Callaway 2005 Annual Report Download - page 100

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CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Lease Commitments
The Company leases certain warehouse, distribution and office facilities, vehicles as well as office
equipment under operating leases and certain computer and telecommunication equipment under capital leases.
Lease terms range from 1 to 10 years expiring at various dates through July 2014, with options to renew at
varying terms. Commitments for minimum lease payments under non-cancelable operating leases as of
December 31, 2005 are as follows:
(In thousands)
2006 .................................................................. $ 5,650
2007 .................................................................. 3,068
2008 .................................................................. 1,151
2009 .................................................................. 184
2010 .................................................................. 25
Thereafter ............................................................. 89
$10,167
Future minimum lease payments have not been reduced by future minimum sublease rentals of $765,000
under an operating lease. Rent expense for the years ended December 31, 2005, 2004 and 2003 was $7,737,000,
$6,391,000 and $4,388,000, respectively.
Unconditional Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and
services, including purchase commitments for production materials, endorsement agreements with professional
golfers and other endorsers, employment and consulting agreements, and intellectual property licensing
agreements pursuant to which the Company is required to pay royalty fees. It is not possible to determine the
amounts the Company will ultimately be required to pay under these agreements as they are subject to many
variables including performance-based bonuses, reductions in payment obligations if designated minimum
performance criteria are not achieved, and severance arrangements. As of December 31, 2005, the Company has
entered into many of these contractual agreements with terms ranging from one to six years. The minimum
obligation that the Company is required to pay under these agreements is $111,895,000 over the next six years. In
addition, the Company also enters into unconditional purchase obligations with various vendors and suppliers of
goods and services in the normal course of operations through purchase orders or 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
reflected in this total. Future purchase commitments as of December 31, 2005 are as follows:
(In thousands)
2006 .................................................................. $ 34,362
2007 .................................................................. 30,017
2008 .................................................................. 23,213
2009 .................................................................. 18,303
2010 .................................................................. 2,400
Thereafter ............................................................. 3,600
$111,895
F-32