Borrowings
The Company’s borrowings at September 28, 2013 and September 29, 2012, including the impact of interest rate and cross-currency swaps, are summarized below:
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | 2013 |
| | 2013 | | 2012 | | Stated Interest Rate (1) | | Pay Floating Interest rate and Cross- Currency Swaps (2) | | Effective Interest Rate (3) | | Swap Maturities |
Commercial paper borrowings | | $ | — |
| | $ | 2,050 |
| | — |
| | $ | — |
| | — |
| | |
U.S. medium-term notes | | 13,155 |
| | 10,117 |
| | 3.09 | % | | 5,550 |
| | 2.55 | % | | 2015-2023 |
European medium-term notes | | — |
| | 90 |
| | — |
| | — |
| | — |
| |
|
Other foreign currency denominated debt | | 509 |
| | 1,225 |
| | 5.27 | % | | 318 |
| | 4.68 | % | | 2017 |
Capital Cities/ABC debt | | 111 |
| | 112 |
| | 8.75 | % | | — |
| | 6.03 | % | | |
Other (4) | | 238 |
| | 450 |
| | — |
| | — |
| | — |
| | |
| | 14,013 |
| | 14,044 |
| | 3.22 | % | | 5,868 |
| | 2.66 | % | | |
HKDL borrowings | | 275 |
| | 267 |
| | 3.25 | % | | — |
| | 3.39 | % | | |
Total borrowings | | 14,288 |
| | 14,311 |
| | 3.22 | % | | 5,868 |
| | 2.68 | % | | |
Less current portion | | 1,512 |
| | 3,614 |
| | 5.18 | % | | — |
| | 5.35 | % | | |
Total long-term borrowings | | $ | 12,776 |
| | $ | 10,697 |
| | | | $ | 5,868 |
| | | | |
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(1) | The stated interest rate represents the weighted-average coupon rate for each category of borrowings. For floating rate borrowings, interest rates are the rates in effect at September 28, 2013; these rates are not necessarily an indication of future interest rates. |
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(2) | Amounts represent notional values of interest rate and cross-currency swaps outstanding as of September 28, 2013. |
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(3) | The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps, purchase accounting adjustments and debt issuance discounts and costs. |
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(4) | Includes market value adjustments for debt with qualifying hedges totaling $117 million and $296 million at September 28, 2013 and September 29, 2012, respectively. |
Commercial Paper
At September 28, 2013, the Company had no commercial paper debt outstanding and had bank facilities with a syndicate of lenders to support commercial paper borrowings as follows:
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| | | | | | | | | | | |
| Committed Capacity | | Capacity Used | | Unused Capacity |
Facility expiring March 2014 | $ | 1,500 |
| | $ | — |
| | $ | 1,500 |
|
Facility expiring February 2015 | 2,250 |
| | — |
| | 2,250 |
|
Facility expiring June 2017 | 2,250 |
| | — |
| | 2,250 |
|
Total | $ | 6,000 |
| | $ | — |
| | $ | 6,000 |
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These bank facilities allow for borrowings at LIBOR-based rates plus a spread depending on the credit default swap spread applicable to the Company's debt, subject to a cap and floor that vary with the Company's debt rating assigned by Moody's Investors Service and Standard and Poor's. The spread above LIBOR can range from 0.23% to 1.93%. The Company also has the ability to issue up to $800 million of letters of credit under the facility expiring in February 2015, which if utilized, reduces available borrowings under this facility. As of September 28, 2013, $252 million of letters of credit had been issued of which none was issued under this facility. The facilities contain only one financial covenant, relating to interest coverage, which the Company met on September 28, 2013 by a significant margin, and specifically exclude certain entities, including the International Theme Parks, from any representations, covenants, or events of default.
Shelf Registration Statement
At September 28, 2013, the Company had a shelf registration statement in place, which allows the Company to issue various types of debt instruments, such as fixed or floating rate notes, U.S. dollar or foreign currency denominated notes, redeemable notes, global notes, and dual currency or other indexed notes. Issuances under the shelf registration will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued. Our ability to issue debt is subject to market conditions and other factors impacting our borrowing capacity.
U.S. Medium-Term Note Program
At September 28, 2013, the total debt outstanding under the U.S. medium-term note program was $13.2 billion. The maturities of current outstanding borrowings range from 1 to 80 years. The debt outstanding includes $12.3 billion of fixed rate notes, which have stated interest rates that range from 0.45% to 7.55% and $810 million of floating rate notes that bear interest at U.S. LIBOR minus a spread. At September 28, 2013, the effective rate was 0.25%.
European Medium-Term Note Program
At September 28, 2013, the Company had a European medium-term note program, which allows the Company to issue various types of debt instruments such as fixed or floating rate notes, U.S. dollar or foreign currency denominated notes, redeemable notes and index linked or dual currency notes. Capacity under the program is $4.0 billion, subject to market conditions and other factors impacting our borrowing capacity. Capacity under the program replenishes as outstanding debt under the program is repaid. The Company had no outstanding borrowings under the program at September 28, 2013.
Other Foreign Currency Denominated Debt
In July 2012, the Company refinanced CAD 328 million ($318 million) borrowed in connection with the acquisition of Club Penguin Entertainment, Inc. in July 2007. This borrowing bears interest at the Canadian Dealer Offered Rate plus 0.83% (2.11% at September 28, 2013) and matures in 2017.
In July 2008, the Company borrowed JPY 54 billion ($538 million) of floating rate loans that had an interest rate of Japanese LIBOR plus 0.42% and which matured in 2013.
In September 2012, the Company refinanced certain UTV borrowings with Indian Rupee (INR) 9.4 billion of term bank loans. At September 28, 2013, the outstanding balance was INR 9.1 billion ($147 million), which bears interest at an average rate of 10.49%, subject to annual revisions, and matures in 2015. The Company also arranged for short-term credit facilities of INR 11.7 billion ($188 million), which bear interest at rates determined at the time of drawdown and expire in 2014. The Company has borrowed INR 2.8 billion ($44 million) under the short-term credit facilities, which bears interest at an average rate of 10.25%.
Capital Cities/ABC Debt
In connection with the Capital Cities/ABC, Inc. acquisition in 1996, the Company assumed debt previously issued by Capital Cities/ABC, Inc. At September 28, 2013, the outstanding balance was $111 million, matures in 2021 and has a stated interest rate of 8.75%.
Disneyland Paris Borrowings
In September 2012, the Company provided Disneyland Paris with €1.3 billion ($1.7 billion) of financing, which was used to repay Disneyland Paris' outstanding third-party bank debt. The Company incurred a net charge of $24 million on the repayment of the third-party debt, which is reported in Other income/(expense), net in the fiscal 2012 Consolidated Statement of Income.
Hong Kong Disneyland Resort Borrowings
HKDL has an unsecured loan facility of HK $2.1 billion ($275 million) from the HKSAR scheduled to mature on dates through September 12, 2030, however earlier repayment may occur depending on future operations and capital expenditures of the park. The interest rate on this loan is subject to biannual revisions, but is capped at an annual rate of 6.75% (until March 2014), 7.625% (until March 2022) and 8.50% (until September 2030). As of September 28, 2013, the rate on the loans was 3.25%.
Total borrowings excluding market value adjustments, have the following scheduled maturities:
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| | | | | | | | | | | |
| Before International Theme Parks Consolidation | | International Theme Parks | | Total |
2014 | $ | 1,508 |
| | $ | — |
| | $ | 1,508 |
|
2015 | 2,014 |
| | — |
| | 2,014 |
|
2016 | 2,013 |
| | 23 |
| | 2,036 |
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2017 | 1,661 |
| | 24 |
| | 1,685 |
|
2018 | 1,293 |
| | 25 |
| | 1,318 |
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Thereafter | 5,407 |
| | 203 |
| | 5,610 |
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| $ | 13,896 |
| | $ | 275 |
| | $ | 14,171 |
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The Company capitalizes interest on assets constructed for its parks, resorts and other property and on theatrical productions. In fiscal years 2013, 2012 and 2011, total interest capitalized was $77 million, $92 million and $91 million, respectively. Interest expense, net of capitalized interest, for fiscal years 2013, 2012 and 2011 was $349 million, $472 million and $435 million, respectively.
