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		Per Share				Total
Public offering price			$11.50				$69,000,000
Underwriting discount			$.805				$4,830,000
Proceeds, before expenses, to Golfsmith International Holdings, Inc.			$10.695				$64,170,000

Merrill Lynch & Co.	JPMorgan

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Prospectus Summary		1
Risk Factors		7
Special Note Regarding Forward-Looking Statements		17
Use of Proceeds		18
Dividend Policy		19
Capitalization		20
Dilution		21
Unaudited Pro Forma Condensed Consolidated Financial Statements		22
Selected Consolidated Financial and Other Data		30
Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Business		52
Management		72
Certain Relationships and Related Party Transactions		85
Principal Stockholders		90
Description of Capital Stock		93
Shares of Common Stock Eligible for Future Sale		96
U.S. Federal Tax Considerations for Non-U.S. Holders of Our Common Stock		99
Underwriting		103
Legal Matters		108
Experts		108
Where You Can Find Additional Information		109
Index to the Consolidated Financial Statements		F-1

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	A reduction in the number of rounds of golf played and the popularity of golf may adversely affect our sales of golf products.

	A reduction in discretionary consumer spending could adversely affect our sales of golf products.

	Our sales and profits may be adversely affected if we or our suppliers fail to develop and introduce new and innovative products that appeal to our customers.

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	Competition from new and existing competitors could have an adverse effect on our sales and profitability.

	Our growth will be adversely affected if we are unable to open new stores and operate them profitably.

	•	identify suitable store locations that meet our target demographics;
	•	negotiate and enter into long-term leases upon acceptable terms;
	•	build-out or refurbish sites on a timely and cost-effective basis;
	•	hire, train and retain skilled managers and personnel; and
	•	integrate new stores into existing operations.

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	If our key suppliers limit the amount or variety of products they sell to us or if they fail to deliver products to us in a timely manner and upon customary pricing terms, our sales and profitability may be reduced.

	Our sales could decline if we are unable to process increased traffic or prevent security breaches on our Internet site and our network infrastructure.

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	We may be unable to expand our business if adequate capital is not available.

	We lease almost all of our store locations. If we are unable to maintain those leases or locate alternative sites for our stores in our target markets and on terms that are acceptable us, our net revenues and profitability could be adversely affected.

	Our operating costs and profitability could be adversely affected if we are unable to accurately predict and respond to seasonal fluctuations in our business.

	Many of our stores are clustered in particular metropolitan areas, and an economic downturn or other adverse events in these areas may significantly reduce the sales for stores located in such areas.

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	Our comparable store sales may fluctuate, which could negatively impact our future operating performance.

	•	customer demand in different geographic regions;
	•	unseasonable weather during certain periods for certain geographic regions;
	•	changes in our product mix;
	•	our decision to relocate or refurbish certain stores;
	•	the launch of promotional events;
	•	the opening of new stores by us and our competitors in our existing markets; and
	•	changes in economic conditions in the areas in which our stores are located.

	If we fail to accurately target the appropriate segment of the consumer catalog market or if we fail to achieve adequate response rates to our catalogs, our sales and profitability may be adversely affected.

	•	achieve adequate response rates to our mailings;
	•	offer an attractive merchandise mix;
	•	cost-effectively add new customers;
	•	cost-effectively design and produce appealing catalogs; and
	•	timely deliver products ordered through our catalogs to our guests.

	If we lose the services of our Chief Executive Officer, we may not be able to manage our operations and implement our growth strategy effectively.

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	Our sales, profitability and company-wide operations would be adversely affected if the operations of our Austin, Texas call center or distribution and fulfillment center were interrupted or shut down.

	A disruption in the service or a significant increase in the cost of our primary delivery service for our direct-to-consumer operations would have a material adverse effect on our sales and profitability.

	An increase in the costs of mailing, paper, and printing our catalogs would adversely affect our profitability.

	If we are unable to enforce our intellectual property rights our sales and profitability may decline.

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	We may become subject to intellectual property suits that could cause us to incur substantial costs or pay substantial damages or prohibit us from selling our products.

	We may be subject to product warranty claims or product recalls which could harm our reputation, adversely affect our sales and cause us to incur substantial costs or pay substantial damages.

	Disruption of operations of ports through which our products are imported from Asia could have a material adverse effect on our sales and profitability.

	We may pursue strategic acquisitions, which could have an adverse impact on our sales and operating results, and could divert the attention of our management.

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	Atlantic Equity Partners III, L.P. will have significant influence over us, including the ability to designate a majority of our board of directors, and its interests may conflict with the interests of our other stockholders.

	•	the composition of our board of directors, which has the authority to direct our business and appoint and remove our officers;
	•	approving or rejecting a merger, consolidation or other business combination; and
	•	amending our certificate of incorporation and bylaws which govern the rights attached to our shares of common stock.

Following this offering, we will be a “controlled company” within the meaning of the Nasdaq corporate governance rules. We will therefore qualify for, and intend to rely on, exemptions from certain Nasdaq corporate governance requirements, and, as a result, our stockholders may not have the same degree of protection as that afforded to stockholders of companies that are subject to all of Nasdaq’s corporate governance requirements.

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	Our directors and executive officers who have relationships with First Atlantic Capital may have conflicts of interest with respect to matters involving our company.

	There has been no prior public market for our common stock and the trading price of our common stock may be adversely affected if an active trading market in our common stock does not develop.

	Future sales of our common stock could cause the market price of our common stock to drop significantly, even if our business is profitable.

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	The anti-takeover provisions in our charter documents and under Delaware law could discourage or prevent others from acquiring our company, and, therefore, our shareholders may lose the opportunity to sell their shares at a favorable price.

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	•	the timing, amount and composition of future capital expenditures;
	•	the timing and number of new store openings and our expectations as to the costs associated with new store openings;
	•	the timing and completion of the remodeling of our existing stores;
	•	our plans to grow particular areas of our business, including sales of our proprietary branded products, our apparel and tennis products; and
	•	our plans to launch new customer care initiatives, including our guest loyalty program.

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			Amount
			(millions)
Source of Funds
New senior secured credit facility(1)			$	41.2
Common stock offered hereby				69.0
	Total sources		$	110.2
Uses of Funds
Repayment of existing senior secured credit facility			$	5.5
Redemption of 8.375% senior secured notes(2)				92.9
Payment of management termination fee(3)				3.0
Transaction fees and expenses(4)				8.8
	Total uses		$	110.2

(1)	Our new senior secured credit facility is expected to provide for a $65.0 million revolving credit facility.
(2)	We are required to give at least 30 days prior notice prior to redeeming the senior secured notes. This amount assumes a redemption date of April 1, 2006. Promptly following the closing of this offering, we intend to issue a notice of redemption. Assuming the senior secured notes are redeemed on July 15, 2006, the amount required to redeem the notes would increase to $94.4 million requiring anticipated additional borrowings of approximately $1.5 million under our new senior secured credit facility as of that date.
(3)	Consists of a one-time $3.0 million fee to terminate our management consulting agreement with First Atlantic Capital, Ltd. upon completion of this offering. The management consulting agreement currently obligates us to pay approximately $600,000 per year, plus expenses, to First Atlantic Capital, Ltd. until 2012.
(4)	Transaction fees and expenses include: (i) $7.8 million related to the underwriting discount and fees and expenses associated with this offering, and (ii) fees and expenses of approximately $1.0 million related to our new senior secured credit facility.

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	•	on an actual basis;
	•	on a pro forma basis to give effect to the following transactions as if they had occurred on April 1, 2006:

	•	an amendment to our certificate of incorporation to authorize the issuance of up to 100,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock; and
	•	the issuance and sale of 6,000,000 shares of common stock in this offering, our receipt of estimated net proceeds of approximately $61.2 million, after deducting the underwriting discount and estimated offering expenses payable by us and based on an initial public offering price of $11.50 per share of common stock, and the application of such net proceeds, together with borrowings under our new senior secured credit facility, as described under “Use of Proceeds.”

			April 1, 2006
			Actual				Pro Forma
			(in thousands)
			(unaudited)
Existing senior secured credit facility			$	5,509			$	—
New senior secured credit facility				—				41,244
8.735% senior secured notes				83,158				—
Total indebtedness			$	88,667			$	41,244
Stockholders’ equity:
	Common stock, $.001 par value per share; 40,000,000 shares authorized and 9,472,143 shares issued and outstanding, actual; 100,000,000 shares authorized and 15,472,143 shares issued and outstanding, pro forma			9				15
	Preferred stock, $.001 par value per share; no shares authorized, issued and outstanding, actual; 10,000,000 shares authorized, and no shares issued and outstanding, pro forma			—				—
	Restricted common stock units, $.001 par value per unit; 331,569 units issued and outstanding, actual, and zero units issued and outstanding, pro forma			1				1
	Additional capital			60,301				121,465
	Other comprehensive income			157				157
	Accumulated deficit			(4,189	)			(20,729	)
Total stockholders’ equity				56,279				100,909
Total capitalization			$	144,946			$	142,153

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Assumed initial public offering price per share							$	11.50
	Historical net tangible book value per share as of April 1, 2006		$	(1.30	)
	Increase per share attributable to new investors			3.32
Historical net tangible book value per share after this offering								2.02
Dilution per share to new investors							$	9.48

			Shares Purchased								Total Consideration
																			Average Price
			Number				Percent				Amount				Percent				Per Share
Existing stockholders				9,803,712				62.0	%		$	67,051,596				49.3	%		$	6.84
New investors				6,000,000				38.0	%		$	69,000,000				50.7	%		$	11.50
	Total			15,803,712				100.0	%		$	136,051,596				100.0	%

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	•	this offering;
	•	$41.2 million of borrowings under our new senior secured credit facility;
	•	the redemption of $93.75 million aggregate principal amount at maturity of our 8.375% senior secured notes due 2009 issued on October 15, 2002, which had an accreted book value of $83.2 million as of April 1, 2006;
	•	the repayment of outstanding borrowings of $5.5 million under our existing senior secured credit facility;
	•	the payment of a one-time $3.0 million fee to terminate our management consulting agreement with First Atlantic Capital, Ltd. upon completion of this offering; and
	•	the payment of (i) $7.8 million related to the underwriting discount and other fees and expenses associated with this offering and (ii) $1.0 million of fees and expenses related to our new senior secured credit facility,

	•	are presented for informational purposes only;
	•	do not purport to represent what our results of operations or financial condition would have been had the Transactions actually occurred on the dates indicated;
	•	do not purport to project our results of operations or financial condition for any future period or as of any future date; and
	•	should be read in conjunction with the information contained in “Selected Consolidated Financial and Other Data”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

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			As of April 1, 2006
			Historical				Adjustments				Pro Forma
ASSETS
Current assets:
	Cash and cash equivalents		$	3,664,380			$	—	(1)		$	3,664,380
	Receivables, net of allowances			2,226,607				—				2,226,607
	Inventories			81,534,562				—				81,534,562
	Prepaid and other current assets			8,381,071				—				8,381,071
Total current assets				95,806,620								95,806,620
Net property and equipment				47,871,027				—				47,871,027
Goodwill				41,634,525				—				41,634,525
Tradename				11,158,000				—				11,158,000
Trademarks				14,156,127				—				14,156,127
Customer database, net of accumulated amortization				2,077,292				—				2,077,292
Debt issuance costs, net of accumulated amortization				4,450,528				(3,450,528	) (2)			1,000,000
Other long-term assets				462,032				—				462,032
Total assets			$	217,616,151			$	(3,450,528	)		$	214,165,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	54,628,420			$	—			$	54,628,420
	Accrued expenses and other current liabilities			13,726,099				(657,654	)			13,068,445
	Line of credit			5,509,001				35,734,820	(1)			41,243,821
Total current liabilities				73,863,520				35,077,166				108,940,686
Long-term debt				83,158,164				(83,158,164	) (1)			—
Deferred rent				4,315,589				—				4,315,589
Total liabilities				161,337,273				(48,080,998	)			113,256,275
Total stockholders’ equity				56,278,878				44,630,470	(3)			100,909,348
Total liabilities and stockholders’ equity			$	217,616,151			$	(3,450,528	)		$	214,165,623

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	(i)	Represents the accreted value of the senior secured notes at October 15, 2006, as determined in accordance with the indenture governing the notes, in excess of the recorded book value of the senior secured notes at April 1, 2006. The indenture governing the senior secured notes provides that in the event the notes are redeemed prior to October 15, 2006, the redemption price is calculated based on the discounted present value of the contractual accreted value of the notes as of, and the remaining interest payment on the notes through, October 15, 2006.
	(ii)	Represents a pre-payment premium of 6.5% on the contractual accreted value of the senior secured notes at October 15, 2006, as required by the terms of the notes.
	(iii)	Represents the present value discount of the contractual accreted value of the notes at October 15, 2006 and the 6.5% pre-payment premium discussed in note (ii) above, assuming a discount rate of 5.47%. In accordance with the terms of the senior secured notes, the discount rate will be determined on the third business day preceding the actual redemption date.
	(iv)	Represents the present value of remaining interest payment on the senior secured notes from April 2, 2006 through October 15, 2006, assuming a discount rate of 5.47%.

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Issuance of common stock in this offering			$	69,000,000
Loss on debt related to repayment of 8.375% senior secured notes(a)				(13,539,530	)
Underwriters fees				(4,830,000	)
Fees and expenses associated with this offering(b)				(6,000,000	)
	Total		$	44,630,470

	(a)	This amount reflects a one-time charge associated with the estimated loss on extinguishment of long-term debt of $13.5 million and is comprised of the following components:

	Contractual accreted value at October 15, 2006 in excess of accreted book value at April 1, 2006(i)		$	2,035,669
	6.5% premium of contractual accreted value(ii)			5,537,599
	Present value discount of contractual accreted value and pre-payment premium(iii)			(2,600,592	)
	Present value of scheduled interest payments through October 2006(iv)			4,116,326
	Write-off of debt issuance costs related to senior secured notes and existing senior secured credit facility			4,450,528
	Total		$	13,539,530

	(i)	Represents the accreted value of the senior secured notes at October 15, 2006, as determined in accordance with the indenture governing the notes, in excess of the recorded accreted book value of the senior secured notes at April 1, 2006.
	(ii)	Represents a pre-payment premium of 6.5% on the contractual accreted value of the senior secured notes at October 15, 2006, as required by the terms of the notes.
	(iii)	Represents the present value discount of the contractual accreted value of the notes at October 15, 2006 and the 6.5% pre-payment premium discussed in note (ii) above, assuming a discount rate of 5.47%. In accordance with the terms of the senior secured notes, the discount rate will be determined on the third business day preceding the actual redemption date.
	(iv)	Represents the present value of the remaining interest payments on the senior secured notes from April 2, 2006 through October 15, 2006, assuming a discount rate of 5.47%.

	(b)	This amount includes $3.0 million in estimated expenses associated with this offering as well as a $3.0 million one-time termination fee paid to First Atlantic Capital, Ltd. to terminate our management consulting agreement.

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		Year Ended December 31, 2005
		Historical				Adjustments				Pro Forma
Net revenues		$	323,794,225			$	—			$	323,794,225
Cost of products sold			208,044,286				—				208,044,286
Gross profit			115,749,939				—				115,749,939
Selling, general and administrative			99,310,158				(681,000	) (1)			98,629,158
Store pre-opening expenses			1,764,685				—				1,764,685
Total operating expenses			101,074,843				(681,000	)			100,393,843
Operating income			14,675,096				681,000				15,356,096
Interest expense			(11,744,232	)			7,986,194	(2)			(3,758,038	)
Interest income			73,263				—				73,263
Other income			469,841				—				469,841
Other expense			(116,331	)			—				(116,331	)
Income (loss) from operations before income taxes			3,357,637				8,667,194				12,024,831
Income tax expense			(400,003	)			—				(400,003	)
Net income (loss)		$	2,957,634			$	8,667,194			$	11,624,828
Basic net income (loss) per share of common stock(3)		$	0.30							$	0.74
Basic weighted average common shares outstanding(3)			9,803,712								15,803,712
Diluted net income (loss) per share of common stock (3)		$	0.30							$	0.73
Diluted weighted average common shares outstanding(3)			9,943,443								15,943,443

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	(a)	Assumes $1.0 million of debt issuance costs related to the new senior secured credit facility amortized over a 5-year estimated life of the new senior secured credit facility.
	(b)	Represents historical interest expense under our existing senior secured credit facility of $0.2 million on historical borrowings used for working capital purposes plus estimated interest expense of $3.6 million related to borrowings under the new senior secured credit facility. Borrowings under the new senior secured credit facility are estimated to be $51.7 million if the Transactions had occurred at January 1, 2005. Interest is calculated assuming a 6.5% interest rate and assuming pro forma borrowings of $51.7 million are outstanding for the entire period presented.

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		Three Months Ended April 1, 2006
		Historical				Adjustments				Pro Forma
Net revenues		$	74,810,296			$	—			$	74,810,296
Cost of products sold			49,007,939				—				49,007,939
Gross profit			25,802,357				—				25,802,357
Selling, general and administrative			23,702,479				(200,000	) (1)			23,502,479
Store pre-opening expenses			199,749								199,749
Total operating expenses			23,902,228				(200,000	)			23,702,228
Operating income			1,900,129				200,000				2,100,129
Interest expense			(3,059,426	)			2,068,999	(2)			(990,427	)
Interest income			10,783				—				10,783
Other income			322,064				—				322,064
Other expense			(42,944	)			—				(42,944	)
Income (loss) from operations before income taxes			(869,394	)			2,268,999				1,399,605
Income tax expense			—				—				—
Net income (loss)		$	(869,394	)		$	2,268,999			$	1,399,605
Basic and diluted net income (loss) per share of common stock(3)		$	(0.09	)						$	0.09
Basic and diluted weighted average common shares outstanding(3)			9,803,712				—				15,803,712

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	(a)	Assumes $1.0 million of debt issuance costs related to the new senior secured credit facility amortized over a 5-year estimated life of the new senior secured credit facility.
	(b)	Represents historical interest expense under our existing senior secured credit facility of $0.1 million on historical borrowings used for working capital purposes plus estimated interest expense of $0.8 million related to borrowings under the new senior secured credit facility. Borrowings under the new senior secured credit facility are estimated to be $51.7 million if the transaction had occurred at January 1, 2005. Interest is calculated assuming a 6.5% rate and assuming pro forma borrowings of $51.7 million are outstanding for the entire period presented.

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		Predecessor									Successor
						Period from					Period from
		Fiscal Year				December 30,					October 16,				Fiscal Year Ended												Three Months Ended
		Ended				2001 through					2002 through
		December 29,				October 15,					December 28,				January 3,				January 1,				December 31,				April 2,				April 1,
		2001				2002					2002				2004				2005				2005				2005				2006
																											(unaudited)
		(in thousands, except share, per share and store data)
Statement of Operations Data:
Net revenues		$	221,439			$	180,315				$	37,831			$	257,745			$	296,202			$	323,794			$	63,958			$	74,810
Cost of products sold			143,118				117,206					25,147				171,083				195,014				208,044				41,195				49,008
Gross profit			78,321				63,109					12,684				86,662				101,188				115,750				22,763				25,802
Selling, general and administrative			64,081				48,308					13,581				73,400				90,763				99,310				21,400				23,702
Store pre-opening/closing expenses			—				122					93				600				743				1,765				517				200
Amortization of deferred compensation(1)			458				6,033					—				—				—				—				—				—
Total operating expenses			64,539				54,463					13,674				74,000				91,506				101,075				21,917				23,902
Operating income (loss)			13,782				8,646					(990	)			12,662				9,682				14,675				846				1,900
Interest expense			(6,825	)			(5,206	)				(2,210	)			(11,157	)			(11,241	)			(11,744	)			(2,862	)			(3,059	)
Interest income			597				331					7				40				64				73				17				11
Other income, net			1,031				2,365					14				164				1,162				354				(1	)			279
Minority interest			(581	)			(844	)				—				—				—				—				—				—
Loss on debt extinguishment(2)			—				(8,047	)				—				—				—				—				—				—
Income (loss) from continuing operations before income taxes			8,004				(2,755	)				(3,179	)			1,709				(333	)			3,358				(2,000	)			(869	)
Income tax benefit (expense)			(251	)			(709	)				633				(645	)			(4,423	)			(400	)			—				—
Income (loss) from continued operations			7,753				(3,464	)				(2,546	)			1,064				(4,756	)			2,958				(2,000	)			(869	)
Income (loss) from discontinued operations			(590	)			(230	)				(40	)			—				—				—				—				—
Income (loss) before extraordinary items			7,163				(3,694	)				(2,586	)			1,064				(4,756	)			2,958				(2,000	)			(869	)
Extraordinary items(3)			—				2,022					—				—				—				—				—				—
Net income (loss)		$	7,163			$	(1,672	)			$	(2,586	)		$	1,064			$	(4,756	)		$	2,958			$	(2,000	)		$	(869	)
Basic and diluted income (loss) per share of common stock(4)			*				*				$	(0.28	)		$	0.11				(0.49	)		$	0.30			$	(0.20	)		$	(0.09	)
Weighted average number of shares outstanding used in basic income (loss) per share calculation(4)			*				*					9,175,002				9,441,148				9,803,712				9,803,712				9,803,712				9,803,712
Weighted average number of shares outstanding used in diluted income (loss) per share calculation(4)			*				*					9,175,002				9,441,148				9,803,712				9,943,443				9,803,712				9,803,712
Other Financial Data:
Gross profit as a percentage of net revenues			35.4	%			35.0	%				33.5	%			33.6	%			34.2	%			35.7	%			35.6	%			34.5	%
Store Data (not in thousands):
Comparable store sales increase (decrease)(5)			2.9	%			N/A					0.1	%			7.4	%			0.7	%			2.6	%			(8.1	)%			12.3	%
Number of stores at period end			24				24					26				38				46				52				46				52
Gross square feet at period end			581,890				*					596,206				759,981				849,677				905,827				825,107				905,827
Net sales per selling square foot for stores open at beginning and end of period(6)		$	268				*				$	271			$	302			$	333			$	353			$	104			$	119

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		Predecessor									Successor
						Period from					Period from
		Fiscal Year				December 30,					October 16,				Fiscal Year Ended												Three Months Ended
		Ended				2001 through					2002 through
		December 29,				October 15,					December 28,				January 3,								December 31,				April 2,				April 1,
		2001				2002					2002				2004				January 1, 2005				2005				2005				2006
		(as restated)(8)									(as restated)(8)				(as restated)(8)				(as restated)(8)								(as restated)(8)
																											(unaudited)
		(in thousands)
Balance Sheet Data (at period end):
Cash and cash equivalents		$	33,735			$	3,788				$	6,950			$	1,051			$	8,575			$	4,207			$	—			$	3,664
Inventories			33,776				33,152					32,352				51,213				54,198				71,472				72,083				81,535
Working capital(7)			47,152				18,753					16,946				18,329				20,309				22,800				19,493				21,943
Total assets			105,686				153,135					155,548				177,449				186,929				204,836				196,726				217,616
Long-term debt			33,720				75,000					75,380				77,483				79,808				82,450				80,432				83,158
Total stockholders’ equity			32,519				56,011					53,473				58,976				54,313				57,127				52,285				56,279

*	Not meaningful.

(1)	During fiscal 2000, the predecessor company’s board of directors authorized Golfsmith to reprice stock options granted to employees and officers with exercise prices in excess of the then-current fair market value. Options to purchase a total of 1,716,780 shares of common stock were repriced. Golfsmith recorded deferred compensation of $4.1 million related to the repriced options during the period from December 30, 2001 through October 15, 2002. The deferred charge was being amortized over the average remaining life of the repriced options. For the period from December 30, 2001 through October 15, 2002, Golfsmith amortized $6.0 million (including all remaining amounts as of the merger date) to compensation expense related to these repriced options. There was no remaining deferred compensation relating to these repriced options subsequent to October 15, 2002 as all remaining historical Golfsmith options vested and were either canceled in exchange for the right to receive cash or surrendered in exchange for stock units as part of the merger transaction.
(2)	On October 15, 2002, immediately prior to the merger with Golfsmith Holdings, Golfsmith repaid existing subordinated notes held by a third party lender. During the period from December 30, 2001 through October 15, 2002, Golfsmith recorded a loss on this extinguishment of senior subordinated debt of $8.0 million.
(3)	Immediately prior to the merger in October 2002, Golfsmith repurchased a minority interest held by a third party. Golfsmith repurchased the minority interest which had a carrying value of $13.1 million for cash consideration of $9.0 million resulting in a $2.1 million write down of long term assets associated with the minority interest and negative goodwill of $2.0 million. In accordance with Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations, the negative goodwill is recorded in the period from December 30, 2001 through October 15, 2002, as an extraordinary item in the consolidated statement of operations. The extraordinary item is recorded without a tax effect due to Golfsmith’s election to be treated as a Subchapter S corporation during the predecessor period.
(4)	For all periods subsequent to October 15, 2002, includes 331,569 shares of common stock issuable immediately following the closing of this offering upon the conversion, for no additional consideration, of equity units held by certain of our existing and former officers and employees.
(5)	We consider sales by a new store to be comparable commencing in the fourteenth month after the store was opened or acquired. We consider sales by a relocated store to be comparable if the relocated store is expected to serve a comparable customer base and there is not more than a 30-day period during which neither the original store nor the relocated store is closed for business. We consider sales by stores with modified layouts to be comparable. We consider sales by stores that are closed to be comparable in the period leading up to closure if they met the qualifications of a comparable store and do not meet the qualifications to be classified as discontinued operations under SFAS No. 144, Accounting for the Impairment of Long-Lived Assets. Comparable store results for a 53-week fiscal year are presented on a 52/52 week basis by omitting the last week of the 53-week period.

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	Comparable store sales are reported for a combined fiscal 2002 — predecessor period from December 30, 2001 through October 15, 2002 plus successor period from October 16, 2002 through December 28, 2002 — compared predecessor fiscal 2001 and are not reported for the interim periods.
(6)	Calculated using net sales of all stores open at both the beginning and the end of the period and the selling square footage for such stores. Selling square feet includes all retail space including but not limited to hitting areas, putting greens and check-out areas. It does not include back-room and receiving space, management offices, employee breakrooms, restrooms, vacant space or area occupied by GolfTEC Learning Centers.
(7)	Defined as total current assets minus total current liabilities.
(8)	Certain adjustments have been made to the prior year financial statements related to the correction of an error in applying generally accepted accounting principles. Adjustments have been made to the consolidated balance sheets for the periods presented to decrease both cash and cash equivalents and accounts payable in connection with outstanding checks written but not presented for payment prior to the financial statement date. The adjustments are the result of the Company funding the related cash accounts at the time the outstanding checks are presented for payment, which has historically been after the date on which the reporting period ends, instead of the date on which the checks are written. The adjustments do not affect previously reported net income, retained earnings or earnings per share in any period presented.

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	Industry Trends

	Fiscal Year

	Don Sherwood Acquisition

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	Revenues

	Revenue Trends and Drivers

																										Three Months Ended
		Fiscal 2003								Fiscal 2004								Fiscal 2005								April 2, 2005								April 1, 2006
		$				%				$				%				$				%				$				%				$				%
		(in thousands)								(in thousands)								(in thousands)								(in thousands)								(in thousands)
																										(unaudited)
Stores		$	162,073				62.9	%		$	204,498				69.0	%		$	234,261				72.3	%		$	42,897				67.1	%		$	53,137				71.0	%
Direct-to-consumer			89,021				34.5				84,372				28.5				83,040				25.7				19,849				31.0				20,207				27.0
International distributors and other(1)			6,651				2.6				7,332				2.5				6,493				2.0				1,213				1.9				1,466				2.0

(1)	Consists of (a) sales made through our international distributors and our distribution and fulfillment center near London, (b) revenues from the Harvey Penick Golf Academy, and (c) our recognition of gift card breakage, as described below.

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	Revenue Recognition

	Cost of Goods Sold

	Operating Expenses

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	Inventory Valuation

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	Long-lived Assets, Including Goodwill and Identifiable Intangible Assets

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	Product Return Reserves

	Store Closure Costs

	Operating Leases

	Deferred Tax Assets

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														Three Months Ended
														April 2,				April 1,
		Fiscal 2003				Fiscal 2004				Fiscal 2005				2005				2006
Statement of Operations Data:
Net revenues			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%
Cost of products sold			66.4				65.8				64.3				64.4				65.5
Gross profit			33.6				34.2				35.7				35.6				34.5
Selling, general and administrative			28.5				30.6				30.7				33.5				31.7
Store pre-opening/closing expenses			0.2				0.3				0.5				0.8				0.3
Total operating expenses			28.7				30.9				31.2				34.3				32.0
Operating income			4.9				3.3				4.5				1.3				2.5
Interest expense			(4.3	)			(3.8	)			(3.6	)			(4.5	)			(4.1	)
Interest income			*				*				*				*				*
Other income, net			0.1				0.4				0.1				n/m				(0.4	)
Income (loss) from continuing operations before income taxes			0.7				n/m				1.0				(3.1	)%			(1.2	)%
Income tax benefit (expense)			n/m				n/m				n/m				*				*
Net income (loss)			0.4	%			n/m				0.9	%			(3.1	)%			(1.2	)%

*	Less than 0.1%.

	Comparison of Three Months Ended April 1, 2006 to Three Months Ended April 2, 2005

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	Comparison of Fiscal 2005 to Fiscal 2004

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	Comparison of Fiscal 2004 to Fiscal 2003

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																																																		Fiscal
		Fiscal 2003																Fiscal 2004																Fiscal 2005																2006
		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4				Q1
		(in thousands, except share per share data and comparable store sales growth)
Net revenues		$	45,830			$	79,256			$	71,141			$	61,518			$	65,782			$	96,944			$	73,896			$	59,581			$	63,958			$	102,494			$	85,521			$	71,821			$	74,810
Gross profit			14,858				25,803				23,360				22,640				22,975				33,374				24,517				20,321				22,763				37,833				29,883				25,272				25,802
Operating income			599				6,460				4,362				1,241				2,478				6,417				2,581				(1,795	)			846				8,982				4,105				742				1,900
Net income (loss)			(1,217	)			2,221				1,012				(951	)			(203	)			2,265				536				(7,354	)			(2,000	)			6,002				1,211				(2,255	)			(869	)
Basic income (loss) per share			(0.13	)			0.24				0.11				(0.10	)			(0.02	)			0.23				0.05				(0.75	)			(0.20	)			0.61				0.12				(0.23	)			(0.09	)
Comparable store sales growth			(2.2)%				8.4%				12.6%				8.1%				23.9%				0.7%				(7.9)%				(4.9)%				(8.1)%				(0.5)%				6.2%				13.5%				12.3%
Net revenues as a percentage of full year results			17.8%				30.7%				27.6%				23.9%				22.2%				32.7%				24.9%				20.2%				19.7%				31.6%				26.4%				22.3%				n/a

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	Cash Flows

	Operating Activities

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	Investing Activities

	Financing Activities

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	Historical Indebtedness

	Senior Secured Notes

	Senior Secured Credit Facility

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	Indebtedness Following this Offering

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	Contractual Obligations

			Payments Due by Period
							Less than
Contractual Obligations			Total				1 Year				1-3 Years				4-5 Years				After 5 Years
			(unaudited)
			(in thousands)
Long-term debt—principal(1)			$	93,750			$	—			$	28,125			$	65,625			$	—
Long-term debt—interest(1)				24,564				7,852				13,293				3,420				—
Operating leases				142,727				17,438				34,192				31,121				59,976
Purchase obligations(2)				7,797				6,787				808				202				—
	Total		$	268,838			$	32,076			$	76,418			$	100,367			$	59,976

(1)	We expect to retire all of our outstanding long-term debt with the proceeds from this offering together with borrowings under our new senior secured credit facility.
(2)	Purchase obligations consist of minimum royalty payments and services and goods we are committed to purchase in the ordinary course of business. Purchase obligations do not include contracts we can terminate without cause with little or no penalty to us.

	Interest Rate Risk

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	Foreign Currency Risks

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	•	Enhancing our guests’ in-store experience. We have emphasized a more attractive and upscale environment, in all of the stores we have opened since October 2002. We have also begun remodeling our older “warehouse-like” stores. We are incorporating hitting areas, putting greens and ball launch monitor technology in all of our stores, and we are introducing partial-flight indoor driving ranges in our larger stores. As part of our SmartFitTM clubfitting program, we are introducing Hot Stix® technology which analyzes a guest’s swing and recommends the clubs and golf balls from our inventory best suited to him or her. Additionally, a majority of our stores currently offer in-store golf lessons from a staff of PGA-certified teaching pros through our relationship with GolfTEC Learning Centers. We believe that this more attractive, activity-based shopping environment drives store traffic and increases revenues. We plan to complete the remodeling of our older stores by the end of 2007, each of which will then incorporate key elements of our new activity-based shopping environment.
	•	Reevaluating our store format. We have undertaken a thorough evaluation of our retail store portfolio in an effort to improve the financial performance of our store base. Based on our evaluation, we determined that our store concept is best suited to a 15,000 to 20,000 square foot store that enables us to accommodate the key elements of our activity-based shopping environment. We will generally seek to open new stores based on this prototype, although we currently operate larger and smaller stores based on our historical store base, and we may open new stores outside of this range depending on local market demographics and real estate prices and availability. Our larger stores enable us to devote the additional space to more hitting areas and larger partial-flight indoor driving ranges.
	•	Increasing our retail store base. We doubled our store base from 26 stores in December 2002 to 52 stores in December 2005 and opened six new stores in the second quarter of 2006. We plan to open between four and six additional stores in 2006 and between 14 and 16 stores in 2007.

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	•	Expanding into the tennis category. Our acquisition of six Don Sherwood Golf & Tennis stores in July 2003 marked our entry into the tennis market. We believe that the tennis category is complementary to our core golf offering due to both sports’ appeal to similar demographics. To date, we have tennis departments in 35 of our stores and plan to continue to roll-out this category in our existing and future stores.

	•	we estimate that the golf retail market that we target represented approximately $6 billion in sales in the United States in 2005;
	•	the golf industry is highly fragmented relative to other retail industries, with no single golf retailer accounting for more than 6% of sales nationally in 2005; and
	•	off-course specialty retailers such as us have become the most popular source for golf equipment for high-spending avid golfers who play 25 or more rounds and/or spend $1,000 or more on golf each year.

	•	Brand awareness and customer recognition. Our 39-year history, nationwide catalog distribution and expansive store base have resulted in significant visibility of the Golfsmith brand, facilitating our entry into new markets and driving traffic to our Internet site. In addition to providing shopping convenience for our guests, our catalogs and Internet site serve as sales and marketing tools to increase the visibility of the Golfsmith brand and to generate greater traffic for our retail stores. As we further expand our store base in new markets, we intend to capitalize on our established and recognized brand and our existing customer base to enhance our position as one of the nation’s leading golf retailers.
	•	Extensive customer database. We use our extensive database, containing over 2.5 million names, to evaluate purchasing trends and behaviors, identify cross-marketing opportunities and target the most attractive potential locations for new stores. We also continually analyze

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		this information to evaluate advertising initiatives and improve the content of our Internet site and catalog offerings.

	•	Seamless shopping experience. Through our integrated multi-channel model, we provide our guests a seamless shopping experience across our retail stores, Internet site and catalogs, maintaining consistent product offerings and promotions. In addition, our multi-channel network allows guests to avoid delivery expenses and waiting time by ordering through our Internet site or catalogs and picking up their order in one of our retail stores.

	•	Premier branded merchandise. We are one of the largest retailers of premier branded golf merchandise. Our premier branded golf merchandise includes names such as adidas®, Callaway®, Cleveland®, Cobra®, FootJoy®, Mizuno®, Nike®, Ping®, TaylorMade® and Titleist®. We also offer the top tennis brands such as adidas®, Babolat®, Head®, Nike®, Prince®, Völkl® and Wilson®. We believe that our market position and strong vendor relationships generally provide us with greater access to new product innovations and large volume purchases at reduced prices. Our extensive offering of premier national brands is a critical component in driving traffic to our stores and distinguishes us from our competitors with a less extensive product offering, such as on-course pro shops and general sporting goods retailers.
	•	Proprietary products. We design, develop and market our proprietary branded merchandise under a variety of brand names, including Lynx®, Snake Eyes® and Zevo®. These brands are priced at lower price points than the premier branded merchandise we offer and generally appeal to our more value- conscious guests. Several of our brands are well-established and have long histories and strong reputations for quality and product performance. Our in-house research and development department has four decades of experience in the development and design of golf clubs and components. Sales of our proprietary branded products, including golf club components, accounted for $50.4 million, or 15.6%, of our net revenues in 2005 and generally have higher margins than non-proprietary branded products. Sales of our proprietary branded products, including golf club components, accounted for $11.0 million, or 14.7%, of our net revenues in the three months ended April 1, 2006, compared to $11.3 million, or 17.7%, of our net revenues in the three months ended April 2, 2005.
	•	Pre-owned clubs. Our pre-owned club offering appeals to value-conscious guests seeking premier brands at attractive prices. We believe our trade-in program promotes new product sales by offering our guests the ability to trade in their old clubs and receive credit toward the purchase of new clubs, thereby increasing our guests’ purchasing frequency and shortening their equipment replacement cycle.

	•	Activity-based shopping environment. All of our stores feature hitting areas, putting greens and ball launch monitor technology that takes images of a guest’s swing and ball strike and analyzes and reports the ball’s launch angle, speed, backspin, side spin and side angle to instantaneously quantify the performance of both player and equipment. Additionally, our larger stores have partial-flight indoor driving ranges. We have also added tennis tunnels (areas specifically designed with enough room to swing a racquet, hit a ball and view ball flight) in three stores and plan to add tennis tunnels in four additional stores in 2006. Based on our experience, we believe that guests are significantly more likely to purchase a club or racquet if they test it first. In addition, we believe that the activity-based format of our

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		stores keeps our guests in the store longer, enhances our brand name and allows our store associates, who we refer to as caddies, to strengthen their relationships with our guests.
	•	Customized golf-related services. We complement our extensive merchandise selection and activity-based shopping environment with a range of golf-related services. Guests in our stores can have a custom club fitting by one of our store caddies utilizing our SmartFitTM program. We also offer Hot Stix® technology, which analyzes a guest’s swing and recommends the clubs and balls from our inventory that are best suited to that individual. In addition, most of our stores offer in-store golf lessons through GolfTEC Learning Centers’ staff of PGA-certified teaching professionals.

	•	90/90 Playability Guarantee. Our 90/90 Playability Guarantee is designed to ensure that our guests are completely satisfied with their club purchases by offering a 90% merchandise credit for certain clubs used and returned during the first 90 days following purchase.
	•	115% Low Price Guarantee. We believe that we provide the most aggressive price guarantee in our industry, whereby we will refund 115% of the difference in price if a guest notifies us within 30 days of purchase of a lower price offered by another authorized retailer.
	•	Clubvantage Program. We offer guests the opportunity to buy a two- or three-year club maintenance program when purchasing clubs, which, among other benefits, offers guests free labor on future re-gripping, re-shafting and repair services.
	•	Golfsmith Credit Card. We offer our own proprietary credit card, which provides our qualified guests with flexible payment options. As a result of our relationship with Wells Fargo, we do not bear any of the financing risk associated with this program.
	•	Player Rewards Loyalty Program. We launched our Player Rewards program in April 2006 in order to strengthen our relationship with our guests by offering them special benefits, coupons and discounts on select products and services.

	•	Enhance distribution logistics. Our infrastructure provides us with the flexibility to choose between shipping merchandise directly from our vendors to our stores or routing merchandise through our distribution and fulfillment center. We evaluate each product to determine which store distribution method is most cost-effective while increasing product availability for our guests.
	•	Provide best-in-class in-stock positions in our stores. We utilize our advanced replenishment system to monitor our in-stock position at each store and generate replenishments as needed. We reduce costly out-of-stock situations and excess inventory markdowns by automated supply chain monitoring. We believe that these benefits would be more costly and difficult to achieve without the capabilities offered by the integrated inventory management system that we have implemented across our channels.
	•	Centrally receive and allocate merchandise. The scale of our purchases, along with our centralized distribution and fulfillment center, enables our third-party vendors to make large

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		quantity container shipments directly to us. After shipment to our centralized distribution facility, we then allocate these products optimally across our stores and direct-to-consumer channels based on demand. Our centralized distribution capabilities also enable us to participate more effectively in bulk purchase programs offered by our vendors, such as “power buys” of prior year’s models or volume discount purchases. Our centralized distribution and fulfillment center is also essential to our proprietary branded products that are sourced from overseas and shipped to us in bulk.

	•	Improve store design. To increase customer traffic, we have developed a new store design that we are implementing in our new stores. We are also in the process of implementing key elements of our store design in most of our existing stores, which we plan to complete by the end of 2007. The new design includes a new store façade, incorporating eye-catching golf and tennis murals, as well as extensive remodeling of the store interior. We have improved the activity-based shopping environment of our stores by installing additional hitting areas, GolfTEC Learning Centers, and Hot Stix® club and ball selection technology. To enhance the shopping experience, we have also improved the overall look of our stores, particularly the apparel section, by adding laminated wood flooring, drop-down ceilings, improved lighting, inviting vendor displays and numerous large screen televisions broadcasting sporting events.
	•	Grow proprietary brands. Our proprietary branded products generally have higher margins than the premier national brands we offer and help to drive overall margin expansion. Because we believe that our proprietary brands appeal to more value-conscious guests and do not compete directly with our premier branded merchandise, we plan to grow our current portfolio of proprietary branded products to ensure that we continue to provide our guests with a compelling merchandise assortment that incorporates the latest technological advances at attractive prices. We also intend to further develop our range of non-golf club product categories, such as balls, tees, golf bags, travel covers and cases, golf carts, gloves, clothing, golf and tennis shoes and gifts.

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	•	Enhance apparel offering. We intend to continue to increase our focus on apparel which provides attractive margins and a higher frequency of repeat purchases. We believe there is significant growth potential in apparel, particularly as we increasingly shift our product offering to premier brands and innovative products.
	•	Target the female demographic. We have launched several initiatives to broaden our appeal to the underserved female golf enthusiast. As a result of increased media attention on women golfers, notably Michelle Wie, we believe that the female golfer demographic has grown. According to the National Golf Foundation, the number of core women golfers in the United States, defined as those playing at least eight rounds per year, was 2.5 million in 2004. While the number of core women golfers has remained steady during recent years, the number of occasional women golfers increased substantially from 2.9 million in 1998 to 4.4 million in 2004. In order to target women golfers we have enhanced our apparel offerings and introduced the “Drive” catalog, focusing solely on women golfers and their equipment and accessory needs, and the “Drive” portion of our Internet site that contains approximately 4,500 SKUs of women-specific products. We are also holding exclusive women’s promotions and events in our stores and are a retail sponsor of the Executive Women’s Golf Association.
	•	Expand the tennis category. As a result of the popularity of both golf and tennis among similar demographic groups, we believe that tennis provides a business opportunity that complements our golf retail business. Tennis also reemphasizes our strategy to target the female consumer who may come into our store because of our tennis product offerings and be exposed to our golf offerings.

Metropolitan Area		Location				Year Opened
Atlanta, Georgia			Duluth, Georgia				1997
			Kennesaw, Georgia				1998
			Buckhead, Georgia				2002
Austin, Texas			Austin (Headquarters), Texas				1996
			Austin (Arboretum), Texas				1998

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Metropolitan Area		Location				Year Opened
Bay Area, California			San Francisco, California				2003
			Walnut Creek, California				2003
			Dublin, California				2003
			San Jose, California				2003
			Fremont, California				2003
			Palo Alto, California				2003
			San Carlos, California				2005
Birmingham, Alabama			Birmingham, Alabama				2006
Chicago, Illinois			Schaumburg, Illinois				1997
			Highland Park, Illinois				1997
			Downers Grove, Illinois				1998
			Lincoln Park, Illinois				2002
Columbus, Ohio			Easton, Ohio				1998
			Columbus (Sawmill), Ohio				2006
Dallas, Texas			Dallas (Midway), Texas				1996
			Plano, Texas				1998
			Arlington, Texas				1998
			Frisco, Texas				2004
			N. Richland Hills, Texas				2006
Denver, Colorado			Westminster, Colorado				1996
			Denver, Colorado				1997
			Golden, Colorado				2005
Detroit, Michigan			Troy, Michigan				1999
			Northville, Michigan				1999
			Auburn Hills, Michigan				2003
Houston, Texas			Houston (North), Texas				1995
			Houston (Westheimer), Texas				1997
			Baybrook, Texas				2004
Los Angeles, California			Ontario, California				1999
			Woodland Hills, California				1999
			Pasadena, California				2002
			Santa Ana, California				2003
			El Segundo, California				2003
			Oxnard, California				2004
Miami, Florida			Hollywood, Florida				2005
Minneapolis, Minnesota			Minnetonka, Minnesota				1998
			Richfield, Minnesota				2006
Orlando, Florida			Millenia, Florida				2004
			Altamonte Springs, Florida				2005
Philadelphia, Pennsylvania			Moorestown, New Jersey				2005
Phoenix, Arizona			Glendale, Arizona				1997
			Chandler, Arizona				1998
			Scottsdale, Arizona				2004

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Metropolitan Area		Location				Year Opened
San Diego, California			San Diego (Mission Valley), California				2004
			Vista, California				2006
Tri-State Area			East Northport, New York				2003
(New York, New Jersey			Norwalk, Connecticut				2003
and Connecticut)			Scarsdale, New York				2003
			Paramus, New Jersey				2004
			Livingston, New Jersey				2004
			Carle Place, New York				2005
			Bridgewater, New Jersey				2005
			New York, New York				2006

	Store Design

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	New Store Site Selection

	•	demographic characteristics, such as a high number of avid golfers and above-average annual household incomes;
	•	visibility from and access to highways or other major roadways;
	•	the level of our penetration in a given market, either through our existing retail stores or our direct-to-consumer channel;
	•	original equipment manufacturer information indicating that a location is within a top merchandising market;
	•	proximity to a large metropolitan area;
	•	presence and strength of competition;
	•	the ability to obtain favorable lease terms; and
	•	“Big Box” retail co-tenants that are likely to draw guests who we would otherwise target within the site’s relevant market.

	Internet

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	Catalogs

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	Branded Products

	Golfsmith Proprietary Brands

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	Club Components

	•	90/90 Playability Guarantee. We believe that our playability guarantee provides us with a distinct competitive advantage. This initiative allows our guests to purchase and use certain clubs for up to 90 days. If a guest decides to return the clubs, we offer the guest a merchandise credit worth 90% of the price of the clubs. We are able to provide this service in part because of our ability to resell such clubs through our pre-owned club offerings, thereby minimizing the impact on our gross margins.
	•	115% Price Guarantee. We offer a 115% low price guarantee that we believe to be the most aggressive guarantee in the industry, whereby we will refund 115% of the difference in purchase price if a guest notifies us within 30 days of purchase of a lower price offered by another authorized retailer.
	•	Club Trade-Ins. Our Club Trade-In Program allows guests to receive a merchandise credit for their pre-owned clubs which can be applied toward the purchase price of new clubs or

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		other products. Guests can trade-in their clubs at any store. Alternatively, our Internet site provides a step-by-step process for guests to grade their pre-owned clubs, determine their value and place an order for new clubs. The guest then sends the pre-owned clubs to us after receiving the new clubs. Our Club Trade-In Program is enhanced by periodic initiatives such as our National Trade-In Days program where guests are given additional value for bringing in their used clubs for an upgrade of equipment or accessories. We have also created a “blue book” for golf clubs so that our customers know in advance the expected trade-in price and can be assured consistent pricing across our channels. By providing an available market for our guests’ used clubs and reducing the cost of new clubs for many guests, we believe that our Club Trade-In Program assists us in developing new guest relationships and reduces the equipment replacement cycle. In addition, we sell the pre-owned clubs that we acquire through this program in our stores and through our Internet site to value-conscious guests.
	•	Golfsmith Credit Card. To meet our guests’ needs, we offer our own proprietary credit card, which provides our qualified guests with flexible payment options for their Golfsmith purchases. As a result of our partnership with Wells Fargo, we do not bear any of the financing risk associated with this program.
	•	Loyalty Program. In April 2006, we launched our Player Rewards program to attract, incentivize and retain guests that shop five or more times per year for either golf and tennis merchandise across all of our channels. The program will be free to all guests and will offer guests advance notice of sales and special events, exclusive invitations to VIP-only events, special pricing on select items, trade-in bonuses and coupons and discounts on select products and services.

	•	SmartFit™ Custom Club Fitting Program. We offer guests the ability to custom fit their clubs through our SmartFitTM program. Through our SmartFitTM program, we customize premier and proprietary branded clubs to the guest’s physical profile (height, wrist-to-floor distance and hand size), swing speed and their desired game characteristics (trajectory, control and distance). We also have the ability to custom build a set of golf clubs from scratch using our clubmaking technology and components. Our SmartFittm program is available to our guests at every store, as well as through our Internet site and catalogs, which we believe differentiates us from our competitors.
	•	Hot Stix® Precision Equipment Recommendation. We license Hot Stix® proprietary technology, which analyzes a guest’s swing and recommends the type of clubs and golf balls from our inventory that are best suited to that individual. We believe that this technology increases our guests’ satisfaction with their club purchases and fosters guest loyalty and potentially reduces product returns.
	•	GolfTEC Learning Centers. Our relationship with GolfTEC Learning Centers, a leading provider of golf lessons with over 128,000 individual lessons in 2005, complements our outstanding caddy team. GolfTEC’s proprietary system features digital video, motion analysis and ball-flight projection to allow its staff of PGA-certified teaching pros to analyze our guest’s swing and compare it to a database of the swings of various professional golfers. In addition, GolfTEC provides software that enables guests to review their lesson, drills and instructor comments online. Guests’ participation in GolfTEC lessons drives traffic and sales within our stores as our guests buy lesson packages that encourage repeat visits to our store location. As of April 2006, GolfTEC provided in-store golf lessons in 31 of our stores. During 2006, we plan to modify three of our existing stores to accommodate in-store golf lessons by GolfTEC.

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	•	Club Repair and Clubvantage Program. We offer repair services at all of our stores. In order to encourage guests to use these services, we offer two-year and three-year plans under our Clubvantage program that enable guests to cover the labor costs associated with re-gripping, re-shafting and repairing individual clubs or club sets for an upfront fee. The program provides additional benefits, such as an additional credit on any clubs that are traded-in and a savings certificate for the Harvey Penick Golf Academy.
	•	Expert Racquet Stringing. As a member of the U.S. Racquet Stringers Association, we are able to offer our guests expert racquet stringing services. Our professionally trained Master Racquet Technicians have passed comprehensive tests to ensure their knowledge and understanding of racquet service. Our Master Racquet Technicians provide our guests with a full range of racquet services and answer their racquet-related questions.

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	•	Increased access to and visibility of golf. The National Golf Foundation determined that golf course facilities have grown from 12,846 in 1994 to 16,057 in 2005. The PGA, LPGA, USGA, World Golf Foundation and others have introduced numerous programs designed to attract, develop and retain golfers, including offering discounted or free lessons to beginning golfers. In addition, the proliferation of professional and amateur golf events and accompanying media coverage and television exposure has further increased the visibility of the sport. As a result of

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		several factors, including the launch of The Golf Channel® and the emergence of golf superstar Tiger Woods, advertising and promotions by equipment manufacturers have increased.
	•	Fragmented market. The golf retail industry is highly fragmented relative to other retail industries, with no single golf retailer accounting for more than 6% of sales nationally in 2005. Specialty off-course retailers lead the retail channel for golf equipment and accessories, and we expect this trend to continue. This trend is driven in part by the ability of off-course retailers to offer a larger selection at competitive prices while offering customers putting greens, hitting areas and other amenities.
	•	Favorable demographic growth. While participation rates have leveled off over the last four years, we expect a growth in participation rates over the next decade as the “baby boomer” generation ages and as more women participate. Golf is one of the few sports which people spend more time playing as they age. The United States Census Bureau estimated that there were approximately 78 million baby boomers in the United States in 2004. According to the National Golf Foundation, if baby boomers in the future behave as senior golfers, aged 60 and above, do today, the number of rounds played by this demographic will increase significantly. Today, baby boomers have a 12.5% participation rate and play an average of 20.5 rounds a year. If they behave like the current generation of senior golfers, their participation rate will drop over time to 9.7% but average rounds will rise to 39.6 per year. Additionally, the National Golf Foundation concluded that golfers over the age of 45 years spend a disproportionate amount on golf (including greens fees and other items outside our products and services). In addition, according to the National Golf Foundation, the number of women golfers has increased from approximately 5.4 million in 1998 to approximately 6.9 million in 2004, representing an increase of 28%. The average annual rounds played by women is very close to the average played by men.
	•	High spending by avid golfers. According to the National Golf Foundation, in 2002 there were approximately 6.0 million avid golfers representing 23% of all golfers and responsible for driving approximately 63% of golf equipment sales. Avid golfers are interested in learning about and buying the latest equipment, upgrading putters and drivers with greater regularity than casual golfers. In addition, avid golfers and golfers who spend $1,000 or more on golf per year purchased more equipment from off-course golf specialty retailers in 2003 than any other channel. For these reasons, avid golfers are an important target customer group.
	•	Technological cycles. Substantial technological advancements in equipment over the past decade have shortened product replacement cycles and increased prices. Significant advances have been achieved in club head, shaft and golf ball construction, design and materials. The recent popularity of utility or “hybrid” clubs, a category of clubs that combines elements of both woods and irons into their design are driving another product replacement cycle. The introduction of new and improved products, together with advertising and promotions by equipment manufacturers and retailers emphasizing the importance of proper equipment to one’s game, has encouraged golfers to change their equipment more frequently. Avid golfers, in particular, appear more willing to invest at the front-end of product cycles at or near the manufacturer’s recommended retail price.

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		Size
Location		(sq. ft.)				Facility Type		Owned/Leased
Austin, Texas			60,000			Office			Owned
Austin, Texas			240,000			Distribution and Fulfillment Center			Owned
Austin, Texas			17 Acres			Driving Range and Training Facility			Owned
Toronto Canada			3,906			Direct-To-Consumer Order Fulfillment Facility			Leased
St. Ives, Cambridgeshire, England			15,900			Office, Warehouse and Shipping Facility			Leased

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Name		Age		Position
James D. Thompson		43		Chief Executive Officer, President and Director
Virginia Bunte		41		Senior Vice President, Chief Financial Officer and Treasurer
Kenneth Brugh		56		Senior Vice President — Real Estate and New Business Development
Fred Quandt		36		Senior Vice President — Merchandising
David Pritchett		41		Senior Vice President — Retail Operations
Kiprian Miles		44		Vice President — Chief Information Officer
Jeff Sheets		46		Vice President — Research and Development
Matthew Corey		39		Vice President — Marketing
David Lowe		45		Vice President — Brands and Golf Instruction
Charles Shaw(1)(2)		72		Chairman of the Board
Roberto Buaron(2)		59		Director
James Grover(3)		34		Director
Noel Wilens(1)(2)		43		Director
Thomas G. Hardy(3)		60		Director
James Long		63		Director
Lawrence Mondry		45		Director
Marvin E. Lesser(3)		64		Director

(1)	Member of our compensation committee.
(2)	Member of our nominating committee.
(3)	Member of our audit committee.

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	•	retaining and terminating our independent auditor;
	•	discussing the scope and results of the audit with the independent auditor, and reviewing with management and the independent accountant our interim and year-end operating results;
	•	reviewing the adequacy of our internal accounting controls and audit procedures; and
	•	approving (or, as permitted, pre-approving) all audit and non-audit services to be performed by the independent auditor.

	•	determining the compensation of our Chief Executive Officer based on the achievement of corporate objectives;
	•	reviewing and recommending approval of compensation of our executive officers;
	•	administering our equity incentive plans; and
	•	reviewing and making recommendations to our board of directors with respect to incentive compensation and equity plans.

	•	developing and recommending criteria for selecting new directors and evaluating and recommending nominees to our board of directors;
	•	supervising the selection and composition of committees of the board of directors;
	•	evaluating the performance of our board of directors and of individual directors; and
	•	identifying and recommending to the board of directors individuals qualified to become executive officers.

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																	Long-Term
																	Compensation
			Annual Compensation
																	Securities
													Other Annual				Underlying
Name and Principal Position			Year		Salary				Bonus				Compensation(1)				Options(2)
James D. Thompson(3)			2005		$	325,000			$	243,750			$	2,100				—
	President and Chief		2004			314,615				—				3,637				—
	Executive Officer		2003			297,000				—				3,561				175,453
Virginia Bunte(4)			2005		$	181,500			$	136,125			$	5,445				—
	Senior Vice President — Chief		2004			181,092				—				5,407				—
	Financial Officer and Treasurer		2003			161,580				—				5,585				39,477
Kenneth Brugh(5)			2005		$	200,000			$	92,000			$	—				—
	Vice President — Real Estate		2004			200,000				—				—				—
	and New Business Development		2003			200,000				—				—				39,477
Matthew Corey(6)			2005		$	195,000			$	78,000			$	2,925				—
	Vice President — Marketing		2004			24,643				51,967				—				39,477
			2003			—				—				—				—
Fred Quandt(7)			2005		$	180,000			$	82,800			$	4,050				—
	Senior Vice President —		2004			164,238				—				3,624				—
	Merchandising		2003			125,000				—				3,168				39,477

(1)	Represents matching contributions made by us under our Retirement Savings Plan.
(2)	Represents grants of options to purchase shares of our common stock under the Golfsmith International Holdings, Inc. 2002 Incentive Stock Plan.
(3)	Mr. Thompson became our President and Chief Executive Officer in October 2002.
(4)	Ms. Bunte became our Senior Vice President — Chief Financial Officer and Treasurer in February 2006. Prior to that, Ms. Bunte was our Vice President — Chief Financial Officer.
(5)	Mr. Brugh became our Senior Vice President — Real Estate and New Business Development in February 2006. Prior to that, Mr. Brugh was our Vice President — Retail and Real Estate.
(6)	Mr. Corey became our Vice President — Marketing in November 2004.
(7)	Mr. Quandt became our Senior Vice President — Merchandising in February 2006. Prior to that, Mr. Quandt was our Vice President — Merchandising.

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										Number of Securities								Value of Unexercised
										Underlying Unexercised								in-the-Money
		Shares								Options at December 31, 2005								Options at December 31, 2005
		Acquired				Value
Name		on Exercise				Realized				Exercisable				Unexercisable				Exercisable				Unexercisable
James D. Thompson			—				—				—				175,453				—			$	817,717
Virginia Bunte			—				—				—				39,477				—				183,987
Kenneth Brugh			—				—				—				39,477				—				183,987
Matthew Corey			—				—				—				39,477				—				107,487
Fred Quandt			—				—				—				39,477				—				183,987

		Number of Securities
		Underlying								Value of Unexercised
		Unexercised Options at								in-the-Money Options at
		December 31, 2005								December 31, 2005
Name		Exercisable				Unexercisable				Exercisable				Unexercisable
James D. Thompson			105,272				70,181			$	490,631			$	327,086
Virginia Bunte			23,686				15,791				110,391				73,596
Kenneth Brugh			23,686				15,791				110,391				73,596
Matthew Corey			15,791				23,686				42,995				64,492
Fred Quandt			23,686				15,791				110,391				73,596

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	2006 Incentive Compensation Plan

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	2002 Incentive Stock Plan

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	Management Incentive Plan

	401(k) Plan

	Severance Pay Plan

	•	current position (Senior Vice President, Vice President, director or manager, or other full time employee);
	•	current salary; and
	•	length of service with us.

	•	for any breach of their duty of loyalty to us or our stockholders;
	•	for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
	•	for unlawful payments of dividends or unlawful stock repurchases or redemptions, as provided under Section 174 of the Delaware General Corporation Law; or
	•	for any transaction from which the director derived improper personal benefit.

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	Registration Rights

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	Provisions Regarding our Shares

	Board Composition

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	•	each of our executive officers;
	•	each of our directors;
	•	all of our executive officers and directors as a group; and
	•	each person known to us to be a beneficial owner of more than 5% of our outstanding common stock.

		Before Offering								After Offering								Percent of
																		Class Beneficially
		Shares								Shares								Owned Assuming
		Beneficially				Percent of				Beneficially				Percent of				Exercise of Over-
Beneficial Owner		Owned				Class				Owned				Class				Allotment Option
Atlantic Equity Partners III, L.P.(1)			9,433,086				99.6	%			9,433,086				61.0	%			57.6	%
Carl Paul(2)			1,498,668				15.8				1,533,210				9.9				9.3
Franklin Paul(2)			1,498,668				15.8				1,533,210				9.9				9.3
Roberto Buaron(3)			9,433,086				99.6				9,433,086				—				—
James D. Thompson(4)			—				—				65,685				*				*
Virginia Bunte(5)			—				—				5,510				—				—
Kenneth Brugh(6)			—				—				56,189				*				*
Matthew Corey			—				—				—				—				—
Fred Quandt(7)			—				—				5,345				*				*
Kiprian Miles			—				—				—				—				—
Jeff Sheets(8)			—				—				4,413				*				*
David Lowe			—				—				—				—				—
Charles Shaw(9)			—				—				—				—				—
James Grover(10)			—				—				—				—				—
Thomas G. Hardy(11)			39,057				*				39,057				*				*
James Long(12)			—				—				—				—				—
Noel Wilens(13)			—				—				—				—				—
Lawrence Mondry(14)			21,931				*				21,931				*				*
Marvin E. Lesser(15)			—				—				—				—				—
All directors and executive officers as a group (16 persons)			9,472,143				100.0	%			9,665,759				61.8	%			58.4	%

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	*	Represents less than 1%.
	(1)	The pre- and post-offering shares consist of 7,934,418 shares owned by Atlantic Equity Partners III, L.P. and 1,498,668 shares owned by Carl and Franklin Paul that are subject to a stockholders’ agreement (the “old stockholders’ agreement”) pursuant to which Carl and Franklin Paul have agreed to vote such shares in favor of nominees to our board of directors proposed by Atlantic Equity Partners III, L.P. These nomination rights will terminate upon the closing of this offering. In addition, Atlantic Equity Partners III, L.P., and Carl and Franklin Paul have entered into a voting and stockholders’ agreement (the “new stockholders’ agreement”) pursuant to which Carl and Franklin Paul have agreed to vote their 1,498,668 shares in the same manner and percentage as Atlantic Equity Partners III, L.P. in accordance with instructions given by Atlantic Equity Partners III, L.P. prior to any stockholder meeting or consent. In addition, the new stockholders’ agreement provides that Carl and Franklin Paul will not transfer the shares that are subject to the agreement except to persons related to them or controlled by them. In the event that Atlantic Equity Partners III, L.P. transfers any of its shares, whether by means of a registered offering, a private sale or a sale under Rule 144 of the Securities Act, Carl and Franklin Paul will be permitted to transfer a proportion of their holdings that is equal to the proportion of Atlantic Equity Partners III, L.P.’s holdings that is transferred. Carl and Franklin Paul will be permitted to include such proportional amount of their shares in the transfer by Atlantic Equity Partners III, L.P., if such transfer by Atlantic Equity Partners III, L.P. is a private sale. The new stockholders’ agreement terminates, among other things, on the earlier of (1) the date on which we first file a Form 10-K or Form 10-Q or a registration statement under the Securities Act based on which, Atlantic Equity Partners III, L.P. holds a number of shares of common stock that is less than 20.0% of our outstanding shares of common stock and (2) May 2008. As a result of these agreements, Atlantic Equity Partners III, L.P. may be deemed to be the beneficial owner of the shares held by Carl and Franklin Paul. Atlantic Equity Partners III, L.P. disclaims beneficial ownership of these shares. Atlantic Equity Partners III, L.P.’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022. As described in footnote 3 below, Roberto Buaron, one of our directors, has voting and investment power over the shares of our common stock of owned by Atlantic Equity Partners III, L.P.
	(2)	The pre- and post-offering shares consist of 979,979 shares owned by Carl Paul and 518,689 shares owned by Franklin Paul. The post-offering shares include equity units held by each of Carl and Franklin Paul, exercisable immediately upon the closing of this offering, which entitle each holder thereof, upon the holder’s election, to receive 17,271 shares of common stock. The pre- and post-offering share amounts do not include 7,934,418 shares owned by Atlantic Equity Partners III, L.P. that are subject to the old stockholders’ agreement described in footnote (1) pursuant to which Atlantic Equity Partners III, L.P. has agreed to vote such shares in favor of one nominee to our board of directors selected by Carl and Franklin Paul. These nomination rights will terminate upon the closing of this offering. In addition, Atlantic Equity Partners III, L.P. and Carl and Franklin Paul have entered into the new stockholders’ agreement described in footnote (1). As a result of these agreements, Carl and Franklin Paul may be deemed to be the beneficial owners of the shares held by Atlantic Equity Partners III, L.P. Each of Carl and Franklin Paul disclaims beneficial ownership of the shares owned by Atlantic Equity Partners III, L.P. The address of each of Carl and Franklin Paul is c/o Golfsmith International Holdings, Inc., 11000 N. IH-35, Austin, Texas 78753-3195.
	(3)	The pre- and post-offering shares include 7,934,418 shares owned by Atlantic Equity Partners III, L.P. Mr. Buaron is the sole member of Buaron Capital Corporation III, LLC. Buaron Capital Corporation III, LLC is the managing member of Atlantic Equity Associates III, LLC. Atlantic Equity Associates III, LLC is the sole general partner of Atlantic Equity Associates III, L.P., which is the sole general partner of Atlantic Equity Partners III, L.P. and, as such, exercises voting and investment power over shares of capital stock owned by Atlantic Equity Partners III, L.P., including shares of our common stock. Mr. Buaron, as the sole member of Buaron Capital Corporation III, LLC has voting and investment power over, and may be deemed to beneficially own, the shares of

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		our common stock owned by Atlantic Equity Partners III, L.P. The pre- and post-offering share amounts also include 1,498,668 shares owned by Carl and Franklin Paul which Atlantic Equity Partners III, L.P. may be deemed to beneficially own by virtue of the stockholders’ agreements described in footnote (1). Mr. Buaron disclaims beneficial ownership of the shares owned by Carl and Franklin Paul and, except to the extent of his pecuniary interest therein, the shares held by Atlantic Equity Partners III, L.P. Mr. Buaron’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022.

	(4)	The post-offering shares beneficially owned include equity units held by Mr. Thompson, exercisable immediately upon the closing of this offering, which entitle the holder thereof, upon the holder’s election, to receive 65,685 shares of common stock.
	(5)	The post-offering shares beneficially owned include equity units held by Ms. Bunte, exercisable immediately upon the closing of this offering, which entitle the holder thereof, upon the holder’s election, to receive 5,510 shares of common stock.
	(6)	The post-offering shares beneficially owned include equity units held by Mr. Brugh, exercisable immediately upon the closing of this offering, which entitle the holder thereof, upon the holder’s election, to receive 56,189 shares of common stock.
	(7)	The post-offering shares beneficially owned include equity units held by Mr. Quandt, exercisable immediately upon the closing of this offering, which entitle the holder thereof, upon the holder’s election, to receive 5,345 shares of common stock.
	(8)	The post-offering shares beneficially owned include equity units held by Mr. Sheets, exercisable immediately upon the closing of this offering, which entitle the holder thereof, upon the holder’s election, to receive 4,413 shares of common stock.
	(9)	Mr. Shaw’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022.

(10)	Mr. Grover’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022.
(11)	Mr. Hardy’s address is 935 Park Avenue, New York, New York 10028.
(12)	Mr. Long’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022.
(13)	Mr. Wilens’s address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022.
(14)	Mr. Mondry’s address is 14951 N. Dallas Parkway, Dallas, Texas 75254.
(15)	Mr. Lesser’s address is 4 Currier’s Cove, Portsmouth, New Hampshire 03801.

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	•	prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
	•	upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by excluding employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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	•	on or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3 % of the outstanding voting stock that is not owned by the interested stockholder.

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	•	approximately 240,000 shares will be eligible for sale on the date of this prospectus; and
	•	approximately 9.6 million shares will be eligible for sale beginning 180 days after the date of this prospectus upon the expiration of the lock-up agreements as described below, of which approximately 9.5 million will be subject to volume limitations under Rule 144.

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	•	transactions relating to shares of common stock or other securities acquired in open market transactions, unless such transaction would result in the filing of any reports pursuant to Section 16 of the Securities Exchange Act of 1934;
	•	the exercise of stock options granted pursuant to any of our equity incentive plans, provided that the transfer restrictions shall apply to any shares of common stock issued upon such exercise;
	•	the establishment of any contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities Exchange Act of 1934, as amended, provided that no sales shall be made pursuant to such a plan prior to the expiration of the 180-day lock-up period;
	•	bona fide gifts (which shall include, in the case of an individual, a gift occurring at death by will or intestacy, and transfers during lifetime to a trust or other entity for bona fide estate planning or tax purposes); and
	•	distributions to limited partners or shareholders or transfers to controlled or controlling entities or entities under common control, provided that in the case of any transfer or distribution pursuant to this or the immediately preceding bullet point, each donee, distributee or other transferee shall enter into a similar lock-up agreement.

	•	1% of the then outstanding shares of our common stock, which is expected to equal approximately 154,726 shares immediately after this offering, or
	•	the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing with the SEC of a notice on Form 144 with respect to such sale.

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	•	a citizen or resident of the United States;
	•	a corporation, or an entity classified as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
	•	an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
	•	a trust if such trust validly elects to be treated as a United States person for U.S. federal income tax purposes or if (a) a court within the United States is able to exercise primary supervision over its administration and (b) one or more United States persons have the authority to control all of the substantial decisions of the trust.

	•	financial institutions or insurance companies;
	•	real estate investment trusts, regulated investment companies or grantor trusts;
	•	dealers or traders in securities or currencies;
	•	tax-exempt entities;
	•	certain former citizens or residents of the United States;
	•	persons that received our common stock as compensation for the performance of services;
	•	persons that will hold our common stock as part of a “hedging” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes;
	•	persons that have a “functional currency” other than the U.S. dollar; or
	•	holders that own or are deemed to own 10% or more, by voting power or value, of our stock.

99

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101

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102

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		Number
Underwriter		of Shares
Merrill Lynch, Pierce, Fenner & Smith Incorporated			2,850,000
J.P. Morgan Securities Inc.			2,280,000
Lazard Capital Markets LLC			570,000
Barrington Research Associates, Inc.			100,000
Janney Montgomery Scott LLC			100,000
Wedbush Morgan Securities Inc.			100,000
Total			6,000,000

		Per Share				Without Option				With Option
Public offering price			$11.50				$69,000,000				$79,350,000
Underwriting discount			$.805				$4,830,000				$5,554,500
Proceeds, before expenses, to Golfsmith International Holdings, Inc.			$10.695				$64,170,000				$73,795,500

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	•	offer, pledge, sell or contract to sell any common stock;
	•	sell any option or contract to purchase any common stock;
	•	purchase any option or contract to sell any common stock;
	•	grant any option, right or warrant for the sale of any common stock;
	•	lend or otherwise dispose of or transfer any common stock;
	•	request or demand that we file a registration statement related to the common stock; or
	•	enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

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	•	the valuation multiples of publicly traded companies that the representative believes to be comparable to us,
	•	our financial information,
	•	the history of, and the prospects for, our company and the industry in which we compete,
	•	an assessment of our management, its past and present operations, and the prospects for, and timing of, our future revenues,
	•	the present state of our development, and
	•	the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

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	•	to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
	•	to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than €43,000,000, and (3) an annual net turnover of more than €50,000,000 as shown in its last annual or consolidated accounts; or
	•	in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

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	•	made by investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of September 1, 1993 (the “Banking Act”), Decree No. 58 of February 24, 1998, Regulation No. 11522, as amended, and any other applicable laws and regulations; and
	•	in compliance with any other applicable notification requirement or limitation which may be imposed upon the offer of the shares stock in Italy by CONSOB.

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		Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets at December 31, 2005 and January 1, 2005			F-3
Consolidated Statements of Operations for the fiscal year ended December 31, 2005, the fiscal year ended January 1, 2005 and the fiscal year ended January 3, 2004			F-5
Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the fiscal year ended December 31, 2005, the fiscal year ended January 1, 2005 and the fiscal year ended January 3, 2004			F-6
Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2005, the fiscal year ended January 1, 2005 and the fiscal year ended January 3, 2004			F-7
Notes to Consolidated Financial Statements			F-8
Consolidated Balance Sheets at April 1, 2006 (unaudited) and December 31, 2005			F-32
Consolidated Statements of Operations for the three months ended April 1, 2006 and April 2, 2005 (unaudited)			F-34
Consolidated Statements of Cash Flows for the three months ended April 1, 2006 and April 2, 2005 (unaudited)			F-35
Notes to Consolidated Financial Statements (unaudited)			F-37

F-1

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	/s/ ERNST & YOUNG LLP

F-2

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			December 31,				January 1,
			2005				2005
							(as restated)
ASSETS
Current assets:
	Cash and cash equivalents		$	4,207,497			$	8,574,966
	Receivables, net of allowances of $146,964 at December 31, 2005 and $161,838 at January 1, 2005			1,646,454				854,555
	Inventories			71,472,061				54,197,532
	Prepaid and other current assets			6,638,109				6,405,525
Total current assets				83,964,121				70,032,578
Property and equipment:
	Land and buildings			21,256,771				21,133,430
	Equipment, furniture, fixtures			19,004,608				15,174,320
	Leasehold improvements and construction in progress			20,866,839				15,247,612
				61,128,218				51,555,362
	Less: accumulated depreciation and amortization			(14,558,256	)			(10,647,641	)
Net property and equipment				46,569,962				40,907,721
Goodwill				41,634,525				41,634,525
Tradenames				11,158,000				11,158,000
Trademarks				14,156,127				14,483,175
Customer database, net of accumulated amortization of $1,227,490 at December 31, 2005 and $849,801 at January 1, 2005				2,171,715				2,549,404
Debt issuance costs, net of accumulated amortization of $3,126,103 at December 31, 2005 and $2,062,104 at January 1, 2005				4,731,612				5,795,611
Other long-term assets				450,208				368,285
Total assets			$	204,836,270			$	186,929,299

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				December 31,				January 1,
				2005				2005
								(as restated)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	42,000,236			$	31,006,493
	Accrued expenses and other current liabilities				19,163,459				18,717,115
	Lines of credit				—				—
Total current liabilities					61,163,695				49,723,608
Long-term debt, less current maturities					82,450,000				79,808,033
Deferred rent liabilities					4,095,442				3,084,367
Total liabilities					147,709,137				132,616,008
Stockholders’ Equity:
	Common stock –$.001 par value; 40,000,000 shares authorized; 9,472,143 shares issued and outstanding at December 31, 2005 and January 1, 2005				9,473				9,473
		Restricted stock units –$.001 par value; 331,569 shares issued and outstanding at December 31, 2005 and January 1, 2005			331				331
	Additional capital				60,301,153				60,301,153
	Other comprehensive income				135,815				279,607
	Accumulated deficit				(3,319,639	)			(6,277,273	)
Total stockholders’ equity					57,127,133				54,313,291
Total liabilities and stockholders’ equity				$	204,836,270			$	186,929,299

F-4

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		Fiscal Year
		Ended				Fiscal Year				Fiscal Year
		December 31,				Ended				Ended
		2005				January 1, 2005				January 3, 2004
Net revenues		$	323,794,225			$	296,202,149			$	257,744,780
Cost of products sold			208,044,286				195,014,579				171,083,110
Gross profit			115,749,939				101,187,570				86,661,670
Selling, general and administrative			99,310,158				90,763,231				73,400,271
Store pre-opening expenses			1,764,685				742,880				599,603
Total operating expenses			101,074,843				91,506,111				73,999,874
Operating income			14,675,096				9,681,459				12,661,796
Interest expense			(11,744,232	)			(11,240,550	)			(11,156,792	)
Interest income			73,263				63,939				39,776
Other income			469,841				1,178,790				210,707
Other expense			(116,331	)			(16,530	)			(46,270	)
Income (loss) from operations before income taxes			3,357,637				(332,892	)			1,709,217
Income tax expense			(400,003	)			(4,422,724	)			(644,953	)
Net income (loss)		$	2,957,634			$	(4,755,616	)		$	1,064,264
Basic and diluted net income (loss) per share of common stock		$	0.30			$	(0.49	)		$	0.11
Basic weighted average common shares outstanding			9,803,712				9,803,712				9,441,148
Diluted weighted average common shares outstanding			9,943,443				9,803,712				9,441,148

F-5

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												Restricted Stock
				Common Stock								Units												Other
																				Additional				Comprehensive				Accumulated				Stockholders’
				Shares				Amount				Shares				Amount				Capital				Income				Deficit				Equity
Balance at December 28, 2002					8,806,881			$	8,807				368,122			$	368			$	56,001,784			$	48,148			$	(2,585,921	)		$	53,473,186
Issuance of common stock					628,709				629				—				—				4,299,369				—				—				4,299,998
Conversion of restricted stock					36,553				37				(36,553	)			(37	)			—				—				—				—
Comprehensive loss:
	Translation adjustments, cumulative translation gain of $186,877 at January 3, 2004				—				—				—				—				—				138,729				—				138,729
	Net income				—				—				—				—				—				—				1,064,264				1,064,264
		Total comprehensive income			—				—				—				—				—				—				—				1,202,993
Balance at January 3, 2004					9,472,143			$	9,473				331,569			$	331			$	60,301,153			$	186,877			$	(1,521,657	)		$	58,976,177
Comprehensive loss:
	Translation adjustments, cumulative translation gain of $279,607 at January 1, 2005				—				—				—				—				—				92,730				—				92,730
	Net loss				—				—				—				—				—				—				(4,755,616	)			(4,755,616	)
		Total comprehensive loss			—				—				—				—				—				—				—				(4,662,886	)
Balance at January 1, 2005					9,472,143			$	9,473				331,569			$	331			$	60,301,153			$	279,607			$	(6,277,273	)		$	54,313,291
Comprehensive loss:
	Translation adjustments, cumulative translation gain of $135,815 at December 31, 2005				—				—				—				—				—				(143,792	)			—				(143,792	)
	Net income				—				—				—				—				—				—				2,957,634				2,957,634
		Total comprehensive income			—				—				—				—				—				—				—				2,813,842
Balance at December 31, 2005					9,472,143			$	9,473				331,569			$	331			$	60,301,153			$	135,815			$	(3,319,639	)		$	57,127,133

F-6

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				Fiscal Year				Fiscal Year				Fiscal Year
				Ended				Ended				Ended
				December 31,				January 1,				January 3,
				2005				2005				2004
								(as restated)				(as restated)
Operating Activities
Net income (loss)				$	2,957,634			$	(4,755,616	)		$	1,064,264
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation				5,489,782				5,261,001				4,850,711
	Amortization of intangible assets				377,689				377,690				377,689
	Amortization of debt issue costs and debt discount				3,705,966				3,300,169				3,011,179
	Non-cash loss on write-off of property and equipment				1,480,601				476,713				—
	Net loss (gain) on sale of real estate and other assets				(370,613	)			(1,064,045	)			3,069
	Changes in operating assets and liabilities:
		Accounts receivable			(791,899	)			525,737				(1,109,008	)
		Inventories			(17,274,529	)			(2,982,474	)			(14,196,793	)
		Prepaid and other current assets			(232,584	)			(3,037,537	)			379,638
		Deferred income taxes			—				4,162,096				179,970
		Other assets			(81,923	)			(321,352	)			(56,333	)
		Accounts payable			10,993,743				9,425,215				5,931,850
		Accrued expenses and other current liabilities			433,246				1,952,201				2,632,298
		Deferred rent			1,011,075				2,000,856				570,187
Net cash provided by operating activities					7,698,188				15,320,654				3,638,721
Investing Activities
Purchase of property, plant and equipment					(12,655,232	)			(8,567,480	)			(5,759,429	)
Proceeds from sale of real estate and other assets					731,463				2,105,000				18,046
Purchase of assets and other					—				—				(956,676	)
Purchase of business, net of cash received					—				—				(8,585,560	)
Net cash used in investing activities					(11,923,769	)			(6,462,480	)			(15,283,619	)
Financing Activities
Principal payments on lines of credit					(47,198,103	)			(33,524,025	)			(27,178,727	)
Proceeds from lines of credit					47,198,103				32,106,986				28,595,766
Proceeds from issuance of common stock					—				—				4,299,998
Debt issuance costs					—				—				(82,410	)
Other					(2,244	)			(6,607	)			(23,264	)
Net cash provided by (used in) financing activities					(2,244	)			(1,423,646	)			5,611,363
Effect of exchange rate changes on cash					(139,644	)			89,894				134,506
Change in cash and cash equivalents					(4,367,469	)			7,524,422				(5,899,029	)
Cash and cash equivalents, beginning of period					8,574,966				1,050,544				6,949,573
Cash and cash equivalents, end of period				$	4,207,497			$	8,574,966			$	1,050,544
Supplemental cash flow information:
Interest payments				$	8,031,328			$	7,968,535			$	7,130,032
Tax payments					724,766				304,180				699,198
Amortization of discount on senior secured notes					2,641,967				2,325,564				2,102,424

F-7

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1.	Nature of Business and Summary of Significant Accounting Policies

	Description of Business

	Basis of Presentation

	Use of Estimates

	Correction of an Error

F-8

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	Cash Equivalents

	Accounts Receivable

	Inventories

	Concentration of Foreign Suppliers

	Property and Equipment

	Long-Lived Assets

F-9

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	Store Pre-opening and Closing Expenses

	Operating Leases

F-10

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	Foreign Currency Translation

	Concentrations of Credit Risk

	Fair Value of Financial Instruments

	Revenue Recognition

F-11

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	Sales Incentives

	Shipping and Handling Costs

	Vendor Rebates and Promotions

F-12

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Table of Contents

	Income Taxes

	Catalog Costs and Advertising

	Debt Issuance Costs

	Goodwill and Intangible Assets

F-13

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	Insurance and Self-Insurance Reserves

F-14

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	Stock-Based Compensation

			Fiscal Year				Fiscal Year				Fiscal Year
			Ended				Ended				Ended
			December 31,				January 1,				January 3,
			2005				2005				2004
Net Income (loss) as reported			$	2,957,634			$	(4,755,616	)		$	1,064,264
Total stock-based compensation cost, net of related tax effects included in the determination of net income (loss) as reported				—				—				—
The stock-based employee compensation cost, net of related tax effects, that would have been included in the determination of net income (loss) if the fair value based method had been applied to all awards				(226,531	)			(156,012	)			(97,585	)
Pro forma net income (loss)			$	2,731,103			$	(4,911,628	)		$	966,679
Earnings per share:
	Basic and diluted — as reported		$	0.30			$	(0.49	)		$	0.11
	Basic and diluted — pro forma		$	0.28			$	(0.50	)		$	0.10

	Segments

	Fiscal Year

	Recently Issued Accounting Standards

F-15

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2.	Business Combinations

	Don Sherwood Golf & Tennis

F-16

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Table of Contents

3.	Asset Acquisition

4.	Intangible Assets

		Fiscal Year				Fiscal Year
		Ended				Ended
		December 31,				January 1,
		2005				2005
Customer database gross carrying amount		$	3,399,205			$	3,399,205
Accumulated amortization			(1,227,490	)			(849,801	)
Customer database net carrying amount		$	2,171,715			$	2,549,404

2006		$	377,689
2007			377,689
2008			377,689
2009			377,689
2010			377,689
Thereafter			283,270
		$	2,171,715

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5.	Debt

		Fiscal Year				Fiscal Year
		Ended				Ended
		December 31,				January 1,
		2005				2005
Senior secured notes due October 15, 2009 (see discussion below)		$	93,750,000			$	93,750,000
Total long-term debt			93,750,000				93,750,000
Less current maturities			—				—
Long-term portion			93,750,000				93,750,000
Unamortized discount on senior secured notes			(11,300,000	)			(13,941,967	)
Long-term debt, net of discount		$	82,450,000			$	79,808,033

2006		$	—
2007			18,750,000
2008			9,375,000
2009			65,625,000
2010			—
Thereafter			—
		$	93,750,000

	Senior Secured Notes

F-18

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		Percentages of
		Notes Required
	Mandatory Redemption Date	to be Redeemed
	October 15, 2007		20%
	October 15, 2008		10%

	Senior Secured Credit Facility

F-19

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6.	Store Closure and Asset Impairments

F-20

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7.	Commitments and Contingencies

	Lease Commitments

			Operating
			Lease				Sublease
			Obligations				Income
2006			$	16,903,668			$	1,182,208
2007				17,755,669				1,188,496
2008				16,789,323				1,015,110
2009				15,819,428				818,952
2010				15,492,741				405,734
Thereafter				63,877,650				1,008,961
	Total minimum lease payments		$	146,638,479
	Total minimum sublease rentals						$	5,619,461

	Employment Agreements

F-21

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	Legal Proceedings

8.	Guarantees

9.	Accrued Expenses and Other Current Liabilities

				Fiscal Year				Fiscal Year
				Ended				Ended
				December 31,				January 1,
				2005				2005
	Salaries and benefits			$	2,927,440			$	1,791,931
	Interest				2,654,411				2,647,670
	Allowance for returns reserve				671,742				1,326,394
	Gift certificates				8,091,210				7,521,148
	Taxes				2,704,282				3,169,661
	Other				2,114,374				2,260,311
	Total			$	19,163,459			$	18,717,115

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10.	Other Income and Expense

11.	Retirement and Profit Sharing Plans

12.	Common Stock

	Golfsmith International Holdings, Inc.

	Golfsmith International, Inc.

	Dividends

F-23

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	Capital Shares Reserved for Issuance

Stock options				1,250,109
Restricted stock units				331,569
Additional authorized common shares				28,946,179
	Total unissued authorized common shares			30,527,857

13.	Restricted Stock Units

14.	Stock Option Plan

	Golfsmith International Holdings, Inc. 2002 Incentive Stock Plan

F-24

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	Fair Value Disclosures

F-25

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Table of Contents

15.	Earnings Per Share

F-26

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Table of Contents

16.	Income Taxes

F-27

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F-28

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17.	Foreign and Domestic Operations

18.	Valuation and Qualifying Accounts

F-29

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Table of Contents

19.	Consolidated Quarterly Financial Information (Unaudited)

		First				Second				Third				Fourth				Full
Fiscal 2005		Quarter				Quarter				Quarter				Quarter				Year
Net revenues		$	63,958,382			$	102,493,511			$	85,521,081			$	71,821,251			$	323,794,225
Gross profit			22,762,892				37,832,621				29,882,762				25,271,664				115,749,939
Income (loss) from continuing operations			(1,999,612	)			6,001,687				1,210,595				(2,255,036	)			2,957,634
Net income (loss)			(1,999,612	)			6,001,687				1,210,595				(2,255,036	)			2,957,634
Basic net income (loss) per share of common stock		$	(0.20	)		$	0.61			$	0.12			$	(0.23	)		$	0.30
Basic weighted average common shares outstanding			9,803,712				9,803,712				9,803,712				9,803,712				9,803,712
Diluted net income (loss) per share of common stock		$	(0.20	)		$	0.60			$	0.12			$	(0.23	)		$	0.30
Diluted weighted average common shares outstanding			9,803,712				9,946,879				9,943,684				9,803,712				9,943,443

		First				Second				Third				Fourth				Full
Fiscal 2004		Quarter				Quarter				Quarter				Quarter				Year
Net revenues		$	65,782,039			$	96,943,734			$	73,895,536			$	59,580,840			$	296,202,149
Gross profit			22,975,182				33,374,179				24,516,783				20,321,426				101,187,570
Income (loss) from continuing operations			(202,961	)			2,265,194				535,655				(7,353,504	)			(4,755,616	)
Net income (loss)			(202,961	)			2,265,194				535,655				(7,353,504	)			(4,755,616	)
Basic and diluted net income (loss) per share of common stock		$	(0.02	)		$	0.23			$	0.05			$	(0.75	)		$	(0.49	)
Basic weighted average common shares outstanding			9,803,712				9,803,712				9,803,712				9,803,712				9,803,712
Diluted weighted average common shares outstanding			9,803,712				9,835,324				9,956,125				9,803,712				9,803,712

20.	Related Party Transactions

F-30

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	•	in the case of a transaction involving less than $50 million in total enterprise value, 2% of such total enterprise value;
	•	in the case of a transaction involving more than $50 million but less than $100 million in total enterprise value, $1 million; and
	•	in the case of a transaction involving more than $100 million in total enterprise value, 1% of such total enterprise value.

21.	Subsequent Events

F-31

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			April 1,				December 31,
			2006				2005
			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	3,664,380			$	4,207,497
	Receivables, net of allowances of $154,656 at April 1, 2006 and $146,964 at December 31, 2005			2,226,607				1,646,454
	Inventories			81,534,562				71,472,061
	Prepaid and other current assets			8,381,071				6,638,109
Total current assets				95,806,620				83,964,121
Property and equipment:
	Land and buildings			21,256,771				21,256,771
	Equipment, furniture, fixtures and autos			19,760,082				19,004,608
	Leasehold improvements and construction in progress			22,948,485				20,866,839
				63,965,338				61,128,218
	Less: accumulated depreciation			(16,094,311	)			(14,558,256	)
Net property and equipment				47,871,027				46,569,962
Goodwill				41,634,525				41,634,525
Tradename				11,158,000				11,158,000
Trademarks				14,156,127				14,156,127
Customer database, net of accumulated amortization of $1,321,913 at April 1, 2006 and $1,227,490 at December 31, 2005				2,077,292				2,171,715
Debt issuance costs, net of accumulated amortization of $3,407,188 at April 1, 2006 and $3,126,103 at December 31, 2005				4,450,528				4,731,612
Other long-term assets				462,032				450,208
Total assets			$	217,616,151			$	204,836,270

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			April 1,				December 31,
			2006				2005
			(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	54,628,420			$	42,000,236
	Accrued expenses and other current liabilities			13,726,099				19,163,459
	Line of credit			5,509,001				—
Total current liabilities				73,863,520				61,163,695
Long-term debt				83,158,164				82,450,000
Deferred rent				4,315,589				4,095,442
Total liabilities				161,337,273				147,709,137
Stockholders’ equity:
	Common stock –$.001 par value; 40,000,000 shares authorized; 9,472,143 shares issued and outstanding at April 1, 2006 and December 31, 2005, respectively			9,473				9,473
	Restricted common stock units –$.001 par value; 331,569 shares issued and outstanding at April 1, 2006 and December 31, 2005, respectively			331				331
	Additional capital			60,301,153				60,301,153
	Other comprehensive income			156,954				135,815
	Accumulated deficit			(4,189,033	)			(3,319,639	)
Total stockholders’ equity				56,278,878				57,127,133
Total liabilities and stockholders’ equity			$	217,616,151			$	204,836,270

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		Three Months Ended
		April 1,				April 2,
		2006				2005
Net revenues		$	74,810,296			$	63,958,382
Cost of products sold			49,007,939				41,195,490
Gross profit			25,802,357				22,762,892
Selling, general and administrative			23,702,479				21,399,935
Store pre-opening expenses			199,749				516,757
Total operating expenses			23,902,228				21,916,692
Operating income			1,900,129				846,200
Interest expense			(3,059,426	)			(2,862,102	)
Interest income			10,783				17,440
Other income			322,064				22,598
Other expense			(42,944	)			(23,748	)
Loss before income taxes			(869,394	)			(1,999,612	)
Income tax benefit (expense)			—				—
Net loss		$	(869,394	)		$	(1,999,612	)
Basic and diluted net loss per share of common stock		$	(0.09	)		$	(0.20	)
Basic and diluted weighted average common shares outstanding			9,803,712				9,803,712

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					Three Months Ended
					April 1,				April 2,
					2006				2005
									(as restated)
Operating Activities
Net loss					$	(869,394	)		$	(1,999,612	)
Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation				1,528,596				1,230,587
		Amortization of intangible assets				94,423				94,422
	Amortization of debt issue costs and debt discount					989,248				881,304
	Gain on sale of assets					—				(11,500	)
		Changes in operating assets and liabilities:
			Accounts receivable			(580,153	)			(819,581	)
			Inventories			(10,062,501	)			(17,885,274	)
			Prepaid and other current assets			(1,742,962	)			251,968
			Other assets			(11,824	)			(22,807	)
			Accounts payable — trade			12,628,184				14,647,805
			Accounts payable — bank			—				282,552
			Accrued expenses and other current liabilities			(5,437,360	)			(4,234,366	)
			Deferred rent			220,147				507,293
Net cash used in operating activities						(3,243,596	)			(7,077,209	)
Investing Activities
Capital expenditures						(2,834,256	)			(1,479,312	)
Proceeds from sale of assets						—				11,500
Net cash used in investing activities						(2,834,256	)			(1,467,812	)
Financing Activities
Principal payments on lines of credit						(17,674,471	)			(3,257,468	)
Proceeds from lines of credit						23,183,472				3,257,468
Other						—				(2,244	)
Net cash provided by (used in) financing activities						5,509,001				(2,244	)
Effect of exchange rate changes on cash						25,734				(27,701	)
Change in cash and cash equivalents						(543,117	)			(8,574,966	)
Cash and cash equivalents, beginning of period						4,207,497				8,574,966
Cash and cash equivalents, end of period					$	3,664,380			$	—

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			Three Months Ended
			April 1,				April 2,
			2006				2005
							(as restated)
Supplemental cash flow information:
	Interest payments		$	3,997,843			$	3,941,836
	Tax payments			55,357				117,425
	Amortization of discount on senior secured notes			708,164				624,048

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			April 1,				December 31,
			2006				2005
Salaries and benefits			$	2,347,141			$	2,927,440
Interest				722,435				2,654,411
Allowance for returns reserve				599,048				671,742
Gift certificates				6,559,469				8,091,210
Taxes				1,949,280				2,704,282
Other				1,548,726				2,114,374
	Total		$	13,726,099			$	19,163,459

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			Three Months Ended
			April 1,				April 2,
			2006				2005
Net loss			$	(869,394	)		$	(1,999,612	)
Basic:
	Weighted-average shares of common stock outstanding			9,472,143				9,472,143
	Weighted-average shares of restricted common stock units outstanding			331,569				331,569
	Shares used in computing basic net loss per share			9,803,712				9,803,712
Effect of dilutive securities:
	Stock options and awards			—				—
	Shares used in computing diluted net loss per share			9,803,712				9,803,712
Basic and diluted net loss per share			$	(0.09	)		$	(0.20	)

			Operating
			Lease
			Obligations
2006			$	12,984,684
2007				17,761,141
2008				16,790,235
2009				15,819,428
2010				15,492,741
Thereafter				63,877,650
	Total minimum lease payments		$	142,725,879

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