Callaway 1999 Annual Report Download - page 38

36 CALLAWAY GOLF COMPANY
NOTE 5
ACCOUNTS RECEIVABLE SECURITIZATION
The Company’s wholly-owned subsidiary, Callaway Golf Sales
Company, sells trade receivables on an ongoing basis to its
wholly-owned subsidiary, Golf Funding. Pursuant to an agree-
ment effective February 12, 1999 with a securitization compa-
ny (the “Accounts Receivable Facility”), Golf Funding, in turn,
sells such receivables to the securitization company on an
ongoing basis, which yields proceeds of up to $80.0million at
any point in time. Golf Funding’s sole business is the purchase
of trade receivables from Callaway Golf Sales Company. Golf
Funding is a separate corporate entity with its own separate
creditors, which in the event of its liquidation will be entitled
to be satisfied out of Golf Funding’s assets prior to any value in
Golf Funding becoming available to the Company. The
Accounts Receivable Facility expires in February 2004.
Under the Accounts Receivable Facility, the receivables
are sold at face value with payment of a portion of the pur-
chase price being deferred. As of December 31, 1999, no
amount was outstanding under the Accounts Receivable
Facility. Fees incurred in connection with the sale of accounts
receivable for year ended December 31, 1999 were $923,000
and were recorded as interest expense.
NOTE 6
GRANTOR STOCK TRUST
In July 1995, the Company established the Callaway Golf
Company Grantor Stock Trust (the “GST”). In conjunction with
the formation of the GST, the Company sold 4,000,000 shares
of newly issued Common Stock to the GST at a purchase price
of $60,575,000 ($15.14 per share). In December 1995, the
Company sold an additional 1,300,000 shares of newly issued
Common Stock to the GST at a purchase price of $26,263,000
($20.20 per share). The sale of these shares had no net impact
on shareholders’ equity. During the term of the GST, shares in
the GST may be used to fund the Company’s obligations with
respect to one or more of the Company’s non-qualified or qual-
ified employee benefit plans.
Shares owned by the GST are accounted for as a reduc-
tion to shareholders’ equity until used in connection with
employee benefits. Each period, the shares owned by the GST
are valued at the closing market price, with corresponding
changes in the GST balance reflected in capital in excess of
par value.
NOTE 7
EARNINGS PER COMMON SHARE
The schedule below summarizes the elements included in the calculation of basic and diluted earnings (loss) per common share for
the years ended December 31, 1999, 1998 and 1997.
For the years ended December 31, 1999 and 1997, 10,979,000 and 917,000 options, respectively, were excluded from the cal-
culations, as their effect would have been antidilutive. For the year ended December 31, 1998, all dilutive securities were excluded
from the calculation of diluted loss per share, as their effect would have been antidulutive.
(in thousands, except per share data) Year ended December 31,
1999 1998 1997
Net income (loss) $55,322 ($ 26,564)$132,704
Weighted-average shares outstanding:
Weighted-average shares outstanding – Basic 70,397 69,463 68,407
Dilutive securities 817 3,291
Weighted-average shares outstanding – Diluted 71,214 69,463 71,698
Earnings (loss) per common share:
Basic $0.79 ($0.38)$1.94
Diluted $0.78 ($0.38)$1.85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS