Callaway Golf Company Reports Record 1997 Sales of $842.9 Million
PR Newswire - January 28, 1998 17:19
CARLSBAD, Calif., Jan. 28 /PRNewswire/ -- Callaway Golf Company
(NYSE: ELY) announced today that its net sales in the year ended December 31,
1997 increased 24 percent to $842.9 million over the previous year's net sales
of $678.5 million. The Company also announced that it had net income of
$132.7 million for 1997 -- an increase of eight percent as compared with net
income of $122.3 million reported for 1996 ($1.85 per diluted share for 1997
vs. $1.73 per diluted share for 1996, an increase of seven percent). Net
income included a one-time charge of $12.0 million for the settlement of
litigation between the Company and a former employee; without that charge, net
income for 1997 would have been $140.1 million, an increase of 15% over the
prior year, and diluted earnings per share would have been $1.95, an increase
of 13%.
Net sales for the three months ended December 31, 1997, were $163.4
million, up 18 percent from net sales of $138.8 million for the comparable
period of 1996. For the three months ended December 31, 1997, net income was
$24.4 million, or $0.34 per diluted share -- compared with $25.5 million, or
$0.36 per diluted share, for the comparable period a year ago.
The 1997 fourth quarter revenues reflect sales of Biggest Big Bertha(TM)
Titanium Drivers and Great Big Bertha(R) Titanium Metal Woods of $70.9
million, sales of Big Bertha(R) War Bird(R) Stainless Steel Metal Woods of
$21.7 million, sales of Big Bertha(R) Irons of $28.9 million, sales of Great
Big Bertha(R) Tungsten*Titanium(TM) Irons of $24.2 million, Odyssey Golf sales
of $8.3 million, and other sales of $9.4 million.
Sales for the year ended December 31, 1997 resulted in revenues from
Biggest Big Bertha(TM) Titanium Drivers and Great Big Bertha(R) Titanium Metal
Woods of $393.7 million, Big Bertha(R) War Bird(R) Stainless Steel Metal Woods
of $150.5 million, Big Bertha(R) Irons of $174.6 million, Great Big Bertha(R)
Tungsten*Titanium(TM) Irons of $59.3 million, Odyssey Golf sales of $20.1
million, and other sales of $44.7 million.
Cost of goods sold as a percentage of net sales for the fourth quarter
increased to 50% from 46% in the fourth quarter of the previous year. This
increase was primarily due to increased sales of irons, which have lower
margins than metal woods, combined with an increase in sales to Japan, a
market which has the lowest margins of all the markets in which the Company
sells.
Selling expenses in the fourth quarter of 1997 increased to $25.4 million
(16% of net sales) compared to $19.0 million (14%) in the fourth quarter of
1996, primarily due to increased promotional and tour expenses, higher costs
related to the Company's interactive golf venues, and additional marketing
support in Japan.
General and administrative expenses for the fourth quarter of 1997 were
$13.7 million (8% of net sales) compared to $13.0 million (9%) for the fourth
quarter of 1996. The changes were primarily due to additional expenses
associated with the ongoing start-up of the golf ball business and the
acquisition of Odyssey Golf, partially offset by reduced employee compensation
expenses.
Research and development expenses increased to $5.6 million in the fourth
quarter of 1997 from $4.5 million for the same period in the prior year,
consistent with the Company's plan to increase research and development
efforts for the existing business and for potential new business
opportunities.
"Although 1997 was another successful year for Callaway Golf, we recognize
that we face many challenges ahead," said Donald H. Dye, President and C.E.O.
of Callaway Golf Company. "It is our belief that the new Big Bertha(R)
X-12(TM) Irons, which were just introduced, and the rest of our 1998 product
line, will help us continue to compete successfully in the marketplace. We
also recognize that uncertainties and problems in international markets
affected our business in 1997 and will likely affect our business in 1998. We
have therefore planned to accelerate the reorganization of our international
operations, including the acquisition of distribution rights in certain key
countries in Europe and Asia. These actions reflect, in our opinion, good
investments in the future of the Company."
"In 1997, Callaway Golf's Big Bertha(R) metal woods and irons remained the
world's favorite golf clubs," stated Ely Callaway, Chairman and Founder of
Callaway Golf. "For all of 1997, Big Bertha(R) Drivers continued to be
dominant on the five leading professional tours in U.S. and Europe. Big
Bertha(R) woods and irons have been the number one selling golf clubs in golf
shops around the world. We are very proud of that and we look forward to more
of the same kind of acceptance in 1998."
Dividend
The Board of Directors has approved a quarterly dividend of $.07 per share
payable March 3, 1998, to shareholders of record on February 10, 1998.
1998 Annual Meeting
The Company also announced that its 1998 Annual Meeting of Shareholders
will be held on April 23, 1998, at the Company's headquarters in Carlsbad,
California.
Stock Repurchases
The Company announced that it repurchased 720,800 shares of its Common
Stock during the month of December 1997, at a total cost of $20.0 million, for
an average cost per share of $27.71.
Statements used in this press release that relate to future plans, events,
financial results or performance are forward-looking statements as defined
under the Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those anticipated as a result of certain risks and
uncertainties, including but not limited to market acceptance of current and
future products, competitive pressures, and investment risks, costs and
potential disruption of business as a result of the proposed reorganization of
international operations, as well as other risks and uncertainties detailed
from time to time in the Company's periodic reports on Forms 10-K, 10-Q and
8-K 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.
For more information about Callaway Golf Company, please visit the
company's website on the internet at www.callawaygolf.com
Callaway Golf Company
Consolidated Condensed Income Statement
(In thousands, except per share data)
Fourth Quarter Ended Year Ended
December 31, December 31,
(unaudited)
1997 1996 1997 1996
Net sales $163,386 100% $138,827 100% $842,927 100% $678,512 100%
Cost of goods
sold 81,100 50% 63,455 46% 400,127 47% 317,353 47%
Gross profit 82,286 50% 75,372 54% 442,800 53% 361,159 53%
Operating expenses:
Selling 25,351 16% 18,974 14% 120,589 14% 80,701 12%
General and
administrative 13,680 8% 13,035 9% 70,724 8% 74,476 11%
Research and
development 5,616 3% 4,501 3% 30,298 4% 16,154 2%
Litigation
settlement 12,000 1%
Income from
operations 37,639 23% 38,862 28% 209,189 25% 189,828 28%
Other income,
net 1,016 1,816 4,576 5,767
Income before
income taxes 38,655 24% 40,678 29% 213,765 25% 195,595 29%
Provision for
income taxes 14,288 15,151 81,061 73,258
Net income $ 24,367 15% $25,527 18% $132,704 16% $122,337 18%
Earnings per common share:
Basic $0.35 $0.38 $1.94 $1.83
Diluted $0.34 $0.36 $1.85 $1.73
Common equivalent shares:
Basic 69,362 67,454 68,407 66,832
Diluted 72,367 71,472 71,698 70,661
Callaway Golf Company
Consolidated Condensed Balance Sheet
(In thousands)
December 31,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 26,204 $108,457
Accounts receivable, net 124,470 74,477
Inventories, net 97,094 98,333
Deferred taxes 23,810 25,948
Other current assets 10,208 4,298
Total current assets 281,786 311,513
Property, plant and equipment, net 142,503 91,346
Other assets 137,425 25,569
$561,714 $428,428
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $30,063 $14,996
Accrued employee compensation and benefits 14,262 16,195
Accrued warranty expense 28,059 27,303
Income taxes payable 2,558
Total current liabilities 72,384 61,052
Long-term liabilities 7,905 5,109
Shareholders' equity: 481,425 362,267
$561,714 $428,428
SOURCE Callaway Golf Company
/CONTACT: Krista Mallory of Callaway Golf Company, 760-931-1771/
/Web site: callawaygolf.com
(ELY)
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