Callaway 2002 Annual Report Download - page 10

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The Great Big Be rt ha II Driv e r
and Fairway Woods
“We share every golfer’s passion for the game, and commit
our talents and our technology to increasing the satisfaction
and enjoyment all golfers derive from pursuing that passion.”
CALLAWAY GOLF COMPANY 7
our competitors. We believe that sustainable long-term
profitability and positive cash flow based on demonstrably
superior and pleasingly different products is the proper
orientation for the Company and the Callaway Golf brand.
Our biggest challenge is the elimination of the losses in our golf
ball business. Our golf ball team has done a commendable job in
developing exceptional products that have, in a very short time,
achieved phenomenal penetration on the professional tours and
positive reviews from expert and amateur golfers alike. Moreover,
we continue to increase our sales and our market share. But the ball
business continues to lose money. Factors that hold us back
include the large start-up costs, including those needed to get into
this business with a technologically superior product, and the difficulties
inherent in achieving efficient production volumes in a very
competitive market. We are committed to eliminating these losses,
and are looking at all alternatives to accomplish this objective,
including exiting the segment if that is the only viable solution.
We have some opportunities in 2003 growing out of our ability to
generate significant free cash flow. Combined with our lack of debt,
we have the freedom to evaluate acquisition and investment opportu-
nities, repurchase stock, pay dividends, or otherwise take advantage
of opportunities that might come our way. In the coming days, I
believe our strong liquidity position is an important and valuable asset.
In our corporate mission statement, we stake out this position
for ourselves:
We recognize that golf is an obsession that is played with a
passion, and that this passion is found in all golfers of all skill levels.
It is the passion that pushes us to seek more good shots, and the
great satisfaction that comes with each, whatever the final score
in the round. We share this passion with every golfer, and will
continue to run our business guided by this simple rule.
Enjoy the game.
Ronald A. Drapeau
Chairman, President and CEO
April 4, 2003