Callaway 2008 Annual Report Download - page 48

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currencies which must be translated into U.S. dollars for financial reporting purposes. Based upon current rates,
management expects that, overall, the US dollar in 2009 will be much stronger than in 2008 relative to the
foreign currencies in which the Company conducts business, which would have a significant adverse effect upon
the Company’s reported financial results in 2009. For example, if the Company were to translate its 2008
financial results based upon applicable exchange rates in January 2009 (as opposed to actual 2008 rates), the
Company’s reported 2008 consolidated net sales would have been approximately $56 million lower and reported
consolidated earnings per share would have been approximately $0.35 to $0.40 lower. Investors should note that
this example only demonstrates the effect of the translation of foreign currency under the assumptions used in
this example and that the actual effect of the translation of foreign currency on 2009 results will depend upon
many factors, including actual currency exchange rates during 2009.
Years Ended December 31, 2008 and 2007
Net sales decreased $7.4 million (1%) to $1,117.2 million for the year ended December 31, 2008, compared
to $1,124.6 million for the year ended December 31, 2007. This decrease reflects a $17.4 million decrease in net
sales of the Company’s golf clubs segment partially offset by a $10.0 million increase in net sales of the
Company’s golf balls segment as set forth below (dollars in millions):
Years Ended
December 31, Growth (Decline)
2008 2007 Dollars Percent
Net sales
Golf clubs .............................................. $ 894.1 $ 911.5 $(17.4) (2)%
Golf balls .............................................. 223.1 213.1 10.0 5%
$1,117.2 $1,124.6 $ (7.4) (1)%
For further discussion of each operating segment’s results, see “Golf Club and Golf Ball Segments Results”
below.
Net sales information by region is summarized as follows (dollars in millions):
Years Ended
December 31, Growth (Decline)
2008 2007 Dollars Percent
Net sales:
United States ............................................ $ 554.0 $ 597.6 $(43.6) (7)%
Europe ................................................. 191.1 193.3 (2.2) (1)%
Japan .................................................. 166.5 120.1 46.4 39%
Rest of Asia ............................................ 80.0 86.1 (6.1) (7)%
Other foreign countries .................................... 125.6 127.5 (1.9) (1)%
$1,117.2 $1,124.6 $ (7.4) (1)%
Net sales in the United States decreased $43.6 million (7%) to $554.0 million for the year ended
December 31, 2008, compared to the year ended December 31, 2007. This decline was primarily due to reduced
demand caused by a less favorable economic environment in the United States in 2008. The Company’s sales in
regions outside of the United States increased $36.2 million (7%) to $563.2 million for the year ended
December 31, 2008 compared to the same period in 2007. This increase in international net sales was primarily
attributable to an increase of $46.4 million in Japan, primarily due to continued strong sales of a region specific
driver introduced in 2008. The increase in international net sales was positively affected by $11.4 million of net
favorable changes in foreign currency rates primarily in Japan and other foreign countries. The favorable
fluctuations in foreign currency rates were partially offset by selective price reductions taken in certain regions
during the first half of 2008 in response to the weakened U.S. dollar.
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