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September 20, 2019
Brian P. Lynch
Chief Financial Officer
Callaway Golf Company
2180 Rutherford Road
Carlsbad, California 92008
Re: Callaway Golf Company
Form 10-K for the Fiscal Year Ended December 31, 2018
Filed March 1, 2019
Form 10-Q for the Quarterly Period Ended June 30, 2019
Filed August 9, 2019
Form 8-K
Filed on August 8, 2019
File No. 001-10962
Dear Mr. Lynch:
We have reviewed your filings and have the following comments. In some
of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-Q for the Quarterly Period Ended June 30, 2019
Note 3. Revenue Recognition, page 14
1. We note that your disclosure of disaggregated revenue in Note 3 is
limited to golf clubs,
golf balls, apparel, and gear, accessories and other. We also note that
in the Form 10-K
for the year ended December 31, 2018 you disclosed revenue disaggregated
into the
following categories: woods, irons, putters, golf balls, and gear
accessories and other.
Please explain to us why you no longer believe you should disaggregate
the
revenue related to the golf clubs category (i.e. woods, irons, and
putters). Please consider
the guidance in ASC 606-10-55-90 and 55-91 in your response to us.
Brian P. Lynch
FirstNameGolf Company P. Lynch
Callaway LastNameBrian
Comapany 20, 2019
September NameCallaway Golf Company
September 20, 2019 Page 2
Page 2
FirstName LastName
Note 18. Segment Information, page 34
2. We note your disclosure that due to the January 2019 acquisition of
Jack Wolfskin,
combined with the continued growth of TravisMathew and OGIO branded
soft goods, and
the anticipated significant future growth in the soft goods business,
you reassessed your
operating segments and evaluated your global business platform, and as
a result changed
the composition of your reportable segments on the basis of golf
equipment and soft
goods products. With such assessment you now have two reportable
operating segments,
namely the Golf Equipment operating segment and the Apparel, Gear and
Other operating
segment. We note the Golf Equipment segment now consists of golf clubs
and golf balls.
Given that golf balls was previously its own operating and reportable
segment and
represented in excess of 10% of both net sales and pre-tax income in
prior periods, as well
as the six months ended June 30, 2019, please tell us and disclose if
you have aggregated
the previous operating segments of golf clubs and golf balls into one
new reportable
segment, and explain the basis thereof for aggregation. Your response
should address the
requirements of ASC 280-10-50-11 and 50-12(a) and (b). If you do not
currently consider
golf balls to be a separate operating segment, please explain to us
why not using the
criteria in ASC 280-10-50-1.
Form 8-K furnished on August 8, 2019
Exhibit 99.1 Earnings Release, page 1
3. We note that the table reconciling net income to adjusted EBITDA for
the 2019 trailing
twelve months and 2018 trailing twelve months, appears to have two
different amounts
titled "Adjusted EBITDA." To avoid confusion, please revise so that
these differing
amounts do not both have the title "Adjusted EBITDA."
4. We note that your earnings release discloses guidance for full year
2019 non-GAAP net
sales, earnings per share, Adjusted EBITDA, gross margin, and
operating expenses and
guidance for Q3 2019 for net sales, earnings per share, and Adjusted
EBITDA. Please
note that each of these amounts should be reconciled to the comparable
GAAP measures.
In this regard, we note the tables at the end of the release appear to
disclose certain non-
GAAP adjustments, however these tables are not considered
reconciliations of the GAAP
amounts to non-GAAP measures. If you can not provide these
reconciliations without
unreasonable efforts, please revise to disclose that fact. Please
revise accordingly. See
Item 10(e)(1)(i)(B) of Regulation S-K and Question 102.10 of the SEC
Staff's
Compliance and Disclosure Interpretations on Non-GAAP Financial
Measures, updated
April 4, 2018.
5. We note that your Supplemental Financial Information and Non-GAAP
Reconciliation tables for both the three months and six months ended
June 30, 2019 and
2018, appear to present a full non-GAAP income statement when
reconciling non-GAAP
measures to the most directly comparable GAAP measures. Please be
advised it is not
Brian P. Lynch
Callaway Golf Company
September 20, 2019
Page 3
appropriate to present a full non-GAAP income statement for purposes
of reconciling non-
GAAP measures to the most directly comparable GAAP measure. Please
revise and
reconcile without presenting a full non-GAAP income statement or tell
us why you
believe your current disclosure is appropriate. See Question 102.10 of
the updated Non-
GAAP Financial Measures Compliance and Disclosure Interpretations
updated on April 4,
2018. Additionally, please explain to us and revise to more clearly
disclose the nature of
the adjustments in the column titled "Non-Cash Purchase Accounting
Adjustments."
6. We note that at the top of your earnings release, non-GAAP fully
diluted earnings per
share and Adjusted EBITDA are presented with more prominence than the
most
comparable GAAP measures. Please revise to disclose the most directly
comparable
GAAP measure prior to disclosure of a non-GAAP measure, in accordance
with Item
10(e)(1)(i)(A) of Regulation S-K.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Beverly Singleton at (202) 551-3328 or Claire Erlanger
at (202) 551-
3301 if you have questions regarding comments on the financial statements and
related
matters. Please contact Melissa Raminpour at (202) 551-3379 with any other
questions.
FirstName LastNameBrian P. Lynch Sincerely,
Comapany NameCallaway Golf Company
Division of
Corporation Finance
September 20, 2019 Page 3 Office of
Transportation and Leisure
FirstName LastName