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Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases

Note 3. Leases

The Company leases office space, manufacturing plants, warehouses, distribution centers, Company-operated Topgolf venues, vehicles, and equipment, as well as retail and/or outlet locations related to the TravisMathew and Jack Wolfskin businesses and the apparel business in Japan. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $10,986,000 and $14,879,000 for the three and six months ended June 30, 2021, respectively, which is comprised of $13,585,000 in initial licensing payments and $1,294,000 in monthly lease payments. Revenue from sales-type leases are included in services revenues within the consolidated condensed statements of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

			Balance Sheet Location						June 30, 2021
Leasing receivables, net - current			Other current assets						$	9,983
Leasing receivables - long-term			Other assets						36,309
									$	46,292

Operating and Finance Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and Topic 840: "Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic" issued in April 2020, and account for these concessions as if they were made under the enforceable rights included in the original agreement. Rent deferments were recorded as a payable and paid at a later negotiated date. Rent abatements were recognized as reductions in rent expense over the periods covered by the abatement period. As of June 30, 2021 the Company recorded rent deferments of $10,697,000, of which $1,804,000 was recorded in accrued expenses, and $8,894,000 was recorded in other long-term liabilities in the consolidated condensed balance sheets. Of the rent deferments recorded as of June 30, 2021, $10,309,000 was recorded in connection with the Topgolf merger in March 2021. As of December 31, 2020 the Company recorded rent deferments of $687,000. There were no rent abatements recorded for the three and six months ended June 30, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

			Balance Sheet Location						June 30, 2021						December 31, 2020
Operating Leases
ROU assets, net			Operating lease ROU assets, net						$	1,057,225					$	194,776
Lease liabilities, short-term			Operating lease liabilities, short-term						$	55,492					$	29,579
Lease liabilities, long-term			Operating lease liabilities, long-term						$	1,174,780					$	177,996
Finance Leases
ROU assets, net,			Other assets						$	2,077					$	1,003
Lease liabilities, short-term			Accrued expenses						$	1,169					$	252
Lease liabilities, long-term			Long-term other						$	1,672					$	447

The components of lease expense are as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Operating lease costs			$	40,915					$	10,279					$	61,412					$	21,301
Financing lease costs:
Amortization of right-of-use assets			854						153						1,177						320
Interest on lease liabilities			26						11						46						22
Total financing lease costs			880						164						1,223						342
Variable lease costs			1,953						587						2,532						1,883
Total lease costs			$	43,748					$	11,030					$	65,167					$	23,526

Other information related to leases was as follows (in thousands):

						Six Months Ended June 30,
Supplemental Cash Flows Information						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	52,513					$	18,227
Operating cash flows from finance leases						$	311					$	22
Financing cash flows from finance leases						$	200					$	206
Lease liabilities arising from new ROU assets:
Operating leases						$	33,000					$	53,417
Finance leases						$	188					$	130

			June 30, 2021						December 31, 2020
Weighted average remaining lease term (years):
Operating leases			14.4						9.8
Finance leases			2.6						3.0
Weighted average discount rate:
Operating leases			8.2		%				5.3		%
Finance leases			5.4		%				3.9		%

Future minimum lease obligations as of June 30, 2021 were as follows (in thousands):

			Operating Leases						Finance Leases
Remainder of 2021			$	67,587					$	584
2022			149,746						1,261
2023			147,019						771
2024			143,893						367
2025			142,622						24
Thereafter			1,514,983						8
Total future lease payments			2,165,850						3,015
Less: imputed interest			935,578						174
Total			$	1,230,272					$	2,841

Lease payments exclude $896,854,000 related to 16 non-cancellable leases that have been signed as of June 30, 2021 but have not yet commenced. Of the 16 leases, three are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $178,000,000 as of June 30, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $124,731,000 in construction costs within property, plant and equipment as of June 30, 2021. Additionally, as of June 30, 2021, the Company recorded $63,636,000 in construction advances from the landlord in connection with properties. The Company will determine the lease classification

for properties currently under construction at the end of the construction period. The initial base term upon the commencement of these leases is generally 20 years.

Financing Obligations (Deemed Landlord Financing Contracts)

During the six months ended June 30, 2021, the Company accounted for four deemed landlord financing (“DLF”) contracts that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC Topic 842. As of June 30, 2021, the Company was the accounting owner of a total of twelve buildings under DLF contracts. As of June 30, 2021, the net book value included in property, plant and equipment on the consolidated condensed balance sheets related to these buildings totaled $323,590,000. Buildings capitalized in conjunction with DLF contracts are depreciated, less residual value, over 20 years or over their estimated useful life, whichever is shorter.

Supplemental balance sheet information related to DLF contracts is as follows (in thousands):

			Balance Sheet Location						June 30, 2021
DLF contracts liabilities, short-term			Accrued expenses						$	516
DLF contracts liabilities, long-term			Deemed landlord financing, long-term						$	263,219

The components of DLF contracts expenses are as follows (in thousands):

			Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
Amortization of DLF contracts			$	1,337					$	1,704
Interest on DLF contracts			5,638						7,146
Total DLF contracts expenses			$	6,975					$	8,850

Other information related to DLF contracts was as follows (in thousands):

Supplemental Cash Flows Information						Six Months Ended June 30, 2021
Financing cash flows from DLF contracts						$	8,789

			June 30, 2021
Weighted average remaining lease term (years)			19.4
Weighted average discount rate			8.9		%

Future minimum financing obligations related to DLF contracts as of June 30, 2021 were as follows (in thousands):

Remainder of 2021						$	9,845
2022						23,225
2023						23,062
2024						23,253
2025						23,581
Thereafter						412,498
Total future lease payments						515,464
Less: imputed interest						251,729
Total						$	263,735

Leases

Note 3. Leases

The Company leases office space, manufacturing plants, warehouses, distribution centers, Company-operated Topgolf venues, vehicles, and equipment, as well as retail and/or outlet locations related to the TravisMathew and Jack Wolfskin businesses and the apparel business in Japan. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $10,986,000 and $14,879,000 for the three and six months ended June 30, 2021, respectively, which is comprised of $13,585,000 in initial licensing payments and $1,294,000 in monthly lease payments. Revenue from sales-type leases are included in services revenues within the consolidated condensed statements of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

			Balance Sheet Location						June 30, 2021
Leasing receivables, net - current			Other current assets						$	9,983
Leasing receivables - long-term			Other assets						36,309
									$	46,292

Operating and Finance Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and Topic 840: "Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic" issued in April 2020, and account for these concessions as if they were made under the enforceable rights included in the original agreement. Rent deferments were recorded as a payable and paid at a later negotiated date. Rent abatements were recognized as reductions in rent expense over the periods covered by the abatement period. As of June 30, 2021 the Company recorded rent deferments of $10,697,000, of which $1,804,000 was recorded in accrued expenses, and $8,894,000 was recorded in other long-term liabilities in the consolidated condensed balance sheets. Of the rent deferments recorded as of June 30, 2021, $10,309,000 was recorded in connection with the Topgolf merger in March 2021. As of December 31, 2020 the Company recorded rent deferments of $687,000. There were no rent abatements recorded for the three and six months ended June 30, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

			Balance Sheet Location						June 30, 2021						December 31, 2020
Operating Leases
ROU assets, net			Operating lease ROU assets, net						$	1,057,225					$	194,776
Lease liabilities, short-term			Operating lease liabilities, short-term						$	55,492					$	29,579
Lease liabilities, long-term			Operating lease liabilities, long-term						$	1,174,780					$	177,996
Finance Leases
ROU assets, net,			Other assets						$	2,077					$	1,003
Lease liabilities, short-term			Accrued expenses						$	1,169					$	252
Lease liabilities, long-term			Long-term other						$	1,672					$	447

The components of lease expense are as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Operating lease costs			$	40,915					$	10,279					$	61,412					$	21,301
Financing lease costs:
Amortization of right-of-use assets			854						153						1,177						320
Interest on lease liabilities			26						11						46						22
Total financing lease costs			880						164						1,223						342
Variable lease costs			1,953						587						2,532						1,883
Total lease costs			$	43,748					$	11,030					$	65,167					$	23,526

Other information related to leases was as follows (in thousands):

						Six Months Ended June 30,
Supplemental Cash Flows Information						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	52,513					$	18,227
Operating cash flows from finance leases						$	311					$	22
Financing cash flows from finance leases						$	200					$	206
Lease liabilities arising from new ROU assets:
Operating leases						$	33,000					$	53,417
Finance leases						$	188					$	130

			June 30, 2021						December 31, 2020
Weighted average remaining lease term (years):
Operating leases			14.4						9.8
Finance leases			2.6						3.0
Weighted average discount rate:
Operating leases			8.2		%				5.3		%
Finance leases			5.4		%				3.9		%

Future minimum lease obligations as of June 30, 2021 were as follows (in thousands):

			Operating Leases						Finance Leases
Remainder of 2021			$	67,587					$	584
2022			149,746						1,261
2023			147,019						771
2024			143,893						367
2025			142,622						24
Thereafter			1,514,983						8
Total future lease payments			2,165,850						3,015
Less: imputed interest			935,578						174
Total			$	1,230,272					$	2,841

Lease payments exclude $896,854,000 related to 16 non-cancellable leases that have been signed as of June 30, 2021 but have not yet commenced. Of the 16 leases, three are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $178,000,000 as of June 30, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $124,731,000 in construction costs within property, plant and equipment as of June 30, 2021. Additionally, as of June 30, 2021, the Company recorded $63,636,000 in construction advances from the landlord in connection with properties. The Company will determine the lease classification

for properties currently under construction at the end of the construction period. The initial base term upon the commencement of these leases is generally 20 years.

Financing Obligations (Deemed Landlord Financing Contracts)

During the six months ended June 30, 2021, the Company accounted for four deemed landlord financing (“DLF”) contracts that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC Topic 842. As of June 30, 2021, the Company was the accounting owner of a total of twelve buildings under DLF contracts. As of June 30, 2021, the net book value included in property, plant and equipment on the consolidated condensed balance sheets related to these buildings totaled $323,590,000. Buildings capitalized in conjunction with DLF contracts are depreciated, less residual value, over 20 years or over their estimated useful life, whichever is shorter.

Supplemental balance sheet information related to DLF contracts is as follows (in thousands):

			Balance Sheet Location						June 30, 2021
DLF contracts liabilities, short-term			Accrued expenses						$	516
DLF contracts liabilities, long-term			Deemed landlord financing, long-term						$	263,219

The components of DLF contracts expenses are as follows (in thousands):

			Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
Amortization of DLF contracts			$	1,337					$	1,704
Interest on DLF contracts			5,638						7,146
Total DLF contracts expenses			$	6,975					$	8,850

Other information related to DLF contracts was as follows (in thousands):

Supplemental Cash Flows Information						Six Months Ended June 30, 2021
Financing cash flows from DLF contracts						$	8,789

			June 30, 2021
Weighted average remaining lease term (years)			19.4
Weighted average discount rate			8.9		%

Future minimum financing obligations related to DLF contracts as of June 30, 2021 were as follows (in thousands):

Remainder of 2021						$	9,845
2022						23,225
2023						23,062
2024						23,253
2025						23,581
Thereafter						412,498
Total future lease payments						515,464
Less: imputed interest						251,729
Total						$	263,735

Leases

Note 3. Leases

The Company leases office space, manufacturing plants, warehouses, distribution centers, Company-operated Topgolf venues, vehicles, and equipment, as well as retail and/or outlet locations related to the TravisMathew and Jack Wolfskin businesses and the apparel business in Japan. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $10,986,000 and $14,879,000 for the three and six months ended June 30, 2021, respectively, which is comprised of $13,585,000 in initial licensing payments and $1,294,000 in monthly lease payments. Revenue from sales-type leases are included in services revenues within the consolidated condensed statements of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

			Balance Sheet Location						June 30, 2021
Leasing receivables, net - current			Other current assets						$	9,983
Leasing receivables - long-term			Other assets						36,309
									$	46,292

Operating and Finance Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and Topic 840: "Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic" issued in April 2020, and account for these concessions as if they were made under the enforceable rights included in the original agreement. Rent deferments were recorded as a payable and paid at a later negotiated date. Rent abatements were recognized as reductions in rent expense over the periods covered by the abatement period. As of June 30, 2021 the Company recorded rent deferments of $10,697,000, of which $1,804,000 was recorded in accrued expenses, and $8,894,000 was recorded in other long-term liabilities in the consolidated condensed balance sheets. Of the rent deferments recorded as of June 30, 2021, $10,309,000 was recorded in connection with the Topgolf merger in March 2021. As of December 31, 2020 the Company recorded rent deferments of $687,000. There were no rent abatements recorded for the three and six months ended June 30, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

			Balance Sheet Location						June 30, 2021						December 31, 2020
Operating Leases
ROU assets, net			Operating lease ROU assets, net						$	1,057,225					$	194,776
Lease liabilities, short-term			Operating lease liabilities, short-term						$	55,492					$	29,579
Lease liabilities, long-term			Operating lease liabilities, long-term						$	1,174,780					$	177,996
Finance Leases
ROU assets, net,			Other assets						$	2,077					$	1,003
Lease liabilities, short-term			Accrued expenses						$	1,169					$	252
Lease liabilities, long-term			Long-term other						$	1,672					$	447

The components of lease expense are as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2021						2020						2021						2020
Operating lease costs			$	40,915					$	10,279					$	61,412					$	21,301
Financing lease costs:
Amortization of right-of-use assets			854						153						1,177						320
Interest on lease liabilities			26						11						46						22
Total financing lease costs			880						164						1,223						342
Variable lease costs			1,953						587						2,532						1,883
Total lease costs			$	43,748					$	11,030					$	65,167					$	23,526

Other information related to leases was as follows (in thousands):

						Six Months Ended June 30,
Supplemental Cash Flows Information						2021						2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	52,513					$	18,227
Operating cash flows from finance leases						$	311					$	22
Financing cash flows from finance leases						$	200					$	206
Lease liabilities arising from new ROU assets:
Operating leases						$	33,000					$	53,417
Finance leases						$	188					$	130

			June 30, 2021						December 31, 2020
Weighted average remaining lease term (years):
Operating leases			14.4						9.8
Finance leases			2.6						3.0
Weighted average discount rate:
Operating leases			8.2		%				5.3		%
Finance leases			5.4		%				3.9		%

Future minimum lease obligations as of June 30, 2021 were as follows (in thousands):

			Operating Leases						Finance Leases
Remainder of 2021			$	67,587					$	584
2022			149,746						1,261
2023			147,019						771
2024			143,893						367
2025			142,622						24
Thereafter			1,514,983						8
Total future lease payments			2,165,850						3,015
Less: imputed interest			935,578						174
Total			$	1,230,272					$	2,841

Lease payments exclude $896,854,000 related to 16 non-cancellable leases that have been signed as of June 30, 2021 but have not yet commenced. Of the 16 leases, three are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $178,000,000 as of June 30, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $124,731,000 in construction costs within property, plant and equipment as of June 30, 2021. Additionally, as of June 30, 2021, the Company recorded $63,636,000 in construction advances from the landlord in connection with properties. The Company will determine the lease classification

for properties currently under construction at the end of the construction period. The initial base term upon the commencement of these leases is generally 20 years.

Financing Obligations (Deemed Landlord Financing Contracts)

During the six months ended June 30, 2021, the Company accounted for four deemed landlord financing (“DLF”) contracts that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC Topic 842. As of June 30, 2021, the Company was the accounting owner of a total of twelve buildings under DLF contracts. As of June 30, 2021, the net book value included in property, plant and equipment on the consolidated condensed balance sheets related to these buildings totaled $323,590,000. Buildings capitalized in conjunction with DLF contracts are depreciated, less residual value, over 20 years or over their estimated useful life, whichever is shorter.

Supplemental balance sheet information related to DLF contracts is as follows (in thousands):

			Balance Sheet Location						June 30, 2021
DLF contracts liabilities, short-term			Accrued expenses						$	516
DLF contracts liabilities, long-term			Deemed landlord financing, long-term						$	263,219

The components of DLF contracts expenses are as follows (in thousands):

			Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
Amortization of DLF contracts			$	1,337					$	1,704
Interest on DLF contracts			5,638						7,146
Total DLF contracts expenses			$	6,975					$	8,850

Other information related to DLF contracts was as follows (in thousands):

Supplemental Cash Flows Information						Six Months Ended June 30, 2021
Financing cash flows from DLF contracts						$	8,789

			June 30, 2021
Weighted average remaining lease term (years)			19.4
Weighted average discount rate			8.9		%

Future minimum financing obligations related to DLF contracts as of June 30, 2021 were as follows (in thousands):

Remainder of 2021						$	9,845
2022						23,225
2023						23,062
2024						23,253
2025						23,581
Thereafter						412,498
Total future lease payments						515,464
Less: imputed interest						251,729
Total						$	263,735

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The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

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-Name Accounting Standards Codification
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The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

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-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 30
-URI http://asc.fasb.org/subtopic&trid=77888252

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