Callaway 2008 Annual Report Download - page 19

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television commercials, primarily on The Golf Channel, ESPN and on network television during golf telecasts, as
well as web-based advertising. Advertising of the Company’s products outside of the United States is generally
handled by the Company’s subsidiaries, and while it is based on the Company’s global brand principles, the local
execution is tailored by each region based on their unique consumer market and lifestyles.
In addition, the Company establishes relationships with professional golfers in order to promote the
Company’s products. The Company has entered into endorsement arrangements with members of the various
professional golf tours to promote the Company’s golf club and golf ball products. For certain risks associated
with such endorsements, see below, “Certain Factors Affecting Callaway Golf Company” contained in Item 1A.
Competition
The golf club markets in which the Company competes are highly competitive and are served by a number
of well-established and well-financed companies with recognized brand names. With respect to drivers, fairway
woods and irons, the Company’s major competitors are TaylorMade, Titleist, Cobra, Cleveland (Srixon), Ping,
Mizuno, Bridgestone and Nike. For putters, the Company’s major competitors are Ping, Titleist and TaylorMade.
In addition, the Company also competes with Dunlop and Yamaha among others in Japan and throughout Asia.
The Company believes that it is the leader, or one of the leaders, in every golf club market in which it competes.
The golf ball business is also highly competitive. There are a number of well-established and well-financed
competitors, including Acushnet (Titleist and Pinnacle brands), Sumitomo Rubber Industries (Dunlop and Srixon
brands), Bridgestone (Bridgestone and Precept brands), Nike, Dick’s Sporting Goods (MaxFli brand) and others.
These competitors compete for market share in the golf ball business, with Acushnet having a market share of
over 50% of the golf ball business in the United States and the leading position in other regions outside the
United States. The Company’s golf ball products have been well received by both professional and amateur
golfers alike. The Company’s golf ball products continue to receive a significant degree of usage on the major
professional golf tours and maintained the number two position on the PGA tour in 2008. In addition, the
Company’s golf ball products remained number two in U.S. dollar market share in 2008.
For both golf clubs and golf balls, the Company generally competes on the basis of technology, quality,
performance, customer service and price. In order to gauge the effectiveness of the Company’s response to such
factors, its management receives and evaluates Company-generated market research for U.S. and foreign
markets, as well as periodic public and customized market research for U.S. markets from Golf Datatech.
For risks relating to competition, see below, “Certain Factors Affecting Callaway Golf Company” contained
in Item 1A.
Environmental Matters
The Company’s operations are subject to federal, state and local environmental laws and regulations that
impose limitations on the discharge of pollutants into the environment and establish standards for the handling,
generation, emission, release, discharge, treatment, storage and disposal of certain materials, substances and
wastes and the remediation of environmental contaminants (“Environmental Laws”). In the ordinary course of its
manufacturing processes, the Company uses paints, chemical solvents and other materials, and generates waste
by-products, that are subject to these Environmental Laws. In addition, in connection with the Top-Flite
Acquisition, the Company assumed certain monitoring and remediation obligations at the manufacturing facility
in Chicopee, Massachusetts.
The Company adheres to all applicable Environmental Laws and takes action as necessary to comply with
these laws. The Company maintains an environmental and safety program and employs two full-time
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
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