Callaway 2000 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2000 Callaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 52

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52

Dear shareholders and friends
Callaway Golf Company | 4
In my letter to you a year ago, I stated, “I am pretty sure that the operating results I will report
[for the year 2000] probably will look good to most of you and will be encouraging to all except our
competitors.”
I think it is fair to say that we achieved our goals for 2000, and I hope that you have a feeling of
encouragement as I predicted. In January, we reported for the year 2000 a 16% increase in revenues to
$838 million and a 46% increase in net income to $81 million. We did this even though the golf club
market in general remained relatively flat. At the same time, we launched our golf ball business with
first year sales of $34 million. Our earnings per share increased 45% to $1.13.
Golf club sales grew 12% in 2000 as we made and sold about 6 million units. We launched the Big
Bertha® Steelhead™ X-14® irons in 2000, and they were enthusiastically accepted by golfers worldwide.
The Odyssey® brand grew to a 30% U.S. market share as it retained its position as the #1 putter in golf.
Meanwhile, the Big Bertha Steelhead Plus™ and Great Big Bertha® Hawk Eye® Drivers and Fairway Woods
sold very well, maintaining the #1 position in both units and revenues in the U.S. metal woods category.
At a major news conference last October, we launched the most-publicized new driver in golf equip-
ment history – the Big Bertha ERC II™ Forged Titanium Driver. More later on that remarkable product,
and on the exceptional new Big Bertha Hawk Eye VFT™ Driver and Fairway Woods, which we introduced
at the same October event.
When all the dust settled, our first year in the golf ball business resulted in net sales of $34 million,
with a reported loss of about $46 million. Clearly, that loss was far higher than we had expected. But
there were a variety of operational issues that prevented us from achieving our goals, and we have
discussed them in detail in our various press releases, filings and reports. We now believe that the
operational improvements we made in the second half of the year already are paying dividends. We met
our golf ball sales targets for the fourth quarter and we feel we have good momentum going into 2001
with new trial programs, more competitive pricing, staff programs and a focus on the “green grass” pro
shop distribution of our golf balls. On the five major professional tours combined worldwide, the
Callaway Golf ball became the #2 brand of golf ball in use in just one year, with more than 150
professionals putting the ball into play in 2000. Professionals using Rule 35® golf balls won more than
$31 million in our first year of tour activity with this golf ball.
For the year 2001 we have said that we hope to increase our revenues, improve our gross margins and
increase our pre-tax profit for the year. We cannot guarantee that we will hit these lofty targets,