Microsoft 2009 Annual Report Download - page 61

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PAGE 61
NOTE 12 DEBT
SHORT-TERM DEBT
In September 2008, our Board of Directors authorized debt financings of up to $6.0 billion. Pursuant to the
authorization, we established a commercial paper program providing for the issuance and sale of up to $2.0 billion in
short-term commercial paper. As of June 30, 2009, $2.0 billion of the commercial paper was issued and outstanding
with a weighted average interest rate, including issuance costs, of 0.20% and maturities of 22 to 119 days. The
estimated fair value of this commercial paper approximates its carrying value.
In September 2008, we also entered into a $2.0 billion six-month senior unsecured credit facility, principally to
support the commercial paper program. In November 2008, we replaced the six-month credit facility with a $2.0
billion 364-day credit facility. This credit facility expires on November 6, 2009. In March 2009, we entered into an
additional credit facility. This $1.0 billion 364-day credit facility expires on March 12, 2010. As of June 30, 2009, we
were in compliance with the only financial covenant in both credit agreements, which requires us to maintain a
coverage ratio of at least three times earnings before interest, taxes, depreciation, and amortization to interest
expense. No amounts were drawn against these credit facilities during the year ended June 30, 2009.
LONG-TERM DEBT
In November 2008, we filed a shelf registration statement with the U.S. Securities and Exchange Commission that
allows us to issue debt securities from time to time pursuant to the September 2008 authorization for debt financings
of up to $6.0 billion. In May 2009, we issued $3.75 billion of debt securities under that registration statement
(“Notes”). Interest on the Notes will be payable semi-annually on June 1 and December 1 of each year, commencing
on December 1, 2009, to holders of record on the preceding May 15 and November 15. The Notes are senior
unsecured obligations and will rank equally with our other unsecured and unsubordinated debt outstanding.
The components of long-term debt as of June 30, 2009 were as follows:
(In millions)
2.95% Notes due on June 1, 2014 $2,000
4.20% Notes due on June 1, 2019 1,000
5.20% Notes due on June 1, 2039 750
Unamortized debt discount (4)
Total $3,746
Maturities of long-term debt for the next five years are as follows:
(In millions)
Y
ear Ended June 30, Amount
2010 $ –
2011 –
2012 –
2013 –
2014 2,000
Thereafter 1,750
Total $3,750
As of June 30, 2009, the total carrying value and estimated fair value of our long-term debt were $3.75 billion and
$3.74 billion, respectively. The estimate of fair value is based on quoted prices for our publicly-traded debt as of
June 30, 2009. The effective interest yields of the Notes due in 2014, 2019, and 2039 were 3.00%, 4.29%, and
5.22%, respectively, at June 30, 2009.