CARLSBAD, Calif., Jul 18, 2007 (BUSINESS WIRE) -- Callaway Golf Company (NYSE:ELY) today announced that, based on current information, the Company estimates net sales for the second quarter ended June 30, 2007 of approximately $380 million, a year-over-year increase of approximately 11%. Management also estimates that based on these sales levels, earnings per diluted share will increase over 50% to between $0.50 and $0.53, including long-term incentive compensation expense. These results are based on approximately 69.3 million shares outstanding and include after-tax charges of approximately $0.02 per share related to the gross margin improvement initiatives announced in November 2006.

For the second quarter of 2006, the Company reported net sales of $342 million and fully diluted earnings per share of $0.33 (on 68.6 million shares), including long-term incentive compensation expense.

Those results include after-tax charges of approximately $0.02 per share associated with the restructuring initiatives announced in September 2005 and the Top-Flite integration.

Business Update

"We are very pleased with our preliminary second quarter results,"
commented George Fellows, President and CEO of Callaway Golf. "Retail sell-through of our products was strong, resulting in solid re-orders from our retailers during the quarter. While demand for our fusion drivers had been outstripping capacity, by the end of the quarter we were able to make significant headway, and expect to have the supply issue completely behind us by the end of July. In addition to the strong consumer acceptance of our 2007 products, the progress we're making on gross margin improvement and inventory reduction initiatives has resulted in the significant improvement in profitability for the quarter compared to last year. This was in line with our full year guidance."

Details of Second Quarter Results :

Sales >>>>

The estimated increase in sales for the second quarter is attributable to several factors, including strong sales of FT-5 and FT-i drivers and X-20 irons, and increased sales of accessories and golf balls.

Gross Margins >>>>

The Company estimates its gross margins as a percentage of net sales to be approximately 46% for the second quarter. Excluding charges related to gross margin improvement initiatives, it is estimated that pro forma gross margins, as a percentage of net sales, would be approximately 47%. In the second quarter of 2006, the Company's gross margins were 41% and excluding integration and restructuring charges were 41%. The estimated increase in pro forma gross margins can be attributed to an increased mix of sales of higher margin products such as fusion drivers and X-series irons, as well as positive contribution from this year's implementation of gross margin improvement initiatives.





About Callaway Golf 

Callaway Golf Company, which celebrates its 25th Anniversary in 2007, manufactures and sells golf clubs and golf balls, and sells golf accessories, under the Callaway Golf(R), Odyssey(R), Top-Flite (R), and Ben Hogan(R) brands in more than 110 countries worldwide.
For more information please visit www.callawaygolf.com.