Callaway 2006 Annual Report Download - page 52

Share Repurchases
In November 2005, the Company announced that its Board of Directors authorized it to repurchase shares of
its Common Stock in the open market or in private transactions, subject to the Company’s assessment of market
conditions and buying opportunities, up to a maximum cost to the Company of $50.0 million over a three year
period. In June 2006, the Company announced that the Board of Directors authorized a new $50.0 million stock
repurchase program, which remains in effect until completed or otherwise terminated by the Board of Directors.
The November 2005 combined with the June 2006 stock repurchase programs supersede all prior stock
repurchase authorizations. During 2006, the Company repurchased 3,457,000 shares of its Common Stock at an
average cost per share of $15.29. As of December 31, 2006, the Company completed the November 2005
repurchase program and is authorized to repurchase up to $47.1 million of its Common Stock under the June
2006 repurchase program.
During 2006, the Company reacquired 10,500 shares of its Common Stock at an average cost per share of
$12.86 through the withholding of shares in satisfaction of employee tax obligations related to the vesting of
Restricted Stock awards. There were no share repurchases during the fourth quarter of 2006. The Company’s
repurchases of shares of Common Stock are recorded at the average cost of the Common Stock held in treasury
and result in a reduction of shareholder’s equity.
Other Significant Cash and Contractual Obligations
The following table summarizes certain significant cash obligations as of December 31, 2006 that will affect
the Company’s future liquidity (in millions):
Payments Due By Period
Total
Less than
1 Year 1-3 Years 4-5 Years
More than
5 Years
Line of credit ..................................... $ 80.0 80.0 $ — $— $ —
Operating leases(1) ................................. 22.7 6.0 5.9 3.8 7.0
Unconditional purchase obligations(2) .................. 126.8 60.7 60.7 2.9 2.5
Deferred compensation(3) ............................ 7.2 0.5 0.8 0.4 5.5
Investment commitments (4) .......................... 2.0 2.0 — — —
Total(5) ........................................... $238.7 $149.2 $67.4 $ 7.1 $15.0
(1) The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment
under operating leases. The amounts presented in this line item represent commitments for minimum lease
payments under noncancelable operating leases and include operating leases assumed as part of the
Top-Flite Acquisition.
(2) 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. The amounts listed
approximate minimum purchase obligations, base compensation, and guaranteed minimum royalty
payments the Company is obligated to pay under these agreements. The actual amounts paid under some of
these agreements may be higher or lower than the amounts included. In the aggregate, the actual amount
paid under these obligations is likely to be higher than the amounts listed as a result of the variable nature of
these obligations. 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
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