Callaway 2004 Annual Report Download - page 84

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CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 6. Goodwill and Intangible Assets
EÅective January 1, 2002, the Company adopted SFAS No. 142, ""Goodwill and Other Intangible
Assets.'' As a result of adopting SFAS No. 142, the Company's goodwill and certain intangible assets are no
longer amortized, but are subject to an annual impairment test. The following sets forth the intangible assets
by major asset class:
December 31, 2004 December 31, 2003
Useful
Life Accumulated Net Book Accumulated Net Book
(Years) Gross Amortization Value Gross Amortization Value
(In thousands)
Non-Amortizing:
Trade name, trademark and
trade dress ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $121,794 $ Ì $121,794 $120,605 $ Ì $120,605
Amortizing:
Patents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3-16 35,307 9,787 25,520 32,277 7,251 25,026
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1-9 3,080 1,226 1,854 4,386 382 4,004
Total intangible assets ÏÏÏÏÏÏÏÏÏ $160,181 $11,013 $149,168 $157,268 $7,633 $149,635
Aggregate amortization expense on intangible assets was approximately $3,380,000 for the year ended
December 31, 2004. Amortization expense related to intangible assets at December 31, 2004 in each of the
next Ñve Ñscal years and beyond is expected to be incurred as follows:
(In thousands)
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3,042
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,992
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,988
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,948
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,768
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,636
$27,374
In connection with the settlement of the Perfect Putter litigation, the Company, among other things,
acquired certain patents and other intellectual property owned by Perfect Putter. As of December 31, 2004,
the estimated value assigned to the acquired Perfect Putter intellectual property was $2,300,000. The Ñnal
valuation of the acquired intellectual property is to be determined by an independent valuation company. It is
anticipated that the Ñnal assessment will be completed during the Ñrst half of 2005 and will not diÅer
materially from the preliminary value recorded.
In accordance with SFAS No. 142, the Company has completed the annual impairment tests and fair
value analysis for goodwill and other non-amortizing intangible assets, respectively, held throughout the year.
There were no impairments or impairment indicators present and no loss was recorded during the year ended
December 31, 2004. The value of the trade names and other intangible assets acquired in connection with the
FrogTrader and Top-Flite acquisitions were determined through an independent valuation. Changes in
goodwill during the year ended December 31, 2004 consisted of $9,097,000 of goodwill added in connection
with the FrogTrader acquisition, as well as, $1,155,000 in foreign currency Öuctuations. The $2,014,000
increase in goodwill during the year ended December 31, 2003, was due entirely to foreign currency
Öuctuations.
F-19