payments is probable.

For sales-type and finance leases, we record customer financing receivables at lease inception.

A customer financing receivable is recorded at the aggregate of future minimum lease payments, estimated residual value of the leased equipment, and any deferred incremental direct costs less unearned income.

Income is recognized over the life of the lease to approximate a level rate of return on the net investment.

Income recognition is generally suspended for financing receivables at the date full recovery of income and principal becomes not probable.

Income is recognized when financing receivables become contractually current and performance is demonstrated by the customer .

values, which are reviewed periodically, represent the estimated amount we expect to receive at lease termination from the disposition of the leased equipment.

For notes receivable, notes are recorded as customer financing receivables net of any unamortized discounts and deferred incremental direct costs.

Interest income and amortization of any discounts are recorded ratably over the related term of the note.

Income recognition is generally suspended for customer financing receivables that are uncollectible.

We determine that a customer financing receivable is uncollectible when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms.

We determine a customer financing receivable is past due when cash has not been received upon the due date specified in the contract.

We evaluate the collectability of customer financing receivables at commencement and on a recurring basis.

If a customer financing receivable is determined to be uncollectible, the customer is categorized as non-accrual status.

When a customer is in non-accrual status at commencement, sales-type lease revenue is deferred until substantially all cash has been received or the customer is removed from non-accrual status.

If we have a direct finance lease and/or a note receivable with a customer that is in non-accrual status, or a sales-type lease with a customer that changes to non-accrual status after commencement, we recognize contractual interest income as payments are received to the extent there is sufficient collateral and payments exceed past due principal payments.

Residual values, which are reviewed periodically, represent the estimated amount we expect to receive at lease termination from the disposition of the leased equipment.

Actual residual values realized could differ from these estimates.

1 unchanged sentence

For operating leases, revenue on leased aircraft and equipment is recorded on a straight-line basis over the term of the lease.

Operating lease assets, included in Customer financing, are recorded at cost and depreciated over the period that we project we will hold the asset to an estimated residual value, using the straight-line method.

Operating lease assets, included in Customer financing, net, are recorded at cost and depreciated to an estimated residual value using the straight-line method over the period that we project we will hold the asset.

We periodically review our estimates of residual value and recognize forecasted changes by prospectively adjusting depreciation expense.

For notes receivable, notes are recorded net of any unamortized discounts and deferred incremental direct costs.

Interest income and amortization of any discounts are recorded ratably over the related term of the note.

Reinsurance Revenue Our wholly-owned insurance subsidiary, Astro Ltd., participates in a reinsurance pool for workers’ compensation.

5 unchanged sentences

We provide assistance and support to facilitate efficient and safe aircraft operation to the operators of all our commercial airplane models.

Collectively known as fleet support, these activities and support services include flight and maintenance training, field service support, engineering support, and technical data and documents.

Collectively known as fleet support, these activities and support services include flight and maintenance training, field service support, engineering support, and

technical data and documents.

Fleet support activity begins prior to aircraft delivery as the customer receives training, manuals, and technical consulting support.

5 unchanged sentences

Research and development includes costs incurred for experimentation, design and testing, as well as bid and proposal efforts related to government products and services, which are expensed as incurred unless the costs are related to certain contractual arrangements with customers.

Costs that are incurred pursuant to such contractual arrangements are recorded over the period that revenue is recognized, consistent with our contract accounting policy.

Costs that are incurred pursuant to such contractual arrangements are recorded over the period that revenue is recognized, consistent with our long-term contract accounting policy.

We have certain research and development arrangements that meet the requirement for best efforts research and development accounting.

4 unchanged sentences

For awards settled in shares, we measure compensation expense based on the grant-date fair value net of estimated forfeitures.

For awards settled in cash, or that may be settled in cash, we measure compensation

expense based on the fair value at each reporting date net of estimated forfeitures.

For awards settled in cash, or that may be settled in cash, we measure compensation expense based on the fair value at each reporting date net of estimated forfeitures.

The expense is recognized over the requisite service period, which is generally the vesting period of the award.

1 unchanged sentence

federal, state and local, and non-U.S.

income taxes are calculated on reported (Loss)/earnings before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.

income taxes are calculated on reported Loss before income taxes based on current tax law and also include, in the current period, the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.

Such provisions differ from the amounts currently receivable or payable because certain items of income and expense are recognized in different time periods for financial reporting purposes than for income tax purposes.

3 unchanged sentences

To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

Tax-related interest and penalties are classified as a component of Income tax benefit/(expense).

Tax-related interest and penalties are classified as a component of Income tax benefit.

We also assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not that all or a portion of such assets will not be realized.

25 unchanged sentences

Negative balances reclassified to Accounts payable were $ 47 and $ 74 at December 31, 2021 and 2020.

Inventoried costs on commercial aircraft programs and long-term contracts include direct engineering, production and tooling and other non-recurring costs, and applicable overhead, which includes fringe benefits, production related indirect and plant management salaries and plant services, not in excess of estimated net realizable value.

benefits, production related indirect and plant management salaries and plant services, not in excess of estimated net realizable value.

To the extent a material amount of such costs are related to an abnormal event or are fixed costs not appropriately attributable to our programs or contracts, they are expensed in the current period rather than inventoried.

43 unchanged sentences

Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present

value of lease payments over the lease term.

Operating lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

We use our estimated incremental borrowing rate in determining the present value of lease payments.

2 unchanged sentences

Lease expense is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components which are accounted for as a single lease component.

We have real property lease agreements with lease and non-lease components which are accounted for as a single lease component.

Asset Retirement Obligations

5 unchanged sentences

In addition, there may be conditional asset retirement obligations that we have not yet discovered (e.g.

asbestos may exist in certain buildings but we have not become aware of it through the normal course of business), and therefore, these obligations also have not been included in the Consolidated Financial Statements.

asbestos may exist in certain buildings but we have not become aware of it through the normal course of

business), and therefore, these obligations also have not been included in the Consolidated Financial Statements.

Goodwill and Other Acquired Intangibles

18 unchanged sentences

We evaluate the potential impairment of finite-lived acquired intangible assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If the carrying

value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.

If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.

Time deposits are held-to-maturity investments that are carried at cost.

17 unchanged sentences

We use derivative instruments to principally manage a variety of market risks.

For our cash flow hedges, the derivative’s gain or loss is initially reported in comprehensive income and is subsequently reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings.

We have agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and international business requirements.

For our cash flow hedges, the derivative’s gain or loss is initially reported in comprehensive income and is subsequently reclassified into earnings in the same period(s) during which the hedged forecasted transaction affects earnings.

We have agreements to purchase and sell aluminum to address long-term strategic sourcing objectives and non-U.S.

business requirements.

These agreements are derivatives for accounting purposes but are not designated for hedge accounting treatment.

3 unchanged sentences

We establish allowances for credit losses on accounts receivable, unbilled receivables, customer financing receivables and certain other financial assets.

The adequacy of these allowances are assessed quarterly through consideration of factors including, but not limited to, customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates

and collateral exposures.

We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers.

The adequacy of these allowances is assessed quarterly through consideration of factors such as customer credit ratings, bankruptcy filings, published or estimated credit default rates, age of the receivable, expected loss rates and collateral exposures.

We determine the creditworthiness of our customers by assigning internal credit ratings based upon publicly available information and information obtained directly from the customers.

Our rating categories are comparable to those used by major credit rating agencies.

22 unchanged sentences

Sales-type/finance leases are treated as receivables, and allowances for losses are established as necessary.

We assess the fair value of the assets we own, including equipment under operating leases, assets held for sale or re-lease, and collateral underlying receivables, to determine if their fair values are less

than the related assets’ carrying values.

Customer financing is collateralized by security in the related asset.

We assess the fair value of equipment under operating leases, assets held for sale or re-lease, and collateral underlying receivables to determine if their fair values are less than the related customer financing assets’ carrying values.

Differences between carrying values and fair values of sales-type/finance leases and notes and other receivables, as determined by collateral value, are considered in determining the allowance for losses on receivables.

2 unchanged sentences

Impairment review for assets under operating leases and held for sale or re-lease We evaluate for impairment assets under operating lease or assets held for sale or re-lease when events or changes in circumstances indicate that the expected undiscounted cash flow from the asset may be less than the carrying value.

We use various assumptions when determining the expected undiscounted cash flow, including our intentions for how long we will hold an asset subject to operating lease before it is sold, the expected future lease rates, lease terms, residual value of the asset, periods in which the asset may be held in preparation for a follow-on lease, maintenance costs, remarketing costs and the remaining economic life of the asset.

economic life of the asset.

We record assets held for sale at the lower of carrying value or fair value less costs to sell.

When we determine that impairment is indicated for an asset, the amount of impairment expense recorded is the excess of the carrying value over the fair value of the asset.

Allowance for losses on customer financing receivables We record the potential impairment of customer financing receivables in a valuation account, the balance of which is an accounting estimate of expected but unconfirmed losses.

The allowance for losses on receivables relates to two components of receivables:

(a) receivables that are evaluated individually for impairment and (b) all other receivables.

We determine a receivable is impaired when, based on current information and events, it is expected that we will be unable to collect amounts due according to the original contractual terms of the receivable agreement, without regard to any subsequent restructurings.

Factors considered in assessing collectability include, but are not limited to, a customer’s extended delinquency, requests for restructuring and filings for bankruptcy.

We determine a specific impairment allowance based on the difference between the carrying value of the receivable and the estimated fair value of the related collateral we would expect to realize.

We review the adequacy of the allowance attributable to the remaining receivables (after excluding receivables subject to a specific impairment allowance) by assessing both the collateral exposure and the applicable cumulative default rate.

Allowance for losses on customer financing receivables We record the estimated allowance for potential losses on customer financing receivables in a valuation account.

The four primary factors influencing the level of our allowance for losses on customer financing receivables are collateral values, internal customer credit ratings, default rates and expected loss rate.

We review the adequacy of the allowance for losses by assessing the collateral exposure, the applicable default rate and expected loss rate.

Collateral exposure for a particular receivable is the excess of the carrying value of the receivable over the fair value of the related collateral.

A receivable with an estimated fair value in excess of the carrying value is considered to have no collateral exposure.

The applicable cumulative default rate is determined using two components:

customer credit ratings and weighted average remaining contract term.

Internally assigned credit ratings, our credit quality indicator, are determined for each customer in the portfolio.

Those ratings are updated based upon public information and information obtained directly from our customers.

The applicable default rate is determined using two components:

internal customer credit ratings and weighted average remaining contract term.

We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers.

Our rating categories are comparable to those used by the major credit rating agencies.

We apply an expected loss rate, based on publicly available information, to the applicable default rate.

We have entered into agreements with certain customers that would entitle us to look beyond the specific collateral underlying the receivable for purposes of determining the collateral exposure as described above.

Should the proceeds from the sale of the underlying collateral asset resulting from a default condition be insufficient to cover the carrying value of our receivable (creating a shortfall condition), these agreements would, for example, permit us to take the actions necessary to sell or retain certain other assets in which the customer has an equity interest and use the proceeds to cover the shortfall.

Each quarter we review customer credit ratings, published historical credit default rates for different rating categories, and multiple third-party aircraft value publications as a basis to validate the reasonableness of the allowance for losses on receivables.

There can be no assurance that actual results will not differ from estimates or that the consideration of these factors in the future will not result in an increase or decrease to the allowance for losses on receivables.

Each quarter we review the assigned internal customer credit ratings, published historical credit default rates for different rating categories and multiple third-party aircraft value publications as a basis to validate the reasonableness of the allowance for losses on customer financing receivables.

In conjunction with certain product sales, we provide warranties that cover factors such as non-conformance to specifications and defects in material and design.

The majority of our warranties are issued by our Commercial Airplanes segment.

The majority of our warranties are issued by our BCA segment.

Generally, aircraft sales are accompanied by a 3 to 4 -year standard warranty for systems, accessories, equipment, parts, and software manufactured by us or manufactured to certain standards under our authorization.

4 unchanged sentences

Estimated costs related to standard warranties are recorded in the period in which the related product delivery occurs.

The warranty liability recorded at each balance sheet date reflects the estimated number of months of warranty coverage outstanding for products delivered times the average of historical monthly warranty payments, as well as additional amounts for certain major warranty issues that exceed a normal claims level.

certain major warranty issues that exceed a normal claims level.

Estimated costs of these additional warranty issues are considered changes to the initial liability estimate.

14 unchanged sentences

Note 2 – Goodwill and Acquired Intangibles

Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other.

Changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020 were as follows:

Airplanes Defense, Space & Security Global Services Other Total

Balance at January 1, 2019 $ 1,241 $ 3,229 $ 3,345 $ 25 $ 7,840

KLX acquisition adjustments ( 51 ) ( 51 )

Acquisitions 72 188 62 322

Dispositions ( 49 ) ( 49 )

Balance at December 31, 2019 $ 1,313 $ 3,219 $ 3,441 $ 87 $ 8,060

Goodwill adjustments 3 5 13 21

20 unchanged sentences

Estimated amortization expense $ 245 $ 236 $ 221 $ 195 $ 192

During 2019, we acquired $ 563 of finite-lived intangible assets, of which $ 30 related to non-cash investing and financing transactions.

Note 3 – Earnings Per Share

7 unchanged sentences

Years ended December 31, 2021 2020 2019

Net (loss)/earnings attributable to Boeing Shareholders ($ 11,873 ) ($ 636 ) $ 10,460

Net loss attributable to Boeing Shareholders ($ 4,202 ) ($ 11,873 ) ($ 636 )

earnings available to participating securities

Net (loss)/earnings available to common shareholders ($ 11,873 ) ($ 636 ) $ 10,453

Net loss available to common shareholders ($ 4,202 ) ($ 11,873 ) ($ 636 )

Basic weighted average shares outstanding

11 unchanged sentences

587.6 568.6 565.4

Net (loss)/earnings per share:

Net loss per share:

($ 7.15 ) ($ 20.88 ) ($ 1.12 )

( 7.15 ) ( 20.88 ) ( 1.12 )

(1) Diluted (loss)/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 years ended December 31, 2020 and 2019, potential common shares of 1.6 million and 4.1 million were excluded from diluted loss per share because the effect would have been antidilutive.

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

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

As a result of incurring a net loss for the years ended December 31, 2021, 2020 and 2019, potential common shares of 2.6 million, 1.6 million and 4.1 million, respectively, were excluded from diluted loss per share because the effect would have been antidilutive.

In addition, t he 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)/earnings per share because the effect was either antidilutive or the performance condition was not met.

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)

3 unchanged sentences

Restricted stock units 0.4 1.0

Stock options 0.3

Note 4 – Income Taxes

The components of (Loss)/earnings before income taxes were:

The components of Loss before income taxes were:

Years ended December 31, 2021 2020 2019

1 unchanged sentence

Total ($ 5,033 ) ($ 14,476 ) ($ 2,259 )

Income tax (benefit)/expense consisted of the following:

Income tax benefit consisted of the following:

Years ended December 31, 2021 2020 2019

8 unchanged sentences

Total income tax (benefit)/expense ($ 743 ) ($ 2,535 ) ($ 1,623 )

Net income tax payments were $ 37 , $ 837 and $ 1,326 in 2020, 2019 and 2018, respectively.

Net income tax (refunds)/payments were ($ 1,480 ), $ 37 and $ 837 in 2021, 2020 and 2019, respectively.

The following is a reconciliation of the U.S.

federal statutory tax to actual income tax expense:

federal statutory tax to actual income tax (benefit)/expense:

Years ended December 31, 2021 2020 2019

2 unchanged sentences

Valuation allowance 512 ( 10.2 ) 2,603 ( 18.0 ) 25 ( 1.1 )

Impact of CARES Act (1)

( 1,175 ) 8.1

Audit settlements (2)

( 587 ) 4.1 ( 371 ) 16.4 ( 412 ) ( 3.6 )

Research and development credits ( 189 ) 3.8 ( 284 ) 2.0 ( 382 ) 16.9

Other provision adjustments 234 ( 1.7 ) 66 ( 3.0 ) 91 1.0

State income tax provision, net of effects on U.S.

federal tax ( 94 ) 1.9 ( 168 ) 1.2 ( 45 ) 2.0

Tax on non-U.S.

activities 47 ( 0.9 ) 7 ( 0.1 ) 20 ( 0.9 )

Impact of CARES Act (1)

3 ( 0.1 ) ( 1,175 ) 8.1

Other provision adjustments 41 ( 0.9 ) 234 ( 1.7 ) 66 ( 3.0 )

Excess tax benefits (2)

( 6 ) 0.1 ( 82 ) 0.6 ( 180 ) 8.0

Audit settlements (3)

( 587 ) 4.1 ( 371 ) 16.4

Foreign derived intangible income (4)

1 unchanged sentence

Tax deductible dividends ( 13 ) 0.1 ( 53 ) 2.4

Tax on non-US activities 7 ( 0.1 ) 20 ( 0.9 ) 27 0.2

Impact of Tax Cuts and Jobs Act (5)

( 111 ) ( 1.0 )

Income tax (benefit)/expense ($ 743 ) 14.7 % ($ 2,535 ) 17.5 % ($ 1,623 ) 71.8 %

(1) On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, which includes a five year net operating loss (NOL) carryback provision which enabled us to benefit from certain losses and re-measure certain deferred tax assets and liabilities at the former federal tax rate of 35 %.

In 2020, we recorded tax benefits of $ 1,175 related to the NOL carryback provision.

(1) On March 27, 2020, the CARES Act was enacted, which includes a five year net operating loss (NOL) carryback provision which enabled us to benefit from the 2020 U.S.

federal tax NOL at the former federal tax rate of 35 %.

In 2021 and 2020, we recorded tax expense of $ 3 and tax benefits of $ 1,175 related to the NOL carryback provision.

(2) I n 2021, 2020 and 2019, we recorded excess tax benefits related to employee share-based payments of $ 6 , $ 82 and $ 180 , respectively.

(3) In the fourth quarter of 2020, we recorded a tax benefit of $ 587 related to the settlement of the 2015-2017 federal tax audit.

In the fourth quarter of 2019, we recorded a tax benefit of $ 371 related to the settlement of state tax audits spanning 15 tax years.

In the third quarter of 2018, we recorded a tax benefit of $ 412 related to the settlement of the 2013-2014 federal tax audit.

(3) In 2020, 2019 and 2018, we recorded excess tax benefits related to employee share-based payments of $ 82 , $ 180 and $ 181 , respectively.

(4) In 2020 and 2019, we recorded tax benefits related to foreign derived intangible income of $ 31 and $ 229 , respectively which effectively apply a lower U.S.

tax rate to intangible income derived from serving non-U.S.

(5) During the fourth quarter of 2018 and in accordance with U.S.

Securities and Exchange Commission Staff Accounting Bulletin No.

118, the Company completed its accounting for the provisional amounts recognized at December 31, 2017 and recorded an incremental benefit related to refinements to these provisional amounts which was not significant.

Significant components of our deferred tax assets/(liabilities) at December 31 were as follows:

2 unchanged sentences

Fixed assets, intangibles and goodwill ( 1,657 ) ( 1,645 )

737 MAX customer concessions and other considerations 1,253 1,626

Net operating loss, credit and capital loss carryovers (1)

Other postretirement benefit obligations 1,023 1,120

Federal net operating loss, credit, interest and other carryovers (1)

Other employee benefits 991 957

State net operating loss, credit, interest and other carryovers (2)

Other postretirement benefit obligations 913 1,023

Accrued expenses and reserves 763 808

Customer and commercial financing ( 180 ) ( 268 )

737 MAX customer concessions and other considerations 682 1,253

Other 227 ( 36 )

2 unchanged sentences

Net deferred tax assets/(liabilities) after valuation allowance ($ 141 ) ($ 924 )

(1) Of the deferred tax asset for net operating loss and credit carryovers, $ 793 expires on or before December 31, 2040 and $ 389 may be carried over indefinitely.

(1) Of the deferred tax asset for federal net operating loss, credit, interest and other carryovers, $ 536 expires on or before December 31, 2041 and $ 986 may be carried over indefinitely.

(2) Of the deferred tax asset for state net operating loss, credit, interest and other carryovers, $ 453 expires on or before December 31, 2041 and $ 476 may be carried over indefinitely.

Net deferred tax assets/(liabilities) at December 31 were as follows:

9 unchanged sentences

federal and state tax jurisdictions.

federal tax perspective the Company does not have any significant net operating loss carryforwards nor does it have any significant federal tax credits that are at risk of expiring.

The Company generated taxable income in 2018 and 2019 and expects to have a tax net operating loss in 2020 that will be carried back to prior years when the tax rate was 35 % due to the CARES Act benefit as described above.

During 2019 and 2020 the Company generated significant pre-tax losses and in the fourth quarter of 2020 the Company reached a three-year cumulative pre-tax loss position.

We also normalized earnings and other comprehensive income for certain non-recurring items including certain 737 MAX expenses, an agreement with the Department of Justice, severance costs and remeasurement gains and losses from the annual remeasurement of pension and other postretirement benefit obligations.

On a normalized basis the Company expects to reach a three-year cumulative loss position in 2021 as record earnings in 2018 are replaced by 2021 results.

For purposes of assessing the recoverability of deferred

tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.

As of December 31, 2020 the Company has recorded valuation allowances of $ 3,094 primarily for certain federal deferred tax assets, state net operating loss carryforwards, and state tax credits.

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 determine the reversal patterns.

federal tax perspective, the Company generated a tax NOL in 2020 that was carried back to prior years when the tax rate was 35 % due to the CARES Act benefit as described above.

The Company generated tax NOL and interest carryovers in 2021 that can be carried forward indefinitely and federal research and development credits that can be carried forward 20 years.

In the fourth quarter of 2020 and throughout 2021, the Company was in a three-year cumulative pre-tax loss position.

We also normalized earnings and other comprehensive income (OCI) for certain non-recurring items and reached a normalized three-year cumulative loss position in 2021.

Adjustments to normalize earnings included non-recurring items for certain 737 MAX expenses, an agreement with the Department of Justice, severance costs and remeasurement gains and losses from the annual

remeasurement of pension and other postretirement benefit obligations.

For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.

As of December 31, 2021 and 2020, the Company has recorded valuation allowances of $ 2,423 and $ 3,094 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.

Because the pension and other postretirement benefit obligations are recorded to both continuing operations and other comprehensive income (OCI), the Company recorded a portion of the fourth quarter increase in the valuation allowance to income tax expense in continuing operations ($ 2,513 ) and a portion to OCI ($ 196 ).

If the Company continues to generate losses and negative normalized earnings in future periods, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI.

When income generation returns to more normal levels we can expect to see the allowance reverse and increase reported earnings and/or OCI.

The TCJA one-time repatriation tax and Global Intangible Low Tax Income liabilities effectively taxed the undistributed earnings previously deferred from U.S.

During 2021, the Company decreased the valuation allowance by $ 671 .

This reflects a tax benefit of $ 1,206 included in OCI primarily due to the net actuarial gains that resulted from the annual remeasurement of pension assets and liabilities.

This was partially offset by tax expense of $ 512 recorded in continuing operations and an increase of $ 23 related to the associated federal benefit of state impacts.

Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI.

The Tax Cuts and Jobs Act (TCJA) one-time repatriation tax and Global Intangible Low Tax Income liabilities effectively taxed the undistributed earnings previously deferred from U.S.

income taxes.

We have not provided for foreign withholding tax on the undistributed earnings from our non-U.S.

We have not provided for deferred income taxes on the undistributed earnings from certain non-U.S.

subsidiaries because such earnings are considered to be indefinitely reinvested.

If such earnings were to be distributed, any foreign withholding tax would not be significant.

If such earnings were to be distributed, any deferred income taxes would not be significant.

As of December 31, 2021 and 2020, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant.

10 unchanged sentences

Unrecognized tax benefits – December 31 $ 858 $ 966 $ 1,476

As of December 31, 2020, 2019 and 2018, the total amount of unrecognized tax benefits was $ 966 , $ 1,476 and $ 2,412 , respectively, of which $ 734 , $ 1,287 and $ 1,405 would affect the effective tax rate, if recognized.

As of December 31, 2020, these amounts are primarily associated with the amount of research tax credits claimed and uncertainties in the TCJA.

As of December 31, 2021, 2020 and 2019, the total amount of unrecognized tax benefits include $ 790 , $ 734 and $ 1,287 , respectively, that would affect the effective tax rate, if recognized.

As of December 31, 2021, these amounts are primarily associated with the amount of research tax credits claimed and various other matters.

Federal income tax audits have been settled for all years prior to 2018.

The Internal Revenue Service (IRS) is expected to begin the 2018-2019 federal tax audit in the first quarter of 2021.

The Internal Revenue Service (IRS) began the 2018-2019 federal tax audit in the first quarter of 2021 and recently added tax year 2020 to the audit.

We are also subject to examination in major state and international jurisdictions for the 2008-2020 tax years.

believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

Note 5 – Accounts Receivable, net

10 unchanged sentences

government contracts

Our valuation allowance was increased from $ 73 to $ 138 on January 1, 2020 upon adoption of ASU 2016-13.

Accounts receivable expected to be collected after one year are not material.

Note 6 – Allowances for Losses on Financial Assets

Upon adoption of ASU 2016-13, we recorded a $ 162 cumulative-effect adjustment to retained earnings to increase our allowances for credit losses, resulting in a balance of $ 337 as of January 1, 2020.

The change in allowances for expected credit losses for the year ended December 31, 2020 consisted of the following:

Accounts receivable, net Unbilled receivables, net Other Current Assets, net Customer financing, net Other Assets, net Total

The change in allowances for expected credit losses for the years ended December 31, 2021 and 2020 consisted of the following:

Accounts receivable Unbilled receivables Other Current Assets Customer financing Other Assets Total

Balance at January 1, 2020 ($ 138 ) ($ 81 ) ($ 38 ) ($ 5 ) ($ 75 ) ($ 337 )

($ 138 ) ($ 81 ) ($ 38 ) ($ 5 ) ($ 75 ) ($ 337 )

Changes in estimates ( 314 ) ( 48 ) ( 34 ) ( 12 ) ( 66 ) ( 474 )

( 314 ) ( 48 ) ( 34 ) ( 12 ) ( 66 ) ( 474 )

Write-offs 8 8

1 unchanged sentence

Balance at December 31, 2020 ( 444 ) ( 129 ) ( 72 ) ( 17 ) ( 140 ) ( 802 )

Balance at January 1, 2021 ( 444 ) ( 129 ) ( 72 ) ( 17 ) ( 140 ) ( 802 )

Changes in estimates ( 24 ) ( 11 ) 6 ( 1 ) ( 59 ) ( 89 )

Write-offs 77 49 4 13 143

Recoveries 1 1

Balance at December 31, 2021 ($ 390 ) ($ 91 ) ($ 62 ) ($ 18 ) ($ 186 ) ($ 747 )

Note 7 – Inventories

4 unchanged sentences

Total $ 78,823 $ 81,715

Long-term contracts in progress includes Delta launch program inventory that is being sold at cost to United Launch Alliance (ULA) under an inventory supply agreement that terminates on March 31, 2021.

The inventory balance was $ 17 and $ 176 at December 31, 2020 and 2019.

See indemnifications to ULA in Note 14.

Commercial spare parts, used aircraft, general stock materials and other includes capitalized precontract costs of $ 648 at December 31, 2021 and $ 733 at December 31, 2020 primarily related to KC-46A Tanker and Commercial Crew.

Commercial Aircraft Programs

The increase in commercial aircraft programs inventory during 2020 reflects the large number of undelivered aircraft due to the 737 MAX grounding, lower wide-body deliveries driven by the impacts of the COVID-19 pandemic and 787 production issues and associated rework, partially offset by a reach-forward loss of $ 6,493 on the 777X program.

At December 31, 2020, commercial aircraft programs inventory includes approximately 425 undelivered 737 MAX aircraft and 80 undelivered 787 aircraft.

The decrease in commercial aircraft programs inventory during 2021 reflects lower 737 MAX inventory due to resumption of deliveries and a reach-forward loss on the 787 program.

These decreases were partially offset by a continued buildup of 787 aircraft, as well as growth in 777X inventory.

Commercial aircraft programs inventory includes approximately 335 737 MAX aircraft and 110 787 aircraft at December 31, 2021 as compared with 425 737 MAX aircraft and 80 787 aircraft at December 31, 2020.

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 rates reductions are necessary, and/or contract the program accounting quantities, future earnings may be reduced and/or additional reach-forward losses may have to be recorded.

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 December 31, 2021 and 2020, commercial aircraft programs inventory included the following amounts related to the 737 program:

2 unchanged sentences

At December 31, 2021 and 2020, commercial aircraft programs inventory included the following amounts related to the 777X program:

unamortized tooling and other non-recurring costs of $ 3,295 and $ 2,914 .

$ 3,363 and $ 1,727 of work in process and $ 3,521 and $ 3,295 of unamortized tooling and other non-recurring costs.

During the fourth quarter of 2020, we determined that estimated costs to complete the 777X program plus costs already included in 777X inventory exceed estimated revenues from the program.

The resulting reach-forward loss of $ 6,493 was recorded as a reduction to deferred production costs.

As a result, 777X deferred production costs were immaterial at December 31, 2020.

As a result, 777X deferred production costs were immaterial at December 31, 2020 and remain immaterial at December 31, 2021.

The level of profitability on the 777X program will be subject to a number of factors.

These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification.

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.

At December 31, 2020 and 2019, commercial aircraft programs inventory included the following amounts related to the 787 program:

During the fourth quarter of 2021, we determined that estimated costs to complete the 787 program plus costs already included in 787 inventory exceed estimated revenues from the program.

The resulting reach-forward loss of $ 3,460 was recorded as a reduction to deferred production costs.

December 31, 2021 and 2020, commercial aircraft programs inventory included the following amounts related to the 787 program:

deferred production costs of $ 11,693 and $ 14,976 , $ 1,907 and $ 1,865 of supplier advances, and $ 1,815 and $ 1,863 of unamortized tooling and other non-recurring costs.

2 unchanged sentences

Note 8 – Contracts with Customers

Unbilled receivables decreased from $ 9,043 at December 31, 2019 to $ 7,995 at December 31, 2020, primarily driven by an increase in billings at BDS and BGS, as well as an increase in allowances for expected credit losses at BGS.

Advances and progress billings decreased from $ 51,551 at December 31, 2019 to $ 50,488 at December 31, 2020, primarily driven by revenue recognized in excess of advances on orders received and return of BCA customer advances, partially offset by advances on orders received at BCA, BDS, and BGS .

Unbilled receivables increased from $ 7,995 at December 31, 2020 to $ 8,620 at December 31, 2021, primarily driven by revenue recognized at BDS and BGS in excess of billings.

Advances and progress billings increased from $ 50,488 at December 31, 2020 to $ 52,980 at December 31, 2021, primarily driven by advances on orders received at BDS, BCA and BGS, partially offset by revenue recognized and the return of customer advances at BCA.

Revenues recognized for the years ended December 31, 2021 and 2020 from amounts recorded as Advances and progress billings at the beginning of each year were $ 11,336 and $ 10,360 .

Certain commercial airplane customers are experiencing liquidity issues and seeking additional capital.

Should these customers fail to address their liquidity issues, accounts receivable, unbilled receivables and certain inventory could become impaired.

In addition we would have to remove contracts related to these customers from backlog and remarket any undelivered aircraft.

The following table summarizes our contract assets under long-term contracts that were unbillable or related to outstanding claims as of December 31:

5 unchanged sentences

Total $ 8,620 $ 7,995 $ 15 $ 18

(1) In the first quarter of 2020, we adopted ASU 2016-13, refer to Note 6.

Unbilled receivables related to commercial customer incentives expected to be collected after one year were $ 131 and $ 178 at December 31, 2021 and 2020.

2 unchanged sentences

Customer financing primarily relates to our BCC segment.

Financing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate the lease.

Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price.

Customer financing consisted of the following at December 31:

3 unchanged sentences

Total financing receivables 1,356 1,339

Operating lease equipment, at cost, less accumulated depreciation of $ 209 and $ 235

Gross customer financing 2,054 2,306

Less allowance for losses on receivables ( 18 ) ( 17 )

Financing receivables, net 1,338 1,322

Operating lease equipment, at cost, less accumulated depreciation of $ 58 and $ 209

Total $ 1,812 $ 2,037

We acquire aircraft to be leased to customers through trades, lease returns, purchases in the secondary market, and new aircraft transferred from our BCA segment.

Leasing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate the lease.

Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price.

A minority of leases contain variable lease payments based on actual aircraft usage and are paid in arrears.

The components of investment in sales-type/finance leases at December 31 were as follows:

3 unchanged sentences

Total $ 944 $ 919

Operating lease equipment primarily includes large commercial jet aircraft.

Financing receivable balances evaluated for impairment at December 31 were as follows:

Individually evaluated for impairment $ 391 $ 400

Collectively evaluated for impairment 948 1,072

Total financing receivables $ 1,339 $ 1,472

We determine a receivable is impaired when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms.

At December 31, 2020 and 2019, we individually evaluated for impairment customer financing receivables of $ 391 and $ 400 , of which $ 380 and $ 388 were determined to be impaired.

We recorded no allowance for losses on these impaired receivables as the collateral values exceeded the carrying values of the receivables.

We determine a receivable is past due when cash has not been received upon the due date specified in the contract.

At December 31, 2021 and 2020, $ 378 and $ 380 were determined to be uncollectible financing receivables and placed on non-accrual status.

We recorded no allowance for losses on these uncollectible financing receivables as the collateral values exceeded the carrying values of the receivables.

Customer financing interest income received for the years ended December 31, 2021 and 2020 was $ 18 and $ 34 .

There were no past due customer financing receivables as of December 31, 2021.

We evaluate the collectability of customer financing receivables at commencement and on a recurring basis.

If a customer financing receivable is deemed uncollectible, the customer is categorized as non-accrual status.

When a customer is in non-accrual status at commencement, sales-type lease revenue is deferred until substantially all cash has been received or the customer is removed from non-accrual status.

If a customer status changes to non-accrual after commencement or is a direct finance lease and sufficient collateral is available, we recognize contractual interest income as payments are received to the extent payments exceed past due principal payments.

If there is not sufficient collateral, then revenue is not recognized until payments exceed the principal balance.

Receivables in non-accrual status as of December 31, 2020 and December 31, 2019 were $ 380 and $ 388 .

Interest income received for the twelve and three months ended December 31, 2020 was $ 34 and $ 8 .

The adequacy of the allowance for losses is assessed quarterly.

Four primary factors influencing the level of our allowance for losses on customer financing receivables are customer credit ratings, default rates, expected loss rate and collateral values, which may be adversely affected by impacts that COVID-19 has on our customers.

We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers.

Our rating categories are comparable to those used by the major credit rating agencies.

Our allowance for losses on receivables decreased from $ 8 to $ 5 on January 1, 2020 upon adoption of ASU 2016-13.

See Note 6 – Allowances for Losses on Financial Assets.

Our financing receivable balances at December 31 by internal credit rating category and year of origination consisted of the following:

5 unchanged sentences

Total carrying value of financing receivables $ 311 $ 127 $ 68 $ 13 $ 284 $ 553 $ 1,356

At December 31, 2020, our allowance related to receivables with ratings of CCC, B, BB and BBB.

At December 31, 2021, our allowance for losses related to receivables with ratings of CCC, B, BB and BBB.

We applied default rates that averaged 24.2 %, 5.5 %, 2.6 % and 0.2 %, respectively, to the exposure associated with those receivables.

Customer Financing Exposure

Customer financing is collateralized by security in the related asset.

The value of the collateral is closely tied to commercial airline performance and overall market conditions and may be subject to reduced valuation with market decline.

Certain collateral values are being adversely impacted by the changes in market conditions driven by the COVID-19 pandemic.

Declines in collateral values could result in asset impairments, reduced finance lease income, and an increase in the allowance for losses.

Our customer financing collateral is concentrated in out-of-production aircraft and 747-8 aircraft.

Generally, out-of-production aircraft have experienced greater collateral value declines than in-production aircraft.

The majority of customer financing carrying values are concentrated in the following aircraft models at December 31:

The majority of our customer financing portfolio is concentrated in the following aircraft models at December 31:

717 Aircraft ($ 62 and $ 98 accounted for as operating leases)

5 unchanged sentences

747-400 Aircraft ($ 1 and $ 19 accounted for as operating leases)

Charges related to customer financing asset impairment for the years ended December 31 were as follows:

Operating lease equipment primarily includes large commercial jet aircraft.

Impairment charges related to customer financing operating lease assets for the years ended December 31 were as follows:

2021 2020 2019

2 unchanged sentences

Total $ 31 $ 24 $ 270

Lease income recorded in Revenue on the Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 included $ 57 and $ 62 from sales-type/finance leases, and $ 118 and $ 139 from operating leases, of which $ 9 and $ 8 related to variable operating lease payments.

Lease income recorded in Revenue on the Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 included $ 54 and $ 57 from sales-type/finance leases, and $ 68 and $ 118 from operating leases.

Profit at the commencement of sales-type leases was recorded in revenue for the years ended December 31, 2021 and 2020 in the amount of $ 78 and $ 26 .

As of December 31, 2021, undiscounted cash flows for notes receivable, sales-type/finance and operating leases over the next five years and thereafter are as follows:

6 unchanged sentences

Thereafter 126 279 37

Total lease receipts 420 756 388

Total financing receipts 412 1,099 230

Less imputed interest ( 265 )

19 unchanged sentences

Equity method investments (1)

$ 936 $ 1,031

Time deposits 7,676 17,154

5 unchanged sentences

Retained earnings at December 31, 2021 include undistributed earnings from our equity method investments of $ 136 .

(2) Reflects amounts restricted in support of our workers’ compensation programs, employee benefit programs, and insurance premiums.

During the third quarter of 2021, Boeing and AE Industrial Partners announced a strategic partnership to establish a dedicated aerospace venture fund.

This transaction resulted in the deconsolidation of HorizonX and generated a gain of $ 117 which is included in Income from operating investments, net.

(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.

25 unchanged sentences

Total $ 1,539

As of December 31, 2020, we have entered into a lease that has not yet commenced of $ 226 , for a maintenance, repair and overhaul hangar that will support military aircraft programs.

This lease will commence in 2023 with a lease term of 25 years.

As of December 31, 2021, we have entered into leases that have not yet commenced of $ 265 , for a maintenance, repair and overhaul hangar and a paint hangar that will support military aircraft programs.

These leases will commence between 2022 and 2023 with lease terms of 7 years to 25 years.

Note 13 – Liabilities, Commitments and Contingencies

7 unchanged sentences

Forward loss recognition 2,014 1,913

Dividends payable 1,159

Income taxes payable 5 43

2 unchanged sentences

Total $ 18,455 $ 22,171

737 MAX Grounding and COVID-19 Impacts

737 MAX Grounding

In 2019, following two fatal 737 MAX accidents, the Federal Aviation Administration (FAA) and non-U.S.

3 unchanged sentences

resumed in late 2020 following rescission by the FAA of its grounding order.

Multiple legal actions have been filed against us as a result of the accidents.

In addition, we are fully cooperating with U.S.

government investigations related to the accidents and the 737 MAX program, including an investigation by the Securities and Exchange Commission, the outcome of which may be material.

Other than as described below with respect to the U.S.

Department of Justice, we cannot

reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the lawsuits, investigations and inquiries related to the 737 MAX.

On January 6, 2021, we entered into a Deferred Prosecution Agreement with the U.S.

Department of Justice that resolves the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX airplane by the FAA.

Under the terms of the Deferred Prosecution Agreement, we agreed to the filing of a criminal information charging the Company with one count of conspiracy to defraud the United States, based on the conduct of two former 737 MAX program technical pilots;

the criminal information will be dismissed after three years, provided that we comply with our obligations under the agreement.

The Deferred Prosecution Agreement requires that we make payments totaling $ 2.51 billion, which consist of (a) a $ 243.6 million criminal monetary penalty;

(b) $ 500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents;

and (c) $ 1.77 billion to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement.

The agreement also requires that we review our compliance program and undertake continuous improvement efforts with respect to it, and implement enhanced compliance reporting and internal controls mechanisms.

Of the payments described above, $ 1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations.

We expensed $ 743.6 million in the fourth quarter of 2020 related to this agreement.

During the fourth quarter of 2020, the FAA rescinded the order that grounded 737 MAX aircraft and issued an Airworthiness Directive specifying requirements that must be met before U.S.

carriers can resume service, including installing software enhancements, completing wire separation modification, conducting pilot training and performing maintenance steps to prepare parked aircraft to fly again.

The FAA also issued a Continued Airworthiness Notification to the International Community, and published the 737 MAX training requirements.

The FAA must approve 737 MAX pilot training program revisions for each U.S.

airline operating the aircraft and has indicated its intent to retain its authority to issue airworthiness certificates and export certificates of airworthiness for all new 737 MAX aircraft manufactured subsequent to the grounding order.

The Brazilian National Civil Aviation Agency approved return of operations in the fourth quarter of 2020, and Transport Canada and the European Union Aviation Safety Agency (EASA) approved return of operations in the first quarter of 2021.

In December 2020, we delivered 27 aircraft, in compliance with the FAA regulatory requirements described above.

We have assumed that the remaining non-U.S.

regulatory approvals will occur and enable deliveries during the first half of 2021.

We have approximately 425 airplanes in inventory as of December 31, 2020.

A number of customers have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory.

We now expect to deliver about half of the 737 MAX aircraft in inventory by the end of 2021.

In the event that we are unable to resume aircraft deliveries in non-U.S.

jurisdictions consistent with our assumptions of regulatory approval timing, our expectation of delivery timing could be impacted.

Due to the grounding and associated suspension of 737 MAX deliveries, we temporarily suspended 737 MAX production beginning in January 2020.

We resumed early stages of 737 MAX production in May 2020 and continued to produce at low rates through the end of 2020.

In addition, we reduced the number of aircraft included in the accounting quantity by 400 units in the first quarter of 2020 as a result of reductions to planned production rates due to COVID-19 driven market uncertainties.

As we are producing at abnormally low production rates in 2020 and 2021, we expect to incur approximately $ 5 billion of abnormal production costs that are being expensed as incurred.

The slowdown in the planned production rate ramp-up increased expected abnormal costs, however this increase was offset by adjustments to the determination of the normal production level due to COVID-19 impacts on customer demand, as well as cost reduction activities, including significant

reductions in employment levels.

We expensed $ 2,567 of abnormal production costs during the year ended December 31, 2020.

In addition to impacts related to the 737 MAX accidents and subsequent grounding, the 737 program continues to be significantly impacted by the COVID-19 pandemic and its effect on aircraft demand.

These impacts have resulted in lower production and delivery rate assumptions.

We currently expect to gradually increase the production rate to 31 per month by early 2022.

We currently assume that we will implement further gradual production rate increases in subsequent periods based on market demand.

The ongoing impacts of COVID-19 on market demand have also created significant uncertainty around the timing of deliveries of 737 MAX aircraft in inventory.

We may need to recognize additional costs associated with remarketing and/or reconfiguring aircraft in inventory, which may reduce revenue and/or earnings in future periods.

We have also recorded additional expenses of $ 416 and $ 328 due to the 737 MAX grounding during 2020 and 2019, which include costs related to storage, inventory impairment, pilot training, and software updates.

The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during 2020.

In addition, several other non-U.S.

civil aviation authorities, including the Brazilian National Civil Aviation Agency, Transport Canada, and the European Union Aviation Safety Agency have subsequently approved return of operations, allowing us to resume deliveries in those jurisdictions.

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.

We expect 737 MAX deliveries to China to resume in 2022, subject to final regulatory approvals, although risk remains around the timing and rate of those deliveries.

Over 185 countries have approved the resumption of 737 MAX operations.

The 737 MAX remains grounded in a small number of non-U.S.

jurisdictions.

We have gradually increased production rates in 2020 and 2021 and continue to expect to increase the production rate to 31 per month by early 2022, as well as implement further gradual production rate increases in subsequent periods based on market demand and supply chain capacity.

We produced at abnormally low production rates in 2020 and 2021 and expensed abnormal production costs of $ 1,887 and $ 2,567 during the years ended December 31, 2021 and 2020.

We do not expect the remaining abnormal costs related to the 737 MAX to be significant and expect most of the remainder to be incurred in early 2022.

In 2021, we delivered 245 aircraft.

We have approximately 335 airplanes in inventory as of December 31, 2021 and we anticipate delivering most of these aircraft by the end of 2023.

We continue to work with 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.

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.

We have also recorded additional expenses of $ 175 , $ 416 , and $ 328 due to the 737 MAX grounding during 2021, 2020, and 2019, respectively.

The expenses include costs related to storage, inventory impairment, pilot training, and software updates.

The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during 2021 and 2020.

Beginning balance – January 1 $ 5,537 $ 7,389

Initial liability recorded in the second quarter of 2019 $ 6,110

Reductions for payments made ( 2,535 ) ( 2,188 )

2 unchanged sentences

Ending balance – December 31 $ 2,940 $ 5,537

We are working with our customers to minimize the impact to their operations from grounded and undelivered aircraft.

We continue to reassess the liability for estimated potential concessions and other considerations to customers on a quarterly basis.

This reassessment includes updating estimates to reflect revisions to return to service, delivery and production rate assumptions driven by timing of regulatory approvals, as well as latest information based on engagements with 737 MAX customers.

The liability represents our current best estimate of future concessions and other considerations to customers, and is necessarily based on a series of assumptions.

It is subject to change in future quarters as negotiations with customers mature and timing and conditions of return to service are better understood.

The liability balance of $ 5.5 billion at December 31, 2020 includes $ 2.3 billion expected to be liquidated by lower customer delivery payments, $ 0.6 billion expected to be paid in cash and $ 0.1 billion in other concessions.

Of the cash payments to customers, we expect to pay $ 0.3 billion in 2021 and $ 0.3 billion in 2022.

The liability balance of $ 2.9 billion at December 31, 2021 includes $ 2.2 billion of contracted customer concessions and other liabilities and $ 0.7 billion that remains subject to negotiation with customers.

The contracted amount includes $ 1.0 billion expected to be liquidated by lower customer delivery payments, $ 1.0 billion expected to be paid in cash and $ 0.2 billion in other concessions.

Of the cash payments to customers, we expect to pay $ 0.8 billion in 2022.

The type of consideration to be provided for the remaining $ 0.7 billion will depend on the outcomes of negotiations with customers.

The 737 MAX remains grounded in certain non-U.S.

jurisdictions.

The civil aviation authorities in those jurisdictions will determine the timing and conditions of return to service.

Our assumptions reflect our current best estimate, but actual timing and conditions of return to service and resumption of deliveries could differ from this estimate, the effect of which could be material.

We are unable at this time to reasonably estimate potential future additional financial impacts or a range of loss, if any, due to continued uncertainties related to the timing and conditions of return to service, uncertainties related to the impacts of COVID-19 on our operations, supply chain and customers, future changes to the production rate, supply chain impacts, and/or the results of negotiations with particular customers.

Any such impacts, including any changes in our estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows.

For example, we expect that, in the event

that we are unable to resume aircraft deliveries in non-U.S.

jurisdictions consistent with our assumptions, the continued absence of revenue, earnings, and cash flows associated with 737 MAX deliveries would continue to have a material impact on our operating results.

In the event that future production rate increases occur at a slower rate or take longer than we are currently assuming, we expect that the growth in inventory and other cash flow impacts associated with production would decrease.

However, while any prolonged production suspension or delays in planned production rate increases could mitigate the impact on our liquidity, it could significantly increase the overall expected costs to produce aircraft included in the accounting quantity, which would reduce 737 program margins and/or increase abnormal production costs in the future.

Commercial air traffic has fallen dramatically due to the COVID-19 pandemic.

While this trend has impacted passenger traffic most severely, near-term cargo traffic has also fallen significantly due to the global economic downturn and the reduction in cargo capacity on passenger airplanes.

Airlines have significantly reduced their capacity, and many could implement further reductions in the near future.

Many airlines are also implementing significant reductions in staffing.

These capacity changes are causing, and are expected to continue to cause, negative impacts to our customers’ revenue, earnings, and cash flow, and in some cases may threaten the future viability of some of our customers, potentially causing defaults within our customer financing portfolio and/or requiring us to remarket aircraft that have already been produced and/or are currently in backlog.

If 737 MAX aircraft remain grounded for an extended period of time in non-U.S.

jurisdictions, we may experience additional reductions to backlog and/or significant order cancellations.

Additionally, we may experience fewer new orders and increased cancellations across all of our commercial airplane programs as a result of the COVID-19 pandemic and associated impacts on demand.

Our customers may also lack sufficient liquidity to purchase new aircraft due to impacts from the pandemic.

We are also observing a significant increase in the number of requests for payment deferrals, contract modifications, lease restructurings and similar actions, and these trends may lead to additional earnings charges, impairments and other adverse financial impacts in our business over time.

In addition, to the extent that customers have valid rights to cancel undelivered aircraft, we may be required to refund pre-delivery payments, putting additional constraints on our liquidity.

There is risk that the industry implements longer-term strategies involving reduced capacity, shifting route patterns, and mitigation strategies related to impacts from COVID-19 and the risk of future public health crises.

In addition, airlines may experience reduced demand due to reluctance by the flying public to travel.

As a result, there is significant uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels.

The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, putting significant negative pressure on cargo traffic.

Any of these factors would have a significant impact on the demand for both single-aisle and wide-body commercial aircraft, as well as for the services we provide to commercial airlines.

In addition, a lengthy period of reduced industry-wide demand for commercial aircraft would put additional pressure on our suppliers, resulting in increased procurement costs and/or additional supply chain disruption.

To the extent that the COVID-19 pandemic or its aftermath further impacts demand for our products and services or impairs the viability of some of our customers and/or suppliers, our financial condition, results of operations, and cash flows could be adversely affected, and those impacts could be material.

Environmental

16 unchanged sentences

Ending balance – December 31 $ 1,900 $ 1,527

The increase in the product warranty reserve during the years ended December 31, 2020 and 2019 is primarily driven by charges related to “pickle forks” on 737NG aircraft.

The increase in the product warranty reserve during the year ended December 31, 2020 is primarily driven by charges related to “pickle forks” on 737NG aircraft.

During 2019, we detected cracks in the "pickle forks", a frame fitting component of the structure connecting the wings to the fuselages of 737NG aircraft.

We notified the FAA, which issued a directive requiring that certain 737NG airplanes be inspected.

We have estimated the number of aircraft that will have to be repaired in the future and provisioned for the estimated costs of completing the repairs.

We recognized charges of $ 135 in 2019 for current and projected future aircraft repairs.

During the first quarter of 2020, we recognized additional charges of $ 336 based on revised engineering and fleet utilization estimates as well as updated repair cost estimates.

In 2019, we estimated the number of aircraft that would have to be repaired in the future and provisioned for the estimated costs of completing the repairs.

During the first quarter of 2020, we recognized charges of $ 336 based on revised engineering and fleet utilization estimates as well as updated repair cost estimates.

We cannot estimate a range of reasonably possible losses, if any, in excess of amounts recognized due to the ongoing nature of the inspections and repairs and pending the completion of investigations into the cause of the condition.

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.

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.

11 unchanged sentences

Funding Commitments

We have commitments to make additional capital contributions of $ 243 to joint ventures over the next seven years.

We have commitments to make additional capital contributions of $ 248 to joint ventures over the next six years.

Standby Letters of Credit and Surety Bonds

5 unchanged sentences

We have loans in place to cover costs paid or incurred to carry the underlying life insurance policies.

December 31, 2020 and 2019, the cash surrender value was $ 395 and $ 448 and the total loans were $ 382 and $ 431 .

As of December 31, 2021 and 2020, the cash surrender value was $ 374 and $ 395 and the total loans were $ 360 and $ 382 .

As we have the right to offset the loans against the cash surrender value of the policies, we present the net asset in Other assets on the Consolidated Statements of Financial Position as of December 31, 2021 and 2020.

United States Government Defense Environment Overview

The Omnibus appropriations acts for FY21, enacted in December 2020, provided FY21 appropriations for government departments and agencies, including the United States Department of Defense (U.S.

DoD), the National Aeronautics and Space Administration (NASA) and the Federal Aviation Administration.

The enacted FY21 appropriations included funding for Boeing’s major programs, such as the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, P-8 Poseidon and Space Launch System.

However, there continues to be uncertainty with respect to future program-level appropriations for the U.S.

DoD and other government agencies, including NASA.

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.

BDS Fixed-Price Development Contracts

We have recorded earnings charges for losses on a number of fixed-price development contracts.

Fixed-price development work is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work.

BDS fixed-price contracts with significant development work include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites.

The operational and technical complexities of these contracts create financial risk, which could trigger termination provisions, order cancellations or other financially significant exposure.

Changes to cost and revenue estimates could result in lower margins or material charges for reach-forward losses.

For example, we have recorded an increase in the reach-forward loss of $ 1,320 on KC-46A Tanker in 2020.

The KC-46A Tanker reach-forward loss reflects $ 551 of costs associated with the agreement signed in April 2020 with the U.S.

Air Force (USAF) to develop and integrate a new Remote Vision System, and the remaining costs reflect production inefficiencies including impacts of COVID-19 disruption.

Moreover, our fixed-price development programs remain subject to additional reach-forward losses if we experience further production, technical or quality issues, schedule delays, or increased costs.

The operational and technical complexities of these contracts create financial risk, which could trigger additional earnings charges, termination provisions, order cancellations or other financially significant exposure.

KC-46A Tanker

2 unchanged sentences

This Engineering, Manufacturing and Development (EMD) contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration.

Since 2016, the USAF has authorized five low rate initial production (LRIP) lots for a total of 67 aircraft.

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 are valued at approximately $ 19 billion as of December 31, 2021.

At December 31, 2021, we had approximately $ 243 of capitalized precontract costs and $ 409 of potential termination liabilities to suppliers.

These values were primarily related to 12 aircraft in lot 6 and 15 aircraft in lot 7 for which we received contract awards in January 2021.

Recoverable Costs on Government Contracts

2 unchanged sentences

We work with the U.S.

government to assess the merits of claims and where appropriate reserve for

amounts disputed.

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.

The following table summarizes changes in the severance liability during 2020:

The following table summarizes changes in the severance liability during 2021 and 2020:

Beginning balance – January 1 $ 283

Initial liability recorded in the second quarter of 2020 $ 652

4 unchanged sentences

The severance packages are consistent with the Company’s ongoing compensation and benefits plans.

As of December 31, 2020, approximately 18,000 of the 26,000 employees have left the Company, and the remainder are expected to leave in 2021.

During the first quarter of 2021, we reduced the estimated number of employees expected to leave the Company through voluntary and involuntary terminations to approximately 23,000.

During the second quarter of 2021, we further reduced the estimated number of employees expected to leave the company through voluntary and involuntary terminations to approximately 19,000.

As of December 31, 2021, our severance liability primarily relates to remaining severance payments to terminated employees.

Note 14 – Arrangements with Off-Balance Sheet Risk

9 unchanged sentences

Contingent repurchase commitments $ 548 $ 1,452 $ 548 $ 1,452

Indemnifications to ULA:

Contributed Delta inventory

Inventory supply agreement 17 34

Questioned costs 317 $ 48

Credit guarantees 90 90 28 28 $ 24 $ 24

Contingent Repurchase Commitments The repurchase price specified in contingent repurchase commitments is generally lower than the expected fair value at the specified repurchase date.

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.

Indemnifications to ULA During the first quarter of 2020, the USAF and ULA reached a settlement regarding previously questioned deferred support and deferred production costs.

As part of the settlement the USAF agreed to reimburse ULA for $ 307 of those costs, which was received by ULA in the second quarter.

Our indemnification to ULA associated with the recoverability of contributed assets

expired on December 31, 2020, resulting in a $ 33 payment to the partnership.

This settlement retires our indemnification risks to ULA.

Other Indemnifications In conjunction with our sales of Electron Dynamic Devices, Inc.

and Rocketdyne Propulsion and Power businesses and our BCA facilities in Wichita, Kansas and Tulsa and McAlester, Oklahoma, we agreed to indemnify, for an indefinite period, the buyers for costs relating to pre-closing environmental conditions and certain other items.

We are unable to assess the potential number of future claims that may be asserted under these indemnifications, nor the amounts thereof (if any).

As a result, we cannot estimate the maximum potential amount of future payments under these indemnities and therefore, no liability has been recorded.

To the extent that claims have been made under these indemnities and/or are probable and reasonably estimable, liabilities associated with these indemnities are included in the environmental liability disclosure in Note 13.

Credit Guarantees We have issued credit guarantees where we are obligated to make payments to a guaranteed party in the event that the original lessee or debtor does not make payments or perform certain specified services.

1 unchanged sentence

Current outstanding credit guarantees expire through 2036.

Industrial Revenue Bonds

Industrial Revenue Bonds (IRB) issued by St.

Industrial Revenue Bonds Industrial Revenue Bonds (IRB) issued by St.

Louis County were used to finance the purchase and/or construction of real and personal property at our St.

5 unchanged sentences

As of December 31, 2021 and 2020, the assets and liabilities associated with the IRBs were $ 271 .

Other Indemnifications In conjunction with our sales of Electron Dynamic Devices, Inc.

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.

Note 15 – Debt

In the first quarter of 2020, we entered into a $ 13,825 , two-year delayed draw term loan facility, which includes additional commitments made subsequent to the initial closing date.

As of December 31, 2020, we have fully drawn on the 13,825 delayed draw term loan facility, with February 6, 2022 as the final maturity date.

Borrowings outstanding bear interest at the Eurodollar rate (determined in accordance with the delayed draw term loan facility agreement) plus between 0.75 % and 1.25 %, depending on our credit rating.

In the second quarter of 2020, we issued $ 25,000 of fixed rate senior notes consisting of $ 3,000 due May 1, 2023 that bear an annual interest rate of 4.508 %, $ 3,500 due May 1, 2025 that bear an annual interest rate of 4.875 %, $ 2,000 due May 1, 2027 that bear an annual interest rate of 5.04 %, $ 4,500 due May 1, 2030 that bear an annual interest rate of 5.15 %, $ 3,000 due May 1, 2040 that bear an annual interest rate of 5.705 %, $ 5,500 due May 1, 2050 that bear an annual interest rate of 5.805 %, and $ 3,500 due May 1, 2060 that bear an annual interest rate of 5.93 %.

In the first quarter of 2021, we issued $ 9,825 of fixed rate senior notes consisting of $ 1,325 due February 4, 2023 that bear an annual interest rate of 1.167 %, $ 3,000 due February 4, 2024 that bear an annual interest rate of 1.433 %, and $ 5,500 due February 4, 2026 that bear an annual interest rate of 2.196 %.

The notes are unsecured senior obligations and rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness.

The net proceeds of the issuance totaled $ 9,780 , after deducting underwriting discounts, commissions and offering expenses.

In the fourth quarter of 2020, we issued $ 4,900 of fixed rate senior notes consisting of $ 1,000 due February 1, 2024 that bear an annual interest rate of 1.95 %, $ 1,400 due February 1, 2026 that bear an annual interest rate of 2.75 %, $ 1,100 due February 1, 2028 that bear an annual interest rate of 3.25 %, and $ 1,400 due February 1, 2031 that bear an annual interest rate of 3.625 %.

The notes are unsecured

senior obligations and rank equally in right of payment with our existing and future unsecured and unsubordinated indebtedness.

The net proceeds of the issuance totaled $ 4,870 , after deducting underwriting discounts, commissions, and offering expenses.

We used the net proceeds of these note issuances to repay $ 9,825 outstanding under our two-year delayed draw term loan credit agreement in the first quarter of 2021, and we repaid the remaining $ 4,000 in the fourth quarter of 2021.

Interest incurred, including amounts capitalized, was $ 2,790 , $ 2,280 and $ 867 for the years ended December 31, 2021, 2020 and 2019, respectively.

1 unchanged sentence

Total Company interest payments were $ 2,583 , $ 1,925 and $ 973 for the years ended December 31, 2021, 2020 and 2019, respectively.

We have $ 9,473 currently available under credit line agreements, of which $ 3,073 is a 364-day revolving credit facility expiring in October 2021, $ 3,200 expires in October 2022, and $ 3,200 expires in October 2024.

In the first quarter of 2021, we entered into a $ 5,280 two-year revolving credit agreement.

As of December 31, 2021, we had $ 14,740 currently available under credit line agreements, of which $ 3,060 is a 364-day revolving credit facility expiring in October 2022, $ 3,200 expires in October 2022, $ 5,280 expires in March 2023 and $ 3,200 expires in October 2024.

The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings one year beyond the aforementioned expiration date.

2 unchanged sentences

Unsecured debt $ 1,155 $ 1,448

Non-recourse debt and notes 15 21

Finance lease obligations 61 65

Commercial paper 6,109

Other notes 80 180

9 unchanged sentences

3.95 % - 5.15 % due through 2059

13,993 13,917

5.71 % - 6.63 % due through 2060

Commercial paper

Non-recourse debt and notes

6.98 % notes due through 2021

13,008 13,005

6.88 % - 8.75 % due through 2043

Other debt and notes

Finance lease obligations due through 2044

1 unchanged sentence

Total debt $ 58,102 $ 63,583

At December 31, 2020, we had no commercial paper borrowings.

At December 31, 2019, commercial paper borrowings totaling $ 6,109 , with a weighted-average interest rate of 2.2 %, were supported by unused commitments under the revolving credit agreement.

Total debt at December 31 is attributable to:

2 unchanged sentences

Total debt $ 58,102 $ 63,583

At December 31, 2020, $ 15 of debt (non-recourse debt) was collateralized by customer financing assets totaling $ 167 .

Scheduled principal payments for debt and minimum finance lease obligations for the next five years are as follows:

9 unchanged sentences

We also have other postretirement benefits (OPB) other than pensions which consist principally of health care coverage for eligible retirees and qualifying dependents, and to a lesser extent, life insurance to certain groups of retirees.

Retiree health care is provided principally until age 65 for approximately two-thirds of those participants who are eligible for health care coverage.

Retiree health care is provided principally until age 65 for approximately three-fourths of those participants who are eligible for health care coverage.

Certain employee groups, including employees covered by most United Auto Workers bargaining agreements, are provided lifetime health care coverage.

The funded status of the plans is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO).

The funded status of the plans is measured as the

difference between the plan assets at fair value and the projected benefit obligation (PBO).

We have recognized the aggregate of all overfunded plans in Other assets and the aggregate of all underfunded plans in either Accrued retiree health care or Accrued pension plan liability, net.

7 unchanged sentences

Amortization of prior service credits ( 80 ) ( 80 ) ( 79 ) ( 35 ) ( 38 ) ( 35 )

( 80 ) ( 79 ) ( 56 ) ( 38 ) ( 35 ) ( 126 )

Recognized net actuarial loss/(gain) 1,219 1,032 643 ( 56 ) ( 63 ) ( 46 )

1 unchanged sentence

Net periodic benefit (income)/cost ($ 525 ) ($ 337 ) ($ 372 ) $ 86 $ 105 $ 184

Net periodic benefit cost included in (Loss)/earnings

from operations $ 3 $ 313 $ 313 $ 91 $ 88 $ 84

Net periodic benefit cost included in Loss from operations $ 3 $ 3 $ 313 $ 90 $ 91 $ 88

Net periodic benefit (income)/cost included in Other income, net ( 528 ) ( 340 ) ( 374 ) ( 1 ) 16 107

Net periodic benefit (income)/cost included in (Loss)/earnings before income taxes

Net periodic benefit (income)/cost included in Loss before income taxes

($ 525 ) ($ 337 ) ($ 61 ) $ 89 $ 107 $ 195

In 2021, we recorded a $ 193 settlement charge in Other income, net and remeasured assets and benefit obligations related to three of the Company’s pension plans.

The following tables show changes in the benefit obligation, plan assets and funded status of both pensions and OPB for the years ended December 31, 2021 and 2020.

7 unchanged sentences

Amendments ( 29 )

Actuarial loss/(gain) 7,759 8,695 ( 218 ) 127

Settlement/curtailment/other

( 68 ) ( 756 ) 55

Actuarial (gain)/loss ( 3,249 ) 7,759 ( 401 ) ( 218 )

Settlement/other ( 870 ) ( 68 ) 55

Gross benefits paid ( 4,653 ) ( 5,386 ) ( 411 ) ( 450 )

57 unchanged sentences

We use various analytics to determine the optimal asset mix and consider plan liability characteristics, liquidity characteristics, funding requirements, expected rates of return and the distribution of returns.

A key element of our strategy is to de-risk the plan as the funded status of the plan increases.

During 2021, as the funded status of the plans increased, certain assets were reallocated to fixed income.

The changes in the asset allocation are reflected in the asset allocation table below.

We identify investment benchmarks to evaluate performance for the asset classes in the strategic asset allocation that are market-based and investable where possible.

15 unchanged sentences

Private equity investment vehicles are primarily limited partnerships (LPs) that mainly invest in U.S.

leveraged buyout, venture capital and special situation strategies.

leveraged buyout, venture capital, growth and special situation strategies.

Real estate and real assets include global private investments that may be held through investments in a limited partnership (LP) or other fund structures and publicly traded investments (such as Real Estate Investment Trusts (REITs) in the case of real estate).

2 unchanged sentences

Hedge fund investments seek to capitalize on inefficiencies identified across and within different asset classes or markets.

Hedge fund strategy types include, but are not limited to directional, event driven, relative value, long-short and multi-strategy.

Hedge fund strategy types include, but are not limited to, directional, event driven, relative value and long-short.

Investment managers are retained for explicit investment roles specified by contractual investment guidelines.

Certain investment managers are authorized to use derivatives, such as equity or bond futures, swaps, options and currency futures or forwards.

Derivatives are used to achieve the desired market exposure of a security or an index, transfer value-added performance between asset classes,

achieve the desired currency exposure, adjust portfolio duration or rebalance the total portfolio to the target asset allocation.

Derivatives are used to achieve the desired market exposure of a security or an index, transfer value-added performance between asset classes, achieve the desired currency exposure, adjust portfolio duration or rebalance the total portfolio to the target asset allocation.

As a percentage of total pension assets, derivative net notional amounts were 33.4 % and 8.3 % for fixed income, including to-be-announced mortgage-backed securities and treasury forwards, and ( 5.4 %) and 0.4 % for global equity and commodities at December 31, 2021 and 2020.

23 unchanged sentences

Other 3 $ 3 19 $ 18 1

Assets 62 62 6 6

Liabilities ( 48 ) ( 48 ) ( 17 ) ( 17 )

17 unchanged sentences

Fixed income common/collective/pooled funds $ 1,712 $ 2,345

$ 2,345 $ 959

Fixed income other 747 604

4 unchanged sentences

Total investments measured at NAV as a practical expedient $ 20,789 $ 23,013

$ 23,013 $ 20,249

Cash $ 520 $ 267

13 unchanged sentences

For those investments reported on a one-quarter lagged basis (primarily LPs) we use NAVs, adjusted for subsequent cash flows and significant events.

Real estate and real asset NAV valuations are based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data.

Real estate and real asset NAVs are based on the valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data.

For those investments reported on a one-quarter lagged basis (primarily LPs), NAVs are adjusted for subsequent cash flows and significant events.

3 unchanged sentences

This is primarily done by applying a market or income valuation methodology depending on the specific type of security or instrument held.

Investments in private equity, private debt, real estate, real assets, and hedge funds are primarily calculated and reported by the General Partner (GP), fund manager or third party administrator.

Investments in private equity, private debt, real estate, real assets and hedge funds are primarily calculated and reported by the General Partner, fund manager or third party administrator.

Additionally, some investments in fixed income and equity are made via commingled vehicles and are valued in a similar fashion.

6 unchanged sentences

government and

agencies 2 ( 2 )

Mortgage backed and

6 unchanged sentences

Total $ 240 ($ 7 ) $ 5 ($ 40 ) $ 198

2019 Balance Net Realized and Unrealized Gains Net Purchases, Issuances and Settlements Net Transfers Into Level 3 December 31

2020 Balance Net Realized and Unrealized Gains/(Losses) Net Purchases, Issuances and Settlements Net Transfers Into/(Out of) Level 3 December 31

Fixed income securities:

$ 5 $ 1 $ 18 $ 16 $ 40

government and agencies

Mortgage backed and asset backed

461 ( 1 ) ( 93 ) ( 247 ) 120

Municipal 3 2 67 72

Sovereign ( 1 ) 2 1 2

Equity securities:

2 unchanged sentences

Total $ 472 $ 2 ($ 71 ) ($ 163 ) $ 240

For the year ended December 31, 2021, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 2021 were ($ 1 ) for mortgage backed and asset backed fixed income securities and ($ 8 ) for sovereign.

For the year ended December 31, 2020, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 2020 were $ 2 for corporate, $ 1 for mortgage backed and asset backed fixed income securities, $ 3 for municipal bonds and ($ 1 ) for sovereign.

For the year ended December 31, 2019, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 2019 were $ 10 for mortgage backed and asset backed fixed income securities and ($ 1 ) for non-U.S.

common and preferred stock equity securities.

OPB Plan Assets The majority of OPB plan assets are invested in a balanced index fund which is comprised of approximately 60 % equities and 40 % debt securities.

The index fund is valued using a market approach based on the quoted market price of an identical instrument (Level 1).

The index fund is valued using a

market approach based on the quoted market price of an identical instrument (Level 1).

The expected rate of return on these assets does not have a material effect on the net periodic benefit cost.

28 unchanged sentences

Years ended December 31, 2021 2020 2019

Restricted stock units and other awards $ 243 $ 217 $ 213

Recognized in Loss from operations $ 667 $ 243 $ 217

Recognized in Inventories $ 173

Income tax benefit $ 148 $ 53 $ 47

Stock Options

We discontinued granting options in 2014, replacing them with performance-based restricted stock units.

On February 17, 2021, we granted 342,986 premium-priced stock options to our executive officers as part of our long-term incentive program.

These stock options have an exercise price equal to 120% of the fair market value of our stock on the date of grant.

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 $ 74.63 per unit and was estimated using a Monte-Carlo simulation model using the following assumptions:

expected life 6.6 years, expected volatility 37.8 %, risk free interest rate 1.3 % and no expected dividend yield.

During 2021, we also granted 148,322 stock options to certain executives to encourage retention or to award various achievements, of which 40,322 had an exercise price equal to 120 % of the fair market value of our stock on the date of grant, and the remaining 108,000 had an exercise price equal to the fair market value on the date of grant.

These stock options are scheduled to vest and become exercisable three years after the grant date and expire ten years after the grant date.

The grant date fair market value of these awards was not significant.

Options granted through January 2014 had an exercise price equal to the fair market value of our stock on the date of grant and expire 10 years after the date of grant.

The stock options vested over a period of three years and were fully vested as of December 31, 2017.

These stock options vested over a period of three years and were fully vested as of December 31, 2017.

Stock option activity for the year ended December 31, 2021 is as follows:

2 unchanged sentences

Outstanding at beginning of year 1,860,520 $ 75.71

Granted 491,308 250.80

Exercised ( 570,862 ) 73.93

Expired ( 26,663 ) 75.13

Forfeited ( 44,924 ) 258.83

Outstanding at end of year 1,709,379 $ 121.83 3.1 $ 158

1 unchanged sentence

The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $ 84 , $ 90 and $ 279 , with a related tax benefit of $ 19 , $ 32 and $ 61 , respectively.

At December 31, 2021, there was $ 19 of total unrecognized compensation cost related to options which is expected

to be recognized over a weighted average period of 2.5 years.

No options vested during the years ended December 31, 2021, 2020 and 2019.

1 unchanged sentence

In February 2021, 2020 and 2019, we granted to our executives 980,077 , 325,108 and 233,582 restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of $ 215.70 , $ 319.04 and $ 428.22 per unit, respectively.

In December 2020, we granted to our executives 721,734 RSUs as part of our long-term incentive program with a grant date fair value of $ 233.00 per unit.

The RSUs granted under this program will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date.

If an executive terminates employment because of retirement, layoff, disability, or death, the employee (or beneficiary) will receive a proration of stock units based on active employment during the three-year service period, except in the case of the December 2020 grant, which will vest in full for executives that terminate employment due to retirement after attaining certain age and service conditions.

During 2021, we also granted 47,430 RSUs as part of this long-term incentive program.

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 employee (or beneficiary) may receive a proration of stock units based on active employment during the three-year service period 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.

2 unchanged sentences

The RSUs granted under this program will vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date.

If an employee terminates employment because of retirement, layoff, disability, or death, the employee (or beneficiary) will receive a proration of stock units based on active

employment during the three-year service period.

If an employee terminates employment because of retirement, layoff, disability or death, the employee (or beneficiary) may receive a proration of stock units based on active employment during the three-year service period.

In all other cases, the RSUs will not vest and all rights to the stock units will terminate.

These RSUs are labeled employee long-term incentive program in the table below.

In addition to RSUs awarded under our long-term incentive program, we grant RSUs to certain executives and employees to encourage retention or to reward various achievements.

In addition to RSUs awarded under our long-term incentive programs, we grant RSUs to certain executives and employees to encourage retention or to reward various achievements.

These RSUs are labeled other RSUs in the table below.

5 unchanged sentences

Granted 1,027,507 216,782

Dividends 7,091 7,303

Forfeited ( 205,400 ) ( 378,881 ) ( 33,563 )

1 unchanged sentence

Outstanding at end of year 2,049,695 4,780,724 698,866

Undistributed vested units 344,125 985,427 16,212

Unrecognized compensation cost $ 258 $ 573 $ 67

Weighted average remaining contractual life (years)

The number of vested but undistributed RSUs at December 31, 2020 was not significant.

Weighted average remaining amortization period (years)

Performance-Based Restricted Stock Units

Performance-Based Restricted Stock Units (PBRSUs) are stock units that pay out based on the Company’s total shareholder return as compared to a group of peer companies over a three-year period.

Performance-Based Restricted Stock Units (PBRSUs) are stock units that pay out based on the Company’s total shareholder return (TSR) as compared to a group of peer companies over a three-year period.

The award payout can range from 0 % to 200 % of the initial PBRSU grant.

9 unchanged sentences

2019 2/25/2019 3 years 23.88 % 2.46 % 466.04

2018 2/26/2018 3 years 22.11 % 2.36 % 390.27

PBRSU activity for the year ended December 31, 2021 was as follows:

2 unchanged sentences

Outstanding at beginning of year 621,559

Granted 290,202

Performance based adjustment (1)

Dividends 27,299

Forfeited ( 34,827 )

Distributed ( 732,216 )

Outstanding at end of year 383,401

Unrecognized compensation cost $ 36

Weighted average remaining contractual life (years)

(1) Represents net incremental number of units issued at vesting based on TSR for units granted in 2017.

Weighted average remaining amortization period (years)

(1) Represents net number of units adjusted at vesting based on TSR for units granted in 2018.

Performance Awards

1 unchanged sentence

Each unit has an initial value of $ 100 dollars.

The amount payable at the end of the three -year performance period may be anywhere from $ 0 to $ 200 dollars per unit for the 2019 and 2018 Performance Awards and $ 0 to $ 150 dollars for 2020 Performance Awards, depending on the Company’s performance against plan for a three-year period.

The amount payable at the end of the three -year performance period may be anywhere from $ 0 to $ 200 dollars per unit for the 2019 Performance Awards and $ 0 to $ 150 dollars for 2020 Performance Awards, depending on the Company’s performance against plan for a three-year period.

The Compensation Committee has the discretion to pay these awards in cash, stock or a combination of both after the three-year performance period.

Compensation expense, based on the estimated performance payout, is recognized ratably over the performance period.

The minimum payout amount is $ 0 and the maximum amount we could be required to pay out for the 2020, 2019 and 2018 Performance Awards is $ 274 , $ 341 and $ 331 , respectively.

The minimum payout amount is $ 0 , and the maximum amount we could be required to pay out for the 2020 and 2019 Performance Awards is $ 253 and $ 323 .

Deferred Compensation

The Company has deferred compensation plans which permit certain employees to defer a portion of their salary, bonus, certain other incentive awards, and retirement contributions.

The Company has deferred compensation plans which permit certain employees and executives to defer a portion of their salary, bonus, certain other incentive awards and retirement contributions.

Participants can diversify these amounts among 23 investment funds including a Boeing stock unit account.

32 unchanged sentences

Amounts reclassified from AOCI 27 810 (3)

Net current period Other comprehensive (loss)/income

( 27 ) 1 ( 22 ) ( 1,022 ) ( 1,070 )

Net current period Other comprehensive income/(loss) 98 41 ( 1,119 ) ( 980 )

Balance at December 31, 2020 ($ 30 ) $ 1 ($ 43 ) ($ 17,061 ) ($ 17,133 )

2 unchanged sentences

Amounts reclassified from AOCI

( 6 ) 1,232 (3)

Net current period Other comprehensive (loss)/income

2 unchanged sentences

(1) Net of tax.

(2) Primarily relates to remeasurement of assets and benefit obligations related to the Company's pension and other postretirement benefit plans resulting in an actuarial gain/(loss) of $ 4,262 , ($ 1,956 ) and ($ 1,413 ) (net of tax of ($ 32 ), $ 111 and $ 405 ) for the years ended December 31, 2021, 2020 and 2019.

(3) Primarily relates to amortization of actuarial losses for the years ended December 31, 2021, 2020 and 2019 totaling $ 1,155 , $ 917 and $ 464 (net of tax of ($ 8 ), ($ 52 ) and ($ 133 )), respectively.

5 unchanged sentences

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 items used in production.

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.

We continue to monitor the effects of the COVID-19 pandemic on our cash flow hedges, including reductions in our forecasted purchases of certain commodities.

As of December 31, 2020, the impact of the COVID-19 pandemic on our cash flow hedges was not significant.

Derivative Instruments Not Receiving Hedge Accounting Treatment

1 unchanged sentence

business requirements.

These agreements are derivative instruments for accounting purposes.

These agreements are derivative instruments

for accounting purposes.

The quantities of aluminum in these agreements offset and are priced at prevailing market prices.

89 unchanged sentences

Notes receivable, net $ 420 $ 488 $ 488

Debt, excluding finance lease obligations and commercial paper

( 20,964 ) ( 23,119 ) ( 23,081 ) ($ 38 )

Debt, excluding finance lease obligations ( 63,380 ) ( 72,357 ) ( 72,342 ) ($ 15 )

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.

12 unchanged sentences

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.

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.

Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX, including an investigation by the Securities and Exchange Commission, the outcome of which may be material.

During the fourth quarter of 2021, we entered into a proposed settlement with plaintiffs in a shareholder derivative lawsuit.

Under the proposed settlement, which is subject to court approval, the Company would receive monetary payments of approximately $ 237 , before attorneys’ fees, and commit to making certain governance changes.

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.

Other than with respect to the agreement described below with the U.S.

Department of Justice, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the pending lawsuits, investigations, and inquiries related to the 737 MAX.

Department of Justice entered in 2021, 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.

On January 6, 2021, we entered into a Deferred Prosecution Agreement with the U.S.

2 unchanged sentences

the criminal information will be dismissed after three years, provided that we comply with our obligations under the agreement.

The Deferred Prosecution Agreement requires that we make payments totaling $ 2.51 billion, which consist of (a) a $ 243.6 million criminal monetary penalty;

(b) $ 500 million in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents;

The Deferred Prosecution Agreement requires that we make payments totaling $ 2,510 , which consist of (a) a $ 244 criminal monetary penalty;

(b) $ 500 in additional compensation to the heirs and/or beneficiaries of those who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents;

and (c) $ 1,770 to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement.

Of the payments described above, $ 1.77 billion has been included in amounts reserved in prior quarters for 737 MAX customer considerations.

We incurred earnings charges equal to the remaining $ 743.6 million in the fourth quarter of 2020 related to this agreement.

We expensed $ 744 in the fourth quarter of 2020 related to this agreement.

During the first quarter, consistent with the terms of the Deferred Prosecution Agreement, the monetary penalty was paid, and the $ 500 compensation amount was transferred to a fund established to benefit the heirs and/or beneficiaries of the victims of the 737 MAX accidents.

In addition, the $ 1,770 amount related to the Company’s airline customers was included in amounts reserved in prior quarters for 737 MAX customer considerations.

During 2019, we entered into agreements with Embraer S.A.

4 unchanged sentences

Note 22 – Segment and Revenue Information

Effective at the beginning of 2020, certain programs were realigned between our BDS segment and Unallocated items, eliminations and other.

Business segment data for 2019 and 2018 has been adjusted to reflect the realignment.

Our primary profitability measurements to review a segment’s operating results are Earnings/(loss) from operations and operating margins.

17 unchanged sentences

Europe $ 8,967 $ 7,961 $ 10,366

Asia, other than China 4,128 10,662 12,141

Asia 5,845 5,931 16,346

Middle East 4,653 5,308 9,272

China 1,803 5,684 13,764

Canada 969 1,302 2,019

21 unchanged sentences

Middle East 1,098 1,647 5,761

Asia, other than China 1,408 7,395 8,274

China 1,271 5,051 13,068

Asia 2,792 2,679 12,446

Other 1,681 513 3,450

39 unchanged sentences

Earnings in Equity Method Investments

We recorded Earnings from operations associated with our equity method investments of $ 86 , $ 90 and $ 167 , primarily in our BDS segment, for the years ended December 31, 2020, 2019 and 2018, respectively.

Our total backlog represents the estimated transaction prices on performance obligations to our customers for which work remains to be performed.

Backlog is converted into revenue in future periods as work is performed, primarily based on the cost incurred or at delivery and acceptance of products, depending on the applicable accounting method.

Our share of income or loss from equity method investments was $ 40 , $ 86 and $ 90 , primarily in our BDS segment, for the years ended December 31, 2021, 2020 and 2019, respectively.

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 December 31, 2021 was $ 377,499 .

We expect approximately 17 % to be converted to revenue through 2022 and approximately 74 % through 2025, with the remainder thereafter.

There is significant uncertainty regarding the timing of when backlog will convert into revenue due to the 737 MAX grounding in non-U.S.

jurisdictions, entry into service of the 777X, 737 MAX 7 and/or 737 MAX 10, and COVID-19 impacts.

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 COVID-19 impacts.

Unallocated Items, Eliminations and other

34 unchanged sentences

Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, tax assets, capitalized interest, assets managed centrally on behalf of the four principal business segments and intercompany eliminations.

From December 31, 2019 to December 31, 2020, assets in BCA increased primarily due to higher inventory balances and assets in Unallocated items, eliminations, and other increased due to higher cash and short-term investment balances from debt issued throughout 2020.

From December 31, 2020 to December 31, 2021, assets in Unallocated items, eliminations and other decreased primarily due to reductions in short-term and other investment balances.

Capital Expenditures

19 unchanged sentences

In 2019, $ 717 was included in the primary business segments, of which $ 407 , $ 257 and $ 53 was included in BCA, BDS and BGS, respectively.

Note 23 – Quarterly Financial Data (Unaudited)

4th 3rd 2nd 1st 4th 3rd 2nd 1st

Total revenues $ 15,304 $ 14,139 $ 11,807 $ 16,908 $ 17,911 $ 19,980 $ 15,751 $ 22,917

Total costs and expenses ( 20,992 ) ( 13,105 ) ( 12,978 ) ( 16,768 ) ( 18,708 ) ( 16,930 ) ( 17,810 ) ( 18,645 )

(Loss)/earnings from operations ( 8,049 ) ( 401 ) ( 2,964 ) ( 1,353 ) ( 2,204 ) 1,259 ( 3,380 ) 2,350

Net (loss)/earnings attributable to Boeing Shareholders ( 8,420 ) ( 449 ) ( 2,376 ) ( 628 ) ( 1,010 ) 1,167 ( 2,942 ) 2,149

Basic (loss)/earnings per share ( 14.65 ) ( 0.79 ) ( 4.20 ) ( 1.11 ) ( 1.79 ) 2.07 ( 5.21 ) 3.79

Diluted (loss)/earnings per share ( 14.65 ) ( 0.79 ) ( 4.20 ) ( 1.11 ) ( 1.79 ) 2.05 ( 5.21 ) 3.75

Gross profit is calculated as Total revenues minus Total costs and expenses.

Total costs and expenses includes Cost of products, Cost of services and Boeing Capital interest expense.

During the first quarter of 2020, we recorded $ 797 of abnormal production costs related to 737 MAX, $ 336 related to 737NG frame fitting component repair costs, $ 137 of abnormal production costs from the temporary suspension of Puget Sound production in response to COVID-19, and a $ 168 reach-forward loss on VC-25B.

During the first quarter of 2019, we concluded that lease incentives granted to a customer that experienced liquidity issues were impaired and recorded a charge of $ 250 .

During the second quarter of 2020, we recorded $ 859 of charges at BGS related to asset impairments, $ 712 of abnormal production costs related to the 737 MAX, $ 652 of severance costs, and $ 133 of abnormal production costs from the temporary suspension of Puget Sound production in response to COVID-19.

During the second quarter of 2019, we recorded a charge of $ 109 related to ongoing litigation associated with recoverable costs on U.S.

government contracts.

During the third quarter of 2020, we recorded $ 590 of abnormal production costs related to the 737 MAX and $ 328 of severance costs.

During the fourth quarter of 2020, we recorded a reach-forward loss on the 777X program of $ 6,493 , abnormal production costs related to the 737 MAX of $ 468 and asset impairments of $ 290 at BGS.

Additionally, we recorded an increase to our valuation allowances and a tax benefit of $ 587 related to the settlement of the 2015-2017 federal tax audit.

During the fourth quarter of 2019, we recorded a divestiture gain of $ 395 and a tax benefit of $ 371 related to the settlement of state tax audits spanning 15 tax years.

Additionally, we recorded an impairment of $ 293 as a result of our decision to retire the Aviall brand and trade name, and an increase to the reach-forward loss on Commercial Crew of $ 410 .

We recorded a reduction to revenue in the second and fourth quarters of 2020 of $ 551 and $ 128 for 737 MAX customer considerations.

In the third quarter of 2020, we recorded an increase to revenue of $ 151 for 737 MAX customer considerations.

During the second and fourth quarters of 2019, we recorded a reduction to revenue of $ 5,610 and $ 2,619 for 737 MAX customer considerations, net of insurance recoveries.

We recorded an increase to the reach-forward loss on KC-46A Tanker in the first, second, third, and fourth quarters of 2020 of $ 827 , $ 151 , $ 67 and $ 275 , respectively.

In the fourth quarter of 2019, we recorded an increase to the reach-forward loss on KC-46A Tanker of $ 108 .

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 1, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 31, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

18 unchanged sentences

Fixed-price development contracts are inherently uncertain in that revenue is fixed while the estimates of costs required to complete these contracts are subject to significant variability.

Due to the technical performance requirements in many of these contracts, changes to cost estimates could occur, resulting in lower margins or material reach-forward losses.

Due to the technical performance requirements in many of these contracts, changes to cost and revenue estimates could occur, resulting in lower margins or material reach-forward losses.

Given the complexity of certain of the Company’s fixed-price development contracts, including the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft contracts, the limited amount of historical data available in certain instances and significant judgments necessary to estimate future costs at completion, auditing these estimates involved extensive audit effort and a high degree of auditor judgment and required audit professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit

Our auditing procedures related to the cost estimates for the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft fixed-price development contracts included the following, among others:

Our audit procedures related to the cost estimates for the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft fixed-price development contracts included the following, among others:

• We evaluated the appropriateness and consistency of management’s methods used in developing its estimates.

• We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key estimates, including the range and probability of possible outcomes.

• We performed inquiries of the Company’s project managers and others directly involved with the contracts to evaluate project status and project challenges which may affect total estimated costs to complete.

• We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key cost and schedule estimates, including the range and probability of reasonable outcomes, and the appropriateness of the timing of changes to key estimates.

• We performed inquiries of the Company’s project managers and others directly involved with the contracts to evaluate management’s ability to achieve the key cost and schedule estimates, as well as evaluate project status and project challenges which may affect total estimated costs to complete.

We also observed the project work site when key estimates related to tangible or physical progress of the project.

• We tested the accuracy and completeness of the data used in developing key estimates.

We developed independent expectations of likely outcomes using, in part, the program’s data and compared our expectations to management’s estimates.

• We tested the effectiveness of controls over the review of judgments made and significant assumptions used to develop key estimates, including controls over the data used in developing the estimates and the mathematical extrapolation of such data.

• We performed retrospective reviews, comparing actual performance to estimated performance and the related financial statement impact, when evaluating the thoroughness and precision of management’s estimation process and effectiveness of related internal controls.

• We tested the accuracy and completeness of the key data used in developing estimates.

We developed independent expectations of reasonable outcomes using, in part, the program’s data and compared our expectations to management’s estimates.

• We tested the effectiveness of controls over the review of judgments made and significant assumptions used to develop key estimates, including controls over the key data used in developing the estimates and the mathematical extrapolation of such data.

• We performed retrospective reviews, comparing actual performance to estimated performance and the related financial statement impact, including the appropriateness of the timing of changes to key estimates, when evaluating the thoroughness and precision of management’s estimation process and effectiveness of related internal controls.

Program Accounting Estimates for the 777X Program – Refer to Notes 1 and 7 to the financial statements

3 unchanged sentences

The use of program accounting requires estimating and demonstrating customer demand for the number of units included in the program (program accounting quantity) and estimating the sales and costs over the expected life of each program.

In particular, estimating the initial program accounting quantity and revenue for unsold units within the program accounting quantity involves measurement uncertainty resulting in a range of possible outcomes.

Additionally, the level of effort to meet regulatory requirements and achieve certification may be challenging to predict, resulting in delays in the timing of entry into service and corresponding increases in estimated costs.

Changes to the program accounting quantity or revenue and cost estimates could occur, resulting in lower margins or material reach-forward losses.

Auditing the estimated revenues and costs for the 777X program involved extensive audit effort and required professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.

Auditing the estimated revenues and costs for the 777X program involved extensive audit effort and required audit professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.

How the Critical Audit Matter Was Addressed in the Audit

Our auditing procedures over the estimated revenues and costs for the 777X program accounting quantity included the following, among others:

• We inquired of the Company’s management, including individuals responsible for sales and pricing, to evaluate the status of current sales campaigns, short and long-term market demand, and status of negotiations with individual sold firm customers.

Our audit procedures over the estimated revenues and costs for the anticipated 777X program accounting quantity included the following, among others:

• We compared management’s estimate of market demand to external industry sources of expected demand.

2 unchanged sentences

• We evaluated the appropriateness and consistency of management’s methods used in developing its cost estimates.

• Performed inquiries of those directly involved with the certification of the aircraft to evaluate project status and challenges which may affect total estimated costs to certify the aircraft.

• We tested the effectiveness of controls including those over the data used in developing the estimates, the mathematical extrapolation of such data, and management’s judgment regarding the range of possible outcomes relating to the specific estimates.

Liabilities related to the 737 MAX Grounding – Refer to Notes 13 and 21 to the financial statements

• We performed inquiries of those directly involved with the certification of the aircraft to evaluate project status and challenges which may affect total estimated costs to achieve certification of the aircraft.

• We tested the effectiveness of controls including those over the key data used in developing the estimates, the mathematical extrapolation of such data, and management’s judgment regarding the range of reasonable outcomes relating to the specific estimates.

Program Accounting Revenue Estimates for the 787 Program — Refer to Notes 1, 7, and 22 to the financial statements

Critical Audit Matter Description

In 2019, following two fatal 737 MAX accidents, the Federal Aviation Administration (FAA) and non-U.S.

Production quality issues for the 787 Program have resulted in increased risk associated with forecasted revenue estimates primarily due to the difficulty in assessing the timeline for restarting 787 deliveries.

The Company uses program accounting in order to compute cost of sales and margin for each commercial airplane sold.

The use of program accounting requires estimating the revenue expected to be earned upon delivery of the aircraft included in the program’s accounting quantity.

The timing of the Federal Aviation Administration's (“FAA”) approval to resume deliveries, the impact to the delivery schedule from delayed deliveries, and the value of the consideration expected to be provided to customers for delivery delays are key factors that affect estimated revenue.

There is increased estimation uncertainty related to the revenue forecasts of aircraft which have reached or are expected to reach a delivery delay period that provides the customer with a contractual termination right.

Due to continued uncertainty in the expected FAA approval date to resume 787 aircraft deliveries, there is significant judgment in determining which aircraft will reach these contractual termination rights.

Changes to the expected delivery resumption date could have a flowthrough impact and result in additional consideration to customers.

This could result in lower margins or further material reach-forward losses.

Auditing the estimated revenues for the 787 program involved extensive audit effort and required professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over the estimated revenues for the 787 program included the following, among others:

• We inquired of the Company’s management, including individuals responsible for engineering and production operations, to assess whether the estimated FAA approval and delivery resumption date represent management’s best estimates based on the status of the rework activity.

• We inquired of the Company’s management, including the individuals communicating with the FAA, to assess if there is contradictory information to that assumed by management related to the estimated timeline for rework completion or getting FAA approval to resume deliveries.

• We evaluated the appropriateness and consistency of management’s method for developing the deliveries schedule assumptions.

• We inquired of the Company’s management, including individuals responsible for sales and pricing, to evaluate the status of current contracts with customers and expected consideration to be provided to customers.

• We evaluated the appropriateness and consistency of management’s methods and significant assumptions used in developing its estimates related to forecasted revenue for aircraft which have or are expected to have delivery delays.

Liabilities related to the 737 MAX Grounding – Refer to Note 13 to the financial statements

Critical Audit Matter Description

In 2019, following two fatal 737 MAX accidents, the FAA and non-U.S.

civil aviation authorities issued orders suspending commercial operations of 737 MAX aircraft (the “737 MAX Grounding”).

1 unchanged sentence

in late 2020 following rescission by the FAA of its grounding order.

The 737 MAX remains grounded in certain non-U.S.

jurisdictions.

In addition, multiple legal actions have been filed against the Company following the fatal accidents and various governmental and regulatory investigations and inquiries continue relating to the accidents and the 737 MAX aircraft.

During 2019, the Company recorded an initial liability in connection with estimated payments, concessions and other in-kind consideration it intends to provide to customers for disruptions related to the 737 MAX Grounding and associated delivery delays.

This liability totaled $2.9 billion at December 31, 2021 and is reflected in the financial statements in Accrued liabilities.

This represents the Company’s best estimate of future concessions and other consideration to its customers, and is necessarily based on individual negotiations with customers and the substance of such negotiations.

Significant judgment is involved in management’s ability to assess and reasonably estimate potential additional financial statement effects or a range of loss, if any, resulting from the outcome of 737 MAX-related litigation and the results of the various ongoing governmental and regulatory investigations and inquiries related to the 737 MAX.

The subjectivity of the liability associated with providing consideration to customers resulting from the 737 MAX Grounding and the complexity of assessing the outcome of the ongoing litigation and investigations related to the 737 MAX required a high degree of auditor judgment and increased audit effort.

Of the $2.9 billion, $2.2 billion has been contractually agreed to with customers.

The liability represents the Company’s best estimate of future concessions and other consideration to its customers.

To the extent not contractually agreed upon, the estimate is based on individual negotiations with customers and the substance of such negotiations.

The subjectivity of the estimate of approximately $0.7 billion relating to consideration that has not yet been contractually agreed to with customers involved extensive audit effort and a high degree of auditor judgment and required audit professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit

Our auditing procedures associated with liabilities related to the 737 MAX Grounding included the following, among others:

• We inquired of management to understand developments with the 737 MAX Grounding, including the status of regulatory approval for return to service in various foreign jurisdictions and the status of consideration negotiations with individual customers.

Our audit procedures associated with liabilities related to the 737 MAX Grounding included the following, among others:

• We inquired of management to understand developments with the 737 MAX Grounding, including the status of consideration negotiations with individual customers.

• We obtained written representations from management concerning its intent to provide consideration to customers and the extent of that consideration.

• We tested the effectiveness of controls related to nonrecurring items and loss contingencies associated with litigation, claims and assessments.

• We evaluated the significant assumptions used by management to estimate the liability for customer consideration, including the timing and conditions of 737 MAX return to service in various foreign jurisdictions, and, where possible, we corroborated the significant assumptions with management outside of the accounting and finance organizations.

• We evaluated the significant assumptions used by management to estimate the liability for customer consideration, and, where possible, we corroborated the significant assumptions with management outside of the accounting and finance organizations.

• We reviewed the terms of customer contracts and correspondence with customers concerning potential consideration as a result of the 737 MAX Grounding.

1 unchanged sentence

• We evaluated delivery documents for 737 MAX deliveries for incremental value provided at delivery as potential consideration as a result of the 737 MAX Grounding.

• We inquired of internal and external legal counsel to understand developments related to contractual obligations to customers, litigation and other claims relating to the 737 MAX Grounding and progression in potential settlement discussions.

• We read minutes of meetings of the Board of Directors and its committees for evidence of unrecorded loss contingencies.

• We evaluated the Company’s disclosures for consistency with our knowledge of matters related to the 737 MAX Grounding.

Income Taxes – Realizability of Deferred Tax Assets– Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

As more fully described in Notes 1 and 4 to the consolidated financial statements, the Company recognizes deferred income taxes for differences between the financial statement carrying amount and tax basis of assets and liabilities, measured using enacted statutory rates in effect for the years in which the basis differences are expected to reverse.

A valuation allowance is provided to offset deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Future realization of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character.

Sources of taxable income typically include future reversals of deferred tax liabilities, future taxable income exclusive of reversals of deferred tax liabilities, and tax planning strategies.

During 2020 the Company determined that it is not more likely than not that sufficient taxable income of the appropriate character will be generated in the future to realize all of its deferred tax assets;

therefore, a valuation allowance has been recorded.

We identified the Company’s determination that it is not more likely than not that sufficient taxable income will be generated in the future to realize all of its deferred tax assets as a critical audit matter because of the significant judgments and estimates made related to the timing of future reversals of deferred tax assets and liabilities.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing audit procedures to evaluate the reasonableness of management’s methodologies and estimates.

How the Critical Audit Matter Was Addressed in the Audit

Our auditing procedures related to the timing of future reversals of deferred tax assets and liabilities included the following, among others:

• With the assistance of our income tax specialists, we evaluated the reasonableness of the methods, significant assumptions, and judgments used by management to determine whether it was more likely than not that the Company would be able to realize its deferred tax assets.

• We tested the Company’s methodologies for scheduling the reversal of existing taxable and deductible temporary differences.

• We evaluated whether the estimates considered when determining future taxable income were consistent with the evidence obtained in other areas of the audit.

• We tested the effectiveness of controls over deferred tax assets and liabilities, including management’s controls over determining the pattern of the reversals of deferred tax assets and liabilities.

/s/ Deloitte & Touche LLP

Chicago, Illinois

February 1, 2021

January 31, 2022

We have served as the Company's auditor since at least 1934;

5 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020 of the Company, and our report dated February 1, 2021 expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021 of the Company, and our report dated January 31, 2022 expressed an unqualified opinion on those financial statements.

Basis for Opinion

16 unchanged sentences

Chicago, Illinois

February 1, 2021

January 31, 2022

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data