Note 6 – 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 December 26, 2015 and September 26, 2015, the Company had $7.3 billion and $8.5 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 0.20% as of December 26, 2015 and 0.14% as of September 26, 2015.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the three months ended December 26, 2015 and December 27, 2014 (in millions):

 

		Three Months Ended
		December 26, 2015				December 27, 2014
Maturities less than 90 days:
Proceeds from (repayments of) commercial paper, net		$	(393	)		$	62
Maturities greater than 90 days:
Proceeds from commercial paper			492				197
Repayments of commercial paper			(1,339	)			(2,668	)
Proceeds from (repayments of) commercial paper, net			(847	)			(2,471	)
Total change in commercial paper, net		$	(1,240	)		$	(2,409	)

 

Long-Term Debt

As of December 26, 2015, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $55.5 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 December 26, 2015 and September 26, 2015:

 

		Maturities				December, 26, 2015								September 26, 2015
						Amount (in millions)				Effective Interest Rate				Amount (in millions)				Effective Interest Rate
2013 debt issuance of $17.0 billion:
Floating-rate notes			2016 - 2018			$	3,000				0.51% - 1.10%			$	3,000				0.51% - 1.10%
Fixed-rate 0.45% - 3.85% notes			2016 - 2043				14,000				0.51% - 3.91%				14,000				0.51% - 3.91%
2014 debt issuance of $12.0 billion:
Floating-rate notes			2017 - 2019				2,000				0.41% - 0.64%				2,000				0.37% - 0.60%
Fixed-rate 1.05% - 4.45% notes			2017 - 2044				10,000				0.40% - 4.48%				10,000				0.37% - 4.48%
2015 debt issuances of $27.3 billion:
Floating-rate notes			2017 - 2020				1,755				0.41% - 1.87%				1,743				0.36% - 1.87%
Fixed-rate 0.35% - 4.375% notes			2017 - 2045				24,793				0.28% - 4.51%				24,958				0.28% - 4.51%
Total term debt							55,548								55,701
Unamortized discount							(109	)							(114	)
Hedge accounting fair value adjustments							265								376
Less: Current portion of long-term debt							(2,500	)							(2,500	)
Total long-term debt						$	53,204							$	53,463

As of December 26, 2015, ¥118.0 billion of Japanese yen-denominated notes was designated as a hedge of the foreign currency exposure of its 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 December 26, 2015 and September 26, 2015, the carrying value of the debt designated as a net investment hedge was $1.0 billion and $2.1 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 and, if applicable, adjustments related to hedging. The Company recognized $271 million and $128 million of interest expense on its term debt for the three months ended December 26, 2015 and December 27, 2014, respectively.

As of December 26, 2015 and September 26, 2015, the fair value of the Company’s Notes, based on Level 2 inputs, was $55.1 billion and $54.9 billion, respectively.