<PAGE>
                                    
                                      10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


 [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

 For the quarterly period ended               June 30, 1997
                                ---------------------------

 OR

 [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

 For the transition period from                   to

 Commission file number    1-3685

                       MCDONNELL DOUGLAS CORPORATION
          (Exact name of registrant as specified in its charter)


             Maryland                            43-0400674
 (State or other jurisdiction of     (I.R.S. Employer Identification No.)
  incorporation or organization)


                Post Office Box 516, St. Louis, MO  63166
          (Address and zip code of principal executive offices)


                                 314-232-0232
            (Registrant's telephone number, including area code)

 Indicate  by check  mark  whether  the  registrant  (1) has filed  all  reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for each  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

        Yes   X    No


================================================================================

 Common shares outstanding at August 13, 1997 - 100 shares

 Registrant,  a  wholly  owned  subsidiary  of The  Boeing  Company,  meets  the
conditions set forth in General  Instruction H(1)(a) and (b) to Form 10-Q and is
therefore filing this Form with the reduced disclosure format.


<PAGE>



TABLE OF CONTENTS




PART I   FINANCIAL INFORMATION                                       Page


                ITEM 1.  FINANCIAL STATEMENTS

               CONSOLIDATED STATEMENTS OF EARNINGS                    3-4

               BALANCE SHEET                                          5-6

               CONSOLIDATED STATEMENT OF CASH FLOWS                     7

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            8-14

          ITEM 2.  MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS*  15-18



PART II   OTHER INFORMATION


          ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                    19





*  Management's   Analysis  of  Results  of  Operations   included  in  lieu  of
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  which is omitted  pursuant to General  Instruction  H(1)(b) to Form
10-Q.



<PAGE>


PART I  FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(Millions of dollars, except share data)


THREE MONTHS ENDED JUNE 30                          1997         1996
                                                  -------      ------
                                                       (unaudited)

Revenues                                          $ 3,559      $ 3,264

Costs and expenses:
  Cost of products, services and rentals            2,926        2,640
  General and administrative expenses                 187          177
  Research and development                             97           91
  Interest expense:
    Aerospace segments                                 21           31
    Financial services and other segment               33           32
                                                  --------     -------

      Total Costs and Expenses                      3,264        2,971
                                                  --------     -------

    EARNINGS BEFORE INCOME TAXES                      295          293

Income taxes                                          100          105
                                                  --------     -------

    NET EARNINGS                                  $   195      $   188
                                                  ========     =======


EARNINGS PER SHARE                                $   .93      $   .87
                                                  ========     =======

DIVIDENDS DECLARED PER SHARE                      $   .12      $   .12
                                                  ========    ========







The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>



MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(Millions of dollars, except share data)


SIX MONTHS ENDED JUNE 30                            1997         1996
                                                  -------      ------
                                                       (unaudited)

Revenues                                          $ 6,789      $ 6,435

Costs and expenses:
  Cost of products, services and rentals            5,533        5,177
  General and administrative expenses                 358          346
  Research and development                            191          179
  Interest expense:
    Aerospace segments                                 56           62
    Financial services and other segment               68           62
                                                  --------     -------

      Total Costs and Expenses                      6,206        5,826
                                                  --------     -------

    EARNINGS BEFORE INCOME TAXES                      583          609

Income taxes                                          207          223
                                                  --------     -------

    NET EARNINGS                                  $   376      $   386
                                                  ========     =======


EARNINGS PER SHARE                                $  1.79      $  1.76
                                                  ========     =======

DIVIDENDS DECLARED PER SHARE                      $   .24      $   .24
                                                  ========    ========







The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


BALANCE SHEET
(Millions of dollars and shares)


                                         McDonnell Douglas Corporation
                                         and Consolidated Subsidiaries
                                                 June 30    December 31
                                                   1997         1996
                                               (unaudited)
Assets
  Cash and cash equivalents                      $   167     $ 1,094
  Accounts receivable                                942         882
  Finance receivables and property on lease        3,305       3,090
  Contracts in process and inventories             3,980       3,486
  Prepaid income taxes                                 -           -
  Property, plant, and equipment                   1,494       1,453
  Investment in Financial Services                     -           -
  Other assets                                     1,740       1,626
                                                 --------    -------
Total Assets                                     $11,628     $11,631
                                                 ========    =======

Liabilities and Shareholders' Equity
Liabilities
  Accounts payable and accrued expenses          $ 2,472     $ 2,595
  Accrued retiree benefits                         1,109       1,109
  Income taxes                                       111          83
  Advances and billings in excess of related
    costs                                          1,449       1,310
  Notes payable and long-term debt
    Aerospace segments                             1,168       1,438
    Financial services and other segment           1,877       1,995
                                                 --------    -------
                                                   8,186       8,530

Minority interest                                     63          63

Shareholders'  equity
  Preferred  Stock - none issued
  Common Stock - issued and
  outstanding:
    1997, 210.0 shares; 1996, 209.6 shares           210         210
  Additional capital                                  32           -
  Retained earnings                                3,176       2,850
  Unearned compensation                              (39)        (22)
                                                 --------    -------
                                                   3,379       3,038
                                                 --------    -------

Total Liabilities and Shareholders' Equity       $11,628     $11,631
                                                 =======     =======

The accompanying notes are an integral part of the financial statements.


<PAGE>







       MDC Aerospace                    Financial Services
   June 30   December 31               June 30   December 31
    1997         1996                    1997        1996
  -------      -------                ---------  --------
 (unaudited)                         (unaudited)

  $   152      $ 1,077                 $    15      $    17
    1,024          964                       -            -
      544          254                   2,761        2,836
    3,980        3,486                       -            -
      273          278                       -            -
    1,435        1,391                      59           62
      413          383                       -            -
    1,652        1,535                      88           91
  --------     --------                --------     -------
  $ 9,473      $ 9,368                 $ 2,923      $ 3,006
  ========     ========                ========     =======



  $ 2,375     $  2,470                 $   179      $   207
    1,109        1,109                       -            -
        -            -                     384          361

    1,394        1,265                      55           45

    1,153        1,423                      15           15
        -            -                   1,877        1,995
  --------     --------                --------     -------
    6,031        6,267                   2,510        2,623

       63           63                       -            -




      210          210                       -            -
       32            -                     238          238
    3,176        2,850                     175          145
      (39)         (22)                      -            -
  --------     --------                --------     -------
    3,379        3,038                     413          383
  --------     --------                --------     -------
  $ 9,473      $ 9,368                 $ 2,923      $ 3,006
  ========     ========                ========     =======


As used on this  page,  "MDC  Aerospace"  means  the basis of  consolidation  as
described  in  Note  1 to  the  consolidated  financial  statements;  "Financial
Services" means Boeing Capital  Services  Company  (formerly  McDonnell  Douglas
Financial  Services  Corporation)  and  all of  its  affiliates  and  associated
companies  and  McDonnell  Douglas  Realty  Company.  Transactions  between  MDC
Aerospace  and  Financial  Services  have been  eliminated  from the  "McDonnell
Douglas Corporation and Consolidated Subsidiaries" columns.


<PAGE>


MCDONNELL DOUGLAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)


SIX MONTHS ENDED JUNE 30                          1997         1996
                                                --------     ------
                                                     (unaudited)
OPERATING ACTIVITIES
  Net earnings                                   $  376       $  386
  Adjustments to reconcile net earnings to net
    cash provided (used) by operating activities:
      Depreciation and amortization                 131          130
      Pension income                                (79)         (65)
      Change in operating assets and liabilities   (528)        (252)
                                                 -------      -------

    NET CASH PROVIDED (USED) BY OPERATING
      ACTIVITIES                                   (100)         199

INVESTING ACTIVITIES
  Property, plant and equipment acquired           (135)         (87)
  Finance receivables and property on lease        (251)        (318)
  Other                                              (3)          (6)
                                                 --------     -------

    NET CASH USED BY INVESTING ACTIVITIES          (389)        (411)

FINANCING ACTIVITIES
  Net change in borrowings (maturities 90 days
    or less)                                         12           33
  Debt having maturities more than 90 days:
    New borrowings                                   66          366
    Repayments                                     (466)        (156)
  Common shares purchased                             -         (377)
  Dividends paid                                    (50)         (49)
                                                 -------      -------

    NET CASH USED BY FINANCING
      ACTIVITIES                                   (438)        (183)
                                                 -------      -------

    DECREASE IN CASH AND CASH
      EQUIVALENTS                                  (927)        (395)

Cash and cash equivalents at beginning of year    1,094          797
                                                 -------      ------

Cash and cash equivalents at end of period       $  167       $  402
                                                 =======      ======




The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


MCDONNELL DOUGLAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(Millions of dollars)




1.   Basis of Presentation

The  accompanying   unaudited  consolidated  financial  statements  reflect  all
adjustments (which comprise only normal recurring  accruals)  necessary,  in the
opinion of management,  for a fair presentation of the financial  position,  the
results of operations and the cash flows for the interim periods presented.  The
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and footnotes  thereto  included in McDonnell  Douglas  Corporation's
Annual Report to Shareholders for the year ended December 31, 1996.

The consolidated financial statements comprise the accounts of McDonnell Douglas
Corporation and its subsidiaries,  including Boeing Capital Services Corporation
(formerly McDonnell Douglas Financial Services Corporation) (BCSC), which is the
parent company of Boeing Capital Corporation (formerly McDonnell Douglas Finance
Corporation) (BCC). In consolidation,  all significant intercompany balances and
transactions are eliminated.

The consolidating balance sheet represents the sum of all affiliates - companies
that  McDonnell  Douglas  Corporation  directly or indirectly  controls  through
majority  ownership or otherwise.  Financial data and related  measurements  are
presented in the following categories:

   MDC  Aerospace.  This  represents  the  consolidation  of  McDonnell  Douglas
   Corporation  including all of its subsidiaries  other than BCSC and McDonnell
   Douglas Realty Company (MDRC). Those two are presented on a one-line basis as
   Investment in Financial Services.

   Financial Services.  This represents the consolidation of BCSC (and
   its subsidiaries) and MDRC, both wholly owned subsidiaries of
   McDonnell Douglas.

   McDonnell Douglas Corporation and Consolidated Subsidiaries.  This
   represents the consolidation of McDonnell Douglas Corporation and
   all its subsidiaries (the Company).


Earnings Per Share

Statement of Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  Per
Share," issued in February 1997,  specifies the computation,  presentation,  and
disclosure  requirements  for earnings per share. The objective of SFAS No. 128,
which is effective  for  financial  statements  issued for periods  ending after
December 15, 1997, is to simplify the standards for computing earnings per share

<PAGE>

and make them  comparable to  international  earnings per share  standards.  The
Company does not believe  that  adoption of this  standard  will have a material
impact on its earnings per share calculations.

2.   Merger with The Boeing Company

On August 1, 1997, McDonnell Douglas and The Boeing Company (Boeing) completed a
transaction whereby McDonnell Douglas became a wholly owned subsidiary of Boeing
by merging a wholly  owned  subsidiary  of Boeing  into  McDonnell  Douglas in a
stock-for-stock transaction.  McDonnell Douglas shareholders received 1.3 shares
of Boeing common stock for each share of McDonnell Douglas common stock.

Shareholders'  Equity in the June 30, 1997 and December  31, 1996 Balance  Sheet
does not reflect the August 1, 1997 transaction in which Common Stock issued and
outstanding changed to one hundred shares, with Additional Capital increasing by
the previous balance in Common Stock.

3.   Contracts in Process and Inventories

Contracts in process and inventories consisted of the following:

                                                June 30   December 31
                                                 1997         1996

Government contracts in process               $ 5,313      $ 5,177
Commercial products in process                  2,763        2,211
Material and spare parts                          771          713
Progress payments to subcontractors               754          843
Progress payments received                     (5,621)      (5,458)
                                              --------     --------

                                              $ 3,980      $ 3,486
                                              ========     =======

Substantially  all  government  contracts in process (less  applicable  progress
payments received)  represent unbilled revenue and revenue that is currently not
billable.

The U.S.  Navy on  January 7,  1991,  notified  McDonnell  Douglas  and  General
Dynamics  Corporation  (the Team) that it was terminating for default the Team's
contract for development and initial  production of the A-12 aircraft.  The Team
filed a legal action to contest the Navy's  default  termination,  to assert its
rights  to  convert  the  termination  to  one  for  "the   convenience  of  the
Government,"  and to obtain payment for work done and costs incurred on the A-12
contract  but not paid to date.  At June 30,  1997,  Contracts  in  Process  and
Inventories  included  approximately  $574 million of recorded costs on the A-12
contract,  against which the Company has  established  a loss  provision of $350
million.  The amount of the provision,  which was established in 1990, was based
on the Company's  belief,  supported by an opinion of outside counsel,  that the
termination  for default  would be converted to a termination  for  convenience,
that the Team would  establish a minimum of $250 million in claims  adjustments,
that  there  was a range of  reasonably  possible  results  on  termination  for
convenience,  and that it was  prudent  to  provide  for what the  Company  then
believed was the upper range of possible loss on  termination  for  convenience,
namely $350 million.

<PAGE>

On  December  19,  1995,  the U.S.  Court of  Federal  Claims  ordered  that the
Government's  termination  of the A-12  contract  for default be  converted to a
termination for  convenience of the Government.  On December 13, 1996, the Court
issued an opinion confirming its prior no-loss adjustment and no-profit recovery
order.  Subsequent  to an early 1997  stipulation  based on the prior orders and
findings of the Court in which the parties agreed that  plaintiffs were entitled
to recover  $1.071  billion,  the Court has  preliminarily  determined  that the
Government is liable for certain adjustments that increase  plaintiffs' possible
recovery.  A trial to  determine  plaintiffs'  recovery  has now  concluded  and
judgment is expected in the near future.  On January 22, 1997,  the Court issued
an opinion in which it ruled that plaintiffs are entitled to recover interest on
that recovery.

Although the Government is expected to appeal the resulting judgment,  McDonnell
Douglas  believes  that it will  be  sustained.  Final  resolution  of the  A-12
litigation  will depend on such  appeals and  possible  further  litigation,  or
negotiations,  with the Government. If sustained,  however, the expected damages
judgment,  including interest,  ultimately could result in pretax income ranging
up to an amount that could more than offset the loss  provision  established  in
1990.


4.   Debt & Credit Arrangements

MDC Aerospace Credit Agreements

As a result of the merger  described in Note 2, the revolving  credit  agreement
(RCA) available to MDC Aerospace at June 30, 1997 was canceled by the Company in
August 1997. There were no RCA amounts  outstanding at June 30, 1997 or December
31,  1996.  Working  capital  needs of the Company will be advanced by Boeing as
needed.

During  1996,  MDC  Aerospace  filed a shelf  registration  statement  with  the
Securities and Exchange Commission (SEC) relating to debt securities. The filing
increased a prior offering,  commenced in 1992, by an aggregate principal amount
of $1 billion. In the fourth quarter of 1996, the Company issued $250 million of
6.9% notes due in 2006 under this shelf  registration.  As of June 30, 1997, MDC
Aerospace had $948 million of unissued debt securities  registered with the SEC.
The interest rate  applicable to each note and certain other  variable terms are
established at the date of issue.

Senior debt  securities  totaling  $1.145  billion were  outstanding at June 30,
1997.  The notes were issued in 1992,  1993 and 1996 with interest rates of 6.9%
to 9.8% and maturities from 2000 to 2012. Aerospace long-term debt also includes
aerospace-related  obligations of McDonnell Douglas Realty Company in the amount
of $14 million at June 30, 1997.


<PAGE>

Financial Services Credit Agreements

BCSC and BCC have a joint RCA which expires in August 2001. Under the agreement,
BCC may borrow a maximum of $240 million,  reduced by BCSC borrowings under this
same  agreement,  which are limited to $16 million.  The interest  rate,  at the
option of BCC or BCSC, is either a floating rate,  generally  based on a defined
prime rate or fixed rate related to LIBOR. There were no outstanding  borrowings
under this  agreement  at June 30, 1997.  Commercial  paper issued by BCC in the
amount of $153 million was  outstanding  at June 30,  1997.  The joint RCA could
therefore be used to support the full amount of commercial paper outstanding.

Various credit and debt agreements  require BCC to maintain a minimum net worth,
to  restrict  indebtedness,   and  to  limit  BCC's  cash  dividends  and  other
distributions.

During the second quarter of 1995, BCC filed a shelf registration statement with
the SEC  relating  to up to $750  million  aggregate  principal  amount  of debt
securities.  BCC established a $750 million  medium-term note program under this
shelf  registration  statement and, as of June 30, 1997, had issued $550 million
of such notes.

During July 1995,  BCSC  initiated a  medium-term  note program  under a private
placement  of up to  $100  million  principal  amount.  This  note  program  was
increased  to $200 million in April 1996.  As of June 30, 1997,  BCSC had issued
$135 million of securities under this program.

BCC's  senior debt at June 30, 1997,  included $50 million  secured by equipment
that had a carrying value of $67 million. MDRC's debt of $40 million at June 30,
1997,  was secured by  indentures of mortgage and deeds of trust on its interest
in real estate developments that had a carrying value of $58 million.


5.   Financial Instruments

McDonnell Douglas uses derivative  financial  instruments to manage well-defined
foreign exchange  subcontract price risks and foreign currency  denominated debt
risks,  and  on a  selective  basis  to  reduce  the  impact  of  interest  rate
fluctuations on certain debt  instruments.  McDonnell  Douglas does not trade in
derivatives for speculative purposes.

At June 30, 1997, the notional amount of forward exchange contracts  denominated
in currencies of major industrial  countries was $293 million.  The terms of the
currency  derivatives  vary,  but the longest is three years.  At June 30, 1997,
unrealized gains, net of losses, on forward exchange contracts were $12 million.

At June 30,  1997,  BCC had interest  rate swap  agreements  outstanding  listed
below.  The Company  believes it has no market  rate risk as the  interest  rate
swaps are matched with specific debt.

                          Contract    Notional   Receive        Pay
                          Maturity     Amount     Rate          Rate

Capital lease
  obligations            2006 - 2008    $388     Floating   6.7% - 7.6%
Medium-term notes        2000 - 2001    $ 50    6.8% - 8.6%   Floating

The floating rates are based on LIBOR or on Federal Funds.

<PAGE>

Because of the off-balance-sheet nature of derivative instruments,  counterparty
failure would result in recognition of unrealized gains and losses.  The Company
does not anticipate nonperformance by any of its counterparties.


6.   Commitments and Contingencies

A number of legal  proceedings  and  claims are  pending  or have been  asserted
against the Company.  A substantial  number of such legal proceedings and claims
are covered by insurance or settlements  with insurance  companies.  The Company
believes that the final outcome of such  proceedings  and claims will not have a
material adverse effect on its earnings, cash flow, or financial position.

The marketing of commercial  aircraft sometimes results in agreements to provide
or to guarantee  long-term  financing  of some portion of the delivery  price of
aircraft, to lease aircraft, or to guarantee customer lease payments or aircraft
values.  At June 30, 1997,  the Company had made offers of this nature  totaling
$1.919  billion  related to aircraft on order or under  option.  The Company had
made  guarantees  and other  commitments  totaling  $862  million  on  delivered
aircraft.  At June 30, 1997,  BCSC also had  commitments to provide  leasing and
other  financing in the aggregate  amount of $207 million.  The Company does not
expect  these offers or  commitments  to have a material  adverse  effect on its
earnings, cash flow, or financial position.

The Company's outstanding  guarantees include amounts related to MD-11s operated
by Viacao Aerea  Rio-Grandense  S.A.  (VARIG).  During 1994,  VARIG notified its
aircraft  lenders  and  lessors  that it was  temporarily  suspending  payments,
pending the restructuring of its financial obligations.  In connection with that
restructuring,  the Company made lease, loan, and interest payments totaling $70
million on behalf of VARIG in 1994 and 1995.  At June 30,  1997,  VARIG had made
repayments  totaling  $28 million to the Company.  During  January  1996,  VARIG
requested deferral of additional  obligations  covering the January 1996 through
January 1998 period.  VARIG and the Company agreed to defer up to $60 million in
certain payments owed to the Company,  with repayment by VARIG to begin in 1998.
At June 30,  1997,  the Company  had made  payments  related to this  additional
deferral in the amount of $40 million on behalf of VARIG.  These  restructurings
and payments have not had and, if the  restructuring  steps are successful,  are
not expected to have a material adverse effect on the Company's  earnings,  cash
flow, or financial position.

Trans World Airlines Inc. (TWA), one of the Company's  largest  aircraft-leasing
customers,  continues to operate under a reorganization  plan,  confirmed by the
U.S.  Bankruptcy Court in 1995 that  restructured its indebtedness and leasehold
obligations  to its creditors.  TWA continues to face financial and  operational
challenges  due in part to an  airliner  crash in July 1996 and  turnover of key
management,  which  occurred  during  1996.  The  reorganization  plan and TWA's
current  financial  condition  have not had,  and are not  expected  to have,  a
material  adverse  effect on the  Company's  earnings,  cash flow,  or financial
position.  However, TWA's independent auditors included an explanatory paragraph
in their  "Independent  Auditors'  Report" for TWA's December 31, 1996 financial
statements  expressing  "substantial doubt" about TWA's ability to continue as a
going concern. The Company anticipates  deliveries of additional aircraft to TWA
during 1997. The Company will continue to evaluate the impact of TWA's financial
condition on existing and potential future financial  commitments and guarantees
to TWA.

<PAGE>

The  Company  is  a  party  to  a  number  of  proceedings   brought  under  the
Comprehensive Environmental Response,  Compensation, and Liability Act, commonly
known as  Superfund,  and under  similar  state  statutes.  The Company has been
identified as a potentially  responsible  party (PRP) at 37 sites. Of these, the
Company  believes  that it has de minimis  liability  at 25 sites,  including 19
sites at which it believes that it has no future liability.  At two of the sites
where the Company's  liability is not  considered to be de minimis,  the Company
lacks  sufficient  information  to  determine  its  probable  share or amount of
liability.  At the remaining  ten sites at which the Company's  liability is not
considered  to be de minimis,  either final or interim  cost-sharing  agreements
have been effected between the cooperating PRPs, although such agreements do not
fix the amount of cleanup  costs that the parties will bear.  In  addition,  the
Company  is  remediating,  or has begun  environmental  engineering  studies  to
determine  cleanup  requirements  for, certain of its current operating sites or
former sites of industrial activity.

At June 30, 1997, the accrued  liability for study and remediation  expenditures
at Superfund sites and at the Company's  current and former  operating sites was
$47 million.  Because of the inherent  uncertainty  of the  estimation  process,
actual costs could differ from  estimates.  Ongoing  operating  and  maintenance
costs at current  operating sites and remediation  expenditures on property held
for sale are not included in this amount.  The Company believes that any amounts
paid in excess of the accrued  liability will not have a material  effect on its
earnings, cash flow, or financial position.  Claims for recovery are recorded as
receivables  and therefore they have not been netted  against the  environmental
liabilities. At June 30, 1997, a receivable had been recorded from one insurance
carrier for agreed reimbursement of environmental costs for $7 million.


7.   Operations of BCSC

The condensed  financial  data  presented  below have been  summarized  from the
unaudited consolidated financial statements of BCSC:

Six Months Ended June 30                    1997             1996
                                          --------         ------

Earned income                              $ 123            $ 112
Costs and expenses                            83               77
Net earnings                                  25               23

Cash flow provided (used) by:

   Operating activities                    $  72            $  72
   Investing activities                       48             (327)
   Financing activities                     (123)             257


<PAGE>



8.   Supplementary Payment Information

Six Months Ended June 30                    1997             1996
                                          --------         ------

Interest paid                              $ 131            $ 108
Income taxes paid                            167              207

9.   Earnings Per Share

Earnings  per share  computations  are based upon the  weighted  average  common
shares  outstanding during the six-month period which were 209.9 million in 1997
and 220.1 million in 1996.



<PAGE>


ITEM 2.  MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS


The following  discussion and analysis  should be read in  conjunction  with the
Notes to  Consolidated  Financial  Statements  beginning on page 8, and with the
Results of Operations  section of the  Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations (MD&A), the Audited  Consolidated
Financial  Statements  and  the  Notes  to  Consolidated   Financial  Statements
appearing in the Company's 1996 Annual Report to  Shareholders  (the 1996 Annual
Report).

Forward-Looking Information

Certain  statements in  Management's  Analysis of Results of Operations  contain
"forward-looking"  information (as defined in the Private Securities  Litigation
Reform Act of 1995) that involves risk and uncertainty, including projections of
future  sales,  earnings,  production  levels  and costs,  aircraft  deliveries,
research and  development,  environmental  and other  expenditures,  and various
business environment trends.  Actual results and trends in the future may differ
materially  depending  on a variety of factors  including,  but not  limited to,
changing  priorities or  reductions in the U.S. and worldwide  defense and space
budgets;  global trade  policies;  worldwide  political  stability  and economic
growth;  termination of government contracts due to unilateral government action
or the Company's  failure to perform;  governmental  export and import policies;
the Company's  successful  execution of internal  operating  plans;  performance
issues with key suppliers and subcontractors; factors that result in significant
and prolonged  disruption to air travel  worldwide;  aircraft delivery delays or
defaults by customers;  collective  bargaining labor disputes;  other regulatory
uncertainties;  and legal  proceedings.  For further discussion of certain risks
and  uncertainties  that may affect the  actual  results of any  forward-looking
information  contained  herein,  refer to the Form 8-K filed by the Company with
the Securities and Exchange Commission (SEC) on April 17, 1996.

Results of Operations

McDonnell  Douglas  revenues  were $3.6  billion in the second  quarter of 1997,
above the 1996 revenues of $3.3 billion for the same period.  Revenues increased
in all  segments,  with  the  largest  gain in the  military  aircraft  segment.
Revenues  for the first six  months  of 1997  were  $6.8  billion,  up from $6.4
billion in the first six months of 1996.

Net earnings for the second  quarter of 1997 were $195 million,  or 93 cents per
share, an increase from the second quarter 1996 net earnings of $188 million, or
87 cents per share.  Costs related to merger activities in the second quarter of
1997 were offset by favorable  resolution of state tax issues.  Net earnings for
the first six months of 1997 were $376  million,  or $1.79 per  share,  compared
with $386 million, or $1.76 per share in the first six months of 1996.

<PAGE>

Operating  earnings were $320 million for the second  quarter,  and $641 million
for the first six months of 1997,  compared to $328  million  and $675  million,
respectively, for the same periods in 1996.

Interest  expense  totaled $21 million in the second quarter of 1997,  down from
$31 million in the second quarter of 1996. The decrease in 1997 largely reflects
interest reductions  associated with favorable  resolution of prior years' state
tax issues.

Pension  income totaled $39 million in the second quarter and $79 million in the
first six months of 1997,  compared with $33 million and $65 million in the same
periods of 1996. The increase is associated with a higher level of plan assets.


                                      Three Months Ended   Six Months Ended
                                            June 30            June 30
                                        1997      1996      1997       1996
                                       ------     -----    ------      ----
                                                 (Millions of dollars)
Revenues
  Military aircraft                   $ 2,065   $ 1,923   $ 4,011   $ 3,962
  Commercial aircraft                     805       722     1,429     1,150
  Missiles, space and electronic
    systems                               587       529     1,140     1,137
  Financial services and other             97        87       198       174
                                      -------   -------   --------  -------
    Operating revenues                  3,554     3,261     6,778     6,423

  Non-operating income                      5         3        11        12
                                      -------   -------   --------  -------

  Total Revenues                      $ 3,559   $ 3,264   $ 6,789   $ 6,435
                                      =======   =======   ========  =======

Earnings
  Military aircraft                   $   238   $   243   $   497   $   493
  Commercial aircraft                      14        18        18        37
  Missiles, space and electronic
    systems                                45        53        81       111
  Financial services and other             23        14        45        34
                                      -------   -------   --------   ------
    Operating earnings                    320       328       641       675

  Corporate and other                      (4)       (4)       (2)       (4)
  Interest expense                        (21)      (31)      (56)      (62)
  Income taxes                           (100)     (105)     (207)     (223)
                                      --------  --------  --------   -------

  Net Earnings                        $   195   $   188   $   376   $   386
                                      ========  ========  ========  =======


Military Aircraft

Revenues in the  military  aircraft  segment  increased  to $2.1  billion in the
second  quarter of 1997,  compared  with $1.9  billion in the second  quarter of
1996.  Increased  revenues  in the  F-15,  C-17  and  classified  programs  were
partially offset by lower revenues in the F/A-18 C/D program.  Revenues for this
segment in the first six months of both 1997 and 1996 were $4.0 billion.

<PAGE>

Operating  earnings in this segment  were $238 million in the second  quarter of
1997,  compared with $243 million in the same period in 1996.  Improved earnings
in the C-17 and F-15  programs  largely  offset  lower  earnings  in the  F/A-18
program.  Earnings  in the second  quarter of 1996  included an award fee on the
development  portion of the F/A-18 program.  Operating  earnings in this segment
for the first six months of 1997 were $497  million,  compared with $493 million
in the 1996 same period.


Commercial Aircraft

Revenues in the  commercial  aircraft  segment  increased to $805 million in the
1997 second quarter and $1.4 billion for the first six months of 1997, from $722
million and $1.2  billion,  respectively,  in the 1996 same  periods.  McDonnell
Douglas deliveries in the first two quarters of 1997 and 1996 were as follows:

                           Three Months Ended             Six Months Ended
                                30 June                        June 30
                           1997          1996             1997            1996
                           ----          ----             ----            ----

              MD-80          8              3               8                7
              MD-90          4              1              11                4
              MD-11          2              4               4                7

One of the twin jet  deliveries in the second  quarter of 1997,  two of the twin
jet  deliveries  in the first  quarter  of each  year and two of the 1996  first
quarter trijet  deliveries  were accounted for as operating  leases with minimal
revenue recorded on such transactions at the time of delivery.

Operating  earnings  in this  segment in the 1997  second  quarter and first six
months were $14 million and $18 million, respectively, compared with $18 million
and $37 million,  respectively, in the 1996 same periods. Earnings from the sale
of spare  parts and related  services in both  periods  were  largely  offset by
losses from development  activities and sale of production  aircraft.  Increased
losses in both 1997  quarters on the MD-95  program,  currently in  development,
were in part  offset by  reduction  in cost  estimates  related to prior  period
deliveries of trijet and twin jet aircraft.  Additionally,  earnings in the 1996
first  quarter  included   recoveries  from  an  insurance  carrier  related  to
environmental coverage at several sites, and in the 1996 second quarter included
recoveries from an insurance carrier of charges previously expensed related to a
1987 airline accident.

During the 1997 second  quarter,  McDonnell  Douglas  received  one MD-11 trijet
order,  scheduled for delivery in 1998. On June 30, 1997,  McDonnell Douglas had
firm orders for 21 MD-80 twin jets, 96 MD-90 twin jets, 50 MD-95 twin jets,  and
17 MD-11 trijets.


<PAGE>



Missiles, Space and Electronic Systems

Revenues in the missiles, space and electronic systems segment were $587 million
in the second quarter of 1997,  compared with $529 million in the same period in
1996. The Delta programs  contributed to the higher  revenues in the 1997 second
quarter.  Revenues  for the  first  six  months  in both 1997 and 1996 were $1.1
billion.

Operating   earnings  in  this   segment  were  $45  million  and  $81  million,
respectively,  in the second quarter and first six months of 1997, compared with
$53 million and $111 million,  respectively, in the same periods of 1996. Profit
margins in this segment were down two  percentage  points in the second  quarter
and three  percentage  points for the first six months of 1997,  as  compared to
1996.   Expenditures  on  the  Delta  III,  a  launch  vehicle  currently  under
development, and lower earnings on the Space Station and Delta II program caused
the decrease during the first six months in 1997.

Financial Services

Operating  earnings in the financial services and other segment were $23 million
in the second  quarter and $45  million in the 1997 first six  months,  compared
with $14  million  and $34  million in the 1996 same  periods.  Revenues in this
segment  were up $10 million  during the second  quarter to $97 million and were
$198  million for the first six months of 1997,  $24 million  higher than in the
first  six  months  of 1996.  The  earnings  and  revenue  growth  reflects  the
corporation's continued focus on growing this segment of its business.

 Backlog

McDonnell  Douglas had firm backlog of $21.9 billion on June 30, 1997,  compared
with $23.7 billion on December 31, 1996. Total backlog was $42.2 billion on June
30, 1997, compared with $44.4 billion on December 31, 1996.


<PAGE>



PART II OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

         (12)  Computation of Ratio of Earnings to Fixed Charges

         (27)  Financial Data Schedule

     (b) Reports on Form 8-K

         Form 8-K filed on July 3, 1997, in response to Item 5.
         Form 8-K filed on July 17, 1997, in response to Item 5. 
         Form 8-K filed on July 23, 1997, in response to Item 5.
         Form 8-K  filed on July 24, 1997, in response to Item 5. 
         Form 8-K filed on July 31, 1997, in response to Item 5.



 SIGNATURE

       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, its principal accounting officer, thereunto duly authorized.


                                                  MCDONNELL DOUGLAS CORPORATION
                                                           (Registrant)



 Date:     August 14, 1997                        /s/  M. N. Schroeder    
       ------------------------                   ------------------------------
                                                  M. N. Schroeder
                                                  Vice President and Controller
                                                  and Registrant's Authorized
                                                  Officer