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United States securities and exchange commission logo
December 21, 2020
Brian Lynch
Chief Financial Officer
Callaway Golf Company
2180 Rutherford Road
Carlsbad, CA 92008
Re: Callaway Golf
Company
Form 10-K for the
Fiscal Year Ended December 31, 2019
Filed March 2, 2020
Form 10-Q for the
Fiscal Quarter Ended September 30, 2020
Filed November 9,
2020
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-K for the Fiscal Year Ended December 31, 2019
Management s Discussion and Analysis of Financial Condition and
Results of Operations
Executive Summary of Results of Operations, page 38
1. We note that your
presentation of non-GAAP net income and diluted EPS on pages 41 and
46 includes adjustments
for acquisition and transition expenses or acquisition and other
non-recurring expenses.
We further note that the Adjusted EBITDA presentation within
your Form 8-K earnings
release filed on November 9, 2020 similarly includes an
adjustment for
acquisitions and other non-recurring costs. Please provide us with the
nature of all
significant expenses included in these adjustments. Considering they appear
to recur in multiple
periods, also tell us how you determined they qualify to be described
as non-recurring
and do not represent normal, recurring cash expenses necessary to
operate your business.
See Questions 100.01 and 102.03 and of the Compliance and
Brian Lynch
FirstName LastNameBrian
Callaway Golf Company Lynch
Comapany21,
December NameCallaway
2020 Golf Company
December
Page 2 21, 2020 Page 2
FirstName LastName
Disclosure Interpretations on Non-GAAP Financial Measures.
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies, page F-10
2. Please revise future filings to clearly disclose the nature of
expenses included within each
of the material expense line items on your statements of operations.
Form 10-Q for the Fiscal Quarter Ended September 30, 2020
Note 6. Financing Arrangements
Convertible Senior Notes, page 23
3. We note that you amortize the debt discount and debt issuance costs
associated with the
liability component of your 2.75% Convertible Senior Notes over the
remaining term.
Please tell us how your amortization policy complies with the guidance
in ASC 470-20-
35-13 requiring amortization of such items over the expected life of a
similar liability that
does not have an associated equity component.
4. We note that for purposes of calculating diluted earnings per share
you appear to presume
cash settlement of the principal amount of your Convertible Senior
Notes upon conversion
and utilize the treasury stock method. Explain in sufficient detail
how you determined it
was not appropriate to presume share settlement and apply the
if-converted method and
how you determined use of the treasury stock method was appropriate.
See ASC 260-10-
45-45 through -47, ASC 260-10-45-40 through -41, and ASC
260-10-55-36A.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Executive Summary to the Results of Operations and Financial Condition, page 42
5. We note that you derive revenues through various channels, including
wholesale, retail,
and e-commerce operations. Your disclosures throughout your results of
operations
discussions indicate that the e-commerce channel had a positive impact
on your sales and
gross margins during the three and nine month periods ended September
30, 2020. In
future filings, to the extent results and trends are not materially
consistent across all sales
channels, please quantify in dollars and/or percentage change the
impact each channel had
and is expected to have on your consolidated and operating segment
sales and gross
margins.
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.
Brian Lynch
Callaway Golf Company
December 21, 2020
Page 3
You may contact Andrew Blume, Staff Accountant, at (202) 551-3254 or
Martin James,
Senior Advisor, at (202) 551-3671 with any questions.
FirstName LastNameBrian Lynch Sincerely,
Comapany NameCallaway Golf Company
Division of Corporation
Finance
December 21, 2020 Page 3 Office of Manufacturing
FirstName LastName