Debt (Tables)

6 Months Ended

Jul. 01, 2011

Debt (Tables) [Abstract]

Components of debt and reconciliation to carrying amount

	July 1,			December 31,
	2011			2010
	(in millions)
L-3 Communications:
Borrowings under Revolving Credit Facility(1)	$	—		$	—
5.20% Senior Notes due 2019		1,000			1,000
4.75% Senior Notes due 2020		800			800
4.95% Senior Notes due 2021		650			—
5 7/8% Senior Subordinated Notes due 2015		—			650
6 3/8% Senior Subordinated Notes due 2015		1,000			1,000
Subtotal		3,450			3,450
L-3 Holdings:
3% Convertible Contingent Debt Securities due 2035(2)		689			700
Principal amount of long-term debt		4,139			4,150
Less: Unamortized discounts		(13	)		(13	)
Carrying amount of long-term debt		4,126			4,137
Less: Current portion of long-term debt(3)		—			(11	)
Carrying amount of long-term debt, excluding current portion	$	4,126		$	4,126

(1)

The Company’s Revolving Credit Facility, which matures on October 23, 2012, provides for total aggregate borrowings of up to $1 billion. At July 1, 2011, available borrowings under the Revolving Credit Facility were $989 million after reductions for outstanding letters of credit of $11 million.

(2)

Under select conditions, including if L-3 Holdings common stock price is more than 120% (currently $117.35) of the then current conversion price ($97.79 as of March 1, 2011) for a specified period, the conversion feature of the CODES will require L-3 Holdings, upon conversion, to pay the holders of the CODES the principal amount in cash, and if the settlement amount exceeds the principal amount, the excess will be settled in cash or stock or a combination thereof, at the Company’s option. At the current conversion price of $97.79, the aggregate consideration to be delivered upon conversion would be determined based on 7.0 million shares of L-3 Holdings’ common stock. See Note 10 to the audited consolidated financial statements for the year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K for additional information regarding the CODES, including conditions for conversion. L-3 Holdings’ closing stock price on August 3, 2011 was $73.19 per share. Through February 1, 2011, the effective interest rate on the CODES was 6.33% and interest expense related to both the contractual coupon interest and amortization of the discount on the liability components. The Company amortized the discount on the liability component of the CODES through February 1, 2011 which was the first date that the holders of the CODES had a contractual right to require L-3 Holdings to repurchase the CODES. Interest expense for the CODES after February 1, 2011 relates only to the contractual coupon interest. Interest expense recognized was $5 million and $11 million for the second quarter periods ended July 1, 2011 and June 25, 2010, respectively and $12 million and $21 million for the first half periods ended July 1, 2011 and June 25, 2010, respectively. The following table provides additional information about the Company’s CODES:

	July 1,		December 31,
	2011		2010
	(in millions)
Carrying amount of the equity component (conversion feature)	$	64	$	64
Unamortized discount of liability component amortized through February 1, 2011	$	—	$	2
Net carrying amount of liability component	$	689	$	698

⁽³⁾ On February 2, 2011, L-3 Holdings repurchased approximately $11 million of the CODES as a result of the exercise by the holders of their contractual right to require L-3 Holdings to repurchase their CODES. At July 1, 2011 and December 31, 2010, the remaining $689 million principal amount of CODES are classified as long-term debt.

Additional information related to Convertible Contingent Debt Securities

	July 1,		December 31,
	2011		2010
	(in millions)
Carrying amount of the equity component (conversion feature)	$	64	$	64
Unamortized discount of liability component amortized through February 1, 2011	$	—	$	2
Net carrying amount of liability component	$	689	$	698