Boeing 2008 Annual Report Download - page 58

On January 29, 2009 Standard & Poor’s confirmed Boeing’s A+ credit rating but changed its outlook
from stable to negative, citing the challenging commercial aviation environment.
Capital Resources We have substantial borrowing capacity. We and BCC have commercial paper
programs that continue to serve as significant potential sources of short-term liquidity. Throughout
2008 and at December 31, 2008, neither we nor BCC had any commercial paper borrowings
outstanding. Currently, we have $3,000 million ($1,500 million exclusively available for BCC) of unused
borrowing on revolving credit line agreements, of which $2,000 million is a 5-year credit facility expiring
in November 2012 and $1,000 million is a 364-day revolving credit facility expiring in November 2009.
Both the 5-year and 364-day credit facilities have a one-year term out option which allows us to extend
the maturity of any borrowings one year beyond the aforementioned expiration dates. In 2008, we
renewed the $1,000 million 364-day revolving credit facility, of which $500 million is allocated to BCC.
We anticipate that these credit lines will primarily serve as backup liquidity to support possible
commercial paper borrowings in 2009. BCC has a $5,000 million shelf registration statement that was
declared effective on November 12, 2008 under which it may offer debt securities.
We believe our ability to access external capital resources should be sufficient to satisfy existing short-
term and long-term commitments and plans, and also to provide adequate financial flexibility to take
advantage of potential strategic business opportunities should they arise within the next year. At this
point in time, our access to liquidity sources has not been materially impacted by the current credit
environment, and we do not expect that it will be materially impacted in the near future. There can be
no assurance, however, that the cost or availability of future borrowings, if any, under our commercial
paper program, in the debt markets or our credit facilities will not be materially impacted by the ongoing
capital market disruptions.
In accordance with Statement of Financial Accounting Standards No. 158, Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106 and 132(R) (SFAS 158), we recognize the funded status of our defined benefit pension
and other postretirement plans, with a corresponding after-tax adjustment to Accumulated other
comprehensive loss. The 2008 annual remeasurement of our pension and other postretirement plans
resulted in a net $8,565 million decrease in Shareholders’ equity, primarily due to declines in our
pension plan assets, as a result of declines in financial markets. As a result of the pension
remeasurement, we have negative Shareholders’ equity at December 31, 2008. We do not expect
negative Shareholders’ equity to affect our ability to pay dividends or comply with debt covenants. The
2007 annual remeasurement of our pension and other postretirement plans resulted in a net $3,441
million increase in Shareholders’ equity.
At December 31, 2008 our pension plans were $8,420 million underfunded as measured under GAAP
and, in the aggregate, approximately $3,000 million underfunded as measured under the Employee
Retirement Income Security Act (ERISA). The difference in the funded status between the two
standards is mostly attributable to the fact that ERISA uses average asset values and discount rates,
whereas GAAP requires us to measure our plan assets and discount our benefit obligations as of the
end of the year. Required contributions under ERISA, as well as rules governing funding of our non-
U.S. pension plans, are not expected to exceed $50 million in 2009. We anticipate contributing
approximately $500 million to our pension plans in 2009. Absent a recovery of asset values or higher
interest rates, we will be required to make higher contributions in future years.
As of December 31, 2008, we were in compliance with the covenants for our debt and credit facilities.
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