What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-01-27 compared with 2022-01-31 · 318 added, 464 removed, 1565 unchanged (33% of the section changed)

42 unchanged sentences

3,502 3,017 ( 5,685 )

Income/(loss) from operating investments, net 210 9 ( 4 )

(Loss)/income from operating investments, net ( 16 ) 210 9

General and administrative expense ( 4,187 ) ( 4,157 ) ( 4,817 )

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Loss before income taxes ( 5,022 ) ( 5,033 ) ( 14,476 )

Income tax benefit 743 2,535 1,623

Income tax (expense)/benefit ( 31 ) 743 2,535

Net loss ( 5,053 ) ( 4,290 ) ( 11,941 )

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Currency translation adjustments ( 62 ) ( 75 ) 98

Unrealized gain on certain investments, net of tax of $ 0 , $ 0 and $ 0

Unrealized loss on certain investments, net of tax of $ 0 , $ 0 and $ 0

Derivative instruments:

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

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

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

Unrealized (loss)/gain arising during period, net of tax of $ 12 , ($ 16 ) and ($ 4 )

Reclassification adjustment for loss/(gain) included in net earnings, net of tax of ($ 3 ), $ 2 and ($ 7 )

Total unrealized (loss)/gain on derivative instruments, net of tax ( 30 ) 49 41

Defined benefit pension plans & other postretirement benefits:

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1,533 4,262 ( 1,956 )

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

Amortization of actuarial loss included in net periodic pension cost, net of tax of ($ 11 ), ($ 8 ) and ($ 52 )

791 1,155 917

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

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

Amortization of prior service credits included in net periodic pension cost, net of tax of $ 2 , $ 1 and $ 6

( 114 ) ( 114 ) ( 112 )

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

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

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

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

Total defined benefit pension plans & other postretirement benefits, net of tax 2,202 5,500 ( 1,119 )

Other comprehensive income/(loss), net of tax 2,109 5,474 ( 980 )

Comprehensive loss related to noncontrolling interests ( 41 )

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

Comprehensive (loss)/income, net of tax ( 2,944 ) 1,184 ( 12,921 )

Comprehensive loss related to noncontrolling interest ( 118 ) ( 88 ) ( 68 )

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

Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax ($ 2,826 ) $ 1,272 ($ 12,853 )

See Notes to the Consolidated Financial Statements on pages 59 - 114.

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Other 307 304 235

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

Net cash provided/(used) by operating activities 3,512 ( 3,416 ) ( 18,410 )

Cash flows – investing activities:

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Acquisitions, net of cash acquired ( 6 )

Proceeds from dispositions 464

Contributions to investments ( 5,051 ) ( 35,713 ) ( 37,616 )

Proceeds from investments 10,619 45,489 20,275

Purchase of distribution rights ( 127 )

Other ( 11 ) 5 ( 18 )

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Debt repayments ( 1,310 ) ( 15,371 ) ( 10,998 )

Contributions from noncontrolling interests 7

Stock options exercised 50 42 36

Employee taxes on certain share-based payment arrangements ( 40 ) ( 66 ) ( 173 )

Common shares repurchased ( 2,651 )

Dividends paid ( 1,158 )

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Comprehensive

Interest Total

Interests Total

Balance at January 1, 2020 $ 5,061 $ 6,745 ($ 54,914 ) $ 50,482 ($ 16,153 ) $ 317 ($ 8,462 )

Net loss ( 636 ) ( 41 ) ( 677 )

Other comprehensive loss, net of tax of $ 298

( 11,873 ) ( 68 ) ( 11,941 )

Share-based compensation and related dividend equivalents

Other comprehensive loss, net of tax of $ 52

( 980 ) ( 980 )

Share-based compensation 250 250

Treasury shares issued for stock options exercised, net

( 47 ) 104 57

Treasury shares issued for other share-based plans, net

( 214 ) 47 ( 167 )

Common shares repurchased

( 2,651 ) ( 2,651 )

Cash dividends declared ($ 8.22 per share)

Treasury shares contributed to pension plans

952 2,048 3,000

Treasury shares issued for 401(k) contribution 80 115 195

Changes in noncontrolling interests ( 8 ) ( 8 )

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

Impact of ASU 2016-13 ( 162 ) ( 162 )

Balance at January 1, 2020 $ 5,061 $ 6,745 ($ 54,914 ) $ 50,482 ($ 16,153 ) $ 317 ($ 8,462 )

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

Other comprehensive loss, net of tax of $ 52

( 980 ) ( 980 )

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

Share-based compensation 833 833

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( 98 ) 35 ( 63 )

Treasury shares contributed to pension plans

952 2,048 3,000

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

Changes in noncontrolling interests ( 8 ) ( 8 )

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

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Total revenues $ 66,608 $ 62,286 $ 58,158

Earnings/(loss) from operations:

(Loss)/earnings from operations:

Commercial Airplanes ($ 2,370 ) ($ 6,475 ) ($ 13,847 )

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Loss before income taxes ( 5,022 ) ( 5,033 ) ( 14,476 )

Income tax benefit 743 2,535 1,623

Income tax (expense)/benefit ( 31 ) 743 2,535

Net loss ( 5,053 ) ( 4,290 ) ( 11,941 )

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

Liquidity Matters

The global outbreak of COVID-19, 787 production issues and associated rework, and the residual impacts of the 737 MAX grounding continue to have significant adverse impacts on our business and are expected to continue to negatively impact revenue, earnings and operating cash flow in future quarters.

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

We continue to expect commercial air travel to return to 2019 levels in 2023 to 2024.

We expect it will take a few years beyond that for the industry to return to long-term trend growth.

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

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

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

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

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

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

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

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

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

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

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

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

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

There is risk for further downgrades.

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

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

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

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

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

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

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

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

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

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.

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

We continue to transform and improve our business processes.

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

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

Use of Estimates

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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.

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.

Actual results could differ from those estimates.

Operating Cycle

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We use program accounting to determine the amount reported as cost of sales.

In certain situations, where an aircraft is still in our possession, and title and risk of loss has passed to the customer (known as a bill-and-hold arrangement), revenue will be recognized when all specific requirements for transfer of control under a bill-and-hold arrangement have been met.

Payments for commercial aircraft sales are received in accordance with the customer agreement, which generally includes a deposit upon order and additional payments in accordance with a payment schedule, with the balance being due immediately prior to or at aircraft delivery.

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Products sales under long-term contracts primarily include fighter jets, rotorcraft, cybersecurity products, surveillance suites, advanced weapons, missile defense, military derivative aircraft, satellite systems and modification of commercial passenger aircraft to cargo freighters.

Services sales under long-term contracts primarily include support and maintenance agreements associated with our commercial and defense products and space travel on Commercial Crew.

Sales of services under long-term contracts primarily include support and maintenance agreements associated with our commercial and defense products and space travel on Commercial Crew.

For each long-term contract, we determine the transaction price based on the consideration expected to be received.

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

When the current estimates of

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

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

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

The table below reflects the impact of net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts including the impact to Loss from operations from increases in estimated losses on unexercised options for the years ended December 31:

2022 2021 2020

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

Decrease to Revenue ($ 2,335 ) ($ 379 ) ($ 359 )

Increase to Loss from operations ($ 5,253 ) ($ 880 ) ($ 942 )

Decrease to Diluted EPS ($ 8.88 ) ($ 1.28 ) ($ 1.37 )

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

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

Significant adjustments during the three years ended December 31, 2022 included losses on VC-25B, KC-46A Tanker, MQ-25, Commercial Crew and T-7A Red Hawk programs.

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

Payments under long-term contracts may be received before or after revenue is recognized.

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

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

contract with the customer.

Unbilled receivables and advances and progress billings Unbilled receivables (contract assets) arise when the Company recognizes revenue for amounts which cannot yet be billed under terms of the contract with the customer.

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

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

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

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

For sales-type leases, we recognize selling profit or loss at lease inception if collection of the lease payments is probable.

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

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

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

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

For notes receivable, we record customer financing receivables net of any unamortized discounts and deferred incremental direct costs.

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

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

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

We evaluate for impairment assets under operating leases when events or changes in circumstances indicate that the expected undiscounted cash flow from the asset may be less than the carrying value.

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

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

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Revenues and costs are presented net in Cost of sales in the Consolidated Statements of Operations.

Fleet Support

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

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

technical data and documents.

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

This activity continues throughout the aircraft’s operational life.

Services provided after delivery include field service support, consulting on maintenance, repair and operational issues brought forth by the customer or regulators, updating manuals and engineering data, and the issuance of service bulletins that impact the entire model’s fleet.

Field service support involves our personnel located at customer facilities providing and coordinating fleet support activities and requests.

The costs for fleet support are expensed as incurred as Cost of services.

Research and Development

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

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

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

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

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Many of our employees have earned benefits under defined benefit pension plans.

Nonunion and the majority of union employees that had participated in defined benefit pension plans transitioned to a company-funded defined contribution retirement savings plan in 2016.

Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.

The majority of employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan.

We also provide postretirement benefit plans other than pensions, consisting principally of health care coverage to eligible retirees and qualifying dependents.

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The net periodic cost of our pension and other postretirement plans is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate, the long-term rate of asset return and medical trend (rate of growth for medical costs).

A portion of the service cost component of net periodic pension and other postretirement income or expense is not recognized in net earnings in the year incurred because it is allocated to production as product costs and reflected in inventory at the end of a reporting period.

Actuarial gains and losses, which occur when actual experience differs from actuarial assumptions, are reflected in Shareholders’ equity (net of taxes).

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Negative balances reclassified to Accounts payable were $ 102 and $ 47 at December 31, 2022 and 2021.

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

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

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

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Deferred production costs represent actual costs incurred for production of early units that exceed the estimated average cost of all units in the program accounting quantity.

Higher production costs are experienced at the beginning of a new or derivative airplane program.

Higher production costs are experienced at the beginning of a new or derivative aircraft program.

Units produced early in a program require substantially more effort (labor and other resources) than units produced later in a program because of volume efficiencies and the effects of learning.

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The determination of net realizable value of long-term contract costs is based upon quarterly reviews that estimate costs to be incurred to complete all contract requirements.

When actual contract costs and the estimate to complete exceed total estimated contract revenues, a loss provision is recorded.

When actual contract costs and

the estimate to complete exceed total estimated contract revenues, a loss provision is recorded.

The determination of net realizable value of commercial aircraft program costs is based upon quarterly program reviews that estimate revenue and cost to be incurred to complete the program accounting quantity.

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Used aircraft purchased by the Commercial Airplanes segment and general stock materials are stated at cost not in excess of net realizable value.

See ‘Aircraft Valuation’ within this Note for a discussion of our valuation of used aircraft.

Spare parts inventory is stated at lower of average unit cost or net realizable value.

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

Leases We determine if an arrangement is, or contains, a lease at the inception date.

Operating leases are included in Other assets, with the related liabilities included in Accrued liabilities and Other long-term liabilities.

Assets under finance leases, which primarily represent computer equipment, are included in Property, plant and equipment, net, with the related liabilities included in Short-term debt and current portion of long-term debt and Long-term debt on the Consolidated Statements of Financial Position.

Leases We determine if an arrangement is, or contains, a lease under which we are the lessee at the inception date.

Operating lease assets are included in Other assets, with the related liabilities included in Accrued liabilities and Other long-term liabilities.

Assets under finance leases, which primarily represent computer equipment, are included in Property, plant and equipment, net, with the related

liabilities included in Short-term debt and current portion of long-term debt and Long-term debt on the Consolidated Statements of Financial Position.

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

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Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

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

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

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

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

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

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

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

Goodwill and Other Acquired Intangibles

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Operating investments align strategically and are integrated with our operations.

Earnings from operating investments, including our share of income or loss from equity method investments, dividend income from other equity investments, and any impairments or gain/loss on the disposition of these investments, are recorded in Income from operating investments, net.

Non-operating investments are those we hold for non-strategic purposes.

Earnings from non-operating investments, including interest and dividends on marketable securities, and any impairments or gain/loss on the disposition of these investments are recorded in Other income/(loss), net.

All derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent of holding them.

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business requirements.

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

We also hold certain derivative instruments for economic purposes that are not designated for hedge accounting treatment.

For these aluminum agreements and for other derivative instruments not designated for hedge accounting treatment, the changes in their fair value are recorded in earnings immediately.

We also hold certain other derivative instruments for economic purposes.

These aluminum purchase and sale agreements and other derivative instruments are derivatives for accounting purposes but are not designated as hedges for accounting purposes.

For these aluminum agreements and other derivative instruments not designated for hedge accounting treatment, the changes in their fair value are recorded in earnings immediately.

Allowances for Losses on Certain Financial Assets

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

Collateral exposure is the excess of the carrying value of a financial asset over the fair value of the related collateral.

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

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

Aircraft Valuation

Used aircraft under trade-in commitments and aircraft under repurchase commitments In conjunction with signing a definitive agreement 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.

Additionally, we have entered into contingent repurchase commitments with certain customers wherein we agree to repurchase the Sale Aircraft at a specified price, generally 10 to 15 years after delivery of the Sale Aircraft.

Our repurchase of the Sale Aircraft is contingent upon a future, mutually acceptable agreement for the sale of additional new aircraft.

If we execute an agreement for the sale of additional new aircraft, and if the customer exercises its right to sell the Sale Aircraft to us, a contingent repurchase commitment would become a trade-in commitment.

Our historical experience is that contingent repurchase commitments infrequently become trade-in commitments.

Customer financing receivables are collateralized by security in the related asset.

We use a median calculated from published collateral values from multiple third-party aircraft value publications based on the type and age of the aircraft to determine the fair value of aircraft collateral.

Under certain circumstances, we apply judgment based on the attributes 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 outside publications.

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

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

Commercial Aircraft Trade-in Commitments

In conjunction with signing a definitive agreement for the sale of new commercial 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.

Exposure related to trade-in commitments may take the form of:

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On a quarterly basis, we update our valuation analysis based on the actual activities associated with placing each aircraft into a market or using current published third-party aircraft valuations based on the type and age of the aircraft, adjusted for individual attributes and known conditions.

Used aircraft acquired by the Commercial Airplanes segment are included in Inventories at the lower of cost or net realizable value as it is our intent to sell these assets.

To mitigate costs and enhance marketability, aircraft may be placed on operating lease.

While on operating lease, the assets are included in Customer financing.

Customer financing Customer financing includes operating lease equipment, notes receivable and sales-type/finance leases.

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

Customer financing is collateralized by security in the related asset.

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

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

We use a median calculated from published collateral values from multiple third-party aircraft value publications based on the type and age of the aircraft to determine the fair value of aircraft.

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

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

economic life of the asset.

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

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

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

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

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

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

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

The applicable default rate is determined using two components:

internal customer credit ratings and weighted average remaining contract term.

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

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

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

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

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

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

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

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

The warranty liability recorded at each balance sheet date reflects the estimated number of months of warranty coverage outstanding for products delivered times the average of historical monthly warranty payments, as well as additional amounts for

certain major warranty issues that exceed a normal claims level.

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

We provide guarantees to certain commercial airplane customers which include compensation provisions for failure to meet specified aircraft performance targets.

We provide guarantees to certain commercial aircraft customers which include compensation provisions for failure to meet specified aircraft performance targets.

We account for these performance guarantees as warranties.

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Supplier Penalties

We record an accrual for supplier penalties when an event occurs that makes it probable that a supplier penalty will be incurred and the amount is reasonably estimable.

Until an event occurs, we fully anticipate accepting all products procured under production-related contracts.

We record a liability in Accrued liabilities for the fair value of guarantees.

We record an accrual for supplier penalties when an event occurs that makes it probable we will incur a supplier penalty and the amount is reasonably estimable.

At the inception of a guarantee, we record a liability in Accrued liabilities for the fair value of the guarantee.

For credit guarantees, the liability is equal to the present value of the expected loss.

We determine the expected loss by multiplying the creditor’s default rate by the guarantee amount reduced by the expected recovery, if applicable.

At inception of a guarantee, and adjusted each quarter, we also recognize a liability for the expected contingent loss.

We also recognize a liability for the expected contingent loss at inception and adjust it each quarter.

Note 2 – Goodwill and Acquired Intangibles

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As of December 31, 2022 and 2021, we had indefinite-lived intangible assets with carrying amounts of $ 197 relating to trade names.

During 2019, we recorded an impairment of $ 293 within Cost of Sales, as a result of our decision to retire the Aviall brand and trade name.

As of December 31, 2022 and 2021, we had an indefinite-lived intangible asset with a carrying amount of $ 202 related to in process research and development for a next-generation air vehicle.

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Years ended December 31, 2022 2021 2020

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

earnings available to participating securities

Net loss available to common shareholders ($ 4,935 ) ($ 4,202 ) ($ 11,873 )

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

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

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

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

As a result of incurring a net loss in 2022, 2021 and 2020, potential common shares of 3.5 million, 2.6 million and 1.6 million, respectively, were excluded from diluted loss per share because the effect would have been antidilutive.

The following table represents all shares that were excluded from the calculation of diluted loss per share during the respective period but may be dilutive potential common shares in future periods.

This includes potential common shares that were excluded because the effect was either antidilutive or the performance condition was not met.

(Shares in millions)

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Total ($ 5,022 ) ($ 5,033 ) ($ 14,476 )

Income tax benefit consisted of the following:

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

Years ended December 31, 2022 2021 2020

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Total deferred ( 11 ) ( 843 ) 1,264

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

Total income tax expense/(benefit) $ 31 ($ 743 ) ($ 2,535 )

Net income tax (refunds)/payments were ($ 1,317 ), ($ 1,480 ) and $ 37 in 2022, 2021 and 2020, respectively.

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Other provision adjustments 121 ( 2.4 ) 35 ( 0.8 ) 108 ( 0.8 )

Excess tax benefits (2)

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

Audit settlements (2)

( 587 ) 4.1 ( 371 ) 16.4

Foreign derived intangible income (4)

( 31 ) 0.2 ( 229 ) 10.1

Tax deductible dividends ( 13 ) 0.1 ( 53 ) 2.4

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

Income tax expense/(benefit) $ 31 ( 0.6 ) % ($ 743 ) 14.7 % ($ 2,535 ) 17.5 %

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

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

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

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

In 2022, 2021, and 2020, we recorded tax benefits of $ 5 , tax expense of $ 3 , and tax benefits of $ 1,175 related to the NOL carryback provision.

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

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

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

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

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

Inventory and long-term contract methods of income recognition ($ 4,369 ) ($ 3,827 )

Pension benefits 1,739 3,029

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

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

Fixed assets, intangibles and goodwill ( 1,641 ) ( 1,657 )

Research expenditures 1,464

Pension benefits 1,146 1,739

Other employee benefits 1,095 991

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

Other postretirement benefit obligations 913 1,023

Accrued expenses and reserves 933 763

Other postretirement benefit obligations 660 913

737 MAX customer concessions and other considerations 425 682

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

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

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

The Company generated tax NOL in 2021 and interest carryovers in 2021 and 2022 that can be carried forward indefinitely and federal research and development credits that can be carried forward 20 years.

In the fourth quarter of 2020 and throughout 2021 and 2022, the Company was in a three-year cumulative pre-tax loss position.

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

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

remeasurement of pension and other postretirement benefit obligations.

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

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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.

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

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

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

The increase in the valuation allowance during 2022 is primarily due to tax credits and other carryforwards generated in 2022 that cannot be realized in 2022.

During 2022, the Company increased the valuation allowance by $ 739 .

This reflects a tax expense of $ 1,199 recorded in continuing operations and an increase of $ 18 related to the associated federal benefit of state impacts.

This was partially offset by a tax benefit of $ 478 included in OCI primarily due to the net actuarial gains that resulted from the annual remeasurement of pension assets and liabilities.

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

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As of December 31, 2022 and 2021, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant.

The amounts of interest included in the Consolidated Statements of Operations were not significant for the years ended December 31, 2021, 2020 and 2019.

The amounts of interest included in the Consolidated Statements of Operations were not significant for 2022, 2021 and 2020.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Settlements ( 109 )

Statute Lapse

Unrecognized tax benefits – December 31 $ 915 $ 858 $ 966

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

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

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 2008-2021 tax years.

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Commercial aircraft programs 67,702 68,106

Capitalized precontract costs (1)

Commercial spare parts, used aircraft, general stock materials and other 9,073 9,197

Total $ 78,151 $ 78,823

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

(1) Capitalized precontract costs at December 31, 2022 includes amounts related to KC-46A Tanker, Commercial Crew, and T-7 Production Options.

Commercial Aircraft Programs

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

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

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

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

We are currently remarketing certain aircraft and may have to remarket additional aircraft in future periods.

If we are unable to successfully remarket the aircraft, determine further production 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.

The decrease in commercial aircraft programs inventory during 2022 reflects a decrease in 737 and 787 inventory, offset by growth in 777X inventory.

Commercial aircraft programs inventory includes approximately 250 737 aircraft and 100 787 aircraft at December 31, 2022 as compared with 335 737 aircraft and 110 787 aircraft at December 31, 2021.

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

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

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

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

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

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

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

These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, 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.

$ 4,059 and $ 3,363 of work in process, $ 1,330 and $ 652 of

deferred production costs, and $ 3,774 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.

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 $ 325 during the year ended December 31, 2022.

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

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

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

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

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

deferred production costs of $ 12,689 and $ 11,693 , $ 1,831 and $ 1,907 of supplier advances, and $ 1,722 and $ 1,815 of unamortized tooling and other non-recurring costs.

At December 31, 2022, $ 9,881 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 $ 4,530 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

We are currently producing at abnormally low rates resulting in abnormal production costs that are being expensed as incurred.

We expensed abnormal production costs of $ 1,240 and $ 468 during the years ended December 31, 2022 and 2021.

Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling $ 3,586 and $ 3,290 at December 31, 2022 and 2021.

Note 8 – Contracts with Customers

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

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

Unbilled receivables increased from $ 8,620 at December 31, 2021 to $ 8,634 at December 31, 2022, primarily driven by revenue recognized in excess of billings at BGS, partially offset by billings in excess of revenue recognized at BDS.

Advances and progress billings increased from $ 52,980 at December 31, 2021 to $ 53,081 at December 31, 2022, primarily driven by advances on orders received at BCA, partially offset by revenue recognized at BDS and BGS.

Revenues recognized for the years ended December 31, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $ 12,087 and $ 11,336 .

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At December 31, 2022 and 2021, $ 405 and $ 378 were determined to be uncollectible financing receivables and placed on non-accrual status.

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

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

Customer financing interest income received for the years ended December 31, 2022 and 2021 was $ 13 and $ 18 .

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BB $ 35 $ 218 $ 112 $ 39 $ 12 63 479

B 76 $ 49 142 267

CCC 19 370 389

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717 Aircraft ($ 45 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 ($ 174 and $ 145 accounted for as operating leases)

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MD-80 Aircraft (Accounted for as sales-type/finance leases) 96 142

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

757 Aircraft (Accounted for as sales-type/finance leases) 107 126

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

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Total $ 10,550 $ 10,918

Depreciation expense was $ 1,488 , $ 1,533 and $ 1,567 for the years ended December 31, 2021, 2020 and 2019, respectively.

Interest capitalized during the years ended December 31, 2021, 2020 and 2019 totaled $ 76 , $ 81 and $ 83 , respectively.

Depreciation expense was $ 1,396 , $ 1,488 and $ 1,533 for 2022, 2021 and 2020, respectively.

Interest capitalized in 2022, 2021 and 2020 totaled $ 89 , $ 76 and $ 81 , respectively.

During 2022 and 2021, we acquired $ 101 and $ 46 of property, plant and equipment through non-cash investing and financing transactions.

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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.

This transaction resulted in the deconsolidation of HorizonX and generated a gain of $ 117 which is included in (Loss)/income from operating investments, net.

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

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

All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of December 31, 2021.

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

Equity Method Investments

Our equity method investments consisted of the following as of December 31:

Our equity method investments consisted of the following at December 31:

Segment Ownership Percentages Investment Balance

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Total $ 1,581

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

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

As of December 31, 2022, we have entered into leases that have not yet commenced of $ 420 , primarily for a maintenance, repair and overhaul hangar that will support military aircraft programs.

These leases will commence in 2023 with lease terms of 3 years to 25 years.

Note 13 – Liabilities, Commitments and Contingencies

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Accrued compensation and employee benefit costs $ 6,351 $ 6,037

737 MAX customer concessions and other considerations 2,940 5,537

Department of Justice agreement liability 744

737 MAX grounding customer concessions and other considerations 1,864 2,940

Other customer concessions and considerations 1,102 240

Environmental 752 605

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Forward loss recognition 4,060 2,014

Income taxes payable 5 43

Accrued interest payable 599 641

Current portion of lease liabilities 276 268

Current portion of retiree healthcare and pension liabilities 494 536

Other 3,808 3,274

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737 MAX Grounding

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

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

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

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

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

jurisdictions.

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

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

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

In 2021, we delivered 245 aircraft.

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

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

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

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

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

The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during 2022 and 2021.

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The contracted amount includes $ 0.8 billion expected to be liquidated by lower customer delivery payments, $ 0.7 billion expected to be paid in cash and $ 0.1 billion in other concessions.

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

Of the cash payments to customers, we expect to pay $ 0.1 billion in 2023 and the remaining $ 0.6 billion in future years.

The type of consideration to be provided for the remaining $ 0.3 billion will depend on the outcomes of negotiations with customers.

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Beginning balance – January 1 $ 605 $ 565

Reductions for payments made ( 59 ) ( 42 )

Reductions for payments made, net of recoveries ( 43 ) ( 59 )

Changes in estimates 190 99

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Ending balance – December 31 $ 2,275 $ 1,900

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

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

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

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

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

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

Commercial Aircraft Commitments

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

Commercial Aircraft Trade-In Commitments

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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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 $ 248 to joint ventures over the next six years.

Other Financial Commitments

We have financial commitments to make additional capital contributions totaling $ 270 related to certain 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.

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 and security agreements.

Contingent liabilities on outstanding letters of credit agreements and surety bonds aggregated approximately $ 5,070 and $ 3,634 as of December 31, 2022 and 2021.

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As we have the right to offset the loans against the cash surrender value of the policies, we present the net asset in Other assets on the Consolidated Statements of Financial Position as of December 31, 2022 and 2021.

BDS Fixed-Price Development Contracts

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

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

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

KC-46A Tanker

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.

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

The EMD contract and authorized LRIP lots are valued at approximately $ 19 billion as of December 31, 2021.

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

Government Assistance

In 2022, we adopted Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic 832) , which requires certain disclosures for those government assistance transactions for which we have applied a grant accounting model.

Certain states and localities in which we operate offer or have offered various business incentives related to investment and/or job creation.

Between 2010 and 2016, we received cash grants totaling $ 346 related to our investment in operations in South Carolina.

The grants were recorded in Other liabilities and are being amortized, primarily to

inventory, over the useful life of the Property, plant and equipment extending through 2052.

During 2022, we amortized $ 11 to Inventory, and recorded a benefit of $ 5 in Cost of Sales.

At December, 31, 2022, inventory included a benefit of $ 64 and Accrued liabilities included a balance of $ 106 .

We are eligible to claim tax refunds from the State of Missouri and City of Irving, Texas primarily related to job creation and retention through 2031.

During 2022, we received $ 30 in cash and recorded a benefit of $ 21 in Cost of sales.

At December 31, 2022, Other current assets includes receivables of $ 20 .

As of December 31, 2022, $ 56 of refunds, plus interest, is subject to clawback if we fail to meet certain conditions, including employment levels.

We are eligible to claim cash grants through 2032 of up to $ 62 , related to operations in Queensland, Australia.

During 2022, $ 7 cash was received and recorded as a benefit in Cost of Sales.

At December 31, 2022, $ 4 is subject to clawback if we fail to meet certain conditions, including employment levels.

Industrial Revenue Bonds (IRB) issued by St.

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

Tax benefits associated with IRBs include a twelve-year property tax abatement and sales tax exemption from St.

Louis County.

We record these properties on our Consolidated Statements of Financial Position.

We have also purchased the IRBs and therefore are the bondholders as well as the borrower/lessee of the properties purchased with the IRB proceeds.

The liabilities and IRB assets are equal and are reported net in the Consolidated Statements of Financial Position.

As of December 31, 2022 and 2021, the assets and liabilities associated with the IRBs were $ 271 .

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 2021 and 2020:

Beginning balance – January 1 $ 283

Initial liability recorded in the second quarter of 2020 $ 652

Reductions for payments made ( 90 ) ( 658 )

Changes in estimates ( 182 ) 289

Ending balance – December 31 $ 11 $ 283

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

Fixed-Price Contracts

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

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

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

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

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

VC-25B Presidential Aircraft

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

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

During the year ended December 31, 2022, we increased the reach-forward loss on the contract by $ 1,452 primarily driven by increases to cost estimates associated with factory modification labor and support engineering resources due to labor instability and inefficiencies that we now estimate will persist longer than previously anticipated, higher supplier cost estimates based on ongoing supplier negotiations and higher levels of engineering design changes due to technical requirements which are driving increased rework and schedule delays.

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

KC-46A Tanker

In 2011, we were awarded a contract from the USAF to design, develop, manufacture, and deliver four next generation aerial refueling tankers as well as priced options for 13 annual production lots totaling 179 aircraft.

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

Since 2016, the USAF has authorized eight low rate initial production (LRIP) lots for a total of 109 aircraft.

The EMD contract and authorized LRIP lots total approximately $ 21 billion as of December 31, 2022.

As of December 31, 2022, we had approximately $ 209 of capitalized precontract costs and $ 292 of potential termination liabilities to suppliers related to unexercised future lots.

During the year ended December 31, 2022, we increased the reach-forward loss on the KC-46A Tanker program by $ 1,374 primarily reflecting higher production and supply chain costs partially driven by labor instability and supply chain disruption, most of which was recorded during the third quarter of 2022.

The increase in production costs was primarily driven by factory unit time performance expectations that assume continued production disruption due to labor instability and supply chain disruption.

Factory unit time estimates also reflect reduced benefits from prior investments in productivity enablers and higher factory unit time to produce aircraft for the remaining life of the program.

The current year losses also reflect increased estimated change incorporation costs for flight test aircraft as well as schedule delays to complete the Remote Vision System.

Risk remains that we may 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.

During the year ended December 31, 2022, we increased the MQ-25 reach-forward loss by $ 579 primarily driven by higher than anticipated costs to manufacture the EMD units reflecting recent performance which is resulting in additional factory resources and increased engineering costs to address design and supplier quality issues.

We also increased costs associated with engineering design challenges, additional testing and certification activities, and flight test support.

Risk remains that we may 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.

During the year ended December 31, 2022, we recorded earnings charges of $ 203 related to the T-7A Red Hawk fixed-price EMD contract, which has a reach-forward loss at December 31, 2022.

Current year losses were primarily due to supply chain and hardware qualification issues, as well as schedule delays in achieving Military Flight Release and additional cost growth to resolve technical issues and other engineering design changes identified during 2022.

EMD aircraft flight testing is now estimated to start in 2023.

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 2024.

We increased the estimated reach-forward loss by $ 552 during the year ended December 31, 2022 primarily driven by ongoing supply chain negotiations (which are impacted by supply chain constraints and inflationary pressures), and design revisions, as well as an increase in the number of expected units in the initial production lots.

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

At December 31, 2022, we had approximately $ 56 of capitalized precontract costs and $ 283 of potential termination liabilities to suppliers related to future production lots.

Commercial Crew

NASA has contracted us to design and build the CST-100 Starliner spacecraft to transport crews to the International Space Station.

During the second quarter of 2022 we successfully completed the uncrewed Orbital Flight Test.

A crewed flight test is now expected to be completed in 2023.

During the year ended December 31, 2022, we increased the reach-forward loss by $ 288 primarily reflecting increases to estimated costs related to completing the crewed flight tests and revised schedules for both the crewed flight test and three post certification missions.

Most of this increase was recorded in the third quarter of 2022, primarily driven by timing of the three future post certification missions which are now assumed to be completed by 2026 based on NASA’s revised launch plans.

We had previously assumed that the post certification missions would be completed by 2024.

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

At December 31, 2022, we had approximately $ 180 of capitalized precontract costs and $ 159 of potential termination liabilities to suppliers related to unauthorized future missions.

Note 14 – Arrangements with Off-Balance Sheet Risk

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The maximum potential payments represent a “worst-case scenario” and do not necessarily reflect amounts that we expect to pay.

Estimated proceeds from collateral and recourse represent the anticipated values of assets we could liquidate or receive from other parties to offset our payments under guarantees.

The carrying amount of liabilities represents the amount included in Accrued liabilities.

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Credit guarantees 45 90 28 $ 27 $ 24

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

Contingent Repurchase Commitments In conjunction with signing a definitive agreement for the sale of commercial aircraft, we have entered into contingent repurchase commitments with certain customers wherein we agree to repurchase the sold aircraft at a specified price, generally 10 to 15 years after delivery.

Our repurchase of the aircraft is contingent upon entering into a mutually acceptable agreement for the sale of additional new aircraft in the future.

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.

If a future sale agreement is reached and a customer elects to exercise its right under a contingent repurchase commitment, the contingent repurchase commitment becomes a trade-in commitment.

Our historical experience is that contingent repurchase commitments infrequently become trade-in commitments.

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.

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Current outstanding credit guarantees expire through 2036.

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

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

Tax benefits associated with IRBs include a twelve-year property tax abatement and sales tax exemption from St.

Louis County.

We record these properties on our Consolidated Statements of Financial Position.

We have also purchased the IRBs and therefore are the bondholders as well as the borrower/lessee of the properties purchased with the IRB proceeds.

The liabilities and IRB assets are equal and are reported net in the Consolidated Statements of Financial Position.

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

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

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Note 15 – 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 in the first quarter of 2021, and we repaid the remaining $ 4,000 in the fourth quarter of 2021.

In the third quarter of 2022, we entered into a $ 5,800 364 -day revolving credit agreement expiring in August 2023, a $ 3,000 three-year revolving credit agreement expiring in August 2025, and amended our $ 3,200 five-year revolving credit agreement, which expires in October 2024, primarily to incorporate a LIBOR successor rate.

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

As of December 31, 2022, we had $ 12,000 currently available under credit line agreements.

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

Interest incurred, including amounts capitalized, was $ 2,650 , $ 2,790 and $ 2,280 for the years ended December 31, 2022, 2021 and 2020, respectively.

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Total Company interest payments were $ 2,572 , $ 2,583 and $ 1,925 for the years ended December 31, 2022, 2021 and 2020, respectively.

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

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

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

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

Short-term debt and current portion of long-term debt at December 31 consisted of the following:

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Unsecured debt

Variable rate:

Eurodollar plus 0.75 % - 1.25 % due 2022

1.17 % - 2.50 % due through 2026

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Total debt $ 57,001 $ 58,102

Total debt at December 31 is attributable to:

BCC $ 1,525 $ 1,640

Other Boeing 56,577 61,943

Total debt $ 58,102 $ 63,583

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

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Many of our employees have earned benefits under defined benefit pension plans.

Nonunion and the majority of union employees that had participated in defined benefit pension plans transitioned to a company-funded defined contribution retirement savings plan in 2016.

Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.

The majority of employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan.

We fund our major pension plans through trusts.

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

The funded status of the plans is measured as the

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

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

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

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Recognized net actuarial loss/(gain) 913 1,219 1,032 ( 111 ) ( 56 ) ( 63 )

Settlement/curtailment loss/(gain) 193 9 ( 4 )

Settlement/curtailment (gain)/loss ( 4 ) 193 9 ( 4 )

Net periodic benefit (income)/cost ($ 878 ) ($ 525 ) ($ 337 ) $ 14 $ 86 $ 105

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($ 878 ) ($ 525 ) ($ 337 ) $ 21 $ 89 $ 107

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

The following tables show changes in the benefit obligation, plan assets and funded status of both pensions and OPB for the years ended December 31, 2022 and 2021.

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Interest cost 2,080 1,988 98 97

Amendments ( 29 )

Actuarial (gain)/loss ( 17,605 ) ( 3,249 ) ( 914 ) ( 401 )

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Settlement payments

( 870 ) ( 68 )

Benefits paid ( 4,824 ) ( 4,502 ) ( 11 ) ( 15 )

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Since our adoption of the accounting standard for pensions in 1987, we have determined the MRVA based on a five-year moving average of plan assets.

As of December 31, 2021, the MRVA was approximately $ 4,773 less than the fair market value of assets.

As of December 31, 2022, the MRVA was approximately $ 10,131 more than the fair market value of assets.

Assumed health care cost trend rates were as follows:

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Ultimate trend rate 4.50 % 4.50 % 4.50 %

Year that trend reached ultimate rate 2021 2021 2021

Year that trend reaches ultimate rate 2028 2021 2021

Investment Strategy The overall objective of our pension assets is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and address other cash requirements of the pension fund.

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

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

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

During 2022, the funded status of the plans increased as compared to 2021, and additional assets were reallocated to fixed income.

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

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

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

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

Real estate and real assets include global private investments that may be held through investments in LPs or other fund structures.

Real estate includes, but is not limited to, investments in office, retail, apartment and industrial properties.

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

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

Derivatives are used to achieve the desired

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

As a percentage of total pension assets, derivative net notional amounts were 37.1 % and 33.4 % for fixed income, including to-be-announced mortgage-backed securities and treasury forwards, and ( 5.6 %) and ( 5.4 %) for global equity and commodities at December 31, 2022 and 2021.

I n November 2020, the Company contributed $ 3,000 of our common stock to the pension fund.

I n November 2020, the Company elected to contribute $ 3,000 of our common stock to the pension fund.

An independent fiduciary was retained to manage and liquidate the stock over time at its discretion.

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Boeing company stock 1,782 1,782 1,883 1,883

Assets 1 1 10 10

Liabilities ( 1 ) ( 1 ) ( 1 ) ( 1 )

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

Publicly traded REITs and infrastructure stocks are valued using a market approach based on quoted market prices of identical instruments.

Publicly traded infrastructure stocks are valued using a market approach based on quoted market prices of identical instruments.

Exchange-traded commodities futures positions are reported in accordance with changes in daily variation margin which is settled daily and therefore reflected in the payables and receivables portion of the table.

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

Pension assets invested in commingled and limited partnership structures rely on the NAV of these investments as the practical expedient for the valuations.

The following tables present a reconciliation of Level 3 assets held during the years ended December 31, 2021 and 2020.

Pension assets invested in commingled and LP structures rely on the NAV of these investments as the practical expedient for the valuations.

The following tables summarizes the changes of Level 3 assets, reconciled by asset class, held during the years ended December 31, 2022 and 2021.

Transfers into and out of Level 3 are reported at the beginning-of-year values.

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$ 53 ($ 19 ) $ 3 $ 33 $ 70

government and

agencies 2 ( 2 )

Mortgage backed and

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common and preferred stock

2 2 ( 3 ) 4 5

Real assets 2 ( 2 )

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

For the year ended December 31, 2022, the changes in unrealized gains/(losses) for Level 3 assets still held at December 31, 2022 were ($ 16 ) for corporate fixed income securities, ($ 11 ) for mortgage backed and asset backed fixed income securities, ($ 14 ) for municipal fixed income securities, and ($ 1 ) for real asset securities.

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

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

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

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Years ended December 31, 2022 2021 2020

Recognized in Loss from operations $ 667 $ 243 $ 217

Recognized in Inventories $ 173

Income tax benefit $ 148 $ 53 $ 47

Restricted stock units and other awards $ 726 $ 840 $ 243

Income tax benefit (before consideration of valuation allowance) $ 178 $ 148 $ 53

Stock Options

Options have been granted to our executive officers that are scheduled to vest and become exercisable three years after the grant date and expire ten years after the grant date.

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

The fair values of the stock options granted were estimated using a Monte-Carlo simulation model using the assumptions presented below.

The model includes no expected dividend yield.

On February 16, 2022, we granted 348,769 premium-priced stock options to our executive officers as part of our long-term incentive program.

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

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

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

The fair value of the stock options granted was $ 74.63 per unit and was estimated using a Monte-Carlo simulation model using the following assumptions:

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

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

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

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

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

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

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

The grant date fair market values of these awards were not significant.

Grant Year Grant Date Expected Life Expected Volatility Risk Free Interest Rate Grant Date Fair Value Per Option

2022 2/16/2022 6.8 years 36.6 % 2.0 % $ 83.04

2021 2/17/2021 6.6 years 37.8 % 1.3 % $ 74.63

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

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

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

Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value

Stock option activity for the year ended December 31, 2022 was as follows:

Shares Weighted Average Exercise Price Per Option Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value

Number of shares under option:

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The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 75 , $ 84 and $ 90 , with a related tax benefit of $ 17 , $ 19 and $ 32 , respectively.

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

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

At December 31, 2022, there was $ 23 of total unrecognized compensation cost related to options which is expected to be recognized over a weighted average period of 1.9 years.

No options vested during the years ended December 31, 2022, 2021 and 2020.

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In February 2022, 2021 and 2020, we granted to our executives 1,804,541 , 980,077 and 325,108 restricted stock units (RSUs) as part of our long-term incentive program with grant date fair values of $ 217.48 , $ 215.70 and 319.04 per unit, respectively.

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

On July 29, 2022, we also granted 2,568,112 RSUs with a grant date fair value of $ 157.69 per unit as part of our long-term incentive program, accelerating awards planned for 2023 to retain executives.

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

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

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.

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

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

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

These RSUs are labeled other RSUs in the table below.

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

In February 2020 and 2019, we granted to our executives 290,202 and 214,651 PBRSUs as part of our long-term incentive program.

In February 2020, we granted to our executives 290,202 PBRSUs as part of our long-term incentive program.

Compensation expense for the award is recognized over the three-year performance period based upon the grant date fair value.

The grant date fair values were estimated using a Monte-Carlo simulation model with the assumptions presented below.

The model includes no expected dividend yield as the units earn dividend equivalents.

Grant Year Grant Date Performance Period Expected Volatility Risk Free Interest Rate Grant Date Fair Value

2020 2/24/2020 3 years 27.04 % 1.21 % $ 357.38

The model includes no expected dividend yield.

Grant Year Grant Date Performance Period Expected Volatility Risk Free Interest Rate Grant Date Fair Value Per Unit

2020 2/24/2020 3 years 27.0 % 1.2 % $ 357.38

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Weighted average remaining amortization period (years)

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

(1) Represents adjustment to 0 % payout for units granted in 2019.

Performance Awards

During 2020 and 2019, we granted Performance Awards to our executives, which are cash units that pay out based on the achievement of long-term financial goals at the end of a three-year period.

Each unit has an initial value of $ 100 dollars.

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

During 2020, we granted Performance Awards to our executives, which are cash units that pay out based on the achievement of long-term financial goals at the end of a three-year period.

Each unit had an initial value of $ 100 dollars.

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

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

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

As of December 31, 2022 these performance awards have expired with a payout of $ 0 .

Deferred Compensation

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

Total expense related to deferred compensation was $ 126 , $ 93 and $ 174 in 2021, 2020 and 2019, respectively.

Total (income)/expense related to deferred compensation was ($ 117 ), $ 126 and $ 93 in 2022, 2021 and 2020, respectively.

As of December 31, 2022 and 2021, the deferred compensation liability which is being marked to market was $ 1,499 and $ 1,703 .

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Balance at January 1, 2020 ($ 128 ) $ 1 ($ 84 ) ($ 15,942 ) ($ 16,153 )

Other comprehensive (loss)/income before reclassifications

( 27 ) $ 1 ( 48 ) ( 1,397 ) (2)

Amounts reclassified from AOCI

Net current period Other comprehensive (loss)/income

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

Balance at December 31, 2019 ($ 128 ) $ 1 ($ 84 ) ($ 15,942 ) ($ 16,153 )

Other comprehensive income/(loss) before reclassifications 98 14 ( 1,929 ) (2)

98 14 ( 1,929 ) (2)

Amounts reclassified from AOCI

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Other comprehensive (loss)/income before reclassifications ( 75 ) 55 4,268 (2)

( 75 ) 55 4,268 (2)

Amounts reclassified from AOCI ( 6 ) 1,232 (3)

Net current period Other comprehensive (loss)/income ( 75 ) 49 5,500 5,474

Balance at December 31, 2021 ($ 105 ) $ 1 $ 6 ($ 11,561 ) ($ 11,659 )

Other comprehensive (loss)/income before reclassifications

( 62 ) ( 1 ) ( 40 ) 1,529 (2)

Amounts reclassified from AOCI

Net current period Other comprehensive (loss)/income

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(1) Net of tax.

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

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

(2) Primarily related to remeasurement of assets and benefit obligations related to the Company's pension and other postretirement benefit plans resulting in an actuarial gain/(loss) of $ 1,533 , $ 4,262 and ($ 1,956 ) (net of tax of ($ 22 ), ($ 32 ) and $ 111 ) for the years ended December 31, 2022, 2021 and 2020.

(3) Primarily related to amortization of actuarial losses for the years ended December 31, 2022, 2021 and 2020 totaling $ 791 , $ 1,155 and $ 917 (net of tax of ($ 11 ), ($ 8 ) and ($ 52 )), respectively.

These are included in the net periodic pension cost.

(4) Included losses of $ 39 (net of tax of ($ 11 )) from cash flow hedges reclassified to Other income, net because the forecasted transactions are probable of not occurring.

Note 19 – Derivative Financial Instruments

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business requirements.

These agreements are derivative instruments

for accounting purposes.

These agreements are derivative instruments for accounting purposes.

The quantities of aluminum in these agreements offset and are priced at prevailing market prices.

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Foreign exchange contracts

Revenues ($ 3 )

Costs and expenses 7 $ 13

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General and administrative expense 10 5

Gains/(losses) related to undesignated derivatives on foreign exchange and commodity cash flow hedging transactions recognized in Other income, net were insignificant for the years ended December 31, 2021 and December 31, 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 years ended December 31, 2022 and 2021.

Based on our portfolio of cash flow hedges, we expect to reclassify gains of $ 14 (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 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 December 31, 2021 was $ 7 .

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

The fair value of those contracts in a net liability position at December 31, 2022 was $ 33 .

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

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

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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 using significant unobservable inputs (Level 3).

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

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

Fair Value Total Losses Fair Value Total Losses

Total Level 2 Level 3 Total Losses Total Level 2 Level 3 Total Losses

Investments ($ 31 ) ($ 8 )

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$ 47 $ 47 ( 7 ) $ 110 $ 110 ( 31 )

Other assets and Acquired intangible assets

1 ( 9 ) 298 ( 221 )

Property, plant and equipment ( 19 ) 9 9 ( 50 )

Other Assets and Acquired intangible assets 15 15 ( 55 ) 1 1 ( 9 )

Total $ 62 $ 62 ($ 112 ) $ 120 $ 120 ($ 98 )

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.

Level 3 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.

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 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.

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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.

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

Under the proposed settlement, which is subject to court approval, the Company would receive monetary payments of approximately $ 237 , before attorneys’ fees, and commit to making certain governance changes.

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

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

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

Department of Justice entered in 2021, we cannot reasonably estimate a range of loss, if any, not covered by available insurance that may result given the current status of the pending lawsuits, investigations and inquiries related to the 737 MAX.

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

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 $ 2,510 , which consist of (a) a $ 244 criminal monetary penalty;

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

and (c) $ 1,770 to the Company’s airline customers for harm incurred as a result of the grounding of the 737 MAX, offset in part by payments already made and the remainder satisfied through payments to be made prior to the termination of the Deferred Prosecution Agreement.

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 $ 744 in the fourth quarter of 2020 related to this agreement.

During the first quarter, consistent with the terms of the Deferred Prosecution Agreement, the monetary penalty was paid, and the $ 500 compensation amount was transferred to a fund established to benefit the heirs and/or beneficiaries of the victims of the 737 MAX accidents.

In addition, the $ 1,770 amount related to the Company’s airline customers was included in amounts reserved in prior quarters for 737 MAX customer considerations.

During 2021, we entered into (i) a Deferred Prosecution Agreement with the U.S.

Department of Justice that resolved the Department of Justice’s previously disclosed investigation into us regarding the evaluation of the 737 MAX by the Federal Aviation Administration (FAA) as well as (ii) a proposed settlement with plaintiffs in a shareholder derivative lawsuit that resulted in the Company receiving $ 219 in the second quarter of 2022.

In September 2022, we settled a previously disclosed investigation by the Securities and Exchange Commission related to the 737 MAX accidents and consented to a civil penalty, which resulted in an earnings charge of $ 200 that was paid in October 2022.

We cannot reasonably estimate a range of loss, if any, not covered by available insurance that we may incur as a result of any remaining pending lawsuits or other matters related to the accidents and the 737 MAX.

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

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Embraer has disputed our right to terminate the agreements, and the dispute is currently in arbitration.

We cannot reasonably estimate a range of loss, if any, that may result from the arbitration.

We cannot reasonably estimate a range of loss, if any, that may result from the arbitration, which we currently expect to be completed in late 2023 or early 2024.

Note 22 – Segment and Revenue Information

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Years ended December 31, 2022 2021 2020

Europe $ 8,967 $ 7,961 $ 10,366

Asia $ 8,393 $ 5,845 $ 5,931

Europe 7,916 8,967 7,961

Middle East 5,047 4,653 5,308

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United States 39,218 39,076 36,979

Estimated potential concessions and other considerations to 737 MAX customers, net (1)

14 ( 498 ) ( 8,259 )

Estimated potential concessions and other considerations to 737 MAX customers 16 14 ( 498 )

Total revenues $ 66,608 $ 62,286 $ 58,158

(1) Net of insurance recoveries

Revenues from the U.S.

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Revenue from contracts with customers:

Asia $ 4,484 $ 2,792 $ 2,679

Europe 4,038 4,334 3,872

Middle East 2,003 1,098 1,647

Asia 2,792 2,679 12,446

Other 1,681 513 3,450

Other non-U.S.

3,042 1,681 513

Total non-U.S.

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United States 12,167 9,472 7,899

Estimated potential concessions and other considerations to 737 MAX customers, net (1)

14 ( 498 ) ( 8,259 )

Estimated potential concessions and other considerations to 737 MAX customers 16 14 ( 498 )

Total revenues from contracts with customers 25,750 19,391 16,112

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

(1) Net of insurance recoveries

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

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Earnings in Equity Method Investments

Our share of income or loss from equity method investments was $ 40 , $ 86 and $ 90 , primarily in our BDS segment, for the years ended December 31, 2021, 2020 and 2019, respectively.

For the year ended December 31, 2022, our share of income from equity method investments was $ 56 , primarily driven by investments held in Unallocated items, eliminations and other.

For the years ended December 31, 2021 and 2020, our share of income from equity method investments was $ 40 and $ 86 , primarily in our BDS segment.

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

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We expect approximately 17 % to be converted to revenue through 2023 and approximately 71 % 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.

There is significant uncertainty regarding the timing of when backlog will convert into revenue due to timing of 787 deliveries from inventory, timing of 737 MAX delivery resumption in China, timing of entry into service of the 777X, 737-7 and/or 737-10, and the lingering effects of the COVID-19 pandemic.

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 aircraft sold to our BCC segment that are leased by BCC to customers and considered transferred to the BCC segment.

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

federal cost accounting standards.

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

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

Years ended December 31, 2022 2021 2020

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Research and development expense, net ( 278 ) ( 184 ) ( 240 )

Customer financing impairment ( 250 )

Litigation ( 109 )

Eliminations and other unallocated items ( 1,162 ) ( 676 ) ( 1,807 )

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Total $ 137,100 $ 138,552

Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, tax assets, capitalized interest, assets managed centrally on behalf of the four principal business segments and intercompany eliminations.

From December 31, 2020 to December 31, 2021, assets in Unallocated items, eliminations and other decreased primarily due to reductions in short-term and other investment balances.

Assets included in Unallocated items, eliminations and other primarily consist of Cash and cash equivalents, Short-term and other investments, tax assets, capitalized interest, and assets managed centrally on behalf of the four principal business segments and intercompany eliminations.

Capital Expenditures

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The process of estimating margin at completion involves estimating the costs to complete production of goods or rendering of services and comparing those costs to the estimated final revenue amount.

Fixed-price development contracts are inherently uncertain in that revenue is fixed while the estimates of costs required to complete these contracts are subject to significant variability.

Due to the technical performance requirements in many of these contracts, changes to cost and revenue estimates could occur, resulting in lower margins or material reach-forward losses.

Given the complexity of certain of the Company’s fixed-price development contracts, including the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft contracts, the limited amount of historical data available in certain instances and significant judgments necessary to estimate future costs at completion, auditing these estimates involved extensive audit effort and a high degree of auditor judgment and required audit professionals with specialized industry experience.

Margins on fixed-price development contracts are inherently uncertain in that revenue is fixed while the estimates of costs required to complete these contracts are subject to significant variability.

The operational and technical complexities of fixed-price development contracts create financial risk, which could increase the estimates of costs and result in lower margins or material reach-forward losses.

The ongoing effects of macroeconomic challenges, including supply chain disruption, labor shortages, and inflationary pressures compound these complexities and related financial risks.

Given the complexities of certain of the Company’s fixed-price development contracts, including the KC-46A Tanker, Commercial Crew, United States Air Force VC-25B Presidential Aircraft, T-7A Redhawk, and MQ-25 contracts, the limited amount of historical data available in certain instances and significant judgments necessary to estimate future costs at completion, auditing these estimates involved extensive audit effort, a high degree of auditor judgment, and required audit professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the cost estimates for the KC-46A Tanker, Commercial Crew, and United States Air Force VC-25B Presidential Aircraft fixed-price development contracts included the following, among others:

Our audit procedures related to the cost estimates for the KC-46A Tanker, Commercial Crew, United States Air Force VC-25B Presidential Aircraft, T-7A Redhawk, and MQ-25 fixed-price development contracts included the following, among others:

• We evaluated the appropriateness and consistency of management’s methods used in developing its estimates.

• We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key cost and schedule estimates, including the range and probability of reasonable outcomes, and the appropriateness of the timing of changes to key estimates.

• We performed inquiries of the Company’s project managers and others directly involved with the contracts to evaluate management’s ability to achieve the key cost and schedule estimates, as well as evaluate project status and project challenges which may affect total estimated costs to complete.

We also observed the project work site when key estimates related to tangible or physical progress of the project.

• We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key cost and schedule estimates, including the effects of supply chain disruptions, labor shortages, and inflationary pressures.

We also evaluated the ranges and probabilities of reasonably possible outcomes, and where management set its point estimate within the range.

• We evaluated the appropriateness of the timing of changes to key estimates, including evaluating the timeline of key events and knowledge points that led to management’s determination that a change in estimate was necessary.

• We inquired of project managers, engineers, supply chain leadership, and others directly involved with the execution of contracts to evaluate management’s ability to achieve the key cost and schedule estimates, as well as evaluate project status and challenges which may affect total estimated costs to complete.

• We observed the project work site when key estimates related to tangible or physical progress of the project.

• We tested the accuracy and completeness of the key data used in developing estimates.

We developed independent expectations of reasonable outcomes using, in part, the program’s data and compared our expectations to management’s estimates.

• We tested the effectiveness of controls over the review of judgments made and significant assumptions used to develop key estimates, including controls over the key data used in developing the estimates and the mathematical extrapolation of such data.

• We performed retrospective reviews, comparing actual performance to estimated performance and the related financial statement impact, including the appropriateness of the timing of changes to key estimates, when evaluating the thoroughness and precision of management’s estimation process and effectiveness of related internal controls.

developed independent expectations of reasonable outcomes using, in part, the program’s data and compared our expectations to management’s estimates.

• We performed retrospective reviews when evaluating the thoroughness and precision of management’s estimation process and effectiveness of the related internal controls by comparing actual outcomes to previous estimates and the related financial statement impact, and evaluating key judgments made by management when determining the timing of changes to key estimates.

• We tested the effectiveness of internal controls including, those over the review of significant judgments made and assumptions used to develop key estimates, key data used in developing the estimates and the mathematical extrapolation of such data.

Program Accounting Estimates for the 777X Program — Refer to Notes 1, 7, and 22 to the financial statements

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The introduction of new aircraft programs involves increased risk associated with meeting development, certification and production schedules.

The Company uses program accounting in order to compute cost of sales and margin for each commercial airplane sold.

The Company uses program accounting to compute cost of sales and margin for each commercial airplane sold.

The use of program accounting requires estimating and demonstrating customer demand for the number of units included in the program (program accounting quantity) and estimating the sales and costs over the expected life of each program.

In particular, estimating the initial program accounting quantity and revenue for unsold units within the program accounting quantity involves measurement uncertainty resulting in a range of reasonable outcomes.

Additionally, the level of effort to meet regulatory requirements and achieve certification may be challenging to predict, resulting in delays in the timing of entry into service and corresponding increases in estimated costs.

Changes to the program accounting quantity or revenue and cost estimates could occur, resulting in lower margins or material reach-forward losses.

Auditing the estimated revenues and costs for the 777X program involved extensive audit effort and required audit professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.

In particular, estimating the sales and costs associated with the initial program accounting quantity and the unsold units within the program accounting quantity involve measurement uncertainty resulting in a range of reasonable outcomes.

Additionally, the level of effort to meet regulatory requirements and achieve certification may be challenging to predict, including potential delays in the timing of entry into service and corresponding increases in estimated costs.

Changes to the revenue and cost estimates related to the program accounting quantity or regulatory requirements to achieve certification could occur, resulting in lower margins or material reach-forward losses.

Auditing the estimated revenues and costs for the 777X program involved extensive audit effort, a high degree of auditor judgment, and required audit professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over the estimated revenues and costs for the anticipated 777X program accounting quantity included the following, among others:

• We inquired of the Company’s management, including individuals responsible for sales and pricing, to evaluate the status of current sales campaigns, short and long-term market demand, and status of negotiations with individual customers.

Our audit procedures related to the estimated revenues and costs for the anticipated 777X initial program accounting quantity included the following, among others:

• We inquired of management, including individuals responsible for sales and pricing, to evaluate the status of current sales campaigns, short and long-term market demand, and status of negotiations with individual customers.

• We compared management’s estimate of market demand to external industry sources of expected demand.

• We evaluated the appropriateness and consistency of management’s methods and significant assumptions used in developing its estimates related to the initial program accounting quantity and revenue for unsold units.

• We evaluated management’s ability to estimate program revenue by comparison to historical estimates and actual results on similar programs.

• We evaluated management’s ability to estimate program revenue by comparison to historical estimates and actual results on other commercial programs.

• We evaluated the consistency of management’s methods and the appropriateness of significant assumptions used in developing its revenue estimates related to the initial program accounting quantity and unsold units within the program accounting quantity.

• We evaluated the appropriateness and consistency of management’s methods used in developing its cost estimates.

• We performed inquiries of those directly involved with the certification of the aircraft to evaluate project status and challenges which may affect total estimated costs to achieve certification of the aircraft.

• We tested the effectiveness of controls including those over the key data used in developing the estimates, the mathematical extrapolation of such data, and management’s judgment regarding the range of reasonable outcomes relating to the specific estimates.

• We inquired of those directly involved with the certification of the aircraft to evaluate the challenges and timeline to achieve certification, which may affect total estimated costs.

• We evaluated communications with regulatory bodies for information contradictory with management’s certification timeline assumptions.

• We tested the effectiveness of internal controls, including those over the review of significant judgments made and assumptions used to develop key estimates, key data used in developing the estimates and the mathematical extrapolation of such data.

Program Accounting Revenue Estimates for the 787 Program — Refer to Notes 1, 7, and 22 to the financial statements

Critical Audit Matter Description

Production quality issues for the 787 Program have resulted in increased risk associated with forecasted revenue estimates primarily due to the difficulty in assessing the timeline for restarting 787 deliveries.

The Company uses program accounting in order to compute cost of sales and margin for each commercial airplane sold.

Production quality issues and supply chain disruption for the 787 program have resulted in increased risk associated with forecasted revenue estimates primarily due to the difficulty in assessing the value of consideration expected to be provided to customers as a result of delivery delays.

The Company uses program accounting to compute cost of sales and margin for each commercial airplane sold.

The use of program accounting requires estimating the revenue expected to be earned upon delivery of the aircraft included in the program’s accounting quantity.

The timing of the Federal Aviation Administration's (“FAA”) approval to resume deliveries, the impact to the delivery schedule from delayed deliveries, and the value of the consideration expected to be provided to customers for delivery delays are key factors that affect estimated revenue.

There is increased estimation uncertainty related to the revenue forecasts of aircraft which have reached or are expected to reach a delivery delay period that provides the customer with a contractual termination right.

Due to continued uncertainty in the expected FAA approval date to resume 787 aircraft deliveries, there is significant judgment in determining which aircraft will reach these contractual termination rights.

Changes to the expected delivery resumption date could have a flowthrough impact and result in additional consideration to customers.

This could result in lower margins or further material reach-forward losses.

Auditing the estimated revenues for the 787 program involved extensive audit effort and required professionals with specialized industry experience given the high degree of complexity and subjectivity related to management’s estimates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over the estimated revenues for the 787 program included the following, among others:

• We inquired of the Company’s management, including individuals responsible for engineering and production operations, to assess whether the estimated FAA approval and delivery resumption date represent management’s best estimates based on the status of the rework activity.

• We inquired of the Company’s management, including the individuals communicating with the FAA, to assess if there is contradictory information to that assumed by management related to the estimated timeline for rework completion or getting FAA approval to resume deliveries.

• We evaluated the appropriateness and consistency of management’s method for developing the deliveries schedule assumptions.

• We inquired of the Company’s management, including individuals responsible for sales and pricing, to evaluate the status of current contracts with customers and expected consideration to be provided to customers.

• We evaluated the appropriateness and consistency of management’s methods and significant assumptions used in developing its estimates related to forecasted revenue for aircraft which have or are expected to have delivery delays.

Liabilities related to the 737 MAX Grounding – Refer to Note 13 to the financial statements

Critical Audit Matter Description

In 2019, following two fatal 737 MAX accidents, the FAA and non-U.S.

civil aviation authorities issued orders suspending commercial operations of 737 MAX aircraft (the “737 MAX Grounding”).

Deliveries resumed in the U.S.

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

During 2019, the Company recorded an initial liability in connection with estimated payments, concessions and other in-kind consideration it intends to provide to customers for disruptions related to the 737 MAX Grounding and associated delivery delays.

This liability totaled $2.9 billion at December 31, 2021 and is reflected in the financial statements in Accrued liabilities.

Of the $2.9 billion, $2.2 billion has been contractually agreed to with customers.

The liability represents the Company’s best estimate of future concessions and other consideration to its customers.

To the extent not contractually agreed upon, the estimate is based on individual negotiations with customers and the substance of such negotiations.

The subjectivity of the estimate of approximately $0.7 billion relating to consideration that has not yet been contractually agreed to with customers involved extensive audit effort and a high degree of auditor judgment and required audit professionals with specialized industry experience.

While the 787 program resumed deliveries in 2022, the forecasted delivery schedule and the value of the consideration expected to be provided to customers for delivery delays continue to be key factors that affect estimated revenue.

There is estimation uncertainty related to the revenue forecasts of aircraft which have reached or are expected to reach a delivery delay period that provides the customer with a contractual termination right.

Changes to the expected delivery schedule could result in additional consideration to customers.

This could result in lower margins or material reach-forward losses.

Auditing the estimated revenues for the 787 program involved extensive audit effort, a high degree of auditor judgment, and required professionals with specialized industry experience.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures associated with liabilities related to the 737 MAX Grounding included the following, among others:

• We inquired of management to understand developments with the 737 MAX Grounding, including the status of consideration negotiations with individual customers.

• We obtained written representations from management concerning its intent to provide consideration to customers and the extent of that consideration.

• We evaluated the significant assumptions used by management to estimate the liability for customer consideration, and, where possible, we corroborated the significant assumptions with management outside of the accounting and finance organizations.

• We reviewed the terms of customer contracts and correspondence with customers concerning potential consideration as a result of the 737 MAX Grounding.

• We evaluated the terms of settlement agreements with customers for the allocation of value provided between consideration as a result of the 737 MAX Grounding and for consideration related to the impact of current economic conditions resulting from COVID-19.

• We evaluated delivery documents for 737 MAX deliveries for incremental value provided at delivery as potential consideration as a result of the 737 MAX Grounding.

• We read minutes of meetings of the Board of Directors and its committees for evidence of unrecorded loss contingencies.

• We evaluated the Company’s disclosures for consistency with our knowledge of matters related to the 737 MAX Grounding.

Our audit procedures related to the estimated revenues for the 787 program included the following, among others:

• We inquired of management, including operational and supply chain leadership, to assess the assumptions related to the supply chain disruption impacts on the delivery schedule and the estimated timeline for completion of rework.

• We evaluated the appropriateness and consistency of management’s method used in developing the delivery schedule assumptions, including the impact of production quality issues and supply chain disruption.

• We inquired of management, including individuals responsible for sales and pricing, to evaluate the status of current contracts with customers and estimated consideration to be provided to customers.

• We evaluated the consistency of management’s methods and the appropriateness of significant assumptions used in developing its estimates related to forecasted revenue for aircraft which have or are expected to have delivery delays.

/s/ Deloitte & Touche LLP

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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-K

Item 8. Financial Statements and Supplementary Data