CIGNA CORP | 2013 | FY | 3


Note 15 Debt

(In millions)20132012
Short-term:    
Commercial paper$ 100$ 200
Current maturities of long-term debt  41  1
Other  92  -
Total short-term debt$ 233$ 201
Long-term:    
Uncollateralized debt:    
2.75% Notes due 2016$ 600$ 600
5.375% Notes due 2017  250  250
6.35% Notes due 2018  131  131
8.5% Notes due 2019  251  251
4.375% Notes due 2020  249  249
5.125% Notes due 2020  299  299
6.37% Notes due 2021  78  78
4.5% Notes due 2021  299  299
4% Notes due 2022  744  743
7.65% Notes due 2023  100  100
8.3% Notes due 2023  17  17
7.875% Debentures due 2027  300  300
8.3% Step Down Notes due 2033  83  83
6.15% Notes due 2036  500  500
5.875% Notes due 2041  298  298
5.375% Notes due 2042  750  750
Other  65  38
Total long-term debt$ 5,014$ 4,986

As described in Note 3, the Company acquired HealthSpring on January 31, 2012. At the acquisition date, HealthSpring had $326 million of debt outstanding. In accordance with debt covenants, HealthSpring's debt obligation was paid immediately following the acquisition. This repayment is reported as a financing activity in the statement of cash flows for the year ended December 31, 2012.

 

In December 2012, the Company extended the life of its June 2011 five-year revolving credit and letter of credit agreement for $1.5 billion, that permits up to $500 million to be used for letters of credit. This agreement is diversified among 16 banks, with 3 banks having approximately 35% of the commitment and the remainder spread among 13 banks. The credit agreement includes options that are subject to consent by the administrative agent and the committing banks, to increase the commitment amount to $2 billion and to extend the term past December 2017. The credit agreement is available for general corporate purposes, including as a commercial paper backstop and for the issuance of letters of credit. This agreement has certain covenants, including a financial covenant requiring the Company to maintain a total debt-to-adjusted capital ratio at or below 0.50 to 1.00. As of December 31, 2013, the Company had $6.0 billion of borrowing capacity within the maximum debt coverage covenant in the agreement in addition to the $5.2 billion of debt outstanding. There were letters of credit of $39 million issued as of December 31, 2013.

 

On November 10, 2011, the Company issued $2.1 billion of long-term debt as follows: $600 million of 5-Year Notes due November 15, 2016 at a stated interest rate of 2.75% ($600 million, net of discount, with an effective interest rate of 2.936% per year), $750 million of 10-Year Notes due February 15, 2022 at a stated interest rate of 4% ($743 million, net of discount, with an effective interest rate of 4.346% per year) and $750 million of 30-Year Notes due February 15, 2042 at a stated interest rate of 5.375% ($750 million, net of discount, with an effective interest rate of 5.542% per year). Interest is payable semi-annually for the 5-Year, 10-Year and 30-Year Notes. The proceeds of this debt were used to fund the HealthSpring acquisition in January 2012.

 

The Company may redeem these Notes, at any time, in whole or in part, at a redemption price equal to the greater of:

 

 

In March 2011, the Company issued $300 million of 10-Year Notes due March 15, 2021 at a stated interest rate of 4.5% ($298 million, net of discount, with an effective interest rate of 4.683% per year) and $300 million of 30-Year Notes due March 15, 2041 at a stated interest rate of 5.875% ($298 million, net of discount, with an effective interest rate of 6.008% per year). Interest is payable semi-annually. The proceeds of this debt were used for general corporate purposes, including the repayment of debt maturing in 2011.

 

The Company may redeem these Notes, at any time, in whole or in part, at a redemption price equal to the greater of:

 

During 2011, the Company repaid $449 million in maturing long-term debt.

 

Maturities of debt and capital leases are as follows (in millions): $133 in 2014, $28 in 2015, $618 in 2016, $253 in 2017, $131 in 2018 and the remainder in years after 2018. Interest expense on long-term debt, short-term debt and capital leases was $270 million in 2013, $268 million in 2012, and $202 million in 2011.

 

The Company was in compliance with its debt covenants as of December 31, 2013.

 


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