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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 8, 2007
Date of Report (Date of earliest event reported)
CALLAWAY GOLF COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-10962 95-3797580
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2180 RUTHERFORD ROAD, CARLSBAD, CALIFORNIA 92008-7328
(Address of principal executive offices) (Zip Code)
(760) 931-1771
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.*
On February 8, 2007, Callaway Golf Company issued a press release captioned
"Callaway Golf Announces Results for Fourth Quarter and Full Year 2006." A copy
of the press release is attached hereto as Exhibit 99.1 and incorporated herein
by this reference.
Item 9.01 Financial Statements and Exhibits.*
(c) Exhibits.
The following exhibit is being furnished herewith:
Exhibit 99.1 Press Release, dated February 8, 2007, captioned
"Callaway Golf Announces Results for Fourth Quarter
and Full Year 2006."
* The information furnished under Item 2.02 and Item 9.01 of this Current Report
on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any registration statement or other filing under
the Securities Act of 1933, as amended, except as shall be expressly set forth
by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALLAWAY GOLF COMPANY
Date: February 8, 2007 By: /s/ Bradley J. Holiday
-------------------------------
Name: Bradley J. Holiday
Title: Senior Executive Vice President
and Chief Financial Officer
Exhibit Index
-------------
Exhibit Number Description
- -------------- ------------
99.1 Press release, dated February 8, 2007, captioned
"Callaway Golf Announces Results for Fourth Quarter
and Full Year 2006."
Exhibit 99.1
Callaway Golf Announces Results for Fourth Quarter and Full Year 2006
CARLSBAD, Calif.--(BUSINESS WIRE)--Feb. 8, 2007--Callaway Golf
Company (NYSE:ELY) today announced its financial results for the
fourth quarter and full year ended December 31, 2006. Highlights for
the fourth quarter include:
-- Net sales of $179.9 million, as compared to $154.5 million for
the same period in 2005.
-- Loss per share of $0.15 on 67.0 million shares, as compared to
a loss per share of $0.27 on 69.3 million shares in the fourth quarter
of 2005.
-- The 2006 fourth quarter loss per share includes $0.02 of
after-tax charges for employee equity-based compensation associated
with FAS 123R, $0.01 for charges related to the restructuring
initiatives announced in September 2005, and $0.01 for gross margin
improvement initiatives announced in November 2006. The fourth quarter
of 2005 includes after-tax charges of $0.03 for the integration of
Top-Flite and $0.02 for the restructuring charges. Excluding these
charges, the Company's pro forma loss per share for the fourth quarter
of 2006 would have been $0.11, as compared to pro forma loss per share
of $0.22 for the fourth quarter of 2005.
-- Gross profit for the fourth quarter of 2006 was $58.8 million
(or 33% of net sales) compared to $48.2 million (or 31% of net sales)
for the fourth quarter of 2005.
-- Operating Expenses for the fourth quarter of 2006 were $79.9
million compared to $80.8 million for the same period in 2005.
Highlights for the full year of 2006 include:
-- Net sales of $1.018 billion, as compared to $998.1 million for
the same period in 2005.
-- Fully diluted earnings per share of $0.34 on 68.5 million
shares, as compared to fully diluted earnings per share of $0.19 on
69.2 million shares in 2005.
-- The 2006 fully diluted earnings per share includes after-tax
charges of $0.08 for employee equity-based compensation associated
with FAS 123R, $0.04 for the integration of Top-Flite, $0.03 for the
restructuring initiatives, and $0.02 for the gross margin improvement
initiatives. The full year of 2005 includes after-tax charges of $0.11
for integration of Top-Flite, $0.07 for the restructuring, and $0.01
for employee equity-based compensation. Excluding these charges, the
Company's pro forma fully diluted earnings per share for 2006 would
have been $0.51 compared to $0.38 for 2005.
-- Gross profit for 2006 was $398.1 million (or 39% of net sales)
compared to $414.4 million (or 42% of net sales) for 2005. The decline
in gross profit is primarily the result of a lower mix of higher
margin irons, as well as lower Top-Flite and Ben Hogan gross margins
due to the initiatives to clear older inventory.
-- Operating Expenses for 2006 were $361.0 million, a decrease of
$36.2 million compared to $397.2 million in 2005. A majority of the
decrease is due to the restructuring initiatives announced in
September 2005.
"We have made significant progress this year in improving
operations and profitability," announced George Fellows, President and
CEO. "Specifically, we were able to reduce our pro forma operating
expenses in 2006 by approximately $35 million, which is in addition to
the $8 million saved in the fourth quarter of 2005. We are also
pleased with our fourth quarter results which reflect stronger sales
and gross margins and significantly improved earnings compared to the
fourth quarter last year."
"While pleased with our progress so far, we recognize that there
is more we must do to further improve our operations and
profitability," continued Mr. Fellows. "We have therefore begun
implementing our previously announced gross margin initiatives, which
are targeted at saving $50 to $60 million over the next two years. We
also began the relaunch of the Top-Flite brand at the PGA Show in
Orlando at the end of January and are encouraged by the reception the
new Top-Flite D2 ball technology has received. With these projects
underway, along with the 5 out of 11 'Editor Choice' awards we
received for our new 2007 products in Golf Digest's 'Hot List'
equipment review, we are optimistic as we begin the new golf season."
Business Outlook
The Company estimates that its full year 2007 net sales will be in
the range of $1.035 to $1.055 billion. The Company also estimates that
its 2007 full year pro forma fully diluted earnings per share will be
in the range of $0.75 to $0.85, which represents an estimated increase
of over 45% as compared to the Company's pro forma fully diluted
earnings per share in 2006 of $0.51 as discussed above. Estimated pro
forma earnings for 2007 exclude charges related to employee long-term
incentive compensation as well as charges related to the Company's
gross margin initiatives.
Going forward, the Company's pro forma results will include
charges for employee long-term incentive compensation, which are
estimated to be $0.09 per share in 2007 as compared to $0.08 in 2006.
As a result, the Company's pro forma fully diluted earnings per share
for 2007 including these charges are estimated to be in the range of
$0.66 to $0.76, as compared to $0.43 in 2006.
The Company's earnings estimates assume a base of 68.0 million
shares.
The Company will be holding a conference call at 2:00 p.m. PST
today. The call will be broadcast live over the Internet and can be
accessed at www.callawaygolf.com. To listen to the call, please go to
the website at least 15 minutes before the call to register and for
instructions on how to access the broadcast. A replay of the
conference call will be available approximately three hours after the
call ends, and will remain available through 9:00 p.m. PST on
Thursday, February 15, 2007. The replay may be accessed through the
Internet at www.callawaygolf.com or by telephone by calling
1-800-475-6701 toll free for calls originating within the United
States or 320-365-3844 for International calls. The replay pass code
is 862285.
Disclaimer: Statements used in this press release that relate to
future plans, events, financial results, performance or prospects,
including statements relating to estimated sales and earnings for
2007, the relaunch of the Top-Flite brand, and the implementation of,
or cost savings to result from, the Company's gross margin
initiatives, are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995. These estimates and
statements are based upon current information and expectations.
Investors should understand that it is very difficult to forecast
sales of the Company's products as a substantial portion of the
Company's sales each year is derived from the sale of new products.
Accurately estimating the Company's sales each year is therefore based
upon various unknowns including consumer acceptance of the Company's
new products as well as consumer discretionary purchasing behavior in
the upcoming year. Actual results may differ materially from those
estimated or anticipated as a result of these unknowns or as a result
of certain risks and uncertainties, including but not limited to,
delays, difficulties or increased costs associated with the
implementation of the Company's planned gross margin initiatives, the
re-launch of the Top-Flite brand or the implementation of future
initiatives; market acceptance of current and future products; adverse
market and economic conditions; adverse weather conditions and
seasonality; any rule changes or other actions taken by the USGA or
other golf association that could have an adverse impact upon demand
for the Company's products; a decrease in participation levels in
golf; and the effect of terrorist activity, armed conflict, natural
disasters or pandemic diseases on the economy generally, on the level
of demand for the Company's products or on the Company's ability to
manage its supply and delivery logistics in such an environment. For
additional information concerning these and other risks and
uncertainties that could affect these statements and the Company's
business, see Part I, Item 1A of the Company's Annual Report on Form
10-K for the year ended December 31, 2005, as well as other risks and
uncertainties detailed from time to time in the Company's reports on
Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the
Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date hereof. The Company undertakes no obligation to
republish revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Regulation G: The financial results reported in this press release
have been prepared in accordance with accounting principles generally
accepted in the United States ("GAAP"). In addition to the GAAP
results, the Company has also provided additional information
concerning its results, which includes certain financial measures not
prepared in accordance with GAAP. The non-GAAP financial measures
included in this press release exclude charges associated with
employee equity-based compensation, charges related to the integration
of the Callaway Golf Company and Top-Flite Golf Company operations,
charges related to the September 2005 restructuring initiatives, and
charges related to the gross margin initiatives. These non-GAAP
financial measures should not be considered a substitute for any
measure derived in accordance with GAAP. These non-GAAP financial
measures may also be inconsistent with the manner in which similar
measures are derived or used by other companies. Management believes
that the presentation of such non-GAAP financial measures, when
considered in conjunction with the most directly comparable GAAP
financial measures, provides additional useful information concerning
the Company's operations without these charges. The Company has
provided reconciling information in the text of this press release and
in the supplemental financial information attached to this release.
About Callaway Golf
Through an unwavering commitment to innovation, Callaway Golf
Company creates products and services designed to make every golfer a
better golfer. Callaway Golf Company, which celebrates its 25th
Anniversary in 2007, manufactures and sells golf clubs and golf balls,
and sells golf accessories, under the Callaway Golf(R), Odyssey(R),
Top-Flite(R), and Ben Hogan(R) brands in more than 110 countries
worldwide. For more information please visit www.callawaygolf.com.
Callaway Golf Company
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
December December
31, 31,
2006 2005
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $46,362 $49,481
Accounts receivable, net 118,133 98,082
Inventories, net 265,110 241,577
Income taxes receivable 9,094 2,026
Other current assets 54,501 47,424
--------- ---------
Total current assets 493,200 438,590
Property, plant and equipment, net 131,224 127,739
Intangible assets, net 175,159 175,191
Deferred taxes 18,821 6,516
Other assets 27,543 16,462
--------- ---------
$845,947 $764,498
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $111,360 $102,134
Accrued employee compensation and benefits 18,731 24,783
Accrued warranty expense 13,364 13,267
Bank line of credit 80,000 -
Capital leases, current portion - 21
--------- ---------
Total current liabilities 223,455 140,205
Long-term liabilities 43,388 28,245
Minority interest 1,987 -
Shareholders' equity 577,117 596,048
--------- ---------
$845,947 $764,498
========= =========
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter
Ended
December
31,
--------------------------
2006 2005
--------- ---------
Net sales $179,884 100% $154,493 100%
Cost of sales 121,112 67% 106,316 69%
--------- ---------
Gross profit 58,772 33% 48,177 31%
Operating expenses:
Selling expense 52,404 29% 53,945 35%
General and administrative expense 20,483 11% 20,290 13%
Research and development expense 6,999 4% 6,550 4%
--------- ---------
Total operating expenses 79,886 44% 80,785 52%
Income (loss) from operations (21,114) -12% (32,608) -21%
--------- ---------
Other income (expense), net (28) (417)
--------- ---------
Income (loss) before income taxes (21,142) -12% (33,025) -21%
Income tax provision (benefit) (10,948) (14,361)
--------- ---------
Net income (loss) $(10,194) -6% $(18,664) -12%
========= =========
Earnings (loss) per common share:
Basic ($0.15) ($0.27)
Diluted ($0.15) ($0.27)
Weighted-average shares outstanding:
Basic 66,993 69,268
Diluted 66,993 69,268
Year
Ended
December
31,
----------------------------
2006 2005
----------- ---------
Net sales $1,017,907 100% $998,093 100%
Cost of goods sold 619,832 61% 583,679 58%
----------- ---------
Gross profit 398,075 39% 414,414 42%
Operating expenses:
Selling expense 254,526 25% 290,074 29%
General and administrative expense 79,709 8% 80,145 8%
Research and development expense 26,785 3% 26,989 3%
----------- ---------
Total operating expenses 361,020 35% 397,208 40%
Income from operations 37,055 4% 17,206 2%
Other income (expense), net (2,057) (2,669)
----------- ---------
Income before income taxes 34,998 3% 14,537 1%
Income tax provision 11,708 1,253
----------- ---------
Net income $23,290 2% $13,284 1%
=========== =========
Earnings per common share:
Basic $0.34 $0.19
Diluted $0.34 $0.19
Weighted-average shares outstanding:
Basic 67,732 68,646
Diluted 68,503 69,239
Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Year Ended
December 31,
-----------------
2006 2005
-------- --------
Cash flows from operating activities:
Net income $23,290 $13,284
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,274 38,260
Non-cash compensation 11,921 6,527
Loss on disposal of assets 1,135 4,031
Deferred taxes 979 (3,906)
Changes in assets and liabilities, net of
effects of acquisitions (52,885) 7,043
-------- --------
Net cash provided by operating activities 16,714 65,239
-------- --------
Cash flows from investing activities:
Capital expenditures and other (31,880) (31,608)
Investment in golf related ventures (10,008) -
Proceeds from sale of capital assets 469 1,363
Business acquisition, net of cash acquired 374 -
-------- --------
Net cash used in investing activities (41,045) (30,245)
-------- --------
Cash flows from financing activities:
Issuance of Common Stock 9,606 14,812
Dividends paid, net (19,212) (19,557)
Acquisition of Treasury Stock (52,872) (39)
Tax benefit from exercise of stock options 578 2,408
Proceeds from (payments on) Line of Credit, net 80,000 (13,000)
Minority interest 1,987 -
Payments on financing arrangements (16) (44)
-------- --------
Net cash provided by (used in) financing
activities 20,071 (15,420)
-------- --------
Effect of exchange rate changes on cash and cash
equivalents 1,141 (1,750)
-------- --------
Net (decrease) increase in cash and cash
equivalents (3,119) 17,824
Cash and cash equivalents at beginning of period 49,481 31,657
-------- --------
Cash and cash equivalents at end of period $46,362 $49,481
======== ========
Callaway Golf Company
Consolidated Net Sales and Operating Segment Information
(In thousands)
(Unaudited)
Net Sales by Product Category
-----------------------------------
Quarter Ended
December 31, Growth/(Decline)
------------------- ----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
Woods $39,321 $43,401 $(4,080) -9%
Irons 38,279 36,608 1,671 5%
Putters 17,569 21,111 (3,542) -17%
Golf balls 47,250 34,519 12,731 37%
Accessories and other 37,465 18,854 18,611 99%
--------- --------- --------
$179,884 $154,493 $25,391 16%
========= ========= ========
Year Ended
December 31, Growth/(Decline)
--------------------- ----------------
2006 2005 Dollars Percent
----------- --------- -------- -------
Net sales:
Woods $266,478 $241,329 $25,149 10%
Irons 287,960 316,501 (28,541) -9%
Putters 102,714 109,309 (6,595) -6%
Golf balls 214,783 214,695 88 0%
Accessories and other 145,972 116,259 29,713 26%
----------- --------- --------
$1,017,907 $998,093 $19,814 2%
=========== ========= ========
Net Sales by Region
-------------------------------------
Quarter Ended
December 31, Growth/(Decline)
------------------- ----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
United States $95,772 $77,435 $18,337 24%
Europe 26,264 22,018 4,246 19%
Japan 22,313 22,533 (220) -1%
Rest of Asia 14,741 14,287 454 3%
Other foreign countries 20,794 18,220 2,574 14%
--------- --------- --------
$179,884 $154,493 $25,391 16%
========= ========= ========
Year Ended
December 31, Growth/(Decline)
--------------------- ----------------
2006 2005 Dollars Percent
----------- --------- -------- -------
Net sales:
United States $566,600 $563,040 $3,560 1%
Europe 159,886 166,177 (6,291) -4%
Japan 105,705 103,389 2,316 2%
Rest of Asia 75,569 66,890 8,679 13%
Other foreign countries 110,147 98,597 11,550 12%
----------- --------- --------
$1,017,907 $998,093 $19,814 2%
=========== ========= ========
Operating Segment Information
-----------------------------------
Quarter Ended
December 31, Growth/(Decline)
------------------- -----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
Golf clubs $132,634 $119,974 $12,660 11%
Golf balls 47,250 34,519 12,731 37%
--------- --------- --------
$179,884 $154,493 $25,391 16%
========= ========= ========
Income (loss) before provision
for income taxes:
Golf clubs $(94) $(14,045) $13,951 99%
Golf balls (4,615) (3,713) (902) -24%
Reconciling items (16,433) (15,267) (1,166) -8%
--------- --------- --------
$(21,142) $(33,025) $11,883 36%
========= ========= ========
Year Ended
December 31, Growth/(Decline)
--------------------- ----------------
2006 2005 Dollars Percent
----------- --------- -------- -------
Net sales:
Golf clubs $803,124 $783,398 $19,726 3%
Golf balls 214,783 214,695 88 0%
----------- --------- --------
$1,017,907 $998,093 $19,814 2%
=========== ========= ========
Income (loss) before provision
for income taxes:
Golf clubs $101,837 $68,327 $33,510 49%
Golf balls (6,396) (3,612) (2,784) -77%
Reconciling items (60,443) (50,178) (10,265) -20%
----------- --------- --------
$34,998 $14,537 $20,461 141%
=========== ========= ========
Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Quarter Ended December 31,
------------------------------------
2006
------------------------------------
Pro Forma
Callaway Integration Restructuring
Golf Charges Charges
---------- ----------- -------------
Net sales $179,884 $- $-
Gross profit 60,600 (85) (135)
% of sales 34% n/a n/a
Operating expenses 77,451 (84) 1,287
--------- ---------- ------------
Income (loss) from operations (16,851) (1) (1,422)
Other income/(expense), net (28) - -
--------- ---------- ------------
Income (loss) before income taxes (16,879) (1) (1,422)
Provision for income taxes (9,306) (64) (604)
--------- ---------- ------------
Net income (loss) $(7,573) $63 $(818)
========= ========== ============
Diluted earnings (loss) per share: $(0.11) $- $(0.01)
Weighted-average shares
outstanding: 66,993 66,993 66,993
Employee
Stock Gross Margin Total as
Compensation Initiatives Reported
------------- ------------ ---------
Net sales $- $- $179,884
Gross profit (104) (1,504) 58,772
% of sales n/a n/a 33%
Operating expenses 1,232 - 79,886
------------ ----------- ---------
Income (loss) from operations (1,336) (1,504) (21,114)
Other income/(expense), net - - (28)
------------ ----------- ---------
Income (loss) before income taxes (1,336) (1,504) (21,142)
Provision for income taxes (379) (595) (10,948)
------------ ----------- ---------
Net income (loss) $(957) $(909) $(10,194)
============ =========== =========
Diluted earnings (loss) per share: $(0.02) $(0.01) $(0.15)
Weighted-average shares
outstanding: 66,993 66,993 66,993
Quarter Ended December 31,
-----------------------------------------
2005
-----------------------------------------
Pro Forma
Callaway Integration Restructuring
Golf Charges Charges
---------- ----------- -------------
Net sales $154,493 $- $-
Gross profit 48,922 (763) 18
% of sales 32% n/a n/a
Operating expenses 76,129 2,330 2,098
--------- ---------- ------------
Income (loss) from operations (27,207) (3,093) (2,080)
Other income/(expense), net (417) -
--------- ---------- ------------
Income (loss) before income taxes (27,624) (3,093) (2,080)
Provision for income taxes (12,309) (1,176) (790)
--------- ---------- ------------
Net income (loss) $(15,315) $(1,917) $(1,290)
========= ========== ============
Diluted earnings (loss) per share: $(0.22) $(0.03) $(0.02)
Weighted-average shares
outstanding: 69,268 69,268 69,268
Employee
Stock Gross Margin Total as
Compensation Initiatives Reported
------------- ------------ ---------
Net sales $- $- $154,493
Gross profit - - 48,177
% of sales n/a n/a 31%
Operating expenses 228 - 80,785
------------ ----------- ---------
Income (loss) from operations (228) - (32,608)
Other income/(expense), net - - (417)
------------ ----------- ---------
Income (loss) before income taxes (228) - (33,025)
Provision for income taxes (86) - (14,361)
------------ ----------- ---------
Net income (loss) $(142) $- $(18,664)
============ =========== =========
Diluted earnings (loss) per
share: $- $- $(0.27)
Weighted-average shares
outstanding: 69,268 69,268 69,268
Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Year Ended December 31,
--------------------------------------
2006
--------------------------------------
Pro Forma
Callaway Integration Restructuring
Golf Charges Charges
----------- ----------- --------------
Net sales $1,017,907 $- $-
Gross profit 404,154 (3,451) (291)
% of sales 40% n/a n/a
Operating expenses 349,528 588 2,732
----------- ---------- -------------
Income (loss) from operations 54,626 (4,039) (3,023)
Other income/(expense), net (2,057) - -
----------- ---------- -------------
Income (loss) before income
taxes 52,569 (4,039) (3,023)
Provision for income taxes 17,953 (1,555) (1,164)
----------- ---------- -------------
Net income (loss) $34,616 $(2,484) $(1,859)
=========== ========== =============
Diluted earnings (loss) per
share: $0.51 $(0.04) $(0.03)
Weighted-average shares
outstanding: 68,503 68,503 68,503
Employee
Stock Gross Margin Total as
Compensation Initiatives Reported
--------------------------------------
Net sales $- $- $1,017,907
Gross profit (484) (1,853) 398,075
% of sales n/a n/a 39%
Operating expenses 8,172 - 361,020
------------- ------------ -----------
Income (loss) from operations (8,656) (1,853) 37,055
Other income/(expense), net - - (2,057)
------------- ------------ -----------
Income (loss) before income
taxes (8,656) (1,853) 34,998
Provision for income taxes (2,813) (713) 11,708
------------- ------------ -----------
Net income (loss) $(5,843) $(1,140) $23,290
============= ============ ===========
Diluted earnings (loss) per
share: $(0.08) $(0.02) $0.34
Weighted-average shares
outstanding: 68,503 68,503 68,503
Year Ended December 31,
------------------------------------
2005
------------------------------------
Pro Forma
Callaway Integration Restructuring
Golf Charges Charges
------------------------------------
Net sales $998,093 $- $-
Gross profit 422,921 (6,388) (2,119)
% of sales 42% n/a n/a
Operating expenses 384,367 6,025 6,205
--------- ----------- -------------
Income (loss) from operations 38,554 (12,413) (8,324)
Other income/(expense), net (2,669) - -
--------- ----------- -------------
Income (loss) before income taxes 35,885 (12,413) (8,324)
Provision for income taxes 9,365 (4,717) (3,163)
--------- ----------- -------------
Net income (loss) $26,520 $(7,696) $(5,161)
========= =========== =============
Diluted earnings (loss) per share: $0.38 $(0.11) $(0.07)
Weighted-average shares
outstanding: 69,239 69,239 69,239
Employee
Stock Gross Margin Total as
Compensation Initiatives Reported
------------------------------------
Net sales $- $- $998,093
Gross profit - - 414,414
% of sales n/a n/a 42%
Operating expenses 611 - 397,208
------------- ------------ ---------
Income (loss) from operations (611) - 17,206
Other income/(expense), net - - (2,669)
------------- ------------ ---------
Income (loss) before income taxes (611) - 14,537
Provision for income taxes (232) - 1,253
------------- ------------ ---------
Net income (loss) $(379) $- $13,284
============= ============ =========
Diluted earnings (loss) per share: $(0.01) $- $0.19
Weighted-average shares
outstanding: 69,239 69,239 69,239
Callaway Golf Product Launch Schedule
2006 2007
- ----------------------------------- --------------------------------
Major First Half
Launches:
Drivers: Drivers:
-- X-460 Drivers Feb-2006 -- Big Bertha Feb-2007
460 Drivers
-- ERC III Drivers May-2006 -- FT-5 Drivers Feb-2007
(Japan Only) (Phased
sell-in
through
April)
-- FT-I Drivers Feb-2007
(Phased
sell-in
through
April)
-- Hyper ERC Feb-2007
Drivers (Japan
Only)
Fairway Woods: Fairway Woods:
-- X Fwy Woods Feb-2006 -- X Hot Fwy Jan-2007
Woods(a)
-- Big Bertha Feb-2007
Fwy Woods
Hybrids: Hybrids:
-- FT Hybrids Mar-2006 -- X Hybrids(a) Jan-2007
Irons/Wedges: Irons/Wedges:
-- Big Bertha Irons Jan-2006 -- X-20 Jan-2007
Irons(a)
-- X Tour Wedges Mar-2006 -- X Forged Feb-2007
Irons
-- Fusion Wide Sole May-2006
Irons
Putters: Putters:
-- TriBall SRT Feb-2006 -- Whitehot XG Feb-2007
Putters (Supply TwoBall SRT
Constrained) Putters
-- Whitehot XG Apr-2006 -- Black Series Mar-2007
Putters Putters
-- Whitesteel Jun-2006 -- Whitehot XG Apr-2007
TwoBall SRT (Supply Marksman
Putters Constrained) Putters
Balls: Balls:
-- Big Bertha Balls Jan-2006 -- Top-Flite D2 Jan-2007
Balls
-- Top-Flite XL Jan-2006 -- HX Hot Balls Jan-2007
Balls
-- Top-Flite XL Jan-2006 -- Big Bertha Jan-2007
Extreme Balls Balls
-- HX Tour Balls Mar-2006 -- Warbird Jan-2007
Balls
(a)Launched in limited quantities in 2006 with of balance of launch in
2007.
Callaway Golf Product Launch Schedule
2006 2007
- ----------------------------------- ----------------------------------
Major Second Half
Launches:
Drivers: Drivers:
-- None -- No public information
available
Fairway Woods: Fairway Woods:
-- X Hot Fwy Woods(a) Nov-2006 -- No public information
available
Hybrids: Hybrids:
-- X Hybrids(a) Nov-2006 -- No public information
available
Irons/Wedges: Irons/Wedges:
-- X-20 Irons(a) Dec-2006 -- No public information
available
Putters: Putters:
-- Whitehot XG TwoBall Aug-2006 -- No public information
Putters available
Balls: Balls:
- -- CG Walmart Balls (US Nov-2006 -- No public information
Only) available
(a)Launched in limited quantities in 2006 with of balance of launch in
2007.
CONTACT: Callaway Golf Company
Brad Holiday
Patrick Burke
Michele Szynal
760-931-1771