# EDGAR Filing Document

**Accession Number:** 0000012927
**File Stem:** 0001193125-23-059904
**Filing Date:** 2023-3
**Character Count:** 233496
**Document Hash:** 2e2342a1dba632f2a5e528436b15af59
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## Filing Content

## Filing Summary
**0001193125-23-059904.hdr.sgml**: 20230303

**ACCESSION NUMBER**: 0001193125-23-059904

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230303

**DATE AS OF CHANGE**: 20230303

**EFFECTIVENESS DATE**: 20230303

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BOEING CO
- **CENTRAL INDEX KEY:** 0000012927
- **STANDARD INDUSTRIAL CLASSIFICATION:** AIRCRAFT [3721]
- **IRS NUMBER:** 910425694
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-00442
- **FILM NUMBER:** 23703362

**BUSINESS ADDRESS:**
- **STREET 1:** 929 LONG BRIDGE DRIVE
- **CITY:** ARLINGTON
- **STATE:** VA
- **ZIP:** 22202
- **BUSINESS PHONE:** 7034146338

**MAIL ADDRESS:**
- **STREET 1:** 929 LONG BRIDGE DRIVE
- **CITY:** ARLINGTON
- **STATE:** VA
- **ZIP:** 22202

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** BOEING AIRPLANE CO
- **DATE OF NAME CHANGE:** 19730725

### Attached PDF Documents

**Attachment 1:** `d424500dars.pdf`

![img-0.jpeg](img-0.jpeg)

The Boeing Company 2022 Annual Report

# Today, Tomorrow and Beyond

#### Cover Photo

Powered by the Boeing-built core stage, NASA's Space Launch System (SLS) rocket erupted to life on Nov. 16, 2022, at 1:47 a.m. The inaugural launch of the Artemis missions was propelled by a team united in one goal: safely launching the first human-rated spacecraft to the Moon in almost 50 years.

Photo credit: NASA, Chris Coleman and Kevin Dav

'The first launch of the Space Launch System rocket was simply eye-watering.'

- **Mike Sarafin**, *Artemis mission manager, NASA*

'It was an absolutely beautiful launch - visually and technically. It performed the mission as we designed it to do.'

- **John Shannon**, *vice president and program manager, Boeing SLS program*

#### Inside Cover Photo

Boeing SLS teammates react in delight after gathering to watch the Artemis 1 launch near NASA's vertical assembly building at Kennedy Space Center in Florida.

We celebrate today by proudly continuing the legacy of those employees who came before us. Their accomplishments built a solid foundation for our brand and are also reflected in our logo.

The Boeing icon celebrates the first around-the-world flight by the U.S. Army Air Service flying the Douglas World Cruisers in 1924. The Boeing name in Boeing Stratotype created in 1947 celebrates the invention of the large swept-wing jet and the B-47 Stratojet. The 37-degree angle of the type was inspired by the B-47's angle of wing sweep.

Our logo serves as a reminder to add our own moments to the Boeing legacy **today, tomorrow and beyond** as we chart the course for humanity.

![img-1.jpeg](img-1.jpeg)

#### The Boeing Company

As a leading global aerospace company, Boeing develops, manufactures and services commercial airplanes, defense products and space systems for customers in more than 150 countries. As a top U.S. exporter, the company leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact. Boeing's diverse team is committed to innovating for the future, leading with sustainability and cultivating a culture based on the company's core values of safety, quality and integrity. Learn more at boeing.com.

![img-2.jpeg](img-2.jpeg)

Watch a video of the Artemis launch.

#### Stakeholder-Driven Transparency

Boeing is committed to transparency. Through our annual disclosure and reporting cycle, we compile and share a broad set of data, information and operating examples for our stakeholders, including our employees, customers, industry partners, investors, regulatory authorities, communities and others. Using the most widely applicable disclosure frameworks, Boeing reports each year on our financial performance and company priorities; our employee demographics and progress toward achieving equity, diversity and inclusion commitments; our sustainability-focused environmental, social and governance performance; our community investments and advocacy; and our industry-leading aerospace market outlooks.

![img-3.jpeg](img-3.jpeg)

View our Annual Report online and learn more about Boeing.

#### Contents

| A Letter from Boeing President and CEO David L. Calhoun | 2 |
| --- | --- |
| Executive Council | 4 |
| Boeing by the Numbers | 5 |
| A Commitment to Quality | 6 |
| Sustainable Aerospace | 8 |
| Supporting STEM Careers | 10 |
| Global Growth | 12 |
| Celebrating the Past, Embracing the Future | 14 |
| Company Highlights | 16 |
| Form 10-K | 17 |
| Caution Concerning Forward-Looking Statements | 134 |
| Non-GAAP Measures | 135 |
| Selected Programs, Products and Services | 136 |
| Shareholder Information | 145 |
| Board of Directors | 146 |
| Company Officers | 146 |

1

A Letter from Boeing President and CEO David L. Calhoun

For more than a century, The Boeing Company has been at the forefront of historic innovations that connect people around the world and beyond. Today, our work continues to help chart the course for the future of aerospace.

Every day we work to transform our company to service big defense and commercial needs. There is substantial and growing demand for the products and services we create, with more than $400 billion in open orders. In response to these demands and in light of post-COVID supply chain challenges, a priority is making our aircraft production capabilities more predictable and scalable. We do this work while meeting exacting safety and quality standards that are set by our regulators and customers and reflect our values, and I am incredibly proud of the progress we have made in our journey together.

Our mission - to protect, connect and explore our world and beyond - is supported by our unwavering commitment to strengthening safety through continuous improvement, learning and innovation. We will never forget the lives lost in the 737 MAX accidents. Their memory drives us every day to uphold our responsibility to all who depend on the safety of our products and services.

Despite facing existential challenges in our company’s recent history, there has not been a single year in the last decade when we did not invest substantial time and capital to enhance our capabilities and deliver innovation. We established research and technology centers in Australia, Brazil, China, Europe, the Middle East, India, South Korea and most recently in Japan. We believe the unique local perspectives our teammates bring to the table allow us to collaborate globally to find technology solutions that drive future growth.

![img-4.jpeg](img-4.jpeg)

Our product portfolio spans an impressive array of commercial and defense products that meet our customers’ needs, including 737-7, 737-10, 777X, KC-46, MQ-25 and the T-7A. That includes classified products that serve the U.S. government and NATO allies - which we cannot disclose - along with services platforms that cater to a global customer base.

Boeing is one of the most sophisticated engineering and technology companies in the world. We specialize in creating the world’s leading aerospace and defense products and solutions. Prioritizing and expanding large-scale capability investments will help us secure our future.

Additionally, distinctive new capabilities will deliver breakthrough benefits to our customers and reshape our industry in our favor, while uncovering new opportunities for growth. As part of our capability-building journey, we grew our workforce by about 23,000 teammates in 2022, primarily in engineering and manufacturing.

Our team works around the clock to create pioneering physical materials, sophisticated digital platforms and advanced production systems. Digital threads increasingly knit together our capabilities from design to production to support. Big data linked to intelligent analytics powers technologies embedded into our products and services while creating more efficient operations.

2

## 2022 Safety Milestones

| Quarter 1 Deployed Safety Management System Update training to all employees | Established dedicated ombudsperson for FAA Organization Designation Authorization representatives | tools to build transparency and objectivity in workplace safety | Published 53rd Statistical Summary of Commercial Jet Airplane Accidents Report | Quarter 4 Conducted workshops with airline heads of training on competency-based training and assessment program | Learn more about our first Chief Aerospace Safety Officer Report and changes to strengthen safety. |
| --- | --- | --- | --- | --- | --- |
| Quarter 2 Published first annual Chief Aerospace Safety Officer Report | Introduced Boeing Virtual Procedures Trainer for pilots to provide experiential training and complement current training | Launched Life-Saving Rules for employees | Inducted a new real-time data and analytics platform called Boeing Safety Intelligence into our Safety Management System | Established an Environment, Health and Safety Technology & Systems Team to help transform work processes using new technologies |  |
| Deployed Employee Reporting-Speak Up training | Introduced risk management processes and | Quarter 3 Conducted Boeing's first joint safety risk management evaluation with a major network carrier | Conducted first All-Employee Environment & Safety Conference in Boeing's history |  |  |

Wrap all this talent and technology together and what do you get? Autonomous flight. Satellite-guided drones. Augmented reality manufacturing tools. Big leaps forward in sustainable aerospace. Faster design and development cycles. Across Boeing, our people are advancing innovation each and every day.

We will never finish transforming our company. We charted the course of aerospace history through the last century, and we will do the same again over the next one hundred years. Our steadfast commitment to safety, quality, integrity and sustainability leads the way as we operate with discipline, patience and transparency. These principles are tightly woven into the fabric of our values and our culture.

I want to express tremendous appreciation and gratitude to our employees for their care and support of our business and one another, and to our customers, suppliers and regulators for continually helping Boeing become better. I am confident we are on the right path, and I stand inspired by all that our Boeing team is doing today, tomorrow and beyond.

David L. Calhoun
President and CEO

![img-5.jpeg](img-5.jpeg)

Boeing shared strategic plans and forward-looking operational and financial goals for the first time since 2018 at an Investor Conference in November. Calling it an important milestone in the

company's turnaround as we drive stability and position for the future, leaders said employees are at the heart of those plans with safety, quality and integrity key to meeting commitments.

3

Executive Council

Pictured front to back, L to R

Row 1

Elizabeth Lund

Senior Vice President; Chair,
Program Management
Operations Council

Brian J. West

Chief Financial Officer;
Executive Vice President,
Finance

Uma Amuluru

Chief Compliance Officer; Vice
President, Global Compliance

Row 2

Susan Doniz

Chief Information Officer;
Senior Vice President,
Information Technology &
Data Analytics

Brett C. Gerry

Chief Legal Officer;
Executive Vice President,
Global Compliance

Theodore Colbert III

Executive Vice President;
President and CEO, Boeing
Defense, Space & Security

Scott Stocker

Vice President; Chair,
Manufacturing
Operations Council

Row 3

Stephanie Pope

Executive Vice President;
President and CEO, Boeing
Global Services

Stanley A. Deal

Executive Vice President;
President and CEO, Boeing
Commercial Airplanes

Carole A. Murray

Vice President; Chair, Quality
Operations Council

![img-6.jpeg](img-6.jpeg)

Row 4

Dr. Brendan J. Nelson, AO

Senior Vice President;
President, Boeing International

Michael D'Ambrose

Chief Human Resources
Officer; Executive Vice
President, Human Resources

Chris Raymond

Chief Sustainability Officer;
Senior Vice President, Global
Enterprise Sustainability

Row 5

B. Marc Allen

Chief Strategy Officer; Senior
Vice President, Strategy and
Corporate Development

Gregory L. Hyslop

Chief Engineer; Executive
Vice President, Engineering,
Test & Technology

Michael Delaney

Chief Aerospace Safety
Officer; Senior Vice President,
Global Aerospace Safety

Brian Besanceney

Chief Communications
Officer; Senior Vice President,
Communications

Row 6

William A. Ampofo II

Vice President; Chair, Supply
Chain Operations Council

Ziad "Z" Ojakli

Executive Vice President,
Government Operations

4

Boeing by the Numbers

| 374 Delivered 374 737 MAX airplanes | Shipped 8+ million parts, chemicals and consumables | Provided nearly $2B of tuition assistance for employees since 1998 as part of Learning Together Program | Boeing and the U.S. Air Force celebrated 50 years of F-15 innovation |
| --- | --- | --- | --- |
| Veterans make up 14.6% of Boeing's U.S. workforce | Purchased 2 million gallons of blended SAF for its U.S. commercial airplane operations | Delivered the 155th P-8 | $197 MILLION $197M donated from Boeing to support global community engagement efforts |
| 100 Delivered 100th contracted 737-800 Boeing Converted Freighter | Boeing contributed $50M in support of STEM education globally | Hired approximately 23,000 Boeing employees | Invested about $4B in R&D, as well as capital expenditures on our infrastructure, factories, labs and manufacturing centers |

Note: Data reflected here is current as of Dec. 31, 2022

5

## A Commitment to Quality

### Passionate About Precision

Boeing resumed 787 Dreamliner deliveries in August, thanks to the perseverance and determination of teammates across the enterprise in addressing nonconformances in some of the airplanes’ joins. While the safety of the airplanes was not compromised, the joins did not meet the airplanes’ exacting design requirements in some instances.

Leaders paused deliveries, despite the business impact, in order to inspect yet-to-deliver airplanes and correct any nonconformances.

“When I’m working on the 787, I’m doing my part in defining perfection with precision and passion.”

- **TJ Heyward**, *mechanic*, 787 program

![img-7.jpeg](img-7.jpeg)

Learn more about our commitment to quality.

![img-8.jpeg](img-8.jpeg)

6

![img-9.jpeg](img-9.jpeg)

Photo credit: Lufthansa Group

### Responding to Customer Needs

More than 80 customers from six continents have placed orders for nearly 1,500 Dreamliners, making the 787 the fastest-selling twin-aisle airplane in history.

“Boeing and Lufthansa’s histories are intertwined, going all the way back to 1955, and we continue to build this great, transcontinental relationship. ... Our companies share pride in our work, our products and in connecting people around the world. ... Thank you for your dedication and professionalism in building these great machines. We can’t wait to take delivery of them!”

- **Carsten Spohr**, *chairman and CEO, Lufthansa Group*

![img-10.jpeg](img-10.jpeg)

Photo credit: Barney

### History in the Making

The Boeing Starliner capsule completed a successful orbital flight test in May, making history for the second time as the only American orbital capsule to touch down on land instead of in the ocean. This was the last major step for Starliner to demonstrate the safety, quality and performance of the spacecraft before taking American astronauts to the International Space Station (ISS) as part of NASA’s Commercial Crew Program.

The flight test included docking and undocking from the ISS, and provided valuable data for NASA.

“I’m so proud of the team’s resilience and steadfast commitment. NASA is ready to welcome Boeing’s Starliner to the list of American commercial spacecraft capable of flying to the International Space Station.”

- **Steve Stich**, *program manager, NASA Commercial Crew Program*

7

## Sustainable Aerospace

### Exploring New Horizons

Wisk, a technology joint venture, is developing its 6th Generation aircraft. It will be the first candidate for certification of an autonomous, passenger-carrying electric vertical takeoff and landing (eVTOL) aircraft in the U.S. This aircraft is being designed with the highest safety standards and will become an accessible and sustainable transportation option for millions of people around the world.

The Gen 6 aircraft has room for four passengers, carry-on luggage and personal items, can fly 90 miles (145 kilometers) and recharges in 15 minutes.

“Wisk is excited to partner with Boeing on the development of this autonomous aircraft. Our combined experience uniquely positions Wisk to succeed in this exciting new mobility market.”

- **Brian Yutko**, CEO, Wisk

![img-11.jpeg](img-11.jpeg)

Photo: Brian Yutko, CEO, Wisk

![img-12.jpeg](img-12.jpeg)

### Autonomy in the Skies

The uncrewed MQ-28 Ghost Bat is the first military combat aircraft to be designed and built in Australia in 50 years. The co-development program between Boeing and the Royal Australian Air Force uses advanced composite materials and digital engineering to enable the rapid design of the air vehicle and production system, resulting in quality and efficiency outcomes for the program.

“It’s an incredible feeling knowing code that you have written is making an important contribution to cutting-edge autonomous programs. My No. 1 advice would be to back yourself. You are capable of getting out there and making amazing things happen.”

- **Lauren Skelly**, senior software engineer

8

![img-0.jpeg](img-0.jpeg)

### A Decade of ecoDemonstrator

The Boeing ecoDemonstrator program celebrated its 10-year anniversary in 2022. It has accelerated innovation by testing more than 225 promising technologies in an operational environment to help decarbonize aviation, improve operational efficiency and enhance safety and the passenger experience. Almost every ecoDemonstrator platform has used sustainable aviation fuel (SAF), including the first ever commercial airplane test flight using 100% SAF in 2018 in a partnership with FedEx Express.

“We believe sustainable fuels are the best near-term solution to reducing carbon emissions. Our team is proud to support the industry’s commitment to net-zero by 2050, and we are taking tangible steps forward to ensure our airplanes are 100% SAF-capable by 2030.”

- **Rae Lutters**, *program manager, ecoDemonstrator*

![img-1.jpeg](img-1.jpeg)

### Visualizing Net-Zero

This year, a global Boeing engineering and sustainability team unveiled an interactive tool that will help the aviation industry reach net-zero emissions by 2050.

“Cascade is helping put Boeing and data front and center of the conversation about decarbonizing aviation. We are allowing our industry to visualize the climate impact of aviation’s pathways to decarbonize and finding consensus on the most effective strategies to reach net-zero by 2050.”

- **Neil Titchener**, *program leader, Cascade*

![img-2.jpeg](img-2.jpeg)

Learn more about Cascade.

9

## Supporting STEM Careers

### Shaping the Next Generation of Leaders

Boeing works with community partners across the U.S. and around the globe to support science, technology, engineering and mathematics (STEM) education. Amideast is a community partner in the Middle East and North Africa and a leading nonprofit organization engaged in international education, training and development. Boeing and Amideast have supported more than 22,000 young students in Egypt alone, since 2007. This year, Boeing expanded the

partnership with a new grant to help Amideast align STEM activities with Egypt's sustainable development strategy.

'Egyptian youth participating in Amideast-Boeing STEM programs today will define and build a sustainable aerospace future and deliver on this commitment tomorrow. Our goal is to empower and educate these young people and be open to their innovative ideas.'

- **Kuljit Ghata-Aura**, *president, Boeing Middle East, Türkiye and Africa*

![img-3.jpeg](img-3.jpeg)

![img-4.jpeg](img-4.jpeg)

### Code for Success

Boeing partnered with the ThinkYoung Coding School in Gdańsk, Poland, to kick off the first coding school primarily designed for Ukrainian teenagers, but open to children of other nationalities as well. The school is one of many global Boeing community engagement initiatives. Since 2018, Boeing has invested more than 5.9 million euros for pan-European STEM projects.

'Our ThinkYoung Coding School aims to alleviate the war's impact on the educational development of young Ukrainians by growing digital and technological skills they can bring into their professional future. We are proud to have partnered with Boeing for seven years and reaffirm our joint commitment to improving the lives of young people around the world.'

- **Andrea Gerosa**, *founder and CEO, ThinkYoung*

10

# BOEING

## Global Services Dallas, Texas, USA

![img-5.jpeg](img-5.jpeg)

![img-6.jpeg](img-6.jpeg)

### Inspiring Interns

Interns bring fresh perspectives to the work they support, making them an important part of Boeing's success. Our interns have a 71% return rate, contributing to Boeing's Top U.S. Internship of 2022 ranking from WayUp100. Boeing also expanded its partnership with the Thurgood Marshall College Fund (TMCF) to provide students at historically Black colleges and universities with scholarships, internships and immersive boot camp experiences at Boeing sites across the U.S., as well as on-campus networking engagements.

'I had a great experience at Boeing, and would love to duplicate that for other people now that I'm part of the Boeing team. There's so much room to grow and excel.'

- **J'Nea Greer** (pictured above, middle), *Spelman College graduate and TMCF scholar, Boeing Human Resources Career Foundation Program*

![img-7.jpeg](img-7.jpeg)

### Neurodiversity at Work

Boeing's partnerships with Specialisterne USA and Copa Health have helped make our hiring process more inclusive for neurodiverse candidates, who face challenges competing for jobs that align to their skills. The goal of the program is to find neurodivergent individuals with unique skill sets, enhance the diversity of the Boeing workforce and ultimately optimize business

operations so we continue to deliver world-class products.

'My main struggle was getting past the interview phase of recruitment because of my difficulty with social skills when I'm nervous. ... I already feel a part of the Boeing family.'

- **Thomas Breitschwerdt**, *software engineer, V-22 Osprey and Specialisterne USA hire*

11

Global Growth

![img-8.jpeg](img-8.jpeg)

![img-9.jpeg](img-9.jpeg)

### Facing Complex Challenges Head-On

Engineers and technologists at the Boeing India Engineering & Technology Center tackle high-quality, advanced aerospace work and offer their expertise to Boeing's defense, space and commercial businesses globally. Equipped with diverse skill sets and capabilities, team members deliver cutting-edge R&D in traditional and emerging areas and collaborate with global partners to enhance fleet capabilities through next-generation tools.

'I'm proud that our products and innovations contribute to global aerospace growth. The work we do enhances safety, quality, sustainability and productivity in everything we offer our customers. I'm excited to be part of the Boeing team in India.'

- **Krishnapriya Palattuthodi**,  
*electrical design and analysis  
engineer, Boeing India*

### A Mega Milestone

Boeing delivered the 100th contracted 737-800 Boeing Converted Freighter (BCF) to AerCap Cargo in September, following conversion at Boeing Shanghai Aviation Services, and continues to deliver the 737-800BCF from conversion lines around the globe.

'We are delighted to be part of this significant milestone with our partners at Boeing. Since launching the 737-800BCF program with Boeing in 2016, the e-commerce market has grown at a phenomenal rate with increased demand from e-commerce retail businesses. Thanks to its versatility and reliability, the 737-800BCF is becoming the workhorse for express air cargo and e-commerce networks.'

- **Rich Greener**, *head of Cargo, AerCap*

### Enhancing Safety Today and for the Next Generation

Approximately 2.1 million new pilots, technicians and cabin crew will be needed over the next 20 years in commercial aviation. To support this need, Boeing has been designing, developing and implementing an immersive training curriculum for pilots and maintainers centered on competency-based training and assessment.

“Competency-based training is a huge shift in how we instructors were trained and how we train our future pilots. Instead of telling pilots what to do step by step, I ask them to show me what they know. That ultimately enhances safety by increasing resilience in response to challenges.”

- **Ann Kieffer**, *flight training instructor and training center examiner*

### German Distribution Center Helps With Growing Demand

Boeing’s new 200,000-square-foot chemical warehouse near Hamburg, Germany, is a regional hub and hallmark of expanded customer service. The facility serves more than 6,000 global customers with chemicals and specialty materials, with a team of approximately 300 Boeing employees working around the clock to help operators maintain their fleets. The center also supports Boeing’s commitment to sustainable aerospace operations.

“With our new site, we are in a very strong position in the market and will deliver the best services to our customers in Europe and beyond.”

- **Timo Balke**, *regional director, Global Services Operations*

![img-10.jpeg](img-10.jpeg)

![img-11.jpeg](img-11.jpeg)

## Celebrating the Past, Embracing the Future

### The End of an Era

More than 50 years of production of the Queen of the Skies came to an end in December, when the last 747 rolled out of Boeing's widebody factory in Everett, Washington.

The 747 has played a key role in Boeing's history of aerospace leadership. The world's first twin-aisle airplane was built in 1967, and more than 1,500 airplanes would be built over the next 54 years.

Hundreds of employees gathered outside the factory to bid farewell to the final 747-8 Freighter slated for delivery to Atlas Air.

![img-12.jpeg](img-12.jpeg)

![img-13.jpeg](img-13.jpeg)

![img-14.jpeg](img-14.jpeg)

Tens of thousands of Boeing employees have worked on the airplane over the years, and many described the rollout as an emotional experience.

'Generations from now, people will look back on the 747 and marvel at what an incredible airplane it was and the significance that it held not only in aviation history, but in the history of Boeing. So many of our lives have been touched significantly by that airplane in particular, and how it's impacted and benefited our families.'

- **Johnny Patchmatla**, *retired mechanic*, 747 program

![img-15.jpeg](img-15.jpeg)

Watch the final 747 rollout video.

![img-16.jpeg](img-16.jpeg)

![img-17.jpeg](img-17.jpeg)

### A New Generation of Freighters

The billion-dollar e-commerce industry continues to grow post-pandemic along with a demand for more fuel-efficient freighters. Boeing's solution to the need? The 777-8 Freighter. With its advanced technology, new GE9X engines and composite wing design, the airplane offers 30% greater fuel efficiency and emission levels and 25% lower operating costs per metric tonne compared to the 747-400F it is replacing.

'Our partnership with Boeing consolidates Cargolux's position as a global leader of air freight services. Replacing our aging fleet of 747-400Fs with the latest technology and fuel-efficient 777-8F model will contribute to our long-term sustainability program while continuing to offer our customers the tailored service they expect.'

- **Richard Forson**, *president and CEO, Cargolux*

15

## Company Highlights

Our global teams continue to focus on safety and quality in every aspect of how we design, build and support our products and services. We resumed 787 deliveries and secured a historic order with United Airlines for 100 Dreamliners and 100 737 MAX airplanes. Our team delivered the 100th contracted 737-800BCF and opened a state-of-the-art distribution facility in Germany. We furthered space exploration with the successful docking of Starliner to the ISS and powered Artemis' first mission to the Moon with the SLS core stage, and we are confident in our future.

### Product and Services Milestones

#### Boeing Commercial Airplanes

- Launched the 777-8 Freighter and won 774 net orders across our airplane family
- Showcased the 737-10 and 777-9 at the Farnborough International Airshow
- Continued progress on 737 MAX return to service*
- Resumed 787 deliveries
- Celebrated the 10-year anniversary of the ecoDemonstrator program

*+190 countries clear operations; +3 million flight hours through end of 2022

#### Boeing Defense, Space & Security

- Unveiled first T-7A Red Hawk
- Starliner successfully docked to International Space Station, completed flight test
- Germany selected CH-47F Chinook and Poland selected AH-64 Apache
- Advanced Composite Fabrication Center opened in Arizona
- Space Launch System core stage powered first NASA Artemis mission to Moon
- Awarded contract for U.S. Ground-based Midcourse Defense

#### Boeing Global Services

- Delivered 100th contracted 737-800 Boeing Converted Freighter
- Opened new state-of-the-art distribution center near Hamburg, Germany
- Boeing San Antonio inducted its first F-15 EPAWWS, with 43 aircraft scheduled for modification over the coming years
- Awarded contract to continue providing full Performance-Based Logistics support to the Italian Air Force's four KC-767A tankers through December 2025

### Financial Overview

| U.S. dollars in millions, except per share data | 2022 | 2021 | 2020 | 2019 | 2018 |
| --- | --- | --- | --- | --- | --- |
| Revenues | 66,608 | 62,286 | 58,158 | 76,559 | 101,127 |
| (Loss)/earnings from operations | (3,547) | (2,902) | (12,767) | (1,975) | 11,987 |
| Diluted (loss)/earnings per share | (8.30) | (7.15) | (20.88) | (1.12) | 17.85 |
| Operating margins | (5.3%) | (4.7%) | (22.0%) | (2.6%) | 11.9% |
| Core operating (loss)/earnings* | (4,690) | (4,075) | (14,150) | (3,390) | 10,660 |
| Core operating margins* | (7.0%) | (6.5%) | (24.3%) | (4.4%) | 10.5% |
| Core (loss)/earnings per share* | (11.06) | (9.44) | (23.25) | (3.47) | 16.01 |
| Operating cash flow | 3,512 | (3,416) | (18,410) | (2,446) | 15,322 |
| Contractual backlog | 381,977 | 356,362 | 339,309 | 436,473 | 462,070 |
| Total backlog† | 404,381 | 377,499 | 363,404 | 463,403 | 490,481 |

* Non-GAAP measures. See Page 135.

† Total backlog includes contractual and unobligated backlog. See Page 27 of Form 10-K.

### Comparison of Cumulative* Five-year Total Shareholder Returns

| Company/Index | Base Period 2017 | Years Ending December |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  |  | 2018 | 2019 | 2020 | 2021 | 2022 |
| Boeing | 100 | 111.53 | 115.24 | 76.18 | 71.65 | 67.79 |
| S&P 500 Aerospace & Defense | 100 | 91.93 | 119.81 | 100.56 | 113.86 | 133.64 |
| S&P 500 Index | 100 | 95.62 | 125.72 | 148.85 | 191.58 | 156.88 |

*Cumulative return assumes $100 invested; includes reinvestment of dividends.

![img-18.jpeg](img-18.jpeg)

16

![img-19.jpeg](img-19.jpeg)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

# FORM 10-K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

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 1-442

# THE BOEING COMPANY

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of
incorporation or organization)

91-0425694

(I.R.S. Employer Identification No.)

929 Long Bridge Drive Arlington, VA

(Address of principal executive offices)

22202

(Zip Code)

Registrant's telephone number, including area code (703)-414-6338

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $5.00 Par Value

(Title of each class)

BA

(Trading Symbol)

New York Stock Exchange

(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

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 such 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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☑

Non-accelerated filer ☐

Emerging growth company ☐

Accelerated filer ☐

Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of June 30, 2022, there were 593,451,225 common shares outstanding held by nonaffiliates of the registrant, and the aggregate market value of the common shares (based upon the closing price of these shares on the New York Stock Exchange) was approximately $81.1 billion.

The number of shares of the registrant's common stock outstanding as of January 20, 2023 was 598,239,585.

# DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference to the registrant's definitive proxy statement, to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year ended December 31, 2022.

# **THE BOEING COMPANY**
**Index to the Form 10-K**
**For the Fiscal Year Ended December 31, 2022**

|  | Page |
| --- | --- |
| PART I |  |
| Item 1. Business | 1 |
| Item 1A. Risk Factors | 6 |
| Item 1B. Unresolved Staff Comments | 17 |
| Item 2. Properties | 18 |
| Item 3. Legal Proceedings | 18 |
| Item 4. Mine Safety Disclosures | 18 |
| PART II |  |
| Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 19 |
| Item 6. [Reserved] | 19 |
| Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 51 |
| Item 8. Financial Statements and Supplementary Data | 52 |
| Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 122 |
| Item 9A. Controls and Procedures | 122 |
| Item 9B. Other Information | 122 |
| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 122 |
| PART III |  |
| Item 10. Directors, Executive Officers and Corporate Governance | 123 |
| Item 11. Executive Compensation | 126 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 127 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 127 |
| Item 14. Principal Accountant Fees and Services | 127 |
| PART IV |  |
| Item 15. Exhibits, Financial Statement Schedules | 128 |
| Item 16. Form 10-K Summary | 131 |
| Signatures | 132 |

PART I

Item 1. Business

The Boeing Company, together with its subsidiaries (herein referred to as “Boeing,” the “Company,” “we,” “us,” “our”), is one of the world’s major aerospace firms.

We are organized based on the products and services we offer. We operate in four reportable segments:

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

Commercial Airplanes Segment

This segment develops, produces and markets commercial jet aircraft principally to the commercial airline industry worldwide. We are a leading producer of commercial aircraft and offer a family of commercial jetliners designed to meet a broad spectrum of global passenger and cargo requirements of airlines. This family of commercial jet aircraft in production includes the 737 narrow-body model and the 767, 777 and 787 wide-body models. We ended production of the 747 wide-body model in 2022. Development continues on the 777X program and the 737-7 and 737-10 derivatives.

Defense, Space & Security Segment

This segment engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility, including fighter and trainer aircraft; vertical lift, including rotorcraft and tilt-rotor aircraft; and commercial derivative aircraft, including anti-submarine and tanker aircraft. In addition, this segment engages in the research, development, production and modification of the following products and related services: strategic defense and intelligence systems, including strategic missile and defense systems, command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR), cyber and information solutions, and intelligence systems, satellite systems, including government and commercial satellites and space exploration.

Global Services Segment

This segment provides services to our commercial and defense customers worldwide. BGS sustains aerospace platforms and systems with a full spectrum of products and services, including supply chain and logistics management, engineering, maintenance and modifications, upgrades and conversions, spare parts, pilot and maintenance training systems and services, technical and maintenance documents, and data analytics and digital services.

Boeing Capital Segment

BCC seeks to ensure that Boeing customers have the financing they need to buy and take delivery of their Boeing product, while managing overall financing exposure. BCC’s portfolio consists of equipment under operating leases, sales-type/finance leases, notes and other receivables, assets held for sale or re-lease and investments.

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## Intellectual Property

We own numerous patents and have licenses for the use of patents owned by others, which relate to our products and their manufacture. In addition to owning a large portfolio of intellectual property, we also license intellectual property to and from third parties. For example, the U.S. government has licenses in our patents that are developed in performance of government contracts, and it may use or authorize others to use the inventions covered by such patents for government purposes. Unpatented research, development and engineering skills, as well as certain trademarks, trade secrets and other intellectual property rights, also make an important contribution to our business. While our intellectual property rights in the aggregate are important to the operation of each of our businesses, we do not believe that our business would be materially affected by the expiration of any particular intellectual property right or termination of any particular intellectual property patent license agreement.

## Human Capital

As of December 31, 2022 and 2021, Boeing's total workforce was approximately 156,000 and 142,000 with 13% and 12% located outside of the U.S.

As of December 31, 2022, our workforce included approximately 50,000 union members. Our principal collective bargaining agreements and their current status are summarized in the following table:

| Union | Percent of our Employees Represented | Status of the Agreements with Major Union |
| --- | --- | --- |
| The International Association of Machinists and Aerospace Workers (IAM) | 20% | We have two major agreements; one expiring in September 2024 and one in July 2025. |
| The Society of Professional Engineering Employees in Aerospace (SPEEA) | 10% | We have two major agreements expiring in October 2026. |
| The United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) | 1% | We have one major agreement expiring in April 2027. |

Guided by our values, we are committed to creating a company where everyone is included and respected, and where we support each other in reaching our full potential. We are committed to diverse representation across all levels of our workforce to reflect the vibrant and thriving diversity of the communities in which we live and work. In June of 2022, we released our second Global Equity, Diversity and Inclusion report with our workforce composition. As of December 2021, our U.S. workforce was comprised of approximately 23% women, 33% U.S. racial and ethnic minorities and 15% U.S. veterans. We also support Business Resource Groups open to all employees with more than 15,000 participants across 170 chapters globally that focus on gender, race & ethnicity, generations, gender identity, sexual orientation, disability or veteran status. These groups help foster inclusion among all teammates, build awareness, recruit and retain a diverse workforce and support the company in successfully operating in a global, multicultural business environment. We are committed to releasing an annual Global Equity, Diversity and Inclusion report in 2023 which will be updated with the latest year's information. Our 2022 report can be found on our website.

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To attract and retain the best-qualified talent, we offer competitive benefits, including market-competitive compensation, healthcare, paid time off, parental leave, retirement benefits, tuition assistance, employee skills development, leadership development and rotation programs. In 2022, our voluntary resignation rate was approximately 4%. Additionally, we hired approximately 23,000 new employees in 2022 for critical skills and had an offer acceptance rate of 78%.

Employees are encouraged to provide feedback about their experience through ongoing employee engagement activities. Boeing actively listens to its employees via surveys ranging from pre-hire to exiting the company. These voluntary surveys provide aggregate trend reports for the company to address in real time and ensure Boeing maintains an employee-focused experience and culture. We also invest in rewarding performance and have established a multi-level recognition program for the purpose of acknowledging the achievements of excellent individual or team performance.

We are committed to supporting our employees' continuous development of professional, technical and leadership skills through access to digital learning resources and through partnerships with leading professional/technical societies and organizations around the world. For 2022, Boeing employees completed approximately 5.8 million hours of learning. We offer the ability for our people to pursue degree programs, professional certificates and individual courses in strategic fields of study from more than 300 accredited colleges and universities, online and across the globe through our tuition assistance program. Over 9,000 Boeing employees leverage these programs every year.

Safety, quality, integrity and sustainability are at the core of how Boeing operates. We aspire to achieve zero workplace injuries and provide a safe, open and accountable work environment for our employees. Employees are also required on an annual basis to sign the Boeing Code of Conduct to reaffirm their commitment to do their work in a compliant and ethical manner. We provide several channels for all employees to speak up, ask for guidance and report concerns related to ethics or safety violations. We address employee concerns and take appropriate actions that uphold our Boeing values.

## Competition

The commercial jet aircraft market and the airline industry remain extremely competitive. We face aggressive international competitors who are intent on increasing their market share, such as Airbus and entrants from China. We are focused on improving our products and processes and continuing cost reduction efforts. We intend to continue to compete with other aircraft manufacturers by providing customers with airplanes and services that deliver superior design, safety, efficiency and value to customers around the world.

BDS faces strong competition primarily from Lockheed Martin Corporation, Northrop Grumman Corporation, Raytheon Technologies Corporation, General Dynamics Corporation and SpaceX. Non-U.S. companies such as BAE Systems and Airbus Group continue to build a strategic presence in the U.S. market by strengthening their North American operations and partnering with U.S. defense companies. In addition, certain competitors have occasionally formed teams with other competitors to address specific customer requirements. BDS expects the trend of strong competition to continue into 2023.

The commercial and defense services markets are extremely challenging and are made up of many of the same strong U.S. and non-U.S. competitors facing BCA and BDS along with other competitors in those markets. BGS leverages our extensive services network offering products and services which span the life cycle of our defense and commercial aircraft programs: training, fleet services and logistics, maintenance and engineering, modifications and upgrades, as well as the daily cycle of gate-to-gate operations. BGS expects the market to remain highly competitive in 2023, and intends to grow market share by leveraging a high level of customer satisfaction and productivity.

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# Regulatory Matters

Our businesses are heavily regulated in most of our markets. We work with numerous U.S. government agencies and entities, including but not limited to, all of the branches of the U.S. military, the National Aeronautics and Space Administration (NASA), the Federal Aviation Administration (FAA) and the Department of Homeland Security. Similar government authorities exist in our non-U.S. markets.

*Government Contracts.* The U.S. government, and other governments, may terminate any of our government contracts at their convenience, as well as for default based on our failure to meet specified performance requirements. If any of our U.S. government contracts were to be terminated for convenience, we generally would be entitled to receive payment for work completed and allowable termination or cancellation costs. If any of our government contracts were to be terminated for default, generally the U.S. government would pay only for the work that has been accepted and could require us to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted from the original contract. The U.S. government can also hold us liable for damages resulting from the default.

*Commercial Aircraft.* In the U.S., our commercial aircraft products are required to comply with FAA regulations governing production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety. New aircraft models and new derivative aircraft are required to obtain FAA certification prior to entry into service. Outside the U.S., similar requirements exist for airworthiness, installation and operational approvals. These requirements are generally administered by the national aviation authorities of each country and, in the case of Europe, coordinated by the European Union Aviation Safety Agency.

*Environmental.* We are subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could also be affected by laws and regulations relating to climate change, including laws limiting or otherwise related to greenhouse gas emissions. These laws and regulations could lead to increased environmental compliance expenditures, increased energy and raw materials costs and new and/or additional investment in designs and technologies. We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. Investigation, remediation and operation and maintenance costs associated with environmental compliance and management of sites are a normal, recurring part of our operations. These costs often are allowable costs under our contracts with the U.S. government. It is reasonably possible that costs incurred to ensure continued environmental compliance could have a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of investigations.

For additional information relating to environmental contingencies, see Note 13 to our Consolidated Financial Statements.

*Non-U.S. Sales.* Our non-U.S. sales are subject to both U.S. and non-U.S. governmental regulations and procurement policies and practices, including regulations relating to import-export control, tariffs, investment, exchange controls, anti-corruption and repatriation of earnings. Non-U.S. sales are also subject to varying currency, political and economic risks.

# Raw Materials, Parts and Subassemblies

We are highly dependent on the availability of essential materials, parts and subassemblies from our suppliers and subcontractors. The most important raw materials required for our aerospace products

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are aluminum (sheet, plate, forgings and extrusions), titanium (sheet, plate, forgings and extrusions) and composites (including carbon and boron). Although alternative sources generally exist for these raw materials, qualification of the sources could take a year or more. During 2022, as a result of the Russia Ukraine war, we suspended purchasing titanium from Russia. This has not disrupted our operations as we have been able to use inventory on hand and identify alternative sources. Many major components and product equipment items are procured or subcontracted on a sole-source basis. We continue to work with a small number of sole-source suppliers to ensure continuity of supply for certain items.

## Suppliers

We are dependent upon the ability of a large number of U.S. and non-U.S. suppliers and subcontractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs. While we maintain an extensive qualification and performance surveillance system to control risk associated with such reliance on third parties, failure of suppliers or subcontractors to meet commitments could adversely affect production schedules and program/contract profitability, thereby jeopardizing our ability to fulfill commitments to our customers. We are also dependent on the availability of energy sources, such as electricity, at affordable prices.

## Seasonality

No material portion of our business is considered to be seasonal.

## Executive Officers of the Registrant

See “Item 10. Directors, Executive Officers and Corporate Governance” in Part III.

## Other Information

Boeing was originally incorporated in the State of Washington in 1916 and reincorporated in Delaware in 1934. Our principal executive offices are located at 929 Long Bridge Drive, Arlington, Virginia 22202, and our telephone number is (703) 465-3500.

General information about us can be found at www.boeing.com. The information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the Securities and Exchange Commission (SEC). Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding SEC registrants, including Boeing.

## Forward-Looking Statements

This report, as well as our annual report to shareholders, quarterly reports and other filings we make with the SEC, press and earnings releases and other written and oral communications, contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact.

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Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors, including those set forth in the “Risk Factors” section below and other important factors disclosed in this report and from time to time in our other filings with the SEC, could cause actual results to differ materially and adversely from these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law.

### Item 1A. Risk Factors

An investment in our common stock or debt securities involves risks and uncertainties and our actual results and future trends may differ materially from our past or projected future performance. We urge investors to consider carefully the risk factors described below in evaluating the information contained in this report.

#### Risks Related to Our Business and Operations

##### ***We depend heavily on commercial airlines, subjecting us to unique risks.***

*Market conditions have a significant impact on demand for our commercial aircraft and related services.* The commercial aircraft market is predominantly driven by long-term trends in airline passenger and cargo traffic. The principal factors underlying long-term traffic growth are sustained economic growth and political stability both in developed and emerging markets. Demand for our commercial aircraft is further influenced by airline profitability, availability of aircraft financing, world trade policies, government-to-government relations, technological advances, price and other competitive factors, fuel prices, terrorism, pandemics, epidemics and environmental regulations. Historically, the airline industry has been cyclical and very competitive and has experienced significant profit swings and constant challenges to be more cost competitive. Significant deterioration in the global economic environment, the airline industry generally or the financial stability of one or more of our major customers could result in fewer new orders for aircraft or services, or could cause customers to seek to postpone or cancel contractual orders and/or payments to us, which could result in lower revenues, profitability and cash flows and a reduction in our contractual backlog. In addition, because our commercial aircraft backlog consists of aircraft scheduled for delivery over a period of several years, any of these macroeconomic, industry or customer impacts could unexpectedly affect deliveries over a long period.

*We enter into firm fixed-price aircraft sales contracts with indexed price escalation clauses, which could subject us to losses if we have cost overruns or if increases in our costs exceed the applicable escalation rate.* Commercial aircraft sales contracts are often entered into years before the aircraft are delivered. In order to help account for economic fluctuations between the contract date and delivery date, aircraft pricing generally consists of a fixed amount as modified by price escalation formulas derived from labor, commodity and other price indices. Our revenue estimates are based on current expectations with respect to these escalation formulas, but the actual escalation amounts are outside of our control. Escalation factors can fluctuate significantly from period to period. Changes in escalation amounts can significantly impact revenues and operating margins in our Commercial Airplanes business.

*We derive a significant portion of our revenues from a limited number of commercial airlines.* We can make no assurance that any customer will exercise purchase options, fulfill existing purchase commitments or purchase additional products or services from us. In addition, fleet decisions, airline consolidations or financial challenges involving any of our major commercial airline customers could significantly reduce our revenues and limit our opportunity to generate profits from those customers.

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Airlines also are experiencing increased fuel and other costs, and the global economy is experiencing high inflation.

**Our Commercial Airplanes business depends on our ability to maintain a healthy production system, ensure every airplane in our production system conforms to our exacting specifications, achieve planned production rate targets, successfully develop and certify new aircraft or new derivative aircraft, and meet or exceed stringent performance and reliability standards.**

The commercial aircraft business is extremely complex, involving extensive coordination and integration with U.S and non-U.S. suppliers, highly-skilled labor performed by thousands of employees of ours and other partners, and stringent and evolving regulatory requirements and performance and reliability standards. The FAA has been working to implement safety reforms such as the 2018 FAA Reauthorization Act and the 2020 Aircraft Certification, Safety and Accountability Act (ACSAA). One of these, section 116 of the ACSAA prohibited the FAA from issuing a type certificate to aircraft after December 27, 2022 unless the aircraft's flight crew alerting system met certain specifications. The Consolidated Appropriations Act, 2023 amended Section 116 of the ACSAA, such that applications for original or amended type certifications that were submitted to the FAA prior to December 27, 2020, including those of the 737-7 and 737-10, are no longer subject to the crew alerting specifications of Section 116. Additionally, beginning one year after the FAA issues the type certificate for the 737-10, any new 737 MAX aircraft must include certain safety enhancements to be issued an original airworthiness certification by the FAA. These enhancements are included in Boeing's application for the certification for the 737-10, and the sufficiency of these enhancements will be determined by the FAA. Beginning three years after the issuance of a type certificate for the 737-10, all previously delivered 737 MAX aircraft must be retrofitted with these safety enhancements. As the holder of the type certificate, Boeing is required to bear any costs of these safety enhancement retrofits. We have provisioned for the estimated costs associated with the safety enhancements and do not expect those costs to be material. If we experience delays in achieving certification and/or incorporating safety enhancements, future revenues, cash flows and results of operations could be adversely impacted. Comparable agencies in other countries may adopt similar changes. To the extent the FAA or similar regulatory agencies outside the U.S. implement more stringent regulations, we may incur additional compliance costs. In addition, the introduction of new aircraft programs and/or derivatives, such as the 777X, 737-7 and 737-10, involves increased risks associated with meeting development, testing, certification and production schedules.

In addition, we have experienced production quality issues, including in our supply chain, which have contributed to lower 787 deliveries, including a suspension of 787 deliveries from May 2021 to August 2022. We continue to conduct inspections and rework on built and stored 787 aircraft. A number of our customers have contractual remedies, including compensation for late deliveries or rights to reject individual airplane deliveries based on delivery delays. Delays on the 737, 777X and 787 programs have resulted in, and may continue to result in, customers having the right to terminate orders, be compensated for late deliveries and/or substitute orders for other Boeing aircraft.

*We must minimize disruption caused by production changes, achieve operational stability and implement productivity improvements in order to meet customer demand and maintain our profitability.* We have previously announced plans to adjust production rates on several of our commercial aircraft programs. The 787 program is currently producing at low rates and we expect to gradually increase to 5 per month in 2023. Production of the 777X is currently paused and is expected to resume in 2023. The 737 program has experienced operational and supply chain challenges stabilizing production at 31 per month. We plan to gradually increase 737 production rates based on market demand and supply chain capacity. In addition, we continue to seek opportunities to reduce the costs of building our aircraft, including working with our suppliers to reduce supplier costs, identifying and implementing productivity improvements and optimizing how we manage inventory. If production rate changes at any of our

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commercial aircraft assembly facilities are delayed or create significant disruption to our production system, or if our suppliers cannot timely deliver components to us at the cost and rates necessary to achieve our targets, we may be unable to meet delivery schedules and/or the financial performance of one or more of our programs may suffer.

*Operational challenges impacting the production system for one or more of our commercial aircraft programs could result in additional production delays and/or failure to meet customer demand for new aircraft, either of which would negatively impact our revenues and operating margins.* Our commercial aircraft production system is extremely complex. Operational issues, including delays or defects in supplier components, failure to meet internal performance plans, or delays or failures to achieve required regulatory approval, could result in additional out-of-sequence work and increased production costs, as well as delayed deliveries to customers, impacts to aircraft performance and/or increased warranty or fleet support costs. We and our suppliers are experiencing supply chain disruptions as a result of the lingering impacts of COVID-19, global supply chain constraints, and labor instability. We and our suppliers are also experiencing inflationary pressures. We continue to monitor the health and stability of the supply chain as we ramp up production. These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.

*If our commercial aircraft fail to satisfy performance and reliability requirements and/or potentially required sustainability standards, we could face additional costs and/or lower revenues.* Developing and manufacturing commercial aircraft that meet or exceed our performance and reliability standards and/or potentially required sustainability standards, as well as those of customers and regulatory agencies, can be costly and technologically challenging. These challenges are particularly significant with newer aircraft programs. Any failure of any Boeing aircraft to satisfy performance or reliability requirements could result in disruption to our operations, higher costs and/or lower revenues.

# ***Changes in levels of U.S. government defense spending or acquisition priorities could negatively impact our financial position and results of operations.***

We derive a substantial portion of our revenue from the U.S. government, primarily from defense related programs with the United States Department of Defense (U.S. DoD). Levels of U.S. defense spending are very difficult to predict and may be impacted by numerous factors such as the evolving nature of the national security threat environment, U.S. national security strategy, U.S. foreign policy, the domestic political environment, macroeconomic conditions and the ability of the U.S. government to enact relevant legislation such as authorization and appropriations bills.

The timeliness of FY24 and future appropriations for government departments and agencies remains a recurrent risk. A lapse in appropriations for government departments or agencies would result in a full or partial government shutdown, which could impact the Company's operations. Alternatively, Congress may fund government departments and agencies with one or more Continuing Resolutions; however, this would restrict the execution of certain program activities and delay new programs or competitions. In addition, long-term uncertainty remains with respect to overall levels of defense spending in FY24 and beyond. U.S. government discretionary spending, including defense spending, is likely to continue to be subject to pressure.

There continues to be uncertainty with respect to future acquisition priorities and program-level appropriations for the U.S. DoD and other government agencies (including NASA), including changes to national security and defense priorities, and tension between modernization investments, sustainment investments, and investments in new technologies or emergent capabilities. Future investment priority changes or budget cuts, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations, and/or delays of existing contracts or programs, or future program opportunities. Any of these impacts could have a material effect on the results of the Company's financial position, results of operations and/or cash flows.

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In addition, as a result of the significant ongoing uncertainty with respect to both U.S. defense spending and the evolving nature of the national security threat environment, we also expect the U.S. DoD to continue to emphasize affordability, innovation, cybersecurity and delivery of technical data and software in its procurement processes, including the implementation of cybersecurity compliance requirements on the Defense Industrial Base, for which the supply chain may not be fully prepared. We and our suppliers will need to continue to adjust successfully to these changing acquisition priorities and policies or our revenues and market share could be impacted.

*Our ability to deliver products and services that satisfy customer requirements is heavily dependent on the performance and financial stability of our subcontractors and suppliers, as well as on the availability of highly skilled labor, raw materials and other components.*

We rely on other companies, including U.S. and non-U.S. subcontractors and suppliers, to provide and produce raw materials, integrated components and sub-assemblies, and production commodities and to perform some of the services that we provide to our customers. Many of our suppliers are experiencing inflationary pressures, as well as disruptions due to the lingering impacts of COVID-19, global supply chain constraints, and labor instability. If one or more of our suppliers or subcontractors continue to experience financial difficulties, delivery delays or other performance problems, we may be unable to meet commitments to our customers and our financial position, results of operations and cash flows may continue to be adversely impacted. In addition, if one or more of the raw materials on which we depend (such as aluminum, titanium or composites) becomes unavailable to us or our suppliers, or is available only at very high prices, we may be unable to deliver one or more of our products in a timely fashion or at budgeted costs. For example, we suspended purchasing titanium from Russia during 2022 as a result of the Russia Ukraine war. We believe we have sufficient material and parts to avoid production disruptions in the near-term, but future impacts to our production from disruptions in our supply chain are possible. In some instances, we depend upon a single source of supply. Any service disruption from one of these suppliers, either due to circumstances beyond the supplier's control, such as geopolitical developments, or as a result of performance problems or financial difficulties, could have a material adverse effect on our ability to meet commitments to our customers or increase our operating costs.

*Competition within our markets and with respect to the products we sell may reduce our future contracts and sales.*

The markets in which we operate are highly competitive and one or more of our competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. In our BCA business, we face aggressive international competition intent on increasing market share. In our BDS business, we anticipate that the effects of defense industry consolidation, shifting acquisition and budget priorities, and continued cost pressure at our U.S. DoD and non-U.S. customers will intensify competition for many of our BDS products. Our BGS segment faces competition from many of the same strong U.S. and non-U.S. competitors facing BCA and BDS. Furthermore, we are facing increased international competition and cross-border consolidation of competition, and U.S. procurement and compliance requirements that could limit our ability to be cost-competitive in the international market. There can be no assurance that we will be able to compete successfully against our current or future competitors or that the competitive pressures we face will not result in reduced revenues and market share.

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# ***We derive a significant portion of our revenues from non-U.S. sales and are subject to the risks of doing business in other countries.***

In 2022, non-U.S. customers, which includes foreign military sales (FMS), accounted for approximately 41% of our revenues. We expect that non-U.S. sales will continue to account for a significant portion of our revenues for the foreseeable future. As a result, we are subject to risks of doing business internationally, including:

- • changes in regulatory requirements or other executive branch actions, such as Executive Orders;
- • changes in the global trade environment, including disputes with authorities in non-U.S. jurisdictions, including international trade authorities, that could impact sales and/or delivery of products and services outside the U.S. and/or impose costs on our customers in the form of tariffs, duties or penalties attributable to the importation of Boeing products and services;
- • changes to U.S. and non-U.S. government policies, including sourcing restrictions, requirements to expend a portion of program funds locally and governmental industrial cooperation or participation requirements;
- • fluctuations in international currency exchange rates;
- • volatility in international political and economic environments and changes in non-U.S. national priorities and budgets, which can lead to delays or fluctuations in orders;
- • the complexity and necessity of using non-U.S. representatives and consultants;
- • the uncertainty of the ability of non-U.S. customers to finance purchases, including the availability of financing from the Export-Import Bank of the United States;
- • uncertainties and restrictions concerning the availability of funding credit or guarantees;
- • imposition of domestic and international taxes, export controls, tariffs, embargoes, sanctions (such as those imposed on Russia) and other trade restrictions;
- • the difficulty of management and operation of an enterprise spread over many countries;
- • compliance with a variety of non-U.S. laws, as well as U.S. laws affecting the activities of U.S. companies abroad; and
- • unforeseen developments and conditions, including terrorism, war, epidemics and international tensions and conflicts.

While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future. For example, since 2018, the U.S. and China have imposed tariffs on each other's imports. Certain aircraft parts and components that Boeing procures are subject to these tariffs. We are mitigating import costs through Duty Drawback Customs procedures. Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge. China is a significant market for commercial aircraft. Boeing has long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog. For the 737 MAX, there is uncertainty regarding timing of resumption of deliveries in China which is still subject to final regulatory approvals. If we are unable to obtain additional orders from China in the future, our market share could be adversely affected. Furthermore, following Russia's invasion of Ukraine, we suspended our operations in Russia due to sanctions and export controls, and the war has negatively impacted, and could continue to adversely impact, our business and financial results. Impacts from future potential deterioration in trade relations between the U.S. and one or more other countries, could have a material adverse impact on our financial position, results of operations and/or cash flows.

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# ***We use estimates and make assumptions in accounting for contracts and programs. Changes in our estimates and/or assumptions could adversely affect our future financial results.***

Contract and program accounting require judgment relative to assessing risks, estimating revenues and costs and making assumptions for schedule and technical issues. Due to the size and nature of many of our contracts and programs, the estimation of total revenues and cost at completion is complicated and subject to many variables. Assumptions have to be made regarding the length of time to complete the contract or program because costs also include expected increases in wages and employee benefits, material prices and allocated fixed costs. Incentives or penalties related to performance on contracts are considered in estimating sales and profit rates and are recorded when there is sufficient information for us to assess anticipated performance. Customer and supplier claims and assertions are also assessed and considered in estimating revenues, costs and profit rates. Estimates of future award fees are also included in revenues and profit rates.

With respect to each of our commercial aircraft programs, inventoriable production costs (including overhead), program tooling and other non-recurring costs and routine warranty costs are accumulated and charged as cost of sales by program instead of by individual units or contracts. A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for delivery under existing and anticipated contracts limited by the ability to make reasonably dependable estimates. To establish the relationship of sales to cost of sales, program accounting requires estimates of (a) the number of units to be produced and sold in a program, (b) the period over which the units can reasonably be expected to be produced and (c) the units' expected sales prices, production costs, program tooling and other non-recurring costs, and routine warranty costs for the total program. Several factors determine accounting quantity, including firm orders, letters of intent from prospective customers and market studies. Changes to customer or model mix, production costs and rates, learning curve, changes to price escalation indices, costs of derivative aircraft, supplier performance, customer and supplier negotiations/settlements, supplier claims and/or certification issues can impact these estimates. In addition, on development programs such as the 777X, 737-7 and 737-10 we are subject to risks with respect to the timing and conditions of aircraft certification, including potential gaps between when aircraft are certified in various jurisdictions, changes in certification processes and our estimates with respect to timing of future certifications, which could have an impact on overall program status. Any such change in estimates relating to program accounting may adversely affect future financial performance.

Because of the significance of the judgments and estimation processes described above, materially different revenues and profit amounts could be recorded if we used different assumptions, revised our estimates, or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect future period financial performance. For additional information on our accounting policies for recognizing sales and profits, see our discussion under 'Management's Discussion and Analysis - Critical Accounting Policies & Estimates - Accounting for Long-term Contracts/Program Accounting' on pages 48 - 49 and Note 1 to our Consolidated Financial Statements on pages 59 - 69 of this Form 10-K.

# ***We may not realize the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures.***

As part of our business strategy, we may merge with or acquire businesses and/or form joint ventures and strategic alliances. Whether we realize the anticipated benefits from these acquisitions and related activities depends, in part, upon our ability to integrate the operations of the acquired business, the performance of the underlying product and service portfolio, and the performance of the management team and other personnel of the acquired operations. Accordingly, our financial results could be adversely affected by unanticipated performance issues, legacy liabilities, transaction-related charges, amortization of expenses related to intangibles, charges for impairment of long-term assets, credit

11

guarantees, partner performance and indemnifications. Consolidations of joint ventures could also impact our reported results of operations or financial position. While we believe that we have established appropriate and adequate procedures and processes to mitigate these risks, there is no assurance that these transactions will be successful. We also may make strategic divestitures from time to time. These transactions may result in continued financial involvement in the divested businesses, such as through guarantees or other financial arrangements, following the transaction. Nonperformance by those divested businesses could affect our future financial results through additional payment obligations, higher costs or asset write-downs.

### **Risks Related to Our Contracts**

#### ***We conduct a significant portion of our business pursuant to U.S. government contracts, which are subject to unique risks.***

In 2022, 40% of our revenues were earned pursuant to U.S. government contracts, which include FMS through the U.S. government. Business conducted pursuant to such contracts is subject to extensive procurement regulations and other unique risks.

*Our sales to the U.S. government are subject to extensive procurement regulations, and changes to those regulations could increase our costs.* New procurement regulations or climate or cyber-related contractual disclosures, or changes to existing requirements, could increase our compliance costs or otherwise have a material impact on the operating margins of our BDS and BGS businesses. These requirements may also result in withheld payments and/or reduced future business if we fail to comply. For example, proposals to raise domestic content thresholds for our U.S. government contracts could have negative impacts on our business. Compliance costs attributable to current and potential future procurement regulations such as these could negatively impact our financial position, results of operations and/or cash flows.

*The U.S. government may modify, curtail or terminate one or more of our contracts.* The U.S. government contracting party may modify, curtail or terminate its contracts and subcontracts with us, without prior notice and either at its convenience or for default based on performance. In addition, funding pursuant to our U.S. government contracts may be reduced or withheld as part of the U.S. Congressional appropriations process due to fiscal constraints, changes in U.S. national security strategy and/or priorities or other reasons. Further uncertainty with respect to ongoing programs could also result in the event that the U.S. government finances its operations through temporary funding measures such as “continuing resolutions” rather than full-year appropriations. Any loss or anticipated loss or reduction of expected funding and/or modification, curtailment or termination of one or more large programs could have a material adverse effect on our financial position, results of operations and/or cash flows.

*We are subject to U.S. government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under U.S. government contracts.* U.S. government agencies, including the Defense Contract Audit Agency and the Defense Contract Management Agency, routinely audit government contractors. These agencies review our performance under contracts, cost structure and compliance with applicable laws, regulations and standards, as well as the adequacy of and our compliance with our internal control systems and policies. Any costs found to be misclassified or inaccurately allocated to a specific contract will be deemed non-reimbursable, and to the extent already reimbursed, must be refunded. Any inadequacies in our systems and policies could result in withholds on billed receivables, penalties and reduced future business. Furthermore, if any audit, inquiry or investigation uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with the U.S. government. We also

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could suffer reputational harm if allegations of impropriety were made against us, even if such allegations are later determined to be false.

# ***We enter into fixed-price contracts which could subject us to losses if we have cost overruns.***

Our BDS and BGS defense businesses generated approximately 60% and 69% of their 2022 revenues from fixed-price contracts. While fixed-price contracts enable us to benefit from performance improvements, cost reductions and efficiencies, they also subject us to the risk of reduced margins or incurring losses if we are unable to achieve estimated costs and revenues. If our estimated costs exceed our estimated price, we recognize reach-forward losses which can significantly affect our reported results. For example, during the year ended December 31, 2022, BDS recorded additional losses on several fixed price development programs. We continue to experience near-term production disruptions and inefficiencies due to supplier disruption, labor instability and factory performance. These factors have contributed to significant earnings charges on a number of fixed-price development programs which are expected to adversely affect cash flows in future periods, and may result in future earnings charges and adverse cash flow effects. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. The long term nature of many of our contracts makes the process of estimating costs and revenues on fixed-price contracts inherently risky. Fixed-price contracts often contain price incentives and penalties tied to performance, which can be difficult to estimate and have significant impacts on margins. In addition, some of our contracts have specific provisions relating to cost, schedule and performance.

Estimating costs to complete fixed-price development contracts is generally subject to more uncertainty than fixed-price production contracts. Many of these development programs have highly complex designs. In addition, technical or quality issues that arise during development could lead to schedule delays and higher costs to complete, which could result in a material charge or otherwise adversely affect our financial condition. Examples of significant BDS fixed-price development contracts include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B Presidential Aircraft, and commercial and military satellites.

# ***We enter into cost-type contracts, which also carry risks.***

Our BDS and BGS defense businesses generated approximately 40% and 31% of their 2022 revenues from cost-type contracting arrangements. Some of these are development programs that have complex design and technical challenges. These cost-type programs typically have award or incentive fees that are subject to uncertainty and may be earned over extended periods. In these cases the associated financial risks are primarily in reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Programs whose contracts are primarily cost-type include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.

# ***We enter into contracts that include in-orbit incentive payments that subject us to risks.***

Contracts in the commercial satellite industry and certain government satellite contracts include in-orbit incentive payments. These in-orbit payments may be paid over time after final satellite acceptance or paid in full prior to final satellite acceptance. In both cases, the in-orbit incentive payment is at risk if the satellite does not perform to specifications for up to 15 years after acceptance. The net present value of in-orbit incentive fees we ultimately expect to realize is recognized as revenue in the construction period. If the satellite fails to meet contractual performance criteria, customers will not be obligated to continue making in-orbit payments and/or we may be required to provide refunds to the customer and incur significant charges.

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## Risks Related to Cybersecurity and Business Disruptions

*Unauthorized access to our, our customers’ and/or our suppliers’ information and systems could negatively impact our business.*

We rely extensively on information technology systems and networks to operate our company and meet our business objectives. As cyber threats increase in volume and sophistication, the risk to the security of these systems and networks - and to the confidentiality, integrity, and availability of the data they house - continues to evolve, requiring constant vigilance and concerted, company-wide risk management efforts.

A cyberattack or security breach, whether experienced directly or through our supply chain, could, among other serious consequences, result in loss of intellectual property; unauthorized access to various categories of sensitive, proprietary or customer data; disruption or degradation of business operations, or compromise of products or services. To address these risks, we maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management oversight. We also have established a Cybersecurity Governance Council to strengthen governance and coordination of cybersecurity activities. While these measures are designed to prevent, detect and respond to unauthorized activity, there is no guarantee that they will be sufficient to prevent or mitigate the risk of a cyberattack or the potentially serious reputational, operational, or financial impacts that may result. In November 2022, we discovered a cybersecurity incident that impacted certain systems of Jeppesen, a wholly owned Boeing subsidiary that provides flight planning and navigation services. We determined that the incident posed no risk to flight safety. We promptly notified law enforcement, regulatory authorities and customers, launched an investigation, and took additional steps to protect the integrity of our systems. While this incident has not had a material impact on us, future incidents like this one could have material impact on our business, operations, and reputation.

In addition, we manage information and information technology systems for certain customers and/or suppliers. Many of these customers and/or suppliers face similar security threats. If we were unable to protect against the unauthorized access, release and/or corruption of our customers’ and/or suppliers’ confidential, classified or personally identifiable information, our reputation could be damaged, and/or we could face financial or other losses.

*Business disruptions could seriously affect our future sales and financial condition or increase our costs and expenses.*

Our business may be impacted by disruptions including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises. Any of these disruptions could affect our internal operations or our suppliers’ operations and delay delivery of products and services to our customers. Any significant production delays, or any destruction, manipulation or improper use of Boeing’s or our suppliers’ data, information systems or networks could impact our sales, increase our expenses and/or have an adverse effect on the reputation of Boeing and of our products and services.

## Risks Related to Legal and Regulatory Matters

*The outcome of litigation and of government inquiries and investigations involving our business is unpredictable and an adverse decision in any such matter could have a material effect on our financial position and results of operations.*

We are involved in a number of litigation matters. These matters may divert financial and management resources that would otherwise be used to benefit our operations. No assurances can be given that the results of these matters will be favorable to us. An adverse resolution of any of these lawsuits, or future lawsuits, could have a material impact on our financial position and results of operations. In addition, we

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are subject to extensive regulation under the laws of the United States and its various states, as well as other jurisdictions in which we operate. As a result, we are sometimes subject to government inquiries and investigations due, among other things, to our business relationships with the U.S. government, the heavily regulated nature of our industry, and in the case of environmental proceedings, our current or past ownership of certain property. Any such inquiry or investigation could result in an adverse ruling against us, which could have a material impact on our financial position, results of operations and/or cash flows.

# ***Our operations expose us to the risk of material environmental liabilities.***

We are subject to various U.S. federal, state, local and non-U.S. laws and regulations related to environmental protection, including the discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, as well as third-party claims for property damage or personal injury, if we were to violate or become liable under environmental laws or regulations. In some cases, we are subject to such costs due to environmental impacts attributable to our current or past manufacturing operations or the operations of companies we have acquired. In other cases, we are subject to such costs due to an indemnification agreement between us and a third party relating to such environmental liabilities. In all cases, our current liabilities and ongoing cost assessments are based on current laws and regulations. New laws and regulations, more stringent enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new remediation requirements could result in additional costs. For additional information relating to environmental contingencies, see Note 13 to our Consolidated Financial Statements.

# ***We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.***

Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, emerging ESG regulation, contractual requirements, and policy requirements may pose risk to our market outlook, brand and reputation, financial outlook, cost of capital, global supply chain and production continuity, which may impact our ability to achieve long-term business objectives. Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us or our products, require new or additional investment in product designs, result in carbon offset investments or otherwise could negatively impact our business and/or competitive position. Increasing aircraft performance standards, increasing sustainability disclosure requirements in the U.S. and globally, and requirements on manufacturing and product air pollutant emissions, especially greenhouse gas (GHG) emissions, may result in increased costs or reputational risks and could limit our ability to manufacture and/or market certain of our products at acceptable costs, or at all. Physical impacts of climate change, increasing global chemical restrictions and bans, and water and waste requirements may drive increased costs to us and our suppliers and impact our production continuity and data facilities.

Finally, from time to time, in alignment with our sustainability priorities, we establish and publicly announce goals and commitments to improve our environmental performance, such as our recent operational goals in areas of GHG emissions, energy, water and waste. If we fail to achieve or improperly report on our progress toward achieving our sustainability goals and commitments, the resulting negative publicity could adversely affect our reputation and/or our access to capital.

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# Risks Related to Financing and Liquidity

*We may be unable to obtain debt to fund our operations and contractual commitments at competitive rates, on commercially reasonable terms or in sufficient amounts.*

We depend, in part, upon the issuance of debt to fund our operations and contractual commitments. In addition, our debt balances have increased significantly since 2019, driven primarily by impacts related to the 737 MAX grounding and the COVID-19 pandemic, and we expect to continue to actively manage our liquidity. As of December 31, 2022, our debt totaled $57.0 billion of which approximately $14.5 billion of principal payments on outstanding debt will become due over the next three years. In addition, as of December 31, 2022, our airplane financing commitments totaled $16.1 billion. Our increased debt balance resulted in downgrades to our credit ratings in 2020, and our ratings remained unchanged in 2022 and 2021. If we require additional funding in order to pay off existing debt, address further impacts to our business related to market developments, fund outstanding financing commitments or meet other business requirements, our market liquidity may not be sufficient. These risks will be particularly acute if we are subject to further credit rating downgrades. A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt. These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings and/or changes in demand for our products and services. The occurrence of any or all of these events may adversely affect our ability to fund our operations and contractual or financing commitments.

*Substantial pension and other postretirement benefit obligations have a material impact on our earnings, shareholders' equity and cash flows from operations, and could have significant adverse impacts in future periods.*

Many of our employees have earned benefits under defined benefit pension plans. Potential pension contributions include both mandatory amounts required under the Employee Retirement Income Security Act and discretionary contributions to improve the plans' funded status. The extent of future contributions depends heavily on market factors such as the discount rate and the actual return on plan assets. We estimate future contributions to these plans using assumptions with respect to these and other items. Changes to those assumptions could have a significant effect on future contributions as well as on our annual pension costs and/or result in a significant change to shareholders' equity. For U.S. government contracts, we allocate pension costs to individual contracts based on U.S. Cost Accounting Standards which can also affect contract profitability. We also provide other postretirement benefits to certain of our employees, consisting principally of health care coverage for eligible retirees and qualifying dependents. Our estimates of future costs associated with these benefits are also subject to assumptions, including estimates of the level of medical cost increases. For a discussion regarding how our financial statements can be affected by pension and other postretirement plan accounting policies, see 'Management's Discussion and Analysis - Critical Accounting Policies & Estimates - Pension Plans' on page 50 of this Form 10-K. Although under Generally Accepted Accounting Principles in the United States of America (GAAP) the timing of periodic pension and other postretirement benefit expense and plan contributions are not directly related, the key economic factors that affect GAAP expense would also likely affect the amount of cash or stock we would contribute to our plans.

*Our insurance coverage may be inadequate to cover all significant risk exposures.*

We are exposed to liabilities that are unique to the products and services we provide. We maintain insurance for certain risks and, in some circumstances, we may receive indemnification from the U.S. government. The amount of our insurance coverage may not cover all claims or liabilities, and we may be forced to bear substantial costs. For example, liabilities arising from the use of certain of our products, such as aircraft technologies, space systems, spacecraft, satellites, missile systems,

16

weapons, cybersecurity, border security systems, anti-terrorism technologies and/or air traffic management systems may not be insurable on commercially reasonable terms. While some of these products are shielded from liability within the U.S. under the SAFETY Act provisions of the 2002 Homeland Security Act, no such protection is available outside the U.S., potentially resulting in significant liabilities. See Note 21 of the Consolidated Financial Statements for discussion of legal proceedings resulting from the October 29, 2018 accident of Lion Air Flight 610 and the March 10, 2019 accident of Ethiopian Airlines Flight 302. The amount of insurance coverage we maintain may be inadequate to cover these or other claims or liabilities.

*A significant portion of our customer financing portfolio is concentrated among certain customers and in certain types of Boeing aircraft, which exposes us to concentration risks.*

A significant portion of our customer financing portfolio is concentrated among certain customers and in distinct geographic regions. Our portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft, and among customers that we believe have less than investment-grade credit. If one or more customers holding a significant portion of our portfolio assets experiences financial difficulties or otherwise defaults on or does not renew its leases with us at their expiration, and we are unable to redeploy the aircraft on reasonable terms, or if the types of aircraft that are concentrated in our portfolio suffer greater than expected declines in value, our financial position, results of operations and/or cash flows could be materially adversely affected.

#### **Risks Related to Labor**

*Some of our and our suppliers’ workforces are represented by labor unions, which may lead to work stoppages.*

Approximately 50,000 employees, which constitute 32% of our total workforce, were union represented as of December 31, 2022. We experienced a work stoppage in 2008 when a labor strike halted commercial aircraft and certain BDS program production. We may experience additional work stoppages in the future, which could adversely affect our business. We cannot predict how stable our union relationships, currently with 11 U.S. labor organizations and 12 non-U.S. labor organizations, will be or whether we will be able to meet the unions’ requirements without impacting our financial condition. The unions may also limit our flexibility in dealing with our workforce. Union actions at suppliers can also affect us. Work stoppages and instability in our union relationships could delay the production and/or development of our products, which could strain relationships with customers and result in lower revenues.

#### **Item 1B. Unresolved Staff Comments**

Not applicable

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## Item 2. Properties

We had approximately 87 million square feet of floor space on December 31, 2022 for manufacturing, warehousing, engineering, administration and other productive uses, of which approximately 88% was located in the United States. The following table provides a summary of the floor space by business as of December 31, 2022:

| (Square feet in thousands) | Owned | Leased | Government Owned | Total |
| --- | --- | --- | --- | --- |
| Commercial Airplanes | 39,586 | 6,673 |  | 46,259 |
| Defense, Space & Security | 22,643 | 5,090 |  | 27,733 |
| Global Services | 1,201 | 7,591 |  | 8,792 |
| Other (1) | 1,821 | 2,476 | 315 | 4,612 |
| Total | 65,251 | 21,830 | 315 | 87,396 |

$^{(1)}$ Other includes sites used for corporate offices, enterprise research and development and common internal services.

At December 31, 2022, the combined square footage at the following major locations totaled more than 81 million square feet:

- Commercial Airplanes - Greater Seattle, WA; China; Greater Charleston, SC; Greater Portland, OR; Greater Los Angeles, CA; Greater Salt Lake City, UT; Australia and Canada
- Defense, Space & Security - Greater St. Louis, MO; Greater Seattle, WA; Greater Los Angeles, CA; Philadelphia, PA; Mesa, AZ; Huntsville, AL; Oklahoma City, OK; Heath, OH; Greater Washington, DC; Australia; Greater Portland, OR; Houston, TX; and Kennedy Space Center
- Global Services - San Antonio, TX; Greater Miami, FL; Dallas, TX; Great Britain; China; Jacksonville, FL; and Germany
- Other - Chicago, IL; India; Greater Los Angeles, CA; Greater St. Louis, MO; and Greater Washington, DC.

Most runways and taxiways that we use are located on airport properties owned by others and are used jointly with others. Our rights to use such facilities are provided for under long-term leases with municipal, county or other government authorities. In addition, the U.S. government furnishes us certain office space, installations and equipment at U.S. government bases for use in connection with various contract activities.

## Item 3. Legal Proceedings

Currently, we are involved in a number of legal proceedings. For a discussion of contingencies related to legal proceedings, see Note 21 to our Consolidated Financial Statements, which is hereby incorporated by reference.

## Item 4. Mine Safety Disclosures

Not applicable

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## PART II

### Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The principal market for our common stock is the New York Stock Exchange where it trades under the symbol BA. As of January 20, 2023, there were 88,322 shareholders of record.

#### Issuer Purchases of Equity Securities

The following table provides information about purchases we made during the quarter ended December 31, 2022 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

*(Dollars in millions, except per share data)*

|  | (a) | (b) | (c) | (d) |
| --- | --- | --- | --- | --- |
|  | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) |
| 10/1/2022 thru 10/31/2022 | 4,578 | $138.33 |  |  |
| 11/1/2022 thru 11/30/2022 | 2,371 | 142.24 |  |  |
| 12/1/2022 thru 12/31/2022 | 18,793 | 181.13 |  |  |
| Total | 25,742 | $169.94 |  |  |

(1) A total of 25,742 shares were transferred to us from employees in satisfaction of tax withholding obligations associated with the vesting of restricted stock units during the period. We did not purchase any shares of our common stock in the open market pursuant to a repurchase program.

(2) On March 21, 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock. Share repurchases under this open market repurchase program have been suspended since April 2019.

### Item 6. [Reserved]

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# Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

## Consolidated Results of Operations and Financial Condition

### Overview

We are a global market leader in the design, development, manufacture, sale, service and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services. We are one of the two major manufacturers of 100+ seat airplanes for the worldwide commercial airline industry and one of the largest defense contractors in the U.S. While our principal operations are in the U.S., we conduct operations in an expanding number of countries and rely on an extensive network of non-U.S. partners, key suppliers and subcontractors.

Our strategy is centered on successful execution in healthy core businesses - Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS) - supplemented and supported by Boeing Capital (BCC). Taken together, these core businesses have historically generated substantial earnings and cash flow that enable our investments in new products and services. We focus on producing the products and providing the services that the market demands, and continue to find new ways to improve efficiency and quality to provide a fair return for our shareholders. BCA is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, safety, efficiency and value to customers around the world. BDS integrates its resources in defense, intelligence, communications, security, space and services to deliver capability-driven solutions to customers at reduced costs. Our BDS strategy is to leverage our core businesses to capture key next-generation programs while expanding our presence in adjacent and international markets, underscored by an intense focus on growth and productivity. BGS provides support for commercial and defense through innovative, comprehensive and cost-competitive product and service solutions. BCC facilitates, arranges, structures and provides selective financing solutions for our Boeing customers.

### Business Environment and Trends

Domestic travel continues to recover from the lingering effects of the COVID-19 pandemic before international travel and the narrow-body market continues to follow domestic travel recovery, while the wide-body market continues to be paced by international travel recovery. The pace of the commercial market recovery remains impacted by government restrictions related to COVID-19, especially China. We are seeing a strong recovery in travel demand for our airline customers in North and South America, the Middle East, and Europe, and demand for dedicated freighters continues to be underpinned by a strong recovery in global trade.

We and our suppliers are experiencing supply chain disruptions as a result of the lingering impacts of COVID-19, global supply chain constraints, and labor instability. We and our suppliers are also experiencing inflationary pressures. We continue to monitor the health and stability of the supply chain as we ramp up production. These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.

Airline financial performance, which influences demand for new capacity, has been adversely impacted by the COVID-19 pandemic. According to the International Air Transport Association (IATA), net losses for the airline industry were $138 billion in 2020 and $42 billion in 2021. IATA also forecasts $6.9 billion of losses for the industry globally in 2022, with approximately $9.9 billion of profits in North America driven by the robust domestic market being more than offset by losses in other regions. For 2023, IATA is forecasting $4.6 billion in profits for the industry globally. While the outlook continues to improve, we continue to face a challenging environment in the near- to medium-term as airlines are facing increased fuel and other costs, and the global economy is experiencing high inflation. The current environment is also affecting the financial viability of some airlines.

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The long-term outlook for the industry remains positive due to the fundamental drivers of air travel demand: economic growth, increasing propensity to travel due to increased trade, globalization and improved airline services driven by liberalization of air traffic rights between countries. Our Commercial Market Outlook forecast projects a 3.8% growth rate for passenger and cargo traffic over a 20-year period. Based on long-term global economic growth projections of 2.6% in average annual gross domestic product, we project demand for approximately 41,170 new airplanes over the next 20 years. The industry remains vulnerable to exogenous developments including fuel price spikes, credit market shocks, acts of terrorism, natural disasters, conflicts, epidemics, pandemics and increased global environmental regulations.

During 2022, commercial services volume at BGS recovered to pre-pandemic levels. We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry continues to recover. The demand outlook for our government services business remains stable.

At BDS, we continue to see stable demand reflecting the important role our products and services have in ensuring our national security. Outside of the U.S., we are seeing similar solid demand as governments prioritize security, defense technology and global cooperation given evolving threats. We continue to experience near-term production disruptions and inefficiencies due to supplier disruption, labor instability and factory performance. These factors have contributed to significant earnings charges on a number of fixed-price development programs which are expected to adversely affect cash flows in future periods.

As a result of the war in Ukraine, we recorded earnings charges totaling $212 million during the first quarter of 2022, primarily related to asset impairments. We have closed our facilities in Russia. We are focused on the safety of our employees and retaining the strength of our engineering talent through voluntary transfers to other countries. We have also suspended our business in Russia, including parts, maintenance and technical support for Russian airlines, and purchases from Russian suppliers. We are complying with U.S. and international sanctions and export control restrictions. We have sufficient material and parts to avoid production disruptions in the near-term, but future impacts to our production from disruptions in our supply chain are possible. The war in Ukraine continues to impact our airline and lessor customers. We continue to monitor developments and potential Boeing impacts, and take mitigating actions as appropriate.

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## Consolidated Results of Operations

The following table summarizes key indicators of consolidated results of operations:

(Dollars in millions, except per share data)

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | $66,608 | $62,286 | $58,158 |
| GAAP |  |  |  |
| Loss from operations | ($3,547) | ($2,902) | ($12,767) |
| Operating margins | (5.3)% | (4.7)% | (22.0)% |
| Effective income tax rate | (0.6)% | 14.8% | 17.5% |
| Net loss attributable to Boeing Shareholders | ($4,935) | ($4,202) | ($11,873) |
| Diluted loss per share | ($8.30) | ($7.15) | ($20.88) |
| Non-GAAP (1) |  |  |  |
| Core operating loss | ($4,690) | ($4,075) | ($14,150) |
| Core operating margins | (7.0%) | (6.5%) | (24.3%) |
| Core loss per share | ($11.06) | ($9.44) | ($23.25) |

$^{(1)}$ These measures exclude certain components of pension and other postretirement benefit expense. See pages 45 - 47 for important information about these non-GAAP measures and reconciliations to the most directly comparable GAAP measures.

## Revenues

The following table summarizes Revenues:

(Dollars in millions)

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Commercial Airplanes | $25,867 | $19,493 | $16,162 |
| Defense, Space & Security | 23,162 | 26,540 | 26,257 |
| Global Services | 17,611 | 16,328 | 15,543 |
| Boeing Capital | 199 | 272 | 261 |
| Unallocated items, eliminations and other | (231) | (347) | (65) |
| Total | $66,608 | $62,286 | $58,158 |

Revenues increased by $4,322 million in 2022 compared with 2021 driven by higher revenues at BCA and BGS, partially offset by lower revenues at BDS. BCA revenues increased by $6,374 million primarily driven by higher 737 and 787 deliveries. BGS revenues increased by $1,283 million primarily due to higher commercial services volume, partially offset by lower government services volume and performance. BDS revenues decreased by $3,378 million primarily due to charges on development programs, unfavorable performance across other defense programs, and lower P-8 and weapons volume.

Revenues increased by $4,128 million in 2021 compared with 2020 driven by higher revenues at BCA, BDS and BGS. BCA revenues increased by $3,331 million primarily driven by higher 737 MAX deliveries due to recertification and return to service in most jurisdictions and the absence of $498 million of 737 MAX customer considerations which reduced revenues in 2020, partially offset by lower 787 deliveries in 2021. BDS revenues increased by $283 million primarily from higher revenue on the

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KC-46A Tanker program and lower charges in 2021. BGS revenues increased by $785 million primarily due to higher commercial and government services volume.

Revenues will continue to be significantly impacted until the global supply chain stabilizes, labor instability diminishes, and deliveries ramp up.

## Loss From Operations

The following table summarizes Loss from operations:

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Commercial Airplanes | ($2,370) | ($6,475) | ($13,847) |
| Defense, Space & Security | (3,544) | 1,544 | 1,539 |
| Global Services | 2,727 | 2,017 | 450 |
| Boeing Capital | 29 | 106 | 63 |
| Segment operating loss | (3,158) | (2,808) | (11,795) |
| Pension FAS/CAS service cost adjustment | 849 | 882 | 1,024 |
| Postretirement FAS/CAS service cost adjustment | 294 | 291 | 359 |
| Unallocated items, eliminations and other | (1,532) | (1,267) | (2,355) |
| Loss from operations (GAAP) | ($3,547) | ($2,902) | ($12,767) |
| FAS/CAS service cost adjustment * | (1,143) | (1,173) | (1,383) |
| Core operating loss (Non-GAAP)** | ($4,690) | ($4,075) | ($14,150) |

* The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments.

** Core operating loss is a non-GAAP measure that excludes the FAS/CAS service cost adjustment. See pages 45 - 47.

Loss from operations increased by $645 million in 2022 compared with 2021. BGS had a loss from operations of $3,544 million compared with earnings of $1,544 million during 2021, primarily due to charges on development programs. BCA loss from operations decreased by $4,105 million primarily due to the absence in 2022 of the $3,460 million reach-forward loss taken on the 787 program in 2021, higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses. BGS earnings from operations increased by $710 million in 2022 compared with 2021 primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance.

Loss from operations decreased by $9,865 million in 2021 compared with 2020 primarily due to lower losses at BCA and higher earnings at BGS. BCA loss from operations decreased by $7,372 million primarily due to the absence of a $6,493 million reach-forward loss on the 777X program recorded in 2020, lower period expenses, lower 737 MAX customer considerations and higher 737 MAX deliveries, partially offset by a $3,460 million reach-forward loss on the 787 program in 2021. BGS earnings from operations increased by $1,567 million in 2021 compared with 2020 primarily due to charges incurred in 2020 as a result of the COVID-19 pandemic, as well as higher commercial services volume.

Core operating loss increased by $615 million in 2022 compared with 2021 and decreased by $10,075 million in 2021 compared with 2020 primarily due to changes in Segment operating loss as described above.

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**Unallocated Items, Eliminations and Other** The most significant items included in Unallocated items, eliminations and other are shown in the following table:

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Share-based plans | ($114) | ($174) | ($120) |
| Deferred compensation | 117 | (126) | (93) |
| Amortization of previously capitalized interest | (95) | (107) | (95) |
| Research and development expense, net | (278) | (184) | (240) |
| Eliminations and other unallocated items | (1,162) | (676) | (1,807) |
| Unallocated items, eliminations and other | ($1,532) | ($1,267) | ($2,355) |

Share-based plans expense decreased by $60 million in 2022 and increased by $54 million in 2021. The lower expense in 2022 compared to 2021 was due to decreased grants of restricted stock units (RSUs) and other share-based compensation. The higher expense in 2021 compared to 2020 was primarily related to a one-time grant of RSUs to most employees in December 2020.

Deferred compensation expense decreased by $243 million in 2022, primarily driven by changes in broad stock market conditions, and increased by $33 million in 2021, primarily driven by changes in broad stock market conditions and our stock price.

Research and development expense increased by $94 million in 2022 and decreased by $56 million in 2021 primarily due to enterprise investments in product development.

Eliminations and other unallocated expense increased by $486 million in 2022 primarily due to a $200 million settlement with the Securities and Exchange Commission related to the 737 MAX accidents, lower income from operating investments, and an increase in environmental remediation expense. Eliminations and other unallocated expense decreased by $1,131 million in 2021 primarily due to earnings charges of $744 million in the fourth quarter of 2020 in anticipation of the agreement between Boeing and the U.S. Department of Justice that was finalized in January 2021 and higher income from operating investments in 2021.

Net periodic pension benefit costs included in Loss from operations were as follows:

*(Dollars in millions)*

| Years ended December 31, | Pension |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Allocated to business segments | ($852) | ($885) | ($1,027) |
| Pension FAS/CAS service cost adjustment | 849 | 882 | 1,024 |
| Net periodic pension benefit cost included in Loss from operations | ($3) | ($3) | ($3) |

The pension FAS/CAS service cost adjustment recognized in Loss from operations in 2022 decreased by $33 million compared with 2021 and decreased by $142 million in 2021 compared with 2020 due to reductions in allocated pension cost year over year. Net periodic benefit cost included in Loss from operations in 2022 was largely consistent with 2021 and 2020.

For additional discussion related to Postretirement Plans, see Note 16 to our Consolidated Financial Statements.

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## Other Earnings Items

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Loss from operations | ($3,547) | ($2,902) | ($12,767) |
| Other income, net | 1,058 | 551 | 447 |
| Interest and debt expense | (2,533) | (2,682) | (2,156) |
| Loss before income taxes | (5,022) | (5,033) | (14,476) |
| Income tax (expense)/benefit | (31) | 743 | 2,535 |
| Net loss from continuing operations | (5,053) | (4,290) | (11,941) |
| Less: net loss attributable to noncontrolling interest | (118) | (88) | ($68) |
| Net loss attributable to Boeing Shareholders | ($4,935) | ($4,202) | ($11,873) |

Non-operating pension income included in Other income, net was $881 million in 2022, $528 million in 2021, and $340 million in 2020. The increased income in 2022 compared to 2021 was primarily due to lower amortization of net actuarial losses in 2022 and a settlement loss recorded in 2021. The increased income in 2021 compared to 2020 was primarily due to lower interest cost and higher expected return on plan assets, partially offset by higher amortization of net actuarial losses and higher settlement charges.

Non-operating postretirement income included in Other income, net was $58 million in 2022, compared with income of $1 million in 2021 and expense of $16 million in 2020. The increased income in 2022 and 2021 was due to lower amortization of net actuarial losses.

Interest and debt expense decreased by $149 million in 2022 primarily due to lower average debt balances and increased by $526 million in 2021 as a result of higher average debt balances.

In August 2022, the President signed into law the Inflation Reduction Act of 2022, which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we do not expect to have a material impact on our results of operations, financial condition or cash flows. For additional discussion related to Income Taxes, see Note 4 to our Consolidated Financial Statements.

## Total Costs and Expenses ('Cost of Sales')

Cost of sales, for both products and services, consists primarily of raw materials, parts, sub-assemblies, labor, overhead and subcontracting costs. Our BCA segment predominantly uses program accounting to account for cost of sales. Under program accounting, cost of sales for each commercial aircraft program equals the product of (i) revenue recognized in connection with customer deliveries and (ii) the estimated cost of sales percentage applicable to the total remaining program. For long-term contracts, the amount reported as cost of sales is recognized as incurred. Substantially all contracts at our BDS segment and certain contracts at our BGS segment are long-term contracts with the U.S. government and other customers that generally extend over several years. Cost of sales for commercial spare parts is recorded at average cost.

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The following table summarizes cost of sales:

*(Dollars in millions)*

| Years ended December 31 | 2022 | 2021 | Change | 2021 | 2020 | Change |
| --- | --- | --- | --- | --- | --- | --- |
| Cost of sales | $63,106 | $59,269 | $3,837 | $59,269 | $63,843 | ($4,574) |
| Cost of sales as a % of Revenues | 94.7% | 95.2% | (0.5)% | 95.2% | 109.8% | (14.6)% |

Cost of sales increased by $3,837 million in 2022 compared with 2021, primarily due to charges recorded at BDS and higher revenues at BCA. Cost of sales as a percentage of Revenues remained largely consistent in 2022 compared to 2021.

Cost of sales decreased by $4,574 million in 2021 compared with 2020, primarily due to higher earnings charges at BCA, BDS and BGS in 2020, partially offset by higher costs as a result of higher revenues in 2021 and the reach-forward loss on the 787 program. Cost of sales as a percentage of Revenues decreased in 2021 compared to 2020 primarily due to higher earnings charges at BCA and BGS in 2020 and higher revenues in 2021.

**Research and Development** The following table summarizes our Research and development expense:

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Commercial Airplanes | $1,510 | $1,140 | $1,385 |
| Defense, Space & Security | 945 | 818 | 713 |
| Global Services | 119 | 107 | 138 |
| Other | 278 | 184 | 240 |
| Total | $2,852 | $2,249 | $2,476 |

Research and development expense increased by $603 million in 2022 compared with 2021 primarily due to higher research and development expenditures on 777X, 737 MAX, as well as BCA and enterprise investments in product development.

Research and development expense decreased by $227 million in 2021 compared with 2020 primarily due to lower BCA and enterprise investments in product development and lower spending on the 777X program.

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## Backlog

Our backlog at December 31 was as follows:

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Commercial Airplanes | $329,824 | $296,882 |
| Defense, Space & Security | 54,373 | 59,828 |
| Global Services | 19,338 | 20,496 |
| Unallocated items, eliminations and other | 846 | 293 |
| Total Backlog | $404,381 | $377,499 |
| Contractual backlog | $381,977 | $356,362 |
| Unobligated backlog | 22,404 | 21,137 |
| Total Backlog | $404,381 | $377,499 |

Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive contracts have not been executed, orders where customers have the unilateral right to terminate, and unobligated U.S. and non-U.S. government contract funding. The increase in contractual backlog during 2022 was primarily due to an increase in BCA backlog that was partially offset by a decrease in BDS backlog. If we remain unable to deliver 737 MAX aircraft in China for an extended period of time, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.

Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has not been authorized. The increase in unobligated backlog in 2022 was primarily due to contract awards, partially offset by reclassifications to contractual backlog related to BDS and BGS contracts.

## Additional Considerations

**Global Trade** We continually monitor the global trade environment in response to geopolitical economic developments, as well as changes in tariffs, trade agreements or sanctions that may impact the Company.

The current state of U.S.-China relations remains an ongoing watch item. Since 2018, the U.S. and China have imposed tariffs on each other's imports. Certain aircraft parts and components that Boeing procures are subject to these tariffs. We are mitigating import costs through Duty Drawback Customs procedures. China is a significant market for commercial aircraft. Boeing has long-standing relationships with our Chinese customers, who represent a key component of our commercial aircraft backlog. Overall, the U.S.-China trade relationship remains stalled as economic and national security concerns continue to be a challenge.

Beginning in June 2018, the U.S. Government imposed tariffs on steel and aluminum imports. In response to these tariffs, several major U.S. trading partners have imposed, or announced their intention to impose, tariffs on U.S. goods. The U.S. has subsequently reached agreements with Mexico, Canada, the United Kingdom, the European Union, and Japan to ease or remove tariffs on steel and/or aluminum. We continue to monitor the potential for any extra costs that may result from the remaining global tariffs.

We are complying with all U.S. and other government export control restrictions and sanctions imposed on certain businesses and individuals in Russia. We continue to monitor and evaluate additional sanctions and export restrictions that may be imposed by the U.S. Government or other governments,

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as well as any responses from Russia that could affect our supply chain, business partners or customers, for any additional impacts to our business.

## Segment Results of Operations and Financial Condition

### Commercial Airplanes

#### Business Environment and Trends

**Airline Industry Environment** See Overview to Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the airline industry environment.

**Industry Competitiveness** The industry continues to recover from the lingering effects of the COVID-19 pandemic. The commercial aircraft market and the airline industry both remain extremely competitive. While the impacts and responses have varied globally, the reduction of demand and disruption in production has adversely impacted most manufacturers in the commercial aircraft industry.

Continued access to global markets remains vital to our ability to fully realize our sales potential and long-term investment returns. Approximately 70% of Commercial Airplanes' total backlog, in dollar terms, is with non-U.S. airlines. We face aggressive international competitors who are intent on increasing their market share. They offer competitive products and have access to most of the same customers and suppliers. The grounding of the 737 MAX in 2019 and the associated suspension of 737 MAX deliveries in multiple jurisdictions significantly reduced our market share with respect to deliveries of single aisle aircraft and may provide competitors with an opportunity to obtain more orders and increase market share. With government support, Airbus has historically invested heavily to create a family of products to compete with ours. After the acquisition of a majority share of Bombardier's C Series (now A220) in 2018, Airbus continues to expand in the 100-150 seat transcontinental market. Other competitors are also in different phases of developing commercial jet aircraft, including Commercial Aircraft Corporation of China, Ltd. (COMAC), which delivered its first C919 aircraft in 2022. Some of these competitors have historically enjoyed access to government-provided financial support, including 'launch aid,' which greatly reduces the cost and commercial risks associated with airplane development activities. This has enabled the development of airplanes without broad commercial viability; others to be brought to market more quickly than otherwise possible; and many offered for sale below market-based prices. Competitors continue to make improvements in efficiency, which may result in funding product development, gaining market share and improving earnings. This market environment has resulted in intense pressures on pricing and other competitive factors, and we expect these pressures to continue or intensify in the coming years.

We are focused on improving our products and services and continuing our business transformation efforts, which enhances our ability to compete and positions us for market recovery. We are also focused on taking actions to ensure that Boeing is not harmed by unfair subsidization of competitors.

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## Results of Operations

(Dollars in millions)

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | $25,867 | $19,493 | $16,162 |
| % of total company revenues | 39% | 31% | 28% |
| Loss from operations | ($2,370) | ($6,475) | ($13,847) |
| Operating margins | (9.2)% | (33.2)% | (85.7)% |
| Research and development | $1,510 | $1,140 | $1,385 |

## Revenues

BCA revenues increased by $6,374 million in 2022 compared with 2021 primarily due to higher 737 and 787 deliveries in 2022.

BCA revenues increased by $3,331 million in 2021 compared with 2020 primarily due to higher 737 MAX deliveries driven by recertification and return to service in most jurisdictions and the absence of charges for 737 MAX customer considerations which reduced revenues in 2020, partially offset by lower 787 deliveries in 2021.

BCA deliveries, including intercompany deliveries, as of December 31 were as follows:

|  | 737 * | 747 | 767 * | 777 | 787 | Total |
| --- | --- | --- | --- | --- | --- | --- |
| 2022 |  |  |  |  |  |  |
| Cumulative deliveries | 8,132 | 1,572 | 1,271 | 1,701 | 1,037 |  |
| Deliveries | 387 (13) | 5 | 33 (15) | 24 | 31 | 480 |
| 2021 |  |  |  |  |  |  |
| Cumulative deliveries | 7,745 | 1,567 | 1,238 | 1,677 | 1,006 |  |
| Deliveries | 263 (16) | 7 | 32 (13) | 24 | 14 | 340 |
| 2020 |  |  |  |  |  |  |
| Cumulative deliveries | 7,482 | 1,560 | 1,206 | 1,653 | 992 |  |
| Deliveries | 43 (14) | 5 | 30 (11) | 26 | 53 | 157 |

* Intercompany deliveries identified by parentheses

## Loss From Operations

BCA loss from operations was $2,370 million in 2022 compared with $6,475 million in 2021 reflecting higher 737 deliveries and lower abnormal production costs, partially offset by higher research and development spending, charges related to the war in Ukraine and other period expenses. The 2021 loss also reflects a reach-forward loss on the 787 program of $3,460 million. Abnormal production costs in 2022 were $1,753 million, including $1,240 million related to the 787 program, $325 million related to the 777X program, and $188 million related to the 737 program.

BCA loss from operations was $6,475 million in 2021 compared with $13,847 million in 2020. The 2021 loss reflects the reach-forward loss on the 787 program of $3,460 million, abnormal production costs related to the 737 program of $1,887 million, and abnormal production costs related to the 787 program of $468 million resulting from continued production issues, inspections and rework, partially offset by higher 737 MAX deliveries. The 2020 loss reflects the reach-forward loss on the 777X program of $6,493 million, lower deliveries and lower program margins resulting from the COVID-19 pandemic,

29

$2,567 million of abnormal production costs related to the 737 program, $623 million of severance cost, $498 million of 737 MAX customer considerations, $336 million related to 737NG frame fitting component repair costs and $270 million of abnormal production costs in the first half of 2020 from the temporary suspension of operations in response to COVID-19, partially offset by lower research and development spending. Lower 787 margins reflecting a reduction in the accounting quantity in the first quarter of 2020 also contributed to lower earnings.

## **Backlog**

Our total backlog represents the estimated transaction prices on unsatisfied and partially satisfied performance obligations to our customers where we believe it is probable that we will collect the consideration due and where no contingencies remain before we and the customer are required to perform. Backlog does not include prospective orders where customer-controlled contingencies remain, such as the customer receiving approval from its board of directors, shareholders or government or completing financing arrangements. All such contingencies must be satisfied or have expired prior to recording a new firm order even if satisfying such conditions is highly probable. Backlog excludes options and BCC orders as well as orders where customers have the unilateral right to terminate. A number of our customers may have contractual remedies, including rights to reject individual airplane deliveries if the actual delivery date is significantly later than the contractual delivery date. We address customer claims and requests for other contractual relief as they arise. The value of orders in backlog is adjusted as changes to price and schedule are agreed to with customers and is reported in accordance with the requirements of ASC 606.

BCA total backlog of $329,824 million at December 31, 2022 increased from $296,882 million at December 31, 2021, reflecting new orders in excess of deliveries and price escalation, offset by order cancellations and by an increase in the value of existing orders that in our assessment do not meet the accounting requirements of ASC 606 for inclusion in backlog. Aircraft order cancellations during the year ended December 31, 2022 totaled $11,251 million and relate to 737 and 787 aircraft. The net ASC 606 adjustments for the year ended December 31, 2022 resulted in a decrease to backlog of $4,675 million primarily due to a net increase of 777X aircraft in the ASC 606 reserve, partially offset by net decreases in 737 and 787 aircraft in the ASC 606 reserve. ASC 606 adjustments include consideration of aircraft orders where a customer-controlled contingency may exist, as well as an assessment of whether the customer is committed to perform, impacts of geopolitical events or related sanctions, or whether it is probable that the customer will pay the full amount of consideration when it is due. If we remain unable to deliver 737 MAX aircraft in China for an extended period of time, and/or entry into service of the 777X, 737-7 and/or 737-10 is further delayed, we may experience reductions to backlog and/or significant order cancellations.

**Accounting Quantity** The accounting quantity is our estimate of the quantity of airplanes that will be produced for delivery under existing and anticipated contracts. The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates of the revenue and cost of existing and anticipated contracts. It is a key determinant of the gross margins we recognize on sales of individual airplanes throughout a program's life. Estimation of each program's accounting quantity takes into account several factors that are indicative of the demand for that program, including firm orders, letters of intent from prospective customers and market studies. We review our program accounting quantities quarterly.

The accounting quantity for each program may include units that have been delivered, undelivered units under contract and units anticipated to be under contract in the reasonable future (anticipated orders). In developing total program estimates, all of these items within the accounting quantity must be considered.

30

The following table provides details of the accounting quantities and firm orders by program as of December 31. Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries plus undelivered firm orders. Firm orders include military derivative aircraft that are not included in program accounting quantities. All revenues and costs associated with military derivative aircraft production are reported in the BDS segment.

|  | Program |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | 737 | 747 | 767 | 777 | 777X | 787 | † |
| 2022 |  |  |  |  |  |  |  |
| Program accounting quantities | 10,800 | 1,574 | 1,267 | 1,790 | 400 | 1,600 |  |
| Undelivered units under firm orders | 3,653 | 1 | 106 | 69 | 244 | 505 | (8) |
| Cumulative firm orders | 11,785 | 1,573 | 1,377 | 1,770 | 244 | 1,542 |  |
| 2021 |  |  |  |  |  |  |  |
| Program accounting quantities | 10,400 | 1,574 | 1,243 | 1,750 | 350 | 1,500 |  |
| Undelivered units under firm orders | 3,414 | 6 | 108 | 58 | 253 | 411 | (14) |
| Cumulative firm orders | 11,159 | 1,573 | 1,346 | 1,735 | 253 | 1,417 |  |
| 2020 |  |  |  |  |  |  |  |
| Program accounting quantities | 10,000 | 1,574 | 1,207 | 1,700 | 350 | 1,500 |  |
| Undelivered units under firm orders | 3,282 | 8 | 75 | 41 | 191 | 458 | (22) |
| Cumulative firm orders | 10,764 | 1,568 | 1,281 | 1,694 | 191 | 1,450 |  |

† Aircraft ordered by BCC are identified in parentheses.

## Program Highlights

**737 Program** The accounting quantity for the 737 program increased by 400 units during 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes.

We increased the production rate to 31 per month in 2022, and expect to implement further gradual production rate increases based on market demand and supply chain capacity. We expensed abnormal production costs of $188 million and $1,887 million during the years ended December 31, 2022 and 2021.

Over 190 countries have approved the resumption of 737 MAX operations. The first 737 MAX passenger flight in China since 2019 occurred on January 13, 2023. There is uncertainty regarding timing of resumption of deliveries in China, which are still subject to final regulatory approvals. We continue to work with a small number of customers who have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory.

We have approximately 250 aircraft in inventory as of December 31, 2022, including approximately 140 aircraft in inventory that are designated for customers in China. We are remarketing some of these aircraft to other customers. We anticipate delivering most of the aircraft in inventory by the end of 2024. In the event that we are unable to resume aircraft deliveries in China or remarket those aircraft and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing could be impacted.

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The 737-7 and 737-10 models are currently going through FAA certification. The Consolidated Appropriations Act, 2023 amended Section 116 of the ACSAA, such that applications for original or amended type certifications that were submitted to the FAA prior to December 27, 2020, including those of the 737-7 and 737-10, are no longer subject to the crew alerting specifications of Section 116. Additionally, beginning one year after the FAA issues the type certificate for the 737-10, any new 737 MAX aircraft must include certain safety enhancements to be issued an original airworthiness certification by the FAA. These enhancements are included in Boeing's application for the certification for the 737-10, and the sufficiency of these enhancements will be determined by the FAA. Beginning three years after the issuance of a type certificate for the 737-10, all previously delivered 737 MAX aircraft must be retrofitted with these safety enhancements. As the holder of the type certificate, Boeing is required to bear any costs of these safety enhancement retrofits. We have provisioned for the estimated costs associated with the safety enhancements and do not expect those costs to be material.

We are following the lead of the FAA as we work through the certification process, and currently expect the 737-7 to be certified and delivered in 2023, and the 737-10 to begin FAA certification flight testing in 2023 with first delivery in in 2024. At December 31, 2022, we had 27 737-7 and 3 737-10 aircraft in inventory and 236 737-7 and 720 737-10 aircraft in backlog and have delivered a total of 1,033 737 MAX aircraft. If we experience delays in achieving certification and/or incorporating safety enhancements, future revenues, cash flows and results of operations could be adversely impacted.

See further discussion of the 737 MAX in Note 7 and Note 13 to our Consolidated Financial Statements.

**747 Program** We completed production of the 747 in the fourth quarter of 2022 and delivery of the last aircraft is expected to occur in early 2023. Ending production of the 747 did not have a material impact on our financial position, results of operations or cash flows.

**767 Program** The accounting quantity for the 767 program increased by 24 units during 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes. The 767 assembly line includes the commercial program and a derivative to support the KC-46A Tanker program. The commercial program has near break-even gross margins. We are currently producing at a combined rate of 3 aircraft per month.

**777 and 777X Programs** The accounting quantity for the 777 program increased by 40 units during 2022 due to the program's normal progress of obtaining additional orders and delivering airplanes. We are currently producing at a combined production rate of 3 per month for the 777/777X programs. The accounting quantity for the 777X program increased by 50 units during 2022 reflecting the launch of the 777X-8 freighter during the first quarter of 2022. First delivery of the 777X-8 freighter is expected in 2027.

During the first quarter of 2022, we revised the estimated first delivery date of the 777X-9, previously expected in late 2023, and now expect it will occur in 2025, based on an updated assessment of the time required to meet certification requirements. We are working towards Type Inspection Authorization (TIA) which will enable us to begin FAA certification flight testing. The timing of TIA and certification will ultimately be determined by the regulators, and further determinations with respect to anticipated certification requirements could result in additional delays in entry into service and/or additional cost increases.

In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023. We implemented the production pause during the second quarter of 2022, and it is expected to result in abnormal production costs of approximately $1.5 billion that are being expensed as incurred until 777X-9 production resumes. During the year ended December 31, 2022, $0.3 billion of abnormal costs were period expensed.

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The 777X program had near break-even gross margins at December 31, 2022. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued production disruption due to labor instability and supply chain disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.

**787 Program** During the fourth quarter of 2022, we increased the accounting quantity for the 787 program by 100 units due to the program's normal progress of obtaining additional orders and delivering aircraft. The increase in the accounting quantity improved the program's profit margin.

We received FAA authorization to resume delivery on July 28, 2022 and deliveries resumed in August. During 2022, we delivered 31 aircraft to customers. We continue to conduct inspections and rework on undelivered aircraft. During 2021, we delivered 14 aircraft between March and May 2021 prior to deliveries being paused in May 2021 due to production quality issues including in our supply chain. We have implemented changes in the production process designed to ensure that newly-built airplanes meet our specifications and do not require further inspections and rework. At December 31, 2022, and 2021, we had approximately 100 and 110 aircraft in inventory. Most of the aircraft in inventory at December 31, 2022 are expected to deliver by the end of 2024.

We are currently producing at low rates and expect to gradually return to 5 per month in 2023. In the third quarter of 2021, we determined that production rates below 5 per month represented abnormally low production rates and result in abnormal production costs. We also determined that the inspections and rework costs on inventoried aircraft are excessive and should also be accounted for as abnormal production costs that are required to be expensed as incurred. Cumulative abnormal costs recorded through December 31, 2022 totaled $1.7 billion. During the fourth quarter of 2022 we adjusted the total estimate of abnormal production costs up to $2.8 billion with most being incurred by the end of 2023. At December 31, 2021, we were expecting to incur approximately $2 billion of abnormal production costs on a cumulative basis. The increase was primarily driven by a decision in the fourth quarter of 2022 to slow down near-term production due to supply chain constraints and increased inspection and rework costs. We continue to work with customers and suppliers regarding timing of future deliveries and production rate changes.

During the fourth quarter of 2021, we recorded a loss of $3.5 billion on the program primarily due to the additional rework, as well as other actions required to resume 787 deliveries, taking longer than expected. These impacts have resulted in longer than expected delivery delays and associated customer considerations.

**Fleet Support** We provide the operators of our commercial aircraft with assistance and services to facilitate efficient and safe airplane operation. Collectively known as fleet support services, these activities and services begin prior to airplane delivery and continue throughout the operational life of the airplane. They include flight and maintenance training, field service support, engineering services, information services and systems and technical data and documents. The costs for fleet support are expensed as incurred and have historically been approximately 1% of total consolidated costs of products and services.

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**Program Development** The following chart summarizes the time horizon between go-ahead and planned initial delivery for major Commercial Airplanes derivatives and programs.

![img-0.jpeg](img-0.jpeg)

Reflects models in development during 2022

The development schedules shown above are subject to a number of uncertainties, including changes in certification requirements. The timing of certifications will ultimately be determined by the regulators.

### Additional Considerations

The development and ongoing production of commercial aircraft is extremely complex, involving extensive coordination and integration with suppliers and highly-skilled labor from employees and other partners. Meeting or exceeding our performance and reliability standards, as well as those of customers and regulators, can be costly and technologically challenging, such as the 787 production issues and associated rework. In addition, the introduction of new aircraft and derivatives, such as the 777X, 737-7 and 737-10, involves increased risks associated with meeting development, production and certification schedules. These challenges include increased global regulatory scrutiny of all development aircraft in the wake of the 737 MAX accidents. As a result, our ability to deliver aircraft on time, satisfy performance and reliability standards and achieve or maintain, as applicable, program profitability is subject to significant risks. Factors that could result in lower margins (or a material charge if an airplane program has or is determined to have reach-forward losses) include the following: changes to the program accounting quantity, customer and model mix, production costs and rates, changes to price escalation factors due to changes in the inflation rate or other economic indicators, performance or reliability issues involving completed aircraft, capital expenditures and other costs associated with increasing or adding new production capacity, learning curve, additional change incorporation, achieving anticipated cost reductions, the addition of regulatory requirements in connection with certification in one or more jurisdictions, flight test and certification schedules, costs, schedule and demand for new airplanes and derivatives and status of customer claims, supplier claims or assertions and other contractual negotiations. While we believe the cost and revenue estimates incorporated in the consolidated financial statements are appropriate, the technical complexity of our airplane programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions, order cancellations or other financially significant exposure.

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## Defense, Space & Security

### Business Environment and Trends

#### United States Government Defense Environment Overview

The Consolidated Appropriations Act, 2023, enacted in December 2022, provided fiscal year 2023 (FY23) appropriations for government departments and agencies, including $817 billion for the U.S. DoD and $25.4 billion for NASA. The enacted FY23 appropriations included funding for Boeing's major programs, including the F/A-18 Super Hornet, F-15EX, CH-47 Chinook, AH-64 Apache, V-22 Osprey, KC-46A Tanker, MQ-25, and the Space Launch System. The FY23 appropriations support F/A-18 production further into calendar year 2025. The FY23 appropriations did not include funding for additional P-8 aircraft. The P-8 program continues to pursue additional sales opportunities to extend production beyond 2024.

There is ongoing uncertainty with respect to program-level appropriations for the U.S. DoD, NASA and other government agencies for fiscal year 2024 and beyond. U.S. government discretionary spending, including defense spending, is likely to continue to be subject to pressure. Future budget cuts or investment priority changes, including changes associated with the authorizations and appropriations process, could result in reductions, cancellations and/or delays of existing contracts or programs. Any of these impacts could have a material effect on our results of operations, financial position and/or cash flows.

**Non-U.S. Defense Environment Overview** The non-U.S. market continues to be driven by complex and evolving security challenges and the need to modernize aging equipment and inventories. BDS expects that it will continue to have a wide range of opportunities across Asia, Europe and the Middle East given the diverse regional threats. At the end of 2022, 28% of BDS backlog was attributable to non-U.S. customers.

#### Results of Operations

| (Dollars in millions) |  |  |  |
| --- | --- | --- | --- |
| Years ended December 31, | 2022 | 2021 | 2020 |
| Revenues | $23,162 | $26,540 | $26,257 |
| % of total company revenues | 35% | 43% | 45% |
| (Loss)/earnings from operations | ($3,544) | $1,544 | $1,539 |
| Operating margins | (15.3)% | 5.8% | 5.9% |

Since our operating cycle is long-term and involves many different types of development and production contracts with varying delivery and milestone schedules, the operating results of a particular period may not be indicative of future operating results. In addition, depending on the customer and their funding sources, our orders might be structured as annual follow-on contracts, or as one large multi-year order or long-term award. As a result, period-to-period comparisons of backlog are not necessarily indicative of future workloads. The following discussions of comparative results among periods should be viewed in this context.

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Deliveries of new-build production units, including remanufactures and modifications, were as follows:

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| F/A-18 Models | 14 | 21 | 20 |
| F-15 Models | 12 | 16 | 4 |
| CH-47 Chinook (New) | 19 | 15 | 27 |
| CH-47 Chinook (Renewed) | 9 | 5 | 3 |
| AH-64 Apache (New) | 25 | 27 | 19 |
| AH-64 Apache (Remanufactured) | 50 | 56 | 52 |
| MH-139 Grey Wolf | 4 |  |  |
| KC-46 Tanker | 15 | 13 | 14 |
| P-8 Models | 12 | 16 | 15 |
| Commercial Satellites | 4 |  |  |
| Military Satellites | 1 |  |  |
| Total | 165 | 169 | 154 |

## Revenues

BDS revenues in 2022 decreased by $3,378 million compared with 2021 primarily due to charges on development programs. Unfavorable performance across other defense programs and lower P-8 and weapons volume also contributed to the decrease in revenue. Cumulative contract catch-up adjustments in 2022 were $1,858 million more unfavorable than the prior year largely due to charges on development programs.

BDS revenues in 2021 increased by $283 million compared with 2020 primarily due to higher revenue on the KC-46A Tanker program due to new orders for 27 aircraft received during the first quarter of 2021 and lower charges in 2021. This was partially offset by lower revenues on rotorcraft programs, Commercial Crew and VC-25B. Cumulative contract catch-up adjustments in 2021 were $56 million less unfavorable than the prior year, largely due to the lower charges described below.

## (Loss)/earnings From Operations

BDS loss from operations in 2022 of $3,544 million decreased by $5,088 million compared with earnings from operations of $1,544 million in 2021 primarily due to unfavorable impacts of cumulative contract catch-up adjustments ($4,284 million more unfavorable in 2022 than 2021). Volume and mix and higher research and development also contributed to the year over year earnings decline. Charges of fixed price development programs in 2022 included VC-25B ($1,452 million), KC-46A Tanker ($1,374 million), MQ-25 ($579 million), T-7A Red Hawk Production Options ($552 million), T-7A Red Hawk Engineering, Manufacturing and Development (EMD) ($203 million), and Commercial Crew ($288 million). These were partially offset by charges on the KC-46A Tanker ($402 million), VC-25B ($318 million), and Commercial Crew ($214 million) recognized in 2021. The net unfavorable cumulative contract catch-up adjustments represent losses incurred on these development and other programs. See further discussion of fixed-price contracts in Note 13 to our Consolidated Financial Statements.

BDS earnings from operations in 2021 of $1,544 million increased by $5 million compared with earnings from operations of $1,539 million in 2020 primarily due to less unfavorable impacts from cumulative contract catch-up adjustments, which improved $219 million from the prior year, largely due to lower KC-46A Tanker charges in 2021 compared to 2020 and other charges on development programs. The $219 million change in cumulative contract catch-up adjustments was offset primarily by lower volume and mix on rotorcraft programs and lower equity earnings for United Launch Alliance (ULA). During 2020, BDS recorded charges on KC-46A Tanker ($1,320 million) and VC-25B ($168 million).

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BDS (loss)/earnings from operations includes our share of income from equity method investments of $13 million, $53 million and $141 million primarily from our ULA and non-U.S. joint ventures in 2022, 2021 and 2020, respectively. Earnings from our ULA joint venture increased in 2022, partially offset by losses on other operating investments.

## **Backlog**

Total backlog of $54,373 million at December 31, 2022 was $5,455 million lower than December 31, 2021 due to the timing of awards and revenue recognized on contracts awarded in prior years.

## **Additional Considerations**

Our BDS business includes a variety of development programs which have complex design and technical challenges. Some of these programs have cost-type contracting arrangements. In these cases, the associated financial risks are primarily in reduced fees, lower profit rates or program cancellation if cost, schedule or technical performance issues arise. Examples of these programs include Ground-based Midcourse Defense, Proprietary and Space Launch System programs.

Some of our development programs are contracted on a fixed-price basis. Examples of significant fixed-price development programs include Commercial Crew, KC-46A Tanker, MQ-25, T-7A Red Hawk, VC-25B, and commercial and military satellites. A number of our ongoing fixed-price development programs have reach-forward losses. New programs could also have risk for reach-forward loss upon contract award and during the period of contract performance. Many development programs have highly complex designs. As technical or quality issues arise during development, we may experience schedule delays and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated price, either of which could result in a material charge or otherwise adversely affect our financial condition. These programs are ongoing, and while we believe the cost and fee estimates incorporated in the financial statements are appropriate, the technical complexity of these programs creates financial risk as additional completion costs may become necessary or scheduled delivery dates could be extended, which could trigger termination provisions or other financially significant exposure. Risk remains that we may be required to record additional reach-forward losses in future periods.

## **Global Services**

### **Business Environment and Trends**

The aerospace markets we serve include parts distribution, logistics and other inventory services; maintenance, engineering and upgrades; training and professional services; and data analytics and digital services. During 2022, commercial services volume at BGS recovered to pre-pandemic levels. We expect BGS commercial revenues to remain strong in future quarters as the commercial airline industry continues to recover.

Over the long-term, as the size of the worldwide commercial airline fleet continues to grow, so does demand for aftermarket services designed to increase efficiency and extend the economic lives of aircraft. Airlines are using data analytics to plan flight operations and predictive maintenance to improve their productivity and efficiency. Airlines continue to look for opportunities to reduce the size and cost of their spare parts inventory, frequently outsourcing spares management to third parties.

The demand outlook for our government services business has remained stable in 2022. Government services market segments are growing on pace with related fleets, but vary based on the utilization and age of the aircraft. The U.S. government services market is the single largest individual market, comprising over 50 percent of the government services markets served. Over the next decade, we

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expect U.S. growth to remain flat and non-U.S. fleets, led by Middle East and Asia Pacific customers, to add rotorcraft and commercial derivative aircraft at faster rates. We expect less than 20 percent of the worldwide fleet of military aircraft to be retired and replaced over the next ten years, driving increased demand for services to maintain aging aircraft and enhance aircraft capability.

BGS' major customer, the U.S. government, remains subject to the spending limits and uncertainty described on page 35, which could restrict the execution of certain program activities and delay new programs or competitions.

**Industry Competitiveness** Aviation services is a competitive market with many domestic and international competitors. This market environment has resulted in intense pressures on pricing, and we expect these pressures to continue or intensify in the coming years. Continued access to global markets remains vital to our ability to fully realize our sales growth potential and long-term investment returns.

## Results of Operations

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | $17,611 | $16,328 | $15,543 |
| % of total company revenues | 26% | 26% | 27% |
| Earnings from operations | $2,727 | $2,017 | $450 |
| Operating margins | 15.5% | 12.4% | 2.9% |

## Revenues

BGS revenues in 2022 increased by $1,283 million compared with 2021 primarily due to higher commercial services volume, partially offset by lower government services volume and performance. The decrease in government services volume is partly driven by the discontinuation of an engine distribution agreement in the second quarter of 2022. The net favorable impact of cumulative contract catch-up adjustments in 2022 was $137 million lower than the prior year.

BGS revenues in 2021 increased by $785 million compared with 2020 due to higher commercial and government services volume. The net favorable impact of cumulative contract catch-up adjustments in 2021 was $37 million lower than the prior year.

## Earnings From Operations

BGS earnings from operations in 2022 increased by $710 million compared with 2021, primarily due to higher commercial services volume and favorable mix, partially offset by lower government services performance. The net unfavorable impact of cumulative contract catch-up adjustments in 2022 was $148 million worse than the net favorable impact in the prior year.

BGS earnings from operations in 2021 increased by $1,567 million compared with 2020, primarily due to charges incurred in 2020 driven by impacts of the COVID-19 pandemic as well as higher commercial services volume in 2021, partially offset by an inventory write-down of $220 million recognized in the fourth quarter of 2021 driven by revised cost estimates on certain customer contracts. Charges in 2020 included $531 million of inventory write-downs, $178 million of related impairments of distribution rights primarily driven by airlines' decisions to retire certain aircraft, $398 million for higher expected credit losses primarily driven by customer liquidity issues, $115 million of contract termination and facility impairment charges, and $72 million of severance costs. The net favorable impact of cumulative contract catch-up adjustments in 2021 was $98 million lower than the prior year.

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## Backlog

BGS total backlog of $19,338 million at December 31, 2022 decreased by 6% from $20,496 million at December 31, 2021, primarily due to revenue recognized on contracts awarded in prior years.

## Boeing Capital

### Business Environment and Trends

BCC's gross customer financing and investment portfolio at December 31, 2022 totaled $1,549 million. A substantial portion of BCC's portfolio is composed of customers that have less than investment-grade credit. BCC's portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably 717 and 747-8 aircraft.

BCC provided customer financing of $96 million during 2022 and none during 2021. While we may be required to fund a number of new aircraft deliveries in 2023 and/or provide refinancing for existing bridge debt, we expect alternative financing will be available at reasonable prices from broad and globally diverse sources.

Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of service. Approximately 4,950 western-built commercial jet aircraft (18.3% of current world fleet) were parked at the end of 2022, including both in-production and out-of-production aircraft types. Of these parked aircraft, a larger portion are expected to be retired compared to the pre-COVID-19 period, which directly impacts the Company in terms of number of new aircraft deliveries and financing opportunities, the ability of existing customers to meet current payment obligations and the value of aircraft in its portfolio. We continue to work closely with our customers to mitigate the risk. At the end of 2021 and 2020, 20.5% and 29.4% of the western-built commercial jet aircraft were parked. Aircraft valuations could decline if significant numbers of additional aircraft, particularly types with relatively few operators, are placed out of service. See Overview to Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the airline industry environment.

### Results of Operations

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | $199 | $272 | $261 |
| Earnings from operations | $29 | $106 | $63 |
| Operating margins | 15% | 39% | 24% |

### Revenues

BCC segment revenues consist principally of lease income from equipment under operating lease, interest income from financing receivables and notes, and other income. BCC's revenues in 2022 decreased by $73 million compared with 2021 primarily due to lower gains on re-lease of assets.

### Earnings From Operations

BCC's earnings from operations is presented net of interest expense, provision for (recovery of) losses, asset impairment expense, depreciation on leased equipment and other operating expenses. In 2022, earnings from operations decreased by $77 million compared with 2021, primarily due to an increase in the allowance for losses on receivables as a result of the war in Ukraine and lower revenues. Earnings from operations in 2021 increased by $43 million compared with 2020 primarily due to higher revenues, lower provision for losses, and lower interest and asset impairment expenses.

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## Financial Position

The following table presents selected financial data for BCC as of December 31:

| (Dollars in millions) | 2022 | 2021 |
| --- | --- | --- |
| Customer financing and investment portfolio, net | $1,494 | $1,720 |
| Other assets, primarily cash and short-term investments | 460 | 462 |
| Total assets | $1,954 | $2,182 |
| Other liabilities, primarily income taxes | $239 | $347 |
| Debt, including intercompany loans | 1,425 | 1,525 |
| Equity | 290 | 310 |
| Total liabilities and equity | $1,954 | $2,182 |
| Debt-to-equity ratio | 4.9-to-1 | 4.9-to-1 |

BCC's customer financing and investment portfolio at December 31, 2022 decreased $226 million from December 31, 2021, primarily due to portfolio run-off, partially offset by new volume.

BCC enters into certain intercompany transactions, reflected in Unallocated items, eliminations and other, in the form of intercompany guarantees and other subsidies that mitigate the effects of certain credit quality or asset impairment issues on the BCC segment.

## Liquidity and Capital Resources

### Cash Flow Summary

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Net loss | ($5,053) | ($4,290) | ($11,941) |
| Non-cash items | 4,426 | 7,851 | 10,866 |
| Changes in assets and liabilities | 4,139 | (6,977) | (17,335) |
| Net cash provided/(used) by operating activities | 3,512 | (3,416) | (18,410) |
| Net cash provided/(used) by investing activities | 4,370 | 9,324 | (18,366) |
| Net cash (used)/provided by financing activities | (1,266) | (5,600) | 34,955 |
| Effect of exchange rate changes on cash and cash equivalents | (73) | (39) | 85 |
| Net increase/(decrease) in cash & cash equivalents, including restricted | 6,543 | 269 | (1,736) |
| Cash & cash equivalents, including restricted, at beginning of year | 8,104 | 7,835 | 9,571 |
| Cash & cash equivalents, including restricted, at end of year | $14,647 | $8,104 | $7,835 |

**Operating Activities** Net cash provided by operating activities was $3.5 billion during 2022, compared with net cash used by operating activities of $3.4 billion during 2021. The $6.9 billion improvement in cash provided by operating activities in 2022 is primarily driven by improved changes in assets and liabilities of $11.1 billion, partially offset by lower non-cash items of $3.4 billion and higher net loss of $0.8 billion. Changes in assets and liabilities for 2022 improved by $11.1 billion compared with 2021 primarily driven by favorable changes in Accrued liabilities ($6.6 billion), Accounts payable ($4.6 billion) and Inventories ($1.5 billion), partially offset by a decrease in Advances and progress billings ($2.4 billion) in 2022. The increase in Accrued liabilities is primarily driven by the accrued losses on BDS fixed-price development programs, lower payments to 737 MAX customers in 2022, and a $0.7 billion

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payment in 2021 consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S. Department of Justice. Concessions paid to 737 MAX customers totaled $1.0 billion and $2.5 billion during 2022 and 2021. Growth in Accounts Payable in 2022 is a source of cash while reductions in Accounts Payable in 2021 were a use of cash generally reflecting increases in production rates. Inventory improvements were driven by higher 737 MAX deliveries and resumption of 787 deliveries in 2022. Additionally, in 2022 and 2021 we received income tax refunds of $1.5 billion and $1.7 billion. Cash provided by Advances and progress billings was $0.1 billion in 2022, as compared with $2.5 billion of cash provided in 2021. The $3.4 billion reduction in non-cash items in 2022 is primarily driven by the $3.5 billion reach-forward loss on the 787 program that was recorded in 2021. Net loss for 2022 was $5.1 billion compared with net loss of $4.3 billion in 2021. The $0.8 billion year-over-year increase in the net loss is primarily driven by the absence of an income tax benefit in 2022.

The reduction in cash used by operating activities in 2021 compared with 2020 is primarily driven by lower net loss and improved changes in assets and liabilities. Non-cash items in 2021 include the $3.5 billion reach-forward loss on the 787 program which was recorded as a reduction to inventory, as well as $1.2 billion of treasury shares issued to fund Company contributions to the 401(k) plan and $0.8 billion of share-based plans expense reflecting a one-time stock grant to most employees in lieu of 2021 salary increases. The changes in assets and liabilities reflect the significant increase in commercial aircraft inventory in 2020 driven by lower deliveries due to the COVID-19 pandemic and the 737 MAX grounding. In 2021, inventory growth slowed as the continued buildup of 787 aircraft caused by production issues and 777X inventory growth was partially offset by a decrease in 737 MAX inventory following the resumption of deliveries. Compensation payments to 737 MAX customers totaled $2.5 billion in 2021 and $2.2 billion in 2020. In the first quarter of 2021, we paid $0.7 billion consistent with the terms of the Deferred Prosecution Agreement between Boeing and the U.S. Department of Justice. Additionally, in 2021, we received income tax refunds of $1.7 billion. Cash provided by Advances and progress billings was $2.5 billion in 2021, as compared with Cash used by Advances and progress billings of $1.1 billion in 2020.

At December 31, 2022 and 2021, Accounts payable included $2.5 billion and $2.3 billion payable to suppliers who have elected to participate in supply chain financing programs. Payables to suppliers who elected to participate in supply chain financing programs increased by $0.2 billion in 2022 and declined by $1.5 billion and $1.9 billion in 2021 and 2020. Supply chain financing is not material to our overall liquidity. The declines in 2021 and 2020 were primarily due to reductions in commercial purchases from suppliers.

**Investing Activities** Cash provided by investing activities during 2022 was $4.4 billion, compared with cash provided by investing activities of $9.3 billion during 2021 and cash used by investing activities of $18.4 billion during 2020. The decrease in cash inflows in 2022 compared to 2021 is primarily due to $5.6 billion of net proceeds from investments compared to $9.8 billion in 2021. The increase in cash inflows in 2021 compared to 2020 is primarily due to $27.1 billion of higher net proceeds from investments. Capital expenditures totaled $1.2 billion in 2022, compared with $1.0 billion in 2021 and $1.3 billion in 2020. We expect capital expenditures in 2023 to be higher than in 2022.

**Financing Activities** Cash used by financing activities was $1.3 billion during 2022, compared with $5.6 billion during 2021 and cash provided of $35.0 billion in 2020. The decrease of $4.3 billion compared with 2021 primarily reflects higher net debt repayments in 2021. During 2021, debt repayments net of new borrowings were $5.6 billion, primarily due to $13.8 billion of repayments of our two-year delayed draw term loan credit agreement, partially offset by $9.8 billion of fixed rate senior notes issued in the first quarter of 2021. During the year ended December 31, 2020, new borrowings net of repayments were $36.3 billion, primarily due to $29.9 billion of fixed rate senior notes issued in 2020 and $13.8 billion of new borrowings under a two-year delayed draw term loan agreement entered into in the first quarter of 2020.

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At December 31, 2022 and 2021 debt balances totaled $57.0 billion and $58.1 billion, of which $5.2 billion and $1.3 billion were classified as short-term. This included $1.4 billion and $1.5 billion of debt attributable to BCC at December 31, 2022 and 2021, of which $0.2 billion and $0.3 billion were classified as short-term.

During the years ended December 31, 2022, 2021 and 2020, we did not repurchase any shares through our open market share repurchase program. Share repurchases under this program have been suspended since April 2019. In March 2020, the Board of Directors terminated its prior authorization to repurchase shares of the Company's outstanding common stock in the open market. We had 0.2 million, 0.3 million and 0.6 million shares transferred to us from employee tax withholdings in 2022, 2021 and 2020, respectively. In March 2020, we announced the suspension of our dividend until further notice. As a result, we did not pay any dividends in 2022 and 2021 compared with $1.2 billion paid in 2020.

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## Capital Resources

The following table summarizes certain cash requirements for known contractual and other obligations as of December 31, 2022, and the estimated timing thereof. See Note 12 for future operating lease payments.

| (Dollars in millions) | Current | Long-term | Total |
| --- | --- | --- | --- |
| Long-term debt (including current portion) | $5,197 | $52,338 | $57,535 |
| Interest on debt | 2,266 | 31,397 | 33,663 |
| Pension and other postretirement | 519 | 8,133 | 8,652 |
| Purchase obligations | 62,025 | 59,515 | 121,540 |
| 737 MAX customer concessions and consideration (1) | 100 | 600 | 700 |

$^{(1)}$ For further discussion, see Note 13 to our Consolidated Financial Statements.

We expect to be able to fund our cash requirements through cash and short-term investments and cash provided by operations, as well as continued access to capital markets. At December 31, 2022, we had $14.6 billion of cash, $2.6 billion of short-term investments, and $12.0 billion of unused borrowing capacity on revolving credit line agreements. In the third quarter of 2022, we entered into a $5.8 billion 364-day revolving credit agreement expiring in August 2023, a $3 billion three-year revolving credit agreement expiring in August 2025, and amended our $3.2 billion five-year revolving credit agreement, which expires in October 2024, primarily to incorporate a LIBOR successor rate. The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings one year beyond the aforementioned expiration date. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs.

Our increased debt balance resulted in downgrades to our credit ratings in 2020, and our ratings remained unchanged in 2022 and 2021. We expect to be able to access capital markets when we require additional funding in order to pay off existing debt, address further impacts to our business related to market developments, fund outstanding financing commitments or meet other business requirements. A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt. These factors include disruptions or declines in the global capital markets and/or a decline in our financial performance, outlook or credit ratings, and/or associated changes in demand for our products and services. These risks will be particularly acute if we are subject to further credit rating downgrades. The occurrence of any or all of these events may adversely affect our ability to fund our operations and financing or contractual commitments.

Any future borrowings may affect our credit ratings and are subject to various debt covenants. At December 31, 2022, we were in compliance with the covenants for our debt and credit facilities. The most restrictive covenants include a limitation on mortgage debt and sale and leaseback transactions as a percentage of consolidated net tangible assets (as defined in the credit agreements) and a limitation on consolidated debt as a percentage of total capital (as defined in the credit agreements). When considering debt covenants, we continue to have substantial borrowing capacity.

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**Pension and Other Postretirement Benefits** Pension cash requirements are based on an estimate of our minimum funding requirements, pursuant to Employee Retirement Income Security Act (ERISA) regulations, although we may make additional discretionary contributions. Estimates of other postretirement benefits are based on both our estimated future benefit payments and the estimated contributions to plans that are funded through trusts.

At December 31, 2022 and 2021, our pension plans were $5.3 billion and $7.8 billion underfunded as measured under Generally Accepted Accounting Principles in the United States of America (GAAP). On an ERISA basis our plans are more than 100% funded at December 31, 2022. We do not expect to make significant contributions to our pension plans in 2023. We may be required to make higher contributions to our pension plans in future years.

In the fourth quarter of 2020, we contributed $3 billion of our common stock to our pension fund. In the fourth quarter of 2020, we also began using our common stock in lieu of cash to fund Company contributions to our 401(k) plans for the foreseeable future. Under this approach, common stock is contributed to our 401(k) plans following each pay period. This further enables the Company to conserve cash. We have retained an independent fiduciary to manage and liquidate stock contributed to these plans at its discretion.

**Purchase Obligations** Purchase obligations represent contractual agreements to purchase goods or services that are legally binding; specify a fixed, minimum or range of quantities; specify a fixed, minimum, variable or indexed price provision; and specify approximate timing of the transaction. Purchase obligations include amounts recorded as well as amounts that are not recorded on the Consolidated Statements of Financial Position.

Purchase obligations not recorded on the Consolidated Statements of Financial Position include agreements for inventory procurement, tooling costs, electricity and natural gas contracts, property, plant and equipment, customer financing equipment and other miscellaneous production related obligations. The most significant obligation relates to inventory procurement contracts. We have entered into certain significant inventory procurement contracts that specify determinable prices and quantities, and long-term delivery timeframes. In addition, we purchase raw materials on behalf of our suppliers. These agreements require suppliers and vendors to be prepared to build and deliver items in sufficient time to meet our production schedules. The need for such arrangements with suppliers and vendors arises from the extended production planning horizon for many of our products. A significant portion of these inventory commitments is supported by firm contracts with customers and/or has historically resulted in settlement through reimbursement from customers for penalty payments to the supplier should the customer not take delivery. These amounts are also included in our forecasts of costs for program and contract accounting. Some inventory procurement contracts may include escalation adjustments. In these limited cases, we have included our best estimate of the effect of the escalation adjustment in the amounts disclosed in the table above.

Purchase obligations recorded on the Consolidated Statements of Financial Position primarily include accounts payable and certain other current and long-term liabilities including accrued compensation.

We have entered into various industrial participation agreements with certain customers outside of the U.S. to facilitate economic flow back and/or technology or skills transfer to their businesses or government agencies as the result of their procurement of goods and/or services from us. These commitments may be satisfied by our local operations there, placement of direct work or vendor orders for supplies, opportunities to bid on supply contracts, transfer of technology or other forms of assistance. However, in certain cases, our commitments may be satisfied through other parties (such as our vendors) who purchase supplies from our non-U.S. customers. In certain cases, penalties could be imposed if we do not meet our industrial participation commitments. During 2022, we incurred no such penalties. As of December 31, 2022, we had outstanding industrial participation agreements

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totaling $24.8 billion that extend through 2034. Purchase order commitments associated with industrial participation agreements are included in purchase obligations. To be eligible for such a purchase order commitment from us, a non-U.S. supplier must have sufficient capability to meet our requirements and must be competitive in cost, quality and schedule.

**Off-Balance Sheet Arrangements** We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 14 to our Consolidated Financial Statements.

### Commercial Commitments

The following table summarizes our commercial commitments outstanding as of December 31, 2022.

| (Dollars in millions) | Total Amounts Committed/ Maximum Amount of Loss | Less than 1 year | 1-3 years | 4-5 years | After 5 years |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | Standby letters of credit and surety bonds | $5,070 | $3,859 | $1,036 | $10 | $165 |
| Commercial aircraft financing commitments | 16,105 | 3,084 | 5,989 | 4,075 | 2,957 |  |
| Total commercial commitments | $21,175 | $6,943 | $7,025 | $4,085 | $3,122 |  |

Commercial aircraft financing commitments include commitments to provide financing related to aircraft on order, under option for deliveries or proposed as part of sales campaigns or refinancing with respect to delivered aircraft, based on estimated earliest potential funding dates. Customer financing commitments totaled $16.1 billion and $12.9 billion at December 31, 2022 and 2021. The increase relates to new financing commitments. We anticipate that we will not be required to fund a significant portion of our financing commitments as we continue to work with third party financiers to provide alternative financing to customers. Historically, we have not been required to fund significant amounts of outstanding commitments. However, there can be no assurances that we will not be required to fund greater amounts than historically required. See Note 13 to our Consolidated Financial Statements.

### Contingent Obligations

We have significant contingent obligations that arise in the ordinary course of business, which include the following:

**Legal** Various legal proceedings, claims and investigations are pending against us. Legal contingencies are discussed in Note 21 to our Consolidated Financial Statements.

**Environmental Remediation** We are involved with various environmental remediation activities and have recorded a liability of $752 million at December 31, 2022. For additional information, see Note 13 to our Consolidated Financial Statements.

### Non-GAAP Measures

#### Core Operating Loss, Core Operating Margin and Core Loss Per Share

Our Consolidated Financial Statements are prepared in accordance with GAAP which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Core operating earnings, core operating margin and core earnings per share exclude the FAS/CAS service cost adjustment. The FAS/

45

CAS service cost adjustment represents the difference between the Financial Accounting Standards (FAS) pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core earnings per share excludes both the FAS/CAS service cost adjustment and non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to BCA and certain BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid.

The Pension FAS/CAS service cost adjustments recognized in Loss from operations were benefits of $849 million in 2022, $882 million in 2021 and $1,024 million in 2020. The lower benefits in 2022 and 2021 were primarily due to reductions in allocated pension cost year over year. The non-operating pension expense included in Other income, net was a benefit of $881 million in 2022, $528 million in 2021 and $340 million in 2020. The higher benefits in 2022 were primarily due to lower amortization of net actuarial losses and a settlement loss that was recorded in 2021. For further discussion of pension and other postretirement costs, see the Management's Discussion and Analysis on page 24 of this Form 10-K and see Note 22 to our Consolidated Financial Statements.

Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as unallocated pension and other postretirement benefit cost primarily represent costs driven by market factors and costs not allocable to U.S. government contracts.

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## Reconciliation of Non-GAAP Measures to GAAP Measures

The table below reconciles the non-GAAP financial measures of core operating loss, core operating margins and core loss per share with the most directly comparable GAAP financial measures of loss from operations, operating margins and diluted loss per share.

*(Dollars in millions, except per share data)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | $66,608 | $62,286 | $58,158 |
| Loss from operations, as reported | ($3,547) | ($2,902) | ($12,767) |
| Operating margins | (5.3)% | (4.7)% | (22.0)% |
| Pension FAS/CAS service cost adjustment (1) | ($849) | ($882) | ($1,024) |
| Postretirement FAS/CAS service cost adjustment (1) | (294) | (291) | (359) |
| FAS/CAS service cost adjustment (1) | ($1,143) | ($1,173) | ($1,383) |
| Core operating loss (non-GAAP) | ($4,690) | ($4,075) | ($14,150) |
| Core operating margins (non-GAAP) | (7.0)% | (6.5)% | (24.3)% |
| Diluted loss per share, as reported | ($8.30) | ($7.15) | ($20.88) |
| Pension FAS/CAS service cost adjustment (1) | (1.43) | (1.50) | (1.80) |
| Postretirement FAS/CAS service cost adjustment (1) | (0.49) | (0.49) | (0.63) |
| Non-operating pension expense (2) | (1.47) | (0.91) | (0.60) |
| Non-operating postretirement expense (2) | (0.10) |  | 0.03 |
| Provision for deferred income taxes on adjustments (3) | 0.73 | 0.61 | 0.63 |
| Core loss per share (non-GAAP) | ($11.06) | ($9.44) | ($23.25) |
| Weighted average diluted shares (in millions) | 595.2 | 588.0 | 569.0 |

$^{(1)}$ FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. This adjustment is excluded from Core operating loss (non-GAAP).

$^{(2)}$ Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. These expenses are included in Other income, net and are excluded from Core loss per share (non-GAAP).

$^{(3)}$ The income tax impact is calculated using the U.S. corporate statutory tax rate.

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# Critical Accounting Policies & Estimates

## Accounting for Long-term Contracts

Substantially all contracts at BDS and certain contracts at BGS are long-term contracts. Our long-term contracts typically represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods and/or services and the significant service of integration that we provide.

Accounting for long-term contracts involves a judgmental process of estimating the total sales, costs, and profit for each performance obligation. Cost of sales is recognized as incurred, and revenue is determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales.

Due to the size, duration and nature of many of our long-term contracts, the estimation of total sales and costs through completion is complicated and subject to many variables. Total sales estimates are based on negotiated contract prices and quantities, modified by our assumptions regarding contract options, change orders, incentive and award provisions associated with technical performance, and price adjustment clauses (such as inflation or index-based clauses). The majority of these long-term contracts are with the U.S. government where the price is generally based on estimated cost to produce the product or service plus profit. Federal Acquisition Regulations provide guidance on the types of cost that will be reimbursed in establishing contract price. Total cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends, business base and other economic projections. Factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, anticipated labor agreements, and lingering impacts of COVID-19.

Revenue and cost estimates for all significant long-term contract performance obligations are reviewed and reassessed quarterly. Changes in these estimates could result in recognition of cumulative catch-up adjustments to the performance obligation's inception to date revenues, cost of sales and profit in the period in which such changes are made. Changes in revenue and cost estimates could also result in a reach-forward loss or an adjustment to a reach-forward loss which would be recorded immediately in earnings. Net cumulative catch-up adjustments for changes in estimated revenues and costs at completion across all long-term contracts, including the impact of increases in estimated losses on unexercised options, increased Loss from operations by $5,253 million, $880 million and $942 million in 2022, 2021 and 2020, respectively. The cumulative catch-up adjustments in 2022 were primarily due to losses recognized on the VC-25B, KC-46A Tanker, MQ-25, Commercial Crew and T-7A Red Hawk programs. These are all fixed-price development programs, and there is ongoing risk that similar losses may have to be recognized in future periods on these and/or other programs.

Due to the significance of judgment in the estimation process described above, it is likely that materially different earnings could be recorded if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions/estimates, internal and supplier performance, inflationary trends, or other circumstances may adversely or positively affect financial performance in future periods. If the combined gross margins for our profitable long-term contracts had been estimated to be higher or lower by 1% during 2022, it would have increased or decreased pre-tax income for the year by approximately $300 million.

## Program Accounting

Program accounting requires the demonstrated ability to reliably estimate revenues, costs and gross profit margin for the defined program accounting quantity. A program consists of the estimated number of units (accounting quantity) of a product to be produced in a continuing, long-term production effort for

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delivery under existing and anticipated contracts. The determination of the accounting quantity is limited by the ability to make reasonably dependable estimates.

Factors that must be estimated include program accounting quantity, sales price, labor and employee benefit costs, material costs, procured part costs, major component costs, overhead costs, program tooling and other non-recurring costs, and warranty costs. Estimation of the accounting quantity for each program takes into account several factors that are indicative of the demand for the particular program, such as firm orders, letters of intent from prospective customers and market studies. Total estimated program sales are determined by estimating the model mix and sales price for all unsold units within the accounting quantity, added together with the sales prices for all undelivered units under contract. The sales prices for all undelivered units within the accounting quantity include an escalation adjustment for inflation that is updated quarterly. Cost estimates are based largely on negotiated and anticipated contracts with suppliers, historical performance trends, and business base and other economic projections. Factors that influence these estimates include production rates, internal and subcontractor performance trends, learning curve, change incorporation, regulatory requirements in connection with certification, flight test and certification schedules, performance or reliability issues involving completed aircraft, customer and/or supplier claims or assertions, asset utilization, anticipated labor agreements, inflationary or deflationary trends, and lingering impacts of COVID-19.

To ensure reliability in our estimates, we employ a rigorous estimating process that is reviewed and updated on a quarterly basis. This includes reassessing the accounting quantity. Changes in estimates of program gross profit margins are normally recognized on a prospective basis; however, when estimated costs to complete a program plus costs already included in inventory exceed estimated revenues from the program, a loss is recorded in the current period. Reductions to the estimated loss are included in the gross profit margin for undelivered units in the accounting quantity whereas increases to the estimated loss are recorded as an earnings charge in the period in which the loss is determined.

The 767, 777X, and 787 programs had near break-even or single digit margins at December 31, 2022. Adverse changes to the revenue and/or cost estimates for these programs could result in earnings charges in future periods.

**777X Program** The 777X program had near break-even gross margins at December 31, 2022. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued production disruption due to labor instability and supply chain disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods, which may be material.

**787 Program** During the fourth quarter of 2021, we recorded a loss of $3.5 billion on the 787 program primarily due to rework driving longer delivery delays than were previously expected and associated customer considerations. During the fourth quarter of 2022, we increased the 787 program accounting quantity by 100 units due to the program's normal progress of obtaining additional orders and delivering aircraft. The increase in the accounting quantity improved the program's profit margin.

Our program revenue and cost assumptions reflect our current best estimate. However, if we are required to reduce the accounting quantity and/or production rates, experience further delivery delays, incur additional customer considerations, or experience other factors that result in lower margins, the 787 program could record additional losses in future periods, which may be material.

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# Pension Plans

Many of our employees have earned benefits under defined benefit pension plans. The majority of employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan. Accounting rules require an annual measurement of our projected obligation and plan assets. These measurements are based upon several assumptions, including the discount rate and the expected long-term rate of asset return. Future changes in assumptions or differences between actual and expected outcomes can significantly affect our future annual expense, projected benefit obligation and Shareholders' equity.

The projected benefit obligation is sensitive to discount rates. The projected benefit obligation would decrease by $1,270 million or increase by $1,415 million if the discount rate increased or decreased by 25 basis points. A 25 basis point change in the discount rate would not have a significant impact on pension cost. However, net periodic pension cost is sensitive to changes in the expected long-term rate of asset return. A decrease or increase of 25 basis points in the expected long-term rate of asset return would have increased or decreased 2022 net periodic pension cost by $158 million. See Note 16 of the Notes to our Consolidated Financial Statements, which includes the discount rate and expected long-term rate of asset return assumptions for the last three years.

# Deferred Income Taxes - Valuation Allowance

The Company had deferred income tax assets of $12,301 million at December 31, 2022 that can be used in future years to offset taxable income and reduce income taxes payable. The Company had deferred income tax liabilities of $9,306 million at December 31, 2022 that will partially offset deferred income tax assets and result in higher taxable income in future years and increase income taxes payable. Tax law determines whether future reversals of temporary differences will result in taxable and deductible amounts that offset each other in future years. The particular years in which temporary differences result in taxable or deductible amounts generally are determined by the timing of the recovery of the related asset or settlement of the related liability.

On a quarterly basis, we assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of such assets will not be realized.

This assessment takes into account both positive and negative evidence. A recent history of financial reporting losses is heavily weighted as a source of objectively verifiable negative evidence. Due to our recent history of losses, we determined we could not include future projected earnings in our analysis. Rather, we use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. The selection of methodologies and assessment of when temporary differences will result in taxable or deductible amounts involves significant management judgment and is inherently complex and subjective. We believe that the methodologies we use are reasonable and can be replicated on a consistent basis in future periods.

Deferred tax liabilities represent the assumed source of future taxable income and the majority are assumed to generate taxable amounts during the next five years. Deferred tax assets include amounts related to pension and other postretirement benefits that are assumed to generate significant deductible amounts beyond five years. The Company's valuation allowance of $3,162 million at December 31, 2022 primarily relates to pension and other postretirement benefit obligation deferred tax assets, tax credits and other carryforwards that are assumed to reverse beyond the period in which reversals of deferred tax liabilities are assumed to occur. During 2022, the Company increased the valuation allowance by $739 million primarily due to tax credits and other carryforwards generated in 2022 that

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cannot be realized in 2022, partially offset by favorable pension remeasurement. Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or other comprehensive income.

For additional information regarding income taxes, see Note 4 of the Notes to the Consolidated Financial Statements.

## Item 7A. Quantitative and Qualitative Disclosures About Market Risk

### Interest Rate Risk

We have financial instruments that are subject to interest rate risk, principally fixed- and floating-rate debt obligations, and customer financing assets and liabilities. The investors in our fixed-rate debt obligations do not generally have the right to demand we pay off these obligations prior to maturity. Therefore, exposure to interest rate risk is not believed to be material for our fixed-rate debt. As of December 31, 2022, we do not have any significant floating-rate debt obligations. Historically, we have not experienced material gains or losses on our customer financing assets and liabilities due to interest rate changes.

### Foreign Currency Exchange Rate Risk

We are subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. We use foreign currency forward contracts to hedge the price risk associated with firmly committed and forecasted foreign denominated payments and receipts related to our ongoing business. Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates. At December 31, 2022, a 10% increase or decrease in the exchange rate in our portfolio of foreign currency contracts would have increased or decreased our unrealized losses by $232 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments do not create material market risk.

### Commodity Price Risk

We are subject to commodity price risk relating to commodity purchase contracts for items used in production that are subject to changes in the market price. We use commodity swaps and commodity purchase contracts to hedge against these potentially unfavorable price changes. Our commodity purchase contracts and derivatives are both sensitive to changes in the market price. At December 31, 2022, a 10% increase or decrease in the market price in our commodity derivatives would have increased or decreased our unrealized losses by $70 million. Consistent with the use of these contracts to neutralize the effect of market price fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these commodity purchase contracts and the offsetting swaps do not create material market risk.

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# **Item 8. Financial Statements and Supplementary Data**

# **Index to the Consolidated Financial Statements**

|  | Page |
| --- | --- |
| Consolidated Statements of Operations | 53 |
| Consolidated Statements of Comprehensive Income | 54 |
| Consolidated Statements of Financial Position | 55 |
| Consolidated Statements of Cash Flows | 56 |
| Consolidated Statements of Equity | 57 |
| Summary of Business Segment Data | 58 |
| Note 1 - Summary of Significant Accounting Policies | 59 |
| Note 2 - Goodwill and Acquired Intangibles | 70 |
| Note 3 - Earnings Per Share | 70 |
| Note 4 - Income Taxes | 72 |
| Note 5 - Accounts Receivable | 75 |
| Note 6 - Allowance for Losses on Financial Assets | 76 |
| Note 7 - Inventories | 76 |
| Note 8 - Contracts with Customers | 77 |
| Note 9 - Customer Financing | 78 |
| Note 10 - Property, Plant and Equipment | 80 |
| Note 11 - Investments | 81 |
| Note 12 - Leases | 81 |
| Note 13 - Liabilities, Commitments and Contingencies | 83 |
| Note 14 - Arrangements with Off-Balance Sheet Risk | 88 |
| Note 15 - Debt | 89 |
| Note 16 - Postretirement Plans | 90 |
| Note 17 - Share-Based Compensation and Other Compensation Arrangements | 99 |
| Note 18 - Shareholders' Equity | 103 |
| Note 19 - Derivative Financial Instruments | 104 |
| Note 20 - Fair Value Measurements | 106 |
| Note 21 - Legal Proceedings | 108 |
| Note 22 - Segment and Revenue Information | 109 |
| Reports of Independent Registered Public Accounting Firm | 115 |

52

# **The Boeing Company and Subsidiaries**  
 **Consolidated Statements of Operations**

*(Dollars in millions, except per share data)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Sales of products | $55,893 | $51,386 | $47,142 |
| Sales of services | 10,715 | 10,900 | 11,016 |
| Total revenues | 66,608 | 62,286 | 58,158 |
| Cost of products | (53,969) | (49,954) | (54,568) |
| Cost of services | (9,109) | (9,283) | (9,232) |
| Boeing Capital interest expense | (28) | (32) | (43) |
| Total costs and expenses | (63,106) | (59,269) | (63,843) |
|  | 3,502 | 3,017 | (5,685) |
| (Loss)/income from operating investments, net | (16) | 210 | 9 |
| General and administrative expense | (4,187) | (4,157) | (4,817) |
| Research and development expense, net | (2,852) | (2,249) | (2,476) |
| Gain on dispositions, net | 6 | 277 | 202 |
| Loss from operations | (3,547) | (2,902) | (12,767) |
| Other income, net | 1,058 | 551 | 447 |
| Interest and debt expense | (2,533) | (2,682) | (2,156) |
| Loss before income taxes | (5,022) | (5,033) | (14,476) |
| Income tax (expense)/benefit | (31) | 743 | 2,535 |
| Net loss | (5,053) | (4,290) | (11,941) |
| Less: net loss attributable to noncontrolling interest | (118) | (88) | (68) |
| Net loss attributable to Boeing Shareholders | ($4,935) | ($4,202) | ($11,873) |
| Basic loss per share | ($8.30) | ($7.15) | ($20.88) |
| Diluted loss per share | ($8.30) | ($7.15) | ($20.88) |

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

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# **The Boeing Company and Subsidiaries**  
 **Consolidated Statements of Comprehensive Income**

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Net loss | ($5,053) | ($4,290) | ($11,941) |
| Other comprehensive income/(loss), net of tax: |  |  |  |
| Currency translation adjustments | (62) | (75) | 98 |
| Unrealized loss on certain investments, net of tax of $0, $0 and $0 | (1) |  |  |
| Derivative instruments: |  |  |  |
| Unrealized (loss)/gain arising during period, net of tax of $12, ($16) and ($4) | (40) | 55 | 14 |
| Reclassification adjustment for loss/(gain) included in net earnings, net of tax of ($3), $2 and ($7) | 10 | (6) | 27 |
| Total unrealized (loss)/gain on derivative instruments, net of tax | (30) | 49 | 41 |
| Defined benefit pension plans & other postretirement benefits: |  |  |  |
| Net actuarial gain/(loss) arising during the period, net of tax of ($22), ($32) and $111 | 1,533 | 4,262 | (1,956) |
| Amortization of actuarial loss included in net periodic pension cost, net of tax of ($11), ($8) and ($52) | 791 | 1,155 | 917 |
| Settlements included in net (loss)/income, net of tax of $0, ($2) and $0 | (4) | 191 | 5 |
| Amortization of prior service credits included in net periodic pension cost, net of tax of $2, $1 and $6 | (114) | (114) | (112) |
| Prior service (credit)/cost arising during the period, net of tax of $0, $0 and ($2) | (1) |  | 27 |
| Pension and postretirement (cost)/benefit related to our equity method investments, net of tax of $0, ($2) and $0 | (3) | 6 |  |
| Total defined benefit pension plans & other postretirement benefits, net of tax | 2,202 | 5,500 | (1,119) |
| Other comprehensive income/(loss), net of tax | 2,109 | 5,474 | (980) |
| Comprehensive (loss)/income, net of tax | (2,944) | 1,184 | (12,921) |
| Less: Comprehensive loss related to noncontrolling interest | (118) | (88) | (68) |
| Comprehensive (loss)/income attributable to Boeing Shareholders, net of tax | ($2,826) | $1,272 | ($12,853) |

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

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# **The Boeing Company and Subsidiaries**  
 **Consolidated Statements of Financial Position**

*(Dollars in millions, except per share data)*

| December 31, | 2022 | 2021 |
| --- | --- | --- |
| Assets |  |  |
| Cash and cash equivalents | $14,614 | $8,052 |
| Short-term and other investments | 2,606 | 8,192 |
| Accounts receivable, net | 2,517 | 2,641 |
| Unbilled receivables, net | 8,634 | 8,620 |
| Current portion of customer financing, net | 154 | 117 |
| Inventories | 78,151 | 78,823 |
| Other current assets, net | 2,847 | 2,221 |
| Total current assets | 109,523 | 108,666 |
| Customer financing, net | 1,450 | 1,695 |
| Property, plant and equipment, net | 10,550 | 10,918 |
| Goodwill | 8,057 | 8,068 |
| Acquired intangible assets, net | 2,311 | 2,562 |
| Deferred income taxes | 63 | 77 |
| Investments | 983 | 975 |
| Other assets, net of accumulated amortization of $949 and $975 | 4,163 | 5,591 |
| Total assets | $137,100 | $138,552 |
| Liabilities and equity |  |  |
| Accounts payable | $10,200 | $9,261 |
| Accrued liabilities | 21,581 | 18,455 |
| Advances and progress billings | 53,081 | 52,980 |
| Short-term debt and current portion of long-term debt | 5,190 | 1,296 |
| Total current liabilities | 90,052 | 81,992 |
| Deferred income taxes | 230 | 218 |
| Accrued retiree health care | 2,503 | 3,528 |
| Accrued pension plan liability, net | 6,141 | 9,104 |
| Other long-term liabilities | 2,211 | 1,750 |
| Long-term debt | 51,811 | 56,806 |
| Total liabilities | 152,948 | 153,398 |
| Shareholders' equity: |  |  |
| Common stock, par value $5.00 - 1,200,000,000 shares authorized; 1,012,261,159 shares issued | 5,061 | 5,061 |
| Additional paid-in capital | 9,947 | 9,052 |
| Treasury stock, at cost | (50,814) | (51,861) |
| Retained earnings | 29,473 | 34,408 |
| Accumulated other comprehensive loss | (9,550) | (11,659) |
| Total shareholders' deficit | (15,883) | (14,999) |
| Noncontrolling interests | 35 | 153 |
| Total equity | (15,848) | (14,846) |
| Total liabilities and equity | $137,100 | $138,552 |

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

55

# **The Boeing Company and Subsidiaries**  
 **Consolidated Statements of Cash Flows**

(Dollars in millions)

Years ended December 31,

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Cash flows - operating activities: |  |  |  |
| Net loss | ($5,053) | ($4,290) | ($11,941) |
| Adjustments to reconcile net loss to net cash used by operating activities: |  |  |  |
| Non-cash items - |  |  |  |
| Share-based plans expense | 725 | 833 | 250 |
| Treasury shares issued for 401(k) contribution | 1,215 | 1,233 | 195 |
| Depreciation and amortization | 1,979 | 2,144 | 2,246 |
| Investment/asset impairment charges, net | 112 | 98 | 410 |
| Customer financing valuation adjustments | 37 |  | 12 |
| Gain on dispositions, net | (6) | (277) | (202) |
| 787 and 777X reach-forward losses |  | 3,460 | 6,493 |
| Other charges and credits, net | 364 | 360 | 1,462 |
| Changes in assets and liabilities - |  |  |  |
| Accounts receivable | 142 | (713) | 909 |
| Unbilled receivables | 6 | (586) | 919 |
| Advances and progress billings | 108 | 2,505 | (1,060) |
| Inventories | 420 | (1,127) | (11,002) |
| Other current assets | (591) | 345 | 372 |
| Accounts payable | 838 | (3,783) | (5,363) |
| Accrued liabilities | 2,956 | (3,687) | 1,074 |
| Income taxes receivable, payable and deferred | 1,347 | 733 | (2,576) |
| Other long-term liabilities | (158) | (206) | (222) |
| Pension and other postretirement plans | (1,378) | (972) | (794) |
| Customer financing, net | 142 | 210 | 173 |
| Other | 307 | 304 | 235 |
| Net cash provided/(used) by operating activities | 3,512 | (3,416) | (18,410) |
| Cash flows - investing activities: |  |  |  |
| Payments to acquire property, plant and equipment | (1,222) | (980) | (1,303) |
| Proceeds from disposals of property, plant and equipment | 35 | 529 | 296 |
| Acquisitions, net of cash acquired |  | (6) |  |
| Contributions to investments | (5,051) | (35,713) | (37,616) |
| Proceeds from investments | 10,619 | 45,489 | 20,275 |
| Other | (11) | 5 | (18) |
| Net cash provided/(used) by investing activities | 4,370 | 9,324 | (18,366) |
| Cash flows - financing activities: |  |  |  |
| New borrowings | 34 | 9,795 | 47,248 |
| Debt repayments | (1,310) | (15,371) | (10,998) |
| Stock options exercised | 50 | 42 | 36 |
| Employee taxes on certain share-based payment arrangements | (40) | (66) | (173) |
| Dividends paid |  |  | (1,158) |
| Net cash (used)/provided by financing activities | (1,266) | (5,600) | 34,955 |
| Effect of exchange rate changes on cash and cash equivalents | (73) | (39) | 85 |
| Net increase/(decrease) in cash & cash equivalents, including restricted | 6,543 | 269 | (1,736) |
| Cash & cash equivalents, including restricted, at beginning of year | 8,104 | 7,835 | 9,571 |
| Cash & cash equivalents, including restricted, at end of year | 14,647 | 8,104 | 7,835 |
| Less restricted cash & cash equivalents, included in Investments | 33 | 52 | 83 |
| Cash and cash equivalents at end of year | $14,614 | $8,052 | $7,752 |

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

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# **The Boeing Company and Subsidiaries**  
 **Consolidated Statements of Equity**

|  | Boeing shareholders |  |  |  |  | Non-controlling Interests | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  | Common Stock | Additional Paid-In Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss |  |  |
| (Dollars in millions, except per share data) |  |  |  |  |  |  |  |
| Balance at January 1, 2020 | $5,061 | $6,745 | ($54,914) | $50,482 | ($16,153) | $317 | ($8,462) |
| Net loss |  |  |  | (11,873) |  | (68) | (11,941) |
| Other comprehensive loss, net of tax of $52 |  |  |  |  | (980) |  | (980) |
| Share-based compensation |  | 250 |  |  |  |  | 250 |
| Treasury shares issued for stock options exercised, net |  | (26) | 63 |  |  |  | 37 |
| Treasury shares issued for other share-based plans, net |  | (214) | 47 |  |  |  | (167) |
| Treasury shares contributed to pension plans |  | 952 | 2,048 |  |  |  | 3,000 |
| Treasury shares issued for 401(k) contribution |  | 80 | 115 |  |  |  | 195 |
| Changes in noncontrolling interests |  |  |  |  |  | (8) | (8) |
| Other |  |  |  | 1 |  |  | 1 |
| Balance at December 31, 2020 | $5,061 | $7,787 | ($52,641) | $38,610 | ($17,133) | $241 | ($18,075) |
| Net loss |  |  |  | (4,202) |  | (88) | (4,290) |
| Other comprehensive income, net of tax of ($57) |  |  |  |  | 5,474 |  | 5,474 |
| Share-based compensation |  | 833 |  |  |  |  | 833 |
| Treasury shares issued for stock options exercised, net |  | (28) | 70 |  |  |  | 42 |
| Treasury shares issued for other share-based plans, net |  | (98) | 35 |  |  |  | (63) |
| Treasury shares issued for 401(k) contribution |  | 558 | 675 |  |  |  | 1,233 |
| Balance at December 31, 2021 | $5,061 | $9,052 | ($51,861) | $34,408 | ($11,659) | $153 | ($14,846) |
| Net loss |  |  |  | (4,935) |  | (118) | (5,053) |
| Other comprehensive income, net of tax of ($22) |  |  |  |  | 2,109 |  | 2,109 |
| Share-based compensation |  | 725 |  |  |  |  | 725 |
| Treasury shares issued for stock options exercised, net |  | (31) | 81 |  |  |  | 50 |
| Treasury shares issued for other share-based plans, net |  | (94) | 46 |  |  |  | (48) |
| Treasury shares issued for 401(k) contribution |  | 295 | 920 |  |  |  | 1,215 |
| Balance at December 31, 2022 | $5,061 | $9,947 | ($50,814) | $29,473 | ($9,550) | $35 | ($15,848) |

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

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# **The Boeing Company and Subsidiaries**  
 **Notes to the Consolidated Financial Statements**  
 **Summary of Business Segment Data**

*(Dollars in millions)*

| Years ended December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues: |  |  |  |
| Commercial Airplanes | $25,867 | $19,493 | $16,162 |
| Defense, Space & Security | 23,162 | 26,540 | 26,257 |
| Global Services | 17,611 | 16,328 | 15,543 |
| Boeing Capital | 199 | 272 | 261 |
| Unallocated items, eliminations and other | (231) | (347) | (65) |
| Total revenues | $66,608 | $62,286 | $58,158 |
| (Loss)/earnings from operations: |  |  |  |
| Commercial Airplanes | ($2,370) | ($6,475) | ($13,847) |
| Defense, Space & Security | (3,544) | 1,544 | 1,539 |
| Global Services | 2,727 | 2,017 | 450 |
| Boeing Capital | 29 | 106 | 63 |
| Segment operating loss | (3,158) | (2,808) | (11,795) |
| Unallocated items, eliminations and other | (1,532) | (1,267) | (2,355) |
| FAS/CAS service cost adjustment | 1,143 | 1,173 | 1,383 |
| Loss from operations | (3,547) | (2,902) | (12,767) |
| Other income, net | 1,058 | 551 | 447 |
| Interest and debt expense | (2,533) | (2,682) | (2,156) |
| Loss before income taxes | (5,022) | (5,033) | (14,476) |
| Income tax (expense)/benefit | (31) | 743 | 2,535 |
| Net loss | (5,053) | (4,290) | (11,941) |
| Less: net loss attributable to noncontrolling interest | (118) | (88) | (68) |
| Net loss attributable to Boeing Shareholders | ($4,935) | ($4,202) | ($11,873) |

This information is an integral part of the Notes to the Consolidated Financial Statements. See Note 22 for further segment results.

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# **The Boeing Company and Subsidiaries**  
**Notes to the Consolidated Financial Statements**  
**Years ended December 31, 2022, 2021 and 2020**  
*(Dollars in millions, except otherwise stated)*

# **Note 1 - Summary of Significant Accounting Policies**

# **Principles of Consolidation and Basis of Presentation**

The Consolidated Financial Statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing,” the “Company,” “we,” “us” or “our”). These statements include the accounts of all majority-owned subsidiaries and variable interest entities that are required to be consolidated. All significant intercompany accounts and transactions have been eliminated. As described in Note 22, we operate in four reportable segments: Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS) and Boeing Capital (BCC).

# **Use of Estimates**

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

# **Operating Cycle**

For classification of certain current assets and liabilities, we use the duration of the related contract or program as our operating cycle, which is generally longer than one year.

# **Revenue and Related Cost Recognition**

**Commercial aircraft contracts** The majority of our BCA segment revenue is derived from commercial aircraft contracts. For each contract, we determine the transaction price based on the consideration expected to be received. We allocate the transaction price to each commercial aircraft performance obligation based on relative standalone selling prices adjusted by an escalation formula as specified in the customer agreement. Revenue is recognized for each commercial aircraft performance obligation at the point in time when the aircraft is completed and accepted by the customer. We use program accounting to determine the amount reported as cost of sales.

Payments for commercial aircraft sales are received in accordance with the customer agreement, which generally includes a deposit upon order and additional payments in accordance with a payment schedule, with the balance being due immediately prior to or at aircraft delivery. Advances and progress billings (contract liabilities) are normal and customary for commercial aircraft contracts and not considered a significant financing component as they are intended to protect us from the other party failing to adequately complete some or all of its obligations under the contract.

**Long-term contracts** Substantially all contracts at BDS and certain contracts at BGS are long-term contracts with the U.S. government and other customers that generally extend over several years. Products sales under long-term contracts primarily include fighter jets, rotorcraft, cybersecurity products, surveillance suites, advanced weapons, missile defense, military derivative aircraft, satellite systems and modification of commercial passenger aircraft to cargo freighters. Sales of services under long-term contracts primarily include support and maintenance agreements associated with our commercial and defense products and space travel on Commercial Crew.

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For each long-term contract, we determine the transaction price based on the consideration expected to be received. We allocate the transaction price to each distinct performance obligation to deliver a good or service, or a collection of goods and/or services, based on the relative standalone selling prices. A long-term contract will typically represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods and/or services and the significant service of integration that we provide. While the scope and price on certain long-term contracts may be modified over their life, the transaction price is based on current rights and obligations under the contract and does not include potential modifications until they are agreed upon with the customer. When applicable, a cumulative adjustment or separate recognition for the additional scope and price may result. Long-term contracts can be negotiated with a fixed price or a price in which we are reimbursed for costs incurred plus an agreed upon profit. The Federal Acquisition Regulations provide guidance on the types of cost that will be reimbursed in establishing the price for contracts with the U.S. government. Certain long-term contracts include in the transaction price variable consideration, such as incentive and award fees, if specified targets are achieved. The amount included in the transaction price represents the expected value, based on a weighted probability, or the most likely amount.

Long-term contract revenue is recognized over the contract term (over time) as the work progresses, either as products are produced or as services are rendered. We generally recognize revenue over time as we perform on long-term contracts because of continuous transfer of control to the customer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. Similarly, for non-U.S. government contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment of the transaction price associated with work performed to date on products or services that do not have an alternative use to the Company.

The accounting for long-term contracts involves a judgmental process of estimating total sales, costs and profit for each performance obligation. Cost of sales is recognized as incurred. The amount reported as revenues is determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales. Recognizing revenue as costs are incurred provides an objective measure of progress on the long-term contract and thereby best depicts the extent of transfer of control to the customer.

For long-term contracts for which revenue is recognized over time, changes in estimated revenues, cost of sales and the related effect on operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a long-term contract's percentage-of-completion. When the current estimates of total revenues and costs at completion for a long-term contract indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.

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

|  | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Decrease to Revenue | ($2,335) | ($379) | ($359) |
| Increase to Loss from operations | ($5,253) | ($880) | ($942) |
| Decrease to Diluted EPS | ($8.88) | ($1.28) | ($1.37) |

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

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