Callaway 2010 Annual Report Download - page 53

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net sales as discussed above. The increase in gross margin was primarily a result of favorable changes in foreign
currency rates, cost savings provided by the Company’s Global Operations Strategy Initiatives, including a
favorable shift in golf ball production to more cost efficient regions outside the United States, as well as a
favorable shift in product mix as a result of increased sales of higher margin Callaway Golf balls in 2010
compared to sales of value priced Top-Flite golf balls in 2009.
Years Ended December 31, 2009 and 2008
The adverse effects of the weak global economy experienced during 2009 had a significant negative impact
on the golf industry in general and on consumer confidence and retailer demand. These conditions were further
exacerbated by the impact of unfavorable foreign currency exchange rates. These factors contributed to a decline
in net sales of $166.4 million (15%) to $950.8 million for the year ended December 31, 2009, compared to
$1,117.2 million for the year ended December 31, 2008. This decrease reflects a $121.8 million decline in net
sales of the Company’s golf club segment and a $44.6 million decline in net sales of the Company’s golf balls
segment as indicated below (dollars in millions):
Years Ended
December 31, Decline
2009(1) 2008 Dollars Percent
Net sales
Golf clubs .............................................. $772.3 $ 894.1 $(121.8) (14)%
Golf balls .............................................. 178.5 223.1 (44.6) (20)%
$950.8 $1,117.2 $(166.4) (15)%
(1) Certain costs associated with gift card promotions have been reclassified from accessories and other into the
applicable product categories to conform with the presentation as of December 31, 2010. The Company’s
gift card promotions during 2008 did not have a material impact to the Company’s results of operations and
therefore, the amounts presented for 2008 were not impacted by this reclassification.
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, Decline
2009 2008 Dollars Percent
Net sales:
United States ........................................... $475.4 $ 554.0 $ (78.6) (14)%
Europe ................................................ 134.5 191.1 (56.6) (30)%
Japan .................................................. 162.7 166.5 (3.8) (2)%
Rest of Asia ............................................ 77.0 80.0 (3.0) (4)%
Other foreign countries ................................... 101.2 125.6 (24.4) (19)%
$950.8 $1,117.2 $(166.4) (15)%
Net sales in the United States decreased $78.6 million (14%) to $475.4 million for the year ended
December 31, 2009, compared to the year ended December 31, 2008. The Company’s sales in regions outside of
the United States decreased $87.8 million (16%) to $475.4 million for the year ended December 31, 2009
compared to the same period in 2008. The decrease in net sales in the United States and internationally was
primarily attributable to the unfavorable economic conditions experienced in 2009, and a $36.0 million decline in
net sales internationally as a result of unfavorable changes in foreign currency rates, primarily in Europe.
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