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Borrowings
12 Months Ended
Oct. 03, 2015
Debt Disclosure [Abstract]  
Borrowings
Borrowings
The Company’s borrowings at October 3, 2015 and September 27, 2014, including the impact of interest rate and cross-currency swaps, are summarized below:
 
 
 
 
 
 
2015
 
 
2015
 
2014
 
Stated
Interest
Rate (1)
 
Pay Floating Interest rate and Cross-
Currency Swaps (2)
 
Effective
Interest
Rate (3)
 
Swap
Maturities
Commercial paper
 
$
2,430

 
$
50

 

 
$

 
0.19
%
 
 
U.S. medium-term notes (4)
 
13,873

 
13,668

 
2.95
%
 
6,425

 
2.31
%
 
2016-2023
Foreign currency denominated debt
 
447

 
530

 
4.94
%
 
249

 
4.74
%
 
2017
Capital Cities/ABC debt
 
108

 
110

 
8.75
%
 

 
6.01
%
 
 
Other (5)
 
159

 
184

 
 
 

 
 
 
 
 
 
17,017

 
14,542

 
2.62
%
 
6,674

 
2.10
%
 
 
International Theme Parks borrowings
 
319

 
253

 
3.30
%
 

 
3.41
%
 
 
Total borrowings
 
17,336

 
14,795

 
2.63
%
 
6,674

 
2.12
%
 
 
Less current portion
 
4,563

 
2,164

 
1.39
%
 
1,250

 
0.73
%
 
 
Total long-term borrowings
 
$
12,773

 
$
12,631

 
 
 
$
5,424

 
 
 
 
 
(1) 
The stated interest rate represents the weighted-average coupon rate for each category of borrowings. For floating rate borrowings, interest rates are the rates in effect at October 3, 2015; these rates are not necessarily an indication of future interest rates.
(2) 
Amounts represent notional values of interest rate and cross-currency swaps outstanding as of October 3, 2015.
(3) 
The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance discounts and costs.
(4) 
Includes debt issuance costs totaling $46 million and $45 million at October 3, 2015 and September 27, 2014, respectively.
(5) 
Includes market value adjustments for debt with qualifying hedges totaling $131 million and $74 million at October 3, 2015 and September 27, 2014, respectively.
Commercial Paper
At October 3, 2015 and September 27, 2014, the Company had $2,430 million and $50 million, respectively, of commercial paper borrowings outstanding and had bank facilities with a syndicate of lenders to support commercial paper borrowings as follows:
 
Committed
Capacity
 
Capacity
Used
 
Unused
Capacity
Facility expiring March 2016
$
1,500

 
$

 
$
1,500

Facility expiring June 2017
2,250

 

 
2,250

Facility expiring March 2019
2,250

 

 
2,250

Total
$
6,000

 
$

 
$
6,000


All of the above bank facilities allow for borrowings at LIBOR-based rates plus a spread depending on the credit default swap spread applicable to the Company’s debt, subject to a cap and floor that vary with the Company’s debt rating assigned by Moody’s Investors Service and Standard and Poor’s. The spread above LIBOR can range from 0.23% to 1.63%. The Company also has the ability to issue up to $800 million of letters of credit under the facility expiring in March 2019, which if utilized, reduces available borrowings under this facility. As of October 3, 2015, the Company has $187 million of outstanding letters of credit, of which none were issued under this facility. The facilities contain only one financial covenant, relating to interest coverage, which the Company met on October 3, 2015 by a significant margin, and specifically exclude certain entities, including the International Theme Parks, from any representations, covenants, or events of default.
Commercial paper activity is as follows:
 
Commercial paper with original maturities less than three months, net(1)
 
Commercial paper with original maturities greater than three months
 
Total
Balance at Sept 28, 2013
$

 
$

 
$

Additions
50

 
2,600

 
2,650

Payments

 
(2,600
)
 
(2,600
)
Other Activity

 

 

Balance at Sept 27, 2014
$
50

 
$

 
$
50

Additions
2,277

 
3,019

 
5,296

Payments

 
(2,920
)
 
(2,920
)
Other Activity
3

 
1

 
4

Balance at Oct 3, 2015
$
2,330

 
$
100

 
$
2,430


(1) Borrowings and reductions of borrowings are reported net.
Shelf Registration Statement
At October 3, 2015, the Company had a shelf registration statement in place, which allows the Company to issue various types of debt instruments, such as fixed or floating rate notes, U.S. dollar or foreign currency denominated notes, redeemable notes, global notes, and dual currency or other indexed notes. Issuances under the shelf registration will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued. Our ability to issue debt is subject to market conditions and other factors impacting our borrowing capacity.
U.S. Medium-Term Note Program
At October 3, 2015, the total debt outstanding under the U.S. medium-term note program was $13.9 billion with maturities ranging from 1 to 78 years. The debt outstanding includes $13.7 billion of fixed rate notes, which have stated interest rates that range from 0.45% to 7.55% and $260 million of floating rate notes that bear interest at U.S. LIBOR plus or minus a spread. At October 3, 2015, the effective rate on floating rate notes was 0.69%.
European Medium-Term Note Program
At October 3, 2015, the Company had a European medium-term note program, which allows the Company to issue various types of debt instruments such as fixed or floating rate notes, U.S. dollar or foreign currency denominated notes, redeemable notes and index linked or dual currency notes. Capacity under the program is $4.0 billion, subject to market conditions and other factors impacting our borrowing capacity. Capacity under the program replenishes as outstanding debt under the program is repaid. The Company had no outstanding borrowings under the program at October 3, 2015.
Foreign Currency Denominated Debt
At October 3, 2015, the Company had Canadian $328 million ($249 million) of debt outstanding, which bears interest at the Canadian Dealer Offered Rate plus 0.83% (1.57% at October 3, 2015) and matures in 2017.
In September 2015, the Company renewed and increased its short-term credit facilities to Indian rupee (INR) 18.9 billion ($287 million), which bear interest at rates determined at the time of drawdown and expire in 2016. At October 3, 2015, the Company had borrowed INR 5.8 billion ($88 million) under the facilities, which bear interest at an average rate of 9.19%. Additionally, in September 2015, the Company entered into long-term credit facilities of INR 9.6 billion ($146 million), which bear interest at rates determined at the time of drawdown and expire in 2020. At October 3, 2015, the Company had INR 7.2 billion ($110 million) of borrowings outstanding under the facilities, which bear interest at an average rate of 9.13%, subject to semi-annual revisions, and mature in 2020.
Capital Cities/ABC Debt
In connection with the Capital Cities/ABC, Inc. acquisition in 1996, the Company assumed debt previously issued by Capital Cities/ABC, Inc. At October 3, 2015, the outstanding balance was $108 million, matures in 2021 and has a stated interest rate of 8.75%.
International Theme Parks Borrowings
HKDL has an unsecured loan facility of HK$1.2 billion ($155 million) from the HKSAR. The interest rate on this loan is subject to biannual revisions, but is capped at an annual rate of 7.625% (until March 2022) and 8.50% (until September 2022). As of October 3, 2015, the rate on the loan was 4.13%. Debt service payments will be made depending on sufficient available funds. Repayment is required by September 30, 2022; however, early repayment is permitted.
As part of a plan to construct a third hotel at HKDL, HKSAR has committed to convert up to $112 million of the balance of this loan to equity in HKDL. See Note 6 for further discussion of the transaction.
Shendi has committed to provide shareholder loans to Shanghai Disney Resort totaling 6.4 billion yuan (approximately $1.0 billion), of which 1.0 billion yuan ($160 million) has been provided as of October 3, 2015. The interest rate on the outstanding loan is 2.5% until the park opens, zero percent through December 31, 2020 and 8.0% thereafter. Of the remaining balance available to be drawn, 4.0 billion yuan will be at these same rates and 1.4 billion yuan will be at an interest rate of 7.0% until the park opens and 8.0% thereafter. Debt service payments will be made depending on sufficient available funds. Repayment is required by March 2036; however, early repayment is permitted.
Total borrowings, excluding market value adjustments and debt issuance costs, have the following scheduled maturities:
 
Before 
International
Theme Parks
Consolidation
 
International 
Theme Parks
 
Total
2016
$
4,526

 
$
24

 
$
4,550

2017
2,097

 
24

 
2,121

2018
1,800

 
25

 
1,825

2019
1,501

 
30

 
1,531

2020
860

 
32

 
892

Thereafter
6,148

 
184

 
6,332

 
$
16,932

 
$
319

 
$
17,251


The Company capitalizes interest on assets constructed for its parks and resorts and on theatrical productions. In fiscal years 2015, 2014 and 2013, total interest capitalized was $110 million, $73 million and $77 million, respectively. Interest expense, net of capitalized interest, for fiscal years 2015, 2014 and 2013 was $265 million, $294 million and $349 million, respectively.