Golfsmith Announces Fourth Quarter Fiscal 2010 Results

We look forward to building upon this success with the new initiatives we outlined for fiscal 2011 which include: aggressively building our successful web business; expanding a proven, powerful new store model, driving optimal 4-wall results by store segment; shifting merchandise assortments to more apparel and footwear; expanding proprietary brands; and delivering operational excellence. We believe that we are ideally positioned to benefit from the consolidation of the golf industry as well as the economic recovery in 2011 and beyond.”

Conference Call Information

The company will host a conference call today at 9:00 a.m. (eastern time) to discuss its fourth quarter and fiscal 2010 financial results. The call will be simulcast over the Internet at https://investors.golfsmith.com. A replay will be available for 30 days after the call at the aforementioned website. Telephone replays can be accessed for one month following the call by dialing 877-870-5176 (U.S.) or 858-384-5517 (international) and entering passcode 1538031.

About Golfsmith

Golfsmith International Holdings, Inc. (NASDAQ: GOLF), has been in business for over 40 years and is a specialty retailer of golf and tennis equipment, apparel and accessories. The company operates as an integrated multi-channel retailer, offering its customers the convenience of shopping in more than 70 stores across the United States, through its Internet site and from its assortment of catalogs. Golfsmith offers an extensive product selection that features premier branded merchandise, as well as its proprietary products, clubmaking components and pre-owned clubs.

Cautionary Language

This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about the company’s beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. Forward-looking statements are not guarantees of performance. These statements are based on management’s beliefs and assumptions, which in turn are based in part on currently available information and in part on management’s estimates and projections of future events and conditions. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for the products, the introduction of new product offerings, store opening costs, the ability to lease new sites on a timely basis, expected pricing levels, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve risks and uncertainties, which could cause actual results that differ materially from those contained in any forward-looking statement. Many of these factors are beyond the company’s ability to control or predict. The company believes its forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and the company undertakes no obligation to update publicly any of them in light of new information or future events.

Golfsmith International Holdings, Inc. Consolidated Statements of Operations
			Three Months Ended								Fiscal Year Ended
			January 1, 2011				January 2, 2010				January 1, 2011				January 2, 2010
											(audited)
Net revenues			$	72,884,488			$	63,849,644			$	351,851,394			$	338,025,688
Cost of products sold				49,520,381				42,184,747				232,311,169				222,536,657
Gross profit				23,364,107				21,664,897				119,540,225				115,489,031
Selling, general and administrative				27,214,422				27,975,616				120,377,666				117,272,149
Store pre-opening expenses				240,688				82,508				737,898				292,803
Store closing, lease termination and impairment charges				1,133,212				-				2,705,836				44,716
Total operating expenses				28,588,322				28,058,124				123,821,400				117,609,668
Operating loss				(5,224,215	)			(6,393,227	)			(4,281,175	)			(2,120,637	)
Interest expense				455,942				244,422				1,262,053				1,304,625
Other income (expense), net				2,925				13,306				67,781				63,497
Loss before income taxes				(5,677,232	)			(6,624,343	)			(5,475,447	)			(3,361,765	)
Income tax benefit (expense)				(38,784	)			324,706				(17,898	)			(182,850	)
Net loss				(5,716,016	)			(6,299,637	)			(5,493,345	)			(3,544,615	)
Net loss per common share:
Basic			$	(0.35	)		$	(0.39	)		$	(0.34	)		$	(0.22	)
Diluted			$	(0.35	)		$	(0.39	)		$	(0.34	)		$	(0.22	)

Golfsmith International Holdings, Inc. Consolidated Balance Sheets
			January 1, 2011				January 2, 2010
ASSETS
Current assets:
Cash			$	204,340			$	696,198
Receivables, net of allowances				2,011,241				1,949,411
Inventories				79,417,087				77,991,098
Prepaid expenses and other current assets				6,891,261				4,737,077
Total current assets				88,523,929				85,373,784
Property and equipment, net				58,925,620				56,475,787
Intangible assets, net				25,524,016				25,945,699
Other long-term assets				2,057,363				1,076,592
Total assets			$	175,030,928			$	168,871,862
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	35,694,830			$	32,371,826
Accrued expenses and other current liabilities				20,393,614				19,491,865
Total current liabilities				56,088,444				51,863,691
Deffered rent liabilities				15,344,004				13,412,548
Long-term debt				40,390,034				36,000,000
Total liabilities				111,822,482				101,276,239
Total stockholders' equity				63,208,446				67,595,623
Total liabilities and stockholders' equity			$	175,030,928			$	168,871,862

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