Callaway 2012 Annual Report Download - page 106

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, 2012,
are as follows (in thousands):
2013 .............................................................................. $50,097
2014 .............................................................................. 24,459
2015 .............................................................................. 3,363
2016 .............................................................................. 893
2017 .............................................................................. 406
Thereafter .......................................................................... —
$79,218
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 product or trademarks, (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 addition, the Company has consulting agreements that provide for payment of nominal fees upon the
issuance of patents and/or the commercialization of research results. The Company has also issued guarantees in
the form of standby letters of credit of $3,265,000 as of December 31, 2012.
The duration of these indemnities, commitments and guarantees varies, and in certain cases, may be
indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on
the maximum amount of future payments the Company could be obligated to make. Historically, costs incurred
to settle claims related to indemnities have not been material to the Company’s financial position, results of
operations or cash flows. In addition, the Company believes the likelihood is remote that material payments
under the commitments and guarantees described above will have a material effect on the Company’s financial
condition. The fair value of indemnities, commitments and guarantees that the Company issued during the year
ended December 31, 2012 was not material to the Company’s financial position, results of operations or cash
flows.
Employment Contracts
In addition, the Company has made contractual commitments to each of its officers and certain other
employees providing for severance payments, including salary continuation, upon the termination of employment
by the Company for convenience or by the officer for substantial cause. In addition, in order to assure that the
officers would continue to provide independent leadership consistent with the Company’s best interest, the
contracts also generally provide for certain protections in the event of a change in control of the Company. These
protections include the payment of certain severance benefits, such as salary continuation, upon the termination
of employment following a change in control.
Note 14. Capital Stock
Common Stock and Preferred Stock
As of December 31, 2012, the Company has an authorized capital of 243,000,000 shares, $0.01 par value, of
which 240,000,000 shares are designated common stock, and 3,000,000 shares are designated preferred stock. Of
the preferred stock, 240,000 shares are designated Series A Junior Participating Preferred Stock and 417,639
F-30