Callaway 2013 Annual Report Download - page 54

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40
from its foreign subsidiaries. The Company has not, nor does it anticipate the need to, repatriate funds to the United States
to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with
its domestic debt service requirements. As such, the Company considers the undistributed earnings of its foreign
subsidiaries to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. If in the
future the Company decides to repatriate such foreign earnings, it would need to accrue and pay incremental U.S. federal
and state income tax, reduced by the current amount of available U.S. federal and state net operating loss and tax credit
carryforwards.
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 was
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.
During 2013, the Company repurchased approximately 56,000 shares of its common stock under the November
2007 repurchase program at an average cost per share of $6.50 for a total cost of $0.4 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. In February 2014, the Board of Directors canceled this program and requested that
management seek further Board approval prior to engaging in further open market transactions. The Board continued to
authorize the Company to reacquire shares in satisfaction of the Company's tax withholding obligations in connection
with the settlement of employee equity awards.
Contractual Obligations
The following table summarizes certain significant cash obligations as of December 31, 2013 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)............................................... 23.7 4.2 8.4 8.4 2.7
Capital Leases(2)..................................................................... 1.7 0.9 0.7 0.1 —
Operating leases(3) .................................................................. 33.0 13.1 13.7 5.0 1.2
Unconditional purchase obligations(4) ................................... 58.5 43.3 14.1 1.1 —
Uncertain tax contingencies(5) ............................................... 6.5 2.6 0.7 1.0 2.2
Employee incentive compensation(6) ..................................... 11.0 11.0 — — —
Other long term liabilities(7)................................................... 2.5 — 2.5 — —
Total................................................................................ $ 249.4 $ 75.1 $ 40.1 $ 15.6 $ 118.6
(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.
(2) Amounts represent future minimum lease payments. Capital lease obligations are included in other long-term
liabilities in the accompanying consolidated balance sheets.
(3) The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment under
operating leases. The amounts presented in this line item represent commitments for minimum lease payments under
non-cancelable operating leases.
(4) During the normal course of its business, the Company enters into agreements to purchase goods and services,
including purchase commitments for production materials, endorsement agreements with professional golfers and
other endorsers, employment and consulting agreements, and intellectual property licensing agreements pursuant
to which the Company is required to pay royalty fees. It is not possible to determine the amounts the Company will
ultimately be required to pay under these agreements as they are subject to many variables including performance-