Callaway Golf Company announced its financial results for the quarter ended June 30, 2004, reporting consolidated net sales of $297.9 million, including $2.0 million in net sales from the company's newly acquired subsidiary, FrogTrader, Inc. Consolidated net income was $13.7 million, and fully diluted earnings per share were 20 cents on 68.4 million shares.

Reported net income and earnings per share were reduced by $6.7 million and 10 cents a share, respectively, due to charges associated with the integration of the Top-Flite operations acquired in late 2003. Excluding these charges, the Company's pro forma net income was $20.4 million, and pro forma fully diluted earnings per share were 30 cents, compared with previous company guidance of between 19 cents and 23 cents a share and “analyst consensus” estimates of 22 cents (both of which also exclude integration charges).

Reported net sales, net income and fully diluted earnings per share for the same quarter in 2003 were $242.1 million, $34.1 million and $0.52 on 66.1 million shares, respectively.
“Net income and earnings per share exceeded our earlier guidance in large part due to the delay of certain expenses expected in the second quarter,” said Ron Drapeau, Chairman and CEO. “We also benefited from the inclusion of revenues and earnings from FrogTrader, Inc. Both of these items were planned for inclusion in the full year estimates previously provided.”

For the six months ended June 30, 2004, the Company reported consolidated net sales of $661.7 million, consolidated net income of $54.3 million, and fully diluted earnings per share of $0.79 on 68.4 million shares. Reported net income and earnings per share for the six-month period were reduced by $9.9 million and $0.15, respectively, due to charges associated with the integration of the Top-Flite operations acquired in late 2003. Excluding these charges, the Company's pro forma net income for the six-month period was $64.2 million, and pro forma fully diluted earnings per share were $0.94. Reported net sales, net income and fully diluted earnings per share for the same period in 2003 were $513.8 million, $76.6 million and $1.16 on 66.0 million shares, respectively.

The Company is not changing its guidance for the full year even though its results for the second quarter exceeded expectations. As noted above, the second quarter results were affected favorably by the timing of certain expenses, revenues and earnings. The Company still expects annual results for 2004 to be within the ranges provided in its previous guidance of June 15, 2004.

Estimated net sales for the year are expected to be between $975 and $990 million, with fully diluted earnings per share between $0.15 and $0.25, including estimated integration charges of approximately $0.25 per share. This annual guidance includes expected total losses at Top-Flite of between $0.10 and $0.14 per share. Company gross profits including integration charges are expected to be in the 41% range (the 43% range excluding integration charges), again reflecting the impact of lower margin Top-Flite sales and expenses associated with new Callaway Golf sales programs planned for the second half of the year, including reduced pricing on some products. Third quarter net sales are projected to be about $150-$160 million with losses estimated at $0.37-$0.42 per share.

                         Callaway Golf Company
            Consolidated Condensed Statement of Operations
                 (In thousands, except per share data)
                              (Unaudited)

                                               Quarter Ended
                                                  June 30,
                                        ---------------------------
                                          2004              2003
                                        ---------        ---------

Net sales                               $297,908   100%  $242,077 100%
Cost of goods sold                       170,072    57%   115,583  48%
                                        ---------        ---------
Gross profit                            127,836     43%   126,494  52%
Operating expenses:
   Selling                               74,496     25%    53,164  22%
   General and administrative            21,834      7%    14,629   6%
   Research and development               7,559      3%     6,242   3%
                                        ---------        ---------
Total operating expenses                103,889     35%    74,035  31%
Income from operations                   23,947      8%    52,459  22%
Other income (expense), net              (1,592)            1,472
                                        ---------        ---------
Income before income taxes               22,355      8%    53,931  22%
Income tax provision                      8,640            19,788
                                        ---------        ---------
Net income                              $13,715      5%   $34,143  14%
                                        =========        =========

Earnings per common share:
   Basic                                  $0.20             $0.52
   Diluted                                $0.20             $0.52


                         2004 Sales By Product
                           ($'s - millions)

                                Second Quarter         Year-to-Date
                               ----------------       ---------------
                                Net    % Change       Net    % Change
                               Sales    vs. 2003     Sales    vs. 2003
                             --------  ---------   --------  ---------

Woods                         $75.5         (2%)     $199.3      17%
Irons                          87.0          1%       183.5      (2%)
Putters                        29.2        (37%)       66.1     (27%)
Golf Balls                     74.5        378%       146.6     401%
Accessories, other             31.7         82%        66.2      79%
                             --------              --------
  Total                      $297.9         23%      $661.7      29%


                         Callaway Golf Company
                Supplemental 2004 Financial Information
                 (In thousands, except per share data)
                              (Unaudited)

                                  Quarter Ended June 30,
                    --------------------------------------------------
                        2004                                  2003(a)
                    ---------------------------------------- ---------

                    Callaway  Top-Flite Integration
                       Golf      Golf     Charges   Total      Total
                    --------- --------- -------------------- ---------
Net sales           $227,485   $70,423   $      -  $297,908  $242,077
Gross profit         110,321    23,383     (5,868)  127,836   126,494
% of sales                48%       33%       n/a        43%       52%
Operating expenses    75,259    23,810      4,820   103,889    74,035
                    --------- --------- ---------- --------- ---------
Income from
 operations           35,062      (427)   (10,688)   23,947    52,459
Other income
 (expense), net       (1,908)      316          -    (1,592)    1,472
                    --------- --------- ---------- --------- ---------
Income before income
 taxes                33,154      (111)   (10,688)   22,355    53,931
Income tax provision  12,696       (38)    (4,018)    8,640    19,788
                    --------- --------- ---------- --------- ---------
Net income           $20,458      $(73)   $(6,670)  $13,715   $34,143
                    ========= ========= ========== ========= =========
Diluted earnings per
 share                 $0.30     $0.00     $(0.10)    $0.20     $0.52