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Debt | 6 Months Ended
--- | ---
Feb. 27, 2020
Debt Disclosure [Abstract] |
Debt | Debt
| 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 |

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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