<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 April 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 April 23, 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 April 2, 1999
INDEX
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Page Number
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
Balance Sheets -
April 2, 1999 and December 31, 1999 2
Statements of Operations -
Three Months Ended April 2, 1999 and
March 29, 1998 3
Statements of Cash Flows -
Three Months Ended April 2, 1999 and
March 29, 1998 4
Notes to Financial Statements 5
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
--------------------------------
SIGNATURES 10
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
---------------------
S2 GOLF INC.
BALANCE SHEETS
AS OF APRIL 2, 1999 (UNAUDITED)
AND DECEMBER 31, 1998 (AUDITED)
<TABLE>
<CAPTION>
April 2 Dec. 31
1999 1998
---- ----
ASSETS
Current Assets
<S> <C> <C>
Cash $ 1,615 $ 1,576
Accounts Receivable (Net of Allowance
for Doubtful Accounts of $261,146 in 1999
and $313,025 in 1998 $ 4,036,585 3,312,878
Inventory $ 3,420,718 3,640,123
Prepaid Expenses $ 13,749 32,418
Deferred Income Taxes $ 234,672 215,972
----------- -----------
Total Current Assets 7,707,339 7,202,967
Plant and Equipment - Net $ 58,462 59,442
Non-Current Deferred Income Taxes $ 113,676 118,056
Other Assets - Net $ 149,877 153,615
----------- -----------
Total Assets 8,029,354 7,534,080
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short term Borrowings $ 3,204,631 $ 2,766,879
Accounts Payable $ 372,034 324,849
Accrued Expenses $ 305,656 288,178
Other Current Liabilities $ 57,346 56,075
----------- -----------
Total Current Liabilities 3,939,667 3,435,981
Non-Current Liabilities $ 131,334 146,157
----------- -----------
Total Liabilities 4,071,001 3,582,138
Commitments and Contingencies
Shareholders' Equity
Common Stock, $.01 Par; 12,000,000 Authorized
Shares: 2,219,313 and 2,218,605 Issued and
Outstanding at April 2, 1999 and March 29, 1998
respectively $ 22,193 22,193
Additional Paid in Capital $ 4,040,795 4,040,795
Accumulated Deficit $ (104,635) (111,046)
----------- -----------
Total Shareholders' Equity 3,958,353 3,951,942
----------- -----------
Total Liabilities and Shareholders' Equity $ 8,029,354 $ 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
APRIL 2, 1999 AND MARCH 29, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
April 2, March 29,
1999 1998
---- ----
<S> <C> <C>
Net Sales $ 2,679,325 $ 3,385,629
Cost of Goods Sold 1,862,397 2,287,567
----------- -----------
Gross Profit 816,928 1,098,062
----------- -----------
Operating Expenses:
Selling 451,872 478,746
General & Administrative 290,481 293,255
----------- -----------
Total Operating Expenses 742,353 772,001
----------- -----------
Operating Income 74,575 326,061
----------- -----------
Other Income (Expense)
Interest Expense (64,328) (99,479)
Other Income (Expense) 562 1,075
----------- -----------
Other - Net (63,766) (98,404)
----------- -----------
Income Before Income Taxes 10,809 227,657
Provision (Benefit) for Income Taxes 4,398 90,926
----------- -----------
Net Income $ 6,411 $ 136,731
=========== ===========
Earnings per Common Share - Basic $ 0.00 $ 0.06
=========== ===========
Diluted $ 0.00 $ 0.05
=========== ===========
Weighted Average Number of Shares Outstanding -
Basic 2,219,316 2,218,605
Diluted 2,313,471 2,490,018
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
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<PAGE> 5
S2 GOLF INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
APRIL 2, 1999 AND MARCH 29, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
April 2, March 29,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 6,411 $ 136,731
Adjustments to Reconcile Net Income to Net Cash Provided
By (Used in) Operating Activities:
Depreciation and Amortization 13,626 17,241
Deferred Income Taxes (14,320) 0
Issuance of Stock for Compensation - -
Changes in Assets and Liabilities:
Accounts Receivable (723,707) (1,730,297)
Inventory 219,405 (1,550,683)
Prepaid Expenses 18,669 15,897
Other Assets (400) (200)
Accounts Payable 47,185 906,548
Accrued Expenses 17,478 51,397
Other Current and Non-Current Liabilities (13,552) (14,508)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATIONS (429,205) (2,167,874)
----------- -----------
INVESTING ACTIVITIES
Purchase of Equipment (8,508) 0
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (8,508) 0
FINANCING ACTIVITIES
Proceeds from Line of Credit 2,241,314 3,882,203
Payments on Line of Credit (1,803,562) (1,789,088)
----------- -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 437,752 2,093,115
----------- -----------
(DECREASE) INCREASE IN CASH 39 (74,759)
CASH - BEGINNING OF PERIOD 1,576 121,431
----------- -----------
CASH - END OF PERIOD $ 1,615 $ 46,672
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid During the Year For:
Interest $ 64,328 $ 99,479
Income Taxes (Net of Refund) 138,000 -
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
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<PAGE> 6
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 three months
ended April 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.
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<PAGE> 7
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 of 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.
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.
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<PAGE> 8
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 April 2, 1999 and at December 31, 1998 consisted of the following
components:
<TABLE>
<CAPTION>
4/2/99 12/31/98
<S> <C> <C>
Raw Materials $2,711,573 $2,919,298
Work in Process 25,000 25,000
Finished Goods 684,145 695,825
---------- ----------
$3,420,718 $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.
Plant and equipment at April 2, 1999 and at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
4/2/99 12/31/98
------ --------
<S> <C> <C>
Machinery and Equipment $676,600 $668,092
Furniture and Fixtures 54,485 54,485
Leasehold Improvements 43,554 43,554
-------- --------
Total 774,639 766,131
Less: Accumulated Depreciation
and Amortization 716,177 706,689
-------- --------
$ 58,462 $ 59,442
</TABLE>
Depreciation and amortization for the three months ended April 2, 1999 was
$13,626 and for the twelve months ended December 31, 1998 was $42,329.
-7-
<PAGE> 9
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 April 2, 1999 was 8%. Credit available to the
Company under the line of credit, as of April 2, 1999, was approximately
$530,000.
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 April 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 period ended April 2, 1999 were $2,679,325, a
decrease of $706,304, or 20.9%, compared to the same period in 1998. The
decrease in sales was primarily due to the soft conditions of the golf equipment
market and the decision of management to decline shipping to customers in
tenuous financial condition.
Gross profit as a percentage of sales decreased to 30.5% for the three-month
period ended April 2, 1999 as compared to 32.4% for the same period in 1998. The
primary reason for this decline was attributed to lower sales volume and a
change in the product mix of shipments compared to the prior year.
Selling expenses for the three-month period ended April 2, 1999 were $151,639
compared to $169,358 for the three-month period ended March 29, 1998, a decrease
of 5.6%. The decrease was primarily a result of a 14.8% decrease in sales
commissions, or $21,067, and a 30.9% decrease, or $17,070, in national show
expenses, offset by an increase in product advertising of 14.7%, or $17,485, and
an increase in LPGA royalty expenses of $5,496 or 11%.
General and Administrative expenses for the three-month period ended April 2,
1999 were $290,481, a decrease of less than 1% from the same three-month period
in 1998. With the exception of an $18,000 increase in the provision for bad debt
expense for the three-month period of 1999, the majority of other General and
Administrative expenses are slightly lower than the same period in 1998.
Interest expense for the three-month period ended April 2, 1999 was $64,328,
which reflected a 35% decrease compared to the same period in 1998. This
reduction in interest expense was a direct result of the 32% decrease in the
average loan balance to PNC Bank The average loan balance for the three-
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<PAGE> 10
month period ended April 2, 1999 was $2,986,126 compared to an average loan
balance of $4,394,186 for the three-month period ended March 29, 1998.
The Company's net income for the three-month period ended April 2, 1999 was
$6,411 compared to $136,731 for the same three-month period in 1998. This
decrease was the result of lower revenues and gross margins in 1999 than in
1998.
The effective tax rate for the Company was 40.7% for the three-month period
ended April 2, 1999 compared to 39.9% for the same period in 1998. This slightly
higher rate was a result of the full utilization of the Company's available Net
Operating Loss carry forward in fiscal 1998.
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
The Company's working capital increased by $686 for the three-month period ended
April 2, 1999. Current assets increased by $504,372, offset by an increase in
current liabilities of $503,686. Accounts receivable increased by $723,707 for
the three-month period ended April 2, 1999, which was typical for the Company
due to the cyclical nature of the golf industry. Inventory decreased during the
same period by $219,405, or 6%, which reflected management's decision to improve
inventory turns and decrease the levels of raw materials. The Company's short
term borrowings increased by $437,752, which was a result of the increase to
accounts receivable and the decrease to inventory. In addition, accounts payable
increased by $47,185 for the three-month period ended April 2, 1999 and accrued
expenses increased by $17,478 for the same period.
Working capital increased by $192,105 from the period ending March 29, 1998 to
the period ending April 2, 1999. This increase was the result of a $2,839,181
decrease in current assets offset by a $3,031,286 decrease in current
liabilities.
Cash used in operations was $429,205 and $2,167,874 for the three-month periods
ended April 2, 1999 and March 29, 1998, respectively. Cash provided by financing
activities totaled $437,752 for the three-month period ended April 2, 1999 and
$2,093,115 for the same three-month period in 1998. During the three-month
period ended April 2, 1999, 32% of the cash used was for the payment of income
taxes, which totaled $138,000.
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 $100,000. Software selections
will be finalized in the second quarter of 1999 and implementation will begin in
the third quarter 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
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<PAGE> 11
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 no reports on Form 8-K during the three-month period
ended March 31, 1999.
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.
Date: 4/28/99 /s/ Douglas A. Buffington
-------------------------
By:
Douglas A. Buffington
President and Chief
Operating Officer
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<PAGE> 12
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).
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<PAGE> 13
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).
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.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000782126
<NAME> S2 GOLF INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-02-1999
<CASH> 1,615
<SECURITIES> 0
<RECEIVABLES> 4,297,731
<ALLOWANCES> 261,146
<INVENTORY> 3,420,718
<CURRENT-ASSETS> 7,707,339
<PP&E> 774,639
<DEPRECIATION> 716,177
<TOTAL-ASSETS> 8,029,354
<CURRENT-LIABILITIES> 3,939,667
<BONDS> 0
0
0
<COMMON> 22,193
<OTHER-SE> 3,936,160
<TOTAL-LIABILITY-AND-EQUITY> 8,029,354
<SALES> 2,679,325
<TOTAL-REVENUES> 2,679,325
<CGS> 1,862,397
<TOTAL-COSTS> 742,353
<OTHER-EXPENSES> (562)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,328
<INCOME-PRETAX> 10,809
<INCOME-TAX> 4,398
<INCOME-CONTINUING> 6,411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,411
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
