Callaway 2006 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 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

December 31,
2006 2005 2004 2003 2002
(In thousands)
Balance Sheet Data:
Cash and cash equivalents ..................... $ 46,362 $ 49,481 $ 31,657 $ 47,340 $108,452
Working capital ............................. $269,745 $298,385 $272,934 $253,302 $259,866
Total assets ................................ $845,947 $764,498 $735,737 $748,566 $679,845
Long-term liabilities ......................... $ 43,388 $ 28,245 $ 28,622 $ 29,023 $ 27,297
Total shareholders’ equity ..................... $577,117 $596,048 $586,317 $589,383 $543,387
(1) In September 2005, the Company began the implementation of several company-wide restructuring
initiatives designed to improve the Company’s business processes and reduce the Company’s overall
expenses. In connection with these initiatives, the Company recorded pre-tax charges of $3.0 million and
$8.3 million during 2006 and 2005, respectively, These charges reduced the Company’s gross profit, net
income and earnings per common share by approximately $0.3 million, $1.9 million and $0.03, respectively,
for the year ended December 31, 2006, and $2.1 million, $5.2 million and $0.08, respectively, for the year
ended December 31, 2005 (see Note 5 to the Consolidated Financial Statements).
(2) During 2006, 2005, 2004 and 2003, the Company’s gross profit, net income and earnings per common share
include the recognition of certain integration charges related to the consolidation of its Callaway Golf and
Top-Flite golf ball and golf club manufacturing as well as research and development operations. These
charges reduced the Company’s gross profit, net income and earnings per common share by approximately
$3.5 million, $2.5 million and $0.04, respectively, for the year ended December 31, 2006, $6.4 million,
$7.7 million and $0.11, respectively, for the year ended December 31, 2005, $15.7 million, $17.5 million
and $0.26, respectively, for the year ended December 31, 2004 and $24.1 million, $16.1 million and $0.24,
respectively, for the year ended December 31, 2003. (See Note 5 to the Consolidated Financial Statements).
(3) In November 2006, the Company began the implementation of gross margin initiatives designed to
positively impact gross margins over the next two years. These charges reduced the Company’s gross profit,
net income and earnings per common share by approximately $1.9 million, $1.1 million and $0.02,
respectively, for the year ended December 31, 2006.
(4) On May 28, 2004, the Company acquired all of the issued and outstanding shares of stock of FrogTrader,
Inc. Thus, the Company’s financial data includes the FrogTrader, Inc. results of operation commencing
May 28, 2004. (See Note 4 to the Consolidated Financial Statements).
(5) On September 15, 2003 the Company completed the domestic portion of the Top-Flite Acquisition. The
settlement of the international assets was effective October 1, 2003. Thus, the Company’s financial data
includes The Top-Flite Golf Company results of operations in the United States commencing September 15,
2003, and the international operations commencing October 1, 2003.
(6) For 2002, the Company’s gross profit, net income and earnings per common share include the effect of the
change in accounting estimate for the Company’s warranty reserve. During the third quarter of 2002, the
Company changed its methodology of estimating warranty accruals as a result of the development of
improved data collection techniques and reduced its warranty reserve by approximately $17.0 million,
pre-tax.
(7) Beginning with the first quarter of 2003, the Company records royalty revenue in net sales and royalty
related expenses as selling expenses. Previously, royalty revenue and the related expenses were recorded as
components of other income. Prior periods have been reclassified to conform with the current basis of
presentation.
(8) In connection with the adoption of SFAS 123R, the Company’s gross profit, net income and earnings per
common share were reduced by $0.5 million, $5.8 million and $0.08, respectively, as of December 31,
2006.
23