Filed Pursuant to
Rule 424(b)(3)
File No. 333-37635
PRICING SUPPLEMENT NO. 53 DATED
SEPTEMBER 20, 1999 TO PROSPECTUS
DATED JULY 31, 1998 AND PROSPECTUS
SUPPLEMENT DATED JULY 31, 1998
BOEING CAPITAL CORPORATION
Series X Medium-Term Notes
Due Nine Months or More From Date of Issue
Except as set forth herein, the Series X Medium-Term Notes offered
hereby (the "Notes") have such terms as are described in the accompanying
Prospectus dated July 31, 1998, as amended and supplemented by the Prospectus
Supplement dated July 31, 1998 (the "Prospectus").
Aggregate Principal Amount: $25,000,000
Original Issue Date
(Settlement Date): September 23, 1999
Stated Maturity Date: June 23, 2000
Base Rate: LIBOR
Index Currency: U.S. Dollars
Designated LIBOR Page: LIBOR Telerate Page 3750
Spread: 12 basis points
Initial Interest Rate: Base Rate plus Spread, as determined on September
21, 1999
Index Maturity: Three months
Interest Payment Dates: Commencing December 23, 1999 and thereafter on the
23rd calendar day of each March, June, September
and December up to and including the Maturity Date
Interest Reset Period: Quarterly
Calculation Agent: Bankers Trust Company
Interest Reset Dates: The 23rd calendar day of each March, June,
September and December
Interest Determination
Dates: The second London Business Day preceeding each
Interest Reset Date
Type of Notes Issued: [X] Senior Notes [ ] Fixed Rate Notes
[ ] Subordinated Notes [X] Floating Rate Notes
Optional Redemption: [ ] Yes
[X] No
Form of Notes Issued: [X] Book-Entry Notes
[ ] Certificated Notes
CUSIP Number: 09700WCP6
PURCHASE AS PRINCIPAL
This Pricing Supplement relates to $25,000,000 aggregate principal
amount of Notes that are being purchased, as principal, by Merrill Lynch,
Pierce, Fenner and Smith, Incorporated ("Merrill Lynch"), for resale to
investors at varying prices related to prevailing market conditions at the time
or times of resale as determined by Merrill Lynch. Net proceeds payable by
Merrill Lynch to Boeing Capital Corporation (the "Company") will be 99.96% of
the aggregate principal amount of the Notes, or $24,990,000 before deduction of
expenses payable by the Company. In connection with the sale of the Notes,
Merrill Lynch may be deemed to have received compensation from the Company in
the form of underwriting discounts in the amount of .040% or $10,000.
RECENT DEVELOPMENTS
On June 22, 1999, the Company's Pricing Committee authorized the
issuance and sale from time to time of up to an additional $300,000,000
aggregate initial offering price of the Company's Series X Medium-Term Notes Due
Nine Months or More From Date of Issue, increasing the overall size of the
Company's Series X Medium-Term Note program under the current public shelf
registration (SEC No. 333-37635) from $900,000,000 to $1,200,000,000.
ADDITIONAL RISK FACTORS
Below are two risk factors, entitled "Year 2000 Date Conversion Risks"
and "Liquidity Risks" respectively. These two risk factors supplement rather
than replace the risk factors set forth in the risk factors section beginning on
page S-2 of the Prospectus Supplement delivered with this pricing supplement.
YEAR 2000 DATE CONVERSION RISKS
The Year 2000 issue exists because many computer systems and
applications use two-digit date fields to designate a year. When the century
date change occurs, date-sensitive systems may recognize the year 2000 as 1900,
or not at all. This inability to recognize and properly treat the Year 2000 may
cause systems to process financial and operational information incorrectly. In
July of 1999 we decided to replace our independent advisory firm for Year 2000
matters with the independent advisory firm which installed our new lease
administration system (discussed below). The new firm has commenced work for us
and we are in the process of entering into a definitive agreement with them. As
further discussed below, the new advisory firm will assist us in converting our
systems which are not Year 2000 compliant to systems which are Year 2000
compliant and to test our systems for Year 2000 compliance. We do not expect
this change of firms to have a material adverse effect on the cost or timing of
the Company's Year 2000 compliance efforts.
We have assessed and continue to re-assess the impact of the Year 2000
issue on our information technology ("IT") systems. One of our principal IT
systems is our lease administration system, by which we keep track of our
leases, loans and certain other financial information. In 1996, we initiated a
conversion from our existing lease administration system to programs that we
have been advised are Year 2000 compliant. While the conversion of this lease
administration system has been substantially completed, inadequacies with
respect to certain types of accounts remain which we are continuing to address.
For this reason we are continuing to run the old system parallel to the new
system (which we may continue until the end of 1999). We previously successfully
tested our new lease administration system for Year 2000 compliance and our new
advisory firm plans to test the new lease administration system during the third
quarter of 1999 to confirm that it remains compliant notwithstanding intervening
modifications. In the event that such testing proves the system not to be
compliant and the system cannot be made compliant prior to the end of 1999, our
operations could be materially adversely affected.
Our second principal IT system is our general ledger accounting system.
We use our general ledger accounting system to keep track of our financial
results. We have selected a general ledger accounting system which is certified
by its manufacturer to be Year 2000 compliant. We expect to finish converting
our general ledger accounting system to a Year 2000 compliant system in the
early fourth quarter of 1999. While we expect the compliant accounting system to
be fully operational by the middle of the fourth quarter of 1999, if it is not,
our contingency plan is to remediate our existing general ledger accounting
system at a cost of approximately $75,000. If our contingency plan for this
system fails, our operations could be materially and adversely affected.
With respect to our IT systems other than our lease administration
system and general ledger accounting system, we intend to develop contingency
plans relating to possible Year 2000 problems to the extent we deem necessary
and appropriate, taking into account the advice of the advisory firm which has
begun examining our IT systems and which we expect will complete its analysis
approximately at the end of the third quarter of 1999.
Although we do not consider it likely that Year 2000 problems inherent
within our IT systems will result in significant operational problems, the
possibility of such problems cannot be discounted at this time.
With respect to our non-IT systems such as our telephone and elevator
systems, we have assessed and continue to re-assess the impact of Year 2000
issues on these systems. We believe that our non-IT systems are Year 2000
compliant. However, no assurance can be given that our operations will not be
materially adversely affected by problems with the non-IT systems related to the
Year 2000.
The total cost of the Year 2000 conversion efforts to date has been
funded through operating cash flows and has not had a material adverse effect on
our earnings, cash flow or financial position. This amount does not include the
cost of converting to a new lease administrative system, a project initiated in
1996 to accomplish our goal of increasing productivity irrespective of the Year
2000 issue. Based on information available to date, the estimated cost of the
remaining Year 2000 conversion efforts, including any remediation of our IT and
non-IT systems as well as testing of all our systems, is $1.5 million.
We can give no assurance that Year 2000 problems of third parties (such
as vendors, customers and other financial institutions with which we do
business) will not materially and adversely impact our operations or operating
results. We are in the process of assessing the Year 2000 readiness of those
third parties whose lack of Year 2000 readiness could have a material adverse
impact on our operations. In early 1999, we identified and sent inquiries to
certain significant customers and third parties regarding their Year 2000
readiness. We have received a response from the majority of such third parties
and their responses to date do not indicate a likelihood that their lack of
readiness will have a material adverse effect on our operations. Our assessment
of the Year 2000 readiness of certain third parties will continue throughout
1999.
LIQUIDITY RISKS
We have significant liquidity requirements. We attempt to fund our
business such that scheduled receipts from our portfolio will cover our expenses
and debt payments as they become due. We believe that, absent a severe or
prolonged economic downturn which results in defaults materially in excess of
those provided for, receipts from the portfolio will cover the payment of
expenses and debt payments as they become due. If cash provided by operations,
issuances of commercial paper, borrowings under bank credit lines and term
borrowings do not provide the necessary liquidity, we would be required to
restrict our new business volume, unless we obtained access to other sources of
capital at rates that would allow for a reasonable return on new business.
Our ability to make scheduled payments of the principal of, or to pay
interest on, or to refinance our indebtedness, including the Notes, depends on
the future performance of our investment portfolio. The performance of such
portfolio, in turn, is subject to economic, financial, competitive and other
factors that are beyond our control. While we believe that future cash flows
from the portfolio, together with available borrowings under our revolving
credit line, will be adequate to meet our anticipated requirements for working
capital, interest payments and scheduled principal payments, we cannot assure
you that we will be able to generate sufficient cash flows in the future to
service our debt obligations. If we are unable to do so, we may be required to
refinance all or a portion of our existing debt, including the Notes, sell
assets or obtain additional financing. We cannot assure you that any such
refinancing will be possible or that any such sale of assets or additional
financing could be achieved.
