Callaway 2010 Annual Report Download - page 56

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The $3.6 million (4%) decrease in net sales of putters to $98.1 million for the year ended December 31,
2009, resulted from a reduction in average selling prices partially offset by an increase in sales volume. The
decrease in average selling prices was primarily attributable to an unfavorable shift in product mix from sales of
the more premium Black Series putters during 2008 to sales of the lower priced Crimson putters during 2009,
which also contributed to the increase in sales volume. In addition, sales volume was positively affected by the
launch of the new White Ice putters during the fourth quarter of 2009.
The $3.1 million (1%) increase in sales of accessories and other products to $218.7 million for the year
ended December 31, 2009, was primarily attributable to sales of the Company’s new uPro GPS on-course range
finders introduced in 2009, partially offset by a decline in sales of golf bags and footwear.
Golf Balls Segment
Net sales information for the golf balls segment is summarized as follows (dollars in millions):
Years Ended
December 31, Decline
2009(1) 2008 Dollars Percent
Net sales:
Golf balls ................................................. $178.5 $223.1 $(44.6) (20)%
(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.
The $44.6 million (20%) decrease in net sales of golf balls to $178.5 million for the year ended
December 31, 2009, was primarily due to decreases of $32.0 million in Callaway Golf ball sales and $10.0
million in Top-Flite golf balls sales. These decreases were primarily due to decreases in average selling prices
and sales volume for both Callaway Golf and Top-Flite golf balls. The decrease in average selling prices was
negatively affected by a shift in mix as a result of the launch of moderately priced golf balls in 2009 compared to
more premium golf balls in 2008 for both the Callaway Golf and Top-Flite brands, in addition to various sales
promotions during 2009 and price reductions taken on older Tour Series golf balls. The decrease in sales volumes
was affected by fewer golf ball models launched during 2009 compared to 2008 for both the Callaway Golf and
Top-Flite brands.
Segment Profitability
Profitability by operating segment is summarized as follows (dollars in millions):
Years Ended
December 31, Decline
2009(1) 2008 Dollars Percent
Income (loss) before income taxes
Golf clubs(2)(3) ............................................. $41.4 $134.0 $ (92.6) (69)%
Golf balls(2)(3) .............................................. (16.3) 6.9 (23.2) (336)%
Reconciling items(4) ......................................... (54.7) (39.6) (15.1) (38)%
$(29.6) $101.3 $(130.9) (129)%
(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.
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