Earnings per Common Share

12 Months Ended

Dec. 31, 2021

Note 8. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period.

In periods when net income is reported, diluted earnings per common share takes into account the potential dilution that could occur if outstanding securities were exercised. Dilutive securities are included in the calculation of diluted earnings per common share using the treasury stock method in accordance with ASC Topic 260, “Earnings Per Share.” Dilutive securities include outstanding stock options, restricted stock units and performance share units granted to employees and non-employee directors (see Note 17), as well as common shares underlying convertible notes (see Note 7).

In periods when a net loss is reported or in periods when anti-dilution occurs, weighted-average common shares outstanding—diluted is the same as weighted-average common shares outstanding—basic.

The following table summarizes the computation of basic and diluted earnings per share (in thousands, except per share data):


	Years Ended December 31,
	2021		2020		2019
Earnings per common share—basic
Net income (loss) attributable to Callaway Golf Company	$	321,988	$	(126,934)	$	79,408
Weighted-average common shares outstanding—basic(1)	169,101		94,201		94,251
Basic earnings (loss) per common share	$	1.90	$	(1.35)	$	0.84
Earnings per common share—diluted
Net income (loss)	$	321,988	$	(126,934)	$	79,408
Weighted-average common shares outstanding—basic(1)	169,101		94,201		94,251
Convertible notes weighted-average shares outstanding	5,932		—		—
Outstanding options, restricted stock units and performance share units	1,892		—		2,036
Weighted-average common shares outstanding—diluted	176,925		94,201		96,287
Diluted earnings (loss) per common share	$	1.82	$	(1.35)	$	0.82

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(1)In connection with the Topgolf merger on March 8, 2021, the Company issued approximately 89,776,000 of its common stock to the stockholders of Topgolf, and approximately 188,000 of its common stock for restricted stock awards converted in the merger (see Note 16), of which approximately 73,652,000 weighted-average shares for the year ended December 31, 2021 were included in the basic and diluted share calculations based on the number of days the shares were outstanding during the period.

Convertible Notes

In May 2020, the Company issued $258,750,000 of 2.75% Convertible Notes. The Convertible Notes will have an impact on the Company’s diluted earnings per share when the average market price of its common stock exceeds the conversion price of $17.62 per share, as the Company intends to settle the principal amount of the Convertible Notes in cash upon conversion. The Company is required under the treasury stock method to compute the potentially dilutive shares of common stock related to the Convertible Notes for periods the Company reports net income. As of December 31, 2021, the average market price of its common stock exceeded the conversion price per share and, as such, the common shares underlying convertible notes were included in the calculation of diluted earnings per common share for the year ended December 31, 2021 (see Note 7). As a net loss was reported for the year ended December 31, 2020, common shares underlying convertible notes of 663,000 were excluded from the calculation of diluted loss per common share for the period.

Options, Restricted Stock Units and Performance Share Units

For the year ended December 31, 2021, securities outstanding totaling approximately 1,265,000 shares, comprised of stock options and restricted stock units, were excluded from the calculation of dilutive earnings per common share, as they would be anti-dilutive.

As a net loss was reported for the year ended December 31, 2020, common shares underlying options, restricted stock units and performance share units of 1,425,000 were excluded from the calculation of diluted loss per common share for the period.

For the year ended December 31, 2019, there were no securities excluded from the calculation of diluted earnings per common share for the period.