Callaway 2011 Annual Report Download - page 53

Download and view the complete annual report

Please find page 53 of the 2011 Callaway annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

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(1) 2009(1) Dollars Percent
Net sales:
Woods .................................................... $225.2 $223.2 $ 2.0 1%
Irons ..................................................... 223.9 232.7 (8.8) (4)%
Putters .................................................... 106.3 98.3 8.0 8%
Accessories and other ........................................ 235.7 217.9 17.8 8%
$791.1 $772.1 $19.0 2%
(1) Certain prior period amounts have been reclassified to conform to the current year presentation.
The $2.0 million (1%) increase in net sales of woods to $225.2 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 $8.8 million (4%) decrease in net sales of irons to $223.9 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
volume was primarily attributable to the later timing of iron models launched in the first half of 2010 compared
to the same period in the prior year. The Company launched its X-24 Hot irons in May of 2010 and therefore did
not benefit from a full year worth of sales compared to twelve months of sales of the X-22 irons during 2009.
This decrease was partially offset by increased sales of the Company’s current year Diablo Edge irons compared
to sales of the Diablo irons launched in 2009. The decrease in average selling prices was largely due to a shift in
product mix with the 2010 launch of more moderately priced Diablo Edge irons compared to the higher priced
X-22 and X Forged line of irons launched in 2009. In addition, average selling prices were negatively affected by
increased close-out activity on certain irons and wedges which will be non-conforming in 2011.
The $8.0 million (8%) increase in net sales of putters to $106.3 million for the year ended December 31,
2010 was primarily attributable to an increase in average selling prices partially offset by a slight decline in sales
volumes. The increases in average selling prices was attributable to sales of the new White Ice series of putters
introduced in 2010, which outpaced the decline in sales of the older White Hot XG series of putters. In addition,
average selling prices were favorably affected by the current year launch of the premium Black Series iX line of
putters and Backstryke putter models, which were introduced at higher prices compared to the models launched
in 2009. The decrease in sales volume was primarily due to a decrease in sales of the Company’s progressive
putter models and lower close-out sales volumes of older putter models.
The $17.8 million (8%) increase in net sales of accessories and other products to $235.7 million for the year
ended December 31, 2010 was primarily attributable to: (i) increased sales of packaged sets, which include the
current year launch of the women’s Solaire line of golf clubs; (ii) increased sales of golf apparel under the
39