Callaway 2003 Annual Report Download - page 13

10 CALLAWAY GOLF COMPANY
Selected Financial Data
The following statements of operations data and balance sheet data for the five years ended December 31, 2003 were derived
from the Company’s audited consolidated financial statements. Consolidated balance sheets at December 31, 2003 and 2002 and
the related consolidated statements of operations and of cash flows for each of the three years in the period ended December 31,
2003 and notes thereto appear elsewhere in this report. The data should be read in conjunction with the annual consolidated
financial statements, related notes and other financial information appearing elsewhere in this report.
Years Ended December 31,
(In thousands, except per share data) 2003
(2)
2002(3) 2001(4) 2000(5) 1999
Statement of Operations Data:
Net sales(1) $814,032 $ 793,219 $ 818,072 $ 840,612 $ 720,498
Cost of sales 445,417 393,068 411,585 440,119 384,265
Gross profit(1) 368,615 400,151 406,487 400,493 336,233
Selling, general and administrative expenses(1) 273,231 256,909 259,473 241,187 221,420
Research and development expenses 29,529 32,182 32,697 34,579 34,002
Restructuring credits — — — — (5,894)
Sumitomo transition expenses — — — — 5,713
Income from operations(1) 65,855 111,060 114,317 124,727 80,992
Interest and other income, net(1) 3,550 2,271 5,349 6,119 8,099
Interest expense (1,522) (1,660) (1,552) (1,524) (3,594)
Unrealized energy derivative losses — — (19,922) — —
Income before income taxes and cumulative
effect of accounting change 67,883 111,671 98,192 129,322 85,497
Income tax provision 22,360 42,225 39,817 47,366 30,175
Income before cumulative effect of
accounting change 45,523 69,446 58,375 81,956 55,322
Cumulative effect of accounting change — — — (957) —
Net income $ 45,523 $ 69,446 $ 58,375 $ 80,999 $ 55,322
Earnings per common share:
Basic
Income before cumulative effect
of accounting change $ 0.69 $ 1.04 $ 0.84 $ 1.17 $ 0.79
Cumulative effect of accounting change — — — (0.01) —
Net income $ 0.69 $ 1.04 $ 0.84 $ 1.16 $ 0.79
Diluted
Income before cumulative effect of
accounting change $ 0.68 $ 1.03 $ 0.82 $ 1.14 $ 0.78
Cumulative effect of accounting change — — — (0.01) —
Net income $ 0.68 $ 1.03 $ 0.82 $ 1.13 $ 0.78
Dividends paid per share $ 0.28 $ 0.28 $ 0.28 $ 0.28 $ 0.28
December 31,
(In thousands) 2003 2002 2001 2000 1999
Balance Sheet Data:
Cash and cash equivalents $ 47,340 $ 108,452 $ 84,263 $ 102,596 $ 112,602
Marketable securities $ — $ — $ 6,422 $ — $ —
Working capital $ 253,302 $ 259,866 $ 252,817 $ 233,163 $ 205,198
Total assets $ 748,566 $ 679,845 $ 647,602 $ 630,934 $ 616,783
Long-term liabilities $ 29,023 $ 27,297 $ 31,379 $ 9,884 $ 11,575
Total shareholders’ equity $ 589,383 $ 543,387 $ 514,349 $ 511,744 $ 499,934
(1) Beginning with the first quarter of 2003, the Company records royalty revenue in net sales and related expenses as selling expenses. Previously, royalty revenue and the related expenses were recorded as
components of other income. Prior periods have been reclassified to conform with the current period presentation.
(2) On September 15, 2003 the Company completed the domestic portion of the Top-Flite Acquisition. The settlement of the international assets was effective October 1, 2003. Thus, the Company’s financial data include
The Top-Flite Golf Company results of operations in the United States from September 15, 2003 through December 31, 2003 and the international operations from October 1, 2003 through December 31, 2003.
Additionally, the Company’s 2003 gross profit, net income and earnings per common share include the recognition of integration charges related to the consolidation of its Callaway Golf and Top-Flite golf ball and golf
club manufacturing and research and development operations. These charges reduced the Company’s gross profit by approximately $24.1 million, pre-tax (see Notes 2 and 3 to the Consolidated Financial Statements).
(3) For 2002, the Company’s gross profit, net income and earnings per common share include the effect of the change in accounting estimate for the Company’s warranty accrual. During the third quarter of 2002,
the Company reduced its warranty reserve by approximately $17.0 million, pre-tax (see Note 4 to the Consolidated Financial Statements).
(4) For 2001, the Company’s net income and earnings per common share include the recognition of unrealized energy contract losses due to changes in the estimated fair value of the energy contract based
on market rates. During the second and third quarters of 2001, the Company recorded $6.4 million and $7.8 million, respectively, of after-tax unrealized losses. During the fourth quarter of 2001, the
Company terminated the energy contract. As a result, the Company will continue to reflect the derivative valuation account on its balance sheet with no future valuation adjustments for changes in
market rates, subject to periodic review (see Notes 8 and 13 to the Consolidated Financial Statements).
(5) The Company adopted Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” (“SAB No. 101”) in the fourth quarter of 2000 with an effective date of January 1, 2000. As a result of
the adoption of SAB No. 101, the Company recognized a cumulative effect adjustment of $1.0 million in the Consolidated Statement of Operations for the year ended December 31, 2000, to reflect the change in
the Company’s revenue recognition policy to recognize revenue at the time both legal and practical risk of loss transfers to the customer (see Note 2 to the Consolidated Financial Statements).