**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 April 1,  2007**                                                                                                                                                                                                                                                                                                                                                                                                |
| ** ** | **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 May 15, 2007,the 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 |     | 9 |
|         |               | Item 3.           |       | Quantitative and Qualitative Disclosures About Market  Risk                                 |     | 16 |
|         |               | Item 4.                |       | Controls and Procedures                                                                     |     | 16 |
| PART II | OTHER  INFORMATION |                   |       |
|         |               | Item 1.           |       | Legal  Proceedings                                                                          |     | 17 |
|         |               | Item 1A.          |       | Risk  Factors                                                                               |     | 17 |
|         |               | Item 2.           |       | Unregistered Sales of Equity Securities and Use of  Proceeds                                |     | 17 |
|         |               | Item 3.           |       | Defaults Upon Senior Securities                                                             |     | 17 |
|         |               | Item 4.           |       | Submission of Matters to a Vote of Security Holders                                         |     | 17 |
|         |               | Item 5.           |       | Other  Information                                                                          |     | 17 |
|         |               | Item 6.           |       | Exhibits                                                                                    |     | 17 |
| Signatures   |               | 18                     |
|              |                    |                        |            |                                                                                             |          |  |  |  |

 

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**  | ** ** | ** **              |
|------------------------------------------------------|------------|-------------------------|------------|-------------------------|
| ** **                                           | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** | ** ** |
| **NET  SALES**                                       |       | **$**                   | **29,579** |                    | **$** | **31,659** | ** ** |   |
| Cost of sales                                        |       | 19,562                  |       | 20,085                  | ** ** |   |
| **GROSS PROFIT**                                     |       | **10,017**              |       | **11,574**              | ** ** |   |
| Selling, general and administrative expenses         |       | 3,977                   |       | 3,527                   | ** ** |   |
| Amortization of  intangible assets                   |       | 3,736                   |       | 3,461                   | ** ** |   |
| Business  development, start-up and transition costs |       | 372                     |       | 12                      | ** ** |   |
| Loss on early  extinguishment of long-term debt      |       | 755                     |       | —                  | ** ** |   |
| **OPERATING INCOME**                                 |       | **1,177**               |       | **4,574**               | ** ** |   |
| Interest expense, net                                |       | 6,005                   |       | 4,846                   | ** ** |   |
| Other expenses  (income), net                        |       | 13                      |       | 20                      | ** ** |   |
| **INCOME (LOSS) BEFORE INCOME TAXES**                |       | **(4,841**              | )          | **(292**                | **)** |   |
| Income tax expense (benefit)                         |       | (1,780                  | )          | (62                     | **)** |   |
| **NET  INCOME (LOSS)**                               |       | **$**                   | **(3,061** | )                       | **$** | **(230** | **)** |   |

 

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)**

| ** **                                                                                                    | ** **   | **April 1,  2007** | ** **  | **December 31,  2006** | ** **  |
|---------------------------------------------------------------------------------------------------------------|--------------|--------------------|-------------|-----------------------------|-------------|
| **ASSETS**                                                                                                    |         | ** **         |        |                        |        |   |   |
| **CURRENT ASSETS**                                                                                            |         |               |        |                        |        |   |   |
| Cash and cash equivalents                                                                                     |    | $                  | 3,788       |                   |        | $ | 3,055 |   |   |
| Receivables, net                                                                                              |         | 21,474             |        |                        | 16,819      |   |   |
| Inventories                                                                                                   |         | 26,016             |        |                        | 23,208      |   |   |
| Deferred tax assets                                                                                           |         | 1,458              |        |                        | 1,381       |   |   |
| Prepaid expenses and other current assets                                                                     |         | 2,158              |        |                        | 2,731       |   |   |
| **Total current assets**                                                                                      | ** **   | **54,894**         |        | ** **                  | **47,194**  |   |   |
| Property, plant and equipment, net                                                                            |         | 18,804             |        |                        | 14,482      |   |   |
| Goodwill                                                                                                      |         | 156,015            |        |                        | 150,883     |   |   |
| Intangible assets, net                                                                                        |         | 129,557            |        |                        | 133,262     |   |   |
| Deferred tax assets                                                                                           |         | 1,564              |        |                        | —      |   |   |
| Other assets                                                                                                  |         | 9,025              |        |                        | 7,878       |   |   |
| **Total assets**                                                                                              | ** **   | **$**              | **369,859** |                        | ** **  | **$** | **353,699** |   |   |
| **LIABILITIES AND  STOCKHOLDER’S EQUITY**                                                           |         |               |        |                        |        |   |   |
| **CURRENT LIABILITIES**                                                                                       |         |               |        |                        |        |   |   |
| Current portion of long-term debt                                                                             |         | $                  | 247         |                        |        | $ | 1,257 |   |   |
| Accounts payable                                                                                              |         | 6,526              |        |                        | 6,697       |   |   |
| Accrued expenses and other current liabilities                                                                |         | 9,299              |        |                        | 9,904       |   |   |
| **Total current liabilities**                                                                                 | ** **   | **16,072**         |        | ** **                  | **17,858**  |   |   |
| Deferred tax liabilities                                                                                      |         | —             |        |                        | 206         |   |   |
| Long-term debt, net of current portion                                                                        |         | 260,473            |        |                        | 239,149     |   |   |
| Other liabilities                                                                                             |         | 6,109              |        |                        | 6,204       |   |   |
| **Total liabilities**                                                                                         | ** **   | **282,654**        |        | ** **                  | **263,417** |   |   |
| **STOCKHOLDER’S  EQUITY**                                                                                |         |               |        |                        |        |   |   |
| Common stock—par value $0.01 per share; authorized  1,000 shares; issued and outstanding 100 shares |         | —             |        |                        | —      |   |   |
| Additional paid-in capital                                                                                    |         | 111,943            |        |                        | 111,943     |   |   |
| Accumulated deficit                                                                                           |         | (24,758            | )           |                        | (21,697     | ) |   |
| Accumulated other comprehensive income, net of taxes                                                          |         | 20                 |        |                        | 36          |   |   |
| **Total stockholder’s equity**                                                                           | ** **   | **87,205**         |        | ** **                  | **90,282**  |   |   |
| Commitments and contingent liabilities                                                                        |         | —             |        |                        | —      |   |   |
| **Total  liabilities and stockholder’s equity**                                                          | ** **   | **$**              | **369,859** |                        | ** **  | **$** | **353,699** |   |   |

 

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)**

| ** **                                                                                           | ** **   | **Quarter Ended**       | ** **         |
|------------------------------------------------------------------------------------------------------|--------------|-------------------------|--------------------|
| ** **                                                                                           | ** **   | **April 1,  2007** | ** **         | **April 2,  2006** | ** ** |
| **OPERATING ACTIVITIES**                                                                             |         |                    |               |   |   |
| Net income (loss)                                                                                    |         | $                       | (3,061             | ) | $ | (230 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) operating  activities: |         |                    |               |   |   |
| Depreciation and amortization                                                                        |         | 698                     |               | 544 |   |
| Amortization of deferred financing costs                                                             |         | 300                     |               | 310 |   |
| Amortization of intangible assets                                                                    |         | 3,736                   |               | 3,461 |   |
| Loss on disposal of property, plant and equipment                                                    |         | 8                       |     | 25 |      |
| Loss on early extinguishment of long-term debt                                                       |         | 755                     |               | — |   |
| Deferred income taxes                                                                                |         | (1,847                  | )                  | (122 | ) |
| Changes in operating assets and liabilities, net                                                     |         | (7,785                  | )                  | (3,542 | ) |
| **Net cash provided by (used in) operating  activities**                                             | ** **   | **(7,196**              | )                  | **446** |   |
| **INVESTING  ACTIVITIES**                                                                            |         |                    |               |   |   |
| Purchases of property, plant, equipment                                                              |         | (922                    | )                  | (601 | ) |
| Acquisition of business                                                                              |    | (9,238                  | )        | — |    |
| Other investing activity                                                                             |         | (31                     | )                  | (18 | )   |
| **Net cash used in investing activities**                                                            | ** **   | **(10,191**             | )                  | **(619** | ) |
| **FINANCING  ACTIVITIES**                                                                            |         |                    |               |   |   |
| Proceeds from issuance of bank debt                                                                  |         | 45,000                  |               | — |   |
| Principal payments on bank debt                                                                      |         | (24,686                 | )                  | (320 | ) |
| Payment of debt issuance costs                                                                       |         | (2,138                  | )                  | — |   |
| Other financing activity                                                                             |         | (56                     | )                  | (357 | ) |
| **Net cash provided by (used in) financing  activities**                                             | ** **   | **18,120**              |               | **(677** | ) |
| Net increase (decrease) in cash and cash equivalents                                                 |         | 733                     |               | (850 | ) |
| Cash and cash  equivalents at beginning of period                                                    |         | 3,055                   |               | 4,733 |   |
| **Cash and cash equivalents at  end of period**                                                      | ** **   | **$**                   | **3,788**          |   | **$** | **3,883** |   |

 

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 condensed 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 U.S. generally accepted accounting principles.  It is suggested that these financialstatements be read in conjunction with the audited financial statements and thenotes thereto included in the Company’s annual report on Form 10-K for the yearended December 31, 2006.  In theopinion of management, the unaudited condensed consolidated financialstatements as of and for the periods ended April 1, 2007 and April 2,2006 include all adjustments, consisting of only normal recurring adjustments,which are necessary for the fair 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 usesSunday as the last day of each period (with the exception of December) thenumber of days in the first and fourth quarters of any given year can varydepending on which day of the week January 1st falls 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 (“TTC”), pursuant to which TTS HoldingsLLC and certain of the Company’s senior management purchased all of theoutstanding shares of TTC.  In connectionwith this acquisition, and effective on March 15, 2004, the Company repaidall of its outstanding 2002 senior credit facility, redeemed all of its 107¤8%senior subordinated notes due 2008, and made certain payments of the netremaining equity of the predecessor company to the selling shareholders. Thesepayments were financed with the net proceeds of a new senior credit facilityand new 83¤8%senior subordinated notes due 2011.

This transaction was accountedfor by TTC using the purchase method of accounting.  As the Company is a wholly owned subsidiary ofTrue Temper Corporation, the Company has “pushed down” the effect of thepurchase method of accounting to the financial statements of True Temper Sports,Inc.

**2)  Stock-Based Compensation**

On August 10, 2005 TTC issued, to certainemployees in return for service, a total of 525,400 stock options and stockappreciation rights (“Equity Incentive Awards”) to purchase common stock of TTCfor $13.56 per share.  The EquityIncentive Awards have a term of ten years, and vest and become exercisable atvarious times and under various conditions through August 10, 2012; withcertain acceleration features based on performance criteria.

There have been no equity incentive awards granted,exercised or forfeited in the first quarter of 2007.  The weighted average remaining contractuallife of the Equity Incentive Awards is between eight and nine years.

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)**

In addition, TTC has 468,000 equity awards which vestonly upon a sale of TTC and achievement of certain other terms as described inthe awards.  As of April 1, 2007 theevents required for vesting of these awards are not expected to occur in thenear term.

**3)  Inventories**

| ** **      | ** ** | **April 1,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw materials   |       | $                       | 5,071      |                        |       | $ | 5,168 |   |   |
| Work in process |       | 3,354                   |       |                        | 3,553      |   |   |
| Finished goods  |       | 17,591                  |       |                        | 14,487     |   |   |
| Total           |       | $                       | 26,016     |                        |       | $ | 23,208 |   |   |

 

**4)  SegmentReporting**

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

| ** **         | ** ** | **Quarter Ended**  | ** ** |
|--------------------|------------|-------------------------|------------|
| ** **         | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** |
| Net sales:         |       |                    |       |   |   |
| Golf shafts        |       | $                       | 27,501     |   | $ | 29,541 |   |
| Performance sports |       | 2,078                   |       | 2,118 |   |
| Total              |       | $                       | 29,579     |   | $ | 31,659 |   |
| Gross profit:      |       |                    |       |   |   |
| Golf shafts        |       | $                       | 9,625      |   | $ | 11,282 |   |
| Performance sports |       | 392                     |       | 292 |   |
| Total              |       | $                       | 10,017     |   | $ | 11,574 |   |

 

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)**

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

| ** **                                               | ** ** | **Quarter Ended**  | ** ** |
|----------------------------------------------------------|------------|-------------------------|------------|
| ** **                                               | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** |
| Total reportable segment gross profit                    |       |                    | $          | 10,017 |   |   |   | $ | 11,574 |   |   |
| Less:                                                    |       |                    |       |   |   |   |   |   |   |
| Selling, general and administrative expenses             |       |                    | 3,977      |   |   |   | 3,527 |   |   |
| Amortization of intangible assets                        |       |                    | 3,736      |   |   |   | 3,461 |   |   |
| Business development, start-up and transition costs |       |                    | 372        |   |   |   | 12 |   |   |
| Loss on early extinguishment of long-term debt           |       |                    | 755        |   |   |   | — |   |   |
| Interest expense, net                                    |       |                    | 6,005      |   |   |   | 4,846 |   |   |
| Other expense, net                                       |       |                    | 13         |   |   |   | 20 |   |   |
| Total Company income (loss) before income taxes          |       |                    | $          | (4,841 | ) |   |   | $ | (292 | ) |   |

 

**5)  Comprehensive Income (Loss)**

Totalcomprehensive income (loss) and its components for the periods covered by thisreport are as follows:

| ** **                                                              | ** ** | **Quarter Ended**  | ** ** |
|-------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                              | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** |
| Net income (loss)                                                       |       | $                       | (3,061     | ) |   | $ | (230 | ) |   |
| Mark to market  adjustment on derivative instruments, net of taxes |       | (16                     | )          |   | — |   |   |
| Total comprehensive income (loss)                                       |       | $                       | (3,077     | ) |   | $ | (230 | ) |   |

 

**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 net periodic postretirementbenefit expense related to its unfunded health care plan for retirees, for theperiods covered by this report:

| ** **                                  | ** ** | **Quarter Ended**  | ** ** |
|---------------------------------------------|------------|-------------------------|------------|
| ** **                                  | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** |
| *Pension Plan:*                             | * *   |                    | * *   | * * |   |   | * * | * * |   |
| Net periodic pension  benefit expense       |       |                    | $          | 120 | * * |   |   | $ | 114 | * * |   |
| Cash contributions to  the pension plan     |       |                    | $          | — | * * |   |   | $ | 46 | * * |   |
| *Postretirement  Health Plan:*              |       |                    |       | * * |   |   |   | * * |   |
| Net periodic postretirement benefit expense |       |                    | $          | 122 | * * |   |   | $ | 78 | * * |   |

 

**7)  Acquisition of Business**

On February 25, 2007, the Company acquired 100% of theshares of Supertop Enterprises Limited, the sole shareholder of CN PrecisionSo., Ltd (“CN Precision”), a wholly foreign-owned enterprise in 

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)**

Suzhou, China forapproximately $9.5 million.  Approximately $0.7 million of the purchaseprice is contingent upon the successful completion of certain contractualobligations by the seller.

CN Precision is a startup steel golf shaftmanufacturing facility.  True Temper isin the process of commissioning all of the machinery and equipment necessary tobegin production of steel golf shafts at CN Precision, and expects to begin manufacturingsalable product by the end of 2007.

The Company is in the process of obtaining third-partyvaluations of certain tangible and intangible assets, therefore, the allocationof the purchase price is subject to refinement.  The preliminary purchase price allocationincludes approximately $0.2 million in identifiable intangible assets and $4.9million of goodwill.

The financial position of CN Precision as of April 1,2007 and the results of operations of CN Precision from February 25, 2007through April 1, 2007 have been included in these consolidated financialstatements.  The Company’s consolidatedresults of operations would not have been significantly different than reportedresults had the acquisition occurred at the beginning of 2007 or 2006,respectively.

**8)  Debt Refinancing**

On January 22, 2007, the Company executed an amendmentto its 2006 Restated Credit Facility (the “Second Amendment”).  The Second Amendment was made effective as ofDecember 20, 2006.  The Second Amendmentwas executed in conjunction with a second lien financing effort, described morefully below, and related acquisition, described in Note 7.  In addition to allowing the flexibility forsuch second lien financing, the Second Amendment also provided adjustments tocertain specified financial ratios and tests included in the 2006 RestatedCredit Facility.  As part of the SecondAmendment, the margin adder on LIBOR based loans was increased to between 3.00%and 3.25%, depending on financial ratios, beginning January 22, 2007.

On January 22, 2007, the Company executed a SecondLien Credit Agreement (the “Second Lien”). The Second Lien includes additionalterm loans of approximately $45.0 million, with $25.0 million of the proceedsbeing used to pay down the debt under the 2006 Restated Credit Facility.  The Second Lien is variable rate debt, whichprovides for interest at the Company’s option, at (1) the base rate of the bankacting as administrative agent plus a margin adder of 4.50%, or (2) under aLIBOR option with a borrowing spread of LIBOR plus 5.50%. The maturity date ofthe Second Lien is June 30, 2011.  TheSecond Lien does not amortize.

As a result of paying down$25.0 million of the borrowings under the 2006 Restated Credit Facility, theCompany recognized a loss on early extinguishment of debt of $0.8 million.  This loss is comprised of the write off ofcertain deferred financing costs related to the 2006 Restated Credit Facilityand third party costs incurred in conjunction with the Second Amendment.

**9)  Commitmentsand Contingencies**

***Product Warranties***

The Company generallywarrants its products against certain manufacturing and other defects. Theseproduct warranties are provided for specific periods of time and/or usage ofthe product depending on the nature of the product, the geographic location ofits sale and other factors.  The accruedproduct warranty 

7

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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)**

costsare based primarily on historical experience of actual warranty claims as wellas current information on product costs.

Thefollowing table provides the changes in the Company’s product warranties:
|                                 | ** ** | **Quarter Ended** | ** ** |
|---------------------------------|------------|------------------------|------------|
| ** **                      | ** ** | **April 1,**      | ** ** | **April 2,** | ** ** |
| ** **                      | ** ** | **2007**               | ** ** | **2006** | ** ** |
| Balance at beginning  of period |       |                   | $          | 326 |   |   |   | $ | 309 |   |   |
| Accruals for  warranties issued |       |                   | 406        |   |   |   | 244 |   |   |
| Warranty claims  paid           |       |                   | (349       | ) |   |   | (155 | ) |   |
| Balance at end of period        |       |                   | $          | 383 |   |   |   | $ | 398 |   |   |

 

**10)  RecentAccounting Pronouncements**

In July 2006, the Financial Accounting StandardsBoard (“FASB”) issued FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes—an Interpretation of FASB Statement 109*(“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxesrecognized in an enterprise’s financial statements in accordance with FASBStatement No. 109, *Accounting for IncomeTaxes*.  This interpretationprescribes a “more likely than not” recognition threshold and measurementattribute for the financial statement recognition and measurement of a taxposition taken or expected to be taken in a tax return. FIN 48 alsoprovides guidance on derecognition, classification, interest and penalties,accounting in interim periods, disclosure, and transition.  The Company adopted FIN 48 effectiveJanuary 1, 2007.  Upon adoption, theCompany recorded no liability for unrecognized tax benefits as it believes allof the Company’s tax positions are highly certain of being recognized forincome tax purposes.  Therefore, the adoptionof FIN 48 had no impact on the Company’s consolidated financial positionor its results of operations.

In September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*(“SFAS 157”).  This new standard provides guidance for usingfair value to measure assets and liabilities and information about the extentto which companies measure assets and liabilities at fair value, theinformation used to measure fair value, and the effect of fair valuemeasurements on earnings.  This frameworkis intended to provide increased consistency in how fair value determinationsare made under various existing accounting standards which permit, or in somecases require, estimates of fair market value.  SFAS 157 also expands financial statementdisclosure requirements about a company’s use of fair value measurements,including the effect of such measures on earnings.  The provisions of SFAS 157 are effective forfinancial statements issued for fiscal years beginning after November 15, 2007. While the Company is currentlyevaluating the provisions of SFAS 157, the adoption is not expected to have amaterial impact on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, *Employers’ Accounting for Defined Benefit Pension and OtherPostretirement Plans* — *an amendment of FASBStatements No. 87, 88, 106, and 132(R)* (“SFAS 158”) which requiresan employer to recognize in its statement of financial position the overfundedor underfunded status of a defined benefit pension or other postretirement planmeasured as the difference between the fair value of plan assets and the benefitobligation.  Employers must alsorecognize as a 

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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)**

component of othercomprehensive income, net of tax, the actuarial and experience gains and lossesand the prior service costs and credits.  For an employer without publicly traded equitysecurities, the requirement of SFAS 158 to recognize the funded status of adefined benefit postretirement plan and to provide the required disclosures iseffective as of the end of the fiscal year ending after June 15, 2007.  The requirement to measure plan assets andbenefit obligations as of the date of the employer’s fiscal year-end statementof financial position is effective for fiscal years ending after December 15,2008. The Company is in the process of evaluating the effect, if any, theadoption of SFAS 158 will have on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, *The Fair Value Option for Financial Assets & Financial Liabilities– Including an Amendment of SFAS No. 115* (SFAS 159”).  SFAS 159 permits an entity to irrevocablyelect to report selected financial assets and liabilities at fair value, withsubsequent changes in fair value reported in earnings.  The election may be applied on aninstrument-by-instrument basis.  SFAS 159also establishes additional presentation and disclosure requirements for itemsmeasured using the fair value option.  SFAS 159 is effective for fiscal years beginningafter November 15, 2007. While the Company is currently evaluating theprovisions of SFAS 159, the adoption is not expected to have a material impacton its consolidated financial statements.

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

The following discussionshould be read in conjunction with the more detailed information in the TrueTemper Sports, Inc. 2006****annual financialstatements, including the notes thereto, appearing in the 2006 Annual Report onForm 10-K, filed with the SEC on March 23, 2007.

**Company Overview**

True TemperSports, Inc. (“True Temper” or the “Company”), a wholly owned subsidiaryof True Temper Corporation (“TTC”), is a leading designer, manufacturer andmarketer of steel, composite, and multi-material golf club shafts for originalequipment manufacturers (“OEMs”) and distributors in the golf equipmentindustry. In addition, True Temper produces and sells a variety of performancesports products that offer high strength and tight tolerance tubular componentsto the bicycle, hockey and other recreational sports markets. In 2006, golfshaft sales represented 92% of total net sales, and performance sports sales represented8%. During the first quarter of 2007, netsales of performance sports products represented 7% of total net sales.

**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 GlobalAcquisition was accounted for by TTC usingthe purchase method of accounting. As the Company is a wholly owned subsidiaryof TTC, the Company has “pushed down” the effect of the purchase method ofaccounting to the consolidated 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**  | ** ** |
|------------------------------------------------------|------------|-------------------------|------------|
| ** **                                           | ** ** | **April 1,  2007** | ** ** | **April 2,  2006** | ** ** |
| Net sales                                            |       |                    | 100.0      | % |   |   | 100.0 | % |   |
| Cost of sales                                        |       |                    | 66.1       |   |   |   | 63.4 |   |   |
| Gross profit                                         |       |                    | 33.9       |   |   |   | 36.6 |   |   |
| Selling, general and  administrative expenses        |       |                    | 13.4       |   |   |   | 11.1 |   |   |
| Amortization of  intangible assets                   |       |                    | 12.6       |   |   |   | 10.9 |   |   |
| Loss on early  extinguishment of long-term debt      |       |                    | 2.6        |   |   |   | — |   |   |
| Business development,  start-up and transition costs |       |                    | 1.3        |   |   |   | 0.0 |   |   |
| Operating income                                     |       |                    | 4.0        |   |   |   | 14.4 |   |   |
| Interest expense, net                                |       |                    | 20.3       |   |   |   | 15.3 |   |   |
| Other expenses (income),  net                        |       |                    | 0.0        |   |   |   | 0.1 |   |   |
| Income (loss) before  income taxes                   |       |                    | (16.4      | ) |   |   | (0.9 | ) |   |
| Income tax expense  (benefit)                        |       |                    | (6.0       | ) |   |   | (0.2 | ) |   |
| Net income (loss)                                    |       |                    | (10.3      | )% |   |   | (0.7 | )% |   |

 

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***First Quarter Ended April 1, 2007 Compared to theFirst Quarter Ended April 2, 2006***

***Net Sales*********for the first quarter of 2007 decreasedapproximately $2.1 million, or 6.6%, to $29.6 million from$31.7 million in the first quarter of 2006. Golf shaft sales decreasedapproximately $2.0 million, or 6.9%, to $27.5 million compared to the$29.5 million realized in the first quarter of 2006. This decline in netsales resulted from a reduction in the unit sales of premium steel golf shaftsand stock original equipment manufacturer (“OEM”) graphite golf shafts. Theunit sales reduction in premium steel shafts was driven by several factors, butwas predominantly impacted by the timing of shipments to certain customers asit related to their particular product launch schedule and inventory planningprocesses.  The decline in unit sales ofstock OEM graphite shafts relates primarily to the timing of certain OEM ironlaunches using the Company’s proprietary graphite iron shafts.  These factors were partially offset by anincrease in premium steel golf shaft sales resulting from the 2006 acquisitionof certain assets from Royal Precision, including brands, patents andtrademarks.

Performance sports sales were relatively flat at $2.1million in the first quarter of both 2007 and 2006.

Net sales to international customers increasedapproximately $0.1 million, or 1.3%, to $10.2 million in the firstquarter of 2007 from $10.1 million in the same period of 2006. 

***Gross Profit***for the first quarter of 2007 decreased $1.6 million, or 13.5%, to$10.0 million from $11.6 million in the first quarter of 2006. Grossprofit as a percentage of net sales decreased to 33.9% in the first quarter of2007 from 36.6% in the first quarter of 2006. The decrease in gross profit as apercentage of net sales was driven primarily by an increase in the cost ofnickel, which is a raw material used in the manufacture of steel golf shafts,and an increase in the cost of medical benefits provided to employees. Theseunfavorable factors were partially offset by an increase in profit margins dueto the mix of products sold being more heavily weighted toward premium steelgolf shafts and the Company’s annual price increase which went into effect onJanuary 1, 2007.

***Selling, Generaland Administrative Expenses***(“SG&A”) for thefirst quarter of 2007 increased approximately $0.5 million, or 12.8%, to $4.0 millionfrom $3.5 million in the first quarter of 2006.  SG&A as a percentage of net salesincreased to 13.4% from 11.1%.  Theincrease in SG&A expenses relates primarily to additional sales andmarketing efforts intended to improve the Company’s net sales during theremainder of 2007. In addition to the sales and marketing related costs, duringthe first quarter of 2007 the Company also accrued approximately$0.2 million in severance expenses related to the elimination of theposition of chief operating officer.

***Amortization ofIntangible Assets*** increased during the firstquarter of 2007 to $3.7 million from the $3.5 million recorded duringthe first quarter of 2006. Intangible assets were acquired in connection withthe Gilbert Global Acquisition in 2004 and the acquisition of certain assetsfrom Royal Precision in 2006. Intangible assets with definitive lives are beingamortized using a straight-line method over periods from 2 to 59 years.

***BusinessDevelopment, Start-Up and Transition Costs*** for thefirst quarter of 2007 increased to $0.4 million from less than$0.1 million in the first quarter of 2006. The increase in these costsrelates primarily to expenses associated with the acquisition of CN Precision,a steel golf shaft manufacturing facility located in Suzhou, China.  Costs include certain start-up related coststo begin the commissioning of this new facility and the related productionequipment.  The Company expects to beginproduction of steel golf shafts in this new facility by the end of 2007. SeeNote 7 in the April 1, 2007 consolidated financial statements for afurther discussion of this acquisition.

***Operating Income***for the first quarter of 2007 decreased approximately $3.4 million, to $1.2 millionfrom $4.6 million in the first quarter of 2006. This decrease reflects thegross profit, SG&A and business development, start-up and transition costimpact of the items described above.

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***Interest Expense,Net*** for the third quarter of 2007 increasedapproximately $1.2 million, or 23.9%, to $6.0 million from $4.8 millionin the first quarter of 2006. This increase was due primarily to (i) anincrease in short-term interest rates experienced in the overall economy, (ii)an increase in the outstanding principal balance of variable rate debt due tothe issuance of the $45.0 million second lien credit facility, and (iii) anincrease in the weighted average interest rate for the Company’s variable ratedebt resulting from the higher LIBOR margin adder on the second lien creditfacility.

***Income Tax Expense(Benefit)*** decreased in the first quarter of 2007to an income tax benefit of $1.8 million compared to an income tax benefitof $0.1 million in the first quarter of 2006. 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 thefirst quarter of 2007 decreased to a net loss of $3.1 million as comparedto a net loss of $0.2 million in the first quarter of 2006. This decreasereflects the impact of the items described above.

**Liquidity and Capital 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 loanrequires cash 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 sellingshareholders.

On March 27, 2006, the Companyamended and restated its 2004 Senior Credit Facility (the “2006 Restated CreditFacility”). The 2006 Restated Credit Facility included additional term loansunder the Company’s existing Senior Secured Credit Facilities of approximately$15.0 to $18.0 million, amendments that enable the Company to pursuefuture acquisitions, and the flexibility to enable the Company to execute on itsglobal strategic and operational initiatives.

On January 22, 2007, the Company executed an amendmentto its 2006 Restated Credit Facility (the “Second Amendment”). The SecondAmendment was made effective as of December 20, 2006. The Second Amendmentwas executed in conjunction with a second lien financing effort, described morefully below, and related acquisition, described more fully in Note 7 tothe consolidated financial statements located elsewhere in this quarterlyreport. In addition to allowing the flexibility for such second lien financing,the Second Amendment also provided adjustments to certain specified financialratios and tests included in the 2006 Restated Credit Facility. As part of theSecond Amendment, the margin adder on LIBOR based loans was increased tobetween 3.00% and 3.25%, depending on financial ratios, beginning January 22,2007.

On January 22, 2007, the Company executed a SecondLien Credit Agreement (the “Second Lien”). The Second Lien includes additional term loans of approximately $45.0million, with $25.0 million of the 

12

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proceeds being used to paydown the debt under the 2006 Restated Credit Facility.  The margin adder under the Second Lien is4.5% or 5.5%, depending on the type of borrowing.  The maturity date of the Second Lien is June30, 2011.  The Second Lien does notamortize.

As a result of paying down $25.0 million of theborrowings under the 2006 Restated Credit Facility, the Company recognized aloss on early extinguishment of debt of $0.8 million.  This loss is comprised of the write off ofcertain deferred financing costs related to the 2006 Restated Credit Facilityand third party costs incurred in conjunction with the Second Amendment.

The 2006 Restated Credit Facility, the Second Lien,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 April 1, 2007, theCompany was in compliance with all of the covenants in the 2006 Restated CreditFacility, the Second Lien, and the 83¤8% Notes.

***Cash Flows from Operating Activities***

Cash flows from operating activities were a use ofcash totaling $7.2 million during the first quarter of 2007, and a source ofcash totaling $0.4 million during the first quarter of 2006.

The use of cash in operating activities of $7.2million in the first quarter of 2007 was primarily the result of $0.6 millionin cash generated from normal operations offset by a use of cash in workingcapital of $7.8 million.  The change inworking capital consisted primarily of (1) an increase in accounts receivableof $4.7 million, which was an expected increase related to the higher net salesin the first quarter of 2007 compared to the fourth quarter of 2006, and (2) anincrease in inventory of $2.8 million, which relates to several factors,including (i) an increase in the cost of nickel, a raw material used in themanufacture of steel golf shafts, (ii) an increase in the number of inventorybuild programs with key global golf OEMs, and (iii) an increase in theCompany’s finished goods levels in anticipation of a stronger second quartersales forecast.

The source of cash fromoperating activities of $0.4 million during the first quarter of 2006 wasprimarily the result of $4.0 million in cash generated from normal operationsoffset by a use of cash in working capital of $3.5 million.  The change in working capital consistedprimarily of an increase in accounts receivable of $4.6 million, which was anexpected increase related to the higher net sales in the first quarter of 2006compared to the fourth quarter of 2005.

***Cash Flows from Investing Activities***

Cash flows from investingactivities were a use of cash totaling $10.2 million during the first quarterof 2007, and a use of cash totaling $0.6 million during the first quarter of2006.  The increase in cash used ininvesting activities during 2007 is primarily the result of the acquisition ofCN Precision, as described more fully in Note 7 to the Company’sconsolidated financial statements located elsewhere in this quarterly report.

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***Cash Flows from Financing Activities***

Net cash provided byfinancing activities totaled $18.1 million during the first quarter of 2007, ascompared to the first quarter of 2006 when the Company used $0.7 million incash for financing activities.  Thisincrease relates primarily to (i) new borrowings of second lien term debttotaling $45.0 million during 2007, (ii) the repayment of $24.7 million infirst lien term debt during 2007, and (iii) the payment of $2.0 million in debtissuance costs in 2007 related to the additional borrowings.

***ExistingContractual Cash Obligations***

Thefollowing table reflects the Company’s contractual cash obligations for principalpayments on long-term debt and operating leases as of April 1, 2007 (dollars inmillions):

| ** **        | ** ** | **Total** | ** ** | **2007** | ** ** | **2008  through  2009** | ** ** | **2010  through  2011** | ** ** | **Thereafter** | ** ** |
|-------------------|------------|-----------|------------|----------|------------|-------------------------|------------|-------------------------|------------|----------------|------------|
| Long-Term Debt(1) |       | $         | 260.7      |     | $          | —                  |       |                    | $          | 7.0            |       |   |   | $ | 253.7 |   |   |   | $ | — |   |   |
| Operating Leases  |       | 3.1       |       | 0.9      |       |                    | 1.3        |                    |       |           | 0.9        |   |   |   | — |   |   |
| Total(2)          |       | $         | 263.8      |     | $          | 0.9                     |       |                    | $          | 8.3            |       |   |   | $ | 254.6 |   |   |   | $ | — |   |   |

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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)          Thistable does not include the Company’s future obligations related to the fundingof its pension benefits.

***Future Cash Generation and Use***

Currently theCompany’s intention is to use existing cash and cash provided from futureoperations, if any, as allowed within the covenants of the 2006 Restated CreditFacility, the Second Lien and the 83¤8% Notes, to:

·  Repay the principal on the 2006 RestatedCredit Facility; and/or

·  Make necessary investments to commissionmachinery and equipment for the CN Precision manufacturing facility in Suzhou,China; and/or

·  Make additional investments in the businessfor growth, which may include, among other things, capital expenditures,business acquisitions, and/or expenditures for business development andexpansion.

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 April 1, 2007 the Company has the $20.0 million revolvingcredit facility available for future cash requirements (as reduced by anyoutstanding draws, of which there were $5.0 million as ofDecember 31, 2006). The maximum amount the Company may use of the $20.0million revolving credit facility is limited by the financial covenantscontained within the 2006 Restated Credit Facility and is reduced by anyoutstanding letters of credit. As of April 1, 2007, the Company believes thatcash flow generated from operations, in addition to other financing sources,will be sufficient to meet its cash obligations for the ensuing 12 monthperiod.

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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 Company will beable to obtain the necessary capital, under acceptable terms, from creditors orother sources that will be sufficient to execute any such business investmentor capital expenditure.

** Recent AccountingPronouncements**

Information regarding recent accounting pronouncementsis contained in Note 10 to the Consolidated Financial Statements, which isincorporated herein by this reference.

**Forward-LookingStatements**

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, oranticipates 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 Risk Factors section of Item 1A to Part 1 of theCompany’s 2006 Annual Report on Form 10-K filed with the SEC onMarch 23, 2007.

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 April 1,2007. 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**                     | ** ** | **2007**                             | ** **    | **2008**   | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **There-  after** | ** ** | **Total** | ** ** |
| Fixed-Rate 83¤8%  Senior Subordinated Notes |       |                                 | $ — |       |       | $ — |   | $ — |   | $  — |   | $ 125.0 |   |   | $ — |   |   | $ 125.0 |   |
| Average Interest Rate                            |       |                                 |          |       |       |   |   |   |   |   |   |   |   |   |   |   |   | 8.38 | % |
| 2006 Restated  Credit Facility                   |       |                                 | $ — |       |       | $ 1.0 |   | $ 6.0 |   | $ 71.1 |   | $ 12.6 |   |   | $ — |   |   | $    90.7 |   |
| Average Interest Rate(a)                         |       |                                 |          |       |       |   |   |   |   |   |   |   |   |   |   |   |   | 8.71 | % |
| Second Lien                                      |       |                                 | $ — |       |       | $ — |   | $ — |   | $  — |   | $ 45.0 |   |   | $ — |   |   | $    45.0 |   |
| Average Interest Rate(b)                         |       |                                 |          |       |       |   |   |   |   |   |   |   |   |   |   |   |   | 10.86 | % |

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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 2.00% to 2.25%, or (2) undera LIBOR option with a borrowing rate of LIBOR plus 3.00% to 3.25%.

(b)   The SecondLien is variable rate debt, which provides for interest at the Company’soption, at (1) the base rate of the bank acting as administrative agentplus a margin adder of 4.50%, or (2) under a LIBOR option with a borrowingspread of LIBOR plus 5.50%.

The Company’s operating results are affected bychanges in interest rates primarily as a result of borrowings under the 2006Restated Credit Facility and the Second Lien. If interest rates increased by 25basis points, interest expense would have increased by approximately $0.1 millionfor the quarterly period ended April 1, 2007, based on balancesoutstanding during 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 2006 Annual Report on Form 10-K,as filed with the SEC on March 23, 2007. 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 April 1, 2007.

**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 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 internalcontrol 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 control 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 April 1, 2007.

**Item 5.**                        *Other Information*

—NotApplicable—

**Item 6.**                        *Exhibits*

| 10.9  |   | First Amendment dated as  of December 20, 2006 to the Amended and Restated Credit Agreement dated  as of March 27, 2006 (amending and restating the Credit Agreement dated  as of March 15, 2004, by and among True Temper Corporation, True Temper  Sorts, Inc., the Lenders identified therein, Credit Suisse, Antares  Capital Corporation, Goldman Sachs Credit Partners L.P. and Merrill Lynch  Capital). (filed as Exhibit 10.2 to True Temper Sports, Inc.’s  report on Form 8-K, as filed with the Securities and Exchange  Commission on January 26, 2007).* |
|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.10 |   | Second Lien Credit  Agreement dated as of January 22, 2007, by and among True Temper  Corporation, True Temper Sports, Inc., the Lenders identified therein,  and Credit Suisse). (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 January 26, 2007).*                                                                                                                                                                                                                                        |
| 10.11 |   | Severance Agreement,  dated as of February 19, 2007 by and between True Temper  Sports, Inc. and Fred H. Geyer. (filed as Exhibit 10.11 to True  Temper Sports, Inc.’s annual report on Form 10-K, as filed  with the Securities and Exchange Commission on March 23, 2007).*                                                                                                                                                                                                                                                                                                   |
| 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.

**             Filedherewith.

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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, on May 15, 2007.

|        | 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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