Debt

Short-term debt at September 30 consisted of:



(Millions of dollars)	2015		2014
Loans Payable
Domestic	$	700	$	200
Foreign	—		3
Current portion of long-term debt	752		—
	$	1,452	$	203

The weighted average interest rates for short-term debt were 0.64% and 0.40% at September 30, 2015 and 2014, respectively. Domestic loans payable consist of a commercial paper program the Company entered into in January 2015, in anticipation of the closing of the CareFusion acquisition, which is further discussed in Note 9. Under the program, the Company may issue up to $1 billion in short-term, unsecured commercial paper notes. A former commercial paper program which had been in place to meet short-term financing needs was terminated in February 2015 and the outstanding borrowings of $200 million under the former program were rolled into the new commercial paper program. Borrowings of $700 million were outstanding under the current commercial paper program at September 30, 2015, of which $500 million was used to finance the Company’s acquisition of CareFusion and to pay related fees and expenses. Foreign loans payable consisted of short-term borrowings from financial institutions. The current portion of long-term debt includes $750 million of floating rates notes due on June 15, 2016. These floating rate notes, as well as additional senior unsecured notes, were issued in December 2014 as part of the Company's plan for financing the cash requirements relative to the CareFusion acquisition. The total aggregate principal amount of senior unsecured notes issued in December 2014 was $6.2 billion.

Also in December 2014, the Company entered into a 364-day term loan agreement that provided for a $1 billion term loan facility, the proceeds under which could only be used to pay the cash consideration due pursuant to the CareFusion acquisition agreement, as well as to pay financing fees, other related fees and other expenses associated with the CareFusion acquisition. At September 30, 2015, the term loan was fully repaid with no borrowings outstanding, reflecting principal payments of $650 million, $250 million and $100 million made in April, July and September 2015, respectively.

Concurrent with the execution of the agreement to acquire CareFusion, the Company secured $9.1 billion of fully committed bridge financing to ensure its ability to fund the cash portion of consideration due under the agreement, as well as to pay fees and expenses related to the acquisition. This bridge credit agreement was terminated upon the closing of the CareFusion acquisition in March 2015.

The Company has available a $1 billion syndicated credit facility. This credit facility, under which there were no borrowings outstanding at September 30, 2015, provides backup support for its commercial paper program and can also be used for other general corporate purposes. It includes a provision that enables the Company, subject to additional commitments made by the lenders, to access up to an additional $500 million in financing through the facility, for a maximum aggregate commitment of $1.5 billion. During the third quarter of fiscal year 2014, the Company extended the expiration date of this credit facility to May 2018 from the original expiration date of May 2017. The credit facility includes a single financial covenant that requires the Company to maintain an interest expense coverage ratio (ratio of earnings before income taxes, depreciation and amortization to interest expense) of not less than 5-to-1 for the most recent four consecutive fiscal quarters. The Company was in compliance with this covenant as of September 30, 2015. In addition, the Company has informal lines of credit outside of the United States.

Upon the closing of the CareFusion acquisition in March 2015, the Company assumed the indebtedness of CareFusion, including senior unsecured notes with an aggregate principal amount of $2 billion, which was recorded on the acquisition date at a fair value of $2.174 billion. In March 2015, subsequent to closing the acquisition of CareFusion, the Company commenced offers to exchange all validly tendered and accepted notes issued by CareFusion for notes to be issued by the Company. This offer expired in April 2015 and the aggregate principal amounts below of each series of the CareFusion notes were validly tendered and exchanged for notes issued by the Company.



	Aggregate Principal Amount		Percentage of Total Outstanding Principal Amount of such Series of Existing Notes
Interest Rate and Maturity	(Millions of dollars)
1.450% Notes due May 15, 2017	$	293	97.64	%
6.375% Notes due August 1, 2019	665		95.00	%
3.300% Notes due March 1, 2023	294		97.95	%
3.875% Notes due May 15, 2024	397		99.37	%
4.875% Notes due May 15, 2044	300		99.96	%
Total senior notes issued under exchange transaction	$	1,949

This exchange transaction was accounted for as a modification of the original debt instruments. As such, no gain or loss was recognized in the Company’s consolidated results of operations as a result of this exchange transaction. Following the exchange of the notes, the aggregate principal amount of CareFusion notes that remain outstanding across the five series is $51 million.

Long-Term Debt at September 30 consisted of:



(Millions of dollars)	2015			2014
1.750% Notes due November 8, 2016	$	499		$	499
1.450% Notes due May 15, 2017	300		(A)	—
1.800% Notes due December 15, 2017	1,246		(B)	—
4.900% Notes due April 15, 2018	202			202
5.000% Notes due May 15, 2019	497			497
6.375% Notes due August 1, 2019	802		(A)	—
2.675% Notes due December 15, 2019	1,244		(B)	—
3.250% Notes due November 12, 2020	697			697
3.125% Notes due November 8, 2021	1,013			997
3.300% Notes due March 1, 2023	305		(A)	—
3.875% Notes due May 15, 2024	419		(A)	—
3.734% Notes due December 15, 2024	1,739		(B)	—
7.000% Debentures due August 1, 2027	168			168
6.700% Debentures due August 1, 2028	167			167
6.000% Notes due May 15, 2039	246			246
5.000% Notes due November 12, 2040	296			296
4.875% Notes due May 15, 2044	334		(A)	—
4.685% Notes due December 15, 2044	1,190		(B)	—
Other long-term debt	5			$	—
	$	11,370		$	3,768


(A)	Represents senior unsecured notes issued in the April 2015 exchange of all validly tendered and accepted CareFusion notes for notes issued by the Company, as further discussed above.


(B)	Represents senior unsecured notes issued in December 2014 in connection with the CareFusion acquisition, as further discussed above.

The aggregate annual maturities of long-term debt during the fiscal years ending September 30, 2016 to 2020 are as follows: 2016 — $750; 2017 — $800; 2018 — $1.45 billion; 2019 — $1.2 billion; 2020 — $1.25 billion.

The Company capitalizes interest costs as a component of the cost of construction in progress. A summary of interest costs and payments for the years ended September 30 is as follows:



(Millions of dollars)	2015		2014		2013
Charged to operations	$	371	$	135	$	138
Capitalized	30		32		33
Total interest costs	$	401	$	167	$	171
Interest paid, net of amounts capitalized	$	313	$	135	$	143

The amounts of interest charged to operations and interest paid include $107 million of financing costs associated with the CareFusion acquisition, including interest on the senior unsecured notes issued in December 2014 and commitment fees for the bridge loan facility entered into concurrently with the execution of the agreement to acquire CareFusion. Additional information regarding these costs is provided in Note 9.