Callaway 2004 Annual Report Download - page 31

well as the military actions in the Middle East. The Company's net sales are also aÅected by changes in
foreign currency rates. See below, ""Certain Factors AÅecting Callaway Golf Company Ì Foreign Currency
Risk.''
Net sales information by product category is summarized as follows:
Year Ended
December 31, Growth/(Decline)
2004 2003 Dollars Percent
(In millions)
Net Sales:
Driver and fairway woods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $238.6 $252.4 $(13.8) (5)%
Irons*ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 259.1 280.7 (21.6) (8)%
Putters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100.5 142.8 (42.3) (30)%
Golf balls ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 231.3 78.4 152.9 195 %
Accessories and other*ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 105.1 59.7 45.4 76 %
$934.6 $814.0 $120.6 15 %
* Beginning with the year ended December 31, 2004, the Company includes wedge sales within the iron sales
product category. Previously, wedge sales were included as a component of the accessories and other
category. Prior periods have been reclassiÑed to conform with the current period presentation.
The $13.8 million (5%) decrease in net sales of drivers and fairway woods to $238.6 million for the year
ended December 31, 2004 resulted from lower average selling prices, partially oÅset by higher sales volumes in
2004 compared to the prior year. The majority of this decrease in sales related to a decline in sales of titanium
fairway woods products. This decline in fairway woods sales was expected as the titanium fairway woods
products were introduced in 2003 and 2002 and were considered closeout products in 2004. Also contributing
to the decline in woods sales were the credits given to retailers in connection with sales programs to reduce
inventory levels at retail. These declines were partially oÅset by an increase in sales of the Company's steel
fairway woods products and sales of the Company's new hybrid woods products and new fusion fairway woods
products which were introduced during 2004.
The $21.6 million (8%) decrease in net sales of irons to $259.1 million for the year ended December 31,
2004 was due to a combination of lower sales volumes and lower average selling prices in 2004 compared to
2003. This decline was expected as the Company's steel and titanium iron products were in the second year of
their product life cycle and such products generally sell better in the Ñrst year after introduction. These
decreases were partially oÅset by the introduction of the Company's fusion irons in 2004 as well as an increase
in Top-Flite irons sales, resulting from the inclusion of Top-Flite sales for a full twelve months in 2004 as
compared to Ñfteen weeks in 2003.
The $42.3 million (30%) decrease in net sales of putters to $100.5 million for the year ended
December 31, 2004 was due to a combination of lower sales volumes and lower average selling prices in 2004
compared to 2003. The majority of this decrease was attributable to decreased sales of White Hot putters
which were introduced in 2002, partially oÅset by the introduction of the new White Steel line of putters in
2004 and the inclusion of Top-Flite sales for a full twelve months in 2004 as compared to Ñfteen weeks in
2003.
The $153.0 million (195%) increase in net sales of golf balls to $231.3 million for the year ended
December 31, 2004 was primarily attributable to higher sales volumes resulting from the inclusion of Top-
Flite and Ben Hogan golf ball sales for a full twelve months in 2004 as compared to Ñfteen weeks in 2003.
Sales of the Top-Flite and Ben Hogan brand golf balls were $144.9 million. Callaway Golf ball sales during
2004 were $86.4 million, an increase of $42.1 million (95%) from the year ended 2003. The increase in sales of
Callaway Golf brand golf balls was driven by the success of the HX Tour golf ball products, as well as
increased sales across the entire line of Callaway Golf ball products.
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