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United States securities and exchange commission logo
May 1, 2024
Brian Lynch
Chief Financial Officer
Topgolf Callaway Brands Corp.
2180 Rutherford Road
Carlsbad , CA 92008
Re: Topgolf Callaway
Brands Corp.
10-K for the year
ended December 31, 2023
Form 8-K furnished
February 13, 2024
Dear Brian Lynch :
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter 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 a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the year ended December 31, 2023
Results of Operations
Net Income, Diluted Earnings Per Share and Reconciliation of Non-GAAP
Measures, page 58
1. We note your adjustment
of $12.7 million in total charges related to the impairment and
abandonment of the
Shankstars media game in the Topgolf segment to arrive at December
31, 2023 Non-GAAP net
income. Please tell us more about the nature of this asset and
why it was impaired. As
exiting product lines appear to be part of the normal course of
operating a business,
also please tell us why these adjustments are consistent with
Question 100.01 of the
Compliance and Disclosure Interpretations on Non-
GAAP Financial
Measures.
2. We note that your
disclosure of Non-GAAP net income and non-GAAP diluted EPS
includes an adjustment
for the amortization and depreciation of acquired intangible assets
and purchase accounting
adjustments. Please provide us details as to the nature and
amount of each of these
adjustments and explain to us why you believe they are
appropriate non-GAAP
adjustments. Also, please tell us about the nature of the $12.3m
total reorganization
costs in the Topgolf and Active Lifestyle segments that is included in
Brian Lynch
FirstName LastNameBrian Lynch
Topgolf Callaway Brands Corp.
Comapany
May 1, 2024NameTopgolf Callaway Brands Corp.
May 1,
Page 2 2024 Page 2
FirstName LastName
the Non-Recurring Items adjustment. In this regard, please tell
us why you do not
believe these costs are normal operating costs of your business.
Additionally, this
comment applies to the earnings release on Form 8-K furnished February
13, 2024 which
reflects these adjustments to your non-GAAP operating income (loss),
net income and
diluted EPS as shown in the reconciliation on page 14 of that earnings
release.
Notes to the Financial Statements
Note 13. Commitments and Contingencies
Legal Matters, page F-41
3. We note your disclosure that you are unable to estimate the ultimate
aggregate amount of
monetary loss, amounts covered by insurance, or the financial impact
that will result from
such matters. Please revise future filings as applicable to disclose
the nature of any
material contingency where accrual is not made for the loss
contingency or exposure
exists in excess of the amount accrued. Alternatively, you may
disclose if true that you do
not believe that matters currently pending against the Company will
have a material
adverse effect on your consolidated business, financial condition,
cash flows, or results of
operations. See guidance in ASC 450-20-50-3.
Form 8-K furnished February 13, 2024
Exhibit 99.1 Earnings Release, page 2
4. We note that your table of Non-GAAP results on page 2, as well as your
non-GAAP
reconciliations on page 14, appear to present a full non-GAAP income
statement. Please
revise future filings to avoid giving non-GAAP measures undue
prominence by presenting
a full non-GAAP income statement. See guidance in Question 102.10(c)
of the SEC
Staff s Compliance and Disclosure Interpretations on Non-GAAP
Financial Measures.
5. We note from your reconciliation of Free Cash Flow on page 15, that
your definition of
Free Cash Flow includes an adjustment to add proceeds from financing
arrangements and
government grants. Please provide us more information on the nature of
this adjustment
and why you believe it is appropriate to included in your Free Cash
Flow measure. Please
note that your measure does not represent the typically calculated
Free Cash Flow
measure and should be renamed accordingly. See Question 102.07 of the
SEC Staff s
Compliance and Disclosure Interpretations of Non-GAAP Financial
Measures. Also,
please explain to us more clearly, the nature of the amounts included
in growth capital
expenditures, how those amounts differ from the capital
expenditures included in the
FCF measure, and how management uses the measure of embedded cash
flow.
In closing, 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.
Please contact Charles Eastman at 202-551-3794 or Claire Erlanger at
202-551-3301 with
Brian Lynch
Topgolf Callaway Brands Corp.
May 1, 2024
Page 3
any questions.
FirstName LastNameBrian Lynch Sincerely,
Comapany NameTopgolf Callaway Brands Corp.
Division of Corporation Finance
May 1, 2024 Page 3 Office of Manufacturing
FirstName LastName