Callaway Golf Company last night announced that it is implementing several company-wide initiatives expected to improve its business processes and reduce the company’s overall expenses by approximately $70 million over a two year period, with $50 to $60 million in savings expected in 2006.
The cost of implementing these initiatives is expected to result in charges totalling approximately $12 million, with approximately $6 million to be taken in the third quarter of 2005.
The company will integrate the Callaway Golf, Odyssey, Top-Flite and Ben Hogan selling functions and consolidate all golf ball manufacturing at the Top-Flite locations in Massachusetts and New York – both of which will reduce overall headcount and eliminate redundant infrastructure and overhead while improving functionality.
There will be reductions in staffing throughout the organization, including international subsidiaries.
For the third quarter 2005, the company expects revenues of about $215 million with a loss per share of $0.06-$0.12. These estimated results include charges for these current initiatives of approximately $0.05 per share as well as continuing integration of the Top-Flite and Callaway Golf operations of approximately $0.02 per share.
Excluding these charges, earnings for the quarter are estimated to range from earnings of $0.01 to a loss of $0.05. According to Reuters, analysts expected the company to earn $0.02 per share on revenues of $173.3 million for the third quarter.
Callaway Golf www.callaway.com
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