9	Borrowings

The Company’s borrowings at October 1, 2011 and October 2, 2010, including the impact of interest rate swaps designated as hedges, are summarized below:


					2011
							Interest rate and Cross-Currency Swaps ⁽²⁾
	2011		2010		Stated Interest Rate ⁽¹⁾		Pay Floating		Pay Fixed		Effective Interest Rate ⁽³⁾		Swap Maturities
Commercial paper borrowings	$	1,583	$	1,190		0.15%	$	—	$	—		0.15%
U.S. medium-term notes		8,400		6,815		4.84%		1,050		—		3.87%		2012-2018
European medium-term notes		91		273		1.65%		91		—		0.87%		2013
Other foreign currency denominated debt		1,020		965		0.86%		1,020		—		0.79%		2013
Capital Cities/ABC debt		114		115		8.75%		—		—		6.09%
Other⁽⁴⁾		458		536		—		—		—		—

		11,666		9,894		3.68%		2,161		—		2.94%
Disneyland Paris (DLP) and Hong Kong Disneyland Resort (HKDL):
DLP – CDC loans		1,440		1,417		5.04%		—		—		5.11%
DLP – Credit facilities & other		116		228		4.55%		—		—		5.83%
DLP – Other advances		425		468		3.04%		—		—		3.10%
HKDL – Borrowings		330		473		3.25%		—		—		2.81%

		2,311		2,586		4.39%		—		—		4.45%

Total borrowings		13,977		12,480		3.80%		2,161		—		3.21%

Less current portion		3,055		2,350		2.69%		50		—		2.17%

Total long-term borrowings	$	10,922	$	10,130			$	2,111	$	—

⁽¹⁾	The stated interest rate represents the weighted-average coupon rate for each category of borrowings. For floating rate borrowings, interest rates are based upon the rates at October 1, 2011; these rates are not necessarily an indication of future interest rates.

⁽²⁾	Amounts represent notional values of interest rate and cross-currency swaps as of October 1, 2011.

⁽³⁾

The effective interest rate includes the impact of existing and terminated interest rate and cross-currency swaps on the stated rate of interest and reflects the estimated market interest rate for certain Disneyland Paris borrowings as of the time that they were modified during the 2005 Financial Restructuring. Other adjustments to the stated interest rate such as purchase accounting adjustments and debt issuance costs did not have a material impact on the overall effective interest rate.

⁽⁴⁾	Includes market value adjustments for debt with qualifying hedges totaling $284 million and $315 million at October 1, 2011 and October 2, 2010, respectively.

Commercial Paper

At October 1, 2011, the Company had $1.6 billion of commercial paper debt outstanding. In February 2011, the Company entered into a new four-year $2.25 billion bank facility with a syndicate of lenders. This facility, in combination with an existing $2.25 billion bank facility that matures in 2013, is used to support commercial paper borrowings. These bank facilities allow for borrowings at LIBOR-based rates plus a spread, which depends on the Company’s public debt rating and can range from 0.33% to 4.50%. The Company also has the ability to issue up to $800 million of letters of credit under the new facility, which if utilized, reduces available borrowings under this facility. As of October 1, 2011, $315 million of letters of credit had been issued of which $47 million was issued under this facility. The Company’s bank facilities contain only one financial covenant, relating to interest coverage, which the Company met on October 1, 2011 by a significant margin. The Company’s bank facilities also specifically exclude certain entities, including Disneyland Paris, Hong Kong Disneyland Resort and Shanghai Disney Resort, from any representations, covenants, or events of default.

Shelf Registration Statement

At October 1, 2011, the Company had a shelf registration statement 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 October 1, 2011, the total debt outstanding under U.S. medium-term note programs was $8.4 billion. The maturities of current outstanding borrowings range from 1 to 82 years and stated interest rates range from 0% to 7.55%.

European Medium-Term Note Program

At October 1, 2011, the Company had a European medium-term note program for the issuance of 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. The size of the program is $4.0 billion. The remaining capacity under the program is $3.9 billion, subject to market conditions and other factors impacting our borrowing capacity. The remaining capacity under the program replenishes as outstanding debt under the program matures. At October 1, 2011, the outstanding debt under the program was $91 million, which matures in 2013 and has a stated interest rate of 1.65%. The Company has outstanding borrowings under the program denominated in Japanese Yen (JPY).

Other Foreign Currency Denominated Debt

In connection with the acquisition of Club Penguin Entertainment, Inc. in July 2007, the Company executed a credit agreement denominated in Canadian dollars (CAD) and borrowed CAD328 million ($317 million at October 1, 2011 exchange rate). The loan bears interest at CAD LIBOR plus 0.225% (1.42% at October 1, 2011) and matures in 2013.

In July 2008, the Company executed a loan agreement denominated in JPY and borrowed JPY54 billion ($703 million at October 1, 2011 exchange rate). The loan bears interest at Japanese LIBOR plus 0.42% (0.61% at October 1, 2011) and matures in 2013.

Capital Cities/ABC Debt

In connection with the Capital Cities/ABC, Inc. acquisition in 1996, the Company assumed various debt previously issued by Capital Cities/ABC, Inc. At October 1, 2011, the outstanding balance was $114 million, matures in 2021 and has a stated interest rate of 8.75%.

Disneyland Paris Borrowings


	October 1, 2011		October 2, 2010
CDC senior debt	$	322	$	326
CDC subordinated debt – original and 1994 financing		369		373
CDC subordinated debt – Walt Disney Studios Park financing		749		718

CDC loans		1,440		1,417

Credit facilities and other		116		228
Other advances		425		468

	$	1,981	$	2,113

Disneyland Paris — Caisse des Dépôts et Consignations (CDC) loans. Pursuant to Disneyland Paris’s original financing and the terms of a 1994 financial restructuring, Disneyland Paris borrowed funds from the CDC, a French state bank. As of October 1, 2011, these borrowings consisted of approximately €237 million ($322 million at October 1, 2011 exchange rate) of senior debt and €272 million ($369 million at October 1, 2011 exchange rate) of subordinated debt. The senior debt is collateralized primarily by the Disneyland Park, certain hotels, and land assets of Disneyland Paris with a net book value of approximately €1.1 billion ($1.5 billion at October 1, 2011 exchange rate), whereas the subordinated debt is unsecured. Interest on the senior and subordinated debt is payable semiannually. Of these CDC loans, €466 million ($633 million at October 1, 2011 exchange rate) bear interest at a fixed rate of 5.34%. The remaining CDC loans of €42 million ($58 million at October 1, 2011 exchange rate) bear interest at a fixed rate of 6.33%. The loans mature from fiscal year 2012 to fiscal year 2024.

Disneyland Paris also executed a credit agreement with the CDC to finance a portion of the construction costs of Walt Disney Studios Park. As of October 1, 2011, approximately €551 million ($749 million at October 1, 2011 exchange rate) of subordinated loans were outstanding under this agreement. The loans bear interest at a fixed rate of 5.15% per annum. The loans mature between fiscal years 2015 and 2028.

Pursuant to the 2005 Financial Restructuring, the CDC agreed to conditionally defer and convert to subordinated long-term borrowings, if operating results do not achieve specified levels, interest payments up to a maximum amount of €20 million ($27 million at October 1, 2011 exchange rate) per year for fiscal year 2005 through fiscal year 2012 and €23 million ($31 million at October 1, 2011 exchange rate) for each of the fiscal years 2013 and 2014. Disneyland Paris has deferred €20 million of interest originally payable for each of fiscal year 2005 and 2006 as well as €7 million of accrued interest on these amounts (collectively €47 million). Disneyland Paris did not defer any CDC interest for fiscal years 2007 and 2008. Disneyland Paris deferred €20 million ($27 million at October 1, 2011 exchange rate) of interest related to fiscal year 2009 and 2010, deferred €15 million ($21 million at October 1, 2011 exchange rate) of interest related to fiscal 2011, and will defer the remaining €5 million ($7 million at October 1, 2011 exchange rate) related to fiscal 2011 in the first quarter of fiscal 2012. The interest deferral related to fiscal 2011 is subject to third party confirmation of Disneyland Paris’s operating results.

Disneyland Paris — Credit facilities and other. Pursuant to Disneyland Paris’s original financing with a syndicate of international banks and the terms of a 1994 financial restructuring, Disneyland Paris borrowed funds which are collateralized primarily by the Disneyland Park, the hotels, and land assets of Disneyland Paris with a net book value of approximately €1.1 billion ($1.5 billion at October 1, 2011 exchange rate). At October 1, 2011, the total balance outstanding was €85 million ($116 million at October 1, 2011 exchange rate). The loans mature between fiscal years 2012 and 2013 and bear interest at a rate of EURIBOR plus 3% (4.55% at October 1, 2011).

Disneyland Paris — Other advances. Advances of €304 million ($413 million at October 1, 2011 exchange rate) bear interest at a fixed rate of 3.0%. The remaining advances of €9 million ($12 million at October 1, 2011 exchange rate) are collateralized by certain hotel assets and bear interest at EURIBOR plus 3% (4.55% at October 1, 2011). The advances are expected to mature between fiscal years 2012 and 2017.

Disneyland Paris has in its debt agreements certain annual financial performance objectives and limits on investing and financing activities. In fiscal 2011, Disneyland Paris did not meet its annual performance objectives and must defer €25 million of royalties and management fees payable to the Company and €20 million of interest payable to the CDC. Additionally, as a result of the fact that the performance objectives were not met, certain of Disneyland Paris’s investment activities are further limited by the debt agreements.

Disneyland Paris is also subject to certain financial covenants and believes that it is in compliance with such covenants with the assistance of the Company’s agreement, as permitted under the debt agreements, to defer an additional €9 million of royalties payable to the Company into subordinated long-term borrowings.

The deferrals discussed above and compliance with these financial covenants are subject to final third-party review as provided in Disneyland Paris’s debt agreements.

Hong Kong Disneyland Resort — Borrowings. Hong Kong Disneyland Resort has an unsecured loan facility of HK$2.6 billion ($330 million at October 1, 2011 exchange rate) from the HKSAR that is scheduled to mature on dates through September 12, 2030. The interest rate on this loan is subject to biannual revisions, but is capped at an annual rate of 6.75% (until March 12, 2014), 7.625% (until March 12, 2022) and 8.50% (until September 12, 2030). As of October 1, 2011, the rate on the loans was 3.25%.

Hong Kong Disneyland Resort Capital Realignment Plan

In July 2009, the Company entered into a capital realignment and expansion plan (the Plan) for Hong Kong Disneyland Resort with the HKSAR. See Note 7 for further details of the Plan.

Total borrowings excluding market value adjustments, have the following scheduled maturities:


	Before International Theme Parks Consolidation		International Theme Parks		Total
2012	$	2,857	$	188	$	3,045
2013		1,871		166		2,037
2014		1,466		47		1,513
2015		67		132		199
2016		1,504		45		1,549
Thereafter		3,617		1,733		5,350

	$	11,382	$	2,311	$	13,693

The Company capitalizes interest on assets constructed for its parks, resorts, and other property and on theatrical productions. In 2011, 2010, and 2009, total interest capitalized was $91 million, $82 million, and $57 million, respectively. Interest expense, net of capitalized interest, for 2011, 2010, and 2009 was $435 million, $456 million and $588 million, respectively.