Callaway 2006 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2006 Callaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

environmental engineers at its Carlsbad, California facility and a director of environmental, health and safety
matters at its Chicopee, Massachusetts facility to manage the program. The environmental and safety program
includes obtaining environmental permits as required, capturing and appropriately disposing of any waste
by-products, tracking hazardous waste generation and disposal, air emissions, safety situations, material safety
data sheet management, storm water management and recycling, and auditing and reporting on its compliance.
In addition, The Top-Flite Golf Company is a charter member in the U.S. Environmental Protection
Agency’s National Performance Track program. This program recognizes facilities that have demonstrated a
commitment to superior environmental performance and have a good record of compliance with environmental
regulations. The National Environmental Performance Track was developed by the Environmental Protection
Agency to reward companies who do more than environmental regulations require.
Historically, the costs of environmental compliance have not had a material adverse effect upon the
Company’s business. Furthermore, the Company does not believe that the monitoring and remedial obligations it
assumed in connection with the Top-Flite Acquisition will have a material adverse effect upon the Company’s
business. The Company believes that its operations are in substantial compliance with all applicable
Environmental Laws.
Intellectual Property
The Company is the owner of approximately 2,500 U.S. and foreign trademark registrations and over 2,000
U.S. and foreign patents relating to the Company’s products, product designs, manufacturing processes and
research and development concepts. Other patent and trademark applications are pending and await registration.
In addition, the Company owns various other protectable rights under copyright, trade dress and other statutory
and common laws. The Company’s intellectual property rights are very important to the Company and the
Company seeks to protect such rights through the registration of trademarks and utility and design patents, the
maintenance of trade secrets and the creation of trade dress. When necessary and appropriate, the Company
enforces its rights through litigation.
In the United States, the Company’s patents are generally in effect for up to 20 years from the date of the
filing of the patent application. The Company’s trademarks are generally valid as long as they are in use and their
registrations are properly maintained and have not been found to become generic. See below, “Certain Factors
Affecting Callaway Golf Company” contained in Item 1A.
Licensing
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 line.
7