Callaway 2015 Annual Report Download - page 98

F-28
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and
foreign jurisdictions. The Company is generally no longer subject to income tax examinations by tax authorities in its major
jurisdictions as follows:
Major Tax Jurisdiction Years No Longer Subject to Audit
U.S. federal............................................................................................................................ 2010 and prior
California (U.S.) .................................................................................................................... 2008 and prior
Canada ................................................................................................................................... 2009 and prior
Japan ...................................................................................................................................... 2008 and prior
South Korea ........................................................................................................................... 2009 and prior
United Kingdom .................................................................................................................... 2011 and prior
As of December 31, 2015, the Company did not provide for United States income taxes or foreign withholding taxes
on a cumulative total of $111,953,000 of undistributed earnings from certain non-U.S. subsidiaries that will be permanently
reinvested outside the United States. Upon remittance, certain foreign countries impose withholding taxes, subject to certain
limitations, for use as credits against the Company’s U.S. tax liability, if any. If the foreign earnings were remitted, the Company
does not anticipate a material impact to the Company's federal or state income taxes due to the Company's available net
operating losses and credits. The Company estimates that it would have withholding taxes of $1,125,000 upon remittance.
In 2015 and 2014, the Company ceased its business operations in Thailand and Malaysia, respectively, and accordingly,
the Company no longer maintains a permanent reinvestment assertion with respect to these two entities. The Company intends
to repatriate the undistributed earnings from these two entities to the United States at the time that the winding-down process
has been completed. As of December 31, 2015, the Company has accrued for the estimated incremental U.S. income taxes
related to reversing its permanent indefinite reinvestment assertion. However, these incremental U.S. income taxes are expected
to be offset by the utilization of the Company's cumulative U.S. net operating losses incurred through December 31, 2015.
Note 10. Commitments & Contingencies
Legal Matters
The Company is subject to routine legal claims, proceedings and investigations incident to its business activities,
including claims, proceedings, and investigations relating to commercial disputes and employment matters. The Company
also receives from time to time information claiming that products sold by the Company infringe or may infringe patent,
trademark or other intellectual property rights of third parties. One or more such claims of potential infringement could lead
to litigation, the need to obtain licenses, the need to alter a product to avoid infringement, a settlement or judgment or some
other action or material loss by the Company, which also could adversely affect the Company’s overall ability to protect its
product designs and ultimately limit its future success in the marketplace. In addition, the Company is occasionally subject
to non-routine claims, proceedings or investigations.
The Company regularly assesses such matters to determine the degree of probability that the Company will incur a
material loss as a result of such matters as well as the range of possible loss. An estimated loss contingency is accrued in the
Company’s financial statements if it is probable the Company will incur a loss and the amount of the loss can be reasonably
estimated. The Company reviews all claims, proceedings and investigations at least quarterly and establishes or adjusts any
accruals for such matters to reflect the impact of negotiations, settlements, advice of legal counsel and other information and
events pertaining to a particular matter. All legal costs associated with such matters are expensed as incurred.
Historically, the claims, proceedings and investigations brought against the Company, individually and in the aggregate,
have not had a material adverse effect upon the consolidated results of operations, cash flows or financial position of the
Company. The Company believes that it has valid legal defenses to the matters currently pending against the Company. These
matters are inherently unpredictable and the resolutions of these matters are subject to many uncertainties and the outcomes
are not predictable with assurance. Consequently, management is unable to estimate the ultimate aggregate amount of monetary
loss, amounts covered by insurance or the financial impact that will result from such matters. Management believes that the
final resolution of the current matters pending against the Company, individually and in the aggregate, will not have a material
adverse effect upon the Company’s consolidated financial position. The Company’s results of operations or cash flows,
however, could be materially affected in any particular period by the unfavorable resolution of one or more of these
contingencies.