Callaway Golf Co

Note 1. The Company and Basis of Presentation

The Company

Callaway Golf Company (together with its wholly-owned subsidiaries, referred to as “we,” “our,” “us,” “the Company,” or “Callaway” unless otherwise specified), a Delaware corporation, is a premium golf equipment, gear and apparel company that designs, manufactures and sells high-performance golf clubs, golf balls, apparel, bags, and other accessories through our family of brand names, which include Callaway Golf, Odyssey, TravisMathew, and OGIO.

Our products and brands are reported undertwo operating segments: Golf Equipment, which includes the operations of our golf clubs and golf balls business under the Callaway Golf and Odyssey brand names; and Apparel, Gear and Other (formerly, “Active Lifestyle”), which includes the operations of our soft goods business marketed under the Callaway, TravisMathew, and OGIO brand names.

Basis of Presentation

We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America (“GAAP”). We have condensed or omitted certain information and disclosures that are normally included in our annual consolidated financial statements which are prepared in accordance with GAAP. In the opinion of management, these condensed consolidated financial statements include all normal and recurring adjustments necessary for the fair presentation of the financial position, results of operations and cash flows for the periods and dates presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2026, or any other future periods.

We translate the financial statements of our foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions have been eliminated during consolidation.

Unless otherwise specified, disclosures in these condensed consolidated financial statements reflect continuing operations only. Prior period financial information related to discontinued operations has been reclassified and separately presented in the condensed consolidated financial statements and accompanying notes to conform to the current period presentation. See Note 3 for further information regarding our discontinued operations.

Fiscal Year End

Our annual financial results are reported on a calendar year basis.

Note 2. Summary of Significant Accounting Policies

Our significant accounting policies are described in Note 2 to our audited consolidated financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K which was filed with the SEC on February 27, 2026.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances at that time. We evaluate our estimates on an ongoing basis to ensure that these estimates appropriately reflect changes in our business or as new information becomes available. Actual results may differ from our estimates.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure, on an annual and interim basis, of specific information about cost and expense related items within the notes to our condensed consolidated financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on either a prospective or retrospective basis with early adoption permitted. We are in the process of evaluating the impact that ASU 2024-03 will have on our condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which clarifies the difference between expensed costs and capitalized costs by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact of ASU 2025-06 and do not expect adoption of the standard to have a material impact on our consolidated financial statements and related disclosures.

Recently Adopted Accounting Standards

In May 2026, the FASB issued ASU No. 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818)” (“ASU 2026-02”), which provides specific authoritative guidance for environmental credits and environmental credit obligations. ASU 2026-02 is effective for fiscal years beginning after December 15, 2027, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We elected to early adopt this ASU effective for our quarter ended June 30, 2026. The adoption of this ASU did not have a material impact on our consolidated financial statements or related disclosures for the period ended June 30, 2026.

Note 3. Discontinued Operations

Divestiture of the Topgolf Business

Effective January 1, 2026, we completed the sale of a 60% equity interest in the Topgolf and Toptracer businesses (“Topgolf”) to private equity funds managed by Leonard Green & Partners, L.P. based upon an equity value of approximately $1,100.0 million. In connection with the sale and related financing transactions, we received net proceeds of $820.1 million, net of working capital adjustments and cash retained. In the fourth quarter of 2025, we recorded an estimated loss on sale before income taxes of $143.1 million. During the first quarter of 2026, we recorded net working capital adjustments of $2.5 million, resulting in a total loss on sale of $140.6 million after these adjustments.

The results of operations and cash flows of Topgolf are classified as discontinued operations for all periods presented and our retained ownership interest in Topgolf is accounted for under the equity method of accounting. During the second quarter of 2026, our ownership interest decreased from 40.0% to 39.3% following the sale by Topgolf of additional dilutive units, which decreased our non-controlling interest. In addition to our 39.3% equity interest, we have continuing involvement with Topgolf through ongoing commercial agreements (see Note 9) and a transition services agreement.

For the three and six months ended June 30, 2026, we recognized $1.1 million and $2.3 million, respectively, associated with amounts billed under the transition services agreement with Topgolf, which were recognized in other income (expense), net on the condensed consolidated statement of operations.

Due to the amendment of our 2023 Term Loan B, which required a mandatory prepayment of $500.0 million in connection with the completion of the sale of Topgolf, we attributed $9.6 million and $19.1 million of related interest expense to discontinued operations for the three and six months ended June 30, 2025.

Divestiture of the Jack Wolfskin Business

On May 31, 2025, pursuant to the Sale & Purchase Agreement dated April 10, 2025, we completed the sale of 100% of the equity interests in Callaway Germany Holdco GmbH, which operated the Jack Wolfskin business, for $290.0 million, net of cash retained, and recorded a $26.2 million loss upon completion of the sale. The operating results of Jack Wolfskin are presented as discontinued operations for all periods presented.

Results of Discontinued Operations

The following is a summary of the results of discontinued operations on thecondensed consolidated statement of operations for the periods presented below (in millions). Results of discontinued operations for the three and six months ended June 30, 2026 primarily reflect the settlement of certain indemnification obligations and costs directly related to our divestitures of Topgolf and Jack Wolfskin, in addition to the recognition of an income tax benefit in connection with the sale of Topgolf.

Assets and Liabilities of Discontinued Operations

The following tables summarize the assets and liabilities of discontinued operations on thecondensed consolidated balance sheets for the periods presented (in millions). As Jack Wolfskin was sold on May 31, 2025, and the sale of Topgolf was completed effective January 1, 2026, there are no assets or liabilities of discontinued operations as of June 30, 2026.

Note 4. Revenue Recognition

We recognize revenue from the sale of our products. The following table presents our net sales disaggregated by operating and reportable segment and major category (in millions):

We sell our Golf Equipment products and Apparel, Gear and Other products in the United States and internationally, with our principal international regions being Europe and Asia. Golf Equipment product sales are generally higher than Apparel, Gear and Other sales in all regions.

The following table summarizes sales by geographical region (in millions):

Licensing and royalties

We have licensing and royalty income from licensing agreements for apparel and soft good products in our Apparel, Gear and Other operating segment. The following table summarizes the licensing and royalty income recognized in net sales for the periods presented (in millions):

Deferred revenue

Our short-term deferred revenue balance consists primarily of revenue from the sale of gift cards and accrued customer loyalty points.

The following table provides a reconciliation of activity related to our short-term deferred revenue balance for the periods presented (in millions):

Deferred revenue recognized during the three months ended June 30, 2026 and 2025 from gift card redemptions that were included in the deferred revenue balance at the end of the prior year period was $0.7 million and $1.0 million, respectively. Deferred revenue recognized during the six months ended June 30, 2026 and 2025 from gift card redemptions that were included in the deferred revenue balance at the end of the prior year period was $2.0 million and $2.4 million, respectively. The increase in revenue recognized during the three and six months ended June 30, 2026, includes the impact of the transition to a new customer loyalty program related to our TravisMathew business. We have recognized $2.2 million and $8.0 million, respectively, of deferred revenue related to expired loyalty points during the three and six months ended June 30, 2026.

Variable Consideration

We recognize revenue based on the amount of consideration we expect to receive from customers for the sale of our products adjusted for estimates of variable consideration related to sales returns, discounts and allowances, sales promotions and sales programs, and price concessions. These estimates are based on the amounts earned or expected to be claimed by customers.

As of June 30, 2026 and December 31, 2025, the balances for our short-term sales incentive program included in accounts receivable, net on our condensed consolidated balance sheets, were $28.9 million and $15.0 million, respectively.

As of June 30, 2026 and December 31, 2025, the balances for our sales return reserve included in accounts receivable, net on our condensed consolidated balance sheets, were $100.1 million and $64.2 million, respectively. For these periods, the related cost recovery balances of inventory associated with the sales return liability included in other current assets on our condensed consolidated balance sheets, were $42.2 million and $30.4 million, respectively.

Note 5. Leases

Operating leases and financing leases

Supplemental balance sheet information related to our operating and financing right of use (“ROU”) assets and lease liabilities is as follows (in millions):

Lease Termination Incentive

During the first quarter of 2025, we signed an agreement with the landlord of our Japanese subsidiary’s headquarters to terminate a lease prior to its original end date in exchange for a cash incentive of 1,800.0 million Yen (approximately $12.0 million). As a result, we recognized a $12.0 million gain on lease termination, which was recorded within selling, general and administrative expenses in our condensed consolidated statement of operations.

The components of lease expense, excluding the impact from the lease termination incentive, included in our condensed consolidated statement of operations for the periods presented below are as follows (in millions):

Other information related to leases (in millions):

As of June 30, 2026, our future minimum lease obligations were as follows (in millions):

Note 6. Financing Arrangements

Our credit facilities and long-term debt obligations are summarized as follows (in millions, except interest rates):

Total interest and amortization expense related to our credit facilities and long-term debt obligations, which were recognized in interest income (expense), net on the condensed consolidated statement of operations, is summarized as follows (in millions):

Short-Term Credit Facilities and Available Liquidity

2025 Japan ABL Credit Facility & 2023 ABL Credit Facility

Our 2025 Japan ABL Credit Facility provides a line of credit to our Japan subsidiary of up to 9,000.0 million Yen (or approximately $55.4 million using the exchange rate in effect as of June 30, 2026), and our 2023 ABL Credit Facility has an aggregate principal amount of up to $485.0 million. Both facilities are subject to certain restrictions and covenants related to pledged collateral and financial performance, and, among other things, include provisions that limit certain financing and operational activities and require ongoing compliance with specified performance‑based or availability‑related conditions, as applicable under the respective agreements. In addition, the 2023 ABL Credit Facility requires compliance with a minimum fixed charge coverage ratio of 1.0 to 1.0 during periods in which the borrowing base availability falls below 10% of the maximum aggregate principal amount of the facility.

As of June 30, 2026, we were in compliance with the covenants and other requirements applicable under the 2025 Japan ABL Credit Facility and the 2023 ABL Credit Facility.

Consolidated Available Liquidity

As of June 30, 2026, our consolidated available liquidity, which is comprised of cash on hand and amounts available under our short-term credit facilities, less outstanding letters of credit and outstanding borrowings, was $774.7 million. Our average availability and weighted-average interest rate under our 2023 ABL Credit Facility and 2025 Japan ABL Credit Facility were as follows for the periods presented (in millions except interest rates):

Long-Term Debt and Credit Facilities

2023 Term Loan B

On December 1, 2025, in connection with the sale of the Topgolf business, our 2023 Term Loan B was amended to designate certain Topgolf entities as unrestricted subsidiaries and release them as guarantors, amend certain definitions and covenant provisions, and require a $500.0 million mandatory partial repayment upon consummation of the sale.

On January 2, 2026, in connection with the completion of the sale of Topgolf, we repaid $1,000.0 million under the 2023 Term Loan B comprised of a $500.0 million mandatory repayment and an additional discretionary repayment of $500.0 million. In conjunction with the repayment, we recognized a $15.0 million loss from the partial debt extinguishment to write off the proportionate amount of unamortized debt issuance costs and debt discounts. Of this amount, $7.5 million was allocated to continuing operations and was recognized in other income (expense), net on the condensed consolidated statement of operations. The remaining $7.5 million was allocated to discontinued operations and represents the portion of the write‑off related to the mandatory prepayment of the loan required upon completion of the Topgolf sale. On May 29, 2026, we repaid the remaining $162.5 million principal balance outstanding under the 2023 Term Loan B. In connection with the repayment, we recognized a $2.3 million loss from debt extinguishment to write off the remaining unamortized debt issuance costs and debt discounts, which were recognized in other income (expense), net on the condensed consolidated statement of operations.

Convertible Notes & Capped Call

We had Convertible Notes outstanding that were convertible into shares of our common stock at an initial conversion rate of 56.8 shares per $1,000 principal amount (equivalent to a conversion price of $17.62 per share) and bore interest payable semi-annually on May 1 and November 1. The Convertible Notes could be settled in cash, shares, or a combination thereof at our election and became convertible at the holders' option upon the occurrence of certain contingent conversion events beginning February 1, 2026. In connection with the Convertible Notes, we entered into capped call transactions covering the shares initially underlying the Convertible Notes, which were intended to reduce potential dilution and/or offset cash payments upon conversion. The capped calls had an exercise price of $17.62 per share and a cap price of $23.71 per share, were subject to customary adjustments, and were recorded as a reduction to additional paid-in capital.

On May 1, 2026, we settled our outstanding Convertible Notes at maturity in accordance with their terms, including the payment of accrued and unpaid interest. The settlement was completed entirely in cash, and no shares of common stock were issued. In connection with the settlement, the related capped call transactions expired unexercised.

Equipment Notes

We have long-term financing agreements (the “Equipment Notes”) with various lenders related to various capital investments in certain facilities and information technology equipment. The loans are secured by the relative underlying equipment.

Aggregate Amount of Long-Term Debt Maturities

The following table presents our combined aggregate amount of maturities for our long-term debt and credit facilities over the next five years and thereafter as of June 30, 2026 (in millions):

Note 7. Earnings (Loss) Per Common Share

The following table summarizes the computation of basic and diluted earnings per common share for the periods presented (in millions, except per share data):

Anti-Dilutive Securities

For the three and six months ended June 30, 2026, approximately 0.3 million and 0.4 million securities outstanding, respectively, comprised of stock options, were excluded from the calculation of diluted earnings per common share as they would be anti-dilutive.

For the three and six months ended June 30, 2025, approximately 2.7 million and 3.0 million securities outstanding, respectively, comprised of stock options and restricted stock units were excluded from the calculation of diluted earnings per common share as they would be anti-dilutive.

Note 8. Goodwill and Intangible Assets

Changes in the carrying amount of goodwill by operating and reportable segment are as follows (in millions):

Intangible assets by major asset class are as follows (in millions, except useful life amounts):

We recognized $0.2 million of amortization expense related to acquired intangible assets for each of the three months ended June 30, 2026 and 2025, which is primarily recorded in selling, general and administrative expenses in the condensed consolidated statements of operations. We recognized $0.4 million of amortization expense related to acquired intangible assets for each of the six months ended June 30, 2026 and 2025, which is primarily recorded in selling, general and administrative expenses in the condensed consolidated statements of operations.

As of June 30, 2026, intangible asset amortization expense is expected to be incurred for the periods presented as follows (in millions):

Note 9. Investments

Investment in Topgolf

Upon completion of the sale of our 60% ownership interest in Topgolf effective January 1, 2026, we retained a 40% non-controlling interest with an initial value of $248.5 million. The retained investment is accounted for under the equity method and was recorded at fair value using Level 3 inputs based on the equity value of Topgolf which was derived from the transaction price and adjusted for working capital and other transaction specific adjustments. The carrying amount of the investment is subsequently adjusted to reflect our proportionate share of Topgolf’s income or losses and dividends and distributions received. During the second quarter of 2026, Topgolf sold additional dilutive units which decreased our non-controlling interest to 39.3%.

The following table presents summarized information for Topgolf for the periods presented (amounts in millions). Amounts presented represent the results of operations of Topgolf and do not represent our proportionate share:

For the three and six months ended June 30, 2026, we recognized $1.0 million and $28.7 million, respectively, of equity method investment loss for our respective share of Topgolf’s earnings, which is recorded in income (loss) from equity method investments in the condensed consolidated statement of operations. During the second quarter of 2026, we recognized a $6.5 million distribution from Topgolf, of which, $5.6 million was received in cash, which reduced the carrying value of our investment. We classify cash flows from equity method investment distributions using the cumulative earnings approach. Based on this approach, we determined the distribution was a return of investment and it was therefore classified within investing activities in the condensed consolidated statements of cash flows. As of June 30, 2026, the carrying value of our investment in Topgolf was $213.9 million and is included in equity method investments on our condensed consolidated balance sheets.

For the three and six months ended June 30, 2026, we recognized $2.1 million and $5.3 million, respectively, in net sales for products sold under our commercial agreement with Topgolf. Intra-entity profits on certain sales transactions with Topgolf are eliminated until realized by the Company. As of June 30, 2026, we had $1.6 million in open receivables due from Topgolf related to product sales and services under the commercial and transition service agreements.

Investment in Full Swing

We have an ownership interest of less than 20.0% in Full Swing Golf Holdings, LLC (“Full Swing”), owners of multi-sport indoor virtualization and simulation technology. The initial investment is accounted for at cost and is subsequently adjusted for observable changes in fair value or impairments. As of both June 30, 2026 and December 31, 2025, the carrying value of our investment in Full Swing was $9.3 million, and is included in other assets, net on our condensed consolidated balance sheets.

On July 6, 2026, it was announced that Full Swing has entered into a definitive agreement to sell the business in its entirety to Versant Media Group, Inc. The transaction closed on August 3, 2026, and we received cash proceeds of approximately $24.6 million. Based on the carrying value of our investment as of June 30, 2026, we expect to recognize a gain of approximately $15.3 million in the third quarter of 2026.

Investment in Five Iron Golf

We have an ownership interest of less than 20.0% in The Range NYC, LLC (“Five Iron Golf”), an urban indoor golf experience company which hosts a golf simulation technology and serves food and beverage. The initial investment is accounted for at cost and is subsequently adjusted for observable changes in fair value or impairments. During the six months ended June 30, 2026, we recognized a $4.6 million fair value step-up in our investment based on Level 3 inputs related to an observable market transaction that occurred during the first quarter of 2026. As of June 30, 2026 and December 31, 2025, the carrying value of our investment in Five Iron Golf was $38.5 million and $33.9 million, respectively, and is included in other assets, net on our condensed consolidated balance sheets.

Other Investments

In addition to the investments above, as of June 30, 2026 and December 31, 2025, we had other investments of approximately $5.2 million and $4.4 million, respectively, which are classified in other assets, net on our condensed consolidated balance sheets. The investments are accounted for at cost less impairments and are adjusted for observable changes in fair value.

Note 10. Selected Financial Data

Selected financial data as of the dates presented below is as follows (in millions, except useful life data):

For the three months ended June 30, 2026 and 2025, we recorded total depreciation expense of $9.3 million and $11.0 million, respectively, in our condensed consolidated statements of operations. For the six months ended June 30, 2026 and 2025, we recorded total depreciation expense of $19.9 million and $22.5 million, respectively, in our condensed consolidated statements of operations. Depreciation expense is recognized in cost of sales, research and development expense, and selling, general and administrative expense on the condensed consolidated statement of operations, consistent with the use of the underlying asset.

Note 11. Income Taxes

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

We recorded an income tax provision of $34.8 million and $13.1 million for the three months ended June 30, 2026 and 2025, respectively. As a percentage of pre-tax income, our effective tax rate was 31.5% and 22.4% for the three months ended June 30, 2026 and 2025, respectively. For the three months ended June 30, 2026, the difference between the statutory tax rate and the effective tax rate is primarily due to the impacts of valuation allowances related to our investment in Topgolf, as well as our global mix of earnings. For the three months ended June 30, 2025, the difference between the statutory tax rate and the effective tax rate is primarily due to minimum taxes on our foreign earnings and discrete tax adjustments related to share-based compensation.

We recorded an income tax provision of $67.5 million and $40.3 million for the six months ended June 30, 2026 and 2025, respectively. As a percentage of pre-tax income, our effective tax rate was 30.9% and 27.0% for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, the difference between the statutory tax rate and the effective tax rate is primarily due to the impacts of valuation allowances related to our investment in Topgolf, as well as our global mix of earnings. For the six months ended June 30, 2025, the difference between the statutory tax rate and the effective tax rate is primarily due to minimum taxes on our foreign earnings and discrete tax adjustments related to share-based compensation.

As of June 30, 2026, the gross liability for income taxes associated with uncertain tax positions was $18.8 million. Of this amount, $10.3 million would benefit our condensed consolidated financial statements and effective income tax rate if favorably settled. We recognize interest and penalties related to income tax matters in income tax expense.

Note 12. Commitments & Contingencies

Legal Matters

We are subject to routine legal claims, proceedings, and investigations associated with the normal conduct of our business activities, including commercial disputes and employment matters. We also receive from time-to-time information claiming that products we sell infringe or may infringe patent, trademark, or other intellectual property rights of third parties. One or more such claims of potential infringement could lead to litigation, the need to obtain licenses, the need to alter a product to avoid infringement, a settlement or judgment, or some other action or material loss, which could adversely affect our overall ability to protect our product designs and ultimately limit our future success in the marketplace. Additionally, we are occasionally subject to non-routine claims, proceedings, or investigations.

We regularly assess such matters to determine the degree of probability that we will incur a material loss as a result of such matters, as well as the range of possible loss. An estimated loss contingency is accrued in our financial statements if it is probable we will incur a loss, and the amount of the loss can be reasonably estimated. Historically, the claims, proceedings, and investigations brought against us, individually and in the aggregate, have not had a material adverse effect on ourcondensed consolidated results of operations, cash flows or financial position. While it is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that some of these actions could be decided unfavorably, we do not believe that the matters currently pending against us will have a material adverse effect on our business, condensed consolidated results of operations, cash flows or financial position.

Commitments

During the normal course of our business, we enter into agreements to purchase goods and services, including commitments for endorsement agreements with professional athletes and other endorsers, consulting and service agreements, intellectual property licensing agreements pursuant to which we are required to pay royalty fees, and signed retail lease agreements of which we have not taken possession as of period-end. The amounts listed below approximate the minimum future commitments we are obligated to pay under these agreements. The actual amounts paid under some of the agreements may be higher or lower than these amounts due to the variable nature of these obligations.

As of June 30, 2026, the minimum obligation we are required to pay under these agreements over the next five years and thereafter is as follows (in millions):

Other Contingent Contractual Obligations

During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. The duration of these indemnities, commitments and guarantees varies, and in certain cases, may be indefinite and the majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our condensed consolidated financial statements. The fair value of indemnities, commitments and guarantees that we issued during the three and six months ended, and as of June 30, 2026, were not material to our financial position, results of operations or cash flows.

We have also made certain indemnities under which we may be required to make payments in relation to divestitures of the Topgolf and Jack Wolfskin businesses. These include indemnities against (i) damages arising from certain ongoing litigation matters, (ii) certain exempted claims and (iii) certain pre-closing tax and other liabilities. As of June 30, 2026, we have $3.4 million of indemnities recorded related to the disposals of our businesses (see Note 3), which are reported in other long-term liabilities on the condensed consolidated balance sheet.

Tariff Refunds

On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized by statute. In March 2026, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection (“CBP”) to begin processing refunds of certain IEEPA tariffs. As a result, we filed approximately $49.5 million of refund claims related to previously paid IEEPA tariffs, subject to applicable eligibility, filing, and recovery requirements. These claims were submitted through the CBP phased refund process.

We account for potential recoveries related to these tariff refund claims under the gain contingency guidance in ASC 450 and recognize refunds only when they are deemed realizable. The principal portion of the refunds will be reflected as a reduction of cost of sales for amounts related to goods already sold and any associated interest income received on the tariff refunds will be recognized within interest income (expense), net in the condensed consolidated statements of operations. During the second quarter of 2026, we recognized $10.8 million of tariff refunds attributable to approved Phase 1 claims that were determined to be realizable, which was recorded as a reduction of cost of sales. Any related interest was immaterial.

Subsequent to June 30, 2026, we received cash for $6.7 million of approved tariff refunds related to Phase 2 claims. As these refunds were not deemed realizable as of June 30, 2026, they will be recognized in the third quarter of 2026.

The ultimate amount, if any, and timing of additional recoveries remain subject to ongoing legal, regulatory, and administrative proceedings, and we will recognize additional tariff refunds when the applicable recognition criteria have been met.

Note 13. Share-Based Compensation

Share-Based Awards Granted

We granted the following awards under our stock compensation plans during the periods presented (in millions, except per share data):

Share-Based Compensation Expense

Share-based compensation expense by award-type, net of estimated forfeitures, recognized in the condensed consolidated statement of operations for the periods presented was (in millions):

Share-based compensation, net of estimated forfeitures, recognized in the condensed consolidated statement of operations for the periods presented was (in millions):

Note 14. Fair Value of Financial Instruments

Fair Value Measurements

The carrying amounts of our cash and cash equivalents (which include money market funds), accounts receivable, accounts payable, accrued expenses, and certain other short‑term assets and liabilities approximate fair value due to their short‑term nature.

Money Market Funds

As of June 30, 2026 and December 31, 2025, the carrying value of our money market funds was $199.5 million and $791.7 million, respectively, which is included in cash and cash equivalents on our condensed consolidated balance sheets. During the three months ended June 30, 2026 and June 30, 2025, we recognized$2.1 million and $2.9 million, respectively, of dividend income on our money market funds. During the six months ended June 30, 2026 and June 30, 2025, we recognized$6.7 million and $5.4 million, respectively, of dividend income on our money market funds. Dividend income is included in other income (expense), net in the condensed consolidated statements of operations.

Foreign Currency Forward Contracts

The following table summarizes the valuation of our foreign currency forward contracts (see Note 15) that are measured at fair value on a recurring basis and are categorized within Level 2 of the fair value hierarchy as of the periods presented below (in millions):

There were no transfers of financial instruments between the levels of the fair value hierarchy during the three and six months ended June 30, 2026 or 2025.

Disclosures about the Fair Value of Financial Instruments

The table below presents information about the fair value of our financial liabilities, and is provided for comparative purposes only relative to the carrying values recognized in the condensed consolidated balance sheets as of the periods presented below (in millions):

Non-recurring Fair Value Measurements

We measure certain long-lived assets, goodwill, non-amortizing intangible assets and investments at fair value on a non-recurring basis, at least annually or more frequently if impairment indicators are present. Our cost-basis investments are also subject to fair value remeasurements from observable market transactions. For more detail, see Note 9.

As part of our initiative to rationalize lower margin business, we performed a review of the TravisMathew business including certain warehouse equipment and retail locations. As part of this review, it was decided to exit certain retail locations which did not meet our profitability thresholds, resulting in total impairment charges of $1.8 million recorded during the three and six months ended June 30, 2026. This assessment was based on the estimated future cash flows generated over the remaining lease terms and expected asset lives. As a result, we recognized impairment losses to reduce the carrying values of these assets to their fair values which are categorized within Level 3 of the fair value hierarchy. We recognized $1.4 million of these impairment charges within selling, general and administrative expense and $0.4 million was recognized in cost of sales in our condensed consolidated statement of operations.

We didnot recognize any impairments related to continuing operations during the three and six months ended June 30, 2025.

Note 15. Derivatives and Hedging

The following table summarizes the fair value of our derivative instruments as well as the location of the asset and/or liability on the condensed consolidated balance sheets as of the periods presented below (in millions):

Our derivative instruments are subject to a master netting agreement with each respective counterparty bank and are therefore net settled at their maturity date. Although we have the legal right of offset under the master netting agreements, we have elected not to present these contracts on a net settlement amount basis, and therefore present these contracts on a gross basis on the accompanying condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025. Gains and losses related to our derivative instruments are presented as an adjustment to reconcile net income to net cash provided by or used in operating activities in the condensed consolidated statements of cash flows.

Derivative Designated as Cash Flow Hedging Instruments

We only use derivative instruments, including foreign currency forward contracts and interest rate swaps, to manage market risks related to foreign currency exposure across our global operations and exposure to variable‑rate debt.

As of June 30, 2026, the notional amount of our foreign currency forward contracts designated as cash flow hedges was$73.6 million. As of December 31, 2025, there wereno outstanding cash flow hedges. During the fourth quarter of 2025, we closed out our interest rate swaps in connection with an amendment to the 2023 Term Loan B. As of June 30, 2026, we did not have any outstanding interest rate swap agreements.

The following tables summarize the net effect of all cash flow hedges for each of our derivative contracts on the condensed consolidated financial statements for the periods presented (in millions):

For thethree months ended June 30, 2026 and 2025, $0.6 million and $1.5 million, respectively, of net gains related to the amortization of forward points were released from accumulated other comprehensive income and recognized in cost of sales. For thesix months ended June 30, 2026 and 2025,$1.6 millionand$0.7 million, respectively, of net gains related to the amortization of forward points were released from accumulated other comprehensive income and recognized in cost of sales.

Based on the current valuation of our foreign currency forward contracts, we expect to release net gains of$2.1 million related to our foreign currency forward contracts from accumulated other comprehensive income into earnings over the next 12 months.

Derivatives Not Designated as Hedging Instruments

As of June 30, 2026 and December 31, 2025, the notional amounts of our foreign currency forward contracts not designated as cash flow hedges were approximately $164.8 million and $88.4 million, respectively.

The following table summarizes the location of net gains and losses on foreign currency forward contracts recognized in the condensed consolidated statements of operations for the periods presented (in millions):

During the three months ended June 30, 2026 and 2025, we recognized net foreign currency transaction losses of$2.5 million and gains of $13.4 million, respectively, in other income (expense), net. During the six months ended June 30, 2026 and 2025, we recognized net foreign currency transaction losses of$5.8 million and gains of $23.3 million, respectively, in other income (expense), net.

Note 16. Accumulated Other Comprehensive Loss

The following table details the amounts reclassified from accumulated other comprehensive loss and foreign currency translation adjustments for the three and six months ended June 30, 2026 (in millions):

Note 17. Segment Information

Our operating segments are based on how our Chief Executive Officer as the designated Chief Operating Decision Maker (“CODM”) makes decisions about assessing performance and allocating resources. Our CODM primarily evaluates segment performance using segment operating income (loss), which is calculated by taking total segment net sales less segment operating expenses. Segment operating expenses include operating expenses directly attributable to the segment as well as certain shared corporate administration services and other costs which are allocated to the reportable segments. Segment operating expenses exclude certain non-recurring items and other corporate costs, such as interest expense, interest income and taxes. Our CODM evaluates the profitability of each reportable segment based on segment operating income (loss) because it provides insight to operational leverage and other key operational metrics for each segment. Segment operating income (loss) is also used in the annual budget and forecasting process, and budget-to-actual and forecast-to-actual variances are considered when determining the appropriate allocation of company resources to each of our segments. Our CODM does not evaluate a measure of assets when assessing segment performance.

We havetwo operating and reportable segments:

•Golf Equipment, which is comprised of product sales and expenses that encompass golf club and golf ball products, including Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, Callaway Golf-branded golf balls and sales of pre-owned golf clubs; and

•Apparel, Gear and Other, which is comprised of product sales and expenses for the TravisMathew golf and lifestyle apparel and accessories business, the Callaway soft goods business and the OGIO business, which consists of golf apparel and accessories (including golf bags), and storage gear for sport and personal use. This segment also includes royalties from licensing of our trademarks and service marks for various soft goods products.

There were no sign ificant intersegment transactions during thethree and six months ended June 30, 2026 or 2025.

The following table contains information utilized by our CODM to evaluate our operating segments for the periods presented below (in millions):

We market our products in the United States and internationally, with our principal international markets being Asia and Europe. The tables below contain information about the geographical areas in which we operate. Net sales are attributed to the location to which the product was shipped. Long-lived assets are based on location of domicile.

Note 18. Restructuring

Our restructuring costs primarily consist of severance and termination benefits, asset disposals, write-offs and impairments and other exit and disposal costs. Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs.

Transformation Plan

In connection with the September 2024 announcement of our intended separation of the Topgolf business, we initiated a plan which is intended to optimize organizational efficiencies and decrease operating costs under the separate business structures that are anticipated after the separation (the “Transformation Plan”). For the three and six months ended June 30, 2026, costs incurred under the Transformation Plan were primarily related to employee termination and severance costs. We expect to incur up to $10.0 million in costs related to the Transformation Plan, which we expect to be substantially complete by the end of 2026.

For the three months ended June 30, 2026 and 2025, we incurred $0.6 million and $0.4 million, respectively, of employee termination and severance costs under the Transformation Plan. For the six months ended June 30, 2026 and 2025, we incurred $1.4 million and $1.1 million, respectively, of employee termination and severance costs under the Transformation Plan. Amounts payable for employee termination and severance included in accrued employee compensation and benefits on the condensed consolidated balance sheets at June 30, 2026 and December 31, 2025, totaled $0.6 million and $0.2 million, respectively. As of June 30, 2026, we incurred cumulative costs of $5.7 million related to the Transformation Plan.