Callaway
Golf Co. reported sales in the second quarter decreased 17% to $302
million from $366 million a year ago. On a currency neutral basis,
sales would have fallen 12% to $321 million. Net earnings tumbled 82.5%
to $6.5 million, or 10 cents a share, from $37.1 million, or 58 cents,
a year ago.

The company also reported gross profit for the
second quarter of 2009 of $110 million (36% of net sales), compared to
gross profit of $171 million (47% of net sales) in the second quarter
of 2008, and reported operating expenses of $100 million (33% of net
sales) compared to $111 million (30% of net sales) for the same period
in 2008. Fully diluted earnings per share were 10 cents a share (on
66.8 million shares outstanding), compared to 58 cents (on 63.9 million
shares outstanding) in 2008. Fully diluted earnings per share for the
second quarter include after-tax charges for gross margin improvement
initiatives of 2 cents per share in 2009 and 5 cents per share in 2008.

For
the first six months, the company reported net sales of $574 million, a
decrease of 22% compared to last year�s record six month sales of
$732 million. On a currency neutral basis, net sales would have been
$616 million, a decrease of 16% compared to $732 million in the first
half of 2008. Also for the first six months, gross profit was $226
million (39% of net sales) compared to $347 million (47% of net sales)
for 2008 and operating expenses were $202 million (35% of net sales)
compared to $221 million (30% of net sales) for 2008. Fully diluted
earnings per share for 2009 were 21 cents (on 65.1 million shares
outstanding) compared to record first half diluted earnings per share
of $1.19 (on 64.4 million shares outstanding) for 2008. Fully diluted
earnings per share for the period include after-tax charges for gross
margin improvement initiatives of 3 cents per share in 2009 and 6 cents
per share in 2008.

�Although market conditions remained
challenging during the first half of the year, we are pleased we were
able to increase our market share, manage our inventories, and reduce
our operating costs, while at the same time continuing to invest in our
business,� commented George Fellows, president and CEO. �As we have
said before, the economy and golf industry will recover and there have
been some positive signs of late. We therefore are taking a balanced
approach between managing our expenses and liquidity for the current
environment and taking action and making investments that are in the
best long-term interests of our shareholders. We are the leader in the
golf industry and we intend to remain so in the current environment and
when the global economy fully recovers. It would be short-sighted to
over emphasize the short-term to the detriment of our long-term growth
and shareholder value.�
Callaway Golf Company
Statements of Operations
(In thousands, except per share data)
(Unaudited)













Quarter Ended




June 30,




2009
2008






Net sales
$ 302,219

$ 366,029
Cost of sales
192,371
194,949
Gross profit

109,848


171,080
Operating expenses:




Selling

72,394


80,461

General and administrative

19,358


22,791

Research and development
7,837
7,538


Total operating expenses

99,589


110,790
Income from operations

10,259


60,290
Other income (expense), net
512
(2,600 )
Income before income taxes

10,771


57,690
Income tax provision
3,859
20,583
Net income

6,912


37,107
Dividends accrued on convertible Preferred Stock
438
–
Net income available to common shareholders
$ 6,474
$ 37,107






Earnings per common share:




Basic
$ 0.10

$ 0.59

Diluted
$ 0.10

$ 0.58
Weighted-average common shares outstanding:




Basic

63,121


63,180

Diluted

66,807


63,941