x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
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.)
|
300
Delaware Avenue, Suite 572, Wilmington, Delaware
|
19801
|
(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
17
|
|
Item
3.
|
Legal
Proceedings
|
Page
17
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
Page
18
|
|
PART
II
|
|||
Item
5.
|
Market
for Registrant's Common Equity and Related Stockholders Matters and
Issuer
Purchases of Equity Securities
|
Page
19
|
|
Item
6.
|
Selected
Financial Data
|
Page
21
|
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
Page
21
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Page
31
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
Page
32
|
|
Item
9A.
|
Controls
and Procedures
|
Page
32
|
|
PART
III
|
|||
Item
10
|
Directors
and Executive Officers of the Registrant
|
Page
33
|
|
Item
11
|
Executive
Compensation
|
Page
33
|
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Page
33
|
|
Item
13
|
Certain
Relationships and Related Transactions
|
Page
33
|
|
Item
14
|
Principal
Accounting Fees and Services
|
Page
33
|
|
PART
IV
|
|||
Item
15
|
Exhibits
and Financial Statement Schedules
|
Page
34
|
-- |
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 future market for our capital stock; |
-- | The success of our marketing 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; |
-- | Reliance on third parties, including suppliers; |
-- | The impact of market peers and their respective products; |
-- | The actions of competitors, including pricing, advertising and product development risks concerning future technology; |
-- | 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 the 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 in this Annual Report under "Risk Factors" in Part II, Item 1A, below. |
2006
|
2005
|
2004
|
||||||||
Drivers
|
9.6
|
%
|
27.8
|
%
|
19.6
|
%
|
||||
Fairway
Woods
|
19.5
|
25.8
|
38.1
|
|||||||
Irons
|
67.9
|
42.4
|
39.7
|
|||||||
Wedges
and Other
|
3.0
|
4.0
|
2.6
|
|||||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
|
|
2006
|
2005
|
2004
|
|||||||||||||||||||
Domestic
|
$
|
63,016,000
|
82.9
|
%
|
$
|
48,496,000
|
85.9
|
%
|
$
|
50,301,000
|
88.6
|
%
|
|||||||||
Foreign
|
13,014,000
|
17.1
|
7,928,000
|
14.1
|
6,461,000
|
11.4
|
|||||||||||||||
Total
|
$
|
76,030,000
|
100.0
|
%
|
$
|
56,424,000
|
100.0
|
%
|
$
|
56,762,000
|
100.0
|
%
|
|||||||||
|
|
|
|
|
High
|
Low
|
||||||
2006
|
|||||||
First
Quarter
|
$
|
1.56
|
$
|
1.14
|
|||
Second
Quarter
|
1.66
|
1.40
|
|||||
Third
Quarter
|
1.57
|
1.27
|
|||||
Fourth
Quarter
|
1.97
|
1.31
|
|||||
2005
|
|||||||
First
Quarter
|
$
|
1.70
|
$
|
1.27
|
|||
Second
Quarter
|
1.49
|
1.12
|
|||||
Third
Quarter
|
1.56
|
1.25
|
|||||
Fourth
Quarter
|
1.39
|
1.14
|
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
|
5,697,233
|
$
|
0.04
|
2,184,632
|
||||||
Equity
compensation plans not approved by security holders
|
---
|
n/a
|
---
|
|||||||
Total
|
5,697,233
|
$
|
0.04
|
2,184,632
|
||||||
|
Company
|
December
2001
|
December
2002
|
December
2003
|
December
2004
|
December
2005
|
December
2006
|
||||||
Adams
Golf, Inc.
|
$ 100.00
|
$ 65.79
|
$ 186.85
|
$ 368.38
|
$ 315.77
|
$ 518.37
|
||||||
S&P
Small Cap 600
|
100.00
|
85.37
|
118.49
|
145.33
|
156.49
|
180.14
|
||||||
Peer
Group A (1)
|
100.00
|
70.96
|
95.83
|
87.74
|
94.08
|
94.78
|
(1)
|
Peer
Group consists of Callaway Golf Company, Aldila, Inc. and Cutter
&
Buck Inc.
|
Year
Ended December 31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Consolidated
Statements of Operations Data:
|
||||||||||||||||
Net
sales
|
$
|
76,030
|
$
|
56,424
|
$
|
56,762
|
$
|
50,879
|
$
|
37,917
|
||||||
Operating
income (loss)
|
3,440
|
2,045
|
3,100
|
2,137
|
(8,903
|
)
|
||||||||||
Net
income (loss)
|
$
|
9,000
|
$
|
3,240
|
$
|
3,078
|
$
|
2,003
|
$
|
(8,925
|
)
|
|||||
Income
(loss) per common share (1) :
Basic
|
$
|
0.39
|
$
|
0.14
|
$
|
0.14
|
$
|
0.09
|
$
|
(0.40
|
)
|
|||||
Diluted
|
$
|
0.31
|
$
|
0.12
|
$
|
0.12
|
$
|
0.08
|
$
|
(0.40
|
)
|
|||||
Weighted
average common shares (1):
|
||||||||||||||||
Basic
|
23,321
|
22,734
|
22,554
|
22,480
|
22,480
|
|||||||||||
Diluted
|
28,930
|
27,804
|
26,144
|
24,533
|
22,480
|
|||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||
Total
assets
|
$
|
55,603
|
$
|
44,102
|
$
|
38,378
|
$
|
30,054
|
$
|
26,438
|
||||||
Total
debt (including current maturities)
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Stockholders'
equity
|
$
|
41,869
|
$
|
32,127
|
$
|
26,438
|
$
|
22,228
|
$
|
19,476
|
(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 |
-- | Freight cost by mode (dollars and dollars per unit) |
-- |
Days
of sales outstanding
|
-- | Days of inventory (at cost) |
-- | Days of payables outstanding |
Years
Ended December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
of goods sold
|
55.6
|
53.7
|
50.4
|
|||||||
Gross
profit
|
44.4
|
46.3
|
49.6
|
|||||||
Operating
expenses:
|
||||||||||
Research
and development expenses
|
3.4
|
4.0
|
3.3
|
|||||||
Selling
and marketing expenses
|
26.0
|
29.4
|
28.3
|
|||||||
General
and administrative expenses
|
10.4
|
12.5
|
12.6
|
|||||||
Settlement
expenses
|
---
|
(3.1
|
)
|
---
|
||||||
Restructuring
expense
|
---
|
(0.1
|
)
|
---
|
||||||
Total
operating expenses
|
39.8
|
42.7
|
44.2
|
|||||||
Operating
income
|
4.6
|
3.6
|
5.4
|
|||||||
Interest
income, net
|
0.2
|
0.4
|
0.1
|
|||||||
Other
income, net
|
---
|
1.9
|
0.2
|
|||||||
Income
before income taxes
|
4.8
|
5.9
|
5.7
|
|||||||
Income
tax expense
|
(7.0
|
)
|
0.2
|
0.3
|
||||||
Net
income
|
11.8
|
%
|
5.7
|
%
|
5.4
|
%
|
||||
|
|
|
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
|||||||||||
Long-term
Debt Obligations
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||
Capital
Lease Obligations
|
22,691
|
22,691
|
--
|
--
|
--
|
|||||||||||
Operating
Lease Obligations
|
1,061,475
|
609,290
|
452,185
|
--
|
--
|
|||||||||||
Purchase
Obligations
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Other
Long-term Liabilities
Reflected
on the Registrant's
Balance
sheet under GAAP
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Total
|
$
|
1,084,166
|
$
|
631,981
|
$
|
452,185
|
--
|
--
|
(1) Consolidated
Financial Statements
|
||||
Item
|
Page
|
|||
Index
to Consolidated Financial Statements and Related Financial Statement
Schedule
|
F-1
|
|||
Reports
of Independent Registered Public Accounting Firms
|
F-2
- F-3
|
|||
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
F-4
|
|||
Consolidated
Statements of Operations for the Years ended December 31, 2006,
2005
and
2004
|
F-5
|
|||
Consolidated
Statements of Stockholders' Equity for the Years ended December
31,
2006,
2005 and 2004
|
F-6
- F-7
|
|||
Consolidated
Statements of Cash Flows for the Years ended December 31, 2006,
2005
and
2004
|
F-8
|
|||
Notes
to Consolidated Financial Statements
|
F-9
- F-27
|
|||
(2) Financial
Statement Schedules
|
||||
Our financial statement schedule for the years ended December 31, 2006, 2005 and 2004 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
|
|||
All
other schedules are have been omitted because such schedules are
not
required under the related instructions, or are not applicable, or
because
the information is not present, or is not present in amounts sufficient
to
require submission of the schedule, or because the information required
is
included in the consolidated financial statements and notes
thereto.
|
(3) Exhibits
|
|||||||
The
exhibits listed below are filed as a part of or incorporated by reference
in this Annual Report. Where such filing is made by
incorporation by reference to a previously filed document, such document
is identified in parenthesis. See the Index of Exhibits
included with the exhibits filed as a part of this Annual
Report. |
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
|
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
|
Description
|
Location
|
||||||
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
|
Employment
Agreement - Byron H. (Barney) Adams
|
Incorporated
by reference to the Quarterly Report on Form 10-Q for the quarter
ended
June 30, 2003 (Exhibit 10.13)
|
||||||
Exhibit
10.2
|
Change
of Control Agreement - Eric Logan
|
Incorporated
by reference to the Quarterly Report on Form 10-Q for the quarter
ended
September 30, 2003 (Exhibit 10.14)
|
||||||
Exhibit
10.3
|
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
10.4
|
Extension
of Revolving Line of Credit between Adams Golf, Inc and Bank of
Texas
|
Incorporated
by reference to 2004 Form 10-K (Exhibit 10.15)
|
||||||
Exhibit
10.5*
|
Employment
Agreement - Oliver G. (Chip) Brewer
|
Incorporated
by reference to 2004 Form 10-K (Exhibit 10.16)
|
||||||
Exhibit
10.6*
|
Golf
Consultant Agreement - Thomas S. Watson
|
Incorporated
by reference to 2004 Form 10-K (Exhibit 10.17)
|
||||||
Exhibit
10.7
|
Revolving
Line of Credit between Adams Golf, Inc and Bank of Texas
|
Incorporated
by reference to 2005 Form 10-K (Exhibit 10.8)
|
||||||
Exhibit
10.8
|
Employment
Agreement - Byron H. (Barney) Adams
|
Incorporated
by reference to 2005 Form 10-K (Exhibit 10.9)
|
||||||
Exhibit
10.9
|
Change
of Control - Eric Logan
|
Incorporated
by reference to the Quarterly Report on Form 10-Q for the quarter
ended
March 31, 2006 (Exhibit 10.7)
|
||||||
Exhibit
10.10
|
Commercial
Lease Agreement dated August 16, 2006, between MDN/JSC -II Limited
and the
Company
|
Incorporated
by reference to the Quarterly Report on Form 10-Q for the quarter
ended
September 30, 2006 (Exhibit 10.8)
|
||||||
Exhibit
10.11*
|
Asset
Purchase Agreement of Women’s Golf Unlimited
|
Included
in this filing
|
||||||
Exhibit
21.1
|
Subsidiaries
of the Registrant
|
Included
in this filing
|
||||||
Exhibit
23.1
|
Consent
of KBA Group LLP
|
Included
in this filing
|
||||||
Exhibit
|
Description
|
Location
|
||||||
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
13, 2007
|
By: /S/
B.H. (BARNEY)
ADAMS
|
||
B.H.
(Barney) Adams, Chairman of the Board
|
|||
Date: March
13, 2007
|
By: /S/
B.H. (BARNEY)
ADAMS
|
||
B.H.
(Barney) Adams, Chairman of the Board
|
|||
Date: March
13, 2007
|
By: /S/
OLIVER G.
BREWER III
|
||
Oliver
G. (Chip) Brewer III Chief
Executive Officer, President and Director
|
|||
Date: March
13, 2007
|
By: /S/
ERIC
LOGAN
|
||
Eric
Logan Chief
Financial Officer (Principal
Financial Officer)
|
|||
Date: March
13, 2007
|
By: /S/
PAMELA J.
HIGH
|
||
Pamela
J. High Controller
(Principal
Accounting Officer)
|
|||
|
|||
Date: March
13, 2007
|
By: /S/
MARK R.
MULVOY
|
||
Mark
R. Mulvoy Director
|
|||
Date: March
13, 2007
|
By: /S/
PAUL F. BROWN,
JR.
|
||
Paul
F. Brown, Jr. Director
|
|||
Date: March
13, 2007
|
By: /S/
STEPHEN R.
PATCHIN
|
||
Stephen
R. Patchin Director
|
|||
Date: March
13, 2007
|
By: /S/
ROBERT D.
ROGERS
|
||
Robert
D. Rogers Director
|
|||
Date: March
13, 2007
|
By: /S/
RUSSELL L.
FLEISCHER
|
||
Russell
L. Fleischer Director
|
|||
Page
|
|
Consolidated
Financial Statements
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
F-3
|
Consolidated
Statements of Operations for the Years ended December 31, 2006, 2005
and
2004
|
F-4
|
Consolidated
Statements of Stockholders' Equity for the Years ended December 31,
2006,
2005
and 2004
|
F-5
- F-6
|
Consolidated
Statements of Cash Flows for the Years ended December 31, 2006, 2005
and
2004
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
- F-27
|
Schedule
II - Valuation and Qualifying Accounts
|
S-1
|
/S/
KBA GROUP LLP
|
||
Dallas,
Texas
|
||
March
1, 2007
|
ASSETS
|
|||||||
December
31,
|
|||||||
2006
|
2005
|
||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
9,472
|
$
|
10,747
|
|||
Trade
receivables, net
|
13,553
|
14,171
|
|||||
Inventories,
net
|
24,651
|
16,151
|
|||||
Prepaid
expenses
|
686
|
754
|
|||||
Other
current assets
|
1,371
|
27
|
|||||
Total
current assets
|
49,733
|
41,850
|
|||||
Property
and equipment, net
|
719
|
630
|
|||||
Deferred
tax asset - non current
|
4,052
|
--
|
|||||
Other
assets
|
1,099
|
1,622
|
|||||
$
|
55,603
|
$
|
44,102
|
||||
|
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
6,271
|
$
|
4,691
|
|||
Accrued
expenses
|
7,463
|
7,284
|
|||||
Total
liabilities
|
13,734
|
11,975
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $0.01 par value; authorized 5,000,000 shares; none
issued
|
--
|
--
|
|||||
Common
stock, $.001 par value; authorized 50,000,000 shares; 24,895,226
and
23,471,653 shares issued and 23,958,606 and 22,814,153 shares outstanding
in 2006 and 2005, respectively
|
25
|
23
|
|||||
Additional
paid-in capital
|
90,630
|
89,499
|
|||||
Accumulated
other comprehensive income
|
887
|
888
|
|||||
Accumulated
deficit
|
(46,147
|
)
|
(55,147
|
)
|
|||
Treasury
stock, 936,620 common shares at December 31, 2006 and 657,500 common
shares at December 31, 2005, at cost
|
(3,526
|
)
|
(3,136
|
)
|
|||
Total
stockholders' equity
|
41,869
|
32,127
|
|||||
Commitments
and contingencies
|
|||||||
$
|
55,603
|
$
|
44,102
|
||||
|
|
Years
Ended December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Net
sales
|
$
|
76,030
|
$
|
56,424
|
$
|
56,762
|
||||
Cost
of goods sold
|
42,304
|
30,309
|
28,580
|
|||||||
Gross
profit
|
33,726
|
26,115
|
28,182
|
|||||||
Operating
expenses:
|
||||||||||
Research
and development expenses
|
2,607
|
2,285
|
1,847
|
|||||||
Selling
and marketing expenses
|
19,800
|
16,571
|
16,061
|
|||||||
General
and administrative expenses
|
7,879
|
7,063
|
7,174
|
|||||||
Reversal
of settlement expenses (benefit)
|
--
|
(1,771
|
)
|
--
|
||||||
Reversal
of restructuring expense (benefit)
|
--
|
(78
|
)
|
--
|
||||||
Total
operating expenses
|
30,286
|
24,070
|
25,082
|
|||||||
Operating
income
|
3,440
|
2,045
|
3,100
|
|||||||
Other
income (expense):
|
||||||||||
Interest
income
|
201
|
236
|
81
|
|||||||
Interest
expense
|
(3
|
)
|
(6
|
)
|
(13
|
)
|
||||
Other
|
35
|
1,052
|
76
|
|||||||
Income
before income taxes
|
3,673
|
3,327
|
3,244
|
|||||||
Income
tax expense (benefit)
|
(5,327
|
)
|
87
|
166
|
||||||
Net
income
|
$
|
9,000
|
$
|
3,240
|
$
|
3,078
|
||||
|
|
|||||||||
Income
per common share :
Basic
|
$
|
0.39
|
$
|
0.14
|
$
|
0.14
|
||||
|
|
|
||||||||
Diluted
|
$
|
0.31
|
$
|
0.12
|
$
|
0.12
|
||||
|
|
Shares
of
|
Additional
|
Comprehensive
|
Cost
of
|
Total
|
|||||||||||||||||||||
Common
|
Common
|
Paid-in
|
Income
|
Accumulated
|
Comprehensive
|
Treasury
|
Stockholders'
|
||||||||||||||||||
Stock
|
Stock
|
Capital
|
(Loss)
|
Deficit
|
Income
|
Stock
|
Equity
|
||||||||||||||||||
Balance,
December 31, 2003
|
23,137,571
|
$
|
23
|
$
|
87,162
|
$
|
(356
|
)
|
$
|
(61,465
|
)
|
$
|
(3,136
|
)
|
$
|
22,228
|
|||||||||
Comprehensive
income:
|
|||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
3,078
|
$
|
3,078
|
--
|
3,078
|
||||||||||||||||
Other
comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Unrealized
gain on foreign currency translation
|
--
|
--
|
--
|
331
|
--
|
331
|
--
|
331
|
|||||||||||||||||
Comprehensive
income
|
--
|
--
|
--
|
--
|
--
|
$
|
3,409
|
--
|
--
|
||||||||||||||||
Stock
option forfeitures
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Stock
options exercised
|
120,082
|
--
|
8
|
--
|
--
|
--
|
8
|
||||||||||||||||||
Issuance
of stock options
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Amortization
of deferred compensation
|
--
|
--
|
793
|
--
|
--
|
--
|
793
|
||||||||||||||||||
Balance,
December 31, 2004
|
23,257,653
|
23
|
87,963
|
(25
|
)
|
(58,387
|
)
|
(3,136
|
)
|
26,438
|
|||||||||||||||
Comprehensive
income:
|
|||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
3,240
|
$
|
3,240
|
--
|
3,240
|
||||||||||||||||
Other
comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Unrealized
gain on foreign currency translation
|
--
|
--
|
--
|
913
|
--
|
913
|
--
|
913
|
|||||||||||||||||
Comprehensive
income
|
--
|
--
|
--
|
--
|
--
|
$
|
4,153
|
--
|
--
|
||||||||||||||||
Stock
option forfeitures
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Stock
options exercised
|
214,000
|
--
|
40
|
--
|
--
|
--
|
40
|
||||||||||||||||||
Issuance
of stock options
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||||||
Amortization
of deferred compensation
|
--
|
--
|
1,496
|
--
|
--
|
--
|
1,496
|
||||||||||||||||||
Balance,
December 31, 2005
|
23,471,653
|
$
|
23
|
$
|
89,499
|
$
|
888
|
$
|
(55,147
|
)
|
$
|
(3,136
|
)
|
$
|
32,127
|
||||||||||
(continued)
|
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
|
23,471,653
|
$
|
23
|
$
|
89,499
|
$
|
888
|
$
|
(55,147
|
)
|
$
|
(3,136
|
)
|
$
|
32,127
|
||||||||||
Comprehensive
income:
|
|||||||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
9,000
|
$
|
9,000
|
--
|
9,000
|
||||||||||||||||
Other
comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Unrealized
loss on foreign currency translation
|
--
|
--
|
--
|
(1
|
)
|
--
|
(1
|
)
|
--
|
(1
|
)
|
||||||||||||||
Comprehensive
income
|
--
|
--
|
--
|
--
|
--
|
$
|
8,999
|
--
|
--
|
||||||||||||||||
Stock
options exercised
|
1,423,573
|
2
|
13
|
--
|
--
|
--
|
15
|
||||||||||||||||||
Treasury
stock purchased
|
--
|
--
|
--
|
--
|
--
|
(390
|
)
|
(390
|
)
|
||||||||||||||||
Amortization
of deferred compensation
|
--
|
--
|
1,118
|
--
|
--
|
--
|
1,118
|
||||||||||||||||||
Balance,
December 31, 2006
|
24,895,226
|
$
|
25
|
$
|
90,630
|
$
|
887
|
$
|
(46,147
|
)
|
$
|
(3,526
|
)
|
$
|
41,869
|
Years
Ended December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
9,000
|
$
|
3,240
|
$
|
3,078
|
||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||||
Depreciation
and amortization of property and equipment and intangible
assets
|
335
|
447
|
562
|
|||||||
Amortization
of deferred compensation
|
1,118
|
1,496
|
793
|
|||||||
Provision
for doubtful accounts
|
853
|
557
|
1,224
|
|||||||
Provision
for deferred income tax
|
(5,402
|
)
|
--
|
--
|
||||||
Changes
in assets and liabilities:
|
||||||||||
Trade
receivables
|
(236
|
)
|
(5,411
|
)
|
(108
|
)
|
||||
Inventories
|
(8,500
|
)
|
(4,593
|
)
|
(3,500
|
)
|
||||
Prepaid
expenses
|
68
|
(519
|
)
|
223
|
||||||
Other
current assets
|
7
|
110
|
(131
|
)
|
||||||
Other
assets
|
525
|
(1,579
|
)
|
--
|
||||||
Accounts
payable
|
1,580
|
815
|
2,683
|
|||||||
Accrued
expenses
|
195
|
(303
|
)
|
1,569
|
||||||
Other
non-current liabilities
|
--
|
(449
|
)
|
(79
|
)
|
|||||
Net
cash provided by (used in) operating activities
|
(457
|
)
|
(6,189
|
)
|
6,314
|
|||||
Cash
flows from investing activities:
|
||||||||||
Purchase
of equipment
|
(403
|
)
|
(338
|
)
|
(347
|
)
|
||||
Net
cash used in investing activities
|
(403
|
)
|
(338
|
)
|
(347
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Principal
payments under capital lease obligation
|
(35
|
)
|
(43
|
)
|
(59
|
)
|
||||
Exercise
of stock options
|
15
|
39
|
8
|
|||||||
Treasury
stock purchase
|
(390
|
)
|
--
|
--
|
||||||
Debt
financing costs
|
(4
|
)
|
(2
|
)
|
(15
|
)
|
||||
Net
cash used in financing activities
|
(414
|
)
|
(6
|
)
|
(66
|
)
|
||||
Effects
of exchange rate changes on cash and cash equivalents
|
(1
|
)
|
913
|
331
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
(1,275
|
)
|
(5,620
|
)
|
6,232
|
|||||
Cash
and cash equivalents at beginning of the year
|
10,747
|
16,367
|
10,135
|
|||||||
Cash
and cash equivalents at end of the year
|
$
|
9,472
|
$
|
10,747
|
$
|
16,367
|
||||
|
|
|||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Interest
paid
|
$
|
3
|
$
|
6
|
$
|
13
|
||||
|
|
|||||||||
Income
taxes paid
|
$
|
75
|
$
|
88
|
$
|
129
|
||||
|
|
|
||||||||
Supplemental
disclosure of non-cash investing and financing activities - equipment
financed with capital lease
|
$
|
23
|
$
|
15
|
$
|
--
|
||||
|
|
|
Beginning
Balance
|
Charges
for Warranty claims
|
Estimated
accruals
|
Ending
Balance
|
||||||||||
Year
ended December 31, 2006
|
$
|
307
|
(506
|
)
|
588
|
$
|
389
|
||||||
Year
ended December 31, 2005
|
$
|
297
|
(398
|
)
|
408
|
$
|
307
|
2005
|
2004
|
||||||
Net
income
|
|||||||
As
reported
|
$
|
3,240
|
$
|
3,078
|
|||
Add:
Stock-based compensation expense included in reported
net income
|
1,496
|
793
|
|||||
Deduct:
Total stock-based compensation expense determined under the fair
value method
|
(1,505
|
)
|
(612
|
)
|
|||
Pro
forma net income
|
$
|
3,231
|
$
|
3,259
|
|||
Basic
income per common share:
|
|||||||
As
reported
|
$
|
0.14
|
$
|
0.14
|
|||
Pro
forma
|
$
|
0.14
|
$
|
0.14
|
|||
Diluted
income per common share:
|
|||||||
As
reported
|
$
|
0.12
|
$
|
0.12
|
|||
Pro
forma
|
$
|
0.12
|
$
|
0.12
|
2006
|
2005
|
||||||
Trade
receivables
|
$
|
14,255
|
$
|
15,123
|
|||
Allowance
for doubtful accounts
|
(702
|
)
|
(952
|
)
|
|||
$
|
13,553
|
$
|
14,171
|
||||
2006
|
2005
|
||||||
Finished
goods
|
$
|
13,506
|
$
|
7,453
|
|||
Component
parts
|
11,145
|
8,698
|
|||||
$
|
24,651
|
$
|
16,151
|
2006
|
2005
|
||||||
Equipment
|
$
|
1,992
|
$
|
1,937
|
|||
Computers
and software
|
9,197
|
9,008
|
|||||
Furniture
and fixtures
|
840
|
712
|
|||||
Leaseholds
improvements
|
188
|
188
|
|||||
Accumulated
depreciation and amortization
|
(11,498
|
)
|
(11,215
|
)
|
|||
$
|
719
|
$
|
630
|
||||
|
2006
|
2005
|
||||||
Maintenance
agreements
|
17
|
16
|
|||||
Other
receivable
|
4
|
11
|
|||||
Deferred
tax asset
|
1,350
|
--
|
|||||
$
|
1,371
|
$
|
27
|
2006
|
2005
|
||||||
Deposits
|
14
|
--
|
|||||
Long
term endorsements
|
1,080
|
1,620
|
|||||
Other
|
5
|
2
|
|||||
$
|
1,099
|
$
|
1,622
|
2006
|
2005
|
||||||
Payroll
and commissions
|
$
|
2,046
|
$
|
1,362
|
|||
Advertising
|
326
|
130
|
|||||
Product
warranty expense and sales returns
|
2,040
|
1,546
|
|||||
Professional
services
|
7
|
43
|
|||||
Accrued
inventory
|
296
|
1,242
|
|||||
Accrued
sales promotions
|
859
|
683
|
|||||
Deferred
revenue
|
805
|
1,895
|
|||||
Other
|
1,084
|
383
|
|||||
$
|
7,463
|
$
|
7,284
|
Years
ending
|
||||
December
31,
|
||||
2007
|
$
|
609
|
||
2008
|
439
|
|||
2009
|
13
|
|||
2010
|
--
|
|||
2011
|
--
|
|||
$
|
1,061
|
2006
|
2005
|
2004
|
||||||||
Federal-current
|
$
|
68
|
$
|
83
|
$
|
162
|
||||
State-current
|
7
|
4
|
4
|
|||||||
Deferred
|
(5,402
|
)
|
||||||||
$
|
(5,327
|
)
|
$
|
87
|
$
|
166
|
2006
|
2005
|
2004
|
||||||||
Computed
"expected" tax benefit
|
$
|
1,286
|
$
|
1,165
|
$
|
1,134
|
||||
State
income taxes, net of federal tax expense
|
37
|
33
|
32
|
|||||||
Change
in valuation allowance for deferred tax assets
|
(6,770
|
)
|
(1,242
|
)
|
(1,204
|
)
|
||||
Other
|
120
|
131
|
204
|
|||||||
$
|
(5,327
|
)
|
$
|
87
|
$
|
166
|
2006
|
2005
|
||||||
Deferred
tax assets:
|
|||||||
Allowance
for doubtful accounts receivable
|
$
|
253
|
$
|
343
|
|||
Product
warranty and sales returns
|
735
|
557
|
|||||
Property
and equipment
|
35
|
63
|
|||||
Other
reserves
|
294
|
514
|
|||||
Deferred
Compensation
|
850
|
925
|
|||||
263A
adjustment
|
106
|
128
|
|||||
Research
and development tax credit carryforwards
|
306
|
306
|
|||||
Net
operating loss carryforwards
|
14,080
|
15,458
|
|||||
Total
deferred tax assets
|
16,659
|
18,294
|
|||||
Valuation
allowance
|
(11,257
|
)
|
(18,027
|
)
|
|||
Net
deferred tax assets
|
5,402
|
267
|
|||||
Deferred
tax liabilities:
|
|||||||
Other
|
--
|
267
|
|||||
Total
deferred tax liabilities
|
--
|
267
|
|||||
Net
deferred taxes assets
|
$
|
5,402
|
$
|
--
|
2006
|
2005
|
||||||
Current
|
$
|
1,350
|
$
|
--
|
|||
Non-current
|
4,052
|
--
|
|||||
$
|
5,402
|
$
|
--
|
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
|
|||||
$0.01
- $0.30
|
5,447,223
|
6.93
years
|
$ 0.01
|
3,722,007
|
$ 0.01
|
|||||
$0.31
- $0.99
|
150,000
|
6.12
years
|
0.31
|
112,500
|
0.31
|
|||||
$1.00
- $1.97
|
100,000
|
8.26
years
|
1.19
|
25,000
|
1.20
|
|||||
5,697,223
|
6.93
years
|
$ 0.04
|
3,859,507
|
$ 0.03
|
Weighted
|
Aggregate
|
|||||||||
Number
of
|
Average
|
Intrinsic
|
||||||||
Shares
|
Exercise
price
|
Value
of options
|
||||||||
Options
outstanding at December 31, 2003
|
4,408,187
|
$
|
0.46
|
|||||||
Options
granted
|
2,745,413
|
0.03
|
||||||||
Options
forfeited (expired)
|
(638,540
|
)
|
2.26
|
|||||||
Options
exercised
|
(118,082
|
)
|
0.07
|
|||||||
Options
outstanding at December 31, 2004
|
6,396,978
|
0.09
|
||||||||
Options
granted
|
1,294,161
|
0.01
|
||||||||
Options
forfeited (expired)
|
(306,333
|
)
|
1.32
|
|||||||
Options
exercised
|
(214,000
|
)
|
0.18
|
|||||||
Options
outstanding at December 31, 2005
|
7,170,806
|
0.03
|
||||||||
Options
granted
|
50,000
|
1.18
|
||||||||
Options
forfeited (expired)
|
(100,000
|
)
|
0.74
|
|||||||
Options
exercised
|
(1,423,573
|
)
|
0.01
|
1,973,664
|
||||||
Options
outstanding at December 31, 2006
|
5,697,223
|
$
|
0.04
|
11,003,577
|
||||||
Options
exercisable at December 31, 2006
|
3,859,507
|
$
|
0.03
|
7,501,134
|
Period
of Exercise
|
Total
Options to be exercised
|
|||
2007
|
1,194,667
|
|||
2008
|
777,695
|
|||
2009
|
360,000
|
|||
2010
|
60,000
|
|||
Beyond
2010
|
353,199
|
|||
Total
Options
|
2,745,561
|
2006
|
2005
|
2004
|
||||||||
United
States
|
$
|
63,016
|
$
|
48,496
|
$
|
50,301
|
||||
Rest
of world
|
13,014
|
7,928
|
6,461
|
|||||||
$
|
76,030
|
$
|
56,424
|
$
|
56,762
|
2006
|
2005
|
2004
|
||||||||
Fairway
woods
|
$
|
14,841
|
$
|
14,539
|
$
|
21,630
|
||||
Drivers
|
7,323
|
15,673
|
11,142
|
|||||||
Irons
|
51,649
|
23,919
|
21,107
|
|||||||
Wedges
and other
|
2,217
|
2,293
|
2,883
|
|||||||
Total
|
$
|
76,030
|
$
|
56,424
|
$
|
56,762
|
2006
|
||||||||||||||||
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
|||||||||||||
Net
sales
|
$
|
22,265
|
$
|
25,733
|
$
|
14,960
|
$
|
13,072
|
||||||||
Gross
profit
|
$
|
10,452
|
$
|
11,170
|
$
|
6,385
|
$
|
5,719
|
||||||||
Net
income (loss)
|
$
|
3,349
|
$
|
1,770
|
$
|
(500
|
)
|
$
|
4,381
|
|||||||
Income
(loss) per share - basic
|
$
|
0.15
|
$
|
0.08
|
$
|
(0.02
|
)
|
$
|
0.19
|
|||||||
-
diluted
|
0.12
|
0.06
|
(0.02
|
)
|
0.15
|
|||||||||||
2005
|
||||||||||||||||
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
||||||||||||
Net
sales
|
$
|
16,798
|
$
|
19,792
|
$
|
10,180
|
$
|
9,654
|
||||||||
Gross
profit
|
$
|
8,853
|
$
|
9,029
|
$
|
4,153
|
$
|
4,080
|
||||||||
Net
income (loss)
|
$
|
3,490
|
$
|
1,182
|
$
|
(404
|
)
|
$
|
(1,028
|
)
|
||||||
Income
(loss) per share - basic
|
$
|
0.15
|
$
|
0.05
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
||||||
-
diluted
|
0.13
|
0.04
|
(0.02
|
)
|
(0.04
|
)
|
Schedule
II
|
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, 2006
|
$
|
952
|
853
|
1,103
|
$
|
702
|
|||||||
Year
ended December 31, 2005
|
$
|
746
|
557
|
351
|
$
|
952
|
|||||||
Year
ended December 31, 2004
|
$
|
332
|
1,510
|
1,096
|
$
|
746
|
|||||||
Product
warranty and sales returns:
|
|||||||||||||
Year
ended December 31, 2006
|
$
|
1,546
|
771
|
277
|
$
|
2,040
|
|||||||
Year
ended December 31, 2005
|
$
|
1,120
|
742
|
316
|
$
|
1,546
|
|||||||
Year
ended December 31, 2004
|
$
|
1,015
|
437
|
332
|
$
|
1,120
|
|||||||
Inventory
obsolescence
|
|||||||||||||
Year
ended December 31, 2006
|
$
|
215
|
--
|
62
|
$
|
153
|
|||||||
Year
ended December 31, 2005
|
$
|
474
|
--
|
259
|
$
|
215
|
|||||||
Year
ended December 31, 2004
|
$
|
465
|
--
|
(9
|
)
|
$
|
474
|
||||||
Deferred
tax asset valuation allowance:
|
|||||||||||||
Year
ended December 31, 2006
|
$
|
18,027
|
(6,770
|
)
|
--
|
$
|
11,257
|
||||||
Year
ended December 31, 2005
|
$
|
19,269
|
(1,165
|
)
|
77
|
$
|
18,027
|
||||||
Year
ended December 31, 2004
|
$
|
20,472
|
(1,134
|
)
|
69
|
$
|
19,269
|
(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.
|