Callaway 2006 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 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

CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 5. Restructuring and Integration Initiatives
In September 2005, the Company began the implementation of several company-wide restructuring
initiatives designed to improve the Company’s business processes and reduce the Company’s overall expenses
(the “2005 Restructuring Initiatives”). The 2005 Restructuring Initiatives include, among other things, the
consolidation of the Callaway Golf, Odyssey, Top-Flite and Ben Hogan selling functions, as well as the
elimination or reduction of other operating expenses. The 2005 Restructuring Initiatives and estimated charges
for such initiatives are in addition to the previously reported integration of the Callaway Golf and Top-Flite
operations and the charges for such integration.
In connection with the 2005 Restructuring Initiatives, the Company committed to staff reductions that
involved the elimination of approximately 500 positions worldwide, including full-time and part-time employees,
temporary staffing and open positions. Most of the employee terminations were completed by December 31,
2005 and all such employee terminations were substantially completed by December 31, 2006. During 2005, the
Company recorded charges to cost of sales, selling expense, general and administrative expense, and research
and development expense in the aggregate amount of $8,324,000 in connection with the 2005 Restructuring
Initiatives. The Company incurred charges of $3,023,000 during 2006 related to the 2005 Restructuring
Initiatives.
The activity and liability balances recorded as part of the 2005 Restructuring Initiatives were as follows (in
thousands):
Workforce
Reductions
Facility
and Other Total
Charges to cost and expense ............................. $7,119 $ 1,205 $ 8,324
Non-cash items ........................................ — (1,024) (1,024)
Cash payments ........................................ (3,682) (181) (3,863)
Restructuring balance, December 31, 2005 .................. $3,437 $ — $ 3,437
Charges to cost and expense ............................. 2,507 516 3,023
Non-cash items ........................................ — (216) (216)
Cash payments ........................................ (3,798) (300) (4,098)
Restructuring balance, December 31, 2006 .................. $2,146 $ — $ 2,146
F-17