Segment Information

12 Months Ended

Dec. 31, 2016

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 of Callaway Golf woods, hybrids, irons and wedges and Odyssey putters, including Toulon Design by Odyssey. 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 of Callaway Golf and Strata balls that are designed, manufactured and sold by the Company. There were no significant intersegment transactions.

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

	Years Ended December 31,
	2016			2015			2014
	(In thousands)
Net sales:
Golf Clubs	$	718,935		$	700,649		$	749,956
Golf Balls	152,257			143,145			136,989
	$	871,192		$	843,794		$	886,945
Income (loss) before income tax:
Golf Clubs	$	65,023		$	52,999		$	50,891
Golf Balls	25,642			17,724			15,222
Reconciling items(1)	(32,272		)	(50,660		)	(44,474		)
	$	58,393		$	20,063		$	21,639
Identifiable assets:(2)
Golf Clubs	$	295,601		$	316,079		$	316,710
Golf Balls	37,006			37,394			37,445
Reconciling items(2)	468,675			277,751			270,656
	$	801,282		$	631,224		$	624,811
Additions to long-lived assets:(3)
Golf Clubs	$	9,503		$	14,111		$	9,425
Golf Balls	5,295			2,154			327
	$	14,798		$	16,265		$	9,752
Goodwill:
Golf Clubs	$	25,593		$	26,500		$	27,821
Golf Balls	—			—			—
	$	25,593		$	26,500		$	27,821
Depreciation and amortization:
Golf Clubs	$	14,914		$	13,084		$	18,505
Golf Balls	1,672			4,295			2,731
	$	16,586		$	17,379		$	21,236

(1) 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. The $18,388,000 decrease in reconciling items in 2016 compared to 2015 was primarily due to a $17,662,000 gain recognized in the second quarter of 2016 in connection with the sale of approximately 10.0% of the Company's investment in Topgolf (see Note 6), combined with decreases of $6,365,000 in interest expense and $1,551,000 in corporate stock compensation expense, partially offset by a $3,957,000 increase in foreign currency exchange losses.

(2) 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 including cash and cash equivalents, net accounts receivable, and deferred tax assets. The $190,924,000 increase in reconciling items in 2016 compared to 2015 was primarily due to a benefit of $156,600,000 related to the reversal of the Company's valuation allowance on its U.S. deferred tax assets. This reversal was partially offset by the recognition of $15,974,000 in income taxes payable on the Company's U.S. business (see Note 9).

(3) Additions to long-lived assets are comprised of purchases of property, plant and equipment by reporting segment.

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

	Years Ended December 31,
	2016		2015		2014
	(In thousands)
Net sales:
Woods	$	201,813	$	222,193	$	269,468
Irons	211,947		205,522		200,174
Putters	86,042		86,293		81,161
Golf Balls	152,257		143,145		136,989
Accessories and Other	219,133		186,641		199,153
	$	871,192	$	843,794	$	886,945

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(1)
	(In thousands)
2016
United States	$	447,613	$	199,617
Europe	122,805		7,260
Japan	170,760		6,201
Rest of Asia	67,099		2,668
Other foreign countries	62,915		10,405
	$	871,192	$	226,151
2015
United States	$	446,474	$	205,952
Europe	125,116		8,414
Japan	138,031		4,445
Rest of Asia	70,315		2,868
Other foreign countries	63,858		11,096
	$	843,794	$	232,775
2014
United States	$	421,773	$	210,152
Europe	134,401		7,070
Japan	166,162		4,873
Rest of Asia	89,603		2,936
Other foreign countries	75,006		13,402
	$	886,945	$	238,433

(1) Long-lived assets include all non-current assets of the Company except deferred tax assets.