##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 
 o
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended January 1, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 333-123927
 
 EASTON-BELL SPORTS, INC.
 (Exact name of registrant as specified in its certificate of incorporation)
 
 Delaware
    
    20-1636283(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 7855 Haskell Avenue, Suite 200
Van Nuys, California 91406
(Address of principal executive offices) (Zip Code)
 (818) 902-5800
(Registrants telephone number, including area code)
 
 Securities registered pursuant to Section 12(b) of the Act:
None
 Securities registered pursuant to Section 12(g) of the Act:
None
 
 Yes o No þ
 Yes þ No o
 o þ
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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TABLE OF CONTENTS  PART IItem 1 BusinessItem 1A Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. [Reserved]PART IIItem 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures about Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits, Financial Statement SchedulesSIGNATURESExhibit 10.6Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1    Table of Contents  
 PART I
 
 Item 1.
    
    Business
  Overview
  Easton ® Bell ® Giro ® Riddell ®
   Industry Overview
 Sporting Goods Industry
    2




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Baseball and Softball
  Ice Hockey
  Football Helmets
  Cycling Helmets and Related Accessories
   Helmets for Action Sports, including Snowsports and Powersports
   3




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Sports Apparel
  Our Brands
 Easton Bell Giro Riddell
  Easton. Easton Easton Easton Easton Easton
 Bell. Bell Bell Bell Bell Bell Bell
 Giro. Giro Giro Bell Giro Giros Giro Giro
 Riddell. Riddell Riddell Riddell
 Blackburn ® CoPilot ® Bell Savasa ® MacGregor ®
  4




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Products and Services
  Team Sports
  Baseball and Softball
 Easton
 Ice Hockey
 Easton
 Football
 Football Helmets Riddell
 Reconditioning Services
  Other Products and Licensing
  Riddell Easton
 Riddell Easton MacGregor Riddell Easton Easton MacGregor
  5




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Action Sports
  Cycling and Extreme Sports
 Bell Bell Giro Easton Blackburn Bell CoPilot Barbie Hot Wheels Sesame Street X Games
 Helmets
 Premium Cycling Components and Accessories Blackburn 2
 Cycling Accessories Bell CoPilot
 Snowsports
 Giro
 Powersports
 Bell
 Fitness Accessories
 Bell Savasa
 Competition
   6




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Team Sports
  Action Sports
 Schwinn Mongoose GT
 Boeri Carrera Leedom Marker Pro-Tec R.E.D Salomon Smith Arai Shoei HJC KBC
 Sales
  Sales of Team Sports Products
 Retail Sales
   Institutional Sales
   7




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Sales of Action Sports Products
   Marketing
 Relationships with Athletes, Teams and Organizations
 Easton Bell Giro Riddell
 Riddell Riddell Riddell Riddell Easton Easton
 Advertising and Promotional Events
  Design and Product Development
    8




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Production, Sourcing and Distribution
     Seasonality
  Intellectual Property
   9




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Easton Bell Giro Riddell Barbie Hot Wheels X Games Sesame Street
 Easton Easton Riddell MacGregor Bell
 Employees
  Insurance and Risk Management
  Governmental Regulation
  Financial Information on Geographical Areas
  
 Item 1A.
    
    Risk Factors
 Economic conditions could adversely affect the profitability of some or all of our businesses.
   10




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Our products face intense competition, and if we cannot compete successfully in our industry,
we could lose market share and our business could be adversely affected.
 Boeri, Carrera, Leedom, Marker, Pro-Tec, R.E.D Salomon Smith Arai, Shoei, HJC and KBC
   11




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Sales of our products may be adversely affected if we cannot effectively introduce new and
innovative products.
    The success of our business is dependent on our affiliation with athletes, athletic
associations and leagues.
 Easton Bell Giro Riddell
   12




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Sales of our products will be adversely affected if we cannot satisfy the standards
established by testing and athletic governing bodies.
  The loss of one or more key customers could result in a material loss of revenues.
  The cost of raw materials could affect our operating results.
  The seasonality of our sales may have an adverse effect on our operations and our ability to
service our debt.
  Our success is dependent on our ability to protect our worldwide intellectual property rights
and if we are unable to enforce and protect our intellectual property rights, our competitive
position may be harmed.
   13




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Easton Bell Giro Riddell Easton Easton Easton
 Our products may infringe the intellectual property rights of others, which may cause us to
incur unexpected costs or prevent us from selling our products.
  We are subject to product liability, warranty and recall claims and our insurance
coverage may not cover such claims.
   14




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Our international sourcing and sales network subjects us to additional risks and costs, which
may differ in each country in which we do business and may cause our profitability to decline.
     15




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Changes in foreign currency exchange or interest rates could affect our revenues and costs.
  Our results of operations may suffer if we are not able to adequately forecast demand for our
products.
  
    
    changes in consumer demand for our products or the products of our competitors;
 
    
    new product introductions by our competitors;
 
    
    failure to accurately forecast consumer acceptance of our products;
 
    
    adverse weather during key sporting seasons;
 
    
    unanticipated changes in general market conditions or other factors, which may
result in cancellations of advance orders or a reduction or increase in the rate of
reorders placed by retailers;
 
    
    weakening of economic conditions or consumer confidence in future economic
conditions, which could reduce demand for discretionary items, such as our products;
 
    
    terrorism or acts of war, or the threat thereof, which could adversely affect
consumer confidence and spending or interrupt production and distribution of products
and raw materials; and
 
    
    general economic conditions.
  Many of our products or components of our products are provided by a limited number of
third-party suppliers and manufacturers and, because we have limited control over these parties, we
may not be able to obtain quality products on a timely basis or in sufficient quantities.
   16




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The success of our business is dependent upon our information systems.
  If we fail to maintain an effective system of internal controls, we may not be able to
accurately report our financial results. As a result, current and potential investors could lose
confidence in our financial reporting.
   Our current executive officers, management and key employees are critical to our success, and
the loss of any of these individuals could harm our business, brands and image.
   17




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We may not succeed in integrating an acquisition into our operations, which could have a
material adverse effect on our operations, results of operations and financial condition.
  Employment related matters, such as unionization, may affect our profitability.
   Acts of war, terrorism or epidemics may have an adverse effect on our business.
  We may be subject to potential environmental liability.
   18




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Our failure to comply with trade and other regulations could lead to investigations or actions
by government regulators and negative publicity.
 Riddell
 The value of our brand and sales of our products could be diminished if we, the athletes who
use our products or the sport categories in which we compete, are associated with negative
publicity.
   Recent turmoil in the financial markets could increase our cost of borrowing and impede access
to or increase the cost of financing our operations and investments.
    19




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Our substantial indebtedness could adversely affect our financial health.
   
    
    making it more difficult for us to satisfy our obligations with respect to the
Notes and our other debt;
 
    
    limiting our ability to obtain additional financing to fund future working
capital, capital expenditures, acquisitions or other general corporate requirements;
 
    
    requiring a substantial portion of our cash flows to be dedicated to debt service
payments instead of other purposes, thereby reducing the amount of cash flows available
for working capital, capital expenditures, acquisitions and other general corporate
purposes;
 
    
    increasing our vulnerability to general adverse economic and industry conditions;
 
    
    exposing us to the risk of increased interest rates as certain of our borrowings
are at variable rates of interest;
 
    
    limiting our flexibility in planning for and reacting to changes in the industry
in which we compete;
 
    
    inhibiting our ability to pay fees and invest resources to maintain or expand our
portfolio of intellectual property assets or to comply with license terms concerning
intellectual property assets;
 
    
    placing us at a disadvantage compared to other less leveraged competitors; and
 
    
    increasing our cost of borrowing.
  Despite current indebtedness levels, we may still be able to incur substantially more
debt. This could further exacerbate the risks associated with our substantial leverage.
   20




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The terms of certain of the documents governing our indebtedness, may restrict our current and
future operations, particularly our ability to respond to changes or to take certain actions.
  
    
    incur additional indebtedness and issue capital stock;
 
    
    pay dividends or make other distributions or repurchase or redeem our capital
stock;
 
    
    make certain loans and investments;
 
    
    enter into sale and leaseback transactions;
 
    
    transfer or sell assets;
 
    
    incur certain liens;
 
    
    enter into transactions with affiliates;
 
    
    alter the businesses we conduct;
 
    
    enter into agreements restricting our subsidiaries ability to pay dividends; and
 
    
    consolidate, merge or sell all or substantially all of our assets.
   
    
    limited in how we conduct our business;
 
    
    unable to raise additional debt or equity financing to operate during general
economic or business downturns; or
 
    
    unable to compete effectively or to take advantage of new business opportunities.
   21




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Our variable rate indebtedness will subject us to interest rate risk, which could cause our
indebtedness service obligations to increase significantly.
  We may not be able to generate sufficient cash to service all of our indebtedness and may be
forced to take other actions to satisfy our obligations under our indebtedness, which may not be
successful.
        22




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The Notes are effectively subordinated to our and our subsidiary guarantors indebtedness
under the ABL Facility and our other secured indebtedness to the extent of the value of the
property securing such indebtedness on a basis senior to the Notes.
  The Notes are structurally subordinated to all indebtedness of those of our existing or future
subsidiaries that are not, or do not become, guarantors of the Notes.
   23




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
    
    the designation of such subsidiary guarantor as an unrestricted subsidiary;
 
    
    the release or discharge of all guarantees or indebtedness that resulted in the
creation of the guarantee of the Notes by such subsidiary guarantor; or
 
    
    the sale or other disposition, including the sale of substantially all the
assets, of such subsidiary guarantor.
  Because each guarantors liability under its guarantees may be reduced to zero, avoided or
released under certain circumstances, you may not receive any payments from some or all of the
guarantors.
  The value of the collateral in the event of liquidation will depend on market and
economic conditions, the availability of buyers and other factors. Consequently, liquidating the
collateral securing the Notes may not produce proceeds in an amount sufficient to pay any amounts
due on the Notes.
    24




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In the event of a bankruptcy of us or any of the guarantors, holders of the Notes may be
deemed to have an unsecured claim to the extent that our obligations in respect of the Notes exceed
the fair market value of the collateral securing the Notes.
  The collateral securing the Notes may be diluted under certain circumstances.
  The rights of holders of the Notes to the collateral securing the ABL Facility, in which such
holders have a second-priority lien, are materially limited by the intercreditor agreement.
   The waiver in the intercreditor agreement of rights of marshaling may adversely affect the
recovery rates of holders of the Notes in a bankruptcy or foreclosure scenario.
   25




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Certain assets are excluded from the collateral securing the Notes.
  Your rights in the collateral may be adversely affected by the failure to perfect security
interests in certain collateral acquired in the future.
  Rights of holders of the Notes in the collateral may be adversely affected by the failure
to create or perfect security interests in certain collateral on a timely basis, and a failure to
create or perfect such security interests on a timely basis or at all may result in a default under
the indenture and other agreements governing the Notes.
    There are circumstances other than repayment or discharge of the Notes under which the
collateral securing the Notes and guarantees will be released automatically, without your consent
or the consent of the trustee.
  
    
    a sale, transfer or other disposal of such collateral in a transaction not
prohibited under the indenture;
 
    
    with respect to collateral held by a guarantor, upon the release of such
guarantor from its guarantee;
 
    
    with respect to collateral that is capital stock, upon the dissolution of the
issuer of such capital stock in accordance with the indenture; and
 
    
    with respect to collateral that secures the ABL Facility on a first-priority
basis, upon any release, sale or disposition (other than in connection with a
cancellation or termination of the ABL Facility) of such collateral pursuant to the
terms of the ABL Facility resulting in the release of the lien on such collateral
securing the ABL Facility.
  26




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The collateral securing the Notes is subject to casualty risks and potential environmental
liabilities.
   We may not be able to repurchase the Notes upon a change of control.
     27




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Holders of the Notes may not be able to determine when a change of control giving rise to
their right to have the Notes repurchased has occurred following a sale of substantially all of
our assets.
  In the event of our bankruptcy, the ability of the holders of the Notes to realize upon the
collateral will be subject to certain bankruptcy law limitations.
  
    
    the commencement or continuation of any action or proceeding against the debtor
that was or could have been commenced before the commencement of the bankruptcy case to
recover a claim against the debtor that arose before the commencement of the bankruptcy
case;
 
    
    any act to obtain possession of, or control over, property of the bankruptcy
estate or the debtor;
 
    
    any act to create, perfect or enforce any lien against property of the bankruptcy
estate; and
 
    
    any act to collect or recover a claim against the debtor that arose before the
commencement of the bankruptcy case.
  The value of the collateral securing the Notes may not be sufficient to secure post-petition
interest.
  The interests of our sponsors may conflict with yours.
   28




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Federal and state fraudulent transfer laws may permit a court to void the Notes, the
guarantees and/or the grant of collateral and, if that occurs, you may not receive any payments on
the Notes.
  
    
    we or any of the guarantors, as applicable, were insolvent or rendered insolvent
by reason of the issuance of the Notes or the incurrence of the guarantees;
 
    
    the issuance of the Notes or the incurrence of the guarantees left us or any of
the guarantors, as applicable, with an unreasonably small amount of capital or assets to
carry on the business;
 
    
    we or any of the guarantors intended to, or believed that we or such guarantor
would, incur debts beyond our or such guarantors ability to pay as they mature; or
 
    
    we or any of the guarantors were a defendant in an action for money damages, or
had a judgment for money damages docketed against us or such guarantor if, in either
case, after final judgment, the judgment is unsatisfied.
   
    
    the sum of its debts, including contingent and unliquidated liabilities, was
greater than the fair saleable value of all of its assets;
 
    
    the present fair saleable value of its assets was less than the amount that would
be required to pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature; or
 
    
    it could not pay its debts as they became due.
   Your ability to transfer the Notes is limited by the absence of an active trading market and
an active trading market may not develop for the Notes.
   29




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A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may
increase our future borrowing costs and reduce our access to capital.
  
 Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
  Leased
    
    
    OwnedLocation
    
    Primary Use
    
    Business Segment
    
    Sq. Ft.
    
    
    Sq. Ft.Van Nuys, CA
    
    Corporate Headquarters and Offices
    
    Team and Action Sports
    
    
    56,647Scotts Valley, CA
    
    Offices and Research and Development
    
    Team and Action Sports
    
    
    55,320Irving, TX
    
    Offices
    
    Action Sports
    
    
    27,197Rosemont, IL
    
    Offices and Research and Development
    
    Team Sports
    
    
    20,531Rantoul, IL
    
    Offices, Manufacturing and Warehouse
    
    Team and Action Sports
    
    
    753,696York, PA
    
    Warehouse
    
    Action Sports
    
    
    
    
    
    
    465,000Salt Lake City, UT
    
    Warehouse
    
    Team Sports
    
    
    133,000Elyria, OH
    
    Offices, Reconditioning and Warehouse
    
    Team Sports
    
    
    134,788Monterrey, Mexico
    
    Reconditioning and Warehouse
    
    Team Sports
    
    
    117,328Kirkland, Canada
    
    Offices and Warehouse
    
    Team Sports
    
    
    97,935Tijuana, Mexico
    
    Offices, Manufacturing and Warehouse
    
    Team and Action Sports
    
    
    112,403
   30




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Item 3.
    
    Legal Proceedings
  
 Item 4.
    
    [Reserved]
 
 PART II
 
 Item 5.
    
    Market For Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  
 Item 6.
    
    Selected Financial Data
  Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedJanuary 1,
    
    
    January 2,
    
    
    January 3,
    
    
    December 29,
    
    
    December 30,2011
    
    
    2010
    
    
    2009
    
    
    2007
    
    
    2006(5)(Dollars in millions)Statement of Operations Data:Net sales
    
    $
    772.8
    
    
    $
    716.3
    
    
    $
    775.5
    
    
    $
    724.6
    
    
    $
    639.0Cost of sales(1)
    
    
    510.4
    
    
    
    482.4
    
    
    
    509.1
    
    
    
    475.6
    
    
    
    426.1Gross profit
    
    
    262.4
    
    
    
    233.9
    
    
    
    266.4
    
    
    
    249.0
    
    
    
    212.9Selling, general and administrative expenses
    
    
    191.3
    
    
    
    175.0
    
    
    
    179.2
    
    
    
    170.0
    
    
    
    156.0Management expenses(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.3Restructuring and other infrequent expenses(3)
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    0.6
    
    
    
    0.9Amortization of intangibles
    
    
    11.8
    
    
    
    13.4
    
    
    
    13.4
    
    
    
    13.2
    
    
    
    12.6Gain on sale of property, plant and equipment(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    Income from operations
    
    
    59.3
    
    
    
    45.5
    
    
    
    73.3
    
    
    
    67.5
    
    
    
    35.1Interest expense, net
    
    
    44.6
    
    
    
    44.9
    
    
    
    41.9
    
    
    
    41.6
    
    
    
    42.4Income (loss) before taxes
    
    
    14.7
    
    
    
    0.6
    
    
    
    31.4
    
    
    
    25.9
    
    
    
    (7.3
    )Income tax expense (benefit)
    
    
    6.6
    
    
    
    4.7
    
    
    
    18.0
    
    
    
    11.4
    
    
    
    (1.4
    )Net income (loss)
    
    $
    8.1
    
    
    $
    (4.1
    )
    
    $
    13.4
    
    
    $
    14.5
    
    
    $
    (5.9
    )Cash flow data:Net cash provided by (used in):Operating activities
    
    $
    47.6
    
    
    $
    53.8
    
    
    $
    67.7
    
    
    $
    16.3
    
    
    $
    23.6Investing activities
    
    
    (22.5
    )
    
    
    (16.1
    )
    
    
    (17.6
    )
    
    
    (10.1
    )
    
    
    (420.2
    )Financing activities
    
    
    (35.0
    )
    
    
    (47.4
    )
    
    
    (19.7
    )
    
    
    (0.6
    )
    
    
    403.0Other Financial Data:Capital expenditures
    
    
    20.7
    
    
    
    15.7
    
    
    
    17.6
    
    
    
    16.8
    
    
    
    12.8
  31




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As of
    
    
    As of
    
    
    As of
    
    
    As of
    
    
    As ofJanuary 1,
    
    
    January 2,
    
    
    January 3,
    
    
    December 29,
    
    
    December 30,2011
    
    
    2010
    
    
    2009
    
    
    2007
    
    
    2006(Dollars in millions)Balance Sheet Data:Cash and cash equivalents
    
    $
    24.0
    
    
    $
    33.3
    
    
    $
    41.3
    
    
    $
    16.9
    
    
    $
    9.9Working capital
    
    
    242.6
    
    
    
    211.2
    
    
    
    282.9
    
    
    
    262.8
    
    
    
    225.0Total assets
    
    
    964.6
    
    
    
    960.6
    
    
    
    997.6
    
    
    
    956.5
    
    
    
    948.1Total debt
    
    
    385.2
    
    
    
    415.8
    
    
    
    455.9
    
    
    
    475.6
    
    
    
    476.2Total stockholders equity
    
    
    377.6
    
    
    
    363.8
    
    
    
    347.0
    
    
    
    341.0
    
    
    
    318.2
 
 (1)
    
    Cost of sales included $19.0 million of costs resulting from the purchase accounting
write-up of inventories to fair value for the period ended December 30, 2006.(2)
    
    Represents management fees and reimbursable expenses paid to Fenway Investors pursuant to the
management agreement. At the time of the acquisition of Easton in 2006, our Company made a
payment of $7.5 million to terminate our annual management fee obligation.(3)
    
    Restructuring expenses in fiscal 2008 and 2007 are primarily related to the closure of our
Van Nuys, California manufacturing facility. Restructuring expenses in fiscal 2006 are
primarily related to the closure of our manufacturing facility previously located in Chicago,
Illinois.(4)
    
    Represents gains on the sale of land and building located in Chicago, Illinois in May 2007
and the sale of machinery located in Van Nuys, California in September 2007 as part of the
closures referenced in footnote 3 above.(5)
    
    Does not include results of Easton prior to March 16, 2006, the date of the acquisition of
Easton. 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Uncertainty of Forward-Looking Statements and Information
    32




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Overview
  Easton ® Bell ® Giro ® Riddell ®
   How We Assess the Performance of Our Business
  Net Sales
 Bell Giro Easton
 Cost of Sales
  Gross Profit
   33




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##### Table of Contents



Selling, General and Administrative Expenses
  Results of Operations
   % of Net
    
    
    
    
    
    
    % of Net
    
    
    
    
    
    
    % of Net2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    2008
    
    
    Sales(Dollars in millions)Net sales
    
    $
    772.8
    
    
    
    100.0
    %
    
    $
    716.3
    
    
    
    100.0
    %
    
    $
    775.5
    
    
    
    100.0
    %Cost of sales
    
    
    510.4
    
    
    
    66.0
    
    
    
    482.4
    
    
    
    67.3
    
    
    
    509.1
    
    
    
    65.6Gross profit
    
    
    262.4
    
    
    
    34.0
    
    
    
    233.9
    
    
    
    32.7
    
    
    
    266.4
    
    
    
    34.4Selling, general and administrative expenses
    
    
    191.3
    
    
    
    24.8
    
    
    
    175.0
    
    
    
    24.4
    
    
    
    179.2
    
    
    
    23.1Amortization of intangibles
    
    
    11.8
    
    
    
    1.5
    
    
    
    13.4
    
    
    
    1.9
    
    
    
    13.4
    
    
    
    1.7Restructuring and other infrequent expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    0.1Income from operations
    
    
    59.3
    
    
    
    7.7
    
    
    
    45.5
    
    
    
    6.4
    
    
    
    73.3
    
    
    
    9.5Interest expense, net
    
    
    44.6
    
    
    
    5.8
    
    
    
    44.9
    
    
    
    6.3
    
    
    
    41.9
    
    
    
    5.4Income before income taxes
    
    
    14.7
    
    
    
    1.9
    
    
    
    0.6
    
    
    
    0.1
    
    
    
    31.4
    
    
    
    4.1Income tax expense
    
    
    6.6
    
    
    
    0.9
    
    
    
    4.7
    
    
    
    0.4
    
    
    
    18.0
    
    
    
    2.3Net income (loss)
    
    
    8.1
    
    
    
    1.0
    
    
    
    (4.1
    )
    
    
    (0.3
    )
    
    
    13.4
    
    
    
    1.8Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    2.3
    
    
    
    0.3
    
    
    
    5.3
    
    
    
    0.7
    
    
    
    (11.3
    )
    
    
    (1.5
    )Comprehensive income
    
    $
    10.4
    
    
    
    1.3
    %
    
    $
    1.2
    
    
    
    0.4
    %
    
    $
    2.1
    
    
    
    0.3
    %
 2010 compared to 2009
  
    
    provision for excess and obsolete inventory write-offs of $8.4 million;
 
    
    research and development expenses of $13.2 million;
 
    
    product liability settlement and litigation expenses of $5.4 million;
 
    
    provision for allowance for doubtful accounts of $3.4 million;
 
    
    incentive compensation expense of $7.8 million;
 
    
    equity compensation expense of $3.4 million;
 
    
    expenses of $3.7 million related to severing executives and other reorganizing
activities;
 
    
    depreciation expense of $17.1 million;
 
    
    licensing fees of $4.0 million;
 
    
    expenses of $1.8 million related to the new lacrosse business;
 
    
    interest expense (net) of $44.6 million; and
 
    
    income tax expense of $6.6 million.
  34




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
    
    provision for excess and obsolete inventory write-offs of $6.8 million;
 
    
    research and development expenses of $13.5 million;
 
    
    product liability settlement and litigation expenses of $3.5 million;
 
    
    provision for allowance for doubtful accounts of $3.8 million
 
    
    incentive compensation expense of $1.9 million;
 
    
    equity compensation expense of $5.3 million;
 
    
    expenses of $1.3 million related to severing executives and other reorganizing
activities;
 
    
    depreciation expense of $15.1 million;
 
    
    licensing fees of $2.4 million;
 
    
    refinancing fees of $5.4 million;
 
    
    interest expense (net) of $44.9 million; and
 
    
    income tax expense of $4.7 million.
 Net Sales
  Change2010
    
    
    2009
    
    
    $
    
    
    %(Dollars in millions)Team Sports
    
    $
    426.8
    
    
    $
    387.0
    
    
    $
    39.8
    
    
    
    10.3
    %Action Sports
    
    
    346.0
    
    
    
    329.3
    
    
    
    16.7
    
    
    
    5.1
    %$
    772.8
    
    
    $
    716.3
    
    
    $
    56.5
    
    
    
    7.9
    %
   Cost of Sales
  % of
    
    
    
    
    
    
    % of2010
    
    
    Net Sales
    
    
    2009
    
    
    Net Sales(Dollars in millions)Team Sports
    
    $
    268.6
    
    
    
    62.9
    %
    
    $
    246.1
    
    
    
    63.6
    %Action Sports
    
    
    241.8
    
    
    
    69.9
    %
    
    
    236.3
    
    
    
    71.8
    %$
    510.4
    
    
    
    66.0
    %
    
    $
    482.4
    
    
    
    67.3
    %
  35




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Gross Profit
  % of
    
    
    
    
    
    
    % of2010
    
    
    Net Sales
    
    
    2009
    
    
    Net Sales(Dollars in millions)Team Sports
    
    $
    158.2
    
    
    
    37.1
    %
    
    $
    140.9
    
    
    
    36.4
    %Action Sports
    
    
    104.2
    
    
    
    30.1
    %
    
    
    93.0
    
    
    
    28.2
    %$
    262.4
    
    
    
    34.0
    %
    
    $
    233.9
    
    
    
    32.7
    %
   Selling, General and Administrative Expenses
  
    
    increased incentive compensation expense of $5.9 million due to the
improvement in profitability;
 
    
    an increase in product liability settlement and defense costs of $1.9
million resulting from reserve adjustments and increased litigation costs;
 
    
    increased variable selling expenses of $2.3 million related to the increase in
net sales;
 
    
    increased marketing, promotion and sponsorship program spending by $6.1
million;
 
    
    higher depreciation expense of $3.3 million primarily related to capital
expenditures for information technology and office expansion/renovation;
 
    
    expenses of $1.8 million related to the new lacrosse business;
 
    
    translation of foreign subsidiary expenses from local currency into United States
dollars of $1.8 million;
  
    
    a decrease in bad debt expense of $0.4 million resulting from improved
collections experience and related reserve requirements;
 
    
    mark-to-market adjustment in relation to foreign currency exchange forward
contracts of $1.7 million;
 
    
    decreased equity compensation expense of $1.9 million primarily related to a
plan modification occurring in 2009.
 Amortization of Intangibles
   36




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Interest Expense, Net
  Income Tax Expense
  2009 compared to 2008
  
    
    provision for excess and obsolete inventory write-offs of $6.8 million;
 
    
    research and development expenses of $13.5 million;
 
    
    product liability settlement and litigation expenses of $3.5 million;
 
    
    provision for allowance for doubtful accounts of $3.8 million;
 
    
    refinancing fees of $5.4 million;
 
    
    equity compensation expense of $5.3 million;
 
    
    expenses of $1.3 million related to severing executives and other reorganizing
activities;
 
    
    interest expense (net) of $44.9 million; and
 
    
    income tax expense of $4.7 million.
  
    
    provision for excess and obsolete inventory write-offs of $6.0 million;
 
    
    foreign currency transaction loss of $1.2 million;
 
    
    research and development expenses of $13.3 million;
 
    
    product liability settlement and litigation expenses of $7.1 million;
 
    
    provision for allowance for doubtful accounts of $5.5 million;
 
    
    equity compensation expense of $3.9 million;
 
    
    expenses of $1.8 million related to severing executives and other reorganizing
activities;
 
    
    restructuring and other expenses of $0.5 million, related to the closure of our
Van Nuys, California manufacturing facility;
 
    
    interest expense (net) of $41.9 million; and
 
    
    income tax expense of $18.0 million.
  37




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Net Sales
  Change2009
    
    
    2008
    
    
    $
    
    
    %(Dollars in millions)Team Sports
    
    $
    387.0
    
    
    $
    433.7
    
    
    $
    (46.7
    )
    
    
    (10.8
    )%Action Sports
    
    
    329.3
    
    
    
    341.8
    
    
    
    (12.5
    )
    
    
    (3.7
    )%$
    716.3
    
    
    $
    775.5
    
    
    $
    (59.2
    )
    
    
    (7.6
    )%
   Cost of Sales
  % of
    
    
    
    
    
    % of2009
    
    
    Net Sales
    
    
    2008
    
    
    Net Sales(Dollars in millions)Team Sports
    
    $
    246.1
    
    
    
    63.6
    %
    
    $
    263.2
    
    
    
    60.7
    %Action Sports
    
    
    236.3
    
    
    
    71.8
    %
    
    
    245.9
    
    
    
    71.9
    %$
    482.4
    
    
    
    67.3
    %
    
    $
    509.1
    
    
    
    65.6
    %
   Gross Profit
  % of
    
    
    
    
    
    % of2009
    
    
    Net Sales
    
    
    2008
    
    
    Net Sales(Dollars in millions)Team Sports
    
    $
    140.9
    
    
    
    36.4
    %
    
    $
    170.5
    
    
    
    39.3
    %Action Sports
    
    
    93.0
    
    
    
    28.2
    %
    
    
    95.9
    
    
    
    28.1
    %$
    233.9
    
    
    
    32.7
    %
    
    $
    266.4
    
    
    
    34.4
    %
  38




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Selling, General and Administrative Expenses
  
    
    lower incentive compensation expense of $5.2 million due to the decline in
profitability;
 
    
    a decrease in product liability settlement and defense costs of $3.6 million from
lower settlement and litigation costs;
 
    
    reduced variable selling expenses of $1.9 million related to the decline in net
sales;
    
    controls implemented to reduce marketing and promotion and sponsorship program
spending by $1.7 million;
 
    
    a decrease in bad debt expense of $1.7 million resulting from improved
collections and related reserve requirements;
 
    
    translation of foreign subsidiary expenses from local currency into United States
dollars of $1.4 million;
  
    
    refinancing fees of $5.4 million;
 
    
    higher depreciation of $2.9 million primarily related to capital expenditures for
information technology and office expansion/renovation;
 
    
    mark-to-market adjustment in relation to foreign currency exchange forward
contracts of $1.8 million;
 
    
    increased equity compensation expense of $1.4 million primarily related to the
modification of the 2006 Equity Incentive Plan, or Incentive Plan; and
 
    
    spending related to the television advertising campaign for the True Fitcycling
helmet launch of $1.1 million.
 Restructuring and Other Infrequent Expenses
  Amortization of Intangibles
  Interest Expense, Net
  Income Tax Expense
   39




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Quarterly Results
  For the Following Quarterly PeriodsFirst
    
    
    Second
    
    
    Third
    
    
    Fourth(Dollars in millions)(Unaudited)2010:Net sales
    
    $
    194.1
    
    
    $
    202.8
    
    
    $
    198.8
    
    
    $
    177.1Gross profit
    
    
    64.8
    
    
    
    68.9
    
    
    
    69.6
    
    
    
    59.1Income from operations
    
    
    11.7
    
    
    
    20.1
    
    
    
    18.0
    
    
    
    9.5Net income
    
    
    0.1
    
    
    
    5.0
    
    
    
    3.0
    
    
    
    2009:Net sales
    
    $
    184.9
    
    
    $
    187.3
    
    
    $
    180.4
    
    
    $
    163.7Gross profit
    
    
    60.2
    
    
    
    60.4
    
    
    
    62.0
    
    
    
    51.3Income from operations
    
    
    9.9
    
    
    
    14.8
    
    
    
    18.2
    
    
    
    2.6Net income (loss)
    
    
    1.0
    
    
    
    3.9
    
    
    
    6.3
    
    
    
    (15.3
    )
 Liquidity and Capital Resources
     9.750% Senior Secured Notes
   40




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ABL Credit Facility
     41




---



##### Table of Contents



Holdco Facility Obligations
    Sources and Uses of our Cash
       42




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Outlook
  
    
    Economic Climate.The uncertain worldwide economic environment could cause the
reported financial information not to be necessarily indicative of future operating
results or of future financial condition. The current economic environment continues to
affect our business in a number of direct and indirect ways including: reduced consumer
demand for our products; tighter inventory management by retailers; reduced profit
margins due to pricing pressures and an unfavorable sales mix due to a higher
concentration of sales of mid to lower price point products; changes in currency
exchange rates; lack of credit availability, particularly for specialty retailers; inflation; and
business disruptions due to difficulties experienced by suppliers and customers.
 
    
    Retail Market Conditions.As a result of the slowing worldwide economic
conditions, the retail market for sports equipment has slowed and is extremely
competitive, with strong pressure from retailers for lower prices. We have experienced
the effect of consumers trading down price points and delaying certain discretionary
purchases, which has resulted in retailers reluctance to place orders for inventory in
advance of selling seasons. Further, institutional customers have reduced or deferred
purchases due to budget constraints. These trends may continue to have a negative impact
on our businesses. We continue to address the retail environment through our focus on
innovation and product development and emphasis on multiple price points.
  43




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##### Table of Contents




    
    Operations and Manufacturing.We intend to continue to streamline distribution,
logistics and manufacturing operations, bring uniform methodologies to inventory
management, optimize transportation, improve manufacturing efficiencies and provide a
high level of service to our customers. Over a several year period we have transitioned
production of certain products from our facilities to third party vendors in Asia and
other cost efficient sources of labor. However, as a result of our transition of the
production of products from our own facilities to third party suppliers, we may become
more vulnerable to higher levels of product defects, as well as increased sourced
product costs, and our ability to mitigate such cost increases may be reduced.
 
    
    Interest Expense and Debt Repayment.In connection with the Refinancing, we
entered into a $250.0 million ABL Facility. As of January 1, 2011, the outstanding
principal balance under the ABL Facility was $38.9 million. In addition, we have $350.0
million of outstanding principal amount of our Notes due in December
2016. Because our existing indebtedness requires that we use a substantial portion of our
cash flows to service interest payments, the amount of available cash flows we will have
for working capital, capital expenditures, acquisitions and other general corporate
purposes could be limited.
 
    
    Seasonality.Our business is subject to seasonal fluctuation. Sales of cycling
products and accessories occur primarily during the warm
weather months. Sales of baseball and softball products occur primarily in the late
winter and early spring months in preparation for the spring baseball season.
Sales of football equipment and reconditioning services are driven
primarily by football buying patterns, where orders begin at the end of the school
football season (December) and run through to the start of the next season (August).
Shipments of football products and performance of reconditioning services reach a low
point during the football season. Sales of ice hockey equipment are driven by ice hockey
buying patterns with orders shipping in late spring for fall play. Seasonal impacts are
increasingly mitigated by the increase in snowsports and powersports sales which, to a
certain extent, counter the cycling, baseball, softball and football seasons.
 Contractual Requirements
  Payments Due by PeriodTotal
    
    
    2011
    
    
    2012 to 2013
    
    
    2014 to 2015
    
    
    2016 and Beyond(Dollars in thousands)Long-term debt(1)
    
    $
    388,893
    
    
    $
    38,893
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000Interest payments related to long-term debt(2)
    
    
    201,906
    
    
    
    34,125
    
    
    
    68,250
    
    
    
    68,250
    
    
    
    31,281Capital lease obligations(3)
    
    
    120
    
    
    
    32
    
    
    
    64
    
    
    
    24
    
    
    
    Operating lease obligations
    
    
    39,704
    
    
    
    10,017
    
    
    
    13,657
    
    
    
    6,580
    
    
    
    9,450Sponsorship/royalty agreements
    
    
    13,437
    
    
    
    5,425
    
    
    
    5,750
    
    
    
    1,847
    
    
    
    415Total contractual cash obligations
    
    $
    644,060
    
    
    $
    88,492
    
    
    $
    87,721
    
    
    $
    76,701
    
    
    $
    391,146
 Amount of Commitment Expiration per PeriodTotal
    
    
    2011
    
    
    2012 to 2013
    
    
    2014 to 2015
    
    
    2016 and BeyondStandby letters of credit and similar
instruments
    
    $
    3,306
    
    
    $
    3,306
    
    
    $
    
    
    
    $
    
    
    
    $
    Total commercial commitments and letters
of credit
    
    $
    3,306
    
    
    $
    3,306
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Amounts include obligations pursuant to the ABL Facility and Notes that were outstanding
on January 1, 2011. See Liquidity and Capital Resources.(2)
    
    Estimated interest payments are calculated assuming current interest rates over minimum
maturity periods specified in long-term debt agreements, not including the ABL Facility. Debt
may be repaid sooner or later than such minimum maturity periods.(3)
    
    Amounts include interest on capital lease obligations.  44




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Revenue Recognition.
 Accounts Receivable and Allowances.
 Inventories.
 Long-lived and intangible assets.
  45




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##### Table of Contents



Income Taxes. Income Taxes.
 Product Liability Litigation Matters and Contingencies.
 Derivative Instruments and Hedging Activity.
 Warranty Liability.
 Stock-Based Compensation.
  46




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Recent Accounting Pronouncements
 Improving Disclosures about
Fair Value Measurements
 
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency Risk
     Interest Rate Risk
   47




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Item 8. Financial Statements and Supplementary Data
  PageReport of Independent Registered Public Accounting Firm
    
    
    49Consolidated Balance Sheets as of January 1, 2011 and January 2, 2010
    
    
    50Consolidated Statements of Operations and Comprehensive Income for
the fiscal years ended January 1, 2011, January 2, 2010 and January
3, 2009
    
    
    51Consolidated Statements of Stockholders Equity for the fiscal years
ended January 1, 2011, January 2, 2010 and January 3, 2009
    
    
    52Consolidated Statements of Cash Flows for the fiscal years ended
January 1, 2011, January 2, 2010 and January 3, 2009
    
    
    53Notes to Consolidated Financial Statements
    
    
    54
    48




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Report of Independent Registered Public Accounting Firm
 
     
  49




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 January 1,
    
    
    January 2,2011
    
    
    2010(Amounts in thousands,except share and pershare amounts)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,024
    
    
    $
    33,318Accounts receivable, net
    
    
    216,166
    
    
    
    208,903Inventories, net
    
    
    141,093
    
    
    
    127,915Prepaid expenses
    
    
    7,080
    
    
    
    7,922Deferred taxes
    
    
    16,254
    
    
    
    12,607Other current assets
    
    
    8,483
    
    
    
    10,705Total current assets
    
    
    413,100
    
    
    
    401,370Property, plant and equipment, net
    
    
    49,736
    
    
    
    46,368Deferred financing fees, net
    
    
    14,248
    
    
    
    17,255Intangible assets, net
    
    
    279,047
    
    
    
    290,812Goodwill
    
    
    206,928
    
    
    
    203,541Other assets
    
    
    1,495
    
    
    
    1,299Total assets
    
    $
    964,554
    
    
    $
    960,645LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Revolving credit facility
    
    $
    38,893
    
    
    $
    70,000Current portion of capital lease obligations
    
    
    24
    
    
    
    22Accounts payable
    
    
    73,148
    
    
    
    70,910Accrued expenses
    
    
    58,452
    
    
    
    49,256Total current liabilities
    
    
    170,517
    
    
    
    190,188Long-term debt, less current portion
    
    
    346,168
    
    
    
    345,715Capital lease obligations, less current portion
    
    
    78
    
    
    
    102Deferred taxes
    
    
    49,379
    
    
    
    42,104Other noncurrent liabilities
    
    
    20,774
    
    
    
    18,699Total liabilities
    
    
    586,916
    
    
    
    596,808Stockholders equity:Common stock: $0.01 par value, 100 shares
authorized, 100 shares issued and outstanding at
January 1, 2011 and January 2, 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    360,223
    
    
    
    356,788Retained earnings
    
    
    15,401
    
    
    
    7,275Accumulated other comprehensive income (loss)
    
    
    2,014
    
    
    
    (226
    )Total stockholders equity
    
    
    377,638
    
    
    
    363,837Total liabilities and stockholders equity
    
    $
    964,554
    
    
    $
    960,645
   50




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedJanuary 1,
    
    
    January 2,
    
    
    January 3,2011
    
    
    2010
    
    
    2009(Amounts in thousands)Net sales
    
    $
    772,843
    
    
    $
    716,330
    
    
    $
    775,539Cost of sales
    
    
    510,446
    
    
    
    482,428
    
    
    
    509,127Gross profit
    
    
    262,397
    
    
    
    233,902
    
    
    
    266,412Selling, general and administrative expenses
    
    
    191,303
    
    
    
    175,038
    
    
    
    179,187Amortization of intangibles
    
    
    11,765
    
    
    
    13,406
    
    
    
    13,407Restructuring and other infrequent expenses
    
    
    
    
    
    
    
    
    
    
    492Income from operations
    
    
    59,329
    
    
    
    45,458
    
    
    
    73,326Interest expense, net
    
    
    44,568
    
    
    
    44,910
    
    
    
    41,909Income before income taxes
    
    
    14,761
    
    
    
    548
    
    
    
    31,417Income tax expense
    
    
    6,635
    
    
    
    4,646
    
    
    
    18,004Net income (loss)
    
    
    8,126
    
    
    
    (4,098
    )
    
    
    13,413Other comprehensive income:Foreign currency translation adjustment
    
    
    2,240
    
    
    
    5,320
    
    
    
    (11,296
    )Comprehensive income
    
    $
    10,366
    
    
    $
    1,222
    
    
    $
    2,117
   51




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Additional
    
    
    Retained
    
    
    Accumulated Other
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Earnings
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Capital
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    Equity(Amounts in thousands, except share data)Balance as of December 29, 2007
    
    
    100
    
    
    $
    337,277
    
    
    $
    (2,040
    )
    
    $
    5,750
    
    
    $
    340,987Equity compensation expense
    
    
    
    
    
    
    3,920
    
    
    
    
    
    
    
    
    
    
    
    3,920Net income in 2008
    
    
    
    
    
    
    
    
    
    
    13,413
    
    
    
    
    
    
    
    13,413Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,296
    )
    
    
    (11,296
    )Balance as of January 3, 2009
    
    
    100
    
    
    
    341,197
    
    
    
    11,373
    
    
    
    (5,546
    )
    
    
    347,024Equity compensation expense
    
    
    
    
    
    
    5,327
    
    
    
    
    
    
    
    
    
    
    
    5,327Net loss in 2009
    
    
    
    
    
    
    
    
    
    
    (4,098
    )
    
    
    
    
    
    
    (4,098
    )Capital contribution by RBG
    
    
    
    
    
    
    12,858
    
    
    
    
    
    
    
    
    
    
    
    12,858Distribution to RBG
    
    
    
    
    
    
    (2,594
    )
    
    
    
    
    
    
    
    
    
    
    (2,594
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,320
    
    
    
    5,320Balance as of January 2, 2010
    
    
    100
    
    
    
    356,788
    
    
    
    7,275
    
    
    
    (226
    )
    
    
    363,837Equity compensation expense
    
    
    
    
    
    
    3,435
    
    
    
    
    
    
    
    
    
    
    
    3,435Net income in 2010
    
    
    
    
    
    
    
    
    
    
    8,126
    
    
    
    
    
    
    
    8,126Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    2,240Balance as of January 1, 2011
    
    
    100
    
    
    $
    360,223
    
    
    $
    15,401
    
    
    $
    2,014
    
    
    $
    377,638
   52




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedJanuary 1,
    
    
    January 2,
    
    
    January 3,2011
    
    
    2010
    
    
    2009(Amounts in thousands)Cash flows from operating activities:Net income (loss)
    
    $
    8,126
    
    
    $
    (4,098
    )
    
    $
    13,413Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    28,873
    
    
    
    28,530
    
    
    
    25,622Amortization of deferred financing fees and debt discount
    
    
    3,460
    
    
    
    3,530
    
    
    
    3,578Deferred financing fees of old debt written-off
    
    
    
    
    
    
    8,775
    
    
    
    Equity compensation expense
    
    
    3,435
    
    
    
    5,327
    
    
    
    3,920Deferred income taxes
    
    
    3,628
    
    
    
    (1,169
    )
    
    
    12,390Disposal of property, plant and equipment
    
    
    299
    
    
    
    3
    
    
    
    12Changes in operating assets and liabilities, net of effects
from purchase of businesses:Accounts receivable, net
    
    
    (6,116
    )
    
    
    7,580
    
    
    
    (17,583
    )Inventories, net
    
    
    (11,820
    )
    
    
    21,344
    
    
    
    (14,606
    )Other current and noncurrent assets
    
    
    2,581
    
    
    
    1,278
    
    
    
    (1,155
    )Accounts payable
    
    
    2,158
    
    
    
    (10,789
    )
    
    
    21,381Accrued expenses
    
    
    12,815
    
    
    
    (2,002
    )
    
    
    9,351Other current and noncurrent liabilities
    
    
    133
    
    
    
    (4,515
    )
    
    
    11,372Net cash provided by operating activities
    
    
    47,572
    
    
    
    53,794
    
    
    
    67,695Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (20,724
    )
    
    
    (15,656
    )
    
    
    (17,618
    )Purchase of intellectual property
    
    
    
    
    
    
    (400
    )
    
    
    Purchase of businesses, net of cash acquired
    
    
    (1,750
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (22,474
    )
    
    
    (16,056
    )
    
    
    (17,618
    )Cash flows from financing activities:Payments on capital lease obligations
    
    
    (22
    )
    
    
    (21
    )
    
    
    (21
    )Payments on new revolving ABL credit facility
    
    
    (61,000
    )
    
    
    (15,000
    )
    
    
    Proceeds from new revolving ABL credit facility
    
    
    26,000
    
    
    
    85,000
    
    
    
    Proceeds from old revolving credit facility
    
    
    
    
    
    
    6,000
    
    
    
    53,000Payments on old revolving credit facility
    
    
    
    
    
    
    (6,000
    )
    
    
    (58,500
    )Proceeds from issuance of senior secured notes
    
    
    
    
    
    
    345,677
    
    
    
    Payments on old senior term notes
    
    
    
    
    
    
    (315,788
    )
    
    
    (14,187
    )Extinguishment of senior subordinated notes
    
    
    
    
    
    
    (140,000
    )
    
    
    Capital contribution by RBG
    
    
    
    
    
    
    12,858
    
    
    
    Distribution to RBG
    
    
    
    
    
    
    (2,594
    )
    
    
    Payment of debt issuance costs
    
    
    
    
    
    
    (17,505
    )
    
    
    Net cash used in financing activities
    
    
    (35,022
    )
    
    
    (47,373
    )
    
    
    (19,708
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    630
    
    
    
    1,652
    
    
    
    (5,991
    )Net change in cash and cash equivalents
    
    
    (9,294
    )
    
    
    (7,983
    )
    
    
    24,378Cash and cash equivalents, beginning of year
    
    
    33,318
    
    
    
    41,301
    
    
    
    16,923Cash and cash equivalents, end of year
    
    $
    24,024
    
    
    $
    33,318
    
    
    $
    41,301
   53




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Amounts in thousands, except as specified)
 1. Business and Summary of Significant Accounting Policies
 Organization and Business
  Easton Bell Giro Riddell
 Reporting Period
  Principles of Consolidation
  Cash and Cash Equivalents
  Accounts Receivable and Concentration of Credit Risk
   54




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Inventories
  2010
    
    
    2009Raw materials
    
    $
    19,310
    
    
    $
    17,593Work-in-process
    
    
    2,364
    
    
    
    1,995Finished goods
    
    
    119,419
    
    
    
    108,327$
    141,093
    
    
    $
    127,915
 Property, Plant and Equipment
  Buildings and leasehold improvements
    
    Ten to twenty yearsMachinery and equipment
    
    Three to seven yearsOffice equipment and furniture
    
    Three to five yearsComputer equipment and software
    
    Three to five years
  2010
    
    
    2009Land
    
    $
    105
    
    
    $
    105Building and leasehold improvements
    
    
    12,230
    
    
    
    11,634Machinery and equipment
    
    
    33,004
    
    
    
    28,301Office equipment and furniture
    
    
    4,202
    
    
    
    3,344Computer equipment and software
    
    
    39,780
    
    
    
    30,313Construction in progress
    
    
    13,830
    
    
    
    10,113103,151
    
    
    
    83,810Less accumulated depreciation
    
    
    (53,415
    )
    
    
    (37,442
    )$
    49,736
    
    
    $
    46,368
    55




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Goodwill and Intangible Assets
    January 1, 2011
    
    
    January 2, 2010Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmounts
    
    
    Amortization
    
    
    Amounts
    
    
    AmortizationAmortized intangible assets:Trademarks and tradenames
    
    $
    1,702
    
    
    $
    (1,702
    )
    
    $
    1,702
    
    
    $
    (1,579
    )Customer relationships
    
    
    59,180
    
    
    
    (35,166
    )
    
    
    59,180
    
    
    
    (30,925
    )Patents
    
    
    60,345
    
    
    
    (36,275
    )
    
    
    60,345
    
    
    
    (29,817
    )Licensing and other
    
    
    5,900
    
    
    
    (5,721
    )
    
    
    5,900
    
    
    
    (4,778
    )Total
    
    $
    127,127
    
    
    $
    (78,864
    )
    
    $
    127,127
    
    
    $
    (67,099
    )Indefinite-lived intangible assets:Trademarks
    
    $
    230,784
    
    
    
    
    
    
    $
    230,784
  Riddell Riddell Riddell
 Bell Giro Blackburn Bell Giro Blackburn Bell Giro Blackburn
 Easton Easton Easton
  56




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  Team
    
    
    ActionSports
    
    
    Sports
    
    
    ConsolidatedBalance at January 3, 2009
    
    $
    141,992
    
    
    $
    61,464
    
    
    $
    203,456Additional purchase price
    
    
    85
    
    
    
    
    
    
    
    85Balance at January 2, 2010
    
    
    142,077
    
    
    
    61,464
    
    
    
    203,541Acquisitions
    
    
    3,158
    
    
    
    
    
    
    
    3,158Additional purchase price
    
    
    229
    
    
    
    
    
    
    
    229Balance at January 1, 2011
    
    $
    145,464
    
    
    $
    61,464
    
    
    $
    206,928
   Long-Lived Assets
  Deferred Financing Fees
  Income Taxes
   57




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Revenue Recognition
  Warranty Obligations
   Year Ended2010
    
    
    2009Beginning of year
    
    $
    3,242
    
    
    $
    3,663Warranty costs incurred during the period
    
    
    (4,995
    )
    
    
    (4,438
    )Warranty expense recorded during the period
    
    
    4,187
    
    
    
    4,017End of year
    
    $
    2,434
    
    
    $
    3,242
 Advertising Costs
  Shipping and Handling
  Research and Development Expenses
  Use of Estimates
  Foreign Currency Translation
   58




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Fair Values of Financial Instruments
   January 1, 2011
    
    
    January 2, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial liability:9.75%
Senior Secured
Notes
    
    $
    349,201
    
    
    $
    387,158
    
    
    $
    348,654
    
    
    $
    365,626
 Stock-Based Employee Compensation
  Recent Accounting Pronouncements
 Improving Disclosures about
Fair Value Measurements
 2. Long-term Debt
  2010
    
    
    20099.750% Senior Secured Notes
    
    $
    350,000
    
    
    $
    350,000Senior Secured Credit ABL Facility
    
    
    38,893
    
    
    
    70,000Capital lease obligations
    
    
    102
    
    
    
    124Total long-term debt
    
    
    388,995
    
    
    
    420,124Less unamortized debt discount on senior secured notes
    
    
    (3,832
    )
    
    
    (4,285
    )Less current maturities of long-term debt
    
    
    (38,917
    )
    
    
    (70,022
    )Long-term debt, less current portion
    
    $
    346,246
    
    
    $
    345,817
  59




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 9.750% Senior Secured Notes
    ABL Credit Facility
    60




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
    SeniorSecured
    
    
    CapitalFiscal Year Ending
    
    Notes
    
    
    Leases
    
    
    Total2011
    
    $
    
    
    
    $
    24
    
    
    $
    242012
    
    
    
    
    
    
    26
    
    
    
    262013
    
    
    
    
    
    
    29
    
    
    
    292014
    
    
    
    
    
    
    23
    
    
    
    232015
    
    
    
    
    
    
    
    
    
    
    Thereafter
    
    
    350,000
    
    
    
    
    
    
    
    350,000$
    350,000
    
    
    $
    102
    
    
    $
    350,102
     61




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Holdco Facility Refinancing and Equity Investment
     3. Accrued Expenses
  2010
    
    
    2009Salaries, wages, commissions and bonuses
    
    $
    14,675
    
    
    $
    7,119Advertising
    
    
    5,410
    
    
    
    5,411Rebates
    
    
    6,044
    
    
    
    4,411Warranty
    
    
    2,434
    
    
    
    3,242Product liability  current portion
    
    
    4,491
    
    
    
    4,619Royalties
    
    
    1,830
    
    
    
    2,268Interest
    
    
    3,689
    
    
    
    3,434Income taxes
    
    
    1,192
    
    
    
    2,581Other
    
    
    18,687
    
    
    
    16,171$
    58,452
    
    
    $
    49,256
  62




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 4. Leases
  Capital
    
    
    OperatingFiscal Year Ending
    
    Leases
    
    
    Leases2011
    
    $
    32
    
    
    $
    10,0172012
    
    
    32
    
    
    
    8,3952013
    
    
    32
    
    
    
    5,2622014
    
    
    24
    
    
    
    3,8142015
    
    
    
    
    
    
    2,766Thereafter
    
    
    
    
    
    
    9,450Total minimum lease payments
    
    
    120
    
    
    $
    39,704Less amount representing interest
    
    
    (18
    )Present value of minimum lease
payments, including current maturities
of $24
    
    $
    102
  2010
    
    
    2009Leasehold improvements
    
    $
    247
    
    
    $
    247Less accumulated depreciation
    
    
    (181
    )
    
    
    (161
    )$
    66
    
    
    $
    86
  5. Employee Benefit Plans
    63




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 6. Segment Information
   Team
    
    
    ActionSports
    
    
    Sports
    
    
    ConsolidatedYear ended January 1, 2011:Net sales
    
    $
    426,816
    
    
    $
    346,027
    
    
    $
    772,843Income from operations
    
    
    58,569
    
    
    
    48,600
    
    
    
    107,169Depreciation
    
    
    10,001
    
    
    
    7,107
    
    
    
    17,108Capital expenditures
    
    
    9,982
    
    
    
    10,742
    
    
    
    20,724Year ended January 2, 2010:Net sales
    
    $
    387,021
    
    
    $
    329,309
    
    
    $
    716,330Income from operations
    
    
    46,078
    
    
    
    42,237
    
    
    
    88,315Depreciation
    
    
    9,030
    
    
    
    6,094
    
    
    
    15,124Capital expenditures
    
    
    8,297
    
    
    
    7,359
    
    
    
    15,656Year ended January 3, 2009:Net sales
    
    $
    433,722
    
    
    $
    341,817
    
    
    $
    775,539Income from operations
    
    
    73,049
    
    
    
    35,587
    
    
    
    108,636Depreciation
    
    
    6,601
    
    
    
    5,614
    
    
    
    12,215Capital expenditures
    
    
    10,540
    
    
    
    7,078
    
    
    
    17,618
 Team
    
    
    ActionSports
    
    
    Sports
    
    
    ConsolidatedAssetsJanuary 1, 2011
    
    $
    599,980
    
    
    $
    364,574
    
    
    $
    964,554January 2, 2010
    
    
    585,775
    
    
    
    374,870
    
    
    
    960,645
 Fiscal Year2010
    
    
    2009
    
    
    2008Segment income from operations
    
    $
    107,169
    
    
    $
    88,315
    
    
    $
    108,636Equity compensation expense
    
    
    (3,435
    )
    
    
    (5,327
    )
    
    
    (3,920
    )Restructuring and other infrequent expenses
    
    
    
    
    
    
    
    
    
    
    (492
    )Amortization of intangibles
    
    
    (11,765
    )
    
    
    (13,406
    )
    
    
    (13,407
    )Corporate expenses
    
    
    (32,640
    )
    
    
    (24,124
    )
    
    
    (17,491
    )Consolidated income from operations
    
    $
    59,329
    
    
    $
    45,458
    
    
    $
    73,326
  64




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  2010
    
    
    2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofNet Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net SalesTeam SportsBaseball and softball products
    
    $
    151,097
    
    
    
    19.6
    %
    
    $
    136,924
    
    
    
    19.2
    %
    
    $
    156,692
    
    
    
    20.3
    %Ice hockey products
    
    
    111,127
    
    
    
    14.4
    
    
    
    107,273
    
    
    
    15.0
    
    
    
    117,357
    
    
    
    15.1Football products and reconditioning
    
    
    98,351
    
    
    
    12.7
    
    
    
    81,947
    
    
    
    11.4
    
    
    
    83,164
    
    
    
    10.7Other products and licensing
    
    
    66,241
    
    
    
    8.6
    
    
    
    60,877
    
    
    
    8.5
    
    
    
    76,509
    
    
    
    9.9$
    426,816
    
    
    
    55.3
    %
    
    $
    387,021
    
    
    
    54.1
    %
    
    $
    433,722
    
    
    
    56.0
    %Action SportsCycling helmets
    
    $
    134,073
    
    
    
    17.3
    %
    
    $
    137,837
    
    
    
    19.2
    %
    
    $
    149,745
    
    
    
    19.3
    %Snowsports helmets
    
    
    51,805
    
    
    
    6.7
    
    
    
    43,994
    
    
    
    6.1
    
    
    
    36,460
    
    
    
    4.7Powersports products
    
    
    8,958
    
    
    
    1.2
    
    
    
    9,164
    
    
    
    1.3
    
    
    
    14,301
    
    
    
    1.8Premium cycling components and accessories
    
    
    47,100
    
    
    
    6.1
    
    
    
    39,914
    
    
    
    5.6
    
    
    
    50,352
    
    
    
    6.5Fitness accessories
    
    
    18,920
    
    
    
    2.4
    
    
    
    17,921
    
    
    
    2.5
    
    
    
    17,707
    
    
    
    2.3Cycling accessories
    
    
    85,171
    
    
    
    11.0
    
    
    
    80,479
    
    
    
    11.2
    
    
    
    73,252
    
    
    
    9.4$
    346,027
    
    
    
    44.7
    %
    
    $
    329,309
    
    
    
    45.9
    %
    
    $
    341,817
    
    
    
    44.0
    %Total Net Sales
    
    $
    772,843
    
    
    
    100.0
    %
    
    $
    716,330
    
    
    
    100.0
    %
    
    $
    775,539
    
    
    
    100.0
    %
  2010
    
    
    2009
    
    
    2008North America
    
    $
    655,121
    
    
    $
    602,367
    
    
    $
    661,729Europe
    
    
    101,714
    
    
    
    100,137
    
    
    
    85,942Other
    
    
    16,008
    
    
    
    13,826
    
    
    
    27,868$
    772,843
    
    
    $
    716,330
    
    
    $
    775,539
  2010
    
    
    2009North America
    
    $
    38,299
    
    
    $
    34,985Other
    
    
    11,437
    
    
    
    11,383$
    49,736
    
    
    $
    46,368
  2010
    
    
    2009North America
    
    $
    912,619
    
    
    $
    919,475Other
    
    
    51,935
    
    
    
    41,170$
    964,554
    
    
    $
    960,645
  65




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 7. Product Liability, Litigation and Other Contingencies
 Product Liability
    Litigation and Other Contingencies
  8. Income Taxes
 Income Taxes
   66




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  2010
    
    
    2009Beginning balance
    
    $
    2,690
    
    
    $
    Additions for tax positions of the current year
    
    
    
    
    
    
    2,530Additions for tax positions of the prior year
    
    
    568
    
    
    
    160Ending balance
    
    $
    3,258
    
    
    $
    2,690
   2010
    
    
    2009
    
    
    2008Current tax expense (benefit):Federal
    
    $
    (929
    )
    
    $
    3
    
    
    $
    499State
    
    
    785
    
    
    
    1,386
    
    
    
    1,167Foreign
    
    
    2,582
    
    
    
    1,919
    
    
    
    3,9482,438
    
    
    
    3,308
    
    
    
    5,614Deferred tax expense (benefit):Federal
    
    
    2,898
    
    
    
    2,041
    
    
    
    10,612State
    
    
    593
    
    
    
    175
    
    
    
    1,964Foreign
    
    
    706
    
    
    
    (878
    )
    
    
    (186
    )4,197
    
    
    
    1,338
    
    
    
    12,390Income tax expense
    
    $
    6,635
    
    
    $
    4,646
    
    
    $
    18,004
  2010
    
    
    2009
    
    
    2008Provision for income taxes at United States federal statutory rate of 35%
    
    $
    5,167
    
    
    $
    192
    
    
    $
    10,996State and local income taxes, net of federal income tax effect
    
    
    803
    
    
    
    1,015
    
    
    
    2,641Taxes on foreign income which differ from the United States statutory rate
    
    
    (137
    )
    
    
    (1,423
    )
    
    
    111Non-deductible equity compensation expense
    
    
    1,202
    
    
    
    1,864
    
    
    
    1,372Tax effect of other permanent items
    
    
    372
    
    
    
    1,197
    
    
    
    1,771FIN 48/ASC 740-10 activity
    
    
    544
    
    
    
    2,690
    
    
    
    Other
    
    
    (1,316
    )
    
    
    (889
    )
    
    
    1,113$
    6,635
    
    
    $
    4,646
    
    
    $
    18,004
  67




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  2010
    
    
    2009Deferred income tax assets:Receivable reserves
    
    $
    2,830
    
    
    $
    2,474Inventory
    
    
    4,533
    
    
    
    3,786Accrued expenses and reserves
    
    
    13,431
    
    
    
    10,420Net operating loss carryforwards
    
    
    32,339
    
    
    
    36,303Hedging assets
    
    
    170
    
    
    
    594Other
    
    
    2,288
    
    
    
    2,368Total deferred tax assets
    
    
    55,591
    
    
    
    55,945Deferred income tax liabilities:Property, plant and equipment
    
    
    2,577
    
    
    
    2,172Intangible assets
    
    
    79,626
    
    
    
    76,757Total deferred tax liabilities
    
    
    82,203
    
    
    
    78,929Valuation allowance
    
    
    (6,513
    )
    
    
    (6,513
    )Total net deferred income tax liability
    
    $
    (33,125
    )
    
    $
    (29,497
    )
   2010
    
    
    2009
    
    
    2008Domestic
    
    $
    6,525
    
    
    $
    (3,034
    )
    
    $
    18,032Foreign
    
    
    8,236
    
    
    
    3,582
    
    
    
    13,385Income before income taxes
    
    $
    14,761
    
    
    $
    548
    
    
    $
    31,417
   9. Derivative Instruments and Hedging Activity
    68




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  Level 1:
 Level 2:
 Level 3:
     January 1, 2011
    
    
    January 2, 2010Foreign
    
    
    
    
    
    
    ForeignU.S. Dollars
    
    
    Currency
    
    
    U.S. Dollars
    
    
    CurrencyForeign Currency Exchange Forward
Contracts:U.S. Dollars / Canadian Dollars
    
    $
    4,500
    
    
    Cdn $
    4,476
    
    
    $
    44,505
    
    
    Cdn $
    46,579U.S. Dollars / Euros
    
    
    
    
    
    
    
    
    
    
    120
    
    
    
    83U.S. Dollars / British Pounds
    
    
    
    
    
    £
    
    
    
    
    72
    
    
    £
    45
   69




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:None
    
    $
    
    
    
    $
    
    
    
    $
    Liabilities:Interest rate swap
    
    $
    
    
    
    $
    453
    
    
    $
    Foreign currency
exchange forward
contracts
    
    
    
    
    
    
    93
    
    
    
    Total
    
    $
    
    
    
    $
    546
    
    
    $
    
 10. Stock-Based Employee Compensation
    2010
    
    2009
    
    2008Expected term
    
    2 to 4 years
    
    4 years
    
    4 yearsDividend yield
    
    0.0%
    
    0.0%
    
    0.0%Forfeiture rate
    
    7.7%
    
    7.7%
    
    7.7%Risk-free interest rate
    
    0.15 to .22%
    
    0.17%
    
    1.5 to 2.0%Expected volatility(1)
    
    49.4%
    
    41.4%
    
    39.0 to 46.0%
 
 (1)
    
    Expected volatility is based upon a peer group of companies given no historical data for
the Units.   70




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
  2010
    
    
    2009
    
    
    2008Equity compensation expense
    
    $
    3,435
    
    
    $
    5,327
    
    
    $
    3,920
   Weighted AverageNumber of
    
    
    Grant DateUnits
    
    
    Exercise PriceOutstanding at January 2, 2010
    
    
    89,490,621
    
    
    $
    1.46Granted
    
    
    12,593,622
    
    
    $
    1.32Cancelled
    
    
    (428,353
    )
    
    $
    2.14Forfeited
    
    
    (5,486,215
    )
    
    $
    1.47Outstanding at January 1, 2011
    
    
    96,169,675
    
    
    $
    1.44Vested Units at January 2, 2010
    
    
    22,040,029
    
    
    $
    1.70Vested Units at January 1, 2011
    
    
    35,460,835
    
    
    $
    1.60
 11. Related Party Transactions
  Easton Easton Easton
   71




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)


(Amounts in thousands, except as specified)


12. Supplemental Guarantor Condensed Financial Information
    72




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Balance Sheet
January 1, 2011
 Guarantor
    
    
    Non-GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,981
    
    
    $
    7,049
    
    
    $
    14,994
    
    
    $
    
    
    
    $
    24,024Accounts receivable, net
    
    
    
    
    
    
    189,750
    
    
    
    26,416
    
    
    
    
    
    
    
    216,166Inventories, net
    
    
    
    
    
    
    122,116
    
    
    
    18,977
    
    
    
    
    
    
    
    141,093Prepaid expenses
    
    
    1,306
    
    
    
    4,907
    
    
    
    867
    
    
    
    
    
    
    
    7,080Deferred taxes
    
    
    
    
    
    
    16,254
    
    
    
    
    
    
    
    
    
    
    
    16,254Other current assets
    
    
    
    
    
    
    7,504
    
    
    
    979
    
    
    
    
    
    
    
    8,483Total current assets
    
    
    3,287
    
    
    
    347,580
    
    
    
    62,233
    
    
    
    
    
    
    
    413,100Property, plant and equipment, net
    
    
    21,235
    
    
    
    27,776
    
    
    
    725
    
    
    
    
    
    
    
    49,736Deferred financing fees, net
    
    
    14,248
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,248Investments and intercompany receivables
    
    
    370,712
    
    
    
    70,614
    
    
    
    74,634
    
    
    
    (515,960
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    273,466
    
    
    
    5,581
    
    
    
    
    
    
    
    279,047Goodwill
    
    
    16,195
    
    
    
    185,542
    
    
    
    5,191
    
    
    
    
    
    
    
    206,928Other assets
    
    
    
    
    
    
    1,355
    
    
    
    140
    
    
    
    
    
    
    
    1,495Total assets
    
    $
    425,677
    
    
    $
    906,333
    
    
    $
    148,504
    
    
    $
    (515,960
    )
    
    $
    964,554LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Revolving credit facility
    
    $
    38,893
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    38,893Current portion of capital lease obligations
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24Accounts payable
    
    
    
    
    
    
    71,244
    
    
    
    1,904
    
    
    
    
    
    
    
    73,148Accrued expenses
    
    
    10,562
    
    
    
    41,313
    
    
    
    6,577
    
    
    
    
    
    
    
    58,452Total current liabilities
    
    
    49,455
    
    
    
    112,581
    
    
    
    8,481
    
    
    
    
    
    
    
    170,517Long-term debt, less current portion
    
    
    346,168
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    346,168Capital lease obligations, less current portion
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    78Deferred taxes
    
    
    
    
    
    
    49,379
    
    
    
    
    
    
    
    
    
    
    
    49,379Other noncurrent liabilities
    
    
    
    
    
    
    13,341
    
    
    
    7,433
    
    
    
    
    
    
    
    20,774Long-term intercompany payables
    
    
    
    
    
    
    417,140
    
    
    
    60,496
    
    
    
    (477,636
    )
    
    
    Total liabilities
    
    
    395,623
    
    
    
    592,519
    
    
    
    76,410
    
    
    
    (477,636
    )
    
    
    586,916Total stockholders equity
    
    
    30,054
    
    
    
    313,814
    
    
    
    72,094
    
    
    
    (38,324
    )
    
    
    377,638Total liabilities and stockholders equity
    
    $
    425,677
    
    
    $
    906,333
    
    
    $
    148,504
    
    
    $
    (515,960
    )
    
    $
    964,554
  73




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Balance Sheet
January 2, 2010
 Guarantor
    
    
    Non-GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,347
    
    
    $
    10,229
    
    
    $
    13,742
    
    
    $
    
    
    
    $
    33,318Accounts receivable, net
    
    
    
    
    
    
    184,411
    
    
    
    24,492
    
    
    
    
    
    
    
    208,903Inventories, net
    
    
    
    
    
    
    110,478
    
    
    
    17,437
    
    
    
    
    
    
    
    127,915Prepaid expenses
    
    
    964
    
    
    
    6,382
    
    
    
    576
    
    
    
    
    
    
    
    7,922Deferred taxes
    
    
    
    
    
    
    12,607
    
    
    
    
    
    
    
    
    
    
    
    12,607Other current assets
    
    
    
    
    
    
    7,567
    
    
    
    3,138
    
    
    
    
    
    
    
    10,705Total current assets
    
    
    10,311
    
    
    
    331,674
    
    
    
    59,385
    
    
    
    
    
    
    
    401,370Property, plant and equipment, net
    
    
    19,032
    
    
    
    26,572
    
    
    
    764
    
    
    
    
    
    
    
    46,368Deferred financing fees, net
    
    
    17,255
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,255Investments and intercompany receivables
    
    
    380,365
    
    
    
    91,416
    
    
    
    43,649
    
    
    
    (515,430
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    284,996
    
    
    
    5,816
    
    
    
    
    
    
    
    290,812Goodwill
    
    
    16,195
    
    
    
    182,155
    
    
    
    5,191
    
    
    
    
    
    
    
    203,541Other assets
    
    
    
    
    
    
    1,265
    
    
    
    34
    
    
    
    
    
    
    
    1,299Total assets
    
    $
    443,158
    
    
    $
    918,078
    
    
    $
    114,839
    
    
    $
    (515,430
    )
    
    $
    960,645LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Revolving credit facility
    
    $
    70,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    70,000Current portion of capital lease obligations
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    22Accounts payable
    
    
    
    
    
    
    67,192
    
    
    
    3,718
    
    
    
    
    
    
    
    70,910Accrued expenses
    
    
    6,851
    
    
    
    34,096
    
    
    
    8,309
    
    
    
    
    
    
    
    49,256Total current liabilities
    
    
    76,851
    
    
    
    101,310
    
    
    
    12,027
    
    
    
    
    
    
    
    190,188Long-term debt, less current portion
    
    
    345,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,715Capital lease obligations, less current portion
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    102Deferred taxes
    
    
    
    
    
    
    42,104
    
    
    
    
    
    
    
    
    
    
    
    42,104Other noncurrent liabilities
    
    
    
    
    
    
    11,266
    
    
    
    7,433
    
    
    
    
    
    
    
    18,699Long-term intercompany payables
    
    
    
    
    
    
    447,305
    
    
    
    30,331
    
    
    
    (477,636
    )
    
    
    Total liabilities
    
    
    422,566
    
    
    
    602,087
    
    
    
    49,791
    
    
    
    (477,636
    )
    
    
    596,808Total stockholders equity
    
    
    20,592
    
    
    
    315,991
    
    
    
    65,048
    
    
    
    (37,794
    )
    
    
    363,837Total liabilities and stockholders equity
    
    $
    443,158
    
    
    $
    918,078
    
    
    $
    114,839
    
    
    $
    (515,430
    )
    
    $
    960,645
  74




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Statement of Operations
Fiscal Year Ended January 1, 2011
 Non-Guarantor
    
    
    GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    719,238
    
    
    $
    87,938
    
    
    $
    (34,333
    )
    
    $
    772,843Cost of sales
    
    
    
    
    
    
    475,073
    
    
    
    69,706
    
    
    
    (34,333
    )
    
    
    510,446Gross profit
    
    
    
    
    
    
    244,165
    
    
    
    18,232
    
    
    
    
    
    
    
    262,397Selling, general and administrative expenses
    
    
    41,935
    
    
    
    139,290
    
    
    
    10,078
    
    
    
    
    
    
    
    191,303Amortization of intangibles
    
    
    
    
    
    
    11,765
    
    
    
    
    
    
    
    
    
    
    
    11,765(Loss) income from operations
    
    
    (41,935
    )
    
    
    93,110
    
    
    
    8,154
    
    
    
    
    
    
    
    59,329Interest expense, net
    
    
    43,445
    
    
    
    1,121
    
    
    
    2
    
    
    
    
    
    
    
    44,568Share of net income (loss) of subsidiaries
under equity method
    
    
    93,506
    
    
    
    5,364
    
    
    
    
    
    
    
    (98,870
    )
    
    
    Income (loss) before income taxes
    
    
    8,126
    
    
    
    97,353
    
    
    
    8,152
    
    
    
    (98,870
    )
    
    
    14,761Income tax expense
    
    
    
    
    
    
    3,847
    
    
    
    2,788
    
    
    
    
    
    
    
    6,635Net income (loss)
    
    $
    8,126
    
    
    $
    93,506
    
    
    $
    5,364
    
    
    $
    (98,870
    )
    
    $
    8,126
 Condensed Consolidating Statement of Operations
Fiscal Year Ended January 2, 2010
 Non-Guarantor
    
    
    GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    673,399
    
    
    $
    79,905
    
    
    $
    (36,974
    )
    
    $
    716,330Cost of sales
    
    
    
    
    
    
    454,687
    
    
    
    64,715
    
    
    
    (36,974
    )
    
    
    482,428Gross profit
    
    
    
    
    
    
    218,712
    
    
    
    15,190
    
    
    
    
    
    
    
    233,902Selling, general and administrative expenses
    
    
    34,038
    
    
    
    130,076
    
    
    
    10,924
    
    
    
    
    
    
    
    175,038Amortization of intangibles
    
    
    
    
    
    
    13,406
    
    
    
    
    
    
    
    
    
    
    
    13,406(Loss) income from operations
    
    
    (34,038
    )
    
    
    75,230
    
    
    
    4,266
    
    
    
    
    
    
    
    45,458Interest expense, net
    
    
    44,123
    
    
    
    785
    
    
    
    2
    
    
    
    
    
    
    
    44,910Share of net income (loss) of subsidiaries
under equity method
    
    
    74,063
    
    
    
    3,259
    
    
    
    
    
    
    
    (77,322
    )
    
    
    (Loss) income before income taxes
    
    
    (4,098
    )
    
    
    77,704
    
    
    
    4,264
    
    
    
    (77,322
    )
    
    
    548Income tax expense
    
    
    
    
    
    
    3,641
    
    
    
    1,005
    
    
    
    
    
    
    
    4,646Net (loss) income
    
    $
    (4,098
    )
    
    $
    74,063
    
    
    $
    3,259
    
    
    $
    (77,322
    )
    
    $
    (4,098
    )
  75




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EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Statement of Operations
Fiscal Year Ended January 3, 2009
 Non-Guarantor
    
    
    GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    714,795
    
    
    $
    100,608
    
    
    $
    (39,864
    )
    
    $
    775,539Cost of sales
    
    
    
    
    
    
    473,529
    
    
    
    75,462
    
    
    
    (39,864
    )
    
    
    509,127Gross profit
    
    
    
    
    
    
    241,266
    
    
    
    25,146
    
    
    
    
    
    
    
    266,412Selling, general and administrative expenses
    
    
    24,889
    
    
    
    143,819
    
    
    
    10,479
    
    
    
    
    
    
    
    179,187Amortization of intangibles
    
    
    
    
    
    
    12,737
    
    
    
    670
    
    
    
    
    
    
    
    13,407Restructuring and other infrequent expenses
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    492(Loss) income from operations
    
    
    (24,889
    )
    
    
    84,218
    
    
    
    13,997
    
    
    
    
    
    
    
    73,326Interest expense, net
    
    
    41,502
    
    
    
    699
    
    
    
    (292
    )
    
    
    
    
    
    
    41,909Share of net income (loss) of subsidiaries
under equity method
    
    
    79,804
    
    
    
    10,313
    
    
    
    
    
    
    
    (90,117
    )
    
    
    Income (loss) before income taxes
    
    
    13,413
    
    
    
    93,832
    
    
    
    14,289
    
    
    
    (90,117
    )
    
    
    31,417Income tax expense
    
    
    
    
    
    
    14,028
    
    
    
    3,976
    
    
    
    
    
    
    
    18,004Net income (loss)
    
    $
    13,413
    
    
    $
    79,804
    
    
    $
    10,313
    
    
    $
    (90,117
    )
    
    $
    13,413
  76




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended January 1, 2011
 Guarantor
    
    
    Non-GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    8,126
    
    
    $
    93,506
    
    
    $
    5,364
    
    
    $
    (98,870
    )
    
    $
    8,126Non-cash adjustments
    
    
    21,753
    
    
    
    (80,034
    )
    
    
    (894
    )
    
    
    98,870
    
    
    
    39,695Changes in operating assets and liabilities, net of
effects from purchase of businesses
    
    
    7,262
    
    
    
    (3,895
    )
    
    
    (3,616
    )
    
    
    
    
    
    
    (249
    )Net cash provided by operating activities
    
    
    37,141
    
    
    
    9,577
    
    
    
    854
    
    
    
    
    
    
    
    47,572Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (9,507
    )
    
    
    (10,985
    )
    
    
    (232
    )
    
    
    
    
    
    
    (20,724
    )Purchases of businesses, net of cash acquired
    
    
    
    
    
    
    (1,750
    )
    
    
    
    
    
    
    
    
    
    
    (1,750
    )Net cash used in investing activities
    
    
    (9,507
    )
    
    
    (12,735
    )
    
    
    (232
    )
    
    
    
    
    
    
    (22,474
    )Cash flows from financing activities:Payments on capital lease obligations
    
    
    
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    (22
    )Payments on revolving credit facility, net
    
    
    (35,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,000
    )Net cash used in financing activities
    
    
    (35,000
    )
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    (35,022
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    630
    
    
    
    
    
    
    
    630Net change in cash and cash equivalents
    
    
    (7,366
    )
    
    
    (3,180
    )
    
    
    1,252
    
    
    
    
    
    
    
    (9,294
    )Cash and cash equivalents, beginning of year
    
    
    9,347
    
    
    
    10,229
    
    
    
    13,742
    
    
    
    
    
    
    
    33,318Cash and cash equivalents, end of year
    
    $
    1,981
    
    
    $
    7,049
    
    
    $
    14,994
    
    
    $
    
    
    
    $
    24,024
  77




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended January 2, 2010
 Guarantor
    
    
    Non-GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net (loss) income
    
    $
    (4,098
    )
    
    $
    74,063
    
    
    $
    3,259
    
    
    $
    (77,322
    )
    
    $
    (4,098
    )Non-cash adjustments
    
    
    43,646
    
    
    
    (74,964
    )
    
    
    (1,008
    )
    
    
    77,322
    
    
    
    44,996Changes in operating assets and liabilities, net of
effects from purchase of businesses
    
    
    9,554
    
    
    
    9,906
    
    
    
    (6,564
    )
    
    
    
    
    
    
    12,896Net cash provided by operating activities
    
    
    49,102
    
    
    
    9,005
    
    
    
    (4,313
    )
    
    
    
    
    
    
    53,794Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (7,232
    )
    
    
    (8,178
    )
    
    
    (246
    )
    
    
    
    
    
    
    (15,656
    )Purchase of intellectual property
    
    
    
    
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    (400
    )Net cash used in investing activities
    
    
    (7,232
    )
    
    
    (8,578
    )
    
    
    (246
    )
    
    
    
    
    
    
    (16,056
    )Cash flows from financing activities:Payments on capital lease obligations
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )Payments on old senior term notes
    
    
    (315,788
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315,788
    )Proceeds from new revolving ABL credit facility, net
    
    
    70,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,000Extinguishment of senior subordinated notes
    
    
    (140,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (140,000
    )Proceeds from issuance of senior secured notes
    
    
    345,677
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,677Payments on debt issuance costs
    
    
    (17,505
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,505
    )Distribution to RBG
    
    
    (2,594
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,594
    )Capital contribution by RBG
    
    
    12,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,858Net cash used in financing activities
    
    
    (47,352
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (47,373
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    1,652
    
    
    
    
    
    
    
    1,652Net change in cash and cash equivalents
    
    
    (5,482
    )
    
    
    406
    
    
    
    (2,907
    )
    
    
    
    
    
    
    (7,983
    )Cash and cash equivalents, beginning of year
    
    
    14,829
    
    
    
    9,823
    
    
    
    16,649
    
    
    
    
    
    
    
    41,301Cash and cash equivalents, end of year
    
    $
    9,347
    
    
    $
    10,229
    
    
    $
    13,742
    
    
    $
    
    
    
    $
    33,318
  78




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##### Table of Contents



EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
 (Amounts in thousands, except as specified)
 Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended January 3, 2009
 Guarantor
    
    
    Non-GuarantorIssuer
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    13,413
    
    
    $
    79,804
    
    
    $
    10,313
    
    
    $
    (90,117
    )
    
    $
    13,413Non-cash adjustments
    
    
    30,712
    
    
    
    (72,217
    )
    
    
    (3,090
    )
    
    
    90,117
    
    
    
    45,522Changes in operating assets and liabilities, net of
effects from purchase of businesses
    
    
    (3,805
    )
    
    
    9,026
    
    
    
    3,539
    
    
    
    
    
    
    
    8,760Net cash provided by operating activities
    
    
    40,320
    
    
    
    16,613
    
    
    
    10,762
    
    
    
    
    
    
    
    67,695Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (8,903
    )
    
    
    (8,589
    )
    
    
    (126
    )
    
    
    
    
    
    
    (17,618
    )Net cash used in investing activities
    
    
    (8,903
    )
    
    
    (8,589
    )
    
    
    (126
    )
    
    
    
    
    
    
    (17,618
    )Cash flows from financing activities:Payments on capital lease obligations
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )Payments on senior term notes
    
    
    (14,187
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,187
    )Proceeds from credit facilities, net
    
    
    (5,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,500
    )Net cash used in financing activities
    
    
    (19,687
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (19,708
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (5,991
    )
    
    
    
    
    
    
    (5,991
    )Net change in cash and cash equivalents
    
    
    11,730
    
    
    
    8,003
    
    
    
    4,645
    
    
    
    
    
    
    
    24,378Cash and cash equivalents, beginning of year
    
    
    3,099
    
    
    
    1,820
    
    
    
    12,004
    
    
    
    
    
    
    
    16,923Cash and cash equivalents, end of year
    
    $
    14,829
    
    
    $
    9,823
    
    
    $
    16,649
    
    
    $
    
    
    
    $
    41,301
  79




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 Evaluation of disclosure controls and procedures
   Managements annual report on internal control over financial reporting
      
 Item 9B.
    
    Other Information
   80




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  Name
    
    Age
    
    PositionJames L. Easton
    
    75
    
    ChairmanPaul E. Harrington
    
    49
    
    President, Chief Executive Officer and DirectorMark A. Tripp
    
    52
    
    Chief Financial Officer, Senior Vice President of Finance, Treasurer and SecretaryDonna L. Flood
    
    48
    
    Chief Operations OfficerDaniel J. Arment
    
    50
    
    President of Riddell SportsSteven T. Bigelow
    
    47
    
    President of Action SportsChristopher Zimmerman
    
    51
    
    President of Easton SportsThomas T. Merrigan
    
    60
    
    Executive Vice President and General CounselHugh J. Hamill
    
    56
    
    Senior Vice President for Product CreationJackelyn E. Werblo
    
    56
    
    Senior Vice President of Human ResourcesWilliam L. Beane III
    
    48
    
    DirectorAndrew J. Claerhout
    
    39
    
    DirectorPeter D. Lamm
    
    59
    
    DirectorTerry G. Lee
    
    62
    
    DirectorKevin M. Mansfield
    
    32
    
    DirectorTimothy P. Mayhew
    
    43
    
    DirectorAron I. Schwartz
    
    40
    
    DirectorPeter V. Ueberroth
    
    73
    
    DirectorRichard E. Wenz
    
    61
    
    Director
 James L. Easton
 Paul E. Harrington
 Mark A. Tripp
  81




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##### Table of Contents



Donna L. Flood
 Daniel J. Arment
 Steven T. Bigelow
 Christopher Zimmerman
 Thomas T. Merrigan
 Hugh J. Hamill
 Jackelyn E. Werblo
 William L. Beane III
 Andrew J. Claerhout
  82




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##### Table of Contents



Peter D. Lamm
 Terry G. Lee
 Kevin M. Mansfield
 Timothy P. Mayhew
 Aron I. Schwartz
 Peter V. Ueberroth
 Richard E. Wenz
  83




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##### Table of Contents



Code of Ethics
 www.eastonbellsports.com
 Audit Committee
  
 Item 11.
    
    Executive Compensation
 Compensation Discussion and Analysis
 Philosophy
   Overview of Compensation and Process
    84




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##### Table of Contents




    
    performance against corporate and individual objectives for the previous year;
 
    
    difficulty of achieving desired results in the coming year;
 
    
    value of their unique skills and capabilities to support long-term performance of
our Company;
 
    
    performance of their general management responsibilities; and
 
    
    contribution as a member of the management team.
   Compensation Consultant
  Base Salary and Bonus
   Equity Incentives
  Direct Investment
   85




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##### Table of Contents



Incentive Plan
      Perquisites
  Post-Employment Compensation
   86




---



##### Table of Contents



Specific Compensation of Named Executive Officers
  Summary Compensation Table
 UnitSalary
    
    
    Bonus
    
    
    Awards
    
    
    All Other
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)(6)
    
    
    Compensation
    
    
    ($)Paul E. Harrington,
    
    
    2010
    
    
    $
    709,616
    
    
    $
    1,000,000
    
    
    $
    1,053,788
    
    
    $
    379,997
    
    
    $
    3,143,401Chief Executive Officer(1)
    
    
    2009
    
    
    
    715,385
    
    
    
    425,000
    
    
    
    1,056,256
    
    
    
    359,117
    
    
    
    2,555,7582008
    
    
    
    576,923
    
    
    
    750,000
    
    
    
    532,292
    
    
    
    518,429
    
    
    
    2,377,644Mark A. Tripp,
    
    
    2010
    
    
    
    316,875
    
    
    
    195,000
    
    
    
    141,724
    
    
    
    10,132
    
    
    
    663,731Chief Financial Officer(2)
    
    
    2009
    
    
    
    316,875
    
    
    
    150,000
    
    
    
    271,502
    
    
    
    25,360
    
    
    
    763,7372008
    
    
    
    325,000
    
    
    
    162,499
    
    
    
    163,319
    
    
    
    25,088
    
    
    
    675,906Donna L. Flood,
    
    
    2010
    
    
    
    335,712
    
    
    
    258,750
    
    
    
    146,858
    
    
    
    206,274
    
    
    
    947,594Chief Operations Officer(3)
    
    
    2009
    
    
    
    339,692
    
    
    
    
    
    
    
    146,858
    
    
    
    86,838
    
    
    
    573,388Steven T. Bigelow,
    
    
    2010
    
    
    
    325,000
    
    
    
    275,025
    
    
    
    130,390
    
    
    
    240,829
    
    
    
    971,244President of Action Sports(4)
    
    
    2009
    
    
    
    236,269
    
    
    
    
    
    
    
    185,848
    
    
    
    6,290
    
    
    
    428,4072008
    
    
    
    220,834
    
    
    
    150,000
    
    
    
    82,912
    
    
    
    6,742
    
    
    
    460,488Christopher Zimmerman,
    
    
    2010
    
    
    
    375,000
    
    
    
    185,000
    
    
    
    218,620
    
    
    
    598,911
    
    
    
    1,377,531President of Easton Sports(5)
 
 (1)
    
    Mr. Harringtons employment with us began on April 1, 2008. For 2008, his salary reflects
earned amounts after the commencement of employment. For 2010, all other compensation for Mr.
Harrington includes $180,000 for housing allowance and related taxes paid of $166,520, $30,000
for auto allowance and the remainder for medical expenses and life insurance and disability
insurance premiums.(2)
    
    For 2010, all other compensation for Mr. Tripp includes $7,400 for auto allowance and the
remainder for medical expenses and life insurance and disability insurance premiums.(3)
    
    Ms. Floods employment with us began on January 1, 2009. For 2009, her salary reflects earned
amounts after the commencement of employment. For 2010, all other compensation for Ms. Flood
includes $97,816 for housing allowance and related taxes paid of $86,586, $18,000 for auto allowance and the remainder for
medical expenses and life insurance and disability insurance premiums.(4)
    
    For 2010, all other compensation for Mr. Bigelow includes $139,071 for relocation expenses,
$52,000 for housing allowance and related taxes paid of $43,778 and the remainder for medical
expenses and life insurance and disability insurance premiums.(5)
    
    Mr. Zimmermans employment with us began on March 1, 2010. For 2010, his salary reflects
earned amounts after the commencement of employment. For 2010, all other compensation for Mr.
Zimmerman includes $286,780 for relocation expenses and related taxes paid of $162,096,
$80,000 for housing allowance and related taxes paid of $53,080, $15,000 for auto allowance
and the remainder for life insurance and disability insurance premiums.(6)
    
    For all named executive officers, unit awards include the Class B Common Units of our Parent
granted to such officer under our Parents Incentive Plan. The amounts set forth in the table
reflect the amounts reported for financial statement reporting purposes for the respective
fiscal year. The assumptions made in establishing such amounts are more fully described in
Note 10 to the Audited Consolidated Financial Statements included in Item 8 of this annual
report.  87




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##### Table of Contents



Grants of Plan-Based Awards
 Estimated Future Payments Under
    
    
    
    
    
    
    
    
    
    
    Grant Date FairEquity Incentive Plan Awards
    
    
    Number of Class B
    
    
    Option Exercise
    
    
    Value of optionsGrant Date
    
    
    Threshold ($)(1)
    
    
    Target ($)(2)
    
    
    Maximum ($)(3)
    
    
    Common Units (#) (4)
    
    
    Price ($/sh)(5)
    
    
    ($)(6)Christopher Zimmerman
    
    
    3/1/2010
    
    
    $
    1,333,333
    
    
    $
    2,666,666
    
    
    $
    4,000,000
    
    
    
    6,885,671
    
    
    $
    1.3218
    
    
    $
    0.25
 
 (1)
    
    The threshold payout assumes vesting of all time-based and performance-based Class B
Common Units as well as achievement of the lowest floor payment (based on our Company
achieving certain EBITDA thresholds) payable pursuant to the terms of our Parents limited
liability company agreement. Under the distribution waterfall provisions set forth in our
Parents limited liability company agreement, holders may be entitled to certain additional
distributions.(2)
    
    The target payout assumes vesting of all time-based and performance-based Class B Common
Units as well as achievement of the intermediate floor payment (based on our Company
achieving certain EBITDA thresholds) payable pursuant to the terms of our Parents limited
liability company agreement. Under the distribution waterfall provisions set forth in our
Parents limited liability company agreement, holders may be entitled to certain additional
distributions.(3)
    
    The maximum payout assumes vesting of all time-based and performance-based Class B Common
Units as well as achievement of the highest floor payment (based on our Company achieving
certain EBITDA thresholds) payable pursuant to the terms of our Parents limited liability
company agreement. Under the distribution waterfall provisions set forth in our Parents
limited liability company agreement, holders may be entitled to certain additional
distributions.(4)
    
    All awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan.(5)
    
    The amounts set forth in the table represent the fair market value of a Class A Common Unit
of our Parent on the date the applicable Class B Common Units were granted to such holder.(6)
    
    The amounts set forth in the table reflect the grant date fair value. The assumptions made in
establishing such amount are more fully described in Note 10 to the Audited Consolidated
Financial Statements included in this annual report.  88




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##### Table of Contents



Outstanding Equity Awards at Fiscal Year-End
 Unit AwardsTotal Number of
    
    
    Number of
    
    
    Unit
    
    
    UnitUnits
    
    
    Units (#)
    
    
    Base
    
    
    VestingOutstanding
    
    
    Unvested
    
    
    Price
    
    
    Date(1)
    
    
    (2)
    
    
    ($)(3)
    
    
    (4)Paul E. Harrington
    
    
    4,426,546.85
    
    
    
    1,106,636.46
    
    
    $
    1.3218
    
    
    
    12/31/201121,394,722.05
    
    
    
    16,046,041.53
    
    
    $
    1.3218
    
    
    
    12/31/2012Mark A. Tripp
    
    
    725,987.95
    
    
    
    
    
    
    $
    1.3218
    
    
    
    4,438,265.63
    
    
    
    3,328,699.22
    
    
    $
    1.3218
    
    
    
    12/31/2012Donna L. Flood
    
    
    6,024,962.51
    
    
    
    4,518,721.88
    
    
    $
    1.3218
    
    
    
    12/31/2012Steven T. Bigelow
    
    
    116,505.85
    
    
    
    
    
    
    $
    1.3218
    
    
    
    60,000.00
    
    
    
    15,000.00
    
    
    $
    1.3218
    
    
    
    6/30/201190,000.00
    
    
    
    45,000.00
    
    
    $
    1.3218
    
    
    
    5/31/20124,037,038.81
    
    
    
    3,027,779.10
    
    
    $
    1.3218
    
    
    
    12/31/2012Christopher Zimmerman
    
    
    6,885,671.44
    
    
    
    6,024,962.51
    
    
    $
    1.3218
    
    
    
    12/31/2013
 
 (1)
    
    Awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan.(2)
    
    Total number of unvested Class B Common Units as of January 1, 2011. These Class B Common
Units consist of a portion of the Units that vest over time, and a portion of the Units that
vest if certain performance conditions are met.(3)
    
    Represents the fair market value of a Class A Common Unit of our Parent on the date the
applicable Class B Common Units were granted to such holder, some of which were amended in December 2009
to effect, among other things, a reduction in the applicable distribution threshold.(4)
    
    Date on which 100% of time based units will have vested. Generally, time based units vest
evenly on an annual basis over a 4 year period (in increments of 25% per year). Vested Equity Awards at Fiscal Year-End
 Vested Unit AwardsCumulativeNumber of
    
    
    Value ExpensedUnits (#)
    
    
    throughVested
    
    
    Fiscal 2010Name
    
    (1)
    
    
    (2)Paul E. Harrington
    
    
    8,668,589.90
    
    
    $
    2,642,336Mark A. Tripp
    
    
    1,835,554.36
    
    
    $
    869,647Donna L. Flood
    
    
    1,506,240.63
    
    
    $
    293,716Steven T. Bigelow
    
    
    1,215,765.55
    
    
    $
    487,320Christopher Zimmerman
    
    
    860,708.93
    
    
    $
    218,620
 
 (1)
    
    Awards consist of Class B Common Units issued pursuant to our Parents Incentive Plan that
have time vested prior to January 1, 2011.(2)
    
    Cumulative expense recognized through January 1, 2011 as compensation expense computed.  89




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##### Table of Contents



Employment Arrangements and Payments Upon Termination or Change of Control
  Paul E. Harrington
       Triggering Event
    
    Pay-Out AmountCompany terminates for cause
    
    
    Company terminates other than for cause
    
    $
    2,250,000Mr. Harrington terminates for Good Reason
    
    $
    2,250,000Mr. Harrington terminates other than for Good Reason
    
    
    Termination following a Change of Control
    
    $
    2,250,000
   90




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##### Table of Contents



Mark A. Tripp
       Triggering Event
    
    Pay-Out AmountCompany terminates for cause
    
    
    Company terminates other than for cause
    
    $
    731,250Mr. Tripp terminates for Good Reason
    
    $
    731,250Mr. Tripp terminates other than for Good Reason
    
    
    Termination following a Change of Control
    
    $
    731,250
    91




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##### Table of Contents



Donna L. Flood
        Triggering Event
    
    Pay-Out AmountCompany terminates for cause
    
    
    Company terminates other than for cause
    
    $
    872,250Ms. Flood terminates for Good Reason
    
    $
    872,250Ms. Flood terminates other than for Good Reason
    
    
    Termination following a Change of Control
    
    $
    872,250
    92




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##### Table of Contents



Christopher Zimmerman
        Triggering Event
    
    Pay-Out AmountCompany terminates for cause
    
    
    Company terminates other than for cause
    
    $
    1,108,500Mr. Zimmerman terminates for Good Reason
    
    $
    1,108,500Mr. Zimmerman terminates other than for Good Reason
    
    
    Termination following a Change of Control
    
    $
    1,108,500
    93




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##### Table of Contents



Specific Compensation of Directors
  Director Compensation
 All OtherOption Awards
    
    
    Compensation
    
    
    TotalName(1)
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)James L. Easton
    
    
    
    
    
    
    
    
    
    
    Paul E. Harrington
    
    
    
    
    
    
    
    
    
    
    William L. Beane III
    
    
    
    
    
    
    
    
    
    
    Andrew J. Claerhout
    
    
    
    
    
    
    
    
    
    
    Shael J. Dolman (3)
    
    
    
    
    
    
    
    
    
    
    Peter D. Lamm
    
    
    
    
    
    
    
    
    
    
    Terry G. Lee
    
    
    
    
    
    $
    100,000
    
    
    $
    100,000Kevin M. Mansfield (3)
    
    
    
    
    
    
    
    
    
    
    Timothy P. Mayhew
    
    
    
    
    
    
    
    
    
    
    Aron I. Schwartz
    
    
    
    
    
    
    
    
    
    
    Peter V. Ueberroth
    
    
    
    
    
    
    
    
    
    
    Richard E. Wenz
    
    
    
    
    
    
    50,000
    
    
    
    50,000
 
 (1)
    
    As noted above, Mr. Harrington also serves as a director of our Company and as a member of
the board of managers of our Parent. All of Mr. Harringtons compensation, including for
services as a director, is reflected in the summary compensation table above and therefore has
been omitted from this table.(2)
    
    Mr. Lee received $100,000 pursuant to a consulting agreement with us. Mr. Wenz received
$50,000 as the Chair of the Audit Committee.(3)
    
    Mr. Dolman was replaced by Mr. Mansfield as a member of our board of directors in August
2010. Compensation Committee Interlocks and Insider Participation
  Compensation Committee Report
   94




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##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  EB Sports Corp.
    
    
    Easton-Bell Sports, LLCPercentageOwnershipInterest in
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    PercentageSeries A
    
    
    Series A
    
    
    
    
    
    
    Ownership
    
    
    
    
    
    
    Ownership
    
    
    
    
    
    
    OwnershipPreferred
    
    
    Preferred
    
    
    Class A
    
    
    Interest in
    
    
    Class B
    
    
    Interest in
    
    
    Class C
    
    
    Interest inStock
    
    
    Stock
    
    
    Common
    
    
    Class A
    
    
    Common
    
    
    Class B
    
    
    Common
    
    
    Class C(1)
    
    
    (2)
    
    
    Units(3)
    
    
    Units
    
    
    Units(4)
    
    
    Units(5)
    
    
    Units(6)
    
    
    Units(7)Fenway Partners, LLC(8)
    
    
    66,176.674
    
    
    
    54.1
    %
    
    
    111,020,957.500
    
    
    
    53.5
    %
    
    
    
    
    
    
    
    
    
    
    104,070,987.270
    
    
    
    54.1
    %Ontario Teachers Pension Plan Board(9)
    
    
    28,385.788
    
    
    
    23.2
    %
    
    
    47,621,270.834
    
    
    
    22.9
    %
    
    
    
    
    
    
    
    
    
    
    44,640,154.395
    
    
    
    23.2
    %York Street Capital Partners, LLC(10)
    
    
    7,238.856
    
    
    
    5.9
    %
    
    
    12,271,099.273
    
    
    
    5.9
    %
    
    
    
    
    
    
    
    
    
    
    11,383,865.730
    
    
    
    5.9
    %James L. Easton Living Trust(11)
    
    
    3,948.119
    
    
    
    3.2
    %
    
    
    11,671,880.106
    
    
    
    5.6
    %
    
    
    
    
    
    
    
    
    
    
    6,182,723.655
    
    
    
    3.2
    %Westerkirk Alberta Inc.(12)
    
    
    8,162.079
    
    
    
    6.7
    %
    
    
    1,724,038.508
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    12,899,170.890
    
    
    
    6.7
    %Paul E. Harrington
    
    
    392.270
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    25,821,267.898
    
    
    
    24.6
    %
    
    
    600,000.000
    
    
    
    *Mark A. Tripp
    
    
    101.179
    
    
    
    *
    
    
    
    58,359.401
    
    
    
    *
    
    
    
    5,164,253.580
    
    
    
    4.9
    %
    
    
    155,632.920
    
    
    
    *Donna L. Flood
    
    
    94.847
    
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    6,024,962.510
    
    
    
    5.7
    %
    
    
    150,000.000
    
    
    
    *Steven T. Bigelow
    
    
    2.186
    
    
    
    *
    
    
    
    33,974.315
    
    
    
    *
    
    
    
    4,303,544.650
    
    
    
    4.1
    %
    
    
    3,279.240
    
    
    
    *Christopher Zimmerman
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    6,885,671.440
    
    
    
    6.5
    %
    
    
    
    
    
    
    *James L. Easton(11)
    
    
    3,948.119
    
    
    
    3.2
    %
    
    
    11,671,880.106
    
    
    
    5.6
    %
    
    
    
    
    
    
    
    
    
    
    6,182,723.655
    
    
    
    3.2
    %Peter V. Ueberroth(13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,328.334
    
    
    
    *
    
    
    
    
    
    
    
    Andrew J. Claerhout(14)
    
    
    28,385.788
    
    
    
    23.2
    %
    
    
    47,621,270.834
    
    
    
    22.9
    %
    
    
    
    
    
    
    
    
    
    
    44,640,154.395
    
    
    
    23.2
    %Kevin M. Mansfield(14)
    
    
    28,385.788
    
    
    
    23.2
    %
    
    
    47,621,270.834
    
    
    
    22.9
    %
    
    
    
    
    
    
    
    
    
    
    44,640,154.395
    
    
    
    23.2
    %Terry G. Lee(15)
    
    
    67.271
    
    
    
    *
    
    
    
    114,035.208
    
    
    
    *
    
    
    
    129,328.334
    
    
    
    *
    
    
    
    105,790.155
    
    
    
    *William L. Beane III(16)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,328.334
    
    
    
    *
    
    
    
    
    
    
    
    Peter D. Lamm(17)
    
    
    66,176.674
    
    
    
    54.1
    %
    
    
    111,020,957.500
    
    
    
    53.5
    %
    
    
    
    
    
    
    
    
    
    
    104,070,987.270
    
    
    
    54.1
    %Timothy P. Mayhew(18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,046,209.017
    
    
    
    *
    
    
    
    
    
    
    
    Aron I. Schwartz(18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Richard E. Wenz(19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    258,656.668
    
    
    
    *
    
    
    
    
    
    
    
    All directors and executive officers
as a group(20)
    
    
    99,219.692
    
    
    
    81.0
    %
    
    
    170,581,631.133
    
    
    
    82.2
    %
    
    
    61,081,766.855
    
    
    
    58.1
    %
    
    
    155,989,470.270
    
    
    
    81.0
    %
 
 *
    
    means less than 1%.(1)
    
    For a discussion of the Series A Preferred Stock of EB Sports, see Item 11  Executive Compensation and
Item 13  Certain Relationships and Related Transactions, and Director Independence. Easton-Bell
Sports, LLC owns all of the outstanding voting common stock of EB Sports.(2)
    
    Represents percentage of ownership interest out of 122,428.495 Series A Preferred Stock.(3)
    
    For a discussion of the Class A Common Units of our Parent, see Item 11  Executive Compensation and
Item 13  Certain Relationships and Related Transactions, and Director Independence.(4)
    
    For a discussion of the Class B Common Units of our Parent, see Item 11  Executive Compensation and
Item 13  Certain Relationships and Related Transactions, and Director Independence.(5)
    
    Represents percentage of ownership interest in Class B units of authorized shares of 105,152,750.854.(6)
    
    For a discussion of the Class C Common Units of our Parent, see Item 11  Executive Compensation and
Item 13  Certain Relationships and Related Transactions, and Director Independence.(7)
    
    Represents percentage of ownership interest out of 192,531,729.375 Class C units.  95




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##### Table of Contents



(8)
    
    Represents (i) 108,791,970.029 Class A Common Units and 34,806,025.245 Class C Common Units of our
Parent and 22,379.531 Series A Preferred Stock of EB Sports held by Fenway Easton-Bell Sports Holdings,
LLC, whose managing member is Fenway Partners Capital Fund II, L.P., whose managing member is Fenway
Partners, LLC, (ii) 1,706,031.636 Class A Common Units and 793,729.500 Class C Common Units of our
Parent and 501.886 Series A Preferred Stock of EB Sports held by FPIP, LLC, whose managing member is
Fenway Partners, LLC, (iii) 522,955.835 Class A Common Units and 1,014,940.500 Class C Common Units of
our Parent and 641.760 Series A Preferred Stock of EB Sports held by FPIP Trust, LLC whose managing
member is Fenway Partners, LLC and (iv) 67,456,292.025 Class C Common Units of our Parent and
42,653.497 Series A Preferred Stock of EB Sports held by Fenway Partners Capital Fund III, L.P., whose
general partner is Fenway Partners III, LLC, whose managing member is Fenway Partners, LLC. The
principal executive offices of Fenway Partners, LLC and its affiliates are located at 152 W. 57th
Street, 59th Floor, New York, New York 10019.(9)
    
    The principal executive offices of Ontario Teachers Pension Plan Board are located at 5650 Yonge
Street, Toronto, Ontario M2M 4H5 Canada.(10)
    
    Represents (i) 7,602,347.230 Class A Common Units and 7,052,677.035 Class C Common Units of our Parent
and 4,484.708 Series A Preferred Shares of EB Sports held by York Street Mezzanine Partners, L.P. over
which it has sole voting and investment power and (ii) 4,668,752.043 Class A Common Units and
4,331,188.695 Class C Common Units of our Parent and 2,754.148 Series A Preferred Shares of EB Sports
held by York Street Mezzanine Partners II, L.P. over which it has sole voting and investment power. The
principal executive offices of York Street Capital Partners, LLC are located at 376 Main Street,
Bedminster, New Jersey 07921.(11)
    
    James L. Easton is the Chairman of Easton-Bell Sports, Inc.s board of directors and may be deemed to
beneficially own 11,205,004.902 Class A Common Units and 5,748,726.405 Class C Common Units of our
Parent and 3,672.149 Series A Preferred Shares of EB Sports that are beneficially owned by the James L.
Easton Living Trust and 466,875.204 Class A Common Units and 433,997.250 Class C Common Units of our
Parent and 275.970 Series A Preferred Shares of EB Sports that are beneficially owned by Gregory J.
Easton, the son of James L. Easton. Mr. James L. Easton disclaims beneficial ownership of such units
except to the extent of his pecuniary interests therein. The principal executive offices of the James
L. Easton Living Trust and James L. Easton are located at 7855 Haskell Avenue, Suite 350, Van Nuys,
California 91406.(12)
    
    The principal office of Westerkirk Alberta Inc. is located at 95 Wellington Street West, Suite 1410,
Toronto, Ontario M5J 2N7.(13)
    
    The principal office of Peter V. Ueberroth is located at The Contrarian Group, 5 San Joaquin Plaza,
Suite 330, Newport Beach, CA 92660.(14)
    
    Andrew J. Claerhout and Kevin Mansfield are Vice President and Portfolio Manager, respectively, of
Ontario Teachers Pension Plan Board. Messrs. Claerhout and Mansfield may be deemed to beneficially own
the Class A Common Units and Class C Common Units of Easton-Bell Sports, LLC and Series A Preferred
Stock of EB Sports that are owned by Ontario Teachers Pension Plan Board. Messrs. Claerhout and
Mansfield may be deemed to have the power to dispose of the shares held by Ontario Teachers Pension
Plan Board due to a delegation of authority from the board of directors of Ontario Teachers Pension
Plan Board and each expressly disclaims beneficial ownership of such shares. The principal offices of
Messrs. Claerhout and Mansfield are located at 5650 Yonge Street, Toronto, Ontario M2M 4H5 Canada.(15)
    
    Represents (i) 114,035.208 Class A Common Units and 105,790.155 Class C Common Units of our Parent and
67.271 Series A Preferred Shares of EB Sports held by Hayden Capital Investments, LLC over which it has
sole voting and investment power and (ii) 129,328.334 Class B Common Units held by Terry G. Lee. Mr.
Lee is the managing member of Hayden Capital Investments, LLC. Mr. Lee may be deemed to beneficially
own the units of our Parent that are beneficially owned by Hayden Capital Investments, LLC. Mr. Lee
disclaims beneficial ownership of such units except to the extent of his pecuniary interests therein.
The principal office of Mr. Lee is located at 3655 W. Anthem Way, Suite A109-421, Anthem, AZ 85086.(16)
    
    The principal office of William L. Beane III is located at 7000 Coliseum Way, Oakland, California 94621.  96




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##### Table of Contents



(17)
    
    Peter D. Lamm is the Chairman and Chief Executive Officer of Fenway Partners, LLC, which is the
managing member of: Fenway Partners Capital Fund II, L.P., which is the managing member of Fenway
Easton-Bell Sports Holdings, LLC; Fenway Partners III, LLC, which is the general partner of Fenway
Partners Capital Fund III, L.P.; FPIP, LLC; and FPIP Trust, LLC. Mr. Lamm may be deemed to beneficially
own the units of Easton-Bell Sports, LLC that are beneficially owned by Fenway Easton-Bell Sports
Holdings, LLC, Fenway Partners Capital Fund III, L.P., FPIP, LLC and FPIP Trust, LLC. Mr. Lamm
disclaims beneficial ownership of such units except to the extent of his pecuniary interests therein.
The principal office of Mr. Lamm is located at 152 W. 57th Street, 59th Floor, New York, New York
10019.(18)
    
    The principal offices of Timothy P. Mayhew and Aron I. Schwartz are located at 152 W. 57th Street, 59th
Floor, New York, New York 10019.(19)
    
    The principal office of Richard E. Wenz is located at 26429 Brick Lane, Bonita Springs, Florida 34134.(20)
    
    Represents 19 persons as a group for Class A Common Units, Class B Common Units, Class C Common Units
of our Parent and Series A Preferred Stock of EB Sports.  97




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##### Table of Contents



Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
 Limited Liability Company Agreement
   Stockholders Agreement
  Holdco Facility Refinancing and Equity Investment
    98




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##### Table of Contents



Management Agreements
  Employment Agreements and Arrangements with Management
  Arrangements
with Jas. D. Easton, Inc.
  Easton Easton
  99




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##### Table of Contents



Other Related Party Transactions
    Review, Approval or Radification of Transactions with Related Persons
  Director Independence
   100




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##### Table of Contents



Item 14.
    
    Principal Accountant Fees and Services
 Fees
  2010
    
    
    2009Audit Fees
    
    $
    1,076,000
    
    
    $
    1,268,000Tax Fees
    
    
    
    
    
    
    Total
    
    $
    1,076,000
    
    
    $
    1,268,000
 Audit Fees
 Tax Fees
 Policy of Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditor
   101




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
     Schedule
    
    DescriptionSchedule II
    
    Valuation and Qualifying Accounts
   Exhibit
    
    
    
    The Filings Referenced forNumber

    
    Description of Exhibit
    
    Incorporation by Reference are:2.1
    
    
    Stock Purchase Agreement dated as of February 1, 2006
    
    Exhibit 2.1 to the Company's Current Report on Form 8-K filed February 7, 20063.1
    (a)
    
    Amended and Restated Certificate of Incorporation of Easton-Bell Sports, Inc.
    
    Exhibit 3.1(a) to the Company's Annual Report on Form 10-K filed March 30, 20063.1
    (b)
    
    Amended and Restated Bylaws of Easton-Bell Sports, Inc.
    
    Exhibit 3.1(b) to the Company's Annual Report on Form 10-K filed March 30, 20064.1
    
    
    Form of 9.750% Senior Secured Notes due 2016
    
    Exhibit 4.1 to the Company's Current Report on Form 8-K filed December 9, 20094.2
    
    
    Indenture dated as of December 3, 2009
    
    Exhibit 4.2 to the Company's Current Report on Form 8-K filed December 9, 20094.3
    
    
    Registration Rights Agreement dated as of December 3, 2009
    
    Exhibit 4.3 to the Company's Current Report on Form 8-K filed December 9, 200910.1
    
    
    Revolving Credit Agreement dated as of December 3, 2009
    
    Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 9, 200910.2
    *
    
    2006 Equity Incentive Plan
    
    Exhibit 10.4 to the Company's Annual Report on Form 10-K filed March 30, 200610.3
    *
    
    Amendment to the 2006 Incentive Plan
    
    Exhibit 10.3 to the Company's Annual Report on Form 10-K filed March 16, 201010.4
    *
    
    Amended and Restated Employment Agreement of Paul Harrington
    
    Exhibit 10.4 to the Companys Annual Report on Form 10-K filed March 16, 201010.5
    *
    
    Employment Agreement with Mark Tripp
    
    Exhibit 10.3 to the Company's Current Report on Form 8-K/A filed June 23, 200610.6
    *
    
    Amended and Restated Employment Agreement with Donna L. Flood
    
    Filed herewith10.7
    *
    
    Employment Agreement with Chris Zimmerman
    
    Exhibit 10.7 to the Company's Registration Statement on S-4, filed May 5, 2010
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##### Table of Contents



Exhibit

    
    
    
    The Filings Referenced forNumber

    
    Description of Exhibit
    
    Incorporation by Reference are:10.8
    *
    
    Consulting Agreement with Terry Lee
    
    Exhibit 10.8 to the Company's Registration Statement on Form S-4 filed April 7, 200510.9
    *
    
    Intercreditor Agreement dated as of December 3, 2009
    
    Exhibit 10.9 to the Company's Annual Report on Form 10-K filed March 16, 201021.1
    
    
    Subsidiaries
    
    Filed herewith31.1
    
    
    Certification of Principal Executive Officer pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    
    Certification of the Principal Financial Officer pursuant to the Section 302 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    
    Certification of Principal Executive Officer and Principal Financial Officer pursuant to the 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
  103




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##### Table of Contents



SIGNATURES
  EASTON-BELL SPORTS, INC.By:
    
    /s/ Paul E. HarringtonPaul E. HarringtonPrincipal Executive Officer
   Signature
    
    Title
    
    Date/s/ Paul E. Harrington

Paul E. Harrington
    
    President, Chief Executive Officer and Director 
(Principal Executive Officer)
    
    March 8, 2011/s/ Mark A. Tripp
    
    Chief Financial Officer
    
    March 8, 2011Mark A. Tripp
    
    (Principal
Financial Officer)/s/ James L. Easton
    
    Director
    
    March 8, 2011James L. Easton/s/ William L. Beane III
    
    Director
    
    March 8, 2011William L. Beane III/s/ Andrew J. Claerhout
    
    Director
    
    March 8, 2011Andrew J. Claerhout/s/ Peter D. Lamm
    
    Director
    
    March 8, 2011Peter D. Lamm/s/ Terry G. Lee
    
    Director
    
    March 8, 2011Terry G. Lee/s/ Kevin M. Mansfield
    
    Director
    
    March 8, 2011Kevin M. Mansfield/s/ Timothy P. Mayhew
    
    Director
    
    March 8, 2011Timothy P. Mayhew/s/ Aron I. Schwartz
    
    Director
    
    March 8, 2011Aron I. Schwartz/s/ Peter V. Ueberroth
    
    Director
    
    March 8, 2011Peter V. Ueberroth/s/ Richard E. Wenz
    
    Director
    
    March 8, 2011Richard E. Wenz
  104




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##### Table of Contents



ANNUAL REPORT ON FORM 10-K
ITEM 15 (a)(2)
 FINANCIAL STATEMENT SCHEDULE
YEAR ENDED JANUARY 1, 2011
 II-1
 VALUATION AND QUALIFYING ACCOUNTS
 AdditionsBalance at
    
    
    
    
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning
    
    
    Acquired
    
    
    Costs and
    
    
    
    
    
    
    End ofDescription
    
    of Period
    
    
    Businesses
    
    
    Adjustments
    
    
    Deductions
    
    
    Period(Dollars in thousands)Product Liability ReserveYear ended January 1, 2011
    
    $
    17,208
    
    
    $
    
    
    
    $
    5,412
    
    
    $
    (3,834
    )
    
    $
    18,786Year ended January 2, 2010
    
    
    16,246
    
    
    
    
    
    
    
    3,539
    
    
    
    (2,577
    )
    
    
    17,208Year ended January 3, 2009
    
    
    10,725
    
    
    
    
    
    
    
    7,062
    
    
    
    (1,541
    )
    
    
    16,246Excess and Obsolete Inventory ReserveYear ended January 1, 2011
    
    $
    7,748
    
    
    $
    
    
    
    $
    8,410
    
    
    $
    (6,507
    )
    
    $
    9,651Year ended January 2, 2010
    
    
    7,736
    
    
    
    
    
    
    
    6,801
    
    
    
    (6,789
    )
    
    
    7,748Year ended January 3, 2009
    
    
    7,365
    
    
    
    
    
    
    
    6,027
    
    
    
    (5,656
    )
    
    
    7,736Allowance for Doubtful AccountsYear ended January 1, 2011
    
    $
    6,453
    
    
    $
    
    
    
    $
    3,409
    
    
    $
    (2,920
    )
    
    $
    6,942Year ended January 2, 2010
    
    
    7,273
    
    
    
    
    
    
    
    3,826
    
    
    
    (4,646
    )
    
    
    6,453Year ended January 3, 2009
    
    
    4,944
    
    
    
    
    
    
    
    5,516
    
    
    
    (3,187
    )
    
    
    7,273
  105