
10.	Borrowings


(a)	Short-Term Debt

The following table summarizes the Company’s short-term debt (in millions, except percentages):



	April 26, 2014				July 27, 2013
	Amount		Effective Rate		Amount		Effective Rate
Current portion of long-term debt	$	500	3.11	%	$	3,273	0.63	%
Other notes and borrowings	8		2.60	%	10		2.52	%
Total short-term debt	$	508			$	3,283

In fiscal 2011, the Company established a short-term debt financing program of up to $3.0 billion through the issuance of commercial paper notes. The Company uses the proceeds from the issuance of commercial paper notes for general corporate purposes. In the third quarter of fiscal 2014, the Company repaid $1.0 billion of indebtedness under commercial paper and had no commercial paper outstanding as of each of April 26, 2014 and July 27, 2013.

The effective interest rate on the current portion of long-term debt includes the impact of interest rate swaps, as discussed further in "(b) Long-Term Debt." The Company repaid senior floating-rate and fixed-rate notes upon their maturity in the third quarter of fiscal 2014 for an aggregate principal amount of $3.3 billion. Other notes and borrowings consist of the short-term portion of secured borrowings associated with customer financing arrangements. These notes and credit facilities were subject to various terms and foreign currency market interest rates pursuant to individual financial arrangements between the financing institution and the applicable foreign subsidiary.

As of April 26, 2014, the estimated fair value of the short-term debt approximates its carrying value due to the short maturities.


(b)	Long-Term Debt

The following table summarizes the Company’s long-term debt (in millions, except percentages):



			April 26, 2014				July 27, 2013
	Maturity Date		Amount			Effective Rate	Amount			Effective Rate
Senior notes:
Floating-rate notes:
Three-month LIBOR plus 0.25%	March 14, 2014		$	—		—	$	1,250		0.62%
Three-month LIBOR plus 0.05%	September 3, 2015	(1)	850			0.38%	—			—
Three-month LIBOR plus 0.28%	March 3, 2017	(1)	1,000			0.58%	—			—
Three-month LIBOR plus 0.50%	March 1, 2019	(1)	500			0.79%	—			—
Fixed-rate notes:
1.625%	March 14, 2014		—			—	2,000			0.64%
2.90%	November 17, 2014		500			3.11%	500			3.11%
5.50%	February 22, 2016		3,000			3.05%	3,000			3.07%
1.10%	March 3, 2017	(1)	2,400			0.56%	—			—
3.15%	March 14, 2017		750			0.80%	750			0.84%
4.95%	February 15, 2019		2,000			4.69%	2,000			4.70%
2.125%	March 1, 2019	(1)	1,750			0.77%	—			—
4.45%	January 15, 2020		2,500			2.98%	2,500			4.15%
2.90%	March 4, 2021	(1)	500			0.93%	—			—
3.625%	March 3, 2024	(1)	1,000			1.05%	—			—
5.90%	February 15, 2039		2,000			6.11%	2,000			6.11%
5.50%	January 15, 2040		2,000			5.67%	2,000			5.67%
Other long-term debt			6			2.52%	21			1.46%
Total			20,756				16,021
Unaccreted discount			(65		)		(65		)
Hedge accounting fair value adjustments			193				245
Total			$	20,884			$	16,201

Reported as:
Current portion of long-term debt			$	500			$	3,273
Long-term debt			20,384				12,928
Total			$	20,884			$	16,201

⁽¹⁾ In March 2014, the Company issued senior notes for an aggregate principal amount of $8.0 billion.

To achieve its interest rate risk management objectives, the Company entered into interest rate swaps with an aggregate notional amount of $10.4 billion designated as fair value hedges of certain of its fixed-rate senior notes. In effect, these swaps convert the fixed interest rates of the fixed-rate notes to floating interest rates based on the London InterBank Offered Rate (LIBOR). The gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. For additional information, see Note 11.

The effective rates for the fixed-rate debt include the interest on the notes, the accretion of the discount and, if applicable, adjustments related to hedging. Interest is payable semiannually on each class of the senior fixed-rate notes and payable quarterly on the floating-rate notes. Each of the senior fixed-rate notes is redeemable by the Company at any time, subject to a make-whole premium.

The senior notes rank at par with the commercial paper notes that may be issued in the future pursuant to the Company’s short-term debt financing program, as discussed above under “(a) Short-Term Debt.” As of April 26, 2014, the Company was in compliance with all debt covenants.

As of April 26, 2014, future principal payments for long-term debt, including the current portion, are summarized as follows (in millions):



Fiscal Year	Amount
2014 (remaining three months)	$	—
2015	502
2016	3,853
2017	4,151
2018	—
Thereafter	12,250
Total	$	20,756


(c)	Credit Facility

On February 17, 2012, the Company entered into a credit agreement with certain institutional lenders that provides for a $3.0 billion unsecured revolving credit facility that is scheduled to expire on February 17, 2017. Any advances under the credit agreement will accrue interest at rates that are equal to, based on certain conditions, either (i) the higher of the Federal Funds rate plus 0.50%, Bank of America’s “prime rate” as announced from time to time, or one-month LIBOR plus 1.00% or (ii) LIBOR plus a margin that is based on the Company’s senior debt credit ratings as published by Standard & Poor’s Financial Services, LLC and Moody’s Investors Service, Inc. The credit agreement requires the Company to comply with certain covenants, including that it maintain an interest coverage ratio as defined in the agreement. As of April 26, 2014, the Company was in compliance with the required interest coverage ratio and the other covenants, and the Company had not borrowed any funds under the credit facility.

The Company may also, upon the agreement of either the existing lenders or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $2.0 billion and/or extend the expiration date of the credit facility by up to two additional years, or up to February 17, 2019.