Segment Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Information

Note 16. Segment Information

The Company has two operating segments that are organized on the basis of products, namely the golf clubs segment and golf balls segment. The golf clubs segment consists primarily of Callaway Golf woods, hybrids, irons and wedges and Odyssey putters. This segment also includes golf apparel and footwear, golf bags, golf gloves, travel gear, headwear and other golf-related accessories, in addition to royalties from licensing of the Company’s trademarks and service marks and sales of pre-owned golf clubs. The golf balls segment consists primarily of Callaway Golf balls that are designed, manufactured and sold by the Company. There are no significant intersegment transactions.

The table below contains information utilized by management to evaluate its operating segments for the interim periods presented (in thousands):

	Three Months Ended   March 31,
	2014			2013(1)
Net sales:
Golf Clubs	$	299,164		$	245,369
Golf Balls	52,710			42,387
	$	351,874		$	287,756
Income before income taxes:
Golf Clubs (2)	$	62,737		$	44,757
Golf Balls (2)	11,729			5,416
Reconciling items(3)	(17,680		)	(6,044		)
	$	56,786		$	44,129
Additions to long-lived assets:
Golf Clubs	$	2,915		$	3,606
Golf Balls	101			11
	$	3,016		$	3,617

(1) The prior year amounts have been restated to reflect the Company's current year allocation methodology related to freight revenue and costs, certain discounts and other reserves not specific to a product type. This resulted in increases to net sales and income before income taxes of $598,000 and $768,000, respectively, in the golf club segment, and corresponding decreases in net sales and income before income taxes in the golf ball segment.

(2) In connection with the Cost Reduction Initiatives (see Note 2), the Company’s golf clubs and golf balls segments recognized pre-tax charges of $2,699,000 and $116,000, respectively, during the three months ended March 31, 2013.

(3) Reconciling items represent corporate general and administrative expenses and other income (expense) not included by management in determining segment profitability. The increase in reconciling items in the first quarter of 2014 compared to the first quarter of 2013 was due to the recognition of net losses on foreign currency exchange contracts in the first quarter of 2014 compared to the recognition of net gains in the same period of 2013. During the three months endedMarch 31, 2013, the reconciling items include pre-tax charges of $694,000 in connection with the Cost Reduction Initiatives.