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Borrowings and Credit Arrangements | 12 Months Ended
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Sep. 25, 2021
Debt Disclosure [Abstract] |
Borrowings and Credit Agreements | Borrowings and Credit Agreements The Company’s borrowings consisted of the following:
| September 25, 2021 |  | September 26, 2020
Current debt obligations, net of debt discount and deferred issuance costs: |  |  |
Term Loan | $ | — |  |  | $ | 74.9 |
Revolver | — |  |  | 250.0 |
Securitization Program | 248.5 |  |  | — |
Other | 64.5 |  |  | — |
Total current debt obligations | $ | 313.0 |  |  | $ | 324.9 |
Long-term debt obligations, net of debt discount and issuance costs: |  |  |
Term Loan | 1,382.3 |  |  | 1,379.9 |
2025 Senior Notes | — |  |  | 939.4 |
2028 Senior Notes | 395.4 |  |  | 394.6 |
2029 Senior Notes | 934.5 |  |  | — |
Total long-term debt obligations | 2,712.2 |  |  | 2,713.9 |
Total debt obligations | $ | 3,025.2 |  |  | $ | 3,038.8 |
The debt maturity schedule for the Company’s obligations as of September 25, 2021 was as follows:
|  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 and Thereafter |  | Total
Term Loan* |  | $ | 75.0 |  |  | $ | 112.5 |  |  | $ | 1,200.0 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,387.5 |
Securitization Program |  | 248.5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 248.5 |
2028 Senior Notes |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 400.0 |  |  | 400.0 |
2029 Senior Notes |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 950.0 |  |  | 950.0 |
Other |  | 64.5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 64.5 |
|  | $ | 388.0 |  |  | $ | 112.5 |  |  | $ | 1,200.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,350.0 |  |  | $ | 3,050.5 |
*The Term Loan debt maturity schedule herein represents the 2018 Credit Agreement as of September 25, 2021. The Company amended the credit agreement on September 27, 2021, which resulted in a change in the principal maturity schedule. 2018 Amended and Restated Credit Agreement On December 17, 2018, the Company and certain of its subsidiaries refinanced its term loan and revolving credit facility by entering into an Amended and Restated Credit and Guaranty Agreement as of December 17, 2018 (the "2018 Credit Agreement") 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 amended and restated the Company's prior credit and guaranty agreement as of October 3, 2017 ("2017 Credit Agreement"). The credit facilities under the 2018 Credit Agreement consisted of: •A $1.5 billion secured term loan ("2018 Term Loan") with a maturity date of December 17, 2023; and •A secured revolving credit facility ("2018 Revolver") under which the Company could borrow up to $1.5 billion, subject to certain sublimits, with a maturity date of December 17, 2023. Borrowings under the 2018 Credit Agreement bore interest, at the Company's option and in each case plus an applicable margin as follows: •2018 Term Loan: at the Base Rate, Eurocurrency Rate or LIBOR Daily Floating Rate, •2018 Revolver: if funded in U.S. dollars, the Base Rate, Eurocurrency Rate, or LIBOR Daily Floating Rate, and, if funded in an alternative currency, the Eurocurrency Rate; and if requested under the swing line sublimit, the Base Rate. As of September 25, 2021, the Company had no amounts outstanding under the 2018 Revolver and the interest rate under the 2018 Term Loan was 1.08%. The applicable margin to the Base Rate, Eurocurrency Rate, or LIBOR Daily Floating Rate was subject to specified changes depending on the total net leverage ratio as defined in the 2018 Credit Agreement. The borrowings of the 2018 Term Loan initially bore interest at an annual rate equal to the Eurocurrency Rate (i.e., the LIBOR rate) plus an Applicable Rate equal to 1.00%. The borrowings of the 2018 Revolver initially bore interest at a rate equal to the LIBOR Daily Floating Rate plus an Applicable Rate, which was 1.00% at September 25, 2021. The Company was also required to pay a quarterly commitment fee calculated on the undrawn committed amount available under the 2018 Revolver. The Company was required to make scheduled principal payments under the 2018 Term Loan in increasing amounts ranging from $9.375 million per three-month period commencing with the three-month period ending on December 27, 2019 to $28.125 million per three-month period commencing with the three-month period ending on December 29, 2022 and ending on September 29, 2023. The remaining balance of the 2018 Term Loan after the scheduled principal payments, which was $1.2 billion, and any amounts outstanding under the 2018 Revolver were due at maturity. In addition, subject to the terms and conditions set forth in the 2018 Credit Agreement, the Company could have been required to make certain mandatory prepayments from the net proceeds of specified types of asset sales (subject to certain reinvestment rights), debt issuances and insurance recoveries (subject to certain reinvestment rights). These mandatory prepayments were required to be applied by the Company, first, to the 2018 Term Loan, second, to any outstanding amount under any Swing Line Loans, third, to the 2018 Revolver, fourth to prepay any outstanding reimbursement obligations with respect to Letters of Credit and fifth, to cash collateralize any Letters of Credit. Subject to certain limitations, the Company could have voluntarily prepaid any of the 2018 Credit Facilities without premium or penalty. The 2018 Credit Agreement contained affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants restricting the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and grant additional liens on its assets, engage in mergers or acquisitions or dispose of assets, enter into sale-leaseback transactions, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. In addition, the 2018 Credit Agreement required the Company to maintain certain financial ratios. The 2018 Credit Agreement also contained customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross defaults and an event of default upon a change of control of the Company. Borrowings were secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of the Company and its U.S. subsidiaries, with certain exceptions. The 2018 Credit Agreement contained total net leverage ratio and interest coverage ratio financial covenants measured as of the last day of each fiscal quarter. The total net leverage ratio covenant was 5.00:1.00 beginning on the Company's fiscal quarter ended December 29, 2018, and would have remained as such until it decreased to 4.50:1.00 for the quarter ending June 25, 2022. The interest coverage ratio covenant was 3.75:1.00 beginning on the Company's fiscal quarter ended December 29, 2018, and remained as such for each quarter thereafter. The total net leverage ratio was defined as the ratio of the Company's consolidated net debt as of the quarter end to its consolidated adjusted EBITDA (as defined in the 2018 Credit Agreement) for the four-fiscal quarter period ending on the measurement date. The interest coverage ratio was defined as the ratio of the Company's consolidated adjusted EBITDA for the prior four-fiscal quarter period ending on the measurement date to adjusted consolidated cash interest expense (as defined in the 2018 Credit Agreement) for the same measurement period. The Company was in compliance with these covenants as of September 25, 2021. The Company evaluated the 2018 Credit Agreement for derivatives pursuant to ASC 815, Derivatives and Hedging, and identified embedded derivatives that required bifurcation as the features were not clearly and closely related to the host instrument. The embedded derivatives were a default provision, which could require additional interest payments, and a provision requiring contingent payments to compensate the lenders for changes in tax deductions. The Company determined that the fair value of these embedded derivatives was nominal as of September 25, 2021. Pursuant to ASC 470, Debt (ASC 470), the accounting related to entering into the 2018 Credit Agreement and using the proceeds to pay off the 2017 Credit Agreement 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 2017 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 $0.8 million in the first quarter of fiscal 2019. For the remainder of the creditors, this transaction was accounted for as a modification because on a creditor-by-creditor basis the present value of the cash flows between the two debt instruments before and after the transaction was less than 10%. Interest expense, non-cash interest expense, the weighted average interest rate, and the interest rate at the end of period under the 2018 Credit Agreement and the 2017 Credit Agreement was as follows:
| Years Ended
| September 25, 2021 | September 26, 2020 | September 28, 2019
Interest expense (1) | $ | 22.0 |  | $ | 46.6 |  | $ | 67.0 |
Non-cash interest expense | $ | 2.5 |  | $ | 2.5 |  | $ | 2.6 |
Weighted average interest rate | 1.13 | % | 2.25 | % | 3.79 | %
Interest rate at end of period | 1.08 | % | 1.40 | % | 3.43 | %
(1) Interest expense includes non-cash interest expense related to the amortization of the deferred issuance costs and accretion of the debt discount. 2021 Credit Agreement - Subsequent Event On September 27, 2021, the Company and certain of its subsidiaries refinanced its term loan and revolving credit facility under the 2018 Credit Agreement by entering into Refinancing Amendment No. 2 dated as of September 27, 2021, to the Amended and Restated Credit and Guaranty Agreement as of October 3, 2017, as amended (the "2021 Credit Agreement") with Bank of America, N.A. in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and certain other lenders. The 2021 Credit Agreement amends the Company's 2018 Credit Agreement. Substantially all of the proceeds under the 2021 Credit Agreement of $1.5 billion were used to repay the amounts outstanding under the 2018 Credit Agreement. Borrowings under the 2021 Credit Agreement are secured by first-priority liens on, and a first-priority security interest in (in each case subject to certain liens permitted under the 2021 Credit Agreement), substantially all of the Company's U.S. assets of the Subsidiary Guarantors. These liens are subject to release during the term of the facilities if the Company is able to achieve certain corporate or corporate family ratings and other conditions are met. The credit facilities under the 2021 Credit Agreement consist of: •A $1.5 billion secured term loan ("2021 Term Loan") with a maturity date of September 25, 2026; and •A secured revolving credit facility ("2021 Revolver") under which the Company may borrow up to $2.0 billion, subject to certain sublimits, with a maturity date of September 25, 2026. Borrowings under the 2021 Credit Agreement, other than Swing Line Loans (as defined in the 2021 Credit Agreement), bear interest, at the Company's option, at the Base Rate (as defined in the 2021 Credit Agreement), at the Eurocurrency Rate (as defined in the 2021 Credit Agreement), at the Alternative Currency Daily Rate (as defined in the 2021 Credit Agreement), or at the LIBOR Daily Floating Rate (as defined in the 2021 Credit Agreement), in each case plus the Applicable Rate (as defined in the 2021 Credit Agreement). The Applicable Rate in regards to the Base Rate, the Eurocurrency Rate, the Alternative Currency Daily Rate, the Alternative Currency Term Rate, and the LIBOR Daily Floating Rate is subject to change depending on the Total Net Leverage Ratio (as defined in the 2021 Credit Agreement). The borrowings of the Term Loan under the 2021 Credit Facilities initially bear interest at an annual rate equal to the Eurocurrency Rate for a one month interest period plus an Applicable Rate equal to 1.00%. The Company is also required to pay a quarterly commitment fee calculated on daily basis equal to the Applicable Rate as of such day multiplied by the undrawn committed amount available under the Revolver (taking into account any outstanding amounts under the LC Sublimit). This commitment fee is initially 0.15% per annum for the Revolver. The Company is required to make scheduled principal payments under the 2021 Term Loan in increasing amounts ranging from $3.75 million per three-month period commencing with the three-month period ending on December 29, 2022 to $18.75 million per three-month period commencing with the three month period ending on December 26, 2025. The remaining balance of $1.335 billion (or such lesser aggregate principal amount of Term Loans then outstanding) on the 2021 Term Loan and any amounts outstanding under the 2021 Revolver are due at maturity. In addition, subject to the terms and conditions set forth in the 2021 Credit Agreement, the Company is required to make certain mandatory prepayments from the net proceeds of specified types of asset sales (subject to certain reinvestment rights), debt issuances and insurance recoveries (subject to certain reinvestment rights). Certain of the mandatory prepayments are subject to reduction or elimination if certain financial covenants are met. These mandatory prepayments are required to be applied by the Company, first to the 2021 Term Loan, second to any outstanding amount under any Swing Line Loans, third to the 2021 Revolver, fourth to prepay any outstanding reimbursement obligations with respect to Letters of Credit and fifth to cash collateralize any Letters of Credit. Subject to certain limitations, the Company may voluntarily prepay any of the 2021 Credit Facilities without premium or penalty. The 2021 Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants restricting the ability of the Company, subject to negotiated exceptions, to incur additional indebtedness and grant additional liens on its assets, engage in mergers or acquisitions or dispose of assets, enter into sale-leaseback transactions, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of their businesses. In addition, the 2021 Credit Agreement requires the Borrowers to maintain certain financial ratios. The 2021 Credit Agreement also contains customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross defaults and an event of default upon a change of control of the Company. Senior Notes 2028 Senior Notes On January 19, 2018, the Company completed a private placement of $1.0 billion aggregate principal amount of senior notes and allocated $400 million in aggregate principal amount to its 4.625% Senior Notes due 2028 (the "2028 Senior Notes") at an offering price of 100% of the aggregate principal amount of the 2028 Senior Notes. The 2028 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries. The 2028 Senior Notes mature on February 1, 2028 and bear interest at the rate of 4.625% per year, payable semi-annually on February 1 and August 1 of each year, commencing on August 1, 2018. The Company may redeem the 2028 Senior Notes at any time prior to February 1, 2023 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the indenture. The Company has the option to redeem the 2028 Senior Notes on or after: February 1, 2023 through February 1, 2024 at 102.312% of par; February 1, 2024 through February 1, 2025 at 101.541% of par; February 1, 2025 through February 1, 2026 at 100.770% of par; and February 1, 2026 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the indenture, the Company will be required to make an offer to purchase each holder’s 2028 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. The Company evaluated the 2028 Senior Notes for derivatives pursuant to ASC 815 and did not identify any embedded derivatives that require bifurcation. All features were deemed to be clearly and closely related to the host instrument. 2029 Senior Notes On September 28, 2020, the Company completed a private placement of $950 million aggregate principal amount of its 3.250% Senior Notes due 2029 (the "2029 Senior Notes") at an offering price of 100% of the aggregate principal amount of the 2029 Senior Notes. The 2029 Senior Notes are general senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain domestic subsidiaries. The 2029 Senior Notes mature on February 15, 2029 and bear interest at the rate of 3.250% per year, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2021. The Company may redeem the 2029 Senior Notes at any time prior to September 28, 2023 at a price equal to 100% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date and a make-whole premium set forth in the indenture. The Company may also redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes with the net cash proceeds of certain equity offerings at any time and from time to time before September 28, 2023, at a redemption price equal to 103.250% of the aggregate principal amount so redeemed, plus accrued and unpaid interest, if any, to the redemption date. The Company also has the option to redeem the 2029 Senior Notes on or after: September 28, 2023 through September 27, 2024 at 101.625% of par; September 28, 2024 through September 27, 2025 at 100.813% of par; and September 28, 2025 and thereafter at 100% of par. In addition, if the Company undergoes a change of control coupled with a decline in ratings, as provided in the indenture, the Company will be required to make an offer to purchase each holder’s 2029 Senior Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. The Company evaluated the 2029 Senior Notes for derivatives pursuant to ASC 815, Derivatives and Hedging, and did not identify any embedded derivatives that require bifurcation. All features were deemed to be clearly and closely related to the host instrument. 2025 Senior Notes The Company had 4.375% Senior Notes due 2025 (the “2025 Senior Notes”) outstanding and bore interest at the rate of 4.375% per year, payable semi-annually on April 15 and October 15 of each year. The Company used the net proceeds of the 2029 Senior Notes offering in the first quarter of fiscal 2021 to redeem in full the 2025 Senior Notes in the aggregate principal amount of $950.0 million on October 15, 2020 at an aggregate redemption price of $970.8 million, which included a premium payment of $20.8 million. Since the Company planned to use the proceeds from the 2029 Senior Notes offering to redeem the 2025 Senior Notes, the Company evaluated the accounting for this transaction under ASC 470 to determine modification versus extinguishment accounting on a creditor-by-creditor basis. Certain 2025 Senior Note holders either did not participate in this refinancing transaction or reduced their holdings and these transactions were accounted for as extinguishments. As a result, the Company recorded a debt extinguishment loss in the first quarter of fiscal 2021 of $21.6 million, which comprised pro-rata amounts of the premium payment, debt discount and debt issuance costs. For the remaining 2025 Senior Notes holders who participated in the refinancing, these transactions were accounted for as modifications because on a creditor-by-creditor basis the present value of the cash flows between the debt instruments before and after the transaction was less than 10%. The Company recorded a portion of the transaction expenses of $5.8 million to interest expense pursuant to ASC 470, subtopic 50-40. The remaining debt issuance costs of $7.9 million and debt discount of $6.4 million related to the modified debt are being amortized over the new term of the 2029 Senior Notes using the effective interest method. Interest expense for the 2029 Senior Notes, 2028 Senior Notes and 2025 Senior Notes was as follows:
|  |  | Years Ended
|  |  | September 25, 2021 |  | September 26, 2020 |  | September 28, 2019
| Interest Rate |  | Interest Expense (1) | Non-Cash Interest Expense |  | Interest Expense (1) | Non-Cash Interest Expense |  | Interest Expense (1) | Non-Cash Interest Expense
2029 Senior Notes | 3.250 | % |  | $ | 32.7 |  | $ | 2.1 |  |  | $ | — |  | $ | — |  |  | $ | — |  | $ | — |
2028 Senior Notes | 4.625 | % |  | 19.2 |  | 0.7 |  |  | 19.2 |  | 0.7 |  |  | 19.2 |  | 0.7 |
2025 Senior Notes | 4.375 | % |  | 2.3 |  | 0.1 |  |  | 43.5 |  | 2.1 |  |  | 43.5 |  | 2.1 |
Total |  |  | $ | 54.2 |  | $ | 2.9 |  |  | $ | 62.7 |  | $ | 2.8 |  |  | $ | 62.7 |  | $ | 2.8 |
(1) Interest expense includes non-cash interest expense related to the amortization of the deferred issuance costs and accretion of the debt discount. Accounts Receivable Securitization Program On April 25, 2016, the Company entered into a one-year $200.0 million accounts receivable securitization program (the "Securitization Program") with several of its wholly owned subsidiaries and certain financial institutions, which provides for annual renewals. Under the terms of the Securitization Program, the Company and certain of its wholly-owned subsidiaries sell their respective customer receivables to a bankruptcy remote special purpose entity, which is also a wholly-owned subsidiary of the Company. In addition, the Company also contributed a portion of its customer receivables to the special purpose entity in connection with its establishment. The Company retains servicing responsibility. The special purpose entity, as borrower, and the Company, as servicer, entered into a Credit and Security Agreement with several lenders pursuant to which the special purpose entity, at that time, could borrow up to $200.0 million from the lenders, with the loans secured by the receivables. The amount that the special purpose entity may borrow at a given point in time is determined based on the amount of qualifying receivables that are present in the special purpose entity at such point in time. Borrowings outstanding under the Securitization Program bear interest at LIBOR plus the applicable margin of 0.8% and are included as a component of current liabilities in the Company's consolidated balance sheet, while the accounts receivable securing these obligations remain as a component of net receivables in the Company's consolidated balance sheet. The Company and the special purpose entity are operated and maintained as separate legal entities. The assets of the special purpose entity secure the amounts borrowed and cannot be used to pay other debts or liabilities of the Company. In subsequent years, the Company amended the agreement to extend it for one-year periods and increased the borrowing capacity up to $250.0 million and lowered the applicable margin to 0.7%. In response to the market uncertainties created by the COVID-19 pandemic, on March 26, 2020, the Company paid off the total amount outstanding of $250.0 million previously borrowed. On April 13, 2020, the Company amended the Credit and Security Agreement with the lenders, temporarily suspending the ability to borrow and the need to comply with covenants for up to a year. On June 11, 2021, the Company amended and restated the Credit and Security Agreement to restart the Securitization Program and increased the maximum borrowing amount to $320.0 million. As of September 25, 2021, there was $248.5 million outstanding under this program. Borrowings under the Securitization Program for fiscal 2021 had a weighted-average interest rate of 0.8%. Interest expense under the Securitization Program was $0.9 million, $3.1 million and $7.1 million for fiscal 2021, 2020 and 2019, respectively. The interest rate on the amounts outstanding at September 25, 2021 was 0.8%. The Credit and Security Agreement contains customary representations and warranties and events of default, including payment defaults, breach of representations and warranties, covenant defaults, and an event of default upon a change of control of the Company. In addition, it contains financial covenants consistent with that of the Credit Agreement. As of September 25, 2021, the Company was not required to be in compliance with the Credit and Security Agreement covenants. Other Other represents debt acquired in the Mobidiag acquisition, which is primarily with the European Investment Bank ("EIB"). Multiple tranches were withdrawn under the agreement and were primarily used to fund research and development projects and expansion efforts. The debt agreement contains change-in-control provisions allowing the EIB to call the debt at any time after a change-in-control, which occurred as a result of Hologic acquiring Mobidiag. Accordingly, the Company has classified the debt as current. The tranches withdrawn under this agreement have interest rates ranging from 6.0% to 7.0%. The debt agreement includes additional payments to the EIB based on revenues generated by products developed under the funding as well as prepayment penalties.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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