GOLF 10-K & 10-Q changes, risk factors and insider trading

•Many of our raw materials and product components are provided by a sole or limited number of third-party suppliers and manufacturers.manufacturers, and the cost of our raw materials and product components could affect our operating results.

•We rely on complex information systems to manage our manufacturing, distribution, salessales, finance, accounting and other functions. If our information systems fail to perform these functions adequately or if we experience an interruption in our operations, including a breach in cybersecurity, our business, financial condition and results of operations could be materially adversely affected.

•We and our subsidiaries may be able to incur significant amounts of debt, which could exacerbate the risks associated with current indebtedness.

•The indenture that governs our 7.375% senior unsecured notes due 2028 (the “Notes”) and the credit agreement that governs our Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility (as defined below) containcontains restrictions that limit our flexibility in operating our business.

Our products are recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to spendmake theirdiscretionary timepurchases and money on golf andof golf products when economic conditions are favorable and when consumers feel confident and prosperous. Discretionary spending on golf and the golf products we sell is affected by consumer spending habits and many macroeconomic factors, including general business conditions, stock market prices and volatility, corporate spending, housing prices, inflation, interest rates, the availability of consumer credit, taxes and consumer confidence in future economic conditions. Consumers may reduce or postpone purchases of our products as a result of shifts in consumer spending habits as well as during periods when economic uncertainty increases, disposable income is lower, or during periods of actual or perceived unfavorable economic conditions. A future significant or prolonged decline in general economic conditions or uncertainties regarding future economic prospects that adversely affects consumer discretionary spending, whether in the United States or in our international markets, could result in reduced sales of our products, which could materially adversely affect our business, financial condition and results of operations.

Golf is a recreational activity that requires both time and money,financial resources, and different generations and socioeconomic and ethnic groups use their leisure time and discretionary funds in different ways. Golf participation among younger generations and certain socioeconomic and ethnic groups may not prove to be as popular as it is among older generations. A decline in golf participation or the number of rounds of golf played due to factors such as demographic changes or lack of interest in the sport among young people or certain socioeconomic and ethnic groups could reduce sales of our products and materially adversely affect our business, financial condition and results of operations.

Golf’s most regulated categories are golf balls and golf clubs. We seek to have our new golf ball and golf club products conform with the Rules of Golf because these rules are generally followed by golfers, both professional and amateur. The Rules of Golf set testing standards and establish limitations for the design and performance of golf balls and golf clubs. Historically, the Rules of Golf have regulated golf ball size, weight, spherical symmetry, initial velocity and overall distance. The Governing Bodies have also focused on golf club regulations, including limiting wedge and iron groove size, the size and spring‑like effect of driver faces and club head moment of inertia. In the future, existing Rules of Golf may be altered in ways that may adversely affect the sales of our current or future products.

Many of our raw materials and product components are provided by a sole or limited number of third‑party suppliers and manufacturers.manufacturers, and the cost of our raw materials and product components could affect our operating results.

We rely on a sole or limited number of third‑party suppliers and manufacturers for many of our raw materials and components in our golf balls, golf clubs, golf gloves, golf shoes and certain of our other products. We also use specialized and geographically limited sources for certain of the raw materials used to make our golf gloves and other products. Many of these materials are customized for us and some of our products require specially developed manufacturing techniques and processes which make it difficult to identify and utilize alternative suppliers quickly. If we were to experience any delay or interruption in such supplies, we may not be able to find adequate alternative suppliers at a reasonable cost or without significant disruption to our business. We continue to be exposed to price increases and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, zinc diacrylate, urethane and ionomers for the manufacturing of our golf balls, tungsten, titanium and steel for the manufacturing of our golf clubs, leather and synthetic fabrics for the manufacturing of our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum‑based materials for a number of our products. Any significant supply chain disruptionsdisruptions, price fluctuations or shortages in raw materials or components, including the costs to transport such materials or components of our products, the uncertainty of currency fluctuations against the U.S. dollar, increases in labor rates, trade duties or tariffs, and/or the introduction of new and expensive raw materials could materially adversely affect our business, financial condition and results of operations.

Our ability to continue selecting reliable suppliers who provide timely deliveries of quality materials and components will impact our success in meeting customer demand for timely delivery of quality products. If we experience significantly increased demand, or if, for any reason, we need to replace an existing manufacturer or supplier, there can be no assurance that additional supplies of raw materials or additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any new supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements. Furthermore, the ability of third‑party suppliers to timely deliver raw materials or components may be affected by events beyond their control, such as work stoppages or slowdowns, transportation issues, changes in trade or tariff laws, or significant weather and health conditions, and there can be no assurance that our suppliers and manufacturers will continue to provide raw materials and components that are consistent with our standards and that comply with all applicable laws and regulations. We have occasionally received, and may in the future receive, shipments of supplies or components that fail to conform to our quality control standards, and we have in the past and may again in the future experience supply chain disruptions and related shortages of various raw materials. In addition, shouldwhile we decidedo tonot transitioncontrol existingour manufacturing between third‑party manufacturerssuppliers or totheir transitionlabor existingpractices, in‑housenegative manufacturingpublicity to third‑party manufacturers, such asregarding the transitionmanagement of facilities, production methods employed or materials used by any of our footwear manufacturing to a third-party owned facility in Vietnam, the risk of such a supply chain disruptionsuppliers could increase. Even if we are able to expand existing or find new manufacturing sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Any material delays, interruption or increased costs in the supply of raw materials or components of our products could impact our ability to meet customer demand, which could materially adversely affect our business, financial conditionreputation and resultsmay force us to seek alternative suppliers. If any of operations.the foregoing were to occur, unless we obtain replacement supplies or components in a timely manner, we risk the loss of sales resulting from the inability to manufacture our products and could incur related increased administrative and shipping costs.

For the year ended December 31, 2024,2025, $1,010.3$1,035.4 million of our net sales were generated in regions outside of the United States. Net sales by region are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 7 of Part II to this report and “Notes to Consolidated Financial Statements – Note 21 – Segment Information,” Item 8 of Part II to this report. Substantially all net sales from regions outside of the United States were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar. In contrast, substantially all of our purchases of inventory, raw materials and components by entities in these regions are made in U.S. dollars. ForAs thea year ended December 31, 2024, approximately 80% of our cost of goods sold incurred by regions outside the U.S. was denominated in U.S. dollars. Because these subsidiaries incur substantially all of their cost of goods sold in currencies that are different from the currencies in which they generate substantially all of their sales,result, we are exposed to transaction risk attributable to fluctuations in currency exchange rates, which can impact the gross profit of theseour international subsidiaries. IfIn addition, because substantially all of the operating expenses incurred by our international subsidiaries are denominated in foreign currencies, we are exposed to currency translation risk when we translate the financial results of our consolidated subsidiaries from their local currency into U.S. dollars. Fluctuations in foreign currency exchange rates may positively or negatively affect our reported financial results and can significantly affect period‑over‑period comparisons. A strengthening of the U.S. dollar strengthens against the applicable local currency, more local currency will be neededrelative to purchaseour theforeign same amount of cost of goods sold denominated in U.S. dollars, whichcurrencies could materially adversely affect our business, financial condition and results of operations.

We have entered and expect to continue entering into various foreign exchange forward contracts in an effort to protect against adverse changes in foreign exchange rates and attempt to minimizemitigate foreign currency transaction risk. Our hedging activities can reduce, but will not eliminate, the effects of foreign currency transaction risk on our financial results. The extent to which our hedging activities mitigate foreign currency transaction risks varies based upon many factors, including the timing, value and volume of transactions being hedged.hedged, Accuracyaccuracy of sales forecasts, volatility of currency markets, the availability of hedging instruments and limitations on the duration of such hedging instruments may also affect the effectiveness of our hedging activities.instruments. Because these hedging activities are designed to reduce volatility, they not only reduce the negative impact of a stronger U.S. dollar but could also reduce the positive impact of a weaker U.S. dollar. We are also exposed to credit risk from the counterparties to our hedging activities and market conditions could cause such counterparties to experience financial difficulties. As a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly.

We compete against large‑scale global sports equipment and apparel companies, Japanese industrials, and more specialized golf equipment and golf wear companies, including Callaway, TaylorMade, Ping, SRI Sports Limited, Bridgestone, Nike, Adidas and Under Armour.companies. Many of our competitors have significant competitive strengths, including long operating histories, large and broad consumer bases, established relationships with a broad set of suppliers and customers, established regional or local presence, strong brand recognition and greater financial, R&D, marketing, distribution and other resources than we do. There are unique aspects to the competitive dynamic in each of our product categories and markets. We are not the market leader with respect to certain categories or in certain markets.

Our competitors may be able to create and maintain brand awarenessawareness, andgain market share more quickly and effectively than we can. Our competitors may also be able to increase sales in new and existing markets fastermore quickly and effectively than we do by emphasizing different distribution channels or through other methods,can, and many of our competitors have substantial resources to devote towards increasingthese sales.initiatives. If we are unable to grow or maintain our competitive position in any of our product categories, it could materially adversely affect our business, financial condition and results of operations.

Our business depends on strong brands, and if we are not able to maintain and enhance our brandsbrands, we may be unable to sell our products.

Political, social and geopolitical conditions in the markets in which our products are manufactured and/or sold have been and could continue to be difficult to predict, and may result in adverse effects on our business. The effects of elections, referendums or other political conditions, events, tensions, wars, and other military conflicts in these markets have in the past impacted and could continue to impact how existing laws, regulations and government programs or policies are implemented or result in uncertainty as to how such laws, regulations, programs or policies may change, including with respect to the negotiation of new trade agreements, new, expanded or retaliatory tariffs against certain countries or covering certain products or ingredients (includingsee recent “—U.S. tariffs imposed or threatened to be imposed on China, Canada and Mexicoforeign trade policies, including the assessment of tariffs and other countriesimpositions on imported goods, may have a material adverse effect on our business, financial condition and anyresults retaliatoryof actions taken by such countriesoperations”), sanctions, environmental and climate change regulations, taxes, benefit programs, the movement of goods, services and people between countries, relationships between countries, customer or consumer perception of a particular country or its government and other matters. Such uncertainty could have a negative impact on our business. Further, any changes in global or national political movements or trade policies could alter the trade environment and consumer purchasing behavior which, in turn, could have a material effect on our financial condition and results of operations.

•increased difficulty in ensuring compliance by employees, agents and contractors with our policies as well as with the laws of multiple jurisdictions, including but not limited to the U.S. Foreign Corrupt Practices Act (the “FCPA”), and similar anti‑bribery and anti‑corruption laws, local and international environmental, health and safety laws, and increasingly complex regulations relating to data privacy and the conduct of international commercejurisdictions;

•increased difficulty in controlling and monitoring foreign operations from the United States, including increased difficulty in identifying and recruiting qualified personnel for itsour foreign operations; and

Any violation of our policies or any applicable laws and regulations by our suppliers or manufacturers could interrupt or otherwise disrupt our sourcing, adversely affect our reputation or damage our brand image. While we do not control these suppliers or manufacturers or their labor practices, negative publicity regarding the management of facilities by, production methods of or materials used by any of our suppliers or manufacturers could adversely affect our reputation and sales and force us to locateseek alternative suppliers or manufacturing sources, which could materially adversely affect our business, financial condition and results of operations.

If actual demand for our products exceeds the forecasted demand, we may not be able to produce sufficient quantities of new products in time to fulfill actual demand, which could limit our sales. Any inventory levels in excess of consumer demand may result in inventory write‑downs and/or the sale of excess inventory at discounted prices.

We use United Parcel Service and FedEx Corporation for substantially all ground shipments of products to our U.S. customers. We use ocean shipping services and air carriers for most of our international shipments of products and many of the components we use to manufacture and assemble our products. If there are changes in trade or tariff laws which result in customs processing delays or any significant interruption in service by such providers or at shipping ports or airports, we may be unable to engage alternative suppliers or to receive or ship goods through alternate sites in order to deliver our products or components in a timely and cost‑efficient manner. We could experience manufacturing delays, increased manufacturing and shipping costs, and lost sales due to missed delivery deadlines and product introduction and demand cycles. Any significant interruption in Unitedground Parcel Service or FedEx Corporationshipment services, ship services, at shipping ports or air carrier services could materially adversely affect our business, financial condition and results of operations. For example, in recent years, West Coast port congestion, Panama Canal passage limitations and Red Sea carrier diversions resulted in unbudgeted shipping costs, caused unexpected shipping delays and otherwise made it more difficult to ship our products to certain key markets worldwide. If the cost of delivery or shipping services were to increase significantly and the additional costs could not be covered by product pricing, our business, financial condition and results of operations could be materially adversely affected.

We are in the process of implementing a new worldwide ERP platform as part of our plans to integrate our operations and enhance our supply chain and finance capabilities. Additional implementation activities are expected to continue in phases over the next threeseveral years. ERP implementations are complex, labor intensive, and time-consuming projects, which also involve substantial expenditures on system software and implementation activities. The successful implementation of the new ERP platform is critical to our ability to provide important information to management, obtain and deliver products, provide services and customer support, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, and otherwise operate our business. ERP implementations also require transformation of business and financial processes in order to reap the benefits of the ERP system. Any such implementation involves risks inherent in the conversion to a new computer system, including loss of information and potential disruption to our normal operations. The implementation and maintenance of the new ERP platform has required, and will continue to require, the investment of significant financial and human resources, the re-engineering of processes of our business, and the attention of many employees who would otherwise be focused on other aspects of our business. Our results of operations could be adversely affected if we experience additional time delays or cost overruns during the ERP implementation process, or if we are unable to reap the benefits we expect from the new ERP platform. Any material deficiencies in the design and implementation of the new ERP platform could also result in potentially materially higher costs and could adversely affect our ability to operate our business and otherwise negatively affect our financial reporting and the effectiveness of our internal control over financial reporting. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations.

All of our major operations, including manufacturing, distribution, salessales, finance and accounting, are dependent upon complex information systems. Our information systems are vulnerable to damage or interruption from:

For example, in JulyNovember 2024,2025, a softwaretechnical updateerror by a cybersecuritycloud technology company caused widespread disruptions of operatingservices systems.across the internet. Although we did not experience any material impacts as a result of this software update,incident, we could in the future experience similar third-party software-induced interruptions to our operations. Any damage or significant disruption in the operation of our systems, disruptions, delays or deficiencies in the design or implementation of new systems, or the failure of our information systems to perform as expected would disrupt our business, which may result in decreased sales, increased overhead costs, excess inventory or product shortages which could materially adversely affect our business, financial condition and results of operations.

We are increasingly using websites and social media to interact with consumers and as a means to enhance their experience with our products. We currently have eCommerce operations in the U.S., Canada, Europe and Asia. In our eCommerce services, we process, store and transmit customer data, including payment card information. We also collect consumer data through certain marketing activities. Failure to prevent or mitigate data loss or other security breaches, including breaches of our vendors’ technology and systems, could expose us or consumers to a risk of loss or misuse of such information, result in litigation or potential liability for us and otherwise adversely affect our business, financial condition and results of operations. We would also likely suffer indirect harms such as reputational damage and reticence among other companies to do business with us. For further information, see “—We rely on complex information systems to manage our manufacturing, distribution, salessales, finance, accounting and other functions. If our information systems fail to perform these functions adequately or if we experience an interruption in our operations, including a breach in cybersecurity, our business, financial condition and results of operations could be materially adversely affected.”

Our goodwill and identifiable intangible assets, which primarily consist of goodwill from acquisitions, trademarks, customer relationships and completed technology, represented 31% of our total assets as of December 31, 2025. Accounting rules require the evaluation of our goodwill and intangible assets with indefinite lives for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Such indicators include: (i) a significant adverse change in customer demand or business climate that could affect the value of an asset; (ii) general economic conditions, such as increasing U.S. Treasury rates or unexpected changes in gross domestic product growth; (iii) a change in our market shares; (iv) budget‑to‑actual performance and consistency of operations margins and capital expenditures; (v) a product recall or an adverse action or assessment by a regulator; or (vi) changes in management or key personnel. Goodwill and identifiable intangible assets are deemed impaired when their carrying value exceeds their fair value. If a significant amount of our goodwill and identifiable intangible assets were deemed to be impaired, our business, financial condition and results of operations could be materially adversely affected.

Over the past several years, the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries that encompass many of the jurisdictions in which we operate, has promulgated recommended changes to numerous long standing international tax principles through its Base Erosion and Profit Shifting (“BEPS”) project, including the Pillar II global minimum tax regime. Certain countries in which we operate have enacted legislation consistent with the OECD Pillar II model rules and have introduced a 15% global minimum tax rate for large multinational corporations, effective beginning in 2024. We are included in the consolidated financial statements of a global ultimate parent, are monitoring legislative developments, and are continuing to evaluate the potential impact of Pillar II on our consolidated financial statements. WeWhile we do not expect the impact of Pillar II to be material.material, jurisdictions in which we do business may continue to react to the BEPS initiative by enacting further tax legislation, and our business could be materially impacted.

We maintain insurance of the type and in amounts that we believe is commercially reasonable and that is available to businesses in our industry. We carry various types of insurance, including general liability, auto liability, workers’ compensation, property, stock throughput, cyber and excess umbrella, from highly rated insurance carriers. We believe that the policy specifications and insured limits are adequate to cover against foreseeable losses with terms and conditions that are reasonable and customary for similar businesses and are within industry standards. Nevertheless, market forces beyond our control could limit the scope of the insurance coverage that we can obtain in the future or restrict our ability to buy insurance coverage at reasonable rates. We cannot predict the level of the premiums that we may be required to pay for subsequent insurance coverage, the level of any deductible and/or self‑insurance retention applicable thereto, the level of aggregate coverage available or the availability of coverage for specific risks.

There is no assurance that we can successfully defend or settle all product liability cases. Our insurance policies provide coverage against claims resulting from alleged injuries arising from our products sustained during the respective policy periods, subject to policy terms and conditions. There can be no assurance that this coverage will be renewed or otherwise remain available in the future, that our insurers will be financially viable when payment of a claim is required, that the cost of such insurance will not increase, or that this insurance will ultimately prove to be adequate under our various policies. Furthermore, future rate increases might make insurance coverage programs uneconomical for us to maintain. These potential insuranceinsurance-related problems or any adverse outcome in any liability suit could create increased expenses which could harm our business. We are unable to predict the nature of product liability claims that may be made against us in the future with respect to injuries, diseases or other illnesses resulting from the use of our products or the materials incorporated in our products.

We may need to raise additional funds through public or private debt (for example, our Notessenior notes offering in 20232025) or equity financings in order to:

Any additional capital raised through the sale of equity or securities convertible into equity will dilute the percentage ownership of holders of our common stock. Capital raised through debt financing would require us to make periodic interest payments and may impose restrictive covenants on the conduct of our business. Furthermore, additional financings may not be available on terms favorable to us, or at all, especially during periods of adverse economic conditions, which could make it more difficult or impossible for us to obtain funding for the operation of our business, for making additional investments in product development and for repaying outstanding indebtedness. Our failureinability to obtain additional funding on favorable terms could preventlimit usour fromability makingto make expenditures that may be required to grow ourfor business growth or maintainoperational our operations.enhancements.

As of December 31, 2024,2025, we had $768.9$950.3 million of indebtedness. As of December 31, 2024,2025, we had available borrowingsborrowing capacity under our multi-currency revolving credit facility of $542.4$514.7 million after giving effect to $2.9$4.0 million of outstanding letters of credit and we had available borrowingsborrowing remainingcapacity under our local credit facilities of $47.5$37.8 million. As of December 31, 2024,2025, we had $100.0 million ofno outstanding interest rate swap contracts to hedge the interest rate risk on our variable rate debt. Our outstanding interest rate swap contracts are due to mature on February 28, 2025.

•exposing us to the risk of increased interest rates because manysome of our borrowings are at variable rates of interest;

•making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including financial maintenance covenants and restrictive covenants, if not cured or waived, could result in an event of default under the agreements governing our other indebtedness (if not cured or waived);

Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. To a certain extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to generate sufficient cash flows to service our debt and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations, or raise additional debt or equity capital. We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms, or at all, and these actions may not be sufficient to meet our capital requirements. In addition, any refinancing of our indebtedness could be at a higher interest rate, and the terms of our existing or future debt arrangements may restrict us from utilizing such alternatives. Any downgrade in our corporate credit ratings or the credit ratings of the Notes, or any indications from the rating agencies that our ratings are under surveillance or under review with possible negative implications could increase our cost of financing and limit our ability to access the capital markets to meet liquidity needs. Our failure to make the required interest and principal payments on our indebtedness could result in an event of default under the agreements governing our other indebtedness, which may result in the acceleration of some or all of our outstanding indebtedness. In the absence of sufficient resources to service our debt and meet our other commitments, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. OurThe Secondcredit Amended Credit Facility and the indentureagreement that governs theour Notesmulti-currency underrevolving certaincredit conditionsfacility imposeimposes restrictions on our ability to dispose of assets and use the proceeds from any such disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from such dispositions and these proceeds may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

We and our subsidiaries may be able to incur significant amounts of debt, which could exacerbate the risks associated with our current indebtedness.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. Although the credit agreement governingthat governs our Secondmulti-currency Amendedrevolving Creditcredit Facility,facility and the indenture governingthat governs the 2033 Notes and the agreements governing our other indebtedness each contain restrictions on theincurring incurrenceindebtedness offor additionalborrowed indebtedness,money, these restrictions are subject to a number of significant qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. If we incur additional debt, the risks associated with our existing debt, including our ability to service our debt, could intensify.

The indenture that governs the Notes and the credit agreement that governs our Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility containcontains restrictions that limit our flexibility in operating our business.

The indenture that governs the Notes and the credit agreement that governs our Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility each containcontains various covenants that limit our ability to engage in specified types of transactions. These covenants limit the ability of our subsidiaries to, among other things:

•make investmentsloans and loansinvestments;

As a result of these and other covenants and restrictions, we are and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, weour maycredit beagreement requiredrequires us to maintain specified financial maintenance ratios andand, in connection with certain transactions, satisfy other financial condition tests. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants. A breach of any of these covenants, among others, could result in a default under one or more of these agreements, including as a result of cross defaults,default provisions, which, if not cured or waived, could result in our being required to repay these borrowings before their maturity. If we are unable to repay outstanding borrowings when due, the lenders under our Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility mayhave the right to proceed against the collateral granted to them to secure the debt. If lenders under theour Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility accelerate the debt thereunder, then the obligations under the 2033 Notes could be accelerated. We cannot provide assurance that, if the indebtedness under our Secondmulti-currency Amendedrevolving Creditcredit Facilityfacility and the 2033 Notes were to be accelerated, our assets would be sufficient to repay in full that indebtedness and our other indebtedness. If not cured or waived, such acceleration could have a material adverse effect on our business and our prospects.

The accompanying results have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). These consolidated financial statements include the accounts of Acushnet Holdings Corp. and Acushnet Company, including itsAcushnet Company's wholly-owned subsidiaries and less than wholly-owned subsidiaries, which include avariable interest entities (“VIE”) in which Acushnet Company is the primary beneficiary. In addition, investments in entities over which the Company has significant influence but not control are accounted for using the equity method of accounting. The Company conducts substantially all of its business through Acushnet Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

We generate substantially all of our sales from the sale of golf-related products, including golf balls, golf clubs, golf shoes, golf gloves, golf gear and golf apparel. The demand for golf-related products in general, and golf balls in particular, is directly related to the number of golf participants and the number of rounds of golf being played by these participants. WhileThe roundsgame of play had been relatively stable for years, the game experienced an approximate 8% global increase in rounds in both 2020 and 2021 as dedicated golfers took full advantage of favorable weather, hybrid work schedules and an increase in discretionary time due to the circumstances attendant to the COVID-19 pandemic. Golfgolf remained in high demand in 2022 and 2023,2025, with the number of on-course golf participants in the U.S. increasing for the eighth consecutive year. Worldwide, the number of rounds played inincreased by approximately 2% compared to 2024, and by approximately 22% compared to 2019. In the U.S.U.S., approximatelywhich 16%represents andthe 20%game’s higher,largest respectively, thanmarket, the number of rounds played inincreased 2019. In 2024, the number of rounds played in the U.S. grewby approximately 2%1% compared to 2023,2024, and wereby 22%approximately higher25% compared to 2019. We anticipate that globalthe roundsnumber of golfrounds played will remain resilient in 2025,2026, driven by golferan demographics,increased number of dedicated golfers and continued participation.

Our products are recreational in nature and are therefore discretionary purchases for consumers. Consumers are generally more willing to spendmake theirdiscretionary timepurchases and money on golf andof golf products when economic conditions are favorable and when consumers feel confident and prosperous. Discretionary spending on golf and the golf products we sell is affected by consumer spending habits and many macroeconomic factors, including general business conditions, stock market prices and volatility, corporate spending, housing prices, inflation, interest rates, the availability of consumer credit, taxes and consumer confidence in future economic conditions. Consumers may reduce or postpone purchases of our products as a result of shifts in consumer spending habits as well as during periods when economic uncertainty increases, disposable income is lower, or during periods of actual or perceived unfavorable economic conditions.

Golf is a recreational activity that requires both time and money.financial resources. The golf industry has historically been principally driven by theadults age cohort ofaged 30 years and above, above—primarily “gen x-ers,” “baby boomers,” “millennials”millennials, and, increasingly, “gen z” —who have the time and moneycapacity to engageparticipate consistently in the sport. We believe that the percentage of women golfers will continue to grow, as a higher percentage of new golfers in recent years have been women. Beyond the gen x and baby boomer generations,cohorts, promising developments in golf include thea generational shift resultingin fromgolfer demographics fueled by millennial and gen z golfers making their marks at both professional and amateur levelslevels, andas thewell as a notable rise in junior participation among players ages 6–17. The sport’s demographic base is further broadening, supported by a sustained increase in thewomen numberparticipating of juniors (ages 6-17) who playin golf in recent years.

We generally launch new Titleist golf ball models on a two-year cycle. In general, in odd-numbered years, we launch our premium performance models, Pro V1 and Pro V1x, in the first quarter and in even-numbered years, we launch our premium performance AVX model and most performance models in the first and second quarters. For new golf ball models, sales occur at a higher rate in the year of the initial launch than in the second year. Given the Pro V1 franchise is our highest volume and our highest priced product in this product category, we typically have higher net sales of Titleist golf balls in odd-numbered years.

•drivers and fairways in the third or fourthsecond quarter of even‑numbered years, which typically results in an increase in sales of drivers and fairways duringin suchthe quartersensuing months because retailers take on initial supplies of these products as stock inventory,inventory as well as increase custom fitting activity of these new products, with increased sales generatedcontinuing by such new products continuinginto the following spring and summer of odd‑numbered years;

Net sales generated in regions outside of the United States represented approximatelyover 40-50%40% of our net sales in each of the three years ended December 31, 2024.2025. Substantially all of these net sales were generated in the applicable local currency, which include, but are not limited to, the Japanese yen, the Korean won, the British pound sterling, the euro and the Canadian dollar. In contrast, substantially all of the purchases of inventory, raw materials or components by subsidiaries in these regions are made in U.S. dollars. For each of the three years ended December 31, 2024,2025, approximately 80% of our cost of goods sold incurred by our subsidiaries in regions outside of the United States were denominated in U.S. dollars. Because these subsidiaries incur substantially all of their cost of goods sold in currencies that are different from the currencies in which they generate substantially all of their sales, we are exposed to transaction risk attributable to fluctuations in such exchange rates, which can impact the gross profit of these subsidiaries.

Because our consolidated accounts are reported in U.S. dollars, we are also exposed to currency translation risk when we translate the financial results of our consolidated subsidiaries from their local currency into U.S. dollars. In each of the three years ended December 31, 2024,2025, over 40% of our net sales and approximatelyover 30%25% of our total operating expenses (which amounts represent substantially all of the operating expenses incurred by our subsidiaries in regions outside of the United States) were denominated in foreign currencies. Fluctuations in foreign currency exchange rates may positively or negatively affect our reported financial results and can significantly affect period‑over‑period comparisons. A strengthening of the U.S. dollar relative to our foreign currencies could materially adversely affect our business, financial condition and results of operations.

(1) For the year ended December 31, 2025, includes $13.7 million related to the VBR program. For the year ended December 31, 2024, includes $18.0 million related to the optimization of our supply chain optimization.chain.

(2) For the years ended December 31, 2025, 2024 and 2023,2023 includes $10.5 million, $11.0 million and $1.9 millionmillion, respectively, related to our information technology optimization.

(3) For the years ended December 31, 2024 and 2023, includes $3.4 million and $10.3 millionmillion, respectively, related to our distribution optimization.

(4) For the year ended December 31, 2025, includes a non-cash gain of $20.9 million related to the deconsolidation of Lionscore, amortization expense of $2.4 million related to capitalized implementation costs for cloud computing arrangements, as well as pension settlement costs of $1.3 million related to lump-sum distributions to participants in our defined benefit plans as a result of the VBR program. For the year ended December 31, 2024, includes the non-cash benefit of $17.7 million associated with the PTO Policy Change. In addition, the years ended December 31, 2025, 2024 and 2023, include other gains, losses or costs added back for purposes of calculating Adjusted EBITDA as defined in our credit agreement.

For the year ended December 31, 2024,2025, net sales increased 3.2%,4.1%, or 3.9%4.2% on a constant currency basis, compared to the year ended December 31, 2023,2024. primarilyThe increase was driven by higher net sales volumes in Titleist golf equipmentequipment, andprimarily Golfdue gear andto higher average selling prices in FootJoygolf clubs and higher sales volumes in golf wearballs, andas well as higher net sales in Golf gear, primarily due to higher average selling prices across all product categories. These increases were partially offset by alower net sales volume decline in FootJoy golf wear.wear, Aprimarily declinedue to lower sales volumes in footwear, partially offset by higher average selling prices across all product categories. An increase in net sales volume of products that are not allocated to one of our three reportable segments also contributed to the change in net sales.

The increase in net sales in the United States was primarily duedriven toby increases of $74.9 million in Titleist golf equipment,equipment $13.5of $60.8 million and in Golf gear andof $6.8$9.4 million in FootJoy golf wear.million. The increase in Titleist golf equipment was primarily driven by higher average selling prices in golf clubs and higher sales volumes of our SM10 wedges, GT drivers and fairways and2025 Pro V1 golf ball models, GT hybrids and Proour V1xlatest golfgeneration balls,T-Series irons. These increases were partially offset by lower sales volumes of hybrids, which are in their second model year.year drivers, wedges, and performance model golf balls. The increase in Golf gear was primarily duedriven to higher sales volumes in travel product categories. The increase in FootJoy golf wear was primarily due to higher sales volumes in footwear andby higher average selling prices across all product categories. An increase in apparel, partially offset by lowernet sales volumesof products that are not allocated to one of our three reportable segments also contributed to the change in golfnet gloves.sales.

Net sales in regions outside of the United States decreasedincreased 2.1%,2.5%, or 0.3%2.7% on a constant currency basis, primarilydriven dueby to a net sales decreaseincreases in Japan,EMEA and Rest of World, partially offset by increases in all other regions. The decreasedecreases in Japan wasand dueKorea. toIn lowerEMEA netand sales in FootJoy golf wear, primarily footwear, in products that are not allocated to oneRest of ourWorld, threethe reportable segments and in Golf gear. These decreasesincreases were partially offsetdriven by higher net sales inacross Titleistall golfreportable equipment,segments. driven by golf clubs. In EMEA, theAn increase was due to higher net sales in Titleist golf equipment, partially offset by lower net sales in FootJoy golf wear, primarily footwear, and lower net sales of products that are not allocated to one of our three reportable segments.segments Thealso increasecontributed to the change in net sales in Rest of WorldWorld. In Japan, the decrease was primarily due to lower net sales in FootJoy golf wear, largely in the footwear and apparel product categories, partially offset by higher net sales in Titleist golf equipment, primarilydriven by golf clubs,balls. partiallyIn offsetKorea, bythe decrease was largely due to lower net sales in FootJoy golf wear, primarily footwear. In Korea,in the increasefootwear wasand primarilyapparel dueproduct tocategories, and Golf gear, partially offset by higher net sales in Titleist golf equipment, primarilylargely due to golf clubs, largely offset by lower net sales in FootJoy golf wear, primarily apparel.clubs.

Gross profit increased $67.7$33.5 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. Gross margin increasedwas 47.7% for the year ended December 31, 2025 compared to 48.3% for the year ended December 31, 2024 compared to 47.0% for the year ended December 31, 2023.2024. The increase in gross profit was primarily resultedthe fromresult of increases in Golf gear of $13.3 million, Titleist golf equipment of $55.1 million, Golf gear of $10.6$10.4 million and FootJoy golf wear of $5.6$4.2 million. AThe decreaseincrease in Golf gear was primarily driven by the higher average selling prices discussed previously and lower distribution costs. The increase in Titleist golf equipment was primarily due to the higher sales volumes and higher average selling prices discussed previously, partially offset by higher manufacturing costs. The increase in FootJoy golf wear was primarily driven by the higher average selling prices and a favorable shift in product mix, partially offset by lower sales volumes discussed previously. An increase in gross profit of products not allocated to one of our three reportable segments also contributed to the change in gross profit. ThisIn increaseaddition, these changes in gross profit was primarily due toinclude the salesincremental volumetariff changescosts discussed previouslypreviously, andas increasedwell grossas margin,the primarily driven by a favorable product mix shift. Gross profit includes a non-cash benefitimpact of the $6.6 million benefit recognized during the year ended December 31, 2024 related to the PTO Policy Change.

Research and Developmentdevelopment ("R&D") expenses increased $3.0$8.7 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023. The increase was2024, primarily theas a result of increases in employee-relatedadditional expenses and additional costs to support next generation product introductions, offsetas inwell partas bythe aimpact of the $2.0 million non-cashbenefit benefitrecognized during the year ended December 31, 2024 related to the PTO Policy Change.

Interest expense, net increased $11.3$5.7 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023. This increase was2024, primarily due to an increase in borrowings, asoffset wellin aspart anby increasea decrease in interest rates for the year ended December 31, 2024.rates.

Income tax expense increased $4.8$4.5 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. Our effective tax rate ("ETR") was 21.9% for the year ended December 31, 2025 compared to 19.2% for the year ended December 31, 2024 compared to 17.8% for the year ended December 31, 2023.2024. The increasechange in ETR was primarily driven by changes in our jurisdictional mix of earningsearnings, as well as changesa inreduced ourincome valuationtax allowance.benefit related to the U.S. deduction of foreign-derived intangible income.

Net sales in our Titleist golf equipment segment increased 6.2%,5.9%, or 6.9%5.8% on a constant currency basis, for the year ended December 31, 20242025 compared to the year ended December 31, 2023. The increase was2024, primarily driven by higher average selling prices in golf clubs and higher sales volumes of our SM102025 wedgesPro V1 golf ball models. In addition, higher sales volumes of our T-Series irons launched in the third quarter of 2025 and GT hybrids launched in the first quarter of 20242025 andwere ourmore GT drivers and fairways launched in the third quarter of 2024, as well as higher sales volumes of Pro V1 and Pro V1x and our latest generation AVX, Tour Soft and TruFeel models launched in the first quarter of 2024. This increase was partiallythan offset by lower sales volumes of hybridssecond model year drivers, wedges and irons.performance model golf balls.

Operating income in our Titleist golf equipment segment increaseddecreased $23.1$29.0 million, or 9.2%,10.6%, compared to the prior year period. The increasedecrease in operating income resulted from higher grossoperating profitexpenses of $55.1$39.4 million,million partially offset by higheran operatingincrease expensesin gross profit of $32.4$10.4 million. The increase in gross profit was primarily duedriven toby the higher sales volumes and higher average selling prices as discussed previously,previously. This increase was partially offset by incremental tariff costs and higher manufacturing costs, as well as athe non-cash benefitimpact of the $5.8 million benefit recognized during the year ended December 31, 2024 related to the PTO Policy Change. Higher operating expenses were primarily a result of increases of $10.1$15.8 million in bothselling expense, $11.4 million in advertising and promotionalpromotion expensesexpenses, and selling expense, as well as increases of $9.8 million in administrative expense and $2.4$7.4 million in research and development expenses, primarily driven by new product launches and professional$6.9 tourmillion expenses,in asadministrative well as higher employee and information technology related expenses.expense. These operating expense changes include athe non-cash benefitimpact of the $7.7 million benefit recognized during the year ended December 31, 2024 related to the PTO Policy Change.

Net sales in our FootJoy golf wear segment decreased 2.6%,0.8%, or 2.0%0.7% on a constant currency basis, for the year ended December 31, 20242025 compared to the year ended December 31, 2023. The decrease was primarily2024, due to lower sales volumesvolumes, acrossprimarily allin product categories,footwear, partially offset by higher average selling prices inacross apparelall andproduct golf gloves.categories.

Operating income in our FootJoy golf wear segment increased $7.2$3.5 million, or 40.4%14.0% compared to the prior year period. The increase in operating income resulted from higher gross profit of $5.6$4.2 millionmillion, andpartially loweroffset by higher operating expenses of $1.6$0.7 million. The increase in grossGross profit wasincreased primarily dueas toa result of the higher average selling prices and a favorable shift in apparelproduct andmix golfdiscussed gloves and lower distribution expense,previously, partially offset by lower sales volumes acrossas alldiscussed product categoriespreviously and unfavorableincremental manufacturingtariff overheadcosts. absorption. LowerHigher operating expenses were primarily thea result of aan decreaseincrease of $3.7$1.7 million in selling expense, largely due to lower retail commission expense in Korea, partially offset by ana increasedecrease of $2.2$1.0 million in administrativeadvertising expense.and promotion expenses. These operating expense changes include athe non-cash benefitimpact of the $2.6 million benefit recognized during the year ended December 31, 2024 related to the PTO Policy Change.

Geopolitical Developments and Macroeconomic Factors: The global economy continues to experience elevated levels of volatility and uncertainty, including within thecommodity commodityand energy markets, driven by a combination of geopolitical developments and macroeconomic factors. Increased U.S. tariffs have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions, which have further contributed to disruptions in global capital markets and global supply chains. As a result, we have incurred and may continue to incur incremental costs in connection with importing raw materials, component parts and finished goods. In addition, geopolitical developments, inflationary pressures and other macroeconomic factors have resulted and may continue to result in increased energy, freight, and distribution costs. We have implemented various strategies to mitigate the effect of these incremental costs on our gross profit and gross margin.

Current uncertainties around geopolitical developments and macroeconomic factors and their effects on trading relationships may further affect the costs of our imported raw materials, components parts and finished goods, as well as increaseenergy, freight, and distribution costs. In addition, increased market volatility and currency exchange rate fluctuations, whichfluctuations may influence our hedging strategy. In addition, theseThese factors, and any changes to these factors, could have a material adverse effect on consumer behavior and on our future revenues and overall profitability. We continue to monitor the economic effects of these developments and evaluate opportunities to mitigate their related impacts.

Information Technology Optimization: During 2024, we began a multi-year implementation of a new global cloud-based enterprise resource planning ("ERP") platform as part of our plans to integrate our operations and enhance our supply chain and finance capabilities. We expect that the new global ERP platform will enable further operating efficiencies and support the Company’s digital transformation. Additional implementation activities are expected to continue in phases by geographic region over the next several years. The global ERP platform implementation spending comprises both capitalized costs and operating expenses. The operating expenses represent costs directly related to the deployment of the global ERP platform above the normal ongoing level of spending on information technology to support our operations. In connection with this strategic initiative, we incurred expenses of $6.9 million and $3.4 million, during the three months ended MarchJune 31,30, 2026 and 2025, werespectively, incurredand expenses of $3.0$9.9 million and $2.6$6.0 million, during the six months ended June 30, 2026 and 2025, respectively. In addition, we invested $5.7$13.3 million and $8.0$21.2 million for capitalized implementation costs associated with the integration, configuration and customization of this new global ERP platform during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We anticipate spending approximately $30$35 million to $35$40 million in total for the full year related to the deployment of the new global ERP platform.

________________________ (1) For the three and six months ended MarchJune 31, 2026 and30, 2025, includes $3.0$6.4 million and $2.6 million, respectively, related to ourthe informationVBR technology optimization.program.

(23) For the threesix months ended MarchJune 31, 2026 and 2025, includes $0.5 million and $0.8 million, respectively, related to the amortization of capitalized implementation costs for cloud computing arrangements. For the three months ended March 31,30, 2025, includes a non-cash gain of $20.9 million related to the deconsolidation of Lionscore. The three and six months ended MarchJune 31,30, 2026 and 2025 also include other gains, losses or costs added back for purposes of calculating Adjusted EBITDA as defined in our credit agreement.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, net sales increased 7.1%,13.8%, or 4.8%14.2% on a constant currency basis, compared to the three months ended MarchJune 31,30, 2025. The increase was driven by higher net sales in Titleist golf equipment, primarily due to higher sales volumes in golf clubs and golf balls, and higher average selling prices in golf balls, as well as higher net sales in FootJoy golf wear and Golf gear, primarily due to higher average selling prices across all product categories. These increases were partially offset by lower net sales, on a constant currency basis,categories in FootJoyboth golf wear, primarily due to lower sales volumes in footwear, partially offset by higher average selling prices across all product categories.segments.

The increase in net sales in the United States was primarily driven by increasesan increase in Titleist golf equipment of $17.9 million and in Golf gear of $4.7 million, partially offset by a decrease in FootJoy golf wear of $2.4$59.0 million. The increase in Titleist golf equipment was primarily driven by higher sales volumes in golf clubs, including our recently introduced GTS drivers and fairways and latest generation T-Series irons, as well as higher average selling prices and sales volumes of our Pro V1 golf ball models, as well as higher sales volumes of our newly introduced SM11 wedges, latest generation T-Series irons, and performance model golf balls, partially offset by lower sales volumes of our second model year hybrids, drivers, fairways, and Scotty Cameron putters. The increase in Golf gear was primarily driven by higher average selling prices across all product categories and higher sales volumes in golf bags. The decrease in FootJoy golf wear was primarily due to lower sales volumes, partially offset by higher average selling prices in apparel.models.

Net sales in regions outside the United States increased 10.2%,12.4%, or 4.5%13.3% on a constant currency basis, due to increases across all regions. In EMEA, the increase was primarily due to higher net sales in Titleist golf equipment, driven by increasesgolf in EMEA, Rest of World and Japan, partially offset by a decrease in Korea.clubs. In EMEA and Rest of World, the increasesincrease were primarilywas driven by higher net sales across all reportable segments. In Japan, the increase was drivendue byto higher net sales in Titleist golf equipment, mainly golf clubs.clubs, Inpartially Korea,offset the decrease was primarily due toby lower net sales in all reportable segments, as well asof products that are not allocated to one of our three reportable segments. In Korea, the increase, on a constant currency basis, was primarily due to higher net sales in Titleist golf equipment, mainly golf clubs.

Gross profit increased $18.1$91.5 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. Gross margin wasincreased 47.2%to 54.4% for the three months ended MarchJune 31,30, 2026 compared to 47.9%49.2% for the three months ended MarchJune 31,30, 2025. The increase in gross profit was primarily the result of increasesan increase in Titleist golf equipment of $17.7$75.6 million, as well as increases in FootJoy golf wear of $12.2 million and in Golf gear of $2.8$3.7 million. TheThese increaseincreases inwere Titleistdriven golfby equipmentIEEPA wastariff primarilyrefunds dueof to$44.5 million, as well as the higher sales volumes and higher average selling prices discussed previously. The increase in GolfTitleist geargolf was primarily driven by the higher average selling pricesequipment discussed previously.above, Thesepartially increasesoffset in gross profit also include the impact ofby higher tariff costs due to the tariff measures discussed previously. These increases were partially offset by a decrease in FootJoy golf wear of $2.8 million, primarily due to the higher tariff costs, partially offset by the higher average selling prices discussed previously.

Selling, general and administrative (“SG&A”) expenses increased $13.4$24.2 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This increase was primarily the result of increases of $4.7 million in selling expense, $4.1 million in administrative expense, and $3.4$10.0 million in advertising and promotion expenses.expenses, The$7.8 increase in selling expense was primarily due to higher employee related expenses incurred in connection with the sales volume increases discussed previously, and investments to expand our product fitting networks and to enhance consumer engagement. The increasemillion in administrative expense wasand primarily$6.5 duemillion toin higherselling information technology-related expenses.expense. The increase in advertising and promotion expenses was primarily in Titleist golf equipment to support new product launches. The increase in administrative expense was primarily due to the higher incentive compensation expenses discussed above and higher information technology-related expenses. The increase in selling expense was primarily due to the higher incentive compensation expenses discussed above and investments in our product fitting networks. SG&A expenses also include a $3.2$3.5 million increase in expense related to our information technology optimization, as well as a $3.7 million increase in foreign currency transaction losses, offset in part by a $1.8$2.5 million increase in gains on foreign exchange forward contracts. In addition, during the three months ended June 30, 2025, SG&A expenses include restructuring costs of $6.4 million related to the VBR program.

Intangible amortization expense decreased $1.3 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 due to certain intangible assets becoming fully amortized during the prior period.

OtherInterest Expense (Income),Expense, net

Income tax expense increased $2.5$20.1 million for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. Our ETR was 22.9%23.6% for the three months ended MarchJune 31,30, 2026 compared to 17.9%19.9% for the three months ended MarchJune 31,30, 2025. The change in ETR was primarily driven by changes in our jurisdictional mix of earnings, as well as a reduced income tax benefit related to the U.S. deduction of foreign-derivedforeign derived intangible income.

Net sales in our Titleist golf equipment segment increased 8.9%,20.3%, or 7.1%20.6% on a constant currency basis, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily driven by higher sales volumes of our recently launchedintroduced SM11GTS wedgesdrivers and fairways and latest generation T-Series irons, as well as higher average selling prices of our Pro V1 golf ball models and higher sales volumes of our recently launched AVX, Tour Soft and Velocity performance golf ball models, partially offset by lower sales volumes of our second model year hybrids, drivers, fairways, and Scotty Cameron putters.models.

Operating income in our Titleist golf equipment segment increased $8.4$56.1 million, or 11.1%65.3%, compared to the prior year period. The increase in operating income resulted from higheran increase of $75.6 million in gross profit of $17.7 million,profit, partially offset by higher operating expenses of $9.4$19.5 million. Themillion.The increase in gross profit was primarily driven by IEEPA tariff refunds, as well as the higher sales volumes and higher average selling prices as discussed previously, partially offset by higher tariff costs. Higher operating expenses were a result of increases of $3.8$8.2 million in advertising and promotion expenses, $3.3$5.7 million in administrative expense and $5.6 million in selling expense, and $3.1 million in administrative expense. These increases were partially offset by a decrease of $1.2 million in amortization expense, as discussed previously.

Net sales in our FootJoy golf wear segment increased 1.7%,3.1%, or decreased 1.3%3.1% on a constant currency basis, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.2025, On a constant currency basis net sales decreased largelyprimarily due to lower sales volumes in footwear, partially offset by higher average selling prices across all product categories.categories, partially offset by lower sales volumes in apparel and footwear.

Operating income in our FootJoy golf wear segment decreasedincreased $3.5$7.8 million, or 14.3%67.2% compared to the prior year period. The decreaseincrease in operating income resulted from lowerhigher gross profit of $2.8$12.2 millionmillion, andpartially offset by higher operating expenses of $0.7$4.4 million. GrossThe increase in gross profit decreasedwas primarilydue asto IEEPA tariff refunds offsetting higher tariff costs. Higher operating expenses were a result of higherincreases tariffof costs,$1.6 partiallymillion offsetin byadvertising theand higherpromotion averageexpenses, $1.3 million in selling pricesexpense discussedand previously.$1.1 million in administrative expense.

Net sales in our Golf gear segment increased 10.8%,3.8%, or 8.3%3.9% on a constant currency basis, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily driven by higher average selling prices across all product categories, as well as higher sales volumes in golf bags, partially offset by lower sales volumes in the travel product category.category and golf bags.

Operating income in our Golf gear segment increased $2.0$2.8 million, or 14.5%16.3% compared to the prior year period.period, Thelargely as a result of an increase of $3.7 million in operating income resulted from higher gross profit of $2.8 million,profit, partially offset by higher operating expenses of $0.8$0.9 million. The increase in gross profit was largely due to theIEEPA highertariff averagerefunds, selling prices, partially offset byoffsetting higher tariff costs.