Debt

9 Months Ended

Jun. 30, 2018

Short-term Debt



(in millions, except weighted average amounts)	June 30, 2018			September 30, 2017
Short-term commercial paper borrowings outstanding ⁽¹⁾	$	715		$	330
Current portion of long-term debt	149			149
Short-term debt	$	864		$	479
Weighted average annualized interest rate of commercial paper borrowings	2.36		%	1.45		%
Weighted average maturity period of commercial paper borrowings (days)	13			18

⁽¹⁾The maximum amount of short-term commercial paper borrowings outstanding during the nine months ended June 30, 2018, was $1.148 billion.

Commercial Paper Program

Under the Company’s commercial paper program, the Company may sell up to $1.5 billion face amount of unsecured short-term promissory notes in the commercial paper market. The commercial paper program is supported by the Company's $1.5 billion revolving credit facility.

Revolving Credit Facilities

The Company has a $1.5 billion five-year senior unsecured revolving credit agreement with various banks. At June 30, 2018 and September 30, 2017, there were no outstanding borrowings under the Company's revolving credit facility.

Short-term credit facilities available to non-U.S. subsidiaries were $20 million as of June 30, 2018, of which $2 million was utilized to support commitments in the form of commercial letters of credit. At June 30, 2018 and September 30, 2017, there were no borrowings outstanding under these credit facilities.

At June 30, 2018 and September 30, 2017, there were no significant commitment fees or compensating balance requirements under any of the Company’s credit facilities.

Bridge Credit Facility

On December 16, 2016, pursuant to the B/E Aerospace acquisition, the Company entered into a $4.35 billion 364-day senior unsecured bridge term loan credit agreement with various banks. This bridge facility terminated upon receipt of proceeds from the notes issued to finance a portion of the B/E Aerospace acquisition.

Long-term Debt

On December 16, 2016, pursuant to the B/E Aerospace acquisition, the Company entered into a $1.5 billion three-year senior unsecured term loan credit agreement with various banks. As of June 30, 2018, borrowings outstanding under this facility were $519 million and bear interest at LIBOR plus 1.25 percent amortized in equal quarterly installments of 2.5 percent, or $38 million, with the balance payable on April 13, 2020. During the nine months ended June 30, 2018, the Company made principal prepayments of $238 million in accordance with the loan's prepayment provisions. Proceeds of borrowings under the term loan facility were used to finance a portion of the B/E Aerospace acquisition and to pay related transaction fees and expenses.

The revolving credit agreement and term loan credit agreement each include one financial covenant requiring the Company to maintain a consolidated debt to total capitalization ratio of not greater than 68 percent (excluding the equity impact on accumulated other comprehensive loss related to defined benefit retirement plans). The Company was in compliance with this financial covenant at June 30, 2018. The credit facilities also contain covenants that require the Company to satisfy certain conditions in order to incur debt secured by liens, engage in sale/leaseback transactions or merge or consolidate with another entity.

On April 10, 2017, the Company issued $4.65 billion of senior unsecured notes. The net proceeds of the offering were principally used to finance a portion of the B/E Aerospace acquisition and to pay related transaction fees and expenses. Net proceeds of $300 million were used to repay a portion of the Company's outstanding short-term commercial paper borrowings.

The principal amount of long-term debt, net of discount and debt issuance costs, is summarized as follows:



(in millions, except interest rate figures)	Interest Rate	June 30, 2018			September 30, 2017
Fixed-rate notes due:
July 2019	1.95%	$	300		$	300
July 2019	5.25%	300			300
November 2021	3.10%	250			250
March 2022	2.80%	1,100			1,100
December 2023	3.70%	400			400
March 2024	3.20%	950			950
March 2027	3.50%	1,300			1,300
December 2043	4.80%	400			400
April 2047	4.35%	1,000			1,000
Variable-rate term loan due:
April 2020	1 month LIBOR + 1.25%⁽¹⁾	519			870
Fair value swap adjustment (see Notes 13 and 14)		(1		)	14
Total		6,518			6,884
Less unamortized debt issuance costs and discounts		52			59
Less current portion of long-term debt		149			149
Long-term Debt, Net		$	6,317		$	6,676

⁽¹⁾ The Company has the option to elect a one, two, three or six-month LIBOR interest rate and has elected the one-month rate during the third quarter of 2018. The one-month LIBOR rate at June 30, 2018, was approximately 2.09 percent.

Cash payments for debt interest and fees during the nine months ended June 30, 2018 were $175 million. Cash payments for debt interest and fees during the nine months ended June 30, 2017 were $129 million, of which $28 million related to fees incurred in connection with the bridge credit facility.

ROCKWELL COLLINS INC 10-Q