Callaway 2004 Annual Report Download - page 99

CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
other documentation or that are undocumented except for an invoice. Such unconditional purchase obligations
are generally outstanding for periods less than a year and are settled by cash payments upon delivery of goods
and services and are not reÖected in this total. Future purchase commitments as of December 31, 2004 are as
follows:
(In thousands)
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 38,357
2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26,405
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,045
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18,750
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,750
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,217
$121,524
Other Contingent Contractual Obligations
During its normal course of business, the Company has made certain indemnities, commitments and
guarantees under which it may be required to make payments in relation to certain transactions. These include
(i) intellectual property indemnities to the Company's customers and licensees in connection with the use,
sale and/or license of Company products, (ii) indemnities to various lessors in connection with facility leases
for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers
pertaining to claims based on the negligence or willful misconduct of the Company and (iv) indemnities
involving the accuracy of representations and warranties in certain contracts. In addition, the Company has
made contractual commitments to each of its oÇcers and certain other employees providing for severance
payments upon the termination of employment. The Company also has consulting agreements that provide for
payment of nominal fees upon the issuance of patents and/or the commercialization of research results. The
Company has also issued a guarantee in the form of a standby letter of credit as security for contingent
liabilities under certain workers' compensation insurance policies. The duration of these indemnities,
commitments and guarantees varies, and in certain cases, may be indeÑnite. The majority of these
indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future
payments the Company could be obligated to make. Historically, costs incurred to settle claims related to
indemnities have not been material to the Company's Ñnancial position, results of operations or cash Öows. In
addition, the Company believes the likelihood is remote that material payments will be required under the
commitments and guarantees described above. The fair value of indemnities, commitments and guarantees
that the Company issued during 2004 was not material to the Company's Ñnancial position, results of
operations or cash Öows.
Employment Contracts
The Company has entered into employment contracts with each of the Company's oÇcers. These
contracts generally provide for severance beneÑts, including salary continuation, if employment is terminated
by the Company for convenience or by the oÇcer for substantial cause. In addition, in order to assure that the
oÇcers would continue to provide independent leadership consistent with the Company's best interests in the
event of an actual or threatened change in control of the Company, the contracts also generally provide for
certain protections in the event of such a change in control. These protections include the extension of
employment contracts and the payment of certain severance beneÑts, including salary continuation, upon the
termination of employment following a change in control. The Company is also generally obligated to
reimburse such oÇcers for the amount of any excise taxes associated with such beneÑts.
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