Callaway 2004 Annual Report Download - page 102

CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Long-Lived
Sales Assets
(In thousands)
2002
United States*ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $439,847 $263,706
Europe ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 136,941 16,477
JapanÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 102,624 3,791
Rest of Asia ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 58,040 1,000
Other foreign countries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 55,767 3,683
$793,219 $288,657
*Beginning with the Ñrst quarter of 2003, the Company records royalty revenue in net sales. Previously,
royalty revenue was recorded as a component of other income and prior periods have been reclassiÑed to
conform with the current period presentation.
Note 15. Licensing Arrangements
The Company from time to time licenses its trademarks and service marks to third parties for use on
products such as golf apparel, golf shoes, watches, luggage and other golf related products, such as headwear,
travel bags, golf towels and golf umbrellas. The Company has a current licensing arrangement with Ashworth,
Inc. for a complete line of Callaway Golf men's and women's apparel for distribution in the United States,
Canada, Europe, Australia, New Zealand and South Africa. The Ñrst full year in which the Company received
royalty revenue under these licensing arrangements was 2003. The Company also has a current licensing
arrangement with Sanei International Co., Ltd. (""Sanei'') for a complete line of Callaway Golf men's and
women's apparel for distribution in Asian PaciÑc markets including Japan, Korea, Hong Kong, Taiwan,
Singapore, Indonesia, Malaysia, Thailand, Vietnam, Philippines, Brunei, Myanmar and China.
In addition to apparel, the Company has also entered into licensing arrangements with (i) Tour Golf
Group, Inc. for a Callaway Golf footwear collection, (ii) Fossil, Inc. for a line of Callaway Golf watches and
clocks and (iii) TRG Accessories, LLC for a collection consisting of luggage, personal leather products and
skin protection products. The Company assumed certain license agreements Top-Flite had previously entered
into with third parties to license the use of its Top-Flite, Ben Hogan and Strata brands on apparel, souvenirs
and gifts. In 2004, the Company entered into licensing arrangements with Global Wireless Entertainment, Inc.
for the creation of golf-related software and applications for wireless handheld devices and platforms.
Note 16. Transactions with Related Parties
The Callaway Golf Company Foundation (the ""Foundation'') oversees and administers charitable giving
for the Company and makes grants to carefully selected organizations. OÇcers of the Company also serve as
directors of the Foundation and the Company's employees provide accounting and administrative services for
the Foundation. In 2004, 2003 and 2002, the Company recognized charitable contribution expense of
$920,000, $939,000 and $1,165,000, respectively, as a result of its unconditional promise to contribute such
amounts to the Foundation.
In connection with the terms of the Company's former chief executive oÇcer's separation from the
Company, the Company purchased his primary residence at a cost of $1,715,000. The purchase price was
determined based upon two independent appraisals. As of March 2005, the Company was marketing the home
and accounted for the home as a long-lived asset held for sale classiÑed as other assets.
In the latter part of 2003, the Company requested on short notice that one of its executive oÇcers
relocate to Chicopee, Massachusetts to be the President and Chief Operating OÇcer of the newly acquired
Top-Flite business. In order to assist this oÇcer with his relocation across country on such short notice (and
because under the Sarbanes-Oxley Act of 2002 the Company is prohibited from making a loan to him), the
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