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Form 10-Q
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ý
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Callaway Golf Company
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(Exact name of registrant as specified in its charter)
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Delaware
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95-3797580
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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•
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certain risks and uncertainties, including changes in capital market or economic conditions;
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•
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delays or difficulties in the integration of the TravisMathew and/or OGIO acquisitions;
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•
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consumer acceptance of and demand for the Company’s products;
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•
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future retailer purchasing activity, which can be significantly affected by adverse industry conditions and overall retail inventory levels;
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•
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any unfavorable changes in U.S. trade, tax or other policies, including restrictions on imports or an increase in import tariffs;
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•
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the level of promotional activity in the marketplace;
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•
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future consumer discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions;
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•
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significant fluctuations in foreign currency exchange rates;
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•
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the ability of the Company to manage international business risks;
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•
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future changes in foreign currency exchange rates and the degree of effectiveness of the Company’s hedging programs;
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•
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adverse changes in the credit markets or continued compliance with the terms of the Company’s credit facilities;
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•
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delays, difficulties or increased costs in the supply of components needed to manufacture the Company’s products or in manufacturing the Company’s products, including the Company's dependence on a limited number of suppliers for some of its products;
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•
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adverse weather conditions and seasonality;
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•
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any rule changes or other actions taken by the USGA or other golf association that could have an adverse impact upon demand or supply of the Company’s products;
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•
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the ability of the Company to protect its intellectual property rights;
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•
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a decrease in participation levels in golf;
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•
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the effect of terrorist activity, armed conflict, natural disasters or pandemic diseases on the economy generally, on the level of demand for the Company’s products or on the Company’s ability to manage its supply and delivery logistics in such an environment; and
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•
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the general risks and uncertainties applicable to the Company and its business.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2017 |
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December 31,
2016 |
||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$
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82,021
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$
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125,975
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Accounts receivable, net
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152,420
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127,863
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Inventories
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186,585
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189,400
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Income taxes receivable
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5,109
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|
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637
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Other current assets
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20,466
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16,550
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Total current assets
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446,601
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460,425
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Property, plant and equipment, net
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65,906
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54,475
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Intangible assets, net (Note 6)
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224,351
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88,731
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Goodwill (Note 6)
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56,091
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25,593
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Deferred taxes, net
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83,149
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114,707
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Investment in golf-related venture (Note 8)
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50,495
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48,997
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Other assets
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9,390
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8,354
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Total assets
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$
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935,983
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$
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801,282
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||
Current liabilities:
|
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Accounts payable and accrued expenses
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$
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140,572
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$
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132,521
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Accrued employee compensation and benefits
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34,830
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32,568
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Asset-based credit facilities
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70,618
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11,966
|
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Accrued warranty expense
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7,550
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5,395
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Income tax liability
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3,552
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4,404
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Total current liabilities
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257,122
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186,854
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Long-term liabilities:
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Income tax payable
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4,152
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3,608
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Deferred taxes, net
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1,793
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1,596
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Long-term incentive compensation and other
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764
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624
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Commitments and contingencies (Note 11)
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Shareholders’ equity:
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Preferred stock, $0.01 par value, 3,000,000 shares authorized, none issued and outstanding at September 30, 2017 and December 31, 2016
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—
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—
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Common stock, $0.01 par value, 240,000,000 shares authorized, 95,042,557 and 94,214,295 shares issued at September 30, 2017 and December 31, 2016, respectively
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950
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942
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Additional paid-in capital
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332,133
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330,206
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Retained earnings
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344,413
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287,129
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Accumulated other comprehensive loss
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(9,041
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)
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(18,466
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)
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Less: Common stock held in treasury, at cost, 506,188 and 97,837 shares at September 30, 2017 and December 31, 2016, respectively
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(5,450
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)
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(905
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)
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Total Callaway Golf Company shareholders’ equity
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663,005
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598,906
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Non-controlling interest in consolidated entity (Note 7)
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9,147
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9,694
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Total shareholders’ equity
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672,152
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608,600
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Total liabilities and shareholders’ equity
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$
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935,983
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$
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801,282
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2017
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2016
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2017
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2016
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||||||||
Net sales
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$
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243,604
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$
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187,850
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$
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857,079
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$
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707,497
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Cost of sales
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138,702
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108,975
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456,297
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385,597
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Gross profit
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104,902
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78,875
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400,782
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321,900
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Operating expenses:
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Selling expense
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65,754
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55,869
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205,618
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183,543
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General and administrative expense
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23,957
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19,851
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68,976
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52,484
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Research and development expense
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9,154
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8,420
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26,899
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24,942
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Total operating expenses
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98,865
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84,140
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301,493
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260,969
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Income (loss) from operations
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6,037
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(5,265
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)
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99,289
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60,931
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Interest income
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63
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56
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|
|
399
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|
550
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Interest expense
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(705
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)
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(487
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)
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(2,306
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)
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(1,949
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)
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||||
Gain on sale of investment in golf-related venture (Note 8)
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—
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—
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—
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17,662
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|
||||
Other income (expense), net
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(820
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)
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|
1,251
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(6,197
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)
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(5,806
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)
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||||
Income (loss) before income taxes
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4,575
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(4,445
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)
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91,185
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|
71,388
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|
||||
Income tax provision
|
1,486
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|
1,294
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|
|
30,742
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|
|
4,632
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|
||||
Net income (loss)
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3,089
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(5,739
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)
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60,443
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66,756
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|
||||
Less: Net income attributable to non-controlling interest
|
29
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|
|
127
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|
251
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127
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||||
Net income (loss) attributable to Callaway Golf Company
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$
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3,060
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$
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(5,866
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)
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$
|
60,192
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$
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66,629
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||||||||
Earnings (loss) per common share:
|
|
|
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||||||||
Basic
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$
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0.03
|
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|
$
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(0.06
|
)
|
|
$
|
0.64
|
|
|
$
|
0.71
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Diluted
|
$
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0.03
|
|
|
$
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(0.06
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)
|
|
$
|
0.62
|
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$
|
0.70
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Weighted-average common shares outstanding:
|
|
|
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|
|
|
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||||||||
Basic
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94,450
|
|
|
94,081
|
|
|
94,246
|
|
|
94,021
|
|
||||
Diluted
|
96,879
|
|
|
94,081
|
|
|
96,343
|
|
|
95,687
|
|
||||
|
|
|
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|
|
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||||||||
Dividends declared per common share
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
$
|
3,089
|
|
|
$
|
(5,739
|
)
|
|
$
|
60,443
|
|
|
$
|
66,756
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Change in derivative instruments
|
626
|
|
|
515
|
|
|
(2,992
|
)
|
|
(1,708
|
)
|
||||
Foreign currency translation adjustments
|
3,431
|
|
|
577
|
|
|
12,002
|
|
|
4,195
|
|
||||
Comprehensive income (loss), before income tax on other comprehensive income items
|
7,146
|
|
|
(4,647
|
)
|
|
69,453
|
|
|
69,243
|
|
||||
Income tax benefit (expense) on derivative instruments
|
(277
|
)
|
|
(31
|
)
|
|
521
|
|
|
31
|
|
||||
Comprehensive income (loss)
|
6,869
|
|
|
(4,678
|
)
|
|
69,974
|
|
|
69,274
|
|
||||
Less: Comprehensive income (loss) attributable to non-controlling interest
|
(14
|
)
|
|
(76
|
)
|
|
176
|
|
|
(76
|
)
|
||||
Comprehensive income (loss) attributable to Callaway Golf Company
|
$
|
6,883
|
|
|
$
|
(4,602
|
)
|
|
$
|
69,798
|
|
|
$
|
69,350
|
|
|
Nine Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
60,443
|
|
|
$
|
66,756
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
12,806
|
|
|
12,541
|
|
||
Inventory step-up amortization from acquisitions
|
1,701
|
|
|
—
|
|
||
Deferred taxes
|
32,586
|
|
|
(370
|
)
|
||
Share-based compensation
|
9,583
|
|
|
6,465
|
|
||
Loss (gain) on disposal of long-lived assets and deferred gain amortization
|
1,035
|
|
|
(117
|
)
|
||
Gain on sale of investment in golf-related venture
|
—
|
|
|
(17,662
|
)
|
||
Unrealized losses on foreign currency forward contracts
|
1,373
|
|
|
2,880
|
|
||
Change in assets and liabilities, net of effect from acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
(6,540
|
)
|
|
(38,740
|
)
|
||
Inventories
|
24,038
|
|
|
64,842
|
|
||
Other assets
|
(4,835
|
)
|
|
3,859
|
|
||
Accounts payable and accrued expenses
|
(20,563
|
)
|
|
(10,490
|
)
|
||
Accrued employee compensation and benefits
|
1,762
|
|
|
(3,342
|
)
|
||
Accrued warranty expense
|
2,155
|
|
|
(191
|
)
|
||
Income taxes receivable/payable, net
|
(4,835
|
)
|
|
(639
|
)
|
||
Other liabilities
|
76
|
|
|
(171
|
)
|
||
Net cash provided by operating activities
|
110,785
|
|
|
85,621
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(181,824
|
)
|
|
—
|
|
||
Capital expenditures
|
(16,846
|
)
|
|
(12,163
|
)
|
||
Proceeds from sales of property and equipment
|
560
|
|
|
20
|
|
||
Proceeds from sale of investment in golf-related venture
|
—
|
|
|
23,429
|
|
||
Collection of note receivable
|
—
|
|
|
3,104
|
|
||
Investments in golf-related venture
|
(1,499
|
)
|
|
(1,560
|
)
|
||
Net cash (used in) provided by investing activities
|
(199,609
|
)
|
|
12,830
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from (repayments of) asset-based credit facilities, net
|
58,652
|
|
|
(14,969
|
)
|
||
Acquisition of treasury stock
|
(16,479
|
)
|
|
(5,133
|
)
|
||
Dividends paid
|
(2,827
|
)
|
|
(2,822
|
)
|
||
Distribution to non-controlling interest
|
(974
|
)
|
|
—
|
|
||
Exercise of stock options
|
4,205
|
|
|
2,625
|
|
||
Net cash provided by (used in) financing activities
|
42,577
|
|
|
(20,299
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2,293
|
|
|
(3,325
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(43,954
|
)
|
|
74,827
|
|
||
Cash and cash equivalents at beginning of period
|
125,975
|
|
|
49,801
|
|
||
Cash and cash equivalents at end of period
|
$
|
82,021
|
|
|
$
|
124,628
|
|
Supplemental disclosures:
|
|
|
|
||||
Cash paid for income taxes, net
|
$
|
9,787
|
|
|
$
|
5,750
|
|
Cash paid for interest and fees
|
$
|
1,865
|
|
|
$
|
1,399
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Issuance of treasury stock for compensatory stock awards released from restriction
|
$
|
5,556
|
|
|
$
|
893
|
|
Accrued capital expenditures at period-end
|
$
|
1,865
|
|
|
$
|
1,272
|
|
|
Shareholders' Equity Callaway Golf Company
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
Total Callaway Golf Company Shareholders' Equity
|
|
Non-
Controlling Interest
|
|
|
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
Total
|
|||||||||||||||||||||||||||
Balance at December 31, 2016
|
94,214
|
|
|
$
|
942
|
|
|
$
|
330,206
|
|
|
$
|
287,129
|
|
|
|
$
|
(18,466
|
)
|
|
|
(98
|
)
|
|
$
|
(905
|
)
|
|
|
$
|
598,906
|
|
|
|
$
|
9,694
|
|
|
$
|
608,600
|
|
Acquisition of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,527
|
)
|
|
(16,479
|
)
|
|
|
(16,479
|
)
|
|
|
—
|
|
|
(16,479
|
)
|
||||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
(2,173
|
)
|
|
—
|
|
|
|
—
|
|
|
|
600
|
|
|
6,378
|
|
|
|
4,205
|
|
|
|
—
|
|
|
4,205
|
|
||||||||
Compensatory awards released from restriction
|
825
|
|
|
8
|
|
|
(5,564
|
)
|
|
—
|
|
|
|
—
|
|
|
|
519
|
|
|
5,556
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
9,583
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
9,583
|
|
|
|
—
|
|
|
9,583
|
|
||||||||
Stock dividends
|
4
|
|
|
—
|
|
|
81
|
|
|
(81
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||||
Cash dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,827
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
(2,827
|
)
|
|
|
—
|
|
|
(2,827
|
)
|
||||||||
Equity adjustment from foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
11,826
|
|
|
|
—
|
|
|
—
|
|
|
|
11,826
|
|
|
|
176
|
|
|
12,002
|
|
||||||||
Change in fair value of derivative instruments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(2,401
|
)
|
|
|
—
|
|
|
—
|
|
|
|
(2,401
|
)
|
|
|
—
|
|
|
(2,401
|
)
|
||||||||
Distribution to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(974
|
)
|
|
(974
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
60,192
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
60,192
|
|
|
|
251
|
|
|
60,443
|
|
||||||||
Balance at September 30, 2017
|
95,043
|
|
|
$
|
950
|
|
|
$
|
332,133
|
|
|
$
|
344,413
|
|
|
|
$
|
(9,041
|
)
|
|
|
(506
|
)
|
|
$
|
(5,450
|
)
|
|
|
$
|
663,005
|
|
|
|
$
|
9,147
|
|
|
$
|
672,152
|
|
|
At January 11, 2017
|
|||
Assets Acquired
|
|
|
||
Cash
|
|
$
|
8,061
|
|
Accounts receivable
|
|
7,696
|
|
|
Inventory
|
|
7,092
|
|
|
Other current assets
|
|
328
|
|
|
Property and equipment
|
|
2,369
|
|
|
Intangibles - trade name
|
|
49,700
|
|
|
Intangibles - customer & distributor relationships
|
|
1,500
|
|
|
Intangibles - non-compete agreements
|
|
150
|
|
|
Goodwill
|
|
5,885
|
|
|
Total assets acquired
|
|
82,781
|
|
|
Liabilities Assumed
|
|
|
||
Accounts Payable and accrued liabilities
|
|
16,830
|
|
|
Net assets acquired
|
|
$
|
65,951
|
|
|
At August 17, 2017
|
|||
Assets Acquired
|
|
|
||
Cash
|
|
$
|
663
|
|
Accounts receivable
|
|
9,715
|
|
|
Inventory
|
|
11,909
|
|
|
Other current assets
|
|
549
|
|
|
Property and equipment
|
|
4,327
|
|
|
Other assets
|
|
117
|
|
|
Intangibles - trade name
|
|
78,400
|
|
|
Intangibles - licensing agreement
|
|
1,100
|
|
|
Intangibles - customer & distributor relationships
|
|
4,450
|
|
|
Intangibles - non-compete agreements
|
|
600
|
|
|
Goodwill
|
|
23,436
|
|
|
Total assets acquired
|
|
135,266
|
|
|
Liabilities Assumed
|
|
|
||
Accounts Payable and accrued liabilities
|
|
10,669
|
|
|
Net assets acquired
|
|
$
|
124,597
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(in thousands)
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
249,952
|
|
|
$
|
211,849
|
|
|
$
|
894,936
|
|
|
$
|
780,408
|
|
Net income (loss) attributable to Callaway Golf Company
|
$
|
5,597
|
|
|
$
|
(3,459
|
)
|
|
$
|
70,796
|
|
|
$
|
64,643
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Earnings (loss) per common share—basic
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Callaway Golf Company
|
$
|
3,060
|
|
|
$
|
(5,866
|
)
|
|
$
|
60,192
|
|
|
$
|
66,629
|
|
Weighted-average common shares outstanding—basic
|
94,450
|
|
|
94,081
|
|
|
94,246
|
|
|
94,021
|
|
||||
Basic earnings (loss) per common share
|
$
|
0.03
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.64
|
|
|
$
|
0.71
|
|
Earnings (loss) per common share—diluted
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Callaway Golf Company
|
$
|
3,060
|
|
|
$
|
(5,866
|
)
|
|
$
|
60,192
|
|
|
$
|
66,629
|
|
Weighted-average common shares outstanding—basic
|
94,450
|
|
|
94,081
|
|
|
94,246
|
|
|
94,021
|
|
||||
Options and restricted stock
|
2,429
|
|
|
—
|
|
|
2,097
|
|
|
1,666
|
|
||||
Weighted-average common shares outstanding—diluted
|
96,879
|
|
|
94,081
|
|
|
96,343
|
|
|
95,687
|
|
||||
Dilutive earnings (loss) per common share
|
$
|
0.03
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.62
|
|
|
$
|
0.70
|
|
|
September 30,
2017 |
|
December 31,
2016
|
||||
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
49,457
|
|
|
$
|
46,451
|
|
Work-in-process
|
740
|
|
|
739
|
|
||
Finished goods
|
136,388
|
|
|
142,210
|
|
||
|
$
|
186,585
|
|
|
$
|
189,400
|
|
|
Useful
Life
(Years)
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||||||||
Non-Amortizing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name, trademark and trade dress and other
|
NA
|
|
$
|
216,690
|
|
|
|
$
|
—
|
|
|
|
$
|
216,690
|
|
|
$
|
88,590
|
|
|
|
$
|
—
|
|
|
|
$
|
88,590
|
|
Amortizing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Patents
|
2-16
|
|
31,581
|
|
|
|
31,478
|
|
|
|
103
|
|
|
31,581
|
|
|
|
31,440
|
|
|
|
141
|
|
||||||
Other
|
1-10
|
|
15,780
|
|
|
|
8,222
|
|
|
|
7,558
|
|
|
7,981
|
|
|
|
7,981
|
|
|
|
—
|
|
||||||
Total intangible assets
|
|
|
$
|
264,051
|
|
|
|
$
|
39,700
|
|
|
|
$
|
224,351
|
|
|
$
|
128,152
|
|
|
|
$
|
39,421
|
|
|
|
$
|
88,731
|
|
Remainder of 2017
|
$
|
267
|
|
2018
|
1,066
|
|
|
2019
|
1,053
|
|
|
2020
|
966
|
|
|
2021
|
910
|
|
|
2022
|
734
|
|
|
Thereafter
|
2,665
|
|
|
|
$
|
7,661
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Beginning balance
|
$
|
5,969
|
|
|
$
|
6,172
|
|
|
$
|
5,395
|
|
|
$
|
5,706
|
|
Provision
|
4,371
|
|
|
1,163
|
|
|
8,495
|
|
|
4,403
|
|
||||
Claims paid/costs incurred
|
(2,790
|
)
|
|
(1,820
|
)
|
|
(6,340
|
)
|
|
(4,594
|
)
|
||||
Ending balance
|
$
|
7,550
|
|
|
$
|
5,515
|
|
|
$
|
7,550
|
|
|
$
|
5,515
|
|
Tax Jurisdiction
|
|
Years No Longer Subject to Audit
|
U.S. federal
|
|
2010 and prior
|
California (United States)
|
|
2008 and prior
|
Canada
|
|
2009 and prior
|
Japan
|
|
2010 and prior
|
South Korea
|
|
2011 and prior
|
United Kingdom
|
|
2012 and prior
|
Remainder of 2017
|
$
|
38,286
|
|
2018
|
19,702
|
|
|
2019
|
7,903
|
|
|
2020
|
5,488
|
|
|
2021
|
1,333
|
|
|
2022
|
2
|
|
|
|
$
|
72,714
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
|
|
|
|
||||||||||
Cost of sales
|
$
|
287
|
|
|
$
|
198
|
|
|
$
|
650
|
|
|
$
|
520
|
|
Operating expenses
|
3,894
|
|
|
2,067
|
|
|
8,901
|
|
|
6,280
|
|
||||
Total cost of share-based compensation included in income, before income tax
|
$
|
4,181
|
|
|
$
|
2,265
|
|
|
$
|
9,551
|
|
|
$
|
6,800
|
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts—asset position
|
$
|
460
|
|
|
$
|
—
|
|
|
$
|
460
|
|
|
$
|
—
|
|
Foreign currency forward contracts—liability position
|
(1,403
|
)
|
|
—
|
|
|
(1,403
|
)
|
|
—
|
|
||||
|
$
|
(943
|
)
|
|
$
|
—
|
|
|
$
|
(943
|
)
|
|
$
|
—
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts—asset position
|
$
|
3,524
|
|
|
$
|
—
|
|
|
$
|
3,524
|
|
|
$
|
—
|
|
Foreign currency forward contracts—liability position
|
(85
|
)
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
||||
|
$
|
3,439
|
|
|
$
|
—
|
|
|
$
|
3,439
|
|
|
$
|
—
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
Primary asset-based revolving credit facility
(1)
|
$
|
52,400
|
|
|
$
|
52,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Japan ABL Facilities
(1)
|
$
|
18,218
|
|
|
$
|
18,218
|
|
|
$
|
11,966
|
|
|
$
|
11,966
|
|
Standby letters of credit
(2)
|
$
|
857
|
|
|
$
|
857
|
|
|
$
|
823
|
|
|
$
|
823
|
|
Money market funds
(3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,081
|
|
|
$
|
69,081
|
|
|
(1)
|
The carrying value of the amounts outstanding under the Company's primary asset-based revolving credit facility and Japan ABL Facilities approximates the fair value due to the short-term nature of these obligations. The fair value of this debt is categorized within Level 2 of the fair value hierarchy. See
Note 3
for information on the Company's credit facilities, including certain risks and uncertainties related thereto.
|
(2)
|
The carrying value of the Company's standby letters of credit approximates the fair value as they represent the Company’s contingent obligation to perform in accordance with the underlying contracts. The fair value of this contingent obligation is categorized within Level 2 of the fair value hierarchy.
|
(3)
|
The carrying value of the money market funds approximates fair value as the funds are highly liquid and short-term in nature. The funds seek to maintain a stable net asset value of $1.00 per share, and the market value per share of these funds are available in active markets. As such, they are categorized within Level 1 of the fair value hierarchy. The money market funds accrued dividends, which were reinvested and reflected in the carrying value as of December 31, 2016. There were no money market funds outstanding as of
September 30, 2017
.
|
|
Asset Derivatives
|
||||||||||
September 30, 2017
|
|
December 31, 2016
|
|||||||||
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
|||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
39
|
|
|
Other current assets
|
|
$
|
2,660
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
421
|
|
|
Other current assets
|
|
$
|
864
|
|
|
Liability Derivatives
|
||||||||||
September 30, 2017
|
|
December 31, 2016
|
|||||||||
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
|||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accounts payable and
accrued expenses
|
|
$
|
195
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accounts payable and
accrued expenses
|
|
$
|
1,208
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
57
|
|
|
|
|
|
|
|
|
Location of Net Loss Recognized in Income on Derivative Instruments
|
|
Amount of Net Loss Recognized in Income on
Derivative Instruments
|
||||||||||||||
Derivatives not designated as hedging instruments
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||
Foreign currency forward contracts
|
|
Other income (expense), net
|
|
$
|
(1,233
|
)
|
|
$
|
(50
|
)
|
|
$
|
(6,469
|
)
|
|
$
|
(9,908
|
)
|
|
|
Derivative Instruments
|
|
Foreign Currency Translation
|
|
Total
|
||||||
|
|
|
|
|||||||||
Accumulated other comprehensive income (loss), December 31, 2016
|
|
$
|
1,570
|
|
|
$
|
(20,036
|
)
|
|
$
|
(18,466
|
)
|
Change in derivative instruments
|
|
(2,673
|
)
|
|
—
|
|
|
(2,673
|
)
|
|||
Net gains reclassified to cost of goods sold
|
|
(249
|
)
|
|
—
|
|
|
(249
|
)
|
|||
Foreign currency translation adjustments
|
|
—
|
|
|
11,826
|
|
|
11,826
|
|
|||
Income tax expense
|
|
521
|
|
|
—
|
|
|
521
|
|
|||
Accumulated other comprehensive loss, September 30, 2017, after tax
|
|
$
|
(831
|
)
|
|
$
|
(8,210
|
)
|
|
$
|
(9,041
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
(1)
|
|
2017
|
|
2016
(1)
|
||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Golf Clubs
|
$
|
146,113
|
|
|
$
|
121,228
|
|
|
$
|
535,995
|
|
|
$
|
480,740
|
|
Golf Balls
|
39,071
|
|
|
32,640
|
|
|
136,062
|
|
|
121,052
|
|
||||
Gear, Accessories and Other
|
58,420
|
|
|
33,982
|
|
|
185,022
|
|
|
105,705
|
|
||||
|
$
|
243,604
|
|
|
$
|
187,850
|
|
|
$
|
857,079
|
|
|
$
|
707,497
|
|
Income before income taxes:
|
|
|
|
|
|
|
|
||||||||
Golf Clubs
|
$
|
10,420
|
|
|
$
|
2,224
|
|
|
$
|
83,818
|
|
|
$
|
55,638
|
|
Golf Balls
|
5,040
|
|
|
3,845
|
|
|
27,500
|
|
|
21,985
|
|
||||
Gear, Accessories and Other
|
6,420
|
|
|
595
|
|
|
27,916
|
|
|
16,753
|
|
||||
Reconciling items
(2)
|
(17,305
|
)
|
|
(11,109
|
)
|
|
(48,049
|
)
|
|
(22,988
|
)
|
||||
|
$
|
4,575
|
|
|
$
|
(4,445
|
)
|
|
$
|
91,185
|
|
|
$
|
71,388
|
|
Additions to long-lived assets:
|
|
|
|
|
|
|
|
||||||||
Golf Clubs
|
$
|
1,316
|
|
|
$
|
4,339
|
|
|
$
|
7,928
|
|
|
$
|
8,308
|
|
Golf Balls
|
2,784
|
|
|
1,135
|
|
|
7,872
|
|
|
2,707
|
|
||||
Gear, Accessories and Other
|
767
|
|
|
1,244
|
|
|
2,293
|
|
|
1,741
|
|
||||
|
$
|
4,867
|
|
|
$
|
6,718
|
|
|
$
|
18,093
|
|
|
$
|
12,756
|
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as a result of the change in operating segments as of January 1, 2017.
|
(2)
|
Reconciling items represent corporate general and administrative expenses and other income (expense) not included by management in determining segment profitability. The increase in reconciling items for the three and nine months ended September 30, 2017 compared to the same periods in 2016 was primarily due to a
$17,662,000
gain recognized in the second quarter of 2016 in connection with the sale of approximately 10.0% of the Company's investment in Topgolf, as well as increases in marketing expense and employee costs. For further information on the Company's investment in Topgolf, see Note 8 "Investments."
|
|
September 30, 2017
|
|
December 31, 2016
(1)
|
||||
Total Assets:
(2)
|
|
|
|
||||
Golf Clubs
|
$
|
256,318
|
|
|
$
|
277,469
|
|
Golf Balls
|
47,198
|
|
|
42,460
|
|
||
Gear, Accessories and Other
|
229,416
|
|
|
38,270
|
|
||
Reconciling items
|
403,051
|
|
|
443,083
|
|
||
|
$
|
935,983
|
|
|
$
|
801,282
|
|
Goodwill:
|
|
|
|
||||
Golf Clubs
|
$
|
26,770
|
|
|
$
|
25,593
|
|
Golf Balls
|
—
|
|
|
—
|
|
||
Gear, Accessories and Other
|
29,321
|
|
|
—
|
|
||
|
$
|
56,091
|
|
|
$
|
25,593
|
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017.
|
(2)
|
Total assets by reportable segment are comprised of net inventory, certain property, plant and equipment, intangible assets and goodwill. The increase in total assets for Gear, Accessories and Other was primarily due to the acquisitions of OGIO in January 2017 and TravisMathew in August 2017. Reconciling items represent unallocated corporate assets not segregated between the three segments including cash and cash equivalents, net accounts receivable, and deferred tax assets.
|
•
|
The Company’s results for the third quarter and first nine months of 2017 include transaction and transition expenses of $2.6 million and $8.8 million, respectively, related to the OGIO and TravisMathew acquisitions completed in January 2017 and August 2017, respectively.
|
•
|
The Company’s results for the first nine months of 2016 include a pre-tax gain of $17.7 million from the sale of approximately 10% of the Company's investment in Topgolf. There was no such sale or gain in 2017.
|
•
|
The Company’s results of operations for the third quarter and first nine months of 2017 include the operating results from the OGIO and TravisMathew businesses, which are incremental to the results in the comparative periods of 2016. In addition, the Company’s results of operations for the first nine months of 2017 include the incremental operating results from the apparel joint venture in Japan, which was established in July 2016. The Company’s results of operations for the first nine months of 2016 only include the joint venture’s operating results beginning in the third quarter.
|
•
|
During the third quarter and first nine months of 2016, the Company did not recognize U.S. income tax expense on its U.S. operations due to the prior valuation allowance on its U.S. deferred tax assets. Most of the valuation allowance was reversed in the fourth quarter of 2016 and therefore in January 2017 the Company once again began recognizing U.S. income tax expense on its U.S. operations. When evaluating the Company’s performance on a non-GAAP basis, the Company applied an estimated tax rate of 38.5% to its 2016 interim period results to make them more comparable to 2017.
|
•
|
Beginning in January 2017, the Company began reporting three operating segments (namely, Golf Clubs, Golf Balls and Gear, Accessories and Other) as opposed to the two operating segments reported in 2016 (namely, Golf Clubs and Golf Balls). For comparison purposes, the 2016 results have been reclassified to reflect the current year operating segment presentation.
|
|
Three Months Ended
September 30, |
|
Growth
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Golf clubs
|
$
|
146.1
|
|
|
$
|
121.2
|
|
|
$
|
24.9
|
|
|
20.5
|
%
|
Golf balls
|
39.1
|
|
|
32.7
|
|
|
6.4
|
|
|
19.6
|
%
|
|||
Gear, accessories and other
|
58.4
|
|
|
34.0
|
|
|
24.4
|
|
|
71.8
|
%
|
|||
|
$
|
243.6
|
|
|
$
|
187.9
|
|
|
$
|
55.7
|
|
|
29.6
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Three months ended September 30, 2017
|
|
Three months ended September 30, 2016
|
||||||||||||||||||||
|
As Reported
|
|
Acquisition Costs
(1)
|
|
Non-GAAP
|
|
As Reported
|
|
Non-Cash Tax Adjustment
(2)
|
|
Non-GAAP
|
||||||||||||
Net income (loss) attributable to Callaway Golf Company
|
$
|
3.1
|
|
|
$
|
(2.2
|
)
|
|
$
|
5.3
|
|
|
$
|
(5.9
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
(2.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted earnings (loss) per share
|
$
|
0.03
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
Weighted-average shares outstanding
|
96.9
|
|
|
96.9
|
|
|
96.9
|
|
|
94.1
|
|
|
94.1
|
|
|
94.1
|
|
|
(1)
|
Represents transaction and transition costs associated with the acquisition of OGIO in January 2017 and transaction costs associated with the acquisition of TravisMathew in August 2017. The income tax benefit of $1.1 million associated with these costs were based on the Company's effective tax rate for the three months ended September 30, 2017.
|
(2)
|
The Company had a valuation allowance on its U.S. deferred tax assets in the third quarter of 2016, which resulted in no federal U.S. tax expense for the quarter. In the fourth quarter of 2016, the Company reversed a significant portion of the valuation allowance and recognized income taxes on its U.S. operations that were retroactive for all of 2016. For comparability to the third quarter of 2017, the Company applied an estimated statutory tax rate of 38.5% to calculate non-GAAP results for the third quarter of 2016.
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Three Months Ended
September 30, |
|
Growth
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Gear, accessories and other
|
$
|
58.4
|
|
|
$
|
34.0
|
|
|
$
|
24.4
|
|
|
71.8
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Three Months Ended
September 30, |
|
Growth/(Decline)
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Income before income taxes:
|
|
|
|
|
|
|
|
|||||||
Golf clubs
|
$
|
10.4
|
|
|
$
|
2.2
|
|
|
$
|
8.2
|
|
|
372.7
|
%
|
Golf balls
|
5.0
|
|
|
3.8
|
|
|
1.2
|
|
|
31.6
|
%
|
|||
Gear, accessories and other
|
6.4
|
|
|
0.6
|
|
|
5.8
|
|
|
966.7
|
%
|
|||
Reconciling items
(2)
|
(17.2
|
)
|
|
(11.0
|
)
|
|
(6.2
|
)
|
|
(56.4
|
)%
|
|||
|
$
|
4.6
|
|
|
$
|
(4.4
|
)
|
|
$
|
9.0
|
|
|
204.5
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
(2)
|
Reconciling items represent corporate general and administrative expenses and other income (expense) not included by management in determining segment profitability. The increase in reconciling items was primarily due to increases in employee costs, professional fees and legal expenses.
|
|
Nine Months Ended
September 30, |
|
Growth
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Golf clubs
|
$
|
536.0
|
|
|
$
|
480.7
|
|
|
$
|
55.3
|
|
|
11.5
|
%
|
Golf balls
|
136.1
|
|
|
121.1
|
|
|
15.0
|
|
|
12.4
|
%
|
|||
Gear, accessories and other
|
185.0
|
|
|
105.7
|
|
|
79.3
|
|
|
75.0
|
%
|
|||
|
$
|
857.1
|
|
|
$
|
707.5
|
|
|
$
|
149.6
|
|
|
21.1
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Nine months ended September 30, 2017
|
|
Nine months ended September 30, 2016
|
||||||||||||||||||||||||
|
As Reported
|
|
Acquisition Costs
(1)
|
|
Non-GAAP
|
|
As Reported
|
|
Non-Cash Tax Adjustment
(2)
|
|
Topgolf Gain
(3)
|
|
Non-GAAP
|
||||||||||||||
Net income (loss) attributable to Callaway Golf Company
|
$
|
60.2
|
|
|
$
|
(6.3
|
)
|
|
$
|
66.5
|
|
|
$
|
66.6
|
|
|
$
|
16.0
|
|
|
$
|
17.7
|
|
|
$
|
32.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Diluted earnings (loss) per share
|
$
|
0.62
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.69
|
|
|
$
|
0.70
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.34
|
|
Weighted-average shares outstanding
|
96.3
|
|
|
96.3
|
|
|
96.3
|
|
|
95.7
|
|
|
95.7
|
|
|
95.7
|
|
|
95.7
|
|
|
(1)
|
Represents transaction and transition costs associated with the acquisition of OGIO in January 2017 and transaction costs associated with the acquisition of TravisMathew in August 2017. The income tax benefit of $3.2 million associated with these costs was based on the Company's effective tax rate for the first nine months of 2017.
|
(2)
|
The Company had a valuation allowance on its U.S. deferred tax assets in the first nine months of 2016, which resulted in no federal U.S. tax expense for the nine months ended September 30, 2016. In the fourth quarter of 2016, the Company reversed a significant portion of the valuation allowance and recognized income taxes on its U.S. operations that were retroactive for all of 2016. For comparability to 2017, the Company applied an estimated statutory tax rate of 38.5% to calculate pro-forma results for the nine months ended September 30, 2016.
|
(3)
|
Gain recognized on the sale of approximately 10.0% of the Company's investment in Topgolf in the second quarter of 2016.
|
|
Nine Months Ended
September 30, |
|
Growth/(Decline)
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Woods
|
$
|
262.7
|
|
|
$
|
183.1
|
|
|
$
|
79.6
|
|
|
43.5
|
%
|
Irons
|
202.1
|
|
|
224.4
|
|
|
(22.3
|
)
|
|
(9.9
|
)%
|
|||
Putters
|
71.2
|
|
|
73.2
|
|
|
(2.0
|
)
|
|
(2.7
|
)%
|
|||
|
$
|
536.0
|
|
|
$
|
480.7
|
|
|
$
|
55.3
|
|
|
11.5
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Nine Months Ended
September 30, |
|
Growth/(Decline)
|
|||||||||||
|
2017
|
|
2016
(1)
|
|
Dollars
|
|
Percent
|
|||||||
Income before income taxes:
|
|
|
|
|
|
|
|
|||||||
Golf clubs
|
$
|
83.8
|
|
|
$
|
55.6
|
|
|
$
|
28.2
|
|
|
50.7
|
%
|
Golf balls
|
27.5
|
|
|
22.0
|
|
|
5.5
|
|
|
25.0
|
%
|
|||
Gear, accessories and other
|
27.9
|
|
|
16.8
|
|
|
11.1
|
|
|
66.1
|
%
|
|||
Reconciling items
(2)
|
(48.0
|
)
|
|
(23.0
|
)
|
|
(25.0
|
)
|
|
(108.7
|
)%
|
|||
|
$
|
91.2
|
|
|
$
|
71.4
|
|
|
$
|
19.8
|
|
|
27.7
|
%
|
|
(1)
|
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017. For further discussion, see
Note 16
“Segment Information” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
(2)
|
Reconciling items represent corporate general and administrative expenses and other income (expense) not included by management in determining segment profitability. The increase in reconciling items was primarily due to a $17.7 million gain recognized in the second quarter of 2016 in connection with the sale of approximately 10.0% of the Company's investment in Topgolf, in addition to increases in employee costs, professional fees and legal expenses. For further discussion of the Topgolf gain see Note 8 "Investments" to the Notes to Consolidated Condensed Financial Statements included in Part I, Item 1, of this Form 10-Q.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Primary Asset-Based Revolving Credit Facility
|
$
|
52.4
|
|
|
$
|
52.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Japan ABL facilities
|
18.2
|
|
|
18.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital leases
(1)
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
(2)
|
47.3
|
|
|
8.0
|
|
|
13.6
|
|
|
10.8
|
|
|
14.9
|
|
|||||
Unconditional purchase obligations
(3)
|
72.7
|
|
|
38.3
|
|
|
27.6
|
|
|
6.8
|
|
|
—
|
|
|||||
Uncertain tax contingencies
(4)
|
4.5
|
|
|
0.6
|
|
|
1.3
|
|
|
0.5
|
|
|
2.1
|
|
|||||
Total
|
$
|
195.4
|
|
|
$
|
117.7
|
|
|
$
|
42.6
|
|
|
$
|
18.1
|
|
|
$
|
17.0
|
|
|
(1)
|
Amounts represent future minimum lease payments. Capital lease obligations are included in accounts payable and accrued expenses and other long-term liabilities in the accompanying consolidated condensed balance sheets.
|
(2)
|
The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment under operating leases. The amounts presented in this line item represent commitments for minimum lease payments under non-cancelable operating leases.
|
(3)
|
During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for production materials, endorsement agreements with professional golfers and other endorsers, employment and consulting agreements, and intellectual property licensing agreements pursuant to which the Company is required to pay royalty fees. It is not possible to determine the amounts the Company will ultimately be required to pay under these agreements as they are subject to many variables including performance-based bonuses, severance arrangements, the Company’s sales levels, and reductions in payment obligations if designated minimum performance criteria are not achieved.
|
(4)
|
Amount represents the current and non-current portions of uncertain income tax positions as recorded on the Company's consolidated condensed balance sheet as of
September 30, 2017
. Amounts exclude uncertain income tax positions that the Company would be able to offset against deferred taxes. For further discussion, see
Note 10
“Income Taxes” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Three Months Ended September 30, 2017
|
|||||||||||||||||||
|
Total Number
of Shares Purchased |
|
Weighted
Average Price Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Maximum Dollar Value that May Yet Be Purchased Under the Program
|
|||||||||||||
July 1, 2017-July 31, 2017
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
—
|
|
|
|
|
$
|
25,473,193
|
|
August 1, 2017-August 31, 2017
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
—
|
|
|
|
|
$
|
25,473,193
|
|
September 1, 2017-September 30, 2017
|
|
4,995
|
|
|
|
|
$
|
13.76
|
|
|
|
|
4,995
|
|
|
|
|
$
|
25,404,461
|
|
Total
|
|
4,995
|
|
|
|
|
$
|
13.76
|
|
|
|
|
4,995
|
|
|
|
|
$
|
25,404,461
|
|
|
CALLAWAY GOLF COMPANY
|
|
|
|
By:
|
/s/ Jennifer Thomas
|
|
Jennifer Thomas
|
|
Vice President and
Chief Accounting Officer
|
2.
|
Compensation
. Sections 4(a) and (b) of the Agreement are amended to read:
|
EMPLOYEE
|
|
COMPANY
|
|
|
Callaway Golf Company, a Delaware corporation
|
|
|
|
/s/ Brian P. Lynch
|
|
By: /s/ Chris Carroll
|
Brian P. Lynch
|
|
Chris Carroll
|
|
|
Senior Vice President, Global Human Resources
|
|
|
|
/
S
/ O
LIVER
G. B
REWER
III
|
Oliver G. Brewer III
President and Chief Executive Officer
|
/
S
/ B
RIAN
P. L
YNCH
|
Brian P. Lynch
Senior Vice President, Chief Financial Officer,
General Counsel and Corporate Secretary
|
/
S
/ O
LIVER
G. B
REWER
III
|
Oliver G. Brewer III
President and Chief Executive Officer
|
/
S
/ B
RIAN
P. L
YNCH
|
Brian P. Lynch
Senior Vice President, Chief Financial Officer, General Counsel and Corporate Secretary |