Callaway 2006 Annual Report Download - page 105

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CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table below contains information utilized by management to evaluate its operating segments.
2006 2005 2004
(In thousands)
Net sales
Golf Clubs ..................................... $ 803,124 $783,398 $703,227
Golf Balls ..................................... 214,783 214,695 231,337
$1,017,907 $998,093 $934,564
Income (loss) before tax
Golf Clubs(1,3) .................................. $ 101,837 $ 68,327 $ 36,806
Golf Balls(2,4) ................................... (6,396) (3,612) (16,895)
Reconciling items(5) .............................. (60,443) (50,178) (43,624)
$ 34,998 $ 14,537 $ (23,713)
Identifiable assets(6)
Golf Clubs ..................................... $ 419,212 $390,153 $388,801
Golf Balls ..................................... 152,282 154,355 107,476
Reconciling items(6) .............................. 274,453 219,990 239,460
$ 845,947 $764,498 $735,737
Goodwill
Golf Clubs ..................................... $ 30,833 $ 29,068 $ 30,468
Golf Balls ..................................... — — —
$ 30,833 $ 29,068 $ 30,468
Depreciation and amortization
Golf Clubs ..................................... $ 21,045 $ 25,935 $ 38,492
Golf Balls ..................................... 11,229 12,325 12,662
$ 32,274 $ 38,260 $ 51,154
(1) The Company’s income before provision for income taxes for golf clubs includes the recognition of
integration charges of $1,190,000, $2,485,000 and $2,782,000, and restructuring charges of $2,043,000,
$3,976,000 and $0 in 2006, 2005 and 2004, respectively.
(2) The Company’s income before provision for income taxes for golf balls includes the recognition of gross
margin initiative charges of $1,853,000 in 2006, integration charges of $2,850,000, $6,016,000 and
$17,246,000 in 2006, 2005 and 2004, respectively, and restructuring charges of $980,000, $4,348,000 and
$0 in 2006, 2005 and 2004, respectively.
(3) The Company’s income before provision for income taxes for golf clubs includes the recognition of
employee share-based compensation expense of $6,263,000 in 2006. The Company was not required to
record share-based compensation expense during 2005 and 2004. See Note 12.
(4) The Company’s income before provision for income taxes for golf balls includes employee share-based
compensation charges of $2,394,000 in 2006. The Company was not required to record compensation
expense for stock options during 2005. See Note 12.
(5) Represents corporate general and administrative expenses and other income (expense) not utilized by
management in determining segment profitability. Reconciling items include $3,912,000 and $8,472,000 of
unallocated integration and restructuring charges between the golf ball and golf club segments for 2005 and
2004, respectively. There were no unallocated integration and restructuring charges in 2006.
F-37