Debt

9 Months Ended

May 28, 2020


	May 28, 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		4.64	%	$	135	$	394	$	529	$	223	$	368	$	591
2023 Notes	2.497	%	2.64	%	—		1,245		1,245		—		—		—
2024 Notes	4.640	%	4.76	%	—		597		597		—		597		597
2024 Term Loan A	1.440	%	1.49	%	62		1,186		1,248		—		—		—
2026 Notes	4.975	%	5.07	%	—		498		498		—		497		497
2027 Notes	4.185	%	4.27	%	—		895		895		—		895		895
2029 Notes	5.327	%	5.40	%	—		696		696		—		696		696
2030 Notes	4.663	%	4.73	%	—		845		845		—		845		845
2032D Notes	3.125	%	6.33	%	130		—		130		—		127		127
MMJ Creditor Payments	N/A		N/A		3		—		3		198		—		198
IMFT Member Debt	N/A		N/A		—		—		—		693		—		693
2025 Notes	5.500	%	5.56	%	—		—		—		—		516		516
2033F Notes	2.125	%	2.13	%	—		—		—		196		—		196
					$	330	$	6,356	$	6,686	$	1,310	$	4,541	$	5,851

Senior Unsecured Notes

On April 24, 2020, we issued $1.25 billion aggregate principal amount of our 2023 Notes in a public offering. Issuance costs for these notes were $5 million. We may redeem some or all of these notes at our option prior to their maturity at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal and interest thereon.

The 2023 Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries (which are generally domestic subsidiaries in which we own at least 80% of the voting stock and which own principal property, as defined in the indenture governing such notes) to (1) create or incur certain liens; (2) enter into certain sale and lease-back transactions; and (3) consolidate with or merge with or into, or convey, transfer, or lease all or substantially all of our properties and assets, to another entity. These covenants are subject to a number of limitations and exceptions. Additionally, if a change of control triggering event occurs, as defined in the indenture governing such notes, we will be required to offer to purchase such notes at 101% of the outstanding aggregate principal amount plus accrued interest up to the purchase date.

Credit Facility

Our credit facility provides for our Revolving Credit Facility and our 2024 Term Loan A, which each 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: On March 13, 2020, we drew the $2.50 billion available under our Revolving Credit Facility and on April 24, 2020, we repaid the $2.50 billion. As of May 28, 2020, $2.50 billion was available to us under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility are scheduled to mature in July

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.

Convertible Senior Notes

On March 27, 2020, we notified holders of our 2033F Notes that we would redeem all of the outstanding 2033F Notes on May 5, 2020. Holders could elect to convert these notes through May 4, 2020, at a conversion rate of 91.4808 shares of our common stock per $1,000 of principal amount. In connection with our notice, we made an irrevocable election to settle any conversions in cash. Holders converted all of the 2033F Notes and on May 5, 2020, we paid $64 million to settle the conversions. We recognized a loss of $3 million in the third quarter of 2020 in connection with the transaction.

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 June 30, 2020. As a result, the 2032D Notes are convertible by the holders at any time through September 30, 2020. As of May 28, 2020, the $46.47 trading price of our common stock was higher than the conversion price of our 2032D Notes and, as a result, the aggregate conversion value of $622 million exceeded the aggregate principal amount of $134 million by $488 million.

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” 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.

Debt Activity

The table below presents the effects of issuances, prepayments, and conversions of debt in the first nine 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.


Nine months ended May 28, 2020	Increase (Decrease) in Principal		Increase (Decrease) in Carrying Value		Increase (Decrease) in Cash		Decrease in Equity		Gains (Losses)

Issuances
Revolving Credit Facility	$	2,500	$	2,493	$	2,500	$	—	$	—
2023 Notes	1,250		1,245		1,245		—		—
2024 Term Loan A	1,250		1,248		1,248		—		—
Prepayments
Revolving Credit Facility	(2,500)		(2,493)		(2,500)		—		—
2025 Notes	(519)		(516)		(534)		—		(18)
IMFT Member Debt	(693)		(693)		(621)		—		72
Settled conversions
2033F Notes	(62)		(196)		(266)		(56)		(14)
	$	1,226	$	1,088	$	1,072	$	(56)	$	40