Lockheed Martin 2015 Annual Report Download - page 61

Revolving Credit Facilities
On October 9, 2015, we entered into a new $2.5 billion revolving credit facility (the 5-year Facility) with various banks
and concurrently terminated our existing $1.5 billion revolving credit facility, which was scheduled to expire in August 2016.
The 5-year Facility, which expires on October 9, 2020, is available for general corporate purposes. The undrawn portion of
the 5-year Facility is also available to serve as a backup facility for the issuance of commercial paper. We may request and
the banks may grant, at their discretion, an increase to the new credit facility up to an additional $500 million. There were no
borrowings outstanding under the 5-year Facility as of and for the year ended December 31, 2015.
In contemplation of our acquisition of Sikorsky, on October 9, 2015, we also entered into a 364-day revolving credit
facility (the 364-day Facility, and together with the 5-year Facility, the Facilities) with various banks that provided
$7.0 billion of funding for general corporate purposes, including the acquisition of Sikorsky. Concurrent with the
consummation of the Sikorsky acquisition, we borrowed $6.0 billion under the 364-day Facility. On November 23, 2015, we
repaid all outstanding borrowings under the 364-day Facility with proceeds received from the issuance of the November
2015 Notes described below and terminated any remaining commitments of the lenders under the 364-day Facility.
Borrowings under the Facilities are unsecured and bear interest at rates based, at our option, on a Eurodollar Rate or a
Base Rate, as defined in the Facilities’ agreements. Each bank’s obligation to make loans under the 5-year Facility is subject
to, among other things, our compliance with various representations, warranties and covenants, including covenants limiting
our ability and certain of our subsidiaries’ ability to encumber assets and a covenant not to exceed a maximum leverage ratio,
as defined in the 5-year Facility agreement.
Long-Term Debt
On November 23, 2015, we issued $7.0 billion of notes (the November 2015 Notes) in a registered public offering. We
received net proceeds of $6.9 billion from the offering, after deducting discounts and debt issuance costs, which are being
amortized as interest expense over the life of the debt. The November 2015 Notes consist of:
• $750 million maturing in 2018 with a fixed interest rate of 1.85% (the 2018 Notes);
• $1.25 billion maturing in 2020 with a fixed interest rate of 2.50% (the 2020 Notes);
• $500 million maturing in 2023 with a fixed interest rate of 3.10% (the 2023 Notes);
• $2.0 billion maturing in 2026 with a fixed interest rate of 3.55% (the 2026 Notes);
• $500 million maturing in 2036 with a fixed interest rate of 4.50% (the 2036 Notes), and
• $2.0 billion maturing in 2046 with a fixed interest rate of 4.70% (the 2046 Notes).
We may, at our option, redeem some or all of the November 2015 Notes and unpaid interest at any time by paying the
principal amount of notes being redeemed plus any make-whole premium and accrued and unpaid interest to the date of
redemption. Interest is payable on the 2018 Notes and the 2020 Notes on May 23 and November 23 of each year, beginning
on May 23, 2016; on the 2023 Notes and the 2026 Notes on January 15 and July 15 of each year, beginning on July 15, 2016;
and on the 2036 Notes and the 2046 Notes on May 15 and November 15 of each year, beginning on May 15, 2016. The
November 2015 Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness.
The proceeds of the November 2015 Notes were used to repay the $6.0 billion of borrowings under our 364-day Facility and
for general Corporate purposes.
On February 20, 2015, we issued $2.25 billion of notes (the February 2015 Notes) in a registered public offering. We
received net proceeds of $2.21 billion from the offering, after deducting discounts and debt issuance costs, which are being
amortized as interest expense over the life of the debt. The February 2015 Notes consist of $750 million maturing in 2025
with a fixed interest rate of 2.90%, $500 million maturing in 2035 with a fixed interest rate of 3.60% and $1.0 billion
maturing in 2045 with a fixed interest rate of 3.80%. We may, at our option, redeem some or all of the notes at any time by
paying the principal amount of notes being redeemed plus any make-whole premium and accrued and unpaid interest to the
date of redemption. Interest on the notes is payable on March 1 and September 1 of each year, beginning on September 1,
2015. These notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness. The
proceeds of the February 2015 Notes were used for general Corporate purposes.
We also have an effective shelf registration statement on Form S-3 on file with the U.S. Securities and Exchange
Commission to provide for the issuance of an indeterminate amount of debt securities.
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