Starbucks 2014 Annual Report Download - page 73

Starbucks Corporation 2014 Form 10-K 69
Note 9: Debt
Revolving Credit Facility and Commercial Paper Program
Our $750 million unsecured, revolving credit facility with various banks, of which $150 million may be used for issuances of
letters of credit, is available for working capital, capital expenditures and other corporate purposes, including acquisitions and
share repurchases, and is currently set to mature in February 2018. We may request, and the banks may grant, at their
discretion, increases to the credit facility by a total additional amount of up to $750 million. Borrowings under the credit
facility will bear interest at a variable rate based on LIBOR, and, for US dollar-denominated loans under certain circumstances,
a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin is based on the
better of (i) the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies, and (ii) the
Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the credit facility. The current applicable margin
is 0.795% for Eurocurrency Rate Loans and 0.00% for Base Rate Loans. The credit facility contains provisions requiring us to
maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to
cover financing expenses. As a result of the arbitrator’s ruling on the Kraft litigation, the credit facility was amended on
November 15, 2013 to exclude the impact of the litigation charge, including the impact on our fixed charge coverage ratio. As
of September 28, 2014, we were in compliance with all applicable covenants. No amounts were outstanding under our credit
facility as of September 28, 2014.
Under our commercial paper program, as approved by our Board of Directors, we may issue unsecured commercial paper notes
up to a maximum aggregate amount outstanding at any time of $1 billion, with individual maturities that may vary, but not
exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are to be backstopped by
available commitments under our credit facility. Currently, we may issue up to $727 million under our commercial paper
program (the $750 million committed credit facility amount, less $23 million in outstanding letters of credit). The proceeds
from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other
corporate purposes, including acquisitions and share repurchases. In the first quarter of fiscal 2014, we issued and subsequently
repaid commercial paper borrowings of $225 million to fund a portion of the $2.8 billion payment for the Kraft arbitration
matter. In the fourth quarter of fiscal 2014, we issued and subsequently repaid commercial paper borrowings of $25 million to
fund other corporate purposes. There were no other commercial paper borrowings during fiscal 2014 or fiscal 2013.
Long-term Debt
In December 2013, we issued $400 million of 3-year 0.875% Senior Notes ("the 2016 notes") due December 2016, and $350
million of 5-year 2.000% Senior Notes ("the 2018 notes") due December 2018, in an underwritten registered public offering.
Interest on both of these notes is payable semi-annually on June 5 and December 5 of each year, commencing on June 5, 2014.
In September 2013, we issued $750 million of 10-year 3.85% Senior Notes ("the 2023 notes") due October 2023, in an
underwritten registered public offering. Interest on the 2023 notes is payable semi-annually on April 1 and October 1 of each
year, commencing April 1, 2014.
In August 2007, we issued $550 million of 6.25% Senior Notes ("the 2017 notes") due in August 2017, in an underwritten
registered public offering. Interest on the 2017 notes is payable semi-annually on February 15 and August 15 of each year.
Components of long-term debt including the associated interest rates and related fair values (in millions, except interest rates):
Sep 28, 2014 Sep 29, 2013
Stated Interest
Rate Effective Interest Rate (1)
Issuance Face Value Estimated Fair
Value Face Value Estimated Fair Value
2016 notes $ 400.0 $ 400 $ — $ — 0.875% 0.941%
2017 notes 550.0 625 550.0 644 6.250% 6.292%
2018 notes 350.0 353 — — 2.000% 2.012%
2023 notes 750.0 786 750.0 762 3.850% 2.860%
Total 2,050.0 2,164 1,300.0 1,406
Aggregate unamortized discount 1.7 0.6
Total $ 2,048.3 $ 1,299.4
(1) Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury
locks or forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance.