DEBT AND FINANCING ARRANGEMENTS
Short-term debt consisted of the following (in millions):
|
| | | | | | | |
| September 30, |
| 2013 | | 2012 |
Bank borrowings and commercial paper | $ | 119 |
| | $ | 323 |
|
Weighted average interest rate on short-term debt outstanding | 4.6 | % | | 2.5 | % |
During fiscal 2013, the Company replaced its $2.5 billion committed four-year credit facility, scheduled to mature in February 2015, with a $2.5 billion committed five-year credit facility scheduled to mature in August 2018. The facility is used to support the Company’s outstanding commercial paper. There were no draws on the committed credit facilities during the fiscal years ended September 30, 2013 and 2012. Average outstanding commercial paper for the fiscal year ended September 30, 2013 was $1,123 million, and there was none outstanding at September 30, 2013. Average outstanding commercial paper for the fiscal year ended September 30, 2012 was $1,287 million, and $186 million was outstanding at September 30, 2012.
Long-term debt consisted of the following (in millions; due dates by fiscal year):
|
| | | | | | | |
| September 30, |
| 2013 | | 2012 |
Unsecured notes | | | |
5.8% due in 2013 ($100 million par value) | $ | — |
| | $ | 100 |
|
4.875% due in 2013 ($300 million par value) | — |
| | 310 |
|
Floating rate notes due in 2014 ($350 million par value) | 350 |
| | 350 |
|
1.75% due in 2014 ($450 million par value) | 452 |
| | 456 |
|
7.7% due in 2015 ($125 million par value) | 125 |
| | 125 |
|
5.5% due in 2016 ($800 million par value) | 802 |
| | 800 |
|
7.125% due in 2017 ($150 million par value) | 159 |
| | 162 |
|
2.6% due in 2017 ($400 million par value) | 400 |
| | 400 |
|
2.355% due in 2017 ($46 million par value) | 46 |
| | 46 |
|
5.0% due in 2020 ($500 million par value) | 498 |
| | 498 |
|
4.25% due 2021 ($500 million par value) | 497 |
| | 497 |
|
3.75% due in 2022 ($450 million par value) | 448 |
| | 447 |
|
6.0% due in 2036 ($400 million par value) | 395 |
| | 395 |
|
5.7% due in 2041 ($300 million par value) | 299 |
| | 299 |
|
5.25% due in 2042 ($250 million par value) | 250 |
| | 250 |
|
6.95% due in 2046 ($125 million par value) | 125 |
| | 125 |
|
Capital lease obligations | 65 |
| | 80 |
|
Foreign-denominated debt | | | |
Euro | 426 |
| | 377 |
|
Other | 42 |
| | 28 |
|
Gross long-term debt | 5,379 |
| | 5,745 |
|
Less: current portion | 819 |
| | 424 |
|
Net long-term debt | $ | 4,560 |
| | $ | 5,321 |
|
At September 30, 2013, the Company’s euro-denominated long-term debt was at fixed rates with a weighted-average interest rate of 3.1%. At September 30, 2012, the Company’s euro-denominated long-term debt was at fixed rates with a weighted-average interest rate of 3.6%.
The installments of long-term debt maturing in subsequent fiscal years are: 2014 - $819 million; 2015 - $254 million; 2016 - $808 million; 2017 - $885 million; 2018 - $19 million; 2019 and thereafter - $2,594 million. The Company’s long-term debt includes various financial covenants, none of which are expected to restrict future operations.
Total interest paid on both short and long-term debt for the fiscal years ended September 30, 2013 , 2012 and 2011 was $290 million, $283 million and $216 million, respectively. The Company uses financial instruments to manage its interest rate exposure (see Note 10, “Derivative Instruments and Hedging Activities,” and Note 11, “Fair Value Measurements,” of the notes to consolidated financial statements). These instruments affect the weighted average interest rate of the Company’s debt and interest expense.
Financing Arrangements
During the quarter ended September 30, 2013, two 50 million euro revolving credit facilities and a 37 million euro revolving credit facility expired. The Company entered into two new 50 million euro revolving credit facilities scheduled to expire in August and September 2014. The Company also entered into a new 37 million euro revolving credit facility scheduled to expire in September 2014. There were no draws on the facilities during fiscal 2013.
During the quarter ended September 30, 2013 a $50 million revolving credit facility expired. The Company entered into a new $50 million revolving credit facility scheduled to expire in September 2014. There were no draws on this facility during fiscal 2013.
During the quarter ended September 30, 2013, the Company retired $300 million in principal amount, plus accrued interest, of its 4.875% fixed rate notes that matured September 2013. The Company used cash to fund the payment.
During the quarter ended September 30, 2013, the Company made a partial repayment of 43 million euro, plus accrued interest, of its 100 million euro floating rate credit facility scheduled to mature in February 2017. The Company used cash to fund the payment.
During the quarter ended December 31, 2012, a $35 million and a $100 million committed revolving credit facility expired. The Company entered into a new $35 million committed revolving credit facility scheduled to expire in November 2013 and a new $100 million committed revolving credit facility scheduled to expire in December 2013. As of September 30, 2013, there were no draws on either facility.
During the quarter ended December 31, 2012, the Company entered into a five-year, 70 million euro, floating rate credit facility scheduled to mature in fiscal 2018. The Company drew on the credit facility during the quarter ended December 31, 2012. Proceeds from the facility were used for general corporate purposes.
During the quarter ended December 31, 2012, the Company retired $100 million in principal amount, plus accrued interest, of its 5.8% fixed rate notes that matured November 2012. The Company used cash to fund the payment.
During the quarter ended March 31, 2012, the Company remarketed $46 million aggregate principal amount of 11.5% subordinated notes due in fiscal 2042, on behalf of holders of Corporate Units and holders of separate notes, by issuing $46 million aggregate principal amount of 2.355% senior notes due on March 31, 2017.
During the quarter ended December 31, 2011, the Company issued $400 million aggregate principal amount of 2.6% senior unsecured fixed rate notes due in fiscal 2017, $450 million aggregate principal amount of 3.75% senior unsecured fixed rate notes due in fiscal 2022 and $250 million aggregate principal amount of 5.25% senior unsecured fixed rate notes due in fiscal 2042. Aggregate net proceeds of $1.1 billion from the issuances were used for general corporate purposes, including the retirement of short-term debt and contributions to the Company’s pension and postretirement plans.
During the quarter ended December 31, 2011, the Company entered into a five-year, 75 million euro, floating rate credit facility scheduled to mature in fiscal 2017. The Company drew on the credit facility during the quarter ended March 31, 2012. Proceeds from the facility were used for general corporate purposes.
Net Financing Charges
The Company's net financing charges line item in the consolidated statements of income for the years ended September 30, 2013, 2012 and 2011 contained the following components (in millions):
|
| | | | | | | | | | | |
| Year Ended September 30, |
| 2013 | | 2012 | | 2011 |
| | | | | |
Interest expense, net of capitalized interest costs | $ | 256 |
| | $ | 239 |
| | $ | 186 |
|
Banking fees and bond cost amortization | 21 |
| | 21 |
| | 27 |
|
Interest income | (19 | ) | | (17 | ) | | (8 | ) |
Net foreign exchange results for financing activities | (10 | ) | | (10 | ) | | (31 | ) |
Net financing charges | $ | 248 |
| | $ | 233 |
| | $ | 174 |
|
