Debt |
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Debt | DEBT The following table reflects major components of debt as of September 29, 2018, and September 30, 2017:
Annual maturities of debt for the five fiscal years subsequent to September 29, 2018, are: 2019 - $1,911 million; 2020 - $1,037 million; 2021 - $511 million; 2022 - $1,007 million; 2023 - $405 million. Revolving Credit Facility and Letters of Credit In March 2018, we amended our existing credit facility which, among other things, increased our line of credit from $1.5 billion to $1.75 billion. The facility supports short-term funding needs and serves as a backstop to our commercial paper program and will mature and the commitments thereunder will terminate in March 2023. Amounts available for borrowing under this facility totaled $1.75 billion at September 29, 2018, before deducting amounts to backstop our commercial paper program. At September 29, 2018, we had no outstanding letters of credit issued under this facility. At September 29, 2018 we had $105 million of bilateral letters of credit issued separately from the revolving credit facility, none of which were drawn upon. Our letters of credit are issued primarily in support of leasing obligations and workers’ compensation insurance programs and other legal obligations. If in the future any of our subsidiaries shall guarantee any of our material indebtedness, such subsidiary shall be required to guarantee the indebtedness, obligations and liabilities under this facility. Commercial Paper Program We have a commercial paper program under which we may issue unsecured short-term promissory notes ("commercial paper") up to an aggregate maximum principal amount of $1 billion as of September 29, 2018. As of September 29, 2018, we had $605 million of commercial paper outstanding at a weighted average interest rate of 2.33% with maturities of less than 25 days. 2023/2048 Notes In September 2018, we issued senior unsecured notes with an aggregate principal amount of $900 million, consisting of $400 million due September 2023 and $500 million due September 2048. We used the net proceeds from the issuance to extinguish our Term Loan Tranche B due August 2020 and to reduce amounts outstanding under our commercial paper program. The September 2023 Notes carry a fixed interest rate of 3.9% and the 2048 Notes carry a fixed interest rate at 5.1%. Interest payments on the 2023 and 2048 Notes are due semi-annually on March 28 and September 28. After the original issue discounts of $3 million, we received net proceeds of $897 million. In addition, we incurred debt issuance costs of $9 million related to this issuance. Term Loan Tranche B due August 2020 On June 8, 2018, we amended our existing term loan agreement which increased the principal amount borrowed from $500 million to $750 million. Proceeds from the borrowings were primarily used to fund an acquisition. In the fourth quarter of fiscal 2018, we extinguished the $750 million outstanding balance using cash on hand and funds borrowed under our new 2023 and 2048 senior notes. 7.00% Notes due May 2018 During fiscal 2018, we extinguished the $120 million outstanding balance of the Senior Notes due May 2018 using cash on hand. Term Loan Tranche B due August 2019 During fiscal 2018, we extinguished the $427 million outstanding balance of the Term Loan Tranche B due in August 2019 using cash on hand and proceeds received from the sale of a non-protein business. Debt Covenants Our revolving credit and term loan facilities contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens and encumbrances; incur debt; merge, dissolve, liquidate or consolidate; make acquisitions and investments; dispose of or transfer assets; change the nature of our business; engage in certain transactions with affiliates; and enter into hedging transactions, in each case, subject to certain qualifications and exceptions. In addition, we are required to maintain minimum interest expense coverage and maximum debt-to-capitalization ratios. Our senior notes also contain affirmative and negative covenants that, among other things, may limit or restrict our ability to: create liens; engage in certain sale/leaseback transactions; and engage in certain consolidations, mergers and sales of assets. We were in compliance with all debt covenants at September 29, 2018. |