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Leases | 3 Months Ended
--- | ---
Mar. 31, 2022
Leases [Abstract] |
Leases | Leases Sales-Type Leases The Company enters into non-cancellable 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 is included in services revenues within the consolidated condensed statement of operations. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Sales-type lease selling price(1) |  |  |  |  | $ | 7.1 |  |  | $ | 3.5 |
Cost of underlying assets |  |  |  |  | (3.3) |  |  | (2.4) |
Operating profit |  |  |  |  | $ | 3.8 |  |  | $ | 1.1 |
Interest income |  |  |  |  | $ | 0.9 |  |  | $ | 0.4 |
Leasing revenue attributable to sales-type leases |  |  |  |  | $ | 8.0 |  |  | $ | 3.9 |
(1) Selling price is equal to the present value of lease payments over the non-cancellable term. |  |  |  |  |  |  |
Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021
Leasing receivables, net - short-term | Other current assets |  | $ | 13.4 |  |  | $ | 12.8 |
Leasing receivables, net - long-term | Other assets |  | 45.9 |  |  | 44.1 |
|  |  | $ | 59.3 |  |  | $ | 56.9 |
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 businesses in Japan and Korea. In response to the COVID-19 pandemic, the Company received rent concessions in the form of deferments and abatements on certain of its operating leases. Rent deferments are recorded as payables and are paid at a later negotiated date. Rent abatements are recognized as reductions in rent expense over the periods covered by the abatement period. As of December 31, 2021, the Company had rent deferments of $3.8 million, of which $3.2 million was recorded in accrued expenses, and $0.6 million was recorded in other long-term liabilities in the consolidated balance sheets. As of March 31, 2022, rent deferments of $0.2 million and $0.3 million were recorded in accrued expenses and other long-term liabilities, respectively, in the consolidated condensed balance sheets. There were no material rent abatements recorded during the three months ended March 31, 2022 and March 31, 2021. Supplemental balance sheet information related to leases is as follows (in millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021
Operating Leases |  |  |  |  |
ROU assets, net | Operating lease right-of-use assets, net |  | $ | 1,359.3 |  |  | $ | 1,384.5 |
Lease liabilities, short-term | Operating lease liabilities, short-term |  | $ | 77.8 |  |  | $ | 72.3 |
Lease liabilities, long-term | Operating lease liabilities, long-term |  | $ | 1,356.2 |  |  | $ | 1,385.4 |
Finance Leases |  |  |  |  |
ROU assets, net | Other assets |  | $ | 158.7 |  |  | $ | 129.5 |
Lease liabilities, short-term | Accounts payable and accrued expenses |  | $ | 1.8 |  |  | $ | 1.8 |
Lease liabilities, long-term | Long-term other |  | $ | 162.4 |  |  | $ | 132.5 |
The components of lease expense are as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Operating lease costs |  |  |  |  | $ | 37.4 |  |  | $ | 20.5 |
Financing lease costs: |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  |  |  | 0.6 |  |  | 0.3 |
Interest on lease liabilities |  |  |  |  | 2.1 |  |  | — |
Total financing lease costs |  |  |  |  | 2.7 |  |  | 0.3 |
Variable lease costs |  |  |  |  | 1.9 |  |  | 0.6 |
Total lease costs |  |  |  |  | $ | 42.0 |  |  | $ | 21.4 |
Other information related to leases was as follows (in millions):
|  | Three Months Ended March 31,
Supplemental Cash Flows Information |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 39.8 |  |  | $ | 18.9 |
Operating cash flows from finance leases |  | $ | 2.1 |  |  | $ | — |
Financing cash outflows from finance leases |  | $ | 0.1 |  |  | $ | 0.1 |
Lease liabilities arising from new ROU assets: |  |  |  |
Operating leases |  | $ | — |  |  | $ | 28.4 |
Finance leases |  | $ | 30.0 |  |  | $ | — |
| March 31, 2022 |  | December 31, 2021
Weighted average remaining lease term (years): |  |  |
Operating leases | 15.7 |  | 14.1
Finance leases | 35.3 |  | 36.2
Weighted average discount rate: |  |  |
Operating leases | 5.4 | % |  | 5.3 | %
Finance leases | 5.3 | % |  | 5.3 | %
Future minimum lease obligations as of March 31, 2022 were as follows (in millions):
| Operating Leases |  | Finance Leases |  |
Remainder of 2022 | $ | 104.2 |  |  | $ | 5.4 |  |  |
2023 | 143.5 |  |  | 9.7 |  |  |
2024 | 141.2 |  |  | 9.3 |  |  |
2025 | 138.8 |  |  | 9.0 |  |  |
2026 | 133.9 |  |  | 9.0 |  |  |
Thereafter | 1,569.7 |  |  | 364.2 |  |  |
Total future lease payments | 2,231.3 |  |  | 406.6 |  |  |
Less: imputed interest | 797.3 |  |  | 242.4 |  |  |
Total | $ | 1,434.0 |  |  | $ | 164.2 |  |  |
Financing Obligations (Deemed Landlord Financing Obligations) During the three months ended March 31, 2022, the Company had 29 Deemed Landlord Financing (“DLF”) obligations that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC Topic 842, “Leases”. As of March 31, 2022, the Company was the accounting owner of the 13 land and 16 building assets under the DLF obligations, for a total amount of $127.0 million and $500.6 million, respectively. Land assets and the net book value of the buildings under the DLF obligations are included in property, plant and equipment on the Company’s consolidated condensed balance sheets. Buildings capitalized in conjunction with the 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 millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021 |  |  |  |
DLF obligation liabilities, short-term | Accrued expenses |  | $ | 1.1 |  |  | $ | 0.9 |  |  |  |  |
DLF obligation liabilities, long-term | Deemed landlord financing, long-term |  | $ | 463.5 |  |  | $ | 460.6 |  |  |  |  |
The components of DLF obligation expenses are as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Amortization of DLF obligations |  |  |  |  | $ | 3.2 |  |  | $ | 0.4 |
Interest on DLF obligations |  |  |  |  | 10.1 |  |  | 1.5 |
Total DLF contracts expenses |  |  |  |  | $ | 13.3 |  |  | $ | 1.9 |
Payments on DLF obligations represent payments related to interest accretion for the three months ended March 31, 2022 and March 31, 2021.
| Three Months Ended March 31, |  |
Supplemental Cash Flows Information (in millions) | 2022 |  | 2021 |  |
Operating cash outflows from DLF obligations | $ | 9.6 |  |  | $ | 1.5 |  |  |
Financing cash outflows from DLF obligations | $ | — |  |  | $ | 0.2 |  |  |
| March 31, 2022 |  | December 31, 2021 |  |
Weighted average remaining lease term (years) | 38.8 |  | 39.0 |  |
Weighted average discount rate | 8.8 | % |  | 9.2 | % |  |
Future minimum financing obligations related to DLF obligations as of March 31, 2022 were as follows (in millions):
Remainder of 2022 |  | $ | 23.4 |
2023 |  | 36.5 |
2024 |  | 37.7 |
2025 |  | 38.1 |
2026 |  | 39.0 |
Thereafter |  | 1,810.2 |
Total future lease payments |  | 1,984.9 |
Less: imputed interest |  | 1,520.3 |
Total |  | $ | 464.6 |
Leases Under Construction Lease payments exclude $1,421.2 million related to 14 venues subject to non-cancellable leases that have been signed as of March 31, 2022 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 $43.0 million as of March 31, 2022. As the Company is actively involved in the construction of these properties, the Company recorded $172.9 million in building-related construction costs within property, plant and equipment as of March 31, 2022. Additionally, as of March 31, 2022, the Company recorded $72.3 million in construction advances from the landlords in connection with these 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.
Leases | Leases Sales-Type Leases The Company enters into non-cancellable 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 is included in services revenues within the consolidated condensed statement of operations. Leasing revenue attributed to sales-type leases consists of the selling price and interest income as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Sales-type lease selling price(1) |  |  |  |  | $ | 7.1 |  |  | $ | 3.5 |
Cost of underlying assets |  |  |  |  | (3.3) |  |  | (2.4) |
Operating profit |  |  |  |  | $ | 3.8 |  |  | $ | 1.1 |
Interest income |  |  |  |  | $ | 0.9 |  |  | $ | 0.4 |
Leasing revenue attributable to sales-type leases |  |  |  |  | $ | 8.0 |  |  | $ | 3.9 |
(1) Selling price is equal to the present value of lease payments over the non-cancellable term. |  |  |  |  |  |  |
Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021
Leasing receivables, net - short-term | Other current assets |  | $ | 13.4 |  |  | $ | 12.8 |
Leasing receivables, net - long-term | Other assets |  | 45.9 |  |  | 44.1 |
|  |  | $ | 59.3 |  |  | $ | 56.9 |
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 businesses in Japan and Korea. In response to the COVID-19 pandemic, the Company received rent concessions in the form of deferments and abatements on certain of its operating leases. Rent deferments are recorded as payables and are paid at a later negotiated date. Rent abatements are recognized as reductions in rent expense over the periods covered by the abatement period. As of December 31, 2021, the Company had rent deferments of $3.8 million, of which $3.2 million was recorded in accrued expenses, and $0.6 million was recorded in other long-term liabilities in the consolidated balance sheets. As of March 31, 2022, rent deferments of $0.2 million and $0.3 million were recorded in accrued expenses and other long-term liabilities, respectively, in the consolidated condensed balance sheets. There were no material rent abatements recorded during the three months ended March 31, 2022 and March 31, 2021. Supplemental balance sheet information related to leases is as follows (in millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021
Operating Leases |  |  |  |  |
ROU assets, net | Operating lease right-of-use assets, net |  | $ | 1,359.3 |  |  | $ | 1,384.5 |
Lease liabilities, short-term | Operating lease liabilities, short-term |  | $ | 77.8 |  |  | $ | 72.3 |
Lease liabilities, long-term | Operating lease liabilities, long-term |  | $ | 1,356.2 |  |  | $ | 1,385.4 |
Finance Leases |  |  |  |  |
ROU assets, net | Other assets |  | $ | 158.7 |  |  | $ | 129.5 |
Lease liabilities, short-term | Accounts payable and accrued expenses |  | $ | 1.8 |  |  | $ | 1.8 |
Lease liabilities, long-term | Long-term other |  | $ | 162.4 |  |  | $ | 132.5 |
The components of lease expense are as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Operating lease costs |  |  |  |  | $ | 37.4 |  |  | $ | 20.5 |
Financing lease costs: |  |  |  |  |  |  |
Amortization of right-of-use assets |  |  |  |  | 0.6 |  |  | 0.3 |
Interest on lease liabilities |  |  |  |  | 2.1 |  |  | — |
Total financing lease costs |  |  |  |  | 2.7 |  |  | 0.3 |
Variable lease costs |  |  |  |  | 1.9 |  |  | 0.6 |
Total lease costs |  |  |  |  | $ | 42.0 |  |  | $ | 21.4 |
Other information related to leases was as follows (in millions):
|  | Three Months Ended March 31,
Supplemental Cash Flows Information |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 39.8 |  |  | $ | 18.9 |
Operating cash flows from finance leases |  | $ | 2.1 |  |  | $ | — |
Financing cash outflows from finance leases |  | $ | 0.1 |  |  | $ | 0.1 |
Lease liabilities arising from new ROU assets: |  |  |  |
Operating leases |  | $ | — |  |  | $ | 28.4 |
Finance leases |  | $ | 30.0 |  |  | $ | — |
| March 31, 2022 |  | December 31, 2021
Weighted average remaining lease term (years): |  |  |
Operating leases | 15.7 |  | 14.1
Finance leases | 35.3 |  | 36.2
Weighted average discount rate: |  |  |
Operating leases | 5.4 | % |  | 5.3 | %
Finance leases | 5.3 | % |  | 5.3 | %
Future minimum lease obligations as of March 31, 2022 were as follows (in millions):
| Operating Leases |  | Finance Leases |  |
Remainder of 2022 | $ | 104.2 |  |  | $ | 5.4 |  |  |
2023 | 143.5 |  |  | 9.7 |  |  |
2024 | 141.2 |  |  | 9.3 |  |  |
2025 | 138.8 |  |  | 9.0 |  |  |
2026 | 133.9 |  |  | 9.0 |  |  |
Thereafter | 1,569.7 |  |  | 364.2 |  |  |
Total future lease payments | 2,231.3 |  |  | 406.6 |  |  |
Less: imputed interest | 797.3 |  |  | 242.4 |  |  |
Total | $ | 1,434.0 |  |  | $ | 164.2 |  |  |
Financing Obligations (Deemed Landlord Financing Obligations) During the three months ended March 31, 2022, the Company had 29 Deemed Landlord Financing (“DLF”) obligations that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC Topic 842, “Leases”. As of March 31, 2022, the Company was the accounting owner of the 13 land and 16 building assets under the DLF obligations, for a total amount of $127.0 million and $500.6 million, respectively. Land assets and the net book value of the buildings under the DLF obligations are included in property, plant and equipment on the Company’s consolidated condensed balance sheets. Buildings capitalized in conjunction with the 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 millions):
| Balance Sheet Location |  | March 31, 2022 |  | December 31, 2021 |  |  |  |
DLF obligation liabilities, short-term | Accrued expenses |  | $ | 1.1 |  |  | $ | 0.9 |  |  |  |  |
DLF obligation liabilities, long-term | Deemed landlord financing, long-term |  | $ | 463.5 |  |  | $ | 460.6 |  |  |  |  |
The components of DLF obligation expenses are as follows (in millions):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
Amortization of DLF obligations |  |  |  |  | $ | 3.2 |  |  | $ | 0.4 |
Interest on DLF obligations |  |  |  |  | 10.1 |  |  | 1.5 |
Total DLF contracts expenses |  |  |  |  | $ | 13.3 |  |  | $ | 1.9 |
Payments on DLF obligations represent payments related to interest accretion for the three months ended March 31, 2022 and March 31, 2021.
| Three Months Ended March 31, |  |
Supplemental Cash Flows Information (in millions) | 2022 |  | 2021 |  |
Operating cash outflows from DLF obligations | $ | 9.6 |  |  | $ | 1.5 |  |  |
Financing cash outflows from DLF obligations | $ | — |  |  | $ | 0.2 |  |  |
| March 31, 2022 |  | December 31, 2021 |  |
Weighted average remaining lease term (years) | 38.8 |  | 39.0 |  |
Weighted average discount rate | 8.8 | % |  | 9.2 | % |  |
Future minimum financing obligations related to DLF obligations as of March 31, 2022 were as follows (in millions):
Remainder of 2022 |  | $ | 23.4 |
2023 |  | 36.5 |
2024 |  | 37.7 |
2025 |  | 38.1 |
2026 |  | 39.0 |
Thereafter |  | 1,810.2 |
Total future lease payments |  | 1,984.9 |
Less: imputed interest |  | 1,520.3 |
Total |  | $ | 464.6 |
Leases Under Construction Lease payments exclude $1,421.2 million related to 14 venues subject to non-cancellable leases that have been signed as of March 31, 2022 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 $43.0 million as of March 31, 2022. As the Company is actively involved in the construction of these properties, the Company recorded $172.9 million in building-related construction costs within property, plant and equipment as of March 31, 2022. Additionally, as of March 31, 2022, the Company recorded $72.3 million in construction advances from the landlords in connection with these 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.

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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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