Callaway 1999 Annual Report Download - page 37

35CALLAWAY GOLF COMPANY
NOTE 3
SELECTED FINANCIAL STATEMENT INFORMATION
(in thousands) December 31,
1999 1998
Cash and cash equivalents:
Cash, interest bearing $110,157 $41,689
Cash, non-interest bearing 2,445 3,929
$112,602 $45,618
Accounts receivable, net:
Trade accounts receivable $59,543 $83,405
Allowance for doubtful accounts (5,291)(9,939)
$54,252 $73,466
Inventories, net:
Raw materials $45,868 $102,352
Work-in-process 1,403 1,820
Finished goods 65,661 81,868
112,932 186,040
Reserve for obsolescence (14,994)(36,848)
$97,938 $149,192
Property, plant and equipment, net:
Land $12,358 $13,375
Buildings and improvements 87,910 55,307
Machinery and equipment 50,942 57,334
Furniture, computers and equipment 64,334 55,629
Production molds 22,714 17,472
Construction-in-process 5,032 52,920
243,290 252,037
Accumulated depreciation (101,076)(79,243)
$142,214 $172,794
Intangible assets:
Trade name $69,629 $69,629
Trademark and trade dress 29,841 29,841
Patents, goodwill and other 34,911 35,765
134,381 135,235
Accumulated amortization (14,238)(7,456)
$120,143 $127,779
Accounts payable and accrued expenses:
Accounts payable $11,297 $10,341
Note to related party (Note 16)6,766
Accrued expenses 35,367 18,821
$46,664 $35,928
Accrued employee compensation and
benefits:
Accrued payroll and taxes $15,303 $6,178
Accrued vacation and sick pay 4,571 4,423
Accrued commissions 1,252 482
$21,126 $11,083
NOTE 4
BANK LINE OF CREDIT AND NOTE PAYABLE
On February 12, 1999, the Company consummated the
amendment of its credit facility to increase the facility to up
to $120,000,000 (the “Amended Credit Agreement”). The
Amended Credit Agreement has a five-year term and is
secured by substantially all of the assets of the Company.
The Amended Credit Agreement bears interest at the
Company’s election at the London Interbank Offering Rate
(“LIBOR”) plus a margin or the higher of the base rate on cor-
porate loans at large U.S. money center commercial banks
(prime rate) or the Federal Funds Rate plus 50 basis points.
The line of credit requires the Company to maintain certain
minimum financial ratios, including a fixed charge coverage
ratio, as well as other restrictive covenants. As of December
31, 1999, up to $115,739,000 of the credit facility remained
available for borrowings (including a reduction of $4,261,000
for outstanding letters of credit), subject to meeting certain
availability requirements under a borrowing base formula
and other limitations.
On December 30, 1998, Callaway Golf Ball Company, a
wholly-owned subsidiary of the Company, entered into a mas-
ter lease agreement for the acquisition and lease of up to
$56,000,000 of machinery and equipment. As of December
31, 1999, the Company had finalized its lease program and
leased $50,000,000 of equipment pursuant to the master
lease agreement. This lease program includes an interim
finance agreement (the “Finance Agreement”). The Finance
Agreement provides pre-lease financing advances for the
acquisition and installation costs of the aforementioned
machinery and equipment. The Finance Agreement bears
interest at LIBOR plus a margin and is secured by the under-
lying machinery and equipment and a corporate guarantee
from the Company. During the third and fourth quarters of
1999, the Company converted the balance of this note
payable to the operating lease discussed above. As of
December 31, 1999, no amount was outstanding under this
facility.