Callaway 2000 Annual Report Download - page 37

Callaway Golf Company | 37
reserves for potential credit losses, which it considers adequate to
cover any such losses.
During 2000, 1999 and 1998, approximately 46%, 42% and
38%, respectively, of the Company’s net sales were made to for-
eign customers. An adverse change in either economic conditions
abroad or the Company’s relationship with significant foreign
retailers could negatively impact the volume of the Company’s
international sales and the Company’s results of operations, cash
flows and financial position.
The Company enters into forward exchange rate contracts for
the purpose of hedging foreign exchange rate exposures on exist-
ing or anticipated transactions. In the event of a failure to honor
one of these forward contracts by one of the banks with which the
Company has contracted, management believes any loss would be
limited to the exchange rate differential from the time the con-
tract was made until the time it was compensated.
Recent Accounting Pronouncement
In September 2000, the FASB issued Statement of Financial
Accounting Standards No. 140 (“SFAS No. 140”), “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.” SFAS No. 140 replaces Statement of Financial
Accounting Standards No. 125 (“SFAS No. 125”), “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities.” It revises the standards for securitizations and other
transfers of financial assets and collateral and requires certain dis-
closures, but it carries over most the SFAS No. 125’s provisions
without reconsideration. SFAS No. 140 is effective for transactions
after March 31, 2001, but certain disclosure requirements are
effective for periods ending after December 15, 2000. The
Company does not expect that SFAS No. 140 will have any effect
on its results of operations, financial position or cash flows.
Required disclosures are presented in Note 5.
Reclassifications
In July 2000, the Emerging Issues Task Force (“EITF”) finalized its
consensus on Issue No. 00-10, “Accounting for Shipping and
Handling Revenues and Costs.” Pursuant to EITF Issue No. 00-10 and
the Securities and Exchange Commission’s position on this issue, all
amounts billed to customers for shipping and handling should be
included in “net sales” and costs incurred related to shipping and
handling should be included in “cost of goods sold.” The Company
had previously included shipping and handling revenues and costs
in “selling” expenses. The Company’s Statement of Operations for all
periods presented has been reclassified and reflects the classifica-
tion required by EITF Issue No. 00-10.
Certain other prior period amounts have been reclassified to
conform with the current period presentation.
Note 3
SELECTED FINANCIAL STATEMENT INFORMATION
(in thousands) December 31,
2000 1999
Accounts receivable, net:
Trade accounts receivable $ 65,063 $ 59,543
Allowance for doubtful accounts (6,227) (5,291)
$ 58,836 $ 54,252
Inventories, net:
Raw materials $ 56,936 $ 45,868
Work-in-process 1,293 1,403
Finished goods 83,453 65,661
141,682 112,932
Reserve for obsolescence (7,720) (14,994)
$133,962 $ 97,938
Property, plant and equipment, net:
Land $ 12,358 $ 12,358
Buildings and improvements 90,301 87,910
Machinery and equipment 60,399 50,942
Furniture, computers
and equipment 65,140 64,334
Production molds 25,610 22,714
Construction-in-process 5,766 5,032
259,574 243,290
Accumulated depreciation (124,862) (101,076)
$134,712 $142,214
Intangible assets, net:
Trade name $ 69,629 $ 69,629
Trademark and trade dress 29,841 29,841
Patents, goodwill and other 33,759 34,911
133,229 134,381
Accumulated amortization (20,405) (14,238)
$112,824 $120,143
Accounts payable and accrued expenses:
Accounts payable $ 5,552 $ 11,297
Accrued expenses 38,621 35,367
$ 44,173 $ 46,664
Accrued employee compensation
and benefits:
Accrued payroll and taxes $ 16,178 $ 15,303
Accrued vacation and sick pay 5,111 4,571
Accrued commissions 1,285 1,252
$ 22,574 $ 21,126