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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1996
Commission file number 1-442
THE BOEING COMPANY
7755 East Marginal Way South
Seattle, Washington 98108
Telephone: (206) 655-2121
State of incorporation: Delaware
IRS identification number: 91-0425694
The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and has been subject to such filing requirements for the past 90
days.
As of April 30, 1996, there were 346,095,407 shares of common stock, $5.00
par value, issued and outstanding.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE BOEING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET EARNINGS
(Dollars in millions except per share data)
(Unaudited)
Three months ended
March 31
- -------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------
Sales and other operating revenues $4,293 $5,037
Costs and expenses 4,139 4,811
- -------------------------------------------------------------------------------
Earnings from operations 154 226
Other income, principally interest 57 31
Interest and debt expense (41) (40)
- -------------------------------------------------------------------------------
Earnings before federal taxes on income 170 217
Federal taxes on income 51 36
- -------------------------------------------------------------------------------
Net earnings $ 119 $ 181
===============================================================================
Earnings per share $ .35 $ .53
===============================================================================
Cash dividends per share $ .25 $ .25
===============================================================================
See notes to consolidated financial statements.
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THE BOEING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollars in millions except per share data)
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
(Unaudited)
Assets
- -------------------------------------------------------------------------------
Cash and cash equivalents $ 4,387 $ 3,730
Short-term investments 145
Accounts receivable 1,427 1,470
Current portion of customer financing 75 205
Deferred income taxes 748 840
Inventories 14,791 14,001
Less advances and progress billings (7,568) (7,068)
- -------------------------------------------------------------------------------
Total current assets 14,005 13,178
Customer financing 1,133 1,660
Property, plant and equipment, at cost 13,855 13,744
Less accumulated depreciation (7,465) (7,288)
Deferred income taxes 97 58
Other assets 1,049 746
- -------------------------------------------------------------------------------
$22,674 $22,098
===============================================================================
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
Accounts payable and other liabilities $ 6,728 $ 6,245
Advances in excess of related costs 621 510
Income taxes payable 360 389
Current portion of long-term debt 23 271
- -------------------------------------------------------------------------------
Total current liabilities 7,732 7,415
Accrued retiree health care 2,484 2,441
Long-term debt 2,338 2,344
Shareholders' equity:
Common shares, par value $5.00 -
600,000,000 shares authorized;
349,256,792 shares issued 1,746 1,746
Additional paid-in capital 641 615
Retained earnings 7,865 7,746
Less treasury shares, at cost -
1996 - 3,307,967; 1995 - 5,304,135 (132) (209)
- -------------------------------------------------------------------------------
Total shareholders' equity 10,120 9,898
- -------------------------------------------------------------------------------
$22,674 $22,098
===============================================================================
See notes to consolidated financial statements.
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THE BOEING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Three months ended
March 31
- -------------------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------------------
Cash flows - operating activities:
Net earnings $ 119 $ 181
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 240 265
Changes in assets and liabilities -
Short-term investments (145) 559
Accounts receivable 43 50
Inventories, net of advances and progress billings (290) (330)
Accounts payable and other liabilities 569 418
Advances in excess of related costs 111 (48)
Income taxes payable and deferred 24 157
Other assets (303) (350)
Accrued retiree health care 43 37
- -------------------------------------------------------------------------------
Net cash provided by operating activities 411 939
- -------------------------------------------------------------------------------
Cash flows - investing activities:
Customer financing additions (48) (173)
Customer financing reductions 691 236
Plant and equipment, net additions (160) (224)
- -------------------------------------------------------------------------------
Net cash provided (used) by investing activities 483 (161)
- -------------------------------------------------------------------------------
Cash flows - financing activities:
Debt financing (254) (3)
Shareholders' equity -
Cash dividends paid (86) (85)
Stock options exercised, other 103 14
- -------------------------------------------------------------------------------
Net cash used by financing activities (237) (74)
- -------------------------------------------------------------------------------
Net increase in cash and cash equivalents 657 704
Cash and cash equivalents at beginning of year 3,730 2,084
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of 1st quarter $4,387 $2,788
===============================================================================
See notes to consolidated financial statements.
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THE BOEING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions)
(Unaudited)
Note 1 - Consolidated Financial Statements
The consolidated interim financial statements included in this report have
been prepared by the Company without audit. In the opinion of management,
all adjustments necessary for a fair presentation are reflected in the
interim financial statements. Such adjustments are of a normal and
recurring nature. The results of operations for the period ended March
31, 1996, are not necessarily indicative of the operating results for the
full year. The interim financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's 1995 Annual Report.
Note 2 - Earnings per Share
Earnings per share are computed on the basis of the weighted average
number of shares outstanding during the period. The weighted average
number of shares was 344.8 million and 341.0 million for the three-month
periods ended March 31, 1996 and 1995. There was no material dilutive
effect on earnings per share due to common stock equivalents.
Note 3 - Federal Taxes on Income
The provisions for federal taxes on income for the three-month periods
ended March 31, 1996 and 1995, were reduced by $9 and $18 applicable to
Foreign Sales Corporation tax benefits and by $0 and $23 applicable to
research and experimentation credit, representing combined reductions of
5.3% and 18.9%, respectively, from the statutory tax rate.
Income tax payments (refunds) were $0 and $(124) for the three months
ended March 31, 1996 and 1995.
Note 4 - Accounts Receivable
Accounts receivable consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Accounts receivable under U.S. Government contracts $1,024 $1,059
Accounts receivable from commercial
and foreign military customers 403 411
- -------------------------------------------------------------------------------
$1,427 $1,470
===============================================================================
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Note 5 - Inventories
Inventories consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Commercial jet transport programs
and long-term contracts in progress $13,821 $13,107
Commercial spare parts, general stock
materials and other 970 894
- -------------------------------------------------------------------------------
$14,791 $14,001
===============================================================================
Note 6 - Customer Financing
Long-term customer financing, less current portion, consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Notes receivable $ 159 $ 721
Investment in sales-type leases 400 351
Operating lease aircraft, at cost, less
accumulated depreciation of $340 and $326 674 688
- -------------------------------------------------------------------------------
1,233 1,760
Less valuation allowance (100) (100)
- -------------------------------------------------------------------------------
$1,133 $1,660
===============================================================================
Financing for aircraft is collateralized by security in the related asset,
and historically the Company has not experienced a problem in accessing
such collateral when necessary.
Sales and other operating revenues for the first three months of 1996 and
1995 included interest income of $15 and $50 associated with notes
receivable and sales-type leases.
Note 7 - Other Assets
Other assets consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Prepaid pension expense $1,003 $698
Investments, other 46 48
- -------------------------------------------------------------------------------
$1,049 $746
===============================================================================
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Note 8 - Accounts Payable and Other Liabilities
Accounts payable and other liabilities consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Accounts payable $3,098 $3,017
Accrued compensation and employee benefit costs 1,302 1,374
Lease and other deposits 849 508
Other 1,479 1,346
- -------------------------------------------------------------------------------
$6,728 $6,245
===============================================================================
Note 9 - Long-Term Debt
Long-term debt consisted of the following:
March 31 December 31
1996 1995
- -------------------------------------------------------------------------------
Unsecured debentures and notes:
8 3/8% due Mar. 1, 1996 $ $ 250
6.35% due Jun. 15, 2003 299 299
8 1/10% due Nov. 15, 2006 175 175
8 3/4% due Aug. 15, 2021 398 398
7.95% due Aug. 15, 2024 300 300
7 1/4% due Jun. 15, 2025 247 247
8 3/4% due Sep. 15, 2031 248 248
8 5/8% due Nov. 15, 2031 173 173
7.50% due Aug. 15, 2042 100 100
7 7/8% due Apr. 15, 2043 173 173
6 7/8% due Oct. 15, 2043 125 125
Other notes 123 127
Less current portion (23) (271)
- -------------------------------------------------------------------------------
$2,338 $2,344
===============================================================================
The Company has $2,000 currently available under credit line agreements
with a group of commercial banks. Under these agreements, there are
compensating balance arrangements, and retained earnings totaling $1,575
are free from dividend restrictions. The Company has complied with the
restrictive covenants contained in debt agreements.
Total debt interest, including amounts capitalized, was $55 and $55 for
the three-month periods ended March 31, 1996 and 1995, and interest
payments were $60 and $57, respectively.
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Note 10 - Shareholders' Equity
Changes in shareholders' equity for the three-month periods ended March
31, 1996 and 1995, consisted of the following:
(Shares in thousands)
- -------------------------------------------------------------------------------
Common Stock
------------ Additional Treasury Stock
Par Paid-In Retained --------------
Shares Value Capital Earnings Shares Amount
- -------------------------------------------------------------------------------
Balance - December 31, 1994 349,257 $1,746 $586 $7,696 8,378 $(328)
- -------------------------------------------------------------------------------
Net earnings 181
Treasury shares issued for
incentive stock plans, net (4) (369) 15
Tax benefit related to
incentive stock plans 2
Stock appreciation rights
expired or surrendered 1
- -------------------------------------------------------------------------------
Balance - March 31, 1995 349,257 $1,746 $585 $7,877 8,009 $(313)
===============================================================================
- -------------------------------------------------------------------------------
Balance - December 31, 1995 349,257 $1,746 $615 $7,746 5,304 $(209)
- -------------------------------------------------------------------------------
Net earnings 119
Treasury shares issued for
incentive stock plans, net (2) (1,995) 77
Tax benefit related to
incentive stock plans 25
Stock appreciation rights
expired or surrendered 3
- -------------------------------------------------------------------------------
Balance - March 31, 1996 349,257 $1,746 $641 $7,865 3,309 $(132)
===============================================================================
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Note 11 - Contingencies
Various legal proceedings, claims and investigations related to products,
contracts and other matters are pending against the Company. Most
significant legal proceedings are related to matters covered by insurance.
In January 1991, the Company received from the U.S. Government a notice of
partial termination for default which terminated most of the work required
under contracts to develop and install a new air defense system for Saudi
Arabia, known as the Peace Shield program. In June 1991, the Government
selected another contractor to perform the work which is the subject of
the contracts that have been terminated for default, and the Government
may assert claims related to the reprocurement.
Management's position, supported by outside legal counsel which
specializes in government procurement law, is that the grounds for default
asserted by the Government in the Peace Shield termination are not legally
supportable. Accordingly, management and counsel are of the opinion that
on appeal the termination for default has a substantial probability of
being converted to termination for the convenience of the Government,
which would eliminate any Government claim for cost of reprocurement or
other damages. Additionally, the Company has a legal basis for a claim
for equitable adjustment to the prices and schedules of the contracts (the
"Contract Claim"). Many of the same facts underlie both the Contract
Claim and the Company's appeal of the Government's termination action.
The Company filed its complaint in the United States Court of Federal
Claims to overturn the default termination in order to obtain payment of
the Contract Claim.
In conjunction with the notice of partial termination in January 1991, the
Government demanded the repayment of unliquidated progress payments in the
amount of $605 plus interest. In April 1995, the parties executed an
agreement deferring the Company's potential obligation to repay the $605
from January 25, 1991, until a decision of the court or earlier
settlement. The deferment agreement is subject to annual review by the
Government.
The parties have been engaged in the discovery phase of the litigation,
with the trial scheduled for March 1997, and have concurrently engaged in
discussions which could lead to final settlement. On October 20, 1995,
the court determined all activities in the lawsuit would be "suspended in
light of the prospect of settlement." There can be no assurance that the
Government will agree to final settlement on terms acceptable to the
Company. If a final settlement is not reached, the Company expects that
its position will ultimately be upheld with respect to the termination
action and that it will recover on the Contract Claim.
The Company's financial statements have been prepared on the basis of a
conservative estimate of the Contract Claim and the Company's position
that the termination was for the convenience of the Government. If a
final settlement is not reached, the Company cannot, at this time,
reasonably estimate the length of time that will be required to resolve
the termination appeal and the Contract Claim. In the event that final
settlement does not occur and the Company's appeal of the termination for
default is not successful, the Company could realize a pretax loss on the
program approximating the value of the unliquidated progress payments plus
related interest and potential damages assessed by the Government.
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REVIEW BY INDEPENDENT ACCOUNTANTS
The consolidated statement of financial position as of March 31, 1996, and
the consolidated statements of net earnings and cash flows for the three-
month periods ended March 31, 1996 and 1995, have been reviewed by the
registrant's independent accountants, Deloitte & Touche LLP, whose report
covering their review of the financial statements follows.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
The Boeing Company
Seattle, Washington
We have reviewed the accompanying condensed consolidated statement of
financial position of The Boeing Company and subsidiaries as of March 31,
1996, and the related condensed consolidated statements of net earnings
and cash flows for the three-month periods ended March 31, 1996 and 1995.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with the standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data and of making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, 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.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial position of The Boeing
Company and subsidiaries as of December 31, 1995, and the related
consolidated statements of net earnings, shareholders' equity, and cash
flows for the year then ended (not presented herein); and in our report
dated January 25, 1996, 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, 1995, is fairly stated, in all material respects, in relation
to the consolidated statement of financial position from which it has been
derived.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Seattle, Washington
April 29, 1996
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Sales of $4.3 billion for the first quarter of 1996 were 15% below sales
for the comparable period of 1995 due to fewer commercial jet transport
deliveries. A total of 40 commercial jet transports were delivered,
compared with 59 in the first three months of 1995. During the first
quarter of 1996 deliveries for all models were limited by the recovery in
production rates following the 10-week labor strike by the International
Association of Machinists in the fourth quarter of 1995.
Sales by business segment were as follows ($ in millions):
First Quarter
1996 1995
------ ------
Commercial aircraft $3,016 $3,685
Defense and space 1,277 1,352
------ ------
Total $4,293 $5,037
====== ======
Commercial jet transport deliveries were as follows:
First Quarter
Model 1996 1995
---- ----
737 15 29
747 3 8
757 7 14
767 7 8
777 8 -
-- --
Total 40 59
== ==
Net earnings of $119 million for the first three months of 1996 were 34%
below earnings for the comparable period in 1995, principally due to fewer
commercial aircraft deliveries and a higher effective income tax rate.
Partially offsetting the earnings effect of the lower first quarter sales
were a lower level of research and development expense and increased
corporate investment income. Research and development expense totaled
$293 million for the quarter, compared with $404 million for the same
period of 1995.
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___________________________________________________________________________
|Forward-Looking Information Is Subject To Risk And Uncertainty |
|Certain statements in the financial discussion and analysis by management |
|contain "forward-looking" information that involves risk and |
|uncertainty, including projections for deliveries, sales and research and |
|development, or other trend projections. Actual future results and trends |
|may differ materially depending on a variety of factors, including the |
|Company's successful execution of internal performance plans; product |
|performance risks associated with regulatory certifications of the |
|Company's commercial aircraft by the U.S. Government and foreign |
|governments; other regulatory uncertainties; collective bargaining labor |
|disputes, performance issues with key suppliers and subcontractors; |
|governmental export and import policies; factors that result in |
|significant and prolonged disruption to air travel worldwide; global trade |
|policies; worldwide political stability and economic growth; changing |
|priorities or reductions in the U.S. Government defense and space budget; |
|termination of government contracts due to unilateral government action or |
|failure to perform; and legal proceedings. |
|___________________________________________________________________________|
The effective tax rate for the first quarter of 1996 was 30.0%, compared
with 16.6% for the first quarter of 1995. The higher effective tax rate
for the first quarter of 1996 was due to the expiration of research and
experimentation tax credits.
The overall operating earnings margin, exclusive of research and
development expense, was 10.4% for the first quarter of 1996, compared
with 12.5% for the first quarter of 1995. The lower margin was primarily
attributable to a model mix of commercial aircraft deliveries that
included 8 777s in the first quarter of 1996, compared with no 777s in the
first quarter of 1995 when the 777 was in the certification process. With
regard to the 777 program, new commercial jet transport programs normally
have lower operating profit margins due to initial tooling amortization
and higher unit production costs in the early years of the program.
Approximately 60 commercial aircraft deliveries are planned for the second
quarter, and 215 are currently projected for the year. Total sales for
1996 are currently projected to be in the $22 billion range, compared with
$19.5 billion in 1995. Research and development expense for the full year
1996 is currently projected to be in the $1.2 billion range, compared with
$1.3 billion for 1995.
Airline order activity continues to be encouraging, reflecting the
continued growth in passenger traffic in all major airline markets and
good profitability levels being experienced by the airline industry as a
whole. During the first quarter, the Company announced increases in
planned aircraft production rates on the 737, 747 and 757 models to take
effect in 1997. Current monthly production of 18.5 aircraft per month is
planned to increase to 27 per month by mid-1997.
Significant orders totaling 180 commercial jet transports were announced
in the first quarter and included orders for every model in the Boeing
airplane family. Largest among these were from GE Capital Aviation
Services (GECAS) for 107 aircraft consisting of 5 777s, 20 current-model
737s and 82 next-generation 737-600/700/800s; and from Malaysia Airlines
for 15 777s and 10 long-range 747-400s. International Lease Finance
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Corporation (ILFC) has increased its future fleet of Boeing 777s by
ordering an additional 18 aircraft, and Trans World Airlines (TWA) will
purchase 10 757s directly from Boeing.
Program development continues on schedule for the longer-range 777-200 and
stretched version 777-300 of the 777 family. During the first quarter the
Rolls-Royce Trent 800 engine for the Boeing 777 was awarded its type
certificates by the Federal Aviation Administration (FAA) and Europe's
Joint Aviation Authority (JAA). In March the FAA gave approval for the
General Electric GE-90-powered 777 to begin the 1000-cycle Extended Twin
Operations (ETOPS) flight test program.
Developments during the first quarter in the Company's defense and space
segment included the first flight of the Boeing/Sikorsky joint venture
prototype RAH-66 Comanche reconnaissance attack helicopter and receipt of
a $345 million contract to upgrade the E-3 Airborne Warning and Control
System (AWACS) radar system for the U.S. Air Force, NATO, and the United
Kingdom.
Liquidity and Capital Resources
Cash and short-term investments increased by $802 million during the first
three months of 1996, largely due to the sell-off of customer financing
notes receivable. Although further sell-off of customer financing assets
will occur as circumstances allow, there may also be new customer
financings related to outstanding commitments. Inventory levels will
continue to increase as the production rates build.
The Company's financial liquidity position remains strong, with cash and
short-term investments totaling $4.5 billion at March 31, 1996, and total
long-term debt at 19% of total shareholders' equity plus debt. On March
1, 1996, the Company paid down $250 million of debt that matured on that
date. The Company continues to maintain its $2.0 billion revolving credit
line, which had been reduced from $3.0 billion in the third quarter of 1995.
Backlog
Contractual backlog of unfilled orders (which excludes purchase options
and announced orders for which definitive contracts have not been
executed, and unobligated Government contract values) was as follows ($ in
billions):
March 31 Dec. 31
1996 1995
-------- -------
Commercial aircraft $74.6 $66.5
Defense and space 5.6 5.8
----- -----
Total $80.2 $72.3
===== =====
Unobligated U.S. Government contract values not included in backlog
totaled $7.5 billion at March 31, 1996, and $7.6 billion at December 31,
1995.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 11 to the Consolidated Financial Statements for a discussion
of the Peace Shield termination.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on April
29, 1996.
(c) At the Annual Meeting, in an uncontested election, four nominees
of the Board of Directors were elected directors for three-year
terms expiring on the date of the annual meeting in 1999. The
votes were as follows (in thousands):
For Withheld
------- --------
Robert A. Beck 284,289 2,974
Philip M. Condit 284,496 2,768
John B. Fery 284,431 2,832
Donald E. Petersen 284,379 2,884
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: (10) Material Contracts.
Management Contracts and Compensatory Plans.
(i) Supplemental Benefit Plan for Employees of The
Boeing Company. Plan, as amended February 26,
1996. Filed herewith.
(ii) Deferred Compensation Plan for Employees of The
Boeing Company. Plan, as amended February 26,
1996. Filed herewith.
(iii) Supplemental Retirement Plan for Executives of The
Boeing Company. Plan, as amended February 26,
1996. Filed herewith.
(15) Letter from independent accountants regarding
unaudited interim financial Information. Page 15.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
covered by this report.
- - - - - - -
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)
May 10, 1996 /s/ Gary W. Beil
----------- -------------------
(Date) Gary W. Beil
Vice President and Controller
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EXHIBIT (15)
Letter from Independent Accountants Regarding
Unaudited Interim Financial Information
The Boeing Company and Subsidiaries
The consolidated statement of financial position as of March 31, 1996, the
consolidated statements of net earnings for the three-month periods ended
March 31, 1996 and 1995, and the statements of cash flows for the three-
month periods ended March 31, 1996 and 1995, have been reviewed by the
registrant's independent accountants, Deloitte & Touche LLP, whose letter
regarding such unaudited interim financial information follows.
April 29, 1996
The Boeing Company
Seattle, Washington
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of The Boeing Company and subsidiaries for
the periods ended March 31, 1996 and 1995, as indicated in our report
dated April 29, 1996; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, is
incorporated by reference in Registration Statement No. 33-46540 on Form
S-3 and Prospectuses and in Registration Statement Nos. 2-48576, 2-93923,
33-25332, 33-31434, 33-43854, 33-58798, and 333-03191 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statements prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7
and 11 of that Act.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Seattle, Washington
15
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Exhibit (10) (i)
SUPPLEMENTAL BENEFIT PLAN
FOR EMPLOYEES OF
THE BOEING COMPANY
Section 1. Purpose of the Plan.
The Supplemental Benefit Plan for Employees of The Boeing Company (the Plan) was
established effective January 1, 1978 by The Boeing Company (the Company). The
purpose of the Plan is to supplement the benefits of certain employees under the
Company's Employee Retirement Plan, Voluntary Investment Plans, Employee Stock
Ownership Plan and Financial Security Plan to the extent that such benefits are
reduced by the limitations on benefits and contributions imposed by Section 415
of the Internal Revenue Code of 1986 (the Code). For the period January 1, 1987
through May 31, 1987, the purpose of the Plan shall also be to supplement the
limitation on Elective Deferrals imposed by Section 402(g)(1) of the Code, to
the extent such deferrals for certain employees are required to be reduced.
Effective January 1, 1989, the purpose of the Plan shall be expanded to also
supplement the benefits of certain employees to the extent such benefits are
curtailed because their Compensation exceeds the annual compensation limit
permitted under Section 401(a)(17) of the Code. It is intended that the Plan
shall be an Excess Benefit Plan as defined in Section 3 (36) of the Employee
Retirement Income Security Act of 1974.
Section 2. Eligibility and Participation.
Participation and eligibility shall be limited to those Executive Payroll
(formerly known as 90-Series) employees of the Company, or an affiliate or
subsidiary, who are participants in the Company's Employee Retirement Plan,
Voluntary Investment Plan or Financial Security Plan and whose benefits
thereunder are affected by the limitations on benefits or contributions imposed
by Section 415 and 401(a)(17) of the Code. Such persons shall be referred to as
Participants.
Section 3. Plan Benefits.
Each Participant shall be entitled to benefits under this Plan as follows:
(a) Employee Retirement Plan. With respect to the Employee Retirement
Plan, the benefits under this Plan shall be the difference
between the actual benefits of a Participant under the
Employee Retirement Plan and the benefits that would have been payable
under that plan except for the limitations on benefits imposed by
Sections 415 and 401(a)(17) of the Code. The benefits payable under
this Plan with respect to the Employee Retirement Plan shall be
payable to the Participant or to any other person who is receiving or
entitled to receive benefits with respect to the Participant under the
Employee Retirement Plan, and shall be paid in the same form, at the
same times and for the same period as benefits are paid with respect
to the Participant under the Employee Retirement Plan.
(b) Voluntary Investment Plans; Financial Security Plan; Employee Stock
Ownership Plan. With respect to the Voluntary Investment Plans, the
Financial Security Plan and the Employee Stock Ownership Plan (the
"individual account plans"), the benefits under this Plan shall be
determined separately for each such plan and for each year for which
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the contributions and other additions to the account of a
Participant are reduced because of Sections 415, 401(a)(17) and
402(g)(1) of the Code from what they would otherwise have been
except for that provision. The benefits under this Plan with
respect to a particular year shall be the additional benefit that
would have been payable under the individual account plan to which
the aforesaid reduction is applicable if the reduction on
contributions and other additions had not been made. All amounts
deferred under this Plan shall be credited to the Supplemental
Benefit Plan accounts of Participants at the time such amounts would
otherwise have been credited to their accounts under the individual
account plans. Interest shall be credited to each Participant's
account balance at the same time and at the same rate of interest as
is established for the period involved under the Deferred
Compensation Plan for Employees of The Boeing Company.
Benefits under this Plan shall be payable to the Participant, or to
any person receiving or entitled to receive benefits with respect to
the Participant under the Voluntary Investment Plans of the Company
(the "VIP"), and shall be paid in any form allowable under the VIP
at the same time or times and for the same periods as benefits are
payable under the VIP to or with respect to such Participant.
Section 4. Funding.
The Plan shall be unfunded, and the benefits under the Plan shall be paid only
from the general assets of the Company.
Section 5. Administration.
The Plan shall be administered by the Compensation Committee of the Board of
Directors of The Boeing Company. No member of the Committee shall become a Plan
Participant. The Committee shall make such rules, interpretations,
determinations of fact and computations as it may deem appropriate. Any
decision of the Committee with respect to the Plan, including (without
limitation) any determination of eligibility to participate in the Plan and any
calculation of plan benefits, shall be conclusive and binding on all persons.
The Committee shall submit to the Board of Directors periodic reports covering
the operation of the Plan.
Section 6. Amendment and Termination.
The Boeing Company shall have the authority to amend or terminate the Plan at
any time. In the event of Plan amendment or termination, a Participant's
benefits under the Plan shall not be less than the Plan benefits to which the
Participant would be entitled if the Participant had terminated employment
immediately prior to such amendment or termination of the Plan.
Section 7. Employment Rights.
Nothing in the Plan shall be deemed to give any person any right to remain in
the employ of the Company or affect any right of the Company to terminate a
person's employment with or without cause.
17
<PAGE> 18
Section 8. Employee Rights.
No benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge, execution,
attachment, garnishment, or any other legal process, and any attempt to do so
shall be void.
18
<PAGE> 19
Exhibit (10) (ii)
DEFERRED COMPENSATION PLAN FOR
EMPLOYEES OF THE BOEING COMPANY
1. Purpose. The purpose of the Deferred Compensation Plan for Employees of
The Boeing Company (the "Plan") is to provide a means by which eligible
employees may defer payment of base salaries and of awards made under
the Company's Incentive Compensation Plan (the "ICP").
2. Eligibility. Any Executive Payroll employee, including those employed
by an affiliate or subsidiary of the Company which, pursuant to the
provisions prescribed therein, has adopted The Boeing Company Employee
Retirement Plan, the Voluntary Investment Plan and the Employee
Financial Security Plan, shall be eligible to participate in this Plan;
provided, that the Committee shall designate those Executive Payroll
employees who are eligible to elect salary deferrals hereunder.
3. Elections. An eligible employee may elect deferrals, by executing and
delivering to the Company a notice which shall state:
in the case of salary deferrals, the percentage of the
Participant's base salary (but not more than 50% thereof) to be
deferred in each regular pay period, and
in the case of deferrals of ICP cash awards, the percentage of
the award to be deferred (which shall be all or any portion
thereof), and
in the case of ICP awards other than in cash, an election to
defer such award (such election to apply to all of any non-cash
award), and
with respect to any of the above elections, the method for
crediting investment earnings on deferred amounts.
A notice of election will remain in effect until changed by a subsequent
notice to the Company increasing or decreasing the percentage of future
salary or ICP cash awards to be deferred, terminating an election to
defer non-cash ICP awards, or changing the method for crediting
investment earnings on future deferrals. Any election or change in
election must be made by December 1 to be effective for a salary
deferral for the following year, or for any cash or non-cash award made
under the ICP in the following year, or for changing the earnings
credit method for deferrals made in the following year.
A Participant may request that the Committee approve cancellation of a
salary deferral election during the year for which such deferral was
elected. No such request shall be approved except upon a showing of
substantial hardship not capable of being alleviated through the use of
other resources reasonably available to the Participant. If approved,
such cancellation shall have prospective effect only, from the date of
such approval.
If a Participant terminates participation in this Plan, all amounts
accumulated in the Participant's account prior to termination will
continue to be held subject to the Plan.
19
<PAGE> 20
For purposes of the Plan, a "Participant" means an employee or former
employee having an account under the Plan.
4. Earnings Credits on Deferred Amounts. All amounts deferred under the
Plan shall be credited to the Participant's Plan account at the time an
award is made.
Each account shall be credited with earnings thereon, under the Interest
Credit method or the Stock Unit method, at the election of the
Participant, such election to be irrevocable once made. In the absence
of an election, the Interest Credit method shall be used.
Interest Credit Method. A Participant's account shall be credited
monthly with interest on all amounts in that account during the
preceding month.
Interest will be computed during each calendar year at the mean between
the high and the low during the first eleven months of the preceding
year of yields on Aa-rated industrial Bonds as reported by Moody's
Investors Service, Inc., rounded to the nearest 1/4th of one percent.
The Company will notify Participants annually of the established
interest rate.
Stock Unit Method. At the time an award is made, the Participant's
Stock Unit account shall be credited with the number of shares of
the Company's common stock that could be purchased with the award,
based on the Fair Market Value of such stock on the day of the award
(or on the next business day on which the New York Stock Exchange (the
"Exchange") is open, if the Exchange is closed on the day of the award)
excluding commissions, taxes, and other charges; and such number
(carried to two decimal places) shall be recorded as stock units in the
Participant's account, for bookkeeping purposes only. For purposes of
the Plan, "Fair Market Value" equals the mean of the high and low per
share trading prices for the common stock of the Company as reported in
The Wall Street Journal for the "New York Stock Exchange - Composite
Transactions" for a single trading day. The number of stock units in
an account shall be appropriately adjusted to reflect stock splits,
stock dividends, and other like adjustments in the Company's common
stock.
Each Participant's Stock Unit account periodically shall be credited
with the number of shares of the Company's common stock that could be
purchased, as set forth in the preceding paragraph, by an amount equal
to the cash dividends that would be payable on the number of shares of
the Company's common stock that equals the number of stock units in a
Participant's Stock Unit account. The Company will notify Participants
annually of the number of stock units, and the dividend equivalents,
credited to their Stock Unit account.
The Committee may authorize an irrevocable one-time election by
Participants, to elect the Stock Unit method for Plan balances as of
December 31, 1993.
20
<PAGE> 21
5. Payment. The timing and manner of distribution of amounts held under
the Plan shall be determined by the Committee in its sole discretion,
but distributions shall commence no later than the January 15, or such
later date as may be otherwise determined by the Committee, immediately
following the year in which the Participant reaches age 70-1/2. For
Participants subject to Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder ("Section 16"),
distributions shall commence no earlier than as set forth in this
section. A Participant may submit an election to the Committee, stating
the number of years over which the Participant requests that payment be
made (which shall be between 1 and 15 years), the initial year of
payment, and the payment option (in the case of payments to be made over
2 or more years). The election shall be submitted to the Committee by
not later than December 1 of the year following the year of termination
of the Participant's employment by the Company. Distribution shall be
made in accordance with the election unless the Committee determines
that the distribution should be made at some different time or in some
different manner.
The payment options (in the case of payments to be made over 2 or more
years) shall be as follows:
Approximate Equal Option. The amount payable to the Participant
each year shall be computed by the Company so that the aggregate
amount of cash or stock in a Participant's account under the
Plan shall be distributed in approximately equal installments in
each year for which deferred compensation payments are to be
made; or
Fractional Option. The amount payable to the Participant each
year shall be computed by multiplying a fraction, the numerator
of which is one and the denominator of which is the number of
years remaining in the distribution period, by the balance in
the account on January 1 of such year.
Under either option, the Participant's account shall be debited at the
time of payment.
An approved payment period and payment option shall be applicable to the
Participant's total aggregate deferred compensation accounts under the
Plan, including any accounts previously maintained that have been
combined into an amount under this Plan. Participants who have filed
elections prior to January l, 1993, may by December 1, 1993, revise such
elections (subject to Committee approval) to reflect the payment periods
and payment options permitted by the foregoing provisions, or may cancel
such elections and defer making an election until such time as is
permitted by the foregoing provisions.
Distributions from a Participant's Stock Unit account shall be paid in
cash. Following a Participant's termination of employment (or for
Participants subject to Section 16, following the period the Participant
is so subject and for six months thereafter), distributions may be made
in stock at the written election of the Participant. The cash
distribution shall equal the cash value, on the date as of which the
distribution is calculated (which shall be the first business day in
January unless some other date is prescribed by the Committee), of the
21
<PAGE> 22
number of whole shares of Company common stock then distributable to
such Participant, based on the Fair Market Value of such stock on that
date, or the next day on which the Exchange is open, if the Exchange is
closed on the date the distribution is calculated. Any distribution in
stock shall be in whole shares of the Company's common stock equal in
number to the whole number of stock units credited to the Participant's
account under the Stock Unit method. No fractional shares shall be
distributed and any account balance remaining after a stock distribution
shall be paid in cash.
Except as provided below with respect to the Stock Unit accounts of
Participants subject to Section 16, a Participant may request that
amounts credited to his account under the Plan be distributed prior to
the termination of his employment with the Company, or that an approved
method of payment of his Plan account be changed. Any such request
shall set forth the reason therefor, and is subject to approval by the
Committee in its sole and absolute discretion. Any request for a
distribution prior to termination of employment must be submitted to the
Committee by no later than December l of the year prior to the year in
which the distribution is requested to be made. No request for
distribution prior to termination of employment will be approved if the
Participant also has elected to defer any portion of an award under the
Company's Incentive Compensation Plan to be made in the calendar year in
which the requested distribution is to be made. A Participant may
request that any or all amounts accumulated under this Plan be
distributed except for any amounts, and any interest or dividends
credited thereon, which were deferred in the calendar year in which the
request for distribution is submitted. To the extent required for
exemption under Section 16, distributions prior to termination of
employment shall not be permitted under this Plan from amounts deferred
to a Stock Unit account by a Participant who is subject to Section 16,
except in the case of the Participant's disability. Disability, for
these purposes, shall mean a condition entitling the Participant to
Disability Retirement under the Company's Retirement Plan. For
Participants subject to Section 16, no change to the timing of or
payment option for payments from a Stock Unit account shall be
considered or allowed during the period the Participant is subject to
Section 16 and for any required Section 16 reporting period thereafter.
The Committee may establish guidelines for its own use and the use of
its delegates in considering any such request or any other request or
election under the Plan, but such guidelines shall not in any way limit
the Committee's discretion in acting upon a request or election, or in
determining the timing and manner of any distributions to be made under
the Plan.
Distributions under the Plan shall be subject to withholding for taxes
and other charges, as required by law, and the Company shall deduct from
any such distribution any amounts owed by the Participant to the
Company. For those distributions in stock, required withholding will be
taken from the common stock which would have been received.
22
<PAGE> 23
6. Beneficiaries. A Participant may designate one or more beneficiaries to
receive distributions from the Plan, upon the death of the Participant.
If no beneficiary has been designated, all such amounts shall be paid to
the personal representative of the Participant. Except as provided in
the following paragraph, the death of a Participant shall not affect the
timing or manner of distributions from the Participant's account.
A Participant may elect that one or more fixed payments be made from his
account under the Plan, to his personal representative or designated
beneficiary, following his death. Such payments, if approved by the
Committee, shall be made within 15 months after the Participant's death.
Any amounts thereafter remaining in the account will be distributed at
the time and in the manner approved by the Committee.
7. Termination or Amendment of the Plan. This Plan may be terminated,
modified, or amended from time to time by resolution of the Board of
Directors. If the Plan is terminated, all amounts accumulated prior to
termination will continue to remain subject to the provisions of the
Plan as if the Plan had not been terminated.
8. Participant's Rights. Amounts deferred and accumulated under the Plan
remain the property of the Company, and no Participant or other person
shall acquire any property interest in the account or any other assets
of the Company on account of participation in the Plan, the
Participant's rights being limited to receiving from the Company the
payments provided for in the Plan. The Plan is unfunded and to the
extent that any Participant acquires a right to receive payments from
the Plan, such rights shall be no greater than the right of an unsecured
creditor of the Company.
Except to the extent provided in the final paragraph of Section 5 of the
Plan, the right of a Participant, his legal representative or
beneficiary to receive payments from the Plan shall not be subject to
anticipation, sale, assignment, pledge, encumbrance or charge, nor shall
such right be liable for or subject to the debts, contracts, liabilities
or torts of the Participant, his legal representative or beneficiaries.
9. Powers of Compensation Committee. The Compensation Committee of the
Board of Directors (the "Committee") shall have full power and authority
to construe and interpret this Plan. The Committee may from time to
time delegate such of its functions hereunder as it may determine, to
one or more of the officers of the Company, on such terms and conditions
as the Committee may decide. Decisions of the Committee or its
delegates shall be final and binding upon the Participants, their
legal representatives and beneficiaries. Approval by the Committee or
its delegates of any election or request made by a Participant
pursuant to the Plan shall be subject to the sole discretion of the
Committee or such delegates.
23
<PAGE> 24
Exhibit (10) (iii)
SUPPLEMENTAL RETIREMENT PLAN
FOR EXECUTIVES OF
THE BOEING COMPANY
Section 1. Purpose of the Plan.
The Supplemental Retirement Plan for Executives of The Boeing Company was
established effective July 1, 1980. Its sole purpose is to provide a retirement
benefit for a select group of management or highly compensated employees of The
Boeing Company (the Company) supplemental to the benefits provided by the
Company's Employee Retirement Plan. The prior Plan is amended effective
February 26, 1996, to read as set forth in this Plan document.
Section 2. Definitions.
The Plan means the Supplemental Retirement Plan for Executives of The Boeing
Company as herein set forth, together with any amendments to it that may at any
time be adopted.
The Retirement Plan means The Boeing Company Employee Retirement Plan, together
with any amendments to it that may at any time be adopted.
The Incentive Compensation Plan means the Incentive Compensation Plan for
Officers and Employees of The Boeing Company and Subsidiaries, together with any
amendments to it that may at any time be adopted.
The Long-Term Incentive Program means the program provided for by Section 5A of
the Incentive Compensation Plan, together with any modifications that may at any
time be adopted.
The Supplemental Benefit Plan means the Supplemental Benefit Plan for Employees
of The Boeing Company, together with any amendments to it that may at any time
be adopted.
Defined terms in the Retirement Plan will have the same meaning when used in
this Plan.
The Code means the Internal Revenue Code of 1986, as amended.
The Supplemental Benefit means the benefit provided by this Plan.
Effective January 1, 1991, Final Average Monthly Total Earnings means the sum of
(a) Final Average Monthly Earnings as defined in the Retirement Plan without
regard to the compensation limitation under Code Section 401(a)(17), and (b) the
sum of the five highest awards made to the employee under the Incentive
Compensation Plan during the last ten calendar years preceding his retirement
date divided by sixty. If fewer than five awards are made, then the sum of all
awards made during the last ten calendar years preceding retirement will be used
in computing (b) above.
24
<PAGE> 25
For purposes of the computations under clause (b) above, an employee's Incentive
Compensation Plan award includes:
(i) deferred awards, as well as those paid currently,
(ii) the amount by which the Compensation Committee of the Board
of Directors reduces the employee's Incentive Compensation
Plan award under Section 5 thereof because of the employee's
participation in the Long-Term Incentive program under Section
5A thereof; and
(iii) Boeing Stock Unit awards made under Section 5B thereof at their
Fair Market Value as of the date of the award, determined as
provided in such Section 5B; provided, that Boeing Stock Unit
awards that have been forfeited pursuant to clause (5) of
Section 5B shall be excluded from the computations under clause
(b) above.
(iv) Incentive Stock Unit awards made pursuant to the Incentive Stock
Plan for Employees at their Fair Market Value as of the date of
the award, determined as provided in the grant of the Incentive
Stock Unit award; provided that, Incentive Stock Unit awards
that have been forfeited pursuant to the terms of such award
shall be excluded from the computation under clause (b) above.
Section 3. Eligibility.
Eligibility for the accrual of a Supplemental Benefit under this Plan is limited
to employees of the Company, and employees of an affiliate or subsidiary of the
Company which, pursuant to the provisions prescribed therein, has adopted The
Boeing Company Employee Retirement Plan, the Voluntary Investment Plan and the
Employee Financial Security Plan, either on the active payroll or on approved
leave of absence, on or at any time after July 1, l980, who were also members of
the Incentive Compensation Plan (Executive Payroll, formerly known as 90-Series
Grades) as of July 1, 1980, or who became members of the Incentive Compensation
Plan at a later date.
Eligibility for the payment of a Supplemental Benefit is limited to employees
who have participated in this Plan and who immediately prior to their retirement
or death while in the employ of the Company, as the case may be, were
participants in the Retirement Plan and also on the management payroll; and who,
in the case of death while in the employ of the Company, left a spouse who
became entitled to a survivor benefit under the Retirement Plan.
Section 4. Supplemental Benefit.
The Supplemental Benefit payable to a retiring employee of the Company is a
monthly amount computed as (a) + (b) - (c) below.
(a) Core Benefit: A monthly amount equal to 1% of Final Average
Monthly Total Earnings multiplied by Credited Service and the
appropriate Early Retirement Reduction Factor. The Early
Retirement Reduction Factor is based on the employee's age in
completed months on the date of retirement. The appropriate
factors are as follows:
25
<PAGE> 26
Early Retirement
Age at Retirement Reduction Factor
----------------- ----------------
55 90%
56 92%
57 94%
58 96%
59 98%
60 or older 100%
(b) Excess Benefit. A monthly amount based on .5% of Final Average
Monthly Total Earnings in excess of Covered Compensation divided
by twelve. This amount is multiplied by Credited Service and
then by the appropriate Early Retirement Reduction Factor. The
Early Retirement Reduction Factor is based on the employee's age
in completed months on the date of retirement. The appropriate
factors as follows:
Early Retirement
Age at Retirement Reduction Factor
----------------- ----------------
55 75%
56 80%
57 85%
58 90%
59 95%
60 or older 100%
(c) Retirement Plan and Supplemental Benefit Plan Benefit: The
amount payable from The Boeing Company Employee Retirement
Plan and the amount payable under Section 3 Paragraph (a) of the
Supplemental Benefit Plan. If applicable, this amount will
reflect reductions for early retirement. However, this amount
will not reflect reductions for joint and survivor options or
other optional forms of payment.
In no event will the Supplemental Benefit be less than zero.
26
<PAGE> 27
Section 5. Payment of Benefit.
Subject to Section 6 and the provisions of this Section 5, the Supplemental
Benefit shall be paid to the retiring employee (and, if applicable, to his or
her surviving spouse) at the same time and for the same period and generally in
accordance with the same provisions as are applicable to the payment of
retirement benefits under the Retirement Plan. Without limiting the generality
of the foregoing, if an employee should die while still in the employ of the
Company leaving a spouse entitled to a survivor benefit under the Retirement
Plan, the spouse will be entitled to receive for life on account of the
Supplemental Benefit an amount determined in the same way as his or her survivor
benefit was determined under the Retirement Plan. The retiring employee may
elect to receive payment of the Supplemental Benefit under either the straight
life method or the 50%, 75% or 100% joint and survivor method, and such election
shall be subject to the same actuarial or other adjustments that are used in
determining benefits under the Retirement Plan. If the employee's benefits
under the Retirement Plan are increased on account of subsequent amendments to
that Plan, for example, amendments providing increased benefits for retirees, a
corresponding increase will be made in the Supplemental Benefit.
Section 6. Forfeiture.
A retired employee (and a surviving spouse, if applicable) shall forfeit all
right to receive further payments of the Supplemental Benefit and shall have no
further interest in this Plan if at any time after retirement the retired
employee shall engage in an activity, whether individually or as an employee,
consultant or otherwise, which the Retirement Committee, in its sole and
absolute discretion, shall determine to be in competition with any significant
aspect of the Company's business.
Section 7. Nonassignability.
The Supplemental Benefit shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, charge, execution, attachment,
garnishment or any other legal process. Any attempt to take any such action
shall be void and shall authorize the Retirement Committee, in its sole and
absolute judgment, to forfeit all further right and interest in the Supplemental
Benefit.
Section 8. Funding.
The Plan shall be unfunded, and the Supplemental Benefit shall be paid only from
the general assets of the Company.
Section 9. Administration.
The Plan shall be administered by the Retirement Committee as appointed by the
Board of Directors of The Boeing Company. The Committee shall make such rules,
interpretation, determinations of fact and computations as it may deem
appropriate. Any decision of the Committee with respect to the Plan, including
(without limitation) any calculation of a Supplemental Benefit, shall be
conclusive and binding on all persons.
27
<PAGE> 28
Section 10. Amendment and Termination.
The Boeing Company shall have the authority to amend or terminate the Plan at
any time. Such amendment or termination shall not adversely affect or impair
the benefit entitlements in course of payment to retired employees and surviving
spouses, the contingent rights to the continuance of benefit payments of the
spouses of retired employees named as Joint Annuitants, or the accrued
Supplemental Benefits as defined in this Section of all eligible employees then
in the employ of the Company.
For the purpose of this section, an accrued Supplemental Benefit will be
determined for each eligible employee in accordance with the provisions of
Section 4 but based on Credited Service, Final Average Monthly Total Earnings,
Covered Compensation and the accrued benefit provided by the Retirement Plan all
determined as of the effective date of the amendment or termination. Payment of
benefits based on such an accrued Supplemental Benefit will be made in
accordance with the terms of this Plan to the employee if he retires under the
Retirement Plan, or to his surviving spouse if he dies while in the employ of
the Company and leaves a spouse eligible for a Pre-Retirement Joint and Survivor
Spouse Benefit under the Retirement Plan.
Section 11. Employment Rights.
Nothing in the Plan shall be deemed to give any person any right to remain in
the employ of the Company or affect any right of the Company to terminate a
person's employment with or without cause.
28
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