CALLAWAY GOLF COMPANY REPORTS 1998 SALES OF
$697.6 MILLION
Source: PR Newswire
CARLSBAD, Calif., Jan. 27 /PRNewswire/ -- Callaway Golf Company (NYSE:
ELY) announced today that its net sales for the year ended December 31,
1998 were $697.6 million compared to the previous year's net sales of
$842.9 million. The Company also announced that it had a net loss of
$26.6 million for 1998 compared to net income of $132.7 million
reported for 1997 ($0.38 loss per share for 1998 vs. $1.85 earnings per
diluted share for 1997).
Net sales for the three months ended December 31, 1998, were $114.5
million, down from net sales of $163.4 million for the comparable
period of 1997. For the three months ended December 31, 1998, the
Company reported a net loss of $64.7 million, or $0.93 loss per share
-- compared with net income of $24.4 million, or $0.34 earnings per
diluted share, for the comparable period in 1997.
In line with the Company's earlier announcements (see press release of
November 11, 1998), the Company recorded significant charges in the
fourth quarter, including charges associated with cost reduction
actions and operational improvements. These fourth quarter charges
consisted of employee severance costs, impairment of assets, excess
lease costs, losses on the disposition of assets and other exit costs
of $54.2 million and reserves for excess inventory of $30.0 million,
before income tax benefit. These charges and the resulting losses per
share for the quarter and year ended December 31, 1998, were consistent
with the Company's previous estimates.
Net sales for the year ended December 31, 1998 were comprised of:
revenues of $239.0 million from sales of titanium metal woods; $150.9
million from sales of stainless steel metal woods; $229.1 million from
sales of irons; $49.2 million from sales of Odyssey(R) products; and
$29.4 million from other sales.
Net sales for the fourth quarter of 1998 were comprised of: $23.2
million from sales of titanium metal woods; $46.9 million from sales
of stainless steel metal woods; $31.4 million from sales of irons;
$9.7 million from sales of Odyssey(R) products; and $3.3 million from
other sales.
The Company believes the fourth quarter sales decline was due to
overall softness in the golf equipment market, increased competition
including competitor price reductions and closeouts, the diversion of
consumer purchases to the Company's new Big Bertha(R) Steelhead(TM)
Metal Woods and the Big Bertha(R) X-12(TM) Irons from its higher priced
titanium metal woods and irons, and marketplace anticipation of the new
Great Big Bertha(R) Hawkeye(R) Titanium Metal Woods.
Cost of goods sold as a percentage of net sales for the fourth quarter
of 1998 increased to 82% from 50% in the fourth quarter of the previous
year. This increase was primarily due to additions to the reserve for
excess inventory, increased manufacturing labor and overhead costs, and
lower sales revenue associated with a metal wood wholesale price
reduction on Big Bertha(R) War Bird(R) Stainless Steel Metal Woods, and
Great Big Bertha(R) and Biggest Big Bertha(R) Titanium Metal Woods.
Selling expenses during the fourth quarter of 1998 were $28.7 million
compared to $25.4 million during the fourth quarter of 1997, an
increase of $3.3 million. This increase is primarily attributable to
costs associated with recently acquired foreign and domestic
subsidiaries and an increase in international advertising and other
marketing expenses. These costs were partially offset by reduced
domestic advertising and pro tour expenses.
General and administrative expenses for the fourth quarter of 1998 were
$29.3 million compared to $13.7 million for the fourth quarter of 1997.
This increase was attributable mainly to increased Callaway Golf Ball
Company pre-production expenses and non-capitalized construction costs
related to its new facility; increased expenses associated with newly
acquired foreign and domestic subsidiaries; an increase in various
Callaway Golf Europe expenses associated with the consolidation of the
Company's European operations; and an increase in the Company's reserve
for uncollectable accounts receivable. Additionally, general and
administrative expenses incurred during the fourth quarter of 1997
included the reversal of employee and officer bonus accruals.
Research and development expenses for the fourth quarter of 1998 were
$10.6 million compared to $5.6 million for the prior year's fourth
quarter. This increase was primarily related to increased product
design costs associated with increased employee compensation,
consulting and other overhead expenses. Additionally, research and
development expenses incurred during the fourth quarter of 1997
included the reversal of employee and officer bonus accruals as well as
greater capitalization of production molding costs.
Charges of $54.2 million were recorded in the fourth quarter of 1998
related to the Company's cost reduction actions. This charge is
primarily composed of $28.7 million for asset impairments, excess lease
costs, and costs to exit various non-core business activities,
including venues, new player development, interactive golf and
publishing, $13.8 million for impairment of assets due to the
consolidation of continuing operations, and $11.7 million for employee
severance pay and benefits.
Chairman and C.E.O. Ely Callaway said, "1998 was a challenging year for
our company as it was for most in the golf industry. Even with the
challenges, Callaway Golf retained its position in 1998 as the No.1
golf club company among amateur golfers around the world and on the
five major professional golf tours. In addition, the launches of the
Big Bertha(R) X-12(TM) Irons and the Big Bertha(R) Steelhead(TM) Metal
Woods were very successful." Mr. Callaway continued, "We've got a lot
to be proud of, and many good things to look forward to this year.
Just last week we launched our Great Big Bertha(R) Hawkeye(R) Titanium
Metal Woods to a very enthusiastic audience -- domestically and
internationally."
Dividend
The Board of Directors has approved a quarterly dividend of $.07
per share payable March 3, 1999, to shareholders of record on February
10, 1999.
1999 Annual Meeting
The Company also announced that its 1999 Annual Meeting of
Shareholders will be held on May 5, 1999, at the Company's headquarters
in Carlsbad, California.
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 delays
in product development, adverse market conditions, market acceptance of
current and future products, competitive pressures, and costs and
potential disruption of business as a result of the restructuring of
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 Balance Sheet
(In thousands)
December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $45,618 $26,204
Accounts receivable, net 73,466 124,470
Inventories, net 149,192 97,094
Deferred taxes 51,029 23,810
Other current assets 4,301 10,208
Total current assets 323,606 281,786
Property, plant and
equipment, net 172,794 142,503
Intangible assets, net 127,779 112,141
Other assets 31,648 25,284
$655,827 $561,714
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued expenses $48,899 $30,063
Revolving line of credit 70,919
Accrued employee
compensation and benefits 11,083 14,262
Accrued warranty expense 35,815 28,059
Accrued restructuring reserves 7,389
Income taxes payable 9,903
Total current liabilities 184,008 72,384
Long-term liabilities 18,723 7,905
Shareholders' equity 453,096 481,425
$655,827 $561,714
Callaway Golf Company
Consolidated Condensed Statement of Operations
(In thousands, except share and per share data)
Fourth Quarter Ended Year Ended
December 31, December 31,
(unaudited)
1998 1997 1998 1997
Net sales $114,517 100% $163,386 100% $697,621 100% $842,927 100%
Cost of goods
sold 94,085 82% 81,100 50% 401,607 58% 400,127 47%
Gross profit 20,432 18% 82,286 50% 296,014 42% 442,800 53%
Operating expenses:
Selling 28,708 25% 25,351 16% 147,022 21% 120,589 14%
General and
administrative 29,330 26% 13,680 8% 98,048 14% 70,724 8%
Research and
development 10,638 9% 5,616 3% 36,848 5% 30,298 4%
Litigation
settlement 12,000 1%
Restructuring 54,235 47% 54,235 8%
(Loss) income
from operations (102,479)(89%) 37,639 23% (40,139) (6%) 209,189 25%
Other income,
net 937 1,016 1,240 4,576
(Loss) income
before income
taxes (101,542)(89%) 38,655 24% (38,899) (6%) 213,765 25%
Income tax
(benefit)
provision (36,844) 14,288 (12,335) 81,061
Net (loss) income($64,698)(56%) $24,367 15% ($26,564) (4%)$132,704 16%
(Loss) earnings per common share:
Basic ($0.93) $0.35 ($0.38) $1.94
Diluted ($0.93) $0.34 ($0.38) $1.85
Common equivalent shares:
Basic 69,701 69,362 69,463 68,407
Diluted 69,701 72,367 69,463 71,698
SOURCE Callaway Golf Company
-0- 01/27/99 /CONTACT: Krista Mallory of
Callaway Golf Company, 760-931-1771/
/Web site: callawaygolf.com (ELY)
CO: Callaway Golf Company ST: California IN: SPT HOU SU: ERN |
