Global Edition

Reduced dividend from Callaway

8.09am 11th June 2009 - Corporate

Callaway Golf Company (NYSE: ELY) has announced that its Board of Directors has elected to reduce the second quarter dividend to $0.01 per share, payable on 15th July 2009 to shareholders of record as of 26th June 2009. This represents a $0.06 reduction to the dividend declared and paid on 29th April 2009, in the amount of $0.07 per share.

This action will allow the Company to retain an additional $15.2 million in cash on an annualized basis, which represents $11.4 million over the balance of 2009.

“Over the long term, we believe that Callaway’s ability to preserve its cash position and follow a prudent policy of balance sheet management is in the best interest of our shareholders,” said George Fellows, president and CEO of Callaway Golf Company. “By enhancing liquidity in this environment, we will be better positioned to manage our business and to take advantage of growth opportunities as the economy recovers. The actions we announced today are definitive steps consistent with this strategy.”

“Callaway continues to maintain or grow market share even in this difficult environment which is a testament to our global brand equity and the quality of our products,” Mr. Fellows added. “Based on current trends and market conditions, we remain confident in our annual guidance provided at our first quarter earnings call on April 30th.

“The macroeconomic and foreign currency headwinds that negatively impacted the first quarter continue to impact our second quarter. As a result of these factors, along with charges relating to a 10% reduction in our workforce, our second quarter earnings are, consistent with our expectations, estimated to be similar to those achieved in the first quarter. Earnings for the second half of the year are estimated to be higher than last year due to less foreign currency headwinds, the benefits associated with our cost reduction initiatives and improving economic conditions. Our international expansion will continue, and when the economy turns, we believe that our geographical reach will provide a sustained competitive advantage. Preserving financial flexibility allows Callaway to plan for the second half of 2009 and position us favorably as we move into what we anticipate will be a better 2010.”

Callaway Golf Company has also announced its intention to offer, subject to market and other conditions, shares of Series B Cumulative Perpetual Convertible Preferred Stock, with a liquidation preference of $100 per share, with an aggregate liquidation preference of $125 million, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The sale of the preferred stock is expected to close on 15th June.

Callaway Golf will use the net proceeds of the offering to pay down a portion of the Company’s indebtedness outstanding under its existing revolving line of credit, which the Company believes will enable it to retain the credit facility’s currently favorable terms and avoid the need for an amendment of such terms.

Callaway Golf

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