<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C.  20549
                                          
                                     FORM 10-K
(MARK ONE)
      [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 [FEE REQUIRED]

                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                         OR

           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                           COMMISSION FILE NUMBER 1-12676

                                 -----------------

                               COASTCAST CORPORATION
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 CALIFORNIA                               95-3454926
       (STATE OR OTHER JURISDICTION OF                (I.R.S.  EMPLOYER 
        INCORPORATION OR ORGANIZATION)               IDENTIFICATION NO.)

          3025 EAST VICTORIA STREET                         90221
         RANCHO DOMINGUEZ, CALIFORNIA                     (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

         REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 638-0595

                                 -----------------

            SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                   NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS                            ON WHICH REGISTERED
     -------------------                           ---------------------
 COMMON STOCK, NO PAR VALUE                       NEW YORK STOCK EXCHANGE

         SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE.

                                 -----------------

     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        

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

     Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the New York Stock
Exchange on March 16, 1998 ($21.6875 per share): $171,116,000.

     As of March 16, 1998, 8,959,050 shares of the Common Stock, no par value,
of the Registrant were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

     Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held June 22, 1998, are incorporated by reference into
Part III of this Report.


                                       1

<PAGE>

                               COASTCAST CORPORATION

     ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
PART I                                                                    PAGE
-----------------------------------------------------------------------------
<C>       <S>                                                             <C>
Item 1.   Business                                                          3
Item 2.   Properties                                                        8
Item 3.   Legal Proceedings                                                 8
Item 4.   Submission of Matters to a Vote of Security Holders               9

-----------------------------------------------------------------------------

PART II
-----------------------------------------------------------------------------

Item 5.   Market for Registrant's Common Equity and Related Stockholder
          Matters                                                           11
Item 6    Selected Financial Data                                           14
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                         15
Item 8    Financial Statements and Supplementary Data                       18
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure                                          18

-----------------------------------------------------------------------------

PART III
-----------------------------------------------------------------------------

Item 10.  Directors and Executive Officers of the Registrant                19
Item 11.  Executive Compensation                                            19
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                        19
Item 13.  Certain Relationships and Related Transactions                    19

-----------------------------------------------------------------------------

PART IV
-----------------------------------------------------------------------------

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K  19
</TABLE>


                                       2

<PAGE>

                                   PART I

ITEM 1.  BUSINESS.

GENERAL
                                          
     Coastcast Corporation is one of the largest manufacturers in the world of
investment-cast titanium and stainless steel golf clubheads for high-quality,
premium-priced metal woods, irons and putters.   The Company believes it has
manufactured more metal wood clubheads for high-quality, premium-priced golf
clubs than any other manufacturer.  Over the last fifteen years, golf clubs with
perimeter-weighted heads have become increasingly popular among golfers because
such clubs are more forgiving to off-center hits than other types of clubs.  The
investment-casting process has become the principal method for manufacturing
clubheads because it facilitates the use of perimeter weighting designs and
modern alloys and enhances manufacturing precision and uniformity. 
Manufacturing precision is particularly important in the manufacture of an
oversized, thin-walled metal wood which can involve more than 200 separate
manufacturing steps to produce a clubhead that meets strict standards for size,
weight, strength and finish.
                                          
     The Company also manufactures a variety of investment-cast orthopedic
implants and surgical tools used principally in replacement of hip and knee
joints in humans and small animals, which products accounted for less than 7% of
the Company's total sales for the year ended December 31, 1997.
                                          
RECENT DEVELOPMENTS
                                          
     In the past two years, golf clubs with titanium alloy heads have increased
in popularity.  The Company developed the capability of manufacturing titanium
clubheads and began shipping titanium clubheads at the end of 1995.  Titanium
clubheads accounted for over 55% and approximately 50% of the Company's total
sales in 1996 and 1997, respectively.

BUSINESS STRATEGY - GOLF

     The Company recognizes that golf club companies are critical to its success
and, accordingly, has designed its business strategy to engender customer
satisfaction in order to maintain its industry leadership position.  The
Company's strategy consists of the following principal elements:

     -    MAINTAIN RELIABLE, HIGH-QUALITY MANUFACTURING.  The Company believes
          its manufacturing expertise, quality control, scheduling flexibility,
          substantial production capacity and its ability to manufacture golf
          clubheads using stainless steel or titanium alloys differentiate it
          from others in the industry.  The Company endeavors to respond
          quickly to customers' orders and deliver high-quality clubheads on a
          timely basis.  This capability is particularly important to golf club
          companies which can experience rapid growth from the increasing
          popularity of a particular club or set of clubs.
                                          
     -    INTEGRATE OPERATIONS.  The Company's operations are integrated, from
          the computer-aided manufacture of some of the tooling used to produce
          clubheads through foundry operations and finishing processes,
          including painting.

     -    FOSTER CLOSE CUSTOMER RELATIONSHIPS.  The Company believes that its
          responsive service has been a significant element of its success. 
          The Company endeavors to be a value-added supplier by offering
          consistently high levels of customer service and support.
                                          
     The Company has a staff of 14 employees dedicated to sales and customer
service. The Company maintains its own internal laboratory for testing of
customers' products during the production process.  The Company typically


                                      3

<PAGE>

delivers finished products to its customers within 12 weeks from receipt of the
customer's order during peak production periods, within 8 to 10 weeks during
other periods and within several weeks or even several days if necessary to
accommodate a customer's need for more rapid delivery.  With new products,
depending on their complexity, a longer turnaround period may be expected.

GOLF PRODUCTS

     The Company's golf products are generally used in golf clubs targeted at
the high end of the market.  These clubs must satisfy the requirements of
highly-skilled amateur and professional golfers, including touring
professionals.  As such, golf clubs which incorporate clubheads manufactured by
the Company are sometimes referred to in the industry as "tour-driven" golf
clubs.

     The Company's clubheads are included in a variety of leading metal woods,
irons and putters, some of which are listed below:

<TABLE>
          <S>                                               <C>
          CALLAWAY                                          ODYSSEY
          --------                                          -------
          GREAT BIG BERTHA TITANIUM METAL WOODS             DUAL FORCE BLADE PUTTERS
          BIG BERTHA WARBIRD METAL WOODS                    DF ROSSIE MALLET PUTTERS
          GREAT BIG BERTHA TUNGSTEN TITANIUM IRONS          BLACKSPIN WEDGES
          X12 BIG BERTHA IRONS
          BIG BERTHA IRONS                                  TAYLOR MADE
          TOUR SERIES WEDGES                                -----------
          BIG BERTHA BLADE PUTTERS                          TITANIUM BUBBLE 2 IRONS
          S2H2 PUTTERS                                      BURNER BUBBLE TITANIUM 2 METAL WOODS
          BOBBY JONES PUTTER                                TITANIUM 2 FAIRWAY RAYLORS
                                                            TOUR WOODS
          CLEVELAND                                         BURNER BUBBLE 2 METAL WOODS
          ---------                                         BURNER TOUR IRONS
          8T TOUR ACTION TITANIUM METAL WOODS               LCG IRONS
          TA3 IRONS
          RTG WEDGES                                        TITLEIST
          588 WEDGES                                        --------
          691 WEDGES                                        975D/976R TITANIUM METAL WOODS
          485 WEDGES                                        STARSHIP METAL WOODS
                                                            DCI 962 IRONS
          COBRA                                             OVERSIZE PLUS IRONS
          -----                                             962 "BLADE" IRONS
          KING COBRA TOUR TITANIUM METALWOODS               BOB VOKEY WEDGES
          KING COBRA OFFSET TITANIUM METALWOODS
</TABLE>

GOLF PRODUCT CUSTOMERS

     Over the past ten years, the Company has supplied investment-cast clubheads
for metal woods, irons and putters to a majority of the top golf companies which
produce high-quality, premium-priced golf clubs.  Most golf club companies
source the three principal components of a golf club--the clubhead, shaft, and
grip--from independent suppliers which manufacture these components based on the
golf club companies' designs and specifications.  The Company currently is a
major supplier of stainless steel and titanium clubheads to Callaway Golf
Company, which is the producer of the Big Bertha line of steel metal woods and
irons and the Great Big Bertha titanium metal woods and irons.  In addition, the
Company is a supplier of investment-cast steel and titanium clubheads for
companies which market the Titleist, Odyssey, Taylor Made, Cleveland, Goldwin,
Wilson, Cobra and Daiwa brands of golf clubs.


                                       4

<PAGE>

     Substantially all of the clubheads manufactured by the Company are used in
high-quality, premium-priced golf clubs.  The Company believes that a very
substantial portion of the clubheads manufactured by it are incorporated in
clubs sold in North America, although some of the Company's clubheads are
incorporated in clubs sold in parts of Asia, Europe and other parts of the
world.  Historically, a limited number of golf club companies have held a very
substantial portion of the total market share for high-quality, premium-priced
golf clubs in North America.  Currently, some of the more popular high-quality,
premium-priced clubs are Callaway metal woods and irons; Taylor Made metal woods
and irons; Titleist metal woods, irons and putters; Odyssey putters; Wilson
metal woods, irons and putters; and Cobra metal woods.  Several of these golf
clubheads are marketed by customers of the Company.  Callaway (including Odyssey
after its acquisition by Callaway in August 1997) accounted for 34%, 46% and 47%
of the Company's total sales in 1997, 1996 and 1995, respectively.  Taylor Made
accounted for 23% and 18% of the Company's total sales in 1997 and 1996,
respectively.  Tommy Armour, including Odyssey until its divestiture in August
1997, accounted for 15%, 13% and 10% of the Company's total sales in 1997, 1996
and 1995, respectively.  Fortune Brands (formerly American Brands; Titleist and
Cobra) accounted for 12% and 13% of the Company's total sales in 1997 and 1995,
respectively.

     A close working relationship typically exists between the Company and its
principal golf club customers, and sales and marketing activities are conducted
by a limited number of direct sales employees and senior executives of the
Company.

MANUFACTURING - GOLF

     INVESTMENT-CASTING PROCESS.  Investment-casting is a highly specialized
method of making metal products.  It has become the principal method for the
manufacture of golf clubheads.  Previously, woods were made of wood and irons
were produced by forging and machining.  Greater flexibility in the shape and
weight distribution of clubheads is possible with the investment-casting
process.  Investment-casting facilitates perimeter weighting and the use of
modern alloys.  It also enhances manufacturing precision and uniformity.  The
enhanced precision inherent in investment-casting is particularly important in
the manufacture of metal woods which can involve more than 200 separate
manufacturing steps.

     The basic steps of investment-casting, in its simplest form, are as
follows:

-    Produce a metal die (sometimes called a wax mold) based on specifications
     provided by the customer.

-    Inject wax into the die, producing a pattern the exact shape of the final
     casting.

-    Surround (or "invest") the pattern with a ceramic material which is allowed
     to dry to form a ceramic shell.

-    Remove the wax by heat, leaving a cavity in the ceramic shell in the shape
     of the desired casting.

-    Pour molten metal into the cavity in the ceramic shell and allow it to
     solidify.

-    Remove the ceramic material by mechanical and chemical action after the
     metal solidifies and clean the casting.

-    Finish and inspect the casting.

     METAL ALLOYS.  Most clubheads manufactured by the Company are made of
titanium or stainless steel alloys.  Titanium clubheads have similar tensile
strength as stainless steel with approximately one-half the weight of steel. 


                                       5

<PAGE>

Therefore, a larger oversized clubhead can be manufactured using titanium
without increasing clubhead weight.  The Company's Gardena facility is devoted
to titanium operations.

     POLISHING AND FINISHING.  The Company conducts golf clubhead polishing and
finishing operations in its facilities in Mexicali, Mexico.  Finishing of the
head for an iron or putter can require more than 50 separate steps and finishing
of a head for a metal wood can involve as many as 100 separate steps.  Most of
the clubheads and substantially all of the metal woods manufactured by the
Company are finished by it to customer specifications, although some of such
clubheads--principally irons--are delivered to customers in an unfinished state.
The Company, to assist its customers, at times also polishes and finishes
limited quantities of investment-cast clubheads manufactured by other companies.

     QUALITY CONTROL.  The Company believes that its success as a leading
supplier of golf clubheads is largely attributable to its quality control
measures.  The Company attempts to monitor every aspect of the engineering and
manufacturing process to assure the quality of the clubheads manufactured by the
Company.  Particular attention is paid to the quality of raw materials
(principally wax, ceramic and metal alloys), gating techniques employed in
channeling the flow of molten metal in the ceramic shell in the casting process,
and rigorous inspection standards to assure compliance with the customers'
product specifications throughout the manufacturing process.

     REGULATIONS.  The Company uses hazardous substances and generates hazardous
waste in the ordinary course of its business.  The Company is subject to various
federal, state, local and foreign environmental laws and regulations, including
those governing the use, discharge and disposal of hazardous materials. 
Although the Company has not to date incurred any material liabilities under
environmental laws and regulations and believes that its operations are in
substantial compliance with applicable laws and regulations, environmental
liabilities could arise in the future that may adversely affect the Company's
business.  See "Discontinued Operations" below.

COMPETITION - GOLF

     The Company operates in a highly competitive environment.  The Company
competes against a number of manufacturers of investment-cast titanium clubheads
for high-quality, premium-priced golf clubs, including but not limited to: 
Selmet, Inc., Sturm Ruger, Inc., and Cast Alloys, Inc.  The Company competes
principally against two significant U.S.-based manufacturers (Hitchner
Manufacturing Co., Inc. and Cast Alloys, Inc.) of investment-cast steel
clubheads.  The Company also competes with several foreign manufacturers of
investment-cast steel clubheads, including Worldmark Services Ltd. (formerly 
Fu-Sheng Industrial Co. Ltd.).

     The Company believes that its position as a leading manufacturer of
titanium and steel clubheads for high-quality, premium-priced golf clubs is due
to its ability to produce quality clubheads in quantities sufficient to meet
rapidly growing demand for popular golf clubs, its experience and expertise in
manufacturing investment-cast golf clubheads, and its integrated manufacturing
operations.

     Although price is a factor, the Company does not compete solely on price. 
Quality and service are key success factors in the premium price golf clubhead
market.  The Company seeks to provide better products and service to its
customers than its competitors in order to increase or retain market share.

     Although the Company's foreign competitors (the principal ones of which are
located in Asia) are typically able to offer prices below the Company's prices,
the Company believes that it has some competitive advantages over foreign
manufacturers, including its ability to deliver clubheads more quickly to its
customers due to shorter shipping and lead times.  Shipment of clubheads to the
United States from Asia usually requires at least two weeks by ocean freight. 
In addition, the Company believes that its foreign competitors have not
demonstrated the same willingness and ability as the


                                       6

<PAGE>

Company to commit sufficient resources to meet rapidly growing demand for 
popular golf clubs in a timely manner.  Further, the Company believes that 
certain of its customers prefer products made in the United States.

     The Company also competes against golf club companies that internally
produce clubheads for their clubs.  The Company believes that one of the largest
dozen golf club companies, Karsten Manufacturing Co., which produces the Ping
brand of clubs, manufactures substantially all of the investment-cast steel
clubheads for use in its own clubs.  The Company believes that this golf club
company produces clubheads for its own use only and does not currently compete
with the Company for the business of other golf club companies.  However, in
1996, Karsten Manufacturing Co. purchased some steel golf clubheads for its Ping
brand from the Company.

     The Company also faces potential competition from those golf club companies
that currently purchase golf clubheads from outside suppliers but may, in the
future, manufacture clubheads internally.  If the Company's current customers
begin manufacturing clubheads internally, the Company's sales would be adversely
affected.  The Company believes that as long as component suppliers, such as the
Company, provide high-quality component golf club parts at competitive prices
and reliably, it is unlikely that many golf club companies will commence their
own manufacturing.

     The Company experiences indirect competition from golf club companies that
produce golf clubs with clubheads that are not investment-cast.  For example,
some clubheads for woods are made of wood, some clubheads for irons are forged,
some clubheads for putters are machined, and some clubheads are made of graphite
or other composites.  The Company believes that the investment-cast, metal
clubhead has a greater share of the market for clubheads for high-quality,
premium priced golf clubs than these alternate types of clubheads.  In
particular, the metal wood has surpassed the wooden wood as the most popular
wood and the investment-cast iron has surpassed the forged iron as the most
popular type of iron.  Graphite and other composite clubheads have been
available for several years, but to date have not become nearly as popular as
investment-cast clubheads.

EMPLOYEES

     As of December 31, 1997, the Company employed 5,159 persons on a full-time
basis.  Of these employees, 3,837 were employed by Coastcast Corporation, S.A.,
the Mexican subsidiary of the Company.  The Company considers its employee
relations to be good.

     The production and maintenance employees in the Gardena, California
facility are represented by the United Steelworkers of America.  There were 453
such employees as of December 31, 1997.   The collective bargaining agreement
for such employees was effective May 12, 1997, and will expire on May 11, 2000.

ORTHOPEDIC IMPLANTS

     The Company also manufactures orthopedic implants and surgical tools used
principally for replacement of hip and knee joints in humans and small animals. 
The Company believes that the engineering and manufacturing discipline required
to manufacture these products has contributed to the Company's ability to
manufacture golf products.

     Approximately 70 of the Company's employees serve in the medical implant
and surgical tools operations.  Such operations are conducted in the Rancho
Dominguez, California facility.

     The Company believes that its principal competitors in this business are
Precision Castparts Corporation and PED Manufacturing.


                                       7

<PAGE>

NEW MARKETS

     The Company continues to explore marketing its steel, titanium, and other
alloy investment casting capabilities to potential customers in other commercial
and industrial businesses outside of the golf business.  In 1997, the Company
continued its efforts in this area; however, at this early stage, the Company
cannot predict which product opportunities will result in profitable sales, and
whether volumes will be significant.

DISCONTINUED OPERATIONS

     The Company historically manufactured investment-cast aerospace and other
industrial products in addition to golf clubheads and orthopedic implant
products.  In October 1993, the Company announced its decision to discontinue
its aerospace business because of declining sales and operating losses on this
portion of its business.  This business was essentially phased out by June 1994.
The net current assets of discontinued operations as of December 31, 1997 were
$911,000, principally consisting of the estimated net realizable value of the
Wallingford, Connecticut property including the related deferred tax asset.

       In connection with the offering for sale of the Wallingford, Connecticut
property, the Company had an environmental assessment performed, which
identified the presence of certain chemicals associated with chlorinated
solvents in groundwater beneath a portion of the property.  The Company is
continuing to conduct further investigations to determine the source and extent
of the contamination.  The Company has recorded the net assets associated with
its discontinued operations at the estimated net realizable value.  However,
since the precise source and extent of the contamination has not been identified
at this time, no assurances can be given that the proceeds to be realized upon
sale of this property less the cost of remediation will equal or exceed the
estimated net realizable value.
 
ITEM 2.  PROPERTIES.

     The Company's principal executive offices and one of two investment casting
manufacturing facilities are located in a 120,000 square foot leased facility in
Rancho Dominguez, California, a suburb of Los Angeles.  The lease expires in
October, 2003 and the Company has a five-year extension option.

     The Company owns a complex of plants in Gardena, California (which is
within approximately five miles of the Rancho Dominguez facilities), comprising
an aggregate of approximately 110,000 square feet.  These facilities are
principally used for manufacturing titanium golf clubheads and tooling.  In
October 1994, the Company purchased approximately two acres of land contiguous
to its Gardena facility.  In April 1996, the Company purchased another
approximately two acres of land next to the land purchased in October 1994. 
This land is available for future expansion if and when necessary.

     Clubhead polishing and finishing operations are conducted in facilities
leased by the Company's subsidiary in Mexicali, Mexico under four lease
agreements, comprising an aggregate of approximately 141,000 square feet.  Three
of the leases expire in December 1998, and the other lease expires in June 2001.

     The Company intends to move some of its steel casting operations to a
186,000 square foot leased investment casting facility for steel products in
Tijuana, Mexico.  The facility is currently under construction and is expected
to be operational in 1998.  The Company has options to lease sites contiguous to
the property as needed for future growth.


                                       8

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

     The Company is a party to legal actions arising in the ordinary course of
business, none of which, individually or in the aggregate, in the opinion of
management, after consultation with counsel, will have a material adverse effect
on the business or financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                          AGE       POSITION
----                          ---       --------
<S>                           <C>       <C>
Hans H. Buehler               65        Chairman of the Board
Richard W. Mora               57        President and Chief Executive Officer
Robert C. Bruning             55        Chief Financial Officer and Secretary
Jon A. Knartzer               52        Vice President, Operations
Ramon F. Ibarra               45        Vice President, Manufacturing
Kathleen H. Wainwright        33        Vice President, Sales
</TABLE>

     Mr. Buehler is one of the founders of the Company and has been Chairman of
the Board since the Company's inception in 1980.  Through December 31, 1997, he
was also the Chief Executive Officer.  Prior to founding the Company, he was
President of the Rex Precision Products Division of Alco Standard Corporation, a
competitor of the Company that was acquired by the Company in 1987.  Mr. Buehler
has more than 30 years of experience in the investment-casting business,
including more than 20 years of experience in the manufacture of golf clubheads.

     Mr. Mora joined the Company in May 1995.  Effective January 1, 1998, he
became the President and Chief Executive Officer of the Company.  Prior to that
time, he served as President and Chief Operating Officer.  From 1992 to 1995, he
was Chief Operating Officer of Pharmavite Corporation, a producer and marketer
of nutritional supplements.  From 1971 to 1992, Mr. Mora worked for Bergen
Brunswig Corporation, starting as a member of the sales force and ending in the
position of Group Vice President.

     Mr. Bruning joined the Company in May 1996.  From 1989 to 1996, he was
Chief Financial Officer of Zacky Farms, Inc., a producer of poultry products. 
From 1986 to 1988, Mr. Bruning was a partner at Coopers & Lybrand, LLP.  Prior
to that time he worked for Arthur Andersen, LLP for 19 years, 10 of which he
served as a partner.

     Mr. Knartzer joined the Company in November 1996.  From 1995 to 1996, he
was Vice President of Operations of Enertech, a privately held manufacturer of
products for the nuclear power industry.  From 1992 to 1995, he served as
Director of Operations for Accuride International, a manufacturer of precision
ball bearing equipment.  Prior to that time, he held various management
positions in operations, engineering, and quality assurance.

     Mr. Ibarra joined the Company in June 1981.  Since 1989, he has served as
Vice President, Manufacturing of the golf operations of the Company.  Prior to
such time, he served as the production manager for the Company with respect to
all phases of its business and as the plant manager at the facility located in
Rancho Dominguez, California.


                                       9

<PAGE>

     Ms. Wainwright joined the Company in 1988.  Since November 1996 she has
served as Vice President, Sales.  Prior to that time, she served the Company in
various capacities, including plant manager at the facility located in
Wallingford, Connecticut.

     Each officer serves at the pleasure of the Board of Directors of the
Company.


                                      10

<PAGE>

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

PRINCIPAL MARKET AND PRICES

     The common stock of the Company is listed on the New York Stock Exchange
under the symbol PAR. The following table sets forth the high and low sales
prices per share for the common stock of the Company as reported by the New York
Stock Exchange.

<TABLE>
<CAPTION>
FISCAL YEAR                                           HIGH            LOW
-----------                                         --------       --------
<S>                                                 <C>            <C>
1996
     First Quarter                                  $ 20 1/4       $  9 3/4
     Second Quarter                                   27 5/8         17 7/8
     Third Quarter                                    23 3/4         14 3/8
     Fourth Quarter                                   18 3/4         13
1997
     First Quarter                                    20 1/2         12 1/2
     Second Quarter                                   14 3/8          9 3/4
     Third Quarter                                    15 3/4         10 3/4
     Fourth Quarter                                   17 7/16        13 1/8
</TABLE>

The approximate number of record holders of common stock of the Company as of
March 16, 1998 was 230. 

DIVIDENDS

     The Company does not anticipate paying cash dividends in the foreseeable
future.  Any future determination as to payment of dividends will be at the
discretion of the Company's Board of Directors and will depend on the Company's
results of operations, financial condition, contractual restrictions and other
factors deemed relevant by the Board of Directors.

STOCK REPURCHASE

     On October 25, 1995, the Board of Directors authorized the Company to
purchase up to one million shares of Coastcast common stock from time to time in
the open market or negotiated transactions. The Company did not perform any such
transactions during the year ended December 31, 1997.  As of December 31, 1997,
there were 596,400 shares remaining to be purchased under this authorization.

BUSINESS RISKS

     CUSTOMER CONCENTRATION.  The Company's sales have been and very likely will
continue to be concentrated among a small number of customers.  Sales to as few
as four customers accounted for 84%, 84% and 76% of sales during the years ended
December 31, 1997, 1996 and 1995, respectively.  Sales to the Company's top
customer, Callaway Golf Company (including Odyssey Golf after its acquisition in
August 1997) accounted for 34% of sales for the year ended December 31, 1997.

     The Company has no long-term contracts with, and is not the exclusive
supplier to, any of its customers, which the Company believes is typical
industry practice.  Although the Company is now a principal supplier of steel
and titanium clubheads to Callaway, there are other actual or potential sources
of supply to Callaway and the level of future 


                                       11

<PAGE>


orders is not known at this time. In the event Callaway increases purchases 
from other suppliers, the Company could be adversely affected.  Although the 
Company believes that its relationships with its customers are good and its 
prices are competitive, the loss of a significant customer or a substantial 
decrease in the sales of golf clubs by a significant customer could have a 
material adverse effect on the Company's business.

     COMPETITION.  The Company operates in a highly competitive market.  All 
of the Company's products are manufactured according to customers' designs 
and specifications.  Accordingly, the Company competes against other 
independent domestic and foreign manufacturers which have the capability to 
manufacture investment-cast clubheads.  The Company also experiences indirect 
competition from golf club companies that manufacture their own clubheads or 
make golf clubs with clubheads that are not investment-cast or are made of 
materials the Company is not currently capable of producing.  Potential 
competition also exists from those golf club companies that currently 
purchase clubheads from the Company but may, in the future, manufacture 
clubheads internally.  The Company believes that it competes principally on 
the basis of its ability to produce consistently high-quality golf clubheads 
in quantities sufficient to meet rapidly growing demand for popular golf 
clubs.  Some of the Company's current and potential competitors may have 
greater resources than the Company.

     NEW PRODUCTS.  The Company's historical success has been attributable, 
in part, to its ability to supply clubheads for companies whose new products 
rapidly attained a significant portion of the market for high-quality, 
premium-priced golf clubs.  In the future, the Company's success will depend 
upon its continued ability to manufacture golf clubheads for such companies. 
There are no assurances, however, of the Company's ability to do so.  If a 
golf club having a head not manufactured by the Company gains significant 
market share from customers of the Company, the Company's business would be 
adversely affected.

     NEW MATERIALS AND PROCESSES.  The Company's future success is also 
dependent on continuing popularity of investment-cast clubheads.  A 
significant loss of market share to golf clubs with heads made by other 
processes would have a material adverse impact on the Company's business.  
Similarly, the Company's future success is also dependent on continuing 
popularity of clubheads made of titanium or stainless steel alloys or other 
metal alloys which the Company is capable of casting. 

     MANUFACTURING COST VARIATIONS.  Consistent manufacture of high-quality 
products requires constant care in the manufacture and maintenance of 
tooling, monitoring of raw materials, and inspection for compliance with 
product specifications throughout the manufacturing process.  
Investment-casting is labor intensive, and numerous steps are required to 
produce a finished product. Variations in manufacturing costs and yields 
occur from time to time, especially with new products during the "learning 
curve" phase of production and products which are more difficult to 
manufacture such as titanium or oversized metal wood and iron golf clubheads. 
The length and extent of these variations are difficult to predict.

     DEPENDENCE ON POLISHING AND FINISHING PLANT IN MEXICO.  A substantial 
portion of the golf clubheads manufactured by the Company, and some clubheads 
produced by other clubhead manufacturers, are polished and finished by the 
Company.  The polishing and finishing processes used by the Company are 
highly labor intensive.  The Company performs substantially all of these 
processes in its facilities in Mexicali, Mexico pursuant to the "maquiladora" 
duty-free program established by the Mexican and U.S. governments.  Such 
program enables the Company to take advantage of generally lower costs in 
Mexico, without paying duty on inventory shipped into or out of Mexico or 
paying certain Mexican taxes. The Company pays certain expenses of the Mexico 
facility in Mexican currency and thus is subject to fluctuations in currency 
value.  The Company does not have any exchange rate hedging arrangements to 
protect against fluctuations in currency value.  The Company is also subject 
to other customary risks of doing business outside the United States.  There 
can be no assurance that the Mexican government will continue the 
"maquiladora" program or that the Company will continue to be able to take 
advantage of the benefits of the program.  The loss of these 


                                       12

<PAGE>

benefits could have an adverse effect on the Company's business.  The Company 
believes that the North American Free Trade Agreement has not had any adverse 
effect on its Mexican operations.

     HAZARDOUS WASTE.  In the ordinary course of its manufacturing process, the
Company uses hazardous substances and generates hazardous waste.  The Company
has no material liabilities as of December 31, 1997 under environmental laws and
regulations, and believes that its operations are in substantial compliance with
applicable laws and regulations.  Nevertheless, no assurance can be given that
the Company will not encounter environmental problems or incur environmental
liabilities in the future which could adversely affect its business.  See also
Item 1. Business - Discontinued Operations.

     DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING.  Sales of golf equipment are
dependent on discretionary spending by consumers, which may be adversely
affected by general economic conditions.  A decrease in consumer spending on
premium-priced golf clubs could have an adverse effect on the Company's
business.

     SEASONALITY; FLUCTUATIONS IN OPERATING RESULTS. The Company's customers 
have historically built inventory in anticipation of purchases by golfers in 
the spring and summer, the principal selling season for golf equipment.  The 
Company's operating results have been impacted by seasonal demand for golf 
clubs, which generally results in higher sales in the second and third 
quarters. The timing of large new product orders from customers and 
fluctuations in demand due to a sudden increase or decrease in popularity of 
specific golf clubs have contributed to quarterly or other periodic 
fluctuations.  No assurance can be given, however, that these factors will 
mitigate the impact of seasonality in the future.

     RELIANCE ON KEY PERSONNEL.  The success of the Company is dependent upon
its senior management,  and their ability to attract and retain qualified
personnel.  The Company does not have any non-competition agreements with any of
its employees.  There is no assurance that the Company will be able to retain
its existing senior management personnel or be able to attract additional
qualified personnel.

     SHARES ELIGIBLE FOR FUTURE SALE.  Sales of substantial amounts of common
stock of the Company in the public market or the perception that such sales
could occur may adversely affect prevailing market prices of such common stock.

     FLUCTUATIONS IN CALLAWAY GOLF COMPANY SHARES.  The Company's common stock
value has from time to time fluctuated somewhat in relation to the share value
of the Callaway Golf Company.  The prevailing market price of the Company's
common stock could be adversely impacted by a substantial fluctuation in the
market price of Callaway common stock.



                                       13

<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA.

     The following selected consolidated financial data should be read in
conjunction with the Company's consolidated financial statements and related
notes included elsewhere herein.

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                             ----------------------------------------------------------------------
                                                1997           1996            1995          1994           1993
                                             ----------     ----------      ---------     ---------       ---------
                                                                   (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                          <C>            <C>             <C>           <C>             <C>  
Consolidated Statement of
   Income Data (1):
   Sales                                     $  149,515     $  148,257      $  76,001     $  90,590       $  66,928
   Gross Profit                                  28,533         33,826         12,914        22,746          16,722
   Income from operations                        17,776         24,454          5,941        15,317          10,998
   Income from continuing operations
     before class action lawsuit
     settlement expense and income taxes         18,751         25,496          7,488        16,242          10,352
Class action lawsuit settlement expense           -0-             -0-           2,075          -0-             -0-
Income from Continuing
   Operations Data (2):
   Income before income taxes                    18,751         25,496          5,413        16,242          10,352
   Income taxes (2)                               7,875         10,430          2,114         6,420           4,180
   Income from continuing operations (2)         10,876         15,066          3,299         9,822           6,172
Income from Continuing Operations Per Share--
   Basic (2), (3)                               $  1.24        $  1.72        $  0.36       $  1.10         $  0.85
                                                -------        -------        -------       -------         -------
Income from Continuing Operations Per Share--
   Diluted (2), (3)                             $  1.22        $  1.67        $  0.36       $  1.08         $  0.80
                                                -------        -------        -------       -------         -------
Weighted Average Shares Outstanding--Basic (3)    8,798          8,773          9,045         8,926           7,295
                                                -------        -------        -------       -------         -------
Weighted Average Shares Outstanding--Diluted (3)  8,924          9,038          9,099         9,113           7,747
                                                -------        -------        -------       -------         -------

<CAPTION>

                                                                        AS OF DECEMBER 31,
                                              ----------------------------------------------------------------------
                                                 1997           1996          1995          1994           1993
                                              ---------      ---------      ---------     ---------       ----------
                                                                          (IN THOUSANDS)
<S>                                           <C>            <C>            <C>           <C>             <C>
Consolidated Balance Sheet
   Data (1):
   Working Capital                            $  56,795      $  44,800      $  34,788     $  37,475       $  22,031
   Total Assets                                  90,025         76,100         58,908        56,821          38,608
   Total debt, including
     current portion                               -0-            -0-            -0-          -0-              -0-
   Deferred compensation                          1,614            438           -0-          -0-              -0-
   Shareholders' equity                          78,391         66,487         50,252        51,076          31,309
</TABLE>

(1)  In October 1993, the Company announced its decision to discontinue its
     aerospace business.  See Note 2 of Notes to Consolidated Financial 
     Statements.

(2)  The Company was taxed as an S corporation for federal and state income
     tax purposes from 1983 until December 15, 1993.  Income taxes, income from
     continuing operations, and income from continuing operations per share 
     reflect the pro forma effect of income taxes for the year ended 
     December 31, 1993 as if the Company had been taxed as a C corporation.

(3)  The earnings per share amounts prior to 1997 have been restated as 
     required to comply with Statement of Financial Accounting Standards 
     No. 128, EARNINGS PER SHARE.  For further discussion of earnings per 
     share and the impact of Statement No. 128, see Notes 1 and 12 of Notes 
     to Consolidated Financial Statements.


                                      14

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated operating results
expressed in thousands of dollars and as a percentage of sales.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                         ---------------------------------------------------------------------------------------
                                    1997                         1996                           1995
                                   ------                       ------                         ------
                           AMOUNT          PERCENT        AMOUNT         PERCENT        AMOUNT          PERCENT
                         ----------        -------     ----------        -------      --------          ------- 
<S>                      <C>               <C>         <C>               <C>          <C>               <C>
Sales                    $  149,515          100.0     $  148,257          100.0      $  76,001          100.0
Cost of sales               120,982           80.9        114,431           77.2         63,087           83.0
Gross Profit                 28,533           19.1         33,826           22.8         12,914           17.0
Selling, general
   and administrative        10,757            7.2          9,372            6.3          6,973            9.2
Income from continuing
   operations                17,776           11.9         24,454           16.5          5,941            7.8
Other income, net               975            0.6          1,042            0.7          1,547            2.0
Class action lawsuit
   settlement expense           -0-            0.0            -0-            0.0          2,075            2.7
Income from continuing
   operations before
   income taxes              18,751           12.5         25,496           17.2          5,413            7.1
</TABLE>


YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

     Sales increased $1.2 million, or 1%, to $149.5 million for 1997 from 
$148.3 million for 1996.  Decreases in sales of titanium alloy and steel 
alloy metal wood clubheads were more than offset by increases in sales of 
titanium alloy iron clubheads, putter clubheads, and steel alloy iron 
clubheads, and an increase in medical implant sales.  Titanium clubhead sales 
represented approximately 50% and over 55% of total sales for 1997 and 1996, 
respectively. Sales to Callaway Golf Company, including sales to Odyssey Golf 
after its acquisition by Callaway Golf Company in August 1997,  represented 
34% of total sales for 1997 compared to 46% in 1996.  There is no assurance 
that sales to Callaway will represent similar percentages of total sales in 
the future.

     Gross profit decreased $5.3 million, or 16%, to $28.5 million for 1997 
from $33.8 million for 1996.  The gross profit margin decreased to 19% in 
1997 from 23% in 1996.  The decrease in gross margin was due principally to a 
change in the product mix from a preponderance of metal woods to irons and 
putters.

     Selling, general and administrative expense increased by $1.4 million, 
or 15%, to $10.8 million for 1997 from $9.4 million for 1996.  The increase 
in selling, general and administrative expense was due primarily to increased 
payroll and related expenses, expenses related to the supplemental executive 
retirement program, and increased expenses associated with information 
systems, partially offset by a decrease in legal expenses.


                                      15

<PAGE>


YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

     Sales increased $72.3 million, or 95%, to $148.3 million for 1996 from 
$76.0 million for 1995.  The increase was primarily due to sales of titanium 
alloy clubheads, which have significantly higher unit sales prices than 
steel-alloy clubheads.  Sales of titanium alloy clubheads more than offset a 
decrease in sales of steel alloy clubheads.  Titanium clubhead sales 
represented over 55% and over 6% of total sales for 1996 and 1995, 
respectively.  For the year ended December 31, 1996, the majority of the 
Company's titanium sales were metal wood clubheads.  Sales to Callaway Golf 
Company represented 46% of total sales for 1996 compared to 47% in 1995.

     Gross profit increased $20.9 million, or 162%, to $33.8 million for 1996 
from $12.9 million for 1995.  The gross profit margin increased to 23% in 
1996 from 17% in 1995.  The increase in gross margin was primarily due to the 
shift in production to titanium clubheads.  Gross profit increased $4.5 
million to $4.9 million in the fourth quarter 1996 from $0.4 million in the 
fourth quarter 1995.  The gross profit margin increased to 14% in the fourth 
quarter 1996 from 3% in the fourth quarter 1995.  The increase in gross 
margins was primarily due to higher volume, mainly titanium, and the absence 
of start-up costs of the titanium operations which were present in the fourth 
quarter 1995.  The gross margin for the fourth quarter 1996 was 9% lower than 
the gross margin for the full year 1996, primarily due to seasonality of 
product ordering and the increase in production costs related to the start-up 
of new products.

     Selling, general and administrative expense increased by $2.4 million, 
or 34%, to $9.4 million for 1996 from $7.0 million for 1995 and decreased as 
a percentage of sales to 6% in 1996 from 9% in 1995.  The increase in 
selling, general and administrative expense was due primarily to increased 
management bonus, increased payroll and related expenses,  and expenses 
related to the supplemental executive retirement program.

     Other income, principally interest income, was $1.0 million for 1996, 
compared to $1.5 million for 1995.  The decrease was due to lower cash 
balances during most of 1996, coupled with lower average interest rates.

DISCONTINUED OPERATIONS

     The plan adopted in October 1993 to phase out the aerospace business was 
essentially completed by June 1994.  The net current assets of discontinued 
operations as of December 31, 1997 were $911,000, principally consisting of 
the estimated net realizable value of the Wallingford, Connecticut property 
including the related deferred tax asset.

       In connection with the offering for sale of the Wallingford, 
Connecticut property, the Company had an environmental assessment performed, 
which identified the presence of certain chemicals associated with 
chlorinated solvents in groundwater beneath a portion of the property.  The 
Company is continuing to conduct further investigations to determine the 
source and extent of the contamination.  The Company has recorded the net 
assets associated with its discontinued operations at the estimated net 
realizable value.  However, since the precise source and extent of the 
contamination has not been identified at this time, no assurances can be 
given that the proceeds to be realized upon sale of this property less the 
cost of remediation will equal or exceed the estimated net realizable value.
 
LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalents position at December 31, 1997 
was $28.2 million compared to $14.1 million on December 31, 1996, an increase 
of $14.1 million.  Net cash provided by operating activities was $17.3 
million for the year ended December 31, 1997.  Net income of $10.9 million, 
depreciation and amortization of $2.8 million, a decrease in prepaid expenses 
of $2.8 million, an increase in deferred compensation of $1.2 million were 
partially offset by an increase in accounts receivable of $1.1 million.  
Investing activities of $4.2 million consist primarily of $2.1 million of net 
capital expenditures and the purchase of Company-owned cash surrender value 
life 


                                      16

<PAGE>


insurance policies on certain key employees of $1.9 million.  Net cash 
provided by financing activities of $1.0 million consists mainly of proceeds 
from exercise of stock options of $0.8 million including related tax benefits.

     The Company maintains an unsecured revolving line of credit which allows 
the Company to borrow up to $5 million and which had no outstanding balance 
at December 31, 1997.  This line of credit, which expires on February 1, 
1999, bears interest at the bank's prime rate or LIBOR, plus 2%.

     On October 25, 1995, the Board of Directors authorized the Company to 
purchase up to one million shares of Coastcast common stock from time to time 
in the open market or negotiated transactions.  No such purchases were made 
during the year ended December 31, 1997.  As of December 31, 1997, there were 
596,400 shares remaining to be purchased under this authorization.

     The Company believes that its current cash position, the working capital 
generated by future operations and the ability to borrow should be adequate 
to meet its financing requirements for current operations and the foreseeable 
future.

QUARTERLY INFORMATION AND SEASONALITY

     Set forth below is certain unaudited quarterly financial information.  
The earnings per share amounts for periods ended prior to December 31, 1997 
have been restated as required to comply with Statement of Financial 
Accounting Standards No. 128, EARNINGS PER SHARE.  For further discussion of 
earnings per share and the impact of Statement No. 128, see the notes to the 
consolidated financial statements.  The Company believes that all other 
necessary adjustments, consisting only of normal recurring adjustments, have 
been included in the amounts stated below to present fairly, and in 
accordance with generally accepted accounting principles, the selected 
quarterly information when read in conjunction with the consolidated 
financial statements included elsewhere herein.


<TABLE>
<CAPTION>
                                                   YEAR ENDED                                   YEAR ENDED 
                                                DECEMBER 31, 1997                           DECEMBER 31, 1996
                                    ---------------------------------------   -----------------------------------------------
                                        1ST      2ND       3RD       4TH       1ST            2ND        3RD          4TH
                                      QUARTER  QUARTER   QUARTER   QUARTER    QUARTER       QUARTER     QUARTER      QUARTER
                                    --------- --------- --------- ---------   --------     ---------   ---------    ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>       <C>       <C>       <C>         <C>          <C>         <C>          <C> 
Sales                               $  29,001 $  39,938 $  43,935 $  36,641   $  29,344    $  42,508   $  41,495    $  34,910
Gross profit                            4,025     7,982     9,369     7,157       7,781       11,575       9,552        4,918
Income before taxes                     2,013     4,907     6,449     5,382       5,963        8,627       8,112        2,794
Provision for income taxes                815     2,091     2,709     2,260       2,445        3,623       3,245        1,117
Net income                              1,198     2,816     3,740     3,122       3,518        5,004       4,867        1,677
Net income per share--basic               .14       .32       .43       .35         .40          .57         .55          .19
Net income per share--diluted             .13       .32       .42       .35         .39          .55         .54          .19
</TABLE>

     The Company's customers have historically built inventory in 
anticipation of purchases by golfers in the spring and summer, the principal 
selling season for golf equipment.  The Company's operating results have been 
impacted by seasonal demand for golf clubs, which generally results in higher 
sales in the second and third quarters.  The timing of large new product 
orders from customers and fluctuations in demand due to a sudden increase or 
decrease in popularity of specific golf clubs have contributed to quarterly 
or other periodic fluctuations.  No assurances can be given, however, that 
these factors will mitigate the impact of seasonality.


                                      17

<PAGE>


BACKLOG

     As of December 31, 1997, the Company had a backlog of approximately 
$52.2 million as compared to a backlog of approximately $28.5 million as of 
December 31, 1996.  The Company believes that its current backlog is 
scheduled to be shipped in the ensuing four months.  Although many of the 
Company's customers release purchase orders months prior to the requested 
delivery date, these orders are generally cancelable without penalty provided 
that no production has commenced.  If production has commenced, an order is 
cancelable upon payment of the cost of production.  Historically, the 
Company's backlog generally has been the highest in the second and third 
quarters due principally to seasonal factors.  Backlog is not necessarily 
indicative of future operating results.

YEAR 2000 CONVERSION

     The Company has identified and evaluated changes to computer systems and 
applications required to achieve a year 2000 date conversion with no 
disruption to business operations.  Maintenance or modification costs will be 
expensed as incurred.  The total cost of this effort is still being 
evaluated, but is not expected to be material to the Company.  The Company 
plans to communicate with others with which it does significant business to 
determine their year 2000 compliance readiness and the extent to which the 
Company is vulnerable to any third party year 2000 issues.

FORWARD LOOKING INFORMATION

This report and other reports of the Company contain or may contain certain 
forward-looking statements and information that are based on beliefs of, and 
information currently available to, the Company's management as well as 
estimates and assumptions made by the Company's management.  When used, the 
words "anticipate," "believe," "estimate," "expect," "future," "intend," 
"plan" and similar expressions as they relate to the Company or the Company's 
management, are used to identify forward-looking statements.  Such statements 
reflect the current views of the Company with respect to future events and 
are subject to certain risks, uncertainties and assumptions relating to the 
Company's operations and results of operations, competitive factors and 
pricing pressures, shifts in market demand, the performance and needs of the 
industries served by the Company, the costs of product development and other 
risks and uncertainties, including, in addition to any uncertainties 
specifically identified in the text surrounding such statements, 
uncertainties with respect to changes or developments in social, economic, 
business, industry, market, legal and regulatory circumstances and conditions 
and actions taken or omitted to be taken by third parties, including the 
Company's stockholders, customers, suppliers, business partners, competitors, 
and legislative, regulatory, judicial and other governmental authorities and 
officials.  Should one or more of these risks or uncertainties materialize, 
or should the underlying assumptions prove incorrect, actual results may vary 
significantly from those anticipated, believed, estimated, expected, intended 
or planned. 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The information, other than quarterly information, required by this item 
is incorporated herein by reference to the consolidated financial statements 
and supplementary data listed in Item 14 of Part IV of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     Not applicable.


                                      18

<PAGE>


                                      PART III
                                          
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by this Item with respect to directors is 
incorporated herein by reference to the information contained under the 
caption "Nomination and Election of Directors" in the Proxy Statement 
relating to the Annual Meeting of Shareholders to be held on June 22, 1998, 
which will be filed with the Securities and Exchange Commission no later than 
120 days after the close of the year ended December 31, 1997.  Information 
with respect to executive officers is included in Part I of this Report.  The 
information required by this Item with respect to compliance with Section 
16(a) of the Securities Exchange Act of 1934 is incorporated herein by 
reference to the information contained under the caption "Compliance with 
Section 16(a) of the Securities Exchange Act of 1934" in the Proxy Statement 
relating to the Annual Meeting of Shareholders to be held on June 22, 1998, 
which will be filed with the Securities and Exchange Commission no later than 
120 days after the close of the year ended December 31, 1997.

ITEM 11.  EXECUTIVE COMPENSATION.

     The information required by this Item is incorporated herein by 
reference to the information contained under the caption "Executive 
Compensation and Other Information" in the Proxy Statement relating to the 
Annual Meeting of Shareholders to be held on June 22, 1998, which will be 
filed with the Securities and Exchange Commission no later than 120 days 
after the close of the year ended December 31, 1997.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by this Item is incorporated herein by 
reference to the information contained under the captions "Voting Securities 
and Principal Shareholders" and "Stock Ownership of Management" in the Proxy 
Statement relating to the Annual Meeting of Shareholders to be held on June 
22, 1998, which will be filed with the Securities and Exchange Commission no 
later than 120 days after the close of the year ended December 31, 1997.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Not applicable.

                                      PART IV
                                          
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.

(a)(1)  LIST OF FINANCIAL STATEMENTS

     The consolidated financial statements listed in the accompanying Index to
Financial Statements and Schedules are filed as part of this Report.

(a)(2)  LIST OF FINANCIAL STATEMENT SCHEDULE

     The financial statement schedule listed in the accompanying Index to
Financial Statements and Schedule are filed as part of this Report.


                                      19

<PAGE>


(a)(3)  LIST OF EXHIBITS

     The exhibits listed in the accompanying Index to Exhibits are filed as part
of this Report.

(b)  REPORTS ON FORM 8-K

     The Company did not file any reports on Form 8-K during the fourth quarter
of 1997.


                                       20


<PAGE>


                                     SIGNATURES
                                          
     Pursuant to the requirements of Section 13 or 15(d) 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.
                                          
Dated: March 16, 1998                     COASTCAST CORPORATION
                                          


                                          By: /s/ RICHARD W. MORA
                                              ---------------------------------
                                              Richard W. Mora, President and
                                              Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 16, 1998.

<TABLE>
<CAPTION>
            SIGNATURE                                    TITLE
            ---------                                    -----
<S>                                         <C>
   /s/ HANS H. BUEHLER 
-------------------------------------       Chairman of the Board and Director
Hans H. Buehler


   /s/ RICHARD W. MORA                      President, Chief Executive Officer     
-------------------------------------          and Director (Principal Executive   
Richard W. Mora                                Officer)                            


   /s/ ROBERT C. BRUNING                    Chief Financial Officer and       
-------------------------------------          Secretary (Principal Financial 
Robert C. Bruning                              and Accounting Officer)        


   /s/  GEORGE L. GRAZIADIO 
------------------------------------        Director
George L. Graziadio  


   /s/  EDWIN A. LEVY                   
------------------------------------        Director
Edwin A. Levy  


   /s/   VERNON R. LOUCKS JR.    
------------------------------------        Director
Vernon R. Loucks Jr.     


   /s/   LEE E. MIKLES
------------------------------------        Director
Lee E. Mikles  


   /s/   PAUL A. NOVELLY  
------------------------------------        Director
Paul A. Novelly     
</TABLE>


                                      21
<PAGE>
                    INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

<TABLE>
<CAPTION>


CONSOLIDATED FINANCIAL STATEMENTS                                   PAGE NUMBER
                                                                    -----------
<S>                                                                 <C>

Independent Auditors' Report                                            23

Consolidated Balance Sheets as of December 31, 1997 and 1996            24

Consolidated Statements of Income for the years ended 
    December 31, 1997, 1996 and 1995                                    25

Consolidated Statements of Shareholders' Equity for the 
    years ended December 31, 1995, 1996 and 1997                        26

Consolidated Statements of Cash Flows for the years ended 
    December 31, 1997, 1996 and 1995                                    27

Notes to Consolidated Financial Statements                              28

SCHEDULES

Independent Auditors' Report                                            37

Schedule II--Valuation and Qualifying Accounts for the 
    years ended December 31, 1995, 1996 and 1997                        38

</TABLE>

                                      22

<PAGE>


                           INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Coastcast Corporation:
                                          
We have audited the accompanying consolidated balance sheets of Coastcast 
Corporation and subsidiary as of December 31, 1997 and 1996, and the related 
consolidated statements of income, shareholders' equity, and cash flows for 
each of the three years in the period ended December 31, 1997.  These 
financial statements are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these financial statements based 
on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all 
material respects, the financial position of Coastcast Corporation and 
subsidiary as of December 31, 1997 and 1996, and the results of their 
operations and their cash flows for each of the three years in the period 
ended December 31, 1997 in conformity with generally accepted accounting 
principles.



DELOITTE & TOUCHE LLP

Long Beach, California
February 3, 1998




                                        23

<PAGE>




                               COASTCAST CORPORATION
                                          
                            CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                   ---------------------------------
                                                                        1997              1996
                                                                   -------------       -------------
<S>                                                                <C>                 <C> 
                          ASSETS
Current assets:
   Cash and cash equivalents (Note 1)                              $  28,187,000       $  14,060,000
   Trade accounts receivable, net of allowance for doubtful
     accounts of $500,000 and $400,000 at December 31, 1997
     and 1996, respectively (Note 1)                                  12,893,000          11,783,000
   Inventories (Notes 1 and 3)                                        21,208,000          21,660,000
   Prepaid expenses and other current assets                           2,019,000           4,800,000
   Deferred income taxes (Notes 1 and 8)                               1,597,000             864,000
   Net assets of discontinued operations (Note 2)                        911,000             808,000
                                                                   -------------       -------------
       Total current assets                                           66,815,000          53,975,000
Property, plant and equipment, net (Notes 1 and 4)                    19,079,000          20,171,000
Other assets (Note 7)                                                  4,131,000           1,954,000
                                                                   -------------       -------------
                                                                   $  90,025,000       $  76,100,000
                                                                   -------------       -------------
                                                                   -------------       -------------
              LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities:
   Accounts payable                                                 $  4,986,000        $  5,043,000
   Accrued liabilities (Note 6)                                        5,034,000           4,132,000
                                                                   -------------       -------------
       Total current liabilities                                      10,020,000           9,175,000
Deferred compensation (Note 7)                                         1,614,000             438,000
                                                                   -------------       -------------
       Total liabilities                                              11,634,000           9,613,000
Commitments and contingencies (Notes 2, 7 and 10)
Shareholders' Equity (Notes 1 and 11):
   Preferred stock, no par value, 2,000,000 shares authorized;
      none issued and outstanding
   Common stock, no par value, 20,000,000 shares authorized;
   8,849,005 and 8,777,890 shares issued and outstanding as of
   December 31, 1997 and 1996, respectively                           39,233,000          38,205,000
Retained earnings                                                     39,158,000          28,282,000
                                                                   -------------       -------------
       Total shareholders' equity                                     78,391,000          66,487,000
                                                                   -------------       -------------
                                                                   $  90,025,000       $  76,100,000
                                                                   -------------       -------------
                                                                   -------------       -------------
</TABLE>


           See accompanying notes to consolidated financial statements.


                                       24 

<PAGE>


                              COASTCAST CORPORATION
                                                                     
                        CONSOLIDATED STATEMENTS OF INCOME



<TABLE>
<CAPTION>
                                                                                  YEARS ENDED DECEMBER 31,
                                                                       1997                1996                 1995
                                                                  --------------      --------------       -------------
<S>                                                               <C>                 <C>                  <C>  
Sales (Notes 1 and 9)                                             $  149,515,000      $  148,257,000        $ 76,001,000
Cost of sales                                                        120,982,000         114,431,000          63,087,000
                                                                  --------------      --------------        -------------
Gross profit                                                          28,533,000          33,826,000          12,914,000
Selling, general and administrative                                   10,757,000           9,372,000           6,973,000
                                                                  --------------      --------------        -------------
Income from operations                                                17,776,000          24,454,000           5,941,000
Other income, net                                                        975,000           1,042,000           1,547,000
Class action lawsuit settlement expense                                        -                   -           2,075,000
                                                                  --------------      --------------        -------------
Income before income taxes                                            18,751,000          25,496,000           5,413,000
Provision for income taxes (Notes 1 and 8)                             7,875,000          10,430,000           2,114,000
                                                                  --------------      --------------        -------------
Net income                                                        $   10,876,000      $   15,066,000        $  3,299,000
                                                                  --------------      --------------        -------------
                                                                  --------------      --------------        -------------

NET INCOME PER SHARE (Notes 1 and 12)
Net income per share -- basic                                     $         1.24      $         1.72        $       0.36
                                                                  --------------      --------------        -------------
                                                                  --------------      --------------        -------------
Weighted average shares outstanding                                    8,797,734           8,772,815           9,045,257
                                                                  --------------      --------------        -------------
                                                                  --------------      --------------        -------------

Net income per share -- diluted                                   $         1.22      $         1.67        $       0.36
                                                                  --------------      --------------        -------------
                                                                  --------------      --------------        -------------
Diluted weighted average shares outstanding                            8,924,262           9,038,223           9,098,936
                                                                  --------------      --------------        -------------
                                                                  --------------      --------------        -------------
</TABLE>


                  See accompanying notes to consolidated financial statements.


                                            25

<PAGE>


                                 COASTCAST CORPORATION
                     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                       YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997



<TABLE>
<CAPTION>
                                                            COMMON STOCK
                                                     ----------------------------
                                                     NUMBER OF                             RETAINED                
                                                      SHARES              AMOUNT            EARNINGS           TOTAL
                                                     ---------       -------------       -----------       -------------
<S>                                                  <C>            <C>                  <C>               <C>  
BALANCE AT JANUARY 1, 1995                           9,091,994       $  41,159,000       $  9,917,000      $  51,076,000
  Net income                                                                                3,299,000          3,299,000
  Stock options exercised, including related
    tax benefit (Note 11)                               32,500             298,000                               298,000
  Repurchase of common stock                          (389,800)         (4,421,000)                           (4,421,000)
                                                     ---------       -------------       ------------      -------------
BALANCE AT DECEMBER 31, 1995                         8,734,694          37,036,000         13,216,000         50,252,000
  Net income                                                                               15,066,000         15,066,000
  Stock options exercised, including related
    tax benefit (Note 11)                               56,996             834,000                               834,000
  Director compensatory stock options                                      269,000                               269,000
  Stock options granted to non-employee (Note 11)                          269,000                               269,000
  Repurchase of common stock                           (13,800)           (203,000)                             (203,000)
                                                     ---------       -------------       ------------      -------------
BALANCE AT DECEMBER 31, 1996                         8,777,890          38,205,000         28,282,000         66,487,000
  Net income                                                                               10,876,000         10,876,000
  Stock options exercised, including related
    tax benefit (Note 11)                               71,115             759,000                               759,000
  Director compensatory stock options                                      269,000                               269,000
                                                     ---------       -------------       ------------      -------------
BALANCE AT DECEMBER 31, 1997                         8,849,005       $  39,233,000      $  39,158,000      $  78,391,000
                                                     ---------       -------------       ------------      -------------
                                                     ---------       -------------       ------------      -------------
</TABLE>


                  See accompanying notes to consolidated financial statements.


                                       26

<PAGE>


                              COASTCAST CORPORATION
                       CONSOLIDATED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                 YEARS ENDED DECEMBER 31,
                                                                    ---------------------------------------------------
                                                                          1997              1996                 1995
                                                                    -------------       -------------       -----------
<S>                                                                 <C>                 <C>                 <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                         $  10,876,000      $  15,066,000       $  3,299,000
  Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
      Depreciation and amortization                                      2,838,000          2,479,000          1,862,000
      Loss on disposal of machinery and equipment                          305,000             79,000             21,000
      Change in accrual for disposal of aerospace business                (180,000)          (214,000)          (314,000)
      Deferred compensation                                              1,176,000            438,000                  -  
      Deferred income taxes                                               (656,000)           479,000            258,000
      Non-employee director compensatory stock options                     269,000            269,000
      Changes in operating assets and liabilities:
          Trade accounts receivable                                     (1,110,000)        (4,585,000)          (629,000)
          Inventories                                                      452,000        (14,049,000)          (749,000)
          Prepaid expenses and other current assets                      2,781,000         (2,057,000)        (1,657,000)
          Accounts payable and accrued liabilities                         845,000            519,000          2,906,000
                                                                     -------------       -------------        -----------
              Net cash provided by (used in) operating activities       17,596,000         (1,576,000)         4,997,000
                                                                     -------------       -------------        -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net sales of short-term investments                                            -         14,718,000          4,921,000
  Purchase of property, plant and equipment                             (2,127,000)        (7,653,000)        (3,797,000)
  Proceeds from disposal of machinery and equipment                         76,000            138,000             41,000
  Other assets                                                          (2,177,000)        (1,704,000)            10,000
                                                                     -------------       -------------        -----------
              Net cash (used in) provided by investing activities       (4,228,000)         5,499,000          1,175,000
                                                                     -------------       -------------        -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock options granted to non-employee                                          -            269,000                  -
  Proceeds from issuance of common stock upon exercise
      of options, including related tax benefit                            759,000            834,000            298,000
  Repurchase of common stock                                                     -           (203,000)        (4,421,000)
                                                                     -------------       -------------        -----------
              Net cash provided by (used in) financing activities          759,000            900,000         (4,123,000)
                                                                     -------------       -------------        -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                               14,127,000          4,823,000          2,049,000
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF YEAR                                                               14,060,000          9,237,000          7,188,000
                                                                     -------------       -------------        -----------
CASH AND CASH EQUIVALENTS AT END
  OF YEAR                                                            $  28,187,000      $  14,060,000       $  9,237,000
                                                                     -------------       -------------        -----------
                                                                     -------------       -------------        -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the year for income taxes:                        $   5,544,000      $  10,500,000       $  2,700,000
                                                                     -------------       -------------        -----------
                                                                     -------------       -------------        -----------
</TABLE>

                                      27


<PAGE>


                               COASTCAST CORPORATION

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial 
statements include the accounts of Coastcast Corporation (the "Company") and 
its wholly owned subsidiary.  All material intercompany transactions have 
been eliminated in consolidation.

     ORGANIZATION AND OPERATIONS--Coastcast Corporation is incorporated under 
the laws of the State of California.  The Company's principal business is the 
production of investment-cast golf clubheads, and precision investment 
castings and related engineering for the medical industry.  The Company sells 
its products to customers of varying strength and financial resources, 
principally located in the United States.  The Company's wholly owned 
subsidiary is incorporated under the laws of the Mexican maquiladora program 
and its principal activities are the grinding, polishing and finishing of 
golf clubheads.

     USE OF ESTIMATES--The preparation of financial statements in conformity 
with generally accepted accounting principles requires the Company's 
management to make estimates and assumptions that affect the reported amounts 
of assets and liabilities and disclosure of contingent assets and liabilities 
at the date of the financial statements and the reported amounts of revenues 
and expenses during the reporting period.  Actual results could differ from 
those estimates.

     DISCONTINUED OPERATIONS--The Company has historically manufactured 
investment-cast aerospace and other industrial products in addition to golf 
clubheads and orthopedic implant products.  In October 1993, the Company 
announced its decision to discontinue its aerospace business, and as of June 
1994 had essentially phased out this business (See Note 2).

     REVENUE RECOGNITION--Revenue is recognized when goods are shipped to the 
customer.

     CASH EQUIVALENTS--Cash equivalents consist of short-term investments 
with original maturities of three months or less.

     CONCENTRATION OF CREDIT RISK--The Company's financial instruments that 
are exposed to credit risk consist primarily of accounts receivable.  The 
Company grants credit to substantially all of its customers, performs ongoing 
credit evaluations of its customers' financial condition and maintains an 
allowance for potential credit losses.  See also Note 9.

     INVENTORIES--Inventories are stated at the lower of cost (determined on 
a first-in, first-out basis) or market.

     PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated 
at cost.  Depreciation and amortization are provided using primarily 
straight-line methods over the estimated useful lives of the related assets 
as follows:

<TABLE>
               <S>                                   <C>
               Machinery and equipment                  7 years
               Building and improvements             5-31 years
               Furniture, fixtures and computers      3-7 years
               Autos and trucks                       5-7 years
</TABLE>

                                      28


<PAGE>

     IMPAIRMENT OF LONG-LIVED ASSETS--The Company reviews long-lived assets 
for impairment whenever events or changes in circumstances indicate that the 
carrying amount of an asset may not be recoverable.  If the sum of expected 
future cash flows (undiscounted and without interest charges) is less than 
the carrying amount of an asset, an impairment loss is recognized.

     INCOME TAXES--Deferred tax assets and liabilities are recognized based 
on differences between financial statement and tax basis of assets and 
liabilities using presently enacted tax rates (see Note 8).

     EARNINGS PER SHARE--In 1997, the Company adopted Statement of Financial 
Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE.  SFAS No. 128 
replaced the calculation of primary and fully diluted earnings per share with 
basic and diluted earnings per share.  Unlike primary earnings per share, 
basic earnings per share excludes any dilutive effects of stock options.  
Diluted earnings per share is very similar to the previously reported fully 
diluted earnings per share.  All earnings per share amounts for all periods 
presented have been restated to conform to the SFAS No. 128 requirements.  
Basic net income per share is based on the weighted average number of shares 
of common stock outstanding.  Diluted net income per share is based on the 
weighted average number of shares of common stock outstanding and dilutive 
potential common equivalent shares from stock options (using the treasury 
stock method).

     FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts of cash and 
cash equivalents, accounts receivable and accounts payable approximate fair 
value because of the short maturities of these instruments.

     ACCOUNTING PRONOUNCEMENTS--In June 1997, The Financial Accounting 
Standards Board (FASB) issued Statement No. 130, REPORTING COMPREHENSIVE 
INCOME, which requires companies to report comprehensive income and its 
components as part of a full set of financial statements for fiscal years 
beginning after December 15, 1997, with earlier adoption permitted.  The 
Company intends to adopt SFAS in 1998.

     In 1997, the Financial Accounting Standards Board (FASB) issued 
Statement No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED 
INFORMATION, which requires operating segment disclosures using the 
"management approach" for fiscal years beginning after December 15, 1997, 
with earlier adoption permitted. The Company intends to adopt SFAS No. 131 in 
1998.  The Company has not yet determined what its operating segments will be 
under SFAS No. 131.

2.  DISCONTINUED OPERATIONS

    The plan adopted in October 1993 to phase out the aerospace business was 
essentially completed by June 1994.  The net current assets of discontinued 
operations as of December 31, 1997 were $911,000, principally consisting of 
the estimated net realizable value of the Wallingford, Connecticut property 
including the related deferred tax asset.

    In connection with the offering for sale of the Wallingford, Connecticut 
property, the Company had an environmental assessment performed, which 
identified the presence of certain chemicals associated with chlorinated 
solvents in groundwater beneath a portion of the property.  The Company is 
continuing to conduct further investigations to determine the source and 
extent of the contamination.  The Company has recorded the net assets 
associated with its discontinued operations at the estimated net realizable 
value.  However, since the precise source and extent of the contamination has 
not been identified at this time, no assurances can be given that the 
proceeds to be realized upon sale of this property less the cost of 
remediation will equal or exceed the estimated net realizable value.


                                      29


<PAGE>


3.  INVENTORIES



      Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 
                                                          --------------------------------
                                                              1997               1996
                                                          ------------       -------------
<S>                                                       <C>                <C>
           Raw materials and supplies                     $  7,578,000       $  10,448,000
           Tooling                                             540,000             294,000
           Work-in-process                                  12,375,000           9,792,000
           Finished goods                                      715,000           1,126,000
                                                          ------------       -------------
                                                          $ 21,208,000       $  21,660,000
                                                          ------------       -------------
                                                          ------------       -------------
</TABLE>


      Included above are costs incurred for the production of tooling which 
is subsequently sold to customers upon acceptance of the first production 
unit.

4.  PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consist of the following:


<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                          --------------------------------
                                                               1997                1996
                                                          ------------        ------------
<S>                                                       <C>                 <C>
       Land                                               $  2,186,000        $  2,186,000
       Buildings and improvements                            7,436,000           7,376,000
       Machinery and equipment                              22,656,000          21,800,000
       Autos and trucks                                        786,000             900,000
       Furniture, fixtures and computers                     2,669,000           2,160,000
                                                          ------------        ------------
                                                            35,733,000          34,422,000
  Less accumulated depreciation and amortization            16,654,000          14,251,000
                                                          ------------        ------------
                                                          $ 19,079,000        $ 20,171,000
                                                          ------------        ------------
                                                          ------------        ------------
</TABLE>

      Depreciation and amortization expense for 1997, 1996 and 1995 was 
$2,838,000, $2,479,000 and $1,862,000, respectively.

5.  SHORT-TERM BORROWINGS

      The Company maintains an unsecured revolving line of credit which allows 
the Company to borrow up to $5,000,000 and which had no outstanding balance 
at December 31, 1997 and 1996.  This line of credit, which expires on 
February 1, 1999, bears interest at the bank's prime rate or LIBOR, plus 2%.

6.  ACCRUED LIABILITIES

      Accrued liabilities consist of the following:


                                       30


<PAGE>


<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                          --------------------------------
                                                               1997                1996
                                                          ------------        ------------
<S>                                                       <C>                 <C>
       Accrued payroll and related expenses               $  2,706,000        $  2,222,000
       Accrued vacation                                      1,000,000             834,000
       Accrued insurance                                       434,000             782,000
       Other accrued expenses                                  342,000             294,000
                                                          ------------        ------------
                                                          $  4,482,000        $  4,132,000
                                                          ------------        ------------
                                                          ------------        ------------
</TABLE>


7.  RETIREMENT PLANS

      The Company has a defined benefit plan which covers substantially all 
of its hourly union employees.  The plan provides for a monthly benefit 
payable for the participant's lifetime commencing the first day of the month 
following the attainment of age sixty-five in an amount equal to $9.50 to 
$10.85 multiplied by the participant's credited service.  

      The following table sets forth the plan's funded status:


<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                    --------------------------------
                                                                        1997                1996
                                                                    ------------        -------------
<S>                                                                 <C>                 <C>
Actuarial present value of accumulated benefit
  obligation, including vested benefits of $1,713,000 
  and $1,578,000, respectively                                      $  1,778,000         $ 1,592,000
                                                                    ------------         ------------
                                                                    ------------         ------------
Projected benefit obligation                                        $  1,778,000         $ 1,592,000
Fair value of plan assets                                              2,187,000           1,883,000
                                                                    ------------         ------------
Plan assets in excess of projected benefit obligation                    409,000             291,000
Unrecognized net gain                                                   (275,000)           (106,000)
Unrecognized prior service costs                                          98,000              70,000
Unrecognized transition amount                                          (147,000)           (172,000)
                                                                    ------------         ------------
Prepaid pension cost                                                $     85,000         $    83,000
                                                                    ------------         ------------
                                                                    ------------         ------------
Net pension cost included the following components:
  Service cost                                                      $     35,000         $    31,000
  Interest cost on projected benefit obligation                          112,000             104,000
  Actual return on plan assets                                          (347,000)           (159,000)
  Net amortization and deferral                                          198,000              13,000
                                                                    ------------         ------------
Net period pension income                                           $     (2,000)        $   (11,000)
                                                                    ------------         ------------
                                                                    ------------         ------------
</TABLE>


      The weighted-average discount rate used in determining the actuarial 
present value of the projected benefit obligation was 7% in 1997 and 1996.  
The expected long-term rate of return on assets was 7% for 1997 and 1996.

     Effective January 1, 1996, the Company adopted a retirement savings plan 
(the "401(k) Plan") pursuant to which all U.S. employees who satisfy the age 
and service requirements under the plan and who are not covered by collective 
bargaining agreements may defer compensation for income tax purposes under 
section 401(k) of the Internal Revenue Code of 1986.  Participants may 
contribute up to 15% of their compensation up to the maximum permitted under 
federal law.  The Company is obligated to contribute annually an amount equal 
to 25% of each participant's contribution up to 6% of that participant's 
annual compensation.  In accordance with the provisions of the 401(k) Plan, 
the Company matched employee contributions in the amount of $78,000 and 
$102,000 during 1997 and 1996, respectively.


                                       31


<PAGE>

     On September 1, 1996, the Company adopted a supplemental executive 
retirement plan (the "SERP") for certain key employees.  Benefits generally 
accrue at a rate of 7% of final average salary per year of participation in 
the plan, up to 10 years.  In general, participants in the plan only become 
fully vested with respect to their accrued benefits upon completion of 5 
years of plan participation.  To partially fund this plan, the Company 
purchases whole-life insurance contracts on the related participants.  The 
cash surrender value of these policies is in an irrevocable rabbi trust and 
is presented as an asset of the Company, in "other assets" in the 
accompanying consolidated balance sheets. Deferred compensation expense under 
the SERP was $1,176,000 and $438,000 in 1997 and 1996, respectively.

     The Company does not provide any other post-retirement benefits to its
employees.

8.  INCOME TAXES

The provision for income taxes is as follows:

<TABLE>
<CAPTION>

                            YEARS ENDED DECEMBER 31,
                       -----------------------------------------------
                          1997               1996               1995
                       ----------        -----------        ----------
<S>                    <C>               <C>                <C>
Current:
  Federal              $7,045,000        $ 8,319,000        $1,680,000
  State                 1,703,000          1,405,000           176,000
  Foreign                 (73,000)           227,000              --  
                       ----------        -----------        ----------
                        8,675,000          9,951,000         1,856,000
                       ----------        -----------        ----------
Deferred:
  Federal                (651,000)           258,000           210,000
  State                  (149,000)           221,000            48,000
                       ----------        -----------        ----------
                         (800,000)           479,000           258,000
                       ----------        -----------        ----------
                       $7,875,000        $10,430,000        $2,114,000
                       ----------        -----------        ----------
                       ----------        -----------        ----------
</TABLE>

  The actual provision on income before income taxes differs from the 
statutory federal income tax rate due to the following:

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                               -----------------------------------------------
                                                                  1997               1996              1995
                                                               ----------        -----------        ----------
<S>                                                            <C>               <C>                <C>
Federal income taxes at the statutory rate                     $6,563,000        $ 8,924,000        $1,895,000
State income taxes, net of federal benefit                      1,030,000          1,541,000           363,000
California investment tax credit                                  (30,000)          (349,000)         (168,000)
Other items                                                       312,000            314,000            24,000
                                                               ----------        -----------        ----------
                                                               $7,875,000        $10,430,000        $2,114,000
                                                               ----------        -----------        ----------
                                                               ----------        -----------        ----------
</TABLE>

        The tax effects of items comprising the Company's net deferred tax 
        asset are as follows:

                                      32
<PAGE>

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                      -----------------------
                                                          1997         1996
                                                      ----------    ---------
    <S>                                               <C>           <C>
    Allowance for doubtful accounts                   $  213,000    $ 170,000
    Deferred compensation                                688,000      187,000
    Accrued expenses                                     557,000      128,000
    Inventory reserve                                    635,000      417,000
    State income taxes                                   455,000      584,000
    Depreciation                                        (381,000)    (303,000)
    Other items                                         (570,000)    (319,000)
                                                      ----------    ---------
                                                      $1,597,000    $ 864,000
                                                      ----------    ---------
                                                      ----------    ---------
</TABLE>

9.  MAJOR CUSTOMERS

    The Company derived 34%, 23%, 15% and 12% of sales from four top 
customers in 1997; 46%, 18% and 13% of sales from three top customers in 
1996; and 47%, 13% and 10% of sales from three top customers in 1995.

10. COMMITMENTS

    OPERATING LEASES--The Company leases certain facilities under various 
operating leases with terms ranging from five to ten years.  The leases 
contain renewal options for additional five year periods which have not been 
included in the rental commitment schedule below.  In general, these leases 
provide for payment of property taxes, maintenance and insurance by the 
Company and include rental increases based on the Consumer Price Index.

    The future minimum lease payments required under these leases as of 
December 31, 1997 are as follows:

<TABLE>
<CAPTION>
    YEAR ENDING
    DECEMBER 31,
    --------------------------------------
    <S>                       <C>
    1998                      $ 1,414,000
    1999                        1,310,000
    2000                        1,324,000
    2001                        1,281,000
    2002                        1,157,000
    Thereafter                  4,575,000
                              -----------
                              $11,061,000
                              -----------
                              -----------
</TABLE>

    Rent expense for 1997, 1996 and 1995 was approximately $1,106,000, 
$1,355,000 and $1,273,000, respectively.

11. STOCK OPTION PLANS

    Under the Company's 1996 Amended and Restated Employee Stock Option Plan 
("1996 Employee Stock Option Plan"), a maximum of 1,950,000 shares of common 
stock may be issued pursuant to exercise of options granted to officers and 
key employees under the plan.  Options may be granted under the plan at 
prices which are equal to or 


                                      33
<PAGE>

greater than the fair market value of the shares at the date of grant.  The 
options become exercisable over a period of time as determined by the Board 
of Directors or a committee of directors and generally expire ten years from 
the date of grant or earlier following termination of employment.  As of 
December 31, 1997, an aggregate of 445,493 shares had been purchased pursuant 
to exercise of options granted under the plan, options to purchase an 
aggregate of 1,033,513 shares were outstanding (including options which were 
then exercisable to purchase 408,659 shares), and 470,994 shares were 
available for additional grants of options under the plan.

    Under the Company's 1995 Amended and Restated Non-Employee Director Stock 
Option Plan ("1995 Director Stock Option Plan"), a maximum of 200,000 shares 
of common stock may be issued pursuant to exercise of options granted under 
the plan to certain non-employee directors.  Options are granted under the 
plan at prices equal to the fair market value of the shares at the date of 
grant.  The options generally become exercisable over a three-year period of 
time and expire at the earlier of one year after the optionee ceases to be a 
director or ten years from the date of grant.  As of December 31, 1997, no 
shares had been purchased under the plan, options to purchase an aggregate of 
150,000 shares were outstanding under the plan, including 86,667 shares as to 
which such options were then exercisable, and 50,000 shares were available 
for additional grants of options under the plan .

    In April 1996, the Board of Directors granted to a non-employee options 
to purchase 30,000 shares of common stock, all of which were outstanding as 
of December 31, 1997, including 10,000 shares as to which such options were 
then exercisable.  These options were not issued under the foregoing option 
plans.

    In September 1997, the Board of Directors approved the repricing of all 
employee stock options having exercise prices above the fair market value as 
of the repricing date.  A total of 591,783 shares were repriced.

    The following summarizes the Company's stock option activity under all 
arrangements for the three years ended December 31, 1997:

<TABLE>
<CAPTION>
                                                              WEIGHTED
                                                               AVERAGE
                                                              EXERCISE
                                          NUMBER               PRICE
                                         ---------            --------
<S>                                      <C>                  <C>
Balance, January 1, 1995                   448,992             $13.66
  Granted                                  431,500               8.00
  Forfeited                                (41,600)             16.37
  Exercised                                (32,500)              7.69
                                         ---------            --------
Balance, December 31, 1995                 806,392             $10.73
  Granted                                  689,698              16.81
  Forfeited                               (147,635)             13.36
  Exercised                                (56,996)             12.00
                                         ---------            --------
Balance, December 31, 1996               1,291,459             $14.48
  Granted                                   63,540              15.50
  Forfeited                                (70,371)             15.22
  Exercised                                (71,115)              8.60
                                         ---------            --------
Balance, December 31, 1997               1,213,513             $13.57
                                         ---------            --------
                                         ---------            --------
</TABLE>

    The following table summarizes information about stock options 
outstanding at December 31, 1997:


                                      34
<PAGE>

<TABLE>
<CAPTION>
                                                           WEIGHTED
                                                            AVERAGE          WEIGHTED                               WEIGHTED
  RANGE OF                           NUMBER                REMAINING         AVERAGE            NUMBER              AVERAGE
  EXERCISE                         OUTSTANDING            CONTRACTUAL        EXERCISE         EXERCISABLE           EXERCISE
   PRICES                          AT 12/31/97               LIFE             PRICE           AT 12/31/97            PRICE
-------------                      -----------            -----------        --------         -----------           --------
<S>                                <C>                    <C>                <C>              <C>                   <C>
$4.00 - 10.00                         153,342                 6.5             $ 8.30             133,342             $ 8.05
10.25 - 12.50                         163,167                 7.3              10.87              57,713              10.96
13.13 - 13.81                         184,321                 8.9              13.61              54,214              13.59
14.12 - 14.12                         592,683                 7.6              14.12             210,057              14.12
14.62 - 30.00                         120,000                 8.3              21.19              50,000              21.92
                                   -----------            -----------        --------         -----------           --------
$4.00 - 30.00                       1,213,513                 7.7             $13.57             505,326             $12.87
                                   -----------            -----------        --------         -----------           --------
                                   -----------            -----------        --------         -----------           --------
</TABLE>

    The Company applies Accounting Principles Board Opinion No. 25 and 
related interpretations in accounting for its stock option plans.  
Accordingly, no compensation expense has been recognized for options granted 
under its 1996 Employee Stock Option Plan or its 1995 Director Stock Option 
Plan, except for stock options granted to directors on December 13, 1995, 
which were subject to approval and subsequently approved by shareholders on 
June 12, 1996.  Had compensation cost for the Company's stock option plans 
been determined based on the fair value at the grant dates for awards under 
those plans consistent with the method of SFAS No. 123, the Company's net 
income and earnings per share would have been reduced to the pro forma 
amounts indicated below:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                   ---------------------------------------------
                                                       1997             1996             1995
                                                   -----------      -----------       ----------
<S>                                <C>             <C>              <C>               <C>
Net income:                        As reported     $10,876,000      $15,066,000       $3,299,000
                                   Pro forma         8,749,000       14,460,000        3,179,000

Net income per share - basic:      As reported     $      1.24      $      1.72       $      .36
                                   Pro forma       $       .96      $      1.59       $      .34

Net income per share - diluted:    As reported     $      1.22      $      1.67       $      .36
                                   Pro forma       $       .95      $      1.54       $      .34
</TABLE>

    The fair value of each stock option grant is estimated on the date of 
grant using the Black-Scholes option pricing model.   The following 
weighted-average assumptions were used in 1997, 1996 and 1995, respectively:  
no dividend yield, expected volatility of 67.0%, 61.8% and 61.8%, risk-free 
interest rate of 5.8%, 5.9% and 5.9%, and expected term of 4.6, 4.0 and 4.0 
years.  The weighted average fair value per share of options granted in 1997, 
1996 and 1995 was $7.42, $8.25 and $5.40, respectively.


                                      35
<PAGE>

12. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings 
per share:

<TABLE>
<CAPTION>
                                                                     1998                1997           1996
                                                                  -----------         -----------     ----------
<S>                                                               <C>                 <C>             <C>
Numerator:
  Net income                                                      $10,876,000         $15,066,000     $3,299,000
                                                                  -----------         -----------     ----------
    Numerator for basic and diluted earnings per share--
      income available to common stockholders                      10,876,000          15,066,000      3,299,000

Denominator:
    Denominator for basic earnings per share--
      weighted-average shares                                       8,797,734           8,772,815      9,045,257

  Effect of dilutive securities:
      Stock options                                                   126,528             265,408         53,679
                                                                  -----------         -----------     ----------
  Dilutive potential common shares                                    126,528             265,408         53,679

    Denominator for diluted earnings per share--
      adjusted weighted-average shares and
      assumed conversions                                           8,924,262           9,038,223      9,098,936
                                                                  -----------         -----------     ----------
                                                                  -----------         -----------     ----------
Basic earnings per share                                                $1.24               $1.72          $0.36
                                                                  -----------         -----------     ----------
                                                                  -----------         -----------     ----------
Diluted earnings per share                                              $1.22               $1.67          $0.36
                                                                  -----------         -----------     ----------
                                                                  -----------         -----------     ----------
</TABLE>


                                      36
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Coastcast Corporation:

We have audited the consolidated financial statements of Coastcast 
Corporation and subsidiary as of December 31, 1997 and 1996, and for each of 
the three years in the period ended December 31, 1997, and have issued our 
report thereon dated February 3, 1998; such report is included elsewhere in 
this Annual Report on Form 10-K.  Our audits also included the financial 
statement schedule of Coastcast Corporation, listed in Item 14(a)(2).  This 
financial statement schedule is the responsibility of the Company's 
management.  Our responsibility is to express an opinion based on our audits. 
In our opinion, such financial statement schedule, when considered in 
relation to the basic financial statements taken as a whole, presents fairly 
in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP



Long Beach, California
February 3, 1998


                                      37
<PAGE>

                            COASTCAST CORPORATION

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                      (CHARGED)/
                                       BALANCE AT     CREDITED TO     CHARGED TO                    BALANCE
                                       BEGINNING       COSTS AND        OTHER                        AT END
     CLASSIFICATION                    OF PERIOD       EXPENSES        ACCOUNTS      DEDUCTIONS     OF PERIOD
--------------------------------       ----------     -----------     ----------     ----------     ---------
<S>                                    <C>            <C>             <C>            <C>            <C>
Allowance for doubtful accounts:
  Year ended December 31, 1995          (300,000)      (100,000)                                     (400,000)
  Year ended December 31, 1996          (400,000)                                                    (400,000)
  Year ended December 31, 1997          (400,000)      (100,000)                                     (500,000)
</TABLE>


                                      38
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                                                    SEQUENTIALLY
EXHIBIT                                                                                               NUMBERED
NUMBER                             DESCRIPTION                                                          PAGE
<C>         <S>                                                                                     <C>
3.1.1       Articles of Incorporation of the Company, as amended (1)

3.1.2       Certificate of Amendment of Articles of Incorporation filed with the California 
            Secretary of State on December 6, 1993(1)

3.2         Bylaws of the Company (1)

4           Specimen Stock Certificate of the Company (1)

10.1*       1993 Amended and Restated Employee Stock Option Plan ("Employee Plan") (1)

10.2*       1996 Amended and Restated Employee Stock Option Plan ("Employee Plan") (6)

10.3*       Non-Employee Director Stock Option Plan ("Director Plan"), together with form of 
            notice of grant and grant summary (1)

10.4*       1995 Amended and Restated Non-Employee Director Stock Option Plan ("Director 
            Plan"), together with form of notice of grant and grant summary (1)

10.5        Agreement. effective May 11, 1997, between the Company and United Steelworkers of            42
            America 

10.6        Lease Agreement, dated December 17, 1993, between Productos Recreativos, S.A. and 
            Parque Industrial Mexicali, S.A. de C.V. for the facilities known Mercurio #70 in 
            Mexicali, Mexico (2)

10.7        Lease Agreement, dated December 17, 1993, between Productos Recreativos, S.A. and 
            Parque Industrial Mexicali, S.A. de C.V. for the facilities known as Avenue Galaxia 
            50 in Mexicali, Mexico (2)

10.8        Lease Agreement, dated December 17, 1993, between Productos Recreativos, S.A. and 
            Parque Industrial Mexicali, S.A. de C.V. for the facilities known as Mercurio #30 in 
            Mexicali, Mexico (2)

10.9        Lease Agreement, dated January 22, 1996, between Coastcast Corporation, S.A. and 
            Parque Industrial Mexicali, S.A. de C.V. for the facilities known as Calle Marte #162
            in Mexicali, Mexico (4)

10.10       Guaranty, dated November 1, 1988, by the Company for the leases of the Mexicali, 
            Mexico facilities (1)

10.11       Guaranty, dated January 23, 1996, by the Company for the lease, dated January 22, 
            1996 (4)
</TABLE>


                                      39
<PAGE>

<TABLE>
<C>         <S>                                                                                     <C>
10.12       Lease Agreement, dated August 21, 1997, between Coastcast Corporation, S.A. 
            and Inmobiliaria Y Fraccionadora Lomas, S.A. de C.V. for real estate in Tijuana, 
            Baja California, Mexico (7)

10.13       Lease Agreement, dated September 1, 1997, between the Company and Watson Land 
            Company for the facilities in Rancho Dominguez, California (7)

10.14       Assignment effective February 1, 1998 of Lease dated August 21, 1997, between                69
            Coastcast Corporation, S.A. and Inmobiliaria Y Fraccionadora Lomas, S.A. de C.V. 
            to Coastcast Tijuana, S. de R.L. de C.V. 

10.15       Form of Indemnification Agreement (1)

10.16       Revolving Line of Credit Note and Credit Agreement, effective December 23, 1997,             72
            between the Company and Imperial Bank

10.17*      Amended and Restated Coastcast Corporation Selected Employees Pension Plan, dated 
            October 1, 1987 (1)

10.18*      Amendment to the Coastcast Corporation Selected Employees Pension Plan, effective            85
            May 12, 1997

10.19*      Coastcast Corporation 401(k) Retirement Plan, effective January 1, 1996 (4)

10.22       Coastcast Corporation S Corporation Termination, Tax Allocation and Indemnification 
            Agreement dated December 1, 1993, between the Company and certain Shareholders(1)

10.24*      Coastcast Corporation Supplemental Executive Retirement Plan, effective September 1, 
            1996 (5)

10.25*      First Amendment to Coastcast Corporation Supplemental Executive Retirement Plan, 
            effective September 1, 1996 (5)

10.26*      Second Amendment to Coastcast Corporation Supplemental Executive Retirement Plan, 
            dated February 18, 1997 (6)

10.27*      Trust Agreement by and between Coastcast Corporation and Imperial Trust Company, 
            dated September 1, 1996 (5)

21          Subsidiaries of the Company (4) 

24          Consent of Independent Auditors                                                              86

27.1        FDS

27.2        FDS

27.3        FDS

</TABLE>

----------------------
*   Management contract or compensating plan or arrangement.

(1) Incorporated by reference to the exhibits to the Registration Statement 
    on Form S-1 (Registration No. 33-71294) filed on November 4, 1993, as 
    amended by Amendment No. 1 filed on November 17, 1993, Amendment No. 2 
    filed on December 1, 1993, and Amendment No. 3 filed on December 9, 1993.


                                      40
<PAGE>

(2) Incorporated by reference to the exhibits to Form 10-K for the fiscal 
    year ended December 31, 1993.

(3) Incorporated by reference to the exhibits to Form 10-K for the fiscal 
    year ended December 31, 1994.

(4) Incorporated by reference to the exhibits to Form 10-K for the fiscal 
    year ended December 31, 1995.

(5) Incorporated by reference to the exhibits to Form 10-Q for the fiscal 
    quarter ended September 30, 1996.

(6) Incorporated by reference to the exhibits to Form 10-K for the fiscal 
    year ended December 31, 1996.

(7) Incorporated by reference to the exhibits to Form 10-Q for the fiscal 
    quarter ended September 30, 1997.


                                      41