DEBT

9 Months Ended

Jun. 29, 2019

The components of the Company’s debt are as follows:



	JUNE 29, 2019		JUNE 30, 2018		SEPTEMBER 30, 2018
	(In millions)
Credit Facilities:
Revolving loans	$	200.3	$	1,084.5	$	492.2
Term loans	760.0		262.5		790.0
Senior Notes – 5.250%	250.0		250.0		250.0
Senior Notes – 6.000%	400.0		400.0		400.0
Receivables facility	316.0		285.0		76.0
Other	8.5		15.5		17.5
Total debt	1,934.8		2,297.5		2,025.7
Less current portions	363.2		314.5		132.6
Less unamortized debt issuance costs	8.1		7.6		9.3
Long-term debt	$	1,563.5	$	1,975.4	$	1,883.8

Credit Facilities

On July 5, 2018, the Company entered into a fifth amended and restated credit agreement (the “Fifth A&R Credit Agreement”), providing the Company and certain of its subsidiaries with five-year senior secured loan facilities in the aggregate principal amount of $2.3 billion, comprised of a revolving credit facility of $1.5 billion and a term loan in the original principal amount of $800.0 million (the “Fifth A&R Credit Facilities”).

At June 29, 2019, the Company had letters of credit outstanding in the aggregate principal amount of $20.8 million, and $1,278.8 million of borrowing availability under the Fifth A&R Credit Agreement. The weighted average interest rates on average borrowings under the Fifth A&R Credit Agreement and the former credit agreement were 4.6% and 4.0% for the nine months ended June 29, 2019 and June 30, 2018, respectively.

The Fifth A&R Credit Agreement contains, among other obligations, an affirmative covenant regarding the Company’s leverage ratio on the last day of each quarter calculated as average total indebtedness, divided by the Company’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), as adjusted pursuant to the terms of the Fifth A&R Credit Agreement (“Adjusted EBITDA”). The maximum leverage ratio is: (i) 5.00 for the third quarter of fiscal 2019 through the first quarter of fiscal 2020, (ii) 4.75 for the second quarter of fiscal 2020 through the fourth quarter of fiscal 2020 and (iii) 4.50 for the first quarter of fiscal 2021 and thereafter. The Company’s leverage ratio was 3.68 at June 29, 2019. The Fifth A&R Credit Agreement also contains an affirmative covenant regarding the Company’s interest coverage ratio determined as of the end of each of its fiscal quarters. The interest coverage ratio is calculated as Adjusted EBITDA divided by interest expense, as described in the Fifth A&R Credit Agreement, and excludes costs related to refinancings. The minimum interest coverage ratio was 3.00 for the twelve months ended June 29, 2019. The Company’s interest coverage ratio was 5.94 for the twelve months ended June 29, 2019. The Fifth A&R Credit Agreement allows the Company to make unlimited restricted payments (as defined in the Fifth A&R Credit Agreement), including dividend payments and Common Share repurchases, as long as the leverage ratio resulting from the making of such restricted payments is 4.00 or less. Otherwise the Company may make further restricted payments in an aggregate amount for each fiscal year not to exceed the amount set forth in the Fifth A&R Credit Agreement for such fiscal year ($200.0 million for fiscal 2019 and $225.0 million for fiscal 2020 and thereafter).

Receivables Facility

Under the Master Repurchase Agreement (including the annexes thereto, the “Repurchase Agreement”) and a Master Framework Agreement (the “Framework Agreement” and, together with the Repurchase Agreement, the “Receivables Facility”), as amended, the Company may sell a portfolio of available and eligible outstanding customer accounts receivable to the purchasers and simultaneously agree to repurchase the receivables on a weekly basis. The Company accounts for the sale of receivables under the Receivables Facility as short-term debt and continues to carry the receivables on its Condensed Consolidated Balance Sheets, primarily as a result of the Company’s requirement to repurchase receivables sold. As of June 29, 2019 and June 30, 2018, there were $316.0 million and $285.0 million, respectively, in borrowings on receivables pledged as collateral under the Receivables Facility, and the carrying value of the receivables pledged as collateral was $351.1 million and $316.7 million, respectively. As of June 29, 2019 and June 30, 2018, there was $10.8 million and $0.7 million, respectively, of availability under the Receivables Facility.

Interest Rate Swap Agreements

The Company has outstanding interest rate swap agreements with major financial institutions that effectively convert a portion of the Company’s variable-rate debt to a fixed rate. The swap agreements had a maximum total U.S. dollar equivalent notional amount of $850.0 million at June 29, 2019, $1,000.0 million at June 30, 2018 and $800.0 million at September 30, 2018, respectively. Interest payments made between the effective date and expiration date are hedged by the swap agreements, except as noted below.

The notional amount, effective date, expiration date and rate of each of these swap agreements outstanding at June 29, 2019 are shown in the table below:



Notional Amount (in millions)			Effective Date (a)	Expiration Date	Fixed Rate
$	250	^(b)	1/8/2018	6/8/2020	2.09	%
100			6/20/2018	10/20/2020	2.15	%
200		^(b)	11/7/2018	6/7/2021	2.87	%
100			11/7/2018	7/7/2021	2.96	%
200			11/7/2018	10/7/2021	2.98	%


(a)	The effective date refers to the date on which interest payments were first hedged by the applicable swap agreement.


(b)	Notional amount adjusts in accordance with a specified seasonal schedule. This represents the maximum notional amount at any point in time.

Estimated Fair Values

The methods and assumptions used to estimate the fair values of the Company’s debt instruments are described below:

Credit Facilities

The interest rate currently available to the Company fluctuates with the applicable LIBO rate, prime rate or Federal Funds Effective Rate and thus the carrying value is a reasonable estimate of fair value. The fair value measurement for the Fifth A&R Credit Facilities was classified in Level 2 of the fair value hierarchy.

5.250% Senior Notes

The fair value of the 5.250% Senior Notes was determined based on the trading of the 5.250% Senior Notes in the open market. The difference between the carrying value and the fair value of the 5.250% Senior Notes represents the premium or discount on that date. Based on the trading value on or around June 29, 2019, the fair value of the 5.250% Senior Notes was approximately $252.5 million. The fair value measurement for the 5.250% Senior Notes was classified in Level 1 of the fair value hierarchy.

6.000% Senior Notes

The fair value of the 6.000% Senior Notes was determined based on the trading of the 6.000% Senior Notes in the open market. The difference between the carrying value and the fair value of the 6.000% Senior Notes represents the premium or discount on that date. Based on the trading value on or around June 29, 2019, the fair value of the 6.000% Senior Notes was approximately $414.5 million. The fair value measurement for the 6.000% Senior Notes was classified in Level 1 of the fair value hierarchy.

Accounts Receivable Pledged

The interest rate on the short-term debt associated with accounts receivable pledged under the Receivables Facility fluctuated with the applicable LIBOR and thus the carrying value is a reasonable estimate of fair value. The fair value measurement for the Receivables Facility was classified in Level 2 of the fair value hierarchy.

Weighted Average Interest Rate

The weighted average interest rates on the Company’s debt were 4.7% and 4.3% for the nine months ended June 29, 2019 and June 30, 2018, respectively.