Sign In
Forgot Your Password?

  • Need an Account? Join Today!

    Investor Relations

    RSS CONTENT

    Callaway Golf Company Announces Third Quarter And Year-To-Date 2012 Results; Provides Update On Cost-Reduction Initiatives; And Provides Revised Full Year Guidance
    - Third Quarter net sales of $148 million and pro forma loss per share of $0.50 are consistent with the Company's expectations. GAAP loss per share of $1.33.
    - Estimated gross annualized savings from cost-reduction initiatives increased to $60 million from prior estimate of $52 million.
    - Estimated pre-tax charges associated with these initiatives increased by $15 million of additional charges, primarily non-cash, for a total of $55 million.
    - Callaway estimates full year 2012 revenues of $830-$845 million and pro forma loss per share of $0.73 to $0.83.

    CARLSBAD, Calif., Oct. 25, 2012 /PRNewswire/ -- Callaway Golf Company (NYSE: ELY) today announced its third quarter and year-to-date 2012 financial results. 

    GAAP RESULTS. 

    For the third 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

    $148

    -

    $173

    -

    ($25)

    Gross Profit

    $4

    3%

    $47

    27%

    ($43)

    Operating Expenses

    $86

    58%

    $91

    53%

    $5

    Operating Loss

    ($83)

    (56%)

    ($44)

    (25%)

    ($39)

    Loss per share

    ($1.33)

    -

    ($1.01)

    -

    ($0.32)

    Year to date, the Company reported the following results:

    Dollars in millions except per share amounts

    2012

    % of Sales

    2011

    % of Sales

    Improvement / (Decline)

    Net Sales

    $714

    -

    $733

    -

    ($19)

    Gross Profit

    $239

    33%

    $274

    37%

    ($35)

    Operating Expenses

    $284

    40%

    $305

    42%

    $21

    Operating Loss

    ($45)

    (6%)

    ($31)

    (4%)

    ($14)

    Loss per share

    ($0.91)

    -

    ($1.81)

    -

    $0.90

    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 third 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

    $148

    -

    $173

    -

    ($25)

    Gross Profit

    $31

    21%

    $54

    31%

    ($23)

    Operating Expenses

    $79

    53%

    $85

    49%

    $6

    Operating Loss

    ($48)

    (32%)

    ($32)

    (18%)

    ($16)

    Loss per share

    ($0.50)

    -

    ($0.37)

    -

    ($0.13)

    Year to date, 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

    $714

    -

    $733

    -

    ($19)

    Gross Profit

    $267

    37%

    $292

    40%

    ($25)

    Operating Expenses

    $279

    39%

    $294

    40%

    $15

    Operating Loss

    ($12)

    (2%)

    ($2)

    0%

    ($10)

    Loss per share

    ($0.27)

    -

    ($0.22)

    -

    ($0.05)

    The Company also announced today that it was making good progress on the cost reduction initiatives it announced in July 2012 and that the Company is taking additional actions that are expected to result in an incremental $8 million in savings for a total of approximately $60 million in gross annualized savings related to the cost-reduction initiatives, with approximately $18 million being realized in 2012 and an additional $42 million expected to be realized in 2013. Taking into account the charges related to these additional actions, the Company currently estimates that the pre-tax charges associated with these initiatives will be $55 million (as compared to its prior estimate of $40 million), approximately two-thirds of which will be non-cash charges. Approximately $50 million of the charges will be incurred in 2012 with the balance being incurred in 2013.

    "Our pro forma financial results for the third quarter, while mixed, were consistent with our expectations as we entered the quarter," commented Chip Brewer, President and Chief Executive Officer.  "Our decline in sales and gross margins during the third quarter are the result of the sale of the Top-Flite and Ben Hogan brands earlier this year as well as the sales promotions and other actions we took to stimulate sell-through on our 2012 products and prepare our business for a successful 2013. On the other hand, our results also include a decrease in operating expenses as a result of our cost reduction initiatives. Overall, our results, while not acceptable on an absolute basis, reflect many actions that should be beneficial in the long-term."    

    "We are continuing to make solid progress on our turnaround plan," continued Mr. Brewer.   "In addition to the actions taken earlier this year, including the sale of the Top-Flite and Ben Hogan brands, the licensing of the apparel and footwear businesses, the cost-reduction initiatives, changes in senior management, and changes in our approach to product design and the sales and marketing functions, during the third quarter we also replaced a majority of our outstanding preferred stock with much less expensive 3.75% convertible debt, reached an agreement in principle on a sale/leaseback of our Chicopee, Massachusetts ball factory for a much smaller footprint and lower costs, and began transitioning to a third party based model for our GPS business. These key initiatives are all consistent with our efforts to simplify our business, focus the team on our core business of golf clubs and golf balls, and reduce our cost structure."

    "I am encouraged by the progress we have made in the eight months I have been at Callaway," commented Mr. Brewer.  "We are beginning to see some of the benefits of the actions we have taken in the form of reduced operating expenses and an increase in market share for the last five consecutive months in the U.S., albeit at modest levels. I am also very pleased with the changes we have made in our 2013 product line and marketing strategy, both of which will be more consumer-oriented and relevant. Although we have revised downward our full year 2012 guidance in light of continued softness in the European market and actions we plan to take in the U.S. for the balance of the year to increase sell-through and prepare for 2013, I am confident in our turnaround plans and optimistic that our results will improve significantly in 2013."

    Business Outlook

    The Company provided revised financial guidance, estimating that full year 2012 net sales will range from $830 to $845 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 estimates that full year pro-forma loss per share will range from $0.73 to $0.83, compared to a pro forma loss per share of $0.63 in 2011.  These pro forma estimates exclude from 2012 gains and charges associated with the sale of the Top Flite/Ben Hogan brands, non-cash tax adjustments, and the charges related to 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 and business.  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, November 1, 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 34815171. 

    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. 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 cost structure, success of the 2013 product line, 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 risks and unknowns including delays, difficulties, or increased costs in implementing the cost-reduction initiatives, consumer acceptance of 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 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® and Odyssey® brands 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)

























    September 30,


    December 31,







    2012


    2011










    ASSETS








    Current assets:








    Cash and cash equivalents



    $          59,139


    $         43,023


    Accounts receivable, net



    143,697


    115,673


    Inventories




    189,066


    233,070


    Deferred taxes, net




    3,970


    4,029


    Income taxes receivable



    3,609


    3,654


    Assets held for sale




    2,396


    -


    Other current assets




    20,895


    19,880


        Total current assets




    422,772


    419,329










    Property, plant and equipment, net



    94,919


    117,147

    Intangible assets, net




    123,472


    151,138

    Other assets





    40,775


    39,498


        Total assets




    $        681,938


    $       727,112










    LIABILITIES AND SHAREHOLDERS' EQUITY





    Current liabilities:








    Accounts payable and accrued expenses


    $          99,166


    $       129,193


    Accrued employee compensation and benefits


    21,343


    23,785


    Accrued warranty expense



    8,133


    8,140


    Income tax liabilities




    7,285


    6,666


        Total current liabilities



    135,927


    167,784










    Long-term liabilities




    150,142


    46,514

    Shareholders' equity




    395,869


    512,814


        Total liabilities and shareholders' equity


    $        681,938


    $       727,112



    Callaway Golf Company

    Statements of Operations

    (In thousands, except per share data)

    (Unaudited)






    Quarter Ended


    September 30,


    2012


    2011





    Net sales

    $ 147,906


    $  173,243

    Cost of sales

    144,106


    125,857

    Gross profit

    3,800


    47,386

    Operating expenses:





    Selling 

    60,273


    62,273


    General and administrative 

    18,238


    20,775


    Research and development 

    7,978


    8,501


    Total operating expenses

    86,489


    91,549

    Loss from operations

    (82,689)


    (44,163)

    Other expense, net

    (3,359)


    (3,570)

    Loss before income taxes 

    (86,048)


    (47,733)

    Income tax provision 

    750


    14,854

    Net loss

    (86,798)


    (62,587)

    Dividends on convertible preferred stock

    2,414


    2,625

    Net loss allocable to common shareholders

    $ (89,212)


    $   (65,212)





    Earnings (loss) per common share:





    Basic

    ($1.33)


    ($1.01)


    Diluted

    ($1.33)


    ($1.01)

    Weighted-average common shares outstanding:





    Basic

    67,162


    64,781


    Diluted

    67,162


    64,781






    Nine Months Ended


    September 30,


    2012


    2011





    Net sales

    $ 714,127


    $  732,656

    Cost of sales

    475,303


    458,927

    Gross profit

    238,824


    273,729

    Operating expenses:





    Selling

    212,822


    211,688


    General and administrative

    48,918


    67,186


    Research and development

    22,381


    26,196



    Total operating expenses

    284,121


    305,070

    Loss from operations

    (45,297)


    (31,341)

    Other expense, net

    (4,246)


    (8,377)

    Loss before income taxes 

    (49,543)


    (39,718)

    Income tax provision 

    2,654


    69,117

    Net loss

    (52,197)


    (108,835)

    Dividends on convertible preferred stock

    7,664


    7,875

    Net loss allocable to common shareholders

    $ (59,861)


    $ (116,710)





    Earnings (loss) per common share:





    Basic

    ($0.91)


    ($1.81)


    Diluted

    ($0.91)


    ($1.81)

    Weighted-average common shares outstanding:





    Basic

    65,740


    64,505


    Diluted

    65,740


    64,505




    Callaway Golf Company

    Consolidated Condensed Statements of Cash Flows

    (In thousands)

    (Unaudited)










    Nine Months Ended


    September 30,


    2012


    2011

    Cash flows from operating activities:





    Net loss

    $ (52,197)


    $ (108,835)


    Adjustments to reconcile net loss to net cash used in operating activities:






    Depreciation and amortization

    26,576


    28,438



    Impairment charges

    17,056


    5,413



    Deferred taxes, net

    (1,397)


    51,660



    Non-cash share-based compensation

    2,482


    8,879



    Gain on disposal of long-lived assets

    (1,521)


    (7,196)



    Gain on sale of intangible assets

    (6,602)


    -



    Debt discount amortization

    27


    -



    Changes in assets and liabilities

    (13,675)


    43,501


    Net cash (used in) provided by operating activities

    (29,251)


    21,860





    Cash flows from investing activities:





    Capital expenditures

    (16,001)


    (21,154)


    Proceeds from sale of property, plant and equipment

    324


    18,287


    Net proceeds from sale of intangible assets

    26,861


    -


    Net cash provided by (used in) investing activities

    11,184


    (2,867)





    Cash flows from financing activities:





    Proceeds from issuance of convertible notes

    46,819


    -


    Debt issuance cost

    (3,534)


    -


    Issuance of common stock

    -


    2,198


    Dividends paid

    (9,526)


    (9,819)


    Payment on credit facilities, net

    -


    (2,467)


    Other financing activities

    40


    (84)


    Net cash provided by (used in) financing activities

    33,799


    (10,172)





    Effect of exchange rate changes on cash 

    384


    431

    Net increase in cash and cash equivalents

    16,116


    9,252

    Cash and cash equivalents at beginning of period

    43,023


    55,043

    Cash and cash equivalents at end of period

    $  59,139


    $    64,295




    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



    Nine Months Ended




    September 30,


    Growth/(Decline)




    September 30,


    Growth/(Decline)




    2012


    2011


    Dollars


    Percent




    2012


    2011(2)


    Dollars


    Percent

    Net sales:



















    Woods

    $   31,147


    $   41,545


    $ (10,398)


    -25%




    $ 180,425


    $ 186,117


    $   (5,692)


    -3%


    Irons 

    31,029


    38,223


    (7,194)


    -19%




    147,170


    168,384


    (21,214)


    -13%


    Putters

    15,734


    15,060


    674


    4%




    78,699


    67,030


    11,669


    17%


    Golf balls

    26,620


    32,740


    (6,120)


    -19%




    119,004


    132,085


    (13,081)


    -10%


    Accessories and other (1)

    43,376


    45,675


    (2,299)


    -5%




    188,829


    179,040


    9,789


    5%




    $ 147,906


    $ 173,243


    $ (25,337)


    -15%




    $ 714,127


    $ 732,656


    $ (18,529)


    -3%












































    Net Sales by Region


    Net Sales by Region




    Quarter Ended


    Nine Months Ended




    September 30,


    Growth/(Decline)




    September 30,


    Growth/(Decline)




    2012


    2011


    Dollars


    Percent




    2012


    2011


    Dollars


    Percent

    Net sales:



















    United States

    $   57,140


    $   73,890


    $ (16,750)


    -23%




    $ 349,183


    $ 357,767


    $   (8,584)


    -2%


    Europe

    19,189


    25,365


    (6,176)


    -24%




    105,332


    114,443


    (9,111)


    -8%


    Japan

    41,635


    41,806


    (171)


    0%




    120,868


    108,124


    12,744


    12%


    Rest of Asia

    16,149


    17,505


    (1,356)


    -8%




    60,758


    68,593


    (7,835)


    -11%


    Other foreign countries

    13,793


    14,677


    (884)


    -6%




    77,986


    83,729


    (5,743)


    -7%




    $ 147,906


    $ 173,243


    $ (25,337)


    -15%




    $ 714,127


    $ 732,656


    $ (18,529)


    -3%












































    Operating Segment Information


    Operating Segment Information




    Quarter Ended


    Nine Months Ended




    September 30,


    Growth/(Decline)




    September 30,


    Growth/(Decline)




    2012


    2011(2)


    Dollars


    Percent




    2012


    2011(2)


    Dollars


    Percent

    Net sales:



















    Golf clubs

    $ 121,286


    $ 140,503


    $ (19,217)


    -14%




    $ 595,123


    $ 600,570


    $   (5,447)


    -1%


    Golf balls

    26,620


    32,740


    (6,120)


    -19%




    119,004


    132,086


    (13,082)


    -10%




    $ 147,906


    $ 173,243


    $ (25,337)


    -15%




    $ 714,127


    $ 732,656


    $ (18,529)


    -3%





















    Income (loss) before income taxes:


















    Golf clubs 

    $ (57,840)


    $ (23,846)


    $ (33,994)


    -143%




    $   (7,247)


    $   17,767


    $ (25,014)


    -141%


    Golf balls 

    (13,789)


    (6,715)


    (7,074)


    -105%




    (8,047)


    (3,330)


    (4,717)


    -142%


    Reconciling items (3)


    (14,419)


    (17,172)


    2,753


    16%




    (34,249)


    (54,155)


    19,906


    37%




    $ (86,048)


    $ (47,733)


    $ (38,315)


    -80%




    $ (49,543)


    $ (39,718)


    $   (9,825)


    25%





















    (1)

    Accessories & other include packaged sets as well as pre-owned product 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 September 30,




    Quarter Ended September 30,






    2012




    2011






























    Pro Forma

    Callaway Golf (1)


    Cost Reduction Initiatives(1) (3)


    Non-Cash Tax Adjustment(2)


    Total as Reported




    Pro Forma

    Callaway Golf (1)


    Gross Margin Initiatives (1)


    Restructuring(1)


    Non-Cash Tax Adjustment(2)


    Total as Reported





    Net sales

    $              147,906


    $                         -


    $                       -


    $         147,906




    $              173,243


    $                    -


    $                        -


    $                     -


    $                173,243





    Gross profit

    31,102


    (27,302)


    -


    3,800




    53,626


    (5,191)


    (1,049)


    -


    47,386





    % of sales

    21%


     n/a 


     n/a 


    3%




    31%


     n/a 


     n/a 


     n/a 


    27%





    Operating expenses

    78,707


    7,782


    -


    86,489




    85,165


    38


    6,346


    -


    91,549





    Income (expense) from operations

    (47,605)


    (35,084)


    -


    (82,689)




    (31,539)


    (5,229)


    (7,395)


    -


    (44,163)





    Other expense, net

    (3,359)


    -


    -


    (3,359)




    (3,570)


    -


    -


    -


    (3,570)





    Income (loss) before income taxes

    (50,964)


    (35,084)


    -


    (86,048)




    (35,109)


    (5,229)


    (7,395)


    -


    (47,733)





    Income tax provision (benefit)

    (19,621)


    (13,508)


    33,879


    750




    (13,517)


    (2,013)


    (2,847)


    33,231


    14,854





    Net income (loss)

    (31,343)


    (21,576)


    (33,879)


    (86,798)




    (21,592)


    (3,216)


    (4,548)


    (33,231)


    (62,587)





    Dividends on convertible preferred stock

    2,414


    -


    -


    2,414




    2,625


    -


    -


    -


    2,625





    Net income (loss) allocable to common shareholders

    $               (33,757)


    $              (21,576)


    $            (33,879)


    $          (89,212)




    $               (24,217)


    $           (3,216)


    $               (4,548)


    $          (33,231)


    $                (65,212)





























    Diluted earnings (loss) per share:

    $                   (0.50)


    $                  (0.32)


    $                (0.51)


    $              (1.33)




    $                   (0.37)


    $             (0.05)


    $                 (0.07)


    $              (0.52)


    $                    (1.01)





    Weighted-average shares outstanding:                           

    67,162


    67,162


    67,162


    67,162




    64,781


    64,781


    64,781


    64,781


    64,781














































































    Nine Months Ended September 30,


    Nine Months Ended September 30,


    2012


    2011


    Pro Forma

    Callaway Golf (1) 


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


    Cost Reduction Initiatives(1) (3)


    Non-Cash Tax Adjustment


    Total as Reported


    Pro Forma

    Callaway Golf (1) 


    Global Operations Strategy(1)


    Non-Cash

    Impairment

    Charge


    Restructuring


    Gain on Sale of Buildings


    Non-Cash Tax Adjustment


    Total as Reported

    Net sales

    $              714,127


    $                         -


    $                       -


    $                     -


    $     714,127


    $              732,656


    $                    -


    $                        -


    $                     -


    $                            -


    $                     -


    $     732,656

    Gross profit

    267,087


    -


    (28,263)


    -


    238,824


    292,118


    (17,340)


    -


    (1,049)


    -


    -


    273,729

    % of sales

    37%


     n/a 


     n/a 


     n/a 


    33%


    40%


     n/a 


     n/a 


     n/a 


     n/a 


     n/a 


    37%

    Operating expenses

    279,231


    (6,602)


    11,492


    -


    284,121


    294,088


    231


    5,413


    11,508


    (6,170)


    -


    305,070

    Income (expense) from operations

    (12,144)


    6,602


    (39,755)


    -


    (45,297)


    (1,970)


    (17,571)


    (5,413)


    (12,557)


    6,170


    -


    (31,341)

    Other expense, net

    (4,246)


    -


    -


    -


    (4,246)


    (8,377)


    -


    -


    -


    -


    -


    (8,377)

    Income (loss) before income taxes

    (16,390)


    6,602


    (39,755)


    -


    (49,543)


    (10,347)


    (17,571)


    (5,413)


    (12,557)


    6,170


    -


    (39,718)

    Income tax provision (benefit)

    (6,310)


    2,542


    (15,306)


    21,728


    2,654


    (3,984)


    (6,765)


    (2,084)


    (4,834)


    2,247


    84,537


    69,117

    Net income (loss)

    (10,080)


    4,060


    (24,449)


    (21,728)


    (52,197)


    (6,363)


    (10,806)


    (3,329)


    (7,723)


    3,923


    (84,537)


    (108,835)

    Dividends on convertible preferred stock

    7,664


    -


    -


    -


    7,664


    7,875


    -


    -


    -


    -


    -


    7,875

    Net income (loss) allocable to common shareholders

    $               (17,744)


    $                  4,060


    $            (24,449)


    $          (21,728)


    $     (59,861)


    $               (14,238)


    $         (10,806)


    $               (3,329)


    $            (7,723)


    $                    3,923


    $          (84,537)


    $   (116,710)

























    Diluted earnings (loss) per share:

    $                   (0.27)


    $                    0.06


    $                (0.37)


    $              (0.33)


    $         (0.91)


    $                   (0.22)


    $             (0.17)


    $                 (0.05)


    $              (0.12)


    $                      0.06


    $              (1.31)


    $         (1.81)

    Weighted-average shares outstanding:                           

    65,740


    65,740


    65,740


    65,740


    65,740


    64,505


    64,505


    64,505


    64,505


    64,505


    64,505


    64,505

















































    (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, transition costs associated with licensing the Company's North American apparel business and footwear business, transition costs associated with outsourcing the development of any new technology in the Company's uPro GPS business, and cost associated with the reorganization of the Company's golf ball manufacturing supply chain.



    2012 Trailing Twelve Month Adjusted EBITDA


    2011 Trailing Twelve Month Adjusted EBITDA

    Adjusted EBITDA:

    Quarter Ended


    Quarter Ended


    December 31,


    March 31,


    June 30,


    September 30,




    December 31, 


    March 31,


    June 30,


    September 30,




    2011


    2012


    2012


    2012


    Total


    2010


    2011


    2011


    2011


    Total

    Net income (loss)

    $               (62,985)


    $                31,802


    $               2,799


    $          (86,798)


    $   (115,182)


    $               (32,255)


    $          12,818


    $             (59,066)


    $          (62,587)


    $              (141,090)

    Interest expense (income), net

    324


    817


    884


    1,343


    3,368


    (444)


    142


    207


    399


    304

    Income tax provision (benefit)

    12,442


    (292)


    2,196


    750


    15,096


    (13,231)


    8,780


    45,483


    14,854


    55,886

    Depreciation and amortization expense

    10,198


    8,745


    9,489


    8,342


    36,774


    10,707


    9,880


    9,311


    9,247


    39,145

    Impairment charge

    1,120


    -


    -


    17,056


    18,176


    7,547


    -


    5,413


    -


    12,960

    Adjusted EBITDA

    $               (38,901)

    -

    $                41,072


    $             15,368


    $          (59,307)


    $     (41,768)


    $               (27,676)


    $          31,620


    $                1,348


    $          (38,087)


    $                (32,795)




    Callaway Golf Company


    Summary of Core and Non-core Net Sales and Gross Profit


    (In thousands)


    (Unaudited)



















































     Quarter Ended March, 31, 2012 


    Quarter Ended June 30, 2012


    Quarter Ended September 30, 2012


    Nine Months Ended September 30, 2012




    Pro Forma

    Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)

    Net sales


    $ 285,098


    $ 263,792


    $         21,306


    $ 281,123


    $ 255,137


    $         25,986


    $ 147,906


    $ 138,902


    $           9,004


    $ 714,127


    $         657,831


    $         56,296
























    Gross profit


    $ 124,395


    $ 121,907


    $           2,488


    $ 111,590


    $ 106,485


    $           5,105


    $   31,102


    $   32,731


    $         (1,629)


    $ 267,087


    $         261,123


    $           5,964

    % of Sales


    44%


    46%


    12%


    40%


    42%


    20%


    21%


    24%


    -18%


    37%


    40%


    11%































































































     Quarter Ended March, 31, 2011 


    Quarter Ended June 30, 2011


    Quarter Ended September 30, 2011


    Nine Months Ended September 30, 2011



    Pro Forma

    Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)


    Pro Forma Results


    Core Business


    Non-core Business (1)

    Net sales


    $ 285,599


    $ 260,203


    $         25,396


    $ 273,814


    $ 247,886


    $         25,928


    $ 173,243


    $ 158,011


    $         15,232


    $ 732,656


    $         666,100


    $         66,556
























    Gross profit


    $ 129,983


    $ 126,345


    $           3,638


    $ 108,509


    $ 104,667


    $           3,842


    $   53,626


    $   55,160


    $         (1,534)


    $ 292,118


    $         286,172


    $           5,946

    % of Sales


    46%


    49%


    14%


    40%


    42%


    15%


    31%


    35%


    -10%


    40%


    43%


    9%

    (1)

    Includes: Top-Flite and Ben Hogan branded products, apparel and footwear in North America and uPro GPS devices.

    SOURCE Callaway Golf