TOPGOLF CALLAWAY BRANDS CORP. The following discussion should be read in conjunction with the Consolidated Condensed Financial Statements and the related notes that appear elsewhere in this report. See also "Important Notice to Investors Regarding Forward-Looking Statements" on page 2 of this report. Discussion of Non-GAAP Measures In addition to the financial results contained in this report, which have been prepared and presented in accordance with the accounting principles generally accepted inthe United States ("GAAP"), the Company has also included supplemental information concerning the Company's financial results on a non-GAAP basis. This non-GAAP information includes certain of the Company's financial results on a constant currency basis. This constant currency information estimates what the Company's financial results would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency results and translating them intoU.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. In addition, this non-GAAP information includes certain of the Company's financial results without certain non-cash charges recognized in the three months endedMarch 31, 2021 , including a gain to step-up the Company's former investment in Topgolf to its fair value, amortization expense of intangible assets associated with the Jack Wolfskin, OGIO, TravisMathew acquisitions and more recently the merger with Topgolf, the discount amortization of the Convertible Notes issued inMay 2020 , a valuation allowance on certain deferred tax assets, in addition to other non-recurring expenses. For the three months endedMarch 31, 2020 , non-GAAP financial results exclude certain non-cash charges, including amortization expense of intangible assets associated with the Jack Wolfskin, OGIO and TravisMathew acquisitions, in addition to non-recurring costs associated with the Company's transition to the new North America Distribution Center, in addition to other integration costs associated with Jack Wolfskin. The Company has included in this report information to reconcile this non-GAAP information to the most directly comparable GAAP information. The non-GAAP information presented in this report should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP. The non-GAAP information may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management uses such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate period over period comparisons of the underlying performance of its business and in forecasting the Company's business going forward. Management believes that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful comparative information for investors in their assessment of the underlying performance of the Company's business. Results of Operations Overview of Business, Seasonality and Foreign Currency Business and Products The Company designs, manufactures and sells a full line of high quality golf equipment, including golf clubs and golf balls, and apparel, gear and other products. The Company designs its golf products to be technologically advanced and in this regard invests a considerable amount in research and development each year. The Company designs its golf products for golfers of all skill levels, both amateur and professional. In addition, the Company designs and sells a full line of high quality soft goods, including golf bags, apparel, footwear and other golf accessories. In 2017, the Company expanded its soft goods lines with the acquisitions of OGIO and TravisMathew. Under the OGIO brand, the Company offers a full line of premium personal storage gear for sport and personal use and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. InJanuary 2019 , the Company completed the acquisition ofJW Stargazer Holding GmbH , the owner of the international, premium outdoor apparel, gear and accessories brand, Jack Wolfskin. This acquisition further enhanced the Company's lifestyle category and provides a platform for future growth in the active outdoor and urban outdoor categories. The Company's soft goods under the Callaway, OGIO, TravisMathew and Jack Wolfskin brands are largely designed and developed internally. OnMarch 8, 2021 , the Company completed its previously announced merger with Topgolf. Topgolf is a leading tech-enabled golf entertainment business, with an innovative platform that comprises its state-of-the-art open-air golf and entertainment venues, revolutionary Toptracer ball-tracking technology and innovative media platform. The combined 40 -------------------------------------------------------------------------------- company will benefit from a compelling family of brands with reach across multiple channels including retail, venues, e-commerce and digital communities. The Company's results of operations below therefore present the consolidated results of the Company and Topgolf for the quarter endedMarch 31, 2021 . The Company's Topgolf subsidiary operates on a 52- or 53-week fiscal year ending on the Sunday closest toDecember 31 . As such, the Topgolf financial information included in the Company's consolidated condensed financial statements for the quarter endedMarch 31, 2021 , is for the period beginningMarch 8, 2021 (merger date) throughApril 4, 2021 . Additionally, based on the Company's assessment of the combined business, the Company modified the presentation of its consolidated condensed statement of operations for the three months endedMarch 31, 2021 and 2020. For further information about the merger with Topgolf see Note 6 "Business Combinations" to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.The Company's Topgolf operating segment is comprised of Topgolf venues, Toptracer and media that leverage its brand, proprietary technology, and hospitality offerings to create entertainment experiences for its guests. The Venues business consists of Company-operated venues withinthe United States and company-operated and franchised venues outsidethe United States . Topgolf's venues offer state-of-the-art entertainment facilities with multiple forms of entertainment and are equipped with technology-enabled hitting bays, multiple bars, dining areas and exclusive event spaces. Revenue from company-operated venues is primarily derived from food and beverage, gameplay, and events. Topgolf receives a royalty from its franchised locations. As ofMarch 31, 2021 , Topgolf had 60 venues operating inthe United States with an additional seven venues under construction, three Company-operated venues in theUnited Kingdom and three franchised venues (Australia ,Mexico andUnited Arab Emirates ), in addition to one Company-operated venue under construction in theUnited Kingdom and one franchised venue under construction inGermany . Topgolf has other lines of business, including the Toptracer ball-flight tracking technology, which is licensed to independent driving ranges and used in golf broadcasts, the World Golf Tour digital golf game, digital content creation and sponsorship operations. As ofMarch 31, 2021 , Topgolf had 10,173 Toptracer bays installed. Operating and Reportable Segments The Company has three operating and reportable segments, namely Golf Equipment, Apparel, Gear and Other and Topgolf. The Golf Equipment operating segment, which is comprised of golf club and golf ball products, includesCallaway Golf branded woods, hybrids, irons, wedges, Odyssey putters, including Toulon Design putters by Odyssey, packaged sets,Callaway Golf and Strata branded golf balls and sales of pre-owned golf clubs. The Apparel, Gear and Other operating segment includes Jack Wolfskin outdoor apparel, gear and accessories business, the TravisMathew golf and lifestyle apparel and accessories business, and the Callaway and OGIO businesses, which consist of golf apparel and accessories, storage gear for sport and personal use, and royalties from licensing of the Company's trademarks and service marks for various soft goods products. The Topgolf operating segment includes Company-operated Topgolf venues equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces, franchised venues outside ofthe United States , Toptracer ball-flight tracking technology used by independent driving ranges and broadcast television and the Company's WGT digital golf game. For further information about the Company's segments, see Note 19 "Segment Information" to the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q. Cost of Products and Services The Company's cost of products is comprised primarily of material and component costs, distribution and warehousing costs, and overhead. Historically, over 85% of the Company's manufacturing costs, primarily material and component costs, are variable in nature and fluctuate with sales volumes. With respect to the Company's Golf Equipment operating segment, variable costs as a percentage of cost of sales range between 85% to 95% for golf club products and 70% to 80% for golf ball products. Variable costs for soft goods in the Apparel, Gear and Other operating segment are generally greater than 85% as fewer fixed costs are used in the manufacturing of soft goods products. Generally, the relative significance of the components of cost of sales does not vary materially from these percentages from period to 41 -------------------------------------------------------------------------------- period. In addition, cost of products include hardware costs with respect to Topgolf's Toptracer license agreements classified as sales-type leases, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. The Company's cost of services primarily consists of food and beverage costs and transaction fees with respect to in-app purchases within the Company's WGT digital golf game. Food and beverage costs are variable by nature, change with sales volume, and are impacted by product mix and commodity pricing. Other Venue Expenses Other venue expenses consist of salaries and wages, bonuses, commissions, payroll taxes, and other employee costs that directly support venue operations, rent and occupancy costs, property taxes, depreciation associated with venues, supplies, credit card fees and marketing expenses. The Company anticipates that expenses associated with labor and benefits will increase in the foreseeable future as the Topgolf business continues to expand its operations. Other venue expenses include both fixed and variable components and are therefore not directly correlated with revenue. Venue Pre-Opening Costs Venue pre-opening costs primarily include costs associated with activities prior to the opening of a new company-operated venue, as well as other costs that are not considered in the evaluation of ongoing performance. The Company expects to continue incurring pre-opening costs as it executes its growth trajectory of adding new company-operated venues. Pre-opening costs are expected to fluctuate based on the timing, size and location of new company-operated venues. For a further discussion of revenue and costs on the Company's segments, see "Operating Segment Results for the Three Months EndedMarch 31, 2021 and 2020-Segment Profitability." Seasonality Golf Equipment In most of the regions where the Company conducts business, the game of golf is played primarily on a seasonal basis. Weather conditions generally restrict golf from being played year-round, except in a few markets, with many of the Company's on-course customers closing for the cold weather months. The Company's golf equipment business is therefore subject to seasonal fluctuations. In general, during the first quarter, the Company begins selling its golf club and golf ball products into the golf retail channel for the new golf season. This initial sell-in generally continues into the second quarter. Second-quarter sales are significantly affected by the amount of reorder business of the products sold during the first quarter. Third-quarter sales are generally dependent on reorder business but can also include smaller new product launches, typically resulting in lower sales than the second quarter as many retailers begin decreasing their inventory levels in anticipation of the end of the golf season. Fourth-quarter sales are generally less than the other quarters due to the end of the golf season in many of the Company's key regions. However, third-quarter sales can be affected by a mid-year product launch, and fourth-quarter sales can be affected from time to time by the early launch of product introductions related to the new golf season of the subsequent year. This seasonality, and therefore quarter-to-quarter fluctuations, can be affected by many factors, including the timing of new product introductions as well as weather conditions. In general, because of this seasonality, a majority of the Company's sales from its Golf Equipment operating segment and most, if not all, of its profitability from this segment generally occurs during the first half of the year. Apparel, Gear and Other Sales of the Company's golf and lifestyle apparel, gear and accessories generally follow the same seasonality as golf equipment, and are therefore generally higher during the first half of the year when the game of golf is mostly played. Sales of outdoor apparel, footwear and equipment related to the Jack Wolfskin business focuses primarily on outerwear and consequently experiences stronger sales for such products during the cold-weather months and the corresponding prior sell-in periods. Therefore, sales of Jack Wolfskin products are generally greater during the second half of the year. Topgolf Operating results fluctuate from quarter to quarter due to seasonal factors. Historically, venues experience nominally higher second and third quarter revenues associated with the spring and summer. Topgolf's first and fourth quarters have historically had lower revenues at its venues as compared to the other quarters due to cooler temperatures. Seasonality is expected to be a factor in Topgolf's results of operations. As a result, factors affecting peak seasons at venues, such as adverse weather, could have a disproportionate effect on its operating results. 42 -------------------------------------------------------------------------------- Foreign Currency A significant portion of the Company's business is conducted outside ofthe United States in currencies other than theU.S. dollar. As a result, changes in foreign currency rates can have a significant effect on the Company's financial results. The Company enters into foreign currency forward contracts to mitigate the effects of changes in foreign currency rates. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates, they do not eliminate those effects, which can be significant. These effects include (i) the translation of results denominated in foreign currency intoU.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of the Company's foreign currency forward contracts. In general, the Company's overall financial results are affected positively by a weakerU.S. dollar and are affected negatively by a strongerU.S. dollar as compared to the foreign currencies in which the Company conducts its business. Executive Summary Management is pleased with the overall state and trends of the Company's business and performance for the first quarter of 2021. The Company completed its merger with Topgolf onMarch 8, 2021 , which has started strongly, contributing an incremental$92.6 million in revenues for the first quarter of 2021, which represented four weeks of Topgolf revenue. Additionally, the Company's Golf Equipment business is continuing to experience unprecedented demand resulting in an increase in revenues of$85.2 million or 29.2% and the Company's Apparel, Gear and Other business is recovering from the pandemic faster than anticipated resulting in a$31.5 million increase or 20.9% in revenue for the quarter compared to the first quarter of 2020. As a result, the Company's net revenues for the first quarter of 2021 increased 47.3% to$651.6 million compared to the first quarter of 2020, a new first quarter record for the Company. Operating income increased 87.1% to$76.1 million in the first quarter of 2021 compared to the first quarter of 2020. This improvement was driven by the increase in net revenues across all business segments combined with operating expense leverage and favorable foreign currency exchange rates. This improvement was partially offset by an increase in freight costs, lower in-store retail revenue primarily in the soft goods segment driven by further government mandated shutdowns in centralEurope , and an increase in non-recurring charges, primarily due to acquisition costs in connection with the merger with Topgolf. Interest expense increased$8.3 million to$17.5 million in the first quarter of 2021 compared to$9.2 million in the first quarter of 2020, which was largely the result of interest on the Company's convertible note offering completed inMay 2020 as well as incremental Topgolf interest related to the debt and deemed landlord financed lease obligations assumed in the merger with Topgolf. In connection with the merger with Topgolf, the Company wrote up its pre-merger investment in Topgolf to its fair value, and recognized a gain of$252.5 million in the first quarter of 2021. In connection with the merger with Topgolf, the Company acquired cash of$171.3 million and assumed long-term debt of$535.1 million . Due to the Topgolf cash, the convertible note offering, the Company's efforts to maximize cash and liquidity following the COVID-19 pandemic, combined with the current state of its business, the Company's liquidity significantly improved and is at an all-time high. AtMarch 31, 2021 , the Company's cash and available liquidity under its credit facilities increased to$713.1 million compared to$263.4 million atMarch 31, 2020 . Looking forward, although the COVID-19 pandemic continues to have some negative impact on the Company's business, especially in the international markets, the Company is pleased that all of its business segments, including Topgolf, support an active outdoor lifestyle that is compatible with a world of social distancing, and it anticipates that its continued brand momentum, increased demand for golf equipment and better than anticipated recovery in its soft goods business and Topgolf business will continue in 2021. Three-Month Period EndedMarch 31, 2021 and 2020 Net Revenues Net revenues for the three months endedMarch 31, 2021 increased$209.3 million (47.3%) to$651.6 million compared to$442.3 million for the three months endedMarch 31, 2020 . This increase was led by the strength of the Company's legacy Golf Equipment and Apparel, Gear and Other businesses, which increased$116.7 million or 26.4% 43 -------------------------------------------------------------------------------- compared to the first quarter of 2020, in addition to incremental revenues of$92.6 million due to the merger with Topgolf, which was completed onMarch 8, 2021 . Net revenues in the Company's legacy businesses increased in all major product categories and in most major geographic regions, resulting from the success of the Company's current year product lines and overall brand momentum, and the continued popularity of the game of golf as a safe outdoor activity compatible with the norms of social distancing. Additionally, net revenues in the first quarter of 2020 were negatively impacted by the temporary closure of many of the Company's facilities in response to the COVID-19 pandemic. Fluctuations in foreign currencies had a favorable impact on net revenues of$16.6 million in the first three months of 2021. The Company's net revenues by operating segment are presented below (dollars in millions): Three Months Ended March 31, Growth 2021 2020 Dollars Percent Net revenues: Golf Equipment$ 376.9 $ 291.7 $ 85.2 29.2 % Apparel, Gear and Other 182.1 150.6 31.5 20.9 % Topgolf 92.6 - 92.6 100.0 %$ 651.6 $ 442.3 $ 209.3 47.3 % For further discussion of each operating segment's results, see below "Operating Segment Results for the Three Months EndedMarch 31, 2021 and 2020." Net revenues information by region is summarized as follows (dollars in millions): Non-GAAP Constant Currency Three Months Ended Growth/(Decline) vs. March 31, Growth/(Decline) 2020 2021 2020 Dollars Percent Percent Net revenues: United States$ 388.2 $ 217.5 $ 170.7 78.5 % 78.5% Europe 108.3 96.7 11.6 12.0 % 3.0% Japan 71.9 77.3 (5.4) -7.0 % -9.3% Rest of World 83.2 50.8 32.4 63.8 % 51.8%$ 651.6 $ 442.3 $ 209.3 47.3 % 43.6% Net revenues inthe United States increased$170.7 million (78.5%) to$388.2 million during the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . Net revenues in regions outside ofthe United States increased$38.6 million (17.2%) to$263.4 million for the three months endedMarch 31, 2021 compared to$224.8 million for the three months endedMarch 31, 2020 . Fluctuations in foreign currencies had a favorable impact on international net revenues of$16.6 million in the first three months of 2021 relative to the same period in the prior year. The increase in domestic revenue was primarily due to the Company's recent merger with Topgolf as well as the continued strong brand momentum of the Callaway and TravisMathew brands. The increase in sales in Rest of World was primarily driven by the success of the Jack Wolfskin outdoor apparel line inChina , combined with the negative impact of COVID-19 in the first quarter of 2020 due to the temporary closure of the Company's retail locations and facilities. The increase in sales inEurope was primarily due to the favorable impact of foreign currency exchange rates combined with incremental revenues from the Company's merger with Topgolf. This was partially offset by the government-enforced retail shutdown related to COVID-19, which had a greater impact on the Company's results inEurope during the first quarter of 2021 than the first quarter of 2020. The decline inJapan was primarily caused by a fourth wave of COVID-19 in the first quarter of 2021, which resulted in the temporary closure of retail stores. Costs and Expenses Costs of products increased$64.0 million for the three months endedMarch 31, 2021 compared to the same period in 2020 due to the increase in product sales period over period. As a percent of product revenue, the Company's cost of products was 55.5% compared to 55.8% in the prior year. This slight improvement was due to an increase in direct to consumer sales primarily in the Company's Apparel, Gear and Other segment as well as a favorable shift in foreign 44 -------------------------------------------------------------------------------- currency rates. This was partially offset by an increase in freight costs as well as higher cost of improved technology built into the Company's current year golf club products. Costs of services primarily consists of the cost of food and beverage sold in the Company's Topgolf venues as well as certain costs associated with licensing the Company's Toptracer ball-flight tracking technology. Cost of services increased$11.0 million for the three months endedMarch 31, 2021 compared to the same period in 2020 due to the Company's merger with Topgolf onMarch 8, 2021 . Other venue expenses consist of venue related depreciation and amortization, employee costs, rent, utilities, and other costs associated with Topgolf venues. This balance increased$65.4 million for the three months endedMarch 31, 2021 compared to the same period in 2020 due to the Company's recent merger with Topgolf. Selling, general and administrative expenses increased by$32.1 million to$173.9 million (26.7% of net revenues) during the three months endedMarch 31, 2021 compared to$141.8 million (32.1% of net revenues) in the comparable period of 2020. This increase was primarily due to$15.8 million of non-recurring consulting and legal expenses related to the Topgolf merger as well as$13.2 million in employee costs due to the addition of Topgolf employees combined with an overall increase in employee incentive compensation, and a$2.8 million increase in advertising and promotional expense. Research and development expenses decreased by$0.5 million to$12.7 million (2.0% of net revenues) during the three months endedMarch 31, 2021 compared to$13.2 million (3.0% of net revenues) in the comparable period of 2020. Pre-opening costs primarily include costs associated with activities prior to the opening of a new Company-operated venue, as well as other costs that are not considered in the evaluation of ongoing performance. The Company expects to continue to incur pre-opening costs as it executes its growth trajectory of adding new Company-operated venues. Pre-opening costs are expected to fluctuate based on the timing, size and location of new Company-operated venues. Pre-opening costs were$1.8 million for the three months endedMarch 31, 2021 compared to zero in the same period in 2020 due to the Company's recent merger with Topgolf. Other Income and Expense Interest expense increased by$8.3 million to$17.5 million during the three months endedMarch 31, 2021 compared to$9.2 million in the comparable period of 2020, primarily due to the issuance of$258.8 million in convertible notes inMay 2020 as well as one month of interest expense related to the debt and deemed landlord financing liabilities acquired as part of the Topgolf merger. See Note 7 "Financing Arrangements" to the Notes to Consolidated Condensed Financial Statements included in Part I, Item 1, of this Form 10-Q. As a result of the merger with Topgolf, the Company wrote up the value of its pre-merger shares of Topgolf to their fair value and recorded a gain of$252.5 million during the first quarter of 2021. Other income increased to$9.0 million during the three months endedMarch 31, 2021 compared to$6.5 million in the comparable period of 2020. This increase was due an increase in net foreign currency gains. Income Taxes The Company's provision for income taxes increased$38.6 million to$47.7 million for the three months endedMarch 31, 2021 , compared to$9.2 million in the comparable period of 2020. As a percent of pre-tax income, the Company's effective tax rate for the first three months of 2021 decreased to 14.9% compared to 24.1% in the comparable period of 2020. The Company's tax rate was favorably impacted by the gain on Topgolf investment, which is not taxable for income tax purposes combined with a favorable shift in mix of foreign vs. domestic earnings to regions with lower tax rates. This was partially offset by a$39.0 million valuation allowance that the Company recorded against certain of its deferred tax assets as a result of the Topgolf merger and the fact that Topgolf's losses exceed Callaway's income in recent years. 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. Net Income Net income for the three months endedMarch 31, 2021 increased to$272.5 million compared to$28.9 million in the comparable period of 2020. Diluted earnings per share increased$1.89 to$2.19 per share in the first three months of 2021 compared to earnings per share of$0.30 in the same period in 2020. 45 -------------------------------------------------------------------------------- On a non-GAAP basis, excluding the items described in the table following this paragraph, the Company's net income and diluted earnings per share for the three months endedMarch 31, 2021 would have been$76.6 million and$0.62 per share, respectively, compared to$31.0 million and$0.32 per share, respectively, for the comparative period in 2020. The increase in non-GAAP earnings in 2021 was primarily driven by continued strong demand for the Company's products resulting from the overall increase in popularity of the game of golf. Additionally, the Company's earnings in the first quarter of 2020 were more negatively impacted by to the business disruptions and challenges caused by the COVID-19 pandemic. The table below presents a reconciliation of the Company's as-reported results for the three months endedMarch 31, 2021 and 2020 to the Company's non-GAAP results reported above for the same periods (in millions, except per share information). Three Months Ended March 31, 2021 Non-Cash Amortization of Discount on Non-Cash Acquisition Convertible Other Non-Recurring Tax Valuation GAAP Amortization(1) Notes(2) Charges(3) Allowance(4) Non-GAAP Net income (loss)$ 272.5 $ (2.9)$ (1.9) $ 239.6 $ (38.9)$ 76.6 Diluted earnings (loss) per share$2.19 $(0.02) $(0.02) $1.92 $(0.31) $0.62 Weighted-average shares outstanding 124.6 124.6 124.6 124.6 124.6 124.6 Three Months Ended March 31, 2020 NADC Transition Non-Cash Acquisition Related Costs GAAP Amortization(1) and Other(5) Non-GAAP Net income (loss)$ 28.9 $ (0.9) $ (1.2)$ 31.0 Diluted earnings (loss) per share$ 0.30 $ (0.01)$ (0.01) $ 0.32 Weighted-average shares outstanding 95.7 95.7 95.7 95.7 (1)Includes the non-cash amortization expense of intangible assets in connection with the acquisitions of Jack Wolfskin, TravisMathew and OGIO. In addition, the three months endedMarch 31, 2021 include one month of non-cash amortization expense of the intangible assets acquired in the merger with Topgolf onMarch 8, 2021 . (2)Represents the non-cash amortization of the discount on the Convertible Notes issued inMay 2020 . (3)Other non-recurring charges include a gain to write the Company's investment in Topgolf up to fair value as well as other non-recurring charges and acquisition and transition costs related to the Topgolf merger. (4)As Topgolf's losses exceed Callaway's income in prior years, the Company has recorded a valuation allowance against certain of its deferred tax assets until the Company can demonstrate consolidated earnings. (5)Represents non-recurring costs associated with the Company's transition to the new North America Distribution Center, in addition to other integration costs associated with Jack Wolfskin. Operating Segment Results for the Three Months EndedMarch 31, 2021 and 2020 Golf Equipment Golf equipment net revenues increased$85.2 million (29.2%) to$376.9 million for the three-months endedMarch 31, 2021 compared to$291.7 million for the same period in 2020 due to a$65.1 million (25.9%) increase in golf club revenue and a$20.1 million (49.7%) increase in golf ball revenue. These increases were due to an increase in sales volume and average selling prices across all product categories due the strength of the Company's current year product lines, including the Company's new EPIC, APEX and Chrome Soft products and overall brand momentum, combined with strong performance by the Company's supply chain. In addition, net revenues in the first quarter of 2020 were negatively impacted due to the temporary closure of many of the Company's facilities in response to the COVID-19 pandemic. 46 --------------------------------------------------------------------------------
Net revenues information for the Golf Equipment operating segment by product category is summarized as follows (dollars in millions):
Three Months Ended
March 31, Growth
2021 2020 Dollars Percent
Net revenues:
Golf Clubs $ 316.4 $ 251.2 $ 65.2 26.0 %
Golf Balls 60.5 40.4 20.1 49.8 %
$ 376.9 $ 291.6 $ 85.3 29.3 %
Net golf club revenues increased $65.2 million (26.0%) to $316.4 million for the
three months ended March 31, 2021 compared to the same period in the prior year
primarily due to an increase in both sales volume and average selling prices.
The increase in sales volume was driven by strong momentum across all golf club
categories driven by an increase in the popularity of golf as a result of
heightened demand for outdoor, socially-distanced activities, combined with
strong performance by the Company's supply chain. The increase in average
selling prices was primarily due to the current year launch of the more premium
APEX irons compared to the Mavrik irons launched in the prior year.
Net golf ball revenues increased $20.1 million (49.8%) to $60.5 million for the
three months ended March 31, 2021 compared to the same period in the prior year
primarily due to an increase in sales volume combined with a slight increase in
average selling prices. The higher sales volumes were driven by the increase in
popularity of golf and an increase in rounds played across all regions during
the first quarter of 2021 compared to the prior year.
Apparel, Gear and Other
Apparel, Gear and Other sales increased $31.5 million (20.9%) to $182.1 million
during the three months ended March 31, 2021 compared to $150.6 million for the
same period in 2020, due to an $18.0 million (23.3%) increase in apparel sales
and a $13.5 million (18.4%) increase in sales of gear, accessories and other.
These increases were due to the strong rebound in sales compared to the first
quarter of 2020, which was more negatively impacted by the temporary closure of
many of the Company's wholesale customers and direct retail locations across all
major regions as a result of COVID-19. These increases were driven by an
increase TravisMathew sales, primarily in the e-commerce channel, as well as an
increase in Jack Wolfskin sales, primarily in China , partially offset by lower
retail revenue in Europe due to further government mandated retail shutdowns
during the first quarter of 2021.
Net revenues information for the Apparel, Gear and Other segment is summarized
as follows (dollars in millions):
Three Months Ended
March 31, Growth
2021 2020 Dollars Percent
Net revenues:
Apparel $ 95.3 $ 77.3 $ 18.0 23.3 %
Gear, Accessories, & Other 86.8 73.3 13.5 18.4 %
$ 182.1 $ 150.6 $ 31.5 20.9 %
Topgolf
On March 8, 2021 the Company completed its merger with Topgolf, and the
Company's results of operations include the operations of Topgolf from that date
forward. Topgolf contributed $92.6 million in revenue for the three months ended
March 31, 2021 . Topgolf revenue is primarily generated from Company-operated
venues equipped with technology-enabled hitting bays, multiple bars, dining
areas and event spaces, Toptracer ball-flight tracking technology used by
independent driving ranges and broadcast television, and the Company's WGT
digital golf game.
47
--------------------------------------------------------------------------------
Net revenues information for the Topgolf segment is summarized as follows
(dollars in millions):
Three Months Ended
March 31,
2021
Net revenues:
Venues $ 85.1
Other business lines 7.5
$ 92.6
Segment Profitability
Profitability by operating segment is summarized as follows (dollars in
millions):
Non-GAAP Constant
Three Months Ended Currency Growth
March 31, Growth vs. 2020(1)
2021 2020 Dollars Percent Percent
Net revenues:
Golf Equipment $ 376.9 $ 291.7 $ 85.2 29.2 % 26.3%
Apparel, Gear and Other 182.1 150.6 31.5 20.9 % 15.8%
Topgolf 92.6 - 92.6 100.0 % 100.0%
Total net revenues $ 651.6 $ 442.3 $ 209.3 47.3 % 43.6%
Segment operating income:
Golf Equipment $ 84.9 $ 58.6 $ 26.3 44.9 %
Apparel, Gear and Other 20.5 (3.8) 24.3 639.5 %
Topgolf 4.0 - 4.0 100.0 %
Total segment operating income 109.4 54.8 54.6 99.6 %
Corporate G&A and other(2) 33.3 14.1 19.2 136.2 %
Total operating income 76.1 40.7 35.4 87.0 %
Gain on Topgolf investment(3) 252.5 - 252.5 100.0 %
Interest expense, net (17.5) (9.1) (8.4) 92.3 %
Other income, net 9.0 6.5 2.5 38.5 %
Total income before income taxes $ 320.2 $ 38.0 $ 282.2 742.6 %
(1)Calculated by applying 2019 exchange rates to 2020 reported sales in regions
outside the United States .
(2)Amount includes corporate general and administrative expenses not utilized by
management in determining segment profitability. The amount for 2021 includes
$15.8 million for transaction costs associated with the merger with Topgolf
completed on March 8, 2021 , expenses related to the implementation of new IT
systems for Jack Wolfskin, and $2.2 million for non-cash amortization expense
for intangible assets acquired in the merger. The amount for 2020 includes $1.5
million for non-recurring costs associated with the Company's transition to the
new North America Distribution Center and integration costs associated with Jack
Wolfskin.
(3)Amount represents gain to step-up the Company's former investment in Topgolf
to its fair value in connection with the merger. See Note 10 "Investments" in
the Notes to Consolidated Condensed Financial Statements included in Part I,
Item 1, of this Form 10-Q
Operating income for Golf Equipment increased $26.3 million (44.9%) to $84.9
million for the three months ended March 31, 2021 from $58.6 million in the
comparable period in the prior year. This increase was driven by the increase in
net revenues as discussed above, in addition to the positive impact of
leveraging fixed operating expenses on a higher revenue base period over period,
and the favorable impact of foreign currency exchange rates. These increases
were partially offset by increased freight costs due to a higher mix of air
freight, higher cost of technology incorporated into the golf club models
launched in the current year, and a higher sales mix of golf balls and packaged
sets, which have lower margins relative to golf clubs.
48
--------------------------------------------------------------------------------
Operating income for Apparel, Gear and Other increased $24.3 million (639.4%) to
$20.5 million for the three months ended March 31, 2021 from an operating loss
of $3.8 million in the comparable period in the prior year. This increase was
driven by the increase in net revenues as discussed above, in addition to the
positive impact of leveraging fixed operating overhead costs and operating
expenses on a higher revenue base period over period, the favorable impact of
foreign currency exchange rates, and an increase in direct-to-consumer
e-commerce sales, which have higher margins relative to wholesale.
Topgolf contributed and incremental $4.0 million of operating income in the
first quarter of fiscal 2021.
Financial Condition
The Company's cash and cash equivalents increased $31.2 million to $397.3
million at March 31, 2021 from $366.1 million at December 31, 2020 , primarily
due to proceeds of $258.8 million from Convertible Notes issued in May 2020 ,
partially offset by a decline in net income rolling 12-month period due to the
adverse effects of the COVID-19 pandemic on the Company's business during 2020.
During the first three months of 2020, the Company used its cash and cash
equivalents to fund its operations, repay $12.1 million of amounts outstanding
under its credit and long-term debt facilities, fund capital expenditures of
$28.8 million , and repurchase shares of its common stock for $12.5 million .
Management expects to fund the Company's future operations from current cash
balances and cash provided by its operating activities, combined with borrowings
under its current and future credit facilities as well as from other available
sources of capital, as deemed necessary. See Note 7 "Financing Arrangements" to
the Notes to Consolidated Condensed Financial Statements in Part I, Item 1 and
"Liquidity and Capital Resources" in Part I, Item 2 of this Form 10-Q for
further information on the Company's credit facilities and the Term Loan
Facility.
The Company's accounts receivable balance fluctuates throughout the year as a
result of the general seasonality of the Company's business and is also affected
by the timing of new product launches. With respect to the Company's Golf
Equipment business, the accounts receivable balance will generally be at its
highest during the first and second quarters due to the seasonal peak in the
golf season, and it will generally decline significantly during the third and
fourth quarters as a result of an increase in cash collections and lower sales.
The Company's Apparel, Gear and Other accounts receivable balances are expected
to be higher during the second half of the year due to the seasonal nature of
the Jack Wolfskin business, with a significant portion of its products geared
toward the fall/winter season. On March 8, 2021 , the Company completed its
merger with Topgolf, which primarily records revenue and collects payment at
point-of-sale for most of its venue business. Therefore, Topgolf's accounts
receivable balance is smaller than the Company's other business segments and
primarily consists of sponsorship receivables and swing suite licensing
receivables. As of March 31, 2021 , the Company's net accounts receivable
increased to $328.8 million from $138.5 million as of December 31, 2020 . This
increase reflects the Company's seasonality combined with incremental accounts
receivable from the merger with Topgolf. The Company's net accounts receivable
as of March 31, 2021 increased $69.3 million compared to March 31, 2020
primarily due to an increase in net revenues of $209.3 million in the first
quarter of 2021 compared to the first quarter of 2020 primarily due to the
continued increase in demand for golf equipment as the result of the increased
popularity of golf combined with incremental revenues from the merger with
Topgolf. In addition, sales in the first quarter of 2020 were more negatively
impacted by the economic downturn caused by the COVID-19 pandemic.
The Company's inventory balance fluctuates throughout the year as a result of
the general seasonality of the Company's business and is also affected by the
timing of new product launches. With respect to the Company's Golf Equipment
business, the buildup of inventory levels generally begins during the fourth
quarter and continues heavily into the first quarter as well as into the
beginning of the second quarter in order to meet demand during the height of the
golf season. Inventory levels are also impacted by the timing of new product
launches as well as the success of new products. Apparel, Gear and Other
inventory levels start to build in the second quarter and continues into the
third and fourth quarters due to the seasonal nature of the Company's Jack
Wolfskin business, as many products are geared toward the fall/winter season. On
March 8, 2021 , the Company completed its merger with Topgolf, which is primarily
a services business with lower inventory balances than the Company's other
business segments, and primarily consists of food and beverage as well as retail
merchandise and Toptracer inventory. The Company's inventory decreased to $336.3
million as of March 31, 2021 compared to $352.5 million as of December 31, 2020 .
This decrease was primarily due to the seasonal increase in demand of golf
equipment in the first quarter of 2021 and the continued increase in demand for
golf equipment due to the increase in popularity of golf, partially offset by
the incremental inventory from the merger with Topgolf. The Company's inventory
as of March 31, 2021 decreased by $76.4 million compared to the Company's
inventory as of March 31, 2020 primarily due an increase in demand for golf
equipment and golf accessories as the popularity of golf increased starting in
the second half
49
--------------------------------------------------------------------------------
of 2020 through the first quarter of 2021 combined with the sell-through of
close-out and end-of-life inventory, partially offset by the incremental food
and beverage inventory from the merger with Topgolf.
Liquidity and Capital Resources
The Company's principal sources of liquidity consist of its existing cash
balances, including cash from the issuance of Convertible Notes in May 2020 ,
funds expected to be generated from operations and funds from its credit
facilities. Based upon the Company's current cash balances, its estimates of
funds expected to be generated from operations in 2021, as well as from current
and projected availability under its current or future credit facilities, the
Company believes that it will be able to finance current and planned operating
requirements, capital expenditures, required debt repayments and contractual
obligations and commercial commitments for at least the next 12 months from the
issuance date of this Form 10-Q.
The Company's ability to generate sufficient positive cash flows from operations
is subject to many risks and uncertainties, including future economic trends and
conditions, the future economic impact from the COVID-19 pandemic, demand for
the Company's products, foreign currency exchange rates, and other risks and
uncertainties applicable to the Company and its business (see "Risk Factors"
contained in Part I, Item 1A of its Annual Report on Form 10-K for the year
ended December 31, 2020 ). As of March 31, 2021 , the Company had $713.1 million
in cash and availability under its credit facilities, which is an increase of
$449.7 million or 170.7% compared to March 31, 2020 . Information about the
Company's credit facilities and long-term borrowings is presented in Note 7
"Financing Arrangements" to the Notes to Consolidated Condensed Financial
Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated
herein by this reference.
On March 8, 2021 , the Company completed the merger with Topgolf in an all-stock
transaction (see to Note 6 "Business Combinations" to the Notes to Consolidated
Condensed Financial Statements in Part I, Item 1 of this Form 10-Q). In
connection with the merger with Topgolf, the Company acquired cash of $171.3
million and assumed $535.1 million in long-term debt. The Company believes that
with its continued strong cash generation and increased liquidity, its
geographic diversity and the strength of its brands, it will be able to fund
Topgolf's growth while meeting its other financial obligations.
As of March 31, 2021 , approximately 28.5% of the Company's cash was held in
regions outside of the United States . The Company continues to maintain its
indefinite reinvestment assertion with respect to most jurisdictions in which it
operates because of local cash requirements to operate its business. If the
Company were to repatriate cash to the United States outside of settling
intercompany balances, it may need to pay incremental foreign withholding taxes
which, subject to certain limitations, generate foreign tax credits for use
against the Company's U.S. tax liability, if any. Additionally, the Company may
need to pay certain state income taxes.
50
--------------------------------------------------------------------------------
Other Significant Cash and Contractual Obligations
The table below summarizes certain significant cash obligations as of
Payments Due By Period
Less than More than
Total 1 Year 1-3 Years 3-5 Years 5 Years
(in millions)
Term Loan Facility(1) $ 440.4 $
4.8
101.4 21.5 42.9 36.8 0.2
2020 Japan Term Loan Facility(2) 16.3 3.6 7.3 5.4 -
Interest on Japan Term Loan Facility 0.3 0.1 0.1 0.1 -
Convertible Notes(3) 258.8 - - - 258.8
Equipment Notes(4) 29.8 8.5 13.9 5.9 1.5
Interest on Equipment Notes 1.8 0.8 0.8 0.2 -
ABL Facility(5) 15.2 15.2 - - -
Topgolf Term Loan(6) 343.0 3.5 7.0 332.5 -
Topgolf Revolving Credit Facility(6) 160.0 - 160.0 - -
Mortgage loans(7) 46.7 0.5 1.1 1.3 43.8
Finance leases, including imputed interest(8) 3.2 0.9 1.9 0.4 -
Operating leases, including imputed interest(9) 2,146.4 111.6 290.0 280.4 1,464.4
Deemed landlord financing leases(10) 449.5 13.2 39.9 40.4 356.0
Minimum lease payments for leases signed but not yet commenced(11)
828.5 24.6 73.8 123.0 607.1
Capital commitments(12) 155.0 106.0 49.0 - -
Unconditional purchase obligations(13) 109.9 44.5 65.1 0.3 -
Uncertain tax contingencies(14) 5.8 0.5 1.3 2.6 1.4
Total $ 5,112.0 $ 359.8 $ 763.7 $ 837.7 $ 3,150.8
(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 an original issue discount and other transaction fees. As of March
31, 2021 , the Company had $440.4 million outstanding under the Term Loan
Facility, which is offset by unamortized debt issuance costs of $18.1 million as
presented on the Company's consolidated condensed balance sheet as of March 31,
2021 . For further discussion, see Note 7 "Financing Arrangements" to the Notes
to Consolidated Condensed Financial Statements in Part I, Item 1 of this Form
10-Q.
(2)In August 2020 , the Company entered into the 2020 Japan Term Loan Facility
for 2,000,000,000 Yen (or approximately U.S. $18,064,000 using the exchange rate
in effect as of March 31, 2021 ). The Company had 1,800,000,000 Yen (or
approximately U.S. $16,257,000 using the exchange rate in effect as of March 31,
2021 ) outstanding under the Japan Term Loan Facility on the Company's
consolidated condensed balance sheet as of March 31, 2021 . For further
discussion, see Note 7 "Financing Arrangements" to the Notes to Consolidated
Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(3)In May 2020 , the Company issued $258.8 million of 2.75% Convertibles Notes,
which mature on May 1, 2026 unless earlier redeemed or repurchased by the
Company or converted. As of March 31, 2021 , the Company had $185.9 million
outstanding under the Convertible Notes, net of unamortized debt issuance costs
of $5.3 million and debt discount of $67.6 million , as presented on the
Company's Consolidated condensed balance sheet as of March 31, 2021 . For further
discussion, see Note 7 "Financing Arrangements" to the Notes to Consolidated
Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(4)Between December 2017 and August 2020 , the Company entered into four
long-term financing agreements (the "Equipment Notes") with Bank of America N.A .
and other lenders to invest in its golf ball manufacturing facility in
51
--------------------------------------------------------------------------------
Chicopee, Massachusetts , its North American Distribution Center in Roanoke,
Texas , and in corporate IT equipment. The loans are secured by the underlying
equipment at each facility and the IT equipment. As of March 31, 2021 , the
Company had a combined $29.7 million outstanding under these Equipment Notes.
For further discussion, see Note 7 "Financing Arrangements" to the Notes to
Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(5)The Company has a senior secured asset-based revolving credit facility of up
to $400.0 million (the "ABL Facility) subject to borrowing base availability.
The amounts outstanding under the ABL Facility are secured by certain assets,
including cash (to the extent pledged by the Company), certain intellectual
property, certain eligible real estate, inventory and accounts receivable of the
Company's subsidiaries in the United States , Germany , Canada and the United
Kingdom . For further discussion, see Note 7 "Financing Arrangements" to the
Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this
Form 10-Q.
(6)In connection with the merger with Topgolf on March 8, 2021 , the Company
assumed a $350.0 million term loan facility (the "Topgolf Term Loan"), and a
$175.0 million revolving credit facility with JPMorgan Chase Bank, N.A (the
"Topgolf Revolving Credit Facility"), both with JPMorgan Chase Bank, N.A . At
March 31, 2021 , the outstanding balances under the Topgolf Term Loan and Topgolf
Revolving Credit Facility were $343.0 million and $160.0 million , respectively.
For further discussion, see Note 7 "Financing Arrangements" to the Notes to
Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(7)In connection with the merger with Topgolf on March 8, 2021 , the Company
assumed three mortgage loans related to the construction of three venues. For
further discussion, see Note 7 "Financing Arrangements" to the Notes to
Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(8)Amounts represent future minimum payments under financing leases. At March
31, 2021 , finance lease liabilities of $1.1 million were recorded in accounts
payable and accrued expenses and $1.9 million were recorded in other long-term
liabilities in the accompanying consolidated condensed balance sheets. For
further discussion, see Note 3 "Leases" to the Notes to Consolidated Condensed
Financial Statements in Part I, Item 1 of this Form 10-Q.
(9)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, 2021 ,
short-term and long-term operating lease liabilities of $51.5 million and
$1,155.6 million , respectively, were recorded in the accompanying consolidated
condensed balance sheets. For further discussion, see Note 3 "Leases" to the
Notes to Consolidated Condensed Financial Statements in Part I, Item 1 of this
Form 10-Q.
(10)In connection with the merger with Topgolf on March 8, 2021 , the Company
assumed certain deemed landlord financed leases in connection with the
construction of Topgolf venue facilities. At March 31, 2021 , the short-term and
long-term obligations under these leases were $1.6 million and $221.6 million ,
respectively. For further discussion, see Note 3 "Leases" to the Notes to
Consolidated Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(11)Amount represents the future minimum lease payments under lease agreements
related to future Topgolf facilities that have not yet commenced as of March 31,
2021 . For further discussion, see Note 3 "Leases" to the Notes to Consolidated
Condensed Financial Statements in Part I, Item 1 of this Form 10-Q.
(12)Amount represents capital expenditure commitments under lease agreements for
Topgolf venues under construction that have been signed as of March 31, 2021 .
(13)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
52
--------------------------------------------------------------------------------
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.
(14)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, 2021 . 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.
During its normal course of business, the Company has made certain indemnities,
commitments and guarantees under which it may be required to make payments in
relation to certain transactions. These include (i) intellectual property
indemnities to the Company's customers and licensees in connection with the use,
sale and/or license of Company products or trademarks, (ii) indemnities to
various lessors in connection with facility leases for certain claims arising
from such facilities or leases, (iii) indemnities to vendors and service
providers pertaining to the goods or services provided to the Company or based
on the negligence or willful misconduct of the Company, and (iv) indemnities
involving the accuracy of representations and warranties in certain contracts.
In addition, the Company has made contractual commitments to each of its
officers and certain other employees providing for severance payments upon the
termination of employment. The Company has also issued guarantees in the form of
a standby letter of credit primarily as security for contingent liabilities
under certain workers' compensation insurance policies.
The duration of these indemnities, commitments and guarantees varies, and in
certain cases may be indefinite. The majority of these indemnities, commitments
and guarantees do not provide for any limitation on the maximum amount of future
payments the Company could be obligated to make. Historically, costs incurred to
settle claims related to indemnities have not been material to the Company's
financial position, results of operations or cash flows. In addition, the
Company believes the likelihood is remote that payments under the commitments
and guarantees described above will have a material effect on the Company's
financial condition. The fair value of indemnities, commitments and guarantees
that the Company issued during the three months ended March 31, 2021 was not
material to the Company's financial position, results of operations or cash
flows.
In addition to the contractual obligations listed above, the Company's liquidity
could also be adversely affected by an unfavorable outcome with respect to
claims and litigation that the Company is subject to from time to time (see Note
14 "Commitments & Contingencies" to the Notes to Consolidated Condensed
Financial Statements in Part I, Item 1 and "Legal Proceedings" in Part II,
Item 1 of this Form 10-Q).
Capital Expenditures
The Company has certain capital expenditure commitments under lease agreements
for Topgolf venues under construction that have been signed as of March 31,
2021 . Estimated capital expenditures for the year ended December 31, 2021 in
connection with these leases total approximately $106.0 million . In addition, in
2021, the Company expects to have additional capital expenditures of
approximately $129.0 million for the Callaway legacy business and Topgolf,
combined. Total estimated capital expenditures are expected to be approximately
$235.0 million for the year ended December 31, 2021 .
Off-Balance Sheet Arrangements
The Company has no material off-balance sheet arrangements as defined in
Regulation S-K Item 303(a)(4)(ii).
Critical Accounting Policies and Estimates
Due to the recent merger with Topgolf, the Company updated its significant
accounting policies. For an update to the Company's significant accounting
policies and estimates from the information provided in Part II, Item 8,
"Financial Statements and Supplementary Data" included in the Company's Form
10-K for the fiscal year ended December 31, 2020 , see Note 2 "Summary of
Significant Accounting Policies" in the Notes to the Consolidated Condensed
Financial Statements in Part I, Item I of this Form 10-Q.
53--------------------------------------------------------------------------------
© Edgar Online, source
