Note 6 – Debt

Commercial Paper

In April 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 December 27, 2014 and September 27, 2014, the Company had $3.9 billion and $6.3 billion of Commercial Paper outstanding, respectively, with a weighted-average interest rate of 0.11% 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 three months ended December 27, 2014 (in millions):


Maturities less than 90 days:
Proceeds from (repayments of) commercial paper, net	$	62

Maturities greater than 90 days:
Proceeds from commercial paper		197
Repayments of commercial paper		(2,668	)

Maturities greater than 90 days, net		(2,471	)

Total repayments of commercial paper, net	$	(2,409	)

Long-Term Debt

As of December 27, 2014, the Company has issued floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $32.4 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 December 27, 2014 and September 27, 2014:


	December 27, 2014					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			0.30%		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			0.53%		1,000			0.54%
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			0.30%		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			0.53%		2,000			0.53%
Fixed-rate 2.85% notes due 2021⁽²⁾		3,000			0.78%		3,000			0.79%
Fixed-rate 1.00% Euro-denominated notes due 2022⁽³⁾		1,709			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			0.89%		2,500			0.90%
Fixed-rate 1.63% Euro-denominated notes due 2026⁽³⁾		1,709			3.45%		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%

Total borrowings		32,418					29,000

Unamortized discount		(69	)				(52	)
Hedge accounting fair value adjustments		155					39

Total long-term debt	$	32,504				$	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 Euro-denominated debt issuance of €2.8 billion in the first quarter of 2015.

The Company has entered, and in the future may enter, into interest rate swaps to manage interest rate risk on the Notes. Such swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. In addition, the Company has entered, and in the future may enter, into currency swaps to manage foreign currency risk on the Notes.

In the first quarter of 2015, the Company issued €2.8 billion of Euro-denominated long-term debt. To manage foreign currency risk associated with this issuance, 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.

The effective rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $128 million and $84 million of interest expense on its long-term debt for the three months ended December 27, 2014 and December 28, 2013, respectively.

Future principal payments for the Company’s Notes as of December 27, 2014 are as follows (in millions):


2015	$	0
2016		2,500
2017		2,500
2018		6,000
2019		3,000
Thereafter		18,418

Total future principal payments	$	32,418

As of December 27, 2014 and September 27, 2014, the fair value of the Company’s Notes, based on Level 2 inputs, was $32.4 billion and $28.5 billion, respectively.