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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form
10-Q

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to    
Commission file number: 001-37935
Acushnet Holdings Corp.
(Exact name of registrant as specified in its charter)
Delaware 45-2644353
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
333 Bridge Street Fairhaven, Massachusetts 02719
(Address of principal executive offices) (Zip Code)
 
(800) 225-8500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock - $0.001 par value per share GOLF New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer
Non-accelerated filer

Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
The registrant had 72,224,555 shares of common stock outstanding as of April 29, 2022.

ACUSHNET HOLDINGS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
 
 
1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by that section. These forward-looking statements are included throughout this report, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. The forward-looking statements also reflect our current views with respect to the impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations, financial position and cash flows. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable” and similar terms and phrases to identify forward-looking statements in this report, although not all forward-looking statements use these identifying words.
The forward-looking statements contained in this report are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include:
the duration and impact of the COVID-19 pandemic, which may precipitate or exacerbate one or more of the following risks and uncertainties;
a reduction in the number of rounds of golf played or in the number of golf participants;
unfavorable weather conditions may impact the number of playable days and rounds played in a given year;
consumer spending habits and macroeconomic factors may affect the number of rounds of golf played and related spending on golf products;
demographic factors may affect the number of golf participants and related spending on our products;
changes to the Rules of Golf with respect to equipment;
a significant disruption in the operations of our manufacturing, assembly or distribution facilities;
our ability to procure raw materials or components of our products;
a disruption in the operations of our suppliers;
the cost of raw materials and components;
currency transaction and translation risk;
our ability to successfully manage the frequent introduction of new products or satisfy changing consumer preferences, quality and regulatory standards;
our reliance on technical innovation and high-quality products;
our ability to adequately enforce and protect our intellectual property rights;
involvement in lawsuits to protect, defend or enforce our intellectual property rights;
our ability to prevent infringement of intellectual property rights by others;
changes to patent laws;
intense competition and our ability to maintain a competitive advantage in each of our markets;
limited opportunities for future growth in sales of certain of our products, including golf balls, golf shoes and golf gloves;
our customers’ financial condition, their levels of business activity and their ability to pay trade obligations;
a decrease in corporate spending on our custom logo golf balls;
our ability to maintain and further develop our sales channels;
consolidation of retailers or concentration of retail market share;
our ability to maintain and enhance our brands;
seasonal fluctuations of our business;
fluctuations of our business based on the timing of new product introductions;
risks associated with doing business globally;
compliance with laws, regulations and policies, including the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, as well as federal, state and local policies and executive orders regarding the COVID-19 pandemic;
our ability to secure professional golfers to endorse or use our products;
negative publicity relating to us or the golfers who use our products or the golf industry in general;
our ability to accurately forecast demand for our products;
a disruption in the service, or a significant increase in the cost, of our primary delivery and shipping services or a significant disruption at shipping ports;
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our ability to maintain our information systems to adequately perform their functions;
cybersecurity risks;
our ability to comply with data privacy and security laws;
the ability of our eCommerce systems to function effectively;
impairment of goodwill and identifiable intangible assets;
our ability to attract and/or retain management and other key employees and hire qualified management, technical and manufacturing personnel;
our ability to prohibit sales of our products by unauthorized retailers or distributors;
our ability to grow our presence in existing international markets and expand into additional international markets;
tax uncertainties, including potential changes in tax laws, unanticipated tax liabilities and limitations on utilization of tax attributes after any change of control;
adequate levels of coverage of our insurance policies;
product liability, warranty and recall claims;
litigation and other regulatory proceedings;
compliance with environmental, health and safety laws and regulations;
our ability to secure additional capital at all or on terms acceptable to us and potential dilution of holders of our common stock;
lack of assurance of positive returns on capital investments;
risks associated with acquisitions and investments;
our estimates or judgments relating to our critical accounting estimates;
terrorist activities and international political instability;
occurrence of natural disasters or pandemic diseases, including the COVID-19 pandemic;
a high degree of leverage, ability to service our indebtedness, ability to incur more indebtedness and restrictions in the agreements governing our indebtedness;
our use of derivative financial instruments;
the ability of our controlling shareholder to control significant corporate activities, and that our controlling shareholder’s interests may conflict with yours;
our status as a controlled company;
the market price of shares of our common stock;
share repurchase program execution and effects thereof;
our ability to maintain effective internal controls over financial reporting;
our ability to pay dividends;
our status as a holding company;
dilution from future issuances or sales of our common stock;
anti-takeover provisions in our organizational documents and Delaware law;
reports from securities analysts; and
other factors discussed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K and in any other reports we file with the Securities and Exchange Commission (“SEC”), including this Quarterly Report on Form 10-Q.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.
Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
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Website Disclosure
We use our website (www.acushnetholdingscorp.com) as a channel of distribution of company information. The information we post through this channel may be material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Acushnet Holdings Corp. when you enroll your e-mail address by visiting the “Resources” section of our website at https://www.acushnetholdingscorp.com/investors/resources. On our website, we post the following filings free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. The contents of our website are not, however, a part of this report.
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PART I.       FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
March 31, December 31,
(in thousands, except share and per share amounts) 2022 2021
Assets
Current assets
Cash, cash equivalents and restricted cash ($14,549 and $15,612 attributable to the variable interest entity ("VIE"))
$ 114,402  $ 281,677 
Accounts receivable, net 377,252  174,435 
Inventories ($18,691 and $19,385 attributable to the VIE)
448,780  413,314 
Prepaid and other assets 114,508  99,750 
Total current assets 1,054,942  969,176 
Property, plant and equipment, net ($10,339 and $10,466 attributable to the VIE)
230,006  231,761 
Goodwill ($32,312 and $32,312 attributable to the VIE)
208,797  210,431 
Intangible assets, net 463,267  465,341 
Deferred income taxes 55,240  60,814 
Other assets ($2,144 and $2,166 attributable to the VIE)
73,551  68,313 
Total assets $ 2,085,803  $ 2,005,836 
Liabilities, Redeemable Noncontrolling Interest and Shareholders' Equity
Current liabilities
Short-term debt $ 97,318  $ 116 
Current portion of long-term debt 17,500  17,500 
Accounts payable ($13,670 and $13,275 attributable to the VIE)
187,642  163,607 
Accrued taxes 72,819  57,307 
Accrued compensation and benefits ($861 and $1,511 attributable to the VIE)
56,553  113,453 
Accrued expenses and other liabilities ($3,726 and $4,677 attributable to the VIE)
104,072  131,041 
Total current liabilities 535,904  483,024 
Long-term debt 293,280  297,354 
Deferred income taxes 4,986  4,950 
Accrued pension and other postretirement benefits 93,821  93,705 
Other noncurrent liabilities ($2,222 and $2,218 attributable to the VIE)
45,887  43,237 
Total liabilities 973,878  922,270 
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest 3,229  3,299 
Shareholders' equity
Common stock, $0.001 par value, 500,000,000 shares authorized; 76,289,077 and 75,855,036 shares issued
76  76 
Additional paid-in capital 943,239  948,423 
Accumulated other comprehensive loss, net of tax (104,527) (99,582)
Retained earnings 392,538  324,966 
Treasury stock, at cost; 3,940,522 and 3,314,562 shares (including 537,839 of accrued share repurchases
as of December 31, 2021) (Note 10)
(160,933) (131,039)
Total equity attributable to Acushnet Holdings Corp. 1,070,393  1,042,844 
Noncontrolling interests 38,303  37,423 
Total shareholders' equity 1,108,696  1,080,267 
Total liabilities, redeemable noncontrolling interest and shareholders' equity $ 2,085,803  $ 2,005,836 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
  Three months ended March 31,
(in thousands, except share and per share amounts) 2022 2021
Net sales $ 606,087  $ 580,885 
Cost of goods sold 289,088  270,146 
Gross profit 316,999  310,739 
Operating expenses:    
Selling, general and administrative 195,691  176,369 
Research and development 13,976  12,329 
Intangible amortization 1,963  1,972 
Income from operations 105,369  120,069 
Interest expense, net 1,277  3,616 
Other expense, net 1,326  1,992 
Income before income taxes 102,766  114,461 
Income tax expense 20,919  27,834 
Net income 81,847  86,627 
Less: Net income attributable to noncontrolling interests (802) (1,669)
Net income attributable to Acushnet Holdings Corp. $ 81,045  $ 84,958 
Net income per common share attributable to Acushnet Holdings Corp.:    
Basic $ 1.10  $ 1.14 
Diluted 1.10  1.13 
Weighted average number of common shares:    
Basic 73,513,109  74,778,189 
Diluted 73,922,728  75,255,312 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
  Three months ended March 31,
(in thousands) 2022 2021
Net income $ 81,847  $ 86,627 
Other comprehensive loss:
Foreign currency translation adjustments (7,570) (7,080)
Cash flow derivative instruments:
Unrealized holding gains arising during period 3,076  4,367 
Reclassification adjustments included in net income (1,355) 563 
Tax expense (516) (1,664)
Cash flow derivative instruments, net 1,205  3,266 
Pension and other postretirement benefits:    
Pension and other postretirement benefits adjustments 1,863  2,575 
Tax expense (443) (739)
Pension and other postretirement benefits adjustments, net 1,420  1,836 
Total other comprehensive loss (4,945) (1,978)
Comprehensive income 76,902  84,649 
Less: Comprehensive income attributable to noncontrolling interests (747) (1,529)
Comprehensive income attributable to Acushnet Holdings Corp. $ 76,155  $ 83,120 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
  Three months ended March 31,
(in thousands) 2022 2021
Cash flows from operating activities    
Net income $ 81,847  $ 86,627 
Adjustments to reconcile net income to cash flows used in operating activities
Depreciation and amortization 10,367  10,363 
Unrealized foreign exchange loss (gain) 1,433  (3,593)
Amortization of debt issuance costs 203  917 
Share-based compensation 5,353  5,533 
(Gain) loss on disposals of property, plant and equipment (1) 155 
Deferred income taxes 4,341  10,265 
Changes in operating assets and liabilities
Accounts receivable (206,468) (190,019)
Inventories (39,341) 24,987 
Accounts payable 30,079  13,788 
Accrued taxes 17,464  15,039 
Other assets and liabilities (69,325) (4,058)
Cash flows used in operating activities (164,048) (29,996)
Cash flows from investing activities    
Additions to property, plant and equipment (11,686) (6,410)
Cash flows used in investing activities (11,686) (6,410)
Cash flows from financing activities
Proceeds from short-term borrowings, net 97,700  22,178 
Repayments of term loan facility (4,375) (4,375)
Purchases of common stock (59,108) (2,377)
Dividends paid on common stock (13,984) (12,658)
Dividends paid to noncontrolling interests (101) (48)
Payment of employee restricted stock tax withholdings (10,661) (3,946)
Cash flows provided by (used in) financing activities 9,471  (1,226)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (1,012) (773)
Net decrease in cash, cash equivalents and restricted cash (167,275) (38,405)
Cash, cash equivalents and restricted cash, beginning of year 281,677  151,452 
Cash, cash equivalents and restricted cash, end of period $ 114,402  $ 113,047 
Supplemental information    
Non-cash additions to property, plant and equipment $ 1,744  $ 1,895 
Non-cash additions to right-of-use assets obtained in exchange for operating lease obligations 8,065  1,291 
Non-cash additions to right-of-use assets obtained in exchange for finance lease obligations 335  — 
Dividend equivalents rights ("DERs") declared not paid 427  477 
Share repurchase liability (Note 10) —  2,347 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
  Common Stock Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss,
Net of Tax
Retained
Earnings
Treasury Stock Total
Shareholders'
Equity
Attributable
to Acushnet
Holdings Corp.
Noncontrolling
Interests
Total
Shareholders'
Equity
(in thousands) Shares Amount
Balances as of December 31, 2020 75,666  $ 76  $ 925,385  $ (96,182) $ 199,776  $ (45,106) $ 983,949  $ 33,304  $ 1,017,253 
Net income —  —  —  —  84,958  —  84,958  1,862  86,820 
Other comprehensive loss —  —  —  (1,978) —  —  (1,978) —  (1,978)
Share-based compensation —  —  5,369  —  —  —  5,369  —  5,369 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
181  —  (3,945) —  —  —  (3,945) —  (3,945)
Purchases of common stock (Note 10)
—  —  —  —  —  (2,377) (2,377) —  (2,377)
Share repurchase liability (Note 10)
—  —  —  —  —  (2,347) (2,347) —  (2,347)
Dividends and dividend equivalents declared —  —  —  —  (12,767) —  (12,767) —  (12,767)
Dividends declared to noncontrolling interests
—  —  —  —  —  —  —  (48) (48)
Balances as of March 31, 2021 75,847  $ 76  $ 926,809  $ (98,160) $ 271,967  $ (49,830) $ 1,050,862  $ 35,118  $ 1,085,980 
Balances as of December 31, 2021 75,855  $ 76  $ 948,423  $ (99,582) $ 324,966  $ (131,039) $ 1,042,844  $ 37,423  $ 1,080,267 
Net income —  —  —  —  81,045  —  81,045  981  82,026 
Other comprehensive loss —  —  —  (4,945) —  —  (4,945) —  (4,945)
Share-based compensation —  —  5,189  —  —  —  5,189  —  5,189 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
434  —  (10,373) —  —  —  (10,373) —  (10,373)
Purchases of common stock (Note 10)
—  —  —  —  —  (29,894) (29,894) —  (29,894)
Dividends and dividend equivalents declared —  —  —  —  (13,473) —  (13,473) —  (13,473)
Dividends declared to noncontrolling interests
—  —  —  —  —  —  —  (101) (101)
Balances as of March 31, 2022 76,289  $ 76  $ 943,239  $ (104,527) $ 392,538  $ (160,933) $ 1,070,393  $ 38,303  $ 1,108,696 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ACUSHNET HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Acushnet Holdings Corp. (the “Company”), its wholly-owned subsidiaries and less than wholly-owned subsidiaries, including a variable interest entity (“VIE”) in which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Certain information in footnote disclosures normally included in annual financial statements has been condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and U.S. GAAP. The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the unaudited condensed consolidated financial statements do not include all disclosures required by U.S. GAAP. In the opinion of management, the financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the full year ending December 31, 2022, nor were those of the comparable 2021 period representative of those actually experienced for the full year ended December 31, 2021. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2021 included in its Annual Report on Form 10-K filed with the SEC on March 1, 2022.
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its consolidated financial statements. The impact of the COVID-19 pandemic continues to evolve, and both the full impact and duration of the COVID-19 pandemic remain highly uncertain. Accordingly, the Company's business, results of operations, financial position and cash flows could be materially impacted in ways that the Company cannot currently predict.
Variable Interest Entities
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the entity’s expected losses, or the right to receive the entity’s expected residual returns. The Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.
The Company consolidates the accounts of Acushnet Lionscore Limited, a VIE which is 40% owned by the Company. The sole purpose of the VIE is to manufacture the Company’s golf footwear and as such, the Company is deemed to be the primary beneficiary. The Company has presented separately on its consolidated balance sheets, to the extent material, the assets of its consolidated VIE that can only be used to settle specific obligations of its consolidated VIE and the liabilities of its consolidated VIE for which creditors do not have recourse to its general credit. The general creditors of the VIE do not have recourse to the Company. Certain directors of the VIE have guaranteed the credit lines of the VIE, for which there were no outstanding borrowings as of March 31, 2022 and December 31, 2021. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.
Noncontrolling Interests and Redeemable Noncontrolling Interest
The ownership interests held by owners other than the Company in less than wholly-owned subsidiaries are classified as noncontrolling interests. The financial results and position of noncontrolling interests are included in the Company’s
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unaudited condensed consolidated financial statements. The value attributable to the noncontrolling interests is presented on the unaudited condensed consolidated balance sheets, separately from the equity attributable to the Company. Net income (loss) and comprehensive income (loss) attributable to noncontrolling interests are presented separately on the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of comprehensive income, respectively.
Redeemable noncontrolling interests are those noncontrolling interests which are or may become redeemable at a fixed or determinable price on a fixed or determinable date, at the option of the holder, or upon occurrence of an event. The Company initially recorded the redeemable noncontrolling interest at its acquisition date fair value. The carrying amount of the redeemable noncontrolling interest is subsequently adjusted to the greater amount of either the initial carrying amount, increased or decreased for the redeemable noncontrolling interest's share of comprehensive income (loss) or the redemption value, assuming the noncontrolling interest is redeemable at the balance sheet date. This adjustment is recognized through retained earnings and is not reflected in net income (loss) or comprehensive income (loss). The value attributable to the redeemable noncontrolling interest and the related loan to minority shareholders, which is recorded as a reduction to redeemable noncontrolling interest, is presented in the unaudited condensed consolidated balance sheets as temporary equity between liabilities and shareholders’ equity. The amount of the loan to minority shareholders was $4.4 million as of both March 31, 2022 and December 31, 2021.
Cash, Cash Equivalents and Restricted Cash
Cash held in Company checking accounts is included in cash. Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less which are readily convertible into cash. The Company classifies as restricted certain cash that is not available for use in its operations. As of March 31, 2022 and December 31, 2021, the amount of restricted cash included in cash, cash equivalents and restricted cash on the unaudited condensed consolidated balance sheets was $1.8 million and $1.9 million, respectively.
Foreign Currency Translation and Transactions
Foreign currency transaction losses included in selling, general and administrative expense were $1.8 million and $1.0 million for the three months ended March 31, 2022 and 2021, respectively.
Recently Adopted Accounting Standards
The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). Management determined that recently issued ASUs are not expected to have a material impact on the Company's consolidated financial statements.
2. Allowance for Doubtful Accounts
The Company estimates expected credit losses using a number of factors, including customer credit ratings, age of receivables, historical credit loss information and current and forecasted economic conditions (including the impact of the COVID-19 pandemic) which could affect the collectability of the reported amounts. All of these factors have been considered in the estimate of expected credit losses.
The activity related to the allowance for doubtful accounts was as follows:
Three months ended March 31,
(in thousands) 2022 2021
Balance at beginning of period $ 5,980  $ 7,698 
Bad debt expense (recovery) 922  (445)
Amount of receivables written off (44) (144)
Foreign currency translation and other (72) (32)
Balance at end of period $ 6,786  $ 7,077 
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3. Inventories
The components of inventories were as follows: 
March 31, December 31,
(in thousands) 2022 2021
Raw materials and supplies $ 121,474  $ 105,784 
Work-in-process 26,721  21,259 
Finished goods 300,585  286,271 
Inventories $ 448,780  $ 413,314 
4. Product Warranty
The Company has defined warranties generally ranging from one to two years. Products covered by the defined warranty policies primarily include all Titleist golf products, FootJoy golf shoes and FootJoy golf outerwear. These product warranties generally obligate the Company to pay for the cost of replacement products, including the cost of shipping replacement products to its customers. The estimated cost of satisfying future warranty claims is accrued at the time the sale is recorded. In estimating future warranty obligations, the Company considers various factors, including its warranty policies and practices, the historical frequency of claims and the cost to replace or repair products under warranty.
The activity related to the Company’s warranty obligation for accrued warranty expense was as follows:
  Three months ended March 31,
(in thousands) 2022 2021
Balance at beginning of period $ 4,177  $ 3,831 
Provision 995  1,029 
Claims paid/costs incurred (1,045) (918)
Foreign currency translation and other (36) (43)
Balance at end of period $ 4,091  $ 3,899 
5. Debt and Financing Arrangements
Credit Facility
The credit facility includes a revolving credit facility and a term loan facility. As of March 31, 2022, there were $81.0 million in outstanding borrowings under the revolving credit facility, with a weighted average interest rate of 2.61%. There were no outstanding borrowings under the revolving credit facility as of December 31, 2021. As of March 31, 2022, the Company had available borrowings under its revolving credit facility of $306.7 million after giving effect to $12.3 million of outstanding letters of credit.
The credit agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on the Company's leverage and interest coverage ratios. The credit agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of March 31, 2022, the Company was in compliance with all covenants under the credit agreement.
Other Short-Term Borrowings
The Company has certain unsecured local credit facilities available through its subsidiaries. There were $16.3 million and $0.1 million in outstanding borrowings under the Company's local credit facilities as of March 31, 2022 and December 31, 2021, respectively. The weighted average interest rate applicable to the outstanding borrowings was 0.27% and 2.57% as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022, the Company had available borrowings remaining under these local credit facilities of $38.2 million.
Letters of Credit
As of March 31, 2022 and December 31, 2021, there were outstanding letters of credit related to agreements, including the Company's credit facility, totaling $15.7 million and $17.3 million, respectively, of which $12.8 million and $14.3 million,
13

respectively, was secured. These agreements provided a maximum commitment for letters of credit of $57.1 million as of March 31, 2022.
6. Derivative Financial Instruments
The Company principally uses derivative financial instruments to reduce the impact of foreign currency fluctuations and interest rate variability on the Company's results of operations. The principal derivative financial instruments the Company enters into are foreign exchange forward contracts and interest rate swaps. The Company does not enter into derivative financial instrument contracts for trading or speculative purposes.
Foreign Exchange Derivative Instruments
Foreign exchange forward contracts are foreign exchange derivative instruments primarily used to reduce foreign currency risk related to transactions denominated in a currency other than functional currency. These instruments are designated as cash flow hedges. The periods of the foreign exchange forward contracts correspond to the periods of the hedged forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The primary foreign exchange forward contracts pertain to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won and the euro. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts designated under hedge accounting as of March 31, 2022 and December 31, 2021 was $225.9 million and $228.8 million, respectively.
The Company also enters into foreign exchange forward contracts, which either do not qualify as hedging instruments or have not been designated as such, to reduce foreign currency transaction risk related to certain intercompany assets and liabilities denominated in a currency other than functional currency. These undesignated instruments are recorded at fair value as a derivative asset or liability with the corresponding change in fair value recognized in selling, general and administrative expense. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts not designated under hedge accounting was $19.1 million as of March 31, 2022. There were no outstanding foreign exchange forward contracts not designated under hedge accounting as of December 31, 2021.
Interest Rate Derivative Instruments
The Company enters into interest rate swap contracts to reduce interest rate risk related to floating rate debt. Under the contracts, the Company pays fixed and receives variable rate interest, in effect converting a portion of its floating rate debt to fixed rate debt. Interest rate swap contracts are accounted for as cash flow hedges. As of March 31, 2022 and December 31, 2021, there were no interest rate swap contracts outstanding.
Impact on Financial Statements
The fair value of hedge instruments recognized on the unaudited condensed consolidated balance sheets was as follows:
(in thousands) March 31, December 31,
Balance Sheet Location Hedge Instrument Type 2022 2021
Prepaid and other assets Foreign exchange forward $ 7,814  $ 6,320 
Other assets Foreign exchange forward 1,991  1,491 
Accrued expenses and other liabilities Foreign exchange forward 808  488 

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The hedge instrument gain (loss) recognized in accumulated other comprehensive loss, net of tax was as follows:
  Three months ended
  March 31,
(in thousands) 2022 2021
Type of hedge    
Foreign exchange forward $ 3,076  $ 4,376 
Interest rate swap —  (9)
 Total $ 3,076  $ 4,367 
Gains and losses on derivative instruments designated as cash flow hedges are reclassified from accumulated other comprehensive loss, net of tax at the time the forecasted hedged transaction impacts the statements of operations or at the time the hedge is determined to be ineffective. Based on the current valuation, during the next 12 months the Company expects to reclassify a net gain of $6.7 million related to foreign exchange derivative instruments from accumulated other comprehensive loss, net of tax, into cost of goods sold. For further information related to amounts recognized in accumulated other comprehensive loss, net of tax, see Note 12.
The hedge instrument gain (loss) recognized on the unaudited condensed consolidated statements of operations was as follows:
  Three months ended
  March 31,
(in thousands) 2022 2021
Location of gain (loss) in statements of operations    
Foreign exchange forward:
Cost of goods sold $ 1,355  $ 396 
Selling, general and administrative (1)
675  640 
Total $ 2,030  $ 1,036 
Interest Rate Swap:
Interest expense, net $ —  $ (959)
Total $ —  $ (959)
_______________________________________________________________________________
(1)    Relates to net gains (losses) on foreign exchange forward contracts derived from previously designated cash flow hedges.
Credit Risk
The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions, as well as its own credit quality, and considers the risk of counterparty default to be minimal.
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7. Fair Value Measurements
Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 were as follows:
  Fair Value Measurements as of  
  March 31, 2022 using:  
(in thousands) Level 1 Level 2 Level 3 Balance Sheet Location
Assets        
Rabbi trust $ 5,127  $ —  $ —  Prepaid and other assets
Foreign exchange derivative instruments —  8,116  —  Prepaid and other assets
Deferred compensation program assets 779  —  —  Other assets
Foreign exchange derivative instruments —  1,991  —  Other assets
Total assets $ 5,906  $ 10,107  $ —   
Liabilities        
Foreign exchange derivative instruments $ —  $ 808  $ —  Accrued expenses and other liabilities
Deferred compensation program liabilities 779  —  —  Other noncurrent liabilities
Total liabilities $ 779  $ 808  $ —   
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 were as follows:
  Fair Value Measurements as of  
  December 31, 2021 using:  
(in thousands) Level 1 Level 2 Level 3 Balance Sheet Location
Assets        
Rabbi trust $ 5,364  $ —  $ —  Prepaid and other assets
Foreign exchange derivative instruments —  6,320  —  Prepaid and other assets
Deferred compensation program assets 842  —  —  Other assets
Foreign exchange derivative instruments —  1,491  —  Other assets
Total assets $ 6,206  $ 7,811  $ —   
Liabilities        
Foreign exchange derivative instruments $ —  $ 488  $ —  Accrued expenses and other liabilities
Deferred compensation program liabilities 842  —  —  Other noncurrent liabilities
Total liabilities $ 842  $ 488  $ —   
Rabbi trust assets are used to fund certain retirement obligations of the Company. The assets underlying the Rabbi trust are equity and fixed income exchange-traded funds.
Deferred compensation program assets and liabilities represent a program where select employees could defer compensation until termination of employment. Effective July 29, 2011, this program was amended to cease all employee compensation deferrals and provided for the distribution of all previously deferred employee compensation. The program remains in effect with respect to the value attributable to the employer match contributed prior to July 29, 2011.
Foreign exchange derivative instruments are foreign exchange forward contracts primarily used to limit currency risk that would otherwise result from changes in foreign exchange rates (Note 6). The Company uses the mid-price of foreign exchange forward rates as of the close of business on the valuation date to value each foreign exchange forward contract at each reporting period.
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8. Pension and Other Postretirement Benefits
Components of net periodic benefit cost were as follows: 
  Pension Benefits Postretirement Benefits
  Three months ended March 31,
(in thousands) 2022 2021 2022 2021
Components of net periodic benefit cost        
Service cost $ 2,007  $ 2,135  $ 160  $ 162 
Interest cost 2,234  1,951  84  75 
Expected return on plan assets (1,871) (2,547) —  — 
Settlement expense —  1,419  —  — 
Amortization of net loss (gain) 935  1,421  (152) (65)
Amortization of prior service cost (credit) 69  71  (34) (34)
Net periodic benefit cost $ 3,374  $ 4,450  $ 58  $ 138 
The non-service cost components of net periodic benefit cost are included in other expense, net in the unaudited condensed consolidated statements of operations.
9. Income Taxes
Income tax expense decreased by $6.9 million to $20.9 million for the three months ended March 31, 2022 compared to $27.8 million for the three months ended March 31, 2021. The Company’s effective income tax rate ("ETR") was 20.4% for the three months ended March 31, 2022 compared to 24.3% for the three months ended March 31, 2021.
The ETR for the three months ended March 31, 2022 differed from the U.S. statutory tax rate primarily due to the impact of the U.S. deduction for foreign derived intangible income and federal and state tax credits, partially offset by the U.S. taxation of foreign income and the Company's geographic mix of income. The ETR for the three months ended March 31, 2021 differed from the U.S. statutory tax rate primarily due to the U.S. taxation of foreign income and the Company's geographic mix of income, partially offset by the impact of the U.S. deduction for foreign derived intangible income and federal and state tax credits.
10. Common Stock
Dividends
The Company declared dividends per common share, including DERs (Note 11), during the periods presented as follows:
Dividends per Common Share
Amount
(in thousands)
2022:
First Quarter $ 0.180  $ 13,473 
Total dividends declared in 2022 $ 0.180  $ 13,473 
2021:
Fourth Quarter $ 0.165  $ 12,619 
Third Quarter 0.165  12,692 
Second Quarter 0.165  12,768 
First Quarter 0.165  12,767 
Total dividends declared in 2021 $ 0.660  $ 50,846 
During the second quarter of 2022, the Company's Board of Directors declared a dividend of $0.180 per share of common stock to shareholders of record as of June 3, 2022 and payable on June 17, 2022.
Share Repurchase Program
As of March 31, 2022, the Board of Directors had authorized the Company to repurchase up to an aggregate of $200.0 million of its issued and outstanding common stock.
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Share repurchases may be effected from time to time in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at the discretion of the Company consistent with the Company's general working capital needs and within the constraints of the Company’s credit agreement.
As previously disclosed, in connection with this share repurchase program, the Company entered into an agreement with Magnus Holdings Co., Ltd. (“Magnus”), a wholly-owned subsidiary of Fila Holdings Corp., to purchase from Magnus an equal amount of its common stock as it purchases on the open market, up to an aggregate of $24.9 million at the same weighted average per share price (the "2019 Agreement"). As the Company repurchased a cumulative total of $24.9 million of common stock through open market purchases, the determination date, as defined in the 2019 Agreement, was automatically triggered on March 18, 2021. As a result, on April 2, 2021, the Company repurchased 355,341 shares of common stock for an aggregate of $11.1 million from Magnus, in satisfaction of its obligations under the 2019 Agreement.
On November 8, 2021, the Company entered into a new agreement with Magnus to purchase from Magnus an equal amount of its common stock as it purchases on the open market, up to an aggregate of $37.5 million at the same weighted average per share price (the "2021 Agreement"). In relation to the 2021 Agreement, the Company recorded a share repurchase liability of $29.2 million for 537,839 shares of common stock, which was included in accrued expenses and other liabilities and treasury stock on the consolidated balance sheet as of December 31, 2021. Between January 1, 2022 and January 14, 2022, the Company repurchased an additional 161,980 shares of its common stock on the open market for an aggregate of $8.3 million, bringing the cumulative total open market purchases to $37.5 million. As a result, on January 24, 2022, the Company repurchased 699,819 shares of common stock for an aggregate of $37.5 million from Magnus, in satisfaction of its obligations under the 2021 Agreement.
The Company's share repurchase activity was as follows:
Three months ended March 31,
(in thousands, except share and per share amounts) 2022 2021
Shares repurchased in the open market:
Shares repurchased 463,980  56,156 
Average price $ 46.57  $ 42.34 
Aggregate value $ 21,607  $ 2,377 
Shares repurchased from Magnus:
Shares repurchased 699,819  — 
Average price (1)
$ 53.59  $ — 
Aggregate value $ 37,501  $ — 
Total shares repurchased:
Shares repurchased 1,163,799  56,156 
Average price $ 50.79  $ 42.34 
Aggregate value $ 59,108  $ 2,377 
___________________________________
(1)    In accordance with the share repurchase agreement, shares purchased from Magnus are accrued for at the same weighted average price as those purchased on the open market as if the purchase from Magnus had occurred on the same day. As such, the average price of Magnus repurchases during the current period may differ from open market purchases due to the settlement of the previously recorded share repurchase liability, as well as, open market purchases made after the completion of the Magnus Share repurchase agreement.
As of March 31, 2022, the Company had $39.1 million remaining under the current share repurchase authorization. On April 28, 2022, the Board of Directors authorized the Company to repurchase up to an additional $150.0 million of its issued and outstanding common stock, bringing the total authorization up to $350.0 million. This program will remain in effect until completed or until terminated by the Board of Directors.
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11. Equity Incentive Plans
Under the Acushnet Holdings Corp. 2015 Omnibus Incentive Plan (“2015 Plan”), the Company may grant stock options, stock appreciation rights, restricted shares of common stock, restricted stock units ("RSUs"), performance stock units ("PSUs") and other share-based and cash-based awards to members of the Board of Directors, officers, employees, consultants and advisors of the Company. As of March 31, 2022, the only awards granted under the 2015 Plan were RSUs and PSUs.
Restricted Stock and Performance Stock Units
RSUs granted to members of the Board of Directors vest immediately into shares of common stock. RSUs granted to Company officers generally vest over three years, with one-third of each grant vesting annually, subject to the recipient's continued employment with the Company. RSUs granted to other employees, consultants and advisors of the Company vest in accordance with the terms of the grants, generally either over three years or, beginning in 2022, with one-third of each grant vesting annually, subject to the recipient’s continued service to the Company. PSUs granted to Company officers and other employees vest based upon the Company's performance against specified metrics, generally over a three-year performance period, subject to the recipient's continued service to the Company. At the end of the performance period, the number of shares of common stock that could be issued is determined based upon the Company's performance against these metrics. The number of shares that could be issued can range from 0% to 200% of the recipient's target award. Recipients of the awards granted under the 2015 Plan may elect to defer receipt of all or any portion of any shares of common stock issuable upon vesting to a future date elected by the recipient.
All RSUs and PSUs granted under the 2015 Plan have DERs, which entitle holders of RSUs and PSUs to the same dividend value per share as holders of common stock and can be paid in either cash or common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs and PSUs. DERs are paid when the underlying shares of common stock are delivered.
A summary of the Company’s RSUs and PSUs as of March 31, 2022 and changes during the three months then ended is presented below: 
  Weighted- Weighted-
  Number Average Number Average
  of RSUs Fair Value RSUs of PSUs Fair Value PSUs
Outstanding as of December 31, 2021 691,373  $ 33.66  367,067  $ 32.84 
Granted 345,230  43.96  167,587  43.96 
Vested (1)
(68,189) 32.72  —  — 
Forfeited (5,617) 31.26  —  — 
Outstanding as of March 31, 2022 962,797  $ 37.43  534,654  $ 36.32 

_______________________________________________________________________________
(1) Includes 41,173 shares of common stock related to RSUs that were not delivered as of March 31, 2022.
A summary of shares of common stock issued related to the 2015 Plan, including the impact of any DERs issued in common stock, is presented below:
Three months ended Three months ended
  March 31, 2022 March 31, 2021
RSUs PSUs RSUs PSUs
Shares of common stock issued 492,580  188,527  270,779  — 
Shares of common stock withheld by the Company as payment by employees in lieu of cash to satisfy tax withholding obligations
(159,851) (87,215) (89,938) — 
Net shares of common stock issued 332,729  101,312  180,841  — 
Cumulative undelivered shares of common stock 414,866  191,242  395,670  — 
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Compensation expense recorded related to RSUs and PSUs in the unaudited condensed consolidated statements of operations was as follows:
  Three months ended
March 31,
(in thousands) 2022 2021
RSUs $ 2,770  $ 2,359 
PSUs 2,419  3,010 
The remaining unrecognized compensation expense related to unvested RSUs and unvested PSUs was $25.8 million and $18.3 million, respectively, as of March 31, 2022 and are expected to be recognized over the related weighted average period of 1.7 years and 2.1 years, respectively.
Compensation Expense
The allocation of share-based compensation expense in the unaudited condensed consolidated statements of operations was as follows:
  Three months ended
March 31,
(in thousands) 2022 2021
Cost of goods sold $ 300  $ (7)
Selling, general and administrative 4,698  5,381 
Research and development 355  159 
Total compensation expense before income tax 5,353  5,533 
Income tax benefit 1,176  1,267 
Total compensation expense, net of income tax $ 4,177  $ 4,266 
12. Accumulated Other Comprehensive Loss, Net of Tax
Accumulated other comprehensive loss, net of tax consists of foreign currency translation adjustments, unrealized gains and losses from derivative instruments designated as cash flow hedges (Note 6) and pension and other postretirement adjustments (Note 8).
The components of and adjustments to accumulated other comprehensive loss, net of tax, were as follows:
  Foreign Accumulated
  Foreign Exchange Pension and Other
Currency Derivative Other Comprehensive
(in thousands) Translation Instruments Postretirement Loss, Net of Tax
Balance as of December 31, 2021 $ (66,915) $ 5,167  $ (37,834) $ (99,582)
Other comprehensive (loss) income before reclassifications (7,570) 3,076  1,045  (3,449)
Amounts reclassified from accumulated other comprehensive loss, net of tax —  (1,355) 818  (537)
Tax expense —  (516) (443) (959)
Balance as of March 31, 2022 $ (74,485) $ 6,372  $ (36,414) $ (104,527)
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13. Net Income per Common Share
The following is a computation of basic and diluted net income per common share attributable to Acushnet Holdings Corp.:
  Three months ended
  March 31,
(in thousands, except share and per share amounts) 2022 2021
Net income attributable to Acushnet Holdings Corp. $ 81,045  $ 84,958 
Weighted average number of common shares:
Basic 73,513,109  74,778,189 
RSUs 325,550  477,123 
PSUs 84,069  — 
Diluted 73,922,728  75,255,312 
Net income per common share attributable to Acushnet Holdings Corp.:
Basic $ 1.10  $ 1.14 
Diluted $ 1.10  $ 1.13 
Net income per common share attributable to Acushnet Holdings Corp. was calculated using the treasury stock method.
The Company’s potential dilutive securities for the three months ended March 31, 2022 and 2021 include RSUs and PSUs. PSUs vest based upon achievement of performance targets and are excluded from the diluted shares outstanding unless the performance targets have been met as of the end of the applicable reporting period regardless of whether such performance targets are probable of achievement. As of March 31, 2022, the minimum performance target was achieved relating to certain PSUs and as a result, these PSUs have been included in diluted shares outstanding for the three months ended March 31, 2022.
The following securities have been excluded from the calculation of diluted weighted-average common shares outstanding as their impact was determined to be anti-dilutive:
  Three months ended
  March 31,
  2022 2021
RSUs 66,405  291,484 
14. Segment Information
The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions about assessing performance and allocating resources. The Company has four reportable segments that are organized on the basis of product categories. These segments include Titleist golf balls, Titleist golf clubs, Titleist golf gear and FootJoy golf wear.
The CODM primarily evaluates performance using segment operating income (loss). Segment operating income (loss) includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes interest expense, net, restructuring charges, the non-service cost component of net periodic benefit cost, transaction fees and other non-operating gains and losses as the Company does not allocate these to the reportable segments. The CODM does not evaluate a measure of assets when assessing performance.
Results shown for the three months ended March 31, 2022 and 2021 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. There are no intersegment transactions.
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Information by reportable segment and a reconciliation to reported amounts are as follows:
Three months ended March 31,
(in thousands) 2022 2021
Net sales    
Titleist golf balls $ 163,838  $ 173,637 
Titleist golf clubs 160,815  155,827 
Titleist golf gear 44,146  53,120 
FootJoy golf wear 197,553  159,434 
Other 39,735  38,867 
Total net sales $ 606,087  $ 580,885 
Segment operating income    
Titleist golf balls $ 33,373  $ 34,317 
Titleist golf clubs 32,228  41,799 
Titleist golf gear 2,194  9,728 
FootJoy golf wear 31,315  28,117 
Other 7,427  6,471 
Total segment operating income 106,537  120,432 
Reconciling items:    
Interest expense, net (1,277) (3,616)
Non-service cost component of net periodic benefit cost (1,265) (2,291)
Other (1,229) (64)
Total income before income tax $ 102,766  $ 114,461 
Information as to the Company’s operations in different geographical areas is presented below. Net sales are categorized based on the location in which the sale originates.
Three months ended March 31,
(in thousands) 2022 2021
United States $ 295,126  $ 308,636 
EMEA (1)
112,357  80,575 
Japan 45,795  56,377 
Korea 85,717  79,097 
Rest of world 67,092  56,200 
Total net sales $ 606,087  $ 580,885 
_______________________________________________________________________________
(1) Europe, the Middle East and Africa ("EMEA")
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15. Commitments and Contingencies
Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for advertising (including media placement and production costs), finished goods inventory, capital expenditures and endorsement arrangements with professional golfers.
The Company's purchase obligations as of March 31, 2022 were as follows:
  Payments Due by Period
  Remainder of          
(in thousands) 2022 2023 2024 2025 2026 Thereafter
Purchase obligations (1)
$ 286,896  $ 30,476  $ 12,415  $ 7,485  $ 2,424  $ 34,791 
_______________________________________________________________________________
(1)    The reported amounts exclude those liabilities included on the unaudited condensed consolidated balance sheet as of March 31, 2022.
Litigation
The Company and its subsidiaries are party to lawsuits associated with the normal conduct of their businesses and operations. 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. Consequently, the Company is unable to estimate the ultimate aggregate amount of monetary loss, amounts covered by insurance or the financial impact that will result from such matters and has not recorded a liability related to potential losses.
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ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in “Part II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (“SEC”). Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” following the Table of Contents. Unless otherwise noted, the figures in the following discussion are unaudited.
Overview
We are the global leader in the design, development, manufacture and distribution of performance-driven golf products, which are widely recognized for their quality excellence. Today, we are the steward of two of the most revered brands in golf - Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wearable brands.
Our target market is dedicated golfers, who are the cornerstone of the worldwide golf industry. These dedicated golfers are avid and skill-biased, prioritize performance and commit the time, effort and money to improve their game. We believe our focus on innovation and process excellence yields golf products that represent superior performance and consistent product quality, which are the key attributes sought after by dedicated golfers. Many of the game's professional players, who represent the most dedicated golfers, prefer our products, thereby validating our performance and quality promise, while also driving brand awareness. We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the world's best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game's best players.
We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers, and favorable and market‑differentiating mix of consumable and durable products have been the key drivers of our solid financial performance.
Our net sales are diversified by both product category and mix, as well as geography. Our product categories include golf balls, golf clubs, wedges and putters, golf shoes, golf gloves, golf gear and golf outerwear and apparel. Our product portfolio contains a favorable mix of consumable products, which we consider to be golf balls and golf gloves, and more durable products, which we consider to be golf clubs, golf shoes, golf gear and golf outerwear and apparel. Our net sales are also diversified by geography with a substantial majority of our net sales generated in five countries: the United States, Japan, Korea, the United Kingdom and Canada. We have the following reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear.
Our financial results and operations continue to be impacted by the macroeconomic environment, including the ongoing COVID-19 pandemic. Global supply chain issues and the impact of inflation have resulted in constrained raw material, component and sourced product availability and increased raw material and other input costs, including higher freight expense. These increased costs negatively impacted cost of sales for the three months ended March 31, 2022, resulting in a lower gross margin as compared to the three months ended March 31, 2021. Inflation, particularly in the form of higher raw material costs combined with higher shipping costs, is expected to remain an issue for the remainder of 2022.
Key Performance Measures
We use various financial metrics to measure and evaluate our business, including, among others: (i) net sales on a constant currency basis, (ii) Adjusted EBITDA on a consolidated basis, (iii) Adjusted EBITDA margin on a consolidated basis and (iv) segment operating income (loss).
Since a significant percentage of our net sales are generated outside of the United States, we use net sales on a constant currency basis to evaluate the sales performance of our business in period over period comparisons and for forecasting our business going forward. Constant currency information allows us to estimate what our sales performance would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency sales and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. This constant currency information should not be considered in isolation or as a substitute for any measure derived in
24

accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our presentation of constant currency information may not be consistent with the manner in which similar measures are derived or used by other companies.
We primarily use Adjusted EBITDA on a consolidated basis to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go to market execution and costs to incur across our business. We present Adjusted EBITDA as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. We define Adjusted EBITDA in a manner consistent with the term “Consolidated EBITDA” as it is defined in our credit agreement. Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in the agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to net income (loss) attributable to Acushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income (loss) attributable to Acushnet Holdings Corp., see “—Results of Operations” below.
We also use Adjusted EBITDA margin on a consolidated basis, which measures our Adjusted EBITDA as a percentage of net sales, because our management uses it to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go to market execution and costs to incur across our business. We present Adjusted EBITDA margin as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to any measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA margin has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA margin is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.
Lastly, we use segment operating income (loss) to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. Segment operating income (loss) includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes interest expense, net; restructuring charges; the non-service cost component of net periodic benefit cost; transaction fees and other non-operating gains and losses as we do not allocate these to the reportable segments.
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Results of Operations
The following table sets forth, for the periods indicated, our results of operations.
 
  Three months ended
  March 31,
(in thousands) 2022 2021
Net sales $ 606,087  $ 580,885 
Cost of goods sold 289,088  270,146 
Gross profit 316,999  310,739 
Operating expenses:      
Selling, general and administrative 195,691  176,369 
Research and development 13,976  12,329 
Intangible amortization 1,963  1,972 
Income from operations 105,369  120,069 
Interest expense, net 1,277  3,616 
Other expense, net 1,326  1,992 
Income before income taxes 102,766  114,461 
Income tax expense 20,919  27,834 
Net income 81,847  86,627 
Less: Net income attributable to noncontrolling interests (802) (1,669)
Net income attributable to Acushnet Holdings Corp. $ 81,045  $ 84,958 
Adjusted EBITDA:      
Net income attributable to Acushnet Holdings Corp. $ 81,045  $ 84,958 
Interest expense, net 1,277  3,616 
Income tax expense 20,919  27,834 
Depreciation and amortization 10,367  10,363 
Share-based compensation 5,353  5,533 
Other extraordinary, unusual or non-recurring items, net (1)
235  1,311 
Net income attributable to noncontrolling interests 802  1,669 
Adjusted EBITDA $ 119,998  $ 135,284 
Adjusted EBITDA margin 19.8  % 23.3  %

_______________________________________________________________________________________
(1)The three months ended March 31, 2022 and 2021 include other immaterial, unusual or non-recurring items, net. The three months ended March 31, 2021 also includes pension settlement costs of $1.4 million related to lump-sum distributions to participants in our defined benefit plans as a result of the voluntary retirement program as part of management’s approved restructuring program.
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Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021
Net sales by reportable segment is summarized as follows: 
  Three months ended     Constant Currency
  March 31, Increase/(Decrease) Increase/(Decrease)
(in millions) 2022 2021 $ change % change $ change % change
Titleist golf balls $ 163.8  $ 173.6  $ (9.8) (5.6) % $ (6.1) (3.5) %
Titleist golf clubs 160.8  155.8  5.0  3.2  % 9.5  6.1  %
Titleist golf gear 44.1  53.1  (9.0) (16.9) % (7.5) (14.1) %
FootJoy golf wear 197.6  159.4  38.2  24.0  % 45.0  28.2  %
Net sales information by region is summarized as follows: 
  Three months ended     Constant Currency
  March 31, Increase/(Decrease) Increase/(Decrease)
(in millions) 2022 2021 $ change % change $ change % change
United States $ 295.1  $ 308.6  $ (13.5) (4.4) % $ (13.5) (4.4) %
EMEA 112.4  80.6  31.8  39.5  % 38.3  47.5  %
Japan 45.8  56.4  (10.6) (18.8) % (6.4) (11.3) %
Korea 85.7  79.1  6.6  8.3  % 13.6  17.2  %
Rest of world 67.1  56.2  10.9  19.4  % 12.3  21.9  %
Total net sales $ 606.1  $ 580.9  $ 25.2  4.3  % $ 44.3  7.6  %
Segment operating income by reportable segment is summarized as follows: 
  Three months ended    
(in millions) March 31, Increase/(Decrease)
Segment operating income 2022 2021 $ change % change
Titleist golf balls $ 33.4  $ 34.3  $ (0.9) (2.6) %
Titleist golf clubs 32.2  41.8  (9.6) (23.0) %
Titleist golf gear 2.2  9.7  (7.5) (77.3) %
FootJoy golf wear 31.3  28.1  3.2  11.4  %
Net Sales
Net sales increased $25.2 million, or 4.3%, to $606.1 million for the three months ended March 31, 2022 compared to $580.9 million for the three months ended March 31, 2021. On a constant currency basis, net sales increased $44.3 million, or 7.6%, to $625.2 million. The increase in net sales on a constant currency basis resulted from an increase of $45.0 million in FootJoy golf wear and an increase of $9.5 million in Titleist golf clubs. The increase in FootJoy net sales was driven by higher sales volumes in EMEA primarily due to the adverse impact of government-ordered shutdowns in this region in the first quarter of 2021. The increase in Titleist golf club sales was driven by higher sales volumes of our newly introduced SM9 wedges and T-Series irons. These increases were partially offset by decreases of $7.5 million in Titleist golf gear largely due to supply chain and fulfillment constraints and $6.1 million in Titleist golf balls primarily as a result of limited availability of certain raw materials. Sales volume growth of products that are not allocated to one of our four reportable segments also contributed to the increase in net sales.
The decrease in net sales in the United States was primarily as a result of a decrease of $10.6 million in Titleist golf balls, primarily due to limited availability of certain raw materials and a decrease of $4.6 million in Titleist golf gear, largely due to supply chain and fulfillment constraints.
Net sales in regions outside the United States increased $38.7 million, or 14.2%, to $311.0 million for the three months ended March 31, 2022 compared to $272.3 million for the three months ended March 31, 2021. On a constant currency basis, net sales in such regions increased $57.8 million, or 21.2%, to $330.1 million. In EMEA, net sales increased across all reportable segments, primarily due to the adverse impact of government-ordered shutdowns in this region in the first quarter of 2021. In Korea, net sales increased in all reportable segments except Titleist golf gear which was impacted by supply chain
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constraints. In Japan, net sales decreased in all reportable segments except FootJoy golf wear due to supply chain and fulfillment constraints. In Rest of World, net sales increased across all reportable segments.
Gross Profit
Gross profit increased $6.3 million to $317.0 million for the three months ended March 31, 2022 compared to $310.7 million for the three months ended March 31, 2021. Gross margin decreased to 52.3% for the three months ended March 31, 2022 compared to 53.5% for the three months ended March 31, 2021. The increase in gross profit primarily resulted from an increase of $11.8 million in FootJoy golf wear primarily due to the sales volume increases discussed previously. This increase was partially offset by a decrease of $6.4 million in Titleist golf gear primarily due to lower net sales as discussed previously, a decrease of $3.2 million in Titleist golf clubs primarily due to higher component costs and higher inbound freight costs across all reportable segments.
The decrease in gross margin was primarily driven by lower gross margins in FootJoy golf wear, Titleist golf clubs and Titleist golf gear and was partially offset by higher gross margins in Titleist golf balls. The decrease in Titleist golf clubs was primarily due to higher component costs. Higher gross margins in Titleist golf balls were primarily due to favorable manufacturing costs. Higher inbound freight costs unfavorably impacted gross margin across all reportable segments.
Selling, General and Administrative Expenses
SG&A expenses increased $19.3 million to $195.7 million for the three months ended March 31, 2022 compared to $176.4 million for the three months ended March 31, 2021. This increase was primarily due to an increase of $11.0 million in selling expense due to higher sales volumes as discussed previously including higher retail commission expense in Korea and higher distribution expenses, an increase of $5.4 million in administrative expense primarily due to information technology related consulting expenses, and an increase of $2.1 million in advertising and promotional expenses, primarily in Titleist golf clubs. Overall, SG&A included a $4.0 million favorable impact of changes in foreign currency exchange rates across all expense categories and reportable segments.
Research and Development
R&D expenses increased $1.7 million to $14.0 million for the three months ended March 31, 2022 compared to $12.3 million for the three months ended March 31, 2021, primarily related to an increase in employee-related costs.
Interest Expense, net
Interest expense, net decreased $2.3 million to $1.3 million for the three months ended March 31, 2022 compared to $3.6 million for the three months ended March 31, 2021. This decrease was primarily due to a decrease in losses from interest rate swaps, lower interest rates and a decrease in the amortization for debt issuance costs.
Income Tax Expense
Income tax expense decreased $6.9 million to $20.9 million for the three months ended March 31, 2022 compared to $27.8 million for the three months ended March 31, 2021. Our effective income tax rate ("ETR") was 20.4% for the three months ended March 31, 2022 compared to 24.3% for the three months ended March 31, 2021. The decrease in the ETR was primarily driven by changes in our jurisdictional mix of earnings.
Segment Results
Titleist Golf Balls Segment
Net sales in our Titleist golf balls segment decreased $9.8 million, or 5.6%, to $163.8 million for the three months ended March 31, 2022 compared to $173.6 million for the three months ended March 31, 2021. On a constant currency basis, net sales in our Titleist golf balls segment decreased $6.1 million, or 3.5%, to $167.5 million. This decrease was due to lower sales volumes across all models as a result of limited availability of certain raw materials.
Operating income in our Titleist golf balls segment decreased $0.9 million, or 2.6%, to $33.4 million for the three months ended March 31, 2022 compared to $34.3 million for the three months ended March 31, 2021. Higher gross profit of $1.5 million was offset by higher operating expenses, resulting in a decrease in operating income. The higher gross profit was driven by an improvement in manufacturing costs, as prior year production was more unfavorably impacted by raw material availability, and higher average selling prices and was partially offset by higher inbound freight costs. Operating expenses increased primarily as a result of an increase of $1.8 million in administrative expenses, as discussed previously.
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Titleist Golf Clubs Segment
Net sales in our Titleist golf clubs segment increased $5.0 million, or 3.2%, to $160.8 million for the three months ended March 31, 2022 compared to $155.8 million for the three months ended March 31, 2021. On a constant currency basis, net sales in our Titleist golf clubs segment increased $9.5 million, or 6.1%, to $165.3 million. This increase was largely due to higher sales volumes of our newly introduced SM9 wedges launched in the first quarter of 2022 and T-Series irons launched in the fourth quarter of 2021. This increase was partially offset by lower sales volumes of drivers, hybrids and fairways which were all in their second model year and were also impacted by component shortages and delays.
Operating income in our Titleist golf clubs segment decreased $9.6 million to $32.2 million for the three months ended March 31, 2022 compared to $41.8 million for the three months ended March 31, 2021. The decrease in operating income resulted from lower gross profit of $3.2 million and higher operating expenses. The decrease in gross profit was due to higher inbound freight and component costs. Higher operating expenses were primarily as a result of an increase of $2.4 million in selling expense primarily due to higher distribution expenses and an increase of $1.9 million in advertising and promotional expense.
Titleist Golf Gear Segment
Net sales in our Titleist golf gear segment decreased $9.0 million, or 16.9%, to $44.1 million for the three months ended March 31, 2022 compared to $53.1 million for the three months ended March 31, 2021. On a constant currency basis, net sales in our Titleist golf gear segment decreased $7.5 million, or 14.1%, to $45.6 million. This decrease was primarily due to sales volume decreases in golf bags and headwear product categories due to supply chain and fulfillment constraints, partially offset by higher average selling prices across all product categories.
Operating income in our Titleist golf gear segment decreased $7.5 million, or 77.3%, to $2.2 million for the three months ended March 31, 2022 compared to $9.7 million for the three months ended March 31, 2021. The decrease in operating income was primarily as a result of lower gross profit of $6.4 million due to the sales volume decrease discussed previously and increased inbound freight costs.
FootJoy Golf Wear Segment
Net sales in our FootJoy golf wear segment increased $38.2 million, or 24.0%, to $197.6 million for the three months ended March 31, 2022 compared to $159.4 million for the three months ended March 31, 2021. On a constant currency basis, net sales in our FootJoy golf wear segment increased $45.0 million, or 28.2%, to $204.4 million. This increase was primarily due to increased sales volumes and higher average selling prices across all product categories primarily driven by EMEA.
Operating income in our FootJoy golf wear segment increased $3.2 million, or 11.4%, to $31.3 million for the three months ended March 31, 2022 compared to $28.1 million for the three months ended March 31, 2021. The increase in operating income resulted from higher gross profit of $11.8 million primarily as a result of the sales volume increase and higher average selling prices discussed previously, partially offset by increased inbound freight costs and higher operating expenses. Operating expenses increased primarily as a result of an increase of $6.5 million in selling expense due to higher sales volumes as discussed previously including higher retail commission expense in Korea and higher distribution expenses, as well as an increase of $1.6 million in administrative expense, as discussed previously.

Liquidity and Capital Resources
Our primary cash needs relate to working capital, capital expenditures, servicing our debt, paying dividends, pension contributions and repurchasing shares of our common stock. We expect to rely on cash flows from operations and borrowings under our revolving credit facility and local credit facilities as our primary sources of liquidity.
Our liquidity is impacted by our level of working capital, which is cyclical as a result of the general seasonality of our business. Our accounts receivable balance is generally at its highest starting at the end of the first quarter and continuing through the second quarter, and declines during the third and fourth quarters as a result of both an increase in cash collections and lower sales. Our inventory balance also fluctuates as a result of the seasonality of our business. Generally, our buildup of inventory starts during the fourth quarter and continues through the first quarter and into the beginning of the second quarter in order to meet demand for our initial sell-in during the first quarter and reorders in the second quarter. Both accounts receivable and inventory balances are impacted by the timing of new product launches.
As of March 31, 2022, we had $112.6 million of unrestricted cash and cash equivalents (including $13.8 million attributable to our FootJoy golf shoe variable interest entity). As of March 31, 2022, 73.4% of our total unrestricted cash and
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cash equivalents was held at our non-U.S. subsidiaries, including our FootJoy golf shoe variable interest entity. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost effective basis. We are not aware of any restrictions on repatriation of these funds and, subject to foreign withholding taxes, those funds could be repatriated, if necessary. We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs related to debt service requirements.
As noted previously, the COVID-19 pandemic could impact our results of operations in ways we cannot currently predict. Nonetheless, we believe that cash expected to be provided by operating activities, together with our cash on hand and the availability of borrowings under our revolving credit facility and our local credit facilities (subject to customary borrowing conditions) will be sufficient to meet our liquidity requirements for at least the next 12 months. Our ability to generate sufficient cash flows from operations is, however, subject to many risks and uncertainties, including future economic trends and conditions (such as the COVID-19 pandemic), demand for our products, availability and cost of our raw materials and components, foreign currency exchange rates and other risks and uncertainties applicable to our business, as described in our Annual Report on Form 10-K for the year ended December 31, 2021.
Debt and Financing Arrangements
As of March 31, 2022, we had $306.7 million of availability under our revolving credit facility after giving effect to $12.3 million of outstanding letters of credit. Additionally, we had $38.2 million available under our local credit facilities.
Our credit agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and interest coverage ratios. The credit agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of March 31, 2022, we were in compliance with all covenants under the credit agreement.
See “Notes to Consolidated Financial Statements-Note-10-Debt and Financing Arrangements” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of our credit facilities and related credit agreement. Additionally, see "Risk Factors - Risks Related to Our Indebtedness" as described in our Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion surrounding the risks and uncertainties related to our credit facilities.
Capital Expenditures
We made $11.7 million of capital expenditures during the three months ended March 31, 2022. Capital expenditures for the full year are expected to be approximately $60 million, although the actual amount may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases due to supply chain challenges. Capital expenditures generally relate to investments to support the manufacturing and distribution of products, our go-to-market activities and continued investments in information technology to support our global strategic initiatives.
Dividends and Share Repurchase Program
As of March 31, 2022, our Board of Directors has authorized us to repurchase up to an aggregate of $200.0 million of our issued and outstanding common stock. During the three months ended March 31, 2022, we repurchased 1,163,799 shares of common stock at an average price of $50.79 for an aggregate of $59.1 million. Included in this amount were 699,819 shares of common stock repurchased from Magnus for an aggregate of $37.5 million on January 24, 2022, in satisfaction of our obligations pursuant to our previously disclosed Magnus share repurchase agreement.
As of March 31, 2022, we had $39.1 million remaining under the current share repurchase authorization. On April 28, 2022, the Board of Directors authorized us to repurchase up to an additional $150.0 million of our issued and outstanding common stock, bringing the total authorization up to $350.0 million. See “Notes to Unaudited Condensed Consolidated Financial Statements-Note-10-Common Stock,” Item 1 of Part I included elsewhere in this report for a description of our share repurchase program and Magnus share repurchase agreements.
During the three months ended March 31, 2022, we paid dividends on our common stock of $14.0 million to our shareholders. During the second quarter of 2022, our Board of Directors declared a dividend of $0.180 per share of common stock to shareholders of record as of June 3, 2022 and payable on June 17, 2022.
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Cash Flows
The following table presents the major components of net cash flows provided by (used in) operating, investing and financing activities for the periods indicated:
  Three months ended
  March 31,
(in thousands) 2022 2021
Cash flows provided by (used in):      
Operating activities $ (164,048) $ (29,996)
Investing activities (11,686) (6,410)
Financing activities 9,471  (1,226)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (1,012) (773)
Net decrease in cash, cash equivalents and restricted cash $ (167,275) $ (38,405)
Cash Flows from Operating Activities
Net cash used in operating activities increased $134.0 million to $164.0 million for the three months ended March 31, 2022 compared to $30.0 million for the three months ended March 31, 2021. The increase in cash used in operating activities was primarily driven by changes in working capital. Working capital at any specific point in time is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.
Cash Flows from Investing Activities    
Net cash used in investing activities increased $5.3 million to $11.7 million for the three months ended March 31, 2022 compared to $6.4 million for the three months ended March 31, 2021, driven by changes in capital expenditures.
Cash Flows from Financing Activities
Net cash provided by financing activities increased $10.7 million to $9.5 million for the three months ended March 31, 2022 compared to net cash used in financing activities of $1.2 million for the three months ended March 31, 2021. This increase was primarily due to an increase in proceeds from borrowings, offset in part by an increase in purchases of common stock.
Off-Balance Sheet Arrangements
As of March 31, 2022, other than as discussed above, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Issued Accounting Standards
We have reviewed all recently issued standards and have determined that, other than as disclosed in "Notes to Unaudited Condensed Consolidated Financial Statements-Note-1-Summary of Significant Accounting Policies," Item 1 of Part I included elsewhere in this report, such standards will not have a significant impact on our consolidated financial statements or otherwise do not apply to our operations.
ITEM 3.      Quantitative and Qualitative Disclosures About Market Risk
We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates, such as interest rates, foreign exchange rates and commodity prices and availability, as well as inflation risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes and do not believe we are exposed to material market risk with respect to our cash and cash equivalents.
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Interest Rate Risk
We are exposed to interest rate risk under our various credit facilities which accrue interest at variable rates, as described in "Notes to Unaudited Condensed Consolidated Financial Statements-Note-5- Debt and Financing Arrangements,” Item1 of Part I, included elsewhere in this report. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates for our floating rate debt. Our floating rate debt requires payments based on a variable interest rate index. Increases in interest rates may reduce our net income by increasing the cost of our debt.
We performed a sensitivity analysis to assess the potential effect of a hypothetical movement in interest rates on our annual pre-tax interest expense. As of March 31, 2022, we had $407.9 million of outstanding indebtedness at variable interest rates (excluding unamortized debt issuance costs). The sensitivity analysis, while not predictive in nature, indicated that a one percentage point increase in the interest rate applied to these borrowings as of March 31, 2022 would have resulted in an increase of $4.1 million in our annual pre-tax interest expense.
Foreign Exchange Risk
We are exposed to foreign currency transaction risk related to transactions denominated in a currency other than functional currency. In addition, we are exposed to currency translation risk resulting from the translation of the financial results of our consolidated subsidiaries from their functional currency into U.S. dollars for financial reporting purposes.
We use financial instruments to reduce the earnings and shareholders' equity volatility relating to transaction risk. The principal financial instruments we enter into on a routine basis are foreign exchange forward contracts, primarily pertaining to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won and the euro. The periods of the foreign exchange forward contracts designated as hedges correspond to the periods of the forecasted hedged transactions, which do not exceed 24 months subsequent to the latest balance sheet date. We do not enter into derivative financial instrument contracts for trading or speculative purposes.
We performed a sensitivity analysis to assess potential changes in the fair value of our foreign exchange forward contracts relating to a hypothetical movement in foreign currency exchange rates. The gross U.S. dollar equivalent notional amount of all foreign exchange forward contracts outstanding at March 31, 2022 was $245.0 million, representing a net settlement asset of $9.3 million. The sensitivity analysis of changes in the fair value of our foreign exchange forward contracts outstanding as of March 31, 2022, while not predictive in nature, indicated that the net settlement asset of $9.3 million would decrease by $13.9 million resulting in a net settlement liability of $4.6 million, if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts.
The sensitivity analysis described above recalculates the fair value of the foreign exchange forward contracts outstanding by replacing the actual foreign currency exchange rates and current month forward rates with foreign currency exchange rates and forward rates that reflect a 10% weakening of the U.S. dollar against all currencies covered by our contracts. All other factors are held constant. The sensitivity analysis disregards the possibility that currency exchange rates can move in opposite directions and that gains from one currency may or may not be offset by losses from another currency. The analysis also disregards the offsetting change in value of the underlying hedged transactions and balances.
The financial markets and currency volatility may limit our ability to cost-effectively hedge these exposures. The counterparties to derivative contracts are major financial institutions with investment grade credit ratings. We monitor the credit quality of these financial institutions on an ongoing basis.
Commodity Risk
We are exposed to commodity price and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, urethane and Surlyn for the manufacturing of our golf balls, titanium and steel for the assembly of our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum-based materials for a number of our products.
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Impact of Inflation
Our results of operations and financial condition are presented based on historical cost, and inflation in the cost of our products, overhead costs or wage rates may adversely affect our operating results. During the three months ended March 31, 2022, the impact of inflation resulted in increased raw material and other input costs as compared to the three months ended March 31, 2021. Should the current higher inflationary environment continue, including increased raw material and other input costs, our business, results of operations, financial position and cash flows could be materially impacted in the future.
ITEM 4.      Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the fiscal quarter ended March 31, 2022. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II.         OTHER INFORMATION

ITEM 1.      Legal Proceedings
We are party to lawsuits associated with the normal conduct of our businesses and operations. 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.

Item 1A.      Risk Factors
You should carefully consider each of the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, as well as the other information set forth in this report. There have been no material changes to the risk factors as described in our Annual Report on Form 10-K for the year ended December 31, 2021.
ITEM 2.      Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company’s purchase of common stock for the first quarter of 2022:
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs
Approximate dollar value of shares that may yet be purchased under the plans or programs (1)
 (in thousands)
January 1, 2022 - January 31, 2022 (2)
914,799  $ 52.76  914,799  $ 49,909 
February 1, 2022 - February 28, 2022 111,000  44.52  111,000  44,967 
March 1, 2022 - March 31, 2022 138,000  42.75  138,000  39,067 
Total 1,163,799  $ 50.79  1,163,799  $ 39,067 

_______________________________________________________________________________
(1)    As of March 31, 2022, the Board of Directors had authorized us to repurchase up to an aggregate of $200.0 million of our issued and outstanding common stock. On April 28, 2022, the Board of Directors authorized us to repurchase up to an additional $150.0 million of our issued and outstanding common stock, bringing the total authorization up to $350.0 million.
(2)     Includes 699,819 shares of common stock repurchased from Magnus for an aggregate of $37.5 million, in satisfaction of our previously disclosed share repurchase obligations. See “Notes to Unaudited Condensed Consolidated Financial Statements-Note 10-Common Stock,” Item 1 of Part I, included elsewhere in this report, for disclosures related to the Magnus share repurchase agreement.

ITEM 3.      Defaults Upon Senior Securities

None.

ITEM 4.      Mine Safety Disclosures

None.

ITEM 5.      Other Information

None.
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ITEM 6.      Exhibits
Exhibit No.      Description
     
 
     
 
     
 
     
 
     
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
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SIGNATURES
    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  ACUSHNET HOLDINGS CORP.
   
Dated: May 5, 2022 By: /s/ David Maher
    David Maher
    President and Chief Executive Officer
    (Principal Executive Officer)
     
     
Dated: May 5, 2022 By: /s/ Thomas Pacheco
    Thomas Pacheco
    Executive Vice President, Chief Financial Officer and Chief Accounting Officer
    (Principal Financial Officer and Principal Accounting Officer)
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