Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Note 3. Leases

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. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Deemed Landlord Financing Leases

As of March 31, 2021, the Company accounted for two deemed landlord financing leases that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC 842. As of March 31, 2021, the Company was the accounting owner of ten landlord buildings under deemed landlord financing contracts. As of March 31, 2021, the net book value included in property, plant and equipment related to these buildings on the consolidated condensed balance sheet totaled $280,864,000. The Company depreciates these properties over the initial lease term of 20 years or over their estimated useful life, whichever is shorter.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $3,893,000 for the three months ended March 31, 2021, which was included in services revenues within the consolidated condensed statement of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

	Balance Sheet Location	March 31, 2021
Leasing receivables, net - current	Other current assets	$	8,957
Leasing receivables - long-term	Other assets	29,903
		$	38,860

Operating Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and 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. As of March 31, 2021 and December 31, 2020 the Company recorded rent deferments of $3,425,000 and $687,000, respectively, which were recorded in accrued expenses, and $9,345,000 other long-term liabilities in the consolidated condensed balance sheets as of March 31, 2021. Of the rent deferments recorded as of March 31, 2021, $12,770,000 was recorded in connection with the Topgolf merger in March 2021. There were no rent abatements recorded for the three months ended March 31, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Balance Sheet Location	March 31, 2021		December 31, 2020
Operating Leases
ROU assets, net	Operating lease ROU assets, net	$	1,041,395	$	194,776
Lease liabilities, short-term	Operating lease liabilities, short-term	$	51,510	$	29,579
Lease liabilities, long-term	Operating lease liabilities, long-term	$	1,155,551	$	177,996
Deemed Landlord Financing
Lease liabilities, short-term	Accrued expenses	$	1,567	$	—
Lease liabilities, long-term	Deemed landlord financing, long-term	$	221,618	$	—
Finance Leases
ROU assets, net,	Other assets	$	2,761	$	1,003
Lease liabilities, short-term	Accrued expenses	$	1,090	$	252
Lease liabilities, long-term	Long-term other	$	1,903	$	447

The components of lease expense are as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Operating lease costs	$	20,497	$	11,022
Financing lease costs:
Amortization of right-of-use assets	322		167
Interest on lease liabilities	20		11
Total financing lease costs	342		178
Variable lease costs	579		1,296
Total lease costs	$	21,418	$	12,496

Other information related to leases was as follows (in thousands):

	Three Months Ended March 31,
Supplemental Cash Flows Information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,852	$	9,331
Operating cash flows from finance leases	$	9	$	11
Financing cash flows from finance leases	$	95	$	109
Lease liabilities arising from new ROU assets:
Operating leases	$	28,419	$	51,851
Finance leases	$	29	$	22

	March 31, 2021		December 31, 2020
Weighted average remaining lease term (years):
Operating leases	14.6		9.8
Finance leases	2.8		3.0
Weighted average discount rate:
Operating leases	8.2	%	5.3	%
Finance leases	5.3	%	3.9	%

Future minimum lease obligations as of March 31, 2021 were as follows (in thousands):

	Operating Leases		DLF Leases		Finance Leases
Remainder of 2021	$	111,570	$	13,253	$	902
2022	146,151		20,026		1,171
2023	143,834		19,862		736
2024	141,171		20,054		352
2025	139,169		20,380		26
Thereafter	1,464,450		355,973		9
Total future lease payments	2,146,345		449,548		3,196
Less: imputed interest	939,284		226,363		203
Total	$	1,207,061	$	223,185	$	2,993

Lease payments exclude $828,530,000 related to 14 non-cancellable leases that have been signed as of March 31, 2021 but have not yet commenced. Of the 14 leases, five are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $75,000,000 as of March 31, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $58,103,000 in construction costs within property, plant and equipment as of March 31, 2021. In addition, the Company recorded $54,874,000 in advances from the landlord in connection with properties under construction as of March 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.

Leases

Note 3. Leases

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. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Deemed Landlord Financing Leases

As of March 31, 2021, the Company accounted for two deemed landlord financing leases that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC 842. As of March 31, 2021, the Company was the accounting owner of ten landlord buildings under deemed landlord financing contracts. As of March 31, 2021, the net book value included in property, plant and equipment related to these buildings on the consolidated condensed balance sheet totaled $280,864,000. The Company depreciates these properties over the initial lease term of 20 years or over their estimated useful life, whichever is shorter.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $3,893,000 for the three months ended March 31, 2021, which was included in services revenues within the consolidated condensed statement of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

	Balance Sheet Location	March 31, 2021
Leasing receivables, net - current	Other current assets	$	8,957
Leasing receivables - long-term	Other assets	29,903
		$	38,860

Operating Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and 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. As of March 31, 2021 and December 31, 2020 the Company recorded rent deferments of $3,425,000 and $687,000, respectively, which were recorded in accrued expenses, and $9,345,000 other long-term liabilities in the consolidated condensed balance sheets as of March 31, 2021. Of the rent deferments recorded as of March 31, 2021, $12,770,000 was recorded in connection with the Topgolf merger in March 2021. There were no rent abatements recorded for the three months ended March 31, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Balance Sheet Location	March 31, 2021		December 31, 2020
Operating Leases
ROU assets, net	Operating lease ROU assets, net	$	1,041,395	$	194,776
Lease liabilities, short-term	Operating lease liabilities, short-term	$	51,510	$	29,579
Lease liabilities, long-term	Operating lease liabilities, long-term	$	1,155,551	$	177,996
Deemed Landlord Financing
Lease liabilities, short-term	Accrued expenses	$	1,567	$	—
Lease liabilities, long-term	Deemed landlord financing, long-term	$	221,618	$	—
Finance Leases
ROU assets, net,	Other assets	$	2,761	$	1,003
Lease liabilities, short-term	Accrued expenses	$	1,090	$	252
Lease liabilities, long-term	Long-term other	$	1,903	$	447

The components of lease expense are as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Operating lease costs	$	20,497	$	11,022
Financing lease costs:
Amortization of right-of-use assets	322		167
Interest on lease liabilities	20		11
Total financing lease costs	342		178
Variable lease costs	579		1,296
Total lease costs	$	21,418	$	12,496

Other information related to leases was as follows (in thousands):

	Three Months Ended March 31,
Supplemental Cash Flows Information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,852	$	9,331
Operating cash flows from finance leases	$	9	$	11
Financing cash flows from finance leases	$	95	$	109
Lease liabilities arising from new ROU assets:
Operating leases	$	28,419	$	51,851
Finance leases	$	29	$	22

	March 31, 2021		December 31, 2020
Weighted average remaining lease term (years):
Operating leases	14.6		9.8
Finance leases	2.8		3.0
Weighted average discount rate:
Operating leases	8.2	%	5.3	%
Finance leases	5.3	%	3.9	%

Future minimum lease obligations as of March 31, 2021 were as follows (in thousands):

	Operating Leases		DLF Leases		Finance Leases
Remainder of 2021	$	111,570	$	13,253	$	902
2022	146,151		20,026		1,171
2023	143,834		19,862		736
2024	141,171		20,054		352
2025	139,169		20,380		26
Thereafter	1,464,450		355,973		9
Total future lease payments	2,146,345		449,548		3,196
Less: imputed interest	939,284		226,363		203
Total	$	1,207,061	$	223,185	$	2,993

Lease payments exclude $828,530,000 related to 14 non-cancellable leases that have been signed as of March 31, 2021 but have not yet commenced. Of the 14 leases, five are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $75,000,000 as of March 31, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $58,103,000 in construction costs within property, plant and equipment as of March 31, 2021. In addition, the Company recorded $54,874,000 in advances from the landlord in connection with properties under construction as of March 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.

Leases

Note 3. Leases

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. The Company also enters into non-cancellable agreements with driving ranges and hospitality and entertainment venues to license Toptracer software and hardware, which are classified as sales-type leases.

Deemed Landlord Financing Leases

As of March 31, 2021, the Company accounted for two deemed landlord financing leases that did not meet the sale-leaseback criteria upon the completion of construction in accordance with ASC 842. As of March 31, 2021, the Company was the accounting owner of ten landlord buildings under deemed landlord financing contracts. As of March 31, 2021, the net book value included in property, plant and equipment related to these buildings on the consolidated condensed balance sheet totaled $280,864,000. The Company depreciates these properties over the initial lease term of 20 years or over their estimated useful life, whichever is shorter.

Sales-Type Leases

Leasing revenue attributed to sales-type leases was $3,893,000 for the three months ended March 31, 2021, which was included in services revenues within the consolidated condensed statement of operations. Leasing receivables related to the Company’s net investment in sales-type leases are as follows (in thousands):

	Balance Sheet Location	March 31, 2021
Leasing receivables, net - current	Other current assets	$	8,957
Leasing receivables - long-term	Other assets	29,903
		$	38,860

Operating Leases

In response to the COVID-19 pandemic, the Company received certain rent concessions in the form of deferments and abatement on a few of its operating leases. The Company opted to not modify these leases in accordance with the FASB Staff Q&A-Topic 842 and 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. As of March 31, 2021 and December 31, 2020 the Company recorded rent deferments of $3,425,000 and $687,000, respectively, which were recorded in accrued expenses, and $9,345,000 other long-term liabilities in the consolidated condensed balance sheets as of March 31, 2021. Of the rent deferments recorded as of March 31, 2021, $12,770,000 was recorded in connection with the Topgolf merger in March 2021. There were no rent abatements recorded for the three months ended March 31, 2021 or 2020.

Supplemental balance sheet information related to leases is as follows (in thousands):

	Balance Sheet Location	March 31, 2021		December 31, 2020
Operating Leases
ROU assets, net	Operating lease ROU assets, net	$	1,041,395	$	194,776
Lease liabilities, short-term	Operating lease liabilities, short-term	$	51,510	$	29,579
Lease liabilities, long-term	Operating lease liabilities, long-term	$	1,155,551	$	177,996
Deemed Landlord Financing
Lease liabilities, short-term	Accrued expenses	$	1,567	$	—
Lease liabilities, long-term	Deemed landlord financing, long-term	$	221,618	$	—
Finance Leases
ROU assets, net,	Other assets	$	2,761	$	1,003
Lease liabilities, short-term	Accrued expenses	$	1,090	$	252
Lease liabilities, long-term	Long-term other	$	1,903	$	447

The components of lease expense are as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Operating lease costs	$	20,497	$	11,022
Financing lease costs:
Amortization of right-of-use assets	322		167
Interest on lease liabilities	20		11
Total financing lease costs	342		178
Variable lease costs	579		1,296
Total lease costs	$	21,418	$	12,496

Other information related to leases was as follows (in thousands):

	Three Months Ended March 31,
Supplemental Cash Flows Information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18,852	$	9,331
Operating cash flows from finance leases	$	9	$	11
Financing cash flows from finance leases	$	95	$	109
Lease liabilities arising from new ROU assets:
Operating leases	$	28,419	$	51,851
Finance leases	$	29	$	22

	March 31, 2021		December 31, 2020
Weighted average remaining lease term (years):
Operating leases	14.6		9.8
Finance leases	2.8		3.0
Weighted average discount rate:
Operating leases	8.2	%	5.3	%
Finance leases	5.3	%	3.9	%

Future minimum lease obligations as of March 31, 2021 were as follows (in thousands):

	Operating Leases		DLF Leases		Finance Leases
Remainder of 2021	$	111,570	$	13,253	$	902
2022	146,151		20,026		1,171
2023	143,834		19,862		736
2024	141,171		20,054		352
2025	139,169		20,380		26
Thereafter	1,464,450		355,973		9
Total future lease payments	2,146,345		449,548		3,196
Less: imputed interest	939,284		226,363		203
Total	$	1,207,061	$	223,185	$	2,993

Lease payments exclude $828,530,000 related to 14 non-cancellable leases that have been signed as of March 31, 2021 but have not yet commenced. Of the 14 leases, five are scheduled to commence in 2021. The Company's minimum capital commitment related to these leases was approximately $75,000,000 as of March 31, 2021. As the Company is actively involved in the construction of these properties, the Company recorded $58,103,000 in construction costs within property, plant and equipment as of March 31, 2021. In addition, the Company recorded $54,874,000 in advances from the landlord in connection with properties under construction as of March 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.