Debt (Tables)
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12 Months Ended |
Dec. 31, 2016 |
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| Debt [Abstract] |
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| Components of Debt and Reconciliation to Carrying Amount of Current and Long-Term Debt |
The components of debt and a reconciliation to the carrying amount of current and long-term debt are presented in the table below. | December 31, | | 2016 | 2015 | | (in millions) | Borrowings under Revolving Credit Facility(1) | $ | — | | $ | — | | 3.95% Senior Notes due 2016 | | — | | | 500 | | 1.50% Senior Notes due 2017 | | — | | | 350 | | 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 | | | 650 | | 3.95% Senior Notes due 2024 | | 350 | | | 350 | | 3.85% Senior Notes due 2026 | | 550 | | | — | | Principal amount of long-term debt | | 3,350 | | | 3,650 | | Unamortized discounts | | (8 | ) | | (8 | ) | Deferred debt issue costs | | (17 | ) | | (16 | ) | Carrying amount of long-term debt | | 3,325 | | | 3,626 | | Current portion of long-term debt | | — | | | (499 | ) | Carrying amount of long-term debt, excluding current portion | $ | 3,325 | | $ | 3,127 | |
| (1) | During 2016, L3's aggregate borrowings and repayments under the Credit Facility were $819 million. L3 had the full availability of its $1 billion Credit Facility at December 31, 2016 and December 31, 2015. |
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| Information Regarding Outstanding Senior Subordinated Notes |
The Senior Notes are unsecured senior obligations of L3. The terms of each outstanding Senior Note are presented in the table below. Note | Date of Issuance | Amount
Issued | Discount(1) | Net
Cash
Proceeds | Effective
Interest
Rate | Redemption
at Treasury
Rate(2)(3) | | | (in millions) | | | 5.20% Senior Notes due
October 15, 2019 | October 2, 2009 | $ | 1,000 | | $ | 4 | | $ | 987 | | | 5.25 | % | 30 bps | 4.75% Senior Notes due
July 15, 2020 | May 21, 2010 | $ | 800 | | $ | 3 | | $ | 790 | | | 4.79 | % | 25 bps | 4.95% Senior Notes due
February 15, 2021 | February 7, 2011 | $ | 650 | | $ | 4 | | $ | 639 | | | 5.02 | % | 25 bps | 3.95% Senior Notes due
May 28, 2024 | May 28, 2014 | $ | 650 | | $ | 3 | | $ | 641 | (4) | | 4.02 | % | 20 bps | 3.85% Senior Notes due
December 15, 2026 | December 5, 2016 | $ | 550 | | $ | 3 | | $ | 542 | | | 3.91 | % | 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 Senior Notes maturing in 2019, 2020 and 2021 may be redeemed at any time prior to their maturity and the Senior Notes maturing in 2024 and 2026 may be redeemed at any time prior to February 28, 2024 and September 15, 2026, respectively, (three months prior to their maturity) at the option of L3, in whole or in part, at a redemption price equal to the greater of: (1) 100% of the principal amount, or (2) 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 Senior Notes maturing in 2024 and 2026 are redeemed at any time on or after February 28, 2024 and September 15, 2026, respectively, the redemption price would be equal to 100% of the principal amount. |
| (3) | Upon the occurrence of a change in control (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. |
| (4) | The net cash proceeds of $988 million (after deduction of the bond discount, underwriting expenses and commissions and other related expenses) were used primarily to fund the CODES retirement as discussed below. The remaining net proceeds were used for general corporate purposes. |
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| Repurchases, Redemptions and Maturities of Senior Notes |
The repurchases, redemptions and maturities of senior notes are presented in the table below. Note | Settlement Type | Date Settled | Aggregate
Amount | Debt
Retirement
Charge | Cash
Payments | | | | (in millions) | 1.50% Senior Notes due 2017(1) | Redemption | December 30, 2016 | $ | 350 | | $ | 2 | | $ | 351 | | 3.95% Senior Notes due 2016 | Maturity | November 15, 2016 | $ | 200 | | $ | — | | $ | 200 | | 3.95% Senior Notes due 2016(2) | Redemption | May 20, 2016 | $ | 300 | | $ | 5 | | $ | 305 | | 3.95% Senior Notes due 2024 | Tender Offer | December 22, 2015 | $ | 300 | | $ | 1 | | $ | 297 | | CODES due 2035(3) | Redemption | June 20, 2014 | $ | 689 | | $ | — | | $ | 935 | |
| (1) | The 1.50% Senior Notes due 2017 were redeemed at a price equal to 100.323%of the principal amount thereof,plus accrued and unpaid interest to the redemption date. Interest ceased to accrue on and after the redemption date. |
| (2) | The 3.95% Senior Notes due 2016 were redeemed at a price equal to 101.475% of the principal amount thereof, plus accrued and unpaid interest. Interest ceased to accrue on and after May 20, 2016 and the only remaining right of holders of such Notes was to receive payment of the Redemption Price and accrued interest. |
| (3) | In 2005, L3 sold $700 million of 3% Convertible Contingent Debt Securities (CODES) due August 1, 2035. On February 2, 2011, L3 reporchased approximately $11 million of the CODES. The conversion value of CODES of $935 million was calculated in accordance with the indenture governing the CODES. L3 settled the entire conversion value with respect to converted CODES in cash. As a result of the conversion, the Company recorded a reduction to shareholders’ equity of $161 million, related to the excess conversion value over the fair value of the debt component of the CODES, net of deferred tax liability. Interest expense recognized for the CODES was $2 million for the year ended December 31, 2014. |
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