View:
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
April 21, 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, 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 April 21, 2005, Callaway Golf Company issued a press release captioned
"Callaway Golf Announces First Quarter 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.*
(c) Exhibits.
--------
The following exhibit is being furnished herewith:
Exhibit 99.1 Press Release, dated April 21, 2005, captioned
"Callaway Golf Announces First Quarter 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: April 21, 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 April 21, 2005, captioned "Callaway Golf
Announces First Quarter Results."
Exhibit 99.1
Callaway Golf Announces First Quarter Results
CARLSBAD, Calif.--(BUSINESS WIRE)--April 21, 2005--Callaway Golf
Company (NYSE:ELY) today released its consolidated financial results
for the quarter ended March 31, 2005, announcing consolidated net
sales for the quarter of $299.9 million, net income of $18.4 million,
and diluted earnings per share of $0.27 on 68.6 million shares.
Reported net income and earnings per share include after tax charges
of $2.3 million and $0.03, respectively, associated with the
integration of the Top-Flite operations acquired in late 2003. On a
pro forma basis, which excludes these charges, the Company would have
had net income of $20.7 million and diluted earnings per share of
$0.30. Reported net sales, net income and diluted earnings per share
for the same quarter in 2004 (which included after tax integration
charges of $3.2 million or $0.05 per share) were $363.8 million, $40.5
million and $0.59, respectively.
"Our first quarter results are in line with the preliminary
estimates we provided in early April," said William C. Baker, Chairman
and CEO. "Staggered product launches and closely monitoring retail
inventory have allowed us to achieve our reported sales and profit
levels without overloading the retail channel."
In accordance with the Company's dividend practice, the next
dividend will be determined by the Board of Directors at its May
meeting.
BUSINESS OUTLOOK
"Sales in the first quarter were solid and retail inventories are
at the appropriate levels," said Bradley J. Holiday, Senior Executive
Vice President and Chief Financial Officer. "We will continue to ship
our current products into the market based upon demand generated by
the opening of the true golf season in most of our markets, and have
additional new product launches planned for later in the year,
including the launch of the Callaway Golf X-Tour Irons and increased
shipments of the Ben Hogan drivers and fairway woods during the second
quarter."
The Company will be holding a conference call at 2:00 p.m. PDT
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 two hours after the
conclusion of the conference call and will remain available through
9:00 P.M. PDT on April 28, 2005. The replay may be accessed through
the Internet at www.callawaygolf.com or by telephone by calling (800)
642-1687 for calls originating within the United States or (706)
645-9291 for International calls. The replay pass code is 5523396.
Disclaimer: Statements used in this press release that relate to
future plans, events, financial results, performance or prospects,
including statements under the Business Outlook Section of the press
release relating to future demand for the Company's products, retail
inventory levels, new product launches and future shipments, 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 or unanticipated
costs in integrating the Top-Flite Golf and Callaway Golf assets,
brands and businesses, the maintenance of good vendor relationships,
adverse market and economic conditions, market acceptance of current
and future products, adverse weather conditions and seasonality,
competitive pressures, fluctuations in foreign currency exchange
rates, delays, difficulties or increased costs in the manufacturing of
the Company's golf club or ball products, or in the procurement of
materials or resources needed to manufacture the Company's golf club
or ball products, 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 or armed conflict 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, see Part II, Item
7 of the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, 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,
as well as in the supplemental financial information attached to this
release.
Regulation G: The Company's 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. 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 operating performance. The
Company has provided reconciling information in the text of this press
release.
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.
Callaway Golf Company
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
March 31, December 31,
2005 2004
---------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 27,869 $ 31,657
Accounts receivable, net 227,789 105,153
Inventories, net 172,492 181,230
Deferred taxes 41,383 32,959
Income taxes receivable -- 28,697
Other current assets 13,982 14,036
--------- ---------
Total current assets 483,515 393,732
Property, plant and equipment, net 134,274 135,865
Intangible assets, net 178,463 179,636
Deferred taxes 7,520 9,837
Other assets 18,241 16,667
--------- ---------
$822,013 $735,737
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 93,658 $ 75,501
Accrued employee compensation and
benefits 22,549 20,215
Accrued warranty expense 12,902 12,043
Line of credit 59,500 13,000
Income taxes payable 5,232 --
Other current liabilities 28 39
--------- ---------
Total current liabilities 193,869 120,798
Long-term liabilities 27,380 28,622
Shareholders' equity 600,764 586,317
--------- ---------
$822,013 $735,737
========= =========
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended
March 31,
------------------------
2005 2004
------------------------
Net sales $299,857 100% $363,786 100%
Cost of sales 167,251 56% 197,595 54%
--------- ---------
Gross profit 132,606 44% 166,191 46%
Operating expenses:
Selling expenses 75,745 25% 71,195 20%
General and administrative expenses 19,085 6% 22,861 6%
Research and development expenses 6,240 2% 8,109 2%
--------- ---------
Total operating expenses 101,070 34% 102,165 28%
Income from operations 31,536 11% 64,026 18%
Other (expense) income, net (1,181) 271
--------- ---------
Income before income taxes 30,355 10% 64,297 18%
Provision for income taxes 11,995 23,752
--------- ---------
Net income $ 18,360 6% $ 40,545 11%
========= =========
Earnings per common share:
Basic $ 0.27 $ 0.60
Diluted $ 0.27 $ 0.59
Weighted-average shares outstanding:
Basic 68,181 67,285
Diluted 68,624 68,365
Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Quarter Ended
March 31,
------------------
2005 2004
------------------
Cash flows from operating activities:
Net income $ 18,360 $ 40,545
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 12,186 13,812
Non-cash compensation 1,479 2
Loss (gain) on disposal of long-lived assets 210 (106)
Tax benefit from exercise of stock options 41 996
Net non-cash foreign currency hedging losses -- 1,764
Deferred taxes (589) 754
Changes in assets and liabilities, net (73,067) (142,543)
-------- ---------
Net cash used in operating activities (41,380) (84,776)
-------- ---------
Cash flows from investing activities:
Capital expenditures (10,198) (2,622)
Proceeds from sale of capital assets 3 271
-------- ---------
Net cash used in investing activities (10,195) (2,351)
-------- ---------
Cash flows from financing activities:
Proceeds from financing arrangements 102,000 106,487
Payments on financing arrangements (55,500) (53,900)
Issuance of Common Stock 2,053 8,874
-------- ---------
Net cash provided by financing activities 48,553 61,461
-------- ---------
Effect of exchange rate changes on cash and cash
equivalents (766) (741)
Net decrease in cash and cash equivalents (3,788) (26,407)
Cash and cash equivalents at beginning of period 31,657 47,340
-------- ---------
Cash and cash equivalents at end of period $ 27,869 $ 20,933
======== =========
Callaway Golf Company
Consolidated Net Sales and Operating Segment Information
(In thousands)
(Unaudited)
Net Sales by Product Category
-----------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- ---------------------
2005 2004 Dollars Percent
--------- --------- --------- ---------
Net sales:
Woods $ 65,464 $123,797 $(58,333) -47%
Irons 107,948 96,505 11,443 12%
Putters 31,848 37,277 (5,429) -15%
Golf balls 59,033 72,096 (13,063) -18%
Accessories and other 35,564 34,111 1,453 4%
--------- --------- ---------
$299,857 $363,786 $(63,929) -18%
========= ========= =========
Net Sales by Region
-----------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- ---------------------
2005 2004 Dollars Percent
--------- --------- --------- ---------
Net sales:
United States $185,101 $217,642 $(32,541) -15%
Europe 48,909 67,213 (18,304) -27%
Japan 24,852 31,705 (6,853) -22%
Rest of Asia 14,665 15,981 (1,316) -8%
Other foreign
countries 26,330 31,245 (4,915) -16%
--------- --------- ---------
$299,857 $363,786 $(63,929) -18%
========= ========= =========
Operating Segment Information
-----------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- ---------------------
2005 2004 Dollars Percent
--------- --------- --------- ---------
Net sales:
Golf clubs $240,824 $291,690 $(50,866) -17%
Golf balls 59,033 72,096 (13,063) -18%
--------- --------- ---------
$299,857 $363,786 $(63,929) -18%
========= ========= =========
Income (loss) before
income taxes:
Golf clubs (2) $40,379 $78,843 $(38,464) -49%
Golf balls (2) 1,726 (1,647) 3,373 205%
Reconciling items (1) (11,750) (12,899) 1,149 9%
--------- --------- ---------
$30,355 $64,297 $(33,942) -53%
========= ========= =========
(1) Represents corporate general and administrative expenses and
other income (expense) not utilized by management in determining
segment profitability.
(2) Prior period amounts have been reclassified to conform with
current period presentation
Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Quarter Ended March 31,
--------------------------------
2005
--------------------------------
Pro Forma Integration Total as
Callaway Charges Reported
Golf
---------- ----------- ----------
Net sales $299,857 $ - $299,857
Gross profit 135,689 (3,083) 132,606
% of sales 45% n/a 44%
Operating expenses 100,326 744 101,070
--------- ---------- ---------
Income (loss) from operations 35,363 (3,827) 31,536
Other income (expense), net (1,181) - (1,181)
--------- ---------- ---------
Income (loss) before income taxes 34,182 (3,827) 30,355
Provision for income taxes 13,449 (1,454) 11,995
--------- ---------- ---------
Net income (loss) $ 20,733 $ (2,373) $ 18,360
========= ========== =========
Diluted earnings (loss) per share: $ 0.30 $ (0.03) $ 0.27
Weighted-average shares outstanding: 68,624 68,624 68,624
Quarter Ended March 31,
--------------------------------
2004
--------------------------------
Pro Forma Integration Total as
Callaway Charges Reported
Golf
---------- ----------- ---------
Net sales $363,786 $ - $363,786
Gross profit 169,661 (3,470) 166,191
% of sales 47% n/a 46%
Operating expenses 100,527 1,638 102,165
--------- ---------- ---------
Income (loss) from operations 69,134 (5,108) 64,026
Other income (expense), net 271 - 271
--------- ---------- ---------
Income (loss) before income taxes 69,405 (5,108) 64,297
Provision for income taxes 25,639 (1,887) 23,752
--------- ---------- ---------
Net income (loss) $ 43,766 $ (3,221) $ 40,545
========= ========== =========
Diluted earnings (loss) per share: $ 0.64 $ (0.05) $ 0.59
Weighted-average shares outstanding: 68,365 68,365 68,365
CONTACT: Callaway Golf Company
Brad Holiday or Larry Dorman, 760-931-1771