UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended March 29, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


Commission file number 333-72343



TRUE TEMPER SPORTS, INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

52-2112620(I.R.S. Employer
Identification Number)8275 Tournament Drive
Suite 200
Memphis, Tennessee(Address of principal executive offices)

38125(Zip Code)Telephone: (901) 746-2000(Registrant's telephone number,
including area code)




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ý No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes o    No o

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý

Smaller reporting company o(Do not check if a
smaller reporting
company)


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

As of May 12, 2009, the Registrant had 100 shares of Common Stock, $0.01 par value per share, outstanding.



---





TRUE TEMPER SPORTS, INC.    INDEX

PagePART I

FINANCIAL INFORMATIONItem 1.

Financial Statements

1Condensed Consolidated Statements of Operations (Unaudited)

1Condensed Consolidated Balance Sheets (Unaudited)

2Condensed Consolidated Statements of Cash Flows (Unaudited)

3Notes to Condensed Consolidated Financial Statements (Unaudited)

4Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

15Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22Item 4T.

Controls and Procedures

23PART II

OTHER INFORMATIONItem 1.

Legal Proceedings

24Item 1A.

Risk Factors

24Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24Item 3.

Defaults Upon Senior Securities

24Item 4.

Submission of Matters to a Vote of Security Holders

25Item 5.

Other Information

25Item 6.

Exhibits

25Signatures

26


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)    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)
(Dollars in thousands)

Quarter EndedMarch 29,
2009

March 30,
2008NET SALES

$
18,439

$
35,827Cost of sales


15,691


23,329GROSS PROFIT


2,748


12,498Selling, general and administrative expenses


2,999


3,867Amortization of intangible assets


3,739


3,734Restructuring, business development, start-up and transition costs


1,753


254OPERATING (LOSS) INCOME


(5,743
)

4,643Interest expense, net


5,718


6,168Other expenses


11


43LOSS BEFORE INCOME TAXES


(11,472
)

(1,568
)Income tax (benefit) expense


(11
)

31NET LOSS

$
(11,461
)
$
(1,599
)


See
accompanying notes to condensed consolidated financial statements

1

---





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

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

March 29,
2009

December 31,
2008ASSETSCURRENT ASSETSCash and cash equivalents

$
12,766

$
14,719Receivables, net


17,332


18,616Inventories


29,909


31,850Deferred tax assets


1,237


1,237Prepaid expenses and other current assets


3,457


2,349Total current assets


64,701


68,771Property, plant and equipment, net


18,219


18,696Intangible assets, net


100,692


104,431Other assets


6,582


6,979Total assets

$
190,194

$
198,877LIABILITIES AND STOCKHOLDER'S DEFICITCURRENT LIABILITIESCurrent portion of long-term debt

$
271,733

$
271,733Accounts payable


4,684


5,543Accrued interest


7,233


4,338Accrued expenses and other current liabilities


9,565


9,529Total current liabilities


293,215


291,143Deferred tax liabilities


10,134


10,134Long-term debt, net of current portion





Other liabilities


12,865


12,891Total liabilities


316,214


314,168STOCKHOLDER'S DEFICITCommon stockpar value $0.01 per share; authorized 1,000 shares; issued and outstanding 100 shares





Additional paid-in capital


122,673


122,673Accumulated deficit


(237,024
)

(225,563
)Accumulated other comprehensive loss, net of taxes


(11,669
)

(12,401
)Total stockholder's deficit


(126,020
)

(115,291
)Commitments and contingent liabilities (See Note 8)Total liabilities and stockholder's deficit

$
190,194

$
198,877


See
accompanying notes to condensed consolidated financial statements

2

---





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

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

Quarter EndedMarch 29,
2009

March 30,
2008OPERATING ACTIVITIESNet loss

$
(11,461
)
$
(1,599
)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation


793


846Amortization of deferred financing costs


465


461Amortization of intangible assets


3,739


3,734(Gain) loss on disposal of property, plant and equipment


(15
)

13Change in accrued interest


2,895


(2,780
)Changes in other operating assets and liabilities, net


1,999


(655
)Net cash provided by (used in) operating activities


(1,585
)

20INVESTING ACTIVITIESPurchases of property, plant and equipment


(365
)

(440
)Proceeds from sale of property, plant and equipment


64


Net cash used in investing activities


(301
)

(440
)FINANCING ACTIVITIESDividends paid to True Temper Corporation





(475
)Other financing activity


(67
)

(61
)Net cash used in financing activities


(67
)

(536
)Net decrease in cash and cash equivalents


(1,953
)

(956
)Cash and cash equivalents at beginning of period


14,719


4,722Cash and cash equivalents at end of period

$
12,766

$
3,766


See
accompanying notes to condensed consolidated financial statements

3

---





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 financial statements of True Temper Sports, Inc. and subsidiaries ("True
Temper" or the "Company") have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q and
consequently do not include all the disclosures required by U.S. generally accepted accounting principles. It is suggested that these financial statements be read in conjunction with the audited
consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2008. In the opinion of
management, the unaudited condensed consolidated financial statements as of and for the periods ended March 29, 2009 and March 30, 2008 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 and ends on December 31 of each year. During the course of the year the Company closes its books on a monthly and quarterly
basis following a 4,4,5 week closing calendar. Since the Company uses Sunday as the last day of each period (with the exception of December) the number of days in the first and fourth quarters
of any given year can vary depending on which day of the week January 1st falls on.

On
January 30, 2004, TTS Holdings LLC, a company formed by Gilbert Global Equity Partners, L.P. and its affiliated funds ("Gilbert Global"), entered into a stock
purchase agreement with the Company's direct parent company, True Temper Corporation ("TTC"), pursuant to which TTS Holdings LLC and certain of the Company's senior management purchased all of
the outstanding shares of TTC ("Gilbert Global Acquisition"). The Gilbert Global Acquisition was finalized and closed on March 15, 2004.

2) Stock-Based Compensation

On August 10, 2005 TTC issued, to certain employees in return for service, a total of 525,400 stock options and stock
appreciation rights ("Equity Incentive Awards") to purchase common stock of TTC for $13.56 per share. The Equity Incentive Awards have a term of ten years, and vest and become exercisable at various
times and under various conditions through August 10, 2012; with certain acceleration features based on performance criteria. During the year ended December 31, 2008, a total of 60,000
Equity Incentive Awards were granted and none were exercised or forfeited.

There
have been no Equity Incentive Awards granted, exercised or forfeited in the first quarter of 2009. The weighted average remaining contractual life of the Equity Incentive Awards is
between six and seven years.

In
addition, TTC has 354,000 equity awards which vest only upon a sale of TTC and achievement of certain other terms as described in the awards. As of March 29, 2009, the events
required for vesting of these awards are not expected to occur in the near term.

4

---



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)

3) Inventories

March 29,
2009

December 31,
2008Raw materials

$
4,170

$
5,995Work in process


2,719


2,598Finished goods


23,020


23,257Total

$
29,909

$
31,850


4) Segment Reporting

(a) Segment Reporting

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

Quarter EndedMarch 29,
2009

March 30,
2008Net sales:Golf shafts

$
15,054

$
31,922Performance sports


3,385


3,905Total

$
18,439

$
35,827Gross profit:Golf shafts

$
2,076

$
11,608Performance sports


672


890Total

$
2,748

$
12,498


5

---



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)

Following
is a reconciliation of total reportable segment gross profit to total Company loss before income taxes:

Quarter EndedMarch 29, 2009

March 30, 2008Total reportable segment gross profit

$
2,748

$
12,498Less:Selling, general and administrative expenses


2,999


3,867Amortization of intangible assets


3,739


3,734Restructuring, business development, start-up and transition costs


1,753


254Interest expense, net


5,718


6,168Other expense, net


11


43Total Company loss before income taxes

$
(11,472
)
$
(1,568
)


(b) Sales by Geographic Region

The geographic distribution of the Company's net sales, by location of customer, is summarized as follows:

Quarter EndedMarch 29,
2009

March 30,
2008U.S.

$
11,180

$
23,794International


7,259


12,033Total

$
18,439

$
35,827


5) Comprehensive Loss

Total comprehensive loss and its components for the periods covered by this report are as follows:

Quarter EndedMarch 29,
2009

March 30,
2008Net loss

$
(11,461
)
$
(1,599
)Mark to market adjustment on derivative instruments


732


167Total comprehensive loss

$
(10,729
)
$
(1,432
)


6

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)
(Dollars in thousands unless otherwise indicated)

6) Pension and Other Postretirement Benefits

The following table reflects the Company's net periodic pension benefit expense and cash contributions to its pension plan, as well as
the net periodic postretirement benefit expense related to its unfunded health care plan for retirees, for the periods covered by this report:

Quarter EndedMarch 29,
2009

March 30,
2008Pension Plan:Net periodic pension benefit expense

$
171

$
164Cash contributions to the pension plan

$
260

$
105Postretirement Health Plan:Net periodic postretirement benefit expense

$
148

$
148


7) Borrowings

Long-term debt as of March 29, 2009 and December 31, 2008 consisted of the following:

March 29,
2009

December 31,
200883/8% Senior Subordinated Notes due 2011

$
125,000

$
125,0002006 Restated Credit Facility


101,733


101,733Second Lien


45,000


45,000Total debt


271,733


271,733Less current portion


271,733


271,733Long-term debt, net of current portion

$


$



On
January 22, 2007, the Company executed an amendment to its 2006 Restated Credit Facility (the "Second Amendment"). The Second Amendment was made effective as of
December 20, 2006. The Second Amendment was executed in conjunction with a second lien financing effort, described more fully below, and related acquisition of CN Precision. In addition to
allowing the flexibility for such second lien financing, the Second Amendment also provided adjustments to certain specified financial ratios and tests included in the 2006 Restated Credit Facility.
As part of the Second Amendment, the margin adder on LIBOR based loans was increased to between 3.0% and 3.25%, depending on financial ratios, beginning January 22, 2007. Due to the events of
default described below, interest on the 2006 Restated Credit Facility will accrue at the base rate which is the greater of (a) the Prime Rate, or (b) the Federal Funds Effective Rate in
effect at the beginning of each quarter. A margin adder of 2.5% and a default margin adder of 2.0% is added to the base rate.

On
January 22, 2007, the Company executed a Second Lien Credit Agreement (the "Second Lien"). The Second Lien included additional term loans of approximately $45.0 million,
with $24.7 million of the proceeds being used to pay down the debt under the 2006 Restated Credit Facility. The margin adder under the Second Lien is 4.5% or 5.5%, depending on the type of
borrowing. The maturity date of the Second Lien is June 30, 2011. The Second Lien does not amortize. Due to the

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)

events
of default described below, interest on the Second Lien will accrue at the base rate which is the greater of (a) the Prime Rate, or (b) the Federal Funds Effective Rate in effect
at the beginning of each quarter. A margin adder of 5.0% and a default margin adder of 2.0% is added to the base rate.

Due
to the events of default described below, interest on the 83/8% Notes will accrue at the default rate of 93/8%.

Substantially
all of the Company's assets are pledged as collateral under the 2006 Restated Credit Facility and the Second Lien. The 2006 Restated Credit Facility, the Second Lien, and
the 83/8% Senior Subordinated Notes due 2011 (the "83/8% 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 acquisitions and capital expenditures, sell assets, create liens or other encumbrances, make certain payments and
dividends, or merge or consolidate. Furthermore, the 2006 Restated Credit Facility and the Second Lien require certain mandatory prepayments including payments from the net proceeds of certain asset
sales and a portion of the Company's excess cash flows as defined within each credit agreement. The 2006 Restated Credit Facility and the Second Lien also require the Company to maintain certain
specified financial ratios and tests including minimum interest coverage and fixed charge coverage ratios, and maximum leverage ratios. As of March 29, 2009, the Company was not in compliance
with these ratios.

On
April 23, 2008, the Company entered into interest rate swap agreements to fix the underlying LIBOR borrowing base rate on $100.0 million of its variable rate debt at
approximately 3.20% for a period of approximately 24 months. The Company has designated the interest rate swaps as cash flow hedges for accounting purposes.

Liquidity and Substantial Doubt About the Company's Ability to Continue as a Going Concern

On March 16, 2009, the Company did not make the principal payment then due on its revolving credit loans, in an aggregate amount
equal to $20.0 million (including $17.0 million in borrowings and $3.0 million in outstanding letters of credit), due to the lenders under
the 2006 Restated Credit Facility. The Company's failure to make the scheduled principal payment on the revolving credit loans is an Event of Default under the 2006 Restated Credit Facility, which
entitles the lenders to immediately accelerate the repayment of all other amounts borrowed under the 2006 Restated Credit Facility together with accrued and unpaid interest thereon.

Also
on March 16, 2009, the Company did not pay interest then due to the holders of its 83/8% Notes. The failure to pay interest constituted an Event of Default
under the Indenture, which gave the holders of the 83/8% Notes the right to accelerate the payment of the principal together with accrued and unpaid interest thereon. The
non-payment of principal then due under the 2006 Restated Credit Facility described above also constituted an Event of Default under the Indenture, giving the holders of the
83/8% Notes the right to immediately accelerate the repayment of the principal of the 83/8% Notes together with accrued and unpaid interest thereon.

The
non-payment of interest under the Indenture also constituted an Event of Default under the Second Lien, giving the lenders the right to accelerate the repayment of
amounts borrowed under the Second Lien together with accrued and unpaid interest thereon. The non-payment of principal under the 2006 Restated Credit Facility, if continued for
90 days after notice or if the maturity of principal of the 2006 Restated Credit Facility is accelerated, will constitute an Event of Default under the Second

8

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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)

Lien,
giving the lenders the right to accelerate the repayment of amounts borrowed under the Second Lien together with accrued and unpaid interest thereon.

Due
to the events of default described above, all of the Company's debt has been classified as a current liability on its consolidated balance sheets as of March 29, 2009 and
December 31, 2008.

The
Company has negotiated the terms of a 90-day forbearance with all of the lenders in the Company's revolving credit facility, and a majority of the lenders in the Company's 2006
Restated Credit Facility. Under the terms of the forbearance, the lenders in the Company's revolving credit facility and 2006 Restated Credit Facility have agreed not to exercise their rights as a
result of this default through June 16, 2009, provided the Company adheres to the requirements of the forbearance terms. Upon expiration of the forbearance period, the forbearance shall be
immediately and automatically terminated and be of no further force or effect. The Company's non-compliance with the aforementioned covenants, decreasing revenues resulting from the
current global economic downturn, and substantial annual cash interest payment requirements raise substantial doubt about its ability to continue as a going concern under its existing capital
structure.

The
Company has retained the investment banking firm, Lazard Middle Market, to assist it in exploring alternatives to enhance the Company's capital structure. The Company is currently in
ongoing discussions with certain lenders under the 2006 Restated Credit Facility, the Second Lien, and the 83/8%
Notes to refinance or restructure its debt. In addition to addressing the Company's capital structure, management has also enacted restructuring plans to address operating costs by reducing headcount
on a global basis, significantly reducing fixed costs at the Company's manufacturing facilities, renegotiating lease terms and rental rates for certain of the Company's facilities, and decreasing
discretionary spending on items such as travel, entertainment, and certain marketing expenses.

There
can be no guarantee that any restructuring or refinancing plan will be successfully implemented. Failure to successfully implement a restructuring or refinancing plan or otherwise
address compliance issues under the 2006 Restated Credit Facility, the Second Lien, or the 83/8% Notes within the time frame permitted may have a material adverse effect on the
Company's business, results of operations, and financial position, and may materially impact the Company's ability to continue as a going concern.

None
of the lenders under the 2006 Restated Credit Facility or the Second Lien, nor any holders of 83/8% Notes have accelerated the payment of principal or interest under
any of the applicable agreements as of the time of filing of this Quarterly Report on Form 10-Q.

8) Commitments and Contingencies

Product Warranties

The Company generally warrants its products against certain manufacturing and other defects. These product warranties are provided for
specific periods of time and/or usage of the product depending on the nature of the product, the geographic location of its sale and other factors. The accrued product warranty costs are based
primarily on historical experience of actual warranty claims as well as current information on product costs.

9

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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)

The
following table provides the changes in the Company's product warranties:

Quarter EndedMarch 29,
2009

March 30,
2008Balance at beginning of period

$
318

$
447Accruals for warranties issued


272


373Warranty claims paid


(140
)

(287
)Balance at end of period

$
450

$
533


9) Fair Value Measurements

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157,Fair Value
Measurements.SFAS No. 157 defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles and expands disclosures
about fair value measurements. The provisions of SFAS No. 157 related to certain nonfinancial assets and liabilities are effective for financial statements issued for fiscal years beginning
after November 15, 2008. The remaining provisions of SFAS No. 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007, and the Company
adopted such provisions effective January 1, 2008.

SFAS
No. 157 defines the inputs used to measure fair value into the following fair value hierarchy:



As
of March 29, 2009, cash flow hedging derivative liabilities were principally related to the fair value of foreign exchange forward contracts and interest rate swaps. These
liabilities are included in accrued expenses and other current liabilities on the Company's consolidated balance sheet. The Company defines the fair value of foreign exchange forward contracts as the
amount of the difference between the contracted and current market foreign currency exchange rates at the end of the period. Management estimates the fair value of foreign exchange forward contracts
on a quarterly basis by obtaining market quotes for future contracts with similar terms, adjusted where necessary for maturity
differences. Management estimates the fair value of its interest rate swaps by obtaining market quotes for future contracts with similar terms, adjusted where necessary for maturity differences and
credit value adjustments to take into account non-performance risk and credit risk. To further estimate the fair value of the interest rate swaps, the Company uses estimates of future cash
flows, which are discounted to a net present value, based on the forward LIBOR curve at the reporting date.

10

---



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)

The
following table sets forth, by level within the fair value hierarchy, the Company's derivative liabilities recorded at fair value on a recurring basis as of March 29, 2009:

True Temper Fair Value Measurements at Reporting Date

Description

March 29,
2009

Level 1

Level 2

Level 3Derivatives (foreign exchange forward contracts)

$
219

$


$
219

$
Derivatives (interest rate swaps)

$
2,269

$


$


$
2,269


The
change in fair value of the interest rate swaps during the quarter ended March 29, 2009 represents an unrealized loss of $39 recognized in accumulated other comprehensive loss
at March 29, 2009.

Additional
information related to the Company's derivative instruments is provided in Note 10.

The
fair value estimates presented herein are based on information available to management as of March 29, 2009. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair
value may differ significantly from the amounts presented herein.

10) Derivative Instruments

The Company uses foreign exchange forward contracts ("Instruments" or "Derivative Instruments") in its management of foreign currency
exchange rate exposures. Instruments that are designated hedges in accordance with SFAS No. 133,Accounting for Derivative Instruments and Certain Hedging Activities, as
amended, must be effective at reducing the risks associated with the underlying exposure and must be designated as a hedge at the inception of the contract. Accordingly,
changes in the market value of the Instruments must have a high degree of inverse correlation with changes in the market value or cash flows of the underlying hedged item. The Company formally
assesses both at inception of the hedge and on an ongoing basis whether each derivative is highly effective in offsetting changes in fair value or cash flows of the hedged item. If it is determined
that a derivative is not highly effective, the Company will discontinue hedge accounting prospectively and record any ineffectiveness in earnings.

The
Company has used Derivative Instruments to hedge several components of its revenue and cash collection stream, including, (i) anticipated foreign currency sales,
(ii) accounts receivable denominated in foreign currencies, and (iii) cash balances maintained in foreign currencies. These contracts typically have maturities of less than one year.

On
April 23, 2008, the Company entered into interest rate swap agreements to fix the underlying LIBOR borrowing base rate on $100.0 million of its variable rate debt at
approximately 3.20% for a period of approximately 24 months. The Company has designated the interest rate swaps as cash flow hedges for accounting purposes.

The
changes in the market value of Derivative Instruments designated as hedging instruments for anticipated foreign currency sales and the Company's interest rate swaps are recognized in
the

11

---



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)

consolidated
balance sheets as a component of accumulated other comprehensive loss in stockholder's deficit. To the extent an Instrument is no longer effective as a hedge due to a change in the
underlying exposure, gains and losses are recognized currently in the consolidated statements of operations as a component of cost of sales or interest expense for the foreign exchange contracts and
interest rate swaps, respectively.

The
changes in the market value of Derivative Instruments hedging accounts receivable or cash denominated in foreign currency are recognized as a component of operating income (loss)
during the period of the change, as they are marked to market on a monthly basis.

The
following table summarizes the contractual notional amounts of True Temper's forward foreign exchange contracts as of March 29, 2009 and December 31, 2008 (in U.S.
dollars):

March 29,
2009

December 31,
2008Pound Sterling

$


$
1,284Yen


5,476


9,497Total

$
5,476

$
10,781


The
following table summarizes the impact of cash flow hedges on the Company's consolidated balance sheets as of March 29, 2009 and December 31, 2008:

Asset Derivatives as of

Liability Derivatives as ofMarch 29, 2009

December 31, 2008

March 29, 2009

December 31, 2008Derivatives Designated as Hedging Instruments under SFAS No. 133Balance Sheet Location

Fair Value

Fair Value

Fair Value

Fair ValueInterest rate swaps

Accrued expenses and other liabilities

$


$


$
2,269

$
2,230Foreign exchange contracts

Accrued expenses and other liabilities





384


219


1,439$


$
384

$
2,488

$
3,669


Note 9 contains additional disclosures regarding the fair value of the Company's Derivative Instruments.

12

---



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)

The
following table summarizes the impact of cash flow hedges on the Company's consolidated statements of operations for the quarters ending March 29, 2009 and December 31,
2008:

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss(1)Amount of Gain (Loss) Recognized in Other Comprehensive Loss(1)





Amount of Gain (Loss) Recognized in Income on Derivative(2)Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss(1)Derivatives in SFAS No. 133
Cash Flow Hedges

Quarter Ended March 29, 2009

Quarter Ended March 30, 2008

Quarter Ended March 29, 2009

Quarter Ended March 30, 2008

Location of Gain (Loss) Recognized in Income on Derivative(2)

Quarter Ended March 29, 2009

Quarter Ended March 30, 2008Interest rate swaps

$
(39
)
$


Interest expense

$


$


Other expenses

$


$
Foreign exchange contracts


399


235

Net sales


(128
)

68

Cost of sales


(244
)

$
360

$
235



$
(128
)
$
68



$
(244
)
$



---

11) Restructuring, Business Development, Start-up and Transition Costs

Restructuring, business development, start-up and transition costs in the first quarter of 2009 and 2008 include costs
related to the start-up of steel golf shaft manufacturing at the Company's recently acquired facility in Suzhou, China. Restructuring, business development, start-up and
transition costs in the first quarter of 2009 also reflect cost reduction and restructuring efforts enacted in direct response to the weakening global economy and golf market. These costs include
severance payments for terminated employees, medical and other benefit continuation during severance periods, and outplacement assistance for terminated senior level management employees. The costs
are expensed as incurred and separately identified in the condensed consolidated statements of operations as a component of operating (loss) income.

The
following table provides the changes in the Company's accrual for severance benefits related to the 2009 restructuring efforts as described above:

Quarter Ended
March 29,
2009Balance at beginning of period

$
565Liabilities accrued for severance benefits during the period


1,158Severance benefits paid during the period


(632
)Balance at end of period

$
1,091


12) Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised),Business Combinations.
SFAS No. 141R replaces SFAS No. 141 while retaining the fundamental requirements in SFAS No. 141 that the acquisition (purchase) method of accounting be used for all business
combinations. SFAS No. 141R retains SFAS No. 141 guidance for identifying and recognizing intangible assets separately from goodwill and makes certain changes to how the acquisition
(purchase) method is applied. SFAS

13

---



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)

No. 141R
is effective on a prospective basis for business combinations for which the acquisition date is on or after January 1, 2009. Generally, the effects of SFAS No. 141R will
depend on future acquisitions.

In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interest in Consolidated Financial Statementsan amendment of ARB
No. 51.SFAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest (sometimes called a minority
interest) in a subsidiary and for the deconsolidation of a subsidiary and to provide consistency with
SFAS No. 141. SFAS No. 160 is effective for financial statements for fiscal years beginning on or after December 15, 2008. The adoption of SFAS No. 160 did not have a
material impact on the Company's consolidated financial statements.

In
March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities.SFAS
No. 161 is effective for financial statements issued for periods beginning after November 15, 2008, with early application encouraged. This statement amends and expands the disclosure
requirements in SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, and other related literature. The Company adopted the
provisions of SFAS No. 161 in the first quarter of 2009 and has included the required disclosures in Note 10.

In
January 2009, the FASB issued Staff Position SFAS 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, "Interim
Disclosures about Fair Value of Financial Instruments" (SFAS 107-1 and APB 28-1). This proposal amends FASB Statement No. 107,
"Disclosures about Fair Values of Financial Instruments," to require disclosures about fair value of financial instruments in interim financial
statements as well as in annual financial statements. The proposal also amends APB Opinion No. 28, "Interim Financial Reporting," to require
those disclosures in all interim financial statements. This staff position is effective for interim periods ending after June 15, 2009, but early adoption is permitted for interim periods
ending after March 15, 2009. The Company plans to adopt SFAS 107-1 and APB 28-1 and provide the additional disclosure requirements for second quarter 2009.

In
December, 2008, the FASB issued Staff Position SFAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan
Assets" (SFAS 132(R)-1). This staff position provides guidance on an employer's disclosures about plan assets of a defined benefit pension or other
postretirement plan and requires additional disclosure about how investment allocation decisions are made, more information about major categories of plan assets, including concentrations of risk and
fair-value measurements, and the fair-value techniques and inputs used to measure plan assets. This staff position is effective for years ending after December 15, 2009.
The Company has not yet evaluated the impact, if any, of this requirement.

14

---





Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the more detailed information in the True Temper Sports, Inc. annual
consolidated financial statements, including the notes thereto, appearing in the 2008 annual report on Form 10-K, filed with the SEC on March 31, 2009.

Company Overview

True Temper Sports, Inc. ("True Temper" or the "Company"), a wholly owned subsidiary of True Temper Corporation ("TTC"), is a
leading designer, manufacturer and marketer of steel, composite, and multi-material golf club shafts for original equipment manufacturers ("OEMs") and distributors in the golf equipment industry. In
addition, True Temper produces and sells a variety of performance sports products that offer high strength and tight tolerance tubular components to the bicycle, hockey and other recreational sports
markets. In 2008, golf shaft sales represented 86% of total net sales, and performance sports sales represented 14%. During the first quarter of 2009, net sales of performance sports products
represented 18% of total net sales.

Purchase Agreement for True Temper Corporation

On January 30, 2004, TTS Holdings LLC, a company formed by Gilbert Global Equity Partners, L.P. and its affiliated
funds ("Gilbert Global"), 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 senior management purchased all of the outstanding shares of TTC ("Gilbert Global Acquisition"). The Gilbert Global Acquisition was finalized and closed on March 15, 2004.

Results of Operations

The following table sets forth the components of net loss as a percentage of net sales for the periods indicated:

Quarter EndedMarch 29,
2009

March 30,
2008Net sales


100.0
%

100.0
%Cost of sales


85.1


65.1Gross profit


14.9


34.9Selling, general and administrative expenses


16.3


10.8Amortization of intangible assets


20.3


10.4Business development, start-up and transition costs


9.5


0.7Operating (loss) income


(31.2
)

13.0Interest expense, net


31.0


17.2Other expenses


0.1


0.1Loss before income taxes


(62.3
)

(4.4
)Income tax (benefit) expense


(0.1
)

0.1Net loss


(62.2
)%

(4.5
)%


First Quarter Ended March 29, 2009 Compared to the First Quarter Ended March 30, 2008

Net Salesfor the first quarter of 2009 decreased approximately $17.4 million,
or 48.5%, to $18.4 million from $35.8 million in the first quarter of 2008. Golf shaft sales decreased approximately $16.9 million, or 52.8%, to $15.1 million compared to
the $31.9 million realized in the first quarter of 2008. The decrease in net sales is primarily related to a decrease in the unit volume of premium steel golf shafts due to a reduction in
overall consumer discretionary spending associated with the current

15

---



economic
recession, combined with an overall reduction in the channel inventory located at both the retail and wholesale levels.

Performance
sports sales decreased approximately $0.5 million, or 13.3%, to $3.4 million from $3.9 million in the first quarter of 2008. Performance sports sales,
while down on a year-over year basis, have not been impacted to the same degree as golf shafts as the Company continues to gain market share and execute on its performance sports growth strategy.

Net
sales to international customers decreased approximately $4.8 million, or 39.7%, to $7.3 million in the first quarter of 2009 from $12.0 million in the first
quarter of 2008. This decrease is primarily related to a decrease in the unit volume of premium steel golf shafts due to a reduction in overall consumer discretionary spending associated with the
current economic recession. International golf shaft sales have not been impacted to the same degree as domestic golf shaft sales as the Company continues to gain share in the Japanese market and
major golf OEMs continue to shift product assembly into China.

Gross Profitfor the first quarter of 2009 decreased $9.8 million, or 78.0%, to $2.7 million from $12.5 million in
the first quarter of 2008. Gross profit as a percentage of net sales decreased to 14.9% in the first quarter of 2009 from 34.9% in the first quarter of 2008. The decrease in gross profit as a
percentage of net sales was driven by several factors, but resulted primarily from (i) fixed manufacturing costs being spread over significantly decreased sales and production volumes in both
the golf and performance sports segments, and (ii) the mix of products sold being more heavily weighted toward lower priced steel and graphite golf shafts as well as performance sports
products which generally have lower overall margins. The Company has implemented a number of cost reduction initiatives intended to somewhat offset the negative impact to gross profit margins. In
order to position the Company to meet the currently reduced demand for steel golf shafts, total US workforce has been significantly reduced. In addition, the Company has instituted a number of fixed
overhead cost reduction initiatives that are designed to remove $8.0 million in infrastructure costs on an annual basis. These reductions include position eliminations, utility and energy
conservation programs, facility rationalization and freight program consolidation.

Selling, General and Administrative Expenses ("SG&A")for the first quarter of 2009 decreased approximately $0.9 million, or 22.4%,
to $3.0 million from $3.9 million in the first quarter of 2008. This decrease is primarily due to cost reduction programs in response to current economic conditions including reducing
headcount, renegotiating lease terms and rental rates for certain of the Company's facilities, and reducing discretionary spending on items such as travel, entertainment, advertising and promotion.
SG&A as a percentage of net sales increased to 16.3% from 10.8% in the first quarter of 2008 due to the decrease in net sales described above.

Amortization of Intangible Assetswas relatively stable at $3.7 million during the first quarter of both 2009 and 2008. Intangible
assets were acquired in connection with (i) the Gilbert Global Acquisition in 2004, (ii) the acquisition of certain assets from Royal Precision in 2006, and (iii) the acquisition
of CN Precision in 2007. Intangible assets with definitive lives are being amortized using a straight-line method over periods from 2 to 59 years.

Restructuring, Business Development, Start-Up and Transition Costsfor the first quarter of 2009 increased to
$1.8 million from $0.3 million in the first quarter of 2008. The costs incurred in 2009 include (i) $1.2 million related to restructuring and cost reduction efforts enacted in
direct response to the weakening global economy and golf market. These costs include severance payments for terminated employees, as well as medical and other benefit continuation during severance
periods, (ii) $0.5 million in legal and advisory fees related to restructuring the Company's debt, and (iii) $0.1 million in start-up related costs for the continued ramp-up of
production of steel golf shafts in Suzhou, China.

Operating (Loss) Incomefor the first quarter of 2009 decreased approximately $10.4 million, to an operating loss of
$5.7 million from operating income of $4.6 million in the first quarter of 2008. This

16

---



decrease
reflects the impact from gross profit, SG&A, and restructuring, business development, start-up and transition costs described above.

Interest Expense, Netfor the first quarter of 2009 decreased approximately $0.5 million, or 7.3%, to $5.7 million from
$6.2 million in the first quarter of 2008. This decrease was due primarily to a decrease in the weighted average interest rate for the Company's variable rate debt as interest rates in both the
US and Europe declined during the fourth quarter of 2008 and first quarter of 2009.

Income Tax (Benefit) Expensedecreased in the first quarter of 2009 to an income tax benefit of less than $0.1 million, compared to
an income tax expense of slightly less than $0.1 million in the first quarter of 2008. This decrease was due primarily to foreign income tax refunds recorded in the first quarter of 2009.

Net Lossfor the first quarter of 2009 increased to a net loss of $11.5 million as compared to a net loss of $1.6 million in
the first quarter of 2008. This decrease reflects the impact from gross profit, SG&A, restructuring, business development, start-up and transition costs, interest expense, and income tax
expense (benefit) described above.

Liquidity and Capital Resources

General

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

Also
in conjunction with the Gilbert Global Acquisition, the Company issued new 83/8% Senior Subordinated Notes due 2011 (the "83/8% Notes"). The
83/8% Notes require cash interest payments each March 15th and September 15th commencing on September 15, 2004. The 83/8% Notes are
redeemable at the Company's option, under certain circumstances and at certain redemption prices, beginning March 15, 2008. Due to the events of default described below, interest on the
83/8% Notes will accrue at the default rate of 93/8%.

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

On
March 27, 2006, the Company amended and restated its 2004 Senior Credit Facility (the "2006 Restated Credit Facility"). The 2006 Restated Credit Facility included additional
term loans under the Company's existing Senior Secured Credit Facilities of approximately $18.0 million, amendments that enable the Company to pursue future acquisitions, and the flexibility to
enable the Company to execute on its global strategic and operational initiatives.

On
January 22, 2007, the Company executed an amendment to its 2006 Restated Credit Facility (the "Second Amendment"). The Second Amendment was made effective as of
December 20, 2006. The Second Amendment was executed in conjunction with a second lien financing effort, described more fully below, and related acquisition, both described more fully in
Note 7 to the condensed consolidated financial statements located elsewhere in this quarterly report. In addition to allowing the flexibility for such second lien financing, the Second
Amendment also provided adjustments to certain specified financial ratios and tests included in the 2006 Restated Credit Facility. As part of the Second Amendment, the margin adder on LIBOR based
loans was increased to between 3.00% and 3.25%, depending on financial ratios, beginning January 22, 2007. Due to the events of default described below, interest on the 2006 Restated Credit
Facility will accrue at the base rate which is the greater of (a) the Prime Rate, or (b) the Federal Funds Effective Rate in effect at the beginning of each quarter. A margin adder of
2.5% and a default margin adder of 2.0% is added to the base rate.

17

---



On
January 22, 2007, the Company executed a Second Lien Credit Agreement (the "Second Lien"). The Second Lien includes additional term loans of approximately $45.0 million,
with $24.7 million of the proceeds being used to pay down the debt under the 2006 Restated Credit Facility. The margin adder under the Second Lien is 4.5% or 5.5%, depending on the type of
borrowing. The maturity date of the Second Lien is June 30, 2011. The Second Lien does not amortize. Due to the events of default described below, interest on the Second Lien will accrue at the
base rate which is the greater of (a) the Prime Rate, or (b) the Federal Funds Effective Rate in effect at the beginning of each quarter. A margin adder of 5.0% and a default margin
adder of 2.0% is added to the base rate.

As
a result of paying down $24.7 million of the borrowings under the 2006 Restated Credit Facility, the Company recognized a loss on early extinguishment of debt of
$0.8 million. This loss is comprised of the write off of certain deferred financing costs related to the 2006 Restated Credit Facility and third party costs incurred in conjunction with the
Second Amendment.

During
the second quarter of 2008, the Company entered into interest rate swap agreements to fix the underlying LIBOR borrowing base rate on $100.0 million of its variable rate
debt at approximately 3.20% for a period of approximately 24 months. The Company has designated the interest rate swaps as cash flow hedges for accounting purposes.

The
2006 Restated Credit Facility, the Second Lien, and the 83/8% 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 acquisitions and capital expenditures, sell assets, create liens or other encumbrances, make certain payments and
dividends, or merge or consolidate. Furthermore, the 2006 Restated Credit Facility and the Second Lien require certain mandatory prepayments including payments from the net proceeds of certain asset
sales and a portion of the Company's excess cash flows as defined within each credit agreement. The 2006 Restated Credit
Facility and the Second Lien also require the Company to maintain certain specified financial ratios and tests including minimum interest coverage and fixed charge coverage ratios, and maximum
leverage ratios. The Company was not in compliance with these ratios at March 29, 2009.

Due
to the current global economic and retail market conditions, and the resulting impact on the overall golf industry, the Company was in noncompliance of certain financial covenants
under its 2006 Restated Credit Facility and Second Lien Credit Agreement as of March 29, 2009; and as of March 16, 2009 the Company was in default on these credit agreements and its
83/8% Notes (as more fully described below). Effective March 16, 2009 the Company entered into a 90-day forbearance with all of the lenders in the Company's revolving credit facility,
and a majority of the lenders in the Company's 2006 Restated Credit Facility. Under the terms of the forbearance, the lenders in the Company's revolving credit facility and 2006 Restated Credit
Facility have agreed not to exercise their rights as a result of this default through June 16, 2009, provided the Company adheres to the requirements of the forbearance terms. Upon expiration
of the forbearance period, the forbearance shall be immediately and automatically terminated and be of no further force or effect. The Company's non-compliance with the aforementioned
covenants, decreasing revenues resulting from the current global economic downturn, and substantial annual cash interest payment requirements raise substantial doubt about its ability to continue as a
going concern under its existing capital structure.

On
March 16, 2009, the Company did not make the principal payment then due on its revolving credit loans, in an aggregate amount equal to $20.0 million (including
$17.0 million in borrowings and $3.0 million in outstanding letters of credit), due to the lenders under the 2006 Restated Credit Facility. The Company's failure to make the scheduled
principal payment on the revolving credit loans is an Event of Default under the 2006 Restated Credit Facility, which entitles the lenders to immediately accelerate the repayment of all other amounts
borrowed under the 2006 Restated Credit Facility together with accrued and unpaid interest thereon.

Also
on March 16, 2009, the Company did not pay interest then due to the holders of its 83/8% Notes. The failure to pay interest constituted an Event of Default
under the Indenture, which gave the

18

---



holders
of the 83/8% Notes the right to accelerate the payment of the principal together with accrued and unpaid interest thereon. The non-payment of principal then due
under the 2006 Restated Credit Facility described above also constituted an Event of Default under the Indenture, giving the holders of the 83/8% Notes the right to immediately
accelerate the repayment of the principal of the 83/8% Notes together with accrued and unpaid interest thereon.

The
non-payment of interest under the Indenture also constituted an Event of Default under the Second Lien, giving the lenders the right to accelerate the repayment of
amounts borrowed under the Second Lien together with accrued and unpaid interest thereon. The non-payment of principal under the 2006 Restated Credit Facility, if continued for
90 days after notice or if the maturity of principal of the 2006 Restated Credit Facility is accelerated,
will constitute an Event of Default under the Second Lien, giving the lenders the right to accelerate the repayment of amounts borrowed under the Second Lien together with accrued and unpaid interest
thereon. Substantially all of the Company's assets are pledged as collateral under the 2006 Restated Credit Facility and the Second Lien.

Due
to the events of default described above, all of the Company's debt has been classified as a current liability on its consolidated balance sheets as of March 29, 2009 and
December 31, 2008.

The
Company has retained the investment banking firm Lazard Middle Market to assist it in exploring alternatives to enhance the Company's capital structure. The Company is currently in
ongoing discussions with its lenders to refinance or restructure its debt. In addition to addressing the Company's capital structure, management has also enacted restructuring plans to address
operating costs by significantly reducing headcount on a global basis, significantly reducing fixed costs at the Company's manufacturing facilities, renegotiating lease terms and rental rates for
certain of the Company's facilities, and decreasing discretionary spending on items such as travel, entertainment, advertising and promotion.

There
can be no guarantee that any restructuring or refinancing plan will be successfully implemented. Failure to successfully implement a restructuring or refinancing plan or otherwise
address compliance issues under the 2006 Restated Credit Facility, the Second Lien, or the 83/8% Notes within the time frame permitted may have a material adverse effect on the
Company's business, results of operations, and financial position, and may materially impact the Company's ability to continue as a going concern.

None
of the lenders under the 2006 Restated Credit Facility or the Second Lien, nor any holders of 83/8% Notes have accelerated the payment of principal or interest under
any of the applicable agreements as of the time of filing of this quarterly report on Form 10-Q.

Cash Flows from Operating Activities

Net cash used in operating activities during the first quarter of 2009 was $1.6 million, compared to cash flows provided by
operating activities of slightly less than $0.1 million during the first quarter of 2008.

The
use of cash in operating activities of $1.6 million in the first quarter of 2009 was primarily the result of $3.6 million in cash used in operations offset by an
improvement in working capital of $2.0 million. The change in working capital consisted primarily of a decrease in inventories of $1.9 million associated with the Company's continued
efforts to reduce its global stocking levels for all types of inventories,
and a decrease in accounts receivable of $1.3 million associated with a decrease in sales and increased collection efforts.

The
source of cash from operating activities of slightly less than $0.1 million during the first quarter of 2008 was primarily the result of $0.7 million in cash generated
from operations, offset by a use of cash in working capital of $0.7 million. The use of cash for working capital purposes related primarily to an increase in trade accounts receivable from
December 31, 2007 to March 30, 2008 totaling $3.1 million, or 14.6%, which was driven by the revenue increase in first quarter of 2008.

19

---



Cash Flows from Investing Activities

Cash flows from investing activities were a use of cash totaling $0.3 million during the first quarter of 2009, and a use of
cash totaling $0.4 million during the first quarter of 2008. The use of cash in investing activities during the first quarters of 2009 and 2008 related primarily to routine capital expenditures
for machinery and equipment.

Cash Flows from Financing Activities

Cash flows from financing activities were a use of cash totaling $0.1 million during the first quarter of 2009, and a use of
cash totaling $0.5 million in the first quarter of 2008.

The
cash used by financing activities during the first quarter of 2008 related primarily to a distribution to the Company's parent company, True Temper Corporation, to facilitate a
contractual equity repurchase associated with a severance arrangement.

Existing Contractual Cash Obligations

The following table reflects the Company's contractual cash obligations for principal and interest payments on long-term
debt, operating leases and purchase commitments as of March 29, 2009 (dollars in millions). Amounts reflected as Long-Term Debt are based on the original, contractual payment dates
under the Company's various debt agreements. As described more fully in Note 7 to the condensed consolidated financial statements included elsewhere in this quarterly report, due to
non-compliance with various covenants in the 2006 Restated Credit Facility and Second Lien, and the failure to make required principal and interest payments under the 2006 Restated Credit
Facility and the 83/8% Notes, respectively, the lenders in each of these debt agreements have the right to accelerate the contractual repayment of amounts borrowed into calendar 2009.
As a result, the Company's debt has been classified as current on its consolidated balance sheets as of March 29, 2009 and December 31, 2008.

Total

2009

2010
through
2011

2012
through
2013

ThereafterLong-Term Debt(1 and 2)

$
327.3

$
40.7

$
286.6

$


$
Operating Leases


4.5


0.9


2.3


1.3


Purchase Commitments(3)


1.5


1.5








Total(4)

$
333.3

$
43.1

$
288.9

$
1.3

$



---

20

---



Future Cash Generation and Use

As illustrated above, the Company has considerable, contractual obligations related to principal and interest payments on its debt
obligations. Given the current global economic downturn, and its impact on the golf industry and True Temper specifically, it is unlikely that the Company can meet the current obligations under all of
its debt instruments. As more fully described elsewhere in this quarterly report, and in Note 7 to the condensed consolidated financial statements included herein, the Company is engaged in a
review of its capital structure. The Company expects that ongoing discussions with its financial advisors and lenders will result in a plan that the Company can use to meet its future principal and
interest obligations, under a modified capital structure.

In
addition to the debt service obligations for principal and interest payments, the Company's liquidity needs largely relate to working capital requirements and capital expenditures for
machinery and equipment. The Company intends to fund its current and long-term working capital and capital expenditure requirements through cash flow generated from operations.

Depending
on the size, any future acquisitions, joint ventures, capital expenditures or similar transactions may require significant capital resources in excess of cash provided from
operations, and potentially in excess of cash available under the revolving credit facility. There can be no assurance that the Company will be able to obtain the necessary capital, under acceptable
terms, from creditors or other sources, that will be sufficient to execute any such business investment or capital expenditure.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is contained in Note 12 to the condensed consolidated financial
statements, which is incorporated herein by this reference.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe harbor for forward-looking statements made by the
Company. This document contains forward-looking statements, including but not limited to Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations". All
statements which address future operating or financial performance, events or developments that the Company 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 on management's current views and assumptions regarding future events and operating performance. However, there are many risk factors, including
but not limited to, the Company's substantial leverage, the Company's ability to service its debt, the general state of the economy, the Company's ability to execute its plans, fluctuations in the
price and availability of energy, fluctuations in the price and availability of raw materials, potentially significant increases to employee health and welfare costs, competitive factors, and other
risks that could cause the actual results to differ materially from the estimates or predictions contained in the Company's forward-looking statements. Additional information concerning the Company's
risk factors is contained from time to time in the Company's public filings with the SEC; and most recently in the Risk Factors section of Item 1A to Part 1 of the Company's 2008 Annual
Report on Form 10-K filed with the SEC on March 31, 2009.

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

21

---



Item 3.Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

The table below provides information about our debt obligations as of March 29, 2009 that are sensitive to changes in interest
rates. The table presents cash flows and related weighted average interest rates at March 29, 2009 by expected maturity dates (dollars in millions). Expected maturity dates are based on the
original, contractual payment dates under the Company's various debt agreements. As described more fully in Note 7 to the condensed consolidated financial statements included elsewhere in this
quarterly report, due to non-compliance with various covenants in the 2006 Restated Credit Facility and Second Lien, and the failure to make required principal and interest payments under
the 2006 Restated Credit Facility and the 83/8% Notes, respectively, the lenders in each of these debt agreements have the right to accelerate the contractual repayment of amounts
borrowed into calendar 2009. As a result, the Company's debt has been classified as current on its consolidated balance sheets as of March 29, 2009 and December 31, 2008.

Expected Maturity DateLONG TERM DEBT

2009

2010

2011

2012

2013

Thereafter

TotalFixed Rate 83/8% Senior Subordinated Notes

$


$


$
125.0

$


$


$


$
125.0Average Interest Rate(a)




















9.38
%2006 Restated Credit Facility


18.0


71.1


12.6










$
101.7Average Interest Rate(b)(d)




















6.89
%Second Lien








45.0










$
45.0Average Interest Rate(c)(d)




















6.63
%


---

Exchange Rate Sensitivity

We use forward foreign exchange contracts ("Instruments" or "Derivative Instruments") in our management of foreign currency exchange
rate exposures. We are exposed to exchange rate fluctuations in the British Pound and Japanese Yen due to sales in those currencies and to the Chinese Yuan due to operating costs for our facilities in
China. Instruments used as hedges must be effective at reducing the risks associated with the underlying exposure and must be designated as a hedge at the inception of the contract. Accordingly,
changes in the market value of the Instruments must have a high degree of inverse correlation with changes in the market value or cash flows of the underlying hedged item.

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We
use Derivative Instruments to hedge several components of our revenue and cash collection stream, including, (i) anticipated foreign currency sales, (ii) accounts
receivable denominated in foreign currencies, and (iii) cash balances maintained in foreign currencies.

The
changes in the market value of Derivative Instruments hedging anticipated foreign currency sales are recognized in the consolidated balance sheets as a component of accumulated other
comprehensive income (loss) in stockholder's deficit. To the extent an instrument is no longer effective as a hedge due to a change in the underlying exposure, gains and losses are recognized
currently in the consolidated statements of operations as a component of cost of sales.

The
changes in the market value of Derivative Instruments hedging accounts receivable or cash denominated in foreign currency are recognized as a component of operating income during the
period of the change, as they are marked to market on a monthly basis. The estimated fair value of the foreign currency hedges was a liability of $0.2 million at March 29, 2009.

The
following table summarizes the contractual notional amounts of True Temper's forward foreign exchange contracts as of March 29, 2009 (in U.S. dollars in millions):

Pound Sterling

$
Yen


5.5Total

$
5.5


Assuming
a hypothetical 10% adverse change in all foreign currencies, with the resulting functional currency gains and losses translated into U.S. dollars at the spot rate, the loss in
fair value of exchange contracts held on March 29, 2009, would be $0.6 million. Those losses would be offset, in part, by gains on the underlying receivables and cash being hedged.

Information
concerning the Company's market risks related to commodities is contained in the "Management's Discussion and Analysis of Financial Condition and Results of Operations"
section of the Company's 2008 Annual Report on Form 10-K, as filed with the SEC on March 31, 2009. This information has been omitted from this report as there have been no
material changes to the Company's risks related to commodities as of March 29, 2009.

Item 4T.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Evaluations required by Rule 13a-15 of the Securities Exchange Act of 1934 of the effectiveness of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report have been carried out
under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer. Based upon such evaluations, the Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.

Changes in Internal Controls

There were no changes in the Company's internal control over financial reporting that occurred during its last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened against the
Company. While the Company cannot predict the outcome of these matters, in the opinion of management, any liability arising from these matters will not have a material adverse effect on the Company's
business, financial condition or results of operations.

Item 1A.Risk Factors

No changes

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

Not applicable

Item 3.Defaults Upon Senior Securities

On March 16, 2009, the Company did not make the principal payment then due on its revolving credit loans, in an aggregate amount
equal to $20.0 million (including $17.0 million in borrowings and $3.0 million in outstanding letters of credit), due to the lenders under the 2006 Restated Credit Facility. The
Company's failure to make the scheduled principal payment on the revolving credit loans is an Event of Default under the 2006 Restated Credit Facility, which entitles the lenders to immediately
accelerate the repayment of all other amounts borrowed under the 2006 Restated Credit Facility together with accrued and unpaid interest thereon.

Also
on March 16, 2009, the Company did not pay interest then due to the holders of its 83/8% Notes. The failure to pay interest constituted an Event of Default
under the Indenture, which gave the holders of the 83/8% Notes the right to accelerate the payment of the principal together with accrued and unpaid interest thereon. The
non-payment of principal then due under the 2006 Restated Credit Facility described above also constituted an Event of Default under the Indenture, giving the holders of the
83/8% Notes the right to immediately accelerate the repayment of the principal of the 83/8% Notes together with accrued and unpaid interest thereon.

The
non-payment of interest under the Indenture also constituted an Event of Default under the Second Lien, giving the lenders the right to accelerate the repayment of
amounts borrowed under the Second Lien together with accrued and unpaid interest thereon. The non-payment of principal under the 2006 Restated Credit Facility, if continued for
90 days after notice or if the maturity of principal of the 2006 Restated Credit Facility is accelerated, will constitute an Event of Default under the Second Lien, giving the lenders the right
to accelerate the repayment of amounts borrowed under the Second Lien together with accrued and unpaid interest thereon. Substantially all of the Company's assets are pledged as collateral under the
2006 Restated Credit Facility and the Second Lien.

The
Company was in noncompliance of certain financial covenants under its 2006 Restated Credit Facility and Second Lien Credit Agreement as of March 29, 2009; and, as described
above, as of March 16, 2009 the Company was in default on these credit agreements and its 83/8% Notes. The Company has negotiated the terms of a 90 day forbearance with
all of the lenders in the Company's revolving credit facility, and a majority of the lenders in the Company's 2006 Restated Credit Facility. Under the terms of the forbearance, the lenders in the
Company's revolving credit facility and 2006 Restated Credit Facility have agreed not to exercise their rights as a result of this default through June 16, 2009, provided the Company adheres to
the requirements of the forbearance terms. Upon expiration of the forbearance period, the forbearance shall be immediately and automatically terminated and be of no further force or effect.

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

There were no matters submitted to a vote of security holders during the quarter ended March 29, 2009.

Item 5.Other Information

Not Applicable

Item 6.Exhibits

| |      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ---- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.1 |  | Forbearance Agreement dated as of March 16, 2009 by and among True Temper Corporation, True Temper Sports, Inc., True Temper Sports-PRC Holdings, Inc., El Cajon Equipment Corporation, Credit
Suisse, and the lenders identified in the Amended and Restated Credit Agreement dated as of March 27, 2006 (amending and restating the Credit Agreement dated as of March 15, 2004) (as otherwise amended, restated, supplemented, waived or
otherwise modified from time to time).**
| | 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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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on May 13, 2009.

True Temper Sports, Inc.By:

/s/ SCOTT C. HENNESSYName:

Scott C. HennessyTitle:

President and Chief Executive OfficerBy:

/s/ JASON A. JENNEName:

Jason A. JenneTitle:

Vice President, Chief Financial Officer and Treasurer


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