Callaway 2013 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2013 Callaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

18
The Company relies on complex information systems for management of its manufacturing, distribution, sales and
other functions. If the Company’s information systems fail to perform these functions adequately or if the Company
experiences an interruption in their operation, including a breach in cyber security, its business and results of operations
could suffer.
All of the Company’s major operations, including manufacturing, distribution, sales and accounting, are dependent
upon the Company’s complex information systems. The Company’s information systems are vulnerable to damage or
interruption from:
• Earthquake, fire, flood, hurricane and other natural disasters;
• Power loss, computer systems failure, Internet and telecommunications or data network failure; and
• Hackers, computer viruses, software bugs or glitches.
Any damage or significant disruption in the operation of such systems or the failure of the Company’s information
systems to perform as expected would disrupt the Company’s business, which may result in decreased sales, increased
overhead costs, excess inventory and product shortages and otherwise adversely affect the Company’s operations, financial
performance and condition.
Unauthorized access to, or accidental disclosure of, consumer personally-identifiable information that the Company
collects through its websites may result in significant expenses and negatively impact our reputation and business.
There is growing concern over the security of personal information transmitted over the Internet, consumer identity
theft and user privacy. While the Company has implemented security measures, the Company’s computer systems may
be susceptible to electronic or physical computer break-ins, viruses and other disruptions and security breaches. Any
perceived or actual unauthorized disclosure of personally-identifiable information regarding visitors to the Company’s
websites or otherwise, whether through a breach of the Company’s network by an unauthorized party, employee theft,
misuse or error or otherwise, could harm the Company’s reputation, impair the Company’s ability to attract website
visitors, or subject the Company to claims or litigation arising from damages suffered by consumers, and adversely affect
the Company’s operations, financial performance and condition.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The Company and its subsidiaries conduct operations in both owned and leased properties. The Company’s principal
executive offices and domestic operations are located in Carlsbad, California. The Company has four buildings that are
utilized in its Carlsbad operations, which are comprised of corporate offices and the Company’s performance center, as
well as manufacturing, research and development, warehousing and distribution facilities. These buildings comprise
approximately 546,000 square feet of space. The Company owns two of these buildings, representing approximately
269,000 square feet of space, and leases two properties representing approximately 277,000 square feet of space. The
Company is currently subleasing one of these two buildings comprised of 150,000 square feet. The lease terms expire
between March 2016 and November 2017.
In February 2013, the Company sold its golf ball manufacturing plant in Chicopee, Massachusetts and entered into
an agreement to lease back approximately 232,000 square feet, which the Company believes is adequate for ongoing
business. The lease term for this facility expires in February 2018.
The Company also leases a golf club manufacturing facility in Monterrey, Mexico comprised of approximately
180,000 square feet. The lease term for this facility expires in February 2018.
In addition, the Company leases a distribution center in Roanoke, Texas comprised of approximately 202,000 square
feet. The lease term for this facility expires in September 2020.
The Company owns and leases additional properties domestically and internationally, including properties in the
United States, Australia, Canada, Japan, Korea, the United Kingdom, China, Thailand and India. The Company’s