Current Liabilities

9 Months Ended

Apr. 30, 2017

Other Liabilities Disclosure [Abstract]

5. Current Liabilities

Short-Term Debt

Short-term debt at July 31, 2016 included $500 million of 5.75% senior unsecured notes due on March 15, 2017, less the unamortized discount. During the third quarter of fiscal 2017 we repaid those notes when they became due using cash from operations. We paid $29 million in cash for interest on the notes during the nine months ended April 30, 2017 and $29 million in cash for interest on the notes during the nine months ended April 30, 2016.

On February 1, 2016 we entered into a master credit agreement with certain institutional lenders for a five-year credit facility in an aggregate principal amount of $1.5 billion. The master credit agreement includes a $500 million unsecured term loan and a $1 billion unsecured revolving credit facility. At April 30, 2017, $500 million was outstanding under the term loan, of which $50 million was classified as short-term debt. See Note 6, “Long-Term Obligations and Commitments – Long-Term Debt,” for more information regarding the term loan.

Unsecured Revolving Credit Facilities

The master credit agreement we entered into on February 1, 2016 includes a $1 billion unsecured revolving credit facility that will expire on February 1, 2021. Under the master credit agreement we may, subject to certain customary conditions, on one or more occasions increase commitments under the revolving credit facility in an amount not to exceed $250 million in the aggregate and may extend the maturity date up to two times. Advances under the revolving credit facility accrue interest at rates that are equal to, at our election, either Bank of America's alternate base rate plus a margin that ranges from 0.0% to 0.5% or the London Interbank Offered Rate (LIBOR) plus a margin that ranges from 0.9% to 1.5%. Actual margins under either election will be based on our senior debt credit ratings. The master credit agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 as of any date and a ratio of annual EBITDA to annual interest expense of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. We remained in compliance with these covenants at all times during the quarter ended April 30, 2017. During the nine months ended April 30, 2017 we borrowed $150 million under this revolving credit facility and at April 30, 2017 no amounts were outstanding. We paid $1 million in cash for interest on the revolving credit facility during the nine months ended April 30, 2017 and $2 million in cash for interest on revolving credit facilities during the nine months ended April 30, 2016.

Other Current Liabilities

Other current liabilities were as follows at the dates indicated:



(In millions)	April 30, 2017		July 31, 2016
Reserve for product returns	$	41	$	7
Reserve for rebates	34		14
Current portion of license fee payable	10		10
Current portion of deferred rent	6		6
Interest payable	1		11
Amounts due for share repurchases	5		—
Executive deferred compensation plan liabilities	80		69
Other	45		40
Total other current liabilities	$	222	$	157

The balances of several of our other current liabilities, particularly our reserves for product returns and rebates, are affected by the seasonality of our business. See Note 1, “Description of Business and Summary of Significant Accounting Policies – Seasonality,” for more information.