Callaway Golf Announces Results for Second 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 second quarter ended June June: see month. 30, 2006. Highlights for the quarter include: --Net sales of $341.8 million, an increase of 6% as compared to $323.1 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 68.6 million shares, an increase of 22%, as compared to $0.27 on 68.7 million shares in 2005. --Fully diluted earnings per share include $0.03 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 charges of $0.01 for the integration of Top-Flite operations and $0.01 for the cost-reduction initiatives announced in September September: see month. 2005. The second 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 second quarter of 2006 would have increased 27% to $0.38, as compared to pro forma fully diluted earnings per share of $0.30 for the second quarter of 2005. --Gross profit for the second quarter of 2006 was $140.1 million (or 41% of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight ), a decrease of $6.6 million from $146.7 million (or 45% of net sales) for the second quarter of 2005. Gross margins in the second quarter of 2006 were negatively affected by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.3 million (or one percentage point) due to a golf ball work-in-process inventory adjustment. --Operating expenses for the second quarter of 2006 were $101.3 million, a decrease of $17.7 million compared to $119.0 million in 2005. A majority of the decrease is due to the cost-reduction initiatives announced in September 2005. This decrease also includes a $7.0 million reduction in accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. employee incentive compensation compared to last year. Highlights for the first six months include: --Net sales of $644.3 million, an increase of 3.3% as compared to $623.0 million for the same period in 2005. --Fully diluted earnings per share of $0.65 on 69.4 million shares, an increase of 20%, as compared to $0.54 on 68.6 million shares in 2005. --Fully diluted earnings per share include $0.05 of after-tax charges for employee equity-based compensation associated with FAS 123R as well as $0.02 for the integration of Top-Flite operations and $0.01 associated with the cost-reduction initiatives. The first half of 2005 included after-tax charges of $0.06 for the integration of Top-Flite operations. Excluding these charges, the Company's pro forma fully diluted earnings per share for the first half of 2006 would have increased 22% to $0.73, as compared to pro forma fully diluted earnings per share of $0.60 for the first half of 2005. --Gross profit for the first half of 2006 was $271.6 million (or 42% of net sales), a decrease of $7.7 million from $279.3 million (or 45% of net sales) for the first half of 2005. --Operating expenses for the first half of 2006 were $196.5 million, a decrease of $23.5 million compared to $220.0 million in 2005. A majority of this decrease reflects the cost-reduction initiatives announced in September 2005. This decrease also includes a $4.5 million reduction in accrued employee incentive compensation. "Shortly after joining the Company we announced in September 2005 the implementation of several business improvement and cost-reduction initiatives to improve the manner in which we bring products to market as well as reduce our overall operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ," 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. of Callaway Golf Company. "Our second quarter results reflect the success of these initiatives. Sales of our Callaway Callaway may refer to:
Odyssey Homer’s long, narrative poem centered on Odysseus. [Gk. Lit.: Odyssey] See : Epic Odyssey brands continue to gain momentum in both revenue and market share which indicates that our product line for 2006 is being well received by both our customers and consumers in a very competitive marketplace," continued Mr. Fellows. "In addition, we are also delivering the anticipated savings in operating expenses from our cost-reduction initiatives and expect that a majority of those savings will positively impact earnings with the balance being reinvested in demand creation initiatives, consistent with our commitment. Performance in these two areas is critical to achieving our three year targets." "We also previously announced we would focus on reversing the decline in gross margins that we had been experiencing over the last several years," continued Mr. Fellows. "Our second quarter gross margin results did not meet our expectations due to some unanticipated execution issues and cost increases. Initiatives are in process to begin improving gross margins, but they will not impact results until late 2006 and into next year." Mr. Fellows added, "In addition to the gross margin initiatives, we are also focused on restoring the Top-Flite brand business. We believe that this brand can succeed in the market place and are implementing several initiatives designed to stabilize stabilize See peg. this important brand. I can assure you that these and other such initiatives are a top priority and I hope to share more details by the end of the year." "In summary," continued Mr. Fellows, "we are comfortable with our three year corporate targets. I am pleased with our progress to date, with sales and earnings up for the first half, but recognize there is more to do. Our core brands are performing well and we are aggressively focused on improving our overall profitability." 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 three hours after its conclusion, and will remain available through 9:00 p.m. PDT on Wednesday Wednesday: see week. , August 2, 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 837120. 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 momentum in revenue or market share, future gross margin improvement, restoration of the Top-Flite brand, future operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. savings and reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. , and achievement of three year 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; delays, difficulties or increased costs in manufacturing the Company's products; a decrease in supply or increased costs of the materials needed to manufacture the Company's products; an increase in competitive pricing pressures; 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, the integration of the Company's Top-Flite operations and charges related to the Company's business improvement and cost-reduction initiatives announced in September 2005. 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(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)
June 30, December 31,
2006 2005
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $48,113 $49,481
Accounts receivable, net 257,782 98,082
Inventories, net 232,236 241,577
Income taxes receivable - 2,026
Other current assets 50,108 47,424
--------- ---------
Total current assets 588,239 438,590
Property, plant and equipment, net 136,024 127,739
Intangible assets, net 176,098 175,191
Deferred taxes 4,657 6,516
Other assets 15,072 16,462
--------- ---------
$920,090 $764,498
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $128,930 $102,134
Accrued employee compensation and benefits 20,176 24,783
Accrued warranty expense 15,469 13,267
Bank line of credit 110,300 -
Income taxes payable 10,590 -
Capital leases, current portion - 21
--------- ---------
Total current liablilities 285,465 140,205
Long-term liabilities 26,946 28,245
Shareholders' equity 607,679 596,048
--------- ---------
$920,090 $764,498
========= =========
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended
June 30,
-----------------------
2006 2005
--------- ---------
Net sales $341,815 100% $323,132 100%
Cost of sales 201,729 59% 176,399 55%
--------- ---------
Gross profit 140,086 41% 146,733 45%
Operating expenses:
Selling expense 77,045 23% 90,640 28%
General and administrative expense 18,101 5% 21,239 7%
Research and development expense 6,194 2% 7,083 2%
--------- ---------
Total operating expenses 101,340 30% 118,962 37%
--------- ---------
Income from operations 38,746 11% 27,771 9%
Other expense, net (1,273) (1,806)
--------- ---------
Income before income taxes 37,473 11% 25,965 8%
Income tax provision 14,934 7,573
--------- ---------
Net Income $22,539 7% $18,392 6%
========= =========
Earnings per common share:
Basic $0.33 $0.27
Diluted $0.33 $0.27
Weighted-average shares outstanding:
Basic 67,799 68,270
Diluted 68,577 68,660
Six Months Ended
June 30,
------------------------
2006 2005
--------- ---------
Net sales $644,260 100% $622,989 100%
Cost of goods sold 372,662 58% 343,650 55%
--------- ---------
Gross profit 271,598 42% 279,339 45%
Operating expenses:
Selling expense 145,173 23% 166,385 27%
General and administrative expense 38,325 6% 40,324 6%
Research and development expense 12,998 2% 13,323 2%
--------- ---------
Total operating expenses 196,496 30% 220,032 35%
--------- ---------
Income from operations 75,102 12% 59,307 10%
Other expense, net (971) (2,987)
--------- ---------
Income before income taxes 74,131 12% 56,320 9%
Provision for income taxes 28,731 19,568
--------- ---------
Net income $45,400 7% $36,752 6%
========= =========
Earnings per common share:
Basic $0.66 $0.54
Diluted $0.65 $0.54
Weighted-average shares outstanding:
Basic 68,479 68,226
Diluted 69,356 68,643
Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
------------------
2006 2005
--------- --------
Cash flows from operating activities:
Net income $45,400 $36,752
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 15,225 22,659
Non-cash compensation 6,331 3,957
Loss on disposal of assets 324 856
Deferred taxes 1,165 (1,184)
Changes in assets and liabilities, net of
effects of acquisitions (114,383) (67,378)
--------- --------
Net cash used in operating activities (45,938) (4,338)
--------- --------
Cash flows from investing activities:
Capital expenditures (20,463) (19,046)
Business acquisition, net of cash acquired (5,911) -
Proceeds from sale of capital assets 120 20
--------- --------
Net cash used in investing activities (26,254) (19,026)
--------- --------
Cash flows from financing activities:
Issuance of Common Stock 6,519 3,560
Dividends paid, net (4,901) (4,853)
Acquisition of Treasury Stock (42,894) (39)
Tax benefit from exercise of stock options 481 269
Proceeds from Line of Credit, net 110,300 37,000
Payments on financing arrangements (20) (22)
--------- --------
Net cash provided by financing activities 69,485 35,915
--------- --------
Effect of exchange rate changes on cash
and cash equivalents 1,339 (1,552)
--------- --------
Net increase (decrease) in cash and cash
equivalents (1,368) 10,999
Cash and cash equivalents at beginning of period 49,481 31,657
--------- --------
Cash and cash equivalents at end of period $48,113 $42,656
========= ========
Callaway Golf Company
Consolidated Net Sales and Operating Segment Information
(In thousands)
(Unaudited)
Net Sales by Product Category
-------------------------------------------
Quarter Ended
June 30, Growth/(Decline)
------------------- -----------------------
2006 2005 Dollars Percent
--------- --------- --------------- -------
Net sales:
Woods $86,319 $69,583 $16,736 24%
Irons 106,800 111,686 (4,886) -4%
Putters 37,313 33,976 3,337 10%
Golf balls 69,103 70,759 (1,656) -2%
Accessories and other 42,280 37,128 5,152 14%
--------- --------- ---------------
$341,815 $323,132 $18,683 6%
========= ========= ===============
Six Months Ended
June 30, Growth/(Decline)
------------------- -----------------------
2006 2005 Dollars Percent
--------- --------- --------------- -------
Net sales:
Woods $183,439 $135,047 $48,392 36%
Irons 195,770 219,634 (23,864) -11%
Putters 62,191 65,824 (3,633) -6%
Golf balls 124,833 129,792 (4,959) -4%
Accessories and other 78,027 72,692 5,335 7%
--------- --------- ---------------
$644,260 $622,989 $21,271 3%
========= ========= ===============
Net Sales by Region
-------------------------------------------
Quarter Ended
June 30, Growth/(Decline)
------------------- -----------------------
2006 2005 Dollars Percent
--------- --------- --------------- -------
Net sales:
United States $186,349 $181,453 $4,896 3%
Europe 54,336 56,568 (2,232) -4%
Japan 34,042 30,274 3,768 12%
Rest of Asia 25,561 19,064 6,497 34%
Other foreign countries 41,527 35,773 5,754 16%
--------- --------- ---------------
$341,815 $323,132 $18,683 6%
========= ========= ===============
Six Months Ended
June 30, Growth/(Decline)
------------------- -----------------------
2006 2005 Dollars Percent
--------- --------- --------------- -------
Net sales:
United States $367,632 $366,554 $1,078 0%
Europe 104,421 107,731 (3,310) -3%
Japan 60,156 55,127 5,029 9%
Rest of Asia 42,549 33,729 8,820 26%
Other foreign countries 69,502 59,848 9,654 16%
--------- --------- ---------------
$644,260 $622,989 $21,271 3%
========= ========= ===============
Operating Segment Information
--------------------------------------------
Quarter Ended
June 30, Growth/(Decline)
------------------- ------------------------
2006 2005 Dollars Percent
--------- --------- -------- -------
Net sales:
Golf clubs $272,712 $252,373 $20,339 8%
Golf balls 69,103 70,759 (1,656) -2%
--------- --------- ------------
$341,815 $323,132 $18,683 6%
========= ========= ============
Income before provision
for income taxes:
Golf clubs $50,327 $33,365 $16,962 51%
Golf balls 545 6,018 (5,473) -91%
Reconciling items (13,399) (13,418) 19 0%
--------- --------- ------------
$37,473 $25,965 $11,508 44%
========= ========= ============
Six Months Ended
June 30, Growth/(Decline)
--------------------- ----------------------
2006 2005 Dollars Percent
--------- --------- -------- ----------
Net sales:
Golf clubs $519,427 $493,197 $26,230 5%
Golf balls 124,833 129,792 (4,959) -4%
--------- --------- ------------
$644,260 $622,989 $21,271 3%
========= ========= ============
Income before provision
for income taxes:
Golf clubs $95,395 $73,744 $21,651 29%
Golf balls 6,902 7,744 (842) -11%
Reconciling
items (28,166) (25,168) (2,998) -12%
--------- --------- ------------
$74,131 $56,320 $17,811 32%
========= ========= ============
Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Quarter Ended June 30,
--------------------------------------------------------
2006
--------------------------------------------------------
Pro Forma Integration Restructuring Employee Total as
Callaway Charges Charges Stock Reported
Golf Compensation
---------- --------- ------------- ------------- ---------
Net sales $341,815 $- $- $- $341,815
Gross
profit 141,859 (1,516) (96) (161) 140,086
% of sales 42% n/a n/a n/a 41%
Operating
expenses 98,095 218 474 2,553 101,340
--------- -------- ------- -------- ---------
Income (loss)
from
operations 43,764 (1,734) (570) (2,714) 38,746
Other
expense,
net (1,273) - - - (1,273)
--------- -------- ------- -------- ---------
Income before
income
taxes 42,491 (1,734) (570) (2,714) 37,473
Provision
for income
taxes 16,635 (662) (213) (826) 14,934
--------- -------- ------- -------- ---------
Net income
(loss) $25,856 $(1,072) $(357) $(1,888) $22,539
========= ======== ======= ======== =========
Diluted earnings
(loss) per
share: $0.38 $(0.01) $(0.01) $(0.03) $0.33
Weighted-average
shares
outstanding: 68,577 68,577 68,577 68,577 68,577
Quarter Ended June 30,
--------------------------------------------------------
2005
--------------------------------------------------------
Pro Forma Integration Restructuring Employee Total as
Callaway Charges Charges Stock Reported
Golf Compensation
---------- ---------- ------------- ------------- ---------
Net sales $323,132 $- $- $- $323,132
Gross
profit 148,027 (1,294) - - 146,733
% of sales 46% n/a n/a n/a 45%
Operating
expenses 116,880 1,966 - 116 118,962
--------- -------- ------- -------- ---------
Income (loss)
from
operations 31,147 (3,260) - (116) 27,771
Other expense,
net (1,806) - - - (1,806)
--------- -------- ------- -------- ---------
Income before
income
taxes 29,341 (3,260) - (116) 25,965
Provision
for income
taxes 8,856 (1,239) - (44) 7,573
--------- -------- ------- -------- ---------
Net income
(loss) $20,485 $(2,021) $- $(72) $18,392
========= ======== ======= ======== =========
Diluted earnings
(loss) per
share: $0.30 $(0.03) $- $(0.00) $0.27
Weighted-average
shares
outstanding: 68,660 68,660 68,660 68,660 68,660
Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
--------------------------------------------------------
2006
--------------------------------------------------------
Pro Forma Integration Restructuring Employee Total as
Callaway Charges Charges Stock Reported
Golf Compensation
---------- ---------- ------------- ------------- ---------
Net sales $644,260 $- $- $- $644,260
Gross
profit 274,141 (2,171) (110) (262) 271,598
% of sales 43% n/a n/a n/a 42%
Operating
expenses 190,783 593 450 4,670 196,496
--------- -------- ------- -------- ---------
Income (loss)
from
operations 83,358 (2,764) (560) (4,932) 75,102
Other expense,
net (971) - - - (971)
--------- -------- ------- -------- ---------
Income (loss)
before
income
taxes 82,387 (2,764) (560) (4,932) 74,131
Provision
for income
taxes 31,628 (1,061) (209) (1,627) 28,731
--------- -------- ------- -------- --------
Net income
(loss) $50,759 $(1,703) $(351) $(3,305) $45,400
========= ======== ======= ======== ========
Diluted earnings
(loss) per
share: $0.73 $(0.02) $(0.01) $(0.05) $0.65
Weighted-average
shares
outstanding: 69,356 69,356 69,356 69,356 69,356
Six Months Ended June 30,
--------------------------------------------------------
2005
-------------------------------------------------------
Pro Forma Integration Restructuring Employee Total as
Callaway Charges Charges Stock Reported
Golf Compensation
----------- --------- ------------- ------------- ---------
Net sales $622,989 $- $- $- $622,989
Gross
profit 283,716 (4,377) - - 279,339
% of sales 46% n/a n/a n/a 45%
Operating
expenses 217,108 2,710 - 214 220,032
--------- -------- ------- -------- ---------
Income (loss)
from
operations 66,608 (7,087) - (214) 59,307
Other expense,
net (2,987) - - - (2,987)
--------- -------- ------- -------- ---------
Income (loss)
before
income
taxes 63,621 (7,087) - (214) 56,320
Provision for
income
taxes 22,342 (2,693) - (81) 19,568
--------- -------- ------- -------- ---------
Net income
(loss) $41,279 $(4,394) $- $(133) $36,752
========= ======== ======= ======== =========
Diluted earnings
(loss) per
share: $0.60 $(0.06) $- $(0.00) $0.54
Weighted-average
shares
outstanding: 68,643 68,643 68,643 68,643 68,643
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