MANUFACTURER / SUPPLIER MANUFACTURER / SUPPLIER WORKSHOPWORKSHOPDave BranonDave BranonFormer Chairman and CEO Former Chairman and CEO SlazengerSlazenger

Manufacturers Immersed in Manufacturers Immersed in Virulently Oversupplied, Flat Virulently Oversupplied, Flat MarketMarket• Awesome margin pressures – Awesome margin pressures –

volume generation with sharp decreases in volume generation with sharp decreases in average-selling prices (10-15% reductions average-selling prices (10-15% reductions 2002 vs. 2001 clubs/balls) and aggressive 2002 vs. 2001 clubs/balls) and aggressive but low-margin expansion into new distribution but low-margin expansion into new distribution channels (mass-merchants, etc.)channels (mass-merchants, etc.)

– Publicly traded companies under vicious Publicly traded companies under vicious growth mandates to sustain capital-streamgrowth mandates to sustain capital-stream

Manufacturers Immersed in Manufacturers Immersed in Virulently Oversupplied, Flat Virulently Oversupplied, Flat MarketMarket• Marketing costs have spiraled out of control - media Marketing costs have spiraled out of control - media

expense, endorsement contracts, high-cost expense, endorsement contracts, high-cost maintenance of dedicated sales forces, mark-down maintenance of dedicated sales forces, mark-down provisions, point-of-sale demands, etc.provisions, point-of-sale demands, etc.

– New 1999 brand entries forced 58% surge in golf New 1999 brand entries forced 58% surge in golf ball television / print spending to ball television / print spending to $70-million vicinity$70-million vicinity

– 2001 endorsement budgets topped 2001 endorsement budgets topped $400-million$400-million

– PGA trade show costs in $3-4,000,000 range PGA trade show costs in $3-4,000,000 range for manufacturersfor manufacturers

Manufacturers Immersed in Manufacturers Immersed in Virulently Oversupplied, Flat Virulently Oversupplied, Flat MarketMarket• Product life-cycles almost ridiculously Product life-cycles almost ridiculously

narrowed which exerts enormous (and narrowed which exerts enormous (and desperate) acceleration of new product desperate) acceleration of new product introductions with concomitant consumer introductions with concomitant consumer confusion and cynicism, profit-eroding trade confusion and cynicism, profit-eroding trade make-goods and / or returns, and production make-goods and / or returns, and production retro-fit and upgrade expendituresretro-fit and upgrade expenditures

– Titleist spent $75-million – Titleist spent $75-million – urethane capacityurethane capacity

Manufacturers Immersed in Manufacturers Immersed in Virulently Oversupplied, Flat Virulently Oversupplied, Flat MarketMarket• Consolidations dictating future portfolio impact: Consolidations dictating future portfolio impact:

Titleist / FootJoy / Cobra…Spalding / Etonic / Titleist / FootJoy / Cobra…Spalding / Etonic / Hogan…Taylor / Maxfli / Adidas…Callaway / Hogan…Taylor / Maxfli / Adidas…Callaway / Odyessey / Ashworth license, etc.Odyessey / Ashworth license, etc.

• Tightening retail market compelling customer-Tightening retail market compelling customer-service demands which force bloated working-service demands which force bloated working-capital reserves to comply with quick-turnaround capital reserves to comply with quick-turnaround and order-fulfillment requirementsand order-fulfillment requirements

• Contracted-and-paid retail-chain alliances exclude Contracted-and-paid retail-chain alliances exclude small and mid-tier suppliers and lessen consumer small and mid-tier suppliers and lessen consumer exposure incidenceexposure incidence

For Consideration:For Consideration:• How to raise funds down and across the How to raise funds down and across the

value-chain. In effect, all who benefit from growth must value-chain. In effect, all who benefit from growth must contribute to growthcontribute to growth

• All parties required and/or requested to contribute must All parties required and/or requested to contribute must have a seat-at-the-table…such as retailers, broadcast have a seat-at-the-table…such as retailers, broadcast media, etc.media, etc.

• Moving 20/20 from altruistic facilitation to funded Moving 20/20 from altruistic facilitation to funded activation implies structure and accountability…how and activation implies structure and accountability…how and what?what?

• Absorption of and/or coordination with other initiatives and Absorption of and/or coordination with other initiatives and organizations…efficiency of funds utilization and avoidance organizations…efficiency of funds utilization and avoidance of duplicationof duplication

Discussion:Discussion:

• Research…is enough known to productively Research…is enough known to productively proceed or do we risk paralysis by analysis?proceed or do we risk paralysis by analysis?

• Prospect-targets (and defined objectives…what Prospect-targets (and defined objectives…what gets measured gets done)gets measured gets done)

• Scope…national / regional / localScope…national / regional / local

• Programs / Promotions…growth-templatesPrograms / Promotions…growth-templates

• Communication parameters and channelsCommunication parameters and channels

• Special Issues…political, legal, tax, environmental, Special Issues…political, legal, tax, environmental, educational, etc.educational, etc.

Source of FundsSource of Funds

$.01$.01 $.02$.02$.03$.03

1.1. Course Owners/Course Owners/ Clubs (rds.) Clubs (rds.) 570 million570 million 5,7005,700 11,40011,40017,10017,100

2.2. Manufacturers: Manufacturers: Golf Balls (dz.)Golf Balls (dz.) 59 million59 million 590590 1,1801,1801,7701,770

Golf Clubs (pcs.)Golf Clubs (pcs.)20 million20 million 200200 400400600600

Footwear (prs.)Footwear (prs.)4.5 million4.5 million 4545 9090135135

Gloves (dz.)Gloves (dz.) 1.5 million1.5 million 1515 30304545

Apparel (ea.)Apparel (ea.) 35 million35 million 350350 7007001,0501,050

1,2001,200 2,4002,4003,600 3,600

Cents Per Sale and/or ServiceCents Per Sale and/or Service

Contributions (000)Contributions (000)

Source of FundsSource of Funds

$.01$.01 $.02$.02 $.03$.03

3.3. Suppliers to Mfgs. (various units) Suppliers to Mfgs. (various units) 200 million200 million 2,0002,000 4,0004,000 6,0006,000

4.4. Media: Broadcast (viewers) Media: Broadcast (viewers) 96 million96 million 960960 1,9201,920 2,8802,880 Print (subscribers) Print (subscribers) 5 million5 million 5050 100100 150150

5.5. Professional Tours (tickets sold)Professional Tours (tickets sold) 7.6 million7.6 million 7676 152152 228228

6.6. PGA (paid lessons)PGA (paid lessons) 6.9 million6.9 million 6969 138138 207207

7.7. USGA (members/dues)USGA (members/dues) .8 million.8 million 88 1616 2424

8.8. Retailers: On-Course (units sold)Retailers: On-Course (units sold) 25 million25 million 250250 500500 750750 Off-Course (units sold) Off-Course (units sold) 60 million60 million 600600 1,2001,200 1,8001,800 Sporting Goods / Mass Sporting Goods / Mass 35 million35 million 350350 700700 1,0501,050

1,2001,200 2,4002,4003,6003,600

Cents Per Sale and/or ServiceCents Per Sale and/or Service

Contributions (000)Contributions (000)

Source of FundsSource of Funds

Total Funds RaisedTotal Funds Raised @ $0.1@ $0.1$11,263,00$11,263,00

@ $0.2@ $0.2$22,526,000$22,526,000

@ $0.3@ $0.3$33,789,00$33,789,00

Cents Per Sale and/or ServiceCents Per Sale and/or Service

PLUS Contributions from Alternative Facilities (5000+) PLUS Contributions from Alternative Facilities (5000+) Rounds and Buckets!Rounds and Buckets!

Consumer Focus-Group Consumer Focus-Group ResearchResearch

““I used to patronize the shop but now it’s just a bunch I used to patronize the shop but now it’s just a bunch of kids who don’t know their ass from a hole in of kids who don’t know their ass from a hole in the ground.”the ground.”

““The one thing it always had was friendly service but The one thing it always had was friendly service but they are so understaffed now I guess they don’t have they are so understaffed now I guess they don’t have the time.”the time.”

““The place is sorta like a factory…move ‘em in out.”The place is sorta like a factory…move ‘em in out.”

““The pro shop used to be a good place to buy stuff but The pro shop used to be a good place to buy stuff but they don’t have the merchandise or the service they don’t have the merchandise or the service anymore so I go to Edwin Watts which is like a big, anymore so I go to Edwin Watts which is like a big, adult adult toy store.”toy store.”

Slazenger Golf-USASlazenger Golf-USAHigh Frequency Player…Comments Referring to High Frequency Player…Comments Referring to On-Course Pro ShopsOn-Course Pro Shops

Consumer Focus-Group Consumer Focus-Group ResearchResearch

““When the pro owned the place (shop) he’d give When the pro owned the place (shop) he’d give you a free lesson or like a 10-minute checkup…but you a free lesson or like a 10-minute checkup…but he’s kinda lost his interest it seems like.”he’s kinda lost his interest it seems like.”

““What the hell is some 18-year old kid working What the hell is some 18-year old kid working part-time gonna do for my game?”part-time gonna do for my game?”

““They used to serve coffee and donuts and we’d They used to serve coffee and donuts and we’d hang around and shoot the….but now it’s grab the hang around and shoot the….but now it’s grab the scorecard and go.”scorecard and go.”

““To me it’s a game. To them it’s a business…which, To me it’s a game. To them it’s a business…which, I know, it is but I miss the old atmosphere.”I know, it is but I miss the old atmosphere.”

Slazenger Golf-USASlazenger Golf-USAHigh Frequency Player…Comments Referring to High Frequency Player…Comments Referring to On-Course Pro ShopsOn-Course Pro Shops