x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
DELAWARE
|
75-2320087
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
2801
E. Plano Pkwy, Plano, Texas
|
75074
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(302)
427-5892
|
(Registrant's
telephone number, including area code)
|
Securities
registered pursuant to Section 12(b) of the Act:
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
|
Common
Stock $.001 Par Value
|
PART
I
|
||||||
Item
1.
|
Business
|
Page
3
|
||||
Item
1A.
|
Risk
Factors
|
Page
11
|
||||
Item
2.
|
Properties
|
Page
18
|
||||
Item
3.
|
Legal
Proceedings
|
Page
18
|
||||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
N/A
|
||||
PART
II
|
||||||
Item
5.
|
Market
for Registrant's Common Equity and Related Stockholders Matters and Issuer
Purchases of Equity Securities
|
Page
21
|
||||
Item
6.
|
Selected
Financial Data
|
Page
23
|
||||
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
Page
24
|
||||
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Page
32
|
||||
Item
8.
|
Financial
Statements and Supplementary Data
|
Page
32
|
||||
Item
9A(T).
|
Controls
and Procedures
|
Page
33
|
||||
PART
III
|
||||||
Item
10
|
Directors
and Executive Officers of the Registrant
|
Page
34
|
||||
Item
11
|
Executive
Compensation
|
Page
34
|
||||
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Page
34
|
||||
Item
13
|
Certain
Relationships and Related Transactions
|
Page
34
|
||||
Item
14
|
Principal
Accounting Fees and Services
|
Page
34
|
||||
PART
IV
|
||||||
Item
15
|
Exhibits
and Financial Statement Schedules
|
Page
35
|
—
|
The
ability to maintain historical growth in revenue and
profitability;
|
—
|
Product
development difficulties;
|
—
|
Product
approval and conformity to governing body
regulations;
|
—
|
Assembly
difficulties;
|
—
|
Product
introductions;
|
—
|
Patent
infringement risks;
|
—
|
Uncertainty
of the ability to protect intellectual property
rights;
|
—
|
Market
demand and acceptance of products;
|
—
|
The
impact of changing economic
conditions;
|
—
|
The
global economic uncertainty;
|
—
|
The
future market for our capital
stock;
|
—
|
The
uncertainty in the debt and equity
markets;
|
—
|
The
success of our marketing strategy;
|
—
|
The
success of our tour strategy;
|
—
|
Our
dependence on one supplier for a majority of our inventory
products;
|
—
|
Our
dependence on suppliers who are concentrated in one geographic
region;
|
—
|
Our
dependence on a limited number of
customers;
|
—
|
Business
conditions in the golf industry;
|
—
|
Solvency
of, and reliance on third parties, including suppliers, and freight
transporters;
|
—
|
The
actions of competitors, including pricing, advertising and product
development risks concerning future
technology;
|
—
|
Investor
audience, interest or valuation;
|
—
|
The
management of sales channels and
re-distribution;
|
—
|
The
uncertainty of the results of pending
litigation;
|
—
|
The
adequacy of the allowance for doubtful accounts, obsolete inventory and
warranty reserves;
|
—
|
The
risk associated with events that may prove unrecoverable under existing
insurance policies; and
|
—
|
The
impact of operational restructuring on operating results and liquidity and
one-time events and other factors detailed under Risk Factors, Item
1A.
|
2008
|
2007
|
2006
|
||||||||||
Irons
|
62.5 | % | 66.9 | % | 67.9 | % | ||||||
Fairway
Woods
|
24.4 | 19.5 | 19.5 | |||||||||
Drivers
|
12.3 | 11.1 | 9.6 | |||||||||
Wedges
and Other
|
0.8 | 2.5 | 3.0 | |||||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % |
2008
|
2007
|
2006
|
||||||||||||||||||||||
Domestic
|
$ | 73,375,000 | 80.2 | % | $ | 78,623,000 | 83.1 | % | $ | 63,016,000 | 82.9 | % | ||||||||||||
Foreign
|
18,076,000 | 19.8 | 15,981,000 | 16.9 | 13,014,000 | 17.1 | ||||||||||||||||||
Total
|
$ | 91,451,000 | 100.0 | % | $ | 94,604,000 | 100.0 | % | $ | 76,030,000 | 100.0 | % |
High
|
Low
|
|||||||
2008
|
||||||||
First
Quarter
|
$ | 10.20 | $ | 8.08 | ||||
Second
Quarter
|
8.80 | 5.20 | ||||||
Third
Quarter
|
7.42 | 4.40 | ||||||
Fourth
Quarter
|
5.08 | 2.65 | ||||||
2007
|
||||||||
First
Quarter
|
$ | 9.00 | $ | 7.00 | ||||
Second
Quarter
|
9.64 | 7.44 | ||||||
Third
Quarter
|
8.80 | 7.64 | ||||||
Fourth
Quarter
|
9.16 | 7.60 |
Plan
Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
(a)
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and
rights
(b)
|
Number
of securities
remaining
available for
future
issuance under equity
compensation
plans
(excluding
securities
reflected
in column (a))
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
892,982 | $ | 0.19 | 891,160 | ||||||||
Equity
compensation plans not approved by security holders
|
— | n/a | — | |||||||||
Total
|
892,982 | $ | 0.19 | 891,160 |
Company
|
December
2003
|
December
2004
|
December
2005
|
December
2006
|
December
2007
|
December
2008
|
||||||||||||||||||
Adams
Golf, Inc.
|
100.00 | 197.15 | 169.00 | 277.43 | 316.90 | 105.63 | ||||||||||||||||||
S&P
Small Cap 600
|
100.00 | 122.65 | 132.07 | 152.03 | 151.59 | 104.47 | ||||||||||||||||||
Peer
Group A (1)
|
100.00 | 91.86 | 98.64 | 99.38 | 122.65 | 64.12 |
(1)
|
Peer
Group consists of Callaway Golf Company, Aldila, Inc. and Cutter &
Buck Inc.
|
Total
Number of
Shares
Repurchased
(1)
|
Average
Price
Paid
per
Share
|
Total
Number of
shares
Purchased as a
Part
of Publically
Announced
Plans
|
Maximum
Number
of
Shares that May
yet
be Purchased
Under
the Plan
|
|||||||||||||
October
1 to October 31, 2008
|
— | — | — | — | ||||||||||||
November
1 to November 30, 2008
|
6,794 | $ | 3.51 | — | — | |||||||||||
December
1 to December 31, 2008
|
9,500 | $ | 2.90 | — | — | |||||||||||
Total
|
16,294 | $ | 3.15 | — | — |
Year
Ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||||||
Consolidated
Statements of Operations Data:
|
||||||||||||||||||||
Net
sales
|
$ | 91,451 | $ | 94,604 | $ | 76,030 | $ | 56,424 | $ | 56,762 | ||||||||||
Operating
income / (loss)
|
(1,422 | ) | 4,106 | 3,440 | 2,045 | 3,100 | ||||||||||||||
Net
income / (loss)
|
$ | (1,459 | ) | $ | 9,401 | $ | 9,000 | $ | 3,240 | $ | 3,078 | |||||||||
Income / (loss) per common share (1) : | ||||||||||||||||||||
Basic
|
$ | (0.23 | ) | $ | 1.54 | $ | 1.54 | $ | 0.57 | $ | 0.55 | |||||||||
Diluted
|
$ | (0.23 | ) | $ | 1.32 | $ | 1.24 | $ | 0.47 | $ | 0.47 | |||||||||
Weighted
average common shares (1):
|
||||||||||||||||||||
Basic
|
6,413 | 6,095 | 5,830 | 5,684 | 5,639 | |||||||||||||||
Diluted
|
7,368 | 7,134 | 7,232 | 6,951 | 6,536 | |||||||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||||||
Total
assets
|
$ | 67,056 | $ | 71,186 | $ | 55,603 | $ | 44,102 | $ | 38,378 | ||||||||||
Total
debt (including current maturities)
|
— | — | — | — | — | |||||||||||||||
Stockholders'
equity
|
$ | 50,314 | $ | 53,299 | $ | 41,869 | $ | 32,127 | $ | 26,438 |
(1)
|
See
Note 1 (k) of Notes to Consolidated Financial Statements for information
concerning the calculation of income / (loss) per common share and
weighted average common shares
outstanding.
|
—
|
Daily
sales by product group
|
—
|
Daily
sales by geography
|
—
|
Sales
by customer channel
|
—
|
Gross
margin performance
|
—
|
Market
share by product at retail
|
—
|
Inventory
share by product at retail
|
—
|
Product
returns (dollars and percentage of
sales)
|
—
|
Product
credits (dollars and percentage of
sales)
|
—
|
Units
shipped per man-hour worked
|
—
|
Orders
shipped on time
|
—
|
Expenses
by department
|
—
|
Inbound
and outbound freight cost by mode (dollars and dollars per
unit)
|
—
|
Inbound
freight utilization by mode (ocean vs
air)
|
—
|
Vendor
purchase order cycle time
|
—
|
Days
of sales outstanding
|
—
|
Days
of inventory (at cost)
|
—
|
Days
of payables outstanding
|
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
of goods sold
|
59.0 | 57.7 | 55.6 | |||||||||
Gross
profit
|
41.0 | 42.3 | 44.4 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development expenses
|
4.1 | 3.9 | 3.4 | |||||||||
Selling
and marketing expenses
|
28.6 | 25.1 | 26.0 | |||||||||
General
and administrative expenses
|
9.8 | 8.9 | 10.4 | |||||||||
Total
operating expenses
|
42.5 | 37.9 | 39.8 | |||||||||
Operating
income / (loss)
|
(1.5 | ) | 4.4 | 4.6 | ||||||||
Interest
income, net
|
0.0 | 0.3 | 0.2 | |||||||||
Other
income / (loss), net
|
(0.1 | ) | 0.2 | — | ||||||||
Income
before income taxes
|
(1.6 | ) | 4.9 | 4.8 | ||||||||
Income
tax expense (benefit)
|
0.0 | (5.0 | ) | (7.0 | ) | |||||||
Net
income / (loss)
|
(1.6 | )% | 9.9 | % | 11.8 | % |
Contractual
Obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
|||||||||||||||
Long-term
Debt Obligations
|
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Capital
Lease Obligations
|
32,824 | 14,616 | 18,208 | — | — | |||||||||||||||
Operating
Lease Obligations
|
2,556,165 | 640,722 | 1,198,958 | 716,485 | — | |||||||||||||||
Purchase
Obligations
|
— | — | — | — | — | |||||||||||||||
Other
Long-term Liabilities Reflected on the Registrant's Balance sheet under
GAAP
|
— | — | — | — | — | |||||||||||||||
Total
|
$ | 2,588,989 | $ | 655,338 | $ | 1,217,166 | $ | 716,485 | — |
Item
|
Page
|
|||
Index
to Consolidated Financial Statements and Related Financial Statement
Schedule
|
F-1
|
|||
Report
of Independent Registered Public Accounting Firm
|
F-2 - F-3
|
|||
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-4
|
|||
Consolidated
Statements of Operations for the Years ended December 31, 2008, 2007 and
2006
|
F-5
|
|||
Consolidated
Statements of Stockholders' Equity for the Years ended December 31, 2008,
2007 and 2006
|
F-6 - F-7
|
|||
Consolidated
Statements of Cash Flows for the Years ended December 31, 2008, 2007 and
2006
|
F-8
|
|||
Notes
to Consolidated Financial Statements
|
F-9 - F-26
|
|||
|
||||
(2) Financial
Statement Schedule
|
||||
|
||||
Our
financial statement schedule for the years ended December 31, 2008, 2007
and 2006 is filed as part of this Annual Report and should be read in
conjunction with our Consolidated Financial
Statements.
|
||||
|
||||
Schedule
II - Valuation and Qualifying Accounts
|
S-1
|
Exhibit
|
Description
|
Location
|
||
Exhibit
3.1
|
Amended
and Restated Certificate of Incorporation
|
Incorporated
by reference to Form S-1 File No. 333-51715 (Exhibit
3.1)
|
||
Exhibit
3.2
|
Certificate
of Amendment to the Restated Certificate of Incorporation filed on
February 14, 2008
|
Incorporated
by reference to 2007 Form 10-K (Exhibit 3.2)
|
||
Exhibit
3.3
|
Amended
and Restated By-laws
|
Incorporated
by reference to Form S-1 File No. 333-51715 (Exhibit
3.2)
|
||
Exhibit
4.1
|
1998
Stock Incentive Plan of the Company dated February 26, 1998, as
amended
|
Incorporated
by reference to Form S-8 File No. 333-68129 (Exhibit
4.1)
|
||
Exhibit
4.2
|
1996
Stock Option Plan dated April 10, 1998
|
Incorporated
by reference to Form S-1 File No.333-51715 (Exhibit
4.2)
|
Exhibit
4.3
|
Adams
Golf, Ltd. 401(k) Retirement Plan
|
Incorporated
by reference to Form S-1 File No.333-51715 (Exhibit
4.3)
|
||
Exhibit
4.4
|
1999
Non-Employee Director Plan of Adams Golf, Inc.
|
Incorporated
by reference to 1999 Form 10-K (Exhibit 4.4)
|
||
Exhibit
4.5
|
1999
Stock Option Plan for Outside Consultants of Adams Golf,
Inc.
|
Incorporated
by reference to Form S-8 File No. 333-37320 (Exhibit
4.5)
|
||
Exhibit
4.6
|
2002
Stock Incentive Plan for Adams Golf, Inc.
|
Incorporated
by reference to Annex A of the 2002 Proxy Statement (Annex
A)
|
||
Exhibit
4.7
|
Form
of Option Agreement under the 2002 Stock Option Plan of Adams Golf,
Inc.
|
Incorporated
by reference to Form S-8 File No. 333-112622 (Exhibit
4.7)
|
||
Exhibit
10.1
|
Amendment
dated September 1, 2003 to the Commercial Lease Agreement dated April 6,
1998, between Jackson-Shaw Technology Center II and the
Company
|
Incorporated
by reference to 2003 Form 10-K (Exhibit 10.12)
|
||
Exhibit
10.2*
|
Golf
Consultant Agreement - Thomas S. Watson
|
Incorporated
by reference to 2004 Form 10-K (Exhibit 10.17)
|
||
Exhibit
10.3*
|
Asset
Purchase Agreement of Women’s Golf Unlimited
|
Incorporated
by reference to 2006 Form 10-K (Exhibit 10.11)
|
||
Exhibit
10.4
|
Change
of Control - Eric Logan
|
Incorporated
by reference to the Quarterly Report on From 10-Q for the quarter ended
June 30, 2007 (Exhibit 10.8)
|
||
Exhibit
10.5
|
Revolving
line of Credit between Adams Golf, Inc and Wachovia Bank, National
Association
|
Incorporated
by reference to the Report on From 8-K dated November 13, 2007 (Exhibit
10.1)
|
||
Exhibit
10.6*
|
Employment
Agreement - Oliver G. (Chip) Brewer
|
Incorporated
by reference to 2007 Form 10-K (Exhibit 10.8)
|
||
Exhibit
10.7
|
Commercial
Lease Agreement dated December 15, 2007, between MDN/JSC -II Limited and
the Company
|
Incorporated
by reference to 2007 Form 10-K (Exhibit 10.9)
|
||
Exhibit
10.8
|
Commercial
Lease Agreement dated April 10, 2008, between CLP Properties Texas, L.P.
and the Company
|
Incorporated
by reference to the Report on From 8-K dated April 15, 2008 (Exhibit
10.1)
|
||
Exhibit
10.9
|
Employment
Agreement - Byron (Barney) H. Adams
|
Incorporated
by reference to the Report on From 8-K dated January 12, 2009 (Exhibit
10.1)
|
||
Exhibit
21.1
|
Subsidiaries
of the Registrant
|
Included
in this filing
|
||
Exhibit
23.1
|
Consent
of KBA Group LLP
|
Included
in this filing
|
||
Exhibit
31.1
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Included
in this filing
|
Exhibit
31.2
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Included
in this filing
|
||
Exhibit
32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Included
in this
filing
|
ADAMS
GOLF, INC., a Delaware corporation
|
||
Date: March
11, 2009
|
By:
|
/S/ B.H. (BARNEY)
ADAMS
|
B.H.
(Barney) Adams, Chairman of the
Board
|
Date: March
11, 2009
|
By:
|
/S/ B.H. (BARNEY) ADAMS
|
B.H.
(Barney) Adams, Chairman of the Board
|
||
Date: March
11, 2009
|
By:
|
/S/ OLIVER G.
BREWER III
|
Oliver
G. (Chip) Brewer III
|
||
Chief
Executive Officer, President and Director
|
||
Date: March
11, 2009
|
By:
|
/S/ ERIC T. LOGAN
|
Eric
Logan
|
||
Chief
Financial Officer
|
||
(Principal
Financial Officer)
|
||
Date: March
11, 2009
|
By:
|
/S/ PAMELA J. HIGH
|
Pamela
J. High
|
||
Controller
|
||
(Principal
Accounting Officer)
|
||
Date: March
11, 2009
|
By:
|
/S/ MARK R. MULVOY
|
Mark
R. Mulvoy
|
||
Director
|
||
Date: March
11, 2009
|
By:
|
/S/ ROBERT D. ROGERS
|
Robert
D. Rogers
|
||
Director
|
||
Date: March
11, 2009
|
By:
|
/S/ RUSSELL L. FLEISCHER
|
Russell
L. Fleischer
|
||
Director
|
||
Date: March
11, 2009
|
By:
|
/S/ JOSEPH R. GREGORY
|
Joseph
R. Gregory
|
||
Director
|
||
Date: March
11, 2009
|
By:
|
/S/ JOHN M. GREGORY
|
John
M. Gregory
|
||
Director
|
Page
|
||
Consolidated
Financial Statements
|
||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
|
|
Consolidated
Statements of Operations for the Years ended December 31, 2008, 2007 and
2006
|
F-4
|
|
Consolidated
Statements of Stockholders' Equity for the Years ended December 31,
2008, 2007 and 2006
|
F-5
- F-6
|
|
Consolidated
Statements of Cash Flows for the Years ended December 31, 2008, 2007
and 2006
|
F-7
|
|
Notes
to Consolidated Financial Statements
|
F-8
- F-26
|
|
Financial Statement Schedule | ||
Our financial statement schedule for the years ended December 31, 2008, 2007 and 2006 is filed as part of this Report and should be read in conjunction with our Consolidated Financial Statements. | ||
Schedule
II – Valuation and Qualifying Accounts
|
S-1
|
/S/
KBA GROUP LLP
|
Dallas,
Texas
|
March
11, 2009
|
December 31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 5,960 | $ | 11,265 | ||||
Trade
receivables, net
|
14,743 | 18,009 | ||||||
Inventories,
net
|
33,611 | 28,745 | ||||||
Prepaid
expenses
|
908 | 743 | ||||||
Other
current assets
|
29 | 1,432 | ||||||
Total
current assets
|
55,251 | 60,194 | ||||||
Property
and equipment, net
|
1,210 | 1,046 | ||||||
Deferred
tax asset – non current
|
10,228 | 8,877 | ||||||
Other
assets
|
367 | 1,069 | ||||||
$ | 67,056 | $ | 71,186 | |||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 9,471 | $ | 9,205 | ||||
Accrued
expenses and other current liabilities
|
7,253 | 8,682 | ||||||
Total
current liabilities
|
16,724 | 17,887 | ||||||
Other
liabilities
|
18 | -- | ||||||
Total
liabilities
|
16,742 | 17,887 | ||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.01 par value; authorized 1,250,000 shares; none
issued
|
-- | -- | ||||||
Common
stock, $.001 par value; authorized 12,500,000 shares; 6,909,866 and
6,547,847 shares issued and 6,498,929 and 6,221,724 shares outstanding at
December 31, 2008 and 2007, respectively
|
7 | 7 | ||||||
Additional
paid-in capital
|
92,701 | 91,737 | ||||||
Accumulated
other comprehensive income
|
565 | 2,555 | ||||||
Accumulated
deficit
|
(38,205 | ) | (36,746 | ) | ||||
Treasury
stock, 410,937 common shares at December 31, 2008 and 326,123 common
shares at December 31, 2007, at cost
|
(4,754 | ) | (4,254 | ) | ||||
Total
stockholders' equity
|
50,314 | 53,299 | ||||||
Commitments
and contingencies
|
||||||||
$ | 67,056 | $ | 71,186 |
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
$ | 91,451 | $ | 94,604 | $ | 76,030 | ||||||
Cost
of goods sold
|
53,981 | 54,608 | 42,304 | |||||||||
Gross
profit
|
37,470 | 39,996 | 33,726 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development expenses
|
3,758 | 3,698 | 2,607 | |||||||||
Selling
and marketing expenses
|
26,205 | 23,772 | 19,800 | |||||||||
General
and administrative expenses
|
8,929 | 8,420 | 7,879 | |||||||||
Total
operating expenses
|
38,892 | 35,890 | 30,286 | |||||||||
Operating
income/(loss)
|
(1,422 | ) | 4,106 | 3,440 | ||||||||
Other
income (expense):
|
||||||||||||
Interest
income
|
122 | 286 | 201 | |||||||||
Interest
expense
|
(100 | ) | (1 | ) | (3 | ) | ||||||
Other
|
(63 | ) | 264 | 35 | ||||||||
Income/(loss)
before income taxes
|
(1,463 | ) | 4,655 | 3,673 | ||||||||
Income
tax expense(benefit)
|
(4 | ) | (4,746 | ) | (5,327 | ) | ||||||
Net
income/(loss)
|
$ | (1,459 | ) | $ | 9,401 | $ | 9,000 | |||||
Income/(loss)
per common share:
|
||||||||||||
Basic
|
$ | (0.23 | ) | $ | 1.54 | $ | 1.54 | |||||
Diluted
|
$ | (0.23 | ) | $ | 1.32 | $ | 1.24 |
Shares
of
|
Additional
|
Accumulated
Other
|
Cost
of
|
Total
|
||||||||||||||||||||||||||||
Common
|
Common
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
Treasury
|
Stockholders'
|
|||||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Income
(Loss)
|
Deficit
|
Income
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balance,
December 31, 2005
|
5,867,914 | $ | 6 | $ | 89,516 | $ | 888 | $ | (55,147 | ) | $ | (3,136 | ) | $ | 32,127 | |||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | — | 9,000 | $ | 9,000 | — | 9,000 | |||||||||||||||||||||||
Other
comprehensive income/(loss), net of tax:
|
||||||||||||||||||||||||||||||||
Unrealized
loss on foreign currency translation
|
— | — | — | (1 | ) | — | (1 | ) | — | (1 | ) | |||||||||||||||||||||
Comprehensive
income
|
— | — | — | — | — | $ | 8,999 | — | — | |||||||||||||||||||||||
Stock
options exercised
|
355,893 | — | 15 | — | — | — | 15 | |||||||||||||||||||||||||
Treasury
stock purchased
|
— | — | — | — | — | (390 | ) | (390 | ) | |||||||||||||||||||||||
Amortization
of deferred compensation
|
— | — | 1,118 | — | — | — | 1,118 | |||||||||||||||||||||||||
Balance,
December 31, 2006
|
6,223,807 | 6 | 90,649 | 887 | (46,147 | ) | (3,526 | ) | 41,869 | |||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | — | 9,401 | $ | 9,401 | — | 9,401 | |||||||||||||||||||||||
Other
comprehensive income, net of tax:
|
||||||||||||||||||||||||||||||||
Unrealized
gain on foreign currency translation
|
— | — | — | 1,668 | — | 1,668 | — | 1,668 | ||||||||||||||||||||||||
Comprehensive
income
|
— | — | — | — | — | $ | 11,069 | — | — | |||||||||||||||||||||||
Stock
options exercised
|
324,040 | 1 | 42 | — | — | — | 43 | |||||||||||||||||||||||||
Treasury
stock purchased
|
— | — | — | — | — | (728 | ) | (728 | ) | |||||||||||||||||||||||
Amortization
of deferred compensation
|
— | — | 1,046 | — | — | — | 1,046 | |||||||||||||||||||||||||
Balance,
December 31, 2007
|
6,547,847 | $ | 7 | $ | 91,737 | $ | 2,555 | $ | (36,746 | ) | $ | (4,254 | ) | $ | 53,299 |
Shares
of
|
Additional
|
Accumulated
Other
|
Cost
of
|
Total
|
||||||||||||||||||||||||||||
Common
|
Common
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
Treasury
|
Stockholders'
|
|||||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Income (Loss)
|
Deficit
|
(Loss)
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balance,
December 31, 2007
|
6,547,847 | $ | 7 | $ | 91,737 | $ | 2,555 | $ | (36,746 | ) | $ | (4,254 | ) | $ | 53,299 | |||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||||||
Net
loss
|
— | — | — | — | (1,459 | ) | $ | (1,459 | ) | — | (1,459 | ) | ||||||||||||||||||||
Other
comprehensive loss, net of tax:
|
||||||||||||||||||||||||||||||||
Unrealized
loss on foreign currency translation
|
— | — | — | (1,990 | ) | — | (1,990 | ) | — | (1,990 | ) | |||||||||||||||||||||
Comprehensive
loss
|
— | — | — | — | — | $ | (3,449 | ) | — | — | ||||||||||||||||||||||
Stock
options exercised
|
200,919 | — | 8 | — | — | — | 8 | |||||||||||||||||||||||||
Issuance
of restricted stock
|
161,365 | — | — | — | — | — | — | |||||||||||||||||||||||||
Stock
retired
|
(265 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Treasury
stock purchased
|
— | — | — | — | — | (500 | ) | (500 | ) | |||||||||||||||||||||||
Amortization
of deferred compensation
|
— | — | 956 | — | — | — | 956 | |||||||||||||||||||||||||
Balance,
December 31, 2008
|
6,909,866 | $ | 7 | $ | 92,701 | $ | 565 | $ | (38,205 | ) | $ | (4,754 | ) | $ | 50,314 |
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income/(loss)
|
$ | (1,459 | ) | $ | 9,401 | $ | 9,000 | |||||
Adjustments
to reconcile net income/(loss) to net cash provided by (used in) operating
activities:
|
||||||||||||
Depreciation
and amortization of property and equipment and intangible
assets
|
578 | 460 | 335 | |||||||||
Amortization
of deferred compensation
|
956 | 1,046 | 1,118 | |||||||||
Provision
for doubtful accounts
|
1,539 | 316 | 853 | |||||||||
Provision
for deferred income taxes
|
— | (4,826 | ) | (5,402 | ) | |||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Trade
receivables
|
1,727 | (4,772 | ) | (236 | ) | |||||||
Inventories
|
(4,866 | ) | (4,094 | ) | (8,500 | ) | ||||||
Prepaid
expenses
|
(165 | ) | (57 | ) | 68 | |||||||
Other
current assets
|
52 | (61 | ) | 7 | ||||||||
Other
assets
|
557 | 531 | 525 | |||||||||
Accounts
payable
|
266 | 2,934 | 1,580 | |||||||||
Accrued
expenses and other current liabilities
|
(1,449 | ) | 1,242 | 195 | ||||||||
Other
liabilities
|
— | — | — | |||||||||
Net
cash provided by (used in) operating activities
|
(2,264 | ) | 2,120 | (457 | ) | |||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of equipment
|
(552 | ) | (653 | ) | (403 | ) | ||||||
Purchase
of intangible assets
|
— | (600 | ) | — | ||||||||
Net
cash used in investing activities
|
(552 | ) | (1,253 | ) | (403 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Principal
payments under capital lease obligation
|
(11 | ) | (22 | ) | (35 | ) | ||||||
Exercise
of stock options
|
8 | 43 | 15 | |||||||||
Treasury
stock purchase
|
(500 | ) | (728 | ) | (390 | ) | ||||||
Debt
financing costs
|
4 | (35 | ) | (4 | ) | |||||||
Net
cash used in financing activities
|
(499 | ) | (742 | ) | (414 | ) | ||||||
|
||||||||||||
Effects
of exchange rate changes
|
(1,990 | ) | 1,668 | (1 | ) | |||||||
Net
increase (decrease) in cash and cash equivalents
|
(5,305 | ) | 1,793 | (1,275 | ) | |||||||
Cash
and cash equivalents at beginning of the year
|
11,265 | 9,472 | 10,747 | |||||||||
Cash
and cash equivalents at end of the year
|
$ | 5,960 | $ | 11,265 | $ | 9,472 | ||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Interest
paid
|
$ | 101 | $ | 1 | $ | 3 | ||||||
Income
taxes paid
|
$ | 9 | $ | 65 | $ | 75 | ||||||
Supplemental
disclosure of non-cash investing and financing activities Equipment
financed with capital lease
|
$ | 44 | $ | — | $ | 23 |
|
(a) General
|
|
We
design, assemble, market and distribute premium quality, technologically
innovative golf clubs for all skill levels. Our recently
launched products include Speedline drivers and hybrid fairway woods, Idea
Tech a4 and a4 OS I-woods and irons, Idea a3 and a3 OS I-woods and irons,
Idea Pro Gold I-woods and irons and Insight Tech a4 and a4 OS drivers and
hybrid-fairway woods. We also continue to develop new products
for certain of our older product lines that include RPM family drivers and
fairway woods and irons, the Ovation family of drivers, fairway woods and
irons, Tom Watson signature wedges and under the name of Women's Golf
Unlimited, the Lady Fairway and Square 2 brands. We continue to
sell from certain older product lines the Insight XTD A3 & A3 OS
drivers and hybrid-fairway woods, Idea a2 and a2 OS irons, Idea Tech OS
I-woods and irons, Idea a2 and a2 OS, the Tight Lies family of fairway
woods, the Puglielli series of wedges, and certain
accessories.
|
|
The
consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
|
|
(b) Inventories
|
|
Inventories
are valued at the lower of cost or market and primarily consist of
finished golf clubs and component parts. Cost is determined
using the first-in, first-out method. The inventory balance,
which includes material, labor, assembly overhead costs and inbound
freight, is recorded net of an estimated allowance for obsolete
inventory. The estimated allowance for obsolete inventory is
based upon management's understanding of market conditions and forecasts
of future product demand. Accounting for inventories could
result in material adjustments if market conditions and future demand
estimates are significantly different than original assumptions, causing
the reserve for obsolescence to be materially adversely
affected.
|
|
(c) Allowance
for Doubtful Accounts
|
|
We
maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required
payments. An estimate of uncollectable amounts is made by
management using an evaluation methodology involving both overall and
specific identification. We evaluate each individual customer
and measure various key aspects of the customer such as, but not limited
to, their overall credit risk (via Dun and Bradstreet reports), payment
history, track record for meeting payment plans, industry communications,
the portion of the customer's balance that is past due and other various
items. From an overall perspective, we also look at the aging
of the receivables in total and aging relative to prior periods and
evaluate economic conditions to determine the appropriate reserve
requirements. Fluctuations in the reserve requirements will
occur from period to period as the change in customer mix or strength of
the customers could affect the reserve disproportionately compared to the
total change in the accounts receivable balance. Based on
management's assessment, we provide for estimated uncollectable amounts
through a charge to earnings and a credit to the valuation
allowance. Balances which remain outstanding after we have used
reasonable collection efforts are written off through a charge to the
valuation allowance and a credit to accounts receivable. We
generally do not require collateral. The allowance for doubtful
accounts could be significantly affected as a result of a deviation in our
assessment of any one or more customers' financial
strength. While only two customers represent greater than 5%
but less than 10% of net sales and no customer represents greater than 10%
of net sales for the year ended December 31, 2008, if a combination of
customers were to become financially impaired, including, but not limited
to, due to the current global economic recession and credit crisis, our
financial results could be severely
affected.
|
|
(d) Property
and Equipment
|
|
Property
and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives of the
respective assets, which range from three to seven
years. Maintenance and repairs are expensed as
incurred. Significant replacements and betterments are
capitalized.
|
|
(e) Revenue
Recognition
|
|
We
recognize revenue when the product is shipped. At that time,
the title and risk of loss transfer to the customer and collectability is
reasonably assured. Collectability is evaluated on an
individual customer basis taking into consideration historical payment
trends, current financial position, results of independent credit
evaluations and payment terms. If our assessment of
collectability decreases significantly , because of factors resulting from
the current global economic recession, our revenue would be adversely
affected. Additionally, an estimate of product returns and
warranty costs are recorded when revenue is
recognized. Estimates are based on historical trends taking
into consideration current market conditions, customer demands and product
sell through. We also record estimated reductions in revenue
for sales programs such as co-op advertising and spiff
incentives. Estimates in the sales program accruals are based
on program participation and forecast of future product demand. If
actual sales returns and sales programs significantly exceed the recorded
estimated allowances, our sales would be adversely affected. We
recognize deferred revenue as a result of sales that have extended terms
and a right of return of the product under a specified
program. Once the product is paid for and all revenue
recognition criteria have been met, we record
revenue.
|
|
(f) New
Accounting Pronouncements
|
|
In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations - an
amendment of FASB Statement No. 141, which
defines the acquirer in a business combination and discusses reporting of
the acquisition method of accounting for transactions. We will
adopt the provisions of this standard in the first quarter of 2009; we
expect the adoption of this standard to have no impact on the consolidated
financial statements.
|
|
In
December 2007, the FASB issued SFAS No. 160, Accounting for Noncontrolling
Interests in Consolidated Financial Statements-an amendment of ARB No.
51,
which establishes standards for reporting and comparability of
consolidated financial statements, specifically as it relates to
noncontrolling interests. We adopted the provisions of this
standard in the fourth quarter of 2008; the adoption of this standard had
no impact on the consolidated financial
statements.
|
|
In
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities- an amendment of FASB Statement No.
133, which
provides guidance on enhanced disclosures for derivative and hedging
activities. We adopted the provisions of this standard in the
fourth quarter of 2008; the adoption of this standard had no impact on the
consolidated financial statements.
|
|
(g) Research
and Development
|
|
Research
and development costs consist of all costs incurred in planning, designing
and testing of golf equipment, including salary costs related to research
and development. These costs are expensed as
incurred. Our research and development expenses were
approximately $3,758,000, $3,698,000 and $2,607,000 for the years ended
December 31, 2008, 2007 and 2006,
respectively.
|
|
(h) Advertising
Costs
|
|
Advertising
costs, included in selling and marketing expenses on the accompanying
consolidated statements of operations, other than direct commercial costs,
are expensed as incurred and totaled approximately $6,559,000, $5,732,000
and $5,631,000 for the years ended December 31, 2008, 2007 and 2006,
respectively.
|
|
(i) Product
Warranty
|
|
Our
golf equipment is sold under warranty against defects in material and
workmanship for a period of one year. An allowance for
estimated future warranty costs is recorded in the period products are
sold. In estimating our future warranty obligations, we
consider various relevant factors, including our stated warranty policies,
the historical frequency of claims, and the cost to replace or repair the
product. Accounting for product warranty reserve could be
adversely affected if one or more of our products were to fail (i.e.
broken shaft, broken head, etc) to a significant degree above and beyond
our historical product failure rates, which determine the product warranty
accruals.
|
Beginning
Balance
|
Charges for
Warranty Claims
|
Estimated
Accruals
|
Ending
Balance
|
|||||||||||||
Year
ended December 31, 2008
|
$ | 337 | (697 | ) | 882 | $ | 522 | |||||||||
Year
ended December 31, 2007
|
$ | 389 | (543 | ) | 491 | $ | 337 |
|
(j) Income
Taxes
|
|
We
account for income taxes in accordance with FAS No. 109, "Accounting for
Income Taxes" ("FAS 109") as clarified by FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes ("FIN 48").
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to the differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date. In assessing the realizability of deferred
income tax assets, we consider whether it is "more likely than not",
according to the criteria of FAS 109, that some portion or all of the
deferred income tax assets will be realized. The ultimate
realization of deferred income tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary
differences become deductible. FIN 48 requires that we
recognize the financial statement benefit of a tax position only after
determining that the relevant tax authority would more likely than not
sustain the position following an audit. For tax positions
meeting the more likely than not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the relevant
tax authority. Due to our historical operating results,
management is unable to conclude on a more likely than not basis that all
deferred income tax assets generated from net operating losses through
December 31, 2002 and other deferred tax assets will be
realized. However, due to our recent earnings history, we have
concluded that it is more likely than not that a portion of the deferred
tax asset will be realized. We have recognized a valuation
allowance equal to a portion of the deferred income tax asset for which
realization is uncertain
|
|
(k) Income/(Loss)
Per Share
|
|
The
weighted average common shares used for determining basic and diluted loss
per common share were 6,413,054 for the year ended December 31,
2008. The effect of all options to purchase shares of our
common stock for the year ended December 31, 2008 were excluded from the
calculation of dilutive shares as the effect of inclusion would have been
antidilutive.
|
|
The
weighted average common shares used for determining basic and diluted
income per common share were 6,094,385 and 7,134,363, respectively, for
the year ended December 31, 2007. The effect of all options to
purchase shares of our common stock for the year ended December 31, 2007
resulted in additional dilutive shares of
1,039,978.
|
|
The
weighted average common shares used for determining basic and diluted
income per common share were 5,830,229 and 7,232,445, respectively, for
the year ended December 31, 2006. The effect of all options to
purchase shares of our common stock for the year ended December 31, 2006
resulted in additional dilutive shares of
1,402,216.
|
|
(l) Financial
Instruments
|
|
The
carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses approximate fair value due to the
short maturity of these
instruments.
|
|
(m) Impairment
of Long-Lived Assets
|
|
We
follow the guidance in SFAS ("Statement of Financial Accounting
Standards") 144 in reviewing long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future net
cash flows to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to
sell. During the years ended December 31, 2008, 2007 and 2006,
there was no impairment of long-lived
assets.
|
|
(n) Comprehensive
Income / (Loss)
|
|
Comprehensive
income / (loss) consists of net income / (loss) and unrealized gains and
losses, net of related tax effect, on foreign currency translation
adjustments.
|
|
(o) Cash
and Cash Equivalents
|
|
We
consider all short-term highly liquid instruments, with an original
maturity of three months or less, to be cash
equivalents.
|
2008
|
2007
|
|||||||
Trade
receivables
|
$ | 16,064 | $ | 18,521 | ||||
Allowance
for doubtful accounts
|
(1,321 | ) | (512 | ) | ||||
$ | 14,743 | $ | 18,009 |
|
Inventories
consist of the following at December 31, 2008 and
2007:
|
2008
|
2007
|
|||||||
Finished
goods
|
$ | 20,226 | $ | 16,887 | ||||
Component
parts
|
13,385 | 11,858 | ||||||
$ | 33,611 | $ | 28,745 |
|
Property
and equipment consist of the following at December 31, 2008 and
2007:
|
2008
|
2007
|
|||||||
Equipment
|
$ | 2,442 | $ | 2,296 | ||||
Computers
and software
|
7,716 | 7,924 | ||||||
Furniture
and fixtures
|
940 | 770 | ||||||
Leaseholds
improvements
|
182 | 188 | ||||||
Accumulated
depreciation and amortization
|
(10,070 | ) | (10,132 | ) | ||||
$ | 1,210 | $ | 1,046 |
2008
|
2007
|
|||||||
Maintenance
agreements
|
29 | 81 | ||||||
Deferred
tax asset
|
— | 1,351 | ||||||
$ | 29 | $ | 1,432 |
|
We
have a deferred tax asset of $10.2 million recorded, of which the short
term portion has been reclassified as long term during the year ended
December 31, 2008 and reported as a deferred tax asset non-current in the
non-current asset section of the balance sheet. This amount
represents what we believe to be an estimate of future usage of our carry
back; the remaining asset has an existing valuation allowance applied to
it. At December 31, 2008, we had net operating loss
carryforwards for federal, foreign and state income tax purposes of
approximately $37 million and tax credit carryforwards of $0.3 million,
which are available to offset future taxable income through
2028.
|
2008
|
2007
|
|||||||
Deposits
|
$ | 6 | $ | 23 | ||||
Long
term endorsements
|
— | 540 | ||||||
Other,
including intangible assets purchased
|
361 | 506 | ||||||
$ | 367 | $ | 1,069 |
|
Accrued
expenses and other current liabilities consist of the following at
December 31, 2008 and 2007:
|
2008
|
2007
|
|||||||
Payroll
and commissions
|
$ | 447 | $ | 2,707 | ||||
Product
warranty expense and sales returns
|
1,641 | 1,611 | ||||||
Professional
services
|
7 | 23 | ||||||
Accrued
inventory
|
1,021 | 971 | ||||||
Accrued
sales promotions
|
274 | 390 | ||||||
Deferred
revenue
|
1,429 | 1,538 | ||||||
Other
|
2,434 | 1,442 | ||||||
$ | 7,253 | $ | 8,682 |
|
We
are obligated under certain noncancellable operating leases for assembly,
warehouse and office space. A summary of the minimum rental
commitments under noncancellable leases is as
follows:
|
Years
ending
|
||||
December 31,
|
||||
2009
|
641 | |||
2010
|
629 | |||
2011
|
570 | |||
2012
|
430 | |||
2013
|
286 | |||
$ | 2,556 |
2008
|
2007
|
2006
|
||||||||||
Federal-current
|
$ | (13 | ) | $ | 79 | $ | 68 | |||||
State-current
|
9 | 1 | 7 | |||||||||
Deferred
|
— | (4,826 | ) | (5,402 | ) | |||||||
$ | (4 | ) | $ | (4,746 | ) | $ | (5,327 | ) |
2008
|
2007
|
2006
|
||||||||||
Computed
"expected" tax benefit
|
$ | (511 | ) | $ | 1,629 | $ | 1,286 | |||||
State
income taxes, net of federal tax expense
|
(15 | ) | 47 | 37 | ||||||||
Change
in valuation allowance for deferred tax assets
|
680 | (6,809 | ) | (6,770 | ) | |||||||
Other
|
(158 | ) | 387 | 120 | ||||||||
$ | (4 | ) | $ | (4,746 | ) | $ | (5,327 | ) |
2008
|
2007
|
|||||||
Deferred
tax assets:
|
||||||||
Allowance
for doubtful accounts receivable
|
$ | 475 | $ | 184 | ||||
Product
warranty and sales returns
|
591 | 580 | ||||||
Other
reserves
|
277 | 89 | ||||||
Deferred
compensation
|
312 | 166 | ||||||
263A
adjustment
|
51 | 106 | ||||||
Research
and development tax credit carryforwards
|
306 | 306 | ||||||
Net
operating loss carryforwards
|
13,344 | 13,245 | ||||||
Total
deferred tax assets
|
15,356 | 14,676 | ||||||
Valuation
allowance
|
(5,128 | ) | (4,448 | ) | ||||
Net
deferred tax assets
|
$ | 10,228 | $ | 10,228 |
2008
|
2007
|
|||||||
Current
|
$ | — | $ | 1,351 | ||||
Non-current
|
10,228 | 8,877 | ||||||
$ | 10,228 | $ | 10,228 |
|
(a) Employee
Stock Option Plans
|
|
ADAMS
GOLF, INC. AND SUBSIDIARIES
|
|
Notes
to Consolidated Financial
Statements
|
|
December
31, 2008 and 2007
|
|
(Tables
in thousands, except share and per share
amounts)
|
Weighted
|
Weighted
|
Weighted
|
|||||||||||||||
Range of
|
Average
|
Average
|
Average Vested
|
||||||||||||||
Exercise
|
Options
|
Remaining
|
Exercise Price
|
Options
|
Exercise Price
|
||||||||||||
Prices
|
Outstanding
|
Contractual life
|
per share
|
Exercisable
|
per share
|
||||||||||||
$0.04
- $4.00
|
867,982 |
4.29
years
|
$ | 0.06 | 866,420 | $ | 0.06 | ||||||||||
$4.01
- $8.00
|
25,000 |
6.26 years
|
4.76 | 18,750 | 4.77 | ||||||||||||
892,982 |
4.35 years
|
$ | 0.19 | 885,170 | $ | 0.16 |
Weighted
|
Aggregate
|
|||||||||||
Number of
|
Average
|
Intrinsic
|
||||||||||
Shares
|
Exercise price
|
Value of options
|
||||||||||
Options
outstanding at December 31, 2005
|
1,792,701 | 0.12 | ||||||||||
Options
granted
|
12,500 | 4.72 | ||||||||||
Options
forfeited (expired)
|
(25,000 | ) | 2.96 | |||||||||
Options
exercised
|
(355,893 | ) | 0.04 | 1,973,664 | ||||||||
Options
outstanding at December 31, 2006
|
1,424,308 | 0.16 | 11,003,577 | |||||||||
Options
granted (resulting from the reverse split conversion of
existing options)
|
7 | 0.04 | ||||||||||
Options
forfeited (expired)
|
— | — | ||||||||||
Options
exercised
|
(324,041 | ) | 0.04 | 2,557,468 | ||||||||
Options
outstanding at December 31, 2007
|
1,100,274 | 0.16 | 9,725,455 | |||||||||
Options
granted
|
— | — | ||||||||||
Options
forfeited (expired)
|
(6,373 | ) | 0.04 | |||||||||
Options
exercised
|
(200,919 | ) | 0.04 | 1,429,703 | ||||||||
Options
outstanding at December 31, 2008
|
892,982 | 0.19 | 2,510,227 | |||||||||
Options
exercisable at December 31, 2008
|
885,170 | $ | 0.16 | 2,516,352 |
|
(a) Common Stock Repurchase
Program
|
|
(b) Deferred
Compensation
|
Period of Exercise
|
Total Options to be
Exercised
|
|||
2009
|
90,000 | |||
2010
|
15,000 | |||
2011
|
27,500 | |||
2012
|
29,459 | |||
Beyond
2012
|
31,250 | |||
Total
Options
|
193,209 |
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 73,375 | $ | 78,623 | $ | 63,016 | ||||||
Rest
of world
|
18,076 | 15,981 | 13,014 | |||||||||
$ | 91,451 | $ | 94,604 | $ | 76,030 |
|
The
following table sets forth net sales by product class for the years ended
December 31, 2008, 2007 and 2006:
|
2008
|
2007
|
2006
|
||||||||||
Fairway
woods
|
$ | 22,289 | $ | 18,428 | $ | 14,841 | ||||||
Drivers
|
11,276 | 10,472 | 7,323 | |||||||||
Irons
|
57,117 | 63,251 | 51,649 | |||||||||
Wedges
and other
|
769 | 2,453 | 2,217 | |||||||||
Total
|
$ | 91,451 | $ | 94,604 | $ | 76,030 |
|
ADAMS
GOLF, INC. AND SUBSIDIARIES
|
|
Notes
to Consolidated Financial
Statements
|
|
December
31, 2008 and 2007
|
|
(Tables
in thousands, except share and per share
amounts)
|
|
Quarterly
financial results for the years ended December 31, 2008 and 2007 are as
follows:
|
2008
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Net
sales
|
$ | 28,001 | $ | 33,260 | $ | 17,700 | $ | 12,490 | ||||||||
Gross
profit
|
$ | 12,111 | $ | 13,736 | $ | 6,763 | $ | 4,860 | ||||||||
Net
income (loss)
|
$ | 798 | $ | 1,554 | $ | (1,163 | ) | $ | (2,647 | ) | ||||||
Income
(loss) per share – basic
|
$ | 0.13 | $ | 0.24 | $ | (0.18 | ) | $ | (0.41 | ) | ||||||
–
diluted
|
0.11 | 0.21 | (0.18 | ) | (0.41 | ) |
2007
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Net
sales
|
$ | 27,808 | $ | 30,403 | $ | 18,929 | $ | 17,464 | ||||||||
Gross
profit
|
$ | 12,195 | $ | 13,302 | $ | 7,740 | $ | 6,760 | ||||||||
Net
income (loss)
|
$ | 3,754 | $ | 2,517 | $ | (327 | ) | $ | 3,457 | |||||||
Income
(loss) per share – basic
|
$ | 0.63 | $ | 0.42 | $ | (0.05 | ) | $ | 0.57 | |||||||
–
diluted
|
0.49 | 0.33 | (0.05 | ) | 0.49 |
|
ADAMS
GOLF, INC. AND SUBSIDIARIES
|
|
Notes
to Consolidated Financial
Statements
|
|
December
31, 2008 and 2007
|
|
(Tables
in thousands, except share and per share
amounts)
|
|
We
are currently dependent on four customers, which collectively comprised
approximately 24.4% of net sales for the year ended December 31,
2008. Of these, two customer individually represented greater
than 5% but less than 10% of net sales, while no customer individually
represented greater than 10% of net sales for the year ended December 31,
2008. For the year ended December 31, 2007, four customers,
which collectively comprised approximately 25.5% of net sales, of which
one customer individually represented greater than 5% but less than 10% of
net sales, while one customer individually represented greater than 10%
but less than 15% of net sales for the year ended December 31,
2007. For the year ended December 31, 2006, four customers,
which collectively comprised approximately 25.2% of net sales, of which
three customers individually represented greater than 5% but less than 10%
of net sales, while no customer individually represented greater than 10%
of net sales for the year ended December 31, 2006. The loss of
an individual or a combination of these customers or a significant
impairment or reduction in such customers' business, including, but not
limited to, as a result of the current global economic recession and
credit crisis, would have a material adverse effect on consolidated
revenues, results of operations, financial condition and competitive
market position.
|
|
A
significant portion of our inventory purchases are from one supplier in
China; we purchased approximately 48% and 46% of our total inventory
purchased for the years ended December 31, 2008 and 2007, respectively,
from this one Chinese supplier. This supplier and many other
industry suppliers are located in China. We do not anticipate
any changes in the relationships with its suppliers. If such
change were to occur, we have alternative sources available; however, a
loss of our primary supplier or significant impairment to its business,
including, but not limited to, due to the global economic recession and
credit crisis, could adversely affect our business during the period in
which we would have to find an alternative source for such
supplies.
|
Balance at
|
Charged to
|
Balance at
|
||||||||||||||
Beginning
|
Cost and Other
|
End of
|
||||||||||||||
Description
|
of Period
|
Expenses
|
Deductions(1)
|
Period
|
||||||||||||
Allowance
for doubtful accounts:
|
||||||||||||||||
Year
ended December 31, 2008
|
$ | 512 | 1,539 | 730 | $ | 1,321 | ||||||||||
Year
ended December 31, 2007
|
$ | 702 | 316 | 506 | $ | 512 | ||||||||||
Year
ended December 31, 2006
|
$ | 952 | 853 | 1,103 | $ | 702 | ||||||||||
Product
warranty and sales returns:
|
||||||||||||||||
Year
ended December 31, 2008
|
$ | 1,611 | 885 | 855 | $ | 1,641 | ||||||||||
Year
ended December 31, 2007
|
$ | 2,040 | 545 | 974 | $ | 1,611 | ||||||||||
Year
ended December 31, 2006
|
$ | 1,546 | 1,359 | 865 | $ | 2,040 | ||||||||||
Inventory
obsolescence:
|
||||||||||||||||
Year
ended December 31, 2008
|
$ | 189 | 8 | — | $ | 197 | ||||||||||
Year
ended December 31, 2007
|
$ | 153 | 36 | — | $ | 189 | ||||||||||
Year
ended December 31, 2006
|
$ | 215 | — | 62 | $ | 153 | ||||||||||
Deferred
tax asset valuation allowance:
|
||||||||||||||||
Year
ended December 31, 2008
|
$ | 4,448 | — | 680 | $ | 5,128 | ||||||||||
Year
ended December 31, 2007
|
$ | 11,257 | (6,809 | ) | — | $ | 4,448 | |||||||||
Year
ended December 31, 2006
|
$ | 18,027 | (6,770 | ) | — | $ | 11,257 |
(1)
|
Represents
uncollectible accounts charged against the allowance for doubtful
accounts, actual costs incurred for warranty repairs and sales returns,
and inventory items deemed obsolete charged against the inventory
obsolescence reserve.
|