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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2022

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value on a recurring basis using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Authoritative guidance establishes three levels of the fair value hierarchy as follows:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3: Fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying amounts of cash and cash equivalents, accounts receivables, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term nature, and are therefore categorized within Level 1 of the fair value hierarchy.

Hedging instruments are re-measured on a recurring basis using broker quotes, daily market foreign currency rates, and interest rate curves as applicable (see Note 15) and are therefore categorized within Level 2 of the fair value hierarchy.

The following table summarizes the valuation of the Company’s foreign currency forward contracts and interest rate hedge agreements (see Note 15) that are measured at fair value on a recurring basis, and are classified within Level 2 of the fair value hierarchy as of September 30, 2022 and December 31, 2021 (in millions):


	Fair Value		Level 2
September 30, 2022
Foreign currency forward contracts—asset position	$	12.3	$	12.3
Foreign currency forward contracts—liability position	(1.1)		(1.1)

Interest rate hedge agreements—asset position	7.1		7.1


	$	18.3	$	18.3
December 31, 2021
Foreign currency forward contracts—asset position	$	0.3	$	0.3
Foreign currency forward contracts—liability position	(0.2)		(0.2)

Interest rate hedge agreements—liability position	(8.7)		(8.7)
	$	(8.6)	$	(8.6)

There were no transfers of financial instruments between the levels of the fair value hierarchy during the three and nine months ended September 30, 2022 and 2021.

Disclosures about the Fair Value of Financial Instruments

The table below presents information about the fair value of the Company’s financial liabilities, and is provided for comparative purposes only relative to the carrying values of the Company’s financial instruments recognized in the consolidated condensed balance sheets as of September 30, 2022 and consolidated balance sheets as of December 31, 2021. Fair value of information was derived using Level 2 inputs of the fair value hierarchy and included quoted prices for similar instruments in active markets, quantitative pricing models, observable market borrowing rates, as well as other observable inputs and applicable valuation techniques.


	September 30, 2022				December 31, 2021
	(in millions)
	Carrying Value		Fair Value		Carrying Value		Fair Value
U.S. Asset-Based Revolving Credit Facility	$	65.0	$	65.0	$	9.1	$	9.1
2022 Japan ABL Facility	$	34.6	$	34.6	$	—	$	—
Japan Term Loan	$	—	$	—	$	13.0	$	12.2
Term Loan	$	433.2	$	431.7	$	436.8	$	437.5
Topgolf Term Loan	$	337.8	$	336.1	$	340.4	$	346.1

Convertible Notes	$	258.3	$	338.7	$	258.8	$	444.4
Equipment Notes	$	23.5	$	19.7	$	31.1	$	30.2
Mortgage Loans	$	46.0	$	54.1	$	46.4	$	52.3

Non-recurring Fair Value Measurements

The Company measures certain assets at fair value on a non-recurring basis at least annually or more frequently if impairment indicators are present. These assets include long-lived assets, goodwill, non-amortizing intangible assets and investments that are written down to fair value when they are held for sale or determined to be impaired. In the third quarter of 2022, the Company recognized an impairment loss of $4.8 million related to the impairment of property, plant and equipment at an underperforming premerger Topgolf concept location. The fair value was determined using the cost approach for similar assets, considering the highest and best use of these assets. The impairment was included in other venue expenses in the Company’s consolidated condensed statements of operations for the three and nine months ended September 30, 2022, and was categorized within Level 3 of the fair value hierarchy. There were no impairments recognized in the three and nine months ended September 30, 2021.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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