DEBT AND CREDIT ARRANGEMENTS

9 Months Ended

Sep. 27, 2024

NOTE G: DEBT AND CREDIT ARRANGEMENTS

Long-Term Debt

Long-term debt, net is summarized below:


(In millions)	September 27, 2024		December 29, 2023

Variable-rate debt:

Term loan, due November 21, 2025 (“Term Loan 2025”)	$	—	$	2,250

Fixed-rate debt:

3.95% notes, due May 28, 2024 (“3.95% 2024 Notes”)	—		350
3.832% notes, due April 27, 2025 (“3.832% 2025 Notes”)	600		600
7.00% debentures, due January 15, 2026	100		100
3.85% notes, due December 15, 2026	550		550
5.40% notes, due January 15, 2027(1)	1,250		1,250
6.35% debentures, due February 1, 2028	26		26
4.40% notes, due June 15, 2028	1,850		1,850
5.05% notes, due June 1, 2029 (“5.05% 2029 Notes”)	750		—
2.90% notes, due December 15, 2029	400		400
1.80% notes, due January 15, 2031	650		650
5.25% notes, due June 1, 2031 (“5.25% 2031 Notes”)	750		—
5.40% notes, due July 31, 2033(1)	1,500		1,500
5.35% notes, due June 1, 2034 (“5.35% 2034 Notes”)	750		—
4.854% notes, due April 27, 2035	400		400
6.15% notes, due December 15, 2040	300		300
5.054% notes, due April 27, 2045	500		500
5.60% notes, due July 31, 2053(1)	500		500
5.50% notes, due August 15, 2054 (“5.50% 2054 Notes”)	600		—
Total variable and fixed-rate debt	11,476		11,226
Financing lease obligations and other debt	300		300
Long-term debt, including the current portion of long-term debt	11,776		11,526
Plus: unamortized bond premium	41		51
Less: unamortized discounts and issuance costs	(84)		(54)
Long-term debt, including the current portion of long-term debt, net	11,733		11,523
Less: current portion of long-term debt, net	(640)		(363)
Total long-term debt, net	$	11,093	$	11,160

_______________

(1) Collectively, the “AJRD Notes.”

Long-Term Debt Issued

On March 13, 2024, we closed the issuance and sale of $2.25 billion aggregate principal amount of new long-term fixed-rate debt consisting of the 5.05% 2029 Notes, the 5.25% 2031 Notes, and the 5.35% 2034 Notes. (collectively, the “March Issued 2024 Notes”). The March Issued 2024 Notes were used to repay Term Loan 2025, including related fees and expenses, which had an outstanding balance of $2.25 billion at December 29, 2023.

Interest on the March Issued 2024 Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2024.

On August 2, 2024, we closed the issuance and sale of $600 million aggregate principal amount of the 5.50% 2054 Notes and used the net proceeds to repay borrowings under our commercial paper program (“CP Program”).

Interest on the 5.50% 2054 Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2025.

We may, at our option, redeem the March Issued 2024 Notes and the 5.50% 2054 Notes at any time, and from time to time, in whole or in part, at the applicable redemption price, as defined in the respective notes. Both the March Issued 2024 Notes and the 5.50% 2054 Notes rank equally in right of payment with all of our existing unsecured and unsubordinated indebtedness.

We incurred debt issuance costs of $20 million and $7 million for the March Issued 2024 Notes and the 5.50% 2054 Notes, respectively, which are being amortized over the life of each respective note. Such amortization is included as a component of the “Interest expense, net” line item in our Condensed Consolidated Statement of Operations.

Long-Term Debt Repayments

On March 14, 2024, we repaid the entire outstanding $2.25 billion drawn on Term Loan 2025, which at time of repayment had a variable interest rate of 6.7%, with proceeds from the issuance of the March Issued 2024 Notes, which bear fixed interest rates between 5.05% and 5.35%. Additionally, during the quarter ended June 28, 2024, we repaid the $350 million aggregate principal amount of our 3.95% 2024 Notes.

Credit Agreements

On January 26, 2024, we established a new $1.5 billion, 364-day senior unsecured revolving credit facility (“2024 Credit Facility”) by entering into a 364-day credit agreement maturing no later than January 24, 2025 (“2024 Credit Agreement”) with a syndicate of lenders. We may extend the maturity of any loans outstanding under the 2024 Credit Agreement by one year, subject to the satisfaction of certain conditions. The 2024 Credit Agreement replaces the prior $2.4 billion 364-Day Credit Agreement (“2023 Credit Agreement”).

At our election, borrowings under the 2024 Credit Agreement, which are designated in U.S. Dollars, bear interest at the sum of the term secured overnight financing rate or the Base Rate (as defined in the 2024 Credit Agreement), plus an applicable margin that varies based on the ratings of our senior unsecured long-term debt securities (“Senior Debt Ratings”). In addition to interest payable on the principal amount of indebtedness outstanding, we are required to pay a quarterly unused commitment fee that varies based on our Senior Debt Ratings.

The 2024 Credit Agreement also contains representations, warranties, covenants and events of default that are substantially similar to the existing Revolving Credit Agreement, dated as of July 29, 2022 (“2022 Credit Agreement”) which established a $2.0 billion, five-year senior unsecured revolving credit facility. For a description of the 2022 Credit Agreement and related covenants, see Note 8: Debt and Credit Arrangements in our Fiscal 2023 Form 10-K.

At September 27, 2024, we had no outstanding borrowings under either our 2024 Credit Agreement or our 2022 Credit Agreement, had available borrowing capacity of $2.3 billion, net of outstanding CP Program borrowings and were in compliance with all covenants under both aforementioned credit agreements.

See Note 8: Debt and Credit Arrangements in our Fiscal 2023 Form 10-K for additional information regarding our 2022 Credit Agreement and our 2023 Credit Agreement.

Commercial Paper Program

On January 26, 2024, we lowered the maximum amount available under our CP Program to $3.0 billion from $3.9 billion in accordance with the terms of the CP Program. The CP Program is supported by amounts available under the 2022 Credit Agreement and the 2024 Credit Agreement.

The commercial paper notes are sold at par less a discount representing an interest factor or, if interest bearing, at par, and the maturities vary but may not exceed 397 days from the date of issue. The commercial paper notes will rank at least pari passu with all other unsecured and unsubordinated indebtedness.

At September 27, 2024 and December 29, 2023, we had $1.2 billion and $1.6 billion in outstanding notes under our CP Program, respectively, which is included as a component of the “Short-term debt” line item in our Condensed Consolidated Balance Sheet. The outstanding notes under our CP Program had a weighted-average interest rate of 5.32% and 5.95% at September 27, 2024 and December 29, 2023, respectively.