Callaway 2013 Annual Report Download - page 15

1
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 apparel
and footwear, golf bags, golf gloves, headwear, towels, umbrellas, eyewear and travel gear) under the Callaway Golf,
Odyssey and Strata 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 www.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
golf apparel and footwear, prescription eyewear, golf gloves, umbrellas, and practice aids. The Company’s products are
sold in the United States and in over 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, 2013,
2012 and 2011, 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:
Years Ended December 31,
2013 2012 2011
(Dollars in millions)
Woods......................................................................... $ 256.4 30% $ 200.6 24% $ 211.2 24%
Irons............................................................................ 181.8 22% 170.8 20% 206.8 23%
Putters......................................................................... 89.6 11% 93.3 11% 88.2 10%
Golf balls .................................................................... 132.1 16% 139.6 17% 160.3 18%
Accessories and other................................................. 182.9 21% 229.8 28% 220.0 25%
Net sales ..................................................................... $ 842.8 100% $ 834.1 100% $ 886.5 100%
For a discussion regarding the changes in net sales for each product group from 2013 to 2012 and from 2012 to
2011, see below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations” contained in Item 7.
The Company’s current principal products by product group are described below:
Woods. This product category includes sales of the Company’s drivers, fairway woods and hybrid products, which
are sold under the Callaway Golf brand. These products are generally made of metal (either titanium or steel) or a