Callaway 2006 Annual Report Download - page 48

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Net sales information by product category is summarized as follows:
Year Ended
December 31, Growth (Decline)
2005 2004 Dollars Percent
($ in millions)
Net Sales:
Driver and fairway woods .................................... $241.3 $238.6 $ 2.7 1%
Irons ..................................................... 316.5 259.1 57.4 22%
Putters .................................................... 109.3 100.5 8.8 9%
Golf balls ................................................. 214.7 231.3 (16.6) (7)%
Accessories and other ........................................ 116.3 105.1 11.2 11%
$998.1 $934.6 $ 63.5 7%
The $2.7 million (1%) increase in net sales of drivers and fairway woods to $241.3 million for the year
ended December 31, 2005 resulted from increased sales volumes almost entirely offset by lower average selling
prices in 2005 compared to the prior year. The majority of this increase related to sales of the Company’s new
2005 products including new Callaway titanium drivers, multi-material driver and fairway woods products and
hybrid woods products as well as an increase in sales of the Company’s new 2005 Ben Hogan drivers and
fairway woods products, which were all introduced during 2005. This increase was partially offset by a decline in
sales of the Company’s older multi-material and titanium driver products, steel fairway woods products and
titanium fairway woods products, which were expected as the Company’s products generally sell better in their
first year after introduction and 2005 is the second year in the life cycles of these products.
The $57.4 million (22%) increase in net sales of irons to $316.5 million for the year ended December 31,
2005 resulted from higher sales volumes as well as higher average selling prices during 2005 compared to 2004.
The increase in sales volumes is primarily attributable to the Company offering more new irons models in its
2005 product line than its 2004 product line, including multi-material irons products which were not introduced
until the fourth quarter of 2004. The increase in average selling prices is due to a shift in product mix to higher
priced multi-material and steel irons products. These sales increases were partially offset by a decrease in sales of
the Company’s older irons products which were in the second and third years of their product life cycles.
The $8.8 million (9%) increase in net sales of putters to $109.3 million for the year ended December 31,
2005 is attributable to the current year introduction of the Odyssey White Steel and Dual Force 2 putters and the
Callaway Golf I-Trax Putter, partially offset by decreased sales of the Company’s older putter models which
were in the second and third years of their product life cycles.
The $16.6 million (7%) decrease in net sales of golf balls to $214.7 million for the year ended December 31,
2005 resulted from decreased Top-Flite golf ball sales partially offset by an increase in Callaway Golf ball sales.
The decrease in Top-Flite golf ball sales resulted from lower sales volumes and lower average selling prices. The
decrease is due in part to the planned reduction in the number of Top-Flite golf ball models in the 2005 product
line as a result of the Company’s discontinuance of certain less profitable golf ball models. The increase in
Callaway golf ball sales is primarily due to the expansion of the Callaway golf ball product line as a result of the
successful launch of two new Callaway Golf ball models during 2005.
The $11.2 million (11%) increase in net sales of accessories and other products to $116.3 million for the
year ended December 31, 2005 is primarily attributable to a $10.4 million increase in sales of pre-owned
products through the FrogTrader business resulting from the inclusion of FrogTrader sales for a full year in 2005
compared to seven months in 2004, as well as an increase in sales of Callaway Golf bags and royalty revenue
from other licensed merchandise.
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