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Derivative Instruments | 9 Months Ended
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Jun. 29, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments The Company manages its exposure to various risks relating to its ongoing business operations according to a risk management policy. The primary risks managed with derivative instruments are interest rate risk and foreign exchange risk. The Company’s derivative positions measured at fair value (see Note 14) are summarized in the following tables:
| As of June 29, 2024
| Current Assets |  | Investments/ Other Assets |  | Other Current Liabilities |  | Other Long- Term Liabilities
Derivatives designated as hedges |  |  |  |  |  |  |
Foreign exchange | $ | 491 |  |  | $ | 264 |  |  | $ | (94) |  |  | $ | (64) |
Interest rate | — |  |  | — |  |  | (1,479) |  |  | — |
Other | 2 |  |  | 2 |  |  | (1) |  |  | — |
Derivatives not designated as hedges |  |  |  |  |  |  |
Foreign exchange | 113 |  |  | 2 |  |  | (234) |  |  | (2) |
Other | 3 |  |  | 95 |  |  | — |  |  | — |
Gross fair value of derivatives | 609 |  |  | 363 |  |  | (1,808) |  |  | (66) |
Counterparty netting | (434) |  |  | (228) |  |  | 599 |  |  | 63 |
Cash collateral (received) paid | (61) |  |  | — |  |  | 911 |  |  | — |
Net derivative positions | $ | 114 |  |  | $ | 135 |  |  | $ | (298) |  |  | $ | (3) |
| As of September 30, 2023
| Current Assets |  | Investments/ Other Assets |  | Other Current Liabilities |  | Other Long- Term Liabilities
Derivatives designated as hedges |  |  |  |  |  |  |
Foreign exchange | $ | 595 |  |  | $ | 338 |  |  | $ | (123) |  |  | $ | (93) |
Interest rate | — |  |  | — |  |  | (1,791) |  |  | — |
Other | 12 |  |  | 6 |  |  | — |  |  | — |
Derivatives not designated as hedges |  |  |  |  |  |  |
Foreign exchange | 384 |  |  | 19 |  |  | (520) |  |  | (79) |
Other | — |  |  | 128 |  |  | (13) |  |  | — |
Gross fair value of derivatives | 991 |  |  | 491 |  |  | (2,447) |  |  | (172) |
Counterparty netting | (770) |  |  | (262) |  |  | 900 |  |  | 132 |
Cash collateral (received) paid | (123) |  |  | (7) |  |  | 1,257 |  |  | — |
Net derivative positions | $ | 98 |  |  | $ | 222 |  |  | $ | (290) |  |  | $ | (40) |
Interest Rate Risk Management The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and on the market value of its borrowings. In accordance with its policy, the Company targets its fixed-rate debt as a percentage of its net debt between a minimum and maximum percentage. The Company primarily uses pay-floating and pay-fixed interest rate swaps to facilitate its interest rate risk management activities. The Company designates pay-floating interest rate swaps as fair value hedges of fixed-rate borrowings effectively converting fixed-rate borrowings to variable-rate borrowings. The total notional amount of the Company’s pay-floating interest rate swaps at both June 29, 2024 and September 30, 2023 was $13.5 billion. The following table summarizes fair value hedge adjustments to hedged borrowings:
| Carrying Amount of Hedged Borrowings |  | Fair Value Adjustments Included in Hedged Borrowings
| June 29, 2024 |  | September 30, 2023 |  | June 29, 2024 |  | September 30, 2023
Borrowings: |  |  |  |  |  |  |
Current | $ | 2,869 |  |  | $ | 1,439 |  |  | $ | (42) |  |  | $ | (59) |
Long-term | 9,746 |  |  | 10,748 |  |  | (1,280) |  |  | (1,694) |
| $ | 12,615 |  |  | $ | 12,187 |  |  | $ | (1,322) |  |  | $ | (1,753) |
The following amounts are included in “Interest expense, net” in the Condensed Consolidated Statements of Operations:
| Quarter Ended |  | Nine Months Ended
| June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023
Gain (loss) on: |  |  |  |  |  |  |
Pay-floating swaps | $ | 64 |  |  | $ | (208) |  |  | $ | 407 |  |  | $ | 98 |
Borrowings hedged with pay-floating swaps | (64) |  |  | 208 |  |  | (407) |  |  | (98) |
Benefit (expense) associated with interest accruals on pay-floating swaps | (153) |  |  | (140) |  |  | (460) |  |  | (360) |
The Company may designate pay-fixed interest rate swaps as cash flow hedges of interest payments on floating-rate borrowings. Pay-fixed interest rate swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these cash flow hedges are deferred in AOCI and recognized in interest expense as the interest payments occur. The Company did not have pay-fixed interest rate swaps that were designated as cash flow hedges of interest payments at June 29, 2024 or at September 30, 2023, and gains and losses related to pay-fixed interest rate swaps recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material. Foreign Exchange Risk Management The Company transacts business globally and is subject to risks associated with foreign currency exchange rates. The Company’s objective is to reduce earnings and cash flow fluctuations associated with changes in foreign currency exchange rates, enabling management to focus on core business operations. The Company enters into option and forward contracts to protect the value of its existing foreign currency assets, liabilities, firm commitments and forecasted but not firmly committed foreign currency transactions. In accordance with policy, the Company hedges its forecasted foreign currency transactions for periods generally not to exceed four years within an established minimum and maximum range of annual exposure. The gains and losses on these contracts offset changes in the U.S. dollar equivalent value of the related forecasted transaction, asset, liability or firm commitment. The principal currencies hedged are the euro, Canadian dollar, Japanese yen, British pound and Chinese yuan. Cross-currency swaps are used to effectively convert foreign currency denominated borrowings into U.S. dollar denominated borrowings. The Company designates foreign exchange forward and option contracts as cash flow hedges of firmly committed and forecasted foreign currency transactions. As of June 29, 2024 and September 30, 2023, the notional amounts of the Company’s net foreign exchange cash flow hedges were $10.7 billion and $8.3 billion, respectively. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of the foreign currency transactions. Net deferred gains recorded in AOCI for contracts that will mature in the next twelve months total $397 million. The following table summarizes the effect of foreign exchange cash flow hedges on AOCI:
| Quarter Ended |  | Nine Months Ended
| June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023
Gain (loss) recognized in Other Comprehensive Income | $ | 235 |  |  | $ | 89 |  |  | $ | 208 |  |  | $ | (398) |
Gain (loss) reclassified from AOCI into the Statements of Operations(1) | 111 |  |  | 76 |  |  | 345 |  |  | 414 |
(1)Primarily recorded in revenue. The Company designates cross currency swaps as fair value hedges of foreign currency denominated borrowings. The impact from the change in foreign currency on both the cross currency swap and borrowing is recorded to “Interest expense, net.” The impact from interest rate changes is recorded in AOCI and is amortized over the life of the cross currency swap. As of both June 29, 2024 and September 30, 2023, the total notional amount of the Company’s designated cross currency swaps was Canadian $1.3 billion ($0.9 billion). The related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material . Foreign exchange risk management contracts with respect to foreign currency denominated assets and liabilities are not designated as hedges and do not qualify for hedge accounting. The net notional amount of these foreign exchange contracts at June 29, 2024 and September 30, 2023 were $3.4 billion and $3.1 billion, respectively. The following table summarizes the net foreign exchange gains or losses recognized on foreign currency denominated assets and liabilities and the net foreign exchange gains or losses on the foreign exchange contracts we entered into to mitigate our exposure with respect to foreign currency denominated assets and liabilities by the corresponding line item in which they are recorded in the Condensed Consolidated Statements of Operations:
| Costs and expenses |  | Interest expense, net |  | Income taxes
Quarter Ended: | June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023 |  | June 29, 2024 |  | July 1, 2023
Net gains (losses) on foreign currency denominated assets and liabilities | $ | (89) |  |  | $ | (61) |  |  | $ | 10 |  |  | $ | (19) |  |  | $ | 17 |  |  | $ | (15) |
Net gains (losses) on foreign exchange risk management contracts not designated as hedges | 60 |  |  | — |  |  | (12) |  |  | 17 |  |  | (9) |  |  | 19 |
Net gains (losses) | $ | (29) |  |  | $ | (61) |  |  | $ | (2) |  |  | $ | (2) |  |  | $ | 8 |  |  | $ | 4 |
Nine Months Ended: |  |  |  |  |  |  |  |  |  |  |
Net gains (losses) on foreign currency denominated assets and liabilities | $ | (157) |  |  | $ | 99 |  |  | $ | 8 |  |  | $ | (39) |  |  | $ | (22) |  |  | $ | (124) |
Net gains (losses) on foreign exchange risk management contracts not designated as hedges | 21 |  |  | (260) |  |  | (14) |  |  | 36 |  |  | 13 |  |  | 106 |
Net gains (losses) | $ | (136) |  |  | $ | (161) |  |  | $ | (6) |  |  | $ | (3) |  |  | $ | (9) |  |  | $ | (18) |
Commodity Price Risk Management The Company is subject to the volatility of commodities prices and the Company designates certain commodity forward contracts as cash flow hedges of forecasted commodity purchases. Mark-to-market gains and losses on these contracts are deferred in AOCI and are recognized in earnings when the hedged transactions occur, offsetting changes in the value of commodity purchases. The notional amount of these commodities contracts at June 29, 2024 and September 30, 2023 and related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material. Risk Management – Other Derivatives Not Designated as Hedges The Company enters into certain other risk management contracts that are not designated as hedges and do not qualify for hedge accounting. These contracts, which include certain total return swap contracts, are intended to offset economic exposures of the Company and are carried at market value with any changes in value recorded in earnings. The notional amounts of these contracts at June 29, 2024 and September 30, 2023 were $0.5 billion and $0.4 billion, respectively. The related gains or losses recognized in earnings for the quarter and nine-month periods ended June 29, 2024 and July 1, 2023 were not material. Contingent Features and Cash Collateral The Company has master netting arrangements by counterparty with respect to certain derivative financial instrument contracts. The Company may be required to post collateral in the event that a net liability position with a counterparty exceeds limits defined by contract and that vary with the Company’s credit rating. In addition, these contracts may require a counterparty to post collateral to the Company in the event that a net receivable position with a counterparty exceeds limits defined by contract and that vary with the counterparty’s credit rating. If the Company’s or the counterparty’s credit ratings were to fall below investment grade, such counterparties or the Company would also have the right to terminate our derivative contracts, which could lead to a net payment to or from the Company for the aggregate net value by counterparty of our derivative contracts. The aggregate fair values of derivative instruments with credit-risk-related contingent features in a net liability position by counterparty were $1.2 billion and $1.6 billion at June 29, 2024 and September 30, 2023.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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