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F-16
completed in 2011 and only nominal charges were incurred in 2012. The Company continues to maintain limited manufacturing
and distribution facilities in Carlsbad, California and Chicopee, Massachusetts.
The charges recognized under the GOS Initiatives include non-cash charges for the acceleration of depreciation on certain
golf club and golf ball manufacturing equipment and cash charges related to severance benefits and transition costs, which
consist primarily of consulting expenses, costs associated with redundancies during the start-up and training phase of the new
production facility in Monterrey, Mexico, start-up costs associated with the establishment of third-party logistics sites, travel
expenses, and costs associated with the transfer of inventory and equipment. In the aggregate through December 31, 2012,
the Company recognized total charges of $39,419,000 in connection with the GOS Initiatives. See Note 19 for charges
absorbed by the Company’s operating segments.
Reorganization and Reinvestment Initiatives
In June 2011, the Company began the implementation of certain restructuring initiatives (the “Reorganization and
Reinvestment Initiatives”) that involved (i) streamlining the Company’s organization to reduce costs, simplifying internal
processes and increasing focus on the Company’s consumers and retail partners, (ii) reorganizing the Company’s organizational
structure to place greater emphasis on global brand management and improve the effectiveness of the Company’s key initiatives
and (iii) reinvesting in brand and demand creation initiatives to drive sales growth.
In connection with these initiatives, during 2012, the Company recognized net pre-tax charges of $1,012,000, of which
$473,000 and $539,000 were recognized in cost of sales and operating expenses, respectively. In the aggregate, through
December 31, 2012, the Company incurred total pre-tax charges of $17,341,000 in connection with these initiatives.
The table below depicts the activity and liability balances recorded as part of the GOS Initiatives and the Reorganization
and Reinvestment Initiatives. Amounts payable as of December 31, 2012 were included in accrued employee compensation
and benefits, in the accompanying consolidated balance sheets. There were no amounts payable as of December 31, 2013
and 2014.
GOS Initiatives
Reorganization
and
Reinvestment
Initiatives
(In thousands)
Workforce
Reductions
Transition
Costs
Asset
Write-offs
Workforce
Reductions Total
Restructuring payable balance, December 31, 2011........ $ 1,219 $ 55 $ — $ 5,357 $ 6,631
Charges to cost and expense.......................................... (98) 21 — 1,012 935
Cash payments............................................................... (985)(76)— (6,316)(7,377)
Restructuring payable balance, December 31, 2012........ $ 136 $ — $ — $ 53 $ 189
Cash Payments............................................................... $ (136)$ — $ — $ (53)$ (189)
Restructuring payable balance, December 31, 2013........ $ — $ — $ — $ — $ —
Cost Reduction Initiatives
In December 2013, the Company completed its cost reduction initiatives that were announced in July 2012 (the “Cost
Reduction Initiatives”), which streamlined and simplified the Company’s organizational structure and changed the manner in
which the Company approaches and operates its business. These initiatives included (i) a reduction in workforce that impacted
all regions and levels of the organization in addition to other transition costs; (ii) greater focus on the Company’s core product
lines, which included the transition of certain of the Company's apparel and footwear product lines to a licensing arrangement
with third parties; (iii) the transition of the Company’s GPS device business to a third-party based model; and (iv) the
reorganization of the Company’s golf ball manufacturing supply chain, including the sale and lease-back of the Company’s
ball manufacturing facility in Chicopee, Massachusetts (see Note 7).
As of December 31, 2013, the Company completed the Cost Reduction Initiatives and did not incur any additional
charges associated with these initiatives in 2014. In the aggregate through December 31, 2013, the Company recognized total
charges of approximately $70,600,000 in connection with these initiatives, of which approximately two-thirds resulted in non-
cash charges.