Callaway 2010 Annual Report Download - page 117

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
February 2018, with options to renew at varying terms. Commitments for minimum lease payments under
non-cancelable operating leases as of December 31, 2010 are as follows (in thousands):
2011 .............................................................................. $12,488
2012 .............................................................................. 9,914
2013 .............................................................................. 4,310
2014 .............................................................................. 3,888
2015 .............................................................................. 3,561
Thereafter .......................................................................... 5,432
$39,593
Rent expense for the years ended December 31, 2010, 2009 and 2008 was $13,967,000, $13,567,000 and
$12,985,000, respectively.
Unconditional Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and
services, including purchase commitments for production materials, endorsement agreements with professional
golfers and other endorsers, employment and consulting agreements, and intellectual property licensing
agreements pursuant to which the Company is required to pay royalty fees. It is not possible to determine the
amounts the Company will ultimately be required to pay under these agreements as they are subject to many
variables including performance-based bonuses, reductions in payment obligations if designated minimum
performance criteria are not achieved, and severance arrangements. As of December 31, 2010, the Company has
entered into many of these contractual agreements with terms ranging from one to four years. The minimum
obligation that the Company is required to pay under these agreements is $88,081,000 over the next four years. In
addition, the Company also enters into unconditional purchase obligations with various vendors and suppliers of
goods and services in the normal course of operations through purchase orders or other documentation or that are
undocumented except for an invoice. Such unconditional purchase obligations are generally outstanding for
periods less than a year and are settled by cash payments upon delivery of goods and services and are not
reflected in this total. Future purchase commitments as of December 31, 2010 are as follows (in thousands):
2011 .............................................................................. $41,901
2012 .............................................................................. 22,684
2013 .............................................................................. 14,990
2014 .............................................................................. 8,506
Thereafter .......................................................................... —
$88,081
Other Contingent Contractual Obligations
During its normal course of business, the Company has made certain indemnities, commitments and
guarantees under which it may be required to make payments in relation to certain transactions. These include
(i) intellectual property indemnities to the Company’s customers and licensees in connection with the use, sale
and/or license of Company products, (ii) indemnities to various lessors in connection with facility leases for
certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining
to the goods and services provided to the Company or based on the negligence or willful misconduct of the
Company and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In
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