Callaway Golf Company said third quarter net sales slid 11% to $190.9 million from $213.5 million in the year-ago period. On a currency neutral basis, the company said net sales would have been $194 million, a decrease of 9% compared to the third quarter of 2008.

“While market conditions have been challenging this year, we have managed our business in such a way that we have gained market share in all club categories, managed our expenses responsibly and invested in a few important growth initiatives that should position Callaway Golf to grow when the economy begins to rebound,” commented George Fellows, President and CEO. “We are already seeing some improvement in global economic conditions and a lessening of the negative impact of foreign currency exchange rates. Furthermore, initial feedback on our 2010 new products has been positive, our supply chain continues to improve, and the many actions we’ve taken this year, together with our increased market share base, should position us to generate a meaningful turnaround and return to profitability next year.”

Gross profit fell 25.7% to $59.6 million compared to $80.1 million a year ago, yielding a gross margin of 31% compared to 38% a year ago.

The company reported a loss of 25 cents per share (on 63.2 million shares outstanding), compared to a loss of 12 cents per share (on 62.5 million shares outstanding) in 2008. The company said the loss per share for the third quarter of 2009 was adversely affected by one penny per share associated with the company’s gross margin initiatives and 4 cents per share dilution related to the company's preferred stock issuance.

The loss per share for the third quarter of 2008 included after-tax charges of 4 cents per share for the gross margin initiatives. Operating expenses were $85 million(45% of net sales) compared to $93 million (43% of net sales) for the same period in 2008.

Business Outlook

The company estimates sales for the year will be down approximately 16% due to the challenging economic and market environment in addition to unfavorable foreign currency exchange rates. Gross margins for the year are now estimated to be approximately 37% compared to the Company’s prior estimate of 38% – 40%, due to higher than expected participation rates on second and third quarter sales promotions.

Operating expenses for the year are still anticipated to be approximately $370 – $380 million as compared to $403 million in 2008. This estimate includes increased expenses in 2009 resulting from investments in the company’s business including the uPro acquisition, costs related to reductions in workforce, and international expansion. The company estimates a full year loss per share of 30 cents to 35 cents which includes after tax charges of 5 cents per share for gross margin initiatives and approximately 9 cents per share of dilution associated with the company’s preferred equity.