Note 6 – Debt

Commercial Paper

In 2014, the Board of Directors authorized the Company to issue unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company intends to use net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of March 28, 2015 and September 27, 2014, the Company had $3.8 billion and $6.3 billion of Commercial Paper outstanding, respectively, with a weighted-average interest rate of 0.10% and 0.12%, respectively, and maturities generally less than nine months.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the six months ended March 28, 2015 (in millions):


Maturities less than 90 days:
Proceeds from (repayments of) commercial paper, net	$	985

Maturities greater than 90 days:
Proceeds from commercial paper		547
Repayments of commercial paper		(4,040	)

Maturities greater than 90 days, net		(3,493	)


Total repayments of commercial paper, net	$	(2,508	)

Long-Term Debt

As of March 28, 2015, the Company has outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $39.9 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the domestic floating-rate notes, semi-annually for the domestic fixed-rate notes and annually for the foreign fixed-rate notes. The following table provides a summary of the Company’s long-term debt as of March 28, 2015 and September 27, 2014:


	March 28, 2015					September 27, 2014
	Amount (in millions)			Effective Interest Rate		Amount (in millions)			Effective Interest Rate
Floating-rate notes due 2016 ⁽¹⁾	$	1,000			0.51%	$	1,000			0.51%
Floating-rate notes due 2017 ⁽²⁾		1,000			0.33%		1,000			0.31%
Floating-rate notes due 2018 ⁽¹⁾		2,000			1.10%		2,000			1.10%
Floating-rate notes due 2019 ⁽²⁾		1,000			0.56%		1,000			0.54%
Floating-rate notes due 2020 ⁽³⁾		500			0.51%		0			0
Fixed-rate 0.45% notes due 2016 ⁽¹⁾		1,500			0.51%		1,500			0.51%
Fixed-rate 1.05% notes due 2017 ⁽²⁾		1,500			0.32%		1,500			0.30%
Fixed-rate 1.00% notes due 2018 ⁽¹⁾		4,000			1.08%		4,000			1.08%
Fixed-rate 2.10% notes due 2019 ⁽²⁾		2,000			0.55%		2,000			0.53%
Fixed-rate 1.55% notes due 2020 ⁽³⁾		1,250			0.50%		0			0
Fixed-rate 2.85% notes due 2021 ⁽²⁾		3,000			0.81%		3,000			0.79%
Fixed-rate 2.15% notes due 2022 ⁽³⁾		1,250			0.82%		0			0
Fixed-rate 1.00% Euro-denominated notes due 2022 ⁽⁴⁾		1,534			2.94%		0			0
Fixed-rate 2.40% notes due 2023 ⁽¹⁾		5,500			2.44%		5,500			2.44%
Fixed-rate 3.45% notes due 2024 ⁽²⁾		2,500			0.92%		2,500			0.90%
Fixed-rate 0.38% Swiss Franc-denominated notes due 2024 ⁽⁵⁾		915			0.28%		0			0
Fixed-rate 2.50% notes due 2025 ⁽³⁾		1,500			2.60%		0			0
Fixed-rate 1.63% Euro-denominated notes due 2026 ⁽⁴⁾		1,534			3.45%		0			0
Fixed-rate 0.75% Swiss Franc-denominated notes due 2030 ⁽⁵⁾		392			0.74%		0			0
Fixed-rate 3.85% notes due 2043 ⁽¹⁾		3,000			3.91%		3,000			3.91%
Fixed-rate 4.45% notes due 2044 ⁽²⁾		1,000			4.48%		1,000			4.48%
Fixed-rate 3.45% notes due 2045 ⁽³⁾		2,000			3.58%		0			0

Total borrowings		39,875					29,000

Unamortized discount		(80	)				(52	)
Hedge accounting fair value adjustments		277					39

Total long-term debt	$	40,072				$	28,987

⁽¹⁾

Tranche relates to the $17.0 billion debt issuance in the third quarter of 2013.

⁽²⁾

Tranche relates to the $12.0 billion debt issuance in the third quarter of 2014.

⁽³⁾

Tranche relates to the $6.5 billion debt issuance in the second quarter of 2015.

⁽⁴⁾

Tranche relates to Euro-denominated debt issuance of €2.8 billion in the first quarter of 2015.

⁽⁵⁾

Tranche relates to Swiss Franc-denominated debt issuance of SFr1.3 billion in the second quarter of 2015.

During the first six months of 2015, the Company issued €2.8 billion of Euro-denominated notes, $6.5 billion of U.S. dollar-denominated notes and SFr1.3 billion of Swiss Franc-denominated notes. To manage foreign currency risk associated with the Euro-denominated notes, the Company entered into currency swaps with an aggregate notional amount of $3.5 billion, which effectively converted the Euro-denominated notes to U.S. dollar-denominated notes. To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes maturing in 2020 and 2022, the Company entered into interest rate swaps with an aggregate notional amount of $2.5 billion, which effectively converted the fixed interest rates on these notes to a floating interest rate. For further discussion regarding the Company’s use of derivative instruments to manage interest rate and foreign currency risk, 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 and, if applicable, adjustments related to hedging. The Company recognized $161 million and $289 million of interest expense on its long-term debt for the three- and six-month periods ended March 28, 2015, respectively. The Company recognized $84 million and $168 million of interest expense on its long-term debt for the three- and six-month periods ended March 29, 2014, respectively.

Future principal payments for the Company’s Notes as of March 28, 2015 are as follows (in millions):


2015	$	0
2016		2,500
2017		2,500
2018		6,000
2019		3,000
Thereafter		25,875

Total future principal payments	$	39,875

As of March 28, 2015 and September 27, 2014, the fair value of the Company’s Notes, based on Level 2 inputs, was $40.2 billion and $28.5 billion, respectively.