Callaway Golf Company Announces Significantly Improved Third Quarter And Year-to-Date Financial Results And Increases Annual

   Callaway Golf Company Announces Significantly Improved Third Quarter And
    Year-to-Date Financial Results And Increases Annual Financial Guidance

- Net sales of the Company's current business, on a constant currency basis,
grew 38% for the third quarter and 13% for the first nine months. On a GAAP
basis, net sales grew 21% for the third quarter and grew less than 1% for the
first nine months.

- 2013 third quarter loss per share of ($0.32), compared to a loss per share
of ($1.33) in 2012; 2013 first nine months diluted earnings per share of
$0.36, compared to a diluted loss per share of ($0.91) in 2012.

- 2013 third quarter non-GAAP diluted loss per share of ($0.18), compared to a
non-GAAP diluted loss per share of ($0.50) in 2012; 2013 first nine months
non-GAAP diluted earnings per share of $0.33 compared to a non-GAAP diluted
loss per share of ($0.27) in 2012.

- Full Year 2013 Revised Guidance: Net sales are estimated to be $836 million
with non-GAAP pretax income of $2 million to $7 million and non-GAAP diluted
earnings/loss per share is estimated to range from ($0.03) - $0.01, compared
to previous guidance of net sales of $810-$820 million and a non-GAAP pretax
loss of $9 million to breakeven and a non-GAAP loss per share of ($0.12) -
($0.04).

PR Newswire

CARLSBAD, Calif., Oct. 24, 2013

CARLSBAD, Calif., Oct. 24, 2013 /PRNewswire/ -- Callaway Golf Company
(NYSE:ELY) today announced its third quarter and year-to-date 2013 financial
results. The Company's results include sales growth as well as significant
improvements in gross margins, operating expenses, and earnings for the third
quarter and year to date, both on a GAAP and non-GAAP basis. These financial
results reflect the continued success of the Company's turnaround plan,
including continued improvement in the development of more exciting and
performance-oriented products, brand momentum, operating efficiencies, and
cost management.

The Company was able to grow sales despite adverse changes in foreign currency
rates and the sale in 2012 of the Top-Flite and Ben Hogan Brands and the
transition to a licensing arrangement for apparel and footwear in North
America. The sale of these brands and licensing arrangements negatively
impacted 2013 sales by approximately $53 million for the first nine months,
and by approximately $9 million for the third quarter, compared to the same
periods in 2012. In addition, changes in foreign currency rates negatively
affected 2013 net sales by approximately $32 million for the first nine
months, and by approximately $14 million for the third quarter, as compared to
the same periods in 2012. On a constant currency basis, the Company's current
business, which excludes the sold or licensed brands and businesses, achieved
13% sales growth for the first nine months of 2013, and 38% sales growth for
the third quarter of 2013, compared to the same periods in 2012.

In addition to sales growth, the Company's 2013 financial results also
benefitted from increased operating efficiencies, and the continued success of
the Company's cost reduction initiatives, including a decrease in charges
related to these initiatives in 2013. As a result, the Company reported
significant improvements in earnings with non-GAAP diluted earnings/loss per
share improving by $0.32 and $0.60, respectively, for the third quarter and
first nine months of 2013 as compared to the same periods in 2012, and with
GAAP earnings per share increasing even more.

GAAP RESULTS.

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

Dollars in millions except 2013    % of Sales 2012    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $178    -          $148    -          $30
Gross Profit               $59     33%        $4      3%         $55
Operating Expenses         $76     43%        $87     59%        $11
Operating Loss             ($17)   (10%)      ($83)   (56%)      $66
Net Loss                   ($21)   (12%)      ($87)   (59%)      $66
Diluted loss per share     ($0.32) -          ($1.33) -          $1.01

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

Dollars in millions except   2013  % of Sales 2012    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                    $716  -          $714    -          $2
Gross Profit                 $286  40%        $239    33%        $47
Operating Expenses           $251  35%        $284    40%        $33
Operating Income/Loss        $35   5%         ($45)   (6%)       $80
Net Income/Loss              $31   4%         ($52)   (7%)       $83
Diluted earnings/loss per    $0.36 -          ($0.91) -          $1.27
share

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

Dollars in millions except 2013    % of Sales 2012    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                  $178    -          $148    -          $30
Gross Profit               $60     34%        $31     21%        $29
Operating Expenses         $75     42%        $79     53%        $4
Operating Loss             ($15)   (9%)       ($48)   (32%)      $33
Net Loss                   ($11)   (6%)       ($31)   (21%)      $20
Diluted loss per share     ($0.18) -          ($0.50) -          $0.32

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

Dollars in millions except   2013  % of Sales 2012    % of Sales Improvement /
per share amounts                                                (Decline)
Net Sales                    $716  -          $714    -          $2
Gross Profit                 $293  41%        $267    37%        $26
Operating Expenses           $248  35%        $279    39%        $31
Operating Income/Loss        $45   6%         ($12)   (2%)       $57
Net Income/Loss              $28   4%         ($10)   (1%)       $38
Diluted earnings/loss per    $0.33 -          ($0.27) -          $0.60
share

"We are pleased with our results for the third quarter and first nine months
of the year," commented Chip Brewer, President and Chief Executive Officer.
"Market conditions during the third quarter were better than we had
anticipated as we entered the quarter, due in part to improvements in weather
and rounds played in both Europe and the Americas. These market conditions,
along with continued gains in market share in our major markets and the
realization of the benefits from the many actions we have taken over the past
year to improve our operations and reduce our costs, have resulted in an
increase in sales and operating income. On a constant currency, continuing
business basis for the third quarter and first nine months of 2013, sales
increased 38% and 13%, respectively. Likewise, non-GAAP operating income for
the third quarter and first nine months of the year increased approximately
$33 million and $57 million, respectively, compared to the same periods in
2012. Moreover, our inventory levels, both internally and at retail, are in
good shape, positioning us well for the balance of this year and the start of
the 2014 golf season."

"While we are pleased with our first nine months results, which provide
evidence that our turnaround is working, we are fully aware that we have more
work to do to return to acceptable levels of performance," continued Mr.
Brewer. "As I mentioned when I started with Callaway, successful turnarounds
take time and we did not expect to complete everything in only one year. With
that said, our turnaround is proceeding at or above our original expectations,
particularly given the headwinds we experienced this year from unfavorable
changes in foreign currency rates, adverse weather conditions, a very late
start to the 2013 golf season, and higher than normal promotional activity in
both North America and Europe. I remain optimistic about the opportunities
that lie ahead for Callaway and look forward to reporting to you on our
continued progress."

Business Outlook

Due to better than expected third quarter performance, the Company is
increasing its 2013 full year financial guidance as follows:

  oNet sales for the full year 2013 are currently estimated to be
    approximately $836 million, compared to previous guidance of $810-$820
    million. Net sales for full year 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 13% compared to 2012.
  oFor the full year 2013, the Company estimates non-GAAP pre-tax income of
    $2 million - $7 million, which based upon an assumed tax rate of 38.5%
    equates to an estimated non-GAAP net income within a range of $2 million
    to $4 million and non-GAAP diluted earnings/loss per share of ($0.03) to
    $0.01, including the impact of dividends paid on the Company's outstanding
    convertible preferred stock. The Company's prior guidance was for a
    non-GAAP pre-tax loss of $9 million to breakeven, which equated to a
    non-GAAP net loss of $6 million to breakeven, and a non-GAAP diluted loss
    per share range of ($0.12) to ($0.04). For the full year 2012, the
    Company's non-GAAP loss was $43 million with a non-GAAP diluted 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. 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, October 31, 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
75865696.

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 North American 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 earnings/loss and income/loss per share for 2013, 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)
                                               September 30,    December 31,
                                               2013             2012
ASSETS
Current assets:
         Cash and cash equivalents             $            $    
                                               37,399          52,003
         Accounts receivable, net              157,371          91,072
         Inventories                           190,870          211,734
         Other current assets                  24,465           29,791
         Assets held for sale                  -                2,396
          Total current assets              410,105          386,996
Property, plant and equipment, net             73,957           89,093
Intangible assets, net                         117,982          118,223
Other assets                                   48,865           43,324
          Total assets                      $             $   
                                               650,909         637,636
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
         Accounts payable and accrued          $             $   
         expenses                              123,672         129,021
         Accrued employee compensation and     26,759           20,649
         benefits
         Accrued warranty expense              6,766            7,539
         Other current liabilities             5,810            4,357
          Total current liabilities         163,007          161,566
Long-term liabilities                          153,148          154,362
Shareholders' equity                           334,754          321,708
          Total liabilities and             $             $   
         shareholders' equity                  650,909         637,636





Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                                   Quarter Ended
                                                   September 30,
                                                   2013        2012
Net sales                                          $ 178,229   $ 147,906
Cost of sales                                      118,820     144,106
Gross profit                                       59,409      3,800
Operating expenses:
         Selling                                  49,871      60,273
         General and administrative               18,870      18,238
         Research and development                 7,689       7,978
                  Total operating expenses         76,430      86,489
Loss from operations                               (17,021)    (82,689)
Other expense, net                                 (3,095)     (3,359)
Loss before income taxes                          (20,116)    (86,048)
Income tax provision                              1,037       750
Net loss                                           (21,153)    (86,798)
Dividends on convertible preferred stock           1,766       2,414
Net loss allocable to common shareholders          $ (22,919)  $ (89,212)
Loss per common share:
         Basic                                     ($0.32)     ($1.33)
         Diluted                                   ($0.32)     ($1.33)
Weighted-average common shares outstanding:
         Basic                                     72,649      67,162
         Diluted                                   72,649      67,162
                                                   Nine Months Ended
                                                   September 30,
                                                   2013        2012
Net sales                                          $ 715,631   $ 714,127
Cost of sales                                      430,134     475,303
Gross profit                                       285,497     238,824
Operating expenses:
         Selling                                   179,851     212,822
         General and administrative                48,626      48,918
         Research and development                  22,435      22,381
                  Total operating expenses         250,912     284,121
Income (loss) from operations                      34,585      (45,297)
Other income (expense), net                        934         (4,246)
Income (loss) before income taxes                 35,519      (49,543)
Income tax provision                              4,941       2,654
Net income (loss)                                  30,578      (52,197)
Dividends on convertible preferred stock           3,332       7,664
Net income (loss) allocable to common shareholders $  27,246  $ (59,861)
Earnings (loss) per common share:
         Basic                                     $0.38       ($0.91)
         Diluted                                   $0.36       ($0.91)
Weighted-average common shares outstanding:
         Basic                                     71,613      65,740
         Diluted                                   86,870      65,740





Callaway Golf Company
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
                                                          Nine Months Ended
                                                          September 30,
                                                          2013      2012
Cash flows from operating activities:
 Net income (loss)                                        $ 30,578  $ (52,197)
 Adjustments to reconcile net income to net cash provided
 by (used in) operating activities:
        Depreciation and amortization                     19,693    26,576
        Impairment charges                                -         17,056
        Deferred taxes, net                               303       (1,397)
        Non-cash share-based compensation                 2,592     2,482
        Loss (gain) on disposal of                        2,428     (1,521)
        long-lived assets
        Gain on sale of intangible                        -         (6,602)
        assets
        Discount amortization on                          523       27
        convertible notes
        Changes in assets and liabilities                 (48,559)  (13,675)
 Net cash provided by (used in) operating activities      7,558     (29,251)
Cash flows from investing activities:
 Capital expenditures                                     (8,920)   (16,001)
 Proceeds from sale of property, plant and equipment      4,025     324
 Net proceeds from sale of intangible assets              -         26,861
 Investment in golf related ventures                      (7,189)   -
 Net cash (used in) provided by investing activities      (12,084)  (15,677)
Cash flows from financing activities:
 Dividends paid                                           (4,882)   (9,526)
 Equity issuance cost                                     (274)     -
 Proceeds from issuance of convertible notes              -         46,819
 Debt issuance cost                                       -         (3,534)
 Other financing activities                               -         40
 Net cash (used in) provided by financing activities      (5,156)   43,325
Effect of exchange rate changes on cash                  (4,922)   384
Net (decrease) increase in cash and cash equivalents      (14,604)  16,116
Cash and cash equivalents at beginning of period          52,003    43,023
Cash and cash equivalents at end of period                $ 37,399  $ 59,139





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                                   Nine Months Ended
             September 30,       Growth/(Decline)            September 30,            Growth/(Decline)
             2013      2012      Dollars  Percent            2013           2012      Dollars   Percent
Net sales:
             $        $        $                           $        $         $ 
 Woods       56,525    31,147    25,378   81%                          180,425   47,547    26%
                                                             227,972
 Irons      39,472    31,029    8,443    27%                152,492        147,170   5,322     4%
 Putters     20,388    15,734    4,654    30%                75,818         78,699    (2,881)   -4%
 Golf balls  25,619    26,620    (1,001)  -4%                112,032        119,004   (6,972)   -6%
 Accessories 36,225    43,376    (7,151)  -16%               147,317        188,829   (41,512)  -22%
 and other
             $         $         $                           $        $         $  
             178,229   147,906   30,323   21%                          714,127   1,504     0%
                                                             715,631
             Net Sales by Region                                                      Net Sales by Region
                                                             Constant                                                                  Constant
                                                             Currency                                                                  Currency
                                                             Excluding                                                                 Excluding
                                                             Businesses                                                                Businesses
             Quarter Ended                         Constant  Sold or                  Nine Months Ended                      Constant  Sold or
                                                   Currency  Transitioned                                                   Currency  Transitioned
                                                   Growth    Growth vs.                                                     Growth    Growth vs.
             September 30,       Growth/(Decline)  vs.       2012 ^(1) (2)            September 30,      Growth/(Decline)    vs.       2012 ^(1) (2)
                                                   2012^(1)                                                                  2012^(1)
             2013      2012      Dollars  Percent  Percent   Percent                  2013      2012     Dollars   Percent   Percent   Percent
Net sales:
 United      $        $        $       17%      17%       33%                      $         $        $ 1,960  1%        1%        13%
 States      66,998    57,140    9,858                                                351,143   349,183
 Europe      26,493    19,189    7,304    38%      41%       52%                      104,942   105,332  (390)     0%        2%        7%
 Japan       48,575    41,635    6,940    17%      47%       47%                      129,421   120,868  8,553     7%        31%       31%
 Rest of     23,747    16,149    7,598    47%      44%       45%                      66,709    60,758   5,951     10%       8%        7%
 Asia
 Other
 foreign     12,416    13,793    (1,377)  -10%     -3%       3%                       63,416    77,986   (14,570)  -19%      -16%      -4%
 countries
             $         $         $        21%      30%       38%                      $         $        $ 1,504  0%        5%        13%
             178,229   147,906   30,323                                               715,631   714,127
^(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                                   Nine Months Ended
             September 30,       Growth/(Decline)            September 30,            Growth/(Decline)
             2013      2012      Dollars  Percent            2013           2012      Dollars   Percent
Net sales:
             $         $         $                           $        $         $  
 Golf clubs  152,610   121,286   31,324   26%                          595,123   8,476     1%
                                                             603,599
 Golf balls  25,619    26,620    (1,001)  -4%                112,032        119,004   (6,972)   -6%
             $         $         $                           $        $         $  
             178,229   147,906   30,323   21%                          714,127   1,504     0%
                                                             715,631
Income (loss) before
income taxes:
 Golf        $        $         $                           $        $        $ 
 clubs^(1)   (4,409)   (57,840)  53,431   92%                         (7,247)   67,658    934%                       `
                                                             60,411
 Golf balls  (3,421)   (13,789)  10,368   75%                3,473          (8,047)   11,520    143%
 ^(1)
 Reconciling (12,286)  (14,419)  2,133    15%                (28,365)       (34,249)  5,884     17%
 items ^(2)
             $         $         $                           $        $         $ 
             (20,116)  (86,048)  65,932   77%                         (49,543)  85,062    172%
                                                             35,519

^(1) In connection with the Cost Reduction Initiatives, the Company's golf
clubs and golf balls segments recognized pre-tax charges of $1.0 million and
$0.5 million, respectively, during the three months ended September30, 2013,
and $23.6 million and $9.3 million, respectively, during the three months
ended September30, 2012. The Company's golf clubs and golf balls segments
recognized pre-tax charges of $4.3 million and $4.7 million, respectively,
during the nine months ended September30, 2013, in connection with these
initiatives, and $25.3 million and $9.7 million, respectively, during the nine
months ended September30, 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 September 30,                                        Quarter Ended September 30,
                                        2013                                                               2012
                                        Non-GAAP  Cost Reduction                                           Non-GAAP  Cost Reduction
                                        Callaway  Initiatives^(1)  Non-Cash Tax    Total as                Callaway  Initiatives^(1)  Non-Cash Tax    Total as
                                        Golf      (3)              Adjustment^(2)  Reported                Golf      (3)              Adjustment^(2)  Reported
                                        ^(1)                                                               ^(1)
                                        $      $         $         $                   $      $         $         $    
Net sales                                          -            -       178,229                            -              -    147,906
                                        178,229                                                           147,906
Gross profit                            60,414    (1,005)          -               59,409                  31,102    (27,302)         -               3,800
% of sales                              34%       -1%              n/a           33%                     21%       -18%             n/a           3%
Operating expenses                      75,577    853              -               76,430                  78,707    7,782            -               86,489
Loss from operations                    (15,163)  (1,858)          -               (17,021)                (47,605)  (35,084)         -               (82,689)
Other expense, net                      (3,095)   -                -               (3,095)                 (3,359)   -                -               (3,359)
Loss before income taxes                (18,258)  (1,858)          -               (20,116)                (50,964)  (35,084)         -               (86,048)
Income tax provision (benefit)          (7,030)   (716)            8,783           1,037                   (19,621)  (13,508)         33,879          750
Net loss allocable to common            (11,228)  (1,142)          (8,783)         (21,153)                (31,343)  (21,576)         (33,879)        (86,798)
shareholders
Dividends on convertible preferred      1,766     -                -               1,766                   2,414     -                -               2,414
stock
Net loss allocable to common            $      $          $          $                   $      $           $         $    
shareholders                                  (1,142)         (8,783)        (22,919)                      (21,576)        (33,879)       
                                        (12,994)                                                           (33,757)                                   (89,212)
                                        $                                       $                   $                                       $    
Diluted loss per share:                       $         $                                     $         $           
                                                (0.02)          (0.12)         (0.32)                          (0.32)            (0.51)     (1.33)
                                        (0.18)                                                             (0.50)
Weighted-average shares                 72,649    72,649           72,649          72,649                  67,162    67,162           67,162          67,162
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.
                                        Nine Months Ended September 30,                                    Nine Months Ended September 30,
                                        2013                                                               2012
                                        Non-GAAP  Cost Reduction   Non-Cash Tax                            Non-GAAP  Cost Reduction   Gain on Sale    Non-Cash
                                        Callaway  Initiatives^(1)  Adjustment      Total as                Callaway  Initiatives^(1)  of Top-Flite &  Tax         Total as
                                        Golf      (3)              ^(2)            Reported                Golf      (3)              Ben Hogan^(1)   Adjustment  Reported
                                        ^(1)                                                               ^(1)                                       ^(2)
                                        $      $         $         $                   $      $         $         $       $  
Net sales                                          -            -       715,631                            -              -          714,127
                                        715,631                                                           714,127                                     -
Gross profit                            292,871   (7,374)          -               285,497                 267,087   (28,263)         -               -           238,824
% of sales                              41%       -1%              n/a            40%                     37%       -4%              n/a            n/a        33%
Operating expenses                      247,921   2,991            -               250,912                 279,231   11,492           (6,602)         -           284,121
Income (expense) from operations        44,950    (10,365)         -               34,585                  (12,144)  (39,755)         6,602           -           (45,297)
Other income (expense), net             934       -                -               934                     (4,246)   -                -               -           (4,246)
Income (loss) before income taxes       45,884    (10,365)         -               35,519                  (16,390)  (39,755)         6,602           -           (49,543)
Income tax provision (benefit)          17,665    (3,991)          (8,733)         4,941                   (6,310)   (15,306)         2,542           21,728      2,654
Net income (loss)                       28,219    (6,374)          8,733           30,578                  (10,080)  (24,449)         4,060           (21,728)    (52,197)
Dividends on convertible preferred      3,332     -                -               3,332                   7,664     -                -               -           7,664
stock
Net income (loss) allocable to common   $      $          $         $                   $      $           $         $       $  
shareholders                                  (6,374)         8,733            27,246                      (24,449)          4,060                 (59,861)
                                        24,887                                                            (17,744)                                   (21,728)
                                        $                                       $                   $                                       $    
Diluted earnings (loss) per share:            $         $                                    $         $                  $    
                                                (0.07)           0.10          0.36                            (0.37)             0.06     (0.33)     (0.91)
                                        0.33                                                              (0.27)
Weighted-average shares                 86,870    86,870           86,870          86,870                  65,740    65,740           65,740          65,740      65,740
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
                                        December  March 31,        June 30,        September               December  March 31,        June 30,        September
                                        31,                                        30,                     31,                                        30,
                                        2012      2013             2013            2013       Total        2011      2012             2012            2012        Total
                                        $      $          $          $      $        $      $          $         $       $ 
Net income (loss)                             41,660           10,071          (21,153)   (41,428)          31,802             2,799                 (115,182)
                                        (72,006)                                                           (62,985)                                   (86,798)
Interest expense, net                   1,919     2,157            2,470           1,975      8,521        324       817              884             1,343       3,368
Income tax provision (benefit)          3,008     2,469            1,435           1,037      7,949        12,442    (292)            2,196           750         15,096
Depreciation and amortization expense   7,835     6,956            6,472           6,265      27,528       10,198    8,745            9,489           8,342       36,774
Impairment charges                      4,877     -                -               -          4,877        1,120     -                -               17,056      18,176
                                        $      $          $          $      $        $      $          $         $       $  
Adjusted EBITDA                               53,242           20,448          (11,876)     7,447          41,072            15,368                  (41,768)
                                        (54,367)                                                           (38,901)                                   (59,307)





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              Nine Months Ended
                        September 30,              September 30,              Full Year
                        2013     2012     Percent  2013     2012      Percent  2013     2012      Percent
                                                                               ^(F)
Net sales:              $        $        21%      $        $         0%       $        $         0%
                        178,229  147,906           715,631  714,127            836,000  834,065
 Businesses             (271)    (9,004)           (2,873)  (56,306)           (2,900)  (60,246)
 sold/transitioned
  Sales, net of
  businesses            177,958  138,902  28%      712,758  657,821   8%       833,100  773,819   8%
  sold/transitioned
 Currency impact ^(1)   13,724   -                 31,514   -                  40,300   -
 (2)
  Sales, net of
  businesses            $        $                 $        $                  $        $
  sold/transitionedand 191,682  138,902  38%      744,272  657,821   13%      873,400  773,819   13%
  currency 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 nine months of 2013
combined with forecasted results for the remainder of the full year.

SOURCE Callaway Golf Company

Website: http://www.callawaygolf.com
 
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