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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