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
September 29, 2005
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, CA 92008-7328
(Address of principal executive offices) (Zip Code)
(760) 931-1771
Registrant's telephone number, including area code
(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 2.05 Costs Associated with Exit or Disposal Activities.
On September 29, 2005, following a comprehensive review of the
Company's operations, the Company announced the implementation of several
company-wide initiatives that were designed to improve the Company's business
processes and reduce costs. Also on September 29, 2005, as part of these
initiatives, the Company committed to staff reductions under a plan of
termination. The staff reductions will involve the elimination of approximately
500 positions worldwide, including full-time and part-time employees, temporary
staffing and open positions. The Company expects that most of the employment
terminations under the plan will be completed by December 31, 2005 and that all
terminations under the plan will be completed by December 31, 2006.
Employees terminated under the plan of termination will receive
termination benefits for a specified period. As a result of the Company's
provision of termination benefits, the Company expects to incur charges in the
aggregate amount of approximately $11 million, most of which will be recognized
during the third and fourth quarters of 2005. The full amount of the $11 million
charge for termination benefits is expected to result in future cash
expenditures.
Item 7.01 Regulation FD Disclosure.*
On September 29, 2005, Callaway Golf Company issued a press release
captioned "Callaway Golf Company Announces Value Enhancement Initiatives;
Anticipates Improved Third Quarter Results," announcing, among other things, the
Company's implementation of company-wide initiatives to improve business
processes and reduce overall expenses and providing an estimate of third quarter
financial results. A copy of the press release is attached hereto as Exhibit
99.1 and incorporated herein by this reference.
The Company also announced in its press release that the Company
expects to incur charges of approximately $12 million in connection with these
company-wide initiatives. This amount includes the $11 million of charges for
the termination benefits described in Item 2.05 above.
Item 9.01 Financial Statements and Exhibits. *
(d) Exhibits:
---------
The following exhibit is filed with this report on Form 8-K:
Exhibit No. Description
----------- -----------
99.1 Press release, dated September 29,
2005, captioned, "Callaway Golf
Company Announces Value Enhancement
Initiatives; Anticipates Improved
Third Quarter Results."
*The information furnished under Item 7.01 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: September 29, 2005 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 "Callaway Golf Company Announces
Value Enhancement Initiatives; Anticipates Improved
Third Quarter Results."
EXHIBIT 99.1
Callaway Golf Company Announces Value Enhancement Initiatives; Anticipates
Improved Third Quarter Results
CARLSBAD, Calif.--(BUSINESS WIRE)--Sept. 29, 2005--Callaway Golf
Company (NYSE:ELY) today announced that the Company is implementing
several company-wide initiatives expected to improve Callaway Golf's
business processes and reduce the Company's overall expenses by
approximately $70 million over a two year period, with between $50 and
$60 million in savings expected in 2006. The cost of implementing
these initiatives is expected to result in charges totaling
approximately $12 million, with approximately $6 million to be taken
in the third quarter of 2005. The savings are expected to fund
improved profitability and investment in future growth.
The actions are intended to streamline and improve the company's
operations, resulting in a leaner organization that is more efficient,
effective and competitive. Examples of the many actions being taken
throughout the company include the integration of the Callaway Golf,
Odyssey, Top-Flite and Ben Hogan selling functions and the complete
consolidation of all golf ball manufacturing at the Top-Flite
locations in Massachusetts and New York - both of which will reduce
overall headcount and eliminate redundant infrastructure and overhead
while improving functionality. With these operating improvements,
there will be reductions in staffing throughout the organization,
including international subsidiaries.
George Fellows, President and CEO of Callaway Golf Company,
stated, "We are committed to improving the Company's profitability and
enhancing its ability to compete and grow as the technological leader
in the industry. These actions and the associated savings represent a
significant step forward in that effort. We expect near term gains in
efficiency and profitability from these actions, along with future
benefits as we reinvest a portion of the savings to drive growth and
profitability over the longer term."
"This is the first of several steps aimed at creating more value,"
Mr. Fellows continued. "We are also evaluating all the factors that
have contributed to declines in gross margins in recent years, and our
management team is confident that there is room for meaningful
improvement in that area as well. In particular, we are identifying
steps in our supply and assembly operations that will further improve
performance and reduce costs."
Preliminary results suggest that third quarter net sales and
earnings will be significantly improved compared to the third quarter
of 2004, with estimated net sales for the third quarter ending
September 30, 2005 of approximately $215 million versus $129 million
last year, and a corresponding loss per share ranging from $0.06 to
$0.12, compared to a loss of $0.53 last year. These estimated results
include charges for these current initiatives of approximately $0.05
per share as well as continuing integration of the Top-Flite and
Callaway Golf operations of approximately $0.02 per share, compared to
$0.07 for Top-Flite and Callaway Golf integration charges included in
2004. Excluding these charges, earnings for the quarter are estimated
to range from earnings of $0.01 to a loss of $0.05, compared to a loss
of $0.46 last year.
The Company will be holding a conference call at 2:00 p.m. PDT on
September 29, 2005, which will be hosted by George Fellows, President
and CEO, and Bradley J. Holiday, Senior Executive Vice President and
Chief Financial Officer. 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 two hours after
the conclusion of the conference call. The replay may be accessed
through the Internet at www.callawaygolf.com or by telephone by
calling 800-475-6701 toll free for calls originating within the United
States or 320-365-3844 for International calls. The replay pass code
is 797366 and the replay will be available through 9:00 p.m. PDT on
October 6, 2005.
The Company will release actual third quarter financial results on
October 26, 2005. A conference call and webcast will also take place
at that time to discuss financial results.
Disclaimer: Investors should be aware that the Company has not yet
finalized its results for the third quarter and that the Company's
"preliminary" estimates of net sales and earnings for the third
quarter reflect management's estimates based upon the information
available at the time made. These estimates could differ materially
from the Company's actual results if the information on which the
estimates were based ultimately proves to be incorrect or incomplete.
In addition, statements used in this press release that relate to
future plans, events, financial results, performance or prospects,
including statements relating to the initiatives described in this
press release, the amount or timing of benefits and/or charges
associated with those initiatives (including improved business
processes, reduced annual expenses, improved profitability and
possible future growth) and prospects for increased shareholder value,
are forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. These statements are based upon current
information and expectations. Actual results may differ materially
from those anticipated as a result of certain risks and uncertainties,
including but not limited to delays, difficulties, changed strategies,
or unanticipated factors affecting implementation of the initiatives,
as well as the general risks and uncertainties applicable to the
Company and its business. For additional information concerning these
and other risks and uncertainties, see Part I, Item 2 of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 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 preliminary 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 (i) charges associated
with the initiatives discussed in this press release and (ii) charges
associated with the integration of the Callaway Golf Company and
Top-Flite Golf Company operations. 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.
Through an unwavering commitment to innovation, Callaway Golf
Company creates products and services designed to make every golfer a
better golfer. Callaway Golf Company manufactures and sells golf clubs
and golf balls, and sells golf accessories, under the Callaway
Golf(R), Top-Flite(R), Odyssey(R) and Ben Hogan(R) brands. For more
information visit www.callawaygolf.com.
CONTACT: Callaway Golf Company
Brad Holiday or Larry Dorman, (760) 931-1771