Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair Value Measurements

We measure our 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, money market funds, accounts receivable, accounts payable and accrued expenses and certain other short-term liabilities approximate fair value due to their high liquidity and short-term nature, and are therefore categorized within Level 1 of the fair value hierarchy. Our money market funds accrue dividends, which are reinvested in the funds, and are reflected in the carrying values of the funds. As of June 30, 2024 and December 31, 2023, the carrying value of our money market funds was $148.4 million and $196.5 million, respectively, which is included in cash and cash equivalents on our condensed consolidated balance sheets.

Hedging instruments are re-measured on a recurring basis using pricing models, 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 our 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 the periods presented (in millions):

	Level 2 Fair Value
June 30, 2024
Foreign currency forward contracts—asset position	$	13.0
Foreign currency forward contracts—liability position	(1.1)
Interest rate hedge agreements—asset position	11.1
	$	23.0
December 31, 2023
Foreign currency forward contracts—asset position	$	0.2
Foreign currency forward contracts—liability position	(4.5)
Interest rate hedge agreements—asset position	5.2
Interest rate hedge agreements—liability position	(2.6)
	$	(1.7)

There were no transfers of financial instruments between the levels of the fair value hierarchy during the three and six months ended June 30, 2024 and 2023.

Disclosures about the Fair Value of Financial Instruments

The table below presents information about the fair value of our financial assets and 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 (in millions):

		June 30, 2024				December 31, 2023
	Measurement Level	Carrying Value		Fair Value		Carrying Value		Fair  Value
2023 U.S. ABL Credit Facility	Level 2	$	20.2	$	20.2	$	26.3	$	26.3
2022 Japan ABL Credit Facility	Level 2	$	24.9	$	24.9	$	28.4	$	28.4
2023 Term Loan B	Level 2	$	1,184.4	$	1,188.1	$	1,240.6	$	1,242.2
Convertible Notes	Level 2	$	258.3	$	287.4	$	258.3	$	277.0
Equipment Notes	Level 2	$	15.0	$	13.2	$	19.2	$	17.0
Mortgage Loans	Level 2	$	44.6	$	52.2	$	45.4	$	54.8

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. These assets are written down to fair value when they are classified as held for sale or determined to be impaired. During the three and six months ended June 30, 2024, we recognized a $3.4 million impairment loss related to the abandonment of our Shankstars online digital game in our Topgolf segment, which is included within research and development expense within our condensed consolidated statement of operations.

During the three months ended June 30, 2024, we performed an assessment of retail locations of our Jack Wolfskin business in connection with our restructuring and reorganization initiatives within our Active Lifestyle segment (see Note 18). During this assessment, we determined that certain operating ROU and fixed assets related to certain retail stores may not be fully recoverable based on the estimated cash flows for these stores over the remaining lease terms and asset lives. As a result, we recognized $2.9 million in impairment losses in selling, general and administrative expense within our condensed consolidated statement of operations related to the reduction of the carrying values of these assets to their fair values, which are categorized within Level 3 of the fair value hierarchy.

We did not recognize any impairments during the three and six months ended June 30, 2023.