9. Financial Instruments

Foreign Currency Exchange Rate Risk

During fiscal 2015, we entered into cross-currency swap contracts with an aggregate notional value of €1,000 million to reduce our exposure to foreign currency exchange rate risk associated with certain intercompany loans. Under the terms of these contracts, which have been designated as cash flow hedges, we make interest payments in euros at 3.50% per annum and receive interest in U.S. dollars at a weighted-average rate of 5.33% per annum. Upon the maturity of these contracts in fiscal 2022, we will pay the notional value of the contracts in euros and receive U.S. dollars from our counterparties. In connection with the cross-currency swap contracts, both counterparties to each contract are required to post cash collateral.

At March 29, 2019 and September 28, 2018, our cross-currency swap contracts were in liability positions of $30 million and $100 million, respectively, and were recorded in other liabilities on the Condensed Consolidated Balance Sheets. At March 29, 2019 and September 28, 2018, collateral paid to our counterparties approximated the derivative positions and was recorded in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The impacts of our cross-currency swap contracts were as follows:


	For the				For the
	Quarters Ended				Six Months Ended
	March 29,		March 30,		March 29,		March 30,
	2019		2018		2019		2018
	(in millions)
Gains (losses) recorded in other comprehensive income (loss)	$	13	$	(22)	$	32	$	(32)
Gains (losses) excluded from the hedging relationship(1)		21		(31)		38		(50)

(1)

Gains and losses excluded from the hedging relationship are recognized prospectively in selling, general, and administrative expenses and are offset by losses and gains generated as a result of re-measuring certain intercompany loans to the U.S. dollar.

Hedge of Net Investment

During fiscal 2019, we expanded our cross-currency swap program to hedge our net investment in certain foreign operations. The aggregate notional value of the fiscal 2019 contracts was $1,901 million at March 29, 2019. Under the terms of these contracts, we receive interest in U.S. dollars at a weighted-average rate of 3.00% per annum and pay no interest. Upon the maturity of these contracts at various dates through fiscal 2023, we will pay the notional value of the contracts in the designated foreign currencies and receive U.S. dollars from our counterparties.

In addition to the cross-currency swap program, we hedge our net investment in certain foreign operations using intercompany loans and external borrowings denominated in the same currencies. The aggregate notional value of these hedges was $3,415 million and $4,064 million at March 29, 2019 and September 28, 2018, respectively.

The impacts of our hedge of net investment programs were as follows:


		For the			For the
		Quarters Ended			Six Months Ended
	March 29,		March 30,		March 29,		March 30,
	2019		2018		2019		2018
	(in millions)
Foreign currency exchange gains (losses) on intercompany loans and external borrowings(1)	$	36	$	(79)	$	112	$	(145)
Gains on cross-currency swap contracts designated as hedges of net investment(2)		42		—		37		—

(1) Foreign currency exchange gains and losses on intercompany loans and external borrowings are recorded as currency translation, a component of accumulated other comprehensive income (loss), and are offset by changes attributable to the translation of the net investment.

(2) Gains and losses on cross-currency swap contracts designated as hedges of net investment are recorded as currency translation.