<PAGE>   1

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                       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 JULY 3, 1999

                                       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

                         SPALDING HOLDINGS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      59-2439656
(STATE OR OTHER JURISDICTION OF INCORPORATION       (I.R.S. EMPLOYER IDENTIFICATION NO.)
               OR ORGANIZATION)
                                                                   01013
  425 MEADOW STREET, CHICOPEE, MASSACHUSETTS                     (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
                                 (413) 536-1200

              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.

                               [X] Yes     [ ] No

     The number of shares outstanding of the registrant's Common stock, par
value $.01 per share, at July 31, 1999, was 97,483,963 shares.

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<PAGE>   2

                               INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                  PAGE NO.
                                                                                  --------
<S>        <C>      <C>                                                           <C>
Part I.    FINANCIAL INFORMATION
           Item 1.  Financial Statements
                    Condensed Statements of Consolidated Earnings (Loss) for the
                    three fiscal months ended July 3, 1999 and June 30, 1998....      2
                    Condensed Statements of Consolidated Earnings (Loss) for the
                    six fiscal months ended July 3, 1999 and June 30, 1998......      3
                    Condensed Consolidated Balance Sheets at July 3, 1999 and
                    December 31, 1998...........................................      4
                    Condensed Statements of Consolidated Cash Flows for the six
                    fiscal months ended July 3, 1999 and June 30, 1998..........      5
                    Notes to Condensed Consolidated Financial Statements........      6
                    Independent Accountants' Report.............................     10
           Item 2.  Management's Discussion and Analysis of Results of
                    Operations and Financial Condition..........................     11
           Item 3.  Quantitative and Qualitative Disclosures about Market
                    Risk........................................................     20
Part II.   OTHER INFORMATION
           Item 1.  Legal Proceedings...........................................     21
           Item 6.  Exhibits and Reports on Form 8-K............................     22
</TABLE>

                                        1
<PAGE>   3

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

              CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS (LOSS)
        FOR THE THREE FISCAL MONTHS ENDED JULY 3, 1999 AND JUNE 30, 1998
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  THREE FISCAL
                                                                  MONTHS ENDED
                                                              --------------------
                                                              JULY 3,     JUNE 30,
                                                                1999        1998
                                                              --------    --------
                                                                  (UNAUDITED)
<S>                                                           <C>         <C>
NET SALES...................................................  $128,043    $244,168
  Cost of sales.............................................    69,312     164,272
                                                              --------    --------
GROSS PROFIT................................................    58,731      79,896
  Selling, general and administrative expenses..............    45,512      87,616
  Royalty income, net.......................................    (2,852)     (3,026)
  Restructuring and other unusual costs.....................       202       3,375
                                                              --------    --------
INCOME (LOSS) FROM OPERATIONS...............................    15,869      (8,069)
  Interest expense, net.....................................    13,914      21,714
  Currency loss (gain), net.................................      (289)      1,659
  Equity in net (earnings) loss of Evenflo Company, Inc.....       724           0
                                                              --------    --------
EARNINGS (LOSS) BEFORE INCOME TAXES.........................     1,520     (31,442)
  Income taxes (benefit)....................................       976     (10,760)
                                                              --------    --------
NET EARNINGS (LOSS).........................................  $    544    $(20,682)
                                                              ========    ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements
                                        2
<PAGE>   4

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

              CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS (LOSS)
         FOR THE SIX FISCAL MONTHS ENDED JULY 3, 1999 AND JUNE 30, 1998
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   SIX FISCAL
                                                                  MONTHS ENDED
                                                              --------------------
                                                              JULY 3,     JUNE 30,
                                                                1999        1998
                                                              --------    --------
                                                                  (UNAUDITED)
<S>                                                           <C>         <C>
NET SALES...................................................  $245,199    $486,391
  Cost of sales.............................................   137,050     326,669
                                                              --------    --------
GROSS PROFIT................................................   108,149     159,722
  Selling, general and administrative expenses..............    90,674     164,958
  Royalty income, net.......................................    (4,949)     (5,810)
  Restructuring and other unusual costs.....................       666       8,727
                                                              --------    --------
INCOME (LOSS) FROM OPERATIONS...............................    21,758      (8,153)
  Interest expense, net.....................................    27,915      41,045
  Currency loss (gain), net.................................       673       2,277
  Equity in net (earnings) loss of Evenflo Company, Inc.....       809           0
                                                              --------    --------
EARNINGS (LOSS) BEFORE INCOME TAXES.........................    (7,639)    (51,475)
  Income taxes (benefit)....................................    (2,021)    (17,522)
                                                              --------    --------
NET EARNINGS (LOSS).........................................  $ (5,618)   $(33,953)
                                                              ========    ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements
                                        3
<PAGE>   5

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       JULY 3, 1999 AND DECEMBER 31, 1998
              (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                JULY 3,      DECEMBER 31,
                                                                 1999            1998
                                                              -----------    ------------
                                                              (UNAUDITED)
<S>                                                           <C>            <C>
                                         ASSETS

CURRENT ASSETS
Cash........................................................   $  9,265        $  8,036
Receivables, less allowance of $2,091 and $3,491............    110,954          86,196
Inventories.................................................     66,199          89,166
Deferred income taxes.......................................      9,430          11,592
Other.......................................................      1,891           1,098
                                                               --------        --------
     TOTAL CURRENT ASSETS...................................    197,739         196,088
Property, plant and equipment, net..........................     55,466          51,660
Intangible assets, net......................................    110,373         112,662
Deferred income taxes.......................................     90,512          85,838
Deferred financing costs....................................     17,758          19,395
Investment in Evenflo Company, Inc..........................      9,601          10,340
Other.......................................................        900             194
                                                               --------        --------
     TOTAL ASSETS...........................................   $482,349        $476,177
                                                               ========        ========

                     LIABILITY AND SHAREHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES
Non-U.S. bank loans.........................................   $  5,855        $  6,531
Accounts payable............................................     79,965          85,198
Accrued expenses............................................     63,915          55,045
Income taxes................................................        271             349
                                                               --------        --------
     TOTAL CURRENT LIABILITIES..............................    150,006         147,123
Long-term debt..............................................    531,847         524,519
Pension.....................................................      9,387           8,360
Post-retirement benefits....................................      7,818           7,549
Other.......................................................          0              67
                                                               --------        --------
     TOTAL LIABILITIES......................................    699,058         687,618

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIENCY)

Preferred stock, $.01 par value, 50,000,000 shares
  authorized; 1,000,000 outstanding (liquidation value $100
  million and related common stock warrants)................    100,000         100,000
Common stock, $.01 par value, 150,000,000 shares authorized,
  97,483,963 and 96,933,963 shares outstanding at July 3,
  1999 and December 31, 1998, respectively..................        975             969
Paid-in capital.............................................    452,784         452,434
Accumulated deficit.........................................   (766,976)       (761,358)
Treasury stock, 17,222 shares, at cost......................        (77)            (77)
Deferred compensation.......................................       (250)              0
Accumulated other comprehensive earnings (loss) -- currency
  translation adjustments...................................     (3,165)         (3,409)
                                                               --------        --------
     Total shareholders' equity (deficiency)................   (216,709)       (211,441)
                                                               --------        --------
Total liabilities and shareholders' equity (deficiency).....   $482,349        $476,177
                                                               ========        ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements
                                        4
<PAGE>   6

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

                CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
         FOR THE SIX FISCAL MONTHS ENDED JULY 3, 1999 AND JUNE 30, 1998
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              JULY 3,     JUNE 30,
                                                                1999        1998
                                                              --------    --------
                                                                  (UNAUDITED)
<S>                                                           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).........................................  $ (5,618)   $(33,953)
Adjustments to reconcile net earnings (loss) to net cash
  provided by (used in) operating activities:
  Depreciation..............................................     3,959      11,050
  Equity in (earnings) loss of Evenflo Company, Inc.........       809           0
  Intangibles amortization..................................     2,233       2,788
  Deferred income taxes.....................................    (2,513)    (18,345)
  Deferred financing cost amortization......................     1,637       2,725
  Other.....................................................       207        (133)
Changes in assets and liabilities:
  Receivables...............................................   (24,758)    (45,393)
  Inventories...............................................    22,967      (4,904)
  Current liabilities, excluding bank loans.................     3,559       5,804
  Other.....................................................      (245)      1,615
                                                              --------    --------
     NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES....     2,237     (78,746)
                                                              --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures......................................    (7,765)    (16,189)
                                                              --------    --------
     NET CASH FLOWS PROVIDED BY (USED IN) INVESTING
      ACTIVITIES............................................    (7,765)    (16,189)
                                                              --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayment) under revolving credit loan......     7,328     114,400
Net borrowings (repayment) of other indebtedness............      (676)         13
Payment of new credit agreement costs.......................         0      (2,698)
Proceeds from issuance of common stock......................       105         111
Repurchase of common stock..................................         0         (56)
                                                              --------    --------
     NET CASH FLOWS PROVIDED BY (USED IN) FINANCING
      ACTIVITIES............................................     6,757     111,770
                                                              --------    --------
NET INCREASE (DECREASE) IN CASH.............................     1,229      16,835
Cash balance, beginning of period...........................     8,036       3,734
                                                              --------    --------
Cash balance, end of period.................................  $  9,265    $ 20,569
                                                              ========    ========
SUPPLEMENTAL CASH FLOW DATA:
Interest paid...............................................  $ 24,180    $ 38,704
Income taxes paid (refunded)................................       569      (6,615)
</TABLE>

            See Notes to Condensed Consolidated Financial Statements
                                        5
<PAGE>   7

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (DOLLAR AMOUNT IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1 -- BASIS OF PRESENTATION

     The accompanying condensed consolidated balance sheet of Spalding Holdings
Corporation and subsidiaries (the "Company") as of July 3, 1999, and the related
condensed statements of consolidated earnings (loss) and of cash flows for the
three and six fiscal month periods ended July 3, 1999 and June 30, 1998 are
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of such consolidated financial statements have been included. Such
adjustments consist only of normal recurring items. Interim results may not be
indicative of results for a full year.

     The Company is a global manufacturer and marketer of branded consumer
products serving the sporting goods markets under the primary trade names
Spalding(R), Top Flite(R), Etonic(R), Strata(R), Ben Hogan(R), and Dudley(R).
The primary subsidiary of the Company is Spalding Sports Worldwide, Inc.
("Spalding"). The Company markets and licenses a variety of recreational and
athletic products such as golf balls, golf clubs, golf shoes, golf bags and
accessories, basketballs, volleyballs, footballs, soccer balls, softballs,
baseballs and gloves, handballs, and clothing, shoes and equipment for many
other sports.

     Prior to August 20, 1998, Evenflo Company, Inc. ("Evenflo") was also a
subsidiary of the Company. Evenflo markets under the Evenflo(R), Gerry(R) and
Snugli(R) trademarks, specialty juvenile products, including reusable and
disposable baby bottle feeding systems, breast-feeding aids, pacifiers and oral
development items, baby bath, health and safety items, monitors and other baby
care products and accessories, as well as juvenile car seats, stationary
activity products, strollers, high chairs, portable play yards, cribs, dressers
and changing tables, gates, soft carriers and frame carriers, child carriers and
mattresses.

     On August 20, 1998, the Company separated its two businesses, Spalding and
Evenflo, into two stand-alone companies (the "Reorganization"). Following
completion of the Reorganization, the Company's headquarters in Tampa, Florida
was closed and its functions transferred to the separate Spalding and Evenflo
operations. After giving effect to the Reorganization, the Company continues to
own 42.4% of the common stock of Evenflo.

     Subsequent to the Reorganization of the businesses, the Company elected
Edwin L. Artzt (former Chairman and Chief Executive Officer of Procter & Gamble
Company) in October 1998 as Chairman of the Board of Directors and hired James
R. Craigie (formerly an Executive Vice President of Kraft, Inc.) in December
1998 as President and Chief Executive Officer. Under this new leadership, the
management of the Company is repositioning its brands to improve profitability
of its sales, restructuring its organization to lower operating expenses, and
reengineering its key business processes to lower working capital and improve
customer service.

     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
December 31, 1998, 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 Transition Period (October 1, 1998 through December
31, 1998).

     The Company's year end is December 31. Effective January 1, 1999, the
Company changed its quarterly operating cycle whereby each quarter closes on the
thirteenth Saturday of that period except the fourth quarter which always closes
on December 31. The Company's fiscal quarters for the 1999 calendar year are as
follows: April 3, July 3, October 2 and December 31.

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

                                        6
<PAGE>   8
                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2 -- CHANGE IN ACCOUNTING PRINCIPLE

     Prior to 1999, costs for a majority of the U.S. inventories were determined
by the use of the last-in, first-out costing method ("LIFO"). Effective January
1, 1999, the Company changed its method of valuing U.S. inventories from LIFO to
the first-in, first-out costing method ("FIFO") to more properly reflect the
method of product consumption. All previously reported amounts have been
restated to reflect the retroactive application of this accounting change as
required by generally accepted accounting principles. As of December 31, 1998,
the effect of this change resulted in a $5,120 decrease in inventory, a $1,792
increase in deferred tax assets and an overall $3,328 decrease in equity. The
accounting change increases the net loss for the three and six months ended June
30, 1998 by $270 and $982, respectively.

NOTE 3 -- INVENTORIES

<TABLE>
<CAPTION>
                                                              JULY 3,    DECEMBER 31,
                                                               1999          1998
                                                              -------    ------------
<S>                                                           <C>        <C>
Finished goods..............................................  $48,484      $68,018
Work in process.............................................    3,258        3,385
Raw materials...............................................   14,457       17,763
                                                              -------      -------
     Total inventories......................................  $66,199      $89,166
                                                              =======      =======
</TABLE>

NOTE 4 -- SEGMENT INFORMATION

     The Company manages the operations of the business based on three operating
segments: U.S. Golf Products, U.S. Sporting Goods Products and International
Operations. The following table is presented in accordance with Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information."

<TABLE>
<CAPTION>
                                                 U.S.
                                      U.S.     SPORTING
                                      GOLF      GOODS     INTERNATIONAL   EVENFLO    ALL OTHER    TOTAL
                                    --------   --------   -------------   --------   ---------   --------
<S>                                 <C>        <C>        <C>             <C>        <C>         <C>
Three Fiscal Months ended July 3,
  1999
  Net sales.......................  $ 75,610   $18,589      $ 33,844      $     --   $     --    $128,043
  Income (loss) from operations...     8,116      (686)        5,618            --      2,821      15,869
Three Months ended June 30, 1998
  Net sales.......................  $ 92,751   $26,653      $ 42,229      $ 82,535   $     --    $244,168
  Income (loss) from operations...    (5,917)   (4,211)          419          (936)     2,576      (8,069)
Fiscal Six Months Ended July 3,
  1999
  Net sales.......................  $139,099   $41,945      $ 64,155      $     --   $     --    $245,199
  Income (loss) from operations...     8,420       250         8,393            --      4,695      21,758
Six Months Ended June 30, 1998
  Net sales.......................  $179,353   $54,637      $ 76,818      $175,583   $     --    $486,391
  Income (loss) from operations...       (80)   (6,639)       (7,808)        1,591      4,783      (8,153)
As of July 3, 1998
  Identifiable assets.............  $ 85,647   $11,909      $101,041      $  9,601   $274,151    $482,349
As of December 31, 1998
  Identifiable assets.............  $110,584   $17,191      $106,342      $ 10,340   $231,720    $476,177
</TABLE>

     U.S. Golf Products represent the Company's largest operating segment. The
products included in this segment are golf balls, golf clubs, golf shoe and golf
accessories (bags, hats, club covers, tees, towels and sports luggage).

                                        7
<PAGE>   9
                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Spalding currently markets its golf products under the following brand
names:

<TABLE>
<CAPTION>
                          GOLF SHOES AND
GOLF BALLS   GOLF CLUBS    ACCESSORIES
----------   ----------   --------------
<S>          <C>          <C>
Strata(R)    Ben)          Etonic(R   )
             Hogan(R
Top-Flite(R) Top-Flite(R)  Ben Hogan(R)
Spalding(R)  Spalding(R)   Top-Flite(R)
Molitor(R)                 Spalding(R )
</TABLE>

     U.S. Sporting Goods includes basketballs, softball and baseball products,
volleyballs, soccer balls, athletic shoes and other sports products. These
products are primarily sold under the Spalding(R) trademark. Softball products
are marketed under the Dudley(R) trademark.

     The International segment conducts operations outside of the U.S. and
consists of both subsidiary and third party distributors. Subsidiary operations
are maintained in key golf and sporting goods markets outside the U.S.,
including operations in Canada, Australia, New Zealand, United Kingdom and
Sweden. In addition to the subsidiary operations, the Company conducts business
with over 100 third-party distributors in other markets throughout the world. In
both the subsidiary and distributor territories, the Company markets a line of
golf and sporting goods products similar to those in the U.S. segments.

     The "All Other" category includes worldwide licensing and other items not
allocable to one of the segments. Worldwide licensing is a result of Spalding
granting licensees the exclusive right to use specified Spalding trademarks for
specific product categories, in specific markets. The Spalding(R), Top-Flite(R),
Etonic(R) and Ben Hogan(R) names are licensed in a broad range of product
categories, including shoe and apparel lines. In exchange for these exclusive
licenses, the Company receives royalty fees. The majority of royalty revenues
are generated in the U.S. and Japanese markets.

NOTE 5 -- INVESTMENT IN AFFILIATE

     On August 20, 1998, the Company effectively completed the separation of
Spalding and Evenflo, into two stand-alone companies (see Note 1). For the
periods prior to August 20, 1998, the financial statements for Evenflo have been
consolidated with those of the Company. The financial statements for the periods
subsequent to the sale include the portion of Evenflo's results attributable to
the Company's ownership on an equity accounting basis.

     Summarized financial information of Evenflo for the three and six months
ended June 30, 1999 is set forth below.

                     CONDENSED INCOME STATEMENT INFORMATION

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED    SIX MONTHS ENDED
                                                       JUNE 30, 1999        JUNE 30, 1999
                                                     ------------------    ----------------
<S>                                                  <C>                   <C>
Net sales..........................................       $70,185              $165,045
                                                          =======              ========
Gross profit.......................................       $17,014              $ 39,068
                                                          =======              ========
Earnings (loss) before income tax and extraordinary
  items............................................       $(2,831)             $ (2,773)
                                                          =======              ========
Net earnings (loss)................................       $(1,707)             $ (1,907)
                                                          =======              ========
Company's proportionate share (42.4%)..............       $  (724)             $   (809)
                                                          =======              ========
EBITDA.............................................       $ 5,451              $ 13,336
                                                          =======              ========
</TABLE>

                                        8
<PAGE>   10
                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 6 -- CONTINGENCIES

     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, and
local 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 amount and estimated liabilities are not considered significant by
the Company based on present facts.

     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 on the Company's
condensed consolidated financial statements.

     Effective with the Reorganization on August 20, 1998, the Company and
Evenflo entered into an indemnity agreement whereby the Company and Evenflo
indemnified the other against liability or obligation related to their
respective operations or business whether arising prior to or after the
Reorganization. Additionally, the Company indemnified Evenflo against damages,
as advisory or other corrective action relating to any products manufactured by
Evenflo prior to the close of business on August 20, 1998. The estimated
liability as of July 3, 1999 recorded by the Company related to these matters is
approximately $1,200.

NOTE 7 -- COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" which establishes standards for reporting and disclosure of
comprehensive income and its components. For the three fiscal months ended July
3, 1999 and June 30, 1998, the comprehensive income (loss) was $183 and
$(20,511), respectively. For the six fiscal months ended July 3, 1999 and June
30, 1998, the comprehensive income (loss) was $(5,374) and $(33,892),
respectively.

                                        9
<PAGE>   11

                        INDEPENDENT ACCOUNTANTS' REPORT

The Board of Directors
Spalding Holdings Corporation
Chicopee, Massachusetts

     We have reviewed the accompanying condensed consolidated balance sheet of
Spalding Holdings Corporation and subsidiaries (the "Company") as of July 3,
1999, and the related condensed statements of consolidated earnings (loss) and
of condensed consolidated cash flows for the three and six fiscal months ended
July 3, 1999 and June 30, 1998. 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 December 31, 1998,
and the related statements of consolidated earnings (loss), consolidated cash
flows and consolidated shareholders' equity (deficiency) for the period October
1, 1998 through December 31, 1998 (not presented herein); and in our report
dated March 19, 1999, 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 December 31, 1998, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.

     As discussed in Note 2 to the condensed consolidated financial statements,
effective January 1, 1999, the Company changed its method of valuing U.S.
inventories from the Last-in, First-out costing method to the First-in,
First-out costing method.

DELOITTE & TOUCHE LLP

Hartford, Connecticut
August 6, 1999

                                       10
<PAGE>   12

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

FORWARD-LOOKING STATEMENTS

     Sections of this Form 10-Q, including Management's Discussion and Analysis
of Financial Conditions and Results of Operations ("MD&A"), contain various
forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995, with respect to the financial condition, results
of operation and business of the Company. Examples of forward-looking statements
are statements that use the words "expect", "anticipate", "plan", "intend",
"project", "believe" and similar expressions. These forward-looking statements
involve certain risks and uncertainties, and no assurance can be given that any
of such matters will be realized. Actual results may differ materially from
those contemplated by such forward looking statements as a result of, among
other things, failure by the Company to predict accurately customer preferences;
a decline in the demand for merchandise offered by the Company; failure of the
Company's brand repositioning strategy and organizational restructuring;
competitive influences; changes in levels of consumer spending habits;
effectiveness of the Company's brand awareness and marketing programs; general
economic conditions that are less favorable than expected or a downturn in the
consumer products industry; a significant change in the regulatory environment
applicable to the Company's business; an increase in the rate of import duties
or export quotas with respect to the Company's merchandise; any material adverse
effects of the Year 2000 issue on the business of the Company or third parties
with which the Company does business; or an adverse outcome of the litigation
referred to in "Legal Proceedings" that materially and adversely affects the
Company's financial condition. The Company assumes no obligation to update or
revise any such forward looking statements, which speak only as of their date,
even if experience or future events or changes make it clear that any projected
financial or operating results implied by such forward-looking statements will
not be realized.

     Basis Of Presentation.  As previously stated, on August 20, 1998, the
Company separated its two businesses, Spalding and Evenflo, into two stand-alone
companies. Accordingly, the unaudited financial statements presented for the
three and six months ended June 30, 1998 include the results of operations and
cash flows for Evenflo. For improved comparability, the Company has provided
below, summary pro forma results of operations for the three and six months June
30, 1998 giving impact to the elimination of Evenflo from the historical
information as if the Reorganization had occurred on January 1, 1998. The
management's discussion and analysis provides analysis against the pro forma
June 30, 1998 financial statements. For additional information on business
segments, see Note 4 in the Notes to Condensed Consolidated Financial Statements
included elsewhere in the Form 10-Q.

                                       11
<PAGE>   13

                 SPALDING HOLDINGS CORPORATION AND SUBSIDIARIES

              CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS (LOSS)
           FOR THE FISCAL THREE AND SIX MONTHS ENDED JULY 3, 1999 AND
           PRO FORMA FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998
            GIVING EFFECT TO THE EXCLUSION OF EVENFLO COMPANY, INC.
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED       SIX MONTHS ENDED
                                                  --------------------    --------------------
                                                              PROFORMA                PROFORMA
                                                  JULY 3,     JUNE 30,    JULY 3,     JUNE 30,
                                                    1999        1998        1999        1998
                                                  --------    --------    --------    --------
                                                      (UNAUDITED)             (UNAUDITED)
<S>                                               <C>         <C>         <C>         <C>
NET SALES.......................................  $128,043    $161,633    $245,199    $310,801
  Cost of sales.................................    69,312      98,744     137,050     187,616
                                                  --------    --------    --------    --------
GROSS PROFIT....................................    58,731      62,889     108,149     123,185
  Selling, general and administrative
     expenses...................................    45,512      70,195      90,674     131,122
  Royalty income, net...........................    (2,852)     (2,839)     (4,949)     (5,532)
  Restructuring and other unusual costs.........       202       2,665         666       7,344
                                                  --------    --------    --------    --------
INCOME (LOSS) FROM OPERATIONS...................    15,869      (7,132)     21,758      (9,749)
  Interest expense, net.........................    13,914      18,690      27,915      35,435
  Currency loss (gain), net.....................      (289)      1,396         673       1,840
  Equity in net (earnings) loss of Evenflo
     Company, Inc...............................       724           0         809           0
                                                  --------    --------    --------    --------
EARNINGS (LOSS) BEFORE INCOME TAXES.............     1,520     (27,218)     (7,639)    (47,024)
  Income taxes (benefit)........................       976      (9,105)     (2,021)    (15,102)
                                                  --------    --------    --------    --------
NET EARNINGS (LOSS).............................  $    544    $(18,113)   $ (5,618)   $(31,922)
                                                  ========    ========    ========    ========
</TABLE>

                                       12
<PAGE>   14

RESULTS OF OPERATIONS

     Overall, the business results for the fiscal three months and six months
ended July 3, 1999 are delivering the intended benefits of the business
strategies implemented by Spalding's now management team, namely: (1) improving
the profitability of sales via the repositioning of key brands; (2) lowering
operating expenses via the restructuring of the organization and (3) lowering
working capital and improving customer service via the reengineering of key
business practices. As a result, net earnings results for both the fiscal three
and six months ended July 3, 1999, are significantly ahead of prior year results
for the same period.

 Fiscal Three Months ended July 3, 1999 ("1999 Second Quarter") as Compared to
 the Three Months ended June 30, 1998 ("1998 Second Quarter").

     Net Sales are gross sales net of returns, allowances and trade discounts.
The Company's net sales decreased 20.8% to $128.0 million for the 1999 second
quarter compared to $161.6 million for the 1998 second quarter. U.S. Golf net
sales decreased 18.5% to $75.6 million for the 1999 second quarter compared to
$92.8 million for the same quarter in 1998. The decrease in net sales was
expected as the Company continued its plan to exit low margin products and loss
generating businesses. Lower golf club and accessory sales were partially offset
by increased golf ball sales. The U.S. net sales of the Strata and Top-Flite
family of golf balls increased an aggregate of 33.6%. U.S. Sporting Goods
decreased 30.3% to $18.6 million for the 1999 second quarter compared to $26.7
million for the same quarter in 1998. The decrease is across all product lines,
but is primarily attributable to the elimination of many lower end, unprofitable
products. International sales decreased 19.9% to $33.8 million for the 1999
second quarter compared to $42.2 million for the comparable period in 1998. The
international decrease is related to the 1998 closure of subsidiary operations
in Mexico, Spain, Italy, France and Germany and the downsizing of operations in
Japan.

     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
and production. The Company's gross profit decreased to $58.7 million in the
1999 second quarter from $62.9 million for the 1998 second quarter, a decrease
of $4.2 million or 6.7%. At the same time, gross profit as a percentage of net
sales increased to 45.9% for the 1999 second quarter from 38.9% for the
comparable prior year quarter.

     The increase in the gross profit margin rates were driven by improved
margins in the golf ball and sporting goods product lines, as well as increased
international gross profit margins. The U.S. golf ball gross profit margins
improved as a result of an increase in the aggregate sales of Strata, Top-Flite
XL 2000 and Top-Flite XL. Internationally, the gross profit rate increased to
39.5% for the 1999 second quarter from 34.1% for the 1998 second quarter.
Stronger product mix in on-going operations accounted for 4.3 percentage points
of the increase, while the 1998 closure of unprofitable operations accounted for
the remainder of the improvement.

     Selling, General and Administrative ("SG&A") Expenses.  SG&A expenses
include the costs necessary to sell and distribute the Company's products and
the general and administrative costs of managing the business, including
salaries and related benefits, commissions, advertising and promotion expenses,
customer service expenses, distribution costs, bad debts, travel, amortization
of intangible assets, insurance and product liability costs, consumer corrective
action campaigns costs associated with the indemnification agreement with
Evenflo and professional fees. The Company's SG&A expenses decreased to $45.5
million for the 1999 second quarter from $70.2 million for the 1998 second
quarter, a decrease of $24.7 million or 35.2%.

     SG&A in the U.S. decreased to $37.7 million from $56.9 million, a decrease
of $19.2 million or 33.7%. The decrease is primarily attributable to (i) $10.0
million of lower advertising expenses, primarily due to a reduction in
advertising golf clubs and (ii) $9.2 million of reduced selling and
administrative costs (net of new computer implementation costs for the quarter
of $3.6 million) associated with the restructuring of the sales force and
corporate office activities. Internationally, the SG&A expense decreased to $7.8
million from $13.3 million, a decrease of $5.5 million or 41.4%. The decrease in
the International segment was primarily the result of expense eliminated within
the restructured operations in Japan, Mexico, Spain, France, Germany and Italy.
The remainder of the reduction is a result of the elimination of U.S. overheads
related to the international operations.

                                       13
<PAGE>   15

     Royalty Income increased to $2.9 million in the 1999 second quarter from
$2.8 million in the 1998 second quarter, an increase of $0.1 million or 3.6%.
The increase was primarily driven by higher royalty revenue in international
operations of $0.3 million offset by a decline in U.S. royalties of $0.2 million
in lower clothing royalties.

     Spalding Restructuring and Other Unusual Costs.  In 1997, the Company
implemented a plan to restructure the Spalding domestic and international
operations to focus on core line golf and sporting goods products. In 1998, the
plan was expanded to reduce the infrastructure needed to support the
international operations by converting subsidiary operations to distributors in
Mexico, France, Germany, Italy and Spain and downsizing operations in Japan.
This restructuring resulted in the elimination of approximately 120
international positions at various levels. Additionally, the U.S. operations
incurred certain management severance costs associated with the elimination of
approximately 100 domestic positions and the closing of the former headquarters
in Tampa, Florida. During the 1999 second quarter, the Company recorded $0.2
million of additional charges related to the restructuring of its operations,
primarily management severance and related expenses.

     The Company aggressively continues its plan to consolidate its operations.
The Company paid $1.4 million of these restructuring costs in the 1999 second
quarter and charged $0.2 million in the 1999 second quarter of non-cash
write-offs against the restructuring accruals and currently anticipates that the
remaining restructuring actions will be substantially completed by the end of
1999. As of July 3, 1999, the total amount accrued for restructuring charges is
$7.7 million.

     Interest Expense decreased $4.8 million to $13.9 million in the 1999 second
quarter from $18.7 million in the 1998 second quarter, a decrease of 25.7%. The
decrease is principally due to the sale of a majority interest in Evenflo and
the repayment of $278.8 million of debt on August 20, 1998. This repayment
resulted in a decrease in average borrowings under the Company's Credit
Facility. The Revolving Credit Facility and the Term Loans make up the
outstanding portion of the Company's $650.0 million Credit Facility (the "Credit
Facility"). The Company has outstanding $200.0 million of 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 and other financing
agreements for the 1999 second quarter was approximately $556.2 million compared
to approximately $756.5 million then in effect during the 1998 second quarter.

     Net Currency Gains of $0.3 million representing an improvement of $1.7
million in the 1999 second quarter in comparison to the 1998 second quarter loss
of $1.4 million. See "Liquidity and Capital Resources".

     Income Taxes were a tax expense of $1.0 million for the 1999 second
quarter, which represents an effective tax rate of 67% in relation to earnings
before income taxes of $1.5 million. The effective tax rate varied from a U.S.
federal statutory rate of 35% due to actual non-U.S. withholding taxes paid
during the quarter and the Company's portion of Evenflo's loss of $0.7 million
for the 1999 second quarter for which tax benefit has not been recognized.

     Net Earnings were $0.5 million for the 1999 second quarter compared to a
net loss of $18.1 million for the 1998 second quarter. The $18.6 million
increase in net earnings was a result of a $23.0 million increase in earning
from operations, plus a decrease in interest expense of $4.8 million plus a $1.7
million decrease in currency losses offset by $10.1 million of lower income tax
benefit and $0.7 million loss related to the Company's remaining investment in
Evenflo.

 Fiscal Six Months ended July 3, 1999 ("1999 Six Months") as Compared to the Six
 Months ended June 30, 1998 ("1998 Six Months").

     Net Sales are gross sales net of returns, allowances and trade discounts.
The Company's net sales decreased 21.1% to $245.2 million for the 1999 six
months compared to $310.8 million for the 1998 six months. U.S. Golf net sales
decreased 22.5% to $139.1 million for the 1999 six months compared to $179.4
million for the same period in 1998. The decrease in net sales was expected as
the Company continued its plan to exit low margin products and loss generating
businesses. Lower golf club and accessory sales were partially offset by
increased golf ball sales. The U.S. sales of the Strata and Top-Flite family of
golf balls increased an

                                       14
<PAGE>   16

aggregate of 23.6%. U.S. Sporting Goods decreased 23.3% to $41.9 million for the
1999 six months compared to $54.6 million for the same period in 1998. The
decrease is across all product lines, but is primarily attributable to the
elimination of many lower end, unprofitable products. International sales
decreased 16.4% to $64.2 million for the 1999 six months compared to $76.8
million for the comparable period in 1998. The international decrease is related
to the 1998 closure of subsidiary operations in Mexico, Spain, Italy, France and
Germany and the downsizing of operations in Japan.

     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
and production. The Company's gross profit decreased to $108.1 million in the
1999 six months from $123.2 million for the 1998 six months, a decrease of $15.1
million or 12.3%. At the same time, gross profit as a percentage of net sales
increased to 44.1% for the 1999 six months from 39.6% for the comparable prior
year period.

     The increase in the gross profit margin rates were primarily driven by
improved margins in golf balls, golf accessories, basketballs, diamond, athletic
shoes as well as increased international gross profit margins. Internationally,
the gross profit rate increased to 38.5% for the 1999 six months from 33.4% for
the 1998 six months. Stronger product mix in on-going operations accounted for
3.1 percentage points of the increase, while the 1998 closure of unprofitable
operations accounted for the remainder of the improvement.

     Selling, General and Administrative ("SG&A") Expenses.  SG&A expenses
include the costs necessary to sell and distribute the Company's products and
the general and administrative costs of managing the business, including
salaries and related benefits, commissions, advertising and promotion expenses,
customer service expenses, distribution costs, bad debts, travel, amortization
of intangible assets, insurance and product liability costs, consumer corrective
action campaigns costs associated with the indemnification agreement with
Evenflo and professional fees. The Company's SG&A expenses decreased to $90.7
million for the 1999 six months from $131.1 million for the 1998 six months, a
decrease of $40.4 million or 30.8%.

     SG&A in the U.S. decreased to $74.2 million from $101.7 million, a decrease
of $27.5 million or 27%. The decrease is primarily attributable to (i) $15.9
million of lower advertising expenses related to golf clubs and (ii) $11.6
million of reduced selling and administrative costs (net of new computer
implementation costs for the 1999 six months of $6.1 million) associated with
the restructuring of the sales force and corporate office activities.
Internationally, the SG&A expense decreased to $16.5 million from $29.4 million,
a decrease of $12.9 million or 43.9%. The decrease in the International segment
was primarily the result of expense eliminated within the restructured
operations in Japan, Mexico, Spain, France, Germany and Italy. The remainder of
the reduction is a result of the elimination of U.S. overheads related to the
international operations.

     Royalty Income decreased to $5.0 million in the 1999 six months from $5.5
million in the 1998 six months, a decrease of $0.5 million or 9.1%. The decrease
is primarily due to lower clothing royalties in the U.S., a result of a
reorganization of the product category and the discontinuance of licensees that
no longer matched the Company's brand strategies. Lower royalties were partially
offset by lower operating expenses.

     Spalding Restructuring and Other Unusual Costs.  In 1997, the Company
implemented a plan to restructure the Spalding domestic and international
operations to focus on core line golf and sporting goods products. In 1998, the
plan was expanded to reduce the infrastructure needed to support the
international operations by converting subsidiary operations to distributors in
Mexico, France, Germany, Italy and Spain and downsizing operations in Japan.
This facility restructuring resulted in the elimination of approximately 120
international positions at various levels. Additionally, the U.S. operations
incurred certain management severance costs associated with the elimination of
approximately 100 domestic positions and the closing of the former headquarters
in Tampa, Florida. During the 1999 six months, the Company recorded $0.7 million
of additional charges related to the restructuring of its operations, primarily
management severance and related expenses.

     The Company aggressively continues its plan to consolidate its operations.
The Company paid $3.3 million of these restructuring costs in the 1999 six
months and charged $0.7 million in the 1999 six months of

                                       15
<PAGE>   17

non-cash write-offs against the restructuring accruals and currently anticipates
that the remaining restructuring actions will be substantially completed by the
end of 1999.

     Interest Expense decreased $7.5 million to $27.9 million in the 1999 six
months from $35.4 million in the 1998 six months, a decrease of 21.2%. The
decrease is principally due to the sale of a majority interest in Evenflo and
the repayment of $278.8 million of debt on August 20, 1998. This repayment
resulted in a decrease in average borrowings under the Company's Credit
Facility. The Revolving Credit Facility and the Term Loans make up the
outstanding portion of the Company's $650.0 million Credit Facility (the "Credit
Facility"). The Company has outstanding $200.0 million of 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 and other financing
agreements for the 1999 six months was $551.6 million compared to $776.0 million
then in effect during the 1998 six months.

     Net Currency Losses of $0.7 million were $1.2 million lower in the 1999 six
months than in the 1998 six months. See "Liquidity and Capital Resources".

     Income Taxes were a tax benefit of $2.0 million for the 1999 six months,
which represents an effective tax rate of 26% in relation to a loss before
income taxes of $7.6 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 reduced
the benefit realized on the loss and the Company's portion of Evenflo's loss of
$0.8 million for the 1999 six months for which tax benefit has not been
recognized.

     Net Loss was $5.6 million for the 1999 six months compared to $31.9 million
for the 1998 six months. The $26.3 million decrease in the net loss was a result
of a $31.5 million increase in earning from operations, plus a decrease in
interest expense of $7.5 million and a $1.2 million decrease in currency losses
offset by $13.1 million of lower income tax benefit and $0.8 million loss
related to the Company's remaining investment in Evenflo.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal sources of liquidity are from cash flows generated
from operations and from borrowings under the Company's $250.0 million revolving
credit facility and certain non-U.S. facilities (the majority of which non-U.S.
borrowings are guaranteed by the Company). The Company's principal uses of
liquidity is to provide working capital, meet debt service requirements and
finance the Company's strategic plans. At July 3, 1999, the Company had an
available borrowing capacity under the Credit Facility of $61.4 million (net of
$37.6 million of outstanding letters of credit and bankers' acceptances). The
Company does not have any required amortization of Term Loans in calendar 1999.

     The Company believes its business is somewhat seasonal. For calendar 1998
quarterly net sales as a percentage of total sales were approximately 29.8%,
32.3%, 26.6%, and 11.3%, 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 fourth quarters when cash generated from operating activities coupled
with drawdowns from credit facilities have been invested in receivables and
inventories.

     For the 1999 six months, the Company used $5.5 million in cash before
financing activities to fund $7.8 million in capital expenditures (primarily an
integrated computer system). Operating activities generated $2.2 million of
cash. Cash usage in the 1999 six months was funded from $6.6 million in net
borrowings from the Company's Revolving Credit Facility and credit facilities
available to certain of the Company's non-U.S. operations.

     Net cash flows generated by operating activities were $2.2 million in the
1999 six months compared to cash used in operating activities of $78.7 million
for the 1998 six months. The $81.0 million lower use of cash for operating
activities when compared to the 1998 six months was due to (i) $44.3 million
lower use of cash for working capital, (ii) a $26.3 million decrease in the net
loss and (iii) a $7.7 million decrease in other non-cash items affecting cash
flow from operations.

                                       16
<PAGE>   18

     Capital expenditures during the 1999 six months relate primarily to the
implementation of a new integrated computer system. The Company expects to fund
approximately $12.0 million in capital expenditures in 1999.

     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, some 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, the Company may face liquidity problems
and might be required to dispose of material assets or operations to fund its
operations and capital expenditures and to meet its debt service and other
obligations, and there can be no assurances 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 1999 second quarter as
compared to the 1998 second quarter and to the 1999 six months as compared to
the 1998 six months.

                     THREE FISCAL MONTHS ENDED JULY 3, 1999
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                OTHER ITEMS
HISTORICAL       AFFECTING       ADJUSTED
  EBITDA     HISTORICAL EBITDA    EBITDA
----------   -----------------   --------
<S>          <C>                 <C>
$18,522           $5,737         $24,259
 =======          ======         =======
</TABLE>

     The Company's 1999 historical EBITDA was adversely affected by $4,811 of
restructuring and other unusual costs. Restructuring costs were $202 and
primarily consisted of management severance costs. In addition, the Company
incurred $4,609 of other unusual expenses associated primarily with software
expense and consulting services related to the implementation of an integrated
computer system (Systems Application Processes or "SAP"). The new software will
support the Company's efforts to incorporate industry best practices and
increase efficiencies. The remaining difference of $724 represents the non-cash
equity in net losses of Evenflo.

                        THREE MONTHS ENDED JUNE 30, 1998
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  OTHER ITEMS
                                                 HISTORICAL        AFFECTING        ADJUSTED
                                                   EBITDA      HISTORICAL EBITDA     EBITDA
                                                 ----------    -----------------    --------
<S>                                              <C>           <C>                  <C>
Spalding.......................................   $(4,222)          $10,252          $6,030
Evenflo........................................     2,587               872           3,459
Corporate......................................    (1,128)               11          (1,117)
                                                  -------           -------          ------
Consolidated...................................   $(2,763)          $11,135          $8,372
                                                  =======           =======          ======
</TABLE>

     Spalding's 1998 second quarter historical EBITDA was adversely affected by
$10,252 of restructuring and other unusual costs. Restructuring costs were
$2,665 and consisted of (i) $816 principally for international severance and
lease settlements and (ii) $849 of management severance costs. In addition,
Spalding incurred $7,587 of other unusual expenses associated with the closure
and downsizing of certain international affiliates under the international
restructuring program consisting of (i) $10 in receivable cash discounts that
reduced net sales, (ii) $148 in inventory write-offs in Japan and certain
exiting countries expensed to cost of sales, (iii) $900 inventory write-offs at
Etonic expensed to cost of sales, (iv) $529 in receivable write-offs due to

                                       17
<PAGE>   19

lower collection rates in exiting countries charged to SG&A expenses, (v) $300
in computer lease abandonment at Etonic charged to SG&A expenses, and (vi)
$5,700 charged to SG&A for the misapplication of funds by Spalding's freight
audit and payment provider.

     Evenflo's 1998 second quarter historical EBITDA was adversely affected by
$872 of restructuring and other unusual costs. Restructuring costs were $710 to
relocate the Gerry Colorado administrative and manufacturing operations to
Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $162 of
other unusual expenses including $26 of expenses to cost of sales to relocate
the Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia locations
and $136 charged to selling, general and administrative expenses for Year 2000
conversion costs.

                      SIX FISCAL MONTHS ENDED JULY 3, 1999
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                OTHER ITEMS
HISTORICAL       AFFECTING       ADJUSTED
  EBITDA     HISTORICAL EBITDA    EBITDA
----------   -----------------   --------
<S>          <C>                 <C>
$26,468           $8,712         $35,180
 =======          ======         =======
</TABLE>

     The Company's 1999 six months historical EBITDA was adversely affected by
$7,903 of restructuring and other unusual costs. Restructuring costs were $666
and primarily consisted of management severance costs. In addition, the Company
incurred $7,237 of other unusual expenses associated primarily with software
expense and consulting services related to the implementation of an integrated
computer system (Systems Application Processes or "SAP"). The new software will
support the Company's efforts to incorporate industry best practices and
increase efficiencies. The remaining difference of $809 represents the non-cash
equity in net losses of Evenflo.

                         SIX MONTHS ENDED JUNE 30, 1998
                         (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  OTHER ITEMS
                                                 HISTORICAL        AFFECTING        ADJUSTED
                                                   EBITDA      HISTORICAL EBITDA     EBITDA
                                                 ----------    -----------------    --------
<S>                                              <C>           <C>                  <C>
Spalding.......................................   $(3,060)          $17,706         $14,646
Evenflo........................................     8,509             1,968          10,477
Corporate......................................    (2,042)              138          (1,904)
                                                  -------           -------         -------
Consolidated...................................   $ 3,407           $19,812         $23,219
                                                  =======           =======         =======
</TABLE>

     Spalding's 1998 six months historical EBITDA was adversely affected by
$17,706 of restructuring and other unusual costs. Restructuring costs were
$7,344 and consisted of (i) $3,995 principally for international severance and
lease settlements and (ii) $3,349 of management severance costs. In addition,
Spalding incurred $10,362 of other unusual expenses associated with the closure
and downsizing of certain international affiliates under the international
restructuring program consisting of (i) $536 in receivable cash discounts that
reduced net sales, (ii) $2,325 in inventory write-offs in Japan and certain
countries that Spalding exited that were expensed to cost of sales, and (iii)
$1,501 in receivable write-offs due to lower collections rates in countries that
Spalding has exited, (iv) $300 in computer lease settlements Etonic charged to
SG&A expense and (v) $5,700 charged to SG&A expense for the misapplication of
funds by Spalding's freight audit and payment provider.

                                       18
<PAGE>   20

     Evenflo's 1998 six months historical EBITDA was adversely affected by
$1,968 of restructuring and other unusual costs. Restructuring costs were $1,383
to relocate the Gerry Colorado administrative and manufacturing operations to
Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $585 of
other unusual expenses including $235 of expenses to cost of sales to relocate
the Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia locations
and $350 charged to selling, general and administrative expenses for Year 2000
conversion costs.

YEAR 2000 COMPLIANCE

     The Company has been conducting a comprehensive review of its computer
systems to identify those that could be adversely affected by the "Year 2000
issue" (which refers to the inability of many computer systems to process
accurately dates later than December 31, 1999), and has been executing a plan to
remediate or replace affected systems that use microchips or other embedded
technology. (For example, robotic systems at the Company's manufacturing
center.)

     The Company's Year 2000 compliance project includes four phases: (1)
evaluation of the Company's owned or leased systems and equipment to identify
potential Year 2000 compliance issues; (2) remediation or replacement of Company
systems and equipment determined to be non-compliant (and testing of remediated
systems before returning them to production); (3) inquiry regarding Year 2000
readiness of material business partners and other third parties on whom the
Company's business is dependent; and (4) development of contingency plans, where
feasible, to address potential third party non-compliance or failure of material
Company systems.

     The initial phase of the Company's Year 2000 compliance project was the
evaluation of all software, hardware and equipment owned or licensed by the
Company, and identification of those systems and equipment requiring Year 2000
remediation. Analysis of all material software and hardware has been completed.
Of those software systems requiring remediation or replacement, all material
systems have already been remediated. In addition, all mission critical computer
hardware in the Company's home offices, manufacturing center and distribution
center that was not Year 2000 compliant has been remediated and hardware and
software unique to the Company's offices located outside the United States has
been remediated. Spalding will continue to apply Year 2000 upgrades immediately
upon notification of our information technology providers.

     The Company has engaged a consultant to assist in the evaluation of the
equipment used in the Company's manufacturing center (other than computer
software and hardware, which were included in the analysis and remediation
efforts described in the preceding paragraph). The equipment evaluation was
completed in December 1998, and remediation or replacement of manufacturing
center equipment found not to be Year 2000 compliant is completed.

     The costs and timing for replacement of certain of the Company's systems
that were not Year 2000 compliant have been anticipated as part of the Company's
planned information systems spending. The total cost to the Company specifically
associated with addressing the Year 2000 issue with respect to its systems and
equipment has not been, and is not anticipated to be, material to the Company's
financial position or results of operations. The Company estimates that the
total additional cost of managing its Year 2000 project, remediating existing
systems and replacing non-compliant systems, is approximately $1.3 million of
which approximately $0.6 million has been or will be expensed as incurred, and
$0.7 million has been or will be capitalized. Future costs, if any, will be
incurred as part of the SAP implementation. Although the Company believes its
Year 2000 compliance efforts with respect to its systems will be successful, any
failure or delay could result in actual costs and timing materially different
from that presently contemplated, and in a disruption of business. The Company
is developing a contingency plan to permit its primary operations to continue if
the Company's modifications and conversions of its systems are not successfully
completed on a timely basis, but the foregoing cost estimates do not take into
account any expenditures associated with such contingencies. The Company's cost
estimates also do not include time or costs that may be incurred as a result of
third parties' not becoming Year 2000 compliant on a timely basis.

                                       19
<PAGE>   21

     The Company is communicating with its business partners, including key
manufacturers, vendors, banks and other third parties with whom it does
business, to obtain information regarding their state of readiness with respect
to the Year 2000 issue. Failure of third parties to remediate Year 2000 issues
affecting their respective businesses on a timely basis, or to implement
contingency plans sufficient to permit uninterrupted continuation of their
businesses in the event of a failure of their systems, could have a material
adverse effect on the Company's business and results of operations. Assessment
of third party Year 2000 readiness has been substantially completed.

     The Company's Year 2000 compliance project included development of a
contingency plan designed to support critical business operations in the event
of the occurrence of systems failures or the occurrence of reasonably likely
worst case scenarios. The Company's contingency plans will be substantially
developed by September 30, 1999.

     The Company may not be able to compensate adequately for business
interruption caused by certain third parties. Potential risks include suspension
or significant curtailment of service or significant delays by banks, utilities
or common carriers, or at U.S. ports of entry. The Company's business also could
be materially adversely affected by the failure of governmental agencies to
address Year 2000 issues affecting the Company's operations. For example, a
significant amount of the Company's merchandise is manufactured outside the
United States, and the Company is dependent upon the issuance by foreign
governmental agencies of export visas for, and upon the U.S. Customs Service to
process and permit entry into the United States of, such merchandise. If
failures in government systems result in the suspension or delay of these
agencies' services, the Company could experience significant interruption or
delays in its inventory flow.

     The costs and the timing for management's completion of Year 2000
compliance, modification and testing processes are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, the success of third
parties' Year 2000 compliance efforts and other factors. There can be no
assurance that these assumptions will be realized or that actual results will
not vary materially.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. The accounting for changes in the fair value of
a derivative (that is, gains and losses) depends upon the intended use of the
derivative and resulting designation if used as a hedge. SFAS No. 133 is
effective for 2001. The adoption of SFAS No. 133 is not expected to have a
material effect on the Company's consolidated financial statements.

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DISCLOSURE ABOUT FOREIGN CURRENCY RISK

     Although the majority of the Company's transactions are in U.S. Dollars,
affiliates operate in their local currency with certain transactions for
inventory and royalties being denominated in U.S. Dollars. The Company may
purchase short-term forward exchange contracts to hedge payments that require
conversion to U.S. Dollars. The purpose of entering into these hedge contracts
is to minimize the impact of foreign currency fluctuation on the results of
operations. Certain increases or decreases in the affiliate U.S. dollar payments
are offset by gains and losses on the hedges. The contracts have maturity dates
that do not exceed twelve months. The Company does not purchase short-term
forward exchange contracts for trading purposes.

                                       20
<PAGE>   22

     As of July 3, 1999, the Company had outstanding the following purchased
foreign exchange forward contracts (in thousands of U.S. dollars):

<TABLE>
<CAPTION>
                                                                   WEIGHTED
                                                                   AVERAGE
                                                       CONTRACT    CONTRACT    UNREALIZED
                                                        AMOUNT       RATE      GAIN (LOSS)
                                                       --------    --------    -----------
<S>                                                    <C>         <C>         <C>
Foreign currency forward contracts:
  Canadian dollar....................................   $5,676      $1.49         $(96)
                                                        ------      -----         ----
     Total...........................................   $5,676                    $(96)
                                                        ======                    ====
</TABLE>

DISCLOSURE ABOUT INTEREST RATE RISK

     The Company is subject to market risk from exposure to changes in interest
rates based on its financing, investing, and cash management activities. The
Company utilizes a balanced mix of debt maturities along with both fixed-rate
and variable-rate debt to manage its exposures to changes in interest rates. The
Company does not expect changes in interest rates to have a material effect on
income or cash flows in 1999, although there can be no assurances that interest
rates will not significantly change.

     In order to reduce the impact of fluctuating rates on its variable rate
debt, on April 14, 1999, the Company entered into an interest rate cap on $300.0
million of its variable rate, Eurodollar debt associated with the Credit
Facility (total variable rate, Eurodollar debt at July 3, 1999 was $320.8
million). The cap has a strike rate of 5.16% and has a termination date of
December 31, 1999. At July 31, 1999, the effective Eurodollar debt interest rate
was 5.31%.

                                    PART II.

                               OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     Reference is made to Part I, Item 3 "Legal Proceedings" of the Registrant's
Annual Report on Form 10-K for the Transition Period ended December 31, 1998,
filed March 29, 1999. Since March 29, 1999, the Company has not been named as a
defendant in any action that to the best of the Company's knowledge could have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.

     The Company had previously reported litigation involving a patent
infringement suit against Graco relating to Evenflo's Carry Right handle used on
Evenflo's line of car seats and a counterclaim by Graco alleging certain
infringements by Evenflo. Further, Century filed suit against Evenflo and
Spalding alleging infringements of two patents relating to the design of the
storage compartment and base of Evenflo car seats. Following execution of a
settlement agreement dated May 26, 1999 among Evenflo, Graco, and Century, all
of the foregoing litigation was dismissed. The terms of the settlement agreement
are confidential. The effect of the settlement agreement is not material to the
consolidated financial condition or the results of operations of the Company.

                                       21
<PAGE>   23

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<TABLE>
<S>   <C>
 3.1  Restated Certificate of Incorporation of Evenflo and
      Spalding Holdings Corporation
15    Letter in lieu of consent of Deloitte & Touche LLP RE:
      unaudited interim financial information
27.1  Fiscal six months ended July 3, 1999 Financial Data Schedule
      Restated six months ended June 30, 1998 Financial Data
27.2  Schedule(*)
</TABLE>

---------------
(*) Financial Data Schedule is restated to reflect the retroactive application
    of the Company's change in method of valuing U.S. inventories from LIFO to
    FIFO.

     (b) Reports on Form 8-K

     None.

                                       22
<PAGE>   24

                                   SIGNATURE

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

                                          Spalding Holdings Corporation
                                          (Registrant)

                                          By: /s/          G. WADE LEWIS
                                            ------------------------------------
                                            G. Wade Lewis
                                            Chief Financial Officer
                                            (a Principal Financial Officer and
                                            authorized signatory)

Date: August 13, 1999

                                       23