Callaway Golf Company (NYSE:ELY) today announced that, based on current
information, the Company’s full year net sales for 2008 are estimated to
be $1.117 billion compared to $1.125 billion in 2007. Consistent with
the Company’s recent earnings guidance, pro forma diluted earnings per
share for 2008 are estimated to range from $0.93 to $0.95 (on 63.8
million shares outstanding), an increase of approximately 6% compared to
pro forma diluted earnings per share of $0.89 in 2007 (on 67.5 million
shares outstanding).
Pro forma earnings results for 2008 exclude a non-cash, non-operational
after-tax benefit of $0.22 per share related to the reversal of a $19.9
million energy derivative valuation account established in 2001 in
connection with the Company’s termination of a long-term energy supply
contract. Pro forma results for 2008 and 2007 also exclude charges
related to the Company’s gross margin initiatives of $0.12 per share and
$0.08 per share, respectively. Including these benefits and charges,
reported earnings for 2008 are estimated to range from $1.03 to $1.05
per share, compared to $0.81 per share for 2007.
"Accounting rules have required that we maintain the energy derivative
valuation account on our books until now,” said Brad Holiday, Senior
Executive Vice President and Chief Financial Officer. "This is a one
time, non-cash accounting benefit that does not relate to our operations
during the period and was not included in our earnings guidance. We will
provide pro forma results excluding this benefit, along with our
reported results, to allow for a better comparison of our operational
performance.”
Business Update
"We are pleased that we achieved year over year earnings growth in what
was a very challenging 2008,” commented George Fellows, President and
CEO of Callaway Golf. "These results reflect the efforts of everyone at
Callaway Golf to control costs throughout the year, deliver our targeted
gross margin savings, and leverage our supply chain to adjust to a rapid
decline in worldwide economic conditions during the second half of the
year.”
"As we begin 2009, we are anticipating continued adverse global economic
conditions and are encountering significant headwinds from unfavorable
foreign currency exchange rates which we expect will have a significant
effect on our international results in 2009,” continued Mr. Fellows.
"Despite these macroeconomic conditions, which are beyond our control,
our brands and our operations remain strong. We have our strongest
line-up of new products ever for 2009, we continue to benefit from the
many gross margin and operational initiatives we have implemented over
the past three years, and we will continue to drive incremental gross
margin savings as we embark on our next round of initiatives in 2009.
Additionally, as we demonstrated in 2008, we will carefully manage our
costs and inventories throughout the year and will take the necessary
actions to maximize our financial results for our shareholders in
whatever economic conditions persist.”
Conference Call
The Company will release actual full year 2008 financial results on
January 27, 2009. A conference call and webcast will also take place at
that time.
Disclaimer: Investors should be
aware that the Company has not yet finalized its results for 2008 and
that the Company’s "preliminary” estimates of net sales and earnings for
2008 reflect management’s estimates based upon the information available
at the time made. These estimates could differ materially from the
Company’s actual results if the information on which the estimates are
based ultimately proves to be incorrect or incomplete. In addition,
statements made in this press release that relate to future plans,
events, financial results, performance or prospects, including
statements relating to the strength of the 2009 product line-up, the
continued benefit from prior initiatives and the incremental gross
margin savings from future initiatives, as well as the Company’s ability
to manage in 2009 the Company’s costs and inventories and to maximize
shareholder value, are forward-looking statements as defined under the
Private Securities Litigation Reform Act of 1995. These estimates and
statements are based upon current information and expectations.
Accurately estimating the Company’s reported future financial
performance is based upon various unknowns including, future changes in
foreign currency rates and consumer acceptance and demand for the
Company’s products as well as future consumer discretionary purchasing
activity, which can be significantly adversely affected by unfavorable
economic or market conditions. Actual results may differ materially from
those estimated or anticipated as a result of these unknowns or other
risks and uncertainties, including delays, difficulties or increased
costs in the supply of components needed to manufacture the Company’s
products, in manufacturing the Company’s products, or in connection with
the implementation of the Company’s planned gross margin initiatives or
the implementation of future initiatives; 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 and the Company’s business, see Part I,
Item 1A of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, 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 from time to time 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.
Regulation G: The financial
results reported in this press release have been prepared in accordance
with accounting principles generally accepted in the United States
("GAAP”). In addition to the GAAP results, the Company has also provided
additional information concerning its results, which includes certain
financial measures not prepared in accordance with GAAP. The non-GAAP
financial measures included in this press release exclude the benefit
from the reversal of an energy derivative valuation account and charges
associated with the Company’s gross margin initiatives. These non-GAAP
financial measures should not be considered a substitute for any measure
derived in accordance with GAAP. These non-GAAP financial measures may
also be inconsistent with the manner in which similar measures are
derived or used by other companies. Management believes that the
presentation of such non-GAAP financial measures, when considered in
conjunction with the most directly comparable GAAP financial measures,
provides additional useful information concerning the Company’s
operations without these charges. The Company has provided reconciling
information in the text of this press release.
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 accessories, under the Callaway Golf®,
Odyssey®, Top-Flite®, and Ben Hogan® brands in more than 110 countries
worldwide. For more information please visit www.callawaygolf.com
or www.shop.callawaygolf.com.
