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Debt | 12 Months Ended
--- | ---
Dec. 28, 2024
Debt Disclosure [Abstract] |
Debt | 15. Debt
(in millions) | December 28, 2024 |  | December 30, 2023
Japanese loans - current portion | $ | 22.3 |  |  | $ | 23.0 |
Term loan - current portion | 15.0 |  |  | 11.3 |
Short-term debt | 37.3 |  |  | 34.3 |
Revolver - long-term | 456.0 |  |  | 591.5 |
Term loan - long-term | 258.3 |  |  | 271.4 |
Japanese loans - long-term | 13.6 |  |  | 8.8 |
Long-term debt | 727.9 |  |  | 871.7 |
Total debt | $ | 765.2 |  |  | $ | 906.0 |
Credit Facility On April 11, 2022, the Company entered into a credit agreement (Credit Facility) with financial institutions party thereto as initial lenders (collectively, the Initial Lenders), Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A., Bank of the West and BofA Securities, Inc., as co-syndication agents. The Credit Facility provides for an unsecured term loan of $300.0 million (Term Loan) and $500.0 million of on-going unsecured revolving commitments (Revolver), with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity by an additional $400.0 million (plus additional unlimited amounts if certain incurrence tests are met) in the future with the Initial Lenders and additional lenders, as required. Debt issuance costs of $8.4 million were recorded as a reduction to the carrying amount of the Credit Facility and are being amortized to interest expense using the effective interest method. The Credit Facility also provides for a sublimit of up to $50.0 million for the issuance of letters of credit. Borrowings under the Credit Facility will be deemed, at the Company’s election, either: (a) an Alternate Base Rate (ABR) Loan, which bears interest at the ABR, plus a spread of 0.000% to 0.750% based upon a Company leverage ratio, or (b) a Term SOFR Loan, which bears interest at the Adjusted Term SOFR Rate (as defined below), plus a spread of 1.000% to 1.750% based upon a Company net leverage ratio. Pursuant to the terms of the Credit Facility, the ABR is equal to the greatest of (i) the prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50%, and (iii) the one-month Adjusted Term SOFR plus 1.0%. The Adjusted Term SOFR Rate is equal to the Term SOFR Rate (as defined in the Credit Facility) for the applicable interest period plus a spread adjustment of 0.10%, 0.15% and 0.25% for the interest periods ending one, three and six months, respectively. At December 28, 2024, the effective interest rate on the Credit Facility was 5.9%. The Company is also obligated under the Credit Facility to pay an unused fee ranging from 0.150% to 0.275% per annum, based upon a Company leverage ratio, with respect to any non-utilized portion of the Credit Facility. The Company is subject to certain covenants, including financial covenants related to a net leverage ratio and an interest charge coverage ratio, and other customary negative covenants. The Credit Facility also includes customary events of default which, upon the occurrence of any such event of default, provide the Initial Lenders (and any additional lenders) with the right to take either or both of the following actions: (a) immediately terminate the commitments, and (b) declare the loans then outstanding immediately due and payable in full. All unpaid principal under the Credit Facility will become due and payable on April 12, 2027. On May 16, 2022, the Company entered into the First Amendment to the Credit Agreement (First Amendment) with the Initial Lenders and Citibank, N.A., as the administrative agent, which amended the Credit Facility. The First Amendment provides for an additional $205 million of unsecured revolving commitments, increasing the aggregate amount of the Revolver from $500 million to $705 million. Borrowing rates, maturity date, financial covenants, affirmative and negative covenants and other restricted terms remain unchanged from the Credit Facility. All unpaid principal under the First Amendment will become due and payable on April 12, 2027. As a result of certain terms of the Credit Facility associated with changes in the Board, the Company requested and received a consent of certain lenders under the Credit Facility. On September 17, 2024, the lenders consented to potential changes in the Board resulting from the election of new directors of the Company at the Company’s 2024 Annual Meeting of Stockholders held on September 19, 2024. As of December 28, 2024, we had approximately $245.5 million of available borrowing capacity, (net of approximately $47.0 million of outstanding available letters of credit) under our Credit Facility. The Company was in full compliance with all covenants contained in its debt agreements and Credit Facility at December 28, 2024. For the years ended December 28, 2024, December 30, 2023 and December 31, 2022, the Company incurred total interest expense of $41.2 million, $47.0 million and $23.7 million, under the Credit Facility, respectively. Furthermore, in connection with the Sound United acquisition, the Company assumed three outstanding loans as follows: Japanese Revolving Loan In March 2020, D&M Holdings Inc., a subsidiary of the Company, entered into a secured revolving loan (Japanese Revolving Loan) with Mizuho bank, which allows borrowing up to ¥800 million (approximately $5.1 million). The Japanese Revolving Loan is an evergreen agreement that terminates upon request by either the financial institution or the borrower and is collateralized with land and buildings in Shirakawa-Shi owned by the borrower. The carrying value collateralized assets was approximately $7.6 million as of December 28, 2024. Interest accrues at a rate equal to the Mizuho Tokyo Interbank Offered Rate (TIBOR) plus a fixed spread of 0.50% per annum. In connection with the execution of the Japanese Revolving Loan, the Company incurred debt issuance costs of ¥7.2 million (approximately $0.1 million). On February 28, 2023, D&M Holdings Inc., and Mizuho Bank executed an amendment to the Japanese Revolving Loan, to increase the maximum aggregate revolving loan to ¥3.00 billion (approximately $19.0 million). Under the amendment, the facility accrues interest at a rate equal to the TIBOR plus a fixed spread of 0.75% per annu m. The Company also paid an upfront fee of ¥22.0 million (approximately $0.1 million) on the incremental amount of the revolving Credit Facility. As of December 28, 2024, the effective interest rate on the Japanese Revolving Loan was 1.1%. The Japanese Revolving Loan agreement contains customary affirmative and negative covenants, such as financial reporting requirements and customary covenants that restrict the borrower’s ability to, among other things, provide collateral for obligations borne by the borrower, and determine the eligibility to declare, and amount of, potential dividends to be paid during a given fiscal year. As of December 28, 2024, the Company was in compliance with all covenants under the Japanese Revolving Loan agreements. Japanese Government Loans In May and June 2020, D&M Holdings Inc., received ¥1.48 billion (approximately $9.4 million) in non-collateralized Japanese Government Loan facilities (Japanese Government Loans) as part of its local Japanese stimulus program. Interest accrues at a weighted-average rate of 1.33% and is repayable in installments with various maturities through June 2035. The non-current portion of the Japanese Government Loans is presented under long-term debt and the current portion is presented under short-term debt on the accompanying consolidated balance sheets. The Company incurred no debt issuance costs in connection with the Japanese Government Loans. Japanese Equipment Loans In April and May 2021, D&M Holdings Inc., entered into an uncollateralized Japanese Equipment Loans of ¥150 million (approximately $1.0 million), payable in installments through March 2031 with an interest rate of 0.58%, and ¥80 million (approximately $0.5 million) payable in installments through April 2028 with an interest rate of 1.2%. The non-current portion of the Japanese Equipment Loans is presented under long-term debt and the current portion is presented under short-term debt on the accompanying consolidated balance sheets. The Company incurred no debt issuance costs in connection with these Japanese Equipment Loans. In September 2024, D&M Holdings Inc., entered into an uncollateralized Japanese Equipment Loan of ¥230.0 million (approximately $1.5 million) with Mizuho Bank, payable in installments through September 2031 accruing interest at a rate of 1.095%. The non-current portion of the Japanese Equipment Loan is presented under long-term debt and the current portion is presented under short-term debt on the accompanying consolidated balance sheets. There were no debt issuance costs in connection with this Japanese Equipment Loan with Mizuho Bank. The Company is not subject to any related financial covenants or operational restrictions. Japanese Syndicate Loan In September 2024, D&M Holdings, Inc., entered into a syndicate loan (Japanese Syndicate Loan) of ¥1.25 billion (approximately $7.9 million) with The Shoko Chukin Bank as the Agent, payable in installments through August 2029, with interest at a rate equal to 3-month TIBOR plus a fixed spread of 0.70% per annum. In connection with the execution of the Japanese Syndicate Loan, the Company incurred an arrangement fee of ¥25.0 million (approximately $0.2 million). These costs were capitalized and are being amortized over the term of the loan. The Japanese Syndicate Loan agreement contains customary affirmative and negative covenants, such as financial reporting requirements and customary covenants that restrict the borrower’s ability to, among other things, provide collateral for obligations borne by the borrower, and financial covenants. As of December 28, 2024, the Company was in compliance with all covenants under the Japanese Syndicate Loan agreement. As of December 28, 2024, the aggregate maturities of principal on all debt for each of the next five years and thereafter are as follows:
Fiscal year |  | Amount (in millions)
2025 |  | $ | 37.3 |
2026 |  | 18.3
2027 |  | 702.6
2028 |  | 2.9
2029 |  | 1.9 |
Thereafter |  | 2.2
Total |  | $ | 765.2 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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