<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended                March 31, 1998
                               -------------------------------------------------

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

                        Commission file number 333-14569

                     EVENFLO & SPALDING HOLDINGS CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

           DELAWARE                                        59-2439656
--------------------------------------------------------------------------------
(State or Other Jurisdiction                (I.R.S. Employer Identification No.)
of Incorporation or Organization)

601 South Harbour Island Boulevard, Suite 200, Tampa, Florida         33602-3141
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

Registrant's Telephone Number, Including Area Code:           (813) 204-5200
                                                     ---------------------------

--------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Indicate by check X 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
                                       ---    ---

The number of shares outstanding of the registrant's Common stock, par value
$.01 per share, at April 30, 1998, was 96,931,741 shares.


                                       1

<PAGE>   2



EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS (LOSS)
AND COMPREHENSIVE EARNINGS (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                        Three months ended
                                                                             March 31,
                                                                     ------------------------
                                                                        1998           1997
                                                                     ---------       --------
<S>                                                                  <C>              <C>    
NET SALES                                                            $ 236,551        205,871

     Cost of sales                                                     164,379        135,886
                                                                     ---------       --------

GROSS PROFIT                                                            72,172         69,985

     Selling, general and administrative expenses                       68,593         57,002
     Royalty income, net                                                (2,784)        (2,895)
     Restructuring costs                                                 5,352            400
                                                                     ---------       --------

INCOME FROM OPERATIONS                                                   1,011         15,478

     Interest expense, net                                              19,331         17,201
     Currency loss, net                                                    618            251
                                                                     ---------       --------

EARNINGS (LOSS) BEFORE INCOME TAXES                                    (18,938)        (1,974)

     Income taxes (benefit)                                             (6,379)          (987)
                                                                     ---------       --------


NET EARNINGS (LOSS)                                                    (12,559)          (987)

     Other comprehensive earnings (loss) - currency translation
         adjustments net of tax benefit of $45 and $25                    (111)          (530)
                                                                     ---------       --------

COMPREHENSIVE EARNINGS (LOSS)                                        $ (12,670)        (1,517)
                                                                     =========       ======== 
</TABLE>



See Unaudited Notes to Condensed Consolidated Financial Statements


                                       2

<PAGE>   3



EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS (LOSS)
AND COMPREHENSIVE EARNINGS (LOSS)
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                         Six months ended
                                                                             March 31,
                                                                     ------------------------
                                                                        1998            1997
                                                                     ---------        -------
<S>                                                                  <C>              <C>    
NET SALES                                                            $ 393,600        331,065

     Cost of sales                                                     277,655        223,059
                                                                     ---------        -------

GROSS PROFIT                                                           115,945        108,006

     Selling, general and administrative expenses                      123,440        107,300
     Royalty income, net                                                (6,806)        (5,772)
     Restructuring costs                                                 5,761          1,061
                                                                     ---------        -------

INCOME (LOSS) FROM OPERATIONS                                           (6,450)         5,417

     Interest expense, net                                              37,575         33,826
     Currency loss, net                                                  1,559            221
                                                                     ---------        -------

EARNINGS (LOSS) BEFORE INCOME TAXES                                    (45,584)       (28,630)

     Income taxes (benefit)                                            (15,481)       (14,315)
                                                                     ---------        -------


NET EARNINGS (LOSS)                                                    (30,103)       (14,315)

     Other comprehensive earnings (loss) - currency translation
         adjustments net of tax benefit of $198 and $127                  (151)          (212)
                                                                     ---------        -------

COMPREHENSIVE EARNINGS (LOSS)                                        $ (30,254)       (14,527)
                                                                     =========        ======= 
</TABLE>



See Unaudited Notes to Condensed Consolidated Financial Statements


                                       3

<PAGE>   4


EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND SEPTEMBER 30, 1997
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                       MARCH 31,      September 30,
                                                                         1998             1997
                                                                      -----------     -------------
<S>                                                                   <C>             <C>  
ASSETS 

CURRENT ASSETS
Cash                                                                  $     6,393          5,168
Receivables, less allowance of $5,154 and $3,941                          250,284        243,571
Inventories                                                               223,215        157,512
Deferred income taxes                                                      12,647         13,860
Other                                                                      10,887          8,955
                                                                      -----------       --------
         TOTAL CURRENT ASSETS                                             503,426        429,066
Property, plant and equipment, net                                        115,977        110,195
Intangible assets, net                                                    163,624        154,123
Deferred income taxes                                                      52,296         34,904
Deferred financing costs                                                   29,654         29,594
Other                                                                       3,903          3,349
                                                                      -----------       --------
         TOTAL ASSETS                                                 $   868,880        761,231
                                                                      ===========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Non-U.S. bank loans                                                   $    18,720         17,674
Current maturities of long-term debt                                       17,500         17,500
Accounts payable                                                          219,765        183,657
Accrued expenses                                                           81,259         79,348
Income taxes                                                                  347            811
                                                                      -----------       --------
         TOTAL CURRENT LIABILITIES                                        337,591        298,990
Long-term debt                                                            698,125        609,900
Pension                                                                    12,144         12,327
Post-retirement benefits                                                    8,910          8,910
Other                                                                       1,607          1,735
                                                                      -----------       --------
         TOTAL LIABILITIES                                              1,058,377        931,862
SHAREHOLDERS' EQUITY (DEFICIENCY)
Common stock, $.01 par value, 150,000,000 shares authorized
      and 96,931,741 and 94,655,078 shares outstanding                        970            947
Paid-in capital                                                           443,143        431,780
Retained earnings (deficit)                                              (629,170)      (599,067)
Accumulated other comprehensive earnings (loss) - currency
     translation adjustments                                               (4,440)        (4,291)
                                                                      -----------       --------
         TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)                         (189,497)      (170,631)
                                                                      -----------       --------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)      $   868,880        761,231
                                                                      ===========       ========
</TABLE>



See Unaudited Notes to Condensed Consolidated Financial Statements


                                       4
<PAGE>   5




                                                         
EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                             Six months ended
                                                                                 March 31,
                                                                          ----------------------
                                                                            1998           1997
                                                                          --------       -------
<S>                                                                       <C>            <C>     
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)                                                       $(30,103)      (14,315)
Adjustments to reconcile net earnings (loss) to net cash
   provided (used) by operating activities:
     Depreciation                                                           10,689         8,798
     Intangibles amortization                                                2,743         2,284
     Deferred income taxes                                                 (16,179)       (1,161)
     Deferred financing cost amortization                                    2,318         2,319
     Other                                                                    (183)          (38)
                                                                          --------       -------
         Subtotal                                                          (30,715)       (2,113)
     Receivables                                                            (6,713)      (46,026)
     Inventories                                                           (62,320)      (39,442)
     Current liabilities, excluding bank loans                              36,455        11,896
     Other                                                                  (2,289)       (2,554)
                                                                          --------       -------
              NET CASH USED BY OPERATING ACTIVITIES                        (65,582)      (78,239)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                                                       (16,806)      (11,596)
Payment to purchase net assets of Hogan                                     (1,641)            0
                                                                          --------       -------
              NET CASH FLOWS USED IN INVESTING ACTIVITIES                  (18,447)      (11,596)
                                                                          --------       -------
              NET CASH USED BEFORE FINANCING ACTIVITIES                    (84,029)      (89,835)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit loan                                  78,700         6,300
Net borrowings of other indebtedness                                         7,546         7,356
Payment of new credit agreement costs                                       (2,378)            0
Proceeds from issuance of common stock                                       1,422         7,218
Repurchase of common stock                                                     (36)            0
                                                                          --------       -------
              NET CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES        85,254        20,874
                                                                          --------       -------

CASH - net change                                                            1,225       (68,961)
       beginning of period                                                   5,168        75,298
                                                                          --------       -------
       end of period                                                      $  6,393         6,337
                                                                          ========       =======


SUPPLEMENTAL CASH FLOW DATA
Interest paid                                                             $ 35,863        17,338
Income taxes paid                                                           (6,542)        1,464
Non-cash portion of acquisition of Hogan net assets for
   common stock and a 10 1/2% note                                          13,025             0
</TABLE>


See Unaudited Notes to Condensed Consolidated Financial Statements


                                       5
<PAGE>   6



EVENFLO & SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES 
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997 
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

BASIS OF PRESENTATION

The accompanying condensed consolidated balance sheet of Evenflo & Spalding
Holdings Corporation and subsidiaries (the "Company") as of March 31, 1998, and
the related condensed statements of consolidated earnings (loss) and
comprehensive earnings (loss) for the three and six month periods ended March
31, 1998 and 1997, and of cash flows for the six month periods ended March 31,
1998 and 1997, are unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of such condensed consolidated financial
statements have been included. Such adjustments consisted only of normal
recurring items. Interim results may not be indicative of results for a full
year.

The condensed consolidated financial statements and notes are presented as
permitted by Form 10-Q of the Securities and Exchange Commission and do not
contain certain information included in the Company's annual consolidated
financial statements and notes. The condensed consolidated balance sheet as of
September 30, 1997, was derived from the Company's audited financial statements,
but does not include all disclosures required by generally accepted accounting
principles. This Form 10-Q should be read in conjunction with the Company's
consolidated financial statements and accompanying notes included in its Annual
Report on Form 10-K for the year ended September 30, 1997 (file no. 333-14569).

POTENTIAL ASSET DISPOSITIONS

The Company is currently examining several transaction structures for the
dispositon of Evenflo to an affiliate. The proceeds from any such sale would be
applied to reduce indebtedness under the Company's senior credit agreements. The
Company expects that such a sale could be completed during the current fiscal
year.

RESTRUCTURING COSTS

In fiscal 1997, the Company began to restructure Spalding's international
operations by streamlining operations in Japan and certain European countries.
In the 1998 second quarter, Spalding implemented an expanded international
restructuring program that will reduce the Company's international
infrastructure to a size sufficient to support a strategic focus on core golf
and sporting goods products in selected countries. Operations will be
significantly downsized in Japan, consolidated in Europe, and closed in Mexico.
As a result, future sales activities in Mexico, France, Germany, Italy, and
Spain will be channeled through distributors and/or agents.




                                       6
<PAGE>   7

Restructuring costs were $5,352 in the 1998 second quarter. Spalding
restructuring costs were $4,679 and consisted of (i) $3,179 principally for
international severance and lease settlements and (ii) $1,500 of management
severance costs. Evenflo restructuring costs were $673 to relocate Gerry
Colorado administrative and manufacturing operations to Evenflo's Ohio and
Georgia locations. The Company anticipates significant additional restructuring
charges in future periods. See Restructuring Costs discussion in "Management's
Discussion and Analysis."

SENIOR CREDIT FACILITY AMENDMENT AND ADDITIONAL $25 MILLION SEASONAL CREDIT
FACILITY

On March 31, 1998, the Company reached an agreement with its bank syndicate to
amend (the "Amendment") its senior credit agreement (the "Credit Facility") and
to provide an additional $25,000 senior secured credit facility (the "Seasonal
Credit Facility") for seasonal working capital needs until August 31, 1998. The
Amendment provides for a modification of financial ratio covenants for fiscal
periods through September 30, 1998, a 25 basis point increase in interest rates,
pledge of stock of subsidiaries, collateralization of certain domestic assets,
an amendment fee, and revisions to certain other provisions. The $25,000
Seasonal Credit Facility is available to support the Company's seasonal working
capital needs through August 31, 1998. See "-Liquidity and Capital Resources."

OTHER FINANCING ARRANGEMENTS

On February 18, 1998, the Company financed the new 150,000 square feet Spalding
Chicopee, Massachusetts, warehouse with the Massachusetts Development Finance
Agency. The $6,500, twenty-year loan is at 5% annual interest for the first five
years and converts to 300 basis points over one-year U.S. Treasury in years six
through twenty. In order to maintain the 5% interest rate for the first five
years, Spalding is required to maintain a certain number of new full-time
positions. There are no amortization requirements for the first five years of
the loan, the sixth through fifteenth years require $27 monthly amortization
payments, and years sixteen through twenty require $54 monthly amortization
payments. Massachusetts Development Finance Agency has been granted a security
interest in the warehouse.

ACQUISITIONS

On April 21, 1997, the Company acquired the net assets of Gerry Baby Products
Company ("Gerry") for a purchase price of $68,652. Gerry had manufacturing and
administrative operations in Colorado, which subsequent to the acquisition have
been substantially consolidated into Evenflo's operations in Ohio and Georgia.
Gerry also has manufacturing operations in Wisconsin. Gerry manufactures and/or
markets specialty juvenile products including baby bath, health and safety
items, monitors and other baby care products and accessories, as well as
juvenile car seats, strollers, high chairs, cribs, dressers and changing tables,
gates, and soft and frame carriers marketed under the Gerry(R) and Snugli(R)
brand names. The Gerry acquisition was accounted for using the purchase method;
accordingly, the operating results of Gerry have been included in the condensed
statement of consolidated earnings (loss) from the date of acquisition. If the
acquisition had taken place at October 1, 1996, rather than in April 1997,
Gerry's unaudited results of operations would have increased pro forma
consolidated net sales by $33,446 and 



                                       7
<PAGE>   8

decreased net loss by $462 for the quarter ended March 31, 1997, and would have
increased pro forma consolidated net sales by $56,829 and increased net loss by
$280 for the six months ended March 31, 1997.

On November 26, 1997, the Company acquired certain assets of the Ben Hogan Co.
("Hogan") for a purchase price of $14,666, consisting of $10,000 in Company
common stock (2 million shares), $3,025 in a 10 1/2% note due November 25, 2000,
and $1,641 in cash. Hogan manufactures and/or markets golf clubs, golf balls,
and golf accessories. The Hogan acquisition was accounted for using the purchase
method; accordingly, the operating results of Hogan have been included in the
condensed statement of consolidated earnings (loss) from the date of
acquisition. Consolidated pro forma net sales and net loss would not have been
materially different from the Company's reported amounts for 1997.

CONTINGENCIES

The Company is in disagreement with the Internal Revenue Service (the "IRS")
regarding the valuation of trademarks purchased from an Abarco N.V. ("Abarco")
affiliate in 1994. The IRS has completed the field audit for the year in which
the transactions occurred, and has preliminarily indicated that a portion of the
original purchase price may be recharacterized as a dividend distribution, and
that a portion of the amortization relating to such trademarks may be
disallowed. As a result, the Company expects that it may be assessed withholding
tax of approximately $30,000, and interest and penalties thereon of
approximately $25,000, related to this issue. Under the terms of indemnity
provisions contained in the 1996 Recapitalization and Stock Purchase Agreement
to which the Company and Abarco were parties, the Company believes that any
resulting liability would be indemnified by Abarco. The Company intends to
vigorously contest any assessment from the IRS. If the Company were unsuccessful
in appealing the assessment relating to these trademarks, a portion of the
$43,600 deferred tax asset at March 31, 1998 relating to the future amortization
of such trademarks would be written off as a charge to retained earnings
(deficit). 

The Company is both a plaintiff and defendant in numerous lawsuits incidental to
its current and former operations, some alleging substantial claims. In
addition, the Company's operations are subject to federal, state, local, and
foreign environmental laws and regulations. The Company has entered into
settlement agreements with the U.S. Environmental Protection Agency and other
parties on several sites, and is still negotiating on other sites. The
settlement amounts and estimated liabilities are not significant. Management is
of the opinion that, after taking into account the merits of defenses, insurance
coverage and established reserves, the ultimate resolution of these matters will
not have a material adverse effect in relation to the Company's condensed
consolidated financial statements.


                                       8
<PAGE>   9


INVENTORIES

<TABLE>
<CAPTION>
                                    March 31,  September 30,
                                      1998          1997
                                    --------   -------------
         <S>                        <C>        <C>   
         Finished goods             $150,093       99,733
         Work in process              42,269       28,031
         Raw materials                30,853       29,748
                                    --------      -------
         Total inventories          $223,215      157,512
                                    ========      =======
</TABLE>



RECLASSIFICATIONS

Certain reclassifications have been made to prior year amounts to conform with
current year presentations.




                                       9
<PAGE>   10





INDEPENDENT ACCOUNTANTS' REPORT


The Board of Directors
Evenflo & Spalding Holdings Corporation:


We have reviewed the accompanying condensed consolidated balance sheet of
Evenflo & Spalding Holdings Corporation and subsidiaries (the "Company") as of
March 31, 1998, and the related condensed statements of consolidated earnings
(loss) and comprehensive earnings (loss) for the three and six months ended
March 31, 1998 and 1997, and of cash flows for the six months ended March 31,
1998 and 1997. These financial statements are the responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company at September 30, 1997,
and the related statements of consolidated earnings (loss) and comprehensive
earnings (loss), consolidated cash flows and consolidated shareholders' equity
(deficiency) for the year then ended (not presented herein); and in our report
dated November 7, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of September 30, 1997,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.


DELOITTE & TOUCHE LLP

Tampa, Florida
May 4, 1998



                                       10
<PAGE>   11


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

With the exception of historical information (information relating to the
Company's financial condition and results of operations at historical dates or
for historical periods), the matters discussed in this Management's Discussion
and Analysis of Financial Condition and Results of Operations are
forward-looking statements that necessarily are based on certain assumptions and
are subject to certain risks and uncertainties. These forward-looking statements
are based on management's expectations as of the date hereof, and the Company
does not undertake any responsibility to update any of these statements in the
future. Actual future performance and results could differ from that contained
in or suggested by these forward-looking statements as a result of the factors
set forth in this Management's Discussion and Analysis of Financial Condition
and Results of Operations and elsewhere in this March 31, 1998, Form 10-Q and
other filings by the Company with the Securities and Exchange Commission.

RESULTS OF OPERATIONS

        Quarter Ended March 31, 1998 ("1998 second quarter") as compared
           to the Quarter Ended March 31, 1997 ("1997 second quarter")

NET SALES are gross sales net of returns, allowances, trade discounts, freight
on goods sold, and royalties paid on third-party trademarks used on the
Company's products. The Company's net sales increased $30.7 million or 14.9% to
$236.6 million for the 1998 second quarter compared to $205.9 million for the
same period in the prior year.

Spalding net sales were $143.5 million for the 1998 second quarter, flat with
the 1997 second quarter results of $144.0 million. Domestic net sales of
Spalding's golf equipment for the 1998 second quarter were up $11.0 million or
14.9% over the 1997 second quarter. Spalding experienced higher net sales of
Top-Flite(R) and Spalding(R) golf clubs and Etonic The Difference(R) spikeless
golf shoes, partially offset by $3.1 million lower net sales of golf balls. Net
sales of Hogan products were $1.1 million for the 1998 second quarter. Domestic
net sales of other sporting goods declined $2.6 million or 11.4%, primarily due
to lower sales of products outside the core basketball line. Etonic athletic
shoe net sales increased slightly at $0.6 million from the comparable prior
period, although discounting continues to be prevalent in this product category.
International net sales at Spalding declined $9.5 million or 22.9% in the 1998
second quarter compared to the 1997 second quarter. The decrease resulted
primarily from lower net sales in the Asia/Pacific region, Europe, and Mexico
due in part to international restructuring activity and closings. Weaker
currencies compared to the U.S. dollar negatively impacted Spalding's
international 1998 second quarter net sales by approximately $1.8 million
compared to the 1997 second quarter.

Net sales at Evenflo for the 1998 second quarter increased $31.2 million or
50.5% to $93.0 million from $61.8 million for the 1997 second quarter. Most of
Evenflo's net sales increase is 



                                       11
<PAGE>   12
attributable to the inclusion of Gerry net sales in the 1998 second quarter as
a result of the April 1997 acquisition of Gerry. Without Gerry, Evenflo's net
sales rose 7.1%, with higher net sales of car seats offset by lower net sales of
play yards. International net sales at Evenflo decreased $0.6 million in the
1998 second quarter compared to the 1997 second quarter principally due to lower
net sales in Canada partially offset by higher net sales in Mexico. Weaker
currencies compared to the U.S. dollar negatively impacted Evenflo's
international 1998 second quarter net sales by approximately $0.7 million
compared to the 1997 second quarter.

GROSS PROFIT is net sales less cost of sales which includes the costs necessary
to make the Company's products, including the costs of raw materials,
production, warehousing, and procurement. For the 1998 second quarter, Company
gross profit increased $2.2 million to $72.2 million from $70.0 million for the
same period in the prior year. Gross profit as a percentage of net sales
decreased to 30.5% for the 1998 second quarter from 34.0% for the comparable
prior year quarter.

Gross profit as a percentage of net sales at Spalding decreased to 36.7% in the
1998 second quarter from 38.7% in the 1997 second quarter. Spalding's gross
margin percentage decrease was primarily due to (i) higher net sales of Spalding
golf clubs, which have relatively low margins, (ii) lower net sales of golf
balls, (iii) competitive pricing in Etonic athletic shoes and spiked golf shoes,
(iv) international competitive pricing, combined with a shift to a less
favorable international sales mix and the strength of the U.S. dollar versus
international currencies, and (v) $1.8 million in unusual receivable cash
discounts and inventory write-offs relating to the international restructuring,
partially offset by favorable golf ball manufacturing variances.

Gross profit as a percentage of net sales at Evenflo decreased to 21.0% in the
1998 second quarter from 23.1% in the 1997 second quarter. Evenflo's gross
margin percentage decrease was primarily due to (i) the addition of lower
margin Gerry products, (ii) an increased level of returns, and (iii) a less
favorable international sales mix combined with the strength of the U.S. dollar
versus international currencies.

SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") expenses include the costs
necessary to sell the Company's products and the general and administrative
costs of managing the business, including salaries and related benefits,
commissions, advertising and promotion expenses, bad debts, travel, amortization
of intangible assets, insurance and product liability costs, consumer corrective
action campaign costs, and professional fees. SG&A expenses were $68.6 million,
or 20.3% higher than SG&A expenses of $57.0 million in the comparable quarter
last fiscal year.

Spalding's SG&A expenses increased $6.6 million in the 1998 second quarter
primarily from higher selling, advertising, promotion and endorsement costs, and
higher wages and commissions from increasing the size of the sales force.
Included in SG&A expenses in the 1998 second quarter are $1.0 million in unusual
receivable write-offs due to lower collections in countries that Spalding is
exiting under the international restructuring program. SG&A expenses in the 1997
second quarter included $0.1 million of unusual cost recovery relating to the
October 1996 purchase of Etonic's Canadian distribution rights.


                                       12
<PAGE>   13
 Evenflo had $5.2 million higher SG&A expenses in the 1998 second quarter
principally due to the addition of Gerry, as well as higher safety campaign
costs relating to the Happy Camper(R) play yard, the On-My-Way(R) infant car
seat, the Canadian Ultara(R) car seat, and higher advertising, partially offset
by lower product liability expenses compared to the 1997 second quarter. The
corporate office had $0.1 million lower SG&A expenses in the 1998 second quarter
compared to the 1997 second quarter.

ROYALTY INCOME was $2.8 million in the 1998 second quarter, down 3.8% from $2.9
million in the 1997 second quarter. The slight decrease is principally due to
lower royalty income in Japan.

RESTRUCTURING COSTS were $5.4 million in the 1998 second quarter. Spalding
restructuring costs were $4.7 million and consisted of (i) $3.2 million
principally for international severance and lease settlements and (ii) $1.5
million of management severance costs. Evenflo restructuring costs were $0.7
million to relocate Gerry Colorado administrative and manufacturing operations
to Evenflo's Ohio and Georgia locations. The 1997 second quarter included $0.4
million of Spalding international restructuring costs.

In fiscal 1997, the Company began to restructure Spalding's international
operations by streamlining operations in Japan and certain European countries.
In the 1998 second quarter, Spalding implemented an expanded international
restructuring program that will reduce the Company's international
infrastructure to a size sufficient to support a strategic focus on core golf
and sporting goods products in selected countries. Operations will be
significantly downsized in Japan, consolidated in Europe, and closed in Mexico.
As a result, future sales activities in Mexico, France, Germany, Italy, and
Spain will be channeled through distributors and/or agents. In addition to the
restructuring costs, Spalding incurred $2.8 million of other unusual expenses
associated with the closure and downsizing of certain international affiliates
under the international restructuring program consisting of (i) $0.5 million in
receivable cash discounts that reduced net sales, (ii) $1.3 million in inventory
write-offs in Japan and certain countries that Spalding is exiting expensed to
cost of sales, and (iii) $1.0 million in receivable write-offs due to lower
collection rates in countries that Spalding is exiting charged to selling,
general and administrative expenses. The Company estimates fiscal 1998 Spalding
restructuring and other unusual costs could approximate $23.5 million in total,
principally relating to international restructuring costs. See EBITDA discussion
in "-Liquidity and Capital Resources".

In July 1997, the Company adopted a plan to relocate the Gerry Colorado
administrative and manufacturing operations to Evenflo's Ohio and Georgia
locations. In addition to the restructuring costs, Evenflo incurred $0.4 million
of other unusual expenses including $0.2 million expensed to cost of sales to
relocate the Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia
locations and $0.2 charged to selling, general and administrative expenses for
Year 2000 conversion costs. The Company estimates fiscal 1998 Evenflo
restructuring and other unusual costs could approximate $2.6 million in total.
See EBITDA discussion in "-Liquidity and Capital Resources".

INTEREST EXPENSE increased to $19.3 million in the 1998 second quarter from
$17.2 million in the 1997 second quarter, an increase of $2.1 million or 12.4%.
This increase is due to higher average borrowings under the Company's $250
million revolving credit facility (the "Revolving Credit


                                       13
<PAGE>   14

Facility"), which, combined with $400 million of term loans, comprise the
Company's $650 million Credit Facility. The Company also has outstanding $200
million 10 3/8% Series B Senior Subordinated Notes ("Notes") due 2006. The
Company's average balance under the Notes, Credit Facility, certain non-U.S.
borrowing arrangements and other financing agreements for the 1998 second
quarter was approximately $737 million compared to $648 million under the
Company's borrowing arrangements then in effect during the 1997 second quarter.
At March 31, 1998, the Company had additional availability (though no
borrowings) under the $25 million Seasonal Credit Facility. See further
discussion in the "Unaudited Notes to Condensed Consolidated Financial
Statements" and "-Liquidity and Capital Resources".

CURRENCY LOSS of $0.6 million was $0.4 million higher in the 1998 second quarter
than in the 1997 second quarter. See "-Liquidity and Capital Resources."

INCOME TAXES were a tax benefit of $6.4 million for the 1998 second quarter,
which represents an effective tax rate of 34% in relation to a loss before
income taxes of $18.9 million. The effective tax rate varied from a U.S. federal
statutory rate of 35% due to actual non-U.S. withholding taxes paid that reduce
the benefit realized on the loss. The effective tax rate for the comparable
quarter in the prior year of 50% varied from the statutory rate due to projected
benefits anticipated from utilization of non-U.S. net operating losses. The 1997
second quarter effective tax rate was subsequently adjusted in the 1997 third
and fourth quarters due to higher than expected losses by non-U.S. subsidiaries
for which no tax benefit was recognized.

NET LOSS was $12.6 million for the 1998 second quarter compared to $1.0 million
for the 1997 second quarter. The $11.6 million decrease in earnings was a result
of a $14.5 million decrease in earnings from operations, $2.1 million higher
interest expense, and $0.4 million higher currency loss, partially offset by a
$5.4 million higher income tax benefit.

         Six Months Ended March 31, 1998 ("1998 six months") as compared
           to the Six Months Ended March 31, 1997 ("1997 six months")

NET SALES increased $62.5 million or 18.9% to $393.6 million for the 1998 six
months compared to $331.1 million for the same period in the prior year.

Spalding net sales increased 5.1% to $230.9 million for the 1998 six months
compared to $219.6 million for the 1997 six months. Domestic net sales of
Spalding's golf equipment for the 1998 six months were up $27.8 million or 25.4%
over the 1997 six months. Spalding experienced higher net sales of Top-Flite(R)
golf balls, Top-Flite(R) and Spalding(R) golf clubs as well as Etonic The
Difference(R) spikeless golf shoes. Net sales of Hogan products were $1.2
million for the 1998 six months. Domestic net sales of other sporting goods
declined $4.1 million or 11.3%, primarily due to lower sales of products outside
the core basketball line. Etonic athletic shoe net sales decreased $0.9 million
from the comparable prior period due to competitive pricing pressures.
International net sales at Spalding declined $11.4 million or 18.2% in the 1998
six months compared to the 1997 six months. The decrease resulted primarily from
lower net sales in the Asia/Pacific region, Europe, and Mexico due in part to
international restructuring activity and closings. Weaker currencies compared to
the U.S. dollar negatively impacted 



                                       14
<PAGE>   15

Spalding's international 1998 six months net sales by approximately $3.5 million
compared to the 1997 six months.

Net sales at Evenflo for the 1998 six months increased 46.0% to $162.7 million
from $111.4 million for the 1997 six months. Most of Evenflo's net sales
increase is attributable to the inclusion of Gerry net sales in the 1998 six
months as a result of the April 1997 acquisition of Gerry. Without Gerry,
Evenflo's net sales increased 3.4%, with higher net sales of car seats and
feeding products offset by lower net sales of play yards. International net
sales at Evenflo decreased $0.5 million in the 1998 six months compared to the
1997 six months principally due to lower net sales in Canada, partially offset
by higher net sales in Mexico. Weaker currencies compared to the U.S. dollar
negatively impacted Evenflo's international 1998 six months net sales by
approximately $1.2 million compared to the 1997 six months.

GROSS PROFIT for the 1998 six months increased $7.9 million to $115.9 million
from $108.0 million for the same period in the prior year. Gross profit as a
percentage of net sales decreased to 29.5% for the 1998 six months from 32.6%
for the 1997 six months.

Gross profit as a percentage of net sales at Spalding decreased to 36.7% in the
1998 six months from 37.5% in the 1997 six months. Spalding's gross margin
percentage decrease was primarily due to (i) higher net sales of Spalding golf
clubs, which have relatively low margins, (ii) competitive pricing in Etonic
athletic shoes and spiked golf shoes, (iii) international competitive pricing,
combined with a shift to a less favorable international sales mix, and the
strength of the U.S. dollar versus international currencies, and (iv) $1.8
million in unusual receivable cash discounts and inventory write-offs relating
to the international restructuring, partially offset by favorable golf ball
manufacturing variances.

Gross profit as a percentage of net sales at Evenflo decreased to 19.1% in the
1998 six months from 23.0% in the 1997 six months. Evenflo's gross margin
percentage decrease was primarily due to (i) the addition of lower margin Gerry
products, (ii) an increased level of returns, and (iii) a less favorable
international sales mix combined with the strength of the U.S. dollar versus
international currencies, partially offset by $0.9 million lower unusual costs
expensed to cost of sales in the 1998 six months compared to the 1997 six
months.

SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") expenses for the 1998 six months
were $123.4 million, or 15.0% higher than SG&A expenses of $107.3 million in the
comparable six months last fiscal year.

Spalding's SG&A expenses increased $7.8 million in the 1998 six months primarily
due to higher selling, advertising, promotion, and endorsement costs, and higher
wages and commissions from increasing the size of the sales force. Included in
SG&A expenses in the 1998 six months are $1.0 million in unusual receivable
write-offs due to lower collections in countries that Spalding is exiting under
the international restructuring program. SG&A expenses for the 1997 six months
included $0.8 million of unusual costs charged to SG&A for the October 1996
purchase of Etonic's Canadian distribution rights.


                                       15
<PAGE>   16
 Evenflo had $8.3 million higher SG&A expenses in the 1998 six months
principally due to the addition of Gerry, as well as higher safety campaign
costs relating to the Happy Camper(R) play yard, the On My Way(R) infant car
seat, and the Canadian Ultara(R) car seat, partially offset by lower product
liability expenses compared to the 1997 six months. The corporate office had
$0.1 million higher SG&A expenses in the 1998 six months compared to the 1997
six months.

ROYALTY INCOME increased to $6.8 million in the 1998 six months from $5.8
million in the 1997 six months, an increase of $1.0 million or 17.9%. The
increase is principally due to royalty income settlements on Evenflo play yards
and Gerry strollers.

RESTRUCTURING COSTS were $5.7 million in the 1998 six months. Spalding
restructuring costs were $5.0 million and consisted of (i) $3.5 million
principally for international severance and lease settlements and (ii) $1.5
million of management severance costs. Evenflo restructuring costs were $0.7
million to relocate Gerry Colorado administrative and manufacturing operations
to Evenflo's Ohio and Georgia locations. The 1997 six months included $1.1
million of Spalding international restructuring costs.

In fiscal 1997, the Company began to restructure Spalding's international
operations by streamlining operations in Japan and certain European countries.
In the 1998 second quarter, Spalding implemented an expanded international
restructuring program that will reduce the Company's international
infrastructure to a size sufficient to support a strategic focus on core golf
and sporting goods products in selected countries. Operations will be
significantly downsized in Japan, consolidated in Europe, and closed in Mexico.
As a result, future sales activities in Mexico, France, Germany, Italy, and
Spain will be channeled through distributors and/or agents. In addition to the
restructuring costs, Spalding incurred $2.8 million of other unusual expenses
associated with the closure and downsizing of certain international affiliates
under the international restructuring program consisting of (i) $0.5 million in
receivable cash discounts that reduced net sales, (ii) $1.3 million in inventory
write-offs in Japan and certain countries that Spalding is exiting expensed to
cost of sales, and (iii) $1.0 million in receivable write-offs due to lower
collection rates in countries that Spalding is exiting charged to selling,
general and administrative expenses. The Company estimates fiscal 1998 Spalding
restructuring and other unusual costs could approximate $23.5 million in total,
principally relating to international restructuring costs. See EBITDA discussion
in "-Liquidity and Capital Resources".

In July 1997, the Company adopted a plan to relocate the Gerry Colorado
administrative and manufacturing operations to Evenflo's Ohio and Georgia
locations. In addition to the restructuring costs, Evenflo incurred $0.8 million
of other unusual expenses including (i) $0.2 million expensed to cost of sales
to relocate the Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia
locations, (ii) $0.2 expensed to cost of sales attributable to the manufacturing
and warehouse reconfiguration at Piqua, Ohio, and (iii) $0.4 charged to selling,
general and administrative expenses for Year 2000 conversion costs. The Company
estimates fiscal 1998 Evenflo restructuring and other unusual costs could
approximate $2.6 million in total. See EBITDA discussion in "-Liquidity and
Capital Resources".

INTEREST EXPENSE increased to $37.6 million in the 1998 six months from $33.8
million in the 1997 six months, an increase of $3.7 million or 11.1%. The
Company's average balance under 



                                       16
<PAGE>   17

the Notes, Credit Facility, certain non-U.S. borrowing arrangements and other
financing agreements for the 1998 six months was approximately $712 million
compared to approximately $633 million under the Company's borrowing
arrangements then in effect during the 1997 six months.

CURRENCY LOSS of $1.6 million was $1.3 million higher in the 1998 six months
than in the 1997 six months. See "-Liquidity and Capital Resources."

INCOME TAXES were a tax benefit of $15.5 million for the 1998 six months, which
represents an effective tax rate of 34% in relation to a loss before income
taxes of $45.6 million. The effective tax rate varied from a U.S. federal
statutory rate of 35% due to actual non-U.S. withholding taxes paid that reduce
the benefit realized on the loss. The effective tax rate for the comparable six
months in the prior year of 50% varied from the statutory rate due to projected
benefits anticipated from utilization of non-U.S. net operating losses.

NET LOSS was $30.1 million for the 1998 six months compared to $14.3 million for
the 1997 six months. The $15.8 million decrease in earnings was a result of a
$11.9 million decrease in earnings from operations, $3.7 million higher interest
expense, and $1.3 million higher currency loss, partially offset by a $1.2
million higher income tax benefit.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity are from cash flows generated from
operations and from borrowings under the Credit Facility and certain non-U.S.
facilities. In addition, on March 30, 1998, the Company entered into a $25
million senior secured credit facility (the "Seasonal Credit Facility")
available for seasonal working capital needs until August 31, 1998. The Company
believes its business is somewhat seasonal. For fiscal 1997, quarterly net sales
as a percentage of total sales were approximately 15%, 25%, 30%, and 30%,
respectively, and quarterly income (loss) from operations as a percentage of
total income (loss) from operations was approximately (13)%, 29%, 40%, and 44%,
respectively. Many sporting goods marketed by Spalding, especially golf
products, experience higher levels of sales in the spring and summer months. The
Company's need for cash historically has been greater in its first and second
quarters when cash generated from operating activities coupled with draw downs
from credit facilities have been invested in receivables and inventories.

For the 1998 six months, the Company used $84.0 million in cash before financing
activities to fund $65.6 million in operating activities, and invest $16.8
million in capital expenditures and $1.6 million in the acquisition of Hogan.
Cash used in operating and investing activities in the 1998 six months were
funded from (i) $79.7 million in net borrowings from the Company's Revolving
Credit Facility and other non-U.S. credit facilities, (ii) a $6.5 million loan
from the Massachusetts Development Finance Agency, and (iii) $1.4 million in
proceeds from the issuance of common stock (net of repurchases) to certain key
employees of the Company under the 1996 Stock Purchase and Option Plan for Key
Employees of Evenflo & Spalding Holdings Corporation and Subsidiaries, less (i)
$2.4 million in fees relating primarily to the amendment of its Credit Facility
and the commitment for the Seasonal Credit Facility, and (ii) a $1.2 million
increase in cash and cash equivalents.


                                       17
<PAGE>   18

Net cash flow used by operating activities for the 1998 six months was $65.6
million compared to $78.2 million for the 1997 six months. The $12.7 million
lower use of cash for operating activities when compared to the 1997 six months
was due to a $41.3 million decrease in the use of cash for working capital
offset by $15.8 million higher net loss and a $12.8 million increase in deferred
taxes and other non-cash expenses. The use of cash for working capital in the
1998 six months compared favorably to the 1997 six months due to a $39.3
decrease in receivables and a $24.9 increase in payables and other accounts,
offset by a $22.9 million increase in inventories.

Capital expenditures were $16.8 million for the 1998 six months compared to
$11.6 million in the 1997 six months. Spalding capital expenditures were $3.7
million higher in the 1998 six months, the majority of which was used to improve
production equipment and continue a multiphase expansion of its warehouse and
golf ball facilities at its Chicopee, Massachusetts, operations. Management
estimates the completion of the multiphase project could require an additional
$7.0 million to be invested in the remainder of fiscal 1998. Capital
expenditures at Evenflo were $1.5 million higher than the comparable 1997 six
months, as Evenflo is in the process of expanding its warehousing and shipping
facilities in Piqua, Ohio, and Canton, Georgia, in order to improve efficiency
and accommodate the consolidation of Gerry's Colorado operations. Management
estimates the completion of the expansion and facilities upgrade could require
an additional $2.2 million to be invested in the remainder of fiscal 1998.
Overall, management expects capital expenditure levels in the 1998 fiscal year
to be slightly lower than those in the 1997 fiscal year.

On November 26, 1997, the Company acquired certain assets of the Ben Hogan Co.
for a purchase price of $14.7 million. The purchased net assets consisted of the
following (dollars in millions):

<TABLE>
<S>                                                        <C>
                  Inventories                              $ 3.4
                  Equipment                                  0.2
                  Intangible assets                         12.2
                                                           -----
                    Total                                   15.8
                  Accrued expenses                          (1.1)
                                                           -----
                  Net assets purchased                     $14.7
                                                           =====
</TABLE>

On February 18, 1998, the Company financed the new 150,000 square feet Spalding
Chicopee, Massachusetts, warehouse with the Massachusetts Development Finance
Agency. The $6.5 million, twenty-year loan is at 5% annual interest for the
first five years and converts to 300 basis points over one-year U.S. Treasury in
years six through twenty. In order to maintain the 5% interest rate for the
first five years, Spalding is required to maintain a certain number of new
full-time positions. There are no amortization requirements for the first five
years of the loan, the sixth through fifteenth year requires $27,084 monthly
amortization payments, and years sixteen through twenty requires $54,167 monthly
amortization payments. Massachusetts Development Finance Agency has been granted
a security interest in the warehouse.

On March 31, 1998, the Company reached an agreement with its bank syndicate to
amend its Credit Facility (the "Amendment") and to provide an additional $25
million Seasonal 



                                       18
<PAGE>   19

Credit Facility. The Amendment provides for a modification of financial ratio
covenants for fiscal periods through September 30, 1998, a 25 basis point
increase in interest rates, pledge of stock of subsidiaries, collateralization
of certain domestic assets, an amendment fee, and revisions to certain other
provisions. The $25 million Seasonal Credit Facility is available to support the
Company's seasonal working capital needs through August 31, 1998.

The primary sources of cash flows from financing activities are from borrowings
under the $250 million Revolving Credit Facility, the $25 million Seasonal
Credit Facility, and credit facilities available to certain of the Company's
non-U.S. facilities. At March 31, 1998, the Company had an available borrowing
capacity of approximately $36 million (reduced to reflect $133 million of
outstanding letters of credit and bankers' acceptances) under the Revolving
Credit Facility and the Seasonal Credit Facility. As of May 8, 1998, the Company
had an available borrowing capacity of approximately $13 million (reduced to
reflect $127 million of outstanding letters of credit and bankers' acceptances)
under the Revolving Credit Facility and the Seasonal Credit Facility.

The Company's ability to fund its operations, make capital expenditures and make
scheduled payments or to refinance its indebtedness will depend upon its future
financial and operating performance, which will be affected by prevailing
economic conditions and financial, business, and other factors, certain of which
are beyond its control. There can be no assurance that the Company's results of
operations, cash flow and capital resources will be sufficient to fund its
operations, capital expenditures, or its debt service obligations. In the
absence of improved operating results or recapitalization, the Company may face
significant liquidity problems and might be required to dispose of material
assets or operations to meet its debt service and other obligations, and there
can be no assurance as to the timing of such sales or the proceeds that the
Company could realize therefrom.

EBITDA (earnings before interest, taxes, depreciation and amortization) is
included as a basis upon which the Company assesses its financial performance,
and certain covenants in the Company's borrowing arrangements are tied to
similar measures. The following sets forth certain information regarding the
Company's EBITDA and other net cash flow items for the 1998 second quarter and
the 1998 six months:

<TABLE>
<CAPTION>
                                                 Three Months Ended March 31, 1998
                                                   (dollar amounts in thousands)
                            ---------------------------------------------------------------------------
                                                                         Historical Cash Flow
                                                                    net cash provided by (used in)
                                                              -----------------------------------------
                                            Other items
                            Historical        affecting        Operating      Investing       Financing
                              EBITDA      historical EBITDA   activities      activities     activities
                              ------      -----------------   ----------      ----------     ----------
         <S>                <C>           <C>                 <C>             <C>            <C>   
         Spalding            $ 2,257            7,454           (25,087)         (4,383)        31,210
         Evenflo               6,622            1,096            (4,574)         (5,948)        11,205
         Corporate            (1,614)             127            (2,631)             --          2,867
                             -------            -----           -------         -------         ------
         Consolidated        $ 7,265            8,677           (32,292)        (10,331)        45,282
                             =======            =====           =======         =======         ======
</TABLE>



                                       19
<PAGE>   20

THREE MONTHS ENDED MARCH 31, 1998
Spalding. Spalding's 1998 second quarter historical EBITDA was adversely
affected by $7,454 of restructuring and other unusual costs. Restructuring costs
were $4,679 and consisted of (i) $3,179 principally for international severance
and lease settlements and (ii) $1,500 of management severance costs. In
addition, Spalding incurred $2,775 of other unusual expenses associated with the
closure and downsizing of certain international affiliates under the
international restructuring program consisting of (i) $526 in receivable cash
discounts that reduced net sales, (ii) $1,277 in inventory write-offs in Japan
and certain countries that Spalding is exiting expensed to cost of sales, and
(iii) $972 in receivable write-offs due to lower collection rates in countries
that Spalding is exiting charged to selling, general and administrative
expenses. The Company estimates fiscal 1998 total Spalding restructuring and
other unusual costs could approximate $23,500 in total, principally relating to
international restructuring costs.

Evenflo. Evenflo's 1998 second quarter historical EBITDA was adversely affected
by $1,096 of restructuring and other unusual costs. Restructuring costs were
$673 to relocate the Gerry Colorado administrative and manufacturing operations
to Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $423 of
other unusual expenses including $209 expensed to cost of sales to relocate the
Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia locations and
$214 charged to selling, general and administrative expenses for Year 2000
conversion costs. The Company estimates fiscal 1998 total Evenflo restructuring
and other unusual costs could approximate $2,600 in total.

<TABLE>
<CAPTION>
                                                 Three Months Ended March 31, 1997
                                                   (dollar amounts in thousands)
                            ---------------------------------------------------------------------------
                                                                         Historical Cash Flow
                                                                    net cash provided by (used in)
                                                              -----------------------------------------
                                            Other items
                            Historical        affecting        Operating      Investing       Financing
                              EBITDA      historical EBITDA   activities      activities     activities
                              ------      -----------------   ----------      ----------     ----------
         <S>                <C>           <C>                 <C>             <C>            <C>   
         Spalding            $16,174             300           (13,860)         (2,423)         15,005
         Evenflo               6,112           1,059            (9,768)         (4,122)         13,168
         Corporate            (1,768)             --           (13,504)             --          13,478
                             -------           -----           -------          ------          ------
         Consolidated        $20,518           1,359           (37,132)         (6,545)         41,651
                             =======           =====           =======          ======          ======
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997

Spalding. Spalding's 1997 second quarter historical EBITDA was adversely
affected by $400 of international restructuring costs offset by $100 of unusual
cost recovery relating to the October 1996 purchase of Etonic's Canadian
distribution rights which were credited to selling, general and administrative
expenses.

Evenflo. Evenflo's 1997 second quarter historical EBITDA was adversely affected
by $1,059 of unusual costs including $765 expensed to cost of sales attributable
to the manufacturing and warehouse reconfiguration at Piqua, Ohio, and $294
charged to selling, general and 



                                       20
<PAGE>   21

administrative expenses to consolidate certain of its operations that were
previously managed separately.

<TABLE>
<CAPTION>
                                                  Six Months Ended March 31, 1998
                                                   (dollar amounts in thousands)
                            ---------------------------------------------------------------------------
                                                                         Historical Cash Flow
                                                                     net cash provided by (used in)
                                                              -----------------------------------------
                                            Other items
                            Historical        affecting        Operating      Investing       Financing
                              EBITDA      historical EBITDA   activities      activities     activities
                              ------      -----------------   ----------      ----------     ----------
         <S>                <C>           <C>                 <C>             <C>            <C>   
         Spalding            $   874            7,803          (27,045)         (8,271)        36,469
         Evenflo               8,271            1,505          (11,344)        (10,176)        22,074
         Corporate            (3,722)             145          (27,193)             --         26,711
                             -------            -----          -------         -------         ------
         Consolidated        $ 5,423            9,453          (65,582)        (18,447)        85,254
                             =======            =====          =======         =======         ======
</TABLE>

SIX MONTHS ENDED MARCH 31, 1998

Spalding. Spalding's 1998 six months historical EBITDA was adversely affected by
$7,803 of restructuring and other unusual costs. Restructuring costs were $5,028
and consisted of (i) $3,528 principally relating to international severance and
lease settlements and (ii) $1,500 of management severance costs. In addition,
Spalding incurred $2,775 of other unusual expenses associated with the closure
and downsizing of certain international affiliates under the international
restructuring program consisting of (i) $526 in receivable cash discounts that
reduced net sales, (ii) $1,277 in inventory write-offs in Japan and certain
countries that Spalding is exiting expensed to cost of sales, and (iii) $972 in
receivable write-offs due to lower collection rates in countries that Spalding
is exiting charged to selling, general and administrative expenses. The Company
estimates fiscal 1998 total Spalding restructuring and other unusual costs could
approximately $23,500 in total, principally relating to international
restructuring costs.

Evenflo. Evenflo's 1998 six months historical EBITDA was adversely affected by
$1,505 of restructuring and other unusual costs. Restructuring costs were $733
to relocate the Gerry Colorado administrative and manufacturing operations to
Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $772 of
other unusual expenses including (i) $209 expensed to cost of sales to relocate
the Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia locations,
(ii) $159 expensed to cost of sales attributable to the manufacturing and
warehouse reconfiguration at Piqua, Ohio, and (iii) $404 charged to selling,
general and administrative expenses for Year 2000 conversion costs. The Company
estimates fiscal 1998 total Evenflo restructuring and other unusual costs could
approximate $2,600 in total.



                                       21
<PAGE>   22


<TABLE>
<CAPTION>
                                                  Six Months Ended March 31, 1997
                                                   (dollar amounts in thousands)
                            ---------------------------------------------------------------------------
                                                                         Historical Cash Flow
                                                                    net cash provided by (used in)
                                                              -----------------------------------------
                                             Other items
                            Historical        affecting        Operating      Investing       Financing
                              EBITDA      historical EBITDA   activities      activities     activities
                              ------      -----------------   ----------      ----------     ----------
         <S>                <C>           <C>                 <C>             <C>            <C>   
         Spalding            $ 11,569            1,894         (29,127)         (2,876)         16,504
         Evenflo                8,330            1,911         (17,789)         (8,720)         22,916
         Corporate             (3,621)              --         (31,323)             --         (18,546)
                             --------            -----         -------         -------         -------
         Consolidated        $ 16,278            3,805         (78,239)        (11,596)         20,874
                             ========            =====         =======         =======         =======
</TABLE>

SIX MONTHS ENDED MARCH 31, 1997

Spalding. Spalding's 1997 six months historical EBITDA was adversely affected by
$1,061 of international restructuring costs and $833 of unusual costs relating
to the October 1996 purchase of Etonic's Canadian distribution rights that were
charged to selling, general and administrative expenses.

Evenflo. Evenflo's 1997 six months historical EBITDA was adversely affected by
$1,911 of unusual costs including $1,239 expensed to cost of sales, attributable
to the manufacturing and warehouse reconfiguration at Piqua, Ohio, and $672
charged to selling, general and administrative expenses to consolidate certain
of its operations that were previously managed separately.

CURRENCY HEDGING. In fiscal 1997, approximately 19% of the total Company net
sales were generated in non-U.S. currencies. A portion of the Company's foreign
sales during the 1998 six month period were made in Asia/Pacific region
countries which have experienced significant currency fluctuations relative to
the U.S. dollar due to recent economic disruptions in that region. Fluctuations
in the value of these currencies relative to the U.S. dollar could have a
material effect on the Company's results of operations. Although the Company
sources many of its goods from foreign manufacturers, the vast majority is
sourced from China which has not experienced significant currency fluctuations
during this period relative to the U.S. dollar. The Company, in its discretion,
uses forward exchange contracts to hedge up to six month transaction exposures
from U.S. dollar purchases made by its non-U.S. operations.

YEAR 2000 COMPLIANCE. Many existing computer software and hardware systems use
only two digits to identify the year in date fields and, as such, could fail or
create erroneous results by or at the year 2000. The Company has made and will
continue to make investments in its software systems and applications to upgrade
systems for year 2000 compliance. In addition, the Company is currently
contacting its significant suppliers and customers in an attempt to identify any
potential year 2000 compliance issues with them. This process is expected to be
complete for most of the Company's operations by the end of calendar 1998, with
minor aspects of the project 



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<PAGE>   23


continuing into the first half of calendar 1999. The financial impact of
becoming Year 2000 compliant has not been and is not expected to be material to
the Company's results of operations.

Although the Company is not aware of any material operational impediments
associated with upgrading its computer hardware and software systems to be Year
2000 compliant, the Company cannot make any assurances that the upgrade of the
Company's computer systems will be completed on schedule, that the upgraded
systems will be free of defects, or that the Company's alternative plans will
meet the Company's needs.



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<PAGE>   24


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Reference is made to Part I, Item 3 "Legal Proceedings" of Registrant's Annual
Report on Form 10-K for the year ended September 30, 1997, filed December 19,
1997. Since December 19, 1997, the Company has not been named as a defendant in
any action which, to the best of the Company's knowledge, could have a material
adverse effect on the financial condition or results of operations of the
Company.

ITEM 5.  OTHER INFORMATION (dollar amounts in thousands)

The Company is currently examining several transaction structures for the
dispositon of Evenflo to an affiliate. The proceeds from any such sale would be
applied to reduce indebtedness under the Company's senior credit agreements. The
Company expects that such a sale could be completed during the current fiscal
year.

In fiscal 1997, the Company began to restructure Spalding's international
operations by streamlining operations in Japan and certain European countries.
In the 1998 second quarter, Spalding implemented an expanded international
restructuring program that will reduce the Company's international
infrastructure to a size sufficient to support a strategic focus on core golf
and sporting goods products in selected countries. Operations will be
significantly downsized in Japan, consolidated in Europe, and closed in Mexico.
As a result, future sales activities in Mexico, France, Germany, Italy, and
Spain will be channeled through distributors and/or agents. Restructuring costs
were $5,352 in the 1998 second quarter. Spalding restructuring costs were $4,679
and consisted of (i) $3,179 principally for international severance and lease
settlements and (ii) $1,500 of management severance costs. Evenflo restructuring
costs were $673 to relocate Gerry Colorado administrative and manufacturing
operations to Evenflo's Ohio and Georgia locations. The Company anticipates
significant additional restructuring charges in future periods. See
Restructuring Costs discussion in "Management's Discussion and Analysis."

The Company is in disagreement with the Internal Revenue Service (the "IRS")
regarding the valuation of trademarks purchased from an Abarco N.V. ("Abarco")
affiliate in 1994. The IRS has completed the field audit for the year in which
the transactions occurred, and has preliminarily indicated that a portion of the
original purchase price may be recharacterized as a dividend distribution, and
that a portion of the amortization relating to such trademarks may be
disallowed. As a result, the Company expects that it may be assessed withholding
tax of approximately $30,000, and interest and penalties thereon of
approximately $25,000, related to this issue. Under the terms of indemnity
provisions contained in the 1996 Recapitalization and Stock Purchase Agreement
to which the Company and Abarco were parties, the Company believes that any
resulting liability would be indemnified by Abarco. The Company intends to
vigorously contest any assessment from the IRS. If the Company were unsuccessful
in appealing the assessment relating to these trademarks, a portion of the
$43,600 deferred tax asset at March 31, 1998 relating to the future amortization
of such trademarks would be written off as a charge to retained earnings
(deficit). 


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<PAGE>   25

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits

<TABLE>
                  <S>      <C>                                     
                  10.1     Credit Agreement Amendment No. 2, dated March 31,
                           1998, to the Credit Agreement dated September 30,
                           1996, among Evenflo & Spalding Holdings Corporation,
                           as the Borrower, the Lenders and Bank of America
                           National Trust & Savings Association, as the
                           administrative agent for the Lenders.*

                  10.2     Security Agreement dated as of March 31, 1998, among
                           Evenflo & Spalding Holdings Corporation, as the
                           Borrower, Spalding & Evenflo Companies, Inc., Evenflo
                           Company, Inc., Etonic Worldwide Corporation, Lisco,
                           Inc., S&E Finance Co., Inc., Spalding Sports Centers,
                           Inc., Etonic Lisco, Inc., Lisco Furniture, Inc.,
                           Lisco Feeding, Inc., and Lisco Sports, Inc., as
                           Subsidiary Grantors, and Bank of America National
                           Trust & Savings Association, as Administrative Agent
                           for the Lenders.*

                  10.3     Amended and Restated Pledge Agreement, dated as of
                           March 31, 1998, to the Credit Agreement dated
                           September 30, 1996, made by Evenflo & Spalding
                           Holdings Corporation, as the Borrower, Spalding &
                           Evenflo Companies, Inc., Evenflo Company, Inc.,
                           Etonic Worldwide Corporation, Lisco, Inc., S&E
                           Finance Co., Inc., Spalding Sports Centers, Inc.,
                           Etonic Lisco, Inc., Lisco Furniture, Inc., Lisco
                           Feeding, Inc., and Lisco Sports, Inc., as Subsidiary
                           Pledgors, in favor of Bank of America National Trust
                           & Savings Association, as Administrative Agent for
                           the Lenders.*

                  10.4     Supplement No. 1, dated March 31, 1998, to the
                           Guaranty, dated as of September 30, 1996, made by
                           Spalding Sports Centers, Inc. in favor of Bank of
                           America National Trust & Savings Association, as
                           Administrative Agent for the Lenders.*

                  10.5     $25,000,000 Liquidity Facility, dated as of March 30,
                           1998, among Evenflo & Spalding Holdings Corporation,
                           as a Guarantor, Spalding & Evenflo Companies, Inc. as
                           the Borrower, Bank of America National Trust &
                           Savings Association, as Administrative Agent, Merrill
                           Lynch Capital Corporation, as Documentation Agent,
                           NationsBank N.A. as Syndication Agent, and Lenders.*

                  10.6     Security Agreement, dated as of March 30, 1998, among
                           Evenflo & Spalding Holdings Corporation, Spalding &
                           Evenflo Companies, Inc., as the Borrower, Evenflo
                           Company, Inc., Etonic Worldwide Corporation, Lisco,
                           Inc., S&E Finance Co., Inc., Spalding Sports Centers,
                           Inc., Etonic Lisco, Inc., Lisco Furniture, Inc.,
                           Lisco Feeding, Inc., and Lisco Sports, Inc., as
                           Subsidiary Grantors, and Bank of America National
                           Trust & Savings Association, as Administrative Agent
                           for the Lenders to the Liquidity Facility dated as of
                           March 30, 1998.*
</TABLE>



                                       25
<PAGE>   26

<TABLE>
                  <S>      <C>                                     
                  10.7     Pledge Agreement, dated as of March 30, 1998, among
                           Evenflo & Spalding Holdings Corporation, Spalding &
                           Evenflo Companies, Inc., as the Borrower, Evenflo
                           Company, Inc., Etonic Worldwide Corporation, Lisco,
                           Inc., S&E Finance Co., Inc., Spalding Sports Centers,
                           Inc., Etonic Lisco, Inc., Lisco Furniture, Inc.,
                           Lisco Feeding, Inc., and Lisco Sports, Inc., as
                           Subsidiary Grantors, and Bank of America National
                           Trust & Savings Association, as Administrative Agent
                           for the Lenders to the Liquidity Facility dated as of
                           March 30, 1998.*

                  10.8     Guaranty, dated as of March 30, 1998, among Evenflo &
                           Spalding Holdings Corporation, Spalding & Evenflo
                           Companies, Inc., as the Borrower, Evenflo Company,
                           Inc., Etonic Worldwide Corporation, Lisco, Inc., S&E
                           Finance Co., Inc., Spalding Sports Centers, Inc.,
                           Etonic Lisco, Inc., Lisco Furniture, Inc., Lisco
                           Feeding, Inc., and Lisco Sports, Inc., as Subsidiary
                           Grantors, and Bank of America National Trust &
                           Savings Association, as Administrative Agent for the
                           Lenders to the Liquidity Facility dated as of March
                           30, 1998.*

                  10.9     $6,500,000 Loan Agreement, dated as of February 18,
                           1998, among Spalding & Evenflo Companies, Inc., as the
                           Borrower, and Government Land Bank, a Massachusetts
                           body politic and corporate created by Chapter 212 of
                           the Acts of 1975.**

                  10.10    Ground Lease and Security Agreement dated February
                           18, 1998, between Spalding & Evenflo Companies, Inc.,
                           as Ground Lessor, and the Massachusetts Development
                           Finance Agency as Lessee.**

                  10.11    Indemnity Agreement, dated February 18, 1998, between
                           Spalding & Evenflo Companies, Inc., as Borrower for
                           the benefit of the Massachusetts Development Finance
                           Agency as Lender.**

                  10.12    Promissory Note, dated February 18, 1998, between
                           Spalding & Evenflo Companies, Inc. as Maker and the
                           Government Land Bank as Payee.**

                  10.13    Sublease Agreement, dated February 18, 1998, between
                           the Government Land Bank as Lessor and Spalding &
                           Evenflo Companies, Inc. as Tenant.**

                  27.1     Financial Data Schedule (for SEC use only).**

                  99.1     News release dated April 1, 1998.*
</TABLE>




                                       26
<PAGE>   27
              (b) Reports on Form 8-K

                  Current report on Form 8-K dated April 1, 1998




*   Previously filed with Form 8-K dated April 1, 1998

**  Filed herewith





                                       27
<PAGE>   28






SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.


                                    Evenflo & Spalding Holdings Corporation
                                                  (Registrant)



Date:    May 15, 1998               By: /s/ W. Michael Kipphut
                                        -----------------------------------
                                        W. Michael Kipphut
                                        Vice President and Treasurer
                                        (a Principal Financial Officer and
                                        authorized signatory)




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