Note 7. Debt

Short-Term Borrowings:

Our short-term borrowings and related weighted-average interest rates consisted of:


	As of September 30, 2015				As of December 31, 2014
	Amount Outstanding		Weighted- Average Rate		Amount Outstanding		Weighted- Average Rate
	(in millions)				(in millions)

Commercial paper	$	1,279		0.5%	$	1,101		0.4%
Bank loans		292		9.0%		204		8.8%

Total short-term borrowings	$	1,571			$	1,305

As of September 30, 2015, the commercial paper issued and outstanding had between 1 and 55 days remaining to maturity. Bank loans include borrowings on primarily uncommitted credit lines maintained by some of our international subsidiaries to meet short-term working capital needs.

Borrowing Arrangements:

We maintain a revolving credit facility for general corporate purposes, including for working capital purposes and to support our commercial paper program. Our $4.5 billion multi-year senior unsecured revolving credit facility expires on October 11, 2018. The revolving credit agreement includes a covenant that we maintain a minimum shareholders’ equity of at least $24.6 billion, excluding accumulated other comprehensive earnings / (losses) and the cumulative effects of any changes in accounting principles. At September 30, 2015, we complied with the covenant as our shareholders’ equity as defined by the covenant was $39.5 billion. The revolving credit facility agreement also contains customary representations, covenants and events of default. There are no credit rating triggers, provisions or other financial covenants that could require us to post collateral as security. As of September 30, 2015, no amounts were drawn on the facility.

Some of our international subsidiaries maintain primarily uncommitted credit lines to meet short-term working capital needs. Collectively, these credit lines amounted to $1.9 billion at September 30, 2015 and $2.1 billion at December 31, 2014. Borrowings on these lines amounted to $292 million at September 30, 2015 and $204 million at December 31, 2014.

Long-Term Debt:

On September 21, 2015, we priced an offering of fr.400 million of Swiss franc-denominated notes, or approximately $414 million in U.S. dollars as of the October 6, 2015 settlement date, consisting of:

•

fr.135 million (or $140 million) of 0.625% fixed rate notes that mature on October 6, 2020

•

fr.265 million (or $274 million) of 1.125% fixed rate notes that mature on December 21, 2023

On October 6, 2015, we received net proceeds of $410 million that were used for general corporate purposes and to fund upcoming debt maturities. On this date, we recorded the fr.400 million of Swiss franc-denominated notes and less than $1 million of premiums and deferred financing costs, which will be amortized into interest expense over the life of the notes.

On June 11, 2015, €400 million of our floating rate euro-denominated notes matured. The notes and accrued interest to date were paid with cash on hand and the issuance of commercial paper.

On March 30, 2015, we issued fr.675 million of Swiss franc-denominated notes, or approximately $694 million in U.S. dollars as of March 31, 2015, consisting of:

•

fr.175 million (or $180 million) of 0.000% fixed rate notes that mature on March 30, 2017

•

fr.300 million (or $308 million) of 0.625% fixed rate notes that mature on December 30, 2021

•

fr.200 million (or $206 million) of 1.125% fixed rate notes that mature on December 30, 2025

We received net proceeds of $675 million that were used for general corporate purposes. We recorded approximately $2 million of premiums and deferred financing costs, which will be amortized into interest expense over the life of the notes.

On March 20, 2015, €850 million of our 6.250% euro-denominated notes matured. The notes and accrued interest to date were paid with the issuance of commercial paper and cash on hand.

On March 20, 2015, we completed a cash tender offer and retired $2.5 billion of our long-term U.S. dollar debt consisting of:

•

$102 million of our 6.500% Notes due in August 2017

•

$115 million of our 6.125% Notes due in February 2018

•

$80 million of our 6.125% Notes due in August 2018

•

$691 million of our 5.375% Notes due in February 2020

•

$201 million of our 6.500% Notes due in November 2031

•

$26 million of our 7.000% Notes due in August 2037

•

$71 million of our 6.875% Notes due in February 2038

•

$69 million of our 6.875% Notes due in January 2039

•

$1,143 million of our 6.500% Notes due in February 2040

We financed the repurchase of these notes, including the payment of accrued interest and other costs incurred, from net proceeds received from the $2.8 billion notes issuance on March 6, 2015 described below and the issuance of commercial paper. In connection with retiring this debt, during the first three months of 2015, we recorded a $708 million loss on extinguishment of debt within interest expense related to the amount we paid to retire the debt in excess of its carrying value and from recognizing unamortized discounts and deferred financing costs in earnings at the time of the debt extinguishment. The loss on extinguishment is included in long-term debt repayments in the condensed consolidated statement of cash flows for the nine months ended September 30, 2015. We also recognized $5 million of charges within interest expense from hedging instruments related to the retired debt. Upon extinguishing the debt, the deferred cash flow hedge amounts were recorded in earnings.

On March 6, 2015, we issued €2.0 billion of euro-denominated notes and £450 million of British pound sterling-denominated notes, or approximately $2.8 billion in U.S. dollars as of March 31, 2015, consisting of:

•

€500 million (or $537 million) of 1.000% fixed rate notes that mature on March 7, 2022

•

€750 million (or $805 million) of 1.625% fixed rate notes that mature on March 8, 2027

•

€750 million (or $805 million) of 2.375% fixed rate notes that mature on March 6, 2035

•

£450 million (or $667 million) of 3.875% fixed rate notes that mature on March 6, 2045

We received net proceeds of $2,890 million that were used to fund the March 2015 tender offer and for other general corporate purposes. We recorded approximately $29 million of discounts and deferred financing costs, which will be amortized into interest expense over the life of the notes.

Our weighted-average interest rate on our total debt was 3.5% as of September 30, 2015, following the completion of our tender offer and debt issuances in the first quarter. Our weighted-average interest rate on our total debt as of December 31, 2014 was 4.3%, down from 4.8% as of December 31, 2013.

Fair Value of Our Debt:

The fair value of our short-term borrowings at September 30, 2015 and December 31, 2014 reflects current market interest rates and approximates the amounts we have recorded on our consolidated balance sheet. The fair value of our long-term debt was determined using quoted prices in active markets (Level 1 valuation data) for the publicly traded debt obligations. At September 30, 2015, the aggregate fair value of our total debt was $16,874 million and its carrying value was $16,359 million. At December 31, 2014, the aggregate fair value of our total debt was $18,463 million and its carrying value was $16,700 million.

Interest and Other Expense / (Income):

Interest and other expense / (income) within our results of continuing operations consisted of:


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
	(in millions)

Interest expense, debt	$	139		$	188		$	461		$	582
Loss on debt extinguishment and related expenses		–			–			713			495
Coffee business transactions currency-related net gains		(29	)		(420	)		(436	)		(413	)
Loss related to interest rate swaps		–			–			34			–
Other expense, net		4			5			42			53

Interest and other expense / (income)	$	114		$	(227	)	$	814		$	717

See Note 2, Divestitures and Acquisitions, and Note 8, Financial Instruments, for information on the currency exchange forward contracts associated with the coffee business transactions. Also see Note 8, Financial Instruments, for information on the loss related to U.S. dollar interest rate swaps no longer designated as accounting cash flow hedges during the first quarter of 2015.