<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-K

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 333-72343

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

                            TRUE TEMPER SPORTS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                       3949                  52-2112620
(STATE OF OTHER JURISDICTION       (PRIMARY STANDARD          (I.R.S. EMPLOYER
      OF INCORPORATION        INDUSTRIAL CLASSIFICATION   IDENTIFICATION NUMBER)
      OR ORGANIZATION)                CODE NUMBER)

                         8275 TOURNAMENT DRIVE SUITE 200
                            MEMPHIS, TENNESSEE 38125
                            TELEPHONE: (901) 746-2000
                        (ADDRESS, INCLUDING ZIP CODE, AND
                    TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                    REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

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

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

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

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

      As of June 30, 2002 the Registrant had 100 shares of Common Stock, $0.01
par value per share, outstanding. All of the Registrant's outstanding shares
were held by True Temper Corporation, the Registrant's parent company, as of
June 30, 2002.

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes |_| No |X|

                      DOCUMENTS INCORPORATED BY REFERENCE:

      Part IV incorporates certain information by reference from the
Registrant's Registration Statement on Form S-4, as filed with the Securities &
Exchange Commission on June 7, 1999, and declared effective on June 10, 1999.

================================================================================
<PAGE>
                            TRUE TEMPER SPORTS, INC.

                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                      INDEX

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
  PART I
    Item 1   Business........................................................  3
    Item 2   Properties...................................................... 14
    Item 3   Legal Proceedings............................................... 15
    Item 4   Submission of Matters to a Vote of Security Holders............. 15
  PART II
    Item 5   Market for Registrant's Common Equity and Related Stockholder
             Matters......................................................... 16
    Item 6   Selected Financial Data......................................... 16
    Item 7   Management's Discussion and Analysis of Financial Condition
             and Results of Operations....................................... 19
    Item 7A  Quantitative and Qualitative Disclosures About Market Risk...... 30
    Item 8   Financial Statements and Supplementary Data..................... 32
    Item 9   Changes in and Disagreements With Accountants on Accounting
             and Financial Disclosures....................................... 53
  PART III
    Item 10  Directors and Executive Officers of the Registrant.............. 53
    Item 11  Executive Compensation.......................................... 54
    Item 12  Security Ownership of Certain Beneficial Owners and Management.. 57
    Item 13  Certain Relationships and Related Transactions.................. 58
    Item 14  Controls and Procedures......................................... 59
  PART IV
    Item 15  Exhibits, Financial Statements Schedule, and Reports on
             Form 8-K........................................................ 61
  SIGNATURES................................................................. 62
  CERTIFICATIONS............................................................. 63
  EXHIBIT INDEX.............................................................. 67
</TABLE>


                                       2
<PAGE>
                                     PART I

ITEM 1.  BUSINESS

GENERAL

      We are the world's leading designer, manufacturer and marketer of golf
club shafts. Since the 1930's we have manufactured golf club shafts under the
widely recognized True Temper brand. In 2002, over 75% of our revenues were
generated through the sale of steel golf club shafts, a market in which we have
an estimated worldwide share of over 65%. We are a major supplier of steel
shafts to the top 20 domestic golf club designers and distributors, including
Callaway, PING, Titleist, Nike, Mizuno, Wilson, Cleveland, TaylorMade and
Golfsmith. In addition, we are a leading manufacturer of premium graphite shafts
in the highly fragmented graphite golf club shaft market.

      Our products include over 1,000 proprietary models (with our customers'
brand name, label or trademark affixed to the shaft) and 2,000 branded models
(with the True Temper and/or Grafalloy brand name, label or trademark affixed to
the shaft) of golf club shafts, including a full range of commercial and premium
grade steel shafts and a full line of premium graphite shafts. True Temper
offers a wide range of steel shaft lines, including:

      (1)   Dynamic Gold, a leading steel shaft on the PGA Tour for the last 20
            years;

      (2)   Sensicore, which utilizes patented vibration-damping technology, to
            combine the feel of graphite with the consistency of steel;

      (3)   BiMatrx, a patented multi-material technology combining the benefits
            of steel with the benefits of graphite into one shaft;

      (4)   TX 90, one of the lightest steel shafts in golf;

      (5)   co-branded products, including Callaway's Memphis 10, PING's JZ and
            ZZ Lite and Wilson's Fat Shaft, and

      (6)   Grafalloy Blue, a new breakthrough graphite shaft designed
            specifically for today's oversized metal woods.

      For the past 16 years, our steel shafts were played by over 84% of the
PGA's major championship winners, including 12 of the last 13 Masters champions.

      We also design, manufacture and market approximately 75 lines of graphite
(carbon fiber based composite) shafts under the True Temper and Grafalloy brand
names, including EI-70, Rocket Graphite, Blue, ProLite, ProLogic, AttackLite and
PowerLite. Our graphite and BiMatrx shafts also have a strong presence on the
professional tours, where they have been used by players such as David Duval,
Davis Love III, David Toms and Tom Watson, each of whom have won professional
tour events during the past three years playing our graphite or BiMatrx shafts.

      In addition, we manufacture a variety of high strength, high tolerance
tubular components for a variety of recreational sports markets. During the past
few years we expanded the design and manufacturing capability of our performance
sports business segment to include not only steel tubing applications but also
composite tubing. Our first product offerings of this type were graphite hockey
and lacrosse stick shafts designed for the premier manufacturers in these two
markets. In 2001 we further expanded our composite tubing capabilities with the
acquisition of substantially all capital assets and intellectual property rights
of Advanced Materials Engineering ("AME"). AME is a designer and manufacturer of
composite carbon fiber bicycle forks for use in high-end road bikes under the
Alpha Q brand name.


                                       3
<PAGE>
THE GOLF CLUB SHAFT INDUSTRY

      Golf clubs are assembled using shafts that are made from two primary
materials. Steel shafts are used to produce most of the iron products sold
today, some of the driver and fairway woods, and almost all of the putters and
wedges. Graphite shafts are used in the assembly of most of the driver and
fairway woods, as well as some of the iron products.

      We estimate that in recent years steel shafts represented approximately
60% of the total worldwide unit sales, and graphite represented the remainder.
We believe new product innovations and consumer preferences indicate the trend
toward steel shafts is growing.

      The steel shaft market is highly concentrated, with only a few
manufacturers worldwide. We believe that this concentration is due in part to
the significant capital investment and customized manufacturing process required
for the production of steel shafts. We have invested significant capital in our
manufacturing facilities and estimate the replacement cost of machinery and
equipment at our steel shaft manufacturing facility to be in the range of $50
million to $60 million.

      Unlike steel, the graphite shaft market is characterized by many smaller
manufacturers who require limited capital investment to produce graphite shafts
in quantity. Although there are a few graphite shaft suppliers with high volume
operations, we do not believe any of them have a majority share in the graphite
market. Typically the graphite manufacturers have a highly concentrated customer
base with most of their sales going to only a few customers.

      Like most golf shaft manufacturers we sell shafts to both original
equipment manufacturers ("OEM's") like Callaway, Titleist, PING, Nike, Wilson
and others, as well as to golf equipment distributors like Golfsmith. OEM's
purchase proprietary products uniquely designed for them as well as products
that the Company sells to any other customer under the True Temper or Grafalloy
brand names. We believe that distributors, who service custom club builders and
pro shops, prefer to purchase True Temper and Grafalloy brand name shafts that
have a high degree of consumer recognition.

BUSINESS STRATEGY

      Our goal is to increase revenues and operating performance by capitalizing
on our position as the leading worldwide designer, manufacturer and marketer of
technologically innovative, performance-oriented golf club shafts. Our business
strategy to achieve this goal consists of the following objectives:

      -     Continue to Increase Our Share of the Steel and Graphite Shaft
            Markets. We intend to continue to increase our share of the steel
            and graphite shaft markets by leveraging the True Temper and
            Grafalloy brands and continuing to introduce new products and
            technologies tailored to the specific needs of golfers. Our plans
            are to continue to develop innovative premium steel shafts with
            performance characteristics and features that support higher than
            average selling prices and gross margins. We expect to increase our
            share of the highly fragmented graphite shaft market by capitalizing
            on our technological leadership to introduce new, higher performance
            premium products under the True Temper and Grafalloy brands. In
            addition, we expect to leverage our brand and international
            distribution capabilities to increase our share of the growing
            international market, which represents approximately one-third of
            the worldwide golf club shaft market.

      -     Leverage Technological Leadership to Introduce New Products. We
            intend to capitalize on our design expertise and couple our internal
            resources with our supplier partnerships to continue to develop and
            introduce new products for the future as we have in the past. In
            2002, over 27% of our revenues were derived from products introduced
            during the past 2 years. In 1996, True Temper developed and
            introduced Sensicore, a highly successful line of premium steel
            shafts that incorporates our patented vibration damping technology.
            We believe the Sensicore technology incorporates the performance
            characteristics and consistency of steel with the feel of graphite,
            while offering the lowest vibration levels of any steel or graphite
            shaft on the market. In 1998 True Temper successfully expanded the


                                       4
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            patented Sensicore technology into graphite shafts. During the past
            several years we developed the revolutionary new BiMatrx technology,
            which combines the favorable performance characteristics of both
            steel and graphite into one shaft. The BiMatrx driver and fairway
            wood products were launched at the January 2001 PGA merchandise show
            in Orlando, Florida. In 2002 we launched the TX 90 steel shaft, one
            of the lightest steel shafts in golf, along with several lightweight
            proprietary OEM designs using the same lightweight technology. In
            2002 we also introduced Grafalloy Blue, a new super lightweight
            graphite shaft designed to enhance the performance of "Big Headed"
            drivers and fairway woods.

      -     Capitalize on the Long-Term Favorable Trends Affecting the Golf
            Equipment Industry. We expect to continue to benefit from the
            long-term positive trends affecting the golf equipment industry.
            These trends include:

            (1)   increased consumer spending since 1990 on recreational
                  activities in general, and on golf equipment in particular;

            (2)   growth in the number of golf courses;

            (3)   increased interest in golf by woman, junior and minority
                  golfers;

            (4)   projected population growth of golfers who are 40 to 60 years
                  old, the segment of the population which generally plays the
                  most rounds and spends the most on golf equipment;

            (5)   substantial increase in media exposure; and

            (6)   the rapid evolution of golf club designs and technology.

      -     Enhance Long-Term Customer Relationships. We are a major supplier to
            the top 20 domestic golf club manufacturers. We intend to continue
            to play a critical role in designing new shaft technologies to meet
            the specific performance requirements of our customers' new
            products. We utilize a computer-aided design program that evaluates
            a new shaft's design with respect to weight, torque, flex point, tip
            and butt flexibility, swing weight and other critical shaft design
            criteria. With this capability, we intend to further enhance our
            customer relationships by developing co-branded products, such as
            the Memphis 10 for Callaway, the Fat Shaft for Wilson, and the JZ
            and ZZ Lite for PING. In addition we are working to improve our
            service levels to all our customers by developing improved
            logistical methods for distributing products worldwide. For example,
            in 2001 we opened a warehouse operation in Hong Kong to service
            customers in China.

      -     Continue to Build the True Temper and Grafalloy Brands. We intend to
            continue to increase awareness of the True Temper and Grafalloy
            brands and to support our new product introductions with targeted
            consumer advertising campaigns. Our marketing programs include:

            (1)   advertising in major industry publications and other media
                  channels both independently and in cooperation with certain of
                  the leading golf club manufacturers and distributors;

            (2)   promoting our products among tour and teaching professionals,
                  college players, coaches and other leaders in the golf
                  community; and

            (3)   maintaining promotional vans to provide technical support to
                  professional golfers at the major events on golf's
                  professional tours.

            We also promote our brands in international markets through our
            sales and distribution offices in Japan, Australia and the United
            Kingdom.


                                       5
<PAGE>
      -     Improve Productivity and Operating Margins. Management believes
            there are opportunities to improve future profit margins through:

            (1)   new product introductions;

            (2)   productivity improvements from enhanced manufacturing
                  processes and work flow designs;

            (3)   reduced scrap and product waste expenses from improved quality
                  standards and processes; and

            (4)   opening a new manufacturing plant in a lower cost region.

PRODUCTS

      We design, manufacture and market steel and graphite golf club shafts, as
well as a variety of high strength, high tolerance tubular components for the
bicycle, automotive and recreational sports markets. We manufacture over 1,000
custom and 2,000 standard golf club shafts featuring different combinations of
performance characteristics, including weight, flex, torque and bend profile.
Our custom (proprietary) shafts, which accounted for approximately 33% of
revenues in 2002, are designed, and frequently co-branded in partnership with
our customers, to accommodate specific golf club designs. Our branded products
with the True Temper and Grafalloy names and designs are typically sold to golf
club manufacturers, distributors and various custom club assemblers, and are
used to either assemble new clubs or to replace the shafts in existing clubs.

      Steel Golf Club Shafts. We manufacture a wide range of steel golf club
shaft lines, including shafts with the Sensicore insert, which are
well-recognized as the leading shafts to combine the performance advantages of
steel with the vibration damping characteristics of graphite; the Dynamic Gold
shaft, which has been one of the most widely used shafts on the PGA Tour for the
last 20 years; and the TX 90 shaft, which is one of the lightest weight steel
shafts in golf.

      Our steel golf club shafts can be divided into the following two primary
product lines:

      (1)   premium steel shafts; and

      (2)   commercial steel shafts.

      Premium steel shafts, such as our Sensicore, Dynamic Gold and TX 90
product lines, are high performance products and generally yield higher profit
margins than commercial steel shafts. Our commercial steel shafts, however, are
more attractively priced for entry-level golfers, resulting in lower per unit
margins coupled with higher production volume and unit sales.

      Graphite Golf Club Shafts. We manufacture a wide range of graphite golf
club shaft lines, which are offered in a variety of weights, torques and flexes.
Our graphite golf club shafts are currently being played by over 100 touring
professionals on the PGA and Champions Tours. Our graphite shafts sold under the
True Temper brand include models such as EI 70 and Rocket, and graphite shafts
sold under the Grafalloy brand include models such as Blue, ProLite, ProLogic,
and Attacklite.

      Golf Club Shafts With Combined Materials. During the last several years we
have been working to develop golf club shafts that combine multiple materials
such as steel and graphite into one shaft. Late in 2000 we introduced a custom
iron product for Adams Golf that combines a steel shaft with a graphite tip
section to produce a shaft that provides a new feel for irons.

      We used this same patented technology to introduce the True Temper branded
product known as BiMatrx in January 2001. The BiMatrx shaft consists of a
graphite shaft with a steel tip section that is currently designed for use in
driver and fairway wood applications.

      Performance Sports Products. We also manufacture and sell a wide variety
of high performance tubular components for the bicycle, hockey and other
recreational sports markets. In 2002, we sold our performance


                                       6
<PAGE>
sports products to a broad range of original equipment manufacturers and
distributors, including Trek Bicycle, Starline Baton, STX, The Hockey Company,
Franklin Sports and Sherwood Hockey.

CUSTOMERS

      We maintain long-standing relationships with a highly diversified customer
base consisting of the premier golf club manufacturers and distributors in the
world. We are a major supplier of shafts to each of the top 20 domestic golf
club designers in the world, including Callaway, PING, Titleist, Nike, Mizuno,
Wilson, Cleveland, Adams, TaylorMade and Golfsmith. In 2002, True Temper had in
excess of 800 customers, including approximately 700 golf club
manufacturers/retailers and more than 100 distributors.

      For many years the Company has maintained a broad and diversified customer
base in the golf equipment market. In 2002 our top ten customers represented 65%
of our sales revenues, while our top two customers represented 23% of our sales.

      We believe that our close customer relationships and responsive service
have been significant elements to our success and that our engineering and
manufacturing expertise provide us with a strong competitive advantage. We have
developed and co-branded several proprietary shafts with our customers, which
include customized steel shafts for Callaway, under the Memphis 10 brand; for
PING, under the JZ and ZZ Lite brands; for Nike, under the Speed Step; and for
Wilson to produce the Fat Shaft line of clubs.

COMPETITION

      We operate in a highly competitive environment. We believe that we compete
principally on the basis of:

      -     our ability to provide a broad range of high quality steel and
            graphite shafts at competitive prices;

      -     our ability to deliver customized products in large quantities on a
            timely basis through distribution channels around the world;

      -     the acceptance of steel and graphite shafts in general, and our
            shafts in particular, by professional and other golfers;

      -     our ability to develop and produce innovative new products that
            provide performance features which benefit golfers of all skill
            levels.

      We estimate that we have over 65% of the worldwide steel shaft market, and
that our next largest steel competitor has less than one third of our volume.
Until recently, we primarily competed with four other steel golf shaft
manufacturers: Royal Precision, Inc., a domestic based steel shaft manufacturer,
Far East Machinery Co., Ltd. (Femco) located in Taiwan, Nippon Shaft Co., Ltd.,
a low volume Japanese brand, and Coyote Sports Inc., the owner of the Apollo
Sports steel shaft brand. However, late in 1999, Coyote Sports Inc. filed for
bankruptcy, and a creditor placed its steel shaft subsidiary, Apollo, into
Receivership under the laws in the United Kingdom. In early 2000, the Apollo
shaft manufacturing operations were shut down and the majority of its steel
shaft manufacturing equipment was purchased by True Temper.

      Unlike steel, the graphite shaft manufacturing industry is highly
fragmented with a large number of suppliers selling to only a few customers. We
believe there are anywhere from fifty to eighty graphite shaft manufacturers
worldwide. A few of these companies reside in North America and many are located
in Far East Asia. We do not believe that there are any graphite suppliers
currently with a market share in graphite that is in any way comparable to the
market share True Temper has in steel. We believe True Temper is one of the top
five highest volume producers of branded premium grade graphite shafts in the
world. Our major competitors in the premium grade branded graphite shaft market
include Aldila, Inc., United Sports Technologies, Inc. (UST), Graphite Design
International, and Fujikura Composite.

      We believe we are the only major shaft supplier that produces both steel
and graphite shafts in significant volumes for the OEM and distributor markets.


                                       7
<PAGE>
DESIGN & DEVELOPMENT

      We design and develop products for both proprietary/co-branded market
applications and for the True Temper/Grafalloy branded product names.

      The larger golf club manufacturers often request exclusively designed
proprietary or co-branded steel and graphite golf club shafts for their club
systems, which require golf club shafts, heads and grips engineered to work
together. We are committed to serving this market by maintaining our role as a
leader in innovative shaft designs for both steel and graphite materials
technology. Shaft designs and modifications are frequently the direct result of
our combined efforts with that of our customers to develop an exclusive shaft
specifically designed for that customer's clubs. We use a computer aided design
analysis program to evaluate a new shaft's design with respect to weight,
torque, flex point, tip and butt flexibility, swing weight and other critical
shaft design criteria.

      In addition to our proprietary/co-branded product applications, we are
very active in designing and developing new products under the True Temper and
Grafalloy brand names that meet the performance needs of golfers of all ages and
skill levels. We develop these branded products based upon our internal research
and evaluation of consumer needs and preferences.

      The materials typically used in production of our designs include several
different high strength steel alloys and advanced composite systems of graphite
and glass fibers with thermosetting epoxy resin systems.

      Using computer aided design, we generate a design which is then analyzed
by computer for stiffness and strength properties. Our research and development
efforts focus on technology development and new materials as an essential
precursor to successful new product development. Our design research focuses on
improvements in shaft aesthetics since cosmetic appearance has become
increasingly important to customers. To supplement our design and development we
employ extensive testing that includes laboratory durability and stress tests,
robotic testing and individual player evaluation.

      In addition, our pursuit of strategic vendor alliances complement our
abilities and needs, an approach which allows us to exploit technical
capabilities beyond our own while minimizing the risk and investment required to
enter the market with new products.

      Research and development costs for the years ended December 31, 2002, 2001
and 2000 were $1.2 million, $1.6 million and $1.6 million, respectively.

MANUFACTURING

      We believe that our manufacturing expertise and production capabilities
enable us to respond quickly to customers' orders and provide sufficient
quantities on a timely basis. We believe that our investment in capital
equipment and personnel training has enabled us to establish a reputation as one
of the leading manufacturers of steel and graphite shafts.

      Steel Shaft Manufacturing Process. The process of manufacturing a steel
shaft has many distinct phases. Generally, a large steel coil is unrolled and
then formed lengthwise, welded and cut into cylinders. The tubing is then
treated and fitted over a metal rod or "mandrel" that is used to determine the
precise inside diameter of the cylinder as it is drawn. The tubing is stretched,
cut into sections, and then weighed and balanced. Later, through a process that
we pioneered, the sections are tapered to give each shaft model a particular
flex and frequency. The shafts are cleaned, straightened, heat-treated and
tempered. The shafts are straightened by machines designed and built by True
Temper. The shafts are plated with layers of nickel to prevent corrosion and
then covered with a fine layer of chrome. Finally, shafts are dried, polished
and inspected for cosmetic flaws before our name and logo is affixed to the
shaft. It takes an average of 15 days to manufacture a True Temper steel shaft.

      Graphite Shaft Manufacturing Process. There are two processes which are
used to manufacture a graphite shaft: flag-wrapping and filament-winding. Most
of our graphite shafts are produced using the flag- wrapping

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process. The flag-wrapping process uses graphite fiber materials or "prepreg" in
sheet form, which requires refrigeration until use. Each new roll of prepreg is
allowed to reach room temperature before the material is cut into pennant-shaped
patterns called flags for each particular shaft design. Layer by layer, various
combinations of prepreg flags are wrapped around mandrels specified for each
particular shaft design. The layered materials are then encased in thin layers
of clear tape for compaction and heated at high temperatures to harden the
material. At the end of the process, the shafts are painted and stylized using a
variety of colors, patterns and designs. The filament-winding process, on the
other hand, begins with a spool, rather than a sheet, of graphite fiber, which
is fed onto the reel of a machine which then wraps the fiber around a mandrel by
turning the mandrel and simultaneously moving the graphite fiber from one end of
the mandrel to the other. Once the mandrel is wrapped, the process uses the same
encasing and heating techniques as the flag wrapping process.

      Raw Materials. We use several raw materials to produce steel golf shafts,
including several steel alloys sourced from two or three primary vendors, nickel
and plating chemicals, Sensicore inserts and various sundry supplies, boxes and
labels. Graphite shafts are produced with a variety of graphite fiber materials
in both sheet and spool form that we source from several different vendors. In
addition, graphite shafts are finished with a wide variety of paints and inks.
We believe that there are adequate alternative suppliers of these materials,
and, therefore, we do not believe that we are dependent on any one supplier.

      In addition to the raw materials discussed above, we also use a
substantial amount of natural gas and electricity in our manufacturing
processes. Suppliers for these types of energy sources are limited, and prices
are subject to general market and industry conditions.

      See "Business Risks and "Qualitative and Quantitative Disclosures About
Market Risk -- Commodity Risk" for risks relating to price increases in raw
materials and energy sources, and to delays in receiving supplies.

MARKETING & PROMOTION

      Our marketing strategy is designed around new product development and
targeted advertising and promotion programs. Through our ability to anticipate
and address consumer trends in the golf equipment market, as well as the
performance demands of professional golfers, we are able to successfully market
our products to golf club manufacturers while strengthening brand awareness.
During the last several years, our marketing efforts through the utilization of
a wide variety of promotional channels, including mass media advertising, print
and television, sponsorship of golf-related events, equipment endorsements from
OEMs and product demonstrations, have increased our overall exposure in the golf
industry.

      For example, we have maintained a strong presence among PGA Tour players,
particularly since 1981, when we began sending our PGA Tour van to all major PGA
events. The Tour van functions as a golf club repair shop on wheels, visiting
over 35 professional tour events during 2002. Typically, the van is located near
the practice tee and lends technical support to the tour professionals while
simultaneously promoting the True Temper and Grafalloy brands with
representatives of original equipment manufacturers. In addition, we provide
technical support to the players on the Champions Tour, the LPGA Tour, and the
Nationwide Tour (formerly the Buy.Com Tour), as well as the European and
Japanese PGA tours.

      Although we do not pay any professional golfer to play our shafts in
competition, we believe that the use of our products by professional golfers
enhances our reputation for quality and performance while also promoting the use
of our shafts. Recognizing the influence professional golfer's product choices
have on consumer preferences, we also engage in special promotional efforts to
encourage professional golfers to use clubs with our shafts. Similarly, we
contribute shafts to college athletic programs and teaching professionals in
order to expose those who may influence future club purchases to the advantages
of True Temper and Grafalloy shafts.

      Much of our advertising and promotional spending is dedicated to print and
television advertising, including cooperative advertising with our customers.
Additional advertising and promotional spending is allocated to promotional
events such as trade shows, consumer golf shows, PGA Tour activities and retail
golf shop advertising displays. In a 1998 New York Times research poll, True
Temper was ranked as the top golf shaft company in terms of brand familiarity.
Of those surveyed, 93% recognized the True Temper brand.


                                       9
<PAGE>
      Advertising and promotional costs for the years ended December 31, 2002,
2001 and 2000 were $3.6 million, $5.0 million and $4.6 million, respectively.

DISTRIBUTION & SALES

      We primarily sell our shafts to golf club manufacturers, retailers and
distributors. Typically, distributors resell our products to custom club
assemblers, pro shops and individuals. Sales to golf club
manufacturers/retailers accounted for over 80% of revenues in 2002.

      We believe that we have one of the most experienced and respected sales
staffs in the industry. Our sales and marketing department includes domestic
sales managers, international sales managers, a customer service group and a
team of design professionals who provide field support to our sales
representatives. We believe that our international market presence, which
comprised approximately 28% of our total 2002 revenues, provides an opportunity
for future growth. We market our products in Japan, Europe, Australia and
Southeast Asia and maintain a distribution operation in each region.

EMPLOYEES

      As of December 31, 2002, we had 675 full-time employees, including 24 in
sales and marketing, 26 in research, development and manufacturing engineering,
546 in production and the balance in administrative and support roles. In
addition, as of December 31, 2002, we had 50 individuals working in production
at our El Cajon facility through a temporary employment agency. The El Cajon
plant has historically used a certain portion of temporary workers in order to
more effectively match the workforce level with the required production level at
various times of the year.

      The hourly employees at our steel plant in Amory, Mississippi are
represented by the United Steel Workers of America. In May 1999, the United
Steel Workers union at our Amory, Mississippi facility voted to accept a new
collective bargaining agreement that covers a four year period beginning in May
1999 and expiring on June 30, 2003. We believe that our relationships with the
union and our employees are good. See "Risk Factors -- Labor Relations" for a
description of how our company would be adversely affected in the event of a
labor disruption or work stoppage affecting our employees.

INTELLECTUAL PROPERTY

      As of December 31, 2002 we held 26 patents worldwide relating to various
products and proprietary technologies, including the Sensicore technology, and
had 8 patent applications pending. We also hold numerous trademarks related to,
among other things, our True Temper and Grafalloy branded products. We do not
believe that our competitive position is dependent solely on patent or trademark
protection, or that our operations are dependent on any individual patent or
trademark.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

      We are subject to federal, state and local environmental and workplace
health and safety laws and regulations, including requirements governing
discharges to the air and water, the handling and disposal of solid and
hazardous wastes, and the remediation of contamination associated with releases
of hazardous substances. In December 2002 a review was conducted by independent
environmental consultants, we believe that we are currently in material
compliance with environmental and workplace health and safety laws and
regulations. Nevertheless, our manufacturing operations involve the use of
hazardous substances and, as is the case with manufacturers in general, if a
release of hazardous substances occurs or has occurred on or from our
facilities, we may be held liable and may be required to pay the cost of
remedying the condition. The amount of any such liability could be material.

      We devote significant resources to maintaining compliance with, and
believe we are in material compliance with, our environmental obligations.
Despite such efforts, the possibility exists that instances of noncompliance
could occur or be identified in the future, the penalties or corrective action
costs associated with which could be material.


                                       10
<PAGE>
      Like any manufacturer, we are subject to the possibility that we may
receive notices of potential liability, pursuant to CERCLA or analogous state
laws, for cleanup costs associated with onsite or offsite waste recycling or
disposal facilities at which waste associated with our operations have allegedly
come to be located. Liability under CERCLA is strict, retroactive, and joint and
several. No such notices are currently pending.

      We have made, and will continue to make, capital expenditures to comply
with current and future environmental obligations. Because environmental
requirements are becoming increasingly stringent, our expenditures for
environmental compliance may increase in the future.

BUSINESS RISKS

SUBSTANTIAL LEVERAGE -- Our substantial indebtedness could adversely affect the
financial health of our company. For example, it could:

      -     make it more difficult for us to satisfy our obligations with
            respect to our Senior Subordinated Notes;

      -     increase our vulnerability to increases in interest rates because
            our secured credit facility, under which our indebtedness was $25.0
            million as of December 31, 2002, is subject to a variable interest
            rate;

      -     limit our ability to fund future working capital, capital
            expenditures, research and development costs, acquisitions and other
            general corporate requirements;

      -     require a substantial amount of our annual cash flow from operations
            for debt service, thereby reducing the availability of our cash flow
            to fund working capital, capital expenditures, research and
            development efforts, acquisitions and other general corporate
            purposes;

      -     limit our flexibility to plan for, or react to, changes in our
            business and the industry in which we operate;

      -     place us at a competitive disadvantage compared to our competitors
            that have less debt; and

      -     limit our ability to borrow additional funds.

ABILITY TO SERVICE DEBT -- Due largely to factors beyond our control, in the
future we may not be able to generate the cash we need to service our
indebtedness. Our ability to make payments on and to refinance our indebtedness,
and to fund planned capital expenditures and research and development efforts
will depend on our ability to generate cash in the future. This, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. Based on our current
level of operations, we believe our cash flow from operations, available cash
and available borrowings under our senior bank facilities will be adequate to
meet our future liquidity needs.

      We cannot assure you, however, that our business will generate sufficient
cash flow from operations, or that future borrowings will be available to us
under our senior bank facilities in an amount sufficient to enable us to pay our
indebtedness, or to fund our other liquidity needs. We may need to refinance all
or a portion of our indebtedness on or before maturity. We might not be able to
refinance any of our indebtedness on commercially reasonable terms or at all.

DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING -- Sales of golf clubs are
dependent on discretionary consumer spending which may be affected by general
economic conditions resulting in a decrease in consumer spending on golf
equipment. In addition, our future results of operations could be affected
adversely by a number of other factors that influence discretionary consumer
spending including, consumer concerns over international and military conflicts
around the world, unseasonal weather patterns, demand for our existing and
future products, new product introductions by our competitors, an overall
decline in participation in golf activities, shifting consumer preferences
between graphite and steel golf club shafts or other materials that we currently
do not produce, and competitive pressures that otherwise result in lower than
expected average selling prices. Any one or more of these factors could result
in our failure to achieve our expectations as to future sales or earnings.
Because most operating expenses are relatively fixed in the short-


                                       11
<PAGE>
term, we may be unable to adjust spending to compensate for any unexpected sales
shortfall, which could adversely affect our results of operations.

NEW PRODUCT INTRODUCTION -- There can be no assurance that we will continue to
develop competitive products, develop or use technology on a timely or
competitive basis or otherwise respond to emerging market trends. Because the
introduction of new golf club shafts using steel, graphite or other composite
and combined materials is critical to our future success, our continued growth
will depend, in large part, on our ability to successfully develop and introduce
new products in the marketplace. Should golf consumers prefer to use golf clubs
made from materials other than steel or graphite, there could be a material
adverse effect on the results of our operations. In addition, the design of new
golf clubs is also greatly influenced by the rules and interpretations of the
U.S. Golf Association ("USGA"). Although the golf equipment standards
established by the USGA generally apply mainly to competitive events sanctioned
by that organization, we believe that it is critical for our future success that
our new shafts comply with USGA standards. No assurance can be given that any
new products will receive USGA approval or that existing USGA standards will not
be altered in ways that adversely affect the sales of our current or future
products.

LABOR RELATIONS -- If any labor disruption or work stoppages affect our
employees, the results of our operation could be adversely affected. At December
31, 2002, we employed approximately 675 full-time individuals. Of these,
approximately 424 hourly employees at our Amory, Mississippi facility are
represented by the United Steel Workers of America ("USW"). The Company's
current collective bargaining agreement with the USW will expire on June 30,
2003. The Company plans to negotiate a new agreement with the USW. However these
efforts may be delayed or unsuccessful and result in labor disruptions such as
work slow downs or stoppages. There can be no assurance that we will not be
subject to work stoppages or other labor disruption and, if such events were to
occur, that there would not be a material adverse effect on our results of
operations.

COMPETITION WITH OTHER GOLF CLUB SHAFT DESIGNERS AND MANUFACTURERS -- We operate
in a highly competitive environment and compete against a number of established
golf club shaft designers, manufacturers and distributors. We also compete
indirectly with manufacturers that produce shafts internally and face potential
competition from golf club manufacturers that currently purchase golf club shaft
components from third parties but which may have, develop or acquire the ability
to manufacture shafts internally. Unlike the steel shaft industry, the graphite
shaft industry is highly fragmented. As a result, we compete with many players
involved in the design and manufacture of graphite shafts. See "Business --
Competition" for a description of the bases on which we compete and the number
of competitors in our industry.

INDUSTRY CONSOLIDATION -- If the industry and customer base continues to
consolidate, then it is possible a consolidation of several of our existing
customers into one company could represent a significant portion of our annual
revenues. If this was to occur, and this customer selected an alternative shaft
supplier, it could have a material adverse effect on our results of operations.
If this consolidated company were to remain a True Temper customer it could
represent an increased credit risk due to its size in relation to our total
accounts receivable.

FLUCTUATIONS IN COST AND AVAILABILITY OF RAW MATERIAL -- Since our company is
dependent upon certain suppliers for steel, nickel, graphite prepreg and other
materials, we are subject to price increases and delays in receiving materials.
Although we have several sources for most of the key raw materials we purchase,
and we attempt to establish purchase price commitments for one-year periods, we
are subject to price increases for raw materials used in the manufacture of golf
club shafts and to delays in receiving these materials. As key components to the
manufacture of golf club shafts, a substantial price increase to one or more of
these raw materials or any extended delay in their delivery could result in a
material adverse effect on our results of operations.

FLUCTUATIONS IN COST AND AVAILABILITY OF ENERGY SOURCES -- Our graphite shaft
manufacturing operation is located in Southern California and is dependent upon
a consistent and affordable supply of electricity. If there is a prolonged
shortage of electrical supply to our California facility and/or a significant
increase in the cost of electrical power, it could result in the temporary or
permanent closure of our graphite shaft operations, which could have a material
adverse affect on the results of our operations.


                                       12
<PAGE>
    In addition, our steel shaft manufacturing plant located in Mississippi
relies upon a consistent and affordable supply of both natural gas and
electrical power in order to conduct normal operations. If the Mississippi
facility should experience a shortage in supply of either power source, or a
significant increase in cost, it could have a material adverse affect on our
results of operations.

FLUCTUATION IN AVAILABILITY OF ENERGY TO CUSTOMERS -- There are a significant
number of golf equipment assemblers who are headquartered and conduct
manufacturing operations in Southern California. In aggregate these companies
account for a significant share of the golf equipment market and also account
for a considerable portion of True Temper's sales revenue. With the disruption
of electrical power to California and other Western states in recent years there
is a risk that our customer's manufacturing operations may be adversely affected
by power shortages. If this were to occur they may reduce their purchases of
shafts from True Temper causing a significant adverse impact to our revenues and
results of operations.

FLUCTUATIONS IN COST OF HEALTH INSURANCE -- Health insurance coverage is a
valuable benefit in retaining and attracting employees and has been subject to
significant price increases by health industry providers. Since we do not plan
to eliminate providing health benefits to our employees, the rising costs could
have a material adverse affect on the results of our operations.

PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY -- There can be no assurance
that the patents we hold relating to certain of our products and technologies
offer complete protection against infringement of our proprietary rights by
others. As of December 31, 2002 we held 26 patents worldwide relating to various
products and proprietary technologies, including the Sensicore technology, and
had 8 patent applications pending. There can be no assurance, however, as to the
degree of protection afforded by these patents or as to the likelihood that
patents will be issued from the pending patent applications. Moreover, these
patents may have limited commercial value or may not protect our products.
Additionally, the U.S. patents that we hold do not preclude competitors from
developing or marketing products similar to our products in international
markets.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS -- We are subject to federal, state,
and local environmental and workplace health and safety laws, regulations and
requirements which, if contravened, could result in significant costs to our
company. Our manufacturing operations involve the use of hazardous substances
and should there be a release of such substances from our facilities, we may be
held liable. Although we believe we are in material compliance with all such
laws, regulations and requirements, instances of noncompliance could occur or be
identified in the future. The penalties or corrective action costs associated
with noncompliance could be material. In addition, we may receive notices of
potential liability pursuant to federal or state laws for cleanup costs
associated with waste recycling or disposal facilities at which wastes
associated with our operations have allegedly come to be located.

RESTRICTIONS IMPOSED BY OUR SENIOR CREDIT FACILITIES AND THE INDENTURE FOR OUR
10 7/8% SENIOR SUBORDINATED NOTES DUE 2008 (THE "NOTES") -- As more fully
described in Note 9 to the financial statements located elsewhere in this annual
report, we are subject to restrictions contained in our senior bank facilities
and in the indenture. Failure to comply with any of the restrictions could
result in acceleration of our debt. The senior credit facilities and the
indenture restrict our ability to:

      -     incur additional indebtedness;

      -     pay dividends and make distributions; and

      -     make certain investments, loans, or advances (including
            acquisitions).

      In the event that we fail to comply with any of these restrictions, or
receive a waiver from compliance, we will be required to pay to our lenders our
outstanding debt or we may be subject to foreclosure on the collateral securing
our obligations under the senior credit facilities.

DEFINED BENEFIT PENSION PLAN - We maintain an employer sponsored defined benefit
pension plan for the hourly employees at our Amory Mississippi steel golf shaft
plant (the "Plan"). We are subject to Financial


                                       13
<PAGE>
Accounting Standards Board guidelines for recognition of our minimum pension
liability, and subject to ERISA regulations with regard to our cash funding of
the plan. As a result, certain US economic conditions involving weak equity
market performance and low general interest rates can both reduce the total
value of the assets of the Plan as well as increase our minimum pension
liability under the Plan. If these economic conditions are severe enough they
could have a significant adverse effect on the funding status of our Plan and
our overall results of operations.

RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS

      The Private Securities Litigation Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by our Company. This document
contains forward-looking statements, including but not limited to, Item 1 of
Part I, Business, and Item 7 of Part II, Management's Discussion and Analysis of
Financial Condition and Results of Operations. All statements which address
operating performance, events or developments that we expect, plan, believe,
hope, wish, forecast, predict, intend, or anticipate will occur in the future
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 general state of the
economy, the Company's ability to execute its plans, competitive factors, and
other risks that could cause the actual results to differ materially from the
estimates or predictions contained in our 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 Business Risk section of Item 1 of Part 1 of this Annual Report on Form
10-K.

      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.

ITEM 2.  PROPERTIES

      Our administrative offices and manufacturing facilities currently occupy
approximately 440,000 square feet. Our shafts are manufactured at two separate
facilities, a steel shaft facility located in Amory, Mississippi and a composite
graphite shaft facility located in El Cajon, California. In addition, we have a
multi-material shaft assembly facility located in Olive Branch, Mississippi. Our
executive offices are located in a leased facility in Memphis, Tennessee. The
following table sets forth certain information regarding significant facilities
operated by True Temper as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                                              LEASE
                                                                     APPROX.    OWNED/      EXPIRATION
         FACILITY                                LOCATION            SQ. FT.    LEASED        DATE
---------------------------------      -------------------------    --------   -------    ---------------
<S>                                    <C>                          <C>        <C>        <C>
Corporate Offices................      Memphis, Tennessee             13,500   Leased     December 2005
Steel Shaft/Tubing Mfg...........      Amory, Mississippi            335,000   Leased     January 2063(1)
Composite Shaft Mfg..............      El Cajon, California           45,907   Leased     March 2004
Building.........................      Olive Branch, Mississippi      45,000   Owned      --
</TABLE>

----------
(1)   There are several leases covering the original land as well as the
      building at our Amory, Mississippi facility. The leases are structured
      with interim renewal periods of between 5 to 10 years, extending through
      January 2063. At the end of each of these renewal periods, the Company has
      the option to allow a lease to automatically renew or to not renew the
      lease.

      In addition, we promote our products in international markets through
sales offices in Australia, Japan and the United Kingdom.

      To the extent that any such properties are leased, we expect to be able to
renew such leases or to lease comparable facilities on terms commercially
acceptable to us.


                                       14
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

      Various claims and legal proceedings, generally incidental to the normal
course of business, are pending or threatened against us. While we 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
our business, financial condition or results of operations.

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

      There were no matters submitted to a vote of security holders during 2002.


                                       15
<PAGE>
                                     PART II

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

      There is no public market for the Company's equity securities. All of the
Company's capital stock is owned by True Temper Corporation.

      The Company declared and paid dividends quarterly on its shares of common
stock during fiscal 2002 and 2001 totaling $27.1 million and $3.6 million
respectfully. The Company declared and paid dividends on its shares of common
stock during fiscal 2000 in the amount of $1.2 million.

      Our various debt instruments impose restrictions on the payment of
dividends by means of covenants. The Company was in compliance with all debt
covenants as of December 31, 2002.

ITEM 6.  SELECTED FINANCIAL DATA

      Set forth below are our selected historical financial data for the five
fiscal years ended December 31, 2002. The historical financial data were derived
from our audited financial statements and the notes thereto (except EBITDA,
EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin and ratio of earnings to
fixed charges data), for which the December 31, 2002, 2001, and 2000 financial
statements are included herein.

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                  --------------------------------------------------------------
                                                      2002         2001         2000         1999        1998(1)
                                                  ----------   ----------   ----------   ----------   ----------
                                                                      (DOLLARS IN THOUSANDS)
<S>                                               <C>          <C>          <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
  Net sales...................................    $  107,401   $  111,083   $  110,636   $   92,215   $   91,450
  Gross profit................................        42,240       43,348       45,254       36,131       32,198
  Selling, general and administrative
     expenses.................................        13,578       14,963       16,899       15,156       13,464
  Allocated corporate expenses (2)............            --           --           --           --          763
  Amortization of goodwill (3)................            --        2,695        2,701        2,701        2,505
  Goodwill write-off (3)......................            --           --           --           --       40,000
  Recapitalization transaction
     expenses ................................            --           --           --           --        5,698
  Impairment charge on long lived
     assets (4)...............................            --           --        1,053           --          750
  Business development and start-up costs (5).           312           --           --           --           --
  Restructuring charges (6)...................            --           --            7          622          400
  Loss on early extinguishment of long-term
     debt.....................................           777           --           --           --           --
  Operating income (loss).....................        27,573       25,690       24,594       17,652      (31,382)
  Interest expense, net of interest
     income...................................        12,236       12,660       13,693       14,341        3,462
  Income tax (benefit) expense (7)............         5,992      (11,539)       5,218        2,318        2,887
  Net income (loss)...........................    $    9,252   $   24,571   $    5,627   $    1,002   $  (37,811)
BALANCE SHEET DATA (AT END OF PERIOD):
  Working capital (8).........................    $   14,828   $   14,748   $    9,881   $   11,200   $    8,942
  Total assets................................       183,380      189,330      175,888      186,963      189,626
  Total debt (9)..............................       124,730      116,522      118,448      136,522      137,545
  Total stockholder's equity..................    $   43,068   $   61,303   $   40,320   $   35,881   $   34,879
OTHER FINANCIAL DATA:
  EBITDA (10).................................    $   30,825   $   31,898   $   30,830   $   23,857   $   14,449
  EBITDA margin (10)..........................          28.7%        28.7%        27.9%        25.9%        15.8%
  Adjusted EBITDA (10)........................    $   32,414   $   32,398   $   32,390   $   25,087   $   21,622
  Adjusted EBITDA margin (10).................          30.2%        29.2%        29.3%       27.2%        23.6%
  Cash from operating activities..............    $   19,903   $   12,162   $   20,607   $    7,619   $    4,661
</TABLE>


                                       16
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>          <C>          <C>          <C>          <C>
  Cash used in investing activities...........        (1,164)      (2,291)      (3,543)      (1,572)      (8,531)
  Cash from (used in) financing
     activities...............................       (19,846)      (5,862)     (19,323)      (1,885)       4,836
  Depreciation and amortization...............         3,252        6,208        6,236        6,205        5,831
  Capital expenditures........................    $    1,164   $    2,201   $    3,621   $    1,620   $    2,366
  Ratio of earnings to fixed
     charges (11).............................          1.7x         2.0x         1.8x         1.2x           --
</TABLE>

----------
(1)   On June 29, 1998, Black & Decker Corporation, along with its True Temper
      Sports Division, and True Temper Sports LLC (an affiliate of Cornerstone
      Equity Investors LLC), entered into an agreement pursuant to which True
      Temper Sports LLC acquired, effective on September 30, 1998, an 89% equity
      interest in True Temper Corporation, our parent company (collectively
      referred to as the "Recapitalization"). The Recapitalization was accounted
      for as a leveraged recapitalization, and accordingly our assets and
      liabilities remained at their historical bases for financial reporting
      purposes; however, for income tax purposes the transaction was treated as
      a taxable business combination.

(2)   Prior to the recapitalization, True Temper received certain services
      provided by Black & Decker that included cash management, tax reporting,
      risk management and internal audits. Charges for these corporate services
      were based upon a general allocation methodology determined by Black &
      Decker, and used to allocate all corporate overhead expenses to Black &
      Decker's operating divisions and subsidiaries.

(3)   In connection with Black & Decker's change in accounting policy with
      respect to the measurement of goodwill impairment, $40,000 of goodwill
      related to True Temper was written off, effective January 1, 1998, as a
      change in accounting estimate inseparable from a change in principle. As
      of January 1, 2002 the Company adopted the provisions of SFAS No. 142,
      Goodwill and Other Intangible Assets. This statement requires Goodwill and
      intangible assets acquired in a purchase business combination and
      determined to have an indefinite useful life not be amortized, but instead
      tested for impairment at least annually in accordance with the provisions
      of SFAS No. 142. In accordance with SFAS No. 142 the Company ceased
      amortizing goodwill as of January 1, 2002 and tested for impairment
      finding there was no impairment. Prior to the adoption of SFAS No. 142,
      goodwill was amortized on a straight-line basis over the expected periods
      to be benefited, generally between 20 and 40 years. See footnote 2(g) to
      the financial statements included elsewhere in this annual report for
      further discussion.

(4)   Impairment charge on long-lived assets reflects the 2000 write-down of the
      roller hearth oven as more fully described in footnote 5 to the financial
      statements included elsewhere in this annual report, and the 1998
      write-down of certain fixed assets and inventory associated with the
      transfer of composite shaft manufacturing from our Olive Branch,
      Mississippi facility to our El Cajon, California facility.

(5)   Reflects travel, consulting, legal services, personnel recruiting and
      other costs related to the China business development project. For a more
      complete discussion of Business development and start-up costs see the
      Outlook for 2003 section in Item 7 Management's Discussion and Analysis of
      Financial Condition and Results of Operations included elsewhere in this
      annual report.

(6)   Reflects severance and other costs related to the consolidation of
      manufacturing and administrative facilities. Charges in 2000, 1999 and
      1998 are directly related to the consolidation of True Temper's Olive
      Branch, Mississippi composite manufacturing operations into the El Cajon,
      California facility. See footnote 5 to the financial statements included
      elsewhere in this annual report for further discussion.

(7)   The 2001 income tax benefit reflects the elimination of the $17,600
      valuation allowance. See footnote 10 to the financial statements included
      elsewhere in this annual report for further discussion.

(8)   Working capital excludes cash and cash equivalents.


                                       17
<PAGE>
(9)   Total debt includes both the current and long-term portions of debt and
      capital lease obligations.

(10)  EBITDA represents operating income or loss plus depreciation, amortization
      of goodwill and goodwill write-off. Adjusted EBITDA represents EBITDA plus
      recapitalization transaction expenses, restructuring charges, management
      services fee, the 1999 union ratification bonus, impairment charge on
      long-lived assets and inventory, business development and start-up costs
      and loss on early extinguishment of debt; less the non-cash pension
      curtailment gain. EBITDA is presented because it is a widely accepted
      financial indicator used by certain investors and analysts to analyze and
      compare companies on the basis of operating performance. EBITDA and
      Adjusted EBITDA are not intended to represent cash flows for the period,
      nor has it been presented as an alternative to operating income as an
      indicator of operating performance and should not be considered in
      isolation or as a substitute for measures of performance prepared in
      accordance with GAAP.

<TABLE>
<CAPTION>
                                                        2002        2001        2000        1999         1998
                                                      ---------  ----------  ----------  ----------   ----------
<S>                                                   <C>        <C>         <C>         <C>          <C>
        Operating income...........................   $  27,573  $   25,690  $   24,594  $   17,652   $  (31,382)
        Plus:
          Depreciation..............................      3,252       3,513       3,535       3,504        3,326
          Amortization of goodwill..................         --       2,695       2,701       2,701        2,505
          Goodwill write-off........................         --          --          --          --       40,000
                                                      ---------  ----------  ----------  ----------   ----------
        EBITDA......................................     30,825      31,898      30,830      23,857       14,449
        Plus:
          Business development and start-up
              costs ................................        312          --          --          --           --
          Loss on early extinguishment of
              long-term debt........................        777          --          --          --           --
          Recapitalization transaction expenses.....         --          --          --          --        5,698
          Impairment of long-lived assets and
              inventory.............................         --          --       1,053          --          950
          Restructuring charges.....................         --          --           7         622          400
          Ratification bonus........................         --          --          --         400           --
          Management Fee............................        500         500         500         500          125
                                                      ---------  ----------  ----------  ----------   ----------
        Less:
          Non-cash curtailment gain.................         --          --          --        (292)          --
                                                      ---------  ----------  ----------  ----------   ----------
        Adjusted EBITDA............................   $  32,414  $   32,398  $   32,390  $   25,087   $   21,622
                                                      =========  ==========  ==========  ==========   ==========
</TABLE>

(11)  Earnings were not sufficient to cover fixed charges by $34,924 in 1998,
      due to a $40,000 goodwill write-off taken as of January 1, 1998.


                                       18
<PAGE>
ITEM 7. 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 AUDITED FINANCIAL STATEMENTS, INCLUDING THE RELATED NOTES,
APPEARING ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

COMPANY OVERVIEW

      True Temper Sports, Inc. or "True Temper", a wholly owned subsidiary of
True Temper Corporation, is a leading designer, manufacturer and marketer of
both steel and composite graphite golf club shafts for original equipment
manufacturers 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 2002, golf shaft sales represented 96% of
total revenues, and performance-sports sales represented 4%.

YEAR IN REVIEW -- 2002

      Continuing the trend that began during the second half of 2000, the past
year proved to be another very challenging one for the overall global economy
and the golf equipment industry. As is now widely publicized, the US economy
began slowing down during the second half of 2000, a scenario which has now
continued throughout 2001 and 2002. The overall U.S. economy deteriorated until
it was finally declared a recession in the third quarter of 2001. These trends
were also reflected in the general conditions of the golf equipment industry,
which began showing signs of softening during the second half of 2000. Many golf
industry analysts reported that rounds played and unit sales for equipment such
as clubs and balls declined from 3% to 5% between 2000 and 2001.

      Unfortunately this trend continued in 2002 as rounds played, unit volume
for golf ball sales, and equipment sales for both woods and irons all declined
for a second straight year. We believe this decline in golf participation and
equipment purchases is fueled by concerns from a weak global economic
environment and higher domestic unemployment rates.

      As a company, True Temper felt the effect of the economic environment
noted above, however, our sales declined only $3.7 million due to new product
introductions and a strong improvement in year over year sales of premium steel
shaft units, particularly putters and wedges.

      Despite the difficult circumstances we believe True Temper performed well
on a full year basis during 2002 by recording sales of $107.4 million compared
to $111.1 million in 2001, a decrease of 3.3%, while achieving an Adjusted
EBITDA level flat to 2001. Although the top line revenue performance was down
slightly year over year, the sales trends during the second half of 2002
reflected an improving landscape.

      In the first half of 2002 True Temper's net sales decreased 14.1% to $59.3
million from $68.9 million in the first half of 2001. This decrease was driven
primarily by reduced sales of our multi-material golf shaft product line, which
was introduced in the first quarter of 2001 and had considerable initial
pipeline fill and an overall heightened interest level during the first six
months following its introduction.

      During the second half of 2002 our net sales increased by 14.3% to $48.1
million from $42.1 million recorded during the second half of 2001. This
increase was driven primarily by the introduction of innovative new lightweight
steel products such as our TX90 shaft, and the increased demand of steel shafts
for putters and wedges.

      For the year True Temper was able to increase operating income by $0.3
million (as adjusted for goodwill amortization and certain other expenses
described in more detail elsewhere in this MD&A). This increase was generated by
several offsetting factors in our operating performance. Gross profit margins
improved slightly between years with a favorable shift in the mix of sales to
higher margin products, slightly favorable foreign currency exchange rates, and
reductions in the cost of natural gas. In addition, we reduced our overall SG&A


                                       19
<PAGE>
expenses by $1.4 million to $13.6 million from $15.0 million in the prior year.
Conversely, our operating performance was negatively impacted by increasing
medical and pension expenses during 2002.

      Also during 2002, as golf club assembly operations continued to move to
Southeast Asia, and in response to the increasingly challenging economic
environment, we took the initial steps toward establishing an operational
presence in China. This business development project is more fully described
elsewhere in this MD&A.

      Finally, in late 2002, we refinanced our existing bank credit facility and
borrowed $25.0 million. Under the new term loan agreement, $23.5 million was
disbursed to our parent company, True Temper Corporation ("TTC"), in the form of
a dividend. The proceeds were used by TTC to extinguish a portion of their high
interest rate debt, thereby allowing TTC to reduce its future annual cash
interest expense by over $1.5 million.

OUTLOOK FOR 2003

      Although our sales in the second half of 2002 increased compared to the
same period in 2001, our outlook and forecast for 2003 is still very guarded. We
believe that we will continue to perform very well against our competition and
that our new product initiatives and plans position us well for the future, the
current economic environment and global uneasiness from military conflict cast a
cautious tone over the outlook for 2003. The incoming order trends for True
Temper during the second half of 2002 were encouraging, yet the general mood and
sentiment from customers and retailers remains subdued. As a result, we continue
to receive orders with relatively short lead times that provide limited
visibility for forecasting future sales volume.

      We expect that our sales volume in 2003 will be driven by several key
factors and company initiatives:

      1)    We expect that sales of steel golf shafts will continue to perform
            well as we develop and market innovative new products such as our
            family of light weight TX 90 steel shafts, as well as develop new
            products & designs to support the current market for putters and
            wedges.

      2)    As golf club head designs have been getting bigger and heavier, we
            developed a new graphite shaft technology known as Grafalloy Blue.
            The shaft has been designed to provide improved performance
            characteristics that not only reduce dispersion but also increase
            distance off the tee. We introduced Grafalloy Blue in the fourth
            quarter of 2002 and will extensively market this product in 2003. In
            addition we plan to devote engineering resources to develop a new
            platform of composite graphite products under the True Temper and
            Grafalloy brands.

      3)    Finally, we plan to continue our efforts to develop and grow sales
            volumes for our Performance Sports segment (formally known as
            Performance Tubing), with particular emphasis on the bicycle and
            hockey markets. During the past three years we increased our sales
            of performance sports products made with composite graphite for the
            hockey, lacrosse and bicycle markets while sales volumes for lower
            margin steel tubing products decreased as we began to shift our
            customer base. In 2003 we intend to continue our focus on the
            Performance Sports segment by working closely with new and existing
            customers in the bicycle and hockey markets.

      In terms of our cost base, as with other manufacturing companies we will
be subject to general inflation factors in the overall economy during 2003. In
addition, we see potential cost increases to our pension, employee medical
benefits and natural gas expenses that could, for a variety of reasons, outpace
the general level of inflation.

      In 2002 we elected to expand our manufacturing capacity to better service
our growing customer demand in Japan and Southeast Asia as well as more
effectively compete in certain low cost markets and product categories. During
the year we spent approximately $.3 million in travel, consulting, legal,
personnel recruiting and other start up business development costs to initiate
opening a composites manufacturing operation in southern China. We expect to
complete the site preparation for this manufacturing facility during the second
quarter of 2003 and begin the initial production of golf shafts during the third
quarter of 2003.

      During 2003 the Company expects to incur additional business development
and start-up costs of approximately $1.5 million to establish this manufacturing
facility. Most of these business development and


                                       20
<PAGE>
start-up costs will represent certain expenses normally associated with start-up
operations, including management travel, professional consulting, legal
services, personnel hiring costs, equipment move and installation costs and
systems set-up. In addition, the Company expects to incur some initial operating
inefficiencies against cost of goods sold once we begin manufacturing products.
In 2003 the Company also expects to spend approximately $0.7 million in capital
expenditures for leasehold improvements for the facility and other incremental
capital investments as required.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED
                                                                DECEMBER 31,
                                                        ----------------------------
                                                          2002       2001      2000
                                                        --------   --------  -------
<S>                                                     <C>        <C>       <C>
     Net sales.......................................    100.0%     100.0%    100.0%
     Cost of sales...................................     60.7       61.0      59.1
       Gross profit..................................     39.3       39.0      40.9
     Selling, general and administrative expenses....     12.6       13.5      15.3
     Amortization of goodwill........................       --        2.4       2.4
     Impairment charge on long-lived assets..........       --         --       1.0
     Business development and start-up costs.........      0.3         --        --
     Restructuring costs.............................       --         --       0.0
     Loss on early extinguishment of debt............      0.7         --        --
       Operating income..............................     25.7       23.1      22.2
     Interest expenses, net of interest income.......     11.4       11.4      12.4
     Other expenses, net.............................      0.1        0.0       0.1
       Earnings before income taxes..................     14.2       11.7       9.8
     Income taxes (benefit) expense..................      5.6      (10.4)      4.7
       Net income....................................      8.6%      22.1%      5.1%

     EBITDA..........................................     28.7%      28.7%     27.9%
     Adjusted EBITDA.................................     30.2%      29.2%     29.3%
</TABLE>

YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31, 2001

      NET SALES for 2002 decreased $3.7 million, or 3.3%, to $107.4 million from
$111.1 million in 2001. Net sales of golf shafts decreased by $3.6 million to
$102.8 million in 2002 from $106.3 million in 2001. This decrease was driven
primarily by reduced sales of our multi-material golf shaft product line, which
was introduced during the first quarter of 2001. The sales generated during 2001
were magnified by the initial sales to OEM's and distributors to fill the supply
chain, as well as the industry-wide interest generated by the nature of this new
product offering. However, in 2002 demand for the multi-material shafts declined
as OEM's and distributors focused on lighter-weight 100% graphite shafts to
accommodate the heavier and bigger golf club heads coming to market. The decline
in sales of multi-material golf shafts and other shafts was partially offset by
the increase in our sales of premium grade steel shafts which have strengthened
with the introduction of our new lighter weight steel products and the year over
year industry wide increase in unit sales for both putters and wedges.

      Performance sports sales decreased slightly to $4.6 million in 2002 from
$4.8 million in 2001. This decrease reflects our decision to exit certain lower
margin steel tubing markets and was partially offset by increased sales of
bicycle and hockey products.

      Net sales to our international customers increased $6.8 million, or 29.1%,
to $30.3 million in 2002 from $23.4 million in 2001. This increase was driven
primarily by increased unit sales volume in premium grade steel shafts which
have strengthened with the introduction of new lighter weight steel products. In
addition export sales have grown with the continued shift of golf club assembly
operations to Southeast Asia. Lastly, we recognized approximately $0.4 million
in higher sales from favorable changes to foreign currency exchange rates over
the course of 2002.


                                       21
<PAGE>
      GROSS PROFIT for the year decreased $1.1 million, or 2.6%, to $42.2
million in 2002 from $43.4 million in 2001. Gross profit as a percentage of net
sales increased to 39.3% from 39.0% the prior year. This slight increase in
gross profit as a percentage of net sales was driven by several factors,
including a favorable shift in the mix of sales to higher margin products, the
positive impact from changes in foreign currency exchange rates between the US
dollar and other currencies and decreases in the cost of natural gas. These
favorable factors were somewhat offset by increased costs for employee medical
benefits, pension expense, inventory valuation adjustments and other inflation
factors.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES for the year decreased $1.4
million, or 9.3%, to $13.6 million in 2002 from $15.0 million in 2001. As a
percentage of net sales, SG&A decreased to 12.6% in 2002 from 13.5% the prior
year. This decrease was driven primarily by a $1.5 million decrease in
promotional advertising expenses. In 2001 we incurred significant advertising
and promotional expenses to promote our new BiMatrx products. This promotion
effort included a national television advertising program. As we entered 2002,
recognizing the challenging economic environment, we decided to reduce our
promotional spending for the year.

      BUSINESS DEVELOPMENT AND START-UP COSTS in 2002 were $0.3 million. This
amount is comprised of travel, consulting, legal, personnel recruiting and other
start up business costs relating to opening a composite manufacturing operation
in southern China.

      LOSS ON EARLY EXTINGUISHMENT OF LONG-TERM DEBT was $0.8 million. The
Company elected to adopt Statement 145, Rescission of FASB Statements Nos. 4 and
64, Amendment of FASB Statement No. 13, and Technical Corrections, as of January
1, 2002, and as such its loss on the early extinguishment of debt in 2002 was
recorded as a component of operating income. In the fourth quarter of 2002 we
refinanced our existing bank credit facility with a new term loan agreement. As
a result we wrote off the remaining unamortized deferred financing costs
associated with our 1998 bank credit facility. The Company did not extinguish
debt in 2001 or 2000.

      OPERATING INCOME in 2002 increased by $1.9 million, or 7.3%, to $27.6
million from $25.7 million in 2001. Operating income as a percentage of net
sales increased to 25.7% in 2002 from 23.1% in 2001. Effective January 1, 2002,
we adopted FASB No. 142, Goodwill and Other Intangible Assets, which requires
us, among other things, to discontinue the amortization of our goodwill. In 2001
goodwill amortization was $2.7 million. Excluding the effects of goodwill
amortization in 2001, the loss on early extinguishment of debt and business
development and start-up costs in 2002, operating income for 2002 would have
increased by $0.3 million, or 1.0% from 2001 and operating income as a
percentage of net sales would have increased to 26.7% from 25.6%. The remainder
of the change in operating income reflects the changes described above in sales,
gross profit and SG&A expenses.

      INTEREST EXPENSE for the year decreased by $0.4 million, to $12.2 million
in 2002 from $12.7 million in 2001. The decrease was generated from the decline
in the average outstanding balance of our term bank debt between periods and the
lower weighted average interest rates on our variable rate debt between years.

      INCOME TAX expense changed by $17.5 million, to a $6.0 million expense in
2002 from an $11.5 million benefit in 2001. In 2001 the Company determined it
was more likely than not the Company would realize the tax benefit of its
deferred tax assets and eliminated its $17.6 million valuation allowance
recorded against its deferred tax assets. The effective tax rate during these
periods differs from a federal statutory rate of 34% due primarily to the
incremental tax rate for state and foreign income tax purposes, and in 2001 the
pre-tax income added back for the non-deductible portion of goodwill
amortization and the elimination of the valuation allowance on deferred tax
assets.

      NET INCOME for the year 2002 decreased to $9.3 million from $24.6 million
in 2001, and reflects the impact of the changes described above.

      EBITDA and Adjusted EBITDA are measurements used by some to gauge our
operating performance and liquidity. EBITDA represents operating income plus
depreciation and amortization of goodwill. Adjusted EBITDA represents EBITDA
plus business development and start-up costs, management service fees, and the
early extinguishment of debt.


                                       22
<PAGE>
      EBITDA and Adjusted EBITDA should not be considered as an alternative to
net income or any other GAAP measurement of performance, as a sole indicator of
operating performance, or an alternative to cash flow from operating, investing
and financing activities as a measure of liquidity.

      EBITDA and Adjusted EBITDA for the years ended December 31, 2002 and 2001
are calculated as follows:

<TABLE>
<CAPTION>
                                                       2002         2001
                                                    ----------   ----------
<S>                                                 <C>          <C>
    Operating income............................    $   27,573   $   25,690
    Plus:
      Depreciation..............................         3,252        3,513
      Amortization of goodwill..................            --        2,695
                                                    ----------   ----------
    EBITDA......................................        30,825       31,898
    Plus:
      Business development and start-up costs ..           312           --
      Loss on early extinguishment of debt......           777           --
      Management Fee............................           500          500
                                                    ----------   ----------
    Adjusted EBITDA.............................    $   32,414   $   32,398
                                                    ==========   ==========
</TABLE>

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

      NET SALES for 2001 increased $0.4 million, or 0.4%, to $111.1 million from
$110.6 million in 2000. Net sales of golf shafts decreased slightly by
approximately $0.3 million to $106.3 million in 2001 from $106.6 million in
2000. The change in golf shaft sales was generated from a combination of
offsetting factors. The Company realized a strong increase in sales of shafts
for driver and fairway woods, especially in the first half of 2001, with the
successful introduction of the BiMatrx shafts. This increase was offset by a
decrease in the sales of our existing golf shaft products which we believe is
the result of (i) poor spring weather conditions in many key geographic regions
for golf participation, (ii) the soft domestic and worldwide economies, and
(iii) a general slowdown in the golf equipment market during 2001 from an
apparent lack of new product offerings by OEM's that provide an incremental
improvement in performance for the avid core golfer.

      Performance tubing sales increased 16.0%, or approximately $0.7 million,
to $4.8 million in 2001 from $4.1 million in 2000. This growth in sales was
generated from an emphasis in the development and sales of recreational product
offerings such as hockey shafts and lacrosse sticks.

      Net sales to our international customers increased $3.2 million, or 15.8%,
to $23.4 million in 2001 from $20.2 million in 2000. Almost all of this increase
was derived from increased sales into Asia, as original equipment manufacturers
continued during 2001 to move a portion of their golf equipment assembly
operations from the United States into Far East Asia. The average exchange rate
for the U.S. dollar strengthened in 2001 versus 2000 in all the major foreign
currencies in which we conduct business. If the average foreign exchange rate
had remained unchanged from 2000, we would have recorded approximately $1.4
million more of net sales to international customers.

      GROSS PROFIT for the year decreased $1.9 million, or 4.2%, to $43.4
million in 2001 from $45.3 million in 2000. Gross profit as a percentage of net
sales decreased to 39.0% from 40.9% the prior year. The decrease in gross profit
dollars and margin was driven by several factors, including (i) a change in the
mix of sales to lower margin products, (ii) higher utility costs for natural gas
at our manufacturing plants, and (iii) the negative impact from changes in the
average foreign currency exchange rates in the United Kingdom, Japan and
Australia.

      Finally, upon acceptance by the Internal Revenue Service, we completed the
termination of one of our defined benefit plans in the fourth quarter of 2000.
After we satisfied all liabilities of the terminated plan and reverted the
remaining assets back to the Company, we recorded a net settlement/curtailment
gain of $0.7 million in fourth quarter of 2000 associated with the plan
termination, of which $0.4 million was recorded as a reduction to cost of sales.
The Company did not record a similar transaction in 2001.


                                       23
<PAGE>
      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES for the year decreased $1.9
million, or 11.5%, to $15.0 million in 2001 from $16.9 million in 2000. As a
percentage of net sales, SG&A decreased to 13.5% in 2001 from 15.3% the prior
year. Although we increased in our annual spending for advertising and
promotions to promote our new BiMatrx products, these investments were more than
offset by reduced expenditures for business travel and management incentive
programs. In addition, our provision for uncollectible accounts receivable was
lower in 2001 versus 2000 as we experienced significant customer bankruptcies
during 2000.

      As described above, in 2000 we completed the termination of one of our
defined benefit plans. After satisfying all liabilities of the terminated plan
and reverting the remaining assets back to the Company, we recorded a net
settlement/curtailment gain of $0.7 million in the fourth quarter of 2000, of
which $0.3 million was recorded as a reduction to the 2000 SG&A expenses.

      OPERATING INCOME in 2001 increased by $1.1 million. This increase reflects
the impact of the $1.9 million decrease in gross profit, offset by $1.9 million
of reduced SG&A expenses in 2001, and the lack of a $1.1 million asset
impairment charge in 2000.

      INTEREST EXPENSE for the year decreased by $1.0 million, to $12.7 million
in 2001 from $13.7 million in 2000. The decrease was generated from the decline
in the average outstanding balance of our term bank debt between periods and the
lower weighted average interest rates on our variable rate debt between years.

      INCOME TAX expense changed by $16.8 million, to an $11.5 million benefit
in 2001 from a $5.2 million expense in 2000. In 2001 the Company determined it
is more likely than not the Company will realize the tax benefit of its deferred
tax assets and eliminated its $17.6 million valuation allowance recorded against
its deferred tax assets. The change in the valuation allowance was recorded as a
deferred tax benefit in the fourth quarter of 2001. Excluding the impact of the
valuation allowance elimination, income tax expense increased by $0.9 million,
to $6.1 million in 2001, compared to $5.2 million in 2000. The effective tax
rate during these periods differs from a federal statutory rate of 34% due
primarily to the pre-tax income added back for the non-deductible portion of
goodwill amortization, the incremental tax rate for state and foreign income tax
purposes and in 2001, the elimination of the valuation allowance.

      NET INCOME for the year 2001 increased to $24.6 million from $5.6 million
in 2000, and reflects the impact of the changes described above.

      EBITDA and Adjusted EBITDA are measurements used by some to gauge our
operating performance. EBITDA represents operating income plus depreciation and
amortization of goodwill. Adjusted EBITDA represents EBITDA plus restructuring
costs, management service fees, and the impairment charge on long- lived assets.

      EBITDA and Adjusted EBITDA for the years ended December 31, 2001 and 2000
are calculated as follows:

<TABLE>
<CAPTION>
                                                         2001         2000
                                                      ----------   ----------
<S>                                                   <C>          <C>
      Operating income............................    $   25,690   $   24,594
      Plus:
        Depreciation..............................         3,513        3,535
        Amortization of goodwill..................         2,695        2,701
                                                      ----------   ----------
      EBITDA......................................        31,898       30,830
      Plus:
        Restructuring cost........................            --            7
        Impairment charge on long-lived assets....            --        1,053
        Management Fee............................           500          500
                                                      ----------   ----------
      Adjusted EBITDA.............................    $   32,398   $   32,390
                                                      ==========   ==========
</TABLE>


                                       24
<PAGE>
      The following table shows cash flow activity by source. Discussion of cash
flow activity is noted in the Liquidity and Capital Resources section below.

<TABLE>
<CAPTION>
                                                        2002         2001
                                                     ----------   ---------
<S>                                                  <C>          <C>
      Net cash provided by operating activities...   $  19,903    $ 12,162
      Net cash used in investing activities.......      (1,164)     (2,291)
      Net cash used in financing activities.......     (19,846)     (5,862)
</TABLE>

LIQUIDITY & CAPITAL RESOURCES

GENERAL

      At the beginning of 2002 we had a bank credit facility which included a
$20.0 million non-amortizing revolving credit facility with funds available on a
revolving basis through September 30, 2004, a $10.0 million term A loan due in
2004 and a $27.5 million term B loan due in 2005. At September 29, 2002 the
unpaid balance on the term A and term B loans were $13.0 million collectively.
In October 2002 the Company repaid the entire $13.0 million outstanding balance
on these term loans.

      In the fourth quarter of 2002 we decided to refinance our bank debt by
eliminating our existing senior credit facility, as described above, and obtain
a new senior credit facility. On December 31, 2002 we entered a new senior
credit facility which includes a $15.0 million non-amortizing revolving credit
facility, and a $25.0 million term loan. Amounts under the revolving credit
facility are available on a revolving basis through December 31, 2007. The term
loan requires quarterly cash interest and principal payments beginning in March
2003 and continuing through December 2007 as more fully outlined in our notes to
the 2002 financial statements included elsewhere in this annual report.

      The Company used the proceeds from this loan to pay a dividend to True
Temper Corporation ("TTC") in order that TTC could repay a portion of the
outstanding principal on its senior discount notes which carry a 13.25% PIK
interest rate or a 12.25% cash interest rate.

      In addition, we have $99.7 million in 10 7/8% Senior Subordinated Notes
Due 2008 (the "Notes"). The Notes require cash interest payments each June 1 and
December 1, beginning June 1, 1999. The Notes are redeemable at the Company's
option, under certain circumstances and at certain redemption prices, beginning
December 1, 2003.

      Both the new senior credit facility and the Notes contain covenants and
events of default, including substantial restrictions and provisions which,
among other things, limit our 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. The
new senior credit facility also requires us to maintain certain specified
financial ratios and tests including minimum EBITDA levels, minimum interest
coverage and fixed charge coverage ratios, and maximum leverage ratios. At
December 31, 2002 we were in compliance with all of the covenants in both the
new senior credit facility and the Notes. Furthermore, the new senior credit
facility requires certain mandatory prepayments including payments from the net
proceeds of certain asset sales and a portion of our excess cash flow.

Year Ended December 31, 2002

      Cash provided by operating activities increased to $19.9 million in 2002
from $12.2 million in 2001. This increase was driven by a decrease in cash
required for working capital needs, specifically trade accounts receivable,
accounts payable and other liabilities.

      We used $1.2 million to invest in property, plant and equipment in 2002
compared to the $2.0 million we spent in 2001. In 2001, $0.3 million was used to
purchase the production assets and intellectual property rights from Advanced
Materials Engineering ("AME"). AME is a designer and manufacturer of composite
carbon fiber bicycle forks for use in high-end road bikes under the Alpha Q
brand name.


                                       25
<PAGE>
      In 2002 we repaid the remaining $16.5 million balance of our original
senior credit facility. Effective December 31, 2002 we refinanced our senior
credit facility as more fully described in footnote 9 to the financial
statements located elsewhere in this annual report. In 2001 we repaid $1.9
million of the principal of our original senior credit facility, and in 2000 we
repaid $18.0 million. Under the terms of our new senior credit facility, we will
be required to pay $4.0 million in scheduled principal payments during 2003.

      In 2002 we declared and made four quarterly dividends to our parent
company, True Temper Corporation, totaling $27.1 million. These funds were used
by our parent company to make quarterly interest payments on its senior discount
notes, and to voluntarily repay a portion of the principal totaling $22.4
million, as more fully described in footnote 9 to the financial statements
located elsewhere in this annual report. In 2001 and 2000 we declared and paid
dividends to our parent company of $3.6 million and $1.2 million respectfully.

      In addition, in the first quarter of 2002 we repurchased $0.3 million in
Notes in an open market repurchase program.

      The Company currently plans to use its existing cash and cash provided
from future operations, if any, as allowed within the covenants of our existing
senior credit facility and our Notes, to:

      -     Repay our senior credit facility, and/or

      -     Issue quarterly cash dividends to our parent company, True Temper
            Corporation, for its use to pay cash interest and or principal
            amounts on its Senior Discount Notes, and/or

      -     To make additional investments in the business for growth, which may
            include, among other things, capital expenditures, business
            acquisitions, and/or expenditures for business development and
            expansion in China, and/or

      -     Repurchase Notes from existing Note holders.

      In addition to the debt service obligations for principal and interest
payments created by the senior credit facility and the Notes described above,
our liquidity needs largely relate to working capital requirements and capital
expenditures for machinery and equipment. We intend to fund our current and long
term working capital, capital expenditure and debt service requirements through
cash flow generated from operations. However, since there can be no assurance of
future performance, as of December 31, 2002 we have the $15.0 million revolving
credit facility available for future cash requirements. The maximum amount the
Company may use of the $15.0 million revolving credit facility is limited by the
financial covenants contained within the senior credit facility. See footnote 9
in the 2002 financial statements for further discussion of the new senior credit
facility.

      The following table reflects the Company's contractual cash obligations
for long-term debt and capital and operating leases as of December 31, 2002.

<TABLE>
<CAPTION>
                                                  2004       2006
                                                 through    through
                                Total    2003     2005       2007    Thereafter
                              --------  ------  --------   --------  ----------
<S>                           <C>       <C>     <C>        <C>       <C>
Long-Term Debt..............  $  124.7  $  4.0  $   9.5    $  11.5     $    99.7
Operating Leases............       1.6     0.8      0.8        --            --
Purchase Commitments (1)....  $    0.4  $  0.4      --         --            --
                              --------  ------ -------      -------    --------
Total.......................  $  126.7  $  5.2  $  10.3    $  11.5     $    99.7
                              ========  ======  =======    ========    =========
</TABLE>

----------
1)    Amount represents the purchase commitments of natural gas and nickel used
      in the manufacture of steel golf shafts at our Amory, Mississippi
      facility.

      In addition to the contractual cash obligations noted in the table above,
the Company also has a management services agreement with our principle share
holder which requires the payment of an annual advisory fee of $0.5 million.


                                       26
<PAGE>
      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.

SEASONALITY

      In general, the component supplier sales to golf equipment companies and
distributors are seasonal, and tend to precede the warm weather golf season.
However, there are exceptions, especially for those suppliers that sell to the
high volume opening price point golf club manufacturers who sell their product
through mass market retail channels and generate strong volumes during the
holiday gift-giving season. Our business does experience some seasonal
fluctuations, based on a 5 year average, approximately 58% of our net sales are
generated in the first half of the year, and the remaining 42% of net sales are
generated in the second half.

INFLATION

      As a general rule we do not believe inflation has had a material impact on
our historical results of operations, as we experience inflation trends that are
consistent with the national averages and probably similar to other domestic
manufacturers.

      Nonetheless, as noted in our earlier disclosure regarding the changes in
gross profit between 2000 and 2001, we experienced an unusually large increase
in the cost of natural gas we use for our steel plant operations in Amory,
Mississippi in 2001, when the average cost of natural gas delivered to our Amory
plant increased by over 50% compared to the average price we paid for delivered
gas in 2000. During 2002 we experienced a decline in our cost for natural gas,
and based upon current market prices and purchases of natural gas contracts for
2003, we expect natural gas costs to increase substantially in the first half of
2003.

      In addition, during the second half of 2001, True Temper recognized a
significant increase in insurance premiums for our employee health benefits
coverage. Beginning in July 2001, the health insurance premiums for one of our
plans, covering a majority of our employees, increased significantly compared to
the national average. The Company expects its increases in health benefit costs
will equal or exceed the national average in 2003.

DEFERRED TAX ASSETS

      In conjunction with the leveraged recapitalization and the issuance of the
Senior Subordinated Notes, we recognized an increase in our deferred tax assets,
since the recapitalization was treated as a taxable business combination for
federal and state income tax purposes. This resulted in a step-up in our tax
basis. This step-up in tax basis provided approximately $185.6 million in future
tax deductions and a reduction of approximately $52.9 million in future tax
payments over the 15 year period beginning with 1998, net of a valuation reserve
of approximately $17.6 million that was established in 1998 when the
Recapitalization occurred. We elected to make a Section 338(h)(10) election
under the Internal Revenue Code resulting in an anticipated annualized cash tax
benefit of approximately $4.7 million, if fully utilized.

      In the fourth quarter of 2001, after considering the Company's historical
financial performance for the preceding three years, and other available
evidence, the Company determined that it was more likely than not the Company
will realize the tax benefit of all of its deferred tax assets. As a result the
Company's valuation allowance on its deferred tax assets was eliminated with the
change in the valuation allowance recorded as a deferred tax benefit.

      See footnote 10 to the financial statements, included elsewhere in this
filing, for a more complete discussion of the Company's deferred tax asset.


                                       27
<PAGE>
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
the appropriate application of certain accounting policies, many of which
require Company management to make estimates and assumptions about future events
and their impact on amounts reported in the financial statements and
accompanying notes. Since future events and their impact cannot be determined
with absolute certainty, the actual results will inevitably differ from
management's estimates. Such differences may be material to the financial
statements.

      The Company believes its application of accounting policies, and the
estimates inherently required therein, are reasonable under the circumstances.
These accounting policies and estimates are constantly reevaluated, and
adjustments are made when facts and circumstances dictate a change.
Historically, the Company has found its application of accounting policies to be
appropriate, and actual results have not differed materially from those
determined using necessary estimates.

      The Company's accounting policies are more fully described in footnote 2
to the financial statements, located elsewhere in this annual report. The
Company has identified certain critical accounting policies which are described
below.

      REVENUE RECOGNITION. The Company derives substantially all of its revenue
from the sales of golf shafts and performance sports products. Revenue is
recognized when all of the following conditions exist: (i) persuasive evidence
of an arrangement exists, (ii) delivery has occurred, (iii) the revenue amount
is determinable and (iv) collection is reasonably assured. Liabilities are
established for estimated returns, allowances, and discounts at the time revenue
is recognized.

      IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING GOODWILL. The Company accounts
for long-lived assets in accordance with the provisions of Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets (Statement 144)
and evaluates its goodwill for impairment under Statement No. 142, Goodwill and
Other Intangible Assets (Statement 142). The Company evaluates its goodwill for
impairment on an annual basis. The Company periodically evaluates its long-lived
assets, including goodwill, for indicators that would suggest that the carrying
amount of the assets may not be recoverable. The judgments regarding the
existence of such indicators are based on factors such as operating performance,
market conditions, and legal factors. The valuation of our long-lived assets,
including goodwill requires us to use our judgment in evaluating these
indicators.

      In accordance with SFAS No. 144, long-lived assets, such as property,
plant, and equipment, and purchased intangibles subject to amortization, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Assets to be disposed
of would be separately presented in the balance sheet and reported at the lower
of the carrying amount or fair value less costs to sell, and are no longer
depreciated. The assets and liabilities of a disposed group classified as held
for sale would be presented separately in the appropriate asset and liability
sections of the balance sheet.

      Goodwill and intangible assets not subject to amortization are tested
annually for impairment, and are tested for impairment more frequently if events
and circumstances indicate that the asset might be impaired. An impairment loss
is recognized to the extent that the carrying amount exceeds the asset's fair
value.

      VALUATION FOR DEFERRED INCOME TAXES. The Company's financial statements
include an estimate of income taxes assessed in each legal jurisdiction in which
the Company operates. These income taxes include both a current payable amount,
as well as a deferred portion which results from a variety of temporary book
versus tax treatment differences. These differences result in deferred tax
assets and liabilities, which are included in the Company's balance sheet. Once
established, any deferred tax asset must be evaluated to determine the
likelihood that we will generate sufficient future taxable income to utilize the
full amount. When facts and


                                       28
<PAGE>
circumstances warrant, the Company establishes, increases or reduces valuation
allowances associated with deferred tax assets in order to reflect which assets
meet the more likely than not realizability test.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

      In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires the Company to record the fair value of an
asset retirement obligation as a liability in the period in which it incurs a
legal obligation associated with the retirement of tangible long-lived assets
that result from the acquisition, construction, development, and/or normal use
of the assets. The Company also records a corresponding asset that is
depreciated over the life of the asset. Subsequent to the initial measurement of
the asset retirement obligation, the obligation will be adjusted at the end of
each period to reflect the passage of time and changes in the estimated future
cash flows underlying the obligation. The Company is required to adopt SFAS No.
143 on January 1, 2003. The adoption of SFAS No. 143 is not expected to have a
material effect on the Company's financial statements.

      In April 2002, the FASB issued Statement No. 145, Rescission of FASB
Statements Nos. 4 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which will affect income statement classification of gains and
losses from extinguishment of debt. Statement 145 considers extinguishment of
debt a risk management strategy by the reporting entity and the FASB does not
believe it should be considered extraordinary under the criteria in APB Opinion
No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions (APB 30), unless the debt extinguishment meets
the unusual in nature and infrequency of occurrence criteria in APB 30.
Statement 145 is effective for fiscal years beginning after May 15, 2002 with
early adoption encouraged. The Company elected to adopt Statement 145 as of
January 1, 2002, and as such its loss on the early extinguishment of debt in
2002 was recorded as a component of operating income. The Company did not
extinguish debt in 2001 or 2000.

      In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires all
companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal
plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities
after December 31, 2002.

      In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.
5, 57 and 107 and a rescission of FASB Interpretation No. 34. This
Interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under guarantees
issued. The Interpretation also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of the
Interpretation are applicable to guarantees issued or modified after December
31, 2002 and are not expected to have a material effect on the Company's
financial statements. The disclosure requirements are effective for financial
statements of interim and annual periods ending after December 15, 2002.

      In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No.
123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures in both annual and interim
financial statements. The Company currently does not have a stock option plan
consequently Statement No. 148 does not apply.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of ARB No. 51. This Interpretation
addresses the consolidation by business enterprises of variable interest
entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The Interpretation requires certain disclosures
in financial statements issued


                                       29
<PAGE>
after January 31, 2003 if it is reasonably possible that the Company will
consolidate or disclose information about variable interest entities when the
Interpretation becomes effective. The application of this Interpretation is not
expected to have a material effect on the Company's financial statements.

RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS

      The Private Securities Litigation Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by our Company. This document
contains forward-looking statements, including but not limited to, Item 1 of
Part I, Business, and Item 7 of Part II, Management's Discussion and Analysis of
Financial Condition and Results of Operations. All statements which address
operating performance, events or developments that we expect, plan, believe,
hope, wish, forecast, predict, intend, or anticipate will occur in the future
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 general state of the
economy, the Company's ability to execute its plans, competitive factors, and
other risks that could cause the actual results to differ materially from the
estimates or predictions contained in our 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 Business Risk section of Item 1 of Part 1 of this Annual Report on Form
10-K.

      The Company's views, estimates, plans and outlook as described within this
annual report 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.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

      The table below provides information about our debt obligations as of
December 31, 2002 that are sensitive to changes in interest rates. The table
presents cash flows and related weighted average interest rates by expected
maturity dates (dollars in millions).

<TABLE>
<CAPTION>
                                                      Expected Maturity Date
                                                                                     There-             Fair
 LONG TERM DEBT                              2003    2004    2005   2006   2007      after     Total    Value
                                            -----   -----   -----  -----   ----     --------  -------  -------

<S>                                         <C>     <C>     <C>    <C>     <C>     <C>       <C>      <C>
Fixed Rate 10.875% Senior Subordinated
  Notes.................................    $  --   $  --   $  --  $  --   $  --   $ 99.70   $  99.7   $102.7
  Average Interest Rate.................                                             10.88%    10.88%
Variable Rate Senior Credit Facility....    $ 4.0   $ 4.5   $ 5.0  $ 5.5   $ 6.0   $    --   $  25.0  $  25.0
  Average Interest Rate (a).............
</TABLE>

----------
(a)   Variable rate long-term debt is comprised of term loans under the senior
      credit facility. The senior credit facility provides for interest at our
      option, at (1) the base rate of the bank acting as administrative agent
      plus a margin adder of 2.25%, or (2) under a LIBOR option with a borrowing
      spread of LIBOR plus 3.50%.

EXCHANGE RATE SENSITIVITY

      We enter into forward-exchange contracts primarily to reduce the impact on
earnings and cash flow from non-functional currency-denominated third-party
receivables. Gains and losses resulting from hedging instruments offset the
losses and gains on the underlying receivable being hedged. Our forward-exchange


                                       30
<PAGE>
contracts generally have maturity dates of 90 to 120 days, and a high
correlation is maintained between the hedges and the underlying receivable. In
most cases, both the exposed transactions and the hedging contracts are marked
to market monthly with gains and losses included in earnings for the period.

    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 December
31, 2002, would be $0.7 million. Those losses would be offset by gains on the
underlying receivables being hedged. See footnote 2(i) to the financial
statements for further discussion of foreign currencies.

    In addition, during 2002 we began, on a limited basis, to purchase forward
foreign currency contracts for future months' anticipated foreign currency
sales. As of December 31, 2002 we had purchased a forward foreign currency
collar for approximately 75% of our anticipated first quarter 2003 Japanese yen
sales. Similar to our forward-exchange contracts described above, we marked this
contract to market as of December 31, 2002.

COMMODITY RISK

    We have some exposure to risks associated with fluctuations in prices for
commodities such as nickel and natural gas which are used to manufacture our
products. Nickel is used in the plating of steel golf shafts, and natural gas is
used as an energy source primarily in our steel manufacturing operations. In
some cases we will purchase contracts to lock in prices for both nickel and
natural gas to be delivered anywhere from one to twenty-four months from the
date the contract is consummated. As of December 31, 2002 we held either under
contract or have purchased approximately 10% of our expected 2003 usage of
natural gas, and approximately 50% of our expected 2003 usage of nickel.


                                       31
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
True Temper Sports, Inc.

    We have audited the accompanying balance sheets of True Temper Sports, Inc.
as of December 31, 2002 and 2001 and the related statements of operations,
changes in stockholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 2002. In connection with our audit of the
financial statements, we also audited the accompanying financial statement
schedule. These financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits.

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

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of True Temper Sports, Inc. as
of December 31, 2002 and 2001 and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

    As discussed in the note 2(g), in 2002 the Company changed its method of
accounting for goodwill and other intangible assets.

KPMG LLP

Memphis, Tennessee
March 3, 2003


                                       32
<PAGE>
                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                            STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        FOR THE YEARS ENDED DECEMBER 31,
                                                    ---------------------------------------
                                                        2002          2001          2000
                                                    ------------  ------------  -----------
<S>                                                 <C>           <C>           <C>
NET SALES.......................................    $   107,401   $   111,083   $   110,636
Cost of sales...................................         65,161        67,735        65,382
                                                    -----------   -----------   -----------
  GROSS PROFIT..................................         42,240        43,348        45,254
Selling, general and administrative expenses....         13,578        14,963        16,899
Amortization of goodwill........................             --         2,695         2,701
Impairment of long-lived assets.................             --            --         1,053
Business development and start-up costs ........            312            --            --
Restructuring costs.............................             --            --             7
Loss on early extinguishment of long-term debt              777            --            --
                                                    -----------   -----------   -----------
  OPERATING INCOME..............................         27,573        25,690        24,594
Interest expense, net of interest income........         12,236        12,660        13,693
Other expenses, net.............................             93            (2)           56
                                                    -----------   -----------   -----------
  INCOME BEFORE INCOME TAXES....................         15,244        13,032        10,845
Income taxes....................................          5,992       (11,539)        5,218
                                                    -----------   -----------   -----------
  NET INCOME....................................    $     9,252   $    24,571   $     5,627
                                                    ===========   ===========   ===========

</TABLE>

                 See accompanying notes to financial statements.


                                       33
<PAGE>
                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                                 BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                            -------------------------
                                                                                2002          2001
                                                                            -----------   -----------
<S>                                                                         <C>           <C>
                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents.............................................    $     7,070   $     8,177
  Receivables, net......................................................         15,083        13,459
  Inventories...........................................................         15,055        13,441
  Deferred financing costs..............................................            566           671
  Prepaid expenses and other assets.....................................          1,198         1,078
                                                                            -----------   -----------
          Total current assets..........................................         38,972        36,826
Property, plant and equipment, net......................................         14,561        16,729
Goodwill, net...........................................................         71,506        71,506
Deferred tax assets, net................................................         54,832        60,356
Deferred financing costs, net...........................................          2,787         3,300
Other assets............................................................            722           613
                                                                            -----------   -----------
          Total assets..................................................    $   183,380   $   189,330
                                                                            ===========   ===========
                    LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
  Current portion of long-term debt.....................................    $     4,000   $     4,675
  Accounts payable......................................................          5,999         4,390
  Accrued expenses and other liabilities................................          7,075         4,836
                                                                            -----------   -----------
          Total current liabilities.....................................         17,074        13,901
Long-term debt, net of current portion..................................        120,730       111,829
Post-retirement medical obligation......................................          2,508         2,297
                                                                            -----------   -----------
          Total liabilities.............................................        140,312       128,027
STOCKHOLDER'S EQUITY
Common stock -- par value $0.01 per share; authorized
  1,000 shares; issued and outstanding 100 shares.......................             --            --
Additional paid-in capital..............................................         40,326        40,326
Retained earnings.......................................................          3,145        20,977
Accumulated other comprehensive loss, net of taxes......................           (403)           --
                                                                            ------------  -----------
          Total stockholder's equity....................................         43,068        61,303
                                                                            -----------   -----------
          Total liabilities and stockholder's equity....................    $   183,380   $   189,330
                                                                            ===========   ===========
</TABLE>

                 See accompanying notes to financial statements.


                                       34
<PAGE>
                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                  STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                     COMMON STOCK                     RETAINED     ACCUMULATED
                                   ----------------    ADDITIONAL    EARNINGS/        OTHER
                                               PAR      PAID IN    (ACCUMULATED   COMPREHENSIVE
                                   SHARES     VALUE     CAPITAL      DEFICIT)         LOSS          TOTAL
                                   ------    -------   ----------  -------------  --------------  ----------

<S>                                <C>       <C>       <C>         <C>            <C>             <C>
BALANCE AT DECEMBER 31, 1999....      100    $   --    $  40,326    $    (4,445)   $         --   $  35,881

  Net income....................       --        --           --          5,627              --       5,627

  Dividends declared to parent
     company....................       --        --           --         (1,188)             --      (1,188)
                                   ------    -------   ---------    ------------   -------------  ----------

BALANCE AT DECEMBER 31, 2000....      100    $   --    $  40,326    $        (6)   $         --   $  40,320

  Net income....................       --        --           --         24,571              --      24,571

  Dividends declared to parent
     company....................       --        --           --         (3,588)             --      (3,588)
                                   ------    -------   ---------    ------------   -------------  ----------

BALANCE AT DECEMBER 31, 2001....      100    $   --    $  40,326    $    20,977    $         --   $  61,303

  Net income....................       --        --           --          9,252              --       9,252

  Minimum pension liability, net
     of taxes...................       --        --           --             --            (403)       (403)
                                                                                                  ----------

  Comprehensive loss, net of
     taxes......................                                                                      8,849

  Dividends declared to parent
     company....................       --         --          --        (27,084)             --     (27,084)
                                   ------    -------   ---------    ------------   -------------  ----------

BALANCE AT DECEMBER 31, 2002....      100    $   --    $  40,326    $     3,145    $       (403)  $  43,068
                                   ======    =======   =========    ============   =============  ==========
</TABLE>

                 See accompanying notes to financial statements.


                                       35
<PAGE>
                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                            STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                                   ----------------------------------------
                                                                       2002           2001          2000
                                                                   -----------    -----------   -----------
<S>                                                                <C>            <C>           <C>
OPERATING ACTIVITIES
  Net income...................................................    $     9,252    $    24,571   $     5,627
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Depreciation and amortization.............................          3,252          6,208         6,236
     Amortization of deferred financing costs..................            697            652           628
     Loss on disposal of property, plant and
       equipment...............................................             80             --            96
     Loss on early extinguishment of long-term debt............            777             --            --
     Impairment charge on long-lived assets and inventory......             --             --         1,053
     Deferred taxes............................................          5,770        (11,770)        5,040
     Other noncash activities..................................             --             --            75
     Changes in assets and liabilities, net of acquisitions:
       Receivables, net........................................         (1,624)        (3,511)        3,138
       Inventories.............................................         (1,614)           967        (3,037)
       Prepaid expenses and other assets.......................           (115)           660        (1,084)
       Accounts payable........................................          1,609         (3,102)        2,212
       Accrued interest........................................            (25)            48          (174)
       Other liabilities.......................................          1,844         (2,561)          797
                                                                   -----------    -----------   -----------
       Net cash provided by operating activities...............         19,903         12,162        20,607
INVESTING ACTIVITIES
  Purchase of property, plant and equipment....................         (1,164)        (2,001)       (3,621)
  Proceeds from the sales of property, plant and
     equipment.................................................             --             37            22
  Purchase of AME..............................................             --           (327)           --
  Other investing activities...................................             --             --            56
                                                                   -----------    -----------   -----------
       Net cash used in investing activities...................         (1,164)        (2,291)       (3,543)
FINANCING ACTIVITIES
  Proceeds from issuance of bank debt..........................         25,000             --            --
  Principal payments on bank debt..............................        (16,504)        (1,901)      (18,000)
  Repurchase of Senior Subordinated Notes......................           (270)            --            --
  Premium paid to repurchase Senior Subordinated Notes.........            (12)            --            --
  Principal payments on capital leases.........................            (18)           (25)          (74)
  Payment of debt issuance costs...............................           (844)          (202)          (64)
  Dividends paid...............................................        (27,084)        (3,588)       (1,188)
  Other financing activity.....................................           (114)          (146)            3
                                                                   -----------    -----------   -----------
       Net cash used in financing activities...................        (19,846)        (5,862)      (19,323)
Net increase (decrease) in cash................................         (1,107)         4,009        (2,259)
Cash at beginning of year......................................          8,177          4,168         6,427
                                                                   -----------    -----------   -----------
Cash at end of year............................................    $     7,070    $     8,177   $     4,168
                                                                   ===========    ===========   ===========
</TABLE>

                 See accompanying notes to financial statements.


                                       36
<PAGE>
                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                          NOTES TO FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS UNLESS OTHERWISE INDICATED)

(1)   DESCRIPTION OF BUSINESS

      True Temper Sports, Inc. ("True Temper" or the "Company") is primarily
      engaged in the design, manufacture and sale of steel and composite golf
      club shafts as well as a variety of other high strength, high tolerance
      tubular components for the bicycle, automotive and recreational sports
      markets. True Temper's manufacturing plants and related facilities are
      located in Memphis, Tennessee, Amory and Olive Branch, Mississippi and El
      Cajon, California. The majority of True Temper's sales are to golf club
      manufacturers and distributors primarily located in the United States,
      Europe, Japan, Australia and Southeast Asia. True Temper operates as a
      wholly-owned operating subsidiary of True Temper Corporation.

(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (a)   REVENUE RECOGNITION

            Revenue is generally recognized when persuasive evidence of an
            arrangement exists, delivery has occurred, the revenue amount is
            determinable and collection is reasonably assured. Valuation
            allowances are established for estimated returns, allowances and
            discounts at the time revenue is recognized.

      (b)   USE OF ESTIMATES

            The preparation of the consolidated financial statements requires
            management of the Company to make a number of estimates and
            assumptions relating to the reported amount of assets and
            liabilities and the disclosure of contingent assets and liabilities
            at the date of the consolidated financial statements and the
            reported amounts of revenues and expenses during the period.
            Significant items subject to such estimates and assumptions include
            the carrying amount of property, plant and equipment; valuation
            allowances for receivables, inventories and deferred income tax
            assets; environmental liabilities; valuation of derivative
            instruments; and assets and obligations related to employee
            benefits. Actual results could differ from those estimates.

      (c)   TRADE ACCOUNTS RECEIVABLE

            Trade receivables are net of allowance for doubtful accounts of $653
            and $539 as of December 31, 2002 and 2001, respectively.

      (d)   INVENTORIES

            Inventories are stated at the lower of cost or market. Cost is
            determined using the first-in, first-out ("FIFO") method.

      (e)   DEFERRED FINANCING COSTS

            Costs associated with the issuance of debt are deferred and
            amortized as a component of interest expense over the life of the
            related debt, using a method that approximates the interest method.


                                       37
<PAGE>
      (f)   PROPERTY, PLANT AND EQUIPMENT

            Property, plant and equipment is stated on a historical cost basis,
            net of accumulated depreciation. Depreciation is provided over the
            estimated useful life of each asset using the straight-line method.
            Leasehold improvements are amortized over the shorter of the useful
            life or the applicable lease term. In general the estimated useful
            lives are as follows:

<TABLE>
<CAPTION>
                             ASSET CATEGORY                              LIFE
            -----------------------------------------------------    -----------
<S>                                                                  <C>
            Buildings............................................    15-40 years
            Furniture and office equipment.......................    10-15 years
            Machinery and equipment..............................     8-15 years
            Computers and related equipment......................      2-4 years
            Leasehold improvements...............................     6-15 years
            Assets held for use--not currently used for
              production.........................................        8 years
</TABLE>

      (g)   GOODWILL

            Goodwill represents the excess of costs over fair value of assets of
            businesses acquired. The Company adopted the provisions of SFAS No.
            142, Goodwill and Other Intangible Assets, as of January 1, 2002.
            Goodwill and intangible assets acquired in a purchase business
            combination and determined to have an indefinite useful life are not
            amortized, but instead tested for impairment at least annually in
            accordance with the provisions of SFAS No. 142. SFAS No. 142 also
            requires that intangible assets with estimable useful lives be
            amortized over their respective estimated useful lives to their
            estimated residual values, and reviewed for impairment in accordance
            with SFAS No. 144, Accounting for Impairment or Disposal of
            Long-Lived Assets.

            In connection with SFAS No. 142's transitional goodwill impairment
            evaluation, the Company performed an assessment of whether there was
            an indication that goodwill is impaired as of the date of adoption.
            To accomplish this, the Company was required to identify its
            reporting units and determine the carrying value of each reporting
            unit by assigning the assets and liabilities, including the existing
            goodwill and intangible assets, to those reporting units as of
            January 1, 2002. The Company was required to determine the fair
            value of each reporting unit and compare it to the carrying amount
            of the reporting unit within six months of January 1, 2002. To the
            extent the carrying amount of a reporting unit exceeded the fair
            value of the reporting unit, the Company would be required to
            perform the second step of the transitional impairment test, as this
            is an indication that the reporting unit goodwill may be impaired.
            The Company was not required to perform the second step for any
            reporting unit, as the fair value of each reporting unit exceeded
            its carrying amount. The Company will test reporting amount of
            goodwill for potential impairment on an annual basis in the
            Company's fiscal fourth quarter or sooner if a goodwill impairment
            indicator is identified.

            Prior to the adoption of SFAS No. 142, goodwill was amortized on a
            straight-line basis over the expected periods to be benefited,
            generally between 20 and 40 years, and assessed for recoverability
            by determining whether the amortization of the goodwill balance over
            its remaining life could be recovered through undiscounted future
            operating cash flows of the acquired operation.

      (h)   DERIVATIVE INSTRUMENTS

            In June 2000, FASB Statement 138, Accounting for Derivative
            Instruments and Hedging Activity -- Deferral of the Effective Date
            of FASB Statement 133, was issued. This statement shall be effective
            for all fiscal quarters of all fiscal years beginning after January
            1, 2001. This statement requires recognition of the fair value of
            all derivative instruments, including certain derivative instruments
            embedded in other contracts, on the balance sheet and establishes
            new accounting rules for hedging activities. The Company uses
            derivative financial instruments for purposes other than trading to
            reduce its exposure to fluctuations in foreign currencies.


                                       38
<PAGE>
            The Company's derivative instruments have not been designated nor do
            they qualify as hedging instruments under the provisions of
            Statements 133 and 138 and the Company recognizes any changes in the
            derivative financial instruments' fair value in earnings.

      (i)   FOREIGN CURRENCIES

            Transaction gains and losses that arise from exchange rate changes
            on transactions denominated in a currency other than the U.S. Dollar
            are included currently in the results of operations as a component
            of cost of sales. True Temper recorded a gain on foreign currency in
            the year ended December 31, 2002 of $37. The Company recorded a loss
            on foreign currency in the years ended December 31, 2001 and 2000 of
            $407 and $496, respectively. True Temper hedges a majority of its
            foreign currency transaction exposure through the use of forward
            exchange contracts and collars. Gains and losses on foreign currency
            transaction hedges are recognized in income and offset the foreign
            exchange gains and losses on the underlying transaction.

            The following table summarizes the contractual notional amounts of
            True Temper's forward exchange contracts as of December 31, 2002 and
            2001:

<TABLE>
<CAPTION>
                                                       2002           2001
                                                    ----------     ----------
<S>                                                 <C>            <C>
            Pound Sterling....................      $    2,631     $    1,110
            Yen...............................           4,177          1,115
            Australian dollar.................             658            942
                                                    ----------     ----------
                      Total...................           7,466     $    3,167
                                                    ==========     ==========
</TABLE>

      (j)   IMPAIRMENT OF LONG-LIVED ASSETS

            SFAS No. 144 provides a single accounting model for long-lived
            assets to be disposed of. SFAS No. 144 also changes the criteria for
            classifying an asset as held for sale; and broadens the scope of
            businesses to be disposed of that qualify for reporting as
            discontinued operations and changes the timing of recognizing losses
            on such operations. The Company adopted SFAS No. 144 on January 1,
            2002. The adoption of SFAS No. 144 did not affect the Company's
            financial statements.

            In accordance with SFAS No. 144, long-lived assets, such as
            property, plant, and equipment, and purchased intangibles subject to
            amortization, are reviewed for impairment whenever events or changes
            in circumstances indicate that the carrying amount of an asset may
            not be recoverable. Recoverability of assets to be held and used is
            measured by a comparison of the carrying amount of an asset to
            estimated undiscounted future cash flows expected to be generated by
            the asset. If the carrying amount of an asset exceeds its estimated
            future cash flows, an impairment charge is recognized by the amount
            by which the carrying amount of the asset exceeds the fair value of
            the asset. Assets to be disposed of would be separately presented in
            the balance sheet and reported at the lower of the carrying amount
            or fair value less costs to sell, and are no longer depreciated. The
            assets and liabilities of a disposed group classified as held for
            sale would be presented separately in the appropriate asset and
            liability sections of the balance sheet.

            Prior to the adoption of SFAS No. 144, the Company accounted for
            long-lived assets in accordance with SFAS No. 121, Accounting for
            Impairment of Long-Lived Assets and for Long-Lived Assets to be
            Disposed Of.

      (k)   BUSINESS DEVELOPMENT AND START-UP COSTS

            Costs associated with business development and start-up cost are
            comprised of costs related to opening a composite manufacturing
            operation including travel, consulting, legal and recruiting costs.
            The costs are expenses as incurred and separately identified on the
            statement of operations as a component of operating income.


                                       39
<PAGE>
      (l)   ADVERTISING AND PROMOTIONAL COSTS

            Advertising and promotional costs are accounted for in accordance
            with Statement of Position 93-7 "Reporting on Advertising Costs",
            which requires that the cost of producing advertisements be expensed
            at the time of the first showing of the advertisement or as
            incurred. True Temper's policy is to expense costs associated with
            the production of advertising at the time of first showing of the
            advertisement. Advertising and promotional costs primarily consist
            of trade show costs, media spots including print, radio and
            television, advertising production and agency fees, sponsorships,
            and product and promotional samples. Advertising and promotional
            expense for 2002, 2001 and 2000 were $3,555, $5,007 and $4,633,
            respectively. Certain of the Company's customers participate in a
            cooperative advertising program where the Company agrees to
            reimburse these customers for a portion of their advertising costs
            that feature the Company's product. Cooperative advertising costs
            are shown as a reduction of sales.

      (m)   RESEARCH AND DEVELOPMENT COSTS

            Costs associated with the development of new products and changes to
            existing products are expensed as incurred and are included in
            selling, general, and administrative expenses. Research and
            development costs for the 2002, 2001 and 2000 were $1,194, $1,587
            and $1,614, respectively.

      (n)   POST-RETIREMENT BENEFITS

            True Temper's hourly union employees at our Amory, Mississippi plant
            are covered by a non-contributory defined benefit plan. The defined
            benefit plan is funded in conformity with funding requirements of
            applicable government regulations. Benefits are based on a
            negotiated, fixed amount multiplied by the employee's length of
            service. In addition to the defined benefit plan, these same
            employees receive certain post-retirement medical, dental and life
            insurance benefits.

            In 2000 the Company completed the termination of the True Temper
            Sports Inc. salaried pension plan. It was replaced by a
            non-contributory defined contribution plan. Company contributions
            to this plan are based on the employee's age and are calculated as
            a percentage of compensation. This plan is funded on a current
            basis. In addition to the non-contributory defined contribution
            plan, certain post-retirement medical, dental and life insurance
            benefits are provided to those salaried employees who were employed
            by the Company prior to the termination of the salaried
            pension plan.

            All employees of True Temper are eligible to participate in a
            company sponsored 401(k) plan. The Company's contribution to this
            plan is calculated as a percentage of the employee's compensation
            and the employee's contribution. All Company contributions to this
            plan are paid in cash.

      (o)   INCOME TAXES

            Income taxes are accounted for under the asset and liability method.
            Deferred tax assets and liabilities are recognized for the future
            tax consequences attributable to differences between the financial
            statement carrying amounts of existing assets and liabilities and
            their respective tax bases and operating loss and tax credit
            carryforwards. Deferred tax assets and liabilities are measured
            using enacted tax rates expected to apply to taxable income in the
            years in which those temporary differences are expected to be
            recovered or settled. The effect on deferred tax assets and
            liabilities of a change in tax rates is recognized in income in the
            period that includes the enactment date.


                                       40
<PAGE>
            In the fourth quarter of 2001, after considering the Company's
            historical financial performance for the preceding three years, and
            other available evidence, Company management determined that it was
            more likely than not the Company will realize the tax benefit of all
            of its deferred tax assets. As a result the Company's valuation
            allowance on its deferred tax assets was eliminated with the change
            in the valuation allowance recorded as a deferred tax benefit. See
            footnote 10, Income Taxes, for further explanation.

      (p)   FAIR VALUE OF FINANCIAL INSTRUMENTS

            The fair value of financial instruments represents the amount at
            which the instrument could be exchanged in a current transaction
            between willing parties, other than a forced sale or liquidation.
            Significant differences can arise between the fair value and
            carrying amount of financial instruments that are recognized at
            historical cost amounts.

            The following methods and assumptions were used by True Temper in
            estimating fair value disclosures for financial instruments:

            Cash, Trade Receivables and Payables -- The amounts reported in the
            balance sheets approximate fair value.

            Long-Term Debt -- The carrying values of the Company's variable rate
            debt approximates fair value. The estimated fair value of the
            Company's fixed rate debt is based upon interest rates available for
            the issuance of debt with similar terms and remaining maturities. As
            of December 31, 2002, the Company's Senior Subordinated Notes have
            an estimated fair value of $102.7 million.

            Foreign Currency Contracts -- The fair value of forward exchange
            contracts is estimated using prices established by financial
            institutions for comparable instruments which was approximately $0.1
            million at December 31, 2002.

            The fair value estimates presented herein are based on information
            available to management as of December 31, 2002. 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.

      (q)   RECENT ACCOUNTING PRONOUNCEMENTS

            In June 2001, FASB issued SFAS No. 143, Accounting for Asset
            Retirement Obligations. SFAS No. 143 requires the Company to record
            the fair value of an asset retirement obligation as a liability in
            the period in which it incurs a legal obligation associated with the
            retirement of tangible long-lived assets that result from the
            acquisition, construction, development, and/or normal use of the
            assets. The Company also records a corresponding asset that is
            depreciated over the life of the asset. Subsequent to the initial
            measurement of the asset retirement obligation, the obligation will
            be adjusted at the end of each period to reflect the passage of time
            and changes in the estimated future cash flows underlying the
            obligation. The Company is required to adopt SFAS No. 143 on January
            1, 2003. The adoption of SFAS No. 143 is not expected to have a
            material effect on the Company's financial statements.

            In April 2002, the FASB issued Statement No. 145, Rescission of FASB
            Statements Nos. 4 and 64, Amendment of FASB Statement No. 13, and
            Technical Corrections, which will affect income statement
            classification of gains and losses from extinguishment of debt.
            Statement 145 considers extinguishment of debt a risk management
            strategy by the reporting entity and the FASB does not believe it
            should be considered extraordinary under the criteria in APB Opinion
            No. 30, Reporting the Results of Operations - Reporting the Effects
            of Disposal of a Segment of a Business, and Extraordinary, Unusual
            and Infrequently Occurring Events and Transactions


                                       41
<PAGE>
            (APB 30), unless the debt extinguishment meets the unusual in nature
            and infrequency of occurrence criteria in APB 30. Statement 145 is
            effective for fiscal years beginning after May 15, 2002 with early
            adoption encouraged. The Company elected to adopt Statement 145 as
            of January 1, 2002, and as such its loss on the early extinguishment
            of debt in 2002 was recorded as a component of operating income. The
            Company did not extinguish debt in 2001 or 2000.

            In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
            Associated with Exit or Disposal Activities. SFAS No. 146 requires
            all companies to recognize costs associated with exit or disposal
            activities when they are incurred rather than at the date of a
            commitment to an exit or disposal plan. SFAS No. 146 is to be
            applied prospectively to exit or disposal activities after December
            31, 2002.

            In November 2002, the FASB issued Interpretation No. 45, Guarantor's
            Accounting and Disclosure Requirements for Guarantees, Including
            Indirect Guarantees of Indebtedness to Others, an interpretation of
            FASB Statements No. 5, 57 and 107 and a rescission of FASB
            Interpretation No. 34. This Interpretation elaborates on the
            disclosures to be made by a guarantor in its interim and annual
            financial statements about its obligations under guarantees issued.
            The Interpretation also clarifies that a guarantor is required to
            recognize, at inception of a guarantee, a liability for the fair
            value of the obligation undertaken. The initial recognition and
            measurement provisions of the Interpretation are applicable to
            guarantees issued or modified after December 31, 2002 and are not
            expected to have a material effect on the Company's financial
            statements. The disclosure requirements are effective for financial
            statements of interim and annual periods ending after December 15,
            2002.

            In December 2002, the FASB issued SFAS No. 148, Accounting for
            Stock-Based Compensation - Transition and Disclosure, an amendment
            of FASB Statement No. 123. This Statement amends FASB Statement No.
            123, Accounting for Stock-Based Compensation, to provide alternative
            methods of transition for a voluntary change to the fair value
            method of accounting for stock-based employee compensation. In
            addition, this Statement amends the disclosure requirements of
            Statement No. 123 to require prominent disclosures in both annual
            and interim financial statements. The Company currently does not
            have a stock option plan consequently Statement No. 148 does not
            apply.

            In January 2003, the FASB issued Interpretation No. 46,
            Consolidation of Variable Interest Entities, an interpretation of
            ARB No. 51. This Interpretation addresses the consolidation by
            business enterprises of variable interest entities as defined in the
            Interpretation. The Interpretation applies immediately to variable
            interests in variable interest entities created after January 31,
            2003, and to variable interests in variable interest entities
            obtained after January 31, 2003. The Interpretation requires certain
            disclosures in financial statements issued after January 31, 2003 if
            it is reasonably possible that the Company will consolidate or
            disclose information about variable interest entities when the
            Interpretation becomes effective. The application of this
            Interpretation is not expected to have a material effect on the
            Company's financial statements.

      (r)   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

            Cash payments for income taxes and interest for the years ended
            December 31, 2002, 2001 and 2000, are as follows:

<TABLE>
<CAPTION>
                                             2002        2001        2000
                                          --------    ---------   ---------
<S>                                       <C>         <C>         <C>
               Income taxes............   $    120    $     280   $     124
               Interest................   $ 11,728    $  12,299   $  13,560
</TABLE>


                                       42
<PAGE>
      (s)   RECLASSIFICATIONS

            Certain prior year amounts have been reclassified to conform to the
            2002 Financial Statements. The reclassifications had no effect on
            net income.

(3)   ACQUISITIONS

      In the third quarter of 2001, True Temper acquired substantially all the
      capital assets and intellectual property rights from Advanced Materials
      Engineering ("AME") for $327 resulting in the recording of goodwill of
      $88. The transition of these assets to our El Cajon facility was completed
      by December 31, 2001.

(4)   GOODWILL
      Amortization expense related to goodwill was $2,695 for the year ended
      December 31, 2001. The following table reconciles previously reported net
      income as if the provisions of SFAS No. 142 were in effect in 2001:

<TABLE>
<CAPTION>
                                                                          2001
                                                      -------------------------------------------
                                                                        Goodwill
                                                                      Amortization
                                          2002        As Reported      Adjustment    As Adjusted
                                       -----------    -----------     ------------   ------------
<S>                                    <C>            <C>             <C>            <C>
      Income before income taxes.....  $    15,244    $    13,032     $     2,695    $    15,727
      Income tax expense (benefit)...        5,992        (11,539)             89        (11,450)
                                       -----------    -----------     -----------    -----------
         Net Income..................  $     9,252    $    24,571     $     2,606    $    27,177
                                       ===========    ===========     ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                          2000
                                                      ------------------------------------------
                                                                       Goodwill
                                                                      Amortization
                                                      As Reported      Adjustment    As Adjusted
                                                      -----------     ------------   -----------
<S>                                                   <C>             <C>            <C>
      Income before income taxes....................  $    10,845     $     2,701    $    13,546
      Income tax expense............................        5,218              89          5,307
                                                      -----------     -----------    -----------
         Net Income.................................  $     5,627     $     2,612    $     8,239
                                                      ===========     ===========    ===========
</TABLE>

(5)   RESTRUCTURING AND ASSET IMPAIRMENT

      During 2002 the Company implemented a plan to establish a physical
      presence in China. The costs incurred of $312 are comprised of travel,
      consulting, legal, personnel recruiting and other start up business costs
      relating to opening a composite manufacturing operation in southern China
      and are identified separately on the statement of operations as business
      development and start-up costs.

      In the fourth quarter of 2000 the Company recognized a non-cash pretax
      charge of $1,053 associated with the impairment of a roller hearth oven
      located in its Amory, Mississippi steel manufacturing plant. The
      impairment loss was recognized when it became clear that the roller hearth
      oven, which had been idle and awaiting installation, was not the most cost
      effective nor an operationally sound alternative to the Company's
      production needs; and as a result the undiscounted future net cash flows
      expected to be generated by this asset were less than its carrying value.
      The Company calculated the impairment loss by comparing the carrying value
      of the asset to its estimated fair market value, which was determined
      based on the Company's internal expertise and discussions with the
      original manufacturer of the oven. As of December 31, 2002 the roller
      hearth oven has a carrying value of zero.

      The Company recorded restructuring expenses as incurred of $7 during 2000,
      related to compensation, moving and other integration costs incurred as a
      result of the transition of manufacturing operations from the Olive Branch
      facility to the El Cajon facility.


                                       43
<PAGE>
(6)   INVENTORIES

      Inventories, as of December 31 of the year indicated, consist of the
      following:

<TABLE>
<CAPTION>
                                                                                        2002        2001
                                                                                     ----------  ----------
<S>                                                                                  <C>         <C>
      Raw materials.............................................................     $    1,751  $    1,558
      Work in process...........................................................          2,445       2,124
      Finished goods............................................................         10,859       9,759
                                                                                     ----------  ----------
                Total...........................................................     $   15,055  $   13,441
                                                                                     ==========  ==========
</TABLE>

(7)   PROPERTY, PLANT AND EQUIPMENT

      Major classes of property, plant and equipment, as of December 31 of the
      year indicated, are summarized as follows:

<TABLE>
<CAPTION>
                                                                                        2002        2001
                                                                                     ----------  ----------
<S>                                                                                  <C>         <C>
      Land improvements.........................................................     $      342  $      342
      Buildings.................................................................          7,008       6,907
      Furniture and office equipment............................................            804         803
      Machinery and equipment...................................................         41,979      41,385
      Computer equipment and capitalized
        software................................................................          2,390       2,447
      Leasehold improvements....................................................          1,695       1,698
      Assets held for use -- not currently
        used in production......................................................          1,251       1,854
      Construction in progress..................................................            436         363
                                                                                     ----------  ----------
                                                                                         55,905      55,799
      Less accumulated depreciation.............................................         41,344      39,070
                                                                                     ----------  ----------
      Net property, plant and equipment.........................................     $   14,561  $   16,729
                                                                                     ==========  ==========
</TABLE>

      Depreciation expense for the years ended December 31, 2002, 2001 and 2000,
      was $3,252, $3,513, and $3,535, respectively.

(8)   OTHER CURRENT LIABILITIES

      Other current liabilities, as of December 31 of the year indicated,
      consist of the following:

<TABLE>
<CAPTION>
                                                                                        2002         2001
                                                                                     ---------    ---------
<S>                                                                                  <C>          <C>
      Accrued compensation, benefits and  related payroll taxes.................         4,537        2,433
      Accrued interest..........................................................           939          964
      Other.....................................................................         1,599        1,439
                                                                                     ---------    ---------
                Total...........................................................     $   7,075    $   4,836
                                                                                     =========    =========
</TABLE>

(9)   BORROWINGS

      (a)   LONG-TERM DEBT

            Long-term debt at December 31, 2002 and 2001 consisted of the
            following:

<TABLE>
<CAPTION>
                                                                                         2002       2001
                                                                                      ---------  ---------
<S>                                                                                   <C>        <C>
                  10.875% Senior Subordinated Notes due 2008.....................     $  99,730  $ 100,000

                  Senior credit facility term loan refinanced in 2002............            --     16,504

                  Senior credit facility term loan maturing December 31, 2007....        25,000         --
                                                                                      ---------  ---------

                  Total debt.....................................................       124,730    116,504

                  Less current maturities........................................         4,000      4,675
                                                                                      ---------  ---------
                  Long-term debt.................................................     $ 120,730  $ 111,829
                                                                                      =========  =========
</TABLE>

                  The 10.875% Senior Subordinated Notes due 2008 (the "Notes")
                  provide for semi-annual interest payments, in arrears. At the
                  option of the Company, up to 35% of the Notes are redeemable
                  prior to December 1, 2001, at 110.875%, with the net cash
                  proceeds of one or


                                       44
<PAGE>
                  more public equity offerings. From December 1, 2001 to
                  November 30, 2003 the Notes may be redeemed, at the option of
                  the Company, in whole or in part, at a premium, upon the
                  occurrence of a change of control. Subsequent to November 30,
                  2003 the Notes may be redeemed, at the option of the Company,
                  in whole or in part, at a redemption price of 105.438%
                  beginning December 1, 2003 and declining ratably thereafter to
                  100.0% on December 1, 2006.

                  In 2002 the Company bought back approximately $0.3 million of
                  the outstanding Notes in an open market non-redemptive
                  repurchase program. In conjunction with the buy backs the
                  Company wrote off a ratable portion of deferred financing
                  costs and the premium on the repurchase of Notes as a loss on
                  early extinguishment of debt in the amount of $20. As of
                  December 31, 2002 the outstanding principal amount of Notes
                  was $99.7 million.

                  In the fourth quarter of 2002 the Company made a scheduled
                  principal payment of $0.6 million and a voluntary repayment of
                  $12.4 million to eliminate the outstanding principal balance
                  of both the term A and term B loans. The Company wrote off
                  $757 of deferred financing costs which related to that debt
                  agreement, and recorded the charge as a loss on early
                  extinguishment of debt.

                  On December 31, 2002 the Company refinanced its then existing
                  senior credit facility with a new senior credit facility that
                  includes a $15.0 million non-amortizing credit facility and a
                  $25.0 million term loan due December 31, 2007. Amounts under
                  the new revolving credit facility are available on a revolving
                  basis through December 31, 2007. We used most of the proceeds
                  from the new term loans to distribute $23.5 million as a
                  dividend to our parent company, True Temper Corporation
                  ("TTC"), on December 31, 2002. TTC used these funds to prepay
                  a portion of its high interest debt.

                  The new senior credit facility provides for interest on the
                  term loan, at the Company's option, at (i) the base rate of
                  the bank acting as administrative agent plus a margin adder of
                  2.25%, or (ii) under a LIBOR option with a borrowing spread of
                  LIBOR plus 3.50%. The rate at December 31, 2002 was 6.50%.

                  The loans under the new senior credit facility are senior to
                  the Notes, and are secured by substantially all of the
                  Company's assets.

                  The new senior credit facility and the Notes contain
                  provisions which, among other things, limit the Company's
                  ability to (i) incur additional indebtedness, (ii) make
                  acquisitions and capital expenditures, (iii) sell assets, (iv)
                  create liens or other encumbrances, (v) make certain payments
                  and dividends, or (vi) merge or consolidate. The new senior
                  credit facility also requires the Company to maintain certain
                  specified financial ratios and tests including, (i) minimum
                  EBITDA levels, (ii) minimum interest coverage and fixed charge
                  coverage ratios, and (iii) maximum leverage ratios. At
                  December 31, 2002 the Company was in compliance with all of
                  the covenants in both the new senior credit facility and the
                  Notes.

                  The terms of the extinguished debt were substantially similar
                  to the new senior credit facility.

                  At December 31, 2002, future minimum principal payments on
                  long-term debt were as follows:

<TABLE>
<CAPTION>
<S>                                                                    <C>
                  2003................................................ $  4,000
                  2004................................................    4,500
                  2005................................................    5,000
                  2006................................................    5,500
                  2007................................................    6,000
                  Thereafter..........................................   99,730
                                                                       --------
                            Total..................................... $124,730
                                                                       ========
</TABLE>


                                       45
<PAGE>
      (b)   LINE OF CREDIT

            The Company may borrow, through December 31, 2007, up to $15,000
            under a revolving credit agreement included in the new senior credit
            facility. Borrowings under the agreement are subject to the same
            provisions described in the long-term debt section of this footnote.
            The Company has no outstanding borrowings under this line of credit
            at December 31, 2002.

(10)  INCOME TAXES

      Total income taxes for the years ended December 31, 2002 and 2001 were
      allocated as follows:

<TABLE>
<CAPTION>
                                                                         2002         2001
                                                                       -------      --------
<S>                                                                    <C>          <C>
      Income from continuing operations                                $5,992       $(11,539)
      Stockholders' equity, for additional minimum pension expense       (247)            --
                                                                       ------       --------
      Total Income taxes                                               $5,745       $(11,539)
                                                                       ======       ========
</TABLE>

      The income tax expense attributable to income for continuing operations,
      for the years ended December 31, 2002, 2001 and 2000, is as follows:

<TABLE>
<CAPTION>
                                               2002        2001        2000
                                            ---------   ---------   ---------
<S>                                         <C>         <C>         <C>
      Current:
        Federal..........................   $      --   $      --   $      48
        State............................          40          40          --
        Foreign..........................         182         191         129
                                            ---------   ---------   ---------
                Total current............         222         231         177
      Deferred:
        Federal..........................       4,858       4,946       4,238
        State............................         912         929         802
        Change in valuation allowance....          --     (17,644)         --
                                            ---------   ---------   ---------
                Total deferred...........       5,770     (11,770)      5,040
                                            ---------   ---------   ---------
                Total....................   $   5,992   $ (11,539)  $   5,218
                                            =========   =========   =========
</TABLE>

      The actual income tax expense attributable to income for continuing
      operations differs from the amounts computed by applying the U.S. federal
      tax rate of 34% to the pretax earnings as a result of the following:

<TABLE>
<CAPTION>
                                                2002         2001        2000
                                             ---------   ---------   ---------
<S>                                          <C>         <C>         <C>
      Computed "expected" tax expense.....   $   5,184   $   4,431   $   3,687
      State tax, net of federal benefit...         628         640         529
      Amortization of goodwill............          --         838         838
      Foreign taxes.......................         182         191         129
      Change in valuation allowance.......          --     (17,644)         --
      Other...............................          (2)          5          35
                                             ---------   ---------   ---------
      Actual income tax expense...........   $   5,992   $ (11,539)  $   5,218
                                             =========   =========   =========
</TABLE>

      On June 29, 1998, Black & Decker Corporation, along with its True Temper
      Sports Division, and True Temper Sports LLC (an affiliate of Cornerstone
      Equity Investors, LLC), entered into an agreement pursuant to which True
      Temper Sports LLC acquired, effective September 30, 1998, an 89% equity
      interest in TTC (collectively referred to as the "Recapitalization"). True
      Temper Sports, Inc. was formed as the operating subsidiary of True Temper
      Corporation. The Recapitalization of TTC was accounted for as a leveraged
      recapitalization, such that the Company's assets and liabilities remain at
      their historical bases for financial reporting purposes, however, for
      income tax purposes, the transaction is treated as a taxable business
      combination, which creates a "step-up" in its tax basis financial
      statements.

      For federal and state income tax purposes, the Recapitalization is a
      taxable business combination and is a qualified stock purchase. The buyer
      and the seller elected jointly to treat the Recapitalization as an


                                       46
<PAGE>
      asset acquisition under section 338(h)(10) of the Internal Revenue Code of
      1986, as amended. An allocation of the purchase price to the tax basis of
      assets and liabilities based on their respective estimated fair values at
      September 30, 1998 was made for income tax purposes. In connection with
      the Recapitalization, the Company recorded a deferred tax asset of
      approximately $52,895, net of a valuation allowance of $17,644, at
      September 30, 1998 related to future tax deductions of the net excess of
      the tax bases of the assets and liabilities over the financial statement
      carrying amounts with a corresponding credit to additional paid-in
      capital.

      In assessing the realizability of deferred tax assets, Company management
      considers whether it is more likely than not that a portion or all of its
      deferred tax assets will be realized. The Company evaluates a variety of
      available evidence in determining the amount of the deferred tax assets to
      be realized including the Company's earnings history, the number of years
      the Company's operating losses can be carried forward and projections of
      future taxable income. Based on the available evidence described above,
      including the Company's historical financial performance since the
      Recapitalization, the Company determined that it was more likely than not
      the Company will realize the tax benefit of all of its deferred tax
      assets. As a result the valuation allowance was eliminated with the change
      in the valuation allowance recorded as a deferred tax benefit in 2001.

      The Company's ability to realize some or all of the benefit from the
      deferred tax asset is dependent upon the Company generating taxable book
      income in the future. Although there can be no assurance of future events,
      management must periodically reevaluate its forecast of the Company's
      future operating results. In the event management determines that
      sufficient future taxable income may not be generated to fully realize the
      deferred tax asset, the Company would record a valuation allowance by a
      charge to income tax expense in the period of such determination.

      The components of deferred tax assets and liabilities at December 31, 2002
      and 2001 are as follows:

<TABLE>
<CAPTION>
                                                            2002         2001
                                                        ----------   ----------
<S>                                                     <C>          <C>
      Deferred tax assets:
        Acquisition costs............................   $      240   $      557
        Goodwill.....................................       50,275       55,090
        Accrued liabilities..........................        1,127          774
        Asset impairment.............................          704          704
        Net operating loss carryforwards.............        3,021        3,584
        Pension liability............................          247           --
        Uniform capitalization.......................          161          161
        Other........................................           38            9
                                                        ----------   ----------
           Gross deferred tax assets.................       55,813       60,879
      Deferred tax liabilities:
        Property, plant and equipment................         (981)        (523)
                                                        ----------   ----------
           Net deferred tax asset....................   $   54,832   $   60,356
                                                        ==========   ==========
</TABLE>

      At December 31, 2002, the Company had net operating loss carryforwards for
      federal and state income tax purposes of approximately $7,700 which expire
      between 2018 and 2022 and $50 alternative minimum tax credit carry forward
      which is carried forward indefinitely.

(11)  EMPLOYEE BENEFIT PLANS

      True Temper Sports, Inc. has a qualified pension plan and a
      post-retirement benefit plan for the hourly union employees at its Amory,
      Mississippi plant. The following tables provide a reconciliation of the
      changes in the plans' benefit obligation and fair value of asset for the
      years ended December 31, 2002 and 2001, and a statement of the plans'
      funded status as of December 31 for each year:


                                       47
<PAGE>
<TABLE>
<CAPTION>
                                                                                       2002         2001
                                                                                   ----------   ----------
<S>                                                                                <C>          <C>
      Reconciliation of benefit obligation:
      Benefit obligation at beginning of year.................................     $   10,515   $    9,360
      Service cost............................................................            337          348
      Interest cost...........................................................            765          694
      Actuarial losses........................................................            937          236
      Benefit payments........................................................           (171)        (123)
                                                                                   ----------   ----------
        Benefit obligation at end of year.....................................     $   12,383   $   10,515
                                                                                   ==========   ==========

      Reconciliation of fair value of plan assets:
        Fair value of plan assets at beginning of year........................     $   13,076   $   13,311
        Actual return on plan assets..........................................         (1,276)        (112)
        Benefit payments......................................................           (171)        (123)
                                                                                   ----------   -----------
           Fair value of plan assets at end of year...........................     $   11,629   $   13,076
                                                                                   ==========   ==========

      Funded status:
        Funded status at December 31..........................................     $     (754)  $    2,561
        Unrecognized net actuarial (loss) gain................................          1,029       (2,376)
                                                                                   ----------   ----------
           Net asset recognized...............................................     $      275   $      185
                                                                                   ==========   ==========
</TABLE>

      The following table provides the amounts recognized in the statement of
      financial position as of December 31:

<TABLE>
<CAPTION>
                                                                                       2002         2001
                                                                                   ----------    ----------
<S>                                                                                <C>           <C>
      Prepaid benefit cost....................................................     $      275    $      185
      Accrued benefit liability, net of tax...................................            403            --
      Accumulated other comprehensive income, net of tax......................           (403)           --
                                                                                   -----------   ----------
           Net amount recognized..............................................     $     275     $      185
                                                                                   ==========    ==========
</TABLE>

      The following table provides the components of net periodic benefit income
      for the defined benefit pension plans for the years ended December 31:

<TABLE>
<CAPTION>
                                                                                       2002          2001
                                                                                   ----------    -----------
<S>                                                                                <C>           <C>
      Service cost of benefits earned during the year.........................     $      337    $      348
      Interest cost on projected benefit obligation...........................            765           694
      Expected return on plan assets..........................................         (1,099)       (1,123)
      Recognized net gains....................................................            (94)         (288)
                                                                                   -----------   -----------
           Net periodic pension income........................................     $      (91)   $     (369)
                                                                                   ==========    ==========
      Weighted average assumptions:
        Discount rate:
           Benefit obligation.................................................           6.75%         7.25%
           Expected return on plan assets.....................................           8.50%         8.50%
           Rate of compensation increase......................................           5.00%         5.00%
</TABLE>

      Assets of the defined benefit plan for hourly union employees consist
      primarily of investments in equity securities, debt securities, and cash
      equivalents.

      In addition to the defined benefit pension plan for hourly employees, the
      Company also maintains a defined contribution plan which covers
      substantially all employees. Expenses for defined contribution plans
      amounted to $748, $720 and $709 in 2002, 2001 and 2000, respectively.

      The Company also participates in certain unfunded health care plans that
      provide post-retirement medical, dental, and life insurance to hourly
      union employees at its Amory, Mississippi plant. The post-retirement plans
      are contributory, and include certain cost-sharing features, such as
      deductibles and co-payments.


                                       48
<PAGE>
      The following table sets forth the benefit obligation of the unfunded
      post-retirement health plans as of December 31:

<TABLE>
<CAPTION>
                                                           2002         2001
                                                        ----------    ---------
<S>                                                     <C>           <C>
      Reconciliation of benefit obligation:
        Benefit obligation at beginning of year......   $    2,691    $   1,974
        Service cost.................................           69           63
        Interest cost................................          191          173
        Participant contributions....................           65           25
        Plan amendments..............................           --         (370)
        Actuarial loss...............................          407          977
        Benefits paid................................         (111)        (151)
                                                        -----------   ----------
        Benefit obligation at end of year............        3,312        2,691
        Unrecognized prior service cost..............          294          332
        Unrecognized net actuarial (loss) gain.......       (1,098)        (726)
                                                        ----------    ---------
        Accrued benefit costs........................   $    2,508    $   2,297
                                                        ==========    =========
</TABLE>

      The following table provides the components of net periodic benefit
      expense for the unfunded post retirement health plans for the years ended
      December 31:

<TABLE>
<CAPTION>
                                                            2002         2001
                                                         ---------     --------
<S>                                                      <C>           <C>
      Service cost...................................    $      69     $     63
      Interest cost..................................          191          173
      Amortization of prior service costs............          (38)         (38)
      Recognized net losses..........................           35           27
                                                         ---------     --------
        Net periodic cost............................    $     257     $    225
                                                         =========     ========
      Discount Rate:
        Benefit obligation...........................       6.75%         7.25%
</TABLE>

      The healthcare cost trend rate used to determine the post-retirement
      benefit obligation was 10.5% for 2002. This rate decreases gradually to an
      ultimate rate of 5.0% in 2013, and remains at that level thereafter. The
      trend rate is a significant factor in determining the amounts reported.
      The following table sets forth the impact of a 1.00% change in the trend
      rate:

<TABLE>
<CAPTION>
<S>                                                                   <C>
      Effect of 1.00% increase in trend rate on:
        Net periodic cost........................................     $      14
        Post-retirement benefit obligation.......................     $     166
      Effect of 1.00% decrease in trend rate on:
        Net periodic cost........................................     $     (15)
        Post-retirement benefit obligation.......................     $    (171)
</TABLE>

(12)  COMMITMENTS AND CONTINGENCIES

      (a)   LEASE OBLIGATION

            The Company is obligated under various non-cancelable leases for
            office facilities and equipment. These leases generally provide for
            renewal options and, in the case of facilities leases, for periodic
            rate increases based upon economic factors. All non-cancelable
            leases with an initial term greater than one year have been
            categorized as either capital or operating leases in conformity with
            FASB Statement No. 13, Accounting for Leases.

            Future minimum payments under non-cancelable operating leases with
            initial terms of one year or more as of December 31, 2002 are as
            follows:

<TABLE>
<CAPTION>
                                                                     OPERATING
                                                                      LEASES
                                                                     ---------
<S>                                                                  <C>
             2003...............................................     $    807
             2004...............................................          448
             2005...............................................          316
             2006...............................................           11
                                                                     --------
                  Total minimum lease payments..................     $  1,582
                                                                     ========
</TABLE>


                                       49
<PAGE>
            Rental expense on operating leases, excluding sublease rent
            received, was $870, $948, and $962 for 2002, 2001 and 2000,
            respectively.

(b)      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. As of December 31, 2002 and 2001, the
            Company has accrued $137 and $101, respectively, for estimated
            product warranty claims. The accrued product warranty costs are
            based primarily on historical experience of actual warranty claims
            as well as current information on product costs. Warranty claims
            expense for each of the years 2002, 2001, and 2000 were $540, $441,
            and $756, respectively.

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

<TABLE>
<CAPTION>
<S>                                                                       <C>
            January 1, 2002............................................   $ 101
            Liabilities accrued for warranties issued during the
              period ..................................................     540
            Warranty claims paid during the period.....................    (504)
                                                                          -----
            December 31, 2002..........................................   $ 137
                                                                          =====
</TABLE>

      (c)   LEGAL PROCEEDINGS

            The company has certain contingent liabilities resulting from
            litigation and claims incident to the ordinary course of business.
            Management believes that the probable resolution of such
            contingencies will not materially affect the financial position or
            results of operations of the Company.

(13)  RELATED PARTY TRANSACTIONS

      In 1998, True Temper entered into a management services agreement with
      Cornerstone Equity Investors, LLC ("Cornerstone"). Cornerstone is a
      related party through its indirect management and ownership interest in
      True Temper Corporation.

      In accordance with this agreement, Cornerstone has agreed to provide:

      (1)   general management services;

      (2)   assistance with the identification, negotiation and analysis of
            acquisitions and dispositions;

      (3)   assistance with the negotiation and analysis of financial
            alternatives; and

      (4)   other services agreed upon by True Temper and Cornerstone.

      In exchange for such services, Cornerstone or its nominee receives:

      (1)   an annual advisory fee of $0.5 million payable quarterly, plus
            reasonable out-of-pocket expenses;

      (2)   a transaction fee in an amount equal to 1.0% of the aggregate
            transaction value in connection with the consummation of any
            material acquisition, divestiture, financing or refinancing by True
            Temper or any of its subsidiaries.

         The management services agreement has an initial term of five years,
         subject to automatic one-year extensions unless the Company or
         Cornerstone provides written notice of termination. The annual advisory
         fee of $0.5 million is an obligation of the Company and is also
         contractually subordinated to the Notes and the Bank Credit facilities.


                                       50
<PAGE>
         In addition to reimbursing Cornerstone for reasonable out-of-pocket
         expenses, the Company paid Cornerstone $0.5 million for each of the
         years 2002, 2001 and 2000, in accordance with the agreement.

(14)  SEGMENT AND OTHER RELATED DISCLOSURES

      (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 and composite golf club shafts for use exclusively
            in the golf industry. The performance sports segment manufactures
            and sells high strength, high tolerance tubular components for
            bicycle, hockey and other recreational sport markets. The accounting
            policies for these segments are the same as those described in the
            summary of significant accounting policies. The Company evaluates
            the performance of these segments based on segment sales and gross
            profit. The Company has no inter-segment sales. General corporate
            assets, that are not allocated down to segments, include: cash,
            non-trade receivables, deferred tax assets, deferred financing costs
            and goodwill created during the acquisition of the Company by Black
            & Decker.

<TABLE>
<CAPTION>
                                                AS OF AND FOR THE YEARS ENDED
                                                        DECEMBER 31,
                                           -------------------------------------
                                               2002         2001         2000
                                           -----------  -----------   ----------
<S>                                        <C>          <C>           <C>
            Net sales:
              Golf shafts..............    $   102,764  $   106,313   $  106,530
              Performance sports.......          4,637        4,770        4,106
                                           -----------  -----------   ----------
                      Total............    $   107,401  $   111,083   $  110,636
                                           ===========  ===========   ==========
            Gross profit:
              Golf shafts..............    $    40,996  $    41,726   $   44,140
              Performance sports.......          1,244        1,622        1,114
                                           -----------  -----------   ----------
                      Total............    $    42,240  $    43,348   $   45,254
                                           ===========  ===========   ==========
            Total assets:
              Jointly used assets......    $     1,596  $     1,586   $    2,560
              Golf shafts..............         39,759       45,599       40,073
              Performance sports.......          3,057        2,767        1,652
                                           -----------  -----------   ----------
                      Total............    $    44,412  $    49,952   $   44,285
                                           ===========  ===========   ==========
</TABLE>

            Revenues from two customers of True Temper's golf shafts segment
            represent approximately $14,000 or 12.8%, and $11,000 or 10.1%
            respectively of the Company's 2002 revenues. Revenues from one
            customer of True Temper's golf shafts segment represent
            approximately $12,000 or 10.4% of the Company's 2001 revenues. No
            single customer had revenues greater than 10% of the total Company
            revenues for 2000.

            Following are reconciliations of total reportable segment assets to
            total Company assets, and total reportable segment gross profit to
            total Company income before income taxes:

<TABLE>
<CAPTION>
                                                           AS OF DECEMBER 31,
                                                       ------------------------
                                                           2002         2001
                                                       -----------  -----------
<S>                                                    <C>          <C>
              Total assets:
                Total from reportable segments.....    $    44,412  $    49,952
                General corporate..................        138,968      139,378
                                                       -----------  -----------
                        Total......................    $   183,380  $   189,330
                                                       ===========  ===========
</TABLE>


                                       51
<PAGE>
<TABLE>
<CAPTION>
                                                                      FOR THE YEARS ENDED DECEMBER 31,
                                                                   -------------------------------------
                                                                       2002         2001         2000
                                                                   -----------  -----------  -----------
<S>                                                                <C>           <C>          <C>
            Total reportable segment gross profit.............     $    42,240   $  43,348    $   45,254
            Less:
              Selling, general and administrative
                 expenses.....................................         13,578       14,963        16,899
              Amortization of goodwill........................             --        2,695         2,701
              Impairment charge on long-lived assets..........             --           --         1,053
              Business development and start-up costs.........            312           --            --
              Restructuring costs.............................             --           --             7
              Loss on early extinguishment of long-term debt              777           --            --
              Interest expense................................         12,236       12,660        13,693
              Other expense (income), net.....................             93           (2)           56
                                                                    ---------    ---------    ----------
            Total Company income before income taxes..........      $  15,244    $  13,032    $   10,845
                                                                    =========    =========    ==========
</TABLE>

      (b)   SALES BY GEOGRAPHIC REGION

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

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED DECEMBER 31,
                                          --------------------------------------
                                              2002         2001          2000
                                          -----------  -----------   -----------
<S>                                       <C>          <C>           <C>
            U.S......................     $    77,137  $    87,647   $    90,407
            International............          30,264       23,436        20,229
                                          -----------  -----------   -----------
                      Total..........     $   107,401  $   111,083   $   110,636
                                          ===========  ===========   ===========
</TABLE>

            No individual country or geographic area outside the U.S. accounts
            for 10% or more of total sales. Assets by location are not
            disclosed, as assets located outside the U.S. are immaterial.

(15)  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      The following is a summary of unaudited quarterly results of operations
      for the years ended December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                    FIRST      SECOND       THIRD       FOURTH
                                   QUARTER     QUARTER     QUARTER      QUARTER
                                 ----------  ----------  ----------   ----------
<S>                              <C>         <C>         <C>          <C>
         2002
         Net sales............   $   29,362  $   29,892  $   22,010   $   26,137
         Gross profit.........       10,598      12,985       8,705        9,952
         Net income...........        2,376       3,741       1,453        1,682
         2001
         Net sales............   $   34,392  $   34,552  $   20,012   $   22,127
         Gross profit.........       12,998      14,242       7,763        8,345
         Net income...........        2,322       3,420         281       18,548
</TABLE>

      In the fourth quarter of 2001, the Company eliminated the $17,644
      valuation allowance on its deferred tax asset and recorded the change as
      an income tax benefit. See footnote 10, Income Taxes, for further
      discussion.


                                       52
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

    None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The directors and executive officers of True Temper as of December 31,
2002 are as follows:

<TABLE>
<CAPTION>
              NAME              AGE                        POSITION
    -----------------------     ---  ------------------------------------------------------------
<S>                             <C>  <C>
    Scott C. Hennessy......     43   Chief Executive Officer, President and Director
    Fred H. Geyer..........     42   Senior Vice President, Chief Financial Officer and Treasurer
    Russell S. Minick......     42   Senior Vice President of Sales and Marketing
    Adrian H. McCall.......     44   Senior Vice President of Global Distribution and Sales
    William R. Beatty......     42   Director of Marketing
    Stephen M. Brown.......     37   Vice President of Human Resources
    David N. Hallford......     49   Vice President of Sales/Golf Products
    Graeme Horwood.........     58   Vice President Engineering, Research and Development
    Gene Pierce............     36   Vice President of Manufacturing
    Mark Rossi.............     46   Director
    Robert A. Knox.........     51   Director
    Raymond A. DeVita......     66   Director
    Patrick N.W. Turner....     43   Director
</TABLE>

      Scott C. Hennessy has been President of True Temper since 1996, and Chief
Executive Officer and Director since October 1998. Mr. Hennessy joined True
Temper in 1994 as Vice President-Sales and Marketing. From 1980 to 1994, Mr.
Hennessy held various management positions at Black & Decker in sales, marketing
and product development. Mr. Hennessy sits on the Board of Governors of the
National Golf Foundation. Mr. Hennessy graduated magna cum laude with a B.S.
from the University of Delaware.

      Fred H. Geyer has been the Senior Vice President since August 2002 and
Chief Financial Officer of True Temper since February 1998. From 1985 to 1998,
Mr. Geyer held various positions at Emerson Electric Company, including Vice
President-Finance in the Air Moving Motor Division. Prior to that, Mr. Geyer
worked at Arthur Andersen LLP as a Senior Auditor. Mr. Geyer is a Certified
Public Accountant and is a member of the American Institute of Certified Public
Accountants. Mr. Geyer graduated magna cum laude with a B.S. from the University
of Missouri at St. Louis.

      Russell S. Minick has been Senior Vice President of Sales and Marketing
since August 2002. From January 2000 to July 2002, Mr. Minick was Director of
Global Warranty Operations for Ford Motor Company. From May of 1983 to January
2000, Mr. Minick held numerous sales, marketing and general management positions
with the Maytag Corporation. Mr. Minick received a B.S. in Marketing from the
University of Northern Iowa.

      Adrian H. McCall has been the Senior Vice President of Global Distribution
and Sales since August 2002. From March 1999 to July 2002 Mr. Mc Call served as
the Vice President of International Sales and Marketing since March 1999. From
September 1995 to March 1999 Mr. McCall served as Director of International
Sales and Marketing for the Company. From May 1992 to September 1995, Mr. McCall
served as Director of International Operations of The Upper Deck Company, a
manufacturer and distributor of baseball cards. Mr. McCall graduated cum laude
with a B.S. from the University of Hartford.

      William R. Beatty has been Director of Marketing since 1996. From December
1993 to March 1996, Mr. Beatty was Group Product Manager and Manager of
International Sales and Marketing for Rubbermaid. Mr. Beatty received a B.S.
from Ohio State University and an M.B.A. from Pepperdine University.

      Stephen R. Brown has been the Vice President of Human Resources since
August 2002. From January 1998 to July 2002 Mr. Brown has served as Director of
Human Resources since 1997. From September 1996 to


                                       53
<PAGE>
December 1997, Mr. Brown served as Manager-Human Resources. Prior to that, since
1992, Mr. Brown served in various Human Resource management positions with
Emerson Electric Company. Mr. Brown received a B.A. from the University of South
Carolina.

      David N. Hallford has been Vice President Sales/Golf Products of True
Temper since 1994. From August 1985 to 1994, Mr. Hallford held various positions
in sales and customer service at Plough Corporation. Mr. Hallford has worked as
an on-course golf professional responsible for management and retail sales. Mr.
Hallford graduated magna cum laude with a B.S. from the University of Memphis.

      Graeme Horwood has been the Vice President of Engineering, Research and
Development since June 2001. From April 2000 to May 2001 Mr. Horwood served as
the Company's Senior Manager Technical Services. From 1986 to 2000, Mr. Horwood
held various management positions at Apollo Sports Technologies. Mr. Horwood is
a Chartered Engineer as well as a member of the Institute of Mechanical
Engineers both in the United Kingdom. Mr. Horwood graduated first class honors
with a B.S. from Coventry University.

      Gene Pierce has been Vice President of Manufacturing since June 2001. From
January 1999 to June 2001 Mr. Pierce served as Director of Steel Operations and
Plant Manager of our steel facility. From May 1997 to January 1999 Mr. Pierce
served as Business Operations Manager at Metalloy Corporation. Mr. Pierce
received both a B.S. and M.B.A. from Mississippi State University.

      Mark Rossi became a director of True Temper in October 1998. Mr. Rossi has
served as Senior Managing Director of Cornerstone Equity Investors L.L.C. since
December 1996. From 1983 to 1996, Mr. Rossi was affiliated with the general
partners of various private equity funds managed by Prudential. Mr. Rossi is
also a director of Maxwell Technologies, Inc., Novatel Wireless, Inc. and
several private companies. Mr. Rossi received a B.A. from Saint Vincent College
and an M.B.A. from Northwestern University.

      Robert A. Knox became a director of True Temper in October 1998. Mr. Knox
has served as Senior Managing Director of Cornerstone Equity Investors, L.L.C.
since December 1996. From 1983 to 1996, Mr. Knox was affiliated with the general
partners of various private equity funds managed by Prudential. Mr. Knox is also
a director of Health Management Associates, Lechters, Inc. and several private
companies. Mr. Knox received a B.A. and an M.B.A. from Boston University.

      Raymond A. DeVita became a director of True Temper in October 1998. Mr.
DeVita served as President of True Temper from 1994 to 1996 and Executive Vice
President of Black & Decker from 1989 to 1996. Mr. DeVita retired in 1996. Prior
to 1989, Mr. DeVita was Executive Vice President of Emhart. Mr. DeVita is also a
director of Black & Decker Health Care Management Corp. Mr. DeVita received a
B.S. and M.S. from Tufts University.

      Patrick N.W. Turner became a director of True Temper in April 2000 in
connection with the refinancing of True Temper Corporation Notes. Mr. Turner is
co-managing partner of Canterbury Mezzanine Capital I and II where he has been
since July 1996. Mr. Turner was a director at Barclays Mezzanine Group a part of
Barclays Bank PLC from 1989 to 1995. Currently, Mr. Turner is a director of one
other private company. Mr. Turner received an M.A. from Oxford University in
England and an M.B.A. from New York University.

ITEM 11.  EXECUTIVE COMPENSATION

      The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to True Temper for 2002,
2001 and 2000 of those persons who served as (1) the Chief Executive Officer
during 2002 and (2) the other four most highly compensated executive officers of
True Temper for 2002 (the "Named Executive Officers"):


                                       54
<PAGE>
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                       ANNUAL COMPENSATION
                                            ---------------------------------------------
                                                             BONUS         OTHER ANNUAL         ALL OTHER
NAME AND PRINCIPAL POSITION         YEAR      SALARY        EARNED        COMPENSATION(1)    COMPENSATION(2)
---------------------------        -----    ----------   ------------     ---------------    ---------------
<S>                                 <C>     <C>          <C>              <C>                <C>
Scott C. Hennessy............       2002    $  321,950   $  375,000         $  27,125           $10,000
  Chief Executive Officer,          2001    $  297,917   $  225,000         $  27,762           $ 8,500
  President and Director            2000    $  273,958   $  683,000(3)      $ 101,236(4)        $ 8,500

Fred H. Geyer................       2002    $  161,583   $  150,000         $   9,263           $ 9,609
  Senior Vice President, Chief      2001    $  151,167   $   75,000         $     167           $ 8,500
  Financial Officer and Treasurer   2000    $  141,167   $  165,000         $     151           $ 8,500

Russell S. Minick............       2002    $   77,705   $  110,000         $  73,358 (5)       $    --
  Senior Vice President of Sales    2001            --           --                --                --
  and Marketing                     2000            --           --                --                --

Adrian H. McCall.............       2002    $  148,917   $  110,000         $   9,243           $ 9,478
  Senior Vice President of          2001    $  140,583   $   50,000         $   2,989           $ 8,500
  International Sales and Marketing 2000    $  135,542   $   75,000         $     143           $ 8,500

Gene Pierce..................       2002    $  143,333   $   70,000         $   1,999           $ 9,167
  Vice President of Operations      2001    $  132,250   $   40,000         $     899           $ 8,500
                                    2000    $  114,586   $   70,000         $     689           $ 7,029
</TABLE>

----------
(1) Includes certain life insurance benefits; and where applicable, country club
    dues and car allowance.

(2) Includes company contributions under our 401(k) plan.

(3) Amount includes a $500,000 performance bonus for 2000 and a service payment
    of $183,000. The service payment was issued pursuant to an agreement that
    was made with Mr. Hennessy in conjunction with the Recapitalization
    agreement between Black & Decker and True Temper Sports LLC.

(4) Includes the dollar value of the difference between the price paid for
    common stock of True Temper Corporation and the fair market value of such
    stock at the time of purchase.

(5) Amount includes moving and relocation benefits.

PENSION PLAN

    True Temper Sports, Inc. sponsors a tax qualified defined benefit pension
plan. Only the hourly employees at the Amory, Mississippi manufacturing plant,
who are part of the collective bargaining unit of the United Steel Workers, are
eligible to participate in the plan. Benefits are calculated based primarily on
years of service, among other factors. As of December 31, 2002 none of True
Temper Corporation's named executive officers were eligible to participate in
the plan.

STOCK OPTION PLAN

      The Board of Directors has adopted a stock option plan which provides for
the grant to certain key employees and/or directors of True Temper of stock
options in True Temper Corporation that are non-qualified options for federal
income tax purposes. The stock option plan is administered by the Compensation
Committee of the Board of Directors. The Compensation Committee has broad powers
under the stock option plan, including exclusive authority to determine:

    (1) who will receive awards;

    (2) the type, size and terms of awards;

    (3) the time when awards will be granted; and

    (4) vesting criteria, if any, of the awards.


                                       55
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

      The following table sets forth all True Temper Corporation common stock
options granted to Named Executives Officers during 2002.

<TABLE>
<CAPTION>
                                                                                               POTENTIAL
                                                                                           REALIZED VALUE OF
                                                   % OF                                      ASSUMED ANNUAL
                                      NUMBER OF    TOTAL                                  RATES OF STOCK PRICE
                                     SECURITIES GRANTED TO   EXERCISE                         APPRECIATION
                                     UNDERLING   EMPLOYEES   OR BASE                         FOR OPTION TERM
                                       OPTIONS  IN FISCAL      PRICE       EXPIRATION     --------------------
NAME                                   GRANTED     YEAR      ($ / SH)         DATE            5%        10%
---------------------------------    ---------- ----------  ---------    --------------  ---------   ---------
<S>                                  <C>        <C>         <C>          <C>             <C>         <C>
Scott C. Hennessy................      100,000      26.0%      $3.25     March 1, 2012    $204,391   $517,966
Fred H. Geyer....................       35,000       9.1%      $3.25     March 1, 2012      71,537     181,288
Russell S. Minick................      125,000      32.5%      $3.25     August 5, 2012    255,488     647,458
Adrian H. McCall.................       25,000       6.5%      $3.25     March 1, 2012      51,098     129,492
Gene Pierce......................       15,000       3.9%      $3.25     March 1, 2012      30,659     77,695
</TABLE>

COMPENSATION OF DIRECTORS

      True Temper will reimburse directors for any out-of-pocket expenses
incurred by them in connection with services provided in such capacity. In
addition, we may compensate directors for services provided in such capacity.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

      As members of the Compensation Committee it is our duty to monitor the
performance and compensation of executive officers and other key employees, and
to make appropriate recommendations and reports to the Board of Directors
concerning matters of executive compensation.

      The Company maintains a compensation program designed to motivate, retain
and attract management, with incentives linked to financial performance and
enhanced shareholder value. The fundamental philosophy is to relate the amount
of compensation for an executive directly to his or her contribution to the
Company's success in achieving superior performance objectives.

      The Company's executive compensation program consists of three components:
1) base salary; 2) potential for annual incentive compensation based on Company
performance; and, 3) the opportunity to earn long-term stock-based incentives
which are intended to encourage achievement of superior long-term results and to
align executive officer interests with those of the shareholders. The base
salary element is developed based on the performance of the individual
executives with reference to industry, peer group and national surveys, with the
objective of having the Company's executive officers receive a level of base
salary similar to the average base salary of individuals at similarly sized
companies, performing comparable duties.

      The annual incentive compensation element is based on the Company's
attainment of certain levels of profitability. The long-term stock-based element
is developed by reference to competitive practices and trends of other companies
which use stock options as a component of executive compensation. Long-term
stock-based incentives are to incentivize executive officers to increase
shareholder value. Accordingly, the Committee has taken into account the amount
and value of options held by each of the executive officers when considering new
grants to assure that deserving executives have an equity participation in the
Company. In determining the stock option grants for fiscal 2001, the Committee
considered the current stock holdings of each individual, their responsibilities
and historical and anticipated future contributions to True Temper's
performance.

      Because of the scope of his responsibilities as Chief Executive Officer
and President, and given the equity stake he has in the Company, the
Compensation Committee separately considers the compensation of Mr. Hennessy.
His salary, like that of the other officers, is determined by reference to
published compensation surveys, and his salary level is in line with such
published salary levels for comparable positions of responsibility. The
Committee believes a portion of the total annual compensation of Mr. Hennessy
should be directly tied to the Company's performance. Accordingly, Mr. Hennessy
also earns a cash bonus based on the True Temper's operating performance during
the current fiscal year.


                                       56
<PAGE>
      The Compensation Committee is of the opinion that the compensation levels
for the Named Executive Officers are reasonable when compared to similar
positions of responsibility and scope in similar industries and that an
appropriate amount of total compensation is based on the performance of the
Company, and therefore provides sufficient incentive for these individuals to
attain improved results in the future.

COMPENSATION COMMITTEE

Raymond A. DeVita
Scott C. Hennessy
Robert A. Knox

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      All of the outstanding shares of our capital stock are owned by True
Temper Corporation. The following table sets forth information with respect to
the beneficial ownership of True Temper Corporation's capital stock as of March
27, 2003 by:

    (1)  all stockholders of True Temper Corporation that own more than 5% of
         any class of such voting securities,

    (2)  each director and named executive officer, and

    (3)  all directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                                                   PERCENTAGE
                                                      NUMBER                           OF       PERCENTAGE OF
                                        NUMBER OF       OF        PERCENTAGE OF    OUTSTANDING     VOTING
                                        PREFERRED     COMMON        OUTSTANDING       COMMON       CAPITAL
      NAME OF BENEFICIAL OWNER(1)        SHARES       SHARES     PREFERRED STOCK      STOCK        STOCK
  ---------------------------------    ----------   ---------    ---------------   -----------  -------------
<S>                                    <C>          <C>          <C>               <C>          <C>
  True Temper Sports LLC(2)........    11,750,000   8,192,163        100.0%         81.3%          81.3%
    c/o Cornerstone Equity Investors,
    L.L.C.
    717 Fifth Avenue
      Suite 1100
    New York, New York 10022
  Scott C. Hennessy................            --     956,951           --           9.5%           9.5%
  Fred H. Geyer....................            --     120,366           --           1.2%           1.2%
  Russell S. Minick................            --      23,438           --             *              *
  Adrian H. McCall.................            --      80,238           --             *              *
  Gene Pierce......................            --      24,167           --             *              *
  Raymond A. DeVita................            --      11,500           --             *              *
  All directors and executive
  officers as a group (9 persons)(3)           --   1,334,926           --          13.3%          13.3%
</TABLE>

----------
 *  Less than 1%.

(1) Except as otherwise indicated, the address for all persons shown on this
    table is c/o True Temper Sports, Inc., 8275 Tournament Drive, Suite 200,
    Memphis, TN 38125.

(2) Membership interests in True Temper Sports, LLC are held by Cornerstone
    Equity Investors IV, L.P. (73.9%), GS Private Equity Partners, L.P. (17.2%),
    GS Private Equity Partners Offshore, L.P. (8.3%) and other investors (0.6%).

(3) Includes issuance of management incentive shares. Excludes stock held by
    True Temper Sports LLC, an affiliate of Cornerstone Equity Investors IV, LP,
    for which the individual directors who are affiliates of Cornerstone
    disclaim beneficial ownership.


                                       57
<PAGE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RECAPITALIZATION AGREEMENT

      In accordance with the terms of the recapitalization agreement, Black &
Decker has indemnified True Temper Sports, LLC, the equity investor, against any
and all damages resulting from any misrepresentation or breach of warranty of
Black & Decker or of True Temper Corporation contained in the recapitalization
agreement, a claim which is typically made the earlier of 18 months following
the closing date or the date on which audited financial statements for the 1999
calendar year are delivered. The indemnification obligations of Black & Decker
under the recapitalization agreement are generally subject to a $5.0 million
basket amount and limited to an aggregate payment of no more than 25% of the
adjusted purchase price received by Black & Decker pursuant to the
recapitalization. Black & Decker will indemnify True Temper for 50% of all
environmental liability up to an aggregate amount of $10.0 million and 80% of
any environmental liability in excess of $10.0 million.

      In addition, Black & Decker has agreed for a period of five years after
the closing date not to compete with True Temper in the business of the company
as conducted as of the closing date.

      As provided in the recapitalization agreement, True Temper Sports, Inc.
may pay contingent amounts to Black & Decker. The amount of such payments, if
any, will be equal to 25% of the EBIT contribution derived from True Temper
Sports, Inc.'s sales to Thiokol. These sales will be in accordance with the
Thiokol contract which is defined in the recapitalization agreement. Such
payments will be made annually during the initial term of the Thiokol contract
based on the EBIT contribution derived in each such year. The Company has made
no payments or recorded any current obligation to make such a payment in
accordance with the recapitalization agreement.

STOCKHOLDERS AGREEMENT

      Upon the consummation of the recapitalization, True Temper Corporation and
all of its stockholders, including True Temper Sports, LLC and Black & Decker,
entered into a stockholders agreement. The stockholders agreement:

      (1)   requires that each of the parties vote all of their voting
            securities of True Temper Corporation and take all other necessary
            or desirable actions to cause the size of the board of directors of
            True Temper Corporation to be established at the number of members
            determined by True Temper Sports, LLC and to cause designees of True
            Temper Sports, LLC representing a majority of the board of directors
            to be elected to the board of directors of True Temper Corporation;

      (2)   grants True Temper Corporation and True Temper Sports, LLC a right
            of first refusal on any proposed transfer of shares of capital stock
            of True Temper Corporation held by Black & Decker and any of the
            other stockholders;

      (3)   grants tag-along rights on certain transfers of shares of capital
            stock of True Temper Corporation;

      (4)   requires the stockholders to consent to a sale of True Temper
            Corporation to an independent third party if such sale is approved
            by certain holders of the then outstanding shares of the company's
            voting common stock; and

      (5)   except in certain instances, prohibits Black & Decker from
            transferring any shares of capital stock of True Temper Corporation
            for certain periods following the consummation of the
            recapitalization. Certain of the foregoing provisions of the
            stockholders agreement will terminate upon the consummation of an
            initial public offering, a qualified public offering or an approved
            sale.


                                       58
<PAGE>
EQUITY REGISTRATION RIGHTS AGREEMENT

      Upon the consummation of the recapitalization, True Temper Corporation and
all of its stockholders, including True Temper Sports, LLC and Black & Decker,
entered into the equity registration rights agreement. Under the equity
registration rights agreement, the holders of a majority of the True Temper
Corporation registrable securities and/or its affiliates have the right to
require True Temper Corporation to register any or all of their shares of common
stock of True Temper Corporation under the Securities Act at the company's
expense. In addition, all holders of registrable securities are entitled to
request the inclusion of any shares of common stock of True Temper Corporation
subject to the equity registration rights agreement in any registration
statement filed by True Temper Corporation at its expense whenever the company
proposes to register any of its common stock under the Securities Act. In
connection with all such registrations, True Temper Corporation has agreed to
indemnify all holders of registrable securities against those liabilities
described in the stockholders agreement, including liabilities under the
Securities Act.

MANAGEMENT SERVICES AGREEMENT

      In connection with the recapitalization, True Temper entered into a
management services agreement with Cornerstone. In accordance with this
agreement, Cornerstone has agreed to provide:

      (1)   general management services;

      (2)   assistance with the identification, negotiation and analysis of
            acquisitions and dispositions;

      (3)   assistance with the negotiation and analysis of financial
            alternatives; and

      (4)   other services agreed upon by True Temper and Cornerstone.

      In exchange for such services, Cornerstone or its nominee receives:

      (1)   an annual advisory fee of $0.5 million payable quarterly, plus
            reasonable out-of-pocket expenses;

      (2)   a transaction fee in an amount equal to 1.0% of the aggregate
            transaction value in connection with the consummation of any
            material acquisition, divestiture, financing or refinancing by True
            Temper or any of its subsidiaries; and

      (3)   a one-time transaction fee of $3.0 million upon the consummation of
            the recapitalization.

      The management services agreement has an initial term of five years,
subject to automatic one-year extensions unless we or Cornerstone provide
written notice of termination. The annual advisory fee of $0.5 million is an
obligation of ours and is also contractually subordinated to the Notes and the
senior credit facilities.

ITEM 14. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

      The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer along with the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based upon that
evaluation, the Company's Chief Executive Officer along with the Company's Chief
Financial Officer concluded that as of March 27, 2003 the Company's disclosure
controls and procedures (1) were effective in alerting them, in a timely manner,
to material information relating to the Company required to be included in the
Company's periodic SEC filings and (2) were adequate to ensure that information
required to be disclosed by the Company in the reports filed or submitted by the
Company under the Exchange Act is


                                       59
<PAGE>
recorded, processed and summarized and reported within the time periods
specified in the SEC's rules and forms.

CHANGES IN INTERNAL CONTROLS

      There have been no significant changes in the Company's internal controls
or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.


                                       60
<PAGE>
                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULE, AND REPORTS ON FORM 8-K

      (a)   DOCUMENTS FILED AS PART OF THIS REPORT:

          1.  Financial Statements. The following financial statements of True
              Temper Sports, Inc. have been included in part II, item 8 of this
              report on Form 10-K.

              Independent Auditors' Report
              Statements of Operations for the three years ended December 31,
              2002 Balance Sheets at December 31, 2002 and 2001 Statements of
              Changes in Stockholder's Equity for the three years ended December
              31, 2002 Statements of Cash Flows for the three years ended
              December 31, 2002 Notes to Financial Statements

          2.  Financial Statement Schedule.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                               Additions
                                                        -----------------------
                                            Balance at  Charged to   Charged to                Balance at
                                             Beginning   Costs and     Other                      Ended
                                            of Period    Expenses    Accounts   Deductions (1)  of Period
                                            ----------  ----------   ---------- -------------- ----------
                                               Dollars in thousands
                                                  (debit)/credit
<S>                                         <C>         <C>          <C>        <C>            <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
          Year Ended December 31, 2000           499       1,124         --        (190)          1,433
          Year Ended December 31, 2001         1,433          87         --        (981)            539
          Year Ended December 31, 2002           539         220         --        (106)            653

RESTRUCTURING RESERVES
          Year Ended December 31, 2000           160          --         --        (160)(2)          --
          Year Ended December 31, 2001            --          --         --          --              --
          Year Ended December 31, 2002            --          --         --          --              --
</TABLE>

----------
    (1) Deductions represent (i) uncollectible accounts charged against the
        allowance for doubtful accounts and (ii) actual costs incurred for
        restructuring activities.

    (2) Represents (i) $42 of actual costs incurred for restructuring activities
        and (ii) the remaining balance of the Seneca plant restructuring reserve
        of $118 was netted against impairment charge on long-lived assets.

      All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.

          3.  Exhibits.

              See the Index to Exhibits.

      (b) REPORTS ON FORM 8-K.

          No reports on Form 8-K were filed during the quarter ended
          December 31, 2002.


                                       61
<PAGE>
                                   SIGNATURES

      Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: March 27, 2003

                                         True Temper Sports, Inc.

                                         By: /s/ SCOTT C. HENNESSY
                                             ------------------------------
                                         Name:   Scott C. Hennessy
                                         Title:  President and
                                                 Chief Executive Officer

                                         By: /s/ FRED H. GEYER
                                             ------------------------------
                                         Name:   Fred H. Geyer
                                         Title:  Senior Vice President,
                                                 Chief Financial Officer
                                                 and Treasurer

      Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated, on March 27, 2003.

                                         By: /s/ ROBERT A. KNOX
                                             ------------------------------
                                         Name:   Robert A. Knox
                                         Title:  Director

                                         By: /s/ MARK ROSSI
                                             ------------------------------
                                         Name:   Mark Rossi
                                         Title:  Director

                                         By: /s/ PATRICK N.W. TURNER
                                             ------------------------------
                                         Name:   Patrick N.W. Turner
                                         Title:  Director

                                         By: /s/ RAYMOND A. DEVITA
                                             ------------------------------
                                         Name:   Raymond A. DeVita
                                         Title:  Director


                                       62
<PAGE>
                                 CERTIFICATIONS

I, Scott C. Hennessy, President and Chief Executive Officer, certify that:

1.    I have reviewed this annual report on Form 10-K of True Temper Sports,
      Inc.;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this annual
      report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      (a)   Designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this annual
            report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this annual report (the "Evaluation Date"); and

      (c)   Presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of the registrant's board of directors (or persons performing
      the equivalent function):

      (a)   All significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      (b)   Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officer and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: March 27, 2003

By: /s/ SCOTT C. HENNESSY
    -----------------------------------------
Name:   Scott C. Hennessy
Title:  President and Chief Executive Officer


                                       63
<PAGE>
                                 CERTIFICATIONS

I, Fred H. Geyer, Senior Vice President, Chief Financial Officer, and Treasurer,
certify that:

1.    I have reviewed this annual report on Form 10-K of True Temper Sports,
      Inc.;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this annual
      report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      (a)   Designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this annual
            report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this annual report (the "Evaluation Date"); and

      (c)   Presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of the registrant's board of directors (or persons performing
      the equivalent function):

      (a)   All significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      (b)   Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officer and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: March 27, 2003

By: /s/ FRED H. GEYER
    ------------------------------------------
Name:   Fred H. Geyer
Title:  Senior Vice President, Chief Financial
        Officer & Treasurer


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<PAGE>
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
-------

<S>         <C>
2.1         Reorganization, Recapitalization and Stock Purchase Agreement dated
            as of June 29, 1998 by and between The Black & Decker Corporation,
            True Temper Sports, Inc. and TTSI LLC ("Recapitalization Agreement")
            (filed as exhibit 2.1 to the Company's Registration Statement on
            Form S-4 (No. 333-72343), as filed with the Securities and Exchange
            Commission (the "SEC") on February 12, 1999 (the "Form S-4").*

2.2         Amendment No. 1 to Recapitalization Agreement dated August 1, 1998
            (filed as exhibit 2.2 to Form S-4).*

2.3         Amendment No. 2 to Recapitalization Agreement dated September 30,
            1998 (filed as exhibit 2.3 to Form S-4).*

2.4         Assignment and Assumption Agreement by and between True Temper
            Corporation ("TTC") and the Company dated September 30, 1998 (filed
            as exhibit 2.4 to Form S-4).*

3.1         Amended and Restated Certificate of Incorporation of the Company,
            dated September 29, 1988 (filed as Exhibit 3.1 to Form S-4).*

3.2         By-laws of the Company (filed as Exhibit 3.2 to Form S-4).*

4.1         Indenture dated November 23, 1998 between the Company United States
            Trust of New York (filed as Exhibit 4.1 to Form S-4).*

4.2         Purchase Agreement dated November 18, 1998 between the Company and
            Donaldson, Lufkin and Jenrette (filed as Exhibit4.2 to Form S-4).*

4.3         Registration Rights Agreement dated as of November 23, 1998 between
            the Company and 4.3 Donaldson, Lufkin and Jenrette (filed as Exhibit
            4.3 to Form S-4).*

10.1        Management Services Agreement dated as of September 30, 1998 between
            the Company and Cornerstone Equity Investors, LLC ("Management
            Services Agreement") (filed as Exhibit 10.1 to Form S-4).*

10.2        Amendment to Management Services Agreement dated November 23, 1998
            (filed as Exhibit 10.2 to Form S-4).*

10.3        Credit Agreement dated as of September 30, 1998 among the Company,
            various financial institutions, DLJ Capital Funding, Inc. and The
            First National Bank of Chicago (filed as Exhibit 10.3 to Form S-4).*

10.4        Securities Purchase Agreement dated as of September 30, 1998 among
            TTC and the Purchase Party thereto (filed as Exhibit 10.4 to Form
            S-4).*

10.5        Amendment No. 1 to Credit Agreement dated June 11, 1999 (filed as
            Exhibit 10.5 to the Company's 1999 Annual Report on Form 10-K, as
            filed with the SEC on March 30, 2000).*

10.6        True Temper Corporation 1998 Stock Option Plan (filed as Exhibit
            10.6 to the Company's 1999 Annual Report on Form 10-K, as filed with
            the SEC on March 30, 2000).*

10.7        Shareholder's Agreement dated as of September 30, 1998 (filed as
            Exhibit 10.7 to the Company's 1999 Annual Report on Form 10-K, as
            filed with the SEC on March 30, 2000).*

10.8        Amended and Restated Management Services Agreement dated March 27,
            2000 (filed as Exhibit 10.8 to the Company's Quarterly Report on
            Form 10-Q for the quarterly period ended April 2, 2000, as filed
            with the SEC on May 16, 2000).*

10.9        Amendment No. 2 to Credit Agreement dated November 17, 2000 (filed
            as Exhibit 10.9 to the Company's Annual Report on Form 10-K, as
            filed with the SEC on March 28, 2001).*

10.10       Amendment No. 3 to Credit Agreement dated December 4, 2001. (filed
            as Exhibit 10.10 to the Company's Annual Report on Form 10-K, as
            filed with the SEC on April 1, 2002).*

10.11       Credit Agreement dated as of December 31, 2002 among the Company,
            Antares Capital Corporation and the Other Financial Institutions
            Party Hereto.

12.1        Computation of Ratio of Earnings To Fixed Charges.
</TABLE>

----------

* Incorporated by reference


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