x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the quarterly period ended September 30, 2009
|
|
or
|
|
¨
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the transition period from t o
|
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)
|
Page
|
|||
PART
I
|
FINANCIAL
INFORMATION
|
||
Item
1.
|
Financial
Statements
|
||
Condensed
Consolidated Balance Sheets -
|
|||
September
30, 2009 (unaudited) and December 31, 2008
|
3
|
||
Unaudited
Condensed Consolidated Statements of Operations -
|
|||
Three
and nine months ended September 30, 2009 and 2008
|
4
|
||
Unaudited
Condensed Consolidated Statement of Stockholders' Equity -
|
|||
Nine
months ended September 30, 2009
|
5
|
||
Unaudited
Condensed Consolidated Statements of Cash Flows -
|
|||
Nine
months ended September 30, 2009 and 2008
|
6
|
||
Notes
to Unaudited Condensed Consolidated Financial Statements
|
7-14
|
||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
15-24
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
N/A
|
|
Item
4(T).
|
Controls
and Procedures
|
24-25
|
|
PART
II
|
OTHER
INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
26-27
|
|
Item
1A.
|
Risk
Factors
|
27
|
|
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
|
N/A
|
|
Item
5.
|
Other
Information
|
N/A
|
|
Item
6.
|
Exhibits
|
28
|
|
Signatures
|
28
|
September
30,
2009
|
December
31,
2008
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 11,407 | $ | 5,960 | ||||
Trade
receivables, net of allowance for doubtful accounts of $1,537 (unaudited)
and $1,321 in 2009 and 2008, respectively
|
16,250 | 14,743 | ||||||
Inventories,
net
|
20,610 | 33,611 | ||||||
Prepaid
expenses
|
455 | 908 | ||||||
Other
current assets
|
190 | 29 | ||||||
Total
current assets
|
48,912 | 55,251 | ||||||
Property
and equipment, net
|
1,027 | 1,210 | ||||||
Deferred
tax asset - non current
|
10,228 | 10,228 | ||||||
Other
assets, net
|
277 | 367 | ||||||
$ | 60,444 | $ | 67,056 | |||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 7,101 | $ | 9,471 | ||||
Accrued
expenses
|
11,423 | 7,253 | ||||||
Other
current liabilities
|
17 | — | ||||||
Total
current liabilities
|
18,541 | 16,724 | ||||||
Other
liabilities
|
6 | 18 | ||||||
Total
liabilities
|
18,547 | 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; 7,108,679 and
6,909,866 shares issued and 6,697,742 and 6,498,929 shares outstanding at
September 30, 2009 (unaudited) and December 31, 2008,
respectively
|
7 | 7 | ||||||
Additional
paid-in capital
|
93,351 | 92,701 | ||||||
Accumulated
other comprehensive income
|
1,808 | 565 | ||||||
Accumulated
deficit
|
(48,515 | ) | (38,205 | ) | ||||
Treasury
stock, 410,937 common shares at September 30, 2009 and December 31, 2008,
at cost
|
(4,754 | ) | (4,754 | ) | ||||
Total
stockholders' equity
|
41,897 | 50,314 | ||||||
$ | 60,444 | $ | 67,056 | |||||
Contingencies
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
$ | 17,385 | $ | 17,700 | $ | 64,115 | $ | 78,961 | ||||||||
Cost
of goods sold
|
11,056 | 10,937 | 45,999 | 46,351 | ||||||||||||
Gross
profit
|
6,329 | 6,763 | 18,116 | 32,610 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development expenses
|
610 | 889 | 2,201 | 2,768 | ||||||||||||
Selling
and marketing expenses
|
4,548 | 4,938 | 15,936 | 21,718 | ||||||||||||
General
and administrative expenses
|
1,614 | 2,096 | 5,199 | 6,846 | ||||||||||||
Settlement
expense
|
5,000 | — | 5,000 | — | ||||||||||||
Total
operating expenses
|
11,772 | 7,923 | 28,336 | 31,332 | ||||||||||||
Operating
income (loss)
|
(5,443 | ) | (1,160 | ) | (10,220 | ) | 1,278 | |||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income (expense), net
|
(19 | ) | 6 | (71 | ) | (14 | ) | |||||||||
Other
income (expense), net
|
(5 | ) | (9 | ) | 45 | (60 | ) | |||||||||
Income
(loss) before income taxes
|
(5,467 | ) | (1,163 | ) | (10,246 | ) | 1,204 | |||||||||
Income
tax expense
|
4 | — | 64 | 16 | ||||||||||||
Net
income (loss)
|
$ | (5,471 | ) | $ | (1,163 | ) | $ | (10,310 | ) | $ | 1,188 | |||||
Net
income (loss) per common share - basic
|
$ | (0.82 | ) | $ | (0.18 | ) | $ | (1.55 | ) | $ | 0.19 | |||||
-
diluted
|
$ | (0.82 | ) | $ | (0.18 | ) | $ | (1.55 | ) | $ | 0.16 |
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
|
— | — | — | — | (10,310 | ) | $ | (10,310 | ) | — | (10,310 | ) | ||||||||||||||||||||
Foreign
currency translation
|
— | — | — | 1,243 | — | 1,243 | — | 1,243 | ||||||||||||||||||||||||
Comprehensive
loss
|
— | — | — | — | — | $ | (9,067 | ) | — | — | ||||||||||||||||||||||
Issuance
of restricted stock
|
100,000 | — | — | — | — | — | — | |||||||||||||||||||||||||
Stock
options exercised
|
98,813 | — | 3 | — | — | — | 3 | |||||||||||||||||||||||||
Compensatory
stock and stock options
|
— | — | 647 | — | — | — | 647 | |||||||||||||||||||||||||
Balance,
September 30, 2009
|
7,108,679 | $ | 7 | $ | 93,351 | $ | 1,808 | $ | (48,515 | ) | $ | (4,754 | ) | $ | 41,897 |
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | (10,310 | ) | $ | 1,188 | |||
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
|
463 | 429 | ||||||
Amortization
of deferred compensation
|
647 | 786 | ||||||
Provision
for doubtful accounts
|
968 | 826 | ||||||
Provision
for inventory reserve
|
1,783 | — | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Trade
receivables
|
(2,475 | ) | (25 | ) | ||||
Inventories
|
11,218 | 2,316 | ||||||
Prepaid
expenses
|
452 | 49 | ||||||
Other
current assets
|
(160 | ) | 57 | |||||
Other
assets
|
(3 | ) | 422 | |||||
Accounts
payable
|
(2,370 | ) | (3,515 | ) | ||||
Accrued
expenses and other current liabilities
|
4,189 | (3,196 | ) | |||||
Net
cash provided by (used in) operating activities
|
4,402 | (663 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of equipment
|
(169 | ) | (396 | ) | ||||
Net
cash used in investing activities
|
(169 | ) | (396 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Principal
payments under capital lease obligation
|
(11 | ) | (9 | ) | ||||
Proceeds
from exercise of stock options
|
3 | 8 | ||||||
Treasury
stock purchase
|
— | (448 | ) | |||||
Debt
financing costs
|
(21 | ) | 9 | |||||
Net
cash used in financing activities
|
(29 | ) | (440 | ) | ||||
Effects
of exchange rate changes
|
1,243 | (947 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
5,447 | (2,446 | ) | |||||
Cash
and cash equivalents at beginning of period
|
5,960 | 11,265 | ||||||
Cash
and cash equivalents at end of period
|
$ | 11,407 | $ | 8,819 | ||||
Supplemental
disclosure of cash flow information
|
||||||||
Interest
paid
|
$ | 78 | $ | 91 | ||||
Income
taxes paid
|
$ | 64 | $ | 10 |
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Finished
goods
|
$ | 12,045 | $ | 20,226 | ||||
Component
parts
|
8,565 | 13,385 | ||||||
Total
inventory
|
$ | 20,610 | $ | 33,611 |
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Payroll
and commissions
|
$ | 540 | $ | 447 | ||||
Product
warranty and sales returns allowances
|
2,022 | 1,641 | ||||||
Professional
services
|
64 | 7 | ||||||
Accrued
settlement expense
|
5,000 | — | ||||||
Accrued
inventory
|
43 | 1,021 | ||||||
Accrued
sales promotions
|
844 | 274 | ||||||
Deferred
revenue
|
1,471 | 1,429 | ||||||
Other
|
1,439 | 2,434 | ||||||
Total
accrued expenses
|
$ | 11,423 | $ | 7,253 |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
United
States
|
$ | 14,455 | $ | 14,154 | $ | 52,503 | $ | 62,609 | ||||||||
Rest
of World
|
2,930 | 3,546 | 11,612 | 16,352 | ||||||||||||
Total
net sales
|
$ | 17,385 | $ | 17,700 | $ | 64,115 | $ | 78,961 |
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
|
(98,813 | ) | 0.04 | 281,113 | ||||||||
Options
outstanding at September 30, 2009
|
894,169 | 0.52 | 2,439,282 | |||||||||
Options
exercisable at September 30, 2009
|
805,419 | 0.19 | 2,467,020 |
Period of Exercise
|
Total Options to be
Exercised
|
|||
2009
|
3,125 | |||
2010
|
15,000 | |||
2011
|
27,500 | |||
2012
|
28,209 | |||
2013
|
13,750 | |||
Beyond
2013
|
15,000 | |||
Total
Options
|
102,584 |
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 | |||||||||
Quarter
ended September 30, 2009
|
$ | 479 | (146 | ) | 74 | $ | 407 |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of goods sold
|
63.6 | 61.8 | 71.7 | 58.7 | ||||||||||||
Gross
profit
|
36.4 | 38.2 | 28.3 | 41.3 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development expenses
|
3.5 | 5.0 | 3.4 | 3.5 | ||||||||||||
Sales
and marketing expenses
|
26.2 | 27.9 | 24.9 | 27.5 | ||||||||||||
General
and administrative expenses
|
9.3 | 11.8 | 8.1 | 8.7 | ||||||||||||
Settlement
expense
|
28.7 | — | 7.8 | — | ||||||||||||
Total
operating expenses
|
67.7 | 44.7 | 44.2 | 39.7 | ||||||||||||
Interest
income (expense), net
|
(0.1 | ) | (0.1 | ) | (0.1 | ) | 0.0 | |||||||||
Other
income, net
|
0.0 | (0.0 | ) | 0.0 | (0.1 | ) | ||||||||||
Income
(loss) before income taxes
|
(31.4 | ) | (6.6 | ) | (16.0 | ) | 1.5 | |||||||||
Income
tax expense
|
0.1 | 0.0 | 0.1 | 0.0 | ||||||||||||
Net
income (loss)
|
(31.5 | )% | (6.6 | )% | (16.1 | )% | 1.5 | % |
ADAMS
GOLF, INC.
|
|||
Date: November
10, 2009
|
By:
|
/S/ OLIVER G. BREWER
III
|
|
Oliver
G. Brewer, III
|
|||
Chief
Executive Officer and President
|
|||
|
(Principal
Executive Officer)
|
||
Date: November
10, 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
|
Incorporated
by reference to Third quarter 2009 Form 10-Q File No 001-33978 (Exhibit
10.9)
|
|
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
|