ACUSHNET HOLDINGS CORP., 10-Q filed on 12/8/2016
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2016
Nov. 30, 2016
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
Acushnet Holdings Corp. 
 
Entity Central Index Key
0001672013 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2016 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Well-known Seasoned Issuer
No 
 
Entity Voluntary Filers
No 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Non-accelerated Filer 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q3 
 
Common stock outstanding
 
74,093,598 
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Assets
 
 
Cash ($12,796 and $10,029 attributable to the variable interest entity ("VIE"))
$ 85,673 
$ 54,409 
Restricted cash
3,195 
4,725 
Accounts receivable, net
208,285 
192,384 
Inventories ($11,573 and $15,755 attributable to the VIE)
298,824 
326,359 
Other assets
80,435 
93,646 
Total current assets
676,412 
671,523 
Property, plant and equipment, net ($10,749 and $11,147 attributable to the VIE)
242,343 
254,894 
Goodwill ($32,312 and $32,312 attributable to the VIE)
185,005 
181,179 
Identifiable intangible assets, net
492,792 
499,494 
Deferred income taxes
117,236 
132,265 
Other assets ($2,704 and $2,738 attributable to the VIE)
24,852 
19,618 
Total assets
1,738,640 
1,758,973 
Liabilities and equity
 
 
Short-term Debt
27,581 
441,704 
Accounts payable ($7,700 and $10,250 attributable to the VIE)
89,530 
89,869 
Payables to related parties
4,544 
12,570 
Accrued taxes
28,102 
29,432 
Accrued compensation and benefits ($795 and $1,035 attributable to the VIE)
228,186 
111,390 
Accrued expenses and other liabilities ($3,385 and $4,516 attributable to the VIE)
81,185 
70,626 
Total current liabilities
459,128 
755,591 
Total long-term debt and capital lease obligations
720,700 
394,511 
Deferred income taxes
6,404 
7,112 
Accrued Equity Appreciation Rights Non Current
 
145,384 
Accrued pension and other postretirement benefits
110,049 
119,549 
Other noncurrent liabilities ($2,869 and $2,841 attributable to the VIE)
20,844 
12,284 
Total liabilities
1,317,125 
1,434,431 
Series A redeemable convertible preferred stock, $.001 par value, 1,838,027 shares authorized at September 30, 2016 and December 31, 2015; 1,838,027 shares issued and outstanding at September 30, 2016 and December 31, 2015 actual; liquidation preference of $187,277,326 at September 30, 2016; no shares issued or outstanding, pro forma as of September 30, 2016
131,036 
131,036 
Equity
 
 
Common stock, $.001 par value, 78,193,494 shares authorized at September 30, 2016 and December 31, 2015; 24,926,535 shares issued and outstanding at September 30, 2016 and 21,821,256 shares issued and outstanding at December 31, 2015 actual; 74,093,598 shares issued and outstanding, pro forma as of September 30, 2016
25 
22 
Additional paid-in capital
379,729 
309,110 
Accumulated other comprehensive loss, net of tax
(73,001)
(67,234)
Retained deficit
(49,606)
(81,647)
Total equity attributable to Acushnet Holdings Corp.
257,147 
160,251 
Noncontrolling interests
33,332 
33,255 
Total equity
290,479 
193,506 
Total liabilities and equity
1,738,640 
1,758,973 
Pro forma
 
 
Assets
 
 
Cash ($12,796 and $10,029 attributable to the variable interest entity ("VIE"))
81,129 
 
Restricted cash
3,195 
 
Accounts receivable, net
208,285 
 
Inventories ($11,573 and $15,755 attributable to the VIE)
298,824 
 
Other assets
80,435 
 
Total current assets
671,868 
 
Property, plant and equipment, net ($10,749 and $11,147 attributable to the VIE)
242,343 
 
Goodwill ($32,312 and $32,312 attributable to the VIE)
185,005 
 
Identifiable intangible assets, net
492,792 
 
Deferred income taxes
117,236 
 
Other assets ($2,704 and $2,738 attributable to the VIE)
24,852 
 
Total assets
1,734,096 
 
Liabilities and equity
 
 
Short-term Debt
27,581 
 
Accounts payable ($7,700 and $10,250 attributable to the VIE)
89,530 
 
Accrued taxes
28,102 
 
Accrued compensation and benefits ($795 and $1,035 attributable to the VIE)
228,186 
 
Accrued expenses and other liabilities ($3,385 and $4,516 attributable to the VIE)
81,185 
 
Total current liabilities
454,584 
 
Total long-term debt and capital lease obligations
358,211 
 
Deferred income taxes
6,404 
 
Accrued pension and other postretirement benefits
110,049 
 
Other noncurrent liabilities ($2,869 and $2,841 attributable to the VIE)
20,844 
 
Total liabilities
950,092 
 
Equity
 
 
Common stock, $.001 par value, 78,193,494 shares authorized at September 30, 2016 and December 31, 2015; 24,926,535 shares issued and outstanding at September 30, 2016 and 21,821,256 shares issued and outstanding at December 31, 2015 actual; 74,093,598 shares issued and outstanding, pro forma as of September 30, 2016
74 
 
Additional paid-in capital
873,205 
 
Accumulated other comprehensive loss, net of tax
(73,001)
 
Retained deficit
(49,606)
 
Total equity attributable to Acushnet Holdings Corp.
750,672 
 
Noncontrolling interests
33,332 
 
Total equity
784,004 
 
Total liabilities and equity
$ 1,734,096 
 
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Cash and cash equivalents
$ 85,673 
$ 54,409 
Inventories
298,824 
326,359 
Property, plant and equipment, net
242,343 
254,894 
Goodwill
185,005 
181,179 
Accounts payable
89,530 
89,869 
Accrued compensation and benefits
228,186 
111,390 
Accrued expenses and other liabilities
81,185 
70,626 
Accrued pension and other postretirement benefits
110,049 
119,549 
Other noncurrent liabilities
20,844 
12,284 
Series A Redeemable convertible preferred stock, par value (in dollars per share)
$ 0.001 
$ 0.001 
Series A Redeemable common stock, shares authorized
1,838,027 
1,838,027 
Series A Redeemable convertible preferred stock, shares issued
1,838,027 
1,838,027 
Series A Redeemable convertible preferred stock, shares outstanding
1,838,027 
1,838,027 
Series A Redeemable convertible preferred stock, liquidation value (in dollars)
187,277 
 
Common stock, par value (in dollars per share)
$ 0.001 
$ 0.001 
Common stock, shares authorized
78,193,494 
78,193,494 
Common stock, shares issued
24,926,535 
21,821,256 
Common stock, shares outstanding
24,926,535 
21,821,256 
Pro forma
 
 
Cash and cash equivalents
81,129 
 
Inventories
298,824 
 
Property, plant and equipment, net
242,343 
 
Goodwill
185,005 
 
Accounts payable
89,530 
 
Accrued compensation and benefits
228,186 
 
Accrued expenses and other liabilities
81,185 
 
Accrued pension and other postretirement benefits
110,049 
 
Other noncurrent liabilities
20,844 
 
Series A Redeemable convertible preferred stock, shares issued
 
Series A Redeemable convertible preferred stock, shares outstanding
 
Common stock, shares issued
74,093,598 
 
Common stock, shares outstanding
74,093,598 
 
VIE
 
 
Cash and cash equivalents
12,796 
10,029 
Inventories
11,573 
15,755 
Property, plant and equipment, net
10,749 
11,147 
Goodwill
32,312 
32,312 
Other assets
2,704 
2,738 
Accounts payable
7,700 
10,250 
Accrued compensation and benefits
795 
1,035 
Accrued expenses and other liabilities
3,385 
4,516 
Accrued pension and other postretirement benefits
1,960 
2,303 
Other noncurrent liabilities
$ 2,869 
$ 2,841 
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
 
 
 
 
Net sales
$ 332,353 
$ 319,868 
$ 1,235,348 
$ 1,182,742 
Cost of goods sold
170,369 
162,528 
614,123 
572,457 
Gross Profit, Total
161,984 
157,340 
621,225 
610,285 
Operating expenses
 
 
 
 
Selling, general and administrative
139,063 
144,246 
445,834 
457,253 
Research and development
12,473 
11,395 
35,296 
34,023 
Intangible amortization
1,654 
1,653 
4,957 
4,966 
Restructuring charges
174 
 
816 
 
Income from operations
8,620 
46 
134,322 
114,043 
Interest expense, net
15,672 
17,563 
44,076 
48,093 
Other (income) expense, net
(2,449)
54 
1,389 
9,988 
Income (loss) before income taxes
(4,603)
(17,571)
88,857 
55,962 
Income tax (benefit) expense
440 
(4,273)
39,878 
32,646 
Net income (loss)
(5,043)
(13,298)
48,979 
23,316 
Less: Net income attributable to noncontrolling interests
(1,124)
(689)
(3,077)
(3,847)
Net income (loss) attributable to Acushnet Holdings Corp.
(6,167)
(13,987)
45,902 
19,469 
Accruing of cumulative dividends
(3,465)
(3,437)
(10,320)
(10,311)
Allocation of undistributed earnings to preferred shareholders
 
 
(15,071)
(4,231)
Net income (loss) attributable to common shareholders - basic
(9,632)
(17,424)
20,511 
4,927 
Adjustments to net income for dilutive securities
 
 
17,046 
 
Net income (loss) attributable to common shareholders - diluted
$ (9,632)
$ (17,424)
$ 37,557 
$ 4,927 
Net income (loss) per common share attributable to Acushnet Holdings Corp.:
 
 
 
 
Basic
$ (0.40)
$ (0.84)
$ 0.91 
$ 0.26 
Diluted
$ (0.40)
$ (0.84)
$ 0.68 
$ 0.25 
Weighted average number of common shares:
 
 
 
 
Basic
23,880,191 
20,678,237 
22,512,577 
19,268,395 
Diluted
23,880,191 
20,678,237 
55,203,829 
19,334,325 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME
 
 
 
 
Net income (loss)
$ (5,043)
$ (13,298)
$ 48,979 
$ 23,316 
Other comprehensive income (loss)
 
 
 
 
Foreign currency translation adjustments
1,943 
(7,800)
14,124 
(14,131)
Foreign exchange derivative instruments
 
 
 
 
Unrealized holding gains (losses) arising during period
(1,549)
(1,435)
(25,174)
5,009 
Reclassification adjustments included in net income
583 
(4,360)
(7,174)
(21,679)
Tax benefit
238 
1,973 
11,368 
4,981 
Foreign exchange derivative instruments, net
(728)
(3,822)
(20,980)
(11,689)
Available-for-sale securities
 
 
 
 
Unrealized holding gains (losses) arising during period
358 
(587)
210 
(769)
Tax benefit (expense)
(135)
187 
(79)
253 
Available-for-sale securities, net
223 
(400)
131 
(516)
Pension and other postretirement benefits adjustments
 
 
 
 
Net gain (loss) arising during period
(209)
2,032 
964 
545 
Tax benefit (expense)
120 
(578)
(6)
(68)
Pension and other postretirement benefits adjustments, net
(89)
1,454 
958 
477 
Total other comprehensive income (loss)
1,349 
(10,568)
(5,767)
(25,859)
Comprehensive income (loss)
(3,694)
(23,866)
43,212 
(2,543)
Less: Comprehensive income attributable to noncontrolling interests
(1,124)
(689)
(3,077)
(3,847)
Comprehensive income (loss) attributable to Acushnet Holdings Corp.
$ (4,818)
$ (24,555)
$ 40,135 
$ (6,390)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities
 
 
Net income (loss)
$ 48,979 
$ 23,316 
Adjustments to reconcile net income to cash provided by operating activities
 
 
Depreciation and amortization
30,553 
31,566 
Unrealized foreign exchange gain (loss)
(1,069)
2,790 
Amortization of debt issuance costs
3,036 
4,224 
Amortization of discount on bonds payable
3,963 
4,017 
Change in fair value of common stock warrants
6,112 
14,535 
Share-based compensation
7,123 
2,033 
Loss on disposals of property, plant and equipment
82 
32 
Deferred income taxes
25,958 
15,765 
Changes in operating assets and liabilities
 
 
Accounts receivable
(5,702)
(12,528)
Inventories
32,123 
(820)
Accounts payable
(387)
(5,622)
Accrued taxes
(1,872)
(1,044)
Accrued expenses and other liabilities
132,355 
13,689 
Other assets
3,793 
(9,758)
Other noncurrent liabilities
(154,993)
36,099 
Interest due to related parties
(8,026)
(8,508)
Cash flows provided by operating activities
122,028 
109,786 
Cash flows from investing activities
 
 
Additions to property, plant and equipment
(13,502)
(15,267)
Change in restricted cash
1,702 
1,364 
Cash flows used in investing activities
(11,800)
(13,903)
Cash flows from financing activities
 
 
Decrease in short-term borrowings, net
(28,163)
(13,278)
Repayment of senior term loan facility
(30,000)
 
Proceeds from senior term loan facility
375,000 
 
Repayment of secured floating rate notes
(375,000)
 
Proceeds from exercise of common stock warrants
34,503 
34,503 
Repayment of bonds
(34,503)
(34,503)
Debt issuance costs
(6,469)
 
Dividends paid on Series A redeemable convertible preferred stock
(13,861)
(13,747)
Dividends paid to noncontrolling interests
(3,000)
(1,800)
Cash flows used in financing activities
(81,493)
(28,825)
Effect of foreign exchange rate changes on cash
2,529 
(2,241)
Net increase in cash
31,264 
64,817 
Cash, beginning of year
54,409 
47,667 
Cash, end of period
85,673 
112,484 
Supplemental information
 
 
Non-cash additions to property, plant and equipment
355 
491 
Non-cash conversion of common stock warrants
$ 28,996 
$ 7,298 
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND EQUITY (UNAUDITED) (USD $)
In Thousands, except Share data, unless otherwise specified
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive loss
Retaimed Deficit
Noncontrolling Interest
Redeemable Convertible Preferred Stock
Total
Balances at December 31, 2015 at Dec. 31, 2015
 
 
 
 
$ 33,255 
 
$ 33,255 
Balances at December 31, 2015 at Dec. 31, 2015
 
 
 
 
 
 
193,506 
Balances at December 31, 2015 at Dec. 31, 2015
22 
309,110 
(67,234)
(81,647)
 
 
160,251 
Balances at December 31, 2015 at Dec. 31, 2015
 
 
 
 
 
131,036 
 
Balances at December 31, 2015 (in shares) at Dec. 31, 2015
21,821 
 
 
 
 
 
 
Balances at December 31, 2015 (in shares) at Dec. 31, 2015
 
 
 
 
 
1,838 
1,838,027 
Changes in stockholders' equity
 
 
 
 
 
 
 
Stockholders' Equity Attributable to Noncontrolling Interest
 
 
 
 
33,332 
 
33,332 
Net income attributable to Acushnet Holdings Corp.
 
 
 
45,902 
3,077 
 
45,902 
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest
 
 
 
 
 
 
48,979 
Other comprehensive loss
 
 
(5,767)
 
 
 
(5,767)
Stock-based compensation expense
 
7,123 
 
 
 
 
7,123 
Issuance of common stock
63,496 
 
 
 
 
63,499 
Issuance of common stock (in shares)
3,105 
 
 
 
 
 
 
Dividends paid on Series A redeemable convertible preferred stock
 
 
 
(13,861)
 
 
(13,861)
Dividends paid to noncontrolling interests
 
 
 
 
(3,000)
 
(3,000)
Balances at September 30, 2016 at Sep. 30, 2016
 
 
 
 
33,332 
 
33,332 
Balances at September 30, 2016 at Sep. 30, 2016
 
 
 
 
 
 
290,479 
Balances at September 30, 2016 at Sep. 30, 2016
25 
379,729 
(73,001)
(49,606)
 
 
257,147 
Balances at September 30, 2016 at Sep. 30, 2016
 
 
 
 
 
$ 131,036 
 
Balances at September 30, 2016 (in shares) at Sep. 30, 2016
24,926 
 
 
 
 
 
 
Balances at September 30, 2016 (in shares) at Sep. 30, 2016
 
 
 
 
 
1,838 
1,838,027 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying 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 VIE in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

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. 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 consolidated balance sheet as of December 31, 2015 is derived from the audited consolidated balance sheet for the year then ended. The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the full year ended December 31, 2016, nor were those of the comparable 2015 period representative of those actually experienced for the full year ended December 31, 2015. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2015 included in the Company’s prospectus, dated October 27, 2016, constituting part of the Company’s Registration Statement on Form S-1, as amended (Registration No. 333-212116), filed with the SEC on October 31, 2016.

Acquisition

Acushnet Holdings Corp. was incorporated in Delaware on May 9, 2011 as Alexandria Holdings Corp., an entity owned by Fila Korea Co., Ltd.(“Fila Korea”), a leading sport and leisure apparel and footwear company which is a public company listed on the Korea Exchange, and a consortium of investors (the “Financial Investors”) led by Mirae Asset Global Investments, a global investment management firm. Acushnet Holdings Corp. acquired Acushnet Company, our operating subsidiary, from Beam Suntory, Inc. (at the time known as Fortune Brands, Inc.) (“Beam”) on July 29, 2011 (the “Acquisition”).

Stock Split

On October 14, 2016, the Company effected a nine-for-one stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for its 7.5% convertible notes due 2021 (“convertible notes”), Series A redeemable convertible preferred stock (“Series A preferred stock”), and the exercise price for the common stock warrants and the strike price of stock-based compensation. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the common stock warrant exercise price, and convertible notes and redeemable convertible preferred stock conversion ratios.

Initial Public Offering

On November 2, 2016, the Company completed an initial public offering of 19,333,333 shares of its common stock sold by selling stockholders at a public offering price of $17.00 per share. Upon the closing of the Company’s initial public offering, all remaining outstanding shares of the Company’s Series A preferred stock were automatically converted into 11,556,495 shares of the Company’s common stock and the Company’s convertible notes were automatically converted into 22,791,852 shares of the Company’s common stock. The underwriters of the Company’s initial public offering exercised their over-allotment option to purchase an additional 2,899,999 shares of common stock from the selling stockholders at the initial public offering price of $17.00 per share.

Automatic Conversion

Following the pricing of the initial public offering, Magnus Holdings Co., Ltd. (“Magnus”), a wholly-owned subsidiary of Fila Korea, purchased from the Financial Investors on a pro rata basis 14,818,720 shares of the Company’s common stock, resulting in Magnus holding a controlling ownership interest of 53.1% of the Company’s outstanding common stock. The 14,818,720 shares of the Company’s common stock sold by the Financial Investors were received upon the automatic conversion of certain of the Company’s outstanding convertible notes (Note 5) and Series A preferred stock (Note 10). The remaining outstanding convertible notes and Series A preferred stock automatically converted into shares of the Company’s common stock prior to the closing of the initial public offering. 

Unaudited Pro Forma Financial Information

The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2016 has been prepared to give effect to the automatic conversion of all of the outstanding convertible notes into an aggregate of 32,624,820 shares of common stock, the payment in cash of accrued and unpaid interest of $4.5 million on the convertible notes and the automatic conversion of all of the outstanding shares of the Series A preferred stock into an aggregate of 16,542,243 shares of common stock as if the Company’s foregoing transactions had occurred on September 30, 2016.

Use of Estimates

The preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets, liabilities, stockholders’ equity, net sales and expenses, and the disclosure of contingent assets and liabilities in its 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 as defined by Accounting Standards Codification (“ASC”) 810. 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 September 30, 2016 and December 31,  2015. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.

Accounts Receivable

As of September 30, 2016 and December 31, 2015, the allowance for doubtful accounts was $18.0 million and $12.4 million, respectively.

Recently Adopted Accounting Standards

Fair Value Measurement

In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015‑07, “Fair Value Measurement: Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent).” Under ASU 2015‑07 investments for which fair value is measured at net asset value per share (or its equivalent) using the practical expedient should not be categorized in the fair value hierarchy. ASU 2015‑07 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The Company adopted the provisions of this standard during the nine months ended September 30, 2016. The retrospective adoption of this standard did not have a significant impact on the consolidated financial statements.

Intangibles—Goodwill and Other—Internal‑Use Software

In April 2015, the FASB issued ASU 2015‑05, “Intangibles—Goodwill and Other—Internal‑Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” ASU 2015‑05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015‑05 is effective for annual periods beginning after December 15, 2015, including interim periods within those fiscal years. The Company prospectively adopted the provisions of this standard during the nine months ended September 30, 2016. The adoption of this standard did not have a significant impact on the consolidated financial statements.

Consolidation: Amendments to the Consolidation Analysis

In February 2015, the FASB issued ASU 2015‑02, “Consolidation: Amendments to Consolidation Analysis.” ASU 2015‑02 places more emphasis on risk of loss when determining controlling interest, reduces the frequency of the application of related‑party guidance when determining controlling financial interest in a VIE and changes consolidation conclusions for companies in several industries. ASU 2015‑02 is effective for reporting periods beginning after December 15, 2015, with early adoption permitted. The Company retrospectively adopted the provisions of this standard during the nine months ended September 30, 2016. The retrospective adoption of this standard did not have a significant impact on the consolidated financial statements.

Recently Issued Accounting Standards

Statement of Cash Flows — Restricted Cash

In November 2016, the FASB issued ASU 2016‑18, “Statement of Cash Flows: Restricted Cash.” ASU 2016‑18 requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016‑18 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

 

Consolidation — Interest Held Through Related Parties

In October 2016, the FASB issued ASU 2016‑17, “Consolidation: Interests Held through Related Parties that are under Common Control.” ASU 2016‑17 changes the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. ASU 2016‑17 is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

 

Income Taxes

In October 2016, the FASB issued ASU 2016‑16, “Income Taxes: Intra-Entity Transfers of Assets other than Inventory.” ASU 2016-16 requires that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016‑15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments” to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Revenue from Contracts with Customers

In May 2016, the FASB issued ASU 2016‑12, “Revenue from Contracts with Customers: Narrow‑Scope Improvements and Practical Expedients.” ASU 2016‑12 addresses narrow‑scope improvements to the guidance on collectability, noncash consideration and completed contracts at transition and provides a practical expedient for contract modifications and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. In March 2016, the FASB issued ASU 2016‑08, “Revenue from Contracts with Customers: Principal versus Agent Considerations” clarifying the implementation guidance on principal versus agent considerations. In August 2015, the FASB issued ASU 2015‑14, “Revenue from Contracts with Customers: Deferral of the Effective Date.” deferring the adoption of previously issued guidance published in May 2014, ASU 2014‑09, “Revenue from Contracts with Customers.” ASU 2014‑09 amends revenue recognition guidance and requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2016‑08 and 2015‑14 are effective for reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. The new standard permits the use of either the retrospective or modified retrospective approach on adoption. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Compensation—Stock Compensation

In March 2016, the FASB issued ASU 2016‑09, “Compensation—Stock Compensation: Improvements to Employee Share‑Based Payment Accounting” to simplify accounting for employee share‑based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this standard is not expected to have a significant 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. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Presentation of Financial Statements—Going Concern

In August 2014, the FASB issued ASU 2014‑15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014‑15 requires management to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued and to provide related footnote disclosures as appropriate. ASU 2014‑15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

 

Inventories
Inventories

2. Inventories

Inventories are valued at the lower of cost and net realizable value. Cost is determined using the first‑in, first‑out inventory method. The inventory balance, which includes material, labor and manufacturing overhead costs, is recorded net of an estimated allowance for obsolete or slow moving inventory.

The components of inventories were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

September 30, 

    

December 31, 

 

 

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Raw materials and supplies

 

$

56,654

 

$

63,119

 

Work-in-process

 

 

19,043

 

 

18,210

 

Finished goods

 

 

223,127

 

 

245,030

 

Inventories

 

$

298,824

 

$

326,359

 

 

Product Warranty
Product Warranty

3. Product Warranty

The Company has defined warranties ranging from one to two years. Products covered by the defined warranty policies include all Titleist golf products, FootJoy golf shoes, and FootJoy golf outerwear. 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

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

(in thousands)

    

2016

 

2015

    

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

3,784

 

$

3,576

 

$

3,345

 

$

2,989

 

Provision

 

 

1,493

 

 

1,379

 

 

4,291

 

 

4,003

 

Claims paid/costs incurred

 

 

(1,542)

 

 

(1,432)

 

 

(3,916)

 

 

(3,449)

 

Foreign currency translation

 

 

(9)

 

 

(59)

 

 

6

 

 

(79)

 

Balance at end of period

 

$

3,726

 

$

3,464

 

$

3,726

 

$

3,464

 

 

Related Party Transactions
Related Party Transactions

4. Related Party Transactions

The Company has historically incurred interest expense payable to related parties on its outstanding convertible notes and bonds with common stock warrants (Note 5). Related party interest expense totaled $10.8 million and $11.3 million for the three months ended September 30, 2016 and 2015 respectively and $25.9 million and $27.8 million for the nine months ended September 30, 2016 and 2015, respectively.

Debt and Financing Arrangements
Debt and Financing Arrangements

5. Debt and Financing Arrangements

The Company’s debt and capital lease obligations were as follows:

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

(in thousands)

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Term loan

 

$

371,576

 

$

 -

 

Secured floating rate notes

 

 

 -

 

 

372,804

 

Convertible notes

 

 

362,490

 

 

362,490

 

Bonds with common stock warrants

 

 

 -

 

 

30,540

 

Senior term loan facility

 

 

 -

 

 

29,836

 

Senior revolving credit facility

 

 

 -

 

 

24,000

 

Revolving credit facility

 

 

13,518

 

 

 -

 

Other short-term borrowings

 

 

 -

 

 

15,064

 

Capital lease obligations

 

 

697

 

 

1,481

 

Total

 

 

748,281

 

 

836,215

 

Less: Short-term debt

 

 

27,581

 

 

441,704

 

Total long-term debt and capital lease obligations

 

$

720,700

 

$

394,511

 

 

The term loan is net of debt issuance costs of $3.4 million as of September 30, 2016.The secured floating rate notes are net of debt issuance costs of $2.2 million as of December 31, 2015.

Senior Secured Credit Facility

On April 27, 2016, the Company entered into a senior secured credit facilities agreement arranged by Wells Fargo Bank, National Association which provides for (i) a $275.0 million multi‑currency revolving credit facility, including a $20.0 million letter of credit sublimit, a $25.0 million swing line sublimit, a C$25.0 million sublimit for Acushnet Canada, Inc., a £20.0 million sublimit for Acushnet Europe Limited and an alternative currency sublimit of $100.0 million for borrowings in Canadian dollars, euros, pounds sterling and Japanese yen (“revolving credit facility”), (ii) a $375.0 million term loan A facility and (iii) a $100.0 million delayed draw term loan A facility. The revolving and term loan facilities mature on July 28, 2021 and the delayed draw term loan A facility expires on July 28, 2017 if not drawn. The credit agreement allows for the incurrence of additional term loans or increases in the revolving credit facility in an aggregate principal amount not to exceed (i) $200.0 million plus (ii) an unlimited amount so long as the net average secured leverage ratio (as defined in the credit agreement) does not exceed 2.00:1.00 on a pro forma basis. The applicable interest rate for the Canadian borrowings under the senior secured credit facility is based on CDOR plus a margin ranging from 1.25% to 2.00% depending on the Net Average Total Leverage Ratio as defined in the credit agreement. The applicable interest for the swing line sublimit is the highest of (a) Federal Funds Rate plus 0.50%, (b) the Prime Rate and (c) the one month LIBOR rate plus 1.00% plus a margin ranging from 0.25% to 1.00% depending on the Net Average Total Leverage Ratio as defined in the credit agreement. The applicable interest rate for all remaining borrowings under the senior secured credit facilities is LIBOR plus a margin ranging from 1.25% to 2.00% depending on the Net Average Total Leverage Ratio as defined in the credit agreement or the highest of (a) Federal Funds Rate plus 0.50%, (b) the Prime Rate and (c) the one month LIBOR rate plus 1.00% plus a margin ranging from 0.25%.to 1.00% depending on the Net Average Total Leverage Ratio as defined in the credit agreement.

The credit agreement contains 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.

The credit agreement was signed and became effective on April 27, 2016 and initial funding under the credit agreement occurred on July 28, 2016. The proceeds of the $375.0 million term loan A facility, borrowings of C$4.0 million (equivalent to approximately $3.0 million) under the revolving credit facility and cash on hand of $23.6 million were used to repay all amounts outstanding under the secured floating rate notes and certain former working credit facilities. The secured floating rate notes, certain former working credit facilities and the former senior revolving credit facility were terminated. The Company recorded interest expense related to the term loan facility, including the amortization of debt issuance costs, of $1.9 million during the three and nine months ended September 30, 2016. The Company recorded interest expense related to the revolving credit facility of $0.4 million during the three and nine months ended September 30, 2016.

Convertible Notes

In 2011 and 2012, the Company issued convertible notes with an aggregate principal amount of $362.5 million to shareholders. The convertible notes bore interest at a rate of 7.5% per annum, which was payable in cash semi‑annually in arrears on February 1 and August 1. The notes matured upon the earlier of July 29, 2021 or the election of the holder upon a change in control, as defined in the securities purchase agreements governing the notes. Amounts due under the convertible notes could only be repaid upon maturity or upon a change in control.

On March 11, 2013, the Company received approval from the holders of the convertible notes to defer any interest payments due after August 1, 2013 and prior to February 1, 2016 pursuant to the covenants imposed by the secured floating rate notes and the senior revolving and term loan facilities.

The notes were convertible at the option of the holder at any time prior to maturity into a number of shares of the Company’s common stock determined by dividing the aggregate outstanding unpaid principal amount of the note by the conversion price of $11.11 per share. The conversion price was subject to adjustment if additional shares of common stock were sold subsequent to the issuance of the convertible notes at a price per common share that was lower than $11.11 per share or upon a subdivision of the outstanding shares of the Company’s common stock. Transfer of the notes to any party, including an affiliate of the noteholder, required prior written consent of the other noteholders and Fila Korea.

On May 6, 2016, the Company and each of the holders of the convertible notes entered into an agreement requiring the mandatory conversion of the convertible notes into fully paid and nonassessable shares of the Company’s common stock upon the closing of an initial public offering. This agreement was amended on September 5, 2016 to provide for the automatic conversion of a portion of the outstanding convertible notes in connection with the sale of shares of the Company’s common stock by the holders of the convertible notes to Magnus. The automatic conversion of all outstanding convertible notes occurred prior to the closing of the Company’s initial public offering. Upon conversion, all accrued but unpaid interest on the principal of the convertible notes was paid to each holder of the convertible notes.

The Company recorded interest expense related to the convertible notes of $6.9 million during the three months ended September 30, 2016 and 2015, respectively and $20.4 million and $20.3 million during the nine months ended September 30, 2016 and 2015, respectively.

Bonds with Common Stock Warrants

In 2011 and 2012, the Company issued bonds with an aggregate principal amount of $172.5 million to shareholders. The bonds bore interest at a rate of 7.5% per annum, which was payable in cash semi‑annually in arrears on February 1 and August 1. The bonds matured upon the earlier of July 29, 2021 or the election of the holder upon a change of control, as defined in the securities purchase agreement governing the bonds. Amounts due under the bonds could only be repaid upon maturity, a change of control, a holder electing to exercise common stock warrants by net settling their bonds or an exercise of common stock warrants by Fila Korea.

In connection with the issuance of these bonds, the Company issued common stock warrants for the purchase of 15,526,431 shares of the Company’s common stock, at an exercise price of $11.11 per share. The exercise price was subject to adjustment if additional shares of common stock were sold subsequent to the issuance of the bonds at a price per common share that was lower than $11.11 per share or upon a subdivision of the outstanding shares of the Company’s common stock. The common stock warrant exercise price could be settled with cash or through tender of an aggregate outstanding principal amount of the bonds and accrued but unpaid interest equal to the exercise price of the common stock warrants.

The common stock warrants were detachable and transferrable by the holders only to Fila Korea or its designee at a price equal to the interest accrued on the underlying bonds at the rate of 4.0% per annum calculated on an annual compounded basis. The shareholders agreement provided Fila Korea with a call option to purchase all of the outstanding common stock warrants held by holders of the bonds in annual installments of 3,105,288 common stock warrants over a five year period beginning July 29, 2012. Fila Korea was required to exercise the common stock warrants within 10 days of the transfer. The exercise of the common stock warrants by Fila Korea triggered the Company to redeem a pro rata share of the bonds payable by using the proceeds received from the exercise of the common stock warrants by Fila Korea.

In July 2016, Fila Korea exercised its final annual call option to purchase 3,105,279 common stock warrants held by the holders of the bonds and exercised such warrants at the exercise price of $11.11 per share. This resulted in proceeds to the Company of $34.5 million which the Company used to repay the outstanding indebtedness under the bonds of $34.5 million.

A discount of $19.9 million relating to the issuance‑date fair value of the common stock warrants was recorded on the issuance date of the bonds and was accreted to interest expense until the maturity date of the bonds. The unamortized discount was $4.0 million as of December 31, 2015.

The Company recorded interest expense related to the bonds, including the amortization of the discount, of $3.9 million and $4.4 million during the three months ended September 30, 2016 and 2015, respectively. The Company recorded interest expense related to the bonds, including the amortization of the discount, of $5.5 million and $7.5 million during the nine months ended September 30, 2016 and 2015, respectively.

Secured Floating Rate Notes

In October 2011, the Company issued secured floating rate notes with Korea Development Bank in an aggregate principal amount of $500.0 million, which matured on July 29, 2016. The notes bore interest at a rate equal to three‑month LIBOR plus a margin of 3.75%, which was required to be paid quarterly in arrears on January 31, April 30, July 31 and October 31. The notes were issued in separate classes with maturity dates ranging from October 2013 to July 2016. Pursuant to an amended and restated pledge and security agreement dated October 31, 2011, the secured floating rate notes were secured by certain assets, including inventory, accounts receivable, fixed assets and intangible assets of the Company, and a second priority security interest in the shares of certain Fila Korea entities, trademarks and bank accounts.

In October 2013, the Company issued secured floating rate notes with Korea Development Bank in an aggregate principal amount of $125.0 million, which matured on July 29, 2016. Proceeds from the issuance of the notes were used, along with existing cash on hand, to repay $150.0 million of the secured floating rate notes issued in October 2011. The notes bore interest at a rate equal to three‑month LIBOR plus a margin of 3.75%, which was required to be paid quarterly in arrears on January 31, April 30, July 31 and October 31.

The Company incurred $13.2 million of issuance costs in connection with the original issuance of $500.0 million secured floating rate notes. In addition, the Company incurred $3.3 million of issuance costs in connection with the issuance of $125.0 million secured floating rate notes during the year ended December 31, 2013. Of the $3.3 million, $1.0 million was immediately recorded as interest expense and $2.3 million was capitalized as debt issuance costs.

On July 28, 2016, the outstanding borrowings under the secured floating rate notes were repaid in full using the proceeds from the senior secured credit facility and the secured floating rate notes were terminated.

The Company recorded interest expense related to the secured floating rate notes, including the amortization of debt issuance costs, of $2.1 million and $5.4 million during the three months ended September 30, 2016 and 2015, respectively. The Company recorded interest expense related to the secured floating rate notes, including the amortization of debt issuance costs, of $12.3 million and $15.8 million during the nine months ended September 30, 2016 and 2015, respectively.

Senior Revolving and Term Loan Facilities

In July 2011, the Company entered into a senior revolving facilities agreement with Korea Development Bank (“Senior Facility Agreement”), which provided for borrowings under a revolving credit facility of up to $50.0 million to be used for general corporate purposes (“Senior Revolving Facility”). The applicable interest rate for borrowings under the Senior Revolving Facility was LIBOR plus a margin of 3.25%. The Senior Facility Agreement required a commitment fee of 0.3% based on the average daily unused portion of the facility. On February 12, 2014, the Company amended its Senior Facility Agreement and simultaneously executed a joinder agreement with Wells Fargo N.A. to increase the borrowing capacity under the Senior Revolving Facility to $75.0 million.

On December 24, 2014, the Company further amended the Senior Facility Agreement to increase the borrowing capacity under the Senior Revolving Facility to $95.0 million, which matured on July 29, 2016. This amendment also provided for borrowings under a senior term loan agreement with Korea Development Bank of $30.0 million (“Senior Term Loan”), which matured on July 29, 2016. The applicable interest rate for borrowings under the Senior Term Loan was three‑month LIBOR plus a margin of 2.63%, and was increased for any required withholding taxes. The Senior Facility Agreement required a commitment fee of 0.3% based on the average daily unused portion of the term loan. Upon entry into the amendment, the Company immediately borrowed the entire $30.0 million under the Senior Term Loan.

There were no outstanding borrowings under the Senior Revolving Facility as of December 31, 2015. The Company recorded interest expense related to the Senior Revolving Facility, including unused commitment fees, of $0.1 million during each of the three months ended September 30, 2016 and 2015.The Company recorded interest expense related to the Senior Revolving Facility, including unused commitment fees, of $0.8 million and $0.7 million during the nine months ended September 30, 2016 and 2015, respectively.

 

On June 30, 2016, the Company repaid all amounts outstanding under the Senior Term Loan facility and the facility was terminated. There were outstanding borrowings under the Senior Term Loan of $30.0 million as of December 31, 2015. As of December 31, 2015, the interest rate applicable to the outstanding borrowings under the Senior Term Loan facility was 3.26%. The Company recorded interest expense related to the Senior Term Loan of $0.4 million during the three months ended September 30, 2015. The Company recorded interest expense related to the Senior Term Loan of $0.7 million and $1.1 million during the nine months ended September 30, 2016 and 2015, respectively.

 

Line of Credit Facility

On February 5, 2016, the Company entered into a working capital facility agreement arranged by Wells Fargo Bank, National Association which provides for borrowings up to $30.0 million. The applicable interest rate for borrowings under the facility was daily one‑month LIBOR plus a margin of 2.50%. The facility required a commitment fee equal to 0.35% of the unused portion of the facility as of the preceding fiscal quarter.

The working capital facility had an original maturity date of May 31, 2016, but was amended on May 18, 2016 to extend the maturity date to July 29, 2016. 

Working Credit Facility (Canada)

In February 2013, the Company entered into a working credit facility agreement arranged by Wells Fargo N.A., Canadian Branch, which provided for borrowings of up to the lesser of (a) C$25 million or (b) the sum of 80% of eligible accounts receivable and 60% of eligible inventory. The working credit facility, as amended, matured on July 29, 2016. The applicable interest rate for borrowings under the facility for Canadian dollar borrowings was CDOR plus a margin of 2.0% or Canadian Prime Rate and for U.S. dollar borrowings was LIBOR plus a margin of 2.0% or U.S. Prime Rate. The facility required a commitment fee equal to 0.25% of the uncancelled and unutilized portion of the facility as of the preceding fiscal quarter.

On July 28, 2016, the outstanding borrowings were repaid using the proceeds from the senior secured credit facility and cash on hand and the working credit facility (Canada) was terminated. There were no outstanding borrowings under the working credit facility (Canada) as of December 31, 2015.

The Company recorded interest expense related to the working credit facility (Canada), including unused commitment fees, of less than $0.1 million during the three months ended September 30, 2016 and $0.1 million during the three months ended September 30, 2015. The Company recorded interest expense related to the working credit facility (Canada), including unused commitment fees, of $0.2 million during each of the nine months ended September 30, 2016 and 2015.  

Working Credit Facility (Europe)

In April 2012, the Company entered into a working credit facility agreement arranged by Wells Fargo Capital Finance (UK) Limited, which provided for borrowings of up to the lesser of (a) £30.0 million or (b) the sum of 85% of eligible accounts receivable and 65% of eligible inventory, of which £5.0 million can be used for letters of credit. The working credit facility had an original maturity date of April 4, 2017. The applicable interest rate for borrowings under the facility was LIBOR plus a margin of 3.0%. The facility included a commitment fee of 0.375% on the average daily unused portion of the facility. The working credit facility was secured by the accounts receivable, inventory and cash collections of Acushnet Europe Limited, a wholly owned subsidiary of the Company.

On July 28, 2016, the outstanding borrowings were repaid using cash on hand and the working credit facility (Europe) was terminated. There were no outstanding borrowings under the working credit facility (Europe) as of December 31, 2015.  

The Company recorded interest expense related to the working credit facility (Europe), including unused commitment fees, of $0.1 million during the three months ended September 30, 2016 and 2015, respectively. The Company recorded interest expense related to the working credit facility (Europe), including unused commitment fees, of $0.5 million during the nine months ended September 30, 2016 and 2015, respectively. 

Derivative Financial Instruments
Derivative Financial Instruments

6. Derivative Financial Instruments

Common Stock Warrants

The Company classifies warrants to purchase common stock as a liability on its consolidated balance sheet as the warrants are free‑standing financial instruments that may result in the issuance of a variable number of the Company’s common shares. The warrants were initially recorded at fair value on grant date, and are subsequently re‑measured to fair value at each reporting date. The Company will continue to adjust the liability until the earlier of exercise of the warrants or expiration of the warrants occurs. Common stock warrants are recorded at fair value (Note 7) and included in accrued expenses and other liabilities on the consolidated balance sheet. Changes in the fair value of the common stock warrants are recognized as other (income) expense, net on the consolidated statement of operations.

On July 29, 2011, the Company issued bonds in the aggregate principal amount of $168.0 million and common stock warrants to purchase an aggregate of 15,120,000 shares of the Company’s common stock. On January 20, 2012, the Company issued $4.5 million of additional bonds and common stock warrants to purchase 406,431 shares of the Company’s common stock (Note 5).

In July 2016, Fila Korea exercised its final annual call option to purchase 3,105,279 common stock warrants held by the holders of the bonds and exercised such warrants at the exercise price of $11.11 per share, or $34.5 million in the aggregate. The Company used the proceeds received from Fila Korea’s exercise of the common stock warrants to redeem the outstanding bonds payable.

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 on a routine basis are foreign exchange forward contracts. The Company does not enter into foreign exchange forward contracts for trading or speculative purposes.

Foreign exchange 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 contracts correspond to the periods of the forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The effective portions of cash flow hedges are reported in accumulated other comprehensive income (loss) and recognized in the consolidated statement of operations when the hedged item affects earnings. Changes in fair value of all economic hedge transactions are immediately recognized in current period earnings. The primary foreign currency hedge 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 of all foreign currency derivative hedges outstanding as of September 30, 2016 was $353.6 million.

The counterparties to derivative contracts are major financial institutions. The Company assesses credit risk of the counterparties on an ongoing basis.

The fair values of foreign exchange derivative instruments on the consolidated balance sheets were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

September 30, 

 

December 31, 

 

(in thousands)

    

Location

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

Asset derivatives

 

Other current assets

 

$

4,639

 

$

13,824

 

 

 

Other noncurrent assets

 

 

43

 

 

790

 

Liability derivatives

 

Other current liabilities

 

 

17,973

 

 

1,265

 

 

 

Other noncurrent liabilities

 

 

6,437

 

 

331

 

 

The effect of foreign exchange derivative instruments on accumulated other comprehensive income (loss) and the consolidated statements of operations was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Recognized in OCI

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Type of hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow

 

$

(1,549)

 

$

(1,435)

 

$

(25,174)

 

$

5,009

 

 

 

$

(1,549)

 

$

(1,435)

 

$

(25,174)

 

$

5,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Recognized in

 

Gain (Loss) Recognized in

 

 

Statement of Operations

 

Statement of Operations

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Location of gain (loss) in statement of operations

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

(583)

 

$

4,360

 

$

7,174

 

$

21,679

Selling, general and administrative expense

 

 

(1,005)

 

 

1,461

 

 

(3,674)

 

 

3,287

 

 

$

(1,588)

 

$

5,821

 

$

3,500

 

$

24,966

 

Based on the current valuation, the Company expects to reclassify a net loss of $13.2 million from accumulated other comprehensive income (loss) into cost of goods sold during the next 12 months.

Fair Value Measurements
Fair Value Measurements

7. 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

 

 

 

 

September 30, 2016 using:

 

 

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Balance Sheet Location

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Rabbi trust

 

$

9,194

 

$

-

 

$

-

 

Other current assets

Foreign exchange derivative instruments

 

 

-

 

 

4,639

 

 

-

 

Other current assets

Rabbi trust

 

 

3,115

 

 

-

 

 

-

 

Other noncurrent assets

Deferred compensation program assets

 

 

1,864

 

 

-

 

 

-

 

Other noncurrent assets

Foreign exchange derivative instruments

 

 

-

 

 

43

 

 

-

 

Other noncurrent assets

Total assets

 

$

14,173

 

$

4,682

 

$

-

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative instruments

 

$

-

 

$

17,973

 

$

-

 

Other current liabilities

Deferred compensation program liabilities

 

 

1,864

 

 

-

 

 

-

 

Other noncurrent liabilities

Foreign exchange derivative instruments

 

 

-

 

 

6,437

 

 

-

 

Other noncurrent liabilities

Total liabilities

 

$

1,864

 

$

24,410

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements as of

 

 

 

 

December 31, 2015 using:

 

 

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Balance Sheet Location

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Rabbi trust

 

$

13,111

 

$

-

 

$

-

 

Other current assets

Foreign exchange derivative instruments

 

 

-

 

 

13,824

 

 

-

 

Other current assets

Rabbi trust

 

 

1,442

 

 

-

 

 

-

 

Other noncurrent assets

Deferred compensation program assets

 

 

2,129

 

 

-

 

 

-

 

Other noncurrent assets

Foreign exchange derivative instruments

 

 

-

 

 

790

 

 

-

 

Other noncurrent assets

Total assets

 

$

16,682

 

$

14,614

 

$

-

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative instruments

 

$

-

 

$

1,265

 

$

-

 

Other current liabilities

Common stock warrants

 

 

-

 

 

-

 

 

22,884

 

Other current liabilities

Deferred compensation program liabilities

 

 

2,129

 

 

-

 

 

-

 

Other noncurrent liabilities

Foreign exchange derivative instruments

 

 

-

 

 

331

 

 

-

 

Other noncurrent liabilities

Total liabilities

 

$

2,129

 

$

1,596

 

$

22,884

 

 

During the nine months ended September 30, 2016 and the year ended December 31, 2015,  there were no transfers between Level 1,  Level 2 and Level 3.

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 forward contracts used to hedge currency fluctuations for transactions denominated in a foreign currency. 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.

The Company categorizes the common stock warrants derivative liability as Level 3 as there are significant unobservable inputs used in the underlying valuations. The common stock warrants are valued using the contingent claims methodology.

The change in Level 3 fair value measurements was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

(in thousands)

    

2016

    

2015

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

22,884

 

$

1,818

 

Common stock warrant exercise

 

 

(28,996)

 

 

(7,298)

 

Total losses included in earnings

 

 

6,112

 

 

28,364

 

Balance at end of period

 

$

-

 

$

22,884

 

 

Pension and Other Postretirement Benefits
Pension and Other Postretirement Benefits

8. Pension and Other Postretirement Benefits

Components of net periodic benefit cost were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

Postretirement Benefits

 

 

 

Three months ended September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

3,684

 

$

4,000

 

$

158

 

$

264

 

Interest cost

 

 

3,147

 

 

2,991

 

 

160

 

 

197

 

Expected return on plan assets

 

 

(3,010)

 

 

(2,658)

 

 

-

 

 

-

 

Curtailment gain

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of net (gain) loss

 

 

(87)

 

 

316

 

 

(382)

 

 

(124)

 

Amortization of prior service cost (credit)

 

 

44

 

 

-

 

 

(42)

 

 

(42)

 

Net periodic benefit cost (credit)

 

$

3,778

 

$

4,649

 

$

(106)

 

$

295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

Postretirement Benefits

 

 

 

Nine months ended September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

8,593

 

$

12,055

 

$

658

 

$

794

 

Interest cost

 

 

9,440

 

 

8,989

 

 

583

 

 

591

 

Expected return on plan assets

 

 

(9,216)

 

 

(7,980)

 

 

-

 

 

-

 

Amortization of net (gain) loss

 

 

160

 

 

950

 

 

(730)

 

 

(372)

 

Amortization of prior service cost (credit)

 

 

131

 

 

-

 

 

(126)

 

 

(127)

 

Net periodic benefit cost

 

$

9,108

 

$

14,014

 

$

385

 

$

886

 

 

Income Taxes
Income Taxes

9. Income Taxes

Income tax expense increased by $4.7 million, to $0.4 million for the three months ended September 30, 2016 compared to a benefit of $4.3 million for the three months ended September 30, 2015. The Company’s effective tax rate (“ETR”) was (9.6%) for the three months ended September 30, 2016, compared to 24.3% for the three months ended September 30, 2015. The decrease in ETR was primarily driven by an increase in indemnified tax obligations for periods prior to the Acquisition, offset by an increase in non-deductible transaction costs and changes to the geographic mix of earnings. 

 

Income tax expense increased by $7.2 million, or 22.2%, to $39.9 million for the nine months ended September 30, 2016 compared to $32.6 million for the nine months ended September 30, 2015. The Company’s ETR was 44.9% for the nine months ended September 30, 2016, compared to 58.3% for the nine months ended September 30, 2015. The decrease in ETR was primarily driven by a reduction of non-cash fair value losses on common stock warrants which are not tax effected, and a reduction in indemnified tax obligations for periods prior to the Acquisition, offset by an increase in non-deductible transactions costs and changes to the geographic mix of earnings. 

 

Redeemable Convertible Preferred Stock
Redeemable Convertible Preferred Stock

10. Redeemable Convertible Preferred Stock

The Company has issued Series A preferred stock. As of September 30, 2016 and December 31, 2015, the Company's certificate of incorporation, as amended and restated, authorized the Company to issue 1,838,027 shares of $0.001 par value preferred stock. Given that certain redemption features of the Series A preferred stock are not solely within the control of the Company, the Series A preferred stock is classified outside of stockholders' equity. The Series A preferred stock is only redeemable upon a change of control or the completion of a qualified initial public offering.

On May 6, 2016, the Company and each of the holders of the Series A preferred stock entered into an agreement requiring the mandatory conversion of the shares of the Series A preferred stock into fully paid and nonassessable shares of the Company’s common stock. This agreement was amended on September 5, 2016 to provide for the automatic conversion of a portion of the outstanding Series A preferred stock in connection with the sale of shares of the Company’s common stock by the holders of the Series A preferred stock to Magnus. This automatic conversion of all outstanding Series A preferred stock occurred prior to the closing of the Company’s initial public offering. Upon conversion, all accrued but unpaid dividends on the shares of the Series A preferred stock was paid to each holder of the shares of the Series A preferred stock. 

Equity Incentive Plans
Equity Incentive Plans

11. Equity Incentive Plans

The Company measures stock‑based awards granted to employees based on the fair value on the date of the grant and recognizes the corresponding compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The Company issues stock‑based awards to employees with service‑based vesting conditions and performance‑based vesting conditions. Compensation expense for awards with only service‑based vesting conditions is recorded using the straight‑line method. Compensation expense for awards with service‑based and performance‑based vesting conditions is recorded on a straight‑line method once the Company has determined that the likelihood of meeting the performance conditions is probable, which requires management judgment.

The Company recognizes compensation expense for only the portion of awards that are expected to vest. In developing a forfeiture rate estimate, the Company has considered its historical experience to estimate pre‑vesting forfeitures for service‑based and performance‑based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially different from the Company’s estimate, the Company may be required to record adjustments to stock‑based compensation expense in future periods.

On January 22, 2016, the Company’s board of directors adopted the Acushnet Holdings Corp. 2015

Omnibus Incentive Plan (‘‘2015 Plan’’) pursuant to which the Company may grant stock options, stock appreciation rights, restricted shares of common stock, restricted stock units, and other stock-based and

cash-based awards to members of the board of directors, officers, employees, consultants and advisors

of the Company. The 2015 Plan was initially administered by the Company’s board of directors and as of the Company’s initial public offering, will be administered by the compensation committee (the board or compensation committee, as applicable, the ‘‘Administrator’’). The Administrator has the authority to establish the terms and conditions of any award issued or granted under the 2015 Plan. The exercise price per share of stock options may not be less than 100% of the fair market value of a share of common stock on the date of the grant and the term of the stock option may not be greater than ten years (except for incentive stock options granted to a 10% stockholder, which shall have an exercise price no less than 110% of the fair market value of the share of common stock on the date of the grant and a term not greater than five years). A total of 8,190,000 authorized shares of the Company’s common stock are reserved for issuance under the 2015 Plan.

 

On June 15, 2016, the Company’s board of directors, in accordance with the 2015 Plan, approved a grant of multi‑year restricted stock units (“RSUs”) and performance stock units (“PSUs”) to certain key members of management. The initial fair value of the grant was estimated at $45.8 million.

On August 9, 2016, the Company’s board of directors approved an additional grant of multi-year RSU’s and PSU’s to certain key members of management. The initial fair value of the grants was estimated at $3.8 million.

The grants were made 50% in RSUs and 50% in PSUs. One‑third of the RSUs vest on January 1 of each of 2017, 2018 and 2019, subject to the employee’s continued employment with the Company, and the PSUs cliff‑vest on December 31, 2018, subject to the employee’s continued employment with the Company and the Company’s level of achievement of the applicable cumulative Adjusted EBITDA performance metrics (as defined in the applicable award agreements) measured over the three-year performance period. Each PSU reflects the right to receive between 0% and 200% of the target number of shares based on the actual three-year cumulative Adjusted EBITDA. The determination of the target value gave consideration to executive performance, potential future contributions and peer group analysis.

The RSUs and PSUs contain the right, but not the obligation, for the Company to repurchase up to 100% of the common stock that was issued in settlement of vested RSUs and PSUs, following an award holder’s termination of employment for any reason. The repurchase right is at the sole discretion of the Company and can be exercised during the 60 day period following the first and second anniversary of any such termination of employment, provided that (i) no shares of common stock may be subject to repurchase unless they have been held by the award holder for at least six months and (ii) no repurchase right may be exercised upon or following the Company’s initial public offering.

To date, the Company has not repurchased any shares issued in respect of restricted stock units or performance stock units. As of September 30, 2016,  no RSUs or PSUs had vested. Remaining unrecognized compensation expense for non‑vested RSUs and non‑vested PSUs granted was $20.4 million and $22.0 million, respectively, as of September 30, 2016 and is expected to be recognized over the related weighted average period of 2.2 years.

The Company deemed the achievement of the 100% target three‑year cumulative Adjusted EBITDA performance metric to be probable as of September 30, 2016. The Company will reassess the probability of achieving the three-year cumulative Adjusted EBITDA target at the end of each reporting period. The Company recorded compensation expense for the RSUs and PSUs of $3.8 million and $2.4 million, respectively, during the three months ended September 30, 2016 and compensation expense for the RSUs and PSUs of $4.4 million and $2.8 million, respectively, during the nine months ended September 30, 2016, the majority of which was included in selling, general and administrative expenses.

Accumulated Other Comprehensive Income (Loss), Net of Tax
Accumulated Other Comprehensive Income (Loss), Net of Tax

12. 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, unrealized gains and losses from available‑for‑sale securities and pension and other postretirement adjustments.

The components of and changes in accumulated other comprehensive income (loss), net of tax, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

Gains (Losses) on

 

Gains on

 

Pension and

 

Accumulated

 

 

 

Currency

 

Foreign Exchange

 

Available-

 

Other

 

Other

 

 

 

Translation

 

Derivative

 

for-Sale

 

Postretirement

 

Comprehensive

 

(in thousands)

    

Adjustments

    

Instruments

    

Securities

    

Adjustments

    

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2015

 

$

(70,019)

 

$

9,166

 

$

1,504

 

$

(7,885)

 

$

(67,234)

 

Other comprehensive income (loss) before reclassifications

 

 

14,124

 

 

(13,806)

 

 

131

 

 

1,523

 

 

1,972

 

Amounts reclassified from accumulated other comprehensive loss

 

 

-

 

 

(7,174)

 

 

-

 

 

(565)

 

 

(7,739)

 

Balances at September 30, 2016

 

$

(55,895)

 

$

(11,814)

 

$

1,635

 

$

(6,927)

 

$

(73,001)

 

 

Net Income per Common Share
Net Income per Common Share

13. Net Income per Common Share

The following is a computation of basic and diluted net income per common share attributable to Acushnet Holdings Corp. under the two‑class method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

(in thousands, except share and per share amounts)

 

2016

    

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Acushnet Holdings Corp.

 

$

(6,167)

 

$

(13,987)

 

$

45,902

 

$

19,469

Less: dividends paid on redeemable convertible preferred stock

 

 

(1,168)

 

 

(1,133)

 

 

(8,023)

 

 

(8,007)

Less: accruing of cumulative dividends

 

 

(2,297)

 

 

(2,304)

 

 

(2,297)

 

 

(2,304)

Less: allocation of undistributed earnings to preferred shareholders

 

 

-

 

 

-

 

 

(15,071)

 

 

(4,231)

Net income (loss) attributable to common stockholders - basic

 

 

(9,632)

 

 

(17,424)

 

 

20,511

 

 

4,927

Adjustments to net income for dilutive securities

 

 

-

 

 

-

 

 

17,046

 

 

-

Net income (loss) attributable to common stockholders - diluted

 

$

(9,632)

 

$

(17,424)

 

$

37,557

 

$

4,927

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

23,880,191

 

 

20,678,237

 

 

22,512,577

 

 

19,268,395

Diluted

 

 

23,880,191

 

 

20,678,237

 

 

55,203,829

 

 

19,334,325

Net income (loss) per common share attributable to Acushnet Holdings Corp.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.40)

 

$

(0.84)

 

$

0.91

 

$

0.26

Diluted

 

$

(0.40)

 

$

(0.84)

 

$

0.68

 

$

0.25

The Company’s potential dilutive securities for the nine months ended September 30, 2016, include Series A preferred stock, RSUs, PSUs, and convertible notes. For the nine months ended September 30, 2015 the Company’s potential dilutive securities include Series A preferred stock, stock options, warrants to purchase common stock and convertible notes. 

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:

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 

 

 

2016

 

2015

 

 

 

 

 

 

 

Series A preferred stock

 

 

16,542,243

 

 

16,542,243

Warrants to purchase common stock

 

 

-

 

 

3,105,279

Convertible notes

 

 

-

 

 

32,624,820

 

Segment Information
Segment Information

14. 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; EAR expense; gains and losses on the fair value of common stock warrants 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 and nine months ended September 30, 2016 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 September 30, 

    

Nine Months Ended September 30, 

 

 

2016

 

2015

 

2016

 

2015

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Titleist golf balls

 

$

119,079

 

$

126,042

 

$

415,328

 

$

430,707

Titleist golf clubs

 

 

74,283

 

 

67,279

 

 

314,579

 

 

287,810

Titleist golf gear

 

 

30,499

 

 

28,995

 

 

114,833

 

 

105,180

FootJoy golf wear

 

 

97,758

 

 

90,941

 

 

361,788

 

 

340,101

Other

 

 

10,734

 

 

6,611

 

 

28,820

 

 

18,944

Total net sales

 

$

332,353

 

$

319,868

 

$

1,235,348

 

$

1,182,742

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

 

 

 

 

 

 

 

 

 

 

 

Titleist golf balls

 

$

17,326

 

$

19,266

 

$

69,679

 

$

78,617

Titleist golf clubs

 

 

(7,527)

 

 

(8,422)

 

 

29,962

 

 

24,907

Titleist golf gear

 

 

832

 

 

889

 

 

15,448

 

 

12,707

FootJoy golf wear

 

 

(524)

 

 

(739)

 

 

25,242

 

 

31,121

Other

 

 

939

 

 

100

 

 

4,788

 

 

1,137

Total segment operating income

 

 

11,046

 

 

11,094

 

 

145,119

 

 

148,489

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(15,672)

 

 

(17,563)

 

 

(44,076)

 

 

(48,093)

EAR expense

 

 

940

 

 

(10,423)

 

 

940

 

 

(33,088)

Loss on fair value of common stock warrants

 

 

 -

 

 

243

 

 

(6,112)

 

 

(14,535)

Other

 

 

(917)

 

 

(922)

 

 

(7,014)

 

 

3,189

Total income (loss) before income tax

 

$

(4,603)

 

$

(17,571)

 

$

88,857

 

$

55,962

 

Commitments and Contingencies
Commitments and Contingencies

15. 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 September 30, 2016.

Purchase obligations by the Company as of September 30, 2016 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments Due by Period

 

 

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

2016

    

2017

    

2018

    

2019

    

2020

    

Thereafter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase obligations

 

$

137,305

 

$

38,469

 

$

15,875

 

$

1,884

 

$

1,456

 

$

4,748

 

 

Lease Commitments

The Company leases certain warehouses, distribution and office facilities, vehicles and office equipment under operating leases.

The Company has an operating lease for certain vehicles that provides for a residual value guarantee. The lease has a noncancelable lease term of one year and may be renewed annually over the subsequent five years. The Company has the option to terminate the lease at the annual renewal date. Termination of the lease results in the sale of the vehicles and the determination of the residual value. The residual value is calculated by comparing the net proceeds of the vehicles sold to the depreciated value at the end of the renewal period. The Company is not responsible for any deficiency resulting from the net proceeds being less than 20% of the original cost in the first year and 20% of the depreciated value for all subsequent years. The Company believes that this guarantee will not have a significant impact on the consolidated financial statements.

Contingencies

In connection with the Company’s acquisition of Acushnet Company, Beam indemnified the Company for certain tax related obligations that relate to periods during which Fortune Brands, Inc. owned Acushnet Company. As of September 30, 2016, the Company’s estimate of its receivable for these indemnifications is $9.9 million, of which $1.2 million is recorded in other current assets and $8.7 million is recorded in other noncurrent assets on the consolidated balance sheet. 

Litigation

Beam

A dispute has arisen between Acushnet Company and Beam with respect to approximately $16.6 million of value-added tax (“VAT”) trade receivables. These receivables were reflected on Acushnet Company’s consolidated balance sheet at the time of the Company’s acquisition of Acushnet Company. Acushnet Company believes that these VAT trade receivables are assets of the Company; Beam claims that these are tax credits or refunds from the period prior to the acquisition of Acushnet Company which are payable to Beam, pursuant to the terms of the Stock Purchase Agreement that covers the sale of the stock of Acushnet Company. Beam has withheld payments in this amount which the Company believes are payable to Acushnet Company in reimbursement of certain other tax liabilities which existed prior to the acquisition of Acushnet Company. On March 27, 2012, Acushnet Company filed a complaint seeking reimbursement of these funds in the Commonwealth of Massachusetts Superior Court Department, Business Litigation Section. Each party filed Motions for Summary Judgment, which motions were denied by the Court on July 29, 2015. Trial was conducted in early June, 2016.  On June 21, 2016, the Court ruled that Beam had a contractual right to the VAT trade receivables actually collected from Acushnet Company's customers prior to the closing of the Company's acquisition of Acushnet Company, but that Beam should pay $972,288 plus pre-judgement interest of $494,859 to the Company to compensate for amounts Beam withheld, but which were not collected from Acushnet Company's customers. The Company recorded the total value as other (income) expense, net on the consolidated statement of operations for the nine months ended September 30, 2016. Acushnet believes that the Court erred in its ruling and filed a Notice of Appeal on July 20, 2016.     

Other Litigation

In addition to the lawsuit described above, 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. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect on the consolidated financial statements.

Subsequent Events
Subsequent Events

16. Subsequent Events

Stock Split

On October 14, 2016, the Company effected a nine‑for‑one stock split of its issued and outstanding shares of common stock. See Note 1 – Summary of Significant Accounting Policies, for disclosure related to the Company’s stock split.

Initial Public Offering

The Company completed an initial public offering of its common stock in November 2016. See Note 1 – Summary of Significant Accounting Policies, for disclosures related to the Company’s initial public offering and other related transactions.

Automatic Conversion

All outstanding convertible notes and Series A preferred stock converted into shares of the Company’s common stock prior to the closing of the Company’s initial public offering. See Note 1 – Summary of Significant Accounting Policies, for disclosures related to such conversion and other related transactions.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation

The accompanying 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 VIE in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation.

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. 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 consolidated balance sheet as of December 31, 2015 is derived from the audited consolidated balance sheet for the year then ended. The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of results to be expected for the full year ended December 31, 2016, nor were those of the comparable 2015 period representative of those actually experienced for the full year ended December 31, 2015. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2015 included in the Company’s prospectus, dated October 27, 2016, constituting part of the Company’s Registration Statement on Form S-1, as amended (Registration No. 333-212116), filed with the SEC on October 31, 2016.

Stock Split

On October 14, 2016, the Company effected a nine-for-one stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for its 7.5% convertible notes due 2021 (“convertible notes”), Series A redeemable convertible preferred stock (“Series A preferred stock”), and the exercise price for the common stock warrants and the strike price of stock-based compensation. Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this stock split and adjustment of the common stock warrant exercise price, and convertible notes and redeemable convertible preferred stock conversion ratios.

Unaudited Pro Forma Financial Information

The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2016 has been prepared to give effect to the automatic conversion of all of the outstanding convertible notes into an aggregate of 32,624,820 shares of common stock, the payment in cash of accrued and unpaid interest of $4.5 million on the convertible notes and the automatic conversion of all of the outstanding shares of the Series A preferred stock into an aggregate of 16,542,243 shares of common stock as if the Company’s foregoing transactions had occurred on September 30, 2016.

Use of Estimates

The preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets, liabilities, stockholders’ equity, net sales and expenses, and the disclosure of contingent assets and liabilities in its 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 as defined by Accounting Standards Codification (“ASC”) 810. 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 September 30, 2016 and December 31,  2015. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.

Accounts Receivable

As of September 30, 2016 and December 31, 2015, the allowance for doubtful accounts was $18.0 million and $12.4 million, respectively.

Recently Adopted Accounting Standards

Fair Value Measurement

In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015‑07, “Fair Value Measurement: Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent).” Under ASU 2015‑07 investments for which fair value is measured at net asset value per share (or its equivalent) using the practical expedient should not be categorized in the fair value hierarchy. ASU 2015‑07 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The Company adopted the provisions of this standard during the nine months ended September 30, 2016. The retrospective adoption of this standard did not have a significant impact on the consolidated financial statements.

Intangibles—Goodwill and Other—Internal‑Use Software

In April 2015, the FASB issued ASU 2015‑05, “Intangibles—Goodwill and Other—Internal‑Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” ASU 2015‑05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015‑05 is effective for annual periods beginning after December 15, 2015, including interim periods within those fiscal years. The Company prospectively adopted the provisions of this standard during the nine months ended September 30, 2016. The adoption of this standard did not have a significant impact on the consolidated financial statements.

Consolidation: Amendments to the Consolidation Analysis

In February 2015, the FASB issued ASU 2015‑02, “Consolidation: Amendments to Consolidation Analysis.” ASU 2015‑02 places more emphasis on risk of loss when determining controlling interest, reduces the frequency of the application of related‑party guidance when determining controlling financial interest in a VIE and changes consolidation conclusions for companies in several industries. ASU 2015‑02 is effective for reporting periods beginning after December 15, 2015, with early adoption permitted. The Company retrospectively adopted the provisions of this standard during the nine months ended September 30, 2016. The retrospective adoption of this standard did not have a significant impact on the consolidated financial statements.

Recently Issued Accounting Standards

Statement of Cash Flows — Restricted Cash

In November 2016, the FASB issued ASU 2016‑18, “Statement of Cash Flows: Restricted Cash.” ASU 2016‑18 requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016‑18 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

 

Consolidation — Interest Held Through Related Parties

In October 2016, the FASB issued ASU 2016‑17, “Consolidation: Interests Held through Related Parties that are under Common Control.” ASU 2016‑17 changes the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. ASU 2016‑17 is effective for annual periods beginning after December 15, 2016, and interim periods within those fiscal years. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

 

Income Taxes

In October 2016, the FASB issued ASU 2016‑16, “Income Taxes: Intra-Entity Transfers of Assets other than Inventory.” ASU 2016-16 requires that entities recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016‑15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments” to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Revenue from Contracts with Customers

In May 2016, the FASB issued ASU 2016‑12, “Revenue from Contracts with Customers: Narrow‑Scope Improvements and Practical Expedients.” ASU 2016‑12 addresses narrow‑scope improvements to the guidance on collectability, noncash consideration and completed contracts at transition and provides a practical expedient for contract modifications and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. In March 2016, the FASB issued ASU 2016‑08, “Revenue from Contracts with Customers: Principal versus Agent Considerations” clarifying the implementation guidance on principal versus agent considerations. In August 2015, the FASB issued ASU 2015‑14, “Revenue from Contracts with Customers: Deferral of the Effective Date.” deferring the adoption of previously issued guidance published in May 2014, ASU 2014‑09, “Revenue from Contracts with Customers.” ASU 2014‑09 amends revenue recognition guidance and requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2016‑08 and 2015‑14 are effective for reporting periods beginning after December 15, 2017, including interim periods within those fiscal years. The new standard permits the use of either the retrospective or modified retrospective approach on adoption. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Compensation—Stock Compensation

In March 2016, the FASB issued ASU 2016‑09, “Compensation—Stock Compensation: Improvements to Employee Share‑Based Payment Accounting” to simplify accounting for employee share‑based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this standard is not expected to have a significant 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. The Company is currently evaluating this standard to determine the impact of its adoption on the consolidated financial statements.

Presentation of Financial Statements—Going Concern

In August 2014, the FASB issued ASU 2014‑15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014‑15 requires management to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued and to provide related footnote disclosures as appropriate. ASU 2014‑15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The adoption of this standard is not expected to have a significant impact on the consolidated financial statements.

Inventories (Tables)
Schedule of inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

September 30, 

    

December 31, 

 

 

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Raw materials and supplies

 

$

56,654

 

$

63,119

 

Work-in-process

 

 

19,043

 

 

18,210

 

Finished goods

 

 

223,127

 

 

245,030

 

Inventories

 

$

298,824

 

$

326,359

 

 

Product Warranty (Tables)
Schedule of warranty obligation for accrued warranty expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

(in thousands)

    

2016

 

2015

    

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

3,784

 

$

3,576

 

$

3,345

 

$

2,989

 

Provision

 

 

1,493

 

 

1,379

 

 

4,291

 

 

4,003

 

Claims paid/costs incurred

 

 

(1,542)

 

 

(1,432)

 

 

(3,916)

 

 

(3,449)

 

Foreign currency translation

 

 

(9)

 

 

(59)

 

 

6

 

 

(79)

 

Balance at end of period

 

$

3,726

 

$

3,464

 

$

3,726

 

$

3,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt and Financing Arrangements (Tables)
Schedule of debt and capital lease obligations

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31, 

 

(in thousands)

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Term loan

 

$

371,576

 

$

 -

 

Secured floating rate notes

 

 

 -

 

 

372,804

 

Convertible notes

 

 

362,490

 

 

362,490

 

Bonds with common stock warrants

 

 

 -

 

 

30,540

 

Senior term loan facility

 

 

 -

 

 

29,836

 

Senior revolving credit facility

 

 

 -

 

 

24,000

 

Revolving credit facility

 

 

13,518

 

 

 -

 

Other short-term borrowings

 

 

 -

 

 

15,064

 

Capital lease obligations

 

 

697

 

 

1,481

 

Total

 

 

748,281

 

 

836,215

 

Less: Short-term debt

 

 

27,581

 

 

441,704

 

Total long-term debt and capital lease obligations

 

$

720,700

 

$

394,511

 

 

Derivative Financial Instruments (Tables)

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

September 30, 

 

December 31, 

 

(in thousands)

    

Location

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

Asset derivatives

 

Other current assets

 

$

4,639

 

$

13,824

 

 

 

Other noncurrent assets

 

 

43

 

 

790

 

Liability derivatives

 

Other current liabilities

 

 

17,973

 

 

1,265

 

 

 

Other noncurrent liabilities

 

 

6,437

 

 

331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Recognized in OCI

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Type of hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow

 

$

(1,549)

 

$

(1,435)

 

$

(25,174)

 

$

5,009

 

 

 

$

(1,549)

 

$

(1,435)

 

$

(25,174)

 

$

5,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) Recognized in

 

Gain (Loss) Recognized in

 

 

Statement of Operations

 

Statement of Operations

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Location of gain (loss) in statement of operations

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

$

(583)

 

$

4,360

 

$

7,174

 

$

21,679

Selling, general and administrative expense

 

 

(1,005)

 

 

1,461

 

 

(3,674)

 

 

3,287

 

 

$

(1,588)

 

$

5,821

 

$

3,500

 

$

24,966

 

Fair Value Measurements (Tables)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements as of

 

 

 

 

September 30, 2016 using:

 

 

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Balance Sheet Location

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Rabbi trust

 

$

9,194

 

$

-

 

$

-

 

Other current assets

Foreign exchange derivative instruments

 

 

-

 

 

4,639

 

 

-

 

Other current assets

Rabbi trust

 

 

3,115

 

 

-

 

 

-

 

Other noncurrent assets

Deferred compensation program assets

 

 

1,864

 

 

-

 

 

-

 

Other noncurrent assets

Foreign exchange derivative instruments

 

 

-

 

 

43

 

 

-

 

Other noncurrent assets

Total assets

 

$

14,173

 

$

4,682

 

$

-

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative instruments

 

$

-

 

$

17,973

 

$

-

 

Other current liabilities

Deferred compensation program liabilities

 

 

1,864

 

 

-

 

 

-

 

Other noncurrent liabilities

Foreign exchange derivative instruments

 

 

-

 

 

6,437

 

 

-

 

Other noncurrent liabilities

Total liabilities

 

$

1,864

 

$

24,410

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements as of

 

 

 

 

December 31, 2015 using:

 

 

(in thousands)

    

Level 1

    

Level 2

    

Level 3

    

Balance Sheet Location

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Rabbi trust

 

$

13,111

 

$

-

 

$

-

 

Other current assets

Foreign exchange derivative instruments

 

 

-

 

 

13,824

 

 

-

 

Other current assets

Rabbi trust

 

 

1,442

 

 

-

 

 

-

 

Other noncurrent assets

Deferred compensation program assets

 

 

2,129

 

 

-

 

 

-

 

Other noncurrent assets

Foreign exchange derivative instruments

 

 

-

 

 

790

 

 

-

 

Other noncurrent assets

Total assets

 

$

16,682

 

$

14,614

 

$

-

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange derivative instruments

 

$

-

 

$

1,265

 

$

-

 

Other current liabilities

Common stock warrants

 

 

-

 

 

-

 

 

22,884

 

Other current liabilities

Deferred compensation program liabilities

 

 

2,129

 

 

-

 

 

-

 

Other noncurrent liabilities

Foreign exchange derivative instruments

 

 

-

 

 

331

 

 

-

 

Other noncurrent liabilities

Total liabilities

 

$

2,129

 

$

1,596

 

$

22,884

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

(in thousands)

    

2016

    

2015

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

22,884

 

$

1,818

 

Common stock warrant exercise

 

 

(28,996)

 

 

(7,298)

 

Total losses included in earnings

 

 

6,112

 

 

28,364

 

Balance at end of period

 

$

-

 

$

22,884

 

 

Pension and Other Postretirement Benefits (Tables)
Schedule of Components of net periodic benefit cost

 

 

Pension Benefits

 

Postretirement Benefits

 

 

 

Three months ended September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

3,684

 

$

4,000

 

$

158

 

$

264

 

Interest cost

 

 

3,147

 

 

2,991

 

 

160

 

 

197

 

Expected return on plan assets

 

 

(3,010)

 

 

(2,658)

 

 

-

 

 

-

 

Curtailment gain

 

 

-

 

 

-

 

 

-

 

 

-

 

Amortization of net (gain) loss

 

 

(87)

 

 

316

 

 

(382)

 

 

(124)

 

Amortization of prior service cost (credit)

 

 

44

 

 

-

 

 

(42)

 

 

(42)

 

Net periodic benefit cost (credit)

 

$

3,778

 

$

4,649

 

$

(106)

 

$

295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

Postretirement Benefits

 

 

 

Nine months ended September 30, 

 

(in thousands)

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

8,593

 

$

12,055

 

$

658

 

$

794

 

Interest cost

 

 

9,440

 

 

8,989

 

 

583

 

 

591

 

Expected return on plan assets

 

 

(9,216)

 

 

(7,980)

 

 

-

 

 

-

 

Amortization of net (gain) loss

 

 

160

 

 

950

 

 

(730)

 

 

(372)

 

Amortization of prior service cost (credit)

 

 

131

 

 

-

 

 

(126)

 

 

(127)

 

Net periodic benefit cost

 

$

9,108

 

$

14,014

 

$

385

 

$

886

 

 

Accumulated Other Comprehensive Income (Loss), Net of Tax (Tables)
Schedule of changes in each component of accumulated comprehensive income (loss), net of tax effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

Gains (Losses) on

 

Gains on

 

Pension and

 

Accumulated

 

 

 

Currency

 

Foreign Exchange

 

Available-

 

Other

 

Other

 

 

 

Translation

 

Derivative

 

for-Sale

 

Postretirement

 

Comprehensive

 

(in thousands)

    

Adjustments

    

Instruments

    

Securities

    

Adjustments

    

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2015

 

$

(70,019)

 

$

9,166

 

$

1,504

 

$

(7,885)

 

$

(67,234)

 

Other comprehensive income (loss) before reclassifications

 

 

14,124

 

 

(13,806)

 

 

131

 

 

1,523

 

 

1,972

 

Amounts reclassified from accumulated other comprehensive loss

 

 

-

 

 

(7,174)

 

 

-

 

 

(565)

 

 

(7,739)

 

Balances at September 30, 2016

 

$

(55,895)

 

$

(11,814)

 

$

1,635

 

$

(6,927)

 

$

(73,001)

 

 

Net Income per Common Share (Tables)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

(in thousands, except share and per share amounts)

 

2016

    

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Acushnet Holdings Corp.

 

$

(6,167)

 

$

(13,987)

 

$

45,902

 

$

19,469

Less: dividends paid on redeemable convertible preferred stock

 

 

(1,168)

 

 

(1,133)

 

 

(8,023)

 

 

(8,007)

Less: accruing of cumulative dividends

 

 

(2,297)

 

 

(2,304)

 

 

(2,297)

 

 

(2,304)

Less: allocation of undistributed earnings to preferred shareholders

 

 

-

 

 

-

 

 

(15,071)

 

 

(4,231)

Net income (loss) attributable to common stockholders - basic

 

 

(9,632)

 

 

(17,424)

 

 

20,511

 

 

4,927

Adjustments to net income for dilutive securities

 

 

-

 

 

-

 

 

17,046

 

 

-

Net income (loss) attributable to common stockholders - diluted

 

$

(9,632)

 

$

(17,424)

 

$

37,557

 

$

4,927

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

23,880,191

 

 

20,678,237

 

 

22,512,577

 

 

19,268,395

Diluted

 

 

23,880,191

 

 

20,678,237

 

 

55,203,829

 

 

19,334,325

Net income (loss) per common share attributable to Acushnet Holdings Corp.:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.40)

 

$

(0.84)

 

$

0.91

 

$

0.26

Diluted

 

$

(0.40)

 

$

(0.84)

 

$

0.68

 

$

0.25

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 

 

 

2016

 

2015

 

 

 

 

 

 

 

Series A preferred stock

 

 

16,542,243

 

 

16,542,243

Warrants to purchase common stock

 

 

-

 

 

3,105,279

Convertible notes

 

 

-

 

 

32,624,820

 

Segment Information (Tables)
Schedule of information by reportable segment and a reconciliation to reported amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

Three Months Ended September 30, 

    

Nine Months Ended September 30, 

 

 

2016

 

2015

 

2016

 

2015

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Titleist golf balls

 

$

119,079

 

$

126,042

 

$

415,328

 

$

430,707

Titleist golf clubs

 

 

74,283

 

 

67,279

 

 

314,579

 

 

287,810

Titleist golf gear

 

 

30,499

 

 

28,995

 

 

114,833

 

 

105,180

FootJoy golf wear

 

 

97,758

 

 

90,941

 

 

361,788

 

 

340,101

Other

 

 

10,734

 

 

6,611

 

 

28,820

 

 

18,944

Total net sales

 

$

332,353

 

$

319,868

 

$

1,235,348

 

$

1,182,742

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income

 

 

 

 

 

 

 

 

 

 

 

 

Titleist golf balls

 

$

17,326

 

$

19,266

 

$

69,679

 

$

78,617

Titleist golf clubs

 

 

(7,527)

 

 

(8,422)

 

 

29,962

 

 

24,907

Titleist golf gear

 

 

832

 

 

889

 

 

15,448

 

 

12,707

FootJoy golf wear

 

 

(524)

 

 

(739)

 

 

25,242

 

 

31,121

Other

 

 

939

 

 

100

 

 

4,788

 

 

1,137

Total segment operating income

 

 

11,046

 

 

11,094

 

 

145,119

 

 

148,489

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(15,672)

 

 

(17,563)

 

 

(44,076)

 

 

(48,093)

EAR expense

 

 

940

 

 

(10,423)

 

 

940

 

 

(33,088)

Loss on fair value of common stock warrants

 

 

 -

 

 

243

 

 

(6,112)

 

 

(14,535)

Other

 

 

(917)

 

 

(922)

 

 

(7,014)

 

 

3,189

Total income (loss) before income tax

 

$

(4,603)

 

$

(17,571)

 

$

88,857

 

$

55,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Tables)
Schedule of purchase obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments Due by Period

 

 

 

Remainder of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

    

2016

    

2017

    

2018

    

2019

    

2020

    

Thereafter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase obligations

 

$

137,305

 

$

38,469

 

$

15,875

 

$

1,884

 

$

1,456

 

$

4,748

 

 

Summary of Significant Accounting Policies (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 9 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2016
VIE
Nov. 2, 2016
Class of Stock, Common
Oct. 14, 2016
Class of Stock, Common
Sep. 30, 2016
Class of Stock, Common
Pro forma
Nov. 2, 2016
Class of Stock, Common
IPO
Nov. 2, 2016
Class of Stock, Common
IPO
Nov. 2, 2016
Class of Stock, Common
Over-allotment
Nov. 2, 2016
Class of Stock, Common
Over-allotment
Nov. 2, 2016
Magnus
Nov. 2, 2016
Magnus
Class of Stock, Common
Oct. 14, 2016
Convertible debt
Sep. 30, 2016
Convertible debt
Pro forma
Summary of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock split
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
7.50% 
 
Shares issued
 
 
 
 
 
 
19,333,333 
 
2,899,999 
 
 
 
 
 
Share price (in dollars per share)
 
 
 
 
 
 
 
$ 17.00 
 
$ 17.00 
 
 
 
 
Shares converted
 
 
 
11,556,495 
 
16,542,243 
 
 
 
 
 
 
 
 
Debt converted
 
 
 
22,791,852 
 
32,624,820 
 
 
 
 
 
 
 
 
Shares purchased by Magnus
 
 
 
 
 
 
 
 
 
 
 
14,818,720 
 
 
Controlling interest, as a perceent
 
 
 
 
 
 
 
 
 
 
53.10% 
 
 
 
Ownership percentage
 
 
40.00% 
 
 
 
 
 
 
 
 
 
 
 
Payment of interest
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 4.5 
Allowance for doubtful accounts
$ 18.0 
$ 12.4 
 
 
 
 
 
 
 
 
 
 
 
 
Inventories (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Inventories
 
 
Raw materials and supplies
$ 56,654 
$ 63,119 
Work-in-process
19,043 
18,210 
Finished goods
223,127 
245,030 
Inventories
$ 298,824 
$ 326,359 
Product Warranty (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Product Warranty Liability [Line Items]
 
 
 
 
Balance at beginning of period
$ 3,784 
$ 3,576 
$ 3,345 
$ 2,989 
Provision
1,493 
1,379 
4,291 
4,003 
Claims paid/costs incurred
(1,542)
(1,432)
(3,916)
(3,449)
Foreign currency translation
(9)
(59)
(79)
Balance at end of period
$ 3,726 
$ 3,464 
$ 3,726 
$ 3,464 
Maximum
 
 
 
 
Product Warranty Liability [Line Items]
 
 
 
 
Product Warranty
 
 
2 years 
 
Minimum
 
 
 
 
Product Warranty Liability [Line Items]
 
 
 
 
Product Warranty
 
 
1 year 
 
Related Party Transactions (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Related Party Transactions
 
 
 
 
Related party interest expense
$ 10.8 
$ 11.3 
$ 25.9 
$ 27.8 
Debt and Financing Arrangements - Schedule of debt and financing arrangements (Details) (USD $)
Sep. 30, 2016
Dec. 31, 2015
Dec. 31, 2015
Senior term loan facility
Dec. 31, 2015
Senior revolving credit facility
Sep. 30, 2016
Revolving credit facility
Sep. 30, 2016
Term Loan
Dec. 31, 2015
Secured Floating Rate Notes
Oct. 31, 2013
Secured Floating Rate Notes
Oct. 31, 2011
Secured Floating Rate Notes
Sep. 30, 2016
Convertible notes
Dec. 31, 2015
Convertible notes
Dec. 31, 2015
Bonds with common stock warrants
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
 
$ 29,836,000 
$ 24,000,000 
$ 13,518,000 
$ 371,576,000 
$ 372,804,000 
 
 
$ 362,490,000 
$ 362,490,000 
$ 30,540,000 
Other short-term borrowings
 
15,064,000 
 
 
 
 
 
 
 
 
 
 
Capital lease obligations
697,000 
1,481,000 
 
 
 
 
 
 
 
 
 
 
Total
748,281,000 
836,215,000 
 
 
 
 
 
 
 
 
 
 
Less: Short-term debt
27,581,000 
441,704,000 
 
 
 
 
 
 
 
 
 
 
Total long-term debt and capital lease obligations
720,700,000 
394,511,000 
 
 
 
 
 
 
 
 
 
 
Issuance cost
 
 
 
 
 
$ 3,400,000 
$ 2,200,000 
$ 2,300,000 
$ 13,200,000 
 
 
 
Debt and Financing Arrangements - Senior Secured Credit Facility (Details)
In Millions, unless otherwise specified
9 Months Ended 0 Months Ended 9 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended 9 Months Ended
Jul. 28, 2016
USD ($)
Sep. 30, 2016
Senior Secured Credit Facility
USD ($)
Sep. 30, 2016
Senior Secured Credit Facility
LIBOR
Minimum
Sep. 30, 2016
Senior Secured Credit Facility
LIBOR
Maximum
Jul. 28, 2016
Revolving credit facility
USD ($)
Jul. 28, 2016
Revolving credit facility
CAD ($)
Sep. 30, 2016
Revolving credit facility
USD ($)
Sep. 30, 2016
Letter of credit facility
USD ($)
Sep. 30, 2016
Swing line
USD ($)
Sep. 30, 2016
Swing line
Federal funds rate
Sep. 30, 2016
Swing line
One Month LIBOR
Sep. 30, 2016
Swing line
One Month LIBOR
Minimum
Sep. 30, 2016
Swing line
One Month LIBOR
Maximum
Sep. 30, 2016
Alternative Currency Sublimit
USD ($)
Jul. 28, 2016
Term Loan A Facility
USD ($)
Sep. 30, 2016
Term Loan A Facility
USD ($)
Sep. 30, 2016
Delayed Draw Term Loan A Facility
USD ($)
Sep. 30, 2016
Acushnet Canada
Senior Secured Credit Facility
CDOR
Minimum
Sep. 30, 2016
Acushnet Canada
Senior Secured Credit Facility
CDOR
Maximum
Sep. 30, 2016
Acushnet Canada
Revolving credit facility
CAD ($)
Sep. 30, 2016
Acushnet Europe
Revolving credit facility
GBP (£)
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
 
 
$ 275.0 
$ 20.0 
$ 25.0 
 
 
 
 
$ 100.0 
 
$ 375.0 
$ 100.0 
 
 
$ 25.0 
£ 20.0 
Contingent maximum increase to Borrowing Capacity
 
200.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured leverage ratio
 
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floor rate
 
 
 
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
Variable rate of interest
 
 
1.25% 
2.00% 
 
 
 
 
 
0.50% 
 
 
 
 
 
 
 
1.25% 
2.00% 
 
 
Leverage ratio basis spread
 
 
 
 
 
 
 
 
 
 
 
0.25% 
1.00% 
 
 
 
 
 
 
 
 
Proceeds from the issuance of notes
 
 
 
 
3.0 
4.0 
 
 
 
 
 
 
 
 
375.0 
 
 
 
 
 
 
Cash on hand
23.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, including amortization of debt issuance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.9 
 
 
 
 
 
Interest expense, excluding amortization of debt issuance costs
 
 
 
 
 
 
$ 0.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt and Financing Arrangements - Convertible Notes (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Jan. 20, 2012
Jul. 29, 2011
Sep. 30, 2016
Convertible notes
Sep. 30, 2015
Convertible notes
Sep. 30, 2016
Convertible notes
Sep. 30, 2015
Convertible notes
Mar. 11, 2013
Convertible notes
Dec. 31, 2012
Convertible notes
Convertible Notes
 
 
 
 
 
 
 
 
Aggregate principal amount
$ 4.5 
$ 168.0 
 
 
 
 
 
$ 362.5 
Interest rate (as a percent)
 
 
 
 
 
 
 
7.50% 
Conversion price (in dollars per share)
 
 
 
 
 
 
$ 11.11 
 
Interest expense, excluding amortization of debt issuance costs
 
 
$ 6.9 
$ 6.9 
$ 20.4 
$ 20.3 
 
 
Debt and Financing Arrangements - Bonds with Common Stock Warrants (Details) (USD $)
9 Months Ended 3 Months Ended 9 Months Ended 24 Months Ended 0 Months Ended 1 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Jan. 20, 2012
Jul. 29, 2011
Sep. 30, 2016
Bonds with common stock warrants
Sep. 30, 2015
Bonds with common stock warrants
Sep. 30, 2016
Bonds with common stock warrants
Sep. 30, 2015
Bonds with common stock warrants
Dec. 31, 2012
Bonds with common stock warrants
Dec. 31, 2012
Bonds with common stock warrants
Common stock warrants
Jul. 29, 2012
Bonds with common stock warrants
Common stock warrants
Fila Korea Ltd.
Jul. 31, 2016
Bonds with common stock warrants
Common stock warrants
Fila Korea Ltd.
Dec. 31, 2015
Bonds with common stock warrants
Common stock warrants
Fila Korea Ltd.
Jul. 29, 2012
Bonds with common stock warrants
Common stock warrants
Fila Korea Ltd.
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount
 
 
$ 4,500,000 
$ 168,000,000 
 
 
 
 
$ 172,500,000 
 
 
 
 
 
Interest rate (as a percent)
 
 
 
 
 
 
 
 
7.50% 
 
 
 
 
 
Interest rate calculated on annual compounded basis (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
4.00% 
Annual installments of warrants available to be purchased under call option
 
 
 
 
 
 
 
 
 
15,526,431 
 
3,105,279 
 
3,105,288 
Period of call option to purchase warrants
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
 
Period to exercise warrants
 
 
 
 
 
 
 
 
 
 
10 days 
 
 
 
Exercise price of warrants (in dollars per share)
 
 
 
 
 
 
 
 
 
$ 11.11 
 
$ 11.11 
 
 
Proceeds from exercise of common stock warrants
34,503,000 
34,503,000 
 
 
 
 
 
 
 
 
 
34,500,000 
 
 
Discount on debt issuance cost
 
 
 
 
 
 
 
 
 
 
 
 
19,900,000 
 
Repayment of debt
 
 
 
 
 
 
 
 
 
 
 
34,500,000 
 
 
Unamortized discount
 
 
 
 
 
 
 
 
 
 
 
 
4,000,000 
 
Interest expense, including amortization of debt issuance costs
 
 
 
 
$ 3,900,000 
$ 4,400,000 
$ 5,500,000 
$ 7,500,000 
 
 
 
 
 
 
Debt and Financing Arrangements - Secured Floating Rate Notes (Details) (USD $)
3 Months Ended 9 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Jan. 20, 2012
Jul. 29, 2011
Oct. 31, 2013
Secured Floating Rate Notes
Sep. 30, 2016
Secured Floating Rate Notes
Sep. 30, 2015
Secured Floating Rate Notes
Sep. 30, 2016
Secured Floating Rate Notes
Sep. 30, 2015
Secured Floating Rate Notes
Dec. 31, 2015
Secured Floating Rate Notes
Oct. 31, 2011
Secured Floating Rate Notes
Oct. 31, 2013
Secured Floating Rate Notes
LIBOR
Oct. 31, 2011
Secured Floating Rate Notes
LIBOR
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount
 
 
 
 
$ 4,500,000 
$ 168,000,000 
$ 125,000,000 
 
 
 
 
 
$ 500,000,000 
 
 
Variable rate of interest
 
 
 
 
 
 
 
 
 
 
 
 
 
3.75% 
3.75% 
Repayment of debt
 
 
 
 
 
 
150,000,000 
 
 
 
 
 
 
 
 
Issuance cost
 
 
 
 
 
 
2,300,000 
 
 
 
 
2,200,000 
13,200,000 
 
 
Interest Expense
15,672,000 
17,563,000 
44,076,000 
48,093,000 
 
 
1,000,000 
 
 
 
 
 
 
 
 
Issuance cost incurred
 
 
 
 
 
 
3,300,000 
 
 
 
 
 
 
 
 
Interest expense, including amortization of debt issuance costs
 
 
 
 
 
 
 
$ 2,100,000 
$ 5,400,000 
$ 12,300,000 
$ 15,800,000 
 
 
 
 
Debt and Financing Arrangements - Senior Revolving and Term Loan Facilities (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended
Jan. 20, 2012
Jul. 29, 2011
Sep. 30, 2016
Senior revolving credit facility
Sep. 30, 2015
Senior revolving credit facility
Sep. 30, 2016
Senior revolving credit facility
Sep. 30, 2015
Senior revolving credit facility
Dec. 24, 2014
Senior revolving credit facility
Jul. 31, 2011
Senior revolving credit facility
Korea Development Bank
Jul. 31, 2011
Senior revolving credit facility
Korea Development Bank
LIBOR
Feb. 12, 2014
Senior revolving credit facility
Wells Fargo, National Association
Sep. 30, 2015
Senior Term Loan
Sep. 30, 2016
Senior Term Loan
Sep. 30, 2015
Senior Term Loan
Dec. 31, 2015
Senior Term Loan
Dec. 24, 2014
Senior Term Loan
Korea Development Bank
Dec. 24, 2014
Senior Term Loan
Korea Development Bank
Dec. 24, 2014
Senior Term Loan
Korea Development Bank
LIBOR
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount
$ 4.5 
$ 168.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 30.0 
 
Maximum borrowing capacity
 
 
 
 
 
 
95.0 
50.0 
 
75.0 
 
 
 
 
 
 
 
Variable rate of interest
 
 
 
 
 
 
 
3.25% 
 
 
 
 
 
 
 
 
2.63% 
Commitment fee of unused portion (as a percent)
 
 
 
 
 
 
 
 
0.30% 
 
 
 
 
 
0.30% 
 
 
Outstanding Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
30.0 
 
 
 
Interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
3.26% 
 
 
 
Debt interest expense
 
 
$ 0.1 
$ 0.1 
$ 0.8 
$ 0.7 
 
 
 
 
$ 0.4 
$ 0.7 
$ 1.1 
 
 
 
 
Debt and Financing Arrangements - Line of Credit Facility (Details) (Working capital facility, Wells Fargo, National Association, USD $)
In Millions, unless otherwise specified
0 Months Ended
Feb. 5, 2015
Feb. 5, 2015
Line of Credit Facility [Line Items]
 
 
Maximum borrowing capacity
 
$ 30.0 
Commitment fee (as a percent)
0.35% 
 
LIBOR
 
 
Line of Credit Facility [Line Items]
 
 
Variable rate of interest
2.50% 
 
Debt and Financing Arrangements - Working Credit Facility (Details)
In Millions, unless otherwise specified
1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Feb. 28, 2013
Working capital facility
Wells Fargo N.A., Canadian Branch
CAD ($)
Sep. 30, 2016
Working capital facility
Wells Fargo N.A., Canadian Branch
USD ($)
Sep. 30, 2015
Working capital facility
Wells Fargo N.A., Canadian Branch
USD ($)
Sep. 30, 2016
Working capital facility
Wells Fargo N.A., Canadian Branch
USD ($)
Sep. 30, 2015
Working capital facility
Wells Fargo N.A., Canadian Branch
USD ($)
Dec. 31, 2015
Working capital facility
Wells Fargo N.A., Canadian Branch
USD ($)
Feb. 28, 2013
Working capital facility
Wells Fargo N.A., Canadian Branch
CDOR
Feb. 28, 2013
Working capital facility
Wells Fargo N.A., Canadian Branch
LIBOR
Apr. 30, 2012
Working capital facility
Wells Fargo Capital Finance (UK) Limited
GBP (£)
Sep. 30, 2016
Working capital facility
Wells Fargo Capital Finance (UK) Limited
USD ($)
Sep. 30, 2015
Working capital facility
Wells Fargo Capital Finance (UK) Limited
USD ($)
Sep. 30, 2016
Working capital facility
Wells Fargo Capital Finance (UK) Limited
USD ($)
Sep. 30, 2015
Working capital facility
Wells Fargo Capital Finance (UK) Limited
USD ($)
Dec. 31, 2015
Working capital facility
Wells Fargo Capital Finance (UK) Limited
USD ($)
Apr. 30, 2012
Working capital facility
Wells Fargo Capital Finance (UK) Limited
LIBOR
Sep. 30, 2016
Letter of credit facility
USD ($)
Apr. 30, 2012
Letter of credit facility
Wells Fargo Capital Finance (UK) Limited
GBP (£)
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
$ 25.0 
 
 
 
 
 
 
 
£ 30.0 
 
 
 
 
 
 
$ 20.0 
£ 5.0 
Commitment fee (as a percent)
0.25% 
 
 
 
 
 
 
 
0.375% 
 
 
 
 
 
 
 
 
Percentage of eligible accounts receivable
80.00% 
 
 
 
 
 
 
 
85.00% 
 
 
 
 
 
 
 
 
Percentage of eligible inventory
60.00% 
 
 
 
 
 
 
 
65.00% 
 
 
 
 
 
 
 
 
Outstanding Balance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt interest expense
 
$ 0.1 
$ 0.1 
$ 0.2 
$ 0.2 
 
 
 
 
$ 0.1 
$ 0.1 
$ 0.5 
$ 0.5 
 
 
 
 
Variable rate of interest
 
 
 
 
 
 
2.00% 
2.00% 
 
 
 
 
 
 
3.00% 
 
 
Derivative Financial Instruments - Common Stock Warrants (Details) (USD $)
9 Months Ended 1 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Jan. 20, 2012
Jul. 29, 2011
Jan. 20, 2012
Common Stock Warrants
Jul. 29, 2011
Common Stock Warrants
Jul. 31, 2016
Fila Korea Ltd
Common Stock Warrants
Derivative [Line Items]
 
 
 
 
 
 
 
Aggregate principal amount
 
 
$ 4,500,000 
$ 168,000,000 
 
 
 
Issue of warrants to purchase shares
 
 
 
 
406,431 
15,120,000 
3,105,279 
Exercise price (in dollars per share)
 
 
 
 
 
 
$ 11.11 
Amount of warrants exercised
$ 34,503,000 
$ 34,503,000 
 
 
 
 
$ 34,500,000 
Derivative Financial Instruments - Fair value of foreign exchange derivative instruments in consolidated balance sheets (Details) (Foreign exchange derivative contract, USD $)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Maximum
Sep. 30, 2016
Derivative designated as hedging
Other current assets
Dec. 31, 2015
Derivative designated as hedging
Other current assets
Sep. 30, 2016
Derivative designated as hedging
Other noncurrent assets
Dec. 31, 2015
Derivative designated as hedging
Other noncurrent assets
Sep. 30, 2016
Derivative designated as hedging
Other current liabilities
Dec. 31, 2015
Derivative designated as hedging
Other current liabilities
Sep. 30, 2016
Derivative designated as hedging
Other noncurrent liabilities
Dec. 31, 2015
Derivative designated as hedging
Other noncurrent liabilities
Derivatives, Fair Value [Line Items]
 
 
 
 
 
 
 
 
 
 
Term of derivative contract
 
24 months 
 
 
 
 
 
 
 
 
Notional amount
$ 353,600,000 
 
 
 
 
 
 
 
 
 
Asset derivatives
 
 
4,639,000 
13,824,000 
43,000 
790,000 
 
 
 
 
Liability derivatives
 
 
 
 
 
 
$ 17,973,000 
$ 1,265,000 
$ 6,437,000 
$ 331,000 
Derivative Financial Instruments - Effect of foreign exchange derivative instruments in comprehensive income (loss) and statement of operations (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Expected reclassification of gain recorded in accumulated other comprehensive loss into earnings during next twelve months
 
 
$ 13,200,000 
 
Derivative designated as hedging |
Foreign exchange derivative contract
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Gain (Loss) Recognized in OCI
(1,549,000)
(1,435,000)
(25,174,000)
5,009,000 
Gain (Loss) Recognized in Statement of Operations
(1,588,000)
5,821,000 
3,500,000 
24,966,000 
Derivative designated as hedging |
Foreign exchange derivative contract |
Cash flow
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Gain (Loss) Recognized in OCI
(1,549,000)
(1,435,000)
(25,174,000)
5,009,000 
Derivative designated as hedging |
Cost of goods sold [Member] |
Foreign exchange derivative contract
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Gain (Loss) Recognized in Statement of Operations
(583,000)
4,360,000 
7,174,000 
21,679,000 
Derivative designated as hedging |
Selling, general and administrative expense [Member] |
Foreign exchange derivative contract
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Gain (Loss) Recognized in Statement of Operations
$ (1,005,000)
$ 1,461,000 
$ (3,674,000)
$ 3,287,000 
Fair Value Measurements - Assets and liabilities at fair value (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Liabilities
 
 
Fair value asset, Transfer between Level 1 to Level 2
$ 0 
 
Fair value asset, Transfer between Level 2 to Level 1
 
Fair value Liabilities, Transfer between Level 1 to Level 2
 
Fair value Liabilities, Transfer between Level 2 to Level 1
 
Level 1
 
 
Assets
 
 
Total assets
14,173 
16,682 
Liabilities
 
 
Total liabilities
1,864 
2,129 
Level 2
 
 
Assets
 
 
Total assets
4,682 
14,614 
Liabilities
 
 
Total liabilities
24,410 
1,596 
Level 3
 
 
Liabilities
 
 
Total liabilities
 
22,884 
Other current assets |
Rabbi trust |
Level 1
 
 
Assets
 
 
Total assets
9,194 
13,111 
Other current assets |
Foreign exchange derivative instruments |
Level 2
 
 
Assets
 
 
Total assets
4,639 
13,824 
Other noncurrent assets |
Rabbi trust |
Level 1
 
 
Assets
 
 
Total assets
3,115 
1,442 
Other noncurrent assets |
Foreign exchange derivative instruments |
Level 2
 
 
Assets
 
 
Total assets
43 
790 
Other noncurrent assets |
Deferred compensation program assets |
Level 1
 
 
Assets
 
 
Total assets
1,864 
2,129 
Other current liabilities |
Foreign exchange derivative instruments |
Level 2
 
 
Liabilities
 
 
Total liabilities
17,973 
1,265 
Other current liabilities |
Common stock warrants |
Level 3
 
 
Liabilities
 
 
Total liabilities
 
22,884 
Other noncurrent liabilities |
Foreign exchange derivative instruments |
Level 2
 
 
Liabilities
 
 
Total liabilities
6,437 
331 
Other noncurrent liabilities |
Deferred compensation program liabilities |
Level 1
 
 
Liabilities
 
 
Total liabilities
$ 1,864 
$ 2,129 
Fair Value Measurements - Reconciliation for liabilities measure at fair value using level 3 (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Reconciliation of Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
 
 
Balance at beginning of period
$ 22,884 
$ 1,818 
Common stock warrant exercise
(28,996)
(7,298)
Total losses included in earnings
6,112 
28,364 
Balance at end of period
 
$ 22,884 
Pension and Other Postretirement Benefits (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Pension Benefits
 
 
 
 
Components of net periodic benefit cost
 
 
 
 
Service cost
$ 3,684 
$ 4,000 
$ 8,593 
$ 12,055 
Interest cost
3,147 
2,991 
9,440 
8,989 
Expected return on plan assets
(3,010)
(2,658)
(9,216)
(7,980)
Amortization of net (gain) loss
(87)
316 
160 
950 
Amortization of prior service cost (credit)
44 
 
131 
 
Net periodic benefit cost (credit)
3,778 
4,649 
9,108 
14,014 
Postretirement Benefits
 
 
 
 
Components of net periodic benefit cost
 
 
 
 
Service cost
158 
264 
658 
794 
Interest cost
160 
197 
583 
591 
Amortization of net (gain) loss
(382)
(124)
(730)
(372)
Amortization of prior service cost (credit)
(42)
(42)
(126)
(127)
Net periodic benefit cost (credit)
$ (106)
$ 295 
$ 385 
$ 886 
Income Taxes (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Income Taxes
 
 
 
 
Increase in income tax expense
$ 4,700,000 
 
$ 7,200,000 
 
Income Tax Expense (Benefit)
$ 440,000 
$ (4,273,000)
$ 39,878,000 
$ 32,646,000 
Effective rates
(9.60%)
24.30% 
44.90% 
58.30% 
Percentage increase in income tax expense
 
 
22.20% 
 
Redeemable Convertible Preferred Stock (Details) (USD $)
Sep. 30, 2016
Dec. 31, 2015
Temporary Equity [Line Items]
 
 
Preferred stock, shares issued (in shares)
1,838,027 
1,838,027 
Preferred stock par value
$ 0.001 
$ 0.001 
Series A Preferred Stock
 
 
Temporary Equity [Line Items]
 
 
Preferred stock, shares issued (in shares)
1,838,027 
1,838,027 
Preferred stock par value
$ 0.001 
$ 0.001 
Equity Incentive Plans (Details) (USD $)
In Millions, except Share data, unless otherwise specified
9 Months Ended 3 Months Ended 6 Months Ended 9 Months Ended 3 Months Ended 6 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended 0 Months Ended
Sep. 30, 2016
Sep. 30, 2016
PSUs
Sep. 30, 2016
PSUs
Sep. 30, 2016
PSUs
Sep. 30, 2016
RSUs
Sep. 30, 2016
RSUs
Sep. 30, 2016
RSUs
Sep. 30, 2016
Omnibus Incentive 2015 Plan [Member]
Jan. 22, 2016
Omnibus Incentive 2015 Plan [Member]
Jan. 22, 2016
Omnibus Incentive 2015 Plan [Member]
Employee Stock option
Minimum
Sep. 30, 2016
Omnibus Incentive 2015 Plan [Member]
PSUs
Jan. 22, 2016
Omnibus Incentive 2015 Plan [Member]
PSUs
Minimum
Sep. 30, 2016
Omnibus Incentive 2015 Plan [Member]
PSUs
Minimum
Sep. 30, 2016
Omnibus Incentive 2015 Plan [Member]
PSUs
Maximum
Sep. 30, 2016
Omnibus Incentive 2015 Plan [Member]
RSUs
Aug. 9, 2016
Omnibus Incentive 2015 Plan [Member]
RSUs and PSUs
Jun. 15, 2016
Omnibus Incentive 2015 Plan [Member]
RSUs and PSUs
Jan. 22, 2016
Omnibus Incentive 2015 Plan [Member]
Incentive stock options
Minimum
Unit-Based Compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share reserved for issuance
 
 
 
 
 
 
 
 
8,190,000 
 
 
 
 
 
 
 
 
 
Options exercise price as a percentage of fair value of common stock
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
110.00% 
Ownership percentage of stockholder
 
 
 
 
 
 
 
 
 
 
 
10.00% 
 
 
 
 
 
 
Term of award
 
 
 
 
 
 
 
 
 
 
P3Y 
P10Y 
 
 
 
 
 
P5Y 
Fair Value of grant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 3.8 
$ 45.8 
 
Percentage of awards granted
 
 
 
 
 
 
 
 
 
 
50.00% 
 
 
 
50.00% 
 
 
 
Awards earned as percentage of specified compensation
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
200.00% 
 
 
 
 
Percentage of share repurchase
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
Repurchase exercise period
 
 
 
 
 
 
 
60 days 
 
 
 
 
 
 
 
 
 
 
Number of shares of common stock that may be subject to repurchase unless they have been held by the award holder for at least six months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Threshold period for shares that may be subject to repurchase
 
 
 
 
 
 
 
6 months 
 
 
 
 
 
 
 
 
 
 
Vested (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation expense
 
22.0 
22.0 
22.0 
20.4 
20.4 
20.4 
 
 
 
 
 
 
 
 
 
 
 
Weighted average period
2 years 2 months 12 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation expense
 
$ 2.4 
$ 2.8 
 
$ 3.8 
$ 4.4 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2016
Foreign Currency Translation Adjustments
Sep. 30, 2016
Gains (Losses) on Foreign Exchange Derivative Instruments
Sep. 30, 2016
Gains on Available- for-Sale Securities
Sep. 30, 2016
Pension and other Postretirement Adjustments
Sep. 30, 2016
Accumulated Other Comprehensive loss
Balance at the beginning of the period
$ (73,001)
$ (67,234)
$ (70,019)
$ 9,166 
$ 1,504 
$ (7,885)
$ (67,234)
Other comprehensive income (loss) before reclassifications
 
 
14,124 
(13,806)
131 
1,523 
1,972 
Amounts reclassified from accumulated other comprehensive loss
 
 
 
(7,174)
 
(565)
(7,739)
Balance at the end of the period
$ (73,001)
$ (67,234)
$ (55,895)
$ (11,814)
$ 1,635 
$ (6,927)
$ (73,001)
Net Income per Common Share - Computation of basic and diluted net income per common share (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Net Income per Common Share
 
 
 
 
Net income (loss) attributable to Acushnet Holdings Corp.
$ (6,167)
$ (13,987)
$ 45,902 
$ 19,469 
Less: dividends paid on redeemable convertible preferred stock
(1,168)
(1,133)
(8,023)
(8,007)
Redeemable Preferred Stock Dividends
1,168 
1,133 
8,023 
8,007 
Less: accruing of cumulative dividends
(2,297)
(2,304)
(2,297)
(2,304)
Less: allocation of undistributed earnings to preferred shareholders
 
 
(15,071)
(4,231)
Net income (loss) attributable to common shareholders - basic
(9,632)
(17,424)
20,511 
4,927 
Adjustments to net income for dilutive securities
 
 
17,046 
 
Net income (loss) attributable to common shareholders - diluted
$ (9,632)
$ (17,424)
$ 37,557 
$ 4,927 
Weighted average number of common shares:
 
 
 
 
Basic
23,880,191 
20,678,237 
22,512,577 
19,268,395 
Diluted
23,880,191 
20,678,237 
55,203,829 
19,334,325 
Net income (loss) per common share attributable to Acushnet Holdings Corp.:
 
 
 
 
Basic
$ (0.40)
$ (0.84)
$ 0.91 
$ 0.26 
Diluted
$ (0.40)
$ (0.84)
$ 0.68 
$ 0.25 
Net Income per Common Share - Calculation of diluted weighted average common shares outstanding (Details)
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Series A preferred stock
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
16,542,243 
16,542,243 
Common stock warrants
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
 
3,105,279 
Convertible notes
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
 
32,624,820 
Segment Information (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
item
Sep. 30, 2015
Segment Reporting Information [Line Items]
 
 
 
 
Number of reportable segments
 
 
 
Total Net Sales
$ 332,353 
$ 319,868 
$ 1,235,348 
$ 1,182,742 
Total segment operating income
11,046 
11,094 
145,119 
148,489 
Reconciling items:
 
 
 
 
Interest expense
(15,672)
(17,563)
(44,076)
(48,093)
EAR expense
 
(10,423)
 
(33,088)
EAR expense, adjustment
940 
 
940 
 
Loss on fair value of common stock warrants
 
243 
(6,112)
(14,535)
Total income (loss) before income taxes
(4,603)
(17,571)
88,857 
55,962 
Titleist golf balls
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Net Sales
119,079 
126,042 
415,328 
430,707 
Total segment operating income
17,326 
19,266 
69,679 
78,617 
Titleist golf clubs
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Net Sales
74,283 
67,279 
314,579 
287,810 
Total segment operating income
(7,527)
(8,422)
29,962 
24,907 
Titleist golf gear
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Net Sales
30,499 
28,995 
114,833 
105,180 
Total segment operating income
832 
889 
15,448 
12,707 
FootJoy golf wear
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Net Sales
97,758 
90,941 
361,788 
340,101 
Total segment operating income
(524)
(739)
25,242 
31,121 
Other
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Total Net Sales
10,734 
6,611 
28,820 
18,944 
Total segment operating income
939 
100 
4,788 
1,137 
Reconciling items:
 
 
 
 
Other
$ (917)
$ (922)
$ (7,014)
$ 3,189 
Commitments and Contingencies (Details) (USD $)
0 Months Ended 9 Months Ended
Jun. 21, 2016
Sep. 30, 2016
Remainder of 2016
 
$ 137,305,000 
2017
 
38,469,000 
2018
 
15,875,000 
2019
 
1,884,000 
2020
 
1,456,000 
Thereafter
 
4,748,000 
Lessor Leasing Arrangements, Operating Leases, Term of Contract
 
1 year 
Lessor Leasing Arrangements, Operating Leases, Renewal Term
 
5 years 
Cost (in percentage)
 
20.00% 
Deprecated Value (in percentage)
 
20.00% 
Loss Contingency, Receivable
 
9,900,000 
Loss Contingency, Receivable, Current
 
1,200,000 
Loss Contingency, Receivable, Noncurrent
 
8,700,000 
Litigation Settlement, Amount
972,288 
 
Litigation Settlement Interest
494,859 
 
Collectibility of receivables
 
 
Loss Contingency, Receivable
 
$ 16,600,000 
Subsequent Events (Details) (Subsequent event)
0 Months Ended
Oct. 14, 2016
Subsequent event
 
Subsequent Event [Line Items]
 
Stock split