Callaway 2009 Annual Report Download - page 112

Black Series i No. 7, and White Hot XG Sabertooth putters infringe U.S. Patent No. 4,962,927. The complaint
also alleges that the Company’s Marxman and iTrax putters infringe the alleged trade dress of plaintiff’s EZ Line
putters. The Company responded to the complaint on September 5, 2008, denying that it infringes the patent or
trade dress and has moved for summary judgment on both claims. If the Court denies summary judgment, then
the trial will commence on March 1, 2010.
On January 19, 2009, the Company filed suit in the Superior Court for the County of San Diego, case no.
37-2009-00050363-CU-BC-NC, against Corporate Trade International, Inc. (“CTI”) seeking damages for breach
of contract and for declaratory relief based on the asserted use and transfer of corporate trade credits to the
Company in connection with the purchase of assets from Top-Flite in 2003. On January 26, 2009, CTI filed its
own suit in the United States District Court for the Southern District of New York, case no. 09CV0698, asserting
claims for breach of contract, account stated and unjust enrichment, and seeking damages of approximately
$8,900,000. On February 19, 2009, the Company filed a motion to dismiss CTI’s New York case. On
February 26, 2009, CTI removed the Company’s San Diego case to the United States District Court for the
Southern District of California, and filed a motion to dismiss, stay or transfer the California action to New York.
Those motions are pending.
On June 2, 2009, the Company was sued in the United States District Court for the Eastern District of
Pennsylvania, case no. 09-2454, by Greenkeepers, Inc. and Greenkeepers of Delaware, LLC asserting that the
Company is infringing U.S. Patent number RE40,407, relating to the golf spikes used in the Company’s golf
shoes. The Company answered the complaint on June 23, 2009 denying infringement. The Company tendered the
matter to its golf spike vendor, Softspikes LLC, which has accepted the defense while reserving its rights
pursuant to an indemnity agreement between the parties. The court has not yet set a trial date.
The Company and its subsidiaries, incident to their business activities, are parties to a number of legal
proceedings, lawsuits and other claims, including the matters specifically noted above. Such matters are subject
to many uncertainties and outcomes are not predictable with assurance. Consequently, management is unable to
estimate the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance, or the
financial impact with respect to these matters. Management believes at this time that the final resolution of these
matters, individually and in the aggregate, will not have a material adverse effect upon the Company’s
consolidated financial condition.
Lease Commitments
The Company leases certain warehouse, distribution and office facilities, vehicles as well as office
equipment under operating leases. Lease terms range from 1 to 8 years expiring at various dates through
November 2017, with options to renew at varying terms. Commitments for minimum lease payments under
non-cancelable operating leases as of December 31, 2009 are as follows (in thousands):
2010 .............................................................................. $ 7,943
2011 .............................................................................. 3,984
2012 .............................................................................. 2,475
2013 .............................................................................. 1,588
2014 .............................................................................. 1,374
Thereafter .......................................................................... 4,199
$21,563
Rent expense for the years ended December 31, 2009, 2008 and 2007 was $13,567,000, $12,985,000 and
$9,818,000, respectively.
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