Callaway 2007 Annual Report Download - page 5

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Good news also came from the Top-Flite
business. We began 2007 with a plan to
stabilize and begin growing this brand, and
I’m happy to report that all the hard work
and effort is beginning to pay off. After many
years of declining revenues and market share,
Top-Flite’s core business reversed course and
grew by 2%. We gained distribution in more
than 900 new accounts, and as a testament
to the performance of Dimple in Dimple
aerodynamics, Time magazine named the D2
Golf Ball one of its “Inventions of the Year.”
With this year’s introduction of the Gamer
and Freak golf balls, the brand and its
“Never Lay Up” attitude is on track to begin
regaining its position as a leading player in
the value category.
Overall, we were very pleased with our
financial results in 2007. Our net sales
increased 10% to $1.125 billion and fully
diluted earnings per share increased 138%
to $.81. Our gross margin initiatives we
announced in 2006 are also paying dividends,
as gross margins increased from 39% of net
sales in 2006 to 44% in 2007. This dramatic
improvement was largely the result of more
than $30 million in savings from process
improvements initiated in 2006, and we are
committed to delivering additional savings
in 2008 and beyond.
This year, Callaway Golf once again is at the
forefront of innovation with the introduction
of I-MIX Technology, which capitalizes on a
recent rule change on club adjustability. This
system gives golfers the ability to quickly
and easily customize their driver clubhead
and shaft to the weather conditions and/or
style of golf course. With more than 1,600
combinations available, I-MIX easily
outdistances the systems of our competitors
so golfers seeking the latest and greatest
technology can find the ideal setups for
their game.
In golf balls, the new Tour i Series is
generating serious buzz on Tour and in golf
shops around the country. The Tour i and
Tour ix and their 4-Piece Inertia Technology
are the most advanced golf balls we’ve ever
developed. Callaway Golf ball usage on Tour is
up more than 40 percent compared to 2007,
further validating our excitement about this
new product. In fact, four of the six players
occupying the top 3 spots in the men’s and
women’s World Golf Rankings play Callaway
Golf balls. Obviously, no other manufacturer
can make that claim.
The professional tours provide us with some
of our most valuable visibility and we were
thrilled when the opportunity presented
itself to add the highly respected and
admired Ernie Els to our Tour Staff. His
beautiful swing, worldwide appeal and major
championship pedigree were a welcome
addition to our already stellar roster of
talent, and since switching to Callaway
Golf equipment he has risen to No. 3 in the
world rankings. Phil Mickelson solidified his
position as the No. 2 player in the world by
winning The Players Championship, the PGA
Tour’s unofficial 5th major, as well as the
Deutsche Bank Championship during the
inaugural FedEx Cup Playoffs.
Morgan Pressel became the youngest player
in LPGA history to win a major title when she
captured the Kraft Nabisco Championship.
And arguably the greatest women’s player of
all-time, Annika Sorenstam, has started the
INNOVATION TECHNOLOGY