Callaway 2015 Annual Report Download - page 5

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ence room at Callaway headquarters into a
studio and our own employees produce every
element of the show. Meanwhile, these types
of efforts create daily content and grass roots
energy around the brand and our products.
Operationally, we continued our ongoing
quest to fi nd new methods, systems and
effi ciencies that save time and costs in every
facet of our business, from sourcing and
manufacturing to expediting product to
market and streamlining our supply chain.
This quest has yielded strong results. For
example, since 2012 our Golf Ball business
has gone from operating at a loss to earning
millions of dollars: quite an operational
turnaround. The strides made in operations,
coupled with bringing new technology to
market, led to a 200 basis point improvement
in gross margins to 42.4% in 2015 compared
to 2014. As with net sales, currency fl uctua-
tions masked some of the progress; on a
constant currency basis, using 2014 foreign
currency exchange rates, our 2015 gross
margins would have been 45.5%, or a 510
basis point improvement over the prior year.
Because so many golfers take their equip-
ment cues from Tour pros, we maintained our
strong presence in global professional golf
through quality Tour Staff professionals like
Phil Mickelson, Henrik Stenson, Jim Furyk,
Patrick Reed and Kenny Perry. Lydia Ko,
just 18, solidifi ed her status as a global golf
superstar by winning LPGA Player of the Year
honors and becoming the youngest player
on any Tour to win a major championship.
Danny Lee, Kevin Kisner, Branden Grace and
Danny Willett, among others, represented
Callaway in a growing class of incredibly
talented young PGA Tour players.
After some diffi cult years, it appears the golf
industry is stabilizing and there may be some
reason for optimism as we head into 2016.
For instance, last year the U.S. witnessed an
increase of 1.8% in rounds played and overall
spend at retail measured in the U.S. by Golf
Datatech improved 2.4%. Furthermore, in
2016 golf returns to the Olympics for the fi rst
time since 1904, and the biennial Ryder Cup,
one of the world’s most popular sporting
events, will be held in September at
Hazeltine National Golf Club in Minnesota.
The continued popularity and growth of
TopGolf likewise bodes well for golf and for
Callaway. Ten new locations opened in 2015,
bringing the total to 21 across the U.S. and
24 globally. TopGolf is a new, fun and highly
social way for both experienced and begin-
ning golfers to enjoy the game, and is also
an excellent way to establish a connection
between consumers and the Callaway brand.
We continue to maintain a minority owner-
ship position in Topgolf as well as an exclusive
presence at every facility, with Callaway clubs
made available to participants.
TOUR PRESENCE
We continued to connect with consumers in exciting new ways
including “Callaway Live,” a weekly online fan engagement
show and special events like The Links at Petco Park.
INNOVATIVE BRAND BUILDING
LYDIA KO
LPGA Player of the Year
Moving into 2016 we look to build on the
momentum we have created in the last
couple of years on the new product front
with the introduction of our XR 16 driver,
which was developed in collaboration with
Boeing and our new and improved Chrome
Soft golf ball with Dual SoftFast core technol-
ogy. The strength of our product lineup is
already generating some buzz as Golf
Digest convened its annual Hot List Panel.
We brought home 17 Gold Medals, including
a number of 5-Star ratings, making us the
top Gold Medal earner of all golf
equipment manufacturers.
We are proud of the strides we continue
to make with our products, our operations
and our relationships with our customers
and consumers, and we, of course, have no
intention of slowing down. We’re confi dent
the considerable investments we’ve made
in R&D talent and resources will allow us to
further our leadership in metal wood, iron,
putter and ball technology. Our innovation
pipeline remains strong; we will continue
developing superior golf equipment that
helps golfers of all levels play better and
enjoy the game more. It’s what the people
at Callaway Golf Company do best and it’s
what drives shareholder value.
Oliver “Chip” Brewer
President and Chief Executive Offi cer
March 16, 2016
CALLAWAY STAFF
PROFESSIONALS
41 HAD
TOUR WINS
IN 2015
Our powerful presence on Tour captured 41 Tour wins in 2015 led
by the likes of Jim Furyk, Lydia Ko and Patrick Reed along with
standout performers Kevin Kisner, Matt Every and Danny Lee.