Financial Instruments

3 Months Ended

Dec. 29, 2023

Financial Instruments

Financial Instruments

10. Financial Instruments

Foreign Currency Exchange Rate Risk

As part of managing the exposure to changes in foreign currency exchange rates, we utilize cross-currency swap contracts and foreign currency forward contracts, a portion of which are designated as cash flow hedges. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in foreign currency exchange rates on intercompany and other cash transactions. We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with the cash flow hedge-designated instruments addressing foreign exchange risks will be reclassified into the Condensed Consolidated Statement of Operations within the next twelve months.

Hedge of Net Investment

We hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $2,792 million and $1,709 million at December 29, 2023 and September 29, 2023, respectively.

We also use a cross-currency swap program to hedge our net investment in certain foreign operations. The aggregate notional value of the contracts under this program was $3,599 million and $3,806 million at December 29, 2023 and September 29, 2023, respectively. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 1.6% per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2028, we will pay the notional value of the contracts in the designated foreign currency and receive U.S. dollars from our counterparties. We are not required to provide collateral for these contracts.

These cross-currency swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows:

	December 29,		September 29,
	2023		2023
	(in millions)
Prepaid expenses and other current assets	$	60	$	109
Other assets		35		79
Accrued and other current liabilities		9		4
Other liabilities		59		10

The impacts of our hedge of net investment programs were as follows:

		For the
		Quarters Ended
	December 29,		December 30,
	2023		2022
	(in millions)
Foreign currency exchange losses on intercompany loans and external borrowings(1)	$	(107)	$	(165)
Losses on cross-currency swap contracts designated as hedges of net investment(1)		(125)		(137)

(1) Recorded as currency translation, a component of accumulated other comprehensive income (loss), and offset by changes attributable to the translation of the net investment.

Commodity Hedges

As part of managing the exposure to certain commodity price fluctuations, we utilize commodity swap contracts. The objective of these contracts is to minimize impacts to cash flows and profitability due to changes in prices of commodities used in production. These contracts had an aggregate notional value of $431 million and $459 million at December 29, 2023 and September 29, 2023, respectively, and were designated as cash flow hedges. These commodity swap contracts were recorded on the Condensed Consolidated Balance Sheets as follows:

	December 29,		September 29,
	2023		2023
	(in millions)
Prepaid expenses and other current assets	$	11	$	3
Accrued and other current liabilities		6		21
Other liabilities		1		5

The impacts of our commodity swap contracts were as follows:

	For the
	Quarters Ended
	December 29,		December 30,
	2023		2022
	(in millions)
Gains recorded in other comprehensive income (loss)	$	26	$	47
Losses reclassified from accumulated other comprehensive income (loss) into cost of sales		(4)		(29)

We expect that significantly all of the balance in accumulated other comprehensive income (loss) associated with commodity hedges will be reclassified into the Condensed Consolidated Statement of Operations within the next twelve months.