Callaway 2010 Annual Report Download - page 50

Other income (expense), net increased to expense of $11.0 million for the year ended December 31, 2010
from income of $0.9 million in the comparable period in 2009. This $11.9 million increase in expense was
primarily attributable to an $11.2 million increase in net foreign currency losses from the mark-to-market of
foreign currency exchange contracts in 2010 as compared to 2009.
The effective tax rate for the year ended December 31, 2010, was a benefit of 47.1% compared to a benefit
of 48.5% for the year ended December 31, 2009. Compared to the corporate statutory rate of 35.0%, the tax rates
in 2010 and 2009 benefited from net reductions to previously estimated tax liabilities as a result of the release of
tax contingencies related to the settlement of various issues under tax examination and the lapse of certain
statutes of limitations.
Net loss for the year ended December 31, 2010 increased to $18.8 million from $15.3 million in the
comparable period of 2009. Net loss allocable to common shareholders for 2010 and 2009 includes $10.5 million
and $5.7 million, respectively, for dividends on preferred stock (as defined in Sources of Liquidity below).
Losses per share for 2010 increased to $0.46 per share on 63.9 million weighted average shares outstanding
compared to losses per share of $0.33 on 63.2 million weighted average shares outstanding for 2009. Net loss and
losses per share for 2010 were negatively impacted by a $4.8 million ($0.08 per share) after-tax impairment
charge related to a reduction in recorded book value of certain intangible assets acquired in 2003 as part of the
Top-Flite Acquisition, after-tax charges of $9.2 million ($0.14 per share) in connection with the Company’s
Global Operations Strategy, and after-tax charges of $2.5 million ($0.04 per share) as a result of workforce
reductions announced during the fourth quarter in 2010. Net loss and losses per share for 2009 were negatively
impacted by after-tax charges of $3.7 million ($0.06 per share) related to costs incurred in connection with
initiatives targeted at improving gross margins as well as by after-tax charges of $3.1 million ($0.05 per share) as
a result of the workforce reductions announced in April 2009.
Golf Clubs and Golf Balls Segments Results for the Years Ended December 31, 2010 and 2009
Golf Clubs Segment
Net sales information for the golf clubs segment by product category is summarized as follows (dollars in
millions):
Years Ended
December 31, Growth (Decline)
2010 2009(1) Dollars Percent
Net sales:
Woods .................................................... $225.4 $222.6 $ 2.8 1%
Irons ..................................................... 223.8 232.9 (9.1) (4)%
Putters .................................................... 106.2 98.1 8.1 8%
Accessories and other ........................................ 235.8 218.7 17.1 8%
$791.2 $772.3 $18.9 2%
(1) Certain prior period costs associated with gift card promotions have been reclassified from accessories and
other into the applicable product categories to conform with the current year presentation.
The $2.8 million (1%) increase in net sales of woods to $225.4 million for the year ended December 31,
2010 was primarily attributable to an increase in sales volume partially offset by a slight decrease in average
selling prices. The increase in sales volume was primarily driven by a 44% increase in sales of fairway woods
due to an increase in new fairway woods products in 2010, partially offset by a 20% decrease in sales of drivers,
which had fewer new product releases in 2010. The slight decrease in average selling prices was primarily due to
close-out activity on older driver models, partially offset by a decrease in promotional activity in 2010.
The $9.1 million (4%) decrease in net sales of irons to $223.8 million for the year ended December 31, 2010
was primarily attributable to a decrease in both sales volume and average selling prices. The decrease in sales
36