Callaway Golf Company has 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.”
“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..
“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.”
Callaway Golf www.callawaygolf.com