Debt |
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Jul. 04, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Debt Debt is as follows:
The aggregate carrying value of the Corporation’s variable-rate, long-term debt obligations under the revolving credit and term loan facilities at July 4, 2026 was $946 million, which approximated fair value. The fair value of the public notes was estimated based on a discounted cash flow method (Level 2) to be $443 million at July 4, 2026. Credit Facilities for Merger Agreement Transactions On September 5, 2025, in connection with the acquisition of Steelcase, the Corporation entered into a Credit Agreement, by and among the Corporation, certain domestic subsidiaries of the Corporation, the lenders from time-to-time party thereto, Wells Fargo Bank, National Association, as administrative agent, and other parties named therein (as amended, restated, supplemented or otherwise modified by time to time, including by Amendment No. 1 to Credit Agreement, dated as of November 5, 2025, and Amendment No. 2 to Credit Agreement, dated as of December 10, 2025, the “Credit Agreement”). The Credit Agreement establishes (i) a senior secured revolving credit facility (the “Revolving Facility,” and the loans thereunder, the “Revolving Loans”), (ii) a senior secured “term loan A” credit facility (the “TLA Facility,” and the loans thereunder, the “Term A Loans”) and (iii) a senior secured “term loan B” credit facility (the “TLB Facility,” and the loans thereunder, the “Term B Loans”). Upon completion of the Steelcase acquisition on December 10, 2025 (the "Closing Date"), the Corporation executed borrowings under these Credit Agreement facilities, which were used primarily to repay and retire outstanding credit facilities and to fund the completion of the Steelcase acquisition. On June 10, 2026, the Corporation entered into Amendment No. 3 to Credit Agreement (“Amendment No. 3”). Amendment No. 3 provides for a new $499 million tranche of term loans maturing in 2032 (the “Replacement Term B Loans”), the proceeds of which were used to refinance all outstanding Term B Loans. Substantially all terms and conditions of the Credit Agreement were unchanged by Amendment No. 3 other than the Applicable Percentage for the 2026 Refinancing Term B Loans. Revolving Credit Facility As of July 4, 2026, the Corporation had $103.0 million of borrowings outstanding under the $425 million Revolving Facility. The Revolving Facility has a scheduled maturity date of the earlier of (a) 5 years after the closing date of the Steelcase acquisition or December 10, 2030 or (b) a customary springing maturity date. The entire amount drawn under the Revolving Facility is considered long-term as the Corporation assumes no obligation to repay any of the amounts borrowed in the next twelve months. The Corporation can access the full $425 million of borrowing capacity available under the Revolving Facility, which includes the $103.0 million of borrowings outstanding as of July 4, 2026, and maintain compliance with the financial covenants under the Credit Agreement, described below. The Corporation deferred the related debt issuance costs for the Credit Agreement. The proportionate share of deferred debt issuance costs related to the Revolving Facility are classified as assets, and the Corporation is amortizing such costs over the term of Revolving Facility. The current portion of the Revolving Facility deferred debt issuance costs of $0.5 million is the amount to be amortized over the next twelve months and is reflected in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheets. The long-term portion of the Revolving Facility deferred debt issuance costs of $1.8 million is reflected in "Other Assets" in the Condensed Consolidated Balance Sheets. In addition to cash flows from operations, the Revolving Facility under the Credit Agreement is the primary source of daily operating capital for the Corporation and provides additional financial capacity for capital expenditures, repurchases of common stock, and strategic initiatives, such as acquisitions. TLA Facility As of July 4, 2026, the Corporation had $345.6 million of borrowings outstanding under the TLA Facility. The TLA Facility has a scheduled maturity date of the earlier of (a) 5 years after the closing date of the Steelcase acquisition or December 10, 2030 (the “TLA Maturity Date”) or (b) a customary springing maturity date. The TLA Facility is subject to principal amortization which began on the last business day of March 2026 with quarterly principal payments due thereafter through the TLA Maturity Date. The quarterly amortization payments are equal to the following amounts of the original principal amount of the Term A Loans: (i) 0.625% for the first four full fiscal quarters after the Closing Date; (ii) 1.25% for the fifth through twelfth full fiscal quarters after the Closing Date (iii) 1.875% for the thirteenth through sixteenth full fiscal quarters after the Closing Date; and (iv) 2.5% for the seventeenth full fiscal quarter after the Closing Date through the TLA Maturity Date. The Corporation deferred the related debt issuance costs for the Credit Agreement. The proportionate share of deferred debt issuance costs related to the TLA Facility, which are classified as a reduction of long-term debt, are being amortized over the term of the TLA Facility. The TLA Facility deferred debt issuance costs do not reduce the amount owed by the Corporation under the TLA Loans. As of July 4, 2026, the TLA Facility deferred debt issuance costs balance of $1.8 million are reflected as a reduction to "Long-Term Debt" in the Condensed Consolidated Balance Sheets. TLB Facility As of July 4, 2026, the Corporation had $497.5 million principal amount of borrowings outstanding under the TLB Facility. Under Amendment No. 3 to the Credit Agreement, on June 10, 2026, all previously outstanding Term B Loans were refinanced and replaced with the 2026 Replacement Term B Loans, constituting a new $499 million tranche of term loans. Remaining terms of the TLB Facility were substantially unchanged. The TLB Facility continues to have a scheduled maturity date of (a) 7 years after the closing date of the Steelcase acquisition or December 10, 2032 (the “TLB Maturity Date”) or (b) a customary springing maturity date. The TLB Facility is subject to principal amortization which began on the last business day of March 2026 with quarterly principal payments due thereafter through the TLB Maturity Date. The quarterly amortization payments are in equal amounts of 0.25% of the original principal amount of the 2026 Replacement Term B Loans for each full fiscal quarter following the execution of Amendment No. 3 through the TLB Maturity Date. The Corporation deferred the related debt issuance costs for the Credit Agreement. The proportionate share of deferred debt issuance costs related to the TLB Facility, which are classified as a reduction of long-term debt, are being amortized over the term of the TLB Facility. The refinancing of the TLB Facility in June 2026 was treated as a partial extinguishment, as a result, a portion of the previously deferred debt issuance costs were recognized as Interest Expense in the Condensed Consolidated Statements of Comprehensive Income during the current period. The TLB Facility deferred debt issuance costs do not reduce the amount owed by the Corporation under the 2026 Replacement Term B Loans. As of July 4, 2026, the TLB Facility deferred debt issuance costs balance of $8.0 million is reflected as a reduction to "Long-Term Debt" in the Condensed Consolidated Balance Sheets. Credit Agreement and Debt Covenants The Credit Agreement contains customary representations and warranties by the Corporation, which include customary materiality, material adverse effect and knowledge qualifiers. The Credit Agreement also contains customary affirmative and negative covenants including, among other requirements, limitations relating to indebtedness, liens, changes to nature of business, mergers, sale of assets and indebtedness of subsidiaries, advances, investments and loans, transactions with affiliates, changes to fiscal year, and organizational documents, restricted actions, and negative pledges. The Credit Agreement contains financial covenants in respect of the Revolving Facility and TLA Facility that require the maintenance of a maximum net leverage ratio and a minimum interest coverage ratio for periods after the Closing Date. The Corporation is required to maintain a maximum Net Leverage Ratio (as defined in the Credit Agreement) as of the end of each fiscal quarter of less than or equal to (i) 4.25 to 1.00 as of the end of each of the first, second, third and fourth full fiscal quarters ending after the Closing Date, (ii) 4.00 to 1.00 as of the end of each of the fifth and sixth full fiscal quarters ending after the Closing Date and (iii) 3.50 to 1.00 as of the end of the seventh full fiscal quarter ending after the Closing Date and as of the end of each fiscal quarter thereafter. In addition, in respect of the Revolving Facility and the TLA Facility the Corporation is required to maintain a minimum Interest Coverage Ratio (as defined in the Credit Agreement) as of the end of each fiscal quarter of greater than or equal to 3.50 to 1.00. The Corporation was in compliance with these financial covenants as of July 4, 2026. Public Notes As of January 3, 2026 the Corporation had outstanding a total of $450.0 million principal amount of public notes (the "Public Notes), consisting of $351.0 million of principal amount of public notes issued by the Corporation in connection with the Steelcase acquisition in exchange for Steelcase public notes in the same principal amount, and $99.0 million principal amount of public notes issued by Steelcase that were not exchanged. At the acquisition date, the Corporation adjusted the public notes acquired to fair value by recognizing a market discount. Additionally, the Corporation deferred the related debt issuance costs for the Credit Agreement. The fair value adjustment and proportionate share of the deferred debt issuance costs related to the Public Notes, which are classified as a reduction of long-term debt, are being amortized over the term of the Public Notes. The Public Notes discount and deferred debt issuance costs do not reduce the amount owed by the Corporation under the Public Notes. As of July 4, 2026, the Public Notes discount balance and deferred debt issuance costs of $11.1 million are reflected as a reduction to "Long-Term Debt" in the Condensed Consolidated Balance Sheets.
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