Callaway Golf Company Q4 2008 Earnings Call Transcript

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2009-01-27 20:11:11.0

Tags: Brand, Call Transcript, Earnings, Term, Sales Strategy, 401(k), Retirement Plans, Branding, Sales Force Management, Personal Finance, Sales, Human Resources, Benefits, Marketing, Seeking Alpha, Callaway Golf Co.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question is from the line of Scott Hamann with KeyBanc Capital Markets. Please go ahead with your question.

Scott Hamann - KeyBanc Capital Markets

Good afternoon. In the fourth quarter, could you give a little color in terms of how much of the sales was attributed to new products versus the old products?

Brad Holiday

The new products that we shipped were right around $40 million. That compares, I believe, with last year's $10 million to $15 million, and I think the year before was more in that $33 million range, So more in line with 2006, Scott, and that was the year prior to 2007 when we had the record year.

Scott Hamann - KeyBanc Capital Markets

Okay. And then, specifically, what types of things can you do in terms of cost structure and how much flexibility do you have to offset a potential sales decline?

George Fellows

As Brad mentioned, we're taking a very, very hard look at our cost structure, not just from a product point of view, but also various support levels and, generally speaking, have taken a very conservative view on spending categories that we believe are more flexible. We're trying not to cut heavily into support of the brands. Quite the contrary, we're trying to support the brands very strongly during this period of time.

But things such as Travel and T&E and a lot of the administrative expenses that we think we have some flex in, we've taken pretty hard cuts at. We have frozen salaries for next year. We have suspended 401(k) matching programs. We've essentially, although not completely frozen hiring, to the extent that we don't have critical positions that we need to fill.

There are many, many areas on a worldwide basis that we took a very hard look at and we believe the net combination of those things will allow us to function quite comfortably through the year and still allow us to support the businesses as we feel they need to be. And so, we're not giving you any specific numbers because we can't at this point. We think we've clawed back a reasonable amount to try to offset some of the FX issues.

Scott Hamann - KeyBanc Capital Markets

Okay. And then, just on the golf ball business, profitability continues to improve there. How far along are you in that process and how much more can you really squeeze out in terms of profitability and how are you going to do that?

 

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