Financing Arrangements

Debt consisted of the following:



		April 26, 2013							April 27, 2012
(in millions, except interest rates)	Maturity by Fiscal Year	Payable			Average Interest Rate		Effective Interest Rate		Payable			Average Interest Rate		Effective Interest Rate
Short-Term Borrowings:
Commercial paper	2013-2014	$	125		0.21	%	—		$	950		0.14	%	—
Capital lease obligations	2013-2014	14			3.30	%	—		14			3.38	%	—
Bank borrowings	2013-2014	221			0.57	%	—		200			0.93	%	—
Five-year 2009 senior notes	2014	550			4.50	%	4.50	%	—			—		—
Seven-year senior convertible notes	2013	—			—		—		2,200			1.63	%	6.03	%
Debt discount	2013	—			—		—		(90		)	—		—
Total Short-Term Borrowings		$	910						$	3,274
Long-Term Debt:
Five-year 2009 senior notes	2014	—			—		—		550			4.50	%	4.50	%
Five-year 2010 senior notes	2015	1,250			3.00	%	3.00	%	1,250			3.00	%	3.00	%
Ten-year 2005 senior notes	2016	600			4.75	%	4.76	%	600			4.75	%	4.76	%
Five-year 2011 senior notes	2016	500			2.63	%	2.72	%	500			2.63	%	2.72	%
Five-year 2013 senior notes	2018	1,000			1.38	%	1.41	%	—			—		—
Ten-year 2009 senior notes	2019	400			5.60	%	5.61	%	400			5.60	%	5.61	%
Ten-year 2010 senior notes	2020	1,250			4.45	%	4.47	%	1,250			4.45	%	4.47	%
Ten-year 2011 senior notes	2021	500			4.13	%	4.19	%	500			4.13	%	4.19	%
Ten-year 2012 senior notes	2022	675			3.13	%	3.16	%	675			3.13	%	3.16	%
Ten-year 2013 senior notes	2023	1,250			2.75	%	2.78	%	—			—		—
Thirty-year 2009 senior notes	2039	300			6.50	%	6.52	%	300			6.50	%	6.52	%
Thirty-year 2010 senior notes	2040	500			5.55	%	5.56	%	500			5.55	%	5.56	%
Thirty-year 2012 senior notes	2042	400			4.50	%	4.51	%	400			4.50	%	4.51	%
Thirty-year 2013 senior notes	2043	750			4.00	%	4.12	%	—			—		—
Interest rate swaps	2015-2022	181			—		—		167			—		—
Deferred gains from interest rate swap terminations	—	50			—		—		102			—		—
Capital lease obligations	2013-2025	152			3.59	%	—		165			3.57	%	—
Bank borrowings	2015	3			5.00	%	—		—			—		—
Discount	2018-2043	(20		)	—		—		—			—		—
Total Long-Term Debt		$	9,741						$	7,359

Senior Convertible Notes In April 2006, the Company issued $2.200 billion of 1.500 percent Senior Convertible Notes due 2011 (2011 Senior Convertible Notes) and $2.200 billion of 1.625 percent Senior Convertible Notes due 2013 (2013 Senior Convertible Notes) (collectively, the Senior Convertible Notes). The Senior Convertible Notes were issued at par and paid interest in cash semi-annually. The 2011 Senior Convertible Notes were repaid in April 2011. The 2013 Senior Convertible Notes were repaid in April 2013. Concurrent with the issuance of the 2013 Senior Convertible Notes, the Company purchased call options on its common stock in private transactions. The call options expired in June 2013 with no financial statement impact.

The Company accounted for the Senior Convertible Notes in accordance with the authoritative guidance for convertible debt, which required the proceeds from the issuance of the Senior Convertible Notes to be allocated between a liability component (issued at a discount) and an equity component. The resulting debt discount was amortized over the period the 2013 Senior Convertible Notes were outstanding as additional non-cash interest expense.

In separate private transactions, the Company sold warrants to issue shares of the Company’s common stock at an exercise price of $76.56 per share. Pursuant to these transactions, warrants for 41 million shares of the Company’s common stock may be settled over a specified period that began in July 2011 and warrants for 41 million shares of the Company’s common stock may be settled over a specified period beginning in July 2013 (the settlement dates). As of April 26, 2013 and April 27, 2012, warrants for 41 million shares of the Company’s common stock had expired.

The Company concluded that the warrants were indexed to its own stock and should be classified in shareholders' equity and not separated as a derivative. The warrants were recorded as an addition to equity as of the trade date. The carrying amount of the equity component as of April 26, 2013 and April 27, 2012 was $547 million.

The following table provides interest expense amounts related to the Senior Convertible Notes.



	Fiscal Year
(in millions)	2013		2012		2011
Interest cost related to contractual interest coupon	$	35	$	36	$	68
Interest cost related to amortization of the discount	90		87		172

Commercial Paper The Company maintains a commercial paper program that allows the Company to have a maximum of $2.250 billion in commercial paper outstanding, with maturities up to 364 days from the date of issuance. As of April 26, 2013 and April 27, 2012, outstanding commercial paper totaled $125 million and $950 million, respectively. During fiscal years 2013 and 2012, the weighted average original maturity of the commercial paper outstanding was approximately 89 and 102 days, respectively, and the weighted average interest rate was 0.18 percent and 0.15 percent, respectively. The issuance of commercial paper reduces the amount of credit available under the Company's existing lines of credit.

Bank Borrowings Approximately $218 million of the $224 million outstanding bank borrowings as of April 26, 2013 were short-term advances to certain non-U.S. subsidiaries under credit agreements with various banks. These advances are guaranteed by the Company. Bank borrowings consist primarily of borrowings at interest rates considered favorable by management and where natural hedges can be gained for foreign exchange purposes.

Lines of Credit The Company has a $2.250 billion syndicated credit facility dated December 17, 2012 which expires on December 17, 2017 (Credit Facility). The Credit Facility provides the Company with the ability to increase its borrowing capacity by an additional $750 million at any time during the term of the agreement. At each anniversary of the date of the Credit Facility, but not more than twice prior to the maturity date, the Company can also request a one-year extension of the maturity date. The Credit Facility provides backup funding for the commercial paper program. The Credit Facility replaced the Company's four-year $2.250 billion syndicated credit facility which was scheduled to expire on December 9, 2014. As of April 26, 2013 and April 27, 2012, no amounts were outstanding on the committed lines of credit.

Interest rates on these borrowings are determined by a pricing matrix, based on the Company’s long-term debt ratings assigned by Standard & Poor’s Ratings Services and Moody’s Investors Service. Facility fees are payable on the credit facilities and are determined in the same manner as the interest rates. The agreements also contain customary covenants, all of which the Company remains in compliance with as of April 26, 2013.

Senior Notes Senior Notes are unsecured, senior obligations of the Company and rank equally with all other secured and unsubordinated indebtedness of the Company. The indentures under which the Senior Notes were issued contain customary covenants, all of which the Company remains in compliance with as of April 26, 2013. The Company used the net proceeds from the sale of the Senior Notes primarily for working capital and general corporate purposes, which include the repayment of other indebtedness of the Company.

In March 2013, the Company issued three tranches of Senior Notes (collectively, the 2013 Senior Notes) with an aggregate face value of $3.000 billion. The first tranche consisted of $1.000 billion of 1.375 percent Senior Notes due 2018. The second tranche consisted of $1.250 billion of 2.750 percent Senior Notes due 2023. The third tranche consisted of $750 million of 4.000 percent Senior Notes due 2043. Interest on each series of the 2013 Senior Notes is payable semi-annually on April 1 and October 1 of each year, commencing on October 1, 2013. The Company used the net proceeds from the sale of the 2013 Senior Notes for working capital and general corporate purposes, including repayment of indebtedness.

As of April 26, 2013 and April 27, 2012, the Company had interest rate swap agreements designated as fair value hedges of underlying fixed-rate obligations including the Company’s $1.250 billion 3.000 percent 2010 Senior Notes due 2015, $600 million 4.750 percent 2005 Senior Notes due 2015, $500 million 2.625 percent 2011 Senior Notes due 2016, $500 million 4.125 percent 2011 Senior Notes due 2021, and $675 million 3.125 percent 2012 Senior Notes due 2022. For additional information regarding the interest rate swap agreements, refer to Note 9.

Contractual maturities of long-term debt for the next five fiscal years and thereafter, including current portions, capital leases, and excluding the debt discount, the fair value impact of outstanding interest rate swap agreements, and the remaining deferred gains from terminated interest rate swap agreements are as follows:



(in millions) Fiscal Year	Obligation
2014	$	564
2015	1,266
2016	1,112
2017	30
2018	1,018
Thereafter	6,104
Total long-term debt	10,094
Less: Current portion of long-term debt	564
Long-term portion of long-term debt	$	9,530