XML 18 R9.htm IDEA: XBRL DOCUMENT

Note 3 - Debt and Revolving Credit Facility

6 Months Ended

Nov. 27, 2022

3. 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 syndicate of financial institutions. The Term Loan Agreement provided 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. During the second 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 full outstanding $250.0 million aggregate principal amount of our 3.25% senior notes on their maturity date of September 15, 2022, as well as to repay outstanding borrowings under our commercial paper program. Borrowings under the Term Loan Agreement bear interest at the sum of Term SOFR (as defined in the Term Loan Agreement), 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. The Company may voluntarily prepay term loans under the Term Loan Agreement, in whole or in part, without premium or penalty, subject to certain conditions. As of November 27, 2022, there were $500.0 million of borrowings outstanding under the Term Loan Agreement.

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 revolving credit facility in 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). The revolving credit facility provided for under the Revolving Credit Agreement replaced the Company's revolving credit facility under the prior revolving credit agreement, which was terminated. 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 November 27, 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 thereafter, with each ratio to be calculated on a rolling four-quarter basis. As of November 27, 2022, we were in compliance with all financial covenants under the Revolving Credit Agreement.

As of November 27, 2022 and May 29, 2022, we had $254.0 million and $180.0 million, respectively, outstanding under our commercial paper program.

We enter into various supplier financing arrangements to facilitate supply from our vendors. Balance sheet classification is based on the nature of the arrangement and amounts are classified as either Accounts payable or Notes payable within our Condensed Consolidated Balance Sheets. We have concluded that certain obligations to our suppliers, including amounts due and scheduled payment terms, are impacted by third-party service programs and therefore we have classified certain amounts outstanding under these programs as Notes payable. We had approximately $109.2 million of short-term borrowings as of November 27, 2022 related to these arrangements.

Net interest expense consists of:

	*Thirteen Weeks Ended*						*Twenty-Six Weeks Ended*
	*November 27, 2022*			*November 28, 2021*			*November 27, 2022*			*November 28, 2021*
Long-term debt	$	100.4		$	97.7		$	198.1		$	194.6
Short-term debt		2.1			0.5			4.0			1.1
Interest income		(0.6	)		(0.3	)		(1.5	)		(0.6	)
Interest capitalized		(1.6	)		(3.0	)		(3.2	)		(6.0	)
	$	100.3		$	94.9		$	197.4		$	189.1