Callaway Golf Company net sales are expected to be approximately $1.018 billion, with corresponding fully
diluted earnings per share ranging from 33 cents to 35 cents. This earnings estimate includes after-tax charges of 8 cents for employee equity-based compensation associated with FAS 123R. It also includes after-tax charges of $0.04 associated with the Top-Flite integration, $0.03 for the restructuring initiatives announced in September 2005 and $0.02 for the gross margin improvement initiatives announced in November
2006. Excluding these charges, pro forma fully diluted earnings per share is expected to range from $0.50 to $0.52.

For the full year 2005, the Company reported net sales of $998 million, fully diluted earnings per share of $0.19, and pro forma fully diluted earnings per share of $0.38. Pro forma results exclude after-tax charges of $0.11 associated with the Top-Flite integration, $0.07 related to the restructuring initiatives, and $0.01 related to employee equity-based compensation.

Business Update

“We ended the year with positive momentum on several fronts,”
commented George Fellows, President and CEO of Callaway Golf. “Annual
sales increased 2% with our core Callaway Golf and Odyssey brands
increasing 9% compared to last year, the result of great products and
an increasing presence in the marketplace. Accordingly, our sales
growth translated into U.S. market share gains in woods, balls, and
accessories and we were able to maintain our #1 market position in
irons and putters. In terms of profitability, we were able to reduce
our pro forma operating expenses in 2006 by approximately $35 million,
in addition to the $8 million saved in the fourth quarter of 2005, due
to the restructuring initiatives we began implementing in September of
2005. We also made some very important additions to our management
team in the international, manufacturing, and marketing areas.
Overall, we are pleased with the progress we have made in 2006 and
believe we have positioned the Company for continued success in 2007.
In fact, in what is a clear testament to our investment in R&D, we
have recently received several awards from Golf Digest for our 2007
products including 'editor's choice' in five out of eleven categories,
including driver, fairway woods, game improvement irons, putters, and
balls.

“Looking forward,” continued Mr. Fellows, “the Company is in the
process of re-launching the Top-Flite brand this year with a new
technology golf ball, the D2, along with several new marketing and
promotional programs. We are also continuing to focus on improving
gross margins across all our brands and saw improved gross margin
trends during the last quarter of 2006. In addition, we are on track
to execute our plan announced last quarter to improve gross margins by
$50 to $60 million over the next two years. With the momentum of our
core brands and these additional initiatives, we are optimistic about
2007.”

Details of Full Year Results

Sales

The estimated increase in sales for the year of approximately 2%
is attributable to a 9% increase in the Callaway Golf/Odyssey brands,
which was offset by a 31% decline in the Top-Flite/Ben Hogan brands.

Gross Margins

Gross margins as a percentage of net sales for 2006 are estimated
to be approximately 39%. Excluding pre-tax charges of $6 million
related to equity-based compensation, the September 2005 restructuring
initiatives, the Top-Flite integration, and the recently announced
gross margin initiatives, it is estimated that pro forma gross margins
for 2006 will be approximately 40%. For the full year 2005, both the
reported and pro forma gross margins were 42%.

Operating Expenses

The Company estimates that its operating expenses for 2006 will be
approximately $361 million compared to $397 million in 2005. Excluding
pre-tax charges of $12 million related to equity-based compensation,
the September 2005 restructuring initiatives, and Top-Flite
integration, pro forma operating expenses are estimated to be
approximately $349 million in 2006 compared to $384 million in 2005.