Callaway 2013 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 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

F-16
The table below depicts the activity and liability balances recorded as part of the GOS Initiatives and the
Reorganization and Reinvestment Initiatives (in thousands). Amounts payable as of December 31, 2012 were included
in accrued employee compensation and benefits, and amounts payable as of December 31, 2011 were included in accrued
employee compensation and benefits and accounts payable and accrued expenses in the accompanying consolidated
balance sheets. There were no amounts payable as of December 31, 2013.
GOS Initiatives
Reorganization
and
Reinvestment
Initiatives
Workforce
Reductions
Transition
Costs
Asset
Write-offs
Workforce
Reductions Total
Restructuring payable balance, December 31, 2010 .. $ 3,268 $ 384 $ — $ — $ 3,652
Charges to cost and expense ....................................... 4,702 17,527 2,451 16,329 41,009
Non-cash items ........................................................... — — (2,451)(2,126)(4,577)
Cash payments ............................................................ (6,751)(17,856)—
(8,846)(33,453)
Restructuring payable balance, December 31, 2011... $ 1,219 $ 55 $ — $ 5,357 $ 6,631
Charges to cost and expense ....................................... (98) 21 — 1,012 935
Cash payments ............................................................ (985)(76)—
(6,316)(7,377)
Restructuring payable balance, December 31, 2012 .. $ 136 $ — $ — $ 53 $ 189
Cash Payments............................................................ $ (136)$ — $ — $ (53)$
(189)
Restructuring payable balance, December 31, 2013 .. $ —$—$—$—$—
Cost Reduction Initiatives
In July 2012, the Company announced it was undertaking additional cost-reduction initiatives (the “Cost Reduction
Initiatives”). These initiatives were designed to streamline and further simplify the Company’s organizational structure
and change the manner in which the Company approaches and operates its business. The actions taken in 2012 included
(i) a reduction in workforce that impacted all regions and levels of the organization in addition to other transition costs;
(ii) greater focus on the Company’s core product lines including licensing to third parties the rights to develop, manufacture
and distribute certain non-core product lines in the U.S. (e.g. apparel and footwear); (iii) transitioning the Company’s
integrated device business to a third-party based model; and (iv) the reorganization of the Company’s golf ball
manufacturing supply chain, including the sale and lease-back of the Company’s ball manufacturing facility in Chicopee,
Massachusetts (Note 7), and the write-off of certain patents related to the Top-Flite brand (Note 8).
These initiatives are estimated to yield approximately $60,000,000 in annualized savings. In connection with these
initiatives, the Company incurred total pre-tax charges of approximately $70,600,000, of which approximately two-thirds
resulted in non-cash charges. As of December 31, 2013, the Company has completed the Cost Reduction Initiatives and
will not incur future charges associated with these initiatives.
During the year ended December 31, 2013, the Company recognized charges of $16,556,000 in connection with
the Cost Reduction Initiatives. Amounts recognized in cost of sales, operating expenses and other income (expense)
totaled $11,149,000, $4,719,000 and $688,000, respectively, during the year ended December 31, 2013. See Note 19 for
charges absorbed by the Company’s operating segments.