Callaway 2010 Annual Report Download - page 96

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arrangement, as well as the controlling influence the Company has in the Suntech operations, the Company is
required to consolidate the financial results of Suntech in its consolidated financial statements for the years ended
December 31, 2010, 2009 and 2008, in accordance with ASC Topic 810, “Consolidations.”
Suntech is a wholly-owned subsidiary of Suntech Mauritius Limited Company (“Mauritius”). The Company
has entered into a loan agreement with Mauritius in order to provide working capital for Suntech. In connection
with this loan agreement, the Company loaned Mauritius a total of $3,200,000 of which $2,188,000 was
outstanding as of December 31, 2010. The Company recorded the loan in other long-term assets in the
accompanying consolidated balance sheets.
Note 7. Business Acquisitions
uPlay Asset Acquisition
On December 31, 2008, the Company acquired certain assets and liabilities of uPlay, LLC (“uPlay”), a
developer and marketer of GPS devices that provide accurate on-course measurements utilizing aerial imagery of
each golf hole. The Company acquired uPlay in order to form synergies from co-branding these products with the
Callaway Golf brand, promote the global distribution of these products through the Company’s existing sales
force and create incremental new business opportunities.
The uPlay acquisition was accounted for as a purchase in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 141, “Business Combinations.” Under SFAS No. 141, the estimated
aggregate cost of the acquired assets was $11,377,000, which includes cash paid of $9,880,000, transaction costs
of $204,000, and assumed liabilities of $1,293,000. The aggregate acquisition costs exceeded the estimated fair
value of the net assets acquired. As a result, the Company has recorded goodwill of $629,000, none of which is
deductible for tax purposes. The Company has recorded the fair values of uPlay’s database and technology,
trademarks and trade names, and non-compete agreements in the amounts of $7,900,000, $540,000 and
$760,000, respectively, using an income valuation approach. This valuation technique provides an estimate of the
fair value of an asset based on the cash flows that the asset can be expected to generate over its remaining useful
life. These intangible assets are amortized using the straight-line method over their estimated useful lives, which
range from 4 to 8 years.
F-18