Crucial 2014 Annual Report Download - page 67

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Debt
Principal
(Increase)
Decrease in
Carrying
Value of Debt
Equity
Component
Reclassified
To Debt(1) Loss(2)
2014 Notes $ 485 $ 478 $ 341 $ 9
2027 Notes 95 80 58 42
2031A Notes 190 154 217 70
2031B Notes(3) —(275) 270 9
$ 770 $ 437 $ 886 $ 130
(1) Based on Level 2 fair value measurements.
(2) The loss on conversion and settlement activities was recorded as $120 million in other non-operating expense and
$10 million in interest expense in 2014.
(3) In the first quarter of 2015, we used an aggregate of $389 million in cash to settle the remaining 2031B Notes. In
connection therewith, we incurred an additional charge of $24 million for the settlement of the 2031B Notes in the first
quarter of 2015.
Repurchases: During 2014, we repurchased $320 million in aggregate principal amount of our 2031B Notes, 2032C
Notes and 2032D Notes in privately-negotiated transactions for an aggregate of $857 million in cash, collectively referred to
herein as the "Repurchased Notes." In connection with the Repurchased Notes, we recognized losses (based on Level 2 fair
value measurements) of $23 million in 2014, which were included in other non-operating expense.
The liability and equity components of the Repurchased Notes had previously been stated separately within debt and
additional capital in our consolidated balance sheet. As a result, our accounting for the Repurchased Notes affect debt and
equity. The table below summarizes amounts reduced in 2014 in connection with the Repurchased Notes:
Principal
Amount Carrying Value of Debt Equity
2031B Notes $ 26 $ 19 $ 43
2032C Notes 188 161 316
2032D Notes 106 89 208
$ 320 $ 269 $ 567
Issuances: During 2014, as part of our debt restructure activities, we issued the following senior notes:
5.875% Senior Notes due February 2022: On February 10, 2014, we issued $600 million in principal amount of the 2022
Notes. Issuance costs for the 2022 Notes totaled $14 million.
The 2022 Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of
our domestic restricted subsidiaries (which are generally subsidiaries in the U.S. in which we own at least 80% of the voting
stock) to (1) create or incur certain liens and enter into sale and lease-back transactions, (2) create, assume, incur or guarantee
certain additional secured indebtedness and unsecured indebtedness of certain of our domestic restricted subsidiaries, and (3)
consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our assets, to another entity. These
covenants are subject to a number of limitations, exceptions and qualifications.
Cash Redemption at Our Option: Prior to February 15, 2017, we may redeem the 2022 Notes, in whole or in part, at a
price equal to the principal amount of the 2022 Notes to be redeemed plus a make-whole premium as described in the indenture
governing the 2022 Notes, together with accrued and unpaid interest. On or after February 15, 2017, we may redeem the 2022
Notes, in whole or in part, at prices above the principal amount that decline over time, as specified in the indenture, together
with accrued and unpaid interest. Additionally, prior to February 15, 2017, we may use the net cash proceeds of one or more
equity offerings to redeem up to 35% of the aggregate principal amount of the 2022 Notes at a price equal to 105.875% of the
principal amount together with accrued and unpaid interest.
5.500% Senior Notes due February 2025: On July 28, 2014, we issued $1.15 billion in principal amount of the 2025
Notes. Issuance costs for the 2025 Notes totaled $13 million.