|
Form
|
10-Q
|
☒
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
☐
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
Callaway Golf Company
|
||
(Exact name of registrant as specified in its charter)
|
||
|
|
|
Delaware
|
|
95-3797580
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on which Registered
|
Common Stock, $0.01 par value per share
|
ELY
|
The New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
•
|
certain risks and uncertainties, including changes in capital market or economic conditions, particularly the uncertainty related to the duration and impact of the COVID-19 pandemic, and related decreases in consumer demand and spending;
|
•
|
the impact of the COVID-19 pandemic and other potential future outbreaks of infectious diseases or other health concerns, and measures taken to limit their impact, which could adversely affect the Company’s business, consumer demand and supply chain, and the global economy;
|
•
|
disruptions to business operations whether from COVID-19-related travel restrictions, mandated quarantines or voluntary “social distancing” that affects employees, customers and suppliers, production delays, closures of manufacturing facilities, retail locations, warehouses and supply and distribution chains, and staffing shortages as a result of remote working requirements or otherwise;
|
•
|
a material impact on the Company's tax provision as a result of the Tax Act;
|
•
|
consumer acceptance of and demand for the Company’s products;
|
•
|
future retailer purchasing activity, which can be significantly affected by adverse industry conditions and overall retail inventory levels;
|
•
|
any unfavorable changes in U.S. trade, tax or other policies, including restrictions on imports or an increase in import tariffs;
|
•
|
the level of promotional activity in the marketplace;
|
•
|
future consumer discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions;
|
•
|
future changes in foreign currency exchange rates and the degree of effectiveness of the Company’s hedging programs;
|
•
|
the ability of the Company to manage international business risks;
|
•
|
the Company's ability to recognize operational synergies and scale opportunities across its supply chain and global business platform;
|
•
|
the costs and disruption associated with activist investors;
|
•
|
significant developments stemming from the U.K.’s withdrawal from the European Union, which could have a material adverse effect on the Company;
|
•
|
adverse changes in the credit markets or continued compliance with the terms of the Company’s credit facilities;
|
•
|
the Company's ability to monetize its investments;
|
•
|
the Company's ability to successfully integrate, operate and expand the retail stores of the acquired TravisMathew and Jack Wolfskin businesses;
|
•
|
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;
|
•
|
adverse weather conditions and seasonality;
|
•
|
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;
|
•
|
the ability of the Company to protect its intellectual property rights;
|
•
|
a decrease in participation levels in golf;
|
•
|
the effect of terrorist activity, armed conflict, natural disasters or pandemic diseases, including without limitation the COVID-19 pandemic, 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
|
•
|
the general risks and uncertainties applicable to the Company and its business.
|
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
166,635
|
|
|
$
|
106,666
|
|
Accounts receivable, net
|
259,530
|
|
|
140,455
|
|
||
Inventories
|
412,690
|
|
|
456,639
|
|
||
Income taxes receivable
|
21,048
|
|
|
9,919
|
|
||
Other current assets
|
74,219
|
|
|
75,671
|
|
||
Total current assets
|
934,122
|
|
|
789,350
|
|
||
Property, plant and equipment, net
|
150,969
|
|
|
132,760
|
|
||
Operating lease right-of-use assets, net
|
193,829
|
|
|
160,098
|
|
||
Intangible assets, net
|
487,864
|
|
|
493,423
|
|
||
Goodwill
|
200,787
|
|
|
203,743
|
|
||
Deferred taxes, net
|
61,517
|
|
|
73,948
|
|
||
Investment in golf-related venture
|
90,134
|
|
|
90,134
|
|
||
Other assets
|
15,854
|
|
|
17,092
|
|
||
Total assets
|
$
|
2,135,076
|
|
|
$
|
1,960,548
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
224,282
|
|
|
$
|
276,300
|
|
Accrued employee compensation and benefits
|
29,438
|
|
|
46,891
|
|
||
Asset-based credit facilities
|
335,593
|
|
|
144,580
|
|
||
Accrued warranty expense
|
9,791
|
|
|
9,636
|
|
||
Operating lease liabilities, short-term
|
28,544
|
|
|
26,418
|
|
||
Current portion of long-term debt
|
8,734
|
|
|
7,317
|
|
||
Income taxes payable
|
12,526
|
|
|
12,104
|
|
||
Total current liabilities
|
648,908
|
|
|
523,246
|
|
||
Long-term liabilities:
|
|
|
|
||||
Operating lease liabilities, long-term
|
175,954
|
|
|
137,696
|
|
||
Long-term debt (Note 6)
|
453,774
|
|
|
443,259
|
|
||
Income tax liability
|
7,156
|
|
|
7,264
|
|
||
Deferred taxes, net
|
72,289
|
|
|
73,483
|
|
||
Other long-term liabilities
|
17,028
|
|
|
8,247
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 3,000,000 shares authorized, none issued and outstanding at March 31, 2020 and December 31, 2019
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 240,000,000 shares authorized, 95,648,648 shares issued at both March 31, 2020 and December 31, 2019, respectively
|
956
|
|
|
956
|
|
||
Additional paid-in capital
|
307,133
|
|
|
323,600
|
|
||
Retained earnings
|
517,004
|
|
|
489,382
|
|
||
Accumulated other comprehensive loss
|
(37,517
|
)
|
|
(22,422
|
)
|
||
Less: Common stock held in treasury, at cost, 1,540,670 and 1,450,875 shares at March 31, 2020 and December 31, 2019, respectively
|
(27,609
|
)
|
|
(24,163
|
)
|
||
Total Callaway Golf Company shareholders’ equity
|
759,967
|
|
|
767,353
|
|
||
Total shareholders’ equity
|
759,967
|
|
|
767,353
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,135,076
|
|
|
$
|
1,960,548
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net sales
|
$
|
442,276
|
|
|
$
|
516,197
|
|
Cost of sales
|
246,602
|
|
|
277,764
|
|
||
Gross profit
|
195,674
|
|
|
238,433
|
|
||
Operating expenses:
|
|
|
|
||||
Selling expense
|
111,061
|
|
|
119,321
|
|
||
General and administrative expense
|
30,693
|
|
|
36,938
|
|
||
Research and development expense
|
13,240
|
|
|
12,538
|
|
||
Total operating expenses
|
154,994
|
|
|
168,797
|
|
||
Income from operations
|
40,680
|
|
|
69,636
|
|
||
Interest income
|
99
|
|
|
189
|
|
||
Interest expense
|
(9,214
|
)
|
|
(9,828
|
)
|
||
Other income (expense), net
|
6,480
|
|
|
(1,940
|
)
|
||
Income before income taxes
|
38,045
|
|
|
58,057
|
|
||
Income tax provision
|
9,151
|
|
|
9,556
|
|
||
Net income
|
28,894
|
|
|
48,501
|
|
||
Less: Net loss attributable to non-controlling interest
|
—
|
|
|
(146
|
)
|
||
Net income attributable to Callaway Golf Company
|
$
|
28,894
|
|
|
$
|
48,647
|
|
|
|
|
|
||||
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.31
|
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.50
|
|
Weighted-average common shares outstanding:
|
|
|
|
||||
Basic
|
94,309
|
|
|
94,684
|
|
||
Diluted
|
95,676
|
|
|
96,419
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
28,894
|
|
|
$
|
48,501
|
|
Other comprehensive income:
|
|
|
|
||||
Change in derivative instruments
|
(589
|
)
|
|
(3,174
|
)
|
||
Foreign currency translation adjustments
|
(14,936
|
)
|
|
(2,978
|
)
|
||
Comprehensive income, before income tax on other comprehensive income items
|
13,369
|
|
|
42,349
|
|
||
Income tax benefit (provision) on derivative instruments
|
430
|
|
|
(428
|
)
|
||
Comprehensive income
|
13,799
|
|
|
41,921
|
|
||
Less: Comprehensive loss attributable to non-controlling interests
|
—
|
|
|
(108
|
)
|
||
Comprehensive income attributable to Callaway Golf Company
|
$
|
13,799
|
|
|
$
|
42,029
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
28,894
|
|
|
$
|
48,501
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
8,997
|
|
|
7,977
|
|
||
Lease amortization expense
|
8,517
|
|
|
9,154
|
|
||
Amortization of debt issuance costs
|
835
|
|
|
647
|
|
||
Inventory step-up from acquisition
|
—
|
|
|
5,367
|
|
||
Deferred taxes, net
|
12,409
|
|
|
4,005
|
|
||
Non-cash share-based compensation
|
1,861
|
|
|
3,435
|
|
||
Loss on disposal of long-lived assets
|
51
|
|
|
75
|
|
||
Unrealized net (gains) losses on hedging instruments
|
767
|
|
|
(478
|
)
|
||
Change in assets and liabilities, net of effect from acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
(120,075
|
)
|
|
(187,577
|
)
|
||
Inventories
|
36,982
|
|
|
42,173
|
|
||
Other assets
|
19,349
|
|
|
(2,962
|
)
|
||
Accounts payable and accrued expenses
|
(58,137
|
)
|
|
(22,730
|
)
|
||
Accrued employee compensation and benefits
|
(16,680
|
)
|
|
(14,983
|
)
|
||
Accrued warranty expense
|
155
|
|
|
966
|
|
||
Change in operating leases, net
|
(7,041
|
)
|
|
(8,714
|
)
|
||
Income taxes receivable/payable, net
|
(11,356
|
)
|
|
(4,468
|
)
|
||
Other liabilities
|
790
|
|
|
(992
|
)
|
||
Net cash used in operating activities
|
(93,682
|
)
|
|
(120,604
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(16,953
|
)
|
|
(11,304
|
)
|
||
Acquisition, net of cash acquired
|
—
|
|
|
(463,105
|
)
|
||
Proceeds from sales of property and equipment
|
—
|
|
|
15
|
|
||
Net cash used in investing activities
|
(16,953
|
)
|
|
(474,394
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from credit facilities, net
|
191,013
|
|
|
174,182
|
|
||
Proceeds from issuance of long-term debt
|
9,766
|
|
|
480,000
|
|
||
Repayments of long-term debt
|
(3,143
|
)
|
|
(1,760
|
)
|
||
Debt issuance cost
|
—
|
|
|
(18,129
|
)
|
||
Principal payments on finance leases
|
(109
|
)
|
|
(114
|
)
|
||
Acquisition of treasury stock
|
(21,938
|
)
|
|
(27,377
|
)
|
||
Dividends paid, net
|
(949
|
)
|
|
(953
|
)
|
||
Exercise of stock options
|
130
|
|
|
—
|
|
||
Net cash provided by financing activities
|
174,770
|
|
|
605,849
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(4,166
|
)
|
|
4,107
|
|
||
Net increase in cash and cash equivalents
|
59,969
|
|
|
14,958
|
|
||
Cash and cash equivalents at beginning of period
|
106,666
|
|
|
63,981
|
|
||
Cash and cash equivalents at end of period
|
$
|
166,635
|
|
|
$
|
78,939
|
|
Supplemental disclosures:
|
|
|
|
||||
Cash paid for income taxes, net
|
$
|
3,983
|
|
|
$
|
3,259
|
|
Cash paid for interest and fees
|
$
|
7,165
|
|
|
$
|
5,042
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Issuance of treasury stock and common stock for compensatory stock awards released from restriction
|
$
|
18,129
|
|
|
$
|
18,467
|
|
Accrued capital expenditures at period-end
|
$
|
4,055
|
|
|
$
|
1,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, December 31, 2018
|
95,649
|
|
|
$
|
956
|
|
|
$
|
341,241
|
|
|
$
|
413,799
|
|
|
|
$
|
(13,700
|
)
|
|
|
(1,138
|
)
|
|
$
|
(17,722
|
)
|
|
|
$
|
724,574
|
|
|
|
$
|
9,734
|
|
|
$
|
734,308
|
|
Acquisition of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,654
|
)
|
|
(27,377
|
)
|
|
|
(27,377
|
)
|
|
|
—
|
|
|
(27,377
|
)
|
||||||||
Compensatory awards released from restriction
|
—
|
|
|
—
|
|
|
(18,467
|
)
|
|
—
|
|
|
|
—
|
|
|
|
803
|
|
|
18,467
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
3,435
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
3,435
|
|
|
|
—
|
|
|
3,435
|
|
||||||||
Stock dividends
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
|
—
|
|
|
|
385
|
|
|
37
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|||||||||
Cash dividends ($0.01 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(953
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
(953
|
)
|
|
|
—
|
|
|
(953
|
)
|
||||||||
Equity adjustment from foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(2,870
|
)
|
|
|
|
|
|
—
|
|
|
|
(2,870
|
)
|
|
|
(108
|
)
|
|
(2,978
|
)
|
||||||||
Change in fair value of derivative instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3,602
|
)
|
|
|
—
|
|
|
—
|
|
|
|
(3,602
|
)
|
|
|
—
|
|
|
(3,602
|
)
|
||||||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
48,647
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
48,647
|
|
|
|
(146
|
)
|
|
48,501
|
|
||||||||
Balance, March 31, 2019
|
95,649
|
|
|
$
|
956
|
|
|
$
|
326,209
|
|
|
$
|
461,456
|
|
|
|
$
|
(20,172
|
)
|
|
|
(1,604
|
)
|
|
$
|
(26,595
|
)
|
|
|
$
|
741,854
|
|
|
|
$
|
9,480
|
|
|
$
|
751,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance at December 31, 2019
|
95,649
|
|
|
$
|
956
|
|
|
$
|
323,600
|
|
|
$
|
489,382
|
|
|
|
$
|
(22,422
|
)
|
|
|
(1,451
|
)
|
|
$
|
(24,163
|
)
|
|
|
$
|
767,353
|
|
|
Adoption of accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
(289
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
(289
|
)
|
|
||||||
Acquisition of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,167
|
)
|
|
(21,938
|
)
|
|
|
(21,938
|
)
|
|
||||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
333
|
|
|
|
130
|
|
|
||||||
Compensatory awards released from restriction
|
—
|
|
|
—
|
|
|
(18,129
|
)
|
|
—
|
|
|
|
—
|
|
|
|
1,055
|
|
|
18,129
|
|
|
|
—
|
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
1,861
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
1,861
|
|
|
||||||
Stock dividends
|
—
|
|
|
—
|
|
|
4
|
|
|
(34
|
)
|
|
|
—
|
|
|
|
2
|
|
|
30
|
|
|
|
—
|
|
|
||||||
Cash dividends ($0.01 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(949
|
)
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
(949
|
)
|
|
||||||
Equity adjustment from foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(14,936
|
)
|
|
|
—
|
|
|
—
|
|
|
|
(14,936
|
)
|
|
||||||
Change in fair value of derivative instruments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(159
|
)
|
|
|
—
|
|
|
—
|
|
|
|
(159
|
)
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
28,894
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
28,894
|
|
|
||||||
Balance at March 31, 2020
|
95,649
|
|
|
$
|
956
|
|
|
$
|
307,133
|
|
|
$
|
517,004
|
|
|
|
$
|
(37,517
|
)
|
|
|
(1,541
|
)
|
|
$
|
(27,609
|
)
|
|
|
$
|
759,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Location
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Operating leases
|
|
|
|
|
|
||||
ROU assets, net
|
Operating lease ROU assets, net
|
|
$
|
193,829
|
|
|
$
|
160,098
|
|
Lease liabilities, short-term
|
Operating lease liabilities, short-term
|
|
$
|
28,544
|
|
|
$
|
26,418
|
|
Lease liabilities, long-term
|
Operating lease liabilities, long-term
|
|
$
|
175,954
|
|
|
$
|
137,696
|
|
|
|
|
|
|
|
||||
Finance Leases
|
|
|
|
|
|
||||
ROU assets, net,
|
Other assets
|
|
$
|
1,108
|
|
|
$
|
1,263
|
|
Lease liabilities, short-term
|
Accounts payable and accrued expenses
|
|
$
|
542
|
|
|
$
|
589
|
|
Lease liabilities, long-term
|
Long-term other
|
|
$
|
509
|
|
|
$
|
558
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating lease costs
|
$
|
11,022
|
|
|
$
|
8,897
|
|
Financing lease costs:
|
|
|
|
||||
Amortization of right-of-use assets
|
167
|
|
|
257
|
|
||
Interest on lease liabilities
|
11
|
|
|
25
|
|
||
Total financing lease costs
|
178
|
|
|
282
|
|
||
Variable lease costs
|
1,296
|
|
|
1,340
|
|
||
Total lease costs
|
$
|
12,496
|
|
|
$
|
10,519
|
|
|
|
Three Months Ended
March 31, |
||||||
Supplemental Cash Flows Information
|
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Operating cash flows - operating leases
|
|
$
|
9,331
|
|
|
$
|
8,714
|
|
Operating cash flows from finance leases
|
|
$
|
11
|
|
|
$
|
25
|
|
Financing cash flows from finance leases
|
|
$
|
109
|
|
|
$
|
114
|
|
|
|
|
|
|
||||
Lease liabilities arising from new ROU assets:
|
|
|
|
|
||||
Operating leases
|
|
$
|
51,851
|
|
|
$
|
3,059
|
|
Finance leases
|
|
$
|
22
|
|
|
$
|
—
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||
Weighted average remaining lease term (years):
|
|
|
|
|
||
Operating leases
|
|
10.1
|
|
|
6.6
|
|
Finance leases
|
|
2.7
|
|
|
2.7
|
|
|
|
|
|
|
||
Weighted average discount rate:
|
|
|
|
|
||
Operating leases
|
|
5.4
|
%
|
|
5.5
|
%
|
Finance leases
|
|
4.1
|
%
|
|
4.5
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
Remainder of 2020
|
$
|
29,289
|
|
|
$
|
510
|
|
2021
|
34,284
|
|
|
245
|
|
||
2022
|
29,864
|
|
|
204
|
|
||
2023
|
26,016
|
|
|
94
|
|
||
2024
|
22,586
|
|
|
23
|
|
||
Thereafter
|
126,550
|
|
|
23
|
|
||
Total future lease payments
|
268,589
|
|
|
1,099
|
|
||
Less: imputed interest
|
64,091
|
|
|
48
|
|
||
Total
|
$
|
204,498
|
|
|
$
|
1,051
|
|
|
|
|
|
|
|
|
|
|
Operating and Reportable Segments
|
||||||||||||||||||||||
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||||
|
Golf Equipment
|
|
Apparel, Gear
& Other
|
|
Total
|
|
Golf Equipment
|
|
Apparel, Gear
& Other
|
|
Total
|
||||||||||||
Major product category:
|
|
|
|
|
|
|
|
||||||||||||||||
Golf Clubs
|
$
|
251,224
|
|
|
$
|
—
|
|
|
$
|
251,224
|
|
|
$
|
261,785
|
|
|
$
|
—
|
|
|
$
|
261,785
|
|
Golf Balls
|
40,437
|
|
|
—
|
|
|
40,437
|
|
|
61,834
|
|
|
—
|
|
|
61,834
|
|
||||||
Apparel
|
—
|
|
|
77,290
|
|
|
77,290
|
|
|
—
|
|
|
96,246
|
|
|
96,246
|
|
||||||
Gear, Accessories & Other
|
—
|
|
|
73,325
|
|
|
73,325
|
|
|
—
|
|
|
96,332
|
|
|
96,332
|
|
||||||
|
$
|
291,661
|
|
|
$
|
150,615
|
|
|
$
|
442,276
|
|
|
$
|
323,619
|
|
|
$
|
192,578
|
|
|
$
|
516,197
|
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Major Geographic Region:
|
|
|
|
||||
United States
|
$
|
217,503
|
|
|
$
|
249,001
|
|
Europe
|
96,719
|
|
|
126,613
|
|
||
Japan
|
77,347
|
|
|
73,228
|
|
||
Rest of World
|
50,707
|
|
|
67,355
|
|
||
|
$
|
442,276
|
|
|
$
|
516,197
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in thousands)
|
||||||
Beginning balance as of January 1
|
$
|
5,992
|
|
|
$
|
5,610
|
|
Adjustment due to the adoption of Topic 326
|
289
|
|
|
—
|
|
||
Provision for credit losses
|
13
|
|
|
(123
|
)
|
||
Write-off of uncollectible amounts, net of recoveries
|
(154
|
)
|
|
(13
|
)
|
||
Ending balance as of March 31
|
$
|
6,140
|
|
|
$
|
5,474
|
|
|
At January 4, 2019
|
|||
Assets Acquired
|
|
|
||
Cash
|
|
$
|
58,096
|
|
Accounts receivable
|
|
26,637
|
|
|
Inventories
|
|
94,504
|
|
|
Income tax receivable
|
|
6,588
|
|
|
Other current assets
|
|
11,483
|
|
|
Property and equipment
|
|
20,930
|
|
|
Operating lease right-of-use assets
|
|
120,865
|
|
|
Deferred tax assets
|
|
2,930
|
|
|
Other assets
|
|
23
|
|
|
Intangibles - trade name
|
|
239,295
|
|
|
Intangibles - retail partners & distributor relationships
|
|
38,743
|
|
|
Goodwill
|
|
150,180
|
|
|
Total assets acquired
|
|
770,274
|
|
|
Liabilities Assumed
|
|
|
||
Accounts Payable and accrued liabilities
|
|
46,124
|
|
|
Income taxes payable, long-term
|
|
2,416
|
|
|
Operating lease liabilities
|
|
120,524
|
|
|
Deferred tax liabilities
|
|
80,009
|
|
|
Net assets acquired
|
|
$
|
521,201
|
|
|
|
(in thousands)
|
||
Remainder of 2020
|
|
$
|
8,332
|
|
2021
|
|
11,297
|
|
|
2022
|
|
11,519
|
|
|
2023
|
|
9,107
|
|
|
2024
|
|
8,290
|
|
|
Thereafter
|
|
428,835
|
|
|
|
|
$
|
477,380
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Earnings per common share—basic
|
|
|
|
||||
Net income attributable to Callaway Golf Company
|
$
|
28,894
|
|
|
$
|
48,647
|
|
Weighted-average common shares outstanding—basic
|
94,309
|
|
|
94,684
|
|
||
Basic earnings per common share
|
$
|
0.31
|
|
|
$
|
0.51
|
|
Earnings per common share—diluted
|
|
|
|
||||
Net income attributable to Callaway Golf Company
|
$
|
28,894
|
|
|
$
|
48,647
|
|
Weighted-average common shares outstanding—basic
|
94,309
|
|
|
94,684
|
|
||
Outstanding options, restricted stock units and performance share units
|
1,367
|
|
|
1,735
|
|
||
Weighted-average common shares outstanding—diluted
|
95,676
|
|
|
96,419
|
|
||
Diluted earnings per common share
|
$
|
0.30
|
|
|
$
|
0.50
|
|
|
March 31,
2020 |
|
December 31, 2019
|
||||
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
75,823
|
|
|
$
|
76,140
|
|
Work-in-process
|
1,079
|
|
|
860
|
|
||
Finished goods
|
335,788
|
|
|
379,639
|
|
||
|
$
|
412,690
|
|
|
$
|
456,639
|
|
|
Useful
Life
(Years)
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||
|
Gross(1)
|
|
Accumulated Amortization
|
|
Net Book
Value
|
|
Gross
|
|
Accumulated Amortization
|
|
Net Book
Value
|
||||||||||||||||||
Indefinite-lived:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade name, trademark, trade dress and other
|
NA
|
|
$
|
450,015
|
|
|
|
$
|
—
|
|
|
|
$
|
450,015
|
|
|
$
|
453,837
|
|
|
|
$
|
—
|
|
|
|
$
|
453,837
|
|
Amortizing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Patents
|
2-16
|
|
31,581
|
|
|
|
31,581
|
|
|
|
—
|
|
|
31,581
|
|
|
|
31,581
|
|
|
|
—
|
|
||||||
Customer and distributor relationships and other
|
1-10
|
|
53,683
|
|
|
|
15,834
|
|
|
|
37,849
|
|
|
53,904
|
|
|
|
14,318
|
|
|
|
39,586
|
|
||||||
Total intangible assets
|
|
|
$
|
535,279
|
|
|
|
$
|
47,415
|
|
|
|
$
|
487,864
|
|
|
$
|
539,322
|
|
|
|
$
|
45,899
|
|
|
|
$
|
493,423
|
|
|
Remainder of 2020
|
$
|
3,584
|
|
2021
|
4,724
|
|
|
2022
|
4,548
|
|
|
2023
|
4,409
|
|
|
2024
|
4,409
|
|
|
Thereafter
|
16,175
|
|
|
|
$
|
37,849
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Beginning balance
|
$
|
9,636
|
|
|
$
|
7,610
|
|
Provision
|
1,808
|
|
|
2,479
|
|
||
Provision liability assumed from acquisition
|
—
|
|
|
2,327
|
|
||
Claims paid/costs incurred
|
(1,653
|
)
|
|
(1,633
|
)
|
||
Ending balance
|
$
|
9,791
|
|
|
$
|
10,783
|
|
Tax Jurisdiction
|
|
Years No Longer Subject to Audit
|
U.S. federal
|
|
2010 and prior
|
California (U.S.)
|
|
2008 and prior
|
Germany
|
|
2014 and prior
|
Japan
|
|
2013 and prior
|
South Korea
|
|
2014 and prior
|
United Kingdom
|
|
2015 and prior
|
Remainder of 2020
|
$
|
52,402
|
|
2021
|
29,681
|
|
|
2022
|
19,988
|
|
|
2023
|
10,335
|
|
|
2024
|
2,799
|
|
|
|
$
|
115,205
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
|
||||||
Cost of sales
|
$
|
156
|
|
|
$
|
249
|
|
Operating expenses
|
1,705
|
|
|
3,186
|
|
||
Total cost of share-based compensation included in income, before income tax
|
$
|
1,861
|
|
|
$
|
3,435
|
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2020
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts—asset position
|
$
|
7,109
|
|
|
$
|
—
|
|
|
$
|
7,109
|
|
|
$
|
—
|
|
Foreign currency forward contracts—liability position
|
(1,888
|
)
|
|
—
|
|
|
(1,888
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest rate hedge agreements—liability position
|
(19,690
|
)
|
|
—
|
|
|
(19,690
|
)
|
|
—
|
|
||||
|
$
|
(14,469
|
)
|
|
$
|
—
|
|
|
$
|
(14,469
|
)
|
|
$
|
—
|
|
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts—asset position
|
$
|
61
|
|
|
$
|
—
|
|
|
$
|
61
|
|
|
$
|
—
|
|
Foreign currency forward contracts—liability position
|
(766
|
)
|
|
—
|
|
|
(766
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cross-currency debt swap agreements—asset position
|
6,163
|
|
|
—
|
|
|
6,163
|
|
|
—
|
|
||||
Cross-currency debt swap agreements—liability position
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest rate hedge agreements—asset position
|
(8,894
|
)
|
|
—
|
|
|
(8,894
|
)
|
|
—
|
|
||||
|
$
|
(3,461
|
)
|
|
$
|
—
|
|
|
$
|
(3,461
|
)
|
|
$
|
—
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
Term Loan Facility(1)
|
$
|
445,200
|
|
|
$
|
411,810
|
|
|
$
|
446,400
|
|
|
$
|
450,864
|
|
Primary Asset-Based Revolving Credit Facility(2)
|
$
|
300,257
|
|
|
$
|
300,257
|
|
|
$
|
114,480
|
|
|
$
|
114,480
|
|
Japan ABL Facility(2)
|
$
|
35,336
|
|
|
$
|
35,336
|
|
|
$
|
30,100
|
|
|
$
|
30,100
|
|
Equipment notes(3)
|
$
|
28,283
|
|
|
$
|
28,283
|
|
|
$
|
19,715
|
|
|
$
|
19,715
|
|
Standby letters of credit(4)
|
$
|
1,375
|
|
|
$
|
1,375
|
|
|
$
|
1,075
|
|
|
$
|
1,075
|
|
|
(1)
|
In January 2019, the Company entered into the Term Loan Facility. The fair value of this debt is categorized within Level 2 of the fair value hierarchy. The fair value of the Term Loan Facility as of March 31, 2020 was affected by volatile market conditions resulting from to the COVID-19 pandemic. See Note 6 for further information.
|
(2)
|
The carrying value of the amounts outstanding under the Company's ABL Facility and Japan ABL Facility 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 based on the observable market borrowing rates. See Note 6 for information on the Company's credit facilities, including certain risks and uncertainties related thereto.
|
(3)
|
In December 2017, August 2019 and March 2020, the Company entered into equipment notes that are both secured by certain equipment at the Company's golf ball manufacturing facility. The fair value of this debt is categorized within Level 2 of the fair value hierarchy. See Note 6 for further information.
|
(4)
|
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, using the exchange rates in effect at March 31, 2020 and December 31, 2019. As such, the fair value of this contingent obligation is categorized within Level 2 of the fair value hierarchy.
|
|
Balance Sheet Location
|
|
Fair Value of
Asset Derivatives
|
||||||
|
March 31, 2020
|
|
December 31, 2019
|
||||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
1,395
|
|
|
$
|
53
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Other current assets
|
|
$
|
5,714
|
|
|
$
|
8
|
|
|
Balance Sheet Location
|
|
Fair Value of
Liability Derivatives
|
||||||
|
March 31, 2020
|
|
December 31, 2019
|
||||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accounts payable and accrued expenses
|
|
$
|
129
|
|
|
$
|
24
|
|
|
|
|
|
|
|
||||
Cross-currency debt swap agreements
|
Accounts payable and accrued expenses
|
|
—
|
|
|
25
|
|
||
|
|
|
|
|
|
||||
Interest rate hedge agreements
|
Accounts payable and accrued expenses
|
|
4,402
|
|
|
1,865
|
|
||
|
Other long-term liabilities
|
|
15,288
|
|
|
7,030
|
|
||
Total
|
|
|
$
|
19,819
|
|
|
$
|
8,944
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
Accounts payable and accrued expenses
|
|
$
|
1,759
|
|
|
$
|
741
|
|
|
|
Gain/(Loss) Recognized in Other Comprehensive Income
(Effective Portion) |
||||||
|
|
Three Months Ended
March 31, |
||||||
Derivatives designated as cash flow hedging instruments
|
|
2020
|
|
2019
|
||||
Foreign currency forward contracts
|
|
$
|
2,410
|
|
|
$
|
546
|
|
Cross-currency debt swap agreements
|
|
15,081
|
|
|
4,071
|
|
||
Interest rate hedge agreements
|
|
(11,233
|
)
|
|
(3,941
|
)
|
||
|
|
$
|
6,258
|
|
|
$
|
676
|
|
|
|
Gain/(Loss) Reclassified from Other Comprehensive Income into Earnings
(Effective Portion)
|
||||||
|
|
Three Months Ended
March 31, |
||||||
Derivatives designated as cash flow hedging instruments
|
|
2020
|
|
2019
|
||||
Foreign currency forward contracts
|
|
$
|
233
|
|
|
$
|
146
|
|
Cross-currency debt swap agreements
|
|
7,048
|
|
|
3,714
|
|
||
Interest rate hedge agreements
|
|
(434
|
)
|
|
(10
|
)
|
||
|
|
$
|
6,847
|
|
|
$
|
3,850
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Net Gain Recognized in Income on Derivative Instruments
|
|
Amount of Net Gain/(Loss) Recognized in Income on
Derivative Instruments
|
||||||
Derivatives not designated as hedging instruments
|
|
Three Months Ended
March 31, |
||||||||
|
2020
|
|
2019
|
|||||||
Foreign currency forward contracts
|
|
Other expense, net
|
|
$
|
5,856
|
|
|
$
|
750
|
|
|
|
|
|
|
|
|
|
|
Derivative Instruments
|
|
Foreign Currency Translation
|
|
Total
|
||||||
Accumulated other comprehensive loss, December 31, 2019, after tax
|
|
$
|
(4,203
|
)
|
|
$
|
(18,219
|
)
|
|
$
|
(22,422
|
)
|
Change in derivative instruments
|
|
6,258
|
|
|
—
|
|
|
6,258
|
|
|||
Net gains reclassified to cost of goods sold
|
|
(233
|
)
|
|
—
|
|
|
(233
|
)
|
|||
Net gains reclassified to other income (expense)
|
|
(5,735
|
)
|
|
—
|
|
|
(5,735
|
)
|
|||
Net gains reclassified to interest expense
|
|
(879
|
)
|
|
—
|
|
|
(879
|
)
|
|||
Income tax benefit on derivative instruments
|
|
430
|
|
|
—
|
|
|
430
|
|
|||
Foreign currency translation adjustments
|
|
—
|
|
|
(14,936
|
)
|
|
(14,936
|
)
|
|||
Accumulated other comprehensive loss, March 31, 2020, after tax
|
|
$
|
(4,362
|
)
|
|
$
|
(33,155
|
)
|
|
$
|
(37,517
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019(1)
|
||||
Net sales:
|
|
|
|
||||
Golf Equipment
|
$
|
291,661
|
|
|
$
|
323,619
|
|
Apparel, Gear and Other
|
150,615
|
|
|
192,578
|
|
||
|
$
|
442,276
|
|
|
$
|
516,197
|
|
Income before income taxes:
|
|
|
|
||||
Golf Equipment
|
$
|
58,620
|
|
|
$
|
70,652
|
|
Apparel, Gear and Other
|
(3,799
|
)
|
|
22,060
|
|
||
Reconciling items(2)
|
(16,776
|
)
|
|
(34,655
|
)
|
||
|
$
|
38,045
|
|
|
$
|
58,057
|
|
Additions to long-lived assets:(3)
|
|
|
|
||||
Golf Equipment
|
$
|
16,962
|
|
|
$
|
5,417
|
|
Apparel, Gear and Other
|
10,124
|
|
|
4,392
|
|
||
|
$
|
27,086
|
|
|
$
|
9,809
|
|
|
(1)
|
The Company continues to refine its expense allocation methodology between operating segments. As a result, the Company reclassified certain information technology expenses between the segments in the first quarter of 2019 in order to conform with the current presentation.
|
(2)
|
Reconciling items represent the deduction of corporate general and administration expenses and other income (expenses), which are not utilized by management in determining segment profitability. The decrease in reconciling items for the three months ended March 31, 2020 compared to March 31, 2019 was primarily due to an increase of $8,325,000 in net gains recognized on hedging contracts combined with a decrease, primarily in employee costs and general and administrative expenses, in the first quarter of 2020. Additionally, during the first quarter of 2019, the reconciling items included non-recurring charges of $4,723,000 in the first quarter of 2019 related to the acquisition of Jack Wolfskin. See Note 6 for information on the Company's credit facilities and long-term debt obligations.
|
(3)
|
Additions to long-lived assets are comprised of purchases of property, plant and equipment.
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Decline
|
|||||||||||
|
2020
|
|
2019
|
|
Dollars
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Golf Equipment
|
$
|
291.7
|
|
|
$
|
323.6
|
|
|
$
|
(31.9
|
)
|
|
-9.9
|
%
|
Apparel, Gear and Other
|
150.6
|
|
|
192.6
|
|
|
(42.0
|
)
|
|
-21.8
|
%
|
|||
|
$
|
442.3
|
|
|
$
|
516.2
|
|
|
$
|
(73.9
|
)
|
|
-14.3
|
%
|
|
Three Months Ended March 31,
|
|
Growth / (Decline)
|
|
Constant Currency Growth vs. 2019
|
|||||||||||
|
2020
|
|
2019
|
|
Dollars
|
|
Percent
|
|
Percent
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
217.5
|
|
|
$
|
249.0
|
|
|
$
|
(31.5
|
)
|
|
-12.6
|
%
|
|
-12.6%
|
Europe
|
96.7
|
|
|
126.6
|
|
|
(29.9
|
)
|
|
-23.6
|
%
|
|
-21.5%
|
|||
Japan
|
77.3
|
|
|
73.2
|
|
|
4.1
|
|
|
5.6
|
%
|
|
4.5%
|
|||
Rest of World
|
50.8
|
|
|
67.4
|
|
|
(16.6
|
)
|
|
-24.6
|
%
|
|
-21.7%
|
|||
|
$
|
442.3
|
|
|
$
|
516.2
|
|
|
$
|
(73.9
|
)
|
|
-14.3
|
%
|
|
-13.6%
|
|
Three Months Ended
March 31, |
|
Decline
|
|||||||||||
|
2020
|
|
2019
|
|
Dollars
|
|
|
Percent
|
|
|||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Apparel
|
$
|
77.3
|
|
|
$
|
96.2
|
|
|
$
|
(18.9
|
)
|
|
-19.6
|
%
|
Gear, Accessories, & Other
|
73.3
|
|
|
96.3
|
|
|
(23.0
|
)
|
|
-23.9
|
%
|
|||
|
$
|
150.6
|
|
|
$
|
192.5
|
|
|
$
|
(41.9
|
)
|
|
-21.8
|
%
|
|
Three Months Ended
March 31, |
|
Decline
|
|||||||||||
|
2020
|
|
2019(1)
|
|
Dollars
|
|
Percent
|
|||||||
Income before income taxes:
|
|
|
|
|
|
|
|
|||||||
Golf Equipment
|
$
|
58.6
|
|
|
$
|
70.6
|
|
|
$
|
(12.0
|
)
|
|
-17.0
|
%
|
Apparel, Gear and Other
|
(3.8
|
)
|
|
22.1
|
|
|
(25.9
|
)
|
|
-117.2
|
%
|
|||
Reconciling items(2)
|
(16.8
|
)
|
|
(34.6
|
)
|
|
17.8
|
|
|
51.4
|
%
|
|||
|
$
|
38.0
|
|
|
$
|
58.1
|
|
|
$
|
(20.1
|
)
|
|
-34.6
|
%
|
|
(1)
|
The Company continues to refine its expense allocation methodology between operating segments. As a result, the Company reclassified certain information technology expenses between the segments in the first quarter of 2019 in order to conform with the current presentation.
|
(2)
|
Reconciling items represent corporate general and administrative expenses and other income (expense) not included by management in determining segment profitability. The $17.9 million decrease in reconciling items in the first quarter of 2020 compared to the first quarter of 2019 was primarily due to an increase of $8.3 million in net gains recognized on hedging contracts combined with a decrease, primarily in employee costs, in general and administrative expenses, both in the first quarter of 2020, in addition to non-recurring acquisition charges of $4.7 million recognized in the first quarter of 2019 related to the acquisition of Jack Wolfskin, which was completed in January 2019.
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Term Loan Facility(1)
|
$
|
445.2
|
|
|
$
|
3.6
|
|
|
$
|
9.6
|
|
|
$
|
9.6
|
|
|
$
|
422.4
|
|
Interest on term loan facility
|
136.3
|
|
|
24.2
|
|
|
47.8
|
|
|
46.8
|
|
|
17.5
|
|
|||||
Equipment notes(2)
|
28.3
|
|
|
6.2
|
|
|
12.3
|
|
|
6.8
|
|
|
3.0
|
|
|||||
Interest on equipment notes
|
2.1
|
|
|
0.8
|
|
|
0.9
|
|
|
0.3
|
|
|
0.1
|
|
|||||
ABL Facility
|
300.2
|
|
|
300.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Japan ABL Facility
|
35.3
|
|
|
35.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Finance leases, including imputed interest(3)
|
1.1
|
|
|
0.5
|
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
|||||
Operating leases, including imputed interest(4)
|
268.6
|
|
|
29.3
|
|
|
64.1
|
|
|
48.6
|
|
|
126.6
|
|
|||||
Unconditional purchase obligations(5)
|
115.2
|
|
|
52.4
|
|
|
49.7
|
|
|
13.1
|
|
|
—
|
|
|||||
Uncertain tax contingencies(6)
|
7.4
|
|
|
0.6
|
|
|
0.9
|
|
|
1.1
|
|
|
4.8
|
|
|||||
Other long term liabilities
|
7.9
|
|
|
0.4
|
|
|
0.9
|
|
|
0.9
|
|
|
5.7
|
|
|||||
Total
|
$
|
1,347.6
|
|
|
$
|
453.5
|
|
|
$
|
186.6
|
|
|
$
|
127.3
|
|
|
$
|
580.2
|
|
|
(1)
|
In January 2019, to fund the purchase price of the Jack Wolfskin acquisition, the Company entered into a Credit Agreement which provides for a Term Loan B facility in an aggregate principal of $480.0 million, which was issued less $9.6 million in original issue discount and other transaction fees. As of March 31, 2020, the Company had $445.2 million outstanding under the Term Loan Facility, which is offset by unamortized debt issuance costs of $14.9 million as presented on the Company's consolidated condensed balance sheet as of March 31, 2020. For further discussion, see Note 6 "Financing Arrangements" to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
(2)
|
In connection with the Company's investment initiatives to improve its manufacturing capabilities at its golf ball manufacturing facility in Chicopee, Massachusetts, the Company entered into a series of long-term financing agreements (the "equipment notes") between 2017 and 2020 that are secured by certain equipment at this facility. As of March 31, 2020, the Company had a combined $28.3 million outstanding under these equipment notes. For further discussion, see Note 6 "Financing Arrangements" to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
(3)
|
Amounts represent future minimum payments under financing leases. At March 31, 2020, finance lease liabilities of $0.5 million were recorded in accounts payable and accrued expenses and $0.5 million were recorded in other long-term liabilities in the accompanying consolidated condensed balance sheets. For further discussion, see Note 2 "Leases" to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
(4)
|
The Company leases certain manufacturing facilities, distribution centers, warehouses, 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. At March 31, 2020, short-term and long-term operating lease liabilities of $28.5 million
|
(5)
|
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. The amounts listed approximate minimum purchase obligations, base compensation, and guaranteed minimum royalty payments the Company is obligated to pay under these agreements. The actual amounts paid under some of these agreements may be higher or lower than the amounts included. In the aggregate, the actual amount paid under these obligations is likely to be higher than the amounts listed as a result of the variable nature of these obligations. In addition, the Company also enters into unconditional purchase obligations with various vendors and suppliers of goods and services in the normal course of operations through purchase orders or other documentation or that are undocumented except for an invoice. Such unconditional purchase obligations are generally outstanding for periods less than a year and are settled by cash payments upon delivery of goods and services and are not reflected in this line item.
|
(6)
|
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 March 31, 2020. Amounts exclude uncertain income tax positions that the Company would be able to offset against deferred taxes. For further discussion, see Note 13 “Income Taxes” to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||||
|
Total Number
of Shares Purchased |
|
Weighted
Average Price Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Program(1)
|
|
Maximum Dollar Value that May Yet Be Purchased Under the Program
|
||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||
January 1, 2020-January 31, 2020
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
—
|
|
|
|
|
$
|
99,322
|
|
|
February 1, 2020-February 29, 2020
|
|
748
|
|
|
|
|
$
|
19.86
|
|
|
|
|
748
|
|
|
|
|
$
|
84,456
|
|
|
March 1, 2020-March 31, 2020
|
|
418
|
|
|
|
|
$
|
16.92
|
|
|
|
|
418
|
|
|
|
|
$
|
77,384
|
|
|
Total
|
|
1,166
|
|
|
|
|
$
|
18.80
|
|
|
|
|
1,166
|
|
|
|
|
$
|
77,384
|
|
|
|
(1)
|
The Company has suspended the 2019 Repurchase Program. The Company has the ability to resume purchases if it deems circumstances warrant it.
|
3.1
|
|
|
Certificate of Incorporation, incorporated herein by this reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, as filed with the Commission on July 1, 1999 (file no. 1-10962).
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
4.1
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
10.4
|
|
|
|
|
|
|
|
10.5
|
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
|
|
10.9
|
|
|
|
|
|
|
10.10
|
|
|
|
|
|
|
|
10.11
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
101.1
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
||
101.2
|
|
|
XBRL Taxonomy Extension Schema Document †
|
|
|
||
101.3
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document †
|
|
|
||
101.4
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document †
|
|
|
||
101.5
|
|
|
XBRL Taxonomy Extension Label Linkbase Document †
|
|
|
||
101.6
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document †
|
|
|
|
|
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) †
|
|
CALLAWAY GOLF COMPANY
|
|
|
|
By:
|
/s/ Jennifer Thomas
|
|
Jennifer Thomas
|
|
Vice President and
Chief Accounting Officer
|
OBLIGORS:
CALLAWAY GOLF COMPANY,
a Delaware corporation
By: /s/Brian P. Lynch
Name: Brian P. Lynch
Title: Executive Vice President and Chief Financial Officer
|
Address for Borrower Agent:
Callaway Golf Company
2180 Rutherford Road
Carlsbad, CA 92008
Attention: Brian P. Lynch
Telephone: (760) 804-4056
Email: Brian.Lynch@callawaygolf.com
With a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Attention: Aaron F. Adams
Facsimile: (212) 351-2494
Email: AFAdams@gibsondunn.com
|
CALLAWAY GOLF SALES COMPANY,
a California corporation
By: /s/Jennifer L. Thomas
Name: Jennifer L. Thomas
Title: Chief Financial Officer and Treasurer
|
CALLAWAY GOLF BALL OPERATIONS, INC.,
a Delaware corporation
By: /s/Jennifer L. Thomas
Name: Jennifer L. Thomas
Title: Treasurer
|
OGIO INTERNATIONAL, INC.,
a Utah corporation
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: Vice President and Treasurer
|
TRAVISMATHEW, LLC,
a California limited liability company
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: Treasurer
|
JACK WOLFSKIN NORTH AMERICA, INC.,
a Delaware corporation
By: /s/Brian P. Lynch
Name: Brian P. Lynch
Title: President and Chief Executive Officer
|
CALLAWAY GOLF INTERACTIVE, INC.
a Texas corporation
By: /s/Jennifer L. Thomas
Name: Jennifer L. Thomas
Title: Chief Financial Officer
|
CALLAWAY GOLF INTERNATIONAL SALES COMPANY,
a California corporation
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: President
|
CALLAWAY GOLF CANADA LTD.,
a Canada corporation
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: Director
|
CALLAWAY GOLF EUROPE LTD.,
a company organized under the laws of England and Wales
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: Director
By: /s/ Neil Howie
Name: Neil Howie
Title: Director
|
CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,
a company limited by shares incorporated under the laws of England and Wales
By: /s/ Neil Howie
Name: Neil Howie
Title: Director
By: /s/ Steven Gluyas
Name: Steven Gluyas
Title: Director
|
CALLAWAY GERMANY HOLDCO GMBH,
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/Patrick S. Burke
Name: Patrick S. Burke
Title: Managing Director
By: /s/ Melody Harris‑Jensbach
Name: Melody Harris‑Jensbach
Title: Managing Director
|
JW STARGAZER HOLDING GMBH,
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris‑Jensbach
Name: Melody Harris‑Jensbach
Title: Managing Director
By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director
|
SKYRAGER GMBH,
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris‑Jensbach
Name: Melody Harris‑Jensbach
Title: Managing Director
By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director
|
JACK WOLFSKIN AUSRÜSTUNG FÜR DRAUSSEN GMBH & CO. KGAA,
a partnership limited by shares (Kommanditgesellschaft auf Aktien) under the laws of the Federal Republic of Germany, acting through its managing partner, SKYRAGER GMBH
By: /s/ Melody Harris Jensbach_
Name: Melody Harris Jensbach
Title: Managing Director
By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director
|
JACK WOLFSKIN RETAIL GMBH,
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris Jensbach
Name: Melody Harris Jensbach
Title: Managing Director
By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director
|
AGENT AND LENDERS
|
BANK OF AMERICA, N.A., as Agent and as a U.S. Lender
By: /s/ James Fallahay
Name: James Fallahay
Title: Senior Vice President
Address:
Bank of America, N.A.
520 Newport Center Drive, Ste. 900
Newport Beach, CA 92660
Attn: James Fallahay
E-Mail: james.fallahay@baml.com
Telecopy: (415) 228-5278
With a copy to:
Morgan, Lewis & Bockius LLP
300 South Grand Avenue, 22nd Floor Los Angeles, California 90071-3132 Attn: Marshall Stoddard, Jr., Esq.
E-Mail: mstoddard@morganlewis.com
Telecopy: (213) 612-2501 |
BANK OF AMERICA, N.A.
(acting through its London branch), as a U.K. Lender and a German Lender
By: /s/ James Fallahay
Name: James Fallahay
Title: Senior Vice President
Address: On File with Agent
|
BANK OF AMERICA, N.A.
(acting through its Canada branch), as a Canadian Lender
By: /s/ Sylwia Durkiewicz
Name: Sylwia Durkiewicz
Title: Vice President
Address:
Bank of America, N.A.
181 Bay Street, Suite 400
Toronto, ON M5J 2V8
Attn: Sylwia Durkiewicz
E-Mail: sylwia.durkiewicz@baml.com
Telecopy: (312) 453-4041
|
SUNTRUST BANK,
as a U.S. Lender, a Canadian Lender,
a U.K. Lender, and a German Lender
By: /s/ Dan Clubb
Name: Dan Clubb
Title: Director
Address: On File with Agent
|
MUFG UNION BANK, N.A.,
as a U.S. Lender, a Canadian Lender,
a U.K. Lender, and a German Lender
By: /s/ Peter Ehlinger
Name: Peter Ehlinger
Title: Vice President
Address: On File with Agent
|
JPMORGAN CHASE BANK, N.A.,
as a U.S. Lender
By: /s/ Daniel Stampfel
Name: Daniel Stampfel
Title: Authorized Officer
Address:
2200 Ross Avenue, 9th FL
Dallas, TX 75201
Attn: Daniel Stampfel
E-Mail: daniel.j.stampfel@jpmorgan.com
Telecopy: 214-965-2594
|
JPMORGAN CHASE BANK, N.A.
LONDON BRANCH,
as a U.K. Lender and a German Lender
By: /s/ Kennedy A. Capin
Name: Kennedy A. Capin
Title: Executive Director
Address:
JPMorgan Chase Bank, N.A.,
25 Bank Street, Canary Wharf
London, E14 5JP
Attn: Kennedy Capin
E-Mail: kennedy.a.capin@jpmorgan.com
Telecopy: +44 (0)20 3493 1365
|
JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH,
as a Canadian Lender
By: /s/ Auggie Marchetti
Name: Auggie Marchetti
Title: Authorized Officer
Address:
JPMorgan Chase Bank, N.A.,
66 Wellington Street West, 45th Floor
Toronto, ON M5K 1E7
Attn: Auggie Marchetti
E-Mail: agostino.a.marchetti@jpmorgan.com
|
/S/ OLIVER G. BREWER III
|
Oliver G. Brewer III
President and Chief Executive Officer
|
/S/ BRIAN P. LYNCH
|
Brian P. Lynch
Executive Vice President and Chief Financial Officer |
/S/ OLIVER G. BREWER III
|
Oliver G. Brewer III
President and Chief Executive Officer
|
/S/ BRIAN P. LYNCH
|
Brian P. Lynch
Executive Vice President and Chief Financial Officer |