CARLSBAD, Calif., July 24,
2014 /PRNewswire/ -- Callaway Golf Company (NYSE:ELY)
today announced its first half and second quarter 2014 financial
results, demonstrating its turnaround is well underway and
positioning it for a return to profitability for the full
year. Despite softer than expected market conditions,
Callaway reported for the first half of 2014 a 9% increase in sales
driven by growth in all product categories: woods (+8%),
irons (+14%), putters (+9%), golf balls (+7%) and accessories and
other (+5%). Additionally, income from operations increased
40% to $72 million and fully diluted
earnings per share increased 12% to $0.66. These increases were driven by the
increased sales and improvements in gross margins of 170 basis
points, which more than offset a planned increase of $9 million in operating expenses and a
$14 million decrease in other income
due to adverse changes in foreign currency contract values. The
2014 results also benefitted from a $9
million decrease in pre-tax charges related to the cost
reduction initiatives that were completed in 2013.
For the second quarter, the Company had previously provided
guidance that its sales and earnings would show a decrease versus
the second quarter of 2013 as a result of a late start to the 2014
golf season, high retail inventory industrywide, and anticipated
promotional activity during the second quarter. The Company's
second quarter results reflect those market conditions with sales
being down 7%, slightly more than the Company's prior guidance of
flat to down 5%, and with earnings declining to $0.04 per diluted share compared to $0.12 per diluted share in 2013, which was
slightly better than the Company's prior guidance of breakeven to
slightly profitable.
These second quarter results were consistent with the Company's
prior full year guidance and the Company today has confirmed its
full year guidance, estimating full year net sales of $880 to $900 million and diluted earnings per
share of $0.12 to $0.16.
GAAP RESULTS
For the second quarter of 2014, the Company reported the
following results, as compared to the same period in 2013:
Dollars in
millions except per share amounts
|
Second
Quarter
2014
|
% of Sales
|
Second
Quarter
2013
|
% of Sales
|
Improvement/
(Decline)
|
Net Sales
|
$232
|
-
|
$250
|
-
|
($18)
|
Gross
Profit
|
$91
|
39%
|
$96
|
38%
|
($5)
|
Operating
Expenses
|
$80
|
35%
|
$84
|
34%
|
$4
|
Operating
Income
|
$11
|
5%
|
$12
|
5%
|
($1)
|
Other
Income/(Expense)
|
($6)
|
(2%)
|
-
|
-
|
($6)
|
Net Income
|
$3
|
2%
|
$10
|
4%
|
($7)
|
Earnings per share
(Diluted)
|
$0.04
|
-
|
$0.12
|
-
|
($0.08)
|
For the first half of 2014, the Company reported the following
results, as compared to the same period in 2013:
Dollars in
millions except per share amounts
|
First
Half 2014
|
% of Sales
|
First
Half 2013
|
% of Sales
|
Improvement/
(Decline)
|
Net Sales
|
$584
|
-
|
$537
|
-
|
$47
|
Gross
Profit
|
$256
|
44%
|
$226
|
42%
|
$30
|
Operating
Expenses
|
$183
|
31%
|
$174
|
33%
|
($9)
|
Operating
Income
|
$72
|
12%
|
$52
|
10%
|
$20
|
Other
Income/(Expense)
|
($10)
|
(2%)
|
$4
|
1%
|
($14)
|
Net Income
|
$59
|
10%
|
$52
|
10%
|
$7
|
Earnings per share
(Diluted)
|
$0.66
|
-
|
$0.59
|
-
|
$0.07
|
"We are pleased with our results for the second quarter in that
we were generally able to achieve our financial guidance while
continuing to build brand momentum and improving field inventory
levels in key markets such as the U.S. and Europe," commented Chip Brewer, President and Chief Executive
Officer. "We achieved these results despite more challenging market
conditions worldwide than we had anticipated. We are also pleased
with our results for the first half of the year. Our
continued brand momentum and the strength of our 2014 product line
enabled us to grow sales for the first half in each of our product
categories despite a decline in industry sales due to a late start
to the 2014 golf season, high industrywide retail inventory levels,
and an increase in promotional activity. As a result, we gained
market share in each of our key markets around the world,
positioning us well for the balance of the year.
"Looking forward, we expect market conditions will remain
challenging for the second half of the year," continued Mr. Brewer.
"However, we believe our brand momentum and product strength will
enable us to overcome these market headwinds and achieve the full
year financial goals we set at the beginning of the year. We
remain pleased with the state of our turnaround and the direction
of our business."
Business Outlook for 2014
Given the Company's increased sales, earnings and market share
during the first half of 2014, the Company is maintaining its full
year guidance despite an anticipated decline in the golf industry
in 2014. The full year guidance the Company provided at the
beginning of the year is as follows:
Full Year
- Net sales for the full year 2014 are estimated to range from
$880 to $900 million, compared to
$843 million in 2013. The Company
believes this growth rate will exceed the overall market and be
driven by brand momentum and market share gains.
- Gross margins are estimated to improve to approximately 41.7%,
compared to 37.3% in 2013. This improvement is expected to result
from the positive full year impact of the many supply chain
initiatives implemented as part of the turnaround strategy as well
as an estimated improved mix of full price product sales.
- Operating expenses are estimated to be approximately
$345 million, compared to
$326 million in 2013. The increase in
operating expenses is due to a planned increase in investments in
tour and marketing, higher variable sales related expenses, and
modest cost of living increases.
- Pre-tax income is estimated to range from $15 to $19 million, with a corresponding tax
provision of approximately $6.5
million. Pre-tax income in 2013 was a loss of $13.3 million with a corresponding tax provision
of $5.6 million.
- Fully diluted earnings per share is estimated to range from
$0.12 to $0.16 per share on a base of
78.0 million shares, compared to a 2013 loss per share of
$0.31 on 72.8 million shares.
If the Company is successful in achieving these results, it would
be the Company's first net profit since 2008 and would represent a
significant milestone in the Company's turnaround.
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, outlook and business. 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,
July 31, 2014. The replay may be accessed through the
Internet at www.callawaygolf.com.
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 sales related to the
Top-Flite and Ben Hogan brands or the products that were
transitioned to a third party model, including apparel and footwear
in certain regions.
Adjusted EBITDA. The Company provided information about
its results, excluding interest, taxes, depreciation and
amortization expenses, and impairment charges ("Adjusted
EBITDA").
In addition, because the Company previously reported its 2013
results on a GAAP and Non-GAAP basis, the Company has included in
the schedules to this release a reconciliation of such information
for 2013. The non-GAAP information presented in this release and
related schedules 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 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 2014 full year sales, sales growth, gross margins,
operating expenses, pre-tax income, and earnings per share, as well
as the Company's recovery and return to profitability, the creation
of shareholder value, future market share gains, market conditions,
brand momentum, improved financial performance and the level of
promotional activity in the marketplace, 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 Company's turnaround strategy; consumer acceptance of and
demand for the Company's products; the level of promotional
activity in the marketplace; unfavorable weather conditions, future
consumer discretionary purchasing activity, which can be
significantly adversely affected by unfavorable economic or market
conditions; future retailer purchasing activity, which can be
significantly negatively affected by adverse industry conditions
and overall retail inventory levels; 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; 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, 2013 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
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.
Contacts:
|
Brad
Holiday
|
|
Patrick
Burke
|
|
(760)
931-1771
|
Callaway Golf
Company
|
Consolidated
Condensed Balance Sheets
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
28,985
|
|
$
36,793
|
|
|
Accounts receivable,
net
|
|
|
196,660
|
|
92,203
|
|
|
Inventories
|
|
|
|
208,796
|
|
263,492
|
|
|
Other current
assets
|
|
|
|
26,728
|
|
29,115
|
|
|
Total current assets
|
|
|
|
461,169
|
|
421,603
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
65,839
|
|
71,341
|
|
Intangible assets,
net
|
|
|
|
118,233
|
|
118,113
|
|
Other
assets
|
|
|
|
|
57,083
|
|
52,806
|
|
|
Total assets
|
|
|
|
$
702,324
|
|
$
663,863
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
101,004
|
|
$
157,120
|
|
|
Accrued employee
compensation and benefits
|
|
28,956
|
|
31,585
|
|
|
Asset-based credit
facility
|
|
|
60,206
|
|
25,660
|
|
|
Accrued warranty
expense
|
|
|
7,396
|
|
6,406
|
|
|
Income tax
liability
|
|
|
|
2,713
|
|
5,425
|
|
|
Total current liabilities
|
|
|
200,275
|
|
226,196
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
|
151,086
|
|
153,048
|
|
Shareholders'
equity
|
|
|
|
350,963
|
|
284,619
|
|
|
Total liabilities and shareholders' equity
|
|
$
702,324
|
|
$
663,863
|
|
|
|
|
|
|
|
|
|
|
|
Callaway Golf
Company
|
Statements of
Operations
|
(In thousands, except
per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Net sales
|
$
231,893
|
|
$
249,646
|
Cost of
sales
|
141,087
|
|
153,994
|
Gross
profit
|
90,806
|
|
95,652
|
Operating
expenses:
|
|
|
|
|
Selling
|
60,604
|
|
61,672
|
|
General and
administrative
|
12,545
|
|
15,169
|
|
Research and
development
|
6,846
|
|
7,333
|
|
|
Total operating
expenses
|
79,995
|
|
84,174
|
Income from
operations
|
10,811
|
|
11,478
|
Other (expense)
income, net
|
(5,569)
|
|
28
|
Income before income
taxes
|
5,242
|
|
11,506
|
Income tax
provision
|
1,873
|
|
1,435
|
Net
income
|
3,369
|
|
10,071
|
Dividends on
convertible preferred stock
|
-
|
|
783
|
Net income allocable
to common shareholders
|
$
3,369
|
|
$
9,288
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$0.04
|
|
$0.13
|
|
Diluted
|
$0.04
|
|
$0.12
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
77,633
|
|
71,111
|
|
Diluted
|
78,560
|
|
86,349
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
Net sales
|
|
$
583,767
|
|
$
537,402
|
Cost of
sales
|
328,064
|
|
311,314
|
Gross
profit
|
255,703
|
|
226,088
|
Operating
expenses:
|
|
|
|
|
Selling
|
137,915
|
|
129,980
|
|
General and
administrative
|
30,541
|
|
29,756
|
|
Research and
development
|
14,759
|
|
14,746
|
|
|
Total operating
expenses
|
183,215
|
|
174,482
|
Income from
operations
|
72,488
|
|
51,606
|
Other (expense)
income, net
|
(10,460)
|
|
4,029
|
Income before income
taxes
|
62,028
|
|
55,635
|
Income tax
provision
|
3,347
|
|
3,904
|
Net
income
|
58,681
|
|
51,731
|
Dividends on
convertible preferred stock
|
-
|
|
1,566
|
Net income allocable
to common shareholders
|
$
58,681
|
|
$
50,165
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$0.76
|
|
$0.71
|
|
Diluted
|
$0.66
|
|
$0.59
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
77,502
|
|
71,086
|
|
Diluted
|
93,367
|
|
92,235
|
Callaway Golf
Company
|
Consolidated
Condensed Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 58,681
|
|
$
51,731
|
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
11,157
|
|
13,428
|
|
|
|
Deferred taxes,
net
|
|
|
172
|
|
200
|
|
|
|
Non-cash share-based
compensation
|
|
2,539
|
|
1,670
|
|
|
|
(Gain) loss on
disposal of long-lived assets
|
|
|
|
(644)
|
|
2,644
|
|
|
|
Discount amortization
on convertible notes
|
|
|
|
365
|
|
344
|
|
|
|
Changes in assets and
liabilities
|
|
(103,605)
|
|
(137,057)
|
|
|
Net cash used in
operating activities
|
|
(31,335)
|
|
(67,040)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(6,238)
|
|
(6,004)
|
|
|
Proceeds from sale of
property, plant and equipment
|
177
|
|
3,935
|
|
|
Investment in
golf-related ventures
|
|
(4,522)
|
|
(1,480)
|
|
|
Net cash used in
investing activities
|
|
(10,583)
|
|
(3,549)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from credit
facilities, net
|
|
34,536
|
|
38,500
|
|
|
Exercise of stock
options
|
|
|
2,005
|
|
-
|
|
|
Credit facility
amendment costs
|
|
(584)
|
|
-
|
|
|
Equity issuance
costs
|
|
|
(10)
|
|
-
|
|
|
Dividends
paid
|
|
|
(1,551)
|
|
(2,989)
|
|
|
Net cash provided by
financing activities
|
|
34,396
|
|
35,511
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
(286)
|
|
13,034
|
|
Net decrease in cash
and cash equivalents
|
|
(7,808)
|
|
(22,044)
|
|
Cash and cash
equivalents at beginning of period
|
36,793
|
|
52,003
|
|
Cash and cash
equivalents at end of period
|
|
$ 28,985
|
|
$
29,959
|
|
Callaway Golf
Company
|
Consolidated Net
Sales and 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
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
(1)
|
|
Dollars
|
|
Percent
|
|
|
|
2014
|
|
2013
(1)
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woods
|
$
52,363
|
|
$
71,638
|
|
$ (19,275)
|
|
-27%
|
|
|
|
$
182,202
|
|
$
168,153
|
|
$
14,049
|
|
8%
|
|
|
|
|
|
|
|
Irons
|
|
52,471
|
|
54,508
|
|
(2,037)
|
|
-4%
|
|
|
|
125,799
|
|
110,510
|
|
15,289
|
|
14%
|
|
|
|
|
|
|
|
Putters
|
26,731
|
|
22,255
|
|
4,476
|
|
20%
|
|
|
|
58,592
|
|
53,772
|
|
4,820
|
|
9%
|
|
|
|
|
|
|
|
Accessories and
other
|
61,594
|
|
58,456
|
|
3,138
|
|
5%
|
|
|
|
125,730
|
|
119,792
|
|
5,938
|
|
5%
|
|
|
|
|
|
|
|
Golf balls
|
38,734
|
|
42,789
|
|
(4,055)
|
|
-9%
|
|
|
|
91,444
|
|
85,175
|
|
6,269
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
$
231,893
|
|
$
249,646
|
|
$ (17,753)
|
|
-7%
|
|
|
|
$
583,767
|
|
$
537,402
|
|
$
46,365
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
prior year amounts have been restated to reflect the company's
current year allocation methodology related to freight revenue and
costs, certain discounts and other reserves not specific to a
product type.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by
Region
|
|
|
|
Net Sales by
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
Businesses
|
|
|
|
|
|
|
|
|
|
Excluding
Businesses
|
|
|
|
|
|
Quarter
Ended
|
|
Constant
Currency
|
|
Sold or
Transitioned
|
|
|
|
Six Months
Ended
|
|
Constant
Currency
|
|
Sold or
Transitioned
|
|
|
|
|
|
June 30,
|
|
Growth
(Decline)
|
|
Growth vs.
2013(1)
|
|
Growth vs. 2013
(2)
|
|
|
|
June 30,
|
|
Growth
|
|
Growth vs.
2013(1)
|
|
Growth vs. 2013
(2)
|
|
|
|
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
|
|
|
2014
|
|
2013
|
|
Dollars
|
|
Percent
|
|
Percent
|
|
Percent
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United
States
|
$
112,527
|
|
$
124,368
|
|
$ (11,841)
|
|
-10%
|
|
-10%
|
|
-9%
|
|
|
|
$
297,218
|
|
$
284,147
|
|
$ 13,071
|
|
5%
|
|
5%
|
|
5%
|
|
|
Europe
|
39,309
|
|
40,152
|
|
(843)
|
|
-2%
|
|
-11%
|
|
-6%
|
|
|
|
90,482
|
|
78,448
|
|
12,034
|
|
15%
|
|
7%
|
|
12%
|
|
|
Japan
|
|
32,517
|
|
36,718
|
|
(4,201)
|
|
-11%
|
|
-8%
|
|
-8%
|
|
|
|
92,518
|
|
80,844
|
|
11,674
|
|
14%
|
|
24%
|
|
24%
|
|
|
Rest of
Asia
|
25,120
|
|
22,863
|
|
2,257
|
|
10%
|
|
6%
|
|
7%
|
|
|
|
52,116
|
|
42,963
|
|
9,153
|
|
21%
|
|
19%
|
|
20%
|
|
|
Other foreign
countries
|
22,420
|
|
25,545
|
|
(3,125)
|
|
-12%
|
|
-7%
|
|
-7%
|
|
|
|
51,433
|
|
51,000
|
|
433
|
|
1%
|
|
9%
|
|
10%
|
|
|
|
|
|
$
231,893
|
|
$
249,646
|
|
$ (17,753)
|
|
-7%
|
|
-8%
|
|
-7%
|
|
|
|
$
583,767
|
|
$
537,402
|
|
$ 46,365
|
|
9%
|
|
10%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated by applying 2013 exchange rates to 2014 reported sales
in regions outside the U.S.
|
|
|
|
|
|
|
|
|
(2)
Calculated by applying 2013 exchange rates to 2014 reported sales
in regions outside the U.S. and excludes sales related to
businesses sold or licensed.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment
Information
|
|
|
Operating Segment
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
Growth/(Decline)
|
|
|
|
June 30,
|
|
Growth
(Decline)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
(1)
|
|
Dollars
|
|
Percent
|
|
|
|
2014
|
|
2013
(1)
|
|
Dollars
|
|
Percent
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf
clubs
|
$
193,159
|
|
$
206,857
|
|
$ (13,698)
|
|
-7%
|
|
|
|
$
492,323
|
|
$
452,226
|
|
$
40,097
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
Golf
balls
|
38,734
|
|
42,789
|
|
(4,055)
|
|
-9%
|
|
|
|
91,444
|
|
85,176
|
|
6,268
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
231,893
|
|
$
249,646
|
|
$ (17,753)
|
|
-7%
|
|
|
|
$
583,767
|
|
$
537,402
|
|
$
46,365
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Golf clubs
(2)
|
$
11,280
|
|
$
24,272
|
|
$ (12,992)
|
|
-54%
|
|
|
|
$
74,017
|
|
$
69,030
|
|
$
4,987
|
|
7%
|
|
|
|
|
`
|
|
|
|
|
|
Golf balls
(2)
|
5,223
|
|
(2,731)
|
|
7,954
|
|
291%
|
|
|
|
16,952
|
|
2,687
|
|
14,265
|
|
531%
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
(3)
|
|
|
(11,261)
|
|
(10,035)
|
|
(1,226)
|
|
12%
|
|
|
|
(28,941)
|
|
(16,082)
|
|
(12,859)
|
|
80%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
5,242
|
|
$
11,506
|
|
$
(6,264)
|
|
-54%
|
|
|
|
$
62,028
|
|
$
55,635
|
|
$
6,393
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
prior year amounts have been reclassed to reflect the company's
current year allocation methodology related to freight revenue and
costs, certain discounts and other reserves not specific to a
product type.
|
|
|
|
|
|
|
|
|
|
(2) In
connection with the 2012 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 $3.3 million and $4.2
million, respectively, during the six months ended June 30,
2013. There were no costs associated with the 2012 Cost
Reduction Initiatives recorded in the three and six months ended
June 30, 2014.
|
|
|
|
|
|
|
|
(3)
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,
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Non-Cash Tax
Adjustment(2)
|
|
Total as
Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
249,646
|
|
$
-
|
|
$
-
|
|
$
249,646
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
99,739
|
|
(4,087)
|
|
-
|
|
95,652
|
|
|
|
|
|
|
|
|
|
|
|
|
% of sales
|
|
|
40%
|
|
-2%
|
|
n/a
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
83,263
|
|
911
|
|
-
|
|
84,174
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
16,476
|
|
(4,998)
|
|
-
|
|
11,478
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
28
|
|
-
|
|
-
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
16,504
|
|
(4,998)
|
|
-
|
|
11,506
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
|
6,354
|
|
(1,924)
|
|
(2,995)
|
|
1,435
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
10,150
|
|
(3,074)
|
|
2,995
|
|
10,071
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on
convertible preferred stock
|
|
|
783
|
|
-
|
|
-
|
|
783
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income allocable
to common shareholders
|
|
|
$
9,367
|
|
$
(3,074)
|
|
$
2,995
|
|
$
9,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
$
0.12
|
|
$
(0.04)
|
|
$
0.04
|
|
$
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares
outstanding:
|
|
|
86,349
|
|
86,349
|
|
86,349
|
|
86,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 worldwide uPro GPS
businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Non-GAAP Callaway
Golf (1)
|
|
Cost Reduction
Initiatives(1) (3)
|
|
Non-Cash Tax
Adjustment (2)
|
|
Total as
Reported
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
537,402
|
|
$
-
|
|
$
-
|
|
$
537,402
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
232,457
|
|
(6,369)
|
|
-
|
|
226,088
|
|
|
|
|
|
|
|
|
|
|
|
|
% of sales
|
|
|
43%
|
|
-1%
|
|
n/a
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
172,344
|
|
2,138
|
|
-
|
|
174,482
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
60,113
|
|
(8,507)
|
|
-
|
|
51,606
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
4,029
|
|
-
|
|
-
|
|
4,029
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
64,142
|
|
(8,507)
|
|
-
|
|
55,635
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
|
|
24,695
|
|
(3,275)
|
|
(17,516)
|
|
3,904
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
39,447
|
|
(5,232)
|
|
17,516
|
|
51,731
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on
convertible preferred stock
|
|
|
1,566
|
|
-
|
|
-
|
|
1,566
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income allocable
to common shareholders
|
|
|
$
37,881
|
|
$
(5,232)
|
|
$
17,516
|
|
$
50,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share:
|
|
|
$
0.45
|
|
$
(0.05)
|
|
$
0.19
|
|
$
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares
outstanding:
|
|
|
92,235
|
|
92,235
|
|
92,235
|
|
92,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 worldwide uPro GPS
businesses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 Trailing Twelve
Month Adjusted EBITDA
|
|
|
|
2013 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,
|
|
|
|
2013
|
|
2013
|
|
2014
|
|
2014
|
|
Total
|
|
|
|
2012
|
|
2012
|
|
2013
|
|
2013
|
|
Total
|
Net income
(loss)
|
$
(21,153)
|
|
$
(49,499)
|
|
$
55,312
|
|
$
3,369
|
|
$
(11,971)
|
|
|
|
$
(86,798)
|
|
$
(70,749)
|
|
$
41,660
|
|
$
10,071
|
|
$
(105,816)
|
Interest expense,
net
|
1,975
|
|
1,963
|
|
2,648
|
|
2,612
|
|
9,198
|
|
|
|
1,343
|
|
1,919
|
|
2,157
|
|
2,470
|
|
7,889
|
Income tax
provision
|
1,037
|
|
658
|
|
1,474
|
|
1,873
|
|
5,042
|
|
|
|
750
|
|
2,246
|
|
2,469
|
|
1,435
|
|
6,900
|
Depreciation and
amortization expense
|
6,265
|
|
5,850
|
|
5,697
|
|
5,460
|
|
23,272
|
|
|
|
8,342
|
|
7,835
|
|
6,956
|
|
6,472
|
|
29,605
|
Impairment
charges
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
17,056
|
|
4,877
|
|
-
|
|
-
|
|
21,933
|
Adjusted
EBITDA
|
$
(11,876)
|
|
$
(41,028)
|
|
$
65,131
|
|
$
13,314
|
|
$
25,541
|
|
|
|
$
(59,307)
|
|
$
(53,872)
|
|
$
53,242
|
|
$
20,448
|
|
$
(39,489)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Callaway Golf Company