CARLSBAD, Calif., Oct. 24, 2013 /PRNewswire/ -- Callaway Golf
Company (NYSE:ELY) today announced its third quarter and
year-to-date 2013 financial results. The Company's results include
sales growth as well as significant improvements in gross margins,
operating expenses, and earnings for the third quarter and year to
date, both on a GAAP and non-GAAP basis. These financial results
reflect the continued success of the Company's turnaround plan,
including continued improvement in the development of more exciting
and performance-oriented products, brand momentum, operating
efficiencies, and cost management.
The Company was able to grow sales despite adverse changes in
foreign currency rates and the sale in 2012 of the Top-Flite and
Ben Hogan Brands and the transition
to a licensing arrangement for apparel and footwear in North
America. The sale of these brands and licensing arrangements
negatively impacted 2013 sales by approximately $53 million for the first nine months, and by
approximately $9 million for the
third quarter, compared to the same periods in 2012. In
addition, changes in foreign currency rates negatively affected
2013 net sales by approximately $32
million for the first nine months, and by approximately
$14 million for the third quarter, as
compared to the same periods in 2012. On a constant currency basis,
the Company's current business, which excludes the sold or licensed
brands and businesses, achieved 13% sales growth for the first nine
months of 2013, and 38% sales growth for the third quarter of 2013,
compared to the same periods in 2012.
In addition to sales growth, the Company's 2013 financial
results also benefitted from increased operating efficiencies, and
the continued success of the Company's cost reduction initiatives,
including a decrease in charges related to these initiatives in
2013. As a result, the Company reported significant
improvements in earnings with non-GAAP diluted earnings/loss per
share improving by $0.32 and
$0.60, respectively, for the third
quarter and first nine months of 2013 as compared to the same
periods in 2012, and with GAAP earnings per share increasing even
more.
GAAP RESULTS.
For the third 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
|
$178
|
-
|
$148
|
-
|
$30
|
Gross
Profit
|
$59
|
33%
|
$4
|
3%
|
$55
|
Operating
Expenses
|
$76
|
43%
|
$87
|
59%
|
$11
|
Operating
Loss
|
($17)
|
(10%)
|
($83)
|
(56%)
|
$66
|
Net Loss
|
($21)
|
(12%)
|
($87)
|
(59%)
|
$66
|
Diluted loss per
share
|
($0.32)
|
-
|
($1.33)
|
-
|
$1.01
|
For the first nine months 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
|
$716
|
-
|
$714
|
-
|
$2
|
Gross
Profit
|
$286
|
40%
|
$239
|
33%
|
$47
|
Operating
Expenses
|
$251
|
35%
|
$284
|
40%
|
$33
|
Operating
Income/Loss
|
$35
|
5%
|
($45)
|
(6%)
|
$80
|
Net
Income/Loss
|
$31
|
4%
|
($52)
|
(7%)
|
$83
|
Diluted earnings/loss
per share
|
$0.36
|
-
|
($0.91)
|
-
|
$1.27
|
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 third 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
|
$178
|
-
|
$148
|
-
|
$30
|
Gross
Profit
|
$60
|
34%
|
$31
|
21%
|
$29
|
Operating
Expenses
|
$75
|
42%
|
$79
|
53%
|
$4
|
Operating
Loss
|
($15)
|
(9%)
|
($48)
|
(32%)
|
$33
|
Net Loss
|
($11)
|
(6%)
|
($31)
|
(21%)
|
$20
|
Diluted loss per
share
|
($0.18)
|
-
|
($0.50)
|
-
|
$0.32
|
For the first nine months 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
|
$716
|
-
|
$714
|
-
|
$2
|
Gross
Profit
|
$293
|
41%
|
$267
|
37%
|
$26
|
Operating
Expenses
|
$248
|
35%
|
$279
|
39%
|
$31
|
Operating
Income/Loss
|
$45
|
6%
|
($12)
|
(2%)
|
$57
|
Net
Income/Loss
|
$28
|
4%
|
($10)
|
(1%)
|
$38
|
Diluted earnings/loss
per share
|
$0.33
|
-
|
($0.27)
|
-
|
$0.60
|
"We are pleased with our results for the third quarter and first
nine months of the year," commented Chip
Brewer, President and Chief Executive Officer. "Market
conditions during the third quarter were better than we had
anticipated as we entered the quarter, due in part to improvements
in weather and rounds played in both Europe and the Americas. These
market conditions, along with continued gains in market share in
our major markets and the realization of the benefits from the many
actions we have taken over the past year to improve our operations
and reduce our costs, have resulted in an increase in sales and
operating income. On a constant currency, continuing business
basis for the third quarter and first nine months of 2013, sales
increased 38% and 13%, respectively. Likewise, non-GAAP
operating income for the third quarter and first nine months of the
year increased approximately $33
million and $57 million,
respectively, compared to the same periods in 2012. Moreover, our
inventory levels, both internally and at retail, are in good shape,
positioning us well for the balance of this year and the start of
the 2014 golf season."
"While we are pleased with our first nine months results, which
provide evidence that our turnaround is working, we are fully aware
that we have more work to do to return to acceptable levels of
performance," continued Mr. Brewer. "As I mentioned when I started
with Callaway, successful turnarounds take time and we did not
expect to complete everything in only one year. With that
said, our turnaround is proceeding at or above our original
expectations, particularly given the headwinds we experienced this
year from unfavorable changes in foreign currency rates, adverse
weather conditions, a very late start to the 2013 golf season, and
higher than normal promotional activity in both North America and Europe. I remain optimistic about the
opportunities that lie ahead for Callaway and look forward to
reporting to you on our continued progress."
Business Outlook
Due to better than expected third quarter performance, the
Company is increasing its 2013 full year financial guidance as
follows:
- Net sales for the full year 2013 are currently estimated to be
approximately $836 million, compared
to previous guidance of $810-$820
million. Net sales for full year 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 13% compared to 2012.
- For the full year 2013, the Company estimates non-GAAP pre-tax
income of $2 million - $7 million,
which based upon an assumed tax rate of 38.5% equates to an
estimated non-GAAP net income within a range of $2 million to $4 million and non-GAAP diluted
earnings/loss per share of ($0.03) to
$0.01, including the impact of dividends paid on the
Company's outstanding convertible preferred stock. The Company's
prior guidance was for a non-GAAP pre-tax loss of $9 million to breakeven, which equated to a
non-GAAP net loss of $6 million to
breakeven, and a non-GAAP diluted loss per share range of
($0.12) to ($0.04). For the full year
2012, the Company's non-GAAP loss was $43
million with a non-GAAP diluted 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. 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,
October 31, 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
75865696.
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 North American 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 earnings/loss
and income/loss per share for 2013, 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 designed to make every golfer a better golfer. Callaway
Golf Company manufactures and sells golf clubs and golf balls, and
sells golf accessories under the Callaway Golf® and Odyssey® brands
worldwide. For more information please visit
www.callawaygolf.com or
shop.callawaygolf.com.
Contacts:
|
Brad
Holiday
|
|
Patrick
Burke
|
|
(760)
931-1771
|
(Logo: http://photos.prnewswire.com/prnh/20091203/CGLOGO)
Callaway Golf
Company
|
Consolidated
Condensed Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
37,399
|
|
$
52,003
|
|
Accounts receivable,
net
|
|
157,371
|
|
91,072
|
|
Inventories
|
|
190,870
|
|
211,734
|
|
Other current
assets
|
|
24,465
|
|
29,791
|
|
Assets held for
sale
|
|
-
|
|
2,396
|
|
Total current assets
|
|
410,105
|
|
386,996
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
73,957
|
|
89,093
|
Intangible assets,
net
|
|
|
|
117,982
|
|
118,223
|
Other
assets
|
|
|
|
|
48,865
|
|
43,324
|
|
Total assets
|
|
|
|
$
650,909
|
|
$
637,636
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
123,672
|
|
$
129,021
|
|
Accrued employee
compensation and benefits
|
|
26,759
|
|
20,649
|
|
Accrued warranty
expense
|
|
6,766
|
|
7,539
|
|
Other current
liabilities
|
|
5,810
|
|
4,357
|
|
Total current liabilities
|
|
163,007
|
|
161,566
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
153,148
|
|
154,362
|
Shareholders'
equity
|
|
334,754
|
|
321,708
|
|
Total liabilities and shareholders' equity
|
|
$
650,909
|
|
$
637,636
|
Callaway Golf
Company
|
Statements of
Operations
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Net sales
|
$ 178,229
|
|
$ 147,906
|
Cost of
sales
|
118,820
|
|
144,106
|
Gross
profit
|
59,409
|
|
3,800
|
Operating
expenses:
|
|
|
|
|
Selling
|
49,871
|
|
60,273
|
|
General and
administrative
|
18,870
|
|
18,238
|
|
Research and
development
|
7,689
|
|
7,978
|
|
|
Total operating
expenses
|
76,430
|
|
86,489
|
Loss from
operations
|
(17,021)
|
|
(82,689)
|
Other expense,
net
|
(3,095)
|
|
(3,359)
|
Loss before income
taxes
|
(20,116)
|
|
(86,048)
|
Income tax
provision
|
1,037
|
|
750
|
Net loss
|
(21,153)
|
|
(86,798)
|
Dividends on
convertible preferred stock
|
1,766
|
|
2,414
|
Net loss allocable to
common shareholders
|
$ (22,919)
|
|
$ (89,212)
|
|
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
Basic
|
|
($0.32)
|
|
($1.33)
|
|
Diluted
|
($0.32)
|
|
($1.33)
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
72,649
|
|
67,162
|
|
Diluted
|
72,649
|
|
67,162
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Net sales
|
$ 715,631
|
|
$ 714,127
|
Cost of
sales
|
430,134
|
|
475,303
|
Gross
profit
|
285,497
|
|
238,824
|
Operating
expenses:
|
|
|
|
|
Selling
|
179,851
|
|
212,822
|
|
General and
administrative
|
48,626
|
|
48,918
|
|
Research and
development
|
22,435
|
|
22,381
|
|
|
Total operating
expenses
|
250,912
|
|
284,121
|
Income (loss) from
operations
|
34,585
|
|
(45,297)
|
Other income
(expense), net
|
934
|
|
(4,246)
|
Income (loss) before
income taxes
|
35,519
|
|
(49,543)
|
Income tax
provision
|
4,941
|
|
2,654
|
Net income
(loss)
|
30,578
|
|
(52,197)
|
Dividends on
convertible preferred stock
|
3,332
|
|
7,664
|
Net income (loss)
allocable to common shareholders
|
$
27,246
|
|
$ (59,861)
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
Basic
|
$0.38
|
|
($0.91)
|
|
Diluted
|
$0.36
|
|
($0.91)
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
71,613
|
|
65,740
|
|
Diluted
|
86,870
|
|
65,740
|
Callaway Golf
Company
|
Consolidated
Condensed Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
$ 30,578
|
|
$ (52,197)
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
19,693
|
|
26,576
|
|
|
Impairment
charges
|
|
|
-
|
|
17,056
|
|
|
Deferred taxes,
net
|
|
|
303
|
|
(1,397)
|
|
|
Non-cash share-based
compensation
|
|
2,592
|
|
2,482
|
|
|
Loss (gain) on
disposal of long-lived assets
|
|
|
|
2,428
|
|
(1,521)
|
|
|
Gain on sale of
intangible assets
|
|
|
|
-
|
|
(6,602)
|
|
|
Discount amortization
on convertible notes
|
|
|
|
523
|
|
27
|
|
|
Changes in assets and
liabilities
|
|
(48,559)
|
|
(13,675)
|
|
Net cash provided by
(used in) operating activities
|
7,558
|
|
(29,251)
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Capital
expenditures
|
|
|
(8,920)
|
|
(16,001)
|
|
Proceeds from sale of
property, plant and equipment
|
4,025
|
|
324
|
|
Net proceeds from
sale of intangible assets
|
-
|
|
26,861
|
|
Investment in golf
related ventures
|
|
(7,189)
|
|
-
|
|
Net cash (used in)
provided by investing activities
|
(12,084)
|
|
(15,677)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Dividends
paid
|
|
|
(4,882)
|
|
(9,526)
|
|
Equity issuance
cost
|
|
|
(274)
|
|
-
|
|
Proceeds from
issuance of convertible notes
|
-
|
|
46,819
|
|
Debt issuance
cost
|
|
|
-
|
|
(3,534)
|
|
Other financing
activities
|
|
|
-
|
|
40
|
|
Net cash (used in)
provided by financing activities
|
(5,156)
|
|
43,325
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
(4,922)
|
|
384
|
Net (decrease)
increase in cash and cash equivalents
|
(14,604)
|
|
16,116
|
Cash and cash
equivalents at beginning of period
|
52,003
|
|
43,023
|
Cash and cash
equivalents at end of period
|
$ 37,399
|
|
$
59,139
|
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
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
56,525
|
|
$
31,147
|
|
$ 25,378
|
|
81%
|
|
|
|
$
227,972
|
|
$ 180,425
|
|
$
47,547
|
|
26%
|
|
|
|
|
|
|
|
|
|
Irons
|
39,472
|
|
31,029
|
|
8,443
|
|
27%
|
|
|
|
152,492
|
|
147,170
|
|
5,322
|
|
4%
|
|
|
|
|
|
|
|
|
|
Putters
|
20,388
|
|
15,734
|
|
4,654
|
|
30%
|
|
|
|
75,818
|
|
78,699
|
|
(2,881)
|
|
-4%
|
|
|
|
|
|
|
|
|
|
Golf balls
|
25,619
|
|
26,620
|
|
(1,001)
|
|
-4%
|
|
|
|
112,032
|
|
119,004
|
|
(6,972)
|
|
-6%
|
|
|
|
|
|
|
|
|
|
Accessories and
other
|
36,225
|
|
43,376
|
|
(7,151)
|
|
-16%
|
|
|
|
147,317
|
|
188,829
|
|
(41,512)
|
|
-22%
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 178,229
|
|
$ 147,906
|
|
$ 30,323
|
|
21%
|
|
|
|
$
715,631
|
|
$ 714,127
|
|
$
1,504
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
|
Net Sales by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
Businesses
|
|
|
|
|
|
|
|
|
|
Excluding
Businesses
|
|
|
|
|
Quarter
Ended
|
|
Constant
Currency
|
|
Sold or
Transitioned
|
|
|
|
Nine Months
Ended
|
|
Constant
Currency
|
|
Sold or
Transitioned
|
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
Growth vs.
2012(1)
|
|
Growth vs. 2012
(1) (2)
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
Growth vs.
2012(1)
|
|
Growth vs. 2012
(1) (2)
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
66,998
|
|
$
57,140
|
|
$
9,858
|
|
17%
|
|
17%
|
|
33%
|
|
|
|
$ 351,143
|
|
$ 349,183
|
|
$
1,960
|
|
1%
|
|
1%
|
|
13%
|
|
Europe
|
26,493
|
|
19,189
|
|
7,304
|
|
38%
|
|
41%
|
|
52%
|
|
|
|
104,942
|
|
105,332
|
|
(390)
|
|
0%
|
|
2%
|
|
7%
|
|
Japan
|
48,575
|
|
41,635
|
|
6,940
|
|
17%
|
|
47%
|
|
47%
|
|
|
|
129,421
|
|
120,868
|
|
8,553
|
|
7%
|
|
31%
|
|
31%
|
|
Rest of
Asia
|
23,747
|
|
16,149
|
|
7,598
|
|
47%
|
|
44%
|
|
45%
|
|
|
|
66,709
|
|
60,758
|
|
5,951
|
|
10%
|
|
8%
|
|
7%
|
|
Other foreign
countries
|
12,416
|
|
13,793
|
|
(1,377)
|
|
-10%
|
|
-3%
|
|
3%
|
|
|
|
63,416
|
|
77,986
|
|
(14,570)
|
|
-19%
|
|
-16%
|
|
-4%
|
|
|
|
|
$ 178,229
|
|
$ 147,906
|
|
$ 30,323
|
|
21%
|
|
30%
|
|
38%
|
|
|
|
$ 715,631
|
|
$ 714,127
|
|
$
1,504
|
|
0%
|
|
5%
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
|
|
September
30,
|
|
Growth/(Decline)
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
2013
|
|
2012
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
|
$ 152,610
|
|
$ 121,286
|
|
$ 31,324
|
|
26%
|
|
|
|
$
603,599
|
|
$ 595,123
|
|
$
8,476
|
|
1%
|
|
|
|
|
|
|
|
|
|
Golf balls
|
25,619
|
|
26,620
|
|
(1,001)
|
|
-4%
|
|
|
|
112,032
|
|
119,004
|
|
(6,972)
|
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 178,229
|
|
$ 147,906
|
|
$ 30,323
|
|
21%
|
|
|
|
$
715,631
|
|
$ 714,127
|
|
$
1,504
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf
clubs(1)
|
$
(4,409)
|
|
$ (57,840)
|
|
$ 53,431
|
|
92%
|
|
|
|
$
60,411
|
|
$
(7,247)
|
|
$
67,658
|
|
934%
|
|
|
|
|
`
|
|
|
|
|
Golf balls
(1)
|
(3,421)
|
|
(13,789)
|
|
10,368
|
|
75%
|
|
|
|
3,473
|
|
(8,047)
|
|
11,520
|
|
143%
|
|
|
|
|
|
|
|
|
|
Reconciling items
(2)
|
(12,286)
|
|
(14,419)
|
|
2,133
|
|
15%
|
|
|
|
(28,365)
|
|
(34,249)
|
|
5,884
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
$ (20,116)
|
|
$ (86,048)
|
|
$ 65,932
|
|
77%
|
|
|
|
$
35,519
|
|
$ (49,543)
|
|
$
85,062
|
|
172%
|
|
|
|
|
|
|
|
|
|
(1) In
connection with the Cost Reduction Initiatives, the Company's golf
clubs and golf balls segments recognized pre-tax charges of $1.0
million and $0.5 million, respectively, during the three months
ended September 30, 2013, and $23.6 million and $9.3 million,
respectively, during the three months ended September 30,
2012. The Company's golf clubs and golf balls segments recognized
pre-tax charges of $4.3 million and $4.7 million, respectively,
during the nine months ended September 30, 2013, in connection
with these initiatives, and $25.3 million and $9.7 million,
respectively, during the nine months ended September 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
September 30,
|
|
|
|
|
|
Quarter Ended
September 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)
|
|
Non-Cash Tax
Adjustment(2)
|
|
Total as
Reported
|
|
|
Net sales
|
$
178,229
|
|
$
-
|
|
$
-
|
|
$
178,229
|
|
|
|
|
|
$
147,906
|
|
$
-
|
|
$
-
|
|
$
147,906
|
|
|
Gross
profit
|
60,414
|
|
(1,005)
|
|
-
|
|
59,409
|
|
|
|
|
|
31,102
|
|
(27,302)
|
|
-
|
|
3,800
|
|
|
% of sales
|
34%
|
|
-1%
|
|
n/a
|
|
33%
|
|
|
|
|
|
21%
|
|
-18%
|
|
n/a
|
|
3%
|
|
|
Operating
expenses
|
75,577
|
|
853
|
|
-
|
|
76,430
|
|
|
|
|
|
78,707
|
|
7,782
|
|
-
|
|
86,489
|
|
|
Loss from
operations
|
(15,163)
|
|
(1,858)
|
|
-
|
|
(17,021)
|
|
|
|
|
|
(47,605)
|
|
(35,084)
|
|
-
|
|
(82,689)
|
|
|
Other expense,
net
|
(3,095)
|
|
-
|
|
-
|
|
(3,095)
|
|
|
|
|
|
(3,359)
|
|
-
|
|
-
|
|
(3,359)
|
|
|
Loss before income
taxes
|
(18,258)
|
|
(1,858)
|
|
-
|
|
(20,116)
|
|
|
|
|
|
(50,964)
|
|
(35,084)
|
|
-
|
|
(86,048)
|
|
|
Income tax provision
(benefit)
|
(7,030)
|
|
(716)
|
|
8,783
|
|
1,037
|
|
|
|
|
|
(19,621)
|
|
(13,508)
|
|
33,879
|
|
750
|
|
|
Net loss allocable to
common shareholders
|
(11,228)
|
|
(1,142)
|
|
(8,783)
|
|
(21,153)
|
|
|
|
|
|
(31,343)
|
|
(21,576)
|
|
(33,879)
|
|
(86,798)
|
|
|
Dividends on
convertible preferred stock
|
1,766
|
|
-
|
|
-
|
|
1,766
|
|
|
|
|
|
2,414
|
|
-
|
|
-
|
|
2,414
|
|
|
Net loss allocable to
common shareholders
|
$
(12,994)
|
|
$
(1,142)
|
|
$
(8,783)
|
|
$
(22,919)
|
|
|
|
|
|
$
(33,757)
|
|
$
(21,576)
|
|
$
(33,879)
|
|
$
(89,212)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share:
|
$
(0.18)
|
|
$
(0.02)
|
|
$
(0.12)
|
|
$
(0.32)
|
|
|
|
|
|
$
(0.50)
|
|
$
(0.32)
|
|
$
(0.51)
|
|
$
(1.33)
|
|
|
Weighted-average
shares
outstanding:
|
72,649
|
|
72,649
|
|
72,649
|
|
72,649
|
|
|
|
|
|
67,162
|
|
67,162
|
|
67,162
|
|
67,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
Nine Months Ended
September 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
|
$
715,631
|
|
$
-
|
|
$
-
|
|
$
715,631
|
|
|
|
|
|
$
714,127
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
714,127
|
Gross
profit
|
292,871
|
|
(7,374)
|
|
-
|
|
285,497
|
|
|
|
|
|
267,087
|
|
(28,263)
|
|
-
|
|
-
|
|
238,824
|
% of sales
|
41%
|
|
-1%
|
|
n/a
|
|
40%
|
|
|
|
|
|
37%
|
|
-4%
|
|
n/a
|
|
n/a
|
|
33%
|
Operating
expenses
|
247,921
|
|
2,991
|
|
-
|
|
250,912
|
|
|
|
|
|
279,231
|
|
11,492
|
|
(6,602)
|
|
-
|
|
284,121
|
Income (expense) from
operations
|
44,950
|
|
(10,365)
|
|
-
|
|
34,585
|
|
|
|
|
|
(12,144)
|
|
(39,755)
|
|
6,602
|
|
-
|
|
(45,297)
|
Other income
(expense), net
|
934
|
|
-
|
|
-
|
|
934
|
|
|
|
|
|
(4,246)
|
|
-
|
|
-
|
|
-
|
|
(4,246)
|
Income (loss) before
income taxes
|
45,884
|
|
(10,365)
|
|
-
|
|
35,519
|
|
|
|
|
|
(16,390)
|
|
(39,755)
|
|
6,602
|
|
-
|
|
(49,543)
|
Income tax provision
(benefit)
|
17,665
|
|
(3,991)
|
|
(8,733)
|
|
4,941
|
|
|
|
|
|
(6,310)
|
|
(15,306)
|
|
2,542
|
|
21,728
|
|
2,654
|
Net income
(loss)
|
28,219
|
|
(6,374)
|
|
8,733
|
|
30,578
|
|
|
|
|
|
(10,080)
|
|
(24,449)
|
|
4,060
|
|
(21,728)
|
|
(52,197)
|
Dividends on
convertible preferred stock
|
3,332
|
|
-
|
|
-
|
|
3,332
|
|
|
|
|
|
7,664
|
|
-
|
|
-
|
|
-
|
|
7,664
|
Net income (loss)
allocable to common shareholders
|
$
24,887
|
|
$
(6,374)
|
|
$
8,733
|
|
$
27,246
|
|
|
|
|
|
$
(17,744)
|
|
$
(24,449)
|
|
$
4,060
|
|
$
(21,728)
|
|
$
(59,861)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
0.33
|
|
$
(0.07)
|
|
$
0.10
|
|
$
0.36
|
|
|
|
|
|
$
(0.27)
|
|
$
(0.37)
|
|
$
0.06
|
|
$
(0.33)
|
|
$
(0.91)
|
Weighted-average
shares
outstanding:
|
86,870
|
|
86,870
|
|
86,870
|
|
86,870
|
|
|
|
|
|
65,740
|
|
65,740
|
|
65,740
|
|
65,740
|
|
65,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
December
31,
|
|
March 31,
|
|
June 30,
|
|
September
30,
|
|
|
|
|
|
December
31,
|
|
March 31,
|
|
June 30,
|
|
September
30,
|
|
|
|
2012
|
|
2013
|
|
2013
|
|
2013
|
|
Total
|
|
|
|
2011
|
|
2012
|
|
2012
|
|
2012
|
|
Total
|
Net income
(loss)
|
$
(72,006)
|
|
$
41,660
|
|
$
10,071
|
|
$
(21,153)
|
|
$
(41,428)
|
|
|
|
$
(62,985)
|
|
$
31,802
|
|
$
2,799
|
|
$
(86,798)
|
|
$
(115,182)
|
Interest expense,
net
|
1,919
|
|
2,157
|
|
2,470
|
|
1,975
|
|
8,521
|
|
|
|
324
|
|
817
|
|
884
|
|
1,343
|
|
3,368
|
Income tax provision
(benefit)
|
3,008
|
|
2,469
|
|
1,435
|
|
1,037
|
|
7,949
|
|
|
|
12,442
|
|
(292)
|
|
2,196
|
|
750
|
|
15,096
|
Depreciation and
amortization expense
|
7,835
|
|
6,956
|
|
6,472
|
|
6,265
|
|
27,528
|
|
|
|
10,198
|
|
8,745
|
|
9,489
|
|
8,342
|
|
36,774
|
Impairment
charges
|
4,877
|
|
-
|
|
-
|
|
-
|
|
4,877
|
|
|
|
1,120
|
|
-
|
|
-
|
|
17,056
|
|
18,176
|
Adjusted
EBITDA
|
$
(54,367)
|
|
$
53,242
|
|
$
20,448
|
|
$
(11,876)
|
|
$
7,447
|
|
|
|
$
(38,901)
|
|
$
41,072
|
|
$
15,368
|
|
$
(59,307)
|
|
$
(41,768)
|
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
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
Full Year
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Percent
|
|
2013
|
|
2012
|
|
Percent
|
|
2013
(F)
|
|
2012
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
$ 178,229
|
|
$ 147,906
|
|
21%
|
|
$ 715,631
|
|
$ 714,127
|
|
0%
|
|
$ 836,000
|
|
$ 834,065
|
|
0%
|
|
Businesses
sold/transitioned
|
(271)
|
|
(9,004)
|
|
|
|
(2,873)
|
|
(56,306)
|
|
|
|
(2,900)
|
|
(60,246)
|
|
|
|
|
Sales, net of
businesses sold/transitioned
|
177,958
|
|
138,902
|
|
28%
|
|
712,758
|
|
657,821
|
|
8%
|
|
833,100
|
|
773,819
|
|
8%
|
|
Currency impact
(1) (2)
|
13,724
|
|
-
|
|
|
|
31,514
|
|
-
|
|
|
|
40,300
|
|
-
|
|
|
|
|
Sales, net of
businesses sold/transitioned and currency impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 191,682
|
|
$ 138,902
|
|
38%
|
|
$ 744,272
|
|
$ 657,821
|
|
13%
|
|
$ 873,400
|
|
$ 773,819
|
|
13%
|
|
(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 nine months of 2013
combined with forecasted results for the remainder of the full
year.
|
SOURCE Callaway Golf Company