Short-Term Borrowings And Long-Term Debt

12 Months Ended

Feb. 28, 2020

Short-Term Borrowings And Long-Term Debt

SHORT-TERM BORROWINGS AND LONG-TERM DEBT



Debt Obligations	Interest Rate Range as of February 28, 2020	Fiscal Year Maturity	February 28, 2020		February 22, 2019
U.S. dollar obligations:
Senior notes (1)	5.125%	2029	$	443.3	$	442.6
Revolving credit facilities (2)(4)		2025	—		—
Notes payable (3)	2.72%	2024	39.9		42.7
Notes payable	7.0%	2022	0.6		—
			483.8		485.3
Foreign currency obligations:
Revolving credit facilities (4)			—		—
Notes payable	6.0% - 9.0%		0.3		0.3
Bank overdraft	0.79%		0.2		1.4
Total short-term borrowings and long-term debt			484.3		487.0
Short-term borrowings and current portion of long-term debt (5)			2.9		4.1
Long-term debt			$	481.4	$	482.9

____________________

(1)

In 2019, we issued $450 of unsecured unsubordinated senior notes, due in January 2029 (“2029 Notes”). The 2029 Notes were issued at 99.213% of par value. The bond discount of $3.5 and direct debt issuance costs of $4.0 were deferred and are being amortized over the life of the 2029 Notes. Although the coupon rate of the 2029 Notes is 5.125%, the effective interest rate is 5.6% after taking into account the impact of the direct debt issuance costs, a deferred loss on an interest rate lock related to the debt issuance and the bond discount. The 2029 Notes rank equally with all of our other unsecured unsubordinated indebtedness, and they contain no financial covenants. We may redeem some or all of the 2029 Notes at any time. The redemption price would equal the greater of: (1) the principal amount of the notes being redeemed or (2) the present value of the remaining scheduled payments of principal and interest discounted to the redemption date on a semi-annual basis at the comparable U.S. Treasury rate plus 40 basis points; plus, in both cases, accrued and unpaid interest. If the notes are redeemed within 3 months of maturity, the redemption price would be equal to the principal amount of the notes being redeemed plus accrued and unpaid interest. During 2020 and 2019, amortization expense related to the discount and debt issuance costs on the 2029 Notes was $0.8 and $0.1, respectively.

(2)

We have a $250.0 global committed bank facility, which was entered into in Q4 2020. This facility amended and restated the former facility, which was scheduled to expire in 2022. As of February 28, 2020 and February 22, 2019, there were no borrowings outstanding under the facilities, our availability to borrow under the facilities were not limited, and we were in compliance with all covenants under the facilities.

In addition, we have revolving credit agreements of $34.5 which can be utilized to support bank guarantees, letters of credit, overdrafts and foreign exchange contracts. As of February 28, 2020, we had $14.9 in outstanding bank guarantees and standby letters of credit against these agreements. We had no draws against our standby letters of credit during 2020 and 2019, respectively.

(3)

We have a $39.9 note payable with an original amount of $50.0 at a floating interest rate based on 30-day LIBOR plus 1.20%. The loan has a term of seven years and requires fixed monthly principal payments of $0.2 on a 20-year amortization schedule with a $32 balloon payment due in 2024. The loan is secured by two corporate aircraft, contains no financial covenants and is not cross-defaulted to our other debt facilities.

(4)

We have unsecured uncommitted short-term credit facilities of up to $5.5 of U.S. dollar obligations and up to $17.7 of foreign currency obligations with various financial institutions available for working capital purposes as of February 28, 2020. Interest rates are variable and determined at the time of borrowing. These credit facilities have no stated expiration date but may be changed or canceled by the banks at any time. There were no borrowings on these facilities as of February 28, 2020 and February 22, 2019.


(5)	The weighted-average interest rate for short-term borrowings and the current portion of long-term debt was 2.5% as of February 28, 2020 and 2.1% as of February 22, 2019.

The annual maturities of short-term borrowings and long-term debt for each of the following five years are as follows:



Fiscal Year Ending in February	Amount
2021	$	2.9
2022	3.2
2023	2.6
2024	31.9
2025	—
Thereafter	443.7
	$	484.3

Global Credit Facility

Our $250 committed unsecured revolving syndicated credit facility expires in 2025. This facility, which was entered into in Q4 2020, amended and restated our prior $200 committed unsecured revolving syndicated credit facility which was scheduled to expire in 2022. There were no borrowings outstanding under either facility as of February 28, 2020 or February 22, 2019. At our option, and subject to certain conditions, we may increase the aggregate commitment under the current facility by up to $125 by obtaining at least one commitment from one or more lenders. During Q1 2021, we borrowed $250 under the current facility. See Note 24 for additional information.

We can use borrowings under the current facility for general corporate purposes, including friendly acquisitions. Interest on borrowings is based on the rate, as selected by us, between the following two options:


•	the applicable margin as set forth in the credit agreement, plus the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5%, (iii) the Eurocurrency rate for one-month interest period plus 1% and (iv) a 0.75% floor; or


•	the Eurocurrency rate, with a floor of zero, plus the applicable margin as set forth in the credit agreement.

The current facility requires us to satisfy two financial covenants:


•	A maximum leverage ratio covenant, which is measured by the ratio of (x) indebtedness less liquidity to (y) trailing four fiscal quarter adjusted EBITDA and is required to be less than 3.5:1. In the context of certain permitted acquisitions, we have a one-time ability, subject to certain conditions, to increase the maximum ratio to 4.0:1 for four consecutive quarters.


•	A minimum interest coverage ratio covenant, which is measured by the ratio of (y) trailing four quarter adjusted EBITDA to (z) trailing four quarter interest expense and is required to be no less than 3.0:1.

The current facility does not include any restrictions on cash dividend payments or share repurchases. As of February 28, 2020, we were in compliance with all covenants under the current facility.