Note 4 - Credit Facilities and Borrowings

12 Months Ended

May 28, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

4. CREDIT FACILITIES AND BORROWINGS

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 the 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 Agreement matures on August 26, 2027 and is unsecured. The term of the Revolving Credit Agreement  may be extended for additional one-year or two-year periods from the then-applicable maturity date on an annual basis. As of May 28, 2023, there were no outstanding borrowings under the Revolving Credit Agreement.

The Revolving Credit Agreement contains events of default customary for unsecured investment grade credit facilities with corresponding grace periods. 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 debt to EBITDA not to exceed 4.5 to 1.0, with each ratio to be calculated on a rolling four-quarter basis. As of  May 28, 2023, we were in compliance with all financial covenants under the Revolving Credit Agreement.

We finance our short-term liquidity needs with existing cash balances, cash flows from operations, and commercial paper borrowings. As of May 28, 2023, we had $576.0 million outstanding under our commercial paper program at an average weighted interest rate of 5.70%. As of May 29, 2022, we had $180.0 million outstanding under our commercial paper program at an average weighted interest rate of 1.41%.

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 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 $62.5 million of short-term borrowings as of  May 28, 2023 related to these arrangements.