Financing arrangements

The principal amounts, fixed contractual coupon rates and aggregate carrying value of our long-term borrowings were as follows (in millions):



	June 30, 2016			December 31, 2015
2.30% notes due 2016 (2.30% 2016 Notes)	$	—		$	750
2.50% notes due 2016 (2.50% 2016 Notes)	1,000			1,000
2.125% notes due 2017 (2.125% 2017 Notes)	1,250			1,250
Floating Rate Notes due 2017	600			600
1.25% notes due 2017 (1.25% 2017 Notes)	850			850
5.85% notes due 2017 (5.85% 2017 Notes)	1,100			1,100
6.15% notes due 2018 (6.15% 2018 Notes)	500			500
Term Loan due 2018 (Term Loan)	1,725			1,975
4.375% euro-denominated notes due 2018 (4.375% 2018 euro Notes)	606			599
5.70% notes due 2019 (5.70% 2019 Notes)	1,000			1,000
Floating Rate Notes due 2019	250			250
2.20% notes due 2019 (2.20% 2019 Notes)	1,400			1,400
2.125% euro-denominated notes due 2019 (2.125% 2019 euro Notes)	750			733
4.50% notes due 2020 (4.50% 2020 Notes)	300			300
2.125% notes due 2020 (2.125% 2020 Notes)	750			750
3.45% notes due 2020 (3.45% 2020 Notes)	900			900
4.10% notes due 2021 (4.10% 2021 Notes)	1,000			1,000
3.875% notes due 2021 (3.875% 2021 Notes)	1,750			1,750
1.25% euro-denominated notes due 2022 (1.25% 2022 euro Notes)	1,388			—
2.70% notes due 2022 (2.70% 2022 Notes)	500			500
3.625% notes due 2022 (3.625% 2022 Notes)	750			750
0.41% Swiss-franc-denominated bonds due 2023 (0.41% 2023 Swiss franc Bonds)	717			—
3.625% notes due 2024 (3.625% 2024 Notes)	1,400			1,400
3.125% notes due 2025 (3.125% 2025 Notes)	1,000			1,000
2.00% euro-denominated notes due 2026 (2.00% 2026 euro Notes)	833			—
5.50% pound-sterling denominated notes due 2026 (5.50% 2026 pound sterling Notes)	633			700
4.00% pound-sterling denominated notes due 2029 (4.00% 2029 pound sterling Notes)	932			1,032
6.375% notes due 2037 (6.375% 2037 Notes)	552			900
6.90% notes due 2038 (6.90% 2038 Notes)	291			500
6.40% notes due 2039 (6.40% 2039 Notes)	466			1,000
5.75% notes due 2040 (5.75% 2040 Notes)	412			700
4.95% notes due 2041 (4.95% 2041 Notes)	600			600
5.15% notes due 2041 (5.15% 2041 Notes)	974			2,250
5.65% notes due 2042 (5.65% 2042 Notes)	487			1,250
5.375% notes due 2043 (5.375% 2043 Notes)	261			1,000
4.40% notes due 2045 (4.40% 2045 Notes)	1,250			1,250
4.563% notes due 2048 (4.563% 2048 Notes)	1,415			—
4.663% notes due 2051 (4.663% 2051 Notes)	3,541			—
Other notes	100			100
Unamortized bond discounts and issuance costs	(1,011		)	(210		)
Total carrying value of debt	$	33,222		$	31,429
Less current portion	(5,294		)	(2,247		)
Total noncurrent debt	$	27,928		$	29,182

The principal amounts of notes denominated in foreign currencies in the above table include €550 million of 4.375% 2018 euro Notes, €675 million of 2.125% 2019 euro Notes, €1,250 million of 1.25% 2022 euro Notes, CHF700 million of 0.41% 2023 Swiss franc Bonds, €750 million of 2.00% 2026 euro Notes, £475 million of 5.50% 2026 pound sterling Notes and £700 million of 4.00% 2029 pound sterling Notes.

There are no material differences between the effective interest rates and coupon rates of any of our borrowings, except for the 4.563% 2048 Notes and the 4.663% 2051 Notes, which have effective interest rates of approximately 6.3% and 5.6%, respectively.

During the first quarter of 2016, we retrospectively adopted a new accounting standard that amends the presentation of debt issuance costs. Such costs are now presented as a direct deduction from the carrying amount of the debt liability and not as deferred charges presented as assets on our Condensed Consolidated Balance Sheets. As a result of adopting this new accounting standard, our Condensed Consolidated Balance Sheet at December 31, 2015, was restated to reflect this impact, which reduced both Other current assets and the Current portion of long-term debt by $3 million and both Other assets and Long-term debt by $124 million.

Debt repayments

During the six months ended June 30, 2016, we repaid $250 million of principal on our Term Loan due 2018 and the $750 million aggregate principal amount of the 2.30% 2016 Notes.

Debt issuances

During the six months ended June 30, 2016, we issued debt securities in the following offerings:


•	In March 2016, we issued $704 million principal amount of bonds, consisting of the 0.41% 2023 Swiss franc Bonds (CHF700 million principal amount).


•	In February 2016, we issued $2.2 billion aggregate principal amount of notes, consisting of the 1.25% 2022 euro Notes (€1,250 million principal amount) and the 2.00% 2026 euro Notes (€750 million principal amount).

Debt issuance costs incurred in connection with both issuances of debt totaling approximately $13 million are being amortized over the respective lives of the debt securities and the related charges are included in Interest expense, net, in the Condensed Consolidated Statements of Income.

In the event of a change-in-control triggering event, as defined, we may be required to purchase all or a portion of these debt securities (as well as the debt exchange issuances discussed below) at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest. In addition, all of the euro-denominated notes issued during 2016 may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued and unpaid interest and a make-whole amount, as defined. These euro-denominated notes may be redeemed without payment of a make-whole amount if they are redeemed on or after three months prior to their maturity date.

Debt exchange

During the three months ended June 30, 2016, we completed a private offering to exchange portions of certain outstanding senior notes due 2037 through 2043 (collectively, the Old Notes), listed below, for new senior notes, consisting of principal amounts of $1.4 billion of 4.563% 2048 Notes and $3.5 billion of 4.663% 2051 Notes (collectively, the New Notes).

The following principal amounts of each series of Old Notes were validly tendered and subsequently canceled (in millions):



	Principal Amount Exchanged
6.375% 2037 Notes	$	348
6.90% 2038 Notes	209
6.40% 2039 Notes	534
5.75% 2040 Notes	288
5.15% 2041 Notes	1,276
5.65% 2042 Notes	763
5.375% 2043 Notes	739

The New Notes bear lower fixed coupon rates while requiring higher principal repayments on extended maturity dates, compared with the Old Notes that were exchanged. There were no other significant changes to the terms between the Old Notes and the New Notes. The exchange is considered a debt modification, and there were no cash payments to or cash receipts from the note holders as a result of the exchange. Existing deferred financing costs associated with the Old Notes, as well as discounts associated with the New Notes aggregating $801 million, will be accreted over the term of the New Notes and recorded as Interest expense, net. Transaction costs of $24 million incurred for the exchange were expensed immediately in Interest and other income, net.