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Segment Information
 12 Months Ended
Dec. 31, 2017
Segment Reporting [Abstract]  
Segment Information
Note 17. Segment Information
The Company has three operating segments, namely Golf Clubs, Golf Balls and Gear, Accessories and Other as of December 31, 2017. Prior to 2017, the Company's operating segments consisted of Golf Clubs and Golf Balls. Due to the recent growth in the accessories and other product category within Golf Clubs from the formation of the apparel joint venture in Japan as well as the Company's acquisition of OGIO in January 2017, the Company reassessed its operating segments during the first quarter of 2017, consistent with the way management reviews its business operations on an ongoing basis. As a result, and based on the Company's assessment, as of January 1, 2017, the Company added a third operating segment, Gear, Accessories and Other, which includes soft goods products and licensing revenues that were formerly in the accessories and other product category within Golf Clubs. Soft goods products include golf apparel and footwear, golf bags, golf gloves, travel gear, headwear and other golf-related accessories, retail apparel sales from the Company's joint venture in Japan, and OGIO branded products as of January 2017. Licensing revenues include royalties from licensing of the Company’s trademarks and service marks for various soft goods. TravisMathew branded products are also included in this operating segment as of August 2017. Subsequent to this change, the Golf Clubs operating segment consists of Callaway Golf woods, hybrids, irons and wedges, Odyssey putters, including Toulon Design putters by Odyssey, packaged sets and sales of pre-owned golf clubs. At the product category level, sales of packaged sets are included within irons, and sales of pre-owned golf clubs are included in the respective woods, irons and putters product categories. The Golf Balls segment continues to consist of Callaway Golf and Strata golf balls that are designed, manufactured and sold by the Company. As a result of these changes, prior period amounts have been reclassified in order to make prior periods comparable to 2017.
The Company's operating segments are organized on the basis of products. There are no significant intersegment transactions.
The table below contains information utilized by management to evaluate its operating segments.
 
Years Ended December 31,
 
2017
 
2016(1)
 
2015(1)
 
(In thousands)
Net sales:
 
 
 
 
 
Golf Clubs
$
643,096

 
$
582,381

 
$
581,450

Golf Balls
162,546

 
152,261

 
143,173

Gear, Accessories and Other
243,094

 
136,550

 
119,171

 
$
1,048,736

 
$
871,192

 
$
843,794

Income (loss) before income tax:
 
 
 
 
 
Golf Clubs
$
77,018

 
$
48,489

 
$
32,630

Golf Balls
26,854

 
23,953

 
18,956

Gear, Accessories and Other
30,631

 
18,223

 
19,137

Reconciling items(2)
(66,448
)
 
(32,272
)
 
(50,660
)
 
$
68,055

 
$
58,393

 
$
20,063

Identifiable assets:(3)
 
 
 
 
 
Golf Clubs
$
321,265

 
$
276,654

 
$
295,659

Golf Balls
57,120

 
45,758

 
47,884

Gear, Accessories and Other
236,515

 
35,788

 
36,429

Reconciling items(3)
376,257

 
443,082

 
251,252

 
$
991,157

 
$
801,282

 
$
631,224

Additions to long-lived assets:(4)
 
 
 
 
 
Golf Clubs
$
11,396

 
$
6,163

 
$
6,774

Golf Balls
12,178

 
6,585

 
7,238

Gear, Accessories and Other
3,790

 
2,050

 
2,253

 
$
27,364

 
$
14,798

 
$
16,265

Goodwill:
 
 
 
 
 
Golf Clubs
$
26,904

 
$
25,593

 
$
26,500

Golf Balls
—

 
—

 
—

Gear, Accessories and Other(5)
29,525

 
—

 
—

 
$
56,429

 
$
25,593

 
$
26,500

Depreciation and amortization:
 
 
 
 
 
Golf Clubs
$
8,769

 
$
8,509

 
$
8,907

Golf Balls
4,496

 
4,355

 
4,566

Gear, Accessories and Other
4,340

 
3,722

 
3,906

 
$
17,605

 
$
16,586

 
$
17,379

 

(1)
Prior period amounts have been reclassified to conform to the current year presentation as the result of the change in operating segments as of January 1, 2017.
(2)
Reconciling items represent the deduction of corporate general and administration expenses and other income (expenses), which are not utilized by management in determining segment profitability. The $34,176,000 increase in reconciling items in 2017 compared to 2016 was primarily due $11,264,000 in one-time transaction and transitional costs associated with the acquisitions of OGIO in January 2017 and TravisMathew in August 2017, a $17,662,000 gain recognized in the second quarter of 2016 in connection with the sale of approximately 10.0% of the Company's investment in Topgolf (see Note 7), combined with increases of $2,286,000 in corporate stock compensation expense and $2,164,000 in interest expense, partially offset by a $4,189,000 increase in foreign currency exchange losses.
(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 three segments including cash and cash equivalents, net accounts receivable, and deferred tax assets. The $66,825,000 decrease in reconciling items in 2017 compared to 2016 was primarily due Topgolf investment. The $191,830,000 increase in reconciling items in 2016 compared to 2015 was primarily due to a benefit of $156,600,000 related to the reversal of the Company's valuation allowance on its U.S. deferred tax assets. This reversal was partially offset by the recognition of $15,974,000 in income taxes payable on the Company's U.S. business (see Note 10).
(4)
Additions to long-lived assets are comprised of purchases of property, plant and equipment.
(5)
The $30,836,000 increase in goodwill in 2017 compared to 2016 was primarily as a result of the acquisitions of OGIO and TravisMathew in 2017.
The Company’s net sales by product category are as follows:
 
Years Ended December 31,
 
2017
 
2016
 
2015
 
(In thousands)
Net sales:
 
 
 
 
 
Woods
$
307,865

 
$
216,094

 
$
222,193

Irons
250,636

 
278,562

 
205,522

Putters
84,595

 
87,725

 
86,293

Golf Balls
162,546

 
152,261

 
143,145

Accessories and Other
243,094

 
136,550

 
186,641

 
$
1,048,736

 
$
871,192

 
$
843,794


The Company markets its products in the United States and internationally, with its principal international markets being Japan and Europe. The tables below contain information about the geographical areas in which the Company operates. Revenues are attributed to the location to which the product was shipped. Long-lived assets are based on location of domicile.
 
Sales
 
Long-Lived
Assets(1)
 
(In thousands)
2017
 
 
 
United States
$
566,365

 
$
403,493

Europe
139,515

 
7,681

Japan
199,331

 
7,635

Rest of Asia
76,540

 
3,717

Other foreign countries
66,985

 
11,248

 
$
1,048,736

 
$
433,774

2016
 
 
 
United States
$
447,613

 
$
199,617

Europe
122,805

 
7,260

Japan
170,760

 
6,201

Rest of Asia
67,099

 
2,668

Other foreign countries
62,915

 
10,405

 
$
871,192

 
$
226,151

2015
 
 
 
United States
$
446,474

 
$
205,952

Europe
125,116

 
8,414

Japan
138,031

 
4,445

Rest of Asia
70,315

 
2,868

Other foreign countries
63,858

 
11,096

 
$
843,794

 
$
232,775


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