| NOTES PAYABLE AND OTHER BORROWINGS |
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7. |
NOTES PAYABLE AND OTHER BORROWINGS |
Notes payable and other borrowings consisted of the following:
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May 31, |
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2022 |
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2021 |
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(Amounts in millions) |
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Date of
Issuance |
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Amount |
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Effective
Interest
Rate |
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Amount |
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Effective
Interest
Rate |
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Fixed-rate senior notes: |
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$1,500, 2.80%, due July 2021(1) |
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July 2014 |
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$ |
— |
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N.A |
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$ |
1,500 |
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2.82% |
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$4,250, 1.90%, due September 2021 |
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July 2016 |
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— |
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N.A |
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4,250 |
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1.94% |
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$2,500, 2.50%, due May 2022 |
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May 2015 |
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— |
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N.A |
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2,500 |
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2.56% |
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$2,500, 2.50%, due October 2022 |
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October 2012 |
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2,500 |
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2.51% |
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2,500 |
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2.51% |
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$1,250, 2.625%, due February 2023 |
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November 2017 |
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1,250 |
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2.64% |
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1,250 |
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2.64% |
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$1,000, 3.625%, due July 2023 |
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July 2013 |
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1,000 |
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3.73% |
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1,000 |
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3.73% |
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$2,500, 2.40%, due September 2023 |
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July 2016 |
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2,500 |
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2.40% |
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2,500 |
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2.40% |
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$2,000, 3.40%, due July 2024 |
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July 2014 |
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2,000 |
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3.43% |
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2,000 |
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3.43% |
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$2,000, 2.95%, due November 2024 |
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November 2017 |
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2,000 |
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2.98% |
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2,000 |
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2.98% |
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$3,500, 2.50%, due April 2025 |
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April 2020 |
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3,500 |
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2.51% |
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3,500 |
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2.51% |
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$2,500, 2.95%, due May 2025 |
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May 2015 |
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2,500 |
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3.00% |
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2,500 |
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3.00% |
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€750, 3.125%, due July 2025(2)(3) |
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July 2013 |
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803 |
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3.17% |
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916 |
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3.17% |
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$2,750, 1.65%, due March 2026 |
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March 2021 |
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2,750 |
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1.66% |
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2,750 |
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1.66% |
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$3,000, 2.65%, due July 2026 |
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July 2016 |
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3,000 |
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2.69% |
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3,000 |
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2.69% |
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$2,250, 2.80%, due April 2027 |
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April 2020 |
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2,250 |
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2.83% |
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2,250 |
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2.83% |
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$2,750, 3.25%, due November 2027 |
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November 2017 |
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2,750 |
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3.26% |
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2,750 |
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3.26% |
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$2,000, 2.30%, due March 2028 |
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March 2021 |
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2,000 |
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2.34% |
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2,000 |
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2.34% |
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$3,250, 2.95%, due April 2030 |
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April 2020 |
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3,250 |
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2.96% |
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3,250 |
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2.96% |
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$500, 3.25%, due May 2030 |
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May 2015 |
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500 |
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3.30% |
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500 |
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3.30% |
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$3,250, 2.875%, due March 2031 |
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March 2021 |
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3,250 |
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2.89% |
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3,250 |
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2.89% |
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$1,750, 4.30%, due July 2034 |
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July 2014 |
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1,750 |
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4.30% |
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1,750 |
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4.30% |
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$1,250, 3.90%, due May 2035 |
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May 2015 |
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1,250 |
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3.95% |
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1,250 |
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3.95% |
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$1,250, 3.85%, due July 2036 |
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July 2016 |
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1,250 |
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3.85% |
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1,250 |
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3.85% |
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$1,750, 3.80%, due November 2037 |
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November 2017 |
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1,750 |
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3.83% |
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1,750 |
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3.83% |
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$1,250, 6.50%, due April 2038 |
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April 2008 |
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1,250 |
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6.52% |
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1,250 |
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6.52% |
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$1,250, 6.125%, due July 2039 |
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July 2009 |
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1,250 |
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6.19% |
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1,250 |
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6.19% |
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$3,000, 3.60%, due April 2040 |
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April 2020 |
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3,000 |
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3.62% |
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3,000 |
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3.62% |
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$2,250, 5.375%, due July 2040 |
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July 2010 |
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2,250 |
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5.45% |
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2,250 |
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5.45% |
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$2,250, 3.65%, due March 2041 |
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March 2021 |
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2,250 |
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3.70% |
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2,250 |
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3.70% |
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$1,000, 4.50%, due July 2044 |
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July 2014 |
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1,000 |
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4.50% |
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1,000 |
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4.50% |
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$2,000, 4.125%, due May 2045 |
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May 2015 |
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2,000 |
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4.15% |
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2,000 |
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4.15% |
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$3,000, 4.00%, due July 2046 |
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July 2016 |
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3,000 |
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4.00% |
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3,000 |
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4.00% |
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$2,250, 4.00%, due November 2047 |
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November 2017 |
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2,250 |
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4.03% |
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2,250 |
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4.03% |
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$4,500, 3.60%, due April 2050 |
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April 2020 |
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4,500 |
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3.62% |
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4,500 |
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3.62% |
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$3,250, 3.95%, due March 2051 |
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March 2021 |
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3,250 |
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3.96% |
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3,250 |
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3.96% |
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$1,250, 4.375%, due May 2055 |
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May 2015 |
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1,250 |
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4.40% |
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1,250 |
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4.40% |
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$3,500, 3.85%, due April 2060 |
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April 2020 |
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3,500 |
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3.87% |
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3,500 |
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3.87% |
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$1,500, 4.10%, due March 2061 |
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March 2021 |
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1,500 |
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4.11% |
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1,500 |
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4.11% |
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Other borrowings due August 2025 |
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November 2016 |
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|
113 |
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3.53% |
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|
113 |
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3.53% |
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Total senior notes and other borrowings |
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|
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$ |
76,166 |
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|
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$ |
84,529 |
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Unamortized discount/issuance costs |
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(284 |
) |
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(315 |
) |
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Hedge accounting fair value adjustments(1)(3) |
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(23 |
) |
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31 |
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Total notes payable and other borrowings |
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|
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$ |
75,859 |
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|
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$ |
84,245 |
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Notes payable, current |
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$ |
3,749 |
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$ |
8,250 |
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Notes payable and other borrowings, non-current |
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$ |
72,110 |
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$ |
75,995 |
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(1) |
We entered into certain interest rate swap agreements that had the economic effects of modifying the fixed-interest obligations associated with the 2.80% senior notes that were outstanding as of May 31, 2021 and that were due and were settled in July 2021 (July 2021 Notes) so that the interest payable on these notes effectively became variable based on LIBOR. The effective interest rates after consideration of these fixed to variable interest rate swap agreements was 0.87% for the July 2021 Notes as of May 31, 2021. Refer to Note 1 for a description of our accounting for fair value hedges. |
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(2) |
In July 2013, we issued €750 million of 3.125% senior notes due July 2025 (July 2025 Notes). Principal and unamortized discount/issuance costs for the July 2025 Notes in the table above were calculated using foreign currency exchange rates, as applicable, as of May 31, 2022 and May 31, 2021, respectively. The July 2025 Notes are registered and trade on the New York Stock Exchange. |
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(3) |
In fiscal 2018 we entered into certain cross-currency interest rate swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a variable-rate, U.S. Dollar-denominated debt of $871 million based on LIBOR. The effective interest rates as of May 31, 2022 and 2021 after consideration of the cross-currency interest rate swap agreements were 4.10% and 3.15%, respectively, for the July 2025 Notes. Refer to Note 1 for a description of our accounting for fair value hedges. |
Future principal payments (adjusted for the effects of the cross-currency interest rate swap agreements associated with the July 2025 Notes) for all of our borrowings at May 31, 2022 were as follows (in millions):
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Fiscal 2023 |
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$ |
3,750 |
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Fiscal 2024 |
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3,500 |
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Fiscal 2025 |
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10,000 |
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Fiscal 2026 |
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3,734 |
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Fiscal 2027 |
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|
5,250 |
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Thereafter |
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50,000 |
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Total |
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$ |
76,234 |
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Senior Notes
Interest is payable semi-annually for the senior notes listed in the above table except for the Euro Notes for which interest is payable annually. We may redeem some or all of the senior notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.
The senior notes rank pari passu with any other notes we may issue in the future pursuant to our commercial paper program (see additional discussion regarding our commercial paper program below) and all existing and future unsecured senior indebtedness of Oracle Corporation including the Revolving Credit Agreement and Bridge Credit Agreement, each as described further below. All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes, any future borrowings pursuant to the Revolving Credit Agreement and borrowings made on June 8, 2022 under the Bridge Credit Agreement, and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at May 31, 2022.
Credit Agreements
In March 2022, we entered into the following two credit agreements:
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a $6.0 billion, five-year revolving credit agreement (the Revolving Credit Agreement), which provides for an unsecured $6.0 billion, five-year revolving credit facility (the Revolving Facility) to be used for our working capital purposes and for other general corporate purposes. Subject to certain conditions stated in the Revolving Credit Agreement, we may borrow, prepay and reborrow amounts under the Revolving Facility during the term of the Revolving Credit Agreement. All amounts borrowed under the Revolving Credit Agreement will become due on March 8, 2027, unless the commitments are terminated earlier either at our request or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related events). Interest is based on either (a) a Term Secured Overnight Financing Rate (SOFR)-based formula plus a margin of 87.5 basis points to 150.0 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis point to 50.0 basis points, depending on the same such credit rating, each as set forth in the Revolving Credit Agreement; and |
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• |
a $15.7 billion delayed draw term loan credit agreement (the Bridge Credit Agreement), which provides for an unsecured $15.7 billion, 364-day term loan commitment (the Bridge Facility), subject to the satisfaction of certain customary conditions. The Bridge Credit Agreement provides that, subject to certain exceptions, net cash proceeds received by us from certain debt and equity issuances shall result in mandatory prepayments or commitment reductions under the Bridge Credit Agreement. The proceeds of borrowings under the Bridge Facility were used to finance the acquisition of Cerner, our refinancing of indebtedness in connection with such acquisition and to pay related fees and expenses. All amounts borrowed under the Bridge Credit Agreement will become due on March 7, 2023, unless settled earlier pursuant to the terms of the Bridge Credit Agreement. Interest is based on either (a) a Term SOFR-based formula plus a margin of 100.0 basis points to 137.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis point to 37.5 basis points, depending on the same such credit rating, each as set forth in the Bridge Credit Agreement. |
No amounts were outstanding pursuant to either of the credit agreements as of May 31, 2022. On June 8, 2022, we drew down the full amount of the Bridge Credit Agreement to finance the acquisition of Cerner.
Each of the abovementioned credit agreements contains certain customary representations and warranties, covenants and events of default, including the requirement that the ratio of “Consolidated EBITDA” to “Consolidated Net Interest Expense” (each term as defined in the respective credit agreements) of Oracle and its subsidiaries shall not be less than 3.0 to 1.0 at the end of any fiscal quarter during the period that the credit agreement is effective. If an event of default occurs under one of the credit agreements and is not cured within applicable grace periods or waived, any unpaid amounts under the applicable credit agreement may be declared immediately due and payable and the commitments under that agreement may be terminated. We were in compliance with the two credit agreements’ covenants as of May 31, 2022.
Commercial Paper Program and Commercial Paper Notes
Our existing $3.0 billion commercial paper program allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas. As of May 31, 2022 and 2021, we did not have any outstanding commercial paper notes.
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