CARLSBAD, Calif. -- The year 2007 was a very good one for Callaway Golf Company (NYSE:ELY), as the company has announced record sales of $1.125 billion, compared to $1.018 billion for the same period in 2006.

The company also announced fully diluted earnings per share of $0.81 on 67.5 million shares, an increase of 138% compared to fully diluted earnings per share of $0.34 on 68.5 million shares in 2006.

Gross profit for 2007 was $493.2 million or 44% of net sales compared to $398.1 million or 39% of net sales a year ago. The increase was primarily the result of gross margin improvement initiatives announced in 2006 as well as an increased mix of higher margin drivers and X-20 irons.

"We have made significant progress improving operations and profitability in 2007," said President and CEO George Fellows. "Specifically, we were able to re-gain woods market share, re-launch the Top-Flite Brand with the successful introduction of the D2 golf ball, and grow our accessories business. In addition, we made significant progress in improving profitability, increasing our gross margins by five percentage points, which contributed to a $135 million increase in cash from operations."

Operating expenses for 2007 were $403.0 million or 36% of net sales compared to $361.0 million or 35% of net sales in 2006. The increase was due primarily to higher employee annual incentive compensation expense related to the Company's significantly improved financial performance as well as an increase in marketing expense to support the Top-Flite re-launch.

For the fourth quarter of 2007, net sales were $174.4 million, a 3% decrease compared to $179.9 million for the same period in 2006, which included significantly more sales from new product launches. That resulted in a loss per share of $0.25 on 63.8 million shares, compared to a loss per share of $0.15 on 67.0 million shares in the fourth quarter of 2006.

Gross profit for the fourth quarter of 2007 was $63.4 million or 36% of net sales compared to $58.8 million or 33% of net sales for the fourth quarter of 2006. Operating expenses for the fourth quarter of 2007 were $92.0 million compared to $79.9 million for the same period in 2006.

"While pleased with our progress so far, we continue to focus on improvement," said Fellows. "We have a strong line-up of 2008 products including our recently announced I-Mix driver with its state-of-the-art technology aimed at providing the best and most flexible performance possible for our consumers.

"Another area we are targeting is supply chain management, where we've made tremendous progress in 2007 but believe there is still room to drive efficiencies. With this strong portfolio of products along with improved operations, we feel well positioned to sustain the momentum we enjoyed in 2007."

The company estimates that its full-year 2008 net sales will be in the range of $1.145 to $1.165 billion, and that its 2008 full-year pro forma fully diluted earnings per share will be in the range of $1.08 to $1.18, which represents an estimated increase of 21% to 33%.

Copyright 2008 PGA.com. All rights reserved.