Callaway 2004 Annual Report Download - page 87

CALLAWAY GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 9. Earnings Per Common Share
The schedule below summarizes the elements included in the calculation of basic and diluted earnings
(loss) per common share for the years ended December 31, 2004, 2003 and 2002.
Year Ended December 31,
2004 2003 2002
(In thousands,
except per share data)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(10,103) $45,523 $69,446
Weighted-average shares outstanding:
Weighted-average shares outstanding Ì Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏ 67,721 66,027 66,517
Dilutive securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 444 757
Weighted-average shares outstanding Ì DilutedÏÏÏÏÏÏÏÏÏÏÏÏ 67,721 66,471 67,274
Earnings (loss) per common share:
BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (0.15) $ 0.69 $ 1.04
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (0.15) $ 0.68 $ 1.03
Diluted earnings per share reÖects the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock. Options with an exercise price in excess
of the average market value of the Company's common stock during the period have been excluded from the
calculation as their eÅect would be antidilutive. Additionally, potentially dilutive securities are excluded from
the computation of earnings per share in periods in which a net loss is reported as their eÅect would be
antidilutive. Thus, weighted-average shares outstanding Ì Diluted is the same as weighted-average shares
outstanding Ì Basic in periods when a net loss is reported. For the years ended December 31, 2004, 2003 and
2002, options outstanding totaling 10,312,000 shares, 10,606,000 shares and 14,177,000 shares, respectively,
were excluded from the calculations of earnings per common share, as their eÅect would have been
antidilutive.
Note 10. Stock, Stock Options and Rights
Common Stock and Preferred Stock
The Company has an authorized capital of 243,000,000 shares, $.01 par value, of which
240,000,000 shares are designated Common Stock, and 3,000,000 shares are designated Preferred Stock. Of
the Preferred Stock, 240,000 shares are designated Series A Junior Participating Preferred Stock in
connection with the Company's shareholders' rights plan (see Shareholders' Rights Plan below). The
remaining shares of Preferred Stock are undesignated as to series, rights, preferences, privileges or restrictions.
The holders of Common Stock are entitled to one vote for each share of Common Stock on all matters
submitted to a vote of the Company's shareholders. Although to date no shares of Series A Junior
Participating Preferred Stock have been issued, if such shares were issued, each share of Series A Junior
Participating Preferred Stock would entitle the holder thereof to 1,000 votes on all matters submitted to a vote
of the shareholders of the Company. The holders of Series A Junior Participating Preferred Stock and the
holders of Common Stock shall generally vote together as one class on all matters submitted to a vote of the
Company's shareholders. Shareholders entitled to vote for the election of directors are entitled to vote
cumulatively for one or more nominees.
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