Callaway 2013 Annual Report Download - page 91

F-21
$1,046,000, $1,569,000 and $1,531,000, respectively, of this deferred gain in general and administrative expenses. The
amortization of the deferred gain is offset by rent expense over the term of the leases which expire in March 2016.
Note 8. Goodwill and Intangible Assets
In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” the Company’s goodwill and certain
intangible assets are not amortized, but are subject to an annual impairment test. The following sets forth the intangible
assets by major asset class:
Useful
Life
(Years)
December 31, 2013 December 31, 2012
Gross
Accumulated
Amortization
Net Book
Value Gross
Accumulated
Amortization
Net Book
Value
(In thousands) (In thousands)
Indefinite-lived:
Trade name, trademark
and trade dress and
other......................... NA $ 88,590 $ — $ 88,590 $ 88,590 $ — $ 88,590
Amortizing:
Patents ......................... 2-16 31,581 31,287 294 31,581 31,022 559
Developed technology
and other .................. 1-9 7,961 7,944 17 7,961 7,921 40
Total intangible assets ........ $128,132 $ 39,231 $ 88,901 $ 128,132 $ 38,943 $ 89,189
Aggregate amortization expense on intangible assets was approximately $288,000, $3,198,000 and $3,979,000 for
the years ended December 31, 2013, 2012 and 2011, respectively. Amortization expense related to intangible assets at
December 31, 2013 in each of the next five fiscal years and beyond is expected to be incurred as follows (in thousands):
2014........................................................................................................................................................................ $ 68
2015........................................................................................................................................................................ 51
2016........................................................................................................................................................................ 51
2017........................................................................................................................................................................ 51
2018........................................................................................................................................................................ 51
Thereafter ............................................................................................................................................................... 39
$ 311
In September 2012, in connection with the Company’s Cost Reduction Initiatives (see Note 3), the Company
transitioned its integrated device business to a third-party based model. As a result, the Company performed an impairment
analysis and determined that the discounted expected cash flows from the sales of uPro GPS devices were less than the
carrying values of the intangible assets and goodwill associated with the uPlay, LLC acquisition, which was completed
in December 2008. This analysis resulted in the recognition of impairment charges of $4,527,000 and $629,000 to write-
off amortizing intangible assets and goodwill, respectively, of which $4,324,000 was recognized in cost of sales and
$832,000 was recognized in operating expenses in the accompanying consolidated statement of operations for the year
ended December 31, 2012.
In 2012 and 2011, the Company recorded impairment charges of $4,572,000 and $5,413,000, respectively, related
to the trade names and trademarks included in non-amortizing intangibles that were associated with the Top-Flite and
Ben Hogan brands. These charges were recorded in general and administrative expenses in the accompanying consolidated
statements of operations for the years ended December 31, 2012 and 2011.
During 2012, the Company sold certain assets related to the Top-Flite brand, including world-wide trademarks and
service marks for net cash proceeds of $19,900,000, in addition to the Ben Hogan brand including trademarks, service
marks and certain other intellectual property for net cash proceeds of $6,961,000. The net book value of the Top-Flite
and Ben Hogan assets totaled $20,244,000, which resulted in the recognition of a pre-tax net gain of $6,602,000 in general
and administrative expenses in the accompanying consolidated statement of operations in 2012.