Callaway 2010 Annual Report Download - page 4

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2010 ANNUAL REPORT
TO MY FELLOW SHAREHOLDERS,
When the economic crisis hit the golf
industry in mid-2008, we made the deci-
sion to weather that crisis with a balanced
approach between managing costs and
continuing to invest in initiatives that would
benefit our business once the economic
headwinds subsided and the golf industry
recovered. We maintained that strategy
during 2010, and while we began to see
some encouraging signs of economic
improve ment over the course of the year,
the pace of the recovery in the golf
industry was not as strong as we had
originally antici pated. Overall, the golf
industry ended the year down slightly
compared to 2009.
This delay in the golf industry recovery,
along with some non-operational charges,
affected the Company’s 2010 reported
results. More specifically, the company’s
earnings declined to a loss of $0.46 per
share compared to a loss of $0.33 per
share in 2009. The Company’s net sales
for 2010 increased 2 percent to $968
million and gross margins improved 230
basis points, but these improvements
were not able to offset these other factors.
The enclosed annual report on Form 10-K
contains more details concerning our 2010
results and the non-operational charges,
and I encourage you to read it.
While the reported results are clearly not
where we expect them to be when the
golf industry fully recovers, they obscure
several important improvements we made
in the underlying operational performance
of our business. These improvements are
largely the result of the balanced approach
we took in managing our business during
the economic downturn. While our deci-
sion to continue to invest in our business
has affected our short-term financial
results, we believe these investments will
yield strong benefits when the recovery in
the golf sector fully takes hold. In fact, we
are already beginning to realize some of
those benefits.
First, we have made the expansion of our
presence in emerging markets a priority.
These markets represent a primary driver
for the Company’s long-term growth.
China has a robust economy, a burgeon-
ing middle class, and the prospect of
millions of new golfers who will need
equipment. We also opened Callaway
Golf India last year, which was a major
step toward making Callaway the leading
In the world of golf there are many brands, but there’s only one Callaway.
We’re different from the others. Different because we’ve always been about
one thing — helping golfers achieve more personal wins. Built on a rich heritage
of innovation, Callaway is dedicated to pushing beyond conventional thinking
to develop authentic products for golfers, by golfers.