Segment Information

3 Months Ended

Mar. 31, 2021

Note 19. Segment Information

On March 8, 2021 the Company completed its merger with Topgolf. Topgolf is primarily a services-based business that provides hospitality offerings and golf entertainment experiences, which is uniquely different compared to the Company's Golf Equipment and Apparel, Gear and Other businesses, which produce, distribute and sell goods through various sales channels. Accordingly, based on the Company's re-assessment of its operating segments, the Company added a third operating segment for its Topgolf business. Therefore, as of March 31, 2021, the Company had three reportable operating segments: Golf Equipment, Apparel, Gear and Other and Topgolf.

The Golf Equipment operating segment is comprised of product revenues and expenses that encompass golf club and golf ball products, including Callaway 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 is comprised of product revenues and expenses for the Jack Wolfskin outdoor apparel, gear and accessories business, the TravisMathew golf and lifestyle apparel and accessories business, the Callaway soft goods business and the OGIO business, which consists of golf apparel and accessories (including golf bags and gloves), storage gear for sport and personal use. This segment also includes royalties from licensing of the Company’s trademarks and service marks for various soft goods products.

The Topgolf operating segment is primarily comprised of service revenues and expenses for its Company-operated Topgolf venues equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces, as well as Toptracer ball-flight tracking technology used by independent driving ranges and broadcast television, and the Company's WGT digital golf game.

There are no significant intersegment transactions during the three months ended March 31, 2021 or 2020.

The tables below contains information utilized by management to evaluate its operating segments for the interim periods presented (in thousands).


	Three Months Ended March 31,
		2021		2020
Net revenues:
Golf Equipment		$	376,882	$	291,661
Apparel, Gear and Other		182,102		150,615
Topgolf(1)		92,637		—
Total net revenues		$	651,621	$	442,276

Income before income taxes:
Golf Equipment		$	84,921	$	58,620
Apparel, Gear and Other		20,490		(3,799)
Topgolf		3,954		—
Total segment operating income		109,365		54,821
Reconciling items(2)		210,839		(16,776)
Total income before income taxes		$	320,204	$	38,045

Additions to long-lived assets:(3)
Golf Equipment		$	6,425	$	16,962
Apparel, Gear and Other		5,066		10,124
Topgolf		26,118		—
Total additions to long-lived assets		$	37,609	$	27,086

(1)Revenue attributable to the Topgolf operating segment is for the period beginning March 8, 2021 (merger date) through April 4, 2021.

(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. Reconciling items for the three months ended March 31, 2021 also include transaction costs of $15,755,000 and $2,248,000 for non-cash amortization expense for intangible assets acquired in connection with the merger with Topgolf (See Note 6), in addition to a gain of $252,531,000 related to the fair value step-up on the Company's investment in Topgolf (see Note 10). Reconciling items for the three months ended March 31, 2020 included expenses related to the Company's transition to the new North America Distribution Center, in addition to other integration costs associated with Jack Wolfskin.

(3)Additions to long-lived assets are comprised of purchases of property, plant and equipment.