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Leases | 12 Months Ended
--- | ---
Dec. 31, 2021
Leases [Abstract] |
Leases | Note 3. Leases Sales-Type Leases With respect to the Company's Toptracer operations, the Company enters into non-cancelable license agreements that provide software and hardware to driving ranges and hospitality and entertainment venues, which are classified as sales-type leases. Leasing revenue attributed to sales-type leases was $34,116,000 for the year ended December 31, 2021 and are included in services revenues within the consolidated statement of operations. There were no revenues attributed to sales-type leases for the years ended December 31, 2020 and 2019. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in thousands):
| December 31, 2021 |  |
Sales-type lease selling price(1) | $ | 29,789 |  |  |
Cost of underlying assets | (11,862) |  |  |
Operating profit | $ | 17,927 |  |  |
Interest income | $ | 4,327 |  |  |
____________ (1) Selling price is equal to the present value of lease payments over the non-cancelable term. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):
| Balance Sheet Location |  | December 31, 2021
Leasing receivables, net - short-term | Other current assets |  | $ | 12,843 |
Leasing receivables - long-term | Other assets |  | 44,080 |
|  |  | $ | 56,923 |
Operating and Finance Leases As a lessee, 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. See Note 1 for the Company’s significant accounting polices related to its leasing activities In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatements on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A: ASC Topic 842 and ASC 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. The Company received rent deferments of $687,000, which were recorded in accounts payable and accrued expenses in the Consolidated Balance Sheet as of December 31, 2020, and rent abatements of $1,435,000 which were recorded as reductions in rent expense in the Consolidated Statements of Operations for the year ended December 31, 2020. As of December 31, 2021 the Company recorded rent deferments of $3,853,000 of which $3,224,000 was recorded in accrued expenses, and $629,000 was recorded in other long-term liabilities in the consolidated balance sheets. There were no material rent abatements recorded for the year ended December 31, 2021. Supplemental balance sheet information related to leases is as follows (in thousands):
|  |  | December 31,
| Balance Sheet Location |  | 2021 |  | 2020
Operating leases: |  |  |  |  |
ROU assets, net | Operating lease right-of-use assets, net |  | $ | 1,384,501 |  |  | $ | 194,776 |
Lease liabilities, short-term | Operating lease liabilities, short-term |  | $ | 72,326 |  |  | $ | 29,579 |
Lease liabilities, long-term | Operating lease liabilities, long-term |  | $ | 1,385,364 |  |  | $ | 177,996 |
Finance Leases: |  |  |  |  |
ROU assets, net, | Other assets |  | $ | 129,500 |  |  | $ | 1,003 |
Lease liabilities, short-term | Accounts payable and accrued expenses |  | $ | 1,838 |  |  | $ | 252 |
Lease liabilities, long-term | Long-term other |  | $ | 132,461 |  |  | $ | 447 |
The components of lease expense are as follows (in thousands):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Operating lease costs |  | $ | 146,286 |  |  | $ | 42,520 |  |  | $ | 38,449 |
Financing lease costs: |  |  |  |  |  |
Amortization of right-of-use assets |  | 3,182 |  |  | 870 |  |  | 845 |
Interest on lease liabilities |  | 4,542 |  |  | 47 |  |  | 83 |
Total financing lease costs |  | 7,724 |  |  | 917 |  |  | 928 |
Variable lease costs |  | 6,511 |  |  | 2,473 |  |  | 4,361 |
Total lease costs |  | $ | 160,521 |  |  | $ | 45,910 |  |  | $ | 43,738 |
Other information related to leases was as follows (in thousands):
|  | December 31,
Supplemental Cash Flows Information |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 123,637 |  |  | $ | 39,774 |
Operating cash flows from finance leases |  | $ | 2,802 |  |  | $ | 47 |
Operating cash flows from DLF leases |  | $ | 17,695 |  |  | $ | — |
Financing cash flows from finance leases |  | $ | 830 |  |  | $ | 792 |
Lease liabilities arising from new ROU assets: |  |  |  |
Operating leases |  | $ | 19,625 |  |  | $ | 65,547 |
Finance leases |  | $ | 52,742 |  |  | $ | 139 |
Weighted average remaining lease term (years): |  |  |  |
Operating leases |  | 14.1 |  | 9.8
Finance leases |  | 36.2 |  | 3.0
Weighted average discount rate: |  |  |  |
Operating leases |  | 5.3 | % |  | 5.3 | %
Finance leases |  | 5.3 | % |  | 3.9 | %
Future minimum lease obligations as of December 31, 2021 were as follows (in thousands):
| Operating Leases |  | Finance Leases
2022 | $ | 138,725 |  |  | $ | 15,035 |
2023 | 136,064 |  |  | 15,688 |
2024 | 133,406 |  |  | 15,429 |
2025 | 130,883 |  |  | 15,241 |
2026 | 125,796 |  |  | 15,575 |
Thereafter | 1,230,228 |  |  | 629,948 |
Total future lease payments | 1,895,102 |  |  | 706,916 |
Less: imputed interest | 437,412 |  |  | 572,617 |
Total | $ | 1,457,690 |  |  | $ | 134,299 |
Lease payments exclude $1,518,384,000 related to 14 non-cancelable leases that have been signed as of December 31, 2021 but have not yet commenced. The Company's minimum capital commitment related to leases, net of amounts reimbursed by third-party real estate financing partners, was approximately $66,000,000 as of December 31, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $208,134,000 in construction costs within property, plant and equipment as of December 31, 2021. Additionally, as of December 31, 2021, the Company recorded $22,943,000 in construction advances from the landlord in connection with properties, which is included on the Company's consolidated balance sheet as of December 31, 2021. 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 Obligations) During 2021, the Company accounted for 29 DLF obligations, each of which represented a failed sale following the application of sale-leaseback criteria within ASC Topic 842, “Leases”. As of December 31, 2021, the Company was the accounting owner of a total of 15 buildings under DLF obligations of which the net book value included in property, plant and equipment on the consolidated balance sheet related to these buildings totaled $521,361,000. DLF obligations included in property, plant and equipment are offset by total DLF obligation liabilities of $461,537,000 on the Company's consolidated balance sheet as of December 31, 2021. Buildings capitalized in conjunction with DLF obligations are depreciated, less residual value, over 40 years or over their estimated useful life, whichever is shorter. Supplemental balance sheet information related to DLF obligations is as follows (in thousands):
| Balance Sheet Location |  | December 31, 2021 |  |  |  |
DLF obligation liabilities, short-term | Accrued expenses |  | $ | 903 |  |  |  |  |
DLF obligation liabilities, long-term | Deemed landlord financing, long-term |  | $ | 460,634 |  |  |  |  |
The components of DLF obligation expenses are as follows (in thousands):
| Income Statement Location |  | December 31, 2021 |  |
Amortization of DLF obligations | Amortization expense |  | $ | 5,707 |  |  |
Interest on DLF obligations | Interest expense, net |  | 28,039 |  |  |
Total DLF contracts expenses |  |  | $ | 33,746 |  |  |
Payments on DLF obligations represent payments related to interest accretion for the year ended December 31, 2021.
Supplemental Cash Flows Information (dollars in thousands) |  | December 31, 2021 |  |
Operating cash outflows from DLF obligations |  | $ | 17,695 |  |
Weighted average remaining term (years) |  | 39.0 |  |
Weighted average discount rate |  | 9.2 | % |  |
Future minimum financing obligations related to DLF obligations as of December 31, 2021 were as follows (in thousands):
2022 |  | $ | 33,337 |
2023 |  | 36,403 |
2024 |  | 37,585 |
2025 |  | 37,961 |
2026 |  | 38,930 |
Thereafter |  | 1,916,536 |
Total future payments |  | 2,100,752 |
Less: imputed interest |  | 1,639,215 |
Total |  | $ | 461,537 |
Leases | Note 3. Leases Sales-Type Leases With respect to the Company's Toptracer operations, the Company enters into non-cancelable license agreements that provide software and hardware to driving ranges and hospitality and entertainment venues, which are classified as sales-type leases. Leasing revenue attributed to sales-type leases was $34,116,000 for the year ended December 31, 2021 and are included in services revenues within the consolidated statement of operations. There were no revenues attributed to sales-type leases for the years ended December 31, 2020 and 2019. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in thousands):
| December 31, 2021 |  |
Sales-type lease selling price(1) | $ | 29,789 |  |  |
Cost of underlying assets | (11,862) |  |  |
Operating profit | $ | 17,927 |  |  |
Interest income | $ | 4,327 |  |  |
____________ (1) Selling price is equal to the present value of lease payments over the non-cancelable term. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):
| Balance Sheet Location |  | December 31, 2021
Leasing receivables, net - short-term | Other current assets |  | $ | 12,843 |
Leasing receivables - long-term | Other assets |  | 44,080 |
|  |  | $ | 56,923 |
Operating and Finance Leases As a lessee, 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. See Note 1 for the Company’s significant accounting polices related to its leasing activities In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatements on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A: ASC Topic 842 and ASC 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. The Company received rent deferments of $687,000, which were recorded in accounts payable and accrued expenses in the Consolidated Balance Sheet as of December 31, 2020, and rent abatements of $1,435,000 which were recorded as reductions in rent expense in the Consolidated Statements of Operations for the year ended December 31, 2020. As of December 31, 2021 the Company recorded rent deferments of $3,853,000 of which $3,224,000 was recorded in accrued expenses, and $629,000 was recorded in other long-term liabilities in the consolidated balance sheets. There were no material rent abatements recorded for the year ended December 31, 2021. Supplemental balance sheet information related to leases is as follows (in thousands):
|  |  | December 31,
| Balance Sheet Location |  | 2021 |  | 2020
Operating leases: |  |  |  |  |
ROU assets, net | Operating lease right-of-use assets, net |  | $ | 1,384,501 |  |  | $ | 194,776 |
Lease liabilities, short-term | Operating lease liabilities, short-term |  | $ | 72,326 |  |  | $ | 29,579 |
Lease liabilities, long-term | Operating lease liabilities, long-term |  | $ | 1,385,364 |  |  | $ | 177,996 |
Finance Leases: |  |  |  |  |
ROU assets, net, | Other assets |  | $ | 129,500 |  |  | $ | 1,003 |
Lease liabilities, short-term | Accounts payable and accrued expenses |  | $ | 1,838 |  |  | $ | 252 |
Lease liabilities, long-term | Long-term other |  | $ | 132,461 |  |  | $ | 447 |
The components of lease expense are as follows (in thousands):
|  | Year Ended December 31,
|  | 2021 |  | 2020 |  | 2019
Operating lease costs |  | $ | 146,286 |  |  | $ | 42,520 |  |  | $ | 38,449 |
Financing lease costs: |  |  |  |  |  |
Amortization of right-of-use assets |  | 3,182 |  |  | 870 |  |  | 845 |
Interest on lease liabilities |  | 4,542 |  |  | 47 |  |  | 83 |
Total financing lease costs |  | 7,724 |  |  | 917 |  |  | 928 |
Variable lease costs |  | 6,511 |  |  | 2,473 |  |  | 4,361 |
Total lease costs |  | $ | 160,521 |  |  | $ | 45,910 |  |  | $ | 43,738 |
Other information related to leases was as follows (in thousands):
|  | December 31,
Supplemental Cash Flows Information |  | 2021 |  | 2020
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 123,637 |  |  | $ | 39,774 |
Operating cash flows from finance leases |  | $ | 2,802 |  |  | $ | 47 |
Operating cash flows from DLF leases |  | $ | 17,695 |  |  | $ | — |
Financing cash flows from finance leases |  | $ | 830 |  |  | $ | 792 |
Lease liabilities arising from new ROU assets: |  |  |  |
Operating leases |  | $ | 19,625 |  |  | $ | 65,547 |
Finance leases |  | $ | 52,742 |  |  | $ | 139 |
Weighted average remaining lease term (years): |  |  |  |
Operating leases |  | 14.1 |  | 9.8
Finance leases |  | 36.2 |  | 3.0
Weighted average discount rate: |  |  |  |
Operating leases |  | 5.3 | % |  | 5.3 | %
Finance leases |  | 5.3 | % |  | 3.9 | %
Future minimum lease obligations as of December 31, 2021 were as follows (in thousands):
| Operating Leases |  | Finance Leases
2022 | $ | 138,725 |  |  | $ | 15,035 |
2023 | 136,064 |  |  | 15,688 |
2024 | 133,406 |  |  | 15,429 |
2025 | 130,883 |  |  | 15,241 |
2026 | 125,796 |  |  | 15,575 |
Thereafter | 1,230,228 |  |  | 629,948 |
Total future lease payments | 1,895,102 |  |  | 706,916 |
Less: imputed interest | 437,412 |  |  | 572,617 |
Total | $ | 1,457,690 |  |  | $ | 134,299 |
Lease payments exclude $1,518,384,000 related to 14 non-cancelable leases that have been signed as of December 31, 2021 but have not yet commenced. The Company's minimum capital commitment related to leases, net of amounts reimbursed by third-party real estate financing partners, was approximately $66,000,000 as of December 31, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $208,134,000 in construction costs within property, plant and equipment as of December 31, 2021. Additionally, as of December 31, 2021, the Company recorded $22,943,000 in construction advances from the landlord in connection with properties, which is included on the Company's consolidated balance sheet as of December 31, 2021. 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 Obligations) During 2021, the Company accounted for 29 DLF obligations, each of which represented a failed sale following the application of sale-leaseback criteria within ASC Topic 842, “Leases”. As of December 31, 2021, the Company was the accounting owner of a total of 15 buildings under DLF obligations of which the net book value included in property, plant and equipment on the consolidated balance sheet related to these buildings totaled $521,361,000. DLF obligations included in property, plant and equipment are offset by total DLF obligation liabilities of $461,537,000 on the Company's consolidated balance sheet as of December 31, 2021. Buildings capitalized in conjunction with DLF obligations are depreciated, less residual value, over 40 years or over their estimated useful life, whichever is shorter. Supplemental balance sheet information related to DLF obligations is as follows (in thousands):
| Balance Sheet Location |  | December 31, 2021 |  |  |  |
DLF obligation liabilities, short-term | Accrued expenses |  | $ | 903 |  |  |  |  |
DLF obligation liabilities, long-term | Deemed landlord financing, long-term |  | $ | 460,634 |  |  |  |  |
The components of DLF obligation expenses are as follows (in thousands):
| Income Statement Location |  | December 31, 2021 |  |
Amortization of DLF obligations | Amortization expense |  | $ | 5,707 |  |  |
Interest on DLF obligations | Interest expense, net |  | 28,039 |  |  |
Total DLF contracts expenses |  |  | $ | 33,746 |  |  |
Payments on DLF obligations represent payments related to interest accretion for the year ended December 31, 2021.
Supplemental Cash Flows Information (dollars in thousands) |  | December 31, 2021 |  |
Operating cash outflows from DLF obligations |  | $ | 17,695 |  |
Weighted average remaining term (years) |  | 39.0 |  |
Weighted average discount rate |  | 9.2 | % |  |
Future minimum financing obligations related to DLF obligations as of December 31, 2021 were as follows (in thousands):
2022 |  | $ | 33,337 |
2023 |  | 36,403 |
2024 |  | 37,585 |
2025 |  | 37,961 |
2026 |  | 38,930 |
Thereafter |  | 1,916,536 |
Total future payments |  | 2,100,752 |
Less: imputed interest |  | 1,639,215 |
Total |  | $ | 461,537 |

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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