Topgolf Callaway Brands Corp.

Previous wording

In September 2024, we announced a strategic plan to pursue a separation of our business into two independent companies: Callaway, a leader in golf equipment with a highly complementary Active Lifestyle business; and Topgolf, a pure-play venue-based golf entertainment business which we believe has potential for high growth. Our Board of Directors is committed to exploring all opportunities to execute the separation in a manner that maximizes shareholder value, including possible options such as a spin-off, sale, or other transaction. If the spin-off is the ultimate shareholder value maximizing path, it will mostly likely occur in 2026, after we have a new CEO is in place. However, there can be no assurance regarding the ultimate timing, terms, or form of the separation, or that the separation will ultimately occur.

Current wording

In September 2024, we announced a strategic plan to pursue a separation of our business into two independent companies: Callaway, a leader in golf equipment with a highly complementary Active Lifestyle business; and Topgolf, a pure-play venue-based golf entertainment business which we believe has potential for high growth. Our Board of Directors is committed to exploring all opportunities to execute the separation in a manner that maximizes shareholder value, including possible options such as a spin-off, sale, or other transaction. If the spin-off is the ultimate shareholder value maximizing path, it will most likely occur in 2026, after we have a new Topgolf CEO in place. However, there can be no assurance regarding the ultimate timing, terms, or form of the separation, or that the separation will ultimately occur.

Previous wording

On May 31, 2025, we completed the sale of 100% of the outstanding equity interests of Callaway Germany Holdco GmbH, which owns various entities that operate the Jack Wolfskin business, to Anca Holdco GmbH & Co. KG, a subsidiary of ANTA Sports Products Limited, for $290.0 million in cash, adjusted for net working capital and other customary conditions.

Current wording

On May 31, 2025, we completed the sale of 100% of the outstanding equity interests of Callaway Germany Holdco GmbH, which owns various entities that operate the Jack Wolfskin business, to Anca Holdco GmbH & Co. KG, a subsidiary of ANTA Sports Products Limited, for approximately $290.0 million in cash, adjusted for net working capital and other customary conditions.

Previous wording

Our Topgolf operating segment is primarily comprised of Company-owned and operated domestic and international Topgolf venues, which are equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces. Our Company-owned and operated venues also offer advertising partnerships to corporate sponsors to feature their names and logos at Topgolf venues and on other media platforms. Revenue from Company-owned and operated venues is primarily derived from the sale of food and beverage, gameplay, and events. As of June 30, 2025, we had 101 Company-owned and operated venues, including 97 Topgolf venues throughout the United States, and four Company-operated venues in the United Kingdom. In addition to our Company-owned and operated venues, we also have eight international franchised Topgolf venues from which we receive royalties.

Current wording

Our Topgolf operating segment is primarily comprised of Company-owned and operated domestic and international Topgolf venues, which are equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces. Our Company-owned and operated venues also offer advertising partnerships to corporate sponsors to feature their names and logos at Topgolf venues and on other media platforms. Revenue from Company-owned and operated venues is primarily derived from the sale of food and beverage, gameplay, and events. As of September 30, 2025, we had 102 Company-owned and operated venues, including 98 Topgolf venues throughout the United States, and four Company-operated venues in the United Kingdom. In addition to our Company-owned and operated venues, we also have eight international franchised Topgolf venues from which we receive royalties.

Previous wording

Operating results for our Golf Equipment segment fluctuate due to seasonal factors, as the game of golf is primarily played on a seasonal basis in most of the regions where we conduct business. Weather conditions generally restrict golf from being played throughout the entire year, with the exception of a few markets, resulting in many of our on-course customers closing during the cold weather months. In general, we launch new products for the new golf season during the first quarter of the year. This initial sell-in period typically continues into the second quarter, while third-quarter sales are generally dependent on reorders and may also include smaller new product launches. Fourth-quarter sales are generally less than the other quarters due to the end of the golf season in many of our key regions. In addition to this seasonality, our golf equipment sales may also be impacted by other factors, including the timing of new product introductions. As a result of these factors, a majority of our Golf Equipment sales, and most, if not all, of the profitability from our Golf Equipment operating segment generally occurs during the first half of the year.

Current wording

Operating results for our Golf Equipment segment fluctuate due to seasonal factors, as the game of golf is primarily played on a seasonal basis in most of the regions where we conduct business. Weather conditions in most parts of the world, including our primary geographic markets, generally restrict golf from being played throughout the entire year, with many of our on-course customers closing during the cold weather months. Operating results are also impacted by the timing of our product launches. In general, we launch new products for the new golf season during the first quarter of the year. This initial sell-in period typically continues into the second quarter, while third-quarter sales are generally dependent on reorders and may also include smaller new product launches. Fourth-quarter sales are generally less than the other quarters due to the end of the golf season in many of our key regions. In addition to this seasonality, our Golf Equipment sales may also be impacted by other factors, including the timing of new product introductions. As a result of these factors, a majority of our Golf Equipment sales, and most, if not all, of the profitability from our Golf Equipment operating segment generally occurs during the first half of the year.

Previous wording

Our Active Lifestyle operating segment is comprised of Callaway Golf, TravisMathew, and OGIO soft goods products. The Callaway Golf soft goods brand offers a full line of premium golf apparel, footwear, gear and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. The OGIO brand offers a full line of premium personal storage gear for sport and personal use and accessories. On certain soft goods products, we receive royalties from the licensing of our trademarks and service marks. On May 31, 2025, we completed the sale of the Jack Wolfskin business, which included a full line of premium outdoor apparel, gear and accessories. The results of operations associated with Jack Wolfskin were included within our Active Lifestyle operating segment through the date of the sale.

Current wording

Our Active Lifestyle operating segment is comprised of soft goods products under our Callaway Golf, TravisMathew, and OGIO brands. The Callaway Golf soft goods brand offers a full line of premium golf apparel, footwear, gear and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. The OGIO brand offers a full line of premium personal storage gear for sport and personal use and accessories. On certain soft goods products, we receive royalties from the licensing of our trademarks and service marks. On May 31, 2025, we completed the sale of the Jack Wolfskin business, which included a full line of premium outdoor apparel, gear and accessories. The results of operations associated with Jack Wolfskin were included within our Active Lifestyle operating segment through the date of the sale.

Previous wording

Our products and services are considered to be non-essential items and are therefore discretionary purchases for consumers. In addition, our Topgolf venues business also depends on corporate discretionary spending relative to its leisure and entertainment-based offerings. As a result, demand for our products and services could be impacted by downturns in the economy and the corresponding impact on discretionary consumer and corporate spending. Macroeconomic factors including sustained inflation and high interest rates continue to put downward pressure on consumer and corporate discretionary spending. While we generally try to mitigate the impact of such macroeconomic factors by closely monitoring changes in consumer retail spending behavior and through the implementation of various strategic initiatives, the persistence of these trends may have an adverse impact on our operating results depending on the severity and length of the changes.

Current wording

Our products and services are discretionary purchases for consumers. In addition, our Topgolf venues business also depends on corporate discretionary spending relative to its leisure and entertainment-based offerings. As a result, demand for our products and services could be impacted by downturns in the economy and the corresponding impact on discretionary consumer and corporate spending. Macroeconomic factors including sustained inflation and high interest rates continue to put downward pressure on consumer and corporate discretionary spending, in addition to the recent increase in tariffs. While we generally try to mitigate the impact of such macroeconomic factors by closely monitoring changes in consumer retail spending behavior and through the implementation of various strategic initiatives, the persistence of these trends may have an adverse impact on our operating results depending on the severity and length of the changes.

Previous wording

Throughout 2025, the U.S. government has announced and rescinded multiple tariffs on multiple foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of tariffs on economic conditions. Increases in tariffs, as well as current uncertainties about tariff levels levied by the U.S. and other governments, may increase the costs for, and impact the availability of, our products, product components and raw materials, a significant amount of which we source from outside of the United States, including Vietnam, Taiwan, Mexico, Bangladesh and other regions. Further, retaliatory tariffs may increase the costs of selling our products in foreign jurisdictions. As a result of tariff costs, we may need to raise our prices to pass costs on to customers, which may not be possible, or may decrease customer demand for our products. The near- and long-term impacts from these tariffs on our business are difficult to predict and depend on the amount, duration, scope and nature of the increases. We are currently assessing the impact of these higher proposed tariffs on our business and are looking for ways to mitigate these higher costs, including continuing to optimize operations and accelerating existing cost reduction and margin improvement programs. Nonetheless, the increases in U.S. and other countries’ tariffs could have a material adverse effect on our financial condition and results of operations, including as a result of higher inflation in the markets in which we operate, an economic slowdown or general economic uncertainty.

Current wording

In 2025, the U.S. government implemented reciprocal tariffs on many countries, including many jurisdictions in which we do business. The U.S. government has announced and rescinded multiple tariffs on multiple foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of tariffs on economic conditions. The reciprocal tariffs implemented in August 2025 have increased the costs for our products, product components and raw materials, a significant amount of which we source from outside the United States, including Vietnam, Taiwan, Mexico, Bangladesh and other regions. If the U.S. government or other governments levy additional tariffs, or if governments continue to generate uncertainty regarding tariffs, the adverse impacts to the costs for, and availability of, our products, product components and raw materials, may continue to increase. Further, retaliatory tariffs may increase the costs of selling our products in foreign jurisdictions. As a result of tariff costs, we may need to raise our prices to pass costs on to customers, which may not be possible, or may decrease customer demand for our products. The near- and long-term impacts from these tariffs on our business are difficult to predict and depend on the amount, duration, scope and nature of the increases, however, we do expect tariffs to have a negative impact on our business and results of operations in and beyond 2025. We are actively monitoring the impact of any further tariffs that become effective, as well as any potential retaliatory actions by other countries, and are continuing to look for ways to mitigate these higher costs, including continuing to optimize operations and accelerating existing cost reduction and margin improvement programs. Nonetheless, the increases in U.S. and other countries’ tariffs could have a material adverse effect on our financial condition and results of operations, including as a result of higher inflation in the markets in which we operate, an economic slowdown or general economic uncertainty.

Previous wording

A significant portion of our business is conducted outside of the United States in currencies other than the U.S. dollar. Therefore, we enter into foreign currency forward contracts to mitigate the effects that changes in foreign currency rates may have on our financial results. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates in the short-term, they do not eliminate those effects, which can be significant, and they do not mitigate their effects over the long-term. These effects include (i) the translation and remeasurement of results denominated in foreign currency into U.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of our foreign currency forward contracts. In general, our overall financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For the three andsix months ended June 30, 2025, foreign currency fluctuations had afavorable impact of $8.6 million andan unfavorable impact of$0.3 million, respectively, on international net revenues.

Current wording

A significant portion of our business is conducted outside of the United States in currencies other than the U.S. dollar. Therefore, we enter into foreign currency forward contracts to mitigate the effects that changes in foreign currency rates may have on our financial results. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates in the short-term, they do not eliminate those effects, which can be significant, and they do not mitigate their effects over the long-term. These effects include (i) the translation and remeasurement of results denominated in foreign currency into U.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of our foreign currency forward contracts. In general, our overall financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For the three andnine months ended September 30, 2025, foreign currency fluctuations had afavorable impact of $2.2 million and$1.9 million, respectively, on international net revenues.

Previous wording

Sustained inflationary pressure partially contributed to the increase in the cost of our products as well as operating costs. While we were able to partially offset these inflationary pressures by increasing the price of our products and services and through cost management initiatives, the length and severity of these conditions are unpredictable, and could be further exacerbated by the proposed increase in tariffs as discussed above. Should conditions persist and/or worsen, such inflationary pressures may have a further adverse effect on our operating results. Further, we may not be able to offset these increased costs through price increases. As a result, our cash flows and results of operations could be adversely affected.

Current wording

Sustained inflationary pressure partially contributed to the increase in the cost of our products as well as operating costs. While we were able to partially offset these inflationary pressures by increasing the price of our products and services and through cost management initiatives, the length and severity of these conditions are unpredictable, and could be further exacerbated by the increases in tariffs as discussed above. Should conditions persist and/or worsen, such inflationary pressures may have a further adverse effect on our operating results. Further, we may not be able to offset these increased costs through price increases. As a result, our cash flows and results of operations could be adversely affected.

Previous wording

Net revenues for the six months ended June 30, 2025 decreased $99.2 million or 4.3% (4.3% on a constant currency basis) as compared to the six months ended June 30, 2024. The decrease was primarily driven by the right-sizing activities and the sale of the Jack Wolfskin business, a decrease in Topgolf same venue sales, and a decrease in Golf Equipment net revenues. Segment operating income increased $14.6 million or 5.7% due to increases in our Golf Equipment and Active Lifestyle operating segments, partially offset by a decline in our Topgolf operating segment.

Current wording

Net revenues for the nine months ended September 30, 2025 decreased $178.1 million or 5.4% (5.4% on a constant currency basis) as compared to the nine months ended September 30, 2024. Excluding the decrease in net revenues due to the sale of the Jack Wolfskin business in May 2025, net revenues decreased $33.2 million or (1.1)% resulting from decreases in our Topgolf operating segment and Active Lifestyle operating segment, offset by an increase in net revenues in our Golf Equipment operating segment. Segment operating income increased $8.1 million or 2.4% due to increases in our Golf Equipment operating segment and in the Active Lifestyle operating segment due to a decrease in segment operating losses resulting from the sale of the Jack Wolfskin business in May 2025, partially offset by a decrease in our Topgolf operating segment.

Previous wording

The $9.1 million (1.8%) and$38.2 million (4.2%) decreases in Topgolf net revenues for the three and six months ended June 30, 2025, respectively, were primarily due to a decline in same venue sales from lower sales associated with walk-ins and reservations combined with a weaker events business. These decreases were partially offset by the opening of new Company-owned and operated venues since the second quarter of 2024.

Current wording

The $19.0 million (4.2%) increase in Topgolf net revenues for thethree months ended September 30, 2025 was primarily due to the opening of new Company-owned and operated venues since the third quarter of 2024 combined with an increase in same venue sales primarily due to improved traffic trends from new value initiatives. The $19.2 million (1.4%) decrease in Topgolf net revenues for the nine months ended September 30, 2025, was primarily due to a decline in same venue sales resulting from lower sales associated with walk-ins combined with a weaker events business, partially offset by the opening of new Company-owned and operated venues since the third quarter of 2024.

Previous wording

The $0.7 million (1.2%) and$15.5 million (26.3%)decreases in segment operating income for the three and six months ended June 30, 2025, respectively, were primarily due to the decreases in net revenues discussed above, partially offset by on-going cost reduction efforts including the continued management of labor costs as well as other operational efficiencies.

Current wording

The $2.8 million (9.9%) increase in segment operating income for thethree months ended September 30, 2025 was primarily due to the increase in net revenues discussed above partially offset by an increase in operating expenses related to employee costs stemming from the opening of new venues since the prior year combined with additional advertising and promotional costs associated with current year marketing campaigns. The$12.7 million (14.5%)decrease in segment operating income for the nine months ended September 30, 2025 was primarily due to the decrease in net revenues discussed above, partially offset by ongoing cost reduction efforts including the continued management of labor costs as well as other operational efficiencies.

Previous wording

The $1.1 million decrease in segment operating income for the three months ended June 30, 2025 was primarily due to the decrease in revenue discussed above combined with the impact of incremental tariffs and unfavorable foreign currency on cost of products sold. These decreases were partially offset by favorable pricing and product mix and the positive impact from cost savings initiatives. The $18.4 million increase in segment operating income for the six months ended June 30, 2025 was primarily due to higher gross margins as a result of favorable pricing and product mix, combined with the positive impact from cost savings initiatives and the recognition of a lease termination incentive in the first quarter of 2025.

Current wording

The $3.6 million decrease in segment operating income for the three months ended September 30, 2025 was primarily due to $8.0 million of incremental tariffs. This decrease was partially offset by the increase in revenue discussed above, combined with favorable pricing and product mix and improved leverage on operating expenses due to cost savings initiatives. The $14.8 million increase in segment operating income for the nine months ended September 30, 2025 was primarily due to higher gross margins as a result of favorable pricing and product mix partially offset by the unfavorable impact from incremental tariffs, combined with the positive impact from cost savings initiatives and the recognition of a lease termination incentive in the first quarter of 2025.

Previous wording

During the three months ended June 30, 2025, net revenues in the United States decreased$29.1 million (3.3%) compared tothe three months ended June 30, 2024 due to a decrease in Topgolf same venue sales and a decrease in sales of golf equipment. These decreases were partially offset by incremental revenues from the opening of new Company-owned andoperated venues at Topgolf.

Current wording

During the three months ended September 30, 2025, net revenues in the United States increased$25.3 million (3.5%) compared tothe three months ended September 30, 2024 due to incremental revenues from the opening of new Company-owned andoperated venues at Topgolf and an increase in sales of Golf Equipment.

Previous wording

During the six months ended June 30, 2025, net revenues in the United States decreased$67.7 million (3.9%) compared to the six months ended June 30, 2024 due to decreases in Topgolf same venue sales, a decrease in sales of golf equipment, and decreases in wholesale revenue due to the timing of shipments at TravisMathew. These decreases were partially offset by incremental revenues from the opening of new Company-owned andoperated venues at Topgolf.

Current wording

During the nine months ended September 30, 2025, net revenues in the United States decreased$42.4 million (1.7%) compared to the nine months ended September 30, 2024 due to decreases in Topgolf same venue sales, a decrease in sales of Golf Equipment, and decreases in TravisMathew sales due to the timing of wholesale shipments. These decreases were partially offset by incremental revenues from the opening of new Company-owned andoperated venues at Topgolf.

Previous wording

During the three and six months ended June 30, 2025, net revenues in Asia decreased$9.3 million (8.5%) and$8.1 million (3.4%), respectively, compared tothe three and sixmonths ended June 30, 2024, primarily due to continued soft market conditions in the golf equipment and apparel markets in Korea, partially offset byincreases in sales of Jack Wolfskin products in China prior to the sale of the Jack Wolfskin business.

Current wording

During the three and nine months ended September 30, 2025, net revenues in Asia decreased$36.4 million (28.7%) and$44.5 million (12.2%), respectively, compared tothe three and nine months ended September 30, 2024, primarily due tothe sale of the Jack Wolfskin business in the second quarter of 2025 combined with continued soft market conditions in the golf equipment and apparel markets in Korea and Japan.

Previous wording

During the three and six months ended June 30, 2025, net revenues in Rest of World decreased by$0.1 million (0.2%) and$3.3 million (3.7%), respectively, compared tothe three and sixmonths ended June 30, 2024.

Current wording

During the three and nine months ended September 30, 2025, net revenues in Rest of World increased by$1.1 million (4.5%) and decreased by$2.2 million (1.9%), respectively, compared tothe three and nine months ended September 30, 2024.

Previous wording

Forthe three and six months ended June 30, 2025, foreign currency exchange rates had afavorable impact of$8.6 million and an unfavorable impact of$0.3 million, respectively, on international net revenues.

Current wording

Forthe three and nine months ended September 30, 2025, foreign currency exchange rates had afavorable impact of$2.2 million and$1.9 million, respectively, on international net revenues.

Previous wording

Cost of products is variable in nature and fluctuates relative to sales volumes. Cost of products includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties and shipping charges, depreciation and amortization, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. During the three and six months ended June 30, 2025, cost of products decreased $20.9 million (5.6%) and$48.1 million (6.1%), respectively, compared to thethree and six months ended June 30, 2024. The decreases were primarily due to a decline in sales in our Active Lifestyle operating segment, partially offset by lower product costs in the Golf Equipment operating segment.

Current wording

Cost of products is variable in nature and fluctuates relative to sales volumes. Cost of products includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties and shipping charges, depreciation and amortization, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. During the three and nine months ended September 30, 2025, cost of products decreased $49.4 million (15.0%) and$97.5 million (8.7%), respectively, compared to thethree and nine months ended September 30, 2024. The decreases were primarily due to a decline in sales in our Active Lifestyle operating segment primarily driven by the sale of our Jack Wolfskin business in May 2025, combined with lower product costs in the Golf Equipment operating segment. These decreases were partially offset by the impact from incremental tariffs of$11.8 millionand$21.7 million in thethree and nine months ended September 30, 2025, respectively.

Previous wording

Cost of services, excluding depreciation and amortization (“cost of services”), primarily includes the cost of food and beverages sold in our Topgolf venues and certain costs associated with Topgolf’s Toptracer license agreements that are primarily classified as sales-type leases. Food and beverage costs are variable in nature, fluctuate relative to sales volume, and are impacted by product mix and commodity pricing. Cost of services excludes employee costs as well as depreciation and amortization. During the three and six months ended June 30, 2025, cost of services decreased $0.3 million (0.6%) and $2.8 million (3.0%), respectively, compared to the three and six months ended June 30, 2024, primarily due to the decline in sales year-over-year.

Current wording

Cost of services, excluding depreciation and amortization (“cost of services”), primarily includes the cost of food and beverages sold in our Topgolf venues and certain costs associated with Topgolf’s Toptracer license agreements that are primarily classified as sales-type leases. Food and beverage costs are variable in nature, fluctuate relative to sales volume, and are impacted by product mix and commodity pricing. Cost of services excludes employee costs as well as depreciation and amortization. During the three months ended September 30, 2025, cost of services increased $2.0 million (4.1%) compared to the three September 30, 2024, primarily due to an increase in food and beverage sales year-over-year. During the nine months ended September 30, 2025, cost of services decreased $0.8 million (0.6%) compared to the nine months ended September 30, 2024, primarily due to the decline in sales year-over-year.

Previous wording

Other venue expenses primarily consist of depreciation and amortization, venue employee costs, rent, utilities, marketing and other costs associated with Topgolf venues. During the three and six months ended June 30, 2025, other venue expenses decreased $3.0 million (0.9%) and$5.2 million (0.8%), respectively, compared tothe three and sixmonths ended June 30, 2024, primarily due tooperational efficiencies in the venues, partially offset by incremental costs from the addition of new Company-owned and operated Topgolf venues since June 30, 2024.

Current wording

Other venue expenses primarily consist of depreciation and amortization, venue employee costs, rent, utilities, marketing and other costs associated with Topgolf venues. During the three and nine months ended September 30, 2025, other venue expenses increased $17.3 million (5.3%) and$12.1 million (1.2%), respectively, compared tothe three and nine months ended September 30, 2024, primarily due to incremental costs from the addition of new Company-owned and operated Topgolf venues since September 30, 2024, partially offset byoperational efficiencies in the venues.

Previous wording

Selling, general and administrative (“SG&A”) expenses primarily consist of non-venue employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation charges (excluding those related to manufacturing, distribution and venue operations), amortization and other miscellaneous expenses. During the three and six months ended June 30, 2025, SG&A expenses decreased $17.7 million (6.8%) and $32.8 million (6.2%), respectively, compared tothe three and six months ended June 30, 2024.

Current wording

Selling, general and administrative (“SG&A”) expenses primarily consist of non-venue employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation charges (excluding those related to manufacturing, distribution and venue operations), amortization and other miscellaneous expenses. During the three and nine months ended September 30, 2025, SG&A expenses decreased $40.0 million (16.0%) and $72.8 million (9.3%), respectively, compared tothe three and nine months ended September 30, 2024.

Previous wording

The$17.7 million decrease for the three months ended June 30, 2025 was primarily related to thesale of the Jack Wolfskin business in May 2025 combined with cost reduction efforts in selling and marketing. These decreases were partially offset by the recognition of a $1.9 million loss on the sale of the Jack Wolfskin business and an increase inemployee costs due to a decrease in accrued bonus expense in the second quarter of 2024.

Current wording

The$40.0 million decrease for the three months ended September 30, 2025 was primarily related to thesale of the Jack Wolfskin business in May 2025 combined with cost reduction efforts in selling and marketing. These decreases were partially offset by an increase inemployee costs due to a decrease in accrued bonus expense in the third quarter of 2024.

Previous wording

The $32.8 million decrease for the six months ended June 30, 2025 was primarily related to the sale of the Jack Wolfskin business in May 2025, a $12.0 million gain recognized from a lease termination incentive in the first quarter of 2025, a decrease in selling and marketing costs primarily related to cost reduction efforts, and lower employee benefits and payroll-related costs due to a decrease in corporate headcount. These decreases were partially offset by the recognition of an $8.9 million loss on the sale of the Jack Wolfskin business.

Current wording

The $72.8 million decrease for the nine months ended September 30, 2025 was primarily related to the sale of the Jack Wolfskin business in May 2025, a $12.0 million gain recognized from a lease termination incentive in the first quarter of 2025, a decrease in selling and marketing costs primarily related to cost reduction efforts, and lower employee benefits and payroll-related costs due to a decrease in corporate headcount. These decreases were partially offset by the recognition of a $9.8 million loss on the sale of the Jack Wolfskin business, combined with an increase inemployee costs due to a decrease in accrued bonus expense in the third quarter of 2024.

Previous wording

Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. During the three and six months ended June 30, 2025, research and development expenses decreased $7.2 million (26.7%) and$9.1 million (18.1%), respectively, compared to thethree and sixmonths ended June 30, 2024, primarily due toreduced employee costs as a result of the sale of the WGT business in the fourth quarter of 2024, reduced headcount from our restructuring initiatives and asset impairment charges in the prior year period related to the abandonment of the Shankstars media game.

Current wording

Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. During the three and nine months ended September 30, 2025, research and development expenses decreased $1.9 million (8.6%) and$11.0 million (15.2%), respectively, compared to thethree and nine months ended September 30, 2024, primarily due toreduced employee costs as a result of the sale of the WGT business in the fourth quarter of 2024 and the sale of the Jack Wolfskin business in the second quarter of 2025, combined with reduced headcount from our restructuring initiatives and an asset impairment charge recognized in the prior year related to the abandonment of the Shankstars media game.

Previous wording

Venue pre-opening costs are primarily related to the costs associated with activities prior to the opening of new Company-owned and operated Topgolf venues, and consist of, but are not limited to, labor, rent and occupancy costs, and travel and marketing expenses. These costs fluctuate based on the planned timing, size and location of new venues. During the three and six months ended June 30, 2025, venue pre-opening costs decreased $1.0 million (35.7%) and $3.6 million (60.0%), respectively, compared tothe three and six months ended June 30, 2024 due to fewer planned venue openings in 2025.

Current wording

Venue pre-opening costs are primarily related to the costs associated with activities prior to the opening of new Company-owned and operated Topgolf venues, and consist of, but are not limited to, labor, rent and occupancy costs, and travel and marketing expenses. These costs fluctuate based on the planned timing, size and location of new venues. During the three and nine months ended September 30, 2025, venue pre-opening costs decreased $1.5 million (38.5%) and $5.1 million (51.5%), respectively, compared tothe three and nine months ended September 30, 2024 due to fewer planned venue openings in 2025.

Previous wording

Interest expense, net increased $1.7 million (3.0%) and $0.9 million (0.8%), respectively, during the three and six months ended June 30, 2025 as compared tothe three and sixmonths ended June 30, 2024, primarily due to an increase in venue financing interest as the result of the addition of new Topgolf venues, partially offset by decreased interest expense on our term loan as a result of lower outstanding balances during the first half of 2025 compared to the same period in 2024, combined with the impact from the debt repricing that took place during the first quarter of 2024.

Current wording

Interest expense, net increased $1.5 million (2.6%) and $2.4 million (1.4%), respectively, during the three and nine months ended September 30, 2025 as compared tothe three and nine months ended September 30, 2024, primarily due to an increase in venue financing interest as the result of the addition of new Topgolf venues, partially offset by decreased interest expense on our term loan as a result of lower outstanding balances during the first half of 2025 compared to the same period in 2024, combined with the impact from the debt repricing that took place during the first quarter of 2024.

Previous wording

Other income, net decreased $19.4 million during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to an increase in net losses on foreign currency transactions, the loss on thesale of the Jack Wolfskin business recorded during the current period, and the impact of dividend income in the prior year from our investment in Full Swing that did not recur, partially offset by the receipt of dividends in our money market accounts.

Current wording

Other income, net increased $7.6 million during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to an increase in net gains on foreign currency transactions and the receipt of dividends in our money market accounts.

Previous wording

Other income, net decreased $19.7 million during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to an increase in net losses on foreign currency transactions, the loss on thesale of the Jack Wolfskin business recorded in the current period, and the impact of dividend income in the prior year from our investment in Full Swing that did not recur, partially offset by a decrease in losses related to a 2024 debt repricing and the receipt of dividends in our money market accounts.

Current wording

Other income, net decreased $12.1 million during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to higher net losses on foreign currency hedging contracts, losses associated with the dissolution of the Jack Wolfskin entities, and the non-recurrence of dividend income in the prior year from our investment in Full Swing. These decreases were partially offset by the absence of a loss recognized in 2024 related to the repricing of our term loan facility and higher dividend income from money market investments.

Previous wording

The provision for income tax increased $23.5 million to $13.8 million for the three months ended June 30, 2025, compared to a benefit of $9.7 million forthe three months ended June 30, 2024. As a percentage of pre-tax income, our effective tax rate for the three months ended June 30, 2025 increased to 40.6% compared to (18.5)% in the comparable period of 2024. The increase in our effective tax rate for the three months ended June 30, 2025 was primarily associated with the change in forecasted book income year-over-year and the associated mix of domestic and foreign earnings in addition to the impact associated with the sale of the Jack Wolfskin business. Our effective tax rate for the three months ended June 30, 2024 was impacted due to forecasted U.S. tax credits the Company had accrued year to date.

Current wording

The provision for income tax increased $11.8 million to a benefit of $7.6 million for the three months ended September 30, 2025, compared to a benefit of $19.4 million forthe three months ended September 30, 2024. As a percentage of pre-tax income, our effective tax rate for the three months ended September 30, 2025 decreased to 34.2% compared to 84.3% in the comparable period of 2024. The decrease in our effective tax rate for the three months ended September 30, 2025 was primarily associated with the change in forecasted book income year-over-year and the associated mix of domestic and foreign earnings, partially offset by a benefit from a favorable audit settlement at one of our foreign subsidiaries. Our effective tax rate for the three months ended September 30, 2024 was impacted by valuation allowances accrued year-to-date associated with the forecasted mix of jurisdictional earnings, and forecasted U.S. income tax credits.

Previous wording

The provision for income tax increased $28.0 million to $23.3 million for the six months ended June 30, 2025, compared to a benefit of $4.7 million forthesix months ended June 30, 2024. As a percentage of pre-tax income, our effective tax rate for the six months ended June 30, 2025 increased to 51.0% compared to (7.4)% in the comparable period of 2024. The increase in our effective tax rate for the six months ended June 30, 2025 was primarily associated with the change in forecasted book income year-over-year and the associated mix of domestic and foreign earnings in addition to the impact associated with the sale of the Jack Wolfskin business. Our effective tax rate for the six months ended June 30, 2024 was impacted due to forecasted U.S. tax credits the Company had accrued year to date.

Current wording

The provision for income tax increased $39.8 million to $15.7 million for the nine months ended September 30, 2025, compared to a benefit of $24.1 million forthe nine months ended September 30, 2024. As a percentage of pre-tax income, our effective tax rate for the nine months ended September 30, 2025 increased to 67.0% compared to (58.9)% in the comparable period of 2024. The increase in our effective tax rate for the nine months ended September 30, 2025 was primarily associated with the change in jurisdictional mix of income plus the impact associated with the sale of the Jack Wolfskin business in May 2025, partially offset by a benefit from a favorable audit settlement at one of our foreign subsidiaries. Our effective tax rate for the nine months ended September 30, 2024 was impacted by valuation allowances accrued year-to-date associated with the forecasted mix of jurisdictional earnings and forecasted U.S. income tax credits.

Previous wording

On a non-GAAP basis, excluding the items described in the table above, our net income and diluted earnings per share for the three months ended June 30, 2025 would have been $45.6 million and $0.24 per share, respectively, compared to $83.1 million and $0.42 per share, respectively, for the same period in 2024. The decrease in non-GAAP net income for the three months ended June 30, 2025 was primarily due to an increase in the provision for income taxes combined with increased foreign currency hedging losses, partially offset by the increase in segment operating income discussed above.

Current wording

On a non-GAAP basis, excluding the items described in the table above, our net loss and diluted loss per share for the three months ended September 30, 2025 would have been $9.2 million and $(0.05) per share, respectively, compared to net income and diluted earnings per share of $4.3 million and $0.02 per share, respectively, for the same period in 2024. The decrease in non-GAAP net income for the three months ended September 30, 2025 was primarily due to a decrease in the income tax benefit combined with a decrease in operating income in our Active Lifestyle and Golf Equipment operating segments, partially offset byincreased foreign currency hedging gains.

Previous wording

The following table presents a reconciliation of our GAAP results for the six months ended June 30, 2025 and 2024 to our non-GAAP results for the same periods (in millions, except per share information):

Current wording

The following table presents a reconciliation of our GAAP results for the nine months ended September 30, 2025 and 2024 to our non-GAAP results for the same periods (in millions, except per share information):

Previous wording

On a GAAP basis, net income decreased to $22.4 million for thesix months ended June 30, 2025 compared to $68.6 million for thesix months ended June 30, 2024. Diluted earnings per share was$0.12 per share for thesix months ended June 30, 2025 as compared to$0.36 for the same period in 2024. The $46.2 million decrease in net income for thesix months ended June 30, 2025 was mainly due to a $28.0 million increase in the income tax provision combined with the recognition of the loss on sale associated with thesale of the Jack Wolfskin business, charges associated with our planned separation from Topgolf and increased foreign currency hedging losses. These decreases were partially offset by increases in segment operating income in the Golf Equipment and Active Lifestyle segments, which were driven by lower operating costs due to cost savings initiatives, higher gross margins, and a gain recognized from a lease termination incentive in the first quarter of 2025.

Current wording

On a GAAP basis, net income decreased to $7.7 million for thenine months ended September 30, 2025 compared to $65.0 million for thenine months ended September 30, 2024. Diluted earnings per share was$0.04 per share for thenine months ended September 30, 2025 as compared to$0.35 for the same period in 2024. The $57.3 million decrease in net income for thenine months ended September 30, 2025 was mainly due to a $39.8 million increase in the income tax provision combined with the recognition of the loss on sale associated with thesale of the Jack Wolfskin business, charges associated with our planned separation from Topgolf and increased foreign currency hedging losses. These decreases were partially offset by increases in segment operating income in the Golf Equipment and Active Lifestyle segments, which were driven by lower operating costs due to cost savings initiatives, higher gross margins, favorable impacts from the sale of the Jack Wolfskin business in the Active Lifestyle segment, and a gain recognized from a lease termination incentive in the first quarter of 2025.

Previous wording

On a non-GAAP basis, excluding the items described in the table above, our net income and diluted earnings per share for the six months ended June 30, 2025 would have been $65.9 million and $0.35 per share, respectively, compared to $97.5 million and $0.51 per share, respectively, for the same period in 2024. The decrease in non-GAAP net income for the six months ended June 30, 2025 was primarily due to an increase in the provision for income taxes combined withan increase in foreign currency hedging losses, partially offset by the increase in segment operating income discussed above.

Current wording

On a non-GAAP basis, excluding the items described in the table above, our net income and diluted earnings per share for the nine months ended September 30, 2025 would have been $56.7 million and $0.31 per share, respectively, compared to $101.8 million and $0.54 per share, respectively, for the same period in 2024. The decrease in non-GAAP net income for the nine months ended September 30, 2025 was primarily due to an increase in the provision for income taxes combined withan increase in foreign currency hedging losses, partially offset by the increase in segment operating income in the Golf Equipment and Active Lifestyle segments discussed above.

Previous wording

Our cash and cash equivalents, including restricted cash, increased $233.5 million to $683.8 million at June 30, 2025 from $450.3 million at December 31, 2024. The increase in cash and cash equivalents was primarily related to cash provided by investing activities of $140.3 million driven by net proceeds received from the sale of the Jack Wolfskin business, cash provided by financing activities of $43.8 million, and cash provided by operating activities of $41.7 million. During the six months ended June 30, 2025, we used our cash and cash equivalents in addition to proceeds received from lease financings to fund operations and purchase capital expenditures. We believe that our cash on hand and existing sources of capital are adequate to fund our future operations, as necessary. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.

Current wording

Our cash and cash equivalents, including restricted cash, increased $415.6 million to $865.9 million at September 30, 2025 from $450.3 million at December 31, 2024. The increase in cash and cash equivalents was primarily related to cash provided by operating activities of $270.1 million, cash provided by investing activities of $73.4 million driven by net proceeds received from the sale of the Jack Wolfskin business, and cash provided by financing activities of $65.4 million. During the nine months ended September 30, 2025, we used our cash and cash equivalents in addition to proceeds received from lease financings to fund operations and purchase capital expenditures. We believe that our cash on hand and existing sources of capital are adequate to fund our future operations, as necessary. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.

Previous wording

Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. Our Active Lifestyle accounts receivable balances have historically been higher during the third and fourth quarters, primarily due to the seasonal concentration of sales for the Jack Wolfskin business during the fall and winter seasons. Our Topgolf venue business primarily records revenue and collects payment at point-of-sale, and therefore, Topgolf’s accounts receivable balance is lower than our other business segments and primarily consists of media partnership receivables. As of June 30, 2025, our consolidated net accounts receivable increased to $338.0 million from $175.7 million at December 31, 2024. The increase primarily reflects the seasonality of our golf equipment sales. Net accounts receivable as of June 30, 2025 decreased $52.4 million compared to June 30, 2024, primarily due to decreased net sales combined with the impact of the sale of the Jack Wolfskin business.

Current wording

Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. Our Active Lifestyle accounts receivable balances have historically been higher during the third and fourth quarters, primarily due to the seasonal concentration of sales for the Jack Wolfskin business during the fall and winter seasons. Our Topgolf venue business primarily records revenue and collects payment at point-of-sale, and therefore, Topgolf’s accounts receivable balance is lower than our other business segments and primarily consists of media partnership receivables. As of September 30, 2025, our consolidated net accounts receivable increased to $218.5 million from $175.7 million at December 31, 2024. The increase primarily reflects the seasonality of Golf Equipment sales. Net accounts receivable as of September 30, 2025 decreased $67.9 million compared to September 30, 2024, primarily due to the sale of the Jack Wolfskin business combined with lower overall net sales.

Previous wording

Our inventory balance fluctuates throughout the year as a result of the general seasonality of certain operating segments within our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. Active Lifestyle inventory levels historically started to increase during the second quarter and continue to increase into the third and fourth quarters primarily due to the seasonal nature of the Jack Wolfskin business, whose products are significantly geared towards the fall and winter seasons. Topgolf is primarily a service-based business which maintains lower inventory balances than our other business segments, primarily consisting of food and beverages as well as retail merchandise and Toptracer inventory. As of June 30, 2025, our inventory decreased $148.4 million to $608.9 million, compared to December 31, 2024, which reflects our seasonality in addition to the impact from the sale of the Jack Wolfskin business. Our inventory decreased $38.2 million as of June 30, 2025, compared to June 30, 2024, due to the sale of the Jack Wolfskin business, which more than offset the increase in Golf Equipment inventory due to year-over-year timing differences and the normalization of ball inventory due to a supplier factory fire in 2024.

Current wording

Our inventory balance fluctuates throughout the year as a result of the general seasonality of certain operating segments within our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. Active Lifestyle inventory levels historically started to increase during the second quarter and continue to increase into the third and fourth quarters primarily due to the seasonal nature of the Jack Wolfskin business, whose products are significantly geared towards the fall and winter seasons. Topgolf is primarily a service-based business which maintains lower inventory balances than our other business segments, primarily consisting of food and beverages as well as retail merchandise and Toptracer inventory. As of September 30, 2025, our inventory decreased $188.6 million to $568.7 million, compared to December 31, 2024, which reflects our seasonality in addition to the impact from the sale of the Jack Wolfskin business. Our inventory decreased $97.7 million as of September 30, 2025, compared to September 30, 2024, primarily due to the sale of the Jack Wolfskin business.

Previous wording

As of June 30, 2025, we had $1,161.7 million in cash and availability under our credit facilities, which is an increase of $377.9 million compared to June 30, 2024. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.

Current wording

As of September 30, 2025, we had $1,254.2 million in combined cash and availability under our credit facilities, which is an increase of $391.2 million compared to September 30, 2024. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.

Previous wording

As of June 30, 2025, approximately 13% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.

Current wording

As of September 30, 2025, approximately 15% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.