Revises 2000 Fourth Quarter and Full Year Results
Raises FY 2001 Diluted EPS Expectations by $0.03
CARLSBAD, Calif., March 19 /PRNewswire/ -- Callaway Golf Company
(NYSE: ELY) announced today that it has retroactively implemented the
Securities and Exchange Commission's Staff Accounting Bulletin No. 101
("SAB 101"). As a result, the Company is revising its previously announced
2000 fourth quarter and full year results to reflect the implementation of SAB
101, effective January 1, 2000. The net effect of this action is to increase
the revenues and EPS results reported for the fourth quarter of 2000 as well
as EPS expectations for the full year 2001, while reducing the revenues and
EPS reported for the full year 2000.
SAB 101 provides expanded guidelines on revenue recognition. Prior to the
implementation of SAB 101, the Company recognized revenue when it shipped
products to its customers. Current interpretations of SAB 101 specify that
revenue should be recognized upon delivery, rather than upon shipment, if the
seller, either legally or through its practice, bears a portion of the risk of
loss or damage during transit.
"After further review of Callaway Golf's current shipping practices, we
felt it was appropriate to revise our 2000 fourth quarter and full year
results in compliance with SAB 101," commented Brad Holiday, Executive Vice
President and Chief Financial Officer. "This effectively shifts revenue from
one period into the subsequent period with no impact to our business. Demand
for the Company's products has remained solid during the first quarter, and
this accounting change does not affect the amount of products shipped during
2000 or estimated to be shipped in 2001. We expect the net sales and
associated earnings that were shifted from fiscal 2000 to be additive to
fiscal 2001 and are increasing our EPS guidance for fiscal 2001 by $0.03 to a
range of $1.54 to $1.59."
As a result of implementing SAB 101, the Company realized fourth quarter
net sales of $142.2 million, a 22% increase from the same period in 1999. The
revised fourth quarter net sales includes a $12.4 million shift from third
quarter 2000 and $5.9 million shift from fourth quarter to the first quarter
of 2001. As a result of this shift in net sales, revised fourth quarter net
income was $4.6 million or $0.07 per diluted share, as compared to $157,000
and less than $0.01 per diluted share for the fourth quarter 1999,
respectively.
For the year ended December 31, 2000, revised net sales were
$837.6 million, a 16% increase from net sales of $719.0 million during 1999.
The revised full year net sales includes a $3.0 million shift from 1999 and a
$5.9 million shift into 2001. As a result, the revised full year 2000 net
income and diluted earnings per share were $81.0 million and $1.13, as
compared to $55.3 million and $0.78 for the full year 1999, respectively. The
change in net income and EPS also includes the cumulative effect of
implementing SAB 101.
Further information on these adjustments are shown on the attached
financial schedules.
The Company has scheduled a conference call for today, Monday, March 19,
2001 at 2:00 pm (PST) to discuss the implementation of SAB 101. Investors
interested in participating in today's conference call may call 785-832-1523
or listen to a live webcast at the Company's website (http://www.callawaygolf.com).
A replay of the conference will be available until Wednesday, March 21, 2001
and can be accessed on the Company's website or by calling 402-220-0664.
Disclaimer: Statements used in this press release that relate to future
plans, events, financial results or performance, including statements relating
to the Company's estimated net sales and earnings for 2001, are
forward-looking statements as defined under the Private Securities Litigation
Reform Act of 1995. These statements are based upon current information and
expectations. Actual results may differ materially from those anticipated as
a result of certain risks and uncertainties, including but not limited to
market acceptance of current and future products, including the Company's golf
ball products and the Company's new golf club products (not all of which
conform to USGA rules), seasonality, adverse market and economic conditions,
competitive pressures, delays, difficulties or increased costs in the
manufacturing of the Company's golf club or ball products, or in the
procurement of materials or resources needed to manufacture the Company's golf
club or ball products (including business interruptions or increased costs
resulting from power outages or shortages), and any actions taken by the USGA
or other golf association that could have an adverse impact upon demand for
the Company's products (such as the USGA's announcement that scores in rounds
played with clubs that do not conform to USGA rules such as the Company's
ERC(TM) II Forged Titanium Driver may not be posted for USGA handicap
purposes). For details concerning these and other risks and uncertainties,
you should consult our most recent Form 10-Q filed with the Securities and
Exchange Commission ("SEC"), as well as the Company's other periodic reports
on Forms 10-K, 10-Q and 8-K subsequently filed with the SEC from time to time.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Callaway Golf Company makes and sells Big Bertha(R) Metal Woods and Irons,
including Big Bertha ERC(TM) II Forged Titanium Drivers, Big Bertha Hawk
Eye(R) VFT(TM) and Big Bertha Hawk Eye VFT Pro Series Titanium Drivers and
Fairway Woods, Big Bertha Steelhead Plus(TM) Stainless Steel Drivers and
Fairway Woods, Hawk Eye Tungsten Injected(TM) Titanium Irons, Steelhead(TM)
X-14(R) and Steelhead X-14 Pro Series Stainless Steel Irons. Callaway Golf
Company also makes and sells Odyssey(R) Putters, including White Hot(R),
TriHot(TM), and Dual Force(R) Putters. Callaway Golf Company makes and sells
the Callaway Golf(R) "Rule 35(R)" Firmfeel(TM) and Softfeel(TM) golf balls,
and the CB1(TM) Red golf ball. For more information about Callaway Golf
Company, please visit our Web sites at http://www.callawaygolf.com,
http://www.callawaygolfball.com and http://www.odysseygolf.com.
Callaway Golf Company
Consolidated Condensed Statement of Operations
(in thousands, except per share data)
Fourth Quarter Ended
(unaudited)
December 31,
2000 1999
Net sales $142,218 100% $116,599 100%
Cost of goods sold 79,513 56% 60,718 52%
Gross profit 62,705 44% 55,881 48%
Operating expenses:
Selling 38,734 27% 32,825 28%
General and administrative 14,530 10% 25,121 22%
Research and development 8,331 6% 8,596 7%
Restructuring (6,325) (5%)
Sumitomo transition costs 5,713 5%
Income from operations 1,110 1% (10,049) (9%)
Other income, net 852 4,819
Income before income taxes and
cumulative effect of
accounting change 1,962 1% (5,230) (4%)
Income tax (benefit) provision (2,652) (5,387)
Income before cumulative effect
of accounting change 4,614 3% 157 0%
Cumulative effect of accounting
change
Net income $4,614 3% $157 0%
Earnings per common share:
Basic
Income before cumulative
effect of accounting change $0.07 $0.00
Cumulative effect of
accounting change $0.00 $0.00
Net Income $0.07 $0.00
Diluted
Income before cumulative
effect of accounting change $0.07 $0.00
Cumulative effect of
accounting change $0.00 $0.00
Net Income $0.07 $0.00
Common equivalent shares:
Basic 68,678 70,726
Diluted 70,301 71,787
Year Ended
December 31,
2000 1999
Net sales $837,627 100% $719,038 100%
Cost of goods sold 440,119 53% 384,265 53%
Gross profit 397,508 47% 334,773 47%
Operating expenses:
Selling 170,541 20% 128,565 18%
General and administrative 70,333 8% 92,478 13%
Research and development 34,579 4% 34,002 5%
Restructuring (5,894) (1%)
Sumitomo transition costs 5,713 1%
Income from operations 122,055 15% 79,909 11%
Other income, net 7,267 5,588
Income before income taxes and
cumulative effect of
accounting change 129,322 16% 85,497 12%
Income tax (benefit) provision 47,366 30,175
Income before cumulative effect
of accounting change 81,956 10% 55,322 8%
Cumulative effect of accounting
change (957)
Net income $80,999 10% $55,322 8%
Earnings per common share:
Basic
Income before cumulative
effect of accounting change $1.17 $0.79
Cumulative effect of
accounting change ($0.01) $0.00
Net Income $1.16 $0.79
Diluted
Income before cumulative
effect of accounting change $1.14 $0.78
Cumulative effect of
accounting change ($0.01) $0.00
Net Income $1.13 $0.78
Common equivalent shares:
Basic 69,946 70,397
Diluted 71,412 71,214
Callaway Golf Company
Consolidated Condensed Balance Sheet
(In thousands)
December 31, December 31,
ASSETS 2000 1999
Current assets:
Cash and cash equivalents $102,596 $112,602
Accounts receivable, net 58,836 54,252
Inventories, net 133,962 97,938
Deferred taxes 29,354 32,558
Other current assets 17,721 13,122
Total current assets 342,469 310,472
Property, plant and equipment, net 134,712 142,214
Intangible assets, net 112,824 120,143
Other assets 40,929 43,954
$630,934 $616,783
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $44,173 $46,664
Accrued employee compensation and benefits 22,574 21,126
Accrued warranty expense 39,363 36,105
Accrued restructuring costs 1,379
Income taxes payable 3,196
Total current liabilities 109,306 105,274
Long-term liabilities:
Deferred compensation 9,884 11,575
Shareholders' equity 511,744 499,934
$630,934 $616,783
Callaway Golf Company
Revised Fiscal Year 2000 Quarterly Financial Data
(in thousands, except per share data)
(UNAUDITED)
Net Sales $197,406 $289,922 $208,081 $142,218 $837,627
Cost of goods sold 109,141 145,415 106,050 79,513 440,119
Gross Margin 88,265 144,507 102,031 62,705 397,508
Operating expenses:
Selling 42,750 47,991 41,066 38,734 170,541
General &
Administrative 17,507 17,613 20,683 14,530 70,333
Research &
Development 8,217 8,132 9,899 8,331 34,579
Income from
Operations 19,791 70,771 30,383 1,110 122,055
Other income, net 1,585 2,141 2,689 852 7,267
Income before income
taxes and cumulative
effect of accounting
change 21,376 72,912 33,072 1,962 129,322
Income tax (benefit)
provision 8,278 28,723 13,017 (2,652) 47,366
Income before
cumulative effect
of accounting change 13,098 44,189 20,055 4,614 81,956
Cumulative effect of
accounting change (957) -- -- -- (957)
Net income $12,141 $44,189 $20,055 $4,614 $80,999
Earnings per
common share:
Basic
Income before
cumulative effect
of accounting
change $0.18 $0.63 $0.29 $0.07 $1.17
Cumulative effect
of accounting
change ($0.01) $0.00 $0.00 $0.00 ($0.01)
Net income $0.17 $0.63 $0.29 $0.07 $1.16
Diluted
Income before
cumulative effect
of accounting
change $0.18 $0.61 $0.29 $0.07 $1.14
Cumulative effect
of accounting
change ($0.01) $0.00 $0.00 $0.00 ($0.01)
Net income $0.17 $0.61 $0.29 $0.07 $1.13
Common equivalent
shares:
Basic 71,199 70,693 69,237 68,678 69,946
Diluted 72,482 72,686 70,203 70,301 71,412
SOURCE Callaway Golf Company
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Related links:
http://www.callawaygolf.com
CONTACT:
Ely Callaway, Brad Holiday, Larry Dorman, or
Krista Mallory, all of Callaway Golf Company, 760-931-1771
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