Debt

9 Months Ended

Aug. 03, 2019

Debt Disclosure [Abstract]

Debt

Debt

Term Loan Agreement

On June 28, 2019, the Company entered into a term loan credit agreement (Term Loan Agreement) with the Company as the borrower and JPMorgan Chase Bank, N.A. as administrative agent and the other banks identified therein as lenders, for an unsecured term loan facility in the principal amount of $1.25 billion, maturing on March 10, 2022. Loans under the term loan facility bear interest, at the Company’s option, at either a rate equal to (a) the Adjusted LIBO Rate (as defined in the Term Loan Agreement) plus a margin based on the Company’s debt rating or (b) the Base Rate (defined as the highest of (i) the prime rate, (ii) the NYFRB Rate (as defined in the Term Loan Agreement) plus .50%, and (iii) one month Adjusted LIBO Rate plus 1.00%) plus a margin based on the Company’s debt rating.

The Term Loan Agreement contains customary representations and warranties, affirmative and negative covenants and events of default applicable to the Company and its subsidiaries. The events of default include, among others, nonpayment of principal, interest, fees or other amounts, failure to perform certain covenants, cross-defaults to certain other indebtedness, insolvency or bankruptcy, customary ERISA defaults or the occurrence of a change of control. The negative covenants include limitations on liens, indebtedness of non-guarantor subsidiaries and mergers and other fundamental changes, among others. The Term Loan Agreement also requires the Company to maintain a consolidated leverage ratio of total consolidated funded debt to consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) for a trailing twelve-month period of not greater than 4.0 to 1.0. The covenant will be reduced to 3.5 to 1.0 beginning in fiscal year 2020, assuming the Company does not undertake any significant acquisitions, mergers, and other fundamental changes. Should such a change occur, the Company may be authorized to increase the covenant back to 4.0 to 1.0.  As of August 3, 2019, the Company was compliant with these covenants.

The Company used the proceeds from the new term loan facility to satisfy the obligations under its then-outstanding 3-year and 5-year term loan facilities.  The 3-year unsecured term loan facility was scheduled to mature on March 10, 2020, and the 5-year unsecured term loan facility was scheduled to mature on March 10, 2022. In addition, prior to the refinancing, the Company made additional principal payments on its then-outstanding term loans including $350.0 million paid in the first and second quarters of fiscal 2019 and $75.0 million paid in the third quarter of fiscal 2019 related to the former 3-year term loan and $100.0 million paid in the third quarter of fiscal 2019 related to the 5-year term loan. Following the refinancing, in the third quarter of fiscal 2019, the Company made additional principal payments on the term loan facility in the amount of $125.0 million. These amounts were not contractually due under the terms of the respective term loan agreements.

Revolving Credit Agreement

On June 28, 2019, the Company entered into a second amended and restated revolving credit agreement (Revolving Credit Agreement) with the Company as borrower and Bank of America, N.A. as administrative agent and the other banks identified therein as lenders, which further amended and restated its amended and restated revolving credit agreement dated as of September 23, 2016. The Revolving Credit Agreement provides for a five year unsecured revolving credit facility in an aggregate principal amount of up to $1.25 billion, expiring on June 28, 2024. The Revolving Credit Agreement is subject to two one-year extension options at the request of the Company and with the consent of the lenders. To date, the Company has not borrowed under this revolving credit facility but may borrow in the future and use the proceeds for repayment of existing indebtedness, stock repurchases, acquisitions, capital expenditures, working capital and other lawful corporate purposes.

Revolving loans under the Revolving Credit Agreement (other than swing line loans) bear interest, at the Company's option, at either a rate equal to (a) the Eurocurrency Rate (as defined in the Revolving Credit Agreement) plus a margin based on the Company’s debt rating or (b) the Base Rate (defined as the highest of (i) the Federal Funds Rate (as defined in the Revolving Credit Agreement) plus .50%, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate plus 1.00%) plus a margin based on the Company’s debt rating. The Revolving Credit Agreement includes a multicurrency borrowing feature for

certain specified foreign currencies. The Company will guarantee the obligations of each subsidiary that is named a designated borrower under the Revolving Credit Agreement.

The Revolving Credit Agreement contains the customary representations and warranties, and affirmative and negative covenants and events of default applicable to the Company and its subsidiaries as summarized above for the Term Loan Agreement.

In December 2018, the Company borrowed $75.0 million under its previously existing revolving credit facility and utilized the proceeds for the repayment of existing indebtedness and working capital requirements. The Company repaid the $75.0 million plus interest of $0.2 million in January 2019.