Altius “Elevate Your Game”

BCLM Consulting Thursday, October 22

U.S. Golf Ball Market Trends

Year

Total Equipment incl balls (millions, USD)

% change vs. prior year

Golf Balls (millions, USD)

% change vs. prior year

2007 2911 552

2008 2752 -5.50% 536 -2.00%

2009 2433 -11.60% 495 -7.60%

2010 2384 -2.00% 479 -3.20%

2011 2414 1.30% 464 -3.10%

2012 2628 8.90% 483 4.10%

Effects of Industry Trends on Altius/CompetitorsGolf Ball Market Share by Manufacturer (select data)

U.S. Retail unit sales 2008 2010 2012

Altius 38.00% 36.70% 35.10%

Primiera 14.20% 16.30% 17.10%

Bantam 16.30% 15.70% 14.70%

Carlsbad 9.30% 8.10% 8.30%

U.S. Retail dollar sales 2008 2010 2012

Altius 58.70% 56.80% 55.20%

Primiera 12.50% 13.20% 15.00%

Bantam 19.30% 18.50% 17.30%

Carlsbad 11.00% 10.50% 9.30%

Why have we seen a decline in the overall market?

Less people playing golf (31 million in 2003→ 26 million by 2012)

Shift in attitude in current generation of golfers

Why has Altius seen a decline in market share?

Retail Price of Golf Balls, Select ManufacturersAverage retail price per dozen balls Altius Primiera Bantam Carlsbad

PremiumVictor

TX Flight BCE Seraph$48 $44 $45 $45

Mid-Range Victor Aerial Merion Celeste$39 $35 $36 $36

Value X Arc Riviera Pegasus$27 $27 $25

Economy X Wing Canterbury Pegasus X$18 $21 $19

Failure to respond to

decline of golf players

Failure to Capture “Sweet Spot” of Market

Share

Why has Altius seen a decline in market share?

Weak presence in off-course channels

Altius share, dollar sales 2008 2010 2012

On-Course 68% 67.60% 67.50%

Off-Course 50.80% 47.90% 45.50%

Difference 17.20% 19.70% 22.00%Dollar sales by channel 2008 2010 2012

On-Course 46% 45.20% 44.20%

Off-Course 54.10% 54.80% 55.80%

Difference 8.10% 9.60% 11.60%

Exhibit 2: Golf Ball Market Share by Manufacturer and Channel

So what...How does Altius respond?

Option 1Maintain Status

Quo

Option 2Implement Altius

“Elevate” Strategy

Option 3Implement

Revised Altius “Elevate” Strategy

Option 1: Maintain Status Quo

StrengthsBrand equity for Altius flagship

Victor TX

High Manufacturer Gross Margin Percentage

Emulation strategy appeals to loyalists

Option 1: Maintain Status Quo

$35 million advertising budget allocated to Victor TX Prestige Line

Low Retailer Gross Margin

Disregards clear golf ball “Sweet Spot” for competitors

Weaknesses

Option 1: Maintain Status QuoStrategy effective through recession

Recession led to change in market

Altius must respond to this change in order to remain competitive

Conclusion

Option 2: Implement Altius “Elevate” Strategy

Strengths Entry into “Value” price point of the market

Increase off-course retailer gross margin

from 15% to 20%, equal to competitors

Nonconforming option facilitates accessibility

Non-conforming ball may damage prestige of brand, USGA sponsorship and association

Inefficient utilization of advertising budget (maintaining $35 million allocation to Victor TX only)

Weaknesses for Option 2

Option 2: ConclusionLegitimacy

tarnished by risks

Ineffective advertising budget allocation given changing market

Altius accessible + affordable

Option 3: Implement Revised Altius “Elevate” StrategyThree Revisions

1. Eliminate Mid-Range Victor Line

2. Eliminate Nonconforming Option

3. Re-appropriate Advertising Budget to better support the

Elevate Line (suggested $10 million)

Elevate

Revised Altius “Elevate” Strategy Strengths

Enhanced Promotion of value-priced Elevate line

Reduction in Manufacturing Costs Minimize Risk of Damaging Brand

WeaknessesReduced promotion of flagship Victor TX lineAbsence of non-conforming golf ball

Our Recommendation: By the Numbers

Gross Profits 2012 (in millions)

Altius 158.63

Primiera 33.3

Bantam 38.44

Carlsbad 20.66

Revenues 2012 (in millions)

Altius 226.64

Primiera 57.96

Bantam 66.85

Carlsbad 35.94

Manufacturer Gross Margin 2012

Altius 70%

Primiera 55-60%

Bantam 55-60%

Carlsbad 55-60%

Our Recommendation:By the

Numbers“Elevate” line has a 64.1% manufacturer gross margin

Amount reappropriated from marketing of Victor TX can be applied to marketing and/or funding of Elevate line

Amount saved from removal of Victor line can also serve the aforementioned purpose

Our Recommendation: By the Market Research

35% of golfers who did not buy Altius cited high prices as a deterrent to buying

45% of lapsed golfers and 53% of non-golfers cited high costs as the top reason for not playing golf at all

Golfers who used other balls still viewed both Altius’s brand and product line positively

Our Recommendation: Option 3Implement Revised

Altius “Elevate” Strategy

Makes the sport more accessible to an evolving generation of golfers

Upholds high profitability and manufacturer gross margin percentages

Preserves the brand equity for which Altius is known

Creates a system in which golfers are encouraged to participate in the “graduating” experience of Altius

Altius

Elevate Your Game.