Callaway 2014 Annual Report Download - page 107

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F-39
Note 19. Segment Information
The Company has two operating segments that are organized on the basis of products, namely the golf clubs segment
and golf balls segment. The golf clubs segment consists of Callaway Golf woods, hybrids, irons and wedges and Odyssey
putters. This segment also includes golf apparel and footwear, golf bags, golf gloves, travel gear, headwear and other golf-
related accessories, in addition to royalties from licensing of the Company’s trademarks and service marks and sales of pre-
owned golf clubs. The golf balls segment consists of Callaway Golf balls that are designed, manufactured and sold by the
Company. In 2014, 2013 and 2012, the Company's top five golf club customers accounted for approximately 25%, 23% and
22% of total consolidated golf club sales, respectively, and the top five golf ball customers accounted for approximately 30%
of total consolidated golf ball sales in 2014 and 27% in 2013 and 2012.
During the first quarter of 2012, the Company completed the sale of certain assets related to the Top-Flite and Ben Hogan
brands (see Note 8). In addition, during the third quarter of 2012, the Company announced the transition of its North American
golf apparel and footwear and global GPS device businesses to a third-party licensing based model. As such, the net sales
and income before income taxes for the year ended December 31, 2013 include minimal sales of Top-Flite and Ben Hogan
golf products as well as sales of golf apparel, footwear and uPro GPS on-course measurement devices. There were no sales
recognized in 2014 related to these items. There are no significant intersegment transactions.
The table below contains information utilized by management to evaluate its operating segments.
Years Ended December 31,
2014 2013(1) 2012(1)
(In thousands)
Net sales:
Golf Clubs............................................................................................................ $ 749,956 $ 711,697 $ 695,441
Golf Balls............................................................................................................. 136,989 131,104 138,624
$ 886,945 $ 842,801 $ 834,065
Income (loss) before income tax:
Golf Clubs(2)
......................................................................................................... $ 50,891 $ 32,738 $ (60,343)
Golf Balls(2)
.......................................................................................................... 15,222 (3,472)(14,503)
Reconciling items(3) ............................................................................................. (44,474)(42,588)(43,200)
$ 21,639 $ (13,322)$
(118,046)
Identifiable assets:(4)
Golf Clubs............................................................................................................ $ 316,710 $ 374,473 $ 328,210
Golf Balls(5)
.......................................................................................................... 37,445 49,261 64,203
Reconciling items(4) ............................................................................................. 270,656 240,129 245,223
$ 624,811 $ 663,863 $ 637,636
Additions to long-lived assets:
Golf Clubs............................................................................................................ $ 9,425 $ 13,250 $ 16,347
Golf Balls............................................................................................................. 327 1,163 260
$ 9,752 $ 14,413 $ 16,607
Goodwill:
Golf Clubs............................................................................................................ $ 27,821 $ 29,212 $ 29,034
Golf Balls............................................................................................................. — — —
$ 27,821 $ 29,212 $ 29,034
Depreciation and amortization:
Golf Clubs............................................................................................................ $ 18,505 $ 21,019 $ 21,096
Golf Balls............................................................................................................. 2,731 4,524 13,315
$ 21,236 $ 25,543 $ 34,411
(1) The prior year amounts have been reclassified to reflect the Company's current year allocation methodology related to
freight revenue and costs, certain discounts and other reserves not specific to a product type. For the year ended December
31, 2013, this resulted in increases in net sales and income before income taxes of $1,043,000 and $5,054,000, respectively,