Quarterly report pursuant to Section 13 or 15(d)

DEBT AND FINANCING ARRANGEMENTS

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DEBT AND FINANCING ARRANGEMENTS
3 Months Ended
Mar. 31, 2014
Debt Disclosure [Abstract]  
DEBT AND FINANCING ARRANGEMENTS
DEBT AND FINANCING ARRANGEMENTS
The carrying value of our outstanding debt as of March 31, 2014 and December 31, 2013 consists of the following (in millions):
 
Principal
Amount
 
 
 
Carrying Value
 
 
Maturity
 
2014
 
2013
Commercial paper
$
1,183

 
2014
 
$
1,183

 
$

Fixed-rate senior notes:
 
 
 
 
 
 
 
3.875% senior notes
1,000

 
2014
 
1,000

 
1,007

1.125% senior notes
375

 
2017
 
368

 
367

5.50% senior notes
750

 
2018
 
817

 
821

5.125% senior notes
1,000

 
2019
 
1,079

 
1,079

3.125% senior notes
1,500

 
2021
 
1,593

 
1,579

2.45% senior notes
1,000

 
2022
 
934

 
913

6.20% senior notes
1,500

 
2038
 
1,481

 
1,481

4.875% senior notes
500

 
2040
 
489

 
489

3.625% senior notes
375

 
2042
 
367

 
367

8.375% Debentures:
 
 
 
 
 
 
 
8.375% debentures
424

 
2020
 
480

 
479

8.375% debentures
276

 
2030
 
283

 
283

Pound Sterling notes:
 
 
 
 
 
 
 
5.50% notes
111

 
2031
 
107

 
105

5.125% notes
757

 
2050
 
721

 
714

Floating rate senior notes
374

 
2049-2053
 
370

 
370

Capital lease obligations
473

 
2014-3004
 
473

 
473

Facility notes and bonds
320

 
2015-2036
 
320

 
320

Other debt
17

 
2014-2022
 
17

 
25

Total Debt
$
11,935

 
 
 
12,082

 
10,872

Less: Current Maturities
 
 
 
 
(2,222
)
 
(48
)
Long-term Debt
 
 
 
 
$
9,860

 
$
10,824



Debt Repayments
On April 1, 2014, our $1.0 billion 3.875% senior notes matured and were repaid in full. The principal balance of the senior notes was repaid from the proceeds of short-term commercial paper issuances. As of March 31, 2014, we have classified the entire 3.875% senior notes balance as a current liability on our consolidated balance sheet.
Sources of Credit
We are authorized to borrow up to $10.0 billion under the U.S. commercial paper program we maintain. We had $1.183 billion outstanding under this program as of March 31, 2014, with an average interest rate of 0.06%. We also maintain a European commercial paper program under which we are authorized to borrow up to €5.0 billion in a variety of currencies. As of March 31, 2014, there were no amounts outstanding under this program. As of March 31, 2014, we have classified the entire commercial paper balance as a current liability on our consolidated balance sheet.
We maintain two credit agreements with a consortium of banks. One of these agreements provides revolving credit facilities of $1.5 billion, and expires on March 27, 2015. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate, (2) the Federal Funds effective rate plus 0.50%, and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our 1-year credit default swap spread, subject to a minimum rate of 0.10% and a maximum rate of 0.75%. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not lower than 0.00%). We are also able to request advances under this facility based on competitive bids for the applicable interest rate. There were no amounts outstanding under this facility as of March 31, 2014.
The second agreement provides revolving credit facilities of $1.0 billion, and expires on March 28, 2019. Generally, amounts outstanding under this facility bear interest at a periodic fixed rate equal to LIBOR for the applicable interest period and currency denomination, plus an applicable margin. Alternatively, a fluctuating rate of interest equal to the highest of (1) JPMorgan Chase Bank’s publicly announced prime rate, (2) the Federal Funds effective rate plus 0.50%, and (3) LIBOR for a one month interest period plus 1.00%, plus an applicable margin, may be used at our discretion. In each case, the applicable margin for advances bearing interest based on LIBOR is a percentage determined by quotations from Markit Group Ltd. for our credit default swap spread, interpolated for a period from the date of determination of such credit default swap spread in connection with a new interest period until the latest maturity date of this facility then in effect (but not less than a period of one year). The minimum applicable margin rate is 0.10% and the maximum applicable margin rate is 0.75% per annum. The applicable margin for advances bearing interest based on the prime rate is 1.00% below the applicable margin for LIBOR advances (but not less than 0.00%). We are also able to request advances under this facility based on competitive bids. There were no amounts outstanding under this facility as of March 31, 2014.
Debt Covenants
Our existing debt instruments and credit facilities subject us to certain financial covenants. As of March 31, 2014 and for all prior periods, we have satisfied these financial covenants. These covenants limit the amount of secured indebtedness that we may incur, and limit the amount of attributable debt in sale-leaseback transactions, to 10% of net tangible assets. As of March 31, 2014, 10% of net tangible assets was equivalent to $2.489 billion; however, we have no covered sale-leaseback transactions or secured indebtedness outstanding. We do not expect these covenants to have a material impact on our financial condition or liquidity.
Fair Value of Debt
Based on the borrowing rates currently available to the Company for long-term debt with similar terms and maturities, the fair value of long-term debt, including current maturities, was approximately $13.196 and $11.756 billion as of March 31, 2014 and December 31, 2013, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of all of our debt instruments.