Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Exelis Inc. (1524471) 10-Q published on May 05, 2015 at 5:56 pm
Reporting Period: Mar 30, 2015
The Company has a competitive advance and revolving credit facility agreement (“Credit Facility”) with a consortium of lenders, which is available for working capital and other general corporate purposes. The Credit Facility provides for a senior unsecured revolving credit facility in an aggregate principal amount of up to $500, which may be increased, at the request of the Company and with the consent of the participating lenders, up to an aggregate amount of $200, for a maximum aggregate amount of $700. The Credit Facility includes a $100 letter of credit commitment. The Credit Facility matures on December 23, 2019, and may be extended for additional one year periods, subject to consent of participating lenders and continuing compliance with the financial covenants and other customary conditions. Borrowings under the Credit Facility bear interest at rates based, at the Company's option, on a Eurodollar rate or an alternate base rate, as defined in the Credit Facility. As of March 31, 2015 and December 31, 2014, there were no borrowings or letters of credit outstanding under the Credit Facility.
The Notes have covenants that restrict our ability to, subject to exceptions, incur indebtedness secured by liens or engage in sale and leaseback transactions. The Notes also have customary events of default, including, but not limited to, non-payment of principal and interest, and certain events of bankruptcy, insolvency or reorganization of the Company. Under the terms of the Notes, we have the option to redeem the Notes prior to maturity. In addition, if the Notes cease to be rated investment grade by each of Moody’s Investors Service, Inc., Fitch Inc. and Standard & Poor’s Rating Services on any date during the 60-day period following the first public announcement of a change of control transaction, each holder of the Notes will have the right to require the Company to repurchase all or any part of such holder’s Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. Notwithstanding the foregoing, a holder of the Notes will not have the right to require us to repurchase such holder's Notes until the change of control transaction has actually been consummated.
During the three months ended March 31, 2015, we granted long-term incentive awards to employees consisting of 0.8 RSUs with a weighted average grant date fair value per share of $24.05. The RSUs are liability-based awards that are cash settled upon vesting and vest annually in three equal installments. We did not grant any NQOs or TSR awards during the three months ended March 31, 2015. The fair value of the RSUs is measured quarterly based on the closing price of Exelis common stock on the last day of the quarter.
To date, two putative class action lawsuits, captioned McGill v. Hake et al., Case No. 1:15-cv-00217, and The George Leon Family Trust, et al. v. Exelis Inc., et al., Case No. 1:15-cv-00466, which are referred to collectively as the shareholder litigation, have been filed by purported Exelis shareholders in the United States District Court for the Southern District of Indiana against Exelis, the members of Exelis’ board of directors, Harris and Harris Communications Solutions (Indiana), Inc. ("Merger Sub") in connection with the announcement of the merger. The two actions were consolidated by order of the court dated April 20, 2015. The operative complaint alleges, among other things, that the directors of Exelis have breached their fiduciary duties owed to shareholders by approving the proposed acquisition of Exelis by Harris, that Exelis, Harris and Merger Sub have aided and abetted the directors of Exelis in breaching their fiduciary duties, and that Exelis and its directors have made untrue statements of material fact and omitted material facts in the registration statement filed by Harris in connection with the merger, in violation of federal securities laws. Among other things, the shareholder litigation seeks to enjoin the merger. Exelis, Harris, Merger Sub, and their respective directors believe that the shareholder litigation and the underlying claims are without merit.
U.S. defense and other discretionary federal budgets have been under political pressure due to concerns over persistent U.S. fiscal deficits and the level of U.S. national debt. Congress and the President reached agreements on omnibus appropriations packages allocating $1.014 trillion in discretionary spending for the U.S. federal government in fiscal year 2015 that complies with the Bipartisan Budget Act of 2013, better known as the Ryan-Murray budget deal, avoiding sequestration. Since the changes made by the Ryan-Murray budget deal have run their natural two year agreed upon course, the federal budget will return to the possibility of enforced sequestration in the fiscal year 2016 budget and appropriations cycle which will require a $38 billion base budget DoD decrease from the permitted fiscal year 2015 cap and an estimated $112 billion in defense spending reductions through fiscal year 2019. However, for fiscal year 2016, the President’s budget proposal anticipates expenditures above the cap required by sequestration under the Budget Control Act of 2011, while the House and Senate’s budget resolution increases the amount of spending for Overseas Contingency Operations, which is not covered by the cap.