Note 6 – Debt

Commercial Paper

In 2014, the Board of Directors authorized the Company to issue unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company intends to use net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of June 27, 2015 and September 27, 2014, the Company had $4.5 billion and $6.3 billion of Commercial Paper outstanding, respectively, with a weighted-average interest rate of 0.10% and 0.12%, respectively, and maturities generally less than nine months.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the nine months ended June 27, 2015 (in millions):


Maturities less than 90 days:
Proceeds from (repayments of) commercial paper, net	$	579

Maturities greater than 90 days:
Proceeds from commercial paper		2,601
Repayments of commercial paper		(4,988	)

Maturities greater than 90 days, net		(2,387	)


Total change in commercial paper, net	$	(1,808	)

Long-Term Debt

As of June 27, 2015, the Company has outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $50.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated floating-rate notes, semi-annually for the U.S. dollar- and yen-denominated fixed-rate notes and annually for the euro- and Swiss franc-denominated fixed-rate notes. The following table provides a summary of the Company’s long-term debt as of June 27, 2015 and September 27, 2014:


	Maturities		June 27, 2015					September 27, 2014
	Maturities		Amount (in millions)			Effective Interest Rate		Amount (in millions)			Effective Interest Rate
2013 debt issuance of $17.0 billion:
Floating-rate notes		2016 - 2018	$	3,000			0.51% - 1.10%	$	3,000			0.51% - 1.10%
Fixed-rate 0.45% - 3.85% notes		2016 - 2043		14,000			0.51% - 3.91%		14,000			0.51% - 3.91%

2014 debt issuance of $12.0 billion:
Floating-rate notes		2017 - 2019		2,000			0.35% - 0.58%		2,000			0.31% - 0.54%
Fixed-rate 1.05% - 4.45% notes		2017 - 2044		10,000			0.34% - 4.48%		10,000			0.30% - 4.48%

First quarter 2015 euro-denominated debt issuance of €2.8 billion:
Fixed-rate 1.00% notes		2022		1,567			2.94%		0			0
Fixed-rate 1.63% notes		2026		1,567			3.45%		0			0

Second quarter 2015 debt issuance of $6.5 billion:
Floating-rate notes		2020		500			0.53%		0			0
Fixed-rate 1.55% notes		2020		1,250			0.53%		0			0
Fixed-rate 2.15% notes		2022		1,250			0.84%		0			0
Fixed-rate 2.50% notes		2025		1,500			2.60%		0			0
Fixed-rate 3.45% notes		2045		2,000			3.58%		0			0

Second quarter 2015 Swiss franc-denominated debt issuance of SFr1.3 billion:
Fixed-rate 0.38% notes		2024		939			0.28%		0			0
Fixed-rate 0.75% notes		2030		403			0.74%		0			0

Third quarter 2015 debt issuance of $8.0 billion:
Floating-rate notes		2017		250			0.33%		0			0
Floating-rate notes		2020		500			0.58%		0			0
Fixed-rate 0.90% notes		2017		750			0.32%		0			0
Fixed-rate 2.00% notes		2020		1,250			0.57%		0			0
Fixed-rate 2.70% notes		2022		1,250			0.95%		0			0
Fixed-rate 3.20% notes		2025		2,000			1.18%		0			0
Fixed-rate 4.38% notes		2045		2,000			4.40%		0			0

Third quarter 2015 yen-denominated debt issuance of ¥250.0 billion:
Fixed-rate 0.35% notes		2020		2,016			0.35%		0			0


Total borrowings				49,992					29,000

Unamortized discount				(97	)				(52	)
Hedge accounting fair value adjustments				24					39
Less: Current portion of long-term debt				(2,500	)				0

Total long-term debt			$	47,419				$	28,987

To manage foreign currency risk associated with the euro-denominated notes issued in the first quarter of 2015, the Company entered into currency swaps with an aggregate notional amount of $3.5 billion, which effectively converted the euro-denominated notes to U.S. dollar-denominated notes.

To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the second quarter of 2015 and maturing in 2020 and 2022, the Company entered into interest rate swaps with an aggregate notional amount of $2.5 billion. To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the third quarter of 2015 and maturing in 2017, 2020, 2022 and 2025, the Company entered into interest rate swaps with an aggregate notional amount of $4.3 billion. These interest rate swaps effectively converted the fixed interest rates on the U.S. dollar-denominated notes to a floating interest rate.

During the third quarter of 2015, the Company designated ¥212.4 billion of the ¥250.0 billion of yen-denominated notes as a hedge of the foreign currency exposure of its net investment in a foreign operation. As a result, the foreign currency transaction gain or loss on the portion of the yen-denominated debt designated as a hedge is recorded in OCI as a part of the cumulative translation adjustment. As of June 27, 2015, the carrying value of the debt designated as a net investment hedge was $1.7 billion.

For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.”

The effective interest rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $197 million and $486 million of interest expense on its long-term debt for the three- and nine-month periods ended June 27, 2015, respectively. The Company recognized $100 million and $268 million of interest expense on its long-term debt for the three- and nine-month periods ended June 28, 2014, respectively.

Future principal payments for the Company’s Notes as of June 27, 2015 are as follows (in millions):


2015	$	0
2016		2,500
2017		3,500
2018		6,000
2019		3,000
Thereafter		34,992

Total future principal payments	$	49,992

As of June 27, 2015 and September 27, 2014, the fair value of the Company’s Notes, based on Level 2 inputs, was $48.7 billion and $28.5 billion, respectively.