SEC Filing | Callaway Golf Company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form	10-Q



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2020



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period to

Commission file number 001-10962




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.)

2180 Rutherford Road, Carlsbad, CA 92008

(760) 931-1771

(Address, including zip code, and telephone number, including area code, of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of September 30, 2020, the number of shares outstanding of the Registrant’s common stock was 94,179,547.

Important Notice to Investors Regarding Forward-Looking Statements: This report contains "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "may," "should," "will," "could," "would," "anticipate," "plan," "believe," "project," "estimate," "expect," "strategy," "future," "likely," and similar references to future periods. Forward-looking statements include, among others, statements that relate to future plans, events, liquidity, financial results, performance, prospects or growth and scale opportunities including, but not limited to, statements relating to future industry and market conditions, the impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition and the impact of any measures taken to mitigate the effect of the pandemic, the strength of the Company’s brands, product lines and e-commerce business, geographic diversity, market recovery, availability of capital under the Company’s credit facilities, the capital markets or other sources, the Company’s conservation and cost reduction efforts, future stock repurchases, cash flows and liquidity, compliance with debt covenants, estimated unrecognized stock compensation expense, projected capital expenditures and depreciation and amortization expense, future contractual obligations, the realization of deferred tax assets, including loss and credit carryforwards, future income tax expense, the future impact of new accounting standards, the expected timing and completion of, and the integration of, the recently announced acquisition of Topgolf International, Inc. ("Topgolf"), the JW Stargazer Holding GmbH ("Jack Wolfskin") acquisition, the related financial impact of the future business and prospects of the Company, TravisMathew, LLC ("TravisMathew"), OGIO International, Inc. ("OGIO"), Jack Wolfskin and Topgolf. These statements are based upon current information and the Company's current beliefs, expectations and assumptions regarding the future of the Company's business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. As a result of these uncertainties and because the information on which these forward-looking statements is based may ultimately prove to be incorrect, actual results may differ materially from those anticipated. Important factors that could cause actual results to differ include, among others, the following:


•	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;

•

risks and uncertainties related to the Company’s pending merger with Topgolf, including the failure to obtain, or delays in obtaining, required regulatory approval, the risk that such approval may result in the imposition of conditions that could adversely affect the Company or the expected benefits of the proposed transaction, any termination fee that may be payable by Callaway pursuant to the terms of the merger agreement, or the failure to satisfy any of the closing conditions to the proposed transaction on a timely basis or at all;


•	costs, expenses or difficulties related to the merger with Topgolf, including the integration of the Topgolf business, or the failure to realize the expected benefits and synergies of the proposed transaction in the expected timeframes or at all;


•	the potential impact of the announcement, pendency or consummation of the proposed transaction on relationships with the Company’s and/or Topgolf’s employees, customers, suppliers and other business partners;


•	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.

Investors should not place undue reliance on these forward-looking statements, which are based on current information and speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect new information or events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Additionally, the risks, uncertainties and other factors set forth above or otherwise referred to in the reports that the Company has filed with the Securities and Exchange Commission may be further amplified by the global impact of the COVID-19 pandemic. Investors should also be aware that while the Company from time to time does communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or other confidential commercial information. Furthermore, the Company has a policy against distributing or confirming financial forecasts or projections issued by analysts and any reports issued by such analysts are not the responsibility of the Company. Investors should not assume that the Company agrees with any report issued by any analyst or with any statements, projections, forecasts or opinions contained in any such report. For details concerning these and other risks and uncertainties, see Part I, Item IA, “Risk Factors” contained in the Company's most recent Annual Report on Form 10-K, as well as the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K subsequently filed with the Securities and Exchange Commission from time to time.

Callaway Golf Company Trademarks: The following marks and phrases, among others, are trademarks of the Company: Alpha Convoy, Apex, Apex Tour, APW, Arm Lock, Backstryke, Big Bertha, Big T, Bird of Prey, Black Series, Bounty Hunter, C Grind, Callaway, Callaway Capital, Callaway Golf, Callaway Media Productions, Callaway Super Hybrid, Callaway X, Capital, Chev, Chev 18, Chevron Device, Chrome Soft, Cirrus, Comfort Tech, CUATER, Cuater C logo, Cup 360, CXR, 360 Face Cup, Dawn Patrol, Demonstrably Superior And Pleasingly Different, Divine, Double Wide, Eagle, Engage, Epic, Epic Flash, ERC, ERC Soft, Exo, Cage, Fast Tech Mantle, Flash Face Technology, FT Optiforce, FT Performance, FT Tour, Fusion, Fusion Zero, GBB, GBB Epic, Gems, Gravity Core, Great Big Bertha, Great Big Bertha Epic, Grom, Groove, In, Groove Technology, Heavenwood, Hersatility, Hex Aerodynamics, Hex Chrome, HX, Hyper Dry, Hyper-Lite, Hyper Speed Face, Jack Wolfskin, Jailbird, Jailbreak, Kings of Distance, Legacy, Life On Tour, Longer From Everywhere, Luxe, Mack Daddy, Magna, Majestic, MarXman, Mavrik, MD3 Milled, MD4 Tactical, MD5, MD 5 Jaws, Metal-X, Microhinge Face Insert, Microhinge Star, Nanuk, NipIt, Number One Putter in Golf, O OGIO, O Works, Odyssey, Odyssey Works, Ogio, OGIO ALPHA, OGIO ARORA, OGIO CLUB, OGIO FORGE, OGIO ME, OGIO RENEGADE, OGIO SAVAGE, Opti Flex, Opti Grip, Opti Shield, OptiFit, Opti Vent, ORG 14, ORG 15, Paw Print, PRESTIGE 7, ProType, ∙R∙, Red Ball, R-Moto, Renegade, Rig 9800, Rossie, RSX, S2H2, Sabertooth, Shredder, Silencer, SLED, SoftFast, Solaire,

Speed Regime, Speed Step, Steelhead XR, Steelhead, Strata, Stroke Lab, Stronomic, Sub Zero, Superhot, Supersoft, SureOut, TM, Tank, Tank Cruiser, Tech Series, Teron, Texapore, Toe Up, Toulon, Toulon Garage, Tour Authentic, Tour Tested, Trade In! Trade Up!, TRAVISMATHEW, TravisMathew TM logo, Trionomer Cover, Truvis, Truvis Pattern, Tyro, udesign, Versa, VFT, W Grind, Warbird, Weather Series, Wedgeducation, White Hot, White Hot Tour, White Ice, World's Friendliest, X-12, X-14, X-16, X-18, X-20, X-22, X-24, X-ACT, X Face VFT, X Hot, X Hot Pro, X² Hot, X Series, XR, XR 16, XSPANN, Xtra Traction Technology, XTT, 2-Ball.

CALLAWAY GOLF COMPANY

INDEX



PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	6
	Consolidated Condensed Balance Sheets as of September 30, 2020 and December 31, 2019	6
	Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2020 and 2019	7
	Consolidated Condensed Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019	8
	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	9
	Consolidated Condensed Statements of Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019	10
	Notes to Consolidated Condensed Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57
Item 4.	Controls and Procedures	58

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)



	September 30, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	286,656		$	106,666
Accounts receivable, net	239,650			140,455
Inventories	324,852			456,639
Income taxes receivable	7,321			9,919
Other current assets	66,667			75,671
Total current assets	925,146			789,350
Property, plant and equipment, net	145,758			132,760
Operating lease right-of-use assets, net	186,721			160,098
Intangible assets, net	474,973			493,423
Goodwill	56,041			203,743
Deferred taxes, net	51,872			73,948
Investment in golf-related venture	111,442			90,134
Other assets	14,355			17,092
Total assets	$	1,966,308		$	1,960,548
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	245,053		$	276,300
Accrued employee compensation and benefits	33,522			46,891
Asset-based credit facilities	30,235			144,580
Accrued warranty expense	9,640			9,636
Operating lease liabilities, short-term	28,011			26,418
Current portion of long-term debt	14,623			7,317
Income taxes payable	10,326			12,104
Total current liabilities	371,410			523,246
Long-term liabilities:
Operating lease liabilities, long-term	170,732			137,696
Long-term debt (Note 6)	651,011			443,259
Income tax liability	7,456			7,264
Deferred taxes, net	60,636			73,483
Other long-term liabilities	16,529			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 September 30, 2020 and December 31, 2019	—			—
Common stock, $0.01 par value, 240,000,000 shares authorized, 95,648,648 shares issued at both September 30, 2020 and December 31, 2019, respectively	956			956
Additional paid-in capital	344,425			323,600
Retained earnings	400,805			489,382
Accumulated other comprehensive loss	(31,323		)	(22,422		)
Less: Common stock held in treasury, at cost, 1,469,101 and 1,450,875 shares at September 30, 2020 and December 31, 2019, respectively	(26,329		)	(24,163		)
Total shareholders’ equity	688,534			767,353
Total liabilities and shareholders’ equity	$	1,966,308		$	1,960,548

The accompanying notes are an integral part of these financial statements.

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net sales	$	475,559		$	426,217		$	1,214,831		$	1,389,122
Cost of sales	274,826			234,828			696,369			752,483
Gross profit	200,733			191,389			518,462			636,639
Operating expenses:
Selling expense	93,855			101,984			285,082			334,418
General and administrative expense	33,230			36,378			98,972			108,739
Research and development expense	10,139			12,538			33,399			38,158
Goodwill and trade name impairment	—			—			174,269			—
Total operating expenses	137,224			150,900			591,722			481,315
Income (loss) from operations	63,509			40,489			(73,260		)	155,324
Interest income	178			94			396			759
Interest expense	(12,905		)	(9,639		)	(34,401		)	(30,203		)
Other income, net	7,010			2,232			27,487			1,459
Income (loss) before income taxes	57,792			33,176			(79,778		)	127,339
Income tax provision	5,360			2,128			6,580			18,892
Net income (loss)	52,432			31,048			(86,358		)	108,447
Less: Net loss attributable to non-controlling interest	—			—			—			(179		)
Net income (loss) attributable to Callaway Golf Company	$	52,432		$	31,048		$	(86,358	)	$	108,626

Earnings (loss) per common share:
Basic	$	0.56		$	0.33		$	(0.92	)	$	1.15
Diluted	$	0.54		$	0.32		$	(0.92	)	$	1.13
Weighted-average common shares outstanding:
Basic	94,171			94,100			94,207			94,284
Diluted	96,612			96,287			94,207			96,197

The accompanying notes are an integral part of these financial statements.

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Net income (loss)	$	52,432		$	31,048		$	(86,358	)	$	108,447
Other comprehensive income:
Change in derivative instruments	(593		)	661			(14,635		)	(8,080		)
Foreign currency translation adjustments	9,128			(17,083		)	2,347			(18,740		)
Comprehensive income (loss), before income tax on other comprehensive income items	60,967			14,626			(98,646		)	81,627
Income tax (provision) benefit on derivative instruments	(66		)	(666		)	3,387			822
Comprehensive income (loss)	60,901			13,960			(95,259		)	82,449
Less: Comprehensive loss attributable to non-controlling interests	—			—			—			(339		)
Comprehensive income (loss) attributable to Callaway Golf Company	$	60,901		$	13,960		$	(95,259	)	$	82,788

The accompanying notes are an integral part of these financial statements.

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net income (loss)	$	(86,358	)	$	108,447
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	28,668			25,471
Lease amortization expense	24,293			23,615
Amortization of debt issuance costs	3,024			2,428
Debt discount amortization	3,857			—
Inventory step-up on acquisition	—			10,703
Impairment loss	174,269			—
Deferred taxes, net	(117		)	8,407
Non-cash share-based compensation	8,066			9,476
Loss on disposal of long-lived assets	297			649
Gain on conversion of note receivable	(1,252		)	—
Unrealized net (gains) losses on hedging instruments	(8,899		)	999
Change in assets and liabilities, net of effect from acquisitions:
Accounts receivable, net	(96,344		)	(123,560		)
Inventories	135,976			71,246
Other assets	11,097			3,547
Accounts payable and accrued expenses	(40,042		)	(37,392		)
Accrued employee compensation and benefits	(13,252		)	(5,558		)
Accrued warranty expense	4			412
Change in operating leases, net	(21,181		)	(22,463		)
Income taxes receivable/payable, net	43			(11,573		)
Other liabilities	402			(1,001		)
Net cash provided by operating activities	122,551			63,853
Cash flows from investing activities:
Capital expenditures	(30,911		)	(36,843		)
Investments in golf related ventures	(19,999		)	—
Acquisitions, net of cash acquired	—			(463,105		)
Proceeds from sales of property and equipment	8			43
Net cash used in investing activities	(50,902		)	(499,905		)
Cash flows from financing activities:
Proceeds from issuance of convertible notes	258,750			—
Proceeds from issuance of long-term debt	37,728			493,167
Premium paid for capped call confirmations	(31,775		)	—
Debt issuance cost	(9,143		)	(19,088		)
(Repayments of) proceeds from credit facilities, net	(114,345		)	70,411
Repayments of long-term debt	(8,203		)	(34,298		)
Repayments of financing leases	(530		)	(583		)
Exercise of stock options	130			—
Dividends paid, net	(1,891		)	(2,834		)
Acquisition of treasury stock	(22,143		)	(27,505		)
Purchase of non-controlling interest	—			(18,538		)
Net cash provided by financing activities	108,578			460,732
Effect of exchange rate changes on cash and cash equivalents	(237		)	(445		)
Net increase in cash and cash equivalents	179,990			24,235
Cash and cash equivalents at beginning of period	106,666			63,981
Cash and cash equivalents at end of period	$	286,656		$	88,216
Supplemental disclosures:
Cash paid for income taxes, net	$	2,935		$	14,874
Cash paid for interest and fees	$	23,704		$	25,184
Non-cash investing and financing activities:
Issuance of treasury stock and common stock for compensatory stock awards released from restriction	$	19,609		$	19,613
Accrued capital expenditures at period-end	$	777		$	2,283

The accompanying notes are an integral part of these financial statements.

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)




	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		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Shares		Amount			Total Callaway Golf Company Shareholders' Equity
Balance at June 30, 2020	95,649	$	956	$	341,615		$	348,376			$	(39,792	)	(1,485	)	$	(26,607	)		$	624,548
Acquisition of treasury stock	—	—		—			—				—			(10	)	(190		)		(190		)
Compensatory awards released from restriction	—	—		(466		)	—				—			26		466				—
Share-based compensation	—	—		3,272			—				—			—		—				3,272
Stock dividends	—	—		1			(3		)		—			—		2				—
Equity adjustment from foreign currency translation	—	—		—			—				9,128			—		—				9,128
Change in fair value of derivative instruments, net of tax	—	—		—			—				(659		)	—		—				(659		)
Equity component of convertible notes, net of issuance costs and tax	—	—		3			—				—			—		—				3
Net income	—	—		—			52,432				—			—		—				52,432
Balance at September 30, 2020	95,649	$	956	$	344,425		$	400,805			$	(31,323	)	(1,469	)	$	(26,329	)		$	688,534



	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		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Shares		Amount			Total Callaway Golf Company Shareholders' Equity
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	—	—		—			—				—			(1,178	)	(22,143		)		(22,143		)
Exercise of stock options	—	—		(203		)	—				—			20		333				130
Compensatory awards released from restriction	—	—		(19,609		)	—				—			1,138		19,609				—
Share-based compensation	—	—		8,066			—				—			—		—				8,066
Stock dividends	—	—		4			(39		)		—			2		35				—
Cash dividends ($0.01 per share)	—	—		—			(1,891		)		—			—		—				(1,891		)
Equity adjustment from foreign currency translation	—	—		—			—				2,347			—		—				2,347
Change in fair value of derivative instruments, net of tax	—	—		—			—				(11,248		)	—		—				(11,248		)
Equity component of convertible notes, net of issuance costs and tax	—	—		57,080			—				—			—		—				57,080
Premiums paid for capped call transactions, net of tax	—	—		(24,513		)	—				—			—		—				(24,513		)
Net loss	—	—		—			(86,358		)		—			—		—				(86,358		)
Balance at September 30, 2020	95,649	$	956	$	344,425		$	400,805			$	(31,323	)	(1,469	)	$	(26,329	)		$	688,534

The accompanying notes are an integral part of these financial statements.

CALLAWAY GOLF COMPANY

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)




	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		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss				Shares		Amount			Total Callaway Golf Company Shareholders' Equity
Balance at June 30, 2019	95,649	$	956	$	319,579		$	489,445			$	(22,271	)	(1,555	)	$	(25,773	)		$	761,936
Acquisition of treasury stock	—	—		—			—				—			(7	)	(111		)		(111		)
Compensatory awards released from restriction	—	—		(309		)	—				—			19		309				—
Share-based compensation	—	—		2,512			—				—			—		—				2,512
Stock dividends	—	—		—			(1		)		—			—		1				—
Cash dividends ($0.01 per share)	—	—		—			(941		)		—			—		—				(941		)
Equity adjustment from foreign currency translation	—	—		—			—				(17,083		)	—		—				(17,083		)
Change in fair value of derivative instruments	—	—		—			—				(5		)	—		—				(5		)
Net Income	—	—		—			31,048				—			—		—				31,048
Balance at September 30, 2019	95,649	$	956	$	321,782		$	519,551			$	(39,359	)	(1,543	)	$	(25,574	)		$	777,356



	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		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss				Shares		Amount			Total Callaway Golf Company Shareholders' Equity				Non- Controlling Interest		Total
Balance at 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	—	—		—			—			—			(1,662	)	(27,505		)		(27,505		)	—		(27,505		)
Compensatory awards released from restriction	—	—		(19,613		)	—			—			872		19,613				—			—		—
Share-based compensation	—	—		9,476