Debt

Commercial Paper

The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of July 1, 2017 and September 24, 2016, the Company had $12.0 billion and $8.1 billion of Commercial Paper outstanding, respectively, with maturities generally less than nine months. The weighted-average interest rate of the Company’s Commercial Paper was 1.01% as of July 1, 2017 and 0.45% as of September 24, 2016.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the nine months ended July 1, 2017 and June 25, 2016 (in millions):



	Nine Months Ended
	July 1, 2017			June 25, 2016
Maturities less than 90 days:
Proceeds from/(Repayments of) commercial paper, net	$	(143	)	$	4,154

Maturities greater than 90 days:
Proceeds from commercial paper	12,633			1,846
Repayments of commercial paper	(8,624		)	(2,008		)
Proceeds from/(Repayments of) commercial paper, net	4,009			(162		)

Total change in commercial paper, net	$	3,866		$	3,992

Term Debt

As of July 1, 2017, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $96.6 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated and Australian dollar-denominated floating-rate notes, semi-annually for the U.S. dollar-denominated, Australian dollar-denominated, British pound-denominated and Japanese yen-denominated fixed-rate notes and annually for the euro-denominated and Swiss franc-denominated fixed-rate notes. The following table provides a summary of the Company’s term debt as of July 1, 2017 and September 24, 2016:



	Maturities			July 1, 2017								September 24, 2016
	Maturities			Amount (in millions)			Effective Interest Rate					Amount (in millions)			Effective Interest Rate
2013 debt issuance of $17.0 billion:
Floating-rate notes	2018		2018	$	2,000			1.10%		1.10	%	$	2,000			1.10%		1.10	%
Fixed-rate 1.000% – 3.850% notes	2018	–	2043	12,500				1.08%	–	3.91	%	12,500				1.08%	–	3.91	%

2014 debt issuance of $12.0 billion:
Floating-rate notes	2019	–	2019	1,000				1.48%		1.48	%	2,000				0.86%	–	1.09	%
Fixed-rate 2.100% – 4.450% notes	2019	–	2044	8,500				1.48%	–	4.48	%	10,000				0.85%	–	4.48	%

2015 debt issuances of $27.3 billion:
Floating-rate notes	2019	–	2020	1,532				1.43%	–	1.87	%	1,781				0.87%	–	1.87	%
Fixed-rate 0.350% – 4.375% notes	2019	–	2045	24,259				0.28%	–	4.51	%	25,144				0.28%	–	4.51	%

2016 debt issuances of $24.9 billion:
Floating-rate notes	2019	–	2021	1,350				1.31%	–	2.32	%	1,350				0.91%	–	1.95	%
Fixed-rate 1.100% – 4.650% notes	2018	–	2046	23,610				1.13%	–	4.78	%	23,609				1.13%	–	4.58	%

Second quarter 2017 debt issuance of $10.0 billion:
Floating-rate notes			2019	500						1.26	%	—						—	%
Floating-rate notes			2020	500						1.38	%	—						—	%
Floating-rate notes			2022	1,000						1.68	%	—						—	%
Fixed-rate 1.550% notes			2019	500						1.59	%	—						—	%
Fixed-rate 1.900% notes			2020	1,000						1.38	%	—						—	%
Fixed-rate 2.500% notes			2022	1,500						1.67	%	—						—	%
Fixed-rate 3.000% notes			2024	1,750						1.98	%	—						—	%
Fixed-rate 3.350% notes			2027	2,250						2.12	%	—						—	%
Fixed-rate 4.250% notes			2047	1,000						4.26	%	—						—	%

Second quarter 2017 debt issuance of $1.0 billion:
Fixed-rate 4.300% notes			2047	1,000						4.30	%	—						—	%

Third quarter 2017 debt issuance of $7.0 billion:
Floating-rate notes			2020	500						1.25	%	—						—	%
Floating-rate notes			2022	750						1.53	%	—						—	%
Fixed-rate 1.800% notes			2020	1,000						1.84	%	—						—	%
Fixed-rate 2.300% notes			2022	1,000						2.34	%	—						—	%
Fixed-rate 2.850% notes			2024	1,750						2.16	%	—						—	%
Fixed-rate 3.200% notes			2027	2,000						2.34	%	—						—	%

Third quarter 2017 euro-denominated debt issuance of €2.5 billion:
Fixed-rate 0.875% notes			2025	1,419						3.03	%	—						—	%
Fixed-rate 1.375% notes			2029	1,419						3.37	%	—						—	%

Third quarter 2017 debt issuance of $1.0 billion:
Fixed-rate 3.000% notes			2027	1,000						3.03	%	—						—	%
Total term debt				96,589								78,384
Unamortized premium/(discount) and issuance costs, net				(210		)						(174		)
Hedge accounting fair value adjustments				(20		)						717
Less: Current portion of long-term debt				(6,495		)						(3,500		)
Total long-term debt				$	89,864							$	75,427

To manage interest rate risk on certain of its fixed-rate notes issued during the third quarter of 2017 and maturing in 2024 and 2027, the Company entered into interest rate swaps with an aggregate notional amount of $2.75 billion, which effectively converted the fixed interest rates on a portion of these notes to floating interest rates. The Company also hedged its entire third quarter 2017 issuance of €2.5 billion of euro-denominated notes by entering into foreign currency swaps to effectively convert these notes to U.S. dollar-denominated notes.

To manage interest rate risk on certain of its fixed-rate notes issued during the second quarter of 2017 and maturing in 2020, 2022, 2024 and 2027, the Company entered into interest rate swaps with an aggregate notional amount of $6.5 billion, which effectively converted the fixed interest rates on these notes to floating interest rates.

A portion of the Company’s Japanese yen-denominated notes is designated as a hedge of the foreign currency exposure of the Company’s net investment in a foreign operation. The foreign currency transaction gain or loss on the Japanese yen-denominated debt designated as a hedge is recorded in OCI as a part of the cumulative translation adjustment. As of July 1, 2017 and September 24, 2016, the carrying value of the debt designated as a net investment hedge was $1.5 billion and $1.9 billion, respectively. For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.”

The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to hedging. The Company recognized $574 million and $1.6 billion of interest expense on its term debt for the three- and nine-month periods ended July 1, 2017, respectively. The Company recognized $393 million and $975 million of interest expense on its term debt for the three- and nine-month periods ended June 25, 2016, respectively.

As of July 1, 2017 and September 24, 2016, the fair value of the Company’s Notes, based on Level 2 inputs, was $98.3 billion and $81.7 billion, respectively.