BOEING CO - Quarter Report: 2024 March (Form 10-Q)

Other charges and credits, net Changes in assets and liabilities – Accounts receivable()()Unbilled receivables()()Advances and progress billings Inventories()()Other current assets() Accounts payable() Accrued liabilities()()Income taxes receivable, payable and deferred()()Other long-term liabilities()()Pension and other postretirement plans()()Financing receivables and operating lease equipment, net Other Net cash used by operating activities()()Cash flows – investing activities:Payments to acquire property, plant and equipment()()Proceeds from disposals of property, plant and equipment Contributions to investments()()Proceeds from investments Other()()Net cash provided/(used) by investing activities ()Cash flows – financing activities:New borrowings Debt repayments()()Stock options exercised Employee taxes on certain share-based payment arrangements()()Other )()Effect of exchange rate changes on cash and cash equivalents() Net decrease in cash & cash equivalents, including restricted()()Cash & cash equivalents, including restricted, at beginning of year Cash & cash equivalents, including restricted, at end of period Less restricted cash & cash equivalents, included in Investments Cash and cash equivalents at end of period$ $

See Notes to the Condensed Consolidated Financial Statements.

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The Boeing Company and Subsidiaries

Condensed Consolidated Statements of Equity

For the three months ended March 31, 2024 and 2023

(Unaudited)

Boeing shareholders

(Dollars in millions)

Common
Stock

Additional
Paid-In
Capital

Treasury Stock

Retained
Earnings

Accumulated Other Comprehensive Loss

Non-
controlling
Interests

Total

Balance at January 1, 2023

($)

Net loss

()

Other comprehensive income, net of tax of $

Share-based compensation

Treasury shares issued for stock options exercised, net

()

Treasury shares issued for other share-based plans, net

()

Treasury shares issued for 401(k) contribution

Balance at March 31, 2023

($)

Balance at January 1, 2024

($)

Net loss

()

Other comprehensive loss, net of tax of $

()

Share-based compensation

Treasury shares issued for other share-based plans, net

()

Treasury shares issued for 401(k) contribution

Balance at March 31, 2024

($)

See Notes to the Condensed Consolidated Financial Statements.

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$ Defense, Space & Security Global Services Unallocated items, eliminations and other()()Total revenues$ $ Loss from operations:Commercial Airplanes($)($)Defense, Space & Security ()Global Services Segment operating (loss)/earnings() Unallocated items, eliminations and other()()FAS/CAS service cost adjustment Loss from operations()()Other income, net Interest and debt expense()()Loss before income taxes()()Income tax benefit Net loss()()Less: net loss attributable to noncontrolling interest()()Net loss attributable to Boeing Shareholders($)($))))($)

Note 2 –

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)($)Less: earnings available to participating securities)($)Basic

Basic weighted average shares outstanding

Less: participating securities(1)

Basic weighted average common shares outstanding

Diluted

Diluted weighted average shares outstanding

Less: participating securities(1)

Diluted weighted average common shares outstanding

Net loss per share:

Basic

($)($)

Diluted

()()

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

Stock options

million and million for the three months ended March 31, 2024 and 2023 were excluded from the computation of Diluted loss per share, because the effect would have been antidilutive as a result of incurring a net loss in those periods.

Note 3 –

%, adjusted for discrete items. Our 2024 estimated annual effective tax rate is primarily driven by taxes on non-U.S. operations. The effective tax rates were % and % for the three months ended March 31, 2024 and 2023, and differ from the estimated annual effective tax rates primarily due to discrete increases in the domestic valuation allowance.

As of December 31, 2023, the Company had recorded valuation allowances of $ primarily for certain domestic deferred tax assets, and certain domestic net operating losses, tax credit and interest carryforwards. To measure the valuation allowance, the Company estimated in what year each of its

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to years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next to years. The valuation allowance results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.

Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service is currently auditing the 2018-2020 tax years. We are also subject to examination in major state and international jurisdictions for the 2010-2022 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

based on current estimates.

Note 4 –

)($)($)($)($)($)Changes in estimates () Write-offs Recoveries

Balance at March 31, 2023

($)($)($)($)($)($)Balance at January 1, 2024($)($)($)($)($)($)Changes in estimates()()() ()()Write-offs Recoveries

Balance at March 31, 2024

($)($)($)($)($)($)

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Note 5 –

$ Long-term contracts in progress

Capitalized precontract costs(1)

Commercial spare parts, used aircraft, general stock materials and other

Total$ $

(1) Capitalized precontract costs at March 31, 2024 and December 31, 2023 included amounts related to KC-46A Tanker, Commercial Crew, and T-7A Red Hawk Production Options. See Note 9.

Commercial Aircraft Programs

At March 31, 2024 and December 31, 2023, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $ and $ and unamortized tooling and other non-recurring costs of $ and $. At March 31, 2024, $ of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders, and $ is expected to be recovered from units included in the program accounting quantity that represent expected future orders.

At March 31, 2024 and December 31, 2023, commercial aircraft programs inventory included the following amounts related to the 777X program: $ and $ of work in process, $ and $ of deferred production costs and $ and $ of unamortized tooling and other non-recurring costs. We expensed abnormal production costs of $ during the three months ended March 31, 2023. In the fourth quarter of 2023, the 777X program resumed production, and as a result, there were no abnormal production costs during the three months ended March 31, 2024.

At March 31, 2024 and December 31, 2023, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $ and $, $ and $ of supplier advances, and $ and $ of unamortized tooling and other non-recurring costs. At March 31, 2024, $ of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders, and $ is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We expensed abnormal production costs of $ and $ during the three months ended March 31, 2024 and 2023.

Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling $ and $ at March 31, 2024 and December 31, 2023.

Note 6 –

at December 31, 2023 to $ at March 31, 2024, primarily driven by revenue recognized at BDS in excess of billings.

Advances and progress billings increased from $ at December 31, 2023 to $ at March 31, 2024, primarily driven by advances on orders received at Commercial Airplanes (BCA), partially offset by revenue recognized at BDS.

Revenues recognized during the three months ended March 31, 2024 and 2023 from amounts recorded as Advances and progress billings at the beginning of each year were $ and $.

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Note 7 –

$ Notes

Total financing receivables

Less allowance for losses on receivables Financing receivables, net

Operating lease equipment, at cost, less accumulated depreciation of $ and $

Total$ $

Financing arrangements typically range in terms from to years and may include options to extend or terminate. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price. At March 31, 2024 and December 31, 2023, $ and $ were determined to be uncollectible financing receivables and placed on non-accrual status. The allowance for losses on receivables decreased primarily due to cash collections during the three months ended March 31, 2024.

$ Unearned income()()Net lease payments receivable Unguaranteed residual assets Total$ $

Financing interest income received for the three months ended March 31, 2024 and 2023 was $ and $.

$ $ $ $ $ B CCC Total carrying value of financing receivables $ $ $ $ $

At March 31, 2024, our allowance for losses related to receivables with ratings of CCC, B and BBB. We applied default rates that averaged %, % and %, respectively, to the exposure associated with those receivables.

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747-8 Aircraft (Accounted for as sales-type leases)

737 Aircraft ($ and $ accounted for as operating leases)

777 Aircraft (Accounted for as operating leases)

747-400 Aircraft (Accounted for as sales-type leases)

Operating lease equipment primarily includes large commercial jet aircraft.

and $ of interest income from sales-type leases and $ and $ from operating lease payments. Profit at the commencement of sales-type leases was recorded in Sales of services for the three months ended March 31, 2024 and 2023 in the amount of $ and $.

Note 8 –

Equity method investments (2)

Available-for-sale debt investments (1)

Equity and other investments

At March 31, 2024, $ of the liability balance remains subject to negotiations with customers, the majority of which we expect to pay in 2024. Of the contracted amount, we expect to pay $ in 2024, while the remaining amounts are primarily expected to be liquidated by lower customer delivery payments.

Environmental

$ Reductions for payments made, net of recoveries()()Changes in estimates Ending balance – March 31$ $

The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years. It is reasonably possible that we may incur costs that exceed these recorded amounts because of regulatory agency orders and directives, changes in laws and/or regulations, higher than expected costs and/or the discovery of new or additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios that includes the high end of a range of reasonably possible cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. At March 31, 2024 and December 31, 2023, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $ and $.

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$ Additions for current year deliveries Reductions for payments made()()Changes in estimates)Ending balance – March 31$ $

Commercial Aircraft Trade-In Commitments

In conjunction with signing definitive agreements for the sale of new aircraft, we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price. The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is assessed quarterly, or as events trigger a change, and takes into consideration the current economic and airline industry environments. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer.

Trade-in commitment agreements at March 31, 2024 have expiration dates from 2024 through 2030. At March 31, 2024 and December 31, 2023 total contractual trade-in commitments were $ and $. As of March 31, 2024 and December 31, 2023, we estimated it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $ and $ and the fair value of the related trade-in aircraft was $ and $.

Financing Commitments

Financing commitments related to aircraft on order, including options and those proposed in sales campaigns, and refinancing of delivered aircraft, totaled $ and $ as of March 31, 2024 and December 31, 2023.

2025 2026 2027 2028 Thereafter $

As of March 31, 2024, $ of these financing commitments relate to customers we believe have less than investment-grade credit. We have concluded that no reserve for future potential losses is required for these financing commitments based upon the terms, such as collateralization and interest rates, under which funding would be provided.

Other Financial Commitments

We have financial commitments to make additional capital contributions totaling $ to certain joint ventures over the next .

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and $ as of March 31, 2024 and December 31, 2023.

Supply Chain Financing Programs

The Company has supply chain financing programs in place under which participating suppliers may elect to obtain payment from an intermediary. The Company confirms the validity of invoices from participating suppliers and agrees to pay the intermediary an amount based on invoice totals. The majority of amounts payable under these programs are due within to days but may extend up to months. At March 31, 2024 and December 31, 2023, Accounts payable included $ billion and $ billion payable to suppliers who have elected to participate in these programs. We do not believe that future changes in the availability of supply chain financing would have a significant impact on our liquidity.

Recoverable Costs on Government Contracts

Our final incurred costs for each year are subject to audit and review for allowability by the U.S. government, which can result in payment demands related to costs they believe should be disallowed. We work with the U.S. government to assess the merits of claims and where appropriate reserve for amounts disputed. If we are unable to satisfactorily resolve disputed costs, we could be required to record an earnings charge and/or provide refunds to the U.S. government.

Fixed-Price Contracts

Long-term contracts that are contracted on a fixed-price basis could result in losses in future periods. Certain of the fixed-price contracts are for the development of new products, services and related technologies. This development work scope is inherently uncertain and subject to significant variability in estimates of the cost and time required to complete the work by us and our suppliers. The operational and technical complexities of fixed-price development contracts create financial risk, which could trigger additional earnings charges, termination provisions, order cancellations, or other financially significant exposure.

VC-25B Presidential Aircraft

The Company’s firm fixed-price contract for the Engineering and Manufacturing Development (EMD) effort on the U.S. Air Force’s (USAF) VC-25B Presidential Aircraft, commonly known as Air Force One, is a $ billion program to develop and modify 747-8 commercial aircraft. During 2023, we increased the reach-forward loss on the contract by $ driven by engineering changes to support the build and installation process; the resolution of supplier negotiations; and factory performance related to labor instability. While we have provisioned for all of our anticipated costs to complete the contract, risk remains that we may record additional losses in future periods.

KC-46A Tanker

In 2011, we were awarded a contract from the USAF to design, develop, manufacture, and deliver next generation aerial refueling tankers as well as priced options for annual production lots totaling aircraft. Since 2016, the USAF has authorized low rate initial production (LRIP) lots for a total of aircraft. The EMD contract and authorized LRIP lots total approximately $ billion as of March 31, 2024.

During 2023, we increased the reach-forward loss on the KC-46A Tanker program by $ primarily resulting from factory disruption and additional rework due to a supplier quality issue. During the three months ended March 31, 2024, we increased the reach-forward loss on the KC-46A Tanker program by $, primarily due to factory disruption associated with supply chain constraints. As of March 31, 2024, we had approximately $ of capitalized precontract costs and $ of potential termination liabilities to

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aircraft and test articles at a contract price of $. In connection with winning the competition, we recognized a reach-forward loss of $ in the third quarter of 2018. During 2023, we increased the reach-forward loss by $ primarily driven by production and flight testing delays as well as higher than anticipated production costs to complete EMD aircraft attributable to factory performance. During the first quarter of 2024, we were awarded a cost-type contract modification totaling $ for additional test aircraft plus other scope increases. Risk remains that we may record additional losses in future periods.

T-7A Red Hawk EMD Contract & Production Options

In 2018, we were awarded the T-7A Red Hawk program. The EMD portion of the contract is a $ fixed-price contract and includes aircraft and simulators. The production portion of the contract includes production lots for aircraft and related services for T-7A Red Hawk aircraft that we believe are probable of being exercised. We expect the first production and support contract option to be exercised in 2025. During 2023, we increased the reach-forward loss on the T-7A Red Hawk program by $ primarily reflecting higher estimated production costs. During the three months ended March 31, 2024, we increased the reach-forward loss on the T-7A Red Hawk program by $ primarily reflecting further increases in estimated production costs. At March 31, 2024, we had approximately $ of capitalized precontract costs and $ of potential termination liabilities to suppliers related to future production lots. Risk remains that we may record additional losses in future periods.

Commercial Crew

National Aeronautics and Space Administration (NASA) has contracted us to design and build the CST-100 Starliner spacecraft to transport crews to the International Space Station and in the second quarter of 2022, we successfully completed the uncrewed Orbital Flight Test. During 2023, we increased the reach-forward loss by $ primarily as a result of delaying the crewed flight test previously scheduled for July 2023 following notification by a parachute supplier of an issue identified through testing. A crewed flight test is planned for May 2024. At March 31, 2024, we had approximately $ of capitalized precontract costs and $ of potential termination liabilities to suppliers related to fixed-price unauthorized future missions. Risk remains that we may record additional losses in future periods.

Note 10 –

$ $ $ $

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

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Note 11 –

$ $ $ Interest cost Expected return on plan assets()()()()Amortization of prior service credits()()()()Recognized net actuarial loss/(gain) ()()Net periodic benefit income($)($)($)($)Net periodic benefit cost included in Loss from operations$ $ $ $ Net periodic benefit income included in Other income, net()()()()

Net periodic benefit income included in Loss before income taxes

($)($)($)$

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Note 12 –

restricted stock units (RSU) to our executives and RSUs to our executive officers as part of our long-term incentive program. The RSUs granted under this program have a grant date fair value of $ and $ per unit. The RSUs granted under this program will generally vest and settle in common stock (on a one-for-one basis) on the third anniversary of the grant date. If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) may receive some or all of their stock units depending on certain age and service conditions. In all other cases, the RSUs will not vest and all rights to the stock units will terminate.

Performance Restricted Stock Units

On March 11, 2024, we granted performance restricted stock units (PRSU) to our executive officers as part of our long-term incentive program that will result in that number of PRSUs being paid out if the target performance metric is achieved. The PRSUs granted under this program have a grant date fair value of $ per unit. The award payout can range from % to % of the initial PRSU grant based on cumulative free cash flow achievement over the period January 1, 2024 through December 31, 2026 as compared to the target set at the start of the performance period, as well as the achievement of certain safety goals. The PRSUs granted under this program will vest at the payout amount determined on the third anniversary of the grant date and settle in common stock (on a one-for-one basis). If an executive terminates employment because of retirement, layoff, disability, or death, the executive (or beneficiary) remains eligible under the award and, if the award is earned, may receive some or all of their stock units depending on certain age and service conditions. In all other cases, the PRSUs will not vest and all rights to the stock units will terminate.

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Note 13 –

))($)($)

Other comprehensive income/(loss) before reclassifications

()

Amounts reclassified from AOCI

)()

(2)

()

Net current period Other comprehensive income/(loss)

() Balance at March 31, 2023($))($)($)Balance at January 1, 2024($)$ $ ($)($)

Other comprehensive loss before reclassifications

())()()

Amounts reclassified from AOCI

Net current period Other comprehensive loss

())()()Balance at March 31, 2024($)$ ($)($)($)

(1)

and ($) (net of tax of $ and $).

Note 14 –

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$ $ $ ($)($))))) ))

Money market funds, available-for-sale debt investments and equity securities are valued using a market approach based on the quoted market prices or broker/dealer quotes of identical or comparable instruments.

Derivatives include foreign currency and commodity contracts. Our foreign currency forward contracts are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an income approach based on the present value of the commodity index prices less the contract rate multiplied by the notional amount.

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

))

Operating lease equipment

$ $ () $ ()) $ $ ($))

Level 3 Investments, Property, plant and equipment, and Other assets were primarily valued using an income approach based on the discounted cash flows associated with the underlying assets. Level 2 Property, plant and equipment were valued based on a third party valuation using a combination of

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Market approachAircraft value publications

$ - $(1)

Median $

Aircraft condition adjustments

($) - $(2)

Net ($)

(1)The range represents the sum of the highest and lowest values for all aircraft subject to fair value measurement, according to the third party aircraft valuation publications that we use in our valuation process.

(2)The negative amount represents the sum, for all aircraft subject to fair value measurement, of all downward adjustments based on consideration of individual aircraft attributes and condition. The positive amount represents the sum of all such upward adjustments.

Fair Value Disclosures

$ $ $ LiabilitiesDebt, excluding finance lease obligations ()()()

December 31, 2023

Carrying
Amount

Total Fair
Value

Level 1

Level 2

Level 3

Assets

Notes receivable, net

Liabilities

Debt, excluding finance lease obligations

()

The fair value of notes receivables classified as Level 2 is estimated with discounted cash flow analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit quality. The fair value of notes receivables classified as Level 3 is based on our best estimate using available counterparty financial data. The fair value of our debt that is traded in the secondary market is classified as Level 2 and is based on current market yields. For our debt that is not traded in the secondary market, the fair value is classified as Level 2 and is based on our indicative borrowing cost derived from dealer quotes or discounted cash flows. With regard to other financial instruments with off-balance sheet risk, it

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Note 16 –

percent ownership stake for $, as well as a joint venture to promote and develop new markets for the C-390 Millennium. In 2020, we exercised our contractual right to terminate these agreements based on Embraer’s failure to meet certain required closing conditions. Embraer has disputed our right to terminate the agreements, and the dispute is currently in arbitration, which we currently expect to be resolved in 2024.

Note 17 –

reportable segments: BCA, BDS, and BGS. All other activities fall within Unallocated items, eliminations and other. See page 6 for the Summary of Business Segment Data, which is an integral part of this note.

BCA develops, produces and markets commercial jet aircraft principally to the commercial airline industry worldwide. Revenue on commercial aircraft contracts is recognized at the point in time when an aircraft is completed and accepted by the customer.

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$ Asia Middle East Other non-U.S. Total non-U.S. revenues United States

Estimated potential concessions and other considerations to 737 MAX customers, net of insurance recoveries

() Intersegment revenues eliminated on consolidation Total segment revenues$ $ Revenue recognized on fixed-price contracts % %Revenue recognized at a point in time % %

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


	2024		2023
Revenue from contracts with customers:
U.S. customers	$		$
Non-U.S. customers(1)
Total segment revenue from contracts with customers	$		$

Revenue recognized over time		%		%

Revenue recognized on fixed-price contracts		%		%

Revenue from the U.S. government(1)		%		%

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

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$ Government Total revenues from contracts with customers Intersegment revenues eliminated on consolidation Total segment revenues$ $ Revenue recognized at a point in time % %Revenue recognized on fixed-price contracts % %

Revenue from the U.S. government(1)

% %

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

Backlog

Our backlog at March 31, 2024 was $. We expect approximately % to be converted to revenue through 2025 and approximately % through 2028, with the remainder thereafter. There is significant uncertainty regarding the timing of when backlog will convert into revenue. We may experience reductions to backlog and/or significant order cancellations due to production disruptions, and/or further delays to entry into service of the 777X, 737-7 and/or 737-10.

Unallocated Items, Eliminations and Other

Unallocated items, eliminations and other include common internal services that support Boeing’s global business operations and eliminations of certain sales between segments. We generally allocate costs to business segments based on the U.S. Government Cost Accounting Standards (CAS).

($)Deferred compensation()()Amortization of previously capitalized interest()()Research and development expense, net()()Eliminations and other unallocated items()()

Unallocated items, eliminations and other

($)($)

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$ Postretirement FAS/CAS service cost adjustment FAS/CAS service cost adjustment$ $

Assets

$ Defense, Space & Security Global Services Unallocated items, eliminations and other Total$ $

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

The Boeing Company

Arlington, Virginia

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated statement of financial position of The Boeing Company and subsidiaries (the “Company”) as of March 31, 2024, the related condensed consolidated statements of operations, comprehensive income, equity, and cash flows for the three-month periods ended March 31, 2024 and 2023, and the related notes (collectively referred to as the "condensed consolidated interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of the Company as of December 31, 2023, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated January 31, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2023, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

Basis for Review Results

This condensed consolidated interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP

Chicago, Illinois

April 24, 2024

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FORWARD-LOOKING STATEMENTS
This report contains “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.

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 could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to:

(1)			general conditions in the economy and our industry, including those due to regulatory changes;

(2)			our reliance on our commercial airline customers;

(3)			the overall health of our aircraft production system, production quality issues, commercial airplane production rates, our ability to successfully develop and certify new aircraft or new derivative aircraft, and the ability of our aircraft to meet stringent performance and reliability standards;

(4)			changing budget and appropriation levels and acquisition priorities of the U.S. government, as well as significant delays in U.S. government appropriations;

(5)			our dependence on our subcontractors and suppliers, as well as the availability of highly skilled labor and raw materials;

(6)			work stoppages or other labor disruptions;

(7)			competition within our markets;

(8)			our non-U.S. operations and sales to non-U.S. customers;

(9)			changes in accounting estimates;

(10)			realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures;

(11)			our dependence on U.S. government contracts;

(12)			our reliance on fixed-price contracts;

(13)			our reliance on cost-type contracts;

(14)			contracts that include in-orbit incentive payments;

(15)			unauthorized access to our, our customers’ and/or our suppliers' information and systems;

(16)			potential business 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;

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(17)			potential adverse developments in new or pending litigation and/or government inquiries or investigations;

(18)			potential environmental liabilities;

(19)			effects of climate change and legal, regulatory or market responses to such change;

(20)			changes in our ability to obtain debt financing on commercially reasonable terms, at competitive rates and in sufficient amounts;

(21)			substantial pension and other postretirement benefit obligations;

(22)			the adequacy of our insurance coverage; and

(23)			customer and aircraft concentration in our customer financing portfolio.

Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

On January 5, 2024, an Alaska Airlines 737-9 flight made an emergency landing after a mid-exit door plug detached in flight. Following the accident, the Federal Aviation Administration (FAA) grounded and required inspections of all 737-9 aircraft with a mid-exit door plug, which constituted the large majority of the approximately 220 737-9 aircraft in the in-service fleet. On January 24, 2024, the FAA approved an enhanced maintenance and inspection process that was required to be performed on each of the grounded 737-9 aircraft. Our 737-9 operators returned their fleets to service in the first quarter. All 737-9 aircraft in production are undergoing this same enhanced inspection process prior to delivery.

The Alaska Airlines accident and the resulting actions we are taking, including slowing production, to improve compliance with our manufacturing quality control requirements have significantly impacted our financial position, results of operations and cash flows during the first quarter of 2024.

Consolidated Results of Operations and Financial Condition

Consolidated Results of Operations

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


	2024		2023
Revenues	$16,569		$17,921

GAAP
Loss from operations	($86)		($149)
Operating margins	(0.5)	%	(0.8)	%
Effective income tax rate	6.1	%	14.3	%
Net loss attributable to Boeing Shareholders	($343)		($414)
Diluted loss per share	($0.56)		($0.69)

Non-GAAP (1)
Core operating loss	($388)		($440)
Core operating margins	(2.3)	%	(2.5)	%
Core loss per share	($1.13)		($1.27)

(1)These measures exclude certain components of pension and other postretirement benefit expense. See pages 43-44 for important information about these non-GAAP measures and reconciliations to the most directly comparable GAAP measures.

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Revenues

The following table summarizes Revenues:


	2024	2023
Commercial Airplanes	$4,653	$6,704
Defense, Space & Security	6,950	6,539
Global Services	5,045	4,720
Unallocated items, eliminations and other	(79)	(42)
Total	$16,569	$17,921

Revenues for the three months ended March 31, 2024 decreased by $1,352 million compared with the same period in 2023 driven by lower revenues at Commercial Airplanes (BCA), partially offset by higher revenues at Defense, Space & Security (BDS) and Global Services (BGS). BCA revenues decreased by $2,051 million primarily driven by lower 737 deliveries and 737-9 customer considerations. BDS revenues increased by $411 million primarily due to higher volume on weapons and proprietary programs and MQ-25 contract modifications in 2024, partially offset by the U.S. Air Force (USAF) KC-46A Tanker Lot 9 award in 2023. BGS revenues increased by $325 million primarily due to higher commercial services revenue.

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:


	2024	2023
Commercial Airplanes	($1,143)	($615)
Defense, Space & Security	151	(212)
Global Services	916	847
Segment operating (loss)/earnings	(76)	20
Unallocated items, eliminations and other	(312)	(460)
Pension FAS/CAS service cost adjustment	230	223
Postretirement FAS/CAS service cost adjustment	72	68
Loss from operations (GAAP)	($86)	($149)
FAS/CAS service cost adjustment *	(302)	(291)
Core operating loss (Non-GAAP) **	($388)	($440)

* 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 43-44.

Loss from operations for the three months ended March 31, 2024 decreased by $63 million compared with the same period in 2023. BDS earnings from operations increased by $363 million compared to the same period in 2023 primarily due to lower charges in 2024 on major fixed-price development programs of $92 million, revenue growth on weapons and proprietary programs, and improved performance across other programs that were more adversely affected by labor instability and supply chain performance in the prior year. BGS earnings from operations increased by $69 million primarily due to higher commercial

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services revenue, partially offset by lower government services performance. BCA loss from operations increased by $528 million reflecting lower 737 deliveries and 737-9 customer considerations, partially offset by lower abnormal production costs. Loss from operations on Unallocated items, eliminations and other decreased by $148 million compared with the same period in 2023 primarily due to decreases in eliminations and other unallocated items and share based plans expense.

Core operating loss for the three months ended March 31, 2024 decreased by $52 million compared with the same period in 2023, primarily due to changes in Loss from operations as described above.

For information related to Postretirement Plans, see Note 11 to our Condensed Consolidated Financial Statements.

Unallocated Items, Eliminations and Other

The most significant items included in Unallocated items, eliminations and other (expense)/income are shown in the following table:


	2024	2023
Share-based plans	$10	($52)
Deferred compensation	(30)	(54)
Amortization of previously capitalized interest	(23)	(23)
Research and development expense, net	(89)	(76)
Eliminations and other unallocated items	(180)	(255)
Unallocated items, eliminations and other	($312)	($460)

Share-based plans expense for the three months ended March 31, 2024 decreased by $62 million compared with the same period in 2023 primarily due to fewer outstanding share-based awards in 2024.

Deferred compensation expense for the three months ended March 31, 2024 decreased by $24 million compared with the same period in 2023 primarily driven by changes in our stock price.

Research and development expense for the three months ended March 31, 2024 was largely unchanged compared with the same period in 2023.

Eliminations and other unallocated items expense for the three months ended March 31, 2024 decreased by $75 million compared with the same period in 2023 due to a decrease in environmental remediation expense.

Other Earnings Items


	2024	2023
Loss from operations	($86)	($149)
Other income, net	277	302
Interest and debt expense	(569)	(649)
Loss before income taxes	(378)	(496)
Income tax benefit	23	71
Net loss from continuing operations	(355)	(425)
Less: net loss attributable to noncontrolling interest	(12)	(11)
Net loss attributable to Boeing Shareholders	($343)	($414)

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Other income, net for the three months ended March 31, 2024 remained relatively consistent compared with the same period in 2023. For information on changes related to non-operating pension and postretirement expenses, see Note 11 to our Condensed Consolidated Financial Statements.

Interest and debt expense for the three months ended March 31, 2024 was lower compared with the same period in the prior year primarily as a result of lower average debt balances.

For additional discussion related to Income Taxes, see Note 3 to our Condensed 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.

The following table summarizes cost of sales:


	2024		2023		Change
Cost of sales	$14,693		$15,998		($1,305)
Cost of sales as a % of Revenues	88.7	%	89.3	%	(0.6)	%

Cost of sales for the three months ended March 31, 2024 decreased by $1,305 million, or 8% compared with the same periods in 2023, primarily due to lower revenues at BCA, partially offset by higher revenues at BDS and BGS. Cost of sales as a percentage of Revenues remained largely consistent during the three months ended March 31, 2024 compared with the same period in 2023.

Research and Development

Research and development expense, net is summarized in the following table:


	2024	2023
Commercial Airplanes	$518	$444
Defense, Space & Security	235	195
Global Services	26	26
Other	89	76
Total	$868	$741

Research and development expense increased by $127 million during the three months ended March 31, 2024 compared to the same period in 2023. The increase at BCA is primarily due to higher spending on the 777X program.

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Backlog


(Dollars in millions)	March 31 2024	December 31 2023
Commercial Airplanes	$447,533	$440,507
Defense, Space & Security	60,744	59,012
Global Services	19,693	19,869
Unallocated items, eliminations and other	779	807
Total Backlog	$528,749	$520,195

Contractual backlog	$505,918	$497,094
Unobligated backlog	22,831	23,101
Total Backlog	$528,749	$520,195

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 the three months ended March 31, 2024 was primarily due to increases in BCA and BDS backlog. We may experience reductions to backlog and/or significant order cancellations due to production disruptions and/or further delays to entry into service of the 777X, 737-7 and/or 737-10.

Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has not been authorized. Unobligated backlog was largely unchanged during the three months ended March 31, 2024.

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 and we have 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, Japan, the United Kingdom, and the European Union 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, as well as any responses from Russia that could affect our supply chain, business partners or customers, for any additional impacts to our business.

Supply Chain We and our suppliers are experiencing supply chain disruptions as a result of 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. These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows.

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The current conflict in Israel and the Gaza Strip has the potential to impact certain of our suppliers, and has impacted some operations for our airline and lessor customers. We are closely monitoring developments, supporting our employees and customers, and will take mitigating actions as appropriate.

Segment Results of Operations and Financial Condition

Commercial Airplanes

Results of Operations


	2024	2023
Revenues	$	$
Loss from operations	($)	($)
Operating margins	(24.6)%	(9.2)%

130

* Intercompany deliveries identified by parentheses.

Loss From Operations

BCA loss from operations was $ million for the three months ended March 31, 2024 compared with $ million in the same period in 2023 reflecting lower 737 deliveries and 737-9 customer considerations, partially offset by lower abnormal production costs.

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 customer financing 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 Accounting Standards Codification (ASC) 606.

BCA total backlog increased from $440,507 million as of December 31, 2023 to $447,533 million at March 31, 2024 reflecting new orders in excess of deliveries. Aircraft order cancellations and net ASC 606 adjustments during the three months ended March 31, 2024 were not significant. ASC 606 adjustments

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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. We may experience reductions to backlog and/or significant order cancellations due to production disruptions and/or further delays to entry into service of the 777X, 737-7 and/or 737-10.

Accounting Quantity

The following table provides details of the accounting quantities and firm orders by program. Cumulative firm orders represent the cumulative number of commercial jet aircraft deliveries plus undelivered firm orders. Firm orders include certain 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
As of 3/31/2024	737		767	777	777X	787	†
Program accounting quantities	11,600		1,279	1,790	500	1,700
Undelivered units under firm orders	4,357	*	101	47	444	719	(8)
Cumulative firm orders	12,952		1,407	1,774	444	1,842

As of 12/31/2023	737		767	777	777X	787	†
Program accounting quantities	11,600		1,279	1,790	500	1,700
Undelivered units under firm orders	4,332		104	48	416	726	(8)
Cumulative firm orders	12,860		1,407	1,775	416	1,836

† Customer financing aircraft orders are identified in parentheses.

*Approximate undelivered orders by minor model: 737-7 (7%), 737-8 (65%), 737-9 (3%) and 737-10 (25%).

Program Highlights

737 Program On January 10, 2024, the FAA notified Boeing that it had initiated an investigation into the 737 quality control system (737-9 Production Audit). This was followed by the FAA announcing actions to increase its oversight of Boeing, including conducting:

1.An audit involving the 737-9 production line and its suppliers to evaluate Boeing’s compliance with approved quality procedures,

2.Increased monitoring of Boeing’s 737-9 in-service events, and

3.An assessment of safety risks around delegated authority and quality oversight, and examination of options to move these functions under independent third parties.

On January 24, 2024, the FAA stated it will not approve production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures.

The FAA communicated its findings from the 737-9 Production Audit of Boeing and Spirit AeroSystems (Spirit) on February 28, 2024. The FAA found multiple instances where the companies failed to comply with manufacturing quality control requirements and provided 90 days from March 1, 2024 to submit a corrective action plan. We are working to develop a comprehensive action plan to address the issues identified by the FAA.

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Our planned production rates are dependent on our suppliers' ability to support our operations and our ability to meet heightened quality control requirements. Prior to the Alaska Airlines accident, we were operating at a production rate of 38 per month. During the first quarter of 2024, as part of our plan to address the issues identified, we slowed production rates to reduce traveled work in our factory, as well as at our suppliers. We are now conducting fuselage inspections at Spirit to ensure quality prior to shipment to Boeing.

We are following the lead of the FAA as we work through the certification process of the 737-7 and 737-10 models. During the first quarter of 2024, the 737-10 program completed the first phase of FAA certification flight testing. As of March 31, 2024, we had approximately 35 737-7 and 737-10 aircraft in inventory. We are planning to incorporate engineering solutions to the de-icing systems on the 737-7 and 737-10 prior to certification, which will delay certification and first deliveries.

As of March 31, 2024, we had approximately 110 737-8 aircraft in inventory that were produced prior to 2023, including approximately 70 aircraft for customers in China. We expect to deliver most of the aircraft in inventory by the end of 2024.

The production slow-down and certification delays had an adverse impact on our financial position, results of operations and cash flows during the first quarter of 2024. This is expected to continue until production rates recover. In the event that we are unable to deliver aircraft and/or increase future production rates consistent with our assumptions, our financial position, results of operations and cash flows will continue to be adversely affected.

See further discussion of the 737 MAX in Note 9 and Note 16 to our Condensed Consolidated Financial Statements.

767 Program 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 at a production rate of 3 aircraft per month.

777 and 777X Programs We are currently at a combined production rate of 4 per month for the 777/777X programs.

We are following the lead of the FAA as we work through the certification process including obtaining approval from the FAA to begin certification flight testing. We expect the first delivery of the 777-9 to occur in 2025 and the 777-8 freighter to occur in 2027. First delivery of the 777-8 passenger aircraft is not expected to occur before 2030.

The level of profitability on the 777X program will be subject to a number of factors. These factors include aircraft certification requirements and timing, change incorporation on completed aircraft, production disruption due to labor instability and supply chain disruption, customer negotiations, further production rate adjustments for the 777X or other commercial aircraft programs, and contraction of the accounting quantity. One or more of these factors could result in reach-forward losses in future periods.

787 Program We are slowing near-term production to below 5 per month due to supply chain constraints, which are also impacting 2024 deliveries. As of March 31, 2024, we had approximately 40 aircraft in inventory that require rework which we expect to complete by the end of 2024. The inspections and rework costs on inventoried aircraft are accounted for as abnormal production costs, and we expensed $80 million in the three months ended March 31, 2024.

Additional Considerations

On March 1, 2024, we confirmed that we were engaged in preliminary discussions with Spirit regarding a potential acquisition of its business. We believe that a deal on reasonable terms would allow for the reintegration of our and Spirit’s manufacturing operations and would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders. We continue to

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engage with Spirit regarding a potential acquisition; however, we have not entered into a definitive agreement, and no assurances can be made that we will reach a definitive agreement and complete the potential acquisition.

Defense, Space & Security

Overview

The Consolidated Appropriations Act, 2024, and the Further Consolidated Appropriations Act, 2024, enacted in March 2024, provided fiscal year 2024 appropriations for government departments and agencies, including $844 billion for the United States Department of Defense (U.S. DoD) and $25 billion for the National Aeronautics and Space Administration (NASA). They included funding for Boeing’s major programs, including P-8, CH-47 Chinook, F-15, KC-46A Tanker, AH-64 Apache, V-22 Osprey, and Space Launch System.

In March 2024, the U.S. government released the President's budget request for fiscal year 2025 (FY25), which requested $850 billion in funding for the U.S. DoD and $25 billion for NASA.

There is ongoing uncertainty with respect to program-level appropriations for the U.S. DoD, NASA and other government agencies for FY25 and beyond. 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, financing position, and/or cash flows.

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 March 31, 2024, 31% of BDS backlog was attributable to non-U.S. customers.

Results of Operations


	2024		2023
Revenues	$6,950		$6,539
Earnings/(loss) from operations	$151		($212)
Operating margins	2.2	%	(3.2)	%

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:


	2024	2023
F/A-18 Models	1	7
F-15 Models	1	2
CH-47 Chinook (New)	1	5
CH-47 Chinook (Remanufactured)	1	1
AH-64 Apache (New)		7
AH-64 Apache (Remanufactured)	6	13
P-8 Models	1	3
KC-46 Tanker	3	1
Commercial Satellites		3
Total	14	42

Revenues

BDS revenues for the three months ended March 31, 2024 increased by $411 million compared with the same period in 2023. The increase reflects higher volume on weapons and proprietary programs and MQ-25 contract modifications in 2024, partially offset by the USAF KC-46A Tanker Lot 9 award in 2023. Net unfavorable cumulative contract catch-up adjustments for the three months ended March 31, 2024 were $104 million lower than the prior year comparable period.

Earnings/(Loss) From Operations

BDS earnings from operations was $151 million for the three months ended March 31, 2024 compared with loss from operations of $212 million in the same period in 2023. The increase in earnings reflects lower charges in 2024 on major fixed-price development programs of $92 million, revenue growth on weapons and proprietary programs, and improved performance across other programs that were more adversely affected by labor instability and supply chain performance in the prior year. Net unfavorable cumulative contract catch-up adjustments were $158 million lower than the comparable period in the prior year, as losses incurred on the five major fixed-price development programs totaled $222 million compared with $314 million in the same period in 2023.

See further discussion of fixed-price contracts in Note 9 to our Condensed Consolidated Financial Statements.

BDS earnings/(loss) from operations includes our share of earnings from equity method investments of $75 million for the three months ended March 31, 2024 compared with equity loss of $14 million for the three months ended March 31, 2023.

Backlog

BDS backlog increased from $59,012 million as of December 31, 2023 to $60,744 million at March 31, 2024, primarily due to the timing of awards, partially offset by revenue recognized on contracts awarded in prior periods.

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 reduced award or incentive 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.

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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

Results of Operations


	2024		2023
Revenues	$5,045		$4,720
Earnings from operations	$916		$847
Operating margins	18.2	%	17.9	%

Revenues

BGS revenues for the three months ended March 31, 2024 increased by $325 million compared with the same period in 2023 primarily due to higher commercial services revenue. The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2024 was $10 million higher than the prior year comparable period.

Earnings From Operations

BGS earnings from operations for the three months ended March 31, 2024 increased by $69 million compared with the same period in 2023, primarily due to higher commercial services revenue, partially offset by lower government services performance. The net unfavorable impact of cumulative contract catch-up adjustments for the three months ended March 31, 2024 was $6 million higher than the prior year comparable period.

Backlog

BGS total backlog decreased from $19,869 million at December 31, 2023 to $19,693 million at March 31, 2024, primarily due to revenue recognized on contracts awarded in prior years, partially offset by timing of awards.

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Liquidity and Capital Resources

Cash Flow Summary


(Dollars in millions)	Three months ended March 31
	2024	2023
Net loss	($355)	($425)
Non-cash items	1,198	1,276
Changes in assets and liabilities	(4,205)	(1,169)
Net cash used by operating activities	(3,362)	(318)
Net cash provided/(used) by investing activities	2,074	(1,823)
Net cash used by financing activities	(4,462)	(1,680)
Effect of exchange rate changes on cash and cash equivalents	(28)	10
Net decrease in cash & cash equivalents, including restricted	(5,778)	(3,811)
Cash & cash equivalents, including restricted, at beginning of year	12,713	14,647
Cash & cash equivalents, including restricted, at end of period	$6,935	$10,836

Operating Activities Net cash used by operating activities was $3.4 billion during the three months ended March 31, 2024, compared with $0.3 billion during the same period in 2023. The $3.1 billion increase in cash used by operating activities was primarily driven by changes in commercial airplane program inventory. Changes in assets and liabilities for the three months ended March 31, 2024 decreased by $3.0 billion compared with the same period in 2023 primarily driven by unfavorable changes in Inventories ($3.4 billion) and Accounts payable ($0.5 billion), and higher payments to 737 MAX customers ($0.4 billion), partially offset by an increase in Advances and progress billings ($1.3 billion).

The growth in Inventories was primarily driven by decreased deliveries for the 737 program in the first quarter of 2024 as compared to the same period in 2023. Concessions paid to 737 MAX customers totaled $553 million and $141 million for the three months ended March 31, 2024 and 2023. Reductions in Accounts payable in 2024 were a use of cash while growth in Accounts payable in 2023 was a source of cash. The increase in Advances and progress billings is primarily driven by advances on orders received at BCA, partially offset by revenue recognized at BDS.

Payables to suppliers who elected to participate in supply chain financing programs decreased by $0.4 billion during the three months ended March 31, 2024 and increased by $0.1 billion during the three months ended March 31, 2023.

Investing Activities Cash provided by investing activities was $2.1 billion during the three months ended March 31, 2024, compared with cash used of $1.8 billion during the same period in 2023. The increase in cash inflows during the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to net proceeds from investments of $2.7 billion in 2024 compared to net contributions to investments of $1.4 billion in 2023. During the three months ended March 31, 2024 and 2023, capital expenditures were $0.6 billion and $0.5 billion. We continue to expect capital expenditures in 2024 to be higher than in 2023.

Financing Activities Cash used by financing activities was $4.5 billion during the three months ended March 31, 2024 compared with $1.7 billion during the same period in 2023. During the three months ended March 31, 2024, net repayments on our debt were $4.4 billion compared with $1.7 billion in the same period in 2023.

As of March 31, 2024 the total debt balance was $47.9 billion, down from $52.3 billion at December 31, 2023. At March 31, 2024, $1.1 billion of debt was classified as short-term.

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Capital Resources

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 March 31, 2024, we had $6.9 billion of cash, $0.6 billion of short-term investments, and $10.0 billion of unused borrowing capacity on revolving credit line agreements. In the third quarter of 2023, we entered into a $3.0 billion five-year revolving credit agreement expiring in August 2028 and a $0.8 billion 364-day revolving credit agreement expiring in August 2024. The 364-day credit facility has a one-year term out option which allows us to extend the maturity of any borrowings until August 2025. The legacy three-year revolving credit agreement expiring in August 2025, which consists of $3.0 billion of total commitments, and the legacy five-year revolving credit agreement expiring in October 2024, as amended, which consists of $3.2 billion of total commitments, each remain in effect. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs.

Our credit ratings were downgraded in 2020 and remained unchanged as of March 31, 2024. During the third quarter of 2023, S&P upgraded the outlook on our credit rating from negative to stable primarily driven by improving deliveries and expected increases in production. During the first quarter of 2024, Moody’s placed our Baa2 and Prime-2 ratings on review for downgrade primarily driven by concern that we will be unable to deliver 737 aircraft at the volumes required to materially expand free cash flow and retire debt in a reasonable timeframe. Fitch also downgraded our credit rating outlook from positive to stable driven by the financial impact of unexpected operational disruptions and the potential for additional corporate actions that should enhance longer-term operations.

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. For example, we continue to engage with Spirit regarding a potential acquisition of its business. 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 such as those we experienced in 2020. 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 March 31, 2024, 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.

Off-Balance Sheet Arrangements

We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 10 to our Condensed 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 16 to our Condensed Consolidated Financial Statements.

Environmental Remediation We are involved with various environmental remediation activities and have recorded a liability of $837 million at March 31, 2024. For additional information, see Note 9 to our Condensed Consolidated Financial Statements.

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Non-GAAP Measures

Core Operating Earnings/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share

Our unaudited condensed consolidated interim financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (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/(loss), Core operating margin and Core earnings/(loss) per share exclude the FAS/CAS service cost adjustment. The FAS/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/(loss) 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 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 $230 million and $223 million for the three months ended March 31, 2024 and 2023. The higher benefits in 2024 were primarily due to increases in allocated pension cost year over year. The non-operating pension expenses included in Other income, net were benefits of $123 million and $134 million for the three months ended March 31, 2024, and 2023. The lower benefits in 2024 were primarily due to lower expected return on plan assets and higher amortization of actuarial losses, partially offset by lower interest cost.

For further discussion of pension and other postretirement costs see the Management’s Discussion and Analysis on page 26 of our 2023 Annual Report on Form 10-K. Management uses core operating earnings/(loss), core operating margin and core earnings/(loss) 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 costs 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 margin and Core loss per share with the most directly comparable GAAP financial measures of Loss from operations, operating margins and Diluted loss per share.


	2024		2023
Revenues	$16,569		$17,921
Loss from operations, as reported	($86)		($149)
Operating margins	(0.5)	%	(0.8)	%

Pension FAS/CAS service cost adjustment (1)	($230)		($223)
Postretirement FAS/CAS service cost adjustment (1)	(72)		(68)
FAS/CAS service cost adjustment (1)	($302)		($291)
Core operating loss (non-GAAP)	($388)		($440)
Core operating margins (non-GAAP)	(2.3)	%	(2.5)	%

Diluted loss per share, as reported	($0.56)		($0.69)
Pension FAS/CAS service cost adjustment (1)	(0.37)		(0.37)
Postretirement FAS/CAS service cost adjustment (1)	(0.12)		(0.11)
Non-operating pension income (2)	(0.20)		(0.23)
Non-operating postretirement income (2)	(0.03)		(0.02)
Provision for deferred income taxes on adjustments (3)	0.15		0.15
Core loss per share (non-GAAP)	($1.13)		($1.27)

Weighted average diluted shares (in millions)	613.2		602.5

(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 expense/(income) represents the components of net periodic benefit cost/(income) other than service cost/(income). This expense/(income) is included in Other income, net and is excluded from Core loss per share (non-GAAP).

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes to our market risk since December 31, 2023.

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Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of March 31, 2024 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the first quarter of 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

Currently, we are involved in a number of legal proceedings. For a discussion of contingencies related to legal proceedings, see Note 16 to our Condensed Consolidated Financial Statements, which is hereby incorporated by reference.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Issuer Purchases of Equity Securities

The following table provides information about purchases we made during the quarter ended March 31, 2024 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

1/1/2024 thru 1/31/2024

70,393

$248.08

2/1/2024 thru 2/29/2024

230,224

204.29

3/1/2024 thru 3/31/2024

1,829

202.56

Total

302,446

$214.47

(1)A total of 302,213 shares were transferred to us from employees in satisfaction of minimum 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.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2024, none of our directors or officers , modified or a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K.

During the three months ended March 31, 2024, the Company did not adopt, modify or terminate a “Rule 10b5-1 trading arrangement” as such term is defined under Item 408 of Regulation S-K.

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Item 6. Exhibits


10.1			Form of U.S. Notice of Terms of Long-Term Incentive Restricted Stock Units – CEO*

10.2			Form of U.S. Notice of Terms of Long-Term Incentive Performance Restricted Stock Units – CEO*

10.3			Form of U.S. Notice of Terms of Long-Term Incentive Restricted Stock Units*

10.4			Form of International Notice of Terms of Long-Term Incentive Restricted Stock Units (Stock-Settled)*

10.5			Form of U.S. Notice of Terms of Long-Term Incentive Performance Restricted Stock Units*

10.6			Form of International Notice of Terms of Long-Term Incentive Performance Restricted Stock Units (Stock-Settled)*

15			Letter from Independent Registered Public Accounting Firm regarding unaudited interim financial information

31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*Management contract or compensatory plan

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Signature

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


						THE BOEING COMPANY
						(Registrant)




April 24, 2024						/s/ Michael J. Cleary
(Date)						Michael J. Cleary
						Senior Vice President and Controller

BOEING CO - Quarter Report: 2024 March (Form 10-Q)

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