Global Edition

Results from Callaway

11.00pm 18th July 2002 - Corporate

Callaway Golf Company (NYSE:ELY) today reported operating results for the second quarter and six months ended June 30, 2002.

For the quarter ended June 30, 2002 compared with the same quarter in 2001, Callaway Golf announced a 37% increase in net income (to $37.1 million from $27.0 million) and a 53% increase in earnings per diluted share (to $0.55 from $0.36) on net sales of $252.2 million ($251.1 million in constant dollars) compared to $253.7 million last year. Excluding the effects of a non-cash charge taken last year in connection with a since-terminated long-term electricity supply agreement, net income and earnings per diluted share increased 12% and 25%, respectively, over the same quarter last year.

For the six months ended June 30, 2002 compared to the same period in 2001, the Company announced an 11% increase in net income (to $67.8 million from $61.1 million) and a 19% increase in earnings per diluted share (to $0.99 from $0.83) on net sales of $508.6 million ($513.2 million in constant dollars) compared to $515.0 million last year.

Excluding the effect of the non-cash charge taken in 2001 as noted above, net income and earnings per diluted share increased 1% and 9%, respectively, over the same period last year.

“While we are very pleased with achieving our predicted range for net sales, we take even greater pleasure in our ability to exceed the range of estimates for net income and earnings per share,” said Ron Drapeau, chairman, president and CEO. “The golf industry is in a business cycle where near-term revenue growth is challenging due to a wide range of factors, including poor economic conditions in key countries, a decline in rounds played in the U.S., and irrational pricing actions by some of our competitors. We take great satisfaction in the fact that we are running our business in ways which defend our #1 market shares in the U.S. in woods, irons and putters while increasing the dollars we bring to the bottom line. Moreover, this increase in profitability is largely a reflection of fundamental changes in the ways we run our business to manage costs while still achieving superior results. These achievements are a testament to the determination of all our employees worldwide to be the best at everything we do.”

Brad Holiday, executive vice-president and chief financial officer, stated, “Operationally, the second quarter was a solid one. Our gross margin increased to 55% from 52% last year despite this year’s planned product mix shift toward stainless steel woods and irons, which generally have lower margins than titanium woods. The gross margin improvement is attributable to our continuing effort to reduce our club manufacturing costs and higher golf ball gross margins. Expense management initiatives and a required change in goodwill amortization reduced our operating expenses 6% and contributed to the second quarter operating margin improvement.”

During the second quarter, the Company repurchased 1.8 million of its shares at an average cost of $17.59 per share. The repurchases completed the $100 million repurchase authorization announced in August 2001 and continued under an additional $50 million repurchase authorization approved by the Board in May 2002.

In accordance with the Company’s dividend practice, the next dividend will be determined by the Board of Directors at its August 2002 meeting.

Callaway Golf Company www.callawaygolf.com

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