Callaway 2014 Annual Report Download - page 91

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F-23
Note 10. Non-Controlling Interests
In July 2013, the Company terminated its Golf Ball Manufacturing and Supply Agreement and certain ancillary
agreements with Qingdao Suntech Sporting Goods Limited Company ("Suntech"). As a result, during the year ended
December 31, 2013, the Company recognized charges of $5,579,000, the majority of which were related to the write-off of
certain manufacturing equipment and inventory located at the Suntech manufacturing facility, and were recognized in cost of
sales within the Company's golf balls operating segment.
Due to the nature of the arrangement, as well as the controlling influence the Company had in the Suntech operations
through July 2013, the Company was required to consolidate the financial results of Suntech in its consolidated financial
statements in accordance with ASC Topic 810, “Consolidations.” For the year ended December 31, 2012, non-controlling
interest related to Suntech in the consolidated statements of shareholders’ equity included net profits of $259,000. The Company
deconsolidated the financial results of Suntech in 2013 as a result of its termination of the Golf Ball Manufacturing Supply
Agreement.
Suntech is a wholly-owned subsidiary of Suntech Mauritius Limited Company (“Mauritius”). The Company had a loan
agreement with Mauritius in order to provide working capital for Suntech, under which the Company loaned Mauritius a total
of $3,200,000. At December 31, 2012, $1,788,000 of the loan balance remained outstanding in other long-term assets in the
accompanying consolidated balance sheet. As of December 31, 2013, the Company finalized an Agreement Regarding
Settlement and Mutual Release, which allowed the Company to offset the remaining loan balance with outstanding accounts
payable, resulting in a net charge of $65,000.