The Chairman’s statement reports challenges in the current marketplace but improved inventory levels at retail due to price reductions taken on 2004 products together with the decision to delay the timing of the launch of some new products. Three new product launches are taking place in the fourth quarter of 2004 in categories where the Company believes that retail inventory levels are not an issue and consumer response will be strong. The loss includes charges of $4.4 million associated with the integration of the Top-Flite operations acquired in late 2003.
Callaway Golf Company (NYSE:ELY) has announced its financial results for the quarter ended 30th September 2004. The Company reported net sales of $128.5 million, a net loss of $35.9 million, or a net loss of $0.53 per fully diluted share, on 67.8 million shares. Included in both the net loss and fully diluted net loss per share were charges of $4.4 million and $0.07, respectively, associated with the integration of the Top-Flite operations acquired in late 2003. On a pro forma basis, which excludes these charges, the Company reported a net loss of $31.5 million, or a net loss of $0.46 per fully diluted share, compared with “analyst consensus” estimates of a net loss of $0.45 per fully diluted share (which also excluded integration charges). Reported net sales, net income and fully diluted earnings per share for the same quarter in 2003 (which included two weeks of Top-Flite results) were $153.6 million, $2.3 million and $0.03 on 66.8 million shares, respectively.
For the nine months ended 30th September 2004, the Company reported net sales of $790.2 million, net income of $18.4 million, and fully diluted earnings per share of $0.27 on 68.2 million shares. Net income and earnings per share for the nine-month period were reduced by $14.3 million and $0.20, respectively, due to charges associated with the integration of the Top-Flite operations. Excluding these charges, the Company’s pro forma net income for the nine-month period was $32.6 million, and pro forma fully diluted earnings per share were $0.47. Reported net sales, net income and fully diluted earnings per share for the same period in 2003 (which included two weeks of Top-Flite results) were $667.4 million, $79.0 million and $1.19 on 66.3 million shares, respectively.
“Our results in the third quarter reflect the challenges we are facing in the current marketplace and the effect of the actions we have taken to address these issues,” said William C. Baker, chairman and CEO. “The price reductions taken on 2004 products together with our decision to delay the timing of the launch of certain new products resulted in improved inventory levels at retail during the quarter, a trend we hope will continue as we prepare for 2005. The management team is committed to the long term success of the company and the brand, and we are working together as a strong and focused team.”
“As previously announced, the Company has suspended providing short term guidance in light of our current situation in the marketplace, the ongoing CEO transition process, and the Company’s focus on strengthening the business in the long term,” said Brad Holiday, senior executive vice president and chief financial officer. “Consistent with our business plan, we have announced three new product lines for launch in the fourth quarter of 2004. These products will target categories where retail inventory levels are not an issue and where we believe consumer response will be strong.”
A replay of the conference call of 19th October, hosted by William C. Baker and Bradley J. Holiday, may be accessed through the Internet at www.callawaygolf.com or by telephone by calling 1-800-642-1687 toll free for calls originating within the United States or 706-645-9291 for International calls. The replay pass code is 1386836 and the replay will be available until 26th October 2004.
For more information about Callaway Golf Company visit www.callawaygolf.com, www.topflite.com, www.odysseygolf.com and www.tradeintradeup.com.
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