Callaway Golf Company Announces Third Quarter And Year-To-Date 2012 Results; Provides Update On Cost-Reduction Initiatives; And

 Callaway Golf Company Announces Third Quarter And Year-To-Date 2012 Results;
Provides Update On Cost-Reduction Initiatives; And Provides Revised Full Year
                                   Guidance

- Third Quarter net sales of $148 million and pro forma loss per share of
$0.50 are consistent with the Company's expectations. GAAP loss per share of
$1.33.

- Estimated gross annualized savings from cost-reduction initiatives increased
to $60 million from prior estimate of $52 million.

- Estimated pre-tax charges associated with these initiatives increased by $15
million of additional charges, primarily non-cash, for a total of $55 million.

- Callaway estimates full year 2012 revenues of $830-$845 million and pro
forma loss per share of $0.73 to $0.83.

PR Newswire

CARLSBAD, Calif., Oct. 25, 2012

CARLSBAD, Calif., Oct. 25, 2012 /PRNewswire/ --Callaway Golf Company (NYSE:
ELY) today announced its third quarter and year-to-date 2012 financial
results.

GAAP RESULTS.

For the third quarter of 2012, the Company reported the following results:

Dollars in millions except 2012    % of Sales 2011    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $148    -          $173    -          ($25)
Gross Profit               $4      3%         $47     27%        ($43)
Operating Expenses         $86     58%        $91     53%        $5
Operating Loss             ($83)   (56%)      ($44)   (25%)      ($39)
Loss per share             ($1.33) -          ($1.01) -          ($0.32)

Year to date, the Company reported the following results:

Dollars in millions except 2012    % of Sales 2011    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $714    -          $733    -          ($19)
Gross Profit               $239    33%        $274    37%        ($35)
Operating Expenses         $284    40%        $305    42%        $21
Operating Loss             ($45)   (6%)       ($31)   (4%)       ($14)
Loss per share             ($0.91) -          ($1.81) -          $0.90

NON-GAAP PRO FORMA 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 pro forma 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 2012, the Company reported the following pro forma
results:

Dollars in millions except 2012    % of Sales 2011    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $148    -          $173    -          ($25)
Gross Profit               $31     21%        $54     31%        ($23)
Operating Expenses         $79     53%        $85     49%        $6
Operating Loss             ($48)   (32%)      ($32)   (18%)      ($16)
Loss per share             ($0.50) -          ($0.37) -          ($0.13)

Year to date, the Company reported the following pro forma results:

Dollars in millions except 2012    % of Sales 2011    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $714    -          $733    -          ($19)
Gross Profit               $267    37%        $292    40%        ($25)
Operating Expenses         $279    39%        $294    40%        $15
Operating Loss             ($12)   (2%)       ($2)    0%         ($10)
Loss per share             ($0.27) -          ($0.22) -          ($0.05)

The Company also announced today that it was making good progress on the cost
reduction initiatives it announced in July 2012 and that the Company is taking
additional actions that are expected to result in an incremental $8 million in
savings for a total of approximately $60 million in gross annualized savings
related to the cost-reduction initiatives, with approximately $18 million
being realized in 2012 and an additional $42 million expected to be realized
in 2013. Taking into account the charges related to these additional actions,
the Company currently estimates that the pre-tax charges associated with these
initiatives will be $55 million (as compared to its prior estimate of $40
million), approximately two-thirds of which will be non-cash charges.
Approximately $50 million of the charges will be incurred in 2012 with the
balance being incurred in 2013.

"Our pro forma financial results for the third quarter, while mixed, were
consistent with our expectations as we entered the quarter," commented Chip
Brewer, President and Chief Executive Officer. "Our decline in sales and
gross margins during the third quarter are the result of the sale of the
Top-Flite and Ben Hogan brands earlier this year as well as the sales
promotions and other actions we took to stimulate sell-through on our 2012
products and prepare our business for a successful 2013. On the other hand,
our results also include a decrease in operating expenses as a result of our
cost reduction initiatives. Overall, our results, while not acceptable on an
absolute basis, reflect many actions that should be beneficial in the
long-term." 

"We are continuing to make solid progress on our turnaround plan," continued
Mr. Brewer. "In addition to the actions taken earlier this year, including
the sale of the Top-Flite and Ben Hogan brands, the licensing of the apparel
and footwear businesses, the cost-reduction initiatives, changes in senior
management, and changes in our approach to product design and the sales and
marketing functions, during the third quarter we also replaced a majority of
our outstanding preferred stock with much less expensive 3.75% convertible
debt, reached an agreement in principle on a sale/leaseback of our Chicopee,
Massachusetts ball factory for a much smaller footprint and lower costs, and
began transitioning to a third party based model for our GPS business. These
key initiatives are all consistent with our efforts to simplify our business,
focus the team on our core business of golf clubs and golf balls, and reduce
our cost structure."

"I am encouraged by the progress we have made in the eight months I have been
at Callaway," commented Mr. Brewer. "We are beginning to see some of the
benefits of the actions we have taken in the form of reduced operating
expenses and an increase in market share for the last five consecutive months
in the U.S., albeit at modest levels. I am also very pleased with the changes
we have made in our 2013 product line and marketing strategy, both of which
will be more consumer-oriented and relevant. Although we have revised downward
our full year 2012 guidance in light of continued softness in the European
market and actions we plan to take in the U.S. for the balance of the year to
increase sell-through and prepare for 2013, I am confident in our turnaround
plans and optimistic that our results will improve significantly in 2013."

Business Outlook

The Company provided revised financial guidance, estimating that full year
2012 net sales will range from $830 to $845 million compared to $887 million
in 2011. The Company's estimated decline in net sales includes the impact of
actions taken by the Company during the first half of the year to streamline
its business, including the sale of the Top-Flite and Ben Hogan brands and the
transition of its footwear and apparel businesses to a licensing model. The
Company estimates that full year pro-forma loss per share will range from
$0.73 to $0.83, compared to a pro forma loss per share of $0.63 in 2011.
These pro forma estimates exclude from 2012 gains and charges associated with
the sale of the Top Flite/Ben Hogan brands, non-cash tax adjustments, and the
charges related to the cost-reduction initiatives and exclude from 2011
charges relating to a non-cash impairment of assets, non-cash tax adjustments,
global operations strategy, restructuring, and the gain on the sale of
buildings in 2011.

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 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, November 1, 2012. 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 34815171.

Non-GAAP Pro Forma 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 pro forma financial information. The non-GAAP
financial information included in the press release and attached schedules
present certain of the Company's financial results excluding charges for (i)
the Company's global operations strategy, (ii) non-cash impairment charges,
(iii) non-cash tax adjustments relating to or as a result of the establishment
of a deferred tax valuation allowance, (iv) restructuring charges, (v) the
gain on the sale of three buildings, (vi) the gain recognized in connection
with the sale of the Top-Flite and Ben Hogan brands, and (vii) the
cost-reduction initiatives. In addition, the Company also provided additional
non–GAAP information about its results, excluding interest, taxes,
depreciation and amortization expenses as well as impairment charges
("Adjusted EBITDA"). For comparative purposes, the Company applied an
annualized statutory tax rate of 38.5% to derive the non-GAAP earnings/loss
per share and Adjusted EBITDA. The non-GAAP information 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 sales and loss per share for
2012, the estimated savings or charges (or timing thereof) related to the
cost-reduction initiatives, future cost structure, success of the 2013 product
line, improved results in 2013 or beyond, and the Company's
recovery/turnaround, 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 cost-reduction
initiatives, consumer acceptance of and demand for the Company's products, the
level of promotional activity in the marketplace, as well as future consumer
discretionary purchasing activity, which can be significantly adversely
affected by unfavorable economic or market conditions, as well as future
changes in foreign currency exchange rates. Actual results may differ
materially from those estimated or anticipated as a result of these 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, 2011 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
          Tim Buckman
          (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,
                                             2012              2011
ASSETS
Current assets:
       Cash and cash equivalents             $             $    
                                             59,139           43,023
       Accounts receivable, net              143,697           115,673
       Inventories                           189,066           233,070
       Deferred taxes, net                   3,970             4,029
       Income taxes receivable               3,609             3,654
       Assets held for sale                  2,396             -
       Other current assets                  20,895            19,880
        Total current assets              422,772           419,329
Property, plant and equipment, net           94,919            117,147
Intangible assets, net                       123,472           151,138
Other assets                                 40,775            39,498
        Total assets                      $    681,938  $    727,112
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
       Accounts payable and accrued          $             $    129,193
       expenses                              99,166
       Accrued employee compensation and     21,343            23,785
       benefits
       Accrued warranty expense              8,133             8,140
       Income tax liabilities                7,285             6,666
        Total current liabilities         135,927           167,784
Long-term liabilities                        150,142           46,514
Shareholders' equity                         395,869           512,814
        Total liabilities and             $    681,938  $    727,112
       shareholders' equity

Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                            Quarter Ended
                                            September 30,
                                            2012        2011
Net sales                                   $ 147,906   $ 173,243
Cost of sales                               144,106     125,857
Gross profit                                3,800       47,386
Operating expenses:
        Selling                            60,273      62,273
        General and administrative         18,238      20,775
        Research and development           7,978       8,501
               Total operating expenses     86,489      91,549
Loss from operations                        (82,689)    (44,163)
Other expense, net                          (3,359)     (3,570)
Loss before income taxes                   (86,048)    (47,733)
Income tax provision                       750         14,854
Net loss                                    (86,798)    (62,587)
Dividends on convertible preferred stock    2,414       2,625
Net loss allocable to common shareholders   $ (89,212)  $  (65,212)
Earnings (loss) per common share:
        Basic                               ($1.33)     ($1.01)
        Diluted                             ($1.33)     ($1.01)
Weighted-average common shares outstanding:
        Basic                               67,162      64,781
        Diluted                             67,162      64,781
                                            Nine Months Ended
                                            September 30,
                                            2012        2011
Net sales                                   $ 714,127   $ 732,656
Cost of sales                               475,303     458,927
Gross profit                                238,824     273,729
Operating expenses:
        Selling                             212,822     211,688
        General and administrative          48,918      67,186
        Research and development            22,381      26,196
               Total operating expenses     284,121     305,070
Loss from operations                        (45,297)    (31,341)
Other expense, net                          (4,246)     (8,377)
Loss before income taxes                   (49,543)    (39,718)
Income tax provision                       2,654       69,117
Net loss                                    (52,197)    (108,835)
Dividends on convertible preferred stock    7,664       7,875
Net loss allocable to common shareholders   $ (59,861)  $ (116,710)
Earnings (loss) per common share:
        Basic                               ($0.91)     ($1.81)
        Diluted                             ($0.91)     ($1.81)
Weighted-average common shares outstanding:
        Basic                               65,740      64,505
        Diluted                             65,740      64,505

Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
                                                       Nine Months Ended
                                                       September 30,
                                                       2012        2011
Cash flows from operating activities:
 Net loss                                              $ (52,197)  $ (108,835)
 Adjustments to reconcile net loss to net cash used in
 operating activities:
          Depreciation and amortization                26,576      28,438
          Impairment charges                           17,056      5,413
          Deferred taxes, net                          (1,397)     51,660
          Non-cash share-based compensation            2,482       8,879
          Gain on disposal of long-lived assets        (1,521)     (7,196)
          Gain on sale of intangible assets            (6,602)     -
          Debt discount amortization                   27          -
          Changes in assets and liabilities            (13,675)    43,501
 Net cash (used in) provided by operating activities   (29,251)    21,860
Cash flows from investing activities:
 Capital expenditures                                  (16,001)    (21,154)
 Proceeds from sale of property, plant and equipment   324         18,287
 Net proceeds from sale of intangible assets           26,861      -
 Net cash provided by (used in) investing activities   11,184      (2,867)
Cash flows from financing activities:
 Proceeds from issuance of convertible notes           46,819      -
 Debt issuance cost                                    (3,534)     -
 Issuance of common stock                              -           2,198
 Dividends paid                                        (9,526)     (9,819)
 Payment on credit facilities, net                     -           (2,467)
 Other financing activities                            40          (84)
 Net cash provided by (used in) financing activities   33,799      (10,172)
Effect of exchange rate changes on cash               384         431
Net increase in cash and cash equivalents              16,116      9,252
Cash and cash equivalents at beginning of period       43,023      55,043
Cash and cash equivalents at end of period             $ 59,139   $  64,295

Callaway Golf Company
Consolidated Net Sales and Operating Segment Information
(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)
              2012      2011      Dollars   Percent    2012      2011^(2)  Dollars   Percent
Net sales:
 Woods        $        $        $         -25%       $         $         $        -3%
              31,147    41,545    (10,398)             180,425   186,117   (5,692)
 Irons       31,029    38,223    (7,194)   -19%       147,170   168,384   (21,214)  -13%
 Putters      15,734    15,060    674       4%         78,699    67,030    11,669    17%
 Golf balls   26,620    32,740    (6,120)   -19%       119,004   132,085   (13,081)  -10%
 Accessories
 and other    43,376    45,675    (2,299)   -5%        188,829   179,040   9,789     5%
 ^(1)
              $         $         $         -15%       $         $         $         -3%
              147,906   173,243   (25,337)             714,127   732,656   (18,529)
              Net Sales by Region                     Net Sales by Region
              Quarter Ended                           Nine Months Ended
              September 30,       Growth/(Decline)     September 30,       Growth/(Decline)
              2012      2011      Dollars   Percent    2012      2011      Dollars   Percent
Net sales:
 United       $        $        $         -23%       $         $         $        -2%
 States       57,140    73,890    (16,750)             349,183   357,767   (8,584)
 Europe       19,189    25,365    (6,176)   -24%       105,332   114,443   (9,111)   -8%
 Japan        41,635    41,806    (171)     0%         120,868   108,124   12,744    12%
 Rest of Asia 16,149    17,505    (1,356)   -8%        60,758    68,593    (7,835)   -11%
 Other
 foreign      13,793    14,677    (884)     -6%        77,986    83,729    (5,743)   -7%
 countries
              $         $         $         -15%       $         $         $         -3%
              147,906   173,243   (25,337)             714,127   732,656   (18,529)
              Operating Segment Information           Operating Segment Information
              Quarter Ended                           Nine Months Ended
              September 30,       Growth/(Decline)     September 30,       Growth/(Decline)
              2012      2011^(2)  Dollars   Percent    2012      2011^(2)  Dollars   Percent
Net sales:
 Golf clubs   $         $         $         -14%       $         $         $        -1%
              121,286   140,503   (19,217)             595,123   600,570   (5,447)
 Golf balls   26,620    32,740    (6,120)   -19%       119,004   132,086   (13,082)  -10%
              $         $         $         -15%       $         $         $         -3%
              147,906   173,243   (25,337)             714,127   732,656   (18,529)
Income (loss) before
income taxes:
 Golf clubs^ $         $         $         -143%      $        $        $         -141%
              (57,840)  (23,846)  (33,994)             (7,247)   17,767    (25,014)
 Golf balls  (13,789)  (6,715)   (7,074)   -105%      (8,047)   (3,330)   (4,717)   -142%
 Reconciling  (14,419)  (17,172)  2,753     16%        (34,249)  (54,155)  19,906    37%
 items ^(3)
              $         $         $         -80%       $         $         $        25%
              (86,048)  (47,733)  (38,315)             (49,543)  (39,718)  (9,825)

^(1) Accessories & other include packaged sets as well as pre-owned product
     sales.
^(2) Certain prior period amounts have been reclassified between product
     categories to conform with the current period presentation.
     Represents corporate general and administrative expenses and other income
^(3) (expense) not utilized by management in determining segment
     profitability.

Callaway Golf Company
Supplemental Financial Information
(In thousands, except per share data)
(Unaudited)
                                        Quarter Ended September 30,                                       Quarter Ended September 30,
                                        2012                                                              2011
                                        Pro                                                               Pro
                                        Forma     Cost Reduction                                          Forma     Gross Margin
                                                  Initiatives^(1)  Non-Cash Tax     Total as                        Initiatives   Restructuring^(1)  Non-Cash Tax    Total as
                                        Callaway  (3)              Adjustment^(2)   Reported              Callaway  ^(1)                             Adjustment^(2)  Reported
                                        Golf                                                              Golf
                                        ^(1)                                                              ^(1)
                                        $      $         $         $                 $      $        $          $         $    
Net sales                                           -          -        147,906                          -       -               -         
                                        147,906                                                          173,243                                                   173,243
Gross profit                            31,102    (27,302)         -                3,800                 53,626    (5,191)       (1,049)            -               47,386
% of sales                              21%       n/a            n/a            3%                    31%       n/a         n/a              n/a           27%
Operating expenses                      78,707    7,782            -                86,489                85,165    38            6,346              -               91,549
Income (expense) from operations        (47,605)  (35,084)         -                (82,689)              (31,539)  (5,229)       (7,395)            -               (44,163)
Other expense, net                      (3,359)   -                -                (3,359)               (3,570)   -             -                  -               (3,570)
Income (loss) before income taxes       (50,964)  (35,084)         -                (86,048)              (35,109)  (5,229)       (7,395)            -               (47,733)
Income tax provision (benefit)          (19,621)  (13,508)         33,879           750                   (13,517)  (2,013)       (2,847)            33,231          14,854
Net income (loss)                       (31,343)  (21,576)         (33,879)         (86,798)              (21,592)  (3,216)       (4,548)            (33,231)        (62,587)
Dividends on convertible preferred      2,414     -                -                2,414                 2,625     -             -                  -               2,625
stock
Net income (loss) allocable to common   $      $          $           $                 $      $        $           $           $    
shareholders                                  (21,576)        (33,879)        (89,212)                   (3,216)       (4,548)            (33,231)         
                                        (33,757)                                                          (24,217)                                                   (65,212)
                                        $                                        $                 $                                                       $    
Diluted earnings (loss) per share:            $         $                                   $        $          $             
                                                 (0.32)        (0.51)          (1.33)                        (0.05)      (0.07)             (0.52)         (1.01)
                                        (0.50)                                                            (0.37)
Weighted-average shares                 67,162    67,162           67,162           67,162                64,781    64,781        64,781             64,781          64,781
outstanding:
                                        Nine Months Ended September 30,                                   Nine Months Ended September 30,
                                        2012                                                              2011
                                        Pro                                                               Pro                     Non-Cash
                                        Forma     Gain on Sale of  Cost Reduction   Non-Cash              Forma     Global                                           Gain on    Non-Cash
                                                  Top-Flite & Ben  Initiatives^(1)  Tax         Total as            Operations    Impairment         Restructuring   Sale of    Tax         Total as
                                        Callaway  Hogan^(1)        (3)              Adjustment  Reported  Callaway  Strategy^(1)                                     Buildings  Adjustment  Reported
                                        Golf                                                              Golf                    Charge
                                        ^(1)                                                             ^(1)
                                        $                                        $                 $                                                       $      $    
Net sales                                      $         $                $              $        $          $                      $  
                                        714,127       -          -         -         714,127   732,656      -       -               -               -         732,656
                                                                                                                                                                     -
Gross profit                            267,087   -                (28,263)         -           238,824   292,118   (17,340)      -                  (1,049)         -          -           273,729
% of sales                              37%       n/a            n/a            n/a       33%       40%       n/a         n/a              n/a           n/a      n/a       37%
Operating expenses                      279,231   (6,602)          11,492           -           284,121   294,088   231           5,413              11,508          (6,170)    -           305,070
Income (expense) from operations        (12,144)  6,602            (39,755)         -           (45,297)  (1,970)   (17,571)      (5,413)            (12,557)        6,170      -           (31,341)
Other expense, net                      (4,246)   -                -                -           (4,246)   (8,377)   -             -                  -               -          -           (8,377)
Income (loss) before income taxes       (16,390)  6,602            (39,755)         -           (49,543)  (10,347)  (17,571)      (5,413)            (12,557)        6,170      -           (39,718)
Income tax provision (benefit)          (6,310)   2,542            (15,306)         21,728      2,654     (3,984)   (6,765)       (2,084)            (4,834)         2,247      84,537      69,117
Net income (loss)                       (10,080)  4,060            (24,449)         (21,728)    (52,197)  (6,363)   (10,806)      (3,329)            (7,723)         3,923      (84,537)    (108,835)
Dividends on convertible preferred      7,664     -                -                -           7,664     7,875     -             -                  -               -          -           7,875
stock
Net income (loss) allocable to common   $      $         $           $       $       $      $         $           $          $      $       $ 
shareholders                                   4,060         (24,449)        (21,728)   (59,861)        (10,806)      (3,329)            (7,723)              (84,537)   (116,710)
                                        (17,744)                                                          (14,238)                                                   3,923
                                        $                                        $                 $                                                       $      $    
Diluted earnings (loss) per share:            $         $                   $            $        $          $                         $    
                                                  0.06        (0.37)          (0.33)      (0.91)           (0.17)      (0.05)             (0.12)          0.06    (1.31)     (1.81)
                                        (0.27)                                                            (0.22)
Weighted-average shares                 65,740    65,740           65,740           65,740      65,740    64,505    64,505        64,505             64,505          64,505     64,505      64,505
outstanding:

^(1) For comparative purposes, the Company applied an annualized statutory tax
     rate of 38.5% to derive pro forma results.
     Current period impact of valuation allowance established against the
^(2) Company's U.S. deferred tax assets and impact of applying statutory tax
     rate of 38.5% to pro forma results.
     Includes costs associated with workforce reductions, transition costs
     associated with licensing the Company's North American apparel business
^(3) and footwear business, transition costs associated with outsourcing the
     development of any new technologyin the Company's uPro GPS business, and
     cost associated with the reorganization of the Company's golf ball
     manufacturing supply chain.

             2012 Trailing Twelve Month Adjusted EBITDA        2011 Trailing Twelve Month Adjusted EBITDA
Adjusted     Quarter Ended                                     Quarter Ended
EBITDA:
             December   March    June    September             December  March    June 30,  September
             31,        31,      30,     30,                   31,      31,                30,
             2011       2012     2012    2012       Total      2010      2011     2011      2011       Total
             $       $     $                           $      $     $                 $    
Net income                    $      $                              $       
(loss)       (62,985)   31,802        (86,798)  (115,182)  (32,255)  12,818  (59,066)  (62,587)  (141,090)
                                 2,799
Interest
expense      324        817      884     1,343      3,368      (444)     142      207       399        304
(income),
net
Income tax
provision    12,442     (292)    2,196   750        15,096     (13,231)  8,780    45,483    14,854     55,886
(benefit)
Depreciation
and          10,198     8,745    9,489   8,342      36,774     10,707    9,880    9,311     9,247      39,145
amortization
expense
Impairment   1,120      -        -       17,056     18,176     7,547     -        5,413     -          12,960
charge
             $       $     $                           $      $     $                 $    
Adjusted          -           $      $                            $        
EBITDA       (38,901)   41,072         (59,307)  (41,768)   (27,676)  31,620  1,348    (38,087)  (32,795)
                                 15,368

Callaway Golf Company
Summary of Core and Non-core Net Sales and Gross Profit
(In thousands)
(Unaudited)
      Quarter Ended March, 31,      Quarter Ended June 30, 2012  Quarter Ended September 30,  Nine Months Ended September
      2012                                                       2012                         30, 2012
      Pro Forma  Core      Non-core  Pro      Core      Non-core  Pro      Core      Non-core  Pro      Core      Non-core
                 Business  Business  Forma    Business  Business  Forma    Business  Business  Forma    Business  Business
      Results              ^(1)      Results            ^(1)      Results            ^(1)      Results            ^(1)
Net     $        $         $      $        $         $      $        $         $      $        $      $   
sales   285,098  263,792    21,306  281,123  255,137    25,986  147,906  138,902           714,127            56,296
                                                                                     9,004              657,831
Gross   $        $         $      $        $         $      $       $        $      $        $      $   
profit  124,395  121,907           111,590  106,485           31,102   32,731             267,087            
                           2,488                        5,105                        (1,629)            261,123   5,964
% of    44%      46%       12%       40%      42%       20%       21%      24%       -18%      37%      40%       11%
Sales
      Quarter Ended March, 31,      Quarter Ended June 30, 2011  Quarter Ended September 30,  Nine Months Ended September
      2011                                                       2011                         30, 2011
      Pro Forma  Core      Non-core  Pro      Core      Non-core  Pro      Core      Non-core  Pro      Core      Non-core
                 Business  Business  Forma    Business  Business  Forma    Business  Business  Forma    Business  Business
      Results              ^(1)      Results            ^(1)      Results            ^(1)      Results            ^(1)
Net     $        $         $      $        $         $      $        $         $      $        $      $   
sales   285,599  260,203    25,396  273,814  247,886    25,928  173,243  158,011    15,232  732,656            66,556
                                                                                                        666,100
Gross   $        $         $      $        $         $      $       $        $      $        $      $   
profit  129,983  126,345           108,509  104,667           53,626   55,160             292,118            
                           3,638                        3,842                        (1,534)            286,172   5,946
% of    46%      49%       14%       40%      42%       15%       31%      35%       -10%      40%      43%       9%
Sales

^(1) Includes: Top-Flite and Ben Hogan branded products, apparel and footwear
     in North America and uPro GPS devices.

SOURCE Callaway Golf

Website: http://www.callawaygolf.com
 
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