Commission File Number 0-29014
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
AMENDMENT NO. 1 TO
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
TEARDROP GOLF COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 57-1056600
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1080 Lousons Road
Union, New Jersey 07083
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (908) 688-4445
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Number of shares of Common Stock outstanding as of March 31, 2000: 5,262,565
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Part 1. Financial Information
Item 1. Financial Statements
TearDrop Golf Company
Consolidated Balance Sheet
March 31, 2000 and December 31, 1999 (All dollar
amounts, except share and per share amounts, in $000's)
<TABLE>
<CAPTION>
March 31, December 31,
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2000 1999
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ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 540 $ 481
Accounts receivable less allowance for
returns and doubtful accounts of $2,195 and $1,793 17,437 11,932
Inventories 11,235 10,778
Other current assets 394 148
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Total current assets 29,606 23,339
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PROPERTY AND EQUIPMENT, less accumulated
depreciation 4,179 4,334
PATENTS & TRADEMARKS, less accumulated
amortization 6,203 6,302
GOODWILL, less accumulated amortization 513 525
------- -------
$40,501 $34,500
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $11,035 $11,064
Accrued liabilities 2,412 2,594
Note payable - shareholder 1,000 500
Current portion of long term debt 1,435 1,363
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Total current liabilities 15,882 15,521
LONG TERM DEBT 20,939 15,705
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par value, authorized
1,000,000 shares, issued and outstanding -- --
none
Common stock, $.01 par value, authorized
10,000,000 shares, issued and 5,262,565
outstanding shares 53 53
Capital in excess of par value 25,346 25,346
Accumulated other comprehensive income (79) (79)
Accumulated deficit (21,640) (22,046)
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Total stockholders' equity 3,680 3,274
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$ 40,501 $ 34,500
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</TABLE>
See Notes to Consolidated Financial Statements
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TearDrop Golf Company
Consolidated Statement of Operations
For the Three Months Ended
March 31, 2000 and 1999
(All dollar amounts, except share and per share amounts, in $000's)
(Unaudited)
Three Months
Ended March 31
--------------------------
2000 1999
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Net sales $ 13,599 $ 15,218
Cost of sales 6,515 9,071
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Gross profit 7,084 6,147
Selling, general and administrative expenses 6,285 8,733
Other income 103 114
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Income (loss) from operations 902 (2,472)
Interest (expense), net (496) (419)
----------- -----------
Income (loss) before income taxes 406 (2,891)
Income tax (expense) (142) --
Utilization of net tax loss carryforward 142 --
----------- -----------
Net income (loss) $ 406 $ (2,891)
=========== ===========
Net income (loss) per common share - basic $ 0.08 $ (0.56)
=========== ===========
Net income (loss) per common share - diluted $ 0.08 $ (0.56)
=========== ===========
Weighted average number of
common shares outstanding - basic 5,262,565 5,179,890
=========== ===========
Weighted Average Number of
common shares outstanding - diluted 5,314,211 5,179,890
=========== ===========
See Notes to Consolidated Financial Statements
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TearDrop Golf Company
Consolidated Statement of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(All dollar amounts, except share and per share amounts, in $000's)
(Unaudited)
Three Months
Ended March 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 406 $(2,891)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 307 246
Provision for doubtful accounts 135 145
Changes in operating assets and liabilities:
(Increase) in accounts receivables (5,640) (7,466)
(Increase) decrease in inventories (457) 3,584
(Increase) in other current assets (246) (986)
Increase (decrease) in accounts payable and other
current liabilities (211) 1,499
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NET CASH (USED) IN OPERATING ACTIVITIES (5,706) (5,869)
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CASH FLOWS FROM INVESTING ACTIVITIES
Investment in patents and trademarks (21) --
Purchases of property and equipment (20) (14)
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NET CASH USED IN INVESTING ACTIVITIES (41) (14)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under financing agreements 5,306 5,327
Proceeds from shareholder note payable 500 500
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,806 5,827
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 59 (56)
CASH AND CASH EQUIVALENTS:
Beginning of year 481 373
------- -------
End of period $ 540 $ 317
======= =======
See Notes to Consolidated Financial Statements
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TEARDROP GOLF COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All amounts, except share and per share amounts, in $000's
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of our management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation have
been included. The results for the quarter ended March 31, 2000 do not
necessarily indicate the results that may be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1999.
During the three months ended March 31, 2000 and 1999, total comprehensive
income (loss) amounted to $406 and $(2,891), respectively.
NOTE 2 - INVENTORIES
Inventories at March 31, 2000 and December 31, 1999 consist of the
following:
March 31, 2000 December 31, 1999
-------------- -----------------
Raw materials and work in process $ 4,776 $ 5,401
Finished goods 6,459 5,377
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Total inventories $11,235 $10,778
NOTE 3 - BANK LOAN
On January 21, 2000, we completed a new revolving loan and credit
agreement with Congress Financial Corporation ("Congress") for $28,000,
including term loans of $6,675, which replaced and repaid the outstanding loan
due First Union National Bank. The loan is due in two years and bears interest
at Congress' prime lending rate plus a) 1% for the revolving portion and $2,175
of the term portion and b) 1.5% for $4,500 of the term loan, and is secured by
substantially all of our assets. Of the term loans, $4,500 is payable at the
rate of $500 quarterly, commencing August 1, 2000, with the balance due at
maturity of the line and $2,175 is payable at the rate of $36 on the first day
of each month, commencing March 1, 2000.
In March 1999, our Chairman of the Board and Chief Executive Officer
loaned us $500 bearing interest at 8% due upon demand, once we have reached
certain reduced levels of indebtedness under the credit facility with the Bank.
In January 2000, the loan was increased to $1,000, and the repayment terms were
changed to be due on demand, payable upon the
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achievement of certain specified debt levels under the revolving credit
agreement and was made convertible upon shareholder approval in April 2000 into
our Common Stock at the rate of $1 per share. In this connection, the difference
between the fair market value of our Common Stock on the date of shareholder
approval ($1.688) and the conversion price of $1 will result in a non-cash
charge to earnings in the second quarter of 2000 of $688.
The carrying value of the outstanding debt approximates its fair value.
NOTE 4 - SEASONALITY
The purchasing decisions of most customers are typically made in the
autumn and a vast majority of sales are expected to occur during the first six
months of the year. In addition, quarterly results may vary from year to year
due to the timing of a new product introductions, orders and sales, advertising
expenditures, promotional periods and shipments. Accordingly, comparisons of
quarterly information of our results of operations may not be indicative of our
overall annual performance.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
We have entered into endorsement agreements with touring professionals for
periods of up to three years. The agreements typically provide for a base
compensation and bonuses based upon, among other things, tournament
performances, standings on the official money list and earning spots on the
Ryder or President Cup teams.
Minimum compensation requirements for the years ending December 31, 2000
and 2001 are approximately $3,200 and $1,000 respectively. Additionally, we have
agreed to issue options to purchase 25,000 and 16,000 shares of our Common Stock
in connection with these agreements for the years ending December 31, 2000 and
2001 respectively. Of the options to be issued under these agreements, 4,000 to
be granted in 2000 could be exchanged for $50.
In April 1999, we extended the employment agreement with our Chairman of
the Board and Chief Executive Officer, to expire on June 24, 2002. The agreement
provides for annual compensation of $500 and performance bonuses, as defined.
NOTE 6 - SEGMENT INFORMATION
It is our opinion that we, at this time, have only one reportable segment,
and that segment is the manufacture, marketing and distribution of golf
equipment. We distribute from our manufacturing and distribution facility in
Morton Grove, Illinois to all areas of the world where golf is played. The
following discussion sets forth the required disclosure regarding single segment
information:
We operated as a single reportable segment with sales the first three
months of 2000 of $13,599, of which $10,758 were sales in the United States and
$2,841 were sales outside of the United States. We sell our products in the
United States through our own sales force to
<PAGE>
approximately 1,500 national accounts (such as national cataloguers, sporting
goods retail chain stores, etc.) and to over 6,000 golf course pro shops which
in turn sell directly to the end user. We sell our products outside of the
United States through a sales office in Canada and through distributors in other
countries.
NOTE 7 - EARNINGS PER SHARE
The difference between the basic and diluted weighted number of Common
Shares outstanding is dilutive stock options.
NOTE 8 - STOCK OPTIONS
In April 2000, our shareholders approved the grant to our Chairman of the
Board and Chief Executive Officer of an option to purchase 1,500,000 shares of
our Common Stock at a price of $1.375. As a result, there will be a non-cash
charge to earnings of $470 in the second quarter of 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TEARDROP GOLF COMPANY
Dated: June 20, 2000 /s/ Rudy A. Slucker
--------------------------------------------------
Rudy A. Slucker, President and Chief
Executive Officer (Principal Executive Officer)
Dated: June 20, 2000 /s/ Joseph Cioni
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Joseph Cioni, Vice President of Finance and Chief
Financial Officer (Principal Financial and
Accounting Officer)
