Annual report pursuant to Section 13 and 15(d)

Debt

v3.20.2
Debt
 12 Months Ended
Sep. 27, 2020
Debt Disclosure [Abstract]  
Debt DebtLong-term Debt. In May 2020, we issued unsecured fixed-rate notes, consisting of $1.2 billion fixed-rate 2.15% notes and $800 million fixed-rate 3.25% notes (May 2020 Notes) that mature on May 20, 2030 and May 20, 2050, respectively. The proceeds from the May 2020 Notes, net of underwriting discounts and offering expenses, were used to repay the $250
million floating-rate and $1.75 billion fixed-rate notes that matured on May 20, 2020, which were classified as short-term debt at September 29, 2019.
In August 2020, we completed an exchange of $2.0 billion of our outstanding fixed-rate notes maturing between 2022 and 2025 (Old Notes) for $1.0 billion fixed-rate 1.30% notes due May 20, 2028 and $1.2 billion fixed-rate 1.65% notes due May 20, 2032 (August 2020 Notes). In connection with this exchange, we also repurchased $202 million of the Old Notes from holders not eligible to participate in the exchange, which resulted in a $17 million loss on extinguishment recorded in interest expense.
The following table provides a summary of our long-term debt and current portion of long-term debt:
September 27, 2020 September 29, 2019
Maturities Amount
(in millions)		 Effective Rate Maturities Amount
(in millions)		 Effective Rate
May 2015 Notes
2022 - 2045
 $ 5,405 
2.62% - 4.73%
2020 - 2045
 $ 8,500 
2.64% - 4.73%
May 2017 Notes
2023 - 2047
 5,860 
1.06% - 4.46%
2023 - 2047
 7,000 
2.70% - 4.47%
May 2020 Notes
2030 - 2050
 2,000 
2.31% - 3.30%
 — 
August 2020 Notes
2028 - 2032
 2,207 
1.96% - 2.65%
 — 
Total principal 15,472  15,500 
Unamortized discount, including debt issuance costs (260) (75)
Hedge accounting fair value adjustments 14  9 
Total long-term debt $ 15,226  $ 15,434 
Reported as:
Short-term debt $ —  $ 1,997 
Long-term debt 15,226  13,437 
   Total $ 15,226  $ 15,434 
At September 27, 2020, future principal payments were $1.5 billion in fiscal 2022, $1.5 billion in fiscal 2023, $914 million in fiscal 2024, $1.4 billion in fiscal 2025 and $10.2 billion after fiscal 2025; no principal payments are due in fiscal 2021. At September 27, 2020 and September 29, 2019, the aggregate fair value of the notes, based on Level 2 inputs, was approximately $17.5 billion and $16.5 billion, respectively.
We may redeem the outstanding fixed-rate notes at any time in whole, or from time to time in part, at specified make-whole premiums as defined in the applicable form of note. We may not redeem the outstanding floating-rate notes prior to maturity. The obligations under the notes rank equally in right of payment with all of our other senior unsecured indebtedness and will effectively rank junior to all liabilities of our subsidiaries. At September 27, 2020, with the exception of $500 million of outstanding unsecured floating-rate notes due January 30, 2023, all of our outstanding long-term debt is comprised of unsecured fixed-rate notes.
The effective interest rates for the notes include the interest on the notes, amortization of the discount, which includes debt issuance costs, and if applicable, adjustments related to hedging. Interest is payable in arrears quarterly for the floating-rate notes and semi-annually for the fixed-rate notes. Cash interest paid related to our commercial paper program and long-term debt, net of cash received from the related interest rate swaps, was $507 million, $563 million and $662 million during fiscal 2020, 2019 and 2018, respectively.
Commercial Paper Program. In fiscal 2020, we reduced the total amount available for issuance under our unsecured commercial paper program from $5.0 billion to $4.5 billion. Net proceeds from this program are used for general corporate purposes. Maturities of commercial paper can range from 1 to up to 397 days. At September 27, 2020 and September 29, 2019, we had $500 million and $499 million, respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average interest rate of 0.21% and 2.17%, respectively, which included fees paid to the commercial paper dealers, and weighted-average remaining days to maturity of 37 days and 41 days, respectively. The carrying value of the outstanding commercial paper approximated its estimated fair value at September 27, 2020 and September 29, 2019.
Revolving Credit Facility. We have an Amended and Restated Revolving Credit Facility (Revolving Credit Facility) that provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $4.5 billion, which expires on November 8, 2021. At September 27, 2020 and September 29, 2019, no amounts were outstanding under the Revolving Credit Facility.
Debt Covenants. The Revolving Credit Facility requires that we comply with certain covenants, including one financial covenant to maintain a ratio of consolidated earnings before interest, taxes, depreciation and amortization to consolidated interest expense, as defined in each of the respective agreements, of not less than three to one at the end of each fiscal quarter. We are not subject to any financial covenants under the notes nor any covenants that would prohibit us from incurring additional indebtedness ranking equal to the notes, paying dividends, issuing securities or repurchasing securities issued by us
or our subsidiaries. At September 27, 2020 and September 29, 2019, we were in compliance with the applicable covenants under the Revolving Credit Facility.