Callaway 2015 Annual Report Download - page 100

F-30
The duration of these indemnities, commitments and guarantees varies, and in certain cases, may be indefinite. The
majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of
future payments the Company could be obligated to make. Historically, costs incurred to settle claims related to indemnities
have not been material to the Company’s financial position, results of operations or cash flows. In addition, the Company
believes the likelihood is remote that payments under the commitments and guarantees described above will have a material
effect on the Company’s financial condition. The fair value of indemnities, commitments and guarantees that the Company
issued during and as of the year ended December 31, 2015 was not material to the Company’s financial position, results of
operations or cash flows.
Employment Contracts
In addition, the Company has made contractual commitments to each of its officers and certain other employees providing
for severance payments, including salary continuation, upon the termination of employment by the Company without
substantial cause or by the officer for good reason or non-renewal. In addition, in order to assure that the officers would
continue to provide independent leadership consistent with the Company’s best interest, the contracts also generally provide
for certain protections in the event of a change in control of the Company. These protections include the payment of certain
severance benefits, such as salary continuation, upon the termination of employment following a change in control.
Note 11. 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.” The Company deconsolidated the financial results of Suntech
in 2013 as a result of its termination of the Golf Ball Manufacturing Supply Agreement.
Note 12. Capital Stock
Common Stock and Preferred Stock
As of December 31, 2015, the Company has an authorized capital of 243,000,000 shares, $0.01 par value, of which
240,000,000 shares are designated common stock, and 3,000,000 shares are designated preferred stock. Of the preferred stock,
240,000 shares are designated Series A Junior Participating Preferred Stock and the remaining shares of preferred stock are
undesignated as to series, rights, preferences, privileges or restrictions.
The holders of common stock are entitled to one vote for each share of common stock on all matters submitted to a vote
of the Company’s shareholders. Although to date no shares of Series A Junior Participating preferred stock have been issued,
if such shares were issued, each share of Series A Junior Participating Preferred Stock would entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the shareholders of the Company. The holders of Series A Junior Participating
Preferred Stock and the holders of common stock shall generally vote together as one class on all matters submitted to a vote
of the Company’s shareholders. Shareholders entitled to vote for the election of directors are entitled to vote cumulatively for
one or more nominees.
Treasury Stock and Stock Repurchases
In August 2014, the Company's Board of Directors authorized a $50,000,000 share repurchase program under which
the Company is 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. The repurchases will be made consistent with the
terms of the Company's credit facility which defines the amount of stock that can be repurchased. The repurchase program
will remain in effect until completed or until terminated by the Board of Directors.
During 2015, the Company repurchased approximately 217,000 shares of its common stock under the 2014 repurchase
program at an average cost per share of $9.03, for a total cost of $1,960,000. The Company’s repurchases of shares of common