Callaway Golf Company expects to report first quarter net sales of approximately $366 million, increasing 9.4% from $334.6 million last year. In addition, the company expects net earnings to increase approximately 25% to a range of 59 cents to 61 cents per diluted share, or an approximate range of $38.2 million to $39.5 million based on 64.8 million shares. These results also include after-tax charges of approximately a penny per share related to gross margin improvement initiatives announced in November 2006.

Business Update

“We are very pleased with our preliminary first quarter results,” commented George Fellows, president and CEO of Callaway Golf. “We continue to build upon the momentum we gained in 2007, including additional improvements in our supply chain and product development processes. The strong sell-in to the retail channel during the first quarter reflects the strength of our brands and the quality of our 2008 product line.”

“While sell-in of our new products has been encouraging thus far,” continued Mr. Fellows, “the second quarter will be a better indicator of how successful our year will be as it is driven by consumer purchases of our products and resulting retail reorders. Additionally, we continue to monitor macroeconomic and competitive conditions globally. Contingency plans we have developed this year, along with business process improvements implemented over the past two years, provide us with greater flexibility to adjust to unforeseen circumstances that might impact our business. At this point, we remain optimistic that our full year financial results for 2008 will be significantly higher than in 2007 and will be within our original guidance.”

Business Outlook

Earlier this year, the company estimated that for 2008, net sales would be in the range of $1.145 billion to $1.165 billion and that pro forma fully diluted earnings per share would be in the range of $1.08 to $1.18 per share, excluding estimated charges of approximately 8 cents per share for the company’s gross margin initiatives. The company said in a release that it felt comfortable with those estimates, but warned that results would likely be at the lower end of the range due to the many uncertainties surrounding the economy, second quarter consumer sell-through, and competitor actions.