Callaway 2004 Annual Report Download - page 23

1995 Plan. Under the 1995 Plan, the Company granted stock options to non-executive oÇcer
employees and consultants of the Company. Although the 1995 Plan permitted stock option grants to be made
at less than the fair market value of the Company's Common Stock on the date of grant, the Company's
practice was to generally grant stock options at exercise prices equal to the fair market value of the Company's
Common Stock on the date of grant.
Promotion Plan. Under the Promotion Plan, the Company granted stock options to golf professionals
and other endorsers of the Company's products. Such grants were generally made at prices that were equal to
the fair market value of the Company's Common Stock on the date of grant.
Key OÇcer Plan. At December 31, 2004, there remained outstanding under this plan an option to
purchase 100,000 shares of the Company's common stock, which previously had been issued to a former
oÇcer of the Company. As of the date of this report, that option has expired and there were no longer any
options or awards outstanding under the key oÇcer plan.
Purchases of Equity Securities by the Issuer and AÇliated Purchasers
In May 2002, the Company announced that its Board of Directors authorized it to repurchase shares of
its Common Stock in the open market or in private transactions, subject to the Company's assessment of
market conditions and buying opportunities, up to a maximum cost to the Company of $50.0 million. During
2004, the Company repurchased 353,000 shares of Common Stock at an average cost per share of $17.84.
There were no share repurchases during the fourth quarter of 2004. As of December 31, 2004, the Company is
authorized to repurchase up to an additional $7.9 million of its Common Stock under the repurchase program.
The Company's repurchases of shares of Common Stock are recorded at average cost in Common Stock held
in treasury and result in a reduction of shareholders' equity. See below ""Share Repurchases'' contained in
Item 7.
Item 6. Selected Financial Data
The following statements of operations data and balance sheet data for the Ñve years ended December 31,
2004 were derived from the Company's audited consolidated Ñnancial statements. Consolidated balance sheets
at December 31, 2004 and 2003 and the related consolidated statements of operations and statements of cash
Öows for each of the three years in the period ended December 31, 2004 and notes thereto appear elsewhere in
this report. The data should be read in conjunction with the annual consolidated Ñnancial statements, related
notes and other Ñnancial information appearing elsewhere in this report.
Year Ended December 31,
2004(2,3) 2003(4) 2002(5) 2001(6) 2000(7)
(In thousands, except per share data)
Statement of Operations Data:
Net sales(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $934,564 $814,032 $793,219 $818,072 $840,612
Cost of salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 575,742 445,417 393,068 411,585 440,119
Gross proÑt(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 358,822 368,615 400,151 406,487 400,493
Selling, general and administrative expenses(1) ÏÏÏÏÏÏÏÏÏÏ 352,967 273,231 256,909 259,473 241,187
Research and development expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,557 29,529 32,182 32,697 34,579
Income (loss) from operations(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (24,702) 65,855 111,060 114,317 124,727
Interest and other income, net(1)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,934 3,550 2,271 5,349 6,119
Interest expenseÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (945) (1,522) (1,660) (1,552) (1,524)
Unrealized energy derivative losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (19,922) Ì
Income (loss) before income taxes and cumulative
eÅect of accounting change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23,713) 67,883 111,671 98,192 129,322
Income tax provision (beneÑt) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (13,610) 22,360 42,225 39,817 47,366
Income (loss) before cumulative eÅect of accounting
change ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (10,103) 45,523 69,446 58,375 81,956
Cumulative eÅect of accounting changeÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì (957)
Net income (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(10,103) $ 45,523 $ 69,446 $ 58,375 $ 80,999
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