19 annotations
The following is a summary of the Topgolf Forecasts, with dollars in millions:
5 Year Forecast
424B3
19 Apr 21
In fiscal years 2017, 2018 and 2019, Topgolf recognized rent expense of $64.5 million, $78.6 million and $119.1 million, respectively, accounting for approximately 9.4%, 8.7% and 10.5%, respectively, of total operating costs. In the thirty-nine weeks ended September 29, 2019 and September 27, 2020, Topgolf recognized rent expense of $89.8 million and $88.6 million, respectively, accounting for approximately 10.8% and 12.2%, respectively, of total operating costs.
Rent Expense
424B3
19 Apr 21
Pre-opening costs include costs associated with activities prior to the opening of a new company-operated venue, including rent, training and recruiting and travel costs for associates engaged in such pre-opening activities.
Pre-opening expense explanation
424B3
19 Apr 21
Deferred revenue—current primarily includes (i) revenue associated with membership fees and event deposits received from our guests, (ii) purchases of game credits by our guests, (iii) purchases of gift cards by our guests and (iv) player purchases of virtual currency in our digital golf game.
Deferred rev explanation
424B3
19 Apr 21
Same venue sales. Same venue sales are a year-over-year comparison of sales for the comparable venue base, which is defined as the number of domestic and international company-operated venues open for 24 full fiscal months or longer. When a venue is closed for repair or remodel, or closed as a result of the COVID-19 pandemic, Topgolf excludes sales from that venue for the fiscal month from each of the current and prior period from the calculation. Same venue sales are impacted by a number of factors including perceptions of Topgolf’s brand, competition, Topgolf’s ability to increase prices without adversely impacting traffic counts, Topgolf’s ability to execute its marketing strategies and their effectiveness, and changes in consumer tastes and preferences and discretionary spending, which may occur for a number of reasons outside of Topgolf’s control, including an economic downturn or slower economic growth, weather and changes in government regulations, among others. Additionally, as Topgolf grows, it expects to continue to penetrate its established markets in order to capture as much of the market demand as possible and further grow its community of fans. When new venues are opened in close proximity to existing venues, this often has an impact on sales of the existing venue as the local market share is divided. Topgolf includes venues negatively impacted by penetration of existing markets in its full comparable venue base. Topgolf measures the impact of opening new venues in close proximity to existing venues on its same venue sales by calculating same venue sales excluding from the comparable venue base venues that had a new venue open with an overlapping trade area, which Topgolf generally evaluates based on drive time to a venue, of an existing venue in the previous 12 fiscal months and then comparing such measure to its same venue sales calculated including its full comparable venue base.In fiscal year 2017, fiscal year 2018 and fiscal year 2019, change in same venue sales was (1.3)%, 0.1% and 0.4%, respectively, which was negatively impacted by penetrating existing markets, as described above, by 202Table of Contents(0.5)%, (0.2)% and (0.5)%, respectively. Topgolf’s comparable venue base consisted of 23, 30 and 37 venues as of the end of fiscal year 2017, fiscal year 2018 and fiscal year 2019, respectively. In first three quarters 2019 and first three quarters 2020, change in same venue sales was 0.4% and (15.8)%, respectively, of which the first three quarters 2019 was negatively impacted by penetrating existing markets, as described above, by (0.5)%. When a venue is closed for repair or remodel, or closed as a result of the COVID-19 pandemic, Topgolf excludes sales from that venue for the fiscal month from each of the current and prior period from the calculation. First three quarters 2020 same venue sales were impacted by actions taken to comply with applicable COVID Orders at venues that were not closed, including reduced operating hours, suspension of alcohol sales and limits on occupancy and event size. Topgolf’s comparable venue base consisted of 33 and 41 venues as of the end of first three quarters 2019 and first three quarters 2020, respectively. The small number of venues included in Topgolf’s comparable venue base makes its same venue sales vulnerable to fluctuations due to changes in local demand and unfavorable weather events.
Same venue sales
424B3
19 Apr 21
As of September 27, 2020, it had eight company-operated and one franchised venues under construction and 25 venues under contract.
Venue pipeline
424B3
19 Apr 21
Though its standard license agreement may change from time to time and terms may vary among licensees, Topgolf’s Toptracer Range license agreements typically have an initial term of between three and five years, which automatically renew for successive one-year periods unless either party provides a termination notice to the other within a specified number of days prior to the expiration of the term. Fees payable to Topgolf under the agreements typically include a license fee, which is comprised of a combination of fixed and variable components depending on the territory and is payable on a monthly basis, in an amount that generally ranges from $150 to $200 per bay. Topgolf expects to continue to evaluate different pricing plans in order to expand reach of the Toptracer Range product offering to as many driving ranges as possible.
Toptracer pricing
424B3
19 Apr 21
The unit economics for a Toptracer Range system are highly attractive, structured under multi-year license agreements with a target monthly cash payment of $150 to $200 per bay, a target cash on cash return of over 50% by the end of year one and a target payback period of approximately two years.
Toptracer unit economics
424B3
19 Apr 21
Toptracer Range generates revenue in the form of fees Topgolf receives under its license agreements with driving range operators and in-game purchases by their customers. Topgolf also offers sponsorship opportunities to its corporate partners through which it generates sponsorship revenue.
Toptracer revenue model
424B3
19 Apr 21
In connection with the merger, and effective as of the closing date, Callaway granted to 189 employees of Topgolf an aggregate of 385,389 inducement performance stock unit (“PSU”) awards (at the target level) and an aggregate of 456,274 inducement restricted stock unit (“RSU”) awards. The awards were granted under Callaway’s 2021 Employment Inducement Plan, which provides for the granting of equity awards to new employees of Callaway. The RSU and PSU awards were approved by Callaway’s Board of Directors and/or Compensation and Management Succession Committee and were granted as an inducement material to the new employees entering into employment with Callaway, in accordance with New York Stock Exchange Rule 303A.08.The RSU awards will vest and the restrictions will lapse in three equal annual installments commencing on the one-year anniversary of the grant date, subject to continued employment through each applicable vesting date.The PSUs will vest after three years based on performance against certain corporate financial objectives over a three-year performance period beginning January 1, 2021 and ending December 31, 2023. The number of shares earned under the PSUs may be 617,689 in the aggregate if maximum performance is achieved during this three-year period. However, final vesting of the PSUs will not occur until the third anniversary of the grant date, following the end of the three-year performance period, and will be subject to continued employment through that date.
Additional RSU and PSU for Topgolf deal
8-K
12 Apr 21
Under the terms of the merger agreement, which was previously announced on October 27, 2020, Callaway issued approximately 90 million shares of its common stock to the shareholders of Topgolf, excluding Callaway, which previously held approximately 14% of Topgolf’s outstanding shares. Immediately following the merger, Callaway shareholders owned approximately 51.3% and formerTopgolf shareholders (excluding Callaway) owned approximately 48.7% of the outstanding shares of the combined company.
Shares issued for transaction
8-K
12 Apr 21
Performance Based Awards
Performance based RSUs
10-K
2020 FY
9 Apr 21
Restricted Stock Units
RSUs
10-K
2020 FY
9 Apr 21
Stock Options
Stock Options
10-K
2020 FY
9 Apr 21
On October 27, 2020, the Company entered into the Merger Agreement to acquire Topgolf in an all-stock transaction (see Note 6). At the effective time of the Merger, all preferred shares and common stock of Topgolf held by the Company will be canceled for no consideration. The Merger is expected to close in the first quarter of 2021, subject to the receipt of shareholder approval, as well as other customary conditions.
Investment shares cancelled in Topgolf
10-K
2020 FY
9 Apr 21
The Company currently estimates that it will issue approximately 90,000,000 shares of its common stock to the stockholders of Topgolf (excluding the Company) for 100% of the outstanding equity of Topgolf, using an exchange ratio based on an equity value of Topgolf of approximately $1,986,000,000 (or approximately $1,745,000,000 excluding Topgolf shares currently held by the Company) and a price per share of the Company’s common stock fixed at $19.40 per share. The actual purchase consideration upon the close of the Merger will be based on the estimated number of shares of the Company's common stock as discussed above, multiplied by the closing price of Company's common stock as of that day. As of December 31, 2020, the Company held approximately 14.3% of Topgolf's outstanding shares. Upon completion of the Merger, the former Topgolf stockholders (other than the Company) are expected to own approximately 48.5% of the combined company on a fully diluted basis. Outstanding Topgolf stock options will be converted into options to purchase the Company’s common stock, generally using the same exchange ratio. The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $75,000,000. The Merger is expected to close on or around March 8, 2021, subject to shareholder approval and other customary conditions.
(No comment added)
10-K
2020 FY
9 Apr 21
Proposed Acquisition of Topgolf International, Inc.
Topgolf Merger Detail
10-K
2020 FY
9 Apr 21
As of January 31, 2021, the number of shares outstanding of the registrant’s common stock, $.01 par value, was 94,241,747.
Shares Outstanding
10-K
2020 FY
9 Apr 21
In October 2020, the Company entered into a definitive agreement to acquire Topgolf International, Inc. (“Topgolf”) in an all-stock transaction (the "Merger"), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Topgolf and 51 Steps, Inc., a Delaware corporation and wholly-owned subsidiary of Callaway (“Merger Sub”). The Merger is expected to close during the first quarter of 2021, after which the former Topgolf stockholders (other than the Company) are expected to own approximately 48.5% of the combined company on a fully diluted basis.
(No comment added)
10-K
2020 FY
9 Apr 21
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