Callaway 2015 Annual Report Download - page 92

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F-22
shareholders, other than Providence Equity (the “Topgolf Repurchase Program”). The Company has agreed to sell
approximately 9.6% to 10.9% of its shares in Topgolf in the Topgolf Repurchase Program, which amount may vary based on
how many other existing Topgolf shareholders participate in the Topgolf Repurchase Program.
In connection with the sale of its Topgolf shares in the Topgolf Repurchase Program, the Company expects to recognize
a gain of approximately $17,377,000 to $19,696,000 in the first half of 2016, which amount will vary based on the number
of shares Topgolf ultimately repurchases from the Company. The Company's total investment in Topgolf accounted for on a
cost-basis prior to these transactions is $54,574,000, which includes $1,259,000 invested in connection with the exercise of
certain stock options in January 2016. The Company's participation in the Topgolf Repurchase Program will reduce its total
investment in Topgolf by approximately $5,674,000 to $6,431,000, to a net total investment accounted for at cost of $48,144,000
to $48,901,000.
Based upon the transactions described above, the Company estimates the fair value of its Topgolf shares to be within
the range of $230,000,000 to $240,000,000 immediately prior to the Providence Equity Investment (and prior to the Topgolf
Repurchase Program). This fair value estimate is based solely upon the valuations and pricing in the Providence Equity
Investment and related Topgolf Repurchase Program. No discount has been attributed to this fair value estimate for any
preferred terms, including any shareholder, governance or other rights provided to Providence Equity that may differ from
those held by the Company, and no premium has been attributed to this fair value estimate for any incremental value that
might otherwise apply in the case of a change in control transaction (e.g. an initial public offering or sale of Topgolf). The
Company’s Topgolf shares are illiquid and there is no assurance that the Company could sell its shares for the estimated fair
value, or at all. Further, this estimate represents the fair value as of a point in time immediately preceding the Providence
Equity Investment. The future value of the Company’s shares may differ materially from the estimated fair value. The future
fair value will be affected by many factors, including the availability of interested and willing buyers, the future performance
of the Topgolf business, Topgolf’s future capital structure, potential future dilution, and private and public equity market
valuations and market conditions. In the absence of the Providence Equity Investment, it would not have been practicable for
the Company to estimate the fair value of its Topgolf shares and there is no assurance that the Company will be able to estimate
the fair value of its Topgolf shares in the future.