Debt

6 Months Ended

Feb. 27, 2020


	February 27, 2020																August 29, 2019
					Net Carrying Amount										Net Carrying Amount
As of	Stated Rate		Effective Rate		Current		Long-Term		Total		Current		Long-Term		Total

Finance lease obligations	N/A		4.95	%	$	153	$	343	$	496	$	223	$	368	$	591
2024 Notes	4.64	%	4.76	%	—		597		597		—		597		597
2024 Term Loan A	2.90	%	2.95	%	62		1,186		1,248		—		—		—
2026 Notes	4.98	%	5.07	%	—		497		497		—		497		497
2027 Notes	4.19	%	4.27	%	—		895		895		—		895		895
2029 Notes	5.33	%	5.40	%	—		696		696		—		696		696
2030 Notes	4.66	%	4.73	%	—		845		845		—		845		845
2032D Notes ⁽¹⁾	3.13	%	6.33	%	—		129		129		—		127		127
2033F Notes ⁽¹⁾	2.13	%	2.13	%	19		—		19		196		—		196
MMJ Creditor Payments	N/A		—	%	3		—		3		198		—		198
IMFT Member Debt	N/A		N/A		—		—		—		693		—		693
2025 Notes	5.50	%	5.56	%	—		—		—		—		516		516
					$	237	$	5,188	$	5,425	$	1,310	$	4,541	$	5,851

⁽¹⁾Since the closing price of our common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading day period ended on December 31, 2019, these notes are convertible by the holders through the calendar quarter ended March 31, 2020. Additionally, the closing price of our common stock also exceeded the thresholds for the calendar quarter ended March 31, 2020; therefore, these notes are convertible by the holders at any time through June 30, 2020.

IMFT Member Debt

In connection with our purchase of Intel’s noncontrolling interest in IMFT on October 31, 2019, we extinguished the remaining IMFT Member Debt as a component of the cash consideration paid to Intel for their interest in IMFT and recognized a non-operating gain of $72 million for the difference between the $505 million of cash consideration allocated to the extinguishment of IMFT Member Debt and its $577 million carrying value. (See “Equity – Noncontrolling Interest in Subsidiary” note for the cash consideration allocated to the repurchase of noncontrolling interest.) Prior to our acquisition of Intel’s interests in IMFT, IMFT repaid Intel $116 million of IMFT Member Debt in the first quarter of fiscal 2020.

Convertible Senior Notes

As of February 27, 2020, the $50.58 trading price of our common stock was higher than the conversion prices of our convertible notes and, as a result, the aggregate conversion value of $752 million exceeded the aggregate principal amount of $150 million by $602 million.

Credit Facility

Our credit facility provides for our 2024 Term Loan A and a committed revolving credit facility. The 2024 Term Loan A and revolving credit facility generally bear interest at rates equal to LIBOR plus 1.25% to 2.00%, depending on our corporate credit rating and leverage ratio. Under the terms of the credit facility, we must maintain ratios, calculated as of the last day of each fiscal quarter, of total indebtedness to adjusted EBITDA and adjusted EBITDA to net interest expense.

2024 Term Loan A: On October 30, 2019, we drew the $1.25 billion available under our 2024 Term Loan A credit facility. Principal payments are due annually in an amount equal to 5.0% of the initial principal amount with the balance due at maturity in October 2024. The 2024 Term Loan A facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.

Revolving Credit Facility: Subsequent to the second quarter of 2020, on March 13, 2020, we drew the $2.50 billion available under our revolving credit facility. Borrowings under the revolving credit facility are scheduled to mature on July 3, 2023 and we may repay amounts borrowed any time without penalty. The revolving credit facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.

Debt Activity

The table below presents the effects of issuances, prepayments, and conversions of debt in the first six months of 2020. When we receive a notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of the principal amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of our election to settle a conversion in cash, we reclassify the fair value of the equity component of the converted notes from additional capital to derivative debt liability within current debt in our consolidated balance sheet.


Six months ended February 27, 2020	Increase (Decrease) in Principal		Increase (Decrease) in Carrying Value		Increase (Decrease) in Cash		Decrease in Equity		Gain (Loss)

Issuances
2024 Term Loan A	$	1,250	$	1,248	$	1,248	$	—	$	—
Prepayments
2025 Notes	(519)		(516)		(534)		—		(18)
IMFT Member Debt	(693)		(693)		(621)		—		72
Settled conversions
2033F Notes	(46)		(180)		(198)		(6)		(12)
Conversions not settled
2033F Notes	—		3		—		(3)		—
	$	(8)	$	(138)	$	(105)	$	(9)	$	42