CARLSBAD, Calif., April 25 /PRNewswire/ -- Callaway Golf Company
(NYSE: ELY) today reported record sales for the first quarter ended March 31,
2001. Reported net sales increased 32% to $261.4 million from $197.4 million
during the first quarter of 2000. Net income increased 181% to $34.1 million
in the first quarter of 2001 from $12.1 million in the first quarter of 2000.
First quarter 2001 diluted earnings per share increased 181% to $0.47 from
$0.17 in the same period last year.
Excluding the impact of recently adopted accounting pronouncements
(SAB 101 on Revenue Recognition and Emerging Issues Task Force 00-10 on
Accounting for Shipping and Handling Revenues and Costs), first quarter net
sales increased 25% to $258.9 million from $206.6 million last year. Net
income and diluted earnings per share increased 109% during the first quarter
to $33.8 million and $0.47 per diluted share, respectively, as compared to
$16.2 million and $0.22 per diluted share in the prior year. Implementing
SAB 101 effectively shifts revenue from one period into a subsequent period,
while adopting EITF 00-10 does not change earnings for any period.
"We are pleased with our overall first quarter results," stated Ely
Callaway, Founder, Chairman, and CEO. "Good momentum has continued from last
year into the first quarter of 2001 due to the success of several of our new
product introductions and key sales programs. With the worldwide launch of
the new Big Bertha(R) ERC(TM) II Drivers, Hawk Eye(R) VFT(TM) Drivers and
Fairway Woods, and our Steelhead(TM) X-14(R) Pro Series Irons, we have
continued to outpace the market and our brand is as strong as it's ever been."
"Golf ball sales doubled in the first quarter of 2001 compared to the
first quarter of 2000, reaching $12 million," continued Mr. Callaway. "These
growing golf ball sales are based upon the recognition that our 'Rule 35' golf
balls incorporate technology that is the state of the art in modern golf ball
design. The 'Rule 35' has quietly become the #2 ball in use on the five major
professional tours combined, #2 in tour earnings and in top ten finishes, and
of course, it is the only ball used to score a 59 on tour this year -- one of
only four balls in pro tour history to be used in such record-setting fashion.
Annika Sorenstam has used the 'Rule 35' golf ball not only to shoot her record
score of 59 during the Standard Register Ping in March, but she has also used
it, along with our driver, fairway woods, irons and putter, to win a
record-tying four straight LPGA tournaments. On May 1, our 'Rule 35' golf
balls will be joined by our new ball offering, the CB1(TM) Red and CB1 Blue
golf balls. We think these new two-piece high performance balls will be
equally appealing representatives of the Callaway Golf brand."
"The first quarter of 2001 was a very good quarter for our new Big Bertha
ERC II and Big Bertha Hawk Eye VFT Drivers," added Mr. Callaway. "The ERC II
Forged Titanium Driver has already been selected as Driver of the Year for
2001 by Choice Magazine -- the leading golf magazine in Japan. The Hawk Eye
VFT Driver appears to be well on its way to becoming the best selling premium
driver in the U.S., just as others of the various Big Bertha driver models
have every year since 1993."
"In light of its success as the most used driver model on the European PGA
Tour thus far in 2001 -- including its ranking as the #1 driver model in use
at each of the last nine tournaments -- it should not surprise anyone to learn
that the ERC II Driver has sold very well outside the U.S. where it fully
conforms with the Rules of Golf as published by the Royal and Ancient Golf
Club of St. Andrews," Mr. Callaway continued. "But it may surprise some to
know that we have already sold and delivered almost as many ERC II Drivers in
the United States as we have outside the U.S. despite the fact that the sale
and use of this club is strongly and aggressively opposed by the USGA. This,
in our opinion, is a strong testament to the performance benefits that the
unique ERC II driver design technology can deliver to average and skilled
golfers everywhere."
First quarter net sales of $258.9 million (excluding the impact of the
accounting pronouncements described above) by product category and region were
as follows:
-- Metal wood sales - $156.6 million (+55%) versus $100.8 million for Q1
2000
-- Iron sales - $65.5 million (-21%) versus $82.6 million for Q1 2000
-- Ball sales - $12.1 million (101%) versus $6.0 million for Q1 2000
-- Putters, accessories, and other sales - $24.7 million (+44%) versus
$17.2 million for Q1 2000
-- U.S. market sales - $142.5 million (+21%) versus $118.1 million for Q1
2000
-- International market sales - $116.4 million (+32%) versus
$88.5 million for Q1 2000
First quarter gross margin as a percent of net sales was 52% versus 45% in
the comparable period last year. This increase was primarily attributable to
higher golf club margins resulting from manufacturing improvements, a product
mix favoring higher margin metal woods, and improved golf ball margins.
Selling and tour expenses for the first quarter were $53.2 million (20% of
net sales), compared to $42.8 million (22% of net sales) in 2000. The dollar
increase was primarily due to increased advertising and promotional expenses
related to the Company's new product launches.
General and Administrative expenses for the first quarter of 2001 were
$19.9 million (8% of net sales), compared to $17.5 million (9% of net sales)
in 2000. This dollar increase is primarily due to costs related to
consolidating operating facilities, and an increase in the Company's provision
for bad debt expense, partially offset by a decrease in depreciation expense.
"We are encouraged with the results we saw in the first quarter from our
manufacturing and operational initiatives," stated Brad Holiday, Executive
Vice President and Chief Financial Officer. "These initiatives contributed
considerably to net income growth during the quarter. Equally as important,
our October 2000 retailer event enabled us to take orders and ship our
products earlier in the selling season. As a result, we were better able to
meet market demand while improving our inventory management."
In accordance with the Company's dividend practice for 2001, the dividend
for the first quarter will be determined by the Board of Directors at its
meeting in May 2001.
BUSINESS OUTLOOK
In light of recently adopted SEC Regulations, the Company has elected
to provide certain forward-looking information in this press release.
These statements are based on current information and expectations,
and actual results may differ materially. The Company undertakes no
obligation to update this information. See further disclaimer below.
Full Year 2001
The Company estimates:
-- Revenue for the year will be approximately $906 million including the
impact of both SAB 101 and EITF 00-10.
-- Gross margins for the year will be approximately 51-52% of net
revenues.
-- Pre-tax profit for the year will be approximately 20-21% of net
revenues.
-- Earnings per share (fully diluted) for the year will be approximately
$1.54 - $1.59.
"While pleased with the strong results for the first quarter," commented
Brad Holiday, "we have not changed our full year forecast. We factored in
the potential impact on our business due to the unusually poor weather
conditions in the U.S. and Europe, as well as growing economic concerns in
both the U.S. and other countries."
The Company will be holding a conference call at 2:00 p.m. PDT today,
which will be hosted by Brad Holiday, Executive Vice President and Chief
Financial Officer. The call will be broadcast live over the Internet and can
be accessed at http://www.callawaygolf.com. To listen to the call, please go
to the web site at least 15 minutes before the call to register and for
instructions on how to access the broadcast. Those wishing to listen via
telephone should call (785) 749-3918 and ask to be connected to the Callaway
Golf call. A replay of the conference call will be available approximately
one hour after the call ends through 5:00 p.m. PDT, April 27, by calling
(877) 710-5298 or by accessing it via our home page at
http://www.callawaygolf.com.
Disclaimer: Statements used in this press release that relate to future
plans, events, financial results or performance, including statements relating
to the Company's future prospects, revenues and profitability, and the
statements set forth in the business outlook section above, 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), adverse weather conditions and 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 additional information concerning
these and other risks and uncertainties, see Part I, Item 1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 2000, as well as
other risks and uncertainties detailed from time to time in the Company's
periodic reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to
time with the Securities and Exchange Commission. 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 and CB1 Blue golf balls. 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.
If you would like to receive Callaway Golf's press releases via e-mail in
the future, please send your request to: newslist@callawaygolf.com.
Callaway Golf Company
Consolidated Condensed Statement of Operations
(In thousands, except per share data)
First Quarter Ended
(unaudited)
March 31,
2001 2000
Net sales $261,365 100% $197,406 100%
Cost of goods sold 124,458 48% 109,141 55%
Gross profit 136,907 52% 88,265 45%
Operating expenses:
Selling 53,246 20% 42,750 22%
General and
administrative 19,850 8% 17,507 9%
Research and
development 8,933 3% 8,217 4%
Income from operations 54,878 21% 19,791 10%
Other income, net 930 1,585
Income before income taxes
and cumulative effect of
accounting change 55,808 21% 21,376 11%
Income tax provision 21,733 8,278
Income before cumulative
effect of accounting
change 34,075 13% 13,098 7%
Cumulative effect of
accounting change (957)
Net income $34,075 13% $12,141 6%
Earnings per common share:
Basic
Income before cumulative
effect of accounting
change $0.49 $0.18
Cumulative effect of
accounting change 0.00 (0.01)
Net income $0.49 $0.17
Diluted
Income before cumulative
effect of accounting
change $0.47 $0.18
Cumulative effect of
accounting change 0.00 (0.01)
Net income $0.47 $0.17
Common equivalent shares:
Basic 70,010 71,199
Diluted 72,453 72,482
March 31, December 31,
2001 2000
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $98,055 $102,596
Accounts receivable, net 159,520 58,836
Inventories, net 129,511 133,962
Deferred taxes 27,535 29,354
Other current assets 26,611 17,721
Total current assets 441,232 342,469
Property, plant and equipment, net 130,500 134,712
Intangible assets, net 115,308 112,824
Other assets 36,681 40,929
$723,721 $630,934
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $65,434 $44,173
Accrued employee compensation and benefits 20,478 22,574
Accrued warranty expense 39,630 39,363
Income taxes payable 10,242 3,196
Total current liabilities 135,784 109,306
Long-term liabilities 8,428 9,884
Shareholders' equity 579,509 511,744
$723,721 $630,934
SOURCE Callaway Golf Company
 back to top
Related links:
http://www.callawaygolf.com
Company News On-Call:
http://www.prnewswire.com/comp/124825.html or fax,
800-758-5804, ext. 124825
CONTACT:
Ely Callaway, Brad Holiday, Larry Dorman, or
Krista Mallory of Callaway Golf Company, 760-931-1771
|
