##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 For the quarterly period ended October 1, 2005
 of
 RIDDELL BELL HOLDINGS, INC.
 A Delaware Corporation
 IRS Employer Identification Number. 20-1636283
 SEC File Number 333-123927
 6225 North State Hwy 161, Suite 300
Irving, Texas 75038
(469) 417-6700
    o þ




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RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES
 INDEX
 PageNumbersPART I. FINANCIAL INFORMATION:Item 1. Financial StatementsCondensed Consolidated Balance Sheets as of
October 1, 2005 and December 31, 2004
    
    
    1Condensed Consolidated Statements of Operations and Comprehensive Income for the
Fiscal Quarter Ended October 1, 2005 and September 30, 2004
    
    
    2Condensed Consolidated Statements of Operations and Comprehensive Income for the
Three Fiscal Quarters Ended October 1, 2005 and September
30, 2004
    
    
    3Condensed Consolidated Statements of Cash Flows for the
Three Fiscal Quarters Ended October 1, 2005 and September
30, 2004
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II. OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    19Item 6. Exhibits
    
    
    19SIGNATURES
    
    
    20Certification of William N. FryCertification of Jeffrey L. GreggCertification of William N. Fry and Jeffrey L. Gregg




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  
   October 1,
    
    
    December 31,2005
    
    
    2004(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,424
    
    
    $
    1,429Accounts receivable, net
    
    
    93,887
    
    
    
    66,373Inventories, net
    
    
    53,903
    
    
    
    49,643Current deferred taxes
    
    
    9,289
    
    
    
    14,210Other current assets
    
    
    8,076
    
    
    
    10,947Total current assets
    
    
    167,579
    
    
    
    142,602Property, plant and equipment, net
    
    
    20,239
    
    
    
    20,469Intangible assets, net
    
    
    178,669
    
    
    
    185,059Goodwill
    
    
    101,689
    
    
    
    101,544Other assets
    
    
    20,421
    
    
    
    20,902Total assets
    
    $
    488,597
    
    
    $
    470,576LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    1,169
    
    
    $
    1,184Accounts payable
    
    
    20,735
    
    
    
    19,693Accrued expenses
    
    
    35,630
    
    
    
    33,066Revolving credit facility
    
    
    7,000
    
    
    
    Total current liabilities
    
    
    64,534
    
    
    
    53,943Long-term debt, less current portion
    
    
    248,026
    
    
    
    248,914Deferred taxes and other noncurrent liabilities
    
    
    40,976
    
    
    
    42,247Total liabilities
    
    
    353,536
    
    
    
    345,104Stockholders Equity:Common stock; $.01 par value, 100 shares
authorized, 100 shares issued and outstanding
at October 1, 2005 and December 31, 2004,
respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    142,351
    
    
    
    139,004Retained deficit
    
    
    (7,665
    )
    
    
    (13,739
    )Accumulated other comprehensive income
    
    
    375
    
    
    
    207Total stockholders equity
    
    
    135,061
    
    
    
    125,472Total liabilities and stockholders equity
    
    $
    488,597
    
    
    $
    470,576
  1




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Fiscal Quarter EndedOctober 1,
    
    
    September 30,2005
    
    
    2004Net sales
    
    $
    102,947
    
    
    $
    38,526Cost of sales
    
    
    65,987
    
    
    
    22,389Gross profit
    
    
    36,960
    
    
    
    16,137Selling, general and administrative expenses
    
    
    24,454
    
    
    
    10,190Amortization of intangibles
    
    
    2,170
    
    
    
    719Income from operations
    
    
    10,336
    
    
    
    5,228Interest expense, net
    
    
    5,657
    
    
    
    9,564Other income
    
    
    557
    
    
    
    Income
(loss) before income taxes
    
    
    5,236
    
    
    
    (4,336
    )Income tax
provision (benefit)
    
    
    2,806
    
    
    
    (1,736
    )Net income
(loss)
    
    
    2,430
    
    
    
    (2,600
    )Other
comprehensive income (loss)Foreign currency translation
    
    
    291
    
    
    
    Comprehensive
income (loss)
    
    $
    2,721
    
    
    $
    (2,600
    )
  2




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##### Table of Contents



Three Fiscal Quarters EndedOctober 1,
    
    
    September 30,2005
    
    
    2004Net sales
    
    $
    293,961
    
    
    $
    100,438Cost of sales
    
    
    186,705
    
    
    
    57,387Gross profit
    
    
    107,256
    
    
    
    43,051Selling, general and administrative expenses
    
    
    72,872
    
    
    
    28,789Amortization of intangibles
    
    
    6,390
    
    
    
    2,465Income from operations
    
    
    27,994
    
    
    
    11,797Interest expense, net
    
    
    16,339
    
    
    
    13,541Other income
    
    
    557
    
    
    
    Income (loss) before income taxes
    
    
    12,212
    
    
    
    (1,744
    )Income tax
provision (benefit)
    
    
    6,138
    
    
    
    (698
    )Net income
(loss)
    
    
    6,074
    
    
    
    (1,046
    )Other
comprehensive income (loss)Foreign currency translation
    
    
    168
    
    
    
    Comprehensive
income (loss)
    
    $
    6,242
    
    
    $
    (1,046
    )
  3




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##### Table of Contents



Three Fiscal Quarters EndedOctober 1,
    
    
    September 30,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    6,074
    
    
    $
    (1,046
    )Adjustments to reconcile net income to net cash used in
operating activities:Depreciation and amortization
    
    
    10,318
    
    
    
    3,977Deferred debt issuance costs amortization
    
    
    1,415
    
    
    
    6,633Accrual of PIK interest expense
    
    
    
    
    
    
    462Variable stock compensation expense
    
    
    2,742
    
    
    
    374Deferred tax
provision (benefit)
    
    
    4,260
    
    
    
    (1,108
    )Write-down of property, plant and equipment
    
    
    127
    
    
    
    Changes in operating assets and liabilities, net of
effects from purchase of businesses:Accounts receivable, net
    
    
    (27,514
    )
    
    
    (11,861
    )Inventories
    
    
    (4,260
    )
    
    
    5,934Other current assets and noncurrent assets
    
    
    2,358
    
    
    
    (2,205
    )Accounts payable
    
    
    1,042
    
    
    
    (1,004
    )Accrued expenses
    
    
    2,564
    
    
    
    4,258Other noncurrent liabilities
    
    
    (609
    )
    
    
    (40
    )Net cash (used in) provided by operating
activities
    
    
    (1,485
    )
    
    
    4,374Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (3,826
    )
    
    
    (513
    )Adjustment to goodwill
    
    
    (145
    )
    
    
    Purchase of businesses, net of cash acquired
    
    
    
    
    
    
    (1,261
    )Net cash used in investing activities
    
    
    (3,971
    )
    
    
    (1,774
    )Cash flows from financing activities:Payments on senior term loan
    
    
    (825
    )
    
    
    (69,837
    )Payments on capital lease obligations
    
    
    (78
    )
    
    
    (172
    )Proceeds from revolving credit facility
    
    
    131,539
    
    
    
    96,369Payments on revolving credit facility
    
    
    (124,539
    )
    
    
    (28,782
    )Deferred debt issuance costs
    
    
    (419
    )
    
    
    (447
    )Capital contribution (distribution)
    
    
    605
    
    
    
    (160
    )Net cash provided by (used in) financing activities
    
    
    6,283
    
    
    
    (3,029
    )Effect of exchange rates on cash and cash equivalents
    
    
    168
    
    
    
    Increase
(Decrease) in cash and cash equivalents
    
    
    995
    
    
    
    (429
    )Cash and cash equivalents at beginning of period
    
    
    1,429
    
    
    
    3,672Cash and cash equivalents at end of period
    
    $
    2,424
    
    
    $
    3,243
  4




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RIDDELL BELL HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 ( )
 1. BASIS OF PRESENTATION
   2. ACQUISITIONS
     5




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##### Table of Contents



Net purchase price including cost of the transaction
    
    $
    242,925Add:Liabilities assumed (mainly accounts payable and
accrued expenses)
    
    
    49,829Less: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
    
    
    55,837Excess of cost over net assets acquired (goodwill)
    
    $
    57,630
  Fiscal Quarter
    
    Three FiscalEnded
    
    Quarters EndedSeptember 30,
    
    September 30,2004
    
    2004Net sales
    
    $
    88,692
    
    
    $
    262,979Net income
    
    
    2,488
    
    
    
    9,163
 3. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
  6




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Write-down ofProperty,
    
    
    
    
    
    
    Employee
    
    
    FacilityPlant and
    
    
    Employee
    
    
    Retention
    
    
    ClosureEquipment
    
    
    Severance
    
    
    Payments
    
    
    Costs
    
    
    TotalFirst Fiscal Quarter of 2005:Provision
    
    
    
    
    
    $
    567
    
    
    
    
    
    
    $
    181
    
    
    $
    748Cash activity
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (181
    )
    
    
    (230
    )Balances as of April 2, 2005
    
    
    
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    518Second Fiscal Quarter of
2005:Provision (reversal)
    
    
    127
    
    
    
    (25
    )
    
    
    32
    
    
    
    325
    
    
    
    459Less:Non-cash activity
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )Cash activity
    
    
    
    
    
    
    (291
    )
    
    
    (26
    )
    
    
    (325
    )
    
    
    (642
    )Balances as of July 2, 2005
    
    
    
    
    
    
    202
    
    
    
    6
    
    
    
    
    
    
    
    208Third Fiscal Quarter of 2005:Provision
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    20
    
    
    
    26Less:Non-cash activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash activity
    
    
    
    
    
    
    (84
    )
    
    
    (1
    )
    
    
    (20
    )
    
    
    (105
    )Balances as of October 1,
2005
    
    $
    
    
    
    $
    118
    
    
    $
    11
    
    
    $
    
    
    
    $
    129
  4. GOODWILL AND OTHER INTANGIBLE ASSETS
  October 1, 2005
    
    
    December 31, 2004Gross
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmounts
    
    
    Amortization
    
    
    Amounts
    
    
    AmortizationAmortized intangible assets:Trademarks and tradenames
    
    $
    1,702
    
    
    $
    (532
    )
    
    $
    1,702
    
    
    $
    (347
    )Customer relationships
    
    
    49,280
    
    
    
    (8,027
    )
    
    
    49,280
    
    
    
    (4,316
    )Patents and technology
    
    
    38,345
    
    
    
    (3,810
    )
    
    
    38,345
    
    
    
    (1,316
    )Total
    
    $
    89,327
    
    
    $
    (12,369
    )
    
    $
    89,327
    
    
    $
    (5,979
    )Unamortized intangible assets:Trademarks
    
    $
    101,711
    
    
    
    
    
    
    $
    101,711
  7




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##### Table of Contents



Team
    
    
    IndividualSports
    
    
    Sports
    
    
    ConsolidatedBalance as of October 1, 2005
    
    $
    41,607
    
    
    $
    60,082
    
    
    $
    101,689
  5. LONG-TERM DEBT
  October 1,
    
    
    December 31,2005
    
    
    2004Senior Secured Credit Facility:Term loan facility
    
    $
    108,900
    
    
    $
    109,7258.375% Senior subordinated notes due 2012
    
    
    140,000
    
    
    
    140,000Capital lease obligations
    
    
    295
    
    
    
    373Total long-term debt
    
    
    249,195
    
    
    
    250,098Less: Current maturities of long-term debt
    
    
    (1,169
    )
    
    
    (1,184
    )Long-term debt, less current portion
    
    $
    248,026
    
    
    $
    248,914
    8




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##### Table of Contents



6. INVENTORIES
   October 1,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    9,389
    
    
    $
    7,925Work-in-process
    
    
    704
    
    
    
    2,034Finished goods
    
    
    43,810
    
    
    
    39,684Inventories, net
    
    $
    53,903
    
    
    $
    49,643
 7. RECENT ACCOUNTING PRONOUNCEMENTS
    9




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8. SEGMENT REPORTING
   TeamFiscal Quarter Ended
    
    Sports
    
    Individual Sports
    
    ConsolidatedOctober 1, 2005Net sales
    
    $
    42,051
    
    
    $
    60,896
    
    
    $
    102,947Income from operations
    
    
    8,057
    
    
    
    5,828
    
    
    
    13,885Depreciation
    
    
    448
    
    
    
    926
    
    
    
    1,374Capital expenditures
    
    
    624
    
    
    
    945
    
    
    
    1,569September 30, 2004Net sales
    
    $
    38,526
    
    
    $
    
    
    
    $
    38,526Income from operations
    
    
    6,090
    
    
    
    
    
    
    
    6,090Depreciation
    
    
    459
    
    
    
    
    
    
    
    459Capital expenditures
    
    
    196
    
    
    
    
    
    
    
    196
 10




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##### Table of Contents



Team
    
    IndividualThree Fiscal Quarters Ended
    
    Sports
    
    Sports
    
    ConsolidatedOctober 1, 2005Net sales
    
    $
    107,827
    
    
    $
    186,134
    
    
    $
    293,961Income from operations
    
    
    17,842
    
    
    
    21,517
    
    
    
    38,359Depreciation
    
    
    1,289
    
    
    
    2,639
    
    
    
    3,928Capital expenditures
    
    
    1,773
    
    
    
    2,053
    
    
    
    3,826September 30, 2004Net sales
    
    $
    100,438
    
    
    $
    
    
    
    $
    100,438Income from operations
    
    
    14,636
    
    
    
    
    
    
    
    14,636Depreciation
    
    
    1,513
    
    
    
    
    
    
    
    1,513Capital expenditures
    
    
    513
    
    
    
    
    
    
    
    513
 TeamSports
    
    Individual Sports
    
    ConsolidatedAssetsAs of October 1, 2005
    
    $
    168,439
    
    
    $
    320,158
    
    
    $
    488,597As of December 31, 2004
    
    
    160,190
    
    
    
    310,386
    
    
    
    470,576
  Fiscal Quarter Ended
    
    
    Three Fiscal Quarters EndedOctober 1,
    
    
    September 30,
    
    
    October 1,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Segment income from
operations
    
    $
    13,885
    
    
    
    6,090
    
    
    $
    38,359
    
    
    $
    14,636Variable stock
compensation expense
    
    
    (1,351
    )
    
    
    (143
    )
    
    
    (2,742
    )
    
    
    (374
    )Restructuring and other
infrequent expense
    
    
    (26
    )
    
    
    
    
    
    
    (1,233
    )
    
    
    Amortization of intangibles
    
    
    (2,170
    )
    
    
    (719
    )
    
    
    (6,390
    )
    
    
    (2,465
    )Consolidated income from
operations
    
    $
    10,336
    
    
    $
    5,228
    
    
    $
    27,994
    
    
    $
    11,797
 9. PRODUCT LIABILITY AND OTHER CONTINGENCIES
  11




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10.
PROVISION (BENEFIT) FOR INCOME TAXES
  
 12




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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.
    RESULTS OF OPERATIONS
 Net Sales
   Change Due toPeriod Ended
    
    Change
    
    AcquisitionOctober 1,
    
    September 30,2005
    
    2004
    
    $
    
    %
    
    $
    
    %Net sales for theFiscal Quarter
Ended
    
    $
    102.9
    
    
    $
    38.5
    
    
    $
    64.4
    
    
    
    167.2
    %
    
    $
    60.9
    
    
    
    94.6
    %Net sales for the
Three FiscalQuarters Ended
    
    $
    293.9
    
    
    $
    100.4
    
    
    $
    193.5
    
    
    
    192.7
    %
    
    $
    186.1
    
    
    
    96.2
    %
 13




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##### Table of Contents



Fiscal Quarter EndedChangeOctober 1,
    
    
    % of
    
    
    September 30,
    
    
    % of
    
    
    due to2005
    
    
    Net Sales
    
    
    2004
    
    
    Net Sales
    
    
    acquisitionGross profit
    
    $
    37.0
    
    
    
    36.0
    %
    
    $
    16.1
    
    
    
    41.8
    %
    
    $
    19.3Selling, general and
administrative expenses
    
    
    24.5
    
    
    
    23.8
    %
    
    
    10.2
    
    
    
    26.5
    %
    
    
    14.7Amortization of intangibles
    
    
    2.2
    
    
    
    2.2
    %
    
    
    0.7
    
    
    
    1.8
    %
    
    
    0.8Income from operations
    
    $
    10.3
    
    
    
    10.0
    %
    
    $
    5.2
    
    
    
    13.5
    %
    
    $
    3.8
 Three Fiscal Quarters EndedChangeOctober 1,
    
    
    % of
    
    
    September 30,
    
    
    % of
    
    
    due to2005
    
    
    Net Sales
    
    
    2004
    
    
    Net Sales
    
    
    acquisitionGross profit
    
    $
    107.3
    
    
    
    36.5
    %
    
    $
    43.0
    
    
    
    42.9
    %
    
    $
    61.0Selling, general and
administrative expenses
    
    
    72.9
    
    
    
    24.6
    %
    
    
    28.8
    
    
    
    28.7
    %
    
    
    43.1Amortization of intangibles
    
    
    5.8
    
    
    
    2.2
    %
    
    
    2.4
    
    
    
    2.5
    %
    
    
    3.5Income from operations
    
    $
    28.6
    
    
    
    9.7
    %
    
    $
    11.8
    
    
    
    11.7
    %
    
    $
    14.4
 Gross Profit
  Selling, General and Administrative Expenses
  Amortization of Intangibles
  14




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Interest Expense.
  Provision
(Benefit) for Income Taxes.
  RESTRUCTURING AND OTHER INFREQUENT EXPENSES
  Write-down ofProperty,
    
    
    
    
    
    
    Employee
    
    
    FacilityPlant and
    
    
    Employee
    
    
    Retention
    
    
    ClosureEquipment
    
    
    Severance
    
    
    Payments
    
    
    Costs
    
    
    TotalFirst quarter of 2005:Provision
    
    
    
    
    
    $
    567
    
    
    
    
    
    
    $
    181
    
    
    $
    748Cash activity
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (181
    )
    
    
    (230
    )Balances as of April 2, 2005
    
    
    
    
    
    
    518
    
    
    
    
    
    
    
    
    
    
    
    518Second quarter of 2005:Provision (reversal)
    
    
    127
    
    
    
    (25
    )
    
    
    32
    
    
    
    325
    
    
    
    459Less:Non-cash activity
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (127
    )Cash activity
    
    
    
    
    
    
    (291
    )
    
    
    (26
    )
    
    
    (325
    )
    
    
    (642
    )Balances as of July 2, 2005
    
    
    
    
    
    
    202
    
    
    
    6
    
    
    
    
    
    
    
    208Third quarter of 2005:Provision (reversal)
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    20
    
    
    
    26Less:Non-cash activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash activity
    
    
    
    
    
    
    (84
    )
    
    
    (1
    )
    
    
    (20
    )
    
    
    (105
    )Balances as of October 1,
2005
    
    $
    
    
    
    $
    118
    
    
    $
    11
    
    
    $
    
    
    
    $
    129
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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
      16




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  17




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##### Table of Contents



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
   
 ITEM 4: CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Uncertainty of Forward-Looking Statements and Information
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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 6. EXHIBITS
 The filings referenced forincorporation byreference areRiddell Bell Holdings,Exhibit Number
    
    Description of Exhibit
    
    Inc.31.1
    
    Certification of William N. Fry
    
    Filed herewith31.2
    
    Certification of Jeffrey L. Gregg
    
    Filed herewith32
    
    Certification of William N. Fry
and Jeffrey L. Gregg
    
    Furnished herewith
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##### Table of Contents



SIGNATURES
  RIDDELL
BELL HOLDINGS, INC.RegistrantDated: November 15, 2005
    
    /s/ Jeffrey L. GreggJeffrey L. GreggExecutive Vice President and Chief Financial Officer(Principal Financial Officer)
 20