XML 35 R13.htm IDEA: XBRL DOCUMENT
v3.19.2

Long-Term Debt | 12 Months Ended
--- | ---
Jun. 01, 2019
Debt Disclosure [Abstract] |
Long-term Debt | Long-Term Debt Long-term debt consisted of the following obligations:
(In millions) | June 1, 2019 |  | June 2, 2018
Debt securities, 6.0%, due March 1, 2021 | $ | 50.0 |  |  | $ | 50.0 |
Syndicated Revolving Line of Credit, due September 2021 | 225.0 |  |  | 225.0 |
Construction-Type Lease | 6.9 |  |  | 7.0 |
Supplier financing program | 3.1 |  |  | 3.8 |
Total debt | $ | 285.0 |  |  | $ | 285.8 |
Less: Current debt | (3.1 | ) |  | (10.8 | )
Long-term debt | $ | 281.9 |  |  | $ | 275.0 |
The Company's syndicated revolving line of credit provides the Company with up to $400 million in revolving variable interest borrowing capacity and includes an "accordion feature" allowing the Company to increase, at its option and subject to the approval of the participating banks, the aggregate borrowing capacity of the facility by $200 million. The facility expires in September 2021 and outstanding borrowings bear interest at rates based on the prime rate, federal funds rate, LIBOR or negotiated rates as outlined in the agreement. Interest is payable periodically throughout the period if borrowings are outstanding. On January 3, 2018, the Company borrowed $225.0 million on its existing revolving line of credit. Of these proceeds, $150.0 million was used to repay its Series B senior notes upon maturity, while the rest of the proceeds was designated for general business purposes. As of June 1, 2019, the total debt outstanding related to borrowings under the syndicated revolving line of credit was $225.0 million. Available borrowings against this facility were $165.0 million due to $10.0 million outstanding letters of credit. As of June 2, 2018, available borrowings against this facility were $166.8 million due to $8.2 million related to outstanding letters of credit. The unsecured senior revolving credit facility restrict, without prior consent, our borrowings, capital leases and the sale of certain assets. In addition, we have agreed to maintain certain financial performance ratios, which include a maximum leverage ratio covenant, which is measured by the ratio of debt to trailing four quarter adjusted EBITDA (as defined in the credit agreement) and is required to be less than 3.5:1, except that we may elect, under certain conditions, to increase the maximum Leverage Ratio to 4:1 for four consecutive fiscal quarter end dates. The covenants also require a minimum interest coverage ratio, which is measured by the ratio of trailing four quarter EBITDA to trailing four quarter interest expense (as defined in the credit agreement) and is required to be greater than 4:1. Adjusted EBITDA is generally defined in the credit agreement as EBITDA adjusted by certain items which include non-cash share-based compensation, non-recurring restructuring costs and extraordinary items. At June 1, 2019 and June 2, 2018, the Company was in compliance with all of these restrictions and performance ratios. Supplier Financing Program The Company has an agreement with a third party financial institution to provide a platform that allows certain participating suppliers the ability to finance payment obligations from the Company. Under this program, participating suppliers may finance payment obligations of the Company, prior to their scheduled due dates, at a discounted price to the third party financial institution. The Company has lengthened the payment terms for certain suppliers that have chosen to participate in the program. As a result, certain amounts due to suppliers have payment terms that are longer than standard industry practice and as such, these amounts have been excluded from the caption “Accounts payable” in the Consolidated Balance Sheets as the amounts have been accounted for by the Company as a current debt obligation. Accordingly, $3.1 million and $3.8 million have been recorded within the caption “Other accrued liabilities” for the periods ended June 1, 2019 and June 2, 2018, respectively. Construction-Type Lease During fiscal 2015, the Company entered into a lease agreement for the occupancy of a new studio facility in Palo Alto, California which runs through fiscal 2026. In fiscal 2017, the Company became the deemed owner of the leased building for accounting purposes as a result of the Company's involvement during the construction phase of the project. The lease is therefore accounted for as a financing transaction and the building and related financing liability were initially recorded at fair value in the Consolidated Balance Sheets within both Construction in progress and Other accrued liabilities. The fair value of the building and financing liability was determined through a blend of an income approach, comparable property sales approach and a replacement cost approach. During the first quarter of fiscal 2019, the construction was substantially completed, and the property was placed in service. As a result, the Company began depreciating the assets over their estimated useful lives. The Company also reclassified the related financing liability to Long-term debt. Additionally, the Company began allocating its monthly lease payments between land rent, which is recorded as an operating lease expense, interest expense and the reduction of the related lease obligation. The imputed interest rate on the financing liability is 2.9%, the Company's incremental borrowing rate. The carrying value of the building was $6.7 million and the related financing liability was $6.9 million at June 1, 2019. The carrying value of the building and the related financing liability were both $7.0 million at June 2, 2018. Annual maturities of debt for the five fiscal years subsequent to June 1, 2019 are as shown in the table below.
(In millions) |
2020 | $ | 3.1 |
2021 | $ | 50.0 |
2022 | $ | 225.0 |
2023 | $ | — |
2024 | $ | — |
Thereafter | $ | 6.9 |

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + 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
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration