Callaway 2013 Annual Report Download - page 44

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30
operating expenses decreased by $38.9 million or 11% in 2013 compared to 2012. In total, the Company incurred charges
of $16.6 million in connection with the Cost Reduction Initiatives in 2013 compared to $54.1 million in 2012.
These improvements, along with the Company’s improved brand momentum resulting from the success of the
Company's 2013 product line, enabled the Company to overcome the adverse effects of changes in foreign currency rates,
and the impact of the sold or transitioned businesses. As a result, the Company's income from operations and diluted
earnings per share improved by $105.5 million and $1.65, respectively, to a loss from operations of $10.8 million and
diluted loss per share of $0.31 for the year ended December 31, 2013 compared to a loss from operations of $116.2 million
and diluted loss per share of $1.96 in 2012. The Company believes that this continued progress and the initial positive
trade reception to its 2014 product line position the Company for a good start to the new golf season and a return to
profitability in 2014.
Years Ended December 31, 2013 and 2012
Net sales for the year ended December 31, 2013 increased $8.7 million (1%) to $842.8 million compared to $834.1
million for the year ended December 31, 2012. This increase was primarily due to an increase in sales of woods and irons
resulting from the successful performance of the Company’s X Hot products which were introduced during the current
year. This increase was offset by the sale of the Top-Flite and Ben Hogan brands in 2012 combined with a decline in sales
of the Company’s accessories and other products due to the transition of the Company’s apparel and footwear sales in
the U.S. to a licensing arrangement during the second half of 2012. Combined, the sale/transition of these businesses
negatively affected sales by approximately $57.2 million in 2013 compared to 2012. Additionally, the Company’s net
sales in 2013 were negatively impacted by $39.8 million resulting from unfavorable fluctuations in foreign currency rates.
The Company’s net sales by operating segment are presented below (dollars in millions):
Years Ended
December 31, Growth/(Decline)
2013 2012 Dollars Percent
Net sales:
Golf clubs............................................................................................. $ 710.7 $ 694.5 $ 16.2 2 %
Golf balls.............................................................................................. 132.1 139.6 (7.5)(5)%
$ 842.8 $ 834.1 $ 8.7 1 %
For further discussion of each operating segment’s results, see “Golf Clubs Segment” and “Golf Balls Segment”
results below.
Net sales information by region is summarized as follows (dollars in millions):
Years Ended
December 31, Growth/(Decline)
2013 2012 Dollars Percent
Net sales:
United States ........................................................................................ $ 401.5 $ 392.1 $ 9.4 2 %
Europe.................................................................................................. 121.5 120.2 1.3 1 %
Japan .................................................................................................... 161.6 157.3 4.3 3 %
Rest of Asia.......................................................................................... 84.1 75.0 9.1 12 %
Other foreign countries ........................................................................ 74.1 89.5 (15.4) (17)%
$ 842.8 $ 834.1 $ 8.7 1 %
Net sales in the United States increased $9.4 million (2%) to $401.5 million during 2013 compared to $392.1 million
in 2012. This increase was primarily due to the successful performance of the X Hot products launched in 2013, partially
offset by significant decline in sales due to the sale of the Top-Flite and Ben Hogan brands in 2012 combined with a
decline in sales of the Company’s accessories and other products due to the transition of the Company’s apparel and
footwear sales in the U.S. to a licensing arrangement during the second half of 2012. The Company’s sales in regions
outside of the United States decreased slightly to $441.3 million in 2013 compared to $442.0 million in 2012. The
Company’s reported net sales in regions outside the United States in 2013 were unfavorably affected by the translation