v2.4.1.9

Debt | 6 Months Ended
--- | ---
Mar. 05, 2015
Debt Disclosure [Abstract] |
Debt | Debt
|  |  |  |  |  | March 5, 2015 |  | August 28, 2014
Instrument(1) |  | Stated Rate |  | Effective Rate |  | Current |  | Long-Term |  | Total |  | Current |  | Long-Term |  | Total
Capital lease obligations(2) |  | N/A |  |  | N/A |  |  | $ | 369 |  |  | $ | 576 |  |  | $ | 945 |  |  | $ | 323 |  |  | $ | 588 |  |  | $ | 911 |
MMJ creditor installment payments |  | N/A |  |  | 6.25 | % |  | 157 |  |  | 684 |  |  | 841 |  |  | 192 |  |  | 939 |  |  | 1,131 |
2019 senior notes |  | 1.258 | % |  | 1.97 | % |  | 92 |  |  | 278 |  |  | 370 |  |  | 92 |  |  | 324 |  |  | 416 |
2022 senior notes |  | 5.875 | % |  | 6.14 | % |  | — |  |  | 600 |  |  | 600 |  |  | — |  |  | 600 |  |  | 600 |
2023 senior notes |  | 5.250 | % |  | 5.43 | % |  | — |  |  | 1,000 |  |  | 1,000 |  |  | — |  |  | — |  |  | — |
2025 senior notes |  | 5.500 | % |  | 5.56 | % |  | — |  |  | 1,150 |  |  | 1,150 |  |  | — |  |  | 1,150 |  |  | 1,150 |
2031B convertible senior notes |  | 1.875 | % |  | 6.98 | % |  | — |  |  | — |  |  | — |  |  | 362 |  |  | — |  |  | 362 |
2032C convertible senior notes(3) |  | 2.375 | % |  | 5.95 | % |  | — |  |  | 314 |  |  | 314 |  |  | — |  |  | 314 |  |  | 314 |
2032D convertible senior notes(3) |  | 3.125 | % |  | 6.33 | % |  | — |  |  | 265 |  |  | 265 |  |  | — |  |  | 288 |  |  | 288 |
2033E convertible senior notes(3) |  | 1.625 | % |  | 4.50 | % |  | 275 |  |  | — |  |  | 275 |  |  | 278 |  |  | — |  |  | 278 |
2033F convertible senior notes(3) |  | 2.125 | % |  | 4.93 | % |  | 268 |  |  | — |  |  | 268 |  |  | 265 |  |  | — |  |  | 265 |
2043G convertible senior notes |  | 3.000 | % |  | 6.76 | % |  | — |  |  | 642 |  |  | 642 |  |  | — |  |  | 636 |  |  | 636 |
Other notes payable |  | 2.634 | % |  | 2.63 | % |  | 38 |  |  | 10 |  |  | 48 |  |  | 126 |  |  | 116 |  |  | 242 |
|  |  |  |  |  | $ | 1,199 |  |  | $ | 5,519 |  |  | $ | 6,718 |  |  | $ | 1,638 |  |  | $ | 4,955 |  |  | $ | 6,593 |
(1) | We have either the obligation or the option to pay cash for the principal amount due upon conversion for all of our convertible notes. Since it is our current intent to settle in cash the principal amount of all of our convertible notes upon conversion, the dilutive effect of such notes on earnings per share is computed under the treasury stock method.
(2) | Weighted-average imputed rate of 3.9% and 4.3% as of March 5, 2015 and August 28, 2014, respectively.
(3) | Since the closing price of our common stock for at least 20 trading days in the 30 trading day period ending on December 31, 2014 exceeded 130% of the conversion price per share, holders had the right to convert their notes at any time during the calendar quarter ended March 31, 2015. The closing price of our common stock also exceeded the thresholds for the calendar quarter ended March 31, 2015; therefore, these notes are convertible by the holders through June 30, 2015. The 2033 Notes are classified as current because the terms of these notes would require us to pay cash for the principal amount of any converted notes.
2015 Debt Activity In the first six months of 2015, we consummated a number of transactions with respect to our debt, including conversions and settlements, repurchases, the issuance of non-convertible senior notes, and the early repayment of a note. The following table presents the effect of each of the actions:
|  | Increase (Decrease) in Principal |  | Increase (Decrease) in Carrying Value |  | Increase (Decrease) in Cash |  | (Decrease) in Equity |  | (Loss) Gain(1)
Conversions and settlements: |  |  |  |  |  |  |  |  |  |
2031B Notes |  | $ | (114 | ) |  | $ | (362 | ) |  | $ | (389 | ) |  | $ | — |  |  | $ | (24 | )
2033E Notes |  | (6 | ) |  | (6 | ) |  | (18 | ) |  | (14 | ) |  | 2 |
|  | (120 | ) |  | (368 | ) |  | (407 | ) |  | (14 | ) |  | (22 | )
Repurchases: |  |  |  |  |  |  |  |  |  |
2032C Notes |  | (5 | ) |  | (4 | ) |  | (18 | ) |  | (13 | ) |  | (1 | )
2032D Notes |  | (31 | ) |  | (26 | ) |  | (107 | ) |  | (79 | ) |  | (2 | )
|  | (36 | ) |  | (30 | ) |  | (125 | ) |  | (92 | ) |  | (3 | )
Issuance |  | 1,000 |  |  | 1,000 |  |  | 988 |  |  | — |  |  | — |
Early repayment of note |  | (121 | ) |  | (120 | ) |  | (122 | ) |  | — |  |  | (5 | )
|  | $ | 723 |  |  | $ | 482 |  |  | $ | 334 |  |  | $ | (106 | ) |  | $ | (30 | )
(1) | Included in other non-operating expense.
Conversions and Settlements: During the first six months of 2015, we had the following debt conversions and settlements: 2031B Notes – On July 23, 2014, we called for the redemption of our remaining 2031B Notes effective on August 22, 2014. Prior to such effective date, substantially all of the holders of our 2031B Notes exercised their option to convert their notes and, in each case, we elected to settle the amount due upon conversion entirely in cash. 2033E Notes – On September 30, 2014, a holder converted a portion of our 2033E Notes, and we elected to settle the amount due upon conversion entirely in cash. As a result of our elections to settle the amounts due upon conversion in cash, each of the settlement obligations became derivative debt liabilities subject to mark-to-market accounting treatment. Under the terms of the indentures for the above notes, cash settlement amounts for these derivative debt liabilities were determined based on the shares underlying the converted notes multiplied by the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Therefore, at the dates of our election to settle the conversion in cash, we reclassified the fair values of the equity components of each of the converted notes from additional capital to derivative debt liabilities within current debt in our consolidated balance sheet. Repurchases: During the first quarter of 2015, we repurchased a portion of our 2032C Notes and 2032D Notes in privately-negotiated transactions. The liability and equity components of the repurchased notes had previously been stated separately within debt and additional capital in our consolidated balance sheet. As a result, our accounting for the repurchased notes affected debt and equity. Issuance: On February 3, 2015, we issued $1.00 billion in principal amount of 2023 Notes due August 2023. Issuance costs for the 2023 Notes totaled $12 million. The 2023 Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our domestic restricted subsidiaries (which are generally subsidiaries in the U.S. in which we own at least 80% of the voting stock) to (1) create or incur certain liens and enter into sale and lease-back transactions, (2) create, assume, incur or guarantee certain additional secured indebtedness and unsecured indebtedness of certain of our domestic restricted subsidiaries, and (3) consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our assets, to another entity. These covenants are subject to a number of limitations, exceptions, and qualifications. Cash Redemption at Our Option: Prior to February 1, 2018, we may redeem the 2023 Notes, in whole or in part, at a price equal to the principal amount of the 2023 Notes to be redeemed plus a make-whole premium as described in the indenture governing the 2023 Notes, together with accrued and unpaid interest. On or after February 1, 2018, we may redeem the 2023 Notes, in whole or in part, at prices above the principal amount that decline over time, as specified in the indenture, together with accrued and unpaid interest. Additionally, prior to February 1, 2018, we may use the net cash proceeds of one or more equity offerings to redeem up to 35% of the aggregate principal amount of the 2023 Notes at a price equal to 105.25% of the principal amount together with accrued and unpaid interest. Early Repayment of Note: On October 17, 2014, we repaid a note prior to its scheduled maturity. 2014 Debt Activity Throughout 2014, we reduced the dilutive effects of our convertible notes by exchanging portions of these notes with less-dilutive convertible notes, or by converting or repurchasing portions of these notes using cash generated from operations and proceeds from issuing non-convertible debt. In the first six months of 2014, we incurred losses related to these activities as follows:
• | $49 million (which included $38 million in non-operating expense and $11 million of interest expense from the payment of a "make-whole") from the exchange of an aggregate principal amount of $440 million of 2027 Notes, 2031A Notes, and 2031B Notes into 2043G Notes;
• | $112 million (which included $106 million in non-operating expense and $6 million of interest expense from the payment of a "make-whole") from the conversion of $351 million of aggregate principal amount of 2014 Notes, 2027 Notes, and 2031A Notes; and
• | $11 million in non-operating expense from the cash repurchase of $164 million of aggregate principal amount of 2031B Notes, 2032C Notes, and 2032D Notes.
Convertible Notes With Debt and Equity Components As of March 5, 2015, the trading price of our common stock was higher than the conversion prices of all of our outstanding convertible notes. As a result, the conversion values were in excess of principal amounts for such notes. The following table summarizes our convertible notes outstanding as of March 5, 2015:
|  | Holder Put Date(1) |  | Outstanding Principal |  | Underlying Shares |  | Conversion Price Per Share |  | Conversion Price Per Share Threshold(2) |  | Conversion Value in Excess of Principal(3)
2032C Notes |  | May 2019 |  | $ | 357 |  |  | 37 |  |  | $ | 9.63 |  |  | $ | 12.52 |  |  | $ | 730 |
2032D Notes |  | May 2021 |  | 313 |  |  | 31 |  |  | 9.98 |  |  | 12.97 |  |  | 604 |
2033E Notes |  | February 2018 |  | 294 |  |  | 27 |  |  | 10.93 |  |  | 14.21 |  |  | 492 |
2033F Notes |  | February 2020 |  | 300 |  |  | 27 |  |  | 10.93 |  |  | 14.21 |  |  | 504 |
2043G Notes(4) |  | November 2028 |  | 1,025 |  |  | 35 |  |  | 29.16 |  |  | 37.91 |  |  | 4 |
|  |  |  | $ | 2,289 |  |  | 157 |  |  |  |  |  |  | $ | 2,334 |
(1) | The terms of our convertible notes give holders the right to require us to repurchase all or a portion of their notes at a date prior to the contractual maturities of the notes.
(2) | Holders have the right to convert all or a portion of their notes at a date prior to the contractual maturity if, during any calendar quarter, the closing price of our common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is more than 130% of the conversion price. The closing price of our common stock exceeded the thresholds for the calendar quarter ended March 31, 2015; therefore, our 2032 Notes and 2033 Notes notes are convertible by the holders through June 30, 2015.
(3) | Based on our closing share price of $29.28 as of March 5, 2015.
(4) | The original principal amount of $820 million accretes up to $917 million in November 2028 and $1.03 billion at maturity in 2043.
We amortize any initial debt discount or imputed interest over the period from issuance of the notes through the earliest date that holders can require us to repurchase all or a portion of their notes (see "Holder Put Date" in the table above). As a result, the period of amortization can be significantly shorter than the contractual maturity. Capital Lease Obligations In the second quarter of 2015, we recorded capital lease obligations aggregating $287 million, including $254 million related to equipment sale-leaseback transactions, at a weighted-average effective interest rate of 3.2%, payable in periodic installments through February 2019. Revolving Credit Facilities On February 12, 2015, we terminated our unused $255 million senior secured three-year revolving credit facility and entered into a senior secured five-year revolving credit facility. Under this credit facility, we can draw up to the lesser of $750 million or 80% of the net outstanding balance of certain trade receivables, as defined in the facility agreement. Any amounts drawn are collateralized by a security interest in such trade receivables. The revolving credit facility contains customary covenants and conditions, including as a funding condition the absence of any event or circumstance that has a material adverse effect on certain of our operations, assets, prospects, business or condition, and including negative covenants that limit or restrict our ability to create liens on, or dispose of, the collateral securing the obligations under this facility. Interest is payable on any outstanding principal balance at a variable rate equal to the London Interbank Offered Rate ("LIBOR") plus an applicable margin ranging between 1.75% to 2.25%, depending upon the utilized portion of the facility. As of March 5, 2015, the amount available to us was $704 million and we had not drawn any amounts under this facility. On December 2, 2014, we terminated our unused $153 million senior secured three-year revolving credit facility and entered into a senior secured five-year revolving credit facility, collateralized by a security interest in certain trade receivables and inventory. The credit facility has an aggregate revolving commitment which is subject to certain adjustments, including an availability block that effectively limits the maximum amount we could draw to $540 million. Additionally, the maximum amount we could draw may decrease further if the value, as defined, of our trade receivables and inventory collateralizing the credit facility, decreases below a specified threshold. The revolving credit facility contains customary covenants and conditions, including as a funding condition the absence of any event or circumstance that has a material adverse effect on our business or financial condition. Generally, interest is payable on any outstanding principal balance at a variable rate not to exceed LIBOR plus an applicable margin ranging between 1.25% to 1.75%, depending upon the utilized portion of the facility. As of March 5, 2015, the amount available to us was $473 million and we had not drawn any amounts under this facility. Contractual Maturities As of March 5, 2015, debt maturities and future minimum lease payments under capital lease obligations were as follows:
|  | Notes Payable |  | Capital Lease Obligations
Remainder of 2015 |  | $ | 65 |  |  | $ | 202 |
2016 |  | 287 |  |  | 340 |
2017 |  | 258 |  |  | 164 |
2018 |  | 551 |  |  | 122 |
2019 |  | 643 |  |  | 85 |
2020 and thereafter |  | 4,561 |  |  | 109 |
Unamortized discounts and interest, respectively |  | (592 | ) |  | (77 | )
|  | $ | 5,773 |  |  | $ | 945 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
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