Callaway 2004 Annual Report Download - page 34

Net sales information by product category is summarized as follows:
Year Ended
December 31, Growth/(Decline)
2003 2002 Dollars Percent
(In millions)
Net Sales:
Driver and fairway woods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $252.4 $310.0 $(57.6) (19)%
IronsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 280.7 252.2 28.5 11%
Putters ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 142.8 111.5 31.3 28%
Golf balls ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 78.4 66.0 12.4 19%
Accessories and other*ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59.7 53.5 6.2 11%
$814.0 $793.2 $ 20.8 3%
* Beginning with the Ñrst quarter of 2003, the Company records royalty revenue in net sales. Previously,
royalty revenue was recorded as a component of other income and prior periods have been reclassiÑed to
conform with the current period presentation.
The $57.6 million (19%) decrease in net sales of driver and fairway woods to $252.4 million represents a
decrease in both unit and dollar sales. This decrease was primarily attributable to a decline in sales of Big
Bertha Hawk Eye VFT Titanium Drivers and Fairway Woods, Big Bertha Steelhead III Drivers and Fairway
Woods, ERC II Forged Titanium Drivers and Fairway Woods and Big Bertha C4 Drivers. The declines in
sales of these products were expected as the Company's products generally sell better in their Ñrst year after
introduction. Both Big Bertha Hawk Eye VFT Titanium Drivers and Fairway Woods and ERC II Forged
Titanium Drivers were introduced in 2001 and Big Bertha C4 Drivers were introduced in 2002. All of these
products were being closed out in 2003. In addition, 2003 is the second year in the life cycle for ERC II
Forged Titanium Fairway Woods and Big Bertha Steelhead III Drivers and Fairway Woods. These decreases
were partially oÅset by sales of Great Big Bertha II Drivers and Fairway Woods, which were launched during
the fourth quarter of 2002. Sales of Great Big Bertha II Drivers and Fairway Woods in 2003 exceeded the
combined prior year sales of all other lines of the Company's titanium driver and fairway woods products
which included Big Bertha Hawk Eye VFT Titanium Drivers and Fairway Woods and ERC II Forged
Titanium Drivers and Fairway Woods.
The $28.5 million (11%) increase in net sales of irons to $280.7 million represents an increase in both
dollar and unit sales. The sales growth was due primarily to the January 2003 launch of the Steelhead X-16
Stainless Steel Irons, including the Steelhead X-16 Pro Series line. This sales growth was partially oÅset by a
decline in sales of Big Bertha Irons which were launched in January 2002, Hawkeye VFT irons which were
launched in August 2001, and Steelhead X-14 Irons which were launched in October 2000 and were being
closed out in 2003.
The $31.3 million (28%) increase in net sales of putters to $142.8 million is primarily attributable to
increased sales of the Company's Odyssey putters primarily resulting from the continued success of the
Odyssey White Hot 2-Ball putter, which was introduced in January 2002.
The $12.4 million (19%) increase in net sales of golf balls to $78.4 million represents an increase in both
unit and dollar sales. The increase is primarily attributable to the addition of Top-Flite, Strata and Ben Hogan
golf ball sales beginning late in the third quarter of 2003. This increase was partially oÅset by a decline in sales
of Callaway Golf balls, which were adversely aÅected by the decline in rounds played in 2003, the absence of
any new product introductions in 2003, and the uncertainty surrounding the Company's golf ball business
earlier in the year.
The $6.2 million (11%) increase in net sales of accessories and other products to $59.7 million is
primarily attributable to increased sales of golf bags, combined with an increase in royalty revenue from
licensed merchandise in 2003 as compared to 2002.
25