Callaway Golf Announces Results for First Quarter 2006.CARLSBAD Carlsbad, cities, United States Carlsbad (kärlz`băd). 1 City (1990 pop. 63,126), San Diego co., S Calif., on the Pacific coast; settled in the 1880s, inc. 1952. , Calif. -- Callaway Golf Company Callaway Golf Company is an American golf company based in Carlsbad, California. They manufacture woods, irons, wedges, putters and golf balls and license its name for apparel, footwear, timepieces and accessories. (NYSE NYSE See: New York Stock Exchange :ELY) today announced its financial results for the first quarter ended March 31, 2006, reporting significant improvements in earnings over the same period a year ago. Highlights for the quarter include: --Net sales of $302.4 million, as compared to $299.9 million for the same period in 2005. --Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.33 on 70.1 million shares, or growth of 22%, as compared to $0.27 on 68.6 million shares in 2005. --Fully diluted earnings per share include $0.02 of after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charges for employee equity-based compensation associated with FAS 123R as well as $0.01 for the integration of Top-Flite operations. The first quarter of 2005 included after-tax charges of $0.03 for the integration of Top-Flite operations. Excluding these charges, the Company's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma fully diluted earnings per share for the first quarter of 2006 would have increased 20% to $0.36, as compared to pro forma fully diluted earnings per share of $0.30 for the first quarter of 2005. "We are pleased with the initial consumer acceptance of our new products this year and the fact that we achieved the second highest first quarter sales level in the history of the Company," commented George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). Fellows, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Achieving this level of sales was significant because product launches in the first quarter of 2006 were timed later in the quarter as compared with product launches last year. We are even more pleased that we were able to leverage 1% growth in revenue to achieve 22% growth in fully diluted earnings per share," continued Mr. Fellows. "Our cost reduction and other initiatives permitted us to bring this substantial increase to our bottom line despite an additional 1.5 million shares in our base. "Although we were particularly pleased with our results this quarter and remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about significant improvement in 2006 earnings compared to last year, our focus is on our longer term goals. We are right on track with those targets and we look forward to Callaway Callaway may refer to:
For more details, including pro forma reconciliations to assist in year-over-year comparison, please see the attached "Supplemental Financial Information." The Company will be holding a conference call at 2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT today. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two hours after the conclusion, and will remain available through 9:00 p.m. PDT on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 5, 2006. The replay may be accessed through the Internet at www.callawaygolf.com or by telephone by calling 1-800-475-6701 toll free for calls originating within the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. or 320-365-3844 for International calls. The replay pass code is 826757. Disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the : Statements used in this press release that relate to future plans, events, financial results, performance or prospects, including statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc earnings improvement in 2006 and achievement of longer-term targets, are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These estimates and statements are based upon current information and expectations. Actual results may differ materially from those anticipated as a result of certain risks and uncertainties, including but not limited to, market acceptance of current and future products, adverse market and economic conditions, adverse weather conditions and seasonality, any rule changes or other actions taken by the USGA USGA United States Golf Association USGA Uhren & Schmuck Gassner (Germany) USGA US Global Nanospace Inc. (stock symbol) USGA Undergraduate Student Government Association or other golf association that could have an adverse impact upon demand for the Company's products, a decrease in participation levels in golf and the effect of terrorist activity, armed conflict, natural disasters or pandemic pandemic /pan·dem·ic/ (pan-dem´ik) 1. a widespread epidemic of a disease. 2. widely epidemic. pan·dem·ic adj. Epidemic over a wide geographic area. n. 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 logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. 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 Part I, Item 1A of the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005, as well as other risks and uncertainties detailed from time to time in the Company's reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company undertakes no obligation to republish re·pub·lish tr.v. re·pub·lished, re·pub·lish·ing, re·pub·lish·es 1. To publish again. 2. Law To revive (a libel or a canceled will). revised forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events. Regulation G: The financial results reported in this press release have been prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). In addition to the GAAP results, the Company has also provided additional information concerning its preliminary results, which includes certain financial measures not prepared in accordance with GAAP. The non-GAAP financial measures included in this press release exclude charges associated with employee equity based compensation and the integration of the Callaway Golf Company and Top-Flite Golf Company operations. These non-GAAP financial measures should not be considered a substitute for any measure derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. in accordance with GAAP. These non-GAAP financial measures may also be inconsistent Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the most directly comparable GAAP financial measures, provides additional useful information concerning the Company's operations without these charges. The Company has provided reconciling information in the text of this press release and in the attachment See attach a file. to this release. Through an unwavering commitment to innovation, Callaway Golf creates products and services designed to make every golfer a better golfer. Callaway Golf Company manufactures and sells golf clubs and golf balls, and sells golf accessories, under the Callaway Golf(R), Top-Flite(R), Odyssey Odyssey (ŏd`ĭsē): see Homer. Odyssey Homer’s long, narrative poem centered on Odysseus. [Gk. Lit.: Odyssey] See : Epic Odyssey (R) and Ben Hogan Noun 1. Ben Hogan - United States golfer who won many major golf tournaments (1912-1997) Hogan, William Benjamin Hogan (R) brands. For more information visit www.callawaygolf.com.
Callaway Golf Company
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
March 31, December 31,
2006 2005
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $24,414 $49,481
Accounts receivable, net 245,195 98,082
Inventories, net 247,397 241,577
Deferred taxes 38,906 38,192
Income taxes receivable - 2,026
Other current assets 16,152 9,232
------------- ------------
Total current assets 572,064 438,590
Property, plant and equipment, net 128,519 127,739
Intangible assets, net 174,560 175,191
Deferred taxes 5,994 6,516
Other assets 15,198 16,462
------------- ------------
$896,335 $764,498
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $121,256 $102,134
Accrued employee compensation and
benefits 26,428 24,783
Accrued warranty expense 15,196 13,267
Bank line of credit 85,000 -
Other current liabilities 10,815 21
------------- ------------
Total current liabilities 258,695 140,205
Long-term liabilities 27,006 28,245
Shareholders' equity 610,634 596,048
------------- ------------
$896,335 $764,498
============= ============
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended
March 31,
------------------------
2006 2005
--------- ---------
Net sales $302,445 100% $299,857 100%
Cost of sales 170,933 57% 167,251 56%
--------- ---------
Gross profit 131,512 43% 132,606 44%
Operating expenses:
Selling 68,128 23% 75,745 25%
General and administrative 20,224 7% 19,085 6%
Research and development 6,804 2% 6,240 2%
--------- ---------
Total operating expenses 95,156 31% 101,070 34%
Income from operations 36,356 12% 31,536 11%
Other income (expense), net 302 (1,181)
--------- ---------
Income before income taxes 36,658 12% 30,355 10%
Income tax provision 13,797 11,995
--------- ---------
Net Income $22,861 8% $18,360 6%
========= =========
Earnings per common share:
Basic $0.33 $0.27
Diluted $0.33 $0.27
Weighted-average shares outstanding:
Basic 69,166 68,181
Diluted 70,143 68,624
Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Quarter Ended
March 31,
------------------
2006 2005
--------- --------
Cash flows from operating activities:
Net income $22,861 $18,360
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,290 12,186
Loss on disposal of assets 138 210
Non-cash compensation 4,401 1,479
Deferred taxes (227) (589)
Changes in assets and liabilities (128,828) (73,067)
--------- --------
Net cash used in operating activities (94,365) (41,421)
--------- --------
Cash flows from investing activities:
Capital expenditures (7,576) (10,198)
Proceeds from sale of capital assets 120 3
--------- --------
Net cash used in investing activities (7,456) (10,195)
--------- --------
Cash flows from financing activities:
Issuance of Common Stock 5,761 2,053
Acquisition of Treasury Stock (14,788) -
Tax benefit from exercise of stock options 426 41
Proceeds on Line of Credit 122,150 102,000
Payments on Line of Credit (37,150) (55,500)
Payments on financing arrangements (20) -
--------- --------
Net cash provided by financing activities 76,379 48,594
--------- --------
Effect of exchange rate changes on cash and cash
equivalents 375 (766)
Net decrease in cash and cash equivalents (25,067) (3,788)
Cash and cash equivalents at beginning of period 49,481 31,657
--------- --------
Cash and cash equivalents at end of period $24,414 $27,869
========= ========
Callaway Golf Company
Consolidated Net Sales and Operating Segment Information
(In thousands)
(Unaudited)
Net Sales by Product Category
-------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- ----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
Woods $97,120 $65,464 $31,656 48%
Irons 86,560 107,948 (21,388) -20%
Putters 24,878 31,848 (6,970) -22%
Golf balls 55,730 59,033 (3,303) -6%
Accessories and other 38,157 35,564 2,593 7%
--------- --------- --------
$302,445 $299,857 $2,588 1%
========= ========= ========
Net Sales by Region
-------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- ----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
United States $181,283 $185,102 $(3,819) -2%
Europe 50,085 52,128 (2,043) -4%
Japan 26,114 24,852 1,262 5%
Rest of Asia 16,988 14,664 2,324 16%
Other foreign countries 27,975 23,111 4,864 21%
--------- --------- --------
$302,445 $299,857 $2,588 1%
========= ========= ========
Operating Segment Information
-------------------------------------
Quarter Ended
March 31, Growth/(Decline)
------------------- -----------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
Golf clubs $246,715 $240,824 $5,891 2%
Golf balls 55,730 59,033 (3,303) -6%
--------- --------- --------
$302,445 $299,857 $2,588 1%
========= ========= ========
Income before provision for
income taxes:
Golf clubs $45,067 $40,379 $4,688 12%
Golf balls 6,356 1,726 4,630 268%
Reconciling items (1) (14,765) (11,750) (3,015) -26%
--------- --------- --------
$36,658 $30,355 $6,303 21%
========= ========= ========
(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 March 31,
-------------------------------------------
2006
-------------------------------------------
Pro Forma Integration Employee Total as
Callaway Charges Stock Reported
Golf Compensation
--------------------------------------------
Net sales $302,445 $- $- $302,445
Gross profit 132,282 (669) (101) 131,512
% of sales 44% n/a n/a 43%
Operating expenses 92,688 351 2,117 95,156
--------- ---------- ------------ ---------
Income from operations 39,594 (1,020) (2,218) 36,356
Other income (expense),
net 302 - - 302
--------- ---------- ------------ ---------
Loss before income taxes 39,896 (1,020) (2,218) 36,658
Income tax provision 14,993 (395) (801) 13,797
--------- ---------- ------------ ---------
Net Income $24,903 $(625) $(1,417) $22,861
========= ========== ============ =========
Diluted earnings (loss)
per share: $0.36 $(0.01) $(0.02) $0.33
Weighted-average shares
outstanding: 70,143 70,143 70,143 70,143
Quarter Ended March 31,
-------------------------------------------
2005
-------------------------------------------
Pro Forma Integration Employee Total as
Callaway Charges Stock Reported
Golf Compensation
-------------------------------------------
Net sales $299,857 $- $- $299,857
Gross profit 135,689 (3,083) - 132,606
% of sales 45% -1% n/a 44%
Operating expenses 100,228 744 98 101,070
--------- ---------- ------------ ---------
Income from operations 35,461 (3,827) (98) 31,536
Other income (expense), net (1,181) - - (1,181)
--------- ---------- ------------ ---------
Loss before income taxes 34,280 (3,827) (98) 30,355
Income tax provision 13,486 (1,454) (37) 11,995
--------- ---------- ------------ ---------
Net Income $20,794 $(2,373) $(61) $18,360
========= ========== ============ =========
Diluted earnings (loss) per
share: $0.30 $(0.03) $(0.00) $0.27
Weighted-average shares
outstanding: 68,624 68,624 68,624 68,624
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