Callaway 2015 Annual Report Download - page 91

F-21
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, 2015 December 31, 2014
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 31,389 192 31,581 31,338 243
Developed technology and
other ................................ 1-9 7,961 7,961 — 7,961 7,961 —
Total intangible assets................ $128,132 $ 39,350 $ 88,782 $ 128,132 $ 39,299 $ 88,833
Aggregate amortization expense on intangible assets was approximately $51,000, $68,000 and $288,000 for the years
ended December 31, 2015, 2014 and 2013, respectively. Amortization expense related to intangible assets at December 31,
2015 in each of the next five fiscal years and beyond is expected to be incurred as follows (in thousands):
2016................................................................................................................................................................................ $51
2017................................................................................................................................................................................ 51
2018................................................................................................................................................................................ 51
2019................................................................................................................................................................................ 39
$ 192
Note 7. Investments
The Company owns a minority interest in Topgolf International, Inc., doing business as the Topgolf Entertainment Group
(“Topgolf”), the owner and operator of Topgolf entertainment centers, which ownership consists of common stock and various
classes of preferred stock. In connection with this investment, the Company has a preferred partner agreement with Topgolf
in which the Company has preferred signage rights, rights as the preferred supplier of golf products used or offered for use
at Topgolf facilities at prices no less than those paid by the Company’s customers, preferred retail positioning in the Topgolf
retail stores, access to consumer information obtained by Topgolf, and other rights incidental to those listed above.
In December 2014, the Company remitted funds to subscribe for $1,699,000 in preferred shares of Topgolf. In January
2015, the subscription was accepted and the Company acquired the $1,699,000 in preferred shares. In December 2015, the
Company invested an additional $940,000 in preferred shares of Topgolf, thereby increasing the Company's total investment
as of December 31, 2015 to $53,315,000. In addition, in December 2015, the Company and Topgolf entered into a shareholder
loan agreement, which resulted in a note receivable from Topgolf for $3,200,000. The loan was subject to an annual interest
rate of 10%, and was due and payable on March 30, 2016. The loan was paid in full in February 2016.
The Company’s total ownership interest in Topgolf, including the Company's voting rights in the preferred shares of
Topgolf, remains at less than 20% of the outstanding equity securities of Topgolf. As of December 31, 2015, the Company
did not have the ability to significantly influence the operating and financing activities and policies of Topgolf, and accordingly,
the Company’s investment in Topgolf is accounted for at cost in accordance with ASC Topic 325, “Investments—Other.”
During 2015, the Company did not conduct a fair value analysis of its investment in Topgolf as it was not practicable to do
so. However, there were no events or changes in circumstances that would have had a significant adverse effect on the fair
value of this investment. In January 2016, the Company exercised certain stock options to acquire additional common shares
in Topgolf for $1,259,000. This additional investment did not increase the Company's ownership percentage above 20%.
On February 22, 2016, Topgolf announced that Providence Equity Partners L.L.C. (“Providence Equity”) has made a
significant minority preferred stock investment in Topgolf (the “Providence Equity Investment”). In connection with the
Providence Equity Investment, Topgolf intends to use a portion of the proceeds it receives to repurchase shares from its existing