Callaway Golf Company Releases Preliminary Third Quarter 2007 Results

Callaway Golf Company (NYSE:ELY) today announced that, based on
current information, the Company estimates net sales for the third
quarter ended September 30, 2007 of approximately $236 million, a
year-over-year increase of 22%. Management also estimates that based
on these sales levels, earnings per diluted share will range between
$0.00 and $0.02, including non-cash employee equity-based compensation
charges associated with FAS 123R and including a gain of approximately
$0.03 per diluted share related to the sale of a building. These
results are based on approximately 67.6 million diluted shares
outstanding and include after-tax charges of approximately $0.04 per
diluted share related to the gross margin improvement initiatives
announced in November 2006. Excluding charges for these gross margin
initiatives, pro forma earnings per diluted share are estimated to
range from $0.04 to $0.06.

For the third quarter of 2006, the Company reported net sales of
$194 million and a loss per share of $0.18 (on 67.0 million shares),
including non-cash FAS 123R charges. 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. Excluding these charges, pro forma loss per
share was $0.16.

Business Update

"We are very pleased with our preliminary third quarter results as
our business continues to exceed our expectations," commented George
Fellows, President and CEO of Callaway Golf. "Consumer and retail
demand for our products has remained strong, resulting in record sales
for the first nine months of 2007. We also continue to realize
significant benefits from our November 2006 gross margin improvement
initiatives and inventory reduction initiatives. For the first nine
months of 2007, our estimated gross margins as a percent of sales has
increased 5 percentage points compared to 2006 and our estimated
inventory at the end of September decreased $28 million compared to
last year, in line with our recent forecasts."

Details of Third Quarter Preliminary Results

Sales

The estimated increase in sales for the third quarter is
attributable to strong sales across the woods, irons, golf balls, and
accessories categories, with a slight decline in putters.

Gross Margins

The Company estimates its gross margins as a percentage of net
sales at approximately 40% for the third quarter. Excluding charges
related to gross margin improvement initiatives, the Company estimates
its pro forma gross margins as a percentage of net sales at
approximately 42%. In the third quarter of 2006, the Company's gross
margins were 35% and excluding integration and restructuring charges
were 36%. The improvement in pro forma gross margins can be attributed
to a positive contribution from this year's implementation of gross
margin improvement initiatives as well as an increased mix of sales of
higher margin products, which was driven by the continued success of
the Company's Fusion Drivers and X-20 Irons.

Operating Expenses

The Company estimates that its operating expenses for the quarter
will be approximately $93 million (40% of net sales), an increase of
approximately $8 million when compared to last year's third quarter of
$85 million (44% of net sales). The dollar increase is due to higher
selling expense associated with the higher sales, increases in
marketing expense, an increase in international expense due to the
weaker dollar, and increased expense for annual employee incentive
compensation associated with the improved year over year operating
results, partially offset by the gain recognized on the sale of a
building.

Business Outlook

The Company is raising the full year forecast with sales estimated
to range from $1.095 to $1.105 billion and pro-forma fully diluted
earnings per share of $0.85 to $0.89 (on an estimated 68.3 million
shares). This compares to a previous forecast of sales ranging from
$1.070 to $1.080 billion and pro-forma fully diluted earnings per
share of $0.78 to $0.84 (on an estimated 70 million shares). Pro forma
earnings exclude charges related to gross margin initiatives,
currently estimated at $0.08 per share for 2007, but include employee
equity-based compensation charges under FAS 123R.

"We are raising our annual forecast for the third time this year
due to the continued sales and margin momentum through the first nine
months," commented Brad Holiday, Chief Financial Officer. "Our
forecast for the balance of the year takes into consideration limited
new product introductions during the fourth quarter compared to
approximately $30 million in 2006. We have also taken into
consideration the fact that product margins are typically lower during
the last quarter as we move our end of life product through the retail
channels. Additionally, our strong earnings have generated a
significant improvement in our cash flow this year, a portion of which
we have used to purchase $75 million of our outstanding stock during
the third quarter."

Conference Call

The Company will release actual third quarter financial results on
November 1, 2007. A conference call and webcast will also take place
at that time.

Disclaimer: Investors should be aware that the Company has not yet
finalized its results for the third quarter of 2007 and that the
Company's "preliminary" estimates of net sales, gross margins,
operating expenses and earnings for the third quarter reflect
management's estimates based upon the information available at the
time made. These estimates could differ materially from the Company's
actual results if the information on which the estimates were based
ultimately proves to be incorrect or incomplete. In addition,
statements used in this press release that relate to future plans,
events, financial results, performance or prospects, including
statements relating to estimated future sales and earnings, 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 majority 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 and demand for 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 other risks
and uncertainties, including delays, difficulties or increased costs
in the supply of components needed to manufacture the Company's
products, in manufacturing the Company's products, or in connection
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 preliminary 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, charges related to the September 2005
restructuring initiatives, and charges related to the Company's 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 for 2006 in the supplemental financial
information contained in the Company's August 1, 2007 press release,
which is available in the Investor Relations section of the Company's
website at www.callawaygolf.com.

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(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.