Debt
Short-Term Debt
We have a debt financing program of up to $3.0 billion through the issuance of commercial paper. Net proceeds from this program are used for general corporate purposes. At December 31, 2012 and December 31, 2013, we had $2.5 billion and $2.0 billion of outstanding commercial paper recorded as short-term debt with weighted-average interest rates of 0.2% and 0.1%. In conjunction with this program, we have a $3.0 billion revolving credit facility expiring in July 2016. The interest rate for the credit facility is determined based on a formula using certain market rates. At December 31, 2012 and December 31, 2013, we were in compliance with the financial covenant in the credit facility, and no amounts were outstanding under the credit facility at December 31, 2012 and December 31, 2013. The estimated fair value of the short-term debt approximated its carrying value at December 31, 2012 and December 31, 2013.
Our short-term debt balance also includes the short-term portion of certain long-term debt, as described in the section below.
Long-Term Debt
In May 2011, we issued $3.0 billion of unsecured senior notes in three tranches (collectively, the Notes) and in August 2013, we entered into a capital lease obligation. The details of these financing arrangements are described in the table below (in millions):
|
| | | | | | | |
| Outstanding Balance As of December 31, 2012 | | Outstanding Balance As of December 31, 2013 |
Short-Term Portion of Long-Term Debt |
|
| |
|
|
1.25% Notes due on May 19, 2014 | $ | 0 |
| | $ | 1,000 |
|
Capital Lease Obligation | 0 |
| | 9 |
|
Total | $ | 0 |
| | $ | 1,009 |
|
| | | |
Long-Term Debt | | | |
1.25% Notes due on May 19, 2014 | $ | 1,000 |
| | $ | 0 |
|
2.125% Notes due on May 19, 2016 | 1,000 |
| | 1,000 |
|
3.625% Notes due on May 19, 2021 | 1,000 |
| | 1,000 |
|
Unamortized discount for the Notes above | (12 | ) | | (10 | ) |
Subtotal | 2,988 |
| | 1,990 |
|
Capital Lease Obligation | 0 |
| | 246 |
|
Total | $ | 2,988 |
| | $ | 2,236 |
|
The effective interest yields of the 2014, 2016, and 2021 Notes were 1.258%, 2.241%, and 3.734%, respectively. Interest on the Notes is payable semi-annually in arrears on May 19 and November 19 of each year. We may redeem the Notes at any time in whole or from time to time in part at specified redemption prices. We are not subject to any financial covenants under the Notes. We used the net proceeds from the issuance of the Notes for general corporate purposes. The total estimated fair value of the Notes was approximately $3.2 billion and $3.1 billion at December 31, 2012 and December 31, 2013. The fair value of the Notes was determined based on observable market prices of identical instruments in less active markets and is categorized accordingly as Level 2 in the fair value hierarchy.
In August 2013, we entered into a capital lease obligation on certain property expiring in 2028 with an option to purchase the property in 2016. The effective rate of the capital lease obligation approximates the market rate. The estimated fair value of the capital lease obligation approximated its carrying value at December 31, 2013.
At December 31, 2013, aggregate future principal payments for long-term debt (including short-term portion of long-term debt) and capital lease obligation were as follows (in millions):
|
| | | | |
Years ending | | |
2014 | | $ | 1,009 |
|
2015 | | 10 |
|
2016 | | 1,236 |
|
2017 | | 0 |
|
Thereafter | | 1,000 |
|
Total | | $ | 3,255 |
|
