BOEING CO current report, Q4 FY2009

Business Context and Reporting Period

Company: The Boeing Company
Filing Type: Form 8-K (Current Report)
Date: November 13, 2009
Event: Entry into a Material Definitive Agreement regarding a new revolving credit facility.

Key Financial Metrics

Debt and Liquidity:

  • New Facility Size: $1.525 billion revolving credit agreement.
  • Term: 364 days.
  • Replacement: Replaces a $1.0 billion facility entered into on November 14, 2008.
  • Commitment Fee: 0.10% per annum on unused commitments.
  • Interest Rate Structure:
    • Base Rate Loans: Base rate (highest of Citibank base rate, Fed Funds + 0.50%, or 1-month LIBOR + 1.00%) plus applicable margin.
    • Eurodollar Loans: Applicable LIBOR rate plus market rate spread.
  • Applicable Margin: Greater of (a) market rate spread minus 1.00% or (b) 0% per annum.
  • Market Rate Spread: Based on credit default swap mid-rate spread (1-year), with a floor of 0.75% and a cap of 2.00% depending on long-term senior unsecured debt rating.

Revenue, Profit, and Cash Flow: The filing text does not provide a clear value for revenue, profit, cash flow, or operating margins.

Material Changes Versus Prior Period

The primary material change is the increase in the revolving credit facility capacity from $1.0 billion to $1.525 billion. The new agreement maintains covenants substantially similar to the previous facility, including restrictions on liens, mergers, and consolidation.

Guidance, Outlook, Risks, and Covenants

Covenants:

  • Debt-to-Capital Ratio: Consolidated debt must not exceed 60% of total capital until the agreement terminates and all amounts are paid in full.
  • Restrictions: Limits on incurring liens or merging/consolidating with other entities.

Events of Default:

  • Failure to pay principal or interest.
  • Materially incorrect representations or warranties.
  • Failure to perform terms/covenants (uncured within 30 days of notice).
  • Cross-default with other debt.
  • Defaults under ERISA obligations.
  • Bankruptcy.

Related Party Transactions: Some lenders and their affiliates provide financial services (cash management, investment banking, leasing) and have entered into foreign exchange and derivative arrangements with Boeing.

Guidance and Outlook: The filing text does not provide a clear value for future financial guidance or management outlook beyond the terms of the credit agreement.

Investor Verification Checklist

  • Verify the current credit rating of Boeing's long-term senior unsecured debt to determine the applicable interest rate spread (floor 0.75% vs. cap 2.00%).
  • Confirm the company's current consolidated debt-to-total capital ratio to ensure compliance with the 60% covenant.
  • Review the specific terms of the foreign exchange and derivative arrangements with lenders mentioned in the filing.
  • Monitor the utilization of the $1.525 billion facility to assess liquidity needs.