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Callaway Golf Company Reports Operating Results (10-Q)

August 02, 2012 | About:
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10qk

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Callaway Golf Company (ELY) filed Quarterly Report for the period ended 2012-06-30.

Callaway Golf Co has a market cap of $361.2 million; its shares were traded at around $5.31 with and P/S ratio of 0.4. The dividend yield of Callaway Golf Co stocks is 0.7%.

Highlight of Business Operations:

Net sales in the United States increased $3.7 million (3%) to $142.3 million during the second quarter of 2012 compared to the same period in the prior year. The Companys sales in regions outside of the United States increased $3.6 million to $138.8 million for the second quarter of 2012 compared to $135.2 million in the same quarter of 2011. This increase was largely due to an increase in sales in Japan due to the earthquake and tsunami in March 2011 which negatively impacted sales in that region in the prior year. This increase was partially offset by a decline in sales in Canada and Korea during the second quarter of 2012. The Companys reported net sales in regions outside the United States in 2012 were unfavorably affected by the translation of foreign currency sales into U.S. dollars based upon 2011 exchange rates. If 2011 exchange rates were applied to 2012 reported sales in regions outside the U.S. and all other factors were held constant, net sales in such regions would have been $3.0 million higher than reported in the second quarter of 2012.

Selling expenses increased by $1.5 million to $75.7 million (27% of net sales) in the second quarter of 2012 compared to $74.2 million (27% of net sales) in the comparable period of 2011. The dollar increase was primarily due to a $4.6 million increase in advertising and promotional expenses, which is consistent with the Companys Reorganization and Reinvestment Initiatives announced in June 2011, partially offset by a $2.2 million decrease in employee costs primarily as a result of a decline in headcount period over period offset by the reversal of accrued incentive compensation expense during the second quarter of 2011.

Net sales in the United States increased $8.1 million (3%) to $292.0 million during the first half of 2012 compared to the same period in the prior year. As mentioned above, this increase was primarily due to the timing of planned product launches primarily in the putters category. The Companys sales in regions outside of the United States decreased $1.3 million to $274.2 million for the first half of 2012 compared to $275.5 million in the same period in 2011. This decrease was largely caused by a decline in sales in Canada of $6.2 million and Korea of $5.4 million during the first half of 2012. This was offset by an increase in sales in Japan due to the earthquake and tsunami in March 2011 which negatively impacted sales in that region in the prior year. The Companys reported net sales in regions outside the United States in 2012 were unfavorably affected by the translation of foreign currency sales into U.S. dollars based upon 2011 exchange rates. If 2011 exchange rates were applied to 2012 reported sales in regions outside the U.S. and all other factors were held constant, net sales in such regions would have been $2.7 million higher than reported during the six months ended June 30, 2012.

Selling expenses increased by $3.1 million to $152.5 million (27% of net sales) in the first six months of 2012 compared to $149.4 million (27% of net sales) in the comparable period of 2011. The dollar increase was primarily due to increases of $9.0 million in advertising and promotional activities, which is consistent with the Companys Reorganization and Reinvestment Initiatives announced in June 2011, partially offset by a $5.9 million decrease in employee costs primarily as a result of a decline in headcount period over period.

General and administrative expenses decreased by $15.7 million to $30.7 million (5% of net sales) in the first six months of 2012 compared to $46.4 million (8% of net sales) in the comparable period of 2011. The dollar decrease was primarily due to (i) an $8.4 million decrease in employee costs primarily as a result of reductions in severance charges and headcount period over period resulting from the 2011 Restructuring and Reorganization Initiatives, (ii) the recognition of a $6.6 million net gain from the sale of the Companys Top-Flite and Ben Hogan brands during the first quarter of 2012, (iii) a $5.4 million impairment charge

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