UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
January 26,
2010
Date of
Report (Date of earliest event reported)
CALLAWAY
GOLF COMPANY
(Exact
name of registrant as specified in its charter)
|
DELAWARE
|
1-10962
|
95-3797580
|
|
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
incorporation)
|
File
Number)
|
Identification
No.)
|
|
2180
RUTHERFORD ROAD, CARLSBAD, CALIFORNIA
|
92008-7328
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(760)
931-1771
Registrant’s
telephone number, including area code
|
NOT
APPLICABLE
|
|
(Former
name or former address, if changed since last
report.)
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition.*
On
January 26, 2010, Callaway Golf Company issued a press release captioned
“Callaway Golf Company Announces 2009 Fourth Quarter and Annual
Results.” A copy of the press release is attached hereto as Exhibit
99.1 and incorporated herein by this reference.
Item
9.01 Financial Statements and Exhibits.*
|
|
(c)
|
Exhibits.
|
The following exhibit is being
furnished herewith:
|
|
Exhibit
99.1
|
Press
Release, dated January 26, 2010, captioned “Callaway Golf Company
Announces 2009 Fourth Quarter and Annual
Results.”
|
* The
information furnished under Item 2.02 and Item 9.01 of this Current Report on
Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any registration statement or other filing under
the Securities Act of 1933, as amended, except as shall be expressly set forth
by specific reference in such filing.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
CALLAWAY
GOLF COMPANY
|
||
|
Date: January
26, 2010
|
By:
|
/s/ Brian P. Lynch
|
|
Name:
|
Brian
P. Lynch
|
|
|
Title:
|
Vice
President
and
Corporate
Secretary
|
|
Exhibit
Index
|
Exhibit Number
|
Description
|
|
|
99.1
|
Press
Release, dated January 26, 2010, captioned “Callaway Golf Company
Announces 2009 Fourth Quarter and Annual
Results.”
|
Contacts: Brad
Holiday
Eric
Struik
(760)
931-1771
CALLAWAY
GOLF COMPANY ANNOUNCES
2009
FOURTH QUARTER AND ANNUAL RESULTS
CARLSBAD,
CA /January 26, 2010/ Callaway Golf Company (NYSE:ELY) today announced its
financial results for the fourth quarter and full year ended December 31,
2009.
For the
fourth quarter, the Company reported:
|
|
·
|
Net
sales of $186 million, an increase of 9% compared to $171 million for the
fourth quarter of 2008. On a currency neutral basis, net sales
would have been $177 million, an increase of 3% compared to the fourth
quarter of 2008.
|
|
|
·
|
Gross
profit of $58 million (31% of net sales) compared to gross profit of $60
million (35% of net sales) in the fourth quarter of
2008.
|
|
|
·
|
Operating
expenses of $87 million (47% of net sales), a decrease of 2% compared to
$89 million (52% of net sales) for the same period in
2008.
|
|
|
·
|
A
pro forma loss of $0.27 per share (on 63.5 million common shares
outstanding), compared to a pro forma loss of $0.24 per share (on 62.7
million common shares outstanding) in 2008. The pro forma loss
per share for the fourth quarter of 2009 excludes a charge of $0.02 per
share associated with the Company’s gross margin improvement
initiatives. The loss per share for the fourth quarter of 2008
excludes a non-cash gain of $0.22 per share associated with the reversal
of the Company’s previous energy derivative valuation account and a charge
of $0.03 per share for the gross margin improvement
initiatives. Including the gross margin initiative charges and
energy derivative gain, the Company’s reported fourth quarter results were
a loss of $0.29 per share for 2009 and a loss of $0.05 per share for 2008.
|
For
the full year, the Company reported:
|
|
·
|
Net
sales of $951 million, a decrease of 15% compared to $1.1 billion for the
same period last year. On a currency neutral basis, net sales would have
been $987 million, a decrease of 12% compared to
2008.
|
|
|
·
|
Gross
profit of $344 million (36% of net sales), compared to $487 million (44%
of net sales) for 2008, reflecting the unusually heavy discounting in the
marketplace as a result of the economic
environment.
|
|
|
·
|
Operating
expenses of $374 million (39% of net sales), a decrease of 7% compared to
$403 million (36% of net sales) for
2008.
|
|
|
·
|
A
pro forma loss per share of $0.27 (on 63.2 million common shares
outstanding) compared to pro forma fully diluted earnings per share of
$0.94 (on 63.8 million common shares outstanding) for 2008. The
pro forma loss per share for 2009 excludes $0.06 per share associated with
the Company’s gross margin improvement initiatives. Pro forma
fully diluted earnings per share for 2008 excludes a gain of $0.22
associated with the reversal of the energy derivative valuation account
and charges of $0.12 per share for the gross margin improvement
initiatives. Including the gross margin initiative charges and
energy derivative gain, the Company’s reported full year results were a
loss of $0.33 per share for 2009 and earnings of $1.04 per share for
2008.
|
“The
economic and market conditions in 2009 were without a doubt the most challenging
in recent history,” commented George Fellows, President and Chief Executive
Officer. “The actions we took in 2009 to manage those difficult
conditions not only allowed us to weather 2009 but they also put us in a good
position to take advantage of what we expect will be improving economic and
market conditions in 2010,” added Mr. Fellows. “Our balanced approach to
managing expenses while at the same time investing in targeted growth
initiatives allowed us both to reduce our operating expenses in 2009 and at the
same time prepare for new market expansion, including the India launch earlier
this month. Improved processes resulting from our gross margin initiatives have
also allowed us to reduce our inventory levels to their lowest year end levels
for the past five years and finish 2009 with inventory as a percent of net sales
of 23%, despite declining sales in 2009. All of these actions and others should
benefit us in 2010.”
“We are
cautiously optimistic that the economy and the golf industry will begin to
recover in 2010,” continued Mr. Fellows. “Factors contributing to our optimistic
outlook include positive customer and media feedback on our 2010 product line,
conservative inventory levels at retail, improving economic and foreign currency
trends, and an anticipated decrease in discounting in the
marketplace. While it will take more than 2010 for the golf industry
to fully recover, we believe this year will be a good step toward that full
recovery.”
Business
Outlook
The
Company estimates sales in 2010 will improve to a range of $990 million to $1.05
billion due to improved economic and market conditions in addition to favorable
foreign currency exchange rates compared to 2009. Gross margins for
the year are estimated to improve to a range of approximately 42% to 44%, due to
a strong product offering and anticipated lower discounting activity at
retail. Operating expenses for the year are estimated to be
approximately $375 - $405 million compared to $374 million in
2009. This estimate includes increased expenses associated with
re-instatement of several employee benefits suspended during 2009 and additional
expenses associated with new market expansion, such as India, as well as other
growth initiatives. The Company estimates full year pro forma
earnings per share of $0.25 to $0.35, which includes a reduction of
approximately $0.16 per share related to the Company’s preferred stock, and
which excludes after tax charges of approximately $0.10 per share associated
with the Company’s global operations strategy targeted at improved gross
margins.
Conference Call and
Webcast
The
Company will be holding a conference call at 2:00 p.m. PST today. The
call will be broadcast live over the Internet and can be accessed at
www.callawaygolf.com. To listen to the call, please go to the website
at least 15 minutes before the call to register and for instructions on how to
access the broadcast. A replay of the conference call will be
available approximately two hours after the call ends, and will remain available
through 9:00 p.m. PST on Tuesday, February 2, 2010. The replay may be
accessed through the Internet at www.callawaygolf.com or by telephone by calling
1-800-642-1687 toll free for calls originating within the United States or
706-645-9291 for International calls. The replay pass code is
51600663.
* * * *
*
Disclaimer: Statements
used in this press release that relate to future plans, events, financial
results, performance or prospects, including statements relating to an economic
or golf industry recovery, future growth, improvement in foreign currency
exchange rates, future discounting, and estimated 2010 sales, gross margins,
operating expenses, and earnings, are forward-looking statements as defined
under the Private Securities Litigation Reform Act of 1995. These
estimates and statements are based upon current information and expectations.
Accurately estimating the Company’s reported future financial performance is
based upon various unknowns, including future changes in foreign currency
exchange rates, 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. 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, in
manufacturing the Company’s products, or in connection with the implementation
of the Company’s planned gross margin initiatives or the implementation of
future initiatives; 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 and the Company’s business, see the Company’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2009 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 from time to time with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Currency Neutral
Basis: This press release includes information regarding
certain aspects of the Company’s financial results for the fourth quarter and
full year 2009 that is presented on a “currency neutral basis.” This information
estimates the impact of the effect of foreign currency translation on the
Company’s 2009 results as compared to the same period in 2008. This
impact is derived by taking the Company’s 2009 local currency results and
translating them into U.S. dollars based upon 2008 foreign currency exchange
rates for the periods presented and does not include any other effect of changes
in foreign currency rates on the Company’s results.
Regulation
G: The financial results reported in this press release have
been prepared in accordance with accounting principles generally accepted in the
United States (“GAAP”). In addition to the GAAP results, the Company
has also provided additional information concerning its results, which include
certain financial measures not prepared in accordance with GAAP. The
non-GAAP financial measures included in this press release present certain of
the Company’s financial results on a “currency neutral basis” or exclude charges
related to the Company’s gross margin initiatives or the gain from the reversal
of the Company’s prior energy derivative valuation account. These
non-GAAP financial measures should not be considered a substitute for any
measure derived in accordance with GAAP. These non-GAAP financial
measures may also be inconsistent with the manner in which similar measures are
derived or used by other companies. Management believes that the
presentation of such non-GAAP financial measures, when considered in conjunction
with the most directly comparable GAAP financial measures, provides additional
useful information for investors as to the underlying performance of the
Company’s business without regard to these items. The Company has
provided reconciling information in the text of this press release or in the
schedules attached to this release.
*****
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 accessories,
under the Callaway Golf®, Odyssey®, Top-Flite®, Ben Hogan® and uPro™ brands in
more than 110 countries worldwide. For more information please visit
www.callawaygolf.com
or Shop.CallawayGolf.com
Callaway
Golf Company
Consolidated
Condensed Balance Sheets
(In
thousands)
(Unaudited)
|
December
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 78,314 | $ | 38,337 | ||||
|
Accounts
receivable, net
|
139,776 | 120,067 | ||||||
|
Inventories
|
219,178 | 257,191 | ||||||
|
Deferred
taxes, net
|
21,276 | 27,046 | ||||||
|
Income
taxes receivable
|
19,730 | 15,549 | ||||||
|
Other
current assets
|
34,713 | 31,813 | ||||||
|
Total
current assets
|
512,987 | 490,003 | ||||||
|
Property,
plant and equipment, net
|
143,436 | 142,145 | ||||||
|
Intangible
assets, net
|
174,017 | 176,689 | ||||||
|
Other
assets
|
45,490 | 46,501 | ||||||
|
Total
assets
|
$ | 875,930 | $ | 855,338 | ||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 118,294 | $ | 126,167 | ||||
|
Accrued
employee compensation and benefits
|
22,219 | 25,630 | ||||||
|
Accrued
warranty expense
|
9,449 | 11,614 | ||||||
|
Income
tax liability
|
1,492 | - | ||||||
|
Credit
facilities
|
- | 90,000 | ||||||
|
Total
current liabilities
|
151,454 | 253,411 | ||||||
|
Long-term
liabilities
|
14,594 | 21,559 | ||||||
|
Shareholders'
equity
|
709,882 | 580,368 | ||||||
|
Total
liabilities and shareholders' equity
|
$ | 875,930 | $ | 855,338 | ||||
Statements
of Operations
(In
thousands, except per share data)
(Unaudited)
|
Quarter
Ended
|
||||||||
|
December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
sales
|
$ | 185,852 | $ | 171,272 | ||||
|
Cost
of sales
|
127,695 | 111,184 | ||||||
|
Gross
profit
|
58,157 | 60,088 | ||||||
|
Operating
expenses:
|
||||||||
|
Selling
|
56,581 | 61,450 | ||||||
|
General
and administrative
|
21,690 | 19,993 | ||||||
|
Research
and development
|
8,546 | 7,258 | ||||||
|
Total
operating expenses
|
86,817 | 88,701 | ||||||
|
Loss
from operations
|
(28,660 | ) | (28,613 | ) | ||||
|
Other
income, net
|
1,963 | 20,693 | ||||||
|
Loss
before income taxes
|
(26,697 | ) | (7,920 | ) | ||||
|
Income
tax benefit
|
(11,142 | ) | (4,766 | ) | ||||
|
Net
loss
|
(15,555 | ) | (3,154 | ) | ||||
|
Dividends
on convertible preferred stock
|
2,625 | - | ||||||
|
Net
loss allocable to common shareholders
|
$ | (18,180 | ) | $ | (3,154 | ) | ||
|
Loss
per common share:
|
||||||||
|
Basic
|
$ | (0.29 | ) | $ | (0.05 | ) | ||
|
Diluted
|
$ | (0.29 | ) | $ | (0.05 | ) | ||
|
Weighted-average
common shares outstanding:
|
||||||||
|
Basic
|
63,472 | 62,662 | ||||||
|
Diluted
|
63,472 | 62,662 | ||||||
|
Year
Ended
|
||||||||
|
December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
sales
|
$ | 950,799 | $ | 1,117,204 | ||||
|
Cost
of sales
|
607,036 | 630,371 | ||||||
|
Gross
profit
|
343,763 | 486,833 | ||||||
|
Operating
expenses:
|
||||||||
|
Selling
|
260,597 | 287,802 | ||||||
|
General
and administrative
|
81,487 | 85,473 | ||||||
|
Research
and development
|
32,213 | 29,370 | ||||||
|
Total
operating expenses
|
374,297 | 402,645 | ||||||
|
Income
(loss) from operations
|
(30,534 | ) | 84,188 | |||||
|
Other
income, net
|
931 | 17,119 | ||||||
|
Income
(loss) before income taxes
|
(29,603 | ) | 101,307 | |||||
|
Income
tax provision (benefit)
|
(14,343 | ) | 35,131 | |||||
|
Net
income (loss)
|
(15,260 | ) | 66,176 | |||||
|
Dividends
on convertible preferred stock
|
5,688 | - | ||||||
|
Net
income (loss) allocable to common shareholders
|
$ | (20,948 | ) | $ | 66,176 | |||
|
Earnings
(loss) per common share:
|
||||||||
|
Basic
|
$ | (0.33 | ) | $ | 1.05 | |||
|
Diluted
|
$ | (0.33 | ) | $ | 1.04 | |||
|
Weighted-average
common shares outstanding:
|
||||||||
|
Basic
|
63,176 | 63,055 | ||||||
|
Diluted
|
63,176 | 63,798 | ||||||
Callaway
Golf Company
Consolidated
Condensed Statements of Cash Flows
(In
thousands)
(Unaudited)
|
Year
Ended
|
||||||||
|
December 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income (loss)
|
$ | (15,260 | ) | $ | 66,176 | |||
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
40,748 | 37,963 | ||||||
|
Deferred
taxes, net
|
3,424 | 13,977 | ||||||
|
Non-cash
share-based compensation
|
8,756 | 6,375 | ||||||
|
(Gain)
loss on disposal of long-lived assets
|
(594 | ) | 510 | |||||
|
Non-cash
change in energy derivative valuation account
|
- | (19,922 | ) | |||||
|
Changes
in assets and liabilities
|
5,797 | (63,374 | ) | |||||
|
Net
cash provided by operating activities
|
42,871 | 41,705 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Capital
expenditures
|
(38,845 | ) | (51,005 | ) | ||||
|
Acquisitions,
net of cash acquired
|
- | (9,797 | ) | |||||
|
Other
investing activities
|
166 | (718 | ) | |||||
|
Net
cash used in investing activities
|
(38,679 | ) | (61,520 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Issuance
of preferred stock
|
140,000 | - | ||||||
|
Equity
issuance costs
|
(6,031 | ) | - | |||||
|
Issuance
of common stock
|
2,562 | 4,708 | ||||||
|
Dividends
paid, net
|
(11,590 | ) | (17,794 | ) | ||||
|
Acquisition
of treasury stock
|
- | (23,650 | ) | |||||
|
Proceeds
from (payments on) credit facilities, net
|
(90,000 | ) | 53,493 | |||||
|
Other
financing activities
|
172 | 307 | ||||||
|
Net
cash provided by financing activities
|
35,113 | 17,064 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
672 | (8,787 | ) | |||||
|
Net
increase (decrease) in cash and cash equivalents
|
39,977 | (11,538 | ) | |||||
|
Cash
and cash equivalents at beginning of period
|
38,337 | 49,875 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 78,314 | $ | 38,337 | ||||
Callaway
Golf Company
Consolidated
Net Sales and Operating Segment Information
(In
thousands)
(Unaudited)
|
Net
Sales by Product Category
|
||||||||||||||||||||||||||||||||
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||||||||||||||||||
|
December
31,
|
Growth/(Decline)
|
December
31,
|
Growth/(Decline)
|
|||||||||||||||||||||||||||||
|
2009
|
2008
|
Dollars
|
Percent
|
2009
|
2008
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
|
Net
sales:
|
||||||||||||||||||||||||||||||||
|
Woods
|
$ | 32,019 | $ | 31,243 | $ | 776 | 2 | % | $ | 223,603 | $ | 268,286 | $ | (44,683 | ) | -17 | % | |||||||||||||||
|
Irons
|
47,205 | 48,245 | (1,040 | ) | -2 | % | 233,985 | 308,556 | (74,571 | ) | -24 | % | ||||||||||||||||||||
|
Putters
|
26,923 | 12,883 | 14,040 | 109 | % | 98,134 | 101,676 | (3,542 | ) | -3 | % | |||||||||||||||||||||
|
Golf
balls
|
34,396 | 41,994 | (7,598 | ) | -18 | % | 180,885 | 223,075 | (42,190 | ) | -19 | % | ||||||||||||||||||||
|
Accessories
and other
|
45,309 | 36,907 | 8,402 | 23 | % | 214,192 | 215,611 | (1,419 | ) | -1 | % | |||||||||||||||||||||
| $ | 185,852 | $ | 171,272 | $ | 14,580 | 9 | % | $ | 950,799 | $ | 1,117,204 | $ | (166,405 | ) | -15 | % | ||||||||||||||||
|
Net
Sales by Region
|
||||||||||||||||||||||||||||||||
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||||||||||||||||||
|
December
31,
|
Growth/(Decline)
|
December
31,
|
Growth/(Decline)
|
|||||||||||||||||||||||||||||
|
2009
|
2008
|
Dollars
|
Percent
|
2009
|
2008
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
|
Net
sales:
|
||||||||||||||||||||||||||||||||
|
United
States
|
$ | 76,494 | $ | 88,976 | $ | (12,482 | ) | -14 | % | $ | 475,383 | $ | 554,029 | $ | (78,646 | ) | -14 | % | ||||||||||||||
|
Europe
|
22,019 | 19,804 | 2,215 | 11 | % | 134,508 | 191,089 | (56,581 | ) | -30 | % | |||||||||||||||||||||
|
Japan
|
49,102 | 33,753 | 15,349 | 45 | % | 162,695 | 166,476 | (3,781 | ) | -2 | % | |||||||||||||||||||||
|
Rest
of Asia
|
18,130 | 12,983 | 5,147 | 40 | % | 76,963 | 80,011 | (3,048 | ) | -4 | % | |||||||||||||||||||||
|
Other
foreign countries
|
20,107 | 15,756 | 4,351 | 28 | % | 101,250 | 125,599 | (24,349 | ) | -19 | % | |||||||||||||||||||||
| $ | 185,852 | $ | 171,272 | $ | 14,580 | 9 | % | $ | 950,799 | $ | 1,117,204 | $ | (166,405 | ) | -15 | % | ||||||||||||||||
|
Operating Segment
Information
|
||||||||||||||||||||||||||||||||
|
Quarter
Ended
|
Year
Ended
|
|||||||||||||||||||||||||||||||
|
December 31,
|
Growth/(Decline)
|
December 31,
|
Growth/(Decline)
|
|||||||||||||||||||||||||||||
|
2009
|
2008
|
Dollars
|
Percent
|
2009
|
2008
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
|
Net
sales:
|
||||||||||||||||||||||||||||||||
|
Golf
clubs
|
$ | 151,456 | $ | 129,278 | $ | 22,178 | 17 | % | $ | 769,914 | $ | 894,129 | $ | (124,215 | ) | -14 | % | |||||||||||||||
|
Golf
balls
|
34,396 | 41,994 | (7,598 | ) | -18 | % | 180,885 | 223,075 | (42,190 | ) | -19 | % | ||||||||||||||||||||
| $ | 185,852 | $ | 171,272 | $ | 14,580 | 9 | % | $ | 950,799 | $ | 1,117,204 | $ | (166,405 | ) | -15 | % | ||||||||||||||||
|
Income
(loss) before income taxes:
|
||||||||||||||||||||||||||||||||
|
Golf
clubs
|
$ | (7,215 | ) | $ | (12,174 | ) | $ | 4,959 | 41 | % | $ | 38,934 | $ | 134,018 | $ | (95,084 | ) | -71 | % | |||||||||||||
|
Golf
balls
|
(6,964 | ) | (3,145 | ) | (3,819 | ) | -121 | % | (13,864 | ) | 6,903 | (20,767 | ) | -301 | % | |||||||||||||||||
|
Reconciling
items (1)
|
(12,518 | ) | 7,399 | (19,917 | ) | 269 | % | (54,673 | ) | (39,614 | ) | (15,059 | ) | -38 | % | |||||||||||||||||
| $ | (26,697 | ) | $ | (7,920 | ) | $ | (18,777 | ) | -237 | % | $ | (29,603 | ) | $ | 101,307 | $ | (130,910 | ) | -129 | % | ||||||||||||
(1)
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 December 31,
|
Quarter
Ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
|||||||||||||||||||||||||||
|
Pro
Forma
Callaway Golf
|
Gross
Margin
Improvement
Initiatives
|
Total
as
Reported
|
Pro
Forma
Callaway
Golf
|
Gross
Margin
Improvement
Initiatives
|
Enron Derivative
|
Total
as
Reported
|
||||||||||||||||||||||
|
Net
sales
|
$ | 185,852 | $ | - | $ | 185,852 | $ | 171,272 | $ | - | $ | - | $ | 171,272 | ||||||||||||||
|
Gross
profit
|
60,031 | (1,874 | ) | 58,157 | 63,201 | (3,113 | ) | - | 60,088 | |||||||||||||||||||
|
% of
sales
|
32 | % | n/a | 31 | % | 37 | % | n/a | - | 35 | % | |||||||||||||||||
|
Operating
expenses
|
86,817 | - | 86,817 | 88,619 | 82 | - | 88,701 | |||||||||||||||||||||
|
Loss
from operations
|
(26,786 | ) | (1,874 | ) | (28,660 | ) | (25,418 | ) | (3,195 | ) | - | (28,613 | ) | |||||||||||||||
|
Other
income, net
|
1,963 | - | 1,963 | 771 | - | 19,922 | 20,693 | |||||||||||||||||||||
|
Income
(loss) before income taxes
|
(24,823 | ) | (1,874 | ) | (26,697 | ) | (24,647 | ) | (3,195 | ) | 19,922 | (7,920 | ) | |||||||||||||||
|
Income
tax provision (benefit)
|
(10,369 | ) | (773 | ) | (11,142 | ) | (9,400 | ) | (1,230 | ) | 5,864 | (4,766 | ) | |||||||||||||||
|
Net
income (loss)
|
(14,454 | ) | (1,101 | ) | (15,555 | ) | (15,247 | ) | (1,965 | ) | 14,058 | (3,154 | ) | |||||||||||||||
|
Dividends
on convertible preferred stock
|
2,625 | - | 2,625 | - | - | - | - | |||||||||||||||||||||
|
Net
income (loss) allocable to common shareholders
|
$ | (17,079 | ) | $ | (1,101 | ) | $ | (18,180 | ) | $ | (15,247 | ) | $ | (1,965 | ) | $ | 14,058 | $ | (3,154 | ) | ||||||||
|
Diluted
earnings (loss) per share:
|
$ | (0.27 | ) | $ | (0.02 | ) | $ | (0.29 | ) | $ | (0.24 | ) | $ | (0.03 | ) | $ | 0.22 | $ | (0.05 | ) | ||||||||
|
Weighted-average
shares outstanding:
|
63,472 | 63,472 | 63,472 | 62,662 | 62,662 | 62,662 | 62,662 | |||||||||||||||||||||
|
Year
Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||||||
|
2009
|
2008
|
|||||||||||||||||||||||||||
|
Pro
Forma
Callaway Golf
|
Gross
Margin
Improvement
Initiatives
|
Total
as
Reported
|
Pro
Forma
Callaway
Golf
|
Gross
Margin
Improvement
Initiatives
|
Enron Derivative
|
Total
as
Reported
|
||||||||||||||||||||||
|
Net
sales
|
$ | 950,799 | $ | - | $ | 950,799 | $ | 1,117,204 | $ | - | $ | - | $ | 1,117,204 | ||||||||||||||
|
Gross
profit
|
349,919 | (6,156 | ) | 343,763 | 499,367 | (12,534 | ) | - | 486,833 | |||||||||||||||||||
|
% of
sales
|
37 | % | n/a | 36 | % | 45 | % | n/a | - | 44 | % | |||||||||||||||||
|
Operating
expenses
|
374,297 | - | 374,297 | 402,469 | 176 | - | 402,645 | |||||||||||||||||||||
|
Income
(loss) from operations
|
(24,378 | ) | (6,156 | ) | (30,534 | ) | 96,898 | (12,710 | ) | - | 84,188 | |||||||||||||||||
|
Other
income (expense), net
|
931 | - | 931 | (2,803 | ) | - | 19,922 | 17,119 | ||||||||||||||||||||
|
Income
(loss) before income taxes
|
(23,447 | ) | (6,156 | ) | (29,603 | ) | 94,095 | (12,710 | ) | 19,922 | 101,307 | |||||||||||||||||
|
Income
tax provision (benefit)
|
(11,921 | ) | (2,422 | ) | (14,343 | ) | 34,160 | (4,893 | ) | 5,864 | 35,131 | |||||||||||||||||
|
Net
income (loss)
|
(11,526 | ) | (3,734 | ) | (15,260 | ) | 59,935 | (7,817 | ) | 14,058 | 66,176 | |||||||||||||||||
|
Dividends
on convertible preferred stock
|
5,688 | - | 5,688 | - | - | - | - | |||||||||||||||||||||
|
Net
income (loss) allocable to common shareholders
|
$ | (17,214 | ) | $ | (3,734 | ) | $ | (20,948 | ) | $ | 59,935 | $ | (7,817 | ) | $ | 14,058 | $ | 66,176 | ||||||||||
|
Diluted
earnings (loss) per share:
|
$ | (0.27 | ) | $ | (0.06 | ) | $ | (0.33 | ) | $ | 0.94 | $ | (0.12 | ) | $ | 0.22 | $ | 1.04 | ||||||||||
|
Weighted-average
shares outstanding:
|
63,176 | 63,176 | 63,176 | 63,798 | 63,798 | 63,798 | 63,798 | |||||||||||||||||||||
|
Adjusted
EBITDA:
|
||||||||||||||||||||||||||||
|
2009
Trailing Twelve Months Adjusted EBITDA
|
2008
Trailing Twelve Months Adjusted EBITDA
|
|||||||||||||||||||||||||||||||||||||||
|
Quarter
Ended
|
Quarter
Ended
|
|||||||||||||||||||||||||||||||||||||||
|
March
31,
|
June
30,
|
September
30,
|
December
31,
|
March
31,
|
June
30,
|
September
30,
|
December
31,
|
|||||||||||||||||||||||||||||||||
|
2009
|
2009
|
2009
|
2009
|
Total
|
2008
|
2008
|
2008
|
2008
|
Total
|
|||||||||||||||||||||||||||||||
|
Net
income (loss)
|
$ | 6,812 | $ | 6,912 | $ | (13,429 | ) | $ | (15,555 | ) | $ | (15,260 | ) | $ | 39,666 | $ | 37,107 | $ | (7,443 | ) | $ | (3,154 | ) | $ | 66,176 | |||||||||||||||
|
Interest
expense (income), net
|
(123 | ) | 551 | (46 | ) | (435 | ) | (53 | ) | 591 | 994 | 497 | 272 | 2,354 | ||||||||||||||||||||||||||
|
Income
tax provision (benefit)
|
4,248 | 3,859 | (11,308 | ) | (11,142 | ) | (14,343 | ) | 25,990 | 20,583 | (6,676 | ) | (4,766 | ) | 35,131 | |||||||||||||||||||||||||
|
Depreciation
and amortization expense
|
9,944 | 10,172 | 10,128 | 10,504 | 40,748 | 8,794 | 10,490 | 9,463 | 9,216 | 37,963 | ||||||||||||||||||||||||||||||
|
Change
in energy derivative valuation acct.
|
- | - | - | - | - | - | - | - | (19,922 | ) | (19,922 | ) | ||||||||||||||||||||||||||||
|
Adjusted
EBITDA
|
$ | 20,881 | $ | 21,494 | $ | (14,655 | ) | $ | (16,628 | ) | $ | 11,092 | $ | 75,041 | $ | 69,174 | $ | (4,159 | ) | $ | (18,354 | ) | $ | 121,702 | ||||||||||||||||