Debt And Financing Arrangements

6 Months Ended

Dec. 31, 2011

Debt And Financing Arrangements

Debt And Financing Arrangements

Note 9. Debt and Financing Arrangements

The Company has outstanding $1.15 billion principal amount of convertible senior notes (the Notes) due in 2014. As of December 31, 2011, none of the conditions permitting conversion of the Notes had been satisfied.  Therefore, no share amounts related to the conversion of the Notes or exercise of the warrants sold in connection with the issuance of the Notes were included in diluted average shares outstanding.  For further information on the Notes, refer to Note 8 "Debt and Financing Arrangements" in the consolidated financial statements included in the Company's annual report on Form 10-K for the year ended June 30, 2011.

The Company also has outstanding $1.4 billion principal amount of floating rate notes due on August 13, 2012.  Interest on the notes accrues at a floating rate of three-month LIBOR reset quarterly plus 0.16% and is paid quarterly.  As of December 31, 2011, the interest rate on the notes was 0.61%.

On September 26, 2011, the Company issued $528 million of 4.535% senior Debentures due in 2042 (the New Debentures) in exchange for $404 million of its previously issued and outstanding 6.45%, 6.625%, 6.75%, 6.95%, 7% and 7.5% debentures.  The Company paid $32 million of debt premium to certain bondholders associated with these exchanges.  The discount on the New Debentures is being amortized over the life of the New Debentures using the effective interest method.

At December 31, 2011, the fair value of the Company's long-term debt exceeded the carrying value by $1.5 billion, as estimated using quoted market prices or discounted future cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.

At December 31, 2011, excluding the accounts receivable securitization facility discussed below, the Company had lines of credit totaling $7.0 billion, of which, $6.2 billion was unused.  Of the Company's total lines of credit, $4.6 billion support a commercial paper borrowing facility, against which $130 million of commercial paper was outstanding at December 31, 2011.

On July 1, 2011, the Company entered into a 364-day accounts receivable securitization facility.  The facility provides the Company with up to $1.0 billion in liquidity.  Under the facility, the Company's U.S.-originated trade accounts receivables are sold to a wholly-owned, bankruptcy-remote entity which then sells an undivided interest in the receivables as collateral for any borrowings under the facility.  Receivable balances related to this facility will continue to be reported as trade receivables in the Company's consolidated balance sheets based upon the Company's continuing involvement with these assets.  Any borrowings under the facility will be classified as secured borrowings.  The Company has no outstanding borrowings under the facility as of December 31, 2011.