Callaway 2015 Annual Report Download - page 54

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Significant Obligations
The following table summarizes certain significant cash obligations as of December 31, 2015 that will affect the
Company’s future liquidity (in millions):
Payments Due By Period
Total
Less than
1 Year 1-3 Years 4-5 Years
More than
5 Years
Japan ABL Facility................................................................. 15.0 15.0———
Capital Leases(1) ....................................................................................... 0.6 0.2 0.4 — —
Operating leases(2) ................................................................................... 22.2 7.6 8.9 3.8 1.9
Unconditional purchase obligations(3) ............................................. 43.3 40.2 2.7 0.4 —
Uncertain tax contingencies(4)............................................................. 3.5 0.4 0.5 0.4 2.2
Employee incentive compensation(5)................................................ 17.2 17.2———
Other long-term liabilities...................................................... 0.1 0.1———
Total................................................................................ $ 101.9 $ 80.7 $ 12.5 $ 4.6 $ 4.1
(1) Amounts represent future minimum lease payments. Capital lease obligations are included in accounts payable and
accrued expenses and other long-term liabilities in the accompanying consolidated balance sheets.
(2) The Company leases certain warehouse, distribution and office facilities, vehicles and office equipment under operating
leases. The amounts presented in this line item represent commitments for minimum lease payments under non-cancelable
operating leases.
(3) During the normal course of its business, the Company enters into agreements to purchase goods and services, including
purchase commitments for production materials, endorsement agreements with professional golfers and other endorsers,
employment and consulting agreements, and intellectual property licensing agreements pursuant to which the Company
is required to pay royalty fees. It is not possible to determine the amounts the Company will ultimately be required to
pay under these agreements as they are subject to many variables including performance-based bonuses, severance
arrangements, the Company’s sales levels, and reductions in payment obligations if designated minimum performance
criteria are not achieved. The amounts listed approximate minimum purchase obligations, base compensation and
guaranteed minimum royalty payments the Company is obligated to pay under these agreements. The actual amounts
paid under some of these agreements may be higher or lower than the amounts included. In the aggregate, the actual
amount paid under these obligations is likely to be higher than the amounts listed as a result of the variable nature of
these obligations. In addition, the Company also enters into unconditional purchase obligations with various vendors
and suppliers of goods and services in the normal course of operations through purchase orders or other documentation
or that are undocumented except for an invoice. Such unconditional purchase obligations are generally outstanding for
periods less than a year and are settled by cash payments upon delivery of goods and services and are not reflected in
this line item.
(4) Amount represents the current and non-current portions of uncertain income tax positions as recorded on the Company's
consolidated balance sheet as of December 31, 2015. Amount excludes uncertain income tax positions that the Company
would be able to offset against deferred taxes. For further discussion see Note 9 “Income Taxes” in the Notes to
Consolidated Financial Statements in this Form 10-K.
(5) Amount represents accrued employee incentive compensation expense earned in 2015, and paid in February 2016.
During its normal course of business, the Company has made certain indemnities, commitments and guarantees under
which it may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities
to the Company’s customers and licensees in connection with the use, sale and/or license of Company products or trademarks,
(ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases,
(iii) indemnities to vendors and service providers pertaining to the goods or services provided to the Company or based on
the negligence or willful misconduct of the Company and (iv) indemnities involving the accuracy of representations and
warranties in certain contracts. In addition, the Company has made contractual commitments to each of its officers and certain
other employees providing for severance payments upon the termination of employment. The Company also has consulting
agreements that provide for payment of nominal fees upon the issuance of patents and/or the commercialization of research
results. The Company has also issued guarantees in the form of standby letters of credit in the amount of $1.0 million as
security for contingent liabilities under certain workers’ compensation insurance policies. The duration of these indemnities,