Callaway 2003 Annual Report Download - page 64

CALLAWAY GOLF COMPANY 61
Treasury Stock
In May 2000, August 2001 and May 2002, the Company announced that its Board of Directors authorized it to repurchase its Common
Stock in the open market or in private transactions, subject to the Company’s assessment of market conditions and buying opportunities
from time to time, up to a maximum cost to the Company of $100,000,000, $100,000,000 and $50,000,000, respectively. The following
schedule summarizes the Company’s repurchase programs:
Common Stock in accordance with the terms of the trust.
Shares held by the GST are voted in accordance with voting
directions from eligible employees of the Company as specified
in the GST.
In conjunction with the formation of the GST, the Company
issued 4,000,000 shares of newly issued Common Stock to
the GST in exchange for a promissory note in the amount of
$60,575,000 ($15.14 per share). In December 1995, the
Company issued an additional 1,300,000 shares of newly
issued Common Stock to the GST in exchange for a promis-
sory note in the amount of $26,263,000 ($20.20 per share).
In July 2001, the Company issued 5,837,000 shares of
Common Stock held in treasury to the GST in exchange for
a promissory note in the amount of $90,282,000 ($15.47
per share). The issuance of these shares to the GST had no
net impact on shareholders’ equity.
For financial reporting purposes, the GST is consolidated
with the Company. The value of shares owned by the GST
are accounted for as a reduction to shareholders’ equity
until used in connection with the settlement of employee
stock option exercises and employee stock plan purchases.
Each period, the shares owned by the GST are valued at the
closing market price, with corresponding changes in the GST
balance reflected in paid-in capital. The issuance of shares by
the GST is accounted for by reducing the GST and paid-in
capital accounts proportionately as the shares are released.
Years Ended December 31,
(In thousands, except per-share data) 2003 2002 2001
Shares Average Cost Shares Average Cost Shares Average Cost
Repurchased Per Share Repurchased Per Share Repurchased Per Share
Authority Announced in May 2000 — $ — — $ — 1,022 $ 19.09
Authority Announced in August 2001 — $ — 866 $ 17.86 4,979 $ 16.98
Authority Announced in May 2002 373 $ 12.77 1,967 $ 15.75 n/a n/a
Total 373 $ 12.77 2,833 $ 16.40 6,001 $ 17.34
The Company has completed its May 2000 and August 2001
repurchase programs. As of December 31, 2003, the
Company is authorized to repurchase up to $14,269,000 of
its Common Stock under the repurchase program
announced in May 2002. The Company’s repurchases of
shares of Common Stock are recorded at average cost in
Common Stock held in treasury and result in a reduction of
shareholders’ equity.
In July 2001, the Company issued 5,837,000 shares of
Common Stock held in treasury to the Callaway Golf
Grantor Stock Trust in exchange for a promissory note in the
amount of $90,282,000. The sale of these shares had no net
impact on shareholders’ equity.
Grantor Stock Trust
In July 1995, the Company established the Callaway Golf
Company Grantor Stock Trust (the “GST”) for the purpose of
funding the Company’s obligations with respect to one or
more of the Company’s non-qualified or qualified employee
benefit plans. The GST shares are used primarily for the settle-
ment of employee stock option exercises and employee stock
plan purchases. The existence of the GST will have no impact
upon the amount of benefits or compensation that will be paid
under the Company’s employee benefit plans. The GST
acquires, holds and distributes shares of the Company’s