What changed in this filing

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Item 1. Financial Statements

2022-04-27 compared with 2021-10-27 · 240 added, 467 removed, 614 unchanged (54% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations

(Dollars in millions, except per share data) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions, except per share data) Three months ended March 31

Sales of products $ 11,427 $ 12,518

5 unchanged sentences

Total costs and expenses ( 13,645 ) ( 13,808 )

5,531 3 1,712 1,034

Income/(loss) from operating investments, net 195 ( 61 ) 120 ( 14 )

(Loss)/income from operating investments, net ( 20 ) 37

General and administrative expense ( 863 ) ( 1,032 )

1 unchanged sentence

Gain on dispositions, net 1 2

Earnings/(loss) from operations 1,269 ( 4,718 ) 329 ( 401 )

Loss from operations ( 1,169 ) ( 83 )

Other income, net 181 190

11 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions) Three months ended March 31

Net loss ($ 1,242 ) ($ 561 )

1 unchanged sentence

Currency translation adjustments 24 ( 36 )

Unrealized gain/(loss) on derivative instruments:

Unrealized gain/(loss) arising during period, net of tax of ($ 18 ), $ 31 , ($ 1 ) and ($ 23 )

64 ( 107 ) ( 1 ) 79

Reclassification adjustment for (gains)/losses included in net loss, net of tax of $ 2 , ($ 6 ), $ 2 and ($ 2 )

( 6 ) 20 ( 4 ) 8

Total unrealized gain/(loss) on derivative instruments, net of tax 58 ( 87 ) ( 5 ) 87

Unrealized gain on derivative instruments:

Unrealized gain arising during period, net of tax of ($ 28 ) and ($ 3 )

Reclassification adjustment for losses/(gains) included in net loss, net of tax of ($ 9 ) and $ 0

Total unrealized gain on derivative instruments, net of tax 129 9

Defined benefit pension plans and other postretirement benefits:

Prior service credit arising during the period, net of tax of $ 0 , ($ 4 ), $ 0 and ($ 4 )

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

( 23 ) ( 23 )

Net actuarial gain/(loss) arising during the period, net of tax of ($ 106 ), $ 19 , ($ 104 ) and $ 16

1,551 ( 65 ) 1,544 ( 53 )

Amortization of actuarial losses included in net periodic pension cost, net of tax of ($ 40 ) and ($ 65 )

690 562 227 172

Settlements included in net loss, net of tax of $ 0 and $ 0

2 unchanged sentences

Other comprehensive income, net of tax 289 181

Comprehensive income/(loss), net of tax 2,189 ( 3,128 ) 1,711 ( 220 )

Comprehensive loss, net of tax ( 953 ) ( 380 )

Comprehensive loss related to noncontrolling interest ( 23 ) ( 24 )

Comprehensive income/(loss) attributable to Boeing Shareholders, net of tax $ 2,256 ($ 3,079 ) $ 1,734 ($ 203 )

Comprehensive loss attributable to Boeing Shareholders, net of tax ($ 930 ) ($ 356 )

See Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Statements of Financial Position

(Dollars in millions, except per share data) September 30

(Dollars in millions, except per share data) March 31

2022 December 31

43 unchanged sentences

Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Nine months ended September 30

(Dollars in millions) Three months ended March 31

Cash flows – operating activities:

21 unchanged sentences

Customer financing, net 18 46

Other 225 289

Net cash used by operating activities ( 3,216 ) ( 3,387 )

Cash flows – investing activities:

Property, plant and equipment additions ( 758 ) ( 1,038 )

Property, plant and equipment reductions 385 275

Acquisitions, net of cash acquired ( 6 )

Payments to acquire property, plant and equipment ( 349 ) ( 291 )

Proceeds from disposals of property, plant and equipment 8 2

Contributions to investments ( 1,732 ) ( 9,688 )

Proceeds from investments 5,037 12,738

Net cash provided/(used) by investing activities 7,389 ( 16,823 )

Net cash provided by investing activities 2,965 2,764

Cash flows – financing activities:

3 unchanged sentences

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

Dividends paid ( 1,158 )

Net cash (used)/provided by financing activities ( 1,238 ) 32,274

Effect of exchange rate changes on cash and cash equivalents, including restricted ( 34 ) 26

Net increase in cash & cash equivalents, including restricted 1,985 1,076

Net cash used by financing activities ( 396 ) ( 48 )

Effect of exchange rate changes on cash and cash equivalents ( 3 ) ( 18 )

Net decrease in cash & cash equivalents, including restricted ( 650 ) ( 689 )

Cash & cash equivalents, including restricted, at beginning of year 8,104 7,835

5 unchanged sentences

Condensed Consolidated Statements of Equity

For the nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

Boeing shareholders

(Dollars in millions) Common

(Dollars in millions, except per share data) Common

Stock Additional

9 unchanged sentences

( 73 ) 37 ( 36 )

Balance at September 30, 2020 $ 5,061 $ 6,687 ($ 54,819 ) $ 47,029 ($ 15,779 ) $ 268 ($ 11,553 )

Balance at January 1, 2021 $ 5,061 $ 7,787 ($ 52,641 ) $ 38,610 ($ 17,133 ) $ 241 ($ 18,075 )

Net loss ( 59 ) ( 67 ) ( 126 )

Other comprehensive income, net of tax of ($ 298 )

Share-based compensation 677 677

Treasury shares issued for stock options exercised, net

Treasury shares issued for other share-based plans, net ( 85 ) 41 ( 44 )

Treasury shares issued for 401(k) contribution 136 170 306

Balance at September 30, 2021 $ 5,061 $ 8,796 ($ 52,030 ) $ 38,551 ($ 14,818 ) $ 174 ($ 14,266 )

See Notes to the Condensed Consolidated Financial Statements.

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the three months ended September 30, 2021 and 2020

Boeing shareholders

(Dollars in millions, except per share data) Common

Stock Additional

Capital Treasury Stock Retained

Earnings Accumulated Other Comprehensive Loss Non-

Interests Total

Balance at July 1, 2020 $ 5,061 $ 6,648 ($ 54,829 ) $ 47,478 ($ 16,025 ) $ 285 ($ 11,382 )

Net loss ( 449 ) ( 17 ) ( 466 )

Other comprehensive income, net of tax of ($ 79 )

Share-based compensation 50 50

Treasury shares issued for stock options exercised, net

Treasury shares issued for other share-based plans, net

( 9 ) 4 ( 5 )

Balance at September 30, 2020 $ 5,061 $ 6,687 ($ 54,819 ) $ 47,029 ($ 15,779 ) $ 268 ($ 11,553 )

Balance at July 1, 2021 $ 5,061 $ 8,481 ($ 52,223 ) $ 38,660 ($ 16,661 ) $ 197 ($ 16,485 )

Balance at March 31, 2021 $ 5,061 $ 8,155 ($ 52,395 ) $ 38,073 ($ 16,952 ) $ 217 ($ 17,841 )

Balance at January 1, 2022 $ 5,061 $ 9,052 ($ 51,861 ) $ 34,408 ($ 11,659 ) $ 153 ($ 14,846 )

Net loss ( 1,219 ) ( 23 ) ( 1,242 )

4 unchanged sentences

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

Balance at September 30, 2021 $ 5,061 $ 8,796 ($ 52,030 ) $ 38,551 ($ 14,818 ) $ 174 ($ 14,266 )

Balance at March 31, 2022 $ 5,061 $ 9,295 ($ 51,573 ) $ 33,189 ($ 11,370 ) $ 130 ($ 15,268 )

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

Summary of Business Segment Data

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions) Three months ended March 31

Commercial Airplanes $ 4,161 $ 4,269

9 unchanged sentences

Boeing Capital ( 36 ) 21

Segment operating earnings/(loss) 1,493 ( 4,808 ) 429 ( 440 )

Segment operating (loss)/earnings ( 1,192 ) 11

Unallocated items, eliminations and other ( 260 ) ( 364 )

FAS/CAS service cost adjustment 283 270

Earnings/(loss) from operations 1,269 ( 4,718 ) 329 ( 401 )

Loss from operations ( 1,169 ) ( 83 )

Other income, net 181 190

13 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements.

The results of operations for the period ended September 30, 2021 are not necessarily indicative of the operating results for the full year.

The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.

The interim financial statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, included in our 2021 Annual Report on Form 10-K.

Liquidity Matters

The global outbreak of COVID-19, 787 production issues and associated rework and residual impacts from the grounding of the 737 MAX airplane in 2019 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 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 the first nine months of 2021, net cash used by operating activities was $ 4.1 billion.

Our operating cash flows continue to be impacted by lower commercial airplane deliveries and increases in commercial airplane inventory.

During the first three months of 2022, net cash used by operating activities was $ 3.2 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 the first quarter of 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 $ 9.8 billion outstanding under our two-year delayed draw term loan credit agreement.

In the third quarter of 2021, we repaid $ 1.2 billion of term notes.

As a result, our cash and short-term investment balance was $ 20.0 billion at September 30, 2021, down from $ 25.6 billion at December 31, 2020, while our debt balance was $ 62.4 billion at September 30, 2021, down from $ 63.6 billion at December 31, 2020.

Short-term debt and the current portion of long-term debt increased to $ 5.4 billion at September 30, 2021, up from $ 1.7 billion at December 31, 2020.

The current portion of long term debt includes term notes of $ 0.3 billion maturing in the fourth quarter of 2021, $ 0.9 billion maturing in 2022, and the remaining delayed draw term loan.

While our two-year delayed draw term loan matures in February 2022, we are planning to repay the remaining $ 4.0 billion in the fourth quarter of 2021.

Our short-term and long-term credit ratings remained unchanged during the third quarter of 2021.

In the first quarter of 2021, we entered into a $ 5.3 billion two-year revolving credit agreement, which we have not drawn upon.

As of September 30, 2021, our unused borrowing capacity on revolving credit agreements is $ 14.8 billion, up from $ 9.5 billion at December 31, 2020.

$ 3.1 billion of the $ 14.8 billion is a 364-day revolving credit facility, which was set to expire in October 2021.

In October 2021, we renewed the 364-day facility for $ 3.1 billion, which now expires in October 2022.

This 364-day facility has a one-year term out option that allows us to extend the maturity of any borrowings one additional year.

As a result, our cash and short-term investment balance was $ 12.3 billion at March 31, 2022, down from $ 16.2 billion at December 31, 2021, while our debt balance was $ 57.7 billion at March 31, 2022, down from $ 58.1 billion at December 31, 2021.

Short-term debt and the current portion of long-term debt increased to $ 2.6 billion at March 31, 2022 from $ 1.3 billion at December 31, 2021.

The current portion of long-term debt includes term notes of $ 0.9 billion maturing in 2022.

As of March 31, 2022, our unused borrowing capacity on revolving credit agreements is $ 14.7 billion, unchanged from December 31, 2021.

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

At September 30, 2021, trade payables included $ 2.8 billion payable to suppliers who have elected to participate in supply chain financing programs.

While access to supply chain financing was reduced in 2020 due to our 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.

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

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 notice.

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

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

We have recorded severance costs for approximately 19,000 employees.

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

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

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

Our borrowing capacity includes $ 6.3 billion scheduled to expire in October 2022, of which $ 3.1 billion has a one-year term out option that allows us to extend the maturity of any borrowings one additional year.

Our short-term and long-term credit ratings remained unchanged during the first quarter of 2022.

There is risk for future downgrades.

At March 31, 2022 and December 31, 2021, trade payables included $ 2.1 billion and $ 2.3 billion payable to suppliers who have elected to participate in supply chain financing programs.

We do not believe that future changes in the availability of supply chain financing will have a significant impact on our liquidity.

We are also working with our customers and supply chain to accelerate receipts and conserve cash.

1 unchanged sentence

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 also deferred certain tax payments in 2020 pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The CARES Act also included a five-year net operating loss carryback provision which enabled us to benefit from certain 2020 losses and resulted in tax refunds of $ 1.3 billion in the third quarter of 2021.

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 pre-COVID capacity.

However, as we consolidate our footprint, terminate leases, and dispose of properties, we may incur near term adverse impacts to earnings.

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

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

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

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

These activities are not intended to constrain our capacity, but rather to enable the Company to emerge stronger and be more resilient when the market recovers.

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.

Based on our current best estimates of market demand, planned production rates, timing of cash receipts and expenditures, our ability to successfully implement further actions to improve liquidity, as well as our ability to access additional liquidity, if needed, we believe it is probable that we will be able to fund our operations for the foreseeable future.

2 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 included in these financial statements are appropriate and reflect increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic, however actual results could differ from those estimates.

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.

Long-term Contracts

2 unchanged sentences

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

(In millions - except per share amounts) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

Increase/(decrease) to Revenue $ 167 ($ 265 ) ($ 63 ) $ 25

Decrease to Earnings/(loss) from operations ($ 84 ) ($ 787 ) ($ 142 ) ($ 38 )

(In millions - except per share amounts) Three months ended March 31

(Decrease)/increase to Revenue ($ 612 ) $ 7

Increase to Loss from operations ($ 1,130 ) ($ 176 )

Decrease to Diluted EPS ($ 1.47 ) ($ 0.29 )

6 unchanged sentences

The elements used in the computation of basic and diluted earnings per share were as follows:

(In millions - except per share amounts) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(In millions - except per share amounts) Three months ended March 31

Net loss attributable to Boeing Shareholders ($ 1,219 ) ($ 537 )

2 unchanged sentences

Basic weighted average shares outstanding

587.3 566.3 589.0 566.6

participating securities (1)

Basic weighted average common shares outstanding

586.9 565.8 588.6 566.1

Basic weighted average shares outstanding

587.3 566.3 589.0 566.6

Dilutive potential common shares (2)

Diluted weighted average shares outstanding

587.3 566.3 589.0 566.6

participating securities (1)

0.4 0.5 0.4 0.5

Diluted weighted average common shares outstanding

586.9 565.8 588.6 566.1

Net loss per share:

1 unchanged sentence

( 2.06 ) ( 0.92 )

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

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

As a result of incurring a net loss for the nine and three months ended September 30, 2021 and 2020, potential common shares of 2.3 million, 2.7 million, 1.6 million and 1.3 million, respectively, were excluded from diluted loss per share because the effect would have been antidilutive.

As a result of incurring a net loss for the three months ended March 31, 2022 and 2021, potential common shares of 3.6 million and 1.7 million were excluded from diluted loss per share because the effect would have been antidilutive.

In addition, the following table includes the number of shares that may be dilutive potential common shares in the future.

These shares were not included in the computation of diluted loss per share because the effect was either antidilutive or the performance condition was not met.

(Shares in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Shares in millions) Three months ended March 31

Performance awards 1.6 2.6

3 unchanged sentences

Note 3 – Income Taxes

Our income tax expense or benefit for interim periods has been historically determined using an estimate of our annual effective tax rate, adjusted for discrete items.

In the third quarter of 2021, we determined that we could not make a reliable estimate of the annual effective tax rate primarily due to nearly break-even pre-tax earnings.

For example during the first quarter of 2021, the Company reported pre-tax losses of $ 572 , second quarter pre-tax earnings of $ 549 and third quarter pre-tax losses of $ 310 while year-to-date pre-tax losses total $ 333 .

As a result, the effective tax rate for the nine months ended September 30, 2021 was calculated based on 2021 year-to-date results.

We recorded a tax benefit of $ 207 for the nine months ended September 30, 2021 primarily reflecting 2021 net operating losses including Research and Development tax credits that are expected to be realized.

As of September 30, 2021 and December 31, 2020, the Company had recorded valuation allowances of $ 2,810 and $ 3,094 primarily for certain federal deferred tax assets, state net operating loss carryforwards, and state tax credits.

$ 301 of the reduction in the valuation allowance was recorded to Other comprehensive income, primarily due to the remeasurement of certain pension assets and liabilities during the third quarter of 2021 that resulted in an actuarial gain.

Our effective tax rates were 23.2 % and 1.9 % for the three months ended March 31, 2022 and 2021.

The 2022 estimated annual effective tax rate reflects the 21 % federal tax rate and an increase to the valuation allowance, which is partially offset by research and development tax credits.

The 2021 rate also reflected the 21 % federal tax rate which was largely offset by discrete tax expenses recorded in the first quarter of 2021 primarily related to an increase in the valuation allowance.

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

To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns.

Based on these methods, deferred tax liabilities were 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 were assumed to reverse and generate tax deductions over the next 15 to 20 years.

The valuation allowance primarily resulted from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of certain deferred tax assets.

As of September 30, 2021, based on the estimated reversal patterns of the Company’s deferred tax assets and liabilities, it is more likely than not that the Company will realize the federal deferred tax assets generated in 2021 as there is sufficient projected income from reversals of deferred tax liabilities in the next five years.

Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years.

The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.

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

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

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

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

1 unchanged sentence

Note 4 – Allowances for Losses on Financial Assets

The changes in allowances for expected credit losses for the nine months ended September 30, 2021 and 2020 consisted of the following:

Accounts receivable, net Unbilled receivables, net Other current assets, net Customer financing, net Other assets, net Total

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

Accounts receivable Unbilled receivables Other current assets Customer financing Other assets Total

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

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Write-offs 1 1

Balance at September 30, 2020 ($ 431 ) ($ 127 ) ($ 58 ) ($ 17 ) ($ 78 ) ($ 711 )

Balance at March 31, 2021 ($ 433 ) ($ 130 ) ($ 78 ) ($ 17 ) ($ 182 ) ($ 840 )

Balance at January 1, 2022 ($ 390 ) ($ 91 ) ($ 62 ) ($ 18 ) ($ 186 ) ($ 747 )

2 unchanged sentences

Recoveries 1 1

Balance at September 30, 2021 ($ 407 ) ($ 126 ) ($ 74 ) ($ 14 ) ($ 172 ) ($ 793 )

Balance at March 31, 2022 ($ 390 ) ($ 76 ) ($ 57 ) ($ 66 ) ($ 208 ) ($ 797 )

Note 5 – Inventories

4 unchanged sentences

Commercial spare parts, used aircraft, general stock materials and other

10,227 10,739

Total $ 79,819 $ 78,823

Commercial spare parts, used aircraft, general stock materials and other includes capitalized precontract costs of $ 646 at September 30, 2021 and $ 733 at December 31, 2020 primarily related to KC-46A Tanker and Commercial Crew.

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

Commercial Aircraft Programs

The increase in commercial aircraft programs inventory during 2022 reflects a continued buildup of 787 aircraft, as well as growth in 777X inventory.

These increases were partially offset by a decrease in 737 MAX inventory reflecting the resumption of deliveries.

Commercial aircraft programs inventory includes approximately 370 737 MAX aircraft and 105 787 aircraft at September 30, 2021 as compared with 425 737 MAX aircraft and 80 787 aircraft at December 31, 2020.

Commercial aircraft programs inventory includes approximately 320 737 MAX aircraft and 115 787 aircraft at March 31, 2022 as compared with 335 737 MAX aircraft and 110 787 aircraft at December 31, 2021.

A number of customers have requested to defer deliveries or to cancel orders.

1 unchanged sentence

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 September 30, 2021 and December 31, 2020, commercial aircraft programs inventory included the following amounts related to the 737 program:

At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 737 program:

deferred production costs of $ 1,753 and $ 1,296 and unamortized tooling and other non-recurring costs of $ 600 and $ 617 .

At September 30, 2021, $ 2,276 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $ 19 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

At September 30, 2021 and December 31, 2020, commercial aircraft programs inventory included the following amounts related to the 777X program:

unamortized tooling and other non-recurring costs of $ 3,444 and $ 3,295 .

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 September 30, 2021 and December 31, 2020.

At March 31, 2022, $ 2,343 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $ 10 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 777X program:

deferred production costs of $ 1,091 and $ 652 and $ 3,572 and $ 3,521 of unamortized tooling and other non-recurring costs.

In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023.

We expect that the production pause will result in abnormal production costs that will be period expensed in future periods and continue until 777X-9 production resumes.

The 777X program has near break-even margins at March 31, 2022.

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

These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on 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 September 30, 2021 and December 31, 2020, 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 exceeded estimated revenues from the program.

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

At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 787 program:

deferred production costs of $ 11,753 and $ 11,693 , $ 1,861 and $ 1,907 of supplier advances, and $ 1,818 and $ 1,815 of unamortized tooling and other non-recurring costs.

At September 30, 2021, $ 11,643 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $ 5,324 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

The 787 program produced at abnormally low production rates during the third quarter of 2021 as we prioritized production resources on inspections and rework.

As a result, we expect to incur approximately $ 1 billion of abnormal production costs on a cumulative basis, which are being expensed as incurred.

Abnormal 787 production costs are associated with abnormally low production rates, as well as costs to complete inspections and rework.

In the third quarter of 2021, we recorded period expense of $ 183 .

We expect to record approximately $ 800 in future quarters while production rates remain low and inspections and rework continues.

In the event we are unable to increase production, complete inspections and rework and/or resume deliveries consistent with our assumptions, our estimate of future abnormal costs could be increased.

Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling $ 3,238 and $ 2,992 at September 30, 2021 and December 31, 2020.

At March 31, 2022, $ 8,901 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm

orders and $ 4,670 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

We expensed abnormal production costs of $ 312 during the three months ended March 31, 2022.

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

Note 6 – Contracts with Customers

Unbilled receivables increased from $ 7,995 at December 31, 2020 to $ 10,009 at September 30, 2021, primarily driven by revenue recognized at Defense, Space & Security (BDS) and Global Services (BGS) in excess of billings .

Advances and progress billings increased from $ 50,488 at December 31, 2020 to $ 51,269 at September 30, 2021, primarily driven by advances on orders received at Commercial Airplanes (BCA), BDS, and BGS, partially offset by revenue recognized and the return of customer advances at BCA.

Revenues recognized during the nine months ended September 30, 2021 and 2020 from amounts recorded as Advances and progress billings at the beginning of each year were $ 10,131 and $ 6,752 .

Revenues recognized during the three months ended September 30, 2021 and 2020 from amounts recorded as Advances and progress billings at the beginning of each year were $ 2,816 and $ 1,497 .

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

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

Revenues recognized during the three months ended March 31, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $ 3,401 and $ 4,718 .

Note 7 – Customer Financing

Customer financing primarily relates to the Boeing Capital (BCC) segment and consisted of the following:

Customer financing primarily relates to the Boeing Capital (BCC) segment.

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

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

Customer financing consisted of the following:

2022 December 31

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Total financing receivables

Operating lease equipment, at cost, less accumulated depreciation of $ 84 and $ 209

Gross customer financing 1,885 2,054

Less allowance for losses on receivables ( 66 ) ( 18 )

Financing receivables, net 1,230 1,338

Operating lease equipment, at cost, less accumulated depreciation of $ 62 and $ 58

Total $ 1,737 $ 1,812

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.

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 September 30, 2021 and December 31, 2020, we individually evaluated for impairment customer financing receivables of $ 378 and $ 391 , of which $ 378 and $ 380 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.

There were no past due customer financing receivables as of September 30, 2021 and September 30, 2020.

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, 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 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 September 30, 2021 and December 31, 2020 were $ 378 and $ 380 .

Interest income received was $ 14 and $ 3 for the nine and three months ended September 30, 2021 and $ 26 and $ 5 for the nine and three months ended September 30, 2020.

The adequacy of the allowance for losses is assessed quarterly.

The 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, each of 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 financing receivable balances at September 30, 2021 by internal credit rating category and year of origination consisted of the following:

At March 31, 2022 and December 31, 2021, $ 412 and $ 378 were determined to be uncollectible financing receivables and placed on non-accrual status.

The increase in the allowance for losses on receivables during the three months ended March 31, 2022 was primarily due to impacts of the war in Ukraine.

Customer financing interest income received was $ 3 and $ 6 the three months ended March 31, 2022 and 2021.

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

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

Rating categories Current 2021 2020 2019 2018 Prior Total

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BB $ 9 $ 231 $ 118 $ 42 $ 13 121 534

B 78 $ 50 159 287

CCC 7 24 410 441

Total carrying value of financing receivables $ 9 $ 266 $ 125 $ 66 $ 13 $ 817 $ 1,296

At September 30, 2021, our allowance related to receivables with ratings of CCC, B, BB, and BBB.

At March 31, 2022, our allowance for losses related to receivables with ratings of CCC, B, BB, and BBB.

We applied default rates that averaged 88.1 %, 26.8 %, 3.4 %, and 0.1 %, respectively, to the exposure associated with those receivables.

Customer Financing Exposure

Customer financing is collateralized by security in the related asset.

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

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

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

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

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

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

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

2022 December 31

717 Aircraft ($ 58 and $ 62 accounted for as operating leases)

747-8 Aircraft ($ 0 and $ 121 accounted for as operating leases)

747-8 Aircraft (accounted for as sales-type finance leases) 394 435

737 Aircraft ($ 186 and $ 145 accounted for as operating leases)

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MD-80 Aircraft (accounted for as sales-type finance leases) 140 142

757 Aircraft ($ 0 and $ 4 accounted for as operating leases)

757 Aircraft (accounted for as sales-type finance leases) 121 126

747-400 Aircraft ($ 0 and $ 1 accounted for as operating leases)

Lease income recorded in Revenue on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021 and 2020 included $ 38 and $ 44 from sales-type/finance leases, and $ 53 and $ 99 from operating leases, of which $ 6 and $ 6 related to variable operating lease payments.

Lease income recorded in Revenue on the Condensed Consolidated Statements of Operations for the three months ended September 30, 2021 and 2020 included $ 13 and $ 15 from sales-type/finance leases, and $ 16 and $ 37 from operating leases, of which $ 1 and $ 2 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the nine months ended September 30, 2021 and 2020 in the amount of $ 57 and $ 18 .

Profit at the commencement of sales-type leases was recorded in revenue for the three months ended September 30, 2021 and 2020 in the amount of $ 21 and $ 8 .

Operating lease equipment primarily includes large commercial jet aircraft.

Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 included $ 18 and $ 13 from sales-type/finance leases, and $ 15 and $ 18 from operating leases, of which $ 4 and $ 2 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the three months ended March 31, 2022 and 2021 in the amount of $ 4 and $ 16 .

Note 8 – Investments

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Total $ 5,865 $ 9,167

(1) Dividends received were $ 52 and $ 9 for the nine and three months ended September 30, 2021 and $ 58 and $ 5 during the same periods in the prior year.

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, employee benefit programs, and insurance premiums.

(1) Dividends received were $ 27 and $ 5 during the three months ended March 31, 2022 and 2021.

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

Allowance for losses on available for sale debt instruments are assessed quarterly.

All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of September 30, 2021.

All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of March 31, 2022.

Note 9 – Commitments and Contingencies

737 MAX Grounding and COVID-19 Impacts

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

civil aviation authorities issued orders suspending commercial operations of 737 MAX aircraft.

Deliveries of the 737 MAX were suspended following these orders.

Deliveries in the U.S.

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

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 (EASA) have subsequently approved return of operations, allowing us to resume deliveries in those jurisdictions.

About 175 countries have approved the resumption of 737 MAX operations.

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

jurisdictions, including China.

Flight tests were completed in China during the third quarter of 2021, and we are continuing to work towards approval by the end of 2021, with the resumption of deliveries to follow in the first quarter of 2022.

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 in Note 17 with respect to our entry during the first quarter into a Deferred Prosecution Agreement 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 lawsuits, investigations and inquiries related to the 737 MAX.

In early April 2021, we notified the FAA that we recommended to operators that certain 737 MAX airplanes be temporarily removed from service to address issues that could affect the operation of the electrical power system.

During the second quarter of 2021, we worked with the FAA to finalize the required actions to address the issues and resumed deliveries in May.

We do not expect this matter to have a material financial impact on the 737 program.

In the first nine months of 2021, we delivered 167 aircraft.

We have approximately 370 airplanes in inventory as of September 30, 2021 and we anticipate delivering most of these aircraft by the end of 2023.

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.

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

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

We produced at abnormally low production rates in 2020 and expect to continue to do so through 2021.

As a result, we expect to incur approximately $ 4.6 billion of abnormal production costs on a cumulative basis, which are being expensed as incurred, of which $ 2,567 was recorded during the year ended December 31, 2020 and $ 1,501 was recorded during the nine months ended September 30, 2021.

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 contributed to the lower production and delivery rate assumptions described above.

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

The ongoing impacts of COVID-19 on market demand and timing of regulatory approvals in certain non-U.S.

jurisdictions 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 $ 136 and $ 33 due to the 737 MAX grounding during the nine and three months ended September 30, 2021, and $ 239 and $ 118 during the nine and three months ended September 30, 2020.

These 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 the nine months ended September 30, 2021 and 2020.

737 MAX Grounding

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

The Civil Aviation Administration of China issued an airworthiness directive in the fourth quarter of 2021 outlining actions required for airlines to return to service.

The 737 MAX has yet to return to service in China.

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

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

jurisdictions.

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

We continued to produce at abnormally low production rates through the first quarter of 2022 and expensed abnormal production costs of $ 188 and $ 568 during the three months ended March 31, 2022 and 2021.

We do not expect the remaining abnormal costs related to the 737 MAX to be significant.

In the first quarter of 2022, we delivered 81 aircraft.

We have approximately 320 airplanes in inventory as of March 31, 2022 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.

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

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

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Changes in estimates 34 30

Ending balance – September 30 $ 3,443 $ 5,981

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 $ 3.4 billion at September 30, 2021 includes $ 1.3 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 $ 0.2 billion in 2021 and $ 0.7 billion in 2022.

Ending balance – March 31 $ 2,419 $ 4,370

The liability balance of $ 2.4 billion at March 31, 2022 includes $ 1.8 billion of contracted customer concessions and other liabilities and $ 0.6 billion that remains subject to negotiation with customers.

The contracted amount includes $ 0.8 billion expected to be liquidated by lower customer delivery payments, $ 0.8 billion expected to be paid in cash and $ 0.2 billion in other concessions.

Of the cash payments to customers, we expect to pay $ 0.6 billion in 2022.

The type of consideration to be provided for the remaining $ 0.6 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 in certain jurisdictions.

For example, a significant portion of our 737 MAX inventory consists of aircraft scheduled to be delivered to customers based in China.

If we are unable to resume deliveries to China consistent with our assumptions, or if further deterioration in trade relations between the U.S.

and China results in unanticipated delivery delays, the continued absence in revenue, earnings, and cash flows associated with 737 MAX deliveries would materially and adversely impact our operating results.

In addition, 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, as well as any changes in our program estimates, could have a material adverse effect on our financial position, results of operations, and/or cash flows.

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 and capacity have fallen dramatically due to the COVID-19 pandemic.

This trend has impacted passenger traffic most severely.

While recovery is accelerating, we continue to expect that it will remain uneven as travel restrictions and varying regional travel protocols continue to impact air travel.

While the pandemic caused a temporary shift in air cargo dynamics, we have seen air cargo traffic return to positive growth in 2021 on economic recovery and strengthening trade.

These 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 certain 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.

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 begin to recover, and whether and at what point capacity will return to and/or exceed pre-COVID-19 levels.

The COVID-19 pandemic also has increased, and its aftermath is also expected to continue to increase, uncertainty with respect to global trade volumes, which could put 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

The following table summarizes environmental remediation activity during the nine months ended September 30, 2021 and 2020.

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

Beginning balance – January 1 $ 605 $ 565

Reductions for payments made ( 35 ) ( 26 )

Reductions for payments made, net of recoveries ( 13 )

Changes in estimates 48 15

Ending balance – September 30 $ 629 $ 571

Ending balance – March 31 $ 653 $ 567

The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years.

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There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated.

At September 30, 2021 and December 31, 2020, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $ 1,057 and $ 1,095 .

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

Product Warranties

The following table summarizes product warranty activity recorded during the nine months ended September 30, 2021 and 2020.

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

Beginning balance – January 1 $ 1,900 $ 1,527

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Changes in estimates 149 234

Ending balance – September 30 $ 1,855 $ 1,559

Ending balance – March 31 $ 1,966 $ 1,734

Commercial Aircraft Commitments

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Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer.

Trade-in commitment agreements at September 30, 2021 have expiration dates from 2021 through 2028.

At September 30, 2021 and December 31, 2020 total contractual trade-in commitments were $ 685 and $ 950 .

As of September 30, 2021 and December 31, 2020, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $ 269 and $ 599 and the fair value of the related trade-in aircraft was $ 269 and $ 580 .

Trade-in commitment agreements at March 31, 2022 have expiration dates from 2022 through 2029.

At March 31, 2022 and December 31, 2021 total contractual trade-in commitments were $ 1,289 and $ 612 .

As of March 31, 2022 and December 31, 2021, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $ 379 and $ 283 and the fair value of the related trade-in aircraft was $ 379 and $ 283 .

Financing Commitments

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $ 13,311 and $ 11,512 as of September 30, 2021 and December 31, 2020.

The estimated earliest potential funding dates for these commitments as of September 30, 2021 are as follows:

October through December 2021 $ 1,419

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $ 12,761 and $ 12,905 as of March 31, 2022 and December 31, 2021.

The estimated earliest potential funding dates for these commitments as of March 31, 2022 are as follows:

April through December 2022 $ 1,759

Thereafter 1,883

As of September 30, 2021, $ 13,189 of these financing commitments relate to customers we believe have less than investment-grade credit.

As of March 31, 2022, all of these financing commitments relate to customers we believe have less than investment-grade credit.

We have concluded that no reserve for future potential losses is required for these financing commitments based upon the terms, such as collateralization and interest rates, under which funding would be provided.

Funding Commitments

We have commitments to make additional capital contributions of $ 256 to joint ventures over the next six years.

We have commitments to make additional capital contributions of $ 244 to joint ventures over the next five years.

Standby Letters of Credit and Surety Bonds

We have entered into standby letters of credit and surety bonds with financial institutions primarily relating to the guarantee of our future performance on certain contracts.

Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $ 3,885 and $ 4,238 as of September 30, 2021 and December 31, 2020.

United States Government Defense Environment Overview

The Omnibus appropriations acts for fiscal year 2021 (FY21), enacted in December 2020, provided FY21 appropriations for government departments and agencies, including $704 billion for the U.S.

DoD, $23 billion for the National Aeronautics and Space Administration (NASA) and $18 billion for the FAA.

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.

In May 2021, the U.S.

government released the President’s budget request for fiscal year 2022 (FY22), which included $715 billion in funding for the U.S.

DoD, $25 billion in funding for NASA and $19 billion for the FAA.

While the President’s budget request for FY22 includes funding for a majority of Boeing’s programs, it did not include funding for F/A-18 Super Hornet, P-8 Poseidon and CH-47F Block II production aircraft.

While there is some continued congressional support for F/A-18 and CH-47F Block II production aircraft for FY22, there is ongoing uncertainty with respect to these and other program-level appropriations for FY22 and future fiscal years.

These programs also continue to pursue non-U.S.

sales opportunities.

The Continuing Resolution (CR), enacted by U.S.

Congress on September 30, 2021, continues federal funding at FY21 appropriated levels through December 3, 2021.

Congress and the President must enact either full-year FY22 appropriations bills or an additional CR to fund government departments and agencies beyond December 3, 2021 or a government shutdown could result, which may impact the Company’s operations.

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

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.

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.

Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $ 3,647 and $ 3,634 as of March 31, 2022 and December 31, 2021.

VC-25B Presidential Aircraft

The Company’s firm fixed-price contract for the Engineering, Manufacturing, and Development (EMD) effort on the U.S.

Air Force’s (USAF) VC-25B Presidential Aircraft, commonly known as Air Force One, is a $ 4.3 billion program to develop and modify two 747-8 commercial aircraft.

During the first quarter of 2022, the cumulative reach-forward loss on the contract increased by $ 660 to $ 1,146 , driven by higher

supplier costs, higher costs to finalize certain technical requirements and schedule delays.

Risk remains that we may be required to record additional losses in future periods.

T-7A Red Hawk EMD Contract & Production Options

In 2018, we were awarded the T-7A Red Hawk program.

The EMD portion of the contract is a $ 860 fixed-price contract and includes five aircraft and seven simulators.

In the first quarter of 2022, we recorded an earnings charge of $ 67 related to the T-7A Red Hawk fixed-price EMD contract, which has close to break-even gross margins at March 31, 2022, primarily due to customer testing requirements and supply chain delays.

The production portion of the contract includes 11 production lots for aircraft and related services.

In 2018, we recorded a loss of $ 400 associated with the 11 production lots and associated support options for 346 T-7A Red Hawk aircraft that we believe are probable of being exercised.

The first production and support contract option is expected to be exercised in 2023.

The estimated loss increased by $ 300 to $ 700 during the first quarter of 2022 driven by ongoing supply chain negotiations which are impacted by supply chain constraints, COVID-19, and inflationary pressures.

Risk remains that we may be required to record additional losses in future periods.

In the third quarter of 2018, we were awarded the MQ-25 EMD contract by the U.S.

The contract is a fixed-price contract that now includes development and delivery of seven aircraft and test articles at a contract price of $890.

In connection with winning the competition, we recognized a reach-forward loss of $ 291 in the third quarter of 2018.

The period of performance runs from 2018 through 2024.

During the first quarter of 2022 we recorded a $ 78 increase to the MQ-25 reach-forward loss primarily driven by additional customer testing requirements and supplier quality challenges.

Risk remains that we may be required to record additional losses in future periods.

KC-46A Tanker

In 2011, we were awarded a contract from the U.S.

Air Force (USAF) to design, develop, manufacture, and deliver four next generation aerial refueling tankers.

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

In 2011, we were awarded a contract from the USAF to design, develop, manufacture, and deliver four next generation aerial refueling tankers.

This EMD contract is a fixed-price incentive fee contract and involves highly complex designs and systems integration.

Since 2016, the USAF has authorized seven low rate initial production (LRIP) lots for a total of 94 aircraft.

The EMD contract and authorized LRIP lots total approximately $ 19 billion as of September 30, 2021.

At September 30, 2021, we had approximately $ 252 of capitalized precontract costs and $ 305 of potential termination liabilities to suppliers.

The EMD contract and authorized LRIP lots total approximately $ 19 billion as of March 31, 2022.

As of March 31, 2022, we had approximately $ 276 of capitalized precontract costs and $ 609 of potential termination liabilities to suppliers.

During the first quarter of 2022, we recorded an increase to the reach-forward loss on the KC-46A Tanker program of $ 165 primarily reflecting higher supply chain and other costs.

Risk remains that we may be required to record additional losses in future periods.

Fixed-Price Contracts

Substantially all contracts at BDS and the majority of contracts at BGS are long-term contracts.

Long-term contracts that are contracted on a fixed-price basis could result in losses in future periods.

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

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

Recoverable Costs on Government Contracts

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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 the nine months ended September 30, 2021 and 2020.

Beginning balance – January 1 $ 283

Initial liability recorded in the second quarter of 2020 $ 652

Reductions for payments made ( 84 ) ( 395 )

Changes in estimates ( 179 ) 328

Ending balance – September 30 $ 20 $ 585

During 2020, the Company recorded severance costs for approximately 26,000 employees expected to leave the Company through a combination of voluntary and involuntary terminations.

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

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 September 30, 2021, our severance liability primarily relates to remaining severance payments to terminated employees.

Note 10 – Arrangements with Off-Balance Sheet Risk

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2022 December 31

2020 September 30

2021 March 31

2022 December 31

2020 September 30

2021 March 31

2022 December 31

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90 90 28 $ 46 $ 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.

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

Generally, these guarantees have been extended on behalf of guaranteed parties with less than investment-grade credit and are collateralized by certain assets.

We record a liability for the fair value of guarantees and the expected contingent loss amount, which is reviewed quarterly.

Current outstanding credit guarantees expire through 2036.

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

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To the extent that claims have been made under these indemnities and/or are probable and reasonably estimable, liabilities associated with these indemnities are included in the environmental liability disclosure in Note 9.

Generally, these guarantees have been extended on behalf of guaranteed parties with less than investment-grade credit and are collateralized by certain assets.

We record a liability for the fair value of guarantees and the expected contingent loss amount, which is reviewed quarterly.

Current outstanding credit guarantees expire through 2036.

Note 11 – Debt

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.

We used the net proceeds of these note issuances to repay $ 9,825 outstanding under our two-year delayed draw term loan credit agreement.

While our two-year delayed draw term loan matures in February 2022, we are planning to repay the remaining $ 4,000 in the fourth quarter of 2021.

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

As of September 30, 2021, we had $ 14,753 currently available under credit line agreements, of which $ 3,073 expires in October 2021, $ 3,200 expires in October 2022, $ 5,280 expires in March 2023, and $ 3,200 expires in October 2024.

In October 2021, we renewed the 364-day facility for $ 3,060 , which now expires in October 2022.

This 364-day facility has a one-year term out option that allows us to extend the maturity of any borrowings one additional year.

We continue to be in full compliance with all covenants contained in our debt or credit facility agreements.

Note 11 – Postretirement Plans

The components of net periodic benefit (income)/cost were as follows:

Nine months ended September 30 Three months ended September 30

Pension Plans 2021 2020 2021 2020

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

Pension Postretirement

2022 2021 2022 2021

Service cost $ 1 $ 1 $ 18 $ 22

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Amortization of prior service credits ( 20 ) ( 20 ) ( 9 ) ( 9 )

Recognized net actuarial loss 924 774 304 258

Settlement charge 156 6 152 3

Net periodic benefit income ($ 379 ) ($ 253 ) ($ 29 ) ($ 83 )

Net periodic benefit cost included in Earnings/(loss) from operations $ 2 $ 2 $ 1

Recognized net actuarial loss/(gain) 227 310 ( 28 ) ( 17 )

Settlement/curtailment loss 1

Net periodic benefit (income)/cost ($ 219 ) ($ 176 ) $ 3 $ 17

Net periodic benefit cost included in Loss from operations $ 1 $ 1 $ 19 $ 22

Net periodic benefit income included in Other income, net ( 220 ) ( 177 ) ( 15 ) ( 5 )

Net periodic benefit income included in Loss before income taxes ($ 379 ) ($ 253 ) ($ 29 ) ($ 83 )

Nine months ended September 30 Three months ended September 30

Other Postretirement Plans 2021 2020 2021 2020

Service cost $ 66 $ 65 $ 22 $ 22

Interest cost 68 107 23 35

Expected return on plan assets ( 6 ) ( 6 ) ( 3 ) ( 1 )

Amortization of prior service credits ( 26 ) ( 29 ) ( 9 ) ( 12 )

Recognized net actuarial gain ( 52 ) ( 33 ) ( 17 ) ( 10 )

Settlement charge ( 2 ) ( 2 )

Net periodic benefit cost $ 50 $ 102 $ 16 $ 32

Net periodic benefit cost included in Earnings/(loss) from operations $ 66 $ 67 $ 22 $ 23

Net periodic benefit (income)/cost included in Other income, net ( 16 ) 37 ( 6 ) 10

Net periodic benefit cost included in Loss before income taxes $ 50 $ 104 $ 16 $ 33

In the third quarter of 2021, we recorded a $ 151 settlement charge in Other income, net and remeasured assets and benefit obligations related to one of the Company’s pension plans.

The remeasurement resulted in a net actuarial gain of $ 1,642 , which is included in Other comprehensive income.

The $ 1,642 reflects a gain of $ 923 primarily driven by an increase in the discount rate from approximately 2.6 % at

December 31, 2020 to approximately 2.8 % as of the remeasurement date, as well as a gain of $ 719 primarily driven by asset returns in excess of expected returns.

Net periodic benefit (income)/cost included in Loss before income taxes ($ 219 ) ($ 176 ) $ 4 $ 17

Note 12 – Share-Based Compensation and Other Compensation Arrangements

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

If certain performance measures are met, the exercise price is reduced to 110 % of the grant date fair market value of our stock.

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

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On February 16, 2022, we granted 1,804,541 restricted stock units (RSU) to our executives as part of our long-term incentive program.

The RSUs granted under this program have a grant date fair value of $ 215.70 per unit and are generally scheduled to vest and settle in common stock (on a one-for-one basis) three years after the grant date.

The RSUs granted under this program have a grant date fair value of $ 217.48 per unit.

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

If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) may receive some or all of their stock units depending on certain age and service conditions.

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

Note 13 – Shareholders' Equity

Accumulated Other Comprehensive Loss

Changes in Accumulated other comprehensive loss (AOCI) by component for the nine and three months ended September 30, 2021 and 2020 were as follows:

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

Currency Translation Adjustments Unrealized Gains and Losses on Certain Investments Unrealized Gains and Losses on Derivative Instruments Defined Benefit Pension Plans & Other Postretirement Benefits Total (1)

Balance at January 1, 2021 ($ 30 ) $ 1 ($ 43 ) ($ 17,061 ) ($ 17,133 )

Other comprehensive income/(loss) before reclassifications 15 ( 107 ) ( 52 ) ( 144 )

Amounts reclassified from AOCI

Net current period Other comprehensive income/(loss) 15 ( 87 ) 446 374

Balance at September 30, 2020 ($ 113 ) $ 1 ($ 171 ) ($ 15,496 ) ($ 15,779 )

Balance at January 1, 2021 ($ 30 ) $ 1 ($ 43 ) ($ 17,061 ) ($ 17,133 )

Other comprehensive (loss)/income before reclassifications ( 36 ) 11 2 ( 23 )

( 63 ) 64 1,553 (3)

Amounts reclassified from AOCI

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Net current period Other comprehensive (loss)/income ( 36 ) 9 208 181

( 63 ) 58 2,320 2,315

Balance at September 30, 2021 ($ 93 ) $ 1 $ 15 ($ 14,741 ) ($ 14,818 )

Balance at June 30, 2020 ($ 161 ) $ 1 ($ 258 ) ($ 15,607 ) ($ 16,025 )

Other comprehensive income/(loss) before reclassifications 48 79 ( 40 ) 87

Balance at March 31, 2021 ($ 66 ) $ 1 ($ 34 ) ($ 16,853 ) ($ 16,952 )

Balance at January 1, 2022 ($ 105 ) $ 1 $ 6 ($ 11,561 ) ($ 11,659 )

Other comprehensive income before reclassifications 24 94 118

Amounts reclassified from AOCI

Net current period Other comprehensive income 24 129 136 289

Balance at September 30, 2020 ($ 113 ) $ 1 ($ 171 ) ($ 15,496 ) ($ 15,779 )

Balance at June 30, 2021 ($ 52 ) $ 1 $ 20 ($ 16,630 ) ($ 16,661 )

Other comprehensive (loss)/income before reclassifications ( 41 ) ( 1 ) 1,543 (3)

Amounts reclassified from AOCI

( 4 ) 346 (2)

Net current period Other comprehensive (loss)/income ( 41 ) ( 5 ) 1,889 1,843

Balance at September 30, 2021 ($ 93 ) $ 1 $ 15 ($ 14,741 ) ($ 14,818 )

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

(1) Net of tax.

(2) Primarily relates to amortization of actuarial losses for the nine and three months ended September 30, 2020 $ 562 and $ 172 (net of tax of ($ 179 ) and ($ 76 )) and nine and three months ended September 30, 2021 totaling $ 690 and $ 227 (net of tax of ($ 182 ) and ($ 60 )).

(2) Primarily relates to amortization of actuarial losses for the three months ended March 31, 2022 and 2021 of $ 159 and $ 228 (net of tax of ($ 40 ) and ($ 65 )).

These are included in the net periodic pension cost.

(3) Primarily relates to remeasurement of assets and benefit obligations related to the Company's pension plans resulting in an actuarial gain for the nine and three months ended September 30, 2021 of $ 1,551 and $ 1,544 (net of tax of ($ 106 ) and ($ 104 )).

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

Note 14 – Derivative Financial Instruments

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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.

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2022 December 31

2020 September 30

2021 March 31

2022 December 31

2020 September 30

2021 March 31

2022 December 31

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Gains/(losses) associated with our hedging transactions and forward points recognized in Other comprehensive income are presented in the following table:

Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

Three months ended March 31

Recognized in Other comprehensive income, net of taxes:

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

Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

Three months ended March 31

Foreign exchange contracts

Revenues ($ 2 ) ($ 1 )

Costs and expenses $ 5

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General and administrative expense 1 2

Gains related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were insignificant for the nine and three months ended September 30, 2021 and 2020.

Losses from cash flow hedges reclassified from AOCI to Other income, net because it is probable the forecasted transactions will not occur, were $ 50 and $ 0 for the three months ended March 31, 2022 and March 31, 2021.

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

Based on our portfolio of cash flow hedges, we expect to reclassify gains of $ 53 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months.

We have derivative instruments with credit-risk-related contingent features.

For foreign exchange and commodity contracts with original maturities of at least five years, our derivative counterparties could require settlement if we default on our five-year credit facility.

For foreign exchange contracts with original maturities of at least five years, our derivative counterparties could require

settlement if we default on our five-year credit facility.

For certain commodity contracts, our counterparties could require collateral posted in an amount determined by our credit ratings.

The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a net liability position at September 30, 2021 was $ 9 .

At September 30, 2021, there was no collateral posted related to our derivatives.

The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a net liability position at March 31, 2022 was $ 1 .

At March 31, 2022, there was no collateral posted related to our derivatives.

Note 15 – Fair Value Measurements

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The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Total Level 1 Level 2 Total Level 1 Level 2

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Commodity derivatives are valued using an income approach based on the present value of the commodity index prices less the contract rate multiplied by the notional amount.

Certain assets have been measured at fair value on a nonrecurring basis.

The following table presents the nonrecurring losses recognized for the nine months ended September 30 due to long-lived asset impairment and the fair value and asset classification of the related assets as of the impairment date:

Total Level 2 Level 3 Total

Losses Total Level 2 Level 3 Total

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3).

The following table presents the nonrecurring losses recognized for the three months ended March 31 due to long-lived asset impairment and the fair value and asset classification of the related assets as of the impairment date:

Losses Total Total

Investments ($ 31 ) ($ 7 )

Customer financing assets

$ 44 ( 2 ) $ 18 ( 9 )

Investments — ( 8 ) 51 51 ( 62 )

Property, plant and equipment ( 19 )

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Total $ 45 ($ 72 ) $ 18 ($ 16 )

Level 3 Investments, Property, plant and equipment, Other Assets and Acquired Intangibles were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets.

Level 2 Property, plant and equipment were valued based on a third party valuation using a combination of income and market approaches that considered estimates of net operating income,

capitalization rates and adjusted for as-is condition.

The fair value of the impaired customer financing assets is derived by calculating a median collateral value from a consistent group of third party aircraft value publications.

Investments, Property, plant and equipment, Other assets and Acquired intangible assets were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets.

The fair value of the impaired customer financing assets includes operating lease equipment and investments in sales type-leases/finance leases and is derived by calculating a median collateral value from a consistent group of third party aircraft value publications.

The values provided by the third party aircraft publications are derived from their knowledge of market trades and other market factors.

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Under certain circumstances, we adjust values based on the attributes and condition of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by third party publications, or on the expected net sales price for the aircraft.

For Level 3 assets that were measured at fair value on a nonrecurring basis during the year ended September 30, 2021, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets.

For Level 3 assets that were measured at fair value on a nonrecurring basis during the period ended March 31, 2022, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets.

Value Valuation

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The fair values and related carrying values of financial instruments that are not required to be remeasured at fair value on the Condensed Consolidated Statements of Financial Position were as follows:

September 30, 2021

March 31, 2022

Amount Total Fair

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The fair value of our debt that is traded in the secondary market is classified as Level 2 and is based on current market yields.

For our debt that is not traded in the secondary market, the fair value is classified as Level 2 and is based on our indicative borrowing cost derived from dealer quotes or discounted cash flows.

For our debt that is not traded in the secondary market, the fair value is classified as Level 2 and is based

on our indicative borrowing cost derived from dealer quotes or discounted cash flows.

The fair values of our debt classified as Level 3 are based on discounted cash flow models using the implied yield from similar securities.

With regard to other financial instruments with off-balance sheet risk, it is not practicable

to estimate the fair value of our indemnifications and financing commitments because the amount and timing of those arrangements are uncertain.

With regard to other financial instruments with off-balance sheet risk, it is not practicable to estimate the fair value of our indemnifications and financing commitments because the amount and timing of those arrangements are uncertain.

Items not included in the above disclosures include cash, restricted cash, time deposits and other deposits, commercial paper, money market funds, Accounts receivable, Unbilled receivables, Other current assets, Accounts payable and long-term payables.

The carrying values of those items, as reflected in the Condensed Consolidated Statements of Financial Position, approximate their fair value at September 30, 2021 and December 31, 2020.

The carrying values of those items, as reflected in the Condensed Consolidated Statements of Financial Position, approximate their fair value at March 31, 2022 and December 31, 2021.

The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash (Level 1).

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Multiple legal actions have been filed against us as a result of the October 29, 2018 accident of Lion Air Flight 610 and the March 10, 2019 accident of Ethiopian Airlines Flight 302.

Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX, including an investigation by the Securities and Exchange Commission, the outcome of which may be material.

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

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

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 Federal Aviation Administration.

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.

We expensed $ 743.6 million 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 million 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 $ 1.77 billion amount related to the Company’s airline customers was included in amounts reserved in prior quarters for 737 MAX customer considerations.

During the fourth quarter of 2021, we entered into a proposed settlement with plaintiffs in a shareholder derivative lawsuit.

In March 2022, the court entered an order approving the proposed settlement and the Company committed to making certain governance changes.

As a result of the settlement, the Company expects to receive approximately $ 200 in 2022.

Further, we are subject to, and cooperating with ongoing governmental and regulatory investigations and inquiries relating to the accidents and the 737 MAX.

Among these is an ongoing investigation by the Securities and Exchange Commission, the outcome of which may be material.

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

During 2019, we entered into agreements with Embraer S.A.

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BCA revenues by customer location consist of the following:

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions) Three months ended March 31

Revenue from contracts with customers:

Europe $ 1,025 $ 873

Asia 1,958 1,964 186 500

Latin America and Caribbean 828 531

Middle East 318 129

Other 1,219 465 220 12

Total non-U.S.

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

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions) Three months ended March 31

Revenue from contracts with customers:

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customers (1)

5,214 5,013 1,784 1,536

Total segment revenue from contracts with customers $ 5,483 $ 7,185

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government (1)

89 % 89 % 89 % 90 %

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

BGS revenues consist of the following:

(Dollars in millions) Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

(Dollars in millions) Three months ended March 31

Revenue from contracts with customers:

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government (1)

41 % 41 % 40 % 45 %

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

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 backlog at September 30, 2021 was $ 367,108 .

Our total backlog includes contracts that we and our customers are committed to perform.

The value in backlog represents the estimated transaction prices on performance obligations to our customers for which work remains to be performed.

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

Our backlog at March 31, 2022 was $ 370,835 .

We expect approximately 34 % to be converted to revenue through 2023 and approximately 86 % through 2026, 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, 787 production issues and associated rework, timing of 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

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Components of Unallocated items, eliminations and other are shown in the following table.

Nine months ended September 30 Three months ended September 30

2021 2020 2021 2020

Three months ended March 31

Share-based plans ($ 83 ) ($ 128 )

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Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of September 30, 2021, the related condensed consolidated statements of operations, comprehensive income, and equity for the three-month and nine-month periods ended September 30, 2021 and 2020, and of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively referred to as the "condensed consolidated interim financial information").

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of March 31, 2022, the related condensed consolidated statements of operations, comprehensive income, equity, and cash flows for the three-month periods ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "condensed consolidated interim financial information").

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB"), the consolidated statement of financial position of the Company as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year then ended (not presented herein);

and in our report dated February 1, 2021, we expressed an unqualified opinion on those consolidated financial statements.

and in our report dated January 31, 2022, we expressed an unqualified opinion on those consolidated financial statements.

In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our review in accordance with standards of the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB.

A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.

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Chicago, Illinois

October 27, 2021

April 27, 2022

FORWARD-LOOKING STATEMENTS

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

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

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

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

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operations, including sales to non-U.S.

(15) threats to the security of our or our customers' information;

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

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

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(24) potential environmental liabilities;

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

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

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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-Q

Item 1. Financial Statements