<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended July 2, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _____ to _____.
Commission File Number: 0-14146
S2 GOLF INC.
------------
(Exact Name of Registrant as Specified in its Charter)
New Jersey 22-2388568
- ---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18 Gloria Lane, Fairfield, NJ 07004
- ----------------------------- -----
(Address of Principal Executive Office) (Zip Code)
(201) 227-7783
--------------
(Registrant's telephone number, including area code)
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 of 1934
during the preceding 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
--- ---
On July 2, 1999, 2,219,312 shares of common stock, $.01 par value, were issued
and outstanding.
<PAGE> 2
S2 GOLF INC.
FORM 10-Q
FOR QUARTERLY PERIOD ENDED JULY 2, 1999
INDEX
-----
Page Number
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Balance Sheets -
July 2, 1999 and December 31, 1999 2
Statements of Operations -
Three Months Ended July 2, 1999 and
June 28, 1998 3
Six Months Ended July 2, 1999 and 4
June 28, 1998
Statements of Cash Flows -
Six Months Ended July 2, 1999 and
June 28, 1998 5
Notes to Financial Statements 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 10
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 10
<PAGE> 3
S2 GOLF INC.
BALANCE SHEETS
AS OF JULY 2, 1999 (UNAUDITED)
AND DECEMBER 31, 1998 (AUDITED)
<TABLE>
<CAPTION>
July 2, Dec. 31
1999 1998
---- ----
ASSETS
<S> <C> <C>
Current Assets
Cash $ 1,715 $ 1,576
Accounts Receivable (Net of Allowance
for Doubtful Accounts of $313,688 in 1999
and $212,562 in 1998 3,044,569 3,312,878
Inventory 2,939,567 3,640,123
Prepaid Expenses 105,690 32,418
Deferred Income Taxes 234,316 215,972
----------- -----------
Total Current Assets 6,325,857 7,202,967
Plant and Equipment - Net 50,263 59,442
Non-Current Deferred Income Taxes 106,296 118,056
Other Assets - Net 146,141 153,615
----------- -----------
Total Assets 6,628,557 7,534,080
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short term Borrowings $ 1,323,108 $ 2,766,879
Accounts Payable 577,804 324,849
Accrued Expenses 364,528 288,178
Other Current Liabilities 59,086 56,075
----------- -----------
Total Current Liabilities 2,324,526 3,435,981
Non-Current Liabilities 111,048 146,157
----------- -----------
Total Liabilities 2,435,574 3,582,138
Commitments and Contingencies
Shareholders' Equity
Common Stock, $.01 Par; 12,000,000 Authorized
Shares: 2,219,313 and 2,219,313 Issued and
Outstanding at July 2, 1999 and December 31,
1998 respectively 22,193 22,193
Additional Paid in Capital 4,040,795 4,040,795
Accumulated Retained Earnings /(Deficit) 129,995 (111,046)
----------- -----------
Total Shareholders' Equity 4,192,983 3,951,942
----------- -----------
Total Liabilities and Shareholders' Equity $ 6,628,557 $ 7,534,080
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
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<PAGE> 4
S2 GOLF INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
JULY 2, 1999 AND JUNE 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
July 2 June 28
1999 1998
---- ----
<S> <C> <C>
Net Sales $ 3,514,504 $ 3,611,429
Cost of Goods Sold 2,335,802 2,387,303
----------- -----------
Gross Profit 1,178,702 1,224,126
----------- -----------
Operating Expenses:
Selling 478,020 423,424
General & Administrative 301,435 297,357
----------- -----------
Total Operating Expenses 779,455 720,781
----------- -----------
Operating Income 399,247 503,345
----------- -----------
Other Income (Expense)
Interest Expense (60,121) (115,424)
Other Income (Expense) - 34,113
----------- -----------
Other - Net (60,121) (81,311)
----------- -----------
Income Before Income Taxes 339,126 422,034
Provision for Income Taxes 104,496 172,355
----------- -----------
Net Income $ 234,630 $ 249,679
=========== ===========
Earnings per Common Share - Basic $ 0.11 $ 0.11
=========== ===========
Diluted $ 0.10 $ 0.10
=========== ===========
Weighted Average Number of Shares Outstanding -
Basic 2,219,316 2,218,925
Diluted 2,299,579 2,453,806
</TABLE>
The accompanying notes are an integral part of these statements
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<PAGE> 5
S2 GOLF INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED
JULY 2, 1999 AND JUNE 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
July 2 June 28
1999 1998
---- ----
<S> <C> <C>
Net Sales $ 6,193,829 $ 6,997,058
Cost of Goods Sold 4,198,199 4,674,870
----------- -----------
Gross Profit 1,995,630 2,322,188
----------- -----------
Operating Expenses:
Selling 929,892 902,170
General & Administrative 591,916 590,612
----------- -----------
Total Operating Expenses 1,521,808 1,492,782
----------- -----------
Operating Income 473,822 829,406
----------- -----------
Other Income (Expense)
Interest Expense (124,449) (214,903)
Other Income (Expense) 562 35,192
----------- -----------
Other - Net (123,887) (179,711)
----------- -----------
Income Before Income Taxes 349,935 649,695
Provision for Income Taxes 108,894 263,281
----------- -----------
Net Income $ 241,041 $ 386,414
=========== ===========
Earnings per Common Share - Basic $ 0.11 $ 0.17
=========== ===========
Diluted $ 0.10 $ 0.16
=========== ===========
Weighted Average Number of Shares Outstanding -
Basic 2,219,316 2,218,848
Diluted 2,306,553 2,475,005
</TABLE>
The accompanying notes are an integral part of these statements
-4-
<PAGE> 6
S2 GOLF INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JULY 2, 1999 AND JUNE 28, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
July 2, June 28,
1999 1998
---- ----
OPERATING ACTIVITIES
- --------------------
<S> <C> <C>
Net Income $ 241,041 $ 386,414
Adjustments to Reconcile Net Income to Net Cash Provided
By (Used in) Operating Activities:
Depreciation and Amortization 27,481 28,808
Deferred Income Taxes (6,584) 0
Issuance of Stock for Compensation - 2,000
Changes in Assets and Liabilities:
Accounts Receivable 268,309 (470,605)
Inventory 700,556 (2,103,593)
Prepaid Expenses (73,272) 16,934
Other Assets (890) (3,906)
Accounts Payable 252,955 520,879
Accrued Expenses 76,350 174,735
Other Current and Non-Current Liabilities (32,098) (27,178)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATIONS 1,453,848 (1,475,512)
----------- -----------
INVESTING ACTIVITIES
- --------------------
Purchase of Equipment (9,938) (5,506)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (9,938) (5,506)
FINANCING ACTIVITIES
- --------------------
Proceeds from Line of Credit 4,939,797 8,191,837
Payments on Line of Credit (6,383,568) (6,820,805)
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,443,771) 1,371,032
----------- -----------
(DECREASE) INCREASE IN CASH 138 (109,986)
CASH - BEGINNING OF PERIOD 1,576 121,431
----------- -----------
CASH - END OF PERIOD $ 1,714 $ 11,445
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES
- ----------------------------------
Cash Paid During the Year For:
Interest $ 124,449 $ 214,903
Income Taxes (Net of Refund) 179,881 50,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
-5-
<PAGE> 7
S2 GOLF INC.
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of S2 Golf Inc. (the "Company")
have been prepared in accordance with generally accepted accounting principals
for interim financial reporting. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all material
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months ended
July 2, 1999 are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 1999. The unaudited financial statements
and related notes are presented as permitted by Form 10-Q and do not contain
certain information included in the Company's annual financial statements and
notes thereto. For further information, refer to the Company's annual financial
statements and notes thereto included in the Company's annual report on Form
10-K for the fiscal year ended December 31, 1998.
1) EARNINGS PER SHARE
During the fiscal year ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 revises a certain methodology for computing earnings per share ("EPS") and
requires the dual presentation of basic and diluted earnings per share. Basic
EPS excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if stock
options or other contracts to issue common stock were exercised and resulted in
the issuance of common stock that then shared in the earnings of the Company.
Diluted EPS is computed using the treasury stock method when the effect of
common stock equivalents would be dilutive. All prior periods have been restated
to comply with the provisions of SFAS No. 128. The only reconciling item between
the denominator used to calculate basic EPS and the denominator used to
calculate diluted EPS is the dilutive effect of stock options issued to
employees of the Company and other parties. The Company has issued no other
potentially dilutive common stock equivalents.
2) REPORTING COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" which was effective for the company for the
year ended December 31, 1998. SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains, and losses) in a full set of general-purpose financial statements. SFAS
No. 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company has evaluated SFAS No. 130 and determined that
it has no impact on the accompanying financial statements.
3) SEGMENTS OF AN ENTERPRISE
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," which was
effective for the Company for years beginning after December 15, 1997. SFAS No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company operates in only one segment, the manufacturing and
marketing of golf equipment. Profitability and investment decisions are made on
a company-wide basis.
4) ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes new disclosure requirements, which provide a comprehensive standard
for recognition and measurement of derivatives and hedging activities. This will
require all derivatives to be recorded on the balance sheet at fair value and
special accounting for certain types of hedges. SFAS No. 133 will take effect in
2000. The Company has not entered into any derivative or hedge transactions and,
therefore, does not believe that SFAS No. 133 will have a material effect on its
financial condition or results of operations.
5) THE LADIES PROFESSIONAL GOLF ASSOCIATION AGREEMENT
The Company has entered into an agreement with the Ladies Professional Golf
Association (LPGA), an Ohio nonprofit corporation, which grants the Company the
exclusive right to use the LPGA name and logo on its women's golf clubs and the
non-exclusive right to use the LPGA name and logo on certain of its other
products, including golf bags. The Company has renewed and restated this
licensing agreement effective January 1, 1999 through December 31, 2003, at
which time the Company has the option to renew the agreement for two consecutive
years under the same terms and conditions. The agreement entitles the Company to
use the license on a worldwide basis. The Company is obligated to pay to the
LPGA a license fee and a royalty fee based on sales volume.
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<PAGE> 8
The minimum annual license fee for the term of the agreement is $200,000 each
consecutive year through 2003. In the event that the sum of (A) 5% of the net
sales of the licensed products (other than golf shoes) up to $1,000,000 in any
calendar year, (B) 2.5% of the net sales of the licensed products (other than
golf shoes) in excess of $1,000,000 and less than $5,000,000 in any calendar
year, (C.) 1% of the net sales of the licensed products (other than golf shoes)
in excess of $5,000,000 and (D) 1% of the net sales of golf shoes in any
calendar year, exceeds the minimum license fee, the excess shall be paid as a
royalty fee.
Under the agreement, the Company is obligated to be a "Title Sponsor" of the
LPGA Teaching and Club Professionals Division Team Classic at an annual cost of
$35,000 beginning in 1999 and increasing by $2,500 per year through 2003. In
addition, the Company is obligated to spend a minimum of $75,000 per year on
various advertising programs.
6) INVENTORY
Inventory is valued at the lower of cost, determined on the basis of the
first-in, first-out method, or market.
Inventory at July 2, 1999 and December 31, 1998 consisted of the following
components:
<TABLE>
<CAPTION>
7/2/99 12/31/98
------ --------
<S> <C> <C>
Raw Materials $2,326,667 $2,919,298
Work in Process 25,000 25,000
Finished Goods 587,900 695,825
---------- ----------
$2,939,567 $3,640,123
</TABLE>
7) PLANT AND EQUIPMENT
Plant and equipment is stated at cost, less accumulated depreciation and
amortization. Depreciation is provided over the estimated useful service life.
The estimated lives used in determining depreciation are:
Machinery and Equipment 5 Years
Furniture and Fixtures 7 Years
Leasehold improvements are amortized over the lives of the respective leases or
the service lives of the improvements, whichever is shorter.
Maintenance and repairs are charged to operations as incurred.
-7-
<PAGE> 9
Plant and equipment at July 2, 1999 and December 31, 1998 were as follows:
<TABLE>
<CAPTION>
7/2/99 12/31/98
------ --------
<S> <C> <C>
Machinery and Equipment $678,030 $668,092
Furniture and Fixtures 54,485 54,485
Leasehold Improvements 43,554 43,554
-------- --------
Total 776,069 766,131
Less: Accumulated Depreciation
and Amortization 725,806 706,689
-------- --------
$ 50,263 $ 59,442
</TABLE>
Depreciation and amortization for the six months ended July 2, 1999 was $19,117
and for the twelve months ended December 31, 1998 was $42,329.
8) SHORT TERM BORROWINGS
The Company has a secured revolving line of credit with PNC Bank, which was
amended and restated as of December 1, 1997, allowing a maximum credit limit of
$5,000,000, less 50% of the aggregate face amount of all outstanding Letters of
Credit, and subject to various borrowing bases through September 1, 2000. The
availability of funds under this line of credit varies as it is based, in part,
on a borrowing base of 80% of eligible accounts receivable and 50% of qualified
inventory. Substantially all of the Company's assets are used as collateral for
the credit line. Interest rates are at prime plus one-quarter percent, paid
monthly; the interest rate as of July 2, 1999 was 8% . Credit available to the
company under the line of credit, as of July 2, 1999, was approximately
$1,987,125.
The credit facility contains certain covenants which, among other items, require
the maintenance of certain financial ratios including tangible net worth and
working capital. Any event of default under the credit facility permits the
lender to cease making additional loans thereunder. The Company was in
compliance with all covenants and conditions of the facility as of July 2, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales for the three-month and six-month periods ended July 2, 1999 were
$3,514,504 and $6,193,829 respectively, compared to $3,611,429 and $6,997,058
for the same period in 1998. The 11.5% decrease in sales for the six-month
period compared to the prior year was primarily due to the soft conditions of
the golf equipment market in the first quarter of 1999 and the decision of
management to decline shipping to customers in tenuous financial condition. Net
sales for the three-month period ended July 2, 1999 were 2.7% less than the same
period in 1998.
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<PAGE> 10
Gross profit as a percentage of sales was 33.5% and 32.2% for the three-month
and six-month periods ended July 2, 1999 respectively, as compared to 33.9% and
33.2% for the same periods in 1998. The primary reason for this decline was
attributed to a change in the product mix of shipments compared to the prior
year.
Selling expenses for the three-month and six-month periods ended July 2, 1999
were $478,020 and $929,892 respectively, compared to $423,424 and $902,170 for
the same periods in 1998. The increase in selling expenses for the six-month
period ended July 2, 1999 was primarily a result of an increase in product
advertising of 33.2% or $75,576, offset by a decrease of $14,917 or 26.6% in
national trade show expense and a decrease of $8,109 or 2.8% in sales commission
expense due to decreased volume. The increased advertising expense was the
result of the company's national television advertisement which ran for the
first time in 1999.
General and Administrative expenses for the three-month and six-month periods
ended July 2, 1999 were $301,435 and $591,916 respectively, compared to $297,357
and $590,612 for the same periods in 1998.
Interest expense for the six-month period ended July 2, 1999 was $124,449, which
reflected a 42% decrease compared to the same period in 1998. This reduction in
interest expense was a direct result of the 44% decrease in the average loan
balance to PNC Bank The average loan balance for the six-month period ended July
2, 1999 was $2,590,571 compared to an average loan balance of $4,637,820 for the
six-month period ended June 28, 1998.
The Company's net income for the six-month period ended July 2, 1999 was
$241,041 compared to $386,414 for the same three-month period in 1998. This
decrease was primarily the result of lower revenues.
The provision for income taxes was $108,894 for the six month period ending July
2, 1999 compared to $263,281 for six month period ending June 29, 1999.
FINANCIAL CONDITION AND LIQUIDITY
The Company's working capital increased by $234,345 for the six-month period
which ended July 2, 1999. Current assets decreased by $877,110 offset by a
decrease in current liabilities of $1,111,455. Accounts receivable decreased by
$268,309 for the six-month period ended July 2, 1999. Inventory decreased during
the same period by $700,556 or 19.3% which reflected management's decision to
improve inventory turns and decrease the levels of raw materials. The Company's
short term borrowings decreased by $1,443,771 which was a result of the
decreases to both accounts receivable and inventory. In addition, accounts
payable increased by $252,955 for the six-month period ended July 2, 1999 and
accrued expenses increased by $76,350 for the same period. The increases in
accounts payable and accrued expenses are primarily a result of the cyclical
nature of the business.
Working capital increased by $185,584 from the period ending June 28, 1998 to
the period ending July 2, 1999. This increase was the result of a $3,477,620
decrease in current assets offset by a $3,663,204 decrease in current
liabilities.
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<PAGE> 11
Cash provided by operations for the six-month period ended July 2, 1999 was
$1,453,848 compared to cash used in operations for the six-month period ended
June 28, 1998 of $1,475,512. Cash used to reduce financing activities totaled
$1,443,771 for the six-month period ended July 2, 1999 compared to cash was
provided by financing activities for the same six-month period in 1998 of
$1,371,032. During the six-month period ended July 2, 1999, cash used for the
payment of income taxes totaled $179,881, and $124,449 was used for the payment
of interest charges on short and long term borrowings.
YEAR 2000 COMPLIANCE
The Company has completed a review of its information systems and applications
in preparation for the Year 2000. The Company expects to incur internal staff
costs as well as outside consulting and other capital expenditures related to
this initiative. Total incremental expenses to remediate and bring current
systems into compliance are not expected to exceed $75,000. Software selections
have been finalized and implementation will begin in August of 1999. The Company
believes that it will be Year 2000 compliant in the fourth quarter of 1999. The
Company believes its vendors and other third parties will be converted timely
and present no Year 2000 issues. None of the Company's products or manufacturing
systems will be affected by the Year 2000 issue. System upgrades are scheduled
to be implemented on a timely basis and should not impact operations or
financial reporting.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits listed on the attached Exhibit Index are filed as part of this
report.
(b) The Company filed a report on Form 8-K dated June 28, 1999 reporting the
dismissal of the Company's independent accountants, Deloitte & Touche LLP,
following a vote by the Audit Committee of the Company's Board of Directors on
June 24, 1999. The Company filed a report on Form 8-K dated June 29, 1999
reporting the engagement of Rothstein, Kass & Company, P.C. to serve as the
principal accountants to audit the Company's financial statements, following a
vote by the Audit Committee of the Company's Board of Directors on June 24,
1999.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
S2 GOLF INC.
August 12, 1999 /s/ Douglas A. Buffington
- --------------- -------------------------
Dated: By:
Douglas A. Buffington
President and Chief
Operating Officer
-11-
<PAGE> 13
Exhibit Index
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT*
- ------- ----------------------
3.1 Amended and Restated Certificate of Incorporation of the
Company dated June 28, 1991 (incorporated by reference to Exhibit
3.1 to the registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991).
3.2 Amended and Restated By-laws of the registrant dated December
6, 1991 (incorporated by reference to Exhibit 3.2 of the
registrant's Annual Report on Form 10-K for the year ended
December 31, 1991).
4.1 Common Stock Purchase Warrant in favor of Wesmar Partners
dated February 28, 1988 (incorporated by reference to Exhibit
4.4 of the registrant's Registration Statement No. 33-37371 on
Form S-3).
4.2 Common Stock Purchase Warrant in favor of Wesmar Partners
dated February 28, 1988 (incorporated by reference to Exhibit
4.5 of the registrant's Registration Statement No. 33-37371 on
Form S-3).
4.3 Stock Option Agreement between the registrant and Wesmar
Partners dated February 29, 1988 (incorporated by reference to
Exhibit 4.6 of the registrant's Registration Statement No.
33-37371 on Form S-3).
10.0 Credit Agreement and Security Agreement between the
registrant and Midlantic Bank, National Association dated
December 29, 1994 (incorporated by reference to Exhibit 99 of the
registrant's Current Report on Form 8-K dated December 26, 1994).
10.1 United States Patent No. 4,203,598 issued to the registrant
(incorporated by reference to Exhibit 10.3 of the registrant's
Registration Statement No. 33-16931 on Form S-1).
10.2 Amended and Restated Licensing Agreement between Ladies
Professional Golf Association and the registrant dated July 1, 1996
(incorporated by reference to Exhibit 12 of the registrant's Annual
Report on Form 10-K for the year ended December 31, 1996).
10.3 Lease Agreement between the registrant and 12 Gloria Lane Limited
Partnership dated June 22, 1989 (incorporated by reference to exhibit
10.6 of the registrant's Registration Statement No. 33-37371 on Form
S-3).
10.4 Modification of Lease Agreement between the registrant and 12
Gloria Lane Industrial Partnership dated October 3, 1995 (incorporated
by reference to Exhibit 10.2 of the registrant's Annual Report on Form
10-K for the year ended December 31, 1995).
10.5 1984 Incentive Stock Option Plan of the registrant dated February
10, 1984 (incorporated by reference to Exhibit 10.7 to the
registrant's Registration Statement No. 33-16931 on Form S-1).
10.6 Consulting Agreement between the registrant and MR & Associates
dated January 1992 (incorporated by reference to exhibit 10.10 of the
registrant's Annual Report on Form 10-K for the year ended December
31, 1992).
10.7 Amendment of Consulting Services Agreement between the registrant
and MR and Associates effective as of February 1, 1996 (incorporated
by reference to Exhibit 10.6 to the registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996).
10.8** 1992 Stock Plan for Independent Directors of S2 Golf, Inc.
dated December 28, 1992 (incorporated by reference to Exhibit 10.11 of
the registrant's Annual Report on form 10-K for the year ended
December 31, 1992).
10.9** Employment Agreement between the registrant and Douglas A.
Buffington dated January 1, 1995 (incorporated by reference to Exhibit
10.10 to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1994).
10.10** Agreement between the registrant and Randy A. Hamill dated
January 2, 1997 (incorporated by reference to Exhibit 10.10 of the
registrant's Annual Report on Form 10-K for the year ended December
31, 1997).
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<PAGE> 14
10.11 Second amendment to loan and security agreement between
registrant and PNC Bank dated December 1, 1997 (incorporated by
reference to Exhibit 10.12 of the registrant's Annual Report on Form
10-K for the year ended December 31, 1997).
27 Financial Data Schedule.
* In the case of incorporation by reference to documents filed by the
registrant under the Exchange Act, the registrant's file number under
the Act is 0-14146.
** Management contract or management compensatory plan or arrangement.
- --------------------------------------------------------------------------------
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUL-02-1999
<CASH> 1,715
<SECURITIES> 0
<RECEIVABLES> 3,358,257
<ALLOWANCES> 313,688
<INVENTORY> 2,939,567
<CURRENT-ASSETS> 6,325,857
<PP&E> 776,069
<DEPRECIATION> 725,806
<TOTAL-ASSETS> 6,628,557
<CURRENT-LIABILITIES> 2,324,526
<BONDS> 0
0
0
<COMMON> 22,193
<OTHER-SE> 4,170,790
<TOTAL-LIABILITY-AND-EQUITY> 6,628,557
<SALES> 6,193,829
<TOTAL-REVENUES> 6,193,829
<CGS> 4,198,199
<TOTAL-COSTS> 1,521,808
<OTHER-EXPENSES> (562)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 124,449
<INCOME-PRETAX> 349,935
<INCOME-TAX> 108,894
<INCOME-CONTINUING> 241,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241,041
<EPS-BASIC> .11
<EPS-DILUTED> .10
</TABLE>
