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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 333-72343
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TRUE TEMPER SPORTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3949 52-2112620
(STATE OF OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
8275 TOURNAMENT DRIVE
SUITE 200
MEMPHIS, TENNESSEE 38125
TELEPHONE: (901) 746-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act) Yes [ ] No [X].
As of May 14, 2003 the Registrant had 100 shares of Common Stock,
$0.01 par value per share, outstanding.
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TRUE TEMPER SPORTS, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Statements of Operations for the three month periods
ended March 30, 2003 (Unaudited) and March 31, 2002 (Unaudited) 1
Condensed Balance Sheets as of March 30, 2003 (Unaudited) and
December 31, 2002 (Unaudited).................................. 2
Condensed Statements of Cash Flows for the three month periods
ended March 30, 2003 (Unaudited) and March 31, 2002 (Unaudited) 3
Notes to Condensed Financial Statements (Unaudited)............ 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.......................................... 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk..... 9
Item 4. Controls and Procedures........................................ 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 11
Item 2. Changes in Securities and Use of Proceeds...................... 11
Item 3. Defaults Upon Senior Securities................................ 11
Item 4. Submission of Matters to a Vote of Security Holders............ 11
Item 5. Other Information.............................................. 11
Item 6. Exhibits and Reports on Form 8-K............................... 11
Signatures...................................................................... 13
Certifications.................................................................. 14
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRUE TEMPER SPORTS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE THREE
MONTHS ENDED
------------------------
MARCH 30, MARCH 31,
2003 2002
---------- ----------
Net sales .......................................... $ 31,601 $ 29,362
Cost of sales ...................................... 19,753 18,764
---------- ----------
GROSS PROFIT ..................................... 11,848 10,598
Selling, general and administrative expenses ....... 4,074 3,576
Business development and start-up costs ............ 125 --
Loss on early extinguishment of long-term debt ..... -- 20
---------- ----------
OPERATING INCOME ................................. 7,649 7,002
Interest expense, net of interest income ........... 3,328 3,102
Other expenses, net ................................ 5 4
---------- ----------
INCOME BEFORE INCOME TAXES ....................... 4,316 3,896
Income taxes ....................................... 1,732 1,520
---------- ----------
NET INCOME ....................................... $ 2,584 $ 2,376
========== ==========
See accompanying notes to condensed financial statements
1
TRUE TEMPER SPORTS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)
CONDENSED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
MARCH 30, DECEMBER 31,
2003 2002
---------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents .................................. $ 10,613 $ 7,070
Receivables, net ........................................... 18,769 15,083
Inventories ................................................ 13,432 15,055
Prepaid expenses and other current assets .................. 1,856 1,764
---------- ----------
Total current assets ................................... 44,670 38,972
Property, plant and equipment, net ........................... 14,197 14,561
Goodwill, net ................................................ 71,506 71,506
Deferred tax assets, net ..................................... 53,185 54,832
Other assets ................................................. 3,536 3,509
---------- ----------
Total assets ........................................... $ 187,094 $ 183,380
========== ==========
LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current portion of long-term debt .......................... $ 4,125 $ 4,000
Accounts payable ........................................... 5,683 5,999
Accrued expenses and other current liabilities ............. 9,957 7,075
---------- ----------
Total current liabilities .............................. 19,765 17,074
Long-term debt less the current portion ...................... 119,605 120,730
Other liabilities ............................................ 2,596 2,508
---------- ----------
Total liabilities ...................................... 141,966 140,312
STOCKHOLDER'S EQUITY
Common stock--par value $0.01 per share;
authorized 1,000 shares; issued and outstanding 100 shares -- --
Additional paid in capital ................................. 40,326 40,326
Retained earnings .......................................... 5,255 3,145
Accumulated other comprehensive loss, net of taxes ......... (453) (403)
---------- ----------
Total stockholder's equity ............................. 45,128 43,068
---------- ----------
Total liabilities and stockholder's equity ............. $ 187,094 $ 183,380
========== ==========
See accompanying notes to condensed financial statements
2
TRUE TEMPER SPORTS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE THREE
MONTHS ENDED
-------------------------
MARCH 30, MARCH 31,
2003 2002
---------- ----------
OPERATING ACTIVITIES
Net income ........................................... $ 2,584 $ 2,376
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 743 856
Amortization of deferred financing costs ......... 213 174
Loss on disposal of property, plant and equipment -- 4
Loss on early extinguishment of long-term debt ... -- 20
Deferred taxes ................................... 1,647 1,482
Changes in operating assets and liabilities, net . 504 1,809
---------- ----------
Net cash provided by operating activities ...... 5,691 6,721
INVESTING ACTIVITIES
Purchase of property, plant and equipment ........ (379) (195)
---------- ----------
Net cash used in investing activities .......... (379) (195)
FINANCING ACTIVITIES
Principal payments on bank debt .................. (1,000) (569)
Repurchase of Senior Subordinated Notes .......... -- (282)
Principal payments on capital leases ............. -- (6)
Payment of debt issuance costs ................... (255) --
Dividends paid ................................... (474) (884)
Other financing activity ......................... (40) (31)
---------- ----------
Net cash used in financing activities .......... (1,769) (1,772)
Net increase in cash ................................. 3,543 4,754
Cash at beginning of period .......................... 7,070 8,177
---------- ----------
Cash at end of period ................................ $ 10,613 $ 12,931
========== ==========
See accompanying notes to condensed financial statements
3
TRUE TEMPER SPORTS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS UNLESS OTHERWISE INDICATED)
1) BASIS OF PRESENTATION
The accompanying unaudited financial statements of True Temper Sports,
Inc. ("True Temper" or the "Company") have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission ("SEC") for
quarterly reports on Form 10-Q and consequently do not include all the
disclosures required by accounting principles generally accepted in the United
States of America. It is suggested that these financial statements be read in
conjunction with the audited financial statements and the notes thereto for the
year ended December 31, 2002. In the opinion of management, the financial
statements include all adjustments which are necessary for the fair presentation
of results for interim periods.
The Company's fiscal year begins on January 1 and ends on December 31
of each year. During the course of the year the Company closes its books on a
monthly and quarterly basis following a 4,4,5 week closing calendar. Since the
Company uses Sunday as the last day of each period (with the exception of
December) the number of days in the first and fourth quarters of any given year
can vary depending on which day of the week January 1st falls on.
2) INVENTORIES
MARCH 30, DECEMBER 31,
2003 2002
---------- ------------
Raw materials ................ $ 1,442 $ 1,751
Work in process .............. 2,311 2,445
Finished goods ............... 9,679 10,859
---------- ----------
Total ........................ $ 13,432 $ 15,055
========== ==========
3) SEGMENT REPORTING
The Company operates in two reportable business segments: golf shafts
and performance sports. The Company's reportable segments are based on the type
of product manufactured and the application of that product in the marketplace.
The golf shaft segment manufactures and sells steel, composite, and
multi-material golf club shafts for use exclusively in the golf industry. The
performance sports segment manufactures and sells high strength, tight tolerance
tubular components for bicycle, hockey and other recreational sport markets. The
Company evaluates the performance of these segments based on segment sales and
gross profit. The Company has no inter-segment sales.
FOR THE THREE
MONTHS ENDED
---------------------------
MARCH 30, MARCH 31,
2003 2002
---------- ----------
Net sales:
Golf shafts ................ $ 30,230 $ 28,314
Performance tubing ......... 1,371 1,048
---------- ----------
Total .................... $ 31,601 $ 29,362
========== ==========
Gross profit:
Golf shafts ................ $ 11,447 $ 10,302
Performance tubing ......... 401 296
---------- ----------
Total .................... $ 11,848 $ 10,598
========== ==========
4
TRUE TEMPER SPORTS, INC.
(A WHOLLY-OWNED SUBSIDIARY OF TRUE TEMPER CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
Following is a reconciliation of total reportable segment gross profit
to total Company income before income taxes:
FOR THE THREE
MONTHS ENDED
------------------------
MARCH 30, MARCH 31,
2003 2002
---------- ----------
Total reportable segment gross profit .......... $ 11,848 $ 10,598
Less:
SG&A expenses ................................ 4,074 3,576
Business development and start-up costs ...... 125 --
Loss on early extinguishment of long-term debt -- 20
Interest expense, net of interest income ..... 3,328 3,102
Other expenses, net .......................... 5 4
---------- ----------
Total Company income before income taxes ....... $ 4,316 $ 3,896
========== ==========
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the more
detailed information in our 2002 Annual Financial Statements, including the
notes thereto, appearing most recently in our 2002 Annual Report on Form 10-K,
filed with the SEC on March 27, 2003.
COMPANY OVERVIEW
True Temper Sports, Inc. ("True Temper" or the "Company"), a wholly
owned subsidiary of True Temper Corporation, is a leading designer, manufacturer
and marketer of steel, composite, and multi-material golf club shafts for
original equipment manufacturers ("OEM's") and distributors in the golf
equipment industry. In addition, True Temper produces and sells a variety of
performance sports products that offer high strength and tight tolerance tubular
components to the bicycle, hockey and other recreational sports markets. In
calendar 2002, golf shaft sales represented 96% of total revenues, and
performance sports sales represented 4%. This sales split has remained
relatively consistent during the first quarter of 2003.
RESULTS OF OPERATIONS
The following table sets forth the components of net income as a
percentage of net sales for the periods indicated:
FOR THE THREE
MONTHS ENDED
-------------------------
MARCH 30, MARCH 31,
2003 2002
---------- ----------
Net sales ...................................... 100.0% 100.0%
Cost of sales .................................. 62.5 63.9
Gross profit ................................... 37.5 36.1
SG&A expenses .................................. 12.9 12.2
Business development and start-up costs ........ 0.4 0.0
Loss on early extinguishment of long-term debt . 0.0 0.1
Operating income ............................. 24.2 23.8
Interest expenses .............................. 10.5 10.6
Other expenses, net ............................ 0.0 0.0
Income before income taxes ................... 13.7 13.3
Income taxes ................................... 5.5 5.2
Net income ................................... 8.2% 8.1%
FIRST QUARTER ENDED MARCH 30, 2003 COMPARED TO THE FIRST QUARTER ENDED MARCH 31,
2002
NET SALES for the first quarter of 2003 increased approximately $2.2
million, or 7.6%, to $31.6 million from $29.4 million in the first quarter of
2002. Golf shaft sales increased approximately $1.9 million, or 6.8%, to $30.2
million in the first quarter of 2003 from $28.3 million in the first quarter of
2002. This increase was driven primarily by increased sales volume for premium
grade steel shafts as more golf OEM's introduced lightweight steel shafts as the
stock component shaft in their new product launches.
Performance sports sales increased approximately $0.3 million, or
30.9%, to $1.4 million in the first quarter of 2003 from $1.0 million in the
first quarter of 2002. This increase was driven primarily by growth in sales of
composite bicycle components, sales of hockey stick shafts to hockey OEM's, and
other component products within the segment.
Net sales to international customers increased approximately $2.9
million, or 45.0%, to $9.3 million in the first quarter of 2003 from $6.4
million in the first quarter of 2002. This increase was driven primarily by
6
improved foreign currency exchange rates in both the United Kingdom and Japan,
and a $2.1 million increase in shipments into China as club assembly operations
continue to grow within that region.
GROSS PROFIT for the first quarter of 2003 increased approximately $1.3
million, or 11.8%, to $11.8 million from $10.6 million in the first quarter of
2002. Gross profit as a percentage of net sales increased to 37.5% in the first
quarter of 2003 from 36.1% in the first quarter of 2002. This increase in gross
profit as a percentage of net sales was driven by several factors, including an
improved sales mix towards higher margin products, the favorable impact from
foreign currency exchange rates in the United Kingdom and Japan, and favorable
leverage on fixed manufacturing costs from increased sales volume. These
favorable factors were somewhat offset by increased costs for natural gas and
employee health care benefits.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") for the first
quarter of 2003 increased approximately $0.5 million, or 13.9%, to $4.1 million
from $3.6 million in the first quarter of 2002. SG&A as a percentage of net
sales increased to 12.9% in the first quarter 2003 from 12.2% in the first
quarter of 2002. This increase occurred primarily due to increased personnel and
travel costs to support the company's new consumer awareness sales program and
new product initiatives.
BUSINESS DEVELOPMENT AND START-UP COSTS for the first quarter of 2003
totaled $0.1 million. No business development and start-up costs were incurred
during the first quarter of 2002. These costs are comprised of travel,
consulting, legal, personnel, recruiting and other start-up business costs
relating to the opening of a composite manufacturing operation in southern
China.
OPERATING INCOME for the first quarter of 2003 increased by $0.6
million, or 9.2%, to $7.6 million from $7.0 million in the first quarter of
2002. Operating income as a percentage of net sales increased to 24.2% in the
first quarter of 2003 from 23.8% in the first quarter of 2002. The change in
operating income reflects the changes described above in sales, gross profit and
SG&A expenses.
INTEREST EXPENSE for the first quarter of 2003 increased to $3.3
million from $3.1 million in the first quarter of 2002. Although interest rates
have declined during the past year, interest expense increased as the Company
increased its outstanding bank debt between comparative quarters in order to
fund dividend payments to its parent company True Temper Corporation.
INCOME TAXES for the first quarter of 2003 increased to $1.7 million
from $1.5 million in the first quarter of 2002. The effective tax rate during
these periods differs from a federal statutory rate of 34% due primarily to the
incremental tax rate for state and foreign income tax purposes.
NET INCOME for the first quarter of 2003 increased by approximately
$0.2 million to $2.6 million from $2.4 million in the first quarter of 2002.
This increase is reflective of the profit impact from the items described above.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
At the beginning of 2002 we had a bank credit facility which included a
$20.0 million non-amortizing revolving credit facility with funds available on a
revolving basis through September 30, 2004, a $10.0 million term A loan due in
2004 and a $27.5 million term B loan due in 2005. At September 29, 2002 the
unpaid balance on the term A and term B loans was $13.0 million collectively. In
October 2002 the Company repaid the entire $13.0 million outstanding balance on
these term loans.
In the fourth quarter of 2002 we decided to refinance our bank debt by
eliminating our existing senior credit facility, as described above, and obtain
a new senior credit facility. On December 31, 2002 we entered a new senior
credit facility which includes a $15.0 million non-amortizing revolving credit
facility and a $25.0
7
million term loan. Amounts under the revolving credit facility are available on
a revolving basis through December 31, 2007. The term loan requires quarterly
cash interest and principal payments beginning in March 2003 and continuing
through December 2007.
The Company used the proceeds from this loan to pay a dividend to True
Temper Corporation ("TTC") in order that TTC could repay a portion of the
outstanding principal on its senior discount notes which carry a 13.25% PIK
interest rate or a 12.25% cash interest rate.
In addition, we have $99.7 million in 10 7/8% Senior Subordinated Notes
Due 2008 (the "Notes"). The Notes require cash interest payments each June 1 and
December 1, beginning June 1, 1999. The Notes are redeemable at the Company's
option, under certain circumstances and at certain redemption prices, beginning
December 1, 2003.
Both the new senior credit facility and the Notes contain covenants and
events of default, including substantial restrictions and provisions which,
among other things, limit our ability to incur additional indebtedness, make
acquisitions and capital expenditures, sell assets, create liens or other
encumbrances, make certain payments and dividends, or merge or consolidate. The
new senior credit facility also requires us to maintain certain specified
financial ratios and tests including minimum EBITDA levels, minimum interest
coverage and fixed charge coverage ratios, and maximum leverage ratios. At March
30, 2003 we were in compliance with all of the covenants in both the new senior
credit facility and the Notes. Furthermore, the new senior credit facility
requires certain mandatory prepayments including payments from the net proceeds
of certain asset sales and a portion of our excess cash flow.
FIRST QUARTER ENDED MARCH 30, 2003 COMPARED TO THE FIRST QUARTER ENDED MARCH 31,
2002
In the first three months of 2003 cash provided by operating activities
decreased by approximately $1.0 million to $5.7 million from $6.7 million in
2002. This decrease was driven by an increase in working capital requirements to
fund outstanding accounts receivable which grew with the increase in first
quarter sales compared to the prior year, and growth in international export
sales.
We used $0.4 million of cash to invest in property, plant and equipment
in the first quarter of 2003, compared to the $0.2 million spent in the first
quarter of 2002.
We repaid $1.0 million of the principal on our senior credit facility
during the first quarter of 2003, compared to the $0.6 million that we repaid
during the first quarter of 2002. Also in the first quarter of 2002, we
repurchased $0.3 million of our Notes.
Currently, our intention is to use existing cash and cash provided from
future operations, if any, as allowed within the covenants of our senior credit
facility and our Notes, to:
- Repay our senior credit facility, and/or
- Issue quarterly cash dividends to our parent company, True Temper
Corporation, for its use to pay cash interest and/or principal
amounts on its senior discount notes, and/or
- To make additional investments in the business for growth or profit
improvements, which may include, among other things, capital
expenditures, business acquisitions and/or expenditures for business
development and expansion in China.
In addition to the debt service obligations for principal and interest
payments created by the senior credit facility and the Notes described above,
our liquidity needs largely relate to working capital requirements and capital
expenditures for machinery and equipment. We intend to fund our current and long
term working capital, capital expenditure and debt service requirements through
cash flow generated from operations. However, since
8
there can be no assurance of future performance, as of March 30, 2003 we have
the $15.0 million revolving credit facility available for future cash
requirements. The maximum amount we may use of the $15.0 million revolving
credit facility is limited by the financial covenants contained within the
senior credit facility. Information concerning our senior credit facility is
contained in the footnotes to the financial statements of our 2002 Annual Report
on Form 10-K, as filed with the SEC on March 27, 2003.
Depending on the size, any future acquisitions, joint ventures, capital
expenditures or similar transactions may require significant capital resources
in excess of cash provided by operations, and potentially in excess of cash
available under the revolving credit facility. There can be no assurance that
the Company will be able to obtain the necessary capital under acceptable terms,
from creditors or other sources, that will be sufficient to execute any such
business investment or capital expenditure.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Act of 1995 (the "Act") provides a
safe harbor for forward-looking statements made by our Company. This document
contains forward-looking statements, including but not limited to Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". All statements which address operating performance, events or
developments that we expect, plan, believe, hope, wish, forecast, predict,
intend, or anticipate will occur in the future, and other similar meanings or
phrases, are forward-looking statements within the meaning of the Act.
The forward-looking statements are based on management's current views
and assumptions regarding future events and operating performance. However,
there are many risk factors, including but not limited to, the Company's
substantial leverage, the Company's ability to service its debt, the general
state of the economy, the Company's ability to execute its plans, fluctuations
of energy prices and availability, fluctuations of raw material prices,
competitive factors, and other risks that could cause the actual results to
differ materially from the estimates or predictions contained in our Company's
forward-looking statements. Additional information concerning the Company's risk
factors is contained from time to time in the Company's public filings with the
SEC; and most recently in the Business Risks section of Item 1 to Part 1 of our
2002 Annual Report on Form 10-K filed with the SEC on March 27, 2003.
The Company's views, estimates, plans and outlook as described within
this document may change subsequent to the release of this statement. The
Company is under no obligation to modify or update any or all of the statements
it has made herein despite any subsequent changes the Company may make in its
views, estimates, plans or outlook for the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information concerning our market risks is contained in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of our 2002 Annual Report on Form 10-K, as filed with the
SEC on March 27, 2003.
This information has been omitted from this report as there have been
no material changes to our market risks as of March 30, 2003.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer along with the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14 under the Securities
Exchange Act of 1934, as amended (the
9
"Exchange Act"). Based upon that evaluation, the Company's Chief Executive
Officer along with the Company's Chief Financial Officer concluded that as of
May 14, 2003 the Company's disclosure controls and procedures (1) were effective
in alerting them, in a timely manner, to material information relating to the
Company required to be included in the Company's periodic SEC filings and (2)
were adequate to ensure that information required to be disclosed by the Company
in the reports filed or submitted by the Company under the Exchange Act is
recorded, processed and summarized and reported within the time periods
specified in the SEC's rules and forms.
CHANGES IN INTERNAL CONTROLS
There have been no significant changes in the Company's internal
controls or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.
10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various claims and legal proceedings generally incidental to the normal
course of business are pending or threatened against us. While we cannot predict
the outcome of these matters, in the opinion of management, any liability
arising from these matters will not have a material adverse effect on our
business, financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
--Not applicable--
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
--None--
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended March 30, 2003.
ITEM 5. OTHER INFORMATION
--Not Applicable--
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
2.1 Reorganization, Recapitalization and Stock Purchase Agreement dated
as of June 29, 1998 by and between The Black & Decker Corporation,
True Temper Sports, Inc. and TTSI LLC ("Recapitalization Agreement")
(filed as exhibit 2.1 to the Company's Registration Statement on
Form S-4 (No. 333-72343), as filed with the Securities and Exchange
Commission (the "SEC") on February 12, 1999 (the "Form S-4")).*
2.2 Amendment No. 1 to Recapitalization Agreement dated August 1, 1998
(filed as exhibit 2.2 to Form S-4).*
2.3 Amendment No. 2 to Recapitalization Agreement dated September 30,
1998 (filed as exhibit 2.3 to Form S-4).*
2.4 Assignment and Assumption Agreement by and between True Temper
Corporation ("TTC") and the Company dated September 30, 1998 (filed
as exhibit 2.4 to Form S-4).*
3.1 Amended and Restated Certificate of Incorporation of the Company,
dated September 29, 1998 (filed as Exhibit 3.1 to Form S-4).*
3.2 By-laws of the Company (filed as Exhibit 3.2 to Form S-4).*
4.1 Indenture dated November 23, 1998 between the Company United States
Trust of New York (filed as Exhibit 4.1 to Form S-4).*
4.2 Purchase Agreement dated November 18, 1998 between the Company and
Donaldson, Lufkin and Jenrette (filed as Exhibit 4.2 to Form S-4).*
11
10.1 Management Services Agreement dated as of September 30, 1998 between
the Company and Cornerstone Equity Investors, LLC ("Management
Services Agreement") (filed as Exhibit 10.1 to Form S-4).*
10.2 Amendment to Management Services Agreement dated November 23, 1998
(filed as Exhibit 10.2 to Form S-4).*
10.3 Credit Agreement dated as of September 30, 1998 among the Company,
various financial institutions, DLJ Capital Funding, Inc. and The
First National Bank of Chicago (filed as Exhibit 10.3 to Form S-4).*
10.4 Securities Purchase Agreement dated as of September 30, 1998 among
TTC and the Purchase Party thereto (filed as Exhibit 10.4 to Form
S-4).*
10.5 Amendment No. 1 to Credit Agreement dated June 11, 1999 (filed as
Exhibit 10.5 to the Company's 1999 Annual Report on Form 10-K, as
filed with the SEC on March 30, 2000).*
10.6 True Temper Corporation 1998 Stock Option Plan (filed as Exhibit
10.6 to the Company's 1999 Annual Report on Form 10-K, as filed with
the SEC on March 30, 2000).*
10.7 Shareholder's Agreement dated as of September 30, 1998 (filed as
Exhibit 10.7 to the Company's 1999 Annual Report on Form 10-K, as
filed with the SEC on March 30, 2000).*
10.8 Amended and Restated Management Services Agreement dated March 27,
2000 (filed as Exhibit 10.8 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended April 2, 2000, as filed
with the SEC on May 16, 2000).*
10.9 Amendment No. 2 to Credit Agreement dated November 17, 2000 (filed
as Exhibit 10.9 to the Company's Annual Report on Form 10-K, as
filed with the SEC on March 28, 2001).*
10.10 Amendment No 3 to Credit Agreement dated December 4, 2001 (filed as
Exhibit 10.10 to the Company's Annual Report on Form 10-K, as filed
with the SEC on April 1, 2002).*
10.11 Credit Agreement dated as of December 31, 2002 among the Company,
Antares Capital Corporation and Other Financial Institutions Party
Hereto (filed as Exhibit 10.11 to the Company's Annual Report on
Form 10-K, as filed with the SEC on March 27, 2003).*
b. Reports on Form 8-K
No reports or Form 8-K were filed during the quarter ended March 30,
2003.
- ----------
* Incorporated by reference.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis, State of
Tennessee, on May 14, 2003.
True Temper Sports, Inc.
By: /s/ SCOTT C. HENNESSY
-------------------------------
Name: Scott C. Hennessy
Title: President and Chief Executive Officer
By: /s/ FRED H. GEYER
--------------------------------
Name: Fred H. Geyer
Title: Senior Vice President,
Chief Financial Officer and Treasurer
13
CERTIFICATIONS
I, Scott C. Hennessy, President and Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of True Temper Sports,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
function):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003
By: /s/ SCOTT C. HENNESSY
---------------------------------
Name: Scott C. Hennessy
Title: President and Chief Executive Officer
14
CERTIFICATIONS
I, Fred H. Geyer, Senior Vice President, Chief Financial Officer, and Treasurer,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of True Temper Sports,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
function):
(a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003
By: /s/ FRED H. GEYER
---------------------------------
Name: Fred H. Geyer
Title: Senior Vice President,
Chief Financial Officer and Treasurer
15