DEBT

Short-term Borrowing

On December 31, 2018, the Company had a bank overdraft of $25 million which was reported in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet at December 31, 2018 and was repaid in January 2019.

Revolving Credit Facility

In June 2015, the Company entered into a $2.0 billion five-year unsecured revolving credit facility with a group of lenders. Borrowings under the revolving credit facility will bear interest, at the Company’s option, at a rate per annum equal to either (i) the adjusted London Inter-bank Offered Rate ("LIBOR") for the interest period in effect for such borrowing plus an applicable margin ranging from 0.875% to 1.50%; or (ii) the greatest of (a) Bank of America, N.A.'s prime lending rate, (b) the federal funds rate plus 0.50%, and (c) an adjusted LIBOR for an interest period of one month plus 1.00%, plus an applicable margin ranging from 0.00% to 0.50%. Undrawn balances available under the revolving credit facility are subject to commitment fees at the applicable rate ranging from 0.085% to 0.20%.

The revolving credit facility provides for the issuance of up to $70 million of letters of credit as well as borrowings of up to $50 million on same-day notice, referred to as swingline loans. Borrowings under the revolving credit facility may be made in U.S. Dollars, Euros, British Pounds Sterling and any other foreign currency agreed to by the lenders. The proceeds of loans made under the facility would be used for working capital and general corporate purposes, which could include acquisitions, share repurchases or debt repayments. There were $5 million of letters of credit issued under the facility at both March 31, 2019 and December 31, 2018. There were no borrowings outstanding under this revolving credit facility at December 31, 2018. At March 31, 2019, there were $250 million of borrowings outstanding with a weighted-average interest rate of 3.5% due in the second quarter of 2019, which is included in "Accrued expenses and other current liabilities" in the Unaudited Consolidated Balance Sheet. In addition, in April 2019, the Company borrowed an additional $150 million under this revolving credit facility, which is due in May 2019 with an interest rate of 3.5%.

Outstanding Debt

Outstanding debt at March 31, 2019 consisted of the following (in millions):



March 31, 2019	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Cost			Carrying Value
Current liabilities:
0.35% Convertible Senior Notes due June 2020	$	1,000	$	(32	)	$	968
Long-term debt:
0.9% Convertible Senior Notes due September 2021	$	1,000	$	(56	)	$	944
0.8% (€1 Billion) Senior Notes due March 2022	1,123		(4		)	1,119
2.15% (€750 Million) Senior Notes due November 2022	842		(3		)	839
2.75% Senior Notes due March 2023	500		(3		)	497
2.375% (€1 Billion) Senior Notes due September 2024	1,123		(10		)	1,113
3.65% Senior Notes due March 2025	500		(3		)	497
3.6% Senior Notes due June 2026	1,000		(6		)	994
1.8% (€1 Billion) Senior Notes due March 2027	1,123		(4		)	1,119
3.55% Senior Notes due March 2028	500		(3		)	497
Total long-term debt	$	7,711	$	(92	)	$	7,619

Outstanding debt at December 31, 2018 consisted of the following (in millions):



December 31, 2018	Outstanding Principal Amount		Unamortized Debt Discount and Debt Issuance Cost			Carrying Value
Long-term debt:
0.35% Convertible Senior Notes due June 2020	$	1,000	$	(39	)	$	961
0.9% Convertible Senior Notes due September 2021	1,000		(61		)	939
0.8% (€1 Billion) Senior Notes due March 2022	1,143		(5		)	1,138
2.15% (€750 Million) Senior Notes due November 2022	858		(4		)	854
2.75% Senior Notes due March 2023	500		(3		)	497
2.375% (€1 Billion) Senior Notes due September 2024	1,143		(10		)	1,133
3.65% Senior Notes due March 2025	500		(3		)	497
3.6% Senior Notes due June 2026	1,000		(6		)	994
1.8% (€1 Billion) Senior Notes due March 2027	1,143		(4		)	1,139
3.55% Senior Notes due March 2028	500		(3		)	497
Total long-term debt	$	8,787	$	(138	)	$	8,649

Based on the closing price of the Company's common stock for the prescribed measurement periods for the three months ended March 31, 2019 and December 31, 2018, the contingent conversion thresholds on the 2020 Notes (as defined below) and 2021 Notes (as defined below) were not exceeded, therefore, these notes were not convertible at the option of the holder. The 2020 Notes were reported as non-current liabilities in the Unaudited Consolidated Balance Sheet at December 31, 2018 and reclassified as current liabilities at March 31, 2019 since the holders will have the right to convert all or any portion of the 2020 Notes at March 15, 2020 regardless of the Company's stock price.

Fair Value of Debt

At March 31, 2019 and December 31, 2018, the estimated fair value of the outstanding Senior Notes was approximately $9.5 billion and $9.3 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. A substantial portion of the market value of the Company's debt in excess of the outstanding principal amount relates to the conversion premium on the Convertible Senior Notes.

Convertible Senior Notes

If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. If the Company's convertible debt is redeemed or converted prior to maturity, a gain or loss on extinguishment is recognized. The gain or loss is the difference between the fair value of the debt component immediately prior to extinguishment and its carrying value. To estimate the fair value of the debt at the conversion date, the Company estimates its straight debt borrowing rate, considering its credit rating and straight debt of comparable corporate issuers.

Description of Convertible Senior Notes

In August 2014, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due September 15, 2021, with an interest rate of 0.9% (the "2021 Notes"). The Company paid $11 million in debt issuance costs during the year ended December 31, 2014 related to this offering. The 2021 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $2,055.50 per share. The 2021 Notes are convertible, at the option of the holder, prior to September 15, 2021, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2021 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2021 Notes in an aggregate value ranging from $0 to $375 million depending upon the date of the transaction and the then current stock price of the Company. At June 15, 2021, holders will have the right to convert all or any portion of the 2021 Notes, regardless of the Company's stock price. The 2021 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the 2021 Notes for cash in certain circumstances. Interest on the 2021 Notes is payable on March 15 and September 15 of each year.

In May 2013, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due June 15, 2020, with an interest rate of 0.35% (the "2020 Notes"). The 2020 Notes were issued with an initial discount of $20 million. The Company paid $1 million in debt issuance costs during the year ended December 31, 2013 related to this offering. The 2020 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $1,315.10 per share. The 2020 Notes are convertible, at the option of the holder, prior to June 15, 2020, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2020 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2020 Notes in an aggregate value ranging from $0 to $397 million depending upon the date of the transaction and the then current stock price of the Company. At March 15, 2020, holders will have the right to convert all or any portion of the 2020 Notes, regardless of the Company's stock price. The 2020 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the 2020 Notes for cash in certain circumstances. Interest on the 2020 Notes is payable on June 15 and December 15 of each year.

In March 2012, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due March 15, 2018, with an interest rate of 1.0% (the "2018 Notes"). The 2018 Notes were convertible, subject to certain conditions, into the Company's common stock at a conversion price of $944.61 per share. In March 2018, in connection with the maturity of the remaining outstanding 2018 Notes, the Company paid $714 million to satisfy the aggregate principal amount due and paid an additional $773 million in satisfaction of the conversion value in excess of the principal amount.

Cash-settled convertible debt, such as the Company's Convertible Senior Notes, is separated into debt and equity components at issuance and each component is assigned a value. The value assigned to the debt component is the estimated fair value, at the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount. Debt discount is amortized using the effective interest rate method over the period from the origination date through the stated maturity date. The Company estimated the straight debt borrowing rates at debt origination to be 3.18% for the 2021 Notes, 3.13% for the 2020 Notes and 3.50% for the 2018 Notes. The yield to maturity was estimated at an at-market coupon priced at par.

Debt discount after tax of $83 million ($143 million before tax) related to the 2021 Notes, $92 million ($154 million before tax) related to the 2020 Notes and $81 million ($135 million before tax) related to the 2018 Notes less financing costs associated with the equity component of the respective convertible notes was recorded in additional paid-in capital in the balance sheet at debt origination.

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $15 million and $20 million, respectively, related to convertible notes, which was almost entirely comprised of the amortization of debt discount of $12 million and $14 million, respectively, and the contractual coupon interest of $3 million and $5 million, respectively. The remaining interest expense relates to the amortization of debt issuance costs. For the three months ended March 31, 2019 and 2018, included in the amortization of debt discount mentioned above was $1 million of original issuance discount related to the 2020 Notes for each period. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity date for the respective debt. The weighted-average effective interest rates for the three months ended March 31, 2019 and 2018 are 3.2% and 3.3%, respectively.

Other Long-term Debt

Other long-term debt had a total carrying value of $6.7 billion at both March 31, 2019 and December 31, 2018. Debt discount is amortized using the effective interest rate method over the period from the origination date through the stated maturity date. The Company estimated the effective interest rates at debt origination to be 0.84% for the Senior Notes maturing in March 2022 (the "March 2022 Notes"), 2.20% for the Senior Notes maturing in November 2022 (the "November 2022 Notes"), 2.78% for the Senior Notes maturing in March 2023, 2.48% for the Senior Notes maturing in September 2024 (the "September 2024 Notes"), 3.68% for the Senior Notes maturing in March 2025, 3.62% for the Senior Notes maturing in June 2026, 1.80% for the Senior Notes maturing in March 2027 (the "March 2027 Notes") and 3.56% for the Senior Notes maturing in March 2028.

For the three months ended March 31, 2019 and 2018, the Company recognized interest expense of $42 million and $43 million, respectively, related to other long-term debt, which was almost entirely comprised of $40 million and $42 million, respectively, related to the contractual coupon interest. The remaining interest expense relates to the amortization of debt discount and debt issuance costs. The remaining period for amortization of debt discount and debt issuance costs is the period until the stated maturity dates for the respective debt.

The aggregate principal value of the Euro-denominated March 2022 Notes, November 2022 Notes, September 2024 Notes and March 2027 Notes and accrued interest thereon was designated as a hedge of the Company's net investment in certain Euro functional currency subsidiaries. The foreign currency transaction gains or losses on these liabilities are measured based upon changes in spot rates and are recorded in "Accumulated other comprehensive loss" in the Unaudited Consolidated Balance Sheets. The Euro-denominated net assets of these subsidiaries are translated into U.S. Dollars at each balance sheet date, with the effects of foreign currency changes also reported in "Accumulated other comprehensive loss" in the Unaudited Consolidated Balance Sheets. Since the notional amount of Euro-denominated debt and related interest have been less than the notional amount of the Company's net investment, the Company has not incurred any ineffectiveness on this hedge. The Company plans to dedesignate a portion of this hedge in the second quarter of 2019. The foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as hedging instruments for accounting purposes will be recognized in net income.