Debt

6 Months Ended

Dec. 30, 2022

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following:

	December 30, 2022		July 1, 2022
	(in millions)
1.50% convertible notes due 2024	$	1,100	$	1,100
4.75% senior unsecured notes due 2026	2,300		2,300
Variable interest rate Term Loan A-2 maturing 2027	2,700		2,700
2.85% senior unsecured notes due 2029	500		500
3.10% senior unsecured notes due 2032	500		500
Total debt	7,100		7,100
Issuance costs and debt discounts	(29)		(78)
Subtotal	7,071		7,022
Less current portion of long-term debt	(38)		—
Long-term debt	$	7,033	$	7,022

During the six months ended December 30, 2022, the Company drew and repaid $1.18 billion principal amount under its $2.25 billion revolving credit facility maturing in January 2027 (the “2027 Revolving Credit Facility”).

In December 2022, the Company amended the credit agreement governing the 2027 Revolving Credit Facility and Term Loan A-2 for the purposes of providing flexibility by adjusting the leverage ratio requirements of the financial covenant thereunder through the Company’s quarter ending September 27, 2024 (such period, the “Covenant Relief Period”). As amended, the Company is required to maintain a maximum ratio (“Leverage Ratio”) of total funded debt to trailing twelve-month Consolidated Adjusted EBITDA (as defined in the Credit Agreement) at the end of each quarter as follows:

Quarter ending:	Leverage ratio
December 30, 2022	3.25 to 1.00
March 31, 2023	3.75 to 1.00
June 30, 2023	4.75 to 1.00
September 29, 2023	5.00 to 1.00
December 29, 2023	4.75 to 1.00
March 29, 2024	4.50 to 1.00
June 28, 2024	4.25 to 1.00
September 27, 2024	3.75 to 1.00
December 27, 2024 and thereafter	3.25 to 1.00

As of December 30, 2022, the Company was in compliance with this financial covenant. The amendment also provides that the due date for amounts outstanding under the Credit Agreement will be accelerated from January 7, 2027 to November 2, 2023 if, as of that date, the Company does not have Cash and cash equivalents plus available unused capacity under its credit facilities that exceed by $1 billion the sum of the outstanding balance of the 1.50% convertible notes due 2024 plus the outstanding principal amount of any other debt maturing within 12 months. In addition, during the Covenant Relief Period, the amendment requires certain subsidiaries of the Company to provide guarantees if the corporate family ratings of the Company from at least two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc. (the “Credit Rating Agencies”) drops below investment grade and includes limits on secured indebtedness and certain types of unsecured subsidiary indebtedness.

In January 2023, the Company entered into a loan agreement (the “Delayed Draw Term Loan Agreement”), which allows the Company to draw a single unsecured loan of up to $875 million (the “Delayed Draw Term Loan”) through June 30, 2023. The Delayed Draw Term Loan Agreement may be terminated, at the election of the Company, at any time without premium or penalty, subject to certain conditions.

Any amount drawn under the Delayed Draw Term Loan Agreement will mature 364 days following the date of the initial draw. However, the due date will be accelerated to November 2, 2023 if conditions for acceleration of amounts due under the Credit Agreement have been triggered as described above.

The Delayed Draw Term Loan will bear interest, at the Company’s option, at a per annum rate equal to either (x) the Adjusted Term SOFR Rate (as defined in the Delayed Draw Term Loan Agreement) plus an applicable margin varying from 1.750% to 2.625% or (y) a base rate plus an applicable margin varying from 0.750% to 1.625%, in each case depending on the corporate family ratings of the Company from at least two of the Credit Rating Agencies. The Company will also pay an unused commitment fee on the Delayed Draw Term Loan Agreement of 0.200%.

The key covenants, limitations and requirements provided under Credit Agreement amendment noted above also apply to the Delayed Draw Term Loan Agreement.

As described in Note 2, Recent Accounting Pronouncements, the Company adopted ASU 2020-06 effective July 2, 2022, using a modified retrospective method, which resulted in the elimination of the originally recorded debt discount associated with the conversion feature on its 1.50% convertible notes due 2024.