What changed in this filing

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Item 1. Financial Statements

2022-07-27 compared with 2022-04-27 · 254 added, 180 removed, 674 unchanged (39% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations

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

(Dollars in millions, except per share data) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Sales of products $ 25,436 $ 26,672 $ 14,009 $ 14,154

5 unchanged sentences

Total costs and expenses ( 28,204 ) ( 28,396 ) ( 14,559 ) ( 14,588 )

2,468 3,819 2,122 2,410

(Loss)/income from operating investments, net ( 3 ) 75 17 38

2 unchanged sentences

Gain on dispositions, net 2 114 1 112

Loss from operations ( 1,169 ) ( 83 )

(Loss)/earnings from operations ( 395 ) 940 774 1,023

Other income, net 434 389 253 199

Interest and debt expense ( 1,280 ) ( 1,352 ) ( 650 ) ( 673 )

Loss before income taxes ( 1,618 ) ( 572 )

Income tax benefit 376 11

Net loss ( 1,242 ) ( 561 )

(Loss)/earnings before income taxes ( 1,241 ) ( 23 ) 377 549

Income tax benefit/(expense) 159 29 ( 217 ) 18

Net (loss)/earnings ( 1,082 ) 6 160 567

net loss attributable to noncontrolling interest ( 56 ) ( 44 ) ( 33 ) ( 20 )

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

Basic loss per share ($ 2.06 ) ($ 0.92 )

Diluted loss per share ($ 2.06 ) ($ 0.92 )

Net (loss)/earnings attributable to Boeing Shareholders ($ 1,026 ) $ 50 $ 193 $ 587

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

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

Weighted average diluted shares (millions) 592.8 588.6 596.4 590.2

2 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

(Dollars in millions) Three months ended March 31

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

Other comprehensive income, net of tax:

(Dollars in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Net (loss)/earnings ($ 1,082 ) $ 6 $ 160 $ 567

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

Currency translation adjustments ( 52 ) ( 22 ) ( 76 ) 14

Unrealized gain on derivative instruments:

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

Unrealized (loss)/gain on derivative instruments:

Unrealized (loss)/gain arising during period, net of tax of $ 21 , ($ 17 ), $ 49 and ($ 14 )

( 74 ) 65 ( 168 ) 54

Reclassification adjustment for losses/(gains) included in net loss, net of tax of ($ 8 ), $ 0 , $ 1 and $ 0

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

30 ( 2 ) ( 5 )

Total unrealized (loss)/gain on derivative instruments, net of tax ( 44 ) 63 ( 173 ) 54

Defined benefit pension plans and other postretirement benefits:

1 unchanged sentence

( 46 ) ( 45 ) ( 23 ) ( 22 )

Net actuarial gain arising during the period, net of tax of $ 0 , ($ 2 ), $ 0 and ($ 2 )

Amortization of actuarial losses included in net periodic pension cost, net of tax of ($ 84 ), ($ 122 ), ($ 44 ) and ($ 57 )

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

314 463 155 235

Settlements included in net (loss)/earnings, net of tax of $ 0 , ($ 1 ), $ 0 and ($ 1 )

Pension and postretirement cost related to our equity method investments, net of tax of $ 0 , ($ 1 ), $ 0 and $ 0

Total defined benefit pension plans and other postretirement benefits, net of tax 268 431 132 223

Other comprehensive income, net of tax 289 181

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

Other comprehensive income/(loss), net of tax 172 472 ( 117 ) 291

Comprehensive (loss)/income, net of tax ( 910 ) 478 43 858

Comprehensive loss related to noncontrolling interest ( 56 ) ( 44 ) ( 33 ) ( 20 )

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

Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax ($ 854 ) $ 522 $ 76 $ 878

See Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Statements of Financial Position

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

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

2022 December 31

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Condensed Consolidated Statements of Cash Flows

(Dollars in millions) Three months ended March 31

(Dollars in millions) Six months ended June 30

Cash flows – operating activities:

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

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

Net (loss)/earnings ($ 1,082 ) $ 6

Adjustments to reconcile net (loss)/earnings to net cash used by operating activities:

Non-cash items –

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Customer financing, net 50 83

Other 145 134

Net cash used by operating activities ( 3,135 ) ( 3,870 )

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Effect of exchange rate changes on cash and cash equivalents ( 71 ) ( 14 )

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

Net increase in cash & cash equivalents, including restricted 2,027 472

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

5 unchanged sentences

Condensed Consolidated Statements of Equity

For the three months ended March 31, 2022 and 2021

For the six months ended June 30, 2022 and 2021

Boeing shareholders

(Dollars in millions, except per share data) Common

(Dollars in millions) Common

Stock Additional

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

Net loss ( 537 ) ( 24 ) ( 561 )

Net earnings 50 ( 44 ) 6

Other comprehensive income, net of tax of ($ 131 )

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Treasury shares issued for 401(k) contribution 296 332 628

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

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

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

5 unchanged sentences

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

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

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

See Notes to the Condensed Consolidated Financial Statements.

The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the three months ended June 30, 2022 and 2021

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 April 1, 2021 $ 5,061 $ 8,155 ($ 52,395 ) $ 38,073 ($ 16,952 ) $ 217 ($ 17,841 )

Net earnings 587 ( 20 ) 567

Other comprehensive income, net of tax of ($ 68 )

Share-based compensation 172 172

Treasury shares issued for stock options exercised, net

Treasury shares issued for other share-based plans, net

( 3 ) 1 ( 2 )

Treasury shares issued for 401(k) contribution 160 162 322

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

Balance at April 1, 2022 $ 5,061 $ 9,295 ($ 51,573 ) $ 33,189 ($ 11,370 ) $ 130 ($ 15,268 )

Net earnings 193 ( 33 ) 160

Other comprehensive loss, net of tax of $ 12

( 117 ) ( 117 )

Share-based compensation 149 149

Treasury shares issued for stock options exercised, net ( 2 ) 7 5

Treasury shares issued for other share-based plans, net ( 5 ) 2 ( 3 )

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

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

See Notes to the Condensed Consolidated Financial Statements.

The Boeing Company and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Business Segment Data

(Dollars in millions) Three months ended March 31

(Dollars in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Commercial Airplanes $ 10,380 $ 10,284 $ 6,219 $ 6,015

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FAS/CAS service cost adjustment 567 538 284 268

Loss from operations ( 1,169 ) ( 83 )

(Loss)/earnings from operations ( 395 ) 940 774 1,023

Other income, net 434 389 253 199

Interest and debt expense ( 1,280 ) ( 1,352 ) ( 650 ) ( 673 )

Loss before income taxes ( 1,618 ) ( 572 )

Income tax benefit 376 11

Net loss ( 1,242 ) ( 561 )

(Loss)/earnings before income taxes ( 1,241 ) ( 23 ) 377 549

Income tax benefit/(expense) 159 29 ( 217 ) 18

Net (loss)/earnings ( 1,082 ) 6 160 567

Net loss attributable to noncontrolling interest ( 56 ) ( 44 ) ( 33 ) ( 20 )

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

Net (loss)/earnings attributable to Boeing Shareholders ($ 1,026 ) $ 50 $ 193 $ 587

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

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

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

The results of operations for the period ended June 30, 2022 are not necessarily indicative of the operating results for the full year.

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

Liquidity Matters

During the first three months of 2022, net cash used by operating activities was $ 3.2 billion.

During the first six months of 2022, net cash used by operating activities was $ 3.1 billion.

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

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

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 expect a negative impact on our operating cash flows until commercial deliveries ramp up.

As a result, our cash and short-term investment balance was $ 11.4 billion at June 30, 2022, down from $ 16.2 billion at December 31, 2021.

Our debt balance of $ 57.2 billion at June 30, 2022 is down from $ 58.1 billion at December 31, 2021.

Short-term debt and the current portion of long-term debt increased to $ 5.4 billion at June 30, 2022 from $ 1.3 billion at December 31, 2021.

The current portion of long-term debt includes term notes of $ 0.3 billion maturing in the fourth quarter of 2022, $ 1.7 billion maturing in the first quarter of 2023, and $ 3.4 billion maturing in the second quarter of 2023.

As of June 30, 2022, our unused borrowing capacity on revolving credit agreements is $ 14.7 billion, unchanged from December 31, 2021.

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

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

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

Our short-term and long-term credit ratings remained unchanged during the first half 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.

At June 30, 2022 and December 31, 2021, trade payables included $ 2.4 billion and $ 2.3 billion payable to suppliers who have elected to participate in supply chain financing programs.

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

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

For example, the United States Department of Defense (U.S.

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

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.

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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.

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.

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

Long-term Contracts

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

When the current estimates of total sales and costs for a long-term contract indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.

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

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

When the current estimates of total sales and costs for a long-term contract, and/or contractual options that are probable of exercise, indicate a loss, a provision for the entire loss is recognized.

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

(In millions - except per share amounts) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

(Decrease)/increase to Revenue ($ 885 ) $ 230 ($ 273 ) $ 223

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

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

(Decrease)/increase to (Loss)/earnings from operations ($ 1,541 ) $ 58 ($ 411 ) $ 234

(Decrease)/increase to Diluted EPS ($ 2.27 ) ($ 0.03 ) ($ 0.29 ) $ 0.41

Note 2 – Earnings Per Share

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

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

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

(In millions - except per share amounts) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Net (loss)/earnings attributable to Boeing Shareholders ($ 1,026 ) $ 50 $ 193 $ 587

earnings available to participating securities

Net loss available to common shareholders ($ 1,219 ) ($ 537 )

Net (loss)/earnings available to common shareholders ($ 1,026 ) $ 50 $ 193 $ 587

Basic weighted average shares outstanding

592.8 586.4 594.0 587.5

participating securities (1)

0.3 0.4 0.3 0.4

Basic weighted average common shares outstanding

592.5 586.0 593.7 587.1

Basic weighted average shares outstanding

592.8 586.4 594.0 587.5

Dilutive potential common shares (2)

Diluted weighted average shares outstanding

592.8 588.6 596.4 590.2

participating securities (1)

0.3 0.4 0.3 0.4

Diluted weighted average common shares outstanding

Net loss per share:

592.5 588.2 596.1 589.8

Net (loss)/earnings per share:

($ 1.73 ) $ 0.09 $ 0.32 $ 1.00

( 1.73 ) 0.09 0.32 1.00

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

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

As a result of incurring a net loss for the three 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.

As a result of incurring a net loss for the six months ended June 30, 2022, 3.0 million potential common shares 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) Three months ended March 31

(Shares in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Performance awards 1.9 2.7 2.3 2.8

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Note 3 – Income Taxes

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.

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

In the second quarter of 2022, we determined that we could not make a reliable estimate of the annual effective tax rate primarily due to the sensitivity of the estimated annual tax rate to changes in forecasted pre-tax earnings in relation to significant permanent differences.

As a result, the effective tax rate for the six months ended June 30, 2022 was calculated based on 2022 year-to-date results.

We recorded a tax benefit of $ 159 for the six months ended June 30, 2022 primarily reflecting the 2022 operating losses.

The difference between the 2022 year-to-date effective tax rate of 12.8 % and the current federal tax rate of 21 % is primarily driven by increases to the valuation allowance in 2022, which reduced our recorded income tax benefit.

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.

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Note 4 – Allowances for Losses on Financial Assets

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

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

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

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Write-offs 15 1 16

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

Balance at June 30, 2021 ($ 413 ) ($ 129 ) ($ 74 ) ($ 16 ) ($ 176 ) ($ 808 )

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

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Recoveries 5 5

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

Balance at June 30, 2022 ($ 148 ) ($ 26 ) ($ 61 ) ($ 60 ) ($ 80 ) ($ 375 )

Note 5 – Inventories

5 unchanged sentences

Total $ 79,917 $ 78,823

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 spare parts, used aircraft, general stock materials and other includes capitalized precontract costs of $ 763 at June 30, 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.

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.

Commercial aircraft programs inventory includes approximately 290 737 MAX aircraft and 120 787 aircraft at June 30, 2022 as compared with 335 737 MAX aircraft and 110 787 aircraft at December 31, 2021.

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

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If we are unable to successfully remarket the aircraft, determine further production rate reductions are necessary, and/or contract the program accounting quantities, future earnings may be reduced and/or additional reach-forward losses may have to be recorded.

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

At June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 737 program:

deferred production costs of $ 1,594 and $ 1,296 and unamortized tooling and other non-recurring costs of $ 649 and $ 617 .

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:

At June 30, 2022, $ 2,230 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $ 13 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

At June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 777X program:

deferred production costs of $ 1,194 and $ 652 and $ 3,625 and $ 3,521 of unamortized tooling and other non-recurring costs.

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

We expect that the 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 production pause is resulting in abnormal production costs that are being expensed as incurred until 777X-9 production resumes.

We expensed abnormal production costs of $ 102 during the three months ended June 30, 2022.

The 777X program has near break-even margins at June 30, 2022.

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

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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:

At June 30, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 787 program:

deferred production costs of $ 12,056 and $ 11,693 , $ 1,931 and $ 1,907 of supplier advances, and $ 1,822 and $ 1,815 of unamortized tooling and other non-recurring costs.

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.

At June 30, 2022, $ 9,018 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders

and $ 4,860 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

We expensed abnormal production costs of $ 595 during the six months ended June 30, 2022.

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

Note 6 – Contracts with Customers

Unbilled receivables increased from $ 8,620 at December 31, 2021 to $ 8,991 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 .

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

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

Revenues recognized during the six months ended June 30, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $ 6,814 and $ 7,315 .

Revenues recognized during the three months ended June 30, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $ 3,413 and $ 2,597 .

Note 7 – Customer Financing

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Total $ 1,701 $ 1,812

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:

At June 30, 2022 and December 31, 2021, $ 406 and $ 378 were determined to be uncollectible financing receivables and placed on non-accrual status.

The increase in the allowance for losses on receivables during the six months ended June 30, 2022 was primarily due to impacts of the war in Ukraine.

Customer financing interest income received was $ 6 and $ 3 for the six and three months ended June 30, 2022 and $ 11 and $ 5 for the six and three months ended June 30, 2021.

Our financing receivable balances at June 30, 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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Total carrying value of financing receivables $ 26 $ 262 $ 123 $ 63 $ 13 $ 791 $ 1,278

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

At June 30, 2022, our allowance for losses related to receivables with ratings of CCC, B, BB, and BBB.

We applied default rates that averaged 90.9 %, 25.8 %, 3.0 %, and 0.1 %, respectively, to the exposure associated with those receivables.

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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 .

Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2022 and 2021 included $ 36 and $ 25 from sales-type/finance leases, and $ 32 and $ 37 from operating leases, of which $ 5 and $ 5 related to variable operating lease payments.

Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 included $ 18 and $ 12 from sales-type/finance leases, and $ 17 and $ 19 from operating leases, of which $ 1 and $ 3 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the six months ended June 30, 2022 and 2021 in the amount of $ 12 and $ 36 .

Profit at the commencement of sales-type leases was recorded in revenue for the three months ended June 30, 2022 and 2021 in the amount of $ 8 and $ 20 .

Note 8 – Investments

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Total $ 2,339 $ 9,167

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

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

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

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

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

All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of June 30, 2022.

Note 9 – Commitments and Contingencies

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Over 190 countries have approved the resumption of 737 MAX operations.

The 737 MAX has yet to return to service in China and a small number of other countries.

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

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

While we expect 737 MAX deliveries to 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.

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

We increased the production rate to 31 per month in 2022, and expect to implement further gradual production rate increases based on market demand and supply chain capacity.

We expensed abnormal production costs of $ 188 during the three months ended March 31, 2022.

We have approximately 290 airplanes in inventory as of June 30, 2022 and we anticipate delivering most of these aircraft by the end of 2023.

We continue to work with a small number of customers who have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory.

Approximately half the aircraft in inventory are designated for customers in China.

In the event that we are unable to resume aircraft deliveries in China and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing and our expectation regarding future gradual production rate increases could be impacted.

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.

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

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

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Changes in estimates 17 ( 8 )

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.

Ending balance – June 30 $ 2,108 $ 3,964

The liability balance of $ 2.1 billion at June 30, 2022 includes $ 1.7 billion of contracted customer concessions and other liabilities and $ 0.4 billion that remains subject to negotiation with customers.

The contracted amount includes $ 0.9 billion expected to be liquidated by lower customer delivery payments, $ 0.6 billion expected to be paid in cash and $ 0.2 billion in other concessions.

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Environmental

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

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

Beginning balance – January 1 $ 605 $ 565

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Changes in estimates 131 41

Ending balance – March 31 $ 653 $ 567

Ending balance – June 30 $ 725 $ 582

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

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

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 .

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

Product Warranties

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

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

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

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Changes in estimates 261 293

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

Ending balance – June 30 $ 2,030 $ 1,768

Commercial Aircraft Commitments

In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price upon the purchase of Sale Aircraft.

In conjunction with signing definitive agreements for the sale of new aircraft, we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price.

The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources.

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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 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 .

Trade-in commitment agreements at June 30, 2022 have expiration dates from 2022 through 2029.

At June 30, 2022 and December 31, 2021 total contractual trade-in commitments were $ 1,270 and $ 612 .

As of June 30, 2022 and December 31, 2021, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $ 349 and $ 283 and the fair value of the related trade-in aircraft was $ 346 and $ 283 .

Financing Commitments

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $ 12,761 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

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $ 13,081 and $ 12,905 as of June 30, 2022 and December 31, 2021.

The estimated earliest potential funding dates for these commitments as of June 30, 2022 are as follows:

July through December 2022 $ 1,209

Thereafter 1,902

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

As of June 30, 2022, all of these financing commitments relate to customers we believe have less than investment-grade credit.

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

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

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

Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $ 3,410 and $ 3,634 as of June 30, 2022 and December 31, 2021.

Recoverable Costs on Government Contracts

Our final incurred costs for each year are subject to audit and review for allowability by the U.S.

government, which can result in payment demands related to costs they believe should be disallowed.

We work with the U.S.

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

If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S.

Fixed-Price Contracts

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

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

Certain of the fixed-price contracts are for the development of new products, services and related technologies.

This development work scope is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work by us and our suppliers.

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

VC-25B Presidential Aircraft

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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.

During the first half of 2022, the reach-forward loss on the contract increased by $ 686 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.

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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.

In the first half of 2022, we recorded earnings charges of $ 103 related to the T-7A Red Hawk fixed-price EMD contract, which has a reach-forward loss at June 30, 2022, primarily due to customer testing requirements, supply chain delays and hardware qualification issues.

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

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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.

The estimated loss increased by $ 351 during the first half of 2022 primarily driven by ongoing supply chain negotiations which are impacted by supply chain constraints, COVID-19, and inflationary pressures.

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

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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.

During the first half of 2022, we increased the MQ-25 reach-forward loss by $ 225 primarily driven by additional testing and certification activities, supplier quality, and engineering design challenges.

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

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

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

The EMD contract and authorized LRIP lots total approximately $ 19 billion as of June 30, 2022.

As of June 30, 2022, we had approximately $ 295 of capitalized precontract costs and $ 866 of potential termination liabilities to suppliers.

During the first half of 2022, we increased the reach-forward loss on the KC-46A Tanker program by $ 209 primarily reflecting higher supply chain and production disruption costs.

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

Fixed-Price Contracts

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

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

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

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

Recoverable Costs on Government Contracts

Our final incurred costs for each year are subject to audit and review for allowability by the U.S.

government, which can result in payment demands related to costs they believe should be disallowed.

We work with the U.S.

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

If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S.

Note 10 – Arrangements with Off-Balance Sheet Risk

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2022 December 31

2021 March 31

2022 December 31

2021 March 31

2022 December 31

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Note 11 – Postretirement Plans

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

Pension Postretirement

2022 2021 2022 2021

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

Six months ended June 30 Three months ended June 30

Pension Plans 2022 2021 2022 2021

Service cost $ 2 $ 2 $ 1 $ 1

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Amortization of prior service credits ( 41 ) ( 40 ) ( 21 ) ( 20 )

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

Recognized net actuarial loss 454 620 227 310

Settlement/curtailment loss 4 3

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 ($ 439 ) ($ 350 ) ($ 220 ) ($ 174 )

Net periodic benefit cost included in (Loss)/earnings from operations $ 2 $ 2 $ 1 $ 1

Net periodic benefit income included in Other income, net ( 441 ) ( 352 ) ( 221 ) ( 175 )

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

Net periodic benefit income included in (Loss)/earnings before income taxes ($ 439 ) ($ 350 ) ($ 220 ) ($ 174 )

Six months ended June 30 Three months ended June 30

Other Postretirement Plans 2022 2021 2022 2021

Service cost $ 36 $ 44 $ 18 $ 22

Interest cost 49 45 25 22

Expected return on plan assets ( 5 ) ( 3 ) ( 3 ) ( 1 )

Amortization of prior service credits ( 17 ) ( 17 ) ( 8 ) ( 8 )

Recognized net actuarial gain ( 56 ) ( 35 ) ( 28 ) ( 18 )

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

Net periodic benefit cost included in (Loss)/earnings from operations $ 39 $ 44 $ 20 $ 22

Net periodic benefit cost included in Other income, net ( 29 ) ( 10 ) ( 14 ) ( 5 )

Net periodic benefit cost included in (Loss)/earnings before income taxes $ 10 $ 34 $ 6 $ 17

Note 12 – Share-Based Compensation and Other Compensation Arrangements

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Accumulated Other Comprehensive Loss

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

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

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

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Net current period Other comprehensive (loss)/income ( 22 ) 63 431 472

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

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

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

Other comprehensive loss before reclassifications ( 52 ) ( 74 ) ( 126 )

Amounts reclassified from AOCI

Net current period Other comprehensive (loss)/income ( 52 ) ( 44 ) 268 172

Balance at June 30, 2022 ($ 157 ) $ 1 ($ 38 ) ($ 11,293 ) ($ 11,487 )

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

Other comprehensive income before reclassifications 14 54 8 76

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Net current period Other comprehensive income 14 54 223 291

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

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

Other comprehensive loss before reclassifications ( 76 ) ( 168 ) ( 244 )

Amounts reclassified from AOCI

( 5 ) 132 (2)

Net current period Other comprehensive (loss)/income ( 76 ) ( 173 ) 132 ( 117 )

Balance at June 30, 2022 ($ 157 ) $ 1 ($ 38 ) ($ 11,293 ) ($ 11,487 )

(1) Net of tax.

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

(2) Primarily relates to amortization of actuarial losses for the six and three months ended June 30, 2022 of $ 314 and $ 155 (net of tax of ($ 84 ) and ($ 44 )) and the six and three months ended June 30, 2021 totaling $ 463 and $ 235 (net of tax of ($ 122 ) and ($ 57 )).

These are included in the net periodic pension cost.

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2022 December 31

2021 March 31

2022 December 31

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:

Three months ended March 31

Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

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:

Three months ended March 31

Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Foreign exchange contracts

Costs and expenses $ 10 $ 3 $ 5 $ 3

General and administrative ( 1 ) $ 3

General and administrative expense ( 7 ) 9 ( 6 ) 6

Commodity contracts

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General and administrative expense 2 3 1 1

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

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 six months ended June 30, 2022 and 2021.

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

Based on our portfolio of cash flow hedges, we expect to reclassify gains of $ 25 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months.

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

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

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 March 31, 2022 was $ 1 .

At March 31, 2022, 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 June 30, 2022 was $ 25 .

At June 30, 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.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Total Level 1 Level 2 Total Level 1 Level 2

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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:

The following table presents the nonrecurring losses recognized for the six months ended June 30 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

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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 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.

For Level 3 assets that were measured at fair value on a nonrecurring basis during the period ended June 30, 2022, the following table presents the fair value of those assets as of the measurement date, valuation techniques and related unobservable inputs of those assets.

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:

March 31, 2022

June 30, 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.

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 March 31, 2022 and December 31, 2021.

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 June 30, 2022 and December 31, 2021.

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

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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.

As a result of the settlement, the Company received $ 219 in the second quarter of 2022.

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

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BCA revenues by customer location consist of the following:

(Dollars in millions) Three months ended March 31

(Dollars in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Revenue from contracts with customers:

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Latin America and Caribbean 1,136 868 308 337

Asia 2,025 1,772 1,297 1,409

Middle East 1,088 513 770 384

Other non-U.S.

568 131 387 86

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) Three months ended March 31

(Dollars in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Revenue from contracts with customers:

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customers (1)

2,892 3,430 1,557 1,765

Total segment revenue from contracts with customers $ 11,674 $ 14,061 $ 6,191 $ 6,876

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government (1)

89 % 89 % 89 % 89 %

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

BGS revenues consist of the following:

(Dollars in millions) Three months ended March 31

(Dollars in millions) Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Revenue from contracts with customers:

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government (1)

34 % 42 % 33 % 41 %

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

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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 .

Our backlog at June 30, 2022 was $ 371,730 .

We expect approximately 29 % to be converted to revenue through 2023 and approximately 81 % through 2026, with the remainder thereafter.

There is significant uncertainty regarding the timing of when backlog will convert into revenue due to 787 production issues and associated rework, timing of 737 MAX delivery resumption in China, timing of entry into service of the 777X, 737 MAX 7 and/or 737 MAX 10, and COVID-19 impacts.

Unallocated Items, Eliminations and other

Unallocated items, eliminations and other include common internal services that support Boeing’s global business operations, intercompany guarantees provided to BCC and eliminations of certain sales between segments.

Such sales include airplanes accounted for as operating leases and considered transferred to the BCC segment.

Such sales include airplanes sold to our BCC segment that are leased by BCC to customers under operating leases and considered transferred to the BCC segment.

We generally allocate costs to business segments based on the U.S.

federal cost accounting standards (CAS).

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

Three months ended March 31

Components of Unallocated items, eliminations and other (expense)/income are shown in the following table.

Six months ended June 30 Three months ended June 30

2022 2021 2022 2021

Share-based plans ($ 108 ) ($ 142 ) ($ 25 ) ($ 14 )

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The Boeing Company

Chicago, Illinois

Arlington, Virginia

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of March 31, 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").

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of June 30, 2022, the related condensed consolidated statements of operations, comprehensive income, and equity for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 2022 and 2021, and the related notes (collectively referred to as the "condensed consolidated interim financial information").

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

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Chicago, Illinois

April 27, 2022

July 27, 2022

FORWARD-LOOKING STATEMENTS

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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