Financing Arrangements

12 Months Ended

Nov. 30, 2019

FINANCING ARRANGEMENTS

Our outstanding debt, including capital leases, was as follows at November 30:



(millions)	2019			2018
Short-term borrowings
Commercial paper	$	575.3		$	509.9
Other	25.4			50.1
	$	600.7		$	560.0
Weighted-average interest rate of short-term borrowings at year-end	2.5		%	2.9		%

Long-term debt
Term loan due 8/17/2020⁽¹⁾	$	—		$	130.0
3.90% notes due 7/8/2021⁽²⁾	250.0			250.0
2.70% notes due 8/15/2022	750.0			750.0
Term loan due 8/17/2022⁽¹⁾	250.0			556.3
3.50% notes due 8/19/2023⁽³⁾	250.0			250.0
3.15% notes due 8/15/2024	700.0			700.0
3.25% notes due 11/15/2025⁽⁴⁾	250.0			250.0
3.40% notes due 8/15/2027⁽⁵⁾	750.0			750.0
4.20% notes due 8/15/2047	300.0			300.0
7.63%–8.12% notes due 2024	55.0			55.0
Other, including capital leases	171.6			180.5
Unamortized discounts, premiums, debt issuance costs and fair value adjustments⁽⁶⁾	(3.1		)	(35.4		)
	3,723.5			4,136.4
Less current portion	97.7			83.5
	$	3,625.8		$	4,052.9


(1)	The term loans are prepayable in whole or in part. Also, the term loan due in 2022 requires quarterly principal payments of 2.5% of the initial principal amount.


(2)	Interest rate swaps, settled upon the issuance of these notes in 2011, effectively set the interest rate on the $250 million notes at a weighted-average fixed rate of 4.01%.


(3)	Interest rate swaps, settled upon the issuance of these notes in 2013, effectively set the interest rate on the $250 million notes at a weighted-average fixed rate of 3.30%.


(4)	Interest rate swaps, settled upon the issuance of these notes in 2015, effectively set the interest rate on the $250 million notes at a weighted-average fixed rate of 3.45%. The fixed interest rate on $100 million of the 3.25% notes due in 2025 is effectively converted to a

variable rate by interest rate swaps through 2025. Net interest payments are based on 3-month LIBOR plus 1.22% during this period (our effective rate as of November 30, 2019 was 3.13%).

(5)

Interest rate swaps, settled upon the issuance of these notes in 2017, effectively set the interest rate on the $750 million notes at a weighted-average fixed rate of 3.44%. The fixed interest rate on $250 million of the 3.40% notes due in 2027 is effectively converted to a variable rate by interest rate swaps through 2027. Net interest payments are based on 3-month LIBOR plus 0.685% during this period (our effective rate as of November 30, 2019 was 2.59%).


(6)	Includes unamortized discounts, premiums and debt issuance costs of $(23.6) million and $(29.0) million as of November 30, 2019 and 2018, respectively. Includes fair value adjustment associated with interest rate swaps designated as fair value hedges of $20.5 million and $(6.4) million as of November 30, 2019 and 2018, respectively.

Maturities of long-term debt, including capital leases, during the fiscal years subsequent to November 30, 2019 are as follows (in millions):



2020	$	97.7
2021	341.1
2022	864.2
2023	257.8
2024	763.1
Thereafter	1,402.7

In connection with our acquisition of RB Foods, we entered into a Term Loan Agreement (“Term Loan”) in August 2017. The Term Loan provide for three-year and five-year senior unsecured term loans, each for $750 million. The net proceeds received from the issuance of the Term Loan was $1,498.3 million. The three-year loan was payable at maturity. The five-year loan is payable in equal quarterly installments in an amount of 2.5% of the initial principal amount, with the remaining unpaid balance due at maturity. The three-year and five-year loans are each prepayable in whole or in part. In 2019 and 2018, we repaid the three-year loan in the amounts of $130.0 million and $370.0 million, respectively. Prior to payoff, the three-year loan bore interest at LIBOR plus 1.125%. In 2019 and 2018, we repaid $306.3 million and $175.0 million, respectively, of the five-year loan, which included required quarterly principal installments of $75.0 million in both years. The five-year loan currently bears interest at LIBOR plus 1.25%. The interest rates are based on our credit rating with the maximum potential interest rate of LIBOR plus 1.75% for the five-year loan.

The provisions of our outstanding $1.0 billion revolving credit facility and the Term Loan restrict subsidiary indebtedness and require us to maintain certain minimum and maximum financial ratios for interest expense coverage and our leverage ratio. The applicable leverage ratio is reduced annually. As of November 30, 2019, our capacity under the revolving credit facility is not affected by these covenants. We do not expect that these covenants would limit our access to our revolving credit facility for the foreseeable future; however, the leverage ratio could restrict our ability to utilize this facility.

In August 2017, we issued an aggregate amount of $2.5 billion of senior unsecured notes. These notes are due as follows: $750.0 million due August 15, 2022, $700.0 million due August 15, 2024, $750.0 million due August 15, 2027 and $300.0 million due August 15, 2047 with stated fixed interest rates of 2.70%, 3.15%, 3.40% and 4.20%, respectively. Interest is payable semiannually in arrears in August and February of each year. The net proceeds received from the issuance of these notes were $2,479.3 million and were used to partially fund our acquisition of RB Foods. In addition, we used a portion of these proceeds to repay our $250.0 million, 5.75% notes that matured on December 15, 2017.

Other debt costs of $15.4 million for the year ended November 30, 2017 represent the financing fees related to a bridge loan commitment, obtained in connection with our acquisition of RB Foods, that expired undrawn.

We have available credit facilities with domestic and foreign banks for various purposes. Some of these lines are committed lines and others are uncommitted lines and could be withdrawn at various times. We have a five-year $1.0 billion revolving credit facility, which will expire in August 2022. The current pricing for the credit facility, on a fully drawn basis, is LIBOR plus 1.25%. The pricing of the credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to LIBOR plus 1.75%. This credit facility supports our commercial paper program and, after $575.3 million was used to support issued commercial paper, we have $424.7 million of capacity at November 30, 2019. In addition, we have several uncommitted lines totaling $261.5 million, which have a total unused capacity at November 30, 2019 of $205.1 million. These lines, by their nature, can be withdrawn based on the lenders’ discretion. Committed credit facilities require a fee, and commitment fees were $1.3 million for both 2019 and 2018.

In 2018, we consolidated our Corporate staff and certain non-manufacturing U.S. employees into our new headquarters building in Hunt Valley, Maryland. The 15-year lease for that building requires monthly lease payments of approximately $0.9 million which began in April 2019. The $0.9 million monthly lease payment is subject to adjustment after an initial 60-month period and thereafter on an annual basis as specified in the lease agreement. Upon commencement of fit-out in the second quarter of 2018, we obtained access to the building, which resulted in the lease commencement date for accounting purposes. We have recognized this lease as a capital lease, with the leased asset of $124.7 million and $133.4 million included in property, plant and equipment, net, as of November 30, 2019 and 2018, respectively. As of November 30, 2019, the total lease obligation was $137.7 million, of which $6.8 million was included in the current portion of long-term debt and $130.9 million was included in long-term debt. As of November 30, 2018, the entire lease liability of $138.6 million was included in long-term debt. During 2019 and 2018, respectively, we recognized amortization expense of $8.7 million and $5.2 million related to the leased asset.

Rental expense under operating leases (primarily buildings and equipment) was $48.1 million in 2019, $58.5 million in 2018 and $46.5 million in 2017. Future annual fixed rental payments under operating leases for the years ended November 30 are as follows (in millions):



2020	$	41.8
2021	35.7
2022	25.8
2023	16.0
2024	10.6
Thereafter	32.3

At November 30, 2019, we had guarantees outstanding of $0.6 million with terms of one year or less. As of November 30, 2019 and 2018, we had outstanding letters of credit of $32.2 million and $7.3 million, respectively. These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions. The unused portion of our letter of credit facility was $13.8 million at November 30, 2019.