Business Context and Reporting Period
Company: The Boeing Company
Filing Type: Form 8-K (Current Report)
Date of Report: November 12, 2010
Event: Entry into a Material Definitive Agreement regarding a new revolving credit facility.
Key Financial Metrics
This filing details a specific financing arrangement rather than reporting period-end financial performance metrics such as revenue, profit, or cash flow.
- New Credit Facility: $2.376 billion, 364-day revolving credit agreement.
- Previous Facility Replaced: $1.525 billion, 364-day credit agreement (entered November 13, 2009).
- Commitment Fee: 0.10% per annum on unused commitments.
- Interest Rate Structure:
- Base Rate Loans: Base rate + Applicable Margin.
- Eurodollar Loans: Applicable LIBOR rate + Market Rate Spread.
- Debt Covenants: Consolidated debt must not exceed 60% of total capital.
Material Changes Versus Prior Period
The primary material change is the increase in the size of the company's short-term revolving credit facility.
- Capacity Increase: The new agreement increases available credit by $851 million compared to the prior facility ($2.376 billion vs. $1.525 billion).
- Terms: The new agreement maintains a 364-day term but updates the interest rate mechanics to include a "market rate spread" tied to Boeing's credit default swap mid-rate spread (floored at 0.50% and capped at 1.50%).
Guidance, Outlook, Risks, and Contingencies
The filing does not provide forward-looking financial guidance or management commentary on operational outlook. It focuses on the terms and risks associated with the new debt instrument.
- Risks and Covenants: The agreement restricts Boeing's ability to incur liens, merge, or consolidate. It limits consolidated debt to 60% of total capital.
- Events of Default: Include failure to pay principal/interest within five days, material misrepresentation, failure to perform covenants (30-day cure period), cross-defaults, certain ERISA liabilities, and bankruptcy/insolvency.
- Consequences of Default: Lenders may accelerate repayment of all outstanding amounts and cease further advances.
- Related Party Transactions: Some lenders and their affiliates provide other financial services (cash management, investment banking, leasing) and have entered into foreign exchange and derivative arrangements with Boeing.
Important Facts for Investor Verification
- Verify the impact of the increased credit capacity ($2.376 billion) on Boeing's overall liquidity position and leverage ratios.
- Monitor Boeing's credit default swap spread to understand the variable interest rate costs under the new "market rate spread" mechanism.
- Confirm compliance with the 60% consolidated debt-to-total capital covenant.
- Review the full text of the Credit Agreement (Exhibit 10.1) for detailed definitions of "total capital" and "consolidated debt."