Callaway 2011 Annual Report Download - page 34

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The Company relies on increasingly complex information systems for management of its manufacturing,
distribution, sales and other functions. If the Company’s information systems fail to perform these functions
adequately or if the Company experiences an interruption in their operation, including a breach in cyber
security, its business and results of operations could suffer.
All of the Company’s major operations, including manufacturing, distribution, sales and accounting, are
dependent upon the Company’s complex information systems. The Company’s information systems are
vulnerable to damage or interruption from:
• Earthquake, fire, flood, hurricane and other natural disasters;
• Power loss, computer systems failure, Internet and telecommunications or data network failure; and
• Hackers, computer viruses, software bugs or glitches.
Any damage or significant disruption in the operation of such systems or the failure of the Company’s
information systems to perform as expected could disrupt the Company’s business, result in decreased sales,
increased overhead costs, excess inventory and product shortages and otherwise adversely affect the Company’s
operations, financial performance and condition.
Unauthorized access to, or accidental disclosure of, consumer personally-identifiable information that the
Company collects through its websites may result in significant expenses and negatively impact our reputation
and business.
There is growing concern over the security of personal information transmitted over the Internet, consumer
identity theft and user privacy. While the Company has implemented security measures, the Company’s
computer systems may be susceptible to electronic or physical computer break-ins, viruses and other disruptions
and security breaches. Any perceived or actual unauthorized disclosure of personally-identifiable information
regarding visitors to the Company’s websites or otherwise, whether through a breach of the Company’s network
by an unauthorized party, employee theft, misuse or error or otherwise, could harm the Company’s reputation,
impair the Company’s ability to attract website visitors, or subject the Company to claims or litigation arising
from damages suffered by consumers, and adversely affect the Company’s operations, financial performance and
condition.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company and its subsidiaries conduct operations in both owned and leased properties. The Company’s
principal executive offices and domestic operations are located in Carlsbad, California. The Company has five
buildings that are utilized in its Carlsbad operations, which are comprised of corporate offices and the
Company’s performance center, as well as manufacturing, research and development, warehousing and
distribution facilities. These buildings comprise approximately 515,000 square feet of space. The Company owns
two of these buildings, representing approximately 269,000 square feet of space, and leases three properties
representing approximately 246,000 square feet of space. The lease terms expire between March 2012 and
November 2017.
The Company also owns a golf ball manufacturing plant, warehouse and offices that encompass
approximately 869,000 square feet in Chicopee, Massachusetts.
In addition, the Company leases a golf club manufacturing facility in Monterrey, Mexico comprised of
approximately 180,000 square feet. The lease term for this facility expires in February 2018.
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