Debt

3 Months Ended

Mar. 29, 2020

Debt Disclosure [Abstract]

Debt

Debt

The Company has taken several actions in March and April 2020 to secure liquidity in light of volatility in the credit markets and economic uncertainty being caused by the COVID-19 pandemic.

On March 18, 2020, the Company closed and funded a 364-day, $150,000 term loan with Wells Fargo Bank, National Association, using the proceeds to repay a portion of outstanding commercial paper. Interest is assessed at the London Interbank Offered Rate (LIBOR) plus a margin based on a pricing grid that uses the Company’s credit ratings. The margin above LIBOR at March 29, 2020 was 125 basis points. There is no required amortization and repayment can be accelerated at any time at the discretion of the Company.

On April 1, 2020, subsequent to quarter end, the Company accessed $250,000 from its $500,000 revolving credit facility with a syndicate of eight banks committed through July 2022. The Company used $85,000 of the proceeds to fully repay its then outstanding commercial paper balance and the remaining proceeds were invested in short-term cash equivalents with maturities of 30 days or less.

On April 6, 2020, the Company borrowed $100,000, pursuant to a new 364-day term loan with U.S. Bank, National Association. Interest is assessed at the LIBOR plus a margin based on a pricing grid that uses the Company's credit ratings. The margin above LIBOR at April 6, 2020 was 125 basis points. There is no required amortization and repayment can be accelerated at any time at the discretion of the Company.

On April 22, 2020, subsequent to quarter end, the Company sold through a public offering $600,000 of 3.125% notes due May 1, 2030. The offering was made pursuant to an effective shelf registration statement. This action was taken largely to mitigate the risk of possible future credit market dislocations triggered by the economic impact of the COVID-19 pandemic. The Company intends to use the net proceeds from the offering of approximately $594,200 for general corporate purposes, including the potential repayment of existing debt. On May 5, 2020, the Company repaid the $250,000 borrowed April 1, 2020 under the Company's revolving credit facility.

As a result of these borrowing actions, the Company currently expects debt maturities of approximately $871,000 in 2021. The Company currently has approximately $750,000 in cash and cash equivalents on hand and $500,000 in committed availability under its revolving credit facility. The Company believes these amounts, combined with expected free cash flow generation, provide ample liquidity to cover the 2021 debt maturities and other cash flow needs of the Company.

To further improve its financial flexibility and liquidity, the Company gave notice in March 2020 of its intent to exercise a conditional one-time option to extend its $200,000 term loan with Wells Fargo Bank, National Association, due May 2020, for an additional 364 days to May 2021. The Company expects the required conditions will be met.

Certain of the Company’s debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements. As of March 29, 2020, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.