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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

| ̈ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended April 3, 2010

OR



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

For the transition period from  to

Commission File Number: 333-123927





EASTON-BELL SPORTS, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-1636283                          
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

7855 Haskell Avenue, Suite 200

Van Nuys, California 91406

(Address of Principal Executive Offices)(Zip Code)

(818) 902-5800

(Registrants Telephone Number, Including Area Code)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes   ̈    No  x.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x.

As of May 14, 2010, 100 shares of Easton-Bell Sports, Inc. common stock were outstanding.









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EXPLANATORY NOTE

The Company is a voluntary filer of reports required of companies with public securities under Sections 13 or 15(d) of the Securities
Exchange Act of 1934.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

INDEX



|                                                                                                                                                 |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                 | 
|                                                                                                                                                 |  | Page
|                                                                                                                                                 | 
|PART I. FINANCIAL INFORMATION:                                                                                                                   |  |     
|                                                                                                                                                 | 
|Item 1. Financial Statements                                                                                                                     |  |     
|                                                                                                                                                 | 
|Consolidated Balance Sheets as of April 3, 2010 (unaudited) and January 2,
2010                                                                  |  | 4   
|                                                                                                                                                 | 
|Consolidated Statements of Income and Comprehensive Income for the Fiscal Quarter Ended April 
3, 2010 (unaudited) and April 4, 2009 (unaudited) |  | 5   
|                                                                                                                                                 | 
|Consolidated Statements of Cash Flows for the Fiscal Quarter Ended April 
3, 2010 (unaudited) and April 4, 2009 (unaudited)                      |  | 6   
|                                                                                                                                                 | 
|Notes to Consolidated Financial Statements                                                                                                       |  | 7   
|                                                                                                                                                 | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                                    |  | 21  
|                                                                                                                                                 | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                               |  | 29  
|                                                                                                                                                 | 
|Item 4T. Controls and Procedures                                                                                                                 |  | 30  
|                                                                                                                                                 | 
|PART II. OTHER INFORMATION:                                                                                                                      |  |     
|                                                                                                                                                 | 
|Item 1. Legal Proceedings                                                                                                                        |  | 31  
|                                                                                                                                                 | 
|Item 1A. Risk Factors                                                                                                                            |  | 31  
|                                                                                                                                                 | 
|Item 6. Exhibits                                                                                                                                 |  | 31  
|                                                                                                                                                 | 
|SIGNATURES                                                                                                                                       |  | 32  



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)



|                                                                                                                             |  |              |         |                |   |         |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | -------------- | - | ------- | -
|                                                                                                                             |  | April 3,2010 |         | January 2,2010 |  
|                                                                                                                             |  | (Unaudited)  |         |                |  
|ASSETS                                                                                                                       | 
|Current assets:                                                                                                              |  |              |         |                |   |         |  
|Cash and cash equivalents                                                                                                    |  | $            | 28,859  |                | $ | 33,318  |  
|Accounts receivable, net                                                                                                     |  |              | 229,043 |                |   | 208,903 |  
|Inventories, net                                                                                                             |  |              | 119,298 |                |   | 127,915 |  
|Prepaid expenses                                                                                                             |  |              | 7,268   |                |   | 7,922   |  
|Deferred taxes                                                                                                               |  |              | 12,607  |                |   | 12,607  |  
|Other current assets                                                                                                         |  |              | 12,539  |                |   | 10,705  |  
|                                                                                                                             |  |              |         |                |   |         |  
|Total current assets                                                                                                         |  |              | 409,614 |                |   | 401,370 |  
|Property, plant and equipment, net                                                                                           |  |              | 47,403  |                |   | 46,368  |  
|Deferred financing fees, net                                                                                                 |  |              | 16,504  |                |   | 17,255  |  
|Intangible assets, net                                                                                                       |  |              | 287,477 |                |   | 290,812 |  
|Goodwill                                                                                                                     |  |              | 206,761 |                |   | 203,541 |  
|Other assets                                                                                                                 |  |              | 1,284   |                |   | 1,299   |  
|                                                                                                                             |  |              |         |                |   |         |  
|Total assets                                                                                                                 |  | $            | 969,043 |                | $ | 960,645 |  
|                                                                                                                             |  |              |         |                |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                         | 
|Current liabilities:                                                                                                         |  |              |         |                |   |         |  
|Revolving credit facility                                                                                                    |  | $            | 78,963  |                | $ | 70,000  |  
|Current portion of capital lease obligations                                                                                 |  |              | 22      |                |   | 22      |  
|Accounts payable                                                                                                             |  |              | 56,636  |                |   | 70,910  |  
|Accrued expenses                                                                                                             |  |              | 57,937  |                |   | 49,256  |  
|                                                                                                                             |  |              |         |                |   |         |  
|Total current liabilities                                                                                                    |  |              | 193,558 |                |   | 190,188 |  
|Long-term debt, less current portion                                                                                         |  |              | 345,824 |                |   | 345,715 |  
|Capital lease obligations, less current portion                                                                              |  |              | 96      |                |   | 102     |  
|Deferred taxes                                                                                                               |  |              | 42,104  |                |   | 42,104  |  
|Other noncurrent liabilities                                                                                                 |  |              | 21,064  |                |   | 18,699  |  
|                                                                                                                             |  |              |         |                |   |         |  
|Total liabilities                                                                                                            |  |              | 602,646 |                |   | 596,808 |  
|                                                                                                                             |  |              |         |                |   |         |  
|Stockholders equity:                                                                                                        |  |              |         |                |   |         |  
|Common stock: $0.01 par value, 100 shares authorized, 100 shares issued and outstanding at April 3, 2010 and January 2,
2010 |  |              |        |                |   |        |  
|Additional paid-in capital                                                                                                   |  |              | 357,948 |                |   | 356,788 |  
|Retained earnings                                                                                                            |  |              | 7,397   |                |   | 7,275   |  
|Accumulated other comprehensive income (loss)                                                                                |  |              | 1,052   |                |   | (226    | )
|                                                                                                                             |  |              |         |                |   |         |  
|Total stockholders equity                                                                                                   |  |              | 366,397 |                |   | 363,837 |  
|                                                                                                                             |  |              |         |                |   |         |  
|Total liabilities and stockholders equity                                                                                   |  | $            | 969,043 |                | $ | 960,645 |  
|                                                                                                                             |  |              |         |                |   |         |  

See accompanying notes to consolidated financial statements.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited and amounts in thousands)



|                                             |  |                      |         |              |   |         |  
|-------------------------------------------- |  | -------------------- | ------- | ------------ | - | ------- | -
|                                             |  | Fiscal Quarter Ended |        
|                                             |  | April 3,2010         |         | April 4,2009 |  
|Net sales                                    |  | $                    | 194,104 |              | $ | 184,851 |  
|Cost of sales                                |  |                      | 129,342 |              |   | 124,676 |  
|                                             |  |                      |         |              |   |         |  
|Gross profit                                 |  |                      | 64,762  |              |   | 60,175  |  
|Selling, general and administrative expenses |  |                      | 49,711  |              |   | 46,895  |  
|Amortization of intangibles                  |  |                      | 3,335   |              |   | 3,352   |  
|                                             |  |                      |         |              |   |         |  
|Income from operations                       |  |                      | 11,716  |              |   | 9,928   |  
|Interest expense, net                        |  |                      | 11,512  |              |   | 8,327   |  
|                                             |  |                      |         |              |   |         |  
|Income before income taxes                   |  |                      | 204     |              |   | 1,601   |  
|Income tax expense                           |  |                      | 82      |              |   | 626     |  
|                                             |  |                      |         |              |   |         |  
|Net income                                   |  |                      | 122     |              |   | 975     |  
|Other comprehensive income:                  |  |                      |         |              |   |         |  
|Foreign currency translation adjustment      |  |                      | 1,278   |              |   | (858    | )
|                                             |  |                      |         |              |   |         |  
|Comprehensive income                         |  | $                    | 1,400   |              | $ | 117     |  
|                                             |  |                      |         |              |   |         |  

See accompanying notes to consolidated financial statements.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and amounts in thousands)



|                                                                                         |  |                      |         |   |              |   |         |  
|---------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ------------ | - | ------- | -
|                                                                                         |  | Fiscal Quarter Ended |        
|                                                                                         |  | April 3,2010         |         |   | April 4,2009 |  
|Cash flows from operating activities:                                                    |  |                      |         |   |              |   |         |  
|Net income                                                                               |  | $                    | 122     |   |              | $ | 975     |  
|Adjustments to reconcile net income to net cash used in operating activities:            |  |                      |         |   |              |   |         |  
|Depreciation and amortization                                                            |  |                      | 6,936   |   |              |   | 6,722   |  
|Amortization of deferred financing fees and debt discount                                |  |                      | 860     |   |              |   | 894     |  
|Equity compensation expense                                                              |  |                      | 1,160   |   |              |   | 927     |  
|Deferred income tax expense                                                              |  |                      |        |   |              |   | 231     |  
|Disposal of property, plant and equipment                                                |  |                      | 6       |   |              |   | 3       |  
|Changes in operating assets and liabilities, net of effects from purchase of businesses: |  |                      |         |   |              |   |         |  
|Accounts receivable, net                                                                 |  |                      | (19,269 | ) |              |   | (9,222  | )
|Inventories, net                                                                         |  |                      | 9,780   |   |              |   | 1,942   |  
|Other current and noncurrent assets                                                      |  |                      | (1,285  | ) |              |   | 2,583   |  
|Accounts payable                                                                         |  |                      | (14,414 | ) |              |   | (8,570  | )
|Accrued expenses                                                                         |  |                      | 10,399  |   |              |   | (10,035 | )
|Other current and noncurrent liabilities                                                 |  |                      | 423     |   |              |   | 236     |  
|                                                                                         |  |                      |         |   |              |   |         |  
|Net cash used in operating activities                                                    |  |                      | (5,282  | ) |              |   | (13,314 | )
|                                                                                         |  |                      |         |   |              |   |         |  
|Cash flows from investing activities:                                                    |  |                      |         |   |              |   |         |  
|Purchase of property, plant and equipment                                                |  |                      | (4,573  | ) |              |   | (3,675  | )
|Purchase of businesses, net of cash acquired                                             |  |                      | (1,750  | ) |              |   |        |  
|                                                                                         |  |                      |         |   |              |   |         |  
|Net cash used in investing activities                                                    |  |                      | (6,323  | ) |              |   | (3,675  | )
|                                                                                         |  |                      |         |   |              |   |         |  
|Cash flows from financing activities:                                                    |  |                      |         |   |              |   |         |  
|Payments on previous senior term notes                                                   |  |                      |        |   |              |   | (788    | )
|Proceeds from revolving credit facility                                                  |  |                      | 7,000   |   |              |   | 4,500   |  
|Payments on revolving credit facility                                                    |  |                      |        |   |              |   | (1,500  | )
|Payments on capital lease obligations                                                    |  |                      | (6      | ) |              |   | (6      | )
|                                                                                         |  |                      |         |   |              |   |         |  
|Net cash provided by financing activities                                                |  |                      | 6,994   |   |              |   | 2,206   |  
|                                                                                         |  |                      |         |   |              |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                             |  |                      | 152     |   |              |   | (504    | )
|Decrease in cash and cash equivalents                                                    |  |                      | (4,459  | ) |              |   | (15,287 | )
|                                                                                         |  |                      |         |   |              |   |         |  
|Cash and cash equivalents, beginning of period                                           |  |                      | 33,318  |   |              |   | 41,301  |  
|                                                                                         |  |                      |         |   |              |   |         |  
|Cash and cash equivalents, end of period                                                 |  | $                    | 28,859  |   |              | $ | 26,014  |  
|                                                                                         |  |                      |         |   |              |   |         |  

See accompanying notes to consolidated financial statements.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited and amounts in thousands, except as specified)

1. Basis of Presentation

Unless otherwise indicated, all references in this Form 10-Q to Easton-Bell, we, us, our, and the Company refer to Easton-Bell
Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its
consolidated subsidiaries, respectively. Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding
voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent.

The accompanying
unaudited consolidated financial statements included herein have been prepared by our Company in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the rules and regulations
of the Securities and Exchange Commission or the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, normal recurring adjustments considered
necessary for a fair presentation have been reflected in these consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with our Companys audited financial statements and notes thereto
included in our Companys Annual Report on Form 10-K for the year ended January 2, 2010. Results for interim periods are not necessarily indicative of the results for the year.

Our Companys fiscal quarters are 13-week periods ending on Saturdays. As a result, our Companys first quarter of fiscal year
2010 ended on April 3, and the first quarter of fiscal year 2009 ended on April 4.

2. Goodwill and Other Intangible Assets

Acquired intangible assets are as follows:



|                                    |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  
|----------------------------------- |  | -------------------- | ------- | ----------------------- | --------------- | ------- | -------------------- |  | ----------------------- | ------- |  | - | ------- | -
|                                    |  | April 3, 2010        |         |                         | January 2, 2010 |        
|                                    |  | GrossCarryingAmounts |         | AccumulatedAmortization |                 |         | GrossCarryingAmounts |  | AccumulatedAmortization |        
|Amortized intangible assets:        |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  
|Trademarks and tradenames           |  | $                    | 1,702   |                         | $               | (1,640  | )                    |  | $                       | 1,702   |  | $ | (1,579  | )
|Customer relationships              |  |                      | 59,180  |                         |                 | (32,287 | )                    |  |                         | 59,180  |  |   | (30,925 | )
|Patents                             |  |                      | 60,345  |                         |                 | (31,431 | )                    |  |                         | 60,345  |  |   | (29,817 | )
|Licensing and other                 |  |                      | 5,900   |                         |                 | (5,076  | )                    |  |                         | 5,900   |  |   | (4,778  | )
|                                    |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  
|Total                               |  | $                    | 127,127 |                         | $               | (70,434 | )                    |  | $                       | 127,127 |  | $ | (67,099 | )
|                                    |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  
|Indefinite-lived intangible assets: |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  
|Trademarks and tradenames           |  | $                    | 230,784 |                         |                 |         |                      |  | $                       | 230,784 |  |   |         |  
|                                    |  |                      |         |                         |                 |         |                      |  |                         |         |  |   |         |  

Goodwill by segment is as follows:



|                                                     |  |            |         |              |   |              |  |   |        
|---------------------------------------------------- |  | ---------- | ------- | ------------ | - | ------------ |  | - | -------
|                                                     |  | TeamSports |         | ActionSports |   | Consolidated
|Balance as of January 2, 2010                        |  | $          | 142,077 |              | $ | 61,464       |  | $ | 203,541
|Acquisitions                                         |  |            | 3,100   |              |   |             |  |   | 3,100  
|Additional purchase price - contingent consideration |  |            | 120     |              |   |             |  |   | 120    
|                                                     |  |            |         |              |   |              |  |   |        
|Balance as of April 3, 2010                          |  | $          | 145,297 |              | $ | 61,464       |  | $ | 206,761
|                                                     |  |            |         |              |   |              |  |   |        

Goodwill and other indefinite-lived intangible assets
are tested for impairment at each of our Companys segments on an annual basis in December, and more often if indications of impairment exist as required under the Financial Accounting Standards Board or the FASBs Accounting Standards
Codification 350-20 Goodwill. The results of our Companys analyses conducted in 2009 indicated that no impairment in the carrying amount of goodwill and other indefinite-lived intangible assets had occurred. During the first fiscal
quarter of 2010, there were no indicators of impairment to goodwill and intangible assets.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



During the first fiscal quarter of 2010, we completed two small acquisitions. In January
2010, Riddell acquired certain assets and assumed certain liabilities of an athletic equipment reconditioning company for a purchase price of approximately $2,700 consisting of cash and contingent consideration. In addition, during January 2010,
Easton acquired certain assets and assumed certain liabilities of a company engaged in the production and sale of lacrosse equipment for approximately $1,000 in cash. Based on a preliminary allocation of purchase price, the carrying amount of
goodwill related to our Team Sports segment was increased by $3,100 due these acquisitions. In addition, a $120 increase was due to an earn-out payment related to a Riddell acquisition completed in prior years. There were no material changes to
goodwill during the first fiscal quarter of 2009.

3. Long-Term Debt

Long-term debt consisted of the following:



|                                                       |  |               |         |   |                 |   |         |  
|------------------------------------------------------ |  | ------------- | ------- | - | --------------- | - | ------- | -
|                                                       |  | April 3, 2010 |         |   | January 2, 2010 |  
|Senior Secured Credit Facility:                        |  |               |         |   |                 |   |         |  
|ABL Facility                                           |  | $             | 78,963  |   |                 | $ | 70,000  |  
|9.750% Senior Secured Notes                            |  |               | 350,000 |   |                 |   | 350,000 |  
|Capital lease obligations                              |  |               | 118     |   |                 |   | 124     |  
|                                                       |  |               |         |   |                 |   |         |  
|Total long-term debt                                   |  |               | 429,081 |   |                 |   | 420,124 |  
|Less unamortized debt discount on senior secured notes |  |               | (4,176  | ) |                 |   | (4,285  | )
|Less current maturities of long-term debt              |  |               | (78,985 | ) |                 |   | (70,022 | )
|                                                       |  |               |         |   |                 |   |         |  
|Long-term debt, less current portion                   |  | $             | 345,920 |   |                 | $ | 345,817 |  
|                                                       |  |               |         |   |                 |   |         |  

9.750% Senior Secured Notes

In December 2009, in connection with the refinancing of our Companys then-existing indebtedness, or the Refinancing, we issued
$350,000 of 9.750% Senior Secured Notes, due December 2016, or the Notes. Interest is payable on the Notes semi-annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a
price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make-whole premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount
of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. Then
we may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, our Company
may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of
aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the
Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund
payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A.
and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the Notes contains certain restrictions that limit our Companys ability to
(1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback
transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates and (9) transfer all or substantially all of our assets or enter into merger
or consolidation transactions. The indenture governing the Notes also requires us to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with
the proceeds of certain sales of assets and subsidiary stock.

Subject to certain exceptions, the indenture governing the
Notes permits our Company and our restricted subsidiaries to incur additional indebtedness, including senior indebtedness and secured indebtedness. In addition, the indenture will not limit the amount of indebtedness that our direct or indirect
parent entities, including EB Sports and RBG, may incur.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



The ABL Facility

Concurrently with the issuance of the Notes on December 3, 2009, our Company entered into a $250,000 senior secured asset-based
revolving credit facility, subject to availability under each of a United States and Canadian borrowing base, which the amount, subject to certain conditions, may be increased to allow borrowings of up to $300,000, together with certain of our
subsidiaries as Canadian Borrowers (as defined therein) or Subsidiary Guarantors (as defined therein), with the lenders party thereto, or the ABL Facility. The unused portion of the ABL Facility (subject to borrowing base availability) is to be
drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs. At April 3, 2010, we had $78,963 outstanding under the ABL facility and $123,520 in availability.

Certain of the Companys wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our
wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition, our wholly-owned Canadian subsidiaries guarantee the obligation of the Canadian borrowings under the Canadian
sub-facility under the ABL Facility. Additionally, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to substantially all of our personal property as collateral for our obligations (and related
guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts receivable, inventory, other personal property relating to such inventory and accounts receivable
and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a first-priority basis. The obligations of our Canadian subsidiaries that are borrowers under the
Canadian sub-facility of the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by substantially all of the assets of our wholly-owned Canadian subsidiaries and our domestic
subsidiaries assets on the same basis as borrowings under the ABL Facility. At April 3, 2010, we had no balance outstanding under the Canadian ABL facility.

The interest rates per annum applicable to the loans under the ABL Facility, other than swingline loans and protective advances, equal an
applicable margin percentage plus, at our option, (1) in the case of U.S. dollar denominated loans, a U.S. base rate or LIBOR, and (2) in the case of Canadian dollar denominated loans, a Canadian base rate, or CDOR. Swingline
loans and protective advances bear interest at the U.S. base rate for U.S. dollar denominated loans and the Canadian base rate for Canadian dollar denominated loans. The applicable margin percentage for the ABL Facility is initially 3.75% for
LIBOR or CDOR and 2.75% for the base rate, which is subject to adjustment to 3.25% for LIBOR or CDOR and 2.25% for the base rate based upon our average excess borrowing availability as calculated under the credit agreement for the ABL Facility. In
addition to paying interest on outstanding principal under the ABL Facility, we are required to pay a commitment fee, in relation to the unutilized commitments, which is initially 0.75% per annum and may be adjusted to 0.50% based upon our
utilization of the ABL Facility (increasing when utilization is lower and decreasing when utilization is higher). We are also required to pay customary letter of credit fees.

The ABL Facility requires that if excess gross availability is less than the greater of a specified percentage of the gross borrowing
base and a specified dollar amount, we must comply with a minimum fixed charge coverage ratio test. In addition, the ABL Facility includes negative covenants that, subject to significant exceptions, limit our ability and the ability of RBG and its
subsidiaries, including the Company, to, among other things (1) incur additional debt, (2) create liens, (3) transfer all or substantially all of their assets or enter into merger or consolidation transactions, (4) change their
business, (5) make investments, loans, advances, guarantees and acquisitions, (6) transfer or sell assets, (7) enter into sale and leaseback transactions, (8) enter into swap agreements, (9) enter into transactions with
affiliates and (10) enter into agreements that restrict dividends from subsidiaries.

Other

Our Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee our obligations
for the purchase of certain inventories and for potential claims exposure for insurance coverage. At April 3, 2010 and January 2, 2010, outstanding letters of credit issued under the revolving credit facilities totaled $3,356 and $3,406,
respectively. The amount of unused lines of credit at April 3, 2010 and January 2, 2010, were $123,520 and $119,962, respectively.

Cash payments for interest were $476 and $11,924 for the fiscal quarters ended April 3, 2010 and April 4, 2009, respectively.
We amortized $751 and $894 of debt issuance costs during the first fiscal quarter of 2010 and 2009, respectively.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



4. Accrued Expenses

Accrued expenses consist of the following:



|                                         |  |               |        |                 |   |       
|---------------------------------------- |  | ------------- | ------ | --------------- | - | ------
|                                         |  | April 3, 2010 |        | January 2, 2010
|Salaries, wages, commissions and bonuses |  | $             | 8,782  |                 | $ | 7,119 
|Advertising                              |  |               | 5,167  |                 |   | 5,411 
|Rebates                                  |  |               | 4,524  |                 |   | 4,411 
|Warranty                                 |  |               | 2,833  |                 |   | 3,242 
|Product liability - current portion      |  |               | 4,979  |                 |   | 5,130 
|Royalties                                |  |               | 2,270  |                 |   | 2,268 
|Interest                                 |  |               | 11,613 |                 |   | 3,434 
|Income taxes                             |  |               | 1,691  |                 |   | 2,581 
|Other                                    |  |               | 16,078 |                 |   | 15,660
|                                         |  |               |        |                 |   |       
|Total accrued expenses                   |  | $             | 57,937 |                 | $ | 49,256
|                                         |  |               |        |                 |   |       

5. Inventories

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory
overhead.

Inventories consisted of the following:



|                 |  |               |         |                 |   |        
|---------------- |  | ------------- | ------- | --------------- | - | -------
|                 |  | April 3, 2010 |         | January 2, 2010
|Raw materials    |  | $             | 18,503  |                 | $ | 17,593 
|Work-in-process  |  |               | 1,614   |                 |   | 1,995  
|Finished goods   |  |               | 99,181  |                 |   | 108,327
|                 |  |               |         |                 |   |        
|Inventories, net |  | $             | 119,298 |                 | $ | 127,915
|                 |  |               |         |                 |   |        

6. Recent Accounting Pronouncements

In February 2010, the FASB issued Accounting Standards Update, or ASU 2010-09 to amend the topic of Subsequent Events. As a result
of this ASU, our Company will no longer disclose the date through which we evaluated subsequent events in the financial statements - either in originally issued financial statements or reissued financial statements. This change addresses practice
issues for our Company with respect to processes around issuing financial statements and Securities and Exchange Commission or SEC registration requirements (e.g., incorporation by reference of previously issued financial statements). In addition,
we will not have to disclose the date that financial statements were reissued unless the financial statements are revised - for either an error correction or other retrospective application of GAAP. We will evaluate subsequent events through the
date that the financial statements are issued. We have adopted this guidance in the first fiscal quarter of 2010, and this guidance did not have a material impact on our Companys financial statements.

In January 2010, the FASB issued ASU 2010-06 to amend the topic of Improving Disclosures about Fair Value Measurements. As a
result of this ASU, our Company is required to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the related reasoning for the transfer. Also included in the new disclosure
requirements is the separate presentation of purchases, sales, issuances and settlements on a gross basis in the reconciliation for significant unobservable inputs, or Level 3 inputs. Further, this ASU clarifies existing fair value disclosures
about the level of disaggregation and about inputs and valuation techniques used to measure fair value for either Level 2 or Level 3 measurements. The new disclosures and clarifications of existing disclosures are effective for interim and
annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll-forward of activity in Level 3 fair value measurements. These Level 3 specific disclosures
are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of the disclosures required for our Company during the first fiscal quarter of 2010 did not have a material
impact on our Companys financial statement disclosures. Our Company is evaluating the impact of the additional disclosures required for our 2011 filings relating to the Level 3 requirements.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



7. Segment Reporting

Our Company has two reportable segments: Team Sports and Action Sports. Our Team Sports segment primarily consists of football, baseball,
softball, ice hockey and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment consists primarily of helmets, equipment, components and accessories for cycling, snowsports and
powersports and fitness related products. Following the acquisition of Easton, our Action Sports segment included Eastons cycling business. Our Company evaluates segment performance primarily based on income from operations excluding equity
compensation expense, management expenses, restructuring and other infrequent expenses, amortization of intangibles and corporate expenses. Our selling, general and administrative expenses, excluding corporate expenses, are charged to each segment
based on where the expenses are incurred. Segment income from operations as presented by our Company may not be comparable to similarly titled measures used by other companies. As a result, the components of income from operations for one segment
may not be comparable to another segment.

Segment results for the fiscal quarters ended April 3, 2010 and April 4,
2009, respectively, are as follows:



|                       |  |            |         |              |   |              |  |   |        
|---------------------- |  | ---------- | ------- | ------------ | - | ------------ |  | - | -------
|Fiscal Quarter Ended   |  | TeamSports |         | ActionSports |   | Consolidated
|April 3, 2010          |  |            |         |              |   |              |  |   |        
|Net sales              |  | $          | 119,433 |              | $ | 74,671       |  | $ | 194,104
|Income from operations |  |            | 17,607  |              |   | 5,937        |  |   | 23,544 
|Depreciation           |  |            | 2,043   |              |   | 1,558        |  |   | 3,601  
|Capital expenditures   |  |            | 2,112   |              |   | 2,461        |  |   | 4,573  
|April 4, 2009          |  |            |         |              |   |              |  |   |        
|Net sales              |  | $          | 107,811 |              | $ | 77,040       |  | $ | 184,851
|Income from operations |  |            | 13,544  |              |   | 6,197        |  |   | 19,741 
|Depreciation           |  |            | 1,876   |              |   | 1,494        |  |   | 3,370  
|Capital expenditures   |  |            | 2,654   |              |   | 1,021        |  |   | 3,675  



|                      |  |            |         |              |   |              |  |   |        
|--------------------- |  | ---------- | ------- | ------------ | - | ------------ |  | - | -------
|                      |  | TeamSports |         | ActionSports |   | Consolidated
|Assets                |  |            |         |              |   |              |  |   |        
|As of April 3, 2010   |  | $          | 602,751 |              | $ | 366,292      |  | $ | 969,043
|As of January 2, 2010 |  |            | 585,775 |              |   | 374,870      |  |   | 960,645

A reconciliation
from the segment information to the Consolidated Statements of Income and Comprehensive Income is set forth below:



|                                    |  |                      |        |   |               |   |        |  
|----------------------------------- |  | -------------------- | ------ | - | ------------- | - | ------ | -
|                                    |  | Fiscal Quarter Ended |       
|                                    |  | April 3, 2010        |        |   | April 4, 2009 |  
|Segment income from operations      |  | $                    | 23,544 |   |               | $ | 19,741 |  
|Equity compensation expense         |  |                      | (1,160 | ) |               |   | (927   | )
|Corporate expenses                  |  |                      | (7,333 | ) |               |   | (5,534 | )
|Amortization of intangibles         |  |                      | (3,335 | ) |               |   | (3,352 | )
|                                    |  |                      |        |   |               |   |        |  
|Consolidated income from operations |  | $                    | 11,716 |   |               | $ | 9,928  |  
|                                    |  |                      |        |   |               |   |        |  

8. Product Liability, Litigation and Other Contingencies

Product Liability

Our Company is subject to various product liability claims and/or suits brought against us for claims involving damages for personal
injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured by our Company and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims,
cannot be determined. Our management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis, which considers, among other factors, our previous claims history and available information on alleged
claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from those estimates.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Our Company maintains product liability insurance coverage under various policies. These
policies provide coverage against claims resulting from alleged injuries sustained during the respective policy periods, subject to policy terms and conditions. The primary portion of our product liability coverage is written under a policy expiring
in July 2011 with a $2,000 limit per occurrence excess of a $1,000, $50 and $500 self-insured retention for helmets, soft goods and all other products, respectively. Our Companys first layer excess policy is written under a liability policy
with a limit of $25,000 excess of $3,000 expiring in January 2011. We also carry a second layer excess liability policy providing an additional limit of $15,000 excess of $28,000 expiring January 2011, for a total limit of $43,000.

In the opinion of management, amounts accrued for exposures relating to product liability claims and other legal proceedings are adequate
and, accordingly, the ultimate resolution of these matters is not expected to have a material effect on our Companys consolidated financial statements. As of April 3, 2010, our Company had no known probable but inestimable exposures
relating to product liability or other legal proceedings that are expected to have a material effect on our Company. There can be no assurance, however, that unanticipated events will not require our Company to increase the amount it has accrued for
any matter or accrue for a matter that has not been previously accrued because it was not considered probable.

Litigation and Other Contingencies

In addition to the matters discussed in the preceding paragraphs, our Company is a party to various non-product liability legal claims and
actions incidental to our business, including without limitation, claims relating to intellectual property as well as employment related matters. For example, a judgment was recently rendered against us in a patent infringement proceeding relating
to certain of our skate boots. However, we do not believe that such judgment or any other claims or actions, either individually or in the aggregate, are material to our business or financial condition.

9. Income Taxes

Our
Company recorded income tax expense of $82 and $626 for the fiscal quarter ended April 3, 2010, and April 4, 2009, respectively. Our Companys effective tax rate was 40.2% for the first fiscal quarter of 2010, as compared to 39.1% for
the first fiscal quarter of 2009. For the fiscal quarter ended April 3, 2010, the difference between the effective rate and the statutory rate is primarily attributable to the permanent differences for equity compensation expense and state
income taxes. For the first fiscal quarter ended April 4, 2009, the difference between the effective rate and the statutory rate was primarily attributable to the permanent difference for equity compensation expense.

10. Derivative Instruments and Hedging Activity

Our Company accounts for all derivatives on the balance sheet as an asset or liability measured at fair value and changes in fair values
are recognized currently in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is deferred in stockholders equity as a component of
accumulated other comprehensive income. The deferred items are recognized in the period the derivative contract is settled. As of April 3, 2010, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the
changes in fair value in the Consolidated Statements of Income and Comprehensive Income.

In 2008, our Company entered an
interest rate swap agreement with Wachovia Bank, N.A. The interest rate swap had an initial fixed USD LIBOR of 2.921%, and was subsequently revised to a fixed USD LIBOR of 2.811% for the period commencing October 15, 2008, through
April 14, 2010 and thereafter a fixed USD LIBOR of 2.921% until the expiration of the agreement on April 15, 2011. The swap had a notional amount of $275,000 which decreased to $250,000 on April 15, 2009 and would decrease to $225,000
on April 15, 2010. The settlement dates for the swap occur monthly on the 15th of each month commencing November 17, 2008 through April 15, 2010 and thereafter quarterly on the 15th of each July, October, January and April
until the expiration of the agreement on April 15, 2011. On December 4, 2009, we entered into an amended and restated swap transaction confirmation with Wachovia Bank, N.A., pursuant to which we agreed to repay $5,982 on
December 7, 2009, which was a portion of the outstanding amount owed under the interest rate swap agreement, and the swap notional amount was reduced to $60,000. On December 7, 2009, our Company, Wachovia Bank, N.A. and JPMorgan Chase
Bank, N.A. entered into a novation confirmation pursuant to which Wachovia Bank, N.A. transferred its position under the revised swap to JPMorgan Chase Bank, N.A. The settlement dates for the revised swap occur on the 15th of each month
commencing December 15, 2009 through April 15, 2010 and thereafter quarterly on the 15th of each July, October, January and April until the expiration of the agreement on April 15, 2011. The swap agreement is not designated
as a hedge, and therefore is recorded at fair value at each balance sheet date, with the resulting changes in fair value charged or credited to interest expense in the accompanying Consolidated Statements of Income and Comprehensive Income each
period.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Our Company uses a fair value hierarchy that prioritizes observable and unobservable
inputs used to measure fair value into three broad levels, which are described below:

Level 1:Quoted prices
(unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3:Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs.

In determining fair value, our Company utilizes valuation techniques that maximize the use
of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

At April 3, 2010, the swap fair value was determined through the use of a model that considers various assumptions, including time
value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 from a third party bank. The fair value of the swap was a liability of $1,450 and $1,585 at April 3, 2010 and January 2,
2010, respectively and is recorded in the non-current portion of other liabilities in the accompanying Consolidated Balance Sheets with the corresponding charge to interest expense. During the first fiscal quarter of 2010, interest expense reflects
$387 related to the swap and a credit of $135 related to the change in the fair value of the swap. During the first fiscal quarter of 2009, interest expense reflected $1,492 related to the swap and a debit of $246 related to the change in the fair
value of the swap.

Our Company has foreign currency exchange forward contracts in place to reduce our risk related to
inventory purchases and foreign currency based accounts receivable. These contracts are not designated as hedges, and therefore, under current accounting standards are recorded at fair value at each balance sheet date, with the resulting change
charged or credited to selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.

The foreign currency exchange contracts in aggregated notional amounts in place to exchange United States Dollars at April 3, 2010
and January 2, 2010 were as follows:



|                                             |  |               |        |                 |      |              |  |                 |        |  |      |       
|-------------------------------------------- |  | ------------- | ------ | --------------- | ---- | ------------ |  | --------------- | ------ |  | ---- | ------
|                                             |  | April 3, 2010 |        | January 2, 2010
|                                             |  | U.S. Dollars  |        | ForeignCurrency |      | U.S. Dollars |  | ForeignCurrency
|Foreign Currency Exchange Forward Contracts: |  |               |        |                 |      |              |  |                 |        |  |      |       
|U.S. Dollars / Canadian Dollars              |  | $             | 32,163 |                 | Cdn$ | 32,404       |  | $               | 44,505 |  | Cdn$ | 46,579
|U.S. Dollars / Euros                         |  |               |       |                 |     |             |  |                 | 120    |  |     | 83    
|U.S. Dollars / British Pounds                |  |               |       |                 | £    |             |  |                 | 72     |  | £    | 45    

As of April 3, 2010
and January 2, 2010, the fair value of the foreign currency exchange forward contracts, using Level 2 inputs from a third party bank, represented a liability of approximately $2,113 and $1,837, respectively. Changes in the fair value of the
foreign currency exchange contracts are reflected in selling, general and administrative expenses each period.

The assets and
liabilities measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820 at April 3, 2010, were as follows:



|                                            |  |                                                           |   |                                           |   |                                        |  |   |  
|------------------------------------------- |  | --------------------------------------------------------- | - | ----------------------------------------- | - | -------------------------------------- |  | - | -
|                                            |  | Fair Value Measurements at Reporting Date Using          
|                                            |  | QuotedPrices
inActiveMarkets 
forIdenticalAssets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3)
|Assets:                                     |  |                                                           |   |                                           |   |                                        |  |   |  
|None                                        |  | $                                                         |  |                                           | $ |                                       |  | $ | 
|                                            |  |                                                           |   |                                           |   |                                        |  |   |  
|Liabilities:                                |  |                                                           |   |                                           |   |                                        |  |   |  
|Interest rate swap                          |  | $                                                         |  |                                           | $ | 1,450                                  |  | $ | 
|Foreign currency exchange forward contracts |  |                                                           |  |                                           |   | 2,113                                  |  |   | 
|                                            |  |                                                           |   |                                           |   |                                        |  |   |  
|Total                                       |  | $                                                         |  |                                           | $ | 3,563                                  |  | $ | 
|                                            |  |                                                           |   |                                           |   |                                        |  |   |  



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Fair Value of Financial Instruments

The carrying amounts reported in our Companys Consolidated Balance Sheets for Cash and cash equivalents, Accounts
receivable, net and Accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. The fair value amount of long-term debt under our Companys 9.75% Notes are based on
quoted market prices for the same or similar issues on borrowing rates available to our Company for loans with similar terms and average maturities.

The estimated fair values of the Companys long-term debt including accrued interest were as follows:



|                           |  |                |         |                 |   |                |  |           |         |  |   |        
|-------------------------- |  | -------------- | ------- | --------------- | - | -------------- |  | --------- | ------- |  | - | -------
|                           |  | April 3, 2010  |         | January 2, 2010
|                           |  | CarryingAmount |         | FairValue       |   | CarryingAmount |  | FairValue
|Financial liability:       |  |                |         |                 |   |                |  |           |         |  |   |        
|9.75% Senior Secured Notes |  | $              | 357,389 |                 | $ | 379,940        |  | $         | 348,654 |  | $ | 365,626

11. Equity-Based Employee
Compensation

On March 16, 2006, our Parent adopted the 2006 Equity Incentive Plan, or the Incentive Plan. Our Parent
amended the Incentive Plan in December 2009 to allow for certain new grants. The Incentive Plan provides for the issuance of Class B Common Units of our Parent, which are intended to be profits interests. Such units qualify as equity instruments of
our Parent. The holders of these units are entitled to share in the distribution of profits above a certain threshold, or the distribution threshold. For any particular such Unit, the distribution threshold is the fair value of a Class A Common
Unit of our Parent on the date of grant. Our Parent has made grants of these units pursuant to the Incentive Plan since its adoption. Generally, so long as the Unit holder is employed or remains a member of the board of managers of our Parent, these
units vest over time (generally a four-year period) or upon achievement of certain company performance goals. Subject to certain conditions, Units are also eligible to vest in the event of an initial public offering or change of control. In December
2009, our Parent issued new Class B Common Units and amended certain existing Class B Common Units, which, in each case, are eligible, subject to certain conditions, for additional distributions from our Parent in the event that certain company
performance goals are met through 2012. In addition, in December 2009, our Parent agreed to amend and restate certain existing Class B Common Units to revise the distribution threshold of such units to an amount commensurate with the then fair
market value of a Class A Common Unit. As of April 3, 2010, there were 105,152,751 Units authorized for grant pursuant to the Incentive Plan.

Our Company uses the Black-Scholes Option Pricing Model to determine the fair value of the Units granted, similar to an equity Stock
Appreciation Right or SAR. This model uses such factors as the market price of the underlying Units at date of issuance, a fair market value of $1.32 for Units issued during the first fiscal quarter of 2010 and the expected term of the Unit, which
is approximately four years, utilizing the simplified method. The weighted average grant date fair value of Units granted during the first fiscal quarter of 2010 amounted to $0.25. During the first fiscal quarter of 2009, no Units were granted.

During the fiscal quarter ended April 3, 2010, the following assumptions were used in the Black-Scholes Option Pricing
Model to value the Units:



|                        |  |                                    |  
|----------------------- |  | ---------------------------------- | -
|                        |  | Fiscal Quarter 
EndedApril 3, 2010 |  
|                       
|Expected term           |  | 4 years                            |  
|Dividend yield          |  | 0.0                                | %
|Forfeiture rate         |  | 7.7                                | %
|Risk-free interest rate |  | 0.15 to 0.22                       | %
|Expected volatility(1)  |  | 49.4                               | %



|(1) | Expected volatility is based upon a peer group of companies given no historical data for the Units.
|--- | ---------------------------------------------------------------------------------------------------

Our Company records compensation expense using the fair value of the Units granted with time vesting over the vesting service period on a
straight-line basis including those Units that are subject to graded vesting. Compensation expense for the performance based vesting Units is recognized when it becomes probable that the performance conditions will be met. As of April 3, 2010,
we have not recognized any compensation expense for the performance based vesting Units as it is not probable that the performance conditions will be met.



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Our Company recognized compensation expense, included in selling, general and
administrative expenses for its Units during the first fiscal quarters of 2010 and 2009 as follows:



|                            |  |                      |       |              |   |    
|--------------------------- |  | -------------------- | ----- | ------------ | - | ---
|                            |  | Fiscal Quarter Ended
|                            |  | April 3,2010         |       | April 4,2009
|Equity compensation expense |  | $                    | 1,160 |              | $ | 927
|                            |  |                      |       |              |   |    

As of April 3, 2010, there was $19,706 of
unrecognized compensation costs, net of actual and estimated forfeitures related to the Units. This was comprised of $6,168 related to time based vesting units and $13,538 related to the performance based vesting units. The unrecognized cost related
to the time based vesting units is expected to be amortized over a weighted average service period of approximately 2.5 years. The unrecognized cost related to the performance based vesting units will be recognized when it becomes probable that
the performance conditions will be met.

Our Companys Unit activity under the Incentive Plan for the first fiscal
quarter of 2010 is as follows:



|                               |  |                |   |  |                                          |     
|------------------------------ |  | -------------- | - |  | ---------------------------------------- | ----
|                               |  | Number ofUnits |   |  | Weighted AverageGrant DateExercise Price
|Outstanding at January 2, 2010 |  | 89,490,621     |   |  | $                                        | 1.46
|Granted                        |  | 7,773,653      |   |  | $                                        | 1.32
|Cancelled                      |  | (428,353       | ) |  | $                                        | 2.14
|Forfeited                      |  | (426,164       | ) |  | $                                        | 2.14
|                               |  |                |   |  |                                          |     
|Outstanding at April 3, 2010   |  | 96,409,757     |   |  | $                                        | 1.44
|                               |  |                |   |  |                                          |     
|Vested Units at April 3, 2010  |  | 23,262,003     |   |  | $                                        | 1.70
|                               |  |                |   |  |                                          |     

12. Warranty Obligations

The Company records a product warranty obligation at the time of sale based on the Companys historical experience. The Company
estimates its warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product warranty return rates, replacement product costs or
service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

The
following is a reconciliation of the changes in our Companys product warranty liability:



|                                            |  |                      |        |   |              |   |       |  
|------------------------------------------- |  | -------------------- | ------ | - | ------------ | - | ----- | -
|                                            |  | Fiscal Quarter Ended |       
|                                            |  | April 3,2010         |        |   | April 4,2009 |  
|Beginning of period                         |  | $                    | 3,242  |   |              | $ | 3,663 |  
|Warranty costs incurred during the period   |  |                      | (1,953 | ) |              |   | (991  | )
|Warranty expense recorded during the period |  |                      | 1,544  |   |              |   | 1,019 |  
|                                            |  |                      |        |   |              |   |       |  
|End of period                               |  | $                    | 2,833  |   |              | $ | 3,691 |  
|                                            |  |                      |        |   |              |   |       |  

13. Related Party Transactions

We, our Parent and certain of its other subsidiaries entered into management agreements with Fenway Partners, LLC and Fenway Partners
Resources, Inc., each an affiliate of Fenway Partners Capital Fund II, L.P., in September 2004. Pursuant to these management agreements, as subsequently amended, Fenway Partners, LLC and Fenway Partners Resources, Inc. provide advisory services
in connection with certain types of transactions and will be entitled to receive a fee equal to the greater of $1.0 million or 1.5% of the gross value of such transaction, plus reimbursement of fees and expenses incurred in connection with such
transactions. The management agreements include customary indemnification provisions in favor of these entities and their affiliates and have initial terms of ten years.



15



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



In connection with the acquisition of Easton in 2006, Easton and various affiliates of
James L. Easton (including Jas. D. Easton, Inc.) entered into various technology license and trademark license agreements with respect to certain intellectual property owned or licensed by Easton, including the Easton brand name. Pursuant to
these agreements, Easton has granted each of Jas D. Easton, Inc., James L. Easton Foundation, Easton Development, Inc. and Easton Sports Development Foundation a name license for use of the Easton name solely as part of their respective
company names. In addition, Easton has granted each of Easton Technical Products, Inc. and Hoyt Archery, Inc. a license to certain trademarks, including the Easton brand solely in connection with specific products or services, none of which
are currently competitive with our Companys products or services. Easton has also granted each of these entities a license to certain technology solely in connection with specific products and fields. Easton has also entered into a patent
license agreement with Easton Technical Products, Inc., which grants it a license to exploit the inventions disclosed in the patent solely within specific fields. Lastly, Easton entered into a trademark license agreement with Easton Technical
Products, Inc., which grants Easton a license to use certain trademarks solely in connection with specific products or services.

Our Company has entered into a right of first offer agreement with Jas. D. Easton, Inc. and Easton Technical Products, Inc. pursuant to
which our Company is to receive the opportunity to purchase Easton Technical Products, Inc. prior to any third party buyer. The term of the right of first offer agreement extends until the earliest of (i) March 16, 2016, (ii) the date
Easton Technical Products, Inc. no longer uses the name Easton, (iii) the effectiveness of any initial public offering by Easton Technical Products, Inc. and (iv) the consummation of any sale of such company or a controlling
interest therein effectuated in accordance with the terms of the right of first offer agreement.

Affiliates of Jas. D.
Easton, Inc. and James L. Easton own certain of the properties currently leased by Easton. Rent payments pursuant to such affiliate leases were $288 for both the first fiscal quarters of 2010 and 2009.

On October 1, 2004, Bell entered into a consulting agreement with Terry Lee, a member of the board of managers of our Parent.
Pursuant to the terms of the consulting agreement, Mr. Lee agreed to provide us and our affiliates with certain consulting services relating to Bell. In exchange for his services, Mr. Lee is entitled to annual compensation of $100. The
term of Mr. Lees consulting agreement is for one year and will automatically extend for additional one-year terms until our Company elects not to extend the agreement.

The Ontario Teachers Pension Plan Board, a member of our Parent, received reimbursement of out of pocket expenses of approximately
$210 in conjunction with expenses they incurred related to the Refinancing.

Effective August 2008, our Parent has agreed to
compensate Richard Wenz, a member of the board of managers of our Parent and the board of directors of our Company, for his services as Chair of our Companys Audit Committee. Mr. Wenz will be paid an annual compensation of $50 for his
services.

14. Supplemental Guarantor Condensed Financial Information

In September 2004, in connection with the acquisition of Bell, our Company (presented as issuer in the following tables) issued $140,000
of 8.375% Senior Subordinated Notes due 2012, or the Previous Notes. The Previous Notes were guaranteed by all of our domestic subsidiaries. In December 2009, in connection with the Refinancing, we issued the Notes. As part of the refinancing,
the Previous Notes were redeemed. The indenture governing the Notes contains certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, grant liens, sell assets and engage in certain other activities. The
Notes are guaranteed by all of our domestic subsidiaries, or Guarantors. Each subsidiary guarantor is wholly owned and the guarantees are full and unconditional and joint and several. All other subsidiaries of our Company, or Non-Guarantors, do not
guarantee the Notes.

The following condensed consolidating financial statements present the results of operations, financial
position and cash flows of (i) Issuer, (ii) Guarantors, (iii) Non-Guarantors and (iv) eliminations to arrive at the information for our Company on a consolidated basis for the first fiscal quarter of 2010 and the respective
comparable periods for fiscal 2009. Separate financial statements and other disclosures concerning the Guarantors are not presented because our management does not believe such information is material to investors. Therefore, each of the Guarantors
is combined in the presentation below.



16



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##### Table of Contents

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Condensed Consolidating Balance Sheet

April 3, 2010



|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|----------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                |  | Issuer |         |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|ASSETS                                          |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Current assets:                                 |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Cash and cash equivalents                       |  | $      | 6,956   |   |                       | $ | 8,515                     |  | $            | 13,388  |  | $            |         |   |  | $ | 28,859 
|Accounts receivable, net                        |  |        |        |   |                       |   | 202,022                   |  |              | 27,021  |  |              |         |   |  |   | 229,043
|Inventories, net                                |  |        |        |   |                       |   | 99,962                    |  |              | 19,336  |  |              |         |   |  |   | 119,298
|Prepaid expenses                                |  |        | 1,046   |   |                       |   | 5,638                     |  |              | 584     |  |              |         |   |  |   | 7,268  
|Deferred taxes                                  |  |        |        |   |                       |   | 12,607                    |  |              |        |  |              |         |   |  |   | 12,607 
|Other current assets                            |  |        |        |   |                       |   | 8,622                     |  |              | 3,917   |  |              |         |   |  |   | 12,539 
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total current assets                            |  |        | 8,002   |   |                       |   | 337,366                   |  |              | 64,246  |  |              |         |   |  |   | 409,614
|Property, plant and equipment, net              |  |        | 20,934  |   |                       |   | 25,665                    |  |              | 804     |  |              |         |   |  |   | 47,403 
|Deferred financing fees, net                    |  |        | 16,504  |   |                       |   |                          |  |              |        |  |              |         |   |  |   | 16,504 
|Investments and intercompany receivables        |  |        | 325,457 |   |                       |   | 140,661                   |  |              | 50,969  |  |              | (517,087 | ) |  |   |       
|Intangible assets, net                          |  |        |        |   |                       |   | 281,727                   |  |              | 5,750   |  |              |         |   |  |   | 287,477
|Goodwill                                        |  |        | 16,195  |   |                       |   | 185,375                   |  |              | 5,191   |  |              |         |   |  |   | 206,761
|Other assets                                    |  |        |        |   |                       |   | 1,249                     |  |              | 35      |  |              |         |   |  |   | 1,284  
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total assets                                    |  | $      | 387,092 |   |                       | $ | 972,043                   |  | $            | 126,995 |  | $            | (517,087 | ) |  | $ | 969,043
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY            |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Current liabilities:                            |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Revolving credit facility                       |  | $      | 78,963  |   |                       | $ |                          |  | $            |        |  | $            |         |   |  | $ | 78,963 
|Current portion of capital lease obligations    |  |        |        |   |                       |   | 22                        |  |              |        |  |              |         |   |  |   | 22     
|Accounts payable                                |  |        |        |   |                       |   | 51,642                    |  |              | 4,994   |  |              |         |   |  |   | 56,636 
|Accrued expenses                                |  |        | 14,877  |   |                       |   | 35,876                    |  |              | 7,184   |  |              |         |   |  |   | 57,937 
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                       |  |        | 93,840  |   |                       |   | 87,540                    |  |              | 12,178  |  |              |         |   |  |   | 193,558
|Long-term debt, less current portion            |  |        | 345,824 |   |                       |   |                          |  |              |        |  |              |         |   |  |   | 345,824
|Capital lease obligations, less current portion |  |        |        |   |                       |   | 96                        |  |              |        |  |              |         |   |  |   | 96     
|Deferred taxes                                  |  |        |        |   |                       |   | 42,104                    |  |              |        |  |              |         |   |  |   | 42,104 
|Other noncurrent liabilities                    |  |        |        |   |                       |   | 13,631                    |  |              | 7,433   |  |              |         |   |  |   | 21,064 
|Long-term intercompany payables                 |  |        |        |   |                       |   | 438,882                   |  |              | 38,754  |  |              | (477,636 | ) |  |   |       
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total liabilities                               |  |        | 439,664 |   |                       |   | 582,253                   |  |              | 58,365  |  |              | (477,636 | ) |  |   | 602,646
|Total stockholders equity                      |  |        | (52,572 | ) |                       |   | 389,790                   |  |              | 68,630  |  |              | (39,451  | ) |  |   | 366,397
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity      |  | $      | 387,092 |   |                       | $ | 972,043                   |  | $            | 126,995 |  | $            | (517,087 | ) |  | $ | 969,043
|                                                |  |        |         |   |                       |   |                           |  |              |         |  |              |          |   |  |   |        



17



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##### Table of Contents

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Condensed Consolidating Balance Sheet

January 2, 2010



|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|----------------------------------------------- |  | ------ | ------- | --------------------- | - | ------------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | -------
|                                                |  | Issuer |         | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|ASSETS                                          |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Current assets:                                 |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Cash and cash equivalents                       |  | $      | 9,347   |                       | $ | 10,229                    |  | $            | 13,742  |  | $            |         |   |  | $ | 33,318 
|Accounts receivable, net                        |  |        |        |                       |   | 184,411                   |  |              | 24,492  |  |              |         |   |  |   | 208,903
|Inventories, net                                |  |        |        |                       |   | 110,478                   |  |              | 17,437  |  |              |         |   |  |   | 127,915
|Prepaid expenses                                |  |        | 964     |                       |   | 6,382                     |  |              | 576     |  |              |         |   |  |   | 7,922  
|Deferred taxes                                  |  |        |        |                       |   | 12,607                    |  |              |        |  |              |         |   |  |   | 12,607 
|Other current assets                            |  |        |        |                       |   | 7,567                     |  |              | 3,138   |  |              |         |   |  |   | 10,705 
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total current assets                            |  |        | 10,311  |                       |   | 331,674                   |  |              | 59,385  |  |              |         |   |  |   | 401,370
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Property, plant and equipment, net              |  |        | 19,032  |                       |   | 26,572                    |  |              | 764     |  |              |         |   |  |   | 46,368 
|Deferred financing fees, net                    |  |        | 17,255  |                       |   |                          |  |              |        |  |              |         |   |  |   | 17,255 
|Investments and intercompany receivables        |  |        | 380,365 |                       |   | 91,416                    |  |              | 43,649  |  |              | (515,430 | ) |  |   |       
|Intangible assets, net                          |  |        |        |                       |   | 284,996                   |  |              | 5,816   |  |              |         |   |  |   | 290,812
|Goodwill                                        |  |        | 16,195  |                       |   | 182,155                   |  |              | 5,191   |  |              |         |   |  |   | 203,541
|Other assets                                    |  |        |        |                       |   | 1,265                     |  |              | 34      |  |              |         |   |  |   | 1,299  
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total assets                                    |  | $      | 443,158 |                       | $ | 918,078                   |  | $            | 114,839 |  | $            | (515,430 | ) |  | $ | 960,645
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|                                                |  |        |         |                       |  
|LIABILITIES AND STOCKHOLDERS EQUITY            |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Current liabilities:                            |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Revolving credit facility                       |  | $      | 70,000  |                       | $ |                          |  | $            |        |  | $            |         |   |  | $ | 70,000 
|Current portion of capital lease obligations    |  |        |        |                       |   | 22                        |  |              |        |  |              |         |   |  |   | 22     
|Accounts payable                                |  |        |        |                       |   | 67,192                    |  |              | 3,718   |  |              |         |   |  |   | 70,910 
|Accrued expenses                                |  |        | 6,851   |                       |   | 34,096                    |  |              | 8,309   |  |              |         |   |  |   | 49,256 
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total current liabilities                       |  |        | 76,851  |                       |   | 101,310                   |  |              | 12,027  |  |              |         |   |  |   | 190,188
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Long-term debt, less current portion            |  |        | 345,715 |                       |   |                          |  |              |        |  |              |         |   |  |   | 345,715
|Capital lease obligations, less current portion |  |        |        |                       |   | 102                       |  |              |        |  |              |         |   |  |   | 102    
|Deferred taxes                                  |  |        |        |                       |   | 42,104                    |  |              |        |  |              |         |   |  |   | 42,104 
|Other noncurrent liabilities                    |  |        |        |                       |   | 11,266                    |  |              | 7,433   |  |              |         |   |  |   | 18,699 
|Long-term intercompany payables                 |  |        |        |                       |   | 447,305                   |  |              | 30,331  |  |              | (477,636 | ) |  |   |       
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total liabilities                               |  |        | 422,566 |                       |   | 602,087                   |  |              | 49,791  |  |              | (477,636 | ) |  |   | 596,808
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total stockholders equity                      |  |        | 20,592  |                       |   | 315,991                   |  |              | 65,048  |  |              | (37,794  | ) |  |   | 363,837
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        
|Total liabilities and stockholders equity      |  | $      | 443,158 |                       | $ | 918,078                   |  | $            | 114,839 |  | $            | (515,430 | ) |  | $ | 960,645
|                                                |  |        |         |                       |   |                           |  |              |         |  |              |          |   |  |   |        



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##### Table of Contents

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Condensed Consolidating Statement of Income

Fiscal Quarter Ended April 3, 2010



|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        
|-------------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------------------------- |  | ------------ | ------ |  | ------------ | ------- | - |  | - | -------
|                                                               |  | Issuer |        |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  | Eliminations |        |  | Consolidated
|Net sales                                                      |  | $      |       |   |                       | $ | 184,269                   |  | $            | 17,805 |  | $            | (7,970  | ) |  | $ | 194,104
|Cost of sales                                                  |  |        |       |   |                       |   | 123,409                   |  |              | 13,903 |  |              | (7,970  | ) |  |   | 129,342
|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        
|Gross profit                                                   |  |        |       |   |                       |   | 60,860                    |  |              | 3,902  |  |              |        |   |  |   | 64,762 
|Selling, general and administrative expenses                   |  |        | 9,692  |   |                       |   | 37,236                    |  |              | 2,783  |  |              |        |   |  |   | 49,711 
|Amortization of intangibles                                    |  |        |       |   |                       |   | 3,335                     |  |              |       |  |              |        |   |  |   | 3,335  
|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        
|(Loss) income from operations                                  |  |        | (9,692 | ) |                       |   | 20,289                    |  |              | 1,119  |  |              |        |   |  |   | 11,716 
|Interest expense, net                                          |  |        | 11,423 |   |                       |   | 88                        |  |              | 1      |  |              |        |   |  |   | 11,512 
|Share of net income (loss) of subsidiaries under equity method |  |        | 21,237 |   |                       |   | 1,062                     |  |              |       |  |              | (22,299 | ) |  |   |       
|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        
|Income (loss) before income taxes                              |  |        | 122    |   |                       |   | 21,263                    |  |              | 1,118  |  |              | (22,299 | ) |  |   | 204    
|Income tax expense                                             |  |        |       |   |                       |   | 26                        |  |              | 56     |  |              |        |   |  |   | 82     
|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        
|Net income (loss)                                              |  | $      | 122    |   |                       | $ | 21,237                    |  | $            | 1,062  |  | $            | (22,299 | ) |  | $ | 122    
|                                                               |  |        |        |   |                       |   |                           |  |              |        |  |              |         |   |  |   |        

Condensed Consolidating Statement of Income

Fiscal Quarter Ended April 4, 2009



|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        
|-------------------------------------------------------------- |  | ------ | ------ | - | --------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------
|                                                               |  | Issuer |        |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated
|Net sales                                                      |  | $      |       |   |                       | $ | 178,212                   |  | $ | 18,144       |   |  | $            | (11,505 | ) |  | $ | 184,851
|Cost of sales                                                  |  |        |       |   |                       |   | 121,014                   |  |   | 15,167       |   |  |              | (11,505 | ) |  |   | 124,676
|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        
|Gross profit                                                   |  |        |       |   |                       |   | 57,198                    |  |   | 2,977        |   |  |              |        |   |  |   | 60,175 
|Selling, general and administrative expenses                   |  |        | 7,274  |   |                       |   | 37,170                    |  |   | 2,451        |   |  |              |        |   |  |   | 46,895 
|Amortization of intangibles                                    |  |        |       |   |                       |   | 3,352                     |  |   |             |   |  |              |        |   |  |   | 3,352  
|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        
|(Loss) income from operations                                  |  |        | (7,274 | ) |                       |   | 16,676                    |  |   | 526          |   |  |              |        |   |  |   | 9,928  
|Interest expense, net                                          |  |        | 8,152  |   |                       |   | 187                       |  |   | (12          | ) |  |              |        |   |  |   | 8,327  
|Share of net income (loss) of subsidiaries under equity method |  |        | 16,401 |   |                       |   | 439                       |  |   |             |   |  |              | (16,840 | ) |  |   |       
|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        
|Income (loss) before income taxes                              |  |        | 975    |   |                       |   | 16,928                    |  |   | 538          |   |  |              | (16,840 | ) |  |   | 1,601  
|Income tax expense                                             |  |        |       |   |                       |   | 527                       |  |   | 99           |   |  |              |        |   |  |   | 626    
|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        
|Net income (loss)                                              |  | $      | 975    |   |                       | $ | 16,401                    |  | $ | 439          |   |  | $            | (16,840 | ) |  | $ | 975    
|                                                               |  |        |        |   |                       |   |                           |  |   |              |   |  |              |         |   |  |   |        



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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(Unaudited and amounts in thousands, except as specified)



Condensed Consolidating Statement of Cash Flows

Fiscal Quarter Ended April 3, 2010



|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                                        |  | Issuer |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Cash flows from operating activities:                                                   |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                                                       |  | $      | 122     |   |                       | $ | 21,237  |                           |  | $ | 1,062        |   |  | $            | (22,299 | ) |  | $ | 122     |  
|Non-cash adjustments                                                                    |  |        | (15,928 | ) |                       |   | 119     |                           |  |   | 2,472        |   |  |              | 22,299  |   |  |   | 8,962   |  
|Changes in operating assets and liabilities, net of effects from purchase of businesses |  |        | 9,907   |   |                       |   | (20,338 | )                         |  |   | (3,935       | ) |  |              |        |   |  |   | (14,366 | )
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash (used in) provided by operating activities                                     |  |        | (5,899  | ) |                       |   | 1,018   |                           |  |   | (401         | ) |  |              |        |   |  |   | (5,282  | )
|Cash flows from investing activities:                                                   |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Purchases of property, plant and equipment                                              |  |        | (3,492  | ) |                       |   | (976    | )                         |  |   | (105         | ) |  |              |        |   |  |   | (4,573  | )
|Purchase of businesses, net of cash acquired                                            |  |        |        |   |                       |   | (1,750  | )                         |  |   |             |   |  |              |        |   |  |   | (1,750  | )
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash used in investing activities                                                   |  |        | (3,492  | ) |                       |   | (2,726  | )                         |  |   | (105         | ) |  |              |        |   |  |   | (6,323  | )
|Cash flows from financing activities:                                                   |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Payments on capital lease obligations                                                   |  |        |        |   |                       |   | (6      | )                         |  |   |             |   |  |              |        |   |  |   | (6      | )
|Proceeds from revolving credit facility, net                                            |  |        | 7,000   |   |                       |   |        |                           |  |   |             |   |  |              |        |   |  |   | 7,000   |  
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) financing activities                                     |  |        | 7,000   |   |                       |   | (6      | )                         |  |   |             |   |  |              |        |   |  |   | 6,994   |  
|Effect of exchange rate changes on cash and cash equivalents                            |  |        |        |   |                       |   |        |                           |  |   | 152          |   |  |              |        |   |  |   | 152     |  
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Decrease in cash and cash equivalents                                                   |  |        | (2,391  | ) |                       |   | (1,714  | )                         |  |   | (354         | ) |  |              |        |   |  |   | (4,459  | )
|Cash and cash equivalents, beginning of period                                          |  |        | 9,347   |   |                       |   | 10,229  |                           |  |   | 13,742       |   |  |              |        |   |  |   | 33,318  |  
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Cash and cash equivalents, end of period                                                |  | $      | 6,956   |   |                       | $ | 8,515   |                           |  | $ | 13,388       |   |  | $            |        |   |  | $ | 28,859  |  
|                                                                                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  

Condensed Consolidating Statement of Cash Flows

Fiscal Quarter Ended April 4, 2009



|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                             |  | Issuer |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Cash flows from operating activities:                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                            |  | $      | 975     |   |                       | $ | 16,401  |                           |  | $ | 439          |   |  | $            | (16,840 | ) |  | $ | 975     |  
|Non-cash adjustments                                         |  |        | (10,125 | ) |                       |   | 8,296   |                           |  |   | (6,234       | ) |  |              | 16,840  |   |  |   | 8,777   |  
|Changes in operating assets and liabilities                  |  |        | 5,102   |   |                       |   | (22,390 | )                         |  |   | (5,778       | ) |  |              |        |   |  |   | (23,066 | )
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash (used in) provided by operating activities          |  |        | (4,048  | ) |                       |   | 2,307   |                           |  |   | (11,573      | ) |  |              |        |   |  |   | (13,314 | )
|Cash flows from investing activities:                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Purchases of property, plant and equipment                   |  |        | (1,959  | ) |                       |   | (1,690  | )                         |  |   | (26          | ) |  |              |        |   |  |   | (3,675  | )
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash used in investing activities                        |  |        | (1,959  | ) |                       |   | (1,690  | )                         |  |   | (26          | ) |  |              |        |   |  |   | (3,675  | )
|Cash flows from financing activities:                        |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Payments on capital lease obligations                        |  |        |        |   |                       |   | (6      | )                         |  |   |             |   |  |              |        |   |  |   | (6      | )
|Payments on senior term notes                                |  |        | (788    | ) |                       |   |        |                           |  |   |             |   |  |              |        |   |  |   | (788    | )
|Proceeds from senior secured credit facility, net            |  |        | 3,000   |   |                       |   |        |                           |  |   |             |   |  |              |        |   |  |   | 3,000   |  
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) financing activities          |  |        | 2,212   |   |                       |   | (6      | )                         |  |   |             |   |  |              |        |   |  |   | 2,206   |  
|Effect of exchange rate changes on cash and cash equivalents |  |        |        |   |                       |   |        |                           |  |   | (504         | ) |  |              |        |   |  |   | (504    | )
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|(Decrease) increase in cash and cash equivalents             |  |        | (3,795  | ) |                       |   | 611     |                           |  |   | (12,103      | ) |  |              |        |   |  |   | (15,287 | )
|Cash and cash equivalents, beginning of period               |  |        | 14,829  |   |                       |   | 9,823   |                           |  |   | 16,649       |   |  |              |        |   |  |   | 41,301  |  
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  
|Cash and cash equivalents, end of period                     |  | $      | 11,034  |   |                       | $ | 10,434  |                           |  | $ | 4,546        |   |  | $            |        |   |  | $ | 26,014  |  
|                                                             |  |        |         |   |                       |   |         |                           |  |   |              |   |  |              |         |   |  |   |         |  



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our consolidated financial statements and the related notes, included
elsewhere in this Form 10-Q.

Unless otherwise indicated, all references in this Form 10-Q to Easton-Bell, we, us, our,
and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and
Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively. Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which
100% of the issued and outstanding voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This quarterly report includes forward-looking statements. All statements other than statements of historical fact included in this report
that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial
condition, results of operations, plans, objectives, future performance and business. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such
as anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with any discussion of the timing or
nature of future operating or financial performance or other events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. The factors
mentioned in our discussion in this quarterly report, as well as the risks outlined under Risk Factors in our 2009 Annual Report on Form 10-K, will be important in determining future results.

These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be
no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Investors should not place undue reliance on any of our forward-looking statements because they are subject to a variety of
risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Furthermore, any forward-looking statement speaks only as of the date on which it is made and except as required by law, we undertake
no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

OVERVIEW

We are a
leading designer, developer and marketer of branded sports equipment, protective products and related accessories. We offer products that are used in baseball, softball, ice hockey, football, lacrosse and other team sports, and in various action
sports, including cycling, snowsports, powersports and skateboarding. Sports enthusiasts at all levels, from recreational participants to professional athletes, choose our products for their innovative designs and advanced materials, which provide a
performance or protective advantage. Throughout our history, our focus on research and development has enabled us to introduce attractive and innovative products, many of which have set new standards for performance in their respective sports. As a
result, we are able to consistently enter new product categories and expand and improve our existing product lines.

We currently sell a broad range of products primarily under four well-known
brandsEaston® (baseball, softball and ice hockey equipment, apparel and cycling components),
Bell® (cycling and action sports helmets and accessories),
Giro® (cycling and snowsports helmets and accessories) and
Riddell® (football equipment and reconditioning services). Together, these brands represent the vast
majority of our revenues. We believe that our brands are among the most recognized in the sporting goods industry as demonstrated by our leading market share in many of our core categories.

We sell our products through diverse channels of distribution including: (i) specialty retailers that cater to sports enthusiasts
who typically seek premium products at the highest performance levels, (ii) national and regional full-line sporting goods retailers and distributors, (iii) institutional buyers such as educational institutions and athletic leagues and
(iv) mass retailers that offer a focused selection of products at entry-level and mid-level price points. As a function of our flexible, low fixed-cost production model, we are able to leverage the expertise of our vendor partners in order to
reduce the overhead and capital intensity generally associated with manufacturing.



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We have two reportable segments: Team Sports and Action Sports. Our Team Sports segment
primarily consists of football, baseball, softball, ice hockey and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment primarily consists of helmets, equipment, components and
accessories for cycling, snowsports and powersports and fitness related products.

How We Assess the Performance of Our
Business

In assessing the performance of our business, we consider a variety of performance and financial measures.
The key measures for determining how our business is performing are net sales growth by segment, gross profit and selling, general and administrative expenses.

Net Sales

Net sales reflect our revenues from the sale of our products and services less returns, discounts and allowances. It also includes
licensing income that we collect. Substantially all of Eastons activity and all of Riddells activity is reflected in our Team Sports segment, which primarily consists of football, baseball, softball, ice hockey and other team sports
products and reconditioning services related to certain of these products. All of Bells activity, including the Bellbrand and theGiro brand and the Eastonbranded cycling products are reflected in our Action
Sports segment, which primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products.

Cost of Sales

Cost of sales includes the direct cost of purchased merchandise, inbound freight, factory operating costs (including depreciation),
warranty costs, distribution and shipping expenses, including outbound freight. Cost of sales generally changes as we incur higher or lower costs from our vendors, experience better or worse productivity in our factories and increase or decrease
inventory levels as certain fixed overhead is included in inventory. A shift in the composition of our net sales can also result in higher or lower cost of sales as our gross profit margins differ by product. We review our inventory levels on an
ongoing basis to identify slow-moving materials and products and generally reserve for excess and obsolete inventory. If we misjudge the market for our products, we may be faced with significant excess inventory and need to allow for higher charges
for excess and obsolete inventory. Such charges have reduced our gross profit in some prior periods and may have a material adverse impact depending on the amount of the charge.

Gross Profit

Gross profit is equal to our net sales minus our cost of sales. Gross profit margin measures gross profit as a percentage of our net
sales. We state inventories at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead costs. Our gross profit may not be fully comparable to other sporting goods companies, as we
include costs related to distribution and freight in cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include all operating expenses not included in cost of sales,
primarily, selling, marketing, administrative payroll, research and development, product liability, insurance and non-manufacturing lease expense, as well as certain depreciation and amortization. Other than selling expenses, these expenses
generally do not vary proportionally with net sales. As a result, SG&A expenses as a percentage of net sales are usually higher in the winter season than the summer season due to the seasonality of net sales.

Factors Affecting our Business

Outlook

Although other factors will likely impact us, including some we do not foresee, we believe our performance for the remainder of 2010 may
be affected by the following:



| |  |  | Economic Climate. The uncertain worldwide economic environment could cause the reported financial information not to be necessarily
indicative of future operating results or of future financial condition. The current economic environment continues to affect our business in a number of direct and indirect ways including: lower net sales from slowing consumer demand for our
products; tighter inventory management by retailers; reduced profit margins due to pricing pressures and an unfavorable sales mix due to a higher concentration of sales of mid to lower price point products; changes in currency exchange rates; lack
of credit availability, particularly for specialty retailers; and business disruptions due to difficulties experienced by suppliers and customers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Retail Market Conditions. As a result of the slowing worldwide economic conditions, the retail market for sports equipment has slowed and
is extremely competitive, with strong pressure from retailers for lower prices. We have experienced the effect of consumers trading down price points and delaying certain discretionary purchases, which has resulted in retailers reluctance to place
orders for inventory in advance of selling seasons. Further, institutional customers have reduced or deferred purchases due to budget constraints. These trends may continue to have a negative impact on our businesses. We continue to address the
retail environment through our focus on innovation and product development and emphasis on multiple price points.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Operations and Manufacturing. We intend to continue to streamline distribution, logistics and manufacturing operations, bring uniform
methodologies to inventory management, optimize transportation, improve manufacturing efficiencies and provide a high level of service to our customers. Over a several year period we have transitioned production of certain products from our
facilities to third party vendors in Asia and other cost efficient sources of labor. However, as a result of our transition of the production of products from our own facilities to third party suppliers, we may become more vulnerable to higher
levels of product defects, as well as increased sourced product costs and our ability to mitigate such cost increases may be reduced.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest Expense and Debt Repayment. In connection with the refinancing of our Companys then-existing indebtedness, or the
Refinancing, we entered into a $250.0 million senior secured asset-based revolving credit facility, subject to availability under each of a United States and Canadian borrowing base, which amount, subject to certain conditions, may be increased to
allow borrowings of up to $300.0 million, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Subsidiary Guarantors (as defined therein), with the lenders party thereto, or the ABL Facility. As of April 3,
2010, the outstanding principal balance under the ABL Facility was $79.0 million. In addition, we have $350.0 million of outstanding principal amount of our Senior Secured Notes due December 2016, or the Notes. Because our existing indebtedness
requires that we use a substantial portion of our cash flows to service debt payments, the amount of available cash flows we will have for working capital, capital expenditures, acquisitions and other general corporate purposes could be limited.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Seasonality. Our business is subject to seasonal fluctuation. Sales of cycling products, baseball and softball products and accessories
occur primarily during the warm weather months. Sales of football equipment and reconditioning services are driven primarily by football buying patterns, where orders begin at the end of the school football season (December) and run through to the
start of the next season (August). Shipments of football products and performance of reconditioning services reach a low point during the football season. Sales of ice hockey equipment are driven by ice hockey buying patterns with orders shipping in
late spring for fall play. Seasonal impacts are increasingly mitigated by the increase in snowsports and powersports sales which, to a certain extent, counter the cycling, baseball, softball and football seasons.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements
which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates estimates, including those related to reserves, intangible assets, income taxes and contingencies. Management
bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition. Sales of products are recognized when title passes and risks of ownership have been transferred to our
customer, which usually is upon shipment. Title generally passes to the dealer or distributor upon shipment from our facilities and the risk of loss upon damage, theft or destruction of the product in transit is the responsibility of the dealer,
distributor or third party carrier. Reconditioning revenue is recognized upon the completion of services. Allowances for sales returns, discounts and allowances, including volume-based customer incentives, are estimated and recorded concurrent with
the recognition of the sale. Royalty income, which is not material, is recorded when earned based upon contract terms with licensees which provide for royalties.



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Accounts Receivable and Allowances. We review the financial condition and
creditworthiness of potential customers prior to contracting for sales and record accounts receivable at their face value upon completion of the sale to our customers. We record an allowance for doubtful accounts based upon managements
estimate of the amount of uncollectible receivables. This estimate is based upon prior experience including historic losses as well as current economic conditions. The estimates can be affected by changes in the retail industry, customer credit
issues and customer bankruptcies. Since we cannot predict future changes in the retail industry and financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates. If the financial condition of
our customers were to deteriorate, resulting in their inability to make payments, a larger allowance might be required. In the event we determine that a smaller or larger allowance is appropriate, we would record a credit or a charge to selling,
general and administrative expense in the period in which such a determination is made. Uncollectible receivables are written-off once management has determined that further collection efforts will not be successful. We generally do not require
collateral from our customers.

Inventories. Inventories are stated at the lower of cost (determined on a
first-in, first-out basis) or market and include material, labor and factory overhead. Provisions for excess and obsolete inventories are based on managements assessment of slow-moving and obsolete inventory on a product-by-product basis. We
record adjustments to our inventory for estimated obsolescence or a decrease in market value equal to the difference between the cost of the inventory and the estimated market value, based on market conditions. These adjustments are estimates, which
could vary significantly, either favorably or unfavorably, from actual experience if future economic conditions, levels of consumer demand, customer inventory levels or competitive conditions differ from our expectations. If changes in economic or
market conditions result in reductions in the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which we made such a determination and record a corresponding charge to cost of
sales.

Long-lived and intangible assets. We follow the current accounting guidance relating to goodwill and
trademarks, whereby assets which have indefinite lives are not amortized, but rather are reviewed periodically for indications of impairment. The carrying values of all long-lived assets, excluding goodwill and indefinite lived intangibles, are
reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable (such as a significant decline in sales, earnings or cash flows or material adverse changes in the
business climate) in accordance with current accounting guidelines. An impairment loss is recognized when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized
balance of the asset. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets with their associated carrying value. If the carrying value of the asset or group of assets exceeds
expected cash flows (undiscounted and without interest charges), an impairment loss would be recognized to the extent that the carrying value exceeds the fair value. The estimate of future cash flows is based upon, among other things, certain
assumptions about expected future operating performance. These estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, changes in general economic conditions, customer requirements and our business model.
For goodwill, on an annual basis or more frequently if certain conditions exist, the fair values of our reporting units are compared with their carrying values and an impairment loss is recognized if the carrying value of a reporting unit exceeds
fair value to the extent that the carrying value of goodwill exceeds its fair value. We generally base our measurement of the fair value of a reporting unit on the present value of future discounted cash flows. The discounted cash flows model
indicates the fair value of each reporting unit based on the present value of the cash flows that we expect each reporting unit to generate in the future. Our significant estimates in the discounted cash flows model include our weighted average cost
of capital, long-term rate of growth and profitability of each reporting unit, and working capital effects. The growth and profitability rates are based on historical rates specific to the markets in which we operate and cost increases that are
reflective of anticipated inflation (deflation) adjusted for any anticipated future cost savings. The fair value of the reporting units could change significantly due to changes in estimates of future cash flows as a result of changing economic
conditions, our business environment and as a result of changes in the discount rate used.

The Companys goodwill
impairment analysis performed as of January 2, 2010 indicated that none of the reporting units were at risk of failing the goodwill impairment test. If reductions in estimated undiscounted or discounted cash flows occur in the future, and such
reductions indicate that an impairment loss has occurred, an impairment loss will be recorded in the period that such a determination is made.

We amortize certain definite-lived acquired intangible assets on a straight-line basis over estimated useful lives of seven to nineteen
years for patents, seven to twenty years for customer relationships, four to five years for licensing and other agreements and seven years for finite-lived trademarks and tradenames. Deferred financing costs are being amortized by the straight-line
method over the term of the related debt, which does not vary significantly from an effective interest method.



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Income Taxes. We follow the provisions of SFAS No. 109,
Accounting for Income Taxes, which was codified into Topic 740, Income Taxes.Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities (excluding non-deductible goodwill) using enacted tax rates in
effect for the years in which the differences are expected to become recoverable or payable. A portion of our deferred tax assets relate to net operating loss carryforwards. The realization of these assets is based upon estimates of future taxable
income. Changes in economic conditions and the business environment and our assumptions regarding realization of deferred tax assets can have a significant effect on income tax expense, and may result in the recognition of an additional income tax
expense in the period such a change occurs.

Product Liability Litigation Matters and Contingencies. We are
subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured or reconditioned by
us or our subsidiaries and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot currently be determined with certainty. We estimate the uninsured portion of probable future
costs and expenses related to claims, as well as incurred but not reported claims and record an accrual in this amount on our consolidated balance sheets. These accruals are based on managements best estimate of probable losses and defense
costs anticipated to result from such claims, from within a range of potential outcomes, based on available information, including an analysis provided by an independent actuarial services firm, previous claims history and available information on
alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from these estimates, and may result in an increase or decrease in expense in the period such an uncertainty is resolved.

Derivative Instruments and HedgingActivity. We account for all derivatives on the balance sheet as an asset or
liability measured at fair value and changes in fair values are recognized currently in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is
deferred in stockholders equity as a component of accumulated other comprehensive income. The deferred items are recognized in the period the derivative contract is settled. We enter into foreign currency exchange forward contracts to reduce
our risk related to inventory purchases. We also have an interest rate swap agreement. As of April 3, 2010, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the changes in fair value in the
Consolidated Statements of Income and Comprehensive Income.

Warranty Liability. We record a warranty obligation
at the time of sale based on our historical experience. We estimate our warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product
warranty return rates, material usage or service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

Equity-Based Compensation. Effective January 1, 2006, we adopted accounting standards which requires us to expense
Class B Common Units of our Parent, or Units, granted under our Parents 2006 Equity Incentive Plan, or the Incentive Plan, based upon the fair market value of the Units on the date of grant. We are amortizing the fair market value of
Units granted over the vesting period of the Units and we are using the prospective method of adoption. For Units issued prior to January 1, 2006, we accounted for these Units using the intrinsic value method in accordance with previous
accounting standards.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items included in our
Consolidated Statements of Income and Comprehensive Income:



|                                             |  |                       |       |               |       |   |              |   |               |  |       |  
|-------------------------------------------- |  | --------------------- | ----- | ------------- | ----- | - | ------------ | - | ------------- |  | ----- | -
|                                             |  | Fiscal Quarter Ended  |      
|                                             |  | April 3,2010          |       | % ofNet Sales |       |   | April 4,2009 |   | % ofNet Sales | 
|                                             |  | (Dollars in millions) |      
|Net sales                                    |  | $                     | 194.1 |               | 100.0 | % |              | $ | 184.9         |  | 100.0 | %
|Cost of sales                                |  |                       | 129.3 |               | 66.6  | % |              |   | 124.7         |  | 67.4  | %
|                                             |  |                       |       |               |       |   |              |   |               |  |       |  
|Gross profit                                 |  |                       | 64.8  |               | 33.4  | % |              |   | 60.2          |  | 32.6  | %
|Selling, general and administrative expenses |  |                       | 49.8  |               | 25.7  | % |              |   | 47.0          |  | 25.4  | %
|Amortization of intangibles                  |  |                       | 3.3   |               | 1.7   | % |              |   | 3.3           |  | 1.8   | %
|                                             |  |                       |       |               |       |   |              |   |               |  |       |  
|Income from operations                       |  | $                     | 11.7  |               | 6.0   | % |              | $ | 9.9           |  | 5.4   | %
|                                             |  |                       |       |               |       |   |              |   |               |  |       |  



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Net Sales

The following table sets forth for the periods indicated, net sales for each of our segments:



|              |  |                      |       |                       |   |        |   |   |      |   |  |      |   
|------------- |  | -------------------- | ----- | --------------------- | - | ------ | - | - | ---- | - |  | ---- | --
|              |  | Fiscal Quarter Ended |      
|              |  | April 
3,2010        |       | April 
4,2009         |   | Change |  
|              |  |                      |       | $                     |   |        | % |  
|              |  |                      |       | (Dollars in millions) |   |        |   |  
|Team Sports   |  | $                    | 119.4 |                       | $ | 107.8  |   | $ | 11.6 |   |  | 10.8 | % 
|Action Sports |  |                      | 74.7  |                       |   | 77.1   |   |   | (2.4 | ) |  | (3.1 | )%
|              |  |                      |       |                       |   |        |   |   |      |   |  |      |   
|              |  | $                    | 194.1 |                       | $ | 184.9  |   | $ | 9.2  |   |  | 5.0  | % 
|              |  |                      |       |                       |   |        |   |   |      |   |  |      |   

Net sales in Team Sports and Action Sports during the first quarter of 2010 were positively
impacted by favorable foreign currency exchange rate movements of $2.6 million and $0.9 million, respectively. On a constant currency basis, net sales in Team Sports increased by $9.0 million, or 8.3%, and net sales in Action Sports
decreased by $3.3 million, or 4.3%. Team Sports net sales increased primarily due to higher sales of baseball, softball and football equipment, apparel and favorable foreign currency exchange rates, while ice hockey equipment sales were relatively
flat. Action Sports net sales decreased, primarily due to lower sales of high price point cycling helmets and accessories, partially offset by higher sales of low price point cycling helmets, snowsports helmets, fitness related products and
favorable foreign currency exchange rates.

Cost of Sales

The following table sets forth for the periods indicated, cost of sales for each of our segments:



|              |  |                      |       |                       |      |   |              |   |               |  |      |  
|------------- |  | -------------------- | ----- | --------------------- | ---- | - | ------------ | - | ------------- |  | ---- | -
|              |  | Fiscal Quarter Ended |      
|              |  | April 3,2010         |       | % ofNet Sales         |      |   | April 4,2009 |   | % ofNet Sales | 
|              |  |                      |       | (Dollars in millions) |      |   |             
|Team Sports   |  | $                    | 75.3  |                       | 63.1 | % |              | $ | 68.8          |  | 63.8 | %
|Action Sports |  |                      | 54.0  |                       | 72.3 | % |              |   | 55.9          |  | 72.5 | %
|              |  |                      |       |                       |      |   |              |   |               |  |      |  
|              |  | $                    | 129.3 |                       | 66.6 | % |              | $ | 124.7         |  | 67.4 | %
|              |  |                      |       |                       |      |   |              |   |               |  |      |  

The decrease in Team Sports cost of sales as a percentage of net sales primarily relates to a
favorable mix due to a higher concentration of sales of higher price point products, lower sourced product costs, improved manufacturing efficiencies and favorable foreign currency exchange rates, partially offset by a non-recurring supplier credit
which benefitted the first fiscal quarter of 2009.

The decrease in Action Sports cost of sales as a percentage of net sales
primarily relates to lower sourced product costs, lower closeout sales and inventory write-offs of mass channel products and favorable foreign currency exchange rates, partially offset by higher royalties due to a sales increase in licensed cycling
helmets and higher inventory write-offs related to specialty channel products.

Gross Profit

The following table sets forth for the periods indicated, gross profit for each of our segments:



|              |  |                      |      |                       |      |   |              |   |               |  |      |  
|------------- |  | -------------------- | ---- | --------------------- | ---- | - | ------------ | - | ------------- |  | ---- | -
|              |  | Fiscal Quarter Ended |     
|              |  | April 3,2010         |      | % ofNet Sales         |      |   | April 4,2009 |   | % ofNet Sales | 
|              |  |                      |      | (Dollars in millions) |      |   |             
|Team Sports   |  | $                    | 44.1 |                       | 36.9 | % |              | $ | 39.0          |  | 36.2 | %
|Action Sports |  |                      | 20.7 |                       | 27.7 | % |              |   | 21.2          |  | 27.5 | %
|              |  |                      |      |                       |      |   |              |   |               |  |      |  
|              |  | $                    | 64.8 |                       | 33.4 | % |              | $ | 60.2          |  | 32.6 | %
|              |  |                      |      |                       |      |   |              |   |               |  |      |  

The increase in Team Sports gross margin primarily relates to a favorable mix due to a higher
concentration of sales of higher price point products, lower sourced product costs, improved manufacturing efficiencies and favorable foreign currency exchange rates, partially offset by a non-recurring supplier credit which benefitted the first
fiscal quarter of 2009.

The increase in Action Sports gross margin primarily relates to lower sourced product costs, lower
closeout sales and inventory write-offs of mass channel products and favorable foreign currency exchange rates, partially offset by higher royalties due to a sales increase in licensed cycling helmets and higher inventory write-offs related to
specialty channel products.



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Selling, General and Administrative Expenses

SG&A expenses increased $2.8 million or 6.0% for the first fiscal quarter of 2010, as compared to the first fiscal quarter of 2009.
The increase primarily relates to higher variable selling expenses of $1.0 million related to the increase in net sales, higher depreciation of $0.7 million related to information technology capital expenditures, $0.3 million of expense related to
the mark-to-market adjustment for foreign currency exchange forward contracts, higher marketing expenses of $0.3 million, higher research and development expenses of $0.3 million and higher equity compensation expense of $0.2 million, partially
offset by $0.4 million of lower expenditures on sales support and events.

Amortization of Intangibles

Amortization of intangibles expense of $3.3 million did not vary for the first fiscal quarters of 2010 and 2009.

Interest Expense

Interest expense increased $3.2 million or 38.2% during the first fiscal quarter of 2010, as compared to the first fiscal quarter of 2009.
The increase relates to higher borrowing costs incurred subsequent to the Refinancing which negatively impacted the first fiscal quarter of 2010 as compared to the first fiscal quarter of 2009, partially offset by the reduced cost resulting from the
reduction in the notional value of the interest rate swap agreement as part of the Refinancing.

Income Tax Expense

Income tax expense was $0.1 million for the first fiscal quarter of 2010, as compared to an income tax expense of $0.6
million for the first fiscal quarter of 2009. The effective tax rate was 40.2% for the first fiscal quarter of 2010, as compared to 39.1% for the first fiscal quarter of 2009. For the first fiscal quarter of 2010, the difference between the
effective rate and the statutory rate is primarily attributable to the permanent difference for equity compensation expense and state income taxes. For the first fiscal quarter of 2009, the difference between the effective rate and the statutory
rate is primarily attributable to the permanent difference for equity compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

Our financing requirements are subject to variations due to seasonal changes in working capital levels. Internally
generated funds are supplemented when necessary from external sources, primarily from the ABL Facility. The cash generated from operating activities, the issuance of the Notes offered on December 3, 2009, and the availability under the new ABL
Facility are our principal sources of liquidity. Each are described below. Based on our current level of operations and anticipated cost savings and operational improvements, we believe our cash flow from operations, available cash and available
borrowings under the ABL Facility will be adequate to meet our liquidity needs for at least the next twelve months. We cannot guarantee that the business will generate sufficient cash flow from operations, that currently anticipated cost savings and
operating improvements will be realized on schedule or that future borrowings will be available to us under the ABL Facility in an amount sufficient to enable us to repay our indebtedness, including our Notes, or to fund our other liquidity needs.
In addition, upon the occurrence of certain events, such as a change of control of our Company, we could be required to repay or refinance our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including
the ABL Facility or our Notes, on commercially reasonable terms or at all.

Our ability to make payments to fund working
capital, capital expenditures, debt service, strategic acquisitions, joint ventures and investments will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, regulatory and other factors
that are beyond our control. Future indebtedness may impose various restrictions and covenants on us which could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business
opportunities.

Our debt to capitalization ratio, which is total debt divided by the sum of total debt and stockholders
equity, was 53.7% at April 3, 2010, as compared to 53.3% at January 2, 2010. The increase was primarily attributable to the increase in debt, partially offset by the positive effect of the foreign currency translation adjustment on
stockholders equity.

From time to time, we review and will continue to review acquisition opportunities as well as
changes in the capital markets. If we were to consummate a significant acquisition or elect to take advantage of favorable opportunities in the capital markets, we may supplement availability or revise the terms under the ABL Facility or complete
public or private offerings of debt securities. If the capital markets present favorable opportunities to purchase our own debt, we may do so.



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9.750% Senior Secured Notes

In December 2009, in connection with the Refinancing, we issued the Notes. Interest is payable on the Notes semi-annually on June 1
and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make-whole premium. We may redeem all or
any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. We may redeem all or any of the Notes on or after December 1, 2013 and
prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. We may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the
principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, we may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition,
during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest.
At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash
proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior
to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated
maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the
Notes contains certain restrictions that limits our ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and
subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates, and (9) transfer
all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires our Company to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of
control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

Subject to certain exceptions, the indenture governing the Notes permits us and our restricted subsidiaries to incur additional
indebtedness, including senior indebtedness and secured indebtedness. In addition, the indenture will not limit the amount of indebtedness that our direct or indirect parent entities, including EB Sports and RBG may incur.

The ABL Facility

Concurrently with the issuance of the Notes in December 2009, we entered into a $250.0 million senior secured asset-based revolving
credit facility, subject to availability under each of a United States and Canadian borrowing base, which amount may be increased to allow borrowings of up to $300.0 million, subject to certain conditions, together with certain of our
subsidiaries as Canadian Borrowers (as defined therein) or Subsidiary Guarantors (as defined therein), with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, Bank of America, N.A., and Wachovia
Capital Finance Corporation (New England), as co-syndication agents, and U.S. Bank National Association, as documentation agent, or the ABL Facility. The unused portion of the ABL Facility available (subject to borrowing base availability) is to be
drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs.

Certain
of our wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition,
our wholly-owned Canadian subsidiaries guarantee the obligation of the Canadian borrowings under the Canadian sub-facility. Additionally, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to
substantially all of our personal property as collateral for our obligations (and related guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts
receivable, inventory, other personal property relating to such inventory and accounts receivable and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a
first-priority basis. The obligations of our Canadian subsidiaries that are borrowers of the Canadian sub-facility under the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by
substantially all of the assets of our wholly-owned Canadian subsidiaries and by our and our domestic subsidiaries assets on the same basis as borrowings by us are secured under the ABL Facility.



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The interest rates per annum applicable to the loans under the ABL Facility, other than
swingline loans and protective advances, equal an applicable margin percentage plus, at our option, (1) in the case of U.S. dollar denominated loans, a U.S. base rate or LIBOR, and (2) in the case of Canadian dollar denominated
loans, a Canadian base rate or CDOR. Swingline loans and protective advances bear interest at the U.S. base rate for U.S. dollar denominated loans and the Canadian base rate for Canadian dollar denominated loans. The applicable margin
percentage for the ABL Facility is initially 3.75% for LIBOR or CDOR and 2.75% for the base rate, which is subject to adjustment to 3.25% for LIBOR or CDOR and 2.25% for the base rate based upon our average excess borrowing availability as
calculated under the credit agreement for the ABL Facility. In addition to paying interest on outstanding principal under the ABL Facility, we are required to pay a commitment fee, in relation to the unutilized commitments, which is initially
0.75% per annum and may be adjusted to 0.50% based upon our Companys utilization of the ABL Facility (increasing when utilization is low and decreasing when utilization is high). We are also required to pay customary letter of credit
fees.

The ABL Facility requires that if excess gross availability is less than the greater of a specified percentage of the
gross borrowing base and a specified dollar amount, we must comply with a minimum fixed charge coverage ratio test. In addition, the ABL Facility includes negative covenants that, subject to significant exceptions, limit our ability and the ability
of RBG and its subsidiaries, including the Company, to, among other things (1) incur additional debt, (2) create liens, (3) transfer all or substantially all of their assets or enter into merger or consolidation transactions,
(4) change its business, (5) make investments, loans, advances, guarantees and acquisitions, (6) transfer or sell assets, (7) enter into sale and leaseback transactions, (8) enter swap agreements, (9) enter into
transactions with affiliates, and (10) enter into agreements that restrict dividends from subsidiaries.

Sources and
Uses of Our Cash

Cash used in operating activities was $5.3 million for the first fiscal quarter of 2010, as compared to
$13.3 million of cash used in the first fiscal quarter of 2009. The decrease in cash used in operating activities primarily reflects increased accrued expenses and reduced inventory, partially offset by higher accounts receivable and lower accounts
payable.

We had $216.1 million in working capital as of April 3, 2010, as compared to $211.2 million at January 2,
2010. The $4.9 million increase in working capital primarily results from the increase in accounts receivable and lower accounts payable, partially offset by the increase in revolver borrowings, higher accrued expenses and the decrease in cash and
inventory.

Cash used in investing activities was $6.3 million for the first fiscal quarter of 2010, as compared to $3.7
million used in the first fiscal quarter of 2009. The primary reason for the difference is that the first fiscal quarter of 2010 reflects $4.6 million related to the purchase of property, plant and equipment for information technology and enhancing
new and existing products and $1.8 million for the purchase of businesses, whereas the first fiscal quarter of 2009 reflects $3.7 million related to the purchase of property, plant and equipment for the implementation of our ERP system and enhancing
new and existing products.

Cash provided by financing activities was $7.0 million for the first fiscal quarter of 2010, as
compared to $2.2 million of cash provided by financing activities in the first fiscal quarter of 2009. The primary reason for the difference is that the first fiscal quarter of 2010 reflects $7.0 million of proceeds from borrowings on the revolving
credit facility, whereas the first fiscal quarter of 2009 reflects $3.0 million of net borrowings on the revolving credit facility and an $0.8 million payment on the old senior term notes.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Foreign Currency Risk

Our net sales and expenses are predominantly denominated in United States dollars. In fiscal year 2009, approximately 86.8% of our
net sales were in United States dollars, with substantially all of the remaining sales in Canadian dollars, British pounds, Euros and Taiwan dollars. In addition, we purchase a number of materials abroad, including finished goods and raw
materials from third parties. A significant amount of these purchases were from vendors in Asia, the majority of which were located in mainland China. We may decide to increase our international sourcing in the future. As a result, we have exposure
to currency exchange risks.

Most of what we purchase in Asia are finished goods rather than raw materials. Because we
generally purchase these goods in United States dollars, changes in the value of the United States dollar can have a more immediate effect on the cost of our purchases. If we are unable to increase our prices to a level sufficient to cover
any increased costs, it could adversely affect our margins.

We enter into foreign currency exchange forward contracts to
reduce the risks related to inventory purchases and foreign currency based accounts receivable denominated in foreign currencies. At April 3, 2010, there were foreign currency forward contracts in effect for the purchase of United States $32.2
million aggregated notional amounts, or approximately Cdn $32.4 million. In the future, if we feel our foreign currency exposure has increased, we may consider entering into additional hedging transactions to help mitigate that risk.



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Considering both the anticipated cash flows from firm purchase commitments and anticipated
purchases for the next quarter and the foreign currency derivative instruments in place at year-end, a hypothetical 10% weakening of the United States dollar relative to other currencies would not have a material adverse effect on our expected
second quarter 2010 earnings or cash flows. This analysis is dependent on actual purchases during the next quarter occurring within 90% of budgeted forecasts. In addition, the effect of the hypothetical change in exchange rates ignores the effect
this movement may have on other variables, including competitive risk. If it were possible to quantify this competitive impact, the results could well be different than the sensitivity effects analysis described. In addition, it is unlikely
currencies would uniformly strengthen or weaken relative to the United States dollar. In reality, some currencies may weaken while others may strengthen. Moreover, any movement of the United States dollar relative to other currencies and
its impact on materials costs would likely be partially offset by the impact on net sales due to our sales internationally and the conversion of those international sales into United States dollars.

Interest Rate Risk

We are exposed to market risk from changes in interest rates that can affect our operating results and overall financial condition. In
connection with our refinancing in December 2009, we entered into a new $250.0 million ABL Facility. As of April 3, 2010, the outstanding principal balance under this facility was $79.0 million. The interest rates on the ABL Facility are based
on (1) the prime rate or LIBOR in the case of U.S. dollar denominated loans and (2) the prime rate or CDOR in the case of Canadian dollar denominated loans, in each case plus an applicable margin percentage. A hypothetical 10% increase
from the current interest rate applicable to the ABL Facility balance of $79.0 million would have resulted in approximately a $0.1 million increase in interest expense for the quarter ended April 3, 2010.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

Evaluation of Disclosure Controls and Procedures

As of April 3, 2010, the end of the fiscal period covered by this quarterly report, we performed an evaluation, under the supervision
and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15
of the Securities Exchange Act of 1934, as amended or the Exchange Act. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that our disclosure controls and procedures are effective to ensure that
information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the period covered by this report that materially affected, or
is reasonably likely to affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

We are
currently involved in various suits and claims, including various product liability suits and claims, all of which constitute ordinary, routine litigation incidental to the business. For example, a judgment was recently rendered against us in a
patent infringement proceeding relating to certain of our skate boots. However, we do not believe that such judgment or any other claims or actions, either individually or in the aggregate, are material to our business or financial condition.



|Item 1A. | Risk Factors
|-------- | ------------

There have
been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended January 2, 2010. The materialization of any risks and uncertainties identified in Forward-Looking Statements contained in this report
together with those previously disclosed in the Form 10-K or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See Part I, Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations  Forward-Looking Statements and Information in this report.



|Item 6. | Exhibits
|------- | --------



| | (a) | The following exhibits are filed or incorporated by reference as part of this Form 10-Q. Each management contract or compensation plan required to be filed as an
exhibit is identified by an asterisk (*):
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|               |  |                                                                                                                                                                                               |  |                                                                                    
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------
|Exhibit
Number |  | Description of Exhibit                                                                                                                                                                        |  | The filings referenced for
incorporation by reference are:                         
|               |  |                                                                                                                                                                                              
|10.1*          |  | Employment Agreement with Chris Zimmerman                                                                                                                                                     |  | Exhibit 10.7 to the Companys Registration Statement on Form S-4, filed May 5, 2010
|               |  |                                                                                                                                                                                              
|31.1           |  | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                    |  | Filed herewith                                                                     
|               |  |                                                                                                                                                                                              
|31.2           |  | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                    |  | Filed herewith                                                                     
|               |  |                                                                                                                                                                                              
|32.1           |  | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |  | Filed herewith                                                                     



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SIGNATURES

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



|                    |  |  |  |  |  |                                      
|------------------- |  |  |  |  |  | -------------------------------------
|                    |  |  |  |  |  | EASTON-BELL SPORTS, INC.             
|                    |  |  |  |  |  | Registrant                           
|                    |  |  | 
|Dated: May 18, 2010 |  |  |  |  |  | /s/    PAUL E.
HARRINGTON            
|                    |  |  |  |  |  | Paul E. Harrington                   
|                    |  |  |  |  |  | President and Chief Executive Officer
|                    |  |  |  |  |  | (Principal Executive Officer)        
|                    |  |  | 
|Dated: May 18, 2010 |  |  |  |  |  | /s/    MARK A.
TRIPP                 
|                    |  |  |  |  |  | Mark A. Tripp                        
|                    |  |  |  |  |  | Chief Financial Officer              
|                    |  |  |  |  |  | (Principal Financial Officer)        



32