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L-3 Communications Prices $1B Senior Notes

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L-3 Communications Corporation, a subsidiary of L-3 Communications Holdings Inc. (LLL - Free Report) , announced that it has priced $1.0 billion in aggregate principal amount of senior notes. The company intends to close the offering on May 28, 2014.

In the latest release, these bonds have been issued in two tranches. While one part comprises $350 million, 3-year senior notes bearing interest at a fixed rate of 1.50% per year and maturing on May 28, 2017, the second part constitutes of $650 million, 10-year senior notes bearing interest at a fixed rate of 3.95% per year and maturing on May 28, 2024.

The company intends to utilize a portion of the net proceeds to fund purchases and for the redemption of its 3.00% Convertible Contingent Debt Securities due Aug 1, 2035. The remaining net proceeds will be used for general corporate purposes.

Long-term debt as of Mar 28, 2014 was $3,631 million, almost flat from the end 2013 level. Interest expense stood at $43 million in the first quarter, flat year over year. In the first quarter 2014, L-3 Communications had $227.0 million in cash and cash equivalents versus $500 million as of Dec 31, 2013. During the first quarter 2014 net cash used in operating activities was $62 million compared to net cash of $146 million generated from operating activities in the year-ago period.

The company surpassed the Zacks Consensus Estimate for both earnings and revenues by 2.6% and 0.2% respectively in the first quarter of 2014. The strong performance was driven by its program execution capability, cost cutting initiatives and contribution from its international and commercial businesses.

For 2014, the company expects earnings in the range of $8.20 to $$8.40 per share. The Zacks Consensus Estimate of $8.37 per share for 2014 reflects an estimated year-over-year growth of 3.77%.

Currently, L-3 Communications Holdings holds a Zacks Rank #3 (Hold). However, other well-ranked defense players include The Boeing Co. (BA - Free Report) , Embraer SA (ERJ - Free Report) and Alliant Techsystems Inc. . All of these stocks hold a Zacks Rank #2 (Buy).

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