Adams Golf reported net sales increased 35.1% to $13.1 million for the fourth quarter from $9.7 million in the comparable period last year. The company used the sales gains to switch last year's net loss of $1.0 million to a net income of $4.4 million this quarter. In diluted earnings per share terms, the company posted net income of 15 cents compared to a net loss of 4 cents in the year-ago quarter. In the 2006 fourth quarter, the company recorded a deferred tax asset of $5.4 million, which represents its estimate of future usage of its net operating loss tax carryforward.
For the full year, net sales were $76.0 million, as compared to $56.4 million for the year ended December 31, 2005. The company had net income of $9.0 million, or 31 cents per fully diluted share for 2006, as compared to net income of $3.2 million, or 12 cents per fully diluted share in 2005. In the 2006 fiscal year, the company benefited from the recording of a deferred tax asset of $5.4 million, as noted above. In the 2005 fiscal year, the company benefited from the reversal of a legal accrual in the amount of $1.8 million and the receipt of $1.0 million for the settlement of an insurance claim.
The company's aggregate cash and cash equivalents balance was $9.5 million as of December 31, 2006. In the fourth quarter of 2006, the company repurchased 141,736 shares under its current stock repurchase plan. The company repurchased an aggregate of 279,120 shares of its common stock in fiscal 2006.
“I'm very pleased with the Company's results for 2006,” said Mr. Chip Brewer, CEO and president of Adams Golf. “Our growth for the year was driven primarily by our Idea hybrid iron sets which, according to Golf Datatech, LLC, have been the #1 selling brand of irons in off course golf specialty retail sales since December of 2005. We benefited in the fourth quarter of 2006 from our launches of the Idea Tech OS 8-piece hybrid iron sets and the Idea Pro 8-piece hybrid iron sets and individual hybrids. Our individual hybrids finished 2006 as the #1 hybrid played by professionals on the combined professional men's tours (PGA, Champions and Nationwide), according to results from the Darrell Survey. We also announced in the fourth quarter of 2006 our intent to purchase certain assets of Women's Golf Unlimited, which is consistent with our goal of expanding our presence in the growing women's golf equipment market. That acquisition closed in the first quarter of 2007. Lastly, we've continued to make investments in our brand and overall organization, particularly our R&D group.”
ADAMS GOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Years Ended
December 31,
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2006 2005
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Net sales $76,030 $56,424
Cost of goods sold 42,304 30,309
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Gross profit 33,726 26,115
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Operating expenses:
Research and development expenses 2,607 2,285
Selling and marketing expenses 19,800 16,571
General and administrative expenses 7,879 7,063
Reversal of settlement expenses (benefit) -- (1,771)
Reversal of restructuring expense (benefit) -- (78)
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Total operating expenses 30,286 24,070
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Operating income 3,440 2,045
Other income (expense):
Interest income 201 236
Interest expense (3) (6)
Other 35 1,052
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Income before income taxes 3,673 3,327
Income tax expense (benefit) (5,327) 87
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Net income $9,000 $3,240
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Income per common share :
Basic $0.39 $0.14
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Diluted $0.31 $0.12
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