Callaway Golf Company Announces Fourth Quarter And Full Year 2012 Results And Provides 2013 Guidance
Callaway Golf Company Announces Fourth Quarter And Full Year 2012 Results And
Provides 2013 Guidance
- 2012 Fourth Quarter net sales of $118 million and pro forma loss per share
of $0.49 are consistent with the Company's guidance last quarter. GAAP loss
per share of $1.03.
- 2012 Full Year net sales of $832 million and pro forma loss per share of
$0.78. GAAP loss per share of $1.98.
- Callaway estimates full year 2013 net sales of approximately $850 million;
pro forma net income at breakeven; and pro forma loss per share of $0.04.
PR Newswire
CARLSBAD, Calif., Jan. 30, 2013
CARLSBAD, Calif., Jan. 30, 2013 /PRNewswire/ -- Callaway Golf Company
(NYSE:ELY) today announced its fourth quarter and full year 2012 financial
results.
GAAP RESULTS.
For the fourth 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 $118 - $154 - ($36)
Gross Profit $8 7% $38 24% ($30)
Operating Expenses $80 67% $87 57% $7
Operating Loss ($71) (61%) ($50) (32%) ($21)
Loss per share ($1.03) - ($1.01) - (0.02)
For the full year 2012, the Company reported the following results:
Dollars in millions except 2012 % of Sales 2011 % of Sales Improvement /
per share amounts (Decline)
Net Sales $832 - $887 - ($55)
Gross Profit $247 30% $311 35% ($64)
Operating Expenses $364 44% $392 44% $28
Operating Loss ($117) (14%) ($81) (9%) ($36)
Loss per share ($1.98) - ($2.82) - $0.84
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 fourth quarter of 2012, the Company reported the following non-GAAP
pro forma results:
Dollars in millions except 2012 % of Sales 2011 % of Sales Improvement /
per share amounts (Decline)
Net Sales $118 - $154 - ($36)
Gross Profit $16 14% $41 27% ($25)
Operating Expenses $74 62% $79 51% $5
Operating Loss ($57) (49%) ($38) (25%) ($19)
Loss per share ($0.49) - ($0.41) - ($0.08)
For the full year 2012, the Company reported the following non-GAAP pro forma
results:
Dollars in millions except 2012 % of Sales 2011 % of Sales Improvement /
per share amounts (Decline)
Net Sales $832 - $887 - ($55)
Gross Profit $283 34% $333 38% ($50)
Operating Expenses $353 42% $373 42% $20
Operating Loss ($70) (8%) ($40) (4%) ($30)
Loss per share ($0.78) - ($0.63) - ($0.15)
"Our pro forma financial results for the fourth quarter and full year reflect
both the previously reported challenges our business faced during 2012 as well
as the actions we took during the year to prepare our business for a
turnaround in 2013," commented Chip Brewer, President and Chief Executive
Officer. "While our 2012 financial results were disappointing, as I look back
on the year, I am very pleased with the pace and direction of change we
implemented. During 2012, we made several key additions to the senior
management team, sold the Top-Flite and Ben Hogan brands, licensed our
footwear and apparel businesses, began transitioning our GPS business to a
third party model, strengthened our presence on tour worldwide, restructured
our Americas and European sales organizations, improved our manufacturing and
supply chains, re-energized our global product development team, overhauled
our approach to global marketing, refinanced a majority of our outstanding
convertible preferred stock with less expensive 3.75% convertible debt and
implemented major reductions in force and other cost reductions which should
result in annualized savings of $60 million. These changes are also driving
cultural and behavioral changes at Callaway which, along with our renewed
focus on our core golf clubs and golf ball businesses, should serve as the
keystone to our turnaround."
"Looking forward, I am encouraged on several fronts," continued Mr. Brewer.
"On a macro basis, we continue to anticipate a slow but steady market recovery
in the U.S. as well as growth opportunities in Asia. During the second half of
2012, we saw stabilization of our overall market share and lower retail
inventory as a result of improved sell-through performance in most of our key
markets. Additionally, we are encouraged with the early response we've
received on our 2013 product line and marketing message. Our expectation is
to re-gain hard goods market share in each of our major markets (Americas,
East Asia, Southeast Asia Pacific and Europe). Despite this optimism, we
remain mindful that there is much work to be done, we continue to anticipate
an extremely competitive market place, and we know that our success ultimately
will be determined by the consumer as measured by both sell-through and
customer loyalty generated from our product performance and brand appeal. All
things considered, I remain confident in our turnaround plans and optimistic
on our long-term outlook. All of us at Callaway are excited for the start of
the 2013 season."
Business Outlook
The Company provided guidance for the full year and first half of 2013 as
follows:
Net Sales
The Company estimates that net sales for the full year 2013 will be
approximately $850 million compared to $832 million in 2012. Net sales
related to the Company's continuing brands and business were $772 million in
2012, with net sales relating to the brands and businesses that were sold or
transitioned to a third party model of approximately $60 million.
The Company estimates that net sales for the first half of 2013 will be
approximately $555 million compared to $566 million in 2012. The Company's
estimated net sales for the first half of 2013 would represent an increase of
7% over the first half 2012 net sales of $519 million related to the Company's
continuing brands and business.
Earnings
The Company estimates that 2013 full year non-GAAP pro-forma net income will
be breakeven with a non-GAAP pro forma loss per share of $0.04 due to the
impact of dividends paid on the Company's outstanding convertible preferred
stock. In 2012, the Company's non-GAAP pro forma loss was $43.9 million with
a non-GAAP pro forma loss per share of $0.78.
The Company estimates that first half 2013 non-GAAP pro forma net income will
be approximately $28 million (an increase of 33% compared to $21 million for
the same period last year) and that non-GAAP pro forma earnings per share will
be approximately $0.33 per share as compared to $0.25 per share for the first
half of 2012.
The non-GAAP pro forma estimates of net income and earnings per share exclude
for 2013 carryover charges related to the Company's prior cost-reduction
initiatives and exclude for 2012 gains and charges relating to the sale of the
Top Flite/Ben Hogan brands and the cost-reduction initiatives. The pro forma
estimates for both 2013 and 2012 are based upon an assumed tax rate of 38.5%.
The schedules to this release include a reconciliation of the non-GAAP
information to the most directly comparable GAAP information.
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. PST today to
discuss the Company's financial results, business and outlook for 2013. The
call will be broadcast live over the Internet and can be accessed at
www.callawaygolf.com. To listen to the call, please go to the website at
least 15 minutes before the call to register and for instructions on how to
access the broadcast. A replay of the conference call will be available
approximately three hours after the call ends, and will remain available
through 9:00 p.m. PST on Wednesday, February 6, 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
90593160.
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, income and per share
results for 2013, the estimated savings or charges (or timing thereof) related
to the cost-reduction initiatives, future market recovery, growth
opportunities, or market share gains, success of the 2013 product line, the
Company's recovery/turnaround, and long-term outlook are forward-looking
statements as defined under the Private Securities Litigation Reform Act of
1995. These statements are based upon current information and expectations.
Accurately estimating the forward-looking statements is based upon various
risks and unknowns including delays, difficulties, or increased costs in
implementing the 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
(760) 931-1771
(Logo: http://photos.prnewswire.com/prnh/20091203/CGLOGO)
Callaway Golf Company
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 52,003 $ 43,023
Accounts receivable, net 89,272 115,673
Inventories 212,563 233,070
Deferred taxes, net 4,170 4,029
Income taxes receivable 1,810 3,654
Assets held for sale 2,396 -
Other current assets 23,811 19,880
Total current assets 386,025 419,329
Property, plant and equipment, net 89,093 117,147
Intangible assets, net 118,223 151,138
Other assets 43,324 39,498
Total assets $ 636,665 $ 727,112
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 129,021 $ 129,193
Accrued employee compensation and 20,171 23,785
benefits
Accrued warranty expense 7,539 8,140
Income tax liabilities 4,357 6,666
Total current liabilities 161,088 167,784
Long-term liabilities 155,126 46,514
Shareholders' equity 320,451 512,814
Total liabilities and shareholders' $ 636,665 $ 727,112
equity
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended
December 31,
2012 2011
Net sales $ 117,881 $ 153,872
Cost of sales 109,766 116,299
Gross profit 8,115 37,573
Operating expenses:
Selling 54,753 53,637
General and administrative 17,634 25,570
Research and development 7,161 8,113
Total operating expenses 79,548 87,320
Loss from operations (71,433) (49,747)
Other income (expense), net 2,435 (796)
Loss before income taxes (68,998) (50,543)
Income tax provision 3,008 12,442
Net loss (72,006) (62,985)
Dividends on convertible preferred stock 783 2,625
Net loss allocable to common shareholders $ (72,789) $ (65,610)
Loss per common share:
Basic ($1.03) ($1.01)
Diluted ($1.03) ($1.01)
Weighted-average common shares outstanding:
Basic 70,996 64,887
Diluted 70,996 64,887
Year Ended
December 31,
2012 2011
Net sales $ 832,008 $ 886,528
Cost of sales 585,069 575,226
Gross profit 246,939 311,302
Operating expenses:
Selling 267,575 265,325
General and administrative 66,552 92,756
Research and development 29,542 34,309
Total operating expenses 363,669 392,390
Loss from operations (116,730) (81,088)
Other expense, net (1,811) (9,173)
Loss before income taxes (118,541) (90,261)
Income tax provision 5,662 81,559
Net loss (124,203) (171,820)
Dividends on convertible preferred stock 8,447 10,500
Net loss allocable to common shareholders $ (132,650) $ (182,320)
Loss per common share:
Basic ($1.98) ($2.82)
Diluted ($1.98) ($2.82)
Weighted-average common shares outstanding:
Basic 67,061 64,601
Diluted 67,061 64,601
Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Year Ended
December 31,
2012 2011
Cash flows from operating activities:
Net loss $ (124,203) $ (171,820)
Adjustments to reconcile net loss to net cash (used
in) provided by operating activities:
Depreciation and amortization 34,411 38,636
Impairment charges 21,933 6,533
Deferred taxes, net (1,925) 55,930
Non-cash share-based compensation 3,142 9,570
Gain on disposal of long-lived assets (1,261) (7,491)
Gain on sale of intangible assets (6,602) -
Debt discount amortization 235 -
Changes in assets and liabilities 45,462 78,740
Net cash (used in) provided by operating activities (28,808) 10,098
Cash flows from investing activities:
Capital expenditures (18,403) (28,931)
Net proceeds from sale of intangible assets 26,861 -
Proceeds from sale of property, plant and equipment 355 19,371
Other investing activities (3,268) -
Net cash provided by (used in) investing activities 5,545 (9,560)
Cash flows from financing activities:
Proceeds from issuance of convertible notes 46,819 -
Debt issuance cost (3,534) -
Issuance of common stock - 2,195
Dividends paid (11,019) (13,093)
Issuance of treasury stock 19 -
Credit facility origination fees - (2,467)
Other financing activities (159) 80
Net cash provided by (used in) financing activities 32,126 (13,285)
Effect of exchange rate changes on cash 117 727
Net increase (decrease) in cash and cash equivalents 8,980 (12,020)
Cash and cash equivalents at beginning of period 43,023 55,043
Cash and cash equivalents at end of period $ 52,003 $ 43,023
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 Year Ended
December 31, Growth/(Decline) December 31, Growth/(Decline)
2012 2011 Dollars Percent 2012 2011^(2) Dollars Percent
Net sales:
Woods $ $ $ -21% $ $ $ -5%
20,163 25,383 (5,220) 200,588 211,191 (10,603)
Irons 23,624 38,129 (14,505) -38% 170,794 206,817 (36,023) -17%
Putters 14,626 21,131 (6,505) -31% 93,325 88,160 5,165 6%
Golf balls 20,572 28,273 (7,701) -27% 139,576 160,359 (20,783) -13%
Accessories
and other 38,896 40,956 (2,060) -5% 227,725 220,001 7,724 4%
^(1)
$ $ $ -23% $ $ $ -6%
117,881 153,872 (35,991) 832,008 886,528 (54,520)
Net Sales by Region Net Sales by Region
Quarter Ended Year Ended
December 31, Growth/(Decline) December 31, Growth/(Decline)
2012 2011 Dollars Percent 2012 2011 Dollars Percent
Net sales:
United $ $ $ -34% $ $ $ -7%
States 40,840 61,682 (20,842) 390,030 419,448 (29,418)
Europe 14,830 19,129 (4,299) -22% 120,160 133,572 (13,412) -10%
Japan 36,443 41,644 (5,201) -12% 157,315 149,768 7,547 5%
Rest of 14,276 14,152 124 1% 75,035 82,746 (7,711) -9%
Asia
Other
foreign 11,492 17,265 (5,773) -33% 89,468 100,994 (11,526) -11%
countries
$ $ $ -23% $ $ $ -6%
117,881 153,872 (35,991) 832,008 886,528 (54,520)
Operating Segment Information Operating Segment Information
Quarter Ended Year Ended
December 31, Growth/(Decline) December 31, Growth/(Decline)
2012 2011 Dollars Percent 2012 2011 Dollars Percent
Net sales:
Golf clubs $ $ $ -23% $ $ $ -5%
97,309 125,599 (28,290) 692,432 726,169 (33,737)
Golf balls 20,572 28,273 (7,701) -27% 139,576 160,359 (20,783) -13%
$ $ $ -23% $ $ $ -6%
117,881 153,872 (35,991) 832,008 886,528 (54,520)
Income
(loss)
before
income
taxes:
Golf $ $ $ -141% $ $ $ 1358%
clubs^ (49,590) (20,591) (28,999) (56,838) (3,899) (52,939)
Golf balls (10,675) (10,382) (293) -3% (18,724) (12,655) (6,069) -48%
Reconciling (8,733) (19,570) 10,837 55% (42,979) (73,707) 30,728 42%
items ^(3)
$ $ $ -37% $ $ $ 31%
(68,998) (50,543) (18,455) (118,541) (90,261) (28,280)
^(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.
^(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 Reconciliation
(In thousands, except per share data)
(Unaudited)
Quarter Ended December 31, Quarter Ended December 31,
2012 2011
Pro Pro Non-Cash
Forma Cost Reduction Non-Cash Tax Total as Forma Global Impairment Non-Cash Tax Total as
Callaway Initiatives^(1) Adjustment^(2) Reported Callaway Operations Charge Restructuring^(1) Adjustment^(2) Reported
Golf (3) Golf Strategy^(1) ^(1)
^(1) ^(1)
$ $ $ $ $ $ $ $ $ $
Net sales - - 117,881 - - - 153,872
117,881 153,872 -
Gross profit 16,084 (7,969) - 8,115 41,025 (3,250) - (202) - 37,573
% of sales 14% n/a n/a 7% 27% n/a n/a n/a n/a 24%
Operating expenses 73,566 5,982 - 79,548 78,771 3,859 1,120 3,570 - 87,320
Expense from operations (57,482) (13,951) - (71,433) (37,746) (7,109) (1,120) (3,772) - (49,747)
Other income (expense), net 2,435 - - 2,435 (796) - - - - (796)
Loss before income taxes (55,047) (13,951) - (68,998) (38,542) (7,109) (1,120) (3,772) - (50,543)
Income tax provision (benefit) (21,193) (5,372) 29,573 3,008 (14,839) (2,737) (431) (1,453) 31,902 12,442
Net loss (33,854) (8,579) (29,573) (72,006) (23,703) (4,372) (689) (2,319) (31,902) (62,985)
Dividends on convertible preferred 783 - - 783 2,625 - - - - 2,625
stock
Net loss allocable to common $ $ $ $ $ $ $ $ $ $
shareholders (8,579) (29,573) (72,789) (4,372) (689) (2,319) (31,902) (65,610)
(34,637) (26,328)
$ $ $ $
Diluted loss per share: $ $ $ $ $ $
(0.12) (0.42) (1.03) (0.07) (0.01) (0.03) (0.49) (1.01)
(0.49) (0.41)
Weighted-average shares 70,996 70,996 70,996 70,996 64,887 64,887 64,887 64,887 64,887 64,887
outstanding:
Year Ended Ended December 31, Year Ended Ended December 31,
2012 2011
Pro Non-Cash Pro Non-Cash Non-Cash
Forma Gain on Sale of Cost Reduction Tax Total as Forma Global Impairment Restructuring Gain on Sale Tax Total as
Callaway Top-Flite & Ben Initiatives^(1) Adjustment Reported Callaway Operations Charge ^(1) of Buildings Adjustment Reported
Golf Hogan^(1) (3) ^(2) Golf Strategy^(1) ^(1) ^(1) ^(2)
^(1) ^(1)
$ $ $ $ $ $ $ $ $ $ $ $
Net sales - - 832,008 - - - 886,528
832,008 - 886,528 - -
Gross profit 283,171 - (36,232) - 246,939 333,143 (20,590) - (1,251) - - 311,302
% of sales 34% n/a n/a n/a 30% 38% n/a n/a n/a n/a n/a 35%
Operating expenses 352,797 (6,602) 17,474 - 363,669 372,859 4,090 6,533 15,078 (6,170) - 392,390
Income (expense) from operations (69,626) 6,602 (53,706) - (116,730) (39,716) (24,680) (6,533) (16,329) 6,170 - (81,088)
Other expense, net (1,811) - - - (1,811) (9,173) - - - - - (9,173)
Income (loss) before income taxes (71,437) 6,602 (53,706) - (118,541) (48,889) (24,680) (6,533) (16,329) 6,170 - (90,261)
Income tax provision (benefit) (27,503) 2,542 (20,678) 51,301 5,662 (18,822) (9,502) (2,515) (6,287) 2,247 116,438 81,559
Net income (loss) (43,934) 4,060 (33,028) (51,301) (124,203) (30,067) (15,178) (4,018) (10,042) 3,923 (116,438) (171,820)
Dividends on convertible preferred 8,447 - - - 8,447 10,500 - - - - - 10,500
stock
Net income (loss) allocable to common $ $ $ $ $ $ $ $ $ $ $ $
shareholders 4,060 (33,028) (51,301) (132,650) (15,178) (4,018) (10,042) 3,923 (116,438) (182,320)
(52,381) (40,567)
$ $ $ $
Diluted earnings (loss) per share: $ $ $ $ $ $ $ $
0.06 (0.49) (0.77) (1.98) (0.23) (0.06) (0.16) 0.06 (1.80) (2.82)
(0.78) (0.63)
Weighted-average shares 67,061 67,061 67,061 67,061 67,061 64,601 64,601 64,601 64,601 64,601 64,601 64,601
outstanding:
^(1)For comparative purposes, the Company applied an annualized statutory tax rate of 38.5% to
derive pro forma results.
^(2)Current period impact of valuation allowance established against the Company's U.S. deferred tax assets and impact of applying
statutory tax rate of 38.5% to pro forma results.
^(3)Includes costs associated with workforce reductions, transition costs associated with licensing the Company's North American apparel and footwear businesses, transition costs associated
with outsourcing the development of any new technology
in 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 EBITDA: Quarter Ended Quarter Ended
March June 30, September 30, December March June 30, September December 31,
31, 31, 31, 30,
2012 2012 2012 2012 Total 2011 2011 2011 2011 Total
$ $ $ $ $ $ $ $ $ $
Net income (loss) 2,799 (86,798) (72,006) (124,203) (59,066) (62,587) (62,985) (171,820)
31,802 12,818
Interest expense, net 817 884 1,343 1,919 4,963 142 207 399 324 1,072
Income tax provision (benefit) (292) 2,196 750 3,008 5,662 8,780 45,483 14,854 12,442 81,559
Depreciation and amortization expense 8,745 9,489 8,342 7,835 34,411 9,880 9,311 9,247 10,198 38,636
Impairment charge - - 17,056 4,877 21,933 - 5,413 - 1,120 6,533
$ $ $ $ $ $ $ $ $ $
Adjusted EBITDA 15,368 (59,307) (54,367) (57,234) 1,348 (38,087) (38,901) (44,020)
41,072 31,620
Callaway Golf Company
Supplemental Financial Information - Non-GAAP
Reconciliation
(In thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
2012
Pro Gain on
Forma Non-Cash Cost Reduction Sale of
Tax Initiatives^(1) Top-Flite Total as
Callaway Adjustment (3) & Ben Reported
Golf ^(2) Hogan^(1)
^(1)
Net sales $ $ $ $ $
566,221 - - - 566,221
Gross profit 235,985 - (961) - 235,024
% of sales 42% n/a n/a n/a 42%
Operating expenses 200,524 - 3,710 (6,602) 197,632
Income (expense) from operations 35,461 - (4,671) 6,602 37,392
Other expense, net (887) - - - (887)
Income (loss) before income taxes 34,574 - (4,671) 6,602 36,505
Income tax provision (benefit) 13,311 (12,151) (1,798) 2,542 1,904
Net income (loss) 21,263 12,151 (2,873) 4,060 34,601
Dividends on convertible preferred 5,250 - - - 5,250
stock
Net income (loss) allocable to common $ $ 12,151 $ (2,873) $ $
shareholders 16,013 4,060 29,351
Diluted earnings (loss) per share: $ $ $ (0.03) $ $
0.25 0.14 0.05 0.41
Weighted-average shares 84,950 84,950 84,950 84,950 84,950
outstanding:
^(1)For comparative purposes, the Company applied an annualized statutory tax
rate of 38.5% to derive pro forma results.
^(2)Current period impact of valuation allowance established against the
Company's U.S. deferred tax assets and impact of applying statutory tax rate
of 38.5% to pro forma results.
^(3)Includes costs associated with workforce reductions and transition costs
associated with licensing the Company's North American apparel business and
footwear business.
2013 Non-GAAP Reconciliation
The non-GAAP pro forma estimates of net income and earnings per share for full
year 2013 exclude carryover charges of $4.2 million (or $0.06 per share)
related to the Company's prior cost-reduction initiatives. The non-GAAP pro
forma estimates of net income and earnings per share for the first half of
2013 exclude carryover charges of $3.8 million (or $0.05 per share) related to
the Company's prior cost-reduction initiatives. Additionally, the Company's
pro forma estimates assume a tax rate of 38.5%.
Callaway Golf Company
Summary of Ongoing and Sold or Transitioned Pro Forma Net Sales and Gross Profit
(In thousands)
(Unaudited)
Quarter Ended March, 31, 2012 Quarter Ended June 30, 2012 Quarter Ended September 30, 2012 Quarter Ended December 31, 2012 Year Ended December 31, 2012
Pro Sold or Pro Sold or Pro Sold or Pro Sold or Pro Sold or
Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned
Results Business Business Results Business Business Results Business Business Results Business Business Results Business Business
^(1) ^(1) ^(1) ^(1) ^(1)
Net $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
sales 285,098 263,792 21,306 281,123 255,137 25,986 147,906 138,902 9,004 117,881 113,931 3,950 832,008 771,762 60,246
Gross $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
profit 124,395 121,907 2,488 111,590 106,485 5,105 31,102 32,731 (1,629) 16,084 17,529 (1,445) 283,171 278,652 4,519
% of 44% 46% 12% 40% 42% 20% 21% 24% -18% 14% 15% -37% 34% 36% 8%
Sales
Quarter Ended March, 31, 2011 Quarter Ended June 30, 2011 Quarter Ended September 30, 2011 Quarter Ended December 31, 2011 Year Ended December 31, 2011
Pro Sold or Pro Sold or Pro Sold or Pro Sold or Pro Sold or
Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned Forma Ongoing Transitioned
Results Business Business Results Business Business Results Business Business Results Business Business Results Business Business
^(1) ^(1) ^(1) ^(1) ^(1)
Net $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
sales 285,599 260,203 25,396 273,814 247,886 25,928 173,243 158,011 15,232 153,872 139,643 14,229 886,528 805,743 80,785
Gross $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
profit 129,983 126,345 3,638 108,509 104,667 3,842 53,626 55,160 (1,534) 41,025 43,500 (2,475) 333,143 329,673 3,470
% of 46% 49% 14% 40% 42% 15% 31% 35% -10% 27% 31% -17% 38% 41% 4%
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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