Originally Posted by newtogolf
I figure FILA used a combination of goodwill and patents to get to the purchase price, but I also have to believe there were were some one time expenses or other things buried in the P&L that made Operating Income so low. If those numbers are accurate it would indicate a poorly run business otherwise.
Yeah, I agree (and forgot to include the patents in my comment on goodwill). Actually, those are probably worth a lot, especially since it seems like the golf ball business has turned into a litigious business and a strong patent portfolio is one's only real defense (or offense).
There are probably some one time expenses related to their past acquisitions such as Cobra. I'm also guessing they had some one time charges from closing some factories for duplicate businesses like Pinnacle. And I'd guess the debt expenses are probably a bit high from the acquisitions as well.
The numbers probably also hint at how expensive sales and marketing are in the golf business. If I recall correctly, Callaway spends something like $40M in R&D, and since much of the Titleist manufacturing is offshored then it is hard to see where a high Opex might come from other than the sales/marketing costs. All those endorsements and TV and magazine advertisements must add up to a lot.