Debt

The following table presents information about the terms and outstanding balances of Torchmark’s debt.

Selected Information about Debt Issues



						As of December 31,
						2017						2016
	Annual Interest Rate			Issue Date	Periodic Interest Payments Due	Outstanding Principal (Par Value)		Outstanding Principal (Book Value)		Outstanding Principal (Fair Value)		Outstanding Principal (Book Value)
Long-term debt:
Notes, due 5/15/23^(3,5)	7.875	%		5/93	5/15 & 11/15	$	165,612	$	164,284	$	195,786	$	164,095
Senior Notes, due 6/15/19^(3,7)	9.250	%		6/09	6/15 & 12/15	292,647		291,888		320,697		291,424
Senior Notes, due 9/15/22^(3,7)	3.800	%		9/12	3/15 & 9/15	150,000		148,477		155,000		148,189
Junior Subordinated Debentures due 12/15/52^(4,8,12)	5.875	%		9/12	quarterly	—		—		—		120,929
Junior Subordinated Debentures due 3/15/36^(4,6,12)	4.888	%	⁽¹³⁾	⁽¹¹⁾	quarterly	20,000		20,000		20,000		20,000
Junior Subordinated Debentures due 6/15/56^(4,9)	6.125	%		4/16	quarterly	300,000		290,460		321,120		290,403
Junior Subordinated Debentures due 11/17/57^(4,10)	5.275	%		11/17	6/15 & 12/15	125,000		123,342		122,039		—
Term loan due 5/17/21^(1,6)	2.600	%	⁽¹⁴⁾	6/16	monthly	98,125		98,125		98,125		100,000
						1,151,384		1,136,576		1,232,767		1,135,040
Less current maturity of term loan						4,375		4,375		4,375		1,875
Total long-term debt						1,147,009		1,132,201		1,228,392		1,133,165

Short-term debt:
Current maturity of term loan						4,375		4,375		4,375		1,875
Commercial paper⁽²⁾						324,250		323,692		323,692		262,600
Total short-term debt						328,625		328,067		328,067		264,475

Total debt						$	1,475,634	$	1,460,268	$	1,556,459	$	1,397,640


(1)	The term loan has higher priority than all other debt issues.


(2)	Commercial paper has priority over all other debt except the term loan.


(3)	All securities, other than the term loan, commercial paper and Junior Subordinated Debentures have equal priority with one another.


(4)	All Junior Subordinated Debentures have equal priority, but are subordinate to all other issues.


(5)	Not callable.


(6)	Callable anytime.


(7)	Callable subject to “make-whole” premium.


(8)	Redeemed on December 22, 2017.


(9)	Callable at any time on or after June15, 2021, and prior to this date upon the occurrence of a Tax Event or Rating Agency Event.


(10)	Callable at any time on or after November 17, 2022, and prior to this date upon the occurrence of a Tax Event or Rating Agency Event.


(11)	Assumed upon November 1, 2012 acquisition of Family Heritage.


(12)	Quarterly payments on the 15th of March, June, September, and December.


(13)	Interest paid at 3 Month LIBOR plus 330 basis points, resets each quarter.


(14)	Interest paid at 1 Month LIBOR plus 125 basis points, resets each month.

Contractual Debt Obligations: The following table presents expected scheduled principal payments under our contractual debt obligations:



	Year Ended December 31,
	2018		2019		2020		2021		2022		Thereafter
Debt obligations	$	328,625	$	299,522	$	9,375	$	77,500	$	150,000	$	610,612

Funded debt: On November 17, 2017, Torchmark completed the issuance and sale of $125 million in aggregate principal of Torchmark’s 5.275% Junior Subordinated Debentures due 2057. The debentures were sold in a private placement pursuant to exemptions from the registration requirements of the Securities Act of 1933. The initial purchaser of the debentures was outside the United States. The net proceeds from the sale of the debentures were $123.3 million, after giving effect to the discount payable to the initial purchaser and expenses of the offering of the debentures. Torchmark used the net proceeds from the offering of the debentures to repay the $125 million outstanding principal, plus accrued interest of $143 thousand on the 5.875% Junior Subordinated Debentures on December 22, 2017. The Debentures were due December 15, 2052 and were callable beginning December 15, 2017.

On April 5, 2016, Torchmark completed the issuance and sale of $300 million in aggregate principal of Torchmark’s 6.125% Junior Subordinated Debentures due 2056. The debentures were sold pursuant to Torchmark’s shelf registration statement on Form S-3, filed September 25, 2015. The net proceeds from the sale of the debentures were $290 million, after giving effect to the underwriting discount and expenses of the offering of the debentures. Torchmark used the net proceeds from the offering of the debentures to repay the $250 million outstanding principal, plus accrued interest of $8 million, on the 6.375% Senior Notes that were due June 15, 2016. The remaining proceeds were used for general corporate purposes.

Credit Facility: On May 17, 2016, Torchmark amended its credit facility to include, as a part of the facility, the issuance of a $100 million term loan and to extend the maturity date of the entire credit facility to May 2021. The facility is further designated as a back-up credit line for a commercial paper program under which the Company may either borrow from the credit line or issue commercial paper at any time, with total commercial paper outstanding not to exceed the facility maximum of $750 million, less any letters of credit issued. Interest is charged at variable rates. The term loan will be repaid on a redemption schedule which provides for quarterly installments that began June 30, 2017 that escalate each annual period with a balloon payment of $75 million due in May 2021. Interest on the term loan is computed and paid monthly at 125 basis points plus 1 Month LIBOR. In accordance with the agreement, Torchmark is subject to certain covenants regarding capitalization. As of December 31, 2017, the Company was in full compliance with these covenants.

Commercial paper outstanding and any amortization payments of the term loan due within one year are reported as short-term debt on the Consolidated Balance Sheets. A table presenting selected information concerning Torchmark’s commercial paper borrowings is presented below.

Credit Facility - Commercial Paper



	At December 31,
	2017			2016
Balance at end of period (at par value)	$	324,250		$	262,850
Annualized interest rate	1.78		%	0.96		%
Letters of credit outstanding	$	177,000		$	177,000
Remaining amount available under credit line	248,750			310,150



	Year Ended December 31,
	2017			2016			2015
Average balance outstanding during period	$	323,429		$	301,550		$	350,851
Daily-weighted average interest rate (annualized)	1.30		%	0.83		%	0.43		%
Maximum daily amount outstanding during period	$	455,912		$	412,676		$	458,110