Callaway 1997 Annual Report Download - page 24

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The pro forma financial data presented are not necessarily
indicative of the Company’s results of operations that might
have occurred had the transaction been completed at the
beginning of the periods specified, and do not purport to re p-
resent what the Company’s consolidated results of operations
might be for any future period.
Year ended December 31,
(in thousands, except per share data) ( u n a u d i t e d )
1 9 9 7 1 9 9 6
Net sales $ 8 8 4 , 8 4 0 $ 7 1 1 , 7 1 5
Net income $ 1 3 4 , 5 1 2 $ 1 1 9 , 3 8 5
Earnings per common share
Ba s i c $ 1 . 9 7 $ 1 . 7 9
Di l u t e d $ 1 . 8 8 $ 1 . 6 9
N OTE 12
SALESINFORMATION
The Company is engaged in domestic and international sales
through retail customers and distributors located within the
following geographic areas:
(in thousands) Year ended December 31,
1 9 9 7 1 9 9 6 1 9 9 5
United St a t e s $ 5 4 7 , 2 5 6 $ 4 6 0 , 6 1 1 $ 3 6 7 , 3 5 9
Ja p a n 8 4 , 6 3 4 5 8 , 1 5 6 6 0 , 9 7 1
All others – individually
less than 10% of
net sales 2 1 1 , 0 3 7 1 5 9 , 7 4 5 1 2 4 , 9 5 7
$ 8 4 2 , 9 2 7 $ 6 7 8 , 5 1 2 $ 5 5 3 , 2 8 7
The Company, through a distribution agre e m e n t ,
appointed Sumitomo Rubber Industries, Ltd. (“Sumitomo”)
as the sole distributor of Callaway
®
golf clubs in Japan. The
distribution agreement re q u i res Sumitomo to purchase speci-
fied minimum quantities. The current distribution agre e m e n t
began in Fe b ru a ry 1993 and ends on December 31, 1999. In
1997,1996 and 1995, sales to Sumitomo accounted for 10 % ,
9% and 11%, respectively, of the Company’s net sales.
N OTE 13
RELATEDPARTYTRANSACTIONS
During June 1997, the Company entered into an agreement
with Saint Andrews Golf Corporation to form All-American
Golf LLC (“All-American”) whereby the Company is a 20%
equity owner in All-American, which operates a nine-hole
golf course, performance center, training facility and driving
range (the “Center”) located in Las Vegas, Nevada. As of
December 31, 1997, the Company had made capital contri-
butions to All-American of $750,000. Additionally, the
Company loaned All-American $5,250,000, pursuant to a
secured promissory note, for purposes of construction and
various other start-up costs. The note, which is secured by c e r-
tain assets of All-American, bears interest of 10% per annum
and is payable in monthly installments. Commencing on the
fifth anniversary of the Center’s opening, the principal shall
be repaid in sixty equal monthly installments.
Note 14
SUBSEQUENTEVENTS
Di v i d e n d
On Ja n u a ry 28, 1998, the Company declared a quarterly cash
dividend of $.07 per share payable on March 3, 1998, to
shareholders of record on February10, 1998.
Bank Line of Cre d i t
On February 4, 1998, the Company renewed its line of
credit, increasing it to $150,000,000. The line of credit is
unsecured and requires the Company to maintain certain
financial ratios, including current and debt-to-equity ratios.
The Company is also subject to other restrictive covenants
under the terms of the credit agreement.
Ac q u i s i t i o n
On February11,1998, the Company purchased distribution
rights and substantially all of the assets of its Korean distrib-
u t o r, subject to certain liabilities. The purchase price consisted
of $3,696,000 in conversion of accounts receivable and cash
of approximately $3,137,000.