Callaway 2012 Annual Report Download - page 15

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PART I
Item 1. Business
Callaway Golf Company (the “Company” or “Callaway Golf”) was incorporated in California in 1982 with
the main purpose of designing, manufacturing and selling high quality golf clubs. The Company became a
publicly traded corporation in 1992, and in 1999, reincorporated in the state of Delaware. The Company has
evolved over time from a manufacturer of golf clubs to one of the leading manufacturers and distributors of a full
line of golf equipment and accessories.
Today, the Company, together with its subsidiaries, designs, manufactures and sells high quality golf clubs
(drivers, fairway woods, hybrids, irons, wedges and putters) and golf balls, and also sells golf accessories (such
as golf bags, golf gloves, headwear, towels, umbrellas and travel gear) under the Callaway Golf and Odyssey
brand names. The Company generally sells its products to retailers, directly and through its wholly-owned
subsidiaries, and to third-party distributors. The Company sells pre-owned golf products through its website,
www.callawaygolfpreowned.com. In addition, the Company sells Callaway Golf and Odyssey products direct to
consumers online through its websites shop.callawaygolf.com and www.odysseygolf.com. The Company also
licenses its trademarks and service marks in exchange for a royalty fee to third parties for use on golf related
accessories, including apparel, footwear, eyewear, rangefinders and practice aids. The Company’s products are
sold in the United States and in approximately 100 countries around the world.
Financial Information about Segments and Geographic Areas
Information regarding the Company’s segments and geographic areas in which the Company operates is
contained in Note 19 to the Notes to the Company’s Consolidated Financial Statements for the years ended
December 31, 2012, 2011 and 2010, which note is incorporated herein by this reference and is included as part of
Item 8—“Financial Statements and Supplementary Data.”
Products
The Company designs, manufactures and sells high quality golf clubs and golf balls, and designs and sells
golf accessories. The Company designs its products to be technologically advanced and in this regard invests a
considerable amount in research and development each year. The Company’s products are designed for golfers of
all skill levels, both amateur and professional, and are generally designed to conform to the Rules of Golf as
published by the United States Golf Association (“USGA”) and the ruling authority known as The R&A.
The following table sets forth the contribution to net sales attributable to the principal product groups for the
periods indicated:
Year Ended December 31,
2012 2011(1) 2010
(Dollars in millions)
Drivers, fairway woods and hybrids ........................ $200.6 24% $211.2 24% $225.2 23%
Irons ................................................. 170.8 20% 206.8 23% 223.9 23%
Putters ................................................ 93.3 11% 88.2 10% 106.3 11%
Golf balls ............................................. 139.6 17% 160.3 18% 176.6 18%
Accessories and other .................................... 229.8 28% 220.0 25% 235.7 25%
Net sales .............................................. $834.1 100% $886.5 100% $967.7 100%
(1) Certain prior period amounts have been reclassified to conform with current period presentation.
1