ACUSHNET HOLDINGS CORP., 10-Q filed on 5/3/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
Apr. 27, 2018
Document And Entity Information [Abstract]    
Entity Registrant Name Acushnet Holdings Corp.  
Entity Central Index Key 0001672013  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Filer Category Accelerated Filer  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Entity Common Stock, Shares Outstanding   74,744,536
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Current assets    
Cash and restricted cash ($16,031 and $13,086 attributable to the variable interest entity (VIE)) $ 48,370 $ 47,722
Accounts receivable, net 348,516 190,851
Inventories ($10,841 and $13,692 attributable to the VIE) 363,328 363,962
Other assets 86,922 84,541
Total current assets 847,136 687,076
Property, plant and equipment, net ($10,010 and $10,240 attributable to the VIE) 225,257 228,922
Goodwill ($32,312 and $32,312 attributable to the VIE) 188,750 185,941
Intangible assets, net 480,043 481,234
Deferred income taxes 106,573 110,318
Other assets ($2,740 and $2,738 attributable to the VIE) 35,129 33,833
Total assets 1,882,888 1,727,324
Current liabilities    
Short-term debt 135,249 20,364
Current portion of long-term debt 29,688 26,719
Accounts payable ($7,276 and $10,587 attributable to the VIE) 91,447 92,759
Accrued income taxes 37,291 34,310
Accrued compensation and benefits 65,389 80,189
Accrued expenses and other liabilities ($4,925 and $2,719 attributable to the VIE) 71,105 52,442
Total current liabilities 430,169 306,783
Long-term debt and capital lease obligations 408,259 416,970
Deferred income taxes 9,288 9,318
Accrued pension and other postretirement benefits ($1,691 and $1,908 attributable to the VIE) 130,660 130,160
Other noncurrent liabilities ($4,903 and $4,689 attributable to the VIE) 18,443 16,701
Total liabilities 996,819 879,932
Commitments and contingencies (Note 16)
Shareholders' equity    
Common stock, $0.001 par value, 500,000,000 shares authorized; 74,744,536 and 74,479,319 shares issued and outstanding 75 74
Additional paid-in capital 896,450 894,727
Accumulated other comprehensive loss, net of tax (80,142) (81,691)
Retained earnings 37,816 1,618
Total equity attributable to Acushnet Holdings Corp. 854,199 814,728
Noncontrolling interests 31,870 32,664
Total shareholders' equity 886,069 847,392
Total liabilities and shareholders' equity $ 1,882,888 $ 1,727,324
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Cash and restricted cash $ 48,370 $ 47,722
Inventories 363,328 363,962
Property, plant and equipment, net 225,257 228,922
Goodwill 188,750 185,941
Other assets 35,129 33,833
Accounts payable 91,447 92,759
Accrued expenses and other liabilities 71,105 52,442
Accrued pension and other postretirement benefits 130,660 130,160
Other noncurrent liabilities $ 18,443 $ 16,701
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 500,000,000 500,000,000
Common stock, shares issued (in shares) 74,744,536 74,479,319
Common stock, shares outstanding (in shares) 74,744,536 74,479,319
VIE    
Cash and restricted cash $ 16,031 $ 13,086
Inventories 10,841 13,692
Property, plant and equipment, net 10,010 10,240
Goodwill 32,312 32,312
Other assets 2,740 2,738
Accounts payable 7,276 10,587
Accrued expenses and other liabilities 4,925 2,719
Accrued pension and other postretirement benefits 1,691 1,908
Other noncurrent liabilities $ 4,903 $ 4,689
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Net sales $ 441,801 $ 433,615
Cost of goods sold 214,127 207,200
Gross profit 227,674 226,415
Operating expenses:    
Selling, general and administrative 151,368 147,812
Research and development 12,392 12,507
Intangible amortization 1,630 1,622
Income from operations 62,284 64,474
Interest expense, net 4,408 2,922
Other (income) expense, net (434) (563)
Income before income taxes 58,310 62,115
Income tax expense 15,220 22,485
Net income 43,090 39,630
Less: Net income attributable to noncontrolling interests (1,606) (1,516)
Net income attributable to Acushnet Holdings Corp. $ 41,484 $ 38,114
Net income per common share attributable to Acushnet Holdings Corp.:    
Basic (in dollars per share) $ 0.56 $ 0.51
Diluted (in dollars per share) 0.55 0.51
Cash dividends declared per common share (in dollars per share) $ 0.13 $ 0.12
Weighted average number of common shares:    
Basic (in shares) 74,650,237 74,220,771
Diluted (in shares) 74,793,823 74,250,155
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Net income $ 43,090 $ 39,630
Foreign currency translation adjustments    
Unrealized holding gains arising during period 11,913 11,580
Foreign exchange translation adjustments, net 11,913 11,580
Foreign exchange derivative instruments    
Unrealized holding losses arising during period (7,081) (11,745)
Reclassification adjustments included in net income 708 (1,811)
Tax benefit 2,113 3,197
Foreign exchange derivative instruments, net (4,260) (10,359)
Available-for-sale securities    
Unrealized holding losses arising during period 0 (105)
Tax benefit 0 40
Available-for-sale securities, net 0 (65)
Pension and other postretirement benefits    
Pension and other postretirement benefits adjustments 34 (182)
Tax benefit (expense) (6) 63
Pension and other postretirement benefits adjustments, net 28 (119)
Total other comprehensive income 7,681 1,037
Comprehensive income 50,771 40,667
Less: Comprehensive income attributable to noncontrolling interests (1,606) (1,516)
Comprehensive income attributable to Acushnet Holdings Corp. $ 49,165 $ 39,151
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities    
Net income $ 43,090 $ 39,630
Adjustments to reconcile net income to cash provided by (used in) operating activities    
Depreciation and amortization 10,325 10,161
Unrealized foreign exchange (gain) loss (1,681) 37
Amortization of debt issuance costs 331 330
Share-based compensation 4,126 3,847
Loss on disposals of property, plant and equipment 0 319
Deferred income taxes 6,369 13,499
Changes in operating assets and liabilities    
Accounts receivable (152,626) (138,926)
Inventories 7,457 14,720
Accounts payable (765) 6,427
Accrued income taxes 2,084 (10,960)
Other assets and liabilities (5,542) (162,572)
Cash flows used in operating activities (86,832) (223,488)
Cash flows from investing activities    
Additions to property, plant and equipment (5,887) (3,676)
Other investing activity (2,496) 0
Cash flows used in investing activities (8,383) (3,676)
Cash flows from financing activities    
Proceeds from short-term borrowings, net 113,293 125,982
Proceeds from delayed draw term loan A facility 0 100,000
Repayments of delayed draw term loan A facility (1,250) (1,250)
Repayment of term loan facilities (4,688) (4,688)
Dividends paid on common stock (9,898) 0
Payment of employee restricted stock tax withholdings (2,634) (903)
Cash flows provided by financing activities 94,823 219,141
Effect of foreign exchange rate changes on cash 1,040 1,621
Net increase (decrease) in cash 648 (6,402)
Cash and restricted cash, beginning of year 47,722 79,140
Cash and restricted cash, end of period 48,370 72,738
Supplemental information    
Non-cash additions to property, plant and equipment 774 121
Dividends declared to noncontrolling interests but not paid 2,400 2,400
Dividend equivalents declared not paid 201 169
Dividends declared to stockholders but not paid $ 0 $ 8,983
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED) - USD ($)
shares in Thousands, $ in Thousands
Total
Total Shareholders' Equity Attributable to Acushnet Holdings Corp.
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Noncontrolling Interest
Changes in stockholders' equity              
Adoption of new accounting standards $ (1,501) $ (1,501)     $ (6,132) $ 4,631  
Beginning balance at Dec. 31, 2017 847,392 814,728 $ 74 $ 894,727 (81,691) 1,618 $ 32,664
Beginning balance (in shares) at Dec. 31, 2017     74,479        
Changes in stockholders' equity              
Net income 43,090 41,484       41,484 1,606
Other comprehensive income 7,681 7,681     7,681    
Share-based compensation 4,357 4,357   4,357      
Vesting of restricted common stock, net of shares withheld for employee taxes (2,633) (2,633) $ 1 (2,634)      
Vesting of restricted common stock, net of shares withheld for employee taxes (in shares)     265        
Dividends and dividend equivalents declared (9,917) (9,917)       (9,917)  
Dividends declared to noncontrolling interests (2,400)           (2,400)
Ending balance at Mar. 31, 2018 $ 886,069 $ 854,199 $ 75 $ 896,450 $ (80,142) $ 37,816 $ 31,870
Ending balance (in shares) at Mar. 31, 2018     74,744        
v3.8.0.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Acushnet Holdings Corp. (the “Company”), its wholly owned subsidiaries and a variable interest entity (“VIE”) in which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current year presentation.
Certain information in footnote disclosures normally included in annual financial statements has been condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and U.S. GAAP. The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the unaudited condensed consolidated financial statements do not include all disclosures required by U.S. GAAP. In the opinion of management, the financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company.  The results of operations for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the full year ending December 31, 2018, nor were those of the comparable 2017 period representative of those actually experienced for the full year ended December 31, 2017. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2017 included in its Annual Report on Form 10-K filed with the SEC on March 7, 2018.
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets, liabilities, shareholders’ equity, net sales and expenses, and the disclosure of contingent assets and liabilities in its unaudited condensed consolidated financial statements. Actual results could differ from those estimates.
Variable Interest Entities
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the entity’s expected losses, or the right to receive the entity’s expected residual returns. The Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.
The Company consolidates the accounts of Acushnet Lionscore Limited, a VIE which is 40% owned by the Company. The sole purpose of the VIE is to manufacture the Company’s golf footwear and as such, the Company is deemed to be the primary beneficiary. The Company has presented separately on its consolidated balance sheets, to the extent material, the assets of its consolidated VIE that can only be used to settle specific obligations of its consolidated VIE and the liabilities of its consolidated VIE for which creditors do not have recourse to its general credit. The general creditors of the VIE do not have recourse to the Company. Certain directors of the noncontrolling entities have guaranteed the credit lines of the VIE, for which there were no outstanding borrowings as of March 31, 2018 and December 31, 2017. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.
Cash and Restricted Cash
Cash held in Company checking accounts is included in cash. Book overdrafts not subject to offset with other accounts with the same financial institution are classified as accounts payable. The Company classifies as restricted certain cash that is not available for use in its operations. As of March 31, 2018 and December 31, 2017, the amount of restricted cash included in cash and restricted cash on the balance sheet was $2.4 million and $2.3 million, respectively.
Accounts Receivable
As of March 31, 2018 and December 31, 2017, the allowance for doubtful accounts was $10.3 million and $10.0 million, respectively.
Foreign Currency Translation and Transactions
Foreign currency transaction gains included in selling, general and administrative expense were $2.0 million and $2.3 million for the three months ended March 31, 2018 and 2017, respectively.
Recently Adopted Accounting Standards
Revenue from Contracts with Customers
On January 1, 2018, the Company adopted the new accounting standard Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers" ("ASC 606") and all the related amendments (the “new revenue standard”) using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to opening retained earnings (Note 2). The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Income Statement—Reporting Comprehensive Income
On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2018‑02, “Income Statement—Reporting Comprehensive Income (Topic 220) —Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” As a result of the adoption of the amendments in this update, the Company recorded a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (Note 10). The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Financial Instruments - Recognition and Measurement
On January 1, 2018, the Company adopted ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 supersedes the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and requires equity securities to be measured at fair value with changes in the fair value recognized through net income, among other items. As a result of the adoption of the amendments in this update, the Company recorded a reclassification of unrealized gains of $2.1 million from accumulated other comprehensive loss to retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Compensation—Retirement Benefits
On January 1, 2018, the Company adopted ASU 2017‑07, “CompensationRetirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost” ("ASU 2017-07"). ASU 2017‑07 requires that an employer report the service cost component of net periodic pension and net periodic post retirement cost in the same line item as other compensation costs arising from services rendered by the employees during the period. It also requires the other components of net periodic pension and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization. As a result of the adoption of the amendments in this update, the Company recorded a reclassification of the non-service cost component of net periodic benefit cost of $0.2 million from selling, general and administrative expense to other (income) expense, net on the consolidated statement of operations for the three months ended March 31, 2017. The adoption of this standard also resulted in the restatement of the Company's segment operating income for the three months ended March 31, 2017 (Note 15).
    
The Company also adopted the following standards during 2018, none of which had a material impact to the Company's financial statements or financial statement disclosures:
Standard
 
 
 
Effective Date
ASU 2017‑09
 
Compensation—Stock Compensation: Scope of Modification Accounting
 
January 1, 2018
ASU 2017‑01
 
Business Combinations: Clarifying the Definition of a Business
 
January 1, 2018

ASU 2016‑16
 
Income Taxes: Intra-Entity Transfers of Assets other than Inventory
 
January 1, 2018
ASU 2016‑15
 
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
 
January 1, 2018


Recently Issued Accounting Standards
    
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
    
In August 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017‑12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” ("ASU 2017-12"). The amendments in this update expand and refine hedge accounting guidance and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ASU 2017-12 also simplifies the application of hedge accounting guidance, hedge documentation requirements and the assessment of hedge effectiveness. ASU 2017‑12 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued or made available for issuance. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.
    
Intangibles—Goodwill and OtherSimplifying the Test for Goodwill Impairment
    
In January 2017, the FASB issued ASU 2017‑04, “Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment” ("ASU 2017-04"). ASU 2017‑04 removes the second step of the goodwill impairment test. Instead an entity will perform a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017‑04 is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.
    
Leases

In February 2016, the FASB issued ASU 2016‑02, “Leases,” which will require lessees to recognize right‑of‑use assets and lease liabilities for leases which were formerly classified as operating leases. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. While the Company is still in the process of completing its analysis on the complete impact this ASU will have on its consolidated financial statements and related disclosures, it does expect the adoption of this standard will have a material impact on its consolidated financial statements.
v3.8.0.1
Revenue
3 Months Ended
Mar. 31, 2018
Revenue From Contract With Customer [Abstract]  
Revenue
Revenue

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, "Revenue Recognition".

The Company recorded a net reduction to opening retained earnings of $1.6 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606, with the impact primarily related to a promotional holiday program. The impact of applying ASC 606 was an increase in net sales of $3.9 million and an increase in cost of sales of $1.3 million for the three months ended March 31, 2018. Additionally, the Company reclassified the liability for refunds on expected returns from accounts receivable, net to accrued expenses and other liabilities and reclassified the value of inventory expected to be recovered related to sales returns from inventories to other assets as of March 31, 2018. The refund liability for expected returns was $10.3 million and $13.5 million as of March 31, 2018 and December 31, 2017, respectively. The value of inventory expected to be recovered related to sales returns was $4.9 million and $4.3 million as of March 31, 2018 and December 31, 2017, respectively. The adoption of ASC 606 did not have any other material impacts to the financial statements.

Accounting Policies

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment or delivery of products, based on the terms of the contract and the jurisdiction of the sale. Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for the products. Revenue is recognized net of allowances for discounts and sales returns. Sales taxes and other similar taxes are excluded from revenue.

A large portion of the Company’s revenue is recognized at a point in time and made to customers who are not engaged in a long-term supply agreement or any form of contract with the Company. A large portion of sales are paid for on account with the majority of terms between 30 and 60 days, not to exceed one year.

    Costs associated with shipping and handling activities, such as merchandising, are included in selling, general and administrative expenses as revenue is recognized. The Company has made an accounting policy election to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.

The Company reduces revenue by the amount of expected returns and records a corresponding refund liability in accrued expenses and other liabilities. The Company accounts for the right of return as variable consideration and recognizes a refund liability for the amount of consideration that it estimates will be refunded to customers. In addition, the Company recognizes an asset for the right to recover returned products in other assets on the consolidated balance sheets. Sales returns are estimated based upon historical rates of product returns, current economic trends and changes in customer demands as well as specific identification of outstanding returns.

Contract Balances

Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. The allowance includes amounts for certain customers where a risk of default has been specifically identified as well as a provision for customer defaults on a formula basis when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers. The assessment of the likelihood of customer defaults is based on various factors, including credit risk assessments, length of time the receivables are past due, historical experience, customer specific information available to the Company and existing economic conditions.

Customer Sales Incentives

The Company offers sales-based incentive programs to certain customers in exchange for certain benefits, including prominent product placement and exclusive stocking by participating retailers. These programs typically provide qualifying customers with rebates for achieving certain purchase goals. The rebates can be settled in the form of cash or credits or in the form of free product. The rebates which are expected to be settled in the form of cash or credits are accounted for as variable consideration. The estimate of the variable consideration requires the use of assumptions related to the percentage of customers who will achieve qualifying purchase goals and the level of achievement. These assumptions are based on historical experience, current year program design, current marketplace conditions and sales forecasts, including considerations of the Company's product life cycles.

The rebates which are expected to be settled in the form of product are estimated based upon historical experience and the terms of the customer programs and are accounted for as an additional performance obligation. This will be recognized as revenue when control of the free products earned transfers to the customer at the end of the related customer incentive program, which generally occurs within one year. Control of the free products generally transfers to the customer at the time of shipment.

Practical Expedients and Exemptions

The Company expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling, general and administrative expense on the consolidated statements of operations.

The Company has elected the practical expedient to not disclose information about remaining performance obligations that have original expected durations of one year or less.

Disaggregated Revenue

In general, the Company's business segmentation is aligned according to the nature and economic characteristics of its products and customer relationships and provides meaningful disaggregation of each business segment's results of operations. See Note 15 for the Company's business segment disclosures, as well as a further disaggregation of net sales by geographical area.
v3.8.0.1
Inventories
3 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Inventories
Inventories
The components of inventories were as follows:
 
(in thousands)
 
March 31,
 
December 31,
 
 
2018
 
2017
Raw materials and supplies
 
$
64,510

 
$
72,342

Work-in-process
 
28,299

 
23,956

Finished goods
 
270,519

 
267,664

Inventories
 
$
363,328


$
363,962

v3.8.0.1
Product Warranty
3 Months Ended
Mar. 31, 2018
Product Warranties Disclosures [Abstract]  
Product Warranty
Product Warranty
The Company has defined warranties ranging from one to two years. Products covered by the defined warranty policies include certain Titleist golf products, FootJoy golf shoes and FootJoy golf outerwear. These product warranties generally obligate the Company to pay for the cost of replacement products, including the cost of shipping replacement products to its customers. The estimated cost of satisfying future warranty claims is accrued at the time the sale is recorded. In estimating future warranty obligations, the Company considers various factors, including its warranty policies and practices, the historical frequency of claims and the cost to replace or repair products under warranty.
The activity related to the Company’s warranty obligation for accrued warranty expense was as follows:
 
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Balance at beginning of period
 
$
3,823

 
$
3,526

Provision
 
1,195

 
1,086

Claims paid/costs incurred
 
(913
)
 
(901
)
Foreign currency translation
 
43

 
53

Balance at end of period

$
4,148


$
3,764

v3.8.0.1
Related Party Transactions
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions

Other current assets includes receivables from related parties of $0.5 million as of December 31, 2017. Accrued expenses and other liabilities includes dividends payable to noncontrolling interests of $2.4 million as of March 31, 2018.
v3.8.0.1
Debt and Financing Arrangements
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Debt and Financing Arrangements
Debt and Financing Arrangements
Senior Secured Credit Facility
There were outstanding borrowings under the revolving credit facility of $122.9 million and $10.1 million as of March 31, 2018 and December 31, 2017, respectively. The weighted average interest rate applicable to the outstanding borrowings was 3.35% and 4.44% as of March 31, 2018 and December 31, 2017, respectively.
 
The credit agreement contains a number of covenants that, among other things, restrict the ability of the U.S. Borrower and its restricted subsidiaries to (subject to certain exceptions), incur, assume, or permit to exist additional indebtedness or guarantees; incur liens; make investments and loans; pay dividends, make payments, or redeem or repurchase capital stock or make prepayments, repurchases or redemptions of certain indebtedness; engage in mergers, liquidations, dissolutions, asset sales, and other dispositions (including sale leaseback transactions); amend or otherwise alter terms of certain indebtedness or certain other agreements; enter into agreements limiting subsidiary distributions or containing negative pledge clauses; engage in certain transactions with affiliates; alter the nature of the business that we conduct or change our fiscal year or accounting practices. Certain exceptions to these covenants are determined based on ratios that are calculated in part using the calculation of Adjusted EBITDA. The credit agreement covenants also restrict the ability of Acushnet Holdings Corp. to engage in certain mergers or consolidations or engage in any activities other than permitted activities. The Company’s credit agreement contains certain customary affirmative and restrictive covenants, including, among others, financial covenants based on the Company’s leverage and interest coverage ratios. The credit agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of March 31, 2018, the Company was in compliance with all covenants under the credit agreement.

As of March 31, 2018, the Company had available borrowings under its revolving credit facility of $143.4 million after giving effect to $8.7 million of outstanding letters of credit.

Other Short-Term Borrowings
The Company has certain unsecured credit facilities available through its subsidiary locations. There were outstanding borrowings under the Company's local credit facilities of $12.3 million and $10.3 million as of March 31, 2018 and December 31, 2017, respectively. The weighted average interest rate applicable to the outstanding borrowings was 0.17% and 0.73% as of March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018, the Company had available borrowings remaining under these unsecured facilities of $54.2 million.

Letters of Credit

As of March 31, 2018 and December 31, 2017, there were outstanding letters of credit totaling $13.1 million and $14.3 million, respectively, of which $9.8 million and $11.2 million was secured, respectively, related to agreements which provided a maximum commitment for letters of credit of $29.5 million and $29.2 million, respectively.
v3.8.0.1
Derivative Financial Instruments
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
Foreign Exchange Derivative Instruments
The Company principally uses financial instruments to reduce the impact of changes in foreign currency exchange rates. The principal derivative financial instruments the Company enters into are foreign exchange forward contracts. The Company does not enter into foreign exchange forward contracts for trading or speculative purposes.
Foreign exchange forward contracts are primarily used to hedge purchases denominated in select foreign currencies, thereby limiting currency risk that would otherwise result from changes in exchange rates. The periods of the foreign exchange forward contracts correspond to the periods of the forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The primary foreign exchange forward contracts pertain to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won and the Euro. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts designated under hedge accounting as of March 31, 2018 and December 31, 2017 was $266.6 million and $278.9 million, respectively.
The counterparties to derivative contracts are major financial institutions. The credit risk of counterparties does not have a significant impact on the valuation of the Company’s derivative instruments.
The fair values of foreign exchange hedges on the consolidated balance sheets were as follows:
 
Balance Sheet
 
March 31,
 
December 31,
(in thousands)
Location
 
2018
 
2017
Asset derivatives
Other current assets
 
$
2,342

 
$
4,675

 
Other noncurrent assets
 
104

 
562

Liability derivatives
Other current liabilities
 
7,186

 
6,360

 
Other noncurrent liabilities
 
2,440

 
276


The foreign exchange hedge loss recognized in accumulated other comprehensive income (loss) was as follows:
 
 
 
Three months ended
 
 
March 31,
(in thousands)
 
2018
 
2017
Type of hedge
 
 
 
 
Cash flow
 
$
(7,081
)
 
$
(11,745
)
 

$
(7,081
)

$
(11,745
)


The foreign exchange hedge gain (loss) recognized on the consolidated statements of operations was as follows:

 
 
Three months ended
 
 
March 31,
(in thousands)
 
2018
 
2017
Location of gain (loss) in statement of operations
 
 
 
 
Cost of goods sold
 
$
(708
)
 
$
1,811

Selling, general and administrative expense
 
(668
)
 
(1,719
)
 

$
(1,376
)

$
92


 
Gains and losses on derivatives designated as cash flow hedges are reclassified from other comprehensive income (loss) to cost of goods sold at the time the forecasted transaction impacts the income statement. Based on the current valuation, the Company expects to reclassify a net loss of $5.3 million from accumulated other comprehensive income (loss) into cost of goods sold during the next 12 months.
v3.8.0.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value on a recurring basis were as follows:
 
 
Fair Value Measurements as of
 
 
 
 
March 31, 2018 using:
 
 
(in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Balance Sheet Location
Assets
 
 
 
 
 
 
 
 
Rabbi trust
 
$
10,147

 
$

 
$

 
Other current assets
Foreign exchange derivative instruments
 

 
2,342

 

 
Other current assets
Deferred compensation program assets
 
1,855

 

 

 
Other noncurrent assets
Foreign exchange derivative instruments
 

 
104

 

 
Other noncurrent assets
Total assets
 
$
12,002


$
2,446


$

 
 
Liabilities
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
$

 
$
7,186

 
$

 
Other current liabilities
Deferred compensation program liabilities
 
1,855

 

 

 
Other noncurrent liabilities
Foreign exchange derivative instruments
 

 
2,440

 

 
Other noncurrent liabilities
Total liabilities
 
$
1,855


$
9,626


$

 
 
 
 
 
Fair Value Measurements as of
 
 
 
 
December 31, 2017 using:
 
 
(in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Balance Sheet Location
Assets
 
 
 
 
 
 
 
 
Rabbi trust
 
$
10,637

 
$

 
$

 
Other current assets
Foreign exchange derivative instruments
 

 
4,675

 

 
Other current assets
Deferred compensation program assets
 
1,866

 

 

 
Other noncurrent assets
Foreign exchange derivative instruments
 

 
562

 

 
Other noncurrent assets
Total assets
 
$
12,503


$
5,237


$

 
 
Liabilities
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
$

 
$
6,360

 
$

 
Other current liabilities
Deferred compensation program liabilities
 
1,866

 

 

 
Other noncurrent liabilities
Foreign exchange derivative instruments
 

 
276

 

 
Other noncurrent liabilities
Total liabilities
 
$
1,866


$
6,636


$

 
 

 
During the three months ended March 31, 2018 and the year ended December 31, 2017, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities.
Rabbi trust assets are used to fund certain retirement obligations of the Company. The assets underlying the Rabbi trust are equity and fixed income exchange‑traded funds.
Deferred compensation program assets and liabilities represent a program where select employees can defer compensation until termination of employment. Effective July 29, 2011, this program was amended to cease all employee compensation deferrals and provided for the distribution of all previously deferred employee compensation. The program remains in effect with respect to the value attributable to the employer match contributed prior to July 29, 2011.
Foreign exchange derivative instruments are foreign exchange forward contracts primarily used to hedge currency fluctuations for transactions denominated in a foreign currency (Note 7). The Company uses the mid‑price of foreign exchange forward rates as of the close of business on the valuation date to value each foreign exchange forward contract at each reporting period.
v3.8.0.1
Pension and Other Postretirement Benefits
3 Months Ended
Mar. 31, 2018
Compensation and Retirement Disclosure [Abstract]  
Pension and Other Postretirement Benefits
Pension and Other Postretirement Benefits
Components of net periodic benefit cost were as follows:
 
 
 
Pension Benefits
 
Postretirement Benefits
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
 
2018
 
2017
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
Service cost
 
$
2,443

 
$
2,337

 
$
175

 
$
235

Interest cost
 
2,958

 
3,018

 
127

 
174

Expected return on plan assets
 
(3,279
)
 
(3,013
)
 

 

Settlement expense
 
8

 
131

 

 

Amortization of net (gain) loss
 
520

 
39

 
(351
)
 
(166
)
Amortization of prior service cost (credit)
 
44

 
44

 
(34
)
 
(41
)
Net periodic benefit cost
 
$
2,694


$
2,556


$
(83
)

$
202


The non-service cost components of net periodic benefit cost are included in other (income) expense, net in the unaudited condensed consolidated statement of operations.
v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Income tax expense decreased by $7.3 million, to $15.2 million for the three months ended March 31, 2018 compared to $22.5 million for the three months ended March 31, 2017. The Company’s effective tax rate (“ETR”) was 26.1% for the three months ended March 31, 2018, compared to 36.2% for the three months ended March 31, 2017.  The decrease in ETR was primarily driven by the significant reduction in the federal corporate income tax rate that became effective January 1, 2018 as a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”), and the impact of changes in the Company’s geographic mix of earnings.     
In connection with The Tax Act, the Company recorded a provisional amount of $14.0 million within income tax expense for the year ended December 31, 2017. In accordance with relevant SEC guidance (“SAB 118”), the effects of the Tax Act may be adjusted within a one-year measurement period from the enactment date for items that were previously reported as provisional, or where a provisional estimate could not be made. The Company continues to analyze the different aspects of the Tax Act which could potentially affect the provisional estimates that were recorded at December 31, 2017. The income tax provision for the three months ended March 31, 2018, did not reflect any adjustment to the provisional amounts previously provided.
The Company early adopted ASU 2018-02 on January 1, 2018, and as a result, recorded a net increase to beginning retained earnings and a decrease to accumulated other comprehensive income (loss) of $4.1 million. This entry reclassified the stranded tax effects resulting from the Tax Act on the Company’s U.S. pension plans, available-for-sale securities and certain foreign currency losses. The Company's accounting policy on accounting for income tax effects in accumulated other comprehensive income (loss) with respect to available-for-sale securities, pension, postretirement benefit plan obligations and currency translation matters is to apply the impact in the aggregate.
v3.8.0.1
Common Stock
3 Months Ended
Mar. 31, 2018
Equity [Abstract]  
Common Stock
Common Stock
The Company declared dividends per common share, including dividend equivalent rights (Note 12), during the periods presented as follows:
(in thousands, except per share amounts)
 
Dividends per Common Share
 
Amount
2018:
 
 
 
 
First Quarter
 
$
0.13

 
$
9,917

2017:
 
 
 
 
Fourth Quarter
 
$
0.12

 
$
9,098

Third Quarter
 
0.12

 
9,146

Second Quarter
 
0.12

 
9,149

First Quarter
 
0.12

 
9,152

Total dividends declared in 2017
 
$
0.48

 
$
36,545



During the second quarter of 2018, the board of directors declared a dividend of $0.13 per common share to shareholders on record as of June 1, 2018 and payable on June 15, 2018.
v3.8.0.1
Equity Incentive Plans
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Equity Incentive Plans
Equity Incentive Plans
Under the Acushnet Holdings Corp. 2015 Omnibus Incentive Plan (“2015 Plan”) the Company may grant stock options, stock appreciation rights, restricted shares of common stock, restricted stock units ("RSUs"), performance stock units (“PSUs”) and other share-based and cash-based awards to members of the board of directors, officers, employees, consultants and advisors of the Company. As of March 31, 2018, the only awards outstanding are RSUs and PSUs. All RSUs and PSUs granted under the 2015 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs and PSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs and PSUs. DERs are paid when the underlying shares vest.
Restricted Stock and Performance Stock Units
A summary of the Company’s RSUs and PSUs as of March 31, 2018 and changes during the three months then ended is presented below: 
 
 
 
 
Weighted-
 
 
Number
 
Average
 
 
of
 
Fair
 
 
RSUs and PSUs
 
Value
Outstanding at December 31, 2017
 
2,060,854

 
$
20.23

Granted
 
154,463

 
21.27

Vested
 
(388,012
)
 
20.30

Forfeited
 

 

Outstanding at March 31, 2018
 
1,827,305

 
$
20.30


 
During 2018, RSUs vested resulting in the issuance of 388,012 shares of common stock, of which 122,795 shares of common stock were delivered to the Company as payment by employees in lieu of cash to satisfy tax withholding obligations. As of March 31, 2018, no PSUs have vested.
The compensation expense recorded for the three months ended March 31, 2018 related to the PSUs was based on the Company’s best estimate of the three year cumulative Adjusted EBITDA forecast as of March 31, 2018. The Company reassesses the estimate of the three‑year cumulative Adjusted EBITDA forecast at the end of each reporting period.
The remaining unrecognized compensation expense related to non‑vested RSUs and non‑vested PSUs granted was $9.5 million and $4.6 million, respectively, as of March 31, 2018 and is expected to be recognized over the related weighted average period of 1.25 years.
The allocation of compensation expense related to equity incentive plans in the consolidated statement of operations was as follows:
 
 
Three months ended
 
 
March 31,
(in thousands)
 
2018
 
2017
Cost of goods sold
 
$
94

 
$
113

Selling, general and administrative expense
 
3,733

 
3,406

Research and development
 
299

 
328

Total compensation expense before income tax
 
4,126

 
3,847

Income tax benefit
 
853

 
1,323

Total compensation expense, net of income tax
 
$
3,273

 
$
2,524

v3.8.0.1
Accumulated Other Comprehensive Income (Loss), Net of Tax
3 Months Ended
Mar. 31, 2018
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]  
Accumulated Other Comprehensive Income (Loss), Net of Tax
Accumulated Other Comprehensive Income (Loss), Net of Tax
Accumulated other comprehensive income (loss), net of tax consists of foreign currency translation adjustments, unrealized gains and losses from foreign exchange derivative instruments designated as cash flow hedges (Note 7) and pension and other postretirement adjustments (Note 9). Prior to the adoption of ASU 2016-01 on January 1, 2018, accumulated other comprehensive income (loss), net of tax included unrealized gains and losses from available-for-sale securities (Note 1).
The components of and changes in accumulated other comprehensive income (loss), net of tax, were as follows:
 
 
 
Foreign
 
Gains (Losses) on
 
Gains (Losses)
 
Pension and
 
Accumulated
 
 
Currency
 
Foreign Exchange
 
on Available-
 
Other
 
Other
 
 
Translation
 
Derivative
 
for-Sale
 
Postretirement
 
Comprehensive
(in thousands)
 
Adjustments
 
Instruments
 
Securities
 
Adjustments
 
Loss
Balance at December 31, 2017
 
$
(57,711
)
 
$
(2,280
)
 
$
1,721

 
$
(23,421
)
 
$
(81,691
)
Adoption of new accounting standards (Note 1 & 10)
 
(2,171
)
 

 
(1,721
)
 
(2,240
)
 
(6,132
)
Other comprehensive income (loss) before reclassifications
 
11,913

 
(7,081
)
 

 
221

 
5,053

Amounts reclassified from accumulated other comprehensive loss
 

 
708

 

 
(187
)
 
521

Tax benefit (expense)
 

 
2,113

 

 
(6
)
 
2,107

Balance at March 31, 2018
 
$
(47,969
)
 
$
(6,540
)
 
$

 
$
(25,633
)
 
$
(80,142
)
v3.8.0.1
Net Income per Common Share
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Net Income per Common Share
Net Income per Common Share

The following is a computation of basic and diluted net income per common share attributable to Acushnet Holdings Corp.:

 
 
Three months ended
 
 
March 31,
(in thousands, except share and per share amounts)
 
2018
 
2017
 
 
 
 
 
Net income attributable to Acushnet Holdings Corp.
 
$
41,484

 
$
38,114

 
 
 
 
 
Weighted average number of common shares:
 
 
 
 
Basic
 
74,650,237

 
74,220,771

Diluted
 
74,793,823

 
74,250,155

 
 
 
 
 
Net income per common share attributable to Acushnet Holdings Corp.:
 
 
 
 
Basic
 
$
0.56

 
$
0.51

Diluted
 
$
0.55

 
$
0.51


 
Net income per common share attributable to Acushnet Holdings Corp. for the three months ended March 31, 2018 and 2017 was calculated under the treasury stock method.
    
The Company’s potential dilutive securities for the three months ended March 31, 2018 and 2017 include RSUs and PSUs. PSUs vest based upon achievement of performance targets and are excluded from the diluted shares outstanding unless the performance targets have been met as of the end of the applicable reporting period regardless of whether such performance targets are probable of achievement.

For the three months ended March 31, 2018 and 2017, the following securities have been excluded from the calculation of diluted weighted‑average common shares outstanding as their impact was determined to be anti‑dilutive:
 
 
 
Three months ended
 
 
March 31,
 
 
2018
 
2017
RSUs
 

 
404,148

v3.8.0.1
Segment Information
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information

The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions about assessing performance and allocating resources. The Company has four reportable segments that are organized on the basis of product categories. These segments include Titleist golf balls, Titleist golf clubs, Titleist golf gear and FootJoy golf wear.

The CODM primarily evaluates performance using segment operating income. Segment operating income includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes interest expense, net, transaction fees and other non‑operating gains and losses as the Company does not allocate these to the reportable segments. The CODM does not evaluate a measure of assets when assessing performance.

Results shown for the three months ended March 31, 2018 and 2017 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. There are no intersegment transactions.

Information by reportable segment and a reconciliation to reported amounts are as follows:
(in thousands)
 
Three months ended March 31,
 
 
2018
 
2017
Net sales
 
 
 
 
Titleist golf balls
 
$
124,906

 
$
134,192

Titleist golf clubs
 
116,893

 
101,942

Titleist golf gear
 
44,345

 
42,390

FootJoy golf wear
 
140,706

 
142,241

Other
 
14,951

 
12,850

Total net sales
 
$
441,801


$
433,615

 
 
 
 
 
Segment operating income
 
 
 
 
Titleist golf balls
 
$
13,980

 
$
21,162

Titleist golf clubs
 
16,383

 
11,421

Titleist golf gear
 
7,784

 
7,304

FootJoy golf wear
 
20,255

 
21,137

Other
 
2,547

 
2,828

Total segment operating income
 
60,949


63,852

Reconciling items:
 
 
 
 
Interest expense, net
 
(4,408
)
 
(2,922
)
Transaction fees
 

 
(94
)
Other
 
1,769

 
1,279

Total income before income tax
 
$
58,310


$
62,115


Net sales by geographical area for the three months ended March 31, 2018 and 2017 are as follows:

 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
United States
 
$
219,289

 
$
223,115

EMEA
 
73,042

 
68,009

Japan
 
52,129

 
50,053

Korea
 
52,675

 
49,882

Rest of world
 
44,666

 
42,556

Total net sales
 
$
441,801

 
$
433,615

v3.8.0.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for production materials, finished goods inventory, capital expenditures and endorsement arrangements with professional golfers. The reported amounts exclude those liabilities included in accounts payable or accrued liabilities on the consolidated balance sheet as of March 31, 2018.
Purchase obligations by the Company as of March 31, 2018 were as follows:
 
 
 
Payments Due by Period
 
 
Remainder of
 
 
 
 
 
 
 
 
 
 
(in thousands)
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
Purchase obligations
 
$
134,086

 
$
16,305

 
$
6,009

 
$
2,665

 
$
912

 
$
2,418



Contingencies

In connection with the Company’s acquisition of Acushnet Company, Beam Suntory, Inc indemnified the Company for certain tax related obligations that relate to periods during which Fortune Brands, Inc. owned Acushnet Company. As of March 31, 2018 and December 31, 2017, the Company’s estimate of its receivable for these indemnifications was $8.6 million and $8.7 million, respectively, which was recorded in other noncurrent assets on the consolidated balance sheet.
Litigation
The Company and its subsidiaries are defendants in lawsuits associated with the normal conduct of their businesses and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that some of these actions could be decided unfavorably. Consequently, the Company is unable to estimate the ultimate aggregate amount of monetary loss, amounts covered by insurance or the financial impact that will result from such matters and has not recorded a liability related to potential losses.
v3.8.0.1
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Acushnet Holdings Corp. (the “Company”), its wholly owned subsidiaries and a variable interest entity (“VIE”) in which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current year presentation.
Certain information in footnote disclosures normally included in annual financial statements has been condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and U.S. GAAP. The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the unaudited condensed consolidated financial statements do not include all disclosures required by U.S. GAAP. In the opinion of management, the financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company.  The results of operations for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the full year ending December 31, 2018, nor were those of the comparable 2017 period representative of those actually experienced for the full year ended December 31, 2017. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2017 included in its Annual Report on Form 10-K filed with the SEC on March 7, 2018.
Use of Estimates
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets, liabilities, shareholders’ equity, net sales and expenses, and the disclosure of contingent assets and liabilities in its unaudited condensed consolidated financial statements. Actual results could differ from those estimates.
Variable Interest Entities
Variable Interest Entities
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the entity’s expected losses, or the right to receive the entity’s expected residual returns. The Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.
The Company consolidates the accounts of Acushnet Lionscore Limited, a VIE which is 40% owned by the Company. The sole purpose of the VIE is to manufacture the Company’s golf footwear and as such, the Company is deemed to be the primary beneficiary. The Company has presented separately on its consolidated balance sheets, to the extent material, the assets of its consolidated VIE that can only be used to settle specific obligations of its consolidated VIE and the liabilities of its consolidated VIE for which creditors do not have recourse to its general credit. The general creditors of the VIE do not have recourse to the Company. Certain directors of the noncontrolling entities have guaranteed the credit lines of the VIE, for which there were no outstanding borrowings as of March 31, 2018 and December 31, 2017. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.
Cash and Restricted Cash
Cash and Restricted Cash
Cash held in Company checking accounts is included in cash. Book overdrafts not subject to offset with other accounts with the same financial institution are classified as accounts payable. The Company classifies as restricted certain cash that is not available for use in its operations. As of March 31, 2018 and December 31, 2017, the amount of restricted cash included in cash and restricted cash on the balance sheet was $2.4 million and $2.3 million, respectively.
Accounts Receivable
Accounts Receivable
As of March 31, 2018 and December 31, 2017, the allowance for doubtful accounts was $10.3 million and $10.0 million, respectively.
Foreign Currency Translation and Transactions
Foreign Currency Translation and Transactions
Foreign currency transaction gains included in selling, general and administrative expense were $2.0 million and $2.3 million for the three months ended March 31, 2018 and 2017, respectively.
Recently Adopted Accounting Standards and Recently Issued Accounting Standards
Recently Adopted Accounting Standards
Revenue from Contracts with Customers
On January 1, 2018, the Company adopted the new accounting standard Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers" ("ASC 606") and all the related amendments (the “new revenue standard”) using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to opening retained earnings (Note 2). The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Income Statement—Reporting Comprehensive Income
On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2018‑02, “Income Statement—Reporting Comprehensive Income (Topic 220) —Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” As a result of the adoption of the amendments in this update, the Company recorded a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (Note 10). The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Financial Instruments - Recognition and Measurement
On January 1, 2018, the Company adopted ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 supersedes the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and requires equity securities to be measured at fair value with changes in the fair value recognized through net income, among other items. As a result of the adoption of the amendments in this update, the Company recorded a reclassification of unrealized gains of $2.1 million from accumulated other comprehensive loss to retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.
Compensation—Retirement Benefits
On January 1, 2018, the Company adopted ASU 2017‑07, “CompensationRetirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost” ("ASU 2017-07"). ASU 2017‑07 requires that an employer report the service cost component of net periodic pension and net periodic post retirement cost in the same line item as other compensation costs arising from services rendered by the employees during the period. It also requires the other components of net periodic pension and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component is eligible for capitalization. As a result of the adoption of the amendments in this update, the Company recorded a reclassification of the non-service cost component of net periodic benefit cost of $0.2 million from selling, general and administrative expense to other (income) expense, net on the consolidated statement of operations for the three months ended March 31, 2017. The adoption of this standard also resulted in the restatement of the Company's segment operating income for the three months ended March 31, 2017 (Note 15).
    
The Company also adopted the following standards during 2018, none of which had a material impact to the Company's financial statements or financial statement disclosures:
Standard
 
 
 
Effective Date
ASU 2017‑09
 
Compensation—Stock Compensation: Scope of Modification Accounting
 
January 1, 2018
ASU 2017‑01
 
Business Combinations: Clarifying the Definition of a Business
 
January 1, 2018

ASU 2016‑16
 
Income Taxes: Intra-Entity Transfers of Assets other than Inventory
 
January 1, 2018
ASU 2016‑15
 
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
 
January 1, 2018


Recently Issued Accounting Standards
    
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
    
In August 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017‑12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” ("ASU 2017-12"). The amendments in this update expand and refine hedge accounting guidance and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ASU 2017-12 also simplifies the application of hedge accounting guidance, hedge documentation requirements and the assessment of hedge effectiveness. ASU 2017‑12 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued or made available for issuance. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.
    
Intangibles—Goodwill and OtherSimplifying the Test for Goodwill Impairment
    
In January 2017, the FASB issued ASU 2017‑04, “Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment” ("ASU 2017-04"). ASU 2017‑04 removes the second step of the goodwill impairment test. Instead an entity will perform a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017‑04 is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.
    
Leases

In February 2016, the FASB issued ASU 2016‑02, “Leases,” which will require lessees to recognize right‑of‑use assets and lease liabilities for leases which were formerly classified as operating leases. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. While the Company is still in the process of completing its analysis on the complete impact this ASU will have on its consolidated financial statements and related disclosures, it does expect the adoption of this standard will have a material impact on its consolidated financial statements.
v3.8.0.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Standards adopted during 2018
The Company also adopted the following standards during 2018, none of which had a material impact to the Company's financial statements or financial statement disclosures:
Standard
 
 
 
Effective Date
ASU 2017‑09
 
Compensation—Stock Compensation: Scope of Modification Accounting
 
January 1, 2018
ASU 2017‑01
 
Business Combinations: Clarifying the Definition of a Business
 
January 1, 2018

ASU 2016‑16
 
Income Taxes: Intra-Entity Transfers of Assets other than Inventory
 
January 1, 2018
ASU 2016‑15
 
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
 
January 1, 2018
v3.8.0.1
Inventories (Tables)
3 Months Ended
Mar. 31, 2018
Inventory Disclosure [Abstract]  
Schedule of inventory
The components of inventories were as follows:
 
(in thousands)
 
March 31,
 
December 31,
 
 
2018
 
2017
Raw materials and supplies
 
$
64,510

 
$
72,342

Work-in-process
 
28,299

 
23,956

Finished goods
 
270,519

 
267,664

Inventories
 
$
363,328


$
363,962

v3.8.0.1
Product Warranty (Tables)
3 Months Ended
Mar. 31, 2018
Product Warranties Disclosures [Abstract]  
Schedule of warranty obligation for accrued warranty expense
The activity related to the Company’s warranty obligation for accrued warranty expense was as follows:
 
 
 
Three months ended March 31,
(in thousands)
 
2018
 
2017
Balance at beginning of period
 
$
3,823

 
$
3,526

Provision
 
1,195

 
1,086

Claims paid/costs incurred
 
(913
)
 
(901
)
Foreign currency translation
 
43

 
53

Balance at end of period

$
4,148


$
3,764

v3.8.0.1
Derivative Financial Instruments (Tables)
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of fair values in foreign exchange hedges on the consolidated balance sheets
The fair values of foreign exchange hedges on the consolidated balance sheets were as follows:
 
Balance Sheet
 
March 31,
 
December 31,
(in thousands)
Location
 
2018
 
2017
Asset derivatives
Other current assets
 
$
2,342

 
$
4,675

 
Other noncurrent assets
 
104

 
562

Liability derivatives
Other current liabilities
 
7,186

 
6,360

 
Other noncurrent liabilities
 
2,440

 
276

Effect of foreign exchange hedges on accumulated other comprehensive income (loss)
The foreign exchange hedge loss recognized in accumulated other comprehensive income (loss) was as follows:
 
 
 
Three months ended
 
 
March 31,
(in thousands)
 
2018
 
2017
Type of hedge
 
 
 
 
Cash flow
 
$
(7,081
)
 
$
(11,745
)
 

$
(7,081
)

$
(11,745
)
Effect of foreign exchange hedges in the consolidated statement of operations
The foreign exchange hedge gain (loss) recognized on the consolidated statements of operations was as follows:

 
 
Three months ended
 
 
March 31,
(in thousands)
 
2018
 
2017
Location of gain (loss) in statement of operations
 
 
 
 
Cost of goods sold
 
$
(708
)
 
$
1,811

Selling, general and administrative expense
 
(668
)
 
(1,719
)
 

$
(1,376
)

$
92