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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
July 18, 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 July 18, 2007, Callaway Golf Company issued a press release captioned
"Callaway Golf Company Releases Preliminary Second Quarter 2007 Results." 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.*
(d) Exhibits.
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The following exhibit is being furnished herewith:
Exhibit 99.1 Press Release, dated July 18, 2007, captioned "Callaway Golf
Company Releases Preliminary Second Quarter 2007 Results."
* 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: July 18, 2007 By: /s/ Bradley J. Holiday
-------------------------------
Name: Bradley J. Holiday
Title: Senior Executive Vice President
and Chief Financial Officer
Exhibit Index
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Exhibit Number Description
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99.1 Press release, dated July 18, 2007, captioned "Callaway Golf
Company Releases Preliminary Second Quarter 2007 Results."
Exhibit 99.1
Callaway Golf Company Releases Preliminary Second Quarter 2007 Results
CARLSBAD, Calif.--(BUSINESS WIRE)--July 18, 2007--Callaway Golf
Company (NYSE:ELY) today announced that, based on current information,
the Company estimates net sales for the second quarter ended June 30,
2007 of approximately $380 million, a year-over-year increase of
approximately 11%. Management also estimates that based on these sales
levels, earnings per diluted share will increase over 50% to between
$0.50 and $0.53, including long-term incentive compensation expense.
These results are based on approximately 69.3 million shares
outstanding and include after-tax charges of approximately $0.02 per
share related to the gross margin improvement initiatives announced in
November 2006.
For the second quarter of 2006, the Company reported net sales of
$342 million and fully diluted earnings per share of $0.33 (on 68.6
million shares), including long-term incentive compensation expense.
Those results include after-tax charges of approximately $0.02 per
share associated with the restructuring initiatives announced in
September 2005 and the Top-Flite integration.
Business Update
"We are very pleased with our preliminary second quarter results,"
commented George Fellows, President and CEO of Callaway Golf. "Retail
sell-through of our products was strong, resulting in solid re-orders
from our retailers during the quarter. While demand for our fusion
drivers had been outstripping capacity, by the end of the quarter we
were able to make significant headway, and expect to have the supply
issue completely behind us by the end of July. In addition to the
strong consumer acceptance of our 2007 products, the progress we're
making on gross margin improvement and inventory reduction initiatives
has resulted in the significant improvement in profitability for the
quarter compared to last year. This was in line with our full year
guidance."
Details of Second Quarter Results
Sales
The estimated increase in sales for the second quarter is
attributable to several factors, including strong sales of FT-5 and
FT-i drivers and X-20 irons, and increased sales of accessories and
golf balls.
Gross Margins
The Company estimates its gross margins as a percentage of net
sales to be approximately 46% for the second quarter. Excluding
charges related to gross margin improvement initiatives, it is
estimated that pro forma gross margins, as a percentage of net sales,
would be approximately 47%. In the second quarter of 2006, the
Company's gross margins were 41% and excluding integration and
restructuring charges were 41%. The estimated increase in pro forma
gross margins can be attributed to an increased mix of sales of higher
margin products such as fusion drivers and X-series irons, as well as
positive contribution from this year's implementation of gross margin
improvement initiatives.
Operating Expenses
The Company estimates that its operating expenses for the quarter
will be approximately $113 million, an increase of approximately $12
million when compared to last year's second quarter. The increase is
due to increases in selling expense associated with the higher sales,
increases in marketing expense, and increased expense for annual
incentive compensation associated with the improved year over year
operating results.
Conference Call
The Company will release actual second quarter financial results
on August 1, 2007. A conference call and webcast will also take place
at that time.
Disclaimer: Investors should be aware that the Company has not yet
finalized its results for the second quarter of 2007 and that the
Company's "preliminary" estimates of net sales, gross margins,
operating expenses and earnings for the second 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 future supply of products and full year
guidance, 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. Actual
results may differ materially from those estimated or anticipated as a
result of certain risks and uncertainties, including but not limited
to, delays, difficulties or increased costs in manufacturing the
Company's products or in obtaining adequate supply of components
needed to manufacture the Company's products, 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 or supply of 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, 2006, 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 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 Company's 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 for 2006 in the supplemental financial
information contained in the Company's July 26, 2006 press release,
which is available in the Investor Relations section of the Company's
website at www.callawaygolf.com.
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.
CONTACT: Callaway Golf Company
Brad Holiday/Patrick Burke/Michele Szynal, 760-931-1771