Callaway 2006 Annual Report Download - page 38

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Stock Incentive Plan (the “Promotion Plan”). No shares are available for grant under the 1995 Plan or the
Promotion Plan at December 31, 2006. For additional information, see Note 12 “Share-Based Employee
Compensation” to the Notes to Consolidated Financial Statements.
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
There were no share repurchases during the fourth quarter of 2006. As of December 31, 2006, the Company
is authorized to repurchase up to $47.1 million of its Common Stock under the June 2006 repurchase program.
See Note 11 – “Capital Stock” to the Notes to Consolidated Financial Statements.
Item 6. Selected Financial Data
The following statements of operations data and balance sheet data for the five years ended December 31,
2006 were derived from the Company’s audited consolidated financial statements. Consolidated balance sheets at
December 31, 2006 and 2005 and the related consolidated statements of operations and statements of cash flows
for each of the three years in the period ended December 31, 2006 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,
2006(1,2,3,8) 2005(1,2) 2004(2,4) 2003(2,5,7) 2002(6)
(In thousands, except per share data)
Statement of Operations Data:
Net sales(7) ................................. $1,017,907 $998,093 $934,564 $814,032 $793,219
Cost of sales ............................... 619,832 583,679 575,742 445,417 393,068
Gross profit(7) ............................... 398,075 414,414 358,822 368,615 400,151
Selling, general and administrative expenses(7) ..... 334,235 370,219 352,967 273,231 256,909
Research and development expenses ............ 26,785 26,989 30,557 29,529 32,182
Income (loss) from operations(7) ................ 37,055 17,206 (24,702) 65,855 111,060
Interest and other income (expense), net(7) ........ 3,364 (390) 1,934 3,550 2,271
Interest expense ............................. (5,421) (2,279) (945) (1,522) (1,660)
Income (loss) before income taxes .............. 34,998 14,537 (23,713) 67,883 111,671
Income tax provision (benefit) ................. 11,708 1,253 (13,610) 22,360 42,225
Net income (loss) ........................... $ 23,290 $ 13,284 $ (10,103) $ 45,523 $ 69,446
Earnings (loss) per common share:
Basic ................................. $ 0.34 $ 0.19 $ (0.15) $ 0.69 $ 1.04
Diluted ................................ $ 0.34 $ 0.19 $ (0.15) $ 0.68 $ 1.03
Dividends paid per share ...................... $ 0.28 $ 0.28 $ 0.28 $ 0.28 $ 0.28
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