Callaway 1999 Annual Report Download - page 45

43CALLAWAY GOLF COMPANY
Details of the one-time charge are as follows (in thousands):
Reserve Reserve
Cash/ One-Time Balance Balance
Non-Cash Charge Activity at 12/31/98 Activity(1)at 12/31/99
Elimination of Job Responsibilities $11,664 $8,473 $3,191 $3,191
Severance packages Cash 11,603 8,412 3,191 3,191
Other Non-cash 61 61
Exiting Certain Non-Core Business Activities $28,788 $12,015 $16,773 $15,394 $1,379
Loss on disposition of subsidiaries Non-cash 13,072 10,341 2,731 2,731(2)
Excess lease costs Cash 12,660 146 12,514 11,135 1,379
Contract cancellation fees Cash 2,700 1,504 1,196 1,196
Other Cash 356 24 332 332
Consolidation of Operations $13,783 $2,846 $10,937 $10,937
Loss on impairment/disposition of assets Non-cash 12,364 2,730 9,634 9,634(3)
Excess lease costs Cash 806 4 802 802(4)
Other Cash 613 112 501 501
(1) Includes reversal of reserve totaling $8,609,000, as actual amounts differed from estimates. Significant reversals are noted below in (2) through (4)
(2) Includes reversal of $6,076,000 of reserve due to the assignment of lease obligation at terms significantly more favorable than estimated at the
establishment of the reserve.
(3) Includes reversal of $1,470,000 of reserve related to disposition of two buildings at higher sales prices than estimated.
(4) Includes reversal of $491,000 of reserve due to the sublease of a facility at terms more favorable than estimated at the establishment of the reserve.
During 1999, the Company incurred charges of $1,295,000 on the disposition of building improvements eliminated during the
consolidation of manufacturing operations, as well as other charges of $671,000. These charges did not meet the criteria for accru-
al in 1998. Additionally, the Company incurred charges of $749,000 related to asset dispositions and other restructuring activities
for which reserves were not established in 1998. Future cash outlays are anticipated to be completed by July 2000.
NOTE 13
LITIGATION SETTLEMENT
In 1997, the Company settled a lawsuit brought against it and
certain officers of the Company by a former officer of the
Company with the payment of $12,000,000.
The Company filed suit against certain of its insurers and
an insurance agent seeking coverage for the costs of defend-
ing and settling the above lawsuit (the “coverage litigation”).
The insurers and the insurance agent settled with the
Company in 1998 for an amount that was not material. This
settlement was recorded in general and administrative
expenses as a reduction of legal fees.
NOTE 14
AQUISITIONS AND REORGANIZATIONS
During 1999, the Company acquired distribution rights and
substantially all of the assets from its distributor in Ireland for
$810,000. Also in 1999, the Company merged its subsidiary,
Callaway Golf Europe, S.A., with another of its subsidiaries,
Callaway Golf Europe, Ltd. and now operates in France through
a satellite office. During 1998, the Company acquired distribu-
tion rights and substantially all of the assets from its distribu-
tors in Korea, Canada, France, Belgium, Norway and Denmark,
as well as the remaining 20% interest in Callaway Golf Trading
GmbH (Note 16), the results of which are consolidated in the
results of Callaway Golf (Germany) GmbH. The aggregate pur-
chase price for these transactions was $27,229,000, excluding
the assumption and subsequent retirement of short-term debt