Borrowings and Credit Arrangements

9 Months Ended

Jul. 01, 2023

Debt Disclosure [Abstract]

Borrowings and Credit Arrangements

Borrowings and Credit Arrangements

The Company’s borrowings consisted of the following: 

	July 1, 2023		September 24, 2022
Current debt obligations, net of debt discount and deferred issuance costs:
Term Loan	$	31.8	$	15.0
Total current debt obligations	$	31.8	$	15.0
Long-term debt obligations, net of debt discount and issuance costs:
Term Loan	1,454.5		1,475.7
2028 Senior Notes	396.6		396.1
2029 Senior Notes	938.2		936.6
Total long-term debt obligations	$	2,789.3	$	2,808.4
Total debt obligations	$	2,821.1	$	2,823.4

2021 Credit Agreement

On September 27, 2021, the Company refinanced its then existing term loan and revolving credit facility with Bank of America, N.A. in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other lenders (the “2018 Credit Agreement”) by entering into a Refinancing Amendment (the “2021 Credit Agreement”). On August 22, 2022, the Company further amended the 2021 Credit Agreement to address the planned phase out of LIBOR by the UK Financial Conduct Authority. Under this amendment, the interest rates applicable to the loans under the 2021 Credit Agreement denominated in U.S. dollars were converted to a variant of the secured overnight financing rate (“SOFR”), as established from time to time by the Federal Reserve Bank of New York, plus a corresponding spread.

The 2021 Credit Agreement provided a $1.5 billion secured term loan facility (the “2021 Term Loan”) and a $2.0 billion revolving credit facility (the “2021 Revolver”). As of July 1, 2023, the principal amount outstanding under the 2021 Term Loan was $1.5 billion, and the interest rate was 6.20% per annum. No amounts were outstanding under the 2021 Revolver, and the full amount was available to be borrowed by the Company.

Pursuant to ASC 470, Debt (ASC 470), the accounting for the refinancing was evaluated on a creditor-by-creditor basis to determine whether each transaction should be accounted for as a modification or extinguishment. Certain creditors under the 2018 Credit Agreement did not participate in this refinancing transaction and ceased being creditors of the Company. As a result, the Company recorded a debt extinguishment loss of $0.7 million in the first quarter of fiscal 2022 to write-off the pro-rata amount of unamortized debt discount and deferred issuance costs related to these creditors. For the remainder of the creditors, this transaction was accounted for as a modification. Pursuant to ASC 470, third-party costs of $7.0 million were recorded as a reduction to debt representing deferred issuance costs and fees paid directly to the lenders.

Interest expense, weighted average interest rates, and the interest rate at the end of period under the 2021 Credit Agreement were as follows: 

	Three Months Ended						Nine Months Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Interest expense	$	24.3		$	7.8		$	67.2		$	18.8
Weighted average interest rate	6.17		%	1.67		%	5.65		%	1.30		%
Interest rate at end of period	6.20		%	2.63		%	6.20		%	2.63		%

The Company’s currently effective interest rate swap agreement, which fixes the floating rate on $1.0 billion of aggregate principal under the 2021 Term Loan at 1.23%, resulted in the Company receiving $9.8 million and $25.0 million in the three and nine months ended July 1, 2023, respectively, which was recorded as a reduction to interest expense.

The 2021 Credit Agreement contains two financial covenants; a total leverage ratio and an interest coverage ratio, both of which are measured as of the last day of each fiscal quarter. These terms, and calculations thereof, are defined in further detail in the 2021 Credit Agreement. As of July 1, 2023, the Company was in compliance with these covenants.

2028 Senior Notes

As of July 1, 2023, the Company had 4.625% Senior Notes due 2028 (the “2028 Senior Notes”) outstanding in the aggregate principal balance of $400 million. The 2028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries and mature on February 1, 2028.

2029 Senior Notes

As of July 1, 2023, the Company had 3.250% Senior Notes due 2029 (the “2029 Senior Notes”) outstanding in the aggregate principal balance of $950 million. The 2029 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries and mature on February 15, 2029.

Interest expense for the 2029 Senior Notes and 2028 Senior Notes was as follows:

			Three Months Ended				Nine Months Ended
	Interest Rate		July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
2028 Senior Notes	4.625	%	4.8		4.8		14.8		14.4
2029 Senior Notes	3.250	%	8.2		8.2		25.3		24.6
Total			$	13.0	$	13.0	$	40.1	$	39.0

Accounts Receivable Securitization Program

During April 2022, the Company repaid the outstanding balance of $248.5 million under its accounts receivable securitization program (the “Securitization Program”). On June 10, 2022, the Company amended the agreement governing the Securitization Program temporarily suspending its ability to borrow and the need to comply with covenants for up to a year. On March 31, 2023, the Company terminated the Securitization Program.