CALLAWAY GOLF CO | 2013 | FY | 3


Investments
The Company owns preferred shares of TopGolf International, Inc. (“TopGolf”), the owner and operator of TopGolf entertainment centers. 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.
During 2013, the Company invested an additional $13,637,000 in preferred shares of TopGolf, thereby increasing the Company's total investment as of December 31, 2013 to $37,605,000. The Company’s total ownership interest in TopGolf, including the incremental investments completed in 2013, remains at less than 20% of the outstanding equity securities of TopGolf. 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 assets in the accompanying consolidated balance sheets as of December 31, 2013 and 2012.

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