Lockheed Martin 2015 Annual Report Download - page 99

Note 10 – Debt
Our long-term debt consisted of the following (in millions):
2015 2014
Notes with rates from 1.85% to 3.80%, due 2016 to 2045 $ 8,150 $1,400
Notes with rates from 4.07% to 5.72%, due 2019 to 2046 6,089 3,589
Notes with rates from 6.15% to 9.13%, due 2016 to 2036 1,941 1,941
Other debt 116 111
Total long-term debt 16,296 7,041
Less: unamortized discounts and deferred financing costs (1,035) (899)
Total long-term debt, net $15,261 $6,142
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 2019.
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 in the borrowing capacity under the 5-year Facility of up to an additional
$500 million. There were no borrowings outstanding under the 5-year Facility as of and during 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 an issuance of new debt (see
below) and terminated any remaining commitments of the lenders under the 364-day Facility.
Borrowings under the Facilities 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 Five-year Facility agreement. As of December 31, 2015, we were in compliance with all covenants contained in the
5-year Facility agreement, as well as in our debt agreements.
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 $6.0 billion of borrowings under our 364-day Facility and for
general corporate purposes.
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