<PAGE>


                      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                          June 30, 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
of Incorporation or Organization)                        Identification No.)

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 July 31, 1998, was 96,921,741 shares.

                                       1

<PAGE>


Evenflo & Spalding Holdings Corporation and Subsidiaries
Unaudited Condensed Statements of Consolidated Earnings (Loss)
and Comprehensive Earnings (Loss)
For the three months ended June 30, 1998 and 1997
(Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                       Three months ended
                                                                            June 30,
                                                                  ----------------------------

                                                                       1998           1997
                                                                    ---------      ---------
<S>                                                                 <C>              <C>     
Net sales                                                           $ 237,584        251,411

     Cost of sales                                                    166,704        170,131
                                                                    ---------      ---------
Gross profit                                                           70,880         81,280

     Selling, general and administrative expenses                      78,187         64,058
     Royalty income, net                                               (3,023)        (3,742)
     Restructuring costs                                                3,375            962
                                                                    ---------      ---------
Income (loss) from operations                                          (7,659)        20,002

     Interest expense, net                                             21,712         19,286
     Currency loss, net                                                 1,655            150
                                                                    ---------      ---------

Earnings (loss) before income taxes                                   (31,026)           566

     Income taxes (benefit)                                           (10,614)        10,083
                                                                    ---------      ---------


Net earnings (loss)                                                   (20,412)        (9,517)

     Other comprehensive earnings (loss) - currency translation
         adjustments net of tax benefit of $130 and $50                   174           (420)
                                                                    ---------      ---------

Comprehensive earnings (loss)                                       $ (20,238)        (9,937)
                                                                    ---------      ---------
                                                                    ---------      ---------
</TABLE>



See Unaudited Notes to Condensed Consolidated Financial Statements


                                       2

<PAGE>


Evenflo & Spalding Holdings Corporation and Subsidiaries
Unaudited Condensed Statements of Consolidated Earnings (Loss)
and Comprehensive Earnings (Loss)
For the nine months ended June 30, 1998 and 1997
(Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                         Nine months ended
                                                                             June 30,
                                                                  -----------------------------

                                                                       1998           1997
                                                                    ---------      ---------
<S>                                                                 <C>              <C>     
Net sales                                                           $ 631,184        582,476

     Cost of sales                                                    444,359        393,190
                                                                    ---------      ---------
Gross profit                                                          186,825        189,286

     Selling, general and administrative expenses                     201,627        171,358
     Royalty income, net                                               (9,829)        (9,514)
     Restructuring costs                                                9,136          2,023
                                                                    ---------      ---------
Income (loss) from operations                                         (14,109)        25,419

     Interest expense, net                                             59,287         53,112
     Currency loss, net                                                 3,214            371
                                                                    ---------      ---------
Earnings (loss) before income taxes                                   (76,610)       (28,064)

     Income taxes (benefit)                                           (26,095)        (4,232)
                                                                    ---------      ---------

Net earnings (loss)                                                   (50,515)       (23,832)

     Other comprehensive earnings (loss) - currency translation
         adjustments net of tax benefit of $328 and $177                   23           (632)
                                                                    ---------      ---------

Comprehensive earnings (loss)                                       $ (50,492)       (24,464)
                                                                    ---------      ---------
                                                                    ---------      ---------
</TABLE>



See Unaudited Notes to Condensed Consolidated Financial Statements


                                       3
<PAGE>


Evenflo & Spalding Holdings Corporation and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
June 30, 1998 and September 30, 1997
(Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                       June 30,     September 30,
Assets                                                                   1998           1997
------                                                               -----------    -------------

<S>                                                                  <C>                  <C>     
Current assets
Cash                                                                 $    20,569            5,168
Receivables, less allowance of $5,233 and $3,941                         233,928          243,571
Inventories                                                              215,070          157,512
Deferred income taxes                                                     11,518           13,860
Other                                                                      9,532            8,955
                                                                     -----------      -----------
         Total current assets                                            490,617          429,066
Property, plant and equipment, net                                       115,455          110,195
Intangible assets, net                                                   162,227          154,123
Deferred income taxes                                                     65,747           34,904
Deferred financing costs                                                  28,408           29,594
Other                                                                      2,459            3,349
                                                                     -----------      -----------
         Total assets                                                $   864,913          761,231
                                                                     -----------      -----------
                                                                     -----------      -----------
Liabilities and Shareholders' Equity (Deficiency)
Current liabilities
Non-U.S. bank loans                                                  $     9,524           17,674
Current maturities of long-term debt                                      17,500           17,500
Accounts payable                                                         171,947          183,657
Accrued expenses                                                          78,808           79,348
Income taxes                                                                 109              811
                                                                     -----------      -----------
         Total current liabilities                                       277,888          298,990
Long-term debt                                                           774,174          609,900
Pension                                                                   12,155           12,327
Post-retirement benefits                                                   8,910            8,910
Other                                                                      1,570            1,735
                                                                     -----------      -----------
         Total liabilities                                             1,074,697          931,862
Shareholders' equity (deficiency)
Common stock, $.01 par value, 150,000,000 shares authorized
      and 96,921,741 and 94,655,078 shares outstanding                       970              947
Paid-in capital                                                          443,097          431,780
Retained earnings (deficit)                                             (649,582)        (599,067)
Accumulated other comprehensive earnings (loss) - currency
     translation adjustments                                              (4,269)          (4,291)
                                                                     -----------      -----------
         Total shareholders' equity (deficiency)                        (209,784)        (170,631)
                                                                     -----------      -----------
         Total liabilities and shareholders' equity (deficiency)     $   864,913          761,231
                                                                     -----------      -----------
                                                                     -----------      -----------
</TABLE>





See Unaudited Notes to Condensed Consolidated Financial Statements


                                        4
<PAGE>


Evenflo & Spalding Holdings Corporation and Subsidiaries
Unaudited Condensed Statements of Consolidated Cash Flows
For the nine months ended June 30, 1998 and 1997
(Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                            Nine months ended
                                                                                 June 30,
                                                                         ------------------------

Increase (Decrease) in Cash                                                   1998           1997
---------------------------                                              ---------      ---------
<S>                                                                      <C>              <C>     
Cash flows from operating activities
Net earnings (loss)                                                      $ (50,515)       (23,832)
Adjustments to reconcile net earnings (loss) to net cash
   provided (used) by operating activities:
     Depreciation                                                           16,257         12,976
     Intangibles amortization                                                4,141          3,537
     Deferred income taxes                                                 (27,033)        (2,297)
     Deferred financing cost amortization                                    3,884          3,478
     Other                                                                    (172)          (407)
                                                                         ---------      ---------
         Subtotal                                                          (53,438)        (6,545)
     Receivables                                                             9,643        (29,439)
     Inventories                                                           (54,175)       (25,629)
     Current liabilities, excluding bank loans                             (14,052)         1,712
     Other                                                                     (14)        (1,622)
                                                                         ---------      ---------
              Net cash used by operating activities                       (112,036)       (61,523)
Cash flows from investing activities
Capital expenditures                                                       (22,664)       (21,033)
Payment to purchase net assets of Hogan                                     (1,641)             0
Payment to purchase net assets of Gerry                                          0        (72,102)
                                                                         ---------      ---------
              Net cash flows used in investing activities                  (24,305)       (93,135)
                                                                         ---------      ---------
              Net cash used before financing activities                   (136,341)      (154,658)
Cash flows from financing activities
Net borrowings under revolving credit loan                                 154,600         88,700
Net borrowings of other indebtedness                                        (1,501)         1,129
Payment of new credit agreement costs                                       (2,698)             0
Proceeds from issuance of common stock                                       1,422          8,226
Repurchase of common stock                                                     (81)          (283)
                                                                         ---------      ---------
              Net cash flows provided (used) by financing activities       151,742         97,772
Cash -  net change                                                          15,401        (56,886)
              beginning of period                                            5,168         75,298
                                                                         ---------      ---------
              end of period                                              $  20,569         18,412
Supplemental cash flow data
Interest paid                                                            $  61,519         41,370
Income taxes paid (refunded)                                                (6,047)         2,316
Non-cash portion of acquisition of Hogan net assets for
   common stock and a 10 1/2% note                                          13,025              0
Non-cash exchange of preferred stock into common stock                           0        164,174
</TABLE>




See Unaudited Notes to Condensed Consolidated Financial Statements


                                       5
<PAGE>


Evenflo & Spalding Holdings Corporation and Subsidiaries
Unaudited Notes to Condensed Consolidated Financial Statements
For the three months and nine months ended June 30, 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 June 30, 1998, and
the related condensed statements of consolidated earnings (loss) and
comprehensive earnings (loss) for the three and nine month periods ended June
30, 1998 and 1997, and of cash flows for the nine month periods ended June 30,
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).

Acquisitions

On April 21, 1997, the Company acquired certain 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 consolidated into Evenflo's operations in Ohio and 
Georgia. Gerry also has manufacturing operations in Wisconsin. Gerry 
manufactured and/or marketed specialty juvenile products under the 
Gerry-Registered Trademark- and Snugli-Registered Trademark- brand names. The 
Gerry acquisition was accounted for using the purchase method of accounting; 
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 $4,533 and would have increased 
the net loss by $(742) for the quarter ended June 30, 1997, and would have 
increased pro forma consolidated net sales by $61,362 and would have 
increased the net loss by $(985) for the nine months ended June 30, 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


                                       6
<PAGE>


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 of accounting;
accordingly, the operating results of Hogan have been included in the condensed
statements 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 the nine months ended June 30,
1998 and 1997.

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 down-sized 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.

Restructuring costs were $9,136 in the nine months ended June 30, 1998. Spalding
restructuring costs were $7,693 and consisted of (i) $4,344 principally for
international severance and lease settlements, (ii) $2,349 of management
severance costs, and (iii) $1,000 of severance and other costs at Etonic.
Evenflo restructuring costs were $1,443 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. 
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 nine
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


                                       7
<PAGE>


positions. There are no amortization requirements for the first five years of
the loan, the sixth through fifteenth year requires $27 monthly amortization
payments, and years sixteen through twenty requires $54 monthly amortization
payments. Massachusetts Development Finance Agency has been granted a security
interest in the warehouse. 

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 deductions 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. 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
Company's deferred tax asset ($42,582 at June 30, 1998) relating to future
amortization of such trademarks owned by the Company would be written off as a
charge to retained earnings (deficit). Under the terms of indemnity provisions
contained in the 1996 Recapitalization and Stock Purchase Agreement to which the
Company and Abarco were parties (the "Recapitalization"), the Company believes
that any resulting liability relating to years prior to the Recapitalization
would be indemnified by Abarco, the selling entity. With respect to the 1997 tax
year, the Company believes that its maximum liability, if any, will not exceed
$2,343, including interest and penalties.

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.

<TABLE>
<CAPTION>
Inventories                                               June 30,             September 30,
                                                            1998                   1997
                                                        ------------           -------------

<S>                                                       <C>                        <C>    
                  Finished goods                          $ 141,241                   99,733
                  Work in process                            40,141                   28,031
                  Raw materials                              33,688                   29,748
                                                           --------                 --------
                  Total inventories                       $ 215,070                  157,512
                                                           --------                 --------
                                                           --------                 --------
</TABLE>




                                       8
<PAGE>

Reclassifications

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


                                       9
<PAGE>


Subsequent Event

On July 31, 1998, the Company announced its intention to separate its two
businesses, Evenflo Company, Inc. ("Evenflo") and Spalding Sports Worldwide,
into two stand-alone companies. Following completion of the restructuring, which
is expected to occur in August 1998, the Company's headquarters in Tampa,
Florida will be closed and its functions transferred to the separate Spalding
and Evenflo operations. The Company estimates restructuring costs associated
with the closure of the corporate office to be approximately $4,500.

KKR 1996 Fund L.P., a limited partnership affiliated with Kohlberg Kravis
Roberts & Co. L.P., plans to acquire 51% of the outstanding common shares of
Evenflo (the "Common Stock") for a purchase price of $25,500 and to acquire
cumulative preferred stock of Evenflo for a purchase price of $40,000, both to
be acquired from a subsidiary of the Company. The subsidiary of the Company will
receive such newly-authorized preferred stock as a distribution from Evenflo. In
addition, prior to the acquisition of the Common Stock by KKR 1996 Fund L.P.,
Great Star Corporation, an affiliate of Abarco, plans to acquire 6.6% of the
outstanding Common Stock for a purchase price of $3,300 from a subsidiary of the
Company. Evenflo plans (i) to issue and sell $110,000 aggregate principal amount
of senior notes in a private offering and (ii) to enter into a $100,000
revolving credit facility with a syndicate of banks and other financial
institutions and borrow $10,000 under such credit facility on the date the
transactions described above are closed. Evenflo plans to apply the proceeds of
these transactions to repay intercompany indebtedness of approximately $110,000
to the Company and to pay transaction fees and expenses of approximately
$10,000.

As part of the restructuring, the Company reached agreement with its bank
syndicate to amend its senior credit facilities to remove certain financial
ratio requirements until December 31, 1999, and to amend other covenants. KKR
1996 Fund L.P. plans to invest $100,000 in exchange for cumulative preferred
stock of the Company.

The proceeds from the above transactions will be used to repay approximately
$275,000 of the Company's senior credit facilities.

As a result of the Evenflo separation, the Company will allocate a portion of 
its assets, liabilities and expenses to Evenflo. Deferred financing costs, 
deferred income taxes and long-term debt will be allocated to Evenflo's 
consolidated balance sheets and corporate administrative expenses, interest 
expense and income taxes wil be allocated to Evenflo's statements of 
consolidated earnings (loss).


                                       10
<PAGE>


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
June 30, 1998, and the related condensed statements of consolidated earnings
(loss) and comprehensive earnings (loss) for the three and nine months ended
June 30, 1998 and 1997, and of cash flows for the nine months ended June 30,
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, (May 20, 1998 as to note R) 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
August 7, 1998


                                       11
<PAGE>


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 June 30, 1998, Form 10-Q and
other filings by the Company with the Securities and Exchange Commission.

Results of Operations

         Quarter Ended June 30, 1998 ("1998 third quarter") as compared
            to the Quarter Ended June 30, 1997 ("1997 third 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 decreased $13.8 million or 5.5% to
$237.6 million for the 1998 third quarter compared to $251.4 million for the
same period in the prior year.

Spalding net sales were $155.1 million for the 1998 third quarter, a decrease 
of $2.1 million or 1.3% compared to the 1997 third quarter results of $157.2 
million. Domestic net sales of Spalding's golf equipment for the 1998 third 
quarter were up $3.7 million or 4.2% over the 1997 third quarter primarily 
due to higher net sales of Spalding-Registered Trademark- golf clubs, golf 
bags, spikeless golf shoes, and the inclusion of Hogan golf products; 
partially offset by $1.8 million lower net sales of golf balls. Domestic net 
sales of other sporting goods declined $3.5 million or 12.8%, primarily due 
to lower net sales of basketballs, volleyballs, softballs, athletic shoes, 
bats, and ball gloves. International net sales at Spalding declined $2.3 
million or 5.3% in the 1998 third quarter compared to the 1997 third quarter. 
The decrease resulted primarily from lower net sales due to international 
restructuring activities in the Asia/Pacific region, Mexico, and certain 
European countries; partially offset by an increase in net sales in Canada 
from strong growth in golf equipment net sales. Weaker currencies compared to 
the U.S. dollar negatively impacted Spalding's international 1998 third 
quarter net sales by approximately $2.0 million compared to the 1997 third 
quarter.

Net sales at Evenflo for the 1998 third quarter decreased $11.7 million or 12.4%
to $82.5 million from $94.2 million for the 1997 third quarter. The decline in
Evenflo's net sales is due principally


                                       12
<PAGE>


to (i) the effects of significantly reduced sales to Toys "R" Us, Inc., 
Evenflo's largest customer (Toys "R" Us recently announced a plan to reduce 
its inventory levels), (ii) lower net sales of play yards due to the 
expiration of a patent license for the manufacture of play yards and a 
nine-month delay in introducing the Play Crib-TM-, Evenflo's newest entrant 
in the play yard product category, which began to be shipped to retailers in 
February 1998, (iii) the discontinuance of certain Gerry products that did 
not fit with Evenflo's product line strategies, (iv) the withdrawal of 
certain Gerry products from the marketplace to re-engineer such products to 
meet Evenflo's standards, and (v) the effect of certain product safety 
campaigns, partially offset by a reduced level of returns of breast pumps. 
International net sales were down $0.3 million compared to the 1997 third 
quarter due primarily to lower net sales in Canada and Malaysia and the 
effect of weaker currencies compared to the U.S. dollar, partially offset by 
higher net sales in Mexico and France. Weaker currencies compared to the U.S. 
dollar negatively impacted Evenflo's international 1998 third quarter net 
sales by approximately $0.8 million compared to the 1997 third 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 third quarter, Company
gross profit decreased $10.4 million to $70.9 million from $81.3 million for the
same period in the prior year. Gross profit as a percentage of net sales
decreased to 29.8% for the 1998 third quarter from 32.3% for the comparable
prior year quarter.

Gross profit as a percentage of net sales at Spalding decreased to 34.7% in 
the 1998 third quarter from 39.7% in the 1997 third quarter. Spalding's gross 
margin percentage decrease was primarily due to (i) lower golf ball 
manufacturing volume that caused fixed costs to be spread over fewer units, 
(ii) a less favorable sales mix including higher sales of Spalding-Registered 
Trademark- golf clubs, golf bags, and golf shoes, which have lower margins 
compared to golf balls, (iii) increased competitive pricing and close-out 
programs of 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) higher transportation costs.

Gross profit as a percentage of net sales at Evenflo increased to 20.6% in the
1998 third quarter from 20.1% in the 1997 third quarter. Evenflo's gross margin
percentage increase was primarily due to (i) operating efficiencies attributable
to Project Discovery, and (ii) lower returns; partially offset by (i) higher
fixed manufacturing costs per unit as Evenflo reduced production volume, and
(ii) a less favorable international sales mix combined with the strength of the
U.S. dollar versus international currencies and higher costs from the
integration of Gerry. Project Discovery expanded and upgraded the warehousing
and shipping facilities, modernized distribution systems, and re-engineered
assembly operations at Evenflo's Piqua, Ohio facility to improve productivity
and increase capacity levels.

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


                                       13
<PAGE>


corrective action campaign costs, and professional fees. SG&A expenses were
$78.2 million, or 22.0% higher than SG&A expenses of $64.1 million in the
comparable quarter last fiscal year. 

Spalding's SG&A expenses increased $13.2 million in the 1998 third quarter 
primarily from (i) higher advertising and promotion costs for premium golf 
club and golf ball product lines, (ii) higher legal costs, (iii) higher 
salesman wages and commissions from increasing the size of the golf products 
sales force, and (iv) $5.7 million of costs due to the misapplication of 
funds by Spalding's freight audit and payment provider who failed to pay 
freight carriers funds advanced by Spalding; partially offset by lower 
international SG&A expenses from restructuring activities that are downsizing 
operations in Japan, consolidating operations in Europe and closing 
operations in Mexico. See "Restructuring Costs".

Evenflo had $1.5 million higher SG&A expenses in the 1998 third quarter 
principally due to higher (i) safety campaign and corrective action costs 
relating to the Two-In-One-Registered Trademark- booster seat, the 
On-My-Way-Registered Trademark- infant car seat, the Canadian 
Ultara-Registered Trademark- car seat and the Happy Camper-Registered 
Trademark- play yard, (ii) advertising and promotion costs, and (iii) product 
liability expenses; partially offset by lower costs as a result of the 
elimination of certain redundant functions as part of the Gerry integration.

The corporate office had $0.6 million lower SG&A expenses principally due to
Gerry acquisition costs incurred in the 1997 third quarter which did not recur
in the 1998 third quarter.

Royalty income was $3.0 million in the 1998 third quarter, down 18.9% from $3.7
million in the 1997 third quarter. The decrease is principally due to lower
royalty income from weak currency and economic conditions in Japan.

Restructuring costs were $3.4 million in the 1998 third quarter. Spalding
restructuring costs were $2.7 million and consisted of (i) $0.8 million
principally for international severance and lease settlements, (ii) $0.9 million
of management severance costs, and (iii) $1.0 million in severance and other 
costs at Etonic. Evenflo restructuring costs were $0.7 million to relocate 
Gerry Colorado administrative and manufacturing operations to Evenflo's Ohio 
and Georgia locations. Restructuring costs were $1.0 million in the 1997 third 
quarter and included $0.4 million of Gerry restructuring charges at Evenflo 
and $0.6 million of international restructuring costs at Spalding. See EBITDA 
discussion in "-Liquidity and Capital Resources".

In fiscal 1997, Spalding began to restructure its 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 its international infrastructure to a size sufficient
to support a strategic focus on core golf and sporting goods products in
selected countries. Operations are being 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.

In addition to the restructuring costs, Spalding incurred $7.6 million of other
unusual costs in the 1998 third quarter associated with (i) the closure and
downsizing of certain international affiliates under the international
restructuring program, (ii) inventory write-downs and computer lease abandonment
at Etonic, and (iii) misapplication of funds by Spalding's freight audit and
payment provider who failed to pay freight carriers funds advanced by Spalding. 
Spalding estimates it will have further


                                       14
<PAGE>


restructuring and unusual costs in the 1998 fourth quarter including
approximately $4.5 million of restructuring costs relating to the closure of its
corporate headquarters in Tampa, Florida. See EBITDA discussion in "-Liquidity
and Capital Resources" and "Unaudited Notes to Condensed Consolidated Financial
Statements".

In July 1997, Evenflo adopted a plan to relocate the Gerry Colorado
administrative and manufacturing operations to Evenflo's Ohio and Georgia
locations. In addition to the Gerry restructuring costs, Evenflo incurred $0.2
million of other unusual costs in the 1998 third quarter for relocation and Year
2000 conversion costs. Evenflo had $1.9 million of unusual costs in the 1997
third quarter. 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 $21.7 million in the 1998 third quarter from $19.3
million in the 1997 third quarter, an increase of $2.4 million or 12.4%. This
increase is due to higher average borrowings under the Company's $25 million
seasonal credit facility (the "Seasonal Credit Facility") and $250 million
revolving credit facility (the "Revolving Credit Facility"), which combined with
$400 million of term loans comprise the Company's $675 million credit facility
(the "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 third quarter was
approximately $776 million compared to approximately $725 million under the
Company's borrowing arrangements then in effect during the 1997 third quarter.
See further discussion in the "Unaudited Notes to Condensed Consolidated
Financial Statements" and "-Liquidity and Capital Resources".

Currency loss of $1.7 million was $1.5 million higher in the 1998 third 
quarter than in the 1997 third quarter. See "-Liquidity and Capital 
Resources."

Income taxes were a tax benefit of $10.6 million for the 1998 third quarter,
which represents an effective tax rate of 34% in relation to a loss before
income taxes of $31.0 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 $10.1 million tax expense for the 1997
third quarter resulted from a change in the Company's estimate of its effective
tax rate from 50% to 15% due to losses by certain non-U.S. subsidiaries for
which no tax benefit was anticipated.

Net loss was $20.4 million for the 1998 third quarter compared to $9.5 million
for the 1997 third quarter. The $10.9 million decrease in earnings was a result
of a $27.7 million decrease in earnings from operations, $2.4 million higher
interest expense, and $1.5 million higher currency loss, partially offset by a
$20.7 million higher income tax benefit.


                                       15
<PAGE>


        Nine Months Ended June 30, 1998 ("1998 nine months") as compared
           to the Nine Months Ended June 30, 1997 ("1997 nine months")

Net sales increased $48.7 million or 8.4% to $631.2 million for the 1998 nine
months compared to $582.5 million for the same period in the prior year.

Spalding net sales increased 2.4% to $386.0 million for the 1998 nine months
compared to $376.8 million for the 1997 nine months. Domestic net sales of
Spalding's golf equipment for the 1998 nine months were up $31.5 million or
16.1% over the 1997 nine months due to increased sales of golf balls, golf
shoes, golf clubs, golf bags and the inclusion of Hogan golf products. Domestic
net sales of other sporting goods declined $8.4 million or 11.5%, primarily due
to lower net sales of basketballs, volleyballs, softballs, athletic shoes, bats
and ball gloves. Etonic athletic shoe net sales decreased $1.5 million from the
comparable prior period due to competitive pricing pressures. International net
sales at Spalding declined $13.9 million or 13.0% in the 1998 nine months
compared to the 1997 nine months. The decrease resulted primarily from lower net
sales in the Asia/Pacific region, Europe, and Mexico due in part to
international restructuring activities; partially offset by an increase in net
sales in Canada from strong growth in golf equipment net sales. Weaker
currencies compared to the U.S. dollar negatively impacted Spalding's
international 1998 nine months net sales by approximately $5.5 million compared
to the 1997 nine months.

Evenflo's net sales increased to $245.2 million in the 1998 nine months from
$205.7 million in the 1997 nine months, an increase of $39.5 million or 19.2%.
The net sales increase was principally due to the inclusion of Gerry net sales
in the 1998 nine months compared to the inclusion of Gerry net sales for
approximately two months in 1997 as a result of the April 1997 acquisition of
Gerry. The increase in net sales was partially offset by (i) lower net sales of
play yards due to the expiration of a patent license for the manufacture of play
yards and a nine-month delay in introducing the Play Crib-TM-, Evenflo's newest
entrant in the play yard product category, which began to be shipped to
retailers in February 1998, (ii) the discontinuance of certain Gerry products
that did not fit with Evenflo's product line strategies, (iii) the withdrawal of
certain Gerry products from the marketplace to re-engineer such products to meet
Evenflo's standards, (iv) the effect of certain product safety campaigns, and
(v) increased levels of returns of breast pumps, monitors and strollers.
International net sales were down $0.9 million compared to the 1997 nine months
due primarily to lower net sales in Canada and Malaysia and the effect of weaker
currencies compared to the U.S. dollar, partially offset by higher net sales in
Mexico and France. While net sales to Toys "R" Us have increased for the
comparable nine month periods, Toys "R" Us has recently announced a plan to
reduce its inventory levels. Evenflo, as a result of this action, recorded
significantly lower net sales to Toys "R" Us in the third quarter of fiscal 1998
than the comparable period of the prior year.

Gross profit for the 1998 nine months decreased $2.5 million to $186.8 million
from $189.3 million for the same period in the prior year. Gross profit as a
percentage of net sales decreased to 29.6% for the 1998 nine months from 32.5%
for the 1997 nine months.


                                       16
<PAGE>


Gross profit as a percentage of net sales at Spalding decreased to 35.9% in the
1998 nine months from 38.4% in the 1997 nine months. Spalding's gross margin
percentage decrease was primarily due to (i) increased competitive pricing,
combined with a shift to a less favorable international sales mix and the
strength of the U.S. dollar versus international currencies, (ii) increased
competitive pricing in Etonic athletic shoes and spiked golf shoes, (iii) a less
favorable sales mix within golf products, (iv) weaker sales mix of sporting
goods, and (v) higher transportation costs.

Evenflo's gross profit increased to $48.1 million in the 1998 nine months from
$44.6 million in the 1997 nine months, an increase of $3.5 million or 7.8%.
However, Evenflo's gross margin decreased to 19.6% in the 1998 nine months from
21.7% in the 1997 nine months principally due to (i) the addition of lower
margin products such as gates, booster car seats, bath products, monitors and
toilet trainers acquired in the Gerry Acquisition, (ii) the impact of the Gerry
integration, partially offset by operating efficiencies attributable to Project
Discovery, (iii) an increased level of returns of breast pumps, monitors and
strollers, (iv) an increase in distribution costs, and (v) a less favorable
international sales mix due to the strength of the U.S. dollar versus certain
international currencies.

Selling, general and administrative ("SG&A") expenses for the 1998 nine months
were $201.6 million, or 17.6% higher than SG&A expenses of $171.4 million in the
comparable nine months last fiscal year.

Spalding's SG&A expenses increased $21.0 million in the 1998 nine months
primarily due to (i) higher advertising and promotion costs for premium golf
club and golf ball product lines, (ii) higher legal costs, (iii) higher salesman
wages and commissions from increasing the size of the golf products sales force,
and (iv) $5.7 million of costs due to the misapplication of funds by Spalding's
freight audit and payment provider who failed to pay freight carriers funds
advanced by Spalding; partially offset by lower international SG&A expenses 
from restructuring activities that are downsizing operations in Japan, 
consolidating operations in Europe and closing operations in Mexico. 
See "Restructuring Costs".

Evenflo's SG&A expenses increased to $46.9 million in the 1998 nine months 
from $37.1 million in the 1997 nine months. As a percentage of net sales, 
SG&A expenses increased to 19.1% in the 1998 nine months from 18.0% in the 
1997 nine months. Evenflo's $9.8 million increase in SG&A expenses was 
principally due to (i) an increased number of selling and administrative 
personnel during the Gerry integration, (ii) increased product development 
and engineering efforts relating to a number of Evenflo's product lines, 
(iii) $3.4 million higher safety campaign and corrective action costs 
relating to the Happy Camper-Registered Trademark- play yard, the 
On-My-Way-Registered Trademark- infant car seat, the Two-In-One booster car 
seat and the Canadian Ultara-Registered Trademark- car seat, and (iv) higher 
advertising and promotional costs, partially offset by (i) lower product 
liability expenses compared to the 1997 nine months, and (ii) lower costs 
from the elimination of certain redundant functions as part of the Gerry 
integration.

The corporate office had $0.6 million lower SG&A expenses principally due to
Gerry acquisition costs incurred in the 1997 nine months which did not recur in
the 1998 nine months.


                                       17
<PAGE>


Royalty income increased to $9.8 million in the 1998 nine months from $9.5
million in the 1997 nine months, an increase of $0.3 million or 3.2%. The
increase is principally due to royalty income settlements on Evenflo play yards
and Gerry strollers; partially offset by lower royalty income at Spalding from
weak currency and economic conditions in Japan.

Restructuring costs were $9.1 million in the 1998 nine months. Spalding
restructuring costs were $7.7 million and consisted of (i) $4.3 million
principally for international severance and lease settlements, (ii) $2.4 million
of management severance costs, and (iii) $1.0 million in severance and other
costs at Etonic. Evenflo restructuring costs were $1.4 million to relocate Gerry
Colorado administrative and manufacturing operations to Evenflo's Ohio and
Georgia locations. Restructuring costs were $2.0 million in the 1997 nine months
and included $1.6 million of Spalding international restructuring costs and $0.4
million of Gerry restructuring charges. See EBITDA discussion in "-Liquidity and
Capital Resources".

In fiscal 1997, Spalding began to restructure its 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 are being 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.

In addition to the restructuring costs, Spalding incurred $10.4 million of other
unusual expenses in the 1998 nine months associated with (i) the closure and
downsizing of certain international affiliates under the international
restructuring program, (ii) inventory write-downs and computer lease abandonment
at Etonic, and (iii) misapplication of funds by Spalding's freight audit and
payment provider who failed to pay freight carriers funds advanced by Spalding. 
Spalding anticipates it will have further restructuring and unusual costs in 
the 1998 fourth quarter including approximately $4.5 million of restructuring 
costs relating to the closure of its corporate headquarters in Tampa, Florida. 
See EBITDA discussion in "-Liquidity and Capital Resources" and "Unaudited 
Notes to Condensed Consolidated Financial Statements".

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 $0.9 million
of other unusual expenses during the 1998 nine months to relocate the Gerry
Colorado warehouse operation to Evenflo's Ohio and Georgia locations, to
reconfigure the manufacturing and warehouse at Piqua, Ohio, and 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 $59.3 million in the 1998 nine months from $53.1
million in the 1997 nine months, an increase of $6.2 million or 11.7%. The
Company's average balance under the Notes, Credit Facility, certain non-U.S.
borrowing arrangements and other financing agreements for the 1998 nine months
was approximately $736 million compared to


                                       18
<PAGE>


approximately $663 million under the Company's borrowing arrangements then in
effect during the 1997 nine months. See further discussion in the "Unaudited
Notes to Condensed Financial Statements" and "-Liquidity and Capital Resources".

Currency loss of $3.2 million was $2.8 million higher in the 1998 nine months 
than in the 1997 nine months. See "-Liquidity and Capital Resources."

Income taxes were a tax benefit of $26.1 million for the 1998 nine months, which
represents an effective tax rate of 34% in relation to a loss before income
taxes of $76.6 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 nine
months in the prior year of 15% varied from the statutory rate due to non-U.S.
net operating losses for which no tax benefit was anticipated.

Net loss was $50.5 million for the 1998 nine months compared to $23.8 million
for the 1997 nine months. The $26.7 million decrease in earnings was a result of
a $39.5 million decrease in earnings from operations, $6.2 million higher
interest expense, and $2.8 million higher currency loss, partially offset by a
$21.8 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 Revolving 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 through third
quarters when cash generated from operating activities coupled with draw downs
from credit facilities have been invested in receivables and inventories.

For the 1998 nine months, the Company used $136.3 million in cash before
financing activities to fund $112.0 million in operating activities, and invest
$22.7 million in capital expenditures and $1.6 million in the acquisition of
Hogan. Cash used in operating and investing activities in the 1998 nine months
were funded from (i) $146.6 million in net borrowings from the Company's
Seasonal Credit Facility, Revolving Credit Facility and other non-U.S. credit
facilities, (ii) $6.5 million loan from the Massachusetts Development Finance
Agency, and (iii) $1.3 million in proceeds from the issuance of common stock
(net of repurchases) to certain key employees and directors of the Company under
the 1996 Stock Purchase and Option Plan for Key Employees of Evenflo & Spalding
Holdings Corporation and Subsidiaries, less (i) $2.7 million in fees relating
primarily to the amendment of its Credit Facility and the commitment for


                                       19
<PAGE>


the seasonal credit facility, and (ii) a $15.4 million increase in cash.

Net cash flow used by operating activities for the 1998 nine months was 
$112.0 million compared to $61.5 million for the 1997 nine months. The $50.5 
million higher use of cash for operating activities when compared to the 1997 
nine months was due to a $26.7 million higher net loss, a $20.2 million 
decrease in deferred taxes and other non-cash expenses, and by $3.6 million 
increase in the use of cash for working capital. The use of cash for working 
capital in the 1998 nine months compared unfavorably to the 1997 nine months 
due to a $14.1 million decrease in payables and other accounts, a $28.6 
million increase in inventories; partially offset by a $39.1 million increase 
in receivables.

Capital expenditures were $22.7 million for the 1998 nine months compared to
$21.0 million in the 1997 nine months. Spalding capital expenditures were $3.5
million higher in the 1998 nine 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 approximate
an additional $4.0 million to be invested in the remainder of fiscal 1998.

Capital expenditures at Evenflo were $13.1 million for the 1998 nine months
compared to $14.9 million in the 1997 nine months. Capital expenditures for the
1998 nine months were $1.8 million lower than the comparable 1997 nine months,
with Evenflo investing $0.5 million to complete Project Discovery, $6.7 million
to complete the expansion of 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, and $1.8 million on computer
hardware and software to unify and upgrade its management information systems to
achieve Year 2000 compliance. Evenflo also incurred $4.1 million in other
capital expenditures for the 1998 nine months. Management estimates that Evenflo
will make an additional $4.9 million in capital expenditures during the
remainder of fiscal 1998. Furthermore, Evenflo anticipates an additional $4.7
million of capital expenditures over the next nine months on computer hardware
and software to unify and upgrade its management information systems and to
achieve Year 2000 compliance. In fiscal 1999, Evenflo expects to make $12.5
million of capital expenditures, $4.4 million of which will represent
maintenance capital expenditures.

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 June 30, 1998, the Company had $20.6 million in cash and
an available borrowing capacity of approximately $3 million (reduced to reflect
$90 million of outstanding letters of credit and bankers' acceptances) under the
Revolving Credit Facility and the Seasonal Credit Facility. As of July 31, 1998,
the Company had approximately $6 million in cash and an available borrowing
capacity of approximately $16 million (reduced to reflect $88 million of
outstanding letters of credit and bankers' acceptances) under the Revolving
Credit Facility and the Seasonal Credit Facility. The $25 million Seasonal
Credit Facility is available to support the Company's seasonal working capital
needs through August 31, 1998.

The Company's ability to fund its operations, make capital expenditures and make
scheduled


                                       20
<PAGE>


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, in addition to the
restructuring announced on July 31, 1998, 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.

Restructuring. On July 31, 1998, the Company announced that its Board of
Directors has approved a restructuring that will result in the separation of its
two businesses, Evenflo Company, Inc. and Spalding Sports Worldwide, into two
stand-alone companies, the infusion of $100 million equity into the Company, and
the reduction of approximately $275 million of debt under the Company's senior
credit facilities.

The restructuring and the separation will allow both companies to better
implement their strategies and to achieve their growth objectives. Moreover, the
companies will benefit from the centralization of their business functions at
their respective headquarters and from fully dedicated, on-site management
teams. The corporate entity now known as Evenflo & Spalding Holdings Corporation
will be renamed Spalding Holdings Corporation and will include Spalding's
operations in addition to an equity interest of approximately 42% in Evenflo.

The separation will be accomplished through a sale by a Company subsidiary of
51% of the outstanding common stock of Evenflo to an affiliate of Kohlberg
Kravis Roberts & Co. L.P. ("KKR") for $25.5 million, and approximately 7% of
Evenflo's outstanding common stock to Great Star Corporation, an affiliate of
Abarco N.V. ("Abarco"), for $3.3 million. Both KKR and Abarco are currently
shareholders of the Company. KKR will also acquire shares of noncash pay
preferred stock of Evenflo for $40 million in cash. Evenflo will receive $120
million of proceeds from certain other debt financings to repay indebtedness
owed to the Company and to pay certain fees and expenses. The proceeds of these
transactions will be used to repay the Company debt under its senior debt
facilities. After giving effect to the recapitalization, Evenflo will have
approximately $48 million of availability for general corporate purposes under a
new $100 million revolving credit facility.

As part of the restructuring, the Company has reached an agreement with its bank
syndicate to amend its senior credit facilities. In addition, KKR has agreed to
invest $100 million in exchange for noncash pay preferred stock of the Company.
Proceeds of that investment, together with the proceeds received from Evenflo,
will be used to repay approximately $275 million of debt under the Company's
senior credit facility.

As part of the restructuring, the Company has reached an agreement with its bank
syndicate to


                                       21
<PAGE>


amend its Credit Facility ("Amendment No. 3"). Amendment No. 3, (i) removes the
financial ratio compliance requirements until December 31, 1999, (ii) modifies
certain financial ratio test levels and definitions, (iii) releases collateral
on Evenflo assets and stock, (iv) provides that net cash proceeds from the sale
and financings of Evenflo and the Company's preferred stock proceeds be applied
to reduce indebtedness under the Credit Facility of approximately $275 million,
and (vi) modifies certain restrictive covenants. The effectiveness of Amendment
No. 3 is conditioned on the Evenflo sale, issuance of $100 million preferred
stock, receipt of a fairness opinion and an amendment fee. After the repayment
of debt, the Company's next scheduled principal payment under the amended Credit
Facility will be in the year 2002.

Following completion of restructuring, which is expected to occur in August
1998, corporate headquarters in Tampa, Florida will be closed and its functions
transferred to the separate Spalding and Evenflo operations.

The capital initiatives and senior credit facilities amendment described above
are conditioned upon the consummation of the restructuring in its entirety.

As a result of the Evenflo separation, the Company will allocate a portion of 
its assets, liabilities and expenses to Evenflo. Deferred financing costs, 
deferred income taxes and long-term debt will be allocated to Evenflo's 
consolidated balance sheets and corporate administrative expenses, interest 
expense and income taxes wil be allocated to Evenflo's statements of 
consolidated earnings (loss). Accordingly, certain of the separate Evenflo 
amounts described above would differ from similarly captioned amounts in any 
separate stand-alone Evenflo consolidated financial statements.

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 third quarter and
the 1998 nine months:

Three Months Ended June 30, 1998

<TABLE>
<CAPTION>
                                          Three Months Ended June 30, 1998
                                           (dollar amounts in thousands)
                    ------------------------------------------------------------------------------------
                                                           Historical Cash Flow
                                                           net cash provided by (used in)
                                                           ---------------------------------------------
                                    Other items
                    Historical      affecting historical   Operating       Investing        Financing
                      EBITDA        EBITDA                 activities      activities       activities
                      ------        ------                 ----------      ----------       ----------
<S>                  <C>             <C>                    <C>              <C>              <C>   
Spalding             $(3,807)        10,252                 (15,188)         (2,922)          19,913
Evenflo                3,287         872.00                  (5,963)         (2,936)          10,564
Corporate             (1,828)            11                 (25,303)              -           36,011
                     --------        ------                 --------         -------          ------
Consolidated         $(2,348)        11,135                 (46,454)         (5,858)          66,488
                     --------        ------                 --------         -------          ------
                     --------        ------                 --------         -------          ------
</TABLE>


Spalding. Spalding's 1998 third 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, (ii) $849 of management severance costs, and (iii) $1,000 in
severance and other costs at Etonic. In addition, Spalding incurred $7,587 of
other unusual expenses consisting of (i) $10 in receivable cash discounts under
the international restructuring program that reduced net sales, (ii) $148 in
inventory write-offs in Japan and certain exiting countries expensed to cost of
sales, (iii) $900 in inventory write-offs at Etonic expensed to cost of sales,
(iv) $529 in receivable write-offs due to lower collection rates in exiting
countries charged to SG&A expenses, (v) $300 in computer lease abandonment at


                                       22
<PAGE>

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 who 
failed to pay freight carriers funds advanced by Spalding.

Evenflo. Evenflo's 1998 third 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 costs including $26 expensed to cost of sales to relocate the
Gerry Colorado warehouse operation to Evenflo's Ohio and Georgia locations and
$136 charged to SG&A expenses for Year 2000 conversion costs. The Company
estimates fiscal 1998 Evenflo restructuring and other unusual costs could
approximate $2,600 in total.



THREE MONTHS ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
                                          Three Months Ended June 30, 1997
                                           (dollar amounts in thousands)
                    ------------------------------------------------------------------------------------
                                                           Historical Cash Flow
                                                           net cash provided by (used in)
                                                           ---------------------------------------------
                                    Other items
                    Historical      affecting historical   Operating       Investing        Financing
                      EBITDA        EBITDA                 activities      activities       activities
                      ------        ------                 ----------      ----------       ----------
<S>                  <C>             <C>                    <C>              <C>              <C>   
Spalding             $21,074           558                   31,592           (3,292)         (21,100)
Evenflo                6,159         2,333                   11,265          (78,247)          70,676
Corporate             (1,950)          728                  (26,133)               -           27,314
                     -------         -----                  -------          -------          -------
Consolidated         $25,283         3,619                   16,724          (81,539)          76,890
                     -------         -----                  -------          -------          -------
                     -------         -----                  -------          -------          -------
</TABLE>



Spalding. Spalding's 1997 third quarter historical EBITDA was adversely affected
by $558 of international restructuring costs principally from severance and
other costs.

Evenflo. Evenflo's 1997 third quarter historical EBITDA was adversely affected
by $2,333 of restructuring and other unusual costs. Restructuring costs were
$404 to relocate the Gerry Colorado administrative and manufacturing operations
to Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $1,929 of
other unusual costs including $1,268 expensed to cost of sales for purchase
accounting effects of Gerry's inventory turnover, $285 expensed to cost of sales
attributable to the manufacturing and warehouse reconfiguration at Piqua, Ohio,
and $376 charged to SG&A expenses to consolidate certain of its operations that
were previously managed separately.

Corporate. Corporate's 1997 third quarter historical EBITDA was adversely
affected by $728 of other unusual costs from the acquisition of Gerry.


                                       23
<PAGE>

Nine Months Ended June 30, 1998

<TABLE>
<CAPTION>
                                          Nine Months Ended June 30, 1998
                                           (dollar amounts in thousands)
                    ------------------------------------------------------------------------------------
                                                           Historical Cash Flow
                                                           net cash provided by (used in)
                                                           ---------------------------------------------
                                    Other items
                    Historical      affecting historical   Operating       Investing        Financing
                      EBITDA        EBITDA                 activities      activities       activities
                      ------        ------                 ----------      ----------       ----------
<S>                  <C>             <C>                    <C>              <C>              <C>   
Spalding             $(2,933)        18,055                  (42,233)        (11,193)          56,382
Evenflo               11,558          2,377                  (17,307)        (13,112)          32,638
Corporate             (5,550)           156                  (52,496)              -           62,722
                     -------         ------                 --------         -------          -------
Consolidated         $ 3,075         20,588                 (112,036)        (24,305)         151,742
                     -------         ------                 --------         -------          -------
                     -------         ------                 --------         -------          -------
</TABLE>


Spalding. Spalding's 1998 nine months historical EBITDA was adversely affected
by $18,055 of restructuring and other unusual costs. Restructuring costs were
$7,693 and consisted of (i) $4,344 principally relating to international
severance and lease settlements, (ii) $2,349 of management severance costs, and
(iii) $1,000 in severance and other costs at Etonic. In addition, Spalding
incurred $10,362 of other unusual expenses consisting of (i) $536 in receivable
cash discounts under the international restructuring program that reduced net
sales, (ii) $1,425 in inventory write-offs in Japan and certain exiting
countries expensed to cost of sales, (iii) $900 in inventory write-offs at
Etonic expensed to cost of sales, (iv) $1,501 in receivable write-offs due to
lower collection rates in exiting countries charged to SG&A expenses, (v) $300
in computer lease settlements at Etonic charged to SG&A expenses, and (vi)
$5,700 charged to SG&A expenses for the misapplication of funds by Spalding's 
freight audit and payment provider who failed to pay freight carriers funds 
advanced by Spalding.

Evenflo. Evenflo's 1998 nine months historical EBITDA was adversely affected by
$2,377 of restructuring and other unusual costs. Restructuring costs were $1,443
to relocate the Gerry Colorado administrative and manufacturing operations to
Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $934 of
other unusual expenses including (i) $235 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) $540 charged to SG&A
expenses for Year 2000 conversion costs. The Company estimates fiscal 1998
Evenflo restructuring and other unusual costs could approximate $2,600 in total.

Corporate.  Corporate's 1998 nine month historical EBITDA was
adversely affected by $156 of other unusual costs from potential
acquisitions.


                                       24
<PAGE>

Nine Months Ended June 30, 1997

<TABLE>
<CAPTION>
                                          Nine Months Ended June 30, 1997
                                           (dollar amounts in thousands)
                    ------------------------------------------------------------------------------------
                                                           Historical Cash Flow
                                                           net cash provided by (used in)
                                                           ---------------------------------------------
                                    Other items
                    Historical      affecting historical   Operating       Investing        Financing
                      EBITDA        EBITDA                 activities      activities       activities
                      ------        ------                 ----------      ----------       ----------
<S>                  <C>             <C>                    <C>              <C>              <C>   
Spalding             $ 32,643          2,452                  2,465           (6,168)         (4,596)
Evenflo                14,489          4,244                 (6,498)         (86,967)         93,566
Corporate              (5,571)           728                (57,490)               -           8,802
                     --------        -------                -------          -------          ------
Consolidated         $ 41,561        $ 7,424                (61,523)         (93,135)         97,772
                     --------        -------                -------          -------          ------
                     --------        -------                -------          -------          ------
</TABLE>


Spalding. Spalding's 1997 nine months historical EBITDA was adversely affected
by $2,452 of restructuring and other unusual costs. Restructuring costs include
$1,619 of international restructuring costs. Unusual costs were $833 relating to
the October 1996 purchase of its Etonic Canadian distribution rights which were
charged to SG&A expenses.

Evenflo. Evenflo's 1997 nine months historical EBITDA was adversely affected by
$4,244 of restructuring and other unusual costs. Restructuring costs were $404
to relocate the Gerry Colorado administrative and manufacturing operations to
Evenflo's Ohio and Georgia locations. In addition, Evenflo incurred $3,840 of
other unusual costs including $1,268 expensed to cost of sales for purchase
accounting effects of Gerry's inventory turnover, $1,524 expensed to cost of
sales attributable to the manufacturing and warehouse reconfiguration at Piqua,
Ohio and $1,048 charged to SG&A expenses to consolidate certain of its
operations that were previously managed separately.

Corporate. Corporate's 1997 nine months historical EBITDA was adversely affected
by $728 of other unusual costs from the acquisition of Gerry.

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 nine 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 has had, and could
in future periods 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 nine
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


                                       25
<PAGE>


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.
This process is expected to be complete for Spalding's operations by December
1998, with minor aspects of the project 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 Spalding's results of operations.

Evenflo anticipates upgrades required for Year 2000 compliance to be completed
by December 1998. Evenflo expects to spend $6.5 million by December 1999 (with
$1.8 million of this amount spent in the 1998 third quarter) to unify and
upgrade its information systems and to resolve its Year 2000 compliance issues.
All costs associated with Year 2000 compliance will be expenses as incurred
other than acquisition of new software or hardware, which will be capitalized.

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. If any such risks materialize, the Company could
experience material adverse consequences, material costs, or both.

Year 2000 compliance issues may also adversely affect the operations and
financial performance of the Company indirectly by affecting the operations of
any one or more of the Company's suppliers or customers. The Company is
currently contacting its significant suppliers and customers in an attempt to
identify any potential Year 2000 compliance issues with them. The Company is
currently unable to anticipate the magnitude of the operational or financial
impact on the Company of Year 2000 compliance issues with its suppliers and
customers.


                                       26
<PAGE>


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 other than the action described below.

On February 20, 1998, the Company was sued by Callaway Golf Company, Inc. for
trademark infringement and false advertising involving the Company's
introduction of the Top-Flite(R) System C(TM) golf ball, which was designed for
use with a Callaway Great Big Bertha(R) driver. The case is in the pre-trial
discovery stage. The Company believes it has meritorious defenses to all claims.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits

                  10.14    Credit Agreement Amendment No. 3 dated July 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.

              (b) Reports on Form 8-K

                           Current report on Form 8-K filed June 16, 1998, 
                           which announced Richard W. Frank as Chairman and 
                           Chief Executive Officer of Evenflo Company, Inc.

                           Current report on Form 8-K filed July 31, 1998, 
                           which provided a cautionary statement for purposes 
                           of the "Safe Harbor" provisions of the Private 
                           Securities Litigation Reform Act of 1995 and 
                           announced the Company's Board of Directors 
                           approved a restructuring of the Company.


                                       27
<PAGE>


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:    August 14, 1998                 By:  /s/ W. Michael Kipphut
                                              -----------------------
                                              W. Michael Kipphut
                                              Vice President and Treasurer
                                              (a Principal Financial Officer and
                                              authorized signatory)


                                       28