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    Investor Relations

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    Callaway Golf Company Announces Second Quarter and First Half 2012 Results; Provides Additional Full Year Guidance
    - 2012 second quarter and first half increases in sales and earnings consistent with preliminary estimates announced earlier this month
    - On target with $52 million in annualized cost reductions announced earlier this month
    - Callaway estimates full year revenues of $835 - $865 million; reiterates estimated full year pro forma loss per share of $0.55 - $0.75.

    CARLSBAD, Calif., July 26, 2012 /PRNewswire/ -- Callaway Golf Company (NYSE:ELY) today announced its second quarter and first half 2012 financial results. The announced results were consistent with the preliminary estimates provided earlier this month and reflect the previously estimated increases in sales and earnings for the second quarter and first half of 2012 compared with the same periods in 2011.  The Company also announced that its cost-reduction initiatives are proceeding well and on pace to deliver the $52 million in targeted gross annualized savings, with an estimated $16 million and $36 million being realized in 2012 and 2013, respectively. 

    GAAP RESULTS. 

    For the second quarter of 2012, the Company reported the following results:

    Dollars in millions except per share amounts

    2012

    % of Sales

    2011

    % of Sales

    Improvement / (Decline)

    Net Sales

    $281

    -

    $274

    -

    $7

    Gross Profit

    $111

    39%

    $103

    37%

    $8

    Operating Expenses

    $101

    36%

    $113

    41%

    $12

    Operating Income/(Loss)

    $10

    3%

    ($10)

    (4%)

    $20

    Earnings/(Loss) per share

    $0.00

    -

    ($0.96)

    -

    $0.96

    For the first half of 2012, the Company reported the following results:

    Dollars in millions except per share amounts

    2012

    % of Sales

    2011

    % of Sales

    Improvement / (Decline)

    Net Sales

    $566

    -

    $559

    -

    $7

    Gross Profit

    $235

    42%

    $226

    40%

    $9

    Operating Expenses

    $198

    35%

    $214

    38%

    $16

    Operating Income

    $37

    7%

    $13

    2%

    $24

    Earnings/(Loss) per share

    $0.41

    -

    ($0.80)

    -

    $1.21

    NON-GAAP PRO FORMA FINANCIAL RESULTS.

    In addition to the Company's results prepared in accordance with GAAP, the Company has also provided additional information concerning its results on a non-GAAP pro forma basis. The manner in which the non-GAAP information is derived is discussed in more detail toward the end of this release and the Company has provided in the tables to this release a reconciliation of this non-GAAP information to the most directly comparable GAAP information.

    For the second quarter of 2012, the Company reported the following pro forma results:

    Dollars in millions except per share amounts

    2012

    % of Sales

    2011

    % of Sales

    Improvement / (Decline)

    Net Sales

    $281

    -

    $274

    -

    $7

    Gross Profit

    $112

    40%

    $109

    40%

    $3

    Operating Expenses

    $97

    35%

    $102

    37%

    $5

    Operating Income

    $14

    5%

    $6

    2%

    $8

    Earnings/(Loss) per share

    $0.05

    -

    ($0.01)

    -

    $0.06

    For the first half of 2012, the Company reported the following pro forma results:

    Dollars in millions except per share amounts

    2012

    % of Sales

    2011

    % of Sales

    Improvement / (Decline)

    Net Sales

    $566

    -

    $559

    -

    $7

    Gross Profit

    $236

    42%

    $238

    43%

    ($2)

    Operating Expenses

    $201

    35%

    $209

    37%

    $8

    Operating Income

    $35

    6%

    $30

    5%

    $5

    Earnings per share

    $0.25

    -

    $0.15

    -

    $0.10

    "We are pleased that sales and earnings increased during the first half of 2012 compared to the same period in 2011," commented Chip Brewer, President and Chief Executive Officer. "The pace of improvement, however, is slower than anticipated and our market shares have not met our expectations, resulting in higher than expected retail inventory levels at this time of year. As a result, we have lowered our sales expectations for the second half of the year to allow us to work through any excess inventory at retail and prepare our business for improved results in 2013."

    "The recently announced cost-reduction initiatives are proceeding on pace with our plan," continued Mr. Brewer. "Having been through this before, I am convinced we are taking the correct actions to assure that this turnaround will be successful. Given the dynamics of the golf business, with products being introduced annually, it takes time for the turnaround to take effect.  Many of the changes we are making at this time to reduce costs, streamline our business, and change our products and the culture at the Company to be more consumer oriented, will have a greater impact on our financial results in 2013 and 2014 than the current year.  I do firmly believe that the changes we are making will be the keystone to a successful recovery and I look forward to reporting to you on our progress." 

    Business Outlook

    The Company provided additional financial guidance, estimating that full year 2012 net sales will range from $835 to $865 million compared to $887 million in 2011.  The Company's estimated decline in net sales includes the impact of actions taken by the Company during the first half of the year to streamline its business, including the sale of the Top-Flite and Ben Hogan brands and the transition of its footwear and apparel businesses to a licensing model. The Company also reiterated its earnings guidance, estimating that full year pro-forma loss per share will range from $0.55 to $0.75, compared to a pro forma loss per share of $0.63 in 2011.  These pro forma estimates exclude from 2012 benefits and charges associated with the sale of the Top Flite/Ben Hogan brands, non-cash tax adjustments, and the cost-reduction initiatives and exclude from 2011 charges relating to a non-cash impairment of assets, non-cash tax adjustments, global operations strategy, restructuring, and the gain on the sale of buildings in 2011.

    Conference Call and Webcast

    The Company will be holding a conference call at 2:00 p.m. PDT today to discuss the Company's financial results, business and the recently announced cost-reduction initiatives.  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. PDT on Thursday, August 2, 2012.  The replay may be accessed through the Internet at www.callawaygolf.com or by telephone by calling 1-855-859-2056 toll free for calls originating within the United States or 404-537-3406 for International calls.  The replay pass code is 12218357. 

    Non-GAAP Pro Forma Information:  The GAAP results contained in this press release and the financial statement schedules attached to this press release have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").  To supplement the GAAP results, the Company has provided certain non-GAAP pro forma financial information.  The non-GAAP financial information included in the press release and attached schedules present certain of the Company's financial results excluding charges for (i) the Company's global operations strategy, (ii) non-cash impairment charges, (iii) non-cash tax adjustments relating to or as a result of the establishment of a deferred tax valuation allowance, (iv) restructuring charges, (v) the gain on the sale of three buildings, (vi) the gain recognized in connection with the sale of the Top-Flite and Ben Hogan brands, and (vii) the cost-reduction initiatives announced today. In addition, the Company also provided additional non–GAAP information about its results, excluding interest, taxes, depreciation and amortization expenses as well as impairment charges ("Adjusted EBITDA"). For comparative purposes, the Company applied an annualized statutory tax rate of 38.5% to derive the non-GAAP earnings/loss per share and Adjusted EBITDA.  The non-GAAP information should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP.  The non-GAAP information may also be inconsistent with the manner in which similar measures are derived or used by other companies.  Management uses such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate period over period comparisons and in forecasting the Company's business going forward.  Management believes that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful comparative information for investors in their assessment of the underlying performance of the Company's business without regard to these items.  The Company has provided reconciling information in the attached schedules.

    Forward-Looking Statements:  Statements used in this press release that relate to future plans, events, financial results, performance or prospects, including statements relating to the estimated sales and loss per share for 2012, the estimated savings or charges (or timing thereof) related to the cost-reduction initiatives, future retail inventory levels, improved results in 2013 or beyond, and the Company's recovery/turnaround, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.  These statements are based upon current information and expectations.  Accurately estimating the forward-looking statements is based upon various unknowns including consumer acceptance and demand for the Company's products, the level of promotional activity in the marketplace, as well as future consumer discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions, as well as future changes in foreign currency exchange rates. Actual results may differ materially from those estimated or anticipated as a result of these unknowns or other risks and uncertainties, including continued compliance with the terms of the Company's credit facility; delays, difficulties or increased costs in the supply of components needed to manufacture the Company's products or in manufacturing the Company's products; 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, the golf industry, and the Company's business, see the Company's Annual Report on Form 10-K for the year ended December 31, 2011 as well as other risks and uncertainties detailed from time to time in the Company's reports on Forms 10-Q and 8-K subsequently filed 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.

    About Callaway Golf

    Through an unwavering commitment to innovation, Callaway Golf Company (NYSE:ELY) 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 apparel, footwear and accessories, under the Callaway Golf® and Odyssey® brands in more than 110 countries worldwide. For more information please visit www.callawaygolf.com or shop.callawaygolf.com.

    Contacts:

    Brad Holiday


    Patrick Burke


    Tim Buckman


    (760) 931-1771

    (Logo: http://photos.prnewswire.com/prnh/20091203/CGLOGO)

    Callaway Golf Company

    Consolidated Condensed Balance Sheets

    (In thousands)

    (Unaudited)















    June 30,


    December 31,




    2012


    2011








    ASSETS





    Current assets:






    Cash and cash equivalents

    $   27,986


    $         43,023



    Accounts receivable, net

    254,903


    115,673



    Inventories

    215,794


    233,070



    Deferred taxes, net

    3,955


    4,029



    Income taxes receivable

    1,753


    3,654



    Other current assets

    18,663


    19,880



        Total current assets

    523,054


    419,329








    Property, plant and equipment, net

    114,323


    117,147


    Intangible assets, net

    129,126


    151,138


    Other assets

    38,622


    39,498



        Total assets

    $ 805,125


    $       727,112








    LIABILITIES AND SHAREHOLDERS' EQUITY





    Current liabilities:






    Accounts payable and accrued expenses

    $ 113,762


    $       129,193



    Accrued employee compensation and benefits

    23,522


    23,785



    Accrued warranty expense

    7,863


    8,140



    Income tax liabilities

    5,237


    6,666



    Credit facility

    70,150


    -



        Total current liabilities

    220,534


    167,784








    Long-term liabilities

    43,547


    46,514


    Shareholders' equity

    541,044


    512,814



        Total liabilities and shareholders' equity

    $ 805,125


    $       727,112


     

    Callaway Golf Company

    Statements of Operations

    (In thousands, except per share data)

    (Unaudited)






    Quarter Ended


    June 30,


    2012


    2011





    Net sales

    $ 281,123


    $ 273,814

    Cost of sales

    170,470


    171,152

    Gross profit

    110,653


    102,662

    Operating expenses:





    Selling 

    75,711


    74,196


    General and administrative 

    18,446


    30,124


    Research and development 

    6,930


    8,498



    Total operating expenses

    101,087


    112,818

    Income (loss) from operations

    9,566


    (10,156)

    Other expense, net

    (4,571)


    (3,427)

    Income (loss) before income taxes 

    4,995


    (13,583)

    Income tax provision 

    2,196


    45,483

    Net income (loss)

    2,799


    (59,066)

    Dividends on convertible preferred stock

    2,625


    2,625

    Net income (loss) allocable to common shareholders

    $        174


    $ (61,691)








    Earnings (loss) per common share:





    Basic

    $0.00


    ($0.96)


    Diluted

    $0.00


    ($0.96)

    Weighted-average common shares outstanding:





    Basic

    65,060


    64,425


    Diluted

    65,112


    64,425












    Year Ended





    June 30,





    2012


    2011








    Net sales

    $ 566,221


    $ 559,413

    Cost of sales

    331,197


    333,070

    Gross profit

    235,024


    226,343

    Operating expenses:





    Selling

    152,549


    149,415


    General and administrative

    30,680


    46,411


    Research and development

    14,403


    17,695



    Total operating expenses

    197,632


    213,521

    Income from operations

    37,392


    12,822

    Other expense, net

    (887)


    (4,807)

    Income before income taxes 

    36,505


    8,015

    Income tax provision

    1,904


    54,263

    Net income (loss)

    34,601


    (46,248)

    Dividends on convertible preferred stock

    5,250


    5,250

    Net income (loss) allocable to common shareholders

    $   29,351


    $     (51,498)








    Earnings (loss) per common share:





    Basic



    $0.45


    $(0.80)


    Diluted



    $0.41


    $(0.80)

    Weighted-average common shares outstanding:





    Basic



    65,021


    64,365


    Diluted



    84,950


    64,365

     

    Callaway Golf Company

    Consolidated Condensed Statements of Cash Flows

    (In thousands)

    (Unaudited)



























    Six Months Ended








    June 30,








    2012


    2011


    Cash flows from operating activities:







    Net income (loss)




    $  34,601


    $ (46,248)



    Adjustments to reconcile net income (loss) to net cash used in operating activities:







    Depreciation and amortization


    18,234


    19,191




    Impairment charge



    -


    5,413




    Deferred taxes, net



    (1,746)


    51,397




    Non-cash share-based compensation


    1,896


    7,581




    Gain and deferred gain amortization on disposal of long-lived assets




    (975)


    (6,752)




    Gain on sale of intangible assets




    (6,602)


    -




    Changes in assets and liabilities


    (136,688)


    (56,015)



    Net cash used in operating activities


    (91,280)


    (25,433)












    Cash flows from investing activities:







    Capital expenditures




    (14,115)


    (14,089)



    Proceeds from sale of property, plant and equipment

    70


    18,172



    Net proceeds from sale of intangible assets


    26,861


    -



    Net cash provided by investing activities


    12,816


    4,083












    Cash flows from financing activities:







    Issuance of common stock



    -


    1,160



    Dividends paid, net




    (6,554)


    (6,542)



    Proceeds from credit facilities, net


    70,150


    37,142



    Other financing activities



    69


    129



    Net cash provided by financing activities


    63,665


    31,889












    Effect of exchange rate changes on cash and cash equivalents

    (238)


    950


    Net (decrease) increase in cash and cash equivalents

    (15,037)


    11,489


    Cash and cash equivalents at beginning of period


    43,023


    55,043


    Cash and cash equivalents at end of period


    $  27,986


    $  66,532














     

    Callaway Golf Company

    Consolidated Net Sales and Operating Segment Information

    (In thousands)

    (Unaudited)



















































    Net Sales by Product Category



    Net Sales by Product Category






    Quarter Ended



    Six Months Ended






    June 30,


    Growth/(Decline)




    June 30,


    Growth/(Decline)







    2012


    2011


    Dollars


    Percent




    2012


    2011


    Dollars


    Percent



    Net sales:























    Woods



    $   58,549


    $   65,254


    $ (6,705)


    -10%




    $ 149,278


    $ 146,281


    $   2,997


    2%




    Irons 



    57,825


    61,142


    (3,317)


    -5%




    116,141


    131,133


    (14,992)


    -11%




    Putters



    38,873


    23,810


    15,063


    63%




    62,965


    52,641


    10,324


    20%




    Golf balls



    49,838


    54,733


    (4,895)


    -9%




    92,384


    99,346


    (6,962)


    -7%




    Accessories and other (1)



    76,038


    68,875


    7,163


    10%




    145,453


    130,012


    15,441


    12%







    $ 281,123


    $ 273,814


    $   7,309


    3%




    $ 566,221


    $ 559,413


    $   6,808


    1%





















































    Net Sales by Region


    Net Sales by Region







    Quarter Ended


    Six Months Ended






    June 30,


    Growth/(Decline)




    June 30,


    Growth/(Decline)







    2012


    2011


    Dollars


    Percent




    2012


    2011


    Dollars


    Percent



    Net sales:























    United States



    $ 142,343


    $ 138,545


    $   3,798


    3%




    $ 292,042


    $ 283,876


    $   8,166


    3%




    Europe



    43,443


    42,923


    520


    1%




    86,142


    89,078


    (2,936)


    -3%




    Japan



    36,978


    28,741


    8,237


    29%




    79,233


    66,318


    12,915


    19%




    Rest of Asia



    26,613


    27,583


    (970)


    -4%




    44,609


    51,089


    (6,480)


    -13%




    Other foreign countries



    31,746


    36,022


    (4,276)


    -12%




    64,195


    69,052


    (4,857)


    -7%







    $ 281,123


    $ 273,814


    $   7,309


    3%




    $ 566,221


    $ 559,413


    $   6,808


    1%





















































    Operating Segment Information


    Operating Segment Information







    Quarter Ended


    Six Months Ended






    June 30,


     

    Growth/(Decline)




    June 30,


     

    Growth/(Decline)







    2012


    2011(2)


    Dollars


    Percent




    2012


    2011(2)


    Dollars


    Percent



    Net sales:























    Golf clubs



    $ 231,285


    $ 219,081


    $ 12,204


    6%




    $ 473,837


    $ 460,067


    $ 13,770


    3%




    Golf balls



    49,838


    54,733


    (4,895)


    -9%




    92,384


    99,346


    (6,962)


    -7%







    $ 281,123


    $ 273,814


    $   7,309


    3%




    $ 566,221


    $ 559,413


    $   6,808


    1%


























    Income (loss) before income taxes:























    Golf clubs 



    $   17,953


    $   12,308


    $   5,645


    46%




    $   50,595


    $   41,613


    $   8,982


    22%




    Golf balls 



    4,162


    1,085


    3,077


    284%




    5,739


    3,385


    2,354


    70%




    Reconciling items (3)



    (17,120)


    (26,976)


    9,856


    37%




    (19,829)


    (36,983)


    17,154


    46%







    $     4,995


    $ (13,583)


    $ 18,578


    137%




    $   36,505


    $     8,015


    $ 28,490


    355%

















































    (1) Accessories & other include Packaged Sets as well as CGI Sales.

    (2)Certain prior period amounts have been reclassified between product categories to conform with the current period presentation.

    (3)Represents corporate general and administrative expenses and other income (expense) not utilized by management in determining segment profitability.















































    Callaway Golf Company

    Supplemental Financial Information

    (In thousands, except per share data)

    (Unaudited)





















































    Quarter Ended June 30,




    Quarter Ended June 30,




    2012




    2011






























    Pro Forma Callaway Golf (1)


    Non-Cash Tax Adjustment(2)


    Cost Reduction Initiatives(1) (3)


    Gain on Sale of Top-Flite & Ben Hogan(1)


    Total as Reported




    Pro Forma Callaway Golf (1)


    Global Operations Strategy (1)


    Non-Cash Impairment Charge (1) 


    Non-Cash Tax Adjustment(2)


    Restructuring(1)


    Total as Reported



    Net sales

    $    281,123


    $          -


    $         -


    $         -


    $281,123




    $ 273,814


    $          -


    $           -


    $           -


    $              -


    $273,814



    Gross profit

    111,590


    -


    (937)


    -


    110,653




    108,509


    (5,847)


    -


    -


    -


    102,662



    % of sales

    40%


     n/a 


     n/a 


     n/a 


    39%




    40%


     n/a 


     n/a 


     n/a 


     n/a 


    37%



    Operating expenses

    97,367


    -


    3,706


    14


    101,087




    102,277


    (34)


    5,413


    -


    5,162


    112,818



    Income (expense) from operations

    14,223


    -


    (4,643)


    (14)


    9,566




    6,232


    (5,813)


    (5,413)


    -


    (5,162)


    (10,156)



    Other expense, net

    (4,571)


    -


    -


    -


    (4,571)




    (3,427)


    -


    -


    -


    -


    (3,427)



    Income (loss) before income taxes

    9,652


    -


    (4,643)


    (14)


    4,995




    2,805


    (5,813)


    (5,413)


    -


    (5,162)


    (13,583)



    Income tax provision (benefit)

    3,717


    272


    (1,788)


    (5)


    2,196




    751


    (2,374)


    (2,084)


    51,177


    (1,987)


    45,483



    Net income (loss)

    5,935


    (272)


    (2,855)


    (9)


    2,799




    2,054


    (3,439)


    (3,329)


    (51,177)


    (3,175)


    (59,066)



    Dividends on convertible preferred stock

    2,625


    -


    -


    -


    2,625




    2,625


    -


    -


    -


    -


    2,625



    Net income (loss) allocable to common shareholders

    $       3,310


    $     (272)


    $ (2,855)


    $      (9)


    $       174




    $      (571)


    $  (3,439)


    $  (3,329)


    $ (51,177)


    $    (3,175)


    $(61,691)





























    Diluted earnings (loss) per share:

    $         0.05


    $    (0.01)


    $   (0.04)


    $  (0.00)


    $      0.00




    $     (0.01)


    $    (0.05)


    $    (0.05)


    $     (0.80)


    $      (0.05)


    $    (0.96)



    Weighted-average shares outstanding:                           

    65,112


    65,112


    65,112


    65,112


    65,112




    64,425


    64,425


    64,425


    64,425


    64,425


    64,425


















































































    Six Months Ended June 30,




    Six Months Ended June 30,


    2012




    2011


    Pro Forma Callaway Golf (1) 


    Non-Cash Tax Adjustment (2)


    Cost Reduction Initiatives(1) (3)


    Gain on Sale of Top-Flite & Ben Hogan(1)


    Total as Reported




    Pro Forma Callaway Golf (1) 


    Global Operations Strategy(1)


    Non-Cash Impairment Charge (1)


    Non-Cash Tax Adjustment (2)


    Restructuring (1)


    Gain on Sale of Buildings(1)


    Total as Reported

    Net sales

    $    566,221


    $          -


    $          -


    $        -


    $566,221




    $ 559,413


    $          -


    $           -


    $           -


    $             -


    $          -


    $559,413

    Gross profit

    235,985


    -


    (961)


    -


    235,024




    238,492


    (12,149)


    -


    -


    -


    -


    226,343

    % of sales

    42%


     n/a 


     n/a 


     n/a 


    42%




    43%


     n/a 


     n/a 


     n/a 


     n/a 


     n/a 


    40%

    Operating expenses

    200,524


    -


    3,710


    (6,602)


    197,632




    208,923


    193


    5,413


    -


    5,162


    (6,170)


    213,521

    Income (expense) from operations

    35,461


    -


    (4,671)


    6,602


    37,392




    29,569


    (12,342)


    (5,413)


    -


    (5,162)


    6,170


    12,822

    Other expense, net

    (887)


    -


    -


    -


    (887)




    (4,807)


    -


    -


    -


    -


    -


    (4,807)

    Income (loss) before income taxes

    34,574


    -


    (4,671)


    6,602


    36,505




    24,762


    (12,342)


    (5,413)


    -


    (5,162)


    6,170


    8,015

    Income tax provision (benefit)

    13,311


    (12,151)


    (1,798)


    2,542


    1,904




    9,662


    (4,752)


    (2,084)


    51,177


    (1,987)


    2,247


    54,263

    Net income (loss)

    21,263


    12,151


    (2,873)


    4,060


    34,601




    15,100


    (7,590)


    (3,329)


    (51,177)


    (3,175)


    3,923


    (46,248)

    Dividends on convertible preferred stock

    5,250


    -


    -


    -


    5,250




    5,250


    -


    -


    -


    -


    -


    5,250

    Net income (loss) allocable to common shareholders

    $      16,013


    $ 12,151


    $ (2,873)


    $ 4,060


    $  29,351




    $     9,850


    $           (7,590)


    $   (3,329)


    $ (51,177)


    $     (3,175)


    $  3,923


    $(51,498)



























    Diluted earnings (loss) per share:

    $          0.25


    $     0.14


    $   (0.03)


    $   0.05


    $      0.41




    $       0.15


    $             (0.12)


    $    (0.05)


    $     (0.79)


    $      (0.05)


    $    0.06


    $    (0.80)

    Weighted-average shares outstanding:                           

    84,950


    84,950


    84,950


    84,950


    84,950




    64,365


    64,365


    64,365


    64,365


    64,365


    64,365


    64,365



























    (1)For comparative purposes, the Company applied an annualized statutory tax rate of 38.5% to derive pro forma results.

    (2)Current period impact of valuation allowance established against the Company's U.S. deferred tax assets and impact of applying statutory tax rate of 38.5% to pro forma results.

    (3)Includes costs associated with workforce reductions and transition costs associated with licensing the Company's North American apparel business and footwear business.
















































































    2012 Trailing Twelve Month Adjusted EBITDA




    2011 Trailing Twelve Month Adjusted EBITDA





    Adjusted EBITDA:

    Quarter Ended




    Quarter Ended






    September 30,


    December 31,


    March 31,


    June 30,






    September 30,


    December 31, 


    March 31,


    June 30,








    2011


    2011


    2012


    2012


    Total




    2010


    2010


    2011


    2011


    Total





    Net income (loss)

    $    (62,587)


    $(62,985)


    $  31,802


    $    2,799


    $(90,971)




    $   (18,317)


    $  (32,255)


    $  12,818


    $  (59,066)


    $   (96,820)





    Interest expense (income), net

    399


    324


    817


    884


    2,424




    (1,234)


    (444)


    142


    207


    (1,329)





    Income tax provision (benefit)

    14,854


    12,442


    (292)


    2,196


    29,200




    (22,100)


    (13,231)


    8,780


    45,483


    18,932





    Depreciation and amortization expense

    9,247


    10,198


    8,745


    9,489


    37,679




    10,687


    10,707


    9,880


    9,311


    40,585





    Impairment charge

    -


    1,120


    -


    -


    1,120




    -


    7,547


    -


    5,413


    12,960





    Adjusted EBITDA

    $    (38,087)


    $(38,901)


    $  41,072


    $   15,368


    $(20,548)




    $   (30,964)


    $  (27,676)


    $  31,620


    $    1,348


    $   (25,672)





    SOURCE Callaway Golf