1080 Lousons Road
TearDrop Golf will be recognized by our customer and the consumer as the leading provider of high quality golf equipment and accessories. We will strengthen our leadership position in high quality golf products through an increased commitment to innovation by providing all golfers with high performing products and providing our customers with the best possible service. TearDrop Golf will continue its commitment to the future of golf by providing aspiring players an opportunity to prepare for the sport's highest level of competition through the TearDrop Professional Golf Tour.
TearDrop Golf Company designs and manufactures a variety of golf clubs and equipment, including putters, irons, woods, and wedges. Included in TearDrop's family of brands are Armour, RAM, and Zebra. The company is also the sole North American distributor of Walter Genuin golf shoes, one of the largest European makers of golf shoes and apparel. TearDrop is the owner of the TearDrop Professional Golf Tour, a tour for aspiring professional golf players, and it sponsors a number of professional players, including Fred Couples and Steve Jones.
Puttering Along: 1993-95
TearDrop Putter Corporation was established in Hilton Head, South Carolina, in 1992 by Fred Hochman. The company originally manufactured only putters. The company's putters featured a rolled face, and this patented technology made TearDrop putters unique compared with rival putters, which generally had flat faces. The rolled-face putters were designed to prevent the bouncing and skidding that often resulted from flat-faced putters and to produce a smoother roll and increased accuracy.
Over the following three years, TearDrop introduced six more putters, all featuring the rolled-face technology. In early 1996 the company changed its name to TearDrop Golf Company to reflect its diversification strategy and introduced a line of wedges. The signature putter was well received by the golf community and was used by golfers on the Professional Golf Association (PGA) Tour, the Nike Tour, and the PGA Senior Tour by the mid-1990s. The putter was ranked in the top ten on the PGA Tour and the PGA Senior Tour in 1995 for the number of victories and top ten finishes achieved by golfers who used it.
The success of the putter led to increased sales for the manufacturer, with revenues growing from $780,000 in 1994 to a promising $1.06 million in 1995. For 1994 the net loss was $550,000; a year later losses reached $540,000. Not all was rosy at TearDrop, however, and by mid-1996 the company had accumulated about $1.5 million in debt, and TearDrop was treacherously close to shutting down.
Major Changes and Accelerated Growth in the Mid-1990s
As TearDrop teetered on the brink of failure, Rudy Slucker searched for something to occupy his free time. Slucker, a successful and wealthy businessman who had retired in 1990 at the age of 40, had not taken up golf until 1992. Although Slucker had little knowledge of the golf business, he invested in TearDrop in 1995 at the request of friend and fellow Hilton Head homeowner Fred Hochman. In 1996 Hochman informed Slucker that TearDrop might close because of financial problems. Slucker said in Interview, 'It didn't take me long to tell Fred I would buy it. I thought I could make something out of it and besides, I needed something to do.'
Slucker may not have known much about golf, but he knew about business. In 1974 Slucker began working at the Atlas Group, an importer and distributor of hardware items and hand tools. Slucker eventually purchased the company and built its sales from $1.2 million in 1974 to about $50 million by 1987. Slucker acquired and sold about 15 businesses over the course of 27 years and had been owner or part-owner of New York's Beacon Theatre, various hockey and minor league baseball teams, Suburban Dessert Shops of New Jersey, Ambassador Optical of Philadelphia, and Major League Fitness health clubs of New Jersey. In 1990 Slucker sold Atlas for an undisclosed sum and retired, devoting his energy to travel and charitable causes.
After acquiring TearDrop from Hochman in September 1996, Slucker immediately implemented an aggressive turnaround strategy. Slucker invested $1 million of his own money into the company but realized the need for additional capital. TearDrop's IPO was completed on December 20, 1996 and raised $5.5 million. The proceeds were then used to pare down debt, finance an extensive advertising and marketing campaign, and pay for professional player endorsements, all of which were considered crucial for saving the company. Despite such efforts, TearDrop still faced an uphill battle, as the golf equipment industry had experienced only small gains in the mid-1990s, with the large companies gobbling up the majority of market share.
TearDrop roared full-steam ahead into 1997, starting the year off with the launch of an advertising and marketing campaign that included television infomercials, as well as television spots and print ads. The company aimed to increase brand awareness and boost its reputation and image as a manufacturer of high-quality golf clubs, and advertising was considered a key tool for accomplishing such a goal. TearDrop's first infomercial featured legendary athlete Jim Palmer and Brett Ogle, a two-time winner of the PGA, demonstrating the advantages of the TearDrop putter. The company's infomercial, which aired on such channels as Fox Sports Network, the Learning Channel, Turner Broadcasting Station, Discovery, and the Golf Channel, was well received, encouraging the company to air it on additional networks and in Asian markets, including Japan, beginning in April.
In February TearDrop announced it would be the exclusive sponsor of 'TearDrop Putt of the Week' on the Golf Channel. The weekly feature showcased the best putts of the week from all golf tours. 'We have previously stated that our objective is to become a leading supplier of high quality specialty clubs by utilizing an aggressive marketing strategy,' Slucker explained in a prepared statement. 'This strategic feature on the Golf Channel, in conjunction with our infomercial, brings us one step closer to achieving that goal.' In April TearDrop announced it would sponsor the 'MCI Heritage Classic Golf Report,' a one-hour program featuring the highlights of the MCI Heritage Classic tournament. The show had a possible audience of approximately 50,000 households.
Along with its new advertising campaign, TearDrop began to sign on numerous professional golfers to act as company spokespersons. In February the company announced that it had secured a number of golfers, including Omar Uresti, Bobby Mitchell, Pat Bates, and P.J. Cowan as spokespersons. The golfers agreed to use the TearDrop putter on their tours, and many also wore golf apparel emblazoned with the TearDrop logo. A month later TearDrop signed Charles Coody, a player on the Senior PGA Tour, as well as Shane Bertsch, Jim Estes, John 'Jumbo' Elliott, Esteban Toledo, and Karl Zoller. In early April the company signed three more players--Mike Swartz and Rick Stallings, both players on the Nike and PGA tours, and Todd Gleaton, who played on the Nike and Hooters Tournaments. Many of TearDrop's signed players performed well, thereby enhancing TearDrop's image and upping exposure. Omar Uresti secured a third place finish at the Bay Hill Invitational in Orlando, Florida, in March. A month later John 'Jumbo' Elliott won the Nike Tour's Alabama Classic, and Pat Bates and P.J. Cowan finished in the top ten. Also in April Esteban Toledo secured a first place finish at the Benson & Hedges Open.
TearDrop's efforts paid off, and the company reported that sales for the first quarter ended March 31, 1997, reflected a 102 percent jump over the corresponding period in 1996. Still, net losses increased as well, from $235,000 during the first quarter of 1996 to about $699,000 for the first quarter of 1997. The company attributed the losses to increased expenses associated with its goal to increase brand awareness. TearDrop continued to make strides to meet this goal and posted several successes in the following months: in June TearDrop was chosen as the official putter for the Golden Bear Tour, a developmental tour for up-and-coming golf players, and the NGA/Hooters Tour. In addition, the company was featured on the television series 'The New Competitors,' which aired on the CNBC Network in June, and TearDrop was voted best putter for 1997-98 by the Golf Industry Association (GIA).
Growth Through Acquisitions in the Late 1990s
After moving its headquarters from Hilton Head to central New Jersey in September 1997, TearDrop bought the assets of Pro Golf Promotions, LLC. The purchase included the Powerbilt Golf Tour, a developmental tour for aspiring professional golfers. The tour was renamed 'The TearDrop Professional Golf Tour.' In November TearDrop stunned the golf industry by acquiring Tommy Armour Golf Co. from U.S. Industries Inc. for about $24.8 million. Morton Grove, Illinois-based Armour, a well-known and well-respected golf brand, manufactured full sets of woods and irons. Started in 1910 as the Burke Golf Company, Armour was one of the oldest golf equipment manufacturers in the United States. The company achieved significant recognition in the 1980s with the introduction of its 845s line of irons. Armour sold more than 600,000 sets of these irons and secured a spot as one of the prominent businesses in the golf industry. The 1990s presented greater challenges, however, and by the time TearDrop purchased Armour, it was in financial straits. Although Armour had sales of about $45 million a year in the mid-1990s, significantly more than TearDrop, which had 1996 sales of $800,000, Armour had not earned a profit in some years. In addition, Armour's sales had remained flat, while its main competitors had enjoyed increasing revenues. Armour had few noteworthy endorsement contracts, and attempts to launch new lines of golf clubs had failed. TearDrop hoped to capitalize on Armour's strong heritage, and the acquisition boosted TearDrop's offerings to cover a full line of golf clubs. Armour redesigned and relaunched its 845s series in the fall of 1997, and TearDrop planned to take advantage of the line's popularity to accelerate company growth.
TearDrop surprised the golf industry once again in December when it announced the acquisition of RAM Golf Corporation, another well-known yet struggling golf company. The 50-year-old RAM manufactured premium irons, woods, wedges, and putters under such brand names as RAM and Zebra. TearDrop purchased the company for about $10 million in stock and cash. RAM, Tommy Armour, and TearDrop operations were consolidated into Armour's Morton Grove, Illinois facilities.
TearDrop entered 1998 as a much larger company and continued its aggressive effort to secure endorsement contracts. The Armour purchase helped TearDrop sign PGA Tour player Tommy Tolles to play 845s irons, and TearDrop also signed Larry Ziegler, a Senior PGA Tour player. In May 1998 Ziegler won the St. Luke's Classic, his first victory in six years. Ziegler attributed his win to his TearDrop putter, explaining in a company statement, 'Much of my success in this event was due to my confidence with my putting. My new TearDrop Putter enabled me to control my speed better than I ever have. It's simply better than my old flat-face putter.' TearDrop scored additional wins in 1998 when it signed Steve Jones, a former U.S. Open Champion, and Fred Couples, a celebrated professional golfer and top-ranked money-winner, to act as company and product spokespersons.
Over the first four months of 1998 TearDrop's stock increased 500 percent, as the company posted its first-ever profitable quarter on sales of $25 million. In the spring of 1998 TearDrop added to its roster of golf events by acquiring the California Golf Tour, a developmental tour for aspiring PGA players that included 27 events in California and Nevada. TearDrop also added the 1998 Crown Royal Open to the TearDrop Professional Golf Tour, which consisted of 44 events, and organized the TearDrop Golf Tour, a minor league golf tour that included 75 events. In November the company landed a multiyear agreement with the Golf Channel to televise highlights and other news from the TearDrop Professional Golf Tour on a bimonthly, half-hour program.
Also in 1998 TearDrop became the exclusive North American distributor of Genuin Golf & Dress of America, Inc.'s golf footwear line. Walter Genuin golf shoes typically were sold in high-end retail stores and golf shops, and TearDrop hoped its contract with Genuin would increase its presence and access to such merchants. In December TearDrop sealed an agreement with Internet retailer Value America to sell TearDrop golf clubs through the Value America Internet store.
For fiscal 1998, TearDrop reported sales of $60.7 million, compared with $9.6 million in fiscal 1997. Net losses for the year declined from $9.1 million in 1997 to $6.3 million. If, however, TearDrop, Armour, and RAM operations had been combined for the full year, losses would have reached $42.9 million. Nearly a quarter of TearDrop's revenues were from sales made through Sam's Clubs. Rudy Slucker was hopeful as the company entered 1999, and he wrote in the TearDrop annual report, 'Thanks to the dedication of our employees and our shareholder support we were able to make our business grow to unprecedented levels. We anticipate even greater growth, more new product introductions, marquis PGA Tour player signings and if our growth continues at its current pace, profitability in 1999.'
The year 1999 was one of ups and downs for TearDrop as the company endeavored to boost sales and recognition. In June the Robb Report magazine ranked TearDrop putters as the best putters in its 'Best of the Best' annual feature. Walter Genuin golf shoes also were named as the best quality golf footwear. TearDrop-sponsored players continued to perform well using the company's golf products, and throughout the year TearDrop golf clubs gained popularity; by the end of 1999 TearDrop was the fourth-ranked golf putter manufacturer and the fifth-ranked iron maker in the United States in terms of sales.
Continuing with its expansion effort, TearDrop formed a joint venture with Kindai Golf Company of Japan in May 1999. The venture, named TearDrop Japan, marketed and distributed TearDrop's host of golf products, as well as Walter Genuin products, in Japan, the world's second largest golf market. In the summer TearDrop introduced the new Tommy Armour 845 evo line of irons, promoted by the company as the 'first true replacement of the 845s irons.' The evo line quickly gained in popularity, and by November six PGA players were using the clubs in competition. TearDrop announced that more than 30 PGA players and 35 Nike Tour players had ordered sets. The line was voted 'Best New Product Introduction' by the Ontario Professional Golfer's Association.
TearDrop was not without challenges in 1999. Despite the increasing popularity of golf&mdashcording to Kon-Lin Research & Analysis Corp., U.S. retail sales of golf clubs were estimated to grow from $1.7 billion in 1994 to about $2.3 billion by 2000 and to nearly $3.0 billion by 2005--golf club sales dropped ten percent in 1998, and many golf companies suffered sales losses. A study by the National Golf Foundation found that participation rates were relatively flat through the 1990s, at about 26.5 million golfers in the United States, because as new players entered the sport, just as many players exited the game. As a result of poor industry conditions, TearDrop's sales suffered as well, and for the six months ended June 30, 1999, the company's sales declined 16 percent, from $44.57 million during the same period in 1998 to $37.59 million. Net income of $2.46 million for the first half of 1998 became a net loss of $2.33 million for the first half of 1999, and it appeared that TearDrop would not meet its November deadline to pay off $21 million in debt. The company, which had estimated that sales in 1999 would reach $90 million, revised its projections to about $65-$70 million. TearDrop pared back advertising efforts and began discounting its products to encourage sales. Analyst Casey Alexander of Gilford Securities Inc. commented on TearDrop's situation in Crain's Chicago Business in August, 'The company is highly leveraged now in an extremely competitive industry. ... They can't afford for too many things to go wrong. As far as I'm concerned, they're walking a tightrope.'
In September TearDrop announced that it had failed to meet NASDAQ Small Cap Market listing requirements and was requesting a hearing before the NASDAQ Listing Qualification Panel to ask for an extension. NASDAQ required companies to have $2 million in net assets, fiscal year net income of $500,000, or market capitalization of $35 million. Fortunately for TearDrop, the company was approved for a $30 million line of credit from Textron Inc.'s Textron Financial Corp. in October, and third quarter sales were hopeful. Sales for the third quarter reached $14.3 million, up from $13 million in the same period of 1998. Net income rose as well, from $372,000 during the third quarter of 1998 to $416,000. TearDrop indicated that each of its product divisions enjoyed growth, with demand for new products on the rise.
Despite TearDrop's financial struggles, the company remained confident about its future. TearDrop planned to continue investing in research and development to provide the latest technological developments to golfers, and the company's success with Tommy Armour 845 evo irons offered hope for success to come. Rudy Slucker intended to turn TearDrop into a profitable company and announced in a company statement, 'The entire sales and marketing team is truly looking forward to the new millennium as the year 2000 holds great potential for TearDrop.'
Principal Subsidiaries: Tommy Armour Golf Company; RAM Golf Corporation; TearDrop Professional Golf Tour; TearDrop Canada; TearDrop Japan (nonmajority stake).
Principal Competitors: Fortune Brands Inc.; Callaway Golf Co.; Karsten Manufacturing Corporation; Taylor Made Golf Company.