Callaway Golf Announces 22% Increase in Sales for the Third Quarter Resulting in Record Sales for the First Nine Months of 2007



    CARLSBAD, CALIF., November 1 /CNW/ - Callaway Golf Company (NYSE:  ELY)
today announced its financial results for the third quarter ended September
30, 2007. Highlights for the third quarter include:

    -- Net sales of $235.5 million, an increase of 22% compared to $193.8
million for the same period in 2006. These strong sales are primarily the
result of sales of Fusion drivers and X-series irons, as well as increases in
sales of accessories and golf balls.

    -- Fully diluted earnings per share of $0.02 on 67.6 million shares
outstanding compared to a loss per share of $0.18 on 67.0 million shares
outstanding in 2006. The third quarter 2007 results include a gain of
approximately $0.03 per diluted share related to the sale of a building.

    -- Fully diluted earnings per share include $0.04 of after-tax charges
for gross margin improvement initiatives. The third quarter of 2006 includes
after-tax charges of $0.01 for the integration of Top-Flite and $0.01 for the
restructuring initiatives announced in September 2005. Excluding these
charges, the Company's pro forma fully diluted earnings per share for the
third quarter of 2007 would have been $0.06 compared to a loss per share of
$0.16 for the third quarter of 2006.

    -- Gross profit for the third quarter of 2007 increased 39% to $94.0
million (or 40% of net sales) compared to $67.7 million (or 35% of net sales)
for the third quarter of 2006. The increase in gross profit as a percent of
sales is primarily the result of the Company's gross margin improvement
initiatives announced in November, 2006 and secondarily a more favorable mix
of higher margin Fusion woods and X-series irons products.

    -- Operating expenses for the third quarter of 2007 were $93.1 million
(or 40% of net sales) compared to $84.6 million (or 44% of net sales) in 2006.
The dollar increase is primarily due to higher marketing expenses, increased
annual incentive compensation associated with the improved financial results
compared to 2006, higher legal expenses to enforce the Company's intellectual
property rights, and higher selling expenses associated with increased sales,
partially offset by the gain recognized on the sale of a building.

    Highlights for the first nine months include:

    -- Net sales increased 13% to $950.2 million, a new record for the
Company. Net Sales were $838.0 million for the same period in 2006.

    -- Fully diluted earnings per share increased 110% to $1.03 on 68.4
million shares outstanding, as compared to $0.49 on 68.8 million shares
outstanding in 2006.

    -- Fully diluted earnings per share include after-tax charges of $0.07
associated with the Company's gross margin improvement initiatives. Results
for the first nine months of 2006 include after-tax charges of $0.04 for the
integration of Top-Flite and $0.01 for restructuring. Excluding these charges,
the Company's pro forma fully diluted earnings per share for 2007 and 2006
would have been $1.10 and $0.54 respectively, an increase of 104%.

    -- Gross profit for 2007 was $429.9 million (or 45% of net sales)
compared to $339.3 million (or 40% of net sales) for 2006. The increase in
gross profit is due to the positive results of the Company's gross margin
initiatives and a more favorable mix of higher margin products.

    -- Operating expenses for 2007 were $311.0 million (or 33% of net sales),
compared to $281.1 million (or 34% of net sales) for 2006. The dollar increase
is primarily due to increased annual incentive compensation associated with
the improved financial results, higher marketing expenses, increased legal
expenses to enforce the Company's intellectual property rights, and higher
selling expenses associated with the increase in sales.

    "We are very pleased with the results for the quarter and for the first
nine months of 2007," commented George Fellows, President and CEO. "Year to
date sales have increased 13% for a new record as a result of strong consumer
demand for our 2007 products, driven by our Fusion drivers and X-series irons
along with the successful launch of the Top-Flite D2 golf ball. This growth
has been across all of our regions, a majority of which was driven by our
international business which is up 19% for the year."

    "Our gross margins as a percent of sales also continue to improve,"
continued Mr. Fellows, "as we successfully execute the gross margin
improvement initiatives announced last November, with a majority of the third
quarter improvement resulting from these efforts. We also reduced our third
quarter inventory by $28 million compared to last year, in line with our
expectations, due to these initiatives while maintaining and in many cases
improving customer service levels. "

    Business Outlook

    The Company estimates that its full year 2007 net sales will be in the
range of $1.095 to $1.105 billion compared to the previous estimate of $1.070
to $1.080 billion. It is also estimated that the 2007 full year pro forma
fully diluted earnings per share will be in the range of $0.85 to $0.89 (on
68.0 million shares) compared to the estimate provided last quarter of $0.78
to $0.84 (on 70.0 million shares). Pro forma earnings exclude charges related
to the Company's gross margin improvement initiatives, currently estimated at
$0.08 per share for 2007, but include charges related to employee equity-based
compensation under FAS 123R.

    "We are raising our forecast to reflect the higher than expected third
quarter results," commented Brad Holiday, Chief Financial Officer. "Our full
year forecast continues to take into consideration that the fourth quarter,
due to seasonality, is typically our smallest revenue quarter and also that
unlike last year, there are very limited new product introductions planned in
the quarter. Overall we are very pleased with our results to date and feel we
are well on track in achieving our three year targets we set earlier this
year."

    The Company will be holding a conference call at 2:00 p.m. PDT today. The
call will be broadcast live over the Internet and can be accessed at
www.callawaygolf.com. To listen to the call, please go to the website at least
15 minutes before the call to register and for instructions on how to access
the broadcast. A replay of the conference call will be available approximately
three hours after the call ends, and will remain available through 9:00 p.m.
PST on Thursday, November 8, 2007. The replay may be accessed through the
Internet at www.callawaygolf.com or by telephone by calling 1-800-475-6701
toll free for calls originating within the United States or 320-365-3844 for
International calls. The replay pass code is 892455.

    Disclaimer: Statements used in this press release that relate to future
plans, events, financial results, performance or prospects, including
statements relating to estimated future sales and earnings, are
forward-looking statements as defined under the Private Securities Litigation
Reform Act of 1995. These estimates and statements are based upon current
information and expectations. Accurately estimating the Company's sales and
therefore earnings each year is therefore based upon various unknowns
including consumer acceptance and demand for the Company's current or new
products as well as future consumer discretionary purchasing behavior. Actual
results may differ materially from those estimated or anticipated as a result
of these unknowns or other risks and uncertainties, including delays,
difficulties or increased costs in the supply of components needed to
manufacture the Company's products, in manufacturing the Company's products,
or in connection with the implementation of the Company's planned gross margin
initiatives, the re-launch of the Top-Flite brand or the implementation of
future initiatives; adverse market and economic conditions; adverse weather
conditions and seasonality; any rule changes or other actions taken by the
USGA or other golf association that could have an adverse impact upon demand
or supply of the Company's products; a decrease in participation levels in
golf; and the effect of terrorist activity, armed conflict, natural disasters
or pandemic diseases on the economy generally, on the level of demand for the
Company's products or on the Company's ability to manage its supply and
delivery logistics in such an environment. For additional information
concerning these and other risks and uncertainties that could affect these
statements and the Company's business, see Part I, Item 1A of the Company's
Annual Report on Form 10-K for the year ended December 31, 2006, as well as
other risks and uncertainties detailed from time to time in the Company's
reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to time with
the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.

    Regulation G: The preliminary financial results reported in this press
release have been prepared in accordance with accounting principles generally
accepted in the United States ("GAAP"). In addition to the GAAP results, the
Company has also provided additional information concerning its results, which
includes certain financial measures not prepared in accordance with GAAP. The
non-GAAP financial measures included in this press release exclude charges
associated with the integration of the Callaway Golf Company and Top-Flite
Golf Company operations, charges related to the September 2005 restructuring
initiatives, and charges related to the Company's gross margin initiatives.
These non-GAAP financial measures should not be considered a substitute for
any measure derived in accordance with GAAP. These non-GAAP financial measures
may also be inconsistent with the manner in which similar measures are derived
or used by other companies. Management believes that the presentation of such
non-GAAP financial measures, when considered in conjunction with the most
directly comparable GAAP financial measures, provides additional useful
information concerning the Company's operations without these charges. The
Company has provided reconciling information in the text of this press release
and in the supplemental financial information attached to this release.

    Through an unwavering commitment to innovation, Callaway Golf creates
products and services designed to make every golfer a better golfer. Callaway
Golf Company manufactures and sells golf clubs and golf balls, and sells golf
accessories, under the Callaway Golf(R), Top-Flite(R), Odyssey(R) and Ben
Hogan(R) brands. For more information visit www.callawaygolf.com.

    
                            Callaway Golf Company
                    Consolidated Condensed Balance Sheets
                                (In thousands)
                                 (Unaudited)


                                                September 30, December 31,
                                                      2007         2006
                                                ------------- ------------


    ASSETS
    Current assets:
         Cash and cash equivalents                $    31,640  $    46,362
         Accounts receivable, net                     165,002      118,133
         Inventories, net                             213,902      265,110
         Deferred taxes                                39,488       32,813
         Income taxes receivable                            -        9,094
         Other current assets                          21,217       21,688
                                                ------------- ------------
            Total current assets                      471,249      493,200

    Property, plant and equipment, net                127,103      131,224
    Intangible assets, net                            173,948      175,159
    Deferred taxes                                     28,193       18,821
    Other assets                                       30,604       27,543
                                                ------------- ------------
                                                  $   831,097  $   845,947
                                                ------------- ------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
         Accounts payable and accrued expenses    $   113,553  $   111,360
         Accrued employee compensation and
          benefits                                     37,776       18,731
         Accrued warranty expense                      13,067       13,364
         Credit facilities                                932       80,000
         Other current liabilities                      4,436            -
                                                ------------- ------------
            Total current liabilities                 169,764      223,455

    Long-term liabilities                              61,593       43,388

    Minority interest                                   1,865        1,987

    Shareholders' equity                              597,875      577,117
                                                ------------- ------------
                                                  $   831,097  $   845,947
                                                ------------- ------------
    

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


                                                    Quarter Ended

                                                    September 30,
                                               -----------------------
                                                 2007          2006
                                               ---------     ---------

    Net sales                                  $235,549 100% $193,763 100%
    Cost of sales                               141,543  60%  126,058  65%
                                               ---------     ---------
    Gross profit                                 94,006  40%   67,705  35%
    Operating expenses:
         Selling                                 65,808  28%   56,949  29%
         General and administrative              19,394   8%   20,901  11%
         Research and development                 7,928   3%    6,788   4%
                                               ---------     ---------
    Total operating expenses                     93,130  40%   84,638  44%
    Income (loss) from operations                   876       (16,933) -9%
    Other income (expense), net                   1,223   1%   (1,058)
                                               ---------     ---------
    Income (loss) before income taxes             2,099   1%  (17,991) -9%
    Income tax provision (benefit)                  830        (6,075)
                                               ---------     ---------
    Net income (loss)                          $  1,269   1% $(11,916) -6%
                                               ---------     ---------

    Earnings (loss) per common share:
         Basic                                 $   0.02        ($0.18)
         Diluted                               $   0.02        ($0.18)
    Weighted-average shares outstanding:
         Basic                                   66,516        67,000
         Diluted                                 67,639        67,000


                                                  Nine Months Ended

                                                    September 30,
                                               -----------------------
                                                 2007          2006
                                               ---------     ---------

    Net sales                                  $950,173 100% $838,023 100%
    Cost of sales                               520,321  55%  498,720  60%
                                               ---------     ---------
    Gross profit                                429,852  45%  339,303  40%
    Operating expenses:
         Selling                                222,009  23%  202,122  24%
         General and administrative              65,139   7%   59,226   7%
         Research and development                23,851   3%   19,786   2%
                                               ---------     ---------
    Total operating expenses                    310,999  33%  281,134  34%
    Income from operations                      118,853  13%   58,169   7%
    Other expense, net                           (2,006)       (2,029)
                                               ---------     ---------
    Income before income taxes                  116,847  12%   56,140   7%
    Income tax provision                         46,103        22,656
                                               ---------     ---------
    Net income                                 $ 70,744   7% $ 33,484   4%
                                               ---------     ---------

    Earnings per common share:
         Basic                                 $   1.05      $   0.49
         Diluted                               $   1.03      $   0.49
    Weighted-average shares outstanding:
         Basic                                   67,250        67,980
         Diluted                                 68,407        68,777
    

    
                            Callaway Golf Company
               Consolidated Condensed Statements of Cash Flows
                                (In thousands)
                                 (Unaudited)


                                                       Nine Months Ended
                                                         September 30,
                                                      --------------------
                                                         2007      2006
                                                      ---------- ---------
    Cash flows from operating activities:
     Net income                                       $  70,744  $ 33,484
     Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                   27,464    23,961
         Non-cash share-based compensation                8,207     9,611
         Deferred taxes                                   1,444    (3,573)
         (Gain) loss on disposal of assets               (3,425)    1,047
         Changes in assets and liabilities, net of
          effects from acquisition                       41,408   (35,969)
                                                      ---------- ---------
     Net cash provided by operating activities          145,842    28,561
                                                      ---------- ---------

    Cash flows from investing activities:
     Capital expenditures                               (24,130)  (28,551)
     Proceeds from sale of capital assets                 5,491       468
     Investment in golf related venture                  (1,310)        -
     Business acquisition, net of cash acquired               -    (5,911)
                                                      ---------- ---------
     Net cash used in investing activities              (19,949)  (33,994)
                                                      ---------- ---------

    Cash flows from financing activities:
     Issuance of common stock                            47,672     9,053
     Dividends paid, net                                (14,241)   (9,695)
     Acquisition of treasury stock                     (101,387)  (52,872)
     Tax benefit from exercise of stock option            4,537       805
     (Payments on) proceeds from credit facilities,
      net                                               (79,068)   60,000
     Other financing activities                            (122)      (16)
                                                      ---------- ---------
     Net cash (used in) provided by financing
      activities                                       (142,609)    7,275
                                                      ---------- ---------

    Effect of exchange rate changes on cash and cash
     equivalents                                          1,994     1,178
                                                      ---------- ---------
    Net (decrease) increase in cash and cash
     equivalents                                        (14,722)    3,020
    Cash and cash equivalents at beginning of period     46,362    49,481
                                                      ---------- ---------
    Cash and cash equivalents at end of period        $  31,640  $ 52,501
                                                      ---------- ---------
    

    
                            Callaway Golf Company
           Consolidated Net Sales and Operating Segment Information
                                (In thousands)
                                 (Unaudited)



                                      Net Sales by Product Category
                                    --------------------------------------
                                      Quarter Ended
                                      September 30,   Growth/(Decline)
                                    ----------------- ----------------
                                      2007     2006   Dollars  Percent
                                    -------- -------- -------- -------
    Net sales:
         Woods                      $ 56,207 $ 43,718 $12,489     29%
         Irons (1)                    65,391   52,966  12,425     23%
         Putters                      21,590   22,954  (1,364)    -6%
         Golf balls                   49,045   42,700   6,345     15%
         Accessories and other (1)    43,316   31,425  11,891     38%
                                    -------- -------- --------
                                    $235,549 $193,763 $41,786     22%
                                    -------- -------- --------





                                      ------------------------------------
                                        Nine Months Ended
                                          September 30,   Growth/(Decline)
                                        ----------------- ----------------
                                          2007     2006   Dollars  Percent
                                        -------- -------- -------- -------
    Net sales:
         Woods                          $271,201 $227,157 $ 44,044     19%
         Irons (1)                       260,809  242,674   18,135      7%
         Putters                          88,122   85,145    2,977      3%
         Golf balls                      174,705  167,533    7,172      4%
         Accessories and other (1)       155,336  115,514   39,822     34%
                                        -------- -------- --------
                                        $950,173 $838,023 $112,150     13%
                                        -------- -------- --------


    (1) Prior periods have been restated to reflect current period
     classification.
    

    
                                          Net Sales by Region
                                   ---------------------------------------
                                     Quarter Ended
                                     September 30,    Growth/(Decline)
                                   ------------------ ----------------
                                      2007     2006   Dollars  Percent
                                   --------- -------- -------- -------
    Net sales:
         United States              $124,321 $103,196  $21,125    20%
         Europe                       40,983   29,201   11,782    40%
         Japan                        25,154   23,236    1,918     8%
         Rest of Asia                 20,540   18,279    2,261    12%
         Other foreign countries      24,551   19,851    4,700    24%
                                   --------- -------- --------
                                    $235,549 $193,763  $41,786    22%
                                   --------- -------- --------


                                        ----------------------------------
                                        Nine Months Ended
                                          September 30,   Growth/(Decline)
                                        ----------------- ----------------
                                          2007     2006   Dollars  Percent
                                        -------- -------- -------- -------
    Net sales:
         United States                  $512,516 $470,828 $ 41,688      9%
         Europe                          167,290  133,622   33,668     25%
         Japan                            96,941   83,392   13,549     16%
         Rest of Asia                     69,006   60,828    8,178     13%
         Other foreign countries         104,420   89,353   15,067     17%
                                        -------- -------- --------
                                        $950,173 $838,023 $112,150     13%
                                        -------- -------- --------
    

    
                                     Operating Segment Information
                              --------------------------------------------
                                 Quarter Ended
                                 September 30,       Growth/(Decline)
                              ------------------- -----------------------
                                  2007      2006   Dollars   Percent
                              --------- --------- --------------------
    Net sales:
         Golf clubs           $186,504  $151,063  $   35,441   23%
         Golf balls             49,045    42,700       6,345   15%
                              --------- --------- ----------
                              $235,549  $193,763  $   41,786   22%
                              --------- --------- ----------

    Income (loss) before provision for income taxes:
         Golf clubs           $ 16,689  $  6,570  $   10,119  154%
         Golf balls             (2,757)   (8,717)      5,960   68%
         Reconciling items (2) (11,833)  (15,844)      4,011   25%
                              --------- --------- ----------
                              $  2,099  $(17,991) $   20,090  112%
                              --------- --------- ----------



                            ----------------------------------------------
                              Nine Months Ended
                                September 30,        Growth/(Decline)
                            -------------------- -------------------------
                                 2007      2006   Dollars     Percent
                            ---------- --------- -------------------------
    Net sales:
         Golf clubs          $775,468  $670,490  $104,978          16%
         Golf balls           174,705   167,533     7,172           4%
                            ---------- --------- ---------
                             $950,173  $838,023  $112,150          13%
                            ---------- --------- ---------

    Income (loss) before provision
     for income taxes:
         Golf clubs          $156,213  $101,931  $ 54,282          53%
         Golf balls             8,244    (1,781)   10,025         563%
         Reconciling items
          (2)                 (47,610)  (44,010)   (3,600)         -8%
                            ---------- --------- ---------
                             $116,847  $ 56,140  $ 60,707         108%
                            ---------- --------- ---------


    (2) Represents corporate general and administrative expenses and
     other income (expense) not utilized by management in determining
     segment profitability.
    

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



                                           Quarter Ended September 30,
                                        ---------------------------------
                                                       2007
                                        ---------------------------------

                                        Pro Forma Gross Margin Total as
                                         Callaway  Improvement  Reported
                                           Golf    Initiatives
                                        ---------------------------------
    Net sales                           $235,549     $     -  $235,549
    Gross profit                          98,125      (4,119)   94,006
    % of sales                                42%        n/a        40%
    Operating expenses                    93,130           -    93,130
                                        --------- ----------- ---------
    Income (loss) from operations          4,995      (4,119)      876
    Other expense, net                     1,223           -     1,223
                                        --------- ----------- ---------
    Income (loss) before income taxes      6,218      (4,119)    2,099
    Income tax provision (benefit)         2,429      (1,599)      830
                                        --------- ----------- ---------
    Net income (loss)                   $  3,789     $(2,520) $  1,269
                                        --------- ----------- ---------

    Diluted earnings (loss) per share:  $   0.06     $ (0.04) $   0.02
    Weighted-average shares
         outstanding:                     67,639      67,639    67,639



                                    Quarter Ended September 30,
                        --------------------------------------------------
                                                2006
                        --------------------------------------------------

                         Pro Forma    Gross    Integra- Restruc-   Total
                          Callaway   Margin      tion    turing     as
                            Golf    Improvement Charges  Charges  Reported
                                    Initiatives
                        --------------------------------------------------
    Net sales            $193,763     $     -  $     -  $     -  $193,763
    Gross profit           69,295        (349)  (1,195)     (46)   67,705
    % of sales                 36%          -      n/a      n/a        35%
    Operating expenses     83,564           -       79      995    84,638
                        ---------- ----------- -------- -------- ---------
    Income (loss) from
     operations           (14,269)       (349)  (1,274)  (1,041)  (16,933)
    Other expense, net     (1,058)                   -        -    (1,058)
                        ---------- ----------- -------- -------- ---------
    Income (loss) before
     income taxes         (15,327)       (349)  (1,274)  (1,041)  (17,991)
    Income tax provision
     (benefit)             (5,176)       (118)    (430)    (351)   (6,075)
                        ---------- ----------- -------- -------- ---------
    Net income (loss)    $(10,151)    $  (231) $  (844) $  (690) $(11,916)
                        ---------- ----------- -------- -------- ---------

    Diluted earnings
     (loss) per share:   $  (0.16)    $ (0.00) $ (0.01) $ (0.01) $  (0.18)
    Weighted-average shares
         outstanding:      67,000      67,000   67,000   67,000    67,000
    

    

                                         Nine Months Ended September 30,
                                        ---------------------------------
                                                       2007
                                        ---------------------------------

                                        Pro Forma Gross Margin Total as
                                         Callaway  Improvement  Reported
                                           Golf    Initiatives
                                        ---------------------------------
    Net sales                           $950,173     $     -  $950,173
    Gross profit                         437,327      (7,475)  429,852
    % of sales                                46%        n/a        45%
    Operating expenses                   310,999           -   310,999
                                        --------- ----------- ---------
    Income (loss) from operations        126,328      (7,475)  118,853
    Other expense, net                    (2,006)          -    (2,006)
                                        --------- ----------- ---------
    Income (loss) before income taxes    124,322      (7,475)  116,847
    Income tax provision (benefit)        49,015      (2,912)   46,103
                                        --------- ----------- ---------
    Net income (loss)                   $ 75,307     $(4,563) $ 70,744
                                        --------- ----------- ---------

    Diluted earnings (loss) per share:  $   1.10     $ (0.07) $   1.03
    Weighted-average shares
         outstanding:                     68,407      68,407    68,407


                                  Nine Months Ended September 30,
                        --------------------------------------------------
                                                2006
                        --------------------------------------------------

                         Pro Forma    Gross    Integra- Restruc-   Total
                          Callaway   Margin      tion    turing     as
                            Golf    Improvement Charges  Charges  Reported
                                    Initiatives
                        --------------------------------------------------
    Net sales            $838,023              $     -  $     -  $838,023
    Gross profit          343,174        (349)  (3,366)    (156)  339,303
    % of sales                 41%                 n/a      n/a        40%
    Operating expenses    279,017                  672    1,445   281,134
                        ---------- ----------- -------- -------- ---------
    Income (loss) from
     operations            64,157        (349)  (4,038)  (1,601)   58,169
    Other expense, net     (2,029)                   -        -    (2,029)
                        ---------- ----------- -------- -------- ---------
    Income (loss) before
     income taxes          62,128        (349)  (4,038)  (1,601)   56,140
    Income tax provision
     (benefit)             24,825        (118)  (1,491)    (560)   22,656
                        ---------- ----------- -------- -------- ---------
    Net income (loss)    $ 37,303     $  (231) $(2,547) $(1,041) $ 33,484
                        ---------- ----------- -------- -------- ---------

    Diluted earnings
     (loss) per share:   $   0.54     $ (0.00) $ (0.04) $ (0.01) $   0.49
    Weighted-average shares
         outstanding:      68,777      68,777   68,777   68,777    68,777
    

    
    Earnings Before Interest, Taxes, Depreciation and
     Amortization (EBITDA):


                                2007 Trailing Twelve Months EBITDA
                           --------------------------------------------
                                          Quarter Ended
                           --------------------------------------------
                           December   March   June   September
                               31,      31,    30,      30,
                             2006      2007    2007      2007   Total
                           --------- ------- ------- --------- --------
    Net income (loss)      $(10,194) $32,836 $36,639   $ 1,269 $ 60,550
    Interest expense
     (income), net              905    1,677   1,672        29    4,283
    Income tax provision
     (benefit)              (10,948)  21,682  23,591       830   35,155
    Depreciation and
     amortization expense     8,313    9,009   8,591     9,864   35,777
                           --------- ------- ------- --------- --------
    EBITDA                 $(11,924) $65,204 $70,493   $11,992 $135,765
                           --------- ------- ------- --------- --------


                                   2006 Trailing Twelve Months EBITDA
                               -------------------------------------------
                                              Quarter Ended
                               -------------------------------------------
                               December   March   June   September
                                   31,      31,    30,      30,
                                 2005      2006    2006    2006     Total
                               --------- ------- ------- --------- -------
    Net income (loss)          $(18,664) $22,861 $22,539 $(11,916) $14,820
    Interest expense (income),
     net                           (165)     533   1,522    1,132    3,022
    Income tax provision
     (benefit)                  (14,361)  13,797  14,934   (6,075)   8,295
    Depreciation and
     amortization expense         7,318    7,290   7,935    8,736   31,279
                               --------- ------- ------- --------- -------
    EBITDA                     $(25,872) $44,481 $46,930 $ (8,123) $57,416
                               --------- ------- ------- --------- -------
    




For further information:

For further information: Callaway Golf Company Brad Holiday Patrick
Burke Michele Szynal (760) 931-1771

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CALLAWAY GOLF COMPANY

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