8-KOther EventsExhibits & Filings

L3HARRIS TECHNOLOGIES, INC. /DE/ 8-K Report, Corporate Update (Jun 4, 2018)

Filed June 4, 2018For Securities:LHX

Summary

L3HARRIS TECHNOLOGIES, INC. /DE/ (LHX) filed an 8-K on June 4, 2018, to report on the closing of its $850 million offering of 4.400% Notes due 2028. The issuance was conducted under an existing shelf registration statement. This action is strategically significant as the company intends to use the net proceeds, along with existing cash, to fully redeem two outstanding debt tranches: $400 million of 4.40% notes due December 2020 and $400 million of 5.55% notes due October 2021. The debt refinancing demonstrates a proactive approach by Harris Corporation to manage its capital structure. By replacing older, higher-interest debt with new, lower-interest debt, the company aims to reduce its future interest expense and potentially improve its profitability and cash flow. Investors should view this move as a positive step towards optimizing the company's financial leverage and cost of capital.

Key Highlights

  • 1Harris Corporation successfully closed an offering of $850 million aggregate principal amount of 4.400% Notes due 2028.
  • 2The debt issuance was conducted under an existing shelf registration statement (Form S-3) filed in August 2016.
  • 3Proceeds will be used to redeem in full $400 million of 4.40% notes due December 2020.
  • 4Proceeds will also be used to redeem in full $400 million of 5.55% notes due October 2021.
  • 5The company is using a portion of the net proceeds, along with cash on hand, to fund these redemptions.
  • 6This move indicates a refinancing of existing debt, likely to lower overall interest expenses.
  • 7The filing includes the form of the new note and a legal opinion on its validity as exhibits.

Frequently Asked Questions

The primary purpose of the $850 million debt issuance is to redeem in full two existing debt obligations: $400 million of 4.40% notes due December 2020 and $400 million of 5.55% notes due October 2021. The company is also using cash on hand to cover these redemptions and associated costs.

The new notes carry a coupon rate of 4.400% and are due in 2028.

By issuing new debt at a 4.400% rate to replace existing debt with higher interest rates (4.40% and 5.55%), the company aims to reduce its overall interest expense. This can lead to improved profitability and increased free cash flow over the long term, optimizing the company's capital structure.

An "automatic shelf" registration statement allows the company to register securities in advance and then issue them "off the shelf" when market conditions are favorable, as was the case with this debt offering. It provides flexibility and speed in accessing capital markets.