Callaway 2012 Annual Report Download - page 4

MY FELLOW SHAREHOLDERS:
This past year has been an eventful
one for Callaway, with a lot of changes
transpiring as we set a course back
toward profitability. We took a
multitude of actions in 2012 on the
road to our turnaround and I’m
happy to report we have made
significant progress.
We finished 2012 with full year net
sales of $834 million and a loss of
$1.96 per share. Needless to say,
these results were disappointing and
do not represent the potential of the
Company. However, the good news
is that I feel we have begun to right
the ship, and we are on course for
better days ahead with a “New
Callaway” that builds upon the global
strength of our Callaway and Odyssey
brands, our product development
resources, and a talented and
dedicated group of employees that
are committed to success for both our
shareholders and our customers.
We have put a priority on becoming
a more dynamic and contemporary
company, with products that resonate
with and excite golfers around the
world. The Company has refocused
its eorts into doing what we do
best, and that’s making the best golf
clubs and golf balls in the industry.
In order to regain this focus, in 2012
we streamlined our business by
selling the Ben Hogan and Top-Flite
brands, licensing our apparel and
footwear businesses, and discon-
tinuing our direct operations in the
GPS/electronics category.
A new senior management team
was assembled that I believe will
have a significant positive impact
on all areas of our business, includ-
ing marketing, global operations,
North American sales, and research
and development. Additionally, we
lowered our cost structure through
various cost reduction initiatives,
which should net annualized savings
of approximately $60 million.
Our U.S. hard goods’ market share
stabilized in the second half of 2012,
putting an end to a trend of losses
in this region, and at the same time
we achieved market share gains in
important international regions such
as Japan and Korea. We also cleared
out inventories both at retail and here
at Callaway, paving the way for our new
products and the 2013 golf season.
Additionally, we strengthened our
balance sheet by refinancing a
majority of our outstanding preferred
stock with less expensive convertible
debt and by raising additional liquidity
to ensure we have additional financial
flexibility to complete our turnaround
and to take advantage of opportunities
as they arise.
Going forward, we are excited with
our new direction.
Callaway’s creative approach is more
authentic and benefit-oriented, with
compelling and simple messaging that
golfers can understand and appreciate.
The 2013 product lineup, featuring the
X Hot clubs, RAZR Fit Xtreme Woods,
and Versa Putters, oers modern
looks and aggressive benefits.
As far as the Tour goes, we have
made exciting additions to our Sta
with new players that can hit the ball
a mile and bring a refreshing sense
of youth and energy to the Callaway
brand. We look forward to seeing
Japanese star Ryo Ishikawa, in
addition to Gary Woodland, Chris
Kirk, Luke List, Brian Stuard, James
Hahn and Nicolas Colsaerts, in the
hunt for titles on the world tours.
The initial feedback on our new
products from our Tour Pros, as well
as our retail partners and consumers