View Filing Data

Property, plant and equipment, net

4,170

4,029

Income taxes receivable

1,810

3,654

Other current assets

23,811

19,880

Assets held for sale

2,396

Total current assets

386,996

419,329

89,093

117,147

Intangible assets, net

89,189

121,935

Goodwill

29,034

29,203

Accounts payable and accrued expenses

1,910

1,386

Other assets

41,414

38,112

Total assets

^[1]

637,636

727,112

Current liabilities:

129,021

129,193

Accrued employee compensation and benefits

20,649

23,785

Accrued warranty expense

7,539

8,140

Total current liabilities

927

4,108

Income tax liability

3,430

2,558

161,566

167,784

Long-term liabilities:

Income taxes payable

6,565

8,115

Convertible notes, net (Note 4)

33,533

31,429

107,133

Long-term incentive compensation and other

7,131

6,970

Commitments and contingencies (Note 13)

Shareholders' equity:

Preferred stock, $.01 par value, 3,000,000 shares authorized, 417,639 and 1,400,000 shares issued and outstanding at December 31, 2012 and 2011, respectively

Common stock, $.01 par value, 240,000,000 shares authorized, 72,264,020 shares and 66,340,695 shares issued at December 31, 2012 and 2011, respectively

723

663

Additional paid-in capital

204,510

265,067

Retained earnings

113,831

247,941

Accumulated other comprehensive income

14,770

14,071

Less: Common stock held in treasury, at cost, 1,267,436 shares and 1,453,819 shares at December 31, 2012 and 2011, respectively

(14,848)

(17,800)

Total Callaway Golf Company shareholders' equity

318,990

509,956

Non-controlling interest in consolidated entity (Note 10)

2,718

2,858

Total shareholders' equity

321,708

512,814

Total liabilities and shareholders' equity

$ 637,636

$ 727,112

[1]	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.

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2012	Dec. 31, 2011
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	417,639	1,400,000
Preferred stock, shares outstanding	417,639	1,400,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	240,000,000	240,000,000
Common stock, shares issued	72,264,020	66,340,695
Less: Common Stock held in treasury, shares	1,267,436	1,453,819

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

General and administrative expenses

$ 834,065

$ 886,528

^[1]

$ 967,656

Cost of sales

585,897

575,226

602,160

Gross profit

248,168

^[2]

311,302

^[3]

365,496

Selling expenses

268,088

265,325

257,285

66,773

92,756

98,431

Research and development expenses

29,542

34,309

36,383

Total operating expenses

364,403

392,390

392,099

Loss from operations

(116,235)

(81,088)

(26,603)

Interest income

550

546

2,886

Interest expense

(5,513)

(1,618)

(848)

Other income (expense), net

3,152

(8,101)

(10,997)

Loss before income taxes

(118,046)

(90,261)

(35,562)

Income tax provision (benefit)

4,900

81,559

(16,758)

Dividends on convertible preferred stock

(122,946)

^[4],[5]

(171,820)

^{[6],[7],[8],[9],[10]}

(18,804)

8,447

10,500

Net loss allocable to common shareholders

$ (131,393)

^[4],[5]

$ (182,320)

$ (29,304)

Loss per common share:

Basic

$ (1.96)

^[4],[5]

$ (2.82)

^{[6],[7],[8],[9],[10]}

$ (0.46)

Diluted

$ (1.96)

^[4],[5]

$ (2.82)

^{[6],[7],[8],[9],[10]}

$ (0.46)

Weighted-average common shares outstanding:

Basic

67,061

64,601

63,902

Diluted

67,061

64,601

63,902

[1]	Certain prior period amounts were reclassified to conform with the current year presentation.
[2]	During the second, third and fourth quarters of 2012, the Company recognized charges of $961,000, $27,302,000, and $7,965,000, respectively, in cost of goods sold in connection with the Company's Cost Reduction Initiatives (see Note 3).
[3]	During the first, second, third and fourth quarters of 2011, the Company recognized charges of $6,302,000, $5,847,000, $5,191,000, and $3,250,000, respectively, in cost of goods sold in connection with the Company's GOS Initiatives (see Note 3).
[4]	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).
[5]	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company's Cost Reduction Initiatives (see Note 3).
[6]	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).
[7]	During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company's GOS Initiatives (see Note 3).
[8]	During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).
[9]	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).
[10]	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company's Reorganization and Restructuring Initiatives (see Note 3).

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Other comprehensive income, net of tax:

$ (122,946)

^[1],[2]

$ (171,820)

^{[3],[4],[5],[6],[7]}

$ (18,804)

Foreign currency translation adjustments

699

507

7,324

Comprehensive loss

$ (122,247)

$ (171,313)

$ (11,480)

[1]	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).
[2]	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company's Cost Reduction Initiatives (see Note 3).
[3]	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).
[4]	During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company's GOS Initiatives (see Note 3).
[5]	During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).
[6]	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).
[7]	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company's Reorganization and Restructuring Initiatives (see Note 3).

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6943989&loc=d3e3602-108585

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.19)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 225
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.18)
-URI http://asc.fasb.org/extlink&oid=6880815&loc=d3e20235-122688

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.22)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=20435746&loc=d3e565-108580

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 10, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A7
-Appendix A

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 87-21
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 19
-Article 5

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 28, 29, 30
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 20
-Article 9

Cash flows from operating activities:

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

$ (122,946)

^[1],[2]

$ (171,820)

^{[3],[4],[5],[6],[7]}

$ (18,804)

Non-cash share-based compensation

34,411

38,636

40,949

Impairment charges

21,933

6,533

7,547

Deferred taxes

(1,925)

55,930

(3,788)

3,142

9,570

9,588

Deferred gain amortization and (gain)/loss on disposal of long-lived assets

(1,261)

(7,491)

177

Gain on sale of intangible assets

(6,602)

Discount amortization on convertible notes

235

Changes in assets and liabilities:

Accounts receivable, net

23,701

28,100

(2,096)

Inventories

20,216

36,460

(38,824)

Other assets

1,044

20,599

(9,896)

Accounts payable and accrued expenses

1,042

(12,613)

13,012

Accrued employee compensation and benefits

(4,057)

(4,187)

2,595

Accrued warranty expense

(601)

(287)

(1,022)

Income taxes receivable and payable

2,563

7,653

8,356

Other liabilities

297

3,015

1,838

Net cash (used in) provided by operating activities

(28,808)

10,098

9,632

Cash flows from investing activities:

Capital expenditures

(18,403)

(28,931)

(22,216)

Proceeds from sale of intangible assets

26,861

Proceeds from sale of property, plant and equipment

355

19,371

Other investing activities

(3,268)

(2,581)

Net cash provided by (used in) investing activities

5,545

(9,560)

(24,797)

Cash flows from financing activities:

Proceeds from issuance of convertible notes

46,819

Debt issuance costs

(3,534)

(2,467)

Issuance of common stock

2,195

2,954

Issuance of treasury stock

Equity issuance costs

(54)

Dividends paid, net

(11,019)

(13,093)

(13,067)

Other financing activities

(159)

(650)

Net cash provided by (used in) financing activities

32,126

(13,285)

(10,817)

Effect of exchange rate changes on cash and cash equivalents

117

727

2,711

Net increase (decrease) in cash and cash equivalents

8,980

(12,020)

(23,271)

Cash and cash equivalents at beginning of year

43,023

55,043

78,314

Cash and cash equivalents at end of year

52,003

43,023

55,043

Supplemental disclosures:

Cash paid for interest and fees

(7,544)

(3,744)

(568)

Cash (paid) received for income taxes, net

(4,234)

3,473

13,849

Noncash investing and financing activities:

Dividends payable

131

438

Issuance of convertible notes in exchange for preferred stock

60,078

Issuance of treasury stock from the settlement of compensatory stock awards

3,735

5,026

Acquisition of treasury stock for minimum statutory withholding taxes

(783)

(1,587)

(725)

Accrued capital expenditures at period end

$ 92

$ 1,888

$ 1,053

[1]	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).
[2]	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company's Cost Reduction Initiatives (see Note 3).
[3]	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).
[4]	During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company's GOS Initiatives (see Note 3).
[5]	During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).
[6]	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).
[7]	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company's Reorganization and Restructuring Initiatives (see Note 3).

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Grantor Stock Trust	Treasury Stock	Non-controlling Interest
Beginning balance (in shares) at Dec. 31, 2009		1,400	66,296					(1,823)
Beginning balance at Dec. 31, 2009	$ 700,915	$ 14	$ 663	$ 257,947	$ 464,951	$ 6,240	$ (7,414)	$ (24,110)	$ 2,624
Exercise of stock options	479			(59)			538
Tax deficit from exercise of stock options and compensatory stock	(564)			(564)
Acquisition of treasury stock (in shares)								(88)
Acquisition of treasury stock	(725)							$ (725)
Compensatory stock and stock options (in shares)			21
Compensatory stock and stock options	8,912			7,341			1,571
Issuance costs of preferred stock	(54)			(54)
Employee stock purchase plan	2,475			(412)			2,887
Stock dividends				9	(103)		94
Cash dividends	(13,067)				(13,067)
Adjustment of grantor stock trust shares to market				27			(27)
Equity adjustment from foreign currency translation	7,324					7,324
Change in non-controlling interest	(358)								(358)
Net loss	(18,458)				(18,804)				346
Ending balance (in shares) at Dec. 31, 2010		1,400	66,317					(1,911)
Ending balance at Dec. 31, 2010	686,879	$ 14	$ 663	264,235	432,977	13,564	(2,351)	$ (24,835)	2,612
Tax deficit from exercise of stock options and compensatory stock	(83)			(83)
Acquisition of treasury stock (in shares)								(227)
Acquisition of treasury stock	(1,587)							$ (1,587)
Compensatory stock and stock options (in shares)			24					394
Compensatory stock and stock options	9,570			2,889			1,655	$ 5,026
Employee stock purchase plan	2,195			(2,035)			634	$ 3,596
Employee stock purchase plan (in shares)								290
Stock dividends				123	(123)
Cash dividends	(13,093)				(13,093)
Adjustment of grantor stock trust shares to market				(62)			$ 62
Equity adjustment from foreign currency translation	507					507
Change in non-controlling interest	(341)								(341)
Net loss	(171,233)				(171,820)				587
Ending balance (in shares) at Dec. 31, 2011		1,400	66,341					(1,454)
Ending balance at Dec. 31, 2011	512,814	$ 14	$ 663	265,067	247,941	14,071		$ (17,800)	2,858
Preferred stock to convertible note exchange (in shares)		(632)
Preferred stock to convertible note exchange	(60,078)	$ (6)		(60,072)
Preferred stock to common stock exchange (in shares)		(350)	5,867
Preferred stock to common stock exchange		$ (4)	$ 59	(55)
Acquisition of treasury stock (in shares)								(122)
Acquisition of treasury stock	(783)							$ (783)
Issuance of treasury stock	19			(3,716)				$ 3,735
Issuance of treasury stock (in shares)								309
Compensatory stock and stock options (in shares)			56
Compensatory stock and stock options	3,142		$ 1	3,141
Stock dividends				145	(145)
Cash dividends	(11,019)				(11,019)
Equity adjustment from foreign currency translation	699					699
Change in non-controlling interest	(399)								(399)
Net loss	(122,687)				(122,946)				259
Ending balance (in shares) at Dec. 31, 2012		418	72,264					(1,267)
Ending balance at Dec. 31, 2012	$ 321,708	$ 4	$ 723	$ 204,510	$ 113,831	$ 14,770		$ (14,848)	$ 2,718

The Company

12 Months Ended

Dec. 31, 2012

The Company

Note 1. The Company

Callaway Golf Company (“Callaway Golf” or the “Company”), a Delaware corporation, together with its subsidiaries, designs, manufactures and sells high quality golf clubs (drivers, fairway woods, hybrids, irons, wedges and putters) and golf balls. The Company also sells golf-related accessories such as golf bags, golf gloves, golf headwear, eyewear, golf towels and golf umbrellas. The Company generally sells its products to golf retailers (including pro shops at golf courses and off-course retailers), sporting goods retailers and mass merchants, directly and through its wholly-owned subsidiaries, and to third-party distributors in the United States and in approximately 100 countries around the world. The Company also sells pre-owned Callaway Golf products through its website www.callawaygolfpreowned.com and sells new Callaway Golf products through its websites shop.callawaygolf.com and www.odysseygolf.com. In addition, the Company licenses its name for golf apparel and footwear, rangefinders and practice aids.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Significant Accounting Policies

Note 2. Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Examples of such estimates include provisions for warranty, uncollectible accounts receivable, inventory obsolescence, sales returns, tax contingencies, estimates on the valuation of share-based awards and recoverability of long-lived assets and investments. Actual results may materially differ from these estimates. On an ongoing basis, the Company reviews its estimates to ensure that these estimates appropriately reflect changes in its business or as new information becomes available.

Recent Accounting Standards

In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013. The adoption of this amendment will not have a material impact on the Company’s disclosures to the consolidated financial statements.

Revenue Recognition

Sales are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition,” as products are shipped to customers, net of an allowance for sales returns and sales programs. The criteria for recognition of revenue are met when persuasive evidence that an arrangement exists and both title and risk of loss have passed to the customer, the price is fixed or determinable and collectability is reasonably assured. Sales returns are estimated based upon historical returns, current economic trends, changes in customer demands and sell-through of products. The Company also records estimated reductions to revenue for sales programs such as incentive offerings. Sales program accruals are estimated based upon the attributes of the sales program, management’s forecast of future product demand, and historical customer participation in similar programs. The following table provides a reconciliation of the activity related to the Company’s allowance for sales returns:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	6,521		$	4,955		$	5,725
Provision		32,425			36,239			29,026
Sales returns		(32,563	)		(34,673	)		(29,796	)

Ending balance	$	6,383		$	6,521		$	4,955

Revenues from gift cards are deferred and recognized when the cards are redeemed. In addition, the Company recognizes revenue from unredeemed gift cards when the likelihood of redemption becomes remote and under circumstances that comply with any applicable state escheatment laws. The Company’s gift cards have no expiration. To determine when redemption is remote, the Company analyzes an aging of unredeemed cards (based on the date the card was last used or the activation date if the card has never been used) and compares that information with historical redemption trends. The deferred revenue associated with outstanding gift cards decreased from $1,988,000 at December 31, 2011 to $1,141,000 at December 31, 2012.

Although the Company announced in July 2012 the transition of its integrated device business to a third-party based model, the Company will continue to maintain services related to course credits used in conjunction with the uPro GPS devices. Revenues from course credits in connection with the use of uPro GPS devices are deferred when purchased and recognized on a straight-line basis over a three year period. Deferred revenue associated with unused course credits was $2,544,000 and $2,945,000 at December 31, 2012 and 2011, respectively.

Amounts billed to customers for shipping and handling are included in net sales and costs incurred related to shipping and handling are included in cost of sales.

Royalty income is recorded in net sales as underlying product sales occur, subject to certain minimums, in accordance with the related licensing arrangements. The Company recognized royalty income under its various licensing agreements of $7,073,000, $6,219,000 and $5,831,000 during 2012, 2011 and 2010, respectively.

Warranty Policy

The Company has a stated two-year warranty policy for its golf clubs. The Company’s policy is to accrue the estimated cost of satisfying future warranty claims at the time the sale is recorded. In estimating its future warranty obligations, the Company considers various relevant factors, including the Company’s stated warranty policies and practices, the historical frequency of claims, and the cost to replace or repair its products under warranty. The decrease in the estimated future warranty obligation is primarily due to a decline in sales and in warranty return rates primarily due to improved durability of newer products combined with an increase in customer paid repairs. The following table provides a reconciliation of the activity related to the Company’s reserve for warranty expense:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	8,140		$	8,427		$	9,449
Provision		7,507			8,614			8,439
Claims paid/costs incurred		(8,108	)		(8,901	)		(9,461	)

Ending balance	$	7,539		$	8,140		$	8,427

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principle and most advantageous market for the asset or liability in an orderly transaction between market participants. The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. The measurement of assets and liabilities at fair value are classified using the following three-tier hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3: Fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company measures fair value using a set of standardized procedures that are outlined herein for all assets and liabilities which are required to be measured at fair value. When available, the Company utilizes quoted market prices from an independent third party source to determine fair value and classifies such items in Level 1. In some instances where a market price is available, but the instrument is in an inactive or over-the-counter market, the Company consistently applies the dealer (market maker) pricing estimate and uses a midpoint approach on bid and ask prices from financial institutions to determine the reasonableness of these estimates. Assets and liabilities subject to this fair value valuation approach are typically classified as Level 2.

Items valued using internally-generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or Level 3 even though there may be some significant inputs that are readily observable. The Company utilizes a discounted cash flow valuation model whenever applicable to derive a fair value measurement on long-lived assets, goodwill and amortizing intangibles. The Company uses its internal cash flow estimates discounted at an appropriate rate, quoted market prices, royalty rates when available and independent appraisals as appropriate. The Company also considers its counterparty’s and own credit risk on derivatives and other liabilities measured at their fair value.

Advertising Costs

The Company advertises primarily through television and print media. The Company’s policy is to expense advertising costs, including production costs, as incurred. Advertising expenses for 2012, 2011 and 2010 were $65,068,000, $53,051,000 and $48,432,000, respectively.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs for 2012, 2011 and 2010 were $29,542,000, $34,309,000 and $36,383,000, respectively.

Foreign Currency Translation and Transactions

The Company’s foreign subsidiaries utilize their local currency as their functional currency. The accounts of these foreign subsidiaries have been translated into United States dollars using the current exchange rate at the balance sheet date for assets and liabilities and at the average exchange rate for the period for revenues and expenses. Cumulative translation gains or losses are recorded as accumulated other comprehensive income in shareholders’ equity. Gains or losses resulting from transactions that are made in a currency different from the functional currency are recognized in earnings as they occur. The Company recorded a net loss in foreign currency transactions of $3,343,000 in 2012 and net gains of $708,000 and $6,926,000 in 2011 and 2010, respectively.

Derivatives and Hedging

The Company uses derivative financial instruments to manage its exposure to foreign exchange rates. The derivative instruments are accounted for pursuant to ASC Topic 815, “Derivatives and Hedging,” which requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet, measure those instruments at fair value and recognize changes in the fair value of derivatives in earnings in the period of change unless the derivative qualifies as an effective hedge that offsets certain exposures. As of December 31, 2012, the Company had derivative financial instruments in the form of foreign currency forward contracts and put and call option contracts that were not designated as hedging instruments in accordance with ASC Topic 815.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments purchased with original maturities of three months or less.

Allowance for Doubtful Accounts

The Company maintains an allowance for estimated losses resulting from the failure of its customers to make required payments. An estimate of uncollectible amounts is made by management based upon historical bad debts, current customer receivable balances, age of customer receivable balances, the customer’s financial condition and current economic trends, all of which are subject to change. Actual uncollected amounts have historically been consistent with the Company’s expectations. The following table provides a reconciliation of the activity related to the Company’s allowance for doubtful accounts:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	7,263		$	9,411		$	9,470
Provision		2,830			2,028			3,091
Write-off of uncollectible amounts, net of recoveries		(3,549	)		(4,176	)		(3,150	)

Ending balance	$	6,544		$	7,263		$	9,411

Inventories

Inventories are valued at the lower of cost or fair market value. Cost is determined using the first-in, first-out (FIFO) method. The inventory balance, which includes material, labor and manufacturing overhead costs, is recorded net of an estimated allowance for obsolete or unmarketable inventory. The estimated allowance for obsolete or unmarketable inventory is based upon current inventory levels, sales trends and historical experience as well as management’s estimates of market conditions and forecasts of future product demand, all of which are subject to change.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives as follows:


Buildings and improvements			10-30 years
Machinery and equipment			5-10 years
Furniture, computers and equipment			3-5 years
Production molds			2-5 years

Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values, change capacities or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income/(loss). Construction in-process consists primarily of costs associated with building improvements, machinery and equipment that have not yet been placed into service, unfinished molds as well as in-process internally developed software.

In accordance with ASC Topic 350-40, “Internal-Use Software,” the Company capitalizes certain costs incurred in connection with developing or obtaining internal use software. Costs incurred in the preliminary project stage are expensed. All direct external costs incurred to develop internal-use software during the development stage are capitalized and amortized using the straight-line method over the remaining estimated useful lives. Costs such as maintenance and training are expensed as incurred.

Long-Lived Assets

In accordance with ASC Topic 360-10-05, “Impairment or Disposal of Long-Lived Assets”, the Company assesses potential impairments of its long-lived assets whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. An impairment charge would be recognized when the carrying amount of a long-lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group.

Goodwill and Intangible Assets

Goodwill and intangible assets consist of goodwill, trade names, trademarks, service marks, trade dress, patents and other intangible assets acquired during the acquisition of Odyssey Sports, Inc. in 1997, FrogTrader, Inc. in 2004, the Tour Golf Group Inc. assets in 2006, the uPlay, LLC assets in 2008, and certain foreign distributors.

In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” goodwill and intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of goodwill and other indefinite-lived intangible assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. To determine fair value, the Company uses its internal discounted cash flow estimates, quoted market prices, royalty rates when available and independent appraisals when appropriate.

Intangible assets that are determined to have definite lives are amortized over their estimated useful lives and are measured for impairment only when events or circumstances indicate the carrying value may be impaired in accordance with ASC Topic 360-10-05 discussed above. See Note 8 for further discussion of the Company’s goodwill and intangible assets.

Investments

The Company determines the appropriate classification of its investments at the time of acquisition and reevaluates such classification at each balance sheet date. Investments that do not have readily determinable fair values are stated at cost and are reported in other assets. The Company monitors investments for impairment in accordance with ASC Topic 325-35-2, “Impairment” and ASC Topic 320-35-17 through 35-35, “Scope of Impairment Guidance.” See Note 9 for further discussion of the Company’s investments.

Share-Based Compensation

The Company accounts for its share-based compensation arrangements in accordance with ASC Topic 718, “Compensation—Stock Compensation” (“ASC Topic 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and non-employees based on estimated fair values. ASC Topic 718 further requires a reduction in share-based compensation expense by an estimated forfeiture rate. The forfeiture rate used by the Company is based on historical forfeiture trends. If actual forfeiture rates are not consistent with the Company’s estimates, the Company may be required to increase or decrease compensation expenses in future periods.

The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options and stock appreciation rights (“SARs”) at the date of grant. The Black-Scholes option valuation model requires the input of subjective assumptions to calculate the value of stock options/SARs. The Company uses historical data among other information to estimate the expected price volatility, expected term, and forfeiture rate. The Company uses forecasted dividends to estimate the expected dividend yield. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense is recognized on a straight-line basis over the vesting period for stock options. Compensation expense for SARs is recognized on a straight-line basis over the vesting period based on an estimated fair value, which is remeasured at the end of each reporting period. Once vested, the SARs continue to be remeasured to fair value until they are exercised.

The Company records compensation expense for restricted stock awards and restricted stock units (collectively “restricted stock”) based on the estimated fair value of the award on the date of grant. The estimated fair value is determined based on the closing price of the Company’s common stock on the award date multiplied by the number of shares underlying the restricted stock awarded. Total compensation expense is recognized on a straight-line basis over the vesting period.

Phantom stock units (“PSUs”) are a form of share-based awards that are indexed to the Company’s stock and are settled in cash. Compensation expense is recognized on a straight-line basis over the vesting period based on the award’s estimated fair value. Fair value is remeasured at the end of each interim reporting period through the award’s settlement date and is based on the closing price of the Company’s stock.

Income Taxes

Current income tax expense or benefit is the amount of income taxes expected to be payable or receivable for the current year. A deferred income tax asset or liability is established for the difference between the tax basis of an asset or liability computed pursuant to ASC Topic 740 and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. The Company maintains a valuation allowance for a deferred tax asset when it is deemed to be more likely than not that some or all of the deferred tax asset will not be realized. In evaluating whether a valuation allowance is required under such rules, the Company considers all available positive and negative evidence, including prior operating results, the nature and reason for any losses, its forecast of future taxable income, and the dates on which any deferred tax assets are expected to expire. These assumptions require a significant amount of judgment, including estimates of future taxable income. These estimates are based on the Company’s best judgment at the time made based on current and projected circumstances and conditions. In 2011, as a result of this evaluation, the Company recorded a valuation allowance against its U.S. deferred tax assets. At the end of each interim and annual reporting period, as the U.S. deferred tax assets are adjusted upwards or downwards, the associated valuation allowance and income tax expense are also adjusted. If sufficient positive evidence arises in the future, such as a sustained return to profitability in the U.S. business, any existing valuation allowance could be reversed as appropriate, decreasing income tax expense in the period that such conclusion is reached. The Company concluded that with respect to non-U.S. entities, there is sufficient positive evidence to conclude that the realization of its deferred tax assets is deemed to be likely, and no allowances have been established. For further information, see Note 12 “Income Taxes.”

Pursuant to ASC Topic 740-25-6, the Company is required to accrue for the estimated additional amount of taxes for uncertain tax positions if it is deemed to be more likely than not that the Company would be required to pay such additional taxes.

The Company is required to file federal and state income tax returns in the United States and various other income tax returns in foreign jurisdictions. The preparation of these income tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company accrues an amount for its estimate of additional tax liability, including interest and penalties in income tax expense, for any uncertain tax positions taken or expected to be taken in an income tax return. The Company reviews and updates the accrual for uncertain tax positions as more definitive information becomes available. Historically, additional taxes paid as a result of the resolution of the Company’s uncertain tax positions have not been materially different from the Company’s expectations. For further information, see Note 12 “Income Taxes.”

Other Income (Expense), Net

Other income (expense), net primarily includes gains and losses on foreign currency exchange contracts and foreign currency transactions. The components of other income (expense), net are as follows:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Foreign currency exchange contract gains/(losses), net	$	6,591		$	(8,861	)	$	(18,600	)
Foreign currency transaction gains/(losses), net		(3,343	)		708			6,926
Gains on deferred compensation plan assets		—			—			199
Other		(96	)		52			478

	$	3,152		$	(8,101	)	$	(10,997	)

Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income include net income and foreign currency translation adjustments. Since the Company has met the indefinite reversal criteria, it does not accrue income taxes on foreign currency translation adjustments. The total equity adjustment from foreign currency translation included in accumulated other comprehensive income was income of $14,770,000 and $14,071,000 as of December 31, 2012 and 2011, respectively.

Segment Information

The Company’s operating segments are organized on the basis of products and consist of golf clubs and golf balls. The golf clubs segment consists primarily of Callaway Golf woods, hybrids, irons, wedges and putters as well as Odyssey putters, pre-owned clubs, rangefinders, other golf-related accessories and royalties from licensing of the Company’s trademarks and service marks. The golf balls segment consists of Callaway Golf golf balls that are designed, manufactured and sold by the Company. The Company also discloses information about geographic areas. This information is presented in Note 19.

Concentration of Credit Risk

The Company’s financial instruments that are subject to concentrations of credit risk consist primarily of cash equivalents, trade receivables and foreign currency exchange contracts.

The Company historically invests its excess cash in money market accounts and short-term U.S. government securities and has established guidelines relative to diversification and maturities in an effort to maintain safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates.

The Company operates in the golf equipment industry and primarily sells its products to golf equipment retailers (including pro shops at golf courses and off-course retailers), sporting goods retailers and mass merchants, directly and through wholly-owned domestic and foreign subsidiaries, and to foreign distributors. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from these customers. The Company maintains reserves for estimated credit losses, which it considers adequate to cover any such losses. At December 31, 2012 and 2011, no single customer in the United States represented over 10% of the Company’s outstanding accounts receivable balance. Managing customer-related credit risk is more difficult in regions outside of the United States. In 2012 and 2011, approximately 53% of the Company’s net sales were made in regions outside of the United States, compared to 52% in 2010. Prolonged unfavorable economic conditions in the United States or in the Company’s international markets could significantly increase the Company’s credit risk.

From time to time, the Company enters into foreign currency forward contracts and put or call options for the purpose of hedging foreign exchange rate exposures on existing or anticipated transactions. In the event of a failure to honor one of these contracts by one of the banks with which the Company has contracted, management believes any loss would be limited to the exchange rate differential from the time the contract was made until the time it was settled.

Restructuring Initiatives

12 Months Ended

Dec. 31, 2012

Restructuring Initiatives

Note 3. Restructuring Initiatives

Global Operations Strategy

In 2010, the Company began the implementation of its Global Operations Strategy Initiatives (“GOS Initiatives”), which targeted the restructuring and relocation of the Company’s manufacturing and distribution operations. This restructuring, which was designed to add speed and flexibility to customer service demands, optimize efficiencies, and facilitate long-term gross margin improvements, included the reorganization of the Company’s manufacturing and distribution centers located in Carlsbad, California, Toronto, Canada, and Chicopee, Massachusetts, the creation of third-party logistics sites in Dallas, Texas and Toronto, Canada, as well as the establishment of a new production facility in Monterrey, Mexico. This restructuring was completed in 2011 and only nominal charges were incurred in 2012. The Company continues to maintain limited manufacturing and distribution facilities in Carlsbad, California and Chicopee, Massachusetts.

In 2011 and 2010, the Company recorded pre-tax charges of $24,680,000 and $14,816,000, respectively, in connection with this restructuring. The majority of these charges were recognized within cost of sales. Costs incurred during 2012 were minimal. See Note 19 for charges absorbed by the Company’s operating segments. In the aggregate through December 31, 2011, the Company recognized total charges of $39,419,000 in connection with the GOS Initiatives.

The charges recognized under the GOS Initiatives include non-cash charges for the acceleration of depreciation on certain golf club and golf ball manufacturing equipment and cash charges related to severance benefits and transition costs, which consist primarily of consulting expenses, costs associated with redundancies during the start-up and training phase of the new production facility in Monterrey, Mexico, start-up costs associated with the establishment of third-party logistics sites, travel expenses, and costs associated with the transfer of inventory and equipment.

Reorganization and Reinvestment Initiatives

In June 2011, the Company began the implementation of certain restructuring initiatives (the “Reorganization and Reinvestment Initiatives”) that involved (i) streamlining the Company’s organization to reduce costs, simplifying internal processes, and increasing focus on the Company’s consumers and retail partners, (ii) reorganizing the Company’s organizational structure to place greater emphasis on global brand management and improve the effectiveness of the Company’s key initiatives, and (iii) reinvesting in brand and demand creation initiatives to drive sales growth. The Company’s restructuring plan resulted in annualized pre-tax savings of approximately $50,000,000 of which approximately half were reinvested into the Callaway and Odyssey brands and demand creation initiatives.

In connection with these initiatives, during 2012 the Company recognized net pre-tax charges of $1,012,000 of which $473,000 and $539,000 were recognized in cost of sales and operating expenses, respectively. In 2011, the Company recognized total pre-tax charges $16,329,000, of which $1,251,000 and $15,078,000 were recognized in cost of sales and operating expenses, respectively.

The table below depicts the activity and liability balances recorded as part of the GOS Initiatives and the Reorganization and Reinvestment Initiatives (in thousands). Amounts payable as of December 31, 2012 were included in accrued employee compensation and benefits, and amounts payable as of December 31, 2011 were included in accrued employee compensation and benefits and accounts payable and accrued expenses in the accompanying consolidated balance sheets.


	GOS Initiatives									Reorganization and Reinvestment Initiatives
	Workforce Reductions			Transition Costs			Asset Write-offs			Workforce Reductions			Total
Charges to cost and expense	$	5,177		$	7,861		$	1,778		$	—		$	14,816
Non-cash items		—			—			(1,778	)		—			(1,778	)
Cash payments		(1,909	)		(7,477	)		—			—			(9,386	)

Restructuring payable balance, December 31, 2010	$	3,268		$	384		$	—		$	—		$	3,652
Charges to cost and expense		4,702			17,527			2,451			16,329			41,009
Non-cash items		—			—			(2,451	)		(2,126	)		(4,577	)
Cash payments		(6,751	)		(17,856	)		—			(8,846	)		(33,453	)

Restructuring payable balance, December 31, 2011	$	1,219		$	55		$	—		$	5,357		$	6,631
Charges to cost and expense		(98	)		21			—			1,012			935
Cash payments		(985	)		(76	)		—			(6,316	)		(7,377	)

Restructuring payable balance, December 31, 2012	$	136		$	—		$	—		$	53		$	189

Cost Reduction Initiatives

In July 2012, the Company announced it was undertaking additional cost-reduction initiatives (the “Cost Reduction Initiatives”). These initiatives were designed to streamline and further simplify the Company’s organizational structure and change the manner in which the Company approaches and operates its business. The actions taken in 2012 included (i) a reduction in workforce that impacted all regions and levels of the organization in addition to other transition costs, which resulted in pre-tax charges of $17,471,000; (ii) greater focus on the Company’s core product lines including licensing to third parties the rights to develop, manufacture and distribute certain non-core product lines (e.g. apparel and footwear), which resulted in pre-tax charges of $5,810,000; (iii) transitioning the Company’s integrated device business to a third party based model, which resulted in pre-tax charges of $6,976,000 to write-off inventory and $4,345,000 to write-off property, plant and equipment related to uPro devices, in addition to impairment charges of $5,156,000 related to intangible assets and goodwill related to the uPlay, LLC acquisition (see Note 8); and (iv) the reorganization of the Company’s golf ball manufacturing supply chain, which resulted in pre-tax charges of $14,303,000, including charges for the sale and lease-back of a reduced portion of the square footage of the Company’s ball manufacturing facility in Chicopee, Massachusetts (Note 7), and the write-off of certain patents related to the Top-Flite brand (Note 8). These initiatives are estimated to yield approximately $60,000,000 in annualized savings. In connection with these initiatives, the Company expects to incur total pre-tax charges of approximately $60,000,000, of which approximately two-thirds is expected to be non-cash charges. The Company expects to incur estimated future charges of approximately $5,900,000 over the next twelve months. These estimates are based upon current information and expectations; however, the amount, nature, or timing of these charges could vary as the Company further develops and implements these initiatives.

During the year ended December 31, 2012, the Company recognized charges of $54,061,000 in connection with the Cost Reduction Initiatives. Amounts recognized in cost of sales and operating expenses totaled $36,228,000 and $17,833,000, respectively, during the year ended December 31, 2012. See Note 19 for charges absorbed by the Company’s operating segments.

The table below depicts the total charges recognized in 2012, the liability balances, and the current estimated future charges relating to the Cost Reduction Initiatives (in thousands). Amounts payable as of December 31, 2012 are included in accrued employee compensation and benefits and accounts payable and accrued expenses in the accompanying consolidated balance sheet.


	Cost Reduction Initiatives
	Workforce Reductions			Transition Costs			Asset Write-offs			Total
Charges to cost and expense	$	14,506		$	6,719		$	32,836		$	54,061
Non-cash items		(448	)		(4,311	)		(32,836	)		(37,595	)
Cash payments		(9,527	)		(1,817	)		—			(11,344	)

Restructuring payable balance, December 31, 2012	$	4,531		$	591		$	—		$	5,122

Total future estimated charges as of December 31, 2012	$	1,300		$	4,600		$	—		$	5,900

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

Financing Arrangements

12 Months Ended

Dec. 31, 2012

Financing Arrangements

Note 4. Financing Arrangements

In addition to cash on hand as well as cash generated from operations, the Company relies on its asset-based revolving credit facility to manage seasonal fluctuations in liquidity and to provide additional liquidity when the Company’s operating cash flows are not sufficient to fund the Company’s requirements. The Company’s ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, the success of the Company’s 2012 restructuring initiatives (Note 3), demand for the Company’s products, foreign currency exchange rates, and the other risks and uncertainties applicable to the Company and its business. If the Company is unable to generate sufficient cash flows to fund its business due to a further decline in sales or otherwise, and is unable to reduce its manufacturing costs and operating expenses to offset such decline the Company will need to increase its reliance on its credit facility for needed liquidity. If the Company’s current credit facility is not available or sufficient and the Company could not secure alternative financing arrangements, the Company’s future operations would be significantly, adversely affected. The Company believes that its current credit facility, along with its cash on hand and cash flows expected to be generated from operations is sufficient to meet the Company’s liquidity requirements for at least the next 12 months.

Asset-Based Revolving Credit Facility

The Company has a Loan and Security Agreement with Bank of America N.A. (as amended, the “ABL Facility”) which provides a senior secured asset-based revolving credit facility of up to $230,000,000, comprised of a $158,333,000 U.S. facility (of which $20,000,000 is available for letters of credit), a $31,667,000 Canadian facility (of which $5,000,000 is available for letters of credit) and a $40,000,000 United Kingdom facility (of which $2,000,000 is available for letters of credit), in each case subject to borrowing base availability under the applicable facility. The aggregate amount outstanding under the Company’s letters of credit was $3,265,000 at December 31, 2012. The amounts outstanding under the ABL Facility are secured by certain assets, including inventory and accounts receivable, of the Company’s U.S., Canadian and U.K. legal entities.

As of December 31, 2012, the Company had no borrowings outstanding under the ABL Facility and had $52,003,000 of cash and cash equivalents. The maximum amount of Indebtedness (as defined by the ABL Facility) that could have been outstanding on December 31, 2012, after outstanding borrowings, letters of credit and certain reserves and the $25,000,000 fixed charge coverage ratio covenant (defined below) was approximately $40,500,000 resulting in total available liquidity of $92,503,000. The maximum availability under the ABL Facility fluctuates with the general seasonality of the business and increases and decreases with changes in the Company’s inventory and accounts receivable balances. The maximum availability is at its highest during the first half of the year when the Company’s inventory and accounts receivable balances are high and then decreases during the second half of the year when the Company’s accounts receivable balance is lower due to an increase in cash collections. Average outstanding borrowings during the year ended December 31, 2012 was $50,300,000 and average available liquidity, defined as cash on hand combined with amounts available under the ABL Facility after outstanding borrowings was $105,900,000. Amounts borrowed under the ABL Facility may be repaid and borrowed as needed. The entire outstanding principal amount (if any) is due and payable at maturity on June 30, 2016.

The ABL Facility includes certain restrictions including, among other things, restrictions on incurrence of additional debt, liens, dividends and other restricted payments, asset sales, investments, mergers, acquisitions and affiliate transactions. As of December 31, 2012, the Company was in compliance with all covenants of the ABL Facility. Additionally, the Company is subject to compliance with a fixed charge coverage ratio covenant during, and continuing 30 days after, any period in which the Company’s borrowing base availability falls below $25,000,000. The Company would not have met the fixed charge coverage ratio as of December 31, 2012, however, the Company’s borrowing base availability was above $25,000,000 during the year ended December 31, 2012, and as such the Company was not subject to compliance with the fixed charge coverage ratio.

The interest rate applicable to outstanding loans under the ABL Facility fluctuates depending on the Company’s trailing 12 month EBITDA (as defined by the ABL Facility) combined with the Company’s “availability ratio” (as defined below). The Company’s “availability ratio” is the ratio, expressed as a percentage of (a) the average daily availability under the ABL Facility to (b) the sum of the Canadian, the U.K. and the U.S. borrowing bases, as adjusted. All applicable margins may be permanently reduced by 0.25% if EBITDA meets or exceeds $25,000,000 over any trailing 12 month period, and may be permanently reduced by an additional 0.25% if EBITDA meets or exceeds $50,000,000 over any trailing 12 month period. At December 31, 2012, the Company’s interest rate applicable to its outstanding loans under the ABL Facility was 4.50%.

In addition, the ABL Facility provides for monthly fees ranging from 0.375% to 0.5% of the unused portion of the ABL Facility, depending on the prior month’s average daily balance of revolver loans and stated amount of letters of credit relative to lenders’ commitments.

The origination fees incurred in connection with the ABL Facility totaled $4,265,000, which will be amortized into interest expense over the term of the ABL Facility agreement. Unamortized origination fees as of December 31, 2012 and 2011 were $3,171,000 and $2,925,000, respectively, of which $906,000 and $650,000, respectively, was included in other current assets and $2,265,000 and $2,275,000, respectively, was included in other long-term assets in the accompanying consolidated balance sheets.

Convertible Senior Notes

On August 29, 2012, the Company issued $112,500,000 of 3.75% Convertible Senior Notes (the “convertible notes”) due August 15, 2019, of which $63,227,000 in aggregate principal amount was exchanged for 632,270 shares of the Company’s outstanding 7.50% Series B Cumulative Perpetual Convertible Preferred Stock, $0.01 par value in separate, privately negotiated exchange transactions (see Note 5), and $49,273,000 in aggregate principal amount was issued in private placement transactions for cash.

The convertible notes were priced at 95.02% of the principal amount with an effective yield to maturity of 4.59% and pay interest of 3.75% per year on the principal amount, payable semiannually in arrears in cash on February 15 and August 15 of each year. The first payment was made on February 15, 2013. Net cash proceeds from the private placement transactions for cash were $46,819,000. The Company incurred transactional fees of $3,534,000 which will be amortized over the term of the convertible notes. Unamortized transaction fees as of December 31, 2012 were $3,365,000, of which $505,000 was included in other current assets and $2,860,000 was included in other long-term assets in the accompanying consolidated financial statements.

The net carrying amount of the convertible notes as of December 31, 2012 was $107,133,000. The unamortized discount of $5,367,000 will be amortized over the remaining term of 6.62 years. Total interest and amortization expense recognized during the year ended December 31, 2012 was $1,680,000.

The convertible notes are convertible, at the option of the note holder, at any time on or prior to the close of business on the business day immediately preceding August 15, 2019, into shares of common stock at an initial conversion rate of 133.3333 shares per $1,000 principal amount of convertible notes, which is equal to a conversion price of approximately $7.50 per share, subject to customary anti-dilution adjustments. Upon the occurrence of certain change of control events of the Company, the Company will pay a premium on the convertible notes converted in connection with such change of control events by increasing the conversion rate on such convertible notes.

Under certain circumstances, the Company has the right to terminate the right of note holders to convert their convertible notes. If the Company exercises such termination right prior to August 15, 2015, each note holder who converts its convertible notes after receiving notice of such exercise will receive a make-whole payment in cash or common stock, as the Company may elect, with respect to the convertible notes converted.

Upon the occurrence of a change of control of the Company or a termination of trading of the common stock of the Company, note holders will have the option to require the Company to repurchase for cash all or any portion of such note holder’s convertible notes at a price equal to 100% of the principal amount of the repurchased convertible notes, plus accrued and unpaid interest thereon to the repurchase date.

The convertible notes are not redeemable by the Company prior to August 15, 2015. On or after August 15, 2015, the convertible notes are redeemable in whole or in part at the option of the Company at a redemption price equal to 100% of the principal amount of the convertible notes to be redeemed, plus accrued and unpaid interest thereon to the redemption date.

The convertible notes contain certain covenants including payment of principal, certain repurchase obligations and interest, obligation of the Company to convert the convertible notes, and other customary terms as defined in the Indenture. The Company was in compliance with these covenants as of December 31, 2012.

Preferred Stock

12 Months Ended

Dec. 31, 2012

Preferred Stock

Note 5. Preferred Stock

In August 2012, the Company exchanged 982,361 shares of its outstanding 7.50% Series B Cumulative Perpetual Convertible Preferred Stock, $0.01 par value (the “preferred stock”) for 5,866,821 shares of common stock and $63,227,000 in convertible notes in separate, privately negotiated transactions (see Note 4). After the exchange, the Company had 417,639 remaining shares of preferred stock outstanding.

The preferred stock is generally convertible at any time at the holder’s option into common stock of the Company at an initial conversion rate of 14.1844 shares of Callaway’s common stock per share of preferred stock, which is equivalent to an initial conversion price of approximately $7.05 per share. At December 31, 2012, based on the initial conversion rate, approximately 5,924,000 shares of common stock would be issuable upon conversion of all of the outstanding shares of preferred stock.

The terms of the preferred stock provide for a liquidation preference of $100 per share and cumulative unpaid dividends from the date of original issue at a rate of 7.50% per annum (equal to an annual rate of $7.50 per share), subject to adjustment in certain circumstances. As of December 31, 2012, the liquidation preference would have been $41,894,000. Dividends on the preferred stock are payable quarterly in arrears subject to declaration by the Board of Directors and compliance with the Company’s line of credit and applicable law.

The Company, at its option, may redeem the preferred stock subject to available liquidity and compliance with any applicable legal requirements and contractual obligations, in whole or in part, at a price equal to 100% of the liquidation preference, plus all accrued and unpaid dividends. The preferred stock has no maturity date and has no voting rights prior to conversion into the Company’s common stock, except in limited circumstances.

Loss per Common Share

12 Months Ended

Dec. 31, 2012

Loss per Common Share

Note 6. Loss per Common Share

Loss per common share, basic and diluted, are computed by dividing net loss allocable to common shareholders by the weighted-average number of common shares outstanding for the period. Weighted-average common shares outstanding—diluted is the same as weighted-average common shares outstanding—basic in periods when a net loss is reported. Dividends on cumulative preferred stock are added to net loss to calculate net loss allocable to common shareholders in the basic loss per share calculation, and in the diluted loss per share calculation in periods when a net loss is reported.

Dilutive securities include the common stock equivalents of convertible preferred stock and convertible notes, options granted pursuant to the Company’s stock option plans and outstanding restricted stock units granted to employees and non-employees (see Note 15). Dilutive securities are included in the calculation of diluted earnings per common share using the treasury stock method and the if-converted method in accordance with ASC Topic 260, “Earnings per Share”.

The following table summarizes the computation of basic and diluted loss per share:


	Year Ended December 31,
	2012			2011			2010
	(In thousands, except per share data)
Basic and diluted loss per common share
Net loss	$	(122,946	)	$	(171,820	)	$	(18,804	)
Less: Preferred stock dividends		(8,447	)		(10,500	)		(10,500	)

Net loss allocable to common shareholders	$	(131,393	)	$	(182,320	)	$	(29,304	)

Weighted-average common shares outstanding—basic and diluted		67,061			64,601			63,902
Basic and diluted loss per common share	$	(1.96	)	$	(2.82	)	$	(0.46	)

Options with an exercise price in excess of the average market value of the Company’s common stock during the period have been excluded from the calculation as their effect would be antidilutive. Additionally, potentially dilutive securities were excluded from the computation in periods in which a net loss is reported as their effect would be antidilutive. For the year ended December 31, 2012, dilutive securities outstanding totaling approximately 27,844,000 (including preferred stock of 15,124,000, and shares underlying convertible notes of 5,100,000) were excluded from the calculations as their effect would have been antidilutive. For the years ended December 31, 2011 and 2010 dilutive securities outstanding totaling approximately 30,676,000 and 30,267,000 shares, respectively, (including preferred stock of 19,858,000) were excluded from the calculations as their effect would have been antidilutive.

Sale of Buildings

12 Months Ended

Dec. 31, 2012

Sale of Buildings

Note 7. Sale of Buildings

In connection with the Company’s Cost Reduction Initiatives, during the third quarter of 2012, the Company reached an agreement in principle to sell its golf ball manufacturing facility in Chicopee, Massachusetts and lease back a reduced portion of the square footage to eliminate unused space at the facility. In connection with this agreement, the Company designated this building as assets available for sale, and recorded a pre-tax charge of $7,939,000 in cost of sales during the year ended December 31, 2012 to mark the building down to its estimated selling price, net of estimated commissions and fees.

On February 28, 2013, the Company completed the sale of its manufacturing facility in Chicopee, Massachusetts for proceeds of $2,253,000, net of closing costs, commissions and estimated environmental remediation costs.

In March 2011, the Company sold three of its buildings located in Carlsbad, California, and entered into lease-back agreements for each building over a period of one to five years. The sale resulted in net proceeds of $18,079,000 and a net gain of $12,668,000, of which $6,170,000 was recognized in general and administrative expenses during the first quarter of 2011. Due to the lease-back arrangement, the Company deferred a portion of this gain in the amount of $6,498,000, which represents the sum of the net present value of the minimum future lease payments through the end of each respective lease term. During the year ended December 31, 2012 and 2011, the Company recognized $1,569,000 and $1,531,000, respectively, of this deferred gain in general and administrative expenses. The amortization of the deferred gain will offset future rent expense over the term of the leases which range from one to five years.

The entire disclosure for sale leaseback transactions. Includes the elements of a transaction involving the sale of property to another party and the lease of the property back to the seller.

Goodwill and Intangible Assets

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2012

Note 8. Goodwill and Intangible Assets

In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” the Company’s goodwill and certain intangible assets are not amortized, but are subject to an annual impairment test. The following sets forth the intangible assets by major asset class:


	Useful Life (Years)		December 31, 2012						December 31, 2011
	Useful Life (Years)		Gross		Accumulated Amortization		Net Book Value		Gross		Accumulated Amortization		Net Book Value
					(In thousands)						(In thousands)
Indefinite-lived:
Trade name, trademark and trade dress and other		NA	$	88,590	$	—	$	88,590	$	108,834	$	—	$	108,834
Amortizing:
Patents		2-16		31,581		31,022		559		36,459		28,908		7,551
Developed technology and other		1-9		7,961		7,921		40		12,387		6,837		5,550

Total intangible assets			$	128,132	$	38,943	$	89,189	$	157,680	$	35,745	$	121,935

Aggregate amortization expense on intangible assets was approximately $3,198,000, $3,979,000, $4,181,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Amortization expense related to intangible assets at December 31, 2012 in each of the next five fiscal years and beyond is expected to be incurred as follows (in thousands):


2013		288
2014		68
2015		51
2016		51
2017		51
Thereafter		90

	$	599

In September 2012, in connection with the Company’s Cost Reduction Initiatives that were announced in July 2012 (see Note 3), the Company committed to a plan to transition its integrated device business to a third party based model. As a result, the Company performed an impairment analysis and determined that the discounted expected cash flows from the sales of uPro GPS devices were less than the carrying values of the intangible assets and goodwill associated with the uPlay, LLC acquisition, which was completed in December 2008. This analysis resulted in the recognition of impairment charges of $4,527,000 and $629,000 to write-off amortizing intangible assets and goodwill, respectively, of which $4,324,000 was recognized in cost of sales and $832,000 was recognized in operating expenses in the accompanying consolidated statement of operations for the year ended December 31, 2012.

In March 2012, in an effort to simplify the Company’s operations and increase focus on the Company’s core Callaway and Odyssey business, the Company sold certain assets related to the Top-Flite brand, including world-wide trademarks and service marks for net cash proceeds of $19,900,000. In addition, in February 2012, the Company completed the sale of the Ben Hogan brand including trademarks, service marks and certain other intellectual property for net cash proceeds of $6,961,000. The net book value of the Top-Flite and Ben Hogan assets totaled $20,244,000, which resulted in the recognition of a pre-tax net gain of $6,602,000 in general and administrative expenses in the accompanying consolidated statement of operations in 2012. During the fourth quarter of 2012, the Company determined that the sum of the future cash flows expected to result from the use of its Top-Flite patents was less than their carrying amount and, as a result, the Company recognized an impairment charge of $4,572,000 in cost of sales in the accompanying consolidated statement of operations to write-off the net book value of these patents.

In December 2011, the Company conducted an impairment test on goodwill related to its reporting unit in Australia. Due to the negative impact of significant flooding and inclement weather as well as a decline in economic conditions in that region during 2011, the Company determined that the estimated fair value for this unit was less than the unit’s net book value including goodwill. As a result, the Company recorded an impairment charge of $1,120,000 to write-off the goodwill balance related to this reporting unit. This charge was recorded in general and administrative expenses in the accompanying consolidated statements of operations for the year ended December 31, 2011.

In 2011 and 2010, the Company recorded impairment charges of $5,413,000 and $7,547,000, respectively, related to the trade names and trademarks included in non-amortizing intangibles that were associated with the Top-Flite and Ben Hogan brands. These charges were recorded in general and administrative expenses in the accompanying consolidated statements of operations for the years ended December 31, 2011 and 2010.

Goodwill at December 31, 2012 and 2011 was $29,034,000 and $29,203,000, respectively. The decrease in goodwill was due to an impairment charge of $629,000 related to the Company’s uPlay, LLC acquisition (as mentioned above), partially offset by $460,000 in foreign currency fluctuations. Gross goodwill before impairments at December 31, 2012 and 2011 was $30,783,000 and $30,323,000, respectively.

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

Non-Controlling Interests

Investments

12 Months Ended

Dec. 31, 2012

Investments

Note 9. Investments

The Company owns $23,967,000 of preferred shares of TopGolf International, Inc. (“TopGolf”), the owner and operator of TopGolf entertainment centers, of which $3,367,000 was invested during 2012. In connection with this investment, the Company has a preferred partner agreement with TopGolf in which the Company has preferred signage rights, rights as the preferred supplier of golf products used or offered for use at TopGolf facilities at prices no less than those paid by the Company’s customers, preferred retail positioning in the TopGolf retail stores, access to consumer information obtained by TopGolf, and other rights incidental to those listed.

The Company’s ownership interest in TopGolf is less than 20%. In addition, the Company does not have the ability to significantly influence the operating and financing activities and policies of TopGolf. Accordingly, the Company’s investment in TopGolf is accounted for at cost in accordance with ASC Topic 325, “Investments—Other,” and is included in other long-term assets in the accompanying consolidated balance sheets as of December 31, 2012 and December 31, 2011.

Non-Controlling Interests

12 Months Ended

Dec. 31, 2012

Note 10. Non-Controlling Interests

The Company has a Golf Ball Manufacturing and Supply Agreement with Qingdao Suntech Sporting Goods Limited Company (“Suntech”), in which Suntech manufactures and supplies certain golf balls solely for and to the Company. In connection with the agreement, the Company provides Suntech with golf ball raw materials, packing materials, molds, tooling, as well as manufacturing equipment in order to carry out the manufacturing and supply obligations set forth in the agreement. Suntech provides the personnel as well as the facilities to effectively perform these manufacturing and supply obligations. Due to the nature of the arrangement, as well as the controlling influence the Company has in the Suntech operations, the Company is required to consolidate the financial results of Suntech in its consolidated financial statements in accordance with ASC Topic 810, “Consolidations.” For the years ended December 31, 2012, 2011 and 2010, non-controlling interest related to Suntech in the consolidated statements of shareholders’ equity included net profits of $259,000, $587,000 and $346,000, respectively.

Suntech is a wholly-owned subsidiary of Suntech Mauritius Limited Company (“Mauritius”). The Company has entered into a loan agreement with Mauritius in order to provide working capital for Suntech. In connection with this loan agreement, the Company loaned Mauritius a total of $3,200,000 of which of which $1,788,000 and $1,988,000 was outstanding as of December 31, 2012 and 2011, respectively. The Company recorded the loan in other long-term assets in the accompanying consolidated balance sheets.

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

Selected Financial Statement Information

Selected Financial Statement Information

12 Months Ended

Dec. 31, 2012

Note 11. Selected Financial Statement Information


	December 31,
	2012			2011
	(In thousands)
Accounts receivable, net:
Trade accounts receivable	$	103,999		$	129,457
Allowance for sales returns		(6,383	)		(6,521	)
Allowance for doubtful accounts		(6,544	)		(7,263	)

	$	91,072		$	115,673

Inventories:
Raw materials	$	43,469		$	46,976
Work-in-process		619			1,286
Finished goods		167,646			184,808

	$	211,734		$	233,070

Property, plant and equipment, net:
Land	$	8,892		$	8,871
Buildings and improvements		79,707			81,349
Machinery and equipment		153,303			154,339
Furniture, computers and equipment		126,733			126,592
Production molds		37,539			39,761
Construction-in-process		1,155			6,591

		407,329			417,503
Accumulated depreciation		(318,236	)		(300,356	)

	$	89,093		$	117,147

Accounts payable and accrued expenses:
Accounts payable	$	45,376		$	39,012
Accrued expenses		67,254			72,465
Accrued goods in-transit		15,345			13,970
Accrued hedging contracts payable		1,046			3,746

	$	129,021		$	129,193

Accrued employee compensation and benefits:
Accrued payroll and taxes	$	12,256		$	13,550
Accrued vacation and sick pay		7,549			8,947
Accrued commissions		844			1,288

	$	20,649		$	23,785

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes

Note 12. Income Taxes

The Company’s loss before income tax provision (benefit) was subject to taxes in the following jurisdictions for the following periods (in thousands):


	Year Ended December 31,
	2012			2011			2010
United States	$	(134,384	)	$	(105,841	)	$	(46,365	)
Foreign		16,338			15,580			10,803

	$	(118,046	)	$	(90,261	)	$	(35,562	)

The expense (benefit) for income taxes is comprised of (in thousands):


	Year Ended December 31,
	2012			2011		2010
Current tax provision (benefit):
Federal	$	(357	)	$	19,908	$	(18,494	)
State		130			580		361
Foreign		6,804			4,964		5,743

		6,577			25,452		(12,390	)

Deferred tax expense (benefit):
Federal		(1,448	)		43,948		117
State		92			10,987		(2,988	)
Foreign		(321	)		1,172		(1,497	)

		(1,677	)		56,107		(4,368	)

Income tax provision (benefit)	$	4,900		$	81,559	$	(16,758	)

Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the related asset or liability. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2012 and 2011 are as follows (in thousands):


	December 31,
	2012			2011
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$	15,617		$	14,161
Basis difference related to fixed assets		10,711			7,891
Compensation and benefits		3,808			3,932
Basis difference for inventory valuation		2,502			2,252
Compensatory stock options and rights		5,238			9,927
Deferred revenue and other		101			2,151
Operating loss carryforwards		105,748			66,332
Tax credit carryforwards		6,024			9,402
Correlative effects of global income allocations		363			424
Federal impact of state taxes		808			—
Basis difference related to intangible assets with a definite life		6,165			2,725

Total deferred tax assets		157,085			119,197
Valuation allowance for deferred tax assets		(151,097	)		(110,844	)

Deferred tax assets, net of valuation allowance	$	5,988		$	8,353

Deferred tax liabilities:
State taxes, net of federal income tax benefit		(33	)		(1,472	)
Prepaid expenses		(1,102	)		(2,582	)
Deferred revenue		(330	)		—
Other		(69	)		(108	)
Basis difference related to intangible assets with an indefinite life		(32,834	)		(34,313	)

Total deferred tax liabilities		(34,368	)		(38,475	)

Net deferred tax assets	$	(28,380	)	$	(30,122	)

Net deferred tax assets are shown on the accompanying consolidated balance sheets as follows:
Current deferred tax assets	$	4,170		$	4,029
Non-current deferred tax assets		1,910			1,386
Current deferred tax liabilities		(927	)		(4,108	)
Non-current deferred tax liabilities		(33,533	)		(31,429	)

Net deferred tax assets (liabilities)	$	(28,380	)	$	(30,122	)

The current year change in net deferred taxes of $1,742,000 is comprised of a net deferred expense of $1,479,000 related to the change in the basis difference of intangible assets with an indefinite life, a net deferred expense of $191,000 related to foreign and separate state jurisdictions for which no valuation allowance has been provided, and a $72,000 expense related to foreign currency translation adjustments.

Deferred tax assets and liabilities result from temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are anticipated to be in effect at the time the differences are expected to reverse. The realization of the deferred tax assets, including the loss and credit carry forwards listed above, is subject to the Company generating sufficient taxable income during the periods in which the temporary differences become realizable. In accordance with the applicable accounting rules, the Company maintains a valuation allowance for a deferred tax asset when it is deemed to be more likely than not that some or all of the deferred tax assets will not be realized. In evaluating whether a valuation allowance is required under such rules, the Company considers all available positive and negative evidence, including prior operating results, the nature and reason for any losses, its forecast of future taxable income, and the dates on which any deferred tax assets are expected to expire. These assumptions require a significant amount of judgment, including estimates of future taxable income. These estimates are based on the Company’s best judgment at the time made based on current and projected circumstances and conditions.

In 2011, the Company performed an analysis to determine the likelihood that its deferred tax assets relating to its U.S. business would be realized. The Company considered its taxable loss in the U.S. in each of the past three years, the reasons for such loss, the Company’s projected financial forecast for its U.S business, and the dates on which the deferred tax assets were expected to expire. This evidence suggested that the Company should establish a valuation allowance. As a result, in 2011, the Company recorded a $52,455,000 increase to income tax expense in order to establish a valuation allowance against its U.S. deferred tax assets and discontinued recognizing income tax benefits related to its U.S. net operating losses. At December 31, 2012 and 2011, the valuation allowance against the Company’s U.S. deferred tax assets was $151,097,000 and $110,844,000, respectively. If sufficient positive evidence arises in the future, such as a sustained return to profitability, any existing valuation allowance could be reversed as appropriate, decreasing income tax expense in the period that such conclusion is reached. The Company has concluded that with respect to non-U.S. entities, there is sufficient positive evidence to conclude that realization of its deferred tax assets is more likely than not under applicable accounting rules, and no allowances have been established.

The non-cash charge to establish the valuation allowance in 2011 did not have any impact on the Company’s consolidated cash flows, nor will such an allowance preclude the Company from using loss carry forwards or other deferred tax assets in the future, except as described below. Until the Company re-establishes a pattern of continuing profitability, in accordance with the applicable accounting guidance, U.S. income tax expense or benefit related to the recognition of deferred tax assets in the consolidated statement of operations for future periods will be offset by decreases or increases in the valuation allowance with no net effect on the consolidated statement of operations.

At December 31, 2012, the Company has federal and state income tax credit carryforwards of $4,354,000 and $6,985,000 respectively, which will expire at various dates beginning in 2020. Such credit carryforwards (in thousands) expire as follows:


U.S. foreign tax credit	2,776	2020 - 2022
U.S. research tax credit	1,578	2030 - 2032
State investment tax credits	197	Do not expire
State research tax credits	6,788	Do not expire

The Company has recorded a deferred tax asset reflecting the benefit of operating loss carryforwards. The net operating losses (in thousands) expire as follows:


U.S. loss carryforwards	$	272,861	2031 - 2032
State loss carryforwards	$	186,344	2013 - 2035
Foreign loss carryforwards	$	492	2019

The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013. Included within this legislation was an extension of the research and development credit which had previously expired on December 31, 2011. This legislation retroactively reinstates and extends the credit from the previous expiration date through December 31, 2013. As the legislation was not enacted until after the close of the year ended December 31, 2012, the income tax impact of the retroactive reinstatement and extension will not be recognized until 2013. If the tax impact of the research and development credit was recognized, the Company does not anticipate any federal income tax benefit due to the valuation allowance against the Company’s U.S. deferred tax assets.

Although the Company has set up a valuation allowance against the majority of its U.S. federal and state deferred tax assets, which include net operating loss carry forwards and other losses, such allowance does not preclude the Company from using the deferred tax assets in the future. However, the Company’s ability to utilize the losses to offset future taxable income may be deferred or limited significantly if the Company were to experience an “ownership change” as defined in section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change will occur if there is a cumulative increase in ownership of the Company’s stock by “5-percent shareholders” (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. The determination of whether an ownership change has occurred for purposes of Section 382 is complex and requires significant judgment. The extent to which the Company’s ability to utilize the losses is limited as a result of such an ownership change depends on many variables, including the value of the Company’s stock at the time of the ownership change. Although the Company’s ownership has changed during the three-year period ended December 31, 2012, the Company does not believe there has been a cumulative increase in ownership in excess of 50 percentage points during that period. The Company continues to monitor changes in ownership. If such a cumulative increase did occur in any three year period and the Company was limited in the amount of losses it could use to offset taxable income, the Company’s results of operations and cash flows would be adversely impacted.

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:


	Year Ended December 31,
	2012			2011			2010
Statutory U.S. tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of U.S. tax benefit		(0.8	)%		(0.8	)%		1.5	%
Federal and State tax credits, net of U.S. tax benefit		—			—			2.6	%
Expenses with no tax benefit		(0.9	)%		0.2	%		(2.4	)%
Foreign income taxed at other than U.S. statutory rate		2.0	%		(1.0	)%		1.5	%
Effect of foreign rate changes		—			(0.5	)%		—
Foreign tax credit		(1.2	)%		—			—
Basis differences of intangibles with an indefinite life		1.3	%		(1.0	)%		—
Release of prepaid taxes on intercompany profit		—			(24.0	)%		—
Change in deferred tax valuation allowance		(37.7	)%		(98.6	)%		2.2	%
Reversal of previously accrued taxes		0.1	%		—			1.4	%
Accrual for interest and income taxes related to uncertain tax positions		0.8	%		(0.6	)%		5.2	%
Other		(2.8	)%		0.9	%		0.1	%

Effective tax rate		(4.2	)%		(90.4	)%		47.1	%

In 2012, 2011 and 2010, the tax rate was impacted by favorable adjustments to previously estimated tax liabilities in the amount of $142,000, $2,000, and $515,000, respectively. The most significant adjustments in each year related to adjustments resulting from the finalization of the Company’s prior year U.S. and state income tax returns as well as agreements reached with the Internal Revenue Service and other major jurisdictions on certain issues necessitating a reassessment of the Company’s tax exposures for all open tax years, with no individual year being significantly affected.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	2012			2011			2010
Balance at January 1	$	9,875		$	9,121		$	15,831
Additions based on tax positions related to the current year		432			830			1,825
Additions for tax positions of prior years		96			370			110
Reductions for tax positions of prior years		(24	)		(39	)		(1,832	)
Settlement of tax audits		(768	)		—			(4,157	)
Reductions due to lapsed statute of limitations		(2,547	)		(407	)		(2,656	)

Balance at December 31	$	7,064		$	9,875		$	9,121

As of December 31, 2012, the liability for income taxes associated with uncertain tax benefits was $7,064,000 and can be reduced by $3,148,000 of offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, which was recorded as a long-term income tax receivable, as well as $748,000 of tax benefits associated with state income taxes and other timing adjustments, which are recorded as deferred income taxes pursuant to ASC Topic 740-25-6. The net amount of $3,168,000, if recognized, would affect the Company’s financial statements and favorably affect the Company’s effective income tax rate.

The Company does expect changes in the amount of unrecognized tax benefits in the next 12 months; however, the Company does not expect the changes to have a material impact on its results of operations or its financial position.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense. For the years ended December 31, 2012, 2011 and 2010, the Company recognized tax expense of approximately $44,000 and $242,000, and a net benefit of approximately $490,000, respectively, related to interest and penalties in the provision for income taxes. As of December 31, 2012 and 2011, the gross amount of accrued interest and penalties included in income taxes payable in the accompanying consolidated balance sheets was $934,000 and $890,000, respectively.

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		2008 and prior
California (U.S.)		2006 and prior
Canada		2007 and prior
Japan		2007 and prior
South Korea		2008 and prior
United Kingdom		2008 and prior

As of December 31, 2012, the Company did not provide for United States income taxes or foreign withholding taxes on a cumulative total of $105,383,000 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 that are then available, 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 any federal or state income taxes due to the valuation allowance against the Company’s U.S. deferred tax assets offset. The Company estimates that it would have withholding taxes of less than $1,000,000 upon remittance.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Commitments and Contingencies

Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Note 13. Commitments and 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. It is possible, however, that the Company’s results of operations or cash flows could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Lease Commitments

The Company leases certain warehouse, distribution and office facilities, vehicles as well as office equipment under operating leases. Lease terms range from 1 to 6 years expiring at various dates through August 2018, with options to renew at varying terms. Commitments for minimum lease payments under non-cancelable operating leases as of December 31, 2012 are as follows (in thousands):


2013	$	12,914
2014		10,571
2015		5,849
2016		2,639
2017		1,717
Thereafter		313

	$	34,003

Rent expense for the Company’s lease commitments for the years ended December 31, 2012, 2011 and 2010 was $18,420,000, $22,318,000, and $13,967,000, respectively.

Unconditional Purchase Obligations

During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for production materials, endorsement agreements with professional golfers and other endorsers, employment and consulting agreements, and intellectual property licensing agreements pursuant to which the Company is required to pay royalty fees. It is not possible to determine the amounts the Company will ultimately be required to pay under these agreements as they are subject to many variables including performance-based bonuses, reductions in payment obligations if designated minimum performance criteria are not achieved, the Company’s sales levels, and severance arrangements. As of December 31, 2012, the Company has entered into many of these contractual agreements with terms ranging from one to six years. The minimum obligation that the Company is required to pay under these agreements is $79,218,000 over the next six years. In addition, the Company also enters into unconditional purchase obligations with various vendors and suppliers of goods and services in the normal course of operations through purchase orders or other documentation or that are undocumented except for an invoice. Such unconditional purchase obligations are generally outstanding for periods less than a year and are settled by cash payments upon delivery of goods and services and are not reflected in this total. Future purchase commitments as of December 31, 2012, are as follows (in thousands):


2013	$	50,097
2014		24,459
2015		3,363
2016		893
2017		406
Thereafter		—

	$	79,218

Other Contingent Contractual Obligations

During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to the Company’s customers and licensees in connection with the use, sale and/or license of Company product or trademarks, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining to the goods and services provided to the Company or based on the negligence or willful misconduct of the Company and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In addition, the Company has consulting agreements that provide for payment of nominal fees upon the issuance of patents and/or the commercialization of research results. The Company has also issued guarantees in the form of standby letters of credit of $3,265,000 as of December 31, 2012.

The duration of these indemnities, commitments and guarantees varies, and in certain cases, may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments the Company could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to the Company’s financial position, results of operations or cash flows. In addition, the Company believes the likelihood is remote that material payments under the commitments and guarantees described above will have a material effect on the Company’s financial condition. The fair value of indemnities, commitments and guarantees that the Company issued during the year ended December 31, 2012 was not material to the Company’s financial position, results of operations or cash flows.

Employment Contracts

In addition, the Company has made contractual commitments to each of its officers and certain other employees providing for severance payments, including salary continuation, upon the termination of employment by the Company for convenience or by the officer for substantial cause. In addition, in order to assure that the officers would continue to provide independent leadership consistent with the Company’s best interest, the contracts also generally provide for certain protections in the event of a change in control of the Company. These protections include the payment of certain severance benefits, such as salary continuation, upon the termination of employment following a change in control.

The entire disclosure for commitments and contingencies.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Capital Stock

12 Months Ended

Dec. 31, 2012

Capital Stock

Note 14. Capital Stock

Common Stock and Preferred Stock

As of December 31, 2012, the Company has an authorized capital of 243,000,000 shares, $0.01 par value, of which 240,000,000 shares are designated common stock, and 3,000,000 shares are designated preferred stock. Of the preferred stock, 240,000 shares are designated Series A Junior Participating Preferred Stock and 417,639 shares are designated 7.50% Series B Cumulative Perpetual Convertible Preferred Stock, $0.01 par value. The remaining shares of preferred stock are undesignated as to series, rights, preferences, privileges or restrictions.

The holders of common stock are entitled to one vote for each share of common stock on all matters submitted to a vote of the Company’s shareholders. Although to date no shares of Series A Junior Participating Preferred Stock have been issued, if such shares were issued, each share of Series A Junior Participating Preferred Stock would entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Company. The 7.50% Series B Cumulative Perpetual Convertible Preferred Stock has no maturity date or, except in limited circumstances, voting rights prior to conversion to common stock. The holders of Series A Junior Participating Preferred Stock and the holders of common stock shall generally vote together as one class on all matters submitted to a vote of the Company’s shareholders. Shareholders entitled to vote for the election of directors are entitled to vote cumulatively for one or more nominees.

Treasury Stock and Stock Repurchases

In November 2007, the Company’s Board of Directors authorized a share repurchase program with a maximum cost to the Company of $100,000,000 (the “November 2007 repurchase program”). Under this program, the Company is authorized to repurchase shares of its common stock in the open market or in private transactions, subject to the Company’s assessment of market conditions and buying opportunities. The November 2007 repurchase program supersedes all prior stock repurchase authorizations and will remain in effect until completed or otherwise terminated by the Board of Directors.

During 2012, the Company repurchased approximately 122,000 shares of its common stock under the November 2007 repurchase program at an average cost per share of $6.40 for a total cost of $783,000. These shares were repurchased to settle shares withheld for taxes due by holders of restricted stock awards. The Company’s repurchases of shares of common stock are recorded at cost and result in a reduction of shareholders’ equity. As of December 31, 2012, the Company remained authorized to repurchase up to an additional $72,795,000 of its common stock under the November 2007 repurchase program.

Grantor Stock Trust

The Callaway Golf Company Grantor Stock Trust (the “GST”) was established for the purpose of funding the Company’s obligations with respect to one or more of the Company’s nonqualified or qualified employee benefit plans. The GST shares were used primarily for the settlement of employee equity-based awards, including restricted stock awards and units, stock option exercises and employee stock plan purchases. In 2011, the GST was terminated upon the release of the remaining shares held by the trust.

The following table presents shares released from the GST for the years ended December 31, 2011 and 2010:


	Year Ended December 31,
	2011		2010
	(In thousands)
Employee stock option exercises		—		62
Employee restricted stock units vested		205		221
Employee stock plan purchases		86		409

Total shares released from the GST		291		692

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
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-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21484-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB TOPIC 4.E)
-URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21488-112644

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.29-31)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph d
-Article 4

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Share-Based Compensation

12 Months Ended

Dec. 31, 2012

Share-Based Compensation

Note 15. Share-Based Compensation

The Company accounts for its share-based compensation arrangements in accordance with ASC Topic 718, which requires the measurement and recognition of compensation expense for all share-based payment awards to employees and directors based on estimated fair values. ASC Topic 718 further requires a reduction in share-based compensation expense by an estimated forfeiture rate. The forfeiture rate used by the Company is based on historical forfeiture trends. If actual forfeiture rates are not consistent with the Company’s estimates, the Company may be required to increase or decrease compensation expenses in future periods.

The Company uses the alternative transition method for calculating the tax effects of share-based compensation pursuant to ASC Topic 718. The alternative transition method includes simplified methods to establish the beginning balance of the additional paid-in capital pool (“APIC Pool”) related to the tax effects of employee share-based compensation, and to determine the subsequent impact on the APIC Pool and consolidated statements of cash flows of the tax effects of employee and director share-based awards that were outstanding upon adoption of ASC Topic 718.

Stock Plans

As of December 31, 2012, the Company had one shareholder approved stock plan, the Callaway Golf Company Amended and Restated 2004 Incentive Plan (the “2004 Plan”), under which shares were available for equity-based awards. The 2004 Plan permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock units and other equity-based awards to the Company’s officers, employees, consultants and certain other non-employees who provide services to the Company. All grants under the 2004 Plan are discretionary, although no participant may receive awards in any one year in excess of 2,000,000 shares. The maximum number of shares issuable over the term of the 2004 Plan is 17,500,000.

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans as of December 31, 2012:


	Authorized		Available			Outstanding
	(In thousands)
1995 Employee Stock Incentive Plan		10,800		—			479
1996 Stock Option Plan		9,000		—			247
2001 Directors Plan		500		10	⁽¹⁾		258
2004 Plan		17,500		4,784			4,836

Total		37,800		4,794			5,820

(1)	The Company’s 2001 Non-Employee Directors Plan expired on December 31, 2011. The shares available for grant under this plan are only available to satisfy incremental dividend equivalent rights for outstanding awards.

Stock Options

All stock option grants made under the 2004 Plan are made at exercise prices no less than the Company’s closing stock price on the date of grant. Outstanding stock options generally vest over a three-year period from the grant date and generally expire up to 10 years after the grant date. The Company recorded $1,586,000, $3,306,000 and $3,606,000 of compensation expense relating to outstanding stock options for the years ended December 31, 2012, 2011 and 2010, respectively.

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. The model uses various assumptions, including a risk-free interest rate, the expected term of the options, the expected stock price volatility, and the expected dividend yield. Compensation expense for employee stock options is recognized over the vesting term and is reduced by an estimate for forfeitures, which is based on the Company’s historical forfeitures of unvested options and awards. For the years ended December 31, 2012, 2011 and 2010, the weighted average estimated forfeiture rate used was 5.7%, 4.5% and 3.5%, respectively. The table below summarizes the average fair value assumptions used in the valuation of stock options granted during the years ended December 31, 2012, 2011 and 2010.


	2012		2011		2010
Dividend yield		1.2%		1.4%		1.1%
Expected volatility		50.6%		48.5%		46.2%
Risk-free interest rate		0.8%		2.0%		2.2%
Expected life		4.9 years		5.0 years		4.7 years

The Company uses forecasted dividends to estimate the expected dividend yield as dividends paid have decreased beginning in 2009. The expected volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the U.S. Treasury yield curve at the date of grant with maturity dates approximately equal to the expected term of the options at the date of the grant. The expected life of the Company’s options is based on evaluations of historical employee exercise behavior, forfeitures, cancellations and other factors. The valuation model applied in this calculation utilizes highly subjective assumptions that could potentially change over time. Changes in the subjective input assumptions can materially affect the fair value estimates of an option. Furthermore, the estimated fair value of an option does not necessarily represent the value that will ultimately be realized by the employee holding the option.

The following table summarizes the Company’s stock option activities for the year ended December 31, 2012 (in thousands, except price per share and contractual term):


Options	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		9,912		$	11.23
Granted		5		$	6.69
Exercised		(3	)	$	5.61
Forfeited		(194	)	$	7.50
Expired		(4,553	)	$	11.55

Outstanding at December 31, 2012		5,167		$	11.08		3.18	$	3
Vested and expected to vest in the future at December 31, 2012		5,155		$	11.09		3.04	$	3
Exercisable at December 31, 2012		4,694		$	11.44		2.69	$	3

The weighted-average grant-date fair value of options granted during the years ended December 31, 2012, 2011 and 2010 was $2.63, $2.94 and $2.37 per share, respectively.

At December 31, 2012, there was $952,000 of total unrecognized compensation expense related to options granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 0.8 years. The amount of unrecognized compensation expense noted above does not necessarily represent the amount that will ultimately be realized by the Company in its consolidated statement of operations.

The total intrinsic value for options exercised during the years ended December 31, 2012 and 2010 was $3,000 and $85,000, respectively. Cash received from the exercise of stock options for the year ended December 31, 2012 and 2010 was $23,000 and $564,000, respectively. There were no stock option exercises in 2011. During 2010, the Company settled the exercise of stock options through the Callaway Golf Company Grantor Stock Trust (see Note 14).

Restricted Stock Units

Restricted stock units awarded under the 2004 Plan and the 2001 Directors Plan are recorded at the Company’s closing stock price on the date of grant. Restricted stock units generally vest at the end of a three year period. In 2012, 2011 and 2010, the weighted average grant-date fair value of restricted stock units granted was $6.36, $7.01 and $7.64, respectively. The Company recorded $1,556,000, $1,799,000 and $3,126,000 of compensation expense related to restricted stock units, in 2012, 2011 and 2010, respectively. The table below is a roll-forward of the activity for restricted stock units during the 12 months ended December 31, 2012 (in thousands, except fair value amounts):


Restricted Stock Units	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		624		$	7.62
Granted		393			6.36
Vested		(354	)		7.61
Forfeited		(16	)		7.22

Nonvested at December 31, 2012		647		$	6.87

At December 31, 2012, there was $2,132,000 of total unrecognized compensation expense related to nonvested restricted stock units granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 1.53 years. The amount of unrecognized compensation expense noted above does not necessarily represent the amount that will ultimately be realized by the Company in its consolidated statement of operations.

Phantom Stock Units

Phantom stock units (“PSUs”) awarded under the 2004 Plan are a form of share-based award that are indexed to the Company’s stock and are settled in cash. Because PSUs are settled in cash, compensation expense recognized over the vesting period will vary based on changes in fair value. Fair value is remeasured at the end of each interim reporting period based on the closing price of the Company’s stock. PSUs vest at the end of a three year period.

The weighted average grant-date fair value per share of PSUs granted to employees during the years ended December 31, 2012 and 2011 was $6.37 and $7.51, respectively. The Company did not grant PSUs in 2010.

The table below is a roll-forward of the activity for phantom stock units during the 12 months ended December 31, 2012 (in thousands, except fair value amounts):


Phantom Stock Units	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		721		$	7.68
Granted		401			6.37
Vested		(389	)		7.79
Forfeited		(225	)		7.22

Nonvested at December 31, 2012		508		$	6.77

In connection with these awards, the Company recognized compensation expense of $1,724,000, $2,095,000 and $3,801,000 for the years ended December 31, 2012, 2011 and 2010, respectively. Accrued compensation expense for PSUs was $1,324,000 at December 31, 2012, which was included in long-term incentive compensation and other in the accompanying consolidated balance sheet. At December 31, 2011, the Company accrued compensation expense of $1,919,000 of which $1,325,000 was included in accrued employee compensation and benefits and $594,000 was included in long-term incentive compensation and other in the accompanying consolidated balance sheet.

Stock Appreciation Rights

The Company records compensation expense for cash settled stock appreciation rights (“SARs”) based on the estimated fair value on the date of grant using the Black Scholes option-pricing model. SARs are subsequently remeasured at each interim reporting period based on a revised Black Scholes value until they are exercised. SARs vest over a three year period. As of December 31, 2012 and 2011, the Company recognized $2,285,000 and $321,000, respectively, in compensation expense related to these awards. At December 31, 2012, the Company accrued compensation expense of $2,607,000, of which $1,819,000 and $788,000 was included in accrued employee compensation and benefits and long-term incentive compensation and other, respectively, in the accompanying consolidated balance sheet. At December 31, 2011, the Company accrued $321,000, which was included in accrued employee compensation and benefits in the accompanying consolidated balance sheet.

The table below summarizes the total number of SARs granted to employees during the years ended December 31, 2012 and 2011 (in thousands):


Stock Appreciation Rights	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		500		$	5.50
Granted		3,377			6.57
Vested		—			—
Forfeited		(882	)		6.52

Nonvested at December 31, 2012		2,995		$	6.42

Employee Stock Purchase Plan

The Company offered an employee stock purchase program in which participating employees authorized the Company to withhold compensation and use the withheld amounts to purchase shares of the Company’s common stock at 85% of the closing price on the last day of each six-month offering period. In 2011, the Company terminated this program. In 2011 and 2010 the Company purchased approximately 376,000 and 409,000 shares, respectively, of common stock under this program on behalf of participating employees and recorded compensation expense of $234,000 and $404,000, respectively.

Share-Based Compensation Expense

The table below summarizes the amounts recognized in the financial statements for the years ended December 31, 2012, 2011 and 2010 for share-based compensation related to employees and directors. Amounts are in thousands, except for per share data.


	2012			2011			2010
Cost of sales	$	276		$	424		$	938
Operating expenses		6,874			10,882			12,451

Total cost of employee share-based compensation included in loss before income tax		7,150			11,306			13,389
Income tax benefit⁽¹⁾		(96	)		(77	)		(4,406	)

Amount included in net loss	$	7,054		$	11,229		$	8,983

Impact on net loss per common share:
Basic and diluted	$	(0.11	)	$	(0.17	)	$	(0.14	)

(1)	Due to the effects the deferred tax asset valuation allowance, the Company’s effective tax rate for 2012 and 2011 is not comparable to the effective tax rate for 2010 as the Company’s income tax amount is not directly correlated to the amount of its pre-tax loss in both periods (see Note 12).

In 2010, in connection with an employment agreement with a former executive officer of the Company, the Company was contractually obligated to grant $11,730,000 in the form of various share-based awards over the service period stipulated in the agreement. As a result, the total contractual obligation related to these equity awards was recognized on a straight-line basis over the contract term, which resulted in the recognition of compensation expense of $1,415,000 and $2,401,000 in 2011 and 2010, respectively. In 2011, as a result of the resignation of the executive officer, the Company accelerated the vesting period of all outstanding equity awards granted under the employment agreement, which resulted in the recognition of additional compensation expense of $2,136,000.

In connection with the Cost Reduction Initiatives announced in July 2012 (see Note 3), the Company recognized $416,000 during the year ended December 31, 2012 in stock compensation expense as a result of the contractual acceleration of the vesting of certain stock options, restricted stock units and phantom stock units. In connection with the Reorganization and Reinvestment Initiatives announced in June 2011 (see Note 3), the Company recognized $3,539,000 during the year ended December 31, 2011 in stock compensation expense as a result of the contractual acceleration of the vesting of certain stock options, restricted stock units and phantom stock units. There were no material award accelerations during 2010.

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 1
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Employee Benefit Plans

Note 16. Employee Benefit Plans

The Company has a voluntary deferred compensation plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for all employees who satisfy the age and service requirements under the 401(k) Plan. Each participant may elect to contribute up to 75% of annual compensation, up to the maximum permitted under federal law. In 2012, the Company matched amounts equal to 50% of the participant’s contributions up to 6% of their eligible annual compensation. In 2011 and 2010, the Company matched an amount equal to 100% of the participant’s contributions up to 6% of their eligible annual compensation.

The portion of the participant’s account attributable to elective deferral contributions and rollover contributions are 100% vested and nonforfeitable. Participants vest in employer matching and profit sharing contributions at a rate of 50% per year, becoming fully vested after the completion of two years of service. In accordance with the provisions of the 401(k) Plan, the Company matched employee contributions in the amount of $2,156,000, $5,061,000 and $5,431,000 during 2012, 2011 and 2010, respectively. Additionally, the Company can make discretionary contributions based on the profitability of the Company. For the years ended December 31, 2012, 2011 and 2010 there were no discretionary contributions.

Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements

Note 17. Fair Value Measurements

Certain of the Company’s financial assets and liabilities are measured at fair value on a recurring and nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or the price paid to transfer a liability (the exit price) in the principle and most advantageous market for the asset or liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified using the following three-tier hierarchy:

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 3: Fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The following table summarizes the valuation of the Company’s foreign currency exchange contracts (see Note 18) that are measured at fair value on a recurring basis by the above pricing levels at December 31, 2012 (in thousands):


	Fair Value			Level 1		Level 2			Level 3
Foreign currency derivative instruments—asset position	$	5,011		$	—	$	5,011		$	—
Foreign currency derivative instruments—liability position		(1,046	)		—		(1,046	)		—

	$	3,965		$	—	$	3,965		$	—

The fair value of the Company’s foreign currency exchange contracts is based on observable inputs that are corroborated by market data. Foreign currency derivatives on the balance sheet are recorded at fair value with changes in fair value recorded in the statement of operations.

Nonrecurring Fair Value Measurements

The Company measures certain assets at fair value on a nonrecurring basis at least annually or when certain indicators are present. These assets include long-lived assets, goodwill and non-amortizing intangible assets that are written down to fair value when they are held for sale or determined to be impaired. As the implied fair value for the items discussed below was based on significant, unobservable inputs, the fair value measurements are classified as Level 3.

During 2012, in connection with the Cost Reduction Initiatives (see Note 3), the Company committed to a plan to sell its golf ball manufacturing facility in Chicopee, Massachusetts. In connection with designating this building as available for sale, the Company recorded an impairment charge of $7,939,000 to write the building down to its estimated selling price, net of estimated commissions and fees (see Note 7). In addition, in connection with the same initiatives, the Company committed to a plan to transition its integrated device business to a third party based model. As a result, the Company performed an impairment analysis that was based on a discounted cash flow model on the net realizable value of its uPro assets, which resulted in impairment charges of $5,156,000 to write-off amortizing intangibles and goodwill (see Note 8), and $4,345,000 to write-off property, plant and equipment associated with uPro devices (see Note 3). Also in connection with the Cost Reduction Initiatives, during the fourth quarter of 2012, the Company determined that the sum of the future cash flows expected to result from the use of its Top-Flite patents was less than their carrying amount and, as a result, the Company recognized an impairment charge of $4,572,000 to write-off the net book value of these patents (see Note 8).

In the fourth quarter of 2011, the Company conducted an impairment test on goodwill related to its reporting unit in Australia. Due to the negative impact of significant flooding and inclement weather as well as a decline in economic conditions in that region during 2011, the Company determined that the estimated fair value for this unit was less than the unit’s net book value including goodwill. As a result, the Company recorded an impairment charge of $1,120,000 to write-off the goodwill balance related to this reporting unit. In June 2011, the Company recorded an impairment charge of $5,413,000 related to the trade names and trademarks included in non-amortizing intangibles that were associated with the Top-Flite and Ben Hogan brands. This charge was recorded in general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2011.

In 2010, the Company recorded an impairment charge of $7,547,000 related to the trade names and trademarks included in non-amortizing intangibles that were associated with the Top-Flite and Ben Hogan brands. This charge was recorded in general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2010.

Disclosures about the Fair Value of Financial Instruments

The table below illustrates information about fair value relating to the Company’s financial assets and liabilities that are recognized on the accompanying consolidated balance sheets as of December 31, 2012 and 2011, as well as the fair value of contingent contracts that represent financial instruments (in thousands). The carrying values of cash and cash equivalents, trade accounts receivable and trade accounts payable and accrued expenses at December 31, 2012 and 2011 are reasonable estimates of fair value due to the short-term nature of these balances.


	December 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible notes	$	107,133	$	118,406	$	—	$	—
Standby letters of credit		3,265		3,265		500		500

The carrying value of the convertible notes at December 31, 2012 is net of the unamortized discount of $5,367,000 (see Note 3). The fair value of the convertible notes was determined based on secondary quoted market prices, and as such is classified as Level 2 in the fair value hierarchy. Amounts outstanding under standby letters of credit represent the Company’s contingent obligation to perform in accordance with the underlying contracts to which they pertain. The fair value of standby letters is classified as Level 1 as it approximates the carrying value due to the short term nature of these obligations.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 825
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-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Derivatives and Hedging

12 Months Ended

Dec. 31, 2012

Derivatives and Hedging

Note 18. Derivatives and Hedging

Foreign Currency Exchange Contracts

The Company accounts for its foreign currency exchange contracts in accordance with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). ASC 815 requires the recognition of all derivatives as either assets or liabilities on the balance sheet, the measurement of those instruments at fair value and the recognition of changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures. In addition, it requires enhanced disclosures regarding derivative instruments and hedging activities to better convey the purpose of derivative use in terms of the risks the Company is intending to manage, specifically about (a) how and why the Company uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under ASC 815, and (c) how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows.

In the normal course of business, the Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions of its international subsidiaries, including certain balance sheet exposures (payables and receivables denominated in foreign currencies). In addition, the Company is exposed to gains and losses resulting from the translation of the operating results of the Company’s international subsidiaries into U.S. dollars for financial reporting purposes. As part of its strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates, the Company uses derivative financial instruments in the form of foreign currency forward contracts and put and call option contracts (“foreign currency exchange contracts”) to hedge transactions that are denominated primarily in Japanese Yen, British Pounds, Euros, Canadian Dollars, Australian Dollars and Korean Won. Foreign currency exchange contracts are used only to meet the Company’s objectives of minimizing variability in the Company’s operating results arising from foreign exchange rate movements. The Company does not enter into foreign currency exchange contracts for speculative purposes. Foreign currency exchange contracts usually mature within twelve months from their inception.

During the years ended December 31, 2012, 2011 and 2010, the Company did not designate any foreign currency exchange contracts as derivatives that qualify for hedge accounting under ASC 815. At December 31, 2012, 2011 and 2010, the notional amounts of the Company’s foreign currency exchange contracts used to hedge the exposures discussed above were approximately $137,125,000, $165,533,000 and $314,190,000, respectively. The Company estimates the fair values of foreign currency exchange contracts based on pricing models using current market rates, and records all derivatives on the balance sheet at fair value with changes in fair value recorded in the statement of operations.

The following table summarizes the fair value of derivative instruments by contract type as well as the location of the asset and/or liability on the consolidated balance sheets at December 31, 2012 and 2011 (in thousands):

Asset Derivatives

December 31, 2012

December 31, 2011

Derivatives not designated as hedging

instruments

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Foreign currency exchange contracts

Other current assets

5,011

Other current assets

2,514

Liability Derivatives

December 31, 2012

December 31, 2011

Derivatives not designated as hedging

instruments

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Foreign currency exchange contracts

Accounts payable and
accrued expenses

1,046

Accounts payable and
accrued expenses

3,746

The following table summarizes the location of gains and losses on the consolidated statements of operations that were recognized during the years ended December 31, 2012, 2011 and 2010, respectively, in addition to the derivative contract type (in thousands):


		Amount of Gain / (Loss) Recognized in Income on Derivative Instruments
		Year Ended December 31,
Derivatives not designated as hedging instruments	Location of gain (loss) recognized in income on derivative instruments	2012		2011			2010
Foreign currency exchange contracts	Other income (expense), net	$	6,591	$	(8,861	)	$	(18,600	)

The net realized and unrealized contractual net gains and (losses) noted in the table above for the years ended December 31, 2012, 2011 and 2010 were used by the Company to offset actual foreign currency transactional net gains associated with assets and liabilities denominated in foreign currencies as well as net gains associated with the translation of foreign currencies in operating results.

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information

Note 19. Segment Information

The Company’s operating segments are organized on the basis of products and include golf clubs and golf balls. During the first quarter of 2012, the Company completed the sale of certain assets related to the Top-Flite brand as well as the sale of the Ben Hogan brand (see Note 8). Prior to the first quarter of 2012, the golf clubs segment consisted primarily of Callaway Golf and Top-Flite woods, hybrids, irons, wedges and putters as well as Odyssey putters, pre-owned clubs, GPS devices and rangefinders, other golf-related accessories and royalties from licensing of the Company’s trademarks and service marks. Prior to the first quarter of 2012, the golf balls segment consisted primarily of Callaway Golf and Top-Flite 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.


	2012			2011			2010
	(In thousands)
Net sales
Golf Clubs	$	694,489		$	726,169		$	791,066
Golf Balls		139,576			160,359			176,590

	$	834,065		$	886,528		$	967,656

Loss before income tax
Golf Clubs⁽¹⁾	$	(59,827	)	$	(3,899	)	$	39,176
Golf Balls⁽¹⁾		(15,019	)		(12,655	)		2,559
Reconciling items⁽²⁾		(43,200	)		(73,707	)		(77,297	)

	$	(118,046	)	$	(90,261	)	$	(35,562	)

Identifiable assets⁽³⁾
Golf Clubs	$	328,210		$	409,074		$	438,002
Golf Balls⁽⁴⁾		64,203			92,280			122,147
Reconciling items⁽³⁾		245,223			225,758			315,863

	$	637,636		$	727,112		$	876,012

Additions to long-lived assets
Golf Clubs	$	16,347		$	23,087		$	20,548
Golf Balls		260			6,680			2,023

	$	16,607		$	29,767		$	22,571

Goodwill
Golf Clubs	$	29,034		$	29,203		$	30,630
Golf Balls		—			—			—

	$	29,034		$	29,203		$	30,630

Depreciation and amortization
Golf Clubs	$	21,096		$	26,695		$	26,582
Golf Balls		13,315			11,941			14,367

	$	34,411		$	38,636		$	40,949

(1)	The table 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, 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


	Year Ended December 31, 2010
	Golf Clubs		Golf Balls		Corporate G&A⁽²⁾		Total
GOS Initiatives	$	12,065	$	762	$	1,989	$	14,816

(2)

•

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 September 30, 2012 (see Note 8);

•

Pre-tax impairment charges of $6,533,000 and $7,547,000 for 2011 and 2010, respectively, primarily related to certain trademarks and trade names (see Note 8);

•

Net gains of $3,248,000 for 2012, and net losses of $8,153,000 and $11,674,000 for 2011 and 2010, 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 $6,170,000 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 and $1,500,000 in 2010. Property held for sale in 2012 and 2010 represents the net book value of the Company’s golf ball manufacturing facility in Chicopee, Massachusetts (see Note 7), and the golf ball manufacturing facility in Gloversville, New York, respectively.

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


	Year Ended December 31,
	2012		2011⁽¹⁾		2010
	(In thousands)
Net sales:
Drivers and Fairway Woods	$	200,588	$	211,191	$	225,227
Irons		170,794		206,817		223,875
Putters		93,325		88,160		106,246
Golf Balls		139,576		160,359		176,590
Accessories and Other		229,782		220,001		235,718

	$	834,065	$	886,528	$	967,656

(1)	Certain prior period amounts were reclassified to conform with the current year presentation.

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)
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

2010
United States	$	468,214	$	291,527
Europe		130,106		6,806
Japan		164,810		8,635
Rest of Asia		89,455		4,511
Other foreign countries		115,071		17,018

	$	967,656	$	328,497

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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Transactions with Related Parties

Transactions with Related Parties

12 Months Ended

Dec. 31, 2012

Note 20. Transactions with Related Parties

The Callaway Golf Company Foundation (the “Foundation”) oversees and administers charitable giving for the Company and makes grants to carefully selected organizations. Officers of the Company also serve as directors of the Foundation and the Company’s employees provide accounting and administrative services for the Foundation. During 2012, 2011 and 2010, the Company did not make any contributions to the Foundation.

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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-Number 210
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Summarized Quarterly Data (Unaudited)

Summarized Quarterly Data (Unaudited)

12 Months Ended

Dec. 31, 2012

Note 21. Summarized Quarterly Data (Unaudited)


	Fiscal Year 2012 Quarters
	1st		2nd		3rd			4th			Total
	(In thousands, except per share data)
Net sales	$	285,098	$	281,123	$	147,906		$	119,938		$	834,065
Gross profit⁽¹⁾	$	124,371	$	110,653	$	3,800		$	9,344		$	248,168
Net income (loss)^(2) (3)	$	31,802	$	2,799	$	(86,798	)	$	(70,749	)	$	(122,946	)
Dividends on convertible preferred stock	$	2,625	$	2,625	$	2,414		$	783		$	8,447
Net income (loss) allocable to common shareholders⁽²⁾⁽³⁾	$	29,177	$	174	$	(89,212	)	$	(71,532	)	$	(131,393	)
Earnings (loss) per common share⁽¹¹⁾
Basic⁽²⁾⁽³⁾	$	0.45	$	0.00	$	(1.31	)	$	(1.01	)	$	(1.96	)
Diluted⁽²⁾⁽³⁾	$	0.37	$	0.00	$	(1.31	)	$	(1.01	)	$	(1.96	)


	Fiscal Year 2011 Quarters
	1st		2nd			3rd			4th			Total
	(In thousands, except per share data)
Net sales	$	285,599	$	273,814		$	173,243		$	153,872		$	886,528
Gross profit⁽⁴⁾	$	123,681	$	102,662		$	47,386		$	37,573		$	311,302
Net income (loss)^{(5)(6)(7)(8)(9)}	$	12,818	$	(59,066	)	$	(62,587	)	$	(62,985	)	$	(171,820	)
Dividends on convertible preferred stock	$	2,625	$	2,625		$	2,625		$	2,625		$	10,500
Net income (loss) allocable to common shareholders	$	10,193	$	(61,691	)	$	(65,212	)	$	(65,610	)	$	(182,320	)
Earnings (loss) per common share⁽¹⁰⁾
Basic^{(5)(6)(7)(8)(9)}	$	0.16	$	(0.96	)	$	(1.01	)	$	(1.01	)	$	(2.82	)
Diluted^{(5)(6)(7)(8)(9)}	$	0.15	$	(0.96	)	$	(1.01	)	$	(1.01	)	$	(2.82	)

(1)	During the second, third and fourth quarters of 2012, the Company recognized charges of $961,000, $27,302,000, and $7,965,000, respectively, in cost of goods sold in connection with the Company’s Cost Reduction Initiatives (see Note 3).

(2)	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).

(3)	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company’s Cost Reduction Initiatives (see Note 3).

(4)	During the first, second, third and fourth quarters of 2011, the Company recognized charges of $6,302,000, $5,847,000, $5,191,000, and $3,250,000, respectively, in cost of goods sold in connection with the Company’s GOS Initiatives (see Note 3).

(5)

During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).

(6)	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company’s Reorganization and Restructuring Initiatives (see Note 3).

(7)

During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company’s GOS Initiatives (see Note 3).

(8)	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).

(9)	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).

(10)	Earnings per share is computed individually for each of the quarters presented; therefore, the sum of the quarterly earnings per share may not necessarily equal the total for the year.

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

Principles of Consolidation

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Principles of Consolidation

Use of Estimates

Use of Estimates

Recent Accounting Standards

Recent Accounting Standards

Revenue Recognition

Revenue Recognition


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	6,521		$	4,955		$	5,725
Provision		32,425			36,239			29,026
Sales returns		(32,563	)		(34,673	)		(29,796	)

Ending balance	$	6,383		$	6,521		$	4,955

Amounts billed to customers for shipping and handling are included in net sales and costs incurred related to shipping and handling are included in cost of sales.

Warranty Policy

Warranty Policy


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	8,140		$	8,427		$	9,449
Provision		7,507			8,614			8,439
Claims paid/costs incurred		(8,108	)		(8,901	)		(9,461	)

Ending balance	$	7,539		$	8,140		$	8,427

Fair Value Measurements

Fair Value Measurements

Level 1: Quoted market prices in active markets for identical assets or liabilities;

Level 3: Fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Advertising Costs

Advertising Costs

Research And Development Costs

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs for 2012, 2011 and 2010 were $29,542,000, $34,309,000 and $36,383,000, respectively.

Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

Derivatives and Hedging

Derivatives and Hedging

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash equivalents are highly liquid investments purchased with original maturities of three months or less.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	7,263		$	9,411		$	9,470
Provision		2,830			2,028			3,091
Write-off of uncollectible amounts, net of recoveries		(3,549	)		(4,176	)		(3,150	)

Ending balance	$	6,544		$	7,263		$	9,411

Inventories

Inventories

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated useful lives as follows:


Buildings and improvements			10-30 years
Machinery and equipment			5-10 years
Furniture, computers and equipment			3-5 years
Production molds			2-5 years

Long-Lived Assets

Long-Lived Assets

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Investments

Investments

Share-Based Compensation

Share-Based Compensation

Income Taxes

Income Taxes

Other Income (Expense), Net

Other Income (Expense), Net

Other income (expense), net primarily includes gains and losses on foreign currency exchange contracts and foreign currency transactions. The components of other income (expense), net are as follows:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Foreign currency exchange contract gains/(losses), net	$	6,591		$	(8,861	)	$	(18,600	)
Foreign currency transaction gains/(losses), net		(3,343	)		708			6,926
Gains on deferred compensation plan assets		—			—			199
Other		(96	)		52			478

	$	3,152		$	(8,101	)	$	(10,997	)

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Segment Information

Segment Information

Concentration of Credit Risk

Concentration of Credit Risk

The Company’s financial instruments that are subject to concentrations of credit risk consist primarily of cash equivalents, trade receivables and foreign currency exchange contracts.

Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Reconciliation of Allowance for Sales Returns

The following table provides a reconciliation of the activity related to the Company’s allowance for sales returns:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	6,521		$	4,955		$	5,725
Provision		32,425			36,239			29,026
Sales returns		(32,563	)		(34,673	)		(29,796	)

Ending balance	$	6,383		$	6,521		$	4,955

Reconciliation of Reserve for Warranty Expense

The following table provides a reconciliation of the activity related to the Company’s reserve for warranty expense:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	8,140		$	8,427		$	9,449
Provision		7,507			8,614			8,439
Claims paid/costs incurred		(8,108	)		(8,901	)		(9,461	)

Ending balance	$	7,539		$	8,140		$	8,427

Reconciliation of Allowance for Doubtful Accounts

The following table provides a reconciliation of the activity related to the Company’s allowance for doubtful accounts:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Beginning balance	$	7,263		$	9,411		$	9,470
Provision		2,830			2,028			3,091
Write-off of uncollectible amounts, net of recoveries		(3,549	)		(4,176	)		(3,150	)

Ending balance	$	6,544		$	7,263		$	9,411

Estimated Useful Lives

Depreciation is computed using the straight-line method over estimated useful lives as follows:


Buildings and improvements			10-30 years
Machinery and equipment			5-10 years
Furniture, computers and equipment			3-5 years
Production molds			2-5 years

Other Income (Expense) Net

The components of other income (expense), net are as follows:


	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Foreign currency exchange contract gains/(losses), net	$	6,591		$	(8,861	)	$	(18,600	)
Foreign currency transaction gains/(losses), net		(3,343	)		708			6,926
Gains on deferred compensation plan assets		—			—			199
Other		(96	)		52			478

	$	3,152		$	(8,101	)	$	(10,997	)

Selected Financial Statement Information (Tables)

12 Months Ended

Dec. 31, 2012

Restructuring Activity and Liability Balances Recorded


	December 31,
	2012			2011
	(In thousands)
Accounts receivable, net:
Trade accounts receivable	$	103,999		$	129,457
Allowance for sales returns		(6,383	)		(6,521	)
Allowance for doubtful accounts		(6,544	)		(7,263	)

	$	91,072		$	115,673

Inventories:
Raw materials	$	43,469		$	46,976
Work-in-process		619			1,286
Finished goods		167,646			184,808

	$	211,734		$	233,070

Property, plant and equipment, net:
Land	$	8,892		$	8,871
Buildings and improvements		79,707			81,349
Machinery and equipment		153,303			154,339
Furniture, computers and equipment		126,733			126,592
Production molds		37,539			39,761
Construction-in-process		1,155			6,591

		407,329			417,503
Accumulated depreciation		(318,236	)		(300,356	)

	$	89,093		$	117,147

Accounts payable and accrued expenses:
Accounts payable	$	45,376		$	39,012
Accrued expenses		67,254			72,465
Accrued goods in-transit		15,345			13,970
Accrued hedging contracts payable		1,046			3,746

	$	129,021		$	129,193

Accrued employee compensation and benefits:
Accrued payroll and taxes	$	12,256		$	13,550
Accrued vacation and sick pay		7,549			8,947
Accrued commissions		844			1,288

	$	20,649		$	23,785

Cost Reduction Initiatives

Restructuring Activity and Liability Balances Recorded


	Cost Reduction Initiatives
	Workforce Reductions			Transition Costs			Asset Write-offs			Total
Charges to cost and expense	$	14,506		$	6,719		$	32,836		$	54,061
Non-cash items		(448	)		(4,311	)		(32,836	)		(37,595	)
Cash payments		(9,527	)		(1,817	)		—			(11,344	)

Restructuring payable balance, December 31, 2012	$	4,531		$	591		$	—		$	5,122

Total future estimated charges as of December 31, 2012	$	1,300		$	4,600		$	—		$	5,900

Global Operations Strategy, Reorganization and Reinvestment Initiatives

Restructuring Activity and Liability Balances Recorded


	GOS Initiatives									Reorganization and Reinvestment Initiatives
	Workforce Reductions			Transition Costs			Asset Write-offs			Workforce Reductions			Total
Charges to cost and expense	$	5,177		$	7,861		$	1,778		$	—		$	14,816
Non-cash items		—			—			(1,778	)		—			(1,778	)
Cash payments		(1,909	)		(7,477	)		—			—			(9,386	)

Restructuring payable balance, December 31, 2010	$	3,268		$	384		$	—		$	—		$	3,652
Charges to cost and expense		4,702			17,527			2,451			16,329			41,009
Non-cash items		—			—			(2,451	)		(2,126	)		(4,577	)
Cash payments		(6,751	)		(17,856	)		—			(8,846	)		(33,453	)

Restructuring payable balance, December 31, 2011	$	1,219		$	55		$	—		$	5,357		$	6,631
Charges to cost and expense		(98	)		21			—			1,012			935
Cash payments		(985	)		(76	)		—			(6,316	)		(7,377	)

Restructuring payable balance, December 31, 2012	$	136		$	—		$	—		$	53		$	189

Loss per Common Share (Tables)

12 Months Ended

Dec. 31, 2012

Computation of Basic and Diluted Earnings Per Share

The following table summarizes the computation of basic and diluted loss per share:


	Year Ended December 31,
	2012			2011			2010
	(In thousands, except per share data)
Basic and diluted loss per common share
Net loss	$	(122,946	)	$	(171,820	)	$	(18,804	)
Less: Preferred stock dividends		(8,447	)		(10,500	)		(10,500	)

Net loss allocable to common shareholders	$	(131,393	)	$	(182,320	)	$	(29,304	)

Weighted-average common shares outstanding—basic and diluted		67,061			64,601			63,902
Basic and diluted loss per common share	$	(1.96	)	$	(2.82	)	$	(0.46	)

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2012

Intangible Assets by Major Asset Class

The following sets forth the intangible assets by major asset class:


	Useful Life (Years)		December 31, 2012						December 31, 2011
	Useful Life (Years)		Gross		Accumulated Amortization		Net Book Value		Gross		Accumulated Amortization		Net Book Value
					(In thousands)						(In thousands)
Indefinite-lived:
Trade name, trademark and trade dress and other		NA	$	88,590	$	—	$	88,590	$	108,834	$	—	$	108,834
Amortizing:
Patents		2-16		31,581		31,022		559		36,459		28,908		7,551
Developed technology and other		1-9		7,961		7,921		40		12,387		6,837		5,550

Total intangible assets			$	128,132	$	38,943	$	89,189	$	157,680	$	35,745	$	121,935

Amortization Expense Related to Intangible Assets

Amortization expense related to intangible assets at December 31, 2012 in each of the next five fiscal years and beyond is expected to be incurred as follows (in thousands):


2013		288
2014		68
2015		51
2016		51
2017		51
Thereafter		90

	$	599

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Loss Before Income Tax Provision (Benefit)

The Company’s loss before income tax provision (benefit) was subject to taxes in the following jurisdictions for the following periods (in thousands):


	Year Ended December 31,
	2012			2011			2010
United States	$	(134,384	)	$	(105,841	)	$	(46,365	)
Foreign		16,338			15,580			10,803

	$	(118,046	)	$	(90,261	)	$	(35,562	)

Expense Benefit for Income Taxes

The expense (benefit) for income taxes is comprised of (in thousands):


	Year Ended December 31,
	2012			2011		2010
Current tax provision (benefit):
Federal	$	(357	)	$	19,908	$	(18,494	)
State		130			580		361
Foreign		6,804			4,964		5,743

		6,577			25,452		(12,390	)

Deferred tax expense (benefit):
Federal		(1,448	)		43,948		117
State		92			10,987		(2,988	)
Foreign		(321	)		1,172		(1,497	)

		(1,677	)		56,107		(4,368	)

Income tax provision (benefit)	$	4,900		$	81,559	$	(16,758	)

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2012 and 2011 are as follows (in thousands):


	December 31,
	2012			2011
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$	15,617		$	14,161
Basis difference related to fixed assets		10,711			7,891
Compensation and benefits		3,808			3,932
Basis difference for inventory valuation		2,502			2,252
Compensatory stock options and rights		5,238			9,927
Deferred revenue and other		101			2,151
Operating loss carryforwards		105,748			66,332
Tax credit carryforwards		6,024			9,402
Correlative effects of global income allocations		363			424
Federal impact of state taxes		808			—
Basis difference related to intangible assets with a definite life		6,165			2,725

Total deferred tax assets		157,085			119,197
Valuation allowance for deferred tax assets		(151,097	)		(110,844	)

Deferred tax assets, net of valuation allowance	$	5,988		$	8,353

Deferred tax liabilities:
State taxes, net of federal income tax benefit		(33	)		(1,472	)
Prepaid expenses		(1,102	)		(2,582	)
Deferred revenue		(330	)		—
Other		(69	)		(108	)
Basis difference related to intangible assets with an indefinite life		(32,834	)		(34,313	)

Total deferred tax liabilities		(34,368	)		(38,475	)

Net deferred tax assets	$	(28,380	)	$	(30,122	)

Net deferred tax assets are shown on the accompanying consolidated balance sheets as follows:
Current deferred tax assets	$	4,170		$	4,029
Non-current deferred tax assets		1,910			1,386
Current deferred tax liabilities		(927	)		(4,108	)
Non-current deferred tax liabilities		(33,533	)		(31,429	)

Net deferred tax assets (liabilities)	$	(28,380	)	$	(30,122	)

Credit Carryforward Expiry


U.S. foreign tax credit	2,776	2020 - 2022
U.S. research tax credit	1,578	2030 - 2032
State investment tax credits	197	Do not expire
State research tax credits	6,788	Do not expire

Net Operating Losses Expiry

The net operating losses (in thousands) expire as follows:


U.S. loss carryforwards	$	272,861	2031 - 2032
State loss carryforwards	$	186,344	2013 - 2035
Foreign loss carryforwards	$	492	2019

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:


	Year Ended December 31,
	2012			2011			2010
Statutory U.S. tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of U.S. tax benefit		(0.8	)%		(0.8	)%		1.5	%
Federal and State tax credits, net of U.S. tax benefit		—			—			2.6	%
Expenses with no tax benefit		(0.9	)%		0.2	%		(2.4	)%
Foreign income taxed at other than U.S. statutory rate		2.0	%		(1.0	)%		1.5	%
Effect of foreign rate changes		—			(0.5	)%		—
Foreign tax credit		(1.2	)%		—			—
Basis differences of intangibles with an indefinite life		1.3	%		(1.0	)%		—
Release of prepaid taxes on intercompany profit		—			(24.0	)%		—
Change in deferred tax valuation allowance		(37.7	)%		(98.6	)%		2.2	%
Reversal of previously accrued taxes		0.1	%		—			1.4	%
Accrual for interest and income taxes related to uncertain tax positions		0.8	%		(0.6	)%		5.2	%
Other		(2.8	)%		0.9	%		0.1	%

Effective tax rate		(4.2	)%		(90.4	)%		47.1	%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	2012			2011			2010
Balance at January 1	$	9,875		$	9,121		$	15,831
Additions based on tax positions related to the current year		432			830			1,825
Additions for tax positions of prior years		96			370			110
Reductions for tax positions of prior years		(24	)		(39	)		(1,832	)
Settlement of tax audits		(768	)		—			(4,157	)
Reductions due to lapsed statute of limitations		(2,547	)		(407	)		(2,656	)

Major Jurisdictions No Longer Subject to Income Tax Examinations by Tax Authorities

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		2008 and prior
California (U.S.)		2006 and prior
Canada		2007 and prior
Japan		2007 and prior
South Korea		2008 and prior
United Kingdom		2008 and prior

Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

Tabular disclosure of tax credit carryforwards available to reduce future taxable income, including amounts, expiration dates, limitations on use and the related deferred tax assets and valuation allowances.

Commitments for Minimum Lease Payments Under Non Cancelable Operating Leases

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments for minimum lease payments under non-cancelable operating leases as of December 31, 2012 are as follows (in thousands):


2013	$	12,914
2014		10,571
2015		5,849
2016		2,639
2017		1,717
Thereafter		313

	$	34,003

Future Purchase Commitments

Future purchase commitments as of December 31, 2012, are as follows (in thousands):


2013	$	50,097
2014		24,459
2015		3,363
2016		893
2017		406
Thereafter		—

	$	79,218

Capital Stock (Tables)

12 Months Ended

Dec. 31, 2012

Shares Released from Grantor Stock Trust

The following table presents shares released from the GST for the years ended December 31, 2011 and 2010:


	Year Ended December 31,
	2011		2010
	(In thousands)
Employee stock option exercises		—		62
Employee restricted stock units vested		205		221
Employee stock plan purchases		86		409

Total shares released from the GST		291		692

Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Shares Authorized, Available for Future Grant and Outstanding Under Each Plans

The following table presents shares authorized, available for future grant and outstanding under each of the Company’s plans as of December 31, 2012:


	Authorized		Available			Outstanding
	(In thousands)
1995 Employee Stock Incentive Plan		10,800		—			479
1996 Stock Option Plan		9,000		—			247
2001 Directors Plan		500		10	⁽¹⁾		258
2004 Plan		17,500		4,784			4,836

Total		37,800		4,794			5,820

(1)	The Company’s 2001 Non-Employee Directors Plan expired on December 31, 2011. The shares available for grant under this plan are only available to satisfy incremental dividend equivalent rights for outstanding awards.

Average Fair Value Assumptions Used in Valuation of Stock Options Granted

The table below summarizes the average fair value assumptions used in the valuation of stock options granted during the years ended December 31, 2012, 2011 and 2010.


	2012		2011		2010
Dividend yield		1.2%		1.4%		1.1%
Expected volatility		50.6%		48.5%		46.2%
Risk-free interest rate		0.8%		2.0%		2.2%
Expected life		4.9 years		5.0 years		4.7 years

Stock Option Activities

The following table summarizes the Company’s stock option activities for the year ended December 31, 2012 (in thousands, except price per share and contractual term):


Options	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		9,912		$	11.23
Granted		5		$	6.69
Exercised		(3	)	$	5.61
Forfeited		(194	)	$	7.50
Expired		(4,553	)	$	11.55

Outstanding at December 31, 2012		5,167		$	11.08		3.18	$	3
Vested and expected to vest in the future at December 31, 2012		5,155		$	11.09		3.04	$	3
Exercisable at December 31, 2012		4,694		$	11.44		2.69	$	3

Roll-Forward of Activity for Restricted Stock Units

The table below is a roll-forward of the activity for restricted stock units during the 12 months ended December 31, 2012 (in thousands, except fair value amounts):


Restricted Stock Units	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		624		$	7.62
Granted		393			6.36
Vested		(354	)		7.61
Forfeited		(16	)		7.22

Nonvested at December 31, 2012		647		$	6.87

Roll-Forward of Activity for Phantom Stock Units

The table below is a roll-forward of the activity for phantom stock units during the 12 months ended December 31, 2012 (in thousands, except fair value amounts):


Phantom Stock Units	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		721		$	7.68
Granted		401			6.37
Vested		(389	)		7.79
Forfeited		(225	)		7.22

Nonvested at December 31, 2012		508		$	6.77

Summary of Total Number of Stock Appreciation Rights Granted

The table below summarizes the total number of SARs granted to employees during the years ended December 31, 2012 and 2011 (in thousands):


Stock Appreciation Rights	Units			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2012		500		$	5.50
Granted		3,377			6.57
Vested		—			—
Forfeited		(882	)		6.52

Nonvested at December 31, 2012		2,995		$	6.42

Share-Based Compensation Including Expense for Phantom Stock Units and Cash Settled Stock Appreciation Rights Granted to Employees


	2012			2011			2010
Cost of sales	$	276		$	424		$	938
Operating expenses		6,874			10,882			12,451

Total cost of employee share-based compensation included in loss before income tax		7,150			11,306			13,389
Income tax benefit⁽¹⁾		(96	)		(77	)		(4,406	)

Amount included in net loss	$	7,054		$	11,229		$	8,983

Impact on net loss per common share:
Basic and diluted	$	(0.11	)	$	(0.17	)	$	(0.14	)

Tabular disclosure of the allocation of equity-based compensation costs to a given line item on the balance sheet and income statement for the period. This may include the reporting line for the costs and the amount capitalized and expensed.

Valuation of Foreign Currency Exchange Contracts by Pricing Levels

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012


	Fair Value			Level 1		Level 2			Level 3
Foreign currency derivative instruments—asset position	$	5,011		$	—	$	5,011		$	—
Foreign currency derivative instruments—liability position		(1,046	)		—		(1,046	)		—

	$	3,965		$	—	$	3,965		$	—

Fair Value Relating to Financial Assets and Liabilities


	December 31, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible notes	$	107,133	$	118,406	$	—	$	—
Standby letters of credit		3,265		3,265		500		500

Derivatives and Hedging (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Fair Value of Derivative Instruments by Contract Type and Location of Asset and/or Liability on Consolidated Condensed Balance Sheets

Asset Derivatives

December 31, 2012

December 31, 2011

Derivatives not designated as hedging

instruments

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Foreign currency exchange contracts

Other current assets

5,011

Other current assets

2,514

Liability Derivatives

December 31, 2012

December 31, 2011

Derivatives not designated as hedging

instruments

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair
Value

Foreign currency exchange contracts

Accounts payable and
accrued expenses

1,046

Accounts payable and
accrued expenses

3,746

Location of Gains and Losses in Consolidated Condensed Statements of Operations that were Recognized and Derivative Contract Type


		Amount of Gain / (Loss) Recognized in Income on Derivative Instruments
		Year Ended December 31,
Derivatives not designated as hedging instruments	Location of gain (loss) recognized in income on derivative instruments	2012		2011			2010
Foreign currency exchange contracts	Other income (expense), net	$	6,591	$	(8,861	)	$	(18,600	)

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

Information Utilized by Management to Evaluate its Operating Segments

Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

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


	2012			2011			2010
	(In thousands)
Net sales
Golf Clubs	$	694,489		$	726,169		$	791,066
Golf Balls		139,576			160,359			176,590

	$	834,065		$	886,528		$	967,656

Loss before income tax
Golf Clubs⁽¹⁾	$	(59,827	)	$	(3,899	)	$	39,176
Golf Balls⁽¹⁾		(15,019	)		(12,655	)		2,559
Reconciling items⁽²⁾		(43,200	)		(73,707	)		(77,297	)

	$	(118,046	)	$	(90,261	)	$	(35,562	)

Identifiable assets⁽³⁾
Golf Clubs	$	328,210		$	409,074		$	438,002
Golf Balls⁽⁴⁾		64,203			92,280			122,147
Reconciling items⁽³⁾		245,223			225,758			315,863

	$	637,636		$	727,112		$	876,012

Additions to long-lived assets
Golf Clubs	$	16,347		$	23,087		$	20,548
Golf Balls		260			6,680			2,023

	$	16,607		$	29,767		$	22,571

Goodwill
Golf Clubs	$	29,034		$	29,203		$	30,630
Golf Balls		—			—			—

	$	29,034		$	29,203		$	30,630

Depreciation and amortization
Golf Clubs	$	21,096		$	26,695		$	26,582
Golf Balls		13,315			11,941			14,367

	$	34,411		$	38,636		$	40,949

(1)	The table 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, 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


	Year Ended December 31, 2010
	Golf Clubs		Golf Balls		Corporate G&A⁽²⁾		Total
GOS Initiatives	$	12,065	$	762	$	1,989	$	14,816

(2)

•

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 September 30, 2012 (see Note 8);

•

Pre-tax impairment charges of $6,533,000 and $7,547,000 for 2011 and 2010, respectively, primarily related to certain trademarks and trade names (see Note 8);

•

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)

Net Sales By Product Category

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


	Year Ended December 31,
	2012		2011⁽¹⁾		2010
	(In thousands)
Net sales:
Drivers and Fairway Woods	$	200,588	$	211,191	$	225,227
Irons		170,794		206,817		223,875
Putters		93,325		88,160		106,246
Golf Balls		139,576		160,359		176,590
Accessories and Other		229,782		220,001		235,718

	$	834,065	$	886,528	$	967,656

(1)	Certain prior period amounts were reclassified to conform with the current year presentation.

Revenues and Long Lived Assets

Long-lived assets are based on location of domicile.


	Sales		Long-Lived Assets (excluding deferred tax assets)
	(In thousands)
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

2010
United States	$	468,214	$	291,527
Europe		130,106		6,806
Japan		164,810		8,635
Rest of Asia		89,455		4,511
Other foreign countries		115,071		17,018

	$	967,656	$	328,497

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

Summarized Quarterly Data

Summarized Quarterly Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2012


	Fiscal Year 2012 Quarters
	1st		2nd		3rd			4th			Total
	(In thousands, except per share data)
Net sales	$	285,098	$	281,123	$	147,906		$	119,938		$	834,065
Gross profit⁽¹⁾	$	124,371	$	110,653	$	3,800		$	9,344		$	248,168
Net income (loss)^(2) (3)	$	31,802	$	2,799	$	(86,798	)	$	(70,749	)	$	(122,946	)
Dividends on convertible preferred stock	$	2,625	$	2,625	$	2,414		$	783		$	8,447
Net income (loss) allocable to common shareholders⁽²⁾⁽³⁾	$	29,177	$	174	$	(89,212	)	$	(71,532	)	$	(131,393	)
Earnings (loss) per common share⁽¹¹⁾
Basic⁽²⁾⁽³⁾	$	0.45	$	0.00	$	(1.31	)	$	(1.01	)	$	(1.96	)
Diluted⁽²⁾⁽³⁾	$	0.37	$	0.00	$	(1.31	)	$	(1.01	)	$	(1.96	)


	Fiscal Year 2011 Quarters
	1st		2nd			3rd			4th			Total
	(In thousands, except per share data)
Net sales	$	285,599	$	273,814		$	173,243		$	153,872		$	886,528
Gross profit⁽⁴⁾	$	123,681	$	102,662		$	47,386		$	37,573		$	311,302
Net income (loss)^{(5)(6)(7)(8)(9)}	$	12,818	$	(59,066	)	$	(62,587	)	$	(62,985	)	$	(171,820	)
Dividends on convertible preferred stock	$	2,625	$	2,625		$	2,625		$	2,625		$	10,500
Net income (loss) allocable to common shareholders	$	10,193	$	(61,691	)	$	(65,212	)	$	(65,610	)	$	(182,320	)
Earnings (loss) per common share⁽¹⁰⁾
Basic^{(5)(6)(7)(8)(9)}	$	0.16	$	(0.96	)	$	(1.01	)	$	(1.01	)	$	(2.82	)
Diluted^{(5)(6)(7)(8)(9)}	$	0.15	$	(0.96	)	$	(1.01	)	$	(1.01	)	$	(2.82	)

(1)	During the second, third and fourth quarters of 2012, the Company recognized charges of $961,000, $27,302,000, and $7,965,000, respectively, in cost of goods sold in connection with the Company’s Cost Reduction Initiatives (see Note 3).

(2)	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).

(3)	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company’s Cost Reduction Initiatives (see Note 3).

(4)	During the first, second, third and fourth quarters of 2011, the Company recognized charges of $6,302,000, $5,847,000, $5,191,000, and $3,250,000, respectively, in cost of goods sold in connection with the Company’s GOS Initiatives (see Note 3).

(5)

(6)	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company’s Reorganization and Restructuring Initiatives (see Note 3).

(7)

(8)	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).

(9)	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).

(10)	Earnings per share is computed individually for each of the quarters presented; therefore, the sum of the quarterly earnings per share may not necessarily equal the total for the year.

Reconciliation of Activity Related to Allowance for Sales Returns (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenue Recognition [Line Items]
Beginning balance	$ 6,521	$ 4,955	$ 5,725
Provision	32,425	36,239	29,026
Sales returns	(32,563)	(34,673)	(29,796)
Ending balance	$ 6,383	$ 6,521	$ 4,955

Significant Accounting Policies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Significant Accounting Policies [Line Items]
Royalty income under licensing agreements	$ 7,073,000	$ 6,219,000	$ 5,831,000
Advertising expenses	65,068,000	53,051,000	48,432,000
Research and development expenses	29,542,000	34,309,000	36,383,000
Foreign currency transaction gains (loss), net	(3,343,000)	708,000	$ 6,926,000
Accumulated other comprehensive income	$ 14,770,000	$ 14,071,000
Percentage of net sales from regions outside United States	53.00%	53.00%	52.00%
Percentage of revenues	No single customer in the United States represented over 10% of the Company's outstanding accounts receivable balance.	No single customer in the United States represented over 10% of the Company's outstanding accounts receivable balance.
Gift Cards
Significant Accounting Policies [Line Items]
Deferred revenue	$ 1,141,000	$ 1,988,000
Unused Course Credits
Significant Accounting Policies [Line Items]
Deferred revenue	$ 2,544,000	$ 2,945,000

Reconciliation of Reserve for Warranty Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Product Liability Contingency [Line Items]
Beginning balance	$ 8,140	$ 8,427	$ 9,449
Provision	7,507	8,614	8,439
Claims paid/costs incurred	(8,108)	(8,901)	(9,461)
Ending balance	$ 7,539	$ 8,140	$ 8,427

Carrying value as of the balance sheet date of obligations incurred through that date and payable for estimated claims under standard and extended warranty protection rights granted to customers. For classified balance sheets, represents the current portion of the liabilities (due within one year or within the normal operating cycle if longer).

Reconciliation of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Provisions for Doubtful Accounts [Line Items]
Beginning balance	$ 7,263	$ 9,411	$ 9,470
Provision	2,830	2,028	3,091
Write-off of uncollectible amounts, net of recoveries	(3,549)	(4,176)	(3,150)
Ending balance	$ 6,544	$ 7,263	$ 9,411

Estimated Useful Lives (Detail)	12 Months Ended
Estimated Useful Lives (Detail)	Dec. 31, 2012
Buildings And improvements \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	10 years
Buildings And improvements \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	30 years
Machinery and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Machinery and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	10 years
Furniture, computers and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	3 years
Furniture, computers and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years
Production molds \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	2 years
Production molds \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	5 years

Other Income (Expense) Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Components of Other Income (Expense) [Line Items]
Foreign currency exchange contract gains/(losses), net	$ 6,591	$ (8,861)	$ (18,600)
Foreign currency transaction gains/(losses), net	(3,343)	708	6,926
Gains on deferred compensation plan assets	0	0	199
Other	(96)	52	478
Other income (expense), net	$ 3,152	$ (8,101)	$ (10,997)

Amount after tax, before reclassification adjustments, resulting from the process of expressing in the reporting currency of the reporting entity those amounts that are denominated or measured in a different currency, and from transactions whose terms are denominated in a currency other than the entity's functional currency.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 20
-URI http://asc.fasb.org/extlink&oid=6915805&loc=d3e32211-110900

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 10A
-Subparagraph (a-c)
-URI http://asc.fasb.org/extlink&oid=20435746&loc=SL7669646-108580

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=20435746&loc=d3e637-108580

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6450520&loc=d3e32583-110901

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6915805&loc=d3e32022-110900

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 18
-URI http://asc.fasb.org/extlink&oid=6915805&loc=d3e32157-110900

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 17
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 52
-Paragraph 13, 20, 31
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Basic and diluted loss per common share

Restructuring Initiatives - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended			12 Months Ended			24 Months Ended
	Jul. 31, 2012	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					$ 55,073,000	$ 41,009,000
Impairment charges					21,933,000	6,533,000	$ 7,547,000
Operating expenses
Restructuring Cost and Reserve [Line Items]
Impairment charges					832,000
Reorganization and Reinvestment Initiatives
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					1,012,000	16,329,000
Expected annualized per-tax saving from restructuring plan						50,000,000
Reorganization and Reinvestment Initiatives \| Cost of Goods Sold
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					473,000	1,251,000
Reorganization and Reinvestment Initiatives \| Operating expenses
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					539,000	15,078,000
Reorganization and Reinvestment Initiatives \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					1,012,000	16,329,000	0
Global Operations Strategy
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense						24,680,000	14,816,000	$ 39,419,000
Global Operations Strategy \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					(98,000)	$ 4,702,000	$ 5,177,000
Cost Reduction Initiatives
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					54,061,000
Expected annualized per-tax saving from restructuring plan					60,000,000
Total future estimated charges, at end of period	$ 60,000,000				5,900,000
Expected Future Restructuring Charges Minimum					5,900,000
Cost Reduction Initiatives \| Cost of Goods Sold
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense		$ 7,965,000	$ 27,302,000	$ 961,000	36,228,000
Cost Reduction Initiatives \| Operating expenses
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					17,833,000
Cost Reduction Initiatives \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					14,506,000
Total future estimated charges, at end of period					1,300,000
Cost Reduction Initiatives \| Workforce Reductions \| Impacts all regions and levels of the organization in addition to other transition costs
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					17,471,000
Cost Reduction Initiatives \| Apparel and Footwear Transition
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					5,810,000
Cost Reduction Initiatives \| Intangible Assets and Goodwill
Restructuring Cost and Reserve [Line Items]
Impairment charges					5,156,000
Cost Reduction Initiatives \| Golf ball \| Manufacturing
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					14,303,000
Cost Reduction Initiatives \| Property Plant and Equipment
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					4,345,000
Cost Reduction Initiatives \| Inventories
Restructuring Cost and Reserve [Line Items]
Pre-tax restructuring charges to cost and expense					$ 6,976,000

Activity and Liability Balances Recorded as part of Global Operations Strategy Initiatives and Reorganization and Reinvestment Initiatives as well as Current Estimated Future Charges Relating Initiatives (Detail) - USD ($)	1 Months Ended	12 Months Ended			24 Months Ended
	Jul. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2011
Restructuring Cost and Reserve [Line Items]
Charges to cost and expense		$ 55,073,000	$ 41,009,000
Global Operations Strategy
Restructuring Cost and Reserve [Line Items]
Charges to cost and expense			24,680,000	$ 14,816,000	$ 39,419,000
Global Operations Strategy \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		1,219,000	3,268,000	0	0
Charges to cost and expense		(98,000)	4,702,000	5,177,000
Non-cash items			0	0
Cash payments		(985,000)	(6,751,000)	(1,909,000)
Restructuring payable balance, Ending Balance		136,000	1,219,000	3,268,000	1,219,000
Global Operations Strategy \| Transition Costs
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		55,000	384,000	0	0
Charges to cost and expense		21,000	17,527,000	7,861,000
Non-cash items			0	0
Cash payments		(76,000)	(17,856,000)	(7,477,000)
Restructuring payable balance, Ending Balance		0	55,000	384,000	55,000
Global Operations Strategy \| Asset Write-offs
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		0	0	0	0
Charges to cost and expense		0	2,451,000	1,778,000
Non-cash items			(2,451,000)	(1,778,000)
Cash payments		0	0	0
Restructuring payable balance, Ending Balance		0	0	0	0
Reorganization and Reinvestment Initiatives
Restructuring Cost and Reserve [Line Items]
Charges to cost and expense		1,012,000	16,329,000
Reorganization and Reinvestment Initiatives \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		5,357,000	0	0	0
Charges to cost and expense		1,012,000	16,329,000	0
Non-cash items			(2,126,000)	0
Cash payments		(6,316,000)	(8,846,000)	0
Restructuring payable balance, Ending Balance		53,000	5,357,000	0	5,357,000
Global Operations Strategy, Reorganization and Reinvestment Initiatives
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		6,631,000	3,652,000	0	0
Charges to cost and expense		935,000	41,009,000	14,816,000
Non-cash items			(4,577,000)	(1,778,000)
Cash payments		(7,377,000)	(33,453,000)	(9,386,000)
Restructuring payable balance, Ending Balance		189,000	6,631,000	$ 3,652,000	6,631,000
Cost Reduction Initiatives
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		0
Charges to cost and expense		54,061,000
Non-cash items		(37,595,000)
Cash payments		(11,344,000)
Restructuring payable balance, Ending Balance		5,122,000	0		0
Total future estimated charges, at end of period	$ 60,000,000	5,900,000
Cost Reduction Initiatives \| Workforce Reductions
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		0
Charges to cost and expense		14,506,000
Non-cash items		(448,000)
Cash payments		(9,527,000)
Restructuring payable balance, Ending Balance		4,531,000	0		0
Total future estimated charges, at end of period		1,300,000
Cost Reduction Initiatives \| Transition Costs
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		0
Charges to cost and expense		6,719,000
Non-cash items		(4,311,000)
Cash payments		(1,817,000)
Restructuring payable balance, Ending Balance		591,000	0		0
Total future estimated charges, at end of period		4,600,000
Cost Reduction Initiatives \| Asset Write-offs
Restructuring Cost and Reserve [Line Items]
Restructuring payable, Beginning balance		0
Charges to cost and expense		32,836,000
Non-cash items		(32,836,000)
Cash payments		0
Restructuring payable balance, Ending Balance		0	$ 0		$ 0
Total future estimated charges, at end of period		$ 0

Financing Arrangements - Additional Information (Detail)	1 Months Ended	12 Months Ended
	Aug. 29, 2012 USD ($) $ / shares shares	Dec. 31, 2012 USD ($) shares $ / shares	Dec. 31, 2011 USD ($) $ / shares	Dec. 31, 2010 USD ($)	Dec. 31, 2009 USD ($)
Debt Instrument [Line Items]
Asset-based credit facility, maximum borrowing capacity		$ 230,000,000
Amount outstanding under letters of credit		3,265,000	$ 500,000
Cash and cash equivalents		$ 52,003,000	43,023,000	$ 55,043,000	$ 78,314,000
Asset-based credit facility, maturity date		Jun. 30, 2016
Available line of credit after outstanding borrowings		$ 105,900,000
Debt Instrument Fixed Charge Coverage		25,000,000
Average outstanding borrowing		$ 50,300,000
Description of condition to reduce applicable margin to interest rate		All applicable margins may be permanently reduced by 0.25% if EBITDA meets or exceeds $25,000,000 over any trailing 12 month period, and may be permanently reduced by an additional 0.25% if EBITDA meets or exceeds $50,000,000 over any trailing 12 month period.
Asset-based credit facility, interest rate		4.50%
Asset-based credit facility, origination fees		$ 4,265,000
Unamortized origination fees		3,171,000	2,925,000
Asset-based credit facility, origination fees included in other current assets		906,000	650,000
Asset-based credit facility, origination fees included in other long-term assets		$ 2,265,000	$ 2,275,000
Convertible senior notes	$ 112,500,000
Convertible senior notes interest rate	3.75%
Convertible senior notes due date	Aug. 15, 2019
Preferred stock, cumulative dividend rate (in percent)	7.50%	7.50%
Preferred stock, par value \| $ / shares	$ 0.01	$ 0.01	$ 0.01
Convertible senior notes, percentage of principal amount		95.02%
Convertible senior notes, effective rate of interest		4.59%
Convertible senior notes, interest payment frequency		Payable semiannually in arrears in cash on February 15 and August 15 of each year. The first payment was made on February 15, 2013.
Proceeds from issuance of convertible notes		$ 46,819,000
Convertible senior notes, transactional fees		3,534,000
Convertible senior notes, net carrying amount		107,133,000
Convertible senior notes, unamortized discount		$ 5,367,000
Convertible senior notes, remaining amortization period		6 years 10 months 17 days
Convertible senior notes, total interest and amortization expense recognized		$ 1,680,000
Convertible senior notes convertible latest date		Aug. 15, 2019
Initial conversion rate, number of common stock issuable \| shares		133.3333
Debt conversion principal amount		$ 1,000
Conversion price per share \| $ / shares		$ 7.50
Repurchase price as percentage of principal amount of senior notes		100.00%
Notes redemption earliest date		Aug. 15, 2015
Redemption price as percentage of principal amount of notes		100.00%
United States
Debt Instrument [Line Items]
Asset-based credit facility, maximum borrowing capacity		$ 158,333,000
Asset-based credit facility, available for letter of credit		20,000,000
Canada
Debt Instrument [Line Items]
Asset-based credit facility, maximum borrowing capacity		31,667,000
Asset-based credit facility, available for letter of credit		5,000,000
United Kingdom
Debt Instrument [Line Items]
Asset-based credit facility, maximum borrowing capacity		40,000,000
Asset-based credit facility, available for letter of credit		$ 2,000,000
Preferred Stock
Debt Instrument [Line Items]
Preferred stock to debt exchange (in shares) \| shares	632,270
Conversion price per share \| $ / shares		$ 7.05
Exchanged for Preferred Stock
Debt Instrument [Line Items]
Convertible senior notes	$ 63,227,000
Private placement purchase agreements
Debt Instrument [Line Items]
Convertible senior notes	$ 49,273,000
Scenario 1
Debt Instrument [Line Items]
Applicable margin rate reduction, (in percent)		0.25%
Scenario 2
Debt Instrument [Line Items]
Applicable margin rate reduction, (in percent)		0.25%
Scenario, Plan
Debt Instrument [Line Items]
Maximum amount of consolidated funded indebtedness including borrowing outstanding		$ 40,500,000
Available line of credit after outstanding borrowings		92,503,000
Unamortized Advisory Fee
Debt Instrument [Line Items]
Unamortized, transaction Fees		3,365,000
Unamortized Advisory Fee \| Other current assets
Debt Instrument [Line Items]
Unamortized, transaction Fees		505,000
Unamortized Advisory Fee \| Other Long Term Assets
Debt Instrument [Line Items]
Unamortized, transaction Fees		2,860,000
Minimum
Debt Instrument [Line Items]
Borrowing base availability		$ 25,000,000
Asset-based credit facility, monthly fees		0.375%
Minimum \| Scenario 1
Debt Instrument [Line Items]
Amount of EBITDA to reduce applicable margin		$ 25,000,000
Minimum \| Scenario 2
Debt Instrument [Line Items]
Amount of EBITDA to reduce applicable margin		$ 50,000,000
Maximum
Debt Instrument [Line Items]
Asset-based credit facility, monthly fees		0.50%

Preferred Stock Offering - Additional Information (Detail) - USD ($)	1 Months Ended	12 Months Ended
	Aug. 29, 2012	Dec. 31, 2012	Dec. 31, 2011
Class of Stock [Line Items]
Convertible senior notes	$ 112,500,000
Preferred stock, shares outstanding	417,639	417,639	1,400,000
Preferred stock, cumulative dividend rate (in percent)	7.50%	7.50%
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Conversion price per share		7.50
Preferred stock, liquidation preference, per share		100
Preferred stock, cumulative dividend rate per share		$ 7.50
Preferred stock, liquidation preference, value		$ 41,894,000
Redemption of preferred, term		The Company, at its option, may redeem the preferred stock subject to available liquidity and compliance with any applicable legal requirements and contractual obligations, in whole or in part, at a price equal to 100% of the liquidation preference, plus all accrued and unpaid dividends.
Percentage of per share price of liquidation preference for redemption		100.00%
Exchanged for Preferred Stock
Class of Stock [Line Items]
Convertible senior notes	$ 63,227,000
Preferred Stock
Class of Stock [Line Items]
Preferred stock to common stock exchange		(350,000)
Conversion rate of the preferred stock to common stock		14.1844
Conversion price per share		$ 7.05
Common stock issuable upon conversion, shares		5,924,000
Series B Cumulative Perpetual Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock to debt and common stock exchange (in shares)	982,361
Common Stock
Class of Stock [Line Items]
Preferred stock to common stock exchange	5,866,821	5,867,000

Computation of Basic and Diluted Loss Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Less: Preferred stock dividends

$ (70,749)

^[1],[2]

$ (86,798)

^[1],[2]

$ 2,799

^[1],[2]

$ 31,802

^[1],[2]

$ (62,985)

^{[3],[4],[5],[6],[7]}

$ (62,587)

^{[3],[4],[5],[6],[7]}

$ (59,066)

^{[3],[4],[5],[6],[7]}

$ 12,818

^{[3],[4],[5],[6],[7]}

$ (122,946)

^[1],[2]

$ (171,820)

^{[3],[4],[5],[6],[7]}

$ (18,804)

(783)

(2,414)

(2,625)

(8,447)

(10,500)

Net loss allocable to common shareholders

$ (71,532)

^[1],[2]

$ (89,212)

^[1],[2]

$ 174

^[1],[2]

$ 29,177

^[1],[2]

$ (65,610)

$ (65,212)

$ (61,691)

$ 10,193

$ (131,393)

^[1],[2]

$ (182,320)

$ (29,304)

Weighted-average common shares outstanding-basic and diluted

67,061

64,601

63,902

Basic and diluted loss per common share

$ (1.96)

$ (2.82)

$ (0.46)

[1]	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).
[2]	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company's Cost Reduction Initiatives (see Note 3).
[3]	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).
[4]	During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company's GOS Initiatives (see Note 3).
[5]	During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).
[6]	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).
[7]	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company's Reorganization and Restructuring Initiatives (see Note 3).

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Loss per Common Share - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Stock Options
Earnings Per Share Disclosure [Line Items]
Antidilutive securities excluded from computation of earnings per share	27,844,000	30,676,000	30,267,000
Preferred Stock
Earnings Per Share Disclosure [Line Items]
Antidilutive securities excluded from computation of earnings per share	15,124,000	19,858,000	19,858,000
Convertible Senior Notes
Earnings Per Share Disclosure [Line Items]
Antidilutive securities excluded from computation of earnings per share	5,100,000

Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic earnings per share (EPS) or earnings per unit (EPU) in the future that were not included in the computation of diluted EPS or EPU because to do so would increase EPS or EPU amounts or decrease loss per share or unit amounts for the period presented.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Antidilution
-URI http://asc.fasb.org/extlink&oid=6505113

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Diluted Earnings Per Share
-URI http://asc.fasb.org/extlink&oid=6510752

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Contingent Stock Agreement
-URI http://asc.fasb.org/extlink&oid=6508534

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 40
-Subparagraph c
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 13, 14
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 07-4
-Paragraph 4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 171
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Sale of Buildings - Additional Information (Detail)	1 Months Ended	3 Months Ended	12 Months Ended
Sale of Buildings - Additional Information (Detail)	Feb. 28, 2013 USD ($)	Mar. 31, 2011 USD ($) Property	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)
Sale Leaseback Transaction [Line Items]
Asset impairment charges			$ 21,933,000	$ 6,533,000	$ 7,547,000
Number of buildings sold and leased-back \| Property		3
Sale and lease-back agreement term, minimum		1 year
Sale and lease-back agreement term, maximum		5 years
Net proceeds from sale and lease-back		$ 18,079,000
Net gain on sale and lease-back		12,668,000		6,170,000
Lease-back transaction deferred gain recognized			1,569,000	$ 1,531,000
Lease-back transaction deferred gain		6,498,000
General and Administrative Expenses
Sale Leaseback Transaction [Line Items]
Net gain on sale and lease-back		$ 6,170,000
Subsequent Event
Sale Leaseback Transaction [Line Items]
Proceeds from sale of manufacturing facility	$ 2,253,000
Building available for sale \| Cost Reduction Initiatives
Sale Leaseback Transaction [Line Items]
Asset impairment charges			$ 7,939,000

Intangible Assets by Major Asset Class (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Intangible Assets by Major Class [Line Items]
Gross	$ 128,132	$ 157,680
Accumulated amortization	38,943	35,745
Net book value	89,189	121,935
Trade name, trademark and trade dress and other
Intangible Assets by Major Class [Line Items]
Gross	88,590	108,834
Net book value	88,590	108,834
Patents
Intangible Assets by Major Class [Line Items]
Gross	31,581	36,459
Accumulated amortization	31,022	28,908
Net book value	$ 559	7,551
Patents \| Minimum
Intangible Assets by Major Class [Line Items]
Useful Life (years)	2 years
Patents \| Maximum
Intangible Assets by Major Class [Line Items]
Useful Life (years)	16 years
Developed technology and other
Intangible Assets by Major Class [Line Items]
Gross	$ 7,961	12,387
Accumulated amortization	7,921	6,837
Net book value	$ 40	$ 5,550
Developed technology and other \| Minimum
Intangible Assets by Major Class [Line Items]
Useful Life (years)	1 year
Developed technology and other \| Maximum
Intangible Assets by Major Class [Line Items]
Useful Life (years)	9 years

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)	1 Months Ended			12 Months Ended
	Mar. 31, 2012	Feb. 29, 2012	Jun. 30, 2011	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010	Sep. 30, 2012
Goodwill and Intangible Assets Disclosure [Line Items]
Aggregate amortization expense on intangible assets				$ 3,198,000	$ 3,979,000		$ 4,181,000
Impairment of intangible assets				4,527,000
Impairment of goodwill				629,000
Impairment charges				21,933,000	6,533,000		7,547,000
Proceeds from sales of intangible assets	$ 19,900,000	$ 6,961,000		26,861,000
Net book value of intangible assets sold	$ 20,244,000
Gain on sale of intangible assets				6,602,000
Goodwill impairment charges					1,120,000	$ 1,120,000
Impairment charges for indefinite lived intangible assets			$ 5,413,000				7,547,000
Goodwill				29,034,000	29,203,000		$ 30,630,000
Decrease in goodwill offset amount due to foreign currency fluctuations				460,000
Gross goodwill					$ 30,323,000			$ 30,783,000
Patents
Goodwill and Intangible Assets Disclosure [Line Items]
Write-off in net book value patents				4,572,000
Cost of sales
Goodwill and Intangible Assets Disclosure [Line Items]
Impairment charges				4,324,000
Operating expenses
Goodwill and Intangible Assets Disclosure [Line Items]
Impairment charges				$ 832,000

Amortization Expense Related to Intangible Assets (Detail) $ in Thousands	Dec. 31, 2012 USD ($)
Expected Amortization Expense [Line Items]
2013	$ 288
2014	68
2015	51
2016	51
2017	51
Thereafter	90
Finite-Lived Intangible Assets, Net, Total	$ 599

Investments - Additional Information (Detail)	Dec. 31, 2012 USD ($)
Schedule of Cost-method Investments [Line Items]
Investment in TopGolf International, Inc.	$ 23,967,000
Investment in TopGolf International, Inc. during the year	$ 3,367,000
Maximum
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest in TopGolf International, Inc.	20.00%

This item represents the aggregate carrying amount of all cost-method investments as reported on or included in the balance sheet. The original cost of the investments may differ from the aggregate carrying amount disclosed due to various adjustments such as: (i) dividends received in excess of earnings after the date of investment that are considered a return of investment and therefore recorded as reductions to cost of the investment, or (ii) a series of operating losses of an investee or other factors which may indicate that a decrease in value of the investment has occurred which is other than temporary and accordingly such decrease in value has been recognized.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.12)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 325
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6872867&loc=d3e40691-111596

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 325
-SubTopic 20
-Section 35
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6383889&loc=d3e40346-111594

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 18
-Paragraph 6
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS115-1/124-1
-Paragraph 18
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 03-1
-Paragraph 22
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Non-Controlling Interest - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Investments in and Advances to Affiliates [Line Items]
Net profits related to non-controlling interest	$ 259,000	$ 587,000	$ 346,000
Amount loaned to Mauritius	3,200,000
Loan to Mauritius, outstanding	$ 1,788,000	$ 1,988,000

Amount of Net Income (Loss) attributable to noncontrolling interest.

Selected Financial Statement Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Accounts receivable, net:
Trade accounts receivable	$ 103,999	$ 129,457
Allowance for sales returns	(6,383)	(6,521)	$ (4,955)	$ (5,725)
Allowance for doubtful accounts	(6,544)	(7,263)	$ (9,411)	$ (9,470)
Accounts receivable, net	91,072	115,673
Inventories:
Raw materials	43,469	46,976
Work-in-process	619	1,286
Finished goods	167,646	184,808
Inventory	211,734	233,070
Property, plant and equipment, net:
Land	8,892	8,871
Buildings and improvements	79,707	81,349
Machinery and equipment	153,303	154,339
Furniture, computers and equipment	126,733	126,592
Production molds	37,539	39,761
Construction-in-process	1,155	6,591
Property, plant and equipment, gross	407,329	417,503
Accumulated depreciation	(318,236)	(300,356)
Property, plant and equipment, net	89,093	117,147
Accounts payable and accrued expenses:
Accounts payable	45,376	39,012
Accrued expenses	67,254	72,465
Accrued goods in-transit	15,345	13,970
Accrued hedging contracts payable	1,046	3,746
Accounts payable and accrued expenses	129,021	129,193
Accrued employee compensation and benefits:
Accrued payroll and taxes	12,256	13,550
Accrued vacation and sick pay	7,549	8,947
Accrued commissions	844	1,288
Accrued employee compensation and benefits	$ 20,649	$ 23,785

Loss Before Income Tax Provision (Benefit) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Provision For Income Taxes [Line Items]
United States	$ (134,384)	$ (105,841)	$ (46,365)
Foreign	16,338	15,580	10,803
Loss before income taxes	$ (118,046)	$ (90,261)	$ (35,562)

Expense (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Components Of Income Tax Expense Benefit [Line Items]
Federal	$ (357)	$ 19,908	$ (18,494)
State	130	580	361
Foreign	6,804	4,964	5,743
Current tax provision (benefit)	6,577	25,452	(12,390)
Federal	(1,448)	43,948	117
State	92	10,987	(2,988)
Foreign	(321)	1,172	(1,497)
Deferred tax expense (benefit)	(1,677)	56,107	(4,368)
Income tax provision (benefit)	$ 4,900	$ 81,559	$ (16,758)

Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$ 15,617	$ 14,161
Basis difference related to fixed assets	10,711	7,891
Compensation and benefits	3,808	3,932
Basis difference for inventory valuation	2,502	2,252
Compensatory stock options and rights	5,238	9,927
Deferred revenue and other	101	2,151
Operating loss carryforwards	105,748	66,332
Tax credit carryforwards	6,024	9,402
Correlative effects of global income allocations	363	424
Federal impact of state taxes	808
Basis difference related to intangible assets with a definite life	6,165	2,725
Total deferred tax assets	157,085	119,197
Valuation allowance for deferred tax assets	(151,097)	(110,844)
Deferred tax assets, net of valuation allowance	5,988	8,353
Deferred tax liabilities:
State taxes, net of federal income tax benefit	(33)	(1,472)
Prepaid expenses	(1,102)	(2,582)
Deferred revenue	(330)
Other	(69)	(108)
Basis difference related to intangible assets with an indefinite life	(32,834)	(34,313)
Total deferred tax liabilities	(34,368)	(38,475)
Net deferred tax assets	(28,380)	(30,122)
Net deferred tax assets are shown on the accompanying consolidated balance sheets as follows:
Current deferred tax assets	4,170	4,029
Non-current deferred tax assets	1,910	1,386
Current deferred tax liabilities	(927)	(4,108)
Non-current deferred tax liabilities	(33,533)	(31,429)
Net deferred tax assets (liabilities)	$ (28,380)	$ (30,122)

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended			12 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Schedule Of Income Tax [Line Items]
Change in net deferred taxes				$ 1,742,000
Net deferred tax asset				1,479,000
Foreign currency translation adjustments				72,000
Net deferred benefit , reserve for uncertain tax positions				191,000
Increase to income tax expense	$ 9,397,000	$ 12,237,000	$ 52,751,000
Deferred tax assets, valuation allowance	110,844,000			151,097,000	$ 110,844,000
Tax credit carryforwards	9,402,000			$ 6,024,000	9,402,000
Tax credit carryforward beginning expiration year				2020
Adjustment to previously estimated tax liabilities				$ 142,000	2,000	$ 515,000
Liability for income taxes associated with uncertain tax positions	9,875,000			7,064,000	9,875,000	9,121,000	$ 15,831,000
Tax benefits associated with potential transfer pricing adjustments				3,148,000
Tax benefits associated with state income taxes and other timing adjustments				748,000
Net amount of unrecognized tax benefit related to uncertain tax positions that would impact, if recognized, effective income tax rate				3,168,000
Interest and penalties related to income tax matters				44,000	242,000	$ (490,000)
Income tax accrued for payment of interest and penalties	890,000			934,000	890,000
Undistributed earnings				105,383,000
Withholding taxes				1,000,000
United States
Schedule Of Income Tax [Line Items]
Increase to income tax expense					52,455,000
Deferred tax assets, valuation allowance	$ 110,844,000			151,097,000	$ 110,844,000
Federal
Schedule Of Income Tax [Line Items]
Tax credit carryforwards				4,354,000
State
Schedule Of Income Tax [Line Items]
Tax credit carryforwards				$ 6,985,000

Expiry Dates of Federal and State Income Tax Credit Carryforwards (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 6,024,000	$ 9,402,000
Federal
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	4,354,000
Federal \| U.S. foreign tax credit
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 2,776,000
Federal \| U.S. foreign tax credit \| Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforwards, expiration year	2020
Federal \| U.S. foreign tax credit \| Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforwards, expiration year	2022
Federal \| U.S. research tax credit
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 1,578,000
Federal \| U.S. research tax credit \| Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforwards, expiration year	2030
Federal \| U.S. research tax credit \| Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforwards, expiration year	2032
State
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 6,985,000
State \| State investment tax credits
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 197,000
Tax credit carryforwards, expiration period	Do not expire
State \| State research tax credits
Tax Credit Carryforward [Line Items]
Tax credit carryforwards	$ 6,788,000
Tax credit carryforwards, expiration period	Do not expire

Net Operating Losses Carryforwards Expire (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2012 USD ($)
Operating Loss Carryforwards [Line Items]
U.S. loss carryforwards	$ 272,861
State loss carryforwards	186,344
Foreign loss carryforwards	$ 492
Federal \| Minimum
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year	2031
Federal \| Maximum
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year	2032
State \| Minimum
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year	2013
State \| Maximum
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year	2035
Foreign
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year	2019

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Loss Carryforwards [Line Items]
Statutory U.S. tax rate	35.00%	35.00%	35.00%
State income taxes, net of U.S. tax benefit	(0.80%)	(0.80%)	1.50%
Federal and State tax credits, net of U.S. tax benefit			2.60%
Expenses with no tax benefit	(0.90%)	0.20%	(2.40%)
Foreign income taxed at other than U.S. statutory rate	2.00%	(1.00%)	1.50%
Effect of foreign rate changes		(0.50%)
Foreign tax credit	(1.20%)
Basis differences of intangibles with an indefinite life	1.30%	(1.00%)
Release of prepaid taxes on intercompany profit		(24.00%)
Change in deferred tax valuation allowance	(37.70%)	(98.60%)	2.20%
Reversal of previously accrued taxes	0.10%		1.40%
Accrual for interest and income taxes related to uncertain tax positions	0.80%	(0.60%)	5.20%
Other	(2.80%)	0.90%	0.10%
Effective tax rate	(4.20%)	(90.40%)	47.10%

Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Unrecognized Tax Benefits [Line Items]
Unrecognized tax benefits, beginning balance	$ 9,875	$ 9,121	$ 15,831
Additions based on tax positions related to the current year	432	830	1,825
Additions for tax positions of prior years	96	370	110
Reductions for tax positions of prior years	(24)	(39)	(1,832)
Settlement of tax audits	(768)		(4,157)
Reductions due to lapsed statute of limitations	(2,547)	(407)	(2,656)
Unrecognized tax benefits, ending balance	$ 7,064	$ 9,875	$ 9,121

Major Jurisdictions no Longer Subject to Income Tax Examinations by Tax Authorities (Detail)	12 Months Ended
	Dec. 31, 2012
U.S. federal
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2008 and prior
California (United States)
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2006 and prior
Canada
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2007 and prior
Japan
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2007 and prior
South Korea
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2008 and prior
United Kingdom
Income Tax Examination [Line Items]
Years No Longer Subject to Audit	2008 and prior

Commitments and Contingencies - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Long-term Purchase Commitment [Line Items]
Operating lease expiration period	2018-08
Rent expense	$ 18,420,000	$ 22,318,000	$ 13,967,000
Unconditional purchase obligations over next six years	79,218,000
Amount outstanding under letters of credit	$ 3,265,000	$ 500,000
Minimum
Long-term Purchase Commitment [Line Items]
Operating lease term	1 year
Unconditional purchase obligations	1 year
Maximum
Long-term Purchase Commitment [Line Items]
Operating lease term	6 years
Unconditional purchase obligations	6 years

Commitments for Minimum Lease Payments Under Non Cancelable Operating Leases (Detail) $ in Thousands	Dec. 31, 2012 USD ($)
Future Minimum Payments Under Non-Cancelable Operating Leases With Initial Terms Of One-Year Or More [Line Items]
2013	$ 12,914
2014	10,571
2015	5,849
2016	2,639
2017	1,717
Thereafter	313
Operating Leases, Future Minimum Payments Due, Total	$ 34,003

Future Purchase Commitments (Detail)	Dec. 31, 2012 USD ($)
Long-term Purchase Commitment [Line Items]
2013	$ 50,097,000
2014	24,459,000
2015	3,363,000
2016	893,000
2017	406,000
Thereafter
Unconditional purchase obligations over next six years	$ 79,218,000

Capital Stock - Additional Information (Detail)	1 Months Ended		12 Months Ended
Capital Stock - Additional Information (Detail)	Aug. 29, 2012 $ / shares	Nov. 30, 2007 USD ($)	Dec. 31, 2012 USD ($) Vote $ / shares shares	Dec. 31, 2011 USD ($) $ / shares shares	Dec. 31, 2010 USD ($) shares
Components Of Common Stock [Line Items]
Authorized capital, shares			243,000,000
Common stock, par value \| $ / shares			$ 0.01	$ 0.01
Common stock, shares authorized			240,000,000	240,000,000
Preferred stock, shares authorized			3,000,000	3,000,000
Preferred stock, shares issued			417,639	1,400,000
Preferred stock, par value \| $ / shares	$ 0.01		$ 0.01	$ 0.01
Preferred stock dividend rate percentage	7.50%		7.50%
Common stock, votes per share \| Vote			1
Common stock, voting rights, description			The holders of common stock are entitled to one vote for each share of common stock on all matters submitted to a vote of the Company's shareholders.
Stock repurchase program, authorized amount \| $		$ 100,000,000
Treasury Stock Acquired, Average Cost Per Share \| $ / shares			$ 6.40
Acquisition of Treasury Stock \| $			$ 783,000	$ 1,587,000	$ 725,000
Stock repurchased remaining authorized amount \| $			$ 72,795,000
Treasury Stock
Components Of Common Stock [Line Items]
Acquisition of Treasury Stock (in shares)			122,000	227,000	88,000
Acquisition of Treasury Stock \| $			$ 783,000	$ 1,587,000	$ 725,000
Series A Junior Participating Preferred Stock
Components Of Common Stock [Line Items]
Preferred stock, shares authorized			240,000
Preferred stock, votes per share \| Vote			1,000
Preferred stock, voting rights, description			Each share of Series A Junior Participating Preferred Stock would entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Company

Shares Released from Grantor Stock Trust (Detail) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
Schedule of Employee Benefit Plans [Line Items]
Total shares released from the GST	291	692
Employee stock option exercises
Schedule of Employee Benefit Plans [Line Items]
Total shares released from the GST		62
Employee restricted stock units vested
Schedule of Employee Benefit Plans [Line Items]
Total shares released from the GST	205	221
Employee stock plan purchases
Schedule of Employee Benefit Plans [Line Items]
Total shares released from the GST	86	409

Share-Based Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense related to stock options	$ 1,586,000	$ 3,306,000	$ 3,606,000
Share based compensation, weighted average estimated forfeiture rate	5.70%	4.50%	3.50%
Weighted-average grant-date fair value of options granted	$ 2.63	$ 2.94	$ 2.37
Total intrinsic value for options exercised	$ 3,000		$ 85,000
Cash received from exercise of stock options	23,000		564,000
Compensation expense related to restricted stock	1,556,000	$ 1,799,000	3,126,000
Stock compensation expense	7,150,000	11,306,000	$ 13,389,000
Accrued employee compensation and benefits	20,649,000	23,785,000
Long-term incentive compensation and other	$ 7,131,000	6,970,000
Cost of closing price of Common stock	85.00%
Reorganization and Reinvestment Initiatives
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 416,000	$ 3,539,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense related to non-vested shares granted	$ 952,000
Unrecognized compensation expense expected recognition period	9 months 18 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized compensation expense related to non-vested shares granted	$ 2,132,000
Unrecognized compensation expense expected recognition period	1 year 6 months 11 days
Weighted average grant date fair value per share of PSUs granted	$ 6.36	$ 7.01	$ 7.64
Vesting period	3 years
Phantom Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value per share of PSUs granted	$ 6.37	$ 7.51
Vesting period	3 years
Stock compensation expense	$ 1,724,000	$ 2,095,000	$ 3,801,000
Accrued employee compensation and benefits		1,325,000
Long-term incentive compensation and other		594,000
Accrued compensation expense	$ 1,324,000	$ 1,919,000
Stock Appreciation Rights (SARs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value per share of PSUs granted	$ 6.57
Vesting period	3 years	3 years
Stock compensation expense	$ 2,285,000	$ 321,000
Accrued employee compensation and benefits	1,819,000
Long-term incentive compensation and other	788,000
Accrued compensation expense	$ 2,607,000	321,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense		$ 234,000	$ 404,000
Purchase of common stock on behalf of employees under employee stock purchase plan		376,000	409,000
Executive Compensation Contracts
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense		$ 1,415,000	$ 2,401,000
Total value of share-based awards granted			$ 11,730,000
Additional compensation expense incurred as result of accelerated vesting period of equity awards granted under employment agreement		$ 2,136,000
2004 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement, maximum number of shares that can be granted to a participant in any fiscal year	2,000,000
2004 Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation arrangement, maximum number of shares issuable	17,500,000

Shares Authorized, Available for Future Grant and Outstanding Under Each Plans (Detail)
shares in Thousands

Dec. 31, 2012

37,800

Available

4,794

1995 Employee Stock Incentive Plan

5,820

10,800

479

1996 Stock Option Plan

9,000

247

2001 Directors Plan

500

^[1]

258

17,500

Available

4,784

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

4,836

[1]	The Company's 2001 Non-Employee Directors Plan expired on December 31, 2011. The shares available for grant under this plan are only available to satisfy incremental dividend equivalent rights for outstanding awards.

Weighted Average Black-Scholes Fair Value Assumptions used in Valuation of Stock Options Granted (Detail)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items]
Dividend yield	1.20%	1.40%	1.10%
Expected volatility	50.60%	48.50%	46.20%
Risk-free interest rate	0.80%	2.00%	2.20%
Expected life	4 years 10 months 24 days	5 years	4 years 8 months 12 days

Stock Option Activities (Detail) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2012 USD ($) $ / shares shares
Number of Shares
Number of Shares, Options outstanding, beginning balance \| shares	9,912
Number of Shares, Granted \| shares	5
Number of Shares, Exercised \| shares	(3)
Number of Shares, Forfeited \| shares	(194)
Number of Shares, Expired \| shares	(4,553)
Number of Shares, Options outstanding, ending balance \| shares	5,167
Number of Shares, Vested and expected to vest at end of period \| shares	5,155
Number of Shares, Options exercisable at end of period \| shares	4,694
Weighted-Average Exercise Price Per Share
Weighted Average Exercise Price, Options outstanding, beginning balance \| $ / shares	$ 11.23
Weighted Average Exercise Price, Granted \| $ / shares	6.69
Weighted Average Exercise Price, Exercised \| $ / shares	5.61
Weighted Average Exercise Price, Forfeited \| $ / shares	7.50
Weighted Average Exercise Price, Expired \| $ / shares	11.55
Weighted Average Exercise Price, Options outstanding, ending balance \| $ / shares	11.08
Weighted Average Exercise Price, Vested and expected to vest at end of period \| $ / shares	11.09
Weighted Average Exercise Price, Options exercisable at end of period \| $ / shares	$ 11.44
Weighted-Average Remaining Contractual Term
Weighted Average Remaining Life, Options outstanding at end of period	3 years 2 months 5 days
Weighted Average Remaining Life, Vested and expected to vest at end of period	3 years 15 days
Weighted Average Remaining Life, Options exercisable at end of period	2 years 8 months 9 days
Aggregate Intrinsic Value
Outstanding aggregate intrinsic value \| $	$ 3
Vested and expected to vest in the future, aggregate intrinsic value \| $	3
Exercisable, aggregate intrinsic value \| $	$ 3

Roll-Forward of Activity for Restricted Stock Units (Detail) - Restricted Stock Units - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Number of Share units
Nonvested number of Units, beginning balance	624
Granted, number of units	393
Vested, number of units	(354)
Forfeited, number of units	(16)
Nonvested number of units, ending balance	647	624
Weighted Average Grant Date Fair Value
Nonvested weighted Average Grant Date Fair Value, beginning balance	$ 7.62
Granted, weighted average grant date fair value	6.36	$ 7.01	$ 7.64
Vested, weighted average grant date fair value	7.61
Forfeited, weighted average grant date fair value	7.22
Nonvested weighted Average Grant Date Fair Value, ending balance	$ 6.87	$ 7.62

Roll-Forward of Activity for Phantom Stock Units (Detail) - Phantom Stock Units - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Number of Share units
Nonvested number of Units, beginning balance	721
Granted, number of units	401
Vested, number of units	(389)
Forfeited, number of units	(225)
Nonvested number of units, ending balance	508	721
Weighted Average Grant Date Fair Value
Nonvested weighted Average Grant Date Fair Value, beginning balance	$ 7.68
Granted, weighted average grant date fair value	6.37	$ 7.51
Vested, weighted average grant date fair value	7.79
Forfeited, weighted average grant date fair value	7.22
Nonvested weighted Average Grant Date Fair Value, ending balance	$ 6.77	$ 7.68

Summary of Total Number of SARs Granted (Detail) - Stock Appreciation Rights (SARs) shares in Thousands	12 Months Ended
	Dec. 31, 2012 $ / shares shares
Number of Share units
Nonvested number of Units, beginning balance \| shares	500
Granted, number of units \| shares	3,377
Vested, number of units \| shares
Forfeited, number of units \| shares	(882)
Nonvested number of units, ending balance \| shares	2,995
Weighted Average Grant Date Fair Value
Nonvested weighted Average Grant Date Fair Value, beginning balance \| $ / shares	$ 5.50
Granted, weighted average grant date fair value \| $ / shares	6.57
Vested, weighted average grant date fair value \| $ / shares
Forfeited, weighted average grant date fair value \| $ / shares	6.52
Nonvested weighted Average Grant Date Fair Value, ending balance \| $ / shares	$ 6.42

Share-Based Compensation Related to Employees and Directors (Detail) - USD ($)
$ / shares in Units, $ in Thousands

12 Months Ended

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Cost of employee share-based compensation included in income (loss), before income tax

$ 7,150

$ 11,306

$ 13,389

Income tax benefit

^[1]

(96)

(77)

(4,406)

Amount included in net loss

$ 7,054

$ 11,229

$ 8,983

Impact on net loss per common share:

Basic and diluted

$ (0.11)

$ (0.17)

$ (0.14)

Cost of sales

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Cost of employee share-based compensation included in income (loss), before income tax

$ 276

$ 424

$ 938

Operating expenses

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Cost of employee share-based compensation included in income (loss), before income tax

$ 6,874

$ 10,882

$ 12,451

[1]	Due to the effects the deferred tax asset valuation allowance, the Company's effective tax rate for 2012 and 2011 is not comparable to the effective tax rate for 2010 as the Company's income tax amount is not directly correlated to the amount of its pre-tax loss in both periods (see Note 12).

Represents the expense recognized during the period arising from equity-based compensation arrangements (for example, shares of stock, unit, stock options or other equity instruments) with employees, directors and certain consultants qualifying for treatment as employees.

Employee Benefit Plans - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Goods and Nonemployee Services Transaction [Line Items]
Maximum employee contribution to defined contribution benefit plans	75.00%
Employer matching contribution to employee contribution percentage	50.00%	100.00%	100.00%
Maximum employee contribution percentage of eligible compensation	6.00%	6.00%	6.00%
Employer contribution towards compensation plan	$ 2,156,000	$ 5,061,000	$ 5,431,000
Defined contribution plan employer vesting percentage	50.00%
Defined contribution plan employee vesting percentage	100.00%
Number of years of service required to vest in full	2 years

Foreign Currency Exchange Contracts Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - Foreign Exchange Contract $ in Thousands	Dec. 31, 2012 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign currency derivative instruments-asset position	$ 5,011
Foreign currency derivative instruments-liability position	(1,046)
Foreign Currency Derivatives at Fair Value, Net, Total	3,965
Observable market based inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Foreign currency derivative instruments-asset position	5,011
Foreign currency derivative instruments-liability position	(1,046)
Foreign Currency Derivatives at Fair Value, Net, Total	$ 3,965

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	1 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2010
Financial Instruments [Line Items]
Impairment charges		$ 21,933,000	$ 6,533,000		$ 7,547,000
Impairment charges for indefinite lived intangible assets	$ 5,413,000				$ 7,547,000
Goodwill impairment charges			$ 1,120,000	$ 1,120,000
Convertible senior notes, unamortized discount		5,367,000
Golf ball \| Building
Financial Instruments [Line Items]
Impairment charges		7,939,000
Golf ball \| Intangible Assets and Goodwill
Financial Instruments [Line Items]
Impairment charges		5,156,000
Golf ball \| Property Plant and Equipment
Financial Instruments [Line Items]
Impairment charges		4,345,000
Golf ball \| Patents
Financial Instruments [Line Items]
Impairment charges		$ 4,572,000

Fair Value Relating to Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2012	Dec. 31, 2011
Carrying Amounts and Fair Values of Financial Instruments or Liabilities [Line Items]
Convertible notes, carrying Value	$ 107,133
Convertible notes, fair Value	118,406
Standby letters of credit, carrying value	3,265	500
Standby letters of credit, fair value	$ 3,265	$ 500

Derivatives and Hedging - Additional Information (Detail) - USD ($)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Derivative [Line Items]
Notional amount of foreign currency exchange contracts	$ 137,125,000	$ 165,533,000	$ 314,190,000

Summary of Fair Value of Derivative Instruments by Contract Type and Location of Asset and/or Liability on Consolidated Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2012	Dec. 31, 2011
Other current assets
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, asset derivatives not designated as hedging instruments, fair value	$ 5,011	$ 2,514
Accounts payable and accrued expenses
Derivatives, Fair Value [Line Items]
Foreign currency exchange contracts, liability derivatives not designated as hedging instruments, fair value	$ 1,046	$ 3,746

Location of Gains and Losses in Consolidated Condensed Statements of Operations that were Recognized and Derivative Contract Type (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency exchange contracts, amount of gain (loss) recognized in income on derivatives not designated as hedging instruments	$ 6,591	$ (8,861)	$ (18,600)
Other income (expense), Net
Derivative Instruments, Gain (Loss) [Line Items]
Foreign currency exchange contracts, amount of gain (loss) recognized in income on derivatives not designated as hedging instruments	$ 6,591	$ (8,861)	$ (18,600)

Information Utilized by Management to Evaluate its Operating Segments (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

$ 119,938

$ 147,906

$ 281,123

$ 285,098

$ 153,872

$ 173,243

$ 273,814

$ 285,599

$ 834,065

$ 886,528

^[1]

$ 967,656

(118,046)

(90,261)

(35,562)

Additions to long-lived assets

^[2]

637,636

727,112

637,636

727,112

876,012

16,607

29,767

22,571

Goodwill

29,034

29,203

29,034

29,203

30,630

34,411

38,636

40,949

Golf clubs

694,489

726,169

791,066

^[3]

(59,827)

(3,899)

39,176

Additions to long-lived assets

^[2]

328,210

409,074

328,210

409,074

438,002

16,347

23,087

20,548

Goodwill

29,034

29,203

29,034

29,203

30,630

21,096

26,695

26,582

Golf ball

139,576

160,359

176,590

^[3]

(15,019)

(12,655)

2,559

Additions to long-lived assets

^[2],[4]

64,203

92,280

64,203

92,280

122,147

260

6,680

2,023

13,315

11,941

14,367

Reconciling items

^[3]

(43,200)

(73,707)

(77,297)

^[2]

$ 245,223

$ 225,758

$ 245,223

$ 225,758

$ 315,863

[1]	Certain prior period amounts were reclassified to conform with the current year presentation.
[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.
[3]	The table 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, 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 Year Ended December 31, 2010 Golf Clubs Golf Balls Corporate G&A(2) Total GOS Initiatives $ 12,065 $ 762 $ 1,989 $ 14,816
[4]	Includes property classified as available for sale in the amount of $2,396,000 in 2012 and $1,500,000 in 2010. Property held for sale in 2012 and 2010 represents the net book value of the Company's golf ball manufacturing facility in Chicopee, Massachusetts (see Note 7), and the golf ball manufacturing facility in Gloversville, New York, respectively.

Information Utilized by Management to Evaluate its Operating Segments (Parenthetical) (Detail) - USD ($)

3 Months Ended

12 Months Ended

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Gain on sale of intangible assets

$ 55,073,000

$ 41,009,000

6,602,000

Impairment charges

21,933,000

6,533,000

$ 7,547,000

Net realized and unrealized gains/losses on foreign currency hedges

3,248,000

8,153,000

11,674,000

Gain (loss) on sale of long-lived assets

$ 12,668,000

6,170,000

Assets held for sale

2,396,000

1,500,000

Cost Reduction Initiatives

Reorganization and Reinvestment Initiatives

54,061,000

1,012,000

16,329,000

GOS Initiatives

24,680,000

14,816,000

Golf clubs

Golf clubs | Cost Reduction Initiatives

31,210,000

21,200,000

Golf clubs | Reorganization and Reinvestment Initiatives

30,398,000

Golf clubs | GOS Initiatives

812,000

5,642,000

15,558,000

12,065,000

Golf ball

Golf ball | Cost Reduction Initiatives

16,829,000

6,367,000

Golf ball | Reorganization and Reinvestment Initiatives

16,589,000

Golf ball | GOS Initiatives

240,000

1,329,000

5,038,000

762,000

Corporate G&A

Corporate G&A | Cost Reduction Initiatives

^[1]

7,034,000

13,442,000

Corporate G&A | Reorganization and Reinvestment Initiatives

^[1]

7,074,000

Corporate G&A | GOS Initiatives

^[1]

$ (40,000)

9,358,000

^[1]

$ 4,084,000

$ 1,989,000

[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. In addition to the corporate general and administrative expenses identified above in connection with the Company's Cost Reduction Initiatives, Reorganization and Reinvestment Initiatives, and GOS initiatives, the following charges were included in reconciling items: • 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 September 30, 2012 (see Note 8); • Pre-tax impairment charges of $6,533,000 and $7,547,000 for 2011 and 2010, respectively, primarily related to certain trademarks and trade names (see Note 8); • Net gains of $3,248,000 for 2012, and net losses of $8,153,000 and $11,674,000 for 2011 and 2010, 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 $6,170,000 recognized in 2011 in connection with the sale of certain buildings (see Note 7).

Summary of Net Sales by Product (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

^[1]

Dec. 31, 2010

Drivers and Fairway Woods

$ 119,938

$ 147,906

$ 281,123

$ 285,098

$ 153,872

$ 173,243

$ 273,814

$ 285,599

$ 834,065

$ 886,528

$ 967,656

200,588

211,191

225,227

Irons

170,794

206,817

223,875

Putters

93,325

88,160

106,246

Golf Balls

139,576

160,359

176,590

Accessories and Other

$ 229,782

$ 220,001

$ 235,718

[1]	Certain prior period amounts were reclassified to conform with the current year presentation.

Summary of Revenue and Long Lived Assets by Geographical Areas (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

$ 119,938

$ 147,906

$ 281,123

$ 285,098

$ 153,872

$ 173,243

$ 273,814

$ 285,599

$ 834,065

$ 886,528

^[1]

$ 967,656

248,730

306,396

248,730

306,396

328,497

United States

392,087

419,448

468,214

212,438

268,376

212,438

268,376

291,527

Europe

120,160

133,572

130,106

7,969

7,313

7,969

7,313

6,806

Japan

157,315

149,768

164,810

6,897

8,386

6,897

8,386

8,635

Rest Of Asia

75,035

82,746

89,455

4,265

4,581

4,265

4,581

4,511

Other Foreign Countries

89,468

100,994

115,071

Quarterly Financial Information [Line Items]

$ 17,161

$ 17,740

$ 17,161

$ 17,740

$ 17,018

[1]	Certain prior period amounts were reclassified to conform with the current year presentation.

Summarized Quarterly Data (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Jun. 30, 2011

Mar. 31, 2011

Dec. 31, 2012

Dec. 31, 2011

Dec. 31, 2010

Dividends on convertible preferred stock

$ 119,938

$ 147,906

$ 281,123

$ 285,098

$ 153,872

$ 173,243

$ 273,814

$ 285,599

$ 834,065

$ 886,528

^[1]

$ 967,656

Gross profit

9,344

^[2]

3,800

^[2]

110,653

^[2]

124,371

^[2]

37,573

^[3]

47,386

^[3]

102,662

^[3]

123,681

^[3]

248,168

^[2]

311,302

^[3]

365,496

Net income (loss)

(70,749)

^[4],[5]

(86,798)

^[4],[5]

2,799

^[4],[5]

31,802

^[4],[5]

(62,985)

^{[6],[7],[8],[9],[10]}

(62,587)

^{[6],[7],[8],[9],[10]}

(59,066)

^{[6],[7],[8],[9],[10]}

12,818

^{[6],[7],[8],[9],[10]}

(122,946)

^[4],[5]

(171,820)

^{[6],[7],[8],[9],[10]}

(18,804)

783

2,414

2,625

8,447

10,500

Net income (loss) allocable to common shareholders

$ (71,532)

^[4],[5]

$ (89,212)

^[4],[5]

$ 174

^[4],[5]

$ 29,177

^[4],[5]

$ (65,610)

$ (65,212)

$ (61,691)

$ 10,193

$ (131,393)

^[4],[5]

$ (182,320)

$ (29,304)

Earnings (loss) per common share

Basic

$ (1.01)

^[4],[5]

$ (1.31)

^[4],[5]

$ 0.00

^[4],[5]

$ 0.45

^[4],[5]

$ (1.01)

^{[6],[7],[8],[9],[10]}

$ (1.01)

^{[6],[7],[8],[9],[10]}

$ (0.96)

^{[6],[7],[8],[9],[10]}

$ 0.16

^{[6],[7],[8],[9],[10]}

$ (1.96)

^[4],[5]

$ (2.82)

^{[6],[7],[8],[9],[10]}

$ (0.46)

Diluted

$ (1.01)

^[4],[5]

$ (1.31)

^[4],[5]

$ 0.00

^[4],[5]

$ 0.37

^[4],[5]

$ (1.01)

^{[6],[7],[8],[9],[10]}

$ (1.01)

^{[6],[7],[8],[9],[10]}

$ (0.96)

^{[6],[7],[8],[9],[10]}

$ 0.15

^{[6],[7],[8],[9],[10]}

$ (1.96)

^[4],[5]

$ (2.82)

^{[6],[7],[8],[9],[10]}

$ (0.46)

[1]	Certain prior period amounts were reclassified to conform with the current year presentation.
[2]	During the second, third and fourth quarters of 2012, the Company recognized charges of $961,000, $27,302,000, and $7,965,000, respectively, in cost of goods sold in connection with the Company's Cost Reduction Initiatives (see Note 3).
[3]	During the first, second, third and fourth quarters of 2011, the Company recognized charges of $6,302,000, $5,847,000, $5,191,000, and $3,250,000, respectively, in cost of goods sold in connection with the Company's GOS Initiatives (see Note 3).
[4]	During the first quarter of 2012, the Company recognized an after-tax gain of $4,069,000 ($0.06 per share) in connection with the sale of the Top-Flite and Ben Hogan brands (see Note 8).
[5]	During the second, third and fourth quarters of 2012, the Company recognized after-tax charges of $2,855,000 ($0.04 per share), $21,576,000 ($0.32 per share), and $8,798,000 ($0.13 per share), respectively, in connection with the Company's Cost Reduction Initiatives (see Note 3).
[6]	During the first quarter of 2011, the Company recognized an after-tax gain of $3,924,000 ($0.05 per share) in connection with the sale of certain buildings (see Note 7).
[7]	During the first, second, third and fourth quarters of 2011, the Company recognized after-tax charges of $4,151,000 ($0.05 per share), $3,439,000 ($0.05 per share), $3,216,000 ($0.05 per share) and $4,372,000 ($0.07 per share), respectively, in connection with the Company's GOS Initiatives (see Note 3).
[8]	During the second quarter of 2011, the Company recognized $52,751,000 ($0.82 per share) of tax expense in order to establish a valuation allowance against its U.S. deferred tax assets. During the third and fourth quarters of 2011, in connection with the establishment of the valuation allowance, the Company recognized tax expense of $12,237,000 ($0.19 per share) and $9,397,000 ($0.14 per share), respectively, relating to the release of certain tax assets on intercompany profits (see Note 12).
[9]	During the second quarter of 2011, the Company recognized an after-tax impairment charge of $3,329,000 ($0.05 per share) related to certain trademarks and trade names (see Note 8).
[10]	During the second, third and fourth quarters of 2011, the Company recognized after-tax charges of $3,175,000 ($0.05 per share), $4,548,000 ($0.07 per share), and $2,319,000 ($0.03 per share), respectively, in connection with the Company's Reorganization and Restructuring Initiatives (see Note 3).

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 225
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.21)
-URI http://asc.fasb.org/extlink&oid=6880815&loc=d3e20235-122688

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6371337&loc=d3e3550-109257

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 55
-Paragraph 52
-URI http://asc.fasb.org/extlink&oid=16381557&loc=d3e4984-109258

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7655603&loc=d3e1252-109256

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04.19)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 225
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04.23)
-URI http://asc.fasb.org/extlink&oid=6879574&loc=d3e536633-122882

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 18
-Article 7

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 36, 37, 38
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 07-4
-Paragraph 4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 20
-Article 5

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Paragraph 21
-Article 9

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.