Borrowings

The Company’s borrowings at October 1, 2016 and October 3, 2015, including the impact of interest rate and cross-currency swaps, are summarized below:



					2016
	2016		2015		Stated Interest Rate ⁽¹⁾		Pay Floating Interest rate and Cross- Currency Swaps ⁽²⁾		Effective Interest Rate ⁽³⁾		Swap Maturities
Commercial paper	$	1,521	$	2,430	—		$	—	0.54	%
U.S. medium-term notes ⁽⁴⁾	16,827		13,873		2.80	%	8,275		2.58	%	2017-2026
Foreign currency denominated debt	448		447		4.88	%	249		4.83	%	2017
Capital Cities/ABC debt	107		108		8.75	%	—		6.01	%
Other ⁽⁵⁾	180		159				—
	19,083		17,017		2.66	%	8,524		2.49	%
International Theme Parks borrowings	1,087		319		1.92	%	—		4.30	%
Total borrowings	20,170		17,336		2.62	%	8,524		2.59	%
Less current portion	3,687		4,563		1.24	%	1,500		1.47	%
Total long-term borrowings	$	16,483	$	12,773			$	7,024


⁽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 1, 2016; 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 1, 2016.


⁽³⁾	The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance premiums, discounts and costs.


⁽⁴⁾	Includes net debt issuance premiums, discounts and costs totaling $132 million and $88 million at October 1, 2016 and October 3, 2015, respectively.


⁽⁵⁾	Includes market value adjustments for debt with qualifying hedges totaling $146 million and $131 million at October 1, 2016 and October 3, 2015, respectively.

Commercial Paper

The Company has bank facilities with a syndicate of lenders to support commercial paper borrowings as follows:



	Committed Capacity		Capacity Used		Unused Capacity
Facility expiring March 2017	$	1,500	$	—	$	1,500
Facility expiring March 2019	2,250		—		2,250
Facility expiring March 2021	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 1, 2016, the Company has $169 million of outstanding letters of credit, of which none were issued under this facility. The facilities specifically exclude certain entities, including the International Theme Parks, from any representations, covenants, or events of default and contain only one financial covenant, relating to interest coverage, which the Company met on October 1, 2016 by a significant margin.

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 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
Additions	—			4,794			4,794
Payments	(1,559		)	(4,155		)	(5,714		)
Other Activity	6			5			11
Balance at Oct 1, 2016	$	777		$	744		$	1,521

⁽¹⁾ Borrowings and reductions of borrowings are reported net.

Credit facility for cruise ships

In October 2016, the Company entered into two credit facilities to finance new cruise ships, which are expected to be delivered in 2021 and 2023. The financing may be used for up to 80% of the contract price of the cruise ships. Under the agreements, $1.0 billion in financing is available beginning in April 2021 and $1.1 billion is available beginning in April 2023. If utilized, the interest rates will be fixed at 3.48% and 3.74%, respectively, and payable semi-annually. The loans will be repaid in 24 equal installments over a 12-year period from the borrowing date. Early repayment is permitted subject to cancellation fees.

Shelf Registration Statement

The Company has 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 1, 2016, the total debt outstanding under the U.S. medium-term note program was $16.8 billion with maturities ranging from 1 to 77 years. The debt outstanding includes $16.1 billion of fixed rate notes, which have stated interest rates that range from 0.88% to 7.55% and $660 million of floating rate notes that bear interest at U.S. LIBOR plus or minus a spread. At October 1, 2016, the effective rate on floating rate notes was 1.10%.

European Medium-Term Note Program

The Company has 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 1, 2016.

Foreign Currency Denominated Debt

At October 1, 2016, the Company had Canadian $328 million ($249 million) of debt outstanding, which bears interest at the Canadian Dealer Offered Rate plus 0.83% (1.72% at October 1, 2016) and matures in 2017.

The Company has short-term credit facilities of Indian rupee (INR) 11.6 billion ($173 million), which bear interest at rates determined at the time of drawdown and expire in 2017. At October 1, 2016, the outstanding balance was INR 3.6 billion ($54 million), which bears interest at an average rate of 8.35%.

At October 1, 2016, the Company had long-term credit facilities of INR 9.6 billion ($144 million). In October 2016, the balance was repaid and the facilities were canceled.

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 1, 2016, the outstanding balance was $107 million, which includes unamortized fair value adjustments recorded in purchase accounting. The debt matures in 2021 and has a stated interest rate of 8.75%.

International Theme Parks Borrowings

As part of financing the construction of a third hotel at Hong Kong Disneyland Resort, HKSAR converted $113 million of a loan to equity, leaving a balance at October 1, 2016 of HK$0.4 billion ($45 million). The interest rate on this loan is subject to biannual revisions and determined based on the Hong Kong prime rate less 0.875%, but is capped at an annual rate of 7.625% until March 2022. After March 2022, the interest rate is based on the Hong Kong prime rate but is capped at an annual rate of 8.50%. As of October 1, 2016, 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.

In addition, HKSAR provided Hong Kong Disneyland Resort with a loan facility totaling HK$0.8 billion ($104 million) that bears interest at a rate of three month HIBOR plus 2% and matures in 2025; however, earlier repayment is permitted. At October 1, 2016, Hong Kong Disneyland Resort had borrowed HK$0.6 billion ($77 million) under the loan facility, which bears interest at a rate of 2.57%.

Shendi has provided Shanghai Disney Resort with term loans totaling 6.4 billion yuan (approximately $1.0 billion) bearing interest at rates up to 8% and maturing in 2036; however, early repayment is permitted. Shendi has also provided Shanghai Disney Resort with a 1.4 billion yuan (approximately $205 million) line of credit bearing interest at 8%. There is no outstanding balance under the line of credit at October 1, 2016.

Total borrowings, excluding market value adjustments and debt issuance premiums, discounts and costs, have the following scheduled maturities:



	Before International Theme Parks Consolidation		International Theme Parks		Total
2017	$	3,686	$	—	$	3,686
2018	1,804		11		1,815
2019	2,759		—		2,759
2020	896		—		896
2021	2,100		17		2,117
Thereafter	7,824		1,059		8,883
	$	19,069	$	1,087	$	20,156

The Company capitalizes interest on assets constructed for its parks and resorts and on theatrical productions. In fiscal years 2016, 2015 and 2014, total interest capitalized was $139 million, $110 million and $73 million, respectively. Interest expense, net of capitalized interest, for fiscal years 2016, 2015 and 2014 was $354 million, $265 million and $294 million, respectively.