Callaway 2006 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2006 Callaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

invests a considerable amount in research and development each year. The Company’s products are designed for
golfers of all skill levels, both amateur and professional.
The following table sets forth the contribution to net sales attributable to the principal product groups for the
periods indicated:
Year Ended December 31,
2006 2005 2004
(In millions)
Drivers and fairway woods .......................... $ 266.5 26% $241.3 24% $238.6 25%
Irons ............................................ 288.0 28% 316.5 32% 259.1 28%
Putters .......................................... 102.7 10% 109.3 11% 100.5 11%
Golf balls ........................................ 214.8 21% 214.7 22% 231.3 25%
Accessories and other .............................. 145.9 15% 116.3 12% 105.1 11%
Net sales ........................................ $1,017.9 100% $998.1 100% $934.6 100%
For a discussion regarding the changes in net sales for each product group from 2006 to 2005 and from 2005
to 2004, see below, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Results of Operations” contained in Item 7.
The Company’s current principal products by product group are described below:
Drivers and Fairway Woods. This product category includes sales of the Company’s drivers, fairway woods
and hybrid products, which are sold under the Callaway Golf, Ben Hogan and Top-Flite brands. These products
are generally made of metal (either titanium or steel) or a combination of metal and a composite material. The
Company’s products compete at all price levels in the drivers and fairway woods category. In general, composite/
metal drivers, fairway woods and hybrids sell at higher price points than titanium drivers and fairway woods, and
titanium products sell at higher price points than steel products. The Company’s drivers, fairway woods and
hybrid products are available in a variety of lofts, shafts and other specifications to accommodate the preferences
and skill levels of all golfers. All of the Company’s current drivers, fairway woods and hybrid products conform
to the current rules of the United States Golf Association (the “USGA”) or the Royal and Ancient Golf Club of
St. Andrews (the “R&A”), as applicable to the markets in which the products are intended to be sold.
Irons. This product category includes sales of the Company’s irons and wedges, which are sold under the
Callaway Golf, Ben Hogan and Top-Flite brands. The Company’s irons are generally made of metal (either
titanium or steel) or a combination of metal and a composite material. The Company’s products compete at all
price levels in the irons category. In general, the Company’s composite/metal irons and titanium irons sell at
higher price points than its steel irons. The Company’s irons are available in a variety of lofts, shafts and other
specifications to accommodate the preferences and skill levels of all golfers. All of the Company’s current iron
products conform to the current rules of the USGA and the R&A.
Putters. This product category includes sales of the Company’s putters, which are sold under the Odyssey,
Callaway Golf, Ben Hogan and Top-Flite brands. The Company’s products compete at all price levels in the
putters category. The Company’s putters are available in a variety of styles, shafts and other specifications to
accommodate the preferences and skill levels of all golfers. All of the Company’s current putter products
conform to the current rules of the USGA and the R&A.
Golf Balls. This product category includes sales of the Company’s golf balls, which are sold under the
Callaway Golf, Ben Hogan and Top-Flite brands. The Company’s golf balls are generally either a 2-piece golf
ball (consisting of a core and cover) or a multi-layer golf ball (consisting of two or more components in addition
to the cover). The Company’s golf ball products include covers that incorporate a traditional dimple pattern as
2