Debt

9 Months Ended

Jun. 27, 2020

Commercial Paper and Repurchase Agreements

The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of both June 27, 2020 and September 28, 2019, the Company had $6.0 billion of Commercial Paper outstanding with maturities generally less than nine months. The weighted-average interest rate of the Company’s Commercial Paper was 0.77% and 2.24% as of June 27, 2020 and September 28, 2019, respectively. The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the nine months ended June 27, 2020 and June 29, 2019 (in millions):


	Nine Months Ended
	June 27, 2020		June 29, 2019
Maturities 90 days or less:
Proceeds from/(Repayments of) commercial paper, net	$	401	$	(3,720)

Maturities greater than 90 days:
Proceeds from commercial paper	5,373		12,977
Repayments of commercial paper	(5,743)		(11,283)
Proceeds from/(Repayments of) commercial paper, net	(370)		1,694

Total proceeds from/(repayments of) commercial paper, net	$	31	$	(2,026)

In 2020, the Company entered into agreements to sell certain of its marketable securities with a promise to repurchase the securities at a specified time and amount (“Repos”). Due to the Company’s continuing involvement with the marketable securities, the Company accounts for its Repos as collateralized borrowings. As of June 27, 2020, the Company had $5.2 billion of Repo liabilities outstanding with maturities of less than three months, and had pledged $5.3 billion of marketable securities as collateral.

Term Debt

As of June 27, 2020, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $100.1 billion (collectively the “Notes”). The Notes are senior unsecured obligations and interest is payable in arrears. The following table provides a summary of the Company’s term debt as of June 27, 2020 and September 28, 2019:


	Maturities (calendar year)	June 27, 2020					September 28, 2019
				Amount (in millions)	Effective Interest Rate		Amount (in millions)		Effective Interest Rate
2013 – 2019 debt issuances:
Floating-rate notes	2021 – 2022	$	2,250	0.80% – 1.49%	$	4,250	2.25% – 3.28%
Fixed-rate 0.375% – 4.650% notes	2020 – 2049	87,055		0.28% – 4.78%	97,429		0.28% – 4.78%

First quarter 2020 debt issuance of €2.0 billion:
Fixed-rate 0.000% – 0.500% notes	2025 – 2031	2,260		0.03% – 0.56%	—		—	%

Third quarter 2020 debt issuance of $8.5 billion:
Fixed-rate 0.750% – 2.650% notes	2023 – 2050	8,500		0.84% – 2.72%	—		—	%
Total term debt		100,065			101,679

Unamortized premium/(discount) and issuance costs, net		(279)			(224)
Hedge accounting fair value adjustments		1,771			612
Less: Current portion of term debt		(7,509)			(10,260)
Total non-current portion of term debt		$	94,048		$	91,807

To manage interest rate risk on certain of its U.S. dollar–denominated fixed- or floating-rate notes, the Company has entered into interest rate swaps to effectively convert the fixed interest rates to floating interest rates or the floating interest rates to fixed interest rates on a portion of these notes. Additionally, to manage foreign currency risk on certain of its foreign currency–denominated notes, the Company has entered into foreign currency swaps to effectively convert these notes to U.S. dollar–denominated notes.

As of September 28, 2019, a portion of the Company’s Japanese yen–denominated notes with a carrying value of $1.0 billion was designated as a hedge of the foreign currency exposure of the Company’s net investment in a foreign operation. The Company’s Japanese yen–denominated notes matured during the third quarter of 2020 and the associated net investment hedges were terminated. For further discussion regarding the Company’s use of derivative instruments, refer to the Derivative Financial Instruments section of Note 3, “Financial Instruments.”

The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to hedging. The Company recognized $664 million and $2.1 billion of interest cost on its term debt for the three- and nine-month periods ended June 27, 2020, respectively. The Company recognized $790 million and $2.4 billion of interest cost on its term debt for the three- and nine-month periods ended June 29, 2019, respectively.

As of June 27, 2020 and September 28, 2019, the fair value of the Company’s Notes, based on Level 2 inputs, was $110.8 billion and $107.5 billion, respectively.