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Callaway Golf reported its fourth quarter and year end results for 2012. The company has sales of $118 million in the final quarter of the year, down $36 million from the previous year. Callaway said it had an operating lost of $71 million for the reporting period. Extending out through the full calendar year, Callaway sales were $832 million, off $55 million form 2011’s numbers. It stated it incurred an operating loss of $117 million versus $81 million in 2011. On a pro forma basis reflecting changes its made to the business going forward, the operating loss was $70 million.

"Our pro forma financial results for the fourth quarter and full year reflect both the previously reported challenges our business faced during 2012 as well as the actions we took during the year to prepare our business for a turnaround in 2013," commented Chip Brewer, President and Chief Executive Officer in a prepared statement. "While our 2012 financial results were disappointing, as I look back on the year, I am very pleased with the pace and direction of change we implemented. During 2012, we made several key additions to the senior management team, sold the Top-Flite and Ben Hogan brands, licensed our footwear and apparel businesses, began transitioning our GPS business to a third party model, strengthened our presence on tour worldwide, restructured our Americas and European sales organizations, improved our manufacturing and supply chains, re-energized our global product development team, overhauled our approach to global marketing, refinanced a majority of our outstanding convertible preferred stock with less expensive 3.75% convertible debt and implemented major reductions in force and other cost reductions which should result in annualized savings of $60 million. These changes are also driving cultural and behavioral changes at Callaway which, along with our renewed focus on our core golf clubs and golf ball businesses, should serve as the keystone to our turnaround.

"Looking forward, I am encouraged on several fronts," Brewer continued. "On a macro basis, we continue to anticipate a slow but steady market recovery in the U.S. as well as growth opportunities in Asia. During the second half of 2012, we saw stabilization of our overall market share and lower retail inventory as a result of improved sell-through performance in most of our key markets.  Additionally, we are encouraged with the early response we've received on our 2013 product line and marketing message.   Our expectation is to re-gain hard goods market share in each of our major markets (Americas, East Asia, Southeast Asia Pacific and Europe). Despite this optimism, we remain mindful that there is much work to be done, we continue to anticipate an extremely competitive market place, and we know that our success ultimately will be determined by the consumer as measured by both sell-through and customer loyalty generated from our product performance and brand appeal. All things considered, I remain confident in our turnaround plans and optimistic on our long-term outlook. All of us at Callaway are excited for the start of the 2013 season."

The Company estimates that net sales for the full year 2013 will be approximately $850 million. Net sales related to Callaway's continuing brands and business were $772 million in 2012, with approximately $60 million related to the brands and businesses that were sold or transitioned to a third party model. It estimates that 2013’s full year could be break even operationally based on a pro forma comparison. It stated it expects to see a small loss of approximately $2.8 million ($0.04 per share) due to the impact of dividends paid on the Company's outstanding convertible preferred stock.

When the top line shrinks, the devil in the details rarely contains any positives. Callaway reported metal wood sales were lower by $10.6 million in 2012, while irons slumped $36 million over 2011. On a positive note, the company’s largest category in terms of revenues, Accessories ($227.7 million) grew by $7.7 million or 4% for the year. Callaway’s sales in the US were down $29.4 million in 2012, while European sales fell $13.4 million. 

Callaway’s management pointed to the changes its made in the structure of its business in 2012, that has yet to pay dividends, for its hope in 2013.