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Callaway Golf Company Announces Revenue And Earnings Growth; Reiterates Full Year Earnings Guidance; And Reports Turnaround Plan

 Callaway Golf Company Announces Revenue And Earnings Growth; Reiterates Full
       Year Earnings Guidance; And Reports Turnaround Plan Is On Track

- 2013 first quarter earnings per share of $0.47, compared to $0.37 in 2012

- 2013 first quarter non-GAAP earnings per share of $0.33, compared to $0.18
in 2012

- Callaway increases estimated first half 2013 non-GAAP earnings per share
guidance from $0.33 to $0.44; lowers estimated first half sales guidance from
$555 million to $540 million

- Callaway reiterates full year 2013 earnings guidance, estimating non-GAAP
net income at breakeven and non-GAAP loss per share of $0.04; lowers full year
2013 estimated sales guidance from $850 million to $830 million.

PR Newswire

CARLSBAD, Calif., April 25, 2013

CARLSBAD, Calif., April 25, 2013 /PRNewswire/ --Callaway Golf Company
(NYSE:ELY) today announced its first quarter 2013 financial results, including
12% sales growth on a constant currency basis on its current business, which
excludes the brands and businesses that in 2012 were sold or transitioned to a
third party model as part of its 2012 turnaround plan. On a GAAP basis, the
Company's sales grew 1% for the first quarter of 2013 as compared to the same
period in 2012.

GAAP RESULTS.

For the first quarter of 2013, the Company reported the following results, as
compared to the same period in 2012:

Dollars in       First                  First
millions except  Quarter      % of      Quarter     % of     Improvement/
                              Sales                 Sales    (Decline)
per share        2013                   2012
amounts
Net Sales        $288         -         $285        -        $3
Gross Profit     $130         45%       $124        44%      $6
Operating        $90          31%       $97         34%      $7
Expenses
Operating Income $40          14%       $28         10%      $12
Income Tax       $2           1%        $0          0%       ($2)
Provision
Net Income       $42          14%       $32         11%      $10
Earnings per     $0.47        -         $0.37       -        $0.10
share (Diluted)

NON-GAAP FINANCIAL RESULTS.

In addition to the Company's results prepared in accordance with GAAP, the
Company also provided additional information concerning its results on a
non-GAAP basis. The manner in which this 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 first quarter of 2013, the Company reported the following non-GAAP
results, as compared to the same period in 2012:

Dollars in millions except per   First        % of  First   % of  Improvement/
share amounts                    Quarter 2013 Sales Quarter Sales (Decline)
                                                    2012
Net Sales                        $288         -     $285    -     $3
Gross Profit                     $133         46%   $124    44%   $9
Operating Expenses               $89          31%   $103    36%   $14
Operating Income                 $44          15%   $21     7%    $23
Income Tax Provision             $18          6%    $10     3%    ($8)
Net Income                       $29          10%   $15     5%    $14
Earnings per share (Diluted)     $0.33        -     $0.18   -     $0.15

The Company's net sales for the first quarter of 2013 increased to $288
million, as compared to $285 million for the same period in 2012. The
strength of the Company's 2013 product line allowed the Company to more than
offset the negative impact of foreign currency and the 2012 sale of the
Top-Flite and Ben Hogan brands and the transition in 2012 to a third party
model for other products, including U.S. apparel and footwear. As compared to
2012, the Company's first quarter 2013 net sales were adversely affected by $8
million due to changes in foreign currency exchange rates and by $20 million
due to the sold or transitioned brands and products. For the first quarter of
2013, net sales relating to the Company's current business, which excludes
these sold or transitioned brands and products, increased by 8% and on a
constant currency basis increased by 12%.

In addition to the increase in sales, improvements in gross margins and
operating expenses contributed to a 27% increase in GAAP fully diluted
earnings per share for the first quarter of 2013 compared to the same period
in 2012. The Company's GAAP earnings results for both periods benefited from
the effects of the Company's deferred tax valuation allowance, which
significantly reduced the Company's income tax provision. The Company's GAAP
fully diluted earnings per share for the first quarter of 2013 was also
adversely affected by approximately $0.02 per share related to charges
incurred in connection with the Company's 2012 cost-reduction initiatives. The
Company's GAAP fully diluted earnings per share for the first quarter of 2012
was positively affected by approximately $0.05 per share related to a gain on
the sale of the Top-Flite and Ben Hogan brands. On a non-GAAP basis, which
excludes these charges/gains and uses an assumed tax rate of 38.5%, the
Company's fully diluted earnings per share increased to $0.33 for the first
quarter of 2013 as compared to $0.18 for the first quarter of 2012.

"I am very pleased with our overall results this quarter," commented Chip
Brewer, President and Chief Executive Officer. "The strength of our 2013
product line, including our new X Hot products and Versa line of putters,
allowed us to achieve a 12% increase in net sales on our current business on a
constant currency basis. In addition, we are beginning to see the results of
the many cost-reduction and other initiatives we took in 2012, which
contributed to improvements in gross margins and operating expenses, and all
of which culminated in a $23 million increase in non-GAAP operating income for
the first quarter of 2013. However, it is still early in the year, and the
second quarter always has a big impact on our ability to achieve our full year
financial targets. With that said, the first quarter was an important first
step in our multi-year turnaround plan and we are pleased to report our
turnaround is on track." 

Business Outlook

First Half 2013

"We are lowering our first half 2013 net sales guidance due to continued
foreign currency headwinds and a slower than expected start to the golf season
in the United States and Europe as a result of unfavorable weather
conditions," commented Brad Holiday, Chief Financial Officer. "Our earnings
for the first quarter of 2013 were higher than anticipated due to better than
expected gross margins and operating expenses, as well as gains on foreign
exchange hedging contracts, all of which together more than offset the
negative impact of foreign currency exchange rates during the quarter,"
continued Mr. Holiday. "As a result of our better than expected first quarter
earnings, we are raising our earnings guidance for the first half of 2013."

The Company is currently providing the following revised guidance for the
first half of 2013:

  oNet sales for the first half of 2013 are currently estimated to be $540
    million, compared to previous guidance of $555 million. Net sales for the
    first half of 2012 were $566 million, which included net sales of $47
    million relating to the brands and products that in 2012 were sold or
    transitioned to a third party model. Excluding sales from the sold or
    transitioned businesses, the Company estimates that net sales from its
    current business on a constant currency basis will increase by
    approximately 7% in the first half of 2013 compared to the first half of
    2012.
  oNon-GAAP earnings per share is currently estimated at $0.44 for the first
    half of 2013, compared to previous guidance of $0.33 per share. During the
    first half of 2012, the Company reported non-GAAP earnings per share of
    $0.25.*

Full Year 2013

"We are lowering our full year 2013 net sales guidance, primarily due to our
expectations that the unfavorable foreign currency headwinds experienced
during the first quarter of 2013 will continue for the balance of the year,"
explained Brad Holiday, Chief Financial Officer. "We believe, however, that
gains on our foreign currency hedging contracts, along with better operating
efficiencies, will enable us to mitigate the anticipated adverse foreign
currency conditions and maintain our full year earnings guidance at this
time."

As a result, the Company is currently providing the following revised guidance
for the full year 2013:

  oNet sales for the full year 2013 are currently estimated to be $830
    million, compared to previous guidance of $850 million. Net sales for 2012
    were $834 million, which included net sales of $60 million related to the
    brands and products that in 2012 were sold or transitioned to a third
    party model. Excluding sales from the sold or transitioned businesses,
    the Company estimates that net sales from its current business on a
    constant currency basis will increase by approximately 12% in 2013
    compared to 2012.
  oFor the full year 2013, the Company continues to estimate that non-GAAP
    net income will be break-even with a non-GAAP loss per share of $0.04 due
    to the impact of dividends paid on the Company's outstanding convertible
    preferred stock. For the full year 2012, the Company's non-GAAP loss was
    $43 million with a non-GAAP loss per share of $0.77.*

*Note: The non-GAAP estimates of net income and earnings per share exclude
for 2013 carryover charges related to the Company's 2012 cost-reduction
initiatives and exclude for 2012 gains and charges related to the sale of the
Top Flite/Ben Hogan brands and the 2012 cost-reduction initiatives. The
non-GAAP estimates for both 2013 and 2012 are based upon an assumed tax rate
of 38.5% because the GAAP tax rates are not directly correlated to the
Company's pre-tax results due to the effect of the Company's deferred tax
valuation allowance.

Conference Call and Webcast

The Company will be holding a conference call at 2:00 p.m. PDT today to
discuss the Company's financial results, 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, May 2, 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 32874412.

Non-GAAP Information

The GAAP results contained in this press release and the financial statement
schedules attached to this press release have been prepared in accordance with
accounting principles generally accepted in the United States ("GAAP"). To
supplement the GAAP results, the Company has provided certain non-GAAP
financial information as follows:

Constant Currency Basis. The Company provided certain information regarding
the Company's net sales or projected net sales on a "constant currency
basis." This information estimates the impact of changes in foreign currency
rates on the translation of the Company's current or projected future period
net sales as compared to the applicable comparable prior period. This impact
is derived by taking the current or projected local currency results and
translating them into U.S. Dollars based upon the foreign currency exchange
rates for the applicable comparable prior period. It does not include any
other effect of changes in foreign currency rates on the Company's results or
business.

Excluded Items. The Company presented certain of the Company's financial
results excluding (i) the gain recognized in connection with the sale of the
Top-Flite and Ben Hogan brands, (ii) charges related to the 2012
cost-reduction initiatives, or (iii) sales related to the Top-Flite and Ben
Hogan brands or the products that were transitioned in 2012 to a third party
model, including U.S. apparel and footwear.

Adjusted EBITDA. The Company provided information about its results, excluding
interest, taxes, depreciation and amortization expenses, and impairment
charges ("Adjusted EBITDA").

Assumed Tax Rate. As a result of the Company's previously reported deferred
tax valuation allowance that was first established in 2011, the Company's GAAP
tax rate is not directly correlated to the Company's pre-tax results. For
comparative purposes, the Company has provided certain of the Company's income
and earnings/loss information and Adjusted EBITDA information based upon an
assumed tax rate of 38.5%. The difference between the Company's actual tax
rate and this assumed tax rate is reflected on the attached schedules under
"Non-Cash Tax Adjustment."

The non-GAAP information presented should not be considered in isolation or as
a substitute for any measure derived in accordance with GAAP. The non-GAAP
information may also be inconsistent with the manner in which similar measures
are derived or used by other companies. Management uses such non-GAAP
information for financial and operational decision-making purposes and as a
means to evaluate period over period comparisons and in forecasting the
Company's business going forward. Management believes that the presentation
of such non-GAAP information, when considered in conjunction with the most
directly comparable GAAP information, provides additional useful comparative
information for investors in their assessment of the underlying performance of
the Company's business without regard to these items. The Company has
provided reconciling information in 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 loss per
share for 2013, success of the 2013 product line, effectiveness of foreign
currency hedging contracts, the Company's recovery/turnaround, and long-term
outlook are forward-looking statements as defined under the Private Securities
Litigation Reform Act of 1995. These statements are based upon current
information and expectations. Accurately estimating the forward-looking
statements is based upon various risks and unknowns including delays,
difficulties, or increased costs in implementing the 2012 cost-reduction
initiatives; consumer acceptance of and demand for the Company's products; the
level of promotional activity in the marketplace; future consumer
discretionary purchasing activity, which can be significantly adversely
affected by unfavorable economic or market conditions; and future changes in
foreign currency exchange rates and the degree of effectiveness of the
Company's hedging programs. Actual results may differ materially from those
estimated or anticipated as a result of these risks and unknowns or other
risks and uncertainties, including continued compliance with the terms of the
Company's credit facility; delays, difficulties or increased costs in the
supply of components needed to manufacture the Company's products or in
manufacturing the Company's products; adverse weather conditions and
seasonality; any rule changes or other actions taken by the USGA or other golf
association that could have an adverse impact upon demand or supply of the
Company's products; a decrease in participation levels in golf; and the effect
of terrorist activity, armed conflict, natural disasters or pandemic diseases
on the economy generally, on the level of demand for the Company's products or
on the Company's ability to manage its supply and delivery logistics in such
an environment. For additional information concerning these and other risks
and uncertainties that could affect these statements, the golf industry, and
the Company's business, see the Company's Annual Report on Form 10-K for the
year ended December 31, 2012 as well as other risks and uncertainties detailed
from time to time in the Company's reports on Forms 10-Q and 8-K subsequently
filed with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of the date hereof. The Company undertakes no obligation to republish
revised forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.

About Callaway Golf

Through an unwavering commitment to innovation, Callaway Golf Company
(NYSE:ELY) creates products 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)
                                                March 31,   December 31,
                                                2013        2012
ASSETS
Current assets:
 Cash and cash equivalents                      $  28,072  $     52,003
 Accounts receivable, net                       255,703     91,072
 Inventories                                    201,951     211,734
 Deferred taxes, net                            4,014       4,170
 Income taxes receivable                        3,850       1,810
 Assets held for sale                           -           2,396
 Other current assets                           26,683      23,811
  Total current assets                       520,273     386,996
Property, plant and equipment, net              83,894      89,093
Intangible assets, net                          117,376     118,223
Other assets                                    42,765      43,324
  Total assets                               $ 764,308   $    637,636
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued expenses          $ 139,939   $    129,021
 Accrued employee compensation and benefits     23,269      20,649
 Accrued warranty expense                       7,887       7,539
 Income tax liabilities                         5,589       4,357
 Asset-based credit facility                    79,489      -
  Total current liabilities                  256,173     161,566
Long-term liabilities                           153,613     154,362
Shareholders' equity                            354,522     321,708
  Total liabilities and shareholders' equity $ 764,308   $    637,636







Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                            Quarter Ended
                                            March 31,
                                            2013         2012
Net sales                                   $ 287,756   $ 285,098
Cost of sales                               157,320      160,727
Gross profit                                130,436      124,371
Operating expenses:
       Selling                             68,308       76,838
       General and administrative          14,587       12,234
       Research and development            7,413        7,473
              Total operating expenses      90,308       96,545
Income from operations                      40,128       27,826
Other income, net                           4,001        3,684
Income before income taxes                 44,129       31,510
Income tax provision (benefit)              2,469        (292)
Net income                                  41,660       31,802
Dividends on convertible preferred stock    783          2,625
Net income allocable to common shareholders $  40,877  $  29,177
Earnings per common share:
       Basic                                $0.58        $0.45
       Diluted                              $0.47        $0.37
Weighted-average common shares outstanding:
       Basic                                71,060       64,983
       Diluted                              92,197       84,930







Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
                                                         Quarter Ended
                                                         March 31,
                                                         2013       2012
Cash flows from operating activities:
 Net income                                              $ 41,660  $ 31,802
 Adjustments to reconcile net income to net cash used in
 operating activities:
           Depreciation and amortization                 6,956      8,745
           Deferred taxes, net                           332        (2,321)
           Non-cash share-based compensation             757        788
           Gain on disposal of long-lived assets         (247)      (559)
           Gain on sale of intangible assets             -          (6,616)
           Discount amortization on convertible notes    169        -
           Changes in assets and liabilities             (150,187)  (124,245)
 Net cash used in operating activities                   (100,560)  (92,406)
Cash flows from investing activities:
 Capital expenditures                                    (3,145)    (8,687)
 Net proceeds from sale of intangible assets             -          26,861
 Proceeds from sale of property, plant and equipment     3,651      50
 Net cash provided by investing activities               506        18,224
Cash flows from financing activities:
 Issuance of common stock                                -          1
 Dividends paid                                          (1,495)    (3,279)
 Proceeds from credit facilities, net                    79,489     85,900
 Other financing activities                              -          169
 Net cash provided by financing activities               77,994     82,791
Effect of exchange rate changes on cash                 (1,871)    37
Net (decrease) increase in cash and cash equivalents     (23,931)   8,646
Cash and cash equivalents at beginning of period         52,003     43,023
Cash and cash equivalents at end of period               $ 28,072  $ 51,669







Callaway Golf Company
Consolidated Net Sales and Operating Segment Information and Non-GAAP
Reconciliation
(In thousands)
(Unaudited)
                           Net Sales by Product Category
                           Quarter Ended
                           March 31,                     Growth/(Decline)
                           2013            2012          Dollars      Percent
Net sales:
     Woods                 $  99,501      $  90,729    $  8,772    10%
     Irons                57,501          58,316        (815)        -1%
     Putters               32,550          24,092        8,458        35%
     Golf balls            42,985          42,546        439          1%
     Accessories and other 55,219          69,415        (14,196)     -20%
Income before income taxes $ 287,756       $ 285,098     $  2,658    1%

              Net Sales by Region
                                                             Constant Currency
                                                             Excluding
                                                             Businesses
              Quarter Ended                        Constant  Sold or
                                                   Currency  Transitioned
                                                   Growth    Growth vs. 2012
              March 31,         Growth/(Decline)   vs.       ^(1) (2)
                                                   2012^(1)
              2013     2012     Dollars   Percent  Percent   Percent
Net sales:
 United       $        $        $ 10,083  7%       7%        16%
 States       159,782  149,699
 Europe       38,296   42,699   (4,403)   -10%     -8%       -4%
 Japan        44,126   42,254   1,872     4%       22%       22%
 Rest of Asia 20,098   17,997   2,101     12%      10%       9%
 Other
 foreign      25,454   32,449   (6,995)   -22%     -20%      -4%
 countries
              $        $        $        1%       4%        12%
              287,756  285,098  2,658

^(1)              Calculated by applying 2012 exchange rates to 2013 reported
                  sales in regions outside the U.S.
                  Calculated by applying 2012 exchange rates to 2013 reported
^(2)              sales in regions outside the U.S. and excludes sales related
                  to businesses sold or transitioned to a third party model.

                            Operating Segment Information
                            Quarter Ended
                            March 31,               Growth/(Decline)
                            2013        2012        Dollars    Percent
Net sales:
   Golf clubs               $ 244,771   $ 242,552   $  2,219  1%
   Golf balls               42,985      42,546      439        1%
                            $ 287,756   $ 285,098   $  2,658  1%
Income before income taxes:
   Golf clubs^(1)           $  43,989  $  32,640  $ 11,349   35%
   Golf balls ^(1)          6,184       1,577       4,607      292%
   Reconciling items ^(2)   (6,044)     (2,707)     (3,337)    123%
                            $  44,129  $  31,510  $ 12,619   40%

                  In connection with the 2012 Cost Reduction Initiatives, the
                  Company's golf club and golf ball operating segments
^(1)              absorbed pre-tax charges of $2.7 million and $0.1 million,
                  respectively, during the quarter ended March 31, 2013. There
                  were no costs associated with the 2012 Cost Reduction
                  Initiatives recorded in the quarter ended March 31, 2012.
                  Represents corporate general and administrative expenses and
^(2)              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 March 31,                               Quarter Ended March 31,
                                        2013                                                  2012
                                        Non-GAAP  Cost Reduction                              Non-GAAP  Gain on
                                        Callaway  Initiatives^(1)  Non-Cash Tax    Total as   Callaway  Sale of  Non-Cash Tax    Total as
                                        Golf      (3)              Adjustment^(2)  Reported   Golf      TF/BH    Adjustment^(2)  Reported
                                        ^(1)                                                  ^(1)      ^(1)
                                        $                                       $       $      $                     $   
Net sales                                      $         $                               $         
                                        287,756       -           -     287,756    285,098             -     285,098
                                                                                                        -
Gross profit                            132,718   (2,282)          -               130,436    124,371   -        -               124,371
% of sales                              46%       n/a            n/a           45%        44%       n/a    n/a           44%
Operating expenses                      89,081    1,227            -               90,308     103,161   (6,616)  -               96,545
Income from operations                  43,637    (3,509)          -               40,128     21,210    6,616    -               27,826
Other income, net                       4,001     -                -               4,001      3,684     -        -               3,684
Income (loss) before income taxes       47,638    (3,509)          -               44,129     24,894    6,616    -               31,510
Income tax provision (benefit)          18,341    (1,351)          (14,521)        2,469      9,584     2,547    (12,423)        (292)
Net income                              29,297    (2,158)          14,521          41,660     15,310    4,069    12,423          31,802
Dividends on convertible preferred      783       -                -               783        2,625     -        -               2,625
stock
Net income (loss) allocable to common   $      $         $         $       $      $     $         $   
shareholders                                  (2,158)         14,521                              12,423           
                                        28,514                                    40,877     12,685   4,069                    29,177
                                        $                                       $       $      $                     $   
Diluted earnings per share:                   $         $                           $            
                                                 (0.02)          0.16        0.47                0.05     0.14        0.37
                                        0.33                                                 0.18
Weighted-average shares                 92,197    92,197           92,197          92,197     84,930    84,930   84,930          84,930
outstanding:

                     For comparative purposes, the Company applied an
^(1)                 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.
                     Includes costs associated with workforce reductions,
                     costs related to transitioning to a third party model for
^(3)                 the U.S. apparel, footwear and uPro GPS businesses and
                     cost associated with the reorganization of the Company's
                     golf ball manufacturing supply chain.

             2013 Trailing Twelve Month Adjusted EBITDA         2012 Trailing Twelve Month Adjusted EBITDA
Adjusted     Quarter Ended                                      Quarter Ended
EBITDA:
             June     September  December   March               June 30,  September  December   March
             30,      30,        31,        31,                           30,        31,        31,
             2012     2012       2012       2013    Total       2011      2011       2011       2012    Total
             $     $      $      $                 $      $      $      $     $    
Net income                                $                                          
(loss)               (86,798)  (72,006)  41,660  (114,345)   (59,066)  (62,587)   (62,985)  31,802  (152,836)
             2,799
Interest     884      1,343      1,919      2,157   6,303       207       399        324        817     1,747
expense, net
Income tax
provision    2,196    750        3,008      2,469   8,423       45,483    14,854     12,442     (292)   72,487
(benefit)
Depreciation
and          9,489    8,342      7,835      6,956   32,622      9,311     9,247      10,198     8,745   37,501
amortization
expense
Impairment   -        17,056     4,877      -       21,933      5,413     -          1,120      -       6,533
charge
Adjusted     $     $      $      $     $         $      $      $      $     $    
EBITDA                                    (45,064)                                     
             15,368  (59,307)  (54,367)  53,242               1,348  (38,087)   (38,901)  41,072  (34,568)





Callaway Golf Company
Constant Currency Net Sales Excluding Businesses Sold or Transitioned
(In thousands)
(Unaudited)
                    Constant Currency Net Sales Excluding Businesses Sold or Transitioned^(F)
                    Quarter Ended
                    March 31,                   First Half                  Full Year
                    2013     2012      Percent  2013     2012      Percent  2013     2012      Percent
                                                ^(F)                        ^(F)
Net sales:          $        $         1%       $        $         -5%      $        $         0%
                    287,756  285,098            540,000  566,221            830,000  834,065
 Businesses         (1,689)  (21,304)           (2,189)  (47,290)           (2,189)  (60,244)
 sold/transitioned
  Sales, net of
  businesses        286,067  263,794   8%       537,811  518,931   4%       827,811  773,821   7%
  sold/transitioned
 Currency impact    8,108    -                  17,121   -                  37,007   -
 ^(1)
  Sales, net of                                                                 
  businesses                                                                                 
  sold/transitioned $        $                  $        $                  $        $
  and currency      294,175  263,794   12%      554,932  518,931   7%       864,818  773,821   12%
  impact

^(1)                Calculated by applying 2012 exchange rates to 2013
                    reported sales in regions outside the U.S.
                    Amounts include reported results for the first quarter of
^(F)                2013 combined with forecasted results for the remainder of
                    the first half/full year.







Callaway Golf Company
Supplemental Financial Information - Non-GAAP Reconciliation
(In thousands, except per share data)
(Unaudited)
2012 Non-GAAP Reconciliation
                                        Six Months Ended June 30,                                    Year Ended December 31,
                                        2012                                                         2012
                                        Non-GAAP  Gain on                     Non-Cash               Non-GAAP  Gain on                     Non-Cash
                                        Callaway  Sale of    Cost Reduction   Tax         Total as   Callaway  Sale of    Cost Reduction   Tax         Total as
                                        Golf      Top-Flite  Initiatives^(1)  Adjustment  Reported   Golf      Top-Flite  Initiatives^(1)  Adjustment  Reported
                                        ^(1)     & Ben      (3)              ^(2)                   ^(1)     & Ben      (3)              ^(2)
                                                  Hogan^(1)                                                    Hogan^(1)
                                        $      $      $         $       $          $      $      $         $       $
Net sales                                                -               566,221                  -                     834,065
                                        566,221     -                       -                    834,065    -                        -
Gross profit                            235,985   -          (961)            -           235,024    284,396   -          (36,228)         -           248,168
% of sales                              42%       n/a      n/a            n/a       42%        34%       n/a      n/a            n/a       30%
Operating expenses                      200,524   (6,602)    3,710            -           197,632    353,172   (6,602)    17,833           -           364,403
Income (expense) from operations        35,461    6,602      (4,671)          -           37,392     (68,776)  6,602      (54,061)         -           (116,235)
Other expense, net                      (887)     -          -                -           (887)      (1,811)   -          -                -           (1,811)
Income (loss) before income taxes       34,574    6,602      (4,671)          -           36,505     (70,587)  6,602      (54,061)         -           (118,046)
Income tax provision (benefit)          13,311    2,542      (1,798)          (12,151)    1,904      (27,176)  2,542      (20,814)         50,348      4,900
Net income (loss)                       21,263    4,060      (2,873)          12,151      34,601     (43,411)  4,060      (33,247)         (50,348)    (122,946)
Dividends on convertible preferred      5,250     -          -                -           5,250      8,447     -          -                -           8,447
stock
Net income (loss) allocable to common   $      $      $          $       $         $      $                       $       $
shareholders                                          (2,873)           12,151    29,351                     $   (33,247)  (50,348)    (131,393)
                                        16,013    4,060                                             (51,858)  4,060
                                        $      $      $         $       $       $      $      $            $       $   
Diluted earnings (loss) per share:                   (0.03)              0.14  0.41                     (0.50)            (0.75)  (1.96)
                                          0.25  0.05                                               (0.77)  0.06
Weighted-average shares                 84,950    84,950     84,950           84,950      84,950     67,061    67,061     67,061           67,061      67,061
outstanding:

                                                       For comparative
                                                       purposes, the Company
^(1)                                                   applied an annualized
                                                       statutory tax rate of
                                                       38.5% to derive
                                                       non-GAAP results.
                                                       Current period impact
^(2)                                                   of applying statutory
                                                       tax rate of 38.5% to
                                                       non-GAAP results.
                                                       Includes costs
                                                       associated with
                                                       workforce reductions,
                                                       costs related to
                                                       transitioning to a
                                                       third party model for
^(3)                                                   the U.S. apparel,
                                                       footwear and uPro GPS
                                                       businesses and cost
                                                       associated with the
                                                       reorganization of the
                                                       Company's golf ball
                                                       manufacturing supply
                                                       chain.
2013 Non-GAAP Reconciliation
The non-GAAP estimates of operating income, net income and earnings per share
for the full year of 2013 exclude pre-tax carryover charges of $10.9 million
(or $0.09 per share) related to the Company's 2012 Cost Reduction
Initiatives. The non-GAAP estimates of operating income, net income and
earnings per share for the first half of 2013 exclude pre-tax carryover
charges of $8.9 million (or $0.06 per share) related to the Company's 2012
Cost Reduction Initiatives. Additionally, the Company's non-GAAP estimates
assume a tax rate of 38.5%.

SOURCE Callaway Golf Company