CARLSBAD, Calif., July 25, 2013 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) today announced its second quarter and first
half 2013 financial results. The announced results were generally
consistent with the first half guidance provided by the Company
last quarter and, consistent with the Company's recent turnaround
initiatives, reflect improved brand momentum, operating
efficiencies and cost management.
Despite softer than expected market conditions in the golf
industry, the Company's results include 6% sales growth for the
first half of 2013, and 1% sales growth for the second quarter of
2013, both on a constant currency basis on its current business,
which excludes the brands and businesses that in 2012 were sold or
transitioned to a third party model. The Company's GAAP sales
results reflect the impact of the sold or transitioned businesses,
which negatively impacted GAAP sales comparisons by approximately
$45 million for the first half of
2013 and by approximately $25 million
for the second quarter of 2013. The reported GAAP sales
results were also impacted by changes in foreign currency rates in
2013 as compared to 2012, which adversely affected sales by
approximately $18 million for the
first half of 2013 and by approximately $10
million for the second quarter of 2013. GAAP sales, which
include the impact of foreign currency and the sold or transitioned
businesses, decreased by 5% and 11% for the first half
and second quarter of 2013, respectively.
The Company's improved brand momentum, operating efficiencies
and cost management enabled the Company to overcome the softer than
expected market conditions, adverse effects of the changes in
foreign currency rates, and the impact of the sold or transitioned
businesses. As a result, the Company reported improvements in
operating income and earnings per share on a GAAP and non-GAAP
basis for both the first half of 2013 and second quarter of 2013 as
compared to the same periods in 2012.
GAAP RESULTS.
For the second quarter of 2013, the Company reported the
following GAAP results:
Dollars in
millions except per share amounts
|
2013
|
% of Sales
|
2012
|
% of Sales
|
Improvement /
(Decline)
|
Net Sales
|
$250
|
-
|
$281
|
-
|
($31)
|
Gross
Profit
|
$96
|
38.3%
|
$111
|
39.4%
|
($15)
|
Operating
Expenses
|
$84
|
34%
|
$101
|
36%
|
$17
|
Operating
Income
|
$11
|
5%
|
$10
|
3%
|
$1
|
Net Income
|
$10
|
4%
|
$3
|
1%
|
$7
|
Earnings per
share
|
$0.12
|
-
|
$0.00
|
-
|
$0.12
|
For the first half of 2013, the Company reported the following
GAAP results:
Dollars in
millions except per share amounts
|
2013
|
% of Sales
|
2012
|
% of Sales
|
Improvement /
(Decline)
|
Net Sales
|
$537
|
-
|
$566
|
-
|
($29)
|
Gross
Profit
|
$226
|
42.1%
|
$235
|
41.5%
|
($9)
|
Operating
Expenses
|
$174
|
33%
|
$198
|
35%
|
$24
|
Operating
Income
|
$52
|
10%
|
$37
|
7%
|
$15
|
Net Income
|
$52
|
10%
|
$35
|
6%
|
$17
|
Earnings per
share
|
$0.59
|
-
|
$0.41
|
-
|
$0.18
|
NON-GAAP 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 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 second quarter of 2013, the Company reported the
following non-GAAP results:
Dollars in
millions except per share amounts
|
2013
|
% of Sales
|
2012
|
% of Sales
|
Improvement /
(Decline)
|
Net Sales
|
$250
|
-
|
$281
|
-
|
($31)
|
Gross
Profit
|
$100
|
40.0%
|
$112
|
39.7%
|
($12)
|
Operating
Expenses
|
$83
|
33%
|
$97
|
35%
|
$14
|
Operating
Income
|
$16
|
7%
|
$14
|
5%
|
$2
|
Net Income
|
$10
|
4%
|
$6
|
2%
|
$4
|
Earnings per
share
|
$0.12
|
-
|
$0.05
|
-
|
$0.07
|
For the first half of 2013, the Company reported the following
non-GAAP results:
Dollars in
millions except per share amounts
|
2013
|
% of Sales
|
2012
|
% of Sales
|
Improvement /
(Decline)
|
Net Sales
|
$537
|
-
|
$566
|
-
|
($29)
|
Gross
Profit
|
$232
|
43.3%
|
$236
|
41.7%
|
($4)
|
Operating
Expenses
|
$172
|
32%
|
$201
|
35%
|
$29
|
Operating
Income
|
$60
|
11%
|
$35
|
6%
|
$25
|
Net Income
|
$39
|
7%
|
$21
|
4%
|
$18
|
Earnings per
share
|
$0.45
|
-
|
$0.25
|
-
|
$0.20
|
"We are pleased with the results for the second quarter and
first half of the year, with continued gains in market share in
most major markets driving an increase in sales on a constant
currency, continuing business basis of 1% and 6% respectively,"
commented Chip Brewer, President and
Chief Executive Officer. "Likewise, non-GAAP net income for
the second quarter and first half of the year increased 71% and
86%, respectively, compared to the same periods in 2012. Our
turnaround plan remains on track and we have been able to continue
to grow our hard goods market share despite market conditions that
remained challenging during the quarter due to both continued
adverse weather conditions and higher than normal promotional
activity in both North America and
Europe."
"Our new products, and in particular our X Hot line of woods and
irons, have resonated well this year with consumers globally,"
continued Mr. Brewer. "Additionally, we are equally excited about
the new products being introduced during the second half of this
year, which include the new OptiForce driver and fairway woods, the
Mack Daddy 2 wedges designed by Roger
Cleveland, as well as our new Legacy Black product line to
be introduced in Japan and the
rest of Asia later this quarter.
However, due to softer than expected market conditions and
increased promotional activity, we are reducing our full year sales
guidance and indicating in our revised earnings guidance that it is
unclear whether our improved operating performance will be able to
continue to offset fully the reduced sales estimates as we have
been able to so far this year."
Business Outlook
Because of softer than expected market conditions and increased
promotional activity, the Company is revising its full year
financial guidance. The Company is currently providing the
following revised guidance for the full year 2013:
- Net sales for the full year 2013 are currently estimated to be
$810-$820 million, compared to
previous guidance of $830
million. Net sales for 2012 were $834 million, which included sales of
$60 million related to the brands and
products that in 2012 were sold or transitioned to a third party
model. Excluding sales from the sold or transitioned
businesses, the Company estimates that net sales from its current
business on a constant currency basis will increase by
approximately 10% compared to 2012.
- For the full year 2013, the Company estimates a non-GAAP
pre-tax loss within a range of $9
million to breakeven, which based upon an assumed tax rate
of 38.5% equates to an estimated non-GAAP net loss within a range
of $6 million to breakeven and a
non-GAAP loss per share of $0.12-$0.04 including the impact of dividends
paid on the Company's outstanding convertible preferred stock. The
Company's prior guidance was for net income at breakeven and a loss
per share of $0.04. For the full year
2012, the Company's non-GAAP loss was $43
million with a non-GAAP loss per share of $0.77.*
*Note: The non-GAAP estimates of earnings/loss exclude
for 2013 carryover charges related to the Company's 2012
cost-reduction initiatives and exclude for 2012 gains and charges
related to the sale of the Top-Flite/Ben Hogan brands and the 2012
cost-reduction initiatives. The non-GAAP estimates for both
2013 and 2012 are based upon an assumed tax rate of 38.5% for
comparative purposes because the GAAP tax rates are not directly
correlated to the Company's pre-tax results due to the effect of
the Company's deferred tax valuation allowance.
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, business and outlook for the balance of
2013. 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, August 1, 2013. 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 19421069.
Non-GAAP 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 financial information as follows:
Constant Currency Basis. The Company provided
certain information regarding the Company's net sales or projected
net sales on a "constant currency basis." This information
estimates the impact of changes in foreign currency rates on the
translation of the Company's current or projected future period net
sales as compared to the applicable comparable prior period.
This impact is derived by taking the current or projected local
currency results and translating them into U.S. Dollars based upon
the foreign currency exchange rates for the applicable comparable
prior period. It does not include any other effect of changes in
foreign currency rates on the Company's results or
business.
Excluded Items. The Company presented certain of
the Company's financial results excluding (i) the gain recognized
in connection with the sale of the Top-Flite and Ben Hogan brands,
(ii) charges related to the 2012 cost-reduction initiatives, or
(iii) sales related to the Top-Flite and Ben Hogan brands or the
products that were transitioned in 2012 to a third party model,
including U.S. apparel and footwear.
Adjusted EBITDA. The Company provided information about
its results, excluding interest, taxes, depreciation and
amortization expenses, and impairment charges ("Adjusted
EBITDA").
Assumed Tax Rate. As a result of the Company's previously
reported deferred tax valuation allowance that was first
established in 2011, the Company's GAAP tax rate is not directly
correlated to the Company's pre-tax results. For comparative
purposes, the Company has provided certain of the Company's
income/loss and earnings/loss per share information and Adjusted
EBITDA information based upon an assumed tax rate of 38.5%. The
difference between the Company's actual tax rate and this assumed
tax rate for historical periods is reflected on the attached
schedules under "Non-Cash Tax Adjustment."
The non-GAAP information presented 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 this press release and 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 2013 sales, sales growth, pre-tax and net loss and loss
per share for 2013, anticipated market conditions and promotional
activity for the balance of 2013, the success of the Company's new
products, the success of the Company's recovery/turnaround, and
long-term outlook 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 2012
cost-reduction initiatives; consumer acceptance of and demand for
the Company's products; the level of promotional activity in the
marketplace; future consumer discretionary purchasing activity,
which can be significantly adversely affected by unfavorable
economic or market conditions; and future changes in foreign
currency exchange rates and the degree of effectiveness of the
Company's hedging programs. Actual results may differ materially
from those estimated or anticipated as a result of these risks and
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, 2012 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 and services designed to make every golfer a better
golfer. Callaway Golf Company manufactures and sells golf clubs and
golf balls, and sells golf apparel, footwear and accessories, under
the Callaway Golf® and Odyssey® brands in more than 110 countries
worldwide. For more information please visit
www.callawaygolf.comor
shop.callawaygolf.com.
Contacts:
|
Brad
Holiday
|
|
Patrick
Burke
|
|
(760)
931-1771
|
(Logo: http://photos.prnewswire.com/prnh/20091203/CGLOGO)
Callaway Golf
Company
|
Consolidated
Condensed Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
29,959
|
|
$
52,003
|
|
|
Accounts receivable,
net
|
|
|
229,290
|
|
91,072
|
|
|
Inventories
|
|
|
|
187,230
|
|
211,734
|
|
|
Assets held for
sale
|
|
|
|
-
|
|
2,396
|
|
|
Other current
assets
|
|
|
|
32,216
|
|
29,791
|
|
|
Total current assets
|
|
|
|
478,695
|
|
386,996
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
76,019
|
|
89,093
|
|
Intangible assets,
net
|
|
|
|
117,350
|
|
118,223
|
|
Other
assets
|
|
|
|
|
43,636
|
|
43,324
|
|
|
Total assets
|
|
|
|
$ 715,700
|
|
$
637,636
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$ 127,688
|
|
$
129,021
|
|
|
Accrued employee
compensation and benefits
|
|
25,443
|
|
20,649
|
|
|
Accrued warranty
expense
|
|
|
8,241
|
|
7,539
|
|
|
Other current
liabilities
|
|
|
|
5,534
|
|
4,357
|
|
|
Asset-based credit
facility
|
|
|
38,500
|
|
-
|
|
|
Total current liabilities
|
|
|
205,406
|
|
161,566
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
|
152,262
|
|
154,362
|
|
Shareholders'
equity
|
|
|
|
358,032
|
|
321,708
|
|
|
Total liabilities and shareholders' equity
|
|
$ 715,700
|
|
$
637,636
|
|
Callaway Golf
Company
|
Statements of
Operations
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Net sales
|
|
$ 249,646
|
|
$ 281,123
|
Cost of
sales
|
153,994
|
|
170,470
|
Gross
profit
|
95,652
|
|
110,653
|
Operating
expenses:
|
|
|
|
|
Selling
|
61,672
|
|
75,711
|
|
General and
administrative
|
15,169
|
|
18,446
|
|
Research and
development
|
7,333
|
|
6,930
|
|
|
Total operating
expenses
|
84,174
|
|
101,087
|
Income from
operations
|
11,478
|
|
9,566
|
Other income
(expense), net
|
28
|
|
(4,571)
|
Income before income
taxes
|
11,506
|
|
4,995
|
Income tax
provision
|
1,435
|
|
2,196
|
Net income
|
10,071
|
|
2,799
|
Dividends on
convertible preferred stock
|
783
|
|
2,625
|
Net income allocable
to common shareholders
|
$
9,288
|
|
$
174
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$0.13
|
|
$0.00
|
|
Diluted
|
$0.12
|
|
$0.00
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
71,111
|
|
65,060
|
|
Diluted
|
86,349
|
|
65,112
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Net sales
|
|
$ 537,402
|
|
$ 566,221
|
Cost of
sales
|
311,314
|
|
331,197
|
Gross
profit
|
226,088
|
|
235,024
|
Operating
expenses:
|
|
|
|
|
Selling
|
129,980
|
|
152,549
|
|
General and
administrative
|
29,756
|
|
30,680
|
|
Research and
development
|
14,746
|
|
14,403
|
|
|
Total operating
expenses
|
174,482
|
|
197,632
|
Income from
operations
|
51,606
|
|
37,392
|
Other income
(expense), net
|
4,029
|
|
(887)
|
Income before income
taxes
|
55,635
|
|
36,505
|
Income tax
provision
|
3,904
|
|
1,904
|
Net income
|
51,731
|
|
34,601
|
Dividends on
convertible preferred stock
|
1,566
|
|
5,250
|
Net income allocable
to common shareholders
|
$
50,165
|
|
$
29,351
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$0.71
|
|
$0.45
|
|
Diluted
|
$0.59
|
|
$0.41
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
71,086
|
|
65,021
|
|
Diluted
|
92,235
|
|
84,950
|
Callaway Golf
Company
|
Consolidated
Condensed Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
|
$
51,731
|
|
$
34,601
|
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
13,428
|
|
18,234
|
|
|
|
Deferred taxes,
net
|
|
|
200
|
|
(1,746)
|
|
|
|
Non-cash share-based
compensation
|
|
1,670
|
|
1,896
|
|
|
|
Loss (gain) on
disposal of long-lived assets
|
|
|
|
2,644
|
|
(975)
|
|
|
|
Gain on sale of
intangible assets
|
|
|
|
-
|
|
(6,602)
|
|
|
|
Discount amortization
on convertible notes
|
|
|
|
344
|
|
-
|
|
|
|
Changes in assets and
liabilities
|
|
(137,057)
|
|
(136,688)
|
|
|
Net cash used in
operating activities
|
|
(67,040)
|
|
(91,280)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6,004)
|
|
(14,115)
|
|
|
Net proceeds from
sale of intangible assets
|
-
|
|
26,861
|
|
|
Proceeds from sale of
property, plant and equipment
|
3,935
|
|
70
|
|
|
Other investing
activities
|
|
|
(1,480)
|
|
-
|
|
|
Net cash (used in)
provided by investing activities
|
(3,549)
|
|
12,816
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(2,989)
|
|
(6,554)
|
|
|
Proceeds from credit
facilities, net
|
|
38,500
|
|
70,150
|
|
|
Other financing
activities
|
|
|
-
|
|
69
|
|
|
Net cash provided by
financing activities
|
|
35,511
|
|
63,665
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
13,034
|
|
(238)
|
|
Net decrease in cash
and cash equivalents
|
|
(22,044)
|
|
(15,037)
|
|
Cash and cash
equivalents at beginning of period
|
52,003
|
|
43,023
|
|
Cash and cash
equivalents at end of period
|
|
$
29,959
|
|
$
27,986
|
|
Callaway Golf
Company
|
Consolidated Net
Sales, Operating Segment Information and Non-GAAP
Reconciliation
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
Growth/(Decline)
|
|
|
|
June 30,
|
|
Growth/(Decline)
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
71,945
|
|
$
58,549
|
|
$
13,396
|
|
23%
|
|
|
|
$
171,446
|
|
$
149,278
|
|
$
22,168
|
|
15%
|
|
|
|
|
|
|
|
|
|
Irons
|
|
55,519
|
|
57,825
|
|
(2,306)
|
|
-4%
|
|
|
|
113,020
|
|
116,141
|
|
(3,121)
|
|
-3%
|
|
|
|
|
|
|
|
|
|
Putters
|
22,880
|
|
38,873
|
|
(15,993)
|
|
-41%
|
|
|
|
55,430
|
|
62,965
|
|
(7,535)
|
|
-12%
|
|
|
|
|
|
|
|
|
|
Golf balls
|
43,428
|
|
49,838
|
|
(6,410)
|
|
-13%
|
|
|
|
86,413
|
|
92,384
|
|
(5,971)
|
|
-6%
|
|
|
|
|
|
|
|
|
|
Accessories and
other
|
55,874
|
|
76,038
|
|
(20,164)
|
|
-27%
|
|
|
|
111,093
|
|
145,453
|
|
(34,360)
|
|
-24%
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
$
249,646
|
|
$
281,123
|
|
$
(31,477)
|
|
-11%
|
|
|
|
$
537,402
|
|
$
566,221
|
|
$
(28,819)
|
|
-5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
|
Net Sales by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency Excluding
Businesses Sold or
Transitioned Growth vs.
2012 (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency
Excluding
Businesses Sold or
Transitioned Growth vs. 2012
(1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Constant
Currency
|
|
|
|
|
Six Months
Ended
|
|
Constant
Currency Growth vs.
2012(1)
|
|
|
|
|
|
June 30,
|
|
Growth/(Decline)
|
|
Growth vs.
2012(1)
|
|
|
|
|
June 30,
|
|
Growth/(Decline)
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
124,368
|
|
$
142,343
|
|
$
(17,975)
|
|
-13%
|
|
-13%
|
|
1%
|
|
|
|
$
284,147
|
|
$
292,042
|
|
$
(7,895)
|
|
-3%
|
|
-3%
|
|
9%
|
|
Europe
|
40,152
|
|
43,443
|
|
(3,291)
|
|
-8%
|
|
-5%
|
|
-1%
|
|
|
|
78,448
|
|
86,142
|
|
(7,694)
|
|
-9%
|
|
-7%
|
|
-2%
|
|
Japan
|
|
36,718
|
|
36,978
|
|
(260)
|
|
-1%
|
|
23%
|
|
23%
|
|
|
|
80,844
|
|
79,233
|
|
1,611
|
|
2%
|
|
22%
|
|
22%
|
|
Rest of
Asia
|
22,863
|
|
26,613
|
|
(3,750)
|
|
-14%
|
|
-16%
|
|
-16%
|
|
|
|
42,963
|
|
44,609
|
|
(1,646)
|
|
-4%
|
|
-6%
|
|
-6%
|
|
Other foreign
countries
|
25,545
|
|
31,746
|
|
(6,201)
|
|
-20%
|
|
-18%
|
|
-7%
|
|
|
|
51,000
|
|
64,195
|
|
(13,195)
|
|
-21%
|
|
-19%
|
|
-5%
|
|
|
|
|
$
249,646
|
|
$
281,123
|
|
$
(31,477)
|
|
-11%
|
|
-8%
|
|
1%
|
|
|
|
$
537,402
|
|
$
566,221
|
|
$
(28,819)
|
|
-5%
|
|
-2%
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2012 exchange
rates to 2013 reported sales in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
(2)Calculated by applying 2012 exchange
rates to 2013 reported sales in regions outside the U.S. and
excludes sales related to businesses sold or transitioned to a
third party model.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
|
Operating Segment
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
June 30,
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth/(Decline)
|
|
|
|
|
|
|
Growth/(Decline)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$
206,218
|
|
$
231,285
|
|
$
(25,067)
|
|
-11%
|
|
|
|
$
450,989
|
|
$
473,837
|
|
$
(22,848)
|
|
-5%
|
|
|
|
|
|
|
|
|
|
Golf balls
|
43,428
|
|
49,838
|
|
(6,410)
|
|
-13%
|
|
|
|
86,413
|
|
92,384
|
|
(5,971)
|
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
249,646
|
|
$
281,123
|
|
$
(31,477)
|
|
-11%
|
|
|
|
$
537,402
|
|
$
566,221
|
|
$
(28,819)
|
|
-5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf
clubs(1)
|
$
20,831
|
|
$
17,953
|
|
$
2,878
|
|
16%
|
|
|
|
$
64,821
|
|
$
50,595
|
|
$
14,226
|
|
28%
|
|
|
|
|
`
|
|
|
|
|
Golf balls
(1)
|
710
|
|
4,162
|
|
(3,452)
|
|
-83%
|
|
|
|
6,896
|
|
5,739
|
|
1,157
|
|
-20%
|
|
|
|
|
|
|
|
|
|
Reconciling items
(2)
|
|
|
(10,035)
|
|
(17,120)
|
|
7,085
|
|
-41%
|
|
|
|
(16,082)
|
|
(19,829)
|
|
3,747
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
$
11,506
|
|
$
4,995
|
|
$
6,511
|
|
130%
|
|
|
|
$
55,635
|
|
$
36,505
|
|
$
19,130
|
|
52%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)In
connection with the Cost Reduction Initiatives, the Company's golf
clubs and golf balls segments recognized pre-tax charges of $0.6
million and $4.1 million, respectively, during the three months
ended June 30, 2013, and $1.7 million and $0.3 million,
respectively, during the three months ended June 30, 2012. The
Company's golf clubs and golf balls segments recognized pre-tax
charges of $3.3 million and $4.2 million, respectively, during the
six months ended June 30, 2013, in connection with these
initiatives, and $1.7 million and $0.3 million, respectively,
during the six months ended June 30, 2012.
|
|
|
|
|
|
|
|
(2)Represents corporate general and
administrative expenses and other income (expense) not utilized by
management in determining segment profitability.
|
|
|
|
|
|
|
|
|
|
|
|
|
Callaway Golf
Company
|
Supplemental
Financial Information - Non-GAAP Information and
Reconciliation
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation to GAAP Reported Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June
30,
|
|
|
|
|
|
Quarter Ended June
30,
|
|
|
2013
|
|
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Non-Cash Tax
Adjustment(2)
|
|
Total as
Reported
|
|
|
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Gain on Sale of TF/BH
(1)
|
|
Non-Cash Tax
Adjustment(2)
|
|
Total as
Reported
|
|
Net sales
|
$
249,646
|
|
$
-
|
|
$
-
|
|
$
249,646
|
|
|
|
|
|
$
281,123
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
281,123
|
|
Gross
profit
|
99,739
|
|
(4,087)
|
|
-
|
|
95,652
|
|
|
|
|
|
111,590
|
|
(937)
|
|
-
|
|
-
|
|
110,653
|
|
% of sales
|
40%
|
|
-2%
|
|
n/a
|
|
38%
|
|
|
|
|
|
40%
|
|
-1%
|
|
n/a
|
|
n/a
|
|
39%
|
|
Operating
expenses
|
83,263
|
|
911
|
|
-
|
|
84,174
|
|
|
|
|
|
97,367
|
|
3,706
|
|
14
|
|
-
|
|
101,087
|
|
Income from
operations
|
16,476
|
|
(4,998)
|
|
-
|
|
11,478
|
|
|
|
|
|
14,223
|
|
(4,643)
|
|
(14)
|
|
-
|
|
9,566
|
|
Other income,
(expense) net
|
28
|
|
-
|
|
-
|
|
28
|
|
|
|
|
|
(4,571)
|
|
-
|
|
-
|
|
-
|
|
(4,571)
|
|
Income (loss) before
income taxes
|
16,504
|
|
(4,998)
|
|
-
|
|
11,506
|
|
|
|
|
|
9,652
|
|
(4,643)
|
|
(14)
|
|
-
|
|
4,995
|
|
Income tax provision
(benefit)
|
6,354
|
|
(1,924)
|
|
(2,995)
|
|
1,435
|
|
|
|
|
|
3,717
|
|
(1,788)
|
|
(5)
|
|
272
|
|
2,196
|
|
Net income (loss)
allocable to common shareholders
|
10,150
|
|
(3,074)
|
|
2,995
|
|
10,071
|
|
|
|
|
|
5,935
|
|
(2,855)
|
|
(9)
|
|
(272)
|
|
2,799
|
|
Dividends on
convertible preferred stock
|
783
|
|
-
|
|
-
|
|
783
|
|
|
|
|
|
2,625
|
|
-
|
|
-
|
|
-
|
|
2,625
|
|
Net income (loss)
allocable to common shareholders
|
$
9,367
|
|
$
(3,074)
|
|
$
2,995
|
|
$
9,288
|
|
|
|
|
|
$
3,310
|
|
$
(2,855)
|
|
$
(9)
|
|
$
(272)
|
|
$
174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
0.12
|
|
$
(0.04)
|
|
$
0.04
|
|
$
0.12
|
|
|
|
|
|
$
0.05
|
|
$
(0.04)
|
|
$
(0.00)
|
|
$
(0.01)
|
|
$
0.00
|
|
Weighted-average
shares
outstanding:
|
86,349
|
|
86,349
|
|
86,349
|
|
86,349
|
|
|
|
|
|
65,112
|
|
65,112
|
|
65,112
|
|
65,112
|
|
65,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)For
comparative purposes, the Company applied an annualized statutory
tax rate of 38.5% to derive non-GAAP results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)Impact
of applying statutory tax rate of 38.5% to non-GAAP
results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)Includes costs associated with the
reorganization of the Company's golf ball manufacturing supply
chain, workforce reductions and costs related to transitioning to a
third party model for the U.S. apparel, footwear and uPro GPS
businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
2013
|
|
|
|
|
|
2012
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Non-Cash Tax
Adjustment (2)
|
|
Total as
Reported
|
|
|
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Gain on Sale of
Top-Flite & Ben Hogan(1)
|
|
Non-Cash Tax
Adjustment (2)
|
|
Total as
Reported
|
|
Net sales
|
$
537,402
|
|
$
-
|
|
$
-
|
|
$
537,402
|
|
|
|
|
|
$
566,221
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
566,221
|
|
Gross
profit
|
232,457
|
|
(6,369)
|
|
-
|
|
226,088
|
|
|
|
|
|
235,985
|
|
(961)
|
|
-
|
|
-
|
|
235,024
|
|
% of sales
|
43%
|
|
-1%
|
|
n/a
|
|
42%
|
|
|
|
|
|
42%
|
|
0%
|
|
n/a
|
|
n/a
|
|
42%
|
|
Operating
expenses
|
172,344
|
|
2,138
|
|
-
|
|
174,482
|
|
|
|
|
|
200,524
|
|
3,710
|
|
(6,602)
|
|
-
|
|
197,632
|
|
Income (expense) from
operations
|
60,113
|
|
(8,507)
|
|
-
|
|
51,606
|
|
|
|
|
|
35,461
|
|
(4,671)
|
|
6,602
|
|
-
|
|
37,392
|
|
Other income
(expense), net
|
4,029
|
|
-
|
|
-
|
|
4,029
|
|
|
|
|
|
(887)
|
|
-
|
|
-
|
|
-
|
|
(887)
|
|
Income (loss) before
income taxes
|
64,142
|
|
(8,507)
|
|
-
|
|
55,635
|
|
|
|
|
|
34,574
|
|
(4,671)
|
|
6,602
|
|
-
|
|
36,505
|
|
Income tax provision
(benefit)
|
24,695
|
|
(3,275)
|
|
(17,516)
|
|
3,904
|
|
|
|
|
|
13,311
|
|
(1,798)
|
|
2,542
|
|
(12,151)
|
|
1,904
|
|
Net income
(loss)
|
39,447
|
|
(5,232)
|
|
17,516
|
|
51,731
|
|
|
|
|
|
21,263
|
|
(2,873)
|
|
4,060
|
|
12,151
|
|
34,601
|
|
Dividends on
convertible preferred stock
|
1,566
|
|
-
|
|
-
|
|
1,566
|
|
|
|
|
|
5,250
|
|
-
|
|
-
|
|
-
|
|
5,250
|
|
Net income (loss)
allocable to common shareholders
|
$
37,881
|
|
$
(5,232)
|
|
$
17,516
|
|
$
50,165
|
|
|
|
|
|
$
16,013
|
|
$
(2,873)
|
|
$
4,060
|
|
$
12,151
|
|
$
29,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
0.45
|
|
$
(0.05)
|
|
$
0.19
|
|
$
0.59
|
|
|
|
|
|
$
0.25
|
|
$
(0.03)
|
|
$
0.05
|
|
$
0.14
|
|
$
0.41
|
|
Weighted-average
shares
outstanding:
|
92,235
|
|
92,235
|
|
92,235
|
|
92,235
|
|
|
|
|
|
84,950
|
|
84,950
|
|
84,950
|
|
84,950
|
|
84,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)For
comparative purposes, the Company applied an annualized statutory
tax rate of 38.5% to derive non-GAAP results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)Impact
of applying statutory tax rate of 38.5% to non-GAAP
results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)Includes costs associated with the
reorganization of the Company's golf ball manufacturing supply
chain, workforce reductions and costs related to transitioning to a
third party model for the U.S. apparel, footwear and uPro GPS
businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 Trailing Twelve
Month Adjusted EBITDA
|
|
|
|
2012 Trailing Twelve
Month Adjusted EBITDA
|
|
Adjusted
EBITDA:
|
Quarter
Ended
|
|
|
|
Quarter
Ended
|
|
|
September
30,
|
|
December
31,
|
|
March 31,
|
|
June 30,
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
March 31,
|
|
June 30,
|
|
|
|
|
2012
|
|
2012
|
|
2013
|
|
2013
|
|
Total
|
|
|
|
2011
|
|
2011
|
|
2012
|
|
2012
|
|
Total
|
|
Net income
(loss)
|
$
(86,798)
|
|
$
(72,006)
|
|
$
41,660
|
|
$
10,071
|
|
$
(107,073)
|
|
|
|
$
(62,587)
|
|
$
(62,985)
|
|
$
31,802
|
|
$
2,799
|
|
$
(90,971)
|
|
Interest expense,
net
|
1,343
|
|
1,919
|
|
2,157
|
|
2,470
|
|
7,889
|
|
|
|
399
|
|
324
|
|
817
|
|
884
|
|
2,424
|
|
Income tax provision
(benefit)
|
750
|
|
3,008
|
|
2,469
|
|
1,435
|
|
7,662
|
|
|
|
14,854
|
|
12,442
|
|
(292)
|
|
2,196
|
|
29,200
|
|
Depreciation and
amortization expense
|
8,342
|
|
7,835
|
|
6,956
|
|
6,472
|
|
29,605
|
|
|
|
9,247
|
|
10,198
|
|
8,745
|
|
9,489
|
|
37,679
|
|
Impairment
charge
|
17,056
|
|
4,877
|
|
-
|
|
-
|
|
21,933
|
|
|
|
-
|
|
1,120
|
|
-
|
|
-
|
|
1,120
|
|
Adjusted
EBITDA
|
$
(59,307)
|
|
$
(54,367)
|
|
$
53,242
|
|
$
20,448
|
|
$
(39,984)
|
|
|
|
$
(38,087)
|
|
$
(38,901)
|
|
$
41,072
|
|
$
15,368
|
|
$
(20,548)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Callaway Golf
Company
|
Constant Currency Net
Sales Excluding Businesses Sold or Transitioned
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Net
Sales Excluding Businesses Sold or
Transitioned(F)
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
First Half
|
|
|
|
Full Year
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Percent
|
|
2013
|
|
2012
|
|
Percent
|
|
2013
(F)
|
|
2012
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
$
249,646
|
|
$
281,123
|
|
-11%
|
|
$
537,402
|
|
$
566,221
|
|
-5%
|
|
$
815,000
|
|
$
834,065
|
|
-2%
|
|
|
Businesses
sold/transitioned
|
(912)
|
|
(25,997)
|
|
|
|
(2,601)
|
|
(47,302)
|
|
|
|
(2,601)
|
|
(60,020)
|
|
|
|
|
|
Sales, net of
businesses sold/transitioned
|
248,734
|
|
255,126
|
|
-3%
|
|
534,801
|
|
518,919
|
|
3%
|
|
812,399
|
|
774,045
|
|
5%
|
|
|
Currency impact
(1) (2)
|
9,688
|
|
-
|
|
|
|
17,792
|
|
-
|
|
|
|
39,500
|
|
-
|
|
|
|
|
|
Sales, net of
businesses sold/transitioned and
currency impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
258,422
|
|
$
255,126
|
|
1%
|
|
$
552,593
|
|
$
518,919
|
|
6%
|
|
$
851,899
|
|
$
774,045
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2012 exchange
rates to 2013 reported sales in regions outside the U.S.
|
|
|
(2) Full
year currency impact is calculated by applying the difference
between 2012 exchange rates and estimated full year 2013 exchange
rates to estimated full year sales in regions outside the
U.S.
|
|
|
(F)Amounts
include reported results for the first half of 2013 combined with
forecasted results for the remainder of the full year. Full year
forecast
|
|
|
was derived by taking
the midpoint from the range of net sales as provided in the revised
guidance for 2013.
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Callaway Golf Company