CREDIT FACILITIES AND BORROWINGS

12 Months Ended

May 26, 2024

CREDIT FACILITIES AND BORROWINGS.

CREDIT FACILITIES AND BORROWINGS

4. CREDIT FACILITIES AND BORROWINGS

2024 Term Loan

In the fourth quarter of fiscal 2024, we entered into an unsecured Term Loan Agreement with a financial institution (the “2024 Term Loan Agreement”). The 2024 Term Loan Agreement provides for term loans to the Company in an aggregate principal amount of up to $300.0 million. We borrowed the full amount of the $300.0 million provided for under the 2024 Term Loan Agreement (the “2024 Term Loan”). The 2024 Term Loan matures on April 29, 2025. The 2024 Term Loan bears interest at the sum of Term SOFR (as defined in the 2024 Term Loan Agreement), plus a percentage spread of 1.15% per annum, plus a 0.10% per annum rate spread adjustment or (b) 0.15% per annum plus the alternate base rate, described in the 2024 Term Loan Agreement as the greatest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50%, and (iii) one-month Term SOFR plus 1.00%. The Company may voluntarily prepay loans under the 2024 Term Loan Agreement, in whole or in part, without premium or penalty, subject to certain conditions.

Revolving Credit Facility

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 26, 2024, 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 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 26, 2024, we were in compliance with all financial covenants under the Revolving Credit Agreement.

Commercial Paper

We finance our short-term liquidity needs with existing cash balances, cash flows from operations, and commercial paper borrowings. As of May 26, 2024, we had $586.0 million outstanding under our commercial paper program at an average weighted interest rate of 5.80%. 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%.