Callaway Golf Company reported net sales of $998.1 million for the full year ended December 31, 2006, a 6.8% increase from $934.6 million in sales for the same period in 2004.
ELY swung to a profit for the year, posting net income of $13.3 million, or 19 cents per diluted share, compared to a net loss of $10.1 million, or a loss of 15 cents per diluted share, for the prior year.

Fully diluted earnings per share for the full year include after-tax charges of 19 cents per share associated with the integration of the Top-Flite operations and the September restructuring initiatives. The full year loss per share for 2004 includes after-tax charges of 26 cents per share associated with the integration of the Top-Flite operations. Excluding these charges, the Company's pro forma fully diluted earnings per share for 2005 would have been 38 cents, as compared to pro forma fully diluted earnings per share of 11 cents for the full year 2004.

For the fourth quarter, Callaway saw net sales improve 7.0% to $154.5 million from $144.4 million in the fourth quarter of 2004. The company narrowed its net loss for the quarter to $18.7 million, or 27 cents per share, compared to a net loss of $28.5 million, or 42 cents per share, in the prior year period.

The net loss per share for the fourth quarter of 2005 includes after-tax charges of five cents per share associated with the integration of the Top-Flite operations acquired in late 2003 and the restructuring initiatives announced on September 29th. The net loss per share for the fourth quarter of 2004 includes after-tax charges of five cents per share associated with the integration of the Top-Flite operations. Excluding these charges, the company's pro forma net loss per share for the fourth quarter of 2005 would have been 22 cents, as compared to a pro forma net loss per share of 37 cents per share in the fourth quarter of 2004.

“We are pleased with the increase in sales for the year, which reflects the strength of our product line and favorable consumer acceptance of our new products, commented George Fellows, President and CEO. “While earnings also improved significantly, they are still not at desired levels. As we announced at the end of the third quarter, however, we have already implemented several company-wide initiatives designed to reduce expenses and improve profitability. We have already started to see the benefits of such initiatives as operating expenses in the fourth quarter decreased as compared to the fourth quarter of 2004.”

Mr. Fellows continued, “We believe we are in a good position entering 2006. We have several new products being introduced, and the initial response from our customers has been very positive. We also expect to continue to realize the benefits of the cost reduction initiatives we implemented in September and we believe we have resolved the supply constraint issues we experienced last year with some products. Our focus in 2006 is to strengthen our marketing programs and enhance customer service, particularly regarding on time delivery of new products in our effort to improve our position in the marketplace and grow profitability.”

                                Callaway Golf Company
                               Statements of Operations
                        (In thousands, except per share data)
                                     (Unaudited)


                                             Quarter Ended
                                              December 31,
                                        ------------------------
                                            2005           2004
                                        ---------      ---------

Net sales                               $154,493  100% $144,413  100%
Cost of sales                            106,316   69%  105,689   73%
                                        ---------      ---------
Gross profit                              48,177   31%   38,724   27%
Operating expenses:
    Selling                               53,945   35%   59,098   41%
    General and administrative            20,290   13%   21,964   15%
    Research and development               6,550    4%    7,034    5%
                                        ---------      ---------
Total operating expenses                  80,785   52%   88,096   61%
Loss from operations                     (32,608) -21%  (49,372) -34%
Other income (expense), net                 (417)         1,219
                                        ---------      ---------
Loss before income taxes                 (33,025) -21%  (48,153) -33%
Income tax benefit                       (14,361)       (19,685)
                                        ---------      ---------
Net loss                                $(18,664) -12% $(28,468) -20%
                                        =========      =========

Loss per common share:
    Basic                                 ($0.27)        ($0.42)
    Diluted                               ($0.27)        ($0.42)


                                               Year Ended
                                              December 31,
                                        ------------------------
                                            2005           2004
                                        ---------      ---------

Net sales                               $998,093  100% $934,564  100%
Cost of sales                            583,679   58%  575,742   62%
                                        ---------      ---------
Gross profit                             414,414   42%  358,822   38%
Operating expenses:
    Selling                              290,074   29%  263,089   28%
    General and administrative            80,145    8%   89,878   10%
    Research and development              26,989    3%   30,557    3%
                                        ---------      ---------
Total operating expenses                 397,208   40%  383,524   41%
Income (loss) from operations             17,206    2%  (24,702)  -3%
Other income (expense), net               (2,669)           989
                                        ---------      ---------
Income (loss) before income taxes         14,537    1%  (23,713)  -3%
Income tax provision                       1,253        (13,610)
                                        ---------      ---------
Net income (loss)                        $13,284    1% $(10,103)  -1%
                                        =========      =========

Earnings (loss) per common share:
    Basic                                  $0.19         ($0.15)
    Diluted                                $0.19         ($0.15)