United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                             -----------------------
                                    Form 10-Q



|X|      Quarterly Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended September 30, 1999

                                       OR

|_|      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the transition period from ________________ to _________________


                              --------------------


                           BOEING CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

                              ---------------------


             Delaware                  95-2564584                0-10795
 (State or other jurisdiction of    (I.R.S. Employer      (Commission File No.)
  Incorporation or Organization)   Identification No.)

                       4060 Lakewood Boulevard, 6th Floor
                       Long Beach, California 90808-1700
                    (Address of principal executive offices)

                                 (562) 627-3000
              (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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes |X| No |_|


Common shares outstanding at November 12, 1999:               50,000 shares

Registrant 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>


                                     Part I

Item 1.       Financial Statements
<TABLE>

Boeing Capital Corporation and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
                                                                             September 30,     December 31,
(Dollars in millions, except stated value and par value)                         1999              1998
---------------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
ASSETS
    Financing receivables:
<S>                                                                        <C>               <C>
      Investment in finance leases                                         $       1,389.3   $       1,365.0
      Notes receivable                                                               618.3             545.7
                                                                           ------------------------------------
                                                                                   2,007.6           1,910.7
      Allowance for losses on financing receivables                                  (60.3)            (62.1)
                                                                           ------------------------------------
                                                                                   1,947.3           1,848.6
    Cash and cash equivalents                                                          8.3              20.3
    Equipment under operating leases, net                                            746.0             889.2
    Equipment held for sale or re-lease                                              113.0              62.3
    Accounts due from Boeing and BCSC                                                 18.3               -
    Other assets                                                                      70.8              41.0
                                                                           ------------------------------------
                                                                           $       2,903.7   $       2,861.4
                                                                           ====================================

LIABILITIES AND SHAREHOLDER'S EQUITY
    Short-term notes payable                                               $         211.4   $         236.7
    Accounts payable and accrued expenses                                             17.0              35.6
    Accounts due to Boeing and BCSC                                                    -                 6.7
    Other liabilities                                                                 98.0              84.8
    Deferred income taxes                                                            417.7             383.3
    Long-term debt:
      Senior                                                                       1,712.2           1,678.7
      Subordinated                                                                    44.9              54.9
                                                                           ------------------------------------
                                                                                   2,501.2           2,480.7
                                                                           ------------------------------------

    Commitments and contingencies - Note 3

    Shareholder's equity:
      Preferred stock - no par value; authorized 100,000 shares:
        Series A; $5,000 stated value; authorized, issued and
        outstanding 10,000 shares                                                     50.0              50.0
      Common stock - $100 par value; authorized 100,000 shares;
        issued and outstanding 50,000 shares                                           5.0               5.0
      Capital in excess of par value                                                  89.5              89.5
      Income retained for growth                                                     258.0             236.2
                                                                           ------------------------------------
                                                                                     402.5             380.7
                                                                           ------------------------------------
                                                                           $       2,903.7   $       2,861.4
                                                                           ====================================
See notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>

Boeing Capital Corporation and Subsidiaries
Consolidated Statements of Income and Income Retained for Growth
(Unaudited)

<CAPTION>
                                                                    Three months ended         Nine months ended
                                                                      September 30,              September 30,
(Dollars in millions)                                               1999          1998         1999          1998
----------------------------------------------------------------------------------------------------------------------

OPERATING INCOME
<S>                                                             <C>           <C>           <C>          <C>
    Finance lease income                                        $     28.2    $     29.1    $     86.2   $     92.5
    Interest income on notes receivable                               12.9          10.3          38.2         25.2
    Operating lease income, net of depreciation expense               15.4          16.0          48.7         50.8
    Net gain on disposal or re-lease of assets                         5.5          12.0          19.3         27.2
    Other                                                              0.5           1.4           1.5          2.2
                                                                ------------------------------------------------------
                                                                      62.5          68.8         193.9        197.9
                                                                ------------------------------------------------------

EXPENSES
    Interest expense                                                  31.2          30.9          95.7         95.6
    Provision for losses                                               1.9           2.6           5.5          7.9
    Operating expenses                                                 2.9           2.9           8.0          8.1
    Other                                                              1.4           4.1           6.5          7.9
                                                                ------------------------------------------------------
                                                                      37.4          40.5         115.7        119.5
                                                                ------------------------------------------------------
Income before provision for income taxes                              25.1          28.3          78.2         78.4
Provision for income taxes                                             9.6           4.6          29.8         23.1
                                                                ------------------------------------------------------
Net income                                                            15.5          23.7          48.4         55.3
Income retained for growth at beginning of period                    251.3         228.1         236.2        208.6
Dividends                                                             (8.8)         (0.9)        (26.6)       (13.0)
                                                                ======================================================
Income retained for growth at end of period                     $    258.0    $    250.9    $    258.0   $    250.9
                                                                ======================================================

See notes to consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>

Boeing Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
                                                                                    Nine months ended
                                                                                      September 30,
(Dollars in millions)                                                           1999              1998
---------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                        <C>               <C>
    Net income                                                             $        48.4     $        55.3
    Adjustments to reconcile net income to net cash provided by
       (used in) operating activities:
         Depreciation expense - equipment under operating leases                    55.3              52.9
         Net gain on disposal or re-lease of assets                                (19.3)            (27.2)
         Provision for losses                                                        5.5               7.9
         Change in assets and liabilities:
           Accounts with Boeing and BCSC                                           (25.0)             (0.8)
           Other assets                                                            (29.8)            (28.3)
           Accounts payable and accrued expenses                                   (19.5)            (33.7)
           Other liabilities                                                        13.2             (21.3)
           Deferred income taxes                                                    34.4             (26.3)
         Other, net                                                                 (2.6)             (0.9)
                                                                           ------------------------------------
                                                                                    60.6             (22.4)
                                                                           ------------------------------------
INVESTING ACTIVITIES
    Net change in short-term notes and leases receivable                           (15.2)            (49.6)
    Purchase of equipment for operating leases                                     (19.2)            (72.4)
    Proceeds from disposition of equipment, notes and
       leases receivable                                                           128.2             290.6
    Collection of notes and leases receivable                                      213.1             163.1
    Acquisition of notes and leases receivable                                    (352.6)           (315.6)
                                                                           ------------------------------------
                                                                                   (45.7)             16.1
                                                                           ------------------------------------
FINANCING ACTIVITIES
    Net change in short-term borrowings                                            (25.3)              9.0
    Debt having maturities more than 90 days:
       Proceeds                                                                    267.0             248.0
       Repayments                                                                 (242.9)           (258.5)
    Payment of cash dividends                                                      (25.7)            (12.1)
                                                                           ------------------------------------
                                                                                   (26.9)            (13.6)
                                                                           ------------------------------------
Net decrease in cash and cash equivalents                                          (12.0)            (19.9)
Cash and cash equivalents at beginning of year                                      20.3              39.1
                                                                           ====================================
Cash and cash equivalents at end of period                                 $         8.3     $        19.2
                                                                           ====================================

See notes to consolidated financial statements.
</TABLE>



<PAGE>


Boeing Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 30,1999
(Unaudited)


Note 1 -- Basis of Presentation

Boeing Capital Corporation (formerly McDonnell Douglas Finance Corporation) (the
"Company") is a wholly-owned  subsidiary of Boeing Capital Services  Corporation
("BCSC"), a wholly-owned subsidiary of McDonnell Douglas Corporation ("McDonnell
Douglas"),  which in turn is wholly-owned by The Boeing Company ("Boeing").  The
accompanying  unaudited  consolidated financial statements have been prepared by
the Company in accordance  with  generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial  statements.  In  the  opinion  of  management  of  the  Company,  the
accompanying   consolidated   financial   statements   reflect  all  adjustments
(consisting of normal recurring  accruals) which are necessary to present fairly
the  consolidated  balance  sheets and the related  consolidated  statements  of
income and income  retained  for growth and cash flows for the  interim  periods
presented. Operating results for the nine-month period ended September 30, 1999,
are not necessarily  indicative of the results that may be expected for the year
ended December 31, 1999. The statements  should be read in conjunction  with the
notes to the consolidated  financial  statements  included in the Company's Form
10-K for the year ended December 31, 1998.


Note 2 -- Credit Agreements and Long-Term Debt

The  provisions  of various  credit and debt  agreements  require the Company to
maintain a minimum net worth,  restrict  indebtedness,  and limit cash dividends
and other distributions.  Under the most restrictive provision, $61.4 million of
the  Company's  income  retained  for  growth was  available  for  dividends  at
September 30, 1999.


Note 3 -- Commitments and Contingencies

On November 1, 1996, The Allen Austin Harris Group, Inc. (the "Plaintiff") filed
a complaint in the Superior Court of the State of California, County of Alameda,
against the Company,  McDonnell  Douglas,  McDonnell  Douglas Aerospace - Middle
East  Limited  and  the  Selah  Group,  Inc.  (collectively  referred  to as the
"Defendants"). The Plaintiff, which had hoped to establish a manufacturing plant
abroad  with  various  assistance  from the  Defendants,  seeks  more than $57.0
million in alleged  damages  (primarily  consisting  of lost  profits)  based on
various theories. The Company believes it has meritorious defenses to all of the
Plaintiff's  allegations,  but is unable to determine at this stage of discovery
if the litigation will have any future material  adverse effect on the Company's
earnings, cash flow or financial position.

The  Company is a party to  litigation  in the  United  States  District  Court,
Southern District of Florida,  entitled  McDonnell  Douglas Finance  Corporation
adv. Aviaco International Leasing, Inc., Aviaco Traders International,  Inc. and
Craig  L.  Dobbin  with  Related  Counter-Claims  (collectively  referred  to as
"Aviaco").  The  foregoing  litigation  arose  out of an action  brought  by the
Company  in July 1991  seeking  remedies  on account  of  defaults  by the other
parties to the  litigation  under loan and related  documents  involving a $17.9
million loan made by the Company.  In January 1994, in response to the Company's
foreclosure  of two aircraft and a related  aircraft lease  agreement  which had
been collateral for the loan, Aviaco filed a counter-claim  against the Company,
asserting nine claims for alleged damages relating to the Company's  foreclosure
based on various tort and contractual theories.

The case  proceeded to jury trial on the three of nine claims which survived the
Company's  Motion for Summary  Judgment.  The case was  submitted to the jury on
October 16, 1997.  On October 17, 1997,  the jury returned a verdict in favor of
Aviaco awarding  aggregate  damages of  approximately  $12.2 million,  including
damages of  approximately  $10.0 million for the failure to exercise  reasonable
care with regard to the related lease agreement.

In December  1997,  the Company  filed a Motion for Judgment as a Matter of Law,
arguing, inter alia, to set aside the $10.0 million award as not being supported
by the record  evidence or by  applicable  law. On February 13, 1998,  the Judge
ruled in favor of the Company and set aside the $10.0 million award.

On March 2, 1998, the Judge entered a Final Judgment  against the Company in the
aggregate amount,  including prejudgment interest, of approximately $2.8 million
with post judgment  interest thereon at the rate of 5.42% per annum.  Aviaco has
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh Circuit. Taking into account amounts reserved for this litigation,  the
Company  does not expect such  litigation  to have any future  material  adverse
effect on its earnings, cash flow or financial position.

A number of legal  proceedings  and  claims are  pending  or have been  asserted
against  the  Company,  many of which are  covered by third  parties,  including
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.

On  October  4,  1999,  the  Company,  together  with  its  new  United  Kingdom
subsidiary,  BCC (Aircraft  Acquisitions) Limited,  entered into an agreement to
purchase  from  British  Airways an aggregate of 34 used Boeing 757 aircraft for
aggregate  consideration of approximately  $500 million.  These aircraft will be
purchased  from  time  to time  over  approximately  a  three-year  time  period
commencing in July 2000.

The Company,  together with Boeing Aircraft Services,  a division of Boeing, has
entered  into a binding  letter of intent  (which is  subject  to,  among  other
things,  the  negotiation  and execution of definitive  documentation)  with DHL
International  Limited ("DHL") pursuant to which the 34 used 757s purchased from
British  Airways will be modified from a passenger to a freighter  configuration
and  then  delivered  (sold  and/or  leased)  to DHL  from  time  to  time  over
approximately a two-year period  commencing  approximately the second quarter of
2001. Pursuant to the letter of intent,  eighteen of the 34 aircraft are subject
to a firm commitment from DHL and the other 16 aircraft are subject to an option
on DHL's part.

Trans World Airlines,  Inc. ("TWA")  accounted for $149.9 million (5.4% of total
Company  portfolio)  and $163.3  million  (5.8% of total  Company  portfolio) at
September 30, 1999 and December 31, 1998,  respectively.  In April 1999, Moody's
rating agency lowered TWA's Outlook from Stable to Negative.  McDonnell  Douglas
provides  guaranties  to the Company for  certain  obligations  of TWA under the
various lease agreements between the Company and TWA. At September 30, 1999, the
maximum  aggregate  coverage under such guaranties was $32.1 million.  As of the
date hereof, TWA is current on its obligations to the Company.  If, however, TWA
were to default on its  obligations  to the Company,  this could have a material
adverse effect on the Company's earnings, cash flow or financial position.

World  Airways,  Inc.  ("World")  accounted  for $171.2  million  (6.2% of total
Company  portfolio)  and $176.4  million  (6.3% of total  Company  portfolio) at
September 30, 1999 and December 31, 1998, respectively. World experienced losses
in 1998 and its cash  balances fell to relatively  low levels.  Also,  Worldcorp
Inc., the majority owner of World, has made a "prepackaged" filing under Chapter
11 of the U.S.  bankruptcy  code. With respect to the existing lease  agreements
between  World and the  Company,  the Company  has agreed to reduce  maintenance
reserve  payments.  The Company has concluded  that the  restructuring  of these
lease  transactions,  taking  into  account an  indemnification  from  McDonnell
Douglas  covering  such  reduction  of  maintenance  reserves,  will  not have a
material  adverse  effect on the  Company's  earnings,  cash  flow or  financial
position.

On June 26,  1998,  Federal  Express  Corporation  ("FedEx")  gave notice to the
Company of its intention to terminate early (in late 1999) two lease  agreements
covering MD-11 freighter aircraft which FedEx leases from the Company.  Based on
an  executed  letter  agreement,  the  Company  does not  expect  the  leases to
terminate  in 1999.  The Company has agreed to give FedEx the right to terminate
the leases early, approximately three years from the date hereof.

The Company had leased six Embraer EMB-120  aircraft to Westair.  As a result of
Westair's  cessation of operations at the end of May 1998, the lease  agreements
for such  aircraft have been  terminated  and the aircraft have been returned to
the Company.  The Company has been remarketing  these aircraft (along with other
used  EMB-120s it holds for sale or lease).  During the second  quarter of 1999,
the  Company  adjusted  the  carrying  value  of  the  ex-Westair   aircraft  to
approximate their fair value,  resulting in a pre-tax loss of approximately $3.4
million. The Company does not expect the disposition of these aircraft to have a
material  adverse  effect on the  Company's  earnings,  cash  flow or  financial
position.

In July 1998, the Company  terminated early a lease agreement  covering one used
DC-10-30  aircraft.  The  Company has  repossessed  such  aircraft  and has been
remarketing it in a currently weak market for this type of aircraft. Taking into
account a guaranty from McDonnell  Douglas,  the disposition of such aircraft is
not expected to have a material adverse effect on the Company's  earnings,  cash
flow or financial position.

At September 30, 1999, the Company had  commitments to provide leasing and other
financing  totaling $276.1 million,  excluding the commitments to DHL previously
mentioned.

In  conjunction  with  prior  asset  dispositions  and  certain  guaranties,  at
September  30,  1999,  the Company  was  subject to a maximum  recourse of $43.8
million.  Based on trends to date,  any losses  related to such exposure are not
expected by the Company to be significant.

The Company  leases  aircraft  under capital leases which have been subleased to
others.  At September 30, 1999, the Company had guaranteed the repayment of $4.2
million in capital lease obligations associated with a 50% partner.


Item 2.       Management's Analysis of Results of Operations

================================================================================
Forward-Looking Information Is Subject to Risk and Uncertainty

From  time to  time,  the  Company  may make  certain  statements  that  contain
projections  or  "forward-looking"   information  (as  defined  in  the  Private
Securities  Litigation  Reform Act of 1995) that involve  risk and  uncertainty.
Certain statements in this Form 10-Q,  particularly those in Note 3 of the Notes
to Consolidated Financial Statements, Item 2 of Part I and Items 1 and 5 of Part
II,  may  contain  forward-looking  information.  The  subject  matter  of  such
statements  may  include,  but not be limited  to, the effects on the Company of
strategic  decisions  of Boeing  and the Year 2000 date  conversion,  as well as
future  earnings,  costs,  expenditures,  losses,  residual  values and  various
business   environment   trends.   In  addition  to  those   contained   herein,
forward-looking  statements  and  projections  may be made by  management of the
Company orally or in writing including,  but not limited to, various sections of
the Company's  filings with the  Securities  and Exchange  Commission  under the
Securities Act of 1933 and the Securities Exchange Act of 1934.

Actual results and trends in the future may differ  materially from  projections
depending on a variety of factors including,  but not limited to, the effects on
the Company of strategic  decisions  relating to the Company made by Boeing, the
capital equipment requirements of United States and foreign businesses,  capital
availability  and cost,  changes in law and tax  benefits,  the tax  position of
Boeing (including the applicability of the alternative minimum tax), competition
from  other  financial  institutions,  the  Company's  successful  execution  of
internal operating plans and Year 2000 date conversion plans, the impact of Year
2000 issues on the Company's customers, vendors and service providers,  defaults
by customers, regulatory uncertainties and legal proceedings.
================================================================================


Interest on notes receivable increased $13.0 million (51.6%) from the first nine
months  of  1998,  primarily  attributable  to a  comparable  increase  in notes
receivable between September 30, 1998 and 1999.

Gain on disposal or re-lease of assets  decreased $7.9 million  (29.0%) from the
first nine months of 1998, primarily attributable to $3.3 million of income from
the sale of two Garuda  aircraft  to Boeing in August  1998 and $3.1  million of
income from the sale of an executive jet in August 1998. The remaining  decrease
is  attributable  to other sales within the  commercial  aircraft and commercial
equipment leasing portfolios in the first nine months of 1998.

Provision for losses  decreased $2.4 million  (30.4%) from the first nine months
of 1998, primarily  attributable to the Company's  determination that additional
provisions  for losses  were not  necessary  or  appropriate  during the current
period given the valuation and assessment of the portfolio.

Other  expenses  decreased  $1.4  million  (17.7%) from the first nine months of
1998,  primarily  attributable  to maintenance  expenses of  approximately  $2.5
million  incurred  in the  first  nine  months of 1998 on an  aircraft  that was
re-leased prior to 1999.

The Company  has not  entered  into new  commercial  aircraft  business in 1999,
primarily because of strategic  decisions which were being made by Boeing during
the year relative to the Company's commercial aircraft business. The decrease in
commercial  aircraft volume was offset by a $82.3 million increase in commercial
equipment leasing and financing.

Year 2000 Date Conversion

The Year 2000 issue exists because many computer  systems and  applications  use
two-digit date fields to designate a year.  When the century date change occurs,
date-sensitive  systems may recognize the year 2000 as 1900, or not at all. This
inability to recognize  and  properly  treat the Year 2000 may cause  systems to
process financial and operational  information  incorrectly.  In July of 1999 we
decided to replace our independent  advisory firm for Year 2000 matters with the
independent  advisory firm which installed our new lease  administration  system
(discussed  below).  As  further  discussed  below,  the  new  advisory  firm is
assisting  us in  converting  our systems  which are not Year 2000  compliant to
systems  which are Year 2000  compliant  and to test our  systems  for Year 2000
compliance.  We do not expect  this  change of firms to have a material  adverse
effect on the cost or timing of the Company's Year 2000 compliance efforts.

We have  assessed and continue to re-assess the impact of the Year 2000 issue on
our information  technology  ("IT") systems.  One of our principal IT systems is
our lease administration system, by which we keep track of our leases, loans and
certain other financial information. In 1996, we initiated a conversion from our
existing lease  administration  system to programs that we have been advised are
Year 2000 compliant.  While the conversion of this lease  administration  system
has been substantially completed, some significant remaining inadequacies in the
new system have been  identified  which we are  continuing to address.  For this
reason we are continuing to run the old system  parallel to the new system while
necessary improvements are being made to the new system. We may need to continue
to run the old system until the end of 1999 or beyond. We are currently studying
as a possible  contingency  plan  whether  the old  system  can be  successfully
remediated for Year 2000 compliance.  We previously  successfully tested our new
lease  administration  system for Year 2000 compliance and our new advisory firm
plans to assist us with testing the new lease  administration  system during the
fourth  quarter of 1999 to confirm  that it  remains  compliant  notwithstanding
intervening modifications.  In the event that such testing proves the new system
not to be Year 2000 compliant,  the new system cannot be made compliant prior to
the  end  of  1999  or  its  inadequacies  cannot  be  fixed  so as to  make  it
sufficiently  reliable prior to the end of 1999, and our existing  system cannot
be made compliant  prior to the end of 1999, our operations  could be materially
adversely affected.

Our second principal IT system is our general ledger  accounting  system. We use
our general ledger accounting system to keep track of our financial results.  We
have  selected a general  ledger  accounting  system  which is  certified by its
manufacturer  to be Year 2000  compliant.  We expect  to finish  converting  our
general ledger  accounting  system to a Year 2000 compliant system in the fourth
quarter of 1999. The accounting system  conversion  project is on schedule for a
December  1, 1999  transition  to the new system.  No material  issues have been
identified  to date. A parallel  test remains to be completed and is on schedule
to support the conversion  date.  While we expect the conversion to be completed
as planned,  in the event unforseen  issues arise,  we will continue  throughout
December to complete the conversion. If a successful conversion is not completed
by the end of 1999,  a  contingency  plan has been  developed  involving  manual
workarounds.

With respect to our IT systems  other than our lease  administration  system and
general  ledger  accounting  system,  we intend  to  develop  contingency  plans
relating to possible  Year 2000  problems  to the extent we deem  necessary  and
appropriate,  taking  into  account  the  advice of the  advisory  firm which is
examining our IT systems and which we expect will  complete its analysis  before
the end of the fourth quarter of 1999.

Although we do not consider it likely that Year 2000  problems  inherent  within
our IT systems will result in material  and adverse  operational  problems,  the
possibility of such problems cannot be discounted at this time.

With respect to our non-IT  systems such as our telephone and elevator  systems,
we have  assessed and  continue to  re-assess  the impact of Year 2000 issues on
these  systems.  We believe  that our non-IT  systems  are Year 2000  compliant.
However,  no assurance can be given that our  operations  will not be materially
and adversely  affected by problems with the non-IT systems  related to the Year
2000.

The  total  cost of the Year 2000  conversion  efforts  to date has been  funded
through  operating  cash flows and has not had a material  adverse effect on our
earnings,  cash flow or  financial  position.  This total cost  amount does not,
however,  include the cost of converting to a new lease administrative system, a
major  project   initiated  in  1996  to  accomplish   our  goal  of  increasing
productivity irrespective of the Year 2000 issue. Based on information available
to date,  the estimated  cost of the  remaining  Year 2000  conversion  efforts,
including any remediation of our IT and non-IT systems as well as testing of all
our systems, is approximately $1.5 million.

We can give no  assurance  that Year 2000  problems  of third  parties  (such as
vendors,  customers and other financial  institutions with which we do business)
will not materially and adversely affect our operations or operating results. We
are in the process of assessing  the Year 2000  readiness of those third parties
whose lack of Year 2000  readiness  could have a material  adverse effect on our
operations.  In  early  1999,  we  identified  and  sent  inquiries  to  certain
significant customers and third parties regarding their Year 2000 readiness.  We
have  received a response  from the  majority  of such third  parties  and their
responses to date do not indicate a likelihood that their lack of readiness will
have a material adverse effect on our operations.

Liquidity Risks

We have significant liquidity requirements. We attempt to fund our business such
that  scheduled  receipts  from our  portfolio  will cover our expenses and debt
payments  as they  become due.  We believe  that,  absent a severe or  prolonged
economic  downturn  which  results  in  defaults  materially  in excess of those
provided for, receipts from the portfolio will cover the payment of expenses and
debt payments as they become due. If cash provided by  operations,  issuances of
commercial  paper,  borrowings  under bank credit lines and term borrowings does
not provide the  necessary  liquidity,  we would be required to restrict our new
business volume,  unless we obtained access to other sources of capital at rates
that would allow for a reasonable return on new business.

Our ability to make  scheduled  payments of the principal of, or to pay interest
on, or to refinance our indebtedness,  depends on the future  performance of our
investment portfolio.  The performance of such portfolio, in turn, is subject to
economic, financial,  competitive and other factors that are beyond our control.
While we  believe  that  future  cash flows from the  portfolio,  together  with
available  borrowings  under our revolving credit line, will be adequate to meet
our  anticipated  requirements  for  working  capital,   interest  payments  and
scheduled principal payments,  we cannot assure that we will be able to generate
sufficient cash flows in the future to service our debt  obligations.  If we are
unable  to do so,  we may be  required  to  refinance  all or a  portion  of our
existing debt, sell assets or obtain additional financing. We cannot assure that
any  such  refinancing  will be  possible  or that any such  sale of  assets  or
additional financing could be achieved.


                                     Part II

Item 1.       Legal Proceedings

On November 1, 1996, The Allen Austin Harris Group, Inc. (the "Plaintiff") filed
a complaint in the Superior Court of the State of California, County of Alameda,
against the Company,  McDonnell  Douglas,  McDonnell  Douglas Aerospace - Middle
East  Limited  and  the  Selah  Group,  Inc.  (collectively  referred  to as the
"Defendants"). The Plaintiff, which had hoped to establish a manufacturing plant
abroad  with  various  assistance  from the  Defendants,  seeks  more than $57.0
million in alleged  damages  (primarily  consisting  of lost  profits)  based on
various theories. The Company believes it has meritorious defenses to all of the
Plaintiff's  allegations,  but is unable to determine at this stage of discovery
if the litigation will have any future material  adverse effect on the Company's
earnings, cash flow or financial position.

The  Company is a party to  litigation  in the  United  States  District  Court,
Southern District of Florida,  entitled  McDonnell  Douglas Finance  Corporation
adv. Aviaco International Leasing, Inc., Aviaco Traders International,  Inc. and
Craig  L.  Dobbin  with  Related  Counter-Claims  (collectively  referred  to as
"Aviaco").  The  foregoing  litigation  arose  out of an action  brought  by the
Company  in July 1991  seeking  remedies  on account  of  defaults  by the other
parties to the  litigation  under loan and related  documents  involving a $17.9
million loan made by the Company.  In January 1994, in response to the Company's
foreclosure  of two aircraft and a related  aircraft lease  agreement  which had
been collateral for the loan, Aviaco filed a counter-claim  against the Company,
asserting nine claims for alleged damages relating to the Company's  foreclosure
based on various tort and contractual theories.

The case  proceeded to jury trial on the three of nine claims which survived the
Company's  Motion for Summary  Judgment.  The case was  submitted to the jury on
October 16, 1997.  On October 17, 1997,  the jury returned a verdict in favor of
Aviaco awarding  aggregate  damages of  approximately  $12.2 million,  including
damages of  approximately  $10.0 million for the failure to exercise  reasonable
care with regard to the related lease agreement.

In December  1997,  the Company  filed a Motion for Judgment as a Matter of Law,
arguing, inter alia, to set aside the $10.0 million award as not being supported
by the record  evidence or by  applicable  law. On February 13, 1998,  the Judge
ruled in favor of the Company and set aside the $10.0 million award.

On March 2, 1998, the Judge entered a Final Judgment  against the Company in the
aggregate amount,  including prejudgment interest, of approximately $2.8 million
with post judgment  interest thereon at the rate of 5.42% per annum.  Aviaco has
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh Circuit. Taking into account amounts reserved for this litigation,  the
Company  does not expect such  litigation  to have any future  material  adverse
effect on its earnings, cash flow or financial position.

A number of legal  proceedings  and  claims are  pending  or have been  asserted
against  the  Company,  many of which are  covered by third  parties,  including
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.


Item 2.       Changes in Securities and Use of Proceeds

Omitted pursuant to instruction H(2).


Item 3.       Defaults Upon Senior Securities

Omitted pursuant to instruction H(2).


Item 4.       Submission of Matters to a Vote of Security Holders

Omitted pursuant to instruction H(2).


Item 5.       Other Information

Summarized below is information on the effects of strategic decisions of Boeing,
borrowing  operations,  portfolio  balances,  new business  volume,  analysis of
allowance for losses on financing  receivables and credit loss  experience,  and
receivable write-offs, net of recoveries by segment.

The Effects of Strategic Decisions of Boeing

On August 1, 1997, the  Boeing-McDonnell  Douglas merger was consummated and the
Company became an indirect  wholly-owned  subsidiary of Boeing. Since that time,
Boeing has  conducted a review of the  operations  of the Company to  determine,
among other things, the strategic value of the Company to Boeing.

On October 4, 1999,  Boeing  announced its decision to consolidate  its customer
financing  under one group,  to be led by the Company.  Boeing's  press  release
explained  that "Boeing  Capital  Corporation  will  continue as a  wholly-owned
subsidiary of The Boeing Company,  but will now integrate the existing financial
services  activities  supporting  commercial  aircraft,  military  aircraft  and
missiles,  and space and  communication  markets."  Boeing's  press  release  is
contained  in the  Company's  Report on Form 8-K filed with the  Securities  and
Exchange Commission ("SEC") on October 4, 1999.

The Company and Boeing are presently  working to implement the  consolidation of
financing  activities and additional  strategic decisions are being made as part
of the  implementation  process.  Boeing currently has a portfolio of commercial
aircraft  financings in excess of $2,500  million.  A portion of this  portfolio
could be transferred to the Company.  The ultimate  amount and terms of any such
transfers are currently under  consideration.  Such amount  transferred could be
very significant in relation to the Company's existing portfolio.

Implementation of the consolidation of Boeing's  customer  financing  operations
under the Company's leadership is in its preliminary stages and accordingly,  no
assurances can be given that its  implementation  will be achieved in the manner
or within the timelines presently contemplated.

Borrowing Operations

On June 22, 1999, the Company authorized an additional $300.0 million (resulting
in an aggregate of $1.2 billion  authorized) of medium-term  notes to be offered
and sold from time to time in the Company's discretion pursuant to the Company's
public shelf registration (SEC Registration No. 333-37635).  As of September 30,
1999, the Company issued $838.4  million of the $1.2 billion  medium-term  notes
authorized,  at interest  rates ranging from 5.35% to 7.64% and with  maturities
ranging from 10 months to 11 years,  leaving an unused balance of $361.6 million
on September 30, 1999.

On July 7,  1999,  the  Company  filed  with  the  SEC a Form  S-3  Registration
Statement for a public shelf registration of $2.5 billion of its debt securities
(SEC File No. 333-82391).  The Company has not requested the SEC to declare such
Registration  Statement  to be  effective.  The  Company  presently  expects  to
commence  utilizing the new shelf  registration upon completion of its currently
effective shelf registration.


Portfolio Balances
<TABLE>

Portfolio balances for the Company's financial reporting segments are summarized
as follows:
<CAPTION>

                                                                             September 30,     December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
Aircraft Financing
  Boeing/McDonnell Douglas aircraft financing
<S>                                                                        <C>               <C>
      Finance leases                                                       $       772.8     $       803.3
      Operating leases                                                             456.4             513.3
      Notes receivable                                                              52.8              82.9
                                                                           -----------------------------------
                                                                                 1,282.0           1,399.5
                                                                           -----------------------------------
  Other commercial aircraft financing
      Finance leases                                                               123.5             131.6
      Operating leases                                                              20.7              30.4
      Notes receivable                                                               3.3              12.0
                                                                           -----------------------------------
                                                                                   147.5             174.0
                                                                           -----------------------------------
Commercial Equipment Leasing and Financing
    Finance leases                                                                 493.0             430.1
    Operating leases                                                               268.9             345.5
    Notes receivable                                                               561.6             449.4
                                                                           -----------------------------------
                                                                                 1,323.5           1,225.0
                                                                           -----------------------------------
Other                                                                                0.6               1.4
                                                                           ===================================
                                                                           $     2,753.6     $     2,799.9
                                                                           ===================================
</TABLE>


New Business Volume
<TABLE>

New business volume is summarized as follows:

<CAPTION>
                                                                                   Nine months ended
                                                                                     September 30,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>
Boeing/McDonnell Douglas aircraft financing                                $         7.0     $        69.8
Other commercial aircraft financing                                                  0.1              22.5
Commercial equipment leasing and financing                                         363.3             281.0
                                                                           -----------------------------------
                                                                           $       370.4     $       373.3
                                                                           ===================================
</TABLE>

<TABLE>

Analysis of Allowance for Losses on Financing Receivables and Credit Loss
Experience
<CAPTION>

                                                                            September 30,      December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
Allowance for losses on financing receivables at beginning
<S>                                                                        <C>              <C>
    of year                                                                $        62.1    $        55.9
Provision for losses                                                                 5.5              7.4
Write-offs, net of recoveries                                                       (7.3)            (2.5)
Other                                                                                -                1.3
                                                                          ====================================
Allowance for losses on financing receivables at end of
    period                                                                 $        60.3    $        62.1
                                                                          ====================================

Allowance as a percentage of total receivables                                       3.0%             3.3%

Net write-offs as percent of average receivables                                     0.4%             0.1%

More than 90 days delinquent:
    Amount of delinquent installments                                      $         0.1    $         0.5
    Total receivables due from delinquent obligors                                   3.9              6.7
    Total receivables due from delinquent obligors
       as a percentage of total receivables                                          0.2%             0.4%

</TABLE>


Receivable Write-offs, Net of Recoveries by Segment

Commercial  aircraft financing had no net write-offs of receivables for the nine
months  ended  September  30,  1999 or 1998.  Commercial  equipment  leasing and
financing had net write-offs of $6.7 million for the nine months ended September
30, 1999 and net recoveries of $0.1 million for the nine months ended  September
30, 1998.


Item 6.       Exhibits and Reports on Form 8-K

A.    Exhibits

         Exhibit 12 Computation of Ratio of Income to Fixed Charges.

         Exhibit 27 Financial Data Schedule.

B.    Reports on Form 8-K

         Form 8-K dated  October 4, 1999 to report under Item 5, a press release
         entitled "Boeing Reorganizes Product Financing Services"



<PAGE>



                                   Signatures


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  financial  officer and by its principal  accounting
officer, thereunto duly authorized.


                             Boeing Capital Corporation


November 12, 1999            /S/ STEVEN W. VOGEDING
                             __________________________________
                             Steven W. Vogeding
                             Vice President and Chief Financial
                             Officer (Principal Financial Officer) and
                             Registrant's Authorized Officer




                             /S/ MAURA R. MIZUGUCHI
                             __________________________________
                             Maura R. Mizuguchi
                             Controller (Principal Accounting Officer)