Note 4 - Long-term Debt and Revolving Credit Facility

3 Months Ended

Aug. 28, 2022

Notes to Financial Statements

Long-Term Debt [Text Block]

4. LONG-TERM DEBT AND REVOLVING CREDIT FACILITY

During the first quarter of fiscal 2023, we entered into an unsecured term loan agreement (the "Term Loan Agreement") with a financial institution. The Term Loan Agreement provides for delayed draw term loans to the Company in an aggregate principal amount of up to $500.0 million. The Term Loan Agreement matures on August 26, 2025. As of August 28, 2022, there were no outstanding borrowings under the Term Loan Agreement. Subsequent to the end of the first quarter of fiscal 2023, we borrowed the full $500.0 million aggregate principal amount available under the Term Loan Agreement. The proceeds were used to repay the outstanding $250.0 million aggregate principal amount of our 3.25% senior notes on the maturity date of September 15, 2022 as well as to repay outstanding borrowings under our commercial paper program.

Borrowings under the Term Loan Agreement will bear interest at, at the Company's election, either (a) the sum of Term SOFR, plus a 0.10% per annum rate spread adjustment, plus a percentage spread (ranging from 0.90% per annum to 1.375% per annum) based on the Company's senior unsecured long-term indebtedness ratings or (b) the alternate base rate, described in the Term Loan Agreement as the greatest of (i) FCSA's prime rate, (ii) the federal funds rate plus 0.50% and (iii) one-month Term SOFR plus 1.00%, plus a percentage spread (ranging from 0% per annum to 0.375% per annum) based on the Company's senior unsecured long-term indebtedness ratings. The Company may voluntarily prepay term loans under the Term Loan Agreement, in whole or in part, without penalty, subject to certain conditions.

During the first quarter of fiscal 2022, we issued $500.0 million aggregate principal amount of 0.500% senior notes due August 11, 2023.

In the first quarter of fiscal 2023, we entered into a second amended and restated revolving credit agreement (the "Revolving Credit Agreement") with a syndicate of financial institutions providing for a maximum aggregate principal amount outstanding at any one time of $2.0 billion (subject to increase to a maximum aggregate principal amount of $2.5 billion with consent of the lenders). It replaced the existing revolving credit facility. The revolving credit facility provided for under the Revolving Credit Agreement matures on August 26, 2027 and is unsecured. The Company may request the term of the Revolving Credit Agreement be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. As of August 28, 2022, there were no outstanding borrowings under the Revolving Credit Agreement.

The Revolving Credit Agreement generally requires our ratio of earnings before interest, taxes, depreciation and amortization ("EBITDA") to interest expense not to be less than 3.0 to 1.0 and our ratio of funded net debt to EBITDA not to exceed 4.75 to 1.0 through the third quarter of fiscal 2023 and 4.5 to 1.0 for each quarter there-after, with each ratio to be calculated on a rolling four-quarter basis. As of August 28, 2022, we were in compliance with all financial covenants under the Revolving Credit Agreement.

Net interest expense consists of:

	Thirteen Weeks Ended
	August 28, 2022			August 29, 2021
Long-term debt	$	97.7		$	96.9
Short-term debt		1.9			0.6
Interest income		(0.9	)		(0.3	)
Interest capitalized		(1.6	)		(3.0	)
	$	97.1		$	94.2