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Debt

12 Months Ended

Mar. 31, 2012

Note 9 — Debt

At March 31, 2012 and 2011, the Company’s debt obligations consisted of the following:


	AT MARCH 31,
(in millions)	2012			2011
Revolving credit facility due August 2012	$	—		$	$250
Revolving credit facility due August 2016		—			—
5.375% Notes due November 2019		750			750
6.125% Notes due December 2014, net of unamortized premium from fair value hedge of $27 and $15		527			515
Other indebtedness, primarily capital leases		29			42
Unamortized discount for Notes		(5	)		(6	)
Total debt outstanding	$	1,301		$	1,551
Less the current portion		(14	)		(269	)
Total long-term debt portion	$	1,287		$	1,282

Interest expense for fiscal years 2012, 2011 and 2010 was $64 million, $68 million and $102 million, respectively.

The maturities of outstanding debt are as follows:


	YEAR ENDED MARCH 31,
(in millions)	2013		2014		2015		2016		2017		THEREAFTER
Amount due	$	14	$	12	$	529	$	1	$	0	$	745

Revolving Credit Facility: In April 2011, the Company repaid the outstanding balance of $250 million on the revolving credit facility that was due August 2012. In August 2011, the Company replaced the revolving credit facility due August 2012 with a new revolving credit facility due August 2016.

The maximum committed amount available under the revolving credit facility due August 2016 is $1 billion. The facility also provides the Company with an option to increase the available credit by an amount up to $500 million. This option is subject to certain conditions and the agreement of the facility lenders.

Advances under the revolving credit facility due August 2016 bear interest at a rate dependent on the Company’s credit ratings at the time of such borrowings and are calculated according to a Base Rate or a Eurocurrency Rate, as the case may be, plus an applicable margin. The Company must also pay facility commitment fees quarterly on the full revolving credit commitment at rates dependent on the Company’s credit ratings.

At March 31, 2012, there were no outstanding borrowings under the revolving credit facility due August 2016 and, based on the Company’s credit ratings, the rates applicable to the facility at March 31, 2012 and 2011 were as follows:


	AT MARCH 31,
	2012			2011
Applicable margin on Base Rate borrowing		0.25	%		—	%
Weighted average interest rate on outstanding borrowings		—	%		0.65	%
Applicable margin on Eurocurrency Rate borrowing		1.10	%		0.35	%
Utilization fee		0	%		0.10	%
Facility commitment fee		0.15	%		0.10	%

The interest rate that would have applied at March 31, 2012 to a borrowing under the revolving credit facility due August 2016 would have been 3.50% for Base Rate borrowings and 1.34% for Eurocurrency Rate borrowings. The Company capitalized the transaction fees of approximately $2 million associated with the revolving credit facility due August 2016. These fees are being amortized to “Interest expense, net” in the Consolidated Statements of Operations.

Total interest expense relating to borrowings under the revolving credit facility for fiscal years 2012, 2011 and 2010 was less than $1 million, $2 million and $5 million, respectively. The revolving credit facility due August 2016 contains customary covenants for borrowings of this type, including two financial covenants: (i) for the 12 months ending each quarter-end, the ratio of consolidated debt for borrowed money to consolidated cash flow, each as defined in the revolving credit facility Credit Agreement, must not exceed 4.00 to 1.00; and (ii) for the 12 months ending at any date, the ratio of consolidated cash flow to the sum of interest payable on, and amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the Credit Agreement, must not be less than 3.50 to 1.00. At March 31, 2012, the Company was in compliance with all covenants.

In addition, future borrowings under the revolving credit facility require, at the date of a borrowing, that (i) no event of default shall have occurred and be continuing and (ii) the Company reaffirm the representations and warranties it made in the Credit Agreement.

Notes: The Company’s 5.375% Notes and 6.125% Senior Notes (collectively, the “Notes”) are senior unsecured obligations and rank equally in right of payment with all of the Company’s other existing and future senior unsecured indebtedness. The Notes are subordinated to any future secured indebtedness to the extent of the assets securing such future indebtedness and structurally subordinated to any indebtedness of the Company’s subsidiaries. The Company has the option to redeem the Notes at any time, at redemption prices equal to the greater of (i) the principal amount of the securities to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal thereof and interest thereon that would be due on the securities to be redeemed, discounted to the date of redemption on a semi-annual basis at the treasury rate plus 30 basis points and 20 basis points for the 5.375% Notes and the 6.125% Notes, respectively.

The maturity of the Notes may be accelerated by the holders upon certain events of default, including failure to make payments when due and failure to comply with covenants or agreements of the Company set forth in the Notes or the Indenture after notice and failure to cure.

5.375% Notes Due November 2019: During the third quarter of fiscal year 2010, the Company issued approximately $750 million principal amount of 5.375% Notes due 2019 (the 5.375% Notes). The net proceeds of the offering were approximately $738 million, after being issued at a discount and deducting expenses, underwriting fees and commissions of approximately $6 million. The discount is being amortized over the term to maturity. In the event of a change of control, each noteholder will have the right to require the Company to repurchase all or any part of such holder’s 5.375% Notes in cash at a price equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to the date of repurchase. This is subject to the right of holders of record on the relevant interest payment date to receive interest due.

6.125% Notes Due December 2014: The Company has entered into interest rate swaps to convert $500 million of its 6.125% Notes into floating interest rate payments through December 1, 2014. Under the terms of the swaps, the Company will pay quarterly interest at an average rate of 2.88% plus the three-month London Interbank Offered Rate (LIBOR), and will receive payment at 5.625%. The LIBOR based rate is set quarterly three months prior to the date of the interest payment. The Company designated these swaps as fair value hedges and accounting for them in accordance with the shortcut method of FASB ASC Topic 815. The carrying value of the 6.125% Notes has been adjusted by an amount that is equal and offsetting to the fair value of the swaps.

Other Indebtedness: The Company has available an unsecured and uncommitted multi-currency line of credit to meet short-term working capital needs for the Company’s subsidiaries operating outside the United States and uses guarantees and letters of credit issued by financial institutions to guarantee performance on certain contracts. At each of March 31, 2012 and 2011, approximately $55 million was pledged in support of bank guarantees and other local credit lines and none of these arrangements had been drawn down by third parties.

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because it maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both. At March 31, 2012 and 2011, the borrowing positions outstanding under this cash pooling arrangement were as follows:


	AT MARCH 31,
(in millions)	2012			2011
Borrowings	$	476		$	260
Repayments		(331	)		(260	)
Foreign currency exchange effect		(6	)		—
Total borrowing positions outstanding⁽¹⁾	$	139		$	—

(1)	Included in “Accrued expenses and other current liabilities” in the Company’s Consolidated Balance Sheet.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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