The achievement of several
significant industry milestones in 2001 enabled Boeing Space and
Communications, the world’s largest space-related entity, to successfully
execute on its strategic vision and business plans, further expanding its
growth in global connectivity, information and communications and integrated
battlespace.

Two successful intercepts for the Ground-Based Midcourse Defense (GMD)
program; the 100th launch of a Delta II rocket; the first mechanical
handshake in space; the launch of its 200th commercial satellite; and the
certification of the RS-68 engine, which will power the new Delta IV rocket,
are among the unit’s achievements during the last 12 months. The
$10-billion, 40,000-person operating division also boasted a near-perfect
record of 39 out of 40 missions successfully completed in 2001.

"We laid out a plan for ourselves and were able to execute on that plan,"
Jim Albaugh, president and CEO of Boeing Space and Communications, said this
week from his office in Seal Beach. "We said that we were going to execute
on our programs, deliver on our promises and improve profitability. and we
did."

Boeing Space and Communications’ businesses encompass five market areas,
aligned to customer requirements: Launch and Orbital Systems; Human Space
Flight & Exploration; Information and Communications; Missile Defense; and
Integrated Battlespace. A brief list of highlights in each market follows.

Launch and Orbital Systems

Launch and Orbital Systems completed eight successful Delta II launches and
two successful Sea Launch missions in 2001. The Delta IV program achieved
U.S. Air Force certification of its RS-68 engine and completed hot-fire
testing of the vehicle’s first stage and announced its first customer and
launch. The RS-68 engine reflects the work of the first new generation of
rocket engineers since the design of the space shuttle’s main engines.

In 2001, Launch and Orbital Systems also achieved a 100 percent launch
success rate on both Delta and Sea Launch missions, including the 100th
Delta II launch.

Human Space Flight and Exploration

Human Space Flight and Exploration had a year filled with historic moments
and significant achievements, including six space shuttle missions to the
International Space Station (ISS).

Two enormous robotic arms reached out towards one another and touched in one
of the most historic "handshakes" of recent times after the U.S. Space
Shuttle Endeavour delivered the Canadian arm, "Canadarm2," to the ISS during
STS-100. The space shuttle’s mechanical arm and the Canadarm2 exchanged
payload during the mission.

In 2001, a new "gateway to space" was added when the Space Shuttle Atlantis
delivered a new Airlock to the ISS during the STS-104 mission. The Airlock
allows astronauts to enter and exit the 470-ton orbiting research facility,
regardless of whether they wear an American or Russian space suit, critical
because design differences between American and Russian spacesuits had
impeded some access at the ISS.

The Space Shuttle Main Engine (SSME) also achieved a major milestone in 2001
with first flight of the Block II engine, a modification that is the
culmination of twenty years of successful performance and evolution for the
engine. With its new high-pressure fuel pump, the Block II engine provides a
level of reliability and safety that surpasses the already remarkable record
of safe and reliable flight for the SSME.

Information and Communications

Boeing continued to break new ground in the field of global connectivity in
2001. Six Boeing satellites were launched, reaching an industry milestone of
200 satellites built and launched. In addition, Boeing had new orders for up
to 18 satellites and payloads, a string of six successful satellite launches
and the demonstration of a new satellite service. Boeing finished the year
with a firm backlog of 35 satellites and payloads, along with 12 options.
One of the major contracts signed by Boeing included a high-capacity
military satellite communications system, Wideband Gapfiller Satellite
System. The program has a $1.3-billion potential value, if all options are
exercised.

Looking toward next year, a Boeing-led team submitted a proposal for a new
Joint Tactical Radio System (JTRS) program being procured by the U.S. Army.
JTRS has the potential to unify communications across the battlefield,
providing soldiers with an unprecedented amount of situational awareness by
connecting military communications on the ground, in the air and in space.

Missile Defense

Boeing continued its role as the prime contractor and lead systems
integrator on the GMD program for the Ballistic Missile Defense
Organization, as well as its significant role in other missile defense
programs in 2001. Among the year’s highlights were two successful GMD
intercepts. Boeing’s Patriot Advanced Capability (PAC-3) team also enjoyed
unprecedented flight test success in 2001 with Boeing hardware performing
successfully on three intercept tests. They moved from test into operations
by equipping the first U.S. Army unit with the PAC-3 missile system.
Boeing’s Strategic System unit also was awarded a five-year contract for
launch support services at Vandenburg Air Force Base in California.

Integrated Battlespace

Much of Boeing Space and Communication’s work this year focused on a new
growth area called Integrated Battlespace, or using ground-, air-, and
space-based systems to provide better situational awareness to the
warfighter.

Boeing delivered four 767 Airborne Warning and Control System (AWACS)
aircraft to Japan, upgraded three U.S. Air Force AWACS, and began upgrading
the Royal Saudi Air Force fleet of five AWACS.

The next-generation command and control system, the 737 Airborne Early
Warning and Control, a program for Australia known as Wedgetail, completed
two major milestones in 2001.

Boeing completed the preliminary design phase of the Future Imagery
Architecture program and successfully conducted the GPS II Preliminary
Design Review with no deficiencies. Boeing Autometric received its initial
ISO 9001 certification. Autometric also deployed resources overseas in
support of Operation Enduring Freedom.

Boeing Space and Communications, headquartered in Seal Beach, Calif., is the
world’s largest space and communications company. A unit of The Boeing
Company, S&C provides integrated solutions in launch services, human space
flight and exploration, missile defense, and information and communications.
It is NASA’s largest contractor; a leading provider of space-based
communications; the primary systems integrator for U.S. missile defense; and
a leading provider of intelligence, surveillance and reconnaissance. The
global enterprise has customers worldwide and manufacturing operations
throughout the United States and Australia.

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Contact: Anne Eisele

(562) 797-1022

anne.f.eisele@boeing.com