Callaway 2011 Annual Report Download - page 109

patents. Acushnet then dropped one of the patents, but expanded its infringement contentions to allege that seven
other models of the Company’s golf balls, using the Company’s patented HX surface geometry, infringe five of
the Acushnet patents asserted in its suit. Acushnet is seeking damages and an injunction to prevent alleged
infringement by the Company. The case was consolidated for discovery and pretrial with the Company’s
March 3, 2009 case against Acushnet, described above.
On February 25, 2011, the District Court in Delaware entered an order temporarily staying the 2009 cases
pursuant to the stipulation of the parties. On May 6, 2011, the parties requested, and the District Court agreed, to
temporarily continue the stay of the 2009 cases. Pursuant to an agreement between the parties, the stay remains in
place.
Corporate Trade Inc. Litigation
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 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 26, 2009, CTI removed the Company’s San Diego case to the United
States District Court for the Southern District of California. On March 1, 2010, the San Diego case was
transferred to the Southern District of New York where it was consolidated with the New York case. On
January 17, 2012, the parties entered into a settlement agreement resolving all disputes; the case was dismissed
on January 25, 2012.
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 7 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, 2011 are as follows (in thousands):
2012 .............................................................................. $14,059
2013 .............................................................................. 6,318
2014 .............................................................................. 5,078
2015 .............................................................................. 3,633
2016 .............................................................................. 2,137
Thereafter ......................................................................... 1,896
$ 33,121
Rent expense for the years ended December 31, 2011, 2010 and 2009 was $22,318,000, $13,967,000 and
$13,567,000, respectively.
Unconditional Purchase Obligations and Other Contractual 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, 2011, the Company has
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