Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

Note 19. 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. 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 balls that are designed, manufactured and sold by the Company. In 2014, 2013 and 2012, the Company's top five golf club customers accounted for approximately 25%, 23% and 22% of total consolidated golf club sales, respectively, and the top five golf ball customers accounted for approximately 30% of total consolidated golf ball sales in 2014 and 27% in 2013 and 2012.

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 licensing 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 were no sales recognized in 2014 related to these items. There are no significant intersegment transactions.

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

	Years Ended December 31,
	2014			2013(1)			2012(1)
	(In thousands)
Net sales:
Golf Clubs	$	749,956		$	711,697		$	695,441
Golf Balls	136,989			131,104			138,624
	$	886,945		$	842,801		$	834,065
Income (loss) before income tax:
Golf Clubs(2)	$	50,891		$	32,738		$	(60,343	)
Golf Balls(2)	15,222			(3,472		)	(14,503		)
Reconciling items(3)	(44,474		)	(42,588		)	(43,200		)
	$	21,639		$	(13,322	)	$	(118,046	)
Identifiable assets:(4)
Golf Clubs	$	316,710		$	374,473		$	328,210
Golf Balls(5)	37,445			49,261			64,203
Reconciling items(4)	270,656			240,129			245,223
	$	624,811		$	663,863		$	637,636
Additions to long-lived assets:
Golf Clubs	$	9,425		$	13,250		$	16,347
Golf Balls	327			1,163			260
	$	9,752		$	14,413		$	16,607
Goodwill:
Golf Clubs	$	27,821		$	29,212		$	29,034
Golf Balls	—			—			—
	$	27,821		$	29,212		$	29,034
Depreciation and amortization:
Golf Clubs	$	18,505		$	21,019		$	21,096
Golf Balls	2,731			4,524			13,315
	$	21,236		$	25,543		$	34,411

(1) The prior year amounts have been reclassified 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. For the year ended December 31, 2013, this resulted in increases in net sales and income before income taxes of $1,043,000 and $5,054,000, respectively, in the golf clubs segment, and corresponding decreases in net sales and income before income taxes in the golf balls segment. For the year ended December 31, 2012, this resulted in increases in net sales and losses before income taxes of $952,000 and $516,000, respectively, in the golf clubs segment, and a corresponding decrease in net sales and losses before income taxes in the golf balls segment.

(2) 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(3)			Total
Cost Reduction Initiatives	$	6,395	$	6,973		$	3,188	$	16,556

	Year Ended December 31, 2012
	Golf Clubs		Golf Balls		Corporate G&A(3)				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

(3) 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, related to foreign currency hedging contracts, offset by net foreign currency transaction losses and gains included in other income (expense); and

• 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).

(4) 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.

(5) 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,
	2014		2013(1)		2012(1)
	(In thousands)
Net sales:
Woods	$	269,468	$	249,809	$	198,078
Irons	200,174		178,771		169,151
Putters	81,161		87,787		92,588
Golf Balls	136,989		131,104		138,624
Accessories and Other	199,153		195,330		235,624
	$	886,945	$	842,801	$	834,065

(1) The prior year amounts have been reclassified 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.

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)
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
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

On a consolidated basis, no one customer accounted for more than 8% of the Company’s consolidated revenues in 2014, 2013 and 2012. The Company's top five customers accounted for no more than 25% of the Company's consolidated revenues in 2014, 23% in 2013, and 25% in 2012.