Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company has two operating segments that are organized on the basis of products and include golf clubs and golf balls. The golf clubs segment consists primarily of Callaway Golf woods, hybrids, irons and wedges, Odyssey putters, pre-owned clubs, golf apparel and footwear, golf bags, golf gloves, travel gear, headwear and other golf-related accessories, as well as royalties from licensing of the Company’s trademarks and service marks. The golf balls segment consists primarily of Callaway Golf balls that are designed, manufactured and sold by the Company. During the first quarter of 2012, the Company completed the sale of certain assets related to the Top-Flite and Ben Hogan brands (see Note 8). In addition, during the third quarter of 2012, the Company announced the transition of its North American golf apparel and footwear and global GPS device businesses to a third-party based model. As such, the net sales and income before income taxes for the year ended December 31, 2013 include minimal sales of Top-Flite and Ben Hogan golf products as well as sales of golf apparel, footwear and uPro GPS on-course measurement devices. There are no significant intersegment transactions.

The table below contains information utilized by management to evaluate its operating segments.

	Years Ended December 31,
	2013			2012			2011
	(In thousands)
Net sales:
Golf Clubs	$	710,654		$	694,489		$	726,169
Golf Balls	132,147			139,576			160,359
	$	842,801		$	834,065		$	886,528
Loss before income tax:
Golf Clubs(1)	$	27,684		$	(59,827	)	$	(3,899	)
Golf Balls(1)	1,582			(15,019		)	(12,655		)
Reconciling items(2)	(42,588		)	(43,200		)	(73,707		)
	$	(13,322	)	$	(118,046	)	$	(90,261	)
Identifiable assets:(3)
Golf Clubs	$	374,473		$	328,210		$	409,074
Golf Balls(4)	49,261			64,203			92,280
Reconciling items(3)	240,129			245,223			225,758
	$	663,863		$	637,636		$	727,112
Additions to long-lived assets:
Golf Clubs	$	13,250		$	16,347		$	23,087
Golf Balls	1,163			260			6,680
	$	14,413		$	16,607		$	29,767
Goodwill:
Golf Clubs	$	29,212		$	29,034		$	29,203
Golf Balls	—			—			—
	$	29,212		$	29,034		$	29,203
Depreciation and amortization:
Golf Clubs	$	21,019		$	21,096		$	26,695
Golf Balls	4,524			13,315			11,941
	$	25,543		$	34,411		$	38,636

(1) The tables below includes total charges absorbed by the Company’s operating segments from the restructuring initiatives discussed in Note 3 (in thousands):

	Year Ended December 31, 2013
	Golf Clubs		Golf Balls		Corporate G&A(2)			Total
Cost Reduction Initiatives	$	6,395	$	6,973		$	3,188	$	16,556

	Year Ended December 31, 2012
	Golf Clubs		Golf Balls		Corporate G&A(2)				Total
Cost Reduction Initiatives	$	30,398	$	16,589		$	7,074		$	54,061
Reorganization and Reinvestment Initiatives	812		240			(40		)	1,012
Total	$	31,210	$	16,829		$	7,034		$	55,073

	Year Ended December 31, 2011
	Golf Clubs		Golf Balls		Corporate  G&A(2)			Total
Reorganization and Reinvestment Initiatives	$	5,642	$	1,329		$	9,358	$	16,329
GOS Initiatives	15,558		5,038			4,084		24,680
Total	$	21,200	$	6,367		$	13,442	$	41,009

(2) Reconciling items represent the deduction of corporate general and administration expenses and other income (expenses), which are not utilized by management in determining segment profitability. In addition to the corporate general and administrative expenses identified above in connection with the Company’s Cost Reduction Initiatives and Reorganization and Reinvestment Initiatives, the following charges were included in reconciling items:

• Net gains of $5,943,000 and $3,248,000 for 2013 and 2012, respectively, and net losses of $8,153,000 for 2011 related to foreign currency hedging contracts, offset by net foreign currency transaction losses and gains included in other income (expense);

• A pre-tax gain of $6,602,000 in connection with the sale of the Top-Flite and Ben Hogan brands during the year ended December 31, 2012 (see Note 8);

• Pre-tax impairment charges of $6,533,000 for 2011 primarily related to certain trademarks and trade names (see Note 8); and

• A pre-tax gain of $6,170,000 recognized in 2011 in connection with the sale of certain buildings (see Note 7).

(3) Identifiable assets are comprised of net inventory, certain property, plant and equipment, intangible assets and goodwill. Reconciling items represent unallocated corporate assets not segregated between the two segments.

(4) Includes property classified as available for sale in the amount of $2,396,000 in 2012. Property held for sale in 2012 represents the net book value of the Company’s golf ball manufacturing facility in Chicopee, Massachusetts (see Note 7).

The Company’s net sales by product category are as follows:

	Years Ended December 31,
	2013		2012		2011
	(In thousands)
Net sales:
Woods	$	256,444	$	200,588	$	211,191
Irons	181,842		170,794		206,817
Putters	89,559		93,325		88,160
Golf Balls	132,147		139,576		160,359
Accessories and Other	182,809		229,782		220,001
	$	842,801	$	834,065	$	886,528

The Company markets its products in the United States and internationally, with its principal international markets being Japan and Europe. The tables below contain information about the geographical areas in which the Company operates. Revenues are attributed to the location to which the product was shipped. Long-lived assets are based on location of domicile.

	Sales		Long-Lived Assets (excluding deferred tax assets)
	(In thousands)
2013
United States	$	401,478	$	206,111
Europe	121,477		7,905
Japan	161,598		6,491
Rest of Asia	84,073		3,627
Other foreign countries	74,175		15,827
	$	842,801	$	239,961
2012
United States	$	392,087	$	212,438
Europe	120,160		7,969
Japan	157,315		6,897
Rest of Asia	75,035		4,265
Other foreign countries	89,468		17,161
	$	834,065	$	248,730
2011
United States	$	419,448	$	268,376
Europe	133,572		7,313
Japan	149,768		8,386
Rest of Asia	82,746		4,581
Other foreign countries	100,994		17,740
	$	886,528	$	306,396