x
|
Quarterly
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)
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|
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Page
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||
PART
I
|
FINANCIAL
INFORMATION
|
|||
Item
1.
|
Financial
Statements
|
|||
Condensed
Consolidated Balance Sheets -
|
||||
June
30, 2009 (unaudited) and December 31, 2008
|
3
|
|||
Unaudited
Condensed Consolidated Statements of Operations -
|
||||
Three
and six months ended June 30, 2009 and 2008
|
4
|
|||
Unaudited
Condensed Consolidated Statement of Stockholders' Equity -
|
||||
Six
months ended June 30, 2009
|
5
|
|||
Unaudited
Condensed Consolidated Statements of Cash Flows -
|
||||
Six
months ended June 30, 2009 and 2008
|
6
|
|||
Notes
to Unaudited Condensed Consolidated Financial Statements
|
7-15
|
|||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
16-25
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
N/A
|
||
Item
4(T).
|
Controls
and Procedures
|
25-26
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
27-28
|
||
Item
1A.
|
Risk
Factors
|
28
|
||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
N/A
|
||
Item
3.
|
Defaults
Upon Senior Securities
|
N/A
|
||
Item
4.
|
Submissions
of Matters to a Vote of Security Holders
|
29
|
||
Item
5.
|
Other
Information
|
N/A
|
||
Item
6.
|
Exhibits
|
29
|
||
Signatures
|
29
|
June
30,
2009
|
December
31,
2008
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 3,268 | $ | 5,960 | ||||
Trade
receivables, net of allowance for doubtful accounts of $1,579 (unaudited)
and $1,321 in 2009 and 2008, respectively
|
22,853 | 14,743 | ||||||
Inventories,
net
|
22,816 | 33,611 | ||||||
Prepaid
expenses
|
638 | 908 | ||||||
Other
current assets
|
40 | 29 | ||||||
Total
current assets
|
49,615 | 55,251 | ||||||
Property
and equipment, net
|
1,133 | 1,210 | ||||||
Deferred
tax asset - non current
|
10,228 | 10,228 | ||||||
Other
assets, net
|
315 | 367 | ||||||
$ | 61,291 | $ | 67,056 | |||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 2,396 | $ | 9,471 | ||||
Accrued
expenses
|
6,604 | 7,253 | ||||||
Credit
facility
|
5,076 | — | ||||||
Other
current liabilities
|
15 | — | ||||||
Total
current liabilities
|
14,091 | 16,724 | ||||||
Other
liabilities
|
9 | 18 | ||||||
Total
liabilities
|
14,100 | 16,742 | ||||||
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; 7,094,304 and
6,909,866 shares issued and 6,683,367 and 6,498,929 shares outstanding at
June 30, 2009 (unaudited) and December 31, 2008,
respectively
|
7 | 7 | ||||||
Additional
paid-in capital
|
93,136 | 92,701 | ||||||
Accumulated
other comprehensive income
|
1,847 | 565 | ||||||
Accumulated
deficit
|
(43,045 | ) | (38,205 | ) | ||||
Treasury
stock, 410,937 common shares at June 30, 2009 and December 31, 2008, at
cost
|
(4,754 | ) | (4,754 | ) | ||||
Total
stockholders' equity
|
47,191 | 50,314 | ||||||
$ | 61,291 | $ | 67,056 | |||||
Contingencies
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
$ | 23,254 | $ | 33,260 | $ | 46,730 | $ | 61,261 | ||||||||
Cost
of goods sold
|
20,476 | 19,524 | 34,943 | 35,414 | ||||||||||||
Gross
profit
|
2,778 | 13,736 | 11,787 | 25,847 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development expenses
|
738 | 793 | 1,590 | 1,879 | ||||||||||||
Selling
and marketing expenses
|
5,437 | 9,125 | 11,387 | 16,780 | ||||||||||||
General
and administrative expenses
|
1,743 | 2,200 | 3,586 | 4,750 | ||||||||||||
Total
operating expenses
|
7,918 | 12,118 | 16,563 | 23,409 | ||||||||||||
Operating
income (loss)
|
(5,140 | ) | 1,618 | (4,776 | ) | 2,438 | ||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income (expense), net
|
(36 | ) | (54 | ) | (53 | ) | (20 | ) | ||||||||
Other
income (expense), net
|
2 | (1 | ) | 50 | (51 | ) | ||||||||||
Income
(loss) before income taxes
|
(5,174 | ) | 1,563 | (4,779 | ) | 2,367 | ||||||||||
Income
tax expense
|
32 | 9 | 61 | 16 | ||||||||||||
Net
income (loss)
|
$ | (5,206 | ) | $ | 1,554 | $ | (4,840 | ) | $ | 2,351 | ||||||
Net
income (loss) per common share - basic
|
$ | (0.78 | ) | $ | 0.24 | $ | (0.73 | ) | $ | 0.37 | ||||||
- diluted
|
$ | (0.78 | ) | $ | 0.21 | $ | (0.73 | ) | $ | 0.32 |
Shares
of
|
Additional
|
Accumulated
Other
|
Cost
of
|
Total
|
||||||||||||||||||||||||||||
Common
|
Common
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
Treasury
|
Stockholders'
|
|||||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Income
|
Deficit
|
Income
(Loss)
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balance,
December 31, 2008
|
6,909,866 | $ | 7 | $ | 92,701 | $ | 565 | $ | (38,205 | ) | $ | (4,754 | ) | $ | 50,314 | |||||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||||||||||
Net
loss
|
— | — | — | — | (4,840 | ) | $ | (4,840 | ) | — | (4,840 | ) | ||||||||||||||||||||
Foreign
currency translation
|
— | — | — | 1,282 | — | 1,282 | — | 1,282 | ||||||||||||||||||||||||
Comprehensive
loss
|
— | — | — | — | — | $ | (3,558 | ) | — | — | ||||||||||||||||||||||
Issuance
of restricted stock
|
100,000 | — | — | — | — | — | — | |||||||||||||||||||||||||
Stock
options exercised
|
84,438 | — | 3 | — | — | — | 3 | |||||||||||||||||||||||||
Compensatory
stock and stock options
|
— | — | 432 | — | — | — | 432 | |||||||||||||||||||||||||
Balance,
June 30, 2009
|
7,094,304 | $ | 7 | $ | 93,136 | $ | 1,847 | $ | (43,045 | ) | $ | (4,754 | ) | $ | 47,191 |
Six
Months Ended
|
||||||||
June
30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | (4,840 | ) | $ | 2,351 | |||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
Depreciation
and amortization of property and equipment and intangible
assets
|
312 | 285 | ||||||
Amortization
of deferred compensation
|
432 | 526 | ||||||
Provision
for doubtful accounts
|
696 | 682 | ||||||
Provision
for inventory reserve
|
2,560 | 29 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Trade
receivables
|
(8,806 | ) | (15,441 | ) | ||||
Inventories
|
8,234 | 1,024 | ||||||
Prepaid
expenses
|
269 | (1,032 | ) | |||||
Other
current assets
|
(10 | ) | 44 | |||||
Other
assets
|
(3 | ) | 287 | |||||
Accounts
payable
|
(7,075 | ) | 1,759 | |||||
Accrued
expenses and other current liabilities
|
(630 | ) | 1,179 | |||||
Net
cash used in operating activities
|
(8,859 | ) | (8,307 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchases
of equipment
|
(161 | ) | (348 | ) | ||||
Net
cash used in investing activities
|
(161 | ) | (348 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Principal
payments under capital lease obligation
|
(9 | ) | (6 | ) | ||||
Proceeds
from exercise of stock options
|
3 | 5 | ||||||
Net
proceeds from credit facility
|
5,052 | (251 | ) | |||||
Net
cash provided by (used in) financing activities
|
5,046 | (252 | ) | |||||
Effects
of exchange rate changes
|
1,282 | (252 | ) | |||||
Net
decrease in cash and cash equivalents
|
(2,692 | ) | (9,159 | ) | ||||
Cash
and cash equivalents at beginning of period
|
5,960 | 11,265 | ||||||
Cash
and cash equivalents at end of period
|
$ | 3,268 | $ | 2,106 | ||||
Supplemental
disclosure of cash flow information
|
||||||||
Interest
paid
|
$ | 58 | $ | 82 | ||||
Income
taxes paid
|
$ | 60 | $ | 9 |
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Finished
goods
|
$ | 12,656 | $ | 20,226 | ||||
Component
parts
|
10,160 | 13,385 | ||||||
Total
inventory
|
$ | 22,816 | $ | 33,611 |
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Payroll
and commissions
|
$ | 439 | $ | 447 | ||||
Product
warranty and sales returns allowances
|
2,337 | 1,641 | ||||||
Professional
services
|
51 | 7 | ||||||
Accrued
inventory
|
15 | 1,021 | ||||||
Accrued
sales promotions
|
656 | 274 | ||||||
Deferred
revenue
|
1,376 | 1,429 | ||||||
Other
|
1,730 | 2,434 | ||||||
Total
accrued expenses
|
$ | 6,604 | $ | 7,253 |
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
United
States
|
$ | 18,464 | $ | 25,238 | $ | 38,048 | $ | 48,456 | ||||||||
Rest
of World
|
4,790 | 8,022 | 8,682 | 12,805 | ||||||||||||
Total
net sales
|
$ | 23,254 | $ | 33,260 | $ | 46,730 | $ | 61,261 |
Number
of
|
Weighted
|
Aggregate
|
||||||||||
Outstanding
|
Average
|
Intrinsic
|
||||||||||
Shares
|
Exercise Price
|
Value of Options
|
||||||||||
Options
outstanding at December 31, 2008
|
892,982 | $ | 0.19 | $ | 2,510,227 | |||||||
Options
granted
|
100,000 | 3.02 | — | |||||||||
Options
forfeited / expired
|
— | — | — | |||||||||
Options
exercised
|
(84,438 | ) | 0.04 | 242,364 | ||||||||
Options
outstanding at June 30, 2009
|
908,544 | 0.51 | 1,722,249 | |||||||||
Options
exercisable at June 30, 2009
|
805,419 | 0.19 | 1,790,468 |
Period of Exercise
|
Total Options to be Exercised
|
|||
2009
|
17,500 | |||
2010
|
15,000 | |||
2011
|
27,500 | |||
2012
|
28,209 | |||
2013
|
13,750 | |||
Beyond
2013
|
15,000 | |||
Total
Options
|
116,959 |
Beginning
Balance
|
Charges
for
Warranty
Claims
|
Estimated
Accruals
|
Ending
Balance
|
|||||||||||||
Quarter
ended December 31, 2008
|
$ | 466 | (152 | ) | 208 | $ | 522 | |||||||||
Quarter
ended March 31, 2009
|
$ | 522 | (63 | ) | 60 | $ | 519 | |||||||||
Quarter
ended June 30, 2009
|
$ | 519 | (168 | ) | 128 | $ | 479 |
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of goods sold
|
88.1 | 58.7 | 74.8 | 57.8 | ||||||||||||
Gross
profit
|
11.9 | 41.3 | 25.2 | 42.2 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development expenses
|
3.2 | 2.4 | 3.4 | 3.1 | ||||||||||||
Sales
and marketing expenses
|
23.4 | 27.4 | 24.4 | 27.4 | ||||||||||||
General
and administrative expenses
|
7.4 | 6.6 | 7.7 | 7.7 | ||||||||||||
Total
operating expenses
|
34.0 | 36.4 | 35.5 | 38.2 | ||||||||||||
Interest
income (expense), net
|
(0.2 | ) | (0.2 | ) | (0.1 | ) | 0.0 | |||||||||
Other
income, net
|
0.0 | (0.0 | ) | 0.1 | (0.1 | ) | ||||||||||
Income
(loss) before income taxes
|
(22.3 | ) | 4.7 | (10.3 | ) | 3.9 | ||||||||||
Income
tax expense
|
0.1 | 0.0 | 0.1 | 0.1 | ||||||||||||
Net
income (loss)
|
(22.4 | )% | 4.7 | % | (10.4 | )% | 3.8 | % |
1.
|
To
elect the following nominees as director to serve until the 2012 Annual
Meeting of Stockholders and until his successor is elected and
qualified.
|
|||
Number
of Shares
|
||||
Vote For
|
Withheld
|
|||
Oliver
G. Brewer
|
5,060,377
|
195,673
|
||
Russell
L. Fleischer
|
5,151,347
|
104,663
|
2.
|
To
ratify the appointment of KBA Group LLP as the independent auditors of the
Company for the year ending December 31, 2009, which was changed to BKD,
LLP as a result of a KBA Group joining BKD on June 1,
2009.
|
Number
of Shares
|
|||||
Vote For
|
Vote Against
|
Abstained
|
|||
|
5,245,801
|
|
9,823
|
|
386
|
ADAMS
GOLF, INC.
|
|||
Date: August
5, 2009
|
By:
|
/S/ OLIVER G. BREWER
III
|
|
Oliver
G. Brewer, III
|
|||
Chief
Executive Officer and President
|
|||
(Principal
Executive Officer)
|
|||
Date: August
5, 2009
|
By:
|
/S/ PAMELA
HIGH
|
|
Pamela
J. High
|
|||
Interim
Chief Financial Officer
|
|||
(Principal
Financial
Officer)
|
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 the Annual Report on Form 10-K for the year ended December
31, 2007 File No. 001-33978 (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 File No. 000-24583 (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 File No. 000-24583
(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 File No. 000-24583 (Exhibit
10.12)
|
||
Exhibit
10.2*
|
Golf
Consultant Agreement - Thomas S. Watson
|
Incorporated
by reference to 2004 Form 10-K File No. 000-24583 (Exhibit
10.17)
|
||
Exhibit
10.3*
|
Asset
Purchase Agreement of Women's Golf Unlimited
|
Incorporated
by reference to 2006 Form 10-K File No. 000-24583 (Exhibit
10.11)
|
||
Exhibit
10.4
|
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
10.5
|
Commercial
Lease Agreement dated December 15, 2007, between MDN/JSC -II Limited and
the Company
|
Incorporated
by reference to 2007 Form 10-K File No 001-33978 (Exhibit
10.9)
|
||
Exhibit
10.6
|
|
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 File No.
001-33978 (Exhibit 10.1)
|
Exhibit
10.7
|
Employment
Agreement - Byron (Barney) H. Adams
|
Incorporated
by reference to the Report on From 8-K dated January 12, 2009 File No.
001-33978 (Exhibit 10.1)
|
||
Exhibit
10.8
|
Employment
Agreement - Oliver G. (Chip) Brewer
|
Incorporated
by reference to the Quarterly Report on From 10-Q for the quarter ended
March 31, 2009 File No. 001-33978 (Exhibit 10.9)
|
||
Exhibit
10.9
|
Amendment
to Revolving line of Credit between Adams Golf, Inc and Wachovia Bank,
National Association
|
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
|