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<SEC-DOCUMENT>0000012927-01-500009.txt : 20010810
<SEC-HEADER>0000012927-01-500009.hdr.sgml : 20010810
ACCESSION NUMBER:		0000012927-01-500009
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010630
FILED AS OF DATE:		20010809

FILER:

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

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-00442
		FILM NUMBER:		1701430

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 3707 MS 1F 31
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98124
		BUSINESS PHONE:		2066552121

	MAIL ADDRESS:	
		STREET 1:		7755 EAST MARGINAL WAY SOUTH
		CITY:			SEATTLE
		STATE:			WA
		ZIP:			98108

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BOEING AIRPLANE CO
		DATE OF NAME CHANGE:	19730725
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>b-q0601.txt
<DESCRIPTION>2Q 2001 10Q
<TEXT>
<page>   1
 ..............................................................................
 ..............................................................................
                     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
                                June 30, 2001


                        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 July 31, 2001, there were 806,094,449 shares of common stock, $5.00 par
value, issued and outstanding.






                                      1
<page>   2
                       PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


                     THE BOEING COMPANY AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                 (Dollars in millions except per share data)
                                 (Unaudited)



                                          Six months ended   Three months ended
                                                June 30              June 30
- -------------------------------------------------------------------------------
                                             2001     2000        2001     2000
- -------------------------------------------------------------------------------
Sales and other operating revenues        $28,809  $24,751     $15,516  $14,841
Cost of products and services              24,037   21,491      12,967   12,944
- -------------------------------------------------------------------------------
                                            4,772    3,260       2,549    1,897

Equity in income (loss) from joint ventures    44       30          22       (1)
General and administrative expense          1,167    1,032         644      542
Research and development expense              883      663         461      375
Gain on dispositions, net                               13                   13
Share-based plans expense                     181      127          99       67
- -------------------------------------------------------------------------------
Operating earnings                          2,585    1,481       1,367      925

Other income, principally interest            252      222          17       73
Interest and debt expense                    (320)    (210)       (172)    (107)
- -------------------------------------------------------------------------------
Earnings before income taxes                2,517    1,493       1,212      891

Income taxes                                  441      455         372      271
- -------------------------------------------------------------------------------
Net earnings before cumulative effect of
 accounting change                          2,076    1,038         840      620

Cumulative effect of accounting change, net     1
- -------------------------------------------------------------------------------
Net Earnings                              $ 2,077  $ 1,038     $   840  $   620
===============================================================================

Basic earnings per share                    $2.50    $1.20       $1.02     $.71
===============================================================================

Diluted earnings per share                  $2.45    $1.18       $ .99     $.71
===============================================================================

Cash dividends paid per share               $ .34    $ .28       $ .17     $.14
===============================================================================

          See notes to condensed consolidated financial statements.
                                      2
<page>   3
                     THE BOEING COMPANY AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                 (Dollars in millions except per share data)
                                                            June 30 December 31
                                                               2001        2000
- -------------------------------------------------------------------------------
Assets                                                   (Unaudited)
- -------------------------------------------------------------------------------

Cash and cash equivalents                                   $ 1,502     $ 1,010
Accounts receivable                                           4,710       4,928
Current portion of customer and commercial financing          1,409         995
Deferred income taxes                                         2,161       2,137
Inventories, net of advances and progress billings            7,407       6,794
- -------------------------------------------------------------------------------
        Total current assets                                 17,189      15,864
Customer and commercial financing                             6,800       5,964
Property, plant and equipment, net                            8,701       8,814
Goodwill and acquired intangibles, net                        5,223       5,214
Prepaid pension expense                                       5,315       4,845
Deferred income taxes                                                        60
Other assets                                                  1,469       1,267
- -------------------------------------------------------------------------------
                                                            $44,697     $42,028
===============================================================================

Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------

Accounts payable and other liabilities                      $11,981     $11,979
Advances in excess of related costs                           4,210       3,517
Income taxes payable                                            802       1,561
Short-term debt and current portion of long-term debt           780       1,232
- -------------------------------------------------------------------------------
        Total current liabilities                            17,773      18,289
Deferred income taxes                                            84
Accrued retiree health care                                   5,215       5,152
Deferred lease income                                           306
Long-term debt                                                9,810       7,567
Minority interest in subsidiaries                                14
Shareholders' equity:
 Common shares, par value $5.00 -
  1,200,000,000 shares authorized;
  Shares issued - 1,011,870,159 and 1,011,870,159             5,059       5,059
 Additional paid-in capital                                   2,468       2,693
 Treasury shares, at cost - 158,881,036 and 136,385,222      (7,658)     (6,221)
 Retained earnings                                           13,873      12,090
 Accumulated other comprehensive income                         (16)         (2)
 Unearned compensation                                           (5)         (7)
 ShareValue Trust shares - 39,369,118 and 39,156,280         (2,226)     (2,592)
- -------------------------------------------------------------------------------
        Total shareholders' equity                           11,495      11,020
- -------------------------------------------------------------------------------
                                                            $44,697     $42,028
===============================================================================
             See notes to condensed consolidated financial statements.
                                      3
<page>   4
                     THE BOEING COMPANY AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                            (Dollars in millions)
                                 (Unaudited)
                                                               Six months ended
                                                                   June 30
- -------------------------------------------------------------------------------
                                                               2001        2000
- -------------------------------------------------------------------------------
Cash flows - operating activities:
  Net earnings                                               $2,077      $1,038
  Adjustments to reconcile net earnings
   to net cash provided by operating activities:
    Share-based plans                                           181         127
    Depreciation                                                600         641
    Amortization of goodwill and intangibles                    141          57
    Customer and commercial financing valuation provision         1           9
    Gain on dispositions, net                                               (13)
    Changes in assets and liabilities -
      Accounts receivable                                       218        (102)
      Inventories, net of advances and progress billings       (618)        350
      Accounts payable and other liabilities                     10          51
      Advances in excess of related costs                       693         234
      Income taxes payable and deferred                        (638)         72
      Deferred lease income                                     306
      Other                                                    (831)       (416)
      Accrued retiree health care                                86          91
- -------------------------------------------------------------------------------
        Net cash provided by operating activities             2,226       2,139
- -------------------------------------------------------------------------------

Cash flows - investing activities:
  Customer financing and properties on lease, additions      (1,913)       (669)
  Customer financing and properties on lease, reductions        568       1,040
  Property, plant and equipment, net additions                 (470)       (452)
  Proceeds from dispositions                                     68          75
- -------------------------------------------------------------------------------
        Net cash used by investing activities                (1,747)         (6)
- -------------------------------------------------------------------------------

Cash flows - financing activities:
  New borrowings                                              2,300         196
  Debt repayments                                              (517)       (338)
  Common shares purchased                                    (1,540)       (348)
  Stock options exercised, other                                 67          29
  Dividends paid                                               (297)       (254)
- -------------------------------------------------------------------------------
        Net cash provided (used) by financing activities         13        (715)
- -------------------------------------------------------------------------------
Net increase in cash and cash equivalents                       492       1,418

Cash and cash equivalents at beginning of year                1,010       3,354
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of 2nd quarter              $1,502      $4,772
===============================================================================
          See notes to condensed consolidated financial statements.
                                      4
<page>   5
                     THE BOEING COMPANY AND SUBSIDIARIES

            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                            (Dollars in millions)
                                 (Unaudited)


Note 1 - Condensed Consolidated Interim Financial Statements

The condensed 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 June 30, 2001, are not necessarily
indicative of the operating results for the full year. The interim financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's 2000 Annual Report.
Certain reclassifications have been made to prior periods to conform with
current reporting.


Note 2 - Acquisitions

On October 6, 2000, the Company acquired Hughes space and communications and
related businesses. The acquisition was accounted for under the purchase method,
by which the purchase price was allocated to the net assets acquired based on
preliminary estimates of their fair values. At December 31, 2000, the purchase
price was $3,849, the initial goodwill was valued at $740 and the other
intangible assets were valued at $631. As of June 30, 2001, the initial goodwill
was valued at $848 and other intangible assets were valued at $647. The purchase
price remains subject to future adjustments based upon ongoing negotiations. The
goodwill and other intangible asset values also remain subject to future
adjustment.

There were no significant changes to the intangible asset balances of the other
acquisitions that occurred in 2000, but the allocation of the net assets
acquired remain subject to future adjustments.

In July 2001, the Financial Accounting Standards Board issued two new
pronouncements:  Statement of Financial Accounting Standard (SFAS) No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  The Company will be required to adopt SFAS No. 141 for all business
combinations completed after June 30, 2001.  This standard requires that
business combinations completed after June 30, 2001, be accounted for under
the purchase method.  Business combinations completed before July 1, 2001,
that were accounted for by the purchase method must meet the requirements of
SFAS No. 142 for classification of intangibles.  Previously acquired
intangibles not meeting the prescribed criteria must be reclassified to
goodwill as of the statement adoption date.  The Company is evaluating the
impact of the adoption of this standard and has not yet determined the effect,
if any, that this statement will have on its financial position and results of
operations.





                                      5
<page>   6
Note 2 - Acquisitions (continued)

Additionally, the Company will be required to adopt SFAS No. 142 at the
beginning of 2002 for all goodwill and other intangible assets recognized in the
Company's statement of financial position as of January 1, 2002. This statement
changes the accounting for goodwill from an amortization method to an
impairment-only approach.  Amortization of goodwill, including goodwill recorded
in past business combinations, will cease upon adoption of this standard.  The
standard is immediately applicable for any goodwill acquired after June 30,
2001.  Goodwill and intangible assets acquired after June 30, 2001, should be
tested for impairment and written down and charged to results of operations only
in the periods in which the recorded value of goodwill and certain intangibles
is more than its fair value. The Company does not expect any expense recognition
from application of the impairment test, but has not completed the testing
necessary for a final determination. If goodwill amortization were to cease,
goodwill expense of approximately $150 per year would no longer be recognized in
the consolidated statement of operations.


Note 3 - Earnings per Share

The weighted average number of shares outstanding (in millions) used to compute
earnings per share are as follows:

                                Six Months ended      Three months ended
                                    June 30                 June 30
                                ----------------      ------------------
                                2001        2000      2001          2000
                                ----        ----      ----          ----
Basic shares                    830.4      867.8      826.9        866.6
Diluted shares                  848.1      876.9      845.1        867.1

Basic earnings per share are calculated based on the weighted average number of
shares outstanding, excluding treasury shares and the outstanding shares held by
the ShareValue Trust. Diluted earnings per share are calculated based on that
same number of shares plus additional dilutive shares representing stock
distributable under stock option and stock unit plans computed using the
treasury stock method, plus contingently issuable shares from other share-based
plans on an as-if converted basis.


Note 4 - Income Taxes

The effective tax rate of 17.5% for the first six months of 2001 is principally
due to a one-time benefit of $343 reflecting a settlement with the Internal
Revenue Service relating to research credit claims on McDonnell Douglas
Corporation fixed-price government contracts applicable to the 1986-1992 federal
income tax returns.  Absent this settlement, the effective tax rate for the
first six months would be 30.6%.  The 30.6% effective tax rate differs from the
federal statutory rate of 35% due to Foreign Sales Corporation tax benefits,
extra-territorial income exclusion, tax credits, state income taxes and the non-
deductibility of certain goodwill, primarily the goodwill associated with the
acquisition of Rockwell International Corporation in 1996.  Net income tax
payments were $925 and $351 for the six months ended June 30, 2001 and 2000.
Payments for the six months ended June 30, 2001, included approximately $900 due
principally to the closeout of contracts accounted for under the completed
contract method for tax purposes.

                                      6
<page>   7
Note 4 - Income Taxes (continued)

In December 1996, The Boeing Company filed suit in the U.S. District Court for
the Western District of Washington for the refund of over $400 in federal income
taxes and related interest. The suit challenged the IRS method of allocating
research and development costs for the purpose of determining tax incentive
benefits on export sales through the Company's Domestic International Sales
Corporation (DISC) and its Foreign Sales Corporation (FSC) for the years 1979
through 1987. In September 1998, the District Court granted the Company's motion
for summary judgment. The U.S. Department of Justice has appealed this decision.
On August 2, 2001, The United States Court of Appeals for the ninth Circuit
reversed the District Court's summary judgment that was in the Company's
favor.  The Company has fully provided for any potential earnings impact that
may result from this decision.  The Company is assessing its options as a
result of the Court of Appeals' actions.


Note 5 - Accounts Receivable

Accounts receivable consisted of the following:
                                                        June 30     December 31
                                                           2001            2000
- -------------------------------------------------------------------------------
U.S. Government contracts                                $2,249          $2,693
Other                                                     2,461           2,235
- -------------------------------------------------------------------------------
                                                         $4,710          $4,928
===============================================================================


Note 6 - Inventories

Inventories consisted of the following:
                                                        June 30     December 31
                                                           2001            2000
- -------------------------------------------------------------------------------
Commercial aircraft programs and
 long-term contracts in progress                       $ 19,719        $ 19,399
Commercial spare parts, general
 stock materials and other                                1,973           1,972
- -------------------------------------------------------------------------------
                                                         21,692          21,371
Less advances and progress billings                     (14,285)        (14,577)
- -------------------------------------------------------------------------------
                                                       $  7,407        $  6,794
===============================================================================

Inventory costs at June 30, 2001, included unamortized tooling of $946 and $378
relating to the 777 and Next-Generation 737 programs, and excess deferred
production costs of $1,007 and $609 relating to the 777 and Next-Generation 737
programs. There are no significant deferred production costs or unamortized
tooling associated with the 717 program.






                                      7
<page>   8
Note 7 - Customer and Commercial Financing

Customer and commercial financing consisted of the following:

                                                        June 30     December 31
                                                           2001            2000
- -------------------------------------------------------------------------------
Aircraft financing
 Notes receivable                                        $  677          $  593
 Investment in sales-type/financing leases                2,222           1,119
 Operating lease equipment, at cost,
  Less accumulated depreciation of $263 and $305          2,758           3,098
Commercial equipment financing
 Notes receivable                                           988             915
 Investment in sales-type/financing leases                  922             697
 Operating lease equipment, at cost,
  Less accumulated depreciation of $108 and $95             798             710
- -------------------------------------------------------------------------------
Less valuation allowance                                   (156)           (173)
- -------------------------------------------------------------------------------
                                                         $8,209          $6,959
===============================================================================

Financing for aircraft is collateralized by security in the related asset, and
historically the Company has not experienced difficulty in accessing such
collateral when necessary. Commercial equipment financing also includes amounts
attributable to regional aircraft, principally with fewer than 80 seats.

The change in the valuation allowance for the first six months of 2001 consisted
of the following:
                                                                      Valuation
                                                                      Allowance
- -------------------------------------------------------------------------------
Beginning balance - December 31, 2000                                     $(173)
Charged to costs and expenses                                                (1)
Reduction in customer and commercial financing assets                        18
- -------------------------------------------------------------------------------
Ending balance - June 30, 2001                                            $(156)
===============================================================================


Note 8 - Accounts Payable and Other Liabilities

Accounts payable and other liabilities consisted of the following:

                                                        June 30     December 31
                                                           2001            2000
- -------------------------------------------------------------------------------
Accounts payable                                        $ 5,216         $ 5,040
Accrued compensation and employee benefit costs           3,157           2,938
Dividends payable                                           146             149
Lease and other deposits                                    345             731
Other                                                     3,117           3,121
- -------------------------------------------------------------------------------
                                                        $11,981         $11,979
===============================================================================


                                      8
<page>   9
Note 9 - Deferred Lease Income

The Company has entered into an agreement with the United Kingdom Royal Air
Force (UKRAF) to lease four C-17 transport aircraft, with delivery taking place
during 2001. The lease terms are for seven years, at which time the UKRAF has
the right to purchase the aircraft for a stipulated value, continue the lease
for two additional years, or return the aircraft. Concurrent with the
negotiation of this lease, the Company and the UKRAF arranged to assign the
contractual lease payments to an independent financial institution, and as of
June 30, 2001, the Company has received a significant portion of the $646 of
scheduled advances from the financial institution in consideration of the
assignment of the future lease receivables from the UKRAF. These proceeds
initially are accounted for as advances and progress billings against inventory.
At the time of delivery of each C-17, the related portion of inventory advances
are reclassified as deferred lease income. Two of the four C-17 transport
aircraft were delivered in the second quarter of 2001. The assignment of lease
receivables is non-recourse to the Company. The scheduled advances of $646
represent the present value of the assigned total lease receivables discounted
at an effective rate of 6.6%. The C-17 deliveries were and will be accounted for
as operating leases.






































                                      9
<page>  10
Note 10 - Debt

Short- and long-term debt consisted of the following:
                                                        June 30     December 31
                                                           2001            2000
- -------------------------------------------------------------------------------
Non-recourse debt and notes
  Enhanced Equipment Trust Certificates                 $   635          $    -
  9.9% - 14.3% notes due through 2003                        68              74
Unsecured debentures and notes:
  $174, 8 3/8% due Feb. 15, 2001                                            174
  $49,  7.565% due Mar. 30, 2002                             48              49
  $120, 9.25% due Apr. 1, 2002                              120             120
  $300, 6 3/4% due Sep. 15, 2002                            299             299
  $300, 6.35% due Jun. 15, 2003                             300             300
  $200, 7 7/8% due Feb. 15, 2005                            205             206
  $300, 6 5/8% due Jun. 1, 2005                             295             294
  $250, 6.875% due Nov. 1, 2006                             249             248
  $175, 8 1/10% due Nov. 15, 2006                           175             175
  $350, 9.75% due Apr. 1, 2012                              348             348
  $400, 8 3/4% due Aug. 15, 2021                            398             398
  $300, 7.95% due Aug. 15, 2024                             300             300
  $250, 7 1/4% due June. 15, 2025                           247             247
  $250, 8 3/4% due Sep. 15, 2031                            248             248
  $175, 8 5/8% due Nov. 15, 2031                            173             173
  $300, 6 5/8% due Feb. 15, 2038                            300             300
  $100  7.50% due Aug. 15, 2042                             100             100
  $175, 7 7/8% due Apr. 15, 2043                            173             173
  $125, 6 7/8% due Oct. 15, 2043                            125             125
Senior debt securities,
  5.5% - 10.6%, due through 2012                          3,278           1,547
Senior medium-term notes,
  3.8% - 7.6%, due through 2017                           1,881           1,775
General term notes
  6.0% - 8.3% due through 2011                                6               7
Subordinated medium-term notes,
  6.9% - 8.3%, due through 2012                              20              25
Capital lease obligations due through 2008                  300             315
Other notes                                                 299             779
- -------------------------------------------------------------------------------
                                                        $10,590          $8,799
===============================================================================

Of the debt balances reported above, $5,508 and $3,677 are attributed to Boeing
Capital Corporation (BCC) for June 30, 2001, and December 31, 2000.

The Company has $3,000 currently available under credit line agreements with a
group of commercial banks. The Company has complied with the restrictive
covenants contained in various debt agreements. Total debt interest, including
amounts capitalized, was $335 and $259 for the six-month periods ended June 30,
2001 and 2000, and interest payments were $306 and $253.







                                     10
<page>  11
Note 10 - Debt (continued)

Additionally, BCC, a wholly owned subsidiary of the Company, has filed a shelf
registration with the Securities and Exchange Commission totaling $2,640. From
this $2,640 shelf, $1,500 was issued in Senior Global Notes, and the remaining
$1,140 was allocated to a new Medium Term Note (MTN) Program made effective
August 31, 2000. BCC had issued and sold $800 in aggregate principal amounts of
MTN, at interest rates ranging from 4.07% to 6.68% and maturities ranging from
one to seven years.

On February 16, 2001, BCC filed a public shelf registration of $5,000 with the
Securities and Exchange Commission. From this $5,000 shelf, BCC received
proceeds on March 8, 2001, from the issuance of $750 in 6.10% senior notes due
2011. On May 10, 2001, BCC received proceeds from the issuance of $1,000 in
5.65% senior notes due 2006.

On May 24, 2001, American Airlines issued Enhanced Equipment Trust Certificates
(EETC), and the Company, through its subsidiary Boeing Capital Corporation,
received proceeds of $635 attributable to 32 MD-83 aircraft owned by the Boeing
Capital Corporation and on lease to American Airlines. The effective interest
rates of these non-recourse borrowings range from 6.82% to 7.69%.

Short-term debt and current portion of long-term debt as of June 30, 2001,
consist of the following: $321 of senior debt securities, senior medium-term
notes, subordinated medium-term notes, $36 of capital lease obligations, $67 of
non-recourse debt and notes, and $356 of other notes.
































                                     11
<page>  12
Note 11 - Shareholders' Equity
Changes in shareholders' equity for the six-month periods ended June 30, 2001
and 2000, consisted of the following:
- -------------------------------------------------------------------------------
                                                 2001                2000
(Shares in thousands)                       Shares   Amount     Shares   Amount
- -------------------------------------------------------------------------------
Common stock
 Beginning balance - January 1           1,011,870  $ 5,059  1,011,870  $ 5,059
- -------------------------------------------------------------------------------
 Ending balance - June 30                1,011,870  $ 5,059  1,011,870  $ 5,059
===============================================================================
Additional paid-in capital
 Beginning balance - January 1                      $ 2,693             $ 1,684
  Share-based compensation                              181                 127
  Treasury shares issued for stock plans, net           (52)                (22)
  Tax benefit related to stock plans                     12                   4
  ShareValue Trust market value adjustment             (366)                 21
- -------------------------------------------------------------------------------
 Ending balance - June 30                           $ 2,468             $ 1,814
===============================================================================
Treasury stock
 Beginning balance - January 1             136,385  $(6,221)   102,357  $(4,161)
  Treasury shares issued for
   stock plans, net                         (2,315)     103     (1,017)      41
  Treasury shares acquired                  24,811   (1,540)     8,700     (348)
- -------------------------------------------------------------------------------
 Ending balance - June 30                  158,881  $(7,658)   110,040  $(4,468)
===============================================================================
Retained earnings
 Beginning balance - January 1                      $12,090             $10,487
  Net earnings                                        2,077               1,038
  Cash dividends declared                              (294)               (253)
- -------------------------------------------------------------------------------
 Ending balance - June 30                           $13,873             $11,272
===============================================================================
Accumulated other comprehensive income
 Beginning balance - January 1                      $    (2)            $     6
  Gains (losses) on certain investments, net of tax       4                  (6)
  Losses on derivative instruments, net of tax          (13)
  Foreign currency translation adjustment                (5)                  4
- -------------------------------------------------------------------------------
 Ending balance - June 30                           $   (16)             $    4
===============================================================================
Unearned compensation
 Beginning balance - January 1                      $    (7)            $   (12)
  Amortization and forfeitures                            2                   2
- -------------------------------------------------------------------------------
 Ending balance - June 30                           $    (5)            $   (10)
===============================================================================
ShareValue Trust
 Beginning balance - January 1              39,156  $(2,592)    38,696  $(1,601)
 Shares acquired from dividend reinvestment,
  net of fees                                  213                 281
 Market value adjustment                                366                 (21)
- -------------------------------------------------------------------------------
 Ending balance - June 30                   39,369  $(2,226)    38,977  $(1,622)
===============================================================================
                                     12
<page>  13
Note 11 - Shareholders' Equity (continued)

For the six months ended June 30, 2001 and 2000, comprehensive income and net
earnings were substantially the same, and differed only by the changes in
accumulated other comprehensive income shown above.

Note 12 - Share-Based Compensation

Share-based plans expense consisted of the following:

                                          Six months ended   Three months ended
                                                June 30              June 30
- -------------------------------------------------------------------------------
                                             2001     2000        2001     2000
- -------------------------------------------------------------------------------
Performance shares                           $107     $ 58         $61      $32
ShareValue Trust                               36       36          18       18
Stock Options, other                           38       33          20       17
- -------------------------------------------------------------------------------
                                             $181     $127         $99      $67
===============================================================================

In addition to the plans above, the Company has issued 7,490,408 stock units as
of June 30, 2001, that are convertible to either stock or a cash equivalent, of
which 6,375,277 are vested, and the remainder vest with employee service. These
stock units principally represent a method of deferring employee compensation by
which a liability is established based upon the current stock price. An expense
or reduction in expense is recognized associated with the change in that
liability balance and is recorded against general and administrative expense.
For the six months ended June 30, 2001, general and administrative expense
related to deferred stock compensation was decreased by $51.


Note 13 - Derivatives and Hedging Activities

As of January 1, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. This standard requires that all derivative
instruments, such as interest rate swap contracts and forward foreign currency
contracts, be recognized in the financial statements and measured at fair
value regardless of the purpose or intent for holding them. Changes in the
fair value of derivative financial instruments are either recognized
periodically in income or shareholders' equity (as a component of accumulated
other comprehensive income), depending on whether the derivative is being used
to hedge changes in fair value or cash flows. The adoption of SFAS No. 133
resulted in a transition gain of $1 on the Condensed Consolidated Statements
of Operations shown under the caption "Cumulative effect of accounting
changes, net," and a loss of $11 (net of tax of $7) recorded to accumulated
other comprehensive income.

Use of Derivative Financial Instruments

The Company uses derivative financial instruments principally to manage the risk
that changes in interest rates will affect either the fair value of its debt
obligations or the amount of its future interest payments and to manage risk
associated with future cash flows in foreign currencies. The following is a
summary of the Company's risk management strategies and the effect of these
strategies on the consolidated financial statements.
                                     13
<page>  14
Note 13 - Derivatives and Hedging Activities (continued)

Interest Rate Risk Management

The Company uses interest rate swap contracts to adjust the amount of total debt
that is subject to variable and fixed interest rates. Under an interest rate
swap contract, the Company either agrees to pay amounts equal to a specified
variable-rate of interest multiplied by a notional principal amount, and to
receive amounts in return equal to a specified fixed-rate of interest multiplied
by the same notional principal amount or, vice versa, to receive a variable-rate
amount and to pay a fixed-rate amount. The notional amounts of the contract are
not exchanged. No other cash payments are made unless the contract is terminated
prior to maturity, in which case the amount paid or received in settlement is
established by agreement at the time of termination and usually represents the
market quotation, at current rates of interest, of the remaining obligations to
exchange payments under the terms of the contract. Interest rate swap contracts
are entered into with a number of major financial institutions in order to
minimize counterparty credit risk.

Pursuant to SFAS No. 133, the Company accounts for its interest rate swap
contracts differently depending upon whether the contract receives hedge
accounting treatment and the nature of the exposure being hedged. Interest rate
swap contracts under which the Company agrees to pay variable-rates of interest
are generally designated as hedges of changes in the fair value of the Company's
fixed-rate debt obligations. Accordingly, such interest rate swap contracts are
reflected at fair value on the Company's consolidated statements of financial
position and the related portion of fixed-rate debt being hedged is reflected at
an amount equal to the sum of its carrying value plus an adjustment representing
the change in fair value of the debt obligations attributable to the interest
rate risk being hedged. The net effect of this accounting on the Company's
operating results is that interest expense on the portion of fixed-rate debt
being hedged is generally recorded based on variable interest rates. These
interest rate swaps are considered to be perfectly effective because they
qualify for the "short-cut method" under SFAS No. 133, and therefore there is no
net change in fair value to be recognized in income.

In addition to the interest rate swaps that qualify for the short-cut method,
the Company holds other interest rate swaps and interest exchange agreements.
Under SFAS No. 133, both the interest rate swaps and the interest exchange
agreements qualify as derivative instruments.  Economically, the intent of the
interest rate swaps is to "hedge" the exposure created by the interest exchange
agreements. However, because the exposure being hedged is a derivative
instrument, this relationship does not qualify for hedge accounting under SFAS
No. 133. As a result, changes in fair value of both instruments are immediately
recognized in income. Although changes in the fair value from these derivative
instruments are recognized in income, these instruments are structured so that
changes in the fair value of interest rate swaps are significantly offset by any
changes in the fair value of interest exchange agreements in income. For the six
month period ended June 30, 2001, these interest rate swaps resulted in expense
of $2 and the interest exchange agreements resulted in income of $1.

The Company entered into interest rate swaps with third-party investors whereby
the interest rate terms differ from the terms in the original receivable. These
interest rate swaps related to $54 of customer financing receivables as of
December 31, 2000. With the adoption of SFAS No. 133, as amended, these swaps
resulted in the recognition of a liability of $4 and a loss in accumulated other
comprehensive income of $3 (net of tax of $1).

                                     14
<page>  15
Note 13 - Derivatives and Hedging Activities (continued)

As of June 30, 2001, interest rate swaps are reflected at a fair value of $24 in
other assets and $22 in other liabilities. Offsetting amounts are a loss
reflected in accumulated other comprehensive income of $9, an adjustment to
underlying long-term senior debt of $9 and net other expense of $2. During the
next twelve months, the Company expects to reclassify to expense $3 from the
transition adjustment loss that was recorded in accumulated other comprehensive
income and recognize income of $12 related to the basis adjustment of certain
underlying liabilities.

Commodity Derivatives

The Company uses commodity derivatives such as fixed-price purchase commitments
to hedge against potentially unfavorable price changes for items used in
production.

On June 29, 2001, the Derivatives Implementation Group, in support of the
Financial Accounting Standards Board, issued Statement 133 Implementation Issue
C15, "Scope Exceptions:  Normal Purchases and Normal Sales Exception for
Option-Type Contracts and Forward Contracts in Electricity."  This
Implementation Issue concluded that the normal purchases and normal sales
exceptions as described in Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities, applied to
electricity contracts only to the extent that the power purchaser is an entity
engaged in selling electricity to retail or wholesale customers.  The
effective date of this implementation guidance for the Company will be July 1,
2001.

The Company has entered into certain commitments to purchase electricity at
fixed prices over a three-year period. As a result of Implementation Issue C15,
these commitments are deemed to be derivatives and will be stated at fair value
on the statement of financial position. The Company projects that the initial
valuation of these commitments will result in a derivative liability of
approximately $64. The Company also projects the derivative will qualify for
cash flow hedge treatment, with the initial valuation resulting in an
unrecognized loss in the accumulated other comprehensive income. Approximately
$22 of expense attributable to this derivative is projected to be recognized in
earnings for the twelve month period beginning July 1, 2001.

Other Derivative Financial Instruments

The Company uses equity conversion options and warrants in certain transactions
to enhance the income potential of these transactions. As of June 30, 2001,
equity conversion options and warrants are reflected at a fair value of $38 in
other assets. These were initially recorded on the balance sheet with a
corresponding discount in notes receivable of $20. The change in fair value for
the six-month period ended June 30, 2001, of $18 was recorded in sales and other
operating revenue.









                                     15
<page>  16
Note 13 - Derivatives and Hedging Activities (continued)

The Company has foreign currency forward contracts that were entered into to
hedge receipt and expenditure commitments made in foreign currencies. As of June
30, 2001, the notional amount of foreign currency forward contracts accounted
for as cash flow hedges is $556. These hedges are carried at market value,
resulting in $25 recorded in other liabilities offset by a loss in accumulated
other comprehensive income ($16 net of tax). Additionally, at June 30, 2001, the
Company had foreign currency forward contracts with a notional value of $206
that were not accounted for as hedges and carried at market value, resulting in
$33 recorded in other liabilities. The Company realized a pretax loss of $10
attributable to these forward contracts during the six months ended June 30,
2001.

Other derivatives held by the Company include a forward-starting interest rate
swap that is not accounted for as a hedge, and as of June 30, 2001, other assets
include $12 as a result of marking to market this interest rate swap.
Accumulated other comprehensive income includes a gain of $9 (net of tax of $5)
attributable to this swap due to the transition adjustment resulting from
implementation of SFAS No. 133, as amended. This transition adjustment is
amortized to income over a period of 13 years.

The Company believes that there is no significant credit risk associated with
the potential failure of any counterparty to perform under the terms of any
derivative financial instrument.


Note 14 - 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. Major
contingencies are discussed below.

The Company is subject to U.S. Government investigations of its practices from
which civil, criminal or administrative proceedings could result. Such
proceedings could involve claims by the Government for fines, penalties,
compensatory and treble damages, restitution and/or forfeitures. Under
government regulations, a company, or one or more of its operating divisions or
subdivisions, can also be suspended or debarred from government contracts, or
lose its export privileges, based on the results of investigations. The Company
believes, based upon all available information, that the outcome of any such
government disputes and investigations will not have a material adverse effect
on its financial position or continuing operations.

In 1991, the U.S. Navy notified the Company and General Dynamics Corporation
(the Team) that it was terminating for default the Team's contract for
development and initial production of the A-12 aircraft. The Team filed a legal
action to contest the Navy's default termination, to assert its rights to
convert the termination to one for "the convenience of the Government," and to
obtain payment for work done and costs incurred on the A-12 contract but not
paid to date. As of June 30, 2001, inventories included approximately $582 of
recorded costs on the A-12 contract, against which the Company has established a
loss provision of $350. The amount of the provision, which was established in
1990, was based on the Company's belief, supported by an opinion of outside



                                     16
<page>  17
Note 14 - Contingencies (continued)

counsel, that the termination for default would be converted to a termination
for convenience, that the Team would establish a claim for contract adjustments
for a minimum of $250, that there was a range of reasonably possible results on
termination for convenience, and that it was prudent to provide for what the
Company then believed was the upper range of possible loss on termination for
convenience, which was $350.

On July 1, 1999, the United States Court of Appeals for the Federal Circuit
reversed a March 31, 1998, judgment of the United States Court of Federal Claims
for the Team. The 1998 judgment was based on a determination that the Government
had not exercised the required discretion before issuing a termination for
default. It converted the termination to a termination for convenience, and
determined the Team was entitled to be paid $1,200, plus statutory interest from
June 26, 1991, until paid. The Court of Appeals remanded the case to the Court
of Federal Claims for a determination as to whether the Government is able to
sustain the burden of showing a default was justified and other proceedings.
Final resolution of the A-12 litigation will depend on the outcome of such
litigation and possible further appeals or negotiations with the Government.

In the Company's opinion, the loss provision continues to provide adequately for
the reasonably possible reduction in value of A-12 net contracts in process as
of June 30, 2001, as a result of a termination of the contract for the
convenience of the Government. The Company has been provided with an opinion of
outside counsel that (i) the Government's termination of the contract for
default was contrary to law and fact, (ii) the rights and obligations of the
Company are the same as if the termination had been issued for the convenience
of the Government, and (iii) subject to prevailing on the issue that the
termination is properly one for the convenience of the Government, the probable
recovery by the Company is not less than $250.

On October 31, 1997, a federal securities lawsuit was filed against the Company
in the U.S. District Court for the Western District of Washington, in Seattle.
The lawsuit names as defendants the Company and three of its then executive
officers. Additional lawsuits of a similar nature have been filed in the same
court. These lawsuits were consolidated on February 24, 1998. The lawsuits
generally allege that the defendants desired to keep the Company's share price
as high as possible in order to ensure that the McDonnell Douglas shareholders
would approve the merger and, in the case of the individual defendants, to
benefit directly from the sale of Boeing stock during the period from April 7,
1997 through October 22, 1997. By order dated May 1, 2000, the Court certified
two subclasses of plaintiffs in the action: a. all persons or entities who
purchased Boeing stock or call options or who sold put options during the period
from July 21, 1997 through October 22, 1997, and b. all persons or entities who
purchased McDonnell Douglas stock on or after April 7, 1997 and who held such
stock until it converted to Boeing stock pursuant to the merger. The plaintiffs
seek compensatory damages and treble damages. On July 13, 2001, the Court
certified certain questions of state law for consideration by the Washington
Supreme Court. The action is currently set for trial on March 7, 2002. The
Company believes that the allegations are without merit and that the outcome of
these lawsuits will not have a material adverse effect on its earnings, cash
flow or financial position.





                                     17
<page>  18
Note 14 - Contingencies (continued)

On October 19, 1999, an indictment was returned by a federal grand jury sitting
in the District of Columbia charging that McDonnell Douglas Corporation (MDC), a
wholly owned subsidiary of the Company, and MDC's Douglas Aircraft Company
division, conspired to and made false statements and concealed material facts on
export license applications and in connection with export licenses, and
possessed and sold machine tools in violation of the Export Administration Act.
The indictment also charged one employee with participation in the alleged
conspiracy. The indictment has since been dismissed as against this employee.
That dismissal was affirmed by the U.S. Court of Appeals for the D.C. Circuit on
May 8, 2001. The indictment relates to the sale and export to China in 1993-1995
of surplus, used machine tools sold by Douglas Aircraft Company to China
National Aero-Technology Import and Export Corporation for use in connection
with the MD-80/90 commercial aircraft Trunkliner Program in China.

As a result of the indictment, the Department of State has discretion to deny
defense-related export privileges to MDC or a division or subsidiary of MDC. The
agency exercised that discretion on January 5, 2000, by establishing a "denial
policy" with respect to defense-related exports of MDC and its subsidiaries.
Most of MDC's major existing defense programs were, however, excepted from that
policy due to overriding U.S. foreign policy and national security interests.
Other exceptions have been granted. There can, however, be no assurance as to
how the Department will exercise its discretion as to program or transaction
exceptions for other programs or future defense-related exports. In addition,
the Department of Commerce has authority to temporarily deny other export
privileges to, and the Department of Defense has authority to suspend or debar
from contracting with the military departments, MDC or a division or subsidiary
of MDC. Neither agency has taken action adverse to MDC or its divisions or
subsidiaries thus far. Based upon all available information, the Company does
not expect actions that would have a material adverse effect on its financial
position or continuing operations. In the unanticipated event of a conviction,
MDC would be subject to Department of State and Department of Commerce denials
or revocations of MDC export licenses. MDC also would be subject to Department
of Defense debarment proceedings.

On February 25, 2000, a purported class action lawsuit alleging gender
discrimination and harassment was filed against The Boeing Company, Boeing North
American, Inc., and McDonnell Douglas Corporation. The complaint, filed with the
United States District Court in Seattle, alleges that the Company has engaged in
a pattern and practice of unlawful discrimination, harassment and retaliation
against females over the course of many years. The complaint, Beck v. Boeing,
names 28 women who have worked for Boeing in the Puget Sound area; Wichita,
Kansas; St. Louis, Missouri; and Tulsa, Oklahoma. On March 15, an amended
complaint was filed naming an additional 10 plaintiffs, including the first from
California. The lawsuit attempts to represent all women who currently work for
the Company, or who have worked for the Company in the past several years.

The Company has denied the allegation that it has engaged in any unlawful
"pattern and practice" and believes that the plaintiffs cannot satisfy the
rigorous requirements necessary to achieve the class action status they seek.
Plaintiffs' motion for class certification was filed in May 2001. The court will
hear argument on the motion in August. The Company intends to vigorously contest
this lawsuit.




                                     18
<page>  19
Note 15 - Business Segment Data

Segment information for revenues, earnings, and research and development
consisted of the following:               Six months ended   Three months ended
                                                June 30              June 30
- -------------------------------------------------------------------------------
                                             2001     2000        2001     2000
- -------------------------------------------------------------------------------
Revenues:
  Commercial Airplanes                    $17,760  $15,051     $ 9,317  $ 9,880
  Military Aircraft and Missiles            5,716    5,938       3,289    3,092
  Space and Communications                  4,765    3,457       2,519    1,798
  Customer and Commercial Financing           440      344         234      177
  Other                                       166      130          95       69
  Accounting differences/eliminations         (38)    (169)         62     (175)
- -------------------------------------------------------------------------------
  Operating revenues                      $28,809  $24,751     $15,516  $14,841
===============================================================================

Earnings from operations:
  Commercial Airplanes                    $ 1,815  $ 1,141     $   955  $   882
  Military Aircraft and Missiles              656      540         410      246
  Space and Communications                    214       36         130      (24)
  Customer and Commercial Financing           327      237         185      130
  Other                                      (126)     (23)        (75)     (25)
  Accounting differences/eliminations         (14)    (247)        (39)    (199)
  Share-based plans                          (181)    (127)        (99)     (67)
  Unallocated expense                        (106)     (76)       (100)     (18)
- -------------------------------------------------------------------------------
  Earnings from operations                  2,585    1,481       1,367      925
  Other income, principally interest          252      222          17       73
  Interest and debt expense                  (320)    (210)       (172)    (107)
- -------------------------------------------------------------------------------
  Earnings before income taxes              2,517    1,493       1,212      891
  Income taxes                                441      455         372      271
- -------------------------------------------------------------------------------
  Net earnings before cumulative effect
   of accounting change                   $ 2,076  $ 1,038     $   840  $   620
===============================================================================

Research and development:
  Commercial Airplanes                    $   385  $   263     $   190  $   160
  Military Aircraft and Missiles              123      123          70       62
  Space and Communications                    248      261         125      137
  Other                                       127       16          76       16
- -------------------------------------------------------------------------------
  Total research and development expense  $   883  $   663     $   461  $   375
===============================================================================

In the first quarter of 2001, the Company adjusted the segment classification of
certain business activities. The Company established an "Other" segment class-
ification which principally includes the activities of Connexion by BoeingSM, a
two-way data communications service for global travelers; Air Traffic Manage-
ment, a business unit developing new approaches to a global solution to address
air traffic management issues; and Phantom Works, an advanced research and
development organization focused on innovative technologies, improved
processes and the creation of new products. The 2000 results have been
reclassified to conform to the revised segment classifications.
                                     19
<page>  20
Note 15 - Business Segment Data (continued)

For internal reporting purposes, the Company records Commercial Airplanes
segment revenues and operating profits for airplanes transferred to other
segments, and such transfers may include airplanes accounted for as operating
leases that are considered transferred to the Customer and Commercial Financing
segment. The revenues for these transfers are eliminated in the 'Accounting
differences/eliminations' caption. In the event an airplane accounted for as an
operating lease is subsequently sold, the 'Accounting differences/eliminations'
caption would reflect the recognition of revenue and operating profit for the
consolidated financial statements.

In the second quarter of 2001, Trans World Airlines (TWA) received final
approval from the U.S. District Court in Wilmington, Delaware, for an asset
purchase agreement with American Airlines (AA). Under this agreement, AA as
lessee has assumed various aircraft leases from TWA whereby the Company is the
lessor. The restructured lease payments from AA are at rates that are lower than
those contracted with TWA; however, none of the associated lease assets have
been deemed to be impaired. As a result of this restructuring, 32 MD-83s
previously accounted for as operating leases were accounted for as sales-type
leases in the second quarter of 2001, with no gain or loss recorded.
Accordingly, the 'Accounting differences/eliminations' caption reflected $792 of
revenue in the second quarter of 2001 related to this transaction.

For internal reporting purposes, the Company recorded Military Aircraft and
Missiles segment revenues and operating profit relating to the delivery of C-17
transport aircraft described in Note 9. The transaction was treated as a
transfer to the 'Other' segment, where the related lease income and expense will
be recorded.

The Company records cost of sales for 7-series commercial airplane programs
under the program method of accounting described in Note 1 to the audited
consolidated financial statements included in the Company's 2000 Annual Report.
For internal measurement purposes, the Commercial Airplanes segment records cost
of sales based on the cost of specific units delivered, and to the extent that
inventoriable costs exceed estimated revenues, a loss is not recognized until
delivery is made, which is not in accordance with generally accepted accounting
principles. For the 717 program and certain commercial modification programs,
the cost of the specific units delivered is reduced, on a per-unit basis, by the
amount previously recognized for forward losses. Proceeds from certain
Commercial Airplanes segment suppliers attributable to participation in
development efforts are accounted for as a reduction in the cost of inventory
received from the supplier under the program accounting method, and as an
expense reduction in the period the proceeds are received for internal
measurement purposes. These adjustments between the internal measurement method
and the program accounting method are included in the 'Accounting
differences/eliminations' caption of net earnings. These adjustments totaled
$(179) and $(321) for the six months ended June 30, 2001 and 2000.










                                     20
<page>  21
Note 15 - Business Segment Data (continued)

The 'Accounting differences/eliminations' caption of net earnings also includes
the impact of cost measurement differences between generally accepted accounting
principles and federal cost accounting standards. This includes the following:
the differences between pension costs recognized under SFAS No. 87, Employers'
Accounting for Pensions, and under federal cost accounting standards,
principally on a funding basis; the differences between retiree health care
costs recognized under SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," and under federal cost accounting standards,
principally on a cash basis; and the differences in timing of cost recognition
related to certain activities, such as facilities consolidation, undertaken as a
result of mergers and acquisitions whereby such costs are expensed under
generally accepted accounting principles and deferred under federal cost
accounting standards. Additionally, the amortization of costs capitalized in
accordance with SFAS No. 34, "Capitalization of Interest Cost," is included in
the 'Accounting differences/eliminations' caption.

The costs attributable to share-based plans are not allocated. Other unallocated
costs include corporate costs not allocated to the operating segments, including
goodwill amortization resulting from acquisitions prior to 1998.





































                                     21
<page>  22

- -------------------------------------------------------------------------------
| Forward-Looking Information Is Subject to Risk and Uncertainty              |
|                                                                             |
|Certain statements in this report contain "forward-looking" information that |
|involves risk and uncertainty, including projections for income recognition  |
|in connection with interest rate swaps, deliveries, launches,  cash          |
|requirements and/or loan guarantees in connection with the Sea Launch joint  |
|venture, estimated tax payments, and other trend projections. This forward-  |
|looking information is based upon a number of assumptions including          |
|assumptions regarding global economic conditions, earnings, government       |
|policies and actions; successful negotiation of contracts with the Company's |
|labor unions and regulatory approvals.  Actual future results and trends may |
|differ materially depending on a variety of factors, including the Company's |
|successful execution of internal performance plans, production rate increases|
|and decreases, production system initiatives, timing of product deliveries   |
|and launches, supplier contract negotiations, asset management plans,        |
|acquisition and divestiture plans, price adjustments associated with         |
|acquisitions and divestitures, procurement plans, and other cost-reduction   |
|efforts; the actual outcomes of certain pending sales campaigns and U. S.    |
|and foreign government procurement activities; acceptance of new products and|
|services; product performance risks;  the cyclical nature of some of the     |
|Company's businesses; volatility of the market for certain products and      |
|services; domestic and international competition in the defense, space and   |
|commercial areas; continued integration of acquired businesses; uncertainties|
|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, subcontractors and customers; governmental export and import  |
|policies; factors that result in significant and prolonged disruption to air |
|travel worldwide; global trade policies; worldwide political stability;      |
|domestic and international economic conditions; price escalation trends; the |
|outcome of political and legal processes, including uncertainty regarding    |
|government funding of certain programs; changing priorities or reductions in |
|the U.S. Government or foreign government defense and space budgets;         |
|termination of government contracts due to unilateral government action or   |
|failure to perform; legal, financial and governmental risks related to       |
|international transactions; legal proceedings; and other economic, political |
|and technological risks and uncertainties.  Additional information           |
|regarding these factors is contained in the Company's SEC filings, including,|
|without limitation and the Company's Annual Report on Form 10-K for the year |
|ended December 31, 2000 and the Quarterly Report on Form 10-Q for the quarter|
|ended March 31, 2001.                                                        |
- ------------------------------------------------------------------------------














                                     22
<page>  23
Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

Revenues
- --------

Sales of $28.8 billion for the first six months of 2001 were 16% higher than
sales for the comparable period of 2000. For the first six months of 2001, a
total of 263 commercial aircraft were delivered, compared with 242 for the same
period in 2000. In second quarter 2001, 141 commercial aircraft were delivered
compared with 167 in second quarter 2000. Approximately 538 commercial aircraft
deliveries are currently projected for the full year 2001, compared with 489 in
2000.

Commercial jet aircraft deliveries were as follows:

                                Six months ended        Three months ended
                                     June 30                 June 30
       --------------------------------------------------------------------
        Model                   2001        2000        2001        2000
       --------------------------------------------------------------------
        717                       24  (9)     11 (5)      17 (8)       8 (4)
        737 Classic                -           2           -           -
        737 Next-Generation      145  (2)*   141          73 (2)     102
        747                       16          12 **        9           8
        757                       20          28          12          18
        767                       23          18          13          13
        777                       33          27          17          17
        MD-11                      2           3           -           1
       --------------------------------------------------------------------
              Total              263         242          141        167
       ====================================================================

       *Includes one intercompany C-40 737 Aircraft
       **Includes one Airborne Laser 747

Commercial jet aircraft deliveries included deliveries under operating lease,
which are identified by parentheses in the table above. Aircraft accounted for
as operating leases have minimal revenues recorded at the time of delivery.

















                                     23
<page>  24
Military Aircraft and Missiles segment deliveries included the following:

                                Six months ended      Three months ended
                                    June 30                 June 30
        ----------------------------------------------------------------
        Model                   2001        2000        2001        2000
        ----------------------------------------------------------------
        C-17                       6 (2)       6           4 (2)       3
        F-15                       -           5           -           1
        F/A-18C/D                  -          14           -           8
        F/A-18E/F                 16          11           9           7
        T-45TS                     8           9           4           5
        CH-47                      6           4           4           3
        C-40                       2           -           2           -
        AH-64 Apache               3           4           1           2

The C-17s identified in parentheses represent deliveries under operating
lease.


Space and Communications segment deliveries included the following:

                                Six months ended      Three months ended
                                    June 30                 June 30
        ----------------------------------------------------------------
        Model                   2001        2000        2001        2000
        ----------------------------------------------------------------
        Delta II                   3           2           3           -
        Satellites                 5           -           4           -

In the second quarter of 2001, Trans World Airlines (TWA) received final
approval from the U.S. District Court in Wilmington, Delaware, for an asset
purchase agreement with American Airlines (AA). Under this agreement, AA as
lessee has assumed various aircraft leases from TWA whereby the Company is the
lessor. The restructured lease payments from AA are at rates that are lower than
those contracted with TWA; however, none of the associated lease assets have
been deemed to be impaired. As a result of this restructuring, 32 MD-83s
previously accounted for as operating leases were accounted for as sales-type
leases in the second quarter of 2001, with no gain or loss recorded.
Accordingly, the 'Accounting differences/eliminations' caption reflected $792
milliion of revenue in the second quarter of 2001 related to this transaction.

Earnings
- --------

Net earnings for the second quarter of 2001 were $840 million, compared with
$620 million for the same period in 2000. Net earnings included $17 million of
other income in the second quarter of 2001, compared with $73 million in 2000.
The lower other income in 2001 relates principally to lower returns on cash and
cash equivalents, reflecting lower cash balances and lower interest rates.
Interest expense for the second quarter of 2001 was $172 million, compared with
$107 million in 2000. The higher interest expense results from increased debt
in support of Customer and Commercial Financing transactions.





                                     24
<page>  25
Net earnings for the first six months of 2001 were $2,077 million, compared with
$1,038 million for the same period in 2000. Other income was $252 million and
$222 million for the first six months of 2001 and 2000. Included in 2001 other
income is $210 million of interest income relating to a non-recurring tax
benefit resulting from a final agreement with the Internal Revenue Service (IRS)
described below. Included in 2000 other income is $53 million of interest income
from a federal income tax audit settlement and $41 million related to the sale
of a long-held equity instrument. Interest expense was $320 million and $210
million for the first six months of 2001 and 2000, also reflecting increased
debt in support of Customer and Commercial Financing transactions.

Income tax expense for the first six months of 2001 was $441 million, or 17.5%
of pretax earnings, compared with $455 million, or 30.5% of pretax earnings in
2000. The 2001 tax provision includes a non-recurring earnings tax benefit
resulting from a final agreement with the IRS primarily regarding previously
filed claims for refund of research and development tax credits. These claims
dealt primarily with historical fixed-price development program expenses
incurred by McDonnell Douglas from 1986 to 1992. The agreement with the IRS
resulted in financial recognition during the first quarter of $343 million of
tax credit and $210 million of related interest income.

Research and development expense totaled $883 million for the first six months
of 2001, compared with $663 million for the same period of 2000. Research and
development expense totaled $461 million for the quarter, compared with $375
million for the same period of 2000. Commercial Airplanes segment research and
development expense of $190 million for the second quarter of 2001 reflects an
increase over the $160 million expense for the second quarter of 2000. Space and
Communications segment research and development expense of $125 million for the
second quarter was lower than the $137 million expense for the second quarter of
2000. Research and development in the 'Other' segment relates principally to
Connexion by BoeingSM.

In December 1996, The Boeing Company filed suit in the U.S. District Court for
the Western District of Washington for the refund of over $400 million in
federal income taxes and related interest. The suit challenged the IRS method of
allocating research and development costs for the purpose of determining tax
incentive benefits on export sales through the Company's Domestic International
Sales Corporation (DISC) and its Foreign Sales Corporation (FSC) for the years
1979 through 1987. In September 1998, the District Court granted the Company's
motion for summary judgment. The U.S. Department of Justice has appealed this
decision. On August 2, 2001, The United States Court of Appeals for the ninth
Circuit reversed the District Court's summary judgment that was in the
Company's favor.  The Company has fully provided for any potential earnings
impact that may result from this decision.  The Company is assessing its
options as a result of the Court of Appeals' actions.

In response to an adverse World Trade Organization (WTO) finding relative to the
U.S. FSC tax provisions, the U.S. repealed FSC and enacted replacement
legislation (Extraterritorial Income Exclusion Act of 2000). The European Union
filed a WTO challenge to the new law and the WTO dispute panel hearing the case
rejected the U.S. position. The final panel report will be circulated to the WTO
membership in August 2001. If appealed, the appellate process would extend into
the third quarter of 2001 and final resolution of this matter could extend into
2002. The U.S Government and industry groups are evaluating options. It is not
possible to predict what impact, if any, this issue will have on future earnings
pending final resolution of the challenge.


                                     25
<page>  26
The Company has significant financing assets and off-balance-sheet commitments
that are impacted by the market value of various jet aircraft. The Company
believes that it has appropriately assessed the impact of aircraft market values
on accounting for such commitments and financing assets. A significant
deterioration in the market value, however, could result in the requirement to
adjust related reserves. The Company will continue to monitor this market.

Operating Earnings
- ------------------

Commercial Airplanes

Second quarter 2001 commercial jet aircraft deliveries totaled 141, compared
with 167 during the same period in 2000 and 122 for first quarter 2001. The
decrease in second quarter 2001 deliveries relative to the same period in 2000
resulted from the Company substantially recovering from the first-quarter 2000
Society of Professional Engineering Employees in Aerospace (SPEEA) work
stoppage.  Commercial Airplanes segment second quarter 2001 operating earnings,
based on the unit cost of airplanes delivered, were $955 million, compared with
$882 million for the same period in 2000. The overall Commercial Airplanes
segment operating profit margin was 10.3% for the second quarter of 2001,
compared with 8.9% for the same period in 2000. The second quarter 2001 margin
increase over the same period in 2000 primarily reflects continued improvement
in the production process, offset by increased research and development expense.

Commercial Airplanes segment earnings, as determined under generally accepted
accounting principles (GAAP) and including intercompany transactions, reflect
the program method of accounting and incorporate a portion of the 'Accounting
differences/eliminations' caption as discussed in Note 15. Commercial Airplanes
segment earnings under GAAP were $887 million and $639 million for the second
quarter of 2001 and 2000. The GAAP determined segment margin of 9.5% in 2001
compares with 6.5% for the same period in 2000. In addition to the impacts to
the segment margins identified above, the improving GAAP earnings and margins
reflect the impact of additional units within the accounting quantity for the
Next-Generation 737 and the 777. The Next-Generation 737 program accounting
quantity was 1,800 units as of June 30, 2001, and 1,400 units as of June 30,
2000. The 777 program accounting quantity was 600 units as of June 30, 2001, and
500 units as of June 30, 2000.

For the six months ended June 30, 2001, Commercial Airplanes segment earnings
were $1,815 million, compared with $1,141 million for the same period in 2000,
and segment operating margins were 10.2% and 7.6% for the first six months of
2001 and 2000. Commercial jet aircraft deliveries totaled 263 for the first half
of 2001, compared with 242 for the same period in 2000. The improved margins in
2001 also reflect continued production process improvements, offset by
increased research and development expense. Research and development expense for
the first six months of 2001 totaled $385 million, compared with $263 million
for the same period in 2000. Commercial Airplanes earnings, as determined
under GAAP described above, were $1,636 million for the first six months of
2001, compared with $820 million for the same period in 2000, and the related
six-month margins were 9.2% and 5.4% for 2001 and 2000.







                                     26
<page>  27
As of June 30, 2001, the Company had cumulatively delivered 68 717 program
aircraft. The 717 program is accounted for under the program method of
accounting described in Note 1 to the audited consolidated financial statements
in the Company's 2000 Annual Report. The Company has established the program
accounting quantity at 200 units. The Company will record 717 deliveries on a
break-even basis until such time as program reviews indicate positive gross
profit within the program accounting quantity. Such program reviews could
include revised assumptions of revenues and costs, or an increase in the program
quantity if warranted by additional program orders. The Company has significant
financial exposure related to the 717 program, principally attributable to
pricing pressures and the slow buildup of firm orders. The slow buildup of firm
orders could result in schedule slides which could require a reevaluation of the
cost of the 200 airplanes in the program accounting quantity.

As a result of the asset purchase agreement between TWA and American Airlines in
April 2001, American Airlines assumed the lease of 15 717s, took delivery under
lease of an additional 8 717s and committed to take delivery under lease of an
additional 7 717s. These lease terms are of a shorter duration than the terms
originally contracted with TWA.

During the first quarter of 2001, Commercial Airplanes announced plans to focus
its product development activities on a faster, longer-range sonic cruiser
airplane.  During the second quarter of 2001, Commercial Airplanes continued to
work together with customers on the sonic cruiser.  In addition, the first 737-
900s were delivered to Alaska Airlines, Continental Airlines and KLM and firm
orders for the new Longer-Range 747-400 Freighter were received from Air France
and ILFC.

Military Aircraft and Missiles

Second quarter 2001 Military Aircraft and Missiles segment operating earnings
were $410 million, compared with $246 million for the second quarter of 2000.
Second quarter 2001 results included a non-recurring earnings increase of $57
million, described below, attributable to the F-15 program. Operating margins
for second quarter 2001 were 12.5%, or 10.7% without the non-recurring earnings
adjustment, compared with 8.0% for the same period in 2000. The increase in
operating margin for 2001 reflects the impact of one additional C-17 transport
aircraft delivery, and lower earnings in the second quarter of 2000 attributable
both to less favorable program performance on certain helicopter programs, and
lower margins associated with various aerospace support contracts.

The Company had procured and committed to long-lead items in anticipation of
orders during 1999 for as many as 24 F-15 fighter aircraft. In the third quarter
of 1999, the Company assessed that there was a limited near-term market for F-
15s. As a result of this revised market assessment, the Company recorded a non-
recurring $225 million pretax charge. In the second quarter of 2001, the U.S.
Air Force ordered an additional 10 F-15Es, which improved the financial outlook
of the program. As a result, the non-recurring charge was adjusted, resulting in
additional operating earnings of $57 million during the quarter.

Operating earnings for the first six months of 2001 were $656 million, compared
with $540 million for the same period in 2000. Operating margins for the six
month period were 11.5% for 2001, or 10.5% excluding the non-recurring F-15
program earnings adjustment, compared with 9.1% for the same period in 2000.

During the quarter, Military Aircraft and Missiles continued to expand its
military aerospace support business and to strengthen its competitiveness in key
U.S. and international defense markets.
                                     27
<page>  28
The Company was selected to lead the C-130 Avionics Modernization Program for
the U.S. Air Force.  Under the program, the Company will develop a modern,
common cockpit avionics system for the approximately 500 C-130 transport
aircraft in U.S. Air Force service. Other Military Aerospace Support wins
include the Canadian F/A-18 Update Program and the F/A-18E/F Integrated
Readiness Support Teaming, or FIRST, program for the U.S. Navy.

The Boeing Joint Strike Fighter (JSF) X-32B accomplished a major aerospace
milestone and a JSF program first on June 24 when it transitioned from wingborne
flight to a hover at the naval air station at Patuxent River, MD.  The X-32B
then made its first vertical landing after transitioning from conventional to
short-takeoff-and-vertical-landing, or STOVL, flight. The Company has success-
fully completed all governmental flight-test requirements for the
Joint Strike Fighter.

Also during the second quarter, Italy selected a Boeing-led international
partnership to deliver 4 767 tanker transports. The Company delivered the first
two of four C-17 transport aircraft leased to the United Kingdom Royal Air
Force, the first international customer for the cargo transport. The delivery of
the first aircraft occurred just a year and a day after the United Kingdom
announced its selection of the C-17 to enhance its military transport
capabilities. Military Aircraft and Missiles Systems segment revenues and
operating margin reflect these two C-17 deliveries, but these transactions are
accounted for as operating leases on a consolidated basis.

Space and Communications

Space and Communications segment operating earnings for the second quarter 2001
were $130 million, compared with a loss of $24 million in the same period in
2000.  The second quarter 2000 results included a charge of $55 million
associated with the incurred costs of a Delta III demonstration launch. The
increased operating earnings from 2000 also resulted from three additional
Delta II launches in the second quarter of 2001 and the acquisition of Boeing
Satellite Systems in the fourth quarter of 2000.

During the quarter, the Company successfully completed test firings of the RS-68
engine and Common Booster Core for the Delta IV. The first launch of Delta IV is
scheduled for 2002, and assigned payloads have been received from the United
States Air Force for launches in August 2002 and second quarter 2003 and from
Loral Skynet do Brasil for the second half of 2002.  Four Boeing Satellite
Systems satellites were successfully launched during the quarter, including the
XM "Roll" satellite launched by Sea Launch, a joint venture of which Boeing is a
40% partner.

Segment operating earnings for the first six months of 2001 were $214 million,
compared with $36 million for the same period in 2000. The increased operating
earnings in 2001 result from the $55 million Delta III demonstration launch
charge discussed above, and the increased volume of activity attributable to the
acquisition of Boeing Satellite Systems. Additionally, research and development
expense has declined in the first six months of 2001 to $248 million, from $261
million in 2000.

The Company continues to monitor the impact of the softening satellite launch
market on the Delta III program and the Sea Launch venture. The Company
continues to monitor potential exposures for the Delta III program by assessing
the estimated revenues attributable to future Delta III launches, including
revenue for launch positions that are currently unsold, along with assessing
inventory and supplier commitments. The next Delta III launch is anticipated for
2003.                                28
<page>  29
The Company has ongoing financial exposure due to the Sea Launch venture. This
financial exposure primarily results from company guarantees extended on
partnership loans. The Company's maximum exposure to credit related losses
associated with Sea Launch credit guarantees is $403 million.

The Company projects that the Sea Launch joint venture may require additional
infusions from the partners in the near term. This would be expected to result
in additional cash requirements and/or loan guarantees imposed on the Company.

Customer and Commercial Financing

Revenues consist principally of interest from financing receivables and lease
income from operating lease equipment. Segment earnings additionally reflect
depreciation on leased equipment and expenses attributable to potentially
uncollectible receivables.  No interest expense on debt is included in Customer
and Commercial Financing segment earnings reflected in Note 15; however,
interest expense of $90 million for second quarter 2001 and $164 million for the
first six months of 2001 is associated with debt relating to financing
activities.

Operating earnings for the Customer and Commercial Financing segment were $185
million for second quarter 2001, compared with $130 million for first quarter
2000, exclusive of interest expense. Operating earnings for the first six months
of 2001 were $327 million, compared with $237 million for the same period in
2000. The increase was due principally to an increase in financing assets.

In the second quarter of 2001, Trans World Airlines (TWA) received final
approval from the U.S. District Court in Wilmington, Delaware, for an asset
purchase agreement with American Airlines (AA). Under this agreement, AA as
lessee has assumed various aircraft leases from TWA whereby the Company is the
lessor. The restructured lease payments from AA are at rates that are lower than
those contracted with TWA; however, none of the associated lease assets have
been deemed to be impaired. As a result of this restructuring, 32 MD-83s
previously accounted for as operating leases were accounted for as sales-type
leases, with no gain or loss recorded.

Liquidity and Capital Resources
- -------------------------------

The Company's financial liquidity position as of June 30, 2001, included cash
and short-term investments totaling $1.5 billion. During the first six months of
2001, the Company repurchased 24.8 million shares for $1.5 billion under an 85
million share repurchase plan.

Excluding non-recourse debt and Boeing Capital Corporation (BCC), a financing
subsidiary wholly owned by the Company, total long-term debt is at 26% of total
shareholders' equity plus debt. The consolidated long-term debt, including BCC,
is at 46% of total shareholders' equity plus debt. Revolving credit line
agreements with a group of major banks, totaling $3.0 billion, remain available
but unused.

The Company believes its internally generated liquidity, together with access to
external capital resources, will be sufficient to satisfy existing commitments
and plans, and also to provide adequate financial flexibility to take advantage
of potential strategic business opportunities should they arise. During the
second quarter of 2001, the Company made a tax payment of approximately $900
million due to, among other factors, the closeout of contracts accounted for
under the completed contract method for tax purposes.
                                     29
<page>  30
Standards Issued and Not Implemented
- ------------------------------------

In July 2001, the Financial Accounting Standards Board issued two new
pronouncements:  Statement of Financial Accounting Standard (SFAS) No. 141,
Business Combinations and SFAS No. 142, "Goodwill and Other Intangible
Assets." The Company will be required to adopt SFAS No. 141 for all business
combinations completed after June 30, 2001.  This standard requires that
business combinations completed after June 30, 2001, be accounted for under
the purchase method.  Business combinations completed before July 1, 2001,
that were accounted for by the purchase method must meet the requirements of
SFAS No. 142.  Intangibles not meeting the prescribed criteria must be
reclassified to goodwill as of the statement adoption date. The Company is
evaluating the impact of the adoption of this standard and has not yet
determined the effect, if any, that this statement will have on its financial
position and results of operations.

Additionally, the Company will be required to adopt SFAS No. 142 at the
beginning of 2002 for all goodwill and other intangible assets recognized in the
Company's statement of financial position as of January 1, 2002. This statement
changes the accounting for goodwill from an amortization method to an
impairment-only approach.  Amortization of goodwill, including goodwill recorded
in past business combinations, will cease upon adoption of this standard.  The
standard is immediately applicable for any goodwill acquired after June 30,
2001.  Goodwill and intangible assets acquired after June 30, 2001, should be
tested for impairment and written down and charged to results of operations only
in the periods in which the recorded value of goodwill and certain intangibles
is more than its fair value. The Company does not expect any expense recognition
from application of the impairment test, but has not completed the testing
necessary for a final determination. If goodwill amortization were to cease,
goodwill expenses of approximately $150 millions per year would no longer be
recognized in the consolidated statement of operations.

On June 29, 2001, the Derivatives Implementation Group, in support of the
Financial Accounting Standards Board, issued Statement 133 Implementation Issue
C15, "Scope Exceptions:  Normal Purchases and Normal Sales Exception for
Option-Type Contracts and Forward Contracts in Electricity."  This
Implementation Issue concluded that the normal purchases and normal sales
exceptions as described in Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities, applied to
electricity contracts only to the extent that the power purchaser is an entity
engaged in selling electricity to retail or wholesale customers.  The
effective date of this implementation guidance for the Company will be July 1,
2001.

The Company has entered into certain commitments to purchase electricity at
fixed prices over a three-year period. As a result of Implementation Issue C15,
these commitments are deemed to be derivatives and will be stated at fair value
on the Statement of Financial Position. The Company projects that the initial
valuation of these commitments will result in a derivative liability of
approximately $65 million. The Company also projects the derivative will qualify
for cash flow hedge treatment, with the initial valuation resulting in an
unrecognized loss in the accumulated other comprehensive income. Approximately
$51 million of expense attributable to this derivative is projected to be
recognized in earnings for the twelve-month period beginning July 1, 2001.



                                     30
<page>  31

Backlog
- -------

Contractual backlog of unfilled orders (which excludes purchase options and
announced orders for which definitive contracts have not been executed, and
unobligated U.S. Government contract funding) was as follows (dollars in
billions):
                                      June 30   March 31   December 31
       ----------------------------------------------------------------
                                         2001       2001          2000
       ----------------------------------------------------------------
        Commercial Airplanes           $ 86.9     $ 88.6        $ 89.8
        Military Aircraft and Missiles   19.9       20.4          17.1
        Space and Communications         14.2       15.1          13.7
       ----------------------------------------------------------------
        Total contractual backlog      $121.0     $124.1        $120.6
       ================================================================

Unobligated U.S. Government contract funding not included in backlog totaled
$27.5 billion at June 30, 2001, compared with $31.3 billion at December 31,
2000.




Item 3.  Quantitative and Qualitative Disclosures About Market Risk


The Company uses equity conversion options and warrants in certain transactions
to enhance the credit worthiness of these transactions. As of June 30, 2001,
equity conversion options and warrants are reflected at a fair value of $38
million in other assets. These were initially recorded on the balance sheet with
a corresponding discount in notes receivable of $20 million. The change in fair
value for the six-month period ended June 30, 2001, of $18 million was recorded
in sales and other operating revenue.

The Company has financial instruments that are subject to interest rate risk,
principally short-term investments, fixed-rate notes receivable attributable to
customer financing, and debt obligations issued at a fixed rate. Historically,
the Company has not experienced material gains or losses due to interest rate
changes when selling short-term investments or fixed-rate notes receivable.
Additionally, the Company uses interest rate swaps to manage exposure to
interest rate changes. Based on the current holdings of short-term investments
and fixed-rate notes, as well as underlying swaps, the exposure to interest rate
risk is not material. Fixed-rate debt obligations issued by the Company are
generally not callable until maturity.











                                     31
<page>  32

The Company is subject to foreign currency exchange rate risk relating to
receipts from customers and payments to suppliers in foreign currencies. As a
general policy, the Company substantially hedges foreign currency commitments of
future payments and receipts by purchasing foreign currency-forward contracts.
As of January 1, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. As of June 30, 2001, the notional value of such
derivatives was $556 million, with a net unrealized loss of $25 million.
Additionally, the Company had foreign currency forward contracts with a notional
value of $206 million that were carried at market value. The Company realized a
net loss of $5 million attributable to these forward contracts during the
quarter.

Less than two percent of receipts and expenditures are contracted in foreign
currencies, and the market risk exposure relating to currency exchange is not
material.









































                                     32
<page>  33
                         PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

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. Major
contingencies are discussed below.

The Company is subject to U.S. Government investigations of its practices from
which civil, criminal or administrative proceedings could result. Such
proceedings could involve claims by the Government for fines, penalties,
compensatory and treble damages, restitution and/or forfeitures. Under
government regulations, a company, or one or more of its operating divisions or
subdivisions, can also be suspended or debarred from government contracts, or
lose its export privileges, based on the results of investigations. The Company
believes, based upon all available information, that the outcome of any such
government disputes and investigations will not have a material adverse effect
on its financial position or continuing operations.

In 1991, the U.S. Navy notified the Company and General Dynamics Corporation
(the Team) that it was terminating for default the Team's contract for
development and initial production of the A-12 aircraft. The Team filed a legal
action to contest the Navy's default termination, to assert its rights to
convert the termination to one for "the convenience of the Government," and to
obtain payment for work done and costs incurred on the A-12 contract but not
paid to date. As of June 30, 2001, inventories included approximately $582
million of recorded costs on the A-12 contract, against which the Company has
established a loss provision of $350 million. The amount of the provision, which
was established in 1990, was based on the Company's belief, supported by an
opinion of outside counsel, that the termination for default would be converted
to a termination for convenience, that the Team would establish a claim for
contract adjustments for a minimum of $250 million, that there was a range of
reasonably possible results on termination for convenience, and that it was
prudent to provide for what the Company then believed was the upper range of
possible loss on termination for convenience, which was $350 million.

On July 1, 1999, the United States Court of Appeals for the Federal Circuit
reversed a March 31, 1998, judgment of the United States Court of Federal Claims
for the Team. The 1998 judgment was based on a determination that the Government
had not exercised the required discretion before issuing a termination for
default. It converted the termination to a termination for convenience, and
determined the Team was entitled to be paid $1,200 million, plus statutory
interest from June 26, 1991, until paid. The Court of Appeals remanded the case
to the Court of Federal Claims for a determination as to whether the Government
is able to sustain the burden of showing a default was justified and other
proceedings. Final resolution of the A-12 litigation will depend on the outcome
of such litigation and possible further appeals or negotiations with the
Government.








                                     33
<page>  34
In the Company's opinion, the loss provision continues to provide adequately for
the reasonably possible reduction in value of A-12 net contracts in process as
of June 30, 2001, as a result of a termination of the contract for the
convenience of the Government. The Company has been provided with an opinion of
outside counsel that (i) the Government's termination of the contract for
default was contrary to law and fact, (ii) the rights and obligations of the
Company are the same as if the termination had been issued for the convenience
of the Government, and (iii) subject to prevailing on the issue that the
termination is properly one for the convenience of the Government, the probable
recovery by the Company is not less than $250 million.

On October 31, 1997, a federal securities lawsuit was filed against the Company
in the U.S. District Court for the Western District of Washington, in Seattle.
The lawsuit names as defendants the Company and three of its then executive
officers. Additional lawsuits of a similar nature have been filed in the same
court. These lawsuits were consolidated on February 24, 1998. The lawsuits
generally allege that the defendants desired to keep the Company's share price
as high as possible in order to ensure that the McDonnell Douglas shareholders
would approve the merger and, in the case of the individual defendants, to
benefit directly from the sale of Boeing stock during the period from April 7,
1997 through October 22, 1997. By order dated May 1, 2000, the Court certified
two subclasses of plaintiffs in the action: a. all persons or entities who
purchased Boeing stock or call options or who sold put options during the period
from July 21, 1997 through October 22, 1997, and b. all persons or entities who
purchased McDonnell Douglas stock on or after April 7, 1997 and who held such
stock until it converted to Boeing stock pursuant to the merger. The plaintiffs
seek compensatory damages and treble damages. On July 13, 2001, the Court
certified certain questions of state law for consideration by the Washington
Supreme Court. The action is currently set for trial on March 7, 2002. The
Company believes that the allegations are without merit and that the outcome of
these lawsuits will not have a material adverse effect on its earnings, cash
flow or financial position.

On October 19, 1999, an indictment was returned by a federal grand jury sitting
in the District of Columbia charging that McDonnell Douglas Corporation (MDC), a
wholly owned subsidiary of the Company, and MDC's Douglas Aircraft Company
division, conspired to and made false statements and concealed material facts on
export license applications and in connection with export licenses, and
possessed and sold machine tools in violation of the Export Administration Act.
The indictment also charged one employee with participation in the alleged
conspiracy. The indictment has since been dismissed as against this employee.
That dismissal was affirmed by the U.S. Court of Appeals for the D.C. Circuit on
May 8, 2001. The indictment relates to the sale and export to China in 1993-1995
of surplus, used machine tools sold by Douglas Aircraft Company to China
National Aero-Technology Import and Export Corporation for use in connection
with the MD-80/90 commercial aircraft Trunkliner Program in China.

As a result of the indictment, the Department of State has discretion to deny
defense-related export privileges to MDC or a division or subsidiary of MDC. The
agency exercised that discretion on January 5, 2000, by establishing a "denial
policy" with respect to defense-related exports of MDC and its subsidiaries.
Most of MDC's major existing defense programs were, however, excepted from that
policy due to overriding U.S. foreign policy and national security interests.
Other exceptions have been granted. There can, however, be no assurance as to




                                     34
<page>  35
how the Department will exercise its discretion as to program or transaction
exceptions for other programs or future defense-related exports. In addition,
the Department of Commerce has authority to temporarily deny other export
privileges to, and the Department of Defense has authority to suspend or debar
from contracting with the military departments, MDC or a division or subsidiary
of MDC. Neither agency has taken action adverse to MDC or its divisions or
subsidiaries thus far. Based upon all available information, the Company does
not expect actions that would have a material adverse effect on its financial
position or continuing operations. In the unanticipated event of a conviction,
MDC would be subject to Department of State and Department of Commerce denials
or revocations of MDC export licenses. MDC also would be subject to Department
of Defense debarment proceedings.

On February 25, 2000, a purported class action lawsuit alleging gender
discrimination and harassment was filed against The Boeing Company, Boeing North
American, Inc., and McDonnell Douglas Corporation. The complaint, filed with the
United States District Court in Seattle, alleges that the Company has engaged in
a pattern and practice of unlawful discrimination, harassment and retaliation
against females over the course of many years. The complaint, Beck v. Boeing,
names 28 women who have worked for Boeing in the Puget Sound area; Wichita,
Kansas; St. Louis, Missouri; and Tulsa, Oklahoma. On March 15, an amended
complaint was filed naming an additional 10 plaintiffs, including the first from
California. The lawsuit attempts to represent all women who currently work for
the Company, or who have worked for the Company in the past several years.

The Company has denied the allegation that it has engaged in any unlawful
"pattern and practice" and believes that the plaintiffs cannot satisfy the
rigorous requirements necessary to achieve the class action status they seek.
Plaintiffs' motion for class certification was filed in May 2001. The court will
hear argument on the motion in August. The Company intends to vigorously contest
this lawsuit.



























                                     35
<page>  36
Item 6.  Exhibits and Reports on Form 8-K

        (a) Exhibits:
              (3) Articles of Incorporation and By Laws
                  (i) By-Laws, as amended and restated on June 25, 2001.
                      Filed herewith.

             (10) Material Contracts
                    Management Contracts and Compensatory Plans
                  (i) The Boeing Company Executive Layoff Benefits Plan
                      as Amended and Restated effective April 1, 2001.
                      Filed herewith.

             (15) Letter from independent accountants regarding unaudited
                  interim financial information. Filed herewith.

             (27) Financial Data Schedule for the six-month period ending
                  June 30, 2000. Filed herewith.

        (b) Reports on Form 8-K:
              No reports on Form 8-K were filed during the quarter covered by
              this report.




































                                     36
<page>  37
                  REVIEW BY INDEPENDENT PUBLIC ACCOUNTANTS


The condensed consolidated statement of financial position as of June 30, 2001,
the condensed consolidated statements of operations for the three- and six-month
periods ended June 30, 2001 and 2000, and the condensed consolidated statements
of cash flows for the six-month period ended June 30, 2001 and 2000, have been
reviewed by the registrant's independent accountants, Deloitte & Touche LLP,
whose report covering their review of the financial statements follows.

















































                                     37
<page>  38
                   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 (the "Company") as of June 30,
2001, and the related condensed consolidated statements of operations for the
three- and six-month periods ended June 30, 2001 and 2000, and the related
condensed consolidated statements of cash flows for the six-month periods ended
June 30, 2001 and 2000.  These financial statements are the responsibility of
the Company's management.

We conducted our review in accordance with 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 auditing standards generally accepted in the United States of
America, 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 accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated statement of
financial position of the Company as of December 31, 2000, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated January 26,
2001, 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, 2000
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

July 25, 2001








                                     38
<page>  39

                                - - - - - - -

                                  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)


        August 8, 2001                   /s/      James A. Bell
       ----------------                  ------------------------------
            (Date)                                James A. Bell
                                            Vice President of Finance
                                              & Corporate Controller






































                                     39

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>c-ex3bylaws.txt
<DESCRIPTION>EX 3 ARTICLES OF INCORPORATION AND BY LAWS
<TEXT>
<page>  1










                                   BY-LAWS

                                     OF

                             THE BOEING COMPANY

                         (As amended June 25, 2001)









































                                      1
<page>   2
                             THE BOEING COMPANY
                                   BY-LAWS
                              TABLE OF CONTENTS

                                  ARTICLE I
                           Stockholders' Meetings
                                                                  Page
Section 1.      Annual Meetings                                      1
Section 2.      Special Meetings                                     1
Section 3.      Place of Meeting                                     1
Section 4.      Notice of Meetings                                   1
Section 5.      Waivers of Notice                                    2
Section 6.      Quorum                                               2
Section 7.      Proxies                                              2
        7.1     Appointment                                          2
        7.2     Delivery to Corporation; Duration                    3
Section 8.      Inspectors of Election                               3
        8.1     Appointment                                          3
        8.2     Duties                                               3
        8.3     Determination of Proxy Validity                      3
Section 9.      Fixing the Record Date                               3
        9.1     Meetings                                             3
        9.2     Consent to Corporate Action Without a Meeting        4
        9.3     Dividends, Distributions, and Other Rights           4
        9.4     Voting List                                          4
Section 10.     Action By Stockholders Without a Meeting             5
Section 11.     Business and Nominations at Stockholders' Meetings   5
        11.1    Business and Nominations at Annual Meetings          5
        11.2    Stockholder Notice                                   6
        11.3    Business and Nominations at Special Meetings         6
        11.4    Stockholder Meeting Procedures                       6
        11.5    Public Announcement of Stockholders' Meetings        7
Section 12.     Notice to Corporation                                7

























                                      2
<page>  3
                                 ARTICLE II
                             Board of Directors

Section 1.      Number and Term of Office                            7
Section 2.      Nomination and Election                              8
        2.1     Nomination                                           8
        2.2     Election                                             8
Section 3.      Place of Meeting                                     8
Section 4.      Annual Meeting                                       8
Section 5.      Stated Meetings                                      8
Section 6.      Special Meetings                                     8
        6.1     Convenors and Notice                                 8
        6.2     Waiver of Notice                                     8
Section 7.      Quorum and Manner of Acting                          8
Section 8.      Chairman of the Board                                9
Section 9.      Resignations                                         9
Section 10.     Removal of Directors                                 9
Section 11.     Filling of Vacancies Not Caused by Removal           9
Section 12.     Directors' Fees                                      9
Section 13.     Action Without a Meeting                             9

                                 ARTICLE III
                              Board Committees

Section 1.      Audit Committee                                      10
Section 2.      Other Committees                                     10
        2.1     Committee Powers                                     10
        2.2     Committee Members                                    10
Section 3.      Quorum and Manner of Acting                          10

                                 ARTICLE IV
                            Officers and Agents:
                   Terms, Compensation, Removal, Vacancies

Section 1.      Officers                                             11
Section 2.      Term of Office                                       11
Section 3.      Salaries of Elected Officers                         11
Section 4.      Bonuses                                              11




















                                      3
<page>  4
Section 5.      Removal of Elected and Appointed Officers            11
Section 6.      Vacancies                                            11

                                  ARTICLE V
                         Officers' Duties and Powers

Section 1.      Chairman of the Board                                12
Section 2.      President                                            12
Section 3.      Chief Executive Officer                              12
Section 4.      Vice Presidents and Controller                       12
Section 5.      Secretary                                            12
Section 6.      Treasurer                                            13
Section 7.      Additional Powers and Duties                         13
Section 8.      Disaster Emergency Powers of Acting Officers         13

                                 ARTICLE VI
                        Stock and Transfers of Stock

Section 1.      Stock Certificates                                   14
Section 2.      Transfer Agents and Registrars                       14
Section 3.      Transfers of Stock                                   14
Section 4.      Lost Certificates                                    14

                                 ARTICLE VII
                                Miscellaneous

Section 1.      Fiscal Year                                          14
Section 2.      (Repealed)
Section 3.      Signing of Negotiable Instruments                    14
Section 4.      Indemnification of Directors and Officers            15
        4.1     Right to Indemnification                             15
        4.2     Right of Indemnitee to Bring Suit                    16
        4.3     Nonexclusivity of Rights                             16
        4.4     Insurance, Contracts, and Funding                    16
        4.5     Persons Serving Other Entities                       16
        4.6     Indemnification of Employees and Agents              17
                 of the Corporation
        4.7     Procedures for the Submission of Claims              17

                                ARTICLE VIII
                                 Amendments

Section 1.      Amendment of the By-Laws: General                    17
Section 2.      Amendments as to Compensation and
                 Removal of Officers                                 17
Section 3.      Amendments as to Shareholder Meetings, Directors     18
Section 4.      Amendment of this Article VIII                       18










                                      4

<page>  5
                                   BY-LAWS
                                     OF
                             THE BOEING COMPANY

                                  ARTICLE I

                           Stockholders' Meetings

SECTION 1.  Annual Meetings.
The Annual Meeting of the stockholders shall be held on the last Monday in the
month of April in each year, or, if that day be a legal holiday, on the next
succeeding day not a legal holiday, at 11:00 a.m., for the election of
directors and the transaction of such other business as may come before the
meeting.

SECTION 2.  Special Meetings.
A special meeting of the stockholders may be called at any time by the Board
of Directors, or by stockholders holding together at least twenty-five percent
of the outstanding shares of stock entitled to vote, except as otherwise
provided by statute or by the Certificate of Incorporation or any amendment
thereto.

SECTION 3.  Place of Meeting.
All meetings of the stockholders of the Corporation shall be held at such
place or places within or without the State of Delaware as may from time to
time be fixed by the Board of Directors or as shall be specified or fixed in
the respective notices or waivers of notice thereof.

SECTION 4.  Notice of Meetings.
Except as otherwise required by statute and as set forth below, notice of each
annual or special meeting of stockholders shall be given to each stockholder
of record entitled to vote at such meeting not less than thirty nor more than
sixty (or the maximum number permitted by applicable law) days before the
meeting date.  If the Corporation has an Interested Stockholder as defined in
Article EIGHTH of the Certificate of Incorporation, notice of each special
meeting of stockholders shall be given to each stockholder of record entitled
to vote at such meeting not less than fifty-five nor more than sixty (or the
maximum number permitted by applicable law) days before the meeting date,
unless the calling of such meeting is ratified by the affirmative vote of a
majority of the Continuing Directors as defined in Article EIGHTH of the
Certificate of Incorporation, in which case notice of such special meeting
shall be given to each stockholder of record entitled to vote at such meeting
not less than thirty nor more than sixty (or the maximum number permitted by
applicable law) days before the meeting date.  Such notice shall be given by
delivering to each stockholder a written or printed notice thereof either
personally or by mailing such notice in a postage-prepaid envelope addressed
to the stockholder's address as it appears on the stock books of the
Corporation.  Except as otherwise required by statute, no publication of any
notice of a meeting of stockholders shall be required.  Every notice of a
meeting of stockholders shall state the place, date, and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called.






                                      5
<page>  6
SECTION 5.  Waivers of Notice.
Whenever any notice is required to be given to any stockholder under the
provisions of these By-Laws, the Certificate of Incorporation, or the Delaware
General Corporation Law, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.  The
attendance of a stockholder at a meeting, in person or by proxy, shall
constitute a waiver of notice of such meeting, except when a stockholder
attends a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.

SECTION 6.  Quorum.
At all meetings of stockholders, except when otherwise provided by statute or
by the Certificate of Incorporation or any amendment thereto, or by the By-
Laws, the presence, in person or by proxy duly authorized, of the holders of
one-third of the outstanding shares of stock entitled to vote shall constitute
a quorum for the transaction of business; and except as otherwise provided by
statute or rule of law, or by the Certificate of Incorporation or any
amendment thereto, or by the By-Laws, the vote, in person or by proxy, of the
holders of a majority of the shares constituting such quorum shall be binding
upon all stockholders of the Corporation.  In the absence of a quorum, a
majority of the shares present in person or by proxy and entitled to vote may
adjourn any meeting, from time to time but not for a period of more than
thirty days at any one time, until a quorum shall attend.  At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.  Unless otherwise provided by statute, no notice of an adjourned
meeting need be given.

SECTION 7.  Proxies.
7.1  Appointment.  Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy.  Such authorization may be accomplished by (a) the
stockholder or such stockholder's authorized officer, director, employee, or
agent executing a writing or causing his or her signature to be affixed to
such writing by any reasonable means, including facsimile signature, or (b) by
transmitting or authorizing the transmission of a telegram, cablegram, or
other means of electronic transmission to the intended holder of the proxy or
to a proxy solicitation firm, proxy support service, or similar agent duly
authorized by the intended proxy holder to receive such transmission;
provided, that any such telegram, cablegram, or other electronic transmission
must either set forth or be accompanied by information from which it can be
determined that the telegram, cablegram, or other electronic transmission was
authorized by the stockholder.  Any copy, facsimile telecommunication, or
other reliable reproduction of the writing or transmission by which a
stockholder has authorized another person to act as proxy for such stockholder
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication, or other
reproduction shall be a complete reproduction of the entire original writing
or transmission.





                                      6
<page>  7
7.2  Delivery to Corporation; Duration.  A proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting or the
delivery to the Corporation of the consent to corporate action in writing.  A
proxy shall become invalid three years after the date of its execution, unless
otherwise provided in the proxy.  A proxy with respect to a specified meeting
shall entitle the holder thereof to vote at any reconvened meeting following
adjournment of such meeting but shall not be valid after the final adjournment
thereof.

SECTION 8.  Inspectors of Election.
8.1  Appointment.  In advance of any meeting of stockholders, the Board of
Directors of the Corporation shall appoint one or more persons to act as
inspectors of election at such meeting and to make a written report thereof.
The Board of Directors may designate one or more persons to serve as alternate
inspectors to serve in place of any inspector who is unable or fails to act.
If no inspector or alternate is able to act at a meeting of stockholders, the
chairman of such meeting shall appoint one or more persons to act as inspector
of elections at such meeting.

8.2  Duties.  The inspectors shall:  (a) ascertain the number of shares of the
Corporation outstanding and the voting power of each such share; (b) determine
the shares represented at the meeting and the validity of proxies and ballots;
(c) count all votes and ballots; (d) determine and retain for a reasonable
period of time a record of the disposition of any challenges made to any
determination by them; and (e) certify their determination of the number of
shares represented at the meeting and their count of the votes and ballots.
Each inspector of election shall, before entering upon the discharge of his or
her duties, take and sign an oath to faithfully execute the duties of inspector
with strict impartiality and according to the best of his or her ability.  The
inspectors of election may appoint or retain other persons or entities to
assist them in the performance of their duties.

8.3  Determination of Proxy Validity.  The validity of any proxy or ballot
executed for a meeting of stockholders shall be determined by the inspectors
of election in accordance with the applicable provisions of the Delaware
General Corporation Law as then in effect.  In determining the validity of
any proxy transmitted by telegram, cablegram, or other electronic
transmission, the inspectors shall record in writing the information upon
which they relied in making such determination.

SECTION 9.  Fixing the Record Date.
9.1  Meetings.  For the purpose of determining stockholders entitled to notice
of and to vote at any meeting of stockholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not precede
the date on which the resolution fixing the record date is adopted by the Board
of Directors, and which record date shall be not fewer than thirty nor more than
sixty (or the maximum number permitted by applicable law) days before the date
of such meeting.  If the corporation has an Interested Stockholder as defined in
Article EIGHTH of the Certificate of Incorporation, the record date for each
special meeting of stockholders shall be not fewer than fifty-five nor more than
sixty (or the maximum number permitted by applicable law) days before the
meeting date, unless the calling of such meeting is ratified by the affirmative
vote of a majority of the Continuing Directors, as defined in Article EIGHTH of
the Certificate of Incorporation.  If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
and to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is

                                      7
<page>  8
9.1  Meetings.  (continued)
waived, at the close of business on the day next preceding the day on which the
meeting is held.  A determination of stockholders of record entitled to notice
of and to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

9.2  Consent to Corporate Action Without a Meeting.  For the purpose of
determining the stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date, which record
date shall not precede the date on which the resolution fixing the record date
is adopted by the Board of Directors, and which date shall not be more than ten
(or the maximum number permitted by applicable law) days after the date on
which the resolution fixing the record date is adopted by the Board of
Directors.  If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by Chapter 1 of the Delaware General Corporation Law as
now or hereafter amended, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the records of proceedings of meetings of stockholders.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested.  If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by Chapter 1 of the Delaware General Corporation Law as now or
hereafter amended, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.

9.3  Dividends, Distributions, and Other Rights.  For the purpose of
determining the stockholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted, and which record date shall be
not more than sixty (or the maximum number permitted by applicable law) days
prior to such action.  If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.

9.4.  Voting List.  At least ten days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting shall be
made, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder.  This list shall be open to examination by any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a
period of ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held.  The list shall also be produced and kept at such meeting for
inspection by any stockholder who is present.


                                      8
<page>  9
SECTION 10.  Action by Stockholders Without a Meeting.
Subject to the provisions of Article NINTH of the Certificate of
Incorporation, any action which could be taken at any annual or special
meeting of stockholders may be taken without a meeting, without prior notice,
and without a vote, if a consent or consents in writing, setting forth the
action so taken, are (a) signed by the holders of outstanding stock having
not fewer than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and (b) delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody
of the records of proceedings of meetings of stockholders.  Delivery made to
the Corporation's registered office shall be by hand or by certified mail or
registered mail, return receipt requested.  Every written consent shall bear
the date of signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless written consents signed by a sufficient number of stockholders
to take such action are delivered to the Corporation, in the manner required
by this section, within sixty (or the maximum number permitted by applicable
law) days of the date of the earliest dated consent delivered to the
Corporation in the manner required by this section.  The validity of any
consent executed by a proxy for a stockholder pursuant to a telegram,
cablegram, or other means of electronic transmission transmitted to such
proxy holder by or upon the authorization of the stockholder shall be
determined by or at the direction of the Secretary of the Corporation.  A
written record of the information upon which the person making such
determination relied shall be made and kept in the records of the proceedings
of the stockholders.  Any such consent shall be inserted in the minute book
as if it were the minutes of a meeting of the stockholders.  Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing.

SECTION 11.  Business and Nominations at Stockholders' Meetings.
11.1    Business and Nominations at Annual Meetings.  In addition to the
election of directors, other proper business may be transacted at the annual
meeting of stockholders, provided that such business is a proper matter for
stockholder action and is properly brought before such meeting. To be
properly brought before an annual meeting, nominations of persons for
election to the Board of Directors and business to be considered by
stockholders must be (a) made or brought by or at the direction of the Board
of Directors, or (b) made or brought before the meeting by a stockholder of
the Corporation who is a stockholder of record at the time of giving notice
as required in this By-Law, who is entitled to vote at the meeting, and who
complies with the notice procedures set forth in this By-Law.  Notice by a
stockholder pursuant to (b) above must be in writing, in accordance with
Section 12 of this Article I, and received by the Secretary not earlier than
the one-hundred and twentieth day nor later than the close of business on the
ninetieth day prior to the date specified in Section 1 of this Article I for
such annual meeting; provided, however, that in the event that the date of
the annual meeting is more than thirty days before or more than sixty days
after such date, notice by the stockholder must be received by the Secretary
not earlier than the one-hundred and twentieth day prior to such annual
meeting and not later than the close of business on the ninetieth day prior
to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made by the Corporation.


                                      9
<page>  10
11.2	Stockholder Notice.  Any stockholder notice given pursuant to Section
11.1 shall set forth (i) the name and address of the stockholder proposing
such business and of the beneficial owner, if any, on whose behalf the
proposal or nomination is made; (ii) a representation that the stockholder is
entitled to vote at such meeting and a statement of the number of shares of
the Corporation which are owned by the stockholder and the number of shares
which are beneficially owned by the beneficial owner, if any; (iii) a
representation that the stockholder intends to appear in person or by proxy
at the meeting to nominate the person or persons or to propose the business
specified in the notice; and (iv) as to each person the stockholder proposes
to nominate for election or re-election as a director, the name and address
of such person and such other information regarding such nominee as would be
required in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had such nominee been nominated by the
Board of Directors, and a description of any arrangements or understandings,
between the stockholder and such nominee and any other persons (including
their names), pursuant to which the nomination is to be made, and the written
consent of each such nominee to being named in the proxy statement as a
nominee and to serving as a director if elected; or, as to each matter the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting, the language of the business matter (if
appropriate), and any material interest of the stockholder in such business.

11.3    Business and Nominations at Special Meetings.  At any special meeting
of the stockholders, only such business as is specified in the notice of such
special meeting given by or at the direction of the person or persons calling
such meeting, in accordance with Section 2 of this Article I, shall come
before such meeting.  Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (a) by or
at the direction of the Board of Directors or (b) provided that the Board of
Directors has determined that directors shall be elected at such meeting, by
any stockholder of the Corporation who is a stockholder of record at the time
of giving of notice provided for in this By-Law, who shall be entitled to
vote at the meeting and who complies with the notice procedures set forth in
this By-Law.  In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board
of Directors, any such stockholder may nominate a person or persons for
election to such position(s) as specified in the Corporation's notice of
meeting, if the stockholder's notice required by paragraph 11.1 of this By-
Law shall be delivered to the Secretary not earlier than the one hundred and
twentieth day nor later than the ninetieth day prior to such special meeting
or the tenth day following the day on which public announcement is first made
of the date of the special meeting and of the nominees proposed by the Board
of Directors to be elected at such meeting.

11.4	Stockholder Meeting Procedures.  No business shall be conducted nor
director nominations made at any meeting of stockholders except in accordance
with this Section 11.  If the facts warrant, the Board of Directors, or the
chairman of a stockholders' meeting at which directors are to be elected, may
determine and declare (a) that a proposal does not constitute proper business
to be transacted at the meeting or (b) that business was not properly brought
before the meeting in accordance with the provisions of this Section 11 or
(c) that a nomination was not made in accordance with this Section 11; and,
if it is so determined, the defective proposal or nomination shall be
disregarded and shall not be transacted or acted upon. The right of
stockholders to bring business before or to make nominations pursuant to the
                                     10
<page>  11
11.4    Stockholder Meeting Procedures.  (continued)
foregoing procedure is subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation.  The procedures set forth in this Section 11 for
stockholders' bringing business before a stockholders' meeting or
stockholders' making nominations for the election of directors are in
addition to, and not in lieu or limitation of, (a) any procedures now in
effect or hereafter adopted by or at the direction of the Board of Directors
or any committee thereof and (b) the requirements set forth in Rule 14a-8 and
Rule 14a-11 under Section 14 of the Securities Exchange Act of 1934, or any
successor provisions.

11.5	Public Announcement of Stockholders' Meetings. For purposes of this By-
Law, "public announcement" as to an annual or special meeting of stockholders
shall mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.  In no
event shall the public announcement of an adjournment of an annual or special
meeting commence a new time period for the giving of a stockholder's notice
as described above.

SECTION 12.  Notice to Corporation.
Any written notice required to be delivered by a stockholder to the
Corporation pursuant to Section 11.1 of this Article I or Section 2.1 of
Article II must be given, either by personal delivery or by registered or
certified mail, postage prepaid, to the Secretary at the Corporation's
executive offices in the City of Seattle, State of Washington.

                                 ARTICLE II
                             Board of Directors

SECTION 1.  Number and Term of Office.
The number of directors shall be thirteen, but the number may be increased,
or decreased to not less than three, from time to time, either by the
directors by adoption of a resolution to such effect or by the stockholders
by amendment of the By-Laws in accordance with Article VIII hereof.  The
directors shall be divided into three classes, each of which shall be
composed as nearly as possible of one-third of the directors.  Each director
shall serve for the term to which the director was elected, and until a
successor shall have been elected and qualified or until the director's prior
death, resignation, or removal.  At each annual election, directors shall be
chosen for a full three-year term to succeed those whose terms expire.


SECTION 2.  Nomination and Election.
2.1	Nomination.  Only persons who are nominated in accordance with Article
I, Section 11 of these By-Laws shall be eligible for election as directors.

2.2     Election.  At each election of directors, the persons receiving the
greatest number of votes shall be the directors.

SECTION 3.  Place of Meeting.
Meetings of the Board of Directors, or of any committee thereof, may be held
either within or without the State of Delaware.



                                     11
<page>  12
SECTION 4.  Annual Meeting.
Each year the Board of Directors shall meet in connection with the annual
meeting of stockholders for the purpose of electing officers and for the
transaction of other business.  No notice of such meeting is required.  Such
annual meeting may be held at any other time or place which shall be specified
in a notice given as hereinafter provided for special meetings of the Board,
or in a consent and waiver of notice thereof, signed by all the directors.

SECTION 5.  Stated Meetings.
The Board of Directors may, by resolution adopted by affirmative vote of a
majority of the whole Board, from time to time appoint the time and place for
holding stated meetings of the Board, if by it deemed advisable; and such
stated meetings shall thereupon be held at the time and place so appointed,
without the giving of any special notice with regard thereto.  In case the day
appointed for a stated meeting shall fall upon a legal holiday, such meeting
shall be held on the next following day, not a legal holiday, at the regularly
appointed hour.  Except as otherwise provided in the By-Laws, any and all
business may be transacted at any stated meeting.

SECTION 6.  Special Meetings.
6.1  Convenors and Notice.  Special meetings of the Board of Directors may be
called by or at the request of the Chairman of the Board or any two directors.
Notice of a special meeting of the Board of Directors, stating the place, day,
and hour of the meeting, shall be given to each director in writing (by mail,
wire, facsimile, or personal delivery) or orally (by telephone or in person).

6.2  Waiver of Notice.  With respect to a special meeting of the Board of
Directors, a written waiver, signed by a director, shall be deemed equivalent
to notice to that director.  A director's attendance at a meeting shall
constitute that director's waiver of notice of such meeting, except when the
director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting was not lawfully called or convened.  Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the waiver of notice of such meeting.


SECTION 7.  Quorum and Manner of Acting.
Except as herein otherwise provided, forty percent of the total number of
directors fixed by or in the manner provided in these By-Laws at the time of
any stated or special meeting of the Board or, if vacancies exist on the Board
of Directors, forty percent of such number of directors then in office,
provided, however, that such number may not be less than one-third of the
total number of directors fixed by or in the manner provided in these By-Laws,
shall constitute a quorum for the transaction of business; and, except as
otherwise required by statute or by the Certificate of Incorporation or any
amendment thereto, or by the By-Laws, the act of a majority of the directors
present at any such meeting at which a quorum is present shall be the act of
the Board of Directors.  In the absence of a quorum, a majority of the
directors present may adjourn any meeting, from time to time, until a quorum
is present.  No notice of any adjourned meeting need be given.

SECTION 8.  Chairman of the Board.
The Chairman of the Board shall preside, when present, at all meetings of the
Board, except as otherwise provided by law.



                                     12
<page>  13
SECTION 9.  Resignations.
Any director of the Corporation may resign at any time by giving written
notice thereof to the Secretary.  Such resignation shall take effect at the
time specified therefor or if the time is not specified, upon delivery
thereof; and, unless otherwise specified with respect thereto, the acceptance
of such resignation shall not be necessary to make it effective.

SECTION 10.  Removal of Directors.
Any director may be removed solely for cause by the affirmative vote of the
holders of record of a majority of the outstanding shares of stock entitled
to vote, at a meeting of the stockholders called for the purpose; and the
vacancy on the Board caused by any such removal may be filled by the
stockholders at such meeting or at any subsequent meeting.

SECTION 11.  Filling of Vacancies Not Caused by Removal.
In case of any increase in the number of directors, or of any vacancy created
by death or resignation, the additional director or directors may be elected
or, as the case may be, the vacancy or vacancies may be filled, either (a) by
the Board of Directors at any meeting, (i) if the Corporation has an
Interested Stockholder as defined in Article EIGHTH of the Certificate of
Incorporation, by the affirmative vote of a majority of the Continuing
Directors, as defined in Article EIGHTH, or (ii) if the Corporation does not
have an Interested Stockholder, by the affirmative vote of a majority of the
remaining directors, though less than a quorum; or (b) by the stockholders
entitled to vote, either at an annual meeting or at a special meeting thereof
called for the purpose, by the affirmative vote of a majority of the
outstanding shares entitled to vote at such meeting.

SECTION 12.  Directors' Fees.
The Board of Directors shall have authority to determine from time to time
the amount of compensation which shall be paid to its members for attendance
at meetings of the Board or of any committee of the Board.

SECTION 13.  Action Without a Meeting.  Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.

                                 ARTICLE III
                              Board Committees
SECTION 1.  Audit Committee.
In addition to any committees appointed pursuant to Section 2 of this Article,
there shall be an Audit Committee, appointed annually by the Board of
Directors, consisting of at least three directors who are not members of
management.  It shall be the responsibility of the Audit Committee to review
the scope and results of the annual independent audit of books and records of
the Corporation and its subsidiaries and to discharge such other
responsibilities as may from time to time be assigned to it by the Board of
Directors.  The Audit Committee shall meet at such times and places as the
members deem advisable, and shall make such recommendations to the Board of
Directors as they consider appropriate.

SECTION 2.  Other Committees.
2.1  Committee Powers.  The Board of Directors may appoint standing or
temporary committees and invest such committees with such powers as it may see
fit, with power to subdelegate such powers if deemed desirable by the Board of
Directors; but no such committee shall have the power or authority of the
                                     13
<page>  14
SECTION 2.  Other Committees.
Board of Directors to adopt, amend, or repeal the By-Laws of the Corporation
or approve, adopt or recommend to the stockholders of the Corporation any
action or matter expressly required by the Certificate of Incorporation, these
By-Laws or the Delaware General Corporation Law to be submitted to
stockholders for approval.

2.2  Committee Members.  The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.  In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member.

SECTION 3.  Quorum and Manner of Acting.
A majority of the number of directors composing any committee of the Board of
Directors, as established and fixed by resolution of the Board of Directors,
shall constitute a quorum for the transaction of business at any meeting of
such committee but, if less than a majority are present at a meeting, a
majority of such directors present may adjourn the meeting from time to time
without further notice. The act of a majority of the members of a committee
present at a meeting at which a quorum is present shall be the act of such
committee.


                                 ARTICLE IV
        Officers and Agents: Terms, Compensation, Removal, Vacancies

SECTION 1.  Officers.
The elected officers of the Corporation shall be a Chairman of the Board (who
shall be a director) and, at the discretion of the Board, a President (who
shall be a director), and one or more Vice Presidents (each of whom may be
assigned by the Board of Directors or the Chief Executive Officer an additional
title descriptive of the functions assigned to such officer and one or more of
whom may be designated Exec-utive or Senior Vice President).  The Board may
also elect one or more Vice Chairmen.  The Board of Directors shall also
designate either the Chairman of the Board or the President as the Chief
Executive Officer of the Corporation.  The Board of Directors shall appoint a
Controller, a Secretary, and a Treasurer.  Any number of offices, whether
elective or appointive, may be held by the same person.  The Chief Executive
Officer may, by a writing filed with the Secretary, designate titles as
officers for employees and agents and appoint Assistant Secretaries and
Assistant Treasurers, as, from time to time, may appear to be necessary or
advisable in the conduct of the affairs of the Corporation and may, in the same
manner, terminate or change such titles.

SECTION 2.  Term of Office.
So far as practicable, all elected officers shall be elected at the annual
meeting of the Board in each year, and shall hold office until the annual
meeting of the Board in the next subsequent year and until their respective
successors are chosen.  The Controller, Secretary, and Treasurer shall hold
office at the pleasure of the Board.

SECTION 3.  Salaries of Elected Officers.
The salaries paid to the elected officers of the Corporation shall be
authorized or approved by the Board of Directors.
                                     14
<page>  15
SECTION 4.  Bonuses.
None of the officers, directors, or employees of the Corporation or any of
its subsidiary corporations shall at any time be paid any bonus or share in
the earnings or profits of the Corporation or any of its subsidiary
corporations except pursuant to a plan approved by affirmative vote of two-
thirds of the members of the Board of Directors.

SECTION 5.  Removal of Elected and Appointed Officers.
Any elected or appointed officer may be removed at any time, either for or
without cause, by affirmative vote of a majority of the whole Board of
Directors, at any meeting called for the purpose.

SECTION 6.  Vacancies.
If any vacancy occurs in any office, the Board of Directors may elect or
appoint a successor to fill such vacancy for the remainder of the term.


                                  ARTICLE V
                         Officers' Duties and Powers

SECTION 1.  Chairman of the Board.
The Chairman of the Board shall preside, when present, at all meetings of the
stockholders (except as otherwise provided by statute) and at all meetings of
the Board of Directors.  The Chairman shall have general power to execute
bonds, deeds, and contracts in the name of the Corporation; to affix the
corporate seal; to sign stock certificates; and to perform such other duties
and services as shall be assigned to or required of the Chairman by the Board
of Directors.

SECTION 2.  President.
The President shall have general power to execute bonds, deeds, and contracts
in the name of the Corporation and to affix the corporate seal; to sign stock
certificates; during the absence or disability of the Chairman of the Board
to exercise the Chairman's powers and to perform the Chairman's duties; and
to perform such other duties and services as shall be assigned to or required
of the President by the Board of Directors; provided, that if the office of
President is vacant, the Chairman shall exercise the duties ordinarily
exercised by the President until such time as a President is elected or
appointed.

SECTION 3.  Chief Executive Officer.
The officer designated by the Board of Directors as the Chief Executive Officer
of the Corpora-tion shall have general and active control of its business and
affairs.  The Chief Executive Officer shall have general power to appoint or
designate all employees and agents of the Corporation whose appointment or
designation is not otherwise provided for and to fix the compensation thereof,
subject to the provisions of these By-Laws; to remove or suspend any employee or
agent who shall not have been elected or appointed by the Board of Directors or
other body; to suspend for cause any employee, agent, or officer, other than an
elected officer, pending final action by the body which shall have appointed
such employee, agent, or officer; and to exercise all the powers usually
pertaining to the office held by the Chief Executive Officer of a corporation.

SECTION 4.  Vice Presidents and Controller.
The several Vice Presidents and the Controller shall perform all such duties
and services as shall be assigned to or required of them, from time to time,
by the Board of Directors or the Chief Executive Officer, respectively.

                                     15
<page>  16
SECTION 5.  Secretary.
The Secretary shall attend to the giving of notice of all meetings of
stockholders and of the Board of Directors and shall keep and attest true
records of all proceedings thereat.  The Secretary shall have charge of the
corporate seal and have authority to attest any and all instruments or
writings to which the same may be affixed and shall keep and account for all
books, documents, papers, and records of the Corporation relating to its
corporate organi-zation.  The Secretary shall have authority to sign stock
certificates and shall generally perform all the duties usually appertaining
to the office of secretary of a corporation.  In the absence of the
Secretary, an Assistant Secretary or Secretary pro tempore shall perform the
duties of the Secretary.

SECTION 6.  Treasurer.
The Treasurer shall have the care and custody of all moneys, funds, and
securities of the Corporation, and shall deposit or cause to be deposited all
funds of the Corporation in accordance with directions or authorizations of
the Board of Directors or the Chief Executive Officer.  The Treasurer shall
have power to sign stock certificates, to indorse for deposit or collection,
or otherwise, all checks, drafts, notes, bills of exchange, or other
commercial paper payable to the Corporation, and to give proper receipts or
discharges therefor.  In the absence of the Treasurer, an Assistant Treasurer
shall perform the duties of the Treasurer.

SECTION 7.  Additional Powers and Duties.
In addition to the foregoing especially enumerated duties and powers, the
several officers of the Corporation shall perform such other duties and
exercise such further powers as may be provided in these By-Laws or as the
Board of Directors may from time to time determine, or as may be assigned to
them by any superior officer.

SECTION 8.  Disaster Emergency Powers of Acting Officers.
If, as a result of a disaster or other state of emergency, the Chief
Executive Officer is unable to perform the duties of that office, (a) the
powers and duties of the Chief Executive Officer shall be performed by the
employee with the highest base salary who shall be available and capable of
performing such powers and duties and, if more than one such employee has the
same base salary, by the employee whose surname begins with the earliest
letter of the alphabet among the group of those employees with the same base
salary; and (b) the officer performing such duties shall continue to perform
such powers and duties until the Chief Executive Officer becomes capable of
performing those duties or until the Board of Directors shall have elected a
new Chief Executive Officer or designated another individual as Acting Chief
Executive Officer; and (c) such officer shall have the power in addition to
all other powers granted to the Chief Executive Officer by these By-Laws and
by the Board of Directors to appoint an acting President, acting Vice
President - Finance, acting Controller, acting Secretary, and acting
Treasurer, if any of the persons duly elected to any such office is not by
reason of such disaster or emergency able to perform the duties of such
office, each of such acting appointees to serve in such capacities until the
officer for whom the appointee is acting becomes capable of performing the
duties of such office or until the Board of Directors shall have designated
another individual to perform such duties or have elected another person to
fill such office; and (d) any such acting officer so appointed shall be
entitled to exercise all powers vested by the By-Laws or the Board of
Directors in the duly elected officer for whom the acting officer is acting;
and (e) anyone transacting business with this Corporation may rely upon a
certification by any two officers of the Corporation that a specified
                                     16
<page>  17
SECTION 8.  Disaster Emergency Powers of Acting Officers.  (continued)
individual has succeeded to the powers of the Chief Executive Officer and
that such person has appointed other acting officers as herein provided and
any person, firm, corporation, or other entity to which such certification
has been delivered by such officers may continue to rely upon it until
notified of a change in writing signed by two officers of this Corporation.

                                 ARTICLE VI
                        Stock and Transfers of Stock

SECTION 1.  Stock Certificates.
Every stockholder shall be entitled to a certificate, signed by the Chairman
of the Board or the President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, certifying
the number of shares owned by the stockholder in the Corporation.  Any and
all of the signatures on a certificate may be a facsimile.  If any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by
the Corporation with the same effect as if he or she were such officer,
transfer agent, or registrar at the date of issue.

SECTION 2.  Transfer Agents and Registrars.
The Board of Directors may, in its discretion, appoint responsible banks or
trust companies in the Borough of Manhattan, in the City of New York, State
of New York, and in such other city or cities as the Board may deem
advisable, from time to time, to act as transfer agents and registrars of the
stock of the Corporation; and, when such appointments shall have been made,
no stock certificate shall be valid until countersigned by one of such
transfer agents and registered by one of such registrars.

SECTION 3.  Transfers of Stock.
Shares of stock may be transferred by delivery of the certificates therefor,
accompanied either by an assignment in writing on the back of the
certificates or by written power of attorney to sell, assign, and transfer
the same, signed by the record holder thereof; but no transfer shall affect
the right of the Corporation to pay any dividend upon the stock to the holder
of record thereof, or to treat the holder of record as the holder in fact
thereof for all purposes, and no transfer shall be valid, except between the
parties thereto, until such transfer shall have been made upon the books of
the Corporation.

SECTION 4.  Lost Certificates.
The Board of Directors may provide for the issuance of new certificates of
stock to replace certificates of stock lost, stolen, mutilated, or destroyed,
or alleged to be lost, stolen, mutilated, or destroyed, upon such terms and
in accordance with such procedures as the Board of Directors shall deem
proper and prescribe.

                                 ARTICLE VII
                                Miscellaneous

SECTION 1.  Fiscal Year.
The fiscal year of the Corporation shall be the calendar year.

SECTION 2.  (Repealed in its entirety by vote of the stockholders, May 5,
1975.)

                                     17
<page>  18
SECTION 3.  Signing of Negotiable Instruments.
All bills, notes, checks, or other instruments for the payment of money shall
be signed or countersigned by such officer or officers and in such manner as
from time to time may be prescribed by resolution (whether general or
special) of the Board of Directors.

SECTION 4.  Indemnification of Directors and Officers.
4.1  Right to Indemnification.  Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved (including, without
limitation, as a witness) in any actual or threatened action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was
a director or officer of the Corporation or that, being or having been such a
director or officer or an employee of the Corporation, he or she is or was
serving at the request of an executive officer of the Corporation as a
director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an official
capacity as such a director, officer, employee, or agent or in any other
capacity while serving as such a director, officer, employee, or agent, shall
be indemnified and held harmless by the Corporation to the full extent
permitted by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), or by other applicable
law as then in effect, against all expense, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) actually and reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall
continue as to an indemnitee who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the indemnitee's heirs,
executors, and administrators; provided, however, that except as provided in
Section 4.2 with respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized or ratified by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Section 4.1 shall be a contract right and shall include the right to
be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an "advance-ment
of expenses"); provided, however, that an advancement of expenses incurred by
an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an under-taking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal that such indemnitee is not
entitled to be indemnified for such expenses under this Section 4.1 or
otherwise; and provided, further, that an advancement of expenses shall not
be made if the Corporation's Board of Directors makes a good faith
determination that such payment would violate law or public policy.

4.2  Right of Indemnitee to Bring Suit.  If a claim under Section 4.1 is not
paid in full by the Corporation within sixty days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
                                     18
<page>  19
4.2  Right of Indemnitee to Bring Suit.  (continued)
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim.  If successful in
whole or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking,
the indemnitee shall also be entitled to be paid the expense of prosecuting
or defending such suit.  The indemnitee shall be presumed to be entitled to
indemnification under this Section 4 upon submission of a written claim (and,
in an action brought to enforce a claim for an advancement of expenses, where
the required undertaking has been tendered to the Corporation), and
thereafter the Corporation shall have the burden of proof to overcome the
presumption that the indemnitee is not so entitled.  Neither the failure of
the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the commencement
of such suit that indemnification of the indemnitee is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that the
indemnitee is not entitled to indemnification shall be a defense to the suit
or create a presumption that the indemnitee is not so entitled.

4.3  Nonexclusivity of Rights.  The rights to indemnification and to the
advancement of expenses conferred in this Section 4 shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provisions of the Certificate of Incorporation, By-Laws, agreement,
vote of stockholders or disinterested directors, or otherwise.  Notwith-
standing any amendment to or repeal of this Section 4, or of any of the
procedures established by the Board of Directors pursuant to Section 4.7, any
indemnitee shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any acts or omissions of such
indemnitee occurring prior to such amendment or repeal.

4.4  Insurance, Contracts, and Funding.
The Corporation may maintain insurance, at its expense, to protect itself and
any director, officer, employee, or agent of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise against
any expense, liability, or loss, whether or not the Corporation would have
the power to indemnify such person against such expense, liability, or loss
under the Delaware General Corporation Law.  The Corporation may, without
further stockholder approval, enter into contracts with any indemnitee in
furtherance of the provisions of this Section 4 and may create a trust fund,
grant a security interest, or use other means (including, without limitation,
a letter of credit) to ensure the payment of such amounts as may be necessary
to effect indemnification as provided in this Section 4.

4.5  Persons Serving Other Entities.  Any person who is or was a director,
officer, or employee of the Corporation who is or was serving (i) as a
director or officer of another corporation of which a majority of the shares
entitled to vote in the election of its directors is held by the Corporation
or (ii) in an executive or management capacity in a partnership, joint
venture, trust, or other enterprise of which the Corporation or a wholly
owned subsidiary of the Corporation is a general partner or has a majority
ownership shall be deemed to be so serving at the request of an executive
officer of the Corporation and entitled to indemnification and advancement of
expenses under Section 4.1.

4.6  Indemnification of Employees and Agents of the Corporation.  The
Corporation may, by action of its Board of Directors, authorize one or more
executive officers to grant rights to advancement of expenses to employees or
                                     19
<page>  20
4.6  Indemnification of Employees and Agents of the Corporation.  (continued)
agents of the Corporation on such terms and conditions as such officer or
officers deem appropriate under the circumstances.  The Corpor-ation may, by
action of its Board of Directors, grant rights to indemnification and
advance-ment of expenses to employees or agents or groups of employees or
agents of the Corporation with the same scope and effect as the provisions of
this Section 4 with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation; provided, however,
that an undertaking shall be made by an employee or agent only if required by
the Board of Directors.

4.7  Procedures for the Submission of Claims.  The Board of Directors may
establish reasonable procedures for the submission of claims for
indemnification pursuant to this Section 4, determination of the entitlement
of any person thereto, and review of any such determination.  Such procedures
shall be set forth in an appendix to these By-Laws and shall be deemed for
all purposes to be a part hereof.

                                ARTICLE VIII

                                 Amendments

SECTION 1.  Amendment of the By-Laws:  General.
Except as herein otherwise expressly provided, the By-Laws of the Corporation
may be altered or repealed in any particular and new By-Laws, not inconsistent
with any provision of the Certificate of Incorporation or any provision of law,
may be adopted, either by the affirmative vote of the holders of record of a
majority in number of the shares present in person or by proxy and entitled to
vote at an annual meeting of stockholders or at a special meeting thereof, the
notice of which special meeting shall include the form of the proposed
alteration or repeal or of the proposed new By-Laws, or a summary thereof; or
either

(a)	by the affirmative vote of a majority of the whole Board of
        Directors at any meeting thereof, or
(b)	by the affirmative vote of all the directors present at any
        meeting at which a quorum, less than a majority, is present;
provided, in either of the latter cases, that the notice of such meeting shall
include the form of the proposed alteration or repeal or of the proposed new
By-Laws, or a summary thereof.

SECTION 2.  Amendments as to Compensation and Removal of Officers.
Notwithstanding anything contained in these By-Laws to the contrary, the
affirmative vote of the holders of record of a majority of the Voting Stock, as
defined in Article EIGHTH of the Certificate of Incorporation, at a meeting of
the stockholders called for the purpose, shall be required to alter, amend,
repeal, or adopt any provision inconsistent with Sections 3, 4 and 5
of Article IV hereof, notice of which meeting shall include the form of the
proposed amendment, or a summary thereof.

SECTION 3.  Amendments as to Stockholders' Meetings, Directors.
Notwithstanding anything contained in these By-Laws to the contrary, either (a)
the affirmative vote of a majority of the Continuing Directors, as defined in
Article EIGHTH of the Certificate of Incorporation, or (b) the affirmative vote
of the holders of record of at least seventy-five percent of the Voting Stock,
as defined in Article EIGHTH of the Certificate of Incorporation, shall be
required to alter, amend, repeal, or adopt any provision inconsistent with
Sections 1, 2, and 4 of Article I and Sections 1, 10, and 11 of Article II.
                                     20
<page>  21
SECTION 4.  Amendment of this Article VIII.
Notwithstanding anything contained in these By-Laws to the contrary, either (a)
the recommendation of a majority of the Continuing Directors, as defined in
Article EIGHTH of the Certificate of Incorporation, together with the
affirmative vote of the holders of record of a majority of the Voting Stock, as
defined in Article EIGHTH of the Certificate of Incorporation, or (b) the
affirmative vote of the holders of record of at least seventy-five percent of
the Voting Stock, as defined in Article EIGHTH of the Certificate of
Incorporation, shall be required to alter, amend, repeal, or adopt any
provision inconsistent with this Article VIII.
















































                                     21

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>d-ex10exlayoff.txt
<DESCRIPTION>EX 10 EXECUTIVE LAYOFF BENEFITS PLAN
<TEXT>
<page>  1




                             THE BOEING COMPANY

                       EXECUTIVE LAYOFF BENEFITS PLAN

               As Amended and Restated effective April 1, 2001

















































                                      1
<page>  2
                              TABLE OF CONTENTS


                                                               Page
ARTICLE 1 --PURPOSE                                              3

ARTICLE 2 --DEFINITIONS                                          3
     2.1    Affiliate or Subsidiary                              3
     2.2    Base Salary                                          3
     2.3    Committee                                            3
     2.4    Company                                              3
     2.5    Compensation Committee                               3
     2.6    Employee                                             3
     2.7    Equivalent Employment                                3
     2.8    Involuntary Layoff                                   3
     2.9    Layoff Benefit                                       4
     2.10   Layoff Event                                         4
     2.11   Plan                                                 4
     2.12   Plan Year                                            4
     2.13   Service                                              4

ARTICLE 3 --ELIGIBILITY AND LAYOFF EVENT                         4
     3.1    Eligibility                                          4
     3.2    Participating Groups                                 4
     3.3    Layoff Events                                        4

ARTICLE 4 --LAYOFF BENEFIT                                       4
     4.1    Layoff Benefit                                       4
     4.2    Timing of Payment                                    5
     4.3    Limit on Payment                                     5
     4.4    Recovery of Payment                                  5
     4.5    Recovery of Debt                                     5
     4.6    Waiver of Claims                                     5
     4.7    Death Benefit                                        5

ARTICLE 5 --ADMINISTRATION                                       5
     5.1    Plan Administration                                  5
     5.2    Rules and Procedures                                 6
     5.3    Committee Liability                                  6
     5.4    Claim Procedure                                      6

ARTICLE 6 --GENERAL PROVISIONS                                   6
     6.1    Plan Amendment and Termination                       6
     6.2    Funding                                              6
     6.3    Benefit Plan Application                             6
     6.4    Provision Against Anticipation                       6
     6.5    Employment Status                                    6
     6.6    Facility of Payment                                  6
     6.7    Construction                                         7









                                      2
<page>  3

                                  ARTICLE 1
                                   PURPOSE

The Boeing Company established The Boeing Company Executive Layoff
Benefits Plan to provide for lump sum payments as layoff benefits for its
executive employees effective August 1, 1997.  This document is an
amendment and complete restatement of the Plan and is effective for Layoff
Events occurring on or after April 1, 2001.

It is intended that this Plan constitute a welfare benefit severance pay
plan under the  Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and that the plan shall be construed and interpreted in
a manner consistent with such intention.

                                  ARTICLE 2
                                 DEFINITIONS

2.1  Affiliate or Subsidiary means a member (other than The Boeing Company) of
     a controlled group of corporations (as defined in Internal Revenue Code
     Section 1563(a) determined without regard to Internal Revenue Code
     Sections 1563(a)(4) and (e)(3)(c)), a group of trades or businesses
     (whether incorporated or not) which are under common control within the
     meaning of Internal Revenue Code Section 414(c), or an affiliated service
     group (as defined in Internal Revenue Code Section 414(m) or 414(o)) of
     which The Boeing Company is a part.

2.2  Base Salary means annual salary excluding bonuses and incentive payments,
     fringe benefits, and other perquisites.

2.3  Committee means the Employee Benefit Plans Committee (or its successor)
     appointed by the Board of Directors of The Boeing Company.

2.4  Company means The Boeing Company, and any Affiliate or Subsidiary, which
     has adopted the Plan by action of its Board of Directors if such adoption
     has been approved by the Compensation Committee or by such corporate
     officers as the Compensation Committee may designate.

2.5  Compensation Committee means the Compensation Committee appointed by the
     Board of Directors of The Boeing Company.

2.6  Employee means a person who is employed by the Company including a person
     on an approved leave of absence.

2.7  Equivalent Employment means an employment offer made prior to a Layoff
     Event:

     a) at an annual base salary equal to no less than 90% of the Employee's
        Base Salary at the time of the offer;
     b) if the Employee is eligible for incentive compensation, with a target
        under the applicable incentive compensation plan which is no less than
        90% of the Employee's target at the time of the offer; and
     c) for a job which is located within 70 miles of the normal location of
        the Employee's employment at the time of the offer.

2.8  Involuntary Layoff  means that an Employee's position has been eliminated
     by the Company.

                                      3
<page>  4
2.9  Layoff Benefit is defined in Article 4.

2.10 Layoff Event is defined in Section 3.3.

2.11 Plan means The Boeing Company Executive Layoff Benefits Plan.

2.12 Plan Year means the calendar year.

2.13 Service shall be determined in the same manner as the service time
     calculation under the Company Service Awards Program procedure.

                                  ARTICLE 3
                        ELIGIBILITY AND LAYOFF EVENT

3.1  Eligibility.  In order to be eligible for a Layoff Benefit, an Employee
     must meet the following requirements as of the date of the Layoff Event:

     a) The Employee must be a member of a participating group of Employees in
        accordance with Section 3.2;
     b) The Employee must have at least one year of Service; and
     c) A Layoff Event must occur with respect to the Employee.

3.2  Participating Groups.   Employees of The Boeing Company who are Executive
     Payroll Employees shall participate in the Plan.  The Compensation
     Committee may, by written resolution, provide for participation of other
     Employees as of an effective date specified in the resolution.

3.3  Layoff Events.   A Layoff Event is an Involuntary Layoff from employment
     with the Company, but does not include a layoff if:

     a) The Employee becomes employed by the Company or any Affiliate or
        Subsidiary of the Company within 90 days of the layoff or refuses an
        offer of employment by the Company or any Affiliate or Subsidiary of
        the Company as an Executive Payroll Employee;
     b) The layoff occurs (i) because of a merger, sale, spin-off,
        reorganization, or similar transfer of assets or stock, or because of a
        change in the operator of a facility or a party to a contract, or
        because of an outsourcing of work, and (ii) the Employee either
        continues in Equivalent Employment (in the case of a stock sale or
        similar transaction), or the Employee is offered Equivalent Employment
        with the new employer, operator or contractor (or an affiliated
        business enterprise);
     c) The layoff occurs because of an act of God, natural disaster or
        national emergency;
     d) The layoff occurs because of a strike, picketing
        of the Company's premises, work stoppage or any similar action that
        would interrupt or interfere with any operation of the Company; or
     e) The termination of employment of the Employee is for any reason other
        than Involuntary Layoff, such as voluntary or temporary layoff,
        completion of a temporary assignment, resignation, dismissal,
        retirement, death or leave of absence.

                                  ARTICLE 4
                               LAYOFF BENEFIT

4.1  Layoff Benefit.  The Layoff Benefit for an Employee who incurs a Layoff
     Event on or after April 1, 2001 is equal to:
     a) One  year of Base Salary at the time of layoff, plus
                                      4
<page>  5
4.1  Layoff Benefit.  (continued)
     b) The Employee's annual target incentive under the Incentive
        Compensation Plan for Officers and Employees of The Boeing Company and
        Subsidiaries, multiplied by the Company's actual performance score for
        the year during which the Layoff Event occurs, less

     c) If applicable, the total of all payments made, or to be made,
        pursuant to any individual employment, separation or severance
        agreement.

4.2  Timing of Payment.  An Employee will receive the portion of the Layoff
     Benefit described in Section 4.1(a) in a lump sum within a reasonable
     period of time following the Layoff Event, and the portion of the Layoff
     Benefit described in Section 4.1(b) in a lump sum in the year following
     the year of the Layoff Event, and in the month after the month in which
     the Compensation Committee of the Board of Directors of the Company has
     approved the performance scores for the Company and operating units.  All
     such payments shall be net of any and all applicable withholding taxes,
     and interest shall not accrue on any portion of the Layoff Benefit,
     regardless of the time of payment.

4.3  Limit on Payment.  No Employee shall be paid more than one Layoff Benefit
     under this Plan.

4.4  Recovery of Payment.  If a Layoff Benefit is paid to an Employee and the
     Committee determines that all or part of such payment was not owed under
     the terms of the Plan, the Company reserves the right to recover such
     payment, including deducting such amounts from any sums due the Employee.

4.5  Recovery of Debt.  If an Employee owes the Company an acknowledged debt,
     including, but not limited to, loans, relocation fees, and travel
     advances, such debt may be deducted from the Layoff Benefit, subject to
     applicable state laws.

4.6  Waiver of Claims.  As a condition to receiving the Layoff Benefit described
     in Section 4.2, the Employee must execute a release of all claims by
     submitting to the Company a Waiver and Release form in a form provided by
     the Company.

4.7  Death Benefit.  No Layoff Benefits are due under the Plan with respect to
     an Employee to the extent not received by the Employee prior to his death.

                                  ARTICLE 5
                               ADMINISTRATION

5.1  Plan Administration.  The Committee will serve as the Plan administrator
     and named fiduciary pursuant to ERISA.  The Committee will have complete
     control of the administration of the Plan, subject to the provisions
     hereof, with all powers necessary to enable it to carry out its duties
     properly in that respect.  Not in limitation, but in amplification of the
     foregoing, it will have the power to interpret the Plan, to apply its
     discretion, and to determine all questions that may arise hereunder,
     including all questions relating to the eligibility of Employees to
     participate in the Plan and the amount of benefit to which any Employee
     may become entitled.  Its decisions upon all matters within the scope of
     its authority will be final and binding.


                                      5
<page>  6
5.2  Rules and Procedures.  The Committee will establish rules and procedures to
     be followed by Employees in filing applications for benefits and in other
     matters required to administer the Plan.

5.3  Committee Liability.  The members of the Committee shall use ordinary care
     and diligence in the performance of their duties, but no member shall be
     personally liable by virtue of any contract, agreement, or other
     instrument made or executed by a member of the Committee, nor for any
     mistake or judgment made by such member or by any other member.  No
     member of the Committee will be liable for the neglect, omission or
     wrongdoing of any other member or of the agents or counsel of the
     Committee.  The Company shall indemnify each member of the Committee
     against, and hold each member harmless from any and all expenses and
     liabilities arising out of, any act or omission to act as a member of the
     Committee, to the fullest extent permitted under the by-laws of the
     Company.

5.4  Claim Procedure.  The Committee shall adopt procedures for the
     presentation of claims for benefits and for the review of the denial of
     such claims by the Committee.  The decision of the Committee upon such
     review shall be final, subject to appeal rights provided by law.



                                  ARTICLE 6
                             GENERAL PROVISIONS

6.1  Plan Amendment and Termination.  The Company, acting through the
     Compensation Committee, may amend or terminate the Plan in whole or in
     part at any time.  Such amendments may include any remedial retroactive
     changes to comply with the requirements of any law or regulation issued
     by any government agency to which the Company is subject.

6.2  Funding.  The Plan shall be unfunded, and Layoff Benefits shall be paid
     from the general assets of the Company.

6.3  Benefit Plan Application.  Layoff Benefits and periods for which an
     Employee receives a Layoff Benefit shall not be considered as
     compensation or service under any employee benefit plan or program and
     shall not be counted toward Service under this Plan.  Layoff Benefits may
     not be deferred into the Voluntary Investment Plan or any other cash or
     deferred arrangement.

6.4  Provision Against Anticipation.  No benefit under the Plan shall be
     subject in any manner to anticipation, alienation, sale, transfer,
     assignment, pledge, encumbrance, charge, or other legal process, and any
     attempt to do so shall be void.

6.5  Employment Status.  Nothing contained in the Plan will be deemed to give
     any Employee the right to be retained in, or recalled to, the employ of
     the Company or to interfere with the rights of the Company to discharge
     any Employee at any time.

6.6  Facility of Payment.  If any Employee is physically or mentally incapable
     of giving a valid receipt for any payment due and no legal representative
     has been appointed for such Employee, the Committee may make such payment
     to any person or institution maintaining such Employee and the release of
     such person or institution will be a valid and complete discharge for
                                      6
<page>  7
6.6  Facility of Payment.  (continued)
     such payment.  Any final payment or distribution to any Employee or the
     legal representative of the Employee in accordance with the provisions
     herein will be in full satisfaction of all claims against the Plan, the
     Committee, and the Company arising under or by virtue of the Plan.

6.7  Construction.   The validity of the Plan or any of its provisions will be
     determined under and will be construed according to federal law and, to
     the extent permissible, according to the laws of the state of Washington.
     If any provision of the Plan is held illegal or invalid for any reason,
     such determination will not affect the remaining provisions of the Plan
     and the Plan will be construed and enforced as if said illegal or invalid
     provision had never been included.













































                                      7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15
<SEQUENCE>6
<FILENAME>e-ex15dt.txt
<DESCRIPTION>EX 15 DELOITTE TOUCHE LETTER
<TEXT>
                                EXHIBIT (15)
                Letter from Independent Accountants Regarding
                   Unaudited Interim Financial Information

                     The Boeing Company and Subsidiaries




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 (the "Company") for the
three- and six-month periods ended June 30, 2001 and 2000, as indicated in our
report dated July 25, 2001; because we did not perform an audit, we expressed no
opinion on the 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 June 30, 2001, is
incorporated by reference in Registration Statement Nos. 2-48576, 33-25332, 33-
31434, 33-43854, 33-58798, 33-52773, 333-03191, 333-16363, 333-26867, 333-32461,
333-32491, 333-32499, 333-32567, 333-35324, 333-41920, 333-47450, and 333-54234
of The Boeing Company 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 any registration
statement 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.






August 8, 2001
Seattle, Washington





















</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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