**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

| **x**      | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE**                                                                                                                                                                                                                                                                                                                                                                                |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | **SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** | **For the Quarterly Period Ended July 2, 2006**                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** ** | **or**                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **o**      | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE**                                                                                                                                                                                                                                                                                                                                                                               |
| ** ** | **SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** | **For the transition period from                                     to                                  ** |

 

**Commissionfile number 333-72343**

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**TRUE TEMPER SPORTS, INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**                                 |   | **52-2112620**          |
|----------------------------------------------|--------|-------------------------|
| (State or other  jurisdiction of             |   | (I.R.S. Employer        |
| incorporation or  organization)              |   | Identification  Number) |
| **8275 Tournament Drive**                    |   |                    |
| **Suite 200**                           |   |                    |
| **Memphis, Tennessee**                       |   | **38125**               |
| **(Address of principal executive offices)** |   | (Zip Code)              |

 

**Telephone: (901) 746-2000**

**(Registrant’s telephone number, including area code)**

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes x No o.

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.

Large acceleratedfiler   o     Acceleratedfiler   o     Non-acceleratedfiler   x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theAct). Yes o No x

As of August 16, 2006the Registrant had 100 shares of Common Stock, $0.01 par value per share,outstanding.

 

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**TRUE TEMPER SPORTS,INC.**

**INDEX**

|              | ** **        | ** **            | ** ** | ** **                                                                                  | **Page** |
|--------------|-------------------|-----------------------|------------|---------------------------------------------------------------------------------------------|----------|
| PART I  |              | FINANCIAL INFORMATION |       |                                                                                        |
|         |              | Item 1.          |       | Financial Statements                                                                        |     | 1 |
|         |              |                  |       | Condensed Consolidated  Statements of Operations (Unaudited)                                |     | 1 |
|         |              |                  |       | Condensed Consolidated Balance Sheets  (Unaudited)                                          |     | 2 |
|         |              |                  |       | Condensed Consolidated  Statements of Cash Flows (Unaudited)                                |     | 3 |
|         |              |                  |       | Notes to Condensed Consolidated  Financial Statements (Unaudited)                           |     | 4 |
|         |              | Item 2.          |       | Management’s Discussion and  Analysis of Financial Condition and Results of Operations |     | 8 |
|         |              | Item 3.          |       | Quantitative and Qualitative  Disclosures About Market Risk                                 |     | 15 |
|         |              | Item 4.               |       | Controls and Procedures                                                                     |     | 15 |
| PART II | OTHER INFORMATION |                  |       |
|         |              | Item 1.          |       | Legal Proceedings                                                                           |     | 16 |
|         |              | Item 1A.         |       | Risk Factors                                                                                |     | 16 |
|         |              | Item 2.          |       | Unregistered Sales of Equity  Securities and Use of Proceeds                                |     | 16 |
|         |              | Item 3.          |       | Defaults Upon Senior  Securities                                                            |     | 16 |
|         |              | Item 4.          |       | Submission of Matters to a  Vote of Security Holders                                        |     | 16 |
|         |              | Item 5.          |       | Other Information                                                                           |     | 16 |
|         |              | Item 6.          |       | Exhibits                                                                                    |     | 16 |
| Signatures   |              | 17                    |
|              |                   |                       |            |                                                                                             |          |  |  |  |

 

i

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**PART I.FINANCIAL INFORMATION**

**Item 1.**                        *Financial Statements*

**TRUE TEMPER SPORTS,INC. AND SUBSIDIARIES(A wholly-owned subsidiary of True Temper Corporation)**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Dollars in thousands)**

| ** **                                                 | ** ** | **Quarter Ended** | ** ** | **Year-To-Date**       | ** ** |
|------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                 | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| **NET  SALES**                                             |       | **$**                  | **30,674** | ** **             | **$**      | **32,565** | ** ** | **$** | **62,333** | ** ** | **$** | **64,668** |   |
| Cost of sales                                              |       | 19,830                 |       | 19,314                 | ** ** | 39,915 |   | 38,548 |   |
| **GROSS PROFIT**                                           |       | **10,844**             | ** ** | **13,251**             | ** ** | **22,418** | ** ** | **26,120** |   |
| Selling, general and administrative expenses               |       | 3,956                  |       | 3,947                  | ** ** | 7,483 |   | 8,135 |   |
| Amortization of  intangible assets                         |       | 3,466                  |       | 3,456                  | ** ** | 6,927 |   | 6,912 |   |
| Business  development, start-up costs and transition costs |       | 1,111                  |       | 70                     | ** ** | 1,123 |   | 135 |   |
| **OPERATING INCOME**                                       |       | **2,311**              | ** ** | **5,778**              | ** ** | **6,885** | ** ** | **10,938** |   |
| Interest expense, net of interest income                   |       | 5,017                  |       | 4,759                  | ** ** | 9,863 |   | 9,526 |   |
| Other expenses,  net                                       |       | 28                     |       | 21                     | ** ** | 48 |   | 33 |   |
| **INCOME (LOSS) BEFORE INCOME TAXES**                      |       | **(2,734**             | **)**      | **998**                | ** ** | **(3,026** | **)** | **1,379** |   |
| Income tax expense (benefit)                               |       | (989                   | )          | $                      | 428        | ** ** | (1,051 | ) | 625 |   |
| **NET  INCOME (LOSS)**                                     |       | **$**                  | **(1,745** | **)**                  | **$**      | **570** | ** ** | **$** | **(1,975** | **)** | **$** | **754** |   |

 

See accompanying notes to condensed consolidated financial statements

1

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**TRUE TEMPER SPORTS,INC. AND SUBSIDIARIES(A wholly-owned subsidiary of True Temper Corporation)**

**CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(Dollars in thousands)**

| ** **                                                                                                    | ** ** | **July 2,  2006** | ** **  | **December 31,  2005** | ** **  |
|---------------------------------------------------------------------------------------------------------------|------------|------------------------|-------------|-----------------------------|-------------|
| **ASSETS**                                                                                                    |       | ** **             |        |                        |        |   |   |
| **CURRENT ASSETS**                                                                                            |       |                   |        |                        |        |   |   |
| Cash and cash equivalents                                                                                     |       | $                      | 3,106       |                        |        | $ | 4,733 |   |   |
| Receivables, net                                                                                              |       | 22,618                 |        |                        | 17,949      |   |   |
| Inventories                                                                                                   |       | 20,951                 |        |                        | 19,633      |   |   |
| Prepaid expenses and other current assets                                                                     |       | 3,776                  |        |                        | 3,830       |   |   |
| **Total current assets**                                                                                      | ** ** | **50,451**             |        | ** **                  | **46,145**  |   |   |
| Property, plant and equipment, net                                                                            |       | 14,537                 |        |                        | 12,210      |   |   |
| Goodwill, net                                                                                                 |       | 155,212                |        |                        | 150,883     |   |   |
| Intangible assets, net                                                                                        |       | 136,294                |        |                        | 132,629     |   |   |
| Other assets                                                                                                  |       | 6,789                  |        |                        | 6,188       |   |   |
| **Total assets**                                                                                              | ** ** | **$**                  | **363,283** |                        | ** **  | **$** | **348,055** |   |   |
| **LIABILITIES &  STOCKHOLDER’S EQUITY**                                                         |       |                   |        |                        |        |   |   |
| **CURRENT LIABILITIES**                                                                                       |       |                   |        |                        |        |   |   |
| Current portion of long-term debt                                                                             |       | $                      | 1,257       |                        |        | $ | 245 |   |   |
| Accounts payable                                                                                              |       | 7,147                  |        |                        | 4,410       |   |   |
| Accrued expenses and other current liabilities                                                                |       | 10,795                 |        |                        | 9,896       |   |   |
| **Total current liabilities**                                                                                 | ** ** | **19,199**             |        | ** **                  | **14,551**  |   |   |
| Deferred tax liability, net                                                                                   |       | 3,378                  |        |                        | 4,531       |   |   |
| Long-term debt, net of current portion                                                                        |       | 234,777                |        |                        | 220,480     |   |   |
| Other liabilities                                                                                             |       | 8,140                  |        |                        | 8,729       |   |   |
| **Total liabilities**                                                                                         | ** ** | **265,494**            |        | ** **                  | **248,291** |   |   |
| **STOCKHOLDER’S  EQUITY**                                                                                |       |                   |        |                        |        |   |   |
| Common stock—par value $0.01 per share; authorized  1,000 shares; issued and outstanding 100 shares |       | —                 |        |                        | —      |   |   |
| Additional paid-in capital                                                                                    |       | 111,943                |        |                        | 111,943     |   |   |
| Accumulated deficit                                                                                           |       | (12,905                | )           |                        | (10,930     | ) |   |
| Accumulated other comprehensive loss, net of taxes                                                            |       | (1,249                 | )           |                        | (1,249      | ) |   |
| **Total stockholder’s equity**                                                                           | ** ** | **97,789**             |        | ** **                  | **99,764**  |   |   |
| Commitments and contingent liabilities                                                                        |       | —                 |        |                        | —      |   |   |
| **Total  liabilities and stockholder’s equity**                                                          | ** ** | **$**                  | **363,283** |                        | ** **  | **$** | **348,055** |   |   |

 

See accompanying notes to condensed consolidated financial statements

2

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**TRUETEMPER SPORTS, INC. AND SUBSIDIARIES(A wholly-owned subsidiary of True Temper Corporation)**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(Dollars in thousands)**

| ** **                                                                                | ** ** | **Year-To-Date**       | ** **    |
|-------------------------------------------------------------------------------------------|------------|------------------------|---------------|
| ** **                                                                                | ** ** | **July 2,  2006** | ** **    | **July 3,  2005** | ** ** |
| **OPERATING ACTIVITIES**                                                                  |       |                   |          |   |   |
| Net income (loss)                                                                         |       | $                      | (1,975   | ) | $ | 754 |   |
| Adjustments to  reconcile net income (loss) to net cash provided by operating activities: |       |                   |          |   |   |
| Depreciation and amortization                                                             |       | 1,145                  |          | 1,349 |   |
| Amortization of deferred financing costs                                                  |       | 652                    |          | 726 |   |
| Amortization of intangible assets                                                         |       | 6,927                  |          | 6,912 |   |
| Loss on disposal of property, plant and equipment                                         |       | 25                     |          | — |   |
| Deferred taxes                                                                            |       | (1,153                 | )             | 500 |   |
| Changes in operating assets and liabilities, net                                          |       | (2,071                 | )             | (696 | ) |
| **Net cash provided by operating activities**                                             | ** ** | **3,550**              |          | **9,545** |   |
| **INVESTING  ACTIVITIES**                                                                 |       |                   |          |   |   |
| Purchase of property, plant, equipment and certain  assets                                |       | (18,947                | )             | (1,313 | ) |
| Other investing activity                                                                  |       | (71                    | )   | — |    |
| **Net cash used in investing activities**                                                 | ** ** | **(19,018**            | )             | **(1,313** | ) |
| **FINANCING  ACTIVITIES**                                                                 |       |                   |          |   |   |
| Proceeds from issuance of bank debt                                                       |       | 18,000                 |          | — |   |
| Principal payments on bank debt                                                           |       | (2,691                 | )             | (7,000 | ) |
| Payment of debt issuance costs                                                            |       | (1,057                 | )             | — |   |
| Other financing activity                                                                  |       | (411                   | )   | (86 | )   |
| **Net cash provided by (used in) financing  activities**                                  | ** ** | **13,841**             |          | **(7,086** | ) |
| Net increase (decrease) in cash                                                           |       | (1,627                 | )             | 1,146 |   |
| Cash at beginning  of period                                                              |       | 4,733                  |          | 3,337 |   |
| **Cash at end of period**                                                                 | ** ** | **$**                  | **3,106**     |   | **$** | **4,483** |   |

 

See accompanying notes to condensed consolidated financial statements

3

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**TRUE TEMPER SPORTS, INC. AND SUBSIDIARIES (A wholly-owned subsidiary of True Temper Corporation)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands unless otherwise indicated)**

**1)  Basis of Presentation**

The accompanying unaudited consolidated financialstatements of True Temper Sports, Inc. and subsidiaries (“True Temper” orthe “Company”) have been prepared in accordance with the rules andregulations of the Securities and Exchange Commission (“SEC”) for quarterlyreports on Form 10-Q and consequently do not include all thedisclosures required by accounting principles generally accepted in the UnitedStates of America. It is suggested that these financial statements be read in conjunctionwith the audited financial statements and the notes thereto for the year ended December 31,2005. In the opinion of management, the financial statements as of and for theperiods ended July 2, 2006 and July 3, 2005 include all adjustments,consisting of only normal recurring adjustments, which are necessary for thefair presentation of results for interim periods.

The Company’s fiscal year begins on January 1 andends on December 31 of each year. During the course of the year the Companycloses its books on a monthly and quarterly basis following a 4,4,5 weekclosing calendar. Since the Company uses Sunday as the last day of each period(with the exception of December) the number of days in the first and fourthquarters of any given year can vary depending on which day of the week January 1stfalls on.

On January 30, 2004, TTS Holdings LLC, a companyformed by Gilbert Global Equity Partners, L.P. and its affiliated funds (“GilbertGlobal”), entered into a stock purchase agreement with the Company’s directparent company, True Temper Corporation, pursuant to which TTS Holdings LLC andcertain of the Company’s senior management purchased all of the outstandingshares of True Temper Corporation. In connection with this acquisition, andeffective on March 15, 2004, the Company repaid all of its outstanding2002 senior credit facility, redeemed all of its 107¤8% seniorsubordinated notes due 2008, and made certain payments of the net remainingequity of the predecessor company to the selling shareholders. These paymentswere financed with the net proceeds of a new senior credit facility and new 83¤8%senior subordinated notes due 2011.

This transaction wasaccounted for by the Company’s parent company using the purchase method ofaccounting. As the Company is a wholly owned subsidiary of True TemperCorporation, the Company has “pushed down” the effect of the purchase method ofaccounting to the financial statements of True Temper Sports, Inc.

**2)  Stock Based Compensation**

On August 10, 2005 the Company’s parent company,True Temper Corporation (“TTC”), issued, to certain employees in return forservice, a total of 525,400 stock options and stock appreciation rights(“Equity Incentive Awards”) to purchase common stock of TTC for $13.56 pershare. The Equity Incentive Awards vest and become exercisable at various timesand under various conditions through August 10, 2012; based on servicewith certain acceleration features based on performance criteria.

On January 1,2006 the Company adopted Statement of Financial Accounting StandardsNo. 123(R) (Revised December 2004), *Share Based Payment*(“SFAS 123(R)”). All equity incentive awards issued subsequent toJanuary 1, 2006 will be accounted for using the guidance provided in thisstatement, which requires the measurement and recognition of compensationexpense for all share-based payment awards to employees and directors based onestimated fair values. As allowed by SFAS 123(R), the Company has 

4

 

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**TRUE TEMPER SPORTS, INC. AND SUBSIDIARIES**

**(A wholly-owned subsidiary of True Temper Corporation)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Unaudited)**

**(Dollars in thousands unless otherwise indicated)**

electedto make this adoption on a prospective basis because the Company meets thedefinition of a non-public entity. For awards issued prior to January 1,2006, the Company continues to apply the intrinsic-value-basedmethod of accounting prescribed by Accounting Principles Board (APB) OpinionNo. 25, Accounting for Stock Issued to Employees, and relatedinterpretations including Financial Accounting Standards Board InterpretationNo. 44,*Accounting for Certain Transactions InvolvingStock Compensation, An Interpretation of APB Opinion No. 25*,issued in March 2000, to account for its fixed-plan Equity IncentiveAwards. Under this method, compensation expense is recorded on the date ofgrant only if the current market price of the underlying stock exceeded theexercise price of the Equity Incentive Award.

TheCompany estimated fair value using the Black-Scholes option-pricing model withthe following weighted-average assumptions: dividend yield=0%; expectedvolatility=0%; risk-free interest rate=4%; expected term=5 years.

TTCand the Company have not granted any equity awards since August 2005. Therehave been no awards exercised or forfeited in 2006. The weighted averageremaining contractual life is nine years.

Inaddition, TTC has 468,000 equity awards which vest only upon a sale of TTC andachievement of other certain terms as described in the awards. As of July 2,2006 the events required for vesting of these awards are not expected to occurin the near term.

**3)  Inventories**

| ** **      | ** ** | **July 2,  2006** | ** ** | **December 31,  2005** | ** ** |
|-----------------|------------|------------------------|------------|-----------------------------|------------|
| Raw materials   |       | $                      | 4,182      |                        |       | $ | 4,556 |   |   |
| Work in process |       | 2,893                  |       |                        | 1,734      |   |   |
| Finished goods  |       | 13,876                 |       |                        | 13,343     |   |   |
| Total           |       | $                      | 20,951     |                        |       | $ | 19,633 |   |   |

 

**4)  SegmentReporting**

The Company operates intwo reportable business segments: golf shafts and performance sports. TheCompany’s reportable segments are based on the type of product manufactured andthe application of that product in the marketplace. The golf shaft segmentmanufactures and sells steel, composite, and multi-material golf club shaftsfor use exclusively in the golf industry. The performance sports segmentmanufactures and sells high strength, tight tolerance tubular components forbicycle, hockey and other recreational sport markets. The Company evaluates theperformance of these segments based on segment sales and gross profit. TheCompany has no inter-segment sales.

5

 

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**TRUE TEMPER SPORTS, INC. AND SUBSIDIARIES**

**(A wholly-owned subsidiary of True Temper Corporation)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Unaudited)**

**(Dollars in thousands unless otherwise indicated)**

 

| ** **         | ** ** | **Quarter Ended** | ** ** | **Year-To-Date**       | ** ** |
|--------------------|------------|------------------------|------------|------------------------|------------|
| ** **         | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| Net sales:         |       |                   |       |                   |       |   |   |   |   |
| Golf shafts        |       | $                      | 28,490     |                   | $          | 30,787 |   | $ | 58,031 |   | $ | 61,432 |   |
| Performance sports |       | 2,184                  |       | 1,778                  |       | 4,302 |   | 3,236 |   |
| Total              |       | $                      | 30,674     |                   | $          | 32,565 |   | $ | 62,333 |   | $ | 64,668 |   |
| Gross profit:      |       |                   |       |                   |       |   |   |   |   |
| Golf shafts        |       | $                      | 10,474     |                   | $          | 12,807 |   | $ | 21,756 |   | $ | 25,385 |   |
| Performance sports |       | 370                    |       | 444                    |       | 662 |   | 735 |   |
| Total              |       | $                      | 10,844     |                   | $          | 13,251 |   | $ | 22,418 |   | $ | 26,120 |   |

 

Followingis a reconciliation of total reportable segment gross profit to total Companyincome (loss) before income taxes:

| ** **                                                      | ** ** | **Quarter Ended** | ** ** | **Year-To-Date**       | ** ** |
|-----------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                      | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| Total reportable segment  gross profit                          |       | $                      | 10,844     |                   | $          | 13,251 |   | $ | 22,418 |   | $ | 26,120 |   |
| Less:                                                           |       |                   |       |                   |       |   |   |   |   |
| Selling, general and  administrative expenses                   |       | 3,956                  |       | 3,947                  |       | 7,483 |   | 8,135 |   |
| Amortization of intangible  assets                              |       | 3,466                  |       | 3,456                  |       | 6,927 |   | 6,912 |   |
| Business development,  start-up costs and transition costs |       | 1,111                  |       | 70                     |       | 1,123 |   | 135 |   |
| Interest expense, net of  interest income                       |       | 5,017                  |       | 4,759                  |       | 9,863 |   | 9,526 |   |
| Other expense, net                                              |       | 28                     |       | 21                     |       | 48 |   | 33 |   |
| Total Company income  (loss) before income taxes                |       | $                      | (2,734     | )                      | $          | 998 |   | $ | (3,026 | ) | $ | 1,379 |   |

 

**5)  Comprehensive Income**

Totalcomprehensive income and its components for the periods covered by this reportare as follows:

| ** **                                                              | ** ** | **Quarter Ended** | ** ** | **Year-To-Date**       | ** ** |
|-------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                              | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| Net income (loss)                                                       |       | $                      | (1,745     | )                      |       | $ | 570 |   |   | $ | (1,975 | ) |   | $ | 754 |   |   |
| Mark to market adjustment on derivative instruments,  net of taxes |       | —                 |       |                   | —     |   |   | — |   |   | (15 | ) |   |
| Total comprehensive  income (loss)                                      |       | $                      | (1,745     | )                      |       | $ | 570 |   |   | $ | (1,975 | ) |   | $ | 739 |   |   |

 

6

 

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**TRUE TEMPER SPORTS, INC. AND SUBSIDIARIES**

**(A wholly-owned subsidiary of True Temper Corporation)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**(Unaudited)**

**(Dollars in thousands unless otherwise indicated)**

**6)  Pension and Other Postretirement Benefits**

Thefollowing table reflects the Company’s net periodic pension benefit expense andcash contributions to its pension plan, as well as the postretirement benefitexpense related to its unfunded health care plan for retirees, for the periodscovered by this report:

| ** **                                   | ** ** | **Quarter Ended** | ** ** | **Year-To-Date**       | ** ** |
|----------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                   | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| *Pension  Plan:*                             | * *   |                   | * *   | * *               |       |   | * * | * * |   |   | * * | * * |   |   | * * | * * |   |
| Net periodic  pension benefit expense        |       |                   | $          | 114                    | * *   |   |   | $ | 148 | * * |   |   | $ | 228 | * * |   |   | $ | 297 | * * |   |
| Cash  contributions to the pension plan      |       |                   | $          | 102                    | * *   |   |   | $ | 45 | * * |   |   | $ | 148 | * * |   |   | $ | 45 | * * |   |
| *Postretirement  Health Plan:*               |       |                   |       | * *               |       |   |   | * * |   |   |   | * * |   |   |   | * * |   |
| Net periodic  postretirement benefit expense |       |                   | $          | 78                     | * *   |   |   | $ | 90 | * * |   |   | $ | 156 | * * |   |   | $ | 180 | * * |   |

 

**7)  Acquisitionof Certain Assets**

On June 8, 2006 the Company acquired certainbusiness assets of the former golf shaft manufacturer RoyalPrecision, Inc. (“Royal Precision”) for approximately $17,850. The assetsacquired were comprised of (i) intellectual property including patents,trademarks, brand names and design technologies, (ii) intangible assetsincluding customer relationships, (iii) a portion of their golf shaftinventory, and (iv) certain steel golf shaft manufacturing equipment. The Companyis currently in the process of finalizing the purchase price allocation. Theasset acquisition followed the announcement that Royal Precision was ceasingoperations and exiting the golf shaft market.

True Temper expects to integrate the machinery andequipment into its existing steel golf shaft facility in Amory, Mississippi,and to produce and distribute the branded products formerly sold by RoyalPrecision.

The purchase price for the assets acquired was paid incash, and is included in the investing section of the Company’s CondensedConsolidated Statement of Cash Flows for the period ended July 2, 2006.Machinery and equipment acquired will be depreciated over its estimatedremaining useful life, between five and ten years. Intangible assets acquiredwith determinable useful lives will be amortized over periods ranging fromeight to ten years.

Certain expenses were incurred to acquire the assetsand transition them to the Company’s existing manufacturing sites. Of thesecosts approximately $1.0 million for the period ended July 2, 2006 wererecorded in the Company’s Condensed Consolidated Statement of Operations asBusiness development, start-up costs and transition costs.

7

 

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**Item 2.**                        *Management’s Discussion and Analysis of Financial Condition and Resultsof Operations*

The following discussion should be read in conjunctionwith the more detailed information in the True Temper Sports, Inc. 2005****annual financial statements, including the notes thereto,appearing most recently in the 2005 Annual Report on Form 10-K,filed with the SEC on March 28, 2006.

**Company Overview**

True Temper Sports, Inc. (“True Temper” or the“Company”), a wholly owned subsidiary of True Temper Corporation (“TTC”), is aleading designer, manufacturer and marketer of steel, composite, andmulti-material golf club shafts for original equipment manufacturers (“OEMs”)and distributors in the golf equipment industry. In addition, True Temperproduces and sells a variety of performance sports products that offer highstrength and tight tolerance tubular components to the bicycle, hockey andother recreational sports markets. In calendar 2005, golf shaft salesrepresented 94% of total revenues, and performance sports sales represented 6%.During the second quarter and year-to-dateperiods of 2006, sales of performance sports products increased to represent 7%of total revenue.

**Purchase Agreementfor True Temper Corporation**

On January 30, 2004, TTS Holdings LLC, a companyformed by Gilbert Global Equity Partners, L.P. and its affiliated funds (“GilbertGlobal”), entered into a stock purchase agreement with the Company’s direct parent company, True Temper Corporation,pursuant to which TTS Holdings LLC and certain of the Company’s seniormanagement purchased all of the outstanding shares of TTC (“Gilbert GlobalAcquisition”). In connection with this acquisition, and effective on March 15,2004, the Company repaid all of its outstanding 2002 senior credit facility,redeemed all of its 107¤8%senior subordinated notes due 2008, and made certain payments of the net remaining equity of the predecessor company to theselling shareholders. These payments were financed with the net proceedsof a new senior credit facility and new 83¤8% seniorsubordinated notes due 2011.

The Gilbert Global Acquisition was accounted for by the Company’s parent company using thepurchase method of accounting. As the Company is a wholly owned subsidiary ofTTC, the Company has “pushed down” the effect of the purchase method ofaccounting to the financial statements of True Temper Sports, Inc.

**Results ofOperations**

Thefollowing table sets forth the components of net income (loss) as a percentageof net sales for the periods indicated:

| ** **                                                 | ** ** | **Quarter Ended** | ** **    | **Year-To-Date**       | ** **   |
|------------------------------------------------------------|------------|------------------------|---------------|------------------------|--------------|
| ** **                                                 | ** ** | **July 2,  2006** | ** **    | **July 3,  2005** | ** **   | **July 2,  2006** | ** ** | **July 3,  2005** | ** ** |
| Net sales                                                  |       | 100.0                  | %             | 100.0                  | %            | 100.0 | % | 100.0 | % |
| Cost of sales                                              |       | 64.6                   |          | 59.3                   |         | 64.0 |   | 59.6 |   |
| Gross profit                                               |       | 35.4                   |          | 40.7                   |         | 36.0 |   | 40.4 |   |
| Selling, general and  administrative expenses              |       | 12.9                   |          | 12.1                   |         | 12.0 |   | 12.6 |   |
| Amortization of  intangible assets                         |       | 11.3                   |          | 10.6                   |         | 11.1 |   | 10.7 |   |
| Business  development, start-up costs and transition costs |       | 3.6                    |          | 0.2                    |         | 1.8 |   | 0.2 |   |
| Operating income                                           |       | 7.5                    |          | 17.7                   |         | 11.0 |   | 16.9 |   |
| Interest expense,  net of interest income                  |       | 16.4                   |          | 14.6                   |         | 15.8 |   | 14.7 |   |
| Other expenses,  net                                       |       | 0.1                    |          | 0.1                    |         | 0.1 |   | 0.1 |   |
| Income (loss) before income taxes                          |       | (8.9                   | )   | 3.1                    |    | (4.9 | )   | 2.1 |   |
| Income tax  expense (benefit)                              |       | (3.2                   | )   | 1.3                    |    | (1.7 | )   | 1.0 |   |
| Net income (loss)                                          |       | (5.7                   | )%            | 1.8                    | %            | (3.2 | )% | 1.2 | % |

 

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***Second Quarter Ended July 2, 2006 Compared to theSecond Quarter Ended July 3, 2005***

***Net Sales*********for the second quarter of 2006decreased approximately $1.9 million, or 5.8%, to $30.7 million from$32.6 million in the second quarter of 2005. Golf shaft sales decreased $2.3 million,or 7.5%, to $28.5 million compared to the $30.8 million realized inthe second quarter of 2005. This decline in revenue resulted primarily from areduction in the sales of premium steel golf shafts. This unit sales reductionwas driven by several factors, but was predominantly impacted by the currentlack of exciting new product introductions particularly in the iron categoryfrom leading golf equipment companies; many of which are scheduled for launchduring the second half of 2006. Offsetting the sluggish market environment forsteel golf shafts, for the second consecutive quarter the Company achievedrecord sales, in both dollars and units, of its graphite golf shaft products.The increased unit volume in graphite golf shafts can be attributed to thecontinued success of branded products such as the Grafalloy ProLaunch, as well as continued momentum surrounding the Company’sstrategic expansion into the stock OEM graphite market.

Performance sports sales increased approximately $0.4 million,or 22.8%, to $2.2 million in the second quarter of 2006 from $1.8 millionin the second quarter of 2005. This increase is reflective of the Company’scontinued shift in product focus away from non-branded, non-sporting goodsofferings, and to the growing bike and composite hockey markets where TrueTemper continues to build momentum for its new product offerings.

Net sales to international customers increased $1.1 million,or 11.7%, to $10.1 million in the second quarter of 2006 from $9.1 millionin the same period of 2005. This increase resulted primarily from a shift inunit sales from the United States to Southeast Asia as our customers determineon a quarterly basis where to have their finished clubs assembled. The assemblyrelated shift in international sales was partially offset by a decline inexport sales for actual usage outside the United States, as these foreignmarkets experienced the same overall golf industry drivers and True Temperspecific issues described above. In addition, the Company experienced a declinein foreign sales of $0.2 million due to fluctuations in foreign currencylevels in the British Pound, Japanese Yen and Australian Dollar.

***Gross Profit***for the second quarter of 2006 decreased $2.4 million, or 18.2%, to $10.8 millionfrom $13.3 million in the second quarter of 2005. Gross profit as apercentage of net sales decreased to 35.4% in the second quarter of 2006 from 40.7%in the second quarter of 2005. The decrease in gross profit as a percentage ofnet sales was driven primarily by (i) an increase in the cost of rawmaterials and energy sources, (ii) unfavorable fluctuations in foreigncurrency exchange rates, and (iii) the expected decline in profit marginsdue to the mix of products sold being more heavily weighted toward graphitegolf and performance sports. These factors were partially offset by increasedselling prices on the Company’s steel and graphite golf products, as well asits performance sports offerings, which were effective January 1, 2006.

***Selling, Generaland Administrative Expenses*** (“SG&A”) for the secondquarter of 2006 were relatively flat as compared to the same period in theprior year.  SG&A for the secondquarter of 2006 was $4.0 million, while the second quarter of 2005 was $3.9million.  SG&A as a percentage of netsales increased to 12.9% from 12.1%. During the second quarter the Company continued its cost control actionsthat were initiated early in 2006.  Thesecost containment efforts, which encompass a variety of functional areas withinthe organization and are representative of both permanent cost savings as wellas the delay of certain non-essential business activities, were instituted inresponse to the softness on the gross profit line.  During the second quarter, the Company’sactions were successful in mitigating the year over year inflation impact tototal SG&A expenses.

***Amortization ofIntangible Assets*** remained relatively flat duringthe second quarter of 2006 at $3.5 million. Intangible assets wereacquired in connection with the Gilbert Global Acquisition. Intangible assetswith definitive lives are being amortized using a straight-line method overperiods from 2 to 59 years.

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***BusinessDevelopment, Start-Up Costs and Transition Costs*** forthe second quarter of 2006 increased $1.0 million, to $1.1 millionfrom $0.1 million in the second quarter of 2005. The increase in thesecosts relates primarily to expenses associated with the acquisition of assetsfrom a former competitor in the steel golf shaft industry, RoyalPrecision.  Costs include acquisitionrelated fees and expenses, legal and other advisory fees, and transportationand integration expenses associated with the transfer of production equipmentand inventory to True Temper facilities.

***Operating Income***for the second quarter of 2006 decreased approximately $3.5 million, or 60.0%,to $2.3 million from $5.8 million in the second quarter of 2005. Thisdecrease reflects the gross profit, SG&A and business development, start-upcosts and transition cost impact of the items described above.

***Interest Expense*** for the second quarter of 2006 was relativelyflat at $5.0 million. An increase in interest expense, drivenprimarily by an increase in the variable interest rate on the Company’s bankdebt, was partially offset by the decrease in outstanding principal amounts ofvariable rate bank debt due to the voluntary prepayments recorded during 2005.

***Income Tax Expense(Benefit)*** decreased in the second quarter of 2006to an income tax benefit of $1.0 million compared to an income tax expenseof $0.4 million in the second quarter of 2005. The effective tax rateduring these periods differs from a federal statutory rate of 34% due primarilyto the incremental tax rate for state and foreign income tax purposes.

***Net Income (Loss)*** for thesecond quarter of 2006 decreased to a net loss of $1.7 million as comparedto $0.6 million of net income in the second quarter of 2005. This decreasereflects the profit impact of the items described above.

***Six Month Period Ended July 2, 2006 Compared tothe Six Month Period Ended July 3, 2005***

***Net Sales*********for the first six months of 2006decreased approximately $2.3 million, or 3.6%, to $62.3 million from $64.7 millionin the first six months of 2005. Golf shaft sales decreased $3.4 million,or 5.5%, to $58.0 million compared to the $61.4 million realized inthe first six months of 2005. This decline in revenue resulted primarily from areduction in the sales of premium steel golf shafts. This unit sales reductionwas driven by several factors, but was predominantly impacted by the currentlack of exciting new product introductions particularly in the iron categoryfrom leading golf equipment companies; many of which are scheduled for launchduring the second half of 2006. Offsetting the sluggish market environment forsteel golf shafts, during the first six months of 2006 the Company achievedrecord sales, in both dollars and units, of its graphite golf shaft products.The increased unit volume in graphite golf shafts can be attributed to thecontinued success of branded products such as the Grafalloy ProLaunch, as well as continued momentum surrounding the Company’sstrategic expansion into the stock OEM graphite market.

Performance sports sales increased approximately $1.1 million,or 32.9%, to $4.3 million in the first six months of 2006 from $3.2 millionin the first six months of 2005. This increase is reflective of the Company’scontinued shift in product focus away from non-branded, non-sporting goodsofferings, and to the growing bike and composite hockey markets where TrueTemper continues to build momentum for its new product offerings.

Net sales to international customers decreased $0.8 million,or 3.7%, to $20.2 million in the first six months of 2006 from $21.1 millionin the same period of 2005. This decline in export sales for actual usageoutside the United States was relatively consistent with the decline in USdomestic sales, as these foreign markets experienced the same overall golfindustry drivers and True Temper specific issues described above. Partiallyoffsetting this decline was an increase in international sales resultingprimarily from a shift in unit sales from the United States to Southeast Asiaas our customers determine on a quarterly basis where to have their finishedclubs assembled. In addition, the Company experienced a decline in foreign 

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sales of $0.6 milliondue to fluctuations in foreign currency levels in the British Pound, JapaneseYen and Australian Dollar.

***Gross Profit***for the first six months of 2006 decreased $3.7 million, or 14.2%, to $22.4 millionfrom $26.1 million in the first six months of 2005. Gross profit as apercentage of net sales decreased to 36.0% in the first six months of 2006 from40.4% in the first six months of 2005. The decrease in gross profit as apercentage of net sales was driven primarily by (i) an increase in thecost of raw materials and energy sources, (ii) unfavorable fluctuations inforeign currency exchange rates, and (iii) the expected decline in profit marginsdue to the mix of products sold being more heavily weighted toward graphitegolf and performance sports. These factors were partially offset by increasedselling prices on the Company’s steel and graphite golf products, as well asits performance sports offerings, which were effective January 1, 2006.

***Selling, Generaland Administrative Expenses*** (“SG&A”) for the firstsix months of 2006 decreased approximately $0.7 million, or 8.0%, to$7.5 million from $8.1 million in the first six months of 2005.SG&A as a percentage of net sales decreased to 12.0% in the first sixmonths of 2006 from 12.6% in the first six months of 2005. This decline inSG&A spending between periods was in response to the softness on the grossprofit line, as the Company put specific expense controls in place to ensurethe best possible read-through to operating profit. These cost controlsencompass a variety of functional areas within the organization, and arerepresentative of both permanent cost savings as well as the delay of certainnon-essential business activities.

***Amortization ofIntangible Assets*** remained relatively flat duringthe first six months of 2006 at $6.9 million. Intangible assets wereacquired in connection with the Gilbert Global Acquisition. Intangible assetswith definitive lives are being amortized using a straight-line method overperiods from 2 to 59 years.

***BusinessDevelopment, Start-Up Costs and Transition Costs***for the first six months of 2006 increased $1.0 million, to $1.1 millionfrom $0.1 million in the first six months of 2005. The increase in thesecosts relates primarily to expenses associated with the acquisition of assetsfrom a former competitor in the steel golf shaft industry, RoyalPrecision.  Costs include acquisitionrelated fees and expenses, legal and other advisory fees, and transportationand integration expenses associated with the transfer of production equipmentand inventory to True Temper facilities.

***Operating Income***for the first six months of 2006 decreased approximately $4.1 million, or 37.1%,to $6.9 million from $10.9 million in the first six months of 2005.This decrease reflects the gross profit, SG&A and business development,start-up costs and transition cost impact of the items described above.

***Interest Expense*** for the first six months of 2006 increasedapproximately $0.3 million, or 3.5%, to $9.9 million from $9.5 million inthe first six months of 2005. An increase in interest expense, drivenprimarily by an increase in the variable interest rate on the Company’s bankdebt, was partially offset by the decrease in outstanding principal amounts ofvariable rate bank debt due to the voluntary prepayments recorded during 2005.

***Income Tax Expense(Benefit)*** decreased in the first six months of2006 to an income tax benefit of $1.1 million compared to an income taxexpense of $0.6 million in the first six months of 2005. The effective taxrate during these periods differs from a federal statutory rate of 34% dueprimarily to the incremental tax rate for state and foreign income taxpurposes.

***Net Income (Loss)*** for thefirst six months of 2006 decreased to a net loss of $2.0 million ascompared to $0.8 million of net income in the first six months of 2005.This decrease reflects the profit impact of the items described above.

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**Liquidity andCapital Resources**

***General***

As part of the Gilbert Global Acquisition the Companyentered into a new senior credit facility (the “2004 Senior Credit Facility”)which includes a $20.0 million non-amortizing revolving credit facility and a$110.0 million Term B loan (as amended from time to time). The term loan requirescash interest payments and quarterly principal payments beginning June 30,2004 and continuing through March 15, 2011.

Also in conjunction with the Gilbert GlobalAcquisition the Company issued new 83¤8% SeniorSubordinated Notes due 2011 (the “83¤8%Notes”). The 83¤8%Notes require cash interest payments each March 15th and September 15thcommencing on September 15, 2004. The 83¤8% Notes areredeemable at the Company’s option, under certain circumstances and at certainredemption prices, beginning March 15, 2008.

The Company used the proceeds from the 2004 SeniorCredit Facility and the 83¤8% Notes to payoff the existing debt that was outstanding at closing on March 15, 2004,and to make a distribution of the net remaining equity to the selling shareholders.

On September 24, 2004 the Company executed anamendment to its 2004 Senior Credit Facility (the “Amendment”). The Amendmentprovided adjustments to certain specified financial ratios and tests includedin the 2004 Senior Credit Facility. As part of the Amendment, the margin adderon LIBOR based loans was increased from 2.50% to between 2.75% and 3.00%,depending on financial ratios, beginning September 24, 2004 and continuingthrough December 31, 2005.

On March 27, 2006 theCompany amended and restated its 2004 Senior Credit Facility (the “2006 RestatedCredit Facility”). The 2006 Restated Credit Facility includes additional termloans under the Company’s existing Senior Secured Credit Facilities ofapproximately $15.0 to $18.0 million, amendments that enable the Companyto pursue future acquisitions, and the necessary flexibility to execute on theCompany’s global strategic and operational initiatives.

Both the 2006 Restated Credit Facility and the 83¤8%Notes contain covenants and events of default, including substantialrestrictions and provisions which, among other things, limit the Company’sability to incur additional indebtedness, make acquisitions and capitalexpenditures, sell assets, create liens or other encumbrances, make certainpayments and dividends, or merge or consolidate. The 2006 Restated CreditFacility also requires the Company to maintain certain specified financialratios and tests including minimum interest coverage and fixed charge coverageratios, and maximum leverage ratios. Furthermore, the 2006 Restated CreditFacility requires certain mandatory prepayments including payments from the netproceeds of certain asset sales and a portion of the Company’s excess cash flowas defined within the credit agreement.

At July 2, 2006 the Company was in compliancewith all of the covenants in both the 2006 Restated Credit Facility and the 83¤8%Notes.

***Six Month Period Ended July 2, 2006 Compared tothe Six Month Period Ended July 3, 2005***

Net cash provided by operating activities declinedapproximately $6.0 million between periods, which relates primarily to thedecrease in gross profit and additional costs for the acquisition andintegration of assets from Royal Precision, as described more fully above. Inaddition overall working capital needs increased by $1.6 million duringthe period ended July 2, 2006 as compared to the same period in 2005. Accountsreceivable increased $4.8 million during the first six months of 2006,which was an expected change based on sales trends and the slight seasonalityof the golf shaft business. Accounts receivable increased $4.6 millionduring the same period in 2005.

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Net cash used for investing activities increased $17.7million during the first six months of 2006, primarily as a result of theacquisition of certain assets from a former competitor in the steel golf shaftindustry, Royal Precision.  Assetsacquired include production equipment, inventory and intellectual property.

Net cash provided by financing activities totaled$13.8 million during the first six months of 2006, as compared to the first sixmonths of 2005 when the Company used $7.1 million in cash for financingactivities.  This increase relatesprimarily to (i) additional borrowings of term debt totaling $18.0 millionduring 2006, used primarily to finance the acquisition of certain assets fromRoyal Precision, (ii) a net decline in repayments of term debt between periodsof $4.3 million, and (iii) the payment of $1.1 million in debt issuance costsin 2006 related to the additional borrowings.

***Existing Contractual Cash Obligations***

Thefollowing table reflects the Company’s contractual cash obligations for principalpayments on long-term debt and capital and operating leases as of July 2,2006 (dollars in millions):

| ** **        | ** ** | **Total** | ** ** | **2006** | ** ** | **2007  through  2008** | ** ** | **2009  through  2010** | ** ** | **Thereafter** | ** ** |
|-------------------|------------|-----------|------------|----------|------------|-------------------------|------------|-------------------------|------------|----------------|------------|
| Long-Term Debt(1) |       | $         | 236.0      |     | $          | 0.6                     |       |                    | $          | 2.5            |       |   |   | $ | 91.8 |   |   |   | $ | 141.1 |   |   |
| Operating Leases  |       | 3.1       |       | 0.5      |       |                    | 1.9        |                    |       |           | 0.6        |   |   |   | 0.1 |   |   |
| Total(2)          |       | $         | 239.1      |     | $          | 1.1                     |       |                    | $          | 4.4            |       |   |   | $ | 92.4 |   |   |   | $ | 141.2 |   |   |

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(1)          The Company’s long-termdebt agreements contain customary change of control provisions that could,under certain circumstances, cause accelerated debt repayment.

(2)          This table does notinclude the Company’s future obligations related to the funding of its pensionbenefits.

***Future CashGeneration and Use***

Currentlyour intention is to use existing cash and cash provided from future operations,if any, as allowed within the covenants of the 2006 Restated Credit Facilityand the 83¤8%Notes, to:

·       Repaythe principal on the 2006 Restated Credit Facility; and/or

·       Tomake additional investments in the business for growth, which may include,among other things, capital expenditures, business acquisitions, and/orexpenditures for business development and expansion.

In addition to the debt service obligations forprincipal and interest payments, the Company’s liquidity needs largely relateto working capital requirements and capital expenditures for machinery andequipment. The Company intends to fund its current and long-term workingcapital, capital expenditure and debt service requirements through cash flowgenerated from operations. However, since there can be no assurance of futureperformance, as of July 2, 2006 the Company has the $20.0 millionrevolving credit facility available for future cash requirements. The maximumamount the Company may use of the $20.0 million revolving credit facilityis limited by the financial covenants contained within the 2006 Restated CreditFacility.

In addition to the Company’s cash obligations forinterest and principal payments related to its debt obligations, the Companyalso has a management services agreement with an affiliate of Gilbert Global,which requires the payment of an annual advisory fee of $0.5 million.

Depending on the size, anyfuture acquisitions, joint ventures, capital expenditures or similartransactions may require significant capital resources in excess of cashprovided from operations, and potentially in excess of cash available under therevolving credit facility. There can be no assurance that the 

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Companywill be able to obtain the necessary capital, under acceptable terms, fromcreditors or other sources that will be sufficient to execute any such businessinvestment or capital expenditure.

**Forward-Looking Statements**

The Private Securities Litigation Reform Act of 1995(the “Act”) provides a safe harbor for forward-looking statements made by theCompany. This document contains forward-looking statements, including but notlimited to Item 2 “Management’s Discussion and Analysis of FinancialCondition and Results of Operations”. All statements which address futureoperating or financial performance, events or developments that the Companyexpects, plans, believes, hopes, wishes, forecasts, predicts, intends, or anticipateswill occur in the future, and other similar meanings or phrases, areforward-looking statements within the meaning of the Act.

The forward-looking statements are based onmanagement’s current views and assumptions regarding future events and operatingperformance. However, there are many risk factors, including but not limitedto, the Company’s substantial leverage, the Company’s ability to service itsdebt, the general state of the economy, the Company’s ability to execute itsplans, fluctuations in the price and availability of energy, fluctuations inthe price and availability of raw materials, potentially significant increasesto employee health and welfare costs, competitive factors, and other risks thatcould cause the actual results to differ materially from the estimates orpredictions contained in the Company’s forward-looking statements.Additional information concerning the Company’s risk factors is contained fromtime to time in the Company’s public filings with the SEC; and most recently inthe Risk Factors section of Item 1A to Part 1 of the Company’s 2005Annual Report on Form 10-K filed with the SEC on March 28, 2006.

The Company’s views, estimates, plans and outlook asdescribed within this document may change subsequent to the release of thisstatement. The Company is under no obligation to modify or update any or all ofthe statements it has made herein despite any subsequent changes the Companymay make in its views, estimates, plans or outlook for the future.

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**Item 3.**                        *Quantitative and Qualitative Disclosures About Market Risk*

**Interest RateSensitivity**

Thetable below provides information about the Company’s debt obligations as of July 2,2006. The table presents cash flows from principal payments and relatedweighted average interest rates by expected maturity dates (dollars inmillions).

|                                                  | ** ** | **Expected Maturity Date** | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|--------------------------------------|------------|------------|------------|
| **LONG TERM DEBT**                     | ** ** | **2006**                             | ** ** | **2007**   | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **There-  after** | ** ** | **Total** | ** ** |
| Fixed-Rate 83¤8%  Senior Subordinated Notes |       | $—                              |       | $—    |       | $— |   | $— |   | $   — |   | $125.0 |   | $125.0 |   |
| Average Interest Rate                            |       |                                 |       |       |       |   |   |   |   |   |   |   |   | 8.38 | % |
| 2006 Restated  Credit Facility                   |       | $0.6                                 |       | $1.3       |       | $1.3 |   | $1.3 |   | $90.5 |   | $ 16.0 |   | $111.0 |   |
| Average Interest  Rate(a)                        |       |                                 |       |       |       |   |   |   |   |   |   |   |   | 8.30 | % |

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(a)           Term loans under the 2006 Restated CreditFacility provide for interest at the Company’s option at (1) the base rateof the bank acting as administrative agent plus a margin adder of 2.00%, or (2) undera LIBOR option with a borrowing rate of LIBOR plus 2.50% to 3.00%.

The Company’s operating results are affected bychanges in interest rates primarily as a result of borrowings under the 2006Restated Credit Facility. If interest rates increased by 25 basis points,interest expense would have increased by approximately $0.1 million forthe quarterly period ended July 2, 2006, based on balances outstandingduring the quarterly period then ended.

Information concerning theCompany’s market risks related to foreign exchange rates and commodities iscontained in the “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” section of the Company’s 2005 Annual Report on Form 10-K,as filed with the SEC on March 28, 2006. This information has been omittedfrom this report as there have been no material changes to the Company’s risksrelated to foreign exchange rates and commodities as of July 2, 2006.

**Item 4.**                        *Controls and Procedures*

**Evaluation ofDisclosure Controls and Procedures**

Evaluations required by Rule 13a-15of the Securities Exchange Act of 1934 of the effectiveness of the Company’sdisclosure controls and procedures (as defined in Rule 13a-15(e) underthe Securities Exchange Act of 1934) as of the end of the period covered bythis Report have been carried out under the supervision and with theparticipation of the Company’s management, including its Chief ExecutiveOfficer and Chief Financial Officer. Based upon such evaluations, the ChiefExecutive Officer and Chief Financial Officer concluded that the Company’sdisclosure controls and procedures were effective. There have been no changesin the Company’s internal controls over financial reporting during the periodcovered by this Report that were identified in connection with the evaluationreferred to above that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal controls over financial reporting.

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**PART II. OTHERINFORMATION**

**Item 1.**                        *Legal Proceedings*

Variousclaims and legal proceedings generally incidental to the normal course ofbusiness are pending or threatened against the Company. While the Company cannotpredict the outcome of these matters, in the opinion of management, anyliability arising from these matters will not have a material adverse effect onthe Company’s business, financial condition or results of operations.

**Item 1A.**                *Risk Factors*

—Nochanges—

**Item 2.**                        *Unregistered Sales of Equity Securities and Use of Proceeds*

—Notapplicable—

**Item 3.**                        *Defaults Upon Senior Securities*

—None—

**Item 4.**                        *Submission of Matters to a Vote of Security Holders*

Therewere no matters submitted to a vote of security holders during the quarterended July 2, 2006.

**Item 5.**                        *Other Information*

—NotApplicable—

**Item 6.**                        *Exhibits*

| 31.1 |   | Certification pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002**  |
|------|--------|----------------------------------------------------------------------------------|
| 31.2 |   | Certification pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002**  |
| 32.1 |   | Certification pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002.** |
| 32.2 |   | Certification pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002.** |

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*                    Incorporatedby reference.

**             Filed herewith

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized, in the City of Memphis, State of Tennessee, on August 16,2006.

|        | True Temper Sports, Inc. |
|--------|-------------------------------|
|   | By:                           | /s/ SCOTT C. HENNESSY |
|   | Name:                    | Scott C. Hennessy |
|   | Title:                        | President and Chief Executive Officer |
|   | By:                           | /s/ JASON A. JENNE |
|   | Name:                    | Jason A. Jenne |
|   | Title:                        | Vice President, Chief Financial Officer |
|   |                          | and Treasurer |
|        |                               |  |  |

 

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