Exchange Ratio:1.3 shares of Boeing for 1 share of McDonnell Douglas

Cash for Fractional Shares: for registered shareholders, $57.25 per whole Boeing share

QUESTIONS?

If the information below does not answer your questions, please contact the exchange agent, at 1-888-777-0923.

On August 1, 1997, McDonnell Douglas Corporation became a part of The Boeing Company and McDonnell Douglas stock ceased to be publicly traded.

Each holder of McDonnell Douglas Corporation common stock at the close of business on July 31, 1997 is entitled to receive in exchange for such share 1.3 shares of the common stock of The Boeing Company. However, certificates will not be issued for fractional shares. Cash will be paid in lieu of any fraction of a share that results from the exchange. The process for making the exchange depends on how the McDonnell Douglas shares were owned and registered.

Types of Stock Ownership

There are two alternative ways to own stock (other than in mutual funds), which are (1) as a registered shareholder, and (2) as a beneficial owner of stock that is held in street name. A registered shareholder usually holds his or her own stock certificates, but in some cases may have the company that issued the stock or that company’s transfer agent keep the shares in book entry form, without certificates. Either way, the registered shareholder’s name and address appear on the company’s shareholder records. The registered shareholder receives dividend checks or automatic deposits of dividends from the company or the transfer agent. The company sends proxy statements, annual reports and other communications directly to the shareholder at the address shown in its records.

A beneficial owner allows his or her stock broker or bank or other nominee to hold the stock. The beneficial owner’s name does not appear anywhere in the company’s shareholder records. Instead, the street name of the broker, bank or other nominee who holds the stock appears on the records. Dividends are delivered to the broker or other nominee, who distributes them to the beneficial owner. All communications from the company, such as proxy statements and annual reports, must be sent to the broker or an agent, who must send them on to the beneficial owner. The company does not know the identities of its beneficial owners.

The Exchange

Those whose shares are held in street name or in employee savings plans do not need to take any action to receive the shares. Their brokers, banks or trustees will take care of the exchange for them.

Registered shareholders (those who hold their own McDonnell Douglas stock certificates) will receive packages instructing them how to exchange their certificates. All of the registered shareholders’ fractional shares were combined and sold on the New York Stock Exchange, as required by the agreement between Boeing and McDonnell Douglas. They were sold on August 20, 1997 for $57.25 per share, so registered shareholders will receive checks for their fractional shares based on a price of $57.25 per whole share of Boeing stock.

Letter of Transmittal Package

In order to receive the Boeing stock and the check, a former McDonnell Douglas shareholder must send in the McDonnell Douglas stock certificate or certificates to Boston EquiServe, transfer agent for Boeing and exchange agent for this transaction.

On Saturday, August 23, 1997, the exchange agent mailed a package to each person who had McDonnell Douglas shares registered at the close of business on July 31, 1997 in an account with First Chicago Trust Company of New York, the McDonnell Douglas transfer agent. The package contained the following:

• A Letter of Transmittal, which is the form that must be completed and signed and returned to the exchange agent with the stock certificates.
• A booklet containing instructions and tax information.

• A return envelope for the Letter of Transmittal and stock certificates.
• The Boeing Company Dividend Reinvestment and Stock Purchase Plan brochure.

The Letter of Transmittal includes a section for enrolling in the Boeing Dividend Reinvestment and Stock Purchase Plan. The brochure for the Plan can also be found on the Boston EquiServe web site .

Dividends

Holders of McDonnell Douglas stock at the close of business on July 31, 1997 will be entitled to the Boeing dividend of $.14 per share that will be paid on September 5, 1997. However, registered shareholders will not receive that dividend or subsequent dividends until they exchange their certificates. This dividend income is taxable and will be reported to the IRS. Until the McDonnell Douglas stock certificates have been surrendered to the exchange agent for the Boeing stock certificate, the dividends will accrue in the Boston EquiServe account of each shareholder. When the old certificates are exchanged, the September 5, 1997 dividend and any other dividends that have become payable will be paid to the shareholder, without interest.

Important Tax Information

According to opinions received from attorneys for Boeing and McDonnell Douglas, the receipt of Boeing stock in exchange for McDonnell Douglas stock will be tax-free for U.S. Federal income tax purposes, except that shareholders will recognize gain or loss with respect to cash received in lieu of fractional shares of Boeing stock. The taxable gain or loss required to be recognized with respect to the cash received in lieu of a fractional share will be equal to the difference between the cash received and the shareholder’s tax basis (determined as described below) in such fractional share (assuming the stock is held as a capital asset).

The information in this document represents our understanding of existing Federal income tax law and regulations and does not constitute tax advice. It does not purport to be complete or to describe tax consequences that may apply to particular categories of shareholders. Each shareholder should consult a tax advisor as to the particular consequences of the transaction under U.S. Federal, state and local tax laws and foreign tax laws, including, in particular, tax basis allocation rules and the effect of possible changes in tax laws that may affect the description set forth here.

Tax Basis Allocation and Holding Period

To determine the tax basis in Boeing stock received in the exchange, a former shareholder of McDonnell Douglas must allocate the tax basis in the McDonnell Douglas stock at the close of business on July 31, 1997. That tax basis is generally equal to the cost of such shares, including commissions. If the McDonnell Douglas stock was held as a capital asset, the holding period in the Boeing shares would be the same as the holding period in the McDonnell Douglas shares for which the Boeing shares are exchanged. If a shareholder acquired McDonnell Douglas shares at different times and at different costs, it will be necessary to make separate basis calculations for each group of shares.

Example

Assume that a shareholder owned 101 shares of McDonnell Douglas stock with a tax basis of $30 for each share, for a total tax basis of $3,030.

If this was a registered shareholder, he or she would receive 131 shares of Boeing stock plus a check for $17.18 (0.3 x $57.25) in lieu of a 0.3 fractional share of Boeing stock.