Callaway 2005 Annual Report Download - page 38

1995 Plan. Under the 1995 Plan, the Company granted stock options to non-executive officer 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.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In November 2005, 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. The new stock
repurchase program supersedes the May 2002 repurchase program and all prior stock repurchase authorizations.
There were no repurchases under this authorization during the fourth quarter of 2005.
During 2005, the Company repurchased 3,000 shares of its Common Stock at an average cost per share of
$12.36 through the withholding of shares in satisfaction of employee tax obligations related to the vesting of
employee restricted stock awards. There were no share repurchases during the fourth quarter of 2005. 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 five years ended December 31,
2005 were derived from the Company’s audited consolidated financial statements. Consolidated balance sheets at
December 31, 2005 and 2004 and the related consolidated statements of operations and statements of cash flows
for each of the three years in the period ended December 31, 2005 and notes thereto appear elsewhere in this
report. The following data should be read in conjunction with the annual consolidated financial statements,
related notes and other financial information appearing elsewhere in this report.
Year Ended December 31,
2005(1,2) 2004(2,3) 2003(2,4) 2002(5) 2001(6)
(In thousands, except per share data)
Statement of Operations Data:
Net sales(7) .................................. $998,093 $934,564 $814,032 $793,219 $818,072
Cost of sales ................................. 583,679 575,742 445,417 393,068 411,585
Gross profit(7) ................................ 414,414 358,822 368,615 400,151 406,487
Selling, general and administrative expenses(7) ...... 370,219 352,967 273,231 256,909 259,473
Research and development expenses .............. 26,989 30,557 29,529 32,182 32,697
Income (loss) from operations(7) ................. 17,206 (24,702) 65,855 111,060 114,317
Interest and other income (expense), net(7) .......... (390) 1,934 3,550 2,271 5,349
Interest expense .............................. (2,279) (945) (1,522) (1,660) (1,552)
Unrealized energy derivative losses ............... ————(19,922)
Income (loss) before income taxes ................ 14,537 (23,713) 67,883 111,671 98,192
Income tax provision (benefit) ................... 1,253 (13,610) 22,360 42,225 39,817
Net income (loss) ............................. $ 13,284 $ (10,103) $ 45,523 $ 69,446 $ 58,375
Earnings (loss) per common share:
Basic ................................... $ 0.19 $ (0.15) $ 0.69 $ 1.04 $ 0.84
Diluted ................................. $ 0.19 $ (0.15) $ 0.68 $ 1.03 $ 0.82
Dividends paid per share ....................... $ 0.28 $ 0.28 $ 0.28 $ 0.28 $ 0.28
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