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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 September 30, 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)
Delaware45-2644353
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
333 Bridge StreetFairhaven,Massachusetts02719
(Address of principal executive offices)(Zip Code)
 
(800225-8500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - $0.001 par value per shareGOLFNew 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 70,209,026 shares of common stock outstanding as of October 28, 2022.

ACUSHNET HOLDINGS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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;
2

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.
3

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.
4

PART I.       FINANCIAL INFORMATION

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

5

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,December 31,
(in thousands, except share and per share amounts)20222021
Assets
Current assets
Cash, cash equivalents and restricted cash ($20,602 and $15,612 attributable to the variable interest entity ("VIE"))
$108,457 $281,677 
Accounts receivable, net324,096 174,435 
Inventories ($19,174 and $19,385 attributable to the VIE)
536,742 413,314 
Prepaid and other assets113,728 99,750 
Total current assets1,083,023 969,176 
Property, plant and equipment, net ($10,167 and $10,466 attributable to the VIE)
236,240 231,761 
Goodwill ($32,312 and $32,312 attributable to the VIE)
199,744 210,431 
Intangible assets, net458,824 465,341 
Deferred income taxes46,973 60,814 
Other assets ($2,088 and $2,166 attributable to the VIE)
76,557 68,313 
Total assets$2,101,361 $2,005,836 
Liabilities, Redeemable Noncontrolling Interest and Shareholders' Equity
Current liabilities
Short-term debt$27,532 $116 
Current portion of long-term debt 17,500 
Accounts payable ($17,063 and $13,275 attributable to the VIE)
178,015 163,607 
Accrued taxes45,117 57,307 
Accrued compensation and benefits ($1,062 and $1,511 attributable to the VIE)
84,645 113,453 
Accrued expenses and other liabilities ($3,911 and $4,677 attributable to the VIE)
163,504 131,041 
Total current liabilities498,813 483,024 
Long-term debt406,728 297,354 
Deferred income taxes5,222 4,950 
Accrued pension and other postretirement benefits93,107 93,705 
Other noncurrent liabilities ($2,115 and $2,218 attributable to the VIE)
46,916 43,237 
Total liabilities1,050,786 922,270 
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest4,322 3,299 
Shareholders' equity
Common stock, $0.001 par value, 500,000,000 shares authorized; 76,321,523 and 75,855,036 shares issued
76 76 
Additional paid-in capital954,926 948,423 
Accumulated other comprehensive loss, net of tax(145,079)(99,582)
Retained earnings483,237 324,966 
Treasury stock, at cost; 6,629,483 and 3,314,562 shares (including 869,368 and 537,839 of accrued share repurchases) (Note 10)
(283,155)(131,039)
Total equity attributable to Acushnet Holdings Corp.1,010,005 1,042,844 
Noncontrolling interests36,248 37,423 
Total shareholders' equity1,046,253 1,080,267 
Total liabilities, redeemable noncontrolling interest and shareholders' equity$2,101,361 $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 September 30,Nine months ended September 30,
(in thousands, except share and per share amounts)2022202120222021
Net sales$558,246 $521,629 $1,822,932 $1,727,364 
Cost of goods sold263,251 252,792 867,332 813,362 
Gross profit294,995 268,837 955,600 914,002 
Operating expenses:    
Selling, general and administrative202,418 199,787 637,276 586,411 
Research and development14,619 14,597 42,533 39,947 
Intangible amortization1,948 1,967 5,865 5,909 
Income from operations76,010 52,486 269,926 281,735 
Interest expense, net4,534 1,147 7,902 6,611 
Other expense, net2,355 939 5,828 3,170 
Income before income taxes69,121 50,400 256,196 271,954 
Income tax expense15,797 10,475 52,786 62,882 
Net income53,324 39,925 203,410 209,072 
Less: Net income attributable to noncontrolling interests(1,487)(661)(4,074)(3,765)
Net income attributable to Acushnet Holdings Corp.$51,837 $39,264 $199,336 $205,307 
Net income per common share attributable to Acushnet Holdings Corp.:    
Basic$0.72 $0.53 $2.74 $2.75 
Diluted0.72 0.52 2.72 2.73 
Weighted average number of common shares:    
Basic71,706,824 74,533,652 72,701,647 74,656,837 
Diluted72,334,398 75,301,431 73,209,719 75,292,647 

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

7

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 Three months ended September 30,Nine months ended September 30,
(in thousands)2022202120222021
Net income$53,324 $39,925 $203,410 $209,072 
Other comprehensive loss:
Foreign currency translation adjustments(26,527)(8,768)(58,592)(16,810)
Cash flow derivative instruments:
Unrealized holding gains (losses) arising during period6,106 (144)18,155 4,900 
Reclassification adjustments included in net income(2,535)1,877 (5,476)4,960 
Tax expense(1,099)(298)(3,977)(2,879)
Cash flow derivative instruments, net2,472 1,435 8,702 6,981 
Pension and other postretirement benefits:    
Pension and other postretirement benefits adjustments2,252 1,581 5,788 4,937 
Tax expense(576)(368)(1,395)(1,291)
Pension and other postretirement benefits adjustments, net1,676 1,213 4,393 3,646 
Total other comprehensive loss(22,379)(6,120)(45,497)(6,183)
Comprehensive income30,945 33,805 157,913 202,889 
Less: Comprehensive income attributable to noncontrolling interests(1,446)(641)(3,862)(3,637)
Comprehensive income attributable to Acushnet Holdings Corp.$29,499 $33,164 $154,051 $199,252 

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

8

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 Nine months ended September 30,
(in thousands)20222021
Cash flows from operating activities  
Net income$203,410 $209,072 
Adjustments to reconcile net income to cash flows (used in) provided by operating activities
Depreciation and amortization30,894 30,816 
Unrealized foreign exchange loss (gain)12,531 (1,721)
Amortization of debt issuance costs1,835 1,337 
Share-based compensation18,159 20,822 
(Gain) loss on disposals of property, plant and equipment(3,257)146 
Deferred income taxes6,928 16,633 
Changes in operating assets and liabilities
Accounts receivable(176,531)(105,707)
Inventories(156,065)26,242 
Accounts payable21,437 26,627 
Accrued taxes(3,419)24,366 
Other assets and liabilities(14,964)31,458 
Cash flows (used in) provided by operating activities(59,042)280,091 
Cash flows from investing activities  
Additions to property, plant and equipment(33,638)(19,210)
Other, net4,542  
Cash flows used in investing activities(29,096)(19,210)
Cash flows from financing activities
Proceeds from (repayments of) short-term borrowings, net (Note 5)
31,056 (2,177)
Proceeds from revolving credit facility483,000  
Repayments of revolving credit facility(77,400) 
Repayments of term loan facility (Note 5)
(315,000)(13,125)
Purchases of common stock(138,158)(30,146)
Payment of debt issuance costs(2,583) 
Dividends paid on common stock(39,672)(37,058)
Dividends paid to noncontrolling interests(1,601)(1,360)
Payment of employee restricted stock tax withholdings(10,661)(3,946)
Other, net(3,600) 
Cash flows used in financing activities(74,619)(87,812)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(10,463)(4,015)
Net (decrease) increase in cash, cash equivalents and restricted cash(173,220)169,054 
Cash, cash equivalents and restricted cash, beginning of year281,677 151,452 
Cash, cash equivalents and restricted cash, end of period$108,457 $320,506 
Supplemental non-cash information  
Additions to property, plant and equipment$6,757 $3,105 
Additions to right-of-use assets obtained in exchange for operating lease obligations17,919 7,341 
Additions to right-of-use assets obtained in exchange for finance lease obligations335 150 
Additions to treasury stock1,595  
Dividend equivalents rights ("DERs") declared not paid1,323 1,537 
Contingent consideration (Note 1)
1,400  
Magnus share repurchase liability (Note 10)
41,577  

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

9

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss,
Net of Tax
Retained
Earnings
Treasury StockTotal
Shareholders'
Equity
Attributable
to Acushnet
Holdings Corp.
Noncontrolling
Interests
Total
Shareholders'
Equity
(in thousands)SharesAmount
Balances as of June 30, 202175,855 $76 $934,919 $(96,245)$338,633 $(54,213)$1,123,170 $36,882 $1,160,052 
Net income— — — — 39,264 — 39,264 832 40,096 
Other comprehensive loss— — — (6,120)— — (6,120)— (6,120)
Share-based compensation — — 6,852 — — — 6,852 — 6,852 
Purchases of common stock (Note 10)
— — — — — (12,261)(12,261)— (12,261)
Dividends and dividend equivalents declared— — — — (12,692)— (12,692)— (12,692)
Dividends declared to noncontrolling interests
— — — — — — — (1,249)(1,249)
Balances as of September 30, 202175,855 $76 $941,771 $(102,365)$365,205 $(66,474)$1,138,213 $36,465 $1,174,678 
Balances as of June 30, 202276,289 $76 $949,206 $(122,700)$444,592 $(200,001)$1,071,173 $34,654 $1,105,827 
Net income— — — — 51,837 — 51,837 1,594 53,431 
Other comprehensive loss— — — (22,379)— — (22,379)— (22,379)
Share-based compensation — — 5,673 — — — 5,673 — 5,673 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
33 — 47 — — — 47 — 47 
Purchases of common stock (Note 10)— — — — — (41,577)(41,577)— (41,577)
Share repurchase liability (Note 10)— — — — — (41,577)(41,577)— (41,577)
Dividends and dividend equivalents declared— — — — (13,192)— (13,192)— (13,192)
Balances as of September 30, 202276,322 $76 $954,926 $(145,079)$483,237 $(283,155)$1,010,005 $36,248 $1,046,253 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss,
Net of Tax
Retained
Earnings
Treasury StockTotal
Shareholders'
Equity
Attributable
to Acushnet
Holdings Corp.
Noncontrolling
Interests
Total
Shareholders'
Equity
(in thousands)SharesAmount
Balances as of December 31, 202075,666 $76 $925,385 $(96,182)$199,776 $(45,106)$983,949 $33,304 $1,017,253 
Net income— — — — 205,307 — 205,307 4,521 209,828 
Other comprehensive loss— — — (6,183)— — (6,183)— (6,183)
Share-based compensation — — 20,331 — — — 20,331 — 20,331 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
189 — (3,945)— — — (3,945)— (3,945)
Purchases of common stock (Note 10)
— — — — — (21,368)(21,368)— (21,368)
Dividends and dividend equivalents declared— — — — (38,227)— (38,227)— (38,227)
Dividends declared to noncontrolling interests
— — — — — — — (1,360)(1,360)
Redemption value adjustment (Note 1)— — — — (1,651)— (1,651)— (1,651)
Balances as of September 30, 202175,855 $76 $941,771 $(102,365)$365,205 $(66,474)$1,138,213 $36,465 $1,174,678 
Balances as of December 31, 202175,855 $76 $948,423 $(99,582)$324,966 $(131,039)$1,042,844 $37,423 $1,080,267 
Purchase of equity from noncontrolling interests (Note 1)— — (838)— — — (838)(3,905)(4,743)
Net income— — — — 199,336 — 199,336 4,331 203,667 
Other comprehensive loss— — — (45,497)— — (45,497)— (45,497)
Share-based compensation — — 17,667 — — — 17,667 — 17,667 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
467 — (10,326)— — — (10,326)— (10,326)
Purchases of common stock (Note 10)
— — — — — (110,539)(110,539)— (110,539)
Share repurchase liability (Note 10)
— — — — — (41,577)(41,577)— (41,577)
Dividends and dividend equivalents declared— — — — (40,065)— (40,065)— (40,065)
Dividends declared to noncontrolling interests
— — — — — — — (1,601)(1,601)
Redemption value adjustment (Note 1)
— — — — (1,000)— (1,000)— (1,000)
Balances as of September 30, 202276,322 $76 $954,926 $(145,079)$483,237 $(283,155)$1,010,005 $36,248 $1,046,253 

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

11

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 and nine months ended September 30, 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 periods 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 unaudited condensed 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 September 30, 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.
12

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 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.
On April 1, 2022, the Company acquired the outstanding equity interest in PG Golf LLC for $5.0 million, including cash consideration of $3.6 million and contingent consideration of $1.4 million, which was included in other noncurrent liabilities on the unaudited condensed consolidated balance sheet as of September 30, 2022.
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). During the nine months ended September 30, 2022 and 2021, the Company recorded a redemption value adjustment of $1.0 million and $1.7 million, respectively. 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 September 30, 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 September 30, 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 $1.7 million and $1.9 million, respectively.
Foreign Currency Transactions
Foreign currency transaction losses included in selling, general and administrative expenses were $6.2 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively. Foreign currency transaction losses included in selling, general and administrative expenses were $15.0 million and $1.9 million for the nine months ended September 30, 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.

13

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 September 30,Nine months ended September 30,
(in thousands)2022202120222021
Balance at beginning of period$7,918 $7,334 $5,980 $7,698 
Bad debt expense193 626 2,648 324 
Amount of receivables written off (203)(224)(472)(268)
Foreign currency translation(227)(74)(475)(92)
Balance at end of period$7,681 $7,662 $7,681 $7,662 
3. Inventories
The components of inventories were as follows: 
September 30,December 31,
(in thousands)20222021
Raw materials and supplies$139,282 $105,784 
Work-in-process28,650 21,259 
Finished goods368,810 286,271 
Inventories$536,742 $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 September 30,Nine months ended September 30,
(in thousands)2022202120222021
Balance at beginning of period$4,077 $4,333 $4,177 $3,831 
Provision1,286 1,414 3,497 4,099 
Claims paid(1,333)(1,406)(3,489)(3,553)
Foreign currency translation and other(150)(65)(305)(101)
Balance at end of period$