Debt |
Debt The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below. | | | | | | | | | | September 28, 2018 | | December 31, 2017 | | (in millions) | Borrowings under Revolving Credit Facility (1) | $ | — |
| | $ | — |
| 5.20% Senior Notes due 2019 | — |
| | 1,000 |
| 4.75% Senior Notes due 2020 | — |
| | 800 |
| 4.95% Senior Notes due 2021 | 650 |
| | 650 |
| 3.85% Senior Notes due 2023 | 800 |
| | — |
| 3.95% Senior Notes due 2024 | 350 |
| | 350 |
| 3.85% Senior Notes due 2026 | 550 |
| | 550 |
| 4.40% Senior Notes due 2028 | 1,000 |
| | — |
| Principal amount of long-term debt (2) | 3,350 |
|
| 3,350 |
| Unamortized discounts | (7 | ) | | (7 | ) | Deferred debt issue costs | (23 | ) | | (13 | ) | Carrying amount of long-term debt | $ | 3,320 |
| | $ | 3,330 |
|
__________________ | | (1) | During the year-to-date period ended September 28, 2018, L3’s aggregate borrowings and repayments under the Credit Facility were $501 million. At September 28, 2018, L3 had the full availability of its $1 billion Credit Facility. |
| | (2) | With respect to the Company’s outstanding senior notes, including the senior notes issued on June 6, 2018, upon the occurrence of both a “change in control” (as defined in the indentures governing the senior notes) along with a “change of control triggering event” (generally described as the applicable series of senior notes ceasing to be rated investment grade, as defined in the indentures governing the senior notes), each holder of the notes will have the right to require L3 to repurchase all or any part of such holder’s notes at an offer price in cash equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase. |
Issuance of Senior Notes On June 6, 2018, L3 issued two series of senior notes, which are unsecured senior obligations of L3. The terms of each series of senior notes are presented in the table below. | | | | | | | | | | | | | | | | | | | | | Note | | Date of Issuance | | Amount Issued | | Discount(1) | | Net Cash Proceeds(2) | | Effective Interest Rate | | Redemption at Treasury Rate(3)(4) | | | | | (dollars in millions) | | | | | 3.85% Senior Notes due June 15, 2023 (the 2023 Notes) | | June 6, 2018 | | $ | 800 |
| | $ | 2 |
| | $ | 792 |
| | 3.89 | % | | 20 bps | 4.40% Senior Notes due June 15, 2028 (the 2028 Notes) | | June 6, 2018 | | $ | 1,000 |
| | $ | 1 |
| | $ | 990 |
| | 4.41 | % | | 25 bps |
__________________ | | (1) | Bond discounts are recorded as a reduction to the principal amount of the notes and are amortized as interest expense over the term of the notes. |
| | (2) | The net cash proceeds of $1,782 million (after deduction of the discount, underwriting expenses and commissions and other related expenses) plus cash on hand were used to fund the concurrent cash tender offers (the Tender Offers) for any and all of $1 billion aggregate principal amount of 5.20% Senior Notes due October 15, 2019 (the 2019 Notes) and $800 million aggregate principal amount of 4.75% Senior Notes due July 15, 2020 (the 2020 Notes) and any related redemption of notes not tendered in the Tender Offers. |
| | (3) | The 2023 Notes may be redeemed at any time prior to May 15, 2023 (one month prior to maturity), and the 2028 Notes may be redeemed at any time prior to March 15, 2028 (three months prior to maturity), at the option of L3, in whole or in part, at a redemption price equal to the greater of: (i) 100% of the principal amount, or (ii) the present value of the remaining principal and interest payments discounted to the date of redemption, on a semi-annual basis, at the Treasury Rate (as defined in the indentures governing the senior notes), plus the spread indicated in the table above. In addition, if the 2023 Notes and the 2028 Notes are redeemed at any time on or after May 15, 2023 and March 15, 2028, respectively, the redemption price would be equal to 100% of the principal amount. |
| | (4) | Upon the occurrence of a change in control (as defined in the indentures governing the senior notes) along with a “change of control triggering event” (generally described as the applicable series of senior notes ceasing to be rated investment grade, as defined in the indentures governing the senior notes), each holder of the notes will have the right to require L3 to repurchase all or any part of such holder’s notes at an offer price in cash equal to 101% of the aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase. |
Repurchases and Redemptions of Senior Notes The table below summarizes the Tender Offers with respect to the 2019 Notes and the 2020 Notes. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Note | | Settlement Type | | Date Settled | | Aggregate Principal | | Principal Tendered | | Tender Premium | | Cash Tendered(1) | | Interest | | Total Cash Payments | | Debt Retirement Charge(2) | | | | | | | (dollars in millions) | 5.20% Senior Notes due 2019 | | Tender Offer | | June 6, 2018 | | $ | 1,000 |
| | $ | 683 |
| | 103.282 | % | | $ | 705 |
| | $ | 5 |
| | $ | 710 |
| | $ | 24 |
| 4.75% Senior Notes due 2020 | | Tender Offer | | June 6, 2018 | | $ | 800 |
| | $ | 535 |
| | 104.092 | % | | $ | 557 |
| | $ | 10 |
| | $ | 567 |
| | $ | 24 |
|
__________________ | | (1) | Excludes $1 million of tender offer fees. |
| | (2) | The debt retirement charge includes $1 million of tender offer fees and $3 million which represents the non-cash retirement of associated unamortized debt issue costs and discounts. |
On June 6, 2018, the Company initiated the redemption of the 2019 Notes and the 2020 Notes that remained outstanding subsequent to the expiration of the Tender Offers. On July 6, 2018, the Company completed the redemption of the 2019 Notes and the 2020 Notes. The terms of the 2019 Notes and the 2020 Notes redemption are presented in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Note | | Settlement Type | | Date Settled | | Principal Redeemed | | Redemption Premium | | Cash Payments | | Interest | | Total Cash Payments | | Debt Retirement Charge(1) | | | | | | | (dollars in millions) | 5.20% Senior Notes due 2019 | | Redemption | | July 6, 2018 | | $ | 317 |
| | 103.048 | % | | $ | 327 |
| | $ | 4 |
| | $ | 331 |
| | $ | 10 |
| 4.75% Senior Notes due 2020 | | Redemption | | July 6, 2018 | | $ | 265 |
| | 103.818 | % | | $ | 275 |
| | $ | 6 |
| | $ | 281 |
| | $ | 11 |
|
__________________ | | (1) | The debt retirement charge includes $1 million which represents the non-cash retirement of associated unamortized debt issue costs and discounts. |
Guarantees. The borrowings under the Credit Facility are fully and unconditionally guaranteed by L3 and by substantially all of the material 100% owned domestic subsidiaries of L3 on an unsecured senior basis. The payment of principal and premium, if any, and interest on the senior notes is fully and unconditionally guaranteed, jointly and severally, by L3’s material 100% owned domestic subsidiaries that guarantee any of its other indebtedness. The guarantees of the Credit Facility and the senior notes rank pari passu with each other.
|