Callaway 2006 Annual Report Download - page 107

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CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 17. Licensing Arrangements
The Company from time to time, in exchange for a royalty fee, licenses its trademarks and service marks to
third parties for use on products such as golf apparel, watches, travel gear and eyewear. The Company has a
current licensing arrangement with Ashworth, Inc. for a complete line of Callaway Golf men’s and women’s
apparel for distribution in the United States, Canada, Europe, Australia, New Zealand and South Africa. The
Company also has a current licensing arrangement with Sanei International Co., Ltd. (“Sanei”) for a complete
line of Callaway Golf men’s and women’s apparel for distribution in Japan, Korea, China and other Asian Pacific
countries.
In addition to apparel, the Company has also licensed its trademarks to, among others, (i) Fossil, Inc. for a
line of Callaway Golf watches and clocks, (ii) TRG Accessories, LLC for a collection primarily consisting of
travel gear, (iii) Global Wireless Entertainment, Inc. for the creation of golf-related software and applications for
wireless handheld devices and platforms and (iv) MicroVision Optical, Inc. for eyewear. Prior to April, 2006, the
Company had a licensing arrangement with Tour Golf Group, Inc. (“TGG”) for a line of Callaway Golf footwear.
In April 2006, the licensing arrangement was terminated and the Company acquired certain assets of TGG. The
Company now designs and sells the Callaway Golf footwear.
Note 18. Transactions with Related Parties
In December 2006, the Company purchased the primary residence from one of its recently hired officers at a
cost of $545,000. The purchase was pursuant to the Company’s home purchase procedures as referenced in the
officer’s Employment Agreement. The purchase price was determined based upon two independent appraisals.
During December 2006, the Company was marketing the home and accounted for the home as a long-lived asset
held for sale classified as other assets. In January 2007, this residence was sold and the Company recorded a net
loss of $22,500.
In connection with the terms of a former chief executive officer’s separation from the Company, the
Company purchased his primary residence at a cost of $1,715,000. The purchase price was determined based
upon two independent appraisals. In 2005, this residence was sold and the Company recorded a gain of $6,000.
The Callaway Golf Company Foundation (the “Foundation”) oversees and administers charitable giving for
the Company and makes grants to carefully selected organizations. Officers of the Company also serve as
directors of the Foundation and the Company’s employees provide accounting and administrative services for the
Foundation. In 2006 and 2005, the Company did not contribute to the Foundation. In 2004, the Company
recognized charitable contribution expense of $920,000, as a result of its unconditional promise to contribute
such amounts to the Foundation.
F-39