Callaway Golf Company Announces Second Quarter And First Half 2013 Earnings Growth; Provides Revised Guidance; And Confirms

 Callaway Golf Company Announces Second Quarter And First Half 2013 Earnings
 Growth; Provides Revised Guidance; And Confirms Turnaround Plan Is On Track

- 2013 second quarter earnings per share of $0.12, compared to break-even in
2012 with 2013 first half earnings per share of $0.59 compared to $0.41 in
2012

- 2013 second quarter non-GAAP earnings per share of $0.12, compared to $0.05
in 2012 with 2013 first half earnings per share of $0.45 compared to $0.25 in
2012

PR Newswire

CARLSBAD, Calif., July 25, 2013

CARLSBAD, Calif., July 25, 2013 /PRNewswire/ -- Callaway Golf Company
(NYSE:ELY) today announced its second quarter and first half 2013 financial
results. The announced results were generally consistent with the first half
guidance provided by the Company last quarter and, consistent with the
Company's recent turnaround initiatives, reflect improved brand momentum,
operating efficiencies and cost management.

Despite softer than expected market conditions in the golf industry, the
Company's results include 6% sales growth for the first half of 2013, and 1%
sales growth for the second quarter of 2013, both 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. The Company's GAAP sales
results reflect the impact of the sold or transitioned businesses, which
negatively impacted GAAP sales comparisons by approximately $45 million for
the first half of 2013 and by approximately $25 million for the second quarter
of 2013. The reported GAAP sales results were also impacted by changes in
foreign currency rates in 2013 as compared to 2012, which adversely affected
sales by approximately $18 million for the first half of 2013 and by
approximately $10 million for the second quarter of 2013. GAAP sales, which
include the impact of foreign currency and the sold or transitioned
businesses,decreased by 5% and 11%for the first half and second quarter of
2013, respectively.

The Company's improved brand momentum, operating efficiencies and cost
management enabled the Company to overcome the softer than expected market
conditions, adverse effects of the changes in foreign currency rates, and the
impact of the sold or transitioned businesses. As a result, the Company
reported improvements in operating income and earnings per share on a GAAP and
non-GAAP basis for both the first half of 2013 and second quarter of 2013 as
compared to the same periods in 2012. 

GAAP RESULTS.

For the second quarter of 2013, the Company reported the following GAAP
results:

Dollars in millions except per 2013  % of Sales 2012  % of Sales Improvement /
share amounts                                                    (Decline)
Net Sales                      $250  -          $281  -          ($31)
Gross Profit                   $96   38.3%      $111  39.4%      ($15)
Operating Expenses             $84   34%        $101  36%        $17
Operating Income               $11   5%         $10   3%         $1
Net Income                     $10   4%         $3    1%         $7
Earnings per share             $0.12 -          $0.00 -          $0.12

For the first half of 2013, the Company reported the following GAAP results:

Dollars in millions except per 2013  % of Sales 2012  % of Sales Improvement /
share amounts                                                    (Decline)
Net Sales                      $537  -          $566  -          ($29)
Gross Profit                   $226  42.1%      $235  41.5%      ($9)
Operating Expenses             $174  33%        $198  35%        $24
Operating Income               $52   10%        $37   7%         $15
Net Income                     $52   10%        $35   6%         $17
Earnings per share             $0.59 -          $0.41 -          $0.18

NON-GAAP FINANCIAL RESULTS.

In addition to the Company's results prepared in accordance with GAAP, the
Company has also provided additional information concerning its results on a
non-GAAP basis. The manner in which the non-GAAP information is derived is
discussed in more detail toward the end of this release and the Company has
provided in the tables to this release a reconciliation of this non-GAAP
information to the most directly comparable GAAP information.

For the second quarter of 2013, the Company reported the following non-GAAP
results:

Dollars in millions except per 2013  % of Sales 2012  % of Sales Improvement /
share amounts                                                    (Decline)
Net Sales                      $250  -          $281  -          ($31)
Gross Profit                   $100  40.0%      $112  39.7%      ($12)
Operating Expenses             $83   33%        $97   35%        $14
Operating Income               $16   7%         $14   5%         $2
Net Income                     $10   4%         $6    2%         $4
Earnings per share             $0.12 -          $0.05 -          $0.07

For the first half of 2013, the Company reported the following non-GAAP
results:

Dollars in millions except per 2013  % of Sales 2012  % of Sales Improvement /
share amounts                                                    (Decline)
Net Sales                      $537  -          $566  -          ($29)
Gross Profit                   $232  43.3%      $236  41.7%      ($4)
Operating Expenses             $172  32%        $201  35%        $29
Operating Income               $60   11%        $35   6%         $25
Net Income                     $39   7%         $21   4%         $18
Earnings per share             $0.45 -          $0.25 -          $0.20

"We are pleased with the results for the second quarter and first half of the
year, with continued gains in market share in most major markets driving an
increase in sales on a constant currency, continuing business basis of 1% and
6% respectively," commented Chip Brewer, President and Chief Executive
Officer. "Likewise, non-GAAP net income for the second quarter and first half
of the year increased 71% and 86%, respectively, compared to the same periods
in 2012. Our turnaround plan remains on track and we have been able to
continue to grow our hard goods market share despite market conditions that
remained challenging during the quarter due to both continued adverse weather
conditions and higher than normal promotional activity in both North America
and Europe."

"Our new products, and in particular our X Hot line of woods and irons, have
resonated well this year with consumers globally," continued Mr. Brewer.
"Additionally, we are equally excited about the new products being introduced
during the second half of this year, which include the new OptiForce driver
and fairway woods, the Mack Daddy 2 wedges designed by Roger Cleveland, as
well as our new Legacy Black product line to be introduced in Japan and the
rest of Asia later this quarter. However, due to softer than expected market
conditions and increased promotional activity, we are reducing our full year
sales guidance and indicating in our revised earnings guidance that it is
unclear whether our improved operating performance will be able to continue to
offset fully the reduced sales estimates as we have been able to so far this
year."

Business Outlook

Because of softer than expected market conditions and increased promotional
activity, the Company is revising its full year financial guidance. 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 $810-$820
    million, compared to previous guidance of $830 million. Net sales for
    2012 were $834 million, which included sales of $60 million related to the
    brands and products that in 2012 were sold or transitioned to a third
    party model. Excluding sales from the sold or transitioned businesses,
    the Company estimates that net sales from its current business on a
    constant currency basis will increase by approximately 10% compared to
    2012.
  oFor the full year 2013, the Company estimates a non-GAAP pre-tax loss
    within a range of $9 million to breakeven, which based upon an assumed tax
    rate of 38.5% equates to an estimated non-GAAP net loss within a range of
    $6 million to breakeven and a non-GAAP loss per share of $0.12-$0.04
    including the impact of dividends paid on the Company's outstanding
    convertible preferred stock. The Company's prior guidance was for net
    income at breakeven and a loss per share of $0.04. 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 earnings/loss exclude for 2013 carryover
charges related to the Company's 2012 cost-reduction initiatives and exclude
for 2012 gains and charges related to the sale of the Top-Flite/Ben Hogan
brands and the 2012 cost-reduction initiatives. The non-GAAP estimates for
both 2013 and 2012 are based upon an assumed tax rate of 38.5% for comparative
purposes because the GAAP tax rates are not directly correlated to the
Company's pre-tax results due to the effect of the Company's deferred tax
valuation allowance.

Conference Call and Webcast

The Company will be holding a conference call at 2:00 p.m. PDT today to
discuss the Company's financial results, business and outlook for the balance
of 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. PDT on Thursday, August 1, 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
19421069.

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/loss and earnings/loss per share information and Adjusted EBITDA
information based upon an assumed tax rate of 38.5%. The difference between
the Company's actual tax rate and this assumed tax rate for historical periods
is reflected on the attached schedules under "Non-Cash Tax Adjustment."

The non-GAAP information presented should not be considered in isolation or as
a substitute for any measure derived in accordance with GAAP. The non-GAAP
information may also be inconsistent with the manner in which similar measures
are derived or used by other companies. Management uses such non-GAAP
information for financial and operational decision-making purposes and as a
means to evaluate period over period comparisons and in forecasting the
Company's business going forward. Management believes that the presentation
of such non-GAAP information, when considered in conjunction with the most
directly comparable GAAP information, provides additional useful comparative
information for investors in their assessment of the underlying performance of
the Company's business without regard to these items. The Company has
provided reconciling information in this press release and the attached
schedules.

Forward-Looking Statements: Statements used in this press release that relate
to future plans, events, financial results, performance or prospects,
including statements relating to the estimated 2013 sales, sales growth,
pre-tax and net loss and loss per share for 2013, anticipated market
conditions and promotional activity for the balance of 2013, the success of
the Company's new products, the success of 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 and services designed to make every golfer a
better golfer. Callaway Golf Company manufactures and sells golf clubs and
golf balls, and sells golf apparel, footwear and accessories, under the
Callaway Golf® and Odyssey® brands in more than 110 countries worldwide. For
more information please visit www.callawaygolf.comor 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)
                                                 June 30,    December 31,
                                                 2013        2012
ASSETS
Current assets:
       Cash and cash equivalents                 $  29,959  $     52,003
       Accounts receivable, net                  229,290     91,072
       Inventories                               187,230     211,734
       Assets held for sale                      -           2,396
       Other current assets                      32,216      29,791
        Total current assets                  478,695     386,996
Property, plant and equipment, net               76,019      89,093
Intangible assets, net                           117,350     118,223
Other assets                                     43,636      43,324
        Total assets                          $ 715,700   $    637,636
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
       Accounts payable and accrued expenses     $ 127,688   $    129,021
       Accrued employee compensation and         25,443      20,649
       benefits
       Accrued warranty expense                  8,241       7,539
       Other current liabilities                 5,534       4,357
       Asset-based credit facility               38,500      -
        Total current liabilities             205,406     161,566
Long-term liabilities                            152,262     154,362
Shareholders' equity                             358,032     321,708
        Total liabilities and shareholders'   $ 715,700   $    637,636
       equity



Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                            Quarter Ended
                                            June 30,
                                            2013         2012
Net sales                                   $ 249,646    $ 281,123
Cost of sales                               153,994      170,470
Gross profit                                95,652       110,653
Operating expenses:
      Selling                              61,672       75,711
      General and administrative           15,169       18,446
      Research and development             7,333        6,930
             Total operating expenses       84,174       101,087
Income from operations                      11,478       9,566
Other income (expense), net                 28           (4,571)
Income before income taxes                 11,506       4,995
Income tax provision                       1,435        2,196
Net income                                  10,071       2,799
Dividends on convertible preferred stock    783          2,625
Net income allocable to common shareholders $   9,288  $    174
Earnings per common share:
      Basic                                 $0.13        $0.00
      Diluted                               $0.12        $0.00
Weighted-average common shares outstanding:
      Basic                                 71,111       65,060
      Diluted                               86,349       65,112
                                            Six Months Ended
                                            June 30,
                                            2013         2012
Net sales                                   $ 537,402    $ 566,221
Cost of sales                               311,314      331,197
Gross profit                                226,088      235,024
Operating expenses:
      Selling                               129,980      152,549
      General and administrative            29,756       30,680
      Research and development              14,746       14,403
             Total operating expenses       174,482      197,632
Income from operations                      51,606       37,392
Other income (expense), net                 4,029        (887)
Income before income taxes                 55,635       36,505
Income tax provision                       3,904        1,904
Net income                                  51,731       34,601
Dividends on convertible preferred stock    1,566        5,250
Net income allocable to common shareholders $  50,165   $  29,351
Earnings per common share:
      Basic                                 $0.71        $0.45
      Diluted                               $0.59        $0.41
Weighted-average common shares outstanding:
      Basic                                 71,086       65,021
      Diluted                               92,235       84,950



Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
                                                         Six Months Ended
                                                         June 30,
                                                         2013       2012
Cash flows from operating activities:
 Net income                                              $ 51,731  $ 34,601
 Adjustments to reconcile net income to net cash used in
 operating activities:
       Depreciation and amortization                     13,428     18,234
       Deferred taxes, net                               200        (1,746)
       Non-cash share-based compensation                 1,670      1,896
       Loss (gain) on disposal of                        2,644      (975)
       long-lived assets
       Gain on sale of intangible assets                 -          (6,602)
       Discount amortization on                          344        -
       convertible notes
       Changes in assets and liabilities                 (137,057)  (136,688)
 Net cash used in operating activities                   (67,040)   (91,280)
Cash flows from investing activities:
 Capital expenditures                                    (6,004)    (14,115)
 Net proceeds from sale of intangible assets             -          26,861
 Proceeds from sale of property, plant and equipment     3,935      70
 Other investing activities                              (1,480)    -
 Net cash (used in) provided by investing activities     (3,549)    12,816
Cash flows from financing activities:
 Dividends paid                                          (2,989)    (6,554)
 Proceeds from credit facilities, net                    38,500     70,150
 Other financing activities                              -          69
 Net cash provided by financing activities               35,511     63,665
Effect of exchange rate changes on cash                 13,034     (238)
Net decrease in cash and cash equivalents                (22,044)   (15,037)
Cash and cash equivalents at beginning of period         52,003     43,023
Cash and cash equivalents at end of period               $ 29,959  $ 27,986



Callaway Golf Company
Consolidated Net Sales, Operating Segment Information and Non-GAAP Reconciliation
(In thousands)
(Unaudited)
               Net Sales by Product Category                                    Net Sales by Product Category
               Quarter Ended                                                    Six Months Ended
               June 30,            Growth/(Decline)                             June 30,                        Growth/(Decline)
               2013      2012      Dollars                   Percent            2013                  2012      Dollars                   Percent
Net sales:
               $      $      $                                         $            $      $   
 Woods                            13,396                  23%                  171,446                                            15%
               71,945   58,549                                                                      149,278  22,168
 Irons        55,519    57,825    (2,306)                   -4%                113,020               116,141   (3,121)                   -3%
 Putters       22,880    38,873    (15,993)                  -41%               55,430                62,965    (7,535)                   -12%
 Golf balls    43,428    49,838    (6,410)                   -13%               86,413                92,384    (5,971)                   -6%
 Accessories   55,874    76,038    (20,164)                  -27%               111,093               145,453   (34,360)                  -24%
 and other
Income before  $      $      $                                         $            $      $   
income taxes   249,646  281,123  (31,477)                  -11%                 537,402                                             -5%
                                                                                                      566,221  (28,819)
               Net Sales by Region                                                                              Net Sales by Region
                                                                                                                                                                                 Constant
                                                                                                                                                                                 Currency
                                                                                Constant Currency
                                                                      Constant  Excluding Businesses                                                                             Excluding
               Quarter Ended                                          Currency  Sold or                         Six Months Ended                                       Constant  Businesses
                                                                                TransitionedGrowth                                                                   Currency  Sold or
                                                                      Growth    vs. 2012 ^(1) (2)                                                                      Growth    Transitioned
               June 30,            Growth/(Decline)                   vs.                                       June 30,                           Growth/(Decline)    vs.       Growth vs.
                                                                      2012^(1)                                                                                         2012^(1)  2012 ^(1)
                                                                                                                                                                                 (2)
               2013      2012      Dollars                   Percent  Percent   Percent                         2013                      2012     Dollars   Percent   Percent   Percent
Net sales:
               $      $      $                                                                         $                      $      $  
 United States 124,368  142,343  (17,975)                  -13%     -13%      1%                                                       292,042  (7,895)   -3%       -3%       9%
                                                                                                                284,147
 Europe        40,152    43,443    (3,291)                   -8%      -5%       -1%                             78,448                    86,142   (7,694)   -9%       -7%       -2%
 Japan         36,718    36,978    (260)                     -1%      23%       23%                             80,844                    79,233   1,611     2%        22%       22%
 Rest of Asia  22,863    26,613    (3,750)                   -14%     -16%      -16%                            42,963                    44,609   (1,646)   -4%       -6%       -6%
 Other foreign 25,545    31,746    (6,201)                   -20%     -18%      -7%                             51,000                    64,195   (13,195)  -21%      -19%      -5%
 countries
               $      $      $                                                                         $                      $      $ 
               249,646  281,123  (31,477)                  -11%     -8%       1%                                                       566,221  (28,819)  -5%       -2%       6%
                                                                                                                537,402
^(1)Calculated by applying 2012 exchange rates to 2013 reported sales in regions outside the U.S.
^(2)Calculated by applying 2012 exchange rates to 2013 reported sales in regions outside the U.S. and excludes sales related to
businesses sold or transitioned to a third party model.
               Operating Segment Information                                    Operating Segment Information
               Quarter Ended                                                    Six Months Ended
                                            Growth/(Decline)                                                             Growth/(Decline)
               June 30,                                                         June 30,
               2013      2012      Dollars                   Percent            2013                  2012      Dollars                   Percent
Net sales:
               $      $      $                                         $            $      $   
 Golf clubs    206,218  231,285  (25,067)                  -11%                 450,989                                             -5%
                                                                                                      473,837  (22,848)
 Golf balls    43,428    49,838    (6,410)                   -13%               86,413                92,384    (5,971)                   -6%
               $      $      $                                         $            $      $   
               249,646  281,123  (31,477)                  -11%                 537,402                                             -5%
                                                                                                      566,221  (28,819)
Income before
income taxes:
 Golf          $      $      $                                         $            $      $   
 clubs^(1)                                               16%                   64,821                                          28%                        `
               20,831   17,953   2,878                                                              50,595   14,226
 Golf balls    710       4,162     (3,452)                   -83%               6,896                 5,739     1,157                     -20%
 ^(1)
 Reconciling   (10,035)  (17,120)  7,085                     -41%               (16,082)              (19,829)  3,747                     19%
 items ^(2)
               $      $      $                                         $            $      $   
                                                        130%                  55,635                                          52%
               11,506   4,995    6,511                                                              36,505   19,130
^(1)In connection with the Cost Reduction Initiatives, the Company's golf clubs and golf balls segments recognized pre-tax charges of $0.6 million
and $4.1 million, respectively, during the three months ended June30, 2013, and $1.7 million and $0.3 million, respectively, during the three
months ended June30, 2012. The Company's golf clubs and golf balls segments recognized pre-tax charges of $3.3 million and $4.2 million,
respectively, during the six months ended June30, 2013, in connection with these initiatives, and $1.7 million and $0.3 million, respectively,
during the six months ended June30, 2012.
^(2)Represents corporate general and administrative expenses and other income (expense) not utilized by
management in determining segment profitability.





Callaway Golf Company
Supplemental Financial Information - Non-GAAP Information and Reconciliation
(In thousands, except per share data)
(Unaudited)
Non-GAAP Reconciliation to GAAP Reported Results:
                                        Quarter Ended June 30,                                              Quarter Ended June 30,
                                        2013                                                                2012
                                        Non-GAAP   Cost Reduction                                           Non-GAAP   Cost Reduction   Gain on
                                        Callaway   Initiatives^(1)  Non-Cash Tax    Total as                Callaway   Initiatives^(1)  Sale of    Non-Cash Tax    Total as
                                        Golf ^(1)  (3)              Adjustment^(2)  Reported                Golf ^(1)  (3)              TF/BH      Adjustment^(2)  Reported
                                                                                                                                        ^(1)
                                        $      $         $         $                    $      $         $      $         $   
Net sales                                            -         -                                       -                  -     
                                        249,646                                    249,646                 281,123                      -                     281,123
Gross profit                            99,739     (4,087)          -               95,652                  111,590    (937)            -          -               110,653
% of sales                              40%        -2%              n/a           38%                     40%        -1%              n/a      n/a           39%
Operating expenses                      83,263     911              -               84,174                  97,367     3,706            14         -               101,087
Income from operations                  16,476     (4,998)          -               11,478                  14,223     (4,643)          (14)       -               9,566
Other income, (expense) net             28         -                -               28                      (4,571)    -                -          -               (4,571)
Income (loss) before income taxes       16,504     (4,998)          -               11,506                  9,652      (4,643)          (14)       -               4,995
Income tax provision (benefit)          6,354      (1,924)          (2,995)         1,435                   3,717      (1,788)          (5)        272             2,196
Net income (loss) allocable to common   10,150     (3,074)          2,995           10,071                  5,935      (2,855)          (9)        (272)           2,799
shareholders
Dividends on convertible preferred      783        -                -               783                     2,625      -                -          -               2,625
stock
Net income (loss) allocable to common   $      $         $         $                    $      $          $      $         $   
shareholders                                   (3,074)         2,995                                   (2,855)                 (272)         
                                         9,367                                    9,288                   3,310                       (9)                       174
                                        $      $         $         $                    $      $         $      $         $   
Diluted earnings (loss) per share:              (0.04)         0.04                                 (0.04)                   (0.01)         
                                          0.12                                   0.12                     0.05                     (0.00)                      0.00
Weighted-average shares                 86,349     86,349           86,349          86,349                  65,112     65,112           65,112     65,112          65,112
outstanding:
^(1)For comparative purposes, the Company applied an annualized statutory tax rate of 38.5%
to derive non-GAAP results.
^(2)Impact of applying statutory tax rate of 38.5% to non-GAAP results.
^(3)Includes costs associated with the reorganization of the Company's golf ball manufacturing supply chain, workforce reductions and costs related to transitioning to a
third party model for the U.S. apparel, footwear and uPro GPS businesses.
                                        Six Months Ended June 30,                                           Six Months Ended June 30,
                                        2013                                                                2012
                                                                                                                                        Gain on
                                        Non-GAAP   Cost Reduction   Non-Cash Tax    Total as                Non-GAAP   Cost Reduction   Sale of    Non-Cash Tax    Total as
                                        Callaway   Initiatives^(1)  Adjustment      Reported                Callaway   Initiatives^(1)  Top-Flite  Adjustment      Reported
                                        Golf ^(1)  (3)              ^(2)                                    Golf ^(1)  (3)              & Ben      ^(2)
                                                                                                                                        Hogan^(1)
                                        $      $         $         $                    $      $         $      $         $   
Net sales                                            -         -                                       -                  -     
                                        537,402                                    537,402                 566,221                      -                     566,221
Gross profit                            232,457    (6,369)          -               226,088                 235,985    (961)            -          -               235,024
% of sales                              43%        -1%              n/a           42%                     42%        0%               n/a      n/a           42%
Operating expenses                      172,344    2,138            -               174,482                 200,524    3,710            (6,602)    -               197,632
Income (expense) from operations        60,113     (8,507)          -               51,606                  35,461     (4,671)          6,602      -               37,392
Other income (expense), net             4,029      -                -               4,029                   (887)      -                -          -               (887)
Income (loss) before income taxes       64,142     (8,507)          -               55,635                  34,574     (4,671)          6,602      -               36,505
Income tax provision (benefit)          24,695     (3,275)          (17,516)        3,904                   13,311     (1,798)          2,542      (12,151)        1,904
Net income (loss)                       39,447     (5,232)          17,516          51,731                  21,263     (2,873)          4,060      12,151          34,601
Dividends on convertible preferred      1,566      -                -               1,566                   5,250      -                -          -               5,250
stock
Net income (loss) allocable to common   $      $         $         $                    $      $          $      $         $   
shareholders                                   (5,232)        17,516                                      (2,873)                12,151           
                                        37,881                                     50,165                  16,013                     4,060                      29,351
                                        $      $         $         $                    $      $         $      $         $   
Diluted earnings (loss) per share:              (0.05)         0.19                                 (0.03)                  0.14          
                                          0.45                                   0.59                     0.25                     0.05                        0.41
Weighted-average shares                 92,235     92,235           92,235          92,235                  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 non-GAAP results.
^(2)Impact of applying statutory tax rate of 38.5% to non-GAAP
results.
^(3)Includes costs associated with the reorganization of the Company's golf ball manufacturing supply chain, workforce reductions and costs related to transitioning to a
third party model for the U.S. apparel, footwear and uPro GPS businesses.
                                        2013 Trailing Twelve Month Adjusted EBITDA                          2012 Trailing Twelve Month Adjusted EBITDA
Adjusted EBITDA:                        Quarter Ended                                                       Quarter Ended
                                        September  December 31,     March 31,       June 30,                September  December 31,     March 31,  June 30,
                                        30,                                                                 30,
                                        2012       2012             2013            2013      Total         2011       2011             2012       2012            Total
                                        $      $         $         $      $          $      $           $      $         $   
Net income (loss)                              (72,006)         41,660                 (107,073)           (62,985)                 2,799          
                                        (86,798)                                   10,071                  (62,587)                    31,802                     (90,971)
Interest expense, net                   1,343      1,919            2,157           2,470     7,889         399        324              817        884             2,424
Income tax provision (benefit)          750        3,008            2,469           1,435     7,662         14,854     12,442           (292)      2,196           29,200
Depreciation and amortization expense   8,342      7,835            6,956           6,472     29,605        9,247      10,198           8,745      9,489           37,679
Impairment charge                       17,056     4,877            -               -         21,933        -          1,120            -          -               1,120
                                        $      $         $         $      $         $      $           $      $         $   
Adjusted EBITDA                                (54,367)         53,242                 (39,984)            (38,901)                15,368           
                                        (59,307)                                   20,448                  (38,087)                    41,072                     (20,548)



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
                    June 30,                     First Half                  Full Year
                    2013      2012      Percent  2013     2012      Percent  2013      2012      Percent
                                                                             ^(F)
Net sales:          $      $       -11%     $     $       -5%      $       $      -2%
                    249,646  281,123           537,402  566,221           815,000  834,065
 Businesses         (912)     (25,997)           (2,601)  (47,302)           (2,601)   (60,020)
 sold/transitioned
  Sales, net of
  businesses        248,734   255,126   -3%      534,801  518,919   3%       812,399   774,045   5%
  sold/transitioned
 Currency impact    9,688     -                  17,792   -                  39,500    -
 ^(1) (2)
  Sales, net of
  businesses
  sold/transitioned $      $                $     $                $       $   
  and currency      258,422  255,126  1%       552,593  518,919  6%       851,899  774,045   10%
  impact
^(1)Calculated by applying 2012 exchange rates to 2013 reported sales in regions outside the
U.S.
^(2) Full year currency impact is calculated by applying the difference between 2012 exchange
rates and estimated full year 2013 exchange rates to estimated full year sales in regions
outside the U.S.
^(F)Amounts include reported results for the first half of 2013 combined with forecasted results
for the remainder of the full year. Full year forecast
was derived by taking the midpoint from the range of net
sales as provided in the revised guidance for 2013.



SOURCE Callaway Golf Company

Website: http://www.callawaygolf.com