DEBT

12 Months Ended

May 27, 2018

NOTE 8. DEBT

Notes Payable

The components of notes payable and their respective weighted-average interest rates at the end of the periods were as follows:

		May 27, 2018				May 28, 2017
In Millions		NotesPayable	Weighted-AverageInterest Rate			NotesPayable	Weighted-AverageInterest Rate
U.S. commercial paper	$	1,213.5	2.2	%	$	954.7	1.1	%
Financial institutions		336.3	6.2			279.4	7.0
Total	$	1,549.8	3.1	%	$	1,234.1	2.4	%

To ensure availability of funds, we maintain bank credit lines sufficient to cover our outstanding notes payable. Commercial paper is a continuing source of short-term financing. We have commercial paper programs available to us in the United States and Europe. We also have uncommitted and asset-backed credit lines that support our foreign operations.

The following table details the fee-paid committed and uncommitted credit lines we had available as of May 27, 2018:

In Billions		Facility Amount		Borrowed Amount
Credit facility expiring:
May 2022	$	2.7	$	-
June 2019		0.2		0.1
September 2018		0.1		-
Total committed credit facilities		3.0		0.1
Uncommitted credit facilities		0.5		0.2
Total committed and uncommitted credit facilities	$	3.5	$	0.3

In February 2018, we entered into a fee-paid commitment letter with certain lenders, pursuant to which such lenders committed to provide a 364-day senior unsecured bridge term loan credit facility (the “Bridge Facility”) in an aggregate principal amount of up to $8.5 billion to provide the financing for the acquisition of Blue Buffalo. The Bridge Facility expired in the fourth quarter of fiscal 2018.

The credit facilities contain covenants, including a requirement to maintain a fixed charge coverage ratio of at least 2.5 times. We were in compliance with all credit facility covenants as of May 27, 2018.

Long-Term Debt

In April 2018, we issued $4,800.0 million principal amount of fixed-rate notes. Interest on the notes is payable semi-annually in arrears. We may redeem the notes in whole, or in part, at any time at the applicable redemption price. The notes are senior unsecured obligations that include a change of control repurchase provision. The net proceeds were used to finance a portion of the Blue Buffalo acquisition. The principal amounts of these fixed-rate notes were as follows:

In Millions		Principal
4.2% notes due April 17, 2028	$	1,400.0
3.7% notes due October 17, 2023		850.0
4.0% notes due April 17, 2025		800.0
4.7% notes due April 17, 2048		650.0
3.2% notes due April 16, 2021		600.0
4.55% notes due April 17, 2038		500.0
Total	$	4,800.0

In April 2018, we issued $1,250.0 million principal amount of floating-rate notes. Interest on the notes is payable quarterly in arrears. The notes are not generally redeemable prior to maturity. These notes are senior unsecured obligations that include a change of control repurchase provision. The net proceeds were used to finance a portion of the Blue Buffalo acquisition. The principal amounts of these floating-rate notes were as follows:

In Millions		Principal
Floating-rate notes due April 16, 2021	$	850.0
Floating-rate notes due October 17, 2023		400.0
Total	$	1,250.0

In February 2018, we paid $113.8 million to repurchase $100.0 million of our previously issued 6.39% medium term notes due 2023. We recorded the $13.8 million premium paid in the repurchase as net interest expense.

In October 2017, we issued $500.0 million principal amount of 2.6 percent fixed-rate notes due October 12, 2022. Interest on the notes is payable semi-annually in arrears. We may redeem the notes in whole, or in part, at any time at the applicable redemption price. The notes are senior unsecured obligations that include a change of control repurchase provision. The net proceeds, together with cash on hand, were used to repay $500.0 million of 1.4 percent fixed-rate notes.

In March 2017, we issued €300.0 million principal amount of floating-rate notes due March 20, 2019. Interest on the notes is payable quarterly in arrears. The notes are not generally redeemable prior to maturity. These notes are senior unsecured obligations that include a change of control repurchase provision. The net proceeds were used to repay a portion of our outstanding commercial paper.

In February 2017, we repaid $1.0 billion of 5.7 percent fixed-rate notes.

In January 2017, we issued $750.0 million principal amount of 3.2 percent fixed-rate notes due February 10, 2027. Interest on the notes is payable semi-annually in arrears. We may redeem the notes in whole or in part at any time at the applicable redemption price. The notes are senior unsecured obligations that include a change of control repurchase provision. The net proceeds were used to repay a portion of our maturing long-term debt.

A summary of our long-term debt is as follows:

In Millions		May 27, 2018		May 28, 2017
4.2% notes due April 17, 2028	$	1,400.0	$	-
5.65% notes due February 15, 2019		1,150.0		1,150.0
3.15% notes due December 15, 2021		1,000.0		1,000.0
3.7% notes due October 17, 2023		850.0		-
Floating-rate notes due April 16, 2021		850.0		-
4.0% notes due April 17, 2025		800.0		-
3.2% notes due February 10, 2027		750.0		750.0
4.7% notes due April 17, 2048		650.0		-
3.2% notes due April 16, 2021		600.0		-
Euro-denominated 2.1% notes due November 16, 2020		582.6		559.2
Euro-denominated 1.0% notes due April 27, 2023		582.6		559.2
Euro-denominated floating-rate notes due January 15, 2020		582.6		559.2
1.4% notes due October 20, 2017		-		500.0
4.55% notes due April 17, 2038		500.0		-
2.6% notes due October 12, 2022		500.0		-
5.4% notes due June 15, 2040		500.0		500.0
4.15% notes due February 15, 2043		500.0		500.0
3.65% notes due February 15, 2024		500.0		500.0
2.2% notes due October 21, 2019		500.0		500.0
Euro-denominated 1.5% notes due April 27, 2027		466.1		447.3
Floating-rate notes due October 17, 2023		400.0		-
Euro-denominated floating-rate notes due March 20, 2019		349.6		335.5
Euro-denominated 2.2% notes due June 24, 2021		232.8		222.8
Medium-term notes, 2.36% to 6.59%, due fiscal 2022 or later		104.2		204.2
Other, including debt issuance costs and capital leases		(81.7)		(39.8)
		14,268.8		8,247.6
Less amount due within one year		(1,600.1)		(604.7)
Total long-term debt	$	12,668.7	$	7,642.9

Principal payments due on long-term debt and capital leases in the next five years based on stated contractual maturities, our intent to redeem, or put rights of certain note holders are $1,600.1 million in fiscal 2019, $1,082.9 million in fiscal 2020, $2,039.9 million in fiscal 2021, $1,232.9 million in fiscal 2022, and $1,082.6 million in fiscal 2023.

Certain of our long-term debt agreements contain restrictive covenants. As of May 27, 2018, we were in compliance with all of these covenants.

As of May 27, 2018, the $54.2 million pre-tax loss recorded in AOCI associated with our previously designated interest rate swaps will be reclassified to net interest over the remaining lives of the hedged transactions. The amount expected to be reclassified from AOCI to net interest in fiscal 2019 is a $9.1 million pre-tax loss.