Commercial Paper and Long-Term Debt

Commercial paper and long-term debt consisted of the following:



	December 31, 2011						December 31, 2010
(in millions)	Par Value		Carrying Value		Fair Value		Par Value		Carrying Value		Fair Value
Commercial paper	$	—	$	—	$	—	$	930	$	930	$	930
Senior unsecured floating-rate notes due February 2011	—		—		—		250		250		250
5.3% senior unsecured notes due March 2011	—		—		—		705		712		711
5.5% senior unsecured notes due November 2012	352		363		366		352		372		377
4.9% senior unsecured notes due February 2013	534		540		556		534		541		568
4.9% senior unsecured notes due April 2013	409		421		427		409		425		437
4.8% senior unsecured notes due February 2014	172		184		185		172		186		184
5.0% senior unsecured notes due August 2014	389		423		424		389		425		423
4.9% senior unsecured notes due March 2015	416		458		460		416		456		444
5.4% senior unsecured notes due March 2016	601		678		689		601		666		661
1.9% senior unsecured notes due November 2016	400		397		400		—		—		—
5.4% senior unsecured notes due November 2016	95		95		110		95		95		105
6.0% senior unsecured notes due June 2017	441		499		518		441		484		491
6.0% senior unsecured notes due November 2017	156		173		183		156		167		174
6.0% senior unsecured notes due February 2018	1,100		1,123		1,308		1,100		1,065		1,249
3.9% senior unsecured notes due October 2020	450		442		478		450		413		429
4.7% senior unsecured notes due February 2021	400		419		450		—		—		—
3.4% senior unsecured notes due November 2021	500		497		517		—		—		—
Zero coupon senior unsecured notes due November 2022	1,095		619		696		1,095		588		677
5.8% senior unsecured notes due March 2036	850		844		1,017		850		844		862
6.5% senior unsecured notes due June 2037	500		495		636		500		495		552
6.6% senior unsecured notes due November 2037	650		645		834		650		645		729
6.9% senior unsecured notes due February 2038	1,100		1,084		1,475		1,100		1,085		1,281
5.7% senior unsecured notes due October 2040	300		298		359		300		298		299
6.0% senior unsecured notes due February 2041	350		348		430		—		—		—
4.6% senior unsecured notes due November 2041	600		593		631		—		—		—
Total commercial paper and long-term debt	$	11,860	$	11,638	$	13,149	$	11,495	$	11,142	$	11,833

Maturities of long-term debt for the years ending December 31 are as follows:



(in millions)	Maturities of Long-Term Debt
2012 (a)	$	982
2013	961
2014	607
2015	458
2016	1,170
Thereafter	7,460


(a)	The $1,095 million par, zero coupon senior unsecured notes due November 2022 have been included in current maturities of long-term debt in the Consolidated Balance Sheets as of December 31, 2011 and 2010 due to a current note holder option to “put” the note to the Company which began on November 15, 2010, and recurs each November 15 thereafter until 2022 (except 2014), at accreted value.

Commercial Paper and Bank Credit Facility

Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through broker-dealers.

In December 2011, the Company amended and renewed its five-year revolving bank credit facility with 21 banks, which will mature in December 2016. The amendment included increasing the capacity to $3.0 billion. This facility supports the Company’s commercial paper program and is available for general corporate purposes. There were no amounts outstanding under this facility as of December 31, 2011. The interest rate on borrowings is variable based on term and amount and is calculated based on the London Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. As of December 31, 2011, the annual interest rate on this facility, had it been drawn, would have ranged from 1.2% to 1.7%.

Debt Covenants

The Company’s bank credit facility contains various covenants including requiring the Company to maintain a debt-to-total-capital ratio, calculated as debt divided by the sum of debt and shareholders’ equity, below 50%. The Company was in compliance with its debt covenants as of December 31, 2011.

Interest Rate Swap Contracts

During 2010, the Company entered into interest rate swap contracts to convert a portion of its interest rate exposure from fixed to floating rates. The interest rate swap contracts were benchmarked to LIBOR and were utilized to more closely align interest expense with interest income received on the Company's cash equivalent and investment balances. The swaps were designated as fair value hedges on fixed-rate debt issues maturing between November 2012 through March 2016 and June 2017 through October 2020. Since the specific terms and notional amounts of the swaps matched those of the debt being hedged, they were assumed to be highly effective hedges and all changes in fair value of the swaps were recorded on the Consolidated Balance Sheets with no net impact recorded in the Consolidated Statements of Operations.

The following table provides a summary of the effect of changes in fair value of fair value hedges, prior to their termination, on the Company’s Consolidated Statements of Operations:



	December 31,
(in millions)	2011			2010
Hedge gain recognized in interest expense	$	190		$	(58	)
Hedged item loss recognized in interest expense	(190		)	58
Net impact on the Company’s Consolidated Statements of Operations	$	—		$	—

In the second half of 2011, the Company terminated all of its interest rate swap fair value hedges ($5.4 billion notional amount). As of the swap contracts' termination dates, the aggregate favorable adjustments to the carrying value of the Company's debt of $132 million is being amortized as a reduction to interest expense over the remaining lives of the underlying debt obligations, which had in total a weighted-average life of 4.1 years. For the year ended December 31, 2011, the net impact of the gain amortization was not material. The purpose of the interest rate swap terminations was to lock-in the impact of low market floating interest rates and reduce the effective interest rate on hedged long-term debt.