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Financing Arrangements | 3 Months Ended
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Mar. 31, 2022
Debt Disclosure [Abstract] |
Financing Arrangements | Financing Arrangements The Company’s debt obligations consist of the following (in millions):
|  | Maturity Date |  | Interest Rate |  | March 31, 2022 |  | December 31, 2021
Short-Term Credit Facilities |  |  |  |  |  |  |  |
U.S. Asset-Based Revolving Credit Facility |  | May 17, 2024 |  | 2.33% |  | $ | 178.2 |  |  | $ | 9.1 |
2022 Japan ABL Facility (1) |  | January 21, 2025 |  | 0.89% |  | 41.1 |  |  | — |
Total Principal Amount |  |  |  |  |  | $ | 219.3 |  |  | $ | 9.1 |
Unamortized Debt Issuance Costs |  |  |  |  |  | $ | 0.9 |  |  | $ | 0.9 |
Balance Sheet Location |  |  |  |  |  |  |  |
Prepaid expenses |  | $ | 0.5 |  |  | $ | 0.9 |
Other long-term assets |  | $ | 0.4 |  |  | $ | — |
Asset-based credit facilities |  | $ | 219.3 |  |  | $ | 9.1 |
|  | Maturity Date |  | Interest Rate |  | March 31, 2022 |  | December 31, 2021
Long-Term Debt and Credit Facilities |  |  |  |  |  |  |  |
Japan Term Loan |  | July 31, 2025 |  | 0.85% |  | $ | — |  |  | $ | 13.0 |
Term Loan B (2) |  | January 4, 2026 |  | 4.96% |  | 435.6 |  |  | 436.8 |
Topgolf Term Loan |  | February 8, 2026 |  | 7.00% |  | 339.5 |  |  | 340.4 |
Convertible Notes |  | May 1, 2026 |  | 2.75% |  | 258.8 |  |  | 258.8 |
Equipment Notes |  | December 27, 2022 - March 19, 2027 |  | 2.36% - 3.79% |  | 28.6 |  |  | 31.1 |
Mortgage Loans |  | July 1, 2033 - July 29, 2036 |  | 9.75% - 11.31% |  | 46.3 |  |  | 46.4 |
Financed Tenant Improvements |  | February 1, 2035 |  | 8.00% |  | 3.6 |  |  | 3.7 |
Total Principal Amount |  |  |  |  |  | $ | 1,112.4 |  |  | $ | 1,130.2 |
Less: Unamortized Debt Issuance Costs |  |  |  |  |  | 26.2 |  |  | 85.8 |
Total Debt, net of Unamortized Debt Issuance Costs |  |  |  |  |  | $ | 1,086.2 |  |  | $ | 1,044.4 |
Balance Sheet Location |  |  |  |  |  |  |  |
Other current liabilities |  | $ | 15.7 |  |  | $ | 19.1 |
Long-term debt |  | 1,070.5 |  |  | 1,025.3 |
|  |  |  |  |  | $ | 1,086.2 |  |  | $ | 1,044.4 |
(1) Subject to an effective interest rate equal to the Tokyo Interbank Offered Rate plus 0.80%.
(2) Subject to an interest rate per annum equal to either, at the Company’s option, the London Interbank Offered Rate or the base rate, plus 4.50% or 3.50%.
Revolving Credit Facilities and Available Liquidity In addition to cash on hand, as well as cash generated from operations, the Company relies on its U.S. Asset-Based Revolving Credit Facility, 2022 Japan ABL Credit Facility, and the Topgolf Revolving Credit Facility to manage seasonal fluctuations in liquidity when the Company’s operating cash flows are not sufficient to fund the Company’s requirements. The principal terms of these credit facilities are described further below and in Note 7 of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K which was filed with SEC on March 1, 2022. As of March 31, 2022, the Company’s available liquidity, which is comprised of cash on hand and amounts available under these revolving credit facilities, after letters of credit and outstanding borrowings, was $575.6 million. U.S. Asset-Based Revolving Credit Facility The Company has an Asset-Based Revolving Credit facility with Bank of America N.A. and other lenders, which provides a senior secured asset-based revolving credit facility of up to $400.0 million (the “ABL Facility”). Amounts outstanding under the ABL Facility are secured by certain assets, including cash (to the extent pledged by the Company), certain intellectual property, eligible real estate, and inventory and accounts receivable of certain of the Company’s subsidiaries in the United States, Germany, Canada and the United Kingdom. Additionally, the ABL Facility includes specific restrictions with which the Company must remain in compliance with in order to satisfy certain fixed charge coverage ratio requirements under the terms of the facility. The interest rate applicable to outstanding borrowings under the ABL Facility may fluctuate depending on the Company’s “availability ratio” which is expressed as a percentage of (i) the average daily availability under the ABL Facility to (ii) the sum of the Canadian, the German, the U.K. and the U.S. borrowing bases, as adjusted. Any unused portions of the ABL Facility are subject to a 0.25% monthly fee. For the period ended March 31, 2022, average outstanding borrowings under the ABL Facility were $55.5 million. As of March 31, 2022, the Company’s trailing 12-month average availability under the ABL Facility was $288.0 million, and the Company’s trailing 12-month average interest rate applicable to its outstanding borrowings under the ABL Facility was 2.9%. 2022 Japan ABL Facility The 2022 Japan ABL Credit Facility provides a line of credit to the Company of up to 6.0 billion Yen (or $49.3 million) subject to borrowing base availability under the facility, and is secured by certain assets, including eligible inventory and accounts receivable. As of March 31, 2022, outstanding borrowings under the 2022 Japan ABL Facility were 5.0 billion Yen (or $41.1 million) and the Company’s remaining borrowing base availability under the 2022 Japan ABL Credit Facility was 1.0 billion Yen (or $8.2 million). Long-Term Debt Japan Term Loan The Company has a five-year Term Loan (the “Japan Term Loan”) between its Japan subsidiary and Sumitomo Mitsui Banking Corporation for 2.0 billion Yen (or $16.4 million). During the three months ended March 31, 2022 the Company repaid the total outstanding principal balance of the Japan Term Loan in the amount of 1.5 billion Yen (or $12.3 million). Interest expense related to the Japan Term Loan during the three months ended March 31, 2022 was immaterial. Interest expense related to the Japan Term Loan for the three months ended March 31, 2021 was 3.9 million Yen (immaterial in USD). Term Loan B The Company has a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A and other lenders (the “Term Lenders”) which provides for a Term Loan B (the “Term Loan”) in an aggregate principal amount of $480.0 million, issued less $9.6 million in issuance discounts and other transaction fees. In March 2021, and in connection with the merger with Topgolf, the Company amended the Term Loan to, among other things, permit the consummation of the merger as well as designate Topgolf and its subsidiaries as unrestricted subsidiaries under the Term Loan and amend certain covenants and other provisions to allow the Company to make certain investments in, and enter into certain transactions with Topgolf. Additionally, the Credit Agreement contains certain default provisions, covenants and restrictions by which the Company must remain in compliance. Loans outstanding under the Term Loan are guaranteed by the Company’s domestic subsidiaries. The loans and guaranties are secured by substantially all the assets of the Company and guarantors. As of March 31, 2022, outstanding borrowings under the Term Loan were $435.6 million and the Company was in compliance with all covenants related to the Credit Agreement. Total interest expense recognized during the three months ended March 31, 2022 and 2021 related to the Term Loan was $6.0 million and $5.8 million, respectively. Topgolf Credit Facilities The Company has a $350.0 million term loan (the “Topgolf Term Loan”), and a $175.0 million revolving credit facility with JPMorgan Chase Bank, N.A (the “Topgolf Revolving Credit Facility”), with JPMorgan Chase Bank, N.A., as Administrative Agent, Swingline Lender and Issuing Bank, RBC Capital Markets, as Syndication Agent, and the other agents, arrangers and lenders party thereto (together, the “Topgolf Credit Facilities”). Borrowings under the Topgolf Credit Facilities accrue interest at a rate per annum equal to, at the Company’s option, either (i) an alternate base rate determined by reference to the highest of (a) the prime rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate plus 0.50%, (c) the adjusted one-month LIBOR rate plus 1.00%, and (d) 1.75%, or (ii) an adjusted LIBOR rate (for a period equal to the relevant interest period) (which shall not be less than 0.75%), in each case plus an applicable margin. Applicable margins may vary relative to each facility and are subject to specific terms and conditions as outlined under each individual agreement. Additionally, the terms of the Topgolf Credit Facilities require the Company to maintain certain leverage ratios on a quarterly basis in addition to the maintenance of certain customary representations, reporting covenants and reporting obligations. The Topgolf Credit Facilities are guaranteed by all direct and indirect domestic wholly owned restricted subsidiaries of Topgolf International, Inc. (for purposes of this description, the “Borrower”), other than certain excluded subsidiaries (such subsidiary guarantors, together with the Borrower, the “Loan Parties”). All obligations under the Topgolf Credit Facilities are, and any future guarantees of those obligations will be, secured by, among other things, and in each case subject to certain exceptions: (1) a first-lien pledge of all of the capital stock or other equity interests held by each Loan Party, and (2) a first-lien pledge of substantially all of the other tangible and intangible assets of each Loan Party. Certain of the Company’s Topgolf locations are required to be subject to leasehold mortgages for the benefit of the lenders under the Topgolf Credit Facilities. As of March 31, 2022, outstanding borrowings under the Topgolf Term Loan were $339.5 million and there were no outstanding borrowings under the Topgolf Revolving Credit Facility. Total interest expense recognized during the three months ended March 31, 2022 and 2021 related to the Topgolf Term Loan was $6.0 million and $1.9 million, respectively. Total interest expense recognized during the three months ended March 31, 2022 and 2021 related to the Topgolf Revolving Credit Facility was $0.4 million and $0.7 million, respectively. Convertible Notes In May 2020, the Company issued $258.8 million of 2.75% Convertible Notes. The Convertible Notes have a stated interest rate of 2.75% per annum on the principal amount and are payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020. The Convertible Notes mature on May 1, 2026, unless earlier redeemed or repurchased by the Company or converted. The Company may settle the Convertible Notes through cash settlement, physical settlement, or combination settlement at its election, and may redeem all or part of the Convertible Notes on or after May 6, 2023, subject to certain stipulations. The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 56.7698 per $1,000 principal amount of Convertible Notes, which is equal to an initial conversion price of $17.62 per share. Additionally, all or any portion of the Convertible Notes may be converted at the conversion rate and at the holders’ option on or after February 1, 2026 until the close of business on the second trading day immediately prior to the maturity date, and upon the occurrence of certain contingent conversion events. The Convertible Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. The Company used the net proceeds from the Convertible Notes offering for general corporate purposes. In connection with the issuance of the Convertible Notes and prior to the Company’s adoption of ASU 2020-06 on January 1, 2022, which is described further in the Note 2 herein, the Company separated certain amounts attributable to the Convertible Notes into liability and equity components in a manner which reflected the interest cost of a similar nonconvertible debt instrument. As a result of the adoption of ASU 2020-06, bifurcation of these amounts is no longer required, and as such, all associated amounts which were previously separated are now reported as a single liability measured at its amortized cost. During the three months ended March 31, 2022 and 2021, the Company recognized interest expense on the Convertible Notes of $1.8 million. Capped Call In connection with the pricing of the Convertible Notes, on April 29, 2020 the Company entered into privately negotiated capped call transactions with certain counterparties (“Capped Calls”). The Capped Calls cover the aggregate number of shares of the Company’s common stock that initially underlie the Convertible Notes, and are generally expected to reduce potential dilution and/or offset any cash payments the Company is required to make related to any conversion of the Convertible Notes. The Capped Calls each have an exercise price of $17.62 per share, subject to certain adjustments, which correspond to the initial conversion prices of the Convertible Notes, and a cap price of $27.10 per share. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be anti-dilutive under the if-converted method. The initial cost of the Capped Calls was recorded as a reduction to additional paid-in-capital on the Company’s Consolidated Balance Sheet. Equipment Notes The Company has long-term financing agreements (the “Equipment Notes”) with various lenders which it uses in order to invest in certain of its facilities and IT equipment. The loans are secured by the relative underlying equipment. During each of the three months ended March 31, 2022 and 2021, the Company recognized $0.2 million in interest expense related to the Equipment Notes. Mortgage Loans The Company has three mortgage loans related to the construction of three of its Topgolf venues. The mortgage loans are secured by the assets of each respective venue and require either monthly (i) principal and interest payments or (ii) interest-only payments until their maturity dates. For loans requiring monthly interest-only payments, the entire unpaid principal balance and any unpaid accrued interest is due on the maturity date. Total interest expense on the mortgage loans recognized during the three months ended March 31, 2022 and 2021 was $1.2 million and $0.4 million, respectively. Aggregate Amount of Maturities The following table presents the Company’s combined aggregate amount of maturities for the Company’s long-term debt over the next five years and thereafter as of March 31, 2022. Amounts payable under the ABL Facility are excluded from this table as they are short-term in nature. Amounts payable under the Term Loan included below represent the minimum principal repayment obligations as of March 31, 2022.
|  | (in millions)
Remainder of 2022 |  | $ | 14.4 |
2023 |  | 16.5 |
2024 |  | 15.3 |
2025 |  | 13.0 |
2026 |  | 1,006.8 |
Thereafter |  | 46.4 |
|  | $ | 1,112.4 |
Less: Unamortized Debt Issuance Costs |  | 26.2 |
Total |  | $ | 1,086.2 |
As of March 31, 2022, the Company was in compliance with all fixed charge coverage ratios and all other financial covenant and reporting requirements under the terms of its credit facilities mentioned above, as applicable.

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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 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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