Callaway 2007 Annual Report Download - page 87

Aggregate amortization expense on intangible assets was approximately $3,341,000, $3,301,000 and
$3,045,000 for the years ended December 31, 2007, 2006 and 2005, respectively. Amortization expense related
to intangible assets at December 31, 2007 in each of the next five fiscal years and beyond is expected to be
incurred as follows (in thousands):
2008 ..................................................................... $ 3,158
2009 ..................................................................... 2,978
2010 ..................................................................... 2,838
2011 ..................................................................... 2,587
2012 ..................................................................... 2,158
Thereafter ................................................................. 5,472
$19,191
In accordance with SFAS No. 142, the Company has completed its annual impairment tests and fair value
analysis for goodwill and other non-amortizing intangible assets held throughout the year. There were no
impairments and no loss was recorded during the year ended December 31, 2007. There were no additions to
goodwill during the year ended December 31, 2007 and goodwill additions during the year ended December 31,
2006 consisted approximately of $307,000 in connection with the FrogTrader acquisition. In addition, the
goodwill balances held in foreign currencies as of December 31, 2007 and 2006 include favorable foreign
currency translation adjustments of $1,227,000 and $1,458,000, respectively.
Note 7. Financing Arrangements
The Company’s principal sources of liquidity are cash flows provided by operations and the Company’s
credit facilities in effect from time to time. The Company currently expects this to continue. The Company’s
primary line of credit is a $250,000,000 line of credit with Bank of America, N.A. and certain other lenders party
to the Company’s November 5, 2004 Amended and Restated Credit Agreement.
The Line of Credit provides for revolving loans of up to $250,000,000, although actual borrowing
availability can be effectively limited by the financial covenants contained therein. As of December 31, 2007, the
maximum amount that could be borrowed under the Line of Credit was $250,000,000, of which $35,000,000 was
outstanding at December 31, 2007. In addition, the Company had approximately $1,507,000 outstanding at
December 31, 2007 under other credit facilities.
Under the Line of Credit, the Company is required to pay certain fees, including an unused commitment fee
of between 10.0 to 25.0 basis points per annum of the unused commitment amount, with the exact amount
determined based upon the Company’s consolidated leverage ratio and trailing four quarters’ earnings before
interest, income taxes, depreciation and amortization, as well as other non-cash expense and income items
(EBITDA) (each as defined in the agreement governing the Line of Credit). Outstanding borrowings under the
Line of Credit accrue interest, at the Company’s election, based upon the Company’s consolidated leverage ratio
and trailing four quarters’ EBITDA of (i) the higher of (a) the Federal Funds Rate plus 50.0 basis points or
(b) Bank of America’s prime rate, or (ii) the Eurodollar Rate (as defined in the agreement governing the Line of
Credit) plus a margin of 50.0 to 125.0 basis points.
The Line of Credit requires the Company to meet certain financial covenants and includes certain other
restrictions, including restrictions limiting dividends, stock repurchases, capital expenditures and asset sales. As
of December 31, 2007, the Company was in compliance with the covenants and other terms of the Line of Credit,
as then applicable.
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