Note 10 — Long-Term Debt
Long-term debt, net of discounts and including adjustments associated with interest rate swaps, as of December 31, consisted of the following:
| 2013 | 2012 | |||||||
|
1.05% guaranteed, notes due 2015 |
$ | 450 | $ | 449 | ||||
|
3.25% guaranteed, notes due 2022 |
1,099 | 1,099 | ||||||
|
4.75% guaranteed, notes due 2042 |
991 | 991 | ||||||
|
4.85% guaranteed, notes due 2023 |
550 | — | ||||||
|
6.15% guaranteed, notes due 2043 |
547 | — | ||||||
|
6.75% guaranteed, notes due 2017 |
765 | 781 | ||||||
|
7.25% guaranteed, notes due 2037 |
448 | 448 | ||||||
|
7.30% guaranteed, notes due 2015 |
— | 200 | ||||||
|
7.625% guaranteed, notes due 2016 |
— | 818 | ||||||
|
7.75% guaranteed, notes due 2018 |
249 | 249 | ||||||
|
Total long-term debt (less current maturities) |
5,099 | 5,035 | ||||||
|
Current maturities of long-term debt |
— | 60 | ||||||
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| $ | 5,099 | $ | 5,095 | |||||
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As of December 31, 2013, the maturities of RAI’s notes, net of discounts, were as follows:
|
Year |
Amount | |||
|
2015 |
$ | 450 | ||
|
2017 |
700 | |||
|
2018 |
249 | |||
|
2022 and thereafter |
3,635 | |||
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| $ | 5,034 | |||
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In conjunction with their obligations under the New Credit Agreement, RAI’s Material Subsidiaries, RJR Tobacco and American Snuff Co., among other subsidiaries, guaranteed the RAI notes. At its option, RAI may redeem any or all of its outstanding notes, in whole or in part at any time, subject to the payment of a make-whole premium.
On June 1, 2012, RAI repaid $450 million in principal of debt due in 2012. In addition, in June 2012, RJR prepaid the remaining insignificant amount of RJR’s guaranteed, unsecured long-term debt that was due in 2015. As a result of the repayment of these notes, RAI is no longer required to present condensed consolidated financial statements relating to RJR’s remaining outstanding notes.
In October 2012, RAI completed the sale of $2.55 billion in aggregate principal amount of senior notes, consisting of $450 million of 1.05% senior notes due October 30, 2015, $1.1 billion of 3.25% senior notes due November 1, 2022 and $1 billion of 4.75% senior notes due November 1, 2042. A portion of the proceeds were used in December 2012 to redeem the $625 million principal amount of 7.25% notes due in 2013. A loss of $21 million on the early extinguishment was recorded in the fourth quarter of 2012, and was included in other expense, net in the consolidated statements of income.
On August 15, 2013, RJR repaid at maturity $60 million in principal amount of its notes. RJR has no remaining outstanding debt.
In September 2013, RAI completed the sale of $1.1 billion in aggregate principal amount of senior notes, consisting of $550 million 4.85% notes due September 15, 2023, and $550 million 6.15% notes due September 15, 2043. Interest on these notes is paid semi-annually.
In September 2013, RAI called for the redemption of the $200 million outstanding principal amount of its 7.30% notes due in 2015, and the $775 million outstanding principal amount of its 7.625% notes due in 2016. A loss of $124 million on the early extinguishment, which includes $35 million of the unamortized portion of the interest rate swap agreements associated with the 7.625% notes, was included in other expense, net in the consolidated statements of income for the year ended December 31, 2013.
See note 2 for additional information on interest rate management of the long-term debt.