Callaway 2012 Annual Report Download - page 60

holder who converts its convertible notes after receiving notice of such exercise will receive a make-whole
payment in cash or common stock, as the Company may elect, with respect to the convertible notes converted.
Upon the occurrence of a change of control of the Company or a termination of trading of the common stock
of the Company, note holders will have the option to require the Company to repurchase for cash all or any
portion of such note holder’s convertible notes at a price equal to 100% of the principal amount of the
repurchased convertible notes, plus accrued and unpaid interest thereon to the repurchase date.
The convertible notes are not redeemable by the Company prior to August 15, 2015. On or after August 15,
2015, the convertible notes are redeemable in whole or in part at the option of the Company at a redemption price
equal to 100% of the principal amount of the convertible notes to be redeemed, plus accrued and unpaid interest
thereon to the redemption date.
The convertible notes contain certain covenants including payment of principal, certain repurchase
obligations and interest, obligations of the Company to convert the convertible notes, and other customary terms
as defined in the indenture relating to the convertible notes. The Company was in compliance with these
covenants as of December 31, 2012.
Share Repurchases
In November 2007, the Company’s Board of Directors authorized a share repurchase program of a
maximum cost to the Company of $100.0 million (the “November 2007 repurchase program”). Under this
program, the Company is authorized to repurchase shares of its common stock in the open market or in private
transactions, subject to the Company’s assessment of market conditions and buying opportunities. The November
2007 repurchase program supersedes all prior stock repurchase authorizations and will remain in effect until
completed or otherwise terminated by the Board of Directors
During 2012, the Company repurchased approximately 122,000 shares of its common stock under the
November 2007 repurchase program at an average cost per share of $6.40 for a total cost of $0.8 million. The
Company acquired these shares to satisfy the Company’s tax withholding obligations in connection with the
vesting and settlement of employee restricted stock unit awards. The Company’s repurchases of shares of
common stock are recorded at cost and result in a reduction of shareholders’ equity. As of December 31, 2012,
the Company remained authorized to repurchase up to an additional $72.8 million of its common stock under this
program.
Other Significant Cash and Contractual Obligations
The following table summarizes certain significant cash obligations as of December 31, 2012 that will affect
the Company’s future liquidity (in millions):
Payments Due By Period
Total
Less than
1 Year 1-3 Years 4-5 Years
More than
5 Years
Convertible notes(1) ................................. $112.5 $ — $ — $ — $112.5
Interest on convertible notes(1) ........................ 27.9 4.2 8.4 8.5 6.8
Unconditional purchase obligations(2) .................. 79.2 50.1 27.8 1.3 —
Operating leases(3) ................................. 34.0 12.9 16.4 4.4 0.3
Uncertain tax contingencies(4) ........................ 7.1 0.1 0.4 3.3 3.3
Total ........................................ $260.7 $67.3 $53.0 $17.5 $122.9
(1) In August 2012, the Company issued $112.5 million of convertible notes due August 15, 2019. Interest of
3.75% per year on the principal amount is payable semiannually in arrears on February 15 and August 15 of
each year, beginning February 15, 2013.
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