**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

## **Washington, D.C.20549**

 

----

 

**FORM 10-Q**

 

**ý**** QUARTERLY REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

 

**For theQuarterly Period Ended April 3, 2005**

 

**or**

 

**o**** TRANSITION REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

 

**Commissionfile number 333-72343**

 

----

 

**TRUE TEMPER SPORTS, INC.**

(Exact name of registrant asspecified in its charter)

 
| **Delaware**                                                     | ** ** | **3949**                                                   | ** ** | **52-2112620**                            |
|------------------------------------------------------------------|------------|------------------------------------------------------------|------------|-------------------------------------------|
| (State or  other jurisdiction of  incorporation or organization) |       | (Primary  Standard Industrial  Classification Code Number) |       | (I.R.S.  Employer  Identification Number) |

 

**8275Tournament Drive**

**Suite 200**

**Memphis,Tennessee 38125**

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

(Address, including zip code,and telephone number, including area code, of registrant’s principal executiveoffices)

 

----

 

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 (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past90 days.  Yes ý   No o.

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Act) Yes o   No ý.

 

As of May 17, 2005 the Registrant had100 shares of Common Stock, $0.01 par value per share, outstanding.

 

 

----

 

**TRUETEMPER SPORTS, INC.**

 

**INDEX**

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

 

----

 

### **PART I. FINANCIAL INFORMATION**

 

**Item 1.****           *FinancialStatements***

 

**TRUETEMPER SPORTS, INC.**

**(A wholly-ownedsubsidiary of True Temper Corporation)**

 

**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**

**(Unaudited)**

**(Dollarsin thousands)**

 
| ** **                                                 | ** ** | **Successor Company**                                   | ** ** | **Predecessor  Company**                                | ** ** |
|------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                 | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| ** **                                                 | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **NET  SALES**                                             | ** ** | **$**                                                   | **32,103** | ** **                                              | **$**      | **9,964** | ** ** | **$** | **20,247** | ** ** |
| Cost of  sales                                             |       | 19,234                                                  |       | 5,988                                                   |       | 11,871 |   |
| **GROSS  PROFIT**                                          | ** ** | **12,869**                                              | ** ** | **3,976**                                               | ** ** | **8,376** | ** ** |
|                                                       |       |                                                    |       |                                                    |       |   |   |
| Selling,  general and administrative expenses              |       | 4,188                                                   |       | 564                                                     |       | 3,635 |   |
| Amortization  of intangible assets                         |       | 3,456                                                   |       | —                                                  |       | — |   |
| Business development,  start-up costs and transition costs |       | 65                                                      |       | 83                                                      |       | 100 |   |
| Transaction  and reorganization expenses                   |       | —                                                  |       | —                                                  |       | 5,381 |   |
| Loss on  early extinguishment of long-term debt            |       | —                                                  |       | —                                                  |       | 9,217 |   |
| **OPERATING  INCOME (LOSS)**                               | ** ** | **5,160**                                               | ** ** | **3,329**                                               | ** ** | **(9,957** | **)** |
|                                                       |       |                                                    |       |                                                    |       |   |   |
| Interest  expense, net of interest income                  |       | 4,767                                                   |       | 685                                                     |       | 2,498 |   |
| Other  expenses (income), net                              |       | 12                                                      |       | 2                                                       |       | (2 | ) |
| **INCOME  (LOSS) BEFORE INCOME TAXES**                     | ** ** | **381**                                                 | ** ** | **2,642**                                               | ** ** | **(12,453** | **)** |
|                                                       |       |                                                    |       |                                                    |       |   |   |
| Income tax  expense (benefit)                              |       | 197                                                     |       | 1,045                                                   |       | (2,845 | ) |
| **NET  INCOME (LOSS)**                                     | ** ** | **$**                                                   | **184**    | ** **                                              | **$**      | **1,597** | ** ** | **$** | **(9,608** | **)** |

 

See accompanying notes tocondensed consolidated financial statements

 

1

----

 

**TRUETEMPER SPORTS, INC.**

**(Awholly-owned subsidiary of True Temper Corporation)**

 

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

**(Dollarsin thousands)**

 
| ** **                                                                                                  | ** ** | **April 3,  2005** | ** **  | **December 31,  2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|-------------------------|-------------|-----------------------------|------------|
| ** **                                                                                                  |       |                    |        |                        |       |
| **ASSETS**                                                                                                  |       |                    |        |                        |       |
| **CURRENT  ASSETS**                                                                                         |       |                    |        |                        |       |
| Cash and  cash equivalents                                                                                  |       | $                       | 4,286       |                        | $          | 3,337 |   |
| Receivables,  net                                                                                           |       | 20,137                  |        | 14,578                      |       |
| Inventories                                                                                                 |       | 19,337                  |        | 21,910                      |       |
| Prepaid  expenses and other current assets                                                                  |       | 3,102                   |        | 3,533                       |       |
| **Total  current assets**                                                                                   | ** ** | **46,862**              | ** **  | **43,358**                  | ** ** |
|                                                                                                        |       |                    |        |                        |       |
| Property,  plant and equipment, net                                                                         |       | 13,157                  |        | 13,407                      |       |
| Goodwill,  net                                                                                              |       | 150,883                 |        | 150,883                     |       |
| Intangible  assets, net                                                                                     |       | 142,810                 |        | 146,266                     |       |
| Other assets                                                                                                |       | 6,642                   |        | 6,911                       |       |
| **Total  assets**                                                                                           | ** ** | **$**                   | **360,354** | ** **                  | **$**      | **360,825** | ** ** |
|                                                                                                        |       |                    |        |                        |       |
| **LIABILITIES  & STOCKHOLDER’S EQUITY**                                                            |       |                    |        |                        |       |
| **CURRENT  LIABILITIES**                                                                                    |       |                    |        |                        |       |
| Current  portion of long-term debt                                                                          |       | $                       | 818         |                        | $          | 545 |   |
| Accounts  payable                                                                                           |       | 5,350                   |        | 4,356                       |       |
| Accrued  expenses and other current liabilities                                                             |       | 7,907                   |        | 9,796                       |       |
| **Total  current liabilities**                                                                              | ** ** | **14,075**              | ** **  | **14,697**                  | ** ** |
|                                                                                                        |       |                    |        |                        |       |
| Deferred tax  liability, net                                                                                |       | 5,531                   |        | 5,403                       |       |
| Long-term  debt, net of current portion                                                                     |       | 231,907                 |        | 232,180                     |       |
| Other  liabilities                                                                                          |       | 7,342                   |        | 7,215                       |       |
| **Total  liabilities**                                                                                      | ** ** | **258,855**             | ** **  | **259,495**                 | ** ** |
|                                                                                                        |       |                    |        |                        |       |
| **STOCKHOLDER’S  EQUITY**                                                                              |       |                    |        |                        |       |
| Common stock  — par value $0.01 per share; authorized 1,000 shares; issued and outstanding  100 shares |       | —                  |        | —                      |       |
| Additional  paid-in capital                                                                                 |       | 111,943                 |        | 111,943                     |       |
| Accumulated  deficit                                                                                        |       | (10,280                 | )           | (10,464                     | )          |
| Accumulated  other comprehensive loss, net of taxes                                                         |       | (164                    | )           | (149                        | )          |
| **Total  stockholder’s equity**                                                                        | ** ** | **101,499**             | ** **  | **101,330**                 | ** ** |
| **Total  liabilities and stockholder’s equity**                                                        | ** ** | **$**                   | **360,354** | ** **                  | **$**      | **360,825** | ** ** |

 

See accompanying notes tocondensed consolidated financial statements

 

2

----

 

**TRUETEMPER SPORTS, INC.**

**(Awholly-owned subsidiary of True Temper Corporation)**

 

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

**(Dollarsin thousands)**

 
| ** **                                                                                      | ** ** | **Successor Company**                                   | ** ** | **Predecessor  Company**                                | ** ** |
|-------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                                                      | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| **OPERATING  ACTIVITIES**                                                                       |       |                                                    |       |                                                    |       |   |   |
| Net income  (loss)                                                                              |       | $                                                       | 184        |                                                    | $          | 1,597 |   | $ | (9,608 | ) |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities:       |       |                                                    |       |                                                    |       |   |   |
| Depreciation  and amortization                                                                  |       | 685                                                     |       | 78                                                      |       | 671 |   |
| Amortization  of deferred financing costs                                                       |       | 363                                                     |       | —                                                  |       | 109 |   |
| Amortization  of intangible assets                                                              |       | 3,456                                                   |       | —                                                  |       | — |   |
| Transaction  and reorganization expenses                                                        |       | —                                                  |       | —                                                  |       | 5,381 |   |
| Loss on  early extinguishment of long-term debt                                                 |       | —                                                  |       | —                                                  |       | 9,217 |   |
| Deferred  taxes                                                                                 |       | 128                                                     |       | 1,081                                                   |       | (3,015 | ) |
| Changes in  operating assets and liabilities, net                                               |       | (3,391                                                  | )          | (2,155                                                  | )          | 227 |   |
| **Net cash  provided by operating activities**                                                  | ** ** | **1,425**                                               | ** ** | **601**                                                 | ** ** | **2,982** | ** ** |
|                                                                                            |       |                                                    |       |                                                    |       |   |   |
| **INVESTING  ACTIVITIES**                                                                       |       |                                                    |       |                                                    |       |   |   |
| Purchase of  property, plant and equipment                                                      |       | (435                                                    | )          | (42                                                     | )          | (330 | ) |
| **Net cash  used in investing activities**                                                      | ** ** | **(435**                                                | **)**      | **(42**                                                 | **)**      | **(330** | **)** |
|                                                                                            |       |                                                    |       |                                                    |       |   |   |
| **FINANCING  ACTIVITIES**                                                                       |       |                                                    |       |                                                    |       |   |   |
| Proceeds  from issuance of bank debt                                                            |       | —                                                  |       | 110,000                                                 |       | — |   |
| Proceeds  from issuance of Senior Subordinated Notes                                            |       | —                                                  |       | 125,000                                                 |       | — |   |
| Principal  payments on bank debt                                                                |       | —                                                  |       | —                                                  |       | (7,700 | ) |
| Repay bank  debt, including accrued interest                                                    |       | —                                                  |       | (6,335                                                  | )          | — |   |
| Call Senior  Subordinated Notes, including accrued interest and call premium                    |       | —                                                  |       | (109,455                                                | )          | — |   |
| Payment of  debt issuance costs                                                                 |       | —                                                  |       | (8,455                                                  | )          | — |   |
| Distribution  of net equity to selling shareholders                                             |       | —                                                  |       | (102,518                                                | )          | — |   |
| Transaction  and reorganization expenses, including cash payments for direct acquisition  costs |       | —                                                  |       | (8,280                                                  | )          | (463 | ) |
| Other  financing activity                                                                       |       | (41                                                     | )          | —                                                  |       | (42 | ) |
| **Net cash  used in financing activities**                                                      | ** ** | **(41**                                                 | **)**      | **(43**                                                 | **)**      | **(8,205** | **)** |
| ** **                                                                                      | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** ** | ** ** |
| Net increase  (decrease) in cash                                                                |       | 949                                                     |       | 516                                                     |       | (5,553 | ) |
| Cash at  beginning of period                                                                    |       | 3,337                                                   |       | 2,836                                                   |       | 8,389 |   |
| **Cash at  end of period**                                                                      | ** ** | **$**                                                   | **4,286**  | ** **                                              | **$**      | **3,352** | ** ** | **$** | **2,836** | ** ** |

 

See accompanying notes tocondensed consolidated financial statements

 

3

----

 

**TRUETEMPER SPORTS, INC.**

**(Awholly-owned subsidiary of True Temper Corporation)**

 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**(Dollarsin thousands unless otherwise indicated)**

 

**1) Basis of Presentation**

 

The accompanying unaudited financialstatements of True Temper Sports, Inc. (“True Temper” or the “Company”) havebeen prepared in accordance with the rules and regulations of the Securitiesand Exchange Commission (“SEC”) for quarterly reports on Form 10-Q andconsequently do not include all the disclosures required by accountingprinciples generally accepted in the United States of America. It is suggestedthat these financial statements be read in conjunction with the auditedfinancial statements and the notes thereto for the year ended December 31,2004. In the opinion of management, the financial statements as of and for theperiods ended April 3, 2005 and March 28, 2004 include alladjustments, consisting of only normal recurring adjustments, which arenecessary for the fair presentation of results for interim periods.

 

The Company’s fiscal year begins on January 1and ends on December 31 of each year. During the course of the year theCompany closes its books on a monthly and quarterly basis following a4,4,5 week closing calendar. Since the Company uses Sunday as the last dayof each period (with the exception of December) the number of days in the firstand fourth quarters of any given year can vary depending on which day of theweek January 1st falls on.

 

On January 30, 2004, TTS Holdings LLC, acompany formed by Gilbert Global Equity Partners, L.P. and its affiliated funds(“Gilbert Global”), entered into a stock purchase agreement with the Company’sdirect parent company, True Temper Corporation, pursuant to which TTS HoldingsLLC and certain of the Company’s senior management purchased all of theoutstanding shares of True Temper Corporation. 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 10 7/8% senior subordinated notes due2008, and made certain payments of the net remaining equity of the predecessorcompany to the selling shareholders. These payments were financed with the net proceeds of a new seniorcredit facility and new 8 3/8% senior subordinated notesdue 2011.

 

This transaction was accounted for by theCompany’s parent company using the purchase method of accounting.  As the Company is a wholly owned subsidiaryof True Temper Corporation, the Company has “pushed down” the effect of thepurchase method of accounting to these financial statements.  These financial statements and accompanyingnotes present the historical cost basis results of the Company as “predecessorcompany” through March 14, 2004, and the results of the Company as “successorcompany” from March 15, 2004 through April 3, 2005, accordingly, thesuccessor company presentation is not comparable to the predecessor companypresentation due to the different basis of accounting.  The financial statements have also beenseparated by a vertical dashed line into predecessor company and successorcompany results where necessary.

 

**2) Inventories**

 
| ** **       | ** ** | **April 3,  2005** | ** ** | **December 31,  2004** | ** ** |
|------------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw  materials   |       | $                       | 5,268      |                        | $          | 4,601 |   |
| Work in  process |       | 2,072                   |       | 2,182                       |       |
| Finished  goods  |       | 11,997                  |       | 15,127                      |       |
| Total            |       | $                       | 19,337     |                        | $          | 21,910 |   |

 

4

----

 

**3) Segment Reporting**

 

The Company operates in two reportablebusiness segments: golf shafts and performance sports. The Company’s reportablesegments are based on the type of product manufactured and the application ofthat product in the marketplace. The golf shaft segment manufactures and sellssteel, composite, and multi-material golf club shafts for use exclusively inthe golf industry. The performance sports segment manufactures and sells highstrength, tight tolerance tubular components for bicycle, hockey and otherrecreational sport markets. The Company evaluates the performance of thesesegments based on segment sales and gross profit. The Company has no inter-segmentsales.

 
| ** **          | ** ** | **Successor Company**                                   | ** ** | **Predecessor  Company**                                | ** ** |
|---------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **          | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| Net sales:          |       |                                                    |       |                                                    |       |   |   |
| Golf shafts         |       | $                                                       | 30,645     |                                                    | $          | 9,379 |   | $ | 19,067 |   |
| Performance  sports |       | 1,458                                                   |       | 585                                                     |       | 1,180 |   |
| Total               |       | $                                                       | 32,103     |                                                    | $          | 9,964 |   | $ | 20,247 |   |
| Gross  profit:      |       |                                                    |       |                                                    |       |   |   |
| Golf shafts         |       | $                                                       | 12,578     |                                                    | $          | 3,801 |   | $ | 8,080 |   |
| Performance  sports |       | 291                                                     |       | 175                                                     |       | 296 |   |
| Total               |       | $                                                       | 12,869     |                                                    | $          | 3,976 |   | $ | 8,376 |   |

 

Following is a reconciliation of totalreportable segment gross profit to total Company income (loss) before incometaxes:

 
| ** **                                                 | ** ** | **Successor Company**                                   | ** ** | **Predecessor  Company**                                | ** ** |
|------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                 | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| Total  reportable segment gross profit                     |       | $                                                       | 12,869     |                                                    | $          | 3,976 |   | $ | 8,376 |   |
| Less:                                                      |       |                                                    |       |                                                    |       |   |   |
| Selling,  general and administrative expenses              |       | 4,188                                                   |       | 564                                                     |       | 3,635 |   |
| Amortization  of intangible assets                         |       | 3,456                                                   |       | —                                                  |       | — |   |
| Business  development, start-up costs and transition costs |       | 65                                                      |       | 83                                                      |       | 100 |   |
| Transaction  and reorganization expenses                   |       | —                                                  |       | —                                                  |       | 5,381 |   |
| Loss on  early extinguishment of long-term debt            |       | —                                                  |       | —                                                  |       | 9,217 |   |
| Interest  expense, net of interest income                  |       | 4,767                                                   |       | 685                                                     |       | 2,498 |   |
| Other  expense (income), net                               |       | 12                                                      |       | 2                                                       |       | (2 | ) |
| Total  Company income (loss) before income taxes           |       | $                                                       | 381        |                                                    | $          | 2,642 |   | $ | (12,453 | ) |

 

5

----

 

**4) Comprehensive Income**

 

Total comprehensive income and its componentsfor the periods covered by this report are as follows:

 
| ** **                                                         | ** ** | **Successor Company**                                   | ** ** | **Predecessor  Company**                                | ** ** |
|--------------------------------------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                         | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| Net income  (loss)                                                 |       | $                                                       | 184        |                                                    | $          | 1,597 |   | $ | (9,608 | ) |
| Mark to  market adjustment on derivative instruments, net of taxes |       | (15                                                     | )          | 75                                                      |       | (121 | ) |
| Total  comprehensive income (loss)                                 |       | $                                                       | 169        |                                                    | $          | 1,672 |   | $ | (9,729 | ) |
|                                                                    |            |                                                         |            |                                                         |            |  |  |  |  |  |  |

 

**5) Acquisition by Gilbert Global**

 

On January 30, 2004, TTS Holdings LLC, acompany formed by Gilbert Global, entered into a stock purchase agreement withthe Company’s direct parent company, True Temper Corporation, pursuant to whichTTS Holdings LLC and certain of the Company’s senior management purchased allof the outstanding shares 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 10 7/8%senior subordinated notes due 2008, and made certain payments of the netremaining equity of the predecessor company to the selling shareholders.  These payments were financed with the netproceeds of a new senior credit facility and new 8 3/8%senior subordinated notes due 2011.

 

The purchase price as stipulated in the January 30,2004 stock purchase agreement totaled $342.0 million, plus direct acquisitioncosts and certain working capital adjustments of $18.4 million, less a purchaseprice adjustment for final working capital of $0.8 million.  Following is the allocation of the totalconsideration paid:

 
| Current  assets, excluding inventory                       |   |    |   | $       | 20,086  |   |
|------------------------------------------------------------|--------|---------|--------|---------|---------|--------|
| Inventory                                                  |   |    |   | 30,119  |    |
| Identifiable  intangible assets:                           |   |    |   |    |    |
| Trade name                                                 |   | $       | 19,455 |    |    |   |
| Patented  technology                                       |   | 11,686  |   |    |    |
| Purchased  customer relationships                          |   | 121,524 |   |    |    |
| Lease  contract                                            |   | 4,323   |   |    |    |
| Other                                                      |   | 262     |   |    |    |
| Total  identifiable intangible assets                      |   |    |   | 157,250 |    |
| Property,  plant and equipment                             |   |    |   | 14,684  |    |
| Deferred tax  assets, net, existing at acquisition date    |   |    |   | 51,866  |    |
| Deferred tax  assets related to acquisition                |   |    |   | 10,552  |    |
| Deferred  financing costs                                  |   |    |   | 7,366   |    |
| Goodwill                                                   |   |    |   | 150,883 |    |
| Other assets                                               |   |    |   | 95      |    |
| Current  liabilities                                       |   |    |   | (12,475 | )       |
| Deferred tax  liability related to intangible assets       |   |    |   | (59,680 | )       |
| Deferred tax  liability related to fair value of inventory |   |    |   | (4,432  | )       |
| Other  liabilities                                         |   |    |   | (6,656  | )       |
| Total                                                      |   |    |   | $       | 359,658 |   |
|                                                            |        |         |        |         |         |        |  |  |

 

6

----

 

This transaction was accounted for by theCompany’s parent company using the purchase method of accounting.  As the Company is a wholly owned subsidiaryof True Temper Corporation, the Company has “pushed down” the effect of thepurchase method of accounting to these financial statements.

 

In connection with the acquisition, theCompany conducted an assessment and valuation of all tangible and intangibleassets acquired.  The results of thisexercise are reflected in the allocation table above.  Of particular note was (i) the establishmentof intangible assets in an aggregate amount of approximately $157.3 millionbased on both internal Company assessments and a thorough study conducted by anindependent firm specializing in intangible asset valuation; and (ii) thewrite-up of inventory by approximately $11.7 million to reflect the estimatedfair value of inventory at the date of acquisition.  Both of these adjustments were completed incompliance with the purchase accounting prescribed by Statement of FinancialAccounting Standards No. 141, *Business Combinations*,which the Company adopted on January 1, 2002.

 

The establishment of the intangible assetsresults in certain non-cash amortization expense beginning in 2004, as theseintangible assets are amortized over their expected economic lives.

 

At the time of the transaction thepredecessor company recorded certain transaction related expenses totaling $5.4million.  These expenses consistprimarily of investment banking merger and acquisition fees, legal fees andother incidental costs and expenses typically incurred in an acquisition ofthis nature.  Also, as a direct result ofthe early extinguishment of the predecessor company’s long-term debt, expensestotaling $9.2 million were incurred consisting primarily of the write-off ofthe remaining deferred financing costs related to the 10 7/8%senior subordinated notes due 2008 and the 2002 senior credit facility, and theearly extinguishment call premium and related interest incurred when theCompany redeemed the 10 7/8% senior subordinated notes onMarch 15, 2004.

 

The following unaudited pro forma financialinformation is presented as if the aforementioned transaction, and all relatedpurchase accounting adjustments, had occurred as of January 1, 2004.  The pro forma amounts contain certainadjustments, including, (i) an adjustment to interest expense to reflect theextinguishment of the 10 7/8% Senior Subordinated Notesdue 2008 and the 2002 senior credit facility, and the issuance of the 8 3/8%Senior Subordinated Notes due 2011 and 2004 senior credit facility, (ii) theelimination of transaction and reorganization expenses and the loss on earlyextinguishment of long-term debt, which are both non-recurring, (iii) theadditional charge to operating income for the amortization of intangible assetsand (iv) the related tax effect of the adjustments described above.

 
| ** **                  | ** ** | **Period from  January 1 to  March 28,  2004** | ** ** |
|-----------------------------|------------|----------------------------------------------------------|------------|
| Net sales                   |       | $                                                        | 30,211     |   |
| Income  before income taxes |       | $                                                        | 3,968      |   |
| Net income                  |       | $                                                        | 2,368      |   |

 

7

----

 

**Item 2.****           *Management’sDiscussion and Analysis of Financial Condition and Results of Operations***

 

The following discussion should be read inconjunction with the more detailed information in the Company’s 2004****Annual Financial Statements, including the notes thereto,appearing most recently in our 2004 Annual Report on Form 10-K, filed withthe SEC on March 30, 2005.

 

**Company Overview**

 

True Temper Sports, Inc. (“True Temper” orthe “Company”), a wholly owned subsidiary of True Temper Corporation (“TTC”),is a leading designer, manufacturer and marketer of steel, composite, andmulti-material golf club shafts for original equipment manufacturers (“OEM’s”)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 2004, golf shaft salesrepresented 94% of total revenues, and performance sports sales represented 6%.This sales split has remained relatively consistent during the first quarter of2005.

 

**Purchase Agreement for True TemperCorporation**

 

On January 30, 2004, TTS Holdings LLC, acompany formed by Gilbert Global Equity Partners, L.P. and its affiliated funds(“Gilbert Global”), 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 TTC (“Gilbert Global Acquisition”). 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 10 7/8% senior subordinated notes due2008, and made certain payments of the net remaining equity of the predecessorcompany to the selling shareholders. These payments were financed with the net proceeds of a new senior creditfacility and new 8 3/8% senior subordinated notes due2011.

 

The Gilbert Global Acquisition was accountedfor by the Company’s parent company using the purchase method ofaccounting.  As the Company is a whollyowned subsidiary of TTC, the Company has “pushed down” the effect of thepurchase method of accounting to these financial statements.  The Company’s financial statements andaccompanying notes present the historical cost basis results of the Company as “predecessor”through March 14, 2004, and the results of the Company as “successor” fromMarch 15, 2004 through April 3, 2005, accordingly, certain elementsof the successor company presentation are not comparable to the predecessorcompany presentation due to the different basis of accounting.

 

For purposes of the following discussion regardingthe Company’s results of operations and cash flow, the Company has combined theresults of the predecessor and successor companies in 2004 in order to comparethe results to the results in 2005. Material variances caused by the different basis of accounting have beendisclosed where applicable.

 

8

----

 

**Results of Operations**

 

The following table sets forth the components of net income as apercentage of net sales for the periods indicated:

 
| ** **                                                 | ** ** | **Successor  Company**                                  | ** ** | **Combined  Company**                                    | ** ** | **Predecessor  Company**                                 | ** ** | **Successor  Company**                                  | ** ** |
|------------------------------------------------------------|------------|---------------------------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                 | ** ** | **Period from  January 1 to  April 3,  2005** | ** ** | **Period from  January 1 to  March 28,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** | **Period from  March 15 to  March 28,  2004** | ** ** |
| Net sales                                                  |       | 100.0                                                   | %          | 100.0                                                    | %          | 100.0                                                    | %          | 100.0                                                   | %          |
| Cost of  sales                                             |       | 59.9                                                    |       | 59.1                                                     |       | 58.6                                                     |       | 60.1                                                    |       |
| Gross profit                                               |       | 40.1                                                    |       | 40.9                                                     |       | 41.4                                                     |       | 39.9                                                    |       |
| Selling,  general and administrative expenses              |       | 13.0                                                    |       | 13.9                                                     |       | 18.0                                                     |       | 5.7                                                     |       |
| Amortization  of intangible assets                         |       | 10.8                                                    |       | —                                                   |       | —                                                   |       | —                                                  |       |
| Business  development, start-up costs and transition costs |       | 0.2                                                     |       | 0.6                                                      |       | 0.5                                                      |       | 0.8                                                     |       |
| Transaction  and reorganization expenses                   |       | —                                                  |       | 17.8                                                     |       | 26.6                                                     |       | —                                                  |       |
| Loss on  early extinguishment of long-term debt            |       | —                                                  |       | 30.5                                                     |       | 45.5                                                     |       | —                                                  |       |
| Operating  income (loss)                                   |       | 16.1                                                    |       | (21.9                                                    | )          | (49.2                                                    | )          | 33.4                                                    |       |
| Interest  expense, net of interest income                  |       | 14.8                                                    |       | 10.5                                                     |       | 12.3                                                     |       | 6.9                                                     |       |
| Other  expenses (income), net                              |       | —                                                  |       | —                                                   |       | —                                                   |       | —                                                  |       |
| Income  (loss) before income taxes                         |       | 1.2                                                     |       | (32.5                                                    | )          | (61.5                                                    | )          | 26.5                                                    |       |
| Income tax  expense (benefit)                              |       | 0.6                                                     |       | (6.0                                                     | )          | (14.1                                                    | )          | 10.5                                                    |       |
| Net income  (loss)                                         |       | 0.6                                                     | %          | (26.5                                                    | )%         | (47.5                                                    | )%         | 16.0                                                    | %          |

 

***First Quarter Ended April 3, 2005Compared to the First Quarter Ended March 28, 2004***

 

***Net Sales***for the first quarter of 2005 increased $1.9 million, or 6.3%, to $32.1 millionfrom $30.2 million in the first quarter of 2004. Golf shaft sales increased$2.2 million, or 7.7%, to $30.6 million compared to the $28.4 million realizedin the first quarter of 2004.  Thisimprovement in revenue was driven by greater unit sales of both steel andgraphite golf shafts.  The increased unitvolume can be attributed to several factors, including (i) increased demand forTrue Temper’s new product offerings such as the Dynamic Gold SL steel shaft andthe Grafalloy ProLaunch graphite shaft, (ii) a greater number of successful newclub introductions from several key OEM partners, specifically in the ironcategory, (iii) general reductions in the overall wholesale and retail channelinventory positions as compared to prior year levels, and (iv) increasedacceptance and usage of the Company’s graphite golf shaft products in certainOEM partners’ custom option programs, primarily in the Grafalloy Blue andProLaunch family of products.  Inaddition to these unit volume drivers, the Company also experienced a favorableproduct mix within its premium steel golf shaft category which furtherbenefited overall revenue.

 

Performance sports sales decreased $0.3million, or 17.4%, to $1.5 million in the first quarter of 2005 from $1.8million in the first quarter of 2004. This decline is reflective of the Company’s continued shift in productfocus away from non-branded, non-sporting goods offerings, and to the growingbike and composite hockey markets.  Salesto these key markets increased slightly between the first quarter of 2004 andfirst quarter of 2005.

 

Net sales to international customers increased $1.0 million, or 9.4%, to$12.0 million in the first quarter of 2005 from $11.0 million in the sameperiod of 2004.  This increase resultedprimarily from the same overall golf industry drivers and True Temper specificissues described above.

 

***Gross Profit***for the first quarter of 2005 increased $0.5 million, or 4.2%, to $12.9 millionfrom $12.4 million in the first quarter of 2004. Gross profit as a percentageof net sales decreased to 40.1% in the first quarter of 2005 from 40.9% in thefirst quarter of 2004.  The decrease ingross profit as a percentage of net sales was driven primarily by (i) anincrease in the cost of raw materials and natural gas and (ii) the unfavorableimpact on gross profit margins resulting from the execution of the Company’sinventory reduction plan, which was initiated during the first quarter of 2005and targets a full year reduction of $3.0 to $5.0 million in total

 

9

----

 

inventory.  These two unfavorablefactors were partially offset by (i) improved foreign currency exchange rates,(ii) increased selling prices and favorable product mix in the golf shaftcategory, and (iii) favorable operating improvements from productivity and costcontrol programs at the Company’s manufacturing facilities.

 

***Selling, General andAdministrative Expenses*** (“SG&A”) for the firstquarter of 2005 remained relatively flat at $4.2 million when compared to thefirst quarter of 2004. SG&A as a percentage of net sales decreased to 13.0%in the first quarter of 2005 from 13.9% in the first quarter of 2004.  This decrease in SG&A as a percentage ofnet sales was due primarily to the increase in sales between periods.

 

During the first quarter of 2005 the Companyspent approximately $0.1 million on its initial compliance project related to Section 404of the Sarbanes-Oxley Act of 2002 (“SOX”). In 2004 the Company spent approximately $0.1 million on SOX initialcompliance, all in the fourth quarter.

 

***Amortizationof Intangible Assets*** for the first quarter of 2005 was $3.5million.  Intangible assets were acquiredin connection with the Gilbert Global Acquisition.  Intangible assets with definitive lives are beingamortized using a straight-line method over periods from 2 to 59 years.  There was no amortization of intangibleassets in the first quarter of 2004.

 

***Business Development, Start-UpCosts and Transition Costs*** for the first quarterof 2005 decreased $0.1 million, to $0.1 million from $0.2 million in the firstquarter of 2004.  These costs representvarious start-up business expenses related to the opening of the Company’scomposite manufacturing operation in Southern China, and the relateddown-sizing costs incurred at the Company’s El Cajon, California facility.

 

***Transaction and ReorganizationExpenses*** for the first quarter of 2004 were $5.4million and were incurred in conjunction with the Gilbert Global Acquisitionwhich closed on March 15, 2004. These transaction related expenses include (i) investment banking mergerand acquisition fees, (ii) legal fees, and (iii) other incidental costs andexpenses related to the sale of TTC.  Nosuch transaction and reorganization expenses were incurred during the firstquarter of 2005.

 

***Loss on the EarlyExtinguishment of Long-Term Debt*** for the firstquarter of 2004 was $9.2 million.  Thecosts recorded as loss on the early extinguishment of long-term debt include(i) the write-off of the remaining deferred financing costs related to our 10 7/8%senior subordinated notes and the Company’s 2002 senior credit facility, and(ii) the early extinguishment call premium and related interest the Companyincurred when the Company redeemed the 10 7/8% seniorsubordinated notes on March 15, 2004. No long-term debt was extinguished during the first quarter of 2005.

 

***Operating Income (Loss)***for the first quarter of 2005 was an operating income of $5.2 million ascompared to an operating loss of $6.6 million in the first quarter of2004.  This increase reflects the profitimpact of the items described above.

 

***Interest Expense***for the first quarter of 2005 increased to $4.8 million from $3.2 million inthe first quarter of 2004.  This increasewas driven primarily by the increase in outstanding principal amounts ofvariable rate bank debt and fixed rate bonds, offset somewhat by a decrease inthe interest rate on the Company’s fixed rate debt between periods.

 

***Income Tax Expense (Benefit)***increasedin the first quarter of 2005 to an income tax expense of $0.2 million comparedto an income tax benefit of $1.8 million in the first quarter of 2004. Theeffective tax rate during these periods differs from a federal statutory rateof 34% due primarily to the incremental tax rate for state and foreign incometax purposes.  For the period from January 1,2004 through March 14, 2004 the effective tax rate also differs due to thenondeductible nature of a portion of transaction and reorganization expenses.

 

***Net Income (Loss)***for the first quarter of 2005 increased to $0.2 million of income as comparedto $8.0 million of a net loss in the first quarter of 2004. This increasereflects the profit impact of the items described above.

 

10

----

 

**Liquidity and Capital Resources**

 

  ***General***

 

As part of the Gilbert Global Acquisition theCompany entered into a new senior credit facility (the “2004 Senior CreditFacility”) which includes a $20.0 million non-amortizing revolving creditfacility and a $110.0 million Term B loan (as amended from time to time).  The term loan requires cash interest paymentsand quarterly principal payments beginning June 30, 2004 and continuingthrough March 15, 2011.

 

Also in conjunction with the Gilbert GlobalAcquisition the Company issued new 8 3/8% SeniorSubordinated Notes due 2011 (the “8 3/8% Notes”).  The 8 3/8% Notesrequire cash interest payments each March 15th and September 15thcommencing on September 15, 2004. The 8 3/8% Notes are redeemable at the Company’soption, under certain circumstances and at certain redemption prices, beginningMarch 15, 2008.

 

The Company used the proceeds from the 2004Senior Credit Facility and the 8 3/8% Notes to pay offthe existing debt that was outstanding at closing on March 15, 2004, andto make a distribution of the net remaining equity to the selling shareholders.

 

Both the 2004 Senior Credit Facility and the8 3/8% Notes contain covenants and events of default,including substantial restrictions and provisions which, among other things,limit the Company’s ability to incur additional indebtedness, make acquisitionsand capital expenditures, sell assets, create liens or other encumbrances, makecertain payments and dividends, or merge or consolidate. The 2004 Senior CreditFacility also requires the Company to maintain certain specified financial ratiosand tests including minimum interest coverage and fixed charge coverage ratios,and maximum leverage ratios. Furthermore, the 2004 Senior Credit Facilityrequires certain mandatory prepayments including payments from the net proceedsof certain asset sales and a portion of the Company’s excess cash flow asdefined within the credit agreement.

 

On September 24, 2004 the Companyexecuted an amendment to its 2004 Senior Credit Facility (the “Amendment”).  The Amendment provided adjustments to certainspecified financial ratios and tests included in the 2004 Senior CreditFacility.  As part of the Amendment, themargin adder on LIBOR based loans was increased from 2.50% to between 2.75% and3.00%, depending on financial ratios, beginning September 24, 2004 andcontinuing through December 31, 2005. At April 3, 2005 the Company was in compliance with all of thecovenants in both the 2004 Senior Credit Facility and the 8 3/8%Notes.

 

***First Quarter Ended April 3, 2005Compared to the First Quarter Ended March 28, 2004***

 

Net cash provided by operating activitiesdeclined $2.2 million between periods. This decline relates primarily to the change in the Company’ssemi-annual payment dates for interest on its fixed rate notes.  During the first quarter of 2005 the Companypaid cash interest on its 8 3/8% Notes totaling $5.2million.  Cash interest on fixed ratedebt did not affect cash provided by operations in the first quarter of 2004,as it was included as part of the financing activity completed in conjunction withthe Gilbert Global Acquisition.

 

Net cash used in investing activitiesremained relatively consistent as the Company spent $0.4 million during thefirst quarter of 2005 and 2004 for capital expenditures.

 

The Company used less than $0.1 million cashfor financing activities in the first quarter of 2005 as compared to $8.2million in the first quarter of 2004. The 2004 activity was the result of the Gilbert Global Acquisition asnoted above.  On March 15, 2004, theproceeds from issuing the 2004 Senior Credit Facility and the proceeds fromissuing the 8 3/8% Notes, plus cash generated fromoperations during the first quarter, and cash on hand at the beginning of thatquarter were used to (i) repay the outstanding principal and interest on theCompany’s 2002 senior credit facility, (ii) redeem and repay the 10 7/8%Notes including accrued and unpaid interest and early redemption call premium,(iii) pay for debt issuance costs on the 2004 senior credit facility and the 8 3/8%Notes, (iv) pay for transaction and reorganization expenses, and (v) make adistribution of the net remaining equity to the selling shareholders.

 

11

----

 

***Existing Contractual Cash Obligations***

 

The following table reflects the Company’scontractual cash obligations for long-term debt and capital and operatingleases as of April 3, 2005 (dollars in millions):

 
| ** **         | ** ** | **Total** | ** ** | **2005** | ** ** | **2006  through  2007** | ** ** | **2008  through  2009** | ** ** | **Thereafter** | ** ** |
|--------------------|------------|-----------|------------|----------|------------|-------------------------|------------|-------------------------|------------|----------------|------------|
| Long-Term  Debt(1) |       | $         | 232.7      |     | $          | 0.5                     |       | $                       | 2.2        |           | $          | 2.2 |   | $ | 227.8 |   |
| Operating  Leases  |       | 2.7       |       | 0.8      |       | 1.4                     |       | 0.5                     |       | —         |       |
| Total(2)           |       | $         | 235.4      |     | $          | 1.3                     |       | $                       | 3.6        |           | $          | 2.7 |   | $ | 227.8 |   |

 

----

(1)          Our long-term debt agreements containcustomary change of control provisions that could, under certain circumstances,cause accelerated debt repayment.

 

(2)          This table does not include our futureobligations related to the funding of our pension benefits.

 

***Future Cash Generation and Use***

 

Currently our intention is to use existingcash and cash provided from future operations, if any, as allowed within the covenantsof the 2004 Senior Credit Facility and the 8 3/8% Notes,to:

 

•                  Repaythe principal on the 2004 Senior 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 China.

 

In addition to the debt service obligationsfor principal and interest payments, the Company’s liquidity needs largelyrelate to working capital requirements and capital expenditures for machineryand equipment.  The Company intends tofund its current and long-term working capital, capital expenditure and debtservice requirements through cash flow generated from operations.  However, since there can be no assurance offuture performance, as of April 3, 2005 the Company has the $20.0 millionrevolving credit facility available for future cash requirements.  The maximum amount the Company may use of the$20.0 million revolving credit facility is limited by the financial covenantscontained within the 2004 Senior Credit Facility.

 

In addition to the Company’s cash obligationsfor interest and principal payments related to its debt obligations, theCompany also has a management services agreement with an affiliate of GilbertGlobal, which requires the payment of an annual advisory fee of $0.5 million.

 

Depending on the size, any futureacquisitions, joint ventures, capital expenditures or similar transactions mayrequire significant capital resources in excess of cash provided fromoperations, and potentially in excess of cash available under the revolvingcredit facility.  There can be noassurance that the Company will be able to obtain the necessary capital, underacceptable terms, from creditors or other sources that will be sufficient toexecute any such business investment or capital expenditure.

 

**Impact of Recently Issued AccountingStandards**

 

In December 2004, the FASB issuedStatement No. 123 (revised December 2004), *Share-BasedPayment*(“Statement 123(R)”). Statement 123(R) replaces FASB Statement 123, *Accountingfor Stock-Based Compensation*, and supersedes APB Opinion No. 25, *Accounting for Stock Issued to Employees*.  Statement 123(R) will require compensationcosts related to share-based payment transactions to be recognized in thefinancial statements.  With limitedexceptions, the amount of compensation cost will be measured based on thegrant-date fair value of the equity or the liability instruments issued.  In addition, liability awards will beremeasured each reporting period. Compensation cost will be recognized over the period that an employeeprovides service in exchange for the award. Statement 123(R) is effective as of the beginning of the first annual

 

12

----

 

reporting period that begins after June 15, 2005.  The Company does not believe the adoption ofStatement 123(R) will have a material impact on the Company’s consolidatedfinancial condition or results of operations taken as a whole.

 

In November 2004, the FASB issued SFASNo. 151, “Inventory Costs.”  SFAS No. 151indicates that “abnormal” amounts of idle facility expense, freight, handlingcosts, and wasted materials should be recognized as current-period charges(when actual production defect rates vary significantly from expected rates)and requires the allocation of fixed production overheads to inventory based onthe “normal capacity”, as defined, of the production facilities.  SFAS No. 151 is effective for inventory costsincurred during fiscal years beginning after June 15, 2005.  The Company has not yet determined theimpact, if any, of adopting SFAS No. 151.

 

**Forward-Looking Statements**

 

The Private Securities Litigation Reform Actof 1995 (the “Act”) provides a safe harbor for forward-looking statements madeby the Company. This document contains forward-looking statements, includingbut not limited to Item 2 “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations”. All statements which addressfuture operating or financial performance, events or developments that theCompany expects, plans, believes, hopes, wishes, forecasts, predicts, intends,or anticipates will occur in the future, and other similar meanings or phrases,are forward-looking statements within the meaning of the Act.

 

The forward-looking statements are based onmanagement’s current views and assumptions regarding future events andoperating performance. However, there are many risk factors, including but notlimited to, the Company’s substantial leverage, the Company’s ability toservice its debt, the general state of the economy, the Company’s ability toexecute its plans, fluctuations in the price and availability of energy,fluctuations in the price and availability of raw materials, potentiallysignificant increases to employee health and welfare costs, competitivefactors, and other risks that could cause the actual results to differmaterially from the estimates or predictions contained in the Company’s forward-lookingstatements. Additional information concerning the Company’s risk factors iscontained from time to time in the Company’s public filings with the SEC; andmost recently in the Business Risks section of Item 1 to Part 1of the Company’s 2004 Annual Report on Form 10-K filed with the SEC on March 30,2005.

 

The Company’s views, estimates, plans andoutlook as described within this document may change subsequent to the releaseof this statement.  The Company is underno obligation to modify or update any or all of the statements it has madeherein despite any subsequent changes the Company may make in its views,estimates, plans or outlook for the future.

 

13

----

 

**Item 3.****           *Quantitativeand Qualitative Disclosures About Market Risk***

 

**Interest Rate Sensitivity**

 

The table below provides information aboutthe Company’s debt obligations as of April 3, 2005 that are sensitive tochanges in interest rates. The table presents cash flows and related weightedaverage interest rates by expected maturity dates (dollars in millions).

 
| ** **                                   | ** ** | **Expected Maturity Date** | ** ** | ** ** | ** ** |
|----------------------------------------------|------------|----------------------------|------------|------------|------------|
| ** **                                   | ** ** | **2005**                   | ** ** | **2006**   | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **Thereafter** | ** ** | **Total** | ** ** |
| LONG TERM DEBT                               | ** ** | ** **                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Fixed-Rate 8  3/8% Senior Subordinated Notes |       | $                          | —     |       | $          | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 125.0 |   | $ | 125.0 |   |
| Average  Interest Rate                       |       |                       |       |       |       |   |   |   |   |   |   | 8.38 | % | 8.38 | % |
| Variable  Rate Senior Credit Facility        |       | $                          | 0.5        |       | $          | 1.1 |   | $ | 1.1 |   | $ | 1.1 |   | $ | 1.1 |   | $ | 102.8 |   | $ | 107.7 |   |
| Average  Interest Rate (a)                   |       |                       |       |       |       |   |   |   |   |   |   |   |   | 5.83 | % |

 

----

(a)            Variable rate long-term debt is comprised ofterm loans under the 2004 Senior Credit Facility, which provides for interestat the Company’s option, at (1) the base rate of the bank acting asadministrative agent plus a margin adder of 2.00%, or (2) under a LIBOR optionwith a borrowing spread of LIBOR plus 2.50% to 3.00%, depending on certainfinancial ratios.

 

The Company’s operating results are affectedby changes in interest rates primarily as a result of borrowings under the 2004Senior Credit Facility. If interest rates increased by 25 basis points,interest expense would have increased by approximately $0.1 million for thequarterly period ended April 3, 2005, based on balances outstanding duringthe quarterly period then ended.

 

Information concerning the Company’s marketrisks related to foreign exchange rates and commodities is contained in the “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” section ofthe Company’s 2004 Annual Report on Form 10-K, as filed with the SEC on March 30,2005. This information has been omitted from this report as there have been nomaterial changes to the Company’s risks related to foreign exchange rates andcommodities as of April 3, 2005.

 

**Item 4.****           *Controls andProcedures***

 

**Evaluation of Disclosure Controls andProcedures**

 

Evaluations required by Rule 13a-15 of theSecurities Exchange Act of 1934 of the effectiveness of the Company’sdisclosure controls and procedures (as defined in Rule 13a-15(e) under theSecurities Exchange Act of 1934) as of the end of the period covered by thisReport have been carried out under the supervision and with the participationof the Company’s management, including its Chief Executive Officer and ChiefFinancial Officer. Based upon such evaluations, the Chief Executive Officer andChief Financial Officer concluded that the Company’s disclosure controls andprocedures were effective. There have been no changes in the Company’s internalcontrols over financial reporting during the period covered by this Report thatwere identified in connection with the evaluation referred to above that havematerially affected, or are reasonably likely to materially affect, the Company’sinternal controls over financial reporting.

 

14

----

 

**PART II.  OTHER INFORMATION**

 

**Item 1.****           *LegalProceedings***

 

Various claimsand legal proceedings generally incidental to the normal course of business arepending or threatened against us. While we cannot predict the outcome of thesematters, in the opinion of management, any liability arising from these matterswill not have a material adverse effect on the Company’s business, financialcondition or results of operations.

 

**Item 2.****           *Changes inSecurities and Use of Proceeds***

 

—Not applicable—

 

**Item 3.****           *DefaultsUpon Senior Securities***

 

—None—

 

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

 

There were no matters submitted to a vote of security holders during thequarter ended April 3, 2005.

 

**Item 5.****           *OtherInformation***

 

—Not Applicable—

 

**Item 6.****           *Exhibits***

 
| 1.1    |   | Purchase Agreement, dated as of March 3, 2004, among  True Temper Sports, Inc., Credit Suisse First Boston LLC and Goldman, Sachs  & Co. (filed as Exhibit 1.1 to True Temper Sports, Inc.’s  Registration Statement on Form S-4, as filed with the Securities and Exchange  Commission on April 13, 2004).*                                                                                                        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.1    |   | Indenture, dated as of March 15, 2004, among True  Temper Sports, Inc., the Guarantors identified therein, and The Bank of  New York (filed as Exhibit 4.1 to True Temper Sports, Inc.’s  Registration Statement on Form S-4, as filed with the Securities and Exchange  Commission on April 13, 2004).*                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 4.2    |   | Form of Senior Subordinated Note due 2011 (filed as  Exhibit 4.2 to True Temper Sports, Inc.’s Registration Statement on Form  S-4, as filed with the Securities and Exchange Commission on April 13,  2004).*                                                                                                                                                                                                               |
| 4.3    |   | Registration Rights Agreement, dated as of March 15,  2004, among True Temper Sports, Inc., El Cajon Equipment Corporation,  True Temper Sports-PRC Holdings, Inc., Credit Suisse First Boston LLC  and Goldman, Sachs & Co (filed as Exhibit 4.3 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with the  Securities and Exchange Commission on April 13, 2004).* |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.1   |   | Management Services Agreement, dated as of March 15,  2004, between GGEP Management, L.L.C., GGEP Management (Bermuda) Ltd.,  and True Temper Sports, Inc. (filed as Exhibit 10.1 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with the  Securities and Exchange Commission on April 13, 2004).*                                                                                    |

 

15

----

 
| 10.2   |   | Shareholders Agreement, dated as of March 15, 2004,  by and among True Temper Corporation, TTS Holdings LLC and the Other  Investors identified therein (filed as Exhibit 10.2 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with the  Securities and Exchange Commission on April 13, 2004).*                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3   |   | True Temper Corporation 2004 Equity Incentive Plan, dated  as of March 15, 2004 (filed as Exhibit 10.3 to True Temper Sports,  Inc.’s Registration Statement on Form S-4, as filed with the Securities and  Exchange Commission on April 13, 2004).*                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.4   |   | Credit Agreement, dated as of March 15, 2004, by and  among True Temper Corporation, True Temper Sports, Inc, the Lenders  identified therein, Credit Suisse First Boston, Antares Capital Corporation,  Goldman Sachs Credit Partners L.P. and Merrill Lynch Capital (filed as  Exhibit 10.4 to True Temper Sports, Inc.’s Registration Statement on  Form S-4, as filed with the Securities and Exchange Commission on April 13,  2004).*                                                        |
| 10.5   |   | Tax Sharing and Administrative Services Agreement, dated  as of March 15, 2004, by and among True Temper Corporation, True Temper  Sports, Inc., El Cajon Equipment Corporation and True Temper Sports-PRC  Holdings, Inc. (filed as Exhibit 10.5 to True Temper Sports, Inc.’s  Registration Statement on Form S-4, as filed with the Securities and Exchange  Commission on April 13, 2004).*                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.6   |   | Employment Agreement, dated as of January 30, 2004,  by and between True Temper Sports, Inc. and Scott C. Hennessy  (filed as Exhibit 10.6 to True Temper Sports, Inc.’s Registration  Statement on Form S-4, as filed with the Securities and Exchange Commission  on April 13, 2004).*                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.7   |   | First Amendment, dated as of September 24, 2004, to  the Credit Agreement, dated as of March 15, 2004, by and among True  Temper Corporation, True Temper Sports, Inc, the Lenders identified  therein, Credit Suisse First Boston, Antares Capital Corporation, Goldman  Sachs Credit Partners L.P. and Merrill Lynch Capital (filed as  Exhibit 10.1 to True Temper Sports, Inc.’s report on Form 8-K, as  filed with the Securities and Exchange Commission on September 30,  2004).* |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 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**                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

----

*                                         Incorporatedby reference.

**                                  Filedherewith

 

16

----

 

**SIGNATURES**

 

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized, in theCity of Memphis, State of Tennessee, on May 17, 2005.

 
|   | 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 Executive Officer  and Treasurer |
|        |                          |  |  |  |

 

17

----