NOTE 10 – DEBT

The Company’s current and long-term debt and available financing consist of the following:

	Debt at June 30						Available financing at June 30, 2018
(In millions)	2018			2017			Committed		Uncommitted
4.15% Senior Notes, due March 15, 2047 (“2047 Senior Notes”)	$	494		$	493		$	—	$	—
4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”)	455			455			—		—
3.70% Senior Notes, due August 15, 2042 (“2042 Senior Notes”)	247			247			—		—
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”)	294			294			—		—
5.75% Senior Notes, due October 15, 2033 (“2033 Senior Notes”)	197			197			—		—
3.15% Senior Notes, due March 15, 2027 (“2027 Senior Notes”)	497			497			—		—
2.35% Senior Notes, due August 15, 2022 (“2022 Senior Notes”)	242			252			—		—
1.70% Senior Notes, due May 10, 2021 (“2021 Senior Notes”)	433			445			—		—
1.80% Senior Notes, due February 7, 2020 (“2020 Senior Notes”)	495			498			—		—
Commercial paper that matured through July 2018 and 2017 (2.00% and 1.07% average interest rate, respectively)	170			170			—		1,330
Other long-term borrowings	7			5			—		—
Other current borrowings	13			19			—		152
Revolving credit facility	—			—			1,500		—

	3,544			3,572			$	1,500	$	1,482

Less current debt including current maturities	(183		)	(189		)

	$	3,361		$	3,383

As of June 30, 2018, the Company’s long-term debt consisted of the following:

Notes	Issue Date	Price		Yield		Principal		Unamortized Debt (Discount) Premium			Interest rate swap adjustments			Debt Issuance Costs			Semi-annual interest payments
($ in millions)

2047 Senior Notes(1),(8)	February 2017	99.739	%	4.165	%	$	500	$	(1	)	$	—		$	(5	)	March 15/September 15
2045 Senior Notes(2),(8)	June 2015	97.999		4.497		300		(6		)	—			(3		)	June 15/December 15
2045 Senior Notes(2),(8)	May 2016	110.847		3.753		150		16			—			(2		)	June 15/December 15
2042 Senior Notes(8)	August 2012	99.567		3.724		250		(1		)	—			(2		)	February 15/August 15
2037 Senior Notes(3),(8)	May 2007	98.722		6.093		300		(3		)	—			(3		)	May 15/November 15
2033 Senior Notes(4)	September 2003	98.645		5.846		200		(2		)	—			(1		)	April 15/October 15
2027 Senior Notes(5),(8)	February 2017	99.963		3.154		500		—			—			(3		)	March 15/September 15
2022 Senior Notes(6),(8)	August 2012	99.911		2.360		250		—			(7		)	(1		)	February 15/August 15
2021 Senior Notes(6),(7),(8)	May 2016	99.976		1.705		450		—			(15		)	(2		)	May 10/November 10
2020 Senior Notes(6),(8)	February 2017	99.986		1.805		500		—			(4		)	(1		)	February 7/August 7

(1) In November 2016, in anticipation of the issuance of the 2047 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $350 million at a weighted-average all-in rate of 3.01%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $3 million that is being amortized against interest expense over the life of the 2047 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2047 Senior Notes will be 4.17% over the life of the debt.

(2) In April and May 2015, in anticipation of the issuance of the 2045 Senior Notes in June 2015, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $300 million at a weighted-average all-in rate of 2.38%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a gain in OCI of $18 million that will be amortized against interest expense over the life of the 2045 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2045 Senior Notes will be 4.216% over the life of the debt. In May 2016, the Company reopened this offering with the same terms and issued an additional $150 million for an aggregate amount outstanding of $450 million of 2045 Senior Notes.

(3) In April 2007, in anticipation of the issuance of the 2037 Senior Notes, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $210 million at a weighted-average all-in rate of 5.45%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a loss in OCI of $1 million that is being amortized to interest expense over the life of the 2037 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2037 Senior Notes will be 6.181% over the life of the debt.

(4) In May 2003, in anticipation of the issuance of the 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $195 million at a weighted-average all-in rate of 4.53%. The treasury lock agreements were settled upon the issuance of the new debt and the Company received a payment of $15 million that is being amortized against interest expense over the life of the 2033 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2033 Senior Notes will be 5.395% over the life of the debt.

(5) In November 2016, in anticipation of the issuance of the 2027 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $450 million at a weighted-average all-in rate of 2.37%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $2 million that is being amortized against interest expense over the life of the 2027 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2027 Senior Notes will be 3.18% over the life of the debt.

(6) The Company entered into interest rate swap agreements with a notional amount totaling $250 million, $450 million and $250 million to effectively convert the fixed rate interest on its outstanding 2020 Senior Notes, 2021 Senior Notes and 2022 Senior Notes, respectively, to variable interest rates based on three-month LIBOR plus a margin.

(7) In April 2016, in anticipation of the issuance of the 2021 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $400 million at a weighted-average all-in rate of 1.27%. The treasury lock agreements were settled upon the issuance of the new debt and the Company made a payment of $1 million that is being amortized to interest expense over the life of the 2021 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2021 Senior Notes will be 1.844% over the life of the debt.

(8) The Senior Notes contain certain customary incurrence-based covenants, including limitations on indebtedness secured by liens.

The Company has a $1.5 billion senior unsecured revolving credit facility that expires on October 3, 2021 (the “Facility”). The Facility may be used for general corporate purposes. Up to the equivalent of $500 million of the Facility is available for multi-currency loans. Interest rates on borrowings under the Facility will be based on prevailing market interest rates in accordance with the agreement. The Company incurred costs of approximately $1 million to establish the Facility, which will be amortized over the term of the Facility. The Facility has an annual fee of approximately $1 million, payable quarterly, based on the Company’s current credit ratings. The Facility contains a cross-default provision whereby a failure to pay other material financial obligations in excess of $175 million (after grace periods and absent a waiver from the lenders) would result in an event of default and the acceleration of the maturity of any outstanding debt under this facility. At June 30, 2018, no borrowings were outstanding under the Facility.

The Company has a $1.5 billion commercial paper program under which it may issue commercial paper in the United States. As of June 30, 2018, the Company had $170 million of commercial paper outstanding that matured through July 2018, which the Company refinanced as it matured. At August 17, 2018, the Company had $100 million of commercial paper outstanding, which may be refinanced on a periodic basis as it matures at the then-prevailing market interest rates.

The Company maintains uncommitted credit facilities in various regions throughout the world. Interest rate terms for these facilities vary by region and reflect prevailing market rates for companies with strong credit ratings. During fiscal 2018 and 2017, the monthly average amount outstanding was approximately $14 million and $17 million, respectively, and the annualized monthly weighted-average interest rate incurred was approximately 11.9% and 11.2%, respectively.

Refer to Note 14 – Commitments and Contingencies for the Company’s projected debt service payments, as of June 30, 2018, over the next five fiscal years.