Callaway 2013 Annual Report Download - page 23

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9
at www.callawaygolf.com. These reports can be accessed free of charge from the Company’s website as soon as reasonably
practicable after the Company electronically files such materials with, or furnishes them to, the Commission. In addition,
the Company’s Corporate Governance Guidelines, Code of Conduct and the written charters of the committees of the
Board of Directors are available in the Corporate Governance portion of the Investor Relations section of the Company’s
website and are available in print to any shareholder who requests a copy. The information contained on the Company’s
website shall not be deemed to be incorporated into this report.
Item 1A. Risk Factors
Certain Factors Affecting Callaway Golf Company
The Company’s business, operations and financial condition are subject to various risks and uncertainties. We urge
you to carefully consider the risks and uncertainties described below, together with all of the other information in this
Annual Report on Form 10-K, including those risks set forth under the heading entitled “Important Notice to Investors
Regarding Forward-Looking Statements,” and in other documents that the Company files with the U.S. Securities and
Exchange Commission, before making any investment decision with respect to the Company’s securities. If any of the
risks or uncertainties actually occur or develop, the Company’s business, financial condition, results of operations and
future growth prospects could be adversely affected. Under these circumstances, the trading prices of the Company’s
securities could decline, and you could lose all or part of your investment in the Company’s securities.
Unfavorable economic conditions could have a negative impact on consumer discretionary spending and therefore
negatively impact the Company’s results of operations, financial condition and cash flows.
The Company sells golf clubs, golf balls and golf accessories. These products are recreational in nature and are
therefore discretionary purchases for consumers. Consumers are generally more willing to make discretionary purchases
of golf products during favorable economic conditions and when consumers are feeling confident and prosperous.
Discretionary spending is also affected by many other factors, including general business conditions, interest rates, the
availability of consumer credit, taxes, and consumer confidence in future economic conditions. Purchases of the
Company’s products could decline during periods when disposable income is lower, or during periods of actual or perceived
unfavorable economic conditions. A significant or prolonged decline in general economic conditions or uncertainties
regarding future economic prospects that adversely affect consumer discretionary spending, whether in the United States
or in the Company’s international markets, could result in reduced sales of the Company’s products, which could have a
negative impact on the Company’s results of operations, financial condition and cash flows.
A severe or prolonged economic downturn could adversely affect our customers’ financial condition, their levels of
business activity and their ability to pay trade obligations.
The Company primarily sells its products to golf equipment retailers directly and through wholly-owned domestic
and foreign subsidiaries, and to foreign distributors. The Company performs ongoing credit evaluations of its customers’
financial condition and generally requires no collateral from these customers. However, a severe or prolonged downturn
in the general economy could adversely affect the retail golf equipment market which in turn, would negatively impact
the liquidity and cash flows of our customers, including the ability of our customers to obtain credit to finance purchases
of our products and to pay their trade obligations. This could result in increased delinquent or uncollectible accounts for
some of the Company’s significant customers. A failure by the Company’s customers to pay on a timely basis a significant
portion of outstanding account receivable balances would adversely impact the Company’s results of operations, financial
condition and cash flows.
The Company has significant international sales and purchases, and unfavorable changes in foreign currency
exchange rates could significantly affect the Company’s results of operations.
A significant portion of the Company’s purchases and sales is international, and the Company conducts transactions
in approximately 19 currencies worldwide. Conducting business in such various currencies exposes the Company to
fluctuations in foreign currency exchange rates relative to the U.S. dollar.
In addition, the Company’s financial results are reported in U.S. dollars. As a result, transactions conducted in
foreign currencies must be translated into U.S. dollars for reporting purposes based upon the applicable foreign currency