Callaway 2009 Annual Report Download - page 93

In connection with this purchase, the Company could be required to pay an additional purchase price not to
exceed $10,000,000 based on a percentage of earnings generated from the sale of uPlay products over a period of
three years ending on December 31, 2011. Any such additional purchase price paid at the end of the three year
period will be recorded as goodwill. The allocation of the aggregate acquisition costs is as follows (in thousands):
Assets Acquired:
Cash .......................................................................... $ 198
Accounts receivable .............................................................. 720
Inventory ...................................................................... 337
Property, plant and equipment ...................................................... 225
Database and technology .......................................................... 7,900
Trademarks and trade names ....................................................... 540
Non-compete agreements .......................................................... 760
Other .......................................................................... 68
Goodwill (Note 8) ............................................................... 629
Liabilities:
Current liabilities ................................................................ (1,293)
Total net assets acquired ...................................................... $10,084
The pro-forma effects of the uPlay, LLC asset acquisition would not have been material to the Company’s results
of operations for fiscal 2008 or 2007 and, therefore, are not presented.
Note 6. Restructuring and Integration Initiatives
In connection with the Company’s gross margin improvement initiatives and its actions to improve the
profitability of its golf ball business, the Company has taken actions to consolidate its golf ball operations into
other existing locations. As a result of these initiatives, in May 2008, the Company announced the closure of its
golf ball manufacturing facility in Gloversville, New York. This closure resulted in the recognition of non-cash
charges for the write-down of the manufacturing facility to its fair value and the acceleration of depreciation on
certain golf ball manufacturing equipment, and cash charges related to severance benefits and facility costs. In the
aggregate through December 31, 2009, the Company recorded pre-tax charges of $4,527,000 in connection with
the closure of this facility. The remaining liability as of December 31, 2009, represents estimated costs for certain
ongoing facility costs. In addition, the Company expects to incur additional charges of approximately $315,000 in
2010, primarily related to the costs associated with the closure of the Gloversville manufacturing facility.
The activity and liability balances recorded as part of the Company’s golf ball manufacturing consolidation
were as follows (in thousands):
Workforce
Reductions
Facility
and Other Total
Charges to cost and expense ........................................ $1,295 $ 2,959 $ 4,254
Non-cash items ................................................... — (1,798) (1,798)
Cash payments ................................................... (1,162) (890) (2,052)
Restructuring payable balance, December 31, 2008 ...................... $ 133 $ 271 $ 404
Charges to cost and expense ........................................ 5 268 273
Cash payments ................................................... (138) (417) (555)
Restructuring payable balance, December 31, 2009 ...................... $ — $ 122 $ 122
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.
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