Callaway 2007 Annual Report Download - page 104

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Employment Contracts
The Company has entered into employment contracts with each of the Company’s officers. These contracts
generally provide for severance benefits, including salary continuation, if employment is terminated by the
Company for convenience or by the officer for substantial cause. In addition, in order to assure that the officers
would continue to provide independent leadership consistent with the Company’s best interests in the event of an
actual or threatened change in control of the Company, the contracts also generally provide for certain
protections in the event of such a change in control. These protections include the payment of certain severance
benefits, including salary continuation, upon the termination of employment following a change in control.
Note 15. Segment Information
The Company’s operating segments are organized on the basis of products and include golf clubs and golf
balls. The golf clubs segment consists primarily of Callaway Golf, Top-Flite and Ben Hogan woods, hybrids,
irons, wedges and putters as well as Odyssey putters, other golf-related accessories and royalties from licensing
of the Company’s trademarks and service marks. The golf balls segment consists primarily of Callaway Golf,
Top-Flite and Ben Hogan golf balls that are designed, manufactured and sold by the Company. There are no
significant intersegment transactions.
The table below contains information utilized by management to evaluate its operating segments.
2007 2006 2005
(In thousands)
Net sales
Golf Clubs ................................... $ 911,527 $ 803,124 $783,398
Golf Balls .................................... 213,064 214,783 214,695
$1,124,591 $1,017,907 $998,093
Income (loss) before tax
Golf Clubs ................................... $ 151,759 $ 101,837 $ 68,327
Golf Balls .................................... 902 (6,396) (3,612)
Reconciling items(1) ............................ (64,386) (60,443) (50,178)
$ 88,275 $ 34,998 $ 14,537
Identifiable assets(2)
Golf Clubs ................................... $ 413,352 $ 419,212 $390,153
Golf Balls .................................... 140,730 152,282 154,355
Reconciling items(2) ............................ 302,881 274,453 219,990
$ 856,963 $ 845,947 $764,498
Goodwill
Golf Clubs ................................... $ 32,060 $ 30,833 $ 29,068
Golf Balls .................................... — — —
$ 32,060 $ 30,833 $ 29,068
Depreciation and amortization
Golf Clubs ................................... $ 23,975 $ 21,045 $ 25,935
Golf Balls .................................... 11,351 11,229 12,325
$ 35,326 $ 32,274 $ 38,260
(1) Represents corporate general and administrative expenses and other income (expense) not utilized by
management in determining segment profitability.
(2) Identifiable assets are comprised of net inventory, certain property, plant and equipment, intangible assets and
goodwill. Reconciling items represent unallocated corporate assets not segregated between the two segments.
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