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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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



FOR THE QUARTERLY PERIOD ENDED APRIL 2, 2005



OR



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



COMMISSION FILE NUMBER 333-123927



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RIDDELL BELL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|DELAWARE                                                       |  | 20-1636283                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



6225 North State Hwy
161, Suite 300

Irving, Texas 75038

(Address of principal executive offices) (Zip Code)



REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE (469) 417-6700



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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 is an accelerated filer (as defined in Exchange
Act Rule 12b-2).    Yes ̈No  x.



As of April 2, 2005, 100 shares of common stock of Riddell Bell Holdings, Inc. were
outstanding.



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##### Table of Contents

RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES



INDEX



|                               |  |         |  |                                                                                                        |  |     
|------------------------------ |  | ------- |  | ------------------------------------------------------------------------------------------------------ |  | ----
|                               |  |         |  |                                                                                                        |  | Page
|PART I.
FINANCIAL INFORMATION: |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Financial Statements                                                                                   |  |     
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Balance Sheets as of April 2, 2005 and December 31, 2004                        |  | 1   
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Operations for the Quarter Ended April 2, 2005 and March 31, 2004 |  | 2   
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Cash Flows for the Quarter Ended April 2, 2005 and March 31, 2004 |  | 3   
|                               |  |         | 
|                               |  |         |  | Notes to Condensed Consolidated Financial Statements                                                   |  | 4   
|                               |  |         | 
|                               |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                  |  | 11  
|                               |  |         | 
|                               |  | Item 3. |  | Quantitative and Qualitative Disclosure about Market Risk                                              |  | 16  
|                               |  |         | 
|                               |  | Item 4. |  | Controls and Procedures                                                                                |  | 16  
|                               | 
|PART II.
OTHER INFORMATION:    |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Legal Proceedings                                                                                      |  | 18  
|                               |  |         | 
|                               |  | Item 6. |  | Exhibits                                                                                               |  | 18  
|                               | 
|SIGNATURES                     |  | 19     



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##### Table of Contents

PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



|                                                                                                                                            |  |               |             |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ------- | -
|                                                                                                                                            |  | April 2, 2005 |             |   | December 31,2004 |  
|ASSETS                                                                                                                                      |  |               | (unaudited) |   |                  |   |         |  
|Current assets:                                                                                                                             |  |               |             |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                   |  | $             | 441         |   |                  | $ | 1,429   |  
|Accounts receivable, net                                                                                                                    |  |               | 86,780      |   |                  |   | 66,373  |  
|Inventories, net                                                                                                                            |  |               | 57,500      |   |                  |   | 49,643  |  
|Deferred taxes                                                                                                                              |  |               | 14,414      |   |                  |   | 14,210  |  
|Other current assets                                                                                                                        |  |               | 10,388      |   |                  |   | 10,947  |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total current assets                                                                                                                        |  |               | 169,523     |   |                  |   | 142,602 |  
|Property, plant and equipment, net                                                                                                          |  |               | 19,949      |   |                  |   | 20,469  |  
|Intangible assets, net                                                                                                                      |  |               | 182,945     |   |                  |   | 185,059 |  
|Goodwill                                                                                                                                    |  |               | 101,544     |   |                  |   | 101,544 |  
|Other assets                                                                                                                                |  |               | 22,131      |   |                  |   | 20,902  |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total assets                                                                                                                                |  | $             | 496,092     |   |                  | $ | 470,576 |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                        |  |               |             |   |                  |   |         |  
|Current liabilities:                                                                                                                        |  |               |             |   |                  |   |         |  
|Current portion of long-term debt                                                                                                           |  | $             | 1,181       |   |                  | $ | 1,184   |  
|Accounts payable                                                                                                                            |  |               | 21,671      |   |                  |   | 19,693  |  
|Accrued expenses                                                                                                                            |  |               | 33,640      |   |                  |   | 33,066  |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total current liabilities                                                                                                                   |  |               | 56,492      |   |                  |   | 53,943  |  
|                                                                                                                                            |  |              
|Long-term debt, less current portion                                                                                                        |  |               | 271,877     |   |                  |   | 248,914 |  
|Other noncurrent liabilities                                                                                                                |  |               | 41,778      |   |                  |   | 42,247  |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total liabilities                                                                                                                           |  |               | 370,147     |   |                  |   | 345,104 |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Stockholders Equity:                                                                                                                       |  |               |             |   |                  |   |         |  
|Common stock; $.01 par value, 100 shares authorized, 100 shares issued and outstanding at April 2, 2005 and December 31, 2004,
respectively |  |               |            |   |                  |   |        |  
|Additional paid-in capital                                                                                                                  |  |               | 139,462     |   |                  |   | 139,004 |  
|Retained deficit                                                                                                                            |  |               | (13,570     | ) |                  |   | (13,739 | )
|Accumulated other comprehensive income                                                                                                      |  |               | 53          |   |                  |   | 207     |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total stockholders equity                                                                                                                  |  |               | 125,945     |   |                  |   | 125,472 |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  
|Total liabilities and stockholders equity                                                                                                  |  | $             | 496,092     |   |                  | $ | 470,576 |  
|                                                                                                                                            |  |               |             |   |                  |   |         |  



See accompanying notes
to condensed consolidated financial statements.



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RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands)



|                                             |  |               |        |   |               |   |       
|-------------------------------------------- |  | ------------- | ------ | - | ------------- | - | ------
|                                             |  | Quarter Ended
|                                             |  | April 2, 2005 |        |   | March 31,2004
|Net sales                                    |  | $             | 87,233 |   |               | $ | 28,214
|Cost of sales                                |  |               | 55,971 |   |               |   | 16,314
|                                             |  |               |        |   |               |   |       
|Gross profit                                 |  |               | 31,262 |   |               |   | 11,900
|                                             |  |              
|Selling, general and administrative expenses |  |               | 23,815 |   |               |   | 8,874 
|Amortization of intangibles                  |  |               | 2,114  |   |               |   | 657   
|                                             |  |               |        |   |               |   |       
|Income from operations                       |  |               | 5,333  |   |               |   | 2,369 
|Interest expense, net                        |  |               | 5,090  |   |               |   | 1,855 
|                                             |  |               |        |   |               |   |       
|Income before income taxes                   |  |               | 243    |   |               |   | 514   
|                                             |  |              
|Income tax provision                         |  |               | 74     |   |               |   | 206   
|                                             |  |               |        |   |               |   |       
|Net income                                   |  |               | 169    |   |               |   | 308   
|                                             |  |              
|Other comprehensive (loss) income            |  |               |        |   |               |   |       
|Foreign currency translation adjustment      |  |               | (154   | ) |               |   |      
|                                             |  |               |        |   |               |   |       
|Comprehensive income                         |  | $             | 15     |   |               | $ | 308   
|                                             |  |               |        |   |               |   |       



See accompanying notes
to condensed consolidated financial statements.



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RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)



|                                                                                         |  |               |         |   |               |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------ | -
|                                                                                         |  | Quarter Ended |        
|                                                                                         |  | April 2, 2005 |         |   | March 31,2004 |  
|Cash flows from operating activities:                                                    |  |               |         |   |               |   |        |  
|Net income                                                                               |  | $             | 169     |   |               | $ | 308    |  
|Adjustments to reconcile net income to net cash used in operating activities:            |  |               |         |   |               |   |        |  
|Depreciation and amortization                                                            |  |               | 3,394   |   |               |   | 1,172  |  
|Deferred debt issuance costs amortization                                                |  |               | 470     |   |               |   | 331    |  
|Accrual of PIK interest expense                                                          |  |               |        |   |               |   | 153    |  
|Variable stock compensation expense                                                      |  |               | 458     |   |               |   | 116    |  
|Deferred tax (benefit) provision                                                         |  |               | (204    | ) |               |   | 205    |  
|Changes in operating assets and liabilities, net of effects from purchase of businesses: |  |               |         |   |               |   |        |  
|Accounts receivable, net                                                                 |  |               | (20,407 | ) |               |   | (7,052 | )
|Inventories                                                                              |  |               | (7,857  | ) |               |   | (1,903 | )
|Other current assets and noncurrent assets                                               |  |               | (1,139  | ) |               |   | 306    |  
|Accounts payable                                                                         |  |               | 1,978   |   |               |   | 34     |  
|Accrued expenses                                                                         |  |               | 574     |   |               |   |       |  
|Other current liabilities and noncurrent liabilities                                     |  |               | (469    | ) |               |   | 1,461  |  
|                                                                                         |  |               |         |   |               |   |        |  
|Net cash used in operating activities                                                    |  |               | (23,033 | ) |               |   | (4,869 | )
|                                                                                         |  |               |         |   |               |   |        |  
|Cash flows from investing activities:                                                    |  |               |         |   |               |   |        |  
|Purchase of property, plant and equipment                                                |  |               | (761    | ) |               |   | (199   | )
|Purchase of businesses, net of cash acquired                                             |  |               |        |   |               |   | (1,252 | )
|                                                                                         |  |               |         |   |               |   |        |  
|Net cash used in investing activities                                                    |  |               | (761    | ) |               |   | (1,451 | )
|                                                                                         |  |               |         |   |               |   |        |  
|Cash flows from financing activities:                                                    |  |               |         |   |               |   |        |  
|Payments on senior term loan                                                             |  |               | (275    | ) |               |   |       |  
|Payments on capital lease obligations                                                    |  |               | (33     | ) |               |   | (58    | )
|Proceeds from revolving credit facility                                                  |  |               | 83,168  |   |               |   | 3,220  |  
|Payments on revolving credit facility                                                    |  |               | (59,900 | ) |               |   |       |  
|                                                                                         |  |               |         |   |               |   |        |  
|Net cash provided by financing activities                                                |  |               | 22,960  |   |               |   | 3,162  |  
|                                                                                         |  |               |         |   |               |   |        |  
|Effect of exchange rates on cash and cash equivalents                                    |  |               | (154    | ) |               |   |       |  
|Decrease in cash and cash equivalents                                                    |  |               | (988    | ) |               |   | (3,158 | )
|                                                                                         |  |               |         |   |               |   |        |  
|Cash and cash equivalents at beginning of period                                         |  |               | 1,429   |   |               |   | 3,672  |  
|                                                                                         |  |               |         |   |               |   |        |  
|Cash and cash equivalents at end of period                                               |  | $             | 441     |   |               | $ | 514    |  
|                                                                                         |  |               |         |   |               |   |        |  



See accompanying notes
to condensed consolidated financial statements.



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RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited and in thousands except as specified)



1. BASIS OF PRESENTATION



The condensed consolidated financial statements of Riddell Bell Holdings, Inc. and subsidiaries (the Company or RBH) included
herein have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Companys financial position, results of operations and cash flows at the dates and for the
periods presented. These condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements and notes thereto included in the Companys Registration Statement on Form S-4 (Reg. No.
333-123927) for the year ended December 31, 2004. Certain reclassifications of previously reported financial information were made to conform to the current presentation. Results for interim periods are not necessarily indicative of the results for
the year.



In fiscal year 2005, the Company changed its
reporting periods for operational purposes from calendar quarterly periods to 13-week periods ending on the Saturday nearest to the last day of each quarter. As a result, the Companys first quarter of fiscal year 2005 ended on April 2, 2005.
The Company believes that there is no material difference between the 2005 and 2004 reporting periods and that the results of both periods are comparable except for the effects of any acquisition in those periods.



2. ACQUISITIONS



On August 11, 2004, Riddell Holdings, LLC, the Company (then known as RSG Holdings, LLC) and Bell Acquisition Corp., its
wholly-owned subsidiary, entered into a merger agreement with Bell Sports Corp. (Bell Sports). On September 30, 2004, Bell Acquisition Corp. was merged with and into Bell Sports, and Bell Sports continued as a direct, wholly-owned
subsidiary. For purposes of this quarterly report, the merger and the related financing transactions are referred to as the Transactions.



The Transactions were financed by an equity investment of $69.1 million in Riddell Holdings, LLC by an investor group led by Fenway Partners Capital Fund
II, L.P. and certain members of management, the borrowing by the Company of $110.0 million under a new seven-year term loan facility and $5.0 million of borrowings under a new $50 million six-year revolving loan facility, and the issuance by the
Company of $140.0 million aggregate principal amount of its 8.375% senior subordinated notes due 2012. Proceeds of these financing arrangements were used to pay the merger consideration, refinance existing indebtedness of Riddell Sports Group, Inc.
(Riddell Sports) and Bell Sports, and pay transaction costs and expenses.



Bell Sports is a leading global designer, developer and marketer of helmets for bicycling and action sports in the world, and of bicycle accessories in the United States. The acquisition of Bell Sports provided the
Company with the opportunity to expand its business and become the leading designer, developer and marketer of head protection equipment and related accessories for numerous athletic and recreational activities. The acquired assets and liabilities
consisted primarily of inventories, accounts receivable, property, plant and equipment, technology, tradenames, trademarks, customer relationships and patents for helmets, child carriers, and other accessories. The results of operations for the Bell
Sports acquisition have been included in the Companys Condensed Consolidated Financial Statements from the date of acquisition. The Bell Sports acquisition was accounted for in accordance with SFAS No. 141, Business Combinations,
and accordingly, the Company has allocated the purchase price to the assets acquired and the liabilities assumed based on a preliminary estimate of fair values as of the acquisition date. This allocation is subject to adjustment and will be
completed in 2005. The Company recorded approximately $57.5 million of goodwill and approximately $126.6 million of other identifiable intangible assets such as tradenames, trademarks, technology and related patents, and customer relationship
intangibles as part of the purchase price allocation.



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Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



The following table presents the preliminary allocation of the acquisition cost, including professional fees and other related acquisition costs, to the
assets acquired and liabilities assumed, based upon their fair value:



|                                                                                                                                     |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | - | -------- | -
|Net purchase price including cost of the transaction                                                                                 |  | $ | 242,925  |  
|Add:                                                                                                                                 |  |   |          |  
|Liabilities assumed (mainly accounts payable and accrued expenses)                                                                   |  |   | 49,684   |  
|Less:                                                                                                                                |  |   |          |  
|Current assets                                                                                                                       |  |   | (101,080 | )
|Property, plant and equipment                                                                                                        |  |   | (13,906  | )
|Other assets                                                                                                                         |  |   | (182     | )
|Trademarks                                                                                                                           |  |   | (62,419  | )
|Patents                                                                                                                              |  |   | (32,496  | )
|Customer relationships                                                                                                               |  |   | (31,700  | )
|Deferred tax assets relating to estimated value of tax net operating loss                                                            |  |   | (49,178  | )
|Net deferred tax liabilities relating to differences in the financial statements and the tax basis of certain assets and
liabilities |  |   | 55,837   |  
|                                                                                                                                     |  |   |          |  
|Excess of cost over net assets acquired (goodwill)                                                                                   |  | $ | 57,485   |  
|                                                                                                                                     |  |   |          |  



The following pro
forma data summarizes the results of operations for the quarter ended March 31, 2004 as if the Bell Sports acquisition had occurred at January 1, 2004. The unaudited pro forma information has been prepared for comparative purposes only and does not
purport to represent what the results of operations of the Company actually would have been had the transaction occurred on the date indicated or what the results of operations may be in any future period.



|           |  |                              |       
|---------- |  | ---------------------------- | ------
|           |  | Quarter ended March 31, 2004
|Net sales  |  | $                            | 84,609
|Net income |  |                              | 1,291 



3. RESTRUCTURING AND OTHER
INFREQUENT EXPENSES



During the first quarter of 2005, the
Company announced and initiated a restructuring plan associated with managements decision to implement actions to reduce the Companys overall cost structure and to drive sustainable improvements in operating and financial performance.
The Company commenced the consolidation and integration of several facilities. As part of the restructuring plan, the Company announced the closure of its manufacturing operations located in Chicago, Illinois. All manufacturing at the Chicago
location will cease during the second quarter of 2005. Manufacturing operations previously undertaken at the Chicago facility will be relocated to existing facilities in Elyria, Ohio and Rantoul, Illinois. The Company has signed a contingent
contract for the sale of the Chicago facility. The sale of the facility is scheduled to be complete before the end of 2005 and is expected to estimated net proceeds of approximately $2.1 million. The closure of this facility is consistent with the
Companys strategy to leverage economies of scale within its operating facilities. The following table summarizes the components of the restructuring initiated during the first quarter of 2005 and accounted for under SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities:



|                             |  |                   |     |   |                      |   |      |       |  |   |      |  
|---------------------------- |  | ----------------- | --- | - | -------------------- | - | ---- | ----- |  | - | ---- | -
|                             |  | EmployeeSeverance |     |   | FacilityClosureCosts |   |      | Total | 
|First quarter 2005 provision |  | $                 | 567 |   |                      | $ | 181  |       |  | $ | 748  |  
|Cash activity                |  |                   | (49 | ) |                      |   | (181 | )     |  |   | (230 | )
|                             |  |                   |     |   |                      |   |      |       |  |   |      |  
|Balances as of April 2, 2005 |  | $                 | 518 |   |                      | $ |     |       |  | $ | 518  |  
|                             |  |                   |     |   |                      |   |      |       |  |   |      |  





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##### Table of Contents

Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



Expected restructuring costs relate to severance costs accrued per the Companys severance policy for the termination of 80 employees. As of April 2,
2005, 20 employees have been terminated.Certain infrequent expenses incurred relate to the transfer of raw material and work in process inventory to ongoing operating facilities and other facility exit costs. Total cash restructuring costs
associated with the plan are expected to be approximately $2.0 million to $3.0 million. Costs of approximately $0.5 million accrued as of April 2, 2005 are expected to be paid during 2005.



4. GOODWILL AND OTHER INTANGIBLE ASSETS



The Companys acquired intangible assets are as follows:



|                               |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  
|------------------------------ |  | ---------------------- | ------- | ----------------------- | ----------------- | ------ | -------------------- |  | ----------------------- | ------- |  | - | ------ | -
|                               |  | April 2, 2005          |         |                         | December 31, 2004 |       
|                               |  | Gross Carrying Amounts |         | AccumulatedAmortization |                   |        | GrossCarryingAmounts |  | AccumulatedAmortization |        
|Amortized intangible assets:   |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  
|Trademarks and trade names     |  | $                      | 1,702   |                         | $                 | (405   | )                    |  | $                       | 1,702   |  | $ | (347   | )
|Customer relationships         |  |                        | 49,280  |                         |                   | (5,549 | )                    |  |                         | 49,280  |  |   | (4,316 | )
|Patents and technology         |  |                        | 38,345  |                         |                   | (2,139 | )                    |  |                         | 38,345  |  |   | (1,316 | )
|                               |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  
|Total                          |  | $                      | 89,327  |                         | $                 | (8,093 | )                    |  | $                       | 89,327  |  | $ | (5,979 | )
|                               |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  
|Unamortized intangible assets: |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  
|Trademarks                     |  | $                      | 101,711 |                         |                   |        |                      |  | $                       | 101,711 |  |   |        |  
|                               |  |                        |         |                         |                   |        |                      |  |                         |         |  |   |        |  



There was no change in
the carrying amount of goodwill during the quarter ended April 2, 2005.



|                            |  |             |        |                  |   |              |  |   |        
|--------------------------- |  | ----------- | ------ | ---------------- | - | ------------ |  | - | -------
|                            |  | Team Sports |        | IndividualSports |   | Consolidated
|Balance as of April 2, 2005 |  | $           | 41,607 |                  | $ | 59,937       |  | $ | 101,544
|                            |  |             |        |                  |   |              |  |   |        



Goodwill is tested for
impairment in each of the Companys segments on an annual basis and more often if indications of impairment exist as required under Statement of Financial Accounting Standards No. 142 (SFAS No. 142) Goodwill and Other
Intangible Assets. The results of the Companys analyses conducted on October 1, 2004 indicated no reduction in the carrying amount of goodwill was required. The Company will perform its next impairment analysis as of October 1, 2005, and
on a future interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value.



5. LONG-TERM DEBT



Long-term debt consisted of the following at April 2, 2005 and December 31, 2004:



|                                          |  |               |         |                  |   |        
|----------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                          |  | April 2, 2005 |         | December 31,2004
|Senior Secured Credit Facility:           |  |               |         |                  |   |        
|Term loan facility                        |  | $             | 109,450 |                  | $ | 109,725
|Revolving credit facility                 |  |               | 23,268  |                  |   |       
|8.375% Senior subordinated notes due 2012 |  |               | 140,000 |                  |   | 140,000
|Capital lease obligations                 |  |               | 340     |                  |   | 373    
|                                          |  |               |         |                  |   |        
|Total long-term debt                      |  |               | 273,058 |                  |   | 250,098
|                                          |  |              
|Less current maturities of long-term debt |  |               | 1,181   |                  |   | 1,184  
|                                          |  |               |         |                  |   |        
|Long-term debt, less current portion      |  | $             | 271,877 |                  | $ | 248,914
|                                          |  |               |         |                  |   |        



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Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



In connection with the Bell Sports acquisition, substantially all of Riddell Sports and Bell Sports existing indebtedness was redeemed or
otherwise repaid and replaced with borrowings under the Companys new senior secured credit facility and with indebtedness pursuant to the 8.375% senior subordinated notes due 2012.



On September 30, 2004, the Company entered into a new senior secured credit facility that provides for a $50.0 million
revolving credit facility and a $110.0 million U.S. dollar denominated term loan. This facility replaced the Companys then-existing $30.0 million revolving credit facility and $50.0 million term loan facility. The revolving credit facility
will mature in September 2010. The term loan facility will amortize at a nominal amount quarterly until it matures in September 2011. Each year the Company may be required to prepay a portion of the term loan facility depending on the amount of
excess cash flow generated in the prior year. The revolving credit facility and term loan facility are fully and unconditionally guaranteed jointly and severally by the Companys parent, RBG Holdings Corp., and all of the Companys
existing domestic subsidiaries, including Bell Sports and Riddell Sports. Interest accrues on amounts outstanding under the revolving credit facility, at the Companys option, at a rate of LIBOR plus 2.75% or an alternate base rate plus 1.75%,
and accrues on amounts outstanding under the term loan facility, at the Companys option, at a rate of LIBOR plus 2.50% or an alternate base rate plus 1.50%. The senior secured credit facility contains covenants restricting, among other things,
the incurrence of indebtedness and the making of certain payments, including dividends, and certain financial covenants including, among others, a minimum interest coverage test, a maximum leverage ratio test and a maximum capital expenditure
limitation. As of April 2, 2005, the Company had total borrowings of $132.7 million under the senior secured credit facility, consisting of $109.4 million under the term loan facility and $23.3 million under the revolving credit facility. As of
April 2, 2005, the Company had availability to borrow an additional $26.1 million under the revolving credit facility.



On September 30, 2004, the Company sold $140.0 million of 8.375% senior subordinated notes due 2012. The 8.375% senior subordinated notes are general
unsecured obligations and are subordinated in right of payment to all existing or future senior indebtedness. Interest is payable on the notes semi-annually on April 1 and October 1 of each year, beginning April 1, 2005. Beginning October 1, 2008,
the Company may redeem the notes, in whole or in part, initially at 104.188% of their principal amount, plus accrued interest, declining to 100% of their principal amount, plus accrued interest, at any time on or after October 1, 2010. In addition,
before October 1, 2008, the Company may redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus accrued interest plus a make-whole premium. Before October 1, 2007, the Company also may redeem up to
35% of the notes at 108.375% of their principal amount using the proceeds from sales of certain kinds of capital stock. The indenture governing the senior subordinated notes contains certain restrictions on the Company, including restrictions on its
ability to incur indebtedness, pay dividends, make investments, grant liens, sell assets and engage in certain other activities. The senior subordinated notes are guaranteed by all of the Companys domestic subsidiaries, including Bell Sports
and Riddell Sports.



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



Cash payments for interest were $4.6 million and $1.4 million for the quarter ended April 2, 2005 and the quarter ended March 31, 2004, respectively.



The Company has arrangements with various banks to issue
standby letters of credit or similar instruments, which guarantee the Companys obligations for the purchase or sale of certain inventories and for potential claims exposure for insurance coverage. At April 2, 2005, outstanding letters of
credit issued under the revolving credit facility totaled $0.6 million.



6.
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 at April 2, 2005 and December 31, 2004:



|                 |  |               |        |                  |   |       
|---------------- |  | ------------- | ------ | ---------------- | - | ------
|                 |  | April 2, 2005 |        | December 31,2004
|Raw materials    |  | $             | 8,891  |                  | $ | 7,925 
|Work-in-process  |  |               | 1,930  |                  |   | 2,034 
|Finished goods   |  |               | 46,679 |                  |   | 39,684
|                 |  |               |        |                  |   |       
|Inventories, net |  | $             | 57,500 |                  | $ | 49,643
|                 |  |               |        |                  |   |       



7. RECENT ACCOUNTING PRONOUNCEMENTS



On October 22, 2004, the American Jobs Creation Act of
2004 (AJCA) was enacted. The AJCA provides a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010. The AJCA also provides for a two-year phase out of the existing
extra-territorial income exclusion (ETI) for foreign sales that was viewed to be inconsistent with international trade protocols by the European Union. Under the guidance in FASB Staff Position No. 109-1, Application of FASB Statement No. 109,
Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, the deduction will be treated as a special deduction as described in SFAS 109. As
such, the special deduction has no effect on deferred tax assets and liabilities existing at the enactment date.



The AJCA provides multi-national companies an election to deduct from taxable income 85% of eligible dividends repatriated from foreign subsidiaries.
Eligible dividends generally cannot exceed $500 million and must meet certain business purposes to qualify for the deduction. In addition, there are provisions which prohibit the use of net operating losses to avoid a tax liability on the taxable
portion of a qualifying dividend. The estimated impact to current tax expense in the United States is generally equal to 5.25% of the qualifying dividend. The AJCA generally allows companies to take advantage of this special deduction from November
2004 through the end of calendar year 2005. The Company did not propose a qualifying plan of repatriation for 2004. The Company is currently assessing whether it will propose a plan of qualifying repatriation in 2005. The estimated range of dividend
amounts that it may consider would not exceed eligible dividend amounts allowable under the AJCA.



In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 123R (SFAS 123R)
Share-Based Payment. SFAS 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS 123R also establishes fair value as the measurement method in accounting for
share-based payments to employees. As required by SFAS 123R, the Company will adopt this new accounting standard effective January 1, 2006. The Company is currently estimating the impact that the application of the expensing provisions of SFAS 123R
will have, if any, on its pre-tax income once adopted.



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



In November 2004, the FASB issued SFAS No. 151, Inventory Costs-An Amendment of ARB No. 43, Chapter 4 (SFAS 151). SFAS 151 amends
the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires
that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of so abnormal as stated in ARB No. 43.
Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005 and is
required to be adopted in the first quarter of 2006. The Company is currently evaluating the effect that the adoption of SFAS 151 will have on its consolidated results of operations and financial condition.



Although the Companys evaluations are still ongoing, it does not
believe the adoption of the foregoing accounting pronouncements will have a material impact on its consolidated results of operations and financial condition.



8. SEGMENT REPORTING



The Company has two reportable segments: Team Sports and Individual Sports. Each segment distributes a full range of head protection equipment, other
athletic, outdoor and active wear products. Team Sports primarily consists of football and other team products and performance reconditioning services related to these products. Individual Sports consists of helmets and accessories for bicycling,
snow sports and power sports and fitness related products. The Company evaluates segment performance primarily based on income from operations. The Companys selling, general and administrative expenses and engineering expenses, excluding
corporate expense, are charged to each segment based on the division where the expenses are incurred. Segment operating income as presented by the Company may not be comparable to similarly titled measures used by other companies. As a result, the
components of operating income for one segment may not be comparable to another segment.



Intersegment transfers are recorded at cost and are presently minimal; there is no intercompany profit or loss on intersegment transfers. Segment results for the quarter ended April 2, 2005 and for the quarter ended
March 31, 2004 are as follows:



|                        |  |            |         |                  |   |              |  |   |        
|----------------------- |  | ---------- | ------- | ---------------- | - | ------------ |  | - | -------
|Quarter Ended           |  | TeamSports |         | IndividualSports |   | Consolidated
|April 2, 2005           |  |            |         |                  |   |              |  |   |        
|Net sales               |  | $          | 28,214  |                  | $ | 59,019       |  | $ | 87,233 
|Income from operations  |  |            | 2,490   |                  |   | 6,163        |  |   | 8,653  
|Depreciation            |  |            | 435     |                  |   | 845          |  |   | 1,280  
|Capital expenditures    |  |            | 302     |                  |   | 459          |  |   | 761    
|                        |  |            |        
|March 31, 2004          |  |            |         |                  |   |              |  |   |        
|Net sales               |  | $          | 28,214  |                  | $ |             |  | $ | 28,214 
|Income from operations  |  |            | 3,142   |                  |   |             |  |   | 3,142  
|Depreciation            |  |            | 515     |                  |   |             |  |   | 515    
|Capital expenditures    |  |            | 199     |                  |   |             |  |   | 199    
|                        |  |            |        
|                        |  | TeamSports |         | IndividualSports |   | Consolidated
|Assets                  |  |            |         |                  |   |              |  |   |        
|As of April 2, 2005     |  | $          | 167,179 |                  | $ | 328,913      |  | $ | 496,092
|As of December 31, 2004 |  |            | 160,190 |                  |   | 310,386      |  |   | 470,576



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##### Table of Contents

Notes to Condensed Consolidated Financial Statements  Continued

(unaudited and in thousands except as specified)



A reconciliation from the segment information to the consolidated balances for income from operations is set forth below:



|                                           |  |               |        |   |               |   |       |  
|------------------------------------------ |  | ------------- | ------ | - | ------------- | - | ----- | -
|                                           |  | Quarter Ended |       
|                                           |  | April 2, 2005 |        |   | March 31,2004 |  
|Segment income from operations             |  | $             | 8,653  |   |               | $ | 3,142 |  
|Variable stock compensation expense        |  |               | (458   | ) |               |   | (116  | )
|Restructuring and other infrequent expense |  |               | (748   | ) |               |   |      |  
|Amortization of intangibles                |  |               | (2,114 | ) |               |   | (657  | )
|                                           |  |               |        |   |               |   |       |  
|Consolidated income from operations        |  | $             | 5,333  |   |               | $ | 2,369 |  
|                                           |  |               |        |   |               |   |       |  



9. PRODUCT LIABILITY AND OTHER
CONTINGENCIES



The Company is subject to various product
liability claims and/or suits brought against it for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured by the Company and, in certain cases, products
manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot presently be determined. Management has established an accrual based on its best estimate of losses and defense costs anticipated to result from such
claims, from within a range of potential outcomes, based on available information, including an analysis of historical data such as the rate of occurrence and the settlement amounts of past cases. The Company maintains product liability insurance
coverage under a policy expiring in January 2009.



10. PROVISION FOR INCOME
TAXES



We recorded an income tax provision of $0.1 million
and $0.2 million for the quarters ended April 2, 2005 and March 31, 2004, respectively. Our effective tax rate was 30.5% for the quarter ended April 2, 2005 as compared to 40.0% for quarter ended March 31, 2004. The decrease in our effective tax
rate is attributable to the component of international earnings added with the Bell Sports acquisition.





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##### Table of Contents

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



GENERAL



On September 30, 2004, pursuant to a merger agreement, we acquired Bell Sports Corp. and its subsidiaries. The transactions relating to the acquisition are more fully described in Note 2 to our condensed
consolidated financial statements. In this report, Bell Sports Corp. and its consolidated subsidiaries are referred to as Bell Sports and Riddell Sports Group, Inc. and its consolidated subsidiaries are referred to as Riddell Sports, and the merger
and the related financing transactions are referred to as the Transactions.



We are a leading designer, developer and marketer of head protection equipment and related accessories for numerous athletic and recreational activities. We are comprised of two formerly independent companies, Riddell
Sports and Bell Sports. Riddell Sports core business is designing, marketing and reconditioning of football helmets as well as other equipment used in football, baseball, lacrosse and other team sports. Riddell Sports sells to a diversified
institutional customer base that includes high schools, colleges, youth leagues and professional teams. Bell Sports core business is designing and marketing of helmets and accessories for bicycling, action sports, snow sports and powersports
(including motorcycling, off-roading and snowmobiling). Bell Sports sells through the mass, sporting goods and specialty retail channels in the United States and Europe.



As a result of the Transactions we have two reportable segments: Team Sports and Individual Sports. Each segment distributes
a full range of head protection equipment, other athletic, outdoor and active wear products. Team Sports primarily consists of football and other team products and performance reconditioning services related to these products. Individual Sports
consists of helmets and accessories for bicycling, snow sports and power sports and fitness related products.



Our business is subject to seasonal fluctuation. Sales of bicycle and other action sports helmets, accessories and other related products are driven
primarily by the warm weather months conducive to bicycling. Sales of football helmets, shoulder pads and reconditioning services are driven primarily by football buying patterns. 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. As a result of the foregoing, our business is least profitable during the
fourth calendar quarter. However, seasonal impacts are increasingly mitigated by the rise in snow sports and powersports sales which have different selling seasons.



RESULTS OF OPERATIONS



Net Sales



Net sales for the first quarter of 2005, increased $59.0 million or 209.2% as compared to the first quarter of the prior year. Team Sports net sales were
flat when compared to the first quarter of the prior year. Sales of institutional athletic products increased slightly due to increased shipments of custom uniforms offset by lower shipments of licensed sports products.



The following table sets forth, for the period indicated, the percentage
relationship to net sales of certain items included in our consolidated statements of operations (dollars in millions):



|          |  |               |      |               |   |      |                          |   |      |  |       |   |   |   |      |  |       |  
|--------- |  | ------------- | ---- | ------------- | - | ---- | ------------------------ | - | ---- |  | ----- | - | - | - | ---- |  | ----- | -
|          |  | Quarter Ended |      | Change        |   |      | Change Due toAcquisition |  
|          |  | April 2,2005  |      | March 31,2004 |   | $    |                          | % |      |  | $     |   | % |  
|Net sales |  | $             | 87.2 |               | $ | 28.2 |                          | $ | 59.0 |  | 209.2 | % |   | $ | 59.0 |  | 100.0 | %
|          |  |               |      |               |   |      |                          |   |      |  |       |   |   |   |      |  |       |  



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations

(Continued)



|                                             |  |               |      |               |                         |   |               |   |               |  |      |   |  |   |     
|-------------------------------------------- |  | ------------- | ---- | ------------- | ----------------------- | - | ------------- | - | ------------- |  | ---- | - |  | - | ----
|                                             |  | Quarter Ended |      |               | Changedue toacquisition
|                                             |  | April 2, 2005 |      | % ofNet Sales |                         |   | March 31,2004 |   | % ofNet Sales |  |     
|Gross profit                                 |  | $             | 31.2 |               | 35.8                    | % |               | $ | 11.9          |  | 42.2 | % |  | $ | 19.8
|Selling, general and administrative expenses |  |               | 23.8 |               | 27.3                    | % |               |   | 8.9           |  | 31.4 | % |  |   | 14.1
|Amortization of intangibles                  |  |               | 2.1  |               | 2.4                     | % |               |   | 0.6           |  | 2.3  | % |  |   | 1.5 
|                                             |  |               |      |               |                         |   |               |   |               |  |      |   |  |   |     
|Income from operations                       |  | $             | 5.3  |               | 6.1                     | % |               | $ | 2.4           |  | 8.5  | % |  | $ | 4.2 
|                                             |  |               |      |               |                         |   |               |   |               |  |      |   |  |   |     



Gross Profit



For the first quarter of 2005, gross profit was impacted by the addition
of Individual Sports whose products typically yield a lower margin percentage than Team Sports products and services. Team Sports margins were slightly below the comparable prior year period due to temporary operating inefficiencies as the Team
Sports division commenced a restructuring of its operations that is expected to result in cost reductions and margin improvements.



Selling, General and Administrative Expenses



Selling general and administrative expenses increased $14.9 million for the first quarter of 2005 from the quarter ended March 31, 2004. The primary
increase in selling general and administrative expenses was due to the addition of Individual Sports. Team Sports selling, general and administrative expenses increased $0.8 million or 9.5% for the first quarter of 2005. Of this increase $0.7
million was due to expenses incurred during the quarter related to the implementation of a plan for operational changes and initiatives to improve manufacturing efficiencies as well as other non-recurring expenses and the remainder was due to
research and development costs related to our new Sideline Response System combined with adding more sales representatives. Offsetting, in part, these increases were lower consulting fees.



Amortization of Intangibles



Amortization of intangibles increased $1.5 million for the first quarter of
2005. The increase is primarily attributable to intangible assets related to the Bell Sports acquisition.



Interest Expense



Interest expense was $5.1 million for the first quarter of 2005, which amounted to a $3.2 million increase over the first quarter 2004. The increase was due to increased borrowings and incremental working capital needs as a result of the
Transactions. Our overall weighted average cost of capital decreased compared to prior year as a result of our recapitalization associated with the Transactions.



Provision for Income Taxes



We recorded an income tax provision of $0.1 million and $0.2 million for the first quarter of 2005 and 2004, respectively. Our effective tax rate was
30.5% for the first quarter of 2005 as compared to 40.0% for the first quarter of 2004. The decrease in our effective tax rate is attributable to the component of international earnings added with the Bell Sports acquisition.



RESTRUCTURING AND OTHER INFREQUENT EXPENSES



During the first quarter of 2005, we announced and initiated a restructuring
plan associated with managements decision to implement actions to reduce our overall cost structure and to drive sustainable improvements in operating and financial performance. We commenced the consolidation and integration of several
facilities. As part of the restructuring plan, we announced the closure of our manufacturing operations located in Chicago, Illinois. All manufacturing at the Chicago location is expected to cease during the second quarter of 2005. Manufacturing
operations previously undertaken at the Chicago facility will be relocated to existing facilities in Elyria, Ohio and Rantoul, Illinois. We have signed a contingent contract for the sale of the Chicago facility.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations

(Continued)



The sale of the facility is scheduled to be complete by the end of 2005 and is expected to result in estimated net proceeds of approximately $2.1 million.
The closure of this facility is consistent with our strategy to leverage economies of scale within our operating facilities. The following table summarizes the components of the restructuring initiated during the first quarter of 2005 and accounted
for under SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (dollars in thousands):



|                             |  |                   |     |   |                      |   |      |       |  |   |      |  
|---------------------------- |  | ----------------- | --- | - | -------------------- | - | ---- | ----- |  | - | ---- | -
|                             |  | EmployeeSeverance |     |   | FacilityClosureCosts |   |      | Total | 
|First quarter 2005 provision |  | $                 | 567 |   |                      | $ | 181  |       |  | $ | 748  |  
|Cash activity                |  |                   | (49 | ) |                      |   | (181 | )     |  |   | (230 | )
|                             |  |                   |     |   |                      |   |      |       |  |   |      |  
|Balances as of April 2, 2005 |  | $                 | 518 |   |                      | $ |     |       |  | $ | 518  |  
|                             |  |                   |     |   |                      |   |      |       |  |   |      |  



Expected restructuring
charges relate to severance costs accrued per our severance policy for the termination of 80 employees. As of April 2, 2005, 20 employees have been terminated.Certain infrequent expenses incurred relate to the transfer of raw material and
work in process inventory to ongoing operating facilities and other facility exit costs. Total cash restructuring costs associated with the plan are expected to be approximately $2.0 million to $3.0 million. Costs of approximately $0.5 million
accrued as of April 2, 2005 are expected to be paid during 2005.



LIQUIDITY
AND CAPITAL RESOURCES



Our financing requirements are
subject to variations due to seasonal changes in inventory and receivable levels. Internally generated funds are supplemented when necessary from external sources, primarily our revolving credit facility.



On September 30, 2004, we entered into a new senior secured credit facility
that provides for a $50.0 million revolving credit facility and a $110.0 million U.S. dollar denominated term loan facility. Our new senior secured credit facility replaced our then-existing $30.0 million revolving credit facility and $50.0 million
term loan facility. Our new revolving credit facility will mature in September 2010. Our new term loan facility will amortize at a nominal amount quarterly until it matures in September 2011. Beginning on March 31, 2005, and each year thereafter, we
may be required to prepay a portion of the term loan facility depending on the amount of excess cash flow generated in the prior year. All of our obligations under our new senior secured credit facility are fully and unconditionally guaranteed
jointly and severally by our parent, RBG Holdings Corp., and all of our existing domestic subsidiaries, including Bell Sports and Riddell Sports. Interest accrues on amounts outstanding under the revolving credit facility, at our option, at a rate
of LIBOR plus 2.75% or an alternate base rate plus 1.75%, and accrues on amounts outstanding under the term loan facility, at our option, at a rate of LIBOR plus 2.50% or an alternate base rate plus 1.50%. Our new senior secured credit facility
contains covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends as well as certain customary financial covenants and maintenance tests, including, among others, a minimum
interest coverage test, a maximum leverage ratio test and a maximum capital expenditure limitation. As of April 2, 2005, we had total borrowings of $132.7 million under our new senior secured credit facility of which $109.4 million was borrowed
under the term loan facility and $23.3 million was borrowed under the revolving credit facility. As of April 2, 2005, we had availability to borrow an additional $26.1 million under our revolving credit facility.



We have arrangements with various banks to issue standby letters of credit or
similar instruments, which guarantee our obligations for the purchase or sale of certain inventories and for potential claims exposure for insurance coverage. As of April 2, 2005, outstanding letters of credit issued under the revolving credit
facility totaled $0.6 million.



Our debt to capitalization
ratio, which is total long-term debt divided by the sum of total long-term debt and stockholders equity, was 68.4% at April 2, 2005 compared to 66.6% at December 31, 2004. The increase was primarily attributable to seasonal working capital
increases and the rollout of powersports products to retail during the first quarter.



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations

(Continued)



On September 30, 2004, we sold $140.0 million of 8.375% senior subordinated notes due 2012. The 8.375% senior subordinated notes are general unsecured
obligations and are subordinated in right of payment to all existing or future senior indebtedness. Interest is payable on the notes semi-annually on April 1 and October 1 of each year, beginning April 1, 2005. Beginning October 1, 2008, we may
redeem the notes, in whole or in part, initially at 104.188% of their principal amount, plus accrued interest, declining to 100% of their principal amount, plus accrued interest, at any time on or after October 1, 2010. In addition, before October
1, 2008, we may redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount, plus accrued interest plus a make-whole premium. Before October 1, 2007, we also may redeem up to 35% of the notes at 108.375% of
their principal amount using the proceeds from sales of certain kinds of capital stock. The indenture governing the senior subordinated notes contains certain restrictions on us, including restrictions on our ability to incur indebtedness, pay
dividends, make investments, grant liens, sell assets and engage in certain other activities. The senior subordinated notes are guaranteed by all of our domestic subsidiaries, including Bell Sports and Riddell Sports.



The cash generated from operating activities and availability under our new
senior secured credit facility are our principal sources of liquidity. 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 our new senior secured credit facility will be adequate to meet our liquidity needs for at least the next twelve months. We cannot assure you, however, that our 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 our new senior secured credit facility in an amount sufficient to enable us to repay our indebtedness,
including our senior subordinated notes, or to fund our other liquidity needs. As a result, we may have to request relief from our lenders on occasion with respect to financial covenant compliance. While we do not currently anticipate asking for any
relief, it is possible that we would require relief in the future.



Cash used in operating activities was $23.0 million for the first quarter ending April 2, 2005, compared to $4.9 million used in first quarter of 2004. The decrease in operating cash flow is primarily the result of the addition of
Individual Sports working capital needs. Our working capital requirements are seasonal, with investments in working capital typically building in the first half of the year and then reducing in the second half of the year. We had $113.0
million in working capital as of April 2, 2005, as compared to $88.7 million at December 31, 2004. Accounts receivable and inventories, combined, were $28.3 million higher than at December 31, 2004. The increase is related to the normal increase in
seasonal business in both segments.



Our business is subject to
seasonal fluctuation. Sales of bicycle and other action sports helmets, accessories and other related products are driven primarily by the warm weather months conducive to bicycling. Sales of football helmets, shoulder pads and reconditioning
services are driven primarily by football buying patterns. 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. As a result of the foregoing, our business is least profitable during the fourth calendar quarter. However, seasonal impacts are increasingly mitigated by the rise in snow sports and powersports
sales which have different selling seasons.



In addition, our
working capital for Team Sports typically experiences a buildup in the first half of the year as we build inventory and seek to level load our manufacturing and reconditioning facilities for the late Spring and Summer selling season. Working capital
for Team Sports typically decreases in the third calendar quarter as inventories are reduced through the Summer selling season and accounts receivables are collected. This pattern is magnified by the preference of many school districts to pay for
items in the budget year in which they will be used. As July 1st often marks the start of the budget year for these customers, receivables that build during the first half of the year are typically collected in the second half of the year.



14



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##### Table of Contents

Managements Discussion and Analysis of Financial Condition and Results of Operations

(Continued)



Capital expenditures for the first quarter of 2005 were $0.8 million compared to $0.2 million in the first quarter of 2004. Capital expenditures made
during 2005 were primarily related to enhancing new and existing products and for initiatives involved in the restructuring.



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 our senior secured credit facility or complete public or private offerings of debt
securities.



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. 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. A description of critical accounting policies and related judgment and estimates that affect the preparation of the consolidated financial statements is set forth in our registration statement filed on Form
S-4 (Reg. No. 333-123927).



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##### Table of Contents

Item 3. Quantitative and Qualitative Disclosure About Market Risk



Our revenues and expenses are denominated in U.S. dollars. As a result, we have relatively little exposure for currency exchange risks. We do not
currently enter into forward exchange contracts to hedge exposure denominated in foreign currencies or any other derivative financial instruments for trading or speculative purposes. In the future, if we feel our foreign currency exposure has
increased, we may consider entering into hedging transactions to help mitigate that risk.



We are exposed to market risk from changes in interest rates which can affect our operating results and overall financial condition. Our indebtedness based on variable interest rates increased upon the completion of
the Transactions. Assuming a 10% increase in interest rates, our net interest expense for the quarter ended April 2, 2005 would have increased by approximately $0.1 million.



Item 4. Controls and Procedures



Evaluation of
Disclosure Controls and Procedures



Under the supervision
and with the participation of our management, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal period. Based upon that evaluation, our principal executive
officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that information required to be disclosed in periodic filings with the
Securities and Exchange Commission, to the extent we were required to make such filings, is recorded, processed, summarized and reported with the time periods specified in the Commissions rules and forms. In addition, such officers concluded
that our disclosure controls and procedures were also effective to ensure that information required to be disclosed in such reports is accumulated and communicated to our management, including such officers, to allow timely decisions regarding
required disclosure.



Our management does not expect that its
disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design
of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over
time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.



Changes in Internal Control Over
Financial Reporting



There were no changes in our internal
controls over financial reporting identified in connection with the evaluation described above that occurred during the quarter ended April 2, 2005, that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.



Uncertainty of Forward-Looking Statements and
Information



This 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 the financial condition, results of operations, plans, objectives, future performance and business of our company. You can identify these statements by the fact
that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as anticipate,



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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. They can be affected by inaccurate assumptions that we might make or by known or unknown risks and uncertainties, including: (i) the level of competition in the sporting goods industry; (ii) legal and regulatory
requirements; (iii) the success of new products; (iv) our relationships with our major suppliers; (v) fluctuations in costs of raw materials; (vi) our relationship with significant customers and licensees; (vii) our labor relations; (viii) departure
of key personnel; (ix) encroachments on our intellectual property; (x) product liability claims; (xi) the timing, cost and success of opening new manufacturing facilities; (xii) our level of indebtedness; (xiii) interest rate risks; (xiv) future
acquisitions; (xv) an increase in return rates; and (xvi) other risks outlined under Risk Factors, in our recently filed registration statement on Form S-4 (Reg. No. 333-123927).



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.



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PART II. OTHER INFORMATION



Item 1. Legal Proceedings



We
are involved in various suits and claims in the normal course of business all of which constitute ordinary, routine litigation incidental to the business. We believe that none of these claims or actions, either individually or in the aggregate, is
material to our business or financial condition.



Item 6. Exhibits



|     |  |                                                                                                                                                                      
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item |  | Exhibit                                                                                                                                                              
|31.1 |  | CEO Certification pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                    
|     | 
|31.2 |  | CFO Certification pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                    
|     | 
|32.1 |  | CEO and CFO Certification pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





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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.



|                    |  |                                                     
|------------------- |  | ----------------------------------------------------
|                    |  | RIDDELL BELL HOLDINGS INC.                          
|                    |  | Registrant                                          
|                    | 
|Dated: May 17, 2005 |  | /s/ JEFFREY L. GREGG                                
|                    |  | Jeffrey L. Gregg                                    
|                    |  | Executive Vice President and Chief Financial Officer
|                    |  | (Principal Financial Officer)                       



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