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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
                                   FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                        COMMISSION FILE NUMBER 333-72343
                            ------------------------

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

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

                             8275 TOURNAMENT DRIVE
                                   SUITE 200
                            MEMPHIS, TENNESSEE 38125
                           TELEPHONE: (901) 746-2000
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

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

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

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

     As of March 28, 2001 the Registrant had 100 shares of Common Stock, $0.01
par value per share, outstanding. All of the Registrant's outstanding shares
were held by True Temper Corporation, the Registrant's parent company, as of
March 28, 2001.
                      DOCUMENTS INCORPORATED BY REFERENCE:

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

                           ANNUAL REPORT ON FORM 10-K
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                     INDEX

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PART I
  Item 1   Business....................................................    1
  Item 2   Properties..................................................   11
  Item 3   Legal Proceedings...........................................   12
  Item 4   Submission of Matters to a Vote of Security Holders.........   12

PART II
  Item 5   Market for Registrant's Common Equity and Related
           Stockholder Matters.........................................   13
  Item 6   Selected Financial Data.....................................   13
  Item 7   Management's Discussion and Analysis of Financial Condition
           and Results of Operations...................................   15
  Item 7A  Quantitative and Qualitative Disclosures About Market
           Risk........................................................   25
  Item 8   Financial Statements and Supplementary Data.................   26
  Item 9   Changes in and Disagreements With Accountants on Accounting
           and Financial Disclosures...................................   49

PART III
  Item 10  Directors and Executive Officers of the Registrant..........   49
  Item 11  Executive Compensation......................................   50
  Item 12  Security Ownership of Certain Beneficial Owners and
           Management..................................................   53
  Item 13  Certain Relationships and Related Transactions..............   54

PART IV
  Item 14  Exhibits, Financial Statements Schedule, and Reports on Form
           8-K.........................................................   56

SIGNATURES.............................................................   58

EXHIBIT INDEX..........................................................   59
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                                     PART I

ITEM 1.  BUSINESS

GENERAL

     We are the world's leading designer, manufacturer and marketer of golf club
shafts. Since the 1930's we have manufactured golf club shafts under the widely
recognized True Temper brand. In 2000, over 70% of our revenues were generated
through the sale of steel golf club shafts, a market in which we have an
estimated worldwide share of over 65%. We are a major supplier of steel shafts
to the top 20 domestic golf club designers and distributors, including Callaway,
PING, Titleist, Mizuno, Wilson, Cleveland, Adams, Spalding, TaylorMade and
Golfsmith. In addition, we are a leading manufacturer of premium graphite shafts
in the highly fragmented graphite golf club shaft market.

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

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

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

     (3) Tri-Gold, which utilizes an innovative design and weighting technology;
         and

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

     From 1990 to 2000, our steel shafts were played by over 82% of the PGA's
major championship winners, including 9 of the last 11 Masters champions.

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

     In addition, we manufacture a variety of high strength, high tolerance
tubular components for the bicycle, automotive and recreational sports markets.
During 2000 we expanded the design and manufacturing capability of our
performance tubing business segment to include not only steel tubing
applications but also composite tubing. Our first product offerings in this new
market are graphite hockey stick shafts designed for Christian and Vic, two
premier names in the hockey industry.

     On October 26, 1998, we acquired substantially all of the assets and
assumed certain liabilities of Grafalloy Corporation, a designer, manufacturer
and distributor of composite golf club shafts located in El Cajon, California.
Since 1973, Grafalloy has designed, manufactured and marketed premium golf
shafts, specializing in branded, performance enhancing designs, including its
Attacklite, ProLite and ProLogic lines of ultra-lightweight and performance
graphite shafts. We believe that our acquisition of Grafalloy has enhanced our
presence in the highly fragmented graphite shaft market.

THE GOLF CLUB SHAFT INDUSTRY

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

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

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

     Unlike steel, the graphite shaft market is characterized by many smaller
manufacturers who require limited capital investment to produce graphite shafts
in quantity. Although there are a few graphite shaft suppliers with scale, none
of them have a majority share in the graphite market. Typically the graphite
manufacturers have a highly concentrated customer base with most of their sales
going to only a few customers.

     Like most golf shaft manufacturers we sell shafts to both original
equipment manufacturers ("OEM's") like Callaway, Titleist, PING and others, as
well as to golf equipment distributors like Golfsmith. OEM's purchase both
proprietary/uniquely designed products as well as True Temper/Grafalloy branded
product offerings. Distributors, who service custom club builders and pro shops,
prefer to purchase brand name shafts that have a high degree of consumer
recognition.

BUSINESS STRATEGY

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

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

     - Leverage Technological Leadership to Introduce New Products.  We intend
       to capitalize on our design expertise and couple our internal resources
       with our supplier partnerships to continue to develop and introduce new
       products for the future as we have in the past. In 2000, over 30% of our
       revenues were derived from products introduced during the past 3 years.
       In 1996, True Temper developed and introduced Sensicore, a highly
       successful line of premium steel shafts that incorporates our patented
       vibration damping technology. We believe the Sensicore technology
       incorporates the performance characteristics and consistency of steel
       with the feel of graphite, while offering the lowest vibration levels of
       any steel or graphite shaft on the market. In 1998 True Temper
       successfully expanded the patented Sensicore technology into graphite
       shafts and in 1999 we continued the product line development with the
       launch of Sensicore Gold, with variable damping technology. 1999 also saw
       the launch of Tri-Gold, which utilizes new ascending mass technology.
       During the past several years we developed the revolutionary new BiMatrx
       technology, which combines the favorable performance characteristics of
       both steel and graphite into one shaft. The BiMatrx driver and fairway
       wood products were launched at the January 2001 PGA merchandise show in
       Orlando, Florida.

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

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

      (2) growth in the number of golf courses;

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

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

      (5) projected population growth of individuals entering their 20s, the age
          when golfers generally begin playing golf;

      (6) significant increase in consumer advertising by the golf equipment
          industry; and

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

     - Enhance Long-Term Customer Relationships.  We are a major supplier to the
       top 20 domestic golf club manufacturers. We intend to continue to play a
       critical role in designing new shaft technologies to meet the specific
       performance requirements of our customers' new products. We utilize a
       computer-aided design program that evaluates a new shaft's design with
       respect to weight, torque, flex point, tip and butt flexibility, swing
       weight and other critical shaft design criteria. In addition, we further
       enhance our customer relationships by developing co-branded products,
       such as the Memphis 10 for Callaway, the Fat Shaft for Wilson, the JZ and
       ZZ Lite for PING and the EI-70+ for Orlimar, among others.

     - Continue to Build the True Temper and Grafalloy Brands.  We intend to
       continue to increase awareness of the True Temper and Grafalloy brands
       and to support our new product introductions with targeted consumer
       advertising campaigns. From 1998 to 2000 we increased advertising
       expenditures by approximately 10.7% to $4.6 million, or approximately
       4.2% of our 2000 revenues. We are currently the only golf club shaft
       manufacturer that consistently advertises on network/national television.
       Our marketing programs also include:

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

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

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

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

     - Continue to Improve Productivity and Operating Margins.  From 1998 to the
       year ended December 31, 2000, we increased our gross profit margins from
       35.2% to 40.9% and our Adjusted EBITDA (as defined in Item 7 of this
       annual report) margins from 23.6% to 29.3%, primarily as a result of
       reducing our cost structure and increasing sales of new higher margin
       products. Management believes there are opportunities to improve future
       gross profit margins through:

      (1) new product introductions;

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

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

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PRODUCTS

     We design, manufacture and market steel and graphite golf club shafts, as
well as a variety of high strength, high tolerance tubular components for the
bicycle, automotive and recreational sports markets. We manufacture over 1,000
custom and 2,000 standard golf club shafts featuring different combinations of
performance characteristics, including weight, flex, torque and bend profile.
Our custom (proprietary) shafts, which accounted for approximately 33% of
revenues in 2000, are designed, and frequently co-branded in partnership with
our customers, to accommodate specific golf club designs. Our branded products
with the True Temper and Grafalloy names and designs are typically sold to golf
club manufacturers, distributors and various custom club assemblers, and are
used to either assemble new clubs or to replace the shafts in existing clubs.

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

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

     (1) premium steel shafts; and

     (2) commercial steel shafts.

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

     Graphite Golf Club Shafts.  We manufacture a wide range of graphite golf
club shaft lines, which are offered in a variety of weights, torques and flexes.
Our graphite golf club shafts include the EI-70 and ProLite which are currently
being played by over 100 touring professionals on the PGA and Senior PGA Tours;
the Sensicore Graphite shaft, which utilizes our patented vibration damping
technology, and the Grafalloy ProLite, which is the winningest ultralight
graphite shaft on tour. Our graphite shafts are also sold under the True Temper
and Grafalloy product brands such as, Dynamic Gold Graphite, TT Lite, ProLogic
and Attacklite.

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

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

     Performance Tubing Products.  We also manufacture and sell a wide variety
of high performance tubular components for the bicycle, automotive and
recreational sports markets. In 2000, we sold our performance tubing products to
a broad range of original equipment manufacturers, including Trek Bicycle, Dana
Corporation, Autodyne Manufacturing, Starline Baton and Christian Hockey.

CUSTOMERS

     We maintain long-standing relationships with a highly diversified customer
base consisting of the premier golf club manufacturers and distributors in the
world. We are a major supplier of shafts to each of the top 20 domestic golf
club designers in the world, including Callaway, PING, Titleist, Mizuno, Wilson,
Cleveland, Adams, Orlimar, TaylorMade and Golfsmith. In 2000, True Temper had in
excess of 800 customers, including approximately 700 golf club manufacturers and
more than 100 distributors.

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     We believe that our close customer relationships and responsive service
have been significant elements to our success and that our engineering and
manufacturing expertise provide us with a strong competitive advantage. We have
developed and co-branded several proprietary shafts with our customers, which
include customized steel shafts for Callaway, under the Memphis 10 brand; for
PING, under the JZ and ZZ Lite brands; for Wilson to produce the Fat Shaft line
of clubs; and for Orlimar, under the EI-70+ brand.

COMPETITION

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

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

     - our ability to deliver customized products in large quantities on a
       timely basis;

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

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

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

     Unlike steel, the graphite shaft manufacturing industry is highly
fragmented with a large number of suppliers selling to only a few customers. We
believe there are anywhere from fifty to eighty graphite shaft manufacturers
worldwide. Many of these companies are located in North America and Far East
Asia. We do not believe that there are any graphite suppliers currently with a
market share in graphite that is in any way comparable to the market share True
Temper has in steel. In addition to True Temper, we believe the larger graphite
suppliers include Aldila, HST, UST, Graphite Design and Fujikura. With the
addition of Grafalloy in October of 1998, we believe that we rank within the top
five highest volume graphite shaft producers in the world.

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

DESIGN & DEVELOPMENT

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

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

     In addition to our proprietary/co-branded product applications, we are very
active in designing and developing new products under the True Temper and
Grafalloy brand names that meet the performance needs

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of golfers of all ages and skill levels. We develop these branded products based
upon our internal research and evaluation of consumer needs and preferences.

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

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

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

     Research and development costs for the years ended December 31, 2000, 1999
and 1998 were $1.6 million, $1.8 million and $2.2 million, respectively.

MANUFACTURING

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

     Steel Shaft Manufacturing Process.  The process of manufacturing a steel
shaft has many distinct phases. Generally, a large steel coil is unrolled and
then formed lengthwise, welded and cut into cylinders. The tubing is then
treated and fitted over a metal rod or "mandrel" that is used to determine the
precise inside diameter of the cylinder as it is drawn. The tubing is stretched,
cut into sections, and then weighed and balanced. Later, through a process that
we pioneered, the sections are tapered to give each shaft model a particular
flex and frequency. The shafts are cleaned, straightened, heat-treated and
tempered. The shafts are straightened by machines designed and built by True
Temper. The shafts are plated with two layers of nickel to prevent corrosion and
then covered with a fine layer of chrome. Finally, shafts are dried, polished
and inspected for cosmetic flaws before our name and logo is affixed to the
shaft. It takes an average of 10 days to manufacture a True Temper steel shaft.

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

     Raw Materials.  We use several raw materials to produce steel golf shafts,
including several steel alloys sourced from two or three primary vendors, nickel
and plating chemicals, Sensicore inserts and various sundry supplies, boxes and
labels. Graphite shafts are produced with a variety of graphite fiber materials
in both sheet and spool form that we source from several different vendors. In
addition, graphite shafts are finished with a wide variety of paints and inks.
We believe that there are adequate alternative suppliers of these materials,
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and, therefore, we do not believe that we are dependent on any one supplier. See
"Business Risks -- Risk Associated with Fluctuations in Raw Material Cost and
Availability" and "Qualitative and Quantitative Disclosures About Market
Risk -- Commodity Risk" for risks relating to price increases in raw materials
and to delays in receiving supplies.

MARKETING & PROMOTION

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

     For example, we have maintained a strong presence among PGA Tour players,
particularly since 1981, when we began sending our PGA Tour van to all major PGA
events. The Tour van functions as a golf club repair shop on wheels, visiting
over 50 professional tour events during 2000. Typically, the van is located on
the practice tee and lends technical support to the tour professionals while
simultaneously promoting the True Temper and Grafalloy brands with
representatives of original equipment manufacturers. In addition, we provide
technical support to the players on the Senior PGA Tour, the LPGA Tour, and the
Buy.Com Tour (formerly the Nike Tour).

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

     Much of our advertising and promotional spending is dedicated to print and
television advertising, including cooperative advertising with our customers. We
believe we are currently the only golf club shaft manufacturer that consistently
advertises on network/national television. Additional advertising and
promotional spending is allocated to promotional events such as trade shows,
consumer golf shows and PGA Tour activities. In a 1998 New York Times research
poll, True Temper was ranked as the top golf shaft company in terms of brand
familiarity. Of those surveyed, 93% recognized the True Temper brand.

     Advertising and promotional costs for the years ended December 31, 2000,
1999 and 1998 were $4.6 million, $4.6 million and $4.2 million, respectively.

DISTRIBUTION & SALES

     We primarily sell our shafts to golf club manufacturers and distributors.
Typically, distributors resell our products to custom club assemblers, pro shops
and individuals. Sales to golf club manufacturers accounted for approximately
75% of revenues in 2000.

     We believe that we have one of the most experienced and respected sales
staffs in the industry. Our sales and marketing department includes domestic
sales managers, international sales managers, a customer service group and a
team of design professionals who provide field support to our sales
representatives. We believe that our international market presence, which
comprised approximately 20% of our total 2000 revenues, provides an opportunity
for future growth. We market our products in Japan, Europe and Southeast Asia
and maintain a sales office and a distribution operation in each region.

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EMPLOYEES

     As of December 31, 2000, we had 667 full-time employees, including 24 in
sales and marketing, 30 in research, development and manufacturing engineering,
573 in production and the balance in administrative and support roles. In
addition, as of December 31, 2000, we had 122 individuals working in production
at our El Cajon facility through a temporary employment agency. The El Cajon
plant has historically used a certain portion of temporary workers in order to
more effectively match the workforce level with the required production level at
various times of the year.

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

INTELLECTUAL PROPERTY

     As of December 31, 2000 we held 29 U.S. patents relating to various
products and proprietary technologies, including the Sensicore technology, and
had 19 patent applications pending. We also hold numerous trademarks related to,
among other things, our True Temper and Grafalloy branded products.

     While we consider our patents and trademarks to be valuable assets, we do
not believe that our competitive position is dependent solely on patent or
trademark protection, or that our operations are dependent on any individual
patent or trademark.

ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

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

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

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

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

BUSINESS RISKS

     This annual report on Form 10-K includes "forward looking statements"
including, in particular, the statements about our plans, strategies, and
prospects under the headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Business". Although we believe that
our

                                        8
<PAGE>   11

plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. Important factors that could
cause actual results to differ materially from the forward looking statements we
make in this report are set forth below and elsewhere in this report. All
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the following cautionary
statements.

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

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

     - increase our vulnerability to increases in interest rates because our
       secured credit facility, under which our indebtedness was $18.4 million
       as of December 31, 2000, is subject to a variable interest rate;

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

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

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

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

     - limit our ability to borrow additional funds.

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

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

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

NEW PRODUCT INTRODUCTION -- There can be no assurance that we will continue to
develop competitive products, develop or use technology on a timely or
competitive basis or otherwise respond to emerging market trends. Because the
introduction of new golf club shafts using steel, graphite or other composite
and combined materials is critical to our future success, our continued growth
will depend, in large part, on our ability to successfully develop and introduce
new products in the marketplace. Should golf
                                        9
<PAGE>   12

consumers prefer to use golf clubs made from materials other than steel or
graphite, there could be a material adverse effect on the results of our
operations. In addition, the design of new golf clubs is also greatly influenced
by the rules and interpretations of the U.S. Golf Association ("USGA"). Although
the golf equipment standards established by the USGA generally apply mainly to
competitive events sanctioned by that organization, we believe that it is
critical for our future success that our new shafts comply with USGA standards.
No assurance can be given that any new products will receive USGA approval or
that existing USGA standards will not be altered in ways that adversely affect
the sales of our current or future products.

LABOR RELATIONS -- If any labor disruption or work stoppages affect our
employees, the results of our operation could be adversely affected. At December
31, 2000, we employed approximately 667 full-time individuals. Of these,
approximately 408 hourly employees at our Amory, Mississippi facility are
represented by the United Steel Workers of America. Although we believe that
relations with our employees and the union are generally good, there can be no
assurance that we will not be subject to work stoppages or other labor
disruption and, if such events were to occur, that there would not be a material
adverse effect on our results of operations.

LIMITED EXPERIENCE AS A STAND ALONE COMPANY -- Since we have operated as an
independent company for only the past 27 months, we cannot assure you that we
will continue to be self-sufficient in our ability to provide general and
administrative services or be able to continue to obtain them at favorable
prices. In the past we have benefited from Black & Decker's provision of general
and administrative services. These services include treasury, tax, risk
management, employee benefits administration, certain legal services, internal
audit and other administrative functions. We entered into a transition services
agreement with Black & Decker pursuant to which Black & Decker agreed to
continue providing us with some of these services, specifically related to our
foreign operations, for up to 12 months after the date on which the
recapitalization occurred, September 30, 1998. Upon the expiration of this
agreement on September 30, 1999 we began obtaining these services through
internal and external sources apart from Black & Decker.

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

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

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

FLUCTUATIONS IN COST AND AVAILABILITY OF ENERGY SOURCES -- Our graphite shaft
manufacturing operation is located in Southern California and is dependent upon
a consistent and affordable supply of electricity. If there is a prolonged
shortage of electrical supply to our California facility and/or a significant
                                        10
<PAGE>   13

increase in the cost of electrical power, it could result in the temporary or
permanent closure of our graphite shaft operations, which could have a material
adverse affect on the results of our operations.

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

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

PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY -- There can be no assurance
that the patents we hold relating to certain of our products and technologies
offer complete protection against infringement of our proprietary rights by
others. As of December 31, 2000 we held 29 U.S. patents relating to various
products and proprietary technologies, including the Sensicore technology, and
had 19 patent applications pending. There can be no assurance, however, as to
the degree of protection afforded by these patents or as to the likelihood that
patents will be issued from the pending patent applications. Moreover, these
patents may have limited commercial value or may not protect our products.
Additionally, the U.S. patents that we hold do not preclude competitors from
developing or marketing products similar to our products in international
markets.

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

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

     - incur additional indebtedness;

     - pay dividends and make distributions; and

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

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

ITEM 2.  PROPERTIES

     Our administrative offices and manufacturing facilities currently occupy
approximately 440,000 square feet. Our shafts are manufactured at two separate
facilities, a steel shaft facility located in Amory, Mississippi and a composite
graphite shaft facility located in El Cajon, California. In addition, we have a
multi-material shaft assembly facility located in Olive Branch, Mississippi. Our
executive offices are located in a leased
                                        11
<PAGE>   14

facility in Memphis, Tennessee. The following table sets forth certain
information regarding significant facilities operated by True Temper as of
December 31, 2000:

<TABLE>
<CAPTION>
                                                                                      LEASE
                                                             APPROX.    OWNED/     EXPIRATION
FACILITY                                LOCATION             SQ. FT.    LEASED        DATE
--------                                --------             -------    ------    -------------
<S>                             <C>                          <C>        <C>       <C>
Corporate Offices.............  Memphis, Tennessee            13,500    Leased    December 2003(1)
Steel Shaft/Tubing Mfg........  Amory, Mississippi           335,000    Leased     January 2063(2)
Composite Shaft Mfg...........  El Cajon, California          45,907    Leased       March 2004
Building......................  Olive Branch, Mississippi     45,000    Owned                --
</TABLE>

---------------
(1) The corporate offices lease has a lease extension option of 2 additional
    years terminating December 31, 2005.

(2) The Amory, Mississippi lease is structured in 5 year automatically renewable
    terms, extending through January 2063. The lease covers the original land
    and building of the Amory facility.

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

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

ITEM 3.  LEGAL PROCEEDINGS

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

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

     There were no matters submitted to a vote of security holders during 2000.

                                        12
<PAGE>   15

                                    PART II

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

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

     The Company declared and paid dividends on its shares of common stock
during fiscal 2000. The amount paid was $1.2 million. The various debt
instruments impose restrictions on the payment of dividends by means of
covenants. The Company was in compliance with all debt covenants as of December
31, 2000.

     The Company did not declare any dividends on its shares of common stock
during fiscal year 1999.

ITEM 6.  SELECTED FINANCIAL DATA

     Set forth below are our selected historical financial data for the five
fiscal years ended December 31, 2000. The historical financial data were derived
from our audited financial statements and the notes thereto, for which the
December 31, 2000, 1999 and 1998 financial statements are included herein.

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                      --------------------------------------------------------
                                        2000        1999      1998(1)       1997        1996
                                      --------    --------    --------    --------    --------
                                                       (DOLLARS IN THOUSANDS)
<S>                                   <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
  Net sales.........................  $110,636    $ 92,215    $ 91,450    $ 82,597    $ 71,603
  Gross profit......................    45,254      36,131      32,198      28,711      21,975
  Selling, general and
     administrative expenses........    16,899      15,156      13,464      13,324      11,145
  Allocated corporate expenses(2)...        --          --         763         927         668
  Amortization of goodwill..........     2,701       2,701       2,505       3,746       3,746
  Goodwill writeoff(3)..............        --          --      40,000          --          --
  Recapitalization transaction
     expenses.......................        --          --       5,698          --          --
  Impairment charge on long lived
     assets(4)......................     1,053          --         750          --          --
  Restructuring charges(5)..........         7         622         400         520         492
  Operating income (loss)...........    24,594      17,652     (31,382)     10,194       5,924
  Interest expense, net of interest
     income.........................    13,693      14,341       3,462          --          --
  Net income (loss).................  $  5,627    $  1,002    $(37,811)   $  4,863    $  2,205
BALANCE SHEET DATA (AT END OF
  PERIOD):
  Working capital(6)................  $  9,881    $ 11,200    $  8,942    $  6,418    $  6,627
  Total assets......................   175,888     186,963     189,626     160,341     163,186
  Total debt(7).....................   118,448     136,522     137,545         349         362
  Total stockholder's equity........  $ 40,320    $ 35,881    $ 34,879    $146,716    $151,907
OTHER FINANCIAL DATA:
  EBITDA(8).........................  $ 30,830    $ 23,857    $ 14,449    $ 17,543    $ 13,233
  EBITDA margin.....................      27.9%       25.9%       15.8%       21.2%       18.5%
  Adjusted EBITDA(8)................  $ 32,390    $ 25,087    $ 21,622    $ 18,063    $ 13,725
  Adjusted EBITDA Margin(8).........      29.3%       27.2%       23.6%       21.9%       19.2%
  Cash from operating activities....  $ 20,607    $  7,619    $  4,661    $ 12,999    $  9,582
  Cash used in investing
     activities.....................    (3,543)     (1,572)     (8,531)     (2,439)     (2,784)
  Cash from (used in) financing
     activities.....................   (19,323)     (1,885)      4,836     (10,054)     (6,462)
</TABLE>

                                        13
<PAGE>   16

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                      --------------------------------------------------------
                                        2000        1999      1998(1)       1997        1996
                                      --------    --------    --------    --------    --------
                                                       (DOLLARS IN THOUSANDS)
<S>                                   <C>         <C>         <C>         <C>         <C>
  Depreciation and amortization.....     6,236       6,205       5,831       7,349       7,309
  Capital expenditures..............  $  3,621    $  1,620    $  2,366    $  2,452    $  2,784
  Ratio of earnings to fixed
     charges(9).....................      1.8x        1.2x          --          --          --
</TABLE>

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

(2) Prior to the recapitalization, True Temper received certain services
    provided by Black & Decker that included cash management, tax reporting,
    risk management and internal audits. Charges for these corporate services
    were based upon a general allocation methodology determined by Black &
    Decker, and used to allocate all corporate overhead expenses to Black &
    Decker's operating divisions and subsidiaries. See Note 11 to the financial
    statements, included elsewhere in this filing, for a detailed discussion of
    these related party transactions, including management's estimate of the
    stand-alone costs for such services.

(3) In connection with Black & Decker's change in accounting policy with respect
    to the measurement of goodwill impairment, $40,000 of goodwill related to
    True Temper was written off, effective January 1, 1998, as a change in
    accounting estimate inseparable from a change in principle. See
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations" and Note 13 to the financial statements included elsewhere in
    this annual report.

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

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

(6) Working capital excludes cash and cash equivalents.

(7) Total debt includes both the current and long-term portions of debt and
    capital lease obligations.

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

(9) Information relating to the ratio of earnings to fixed charge for 1996 and
    1997 has been excluded as the fixed charges were less than $200 for each of
    1996 and 1997 and thus immaterial for each of those years. Earnings were not
    sufficient to cover fixed charges by $34,924 in 1998, due to a $40,000
    goodwill write-off taken as of January 1, 1998.

                                        14
<PAGE>   17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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

COMPANY OVERVIEW

     True Temper Sports, Inc. or "True Temper", a wholly owned subsidiary of
True Temper Corporation, is a leading designer, manufacturer and marketer of
both steel and composite graphite golf club shafts for original equipment
manufacturers and distributors in the golf equipment industry. In addition, True
Temper produces and sells a variety of performance tubing products that offer
high strength and tight tolerance tubular components to the bicycle, automotive
and recreational sports markets. In 2000, golf shaft sales represented 96% of
total revenues, and performance-tubing sales represented 4%.

     On September 30, 1998 True Temper Corporation was recapitalized in a
transaction that was accounted for as a leveraged recapitalization. For a more
detailed discussion of the accounting treatment of this transaction, see the
notes to the financial statements appearing elsewhere in this document. Prior to
this date, True Temper operated as a wholly owned subsidiary of the Black &
Decker Corporation("Black & Decker" or "B&D"). For the periods through September
29, 1998, the accompanying financial information includes all revenues of True
Temper, all items of expense directly incurred by it and expenses charged or
allocated to it by Black & Decker in the ordinary course of business. These
allocated corporate expenses are discussed further in this Management's
Discussion and Analysis and the notes to the financial statements.

     On October 26, 1998 True Temper acquired substantially all of the assets,
and assumed certain liabilities, of Grafalloy Corporation, a wholly owned
subsidiary of The American Materials & Technologies Corporation, located in El
Cajon, California, for approximately $6.1 million in cash. For the purposes of
the financial statements, the acquisition was accounted for as a purchase and,
accordingly, Grafalloy's results are included in the accompanying financial
information as of the date of acquisition.

YEAR IN REVIEW -- 2000

     The golf equipment industry entered 2000 in the midst of an upward sales
trend which began to develop during the third quarter of 1999. We believe that
industry performance began to strengthen during the later half of 1999 because
OEM's and retailers had reduced their inventories during the first half of 1999
of the older product that had been overbuilt in 1998. This improvement in the
golf equipment industry was somewhat short-lived, however, as the market for
golf equipment appeared to slow down during the second half of 2000, with retail
sales showing only modest increases to flat results on a full year over year
basis. We believe this slow down during the third and fourth quarters of 2000
reflected the general softening of the U.S. economy and moderating growth of the
overall golf industry.

     While the golf equipment industry has been impacted by this general
economic slow down, True Temper has continued to post substantial revenue gains
throughout all four quarters of 2000. While we were not completely immune to the
effects of the softening industry during the second half of 2000, we believe
that our continual stream of new product innovations contributed to both sales
and market share growth. Our revenue growth by quarter during 2000, as compared
to the same quarters in 1999, increased by 22.2%, 25.8%, 21.1% and 9.0%,
respectively.

     In addition, we continue to maintain a strong presence and successful
record on the four major U.S. professional golf tours: the PGA Tour, the Senior
PGA Tour, the LPGA Tour and the Buy.Com Tour. During 2000 players using True
Temper and/or Grafalloy shafts won over 70% of all tournament events on the PGA
Tour, Senior PGA Tour and the Buy.Com Tour; including the men's U.S. Open,
British Open and PGA Championship. We feel this performance, combined with our
continuing stream of new product offerings, will add to True Temper's position
as the number one golf shaft on tour.

     The year 2000 was very active for our operational facilities as well.
During the second half of 2000 we re-opened our Olive Branch, Mississippi plant
to assemble our combined material shafts such as the
                                        15
<PAGE>   18

GT iron for Adams Golf and the new BiMatrx driver and fairway wood shafts. We
also increased production at both our Mississippi steel shaft plant and our
California graphite shaft plant, while at the same time implementing various
productivity and cost reduction programs company wide. The combination of this
increased volume and our cost reduction efforts resulted in a substantial
increase in profitability as compared to our 1999 performance. As a result, our
profitability grew at a faster rate than our sales growth. Gross profit
increased 25.2% and Adjusted EBITDA (as defined elsewhere) increased 29.1%
versus a sales revenue increase of 20.0% during 2000.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                              -----------------------
                                                              2000     1999     1998
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
Net sales...................................................  100.0%   100.0%   100.0%
Cost of sales...............................................   59.1     60.8     64.8
  Gross profit..............................................   40.9     39.2     35.2
Selling, general and administrative expenses................   15.3     16.4     15.6
Amortization of goodwill....................................    2.4      2.9      2.7
Write-off of goodwill.......................................     --       --     43.7
Recapitalization transaction expenses.......................     --       --      6.2
Impairment charge on long-lived assets......................    1.0       --      0.8
Restructuring costs.........................................    0.0      0.7      0.4
  Operating income (loss)...................................   22.2     19.1    (34.3)
Interest expenses, net of interest income...................   12.4     15.6      3.8
Other expenses, net.........................................    0.1      0.0      0.1
  Earnings (loss) before income taxes.......................    9.8      3.6    (38.2)
Income taxes................................................    4.7      2.5      3.2
  Net income (loss).........................................    5.1%    1.1%    (41.3)%
EBITDA......................................................   27.9%   25.9%     15.8%
Adjusted EBITDA.............................................   29.3%   27.2%     23.6%
</TABLE>

YEAR ENDED DECEMBER 31, 2000 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

     NET SALES for 2000 increased $18.4 million, or 20.0%, to $110.6 million
from $92.2 million in 1999. Golf shaft sales increased $18.4 million, or 20.8%,
to $106.6 million in 2000 from $88.2 million in 1999. We believe this increase
was driven by several factors, including an increase in consumer demand
resulting from innovative new product introductions we made in late 1999 such as
TriGold and SensiCore Gold; an estimated increase in our steel market share; and
a resurgence during the first half of 2000 in the golf industry in general,
which had begun showing signs of recovery during the second half of 1999. In
particular, the industry showed considerable momentum towards iron products.
During this "year of the iron" several major OEM's and other True Temper
customers introduced new iron products. Since the majority of irons are sold
with steel shafts, we realized a substantial increase in sales of premium grade
steel shafts to these accounts. Finally, our sales of graphite shafts also
increased as we continued to post solid results with our branded products such
as EI-70 and ProLite, as well as the proprietary graphite products we produce
for certain OEM's.

     Performance tubing sales increased to $4.1 million in 2000 from $4.0
million in 1999. We attribute this modest increase, primarily, to the growth in
our recreational product categories which was partially offset by general
weakness in the industrial base of our tubing product lines. During 2000 we
repositioned our performance tubing segment and entered several new markets,
including hockey, which we believe can provide more aggressive growth rates in
future years.

     Net sales to international customers increased $6.0 million, or 42.2% to
$20.2 million in 2000 from $14.2 million in 1999. This increase was driven
primarily by sales growth in Asia and substantial gains in the UK/Europe, where
it appears that True Temper has gained market share. In addition to the
underlying gain in

                                        16
<PAGE>   19

market share, we believe that some of the growth in our international sales,
specifically in Asia, reflects the movement of golf equipment assembly
operations from the United States into far east regions such as China.

     GROSS PROFIT for 2000 increased approximately $9.1 million, or 25.2%, to
$45.3 million from $36.1 million in 1999. Gross profit as a percentage of net
sales increased to 40.9% in 2000 from 39.2% in 1999. This increase in gross
profit margin was driven by several factors, including cost reduction and
productivity improvement programs at both our steel and graphite manufacturing
plants and the added fixed cost leverage provided by the increase in unit sales
volume experienced during 2000. This improvement in gross profit margin was
partially offset by the negative impact of foreign currency rates in the United
Kingdom and Australia, as well as the unfavorable shift in the mix of products
we sell. During 2000 the sales of our lower margin commercial grade steel shafts
increased at a greater rate than our higher margin premium grade steel shafts.

     In addition, during the second quarter of 1999 we paid a ratification bonus
of $0.4 million to the union members at our steel golf shaft plant in
Mississippi, in conjunction with the signing of a four year collective
bargaining agreement that expires in July 2003. In the fourth quarter of 1999 we
recorded a non-cash pension curtailment gain of $0.3 million associated with the
closure of our composite manufacturing facility in Mississippi. Upon acceptance
by the Internal Revenue Service, we completed the termination of one of our
defined benefit plans in the fourth quarter of 2000. After we satisfied all
liabilities of the terminated plan and reverted the remaining assets back to the
Company, we recorded a net settlement/curtailment gain of $0.7 million in the
fourth quarter of 2000 associated with the plan termination of which $0.4
million was recorded against cost of sales.

     Excluding the 1999 impact of the ratification bonus and curtailment gain,
and the 2000 impact of the gain associated with the termination and reversion of
certain defined benefit plan assets, gross profit for 2000 would have increased
$8.6 million, or 23.7%, to $44.8 million from $36.2 million in 1999. Gross
profit as a percentage of net sales would have increased to 40.5% from 39.3%

     SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") expenses increased $1.7
million, to $16.9 million from $15.2 million in 1999, and as a result of the
continued leverage to our overall SG&A cost base SG&A as a percentage of net
sales declined to 15.3% in 2000 from 16.4% in 1999. A substantial portion of the
increased SG&A expense related to an increase in our provision for uncollectable
accounts receivable, that was driven by the bankruptcy filings in 2000 of two
on-line (dot.com) golf equipment distribution customers and one golf equipment
OEM. As a result of the substantial gains in both sales and profitability during
2000, the Company also recorded an increase in certain employee compensation
programs.

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

     OPERATING INCOME for 2000 increased $6.9 million, or 39.3%, to $24.6
million from $17.7 million in 1999. Operating income as a percentage of net
sales increased to 22.2% in 2000 from 19.1% in 1999. In addition to the impact
on operating income from the gross profit and SG&A items discussed above, the
1999 operating income was negatively impacted by restructuring costs of $0.6
million related to the consolidation of our composite manufacturing operations,
and the 2000 operating income was negatively impacted by the recognition of a
$1.1 million charge on impairment of long-lived assets, as more fully described
in the footnotes to the 2000 financial statements.

     Excluding the impact of the restructuring costs and impairment charge, as
well as the ratification bonus, the 1999 non-cash curtailment gain and the 2000
net curtailment/settlement gain related to the termination/ reversion of the
defined benefit plan, as described above, operating income would have increased
approximately $6.6 million, or 35.7%, to $24.9 million in 2000 from $18.4
million in 1999, and operating income as a percentage of net sales would have
increased to 22.5% from 19.9%.

     INTEREST EXPENSE for 2000 decreased to $13.7 million from $14.3 million in
1999. This decrease is the result of the continued reduction of our outstanding
bank debt offset in part by higher weighted average

                                        17
<PAGE>   20

interest rates on our variable rate debt during 2000, which was caused by a
general rise in interest rates in the U.S. economy.

     INCOME TAXES for 2000 increased to $5.2 million from $2.3 million in 1999.
The effective tax rate during these periods differs from a federal statutory
rate of 34% due primarily to the add back of the non-deductible portion of
goodwill amortization to pretax income to arrive at taxable income for the
Company and the incremental tax rate for state and foreign income tax purposes.

     NET INCOME for 2000 increased approximately $4.6 million, to $5.6 million
in 2000 from $1.0 million in 1999. This increase is reflective of the profit
impact from the items described above.

     Excluding the impact of the 1999 restructuring costs, ratification bonus
and curtailment gain, and the 2000 impairment loss and termination/reversion of
the defined benefit plan, as described above, operating income would have
increased approximately $4.4 million, to $5.8 million in 2000 from $1.5 million
in 1999.

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

     EBITDA and Adjusted EBITDA for the years ended December 31, 2000 and 1999
are calculated as follows:

<TABLE>
<CAPTION>
                                                               2000       1999
                                                              -------    -------
<S>                                                           <C>        <C>
Operating income............................................  $24,594    $17,652
Plus:
  Depreciation..............................................    3,535      3,504
  Amortization of goodwill..................................    2,701      2,701
                                                              -------    -------
EBITDA......................................................   30,830     23,857
Plus:
  Restructuring costs.......................................        7        622
  Management services fee...................................      500        500
  Ratification bonus........................................       --        400
  Impairment charge on long-lived assets....................    1,053         --
Less:
  Non-cash curtailment gain.................................       --       (292)
                                                              -------    -------
Adjusted EBITDA.............................................  $32,390    $25,087
                                                              =======    =======
</TABLE>

     The increase in Adjusted EBITDA of $7.3 million, or 29.1%, is reflective of
the profit impact of the operating income items described above, as well as the
impact of the items identified in the preceding table.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

     NET SALES for 1999 increased $0.8 million, or 0.8%, to $92.2 million from
$91.5 million in 1998. This increase was driven primarily by golf shaft sales,
as our performance tubing sales were consistent between 1999 and 1998. This
increase in golf shaft sales was driven by the incremental composite shaft
volume from the purchase of Grafalloy, offset somewhat by decreased unit sales
for commercial steel shaft products. We attribute this decline in commercial
steel shaft sales to the general softness in the entire golf equipment industry
experienced during most of 1999, as well as the effect of the gradual decrease
of inventory in the supply chain, which had built up during previous periods.

     Net sales to international customers decreased $0.5 million, or 3.6%, to
$14.2 million in 1999 from $14.8 million in 1998. This decrease was driven
primarily by lower sales in the United Kingdom, as they experienced the same
general softness in the golf industry during the first half of 1999 that was
apparent in the US, partially offset by increased sales in Japan and Asia, where
we continue to grow our business.

                                        18
<PAGE>   21

     While 1999 total sales increased only modestly over 1998, we are encouraged
by the quarterly trends experienced during 1999. Net sales for the first quarter
of 1999 decreased $1.8 million, or 7.2%, from the same period in 1998; while net
sales for the second quarter of 1999 decreased only $.5 million, or 1.8%, from
the same period in 1998; net sales for the third quarter of 1999 increased $1.5
million, or 7.8%, from the same period in 1998; and net sales for the fourth
quarter of 1999 increased $1.6 million, or 8.2%, from the same period in 1998.
No assurance can be given, however, that this trend will continue in 2000.

     GROSS PROFIT for 1999 increased $3.9 million, or 12.2%, to $36.1 million
from $32.2 million in 1998. Gross profit as a percentage of net sales increased
to 39.2% in 1999 from 35.2% in 1998. This improvement in gross profit as a
percentage of net sales was driven by several factors. Although total net sales
increased only 0.8% in 1999, the mix of product sold to achieve those sales
shifted between 1998 and 1999. In 1999 sales of commercial grade steel shafts,
which have a lower than average profit margin, decreased while sales of our
premium steel product remained relatively flat. This shift in mix resulted in a
higher average sales price per steel unit sold during 1999, and subsequently,
higher gross margins.

     In addition, gross profit improved with our ongoing cost reduction and
productivity improvement efforts and the savings from consolidating our graphite
shaft manufacturing operations into our El Cajon facility.

     In the fourth quarter of 1998 we recorded an expense of $0.2 million to
cost of sales, related to the consolidation of our graphite manufacturing
operations in El Cajon. In the second quarter of 1999 we paid a ratification
bonus of $0.4 million to the union members at our steel golf shaft plant in
Mississippi. This ratification bonus was paid in conjunction with a new
four-year collective bargaining agreement that expires in June 2003.
Additionally, in the fourth quarter of 1999 we recorded a non-cash pension
curtailment gain of $0.3 million associated with the closure of our Olive Branch
facility.

     Excluding the 1998 impact of the restructuring costs, and the 1999 impact
of the ratification bonus and curtailment gain, gross profit for 1999 would have
increased $3.8 million, or 11.9%, to $36.2 million from $32.4 million in 1998,
and gross profit as a percentage of net sales would have increased to 39.3% from
35.4%.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) increased approximately
$0.9 million, or 6.5%, to $15.2 million in 1999 from $14.2 million in 1998. SG&A
as a percentage of net sales increased to 16.4% in 1999 from 15.6% in 1998. The
increase in SG&A spending reflects the impact of adding the Grafalloy
operations, offset primarily by the cost savings from restructuring and
integration programs.

     OPERATING INCOME (LOSS) for 1999 increased by approximately $49.0 million,
to operating income of $17.7 million from an operating loss of $31.4 million in
1998. In addition to the impact on operating income from the gross profit and
SG&A items discussed above, our 1998 operating income was negatively impacted by
a $40.0 million write-off of True Temper's goodwill, and $5.7 million in
expenses associated with the leveraged recapitalization. The goodwill write-off
was recorded in January 1998 by Black & Decker (our former parent company),
while the recapitalization expenses were recorded during the fourth quarter of
1998. Also, the 1999 and 1998 operating income was negatively impacted by
restructuring costs of $0.6 million and $1.2 million, respectively, related to
the consolidation of our graphite manufacturing operations.

     Excluding the impact of the 1998 goodwill write-off and recapitalization
expenses, the 1999 ratification bonus and curtailment gain (discussed above),
and the restructuring costs in both years, operating income would have increased
$2.7 million, or 17.3%, to $18.4 million from $15.7 million in 1998, and
operating income as a percentage of net sales would have increased to 19.9% from
17.1%.

     INTEREST EXPENSES for 1999 increased to $14.3 million from $3.5 in 1998. As
explained further in the notes to the financial statements, none of Black &
Decker's consolidated indebtedness was directly attributable to the assets of
True Temper and, accordingly, no debt of Black & Decker or related interest
expense was allocated to True Temper. Subsequent to the recapitalization on
September 30, 1998, we began to record interest expense in the fourth quarter
related to our Senior Subordinated Notes and senior credit facilities. In 1999
we recorded a full year's worth of interest expense related to this debt.

                                        19
<PAGE>   22

     INCOME TAXES for 1999 decreased to $2.3 million from $2.9 million in 1998.
The effective tax rate during these periods differs from a federal statutory
rate of 34% due primarily to the add back of the non-deductible portion of
goodwill amortization to arrive at taxable income for the Company.

     NET INCOME (LOSS) for 1999 increased by $38.8 million to net income of $1.0
million from a net loss of $37.8 million in 1998. Excluding the impact of the
1998 goodwill write-off and recapitalization expenses, the 1999 ratification
bonus and curtailment gain, and the restructuring costs in both years, net
income would have decreased by $5.1 million to $1.5 million in 1999 from $6.6
million in 1998. This decrease is the result of increased SG&A spending and the
additional $10.9 million in interest expense in 1999, offset by the gross profit
improvements described above.

     EBITDA & ADJUSTED EBITDA are financial measurements used by some to gauge
our operating performance. EBITDA represents operating income plus depreciation,
amortization of goodwill and goodwill write-off. Adjusted EBITDA represents
EBITDA plus recapitalization costs, restructuring costs, management services
fee, and the ratification bonus; less the non-cash curtailment gain.

     EBITDA and Adjusted EBITDA for the years ended December 31, 1999 and 1998
are calculated as follows:

<TABLE>
<CAPTION>
                                                           1999        1998
                                                          -------    --------
<S>                                                       <C>        <C>
Operating income (loss).................................  $17,652    $(31,382)
Plus:
  Depreciation..........................................    3,504       3,326
  Amortization of goodwill..............................    2,701       2,505
  Goodwill write-off....................................       --      40,000
                                                          -------    --------
EBITDA..................................................   23,857      14,449
Plus:
  Recapitalization costs................................       --       5,698
  Restructuring costs...................................      622         400
  Impairment charge on long-lived assets and
     inventory..........................................       --         950
  Management services fee...............................      500         125
  Ratification bonus....................................      400          --
Less:
  Non-cash curtailment gain.............................      292          --
                                                          -------    --------
Adjusted EBITDA.........................................  $25,087    $ 21,622
                                                          =======    ========
</TABLE>

     The increase in adjusted EBITDA of $3.5 million, or 16.0% is reflective of
the profit impact of the operating income (loss) items described above as well
as the impact of the items identified in the table above.

OTHER ISSUES RELATED TO OPERATIONS

     CHANGE IN ACCOUNTING FOR GOODWILL.  True Temper was a wholly owned
subsidiary of the Black & Decker Corporation up until the effective date of the
recapitalization on September 30, 1998. The financial statements of True Temper
include goodwill that has been pushed-down from Black & Decker. As more fully
described in the notes to the financial statements, effective January 1, 1998,
Black & Decker elected to change its method of measuring goodwill impairment
from an undiscounted cash flow approach to a discounted cash flow approach. In
connection with Black & Decker's change in accounting policy, $40.0 million of
goodwill related to True Temper was written off through a charge to operations
during the first quarter of 1998 as a change in accounting estimate inseparable
from a change in principle. That write-down represented the amount necessary to
write-down the carrying value of goodwill for True Temper to Black & Decker's
best estimate, as of January 1, 1998, of True Temper's future discounted cash
flows.

     See Note 13 to the financial statements, "Changes In Accounting for
Goodwill", included elsewhere in this filing, for further discussion of the
write-down of goodwill.

                                        20
<PAGE>   23

     ALLOCATED CORPORATE EXPENSES.  Prior to the recapitalization, Black &
Decker provided us with certain corporate services including cash management,
tax reporting, risk management and internal audit. Allocated expenses for such
services, amounting to $0.8 million for 1998 have been included in our
statements of operating income under SG&A expenses. Charges for these corporate
services were based upon a general allocation methodology determined by Black &
Decker that was used to allocate all corporate overhead expenses to Black &
Decker's operating divisions and subsidiaries. These charges have not
necessarily been allocated on a basis which approximates our estimated usage of
such services as a stand-alone entity. We originally estimated that stand alone
costs to replace the services previously provided by Black & Decker's corporate
staff would be approximately $0.5 million annually. Our actual experience
through 2000 is substantially consistent with our original estimates.

     See Note 11 to the financial statements, "Related Party Transactions",
included elsewhere in this filing, for further discussion of the allocated
corporate expenses.

     RESTRUCTURING CHARGES AND ASSET IMPAIRMENT.  In the fourth quarter of 1998,
we purchased substantially all the assets of Grafalloy Corporation. Among other
reasons, we purchased Grafalloy to provide a complimentary line of premium
performance, ultra lightweight, graphite shafts to our existing graphite product
lines. In addition, the acquisition increased our market share of graphite
shafts and created more scale for our marketing and manufacturing operations. In
conjunction with the acquisition, we developed a restructuring and integration
plan, and publicly announced our plan to our employees and customers in December
1998. As of December 31, 2000, we have completed all phases of the
restructuring. All production of graphite shafts has been transitioned to our El
Cajon facility.

     We had developed an estimate for the combination of restructuring costs and
asset impairment, and in conjunction with our December 1998 announcement,
recorded total charges of $1.35 million to accrue for the allowable severance
and related expenses under EITF 94-3, and to record asset impairment associated
with this 1998 restructuring plan. We had estimated that approximately $0.4
million would be cash expenditures for employee severance and related matters
and $0.95 million in asset impairment charges. The impairment charge consisted
of a $0.2 million write-off of inventory reflected in cost of sales and $0.75
million write-down of long-lived assets.

     Direct charges to the accrual for severance and related matters, which
totaled $0.4 million, were recorded during 1999 and 1998.

     In addition, we incurred costs in 2000 and 1999 for some or all of the
following items related to the 1998 restructuring that were outside the scope of
EITF 94-3:

     (1) machinery, equipment and inventory relocation;

     (2) employee training;

     (3) process re-engineering;

     (4) travel and temporary living for the integration team; and

     (5) certain capital expenditures.

     We spent less than ten thousand dollars on these items in 2000. During 1999
we spent $1.1 million on these items, with $0.6 million recognized as period
costs as incurred during 1999, and $0.5 million capitalized as property, plant
and equipment.

     See Note 5 to the financial statements, "Restructuring and Asset
Impairment", included elsewhere in this filing, for further discussion of the
restructuring charges and reserve activity.

     OLIVE BRANCH FACILITY.  In 1998 we announced the Olive Branch restructuring
in which we planned to move the graphite shaft production operations to El
Cajon, close the facility, and sell the Olive Branch building. During the first
half of 1999 we completed the relocation of the graphite production operations
from Olive Branch to El Cajon and began to actively market the building for
sale. However in 2000 we completed the development of our new combined material
products, the GT iron shaft for Adams Golf and the BiMatrx

                                        21
<PAGE>   24

driver and fairway wood shaft. After considering our options for the manufacture
and assembly of this new and unique shaft design, we decided in 2000 to re-open
the Olive Branch plant to become the assembly site for these new products and
began to increase our production capabilities on a limited basis during the
second half of 2000.

LIQUIDITY & CAPITAL RESOURCES

GENERAL

     As part of the leveraged recapitalization and the acquisition of Grafalloy,
we established a senior credit facility, which includes a $20.0 million
non-amortizing revolving credit facility, none of which was drawn at the closing
of the recapitalization, a $10.0 million term A loan due 2004, and a $27.5
million term B loan due 2005. Amounts under the revolving credit facility are
available on a revolving basis during a period that commenced at the closing of
the leveraged recapitalization, September 30, 1998, and ending on the sixth
anniversary of the closing.

     In addition, as part of the leveraged recapitalization, we issued $100.0
million in 10 7/8% Senior Subordinated Notes Due 2008 (the "Notes"). The Notes
require cash interest payments each June 1 and December 1, beginning June 1,
1999. The Notes are redeemable by the Company, under certain circumstances and
at certain redemption prices, beginning December 1, 2001.

     Both the senior credit facility and the Notes contain covenants and events
of default, including substantial restrictions and provisions which, among other
things, limit our ability to incur additional indebtedness, make acquisitions
and capital expenditures, sell assets, create liens or other encumbrances, make
certain payments and dividends, or merge or consolidate. The senior credit
facility also requires us to maintain certain specified financial ratios and
tests including minimum EBITDA levels, minimum interest coverage and fixed
charge coverage ratios, and maximum leverage ratios. At December 31, 2000 we
were in compliance with all of the covenants in both the senior credit facility
and the Notes. Furthermore, the senior credit facility requires certain
mandatory prepayments including payments from the net proceeds of certain asset
sales and a portion of our excess cash flow.

  Year Ended December 31, 2000

     In calendar 2000, our cash provided by operating activities increased by
$13.0 million to $20.6 million from $7.6 million in 1999. This increase was
driven primarily by an increase in earnings from operations, but was also
enhanced by a decrease in cash required for working capital purposes.

     The $20.6 million of cash provided from operations during 2000 was
generated from $18.8 million in earnings from operations and by $1.8 million in
decreased working capital levels. In contrast, the $7.6 million of cash provided
from operations during 1999 was generated from $10.0 million in earnings from
operations offset by $2.4 million in additional working capital needs.

     We used $3.6 million of cash to invest in property, plant and equipment in
2000, compared to the $1.6 million we spent in 1999. Most of the increase in
capital spending between the two years is related to the purchase of machinery
and equipment from one of our former competitors in the steel golf shaft
industry who was placed into receivership in early 2000.

     We also repaid $18.0 million of the principal on our senior credit facility
during 2000, compared to the $0.9 million we repaid during 1999. This year's
payments included a $2.4 million mandatory prepayment of principal made on
January 31, 2000, as required by the terms of our senior credit facility. The
mandatory prepayment was based on the excess cash flow, as defined in the credit
agreement, generated during 1999. In addition to this mandatory prepayment of
$2.4 million from our 1999 excess cash flow, and the $1.4 million of mandatory
principal payments in 2000, we also made voluntary prepayments of $6.0 million
in the second quarter, $6.2 million in the third quarter and $2.0 million in the
fourth quarter of 2000.

     In November, 2000 we amended the terms of our senior credit facility to
provide additional flexibility to make larger investments in capital
expenditures, business acquisitions, etc. Among the changes contained

                                        22
<PAGE>   25

within the Amendment, the Company can increase the amount of cash dividends to
its parent company, True Temper Corporation within stipulated monetary limits.
The Company declared and paid cash dividends totaling $1.2 million in 2000 to
True Temper Corporation. True Temper Corporation used a majority of the proceeds
from these cash dividends to begin paying cash interest on it's $27.0 million
Senior Discount Notes, thereby reducing the effective interest rate on those
notes by 100 basis points.

     Currently, our intention is to use existing cash and cash provided from
future operations, if any, to:

     - Repay our senior credit facility or other long term debt (as allowed
       within the covenants of our senior credit facility and our notes),

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

     - To make additional investments in the business for growth or profit
       improvements.

     In addition to the debt service obligations for principal and interest
payments created by the Credit Facility and the Notes described above, our
liquidity needs largely relate to working capital requirements and capital
expenditures for machinery and equipment. We intend to fund our current and long
term working capital, capital expenditures and debt service requirements through
cash flow generated from operations. However, since there can be no assurance of
future performance, as of December 31, 2000 we have the full amount of the $20.0
million revolving credit facility available for future cash requirements.

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

SEASONALITY

     In general, the component supplier sales to golf equipment companies and
distributors are seasonal, and tend to precede the warm weather golf season.
However, there are exceptions, especially for those suppliers that sell to the
high volume opening price point golf club manufacturers who sell their product
through mass market retail channels and generate strong volumes during the
holiday gift-giving season. Although our business generally does experience
seasonal fluctuations, in general approximately 55% of our net sales are
generated in the first half of the year, and the remaining 45% of net sales are
generated in the second half.

INFLATION

     We do not believe that inflation has had a material impact on our
historical results of operations.

     During the last several months there have been significant increases to the
cost of electricity that we purchase and use for our graphite plant operations
in El Cajon, California. In addition there has been a dramatic increase in the
cost of natural gas that we use for our steel plant operations in Amory,
Mississippi. Although the changes in the cost for these energy sources have been
relatively minor in years past, if the current rates for both electricity and
natural gas continue for the remainder of 2001, we expect that our 2001 utility
expenses will increase at rates greater than the historical trends.

DEFERRED TAX ASSET

     In conjunction with the leveraged recapitalization and the issuance of the
Senior Subordinated Notes, we have recognized an increase in our deferred tax
assets, since the recapitalization was treated as a taxable business combination
for federal and state income tax purposes. This results in a step-up in our tax
basis. This step-up in tax basis will provide approximately $185.6 million in
future tax deductions and a reduction of approximately $52.9 million in future
tax payments over the 15 year period beginning with 1998, net of a valuation
reserve of approximately $17.6 million. We elected to make a Section 338(h)(10)
election under

                                        23
<PAGE>   26

the Internal Revenue Code resulting in an anticipated annualized cash tax
benefit of approximately $4.7 million, if fully utilized.

     See Notes 4 and 10 to the financial statements, "Recapitalization" and
"Income Taxes", included elsewhere in this filing, for a more complete
discussion of this deferred tax asset and the related valuation reserve.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 2000, FASB Statement 138, "Accounting for Derivative Instruments
and Hedging Activity -- Deferral of the Effective Date of FASB Statement 133",
was issued. This statement shall be effective for all fiscal quarters of all
fiscal years beginning after January 1, 2001. This statement requires
recognition of the fair value of all derivative instruments, including certain
derivative instruments embedded in other contracts, on the balance sheet and
establishes new accounting rules for hedging activities. The Company has only
limited involvement with derivative financial instruments, and does not use them
for trading purposes. This new accounting statement is not expected to have a
material impact on the Company's results of operations, cash flows or financial
position.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101). SAB 101 provides guidance on recognition, presentation and disclosure of
revenues in financial statements. SAB 101, as amended by the SEC, was adopted by
us in the 2000 fourth quarter. Our existing accounting policies conformed to the
requirements of SAB 101; therefore, adoption of this guidance did not impact our
results of operations, cash flows or financial position.

RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS

     The Private Securities Litigation Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by our Company. This document
includes forward-looking statements. All statements which address operating
performance, events or developments that we expect, plan, believe, hope, wish,
forecast, predict, intend, or anticipate will occur in the future are forward
looking statements within the meaning of the Act.

     The forward-looking statements are based on management's current views and
assumptions regarding future events and operating performance. However there are
many risk factors, including but not limited to, the general state of the
economy, the Company's ability to execute its plans, competitive factors, and
other risks that could cause the actual results to differ materially from the
estimates or predictions contained in our Company's forward-looking statements.
Additional information concerning the Company's risk factors is contained from
time to time in the Company's public filings with the SEC; and most recently in
the Business Risk section of Item 1 of Part 1 of this Annual Report on Form
10-K.

                                        24
<PAGE>   27

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

     The table below provides information about our debt obligations as of
December 31, 2000 that are sensitive to changes in interest rates. The table
presents cash flows and related weighted average interest rates by expected
maturity dates (dollars in millions).

<TABLE>
<CAPTION>
                                                    EXPECTED MATURITY DATE
                                        ----------------------------------------------
                                                                                THERE-               FAIR
                                        2001    2002    2003    2004    2005    AFTER     TOTAL     VALUE
                                        ----    ----    ----    ----    ----    ------    ------    ------
<S>                                     <C>     <C>     <C>     <C>     <C>     <C>       <C>       <C>
LONG-TERM DEBT
Fixed Rate 10.875% Senior Subordinated
  Notes...............................  $ --    $ --    $ --    $ --    $ --    $100.0    $100.0    $ 86.8(a)
  Average Interest Rate...............                                           10.88%    10.88%
Variable Rate Bank Credit Facility....  $1.9    $2.3    $0.6    $6.7    $6.9    $   --    $ 18.4    $ 18.4
  Average Interest Rate(b)............
</TABLE>

---------------
(a) As of March 7, 2001 the fair value of the 10.875% Senior Subordinated Notes
    was $99.8.

(b) Variable rate long-term debt is comprised of both term A and term B loans
    under the senior credit facility. The senior credit facility provides for
    interest at our option, at (1) the base rate of the bank acting as
    administrative agent plus a margin adder of 1.00% on term A and 1.25% on
    term B, or (2) under a LIBOR option with borrowing spreads of LIBOR plus
    0.00% to LIBOR plus 2.25% on term A, depending on our leverage ratio, and
    LIBOR plus 2.50% on term B.

EXCHANGE RATE SENSITIVITY

     We enter into forward-exchange contracts primarily to reduce the impact on
earnings and cash flow from non-functional currency-denominated third-party
receivables. Gains and losses resulting from hedging instruments offset the
losses and gains on the underlying receivable being hedged. Our forward-exchange
contracts generally have maturity dates of 90 to 120 days, and a high
correlation is maintained between the hedges and the underlying receivable. In
most cases, both the exposed transactions and the hedging contracts are marked
to market monthly with gains and losses included in earnings for the period.

     Assuming a hypothetical 10% adverse change in all foreign currencies, with
the resulting functional currency gains and losses translated into U.S. dollars
at the spot rate, the loss in fair value of exchange contracts held on December
31, 2000, would be $0.3 million. Those losses would be offset by gains on the
underlying receivables being hedged. See footnote to the financial statements
2(h) for discussion of hedging activity.

COMMODITY RISK

     We have some exposure to risks associated with fluctuations in prices for
commodities used to manufacture our products, primarily for nickel, which is
used in the plating of steel golf shafts. In addition we have some exposure to
the price of natural gas which is used as an energy source primarily in our
steel manufacturing operations. In order to mitigate these commodity risks we
do, from time to time, enter into forward purchase contracts with our major
providers of both nickel and natural gas.

                                        25
<PAGE>   28

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
True Temper Sports, Inc.

     We have audited the accompanying balance sheets of True Temper Sports, Inc.
as of December 31, 2000 and 1999 and the related statements of operations,
changes in stockholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 2000. In connection with our audit of the
financial statements, we also audited the accompanying financial statement
schedule. These financial statements and the financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits.

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

     In our opinion, the financial statements referred to above presents fairly,
in all material respects, the financial position of True Temper Sports, Inc. as
of December 31, 2000 and 1999 and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                          KPMG LLP

Memphis, Tennessee
February 16, 2001

                                        26
<PAGE>   29

                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                            STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                2000         1999        1998
                                                              ---------    --------    ---------
<S>                                                           <C>          <C>         <C>
NET SALES...................................................  $110,636     $92,215     $ 91,450
Cost of sales...............................................    65,382      56,084       59,252
                                                              --------     -------     --------
  GROSS PROFIT..............................................    45,254      36,131       32,198
Selling, general and administrative expenses................    16,899      15,156       14,227
Amortization of goodwill....................................     2,701       2,701        2,505
Write-off of goodwill.......................................        --          --       40,000
Recapitalization transaction expenses.......................        --          --        5,698
Impairment of long-lived assets.............................     1,053          --          750
Restructuring costs.........................................         7         622          400
                                                              --------     -------     --------
  OPERATING INCOME (LOSS)...................................    24,594      17,652      (31,382)
Interest expense, net of interest income....................    13,693      14,341        3,462
Other expenses, net.........................................        56          (9)          80
                                                              --------     -------     --------
  INCOME (LOSS) BEFORE INCOME TAXES.........................    10,845       3,320      (34,924)
Income taxes................................................     5,218       2,318        2,887
                                                              --------     -------     --------
  NET INCOME (LOSS).........................................  $  5,627     $ 1,002     $(37,811)
                                                              ========     =======     ========
</TABLE>

                See accompanying notes to financial statements.
                                        27
<PAGE>   30

                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                                 BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents.................................  $  4,168   $  6,427
  Receivables, net..........................................     9,948     13,086
  Inventories...............................................    14,408     11,371
  Deferred financing costs..................................       618        607
  Prepaid expenses and other assets.........................     1,744        706
                                                              --------   --------
          Total current assets..............................    30,886     32,197
Property, plant and equipment, net..........................    18,078     19,280
Goodwill, net...............................................    74,114     77,032
Deferred tax assets, net....................................    48,586     53,626
Deferred financing costs, net...............................     3,803      4,376
Other assets................................................       421        452
                                                              --------   --------
          Total assets......................................  $175,888   $186,963
                                                              ========   ========
                       LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
  Current portion of long-term debt.........................  $  1,900   $  3,800
  Current portion of capital lease liability................        19         89
  Accounts payable..........................................     7,492      5,280
  Accrued expenses and other liabilities....................     7,426      7,118
                                                              --------   --------
          Total current liabilities.........................    16,837     16,287
Long-term debt, net of current portion......................   116,505    132,605
Capital lease liability, net of current portion.............        24         28
Post-retirement medical obligation..........................     2,202      2,162
                                                              --------   --------
          Total liabilities.................................   135,568    151,082
STOCKHOLDER'S EQUITY
Common stock -- par value $0.01 per share; authorized 1,000
  shares; issued and outstanding 100 shares.................        --         --
Additional paid-in capital..................................    40,326     40,326
Accumulated deficit.........................................        (6)    (4,445)
                                                              --------   --------
          Total stockholder's equity........................    40,320     35,881
                                                              --------   --------
          Total liabilities and stockholder's equity........  $175,888   $186,963
                                                              ========   ========
</TABLE>

                See accompanying notes to financial statements.
                                        28
<PAGE>   31

                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

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

<TABLE>
<CAPTION>
                                                                                     NET INVESTED
                                        COMMON STOCK      ADDITIONAL                  CAPITAL OF
                                     ------------------    PAID-IN     ACCUMULATED   FORMER PARENT
                                     SHARES   PAR VALUE    CAPITAL       DEFICIT        COMPANY       TOTAL
                                     ------   ---------   ----------   -----------   -------------   --------
<S>                                  <C>      <C>         <C>          <C>           <C>             <C>
BALANCE AT DECEMBER 31, 1997.......    --        $--       $    --       $    --       $146,716      $146,716
  Issuance of common shares........   100        --             --            --             --            --
  Net loss for the period from
     January 1, 1998 to September
     29, 1998......................    --        --             --            --        (32,364)      (32,364)
  Net loss for the period from
     September 30, 1998 to December
     31, 1998......................    --        --             --        (5,447)            --        (5,447)
  Net financing activities with
     former parent company.........    --        --             --            --         (7,689)       (7,689)
  Effect of recapitalization.......    --        --             --            --        (66,337)      (66,337)
  Transfer to additional paid-in
     capital on September 30,
     1998..........................    --        --         40,326            --        (40,326)           --
                                      ---        --        -------       -------       --------      --------
BALANCE AT DECEMBER 31, 1998.......   100        --         40,326        (5,447)            --        34,879
  Net income.......................    --        --             --         1,002             --         1,002
                                      ---        --        -------       -------       --------      --------
BALANCE AT DECEMBER 31, 1999.......   100        --         40,326        (4,445)            --        35,881
  Net income.......................                                        5,627                        5,627
  Dividends paid to parent
     company.......................                                       (1,188)                      (1,188)
                                      ---        --        -------       -------       --------      --------
BALANCE AT DECEMBER 31, 2000.......   100        $--       $40,326       $    (6)      $     --      $ 40,320
                                      ===        ==        =======       =======       ========      ========
</TABLE>

                See accompanying notes to financial statements.
                                        29
<PAGE>   32

                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

                            STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000       1999        1998
                                                             --------    -------    ---------
<S>                                                          <C>         <C>        <C>
OPERATING ACTIVITIES
  Net income (loss)........................................  $  5,627    $ 1,002    $ (37,811)
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Depreciation and amortization.........................     6,236      6,205        5,831
     Amortization of deferred financing costs..............       628        592          109
     Provision for restructuring costs.....................        --         --          400
     Write-off of goodwill.................................        --         --       40,000
     Loss (gain) on disposal of property, plant and
       equipment...........................................        96         (9)          89
     Impairment charge on long-lived assets and
       inventory...........................................     1,053         --          950
     Deferred taxes........................................     5,040      2,196       (2,927)
     Other noncash activities..............................        75         --           --
     Changes in assets and liabilities, net of effects from
       business acquired in 1998:
       Receivables, net....................................     3,138       (495)      (3,747)
       Inventories.........................................    (3,037)      (385)       1,711
       Prepaid expenses and other assets...................    (1,084)       365         (700)
       Accounts payable....................................     2,212     (2,460)        (672)
       Accrued interest....................................      (174)      (360)       1,450
       Other liabilities...................................       797        968          (22)
                                                             --------    -------    ---------
       Net cash provided by operating activities...........    20,607      7,619        4,661
INVESTING ACTIVITIES
  Purchase of property, plant and equipment................    (3,621)    (1,620)      (2,366)
  Proceeds from the sales of property, plant and
     equipment.............................................        22         48           --
  Purchase of Grafalloy....................................        --         --       (6,165)
  Other investing activities...............................        56         --           --
                                                             --------    -------    ---------
       Net cash used in investing activities...............    (3,543)    (1,572)      (8,531)
FINANCING ACTIVITIES
  Proceeds from issuance of long term bank debt............        --         --       37,500
  Proceeds from issuance of senior subordinated notes......        --         --      100,000
  Principal payments on bank debt..........................   (18,000)      (900)        (194)
  Principal payments on capital leases.....................       (74)      (122)        (187)
  Payment of debt issuance costs...........................       (64)      (472)      (5,212)
  Dividends paid...........................................    (1,188)        --           --
  Other financing activity.................................         3       (391)        (185)
  Recapitalization.........................................        --         --     (119,197)
  Net proceeds to former parent company....................        --         --       (7,689)
                                                             --------    -------    ---------
       Net cash provided by (used in) financing
          activities.......................................   (19,323)    (1,885)       4,836
Net (decrease) increase in cash............................    (2,259)     4,162          966
Cash at beginning of year..................................     6,427      2,265        1,299
                                                             --------    -------    ---------
Cash at end of year........................................  $  4,168    $ 6,427    $   2,265
                                                             ========    =======    =========
</TABLE>

                See accompanying notes to financial statements.
                                        30
<PAGE>   33

                            TRUE TEMPER SPORTS, INC.
             (A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)

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

(1)      DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

          (a)     DESCRIPTION OF BUSINESS

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

          (b)     BASIS OF PRESENTATION

              On September 30, 1998 True Temper Corporation and the Company
              completed a recapitalization transaction accounted for as a
              leveraged recapitalization, as further discussed in note 3. Prior
              to that date the Company operated as a wholly-owned subsidiary of
              the Black & Decker Corporation (Black & Decker or B&D). For the
              periods through September 29, 1998 the accompanying financial
              statements were prepared from the historical accounting records of
              Black & Decker. These financial statements included all revenues
              of True Temper, all items of expense directly incurred by it and
              expenses charged or allocated to it by Black & Decker in the
              normal course of business.

              Under Black & Decker's centralized cash management system, True
              Temper's cash requirements were provided directly by Black &
              Decker; similarly, cash generated by True Temper was remitted
              directly to Black & Decker. All charges and allocations of cost
              for functions and services provided by Black & Decker were deemed
              paid by True Temper, in cash, in the period in which the cost is
              recorded in the financial statements. Intercompany balances with
              Black & Decker, net of cash, were included in owner's net invested
              capital. None of Black & Decker's indebtedness was directly
              attributable to the assets of True Temper. Accordingly, no debt of
              Black & Decker or related interest expense was allocated to True
              Temper.

              True Temper's results were included in Black & Decker's
              consolidated income tax returns in the various taxing
              jurisdictions in which it operates through September 29, 1998. The
              amount of income tax payable or receivable due to/from Black &
              Decker for the period January to September 1998 was included as a
              component of owner's net invested capital. The provision for
              income taxes, the related assets and liabilities, and the related
              footnote disclosures are presented as if True Temper had filed
              separate tax returns for these periods, and are in accordance with
              Statement of Financial Accounting Standards No. 109, "Accounting
              for Income Taxes".

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          (a)     REVENUE RECOGNITION

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

                                        31
<PAGE>   34

          (b)     USE OF ESTIMATES

              The preparation of financial statements requires management to
              make estimates and assumptions that affect the amounts reported in
              the financial statements and accompanying notes. Actual results
              inevitably will differ from those estimates, and such differences
              may be material to the financial statements. All of the accounting
              judgments and estimations used in preparation of the financial
              statements are based on assumptions that True Temper management
              believes are reasonable under the circumstances.

              All of the accounting judgments, estimations and allocations used
              in preparation of the Company's financial statements prior to the
              leveraged recapitalization on September 30, 1998, are based on
              assumptions that Black & Decker management believed were
              reasonable under the circumstances. However, these allocations and
              estimates are not necessarily indicative of the costs that would
              have resulted if True Temper had been operated as a separate
              entity.

          (c)     TRADE ACCOUNTS RECEIVABLE

              Trade receivables are net of allowance for doubtful accounts of
              $1,433 and $499 as of December 31, 2000 and 1999, respectively.

          (d)     INVENTORIES

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

          (e)     DEFERRED FINANCING COSTS

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

          (f)     PROPERTY, PLANT AND EQUIPMENT

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

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

          (g)     GOODWILL

              The Company assesses the recoverability of goodwill by determining
              whether the amortization of the goodwill balance over its
              remaining life can be recovered through discounted future cash
              flows of the businesses to which goodwill relates. As more fully
              described in Note 13, effective January 1, 1998, Black and Decker
              changed its method for measuring

                                        32
<PAGE>   35

              impairment of goodwill from an undiscounted cash flow approach to
              a discounted cash flow approach.

              ACQUISITION OF TRUE TEMPER SPORTS, INC. BY BLACK & DECKER:  The
              excess of the purchase price of True Temper by Black & Decker over
              the fair value of the net assets acquired was recorded as
              goodwill. Amortization of goodwill is recorded on the
              straight-line method over a period of 40 years. Accumulated
              amortization was approximately $40,500 and $38,000 at December 31,
              2000 and 1999, respectively. Accumulated amortization at December
              31, 2000 does not include a write-off of $40,000, as described in
              the following paragraph and in note 13.

              ACQUISITION OF GRAFALLOY CORPORATION BY TRUE TEMPER SPORTS,
              INC.:  The excess of the purchase price of Grafalloy over the fair
              value of the net assets acquired was recorded as goodwill.
              Amortization of goodwill is recorded on the straight-line method
              over a period of 20 years. Goodwill related to the Grafalloy
              acquisition was $4,114 and $4,568, net of accumulated amortization
              of $513 and $277, at December 31, 2000 and 1999, respectively.

          (h)     FOREIGN CURRENCIES

              Transaction gains and losses that arise from exchange rate changes
              on transactions denominated in a currency other than the U.S.
              Dollar are included currently in the results of operations as a
              component of cost of sales. The loss on foreign currency in the
              years ended December 31, 2000, 1999 and 1998 was $496, $326 and
              $111, respectively. True Temper hedges its foreign currency
              transaction exposure through the use of forward exchange
              contracts. Gains and losses on foreign currency transaction hedges
              are recognized in income and offset the foreign exchange gains and
              losses on the underlying transaction.

              The following table summarizes the contractual notional amounts of
              True Temper's forward exchange contracts as of December 31, 2000
              and 1999:

<TABLE>
<CAPTION>
                                                                              2000      1999
                                                                             ------    ------
               <S>                                                           <C>       <C>
               Pound Sterling..............................................  $1,533    $1,396
               Yen.........................................................     947     1,014
               Australian dollar...........................................     943     1,557
                                                                             ------    ------
                         Total.............................................  $3,423    $3,967
                                                                             ======    ======
</TABLE>

          (i)     IMPAIRMENT OF LONG-LIVED ASSETS

              The Company accounts for long-lived assets in accordance with the
              provisions of SFAS No. 121, "Accounting for the Impairment of
              Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
              This Statement requires that long-lived assets and certain
              identifiable intangibles be reviewed for impairment whenever
              events or changes in circumstances indicate that the carrying
              amount of an asset may not be recoverable. Recoverability of
              assets to be held and used is measured by a comparison of the
              carrying amount of an asset to future net cash flows expected to
              be generated by the asset. If such assets are considered to be
              impaired, the impairment to be recognized is measured by the
              amount by which the carrying amount of the assets exceeds the fair
              value of the assets. Assets to be disposed of are reported at the
              lower of the carrying amount or fair value less costs to sell.

          (j)     ADVERTISING AND PROMOTIONAL COSTS

              Advertising and promotional costs are accounted for in accordance
              with Statement of Position 93-7 "Reporting on Advertising Costs",
              which requires that the cost of producing advertisements be
              expensed at the time of the first showing of the advertisement or
              as

                                        33
<PAGE>   36

              incurred. True Temper's policy is to expense costs associated with
              the production of advertising at the time of first showing of the
              advertisement. Advertising and promotional costs primarily consist
              of trade show costs, media spots including print, radio and
              television, advertising production and agency fees, sponsorships,
              and product and promotional samples. Advertising and promotional
              expense for 2000, 1999 and 1998 were $4,633, $4,568 and $4,186,
              respectively.

          (k)     RESEARCH AND DEVELOPMENT COSTS

              Costs associated with the development of new products and changes
              to existing products are expensed as incurred and are included in
              selling, general, and administrative expenses. Research and
              development costs for the 2000, 1999 and 1998 were $1,614, $1,757
              and $2,155, respectively.

          (l)     POST-RETIREMENT BENEFITS

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

              In 2000 the Company completed the termination of the True Temper
              Sports Inc. salaried pension plan (see Note 12 for further
              discussion.) It was replaced by a non-contributory defined
              contribution plan. Company contributions to this plan are based on
              the employee's age and are calculated as a percentage of
              compensation. This plan is funded on a current basis. In addition
              to the non-contributory defined contribution plan, certain
              post-retirement medical, dental and life insurance benefits are
              provided to those salaried employees who were employed by the
              Company prior to the termination of the salaried pension plan.

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

          (m)     INCOME TAXES

              PRIOR TO SEPTEMBER 30, 1998 -- Prior to the recapitalization on
              September 30, 1998, True Temper was included in the consolidated
              tax return of Black & Decker. Income tax expense was provided as
              if True Temper had filed a separate tax return. Deferred income
              taxes reflect the net tax effects of temporary differences between
              the carrying amounts of assets and liabilities for financial
              reporting purposes. Income taxes payable/receivable and deferred
              tax assets and liabilities were included as a component of net
              invested capital.

              SUBSEQUENT TO SEPTEMBER 30, 1998 -- Beginning on September 30,
              1998, income tax expense is recorded including deferred income
              taxes provided for the differences in the financial statement and
              tax bases of assets and liabilities. The tax effect of the
              temporary differences created as a result of the leveraged
              recapitalization, which resulted in a "step-up" in tax bases (see
              Notes 3 and 10) has been reflected in stockholder's equity at
              December 31, 1998.

          (n)     FAIR VALUE OF FINANCIAL INSTRUMENTS

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

                                        34
<PAGE>   37

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

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

              Long-Term Debt -- The carrying values of the Company's variable
              rate debt approximates fair value. The estimated fair value of the
              Company's fixed rate debt is based upon interest rates available
              for the issuance of debt with similar terms and remaining
              maturities. As of December 31, 2000, the Company's Senior
              Subordinated Notes have an estimated fair value of $86.8 million.

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

              The fair value estimates presented herein are based on information
              available to management as of December 31, 2000. Although
              management is not aware of any factors that would significantly
              affect the estimated fair value amounts, such amounts have not
              been comprehensively revalued for purposes of these financial
              statements since that date and current estimates of fair value may
              differ significantly from the amounts presented herein.

          (o)     RECENT ACCOUNTING PRONOUNCEMENTS

              In June 2000, FASB Statement 138, "Accounting for Derivative
              Instruments and Hedging Activity -- Deferral of the Effective Date
              of FASB Statement 133", was issued. This statement shall be
              effective for all fiscal quarters of all fiscal years beginning
              after January 1, 2001. This statement requires recognition of the
              fair value of all derivative instruments, including certain
              derivative instruments embedded in other contracts, on the balance
              sheet and establishes new accounting rules for hedging activities.
              The Company has only limited involvement with derivative financial
              instruments, and does not use them for trading purposes. This new
              accounting statement is not expected to have a material impact on
              the Company's results of operations, cash flows or financial
              position.

              In December 1999, the Securities and Exchange Commission (SEC)
              issued Staff Accounting Bulletin No. 101, "Revenue Recognition in
              Financial Statements" (SAB 101). SAB 101 provides guidance on
              recognition, presentation and disclosure of revenues in financial
              statements. SAB 101, as amended by the SEC, was adopted by us in
              the 2000 fourth quarter. Our existing accounting policies
              conformed to the requirements of SAB 101; therefore, adoption of
              this guidance did not impact our results of operations, cash flows
              or financial position.

          (p)     SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

              Cash payments for income taxes and interest for the years ended
              December 31, 2000, 1999 and 1998, are as follows:

<TABLE>
<CAPTION>
                                                                  2000       1999       1998
                                                                 -------    -------    ------
               <S>                                               <C>        <C>        <C>
               Income taxes....................................  $   124         --    $5,814
               Interest........................................  $14,464    $14,334    $1,965
</TABLE>

          (q)     RECLASSIFICATIONS

              Certain prior year amounts have been reclassified to conform with
              the 2000 Financial Statements included in this Form 10-K. The
              reclassifications had no effect on net income.

                                        35
<PAGE>   38

(3)      RECAPITALIZATION

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

<TABLE>
        <S>                                                           <C>
        Cash paid to Black & Decker at the recapitalization
          closing...................................................  $177,700
        Cash paid to Black & Decker pursuant to contractual working
          capital adjustment........................................       561
                                                                      --------
                  Subtotal -- cash portion of recapitalization......   178,261
        Black & Decker note.........................................    25,000
        Black & Decker equity investment retained...................     1,036
        Black & Decker investment in redeemable preferred stock.....     2,700
                                                                      --------
                  Total.............................................  $206,997
                                                                      ========
</TABLE>

        The sources and uses of funds for the Recapitalization are summarized as
        follows:

<TABLE>
<CAPTION>
                                                                TRUE
                                                               TEMPER       TTC      COMBINED
                                                              --------    -------    --------
        <S>                                                   <C>         <C>        <C>
        Sources of funds:
          Term loan under senior credit facility............  $ 30,000(1) $    --    $ 30,000
          Senior subordinated notes.........................   100,000         --     100,000
          Black & Decker note...............................        --     25,000      25,000
          True Temper Sports LLC equity investment in common
             stock..........................................        --     16,408      16,408
          True Temper Sports LLC investment in redeemable
             preferred stock................................        --     42,300      42,300
          B&D retained equity investment in common stock....        --      1,036       1,036
          B&D investment in redeemable preferred stock......        --      2,700       2,700
          Company management investment in common stock.....        --        356         356
                                                              --------    -------    --------
                  Total sources of funds....................  $130,000    $87,800    $217,800
                                                              ========    =======    ========
        Uses of funds:
          Recapitalization..................................  $119,197    $87,800    $206,997
          Transaction costs.................................    10,803         --      10,803
                                                              --------    -------    --------
                  Total uses of funds.......................  $130,000    $87,800    $217,800
                                                              ========    =======    ========
</TABLE>

---------------
        (1)     Excludes $7.5 million of incremental borrowing that was added to
                the Senior Credit Facility to finance the Grafalloy acquisition.

                Transaction costs include (i) expenses associated with the
                Recapitalization, (ii) financing costs associated with the
                issuance of the Senior Subordinated Notes and the Bank Credit
                Facility (as more fully described in note (9), and (iii) $3,500
                paid to Cornerstone Equity Investors, LLC for transaction and
                advisory fees.

                                        36
<PAGE>   39

                The initial impact on equity, for both True Temper and its
                parent company, TTC, is as follows:

<TABLE>
<CAPTION>
                                                         TRUE TEMPER       TTC       CONSOLIDATED
                                                         -----------    ---------    ------------
               <S>                                       <C>            <C>          <C>
               Cash dividend to TTC from True Temper...   $(125,916)    $ 125,916     $      --
               Cash paid to Black & Decker pursuant to
                 contractual working capital
                 adjustment............................        (561)           --          (561)
               Establish deferred tax asset, net of
                 valuation allowance...................      52,895            --        52,895
               True Temper liabilities retained by
                 Black & Decker........................       2,200            --         2,200
               Establishment of certain liabilities....      (2,050)           --        (2,050)
               TTC investment in True Temper...........       7,095        (7,095)           --
               Purchase price (excluding working
                 capital adjustment)...................          --      (206,436)     (206,436)
                                                          ---------     ---------     ---------
                         Total impact on equity........   $ (66,337)    $ (87,615)    $(153,952)
                                                          =========     =========     =========
</TABLE>

(4)      ACQUISITION OF GRAFALLOY CORPORATION

         On October 26, 1998, True Temper acquired substantially all of the
         assets, and assumed certain liabilities, of Grafalloy Corporation
         (Grafalloy), a wholly-owned subsidiary of The American Materials &
         Technologies Corporation. In conjunction with this acquisition the
         Company recorded a liability of $500 primarily to cover severance costs
         for certain Grafalloy employees. As of December 31, 2000, 1999 and
         1998, cumulative charges to this accrual totaled $339, $289 and $40,
         respectively. The $161 unused portion of the $500 liability along with
         the purchase price adjustment of $57 were recorded as a reduction to
         goodwill during 2000.

(5)      RESTRUCTURING AND ASSET IMPAIRMENT

        As described in note 4 above, the Company acquired substantially all of
        the assets of Grafalloy on October 26, 1998. In December 1998, the
        Company announced a restructuring program, the principal component of
        which was the consolidation of the Company's Olive Branch, Mississippi
        composite manufacturing operations into the El Cajon, California
        facility. In the second quarter of 1999 the Company completed its
        shutdown of the Olive Branch composite manufacturing operation and its
        expansion of the El Cajon facility. The remainder of the restructuring
        program, which was undertaken to reduce overhead and better leverage the
        investment the Company has in the composite business, was substantially
        completed during the third quarter of 1999.

        In the fourth quarter of 1998, as part of the restructuring program
        described above, the Company recorded restructuring and asset impairment
        charges primarily to cover costs associated with the shutdown of the
        Olive Branch, Mississippi composite manufacturing operation. These
        restructuring costs included an accrual for severance and related costs,
        in accordance with EITF 94-3, of $400, and asset impairment charges of
        $950 associated with this restructuring program. Direct charges to the
        accrual for severance and related payments, which totaled $400, were
        recorded during 1999 and 1998.

                                        37
<PAGE>   40

        The following tables set forth the components of the original
        restructuring accrual and asset write-downs recognized in 1998:

<TABLE>
        <S>                                                           <C>
        Employee severance..........................................  $310
        Other.......................................................    90
                                                                      ----
                  Total restructuring accrual.......................  $400
                                                                      ====
        Write-down Olive Branch Building to fair value, less costs
          to sell...................................................  $600
        Write-down duplicate machinery and equipment to fair value,
          less costs to sell........................................   150
        Write-off of inventory as a result of the restructuring
          program...................................................   200
                                                                      ----
                  Total asset write-downs...........................  $950
                                                                      ====
</TABLE>

        The total charge of $1,350 representing restructuring costs and asset
        impairments was reflected in the 1998 statement of operations as
        follows: (i) $200 for inventory write-off was recorded in cost of sales,
        (ii) $400 of restructuring costs were listed as a separate line item in
        the operating expense section and (iii) $750 for the building and
        equipment write-down was included in impairment of long-lived assets.

        In addition, the Company recorded restructuring expenses as incurred of
        $7 and $622 during 2000 and 1999, respectively, related to compensation,
        moving and other integration costs incurred as a result of the
        transition of manufacturing operations from the Olive Branch facility to
        the El Cajon facility.

        In the fourth quarter of 2000 the Company recognized a non-cash pretax
        charge of $1,053 associated with the impairment of a roller hearth oven
        located in its Amory, Mississippi steel manufacturing plant. The
        impairment loss was recognized when it became clear that the roller
        hearth oven, which had been idle and awaiting installation, was not the
        most cost effective nor an operationally sound alternative to the
        Company's production needs; and as a result the undiscounted future net
        cash flows expected to be generated by this asset were less than its
        carrying value. The Company calculated the impairment loss by comparing
        the carrying value of the asset to its estimated fair market value,
        which was determined based on the Company's internal expertise and
        discussions with the original manufacturer of the oven. While the
        Company feels the most likely disposition of this oven will be a sale to
        a third party, as of December 31, 2000 a formal plan of sale had not
        been sufficiently detailed to warrant classification as "held for sale".
        Accordingly, the Company will continue to depreciate the revised
        carrying value.

(6)      INVENTORIES

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

<TABLE>
<CAPTION>
                                                                       2000       1999
                                                                      -------    -------
        <S>                                                           <C>        <C>
        Raw materials...............................................  $ 1,303    $ 1,345
        Work in process.............................................    2,643      2,042
        Finished goods..............................................   10,462      7,984
                                                                      -------    -------
                  Total.............................................  $14,408    $11,371
                                                                      =======    =======
</TABLE>

                                        38
<PAGE>   41

(7)      PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                            2000       1999
                                           -------    -------
<S>                                        <C>        <C>
Land improvements........................  $   332    $   332
Buildings................................    6,903      6,778
Furniture and office equipment...........      803        747
Machinery and equipment..................   39,773     39,584
Computer equipment and capitalized
  software...............................    2,236      2,184
Leasehold improvements...................    2,073      2,746
Assets held for use -- not currently used
  in production..........................    1,884         --
Construction in progress.................    1,014        449
                                           -------    -------
                                            55,018     52,820
Less accumulated depreciation............   36,940     33,540
                                           -------    -------
Net property, plant and equipment........  $18,078    $19,280
                                           =======    =======
</TABLE>

        Depreciation expense for the years ended December 31, 2000, 1999 and
        1998, was $3,535, $3,504, and $3,326, respectively. Total cost of
        property obtained under capital leases was $996 at both December 31,
        2000 and 1999, respectively. Accumulated depreciation on assets obtained
        under capital leases was $960 and $929 at December 31, 2000 and 1999,
        respectively. Amortization of assets acquired under capital leases is
        included in depreciation expense in all years presented.

(8)      OTHER CURRENT LIABILITIES

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

<TABLE>
<CAPTION>
                                            2000        1999
                                           ------      ------
<S>                                        <C>         <C>
Accrued compensation, benefits and
  related payroll taxes..................  $3,835      $3,293
Accrued interest.........................     916       1,090
Other....................................   2,675       2,735
                                           ------      ------
          Total..........................  $7,426      $7,118
                                           ======      ======
</TABLE>

(9)      BORROWINGS

          (a)     LONG-TERM DEBT

              Long-term debt at December 31, 2000 and 1999 consisted of the
              following:

<TABLE>
<CAPTION>
                                                                           2000        1999
                                                                         --------    --------
               <S>                                                       <C>         <C>
               10.875% Senior Subordinated Notes due 2008..............  $100,000    $100,000
               Bank Credit Facility with an average interest rate of
                 9.03% at December 31, 2000............................    18,405      36,405
                                                                         --------    --------
               Total debt..............................................   118,405     136,405
               Less current maturities.................................     1,900       3,800
                                                                         --------    --------
               Long-term debt..........................................  $116,505    $132,605
                                                                         ========    ========
</TABLE>

              The 10.875% Senior Subordinated Notes due 2008 (the Notes) were
              issued in connection with the Recapitalization. The Notes provide
              for semi-annual interest payments, in arrears, commencing on June
              1, 1999. At the option of the Company, up to 35% of the Notes are

                                        39
<PAGE>   42

              redeemable prior to December 1, 2001, at 110.875%, with the net
              cash proceeds of one or more public equity offerings. From
              December 1, 2001 to November 30, 2003 the Notes may be redeemed,
              at the option of the Company, in whole or in part, at a premium,
              upon the occurrence of a change of control. Subsequent to November
              30, 2003 the Notes may be redeemed, at the option of the Company,
              in whole or in part, at a redemption price of 105.438% beginning
              December 1, 2003 and declining ratably thereafter to 100.0% on
              December 1, 2006.

              The loans outstanding under the Bank Credit Facility (the Credit
              Agreement) are comprised of $4,025 of Term A and $14,381 of Term
              B. The Credit Agreement provides for interest, at the Company's
              option, at (i) the base rate of the bank acting as administrative
              agent plus a margin adder of 1.00% on Term A and 1.25% on Term B,
              or (ii) under a LIBOR option with borrowing spreads of LIBOR plus
              0.00% to LIBOR plus 2.25% on Term A, depending on the Company's
              leverage ratio (as defined in the Credit Agreement), and LIBOR
              plus 2.50% for Term B.

              Scheduled minimum principal payments, amounts of which vary over
              the term of the Credit Agreement, are due quarterly beginning
              December 31, 1998 and ending September 30, 2005. The Credit
              Agreement also requires annual mandatory prepayments of principal,
              in an amount equal to 50% of Excess Cash Flow, as defined in the
              Credit Agreement. Interest is payable, at a minimum, on a
              quarterly basis, based on terms set forth in the Credit Agreement.

              At December 31, 1999 the current maturities of $3,800 included
              $2,400 of mandatory principal prepayments as stipulated under the
              Excess Cash Flow provision. No such annual mandatory prepayment of
              principle was required at December 31, 2000.

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

              The Credit Agreement and the Notes contain provisions which, among
              other things, limit the Company's ability to (i) incur additional
              indebtedness, (ii) make acquisitions and capital expenditures,
              (iii) sell assets, (iv) create liens or other encumbrances, (v)
              make certain payments and dividends, or (vi) merge or consolidate.
              The Bank Credit Facility also requires the Company to maintain
              certain specified financial ratios and tests including, (i)
              minimum EBITDA levels, (ii) minimum interest coverage and fixed
              charge coverage ratios, and (iii) maximum leverage ratios. At
              December 31, 2000 the Company was in compliance with all of the
              covenants in both the Credit Agreement and the Notes.

              At December 31, 2000, future minimum principal payments on
              long-term debt were as follows:

<TABLE>
               <S>                                                           <C>
               2001........................................................  $  1,900
               2002........................................................     2,275
               2003........................................................       675
               2004........................................................     6,669
               2005........................................................     6,886
               Thereafter..................................................   100,000
                                                                             --------
                         Total.............................................  $118,405
                                                                             ========
</TABLE>

          (b)     LINE OF CREDIT

              The Company may borrow, through September 30, 2004, up to $20,000
              under a revolving credit agreement included in the Bank Credit
              Facility. Borrowings under the agreement are subject to the same
              provisions described in the long-term debt section of this
              footnote.

                                        40
<PAGE>   43

              Interest rates are floating, but in no event will be greater than
              prime plus 1.25% or LIBOR plus 2.50%. The Company has no
              outstanding borrowings under this line of credit at December 31,
              2000.

(10)     INCOME TAXES

        The current and deferred provision for income taxes, for the years ended
        December 31, 2000, 1999 and 1998, is as follows:

<TABLE>
<CAPTION>
                                                                   2000      1999      1998
                                                                  ------    ------    -------
        <S>                                                       <C>       <C>       <C>
        Current:
          Federal...............................................  $   48    $   --    $ 4,896
          State.................................................      --        --        918
          Foreign...............................................     129       122         --
                                                                  ------    ------    -------
                  Total current.................................     177       122      5,814
        Deferred:
          Federal...............................................   4,238     1,849     (2,464)
          State.................................................     802       347       (463)
                                                                  ------    ------    -------
                  Total deferred................................   5,040     2,196     (2,927)
                                                                  ------    ------    -------
                  Total.........................................  $5,218    $2,318    $ 2,887
                                                                  ======    ======    =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 2000       1999         1998
                                                                ------    ---------    --------
        <S>                                                     <C>       <C>          <C>
        Computed "expected" tax expense.......................  $3,687     $1,129      $(11,874)
        State tax, net of federal benefit.....................     529        229           300
        Write-off of goodwill.................................      --         --        13,600
        Amortization of goodwill..............................     838        838           838
        Foreign taxes.........................................     129        122            --
        Other.................................................      35         --            23
                                                                ------     ------      --------
        Actual income tax expense.............................  $5,218     $2,318      $  2,887
                                                                ======     ======      ========
</TABLE>

        For federal and state income tax purposes, the Recapitalization is a
        taxable business combination and is a qualified stock purchase. The
        buyer and the seller have elected jointly to treat the Recapitalization
        as an asset acquisition under section 338(h)(10) of the Internal Revenue
        Code of 1986, as amended. An allocation of the purchase price to the tax
        basis of assets and liabilities based on their respective estimated fair
        values at September 30, 1998 was made for income tax purposes. In
        connection with the Recapitalization, the Company recorded a deferred
        tax asset of approximately $52,895, net of a valuation allowance of
        $17,632, at September 30, 1998 related to future tax deductions of the
        net excess of the tax bases of the assets and liabilities over the
        financial statement carrying amounts with a corresponding credit to
        additional paid-in capital.

        Historically the Company has generated operating income and realization
        of the deferred tax assets are dependant upon the Company's ability to
        generate sufficient future taxable income, which management believes is
        more likely than not. The Company anticipates future taxable income
        sufficient to realize the recorded deferred tax asset, net of the
        existing valuation allowance at December 31, 2000. Future taxable income
        is based on management's forecast of the operating results of the
        Company, and there can be no assurance that such results will be
        achieved.

        Management continually reviews such forecasts in comparison with actual
        results and expected trends. In the event management determines that
        sufficient future taxable income may not be

                                        41
<PAGE>   44

        generated to fully realize the deferred tax asset, the Company will
        increase the valuation allowance by a charge to income tax expense in
        the period of such determination.

        The components of deferred tax assets and liabilities at December 31,
        2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                           2000        1999
                                                         --------    --------
<S>                                                      <C>         <C>
Deferred tax assets:
  Acquisition costs....................................  $    874    $  1,192
  Goodwill.............................................    59,855      64,582
  Accrued liabilities..................................     1,186         592
  Asset impairment.....................................       704         259
  Net operating loss carryforwards.....................     3,863       4,712
                                                         --------    --------
     Gross deferred tax assets.........................    66,482      71,337
  Less valuation allowance.............................   (17,644)    (17,632)
                                                         --------    --------
     Deferred tax assets, net of valuation allowance...    48,838      53,705
                                                         --------    --------
Deferred tax liabilities:
  Property, plant and equipment........................      (224)        (55)
  Other................................................       (28)        (24)
                                                         --------    --------
     Gross deferred liabilities........................      (252)        (79)
     Net deferred tax asset............................  $ 48,586    $ 53,626
                                                         ========    ========
</TABLE>

        At December 31, 2000, the Company had net operating loss carryforwards
        for federal and state income tax purposes of approximately $10,050 which
        expire between 2018 and 2020 and $50 alternative minimum tax credit
        carry forward which is carried forward indefinitely.

(11)     RELATED PARTY TRANSACTIONS

        Following is a summarization of certain related party transactions:

        Prior to September 30, 1998, Black & Decker and its affiliates charged
        True Temper for corporate expense allocations, "corporate pass-through
        charges" and other shared services. The costs charged to True Temper for
        such services are included in the accompanying financial statements, and
        are based upon various allocation methodologies determined by Black &
        Decker and, accordingly, may not represent the actual cost of providing
        such services. Furthermore, the amounts charged for these services may
        not necessarily be representative of the costs that would be incurred by
        True Temper on a stand-alone basis.

        Corporate Expense Allocation -- Prior to September 30, 1998, True Temper
        received certain services provided by Black & Decker that include cash
        management, tax reporting, risk management and internal audit. Allocated
        expenses for such services, amounting to $763 for the year ended
        December 31, 1998, have been included in the accompanying statements of
        operations. Charges for these corporate services were based upon a
        general allocation methodology determined by Black & Decker (used to
        allocate all corporate overhead expenses to Black & Decker's operating
        divisions and subsidiaries), and have not necessarily been allocated on
        a basis which approximates True Temper's estimated usage of such
        services. Management believes the estimated stand-alone expenses for
        such services would have been, for the nine month period ended September
        29, 1998, $375.

        Corporate Pass-Through Charges -- Black & Decker provided certain common
        services for True Temper and other Black & Decker affiliates, including
        group self-insurance programs and blanket insurance coverage. Many of
        these services represent services provided by third parties whereby
        Black & Decker incurred the cost of the service on behalf of True
        Temper. Black & Decker charged True Temper for the estimated cost of
        these services. The costs for these services and/or expenses

                                        42
<PAGE>   45

        have been allocated to True Temper by Black & Decker based upon certain
        allocation methodologies determined by Black & Decker. Management
        believes the estimated stand-alone expenses for such services would have
        been, for the nine month period ended September 29, 1998, $4,889.

        Reflected in the statements of operations are the following pass-through
        costs:

<TABLE>
<CAPTION>
                                                                       1998
                                                                      ------
        <S>                                                           <C>
        Product liability and general insurance.....................  $  555
        Human resources.............................................   2,872
        Other.......................................................   1,903
                                                                      ------
                  Total.............................................  $5,330
                                                                      ======
</TABLE>

        Shared Direct Services with Black & Decker Affiliates -- Prior to
        September 30, 1998, True Temper utilized certain direct services
        provided by other Black & Decker affiliates mainly in conjunction with
        the Company's non-domestic sales. The direct services primarily include
        payroll and benefit processing, accounts receivable support, and
        inventory warehousing. Total charges for these services, for the nine
        month period ended September 29, 1998 were $47.

        Net Investment -- The net invested capital account includes transactions
        of an intercompany nature, related to deferred income taxes,
        post-retirement benefits, other intercompany transactions and the
        residual net investment balance in True Temper. The following table sets
        forth the components of the net investment reflected in the Statement of
        Changes In Stockholder's Equity as of December 31, 1998:

<TABLE>
        <S>                                                           <C>
        Deferred income taxes.......................................   $   (236)
        Post-retirement benefits....................................      7,456
        Residual investment.........................................    139,496
                                                                       --------
                  Total.............................................   $146,716
                                                                       ========
</TABLE>

        All transactions between Black & Decker and True Temper have been
        accounted for as settled in cash at the time the transactions were
        recorded by True Temper for the purposes of the statement of cash flows.

(12)     EMPLOYEE BENEFIT PLANS

        True Temper Sports, Inc. has a qualified pension plan and a
        postretirement benefit plan for the hourly union employees at its Amory,
        Mississippi plant. During 2000 the True Temper Sports, Inc. Pension
        Plan, which covered the majority of salaried employees, was terminated
        and all assets were distributed. The following tables provide a
        reconciliation of the changes in the plans' benefit obligation and fair
        value of asset for the years ended December 31, 2000 and 1999, and a
        statement of the plans' funded status as of December 31 for each year:

<TABLE>
<CAPTION>
                                                                       2000       1999
                                                                      -------    -------
        <S>                                                           <C>        <C>
        Reconciliation of benefit obligation:
        Benefit obligation at beginning of year.....................  $12,387    $13,336
        Service cost................................................      317        683
        Interest cost...............................................      851        864
        Actuarial losses (gains)....................................    1,194     (2,172)
        Benefit payments............................................     (188)        --
        Curtailments................................................     (897)      (324)
        Settlements.................................................   (4,314)        --
                                                                      -------    -------
          Benefit obligation at end of year.........................  $ 9,350    $12,387
                                                                      =======    =======
</TABLE>

                                        43
<PAGE>   46

<TABLE>
<CAPTION>
                                                                       2000       1999
                                                                      -------    -------
        <S>                                                           <C>        <C>
        Reconciliation of fair value of plan assets:
          Fair value of plan assets at beginning of year............  $15,249    $14,609
          Actual return on plan assets..............................    3,387        640
          Employer contributions....................................       46         --
          Benefit payments..........................................     (188)        --
          Asset reversion...........................................     (869)        --
          Settlements...............................................   (4,314)        --
                                                                      -------    -------
             Fair value of plan assets at end of year...............  $13,311    $15,249
                                                                      =======    =======
        Funded status:
          Funded status at December 31..............................  $ 3,961    $ 2,862
          Unrecognized net actuarial gain...........................   (4,147)    (3,156)
                                                                      -------    -------
             Net amount recognized..................................  $  (186)   $  (294)
                                                                      =======    =======
</TABLE>

        Pension plan assets exceeded the accumulated benefit obligation at
        December 31, 2000 and December 31, 1999.

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

<TABLE>
<CAPTION>
                                                                       2000       1999
                                                                      -------    -------
        <S>                                                           <C>        <C>
        Service cost of benefits earned during the year.............  $   317    $   683
        Interest cost on projected benefit obligation...............      851        864
        Expected return on plan assets..............................   (1,134)    (1,101)
        Recognized net gains........................................     (168)       (44)
        Recognized curtailment gain.................................     (897)      (267)
        Recognized settlement loss..................................      970         --
                                                                      -------    -------
             Net periodic pension cost..............................  $   (61)   $   135
                                                                      =======    =======
        Weighted average assumptions:
          Discount rate:
             Pension cost...........................................     7.75%      6.50%
             Benefit obligation.....................................     7.50%      7.75%
             Expected return on plan assets.........................     8.50%      7.50%
             Rate of compensation increase..........................     5.00%      5.00%
</TABLE>

        During 2000 True Temper completed the termination of its pension plan
        for salaried employees. As of December 31, 2000 all liabilities of the
        plan were satisfied, and the cash remaining in the plan reverted to the
        Company. As a result, the Company recognized a net
        curtailment/settlement gain of $666, net of excise taxes totaling $130.
        Of the total gain approximately $406 was recognized in cost of sales and
        $260 in selling, general and administrative expenses.

        During 1999, True Temper recognized a curtailment gain totaling $267
        associated with the closure of its Olive Branch, Mississippi
        manufacturing facility.

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

        In addition to the remaining defined benefit pension plan for hourly
        employees, the Company also maintains a defined contribution plan which
        covers substantially all employees. Expenses for defined contribution
        plans amounted to $709, $247 and $174 in 2000, 1999 and 1998,
        respectively.

                                        44
<PAGE>   47

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

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

<TABLE>
<CAPTION>
                                                                       2000        1999
                                                                      ------      ------
        <S>                                                           <C>         <C>
        Reconciliation of benefit obligation:
          Benefit obligation at beginning of year...................  $2,020      $1,965
          Service cost..............................................      37          92
          Interest cost.............................................     137         130
          Actuarial gains...........................................     (91)       (133)
          Benefits paid.............................................     (75)         (2)
          Curtailments..............................................     (52)        (32)
                                                                      ------      ------
          Benefit obligation at end of year.........................   1,976       2,020
          Unrecognized net actuarial loss...........................     226         142
                                                                      ------      ------
          Accrued benefit costs.....................................  $2,202      $2,162
                                                                      ======      ======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                      2000         1999
                                                                      -----        -----
        <S>                                                           <C>          <C>
        Service cost................................................  $  37        $  92
        Interest cost...............................................    137          130
        Amortization of prior service costs.........................     (7)          --
        Recognized curtailment gain.................................    (52)         (25)
                                                                      -----        -----
          Net periodic cost.........................................  $ 115        $ 197
                                                                      =====        =====
        Discount Rate:
          Pension cost..............................................   7.75%        6.50%
          Benefit obligation........................................   7.50%        7.75%
</TABLE>

        The healthcare cost trend rate used to determine the post-retirement
        benefit obligation was 7.0% for 2001. This rate decreases gradually to
        an ultimate rate of 5.0% in 2006, and remains at that level thereafter.
        The trend rate is a significant factor in determining the amounts
        reported. The following table sets forth the impact of a 1.00% change in
        the trend rate:

<TABLE>
        <S>                                                           <C>
        Effect of 1.00% increase in trend rate on:
          Net periodic cost.........................................  $   9
          Post-retirement benefit obligation........................  $  99
        Effect of 1.00% decrease in trend rate on:
          Net periodic cost.........................................  $ (10)
          Post-retirement benefit obligation........................  $(102)
</TABLE>

(13)     CHANGE IN ACCOUNTING FOR GOODWILL

        In 1989 Black & Decker acquired True Temper as part of Black & Decker's
        acquisition of Emhart Corporation. In connection with the acquisition,
        goodwill was allocated to the Company.

        Black & Decker elected to change its method of measuring goodwill
        impairment from an undiscounted cash flow approach to a discounted cash
        flow approach effective January 1, 1998. On a periodic basis, Black &
        Decker estimates future discounted cash flows of the businesses to which
        goodwill relates. When such an estimate of the future discounted cash
        flows, net of the carrying

                                        45
<PAGE>   48

        amount of tangible net assets, is less than the carrying amount of
        goodwill, the difference will be charged to operations. For purposes of
        determining the future discounted cash flows of the businesses to which
        goodwill relates, Black & Decker, based upon historical results, current
        projections, and internal earnings targets, determined the projected
        future operating cash flows, net of income tax payments, of the
        individual businesses. These projected future cash flows are then
        discounted at a rate corresponding to Black & Decker's estimated cost of
        capital, which also is the hurdle rate used by Black & Decker in making
        investment decisions. Future discounted cash flows for businesses to be
        sold include an estimate of the proceeds from the eventual sale of such
        businesses, net of associated selling expenses and taxes. Black & Decker
        believed that measurement of the value of goodwill through a discounted
        cash approach is preferable in that it facilitates the timely
        identification of impairment of the carrying value of investments in
        businesses and provides a more current and, with respect to businesses
        to be sold, more realistic valuation than the undiscounted approach.

        In connection with Black & Decker's change in accounting policy with
        respect to measurement of goodwill impairment described above, $40
        million of goodwill related to True Temper has been written off through
        a charge to operations during the first quarter of 1998. This is a
        change in accounting estimate that is inseparable from a change in
        principle. That write-down represents the amount necessary to write-down
        the carrying value of goodwill for True Temper, according to Black &
        Decker's best estimate as of January 1, 1998, of True Temper's future
        discounted cash flows using the methodology described in the preceding
        paragraph.

(14)     COMMITMENTS AND CONTINGENCIES

          (a)     LEASE OBLIGATION

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

              Future minimum payments under non-cancelable operating and capital
              leases with initial terms of one year or more as of December 31,
              2000 are as follows:

<TABLE>
<CAPTION>
                                                                           CAPITAL     OPERATING
                                                                           LEASES       LEASES
                                                                           -------     ---------
               <S>                                                         <C>         <C>
               2001......................................................    $29        $  874
               2002......................................................     21           491
               2003......................................................     --           401
               2004......................................................     --            88
                                                                             ---        ------
                    Total minimum lease payments.........................     50        $1,854
                                                                                        ======
               Less: amount representing interest........................     (7)
                                                                             ---
                    Present value of net minimum capital lease
                      payments...........................................    $43
               Less: current installments of obligations under capital
                 leases..................................................    $19
                                                                             ---
                    Obligation under capital leases excluding current
                      installments.......................................    $24
                                                                             ===
</TABLE>

              Rental expense on operating leases, excluding sublease rent
              received, was $940, $845, and $547 for 2000, 1999 and 1998,
              respectively.

          (b)     LEGAL PROCEEDINGS

              The company has certain contingent liabilities resulting from
              litigation and claims incident to the ordinary course of business.
              Management believes that the probable resolution of

                                        46
<PAGE>   49

              such contingencies will not materially affect the financial
              position or results of operations of the Company.

(15)     SEGMENT AND OTHER RELATED DISCLOSURES

          (a)     SEGMENT REPORTING

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

<TABLE>
<CAPTION>
                                                               AS OF AND FOR THE YEARS ENDED
                                                                        DECEMBER 31,
                                                               ------------------------------
                                                                 2000       1999       1998
                                                               --------    -------    -------
               <S>                                             <C>         <C>        <C>
               Net sales:
                 Golf shafts.................................  $106,530    $88,204    $87,399
                 Performance tubing..........................     4,106      4,011      4,051
                                                               --------    -------    -------
                         Total...............................  $110,636    $92,215    $91,450
                                                               ========    =======    =======
               Gross profit:
                 Golf shafts.................................  $ 44,140    $35,213    $30,869
                 Performance tubing..........................     1,114        918      1,329
                                                               --------    -------    -------
                         Total...............................  $ 45,254    $36,131    $32,198
                                                               ========    =======    =======
               Total assets:
                 Jointly used assets.........................  $  5,294    $ 5,955
                 Golf shafts.................................    37,339     36,742
                 Performance tubing..........................     1,652      1,978
                                                               --------    -------
                         Total...............................  $ 44,285    $44,675
                                                               ========    =======
</TABLE>

              Revenues from one customer of True Temper's golf shafts segment
              represent approximately $12,000 of the Company's consolidated 1999
              revenues. No single customer had revenues greater than 10% of the
              total Company consolidated revenues for 2000 and 1998.

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

<TABLE>
<CAPTION>
                                                                          AS OF DECEMBER 31,
                                                                         --------------------
                                                                           2000        1999
                                                                         --------    --------
               <S>                                                       <C>         <C>
               Total assets:
                 Total from reportable segments........................  $ 44,285    $ 44,675
                 General corporate.....................................   131,603     142,288
                                                                         --------    --------
                         Total.........................................  $175,888    $186,963
                                                                         ========    ========
</TABLE>

                                        47
<PAGE>   50

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                               ---------------------------------
                                                                 2000        1999        1998
                                                               --------    --------    ---------
               <S>                                             <C>         <C>         <C>
               Total reportable segment gross profit.........  $45,254     $36,131     $ 32,198
               Less:
                 Selling, general and administrative
                    expenses.................................   16,899      15,156       14,227
                 Amortization of goodwill....................    2,701       2,701        2,505
                 Write-off of goodwill.......................       --          --       40,000
                 Recapitalization transaction expenses.......       --          --        5,698
                 Impairment charge on long-lived assets......    1,053          --          400
                 Restructuring costs.........................        7         622          750
                 Interest expense............................   13,693      14,341        3,462
                 Other expense (income), net.................       56          (9)          80
                                                               -------     -------     --------
               Total Company income (loss) before income
                 taxes.......................................  $10,845     $ 3,320     $(34,924)
                                                               =======     =======     ========
</TABLE>

          (b)     SALES BY GEOGRAPHIC REGION

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

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                               ---------------------------------
                                                                 2000         1999        1998
                                                               ---------    --------    --------
               <S>                                             <C>          <C>         <C>
               U.S. .........................................  $ 90,404     $77,984     $76,689
               International.................................    20,232      14,231      14,761
                                                               --------     -------     -------
                         Total...............................  $110,636     $92,215     $91,450
                                                               ========     =======     =======
</TABLE>

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

(16)     SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

        The following is a summary of unaudited quarterly results of operations
        for the years ended December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                       FIRST     SECOND      THIRD     FOURTH
                                                      QUARTER    QUARTER    QUARTER    QUARTER
                                                      -------    -------    -------    -------
        <S>                                           <C>        <C>        <C>        <C>
        2000
        Net sales...................................  $28,611    $34,141    $24,829    $23,055
        Gross profit................................   10,958     14,372     10,405      9,519
        Net income..................................    1,415      3,032      1,092         88

        1999
        Net sales...................................  $23,406    $27,144    $20,506    $21,159
        Gross profit................................    9,177     10,450      8,310      8,194
        Net income..................................      129        879       (152)       146
</TABLE>

                                        48
<PAGE>   51

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES

     None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The directors and executive officers of True Temper as of December 31, 2000
are as follows:

<TABLE>
<CAPTION>
    NAME                             AGE                           POSITION
    ----                             ---                           --------
    <S>                              <C>    <C>
    Scott C. Hennessy..............  41     Chief Executive Officer, President and Director
    Fred H. Geyer..................  40     Vice President, Chief Financial Officer and Treasurer
    Raymond J. Johnson.............  44     Vice President of Operations and Engineering
    David N. Hallford..............  47     Vice President of Sales/Golf Products
    Stephen M. Brown...............  35     Director of Human Resources
    Bill R. Beatty.................  40     Director of Marketing
    Adrian H. McCall...............  42     Vice President of International Sales and Marketing
    Andy York......................  36     Director and General Manager of Performance Tubing
    Mark Rossi.....................  44     Director
    Robert A. Knox.................  48     Director
    Raymond A. DeVita..............  64     Director
    Patrick N.W. Turner............  40     Director
</TABLE>

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

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

     Raymond J. Johnson has been Vice President of Operations and Engineering of
True Temper since July 1999. From August 1998 to July 1999 Mr. Johnson was Vice
President and General Manager of the Diversified Products Division of
Technimark. From 1983 to 1998 Mr. Johnson held various management positions at
Black & Decker in engineering and operations. Mr. Johnson received a B.A. from
the University of North Carolina at Chapel Hill.

     David N. Hallford has been Vice President Sales/Golf Products of True
Temper since 1989. From August 1985 to January 1989, Mr. Hallford held various
positions in sales and customer service at Plough Corporation. Mr. Hallford has
worked as an on-course golf professional responsible for management and retail
sales. Mr. Hallford graduated magna cum laude with a B.S. from the University of
Memphis.

     Stephen R. Brown has been the Director of Human Resources since 1997. From
September 1996 to December 1997, Mr. Brown served as Manager-Human Resources.
Prior to that, since 1992, Mr. Brown

                                        49
<PAGE>   52

served in various Human Resource management positions with Emerson Electric
Company. Mr. Brown received a B.A. from the University of South Carolina.

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

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

     Andy York has been the Director and General Manager of Performance Tubing
since May 1999. From June 1996 to May 1999 Mr. York was Vice President of
Marketing at Nicklaus Golf Equipment Company. Prior to that he was Brand
Manager-Instant Cameras at Polaroid Corporation. Mr. York received a B.S. and an
MBA from Babson College in Wellesley, Massachusetts.

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

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

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

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

ITEM 11.  EXECUTIVE COMPENSATION

     The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to True Temper for 2000
and 1999 of those persons who served as (1) the Chief Executive

                                        50
<PAGE>   53

Officer during 2000 and (2) the other four most highly compensated executive
officers of True Temper for 2000 (the "Named Executive Officers"):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                       ANNUAL COMPENSATION
                                             ---------------------------------------
                                                          BONUS       OTHER ANNUAL        ALL OTHER
NAME AND PRINCIPAL POSITION          YEAR     SALARY      EARNED     COMPENSATION(1)   COMPENSATION(2)
---------------------------          ----    --------    --------    ---------------   ---------------
<S>                                  <C>     <C>         <C>         <C>               <C>
Scott C. Hennessy..................  2000    $273,958    $683,000(5)    $101,236(3)        $8,500
  Chief Executive Officer,           1999    $261,458    $358,000(5)    $ 27,995           $6,109
  President and Director
Fred H. Geyer......................  2000    $141,167    $165,000       $    151           $8,500
  Vice President, Chief Financial    1999    $131,000    $ 55,000       $    136           $4,268
  Officer and Treasurer
Raymond J. Johnson.................  2000    $154,583    $140,000       $  4,524           $8,500
  Vice President, of Operations      1999    $ 91,058    $ 30,000       $ 35,120(4)            --
  and Engineering
Adrian H. McCall...................  2000    $135,542    $ 75,000       $    143           $8,500
  Vice President of International    1999    $129,958    $ 38,000       $    182           $4,248
  Sales and Marketing
David N. Hallford..................  2000    $121,125    $ 66,000       $ 10,611           $7,556
  Vice President of Sales/Golf       1999    $116,583    $ 30,000       $  9,150           $3,813
  Products
</TABLE>

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

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

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

(4) Amount includes moving and relocation benefits.

(5) Amount includes a $500,000 and $175,000 performance bonus for 2000 and 1999
    respectively and a service payment of $183,000 for each year. The two
    service payments for 2000 and 1999 were issued pursuant to an agreement that
    was made with Mr. Hennessy in conjunction with the Recapitalization
    agreement between Black & Decker and True Temper Sports LLC.

PENSION PLANS

     True Temper Sports, Inc. sponsors one tax qualified defined benefit pension
plan. Only the hourly employees at the Amory, Mississippi manufacturing plant,
who are part of the collective bargaining unit, are eligible to participate in
the plan. Benefits are calculated based primarily on years of service, among
other factors. As of December 31, 2000 none of True Temper Corporation's named
executive officers were eligible to participate in the plan.

STOCK OPTION PLAN

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

     (1) who will receive awards;

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

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

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

                                        51
<PAGE>   54

OPTION/SAR GRANTS IN LAST FISCAL YEAR

     The following table sets forth all options granted To Named Executive
Officers during 2000.

<TABLE>
<CAPTION>
                                                  INDIVIDUAL GRANTS
                                -----------------------------------------------------         POTENTIAL
                                                % OF                                      REALIZED VALUE AT
                                               TOTAL                                       ASSUMED ANNUAL
                                NUMBER OF     OPTIONS                                   RATES OF STOCK PRICE
                                SECURITIES   GRANTED TO   EXERCISE                          APPRECIATION
                                UNDERLYING   EMPLOYEES    OR BASE                          FOR OPTION TERM
                                 OPTIONS     IN FISCAL     PRICE        EXPIRATION      ---------------------
NAME                             GRANTED        YEAR       ($/SH)          DATE            5%          10%
----                            ----------   ----------   --------   ----------------   ---------   ---------
<S>                             <C>          <C>          <C>        <C>                <C>         <C>
Hennessy, Scott...............    20,326        80.3%       2.50     January 19, 2010    $31,957     $80,986
Geyer, Fred...................        --          --          --                   --         --          --
Johnson, Raymond..............        --          --          --                   --         --          --
McCall, Adrian................        --          --          --                   --         --          --
Hallford, David...............        --          --          --                   --         --          --
</TABLE>

COMPENSATION OF DIRECTORS

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

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

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

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

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

     The annual incentive compensation element is based on the Company's
attainment of certain levels of profitability. The long-term stock-based element
is developed by reference to competitive practices and trends of other companies
which use stock options as a component of executive compensation. Long-term
stock-based incentives are to incentivize executive officers to increase
shareholder value. Accordingly, the Committee has taken into account the amount
and value of options held by each of the executive officers when considering new
grants to assure that deserving executives have an equity participation in the
Company. In fixing the stock option grants for fiscal 2000, the Committee
considered the current stock holdings of each individual, their responsibilities
and historical and anticipated future contributions to True Temper's
performance.

     Because of the scope of his responsibilities as Chief Executive Officer and
President, and given the equity stake he has in the Company, the Compensation
Committee separately considers the compensation of Mr. Hennessy. His salary,
like that of the other officers, is determined by reference to published
compensation surveys, and his salary level is in line with such published salary
levels for comparable positions of responsibility. The Committee believes a
portion of the total annual compensation of Mr. Hennessy should be

                                        52
<PAGE>   55

directly tied to the Company's performance. Accordingly, Mr. Hennessy also earns
a cash bonus based on the True Temper's operating performance during the current
fiscal year.

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

                                         COMPENSATION COMMITTEE

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

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     All of the outstanding shares of our capital stock are owned by True Temper
Corporation. The following table sets forth information with respect to the
beneficial ownership of True Temper Corporation's capital stock as of March 23,
2001 by:

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

     (2) each director and named executive officer, and

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

<TABLE>
<CAPTION>
                                                                                    PERCENTAGE OF
                                         NUMBER OF    NUMBER OF    PERCENTAGE OF     OUTSTANDING    PERCENTAGE OF
                                         PREFERRED     COMMON       OUTSTANDING        COMMON       VOTING CAPITAL
NAME OF BENEFICIAL OWNER(1)                SHARES      SHARES     PREFERRED STOCK       STOCK           STOCK
---------------------------              ----------   ---------   ---------------   -------------   --------------
<S>                                      <C>          <C>         <C>               <C>             <C>
True Temper Sports LLC(2)..............  11,750,000   8,192,163        100.0%           85.1%            85.1%
  c/o Cornerstone Equity Investors,
    L.L.C.
  717 Fifth Avenue
    Suite 1100
  New York, New York 10022
Scott C. Hennessy......................          --     682,849           --             7.1%             7.1%
Fred H. Geyer..........................          --      62,893           --           *                *
Raymond J. Johnson.....................          --      23,958           --           *                *
Adrian H. McCall.......................          --      49,273           --           *                *
David N. Hallford......................          --      31,097           --           *                *
Raymond A. DeVita......................          --       7,667           --           *                *
All directors and executive officers as
  a group (9 persons)(3)...............          --     902,269           --             9.4%             9.4%
</TABLE>

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

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

(2) Membership interests in True Temper Sports, LLC are held by Cornerstone
    Equity Investors IV, L.P. (73.9%), GS Private Equity Partners, L.P. (17.2%),
    GS Private Equity Partners Offshore, L.P. (8.3%) and other investors (0.5%).

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

                                        53
<PAGE>   56

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RECAPITALIZATION AGREEMENT

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

     In addition, Black & Decker has agreed for a period of five years after the
closing date not to compete with True Temper in the business of the company as
conducted as of the closing date. Black & Decker has also agreed for a period of
up to 12 months after the closing date of the recapitalization not to hire or
solicit the employment of certain employees of True Temper.

     As provided in the recapitalization agreement, True Temper Corporation may
pay contingent amounts to Black & Decker. The amount of such payments, if any,
will be equal to 25% of the EBIT contribution derived from True Temper
Corporation's sales to Thiokol. These sales will be in accordance with the
Thiokol contract which is defined in the recapitalization agreement. Such
payments will be made annually during the initial term of the Thiokol contract
based on the EBIT contribution derived in each such year.

STOCKHOLDERS AGREEMENT

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

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

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

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

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

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

EQUITY REGISTRATION RIGHTS AGREEMENT

     Upon the consummation of the recapitalization, True Temper Corporation and
all of its stockholders, including True Temper Sports, LLC and Black & Decker,
entered into the equity registration rights agreement. Under the equity
registration rights agreement, the holders of a majority of the True Temper

                                        54
<PAGE>   57

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

TRANSITION SERVICES AGREEMENT

     In connection with the recapitalization, True Temper entered into the
transition services agreement with Black & Decker. In accordance with the terms
of the transition services agreement, Black & Decker has agreed to provide a
variety of services, including payroll and financial accounting for True
Temper's foreign operations, among others, at prices set forth in the transition
services agreement for a period of up to 12 months after the closing of the
recapitalization.

CORPORATE EXPENSE ALLOCATION

     True Temper received general administrative services provided by Black &
Decker that include cash management, tax reporting, risk management and internal
audit. Allocated expenses for such services, amounting to $0.9 million and $0.7
million for 1997 and 1998, respectively, have been included in the accompanying
statements of operating income. Charges for these corporate services were based
upon a general allocation methodology determined by Black & Decker and were used
to allocate all corporate overhead expenses to Black & Decker's operating
divisions. The charges have not necessarily been allocated on a basis which
approximates True Temper's estimated usage of such services as a stand-alone
entity.

CORPORATE PASS-THROUGH CHARGES

     Black & Decker provided common services for True Temper and other Black &
Decker affiliates, including group self-insurance programs and blanket insurance
coverage. Many of these services represent services provided by third parties
whereby Black & Decker incurred the cost of the service on behalf of True
Temper. Black & Decker charged True Temper for the estimated cost of these
services. The costs for these services and/or expenses have been allocated to
True Temper by Black & Decker based upon certain allocation methodologies
determined by Black & Decker. Accordingly, there is no assurance that the
amounts allocated for such items provided by Black & Decker would be indicative
of the actual amounts that True Temper would have incurred on a stand alone
basis.

MANAGEMENT SERVICES AGREEMENT

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

     (1) general management services;

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

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

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

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

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

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

                                        55
<PAGE>   58

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

     These terms of the management services agreement are, in our opinion, as
fair and equitable to True Temper as those that could have been obtained from
arms-length negotiations with third parties. The management services agreement
has an initial term of five years, subject to automatic one-year extensions
unless we or Cornerstone provide written notice of termination. The annual
advisory fee of $0.5 million is an obligation of ours and is also contractually
subordinated to the Notes and the senior credit facilities.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS SCHEDULE, AND REPORTS ON FORM 8-K

     (a) Documents filed as part of this report:

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

              Independent Auditors' Report
              Statements of Operations for the three years ended December 31,
              2000
              Balance Sheets at December 31, 2000 and 1999
              Statements of Changes in Stockholder's Equity for the three years
              ended December 31, 2000
              Statements of Cash Flows for the three years ended December 31,
              2000
              Notes to Financial Statements

          2. Financial Statement Schedule.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                                ADDITIONS
                                                         -----------------------
                                            BALANCE AT   CHARGED TO   CHARGED TO                   BALANCE AT
                                            BEGINNING    COSTS AND      OTHER                        ENDED
DESCRIPTION                                 OF PERIOD     EXPENSES     ACCOUNTS    DEDUCTIONS(3)   OF PERIOD
-----------                                 ----------   ----------   ----------   -------------   ----------
                                                                  DOLLARS IN THOUSANDS
                                                                     (DEBIT)/CREDIT
<S>                                         <C>          <C>          <C>          <C>             <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
          Year Ended December 31, 1998....      268           69         284(1)          (29)          592
          Year Ended December 31, 1999....      592          173          --            (266)          499
          Year Ended December 31, 2000....      499        1,124          --            (190)        1,433
ALLOWANCE FOR OBSOLETE INVENTORY
          Year Ended December 31, 1998....      332          307         234(2)         (178)          695
          Year Ended December 31, 1999....      695          396          --            (475)          616
          Year Ended December 30, 2000....      616          400          --            (412)          604
RESTRUCTURING RESERVES
          Year Ended December 31, 1998....      175(4)       400          --             (37)          538
          Year Ended December 31, 1999....      538           --          --            (378)          160
          Year Ended December 31, 2000....      160           --          --            (160)(5)        --
</TABLE>

---------------
     (1) Represents (i) $136 from the acquisition of Grafalloy Corporation and
         (ii) $148 to reclassify outstanding credit memos.

     (2) From the acquisition of Grafalloy Corporation.

     (3) Deductions represent (i) uncollectible accounts charged against the
         allowance for doubtful accounts, (ii) the cost of obsolete inventory
         disposed of and (iii) actual costs incurred for restructuring
         activities.

     (4) Represents costs associated with exiting the Company's Seneca, South
         Carolina production facility.

                                        56
<PAGE>   59

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

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

          3. EXHIBITS.

           See the Index to Exhibits.

     (b) REPORTS ON FORM 8-K.

          No reports on Form 8-K were filed during the quarter ended December
     31, 2000.

                                        57
<PAGE>   60

                                   SIGNATURES

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

Dated: March 28, 2001

                                          True Temper Sports, Inc.

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

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

     Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated, on March 28, 2001.

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

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

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

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

                                        58
<PAGE>   61

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
-------
<C>       <S>
  2.1     Reorganization, Recapitalization and Stock Purchase
          Agreement dated as of June 29, 1998 by and between The Black
          & Decker Corporation, True Temper Sports, Inc. and TTSI LLC
          ("Recapitalization Agreement") (filed as exhibit 2.1 to the
          Company's Registration Statement on Form S-4 (No.
          333-72343), as filed with the Securities and Exchange
          Commission (the "SEC") on February 12, 1999 (the "Form
          S-4").*
  2.2     Amendment No. 1 to Recapitalization Agreement dated August
          1, 1998 (filed as exhibit 2.2 to Form S-4).*
  2.3     Amendment No. 2 to Recapitalization Agreement dated
          September 30, 1998 (filed as exhibit 2.3 to Form S-4).*
  2.4     Assignment and Assumption Agreement by and between True
          Temper Corporation ("TTC") and the Company dated September
          30, 1998 (filed as exhibit 2.4 to Form S-4).*
  3.1     Amended and Restated Certificate of Incorporation of the
          Company, dated September 29, 1988 (filed as Exhibit 3.1 to
          Form S-4).*
  3.2     By-laws of the Company (filed as Exhibit 3.2 to Form S-4).*
  4.1     Indenture dated November 23, 1998 between the Company United
          States Trust of New York (filed as Exhibit 4.1 to Form
          S-4).*
  4.2     Purchase Agreement dated November 18, 1998 between the
          Company and Donaldson, Lufkin and Jenrette (filed as Exhibit
          4.2 to Form S-4).*
  4.3     Registration Rights Agreement dated as of November 23, 1998
          between the Company and Donaldson, Lufkin and Jenrette
          (filed as Exhibit 4.3 to Form S-4).*
 10.1     Management Services Agreement dated as of September 30, 1998
          between the Company and Cornerstone Equity Investors, LLC
          ("Management Services Agreement") (filed as Exhibit 10.1 to
          Form S-4).*
 10.2     Amendment to Management Services Agreement dated November
          23, 1998 (filed as Exhibit 10.2 to Form S-4).*
 10.3     Credit Agreement dated as of September 30, 1998 among the
          Company, various financial institutions, DLJ Capital
          Funding, Inc. and The First National Bank of Chicago (filed
          as Exhibit 10.3 to Form S-4).*
 10.4     Securities Purchase Agreement dated as of September 30, 1998
          among TTC and the Purchase Party thereto (filed as Exhibit
          10.4 to Form S-4).*
 10.5     Amendment No. 1 to Credit Agreement dated June 11, 1999
          (filed as Exhibit 10.5 to the Company's 1999 Annual Report
          on Form 10-K, as filed with the SEC on March 30, 2000).*
 10.6     True Temper Corporation 1998 Stock Option Plan (filed as
          Exhibit 10.6 to the Company's 1999 Annual Report on Form
          10-K, as filed with the SEC on March 30, 2000).*
 10.7     Shareholder's Agreement dated as of September 30, 1998
          (filed as Exhibit 10.7 to the Company's 1999 Annual Report
          on Form 10-K, as filed with the SEC on March 30, 2000).*
 10.8     Amended and Restated Management Services Agreement dated
          March 27, 2000 (filed as Exhibit 10.8 to the Company's
          Quarterly Report on Form 10-Q for the quarterly period ended
          April 2, 2000, as filed with the SEC on May 16, 2000).*
 10.9     Amendment No. 2 to Credit Agreement dated November 17, 2000.
 12.1     Computation of Ratio of Earnings To Fixed Charges.
</TABLE>

---------------
* Incorporated by reference

                                        59