Callaway Golf Company (NYSE:ELY) today announced its financial results for the first quarter ended March 31, 2007, reporting significant improvements in sales and earnings over the same period a year ago. Highlights for the quarter include:

• Net sales of $334.6 million, an 11% increase as compared to $302.4 million for the same period in 2006.
• Fully diluted earnings per share of $0.48 on 68.3 million shares as compared to $0.33 on 70.1 million shares in 2006. This represents a 45% increase in diluted earnings per share.
• Fully diluted earnings per share for the first quarter of 2007 include $0.01 of after-tax charges for gross margin improvement initiatives announced in November, 2006. Also, the first quarter of 2006 includes $0.01 of after-tax charges for the integration of Top-Flite operations. Excluding these charges, the Company’s pro forma fully diluted earnings per share for the first quarter of 2007 would have increased 44% to $0.49, as compared to pro forma fully diluted earnings per share of $0.34 for the first quarter of 2006.

“We are pleased with our results for the first quarter and the initial consumer acceptance of our new products this year,” commented George Fellows, President and CEO. “Our efforts to improve our product development process and supply chain along with gross margin improvement initiatives are beginning to deliver positive operating results.”

“While cautiously optimistic given our first quarter results,” continued Mr. Fellows, “it is important to remember that it is very early in the year. In fact, the second quarter is the real start of the golf season in many regions, and when consumer purchases hit their peak. Accordingly, our focus is to support our retailers during the peak season and deliver products to them and our consumers as quickly as possible. Having said this, we are raising our full year estimates to reflect the positive results of the first quarter, balanced with the fact that a majority of the year still remains.”

Business Outlook

The Company estimates that its full year 2007 net sales will be in the range of $1.045 to $1.065 billion compared to the previous estimate of $1.035 to $1.055 billion and that its 2007 full year pro forma fully diluted earnings per share will be in the range of $0.72 to $0.82 on an estimated 70 million shares compared to $0.66 to $0.76 on 68 million shares. Pro forma earnings exclude charges related to the Company’s gross margin improvement initiatives, currently estimated at $0.08 per share for 2007, but include charges related to employee equity-based compensation under FAS 123R.

For more details, including pro forma reconciliations to assist in year-over-year comparison, please see the attached “Supplemental Financial Information.”

The Company will be holding a conference call at 2:00 p.m. PDT today. The call will be broadcast live over the Internet and can be accessed at www.callawaygolf.com. To listen to the call, please go to the website at least 15 minutes before the call to register and for instructions on how to access the broadcast. A replay of the conference call will be available approximately two hours after the conclusion, and will remain available through 9:00 p.m. PDT on Thursday, May 10, 2007. The replay may be accessed through the Internet at www.callawaygolf.com or by telephone by calling 1-800-475-6701 toll free for calls originating within the United States or 320-365-3844 for International calls. The replay pass code is 871645.

Disclaimer: Statements used in this press release that relate to future plans, events, financial results, performance or prospects, including statements relating to estimated sales and earnings for 2007, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These estimates and statements are based upon current information and expectations. Investors should understand that it is very difficult to forecast sales of the Company’s products as a substantial portion of the Company’s sales each year is derived from the sale of new products. Accurately estimating the Company’s sales (and therefore earnings) each year is therefore based upon various unknowns including consumer acceptance of the Company’s new products as well as future consumer discretionary purchasing behavior. Actual results may differ materially from those estimated or anticipated as a result of these unknowns or as a result of certain risks and uncertainties, including but not limited to, delays, difficulties or increased costs associated with the implementation of the Company’s planned gross margin initiatives, the re-launch of the Top-Flite brand or the implementation of future initiatives; market acceptance of current and future products; adverse market and economic conditions; adverse weather conditions and seasonality; any rule changes or other actions taken by the USGA or other golf association that could have an adverse impact upon demand or supply of the Company’s products; a decrease in participation levels in golf; and the effect of terrorist activity, armed conflict, natural disasters or pandemic diseases on the economy generally, on the level of demand for the Company's products or on the Company's ability to manage its supply and delivery logistics in such an environment. For additional information concerning these and other risks and uncertainties that could affect these statements and the Company’s business, see Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, as well as other risks and uncertainties detailed from time to time in the Company’s reports on Forms 10-K, 10-Q and 8-K subsequently filed from time to time with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Regulation G: The financial results reported in this press release have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition to the GAAP results, the Company has also provided additional information concerning its results, which includes certain financial measures not prepared in accordance with GAAP. The non-GAAP financial measures included in this press release exclude charges associated with the integration of the Callaway Golf Company and Top-Flite Golf Company operations and charges related to the gross margin initiatives. These non-GAAP financial measures should not be considered a substitute for any measure derived in accordance with GAAP. These non-GAAP financial measures may also be inconsistent with the manner in which similar measures are derived or used by other companies. Management believes that the presentation of such non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provides additional useful information concerning the Company’s operations without these charges. The Company has provided reconciling information in the text of this press release and in the supplemental financial information attached to this release.

About Callaway Golf

Through an unwavering commitment to innovation, Callaway Golf Company creates products and services designed to make every golfer a better golfer. 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®, Odyssey®, Top-Flite®, and Ben Hogan® brands in more than 110 countries worldwide. For more information please visit www.callawaygolf.com.