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LONG-TERM DEBT AND FINANCING ARRANGEMENTS

6 Months Ended

Jul. 03, 2021

Debt Disclosure [Abstract]

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

LONG-TERM DEBT AND FINANCING ARRANGEMENTS

Long-term debt and financing arrangements at July 3, 2021 and January 2, 2021 are as follows:

									July 3, 2021																																				January 2, 2021
(Millions of Dollars)			Interest Rate						Original Notional						Unamortized Discount						Unamortized Gain/(Loss) Terminated Swaps 1						Purchase Accounting FV Adjustment						Deferred Financing Fees						Carrying Value						Carrying Value
Notes payable due 2026			3.40%						$	500.0					$	(0.5)					$	—					$	—					$	(2.2)					$	497.3					$	497.2
Notes payable due 2028			7.05%						150.0						—						7.6						7.4						—						165.0						166.1
Notes payable due 2028			4.25%						500.0						(0.3)						—						—						(3.2)						496.5						496.2
Notes payable due 2030			2.30%						750.0						(2.1)						—						—						(4.5)						743.4						742.9
Notes payable due 2040			5.20%						400.0						(0.2)						(28.3)						—						(2.6)						368.9						368.1
Notes payable due 2048			4.85%						500.0						(0.5)						—						—						(5.0)						494.5						494.3
Notes payable due 2050			2.75%						750.0						(1.9)						—						—						(8.3)						739.8						739.9
Notes payable due 2060 (junior subordinated)			4.00%						750.0						—						—						—						(9.2)						740.8						740.7
Long-term debt2									$	4,300.0					$	(5.5)					$	(20.7)					$	7.4					$	(35.0)					$	4,246.2					$	4,245.4

1Unamortized gain/(loss) associated with interest rate swaps are more fully discussed in Note I, Financial Instruments.

2There are no current maturities of long-term debt.

The Company has a $3.0 billion commercial paper program which includes Euro denominated borrowings in addition to U.S. Dollars. As of July 3, 2021 and January 2, 2021, the Company had no borrowings outstanding.

The Company has a five-year $2.0 billion committed credit facility (the “5-Year Credit Agreement”). Borrowings under the 5-Year Credit Agreement may be made in U.S. Dollars, Euros or Pounds Sterling. A sub-limit amount of $653.3 million is designated for swing line advances which may be drawn in Euros pursuant to the terms of the 5-Year Credit Agreement. Borrowings bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and specific terms of the 5-Year Credit Agreement. The Company must repay all advances under the 5-Year Credit Agreement by the earlier of September 12, 2023 or upon termination. The 5-Year Credit Agreement is designated to be a liquidity back-stop for the Company's $3.0 billion U.S. Dollar and Euro commercial paper program. As of July 3, 2021, and January 2, 2021, the Company had not drawn on its five-year committed credit facility.

The Company has a 364-Day $1.0 billion committed credit facility (the "364-Day Credit Agreement"). Borrowings under the 364-Day Credit Agreement may be made in U.S. Dollars or Euros and bear interest at a floating rate plus an applicable margin dependent upon the denomination of the borrowing and pursuant to the terms of the 364-Day Credit Agreement. The Company must repay all advances under the 364-Day Credit Agreement by the earlier of September 8, 2021 or upon termination. The Company may, however, convert all advances outstanding upon termination into a term loan that shall be repaid in full no later than the first anniversary of the termination date provided that the Company, among other things, pays a fee to the administrative agent for the account of each lender. The 364-Day Credit Agreement serves as part of the liquidity back-stop for the Company’s $3.0 billion U.S. Dollar and Euro commercial paper program. As of July 3, 2021, and January 2, 2021, the Company had not drawn on its 364-Day committed credit facility.

The Company has an interest coverage covenant that must be maintained to permit continued access to its committed credit facilities described above. The interest coverage ratio tested for covenant compliance compares adjusted Earnings Before Interest, Taxes, Depreciation and Amortization to adjusted Interest Expense ("adjusted EBITDA"/"adjusted Interest Expense"). In April 2020, the Company entered into an amendment to its 5-Year Credit Agreement to: (a) amend the definition of Adjusted EBITDA to allow for additional adjustment addbacks, which primarily relate to anticipated incremental charges related to the COVID-19 pandemic, for amounts incurred beginning in the second quarter of 2020 through the second quarter of 2021, and (b) lower the minimum interest coverage ratio from 3.5 to 2.5 times for the period from and including the second quarter of 2020 through the end of fiscal year 2021.

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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

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