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What changed in Acushnet Holdings Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Acushnet Holdings Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+418 added−409 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Acushnet Holdings Corp.'s 2023 10-K

418 paragraphs added · 409 removed · 344 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

85 edited+13 added−10 removed104 unchanged
Biggest changeTitleist golf gear accounted for net sales of $204.9 million, $192.6 million and $149.4 million for the years ended December 31, 2022, 2021 and 2020, respectively, in each case representing approximately 10% of our total net sales. FootJoy FootJoy is one of golf’s leading performance wearable brands, which consists collectively of golf shoes, gloves and apparel.
Biggest changeFootJoy FootJoy is one of golf’s leading performance wearable brands, which consists collectively of golf shoes, gloves and apparel. Net sales of FootJoy products for the years ended December 31, 2023, 2022 and 2021 were $596.4 million, $618.0 million and $580.6 million, respectively, representing approximately 25% of our total net sales in 2023.
In addition, our expanding eCommerce presence is expected to yield incremental sales and profitability, as well as to foster a deeper and more real time connection with dedicated golfers. 2 Table of Contents Market Overview and Opportunity Market Overview While rounds of play had been relatively stable for years, the game experienced an approximate 8% global increase in rounds in both 2021 and 2020 as dedicated golfers took full advantage of favorable weather, hybrid work schedules and an increase in discretionary time due to the circumstances attendant to the COVID-19 pandemic.
In addition, our expanding eCommerce presence is expected to yield incremental sales and profitability, as well as to foster a deeper and more real time connection with dedicated golfers. 2 Table of Contents Market Overview and Opportunity Market Overview While rounds of play had been relatively stable for years, the game experienced an approximate 8% global increase in rounds in both 2020 and 2021 as dedicated golfers took full advantage of favorable weather, hybrid work schedules and an increase in discretionary time due to the circumstances attendant to the COVID-19 pandemic.
In early 2023, we launched new Pro V1 and Pro V1x models with advancements in core technology to amplify the high flex casing layer, soft cast thermoset urethane cover, and advanced aerodynamics. The 2023 models maintained their differences in flight, feel and spin.
In early 2023, we launched new Pro V1 and Pro V1x models with advancements in core technology to amplify the high flex casing layer, soft cast thermoset urethane cover and advanced aerodynamics. The 2023 models maintained their differences in flight, spin and feel.
Through partnerships with the medical community and Acushnet HealthWise Coaches, associates gain access to high quality health and wellness services. Associates receive incentives for healthy behaviors, which include up to a 30% surcharge avoidance for healthcare benefits. HealthWise is based on 4 pillars: prevention, education, nutrition & fitness, and volunteerism.
Through partnerships with the medical community and Acushnet HealthWise Coaches, associates gain access to high quality health and wellness services. Associates receive incentives for healthy behaviors, which include up to a 30% surcharge avoidance for healthcare benefits. HealthWise is based on 4 pillars: prevention, education, nutrition and fitness, and volunteerism.
As a long‑time industry participant and market leader, we are well‑positioned to continue to outperform the market in a rules constrained environment. Employees and Human Capital Resources Acushnet's associates and our enduring culture are two key elements of our success. Guided by our strong corporate values, Acushnet’s associates are a key source of competitive advantage.
As a long‑time industry participant and market leader, we believe we are well‑positioned to continue to outperform the market in a rules constrained environment. Employees and Human Capital Resources Acushnet's associates and our enduring culture are two key elements of our success. Guided by our strong corporate values, Acushnet’s associates are a key source of competitive advantage.
ITEM 1. BUSINESS Overview We are the global leader in the design, development, manufacture and distribution of performance‑driven golf products, which are widely recognized for their quality excellence. Our mission—to be the performance and quality leader in every golf product category in which we compete—has remained consistent since we entered the golf ball business in 1932.
ITEM 1. BUSINESS Overview We are the global leader in the design, development, manufacture and distribution of performance‑driven golf products, and these products are widely recognized for their quality excellence. Our mission—to be the performance and quality leader in every golf product category in which we compete—has remained consistent since we entered the golf ball business in 1932.
We also intend to continue to develop and offer concept and limited edition products to showcase advanced technologies and we intend to continue to dedicate the resources necessary to ensure that Titleist drivers, fairways, hybrids and irons, Vokey Design wedges and Scotty Cameron putters remain golf's leaders in performance, technology, craftsmanship and selection. • FootJoy Footwear .
We also intend to continue to develop and offer limited edition products to showcase advanced technologies and we intend to continue to dedicate the resources necessary to ensure that Titleist drivers, fairways, hybrids and irons, Vokey Design wedges and Scotty Cameron putters remain golf's leaders in performance, technology, craftsmanship and selection. • FootJoy Footwear .
Titleist golf gear products are designed and engineered using premium materials, with a focus on delivering performance excellence with function and style. We seek to provide and continually evolve our customization and personalization opportunities across the product portfolio of Titleist golf gear in order to meet the needs of the dedicated players.
Titleist golf gear products are designed and engineered using premium materials, with a focus on delivering quality and performance excellence with function and style. We seek to provide and continually evolve our customization and personalization opportunities across the product portfolio of Titleist golf gear in order to meet the needs of the dedicated players.
We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game’s best players.
We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the world's best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game’s best players.
Complementing Pro V1 and Pro V1x is another high performance golf ball, Pro V1x Left Dash. Introduced in 2019, Pro V1x Left Dash meets the performance needs of a select group of players seeking high flight with even lower long game spin than Pro V1x.
Complementing Pro V1 and Pro V1x is another high performance golf ball, Pro V1x Left Dash. Introduced in 2019, Pro V1x Left Dash meets the performance needs of a select group of players seeking high flight with even lower long game spin than both Pro V1 and Pro V1x.
As a result, we have built an industry leading platform across all performance product categories, driving a market‑differentiating mix of consumable products, which we consider to be golf balls and golf gloves, which collectively represented nearly 40% of our net sales in 2022, and more durable products, which we consider to be golf clubs, golf shoes, golf apparel and golf gear, which collectively represented over 60% of our net sales in 2022.
As a result, we have built an industry leading platform across all performance product categories, driving a market‑differentiating mix of consumable products, which we consider to be golf balls and golf gloves, which collectively represented nearly 40% of our net sales in 2023, and more durable products, which we consider to be golf clubs, golf shoes, golf apparel and golf gear, which collectively represented over 60% of our net sales in 2023.
We are committed to providing dedicated golfers with golf gear—including golf bags, headwear, gloves, travel gear, head covers and other accessories—of performance and quality excellence that is faithful to the Titleist brand promise. We continue to make investments in design and engineering resources and leverage dedicated player insights to drive product excellence in these product categories. • FootJoy Apparel .
We are committed to providing dedicated golfers with golf gear—including golf bags, headwear, gloves, travel gear and other accessories—of performance and quality excellence that is faithful to the Titleist brand promise. We continue to make investments in design and engineering resources and leverage dedicated player insights to drive product excellence in these product categories. • FootJoy Apparel .
Building upon this reputation, KJUS entered the golf outerwear and lifestyle apparel markets with a focus on freedom of movement, temperature regulation and all-weather protection to enhance performance. As a result, KJUS has achieved an enthusiastic following with performance-minded golfers and a premium positioning at leading golf shops worldwide.
Building upon this reputation, KJUS entered the golf outerwear and lifestyle apparel markets with a focus on freedom of movement, temperature regulation and all-weather protection to enhance performance. As a result, KJUS has achieved an enthusiastic following with performance-minded golfers and a premium positioning at many leading golf shops.
We continue to invest in design and innovation to bring golf-specific performance advancements to the footwear category. We launched several new models in 2022, and we plan to continue to enrich our consumer connection initiatives with digital content, product trial and fit experiences in key global markets. Increase Penetration in Golf Gear and Wear Categories.
We continue to invest in design and innovation to bring golf-specific performance advancements to the footwear category. We launched several new models in 2023, and we plan to continue to enrich our consumer connection initiatives with digital content, product trial and fit experiences in key global markets. Increase Penetration in Golf Gear and Wear Categories.
On October 12, 2021, the Governing Bodies announced that a new Model Local Rule will be available beginning on January 1, 2022 to provide those running professional or elite amateur golf competitions the option of limiting the maximum length of a golf club (excluding putters) to 46 inches.
On October 12, 2021, the Governing Bodies announced that a new Model Local Rule would be available beginning on January 1, 2022 to provide those running professional or elite amateur golf competitions the option of limiting the maximum length of a golf club (excluding putters) to 46 inches.
In 2011, FootJoy entered the apparel market with a full line of performance golf apparel and has become one of the leading brands in the U.S., Europe, Korea and other major markets globally. KJUS In July 2019, we acquired KJUS, a Swiss-based manufacturer of premium performance ski, golf and lifestyle apparel.
In 2011, FootJoy entered the apparel market with a full line of performance golf apparel and has become one of the leading brands in the U.S., Europe, Korea and other major markets globally. KJUS In July 2019, we acquired KJUS, a Swiss-born manufacturer of premium performance ski, golf and lifestyle apparel.
Today, we are the steward of two of the most revered brands in golf—Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wearable brands. Titleist has been the #1 ball in professional golf for over 70 years and FootJoy has been the #1 shoe on the PGA Tour for over seven decades.
Today, we are the steward of two of the most revered brands in golf—Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wearable brands. Titleist has been the #1 ball in professional golf for over 75 years and FootJoy has been the #1 shoe on the PGA Tour for over seven decades.
We believe strongly in deep moments of collaboration and connection which drive our long history of innovation, and the workplace strategy should support those goals. Our workplace experience will optimize time spent in-office by ideating, creating and connecting with peers.
We believe strongly in deep moments of collaboration and connection that drive our long history of innovation, and the workplace strategy should support those goals. Our workplace experience will optimize time spent in-office by ideating, creating and connecting with peers.
In development for over two years, these products showcase the technological capabilities of the Titleist Ball R&D and Operations teams. Pro V1 RCT is engineered to deliver the most accurate golf ball data on indoor radar-based launched monitors and was validated in collaboration with a team of fitting experts.
In development for over two years, these products showcase the technological capabilities of the Titleist Ball R&D and Operations teams. Pro V1 and Pro V1x RCT are engineered to deliver the most accurate golf ball data on indoor radar-based launched monitors and was validated in collaboration with a team of fitting experts.
Hence, golf shoes require extensive knowledge and expertise in foot morphology, walking and swing biomechanics, material science and application and sophisticated manufacturing and construction techniques. 7 Table of Contents Golf shoes are also a style and fashion driven category. FootJoy offers a large assortment of styles to suit the needs and tastes of all golfers.
Hence, golf shoes require extensive knowledge and expertise in foot morphology, walking and swing biomechanics, material science and application and sophisticated manufacturing and construction techniques. Golf shoes are also a style and fashion driven category. FootJoy offers a large assortment of styles to suit the needs and tastes of all golfers.
We seek to foster a culture where all associates can bring their complete, authentic self to work and we aspire to increase the diversity of our associate population globally. Our Diversity, Inclusion and Belonging strategy and initiatives are guided by an associate-led Council, consisting of associates from all facets of the Company.
We seek to foster a culture where all associates 12 Table of Contents can bring their complete, authentic self to work and we aspire to increase the diversity of our associate population globally. Our Diversity, Inclusion and Belonging strategy and initiatives are guided by an associate-led Council, consisting of associates from all facets of the Company.
We strive to strengthen our sell-in and sell-through route to market capabilities by focusing on enhancing our sales team's skills, supporting trade partners in those channels where dedicated golfers shop, investing in digital channel opportunities, and educating golfers on Titleist golf ball performance and quality excellence.
We strive to strengthen our sell-in and sell-through route to market capabilities by focusing on enhancing our sales team's skills, supporting trade partners in those channels where dedicated golfers shop, investing in digital channel opportunities, expanding golf ball fitting networks, and educating golfers on Titleist golf ball performance and quality excellence.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Factors Affecting our Results of Operations – Product Life Cycles,” Item 7 of Part II to this report, for further information surrounding our product launch cycles. Manufacturing Our manufacturing processes and management of supply chain operations ensure consistency of product performance and quality.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Factors Affecting our Results of Operations – Product Life Cycles,” Item 7 of Part II to this report, for further information surrounding our product launch cycles. 8 Table of Contents Manufacturing Our manufacturing processes and management of supply chain operations ensure consistency of product performance and quality.
We own and operate the largest golf glove manufacturing operation in the world in Chonburi, Thailand, where we manufacture both FootJoy and Titleist golf gloves. The factory produces over 14 million FootJoy and Titleist gloves annually.
We own and operate the largest golf glove manufacturing operation in the world in Chonburi, Thailand, where we manufacture both FootJoy and Titleist golf gloves. The factory produces over 13 million FootJoy and Titleist gloves annually.
Titleist introduced apparel in Korea, Japan and China with a focus on innovative performance and styling which is specifically designed for these markets using localized go-to-market strategies. We continue to invest in innovative designs and performance fabrics to bring advancements to the apparel category in the markets where Titleist apparel is sold. • Links & Kings.
Titleist introduced apparel in Korea, Japan and China with a focus on innovative performance and styling which is specifically designed for these markets using localized go-to-market strategies. We continue to invest in innovative designs and performance fabrics to bring advancements to the apparel category in the markets where Titleist apparel is sold. • KJUS Outerwear and Apparel.
As a result, we have strong patent positions across our product categories and innovation spaces in which we operate, and have become the leader in obtaining golf ball and golf club patents worldwide. In addition, we believe we have more combined golf shoe and golf glove utility patents than all competitors combined.
As a result, we have strong patent positions across our product categories and innovation spaces in which we operate, and have become the leader in obtaining golf ball and golf club patents worldwide. In addition, we believe we have more 10 Table of Contents combined golf shoe and golf glove utility patents than all competitors combined.
We believe that dedicated golfers are generally the most consistent purchasers of golf products, as we believe they are the most discerning and most likely to invest in premium performance equipment and golf wear. 1 Table of Contents Product Platform Leveraging the success of our golf ball and golf shoe businesses, while maintaining the core values of the Titleist and FootJoy brands, we have strategically entered into product categories such as golf clubs, wedges, putters, golf gloves, golf gear and golf wear with an objective of being the performance and quality leader.
We believe that dedicated golfers are generally the most consistent purchasers of golf products, as we believe they are the most discerning and most likely to invest in premium performance equipment and golf wear. 1 Table of Contents Product Platform Leveraging the success of our golf ball and golf shoe businesses, while maintaining the core values of the Titleist and FootJoy brands, we have strategically entered into product categories such as golf clubs, wedges, putters, golf gloves, golf gear and golf wear.
Acushnet aspires to be a high achieving workforce by providing a workplace that inspires connection, innovation and excellence in performance. As a result, we have recently shifted to a hybrid flexibility model, designed to balance the needs of the role with the flexibility associates desire.
Acushnet aspires to be a high achieving workforce by providing a workplace that inspires connection, innovation and excellence in performance. As a result, we utilize a hybrid flexibility model, designed to balance the needs of the role with the flexibility associates desire.
We are committed to continuous improvement and each R&D team is tasked with developing technology that will deliver better quality and performance products in each generation. For the years ended December 31, 2022, 2021 and 2020 we invested $56.4 million, $55.3 million and $48.9 million, respectively, in R&D.
We are committed to continuous improvement and each R&D team is tasked with developing technology that will deliver better quality and performance products in each generation. For the years ended December 31, 2023, 2022 and 2021 we invested $64.8 million, $56.4 million and $55.3 million, respectively, in R&D.
Our second‑quarter sales are significantly affected by the amount of sell‑through, in particular the amount of higher value discretionary purchases made by customers, which drives the level of reorders of the products sold during the first quarter.
This initial sell‑in generally continues into the second quarter. Our second‑quarter sales are significantly affected by the amount of sell‑through, in particular the amount of higher value discretionary purchases made by customers, which drives the level of reorders of the products sold during the first quarter.
Titleist golf bags are used on professional tours throughout the world and are relied upon by players globally to support their game. In 2023, we plan to introduce our all-new Titleist Players Stand Bag collection, continuing the momentum of this leading bag franchise sold by leading golf courses across the globe.
Titleist golf bags are used on professional tours around the world and are relied upon by players globally to support their game. In 2024, we plan to introduce new colorways to our recently launched all-new Titleist Players Stand Bag collection, continuing the momentum of this leading bag franchise sold by leading golf courses across the globe.
We have different models within each category to address the distinct performance needs of our dedicated golfer target audience. Net sales of Titleist golf clubs, wedges and putters for the years ended December 31, 2022, 2021 and 2020 were $609.6 million, $551.5 million, and $418.4 million, respectively, in each case representing approximately 25% of our total net sales.
We have different models within each category to address the distinct performance needs of our dedicated golfer target audience. Net sales of Titleist golf clubs, wedges and putters for the years ended December 31, 2023, 2022 and 2021 were $658.6 million, $609.6 million and $551.5 million, respectively, representing approximately 28% of our total net sales in 2023.
Beyond the gen‑x and baby boomer generation, promising developments in golf include the generational shift with millennial golfers making their marks at both professional and amateur levels and, in 2022, accounting for 25% of golfers overall in the U.S., and the increase in the number of juniors (ages 6-17) who play golf in recent years. Dedicated Golfers.
Beyond the gen‑x and baby boomer generation, promising developments in golf include the generational shift with millennial golfers making their marks at both professional and amateur levels, and the increase in the number of juniors (ages 6-17) who play golf in recent years. Dedicated Golfers.
We operate under the following four reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear, which represented approximately 30%, 27%, 9% and 27%, respectively, of net sales in 2022. For further information surrounding the principal products of each reportable segment, see “Our Products” further below.
We operate under the following four reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear and FootJoy golf wear, which represented approximately 32%, 28%, 9% and 25%, respectively, of net sales in 2023. For further information surrounding the principal products of each reportable segment, see “Our Products” further below.
The golf industry has been principally driven by the age cohort of 30 years and above, primarily “gen‑xers,” “baby boomers” and, increasingly, "millennials" who have the time and money to engage in the sport.
Golf is a recreational activity that requires time and money. The golf industry has been principally driven by the age cohort of 30 years and above, primarily “gen‑xers,” “baby boomers” and, increasingly, "millennials" who have the time and money to engage in the sport.
On the 2022 worldwide professional tours, Titleist golf balls account for 74% of all golf balls used, over seven times more than the nearest competitor. In November 2021, we introduced Pro V1 and Pro V1x RCT golf balls. RCT stands for "Radar Capture Technology," a proprietary, patent-pending technology.
On the 2023 worldwide professional tours, Titleist golf balls account for 73% of all golf balls used, over seven times more than the nearest competitor. In November 2021, we introduced Pro V1 and Pro V1x RCT golf balls. RCT stands for "Radar Capture Technology," a proprietary, patented technology.
In total, we offer 25 unique loft, sole grind and bounce combinations and four unique finishes to create golf’s most complete wedge product performance range. In addition, Vokey’s online Wedgeworks program promotes limited edition models and allows golfers to customize and personalize their wedges. Vokey Design wedges are the most played wedges by tour professionals.
In total, we offer 25 unique loft, sole grind and bounce combinations and four unique finishes to create golf’s most complete wedge product performance range. In addition, Vokey’s online Wedgeworks program promotes limited edition models and allows golfers to customize and personalize their wedges.
Approximately sixty percent (60%) of our associates are in manufacturing roles across our global manufacturing footprint and approximately fifty-three percent (53%) of our global associates are women. We strive to cultivate the skills, knowledge, and experiences in our associates that enable Acushnet to continue its leadership in performance and product quality.
Approximately fifty-six percent (56%) of our associates are in manufacturing roles across our global manufacturing footprint and approximately fifty percent (50%) of our global associates are women. We strive to cultivate the skills, knowledge and experiences in our associates that enable Acushnet to continue its leadership in performance and product quality.
We expect to continue to enhance our associates' experience by listening to our associates, incorporating leading ideas and best practices and working to enhance our associates’ experience. Long-term associate retention starts with a focus on the safety, health and well-being of our associates.
We expect to continue to enhance our associates' experiences by investing in learning and development, listening to our associates and incorporating leading ideas and best practices. Long-term associate retention starts with a focus on the safety, health and well-being of our associates.
In the third quarter of 2019, we acquired KJUS, a brand which designs premium technical golf, ski and lifestyle apparel with distinctive, clean designs. KJUS entered the golf outerwear and apparel markets less than a decade ago with a focus on freedom of movement, temperature regulation and all-weather protection to enhance performance.
KJUS designs premium technical golf, ski and lifestyle apparel with distinctive, clean designs. KJUS entered the golf outerwear and apparel markets less than a decade ago with a focus on freedom of movement, temperature regulation and all-weather protection to enhance performance.
We also introduce new product innovations at a cadence that we believe best aligns with the typical dedicated golfer’s replacement cycle within each product category. Operational Excellence The requirements of the game lead the dedicated golfer to seek out products of superior performance and consistency. We own or control the design, sourcing, manufacturing, packaging and distribution of our products.
We also introduce new product innovations at a cadence that we believe best aligns with the typical dedicated golfer’s replacement cycle within each product category. Operational Excellence The requirements of the game lead the dedicated golfer to seek out products of superior performance and consistency.
Net sales of Titleist golf balls for the years ended December 31, 2022, 2021 and 2020 were $678.8 million, $667.6 million, and $507.8 million, respectively, in each case representing approximately 30% of our total net sales.
Net sales of Titleist golf balls for the years ended December 31, 2023, 2022 and 2021 were $761.7 million, $678.8 million and $667.6 million, respectively, in each case representing approximately 32% of our total net sales.
In the golf gear market, there are numerous competitors in each product category and geographical market. Titleist golf gear generally competes on the basis of quality, performance, styling and customer service. FootJoy’s significant worldwide competitors in golf shoes include Nike, Adidas and Ecco.
In the golf gear market, there are numerous competitors in each product category and geographical market. Titleist golf bags, headwear, gloves, travel gear and accessories each compete on the basis of quality, performance, styling and customer service. FootJoy’s significant worldwide competitors in golf shoes include Nike, Adidas and Ecco.
Our strategy is to deliver equipment that is superior in performance and quality, validated by the pyramid of influence. It is best‑in‑class performance and quality products that earn and maintain dedicated golfers’ loyalty and trust. Our marketing strategy, developed and refined over many years, is to reinforce this loyalty and trust, driving connectivity with our brands.
It is best‑in‑class performance and quality products that earn and maintain dedicated golfers’ loyalty and trust. Our marketing strategy, developed and refined over many years, is to reinforce this loyalty and trust, driving connectivity with our brands.
Our 620 MB and CB irons are classic, fully forged blade type irons largely preferred by highly skilled golfers. Vokey Design Wedges Bob Vokey champions the Titleist wedge effort by creating high performance wedges to meet the demands of dedicated golfers and the best players in the world.
Our 620 MB and CB irons are classic, fully forged blade type irons largely preferred by highly skilled golfers. Vokey Design Wedges Bob Vokey and his team of design and fitting experts create high performance wedges to meet the demands of dedicated golfers and the best players in the world.
Engagement with associates at all levels is driven through open discussion, listening and engagement surveys. Survey results continue to demonstrate that associate engagement is strong, driven by what we believe to 12 Table of Contents be a strong sense of belonging within the Company and good opportunities to learn and grow.
Engagement with associates at all levels is driven through open discussion, listening and engagement surveys. Survey results continue to demonstrate that associate engagement is strong, driven by what we believe to be a strong sense of belonging within the Company and excitement for the future.
We intend to continue to invest in design and innovation to deliver advancements in KJUS outerwear and apparel. Strategically Pursue Global Growth. While our brands are global, we believe that near‑term growth will be primarily driven by more established golf markets, such as the United States, Japan, Korea and EMEA. However, less mature golf markets also represent longer‑term growth opportunities.
Strategically Pursue Global Growth. While our brands are global, we believe that near‑term growth will be primarily driven by more established golf markets, such as the United States, Japan, Korea and EMEA. However, less mature golf markets also represent longer‑term growth opportunities.
In 2018, we acquired Links & Kings, a brand focused on the design and handcrafted production of luxury leather golf and lifestyle products. We intend to increase sales of Links & Kings products by increasing production capacity and leveraging our existing distribution channels. • KJUS Outerwear and Apparel.
We intend to continue to invest in design and innovation to deliver advancements in KJUS outerwear and apparel. • Links & Kings. Links & Kings focuses on the design and handcrafted production of luxury leather golf and lifestyle products. We intend to increase sales of Links & Kings products by increasing production capacity and leveraging our existing distribution channels.
The majority of custom imprinting is done for 5 Table of Contents corporate logos, as there has long been a strong connection between the business community and golf. We estimate custom golf ball sales represent, on average, between 25 - 30% of our global net golf ball sales.
Our service includes design capabilities, special packaging options and fast turnaround times. The majority of custom imprinting is done for corporate logos, as there has long been a strong connection between the business community and golf. We estimate custom golf ball sales represent, on average, between 25 - 30% of our global net golf ball sales.
Scotty Cameron encourages a selection process that identifies the putter length, toe flow and appearance to deliver proper balance, shaft flex and feel to golfers and to encourage proper technique.
Scotty Cameron encourages a selection process that identifies the putter length, toe flow and appearance to deliver proper balance, shaft flex and feel to golfers and to encourage proper technique. Scotty Cameron putters consist of a range of products for each of these key selection criteria.
We also have enjoyed success with our LINKSLEGEND Series of premium golf bags that launched in the Fall of 2022 at leading clubs around the world. Titleist Golf Headwear Titleist Golf Headwear is recognized on the professional golf tours globally.
We also have enjoyed continued success with our LINKSLEGEND Series of premium golf bags accented by seasonal color drops at leading clubs around the world. Titleist Golf Headwear Titleist Golf Headwear is recognized on the professional golf tours globally.
Since its introduction in 2000, the Titleist Pro V1 has been the best-selling golf ball globally.
Since its introduction in 2000, the Titleist Pro V1 has been the most played ball on the global professional tours and the best-selling golf ball globally.
The game of golf remained in high demand in 2022, with the number of rounds played approximately 16% higher than the number of rounds played in 2019. We anticipate that rounds of golf played will remain resilient in 2023, driven by golfer demographics, dedicated golfers and economic conditions. Golfer Demographics. Golf is a recreational activity that requires time and money.
Golf remained in high demand in 2022 and 2023, with the number of rounds played in the U.S. approximately 16% and 20% higher, respectively, than the number of rounds played in 2019. We anticipate that rounds of golf played will remain resilient in 2024, driven by golfer demographics, dedicated golfers, increased participation and economic conditions. Golfer Demographics.
The Pinnacle brand completes the Acushnet golf ball portfolio with its two major models, Rush and Soft. Competing in the price segment, the Pinnacle brand allows the Titleist brand to focus on the premium performance and performance segments of the market.
All Titleist golf balls feature unique aerodynamic dimple patterns and industry leading quality standards. 5 Table of Contents The Pinnacle brand completes the Acushnet golf ball portfolio with its two major models, Rush and Soft. Competing in the price segment, the Pinnacle brand allows the Titleist brand to focus on the premium performance and performance segments of the market.
The golf shoe category is one of the most demanding of all wearables, as golf shoes must perform in all weather conditions, including extreme temperature and moisture exposure; be resistant to pesticides and fungicides; withstand frequent usage and extensive rounds of play; and provide consistent comfort, support and protection to the golfer in an average of over five miles in a walked round.
With an exclusive focus on golf, FootJoy shoes are designed, developed and manufactured for all golfers across multiple golf shoe categories, including modern classics, technical performance, casual and athletic. 7 Table of Contents The golf shoe category is one of the most demanding of all wearables, as golf shoes must perform in all weather conditions, including extreme temperature and moisture exposure; be resistant to pesticides and fungicides; withstand frequent usage and extensive rounds of play; and provide consistent comfort, support and protection to the golfer in an average of over five miles in a walked round.
For the year ended December 31, 2022, we recorded net sales of $2,270.3 million, net income attributable to Acushnet Holdings Corp. of $199.3 million and Adjusted EBITDA of $338.4 million.
For the year ended December 31, 2023, we recorded net sales of $2,382.0 million, net income attributable to Acushnet Holdings Corp. of $198.4 million and Adjusted EBITDA of $376.1 million.
This rule change will not apply to most golfers until January 1, 2024. It was implemented on professional tours beginning in 2010 and was implemented in elite amateur competitions beginning in 2014. All products manufactured after December 31, 2010 must comply with the new groove specifications.
It was implemented on professional tours beginning in 2010 and was implemented in elite amateur competitions beginning in 2014. All products manufactured after December 31, 2010 must comply with the new groove specifications.
In 2022, we filed over 200 U.S. patent applications and over 400 worldwide. 10 Table of Contents We own or license a large portfolio of trademarks, including for Titleist, Pro V1, Pro V1x, AVX, Union Green, Pinnacle, AP1, AP2, TSR, T Series, CNCPT, Vokey Design, Scotty Cameron, the Circle T Design, FootJoy, FJ, DryJoys, HyperFlex, StaSof, ProDry, MyJoys, Club Glove and KJUS.
We own or license a large portfolio of trademarks, including for Titleist, Pro V1, Pro V1x, AVX, Pinnacle, AP1, AP2, TSR, T Series, CNCPT, Vokey Design, Scotty Cameron, the Circle T Design, FootJoy, FJ, DryJoys, HyperFlex, StaSof, ProDry, MyJoys, MyTPI, TPI, Titleist Performance Institute, Club Glove and KJUS.
Many new regulations on golf balls and golf clubs have been introduced in the past 25 years, which we believe was one of the most active periods for golf equipment regulation in the history of golf.
Many new regulations on golf balls and golf clubs have been introduced in the past 25 years, which we believe has been one of the most active periods for golf equipment regulation in the history of golf. Golf Balls Historically, the Rules of Golf have regulated golf ball size, weight, spherical symmetry, initial velocity and overall distance.
A rule change to allow greater adjustability in golf clubs went into effect on January 1, 2008. In August 2008, the Governing Bodies adopted a rule change further restricting golf club grooves by reducing the groove volume and limiting the groove edge angle allowable on irons and wedges.
In August 2008, the Governing Bodies adopted a rule change further restricting golf club grooves by reducing the groove volume and limiting the groove edge angle allowable on irons and wedges. This rule change did not apply to most golfers until January 1, 2024.
Titleist Golf Gear Titleist Golf Gear is a matrix of distinct categories across golf bags, headwear, golf gloves, travel products, headcovers and other golf accessories. We participate in golf categories where the dedicated player expects us to be and provide dedicated players with products of performance and quality excellence faithful to the Titleist brand promise.
We participate in golf product categories where the dedicated player expects us to be and provide dedicated players with products of performance and quality excellence faithful to the Titleist brand promise.
We have nearly 900 active U.S. utility patents in golf balls, nearly 500 active U.S. utility patents in golf clubs, wedges and putters and nearly 350 active patents in golf shoes and gloves worldwide.
We have over 850 active U.S. utility patents in golf balls, over 500 active U.S. utility patents in golf clubs, wedges and putters and over 425 worldwide patents in golf shoes and gloves. In 2023, we filed nearly 250 U.S. patent applications and nearly 400 worldwide.
As of December 31, 2022, we employed over 7,300 associates worldwide. The addition of over 800 associates in 2022 was necessary to meet the demand for our products. Reflecting our truly global organization, over 2,800 of our associates are located in the Americas, over 600 are located in EMEA, and over 3,700 are located in Asia Pacific.
As of December 31, 2023, we employed approximately 7,300 associates worldwide. Reflecting our truly global organization, approximately 3,100 of our associates are located in the Americas, over 600 are located in EMEA and approximately 3,500 are located in Asia Pacific.
In doing so, we are able to exercise control over every step of the manufacturing process and supply chain operations, thereby setting the standard for quality and consistency. We have developed and refined distinct and independently managed supply chains for each of our product categories.
We own or control the design, sourcing, manufacturing, packaging and distribution of the majority of our products. In doing so, we are able to exercise control over every step of the manufacturing process and supply chain operations, thereby setting the standard for quality and consistency.
Scotty Cameron Putters Scotty Cameron Fine Milled Putters are developed through a specialized and iterative process that blends art and science to create high performance putters. The design inspiration for the Scotty Cameron brand begins with studying the best players in the world and working with them to identify the consistent strengths and attributes of their putting.
The design inspiration for the Scotty Cameron brand begins with studying the best players in the world and working with them to identify the consistent strengths and attributes of their putting.
Titleist golf headwear provides both function and fashion appeal across a multitude of models providing rain and sun protection as well as trend designs for the dedicated player. We have established key product franchises in our headwear assortment with a variety of functions for both men and women including the Tour Performance, the Montauk and the Tour Aussie.
Titleist golf headwear provides both function and fashion appeal across a multitude of models providing rain and sun protection as well as trend designs for the dedicated player.
See "Risk Factors - We are subject to environmental, health and safety laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future." Regulation The Rules of Golf The Rules of Golf set forth the rules of play and the rules for equipment used in the game of golf.
See "Risk Factors - We are subject to environmental, health and safety laws and regulations, which could subject us to liabilities, increase our costs or restrict our operations in the future." Regulation The Rules of Golf We seek to have our new golf ball and golf club products conform with the Rules of Golf published by the United States Golf Association (the "USGA") and The Royal and Ancient Golf Club of St.
For our golf gear and FootJoy and KJUS apparel businesses, we source the finished products from select third-party vendors that have the necessary quality and technical capabilities. Seasonality Weather conditions in most parts of the world, including our primary geographic markets, generally restrict golf from being played year‑round, with many of our on‑course customers closed during the cold weather months.
Seasonality Weather conditions in most parts of the world, including our primary geographic markets, generally restrict golf from being played year‑round, with many of our on‑course customers closed during the cold weather months. In general, during the first quarter, we begin selling our products into the golf retail channel for the new golf season.
Scotty Cameron putters consist of a range of products for each of these key selection criteria. 6 Table of Contents Using the scottycameron.com website as an information and services hub, we offer the opportunity to connect more closely with the Scotty Cameron brand. Golfers can customize and personalize their putter(s) in the online Scotty Cameron Custom Shop.
Using the scottycameron.com website as an information and services hub, we offer the opportunity to connect more closely with the Scotty Cameron brand. Golfers can customize and personalize their putter(s) in the online Scotty Cameron Custom Shop. Through the popular “Club Cameron” loyalty program and the Scotty Cameron online “Studio Store,” brand fans can purchase unique Scotty Cameron accessories.
This is the reason our sales associates are expected not simply to be salespeople, but to function as golf experts and enthusiasts in their respective territories who advise and assist our retail partners to better serve their customers.
As such, our sales associates are expected not simply to be salespeople, but to function as golf experts and enthusiasts in their respective territories who advise and assist our retail partners to better serve their customers. We help generate golfer demand and sell‑through via in‑shop merchandising, promotions and advertising, and also provide product education to club professionals, coaches and instructors.
The eCommerce initiative is expected to yield incremental sales and profitability and enriched data on golfers' preferences and trends, as well as to foster a deeper and more real time connection with dedicated golfers. 9 Table of Contents Marketing Throughout our history, we believe our commitment to marketing has helped further elevate our brands and strengthen our reputation for product performance and quality, with a particular focus on the perception of dedicated golfers.
The eCommerce initiative is expected to yield incremental sales and profitability and enriched data on golfers' preferences and trends, as well as to foster a deeper and more real time connection with dedicated golfers.
We offer custom products across several categories to meet the varying needs of golfers' skill levels, personal styles and preferences.
In addition, we place a strong focus on golfer engagement, starting with fitting and trial initiatives across our balls, clubs and shoes categories. We offer custom products across several categories to meet the varying needs of golfers' skill levels, personal styles and preferences.
We employ approximately 400 sales representatives worldwide, who are compensated through a combination of salary and a performance bonus. We currently service over 28,000 direct accounts worldwide. In both our direct sales and distributor markets, our trade partners are subject to our redistribution policy. Supplementing our core field sales partnerships are Internet‑based initiatives and eCommerce websites.
In both our direct sales and distributor markets, our trade partners are subject to our redistribution policy. 9 Table of Contents Supplementing our core field sales partnerships are Internet‑based initiatives and eCommerce websites.
Golf Clubs The Rules of Golf have also focused on golf club regulations. In 1998, a limitation was placed on the spring‑like effect of driver faces. In 2003, limits were placed on club head dimensions and volume, as well as shaft length. In 2007, club head moment of inertia was limited.
In 2003, limits were placed on club head dimensions and volume, as well as shaft length. In 2007, club head moment of inertia was limited. A rule change to allow greater adjustability in golf clubs went into effect on January 1, 2008.
Our scale and global reach are intended to enable us to maximize cost efficiency, reduce lead time, provide regional customization and gain insights into local markets. 8 Table of Contents We have three company‑owned and operated golf ball manufacturing facilities, two located in the United States and one in Thailand, encompassing approximately 600,000 total square feet with sufficient production capacity to meet anticipated growth.
We have three company‑owned and operated golf ball manufacturing facilities, two located in the United States and one in Thailand, encompassing approximately 600,000 total square feet with sufficient production capacity to meet anticipated growth, including recent capacity expansion capital investments to fuel future growth.
Route to Market Leadership As one of the preferred partners to premium golf shops, we seek to ensure that the performance benefits derived from using our products are showcased and our products are properly merchandised. As we see our retail partners as a critical connection to dedicated golfers, we place great emphasis on building strong relationships and trust with them.
We have developed and refined distinct and independently managed supply chains for each of our product categories. Route to Market Leadership As one of the preferred partners to premium golf shops, we seek to ensure that the performance benefits derived from using our products are showcased and our products are properly merchandised.
We seek to constantly elevate and innovate the performance and quality of our headwear while keeping the design and colors fresh and appealing to the dedicated player.
We have established key product franchises in our headwear assortment with a variety of functions for both men and women including the Tour Performance, the Performance Ball Marker Hat and the Tour Aussie. We seek to constantly elevate and innovate the performance and quality of our headwear while keeping the design and colors fresh and appealing to the dedicated player.
FootJoy Golf Shoes FootJoy is the #1 shoe in golf and has been the #1 shoe on the PGA Tour for over seven decades (since 1945). With an exclusive focus on golf, FootJoy shoes are designed, developed and manufactured for all golfers across multiple golf shoe categories, including modern classics, technical performance, casual and athletic.
FootJoy Golf Shoes FootJoy is the #1 shoe in golf and has been the #1 shoe on the PGA Tour for over seven decades (since 1945).
We own or control the design, sourcing, manufacturing, packaging and distribution of our products. Our manufacturing network is comprised of our owned facilities and partners around the globe.
We own or control the design, sourcing, manufacturing, packaging and distribution of the majority of our products. Our manufacturing network is comprised of our owned facilities and partners around the globe. Our scale and global reach are intended to enable us to maximize cost efficiency, reduce lead time, provide regional customization and gain insights into local markets.
Through the popular “Club Cameron” loyalty program and the Scotty Cameron online “Studio Store,” brand fans can purchase unique Scotty Cameron accessories. In 2014, we also opened the Scotty Cameron Gallery in Encinitas, California, a premium retail boutique which offers consumers the ability to experience the tour fitting process as well as purchase unique accessory items.
We also operate the Scotty Cameron Gallery in Encinitas, California, a premium retail boutique which offers consumers the ability to experience our tour fitting process as well as purchase unique accessory items. Titleist Golf Gear Titleist Golf Gear is a matrix of distinct categories across golf bags, headwear, golf gloves, travel products and other golf accessories.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese covenants limit the ability of our subsidiaries to, among other things: • incur, assume, or permit to exist additional indebtedness or guarantees; • incur liens; • make investments and loans; • pay dividends, make payments on, or redeem or repurchase capital stock or make prepayments, repurchases or redemptions of certain indebtedness; • engage in mergers, liquidations, dissolutions, asset sales, and other non-ordinary course dispositions (including sale leaseback transactions); • amend or otherwise alter terms of certain indebtedness or certain other agreements; • enter into agreements limiting subsidiary distributions or containing negative pledge clauses; • engage in certain transactions with affiliates; • alter the nature of the business that we conduct; • change our fiscal year or accounting practices; or • enter into a transaction or series of transactions that constitutes a change of control.
Biggest changeThese covenants limit the ability of our subsidiaries to, among other things: • incur additional indebtedness and guarantee indebtedness; • issue certain preferred stock or similar equity securities; • pay dividends or make other distributions in respect of, or repurchase or redeem, our capital stock; • prepay, redeem or repurchase certain debt; • make investments and loans; • sell assets; • incur liens; • enter into transactions with affiliates; • enter into agreements restricting our subsidiaries' ability to pay dividends; and • consolidate, merge or sell all or substantially all of our assets.
For example, the Leahy‑Smith America Invents Act (the "Leahy‑Smith Act"), which was adopted in September 2011, includes a number of significant changes to the U.S. patent laws, such as, among other things, changing from a “first to invent” to a “first inventor to file” system, establishing new procedures for challenging patents and establishing different methods for invalidating patents.
For example, the Leahy‑Smith America Invents Act, which was adopted in September 2011, includes a number of significant changes to the U.S. patent laws, such as, among other things, changing from a “first to invent” to a “first inventor to file” system, establishing new procedures for challenging patents and establishing different methods for invalidating patents.
Initiatives to upgrade our business processes and invest in technological improvements to our manufacturing and assembly facilities involve many risks which could result in, among other things, business interruptions and increased costs, any of which may result in our inability to realize returns on our capital investments.
Initiatives to upgrade our facilities and business processes and to invest in technological improvements to our manufacturing and assembly facilities involve many risks, which could result in, among other things, business interruptions and increased costs, any of which may result in our inability to realize returns on our capital investments.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre‑change net operating loss carryforwards and other pre‑change tax attributes, such as foreign tax credits and research tax credits, to offset its post‑change income and taxes may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre‑change net operating loss ("NOL") carryforwards and other pre‑change tax attributes, such as foreign tax credits and research tax credits, to offset its post‑change income and taxes may be limited.
Failure to comply with federal, state and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and adverse publicity and could negatively affect our business, financial condition and results of operations.
Failure to comply with federal, state and international data protection laws and regulations could result in government investigations and/or enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and adverse publicity and could negatively affect our business, financial condition and results of operations.
We generate substantially all of our sales from the sale of golf‑related products, including golf balls, golf clubs, golf shoes, golf gloves, golf gear and golf apparel. The demand for golf‑related products in general, and golf balls in particular, is directly related to the number of golf participants and the number of rounds of golf being played by these participants.
We generate substantially all of our sales from the sale of golf‑related products, including golf balls, golf clubs, golf shoes, golf gloves, golf gear and golf apparel. The demand for golf‑related products in general, and golf balls in particular, is directly related to the number of golf participants and the number of rounds of golf played by these participants.
Our brands have worldwide recognition and our success depends on our ability to maintain and enhance our brand image and reputation. In particular, we believe that maintaining and enhancing the Titleist, Scotty Cameron, Vokey, FootJoy and KJUS brands is critical to maintaining and expanding our customer base.
Our brands have worldwide recognition and our success depends on our ability to maintain and enhance our brand image and reputation. In particular, we believe that maintaining and enhancing the Titleist, Scotty Cameron, Vokey Design, FootJoy and KJUS brands is critical to maintaining and expanding our customer base.
Because our consolidated accounts are reported in U.S. dollars, we are also exposed to currency translation risk when we translate the financial results of our consolidated non‑U.S. subsidiaries from their local currency into U.S. dollars.
Because our consolidated accounts are reported in U.S. dollars, we are also exposed to currency translation risk when we translate the financial results of our consolidated subsidiaries from their local currency into U.S. dollars.
Further supply chain disruptions or shortages in raw materials could materially adversely affect our business, financial condition and results of operations. A disruption in the operations of our suppliers could materially adversely affect our business, financial condition and results of operations.
Supply chain disruptions or shortages in raw materials could materially adversely affect our business, financial condition and results of operations. A disruption in the operations of our suppliers could materially adversely affect our business, financial condition and results of operations.
If we do not maintain our relationship with existing retailers and distributors or develop relationships with new retailers and distributors, our ability to sell our products would be negatively impacted. On a consolidated basis, no one customer that sells or distributes our products accounted for more than 10% of our consolidated net sales in the year ended December 31, 2022.
If we do not maintain our relationship with existing retailers and distributors or develop relationships with new retailers and distributors, our ability to sell our products would be negatively impacted. On a consolidated basis, no one customer that sells or distributes our products accounted for more than 10% of our consolidated net sales in the year ended December 31, 2023.
However, our top ten customers accounted for approximately 20% of our consolidated net sales in the year ended December 31, 2022. Accordingly, the loss of a small number of our large customers, or the reduction in business with one or more of these customers, could materially adversely affect our business, financial condition and results of operations.
However, our top ten customers accounted for approximately 20% of our consolidated net sales in the year ended December 31, 2023. Accordingly, the loss of a small number of our large customers, or the reduction in business with one or more of these customers, could materially adversely affect our business, financial condition and results of operations.
This could result in increased delinquent or uncollectible accounts for our customers as well as a decrease in orders for our products by such customers.
This could result in increased delinquent or uncollectible accounts from our customers as well as a decrease in orders for our products by such customers.
RISK FACTORS Summary Risk Factors Below is a summary of some of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business and Industry • A reduction in the number of rounds of golf played or in the number of golf participants could materially adversely affect our business, financial condition and results of operations. • Unfavorable weather conditions may impact the number of playable days and rounds played in a given year. • Changes to the Rules of Golf with respect to equipment could materially adversely affect our business, financial condition and results of operations. • A significant disruption in the operations of our manufacturing, assembly or distribution facilities could materially adversely affect our business, financial condition and results of operations. • Many of our raw materials or components of our products are provided by a sole or limited number of third-party suppliers and manufacturers. • A disruption in the operations of our suppliers could materially adversely affect our business, financial condition and results of operations. • Our business, financial position, results of operations and cash flows have been, and could continue to be, impacted by the COVID-19 pandemic. • We may not successfully manage the frequent introduction of new products or satisfy changing consumer preferences, quality and regulatory standards. • Failure to successfully innovate and offer high-quality products may adversely affect our ability to compete in the market for our products. • We may be involved in lawsuits to protect, defend or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful. • Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products. • We face intense competition in each of our markets and if we are unable to maintain a competitive advantage, loss of market share, sales or profitability may result. • A severe or prolonged economic downturn could adversely affect our customers' financial condition, their levels of business activity and their ability to pay trade obligations. • We depend on retailers and distributors to market and sell our products, and our failure to maintain and further develop our sales channels could materially adversely affect our business, financial condition and results of operations. • Our business operations are subject to seasonal fluctuations, which could result in fluctuations in our operating results and stock price. • Our business and results of operations are subject to fluctuations based on the timing of new product introductions. • We have significant international operations and are exposed to risks associated with doing business globally. • We rely on complex information systems for management of our manufacturing, distribution, sales and other functions.
RISK FACTORS Summary Risk Factors Below is a summary of some of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business and Industry • A reduction in the number of rounds of golf played or in the number of golf participants could materially adversely affect our business, financial condition and results of operations. • Unfavorable weather conditions may impact the number of playable days and rounds played in a given year. • Changes to the Rules of Golf with respect to equipment could materially adversely affect our business, financial condition and results of operations. • A significant disruption in the operations of our manufacturing, assembly or distribution facilities could materially adversely affect our business, financial condition and results of operations. • Many of our raw materials or components of our products are provided by a sole or limited number of third-party suppliers and manufacturers. • A disruption in the operations of our suppliers could materially adversely affect our business, financial condition and results of operations. • We may not successfully manage the frequent introduction of new products or satisfy changing consumer preferences, quality and regulatory standards. • Failure to successfully innovate and offer high-quality products may adversely affect our ability to compete in the market for our products. • We may be involved in lawsuits to protect, defend or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful. • Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products. • We face intense competition in each of our markets and if we are unable to maintain a competitive advantage, loss of market share, sales or profitability may result. • A severe or prolonged economic downturn could adversely affect our customers' financial condition, their levels of business activity and their ability to pay trade obligations. • We depend on retailers and distributors to market and sell our products, and our failure to maintain and further develop our sales channels could materially adversely affect our business, financial condition and results of operations. • Our business operations are subject to seasonal fluctuations, which could result in fluctuations in our operating results and stock price. • Our business and results of operations are subject to fluctuations based on the timing of new product introductions. • We have significant international operations and are exposed to risks associated with doing business globally. • We rely on complex information systems for management of our manufacturing, distribution, sales and other functions.
The materials and components used by us, our suppliers and our manufacturers involve raw materials, including polybutadiene, urethane and Surlyn for the manufacturing of our golf balls, titanium and steel for the manufacture of our golf clubs, leather and synthetic fabrics for the manufacturing of our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products.
The materials and components used by us, our suppliers and our manufacturers involve raw materials, including polybutadiene, urethane and ionomers for the manufacturing of our golf balls, titanium and steel for the manufacture of our golf clubs, leather and synthetic fabrics for the manufacturing of our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain and enforce or defend additional patent protection in the future.
We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. These changes may materially affect our patents or patent applications and our ability to obtain and enforce or defend additional patent protection in the future.
In addition, in the United States there are a limited number of suppliers of certain raw materials and components for our products as well as finished goods that we sell, and we have increasingly become more reliant on suppliers and vendors located outside of the United States.
In addition, in the United States, there is a limited number of suppliers of certain raw materials and components for our products as well as finished goods that we sell, and we have increasingly become more reliant on suppliers and vendors located outside of the United States.
In addition, to achieve satisfactory performance in international locations, it may be necessary to locate physical facilities, such as regional offices, in the foreign market and to hire employees who are familiar with such foreign markets while also being qualified to market our products.
In addition, to achieve satisfactory performance in international locations, it may be necessary to locate physical facilities, such as regional offices, in these foreign markets and to hire employees who are familiar with such foreign markets while also being qualified to market our products.
A high degree of leverage could have important consequences for us, including: • requiring us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, product development, acquisitions, general corporate and other purposes; • increasing our vulnerability to adverse economic, industry, or competitive developments; • exposing us to the risk of increased interest rates because substantially all of our borrowings are at variable rates of interest; • making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial maintenance covenants and restrictive covenants, could result in an event of default under the agreements governing our indebtedness; • restricting us from making strategic acquisitions or causing us to make non‑strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
A high degree of leverage could have important consequences for us, including: • requiring us to utilize a substantial portion of our cash flows from operations to make payments on our indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, product development, acquisitions, general corporate and other purposes; • increasing our vulnerability to adverse economic, industry, or competitive developments; • exposing us to the risk of increased interest rates because many of our borrowings are at variable rates of interest; • making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including financial maintenance covenants and restrictive covenants, could result in an event of default under the agreements governing our other indebtedness (if not cured or waived); • restricting us from making strategic acquisitions or causing us to make non‑strategic divestitures; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage prevents us from exploiting.
Substantially all of these net sales generated outside of the United States were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar.
Substantially all of these net sales from regions outside of the United States were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar.
Servicing our indebtedness will require a significant amount of cash. Our ability to generate sufficient cash depends on many factors, some of which are not within our control. Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future.
Servicing our indebtedness requires a significant amount of cash. Our ability to generate sufficient cash depends on many factors, some of which are not within our control. Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future.
If we experience significantly increased demand, or if, for any reason, we need to replace an existing manufacturer or supplier, there can be no assurance that additional supplies of raw materials or additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any new supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements.
If we experience significantly increased demand, or if, for any reason, we need to replace an existing manufacturer or supplier, there can be no assurance that additional supplies of raw materials or additional manufacturing capacity will be available when required on terms that are 17 Table of Contents acceptable to us, or at all, or that any new supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements.
In general, an “ownership change” generally occurs if there is a cumulative change in our ownership by “5‑percent shareholders” that exceeds 50 percentage points over a rolling three‑year period. Similar rules apply under state tax laws. We may experience an ownership change from future transactions in our stock, some of which may be outside our control.
In general, an “ownership change” generally occurs if there is a cumulative change in our ownership by “5‑percent shareholders” that exceeds 50 percentage points over a rolling three‑year period. Similar rules apply under state tax laws. We may experience an ownership change from future transactions in our stock, some of which may be outside our 30 Table of Contents control.
Factors driving these short product launch cycles include the rapid introduction of competitive products and consumer demands for the latest technology, style or fashion. In this marketplace, a substantial portion of our annual sales are generated each year by new products. 19 Table of Contents These marketplace conditions raise a number of issues that we must successfully manage.
Factors driving these short product launch cycles include the rapid introduction of competitive products and consumer demands for the latest technology, style or fashion. In this marketplace, a substantial portion of our annual sales are generated each year by new products. These marketplace conditions raise a number of issues that we must successfully manage.
In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. Claims 21 Table of Contents that we have misappropriated the confidential information or trade secrets of third parties could also materially adversely affect our business, financial condition and results of operations.
In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. Claims that we have misappropriated the confidential information or trade secrets of third parties could also materially adversely affect our business, financial condition and results of operations.
In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces their purchases of our products, we 23 Table of Contents may be unable to find a sufficient number of other retail outlets for our products to sustain the same level of sales.
In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces their purchases of our products, we may be unable to find a sufficient number of other retail outlets for our products to sustain the same level of sales.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. 38 Table of Contents Anti‑takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities. Anti‑takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
If we are unable to grow or maintain our competitive position in any of our product categories, it could materially adversely affect our business, financial condition and results of operations. 22 Table of Contents We may have limited opportunities for future growth in sales of certain of our products, including golf balls, golf shoes and golf gloves.
If we are unable to grow or maintain our competitive position in any of our product categories, it could materially adversely affect our business, financial condition and results of operations. We may have limited opportunities for future growth in sales of certain of our products, including golf balls, golf shoes and golf gloves.
However, a severe or prolonged downturn in the general economy could adversely affect the retail golf equipment market, which in turn would negatively impact the liquidity and cash flows of our customers, including the ability of such customers to obtain credit to finance purchases of our products and to pay their trade obligations.
However, a severe or prolonged downturn in the general 22 Table of Contents economy could adversely affect the retail golf equipment market, which in turn would negatively impact the liquidity and cash flows of our customers, including the ability of such customers to obtain credit to finance purchases of our products and to pay their trade obligations.
In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable laws, including anti‑corruption laws, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, and detecting, investigating and resolving actual or alleged violations can be expensive and require significant time and attention from senior management.
If we believe or have reason to believe that our employees or agents have or may have violated applicable laws, including anti‑corruption laws, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, and detecting, investigating and resolving actual or alleged violations can be expensive and require significant time and attention from senior management.
As a result, if we earn net taxable income, our ability to use pre‑change net operating loss carryforwards or other pre‑change tax attributes to offset U.S. federal and state taxable income and taxes may be subject to incremental limitations. We are engaged in a number of intercompany transactions across multiple tax jurisdictions.
As a result, if we earn net taxable income, our ability to use pre‑change NOL carryforwards or other pre‑change tax attributes to offset U.S. federal and state taxable income and taxes may be subject to incremental limitations. We are engaged in a number of intercompany transactions across multiple tax jurisdictions.
See “- We cannot assure you that we will pay dividends on our common stock, and our indebtedness and other factors could limit our ability to pay dividends on our common stock.” 35 Table of Contents In the ordinary course of its business activities, Fila and its affiliates may engage in activities where their interests conflict with our interests or those of our shareholders.
See “- We cannot assure you that we will pay dividends on our common stock, and our indebtedness and other factors could limit our ability to pay dividends on our common stock.” In the ordinary course of its business activities, Fila and its affiliates may engage in activities where their interests conflict with our interests or those of our shareholders.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. Our share repurchase program could be suspended or terminated, may not enhance long-term stockholder value, and may increase the volatility of the price of our stock and diminish our cash reserves.
This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources. 37 Table of Contents Our share repurchase program could be suspended or terminated, may not enhance long-term stockholder value, and may increase the volatility of the price of our stock and diminish our cash reserves.
We rely on our manufacturing facilities in the United States, Thailand and China and assembly and distribution facilities in many of our major markets, certain of which constitute our sole manufacturing facility for a particular product category, including our joint venture facility in China where the majority of our golf shoes are manufactured and our facility in Thailand where we manufacture the majority of our golf gloves.
We rely on our manufacturing facilities in the United States, Thailand, Vietnam and China and assembly and distribution facilities in many of our major markets, certain of which constitute our sole or primary manufacturing facility for a particular product category, including our joint venture facility in China where the majority of our golf shoes are manufactured and our facility in Thailand where we manufacture the majority of our golf gloves.
Our financial condition and results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our common stock.
Our financial condition and results of operations may be adversely affected if our assumptions change or if 33 Table of Contents actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our common stock.
Liability in many situations may be imposed not only without regard to fault, but may also be joint and several, so that we may be held responsible for more than our share of the contamination or other damages, or even for the entire amount.
Liability in many situations may be imposed not only without regard to fault, but may also be joint and 32 Table of Contents several, so that we may be held responsible for more than our share of the contamination or other damages, or even for the entire amount.
However, these efforts may be expensive, time‑consuming, 20 Table of Contents divert management’s attention, and ultimately may not be successful in reducing sales of golf products by these infringers. The failure to prevent or limit such infringers or imitators could adversely affect our reputation and sales.
However, these efforts may be expensive, time‑consuming, divert management’s attention, and ultimately may not be successful in reducing sales of golf products by these infringers. The failure to prevent or limit such infringers or imitators could adversely affect our reputation and sales.
Our products expose us to warranty claims and product liability claims if products we manufacture, sell or design actually or allegedly fail to perform as expected, or the use of those products results, or is alleged to result, in personal injury, death or property damage.
Our products expose us to warranty claims and product liability claims if products we manufacture, sell or design actually or allegedly fail to perform as expected, or the use of those products results, or is alleged to result, in personal injury, 31 Table of Contents death or property damage.
Andrews (the "R&A" and, with the USGA, the "Governing Bodies"), because these rules are generally followed by golfers, both professional and amateur, within their respective jurisdictions. The USGA publishes rules that are generally followed in the United States and Mexico, and the R&A publishes rules that are generally followed in most other countries throughout the world.
Andrews (the "R&A" and, together with the USGA, the "Governing Bodies"), because these rules are generally followed by golfers, both professional and amateur, within their respective jurisdictions. The USGA publishes rules that are generally followed in the United States and Mexico, and the R&A publishes rules that are generally followed in most other countries around the world.
If we are unable to generate sufficient cash flows to service our debt and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations, or raise additional debt or equity capital.
If we are unable to generate sufficient cash flows to service our debt 34 Table of Contents and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations, or raise additional debt or equity capital.
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
We are subject to income taxes in the United States (federal and state) and numerous foreign jurisdictions. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
Consequently, we 36 Table of Contents are not required to comply with certain of the NYSE corporate governance requirements, such as the requirement to have a majority of independent directors on our Board of Directors, or the requirement to have a compensation committee and nominating and corporate governance committee comprised of independent directors.
Consequently, we are not required to comply with certain of the NYSE corporate governance requirements, such as the requirement to have a majority of independent directors on our Board of Directors, or the requirement to have a compensation committee and nominating and corporate governance committee comprised of independent directors.
Moreover, even if the applications will be registered during the registration process, third parties may seek to oppose, limit, or otherwise challenge these applications or registrations. We may be involved in lawsuits to protect, defend or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful.
Moreover, even if the applications will be registered during the registration process, third parties may seek to oppose, limit, or otherwise challenge these applications or registrations. 20 Table of Contents We may be involved in lawsuits to protect, defend or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful.
Court of Appeals for the Federal Circuit have made, and may in the future make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and may in the future make, changes in how the patent laws in their respective jurisdictions are interpreted.
Court of Appeals for the Federal Circuit have made, and may in the future make, changes in 21 Table of Contents how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and may in the future make, changes in how the patent laws in their respective jurisdictions are interpreted.
Certain of our existing agreements governing indebtedness, including our credit agreement, restrict our ability to pay dividends on our common stock. We expect 37 Table of Contents that any future agreements governing indebtedness will contain similar restrictions.
Certain of our existing agreements governing indebtedness, including our credit agreement, restrict our ability to pay dividends on our common stock. We expect that any future agreements governing indebtedness will contain similar restrictions.
Also, as we seek to grow our presence in existing and expand into new geographic or product markets, consumers in these markets may not accept our brand image and may not be willing to pay a premium to purchase our products as compared to other brands.
Also, as we seek 23 Table of Contents to grow our presence in existing and expand into new geographic or product markets, consumers in these markets may not accept our brand image and may not be willing to pay a premium to purchase our products as compared to other brands.
We have 5,962,075 shares available for issuance under our 2015 Incentive Plan. Any shares of common stock that we issue, under our 2015 Incentive Plan or other equity incentive plans that we may adopt in the future, dilute the percentage ownership held by our existing shareholders.
We have 5,476,366 shares available for issuance under our 2015 Incentive Plan. Any shares of common stock that we issue, under our 2015 Incentive Plan or other equity incentive plans that we may adopt in the future, dilute the percentage ownership held by our existing shareholders.
The Rules of Golf as published by the Governing Bodies are virtually the same and are intended to be so pursuant to a Joint Statement of Principles issued in 2001. The Rules of Golf set the guidelines and establish limitations for the design and performance of all golf balls and golf clubs.
The Rules of Golf as published by the Governing Bodies are virtually the same and are intended to be so pursuant to a Joint Statement of Principles issued in 2001. The Rules of Golf set the testing standards and establish limitations for the design and performance of golf balls and golf clubs.
The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations.
The EU and UK GDPR impose, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer personal data of individuals within the EU and UK, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations.
We continue to be exposed to price increases and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, urethane and Surlyn for the manufacturing of our golf balls, titanium and steel for the assembly of our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other 17 Table of Contents petroleum‑based materials for a number of our products.
We continue to be exposed to price increases and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, urethane and ionomers for the manufacturing of our golf balls, titanium and steel for our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products.
Sales by geographic area are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 7 of Part II and “Notes to Consolidated Financial Statements –Note 21 – Segment Information,” Item 8 of Part II, included elsewhere in this report.
Net sales by region are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 7 of Part II and “Notes to Consolidated Financial Statements – Note 21 – Segment Information,” Item 8 of Part II, included elsewhere in this report.
We may need to raise additional funds through public or private debt or equity financings in order to: • fund ongoing operations; • take advantage of opportunities, including expansion of our business or the acquisition of complementary products, technologies or businesses; • develop new products; or • respond to competitive pressures.
We may need to raise additional funds through public or private debt (for example, our Notes offering in 2023) or equity financings in order to: • fund ongoing operations; • take advantage of opportunities, including expansion of our business or the acquisition of complementary products, technologies or businesses; • develop new products; or • respond to competitive pressures.
We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business. Outside of the U.S., data protection laws, including the E.U.
We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, and carry significant potential liability for our business. Outside of the U.S., data protection laws, including the E.U.
Because our non‑U.S. subsidiaries incur substantially all of their cost of goods sold in currencies that are different from the currencies in which they generate substantially all of their sales, we are exposed to transaction risk attributable to fluctuations in such exchange rates, which can impact the gross profit of our non‑U.S. subsidiaries.
Because these subsidiaries incur substantially all of their cost of goods sold in currencies that are different from the currencies in which they generate substantially all of their sales, we are exposed to transaction risk attributable to fluctuations in such exchange rates, which can impact the gross profit of these subsidiaries.
Any damage or significant disruption in the operation of such systems or the failure of our information systems to perform as expected would disrupt our business, which may result in decreased sales, increased overhead costs, excess inventory or product shortages which could materially adversely affect our business, financial condition and results of operations.
Any damage or significant disruption in the operation of such systems, disruptions, delays or deficiencies in the design or implementation of new systems, or the failure of our information systems to perform as expected would disrupt our business, which may result in decreased sales, increased overhead costs, excess inventory or product shortages which could materially adversely affect our business, financial condition and results of operations.
We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline.
Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline.
Furthermore, the ability of third‑party suppliers to timely deliver raw materials or components may be affected by events beyond their control, such as work stoppages or slowdowns, transportation issues, changes in trade or tariff laws, or significant weather and health conditions.
Furthermore, the ability of third‑party suppliers to timely deliver raw materials or components may be affected by events beyond their control, such as work stoppages or slowdowns, transportation issues, changes in trade or tariff laws, or significant weather and health conditions. The cost of raw materials and components could affect our operating results.
Our business could be harmed by the occurrence of natural disasters or pandemic diseases. The occurrence of a natural disaster, such as an earthquake, tsunami, fire, flood or hurricane, or the outbreak of a pandemic disease, including, for example, the COVID-19 pandemic beginning in 2020, could materially adversely affect our business, financial condition and results of operations.
Our business could be harmed by the occurrence of natural disasters or pandemic diseases. The occurrence of a natural disaster, such as an earthquake, tsunami, fire, flood or hurricane, or the outbreak of a pandemic disease, such as the COVID-19 pandemic, could materially adversely affect our business, financial condition and results of operations.
During 2022, our Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $450.0 million.
During 2023, our Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $700.0 million.
Such changes may increase our costs and reduce our revenue. We may also face inconsistent legal requirements across the various jurisdictions in which we operate, further raising both costs of compliance and likelihood that we will fail to satisfy all of our legal requirements.
We may also face inconsistent legal requirements across the various jurisdictions in which we operate, further raising both costs of compliance and likelihood that we will fail to satisfy all of our legal requirements.
We launched our first such initiatives in the U.S. in 2016. Our eCommerce footprint has grown since then, and we now have eCommerce operations in the U.S., Canada, Europe, Japan and Korea. In our eCommerce services, we process, store and transmit customer data, including payment card information. We also collect consumer data through certain marketing activities.
We launched our first such initiatives in the U.S. in 2016. Our eCommerce footprint has grown since then, and we now have eCommerce operations in the U.S., Canada, Europe and Asia. In our eCommerce services, we 28 Table of Contents process, store and transmit customer data, including payment card information. We also collect consumer data through certain marketing activities.
Risks Related to Ownership of Our Common Stock The interests of Magnus and Fila and any of their successors or transferees may conflict with other holders of our common stock. As of December 31, 2022, Magnus, which is wholly‑owned by Fila, beneficially owned approximately 53.4% of our outstanding common stock.
Risks Related to Ownership of Our Common Stock The interests of Magnus and Fila and any of their successors or transferees may conflict with other holders of our common stock. As of December 31, 2023, Magnus, which is wholly‑owned by Fila, beneficially owned approximately 52.2% of our outstanding common stock.
Some of these changes or potential changes may not be advantageous to us, and it may become more difficult to obtain adequate patent protection or to enforce our patents against third parties.
Some of these changes or potential changes may not be advantageous to us, and it may become more difficult to obtain adequate patent protection, to enforce our patents against third parties, or to challenge the validity or enforceability of third parties' patents.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None
The OECD, which represents a coalition of member countries that encompass many of the jurisdictions in which we operate, has promulgated recommended changes to numerous long standing international tax principles through its BEPS project.
The OECD, which represents a coalition of member countries that encompass many of the jurisdictions in which we operate, has promulgated recommended changes to numerous long standing international tax principles through its BEPS project, including the Pillar II global minimum tax regime.
Many new regulations on golf balls and golf clubs have been introduced in the past 25 years, which we believe was one of the most active periods for golf equipment regulation in the history of golf. The Rules of Golf have historically regulated the size, weight and initial velocity of golf balls.
Many new regulations on golf balls and golf clubs have been introduced in the past 25 years, which we believe has been one of the most active periods for golf equipment regulation in the history of golf. Historically, the Rules of Golf have regulated golf ball size, weight, spherical symmetry, initial velocity and overall distance.
Furthermore, if the cost of delivery or shipping services were to increase significantly and the additional costs could not be covered by product pricing it could materially adversely affect our business, financial condition and results of operations. We rely on complex information systems for management of our manufacturing, distribution, sales and other functions.
If these difficulties continue, or if the cost of delivery or shipping services were to increase significantly and the additional costs could not be covered by product pricing, our business, financial condition and results of operations could be materially adversely affected. We rely on complex information systems for management of our manufacturing, distribution, sales, finance, accounting and other functions.
In each of the three years ended December 31, 2022, approximately one-half of our net sales and one-third of our total operating expenses (which amounts represent substantially all of the operating expenses incurred by our non‑U.S. subsidiaries) were denominated in foreign currencies.
In each of the three years ended December 31, 2023, nearly one-half of our net sales and one-third of our total operating expenses (which amounts represent substantially all of the operating expenses incurred by subsidiaries in regions outside of the U.S.) were denominated in foreign currencies.
We use United Parcel Service and FedEx Corporation for substantially all ground shipments of products to our U.S. customers. We use ocean shipping services and air carriers for most of our international shipments of products. In addition, many of the components we use to manufacture and assemble our products are shipped to us via ocean shipping and air carrier.
We use United Parcel Service and FedEx Corporation for substantially all ground shipments of products to our U.S. customers. We use ocean shipping services and air carriers for most of our international shipments of products and many of the components we use to manufacture and assemble our products.
Our failure to make the required interest and principal payments on our indebtedness would result in an event of default under the agreement governing such indebtedness, which may result in the acceleration of some or all of our outstanding indebtedness.
Our failure to make the required interest and principal payments on our indebtedness could result in an event of default under the agreements governing our other indebtedness, which may result in the acceleration of some or all of our outstanding indebtedness.
In contrast, substantially all of the purchases of inventory, raw materials or components by our non‑U.S. subsidiaries are made in U.S. dollars. For the year ended December 31, 2022, approximately 85% of our cost of goods sold incurred by our non‑U.S. subsidiaries was denominated in U.S. dollars.
In contrast, substantially all of the purchases of inventory, raw materials or components by entities in these regions are made in U.S. dollars. For the year ended December 31, 2023, approximately 85% of our cost of goods sold incurred by regions outside the U.S. was denominated in U.S. dollars.
A growing number of federal, state and international data privacy and security laws and regulations have been enacted that govern the collection, use, disclosure, transfer, storage, disposal, and protection of sensitive personal information, such as social security numbers, financial information and other personal information.
A growing number of federal, state and international data privacy and security laws and regulations have been enacted that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information.
You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise. As of December 31, 2022, we had 423,678,477 shares of common stock authorized but unissued.
You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise. As of December 31, 2023, we had 436,570,757 shares of common stock authorized but unissued.
On February 9, 2023, our Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $700.0 million since the share repurchase program was established in 2018.
On February 15, 2024, our Board of Directors authorized us to repurchase up to an additional $300.0 million of our issued and outstanding common stock, bringing the total authorization up to $1.0 billion since the share repurchase program was established in 2018.
We are a “controlled company” within the meaning of the rules of the NYSE. As a result, we will qualify for, and may rely upon, exemptions from certain corporate governance requirements that would otherwise provide protection to shareholders of other companies.
As a result, we will qualify for, and may rely upon, exemptions from certain corporate governance requirements that would otherwise provide protection to shareholders of other companies.
In addition, a change of control under our outstanding equity award agreements and other employment arrangements may result in the vesting of outstanding equity awards and the acceleration of benefits or other payments under certain employment arrangements. A change of control may also result in a default or other negative consequence under our other outstanding agreements or instruments.
In addition, a change of control under our outstanding equity award agreements and other employment arrangements may result in the vesting of outstanding equity awards and the acceleration of 36 Table of Contents benefits or other payments under certain employment arrangements.
The outcome of this notice and the impact of any resulting potential changes to the Rules of Golf is uncertain at this time.
The outcome of the Driver Notice and the impact of any other potential changes to the Rules of Golf are uncertain at this time.
As of December 31, 2022, we had no outstanding interest rate swap contracts to hedge the interest rate risk on our variable rate debt.
As of December 31, 2023, we had $100.0 million of outstanding interest rate swap contracts to hedge the interest rate risk on our variable rate debt.
In 2022, we continued to experience price increases and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, and significant price fluctuations or shortages in such raw materials or components, including the costs to transport such materials or components of our products, the uncertainty of currency fluctuations against the U.S. dollar, increases in labor rates, trade duties or tariffs, and/or the introduction of new and expensive raw materials, could materially adversely affect our business, financial condition and results of operations.
Significant price fluctuations or shortages in such raw materials or components, including the costs to transport such materials or components of our products, the uncertainty of currency fluctuations against the U.S. dollar, increases in labor rates, trade duties or tariffs, and/or the introduction of new and expensive raw materials, could materially adversely affect our business, financial condition and results of operations.
If we fail to introduce technical innovation in our products, consumer demand for our products could decline, and if we experience problems with the quality of our products, we may incur substantial expense to remedy the problems, any of which could materially adversely affect our business, financial condition and results of operations.
If we fail to continue technical innovation in our products, consumer demand for our products could decline, and if we experience problems with the quality of our products, we may incur substantial expense to remedy the problems, any of which could materially adversely affect our business, financial condition and results of operations. 19 Table of Contents Failure to adequately enforce and protect our intellectual property rights could materially adversely affect our business, financial condition and results of operations.
Other state laws include the California Consumer Privacy Act (“CCPA”), which gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights.
For example, the California Consumer Privacy Act, amended by the California Privacy Rights Act (together, the “CCPA”), which gives California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures, limit their use of personal information, and take certain other acts in furtherance of those rights.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Type Facility Size (1) Leased/Owned Fairhaven, Massachusetts Headquarters and Golf Ball R&D 222,720 Owned Golf Balls North Dartmouth, Massachusetts Golf ball manufacturing 179,602 Owned New Bedford, Massachusetts Golf ball manufacturing 244,091 Owned Amphur Pluakdaeng Rayong, Thailand Golf ball manufacturing 230,003 Owned New Bedford, Massachusetts Golf ball customization and distribution center 438,007 Owned Fairhaven, Massachusetts Golf ball packaging 49,580 Owned New Bedford, Massachusetts Golf ball advanced engineering and ball cavity manufacturing 34,000 Leased Sugarland, Texas Golf ball recycling and distribution center 87,214 Leased Golf Clubs, Wedges and Putters Carlsbad, California Golf club assembly and R&D 165,485 Leased San Marcos, California Putter research 19,200 Leased Encinitas, California Putter fitting and sales 3,754 Leased Tochigi, Japan Golf club assembly 20,376 Leased FootJoy Fuzhou, Fujian, China (40% owned joint venture) Golf shoe manufacturing and distribution center 525,031 Building Owned/Land Leased Brockton, Massachusetts Golf shoe R&D, custom glove assembly and distribution center 146,000 Leased Sriracha Chonburi, Thailand Golf glove manufacturing 112,847 Building Owned/Land Leased Sales Offices and Distribution Centers (used by multiple reportable segments) Fairhaven, Massachusetts East Coast customization and distribution center 185,370 Owned Vista, California West Coast distribution center and golf bag embroidery 102,319 Leased Cambridgeshire, United Kingdom Sales office and distribution center, as well as golf club assembly and golf ball customization 156,326 Owned Helmond, The Netherlands Sales office and distribution center 69,965 Leased Victoria, Australia Sales office and distribution center, as well as golf club assembly 37,027 Leased Ontario, Canada Sales office and distribution center 102,057 Leased Randburg, South Africa Sales office and distribution center, as well as golf club assembly 25,060 Leased Yongin-shi, Korea Distribution center, golf ball customization and golf club assembly 174,982 Leased Product Testing and Fitting Centers (Golf Balls and Golf Clubs) Acushnet, Massachusetts East Coast product testing and fitting for golf balls and golf clubs 22 acres total, including 7,662 square foot building Owned Oceanside, California West Coast product testing and fitting for golf balls and golf clubs (Titleist Performance Institute) 30 acres total, including 20,539 square foot building Owned (1) Facility size represents square footage of the building, unless otherwise noted.
Biggest changeLocation Type Facility Size (1) Leased/Owned Fairhaven, Massachusetts Headquarters and golf ball R&D 222,720 Owned Golf Balls North Dartmouth, Massachusetts Golf ball manufacturing 179,602 Owned New Bedford, Massachusetts Golf ball manufacturing 244,091 Owned Amphur Pluakdaeng Rayong, Thailand Golf ball manufacturing 230,003 Owned New Bedford, Massachusetts Golf ball customization and distribution center 438,007 Owned Fairhaven, Massachusetts Golf ball packaging 49,580 Owned New Bedford, Massachusetts Golf ball advanced engineering and ball cavity manufacturing 34,000 Leased Sugarland, Texas Golf ball recycling and distribution center 87,214 Leased Golf Clubs, Wedges and Putters Carlsbad, California Golf club assembly 165,485 Leased Carlsbad, California Tour testing and golf club R&D 50,000 Leased Oceanside, California Digital media studio 10,433 Leased San Marcos, California Putter research 19,200 Leased Encinitas, California Putter fitting and sales 3,754 Leased Tokyo, Japan Golf club assembly 45,274 Leased FootJoy Fuzhou, Fujian, China (40% owned joint venture) Golf shoe manufacturing and distribution center 525,031 Building Owned/Land Leased Brockton, Massachusetts Golf shoe R&D 146,000 Leased Sriracha Chonburi, Thailand Golf glove manufacturing 112,847 Building Owned/Land Leased Sales Offices and Distribution Centers (used by multiple reportable segments) Fairhaven, Massachusetts East Coast customization and distribution center 185,370 Owned Vista, California West Coast distribution center and golf bag embroidery 102,319 Leased Lakeville, Massachusetts East Coast customization and distribution center 555,695 Leased Cambridgeshire, United Kingdom Sales office and distribution center, as well as golf club assembly and golf ball customization 156,326 Owned Helmond, The Netherlands Sales office and distribution center 69,965 Leased Victoria, Australia Sales office and distribution center, as well as golf club assembly 37,027 Leased Ontario, Canada Sales office and distribution center 102,057 Leased Randburg, South Africa Sales office and distribution center, as well as golf club assembly 25,060 Leased Yongin-shi, Korea Distribution center, golf ball customization and golf club assembly 174,982 Leased Product Testing and Fitting Centers (Golf Balls and Golf Clubs) Acushnet, Massachusetts East Coast product testing and fitting for golf balls and golf clubs 22 acres total, including 7,662 square foot building Owned Oceanside, California West Coast product testing and fitting for golf balls and golf clubs (Titleist Performance Institute) 30 acres total, including 20,539 square foot building Owned (1) Facility size represents square footage of the building, unless otherwise noted.
We have additional sales offices and facilities in Colorado, Hawaii, Utah, New Zealand, Malaysia, Singapore, Hong Kong, Taiwan, Japan, Korea, Thailand, Sweden, France, Germany and Switzerland. In the opinion of our management, our properties are adequate and suitable for our business as presently conducted and are adequately maintained. 40 Table of Contents
We have additional sales offices and facilities in Colorado, Hawaii, Utah, New Zealand, Malaysia, Singapore, Hong Kong, Taiwan, Japan, Korea, Thailand, Scotland, Sweden, France, Germany and Switzerland. In the opinion of our management, our properties are adequate and suitable for our business as presently conducted and are adequately maintained. 42 Table of Contents

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

15 edited+4 added−4 removed5 unchanged
Biggest changeName Age Position David Maher 55 President and Chief Executive Officer Mary Lou Bohn 62 President, Titleist Golf Balls Steven Pelisek 62 President, Titleist Golf Clubs John (Jay) Duke, Jr. 54 President, Titleist Golf Gear Christopher Lindner 54 President, FootJoy Thomas Pacheco 54 Executive Vice President, Chief Financial Officer and Chief Accounting Officer Roland Giroux 62 Executive Vice President, Chief Legal Officer and Corporate Secretary Brendan Reidy 45 Executive Vice President, Chief People Officer Roger Czuchra 53 Executive Vice President, Chief Technology and Digital Officer David Maher , 55, joined the Company in 1991 and was appointed President and Chief Executive Officer in January 2018.
Biggest changeName Age Position David Maher 56 President and Chief Executive Officer Sean Sullivan 56 Executive Vice President and Chief Financial Officer Mary Lou Bohn 63 President, Titleist Golf Balls Steven Pelisek 63 President, Titleist Golf Clubs John (Jay) Duke, Jr. 55 President, Titleist Golf Gear Christopher Lindner 55 President, FootJoy Roland Giroux 63 Executive Vice President, Chief Legal Officer and Corporate Secretary Brendan Reidy 46 Executive Vice President, Chief People Officer Roger Czuchra 54 Executive Vice President, Chief Technology and Digital Officer Nicholas Mohamed 48 Vice President, Corporate Controller and Principal Accounting Officer David Maher , 56, joined the Company in 1991 and was appointed President and Chief Executive Officer in January 2018.
Pelisek has held both Marketing and Field Sales positions with the Company and with Lynx Golf. Mr. Pelisek holds a B.S. in Engineering and an M.S. in Civil Engineering, both from the University of Maryland. John (Jay) Duke, Jr., 54, joined the Company and was appointed President, Titleist Golf Gear in 2014. Prior to joining the Company, Mr.
Pelisek has held both Marketing and Field Sales positions with the Company and with Lynx Golf. Mr. Pelisek holds a B.S. in Engineering and an M.S. in Civil Engineering, both from the University of Maryland. John (Jay) Duke, Jr., 55, joined the Company and was appointed President, Titleist Golf Gear in 2014. Prior to joining the Company, Mr.
Roland Giroux, 62, joined the Company in 2000 and was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary in July 2021. Prior to that, Mr. Giroux held a number of positions with the Company, most recently as Vice President and Associate General Counsel beginning in 2017. Prior to joining the Company, Mr.
Roland Giroux, 63, joined the Company in 2000 and was appointed Executive Vice President, Chief Legal Officer and Corporate Secretary in July 2021. Prior to that, Mr. Giroux held a number of positions with the Company, most recently as Vice President and Associate General Counsel beginning in 2017. Prior to joining the Company, Mr.
Steven Pelisek, 62, joined the Company in 1993 and was appointed President, Titleist Golf Clubs in 2016. Prior to that, Mr. Pelisek held positions at the Company of General Manager, Titleist Golf Clubs and Vice President, Club Sales for both the Titleist and Cobra golf club brands. In addition, Mr.
Steven Pelisek, 63, joined the Company in 1993 and was appointed President, Titleist Golf Clubs in 2016. Prior to that, Mr. Pelisek held positions at the Company of General Manager, Titleist Golf Clubs and Vice President, Club Sales for both the Titleist and Cobra golf club brands. In addition, Mr.
Bohn held positions at the Company of Executive Vice President, Titleist Golf Balls and Communications; Vice President Golf Ball Marketing and Titleist Communications; Vice President, Advertising & Communications; and Director, Titleist Advertising. Ms. Bohn holds a B.S./B.A. in Marketing from the University of New Hampshire.
Bohn held positions at the Company of Executive Vice President, Titleist Golf Balls and Communications; Vice President Golf Ball Marketing and Titleist Communications; Vice President, Advertising & Communications; and Director, Titleist Advertising. Ms. Bohn holds a B.S. in Business Administration from the University of New Hampshire.
Brendan Reidy, 45, joined the Company in January 2019 and was appointed Executive Vice President, Chief People Officer in February 2021. Prior to that, Mr. Reidy was the Company’s Senior Vice President, Chief Human Resources Officer from January 2019 to February 2021.
Brendan Reidy, 46, joined the Company in January 2019 and was appointed Executive Vice President, Chief People Officer in February 2021. Prior to that, Mr. Reidy was the Company’s Senior Vice President, Chief Human Resources Officer from January 2019 to February 2021.
Duke was Vice President and Global Franchise Leader for Hasbro - Transformers Global Brand from 2012-2014, President of Karhu Holdings BV from 2008-2012, and held senior general management and strategy positions with Converse Inc. (a subsidiary of Nike, Inc.). Mr.
Duke was Vice President and Global Franchise Leader for Hasbro - Transformers Global Brand from 2012-2014, President of Karhu Holdings BV from 2008-2012, and held senior general management and strategy positions with 43 Table of Contents Converse Inc. (a subsidiary of Nike, Inc.). Mr.
Prior to joining the Company, he was the Chief Information Officer at Centric Brands from May 2019 to November 2022 and Chief Information Officer, North & Central America at Legrand from July 2015 to May 2019, where he was responsible for developing a global technology foundation and creating a digital-first strategy. Mr.
Czuchra was the Chief Information Officer at Centric Brands from May 2019 to November 2022 and Chief Information Officer, North & Central America at Legrand from July 2015 to May 2019, where he was responsible for developing a global technology foundation and creating a digital-first strategy. Mr.
Reidy worked at P&G and Gillette and held a number of positions in HR including as Country HR Manager for Costa Rica and as a leader of key integration projects for the integration of P&G and Gillette. Mr. Reidy holds a B.A. in English from Stonehill College.
Reidy worked at The Proctor & Gamble Company and Gillette and held a number of positions in HR including as Country HR Manager for Costa Rica and as a leader of key integration projects for the integration of The Proctor & Gamble Company and Gillette. Mr. Reidy holds a B.A. in English from Stonehill College.
Duke also spent time earlier in his career working for Morgan Stanley’s Investment Banking Division and in general management positions with Reebok International Ltd. Mr. Duke holds a B.A. in Economics and History from Boston College and an MBA from Duke University. 41 Table of Contents Christopher Lindner, 54, joined the Company and was appointed President, FootJoy in 2016.
Duke also spent time earlier in his career working for Morgan Stanley’s Investment Banking Division and in general management positions with Reebok International Ltd. Mr. Duke holds a B.A. in Economics and History from Boston College and an M.B.A. from Duke University. Christopher Lindner, 55, joined the Company and was appointed President, FootJoy in 2016.
Prior to joining the Company, Mr. Lindner held positions at Wolverine Worldwide Inc. from 2010 to 2016 where he was President of Keds; Chief Marketing Officer and Senior Vice President of Business Development for Sperry; and Chief Marketing Officer and Senior Vice President of North America Sales for Saucony. Prior to 2010, Mr.
Prior to joining the Company, Mr. Lindner held positions at Wolverine Worldwide Inc. from 2010 to 2016, including as President of Keds, and Chief Marketing Officer and Senior Vice President of North America Sales for Saucony. Prior to 2010, Mr.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Executive Officers Set forth below is information concerning the Company’s executive officers as of March 1, 2023.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Executive Officers Set forth below is information concerning the Company’s executive officers as of February 29, 2024.
Roger Czuchra, 53, joined the Company in November 2022 and was appointed Executive Vice President, Chief Technology and Digital Officer.
Roger Czuchra, 54, joined the Company in November 2022 and was appointed Executive Vice President, Chief Technology and Digital Officer. Prior to joining the Company, Mr.
Czuchra has extensive experience with business analytics and transforming the way diverse, global organizations leverage technology for long-term success. Prior to Legrand, he worked at Stanley Black & Decker. Mr.
Czuchra has extensive experience with business analytics and transforming the way diverse, global organizations leverage technology for long-term success. Prior to Legrand, he worked at Stanley Black & Decker. Mr. Czuchra holds a B.S. in Business Management from Albertus Magnus College and a Master of Science in Organizational Leadership from Quinnipiac University School of Business.
Maher holds a B.S. in Finance from Babson College. Mary Lou Bohn, 62, joined the Company in 1987 and was appointed President, Titleist Golf Balls in 2016. Prior to that, Ms.
From October 2016 to June 2023, Mr. Sullivan served on the Company's Board of Directors. Mr. Sullivan holds an M.B.A. from Columbia Business School and a B.B.A. in Accounting from the University of Notre Dame. Mary Lou Bohn, 63, joined the Company in 1987 and was appointed President, Titleist Golf Balls in 2016. Prior to that, Ms.
Removed
Thomas Pacheco, 54, joined the Company in 2017 and was appointed Executive Vice President, Chief Financial Officer and Chief Accounting Officer in January 2019. Prior to that, Mr. Pacheco was Senior Vice President, Finance and Chief Accounting Officer from April 2017 to December 2018. Prior to joining the Company, Mr.
Added
Maher holds a B.S. in Finance from Babson College. Sean Sullivan, 56, joined the Company and was appointed Executive Vice President and Chief Financial Officer in June 2023. Prior to joining the Company, Mr. Sullivan served as the Executive Vice President and Chief Financial Officer of SiriusXM Holdings, Inc., a position he held since October 2020.
Removed
Pacheco was Senior Vice President, Finance and Chief Audit Executive of Dell Technologies from September 2016 to March 2017. Prior to September 2016, Mr. Pacheco served as Senior Vice President, Finance and Chief Accounting Officer at EMC until it was acquired by Dell Technologies.
Added
Sullivan served as Executive Vice President and Chief Financial Officer of AMC Networks, Inc. from 2011 to September 2020, Chief Corporate Officer of RMH from 2010 to 2011, Chief Financial Officer of HiT Entertainment from 2009 to 2010 and Chief Financial Officer and President of Commercial Print and Packaging division of Cenveo, Inc. from 2005 to 2008.
Removed
He joined EMC in 2005 and held several roles in Finance including Assistant Corporate Controller, CFO - Cloud Services Division and Senior Director of Corporate Accounting and Reporting. Mr. Pacheco is a Certified Public Accountant and holds an M.B.A from the University of North Carolina and a B.S. in Accounting from Providence College.
Added
Nicholas Mohamed , 48, joined the Company in April 2023 and was appointed Vice President, Controller and Principal Accounting Officer in June 2023. Prior to joining the Company, Mr. Mohamed served as the Global Controller of Converse, Inc. from February 2021 to April 2023. From 2016 through February 2021, Mr. Mohamed was Converse, Inc.'s Global Accounting Director.
Removed
Czuchra holds a B.S. in Business Management from Albertus Magnus College and a Master of Science in Organizational Leadership from Quinnipiac University School of Business. 42 Table of Contents PART II
Added
Prior to that, Mr. Mohamed served as Senior Finance Executive of Media General, Inc. in 2015, as Vice President, Controller of LIN Media LLC from 2009 to 2014 and as Director, Finance Mergers and Acquisitions at Sensata Technologies, Inc. from 2007 to 2008. Mr. Mohamed holds a B.S. in Accounting from Georgetown University. 44 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+2 added−0 removed6 unchanged
Biggest changeIn relation to these agreements, we recorded a liability of $92.6 million to purchase an additional 2,000,839 shares of common stock from Magnus as of December 31, 2022. See “Notes to Consolidated Financial Statements-Note 16-Common Stock,” Item 8 of Part II, included elsewhere in this report, for disclosures related to the Magnus share repurchase agreements.
Biggest changeSee “Notes to Consolidated Financial Statements-Note 16-Common Stock,” Item 8 of Part II, included elsewhere in this report, for a description of our Magnus share repurchase agreements.
The graph assumes that $100 was invested on December 31, 2017 in each of our common stock, the S&P 500 Index, and the S&P 500 Consumer Durables & Apparel Index and that all dividends were reinvested.
The graph assumes that $100 was invested on December 31, 2018 in each of our common stock, the S&P 500 Index, and the S&P 500 Consumer Durables & Apparel Index and that all dividends were reinvested.
For a description of the restrictions on our ability to pay dividends under our credit agreement, see “Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and “Notes to Consolidated Financial Statements – Note 11 – Debt and Financing Arrangements.” 43 Table of Contents Issuer Purchases of Equity Securities On June 7, 2018, our Board of Directors authorized us to repurchase up to an aggregate of $20.0 million of our issued and outstanding common stock from time to time.
For a description of the restrictions on our ability to pay dividends under our debt agreements, see “Item 7. - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and “Notes to Consolidated Financial Statements – Note 11 – Debt and Financing Arrangements.” 45 Table of Contents Issuer Purchases of Equity Securities On June 7, 2018, our Board of Directors authorized us to repurchase up to an aggregate of $20.0 million of our issued and outstanding common stock from time to time.
Performance Graph Set forth below is a graph comparing the cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Durables & Apparel Index for the period commencing December 31, 2017 through December 31, 2022. Index data was furnished by FactSet.
Performance Graph Set forth below is a graph comparing the cumulative total stockholder return on our common stock against the cumulative total return of the S&P 500 Index and the S&P 500 Consumer Durables & Apparel Index for the period commencing December 31, 2018 through December 31, 2023. Index data was furnished by FactSet.
Dividend Policy We paid a total of $52.2 million, $49.2 million, and $46.1 million in dividends on our common stock during the years ended December 31, 2022, 2021 and 2020, respectively.
Dividend Policy We paid a total of $52.5 million, $52.2 million and $49.2 million in dividends on our common stock during the years ended December 31, 2023, 2022 and 2021, respectively.
(2) On February 9, 2023, the Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $700.0 million since the share repurchase program was established in 2018.
(2 ) On February 15, 2024, the Board of Directors authorized us to repurchase up to an additional $300.0 million of our issued and outstanding common stock, bringing the total authorization up to $1.0 billion since the share repurchase program was established in 2018.
On February 24, 2023, the last reported sales price of our common stock on the NYSE was $49.11 per share and there were eleven record holders of our common stock.
On February 23, 2024, the last reported sales price of our common stock on the NYSE was $69.46 per share and there were ten record holders of our common stock.
The following table provides information relating to the Company’s purchase of common stock for the fourth quarter of 2022: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (1)(2) (in thousands) October 1, 2022 - October 31, 2022 369,382 $ 44.85 369,382 $ 191,857 November 1, 2022 - November 30, 2022 375,000 45.34 375,000 174,854 December 1, 2022 - December 31, 2022 387,089 45.05 387,089 157,416 Total 1,131,471 $ 45.08 1,131,471 $ 157,416 _____________________________________________________________________________ (1) In connection with our share repurchase program, we have entered into certain share repurchase agreements with Magnus Holdings Co., Ltd.
The following table provides information relating to the Company’s purchase of common stock for the fourth quarter of 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (2) (in thousands) October 1, 2023 - October 31, 2023 393,594 $ 52.45 393,594 $ 181,742 November 1, 2023 - November 30, 2023 (1) 1,889,994 54.83 1,889,994 78,107 December 1, 2023 - December 31, 2023 52,000 60.19 52,000 74,977 Total 2,335,588 $ 54.55 2,335,588 _____________________________________________________________________________ (1) In connection with our share repurchase program, we have entered into certain share repurchase agreements with Magnus Holdings Co., Ltd.
On July 26, 2022, our Board of Directors authorized us to repurchase up to an additional $100.0 million of our issued and outstanding common stock, bringing the total authorization up to $450.0 million. The repurchase program will remain in effect until completed or until terminated by the Board of Directors.
On July 26, 2022, our Board of Directors authorized us to repurchase up to an additional $100.0 million of our issued and outstanding common stock. On February 9, 2023, the Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $700.0 million.
Comparison of Cumulative Total Returns 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 Acushnet Holdings Corp. $100.00 $102.10 $160.92 $204.66 $271.57 $220.75 S&P 500 $100.00 $95.62 $125.72 $148.85 $191.58 $156.88 S&P 500 Consumer Durables & Apparel $100.00 $88.04 $118.33 $142.22 $174.02 $122.93 Recent Sales of Unregistered Securities None.
Comparison of Cumulative Total Returns 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 31-Dec-23 Acushnet Holdings Corp. $100.00 $157.83 $200.73 $266.35 $216.51 $326.94 S&P 500 $100.00 $132.62 $157.02 $202.09 $165.49 $209.00 S&P 500 Consumer Durables & Apparel $100.00 $135.42 $162.76 $199.15 $140.69 $166.87 Recent Sales of Unregistered Securities None.
Added
The repurchase program will remain in effect until completed or until terminated by the Board of Directors.
Added
In relation to certain of these agreements, we purchased 1,824,994 shares of our common stock from Magnus for an aggregate of $100.0 million on November 3, 2023, in satisfaction of our obligations under our share repurchase agreements with Magnus.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+17 added−23 removed62 unchanged
Biggest changeThe year ended December 31, 2020 also includes pension settlement costs of $7.2 million related to lump-sum distributions to participants in our defined benefit plans as a result of the voluntary retirement program as part of management’s approved restructuring program, as well as other immaterial unusual or non-recurring items, net. 50 Table of Contents Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Net sales by reportable segment is summarized as follows: Year ended Constant Currency December 31, Increase/(Decrease) Increase/(Decrease) (in millions) 2022 2021 $ change % change $ change % change Titleist golf balls $ 678.8 $ 667.6 $ 11.2 1.7 % $ 37.9 5.7 % Titleist golf clubs 609.6 551.5 58.1 10.5 % 89.7 16.3 % Titleist golf gear 204.9 192.6 12.3 6.4 % 24.1 12.5 % FootJoy golf wear 618.0 580.6 37.4 6.4 % 71.1 12.2 % Net sales information by region is summarized as follows: Year ended Constant Currency December 31, Increase/(Decrease) Increase/(Decrease) (in millions) 2022 2021 $ change % change $ change % change United States $ 1,227.8 $ 1,125.0 $ 102.8 9.1 % $ 102.8 9.1 % EMEA (1) 321.5 296.0 25.5 8.6 % 60.6 20.5 % Japan 161.0 188.0 (27.0) (14.4) % 4.2 2.2 % Korea 312.7 322.6 (9.9) (3.1) % 29.6 9.2 % Rest of World 247.3 216.3 31.0 14.3 % 43.5 20.1 % Total net sales $ 2,270.3 $ 2,147.9 $ 122.4 5.7 % $ 240.7 11.2 % _______________________________________________________________________________ (1) Europe, the Middle East and Africa ("EMEA") Segment operating income by reportable segment is summarized as follows: Year ended December 31, Increase/(Decrease) (in millions) 2022 2021 $ change % change Titleist golf balls $ 112.7 $ 106.2 $ 6.5 6.1 % Titleist golf clubs 100.9 75.4 25.5 33.8 % Titleist golf gear 11.7 14.7 (3.0) (20.4) % FootJoy golf wear 37.0 44.2 (7.2) (16.3) % 51 Table of Contents Net Sales For the year ended December 31, 2022, net sales increased 5.7%, or 11.2% on a constant currency basis, compared to the year ended December 31, 2021.
Biggest change(2) The year ended December 31, 2021 includes pension settlement costs of $2.1 million related to lump-sum distributions to participants in our defined benefit plans as a result of the voluntary retirement program as part of management’s approved restructuring program, as well as $2.4 million of severance and other costs associated with management's program to refine our business model and improve operational efficiencies. 52 Table of Contents Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Net sales by reportable segment is summarized as follows: Year ended Constant Currency December 31, Increase/(Decrease) Increase/(Decrease) (in millions) 2023 2022 $ change % change $ change % change Titleist golf balls $ 761.7 $ 678.8 $ 82.9 12.2 % $ 91.3 13.5 % Titleist golf clubs 658.6 609.6 49.0 8.0 % 58.2 9.5 % Titleist golf gear 216.2 204.9 11.3 5.5 % 14.3 7.0 % FootJoy golf wear 596.4 618.0 (21.6) (3.5) % (12.7) (2.1) % Net sales information by region is summarized as follows: Year ended Constant Currency December 31, Increase/(Decrease) Increase/(Decrease) (in millions) 2023 2022 $ change % change $ change % change United States $ 1,350.0 $ 1,227.8 $ 122.2 10.0 % $ 122.2 10.0 % EMEA (1) 314.7 321.5 (6.8) (2.1) % (4.6) (1.4) % Japan 149.4 161.0 (11.6) (7.2) % 0.2 0.1 % Korea 301.8 312.7 (10.9) (3.5) % (5.2) (1.7) % Rest of World 266.1 247.3 18.8 7.6 % 29.0 11.7 % Total net sales $ 2,382.0 $ 2,270.3 $ 111.7 4.9 % $ 141.6 6.2 % _______________________________________________________________________________ (1) Europe, the Middle East and Africa ("EMEA") Segment operating income by reportable segment is summarized as follows: Year ended December 31, Increase/(Decrease) (in millions) 2023 2022 $ change % change Titleist golf balls $ 144.3 $ 112.7 $ 31.6 28.0 % Titleist golf clubs 106.5 100.9 5.6 5.6 % Titleist golf gear 21.2 11.7 9.5 81.2 % FootJoy golf wear 16.1 37.0 (20.9) (56.5) % 53 Table of Contents Net Sales For the year ended December 31, 2023, net sales increased 4.9%, or 6.2% on a constant currency basis, compared to the year ended December 31, 2022.
While rounds of play had been relatively stable for years, the game experienced an approximate 8% global increase in rounds in both 2021 and 2020 as dedicated golfers took full advantage of favorable weather, hybrid work schedules and an increase in discretionary time due to the circumstances attendant to the COVID-19 pandemic.
While rounds of play had been relatively stable for years, the game experienced an approximate 8% global increase in rounds in both 2020 and 2021 as dedicated golfers took full advantage of favorable weather, hybrid work schedules and an increase in discretionary time due to the circumstances attendant to the COVID-19 pandemic.
Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in the agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income relating to noncontrolling interests.
Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in our agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income (loss) relating to noncontrolling interests.
Because our consolidated accounts are reported in U.S. dollars, we are also exposed to currency translation risk when we translate the financial results of our consolidated non‑U.S. subsidiaries from their local currency into U.S. dollars.
Because our consolidated accounts are reported in U.S. dollars, we are also exposed to currency translation risk when we translate the financial results of our consolidated subsidiaries from their local currency into U.S. dollars.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 A review of our cash flow activities for the year ended December 31, 2021 as compared to the year ended December 31, 2020 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Annual Report for the year ended December 31, 2021, which was filed with the SEC on March 1, 2022, and is incorporated herein by reference.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 A review of our cash flow activities for the year ended December 31, 2022 as compared to the year ended December 31, 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Annual Report for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023, and is incorporated herein by reference.
Recently Issued Accounting Standards We have reviewed all recently issued accounting standards and have determined that, other than as disclosed in “Notes to Consolidated Financial Statements – Note 2 – Summary of Significant Accounting Policies”, Item 8 of Part II, included elsewhere in this report, such accounting standards will not have a significant impact on our consolidated financial statements or do not otherwise apply to our operations. 58 Table of Contents
Recently Issued Accounting Standards We have reviewed all recently issued accounting standards and have determined that, other than as disclosed in “Notes to Consolidated Financial Statements – Note 2 – Summary of Significant Accounting Policies”, Item 8 of Part II, included elsewhere in this report, such accounting standards will not have a significant impact on our consolidated financial statements or otherwise do not apply to our operations. 60 Table of Contents
You should carefully read the “Special Note Regarding Forward‑Looking Statements” section of this report following the Table of Contents. Overview We are the global leader in the design, development, manufacture and distribution of performance‑driven golf products, which are widely recognized for their quality excellence.
You should carefully read the “Special Note Regarding Forward‑Looking Statements” section of this report following the Table of Contents. Overview We are the global leader in the design, development, manufacture and distribution of performance-driven golf products, and these products are widely recognized for their quality excellence.
Golf participation among younger generations and certain socioeconomic and ethnic groups may not prove to be as popular as it is among the current gen‑x and baby boomer generations. In such case, sales of our products could be negatively impacted.
Golf participation among younger generations and certain socioeconomic and ethnic groups may not prove to be as popular as it is among older "millennials" and the current gen‑x and baby boomer generations. In such case, sales of our products could be negatively impacted.
As of December 31, 2022, we had a valuation allowance on certain net operating loss and tax credit carryforwards based on our assessment that it is more likely than not that the deferred tax assets will not be recognized.
As of December 31, 2023, we had a valuation allowance on certain net operating loss and tax credit carryforwards based on our assessment that it is more likely than not that the deferred tax assets will not be recognized.
In general, we launch: • drivers and fairways in the third or fourth quarter of even‑numbered years, which typically results in an increase in sales of drivers and fairways during such quarters because retailers take on initial supplies of these products as stock inventory, with increased sales generated by such new products continuing the following spring and summer of odd‑numbered years; • hybrids in the first or second quarter of odd-numbered years, with the majority of sales generated by such new products occurring in the spring, summer and fall of odd‑numbered years; • irons in the third or fourth quarter of odd‑numbered years, with the majority of sales generated by such new products occurring in the following spring and summer of even‑numbered years because a higher percentage of our new irons as compared to our drivers and fairways are sold through on a custom fit basis and the spring and summer is when golfers tend to make such custom fit purchases; • Vokey Design wedges in the first quarter of even‑numbered years, with the majority of sales generated by such new products occurring in the spring and summer of such even‑numbered years; and • Scotty Cameron putters in the first quarter, with the majority of sales generated by such new products occurring in the spring and summer of the year in which they are launched.
In general, we launch: • drivers and fairways in the third or fourth quarter of even‑numbered years, which typically results in an increase in sales of drivers and fairways during such quarters because retailers take on initial supplies of these products as stock inventory, with increased sales generated by such new products continuing the following spring and summer of odd‑numbered years; • hybrids in the first or second quarter of odd-numbered years, with the majority of sales generated by such new products occurring in the spring, summer and fall of odd‑numbered years; • irons in the third or fourth quarter of odd‑numbered years, with the majority of sales generated by such new products occurring in the following spring and summer of even‑numbered years because a higher percentage of our new irons as compared to our drivers and fairways are sold through on a custom fit basis and the spring and summer is when golfers tend to make such custom fit purchases; • Vokey Design wedges in the first quarter of even‑numbered years, with the majority of sales generated by such new products occurring in the spring and summer of such even‑numbered years; and • Scotty Cameron putters in the first quarter, with Super Select models launched in odd-numbered years and Phantom X models launched in even-numbered years, with the majority of sales generated by such new products occurring in the spring and summer of the year in which they are launched.
Lastly, we use segment operating income (loss) to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. 49 Table of Contents Results of Operations The following table sets forth, for the periods indicated, our results of operations.
Lastly, we use segment operating income (loss) to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. 51 Table of Contents Results of Operations The following table sets forth, for the periods indicated, our results of operations.
As of December 31, 2022 and 2021, the cumulative valuation allowance against deferred tax assets was $34.1 million and $30.0 million, respectively. We are subject to income taxes in the U.S. and foreign jurisdictions. We account for uncertain tax positions using a more likely than not threshold for recognizing and resolving uncertain tax matters.
As of December 31, 2023 and 2022, the cumulative valuation allowance against deferred tax assets was $34.0 million and $34.1 million, respectively. We are subject to income taxes in the U.S. and foreign jurisdictions. We account for uncertain tax positions using a more likely than not threshold for recognizing and resolving uncertain tax matters.
Our fourth‑quarter sales are generally less than the other quarters due to the end of the golf season in many of our key markets, but can also be affected by key product launches.
Our fourth‑quarter sales are generally less than the other quarters due to the end of the golf season in many of our key markets, but can also be affected by key product launches, particularly golf clubs.
See "Notes to Consolidated Financial Statements-Note 11-Debt and Financing Arrangements", "Note 4-Leases", "Note 22-Commitments and Contingencies" and "Note 14-Pension and Other Postretirement Benefits" in Item 8 of Part II of this Annual Report for more information on the nature and timing of obligations for debt, leases, purchase obligations and pension and postretirement benefit plans, respectively.
See "Notes to Consolidated Financial Statements-Note 11-Debt and Financing Arrangements", "Note 4-Leases", "Note 22-Commitments and Contingencies" and "Note 14-Pension and Other Postretirement Benefits" in Item 8 of Part II of this 58 Table of Contents Annual Report for more information on the nature and timing of obligations for debt, leases, purchase obligations and pension and postretirement benefit plans, respectively.
Discretionary spending on golf and the golf products we sell is affected by consumer spending habits, as well as by many macroeconomic factors, including general business conditions, stock market prices and volatility, corporate spending, housing prices, the rate of inflation, interest rates, the availability of consumer credit, taxes and consumer confidence in future economic conditions.
Discretionary spending on golf and the golf products we sell is affected by consumer spending habits, as well as by many macroeconomic factors, including general business conditions, stock market prices and volatility, corporate spending, housing prices, the rate of inflation, interest rates, 47 Table of Contents the availability of consumer credit, taxes and consumer confidence in future economic conditions.
In general, however, because of this seasonality, a larger portion of our sales and profitability generally occurs during the first half of the year. Cyclicality Our sales can also be affected by the launch timing of new products. Product introductions generally stimulate sales as the golf retail channel takes on inventory of new products.
In general, however, because of this seasonality, a larger portion of our sales and profitability generally occurs during the first half of the year. 48 Table of Contents Cyclicality Our sales can also be affected by the launch timing of new products. Product introductions generally stimulate sales as the golf retail channel takes on inventory of new products.
In taking this active approach, we coordinate with the management teams of our key non‑U.S. subsidiaries on an ongoing basis to share our views on anticipated currency movements and make decisions on securing foreign currency exchange contract positions that are incorporated into our business planning and forecasting processes.
In taking this active approach, we coordinate with the management teams of our key subsidiaries on an ongoing basis to share our views on anticipated currency movements and make decisions on securing foreign currency exchange contract positions that are incorporated into our business planning and forecasting processes.
It should not be considered an alternative to any measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or non‑recurring items, or affected 48 Table of Contents by similar non‑recurring items.
It should not be considered an alternative to any measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or non‑recurring items, or affected by similar non‑recurring items.
We present Adjusted EBITDA margin as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is not a measurement of financial performance under U.S. GAAP.
We present Adjusted EBITDA margin as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. 50 Table of Contents Adjusted EBITDA margin is not a measurement of financial performance under U.S. GAAP.
Capital expenditures in 2023 are expected to be approximately $75.0 million, although the actual amount may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases due to supply chain challenges.
Capital expenditures in 2024 are expected to be approximately $85.0 million, although the actual amount may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases due to supply chain challenges.
The credit agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of December 31, 2022, we were in compliance with all covenants under our credit agreement.
Our credit agreements also include customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of December 31, 2023, we were in compliance with all covenants under our credit agreements.
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; restructuring charges; the non-service cost component of net periodic benefit cost; transaction fees and other non-operating gains and losses as we do not allocate these to the reportable segments.
Segment operating income includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes certain other costs, such as interest expense, net; restructuring costs; the non-service cost component of net periodic benefit cost; transaction fees; as well as other non-operating gains and losses that are not allocated to the reportable segments.
Beyond the gen‑x and baby boomer generation, promising developments in golf include the generational shift with millennial golfers making their marks at both professional and amateur levels and, in 2022, accounting for 25% of golfers overall in the U.S., and the increase in the number of juniors (ages 6-17) who play golf in recent years.
Beyond the gen‑x and baby boomer generation, promising developments in golf include the generational shift with millennial golfers making their marks at both professional and amateur levels and the increase in the number of juniors (ages 6-17) who play golf in recent years.
Consumers are generally more willing to spend their time and money to play golf and make discretionary purchases of golf products when economic conditions are favorable and when consumers feel confident and prosperous.
Economic Conditions Our products are recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to spend their time and money to play golf and make discretionary purchases of golf products when economic conditions are favorable and when consumers feel confident and prosperous.
Decreasing the discount rate by 100 basis points would decrease net periodic pension cost by approximately $0.3 million and increase other postretirement benefit cost by approximately $0.2 million for the year ended December 31, 2022.
Decreasing the discount rate by 100 basis points would increase net periodic pension cost by less than $0.1 million and increase other postretirement benefit cost by approximately $0.3 million for the year ended December 31, 2023.
The decrease in ETR was primarily driven by changes in our jurisdictional mix of earnings. 52 Table of Contents Segment Results Titleist Golf Balls Segment Net sales in our Titleist golf balls segment increased 1.7%, or 5.7% on a constant currency basis, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The decrease in ETR was primarily driven by changes in our jurisdictional mix of earnings. Segment Results Titleist Golf Balls Segment Net sales in our Titleist golf balls segment increased 12.2%, or 13.5% on a constant currency basis, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Additionally, see "Risk Factors - Risks Related to Our Indebtedness", Item 1A of Part I included elsewhere in this report, for further discussion surrounding the risks and uncertainties related to our credit facilities. 54 Table of Contents Dividends and Share Repurchase Program During the year ended December 31, 2022, we paid dividends on our common stock of $52.2 million to our shareholders.
Additionally, see "Risk Factors - Risks Related to Our Indebtedness", Item 1A of Part I included elsewhere in this report, for further discussion surrounding the risks and uncertainties related to our debt and financing arrangements. Dividends and Share Repurchase Program During the year ended December 31, 2023, we paid dividends on our common stock of $52.5 million to our shareholders.
We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business. As noted previously, the macroeconomic environment, including the ongoing COVID-19 pandemic, could impact our results of operations in ways we cannot currently predict.
We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business. Macroeconomic factors could impact our results of operations in ways we cannot currently predict.
Other Expense, net Other expense, net increased $4.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase in the non-service cost component of net periodic benefit expense, as well as changes in the fair value of Rabbi trust assets.
Other Expense, net Other expense, net decreased $6.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to a decrease in the non-service cost component of net periodic benefit cost, as well as changes in the fair value of Rabbi trust assets.
Titleist Golf Clubs Segment Net sales in our Titleist golf clubs segment increased 10.5%, or 16.3% on a constant currency basis, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Titleist Golf Clubs Segment Net sales in our Titleist golf clubs segment increased 8.0%, or 9.5% on a constant currency basis, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
During the first quarter of 2023, our Board of Directors declared a dividend of $0.195 per share of common stock to shareholders of record as of March 10, 2023, which is payable on March 24, 2023.
During the first quarter of 2024, our Board of Directors declared a dividend of $0.215 per share of common stock to shareholders of record as of March 8, 2024, which is payable on March 22, 2024.
In each of the three years ended December 31, 2022, approximately one-half of our net sales and one-third of our total operating expenses (which amounts represent substantially all of the operating expenses incurred by our non‑U.S. subsidiaries) were denominated in foreign currencies.
In each of the three years ended December 31, 2023, nearly one-half of our net sales and one-third of our total operating expenses (which amounts represent substantially all of the operating expenses incurred by our subsidiaries in regions outside of the United States) were denominated in foreign currencies.
Our projected benefit obligations related to our pension and other postretirement benefit plans are valued using a weighted‑average discount rate of 5.16% and 5.10%, respectively, for the year ended December 31, 2022.
Our projected benefit obligations related to our pension and other postretirement benefit plans are valued using a weighted‑average discount rates of 4.93% and 4.92%, respectively, for the year ended December 31, 2023.
Cash Flows from Financing Activities The decrease in cash used in financing activities for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to an increase in borrowings, offset in part by an increase in purchases of our common stock.
Cash Flows from Financing Activities The increase in cash used in financing activities for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by an increase in purchases of common stock, as well as a decrease in net proceeds from borrowings.
We perform our annual impairment test of goodwill during the fourth quarter of our fiscal year. We recorded a goodwill impairment loss of $3.8 million for the year ended December 31, 2020 related to KJUS. There were no other impairment losses recorded for the years ended December 31, 2022, 2021 and 2020.
We perform our annual impairment test of goodwill during the fourth quarter of our fiscal year. There were no impairment losses recorded for the years ended December 31, 2023, 2022 and 2021.
Working capital at any specific point in time is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.
These inventory changes were driven by improvements in our supply chain and overall year-end inventory position. Working capital at any specific point in time is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.
Income Tax Expense Income tax expense decreased $9.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. Our effective tax rate ("ETR") was 20.9% for the year ended December 31, 2022 compared to 25.7% for the year ended December 31, 2021.
Income Tax Expense Income tax expense decreased $11.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Our effective tax rate ("ETR") was 17.8% for the year ended December 31, 2023 compared to 20.9% for the year ended December 31, 2022.
See “Notes to Consolidated Financial Statements-Note 2-Summary of Significant Accounting Policies, Note 8-Business Combinations and Note 9-Goodwill and Intangible Assets,” Item 8 of Part II, included elsewhere in this report, for additional information regarding our acquisitions during the year ended December 31, 2022. Capital Expenditures We made $61.4 million of capital expenditures during the year ended December 31, 2022.
See “Notes to Consolidated Financial Statements-Note 9-Goodwill and Intangible Assets,” Item 8 of Part II, included elsewhere in this report, for additional information. 57 Table of Contents Capital Expenditures We made $75.4 million of capital expenditures during the year ended December 31, 2023.
Cash Flows from Investing Activities The increase in cash used in investing activities for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily driven by cash paid for business and trademark acquisitions during the year ended December 31, 2022, as well as increased capital expenditures for the same period.
Cash Flows from Investing Activities The decrease in cash used in investing activities for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily driven by cash paid during the year ended December 31, 2022 for the acquisitions of trademarks related to our putter business, as well as cash paid for business acquisitions during the same period.
Our ability to generate sufficient cash flows from operations is, however, subject to many risks and uncertainties, including current and future economic trends and conditions, demand for our products, availability and cost of our raw materials and components, foreign currency exchange rates and other risks and uncertainties applicable to our business, as described in "Risk Factors," Item 1A of Part I included elsewhere in this report.
Our ability to generate sufficient cash flows from operations is, however, subject to many risks and uncertainties, including current and future economic trends and conditions, demand for our products, availability and cost of our raw materials and components, foreign currency exchange rates and other risks and uncertainties applicable to our business, as described in "Risk Factors," Item 1A of Part I included elsewhere in this report. 56 Table of Contents Debt and Financing Arrangements As of December 31, 2023, we had $616.7 million of availability under our multi-currency revolving credit facility after giving effect to $8.1 million of outstanding letters of credit.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 A detailed review of our results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Annual Report for the year ended December 31, 2021, which was filed with the SEC on March 1, 2022, and is incorporated herein by reference. 53 Table of Contents Liquidity and Capital Resources Our primary cash needs relate to working capital, capital expenditures, servicing our debt, paying dividends, pension contributions and repurchasing shares of our common stock.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 A detailed review of our results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Annual Report for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023, and is incorporated herein by reference.
On February 9, 2023, our Board of Directors authorized us to repurchase up to an additional $250.0 million of our issued and outstanding common stock, bringing the total authorization up to $700.0 million since the share repurchase program was established in 2018.
As of December 31, 2023, we had $75.0 million remaining under the current share repurchase authorization. On February 15, 2024, our Board of Directors authorized us to repurchase up to an additional $300.0 million of our issued and outstanding common stock, bringing the total authorization up to $1.0 billion since the share repurchase program was established in 2018.
Substantially all of these net sales generated outside of the United States were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar.
Substantially all of these net sales were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar. In contrast, substantially all of the purchases of inventory, raw materials or components by subsidiaries in these regions are made in U.S. dollars.
Additionally, our net periodic benefit cost related to our pension plans is calculated using an expected return on plan assets of 3.44% for the year ended December 31, 2022.
Additionally, our net periodic benefit cost related to our pension plans is calculated using an expected return on plan assets of 3.91% for the year ended December 31, 2023. Decreasing the expected return on plan assets by 100 basis points would increase net periodic pension benefit cost by approximately $2.0 million for the year ended December 31, 2023.
The increase in net sales in the United States was primarily as a result of increases of $51.2 million in Titleist golf clubs, $20.6 million in Titleist golf balls, $13.8 million in FootJoy golf wear and $10.1 million in Titleist golf gear.
The increase in net sales in the United States was primarily as a result of increases of $62.0 million in Titleist golf balls, $41.0 million in Titleist golf clubs, $7.7 million in FootJoy golf wear and $7.3 million in Titleist golf gear.
The increase in operating income resulted from higher gross profit of $9.0 million, partially offset by higher operating expenses of $2.4 million. The increase in gross profit was primarily driven by sales volume increases and higher average selling prices, partially offset by higher manufacturing costs and higher inbound freight costs.
The increase in operating income resulted from higher gross profit of $52.7 million, partially offset by higher operating expenses of $20.8 million. The increase in gross profit was primarily driven by higher sales volumes and higher average selling prices as discussed above and lower inbound freight costs.
Year ended December 31, (in thousands) 2022 2021 2020 Net sales $ 2,270,336 $ 2,147,930 $ 1,612,169 Cost of goods sold 1,091,103 1,029,493 782,333 Gross profit 1,179,233 1,118,437 829,836 Operating expenses: Selling, general and administrative 833,422 795,422 610,603 Research and development 56,393 55,335 48,942 Intangible amortization (1) 7,885 7,868 11,629 Restructuring charges — — 13,207 Income from operations 281,533 259,812 145,455 Interest expense, net 13,269 7,709 15,630 Other expense, net 8,829 4,280 16,776 Income before income taxes 259,435 247,823 113,049 Income tax expense 54,351 63,583 13,038 Net income 205,084 184,240 100,011 Less: Net income attributable to noncontrolling interests (5,806) (5,367) (4,005) Net income attributable to Acushnet Holdings Corp. $ 199,278 $ 178,873 $ 96,006 Adjusted EBITDA: Net income attributable to Acushnet Holdings Corp. $ 199,278 $ 178,873 $ 96,006 Interest expense, net 13,269 7,709 15,630 Income tax expense 54,351 63,583 13,038 Depreciation and amortization (1) 41,706 41,243 45,429 Share-based compensation 24,083 27,639 16,016 Restructuring and transformation costs (2) — 2,429 15,589 Beam indemnification expense (3) — — 9,871 Other extraordinary, unusual or non-recurring items, net (4)(5) (85) 1,494 17,600 Net income attributable to noncontrolling interests 5,806 5,367 4,005 Adjusted EBITDA $ 338,408 $ 328,337 $ 233,184 Adjusted EBITDA margin 14.9 % 15.3 % 14.5 % ___________________________________ (1) The year ended December 31, 2020 includes a goodwill impairment loss of $3.8 million related to KJUS.
Year ended December 31, (in thousands) 2023 2022 2021 Net sales $ 2,381,995 $ 2,270,336 $ 2,147,930 Cost of goods sold 1,129,484 1,091,103 1,029,493 Gross profit 1,252,511 1,179,233 1,118,437 Operating expenses: Selling, general and administrative 888,145 833,422 795,422 Research and development 64,839 56,393 55,335 Intangible amortization 14,222 7,885 7,868 Income from operations 285,305 281,533 259,812 Interest expense, net 41,288 13,269 7,709 Other expense, net 2,417 8,829 4,280 Income before income taxes 241,600 259,435 247,823 Income tax expense 42,993 54,351 63,583 Net income 198,607 205,084 184,240 Less: Net income attributable to noncontrolling interests (178) (5,806) (5,367) Net income attributable to Acushnet Holdings Corp. $ 198,429 $ 199,278 $ 178,873 Adjusted EBITDA: Net income attributable to Acushnet Holdings Corp. $ 198,429 $ 199,278 $ 178,873 Interest expense, net 41,288 13,269 7,709 Income tax expense 42,993 54,351 63,583 Depreciation and amortization 51,356 41,706 41,243 Share-based compensation 29,709 24,083 27,639 Other extraordinary, unusual or non-recurring items, net (1)(2) 12,185 (85) 3,923 Net income attributable to noncontrolling interests 178 5,806 5,367 Adjusted EBITDA $ 376,138 $ 338,408 $ 328,337 Adjusted EBITDA margin 15.8 % 14.9 % 15.3 % ___________________________________ (1) The year ended December 31, 2023 includes costs associated with the optimization of our distribution and custom fulfillment capabilities.
Such assets arise because of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as from net operating losses and tax credit carryforwards.
Income Taxes Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as from net operating losses and tax credit carryforwards.
In general, in odd-numbered years, we launch our premium performance models, Pro V1 and Pro V1x, in the first quarter and in even-numbered years, we launch our premium performance AVX model and most performance models in the first and second quarters.
Product Life Cycles Titleist Golf Balls Segment We generally launch new Titleist golf ball models on a two-year cycle. In general, in odd-numbered years, we launch our premium performance models, Pro V1 and Pro V1x, in the first quarter and in even-numbered years, we launch our premium performance AVX model and most performance models in the first and second quarters.
See "Notes to Consolidated Financial Statements- Note 11- Debt and Financing Arrangements," Item 8 of Part II included elsewhere in this report, for a description of our credit facilities and related credit agreements.
As of December 31, 2023, we were in compliance with all covenants under the Indenture. See "Notes to Consolidated Financial Statements- Note 11- Debt and Financing Arrangements," Item 8 of Part II included elsewhere in this report, for a description of our debt and financing arrangements.
Capital expenditures generally relate to investments to support the manufacturing and distribution of products, our go to market activities and continued investments in information technology to support our global strategic initiatives. 55 Table of Contents Cash Flows The following table presents the major components of net cash flows from operating, investing and financing activities for the periods indicated: Year ended December 31, (in thousands) 2022 2021 2020 Cash flows from: Operating activities $ (67,787) $ 314,122 $ 264,425 Investing activities (140,222) (37,597) (24,675) Financing activities (8,584) (140,326) (128,587) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (6,180) (5,974) 6,105 Net (decrease) increase in cash, cash equivalents and restricted cash $ (222,773) $ 130,225 $ 117,268 Cash Flows from Operating Activities The change in cash flows from operating activities for the year ended December 31, 2022 compared to the year ended December 31, 2021 was driven by changes in working capital.
Cash Flows The following table presents the major components of net cash flows from operating, investing and financing activities for the periods indicated: Year ended December 31, (in thousands) 2023 2022 2021 Cash flows from: Operating activities $ 371,827 $ (67,787) $ 314,122 Investing activities (101,486) (140,222) (37,597) Financing activities (264,725) (8,584) (140,326) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 915 (6,180) (5,974) Net increase (decrease) in cash, cash equivalents and restricted cash $ 6,531 $ (222,773) $ 130,225 Cash Flows from Operating Activities The increase in cash provided by operating activities for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was primarily related to changes in working capital, largely driven by inventory.
The increase was primarily driven by higher sales volumes and average selling prices. Sales volumes were negatively impacted by certain raw material availability. Operating income in our Titleist golf balls segment increased $6.5 million, or 6.1%, compared to the prior year period.
The increase was primarily driven by higher sales volumes across all product categories, except gloves, and higher average selling prices across all product categories. Operating income in our Titleist golf gear segment increased $9.5 million, or 81.2%, compared to the prior year period.
This increase was partially offset by lower sales volumes of second model year hybrids. Operating income in our Titleist golf clubs segment increased $25.5 million, or 33.8%, compared to the prior year period. The increase in operating income resulted from higher gross profit of $35.8 million, partially offset by higher operating expenses of $10.2 million.
Operating income in our Titleist golf clubs segment increased $5.6 million, or 5.6%, compared to the prior year period. The increase in operating income resulted from higher gross profit of $37.8 million, partially offset by higher operating expenses of $28.5 million and intangible amortization expense of $3.6 million.
Off‑Balance Sheet Arrangements As of December 31, 2022, other than as discussed above, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources. 56 Table of Contents Critical Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
Off‑Balance Sheet Arrangements As of December 31, 2023, other than as discussed above, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
On June 16, 2022, we entered into a new agreement with Magnus to purchase from Magnus an equal amount of our common stock as we purchase on the open market, up to an aggregate of $75.0 million at the same weighted average per share price (the "2022 Agreement").
(“Magnus”), a wholly-owned subsidiary of Fila Holdings Corp., to purchase from Magnus an equal amount of our common stock as we purchase on the open market, over the period of time from June 12, 2023 through October 27, 2023, up to an aggregate of $100.0 million at the same weighted average per share price (the "2023 Agreement").
Because our non‑U.S. subsidiaries incur substantially all of their cost of goods sold in currencies that are different from the currencies in which they generate substantially all of their sales, we are exposed to transaction risk attributable to fluctuations in such exchange rates, which can impact the gross profit of our non‑U.S. subsidiaries. 47 Table of Contents In an effort to protect against adverse fluctuations in foreign exchange rates and minimize foreign currency transaction risk, we take an active approach to currency hedging, which includes among other things, entering into various foreign exchange forward contracts, with the primary goal of providing earnings and cash flow stability.
In an effort to protect against adverse fluctuations in foreign exchange rates and minimize foreign currency transaction risk, we take an active approach to currency hedging, which includes among other things, entering into various foreign exchange forward contracts, with the primary goal of providing earnings and cash flow stability.
Foreign Currency Net sales generated outside of the United States by our non‑U.S. subsidiaries represent approximately 50% of our net sales in each of the three years ended December 31, 2022.
Foreign Currency Net sales generated in regions outside of the United States represented nearly half of our net sales in each of the three years ended December 31, 2023.
In January 2023, we acquired certain trademarks, domains and products of an industry leader specializing in premium performance golf travel products for $25.0 million.
Other Business Developments In January 2023, we acquired certain trademarks from West Coast Trends, Inc., an industry leader specializing in Club Glove premium performance golf travel products, for $25.2 million.
Basis of Presentation The accompanying results 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"), our wholly-owned subsidiaries and less than wholly-owned subsidiaries, including a variable interest entity (“VIE”) in which we are the primary beneficiary.
GAAP”) and include the accounts of Acushnet Holdings Corp. ("the Company"), our wholly-owned subsidiaries and less than wholly-owned subsidiaries, including a variable interest entity (“VIE”) in which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. We have four reportable segments.
Decreasing the discount rate by 100 basis points would have increased the projected benefit obligations of our pension and other postretirement benefit plan by approximately $30.0 million and $1.2 million, respectively, for the year ended December 31, 2022.
Decreasing the discount rates by 100 basis points would have increased the projected benefit obligations of our pension and other postretirement benefit plan by approximately $32.6 million and $1.0 million, respectively, for the year ended December 31, 2023. 59 Table of Contents Our net periodic benefit cost related to our pension and other postretirement benefit plans is calculated using a weighted average discount rate of 5.16% and 5.10%, respectively, for the year ended December 31, 2023.
Reorders of these new products then depend on the rate of 46 Table of Contents sell‑through. Announcements of new products can often cause our customers to defer purchasing additional golf equipment until our new products are available.
Reorders of these new products then depend on the rate of sell‑through. Announcements of new products can often cause our customers to defer purchasing additional golf equipment until our new products are available. The varying product introduction cycles described below may cause our results of operations to fluctuate as each product line has different volumes, prices and margins.
As of December 31, 2022, we had $57.1 million of unrestricted cash and cash equivalents (including $13.7 million attributable to our FootJoy golf shoe variable interest entity). As of December 31, 2022, 96.1% of our total unrestricted cash and cash equivalents was held at our non‑U.S. subsidiaries, including our FootJoy golf shoe variable interest entity.
As of December 31, 2023, we had $63.7 million of unrestricted cash and cash equivalents (including $11.8 million attributable to our FootJoy golf shoe variable interest entity). As of December 31, 2023, 97.3% of our total unrestricted cash and cash equivalents was held by subsidiaries in regions outside of the United States, including our FootJoy golf shoe variable interest entity.
This increase was primarily due to an increase in interest rates for the year ended December 31, 2022, as well as an increase in borrowings, offset in part by a decrease in losses from interest rate swaps.
Interest Expense, net Interest expense, net increased $28.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was primarily due to an increase in borrowings, as well as an increase in interest rates for the year ended December 31, 2023.
In contrast, substantially all of the purchases of inventory, raw materials or components by our non‑U.S. subsidiaries are made in U.S. dollars. For each of the three years ended December 31, 2022, approximately 85% of our cost of goods sold incurred by our non‑U.S. subsidiaries was denominated in U.S. dollars.
For each of the three years ended December 31, 2023, approximately 85% of our cost of goods sold incurred by our subsidiaries in regions outside of the United States were denominated in U.S. dollars.
Operating expenses increased primarily as a result of increases of $3.5 million and $1.5 million in administrative and selling expenses, respectively, partially offset by a decrease of $2.4 million in advertising and promotional expenses.
Operating expenses increased primarily as a result of increases of $9.3 million, $8.0 million and $3.6 million in selling, advertising and promotional, and research and development expenses, respectively.
These increases were partially offset by a decrease of $4.5 million in advertising and promotional expenses and a decrease in employee related expenses. SG&A also includes an increase of $8.5 million in foreign currency transaction losses, offset in part by an increase in gains on foreign exchange forward contracts of $2.5 million.
The increase in administrative expense was due to increased employee-related expenses partially offset by lower information technology-related expenses. SG&A also includes a decrease of $7.9 million in foreign currency transaction losses, offset in part by a decrease in gains on foreign exchange forward contracts of $3.4 million.
In Japan, net sales increased in FootJoy golf wear and Titleist golf clubs. Gross Profit Gross profit increased $60.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. Gross margin decreased to 51.9% for the year ended December 31, 2022 compared to 52.1% for the year ended December 31, 2021.
In Japan, net sales were flat with increases in Titleist golf balls and Titleist golf gear offset by net sales decreases in Titleist golf clubs and FootJoy golf wear. Gross Profit Gross profit increased $73.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers, and favorable and market‑differentiating mix of consumable and durable products have been the key drivers of our solid financial performance. Our financial results and operations continue to be impacted by the macroeconomic environment, including the ongoing COVID-19 pandemic.
We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers, and favorable and market-differentiating mix of consumable and durable products have been the key drivers of our financial performance. Basis of Presentation The accompanying results have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.
The increase was largely due to higher sales volumes of our SM9 wedges launched in the first quarter of 2022, Phantom X putters launched in the second quarter of 2022, T-Series irons launched in the third quarter of 2021 and TSR drivers and fairways launched in the third quarter of 2022.
The increase in net sales was largely due to higher sales volumes and higher average selling prices of our T-Series irons launched in the third quarter of 2023 and Scotty Cameron Super Select putters launched in the first quarter of 2023, as well as higher sales volumes of our TSR hybrids launched in the first quarter of 2023, partially offset by lower sales volumes of second model year SM9 wedges.
The increase in Titleist golf clubs was primarily driven by higher sales volumes of SM9 wedges, Phantom X putters, T-Series irons and our newly introduced TSR drivers and fairways. The increase in Titleist golf balls was primarily due to higher average selling prices and higher sales volumes.
The increase in Titleist golf clubs was primarily driven by higher sales volumes and higher average selling prices associated with the launches of our T-Series irons and Scotty Cameron Super Select putters, as well as higher sales volumes associated with the launch of our TSR hybrids, partially offset by lower sales volumes of second model year SM9 wedges.
Titleist Golf Gear Segment Net sales in our Titleist golf gear segment increased 6.4%, or 12.5% on a constant currency basis, for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase was primarily due to higher average selling prices across all product categories.
Intangible amortization expense increased due to the acquisition of trademarks in the fourth quarter of 2022. Titleist Golf Gear Segment Net sales in our Titleist golf gear segment increased 5.5%, or 7.0% on a constant currency basis, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increase was primarily due to increased sales volumes across all product categories. Operating income in our FootJoy golf wear segment decreased $7.2 million, or 16.3% compared to the prior year period. The decrease in operating income resulted from higher operating expenses of $21.2 million, partially offset by higher gross profit of $13.9 million.
Operating income in our FootJoy golf wear segment decreased $20.9 million, or 56.5% compared to the prior year period. The decrease in operating income resulted from lower gross profit of $20.3 million.
Our liquidity is impacted by our level of working capital, which is cyclical as a result of the general seasonality of our business.
We expect to rely on cash flows from operations and borrowings under our revolving credit facility and local credit facilities as our primary sources of liquidity. Our liquidity is impacted by our level of working capital, which is cyclical as a result of the general seasonality of our business.
All intercompany balances and transactions have been eliminated in consolidation. We have four reportable segments. These segments include Titleist golf balls, Titleist golf clubs, Titleist golf gear and FootJoy golf wear.
These segments include Titleist golf balls, Titleist golf clubs, Titleist golf gear and FootJoy golf wear.
The decrease in gross margin was primarily due to increased inbound freight costs across all reportable segments. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses increased $38.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses increased $54.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increase in FootJoy golf wear was primarily driven by higher average selling prices of footwear and higher sales volumes of apparel. The increase in Titleist golf gear was primarily driven by higher average selling prices across all product categories. Net sales in regions outside of the United States increased 1.9%, or 13.5% on a constant currency basis.
The increase in FootJoy golf wear was primarily driven by higher sales volumes of apparel and higher average selling prices of apparel and footwear, largely offset by lower sales volumes of footwear. The increase in Titleist golf gear was primarily driven by higher sales volumes of golf bags and higher average selling prices in travel.
The increase in gross profit primarily resulted from an increase of $35.8 million in Titleist golf clubs and an increase of $13.9 million in FootJoy golf wear, both primarily due to sales volume increases. These increases were partially offset by increased inbound freight costs and the unfavorable impact of changes in foreign currency exchange rates across all reportable segments.
This increase in gross profit was primarily due to the higher sales volumes and higher average selling prices discussed above, lower inbound freight costs across all reportable segments and lower royalty expense in Titleist golf clubs. These increases were partially offset by the decline in FootJoy golf wear sales volumes discussed above.
Additionally, f rom time to time, we may make strategic acquisitions and investments to complement our products, technologies or businesses, which could impact our liquidity needs. We expect to rely on cash flows from operations and borrowings under our revolving credit facility and local credit facilities as our primary sources of liquidity.
Liquidity and Capital Resources Our primary cash needs relate to working capital, capital expenditures, servicing our debt, paying dividends, repurchasing shares of our common stock and pension contributions. Additionally, f rom time to time, we may make strategic acquisitions and investments to complement our products, technologies or businesses, which could impact our liquidity needs.
Operating expenses increased primarily as a result of an increase of $2.9 million in selling expense due to higher third party distribution expenses. FootJoy Golf Wear Segment Net sales in our FootJoy golf wear segment increased 6.4%, or 12.2% on a constant currency basis, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
FootJoy Golf Wear Segment Net sales in our FootJoy golf wear segment decreased 3.5%, or 2.1% on a constant currency basis, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to a sales volume decrease in footwear partially offset by sales volume increase in apparel.
Gross profit increased primarily as a result of sales volume increases, partially offset by increased inbound freight costs and the unfavorable impact of changes in foreign currency exchange rates.
Gross profit decreased primarily as a result of the sales volume decrease and unfavorable manufacturing absorption and increased promotional activity in footwear, partially offset by increased sales volumes in apparel and lower inbound freight costs. Operating expenses were largely flat as increased advertising and promotional expenses were offset by lower selling expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

16 edited+2 added−4 removed17 unchanged
Biggest changeThe same sensitivity analysis for changes in the fair value of our foreign exchange forward contracts as of December 31, 2021, indicated that if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts, the net settlement asset of $7.3 million would decrease by $15.6 million resulting in a net settlement liability of $8.3 million.
Biggest changeThe sensitivity analysis of changes in the fair value of our foreign exchange forward contracts outstanding as of December 31, 2023, while not predictive in nature, indicated that the net settlement asset of $2.4 million would decrease by $15.2 million resulting in a net settlement liability of $12.8 million if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES There were no changes in or disagreements with our accountants on accounting and financial disclosure matters. ITEM 9A. CONTROLS AND PROCEDURES The required certifications of our chief executive officer and our principal financial officer are included as Exhibit 31.1 and 31.2 to this Annual Report.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES There were no changes in or disagreements with our accountants on accounting and financial disclosure matters. ITEM 9A. CONTROLS AND PROCEDURES The required certifications of our chief executive officer and our principal financial officer are included as Exhibit 31.1 and 31.2 to this Annual Report.
Based on our assessment, our management determined that, as of December 31, 2022, our internal control over financial reporting is effective. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as stated in their report which appears on page F-2 of this Annual Report.
Based on our assessment, our management determined that, as of December 31, 2023, our internal control over financial reporting is effective. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as stated in their report which appears on page F-2 of this Annual Report.
Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.
Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.
We do not enter into derivative financial instrument contracts for trading or speculative purposes. 59 Table of Contents We performed a sensitivity analysis to assess potential changes in the fair value of our foreign exchange forward contracts relating to a hypothetical movement in foreign currency exchange rates.
We do not enter into derivative financial instrument contracts for trading or speculative purposes. 61 Table of Contents We performed a sensitivity analysis to assess potential changes in the fair value of our foreign exchange forward contracts relating to a hypothetical movement in foreign currency exchange rates.
Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2022. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2023. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control – Integrated Framework (2013)”.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control – Integrated Framework (2013)”.
Commodity Risk We are exposed to commodity price and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, urethane and Surlyn for the manufacturing of our golf balls, titanium and steel for the assembly of our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products.
Commodity Risk We are exposed to commodity price and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, urethane and ionomers for the manufacturing of our golf balls, titanium and steel for our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products.
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022, the last day of the period covered by this Annual Report.
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023, the last day of the period covered by this Annual Report.
As of December 31, 2022, we had $566.6 million of outstanding indebtedness at variable interest rates. The sensitivity analysis, while not predictive in nature, indicated that a one percentage point increase in the interest rate applied to these borrowings as of December 31, 2022 would have resulted in an increase of $5.7 million in our annual pre-tax interest expense.
The sensitivity analysis, while not predictive in nature, indicated that a one percentage point increase in the interest rate applied to these borrowings as of December 31, 2023 would have resulted in an increase of $2.6 million in our annual pre-tax interest expense. As of December 31, 2022, we had $566.6 million of outstanding indebtedness at variable interest rates.
The sensitivity analysis of changes in the fair value of our foreign exchange forward contracts outstanding as of December 31, 2022, while not predictive in nature, indicated that the net settlement asset of $3.6 million would decrease by $17.9 million resulting in a net settlement liability of $14.3 million if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts.
The same sensitivity analysis for changes in the fair value of our foreign exchange forward contracts as of December 31, 2022, indicated that if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts, the net settlement asset of $3.6 million would decrease by $17.9 million resulting in a net settlement liability of $14.3 million.
The same sensitivity analysis for movement in variable interest rates as of December 31, 2021, indicated that a one percentage point increase in the interest rate applied to these borrowings as of December 31, 2021 would have resulted in an increase of $3.2 million in our annual pre‑tax interest expense.
The same sensitivity analysis for movement in variable interest rates as of December 31, 2022, indicated that a one percentage point increase in the interest rate applied to these borrowings as of December 31, 2022 would have resulted in an increase of $5.7 million in our annual pre‑tax interest expense.
Should the current higher inflationary environment continue, including increased raw material and other input costs, our business, results of operations, financial position and cash flows could be materially impacted in the future. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements and financial statements commencing on page F‑1, which are incorporated herein by reference.
Sustained and higher inflationary environments, including increased raw material and other input costs, could materially impact our business, results of operations, financial position and cash flows in the future. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements and financial statements commencing on page F‑1, which are incorporated herein by reference. ITEM 9.
Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under 60 Table of Contents the Securities Exchange Act of 1934, as amended, (the “ Exchange Act”) is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
These certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications. 62 Table of Contents Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, (the “ Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms; and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Under these contracts, we pay fixed and receive variable rate interest, in effect converting a portion of our floating rate debt to fixed rate debt. As of December 31, 2022 and 2021, there were no interest rate swap contracts outstanding.
Under these contracts, we pay fixed and receive variable rate interest, in effect converting a portion of our floating rate debt to fixed rate debt. As of December 31, 2023, the notional value of our outstanding interest rate swap contracts was $100.0 million. As of December 31, 2022, there were no interest rate swap contracts outstanding.
The gross U.S. dollar equivalent notional amount of all foreign exchange forward contracts outstanding at December 31, 2021 was $228.8 million, representing a net settlement asset of $7.3 million.
The gross U.S. dollar equivalent notional amount of all foreign exchange forward contracts outstanding at December 31, 2023 was $209.6 million, representing a net settlement asset of $2.4 million.
Removed
As of December 31, 2021, we had $315.1 million of outstanding indebtedness at variable interest rates (excluding unamortized debt issuance costs).
Added
This sensitivity analysis disregards fluctuations in balances of our outstanding variable rate indebtedness due to borrowings and repayments throughout the year. As of December 31, 2023, we had $255.6 million of outstanding indebtedness at variable interest rates after giving effect to $100.0 million of hedged floating rate indebtedness.
Removed
During the year ended December 31, 2022, the impact of inflation resulted in increased raw material and other input costs as compared to the year ended December 31, 2021.
Added
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe that inflation in the form of increased raw materials and other input costs, including inbound freight and wage rates, has impacted our business, results of operations, financial position and cash flows during the year ended December 31, 2023 and 2022.
Removed
These certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications.
Removed
OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 61 Table of Contents PART III

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