CARLSBAD, Calif.–(BUSINESS WIRE)–Oct. 26, 2005–Callaway Golf Company (NYSE:ELY) today announced its financial results for the quarter and nine months ended September 30, 2005, reporting significant improvements in both sales and earnings. Some of the details for the quarter include:
— Net sales of $220.6 million, as compared to $128.5 million in the third quarter of 2004.
— Net loss per share of $0.07 on 68.8 million shares, as compared to a net loss of $0.53 per share on 67.8 million shares in the third quarter of 2004.
— The net loss per share for the third quarter of 2005 includes after-tax charges of $0.08 per share associated with the integration of the Top-Flite operations acquired in late 2003 and the recently announced restructuring initiatives. The net loss per share for the third quarter of 2004 includes after-tax charges of $0.07 per share associated with the integration of the Top-Flite operations. Excluding these charges, the Company’s pro forma fully diluted earnings per share for the third quarter of 2005 would have been $0.01, as compared to a pro forma net loss per share of $0.46 per share in the third quarter of 2004.
Details for the first nine months of 2005 include:
— Net sales of $843.6 million, as compared to $790.2 million in the first nine months of 2004.
— Fully diluted earnings per share of $0.46 on 69.0 million shares, as compared to fully diluted earnings per share of $0.27 on 68.2 million shares for the first nine months of 2004.
— Fully diluted earnings per share for the first nine months of 2005 includes after-tax charges of $0.14 per share associated with the integration of the Top-Flite operations and the recently announced restructuring initiatives. Fully diluted earnings per share for the first nine months of 2004 includes after-tax charges of $0.20 per share associated with the integration of the Top-Flite operations. Excluding these charges, the Company’s pro forma fully diluted earnings per share for the first nine months of 2005 would have been $0.60, as compared to pro forma fully diluted earnings per share of $0.47 for the first nine months of 2004.
The year-to-date gains in earnings were tempered by increases in selling costs that were partially offset by savings in other operating areas. These increased selling costs reflect increased advertising and promotional expense and increased tour expense. The planned increase in selling expense for 2005 was intended to reinvigorate the Company’s business following disappointing results in 2004, and the Company believes its investment in these activities has contributed to the increase in sales in 2005.
"We are pleased with our third quarter top line results, but know we can do better in profitability," commented George Fellows, President and CEO. "As announced on September 29th, we have taken actions to lower costs while improving our internal processes. These actions are expected to generate savings in 2006 of between $50 and $60 million across the board. While a portion of these savings will be reinvested in growth initiatives, a majority will positively impact profitability. Our next step is to re-examine gross margins in an effort to further reduce costs while maintaining our high quality standards. We believe these actions along with improved and focused marketing will allow us to maximize shareholder value."
For more details, including pro forma reconciliations to assist in year-over-year comparison, please see the attached "Supplemental Financial Information."
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, and will remain available through 9:00 p.m. PST on Wednesday, November 2, 2005. 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 800497.
Disclaimer: Statements used in this press release that relate to future plans, events, financial results, performance or prospects, including statements relating to future shareholder value and statements relating to the restructuring initiatives, and the estimated savings, reinvestment and improved profitability related to such initiatives, 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 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 restructuring 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 as well as in the supplemental financial information attached to 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/Patrick Burke/Larry Dorman
760-931-1771
