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March 9, 2010

Tim Finchem

John Solheim

JAMES CRAMER: Good afternoon, everyone, and thank you for joining us today. I'm James Cramer with the PGA TOUR communications department, and as you undoubtedly are aware, we announced yesterday resolution to the Ping Eye 2 iron and wedge controversy with the PGA TOUR.
Effective March 29th, Ping is waiving its rights that prevent the TOUR from prohibiting the use of Ping Eye 2 irons and wedges that do not meet the 2010 condition of competition from being used at PGA TOUR, Champions Tour and Nationwide Tour events.
To expand upon yesterday's announcement, we are pleased to have PGA TOUR Commissioner Tim Finchem, Ping chairman and CEO John Solheim with us today. We would like to begin with comments by both gentlemen before moving on to questions and answers.
With that, I will turn it over to Commissioner Finchem. Commissioner?
TIM FINCHEM: Thank you, James, and I'm delighted to be here to answer questions related to yesterday's announcement. Let me just make a couple of comments. First of all, the PGA TOUR is absolutely delighted with yesterday's announcement, and as I think everyone on this call recognizes, we were faced with an issue here that created a bit of a distraction and also the perception that we had somewhat of an unlevel playing field on the PGA TOUR.
We therefore were very pleased that John Solheim and Ping took the opportunity to do something extremely positive and significant for the game of golf, as I've mentioned in our release yesterday, and I think everybody involved with the PGA TOUR is particularly appreciative of John's willingness to take this action.
I would -- there have been a couple of press inquiries on a couple of subjects, and I'd just like to clarify a couple of things. First of all, there's been some reference in the press to this being a settlement or agreement. Actually it's neither. This was 100 percent a voluntary action by John Solheim and Ping to waive their rights, those rights emanating from antitrust litigation years ago, that prevented the PGA TOUR from -- that could have prevented the PGA TOUR from prohibiting the use of pre-April 1990 Ping Eye 2 irons, which was the nub of the problem. There was no agreement to do this; John stepped forward to do it.
And secondly, and related to that, there was no money here that exchanged hands. There was no settlement. John Solheim and Ping did this for the good of the game, and Ping received no financial or other direct benefit in exchange for taking this action.
In addition, there have been some questions about The Masters and the PGA of America. Our understanding is that both The Masters and the PGA will use the same rule as the PGA TOUR as it relates to these use of pre-1990 Ping Eye 2s going forward after March 29th. So while all the I's aren't dotted and T's aren't crossed yet, after the 29th we envision the rest of this year and going forward that we're all playing by the same rules, including the U.S. Open, so we're very, very pleased about that.
Also, I'd just say, I'd also like to thank John for considering this matter expeditiously given the fact that time seemed to us to be of the essence in terms of setting this aside, if it could be set aside, and John spent the time and energy getting back into this old issue to review it carefully and come to this conclusion, and so we are doubly appreciative.
Thank you.
JAMES CRAMER: Mr. Solheim, your comments, please?
JOHN SOLHEIM: Well, first off, I'd like to thank Tim for working with us on this and making it work. You know, just giving this waiver means a lot to us, takes a big load off our shoulders, but more, it takes a load off the game, and especially the PGA TOUR. It's just, we want fair competition throughout golf, and the -- especially at the TOUR level. I mean, it's so important. Now that will be level.
The family is very happy to do this, and I mean, it is purely a waiver on our part. We can go forward and not think about it, which is very important to the family, because I saw what my father went through years ago, and I didn't want that to happen again. To achieve what we achieved yesterday is really neat.
Thank you.
JAMES CRAMER: Thank you, Mr. Solheim. Thank you, Commissioner. At this point we'd like to take questions and answers.

Q. Tim, I know when you did a previous conference call on this subject, you had hoped that Ping and John would arrive at the decision they did, you know, sooner than later. Are you still surprised in any way that things moved this quickly, and how much was going on behind the scenes in the past few weeks to get this done? How many personal conversations were you having with John and perhaps USGA officials about this?
TIM FINCHEM: Well, I mean, it involves a legal contract or binding contract that was entered into and contracts that were entered into 20 years ago. So as John would attest, anytime you're dealing with contract language, and old contract language, it involves lawyers. Anytime you involve lawyers, it takes time. There needed to be some analysis.
But I thought, as I said earlier, I thought John mobilized his team. He gave this a thorough look in a relatively short period of time and came to the conclusion of the waiver. I think from the very first conversation I had with John, he was very interested in taking a step here to help the game, and he was very focused on the difficulties not only from a competitive standpoint but from a distraction standpoint. He asked a lot of good questions in that regard.
And I think from that point on, I'll let him speak. I don't want to speak for him, but it was involving lawyers and figuring out how to do this and do it right. We're just pleased that I think the main thing is that he took this step, and it clears the air on this issue for us going forward.

Q. Mr. Solheim, are you surprised that things came to this resolution this quickly, or are you pleasantly surprised let's say?
JOHN SOLHEIM: Yeah, I am surprised it came this quickly. This was a pretty tough one for me. My son John and his feelings on it speeded me up some. But there are a lot of factors here, including thoughts about my dad and that.
But at the same time, I had the full support of the whole team, all the family members, all the -- to get it done, because we don't need something that distracts Ping from anything. We don't need anything that distracts golf from golf.

Q. John, you've met with the USGA. What's your understanding on so-called elite amateur events beginning in 2014? Will competitors be able to use the Eye 2 clubs from the 1980s?
JOHN SOLHEIM: Yeah, we have not changed anything to do with amateurs whatsoever.

Q. Did you discuss changing that?
JOHN SOLHEIM: Not really, no.

Q. Mr. Solheim, I'm trying to understand; A, were you a bit surprised that the USGA didn't bring up the amateur events after 2014, and also, why they wouldn't address or didn't address both the Senior Open and the Women's Open starting in 2010?
JOHN SOLHEIM: Well, I had a discussion with David Fay, and when I -- after Tim and I had figured things out, and basically told him that if they requested the U.S. Open, we would honor that request, because that's the same players that play on the PGA TOUR.
You know, at the same time, he did bring up the other two events, the Senior and the Ladies Open, and I just have a difficulty with the number of clubs that are going to be available and the number of amateurs that will be qualifying for that, having that go in that fast. Hopefully for the following year we'll have that worked out.

Q. And if I could just clarify one other point, so you worked out the issue with the PGA TOUR with Commissioner Finchem first, before going to the USGA and telling them what you guys had agreed upon?
JOHN SOLHEIM: Yeah. Yeah, we did.

Q. I was wondering, you mentioned your father and what he went through. I was wondering if you could talk a little bit about your father's role and how that weighed on your decision as well as you just mentioned before your son John K. and how he influenced your decision.
JOHN SOLHEIM: Well, that was a very difficult time in Ping's history and in my father's and my own life. And my father was fully enveloped by the TOUR's situation. I did not want to see that happen to this company or to myself. Plus I wanted to see that the game is played in equal competition, on a level playing field. So everything kind of fit.

Q. Can you share a little bit about --
JOHN SOLHEIM: Yeah, John -- I'm getting up there in years but intend to be around for quite a while.
But at the same time, John is taking a much larger part in the company, and I've got to -- his opinions are very important to me. How he would handle things and how he might handle things in the future, you know, I've thought for a long time -- I was preparing kind of the in between, but let's put it this way: My health improved greatly the last few years, and I've got a lot of energy today.
But Johnny is an important factor.

Q. Was there something in particular that he told you or that he said that pushed you in one way or the other?
JOHN SOLHEIM: Well, I think to him it's important that it's a level playing field. You know, it's also a factor that our new clubs are -- with the new grooves are performing extremely well in the marketplace. We have quite a few number of TOUR players asking for them that are not our own players, and it's because of the work that he's done, and he wants those to have a chance to shine, you know.

Q. Commissioner, one of the things that has come out from yesterday's press release is an equipment rule-making process, as administered by the USGA. Can you tell me how the PGA TOUR can fit into a role into those discussions?
TIM FINCHEM: Well, sure. We think that the -- we've always sort of fit into the role of communicating either the attitude of the organization or the attitude of our players or the technical commentary of our players, if you will. But I think the direction of the USGA is laid out to bring all the stakeholders together in a way and have a comprehensive discussion about the process for the future is very healthy.
We look forward to taking part in that and hopefully have some constructive things to add when we get to that point about -- from our perspective. I think the process has improved over the years, but I think all of us believe that, and certainly the USGA believes, that you can never have too much communication and you can never have too much interaction of information amongst stakeholders in any endeavor, and certainly that's true in this sport, where you have a variety of different golf organizations. This is a global sport, Tours all over the world, different golf organizations just here in the United States, not to mention the manufacturing community. So I think it's a very positive step.

Q. John, can you just add your comments to that equipment forum, just how pleased you are about that?
JOHN SOLHEIM: I'm very pleased with it. I think it's an exciting step by the USGA, and I really look forward to participating. I'm more of a mechanical person, and sometimes the things that they recommend are pretty difficult to get done, as well as the time frames that they want us to get things done in. Being able to voice our opinion on that and let them understand it means a lot to us.

Q. Commissioner Finchem, I'm just wondering if this forum had been in place prior to this groove implementation, do you, A, believe that the problems that you had with the implementation would have been dealt with at that forum; and B, is it possible that we wouldn't have had grooves implemented by 2010?
TIM FINCHEM: Well, that's an impossible question to answer because I just don't know. I think when you make a rule change of this magnitude, there's going to be obviously -- the potentiality for things that were not foreseen, but from a PGA TOUR perspective, even though last year, as you know, we went through this process of talking to the manufacturers ourselves about possibly delaying implementation, it's been a reasonably -- it's been a good transition to this new rule, but it could always be done -- because communication is important. As I said earlier, you can't have too much communication.
So I think that John's enthusiasm speaks to that kind of communication. I think the USGA recognizes that an institutionalized way to not just seek communication from individual aspects of golf but to have an interchange is very positive.
JAMES CRAMER: Ladies and gentlemen, thank you very much. Commissioner Finchem, Mr. Solheim, thank you for your time this afternoon, and I'd just like to remind everybody that transcripts from this teleconference will be available shortly on pgatour.com and also at asapsports.com. Have a good afternoon.

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