**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

----

**FORM 10-K**

**x**                              ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe fiscal year ended December 31, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Commissionfile number 333-72343**

----

**TRUE TEMPER SPORTS, INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**                    | **52-2112620**          |
|---------------------------------|-------------------------|
| (State or other jurisdiction of | (I.R.S. Employer        |
| incorporation or organization)  | Identification  Number) |

 

| **8275 Tournament Drive  Suite 200** | ** ** |
|-------------------------------------------|------------|
| **Memphis,  Tennessee**                   | **38125**  |
| (Address of Principal Executive           | (Zip Code) |
| Offices)                                  | ** ** |

 

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

(Registrant’s telephonenumber, including area code)

----

**Securities registered pursuant tosection 12(b) of the Act:** None

**Securities registered pursuant tosection 12(g) of the Act:** None

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.   o Yes    x No

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 orSection 15(d) of the Act.   x Yes    o No

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

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment tothis Form 10-K. x

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer as defined in Rule 12b-2 of the Exchange Act. (Checkone):

**Large accelerated filer**o    Acceleratedfiler o     Non-accelerated filer  x

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

As ofJuly 2, 2006 the Registrant had 100 shares of Common Stock, $0.01 par value pershare, outstanding. All of the Registrant’s outstanding shares were held byTrue Temper Corporation, the Registrant’s parent company, as of July 2,2006.

**DocumentsIncorporated by Reference**

**None.**

 

----

**TRUE TEMPER SPORTS,INC.**

**ANNUALREPORT ON FORM 10-K**

**For the Fiscal YearEnded December 31, 2006**

**INDEX**
|                    | ** ** | ** **                                                                                                                  | ** ** | **Page** | ** ** |
|--------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| PART I        |       |                                                                                                                        |       |     |       |   |   |
| Item 1             |       | Business                                                                                                                    |       |     | 3          |   |   |
| Item 1A            |       | Risk  Factors                                                                                                               |       |     | 11         |   |   |
| Item 1B            |       | Unresolved Staff Comments                                                                                                   |       |     | 17         |   |   |
| Item 2             |       | Properties                                                                                                                  |       |     | 17         |   |   |
| Item 3             |       | Legal Proceedings                                                                                                           |       |     | 17         |   |   |
| Item  4            |       | Submission of Matters to a  Vote of Security Holders                                                                        |       |     | 17         |   |   |
| PART II       |       |                                                                                                                        |       |     |       |   |   |
| Item  5            |       | Market for Registrant’s  Common Equity and Related Stockholder Matters and Issuer Purchases of  Equity Securities |       |     | 18         |   |   |
| Item 6             |       | Selected Financial Data                                                                                                     |       |     | 19         |   |   |
| Item  7            |       | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                                 |       |     | 21         |   |   |
| Item  7A           |       | Quantitative and Qualitative  Disclosures About Market Risk                                                                 |       |     | 34         |   |   |
| Item  8            |       | Financial Statements and  Supplementary Data                                                                                |       |     | 35         |   |   |
| Item 9             |       | Changes in and Disagreements With Accountants on  Accounting and Financial Disclosure                                       |       |     | 66         |   |   |
| Item 9A            |       | Controls and Procedures                                                                                                     |       |     | 66         |   |   |
| Item  9B           |       | Other  Information                                                                                                          |       |     | 66         |   |   |
| PART III      |       |                                                                                                                        |       |     |       |   |   |
| Item  10           |       | Directors, Executive Officers and Corporate Governance                                                                      |       |     | 67         |   |   |
| Item  11           |       | Executive Compensation                                                                                                      |       |     | 69         |   |   |
| Item 12            |       | Security Ownership of Certain Beneficial Owners and  Management and Related Stockholder Matters                             |       |     | 76         |   |   |
| Item  13           |       | Certain  Relationships and Related Transactions and Director Independence                                                   |       |     | 77         |   |   |
| Item  14           |       | Principal Accountants Fees  and Services                                                                                    |       |     | 78         |   |   |
| PART IV       |       |                                                                                                                        |       |     |       |   |   |
| Item 15            |       | Exhibits and Financial  Statements Schedule                                                                                 |       |     | 79         |   |   |
| SIGNATURES         |       |                                                                                                                        | 80         |     |       |
| INDEX TO  EXHIBITS |       |                                                                                                                        | 82         |     |       |

 

2

----

**PART I**

**Item 1.**                        *Business*

**Purchase Agreementfor True Temper Corporation**

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

The Gilbert Global Acquisition was accounted for by the Company’s parent company using thepurchase method of accounting. As the Company is a wholly owned subsidiary of TTC,the Company has “pushed down” the effect of the purchase method of accountingto its financial statements. The Company’sfinancial statements and accompanying notes, shown in Item 8 of this annualreport, present the historical cost basis results of the Company as “predecessorcompany” through March 14, 2004, and the results of the Company as “successorcompany” from March 15, 2004 through December 31, 2006. Accordingly, certain elements of the successorcompany presentation are not comparable to the predecessor company presentationdue to the different basis of accounting.

For purposes of the following discussion, contained inItems 1 and 7, regarding the Company’s results of operations and cash flow, theCompany has combined the results of the predecessor and successor companies inorder to more effectively compare the results to the other years. Materialvariances caused by the different basis of accounting have been disclosed whereapplicable.

**General**

We are the world’s leading designer, manufacturer andmarketer of golf shafts. Since the 1930s, we have manufactured golf shaftsunder the widely recognized *True Temper*brand. In 2005, over 70% of our revenue was generated through the sale of steelgolf shafts. We believe that our share of the worldwide steel shaft market wasapproximately 78% in 2006 and that our share is more than five times greaterthan that of the next largest market participant. We are a leading supplier ofpremium steel shafts to top domestic golf club original equipment manufacturersand distributors, including Callaway, Cleveland, Golfsmith, Golf Works, Mizuno,Nike, Ping, TaylorMade, Titleist, Adams and Wilson. From 1987 to 2006, oursteel shafts were played by the winners of 76 of the PGA’s 80 majorchampionships, including 19 of the last 20 Masters champions. We are also oneof the world’s largest manufacturers of premium graphite (carbon fiber basedcomposites) golf shafts, with an estimated share of approximately 12% of thishighly fragmented market. In addition to golf shafts, through our PerformanceSports business, we also design, manufacture and market products such as steeland titanium alloy bicycle frames, composite bicycle components, such as forksand handlebars, and graphite hockey sticks.

Our golf shaftproducts 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, Royal Precision* or *Grafalloy* brand name, label or trademarkaffixed to the shaft), including a full range of premium and commercial gradesteel shafts and a full line of premium graphite shafts. We design, manufactureand market a number of steel shaft product lines, including:

·       *Dynamic Gold,* which has been a leadingsteel shaft on the PGA Tour for the past 25 years;

·       *Dynamic Gold SL,* which delivers theplaying characteristics of Dynamic Gold with 20% less weight;

3

----

·       *Rifle,*providing frequency matched shafts for the ultimate consistencythroughout each set of irons;

·  *Project X*,which features a varying shaft taper rate throughout the set producing a flat,penetrating trajectory;

·       *Black Gold,* which offers a low-to-mid ball flight while combining Frequency TunedTMtechnology with proprietary Grip-toTipTM taper profile;

·       *SensiCore,* which is equipped with patentedvibration-damping technology that, when inserted into our steel shafts,can eliminate up to 70% of vibration at impact to combine the feel of graphitewith the consistency of steel;

·       *Dynalite Gold*, which features a light-weight,soft tip design that promotes a higher ball flight to optimize trajectory forlow-ball hitters;

·       *TX-90*, which at only 90 grams, isone of the lightest steel shafts available and was designed for players seekingconsistent performance using a lighter alternative to traditional steel shafts;

·       *GS75*, the lightest steel golf shaft in the world weighing inat only 75 grams;

·       *TT Lite*, which was designed for the customclub builders and offers a standard weight and mid-flex design which allows forvarious trimming options for a truly custom fit; and

·       Numerousco-branded products, including Callaway’s *Memphis10,*Nike’s *Speedstep,*Ping’s*JZ*and *ZZ Lite*and Wilson’s *FatShaft*.

We also design,manufacture and market several lines of premium graphite shafts under the *Grafalloy*brand name. Our graphite shaftshave a strong presence at the professional level and have been played bywinners on each of the professional tours, including the PGA, EPGA, LPGA,Champions and Nationwide Tours. Our most popular graphite shaft brands include:

·       *Grafalloy Blue,*which is a graphite shaftdesigned specifically to improve performance in today’s oversized metal woods;

·       *Grafalloy ProLaunch Blue,*a graphite shaftdesigned with today’s high performance heads and low-spin balls to help playersachieve optimal launch conditions to reduce ball spin and maximize distance;

·       *Grafalloy**ProlaunchRed*, features Prolaunch technology in a design specificallyengineered to produce a lower, more penetrating trajectory;

·       *Grafalloy Prototype Comp NT*, which incorporates today’s nanotechnology for the most consistent carbon fiber alignment; and

·       *Grafalloy ProLite*, which has won moreprofessional tournaments than any other graphite shaft in history.

We believe that we are the only golf shaft company inthe world which is capable, within its own facilities, of manufacturing bothsteel and graphite golf shafts in large volumes. This unique competitiveadvantage allowed us to design, develop, manufacture and sell the firstcommercially viable multi-material golf shaft combining both steel andgraphite into one shaft. Our *BiMatrx RXi*and*BiMatrx Rocket*shafts utilize apatented multi-material technology to combine the torsional stability andconsistent performance benefits of steel with the light-weight flexiblebenefits of graphite into one shaft.

In addition, this expertise in various materials wasinstrumental in our ability to develop the next generation of golf shafts usingpatented Nanofuse® material. The first brand launch using this 

4

----

revolutionary material isthe *Grafalloy Epic*shaft which has beenproven to not only improve distance but also to reduce dispersion up to 35%.

Through our Performance Sports business, we haveutilized the capabilities developed in our golf shaft business to pursue otherbranded recreational sports equipment markets that have similar competitivedynamics, manufacturing requirements, and raw material applications. We focuson the premium segment of the bicycle market where innovation, quality andbranding are highly valued by the consumer, and products are often customizedto suit the individual consumer’s specific requirements. Our value-addedpremium bicycle component products generally have higher margins than componentparts made for bicycles sold in mass channel retail stores. In the hockeycomponents market, we focus on the composite shafts used in a variety oforiginal equipment manufacturers’ one-piece and composite sticks.

**The Golf Club Shaft Industry**

The golf equipment industry is estimated to be a$4.6 billion industry, with golf clubs making up the largest portion atapproximately 61%, or $2.8 billion. Spending in the golf equipmentindustry is highly concentrated among avid golfers (golfers that play more than25 rounds of golf per year) who account for approximately 57% of the totalspending on golf equipment despite only accounting for approximately 23%of the golfing population.

There are three basic components needed to manufacturea golf club: the shaft, the club head and the grip. The shaft is critical tothe performance of a golf club as it is vital in controlling the consistencyand distance of a golf shot. While branded premium shafts are important to theperformance and marketing of golf clubs, these shafts represent a relativelysmall portion of the overall cost of a golf club, typically under 10% ofthe retail sales price.

The golf shaft market is comprised primarily of steeland graphite shafts. We believe that in 2006 the two largest participants inthe worldwide steel shaft market comprised an aggregate market share over 90%.We believe that this concentration in the steel shaft market is due to the highbarriers to entry created by the technical expertise and capital investmentnecessary to participate in the market as well as the customized manufacturingprocess required for the production of premium steel shafts. The production ofgraphite shafts is less capital intensive and requires less investment thansteel shaft manufacturing. Although recently there has been some consolidationamong graphite shaft manufacturers, the graphite shaft industry is fragmented,with the top five market participants representing approximately 50% of theworldwide market in 2006. We believe that the relatively lower barriers toentry account for this fragmentation.

We believe that from 1991 to 1995, graphite shaftsgained share in the overall shaft market due to the light-weight,vibration-damping characteristics of graphite shafts, particularly forlonger-shafted, larger-headed woods. Since 1995, however, thedevelopment of vibration damping materials for steel shafts such as our *SensiCore*insert, along with theintroduction of lighter weight steel alloys in products such as our *Dynamic Gold SL* and *GS75*shafts,have resulted in steel shafts that have the vibration damping and light-weightcharacteristics of graphite shafts together with the consistent performance anddistance control qualities of steel shafts. We believe that these designimprovements contributed to the growth in share of steel shafts in the overallshaft market from approximately 50% in 1995 to between 60% to 65% in 2006.

**Products**

We design, manufacture and market steel and graphitegolf shafts, as well as a variety of high strength, tight tolerance componentsfor the hockey, bicycle and other recreational sports markets. Our proprietaryshafts, which accounted for approximately 24% of our net sales in 2006, arecustom designed, and frequently co-branded in partnership with our customers,to accommodate specific golf club head designs. As an example, our proprietarymodels include co-branded products such as Callaway’s *Memphis 10*, Nike’s 

5

----

*Speedstep*,Ping’s *JZ* and *ZZ Lite* and Wilson’s *Fat Shaft*. Our branded products with the *True Temper, Royal Precision or**Grafalloy* names and designs are typicallysold to golf club original equipment manufacturers, distributors and variouscustom club assemblers, and are used to either assemble new clubs or to replacethe shafts in existing clubs.

***Steel Golf Shafts.******  ***Wemanufacture a wide range of steel golf shaft lines with unique design featuresand performance characteristics. Our steel golf shafts can be divided into thefollowing two major product categories:

(1)         Premium grade steelshafts; and

(2)         Commercial grade steelshafts.

Premium steel shafts, such as our *Dynamic Gold, Rifle, Project X, Black Gold,Dynamic Gold SL* and *GS75*product lines, are high performance products with tighter design tolerances andquality specifications that sell for higher average selling prices and generatehigher profit margins than commercial grade steel shafts. Our commercial gradesteel shafts are manufactured to a different specification and sell for a loweraverage selling price to original equipment manufacturers who produce and sellopening price point golf club sets, typically to entry-level players whopurchase their products through mass channel retail stores.

***Graphite GolfShafts.******  ***Wemanufacture a wide range of graphite golf shaft lines, which are offered in avariety of weights, torques and flexes. Our graphite golf shafts are currentlybeing played by over 100 touring professionals on the PGA, EPGA, LPGA,Champions and Nationwide Tours. Our graphite shafts are sold under the *Grafalloy* brand name. Similar to steel,graphite shafts can be placed in several categories of performance, quality andprice. Historically, most of the graphite golf shafts that we produced were higherquality and higher priced premium grade shafts that are sold to golf equipmentdistributors, and to original equipment manufacturers for their custom productofferings. Beginning in 2004, with the establishment of our lower cost Chinamanufacturing facility, we also began producing and selling certain lower pricepoint graphite shafts. These products are currently used primarily as stockofferings in original equipment manufacturer iron programs.

***Golf Shafts withCombined Materials.******  ***During the last several years, we havedeveloped golf shafts that combine multiple materials such as steel andgraphite into one shaft. Late in 2000, we introduced a proprietary custom ironproduct for a customer that combines a steel shaft with a graphite tip sectionto produce a shaft that provides a new feel for irons.

We used similar patented technology to introduce the *True Temper* branded product known as *BiMatrx* in January 2001. The *BiMatrx* shaft consists of a graphite shaftwith a steel tip section that was designed for use in driver and fairway woodapplications.

***Golf Shafts withNew Materials.***   In early 2007 we will beintroducing driver and fairway wood shafts constructed of patented Nonofuse® material, whichutilizes today’s most advanced nanotechnology to produce a stronger, lightershaft which incorporates the benefits of both graphite and steel.

***Performance SportsProducts.******  ***Wealso manufacture and sell a wide variety of high performance components for thebicycle, hockey and other recreational sports markets. In 2006, we sold ourperformance sports products to a broad range of original equipmentmanufacturers and distributors.

**Customers**

We maintain long-standing relationships with a highlydiversified customer base. We are a leading supplier of shafts to the topdomestic golf club original equipment manufacturers and distributors, includingCallaway, Cleveland, Golfsmith, Golf Works, Mizuno, Nike, Ping, TaylorMade,Titleist, Adams and Wilson. In 2006, we had in excess of 600 customers,including approximately 540 golf club manufacturers/retailers and approximately80 distributors.

6

----

For many years, we have maintained a broad anddiversified customer base in the golf equipment market. In 2006, our top tencustomers represented approximately 69% of our net sales, and our top customeraccounted for approximately 13% of our net sales.

We believe that our close customer relationships andresponsive service have been significant elements to our success and that ourengineering and manufacturing expertise provide us with a strong competitiveadvantage in truly partnering with our customer base. We have developed andco-branded many proprietary shafts with our customers. As an example, weproduce proprietary customized steel shafts for Callaway, under the *Memphis 10* brand; for Ping, under the *JZ* and *ZZLite* brands; for Nike, using the *Speedstep*brand; and for Wilson to produce the *FatShaft* line of clubs.

**Competition**

We operate in ahighly competitive environment. We believe that we compete principally on thebasis of:

·       ourability to provide a broad range of high quality steel and graphite shafts atcompetitive prices;

·       ourability to deliver customized products in large quantities on a timely basisthrough distribution channels around the world;

·       theacceptance of steel and graphite shafts in general, and our shafts inparticular, by professional and amateur golfers alike; and

·       ourability to develop and produce innovative new products that provide performancefeatures which benefit golfers of all skill levels.

We believe that our share of the worldwide steel shaftmarket was approximately 78% in 2006 and that our share is more than four timesgreater than the share of the next largest market participant. We believe thatwe compete primarily with three other steel golf shaft manufacturers: Far EastMachinery Co., Ltd., located in Taiwan which produces commercial grade golfshafts, Nippon Shaft Co., Ltd., a Japanese manufacturer of premium golfshafts, and Summit Sports World Wide Co., Ltd. which produces limitedvolumes of commercial grade golf shafts.

Unlike steel, the graphite shaft manufacturingindustry is highly fragmented with a large number of suppliers selling to onlya few customers. We believe there are approximately 50 graphite shaftmanufacturers worldwide. A few of these companies reside in North America andmany are located in Far East Asia. We do not believe that there are anygraphite suppliers currently with a market share in graphite that is comparableto the market share we have in steel. We believe we are one of the five largestproducers of branded premium grade graphite shafts in the world and we estimatethat our market share is approximately 12%. Our major competitors in thepremium grade branded graphite shaft market include Aldila, Inc., UnitedSports Technologies, Inc., Graphite Design International, and FujikuraComposites.

We believe that we are the only golf shaft company inthe world which is capable, within its own facilities, of manufacturing both steeland graphite golf shafts in large volumes.

**Design & Development**

We design and develop products for bothproprietary/co-branded market applications and for the *True Temper*,*RoyalPrecision, Grafalloy* branded product range.

The larger golf club manufacturers often requestexclusively designed proprietary or co-branded steel and graphite golf shaftsfor their club systems, which require golf shafts, heads and grips engineeredto work together. We are committed to serving this market by maintaining ourrole as a leader in innovative shaft designs for both steel and graphitematerials technology. Shaft designs and modifications are frequently the directresult of our efforts combined with those of our customers to develop an exclusive

7

----

shaft specificallydesigned for that customer’s clubs. We use a computer aided design analysis systemto evaluate a new shaft’s design with respect to weight, torque, flex point,tip and butt flexibility, swing weight and other critical shaft designcriteria.

In addition to our proprietary/co-branded products, weare very active in designing and developing new products under our variousbrand names that meet the performance needs of golfers of all ages and skilllevels. We develop these branded products based upon our internal research andevaluation of consumer needs and preferences.

The materials typically used in production of ourdesigns include several different high strength steel alloys, advancedcomposites of graphite and glass fibers with thermosetting epoxy resin systems,and today’s most advanced nano materials.

Using state of the art technology, we generate adesign which is then analyzed by computer for stiffness and strength properties.Our research and development efforts focus on innovative technology and newmaterials as an essential precursor to successful new product development. Ourdesign research focuses on improvements in shaft aesthetics since cosmeticappearance has become increasingly important to customers. To supplement ourdesign and development we employ extensive testing that includes laboratorydurability tests, robotic performance testing involving extensive ballflight/trajectory analysis and individual player evaluation.

In 2003, we opened a 14 acre test facility thatenables us to better evaluate our products. We have our own private drivingrange where we perform qualitative player testing and quantitative mechanicaltesting with a Miya 5 swing robot. Our facility utilizes the newest, state ofthe art, TrackMan doppler radar system to track all aspects of ball flight andtrajectory. We believe that we are the only shaft manufacturer with our owndriving range that is capable of this type of product testing.

In addition, our pursuit of strategic vendor alliancescomplement our abilities and needs, an approach which allows us to exploittechnical capabilities beyond our own while minimizing the risk and investmentrequired to enter the market with new products.

Research and development costs for the years ended December 31,2006, 2005 and 2004 were $1.9 million, $1.8 million and$1.5 million, respectively.

**Manufacturing**

We believe that our manufacturing expertise andproduction capabilities enable us to respond quickly to customers’ orders andprovide sufficient quantities on a timely basis. We believe that our investmentin capital equipment and personnel training has helped us to establish areputation as one of the leading manufacturers of steel and graphite shafts.

*SteelShaft Manufacturing Process.**  *The process of manufacturing a steel shaft has manydistinct phases. Generally, a large steel coil is unrolled and then formedlengthwise, welded and cut into cylinders. The tubing is then treated andfitted over a metal rod or “mandrel” that is used to determine the preciseinside diameter of the cylinder as it is drawn. The tubing is stretched, cutinto sections, and then weighed and balanced. Later, through a process that wepioneered, the sections are tapered to give each shaft model a particular flex andfrequency. The shafts are cleaned, straightened, heat-treated and tempered. Theshafts are straightened by machines designed and built by us. The shafts areplated with layers of nickel to prevent corrosion and then covered with a finelayer of chrome. Finally, shafts are dried, polished and inspected for cosmeticflaws before our name and logo is affixed to the shaft.

*GraphiteShaft Manufacturing Process.**  *There are two processes which are used to manufacturea graphite shaft: flag-wrapping and filament-winding. Most of ourgraphite shafts are produced using the flag-wrapping technique. Theflag-wrapping method uses graphite fiber materials or “prepreg” in sheet form,which requires refrigeration until use. Each new roll of prepreg is allowed toreach room 

8

----

temperature before thematerial is cut into pennant-shaped patterns called flags for eachparticular shaft design. Layer by layer, various combinations of prepreg flagsare wrapped around mandrels specified for each particular shaft design. Thelayered materials are then encased in thin layers of clear tape for compactionand heated at high temperatures to harden the material. At the end of theprocess, 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 ontothe reel of a machine which then wraps the fiber around a mandrel by turningthe mandrel and simultaneously moving the graphite fiber from one end of themandrel to the other. Once the mandrel is wrapped, the process uses the sameencasing and heating techniques as the flag wrapping process.

*RawMaterials.**  *Weuse several raw materials to produce steel golf shafts, including several steelalloys sourced from three primary vendors, nickel crowns and plating chemicals,Sensicore inserts and various sundry supplies, boxes and labels. Graphiteshafts are produced with a variety of graphite fiber materials in both sheetand spool form that we source from several different vendors. In addition,graphite shafts are finished with a wide variety of paints, inks and heattransfer labels. We believe that there are adequate alternative suppliers ofthese materials and, therefore, we do not believe that we are dependent on anyone supplier.

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

**Marketing and Promotion**

Our marketing strategy is designed around new productdevelopment and targeted advertising and promotion programs. Through ourability to anticipate and address consumer trends in the golf equipment market,as well as the performance demands of professional golfers, we are able tosuccessfully market our products to golf club manufacturers while strengtheningbrand awareness. During the last several years, our marketing efforts, throughthe utilization of a wide variety of promotional channels, including mass mediaadvertising, print and television, sponsorship of golf-related events,equipment endorsements from original equipment manufacturers and productdemonstrations, have increased our overall exposure in the golf industry.

For example, we have maintained a strong presenceamong PGA Tour players, particularly since 1981, when we began sending our PGATour van to all major PGA events. The tour van functions as a golf club customshop on wheels, visiting over 30 professional tour events during 2006.Typically, the van is located near the practice tee and lends technical supportto the tour professionals while simultaneously promoting the *True Temper,**RoyalPrecision* and *Grafalloy*brands to representatives of original equipment manufacturers. In addition, weprovide technical support to the players on the Champions, Nationwide and LPGATours as well as the European and Japanese PGA Tours.

Although we do not pay any professional golfer toendorse or play our shafts, we believe that the use of our products byprofessional golfers enhances our reputation for quality and performance whilealso promoting the use of our shafts. Due to our strong reputation and service,we estimate that nearly 98% of professional golfers around the world use ourproduct in competition. We clearly recognize the influence that a professionalgolfer, or very low handicap golfer, can have on consumer preferences, so wealso engage in special promotional efforts with local club and teachingprofessionals, and we contribute shafts to college athletic programs, toencourage the use of our product so they provide positive feedback on the *True Temper,**RoyalPrecision* and *Grafalloy*brands to their constituents.

9

----

Much of our advertising and promotional spending isdedicated to print and television advertising, including cooperativeadvertising with our customers. Additional advertising and promotional spendingis allocated to promotional events such as trade shows, consumer golf shows,PGA Tour activities and retail golf shop advertising displays.

Advertising and promotional costs for the years endedDecember 31, 2006, 2005 and 2004 were $3.7 million, $3.5 millionand $3.5 million, respectively.

**Distribution &Sales**

We primarily sell our shafts to original equipmentmanufacturers, retailers and distributors. Typically, distributors resell ourproducts to custom club assemblers, pro shops and individuals. Sales to golfclub manufacturers/retailers accounted for approximately 84% of our net golfshaft sales in 2006, and sales to distributors represented approximately 16% ofour 2006 net golf shaft sales.

We believe that we haveone of the most experienced and respected sales staffs in the industry. Oursales and marketing department includes domestic sales managers, internationalsales managers, a customer service group and a team of design professionals thatprovides field support to our sales representatives. We believe that ourinternational market presence, which comprised approximately 36% of our total 2006net sales, provides an opportunity for future growth. We market our products inJapan, Europe, Australia and Southeast Asia and maintain a distributionoperation in each region. Financial information by geographic segment iscontained in Note 14 to the consolidated financial statements located elsewherein this annual report.

**Employees**

As of December 31, 2006, we had 821 full-timeemployees, including 20 in sales and marketing, 40 in research, development andmanufacturing engineering, 715 in production and the balance in administrativeand support roles.

The hourly employees atour steel plant in Amory, Mississippi are represented by the United SteelWorkers of America. In June 2003, the United Steel Workers union at ourAmory, Mississippi facility voted to accept a new collective bargainingagreement that covers a four year period beginning in July 2003 andexpiring on June 30, 2007. We believe that our relationships with the unionand our employees are good.

**Intellectual Property**

As of December 31,2006, we held 55 patents worldwide relating to various products andproprietary technologies, including the *SensiCore*technology, and had four patent applications pending. We also hold numeroustrademarks related to, among other things, our *TrueTemper, Grafalloy, Royal Precision* and *Alpha Q* branded products. We do not believe that ourcompetitive position is dependent solely on patent or trademark protection, orthat our operations are dependent on any individual patent or trademark.

**Environmental,Health And Safety Matters**

We are subject to federal, state and localenvironmental and workplace health and safety laws and regulations, includingrequirements governing discharges to the air and water, the handling anddisposal of solid and hazardous wastes, and the remediation of contaminationassociated with releases of hazardous substances. In December 2003, areview was conducted by independent environmental consultants and, based uponsuch report, we believe that we are currently in material compliance withenvironmental and workplace health and safety laws and regulations.Nevertheless, our manufacturing operations involve the use of hazardoussubstances and, as is the case with manufacturers in general, if a release ofhazardous 

10

----

substances occurs or hasoccurred on or from our facilities, we may be held liable and may be requiredto pay the cost of remedying the condition. The amount of any such liabilitycould be material.

We devote significant resources to maintainingcompliance with, and believe we are currently in material compliance with, ourenvironmental obligations. Despite such efforts, the possibility exists thatinstances of noncompliance could occur or be identified, the penalties orcorrective action costs associated with which could be material.

Like any manufacturer, we are subject to thepossibility that we may receive notices of potential liability, pursuant toComprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),commonly known as Superfund, or analogous state laws, for cleanup costsassociated with onsite or offsite waste recycling or disposal facilities atwhich waste associated with our operations have allegedly come to be located. Liabilityunder CERCLA is strict, retroactive and joint and several. To our knowledge, nonotices involving any material liability are currently pending.

We have made, and willcontinue to make, capital expenditures to comply with current and future environmentalobligations. Because environmental requirements are becoming increasinglystringent, our expenditures for environmental compliance may increase in thefuture.

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

*Our substantialindebtedness could adversely affect our financial health and prevent us fromfulfilling our obligations.*

Our substantial indebtedness could adversely affectthe financial health of our company. For example, it could:

·       makeit more difficult for us to satisfy our obligations with respect to our 83¤8%Senior Subordinated Notes due 2011;

·       increaseour vulnerability to increases in interest rates because our secured creditfacility, under which our indebtedness was $115.4 million as of December 31,2006, is subject to a variable interest rate;

·       limitour ability to fund future working capital, capital expenditures, research anddevelopment costs, acquisitions and other general corporate requirements;

·       requirea 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 othergeneral corporate purposes;

·       limitour flexibility to plan for, or react to, changes in our business and theindustry in which we operate;

·       placeus at a competitive disadvantage compared to our competitors that have lessdebt; and

·       limit our ability to borrowadditional funds.

*To service ourindebtedness, we will require a significant amount of cash. Our ability to generatecash depends on many factors beyond our control.*

We may not be able to generate the cash we need toservice our indebtedness. Our ability to make payments on and to refinance ourindebtedness, and to fund planned capital expenditures and research anddevelopment 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 ourcontrol. Based on our current level of operations, we believe our cash flowfrom operations, 

11

----

available cash andavailable borrowings under our senior bank facilities will be adequate to meetour future liquidity needs.

Our business may not generatesufficient cash flow from operations, and future borrowings may not be availableto us under our senior bank facilities in an amount sufficient to enable us topay our indebtedness, or to fund our other liquidity needs. We may need torefinance all or a portion of our indebtedness on or before maturity. We mightnot be able to refinance any of our indebtedness on commercially reasonableterms or at all.

*Our success dependson the continued popularity of golf and the growth of the market for golfclubs.*

We generate a substantialportion of our net revenues from the sale of golf shafts. The demand for ourgolf shafts is directly related to the popularity of golf, the number of golfparticipants and the number of rounds of golf being played by theseparticipants. If golf participation decreases, sales of our products would beadversely affected. In addition, the popularity of golf organizations, such asthe PGA, also affects the sales of our golf shafts. We depend on the exposureof our brands to increase brand recognition and reinforce the quality of ourproducts. Any significant reduction in television coverage of PGA or other golftournaments, or any other significant decreases in either attendance at golftournaments or viewership of golf tournaments, will reduce the visibility ofour brand and could adversely affect our sales.

*A reduction indiscretionary consumer spending could reduce sales of our products.*

Sales of golf clubs aredependent on discretionary consumer spending which may be affected by generaleconomic conditions and could result in a decrease in consumer spending on golfequipment. In addition, our future results of operations could be affectedadversely by a number of other factors that influence discretionary consumer spending,including consumer concerns over international and military conflicts aroundthe world, unseasonal weather patterns, demand for our existing and futureproducts, new product introductions by our competitors, an overall decline inparticipation in golf activities, shifting consumer preferences betweengraphite and steel golf shafts or other materials that we currently do notproduce, and competitive pressures that otherwise result in lower than expectedaverage selling prices. Any one or more of these factors could result in ourfailure to achieve our expectations as to future sales or earnings. Becausemost operating expenses are relatively fixed in the short-term, we may beunable to adjust spending to compensate for any unexpected sales shortfall, whichcould adversely affect our results of operations.

*Our new productdevelopment efforts may not be successful.*

We may not be able tocontinue to develop competitive products, develop or use technology on a timelyor competitive basis or otherwise respond to emerging market trends. Becausethe introduction of new golf shafts using steel, graphite or other compositeand combined materials is critical to our future success, our continued growthwill depend, in large part, on our ability to successfully develop andintroduce new products in the marketplace. Should golf consumers prefer to usegolf clubs made from materials other than steel or graphite, there could be amaterial adverse effect on the results of our operations. In addition, thedesign of new golf clubs is also greatly influenced by the rules andinterpretations of the U.S. Golf Association, or USGA, and the Royal andAncient Golf Club of St. Andrews, or St. Andrews. Although the golf equipmentstandards established by the USGA and St. Andrews generally apply tocompetitive events sanctioned by those organizations, we believe that it iscritical for our future success that our new shafts comply with USGA and St.Andrews standards. New products that we introduce may not receive USGA or St.Andrews approval. In addition, existing USGA and St. Andrews standards may bechanged in ways that adversely affect the sales of our current or futureproducts.

12

----

*We are subject towork stoppages at our facilities, which could seriously impact theprofitability of our business.*

If any labor disruption orwork stoppages affect our employees, the results of our operation could beadversely affected. At December 31, 2006, we employed approximately 821 full-timeindividuals. Of these, approximately 379 hourly employees at our Amory,Mississippi facility are represented by the United Steel Workers of America. Ourcollective bargaining agreement with the United Steel Workers of America will expireon June 30, 2007. We may not be able to reach an agreement on a newcollective bargaining agreement. If a work stoppage or other labordisruption were to occur, our results of operations may be materially adverselyaffected.

*We face intensecompetition with other golf shaft designers and manufacturers, and ourinability to compete effectively for any reason could adversely affect ourbusiness.*

We operate in a highlycompetitive environment and compete against a number of established golf shaftdesigners, manufacturers and distributors. We also compete indirectly withmanufacturers that produce shafts internally and face potential competitionfrom golf club manufacturers that currently purchase golf shaft components fromthird parties but which may have, develop or acquire the ability to manufactureshafts internally. Unlike the steel shaft industry, the graphite shaft industryis highly fragmented. As a result, we compete with many competitors involved inthe design and manufacture of graphite shafts. While we have hadlong-established relationships with most of our customers, we are not theexclusive supplier to most of them, and consistent with the industry practice,generally do not have long-term contracts with our customers. Although webelieve that our relationships with our customers are good, the loss of asignificant customer or a substantial decrease in sales to a significantcustomer could have a material adverse affect on our business and operatingresults. See “Business—Competition” for a description of the bases on which wecompete and the number of competitors in our industry. These factors, as wellas demographic trends and economic conditions, could result in increased competitionand could have a material adverse effect on our results of operations.

*Our profitabilitywould be adversely affected if the operation of our Amory manufacturing plantwere interrupted or shut down.*

We operate a majority ofour manufacturing processes at our facility in Amory, Mississippi. Any naturaldisaster or other serious disruption to this facility due to fire, tornado,flood or any other cause would substantially disrupt our sales and would damagea portion of our inventory, impairing our ability to adequately supply ourcustomers. In addition, we could incur significantly higher costs and longerlead times associated with fulfilling our direct-to-consumer orders anddistributing our products to our customers during the time it takes for us toreopen or replace our Amory facility. As a result, disruption at our Amoryfacility would adversely affect our profitability.

*Risks related toour operating facility in China could adversely affect our business.*

In 2003, we opened agraphite manufacturing facility in southern China in order to be able toproduce our graphite shafts at a lower cost. We have since transitioned a largeportion of our composite manufacturing capacity from the United States toChina. As a result, we will be subject to potential political instability inChina and trade conflict between the United States and China.

*Consolidation ofour customer base could adversely affect our business.*

If the industry andcustomer base continues to consolidate, then it is possible a consolidation ofseveral of our existing customers into one company could represent asignificant portion of our annual revenues. If this was to occur, and thiscustomer selected an alternative shaft supplier, it could have a materialadverse effect on our results of operations. If this consolidated company wereto remain our 

13

----

customerit could represent an increased credit risk due to its size in relation to ourtotal accounts receivable.

*Fluctuations in thecost and availability of raw materials could adversely affect our business.*

Since we are dependentupon certain suppliers for steel, nickel, graphite prepreg and other materials,we are subject to price increases and delays in receiving materials. Althoughwe have several sources for most of the key raw materials we purchase, and weattempt to establish purchase price commitments for one-year periods, we aresubject to price increases for raw materials used in the manufacture of golfshafts and to delays in receiving these materials. As key components to themanufacture of golf shafts, a substantial price increase to one or more ofthese raw materials or any extended delay in their delivery could result in amaterial adverse effect on our results of operations.

*Fluctuations in thecost and availability of energy sources to us could adversely affect ourbusiness.*

Our graphite shaftmanufacturing operations in Southern California and China are dependent upon aconsistent and affordable supply of electricity. If there is a prolongedshortage of electrical supply to these facilities and/or a significant increasein the cost of electrical power, we may need to temporarily or permanentlyclose our graphite shaft operations, which could materially adversely affectour results of operations. In addition, our steel shaft manufacturing plantlocated in Mississippi relies upon a consistent and affordable supply of bothnatural gas and electrical power in order to conduct normal operations. If ourMississippi facility should experience a shortage in supply of either powersource or a significant increase in cost, it could have a material adverseaffect on our results of operations.

*Fluctuations in theavailability of energy sources to our customers could adversely affect ourbusiness.*

There are a significantnumber of golf equipment assemblers that are headquartered and conductmanufacturing operations in Southern California. In the aggregate, thesecompanies account for a significant share of the golf equipment market and alsoaccount for a considerable portion of our sales revenue. With the disruption ofelectrical power to California and other Western states in recent years thereis a risk that our customers’ manufacturing operations may be adverselyaffected by power shortages. If this were to occur they may reduce theirpurchases of shafts from us causing a significant adverse impact to ourrevenues and results of operations.

*Fluctuations incost of health insurance could adversely affect our business.*

Health insurance coverageis a valuable benefit in retaining and attracting employees and has beensubject to significant price increases by health industry providers. Since wedo not plan to eliminate providing health benefits to our employees, the risingcosts could have a material adverse affect on the results of our operations.

*If we are unable toprotect our intellectual property rights, our business and prospects may beharmed.*

The patents we holdrelating to certain of our products and technologies may not offer completeprotection against infringement of our proprietary rights by others. As of December 31,2006 we held 55 patents worldwide relating to various products and proprietarytechnologies, including the *SensiCore*technology, and had four patent applications pending. Patents may not be issuedfrom the pending patent applications. Moreover, these patents may have limitedcommercial value or may not protect our products. Additionally, the U.S.patents that we hold do not preclude competitors from developing or marketingproducts similar to our products in international markets. We may infringe onothers’ intellectual property rights. One or more adverse judgments withrespect to these intellectual property rights could negatively impact ourability to compete and could adversely affect our business.

14

----

*We are subject tovarious environmental, health and safety laws and regulations that govern, andimpose liability, for our activities and operations. If we do not comply withthese laws and regulations, our business could be materially and adverselyaffected.*

We are subject to federal,state, and local environmental and workplace health and safety laws,regulations and requirements which, if contravened, could result in significantcosts to us. Our manufacturing operations involve the use of hazardoussubstances and should there be a release of such substances from ourfacilities, we may be held liable. The penalties or corrective action costsassociated with noncompliance could be material. In addition, we may receivenotices of potential liability pursuant to federal or state laws for cleanupcosts associated with waste recycling or disposal facilities at which wastesassociated with our operations have allegedly come to be located.

*Fluctuations incertain general economic conditions could increase our minimum pension liabilityunder our defined benefit pension plan.*

We maintain an employersponsored defined benefit pension plan for the hourly employees at our Amory,Mississippi steel golf shaft plant. We are subject to Financial AccountingStandards 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 U.S. economic conditions involving weak equity marketperformance and low general interest rates can both reduce the total value ofthe assets of the plan as well as increase our minimum pension liability underthe plan. If these economic conditions are severe enough they could have asignificant adverse effect on the funding status of our plan and our overallresults of operations.

*If we do not retainour key personnel and attract and retain other highly skilled employees ourbusiness will suffer.*

If we fail to retain andrecruit the necessary personnel, our business and our ability to obtain newcustomers, develop new products and provide acceptable levels of customerservice could suffer. The success of our business is heavily dependent on theleadership of our key management personnel. If any of these persons were toleave our company it would be difficult to replace them, and our business wouldbe harmed. See “Management.”

*We are subject torisks relating to our international operations.*

We are subject torisks customarily associated with foreign operations, including:

·        fluctuationsin currency exchange rates;

·        importand export license requirements;

·        traderestrictions;

·        changesin tariffs and taxes;

·        restrictionson the transfer of funds into or out of a country;

·        unfamiliaritywith foreign laws and regulations;

·        difficultiesin staffing and managing international operations;

·        generaleconomic and political conditions; and

·        unexpectedchanges in regulatory requirements.

These risks could have amaterial adverse effect on our business, prospects, results of operations andfinancial condition.

15

----

*We are subject toproduct liability claims and other litigation.*

From time to time, we aresubject to product liability claims involving personal injuries allegedlyrelating to our products. Currently pending claims and any future claims aresubject to the uncertainties related to litigation, and the ultimate outcome ofany such proceedings or claims cannot be predicted.

*We may not be ableto identify suitable acquisition candidates, and even if we do, we may not beable to acquire those candidates or successfully integrate their operationswith ours.*

We continuously reviewacquisition prospects that would complement our current product offerings,increase our size and geographic scope of operations or otherwise offer growthand operating efficiency opportunities. Any future acquisition may not besuccessfully completed or, if completed, any such acquisition may not beeffectively integrated into our business. Acquisitions may entail numerousrisks and impose costs on us, including, among others, difficulties associatedwith assimilating acquired operations or products, diversion of management’sattention and adverse effects on existing business relationships with suppliersand customers. In addition, any future acquisitions could result in theincurrence of debt or contingent liabilities and other intangible assets, whichcould have a material adverse effect on our business, financial condition orresults of operations.

*Terrorist attacks,such as the attacks that occurred in New York and Washington, D.C. on September 11,2001, and other acts of violence or war, including the military action in Iraq,have and could negatively impact the U.S. and foreign economies, the financialmarkets, the industries in which we operate, our operations and ourprofitability.*

Terrorist attacks maynegatively affect our operations and your investment. There can be no assurancethat there will not be further terrorist attacks worldwide. These attacks havecontributed to economic instability in the United States and elsewhere, andfurther acts of terrorism, violence or war could further affect the industriesin which we operate, our business and our results of operations. In addition,terrorist attacks or hostilities may directly impact our physical facilities orthose of our suppliers or customers and could impact our sales, our supplychain, our production capability and our ability to deliver our products andservices to our customers. The consequences of any terrorist attacks orhostilities are unpredictable, and we may not be able to foresee events thatcould have an adverse effect on our operations or your investment.

**RisksAssociated 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. Thisdocument contains forward-looking statements, including but not limited to,Item 1 of Part I “Business” and Item 7 of Part II “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”. Allstatements which address operating performance, events or developments that weexpect, plan, believe, hope, wish, forecast, predict, intend, or anticipatewill occur in the future are forward looking statements within the meaning ofthe Act.

The forward-looking statements are based on management’scurrent views and assumptions regarding future events and operatingperformance. 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 todiffer materially from the estimates or predictions contained in our Company’sforward-looking statements. Additional information concerning the Company’srisk factors is contained from time to time in the Company’s public filingswith the SEC; and most recently in Item 1A of Part I of this Annual Reporton Form 10-K.

The Company’s views,estimates, plans and outlook as described within this document may changesubsequent to the release of this statement. The Company is under no obligationto modify or update any 

16

----

or allof the statements it has made herein despite any subsequent changes the Companymay make in its views, estimates, plans or outlook for the future.

**Item 1B.**               *Unresolved Staff Comments*

None.

**Item 2.**                        *Properties*

Ouradministrative offices and manufacturing facilities currently occupyapproximately 500,000 square feet. Our shafts are manufactured at separatefacilities, a steel shaft facility located in Amory, Mississippi and compositegraphite shaft facilities located in El Cajon, California and Guangzhou, China.In addition, we have a multi-material shaft assembly facility located inOlive Branch, Mississippi. Our executive offices are located in a leasedfacility in Memphis, Tennessee. The following table sets forth certaininformation regarding significant facilities operated by us as of December 31,2006:

| **Facility**             | ** ** | ** **                  | ** ** | **Location** | ** ** | **Approx.  Sq. Ft.** | ** ** | **Owned/  Leased**    | ** ** | **Lease  Expiration  Date** | ** ** |
|--------------------------|------------|-----------------------------|------------|--------------|------------|---------------------------|------------|-----------------------|------------|-----------------------------|------------|
| Corporate Offices        |       | Memphis,  Tennessee         |       | 15,241       |       | Leased                    |       | June 2011        |       |
| Steel  Shaft/Tubing Mfg. |       | Amory,  Mississippi         |       | 335,000      |       | Leased                    |       | January 2063(1)  |       |
| Composite Shaft  Mfg.    |       | Guangzhou,  China           |       | 88,000       |       | Leased                    |       | March 2008       |       |
| Composite Shaft  Mfg.    |       | El  Cajon, California       |       | 45,907       |       | Leased                    |       | March 2007       |       |
| Composite Shaft  Mfg.    |       | San  Diego, California      |       | 17,885       |       | Leased                    |       | December 2011(3) |       |
| Building                 |       | Olive  Branch, Mississippi  |       | 45,500       |       | Leased                    |       | July 2007        |       |
| Test Facility            |       | Robinsonville,  Mississippi |       | 1,000        | (2)        | Leased                    |       | March 2008       |       |

----

(1)          There are several leasescovering the original land as well as the building at our Amory, Mississippifacility. The leases are structured with interim renewal periods of between 5to 10 years, extending through January 2063. At the end of each ofthese renewal periods, we have the option to allow a lease to automaticallyrenew or to not renew the lease.

(2)          Included with the leasedspace is 14 acres of land which we use as a driving range to assess variousqualitative and quantitative tests on product performance.

(3)   We expect totake possession of the San Diego property in March 2007.

In addition, we promoteour products in international markets through sales and distribution offices inAustralia, Japan and the United Kingdom, and we also distribute our product inSoutheast Asia from our distribution warehouse in Hong Kong. To the extent thatany such properties are leased, we expect to be able to renew such leases or tolease comparable facilities on terms commercially acceptable to us.

**Item 3.**                        *Legal Proceedings*

Various claims and legalproceedings, generally incidental to the normal course of business, are pendingor threatened against us. While we cannot predict the outcome of these matters,in the opinion of management, any liability arising from these matters will nothave a material adverse effect on our business, financial condition or resultsof operations.

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

There were no matters submitted to a vote of securityholders during 2006.

17

----

**PART II**

**Item 5.**                        *Market for Registrant’s Common Equity and Related Stockholder Matters andIssuer Purchases of Equity Securities*

There is no public market for the Company’s equitysecurities. All of the Company’s capital stock is owned by True Temper Corporation.

The Company paid no dividends on its shares of commonstock in 2005 or 2006.

The Company’s various debt instruments imposerestrictions on the payment of dividends by means of covenants. The Company wasin compliance with all debt covenants as of December 31, 2006.

There were no purchases of the Company’s equitysecurities by or on behalf of the Company or any affiliated purchaser during thefourth quarter of 2006.

18

----

**Item 6.**                        *Selected Financial Data*

Setforth below are our selected historical financial data for the five fiscalyears ended December 31, 2006. The historical financial data were derivedfrom our audited consolidated financial statements and the notes thereto(except the ratio of earnings to fixed charges data), for which the December 31,2006, 2005, and 2004 financial statements are included herein. As more fullydescribed in Note 3 to the audited consolidated financial statements locatedelsewhere in this annual report, the Company went through a businesscombination on March 15, 2004. Accordingly, the following selectedfinancial data is presented for both the predecessor and successor companies. 
|                                                         | ** ** | **Successor Company**           | ** ** | ** **                | ** ** | **Predecessor Company** | ** ** |
|---------------------------------------------------------|------------|--------------------------------------|------------|---------------------------|------------|------------------------------|------------|
| ** **                                              | ** ** | ** **                           | ** ** | ** **                | ** ** | **Period from**         | ** ** | ** ** | ** ** | **Period from** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                              | ** ** | **Years Ended**                 | ** ** | **March 15 to** | ** ** | ** **                   | ** ** | **January 1 to** | ** ** | **Years Ended** | ** ** |
| ** **                                              | ** ** | **December 31,**                | ** ** | **December 31,**     | ** ** | **December 31,**        | ** ** | ** ** | ** ** | **March 14,** | ** ** | **December 31,** | ** ** |
| ** **                                              | ** ** | **2006**                             | ** ** | **2005**                  | ** ** | **2004**                     | ** ** | ** ** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                              | ** ** | **(Dollars in thousands)** | ** ** |
| STATEMENT OF OPERATIONS  DATA:                |       |                                 |       |                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                               |       |                                 | $          | 108,005                   |       |                         |       | $ | 117,594 |   |   |   | $ | 78,120 |   |   |   |   |   | $ | 20,247 |   |   |   | $ | 116,206 |   |   | $ | 107,401 |   |
| Gross profit                                            |       |                                 | 34,811     |                      |       |                         | 47,232     |   |   |   | 18,016 |   |   |   |   |   | 8,376 |   |   |   | 46,736 |   |   | 42,240 |   |
| Selling, general and  administrative expenses           |       |                                 | 14,226     |                      |       |                         | 14,660     |   |   |   | 9,520 |   |   |   |   |   | 3,635 |   |   |   | 14,747 |   |   | 13,578 |   |
| Amortization of intangible  assets(1)                   |       |                                 | 14,343     |                      |       |                         | 13,840     |   |   |   | 10,984 |   |   |   |   |   | — |   |   |   | — |   |   | — |   |
| Impairment charge on long-lived  assets(2)              |       |                                 | —     |                      |       |                         | 357        |   |   |   | — |   |   |   |   |   | — |   |   |   | — |   |   | — |   |
| Business development,  start-up and transition costs(3) |       |                                 | 2,688      |                      |       |                         | 208        |   |   |   | 738 |   |   |   |   |   | 100 |   |   |   | 869 |   |   | 312 |   |
| Transaction and  reorganization expenses(4)             |       |                                 | —     |                      |       |                         | —     |   |   |   | 25 |   |   |   |   |   | 5,381 |   |   |   | — |   |   | — |   |
| Loss on early  extinguishment of long-term debt(4)      |       |                                 | —     |                      |       |                         | —     |   |   |   | — |   |   |   |   |   | 9,217 |   |   |   | — |   |   | 777 |   |
| Operating income (loss)                                 |       |                                 | 3,554      |                      |       |                         | 18,167     |   |   |   | (3,251 | ) |   |   |   |   | (9,957 | ) |   |   | 31,120 |   |   | 27,573 |   |
| Interest expense, net                                   |       |                                 | 20,525     |                      |       |                         | 18,631     |   |   |   | 13,491 |   |   |   |   |   | 2,498 |   |   |   | 13,017 |   |   | 12,236 |   |
| Income tax (benefit)  expense                           |       |                                 | (6,279     | )                         |       |                         | 33         |   |   |   | (6,350 | ) |   |   |   |   | (2,845 | ) |   |   | 7,113 |   |   | 5,992 |   |
| Net income (loss)                                       |       |                                 | (10,767    | )                         |       |                         | (466       | ) |   |   | (10,464 | ) |   |   |   |   | (9,608 | ) |   |   | 10,858 |   |   | 9,252 |   |
| BALANCE SHEET DATA (AT END OF PERIOD):                  |       |                                 |       |                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Working capital(6)                                      |       |                                 | $          | 26,281                    |       |                         |       | $ | 27,403 |   |   |   | $ | 25,324 |   |   |   |   |   | $ | 14,551 |   |   |   | $ | 15,372 |   |   | $ | 14,828 |   |
| Total assets                                            |       |                                 | 353,699    |                      |       |                         | 349,836    |   |   |   | 360,825 |   |   |   |   |   | 178,057 |   |   |   | 179,616 |   |   | 183,380 |   |
| Total debt(7)                                           |       |                                 | 240,406    |                      |       |                         | 220,725    |   |   |   | 232,725 |   |   |   |   |   | 106,030 |   |   |   | 113,730 |   |   | 124,730 |   |
| Total stockholder’s equity                         |       |                                 | 90,282     |                      |       |                         | 99,764     |   |   |   | 101,330 |   |   |   |   |   | 39,064 |   |   |   | 48,793 |   |   | 43,068 |   |
| OTHER  FINANCIAL DATA:                                  |       |                                 |       |                      |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash provided by operating  activities                  |       |                                 | $          | 941                       |       |                         |       | $ | 15,936 |   |   |   | $ | 6,702 |   |   |   |   |   | $ | 2,982 |   |   |   | $ | 21,402 |   |   | $ | 19,903 |   |
| Cash used in investing  activities                      |       |                                 | (20,464    | )                         |       |                         | (2,031     | ) |   |   | (1,182 | ) |   |   |   |   | (330 | ) |   |   | (3,460 | ) |   | (1,164 | ) |
| Cash provided by (used in)  financing activities        |       |                                 | 17,845     |                      |       |                         | (12,509    | ) |   |   | (5,019 | ) |   |   |   |   | (8,205 | ) |   |   | (16,623 | ) |   | (19,846 | ) |
| Depreciation                                            |       |                                 | 2,616      |                      |       |                         | 2,725      |   |   |   | 2,420 |   |   |   |   |   | 671 |   |   |   | 2,906 |   |   | 3,252 |   |
| Capital expenditures(8)                                 |       |                                 | 4,888      |                      |       |                         | 2,612      |   |   |   | 1,232 |   |   |   |   |   | 330 |   |   |   | 3,460 |   |   | 1,164 |   |
| Ratio of earnings to fixed charges(9)                   |       |                                 | 0.2x       |                      |       |                         | 1.0x       |   |   |   | — |   |   |   |   |   | — |   |   |   | 2.3x |   |   | 2.2x |   |

----

(1)    As of January 1,2002 the Company adopted the provisions of SFAS No. 141, *Business Combinations.*This statement requires theidentification and valuation of intangible assets acquired in a businesscombination. Identifiable intangible assets determined to have definitive livesmust be amortized over those expected useful 

19

----

lives. Certain intangibleassets with definitive lives were identified, and the amortization expenseduring the period from March 15, 2004 through December 31, 2006relates to the amortization of these intangibles. See Note 4 to the financialstatements included elsewhere in this annual report for further discussion.

(2)    Impairmentcharge on long-lived assets reflects the 2005 write-down, and subsequentdisposal, of certain manufacturing equipment originally obtained through theacquisition of substantially all of the tangible personal property of ApolloSports in 2000. Apollo Sports was a steel golf shaft competitor in England thatwent out of business in 2000. A significant portion of the assets acquired weresubsequently transferred to True Temper’s Amory, Mississippi facility. Thiswrite-off represents the remainder of the assets located in the United Kingdom thatwere deemed unusable.

(3)    Reflectsvarious start-up business expenses related to the opening of the Company’scomposite manufacturing operation in China, and the related down-sizing costsincurred at the Company’s El Cajon, California facility. Also reflects costsassociated with the acquisition of assets from a former competitor in the steelgolf shaft industry, Royal Precision. These costs include acquisition-related fees and expenses, as well astransportation and integration expenses associated with the transfer ofproduction equipment and inventory to True Temper facilities. For a morecomplete discussion of business development and start-up costs see Note 2(j) tothe financial statements included elsewhere in this annual report.

(4)    On January 30,2004, TTS Holdings LLC, a new company formed by Gilbert Global Equity Partners,L.P. and its affiliated funds (“Gilbert Global”), entered into a stock purchaseagreement with the Company’s directparent company, True Temper Corporation, pursuant to which TTS Holdings LLC andcertain of the Company’s senior management purchased all of the outstandingshares of True Temper Corporation. In connection with this acquisition, andeffective on March 15, 2004, the Company repaid all of its outstanding2002 senior credit facility, redeemed all of its 107¤8% senior subordinated notes due 2008, and made certain payments of the net remaining equity of thepredecessor company to the selling shareholders. These payments werefinanced with the net proceeds of a new senior credit facility and new 83¤8% senior subordinated notes due 2011. As a result of this transaction,the Company incurred certain expenses for legal, investment banking and othermatters; and also recognized a loss on early extinguishment of its 107¤8% senior subordinated notes due 2008. See Note 3 to the financialstatements included elsewhere in this annual report for further discussion.

(6)    Workingcapital includes current assets less current liabilities, excluding cash andcash equivalents.

(7)    Totaldebt includes both the current and long-term portions of debt.

(8)    Capitalexpenditures in 2006 include $2,400 of steel golf manufacturing equipment from RoyalPrecision.

(9)    Earnings in2004 were insufficient to cover fixed charges. The amount of the ratio ofearnings to fixed charges deficiency for the period from March 15 to December31, 2004 was $2,946 and for the period from January 1 to March 14, 2004 was$9,870.

20

----

**Item7.**                        *Management’s Discussion and Analysis of Financial Condition and Resultsof Operations*

*THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTIONWITH THE MORE DETAILED INFORMATION IN THE AUDITED FINANCIAL STATEMENTS,INCLUDING THE RELATED NOTES, APPEARING ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.*

**Company Overview**

True Temper Sports, Inc.(the “Company”) is a wholly owned subsidiary of True Temper Corporation (“TTC”)and a leading designer, manufacturer and marketer of both steel and compositegraphite golf shafts for original equipment manufacturers and distributors inthe golf equipment industry. In addition, the Company produces and sells avariety of performance sports products that offer high strength and tighttolerance components produced with steel alloys and composite carbon fibergraphite materials for the bicycle, hockey and other recreational sportsmarkets. In 2006, golf shaft net sales represented 92% of total net sales, andperformance sports net sales represented 8%.

**PurchaseAgreement for True Temper Corporation**

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

The Gilbert GlobalAcquisition was accounted for by TTCusing the purchase method of accounting. As the Company is a wholly ownedsubsidiary of TTC, the Company has “pushed down” the effect of the purchasemethod of accounting to its financial statements. The Company’s consolidated financial statements and accompanyingnotes, shown in Item 8 of this annual report, present the historical cost basisresults of the Company as “predecessor company” through March 14, 2004,and the results of the Company as “successor company” after that date. Accordingly, certain elements of the successorcompany presentation are not comparable to the predecessor company presentationdue to the different basis of accounting.

For purposes of thefollowing discussion, contained in Item 7 and 7A, regarding the Company’sresults of operations and cash flow, the Company has combined the results ofthe predecessor and successor companies in order to more effectively comparethe results to other years. Material variances caused by the different basis ofaccounting have been disclosed where applicable.

**Year in Review—2006**

The past year presentedTrue Temper with a variety of challenges on both the revenue and cost fronts. Severalfactors contributed to an overall net sales decline of approximately 8.2%, butthe primary driver throughout 2006 was a lack of exciting new golf clubproducts introduced into the market. This trend was particularly prevalent inthe iron category, which is one area where the Company maintains a largemarketshare position.

Compounding this slowdownon the top line, 2006 also brought meaningful commodity inflation that putpressure on the Company’s gross profit percentages. The most noteworthyincrease came in the carbon fiber prepreg market, which impacted the cost ofthe Company’s graphite golf shafts, hockey sticks and bicycle components. Whilethese cost pressures were widespread throughout the industry, affecting 

21

----

competitors,suppliers and customers, the increase in carbon fiber pricing was especiallydetrimental to True Temper’s operations during 2006 as it impacted theCompany’s fastest growing business categories.

During the year, asrevenue softened and the cost of commodities increased, the Company implementeda variety of cost control initiatives throughout its manufacturing facilitiesand corporate offices in order to offset these negative factors. These effortshelped to mitigate the negative impact on gross profit, and provided an overallreduction in selling, general and administrative expenses of approximately $0.4 millionas compared to 2005.

On a positive note, theCompany was successful in completing a strategic acquisition of a leadingcompetitor’s assets when it purchased much of Royal Precision, a former steelgolf shaft manufacturer. After competing with True Temper for many years, RoyalPrecision ceased operations in June 2006, and True Temper purchased selectproduction equipment, inventory, and the intellectual property related to thiscompetitor’s successful *Rifle, Project X*and other premium steel shaft brands.

**Outlook—2007**

In 2007the Company plans to enhance its position in the steel golf shaft market,further penetrate the graphite shaft market, and continue its diversificationstrategy through building momentum in various performance sports categories. Inkeeping with this plan, several new product initiatives have recently beenunveiled, including:

·  *GS75*, thelightest weight steel golf shaft in the market today;

·  *CX20* and *GS20*, two new premium *Alpha Q*composite bicycle forks; and

·  *EPIC*, a newconcept shaft incorporating today’s latest nano-technology.

In addition, the Companyis continually developing additional new carbon fiber based hockey and bicyclecomponents in order to maintain the momentum achieved in these markets during2006, which saw over 30% revenue gains versus 2005. During 2007 the Company alsoplans on diversifying into other rapidly expanding carbon fiber sportsequipment categories, in order to leverage its design and manufacturingcapabilities.

In addition to theseinternal growth drivers, it is anticipated that the overall golf market, andthe iron category in particular, will experience some level of global reboundduring the coming year, as the number of planned new product launches from keygolf equipment companies should increase versus 2006. Based on current timingof such launches, it is anticipated that the overall revenue gains will be mostprominent beginning in mid 2007 and continuing through the back half of theyear.

On the cost front, withthe exception of the very volatile nickel market, it is anticipated that mostraw material and energy sources will remain relatively flat to the 2006 levels.Offsetting the nickel inflation, product pricing and productivity programsshould contribute to improved gross profit read-through for the full year.

Lastly, as discussed inmore detail in Note 16 to the financial statements included elsewhere in thisannual report, during early 2007 the Company closed on an acquisition of asteel golf shaft manufacturing company in Suzhou, China. This is a startupoperation, and 2007 will represent a significant step forward for the Company’sglobal operations and supply chain as this new manufacturing location iscommissioned and production begins to ramp up.

**Althoughthe Company expects that these internal and external factors will favorablybenefit its business, such outcomes are subject to uncertainties andunforeseeable factors relating to internal operations and the overall businessenvironment, all of which are difficult to predict and many of which are beyondthe Company’s control. Actual future results may vary materially as a result ofvarious risks and**

22

----

**uncertainties,including but not limited to, a reduction in discretionary consumer spending ora general downturn in the economy.  SeeItem 1A “Risk Factors” for a complete discussion of these and other riskfactors.**

**Results ofOperations**

Thefollowing table sets forth the components of net loss as a percentage of netsales for the periods indicated:
|                                                                                         | ** ** | **Successor  Company**                       | ** ** | **Successor  Company**                       | ** ** | **Combined  Company**                        | ** ** | **Successor  Company**                                               | ** ** | **Predecessor  Company**                                           | ** ** |
|-----------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** **                                                                              | ** ** | **Year Ended  December 31,  2006** | ** ** | **Year Ended  December 31,  2005** | ** ** | **Year Ended  December 31,  2004** | ** ** | **Period from  March 15 to  December 31,  2004** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| Net sales                                                                               |       |                                         | 100.0      | %                                            |       |                                         | 100.0      | %                                                                    |       |                                                               | 100.0      | % |   |   | 100.0 | % |   |   | 100.0 | % |   |
| Cost of sales                                                                           |       |                                         | 67.8       |                                         |       |                                         | 59.8       |                                                                 |       |                                                               | 73.2       |   |   |   | 76.9 |   |   |   | 58.6 |   |   |
| Gross profit                                                                            |       |                                         | 32.2       |                                         |       |                                         | 40.2       |                                                                 |       |                                                               | 26.8       |   |   |   | 23.1 |   |   |   | 41.4 |   |   |
| Selling, general  and administrative expenses        |       |                                         | 13.2       |                                         |       |                                         | 12.5       |                                                                 |       |                                                               | 13.4       |   |   |   | 12.2 |   |   |   | 18.0 |   |   |
| Amortization of  intangible assets                                                      |       |                                         | 13.3       |                                         |       |                                         | 11.8       |                                                                 |       |                                                               | 11.2       |   |   |   | 14.1 |   |   |   | — |   |   |
| Business  development, start-up and transition costs                               |       |                                         | 2.5        |                                         |       |                                         | 0.2        |                                                                 |       |                                                               | 0.9        |   |   |   | 0.9 |   |   |   | 0.5 |   |   |
| Transaction and  reorganization expenses                                                |       |                                         | —     |                                         |       |                                         | —     |                                                                 |       |                                                               | 5.5        |   |   |   | — |   |   |   | 26.6 |   |   |
| Impairment charge  on long-lived assets                                                 |       |                                         | —     |                                         |       |                                         | 0.3        |                                                                 |       |                                                               | —     |   |   |   | — |   |   |   | — |   |   |
| Loss on early  extinguishment of debt                                                   |       |                                         | —     |                                         |       |                                         | —     |                                                                 |       |                                                               | 9.4        |   |   |   | — |   |   |   | 45.5 |   |   |
| Operating income  (loss)                                                                |       |                                         | 3.3        |                                         |       |                                         | 15.4       |                                                                 |       |                                                               | (13.4      | ) |   |   | (4.2 | ) |   |   | (49.2 | ) |   |
| Interest expense,  net                                                                  |       |                                         | 19.0       |                                         |       |                                         | 15.8       |                                                                 |       |                                                               | 16.3       |   |   |   | 17.3 |   |   |   | 12.3 |   |   |
| Other expenses,  net                                                                    |       |                                         | 0.1        |                                         |       |                                         | —     |                                                                 |       |                                                               | 0.1        |   |   |   | 0.1 |   |   |   | — |   |   |
| Loss before  income taxes                                                               |       |                                         | (15.8      | )                                            |       |                                         | (0.4       | )                                                                    |       |                                                               | (29.8      | ) |   |   | (21.5 | ) |   |   | (61.5 | ) |   |
| Income tax  (benefit) expense                                                           |       |                                         | (5.8       | )                                            |       |                                         | 0.0        |                                                                 |       |                                                               | (9.3       | ) |   |   | (8.1 | ) |   |   | (14.1 | ) |   |
| Net loss                                                                                |       |                                         | (10.0      | )%                                           |       |                                         | (0.4       | )%                                                                   |       |                                                               | (20.4      | )% |   |   | (13.4 | )% |   |   | (47.5 | )% |   |

 

**Year Ended December 31, 2006 Compared to the YearEnded December 31, 2005**

***Net Sales***for 2006 decreasedapproximately $9.6 million, or 8.2%, to $108.0 million from $117.6 million in2005. 

Golf shaft sales decreasedapproximately $11.7 million, or 10.6%, to $99.1 million from $110.8 millionin 2005. This decline in net sales resulted primarily from a reduction in unitsales of two product types; (i) premium steel golf shafts for irons,wedges and putters, and (ii) stock original equipment manufacturer (“OEM”)graphite golf shafts for irons. The unit sales reduction in premium steelshafts was driven by several factors, but was predominantly impacted by thelack of exciting new product introductions in the iron, wedge and puttercategories from the leading golf equipment companies. The decline in unit salesof stock OEM graphite shafts relates primarily to the timing of certain OEMiron launches using the Company’s proprietary graphite iron shafts.

Performance sports salesincreased approximately $2.1 million, or 31.2%, to $8.9 million in 2006 from $6.8million in 2005.  This increase inrevenue was driven primarily by continued sales growth in the Company’s bikeand hockey categories, which remain the strategic focus for the performancesports segment, and comprise the majority of the segment’s new productsinitiatives.

23

----

Net sales to internationalcustomers decreased approximately $4.1 million, or 9.7%, to $38.3 million in2006 from $42.4 million in 2005.  This decreaseresulted primarily from the same overall golf industry factors and Companyspecific issues described above.

***Gross Profit***for 2006 decreasedapproximately $12.4 million, or 26.3%, to $34.8 million from $47.2 millionin 2005. Gross profit as a percentage of net sales decreased to 32.2% in 2006from 40.2% in 2005. The decrease in gross profit as a percentage of net saleswas driven primarily by four key factors: (i) an increase in the cost ofraw materials and energy sources, (ii) unfavorable fluctuations in foreigncurrency exchange rates, (iii) the unfavorable impact of certain fixedcosts in the Company’s manufacturing facilities spread over reduced unitvolume, and (iv) the expected decline in profit margins due to the mix ofproducts sold being more heavily weighted toward graphite golf and performancesports. These factors were partially offset by increased selling prices to theCompany’s customers in January 2006 on steel and graphite golf products, aswell as select performance sports product offerings.

***Selling, General and Administrative (“SG&A”) Expenses***for 2006 decreased approximately $0.5 million, or 3.0%,to $14.2 million from $14.7 million in 2005. SG&A as a percentage of net sales increased to 13.2% in 2006 from 12.5%in 2005.  This increase in SG&A as apercentage of net sales was due primarily to the decrease in sales betweenperiods.  The decrease in SG&A spendingbetween periods was in response to the softness on the gross profit line, asthe Company put specific expense controls in place to ensure the best possibleread-through to operating profit. These cost controls encompass a variety offunctional areas within the organization, and are representative of bothpermanent cost savings as well as the delay in certain non-essential businessactivities.

During 2006 the Companyspent approximately $0.1 million on its initial compliance project related toSection 404 of the Sarbanes-Oxley Act of 2002 (“SOX”).  In 2005 the Company spent approximately $0.2 millionon SOX initial compliance. 

***Amortization of Intangible Assets***for2006 was $14.3 million.  The majority of intangibleassets were acquired in connection with the Gilbert Global Acquisition.  Intangible assets with definitive lives arebeing amortized using a straight-line method over periods from 2 to 59 years.  Amortization of intangible assets in 2005 was$13.8 million.

***Business Development, Start-Up and Transition Costs***for2006 increased approximately $2.5 million, to $2.7 million, from $0.2 millionin 2005. The increase in these costs relates primarily to expenses associatedwith the acquisition of assets from a former competitor in the steel golf shaftindustry, Royal Precision.  Costs includeacquisition related fees and expenses, as well as transportation andintegration expenses associated with the transfer of production equipment andinventory to True Temper facilities.

***Impairment Charge On Long-Lived Assets***for2005 was $0.4 million and was incurred in conjunction with the write-down, andsubsequent disposal, of certain manufacturing equipment originally obtainedthrough the acquisition of substantially all of the tangible, personal propertyof Apollo Sports in 2000.  Apollo Sportswas a steel golf shaft competitor in England that went out of business in2000.  A significant portion of theassets acquired were subsequently transferred to the Company’s Amory,Mississippi facility.  This write-offrepresents the remainder of the assets located in the United Kingdom that weredeemed unusable.  No such charges wereincurred during 2006.

***Operating Income***for 2006decreased approximately $14.6 million to $3.6 million from $18.2 million in 2005.Operating income as a percentage of net sales decreased to 3.3% in 2006 from 15.4%in 2005. This decrease reflects the profit impact of the items described above.

***Interest Expense, net***for 2006 increased approximately $1.8 million to $20.5million from $18.7 million in 2005.  Thisincrease was driven primarily by the increase in outstanding principal amountsof variable rate bank debt associated with the financing required for the acquisitionof assets from Royal Precision, as well 

24

----

as an increase inthe variable interest rate on the Company’s bank debt as reflected by the risein short term borrowing rates in the overall economy.

***Income Tax Expense***for2006 changed to a benefit of approximately $6.3 million from an income taxexpense of approximately $0.0 in 2005. The effective tax rate during theseperiods differs from the U.S. federal statutory rate of 34% due primarily tothe incremental tax rate for state and foreign income tax purposes.

***Net Loss******for 2006 decreased approximately $10.3million to a net loss of $10.8 million from a net loss of $0.5 million in 2005.  This decrease reflects the profit impact fromthe items described above.***

**YearEnded December 31, 2005 Compared to the Year Ended December 31, 2004 (CombinedCompany)**

***Net Sales***for 2005increased approximately $19.2 million, or 19.5%, to $117.6 million from $98.4million in 2004. 

Golf shaft sales increased approximately $18.5 million,or 20.0%, to $110.8 million in 2005 from $92.3 million in 2004.  This improvement in revenue was drivenby several factors, including a favorable shift in the mix of steel golf shaftssold towards more premium, branded products. In addition, the Company generated greater unit sales of graphite golfshafts, which can be attributed to several factors, including:

·  Increased demand for the Company’s new productofferings such as the Grafalloy ProLaunch graphite shaft, Grafalloy Blue ironshaft, and its recently introduced hybrid graphite shafts;

·  A greater number of successful new clubintroductions from several key OEM partners;

·  General reductions in the overall wholesaleand retail channel inventory positions as compared to prior year levels; and

·  Increased acceptance and usage of theCompany’s graphite golf shaft products in certain OEM partners’ custom optionprograms, primarily in the Grafalloy Blue and ProLaunch family ofproducts.  

Performance sports salesincreased approximately $0.7 million, or 12.3%, to $6.8 million in 2005 from $6.0million in 2004.  This increase inrevenue was driven primarily by sales growth in the Company’s bike and hockeycategories, which remain the strategic focus for the performance sportssegment, and comprise the majority of the segment’s new products initiatives.

Net sales to internationalcustomers increased approximately $5.9 million, or 16.2%, to $42.4 million in2005 from $36.5 million in 2004.  Thisincrease resulted primarily from the same overall golf industry factors and Companyspecific issues described above, related to golf shaft sales activity.  In addition, the Company has seen a markedincrease in its penetration into the steel golf shaft market in Japan; dueprimarily to its new, light-weight steel shaft offerings that are being wellreceived by the Japanese golfers and overseas OEM club companies.

***Gross Profit***for 2005increased approximately $20.8 million, or 79.0%, to $47.2 million from $26.4million in 2004. Gross profit as a percentage of net sales increased to 40.2%in 2005 from 26.8% in 2004.

As a result of theapplication of purchase accounting to record the Gilbert Global Acquisition,the Company increased the value of inventory, to reflect its estimated fairvalue at the date of acquisition, by $11.7 million which was subsequentlyreflected in cost of sales corresponding with the related subsequent salesactivity during 2004.  This inventoryfair value adjustment and related recognition in cost of sales is a non-cashtransaction and affects only the 2004 results of operations.  The following paragraph describes the grossprofit results of the Company excluding the impact of this purchase accountingadjustment.

***Gross Profit***for 2005increased approximately $9.2 million, or 24.1%, to $47.2 million from $38.1million in 2004. Gross profit as a percentage of net sales increased to 40.2%in 2005 from 38.7% in 2004.  

25

----

The increase ingross profit as a percentage of net sales was driven primarily by (i) increasedselling prices for golf shaft products, (ii) favorable product mix in thepremium steel golf shaft segment, (iii) improved foreign currency exchangerates, and (iv) favorable operating improvements from productivity and costcontrol programs at the Company’s manufacturing facilities, including the laborcost savings realized from the transition of graphite product manufacturing toGuangzhou, China.  These favorablefactors were partially offset by (i) an increase in the cost of raw materialsand natural gas and (ii) the impact of general inflation on the Company’s otherlabor and overhead costs.

***Selling, General and Administrative (“SG&A”) Expenses***for 2005 increased approximately $1.5 million, or 11.4%,to $14.7 million from $13.2 million in 2004. SG&A as a percentage of net sales decreased to 12.5% in 2005 from 13.4%in 2004.  This decrease in SG&A as apercentage of net sales was due primarily to the increase in sales betweenperiods.  The increase in SG&A spendingbetween periods was due in part to (i) incremental advertising and promotion ofnew products, (ii) performance based management expense, and (iii) moderateincreases in travel costs in support of the revenue gains.

During 2005 the Companyspent approximately $0.2 million on its initial compliance project related toSection 404 of the Sarbanes-Oxley Act of 2002 (“SOX”).  In 2004 the Company spent approximately $0.1million on SOX initial compliance. 

***Amortization of Intangible Assets***for2005 was $13.8 million.  Intangibleassets were acquired in connection with the Gilbert Global Acquisition.  Intangible assets with definitive lives arebeing amortized using a straight-line method over periods from 2 to 59 years.  Amortization of intangible assets in 2004 was$11.0 million, which represented amortization from March 15, 2004 through December31, 2004.

***Business Development, Start-Up and Transition Costs***for2005 decreased approximately $0.6 million, or 75.2%, to $0.2 million from $0.8million in 2004.   These costs representvarious start-up business expenses related to the opening of the Company’scomposite manufacturing operation in Southern China, and the relateddown-sizing costs incurred at the Company’s El Cajon, California facility.  The decrease in cost reflects the fact thatthis project is substantially complete.

***Transaction and Reorganization Expenses***for2004 were $5.4 million and were incurred in conjunction with the sale andpurchase agreement for TTC which closed on March 15, 2004.  These transaction related expenses include(i) investment banking merger and acquisition fees; (ii) legal fees; and (iii)other incidental costs and expenses related to the sale of TTC.  No such transaction and reorganizationexpenses were incurred during 2005.

***Impairment Charge On Long-Lived Assets***for2005 was $0.4 million and was incurred in conjunction with the write-down, andsubsequent disposal, of certain manufacturing equipment originally obtainedthrough the acquisition of substantially all of the tangible, personal propertyof Apollo Sports in 2000.  Apollo Sportswas a steel golf shaft competitor in England that went out of business in2000.  A significant portion of theassets acquired were subsequently transferred to the Company’s Amory,Mississippi facility.  This write-offrepresents the remainder of the assets located in the United Kingdom that weredeemed unusable.  No such charges wereincurred during 2004.

***Loss on the Early Extinguishment of Long-Term Debt***for2004 was $9.2 million.  The costsrecorded as loss on the early extinguishment of long-term debt include (i) thewrite-off of the remaining deferred financing costs related to our 10 7¤8%senior subordinated notes and our 2002 senior credit facility, and (ii) theearly extinguishment call premium and related interest we incurred when weredeemed the 10 7¤8%senior subordinated notes on March 15, 2004. No long-term debt was extinguished during 2005.

***Operating Income (Loss)***for2005 increased approximately $31.4 million to $18.2 million from an operatingloss of $13.2 million in 2004. Operating income loss as a percentage of netsales increased to 15.4% in 2005 from a loss of 13.4% in 2004. This increasereflects the profit impact of the items described above.

26

----

Excluding the impact ofthe 2004 inventory purchase accounting adjustment, 2004 transaction andreorganization expenses, 2004 loss on early extinguishment of long-term debt,2005 impairment charge on long-lived assets, and the amortization of intangibleassets in both 2004 and 2005, operating income would have increasedapproximately $8.3 million.  

***Interest Expense, net***for 2005 increased approximately $2.7 million to $18.7million from $16.0 million in 2004.  Thisincrease was driven primarily by the increase in outstanding principal amountsof variable rate bank debt and fixed rate bonds associated with the GilbertGlobal Acquisition, offset somewhat by a decrease in the interest rate on theCompany’s fixed rate debt between periods.

***Income Tax Expense***for2005 changed to approximately $0.0 compared to an income tax benefit of $9.2million in 2004. The effective tax rate during these periods differs from theU.S. federal statutory rate of 34% due primarily to the incremental tax rate forstate and foreign income tax purposes. For the period from January 1, 2004 through March 14, 2004, theeffective tax rate also differs due to the nondeductible nature of a portion oftransaction and reorganization expenses. 

***Net Loss******for 2005 increased approximately$19.6 million to a net loss of $0.5 million from a net loss of $20.1 million in2004.  This increase reflects the profitimpact from the items described above.***

Excluding the impact ofthe 2004 inventory purchase accounting adjustment, 2004 transaction andreorganization expenses, 2004 loss on early extinguishment of long-term debt,2005 impairment charge on long-lived assets, and the amortization of intangibleassets in both 2004 and 2005, net income would have increased approximately $3.4 million.

**Liquidity andCapital Resources**

Thefollowing table shows cash flow activity by source. Discussion of cash flowactivity is noted below.

| ** **                                           | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------------------------------------------------|------------|----------|------------|----------|------------|
| Net cash provided  by operating activities           |       | $        | 941        |     | $          | 15,936 |   |
| Net cash used in  investing activities               |       | $        | (20,464    | )        | $          | (2,031 | ) |
| Net cash provided by  (used in) financing activities |       | $        | 17,845     |     | $          | (12,509 | ) |

 

**General**

At the beginning of 2004, theCompany had a senior credit facility (the “2002 Senior Credit Facility”) whichincluded a $15.0 million non-amortizing revolving credit facility and a $14.0million term loan. Amounts under the revolving credit facility were availableon a revolving basis through December 31, 2007. The term loan requiredquarterly cash interest and principal payments continuing through December 2007.

In addition, the Companyhad $99.7 million in 107¤8%Senior Subordinated Notes Due 2008 (the “107¤8% Notes”). The107¤8%Notes required cash interest payments each June 1 and December 1,beginning June 1, 1999. The 107¤8%Notes were redeemable at the Company’s option, under certain circumstances andat certain redemption prices.

As part of the GilbertGlobal Acquisition the Company entered into a new senior credit facility (the “2004Senior Credit Facility”) which includes a $20.0 million non-amortizingrevolving credit facility and a $110.0 million Term B loan (as amended fromtime to time). The term loan requires cash interest payments and quarterlyprincipal payments which began June 30, 2004 and continue through March 15, 2011.

Also in conjunction withthe Gilbert Global Acquisition, the Company issued new 83¤8%Senior Subordinated Notes due 2011 (the “83¤8% Notes”). The83¤8%Notes require cash interest payments each March 15 and September 15commencing on September 15, 2004. The 83¤8% Notes areredeemable at the Company’s option, under certain circumstances and at certainredemption prices, beginning March 15, 2008. 

27

----

The Company used theproceeds from the 2004 Senior Credit Facility and the 83¤8%Notes to pay off the existing debt that was outstanding at the closing of theGilbert Global Acquisition on March 15, 2004. Also, a portion of theproceeds were used to pay a dividend to TTC in order for TTC to repay theoutstanding balance on its senior discount notes which carried a 13.25% PIKinterest rate or a 12.25% cash interest rate.

The 2004 Senior Credit Facilityand the Notes contain provisions which, among other things, limit the Company’sability to (i) incur additional indebtedness, (ii) make acquisitions andcapital expenditures, (iii) sell assets, (iv) create liens or otherencumbrances, (v) make certain payments and dividends, or (vi) merge orconsolidate. In addition, both the senior credit facility and the Notes containcustomary change of control provisions that could, under certain circumstances,cause accelerated debt repayment. The 2004 Senior Credit Facility also requiredthe Company to maintain certain specified financial ratios and tests includingminimum interest coverage and fixed charge coverage ratios, and maximumleverage ratios.

On September 24, 2004the Company executed an amendment to its 2004 Senior Credit Facility (the “FirstAmendment”). The First Amendment provided adjustments to certain specifiedfinancial ratios and tests included in the 2004 Senior Credit Facility. As partof the First Amendment, the margin adder on LIBOR based loans was increasedfrom 2.50% to between 2.75% and 3.00%, depending on financial ratios, from September 24,2004 through December 31, 2005.

On March 27, 2006 theCompany amended and restated its 2004 Senior Credit Facility (the “2006 RestatedCredit Facility”). The 2006 Restated Credit Facility includes additional termloans under the Company’s existing Senior Secured Credit Facilities ofapproximately $18.0 million, amendments that enable the Company to pursuefuture acquisitions, and the necessary flexibility to execute on the Company’sglobal strategic and operational initiatives. The proceeds of the additionalterm loans were used primarily to acquire certain assets from former steel golfshaft competitor Royal Precision, as more fully discussed in Note 3 to thefinancial statements included elsewhere in this annual report.

On January 22, 2007 theCompany executed an amendment to its 2006 Restated Credit Facility (the “SecondAmendment”).  The Second Amendment wasmade effective as of December 20, 2006. The Second Amendment was executed in conjunction with a second lienfinancing effort and related acquisition, as more fully described in Note 16 tothe financial statements located elsewhere in this annual report.  In addition to allowing the flexibility forsuch second lien financing, the Second Amendment also provided adjustments tocertain specified financial ratios and tests included in the 2006 RestatedCredit Facility.  As part of the SecondAmendment, the margin adder on LIBOR based loans was increased to between 3.00%and 3.25%, depending on financial ratios, beginning January 22, 2007.

Both the 2006 RestatedCredit Facility and the 83¤8% Notescontain covenants and events of default, including substantial restrictions andprovisions which, among other things, limit the Company’s ability to incuradditional indebtedness, make acquisitions and capital expenditures, sellassets, create liens or other encumbrances, make certain payments anddividends, or merge or consolidate. The 2006 Restated Credit Facility alsorequires the Company to maintain certain specified financial ratios and testsincluding minimum interest coverage and fixed charge coverage ratios, andmaximum leverage ratios. Furthermore, the 2006 Restated Credit Facilityrequires certain mandatory prepayments including payments from the net proceedsof certain asset sales and a portion of the Company’s excess cash flow asdefined within the credit agreement.

At December 31, 2006,the Company was in compliance with all of the covenants in both the 2006Restated Credit Facility, as amended, and the 83¤8% Notes.

***Discussion of CashFlows for Years Ended December 31, 2006 and 2005***

Net cash provided byoperating activities decreased approximately $15.0 million betweenperiods, which relates primarily to the decrease in earnings during 2006 andthe additional costs for the acquisition 

28

----

andintegration of assets from Royal Precision. Overall working capital requirements were relatively flat during 2006,with an increase in inventory, due in part to additional graphite raw materialpurchases secured in a tight market, being effectively offset by a relatedincrease in accounts payable and a decrease in accounts receivable due toimproved collection efforts and overall lower sales revenue.

Net cash used in investingactivities increased $18.4 million during 2006, primarily as a result of theacquisition of certain assets from Royal Precision.  Assets acquired include production equipment,inventory and intellectual property.

Net cash provided byfinancing activities totaled $17.8 million during 2006, as compared to the$12.5 million used in financing activities during 2005.  This increase in cash provided by financingactivities relates primarily to (i) additional borrowings of term debt totaling$18.0 million during 2006, used primarily to finance the acquisition of certainassets from Royal Precision, (ii) additional borrowings under therevolving credit agreement for working capital and general corporate purposeswhich totaled $5.0 million, (iii) a net decline in repayments of termdebt between periods of $8.7 million, and (iv) the payment of $1.3 millionof debt issuance costs during 2006 related to the additional borrowings.

***ExistingContractual Cash Obligations***

Thefollowing table reflects the Company’s contractual cash obligations for principalpayments on long-term debt and operating leases as of December 31, 2006 (dollarsin millions):

| ** **               | ** ** | **Total** | ** ** | ** 2007** | ** ** | **2008  through  2009** | ** ** | **2010  through  2011** | ** ** | **Thereafter** | ** ** |
|--------------------------|------------|-----------|------------|----------------|------------|-------------------------|------------|-------------------------|------------|----------------|------------|
| Long-Term Debt(1)        |       | $         | 240.4      |           |       | $                       | 1.2        |                    |       |           | $          | 7.5 |   |   |   | $ | 231.7 |   |   |   | $ | — |   |   |
| Operating Leases         |       | 3.4       |       |           | 1.1        |                    |       |                    | 1.3        |           |       |   | 1.0 |   |     |   | — |     |   |
| Purchase  Commitments(2) |       | 0.5       |       |           | 0.5        |                    |       |                    | —     |           |       |   | — |   |   |   | — |   |   |
| Total(3)                 |       | $         | 244.3      |           |       | $                       | 2.8        |                    |       |           | $          | 8.8 |   |   |   | $ | 232.7 |   |   |   | $ | — |   |   |

----

(1)   The Company’s long-term debt agreements contain customarychange of control provisions that could, under certain circumstances, causeaccelerated debt repayment.

(2)   Amount represents the purchase commitments for natural gas used inthe manufacture of steel golf shafts at the Amory, Mississippi facility.

(3)   This table does not include future obligations related to fundingpension benefits.

***Future CashGeneration and Use***

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

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

·  Tomake additional investments in the business, which may include, among otherthings, capital expenditures, business acquisitions, and/or expenditures forbusiness development and expansion in China.

In addition to the debtservice obligations for principal and interest payments, the Company’sliquidity needs largely relate to working capital requirements and capitalexpenditures for machinery and equipment. From 2002 through 2006 the Company’sfull year capital expenditures ranged from $1.6 million to $4.9 million.  At this time, the Company believes this to bea reasonable range for forecasted capital expenditures in the near future. TheCompany intends to fund its current and long-term working capital, capitalexpenditure and debt service requirements through cash flow generated fromoperations. However, since there can be no assurance of future performance, asof December 31, 2006, the Company has the $20.0 million revolving creditfacility available for future cash requirements (as reduced by any outstandingdraws, of which there were $5.0 million as of December 31, 2006). Themaximum amount the Company 

29

----

may useof the $20.0 million revolving credit facility is limited by the financialcovenants contained within the 2006 Restated Credit Facility and is reduced byany outstanding letters of credit. As of December 31, 2006, the Companybelieves that cash flow generated from operations, in addition to otherfinancing sources, will be sufficient to meet its cash obligations for theensuing 12 month period.

In addition to theCompany’s cash obligations for interest and principal payments related to itsdebt obligations, the Company also has a management services agreement with anaffiliate of the principle common stock holder in its parent company, whichrequires the payment of an annual advisory fee of $0.5 million.

On January 22, 2007, the Company executed an amendmentto its 2006 Restated Credit Facility (the “Second Amendment”).  The Second Amendment was made effective as ofDecember 20, 2006, and was approved by the Company, Credit Suisse acting asadministrative agent and collateral agent, and by a majority of the lenders whowere party to the 2006 Restated Credit Facility at the effective date.  The Second Amendment was executed inconjunction with a second lien financing effort, described more fully below,and related acquisition.  In addition toallowing the flexibility for such second lien financing, the Second Amendmentalso provided adjustments to certain specified financial ratios and testsincluded in the 2006 Restated Credit Facility. As part of the Second Amendment, the margin adder on LIBOR based loanswas increased to between 3.00% and 3.25%, depending on financial ratios,beginning January 22, 2007.

On January 22, 2007, the Company executed a SecondLien Credit Agreement (the “Second Lien”). The Second Lien includes additional term loans of approximately$45 million, with the provision that approximately $25 million of theproceeds were used to pay down the debt under the 2006 Restated CreditFacility. The Second Lien is variable rate debt, which provides for interest atthe Company’s option, at (1) the base rate of the bank acting asadministrative agent plus a margin adder of 4.50%, or (2) under a LIBOR optionwith a borrowing spread of LIBOR plus 5.50%. The maturity date of the SecondLien is June 30, 2011.  The Second Liendoes not amortize.

On February 26, 2007, the Company acquired CNPrecision, a steel golf shaft manufacturing company located in Suzhou,China.  CN Precision was founded in 2005,and is currently in the final stages of equipment installation.

Depending on the size, anyfuture acquisitions, joint ventures, capital expenditures or similartransactions may require significant capital resources in excess of cashprovided from operations, and potentially in excess of cash available under therevolving credit facility. There can be no assurance that the Company will beable to obtain the necessary capital, under acceptable terms, from creditors orother sources that will be sufficient to execute any such business investmentor capital expenditure.

***Discussion of Cash Flows for Years Ended December 31,2005 and 2004***

Net cash provided by operating activities increasedapproximately $6.3 million between periods, as net income increased during2005. In addition, the Company decreased total inventory by approximately $2.3million during 2005. Offsetting the cash from operations generated by the aforementioneditems, trade accounts receivable increased approximately $3.4 million during2005, due primarily to the increase in sales between periods.

The Company used $2.6 million of cash to invest inproperty, plant and equipment in 2005, compared to the $1.6 million spent in2004. The increase in investments in property, plant and equipment is theresult of additional automation efforts aimed at improving quality andproductivity in the Company’s manufacturing facilities. In addition, anunder-utilized production facility located in Olive Branch, Mississippi wassold during the third quarter of 2005, generating net proceeds of approximately$0.8 million.

30

----

The Company used $12.5 million of net cash forfinancing activities in 2005 as compared to $13.2 million in 2004. The 2005activity includes voluntary prepayments of principal on the 2004 Senior CreditFacility totaling $12.0 million.

The 2004 activity includesthe result of the Gilbert Global Acquisition as noted above. On March 15,2004, the proceeds from issuing the 2004 Senior Credit Facility and theproceeds from issuing the 83¤8% Notes, pluscash generated from operations during the first quarter, and cash on hand atthe beginning of that quarter were used to (i) repay the outstandingprincipal and interest on the Company’s 2002 senior credit facility,(ii) redeem and repay the 107¤8%Notes including accrued and unpaid interest and early redemption call premium,(iii) pay for debt issuance costs on the 2004 senior credit facility andthe 83¤8%Notes, (iv) pay for transaction and reorganization expenses, and(v) make a distribution of the net remaining equity to the sellingshareholders.

**Seasonality**

In general, the componentsupplier sales to golf equipment companies and distributors are seasonal, andtend to precede the warm weather golf season. However, there are exceptions,especially for those suppliers that sell to the high volume opening price pointgolf club manufacturers who sell their product through mass channel retailstores and generate strong volumes during the holiday gift-giving season. Ourbusiness does experience some seasonal fluctuations, based on a five yearaverage, approximately 55% of our net sales are generated in the first half ofthe year, and the remaining 45% of our net sales are generated in the secondhalf.

**Inflation**

With the exception ofnatural gas, nickel, carbon fiber prepreg material, and medical costs, theCompany’s historical financial results have not been significantly impacted byinflationary pressures.  The key cost elementsoutlined above have impacted financial results, or are expected to impactfuture results, and are described in more detail below.

During 2005 and 2006 theCompany experienced an increase in costs for natural gas used in its steelproduct manufacturing plant in Amory, Mississippi.  Based upon current market conditions andnatural gas contracts for 2007, the Company expects overall natural gas coststo be flat to down slightly during 2007. The Company believes its natural gas price inflation has been and willcontinue to be consistent with that experienced by others using this sameenergy source.

During 2005 and 2006 theCompany experienced an increase in costs for nickel, which is used in themanufacture of steel golf shafts.  Basedupon current market conditions, the Company expects overall nickel costs to be materiallyhigher during 2007.  The Company believesits nickel price inflation has been and will continue to be consistent withthat experienced by others using this same raw material.

During 2005 and 2006 theCompany experienced an increase in costs for carbon fiber prepreg materialwhich is used in the manufacture of graphite golf shafts, hockey sticks andbicycle components.  Based upon current marketconditions and purchase price agreements for 2007, the Company expects overallcarbon fiber prepreg costs to be down slightly during 2007.  The Company believes its carbon fiber prepregprice inflation has been and will continue to be consistent with thatexperienced by others using this same raw material.

During 2005 and 2006 theCompany experienced an increase in costs for the medical benefits provided toemployees in the United States.  Basedupon current market conditions and projected medical inflation trends, theCompany expects overall medical costs to be higher in 2007 than experienced in2006.  The Company believes its medicalcost inflation has been and will continue to be consistent with thatexperienced by other US based companies providing employer sponsored medicalbenefits to their employees.

31

----

**Critical Accounting Policies and Estimates**

The preparation offinancial statements in conformity with U.S. generally accepted accountingprinciples (“GAAP”) requires the appropriate application of certain accountingpolicies, many of which require Company management to make estimates andassumptions about future events and their impact on amounts reported in the consolidatedfinancial statements and accompanying notes. Since future events and theirimpact cannot be determined with absolute certainty, the actual results willinevitably differ from management’s estimates. Such differences may be materialto the consolidated financial statements.

The Company believes that itsapplication of accounting policies, and the estimates inherently requiredtherein, are reasonable under the circumstances. These accounting policies andestimates are constantly reevaluated, and adjustments are made when facts andcircumstances dictate a change. Historically, the Company has found its applicationof accounting policies to be appropriate, and actual results have not differedmaterially from those determined using necessary estimates.

The Company’s accountingpolicies are more fully described in Note 2 to its consolidated financialstatements located elsewhere in this annual report. Certain critical accountingpolicies and estimates are described below.

***Revenue Recognition.******  ***The Company derivessubstantially all of its revenue from the sales of golf shafts and performancesports products. Revenue is recognized when all of the following conditionsexist: (i) persuasive evidence of an arrangement exists,(ii) delivery has occurred, (iii) the revenue amount is determinableand (iv) collection is reasonably assured. Valuation allowances areestablished for estimated returns, allowances, and discounts at the timerevenue is recognized.

***Pension and Other Postretirement Obligations.******  ***Pension and otherpostretirement benefits costs and obligations are dependent on assumptions usedin calculating such amounts. These assumptions include discount rates, expectedreturn on plan assets, rates of salary increase, health care cost trend rates,mortality rates, and other factors. These assumptions are updated on an annualbasis prior to the beginning of each year. The Company considers current marketconditions, including interest rates, in making these assumptions. The Companydevelops the discount rates by considering the yields available on high-qualityfixed income investments with maturities corresponding to the related benefitobligation. The Company’s discount rate for both its defined benefit pensionplan and its unfunded post-retirement health plan was 6.00% and 5.75% atDecember 31, 2006 and 2005, respectively. As discussed further in Note 10to the consolidated financial statements, located elsewhere in this annual report,the Company develops the expected return on pension plan assets by consideringvarious factors, which include its targeted asset allocation percentages,historic returns, and expected future returns. The Company’s expected long-termrate of return assumption for assets in its defined benefit plan was 8.50% for 2006and 2005.

The Company believes thatthe assumptions used are appropriate; however, differences in actual experienceor changes in the assumptions may materially affect the Company’s financialposition or results of operations. In accordance with accounting principlesgenerally accepted in the United States, actual results that differ from theactuarial assumptions are accumulated and, if in excess of a specifiedcorridor, amortized over future periods and, therefore, generally affectrecognized expense and the recorded obligation in future periods. Also, gainsand losses resulting from changes in assumptions are amortized over theexpected remaining service period of active plan participants or, for retiredparticipants, the average remaining life expectancy, to the extent that suchamounts exceed 10% of the greater of the market-related value of plan assets orthe projected benefit obligation at the beginning of the year. The Companyexpects that its pension and other postretirement benefit costs in 2007 will berelatively consistent with those recognized in 2006.

***Impairment of Long-Lived Assets, Including Goodwill.******  ***The Company accountsfor long-lived assets in accordance with the provisions of Statement No. 144,*Accounting for the Impairment or Disposal ofLong-Lived Assets* (Statement 144) and evaluates goodwill forimpairment under Statement No. 142, *Goodwilland Other Intangible Assets* (Statement 142). The Company evaluates goodwillfor impairment on an annual 

32

----

basis, andperiodically evaluates long-lived assets, including goodwill, for indicatorsthat would suggest that the carrying amount of the assets may not berecoverable. The judgments regarding the existence of such indicators are basedon factors such as operating performance, market conditions, and legal factors.The valuation of long-lived assets, including goodwill, requires the use of judgmentin evaluating these indicators.

In accordance with SFAS No. 144,long-lived assets, such as property, plant, and equipment, and purchasedintangibles subject to amortization, are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of anasset may not be recoverable. Recoverability of assets to be held and used ismeasured by a comparison of the carrying amount of an asset to estimatedundiscounted future cash flows expected to be generated by the asset. If thecarrying amount of an asset exceeds its estimated future cash flows, animpairment charge is recognized by the amount by which the carrying amount ofthe asset exceeds the fair value of the asset. Assets to be disposed of would beseparately presented in the balance sheet and reported at the lower of thecarrying amount or fair value less costs to sell, and are no longerdepreciated. The assets and liabilities of a disposal group classified as heldfor sale would be presented separately in the appropriate asset and liabilitysections of the balance sheet.

Goodwill and intangible assets not subject toamortization are tested annually for impairment, and are tested for impairmentmore frequently if events and circumstances indicate that the asset might beimpaired. An impairment loss is recognized to the extent that the carryingamount exceeds the asset’s fair value.

***InventoryValuation.***   Inventories are stated at thelower of cost or market, cost being determined on the first-in, first-outmethod.  The Company assesses thevaluation of its inventories and reduces the carrying value of those inventoriesthat are obsolete or in excess of the Company’s forecasted usage to theirestimated net realizable value.  TheCompany estimates the net realizable value of such inventories based onanalyses and assumptions including, but not limited to, historical usage,future demand and market requirements. Reductions to the carrying value of inventories are recorded in cost ofgoods sold.  If the future demand for theCompany’s products is less favorable than the Company’s forecasts, then thevalue of the inventories may be required to be reduced, which could result inmaterial additional expense to the Company and have a material adverse impacton the Company’s consolidated financial statements.

***Valuation for Deferred Income Taxes.******  ***The Company’s consolidatedfinancial statements include an estimate of income taxes assessed in each legaljurisdiction in which it operates. These income taxes include both a current amount,as well as a deferred portion which results from a variety of temporary bookversus tax treatment differences, as well as tax-basis net operating losscarryforwards. These differences result in deferred tax assets and liabilities,which are included in the consolidated balance sheet. Once established, anydeferred tax asset must be evaluated to determine the likelihood that theCompany will generate sufficient future taxable income to utilize the fullamount. When facts and circumstances warrant, the Company will establish,increase or reduce valuation allowances associated with deferred tax assets inorder to reflect which assets meet the more likely than not realizability test.

**Impactof Recently Issued Accounting Standards**

Information regardingrecent accounting pronouncements is contained in Note 2 to theConsolidated Financial Statements, which is incorporated herein by thisreference.

33

----

**Item 7A.**   Quantitative and QualitativeDisclosures About Market Risk

**Interest RateSensitivity**

Thetable below provides information about our debt obligations as ofDecember 31, 2006 that are sensitive to changes in interest rates. Thetable presents cash flows and related weighted average interest rates byexpected maturity dates (dollars in millions).

| ** **                                       | ** ** | **Expected Maturity Date** | ** ** | **There-** | ** ** | ** ** | ** ** |
|--------------------------------------------------|------------|--------------------------------------|------------|------------|------------|------------|------------|
| **LONG TERM DEBT**                     | ** ** | ** **                           | ** ** | **2007**   | ** ** | **2008**   | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **after** | ** ** | **Total** | ** ** |
| Fixed Rate 83¤8%  Senior Subordinated Notes |       | $                                    | —     |       | $          | —     |       | $ | — |   | $ | — |   | $ | 125.0 |   |   | $ | — |   |   | $ | 125.0 |   |
| Average Interest Rate                            |       |                                 |       |       |       |       |       |   |   |   |   |   |   |   |   | 8.38 | % |
| Variable Rate Senior  Credit Facility            |       |   1.2                           |       |   1.2 |       |   6.3 |       |   90.6 |   |     16.1 |   |   |   — |   |   | $ | 115.4 |   |
| Average Interest Rate(a)                         |       |                                 |       |       |       |       |       |   |   |   |   |   |   |   |   | 8.37 | % |
|                                                  |            |                                      |            |            |            |            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

(a)           Variable rate long-termdebt is comprised of term loans under the 2006 Restated Credit Facility, whichprovides for interest at our option, at (1) the base rate of the bankacting as administrative agent plus a margin adder of 2.00% to 2.25%, or(2) under a LIBOR option with a borrowing spread of LIBOR plus 3.00% to 3.25%,depending on certain financial ratios.

**Exchange Rate Sensitivity**

We use forward foreignexchange contracts (“Instruments” or “Derivative Instruments”) in ourmanagement of foreign currency exchange rate exposures. Instruments used ashedges must be effective at reducing the risks associated with the underlyingexposure and must be designated as a hedge at the inception of the contract.Accordingly, changes in the market value of the Instruments must have a highdegree of inverse correlation with changes in the market value or cash flows ofthe underlying hedged item.

We use DerivativeInstruments to hedge several components of our revenue and cash collectionstream, including, (i) anticipated foreign currency sales, (ii) accountsreceivable denominated in foreign currencies, and (iii) cash balancesmaintained in foreign currencies.

The changes in the marketvalue of Derivative Instruments hedging anticipated foreign currency sales arerecognized in the consolidated balance sheets as a component of accumulatedother comprehensive income in stockholder’s equity. To the extent an instrumentis no longer effective as a hedge due to a change in the underlying exposure,gains and losses are recognized currently in the consolidated statements ofoperations as a component of cost of sales.

The changes in the marketvalue of Derivative Instruments hedging accounts receivable or cash denominatedin foreign currency are recognized as a component of operating income duringthe period of the change, as they are marked to market on a monthly basis.

At December 31, 2006,the Company had outstanding forward foreign currency contracts designated ashedging instruments which totaled $5.5 million.

Assuming a hypothetical10% adverse change in all foreign currencies, with the resulting functionalcurrency gains and losses translated into U.S. dollars at the spot rate, theloss in fair value of exchange contracts held on December 31, 2006, wouldbe $0.7 million. Those losses would be offset, in part, by gains on theunderlying receivables and cash being hedged. See Note 2(h) to ourconsolidated financial statements located elsewhere in this annual report for furtherdiscussion of foreign currencies.

**Commodity Risk**

We have some exposure torisks associated with fluctuations in prices for commodities such as nickel andnatural gas which are used to manufacture our products. Nickel is used in theplating of steel golf shafts, and natural gas is used as an energy sourceprimarily in our steel manufacturing operations. In some cases we will purchasecontracts to lock in prices for both nickel and natural gas to be deliveredanywhere from one to twenty-four months from the date the contract isconsummated. As of December 31, 2006 we held either under contract or havepurchased approximately 25% of our expected 2007 usage of natural gas, and hadno contracts for the purchase of nickel.

34

----

**Item 8.        *Consolidated Financial Statements and Supplementary Data***

**INDEX**
| Financial Statements                                                                                                                                                                                                                                                                                                                          | ** ** | **Page(s)** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------|
| The following  consolidated financial statements of True Temper Sports, Inc. and  subsidiaries are submitted in response to Part II, Item 8:                                                                                                                                                                                        |       |        |
| Report  of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                      |       | 36          |
| Consolidated Statements of Operations—for each of the  years ended December 31, 2006 and 2005 and for the period from  March 15, 2004 to December 31, 2004 (Successor Company) and for the  period from January 1, 2004 to March 14, 2004 (Predecessor Company)                                                 |       | 37          |
| Consolidated  Balance Sheets—December 31, 2006 and 2005                                                                                                                                                                                                                                                                             |       | 38          |
| Consolidated Statements of Stockholder’s Equity and  Comprehensive Income (Loss)—for each of the years ended December 31,  2006 and 2005 and for the period from March 15, 2004 to  December 31, 2004 (Successor Company) and for the period from  January 1, 2004 to March 14, 2004 (Predecessor Company) |       | 39          |
| Consolidated Statements of Cash Flows—for each of the  years ended December 31, 2006 and 2005 and for the period from  March 15, 2004 to December 31, 2004 (Successor Company) and for the  period from January 1, 2004 to March 14, 2004 (Predecessor Company)                                                 |       | 41          |
| Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                                                    |       | 42          |

 

35

----

**Report of Independent Registered Public AccountingFirm**

The Board of DirectorsTrue Temper Sports, Inc.:

We have audited the accompanying consolidated balancesheets of True Temper Sports, Inc. and subsidiaries (the Successor Company)as of December 31, 2006 and 2005, and the related consolidated statementsof operations, stockholder’s equity and comprehensive income (loss), and cashflows for each of the years ended December 31, 2006 and 2005 and for theperiod from March 15, 2004 to December 31, 2004. We have also auditedthe related consolidated statements of operations, stockholder’s equity andcomprehensive income (loss), and cash flows of the predecessor of the Company(the Predecessor Company) for the period from January 1, 2004 to March 14,2004. In connection with our audits of the consolidated financial statements,we also audited the accompanying financial statement schedule. Theseconsolidated financial statements and the financial statement schedule are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these consolidated financial statements and the financial statementschedule based on our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, 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 Successor Company’s consolidatedfinancial statements referred to above present fairly, in all materialrespects, the financial position of True Temper Sports, Inc. andsubsidiaries as of December 31, 2006 and 2005, and the results of theiroperations and their cash flows for each of the years ended December 31, 2006and 2005 and for the period from March 15, 2004 to December 31, 2004,in conformity with U.S. generally accepted accounting principles.  Further, in our opinion, the PredecessorCompany’s consolidated financial statements referred to above present fairly,in all material respects, the results of operations and cash flows of thePredecessor Company for the period from January 1, 2004 to March 14,2004, in conformity with U.S. generally accepted accounting principles. Also,in our opinion, the related financial statement schedule, when considered inrelation to the consolidated financial statements taken as a whole, presentsfairly, in all material respects, the information set forth therein.

Asdiscussed in Note 1 to the consolidated financial statements, effectiveMarch 15, 2004, the Successor Company’s consolidated financial statementsreflect the effect of the purchase method of accounting, which is a differentbasis of accounting than the Predecessor Company’s consolidated financialstatements, which are reflected on a historical cost basis. Therefore, the SuccessorCompany’s consolidated financial statements are not comparable to thePredecessor Company’s consolidated financial statements.

Asdiscussed in Notes 2 and 11 to the consolidated financial statements, effectiveJanuary 1, 2006, the Successor Company adopted the fair value method ofaccounting for share-based payment arrangements as required by Statement ofFinancial Accounting Standards No. 123 (revised 2004), *Share-BasedPayment*.
| KPMG LLP             |
|----------------------|
| Memphis,  Tennessee  |
| March 21,  2007 |

 

36

----

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

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Dollars in thousands)**

| ** **                                           | ** ** | **Successor Company** | ** ** | ** **                          | ** ** | **Predecessor  Company**      | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-------------------------------------|------------|-------------------------------|------------|
| ** **                                           | ** ** | **Years ended**       | ** ** | **Period from  March 15** | ** ** | ** **                    | ** ** | **Period from  January 1** | ** ** |
| ** **                                           | ** ** | **December 31,**      | ** ** | **December 31,**               | ** ** | **To December 31,** | ** ** | ** ** | ** ** | **To March 14,** | ** ** |
| ** **                                           | ** ** | **2006**                   | ** ** | **2005**                            | ** ** | **2004**                      | ** ** | ** ** | ** ** | **2004** | ** ** |
| **NET SALES**                                        | ** ** |                       | **$**      | **108,005**                         | ** ** |                          |       | **$** | **117,594** | ** ** |   |   | **$** | **78,120** | ** ** |   |   |   |   | **$** | **20,247** | ** ** |   |
| Cost of sales                                        |       |                       | 73,194     |                                |       |                          | 70,362     |   |   |   | 60,104 |   |   |   |   |   | 11,871 |   |   |
| **GROSS  PROFIT**                                    | ** ** |                       | **34,811** | ** **                          |       |                          | **47,232** | ** ** |   |   | **18,016** | ** ** |   |   |   |   | **8,376** | ** ** |   |
| Selling, general  and administrative expenses        |       |                       | 14,226     |                                |       |                          | 14,660     |   |   |   | 9,520 |   |   |   |   |   | 3,635 |   |   |
| Amortization of  intangible assets                   |       |                       | 14,343     |                                |       |                          | 13,840     |   |   |   | 10,984 |   |   |   |   |   | — |   |   |
| Business  development, start-up and transition costs |       |                       | 2,688      |                                |       |                          | 208        |   |   |   | 738 |   |   |   |   |   | 100 |   |   |
| Transaction and  reorganization expenses             |       |                       | —     |                                |       |                          | —     |   |   |   | 25 |   |   |   |   |   | 5,381 |   |   |
| Impairment charge  on long-lived assets              |       |                       | —     |                                |       |                          | 357        |   |   |   | — |   |   |   |   |   | — |   |   |
| Loss on early  extinguishment of long-term debt      |       |                       | —     |                                |       |                          | —     |   |   |   | — |   |   |   |   |   | 9,217 |   |   |
| **OPERATING  INCOME (LOSS)**                         | ** ** |                       | **3,554**  | ** **                          |       |                          | **18,167** | ** ** |   |   | **(3,251** | **)** |   |   |   |   | **(9,957** | **)** |   |
| Interest expense,  net                               |       |                       | 20,525     |                                |       |                          | 18,631     |   |   |   | 13,491 |   |   |   |   |   | 2,498 |   |   |
| Other expenses  (income), net                        |       |                       | 75         |                                |       |                          | (31        | ) |   |   | 72 |   |   |   |   |   | (2 | ) |   |
| **LOSS  BEFORE INCOME TAXES**                        |       |                       | (17,046    | )                                   |       |                          | **(433**   | **)** |   |   | **(16,814** | **)** |   |   |   |   | **(12,453** | **)** |   |
| Income tax  (benefit) expense                        |       |                       | (6,279     | )                                   |       |                          | 33         |   |   |   | (6,350 | ) |   |   |   |   | (2,845 | ) |   |
| **NET LOSS**                                         | ** ** |                       | **$**      | **(10,767**                         | **)**      |                          |       | **$** | **(466** | **)** |   |   | **$** | **(10,464** | **)** |   |   |   |   | **$** | **(9,608** | **)** |   |

 

See accompanying notes to consolidated financial statements.

37

----

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

**CONSOLIDATED BALANCE SHEETS**

**(Dollars in thousands)**

| ** **                                                                                               | ** ** | **Successor Company** | ** **  | ** **            |
|----------------------------------------------------------------------------------------------------------|------------|----------------------------|-------------|-----------------------|
| ** **                                                                                               | ** ** | **December 31,**      | ** **  | **December 31,** | ** ** | ** ** |
| ** **                                                                                               | ** ** | **2006**                   | ** **  | **2005**              | ** ** | ** ** |
| **ASSETS**                                                                                               |       |                       |        |                  |   |   |   |   |   |   |   |
| **CURRENT ASSETS**                                                                                       |       |                       |        |                  |   |   |   |   |   |   |   |
| Cash                                                                                                     |       |                       | $           | 3,055                 |   |   |   | $ | 4,733 |   |   |   |   |
| Receivables, net                                                                                         |       |                       | 16,819      |                  |   |   | 17,949 |   |   |   |   |
| Inventories                                                                                              |       |                       | 23,208      |                  |   |   | 19,633 |   |   |   |   |
| Prepaid expenses and  other current assets                                                               |       |                       | 2,731       |                  |   |   | 2,591 |   |   |   |   |
| Deferred tax assets                                                                                      |       |                       | 1,381       |                  |   |   | 1,781 |   |   |   |   |
| **Total current assets**                                                                                 | ** ** | ** **                 | **47,194**  |                  | ** ** | ** ** | **46,687** |   |   |   |   |
| Property, plant and  equipment, net                                                                      |       |                       | 14,482      |                  |   |   | 12,210 |   |   |   |   |
| Goodwill                                                                                                 |       |                       | 150,883     |                  |   |   | 150,883 |   |   |   |   |
| Intangible assets, net                                                                                   |       |                       | 133,262     |                  |   |   | 132,629 |   |   |   |   |
| Deferred financing costs                                                                                 |       |                       | 6,367       |                  |   |   | 6,504 |   |   |   |   |
| Other assets                                                                                             |       |                       | 1,511       |                  |   |   | 923 |   |   |   |   |
| **Total assets**                                                                                         | ** ** | ** **                 | **$**       | **353,699**           |   | ** ** | ** ** | **$** | **349,836** |   |   |   |   |
| **LIABILITIES AND STOCKHOLDER’S  EQUITY**                                                           |       |                       |        |                  |   |   |   |   |   |   |   |
| **CURRENT LIABILITIES**                                                                                  |       |                       |        |                  |   |   |   |   |   |   |   |
| Current portion of  long-term debt                                                                       |       |                       | $           | 1,257                 |   |   |   | $ | 245 |   |   |   |   |
| Accounts payable                                                                                         |       |                       | 6,697       |                  |   |   | 4,410 |   |   |   |   |
| Accrued expenses and  other current liabilities                                                          |       |                       | 9,904       |                  |   |   | 9,896 |   |   |   |   |
| **Total current liabilities**                                                                            | ** ** | ** **                 | **17,858**  |                  | ** ** | ** ** | **14,551** |   |   |   |   |
| Deferred tax liabilities                                                                                 |       |                       | 206         |                  |   |   | 6,312 |   |   |   |   |
| Long-term debt, net of current portion                                                                   |       |                       | 239,149     |                  |   |   | 220,480 |   |   |   |   |
| Pension and post-retirement obligations                                                                  |       |                       | 6,204       |                  |   |   | 8,729 |   |   |   |   |
| **Total liabilities**                                                                                    | ** ** | ** **                 | **263,417** |                  | ** ** | ** ** | **250,072** |   |   |   |   |
| **STOCKHOLDER’S EQUITY**                                                                            |       |                       |        |                  |   |   |   |   |   |   |   |
| Common stock—par value $0.01 per share; authorized  1,000 shares; issued and outstanding 100 shares |       |                       | —      |                  |   |   | — |   |   |   |   |
| Additional paid-in capital                                                                               |       |                       | 111,943     |                  |   |   | 111,943 |   |   |   |   |
| Accumulated deficit                                                                                      |       |                       | (21,697     | )                     |   |   | (10,930 | ) |   |   |   |
| Accumulated other comprehensive income (loss)                                                            |       |                       | 36          |                  |   |   | (1,249 | ) |   |   |   |
| **Total stockholder’s equity**                                                                      | ** ** | ** **                 | **90,282**  |                  | ** ** | ** ** | **99,764** |   |   |   |   |
| Commitments and contingent liabilities (See Note 12)                                                     | ** ** | ** **                 | —      |                  | ** ** | ** ** | — |   |   |   |   |
| **Total liabilities and stockholder’s equity**                                                      | ** ** | ** **                 | **$**       | **353,699**           |   | ** ** | ** ** | **$** | **349,836** |   |   |   |   |
|                                                                                                          |            |                            |             |                       |  |  |  |  |  |  |  |  |  |  |

 

See accompanying notes to consolidated financial statements.

38

----

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

**CONSOLIDATED STATEMENTS OFSTOCKHOLDER’S EQUITY ANDCOMPREHENSIVE INCOME (LOSS)**

**(Dollars in thousands)**

| ** **                                                                     | ** ** | ** **            | ** ** | ** **         | ** ** | ** **       | ** **        | **Retained**      | ** ** | **Accumulated**   | ** **        | ** ** | ** ** |
|--------------------------------------------------------------------------------|------------|-----------------------|------------|--------------------|------------|------------------|-------------------|-------------------|------------|-------------------|-------------------|------------|------------|
| ** **                                                                     | ** ** | ** **            | ** ** | ** **         | ** ** | **Additional**   | ** **        | **Earnings/**     | ** ** | **Other**         | ** **        | ** ** | ** ** |
| ** **                                                                     | ** ** | **Common Stock** | ** ** | **Paid-In**        | ** ** | **(Accumulated** | ** **        | **Comprehensive** | ** ** | ** **        | ** **        |
| ** **                                                                     | ** ** | **Shares**            | ** ** | **Par Value** | ** ** | **Capital**      | ** **        | **Deficit)**      | ** ** | **Income (Loss)** | ** **        | **Total**  | ** ** |
| **Balance  at December 31, 2003**                                         | ** ** | ** **            | **100**    | ** **         | ** ** | ** **       | **$ —** | ** **        | ** ** | ** **        | **$ 40,326** | ** ** | ** ** | ** ** | **$ 8,796** | ** ** | ** ** | ** ** | **$ (329** | **)** | ** ** | **$ 48,793** |   |   |
| Net loss for the period from January 1, 2004  through March 14, 2004 |       |                  | —     |               |       |             | —            |              |       |              | —            |       |       |   | (9,608 | ) |   |   | — |   |   | (9,608 | ) |   |
| Mark to market adjustment on derivative instruments,  net of taxes             |       |                  | —     |               |       |             | —            |              |       |              | —            |       |       |   | — |   |   |   | (121 | ) |   | (121 | ) |   |
| Comprehensive loss, net of taxes                                               |       |                  |       |               |       |             |              |              |       |              |              |       |       |   |   |   |   |   |   |   |   | (9,729 | ) |   |
| **Balance at March 14, 2004**                                             | ** ** | ** **            | **100**    | ** **         | ** ** | ** **       | **$ —** | ** **        | ** ** | ** **        | **$ 40,326** | ** ** | ** ** | ** ** | **$  (812** | **)** | ** ** | ** ** | **$ (450** | **)** | ** ** | **$ 39,064** |   |   |

 

See accompanying notes to consolidated financial statements.

39

----

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

**CONSOLIDATEDSTATEMENTS OFSTOCKHOLDER’S EQUITY ANDCOMPREHENSIVE INCOME (LOSS)**

**(Dollars in thousands)**

| ** **                                                                                | ** ** | ** **            | ** ** | ** **         | ** ** | ** **      | ** ** | ** **        | ** ** | **Accumulated**   | ** ** | ** **  | ** **  |
|-------------------------------------------------------------------------------------------|------------|-----------------------|------------|--------------------|------------|-----------------|------------|-------------------|------------|-------------------|------------|-------------|-------------|
| ** **                                                                                | ** ** | ** **            | ** ** | ** **         | ** ** | **Additional**  | ** ** | ** **        | ** ** | **Other**         | ** ** | ** **  | ** **  |
| ** **                                                                                | ** ** | **Common Stock** | ** ** | **Paid-In**        | ** ** | **Accumulated** | ** ** | **Comprehensive** | ** ** | ** **        | ** ** |
| ** **                                                                                | ** ** | **Shares**            | ** ** | **Par Value** | ** ** | **Capital**     | ** ** | **Deficit**       | ** ** | **Income (Loss)** | ** ** | **Total**   | ** **  |
| **Initial  capitalization and acquisition of Predecessor Company at March 15, 2004** |       |                  | **—** | ** **         | ** ** | ** **      | **$**      | **—**        | ** ** | ** **        | **$**      | **112,715** | ** **  | ** ** | **$** | **—** | ** ** | ** ** | ** ** | **$** | **—** | ** ** | ** ** | **$** | **112,715** |   |
| Subsequent  adjustment to initial capitalization for final working capital amount    |       |                  | —     |               |       |            | —     |              |       | (772              | )          |        | —      |   |   |   | — |   |   | (772 | ) |
| Net loss for the period from March 15, 2004  through December 31, 2004          |       |                  | —     |               |       |            | —     |              |       | —            |       |        | (10,464     | ) |   |   | — |   |   | (10,464 | ) |
| Minimum pension liability, net of taxes                                              |       |                  | —     |               |       |            | —     |              |       | —            |       |        | —      |   |   |   | (164 | ) |   | (164 | ) |
| Mark to market adjustment on derivative instruments,  net of taxes                   |       |                  | —     |               |       |            | —     |              |       | —            |       |        | —      |   |   |   | 15 |   |   | 15 |   |
| Comprehensive loss, net of  taxes                                                         |       |                  |       |               |       |            |       |              |       |              |       |        |        |   |   |   |   |   |   | (10,613 | ) |
| **Balance  at December 31, 2004**                                                    |       |                  | **100**    | ** **         | ** ** | ** **      | **—** | ** **        | ** ** | **111,943**       | ** ** | ** **  | **(10,464** | **)** | ** ** | ** ** | **(149** | **)** | ** ** | **101,330** |   |
| Net loss                                                                                  |       |                  | —     |               |       |            | —     |              |       | —            |       |        | (466        | ) |   |   | — |   |   | (466 | ) |
| Minimum pension  liability, net of taxes                                                  |       |                  | —     |               |       |            | —     |              |       | —            |       |        | —      |   |   |   | (1,085 | ) |   | (1,085 | ) |
| Mark to market adjustment on derivative instruments,  net of taxes                        |       |                  | —     |               |       |            | —     |              |       | —            |       |        | —      |   |   |   | (15 | ) |   | (15 | ) |
| Comprehensive loss, net of taxes                                                          |       |                  |       |               |       |            |       |              |       |              |       |        |        |   |   |   |   |   |   | (1,566 | ) |
| **Balance  at December 31, 2005**                                                         |       |                  | **100**    | ** **         | ** ** | ** **      | **—** | ** **        | ** ** | **111,943**       | ** ** | ** **  | **(10,930** | **)** | ** ** | ** ** | **(1,249** | **)** | ** ** | **99,764** |   |
| Net loss                                                                                  |       |                  |       |               |       |            |       |              |       |              |       |        | (10,767     | ) |   |   |   |   |   | (10,767 | ) |
| Minimum pension  liability, net of taxes                                             |       |                  |       |               |       |            |       |              |       |              |       |        |        |   |   |   | 1,211 |   |   | 1,211 |   |
| Mark to market adjustment on derivative instruments,  net of taxes                        |       |                  |       |               |       |            |       |              |       |              |       |        |        |   |   |   | 74 |   |   | 74 |   |
| Comprehensive loss, net of taxes                                                          |       |                  |       |               |       |            |       |              |       |              |       |        |        |   |   |   |   |   |   | (9,482 | ) |
| **Balance  at December 31, 2006**                                                         |       |                  | **100**    | ** **         | ** ** | ** **      | **$**      | **—**        | ** ** | ** **        | **$**      | **111,943** | ** **  | ** ** | **$** | **(21,697** | **)** | ** ** | ** ** | **$** | **36** | ** ** | ** ** | **$** | **90,282** |   |

 

See accompanying notes to consolidated financial statements.

40

----

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

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Dollars in thousands)**

| ** **                                                                                     | ** ** | **Successor Company**              | ** ** | ** **                                                     | ** ** | **Predecessor  Company** | ** ** |
|------------------------------------------------------------------------------------------------|------------|-----------------------------------------|------------|----------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                     | ** ** | **Years ended  December 31,** | ** ** | **Period from  March 15  To December 31,** | ** ** | ** **               | ** ** | **Period from  January 1  To March 14,** | ** ** |
| ** **                                                                                     | ** ** | **2006**                                | ** ** | **2005**                                                       | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| **OPERATING ACTIVITIES**                                                                       |       |                                    |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                       |       | $                                       | (10,767    | )                                                              | $          | (466                     | )          |   | $ | (10,464 | ) |   |   |   |   | $ | (9,608 | ) |   |   |
| Adjustments to reconcile  net loss to net cash provided by operating activities:               |       |                                    |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                   |       | 2,616                                   |       | 2,725                                                          |       |                     | 2,420      |   |   |   |   |   | 671 |   |   |   |
| Amortization of  deferred financing costs                                                      |       | 1,387                                   |       | 1,449                                                          |       |                     | 1,034      |   |   |   |   |   | 109 |   |   |   |
| Amortization of  intangible assets                                                             |       | 14,343                                  |       | 13,840                                                         |       |                     | 10,984     |   |   |   |   |   | — |   |   |   |
| Inventory fair  value adjustment recorded in cost of sales                                     |       | —                                  |       | —                                                         |       |                     | 11,663     |   |   |   |   |   | — |   |   |   |
| Loss on disposal  of property, plant and equipment                                             |       | —                                  |       | 300                                                            |       |                     | 40         |   |   |   |   |   | — |   |   |   |
| Transaction and  reorganization expenses                                                       |       | —                                  |       | —                                                         |       |                     | 25         |   |   |   |   |   | 5,381 |   |   |   |
| Loss on early  extinguishment of long-term debt                                                |       | —                                  |       | —                                                         |       |                     | —     |   |   |   |   |   | 9,217 |   |   |   |
| Deferred income taxes                                                                          |       | (6,492                                  | )          | (201                                                           | )          |                     | (6,432     | ) |   |   |   |   | (2,898 | ) |   |   |
| Changes in operating assets  and liabilities, net of acquisitions:                             |       |                                    |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |   |
| Receivables, net                                                                               |       | 1,130                                   |       | (3,371                                                         | )          |                     | (255       | ) |   |   |   |   | 1,273 |   |   |   |
| Inventories                                                                                    |       | (2,975                                  | )          | 2,277                                                          |       |                     | (3,454     | ) |   |   |   |   | (2,800 | ) |   |   |
| Prepaid expenses  and other assets                                                             |       | (140                                    | )          | (514                                                           | )          |                     | (463       | ) |   |   |   |   | (68 | ) |   |   |
| Accounts payable                                                                               |       | 2,287                                   |       | 54                                                             |       |                     | (2,015     | ) |   |   |   |   | 1,379 |   |   |   |
| Accrued interest                                                                               |       | (34                                     | )          | (38                                                            | )          |                     | 3,761      |   |   |   |   |   | 1,993 |   |   |   |
| Other assets and liabilities                                                                   |       | (414                                    | )          | (119                                                           | )          |                     | (142       | ) |   |   |   |   | (1,667 | ) |   |   |
| **Net cash  provided by operating activities**                                                 | ** ** | **941**                                 |       | **15,936**                                                     |       | ** **               | **6,702**  | ** ** | ** ** | ** ** | ** ** | ** ** | **2,982** | ** ** | ** ** |   |
| **INVESTING ACTIVITIES**                                                                       | ** ** | ** **                              |       | ** **                                                     |       | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   |
| Purchases of  property, plant and equipment                                                    |       | (4,888                                  | )          | (2,612                                                         | )          |                     | (1,232     | ) |   |   |   |   | (330 | ) |   |   |
| Proceeds from sales  of property, plant and   equipment                                        |       | —                                  |       | 784                                                            |       |                     | 50         |   |   |   |   |   | — |   |   |   |
| Purchase of other assets                                                                       |       | (15,450                                 | )          | —                                                         |       |                     | —     |   |   |   |   |   | — |   |   |   |
| Other investing  activity                                                                      |       | (126                                    | )          | (203                                                           | )          |                     | —     |   |   |   |   |   | — |   |   |   |
| **Net cash  used in investing activities**                                                     | ** ** | **(20,464**                             | )          | **(2,031**                                                     | )          | ** **               | **(1,182** | **)** | ** ** | ** ** | ** ** | ** ** | **(330** | **)** | ** ** |   |
| **FINANCING ACTIVITIES**                                                                       |       |                                    |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |   |
| Proceeds from  issuance of bank debt                                                           |       | 23,000                                  |       | —                                                         |       |                     | 110,000    |   |   |   |   |   | — |   |   |   |
| Proceeds from  issuance of Senior Subordinated Notes                                           |       | —                                  |       | —                                                         |       |                     | 125,000    |   |   |   |   |   | — |   |   |   |
| Principal payments  on bank debt                                                               |       | (3,319                                  | )          | (12,000                                                        | )          |                     | (2,275     | ) |   |   |   |   | (7,700 | ) |   |   |
| Repay bank debt,  including accrued interest                                                   |       | —                                  |       | —                                                         |       |                     | (6,335     | ) |   |   |   |   | — |   |   |   |
| Call senior  subordinated notes, including accrued   interest and call premiums                |       | —                                  |       | —                                                         |       |                     | (109,160   | ) |   |   |   |   | — |   |   |   |
| Payment of debt  issuance costs                                                                |       | (1,250                                  | )          | —                                                         |       |                     | (8,678     | ) |   |   |   |   | — |   |   |   |
| Distribution of  net equity to selling shareholders                                            |       | —                                  |       | —                                                         |       |                     | (102,518   | ) |   |   |   |   | — |   |   |   |
| Transaction and  reorganization expenses, including cash payments for direct acquisition costs |       | —                                  |       | —                                                         |       |                     | (10,805    | ) |   |   |   |   | (463 | ) |   |   |
| Other financing  activity                                                                      |       | (586                                    | )          | (509                                                           | )          |                     | (248       | ) |   |   |   |   | (42 | ) |   |   |
| **Net cash  provided by (used in) financing activities**                                       | ** ** | **17,845**                              |       | **(12,509**                                                    | )          | ** **               | **(5,019** | **)** | ** ** | ** ** | ** ** | ** ** | **(8,205** | **)** | ** ** |   |
| Net increase  (decrease) in cash                                                               |       | (1,678                                  | )          | 1,396                                                          |       |                     | 501        |   |   |   |   |   | (5,553 | ) |   |   |
| Cash at beginning  of period                                                                   |       | 4,733                                   |       | 3,337                                                          |       |                     | 2,836      |   |   |   |   |   | 8,389 |   |   |   |
| **Cash at  end of period**                                                                     | ** ** | **$**                                   | **3,055**  |                                                           | **$**      | **4,733**                |       | ** ** | **$** | **3,337** | ** ** | ** ** | ** ** | ** ** | ** ** | **$** | **2,836** | ** ** | ** ** |   |

 

See accompanying notes to consolidated financial statements.

41

----

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

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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

**(1)   DESCRIPTION OF BUSINESS**

True Temper Sports, Inc. and subsidiaries (“TrueTemper” or the “Company”) is primarily engaged in the design, manufacture andsale of steel and composite golf shafts as well as a variety of other highstrength, tight tolerance tubular components for the bicycle, hockey and otherrecreational sports markets. True Temper’s manufacturing plants and relatedfacilities are located in Memphis, Tennessee; Amory and Olive Branch,Mississippi; El Cajon, California; and Guangzhou, China. The majority of TrueTemper’s sales are to golf club manufacturers and distributors primarilylocated in the United States, Europe, Japan, Australia and Southeast Asia. TrueTemper operates as a wholly-owned operating subsidiary of True TemperCorporation (“TTC’’). 

The consolidated financial statements include thefinancial statements of True Temper and its majority owned subsidiaries. Allsignificant intercompany balances and transactions have been eliminated inconsolidation. 

On January 30, 2004, TTS Holdings LLC, a newcompany formed by Gilbert Global Equity Partners, L.P. and its affiliated funds(“Gilbert Global”), entered into a stock purchase agreement with the Company’sdirect parent company, True Temper Corporation, pursuant to which TTS HoldingsLLC and certain of the Company’s senior management purchased all of theoutstanding shares of TTC. In connection with this acquisition, and effectiveon March 15, 2004, the Company repaid all of its outstanding 2002 seniorcredit facility, redeemed all of its 107¤8% seniorsubordinated notes due 2008, and made certain payments of the net remainingequity of the predecessor company to the selling shareholders. These paymentswere financed with the net proceeds of a new senior credit facility and new 83¤8%senior subordinated notes due 2011.

This transaction was accounted for by TTC using thepurchase method of accounting. As the Company is a wholly owned subsidiary ofTrue Temper Corporation, the Company has “pushed down” the effect of thepurchase method of accounting to the consolidated financial statements of TrueTemper Sports, Inc. These financial statements and accompanying notes presentthe historical cost basis results of the Company as “predecessor company”through March 14, 2004, and the results of the Company as “successorcompany” from March 15, 2004 through December 31, 2006; accordingly,the successor company presentation is not comparable to the predecessor companypresentation due to the different basis of accounting. The financial statementshave also been separated by a vertical dashed line into predecessor company andsuccessor company results.

**(2)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**(a)**Revenue Recognition

Revenue is recognized whenpersuasive evidence of an arrangement exists, delivery has occurred, therevenue amount is determinable and collection is reasonably assured. Valuationallowances are established for estimated returns, allowances and discounts at thetime revenue is recognized.

**(b)**Use of Estimates

The preparation of theconsolidated financial statements requires management of the Company to make anumber of estimates and assumptions relating to the reported amount of assetsand 

42

----

liabilitiesand the disclosure of contingent assets and liabilities at the date of theconsolidated financial statements and the reported amounts of revenues andexpenses during the period. Significant items subject to such estimates andassumptions include the carrying amount of goodwill, intangible assets and property,plant and equipment; valuation allowances for receivables, inventories anddeferred income tax assets; valuation of derivative instruments; and assets andobligations related to employee benefits. Actual results could differ fromthose estimates. 

**(c)****          TradeAccounts Receivable**

Trade receivables are netof allowances for doubtful accounts of $477 and $411 as of December 31, 2006and 2005, respectively. 

**(d)****         Inventories**

Inventories are stated atthe lower of cost or market. Cost is determined using the first-in, first-outmethod. 

**(e)****          DeferredFinancing Costs**

Costs associated with theissuance of debt are deferred and amortized as a component of interest expenseover the life of the related debt, using a method that approximates theinterest method. 

**(f)****            Property,Plant and Equipment**

Property,plant and equipment is stated at cost, net of accumulated depreciation.Depreciation is provided over the estimated useful life of each asset using thestraight-line method. Leasehold improvements are amortized over theshorter of the related asset’s useful life or the applicable lease termincluding option periods when appropriate. In general, the estimated usefullives for both predecessor and successor companies are as follows: 

| **Asset Category**             | ** ** | ** **  | ** ** | **Life** | ** ** |
|-------------------------------------|------------|-------------|------------|----------|------------|
| Buildings                           |       | 15-40 years |       |
| Furniture and  office equipment     |       | 10-15 years |       |
| Machinery and  equipment            |       | 8-15 years  |       |
| Computers and capitalized  software |       | 2-4 years   |       |
| Leasehold improvements              |       | 6-15 years  |       |

 

**(g)****          Goodwilland Other Intangible Assets**

Goodwill represents the excess of cost over fair valueof assets of businesses acquired. Goodwill and intangible assets acquired in apurchase business combination and determined to have an indefinite useful lifeare not amortized, but are instead tested for impairment at least annually inaccordance with the provisions of Statement of Financial Accounting Standards(“SFAS”) No. 142, *Goodwill and OtherIntangible Assets*. Intangible assets with estimable useful lives areamortized over their respective estimated useful lives to their estimatedresidual values, and reviewed for impairment in accordance with SFAS No. 144,*Accounting for Impairment or Disposal ofLong-Lived Assets*. 

TheCompany assesses its goodwill and other indefinite-lived intangible assets forimpairment on an annual basis. If an indication of impairment exists, theCompany compares the carrying amount of the reporting unit to its estimatedfair value. If the reporting unit’s carrying value exceeds its fair value, theCompany allocates the fair value to all of the assets and liabilities of thereporting unit and determines the implied fair value of the goodwill andindefinite-lived intangible assets. An impairment 

43

----

loss would be recognized to the extent that areporting unit’s recorded goodwill or other indefinite-lived intangible assetsexceeded the implied fair value. The Company performed its annual impairmenttesting in the fourth quarter of 2006. No impairment was determined uponperforming these impairment tests.

**(h)****         DerivativeInstruments and Foreign Currencies**

The Company uses forward foreign exchange contracts (“Instruments”or “Derivative Instruments”) in its management of foreign currency exchangerate exposures. Instruments that are designated hedges in accordance with SFASNo. 133, *Accounting for**Derivative Instruments and Certain Hedging Activities, as amended*,must be effective at reducing the risks associated with the underlying exposureand must be designated as a hedge at the inception of the contract.Accordingly, changes in the market value of the Instruments must have a highdegree of inverse correlation with changes in the market value or cash flows ofthe underlying hedged item. 

The Company has used Derivative Instruments to hedgeseveral components of its revenue and cash collection stream, including, (i) anticipatedforeign currency sales, (ii) accounts receivable denominated in foreigncurrencies, and (iii) cash balances maintained in foreign currencies. 

The changes in the market value of DerivativeInstruments designated as hedging instruments for anticipated foreign currencysales are recognized in the consolidated balance sheets as a component ofaccumulated other comprehensive income (loss) in stockholder’s equity. To theextent an Instrument is no longer effective as a hedge due to a change in theunderlying exposure, gains and losses are recognized currently in theconsolidated statements of operations as a component of cost of sales. 

The changes in the market value of DerivativeInstruments hedging accounts receivable or cash denominated in foreign currencyare recognized as a component of operating income during the period of thechange, as they are marked to market on a monthly basis. 

At December 31, 2006, theCompany had outstanding forward foreign currency contracts designated ashedging instruments which totaled $5.5 million.

True Temper recorded a gain (loss) in operations onforeign currency of $50 and ($172) for the years ended December 31, 2006and 2005, respectively, $79 for the period January 1, 2004 toMarch 14, 2004, and ($40) for the period March 15, 2004 toDecember 31, 2004. 

Thefollowing table summarizes the contractual notional amounts of True Temper’sforward exchange contracts as of December 31, 2006 and 2005 (in U.S.dollars):

| ** **        | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------|------------|----------|------------|----------|------------|
| Pound Sterling    |       | $        | 5,521      |     | $          | 2,099 |   |
| Yen               |       | 1,277    |       | 2,250    |       |
| Australian dollar |       | 284      |       | 457      |       |
| Total             |       | $        | 7,082      |     | $          | 4,806 |   |

 

**(i)****            Impairmentof Long-Lived Assets**

SFAS No. 144 provides a single accounting modelfor long-lived assets held and used and to be disposed of. SFAS No. 144also changes the criteria for classifying an asset as held for sale; andbroadens the scope of businesses to be disposed of that qualify for reportingas discontinued operations and changes the timing of recognizing losses on suchoperations. 

In accordance with SFAS No. 144, long-livedassets, such as property, plant, and equipment, and purchased intangiblessubject to amortization, are reviewed for impairment whenever events or 

44

----

changes in circumstancesindicate 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 thecarrying amount of an asset to estimated undiscounted future cash flowsexpected to be generated by the asset. If the carrying amount of an assetexceeds its estimated future cash flows, an impairment charge is recognized bythe amount by which the carrying amount of the asset exceeds the fair value ofthe asset. Assets to be disposed of would be separately presented in thebalance sheet and reported at the lower of the carrying amount or fair valueless costs to sell, and are no longer depreciated. The assets and liabilitiesof a disposal group classified as held for sale would be presented separatelyin the appropriate asset and liability sections of the balance sheet. 

During 2005 the Companyrecognized a non-cash pretax charge of $357 associated with the impairment ofcertain steel golf shaft manufacturing equipment originally obtained throughthe acquisition of substantially all of the tangible personal property ofApollo Sports in 2000. A significant portion of the assets acquired weresubsequently transferred to the Company’s Amory, Mississippi facility. The impairmentcharge represents the carrying value of the remainder of the assets located inBirmingham, England, that were deemed to be unusable for future steel golf shaftmanufacturing. As of December 31, 2005 the assets had been disposed of andhad zero book value.

**(j)****            BusinessDevelopment, Start-up Costs and Transition Costs**

Costs associated with business development, start-upand transition costs are comprised of costs related to opening a compositemanufacturing operation in Guangzhou, China and the related down-sizing costsincurred at the Company’s El Cajon, California facility. These costs includetravel, consulting, legal and other professional services, personnel recruitingand compensation, facility rent and other start-up and related shutdowncosts. During 2006, business development, start-up and transition costs alsoreflect the costs associated with the acquisition of assets from a formercompetitor in the steel golf shaft industry, Royal Precision.  These costs include acquisition related feesand expenses, as well as transportation and integration expenses associatedwith the transfer of production equipment and inventory to True Temperfacilities. The costs are expensed as incurred and separately identified in theconsolidated statements of operations as a component of operating income (loss).

**(k)****         Advertisingand Promotional Costs**

Advertising andpromotional costs are accounted for in accordance with Statement of Position 93-7“Reporting on Advertising Costs”, which requires that the cost of producingadvertisements be expensed at the time of the first showing of theadvertisement or as incurred. True Temper’s policy is to expense costsassociated with the production of advertising at the time of first showing ofthe advertisement. Advertising and promotional costs primarily consist of tradeshow costs, media spots including print, radio and television, advertisingproduction and agency fees, sponsorships, and product and promotional samples.Advertising and promotional expense was $3,688 and $3,466 for the years endedDecember 31, 2006 and 2005, respectively, $1,155 for the period January 1,2004 through March 14, 2004, and $2,314 for the period March 15, 2004to December 31, 2004. Certain of the Company’s customers participate in acooperative advertising program where the Company agrees to reimburse thesecustomers for a portion of their advertising costs that feature the Company’sproduct. Cooperative advertising costs are shown as a reduction of net sales. 

**(l)****            Researchand Development Costs**

Costs associated with thedevelopment of new products and changes to existing products are expensed asincurred and are included in selling, general, and administrative expenses.Research and development costs were $1,905 and $1,812 for the years endedDecember 31, 2006 and 2005, 

45

----

respectively,$328 for the period January 1, 2004 through March 14, 2004, and $1,180for the period March 15, 2004 to December 31, 2004. 

**(m)****     RetirementBenefits**

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

True Temper’s US based salaried employees, and certaininternational employees, are covered by a non-contributory definedcontribution plan. Company contributions to this plan are based on the employee’sage and are calculated as a percentage of compensation. This plan is funded ona current basis. In addition to the non-contributory defined contributionplan, certain post-retirement medical, dental and life insurance benefitsare provided to those salaried employees who were employed by the Company priorto January 1, 2000. 

All US based employees,and certain international employees, of True Temper are eligible to participatein a Company-sponsored 401(k) plan. The Company’s contribution to thisplan is calculated as a percentage of the employee’s compensation and theemployee’s contribution. All Company contributions to this plan are paid incash. 

**(n)****         IncomeTaxes**

TheCompany is included in the consolidated U.S. federal income tax return of TTC. Incometaxes are determined and presented in the Company’s consolidated financialstatements using the separate return method, and are accounted for under theasset and liability method. Deferred tax assets and liabilities are recognizedfor the future tax consequences attributable to differences between thefinancial statement carrying amounts of existing assets and liabilities andtheir respective tax bases and operating loss and tax credit carryforwards.Deferred tax assets and liabilities are measured using enacted tax ratesexpected to apply to taxable income in the years in which those temporarydifferences are expected to be recovered or settled. The effect on deferred taxassets and liabilities of a change in tax rates is recognized in income in theperiod that includes the enactment date. 

**(o)   Stock-Based Compensation**

On August 10, 2005 TTC issued, to certain employeesin return for service, a total of 525,400 stock options and stock appreciationrights (“Equity Incentive Awards”) to purchase common stock of TTC for $13.56per share. The Equity Incentive Awards have a term of ten years, and vest andbecome exercisable at various times and under various conditions throughAugust 10, 2012; with certain acceleration features based on performancecriteria.

On January 1, 2006 the Company adopted Statementof Financial Accounting Standards No. 123 (revised 2004), *Share-Based Payment* (“SFAS 123(R)”). All equityincentive awards issued subsequent to January 1, 2006 will be accountedfor using the guidance provided in this statement, which requires themeasurement and recognition of compensation expense for all share-based paymentawards to employees and directors based on estimated fair values. As allowed bySFAS 123(R), the Company has elected to make this adoption on aprospective basis because the Company meets the definition of a non-publicentity. For equity incentive awards issued prior to January 1, 2006, theCompany continues to apply the intrinsic-value method of accountingprescribed by Accounting Principles 

46

----

Board (APB)Opinion No. 25, *Accounting for StockIssued to Employees*, and related interpretations, includingFinancial Accounting Standards Board Interpretation No. 44,*Accounting for Certain Transactions Involving Stock Compensation, AnInterpretation of APB Opinion No. 25*, issued inMarch 2000, to account for its fixed-plan Equity Incentive Awards.Under this method, compensation expense is recorded on the date of grant onlyif the current market price of the underlying stock exceeded the exercise priceof the Equity Incentive Award.

Since adopting SFAS 123(R), TTC and the Companyhave not granted any equity incentive awards. There have been no awardsexercised or forfeited in 2006. The weighted average remaining contractual lifeof the Equity Incentive Awards is between eight and nine years.

In addition, TTC has468,000 equity awards which vest only upon a sale of TTC and achievement ofcertain other terms as described in the awards. As of December 31, 2006the events required for vesting of these awards are not expected to occur inthe near term.

**(p)****         FairValue of Financial Instruments**

The fair value offinancial instruments represents the amount at which the instrument could beexchanged in a current transaction between willing parties, other than a forcedsale or liquidation. Significant differences can arise between the fair valueand carrying amount of financial instruments that are recognized at historicalcost amounts. 

The following methods andassumptions were used by True Temper in estimating fair value disclosures forfinancial instruments: 

*Cash,Trade Receivables and Payables—*The amounts reported in thebalance sheets approximate fair value. 

*Long-TermDebt—*The carrying values of the Company’s variable rate debtapproximates fair value. The estimated fair value of the Company’s fixed ratedebt is based upon interest rates available for the issuance of debt withsimilar terms and remaining maturities. As of December 31, 2006 and 2005,the Company’s Senior Subordinated Notes had an estimated fair value of $106.3 millionand $111.3 million, respectively. 

*ForeignCurrency Contracts—*The fair value of forward exchangecontracts is estimated using prices established by financial institutions forcomparable instruments which was approximately ($0.1) and $0.1 million at December 31,2006 and 2005, respectively. 

The fair value estimatespresented herein are based on information available to management as of December 31,2006. Although management is not aware of any factors that would significantlyaffect the estimated fair value amounts, such amounts have not beencomprehensively revalued for purposes of these financial statements since thatdate and current estimates of fair value may differ significantly from theamounts presented herein. 

**(q)****         RecentAccounting Pronouncements**

In September 2006, the FASB issued SFASNo. 157, *Fair Value Measurements* (“SFAS157”). This new standard provides guidance for using fair value to measureassets and liabilities and information about the extent to which companiesmeasure assets and liabilities at fair value, the information used to measurefair value, and the effect of fair value measurements on earnings. Thisframework is intended to provide increased consistency in how fair valuedeterminations are made under various existing accounting standards whichpermit, or in some cases require, estimates of fair market value. SFAS 157 alsoexpands financial statement disclosure requirements about a company’s use offair 

47

----

value measurements,including the effect of such measures on earnings. The provisions of SFAS 157are effective for financial statements issued for fiscal years beginning afterNovember 15, 2007. While the Company is currently evaluating theprovisions of SFAS 157, the adoption is not expected to have a material impacton its 2008 consolidated financial statements.

In September 2006, the FASB issued SFASNo. 158, *Employers’ Accounting for Defined BenefitPension and Other Postretirement Plans—an amendment of FASB StatementsNo. 87, 88, 106, and 132(R)* which requires an employer torecognize in its statement of financial position the overfunded or underfundedstatus of a defined benefit pension or other postretirement plan measured asthe difference between the fair value of plan assets and the benefitobligation. Employers must also recognize as a component of other comprehensiveincome, net of tax, the actuarial and experience gains and losses and the priorservice costs and credits. The provisions of SFAS 158 are applicable for the Companybeginning on January 1, 2007. The Company is in the process of evaluatingthe effect, if any, the adoption of SFAS 158 will have on its 2007 consolidatedfinancial statements.

In July 2006, the FASB issued FASB InterpretationNo. 48, *Accounting for Uncertainty in Income Taxes*(“FIN 48”) which clarifies the accounting for uncertainty in income taxesrecognized in the financial statements in accordance with FASB StatementNo. 109, *Accounting for Income Taxes*. Thispronouncement prescribes a recognition threshold and measurement process forrecording in the financial statements uncertain tax positions taken or expectedto be taken in the Company’s tax return. FIN 48 also provides guidance onderecognition, classification, interest and penalties, accounting in interimperiods and disclosure requirements for uncertain tax positions. The accountingprovisions of FIN 48 are effective for the Company beginning January 1,2007. The cumulative effect of initially adopting FIN 48 will be recorded as anadjustment to opening retained earnings in the year of adoption and will bepresented separately. The Company is in the process of evaluating the effect,if any, the adoption of FIN 48 will have on its 2007 consolidated financialstatements.

In July 2006, the EITF issued EITF 06-3, *How Taxes Collected from Customers and Remitted to GovernmentalAuthorities Should Be Presented in the Income Statement*,**(“EITF 06-3”) which requires disclosure of the accountingpolicy for tax assessed by a governmental authority that is directly imposed ona revenue-producing transaction.  TheCompany has adopted the provisions of EITF 06-3 and has made the appropriatedisclosures in Note 2 (u).

**(r)****          SupplementalDisclosures of Cash Flow Information**

Cash payments forincome taxes and interest are as follows: 

| ** **   | ** ** | **Successor Company** | ** ** | ** **                | ** ** | **Predecessor  Company** | ** ** |
|--------------|------------|-----------------------|------------|---------------------------|------------|--------------------------|------------|
| ** **   | ** ** | ** **            | ** ** | ** **                | ** ** | **Period from**     | ** ** | ** ** | ** ** | **Period from** | ** ** |
| ** **   | ** ** | **Years Ended**  | ** ** | **March 15 to** | ** ** | ** **               | ** ** | **January 1 to** | ** ** |
| ** **   | ** ** | **December 31,** | ** ** | **December 31,**     | ** ** | ** **               | ** ** | **March 14,** | ** ** |
| ** **   | ** ** | **2006**              | ** ** | **2005**                  | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Income taxes |       | $                     | 213        |                      | $          | 147                      |       |   | $ | 89 |   |   |   |   |   | $ | 174 |   |   |
| Interest     |       | $                     | 19,391     |                      | $          | 17,330                   |       |   | $ | 8,789 |   |   |   |   |   | $ | 348 |   |   |

 

48

----

**(s)****          AccumulatedOther Comprehensive Income (Loss)**

Theaccumulated balances for each classification within accumulated othercomprehensive income (loss) are as follows: 

| ** **              | ** ** | **Derivative  Instruments  Mark to Market  Adjustment** | ** ** | **Minimum  Pension  Liability  Adjustments** | ** ** | **Accumulated  Other  Comprehensive  Income  (Loss)** | ** ** |
|-------------------------|------------|-------------------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------------------------------------|------------|
| Predecessor Company:    |       |                                                              |       |                                         |       |                                                  |       |   |   |   |   |   |   |
| December 31, 2003  |       |                                                              | $          | 192                                          |       |                                                  |       | $ | (521 | ) |   |   | $ | (329 | ) |   |
| Period change           |       |                                                              | (121       | )                                            |       |                                                  | —     |   |   |   | (121 | ) |   |
| March 14, 2004     |       |                                                              | $          | 71                                           |       |                                                  |       | $ | (521 | ) |   |   | $ | (450 | ) |   |
|                    |       |                                                              |       |                                         |       |                                                  |       |   |   |   |   |   |   |
| Successor Company:      |       |                                                              |       |                                         |       |                                                  |       |   |   |   |   |   |   |
| March 15,  2004    |       |                                                              | $          | —                                       |       |                                                  |       | $ | — |   |   |   | $ | — |   |   |
| Period change           |       |                                                              | 15         |                                         |       |                                                  | (164       | ) |   |   | (149 | ) |   |
| December 31,  2004 |       |                                                              | 15         |                                         |       |                                                  | (164       | ) |   |   | (149 | ) |   |
| Period change           |       |                                                              | (15        | )                                            |       |                                                  | (1,085     | ) |   |   | (1,100 | ) |   |
| December 31, 2005       |       |                                                              | —     |                                         |       |                                                  | (1,249     | ) |   |   | (1,249 | ) |   |
| Period change           |       |                                                              | 74         |                                         |       |                                                  | 1,211      |   |   |   | 1,285 |   |   |
| December 31, 2006       |       |                                                              | $          | 74                                           |       |                                                  |       | $ | (38 | ) |   |   | $ | 36 |   |   |

 

**(t)    Reclassifications**

Certain prior yearamounts have been reclassified to conform to current year presentation.

**(u)   TaxesCollected from Customers and Remitted to Governmental Authorities**

The Companycollects sales and value added taxes from customers and remits them togovernmental authorities in certain jurisdictions. These taxes are presentednet in the consolidated statements of operations and are not included in revenues.

**(v)   Adoptionof SAB 108**

In September 2006 the SEC issued Staff AccountingBulletin No. 108, *Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements* (“SAB 108”), to address diversity in practice inquantifying financial statement misstatements. SAB 108 requires registrants to consider both the “rollover” methodwhich focuses on the income statement impact of misstatements and the “ironcurtain” method which focuses on the balance sheet impact of misstatements todefine materiality.  The transitionprovisions of SAB 108 allow a registrant to adjust opening retained earningsfor the cumulative effect of immaterial errors relating to prior years.  The Company adopted SAB 108 during the yearended December 31, 2006.  The adoption ofSAB 108 did not have a material impact on the Company’s consolidated financialposition or results of operations.

**(3)   ACQUISITIONS**

On January 30, 2004, TTS Holdings LLC, a newcompany formed by Gilbert Global Equity Partners, L.P. and its affiliated funds(“Gilbert Global”), entered into a stock purchase agreement with the Company’sdirect parent company, True Temper Corporation, pursuant to which TTS HoldingsLLC and certain of the Company’s senior management purchased all of theoutstanding shares of True Temper Corporation. In connection with thisacquisition, and effective on March 15, 2004, the Company repaid all ofits outstanding 2002 senior credit facility, redeemed all of its 107¤8%senior subordinated notes due 2008, 

49

----

and made certain paymentsof the net remaining equity of the predecessor company to the sellingshareholders. These payments were financed with the net proceeds of a newsenior credit facility and new 83¤8% seniorsubordinated notes due 2011. These debt instruments are further described inNote 8 below.

Thepurchase price as stipulated in the January 30, 2004 stock purchaseagreement totaled $342.0 million, plus direct acquisition costs and certainworking capital adjustments of $18.4 million, less a purchase price adjustmentfor final working capital of $0.8 million. Following is the allocation of thetotal consideration paid:

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

 

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

In connection with the acquisition, the Companyconducted an assessment and valuation of all tangible and intangible assetsacquired. The results of this exercise are reflected in the allocation tableabove. Of particular note was (i) the establishment of intangible assetsin an aggregate amount of approximately $157.3 million based on both internalCompany assessments and a study conducted by an independent firm specializingin intangible asset valuation; and (ii) the write-up of inventory byapproximately $11.7 million to reflect the estimated fair value of inventory atthe date of acquisition. Both of these adjustments were completed in accordancewith Statement of Financial Accounting Standards No. 141, *Business Combinations*.

The establishment of the intangible assets results incertain non-cash amortization expense beginning in 2004, as these intangibleassets are amortized over their expected economic lives. The write-up ofinventory to its estimated fair value results in a non-cash charge to cost ofsales in 2004 totaling $11.7 million.

In addition, at the time of the transaction thepredecessor company recorded certain transaction related expenses totaling $5.4million. These expenses consisted primarily of investment banking merger 

50

----

and acquisition fees,legal fees and other incidental costs and expenses typically incurred in anacquisition of this nature.

Also, as a direct result of the early extinguishmentof the predecessor company’s long-term debt, expenses totaling $9.2 millionwere incurred consisting primarily of the write-off of the remaining deferredfinancing costs related to the 107¤8% seniorsubordinated notes due 2008 and the 2002 senior credit facility, and the earlyextinguishment call premium and related interest incurred when the Companyredeemed the 107¤8%senior subordinated notes on March 15, 2004.

Thefollowing unaudited pro forma financial information is presented as if theaforementioned transaction, and all related purchase accounting adjustments,had occurred as of the beginning of 2004. The pro forma amounts contain certainadjustments, including, (i) an adjustment to interest expense to reflectthe extinguishment of the 107¤8% SeniorSubordinated Notes due 2008 and the 2002 senior credit facility, and theissuance of the 83¤8%Senior Subordinated Notes due 2011 and 2004 senior credit facility, (ii) theelimination of transaction and reorganization expenses, the loss on earlyextinguishment of long term debt, and the non-cash cost of sales charge relatedto the fair value of inventory write-up, which are all non-recurring, (iii) theadditional charge to operating income for the amortization of intangible assetsand (iv) the related tax effect of the adjustments described above.

| ** **                | ** ** | **Year Ended  December 31,** | ** ** |
|---------------------------|------------|----------------------------------------|------------|
| ** **                | ** ** | **2004**                               | ** ** |
| Net sales                 |       |                                   | $          | 98,367 |   |   |
| Loss before  income taxes |       |                                   | (6,633     | ) |   |
| Net loss                  |       |                                   | (4,203     | ) |   |

 

On June 8, 2006 the Company acquired certainbusiness assets of the former golf shaft manufacturer RoyalPrecision, Inc. (“Royal Precision”) for approximately $17.9 million.The assets acquired were comprised of intangible assets of $14.9 millioncomprised of patents, trademarks, brand names and design technologies and otherintangible assets including customer relationships, $0.6 million ininventory, and $2.4 million in certain steel golf shaft manufacturingequipment.

True Temper has completed the integration of themachinery and equipment into its existing steel golf shaft facility in Amory,Mississippi, and is currently producing and distributing the branded productsformerly sold by Royal Precision.

The cash purchase price for the assets acquired isincluded in the investing section of the Company’s consolidated statement of cashflows for the year ended December 31, 2006. Machinery and equipment acquiredwill be depreciated over its estimated remaining useful life, between five andten years. Intangible assets acquired with determinable useful lives will beamortized over periods ranging from eight to ten years.

Certain expenses were incurred to acquire the assetsand transition them to the Company’s existing manufacturing sites. Of thesecosts approximately $2.1 million for the year ended December 31, 2006 wererecorded in the Company’s consolidated statement of operations as businessdevelopment, start-up and transition costs. These costs include acquisition-relatedfees and expenses, as well as transportation and integration expensesassociated with the transfer of production equipment and inventory to TrueTemper facilities.

51

----

**(4)   INTANGIBLE ASSETS**

Thefollowing table sets forth the gross value and accumulated amortization for intangibleassets at December 31, 2006 and 2005.

| ** **                         | ** ** | **Weighted  Average**    | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|------------------------------------|------------|--------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                         | ** ** | **Amortization  Period** | ** ** | **Gross  Value**                | ** ** | **Accumulated  Amortization**   | ** ** | **Net Book  Value** | ** ** | **Gross  Value** | ** ** | **Accumulated  Amortization** | ** ** | **Net Book  Value** | ** ** |
| Trade name                         |       |                     | —     |                            |       | $                               | 22,430     |   |   | $ | — |   |   | $ | 22,430 |   | $ | 19,455 |   |   | $ | — |   |   | $ | 19,455 |   |
| Patented technology                |       |                     | 8  yrs     |                            |       | 12,936                          |       |   | (4,181 | ) |   | 8,755 |   | 11,889 |   |   | (2,638 | ) |   | 9,251 |   |
| Customer-related intangible assets |       |                     | 10  yrs    |                            |       | 132,478                         |       |   | (34,520 | ) |   | 97,958 |   | 121,524 |   |   | (21,820 | ) |   | 99,704 |   |
| Lease contract                     |       |                     | 59  yrs    |                            |       | 4,323                           |       |   | (204 | ) |   | 4,119 |   | 4,323 |   |   | (131 | ) |   | 4,192 |   |
| Other                              |       |                     | 2  yrs     |                            |       | 262                             |       |   | (262 | ) |   | — |   | 262 |   |   | (235 | ) |   | 27 |   |
| Total intangible assets            |       |                     |       |                            |       | $                               | 172,429    |   |   | $ | (39,167 | ) |   | $ | 133,262 |   | $ | 157,453 |   |   | $ | (24,824 | ) |   | $ | 132,629 |   |

 

Thefollowing table sets forth the estimated aggregate future amortization expensefor these intangible assets at December 31, 2006:

| 2007 |   | $      | 14,938 |   |
|------|--------|--------|--------|--------|
| 2008 |   | 14,938 |   |
| 2009 |   | 14,938 |   |
| 2010 |   | 14,938 |   |
| 2011 |   | 14,938 |   |

 

**(5)   INVENTORIES**

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

| ** **      | ** ** | **2006** | ** ** | **2005 ** | ** ** |
|-----------------|------------|----------|------------|----------------|------------|
| Raw materials   |       | $        | 5,168      |           | $          | 4,556 |   |
| Work in process |       | 3,553    |       | 1,734          |       |
| Finished goods  |       | 14,487   |       | 13,343         |       |
| Total           |       | $        | 23,208     |           | $          | 19,633 |   |

 

52

----

**(6)   PROPERTY,PLANT AND EQUIPMENT**

Majorclasses of property, plant and equipment, as of December 31 of the yearindicated, are summarized as follows: 

| ** **                                   | ** ** | **2006** | ** ** | **2005** | ** ** |
|----------------------------------------------|------------|----------|------------|----------|------------|
| Land improvements                            |       | $        | 121        |     | $          | 113 |   |
| Buildings                                    |       | 2,914    |       | 2,815    |       |
| Furniture and  office equipment              |       | 626      |       | 262      |       |
| Machinery and  equipment                     |       | 15,034   |       | 10,924   |       |
| Computer  equipment and capitalized software |       | 540      |       | 451      |       |
| Leasehold  improvements                      |       | 1,458    |       | 1,429    |       |
| Construction in  progress                    |       | 1,788    |       | 1,361    |       |
|                                         |       | 22,481   |       | 17,355   |       |
| Less accumulated  depreciation               |       | 7,999    |       | 5,145    |       |
| Net property, plant and  equipment           |       | $        | 14,482     |     | $          | 12,210 |   |

 

**(7)   ACCRUEDEXPENSES AND OTHER CURRENT LIABILITIES**

Accruedexpenses and other current liabilities, as of December 31 of the yearindicated, consist of the following: 

| ** **                                                | ** ** | **2006** | ** ** | **2005** | ** ** |
|-----------------------------------------------------------|------------|----------|------------|----------|------------|
| Accrued  compensation, benefits and related payroll taxes |       | $        | 3,721      |     | $          | 4,276 |   |
| Accrued interest                                          |       | 3,697    |       | 3,730    |       |
| Other                                                     |       | 2,486    |       | 1,890    |       |
| Total                                                     |       | $        | 9,904      |     | $          | 9,896 |   |

**(8)**          BORROWINGS

**(a)   Long-TermDebt**

Long-termdebt at December 31, 2006 and 2005 consisted of the following:

| ** **                                     | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------------------------------------------|------------|----------|------------|----------|------------|
| 83¤8%  Senior Subordinated Notes due 2011 |       | $        | 125,000    |     | $          | 125,000 |   |
| 2004 senior  credit facility                   |       | 115,406  |       | 95,725   |       |
| Total debt                                     |       | 240,406  |       | 220,725  |       |
| Less current  maturities                       |       | 1,257    |       | 245      |       |
| Long-term debt                                 |       | $        | 239,149    |     | $          | 220,480 |   |

 

The 83¤8% SeniorSubordinated Notes due 2011 (the “Notes”) provide for semi-annual interestpayments, in arrears, due on March 15 and September 15. At the optionof the Company, up to 35% of the Notes are redeemable prior to March 15,2007, at 108.375%, with the net cash proceeds of one or more public equityofferings. In addition, at any time prior to March 15, 2008, the Companymay also redeem all or a part of the Notes upon the occurrence of a change ofcontrol. On or after March 15, 2008 the Notes may be redeemed, at theoption of the Company, in whole or in part, at a redemption price of 104.188%beginning March 15, 2008 and declining ratably thereafter to 100% onMarch 15, 2010.

53

----

The 2004 senior credit facility has a maturity date ofMarch 15, 2011, and provides for interest on the term loan, at the Company’soption, at (i) the base rate of the bank acting as administrative agentplus a margin adder of 2.00%, or (ii) under a LIBOR option with aborrowing spread of LIBOR plus 2.50% to 3.00%, depending on financialratios. The Company’s weighted average rate at December 31, 2006 was 8.37%.

The loans under the 2004 senior credit facility aresenior to the Notes, and are secured by substantially all of the Company’sassets.

The 2004 senior credit facility and the Notes containprovisions which, among other things, limit the Company’s ability to (i) incuradditional indebtedness, (ii) make acquisitions and capital expenditures, (iii) sellassets, (iv) create liens or other encumbrances, (v) make certainpayments and dividends, or (vi) merge or consolidate. In addition, boththe senior credit facility and the Notes contain customary change of controlprovisions that could, under certain circumstances, cause accelerated debtrepayment. The 2004 senior credit facility also requires the Company tomaintain certain specified financial ratios and tests including minimuminterest coverage and fixed charge coverage ratios, and maximum leverageratios.

On September 24, 2004 the Company executed anamendment to its 2004 senior credit facility (the “Amendment”). The Amendmentwas approved by the Company, Credit Suisse First Boston acting asadministrative agent and collateral agent, and by a majority of the lenders whowere party to the 2004 senior credit facility on such date. The Amendmentprovided adjustments to certain specified financial ratios and tests includedin the 2004 senior credit facility. As part of the Amendment, the margin adderon LIBOR based loans was increased from 2.50% to between 2.75% and 3.00%,depending on financial ratios, beginning September 24, 2004 and continuingthrough December 31, 2005.

On March 27, 2006 the Company amended and restated its2004 senior credit facility (the “2006 Restatement”).  The 2006 Restatement was approved by theCompany, Credit Suisse acting as administrative agent and collateral agent, andby a majority of the lenders who were party to the 2004 senior credit facilityat that date.  The 2006 Restatementincludes additional term loans under the Company’s existing Senior SecuredCredit Facilities of approximately $15.0 million, amendments that enable theCompany to pursue future acquisitions, and the necessary flexibility to executeon the Company’s global strategic and operational initiatives.

On January 22, 2007 the Company executed an amendmentto its 2006 Amended and Restated Credit Facility (the “Second Amendment”).  The Second Amendment was made effective as ofDecember 20, 2006, and was approved by the Company, Credit Suisse acting asadministrative agent and collateral agent, and by a majority of the lenders whowere party to the 2006 Amended and Restated Credit Facility at the effectivedate.  The Second Amendment was executedin conjunction with a second lien financing effort and related acquisition, asmore fully described in Note 16.  Inaddition to allowing the flexibility for such second lien financing, the SecondAmendment also provided adjustments to certain specified financial ratios andtests included in the 2006 Amended and Restated Credit Facility.  As part of the Second Amendment, the marginadder on LIBOR based loans was increased to between 3.00% and 3.25%, dependingon financial ratios, beginning January 22, 2007. At December 31, 2006, theCompany was in compliance with all of the covenants in both the 2006 Amendedand Restated Credit Facility and the Notes.

54

----

At December 31,2006, future minimum principal payments on long-term debt were asfollows:

| 2007  |   | $       | 1,257   |   |
|-------|--------|---------|---------|--------|
| 2008  |   | 1,257   |    |
| 2009  |   | 6,257   |    |
| 2010  |   | 90,567  |    |
| 2011  |   | 141,068 |    |
| Total |   | $       | 240,406 |   |

 

**(b)   Line of Credit**

The Company may borrow, through March 15, 2009,up to $20.0 million under a revolving credit agreement included in the 2004senior credit facility. The Company pays an annual commitment fee of 0.05% onthe unused portion of the revolving credit agreement. Borrowings under theagreement are subject to the same provisions described in the long-term debtsection of this Note. The Company had $5.0 million in outstandingborrowings under this line of credit as of December 31, 2006, which isincluded in the preceding table in this note.

**(9)**          INCOMETAXES

Total income taxesfor the periods indicated were allocated as follows:

| ** **                                          | ** ** | **Successor Company** | ** ** | ** **                                  | ** ** | **Predecessor  Company** | ** ** |
|-----------------------------------------------------|------------|----------------------------|------------|---------------------------------------------|------------|--------------------------|------------|
| ** **                                          | ** ** | **Years Ended**       | ** ** | **Period from  March 15 to** | ** ** | ** **               | ** ** | **Period from  January 1 to** | ** ** |
| ** **                                          | ** ** | **December 31,**      | ** ** | **December 31**                        | ** ** | **December 31,**    | ** ** | ** ** | ** ** | **March 14,** | ** ** |
| ** **                                          | ** ** | **2006**                   | ** ** | **2005**                                    | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Income (loss) from  continuing operations           |       |                       | $          | (6,279                                      | )          |                     |       | $ | 33 |   |   |   | $ | (6,350 | ) |   |   |   |   | $ | (2,845 | ) |   |
| Stockholder’s  equity:                         |       |                       |       |                                        |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum pension liability                           |       |                       | 741        |                                        |       |                     | (665       | ) |   |   | (100 | ) |   |   |   |   | — |   |   |
| Mark to market adjustment on derivative instruments |       |                       | 45         |                                        |       |                     | (9         | ) |   |   | 9 |   |   |   |   |   | (74 | ) |   |
| Total income taxes                                  |       |                       | $          | (5,493                                      | )          |                     |       | $ | (641 | ) |   |   | $ | (6,441 | ) |   |   |   |   | $ | (2,919 | ) |   |

 

Theincome tax expense (benefit) attributable to loss from continuing operations,for the periods indicated, is as follows:

| ** **     | ** ** | **Successor Company** | ** ** | ** **                                  | ** ** | **Predecessor  Company** | ** ** |
|----------------|------------|----------------------------|------------|---------------------------------------------|------------|--------------------------|------------|
| ** **     | ** ** | **Years Ended**       | ** ** | **Period from  March 15 to** | ** ** | ** **               | ** ** | **Period from  January 1 to** | ** ** |
| ** **     | ** ** | **December 31,**      | ** ** | **December 31,**                       | ** ** | **December 31,**    | ** ** | ** ** | ** ** | **March 14,** | ** ** |
| ** **     | ** ** | **2006**                   | ** ** | **2005**                                    | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Current:       |       |                       |       |                                        |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal        |       |                       | $          | —                                      |       |                     |       | $ | — |   |   |   | $ | — |   |   |   |   |   | $ | — |   |   |
| State          |       |                       | 40         |                                        |       |                     | 40         |   |   |   | 30 |   |   |   |   |   | 10 |   |   |
| Foreign        |       |                       | 173        |                                        |       |                     | 194        |   |   |   | 52 |   |   |   |   |   | 43 |   |   |
| Total current  |       |                       | 213        |                                        |       |                     | 234        |   |   |   | 82 |   |   |   |   |   | 53 |   |   |
| Deferred:      |       |                       |       |                                        |       |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal        |       |                       | (5,473     | )                                           |       |                     | (169       | ) |   |   | (5,425 | ) |   |   |   |   | (2,439 | ) |   |
| State          |       |                       | (1,019     | )                                           |       |                     | (32        | ) |   |   | (1,007 | ) |   |   |   |   | (459 | ) |   |
| Total deferred |       |                       | (6,492     | )                                           |       |                     | (201       | ) |   |   | (6,432 | ) |   |   |   |   | (2,898 | ) |   |
| Total          |       |                       | $          | (6,279                                      | )          |                     |       | $ | 33 |   |   |   | $ | (6,350 | ) |   |   |   |   | $ | (2,845 | ) |   |

 

55

----

Theactual income tax expense (benefit) attributable to loss from continuingoperations differs from the amounts computed by applying the U.S. federal taxrate of 34% to the pretax loss as a result of the following:

| ** **                                | ** ** | **Successor Company** | ** ** | ** **                                  | ** ** | **Predecessor  Company** | ** ** |
|-------------------------------------------|------------|----------------------------|------------|---------------------------------------------|------------|--------------------------|------------|
| ** **                                | ** ** | **Years Ended**       | ** ** | **Period from  March 15 to** | ** ** | ** **               | ** ** | **Period from  January 1 to** | ** ** |
| ** **                                | ** ** | **December 31,**      | ** ** | **December 31,**                       | ** ** | **December 31,**    | ** ** | ** ** | ** ** | **March 14,** | ** ** |
| ** **                                | ** ** | **2006**                   | ** ** | **2005**                                    | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Computed “expected” tax benefit |       |                       | $          | (5,796                                      | )          |                     |       | $ | (147 | ) |   |   | $ | (5,717 | ) |   |   |   |   | $ | (4,235 | ) |   |
| State tax, net of  federal benefit        |       |                       | (646       | )                                           |       |                     | 5          |   |   |   | (645 | ) |   |   |   |   | (296 | ) |   |
| Foreign taxes                             |       |                       | 173        |                                        |       |                     | 194        |   |   |   | 52 |   |   |   |   |   | 43 |   |   |
| Transaction expenses                      |       |                       | —     |                                        |       |                     | —     |   |   |   | — |   |   |   |   |   | 1,643 |   |   |
| Other                                     |       |                       | (10        | )                                           |       |                     | (19        | ) |   |   | (40 | ) |   |   |   |   | — |   |   |
| Actual income tax expense (benefit)       |       |                       | $          | (6,279                                      | )          |                     |       | $ | 33 |   |   |   | $ | (6,350 | ) |   |   |   |   | $ | (2,845 | ) |   |

 

Thecomponents of deferred tax assets and liabilities at December 31, 2006 and2005 are as follows:

| ** **                          | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------|------------|----------|------------|----------|------------|
| Deferred tax assets:                |       |     |       |     |       |
| Goodwill                            |       | $        | 32,510     |     | $          | 35,831 |   |
| Accrued liabilities                 |       | 1,132    |       | 1,484    |       |
| Asset impairment                    |       | 445      |       | 704      |       |
| Net operating loss  carryforwards   |       | 12,207   |       | 7,867    |       |
| Facility start-up costs             |       | 168      |       | 253      |       |
| Pension liability                   |       | 1,497    |       | 722      |       |
| Post-retirement benefit  obligation |       | 112      |       | 1,162    |       |
| Uniform capitalization              |       | 312      |       | 341      |       |
| Other                               |       | 11       |       | —   |       |
| Gross deferred tax  assets          |       | $        | 48,394     |     | $          | 48,364 |   |
| Deferred tax  liabilities:          |       |     |       |     |       |
| Identifiable intangible  assets     |       | $        | (44,912    | )        | $          | (50,263 | ) |
| Property, plant and  equipment      |       | (1,999   | )          | (2,588   | )          |
| Other                               |       | (308     | )          | (44      | )          |
| Net deferred tax asset (liability)  |       | $        | 1,175      |     | $          | (4,531 | ) |

 

At December 31, 2006, the Company had netoperating loss carryforwards for federal and state income tax purposes ofapproximately $32,200 which expire between 2019 and 2026.

In assessing the realizability of deferred tax assets,management considers whether it is more likely than not that some portion orall of the deferred tax assets will not be realized.  The Company’s ability to realize its deferredtax assets depends on the generation of sufficient future taxable income toallow for the utilization of its net operating loss carryforwards anddeductible temporary differences.  As ofDecember 31, 2006, the Company believes that it is more likely than notthat the results of future operations will generate sufficient future taxableincome to realize its deferred tax assets.

56

----

**(10)**   EMPLOYEEBENEFIT PLANS

TrueTemper Sports, Inc. has a qualified pension plan for the hourly unionemployees at its Amory, Mississippi plant. The following tables provide areconciliation of the changes in the plans’ benefit obligation, fair value of planassets and a statement of the plans’ funded status for the years ended December 31,2006 and 2005:

| ** **                                       | ** ** | **Years Ended December 31,**                                      | ** ** |
|--------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                       | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** |
| Reconciliation of  benefit obligation:           |       |                                                                             |       |   |   |   |   |   |   |
| Benefit obligation  at beginning of period       |       |                                                                             | $          | 19,015 |   |   |   | $ | 17,373 |   |   |
| Service cost                                     |       |                                                                             | 571        |   |   |   | 550 |   |   |
| Interest cost                                    |       |                                                                             | 1,001      |   |   |   | 1,026 |   |   |
| Actuarial (gains)  losses                        |       |                                                                             | (2,060     | ) |   |   | 455 |   |   |
| Benefit payments                                 |       |                                                                             | (490       | ) |   |   | (389 | ) |   |
| Benefit obligation at end of period              |       |                                                                             | $          | 18,037 |   |   |   | $ | 19,015 |   |   |
| Reconciliation of fair value of plan assets:     |       |                                                                             |       |   |   |   |   |   |   |
| Fair value of plan assets at beginning of period |       |                                                                             | $          | 13,044 |   |   |   | $ | 13,387 |   |   |
| Actual return (loss) on plan assets              |       |                                                                             | 956        |   |   |   | (239 | ) |   |
| Employer contributions                           |       |                                                                             | 250        |   |   |   | 285 |   |   |
| Benefit payments                                 |       |                                                                             | (490       | ) |   |   | (389 | ) |   |
| Fair value of plan assets at end of year         |       |                                                                             | $          | 13,760 |   |   |   | $ | 13,044 |   |   |
| Funded status:                                   |       |                                                                             |       |   |   |   |   |   |   |
| Funded status at December 31                |       |                                                                             | $          | (4,277 | ) |   |   | $ | (5,971 | ) |   |
| Unrecognized net actuarial loss                  |       |                                                                             | 396        |   |   |   | 2,320 |   |   |
| Net amount  recognized                           |       |                                                                             | $          | (3,881 | ) |   |   | $ | (3,651 | ) |   |

 

Thefollowing table provides the amounts recognized in the consolidated balancesheets as of December 31, 2006 and 2005:

| ** **                            | ** ** | **December 31,**                                                            | ** ** |
|---------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                            | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** |
| Accrued benefit  liability            |       |                                                                             | $          | (3,944 | ) |   |   | $ | (5,666 | ) |   |
| Accumulated other  comprehensive loss |       |                                                                             | 63         |   |   |   | 2,015 |   |   |
| Net amount  recognized                |       |                                                                             | $          | (3,881 | ) |   |   | $ | (3,651 | ) |   |

 

The Company expects tomake quarterly contributions of $105 to the pension plan in 2007. The followingtable sets forth the estimated benefit payments, which reflect expected futureservice, as appropriate, expected to be paid in the periods indicated.

| 2007           |   | $     | 528    |   |
|----------------|--------|-------|--------|--------|
| 2008           |   | 625   |   |
| 2009           |   | 701   |   |
| 2010           |   | 775   |   |
| 2011           |   | 872   |   |
| 2012–2016 |   | 5,722 |   |

 

57

----

The following tableprovides the components of net periodic pension expense for the defined benefitpension plan for the years ended December 31, 2006 and 2005 and the periodfrom March 15 to December 31, 2004 for the Successor Company; and forthe period from January 1 to March 14, 2004 for the PredecessorCompany:

| ** **                          | ** ** | **Successor Company**                   | ** ** | ** **                                   | ** ** | **Predecessor  Company**                                             | ** ** |
|-------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                          | ** ** | **Year ended  December 31,  2006** | ** ** | **Year ended  December 31,  2005** | ** ** | **Period from  March 15 to  December 31,  2004** | ** ** | ** ** | ** ** | **Period from  January 1 to  March 14,  2004** | ** ** |
| Service cost                        |       |                                         | $          | 571                                          |       |                                                                 |       | $ | 550 |   |   |   | $ | 406 |   |   |   |   |   | $ | 180 |   |   |
| Interest cost                       |       |                                         | 1,001      |                                         |       |                                                                 | 1,026      |   |   |   | 764 |   |   |   |   |   | 203 |   |   |
| Expected return  on plan assets     |       |                                         | (1,092     | )                                            |       |                                                                 | (1,120     | ) |   |   | (862 | ) |   |   |   |   | (227 | ) |   |
| Amortization of  prior service cost |       |                                         | —     |                                         |       |                                                                 | —     |   |   |   | — |   |   |   |   |   | 30 |   |   |
| Net periodic pension expense        |       |                                         | 480        |                                         |       |                                                                 | 456        |   |   |   | 308 |   |   |   |   |   | 186 |   |   |
| Purchase  accounting recognition    |       |                                         | —     |                                         |       |                                                                 | —     |   |   |   | — |   |   |   |   |   | 2,987 |   |   |
| Net periodic pension expense        |       |                                         | $          | 480                                          |       |                                                                 |       | $ | 456 |   |   |   | $ | 308 |   |   |   |   |   | $ | 3,173 |   |   |
| Weighted average  assumptions:      |       |                                         |       |                                         |       |                                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate:                      |       |                                         |       |                                         |       |                                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit obligation                  |       |                                         | 6.00       | %                                            |       |                                                                 | 5.75       | % |   |   | 6.00 | % |   |   |   |   | 6.25 | % |   |
| Expected return on plan assets      |       |                                         | 8.50       | %                                            |       |                                                                 | 8.50       | % |   |   | 8.50 | % |   |   |   |   | 8.50 | % |   |
| Rate of  compensation increase      |       |                                         | 3.00       | %                                            |       |                                                                 | 3.00       | % |   |   | 3.00 | % |   |   |   |   | 3.00 | % |   |

 

Thefollowing table provides information related to the Company’s pension plan inwhich accumulated benefit obligations exceeded the fair value of plan assets asof the applicable period end:

 

| ** **                      | ** ** | **December 31,**                                                            | ** ** |
|---------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                      | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** |
| Projected benefit  obligation   |       |                                                                             | $          | 18,037 |   |   |   | $ | 19,015 |   |   |
| Accumulated  benefit obligation |       |                                                                             | 17,704     |   |   |   | 18,710 |   |   |
| Fair value of assets            |       |                                                                             | 13,760     |   |   |   | 13,044 |   |   |

 

Assetsof the defined benefit pension plan for hourly union employees consistprimarily of investments in equity securities, debt securities, and cashequivalents. The weighted-average asset allocations as of December 31,2006 and 2005 are as follows:

| ** **        | ** ** | **December 31,** | ** ** | ** ** | ** ** |
|-------------------|------------|-----------------------|------------|------------|------------|
| ** **        | ** ** | **2006**              | ** ** | **2005**   | ** ** | **Target** | ** ** |
| Equity securities |       | 66.0                  | %          | 61.0       | %          | 50-70 | % |
| Debt securities   |       | 33.0                  |       | 33.0       |       | 30-50 |   |
| Cash equivalents  |       | 1.0                   |       | 6.0        |       | 0 |   |
| Total             |       | 100.0                 | %          | 100.0      | %          | 100.0 | % |

 

 

58

----

In addition to the defined benefit pension plan forhourly employees, the Company also maintains a defined contribution plan whichcovers substantially all United States based employees. Expenses for definedcontribution plans amounted to $695 for the year ended December 31, 2006, $635for the year ended December 31, 2005, $148 for the period January 1,2004 through March 14, 2004, and $575 for the period March 15, 2004to December 31, 2004.

The Company also participates in certain unfundedhealth care plans that provide post-retirement medical, dental, and lifeinsurance benefits to hourly union employees at its Amory, Mississippi plantand to salaried employees hired prior to January 1, 2000. The post-retirementplans are contributory, and include certain cost-sharing features, suchas deductibles and co-payments.

Thefollowing table sets forth the benefit obligation of the unfunded post-retirementhealth plans for the years ended December 31, 2006 and 2005:

| ** **                              | ** ** | **Years Ended  December 31,** | ** ** |
|-----------------------------------------|------------|-----------------------------------------|------------|
| ** **                              | ** ** | **2006**                                | ** ** | **2005** | ** ** |
| Reconciliation of  benefit obligation:  |       |                                    |       |   |   |
| Benefit obligation at beginning of year |       | $                                       | 3,869      |   | $ | 3,554 |   |
| Service cost                            |       | 136                                     |       | 91 |   |
| Interest cost                           |       | 256                                     |       | 220 |   |
| Participant contributions               |       | 208                                     |       | 185 |   |
| Actuarial loss                          |       | 1,620                                   |       | 723 |   |
| Benefits paid                           |       | (1,496                                  | )          | (904 | ) |
| Benefit obligation at end of year       |       | 4,593                                   |       | 3,869 |   |
| Unrecognized net actuarial loss         |       | (2,333                                  | )          | (806 | ) |
| Accrued benefit  costs                  |       | $                                       | 2,260      |   | $ | 3,063 |   |

 

Thefollowing table provides the components of net periodic expense for theunfunded post- retirement health plans for the years ended December 31,2006 and 2005 and for the periods from January 1, 2004 through March 14,2004 and from March 15, 2004 to December 31, 2004:

| ** **                           | ** ** | **Successor Company**             | ** ** | ** **                             | ** ** | **Predecessor Company**                                        | ** ** |
|--------------------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                           | ** ** | **Year Ended  December 31,** | ** ** | **Year Ended  December 31,** | ** ** | **Period from  March 15 to  December 31,** | ** ** | ** ** | ** ** | **Period from  January 1 to  March 14,** | ** ** |
| ** **                           | ** ** | **2006**                               | ** ** | **2005**                               | ** ** | **2004**                                                       | ** ** | ** ** | ** ** | **2004** | ** ** |
| Service cost                         |       |                                   | $          | 136                                    |       |                                                           |       | $ | 91 |   |   |   | $ | 78 |   |   |   |   |   | $ | 20 |   |   |
| Interest cost                        |       |                                   | 256        |                                   |       |                                                           | 220        |   |   |   | 162 |   |   |   |   |   | 44 |   |   |
| Amortization of  prior service costs |       |                                   | —     |                                   |       |                                                           | —     |   |   |   | — |   |   |   |   |   | (7 | ) |   |
| Recognized net  losses               |       |                                   | 94         |                                   |       |                                                           | —     |   |   |   | — |   |   |   |   |   | 13 |   |   |
| Net periodic cost                    |       |                                   | 486        |                                   |       |                                                           | 311        |   |   |   | 240 |   |   |   |   |   | 70 |   |   |
| Purchase  accounting recognition     |       |                                   | —     |                                   |       |                                                           | —     |   |   |   | — |   |   |   |   |   | 1,060 |   |   |
| Total amount recognized              |       |                                   | $          | 486                                    |       |                                                           |       | $ | 311 |   |   |   | $ | 240 |   |   |   |   |   | $ | 1,130 |   |   |
| Discount rate:                       |       |                                   |       |                                   |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit obligation                   |       |                                   | 6.00       | %                                      |       |                                                           | 5.75       | % |   |   | 6.00 | % |   |   |   |   | 6.00 | % |   |

 

The healthcare cost trendrate used to determine the post-retirement benefit obligation was 8.0%for 2006. This rate decreases gradually to an ultimate rate of 5.0% in 2014,and remains at that level thereafter. While the trend rate can be a significantfactor in determining the amounts reported, for the year ended December 31,2006 a one-percentage-point increase or decrease in the trend ratewill have only minimal impact due to the claims costs being close to theemployer imposed cap.

59

----

The following table setsforth the estimated health care benefit payments expected to be paid in theperiods indicated.

| 2007 |   | $   | 408    |   |
|------|--------|-----|--------|--------|
| 2008 |   | 400 |   |
| 2009 |   | 428 |   |
| 2010 |   | 461 |   |
| 2011 |   | 454 |   |

 

**(11) STOCK OPTIONS**

In 2004, the Company’s parent, True Temper Corporation(“TTC”) adopted an equity incentive plan (the “2004 Plan”) pursuant towhich TTC’s board of directors may grant equity incentive awards to officersand key employees of the Company. The 2004 Plan authorizes grants of options topurchase and grants of restricted shares, in total, up to 1,008,051 shares ofauthorized but unissued common stock. Stock options are granted with anexercise price equal to the stock’s fair market value at the date of grant. Allstock options have 10 year terms and vest and become fully exercisable atdiffering time periods up to four years from the date of grant.

On August 10, 2005 TTC issued, to certainemployees in return for service, a total of 525,400 stock options and stockappreciation rights (“Equity Incentive Awards”) to purchase common stock of TTCfor $13.56 per share. The Equity Incentive Awards have a term of ten years, andvest and become exercisable at various times and under various conditionsthrough August 10, 2012; with certain acceleration features based onperformance criteria.

AtDecember 31, 2006, there were 15,651 shares available for grant under the2004 Plan. There were no grants of equity incentive awards during 2006. The pershare weighted average fair value of stock options granted during 2005 was$2.41, on the date of grant using the Black Scholes option-pricing model(excluding a volatility assumption) with the following weighted averageassumptions:

| Expected dividend  yield  |   | 0.0  | %      |
|---------------------------|--------|------|--------|
| Risk free rate of  return |   | 4.21 | %      |
| Expected life (years)     |   | 4.7  |   |

 

Stockoption activity during 2005 and 2006 is as follows:

| ** **                        | ** ** | **Number of  Shares** | ** ** | **Wtd. Avg.  Exercise  Price** | ** ** |
|-----------------------------------|------------|----------------------------|------------|-------------------------------------|------------|
| Granted on  August 10, 2005  |       |                       | 525,400    |                                |       |   | $ | 13.56 |   |   |
| Exercised                         |       |                       | —     |                                |       |   | — |   |   |
| Forfeited                         |       |                       | —     |                                |       |   | — |   |   |
| Balance at December 31, 2005 |       |                       | 524,400    |                                |       |   | $ | 13.56 |   |   |
| Granted                           |       |                       | —     |                                |       |   | — |   |   |
| Exercised                         |       |                       | —     |                                |       |   | — |   |   |
| Forfeited                         |       |                       | —     |                                |       |   | — |   |   |
| Balance at  December 31, 2006     |       |                       | 524,400    |                                |       |   | $ | 13.56 |   |   |

 

At December 31, 2006,the weighted average remaining contractual life of outstanding options was 8.6years. At December 31, 2006 there were no options exercisable.

60

----

In addition, TTC has468,000 equity awards which vest only upon a sale of TTC and achivement ofcertain other terms  as described in theawards. As of December 31, 2006 the events required for vesting of theseawards are not expected to occur in the near term.

**(12)**   COMMITMENTSAND CONTINGENCIES

**(a)   Lease Obligations**

The Company is obligated under various non-cancelableleases for office facilities and equipment. These leases generally provide forrenewal options and, in the case of facilities leases, for periodic rateincreases based upon economic factors. All non-cancelable leases with aninitial term greater than one year have been categorized as either capital oroperating leases in conformity with SFAS No. 13, *Accounting for Leases*, and related interpretations.

Futureminimum payments under non-cancelable operating leases with initial termsof one year or more as of December 31, 2006 are as follows: 

| ** **                    | ** ** | **Operating  Leases** | ** ** |
|-------------------------------|------------|-----------------------|------------|
| 2007                          |       |                  | $          | 1,127 |   |   |
| 2008                          |       |                  | 725        |   |   |
| 2009                          |       |                  | 571        |   |   |
| 2010                          |       |                  | 535        |   |   |
| 2011                          |       |                  | 394        |   |   |
| Thereafter                    |       |                  | —     |   |   |
| Total minimum  lease payments |       |                  | $          | 3,352 |   |   |

 

Rental expense onoperating leases was $1,227 and $1,067 for the years ended December 31, 2006and 2005, respectively, $210 for the period January 1, 2004 through March 14,2004, and $812 for the period March 15, 2004 to December 31, 2004.

**(b)   Product Warranties**

The Company generally warrants its products againstcertain manufacturing and other defects. These product warranties are providedfor specific periods of time and/or usage of the product depending on thenature of the product, the geographic location of its sale and other factors.As of December 31, 2006 and 2005, the Company has accrued $326 and $309,respectively, for estimated product warranty claims. The accrued productwarranty costs are based primarily on historical experience of actual warrantyclaims as well as current information on product costs. Warranty claims expensewas $1,033 and $959 for the years ended December 31, 2006 and 2005,respectively, $129 for the period January 1, 2004 through March 14,2004, and $527 for the period March 15, 2004 to December 31, 2004.

61

----

Thefollowing table provides the changes in the Company’s product warranties:

| Predecessor  Company:                                        |   |   |   |
|--------------------------------------------------------------|--------|--------|--------|
| January 1, 2003                                              |   | $      | 176    |   |
| Liabilities accrued for warranties issued during the  period |   | 129    |   |
| Warranty claims paid during the period                       |   | (91    | )      |
| March 15,  2004                                         |   | $      | 214    |   |
| Successor Company:                                           |   |   |   |
| Liabilities accrued for warranties issued during the  period |   | 527    |   |
| Warranty claims paid during the period                       |   | (588   | )      |
| December 31,  2004                                      |   | $      | 153    |   |
| Liabilities accrued for warranties issued during the  year   |   | 959    |   |
| Warranty claims paid during the year                         |   | (803   | )      |
| December 31, 2005                                            |   | $      | 309    |   |
| Liabilities accrued for warranties issued during the  year   |   | 1,033  |   |
| Warranty claims paid during the year                         |   | (1,016 | )      |
| December 31, 2006                                            |   | $      | 326    |   |

 

**(c)   LegalProceedings**

The Company has certaincontingent liabilities resulting from litigation and claims incidental to theordinary course of business. Management believes that the probable resolutionof such contingencies will not materially affect the consolidated financialposition or results of operations of the Company.

**(13)**   RELATEDPARTY TRANSACTIONS

On March 15, 2004, True Temper entered into amanagement services agreement with an entity affiliated with Gilbert Global,which is a related party through its indirect management and ownership interestin True Temper Corporation.

In accordance withthis agreement, Gilbert Global has agreed to provide:

(1)          general managementservices;

(2)   assistancewith the identification, negotiation and analysis of acquisitions anddispositions;

(3)   assistancewith the negotiation and analysis of financial alternatives; and

(4)   otherservices agreed upon by True Temper and Gilbert Global.

In exchange forsuch services, Gilbert Global or its nominee receives:

(1)          an annual advisory feeof $0.5 million payable quarterly, plus reasonable out-of-pocketexpenses;

(2)          a transaction fee in anamount equal to 1.25% of the aggregate transaction value in connection with theconsummation of any material acquisition, divestiture, financing or refinancingby True Temper or any of its subsidiaries.

The management services agreement has an initial termof five years, subject to automatic one-year extensions unless theCompany or Gilbert Global provides written notice of termination. The annualadvisory fee of $0.5 million is an obligation of the Company and is alsocontractually subordinated to the Notes and the bank credit facilities.

62

----

During 2006, in additionto annual advisory fees of $0.5 million, the Company paid$1.0 million to Gilbert Global for fees associated with financing andacquisition transactions.

On March 15, 2004, the Company terminated its managementservices agreement with Cornerstone Equity Investors, LLC, which was a relatedparty through its indirect management and ownership interest in the predecessorcompany.

**(14)**   SEGMENTAND OTHER RELATED DISCLOSURES

**(a)   Segment Reporting**

The Company operates in two reportable businesssegments: golf shafts and performance sports. The Company’s reportable segmentsare based on the type of product manufactured and the application of thatproduct in the marketplace. The golf shaft segment manufactures and sells steeland composite golf shafts for use exclusively in the golf industry. Theperformance sports segment manufactures and sells high strength, tighttolerance tubular components for bicycle, hockey and other recreational sportsmarkets. The accounting policies for these segments are the same as thosedescribed in the summary of significant accounting policies. The Companyevaluates the performance of these segments based on segment sales and grossprofit. The Company has no inter-segment sales. General corporate assetsthat are not allocated to segments include: cash, non-trade receivables,deferred tax assets and liabilities, deferred financing costs, corporateproperty, plant and equipment, goodwill and other identifiable intangibleassets.

| ** **            | ** ** | **Successor Company**                    | ** ** | ** **                                                     | ** ** | **Predecessor  Company** | ** ** |
|-----------------------|------------|-----------------------------------------------|------------|----------------------------------------------------------------|------------|--------------------------|------------|
| ** **            | ** ** | **Years Ended   December 31,** | ** ** | **Period from  March 15 to  December 31,** | ** ** | ** **               | ** ** | **Period from  January 1 to  March 14,** | ** ** |
| ** **            | ** ** | **2006**                                      | ** ** | **2005**                                                       | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Net sales:            |       |                                          |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Golf shafts           |       | $                                             | 99,103     |                                                           | $          | 110,820                  |       |   | $ | 73,274 |   |   |   |   |   | $ | 19,067 |   |   |
| Performance sports    |       | 8,902                                         |       | 6,774                                                          |       |                     | 4,846      |   |   |   |   |   | 1,180 |   |   |
| Total                 |       | $                                             | 108,005    |                                                           | $          | 117,594                  |       |   | $ | 78,120 |   |   |   |   |   | $ | 20,247 |   |   |
| Gross profit:         |       |                                          |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Golf shafts           |       | $                                             | 33,958     |                                                           | $          | 45,804                   |       |   | $ | 17,038 |   |   |   |   |   | $ | 8,080 |   |   |
| Performance sports    |       | 853                                           |       | 1,428                                                          |       |                     | 978        |   |   |   |   |   | 296 |   |   |
| Total                 |       | $                                             | 34,811     |                                                           | $          | 47,232                   |       |   | $ | 18,016 |   |   |   |   |   | $ | 8,376 |   |   |
| Depreciation expense: |       |                                          |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Golf shafts           |       | $                                             | 2,050      |                                                           | $          | 2,242                    |       |   | $ | 2,098 |   |   |   |   |   | $ | 582 |   |   |
| Performance sports    |       | 566                                           |       | 483                                                            |       |                     | 322        |   |   |   |   |   | 89 |   |   |
| Total                 |       | $                                             | 2,616      |                                                           | $          | 2,725                    |       |   | $ | 2,420 |   |   |   |   |   | $ | 671 |   |   |
| Capital expenditures: |       |                                          |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Jointly used assets   |       | $                                             | 125        |                                                           | $          | 143                      |       |   | $ | 129 |   |   |   |   |   | $ | 22 |   |   |
| Golf shafts           |       | 4,264                                         |       | 1,686                                                          |       |                     | 810        |   |   |   |   |   | 286 |   |   |
| Performance sports    |       | 499                                           |       | 783                                                            |       |                     | 293        |   |   |   |   |   | 22 |   |   |
| Total                 |       | $                                             | 4,888      |                                                           | $          | 2,612                    |       |   | $ | 1,232 |   |   |   |   |   | $ | 330 |   |   |
| Total assets:         |       |                                          |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Jointly used assets   |       | $                                             | 4,392      |                                                           | $          | 1,810                    |       |   | $ | 1,291 |   |   |   |   |   | $ | 1,398 |   |   |
| Golf shafts           |       | 44,102                                        |       | 42,693                                                         |       |                     | 44,237     |   |   |   |   |   | 42,019 |   |   |
| Performance sports    |       | 4,560                                         |       | 4,210                                                          |       |                     | 3,333      |   |   |   |   |   | 2,920 |   |   |
| Total                 |       | $                                             | 53,054     |                                                           | $          | 48,713                   |       |   | $ | 48,861 |   |   |   |   |   | $ | 46,337 |   |   |

 

63

----

Revenues from two customers of True Temper’s golfshafts segment represented approximately $13,800 or 12.8% and $12,900 or 11.9%,respectively, of the Company’s 2006 net sales; approximately $16,100 or 13.7%,and $14,700 or 12.5%, respectively, of the Company’s 2005 net sales; andapproximately $2,900 or 14.2% and $2,200 or 10.6% of the Company’s net salesfor the period January 1 to March 14, 2004. Revenues from onecustomer of True Temper’s golf shafts segment represented approximately $11,000or 14.1% of the Company’s revenues for the period March 15 to December 31,2004.

Following arereconciliations of total reportable segment assets to total Company assets, asof December 31, and total reportable segment gross profit to total Companyincome before income taxes for the periods indicated:

| ** **                                     | ** ** | **2006** | ** ** | **2005** | ** ** |
|------------------------------------------------|------------|----------|------------|----------|------------|
| Total assets:                                  |       |     |       |     |       |
| Total from reportable segments                 |       | $        | 53,054     |     | $          | 48,713 |   |
| General corporate and other unallocated assets |       | 300,645  |       | 301,123  |       |
| Total                                          |       | $        | 353,699    |     | $          | 349,836 |   |

 

| ** **                                           | ** ** | **Successor Company**              | ** ** | ** **                                                     | ** ** | **Predecessor  Company** | ** ** |
|------------------------------------------------------|------------|-----------------------------------------|------------|----------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                           | ** ** | **Years Ended  December 31,** | ** ** | **Period from  March 15 to  December 31,** | ** ** | ** **               | ** ** | **Period from  January 1 to  March 14,** | ** ** |
| ** **                                           | ** ** | **2006**                                | ** ** | **2005**                                                       | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| Total reportable segment  gross profit               |       | $                                       | 34,811     |                                                           | $          | 47,232                   |       |   | $ | 18,016 |   |   |   |   |   | $ | 8,376 |   |   |
| Less:                                                |       |                                    |       |                                                           |       |                     |       |   |   |   |   |   |   |   |   |
| Selling, general and  administrative expenses        |       | 14,226                                  |       | 14,660                                                         |       |                     | 9,520      |   |   |   |   |   | 3,635 |   |   |
| Amortization of intangible  assets                   |       | 14,343                                  |       | 13,840                                                         |       |                     | 10,984     |   |   |   |   |   | — |   |   |
| Business development,  start-up and transition costs |       | 2,688                                   |       | 208                                                            |       |                     | 738        |   |   |   |   |   | 100 |   |   |
| Transaction and  reorganization expense              |       | —                                  |       | —                                                         |       |                     | 25         |   |   |   |   |   | 5,381 |   |   |
| Impairment charge on  long lived assets              |       | —                                  |       | 357                                                            |       |                     | —     |   |   |   |   |   | — |   |   |
| Loss on early  extinguishment of long-term debt      |       | —                                  |       | —                                                         |       |                     | —     |   |   |   |   |   | 9,217 |   |   |
| Interest expense                                     |       | 20,525                                  |       | 18,631                                                         |       |                     | 13,491     |   |   |   |   |   | 2,498 |   |   |
| Other expense (income),  net                         |       | 75                                      |       | (31                                                            | )          |                     | 72         |   |   |   |   |   | (2 | ) |   |
| Total Company loss before income taxes               |       | $                                       | (17,046    | )                                                              | $          | (433                     | )          |   | $ | (16,814 | ) |   |   |   |   | $ | (12,453 | ) |   |

 

**(b)   Sales byGeographic Region**

The geographicdistribution of the Company’s net sales, by location of customer, is summarizedas follows: 

| ** **    | ** ** | **Successor Company**              | ** ** | ** **                                                     | ** ** | **Predecessor  Company** | ** ** |
|---------------|------------|-----------------------------------------|------------|----------------------------------------------------------------|------------|--------------------------|------------|
| ** **    | ** ** | **Years Ended  December 31,** | ** ** | **Period from  March 15 to  December 31,** | ** ** | ** **               | ** ** | **Period from  January 1 to  March 14,** | ** ** |
| ** **    | ** ** | **2006**                                | ** ** | **2005**                                                       | ** ** | **2004**                 | ** ** | ** ** | ** ** | **2004** | ** ** |
| U.S.          |       | $                                       | 69,664     |                                                           | $          | 75,151                   |       |   | $ | 49,700 |   |   |   |   |   | $ | 12,140 |   |   |
| International |       | 38,341                                  |       | 42,443                                                         |       |                     | 28,420     |   |   |   |   |   | 8,107 |   |   |
| Total         |       | $                                       | 108,005    |                                                           | $          | 117,594                  |       |   | $ | 78,120 |   |   |   |   |   | $ | 20,247 |   |   |

 

64

----

Revenues generated from sales into China accounted forapproximately $19,300 or 17.9% and $20,900 or 17.7% of True Temper’s totalsales for the years ended December 31, 2006 and 2005, respectively, $3,300or 16.4% of True Temper’s total sales for the period January 1 to March 14,2004, and $14,200 or 18.2% of True Temper’s total sales for the period March 15to December 31, 2004. The sales into China are due primarily to our majorU.S. based original equipment manufacturers shifting a portion of theirassembly operations to that region. Assets by location are not disclosed, asassets located outside the U.S. are immaterial.

**(15)**   SELECTEDQUARTERLY FINANCIAL DATA (UNAUDITED)

Thefollowing is a summary of unaudited quarterly results of operations for theyears ended December 31, 2006 and 2005.

 

| ** **        | ** ** | **First  Quarter** | ** ** | **Second  Quarter** | ** ** | **Third  Quarter** | ** ** | **Fourth  Quarter** | ** ** |
|-------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|
| **2006**          |       |               |       |                |       |               |       |                |       |
| Net sales         |       | $                  | 31,659     |                | $          | 30,674             |       | $                   | 21,491     |   | $ | 24,181 |   |
| Gross profit      |       | 11,574             |       | 10,844              |       | 6,790              |       | 5,603               |       |
| Net loss          |       | (230               | )          | (1,745              | )          | (4,146             | )          | (4,646              | )          |
| **2005**          |       |               |       |                |       |               |       |                |       |
| Net sales         |       | $                  | 32,103     |                | $          | 32,565             |       | $                   | 25,520     |   | $ | 27,406 |   |
| Gross profit      |       | 12,869             |       | 13,251              |       | 10,443             |       | 10,669              |       |
| Net income (loss) |       | 184                |       | 570                 |       | (661               | )          | (559                | )          |

 

**(16) SUBSEQUENT EVENTS**

On January 22, 2007, the Company executed an amendmentto its 2006 Amended and Restated Credit Facility (the “Second Amendment”).  The Second Amendment was made effective as ofDecember 20, 2006, and was approved by the Company, Credit Suisse acting asadministrative agent and collateral agent, and by a majority of the lenders whowere party to the 2006 Amended and Restated Credit Facility at the effectivedate.  The Second Amendment was executedin conjunction with a second lien financing effort, described more fully below,and related acquisition.  In addition toallowing the flexibility for such second lien financing, the Second Amendmentalso provided adjustments to certain specified financial ratios and testsincluded in the 2006 Restated Credit Facility. As part of the Second Amendment, the margin adder on LIBOR based loanswas increased to between 3.00% and 3.25%, depending on financial ratios,beginning January 22, 2007.

On January 22, 2007, the Company executed a SecondLien Credit Agreement (the “Second Lien”). The Second Lien includes additional term loans of approximately $45 million,with the provision that approximately $25 million of the proceeds wereused to pay down the debt under the 2006 Amended and Restated Credit Facility. TheSecond Lien is variable rate debt, which provides for interest at the Company’soption, at (1) the base rate of the bank acting as administrative agentplus a margin adder of 4.50%, or (2) under a LIBOR option with a borrowingspread of LIBOR plus 5.50%. The maturity date of the Second Lien is June 30,2011.  The Second Lien does not amortize.

On February 26, 2007, the Company acquired CNPrecision, a steel golf shaft manufacturing company located in Suzhou,China.  CN Precision was founded in 2005,and is currently in the final stages of equipment installation.

65

----

**Item9.        *Changes in andDisagreements With Accountants on Accounting and Financial Disclosure***

None.

**Item 9A.     *Controls and Procedures***

**Evaluationof Disclosure Controls and Procedures**

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

**Item 9B.     *Other Information***

None.

66

----

**PART III**

**Item10.**                 *Directors, Executive Officers and Corporate Governance*

Thedirectors and executive officers of True Temper as of December 31, 2006are as follows:

| **Name**                      | ** ** | ** ** | ** ** | **Age** | ** ** | **Position**                                            | ** ** |
|-------------------------------|------------|------------|------------|---------|------------|---------------------------------------------------------|------------|
| Scott C. Hennessy             |       |       | 48         |    |       | Chief  Executive Officer, President and Director        |       |
| Fred H. Geyer                 |       |       | 46         |    |       | Senior  Vice President, Chief Operating Officer         |       |
| Adrian H. McCall              |       |       | 49         |    |       | Senior  Vice President of Global Distribution and Sales |       |
| Stephen M. Brown              |       |       | 41         |    |       | Vice  President of Human Resources                      |       |
| Chad Hall                     |       |       | 32         |    |       | Director  of Marketing                                  |       |
| Graeme Horwood                |       |       | 62         |    |       | Vice  President Engineering, Research and Development   |       |
| Jason A. Jenne                |       |       | 37         |    |       | Vice  President, Chief Financial Officer and Treasurer  |       |
| Raeford P. Lucas              |       |       | 41         |    |       | Vice  President of Sales                                |       |
| Steven J. Gilbert             |       |       | 59         |    |       | Director  and Co-Chairman                               |       |
| Steven Kotler                 |       |       | 59         |    |       | Director  and Co-Chairman                               |       |
| Richard W.  Gaenzle, Jr. |       |       | 42         |    |       | Director                                                |       |
| Jeffery W.  Johnson           |       |       | 38         |    |       | Director                                                |       |
| William P. Lauder             |       |       | 46         |    |       | Director                                                |       |

 

**Scott C. Hennessy**hasbeen the President since 1996, and the Chief Executive Officer and Directorsince October 1998. Mr. Hennessy joined us in 1994 as Vice President-Salesand Marketing. From 1980 to 1994, Mr. Hennessy held various managementpositions at Black & Decker in sales, marketing and productdevelopment. Mr. Hennessy sits on the Board of Governors of the NationalGolf Foundation. Mr. Hennessy graduated magna cum laude with a B.S. fromthe University of Delaware. 

**Fred H. Geyer**hasbeen the Chief Operating Officer since January 2005, and Senior VicePresident since August 2002. From 1998 through 2004, Mr. Geyer servedas the Company’s Chief Financial Officer. From 1985 to 1998, Mr. Geyerheld various positions at Emerson Electric Company, including Vice President-Financein the Air Moving Motor Division. Prior to that, Mr. Geyer worked atArthur Andersen LLP as a Senior Auditor. Mr. Geyer is a Certified PublicAccountant and is a member of the American Institute of Certified PublicAccountants. Mr. Geyer graduated magna cum laude with a B.S. in Accountingfrom the University of Missouri at St. Louis. 

**Adrian H. McCall**hasbeen the Senior Vice President of Global Distribution and Sales since August 2002.From March 1999 to July 2002, Mr. Mc Call served as our VicePresident of International Sales and Marketing since March 1999. From September 1995to March 1999, Mr. McCall served as our Director of InternationalSales and Marketing. From May 1992 to September 1995, Mr. McCallserved as Director of International Operations of The Upper Deck Company, amanufacturer and distributor of baseball cards. Mr. McCall graduated cumlaude with a B.S. from the University of Hartford. 

**Stephen M. Brown**hasbeen the Vice President of Human Resources since August 2002. From January 1998to July 2002, Mr. Brown has served as our Director of HumanResources. From September 1996 to December 1997, Mr. Brownserved as the Manager-Human Resources. Prior to that, since 1992, Mr. Brownserved in various Human Resource management positions with Emerson ElectricCompany. Mr. Brown received a B.A. from the University of South Carolina. 

**Chad Hall**hasbeen the Director of Marketing since January 2004.  From July 2003-December 2003, Mr. Hall servedas our Sr. Marketing Manager of Product Development and Tour Operations.  From October 2002-June 2003, Mr. Hall servedas our Manager of Tour Operations.  FromApril 2001-September 2002, Mr. Hall served as our Marketing Communications Manager.  Prior to that, since 1999, Mr. Hall heldvarious product development positions at Bridgestone Sports, USA.  Mr. Hall received a B.S. from LibertyUniversity.

67

----

**Graeme Horwood**hasbeen the Vice President of Engineering, Research and Development since June 2001.From April 2000 to May 2001, Mr. Horwood served as our SeniorManager Technical Services. From 1986 to 2000, Mr. Horwood held variousmanagement positions at Apollo Sports Technologies. Mr. Horwood is aChartered Engineer as well as a member of the Institute of Mechanical Engineersboth in the United Kingdom. Mr. Horwood graduated first class honors witha B.S. from Coventry University. 

**Jason Jenne**hasbeen the Chief Financial Officer and Treasurer since January 2005 and VicePresident since August 2003. From September 2002 to August 2003, Mr. Jenneserved as the Director of Corporate Finance. From September 1998 to September2002, Mr. Jenne served as the Corporate Controller. From 1993 to 1998, Mr. Jenneserved in various Finance and Accounting positions at Emerson Electric Company.Mr. Jenne graduated magna cum laude with a B.S. from Southern IllinoisUniversity. 

**Raeford P. Lucas****has been the Vice President of Salessince November 2006.  From June 2006 toOctober 2006, Mr. Lucas served as our Vice President and General Manager ofRoyal Precision and Precision Brands. From 2000 to June 2006, Mr. Lucas held various management positions atRoyal Precision Inc., including Executive Vice President of Sales andMarketing.  Prior to that, Mr. Lucasworked at Outdoor Technologies Group as the General Manager of the Fenwick Golfdivision.  Mr. Lucas received a B.S. fromNorth Carolina State University.**

**Steven J. Gilbert**becamea member of and Co-Chairman of the board of directors upon consummation of theGilbert Global Acquisition. He is a founder and has served as Chairman of theBoard of Gilbert Global Equity Partners, L.P. since 1997. From 1992 to 1997, hewas the founder and Managing General Partner of Soros Capital L.P., theprincipal venture capital and leveraged transaction entity of Quantum Group ofFunds, and a principal Advisor to Quantum Industrial Holdings Ltd. From 1988through 1992 he was the Managing Director of Commonwealth Capital Partners,L.P., a private equity investment firm. From 1984 to 1988, Mr. Gilbert wasthe Managing General Partner of Chemical Venture Partners (now J.P. MorganPartners), which he founded. Mr. Gilbert is a Director of LCCInternational, Inc., Optical Capital Group, Inc., CPM Holdings, Inc.,the Asian Infrastructure Fund and J O Hambro Investment Management, Ltd. Previously,Mr. Gilbert has been a director of numerous public and private companies. MrGilbert received a B.S. from the Wharton School at the University ofPennsylvania, an M.B.A. from the Harvard Graduate School of BusinessAdministration, and a J.D. from Harvard Law School. 

**Steven Kotler**becamea member of and Co-Chairman of the board of directors upon consummation of theGilbert Global Acquisition. He has served as Vice Chairman of Gilbert GlobalEquity Partners, L.P. since 2000. Prior to joining Gilbert Global in 2000,Mr. Kotler, for 27 years, was with Schroder & Co. and itspredecessor firm, Wertheim & Co., where he served as its ChiefExecutive Officer and President. Mr. Kotler is Co-Chairman of the Board ofDirectors of True Temper Sports; and is a Director of CPM Holdings, CowenGroup, Inc., and The Archstone Partnerships. Previously, Mr. Kotler hasserved as a Governor of the American Stock Exchange and a director of numerouspublic and private companies. Mr. Kotler is a graduate of city College ofNew York. 

**Richard W. Gaenzle, Jr.**became a member of the board of directors uponconsummation of the Gilbert Global Acquisition. He is a founder and has servedas Managing Director of Gilbert Global Equity Partners, L.P. since 1997. From1992 to 1997, he was a principal of Soros Capital L.P., the principal venturecapital and leveraged transaction entity of Quantum Group of Funds, and aprincipal Advisor to Quantum Industrial Holdings Ltd. Prior to joining SorosCapital, Mr. Gaenzle held various positions in the investment bankingindustry. Mr. Gaenzle is Vice Chairman of Optical Capital Group, LLC and aDirector of CPM Holdings, Inc. Previously, Mr. Gaenzle has been adirector of numerous companies. Mr. Gaenzle received a B.A. from HartwickCollege and an M.B.A. from Fordham University. 

**Jeffrey W. Johnson**becamea member of the board of directors upon consummation of the Gilbert GlobalAcquisition. He is a founder and has served as Managing Director of GilbertGlobal Equity Partners, L.P. since 1997. Mr. Johnson was previously withGoldman, Sachs & Co. in its mergers and acquisitions department,Hallmark Cards, Inc. and Russell Investment Group. He is a director of 

68

----

CPM Holdings,Inc. Mr. Johnson received a B.A. from Claremont McKenna College and anM.B.A. from the Harvard Graduate School of Business Administration. 

**William P. Lauder**becamea member of the board of directors in 2004. In July 2004 Mr. Lauderwas named the President and Chief Executive Officer of Estee Lauder Companies, Inc.He joined Estee Lauder Companies in 1986 and held numerous positions ofincreasing responsibility. Mr. Lauder received a B.A. and an M.B.A. fromthe Wharton School at the University of Pennsylvania.

**Board of Directors and Committees**

The Board of Directorsheld four meetings during 2006 and took action by written consent on twooccasions. During 2006, a quorum was achieved at each of the scheduled meetingsof the Board of Directors. The standing committees of the Board of Directorsinclude the Audit Committee and the Compensation Committee.

***Audit Committee***

Steven Kotler, Jeffrey W.Johnson and Richard W. Gaenzle, Jr. are members of the Audit Committee, andMr. Kotler chairs this committee. The Audit Committee is empowered to:(i) appoint, fix the compensation of, and oversee the work of theCompany’s independent registered public accounting firm (including the power toresolve any disagreements between management and the independent registeredpublic accounting firm), with the independent registered public accounting firmreporting directly to the Audit Committee; (ii) pre-approve all auditservices and permissible non-audit services; and (iii) engage anddetermine funding for independent counsel and other advisors as it may relateto certain financial or administrative matters of the Company. The Board ofDirectors has determined that Mr. Kotler is an “audit committee financialexpert” within the meaning of the rules of the Securities and ExchangeCommission.

***CompensationCommittee***

Steven J. Gilbert, StevenKotler and Jeffrey W. Johnson are members of the Compensation Committee, andMr. Gilbert chairs this committee. The Compensation Committee isresponsible for monitoring the Company’s adherence with its compensationphilosophy, including ensuring that the compensation paid to its executiveofficers is fair, reasonable and competitive. The Compensation Committee’sresponsibilities, as discussed further in the “Compensation Discussion andAnalysis” in Item 11 of this Part III, include, among other duties, theresponsibility to establish the base salary, incentive compensation and anyother compensation for the Company’s Chief Executive Officer and review andapprove the Chief Executive Officer’s recommendations for the compensation ofcertain executive officers reporting to him. The Compensation Committee alsohas the full power and authority to interpret the provisions and supervise theadministration of the True Temper Corporation 2004 Equity Incentive Plan,including the determination and/or approval of awards to be granted thereunder,and any and all other power and authority to review, interpret and/oradminister compensation and benefit programs as may be delegated by theCompany’s board of directors to the Compensation Committee from time to time.

**Code of Ethics**

The Audit Committee hasadopted a Code of Ethics for the Chief Executive Officer, Chief FinancialOfficer, and other senior financial personnel. A copy of the Code of Ethics isavailable on the Company’s website at www.truetemper.com. The Company willdisclose any amendments or waivers to the Code of Ethics on the same website.

**Item 11.   *Executive Compensation***

**Report on Executive Compensation**

The Compensation Committeeof the Board of Directors of True Temper Corporation, the Company’s parentcompany, has furnished the following report for inclusion in this Annual Reporton Form 10-K:

69

----

The Compensation Committeeis responsible for administering the Company’s executive compensation program.Among other things, we review general compensation issues and determine thecompensation of the Company’s CEO and all other senior executives and keyemployees (hereafter collectively referred to as the “Executives”), and makedeterminations regarding, and administer, all of our employee compensationplans that provide benefits to the Executives.

Wehave reviewed the Compensation Discussion and Analysis included in this AnnualReport on Form 10-K, and discussed the contents hereof with the Company’smanagement. Based upon our review and discussions with management, werecommended to its Board of Directors the inclusion of the CompensationDiscussion and Analysis appearing in this Annual Report on Form 10-K.

|   | Respectfully submitted,                               |
|--------|-------------------------------------------------------|
|   | The Compensation Committee of the  Board of Directors |
|   | Steven J. Gilbert, Chairman                           |
|   | Steven Kotler                                         |
|   | Jeffrey W. Johnson                                    |

 

No portion of this reportshall be deemed to be incorporated by reference into any filing under theSecurities Act of 1933, as amended, or under the Securities Exchange Act of1934, as amended, (collectively, the “Acts”) through any general statement incorporatingby reference the Annual Report on Form 10-K in which this reportappears in its entirety, except to the extent that the company specificallyincorporates this report or a portion of this report by reference. In addition,this report shall not otherwise be deemed to be “soliciting material” or to be“filed” under either of such Acts.

**CompensationDiscussion and Analysis**

***CompensationPhilosophy and Objectives.******  ***TheCompensation Committee believes an effective compensation program should be onethat is designed to: attract and retain the best possible executive talent; tieannual and long-term cash and equity incentives to the achievement ofmeasurable corporate and individual performance objectives; and alignexecutives’ incentives with overall value creation within the organization. Toachieve these objectives, the Compensation Committee implements, maintains andmonitors compensation plans which tie a portion of the Executives’ overallcompensation to the achievement of established objective goals, includingprofitability and the efficient use of capital. When establishing theseobjectives and goals, the Compensation Committee considers those established bycompanies of similar size, while taking into account the strategic goals andrelative performance of True Temper Sports, Inc.

***Role of ExecutiveOfficers in Compensation Decisions.******  ***TheCompensation Committee makes all compensation decisions for the Chief ExecutiveOfficer, and all decisions relating to equity based compensation awards. TheCompensation Committee, together with recommendations and input from the ChiefExecutive Officer, makes equity and non-equity compensation decisions withrespect to the other Executives.

On at least an annual basis, the CompensationCommittee reviews the performance of the Chief Executive Officer as comparedwith the achievement of the Company’s objective goals and any individual goals.The Compensation Committee, together with the Chief Executive Officer, annuallyreviews the performance of each individual Executive as compared with theachievement of Company goals, as the case may be, together with eachExecutive’s individual goals. The Compensation Committee can then exercise itsdiscretion in modifying any recommended adjustments or awards to theExecutives.

***Setting Executive Compensation.******  ***Based on theabove objectives and philosophies, the Compensation Committee has establishedannual and long-term cash and equity compensation components to motivate theExecutives to achieve, and hopefully exceed, the business goals established bythe Company and to 

70

----

fairly reward suchexecutives for achieving such goals. The Compensation Committee has notretained a compensation consultant to review its policies and procedures withrespect to executive compensation. The Compensation Committee periodicallyconducts an internal benchmark review of the aggregate level and mix of ourExecutive compensation against companies in our same industry (both public andprivately held).

**2006 ExecutiveCompensation Components**

For the year ended December 31, 2006, theprincipal components of compensation for the Company’s Executives are describedbelow:

***Base Salary.***   TheCompany provides Executives and other employees with base salary to compensatethem for services rendered during the fiscal year. Base salaries are set torecognize the experience, skills, knowledge and responsibilities required ofthe Executives in their respective roles. Base salaries are reviewed annually,and will be adjusted from time to time to realign salaries with market levelsafter taking into account individual responsibilities, performance andexperience. Base salaries are established for a given position taking intoconsideration the factors discussed above together with available market orcomparable salary data. In 2006, the Compensation Committee approved salaryincreases for our named executive officers ranging from approximately 4% to 9%.The increases were based on each named executive officer’s individual servicesrendered, level and scope of responsibility and experience, comparisons tovarious market pay practices, and the operating performance of the Companyduring calendar year 2005.  The increaserange was 4% to 6% for all of the Executives with the exception of oneindividual who received a 9% increase related to additional jobresponsibilities.  The CompensationCommittee determined that the overall increases, which slightly exceeded thegeneral rate of inflation, were warranted based on the Company’s strongfinancial results during calendar year 2005.

***Performance-BasedExecutive Incentive Compensation Plan.***   TheCompany maintains a performance based Executive incentive compensation plan(the “EICP”). The EICP establishes objectives for the calculation of annualcash bonuses for each Executive, subject to Compensation Committee oversightand modification. The EICP provides for annual incentive bonuses which areintended to compensate Executives for achieving or exceeding Company financialgoals and for achieving individual annual performance goals. The EICP uses asliding scale applied to financial performance targets with correspondingachievement levels. No bonus is earned unless a minimum target is achieved.Additional bonus may be earned should the targets be exceeded. In 2006, theCompany’s operating performance fell below the minimum target established forpayment of cash bonuses under the EICP, which was $30.0 million in AdjustedEBITDA.  Accordingly, no cash bonuseswere paid to the Executives for calendar year 2006. For 2007, the EICPobjectives will again be primarily based on profitability.

Incentives under the EICP are paid in cash and aretypically paid in a single installment in the first quarter following thecompletion of a given fiscal year. The Compensation Committee has reserved theright under the EICP to also pay “discretionary” bonuses. Such discretionarybonuses are paid if the Compensation Committee determines that a particularExecutive has exceeded the objectives and/or goals established for suchExecutive or made a unique contribution to the Company during the year.

***Equity Program;Stock Options and Restricted Stock.***   Underthe True Temper Corporation 2004 Equity Incentive Plan (the “Plan”), theCompensation Committee may make various types of awards with respect to TrueTemper Corporation common stock. True Temper Corporation is a privately heldcompany and its common stock, including any stock issued or obtained pursuantto the Plan, has transfer restrictions. The maximum amount of common stock thatcan be issued (or in respect of which awards can be issued) under the Plan islimited to 1.0 million shares. Among other things, the CompensationCommittee decides which of the Executives or senior managers shall receiveawards under the Plan and the type of award made. In the case of stock optionsgranted under the Plan, the Compensation Committee determines strike price, vestingterms, and such other terms or conditions as the Compensation Committee maydetermine, in their 

71

----

sole discretion, providedit is allowed under the Plan. The Plan has two types of options, service basedoptions and performance based options. Service based options vest on a pro-ratabasis over a period less than five years, have a term of ten years from thedate of grant, and expire if not exercised. Performance based options vest uponthe satisfactory achievement of certain specified profitability targets, have aterm of ten years from the date of grant, and expire if not exercised. In theevent of a change of control, as defined in the Plan, all of the outstandingbut unvested stock options become vested and exercisable.

The Plan also has certain restricted shares availablefor grant. Restrictions are lifted in the event of a change of control, andprovided that a certain specified stock price is achieved during suchtransaction.

All of the awards granted to management under the Planwere granted between March 15, 2004 and August 10, 2005. No suchawards were granted for calendar year 2006.

There is no program, plan or practice in place forselecting grant dates for awards under the Plan in coordination with therelease of material non-public information. The exercise price for the optionawards is the fair market value of the stock of True Temper Corporation on thedate of grant. The fair market value is determined by the CompensationCommittee and the Board of Directors of True Temper Corporation using a varietyof analytical tools. The Compensation Committee is not prohibited from grantingoptions at times when they are in possession of material non-publicinformation. However, no inside information was taken into account indetermining the number of options previously awarded or the exercise price forthose awards, and the Compensation Committee did not “time” the release of anymaterial non-public information to affect the value of those awards.

The Compensation Committee believes that the grantingof such awards promotes, on a short term and long term basis, an enhancedpersonal interest and alignment of those Executives receiving equity awardswith the goals and strategies of the Company. The Compensation Committee alsobelieves that the equity grants provide not only financial rewards to suchExecutives for achieving Company goals but also provide additional incentivesfor Executives to remain with the Company.

***401(k) Plan.***   TheCompany’s Executives are eligible to participate in its company-wide 401k planfor salaried employees. The Company matches, at a 50% rate, the first 6% of theemployee’s contributions.

***Perquisites andOther Personal Benefits.***   The Companyprovides the Executives, including other employees generally, with perquisitesand other personal benefits that the Company and the Compensation Committeebelieve are reasonable, competitive and which are consistent with the overallcompensation program to enable the Company to attract and retain qualifiedemployees for key positions. The Compensation Committee periodically reviewsthe perquisites and other benefits provided to the Executives, as well as theother employees.

***Tax Treatment.******  ***The Company’sBoard of Directors considers the anticipated tax treatment of its executivecompensation program when setting levels and types of compensation.Section 162(m) of the Internal Revenue Code generally disallows a taxdeduction to public companies for compensation paid to a company’s chiefexecutive officer or any of its other four most highly compensated executiveofficers in excess of $1 million in any year, with certain performance-basedcompensation being specifically exempt from this deduction limit. Compensationreceived under the EICP is performance-based, and therefore qualifies for theexemption from the deduction limit. As such, during 2006, none of the Company’semployees subject to this limit received Section 162(m) compensationin excess of $1 million. Consequently, the requirements ofSection 162(m) should not affect the tax deductions available to theCompany in connection with its senior executive compensation program for 2006.

***Conclusion.*****  **The Company’s compensation policiesare designed to reasonably and fairly motivate, retain and reward itsExecutives for achieving the Company’s objectives and goals.

72

----

**Compensation Tables**

***Summary Compensation Table***

Thetable below summarizes the total compensation paid or earned by each of theNamed Executive Officers for the year ended December 31, 2006.

| **(a)**                                                       | ** ** | **(b)**    | ** ** | **(c)**    | ** ** | **(i)**                          | ** ** | **(j)**   | ** ** |
|---------------------------------------------------------------|------------|------------|------------|------------|------------|----------------------------------|------------|-----------|------------|
| **Name and Principal**                              | ** ** | **Fiscal** | ** ** | **Salary** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
| **Position**                                                  | ** ** | ** ** | ** ** | **Year**   | ** ** | **$**                            | ** ** | **$(1)**  | ** ** | **$** | ** ** |
| Scott C. Hennessy                                             |       |       | 2006       |       |       | 435,833                          |       |      | 41,382     |   |   | 477,215 |   |
| *Chief Executive Officer,  President and Director*            |       |       |       |       |       |                             |       |      |       |   |   |   |   |
| Jason A. Jenne                                                |       |       | 2006       |       |       | 162,915                          |       |      | 23,199     |   |   | 186,114 |   |
| *Vice President, Chief Financial  Officer and Treasurer*      |       |       |       |       |       |                             |       |      |       |   |   |   |   |
| Fred H. Geyer.                                                |       |       | 2006       |       |       | 225,833                          |       |      | 29,552     |   |   | 255,385 |   |
| *Senior Vice President, Chief  Operating Officer*             |       |       |       |       |       |                             |       |      |       |   |   |   |   |
| Adrian H. McCall                                              |       |       | 2006       |       |       | 192,915                          |       |      | 29,224     |   |   | 222,139 |   |
| *Senior Vice President of  International Sales and Marketing* |       |       |       |       |       |                             |       |      |       |   |   |   |   |
| Gene Pierce.                                                  |       |       | 2006       |       |       | 168,333                          |       |      | 10,509     |   |   | 178,842 |   |
| *Vice President of Operations*                                |       |       |       |       |       |                             |       |      |       |   |   |   |   |
|                                                               |            |            |            |            |            |                                  |            |           |            |  |  |  |  |  |  |

----

(1)   Includescompany contributions under the Company’s 401(k) plan, certain life insurancebenefits; and where applicable, country club dues and car allowance.

None of the amounts attributable to each perquisite orbenefit exceeds the greater of $25,000 or 10% of the total amount ofperquisites for each named executive officer.

**ManagementAgreements with True Temper Sports, Inc.**

Mr. Scott C. Hennessy, Chief Executive Officer,has an employment agreement with True Temper Sports, Inc.

*Mr. Hennessy’sEmployment Agreement.*   Under his employmentagreement, Mr. Hennessy serves as the Company’s president and chiefexecutive officer. The initial term of the agreement was from March 15,2004 through December 31, 2005, and is automatically renewed forsuccessive one-year periods unless 60 days’ prior notice is given by eitherparty. In addition, Mr. Hennessy is a member of the Company’s board ofdirectors. He receives an annual base salary of at least $400,000, and iseligible to receive an annual performance bonus of 100% of his base salary ifthe Company achieves specified performance objectives. In addition, under theemployment agreement, Mr. Hennessy is provided certain employee benefitsconsistent with other employees of the Company. Upon Mr. Hennessy’stermination of employment by the Company without “cause” or byMr. Hennessy for “good reason” (each as defined in the employmentagreement) or upon the Company’s election not to renew his employment,Mr. Hennessy will be entitled to receive the following severance paymentsand benefits: any accrued but unpaid salary as of the date of the termination,any annual bonus earned but unpaid for the most recently completed fiscal year,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of 12 months. Additionally, Mr. Hennessy will besubject to certain restrictions on his ability to compete with the Company orsolicit any customers or employees for two years after his termination. Mr. Hennessy’semployment agreement may also be terminated for “cause” (as defined in theemployment agreement).

**Bonus Plan**

See “CompensationDiscussion and Analysis” for a discussion of the Company’s EICP.

73

----

**2004 EquityIncentive Plan**

See “CompensationDiscussion and Analysis” as well as Notes 2 and 11 to the Company’s audited consolidatedfinancial statements, located elsewhere in this annual report, for a discussionof the 2004 Equity Incentive Plan.

***Outstanding EquityAwards at Fiscal Year-End***

| ** **        | ** ** | **Option Awards (1)** | ** ** | **Stock Awards (1)**                                                       | ** ** |
|-------------------|------------|---------------------------------|------------|--------------------------------------------------------------------------------------|------------|
| **(a)**           | ** ** | **(b)**                         | ** ** | **(c)**                                                                              | ** ** | **(e)** | ** ** | **(f)** | ** ** | **(g)** | ** ** | **(h)** | ** ** |
| **Name**          | ** ** | ** **                      | ** ** | **Number of  Securities  Underlying  Unexercised  Options -  Exercisable** | ** ** | **Number of  Securities  Underlying  Unexercised  Options -  Unexercisable** | ** ** | **Option  Exercise  Price  $** | ** ** | **Option  Expiration  Date** | ** ** | **Number of  Shares or  Units of  Stock That  Have Not  Vested** | ** ** | **Market  Value of  Shares or  Units of  Stock That  Have Not  Vested  $(2)** | ** ** |
| Scott C. Hennessy |       |                            | —     |                                                                                 |       |   | 144,000 |   |   |   | 13.56 |   |   | 8/10/2015 |   |   | 192,000 |   |   | 2,603,520 |   |
| Jason A. Jenne    |       |                            | —     |                                                                                 |       |   | 36,000 |   |   |   | 13.56 |   |   | 8/10/2015 |   |   | 36,000 |   |   | 488,160 |   |
| Fred H. Geyer     |       |                            | —     |                                                                                 |       |   | 72,000 |   |   |   | 13.56 |   |   | 8/10/2015 |   |   | 84,000 |   |   | 1,139,040 |   |
| Adrian H. McCall  |       |                            | —     |                                                                                 |       |   | 50,200 |   |   |   | 13.56 |   |   | 8/10/2015 |   |   | 60,000 |   |   | 813,600 |   |
| Gene Pierce       |       |                            | —     |                                                                                 |       |   | 28,800 |   |   |   | 13.56 |   |   | 8/10/2015 |   |   | 24,000 |   |   | 325,440 |   |
|                   |            |                                 |            |                                                                                      |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

(1)   See Note 11 to the Company’s audited consolidated financialstatements, located elsewhere in this annual report, for a description of TTC'sshare option and restricted stock plans, including vesting schedule.

(2)   As the common stock of TTC is held by TTS Holdings, LLC andmembers of management, there is no established trading market for the commonstock and it is not traded on any stock exchange.  Since there is not a closing market price atwhich to establish the market value of the awards reported in column (g), the$13.56 per share exercise price of stock options has been used.

**Potential Payments Upon Termination or Change ofControl**

Other than those describedabove in the sections titled “*EquityProgram; Stock Options and Restricted Stock”*and*“*ManagementAgreements with True Temper Sports, Inc.”, the Company has no contractualpayments associated with employment agreements that would be required in theevent of a termination or change of control. The Company does maintain aseverance policy which is used as a guideline in establishing severancebenefits to any salaried employee that is terminated without cause (the“Severance Policy”). The Severance Policy provides, primarily, for salarycontinuation for periods ranging from three to twelve months depending onlength of service. Generally, one week of severance pay is earned for each yearof continuous service, with certain minimum amounts of severance provided forspecific levels of management within the Company.

Following is a discussionof the potential payments required for each Named Executive Officer; in thecase of Mr. Hennessy, payments are governed by his employment agreement,and in the case of all other Named Executive Officers, payments are governed bythe Severance Policy.

*Scott C. Hennessy.**  *Under the terms of his employment agreement,Mr. Hennessy is entitled to receive the following severance payments andbenefits: any accrued but unpaid salary as of the date of the termination, anyannual bonus earned but unpaid for the most recently completed fiscal year,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of 12 months. As of December 31, 2006 the totalamount of such payments would have been approximately $440,000. In addition, inthe event of a change of control, Mr. Hennessy would be entitled toaccelerated vesting of all the option awards, and potentially all of the stockawards, identified in the table above under the heading “Outstanding EquityAwards at Fiscal Year-End”. The specific value of such awards would be 

74

----

determined based onthe terms and conditions of such change of control, including the per shareprice of common stock exchanged in the transaction.

*Adrian H. McCall.**  *Under the terms of the Company’s Severance Policy,Mr. McCall is entitled to receive the following severance payments andbenefits: any accrued but unpaid salary as of the date of the termination,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of at least six months. As of December 31, 2006the total amount of such payments would have been approximately $98,000. Inaddition, in the event of a change of control, Mr. McCall would beentitled to accelerated vesting of all the option awards, and potentially allof the stock awards, identified in the table above under the heading“Outstanding Equity Awards at Fiscal Year-End”. The specific value of suchawards would be determined based on the terms and conditions of such change ofcontrol, including the per share price of common stock exchanged in thetransaction.

*Gene Pierce.**  *Under the terms of the Company’s Severance Policy,Mr. Pierce is entitled to receive the following severance payments andbenefits: any accrued but unpaid salary as of the date of the termination,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of at least six months. As of December 31, 2006the total amount of such payments would have been approximately $85,000. Inaddition, in the event of a change of control, Mr. Pierce would be entitledto accelerated vesting of all the option awards, and potentially all of thestock awards, identified in the table above under the heading “OutstandingEquity Awards at Fiscal Year-End”. The specific value of such awards would bedetermined based on the terms and conditions of such change of control,including the per share price of common stock exchanged in the transaction.

*Jason A. Jenne.**  *Under the terms of the Company’s Severance Policy,Mr. Jenne is entitled to receive the following severance payments andbenefits: any accrued but unpaid salary as of the date of the termination,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of at least six months. As of December 31, 2006the total amount of such payments would have been approximately $83,000. Inaddition, in the event of a change of control, Mr. Jenne would be entitledto accelerated vesting of all the option awards, and potentially all of thestock awards, identified in the table above under the heading “OutstandingEquity Awards at Fiscal Year-End”. The specific value of such awards would bedetermined based on the terms and conditions of such change of control,including the per share price of common stock exchanged in the transaction.

*Fred H. Geyer.**  *Under the terms of the Company’s Severance Policy,Mr. Geyer is entitled to receive the following severance payments andbenefits: any accrued but unpaid salary as of the date of the termination,reimbursement of any outstanding business expenses, and the continuation of hisbase salary for a period of at least six months. On February 19, 2007Mr. Geyer’s employment with True Temper Sports, Inc. was terminated.He will receive total payments of approximately $230,000 during the severanceperiod.

No payments are made if anexecutive terminates his employment without “good reason” or we terminate hisemployment for “cause,” or if, under a severance agreement, an executive leavesfor other than “good reason” or we terminate their employment for any reasonother than without “cause” (including death or disability).

Withrespect to the employment and severance agreements:

·  “cause” generally means (i) thecommission of a felony or a crime of moral turpitude; (ii) a willful andmaterial act of dishonesty involving the Company; (iii) a materialnon-curable breach of the executive’s obligations under the agreement;(iv) material breaches of Company policies or procedures; (v) anyother willful misconduct which causes material harm to the Company or itsbusiness reputation; (vi) a failure to cure a material breach of theexecutive’s obligations under any agreements with the Company, includingcertain agreements related to the executive’s equity participation in theCompany, within 30 days after written notice of such breach; or(vii) breaches of any of the executive’s representations contained inagreements with the Company; and 

75

----

·  “good reason” generally means (i) areduction in the executive’s annual base salary or bonus potential (but notincluding any diminution related to a broader compensation reduction that isnot limited to any particular employee or executive); (ii) a materialdiminution of the executive’s responsibilities; (iii) relocation of theexecutive’s primary work place, as assigned to him by the Company, beyond afifty mile radius; or (iv) a material breach by the Company of any writtenagreement.

**Director Compensation**

The Company does notprovide compensation to Directors for their service in such capacity.

**Compensation Committee Interlocks and InsiderParticipation**

There are no Compensation Committeeinterlocks (*i.e.*, no executiveofficer of the Company or of True Temper Corporation serves as a member of theboard of directors or the compensation committee of another entity that has anexecutive officer serving on the Company’s board of directors or True TemperCorporation’s board of directors).

**Item12.      *SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters***

All ofthe outstanding shares of our capital stock are owned by TTC. The followingtable sets forth information with respect to the beneficial ownership of TTC’scapital stock as of March 1, 2007 by:

(1)   all stockholders of TTC that own more than 5% of any class of suchvoting securities,

(2)   each director and named executive officer, and

(3)   all directors and executive officers as agroup.

| **Name of Beneficial Owner(1)**                                                                        | ** ** | ** ** | ** ** | **Number of  Common  Shares** | ** ** | **Percentage of  Outstanding  Common  Stock** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------|------------|------------|------------|-------------------------------|------------|----------------------------------------------------|------------|
| TTS Holdings LLC  c/o Gilbert Global Equity Capital, LLC.  320 Park Avenue  17th Floor  New York, New York 10022 |       | 8,778,919  |       |                          | 96.8       | %                                                  |       |
| Scott C. Hennessy                                                                                                     |       | 167,021    |       |                          | 1.8        | %                                                  |       |
| Fred H. Geyer                                                                                                         |       | 29,509     |       |                          | *          |                                               |       |
| Adrian H. McCall                                                                                                      |       | 29,509     |       |                          | *          |                                               |       |
| Gene Pierce                                                                                                           |       | 5,533      |       |                          | *          |                                               |       |
| Jason A. Jenne                                                                                                        |       | 3,689      |       |                          | *          |                                               |       |
| All directors and  executive officers as a group (7 persons)                                                          |       | 245,589    |       |                          | 2.7        | %                                                  |       |

----

*       Less than 1%.

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

76

----

**Item 13.**                 *Certain Relationships and Related Transactions and DirectorIndependence*

**Stock PurchaseAgreement**

In accordance with theterms of the Purchase Agreement by and among TTS Holdings LLC, True TemperCorporation, and True Temper Sports, LLC and others dated January 30, 2004(the “Stock Purchase Agreement”), Sellers, as defined in the Stock PurchaseAgreement, have indemnified TTS Holdings, LLC, the purchaser, against anyand all damages resulting from any misrepresentation or breach of warranty ofSellers contained in the Stock Purchase Agreement, for claims made within 18months following the closing date, except that claims involving environmentalmatters, tax matters, or employee benefit matters shall survive for a period of36 months following the closing date. The indemnification obligations of theSellers under the Stock Purchase Agreement are generally subject to a $10.0million basket amount and are limited to an aggregate payment of no more thanthe total amount held in escrow.

**Stockholders Agreement**

Upon theconsummation of the Stock Purchase Agreement, TTC and all of its stockholders,including TTS Holdings, LLC, entered into a stockholders agreement. Thestockholders agreement:

(1)         requires that each of theparties vote all of their voting securities of TTC and take all other necessaryor desirable actions to cause the size of the board of directors of TTC to beestablished at the number of members determined by TTS Holdings, LLC and tocause designees of TTS Holdings, LLC representing a majority of the board ofdirectors to be elected to the board of directors of TTC;

(2)         grantsTTC and TTS Holdings, LLC a right of first refusal on any proposed transfer ofshares of capital stock of TTC held by any of the stockholders;

(3)         grantstag-along rights on certain transfers of shares of capital stock of TTC;

(4)         requiresthe stockholders to consent to a sale of TTC to an independent third party ifsuch sale is approved by certain holders of the then outstanding shares of thecompany’s voting common stock; and

**ManagementServices Agreement**

Inconnection with the stock purchase agreement, True Temper entered into amanagement services agreement with Gilbert Global. In accordance with thisagreement, Gilbert Global has agreed to provide:

(1)         general managementservices;

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

(3)         assistance with thenegotiation and analysis of financial alternatives; and

(4)         other services agreedupon by True Temper and Gilbert Global.

In exchange for such services, Gilbert Global or itsnominee receives:

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

(2)         a transaction fee in anamount equal to 1.25% of the aggregate transaction value in connection with theconsummation of any material acquisition, divestiture, financing or refinancingby True Temper or any of its subsidiaries; and

(3)         a one-time transactionfee of $2.5 million upon the consummation of the recapitalization.

77

----

The management servicesagreement has an initial term of five years, subject to automatic one-yearextensions unless we or Gilbert Global provide written notice of termination.The annual advisory fee of $0.5 million is an obligation of ours and is alsocontractually subordinated to the Notes and the senior credit facilities. 

**DirectorIndependence**

As a debt-only filer, the Company is not required tohave a majority of its Board consist of independent directors.

**Item14.**                 *Principal Accountants Fees and Services*

Thefollowing table represents aggregate fees billed to the Company for fiscalyears ended December 31 by KPMG LLP, the Company’s principal accountingfirm.

| ** **             | ** ** | **Fiscal Years Ended** | ** ** |
|------------------------|------------|----------------------------------|------------|
| ** **             | ** ** | **2006**                         | ** ** | **2005** | ** ** |
| Audit fees             |       | $184,000                         |       | $ | 181,000 |   |
| Audit-related  fees(1) |       | —                           |       | 25,000 |   |
| Tax fees(2)            |       | 128,600                          |       | 37,500 |   |
| All other fees(3)      |       | —                           |       | — |   |
| Total fees(4)          |       | $312,600                         |       | $ | 243,500 |   |

----

(1)          Primarily benefit plansaudit services

(2)          Primarilytax returns, advice and planning

(3)          Primarily advisoryservices relating to compliance with reporting requirements

(4)          All fees have beenapproved by the Audit Committee

The Audit Committee hasconsidered whether performance of services other than audit services iscompatible with maintaining the independence of KPMG LLP.

**Auditor Fees Pre-approval Policy**

In 2003, the Audit Committee adopted a policyconcerning approval of audit and non-audit services to be provided by theindependent registered public accounting firm to the Company. The policyrequires that all services KPMG LLP, the Company’s independent registeredpublic accounting firm, may provide to the Company, including audit servicesand permitted audit-related and non-audit services, excluding certaindesignated tax services, must be approved by the Audit Committee. The Committeeapproved all audit and non-audit services provided by KPMG during 2006.

78

----

**PART IV**

**Item 15.**                 *Exhibits and Financial Statements Schedule*

1.                 *Financial Statements.  *The following financialstatements of True Temper Sports, Inc. have been included in part II, item8 of this report on Form 10-K:

Report of IndependentRegistered Public Accounting Firm

Consolidated Statements ofOperations for the years ended December 31, 2006 and 2005, and the period fromMarch 15, 2004 to December 31, 2004 of the Company

Consolidated Statement ofOperations for the period from January 1, 2004 to March 14, 2004 for thePredecessor Company

Consolidated BalanceSheets at December 31, 2006 and 2005

Consolidated Statements ofStockholder’s Equity and Comprehensive Income (Loss) for the years endedDecember 31, 2006 and 2005, and the period from March 15, 2004 to December31, 2004 of the Company

Consolidated Statement ofStockholder’s Equity and Comprehensive Income (Loss) for the period fromJanuary 1, 2004 to March 14, 2004 for the Predecessor Company

Consolidated Statements ofCash Flows for the years ended December 31, 2006 and 2005, and the period fromMarch 15, 2004 to December 31, 2004 of the Company

ConsolidatedStatement of Cash Flows for the period from January 1, 2004 to March 14, 2004 forthe Predecessor Company

Notesto the Consolidated Financial Statements 

2.                 *Financial Statement Schedule.*

**SCHEDULEII—VALUATION AND QUALIFYING ACCOUNTS**

| ** **                                                | ** ** | ** **                                         | ** ** | **Additions**                                 | ** ** | ** **                           | ** ** | ** **        | ** ** |
|-----------------------------------------------------------|------------|----------------------------------------------------|------------|-----------------------------------------------|------------|--------------------------------------|------------|-------------------|------------|
| ** **                                                | ** ** | **Balance at  Beginning  of Period**     | ** ** | **Charged to  Costs and  Expenses** | ** ** | **Charged to  Other  Accounts** | ** ** | **Deductions(1)** | ** ** | **Balance at  End  of Period** | ** ** |
| ** **                                                | ** ** | **Dollars in thousands  (debit)/credit** | ** ** | ** **                                    | ** ** | ** **                           | ** ** | ** **        | ** ** |
| ALLOWANCE FOR DOUBTFUL ACCOUNTS                           |       |                                               |       |                                          |       |                                 |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| *Predecessor Company*                                     |       |                                               |       |                                          |       |                                 |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Period from  January 1, 2004 to March 14, 2004  |       |                                               | $          | 832                                           |       |                                 |       | $                 | 30         |   |   |   | $ | — |   |   |   | $ | (4 | ) |   |   | $ | 858 |   |   |
| *Successor Company*                                       |       |                                               |       |                                          |       |                                 |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Period from  March 15, 2004 to December 31 2004 |       |                                               | 858        |                                          |       |                                 | 79         |              |       |   | — |   |   |   | (22 | ) |   |   | 915 |   |   |
| Year ended  December 31, 2005                        |       |                                               | 915        |                                          |       |                                 | 165        |              |       |   | — |   |   |   | (669 | ) |   |   | 411 |   |   |
| Year ended December 31, 2006                         |       |                                               | 411        |                                          |       |                                 | 100        |              |       |   | — |   |   |   | (34 | ) |   |   | 477 |   |   |
|                                                           |            |                                                    |            |                                               |            |                                      |            |                   |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

(1)          Deductionsrepresent uncollectible accounts charged against the allowance for doubtfulaccounts.

Allother schedules are omitted because they are not applicable or the requiredinformation is shown in the financial statements or notes thereto.

3.                 *Exhibits.*

See the Index to Exhibits.

79

----

**SIGNATURES**

Pursuant to therequirements of section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
|        | TRUE TEMPER  SPORTS, INC. |
|--------|--------------------------------|
|   | By:                            | /s/ SCOTT C. HENNESSY |
|   | Name:                          | Scott C. Hennessy |
|   | Title:                         | *President and Chief Executive Officer* |
|   | Date:                          | March 23, 2007 |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.
|        | By:    | /s/ STEVEN J.  GILBERT           |
|--------|--------|----------------------------------|
|   | Name:  | Steven J. Gilbert                |
|   | Title: | *Director and Co-Chairman*       |
|   | Date:  | March 23, 2007                   |
|   | By:    | /s/ STEVEN KOTLER                |
|   | Name:  | Steven Kotler                    |
|   | Title: | *Director and Co-Chairman*       |
|   | Date:  | March 23, 2007                   |
|   | By:    | /s/ RICHARD W. GAENZLE, JR. |
|   | Name:  | Richard W. Gaenzle, Jr.     |
|   | Title: | *Director*                       |
|   | Date:  | March 23, 2007                   |
|   | By:    | /s/ JEFFREY W. JOHNSON           |
|   | Name:  | Jeffrey W. Johnson               |
|   | Title: | *Director*                       |
|   | Date:  | March 23, 2007                   |
|   | By:    | /s/ WILLIAM P. LAUDER            |
|   | Name:  | William P. Lauder                |
|   | Title: | *Director*                       |
|   | Date:  | March 23, 2007                   |

80

----

 
|        | By:    | /s/ SCOTT C. HENNESSY                                                      |
|--------|--------|----------------------------------------------------------------------------|
|   | Name:  | Scott C. Hennessy                                                          |
|   | Title: | *President, Chief Executive  Officer  and Director*                        |
|   | Date:  | March 23, 2007                                                             |
|   | By:    | /s/ JASON A.  JENNE                                                        |
|   | Name:  | Jason A. Jenne                                                             |
|   | Title: | *Vice President Chief Financial Officer and  Principal Accounting Officer* |
|   | Date:  | March 23, 2007                                                             |

 

81

----

**INDEX TO EXHIBITS**
| 1.1  |   | Purchase Agreement, dated as of March 3, 2004,  among True Temper Sports, Inc., Credit Suisse First Boston LLC and  Goldman, Sachs & Co. (filed as Exhibit 1.1 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with  the Securities and Exchange Commission on April 13, 2004).*                                                                                                                            |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.1  |   | Indenture, dated as of  March 15, 2004, among True Temper Sports, Inc., the Guarantors  identified therein, and The Bank of New York (filed as Exhibit 4.1 to  True Temper Sports, Inc.’s Registration Statement on Form S-4, as  filed with the Securities and Exchange Commission on April 13, 2004).*                                                                                                                                         |
| 4.2  |   | Form of Senior  Subordinated Note due 2011 (filed as Exhibit 4.2 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with  the Securities and Exchange Commission on April 13, 2004).*                                                                                                                                                                                                                                        |
| 4.3  |   | Registration Rights  Agreement, dated as of March 15, 2004, among True Temper  Sports, Inc., El Cajon Equipment Corporation, True Temper Sports-PRC  Holdings, Inc., Credit Suisse First Boston LLC and Goldman,  Sachs & Co (filed as Exhibit 4.3 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with  the Securities and Exchange Commission on April 13, 2004).*                         |
| 10.1 |   | Management Services Agreement, dated as of March 15, 2004, between GGEP Management,  L.L.C., GGEP Management (Bermuda) Ltd., and True Temper Sports, Inc.  (filed as Exhibit 10.1 to True Temper Sports, Inc.’s Registration  Statement on Form S-4, as filed with the Securities and Exchange  Commission on April 13, 2004).*                                                                |
| 10.2 |   | Shareholders Agreement,  dated as of March 15, 2004, by and among True Temper Corporation, TTS  Holdings LLC and the Other Investors identified therein (filed as  Exhibit 10.2 to True Temper Sports, Inc.’s Registration Statement  on Form S-4, as filed with the Securities and Exchange Commission on  April 13, 2004).*                                                                                                                         |
| 10.3 |   | True Temper Corporation  2004 Equity Incentive Plan, dated as of March 15, 2004 (filed as  Exhibit 10.3 to True Temper Sports, Inc.’s Registration Statement  on Form S-4, as filed with the Securities and Exchange Commission on  April 13, 2004).*                                                                                                                                                                                                 |
| 10.4 |   | Credit Agreement, dated  as of March 15, 2004, by and among True Temper Corporation, True Temper  Sports, Inc, the Lenders identified therein, Credit Suisse First Boston,  Antares Capital Corporation, Goldman Sachs Credit Partners L.P. and  Merrill Lynch Capital (filed as Exhibit 10.4 to True Temper  Sports, Inc.’s Registration Statement on Form S-4, as filed with  the Securities and Exchange Commission on April 13, 2004).* |
| 10.5 |   | Tax Sharing and  Administrative Services Agreement, dated as of March 15, 2004, by and  among True Temper Corporation, True Temper Sports, Inc., El Cajon  Equipment Corporation and True Temper Sports-PRC Holdings, Inc. (filed  as Exhibit 10.5 to True Temper Sports, Inc.’s Registration  Statement on Form S-4, as filed with the Securities and Exchange  Commission on April 13, 2004).*                                            |
| 10.6 |   | Employment Agreement,  dated as of January 30, 2004, by and between True Temper  Sports, Inc. and Scott C. Hennessy (filed as Exhibit 10.6 to  True Temper Sports, Inc.’s Registration Statement on Form S-4, as  filed with the Securities and Exchange Commission on April 13, 2004).*                                                                                                                                                    |

82

----

 
| 10.7  |   | First Amendment, dated as of September 24,  2004, to the Credit Agreement, dated as of March 15, 2004, by and among  True Temper Corporation, True Temper Sports, Inc, the Lenders identified  therein, Credit Suisse First Boston, Antares Capital Corporation, Goldman  Sachs Credit Partners L.P. and Merrill Lynch Capital (filed as  Exhibit 10.1 to True Temper Sports, Inc.’s report on Form 8-K,  as filed with the Securities and Exchange Commission on September 30, 2004).*                                  |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.8  |   | Amended and Restated Credit Agreement dated as of  March 27, 2006, (amending and restating the Credit Agreement dated as of  March 15, 2004, by and among True Temper Corporation, True Temper  Sports, Inc, the Lenders identified therein, Credit Suisse First Boston,  Antares Capital Corporation, Goldman Sachs Credit Partners L.P. and Merrill  Lynch Capital) (filed as Exhibit 10.8 to True Temper Sports, Inc.’s  report on Form 10-K, as filed with the Securities and Exchange Commission on  March 28, 2006).*                            |
| 10.9  |   | First Amendment dated as  of December 20, 2006 to the Amended and Restated Credit Agreement dated as of  March 27, 2006 (amending and restating the Credit Agreement dated as of March  15, 2004, by and among True Temper Corporation, True Temper Sports, Inc., the  Lenders identified therein, Credit Suisse, Antares Capital Corporation,  Goldman Sachs Credit Partners L.P. and Merrill Lynch Capital), (filed as  Exhibit 10.2 to True Temper Sports, Inc.’s report on Form 8-K, as filed with  the Securities and Exchange Commission on January 26, 2007).* |
| 10.10 |   | Second Lien Credit  Agreement dated as of January 22, 2007, by and among True Temper Corporation,  True Temper Sports, Inc., the Lenders identified therein, and Credit Suisse.)  (filed as Exhibit 10.1 to True Temper Sports, Inc.’s report on Form 8-K, as  filed with the Securities and Exchange Commission on January 26, 2007).*                                                                                                                                                                                                                               |
| 10.11 |   | Summary of severance  arrangement dated as of February 19, 2007 between True Temper Sports, Inc.  and Fred H. Geyer. **                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 12.1  |   | Computation of Ratio of  Earnings To Fixed Charges.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1  |   | Certification pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 31.2  |   | Certification pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 32.1  |   | Certification pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 32.2  |   | Certification pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

*                    Incorporatedby reference

**             Filed herewith

83

----