FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
              FOR THE TRANSITION PERIOD FROM ________ TO ________

                         COMMISSION FILE NUMBER 0-19298

               VARSITY BRANDS, INC. (FORMERLY RIDDELL SPORTS INC.)
             (Exact name of registrant as specified in its charter)

           DELAWARE                                      22-2890400
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

          6745 LENOX CENTER COURT, SUITE 300, MEMPHIS, TENNESSEE 38115
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (901) 387-4300

           Securities registered pursuant to Section 12(b) of the Act:
      Title of each class         Name of each exchange on which registered
            [NONE]                                  [NONE]

           Securities registered pursuant to Section 12(g) of the Act:
                          COMMON STOCK, $.01 PAR VALUE
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K (229.405 of this chapter) is not contained  herein,  and will
not be contained,  to the best of Registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [x]

The Registrant  hereby  incorporates by reference,  in response to Part III, its
Proxy  Statement for its 2002 Annual Meeting of  Stockholders  to be filed on or
before April 30, 2002 (except to the limited extent the rules and regulations of
the  Commission  authorize  certain  sections of such Proxy  Statement not to be
incorporated  herein by  reference,  as  specifically  indicated  in such  Proxy
Statement).

The aggregate market value of the 4,853,493  shares of outstanding  voting stock
held by non-affiliates of the Registrant, computed by reference to the last sale
price of the Registrant's Common Stock on March 20, 2002, is $10,871,824.

As of March 20, 2002, the Registrant had 9,452,250 shares of Common Stock,  $.01
par value per share, outstanding.


<PAGE>

         SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

         This  report   contains   certain   forward-looking   statements,   and
information  relating to Varsity Brands,  Inc., formerly known as Riddell Sports
Inc.,  ("Varsity" or the "Company")  that are based on the beliefs of management
as  well  as  assumptions  made  by  and  information   currently  available  to
management.  Such  forward-looking  statements are principally  contained in the
sections "Part I--Item 1--Business" and "Part 2--Item 7--Management's Discussion
and Analysis of Financial  Condition and Results of Operations."  Our statements
of plans,  intentions,  objectives and future economic or operating  performance
contained  in  this  report  are  forward-looking  statements.   Forward-looking
statements  include but are not limited to statements  containing  terms such as
"believes,"  "does not  believe,"  "no reason to believe,"  "expects,"  "plans,"
"intends,"  "estimates,"  "will," "would,"  "anticipated" or "anticipates." Such
statements  reflect the current  views of Varsity with respect to future  events
and are  subject to certain  risks and  uncertainties  and that could  cause the
actual results to differ materially from those expressed in any  forward-looking
statements  made by Varsity.  We do not intend to update  these  forward-looking
statements.

         We were  previously  known as  Riddell  Sports  Inc.  We are a Delaware
corporation  that was  formed in 1988 to  acquire  the  Riddell  brand  football
protective  equipment business.  In 1991, we effected an initial public offering
of our common stock. In 1997, we acquired Varsity Spirit  Corporation,  a leader
in the spirit  industry.  In June 2001 we sold the Riddell Group Division and in
September 2001 we changed our name to Varsity Brands, Inc.

                                     PART I

ITEM 1.           BUSINESS

GENERAL

         Varsity is the leading  marketer and  manufacturer of branded  products
and services to the school spirit  industry,  and is also a leading  provider of
branded services to various other extracurricular activities.

         Under  our many  brands,  the best  known of which are  Varsity  Spirit
Fashions and Universal Cheerleaders Association, all of which we own, we are:

         o    the largest  designer,  marketer and supplier of  cheerleader  and
              dance team uniforms and accessories;

         o    the biggest operator of cheerleading and dance team training camps
              and clinics;

         o    a leading organizer of special events for extracurricular
              activities;

         o    a major provider of studio dance conventions and competitions;

         o    a producer of studio dance apparel for studio dance competitions.

         We have built our various brands and lines of business,  in large part,
based  upon  our  year-round  relationship  marketing  strategy,  which  we have
established and refined during the course of our twenty-seven  (27) years in the
school spirit industry. This strategy involves integrating our core cheerleading
business with our other activities, including conducting training camps, clinics
and  conventions,   and  producing  various  nationally-televised  and  regional
championships in the U.S. and performance events in the U.S. and Europe. Each of
these activities,  which are in themselves profitable,  reinforce each other and
the  sale  of  our   products,   while  they   enhance   participation   in  the
extracurricular market and build loyalty to our brands.

         We believe that our Varsity Spirit Fashions brand cheerleading uniforms
are worn by more high school and college  cheerleaders than any other brand. Our
cheerleading  camps were  attended by more than 245,000  students in 2001,  more
than 40,000 people  traveled to the Walt Disney Resorts in Orlando,  Florida and
Anaheim,  California to  participate  in and view our various  cheerleading  and
dance competitions.

SIGNIFICANT DEVELOPMENTS

         As noted above, on June 22, 2001, the Company completed the sale of its
Riddell Group Division to an acquisition  affiliate of Lincolnshire  Management,
Inc.  ("Lincolnshire"),  a New York based,  private-equity  fund.  The  purchase
price, which was determined by an arms-length negotiation, was for approximately
$61 million in cash,  plus an adjustment to cover seasonal  funded  indebtedness
incurred  by the Riddell  Group  Division  during  2001.  The sale was


<PAGE>

effected pursuant to a stock purchase agreement dated April 27, 2001 between the
Company and Lincolnshire.  The Riddell Group Division  included:  (i) all of the
Company's team sports  business,  excluding Umbro branded team soccer  products,
(ii) the  Company's  licensing  segment,  which allows  third-parties  to market
certain  products  using the Riddell  and  MacGregor  trademarks,  and (iii) the
Company's retail segment, including the New York Executive Office, which managed
the retail and licensing  segments,  and marketed a line of sports  collectibles
and athletic equipment,  principally to retailers in the United States, and to a
limited extent internationally.

         In conjunction with the sale of the Riddell Group Division, the Company
recognized  a decline in value of its net minority  investment  in a company who
makes game  uniforms on behalf of the Riddell  Group  Division.  The Company had
previously  accounted for its  investment in the game uniform  company using the
equity  method  of  accounting.  As a result  of the sale of the  Riddell  Group
Division and the write-down in the value of its minority  investment in the game
uniform  company,  the Company  recorded a loss on the sale of the Riddell Group
Division of $20.5 million ($12.2  million after tax) in 2001 (See  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
below).

         In  September  2001,  the Company  settled the  litigation  that it had
brought in March 2001 against Umbro  Worldwide,  Ltd. and its related  companies
("Umbro")  involving the licensing  agreement  that the Company had entered into
with Umbro in November  1998 (the "Umbro  License").  Specifically,  the Company
brought  suit in the Southern  District of New York  seeking to prevent  certain
breaches by Umbro of its agreement  with Varsity  pertaining to, INTER ALIA, its
sale of products in the United States via the Internet and its threatened change
of market  positioning  of  certain  Umbro  products  previously  sold by Signal
Apparel, Inc. In connection with settling this litigation, the Umbro License was
terminated,  pursuant to which the Company received,  among other things, a cash
payment of $5.5 million. In addition,  the Company is collecting its outstanding
receivables under the Umbro License,  and has sold its remaining  inventory back
to Umbro.  The  amount  for which the  Company  is to  receive  from the sale of
inventory  is  currently  in  dispute  and  will be  resolved  by a third  party
arbitrator. The final  amount to be received from the sale of Umbro inventory is
not known at this time; currently the final settlement can range from $2 million
to $3.7 million.  Under the Umbro  License,  Varsity had the exclusive  right to
sell Umbro branded soccer  apparel,  equipment and footwear to soccer  specialty
stores and others in the team channel of distribution, principally in the United
States.

BUSINESS SEGMENTS

         We presently  employ our  integrated  sales and marketing  strategy and
operate our business  through various  wholly-owned  subsidiaries in principally
two business segments; (i) uniforms and accessories,  and (ii) camps and events.
Historically,  our uniforms and  accessories  segment has been  responsible  for
revenues in slightly more than fifty-eight percent (58%) of total revenues,  and
our camps and events segment has contributed the balance of the revenues.

         UNIFORMS AND ACCESSORIES

         We design,  market and manufacture  cheerleader and dance team uniforms
and  accessories,  including  sweaters,  sweatshirts,  jumpers,  vests,  skirts,
warm-up suits, t-shirts,  shorts,  pompons,  socks, jackets, pins and gloves. We
market all of our cheerleading uniforms and accessories under the Varsity Spirit
trademark.  Approximately  110,000  catalogs are mailed  annually to schools and
school spirit advisors and coaches containing color photographs and descriptions
of our Varsity Spirit line of uniforms and accessories. We supplement our direct
sales force and catalog sales efforts with a telemarketing sales force of eleven
(11) full and part-time employees.

         CAMPS AND EVENTS

         We operate  cheerleader and dance team camps in the United States. Camp
enrollment has increased every year since the camp division commenced  operation
in 1975 with 20 cheerleading camps and 4,000 participants.  During the 2001 camp
season,  approximately  245,000  participants,  consisting of students and their
coaches,  attended Varsity's Universal Cheerleader Association and United Spirit
Association camps,  including over 9,000 participants  representing colleges and
junior  colleges.  During  2001,  cheerleading  and/or  dance team  squads  from
approximately  72% of the universities  comprising the ATLANTIC COAST, BIG EAST,
BIG TEN, BIG TWELVE, PACIFIC 10 and SOUTHEASTERN collegiate athletic conferences
attended our camps.

         A  significant  majority  of our  cheerleader  and dance team camps are
conducted on college or junior college  campuses.  We contract with the colleges
and universities for the provision of housing, food and athletic facilities. Our
camps  generally  are  conducted  over a  four-day  period and are  attended  by
resident and commuting students.

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<PAGE>

         Our instructors are mostly college cheerleaders who may have previously
attended our camps,  and we believe that our training of many of the top college
cheerleading  squads  augments  our  recruiting  of high  school and junior high
school camp  participants.  Prior to the commencement of our camps,  instructors
participate in an intensive  six-day  training session where they are taught new
cheerleading  and dance  material.  We also place a high  degree of  emphasis on
teaching  our  instructors  the most  up-to-date  teaching,  training and safety
techniques.

         We were a founding  member of and remain an active  participant  in the
American  Association of  Cheerleading  Coaches and Advisors,  an industry trade
group whose  mission is to improve the quality of  cheerleading  and to maintain
established  safety  standards.  In 1990,  this industry  trade group  published
comprehensive  certification and safety guidelines for cheerleading  coaches. We
follow the safety  guidelines  established by the  Association  of  Cheerleading
Coaches and  Advisors  in the  training  of our  instructional  staff and in the
conduct of our cheerleader and dance team camps and competitions.

         We promote our Varsity Spirit brand  products and services,  as well as
the school spirit  industry,  through  active and visible  association  with the
following annual championships and television specials:

         o    National High School Cheerleading Championship(R)

         o    National Dance Team Championship(R)

         o    College Cheerleading and Dance Team National Championship(R)

         o    National All Star Cheerleading Championship(R)

         o    Company Dance Championship(R)

         These championships and special events have been regularly televised on
the ESPN  television  network and have been  sponsored by various  companies and
products,  including Nike, Degree, AT&T, Dell, The Walt Disney World Resort, and
Gillette.

         In addition to promoting cheerleading and dance team activities,  these
championships,  television  specials and events are a source of revenues for us.
In 2001,  over  44,000  persons,  including  cheerleaders  and  their  families,
attended our special events.

         OTHER

         We are  continuing  to expand our  uniform  design,  manufacturing  and
special event expertise from  cheerleading  into the private dance studio market
through our venture called Company Dance.  In June 2000, we acquired  certain of
the assets of the Netherland Corporation ("Starlight  Productions"),  one of the
larger  studio  dance  competition   companies.   While  Starlight  Productions'
historical operations and assets are not material in comparison to our Financial
Statements,  we feel that this  acquisition  combined with our existing  Company
Dance  convention  business  will help us to expand our  entree  into the studio
dance   business.   Company  Dance  operates   weekend  dance   conventions  and
competitions in thirty U.S. cities, an annual  convention  championship from the
Walt  Disney  Resort  in  Orlando  that  is  televised  on ESPN  and two  annual
competition championships.

         We  also  operate  Intropa,  a  tour  company,   which  specializes  in
organizing  trips for  cheerleaders,  bands,  choirs and  orchestras,  dance and
theater groups and other school affiliated or performing  groups,  which tour in
the continental United States, Hawaii, Canada, Europe and Israel.

         RELATIONSHIP MARKETING

         Our marketing model is based upon our longstanding  relationships  with
three distinct but equally  important  groups.  First, our direct sales efforts,
through   personalized   service,   creates  an  important   connection  to  the
participants,  coaches and  instructors  of school spirit  activities  and other
extracurricular  activities primarily in junior and senior high schools. Second,
instructors  and staff at our camps,  clinics and  performance  tours and events
motivate  participants to get more  instruction  and become better  competitors.
Third,  we increase our brand awareness and enhance our  relationships  with our
customers  through our  affiliations  with  strategic  partners such as the Walt
Disney  Company,  ESPN and other media and marketing  entities.  These strategic
relationships  and the televised shows that we produce  reinforce the importance
of our events and competitions. We believe that our sales and marketing strategy
provides  us with a  competitive  advantage,  and  features  the  following  key
components:

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<PAGE>

         o    Cross marketing of products and promotional activities

              o    Camps and Clinics

              o    Special events, conventions and competitions

              o    Uniforms and accessories

              o    Key marketing alliances o Internet operations

         o    Direct Sales Force

         CROSS MARKETING AND PROMOTIONAL ACTIVITIES

         Since  1974,  we have  conducted,  and we  continue  to refine,  profit
generating activities, which are an integral part of our promotional efforts. We
create  relationships  through  our camps and  events  and  believe  that  these
relationships  naturally  translate to a sales  opportunity for our cheerleading
uniforms or dance  costumes  when the campers  return to school.  When the sales
force interacts with  cheerleaders or dance team  participants and their coaches
during the design and fitting of custom uniforms, they also have the opportunity
to reinforce  participation in our camps and special events. We intend to extend
this strategy to other extracurricular  activities. The marketing of our various
activities is designed to provide logical extensions to basic  participation and
to encourage participants,  as they improve, to increasingly utilize more of our
products and services. All of our marketing activities are designed so that each
of our  various  products  and  services  reinforce  one  another,  as  well  as
strengthen overall brand awareness and loyalty.

         How we cross-market is evident from our marketing of special events and
competitions  for  cheerleaders.  For example,  in order to  participate  in the
various special events that we offer,  such as the  nationally-televised  Macy's
Thanksgiving Day parade in New York City, a cheerleader must attend and excel at
one of our camps.  Our camps are the only place  that a  cheerleader  can get an
invitation  to appear in one of our  special  events.  Similarly,  we hold local
cheerleading  competitions  that progress to various  regional levels during the
course  of the  fall,  which  are the  only  way for a team to  qualify  for our
championships  which are held at the Walt Disney Resort in Orlando,  Florida and
nationally-televised on ESPN.

         CAMPS & EVENTS

         Our approach to relationship  building has inter-related  parts. In the
case of cheerleading it is our camps which, more than anything else, build brand
loyalty.  Special events,  conventions and competitions enhance our relationship
marketing.

         Just as our camps build loyalty with respect to  cheerleading,  special
events,  conventions and competitions,  for other extracurricular activities can
build  new   allegiances   from   participants   in  a  wide  variety  of  other
extracurricular  activities. We run regional and national cheerleading and dance
team  competitions;  organize national dance  competitions for young individuals
through our studio dance  division;  and sponsor youth soccer  tournaments.  The
national  competitions and finals for these activities are typically held at The
Walt Disney  Resort in Orlando,  Florida and are televised on ESPN and/or ESPN2.
Participants  in the school spirit  activities that we target are also given the
opportunity to take part in various  performance events in the United States and
Europe. These events include parades, such as the annual Macy's Thanksgiving Day
parade in New York  City and  year-end  parades  in London  and  Paris.  We also
arrange  pre-game and half-time shows for college football bowl games. We intend
to extend our  promotional  activities  to a greater  number of  extracurricular
activities with soccer and dance the most likely next additions.

         UNIFORMS AND ACCESSORIES

         The  cheerleaders  who  participate  in our  special  events,  such  as
parades,  often come from a variety of schools. They each need a uniform for the
special event so that they can portray a unified appearance.  We design and sell
such uniforms and also sell a travel package,  including hotel arrangements,  to
the participants in our special events.

         At the same time,  because  participation  in our  various  promotional
activities  enhances our bond with  cheerleaders,  we believe that their team is
more likely to buy our uniforms and accessories.

                                       4
<PAGE>

         KEY MARKETING ALLIANCES

         We also have  longstanding  marketing  alliances  with other  strategic
partners  such as the Walt Disney  Company,  ESPN and other media and  marketing
entities. We are currently in our 20th year of broadcasting  championship events
on ESPN and ESPN2, and our current  agreement with ESPN extends through the year
2003. We have been holding  championship  events at the Walt Disney World Resort
in Orlando,  Florida since 1995, and our current  agreement with the Walt Disney
Company  extends  through the year 2004. All of these alliances serve to further
emphasize the prominence and importance of the activity and the participant. All
of these marketing relationships also enhance one another and serve to reinforce
and cross-market our products and services.

         INTERNET OPERATIONS

         We believe that our Internet  operations,  which are described  further
below, are a logical extension and application of this approach and are designed
to enhance our contact with customers and build brand loyalty.

         DIRECT SALES FORCE

         Our  comprehensive  relationship  marketing and sales  strategy is made
possible by our comprehensive sales efforts which are responsible for developing
and maintaining  relationships  among the 40,000 junior and senior high schools,
and colleges in the United States.  Our sales force develops  relationships with
participants, coaches and instructors of school spirit activities throughout the
U.S.  by  providing  value-added  services  that  enhance  participation  in the
activities.  Examples of this include: providing clinics, and quickly servicing,
designing and fitting custom-uniforms for participants in cheerleading.

         PRODUCTION

         CHEERLEADING AND DANCE TEAM UNIFORMS AND ACCESSORIES

         Most of the cheerleading and dance team uniforms designed, manufactured
and  marketed  by us are made to  order.  The  manufacturers  provide  knitting,
cutting, sewing,  finishing and shipping, and we provide the patterns,  fabrics,
yarn and manufacturing  specifications and quality control supervision.  We also
provide some  cutting,  knitting and  lettering  at two  specialized  production
facilities.  The use of  independent  manufacturing  facilities  to fulfill  our
production needs affords us with the flexibility to adjust our production output
to meet our highly seasonal selling cycle. The use of independent  manufacturers
also  reduces  our fixed  costs,  which we  believe  is  beneficial  in a highly
seasonal business.

         Cheerleading  accessories  such as  shoes,  pompons  and  campwear  are
purchased from various suppliers including Nike, Adidas, Body Wrappers,  and Top
Sox,  among others.  We have expanded the variety and number of  accessories  we
market, which has contributed to the increase in our revenues in recent years.

OUR INTERNET OPERATIONS

         We  believe  that we can take  advantage  of  commercial  opportunities
offered  by  electronic  community-building  and  commerce  as it relates to the
extracurricular  activities  market  because  we  have  the  largest  nationwide
proprietary sales force in the U.S. in the extracurricular activities market. We
believe   that  our   Internet   strategy  of  building   community   sites  and
simultaneously   establishing   complementary   commerce  sites  affords  us  an
opportunity to extend our  relationship  sales and marketing  strategy to expand
our core business and to develop new lines of business.

          We launched our Internet business in the fourth quarter of 1999 with a
community web site with e-commerce  elements for cheerleaders,  WWW.VARSITY.COM.
In the third  quarter  of 2000 we  launched  WWW.CODANCE.COM,  our  website  for
Company Dance.

SEASONALITY

         Our operations  are highly  seasonal.  In recent years,  our operations
have been most  profitable  in the  second  and third  quarters,  with the third
quarter  typically the  strongest,  while losses have typically been incurred in
the first and fourth quarters.

         The following table sets forth selected unaudited  operating results of
continuing  Varsity  operations  for each of the four quarters in 2001 and 2000,
not including the operating  results of the two business units  discontinued  in
2001,

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the  Riddell  Group  and Umbro  divisions,  and the  extraordinary  gain on bond
redemption.  You should read this  information  together  with the  consolidated
financial  statements,  the notes related to those financial  statements and the
other financial data included elsewhere in this report.

<TABLE>
<CAPTION>
                                                             First           Second          Third           Fourth
                                                            Quarter          Quarter         Quarter         Quarter
                                                           ---------        ---------       ---------       ---------
<S>                                                           <C>             <C>             <C>            <C>
Year ended December 31, 2001:
Revenues                                                      $16,659         $54,011         $60,126        $16,753
     Percent of total annual revenues                           11.3%           36.6%           40.7%          11.4%
Income (loss) from continuing operations                     $(6,484)          $7,311          $7,201       $(7,397)

Year ended December 31, 2000:

Revenues                                                      $14,665         $46,999         $57,650        $16,721
     Percent of total annual revenues                           10.8%           34.5%           42.4%          12.3%
Income (loss) from continuing operations                     $(6,806)          $4,687          $7,637       $(6,115)
</TABLE>

         This seasonal pattern is influenced by the following factors:

         o    Cheerleading  and dance  uniforms and  accessories  are  typically
              ordered and shipped between late March,  when new cheerleaders are
              selected for the coming school year,  and the end of August,  just
              before the new school year begins.

         o    We incur costs relating to our camp business  during the first and
              second  quarter as we prepare for the upcoming camp season,  while
              most  revenue  relating  to the camps is earned  during the period
              from June to August.  Company Dance  competitions  and conventions
              primarily  take place during the first and second  quarters  which
              may temper this segment's seasonality.

COMPETITION

         SPIRIT PRODUCTS AND SERVICES

         We are one of two major  companies that design and market  cheerleader,
dance team and  booster  club  uniforms  and  accessories  on a national  basis.
Besides us and our major national  competitor,  National Spirit Group, there are
many other  smaller  regional  competitors  serving the uniform and  accessories
market in the United States. We believe that the principal factors governing the
selection  of  cheerleader  and dance  team  uniforms  and  accessories  are the
quality, variety, design, delivery, service and, to a lesser extent, price.

         We are also one of two companies  that  annually  operate a significant
number of cheerleader and dance team camps in the United States, again the other
being  National  Spirit Group.  There are also many other smaller  companies and
schools  that operate  cheerleading  camps and clinics on a regional  basis.  We
believe that the principal  factors  governing the selection of a cheerleader or
dance team camp or clinic are the  reputation of the camp operator for providing
quality instruction and supervision,  location, schedule and the tuition charged
for camp participation.

         We compete with Showbiz, Starpower, Showstoppers,  Tremaine, West Coast
Dance  Explosion,  New York City Dance Alliance,  and other smaller national and
regional  companies in operating studio dance conventions and  competitions.  We
believe  the  principal  factors  governing  the  selection  of a  studio  dance
convention or competition are the reputation of the dance operator for providing
quality instruction and supervision,  location, schedule and tuition charged for
convention/competition.

TRADEMARKS AND SERVICE MARKS

         We own various  common law and  registered  trademarks  in the U.S. and
various  foreign  countries  including  the  following:  Universal  Cheerleaders
Association, Varsity Spirit, United Spirit Association, Co. Dance, National High
School  Cheerleading  Championship,  the Universal Dance Association,  Universal
Dance Camps,  Varsity Spirit Fashions and The National Dance Team  Championship,
among others.

REGULATION

         There is no national  governing body regulating  cheerleading and dance
team activities at the collegiate level.  Although voluntary guidelines relating
to  safety  and  sportsmanship  have  been  issued  by the  NCAA and some of the
athletic  conferences,  to date  cheerleading and dance teams are generally free
from  rules and  restrictions  similar  to those


                                       6
<PAGE>

imposed on other competitive  athletics at the college level.  However, if rules
limiting  off-season  training  are applied to  cheerleading  and/or dance teams
similar to rules  imposed  by the NCAA on some  inter-collegiate  sports,  it is
likely that we would be unable to offer a significant number of our camps either
because participants would be prohibited from participating during the summer or
because enough suitable sites would not be available.  Although we are not aware
of any school  officially  adopting  these  activities as a  competitive  sport,
recognition  of  cheerleading  and/or dance teams as "sports" would increase the
possibility  that  cheerleader  or dance  activities  may become  regulated.  We
currently do not believe that any regulation of collegiate cheerleading or dance
teams as a "sport" is forthcoming in the  foreseeable  future,  and in the event
any rules are  proposed  to be adopted by  athletic  associations,  we expect to
participate in the formulation of such rules to the extent permissible.

         At the  high  school  level,  some  state  athletic  associations  have
classified  cheerleading  as a sport  and in some  cases  have  imposed  certain
restrictions on off-season  practices and  out-of-state  travel to competitions.
However,  in all  cases to date,  we have been  able to work  with  these  state
athletic  associations to designate acceptable times for the cheerleaders within
these states to attend camps. We have also signed  agreements with several state
associations  to assist with  sponsoring  and  executing  official  competitions
within these states.  To date, state  regulations have not had a material effect
on our ability to conduct our normal business activities.

         Operations  at all of our  facilities  are subject to regulation by the
Occupational Safety and Health Agency and various other regulatory agencies.

EMPLOYEES

         At December 31, 2001, we had approximately 570 employees. Approximately
480 of these employees were employed on a full time basis and  approximately  90
were part time or temporary employees.

         During the summer of 2001, we employed  approximately 2,400 summer camp
instructors, trainers and administrators on a seasonal basis.

         We believe that our relations with our employees are satisfactory.

INSURANCE

         We carry general  liability  insurance  with  coverage  limits which we
believe is adequate for our business.


                                       7
<PAGE>


ITEM 2:  PROPERTIES

         We lease various facilities throughout the U.S.

         We believe our properties, machinery and equipment are adequate for our
current requirements.

         Set forth below is information regarding our principal properties:

<TABLE>
<CAPTION>
Location                             Principal Use                         Square Footage   Lease Expiration Date
-------------------------------      -----------------------------------   --------------   ---------------------
<S>                                  <C>                                       <C>                  <C>
Memphis, Tennessee                   Headquarters for Varsity                   51,045      November 2011
                                     Operations

Bartlett, Tennessee                  Warehouse and Manufacturing               205,000      October 2010

Sunnyvale, California                Offices                                     5,200      May 2003

Houston, Texas                       Offices                                     2,500      November 2002

Edmund, Oklahoma                     Offices and Warehouse                       7,000      February 2003
</TABLE>


ITEM 3.           LEGAL PROCEEDINGS

         Varsity  and its  subsidiaries  from time to time  become  involved  in
various claims and lawsuits incidental to their businesses. The Company does not
believe  that  it  is  currently  involved  in  any  legal  proceedings,  either
individually or in the aggregate,  that could have a material  adverse effect on
its business.

ITEM 4.           SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         At the  Company's  annual  stockholders'  meeting held on September 19,
2001, stockholders  representing a majority of the issued and outstanding voting
securities of the Company voted to amend the Company's Articles of Incorporation
to change the name of the Company  from Riddell  Sports Inc. to Varsity  Brands,
Inc.


                                       8
<PAGE>


                                     PART II

ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS.

         Our common stock was quoted on the Nasdaq  National Stock Market System
under the symbol RIDL through  November 20, 1998.  Commencing  November 23, 1998
our common stock was listed on the American Stock Exchange under the symbol RDL.
As of December 31, 2001, there were  approximately  706 holders of record of our
common stock.  The following  table sets forth the high and low sales prices for
our common stock as reported by the American  Stock  Exchange for 1999, for 2000
and for 2001:

                                                           HIGH         LOW

Year Ended December 31, 1999:
First Quarter                                            $  7.88    $  3.63
Second Quarter                                              4.19       3.00
Third Quarter                                               4.00       2.88
Fourth Quarter                                              3.50       2.81

Year Ended December 31, 2000:
First Quarter                                               3.63       2.94
Second Quarter                                              4.13       2.38
Third Quarter                                               5.75       2.94
Fourth Quarter                                              5.00       2.00

Year Ended December 31, 2001:
First Quarter                                               3.25       2.25
Second Quarter                                              2.69       1.25
Third Quarter                                               2.24       1.56
Fourth Quarter                                              2.20       1.40

         The closing  sale price of the Common  Stock on  December  31, 2001 was
$2.20.

DIVIDEND POLICY

         Since our inception, we have not declared or paid, and do not currently
intend to declare or pay,  any  dividends  on shares of our  common  stock,  and
intend to retain future earnings for  reinvestment  in our business.  Any future
determination  to pay cash  dividends  will be at the discretion of our Board of
Directors  and will be  dependent  upon our  results  of  operations,  financial
condition,  contractual  restrictions  and other factors deemed  relevant by our
Board of Directors.  Our revolving credit facility  prohibits us from paying any
cash dividends  until such time as it has been repaid in full. In addition,  the
terms of our senior notes include  restrictions which require us to meet certain
financial ratios before cash dividends could be paid and which limit the payment
of cash  dividends to 50% of cumulative net income earned while the senior notes
are outstanding.


                                       9
<PAGE>

ITEM 6.           SELECTED FINANCIAL DATA

         The following  selected  consolidated  financial  information should be
read in conjunction with the Consolidated  Financial Statements and related note
included elsewhere in this report.

         The following selected consolidated financial information includes only
the results of the Company's continuing  operations.  The selected  consolidated
financial  information  does not  include the  operating  results of the Riddell
Group and Umbro divisions, which were sold/terminated during 2001.

<TABLE>
<CAPTION>
                                                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA                                     YEAR ENDED DECEMBER 31,
                                           ------------------------------------------------------------------------
                                             2001            2000            1999            1998           1997(1)
                                           --------        --------        --------        --------         -------
<S>                                        <C>             <C>             <C>             <C>              <C>
Net revenues                               $147,549        $136,035        $120,285        $112,195         $65,608
Cost of revenues                             86,968          81,347          71,657          69,641          40,173
                                           --------        --------        --------        --------         -------
Gross profit                                 60,581          54,688          48,628          42,554          25,435
Selling, general and
   administrative expenses                   46,594          42,146          39,831          39,602          21,178

Income from operations                       13,987          12,542           8,797           2,952           4,257
Interest expense, net                        10,346          13,139          12,347          11,786           6,974
                                           --------        --------        --------        --------         -------
Income (loss) from continuing
   operations before income taxes,
   discontinued operations and
   extraordinary item                         3,641           (597)         (3,550)         (8,834)         (2,717)
Income taxes (benefit)                        3,010              __             905              __              __
                                           --------        --------        --------        --------         -------
Income (loss) from continuing
   operations before discontinued
   operations and extraordinary item           $631          $(597)        $(4,455)        $(8,834)        $(2,717)
                                           ========        ========        ========        ========        ========
Earnings (loss) per share before
   discontinued operations and
   extraordinary item:
   Basic                                       $.07          $(.06)          $(.48)          $(.97)          $(.32)
   Diluted                                     $.07          $(.06)          $(.48)          $(.97)          $(.32)
</TABLE>

<TABLE>
<CAPTION>
BALANCE SHEET DATA (EXCLUSIVE OF
ASSETS HELD FOR DISPOSAL) (2)                     DECEMBER 31,
                                            -----------------------
                                              2001            2000            1999            1998            1997
                                            -------         -------         -------         -------         -------
<S>                                         <C>             <C>             <C>              <C>             <C>
Working capital                             $23,640         $12,065         $10,084          $5,438          $5,451
Total assets                                118,631         106,185         109,433         108,856         106,050
Long-term debt, less
   current portion                           80,410         138,919         136,097         126,900         122,500
Stockholders' equity                         17,377          25,872          24,865          25,451          32,125

                                             YEAR ENDED DECEMBER 31,
                                            -----------------------
                                              2001            2000            1999            1998            1997
                                            -------         -------         -------         -------         -------
STATEMENTS OF CASH FLOWS DATA:
Cash flows from continuing
   operations (3)                            $4,239          $4,221        $(5,690)        $(4,814)            $134
Cash flows from investing
   activities (3)                           $65,219        $(2,638)        $(1,384)          $(647)       $(91,245)
Cash flows from financing
   activities (3)                         $(48,082)          $3,099          $8,644          $4,538         $89,518
OTHER DATA (UNAUDITED):
EBITDA from continuing operations (4)       $18,008         $16,248         $12,379          $6,504          $5,957
</TABLE>

----------

     (1)  In 1997, the Company acquired Varsity Spirit Corporation. The
          operating results of Varsity have been included in the consolidated
          financial information from the date of acquisition.

     (2)  See Note 10 to the consolidated financial statements relating to
          contingent liabilities.

     (3)  For more detail regarding cash flow from these activities see the
          Consolidated Statements of Cash Flow on Page F-6.

     (4)  EBITDA from continuing operations is the sum of our earnings or loss
          before discontinued operations, extraordinary items (and the
          cumulative effect of changes in accounting principles (as
          applicable)), interest, income taxes, depreciation and amortization
          expense. EBITDA is a widely accepted financial indicator of a
          company's ability to service indebtedness. However, EBITDA should not
          be considered as an alternative to income from operations or to cash
          flows from operating activities (as determined in accordance with
          generally accepted accounting principles) and should not be construed
          as an indication of our operating performance or as a measure of our
          Liquidity. The measure of EBITDA presented above may


                                       10
<PAGE>

          not be comparable to similarly titled measures reported by other
          companies because EBITDA is not a standardized measure of
          profitability or cash flow as defined by generally accepted accounting
          principals.


ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

Results of operations

         Set forth below is the percentage of our revenues  generated by each of
our two business segments in the years ended December 31, 1999, 2000 and 2001.

                                                    1999       2000       2001

                  Uniforms and Accessories        $69,155    $79,179    $88,131

                  Camps and Events                $51,130    $56,856    $59,418



         YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31,
         2000

         Overview

         On June 22, 2001,  the Company  completed the sale of its Riddell Group
Division to an acquisition  affiliate of  Lincolnshire  Management,  Inc., a New
York based private equity fund. In conjunction with this sale, the Company wrote
down its net minority  investment  in an entity that  provides  game uniforms to
Riddell  Group  Division.  As a  result  of the two  transactions,  the  Company
recorded a loss of $20.5 million ($12.2  million after tax). In September  2001,
the Company  settled the  litigation  that had been  brought  earlier  this year
against  Umbro  Worldwide,  Ltd.  ("Umbro  Worldwide")  involving  its licensing
agreement  between the  Company  and Umbro  Worldwide.  In  connection  with the
settlement  and in  exchange  for  an  upfront  payment  and  Umbro  Worldwide's
agreement to make certain  additional  payments to the Company,  until the third
quarter of 2002,  the Company has  voluntarily  agreed to terminate  its license
effective  November 30, 2001. The Company  reflected the transaction  during the
fourth  quarter of 2001 with the  reserves  necessary  in  conjunction  with the
purchase of inventory by Umbro  Worldwide.  Riddell Group Division's and Umbro's
operating  results are shown as income from operations of discontinued  business
in the Condensed Consolidated Statements of Operations.

         Riddell Group Division  included:  (i) all of the Company's Team Sports
business,  excluding  Umbro  branded team soccer  products,  (ii) the  Company's
licensing segment,  which allowed third-parties to market certain products using
the Riddell and MacGregor  trademarks,  and (iii) the Company's  retail segment,
which  marketed  a  line  of  sports  collectibles  and  athletic  equipment  to
retailers.

         The  Umbro  operations  that  were  discontinued  as a  result  of  the
termination of the license with Umbro  Worldwide  included sales of Umbro soccer
apparel,  equipment  and footwear to soccer  specialty  stores and others in the
team channel of distribution, primarily in the United States.

         As  a  result  of  the  sale  of  Riddell   Group   Division   and  the
discontinuance  of the Umbro license,  Varsity's  continuing  financial  results
consist of operations  within the school  spirit  industry,  including:  (i) the
design,  market and  manufacture  of  cheerleader  and dance team  uniforms  and
accessories,  (ii) the operation of cheerleading and dance team camps throughout
the United States, (iii) the production of nationally televised cheerleading and
dance team championships and other special events,  (iv) the operation of studio
dance competitions and conventions and (v) the design, marketing and manufacture
of dance and recital apparel for the studio dance market.

         During 2001,  the Company used a portion of the proceeds  received from
the sale of Riddell Group Division to repurchase $40.7 million in face amount of
its 10.5% Senior Notes for a total cost, including commissions,  of $32 million.
As a result of the repurchase,  the Company  recognized an extraordinary gain of
approximately  $4.0 million,  net of income taxes,  commissions and related debt
acquisition costs.

         The Company  posted a net loss of $8.5  million,  or $(0.90) per share,
for 2001,  compared with earnings of $.6 million,  or $0.06 per diluted share, a
year earlier.

                                       11
<PAGE>

         Operating income before interest,  taxes,  discontinued  operations and
extraordinary  items for 2001 increased  $1.5 million,  or 12%, to $14.0 million
from $12.5 million in the year ended 2000.  Varsity  benefited from increases in
revenues  which was offset by increases in selling,  general and  administrative
expenses as a percentage of sales, as described in more detail in the discussion
which follows this overview.

         The Company's  operations  are highly  seasonal.  In recent years,  the
Company's operations have been profitable in the second and third quarters, with
the third quarter  typically the  strongest,  while losses have  typically  been
incurred in the first and fourth quarters.

         The operating  results of Riddell Group Division and the Umbro Division
are  reported  as income  from  operations  of  discontinued  businesses  in the
Condensed  Consolidated  Statements of  Operations.  The following  management's
discussion and analysis of financial condition reflects changes occurring in the
Company's  income from  continuing  operations,  exclusive  of the  discontinued
operations of Riddell Group Division and the Umbro division.

         Revenues

         Revenues  for the year  ended  December  31,  2001  increased  by $11.5
million,  or 8.5%,  to $147.5  million  from  $136.0  million for the year ended
December 31, 2000.

         Revenues  from the sale of the  uniforms and  accessories  increased by
$8.9 million,  or 11.3%,  to $88.1 million for the year ended  December 31, 2001
from $79.2  million for the year ended  December  31,  2000.  The  increase  was
attributable to an overall strong increase in most product categories, primarily
uniforms and lettering,  offset by a slight decrease in campwear and shoe sales.
The significant  increase in revenues is a direct result of quicker  delivery of
uniforms and accessories combined with higher merchandise sales generated at our
instructional camps. The improvement in delivery times is partially attributable
to  improvements  made to the Company's  order entry system combined with better
availability  of  inventory   items  for  delivery.   The  improvement  in  camp
merchandise   sales  is  partially   attributable   to  the   consolidation   of
merchandising and warehousing activities within our camps and events division.

         Revenues from camps and events  increased by $2.6 million,  or 4.5%, to
$59.4  million for the year ended  December 31, 2001 from $56.8  million for the
year ended  December 31, 2000. The increase in revenues for the year is directly
attributable to the following: (i) a 50% revenue growth, or $0.6 million, in our
studio  dance   competitions  and   conventions,   such  growth  being  directly
attributable to the acquisition of the assets of the Netherland Corporation,  an
operator of dance  competitions,  in June 2000, and (ii) a 6.5% increase in camp
participants  during the year of 2001 as  compared  to the same  period in 2000.
Such  increases  were  offset  somewhat by a decrease in the number of choir and
band tours handled by the Company's group tour business during 2001.

         Gross profit

         Gross profit for the year ended December 31, 2001 increased by 10.8% to
$60.6  million from $54.7  million for the year ended  December 31, 2000.  Gross
margin  rates  increased  by 0.9  percentage  points to 41.1% for the year ended
December 31, 2001 from 40.2% in the year ended December 31, 2000.

         Gross margins rates for the uniforms and accessories  segment increased
to 46.4% for the year  ended  December  31,  2001 from  45.4% for the year ended
December 31, 2000. The  percentage  increase was primarily due to a shift in the
mix of products sold from lower margin  stockable  items to higher margin custom
uniforms, combined with excellent on-time delivery of production and piece goods
which resulted in lower delivery costs and sales discounts. These increases were
offset  by lower  margins  earned  on the new  performance  dance  wear  line as
compared to our other uniform lines combined with slightly higher  manufacturing
costs associated with the new warehouse and production facility.

         Gross margin rates for the camps and events segment increased  slightly
to 33.2% in the year  ended  December  31,  2001 from  32.9% for the year  ended
December 31, 2000. The increase in the gross margin rate is primarily due to the
overall  decrease  in the  Company's  2001  group  tour  operations,  which have
historically generated lower gross margins than the other parts of the Company's
business;  therefore,  the  decrease  in group tour  operations  resulted  in an
overall  increase in the  segment's  gross  margin  rate.  The  increase is also
partially  due  to  increased   participation  in  the  Company's  studio  dance
competitions and  conventions,  which have  historically  generated higher gross
margins than the cheerleading and dance camps.

         Selling, general and administrative expenses

                                       12
<PAGE>

         Selling,  general and administrative expenses increased as a percentage
of  revenues  to 31.6% for the year ended  December  31, 2001 from 31.0% for the
year ended  December 31, 2000.  This  increase is primarily due to the following
factors:  1) In 2001, the Company  accrued a $900,000  bonus;  no such bonus was
accrued in 2000,  2) The  Company  recognized  approximately  $250,000  in costs
associated  with  abandoning  its old  corporate  headquarters;  and 3)  certain
corporate administrative expenses are now being allocated over a smaller revenue
basis.

         Selling,  general  and  administrative  expenses  as  a  percentage  of
revenues with respect to the uniforms and accessories segment increased to 32.8%
for the year ended  December 31, 2001 from 32.2% in the year ended  December 31,
2000.  The decrease is  primarily  due to increased  rent and  occupancy  costs,
including property taxes,  incurred as a result of moving into the Company's new
warehouse in October 1999, plus additional  costs associated with abandoning the
Company's old headquarters.

         Selling,  general and  administrative  expense ratios for the camps and
events  segment  increased  to 26.9% for the year ended  December  31, 2001 from
24.1% for the year ended  December 31, 2000. The increases are due to additional
overhead incurred as a result of the acquisition of the assets of the Netherland
Corporation  in June  2000.  Netherland's  management  team is  responsible  for
managing the Company's studio dance competitions and conventions, as well as the
Company's line of performance and recital dance wear,  introduced  during fiscal
2000.

         Interest Expense

         Interest  expense  for the years ended  December  31, 2000 and 2001 has
been reduced by $3.1 million and $3.2 million,  respectively,  as a result of an
allocation  of interest  expense to the  discontinued  operations of the Riddell
Group Division.

         Net interest expense,  after the allocation of interest to discontinued
operations,  decreased  by $2.8  million  to $10.3  million  for the year  ended
December  31, 2001 from $13.1  million  for the year ended  December  31,  2000.
Interest expense decreased due to lower interest on the revolving line of credit
resulting  from lower  outstanding  indebtedness  and decreases in the prime and
LIBOR  interest  rates during 2001.  The net interest  expense for the year also
decreased  due to the receipt of interest  income of  approximately  $250,000 as
part of a federal  tax  refund  and  interest  earned  on the net cash  proceeds
received from the sale of Riddell Group  Division.  The tax refund  related to a
carry back of net operating losses of the Company's  Varsity Spirit  Corporation
subsidiaries  for  periods  preceding  the 1997  acquisition  of Varsity  Spirit
Corporation.  The tax refund was for approximately $1.5 million and was recorded
as a receivable at the time of acquisition.

         During  the  year,  the  Company  used a  portion  of the net  proceeds
received from the sale of Riddell Group Division to repurchase  $40.7 million in
face amount of its 10.5% Senior Notes for a total cost,  including  commissions,
of $32.0  million.  As a result of the  repurchase,  the Company  recognized  an
extraordinary  gain  of  approximately  $4.0  million,   net  of  income  taxes,
commissions and related debt acquisition costs.

         Income taxes

         Income tax expense for 2001  consisted  of a current  state  income tax
provision of $900,000,  offset by a deferred tax benefit of $2.2 million,  for a
net benefit of $1.3 million.  The 2001 income tax expense has been  allocated as
follows:  1) $3.0 million income tax expense to continuing  operations;  2) $1.5
million benefit to income (loss) from operations of  discontinued  business;  3)
$6.3  million  benefit to loss on  disposal  of  business;  and 4) $3.5  million
expense to extraordinary gain on retirement of bonds.

         YEAR ENDED DECEMBER 31,2000 COMPARED TO THE YEAR ENDED DECEMBER 31,
         1999

         Comparative  results for this period have been  restated to reflect the
Company's actual,  continuing  operations after giving effect to the sale of the
Riddell Group Division and the discontinuance of the Umbro operations.

         Overview

         The Company  posted net income of $561,000 or $0.06 per share,  for the
year ended  December  31, 2000 as compared  with a net loss of $599,000 or $0.06
per share, for the year ended December 31, 1999.

         Operating income before interest,  taxes,  discontinued  operations and
extraordinary items for the year ended December 31, 2000 increased $3.7 million,
or 42.6%,  to $12.5  million  from $8.8  million in the year ended  December 31,
1999.

                                       13
<PAGE>

         The  operating  results of the  Riddell  Group  Division  and the Umbro
Division are reported as income from  operations of  discontinued  businesses in
the Consolidated  Statements of Operations.  The following management discussion
and analysis of financial conditions reflects changes occurring in the Company's
income from continuing operations,  exclusive of the discontinued  operations of
the Riddell Group Division and the Umbro Division.

         Revenues

         Revenues  for the year  ended  December  31,  2000  increased  by $15.7
million,  or 13.1%,  to $136.0  million  from $120.3  million for the year ended
December 31, 1999.

         Revenues from the sale of uniforms and  accessories  increased by $10.0
million,  or 14.5%,  to $79.2 million for the year ended  December 31, 2000 from
$69.2 million in the year ended December 31, 1999. The increase was attributable
to an overall strong increase in most product  categories,  primarily  uniforms,
lettering and accessories,  offset by a slight decrease in dance and shoe sales.
The significant  increase in revenues is a direct result of expansion within our
existing product lines and increased unit sales.

         Revenues from camps and events  increased by $5.8 million,  or 11.2% to
$56.9  million for the year ended  December 31, 2000 from $51.1  million for the
year ended December 31, 1999. The increase in revenues is directly  attributable
to  the  followings  (i) a  15,000  increase  or  7%,  in  the  number  of  camp
participants,  as compared to the previous year. Camp participants  increased to
230,000 for the year ended  December  31,  2000 from  215,000 for the year ended
December  31,  1999;  (ii) an  increase  in the  number of choir and band  tours
handled by the Company's  group tour business  during 2000;  such increase being
related to additional travel related to the 2000 millennium celebrations.

         Gross profit

         Gross  profit for the year ended  December  31, 2000  increased by $6.1
million,  or  12.5% to $54.7  million  from  $48.6  million  for the year  ended
December 31,  1999.  Gross margin  rates  decreased  slightly by 0.2  percentage
points to 40.2% for the year  ended  December  31,  2000 from  40.4% in the year
ended December 31, 1999.

         Gross margin rates for the uniforms and accessories  segment  decreased
to 45.4% for the year  ended  December  31,  2000 from  46.4% for the year ended
December 31,  1999.  The  percentage  decrease  was  primarily  due to increased
shipping  costs and discounts  given as a result of production  delays caused by
the  significant  increase in the order volume,  combined  with slightly  higher
manufacturing  costs  associated  with new  warehouse  facilities  and increased
inventory costs associated with merchandise sales generated at our instructional
camps.

         Gross margin rates for the camps and events segment  increased to 32.9%
for the year ended  December 31, 2000 from 32.3% for the year ended December 31,
1999. The percentage increase is primarily due to the spreading of certain fixed
and variable  costs over a greater  revenue base. In 1999,  the Company added an
additional  layer  of  employees,  who  were  responsible  for  recruiting  camp
participants.  Such payroll and related costs were spread over a larger  revenue
base in 2000.

         Selling, general and administrative expenses

         Selling,  general and administrative expenses decreased as a percentage
of  revenues  to 31.0% for the year ended  December  31, 2000 from 33.1% for the
year ended December 31, 1999. The improvement is principally due to the improved
absorption  of  the   relatively   fixed   portions  of  selling,   general  and
administrative expenses resulting from the increases in revenues.

         Selling,  general  and  administrative  expenses  as  a  percentage  of
revenues with respect to the uniforms and accessories segment decreased to 32.2%
in the year ended  December  31, 2000 from 33.5% in the year ended  December 31,
1999. The decrease is primarily due to the improved absorption of the relatively
fixed portions of selling,  general and  administrative  expenses resulting from
the increases in revenues realized in 2000.

         Selling,  general  and  administrative  expenses  as  a  percentage  of
revenues with respect to the camps and events segment  decreased to 24.1% in the
year ended December 31, 2000 from 26.3% in the year ended December 31, 1999. The
decrease is primarily  due to the improved  absorption of the  relatively  fixed
portions of selling,  general and  administrative  expenses  resulting  from the
increases in revenues realized in 2000.

         Interest expense

                                       14
<PAGE>

         Interest  expense  for the years ended  December  31, 2000 and 1999 has
been  reduced by $3.2  million and $3.0  million,  respectively,  as a result of
allocation of interest expense to the  discontinued  operations of Riddell Group
Division.

         Net interest expense,  after the allocation of interest to discontinued
operations,  increased  by $0.8  million  to $13.1  million  for the year  ended
December 31, 2000 from $12.3 million for the year ended  December 31, 1999.  The
increase in interest expense was due to an increase in the average borrowings on
the  Company's  line of credit  facility  and  increases  in the prime and LIBOR
interest rates.

         Income taxes

         Interest  tax  expense in 2000  consisted  of a  provision  for federal
alternative  minimum tax,  with an offsetting  deferred tax benefit.  Income tax
expense in 1999  reflects an  adjustment  relating to the  valuation of deferred
taxes. No other net tax expense was recorded in 2000 or 1999.

Liquidity and capital resources

         The seasonality of our working  capital needs is primarily  impacted by
three  factors.  First,  a significant  portion of the products we sell are sold
throughout  the  year on  dated-payment  terms,  with  the  related  receivables
becoming due when the school year begins  during the  following  July to October
period.  Second,  we incur costs relating to our summer camp business during the
first and second quarter as we prepare for the upcoming camp season,  while camp
revenues are mostly collected in the June to August period. Lastly,  outstanding
balance of our debt structure  impacts our working  capital  requirements as the
semi-annual  interest  payments on our  currently  $74.3 million of 10.5% Senior
Notes  outstanding  come due each January and July. Prior to the consummation of
the sale of Riddell Group  Division,  there were $115 million of 10.5% of Senior
Notes  outstanding.  In accordance with certain  provisions of the Senior Notes,
the Company subsequently  repurchased an aggregate of $40.7 million in principal
amount  of  Senior  Notes  following  the sale of the  Riddell  Group  Division.
Specifically,  $11.8 million in principal  amount of Senior Notes in open market
purchases  in the third and fourth  quarters of 2001 for an  aggregate  purchase
price of $8.4 million,  and $28.9 million in principal amount of Senior Notes in
the Company's  "Modified  Dutch Auction" tender offer completed in December 2001
for an aggregate purchase price of $23.1 million.

         To finance the Company's seasonal working capital demands,  we maintain
a credit  facility in the form of a revolving  line of credit.  Upon the sale of
the Riddell Group Division, the Company repaid all indebtedness then outstanding
under its credit  facility,  approximately  $32.7  million,  and in  conjunction
therewith,  the Company  amended and reduced its revolving  credit facility from
$48 million to $15 million.  The  outstanding  balance on the  Company's  credit
facility  follows the seasonal cycles  described  above,  increasing  during the
early part of the operating  cycle in the first and second quarters of each year
and then  decreasing  from the third  quarter  and into the  fourth  quarter  as
collections are used to reduce the outstanding balance.

         At December 31, 2001 there was no outstanding  balance under the credit
facility.  This compares with outstanding  balances of $16.4 million at December
31, 2000.

         Our current debt service obligations are significant and,  accordingly,
our ability to meet our debt  service and other  obligations  will depend on our
future performance and is subject to financial, economic and other factors, some
of which are beyond our control.  Furthermore, due to the seasonality of working
capital  demands  described  above,  year-over-year  growth in our  business and
working capital could lead to higher debt levels in future  periods.  We believe
that operating cash flow together with funds  available from our credit facility
will be sufficient to fund our current debt service,  seasonal and other current
working capital requirements.

Accounting Pronouncements

         In June 2001,  Statement  of  Financial  Accounting  Standards  No. 141
("SFAS  141"),  "Business  Combinations"  was  issued and is  applicable  to all
business  combinations  initiated  after  June  30,  2001  and to  all  business
combinations  accounted  for using  the  purchase  method  for which the date of
acquisition  is  July  1,  2001  or  later.   SFAS  141  requires  all  business
combinations to be accounted for by the purchase  method of accounting.  It also
requires  separate  recognition of intangible  assets that can be identified and
named and also  requires  disclosure  of the primary  reasons  for the  business
combination  and the  allocation of the purchase price by balance sheet caption.
The  Company  does  not  presently  expect  the  adoption  of SFAS 141 to have a
material effect on the Company's financial statements taken as a whole.

                                       15
<PAGE>

         In June 2001,  Statement  of  Financial  Accounting  Standards  No. 142
("SFAS 142"), "Goodwill and Other Intangible Assets" was issued and is effective
for all fiscal years  beginning  after  December 15, 2001.  SFAS 142 changes the
methods of amortizing  goodwill and intangible  assets.  Goodwill and intangible
assets  that have  indefinite  useful  lives will not be  amortized  but will be
tested annually for impairment.  Intangible assets with finite useful lives will
continue  to be  amortized  over their  useful  lives.  The  statement  provides
specific  guidance for testing goodwill for impairment.  Goodwill will be tested
at least annually with a two-step  process that begins with an estimation of the
fair value of the  reporting  unit.  SFAS 142 is  required  to be applied at the
beginning of an entity's fiscal year with impairment losses that arises from the
initial  application of this Statement to be reported as resulting from a change
in accounting principle. The Company will implement SFAS 142 as of the beginning
of fiscal 2002.  The Company has not  determined the impact of this statement on
the carrying value of its goodwill.  The adoptions of the new standard will also
benefit  earnings  beginning  in 2002 by  approximately  $1.9 million in reduced
goodwill amortization.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 14(a) in Part IV and page F-1 of this Report.

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

         None.

                                    PART III

         The Registrant  hereby  incorporates by reference,  in response to Part
III, its Proxy Statement for its 2002 Annual Meeting of Stockholders to be filed
on or  before  April  30,  2002  (except  to the  limited  extent  the rules and
regulations of the Commission authorize certain sections of such Proxy Statement
not to be incorporated  herein by reference,  as specifically  indicated in such
Proxy Statement).

                                     PART IV

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
                  8-K

         (a)(1) and (a)(2) Financial Statements and Schedules to Financial
         Statements

                  The financial statements,  notes thereto,  financial statement
                  schedules  and  accountants'  report  listed in the  "Index to
                  Financial  Statements" on page F-1 of this Report are filed as
                  part of this Report.

         (a)(3)   Exhibits

                  The  exhibits  listed in the  Exhibit  Index  attached to this
                  Report are filed as part of this Report.

         (b)      Reports on Form 8-K

                  None.


                                       16
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       VARSITY BRANDS, INC.

Dated:  April 1, 2002              By: /s/ Jeffrey G. Webb
                                       ----------------------------------------
                                       Jeffrey G. Webb Chief Executive Officer

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/ Jeffrey G. Webb
-------------------------
Jeffrey G. Webb            Vice Chairman of the Board           April 1, 2002
                           and Chief Executive Officer

/s/ Robert E. Nederlander
-------------------------
Robert E. Nederlander      Chairman of the Board                April 1, 2002


/s/ Leonard Toboroff
-------------------------
Leonard Toboroff           Vice President and Director          April 1, 2002


/s/ John M. Nichols
-------------------------
John M. Nichols            Chief Financial Officer              April 1, 2002


/s/ John McConnaughy, Jr.
-------------------------
John McConnaughy, Jr.      Director                             April 1, 2002


/s/ Glen E. Schembechler
-------------------------
Glen E. Schembechler       Director                             April 1, 2002


/s/ Don R. Kornstein
-------------------------
Don R. Kornstein           Director                             April 1, 2002


/s/ Arthur N. Seessel, III
-------------------------
Arthur N. Seessel, III     Director                             April 1, 2002





  Item 14(c)        PART IV

                    Exhibit Index

                    Note: All references to "Riddell Sports Inc." refer to the
                    Company, currently known as "Varsity Brands, Inc."

  EXHIBIT

  NUMBER

                    DESCRIPTION

  2.1               Agreement and Plan of Merger, dated as of May 5, 1997, by
                    and among Riddell Sports Inc., Cheer Acquisition Corp. and
                    Varsity Spirit Corporation (15).

                                       17
<PAGE>

  3.1               Articles of Incorporation of Riddell Sports Inc. (11).

  3.2               First Amended and Restated Bylaws of Riddell Sports Inc.
                    (9).

  3.3               Certificate of Incorporation of All American Sports
                    Corporation (formerly known as Ameracq Corp) (17).

  3.4               Bylaws of All American Sports Corporation (formerly known as
                    Ameracq Corp) (17).

  3.5               Certificate of Incorporation of Cheer Acquisition Corp.
                    (17).

  3.6               Bylaws of Cheer Acquisition Corp. (17).

  3.7               Certificate of Incorporation of Equilink Licensing
                    Corporation (17).

  3.8               Bylaws of Equilink Licensing Corporation (17).

  3.9               Certificate of Incorporation of Proacq Corp. (17).

  3.10              Bylaws of Proacq Corp. (17).

  3.11              Certificate of Incorporation of RHC Licensing Corporation
                    (17).

  3.12              Bylaws of RHC Licensing Corporation (17).

  3.13              Amended and Restated Articles of Incorporation of Riddell,
                    Inc. (formerly known as EN&T Associates Inc.) (17).

  3.14              Bylaws of Riddell, Inc. (formerly known as EN&T Associates
                    Inc.) (17).

  3.15              Amended and Restated Articles of Incorporation of Ridmark
                    Corporation (17).

  3.16              Bylaws of Ridmark Corporation (17).

  3.17              Charter of International Logos, Inc. (17).

  3.18              Bylaws of International Logos, Inc. (17).

  3.19              Charter of Varsity/Intropa Tours, Inc. (17).

  3.20              Bylaws of Varsity/Intropa Tours, Inc. (17).

  3.21              Amended and Restated Charter of Varsity Spirit Fashions &
                    Supplies, Inc. (17).

  3.22              Bylaws of Varsity Spirit Fashions & Supplies, Inc. (17).

  3.23              Amended and Restated Charter of Varsity USA, Inc. (17).

  3.24              Bylaws of Varsity USA, Inc. (17).

  4.1               Indenture, dated as of June 19, 1997, between Riddell,
                    certain subsidiaries of Riddell Sports Inc., as guarantors,
                    and Marine Midland Bank, as Trustee (14).

  9.1               Voting Trust Agreement dated May 1991 (2).

  10.1              Settlement Agreement, dated April 9, 1981, among
                    McGregor-Doniger Inc., Brunswick Corporation and The
                    Equilink Corporation (2).

  10.2              1997 Stock Option Plan (13).

  10.3              1991 Stock Option Plan (2) as amended by amendments
                    described in Riddell Sports Inc.'s proxy materials for its
                    annual stockholders meetings held on August 20, 1992,
                    September 30, 1993, June 27, 1996 and June 24, 1997.

  10.4              Employment Agreement, dated June 22, 1992, between Riddell
                    Sports Inc. and Robert F.

                                       18
<PAGE>

                    Nederlander (4); amended July 27, 1994 (6).

  10.5              Employment Agreement, dated June 22, 1992, between Riddell
                    Sports Inc. and Leonard Toboroff (4); amended July 27, 1994
                    (6).

  10.6              Employment Agreement, dated March 19, 1993, commencing March
                    25, 1993 between David Mauer and Riddell Sports Inc. (5), as
                    amended January 17, 1994; November 1, 1994 (7); November 28,
                    1994 (8).

  10.7              Employment Agreement, dated as of March 7, 1996, between
                    Riddell Sports Inc. and David Groelinger (10), as amended
                    March 7, 1998 (18) and as amended March 1, 2000 (20).

  10.8              Note Purchase Agreement, dated October 30, 1996, between
                    Riddell Sports Inc. and Silver Oak Capital, L.L.C., as
                    amended by letter agreement dated May 2, 1997 (11).

  10.9              Registration Rights Agreement, dated November 8, 1996,
                    between Riddell Sports Inc. and Silver Oak Capital L.L.C.
                    (11).

  10.10             Shareholders Agreement, dated as of May 5, 1997, between
                    Riddell Sports Inc., Cheer Acquisition Corp. and certain
                    shareholders of Varsity Spirit Corporation (16).

  10.11             Employment Agreement, dated as of May 5, 1997, between
                    Riddell Sports Inc. and Jeffrey G. Webb (16).

  10.12             Employment Agreement, dated as of May 5, 1997, between
                    Riddell Sports Inc. and W. Kline Boyd (16), as amended
                    August 2, 1999 (20).

  10.13             Umbro License Agreement, dated as of November 23, 1998,
                    between Umbro International, Inc. and Varsity Spirit
                    Fashions & Supplies, Inc. (19).

  10.14             Asset and USISL Stock Purchase Agreement, dated as of
                    November 1998, between Umbro International, Inc. and Varsity
                    Spirit Fashions & Supplies, Inc. (19).

  10.15             Amended and Restated Loan, Guaranty And Security Agreement
                    dated as of April 20, 1999 among the financial institutions
                    named therein, as the Lenders, Bank of America National
                    Trust and Savings Association, as the Agent, Riddell Sports
                    Inc., as the Parent Guarantor, Riddell, Inc., All American
                    Sports Corporation, Varsity Spirit Corporation, and Varsity
                    Spirit Fashions & Supplies, Inc. collectively, as the
                    Borrower and all other subsidiaries of the Parent Guarantor,
                    collectively, as the Subsidiary Guarantors (19), as amended
                    July 16, 1999 (20), as amended January 1, 2000 (20), as
                    amended December 31, 2000 (21) and as amended December 31,
                    2000 (21).

  10.16             Sublease between Nederlander Television and Film Production,
                    Inc. and Riddell Sports Inc., as amended (20).

  10.17             Employment Agreement, dated as of March 1, 2000, between
                    Riddell Sports Inc. and Greg Webb (21).

  10.18             Industrial Lease Agreement dated August 22, 2000 between
                    Riddell Sports, Inc. and Belz Investco GP (21), as amended
                    January 24, 2001 (21) and as amended February 13, 2001.

  10.19             Lease Agreement dated February 1, 2001 between Riddell
                    Sports Inc. and Lenox Park Building F Partners (21).

  10.20             Second Amended and Restated Loan, Guaranty And Security
                    Agreement dated as of July 23, 2001 among the financial
                    institutions named therein, as the Lenders, Bank of America,
                    N.A., as the Agent, Riddell Sports Inc., as the Parent
                    Guarantor, Varsity Spirit Corporation, Varsity Spirit
                    Fashions & Supplies, Inc., Varsity USA, Inc.,
                    Varsity/Intropa Tours, Inc. and International Logos, Inc.
                    collectively, as the Borrower (22).

  10.21             4.10% Convertible Subordinated Note, dated August 16, 2001,
                    between Riddell Sports Inc. and Silver Oak Capital, L.L.C.
                    (23).

                                       19
<PAGE>

  21                List of subsidiaries (17).

  23                Consent of Grant Thornton LLP regarding Varsity Brands, Inc.
                    (1).

----------

  (1)          Filed herewith.

  (2)          Incorporated by reference to Riddell Sports Inc.'s Registration
               Statement on Form S-1 (Commission File No. 33-40488) effective
               June 27, 1991 (including all pre-effective amendments to the
               Registration Statement).

  (3)          Intentionally omitted.

  (4)          Incorporated by reference to Riddell Sports Inc.'s Form 10-Q
               report (Commission File No. 0-19298) for the quarter ended June
               30, 1992.

  (5)          Incorporated by reference to Riddell Sorts Inc.'s Form 10-K
               report (Commission File No. 0-19298) filed on March 30, 1993.

  (6)          Incorporated by reference to Riddell Sports Inc.'s Form 10-Q for
               the quarter ended June 30, 1994.

  (7)          Incorporated by reference to Riddell Sports Inc.'s Form 10-Q for
               the quarter ended September 30, 1994.

  (8)          Incorporated by reference to Riddell Sports Inc.'s Form 10-K for
               the year ended December 31, 1994.

  (9)          Incorporated by reference to Riddell Sports Inc.'s Form 10-K for
               the year ended December 31, 1995, dated November 11, 1996.

  (10)         Incorporated by reference to Riddell Sports Inc.'s Form 10-Q
               dated May 14, 1996.

  (11)         Incorporated by reference to Riddell Sports Inc.'s Form 10-Q
               dated November 11, 1996.

  (12)         Intentionally omitted.

  (13)         Incorporated by reference to Riddell Sports Inc.'s Proxy
               Statement filed June 6, 1997.

  (14)         Incorporated by reference to Riddell Sports Inc.'s Form 8-K
               dated June 19, 1997.

  (15)         Incorporated by reference to Riddell Sports Inc.'s Report on Form
               8-K filed May 8, 1996.

  (16)         Incorporated by reference to Varsity Spirit Corporation Schedule
               13D filed June 25, 1997.

  (17)         Incorporated by reference to Riddell Sports Inc.'s Registration
               Statement on Form S-4 (Registration No. 333-31525) filed July 18,
               1997.

  (18)         Incorporated by reference to Riddell Sports Inc.'s Form 10-K
               Report for the year ended 1997 (File No. 0-19298).

  (19)         Incorporated by reference to Riddell Sports Inc.'s Form 10-K
               Report for the year ended 1998 (File No. 0-19298).

  (20)         Incorporated by reference to Riddell Sports Inc.'s Form 10-K
               Report for the year ended 1999 (File No. 0-19298).

  (21)         Incorporated by reference to Riddell Sports Inc.'s Form 10-K
               Report for the year ended 2000 (File No. 0-19298).

  (22)         Incorporated by reference to Varsity Brands, Inc.'s Form 10-Q
               Report for the quarter ended June 30, 2001 (File No. 0-19298).

  (23)         Incorporated by reference to Varsity Brands, Inc.'s Form 10-Q
               Report for the quarter ended September 30, 2001 (File No.
               0-19298).


                                       20
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                                             PAGE
<S>                                                                                                           <C>
         Report of Independent Certified Public Accountants..........................................         F-2

         Consolidated Balance Sheets at December 31, 2001 and 2000 ..................................         F-3

         Consolidated Statements of Operations for the years ended
             December 31, 2001, 2000 and 1999 .......................................................         F-4

         Consolidated Statements of Stockholders' Equity for the years
             ended December 31, 2001, 2000 and 1999 .................................................         F-5

         Consolidated Statements of Cash Flows for the years ended
             December 31, 2001, 2000 and 1999........................................................         F-6

         Notes to Consolidated Financial Statements..................................................         F-7


         Financial Statement Schedules

             Report of Independent Certified Public Accountants on Schedule..........................         S-1

             Schedule II - Valuation and Qualifying Accounts.........................................         S-2

             All other financial statement schedules are omitted as the required
             information is presented in the financial statements or the notes
             thereto or is not necessary.
</TABLE>



                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS









Board of Directors
Varsity Brands, Inc.


         We have audited the accompanying consolidated balance sheets of Varsity
Brands, Inc. (formerly Riddell Sports Inc.) (a Delaware corporation) and
Subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2001. These financial statements
are the responsibility of the management of Varsity Brands, Inc. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform our audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Varsity
Brands, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of their operations and their consolidated cash flows for
each of the three years in the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.




                               GRANT THORNTON LLP


Chicago, Illinois
February 20, 2002


<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                               ------------------------------
                                                                                   2001             2000
                                                                               -------------     ------------
<S>                                                                                 <C>                <C>
                                 ASSETS
Current assets:
   Cash and cash equivalents                                                        $14,397            $ 109
   Accounts receivable, trade, less allowance for doubtful
     accounts ($429 and $400, respectively)                                          12,161           14,473
   Inventories                                                                        7,863            7,202
   Prepaid expenses                                                                   3,937            3,250
   Other receivables                                                                  3,555            1,454
   Deferred income taxes                                                              2,383            2,270
   Assets held for disposal                                                               -           87,632
                                                                               -------------     ------------

                    Total current assets                                             44,296          116,390
Property and equipment, less accumulated depreciation                                 4,387            4,349
Intangible assets and deferred charges, less accumulated amortization                69,389           72,615
Other assets                                                                            559              463
                                                                               -------------     ------------

                    Total assets                                                   $118,631         $193,817
                                                                               =============     ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                 $ 5,891          $ 4,072
   Accrued liabilities                                                                8,258            7,131
   Customer deposits                                                                  5,132            5,490
   Current portion of long-term debt                                                  1,375                -
   Liabilities of discontinued businesses                                                 -           10,063
                                                                               -------------     ------------

                    Total current liabilities                                        20,656           26,756
Long-term debt, less current portion                                                 80,410          138,919
Deferred income taxes                                                                   188            2,270
Commitments and contingent liabilities                                                    -                -

Stockholders' equity:
   Preferred stock, $.01 par; authorized 5,000,000 shares; none issued                    -                -
   Common stock, $.01 par; authorized 40,000,000 shares; issued
     outstanding 9,452,250                                                               95               95
   Capital in excess of par                                                          37,306           37,306
   Accumulated deficit                                                              (20,024)         (11,529)
                                                                               -------------     ------------

                    Total stockholders' equity                                       17,377           25,872
                                                                               -------------     ------------

                       Total liabilities and stockholders' equity                  $118,631         $193,817
                                                                               =============     ============
</TABLE>


                 See notes to consolidated financial statements

                                      F-3
<PAGE>
                      VARSITY BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                   Years ended December 31,
                                                              2001            2000           1999
                                                           -----------     -----------    -----------
<S>                                                                 <C>          <C>          <C>

Net revenues:
   Uniforms and accessories                                   $  88,131    $  79,179    $  69,155
   Camps and events                                              59,418       56,856       51,130
                                                              ---------    ---------    ---------

                                                                147,549      136,035      120,285

Cost of revenues:
   Uniforms and accessories                                      47,279       43,209       37,061
   Camps and events                                              39,689       38,138       34,596
                                                              ---------    ---------    ---------

                                                                 86,968       81,347       71,657
                                                              ---------    ---------    ---------

Gross profit                                                     60,581       54,688       48,628

Selling, general and
   administrative expenses                                       46,594       42,146       39,831
                                                              ---------    ---------    ---------

Income from operations                                           13,987       12,542        8,797

Other expense:
   Interest expense                                              11,096       13,139       12,347
   Interest income                                                 (750)          --           --
                                                              ---------    ---------    ---------

Total other expense                                              10,346       13,139       12,347
                                                              ---------    ---------    ---------

Income (loss) from continuing operations before
   income taxes, discontinued operations and
   extraordinary items                                            3,641         (597)      (3,550)

Income taxes (benefit)                                            3,010         --            905
                                                              ---------    ---------    ---------

Income (loss) from continuing operations                            631         (597)      (4,455)

Discontinued operations:
   Income (loss) from operations of discontinued businesses      (3,847)       1,158        3,856
   Loss on disposal of businesses                                (9,326)        --           --
                                                              ---------    ---------    ---------

Total income (expense) from discontinued operations
   before extraordinary items                                   (12,542)         561         (599)

Extraordinary items - Gain on retirement of bonds                 4,047         --           --
                                                              ---------    ---------    ---------

Net income (loss)                                             $  (8,495)   $     561    $    (599)
                                                              =========    =========    =========

Income (loss) from continuing operations per share:
      Basic                                                   $    0.07    $   (0.06)   $   (0.48)
      Diluted                                                 $    0.07    $   (0.06)   $   (0.48)

Net earnings (loss) per share:
      Basic                                                   $   (0.90)   $    0.06    $   (0.06)
      Diluted                                                 $   (0.90)   $    0.06    $   (0.06)

Weighted average number common and common
   equivalent shares outstanding
      Basic                                                       9,452        9,389        9,260
      Diluted                                                     9,452        9,471        9,260

</TABLE>

                 See notes to consolidated financial statements


                                      F-4
<PAGE>
                      VARSITY BRANDS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                      RETAINED
                                            COMMON STOCK              ADDITIONAL      EARNINGS              TOTAL
                                     ---------------------------     PAID IN          (ACCUMULATED      STOCKHOLDERS'
                                       SHARES          AMOUNT        CAPITAL          DEFICIT)             EQUITY
                                     ------------    -----------    -----------    ----------------    ----------------
<S>                                  <C>             <C>            <C>            <C>                 <C>
Balance, January 1, 1999                   9,259           $ 93        $36,849           $ (11,491)           $ 25,451
   Issuance of common stock upon
      exercise of stock options                4              -             13                   -                  13
   Net (loss) for the year                     -              -              -                (599)               (599)
                                     ------------    -----------    -----------    ----------------    ----------------

Balance December 31, 1999                  9,263             93         36,862             (12,090)             24,865
   Stock issued to employees                  54              -            169                   -                 169
   Issuance of common stock upon
      exercise of stock options              135              2            275                   -                 277
   Net income for the year                     -              -              -                 561                 561
                                     ------------    -----------    -----------    ----------------    ----------------

Balance December 31, 2000                  9,452             95         37,306             (11,529)             25,872
   Net (loss) for the year                     -              -              -              (8,495)             (8,495)
                                     ------------    -----------    -----------    ----------------    ----------------

Balance December 31, 2001                  9,452           $ 95        $37,306           $ (20,024)           $ 17,377
                                     ============    ===========    ===========    ================    ================
</TABLE>


                 See notes to consolidated financial statements


                                      F-5
<PAGE>
                      VARSITY BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                                      2001            2000           1999
                                                                   -----------     -----------    -----------
<S>                                                                <C>             <C>            <C>
Cash flows from operating activities:
   Net income (loss)                                                 $ (8,495)          $ 561         $ (599)
   Adjustments to reconcile net income (loss) to net
     cash provided by (used in) continuing operations:
     (Income) loss from operations of discontinued businesses           3,847          (1,158)        (3,856)
      Loss on disposal of businesses                                    9,326               -              -
      Extraordinary gain on retirement of bonds                        (4,047)              -              -
      Depreciation and amortization:
         Amortization of debt issue costs                                 761             863            843
         Other depreciation and amortization                            4,047           3,706          3,581
      Provision for losses on accounts receivable                         325             417            584
      Deferred income taxes                                            (2,195)              -            905
      Changes in assets and liabilities, net of assets sold
          and extraordinary items:
         (Increase) decrease in:
            Accounts receivable, trade                                  1,987          (2,902)        (1,625)
            Inventories                                                  (661)          2,126         (1,430)
            Prepaid expenses                                             (687)            997           (516)
            Other receivables                                          (2,101)            (28)            25
            Other assets                                                 (456)          1,384         (1,139)
         Increase (decrease) in:
            Accounts payable                                            1,819            (611)        (3,623)
            Accrued liabilities                                         1,127            (534)         1,031
            Customer deposits                                            (358)           (600)           129

                                                                   -----------     -----------    -----------

Net cash provided by (used in) continuing operations                    4,239           4,221         (5,690)

Cash flows from discontinued operations and extraordinary item
   Net change in assets held for disposal                              (6,021)         (4,199)        (3,172)
   Deferred bond costs associated with extraordinary gain              (1,067)              -              -

                                                                   -----------     -----------    -----------

Net cash used by discontinued operations and extraordinary item        (7,088)         (4,199)        (3,172)

Cash flows from investing activities:
   Capital expenditures                                                (2,089)         (2,306)        (1,384)
   Net proceeds received from sale of businesses                       67,308               -              -
   Other assets                                                             -            (332)             -

                                                                   -----------     -----------    -----------

Net cash provided by (used in)  investing activities                   65,219          (2,638)        (1,384)

Cash flows from financing activities:
   Net borrowings (repayments) under line-of-credit agreement         (16,419)           2,822          9,197
   Redemption of senior bonds                                         (31,425)              -              -
   Debt issue costs                                                      (238)              -           (566)
   Proceeds from issuance of common stock                                   -             277             13

                                                                   -----------     -----------    -----------

Net cash provided in (used by) financing activities                   (48,082)          3,099          8,644
                                                                   -----------     -----------    -----------

Net increase in cash                                                   14,288             483         (1,602)
Cash, beginning                                                           109            (374)         1,228
                                                                   -----------     -----------    -----------

Cash, ending                                                          $14,397           $ 109         $ (374)
                                                                   ===========     ===========    ===========
</TABLE>


                 See notes to consolidated financial statements

                                      F-6
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Varsity Brands, Inc. and its wholly owned subsidiaries
("the Company"). All significant intercompany accounts and transactions have
been eliminated. The Company changed its name to Varsity Brands, Inc. from
Riddell Sports Inc. in September 2001 in conjunction with the sale of the
Riddell Group Division ("RGD") in June 2001.

         BUSINESS: The Company designs and markets cheerleading and dance team
uniforms and accessories; operates cheerleading and dance team camps, clinics
and special events; and provides studio dance conventions and competitions. The
Company markets its products and services to schools and recreational
organizations and the coaches and participants in the extracurricular market
through its own nationwide sales force, a web site targeted to specific
activities and a year-round marketing cycle of special events, competitions and
instruction.

         CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

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

         PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Depreciation is being computed using the straight-line method over the estimated
useful lives (principally leasehold improvements are depreciated over the lesser
of the lease term or their useful life, and 3 to 7 years for machinery and
equipment and furniture and fixtures) of the related assets.

         INTANGIBLE ASSETS AND DEFERRED CHARGES: Debt issue costs are amortized
to interest expense over the term of the related debt. Other intangibles and
deferred charges are being amortized by the straight-line method over their
respective estimated lives.

         Long-lived assets, including goodwill and other intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. For purposes of
evaluating the recoverability of long-lived assets, the related assets' carrying
value is compared to the undiscounted estimated future cash flows from the
related operations.

         INCOME TAXES: Deferred tax liabilities and assets are recognized for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities (excluding non-deductible goodwill) using enacted tax
rates in effect for the years in which the differences are expected to become
recoverable or payable.

         REVENUES: Sales of products are recorded upon shipment to customers.
Camp and event revenues are recognized over the term of the respective activity.

         ESTIMATES: In preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that


                                      F-7
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses for the periods
reported. Actual results could differ from those estimates. Estimates relating
to contingent liabilities are further discussed in Note 10.

         CONCENTRATION OF CREDIT RISK: The majority of the Company's receivables
arise from sales to schools and other institutions. The Company maintains
reserves for potential losses on receivables from these institutions, as well as
receivables from other customers, and such losses have generally not exceeded
management's expectations.

         EARNINGS (LOSS) PER SHARE: Basic earnings (loss) per share amounts have
been computed by dividing earnings (loss) by the weighted average number of
outstanding common shares. Diluted earnings (loss) per share are computed
dividing earnings (loss) by the weighted average number of common shares and
common equivalent shares relating to dilutive securities. The following table
shows a reconciliation of this denominator:

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                                -----------------------------------
                                                                2001            2000           1999
                                                                ----            ----           ----
                                                                            (IN THOUSANDS)
<S>                                                             <C>             <C>            <C>
         Weighted average number of outstanding
            common shares...................................    9,452           9,389          9,260

         Options, assumed exercise of dilutive options,
            net of treasury shares, which could have
            been purchased from the proceeds of
            the assumed exercise based on
            average market prices...........................        -              82              -
                                                               ------          ------          -----
                  Denominator for diluted computation.......    9,452           9,471          9,260
                                                               ======          ======          =====
</TABLE>


         For the year ended December 31, 2001, options to purchase 2,130,875
shares of common stock with a weighted average price of $4.34 and the
convertible debt described in Note 7 were excluded from the computation of
diluted earnings per share, as their inclusion would not have been dilutive. For
the year ended December 31, 2000, options to purchase 1,960,450 shares of common
stock with a weighted average price of $4.66 and the convertible debt described
in Note 7 were excluded from the computation of diluted earnings per share, as
their inclusion would not have been dilutive. For the year ended December 31,
1999, potentially dilutive securities, which include convertible debt, common
stock options and warrants, were not dilutive due to the net losses incurred and
were excluded from the computation of diluted earnings per share.

         SHIPPING AND HANDLING FEES: In September 2000, the Emerging Issues Task
force ("EITF") reached a consensus with respect to EITF Issue 00-10, "Accounting
for Shipping and Handling Fees and Costs." The purpose of this issue discussion
was to clarify the classification of shipping and handling revenue and costs.
The consensus reached was that all shipping and handling amounts billed to
customers should be classified as revenue. Additionally, a consensus was reached
that the classification of shipping and handling costs is an accounting policy
decision that should be disclosed pursuant to Accounting Principles Board
Opinion No. 22, "Disclosures of Amounting Policies." The Company may adopt a
policy of including shipping and handling costs in cost of sales or in operating
expenses. If shipping costs are material and are not included



                                      F-8
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

in costs of sales, disclosure of both the amount of such costs and the line item
on the income statement is required.

         The Company has adopted EITF issue 00-10 and billings to customers for
freight and handling charges are generally included in net sales and cost of
goods sold in the Consolidated Statements of Operations for all periods
presented.

         NEW ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting
Standards Board (FASB) issued SFAS No. 141, "Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 is effective for
the Company as of January 1, 2002. Under the new rules, goodwill and indefinite
lived intangible assets will no longer be amortized but will be reviewed
annually for impairment. Intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives.

         The adoption of SFAS No. 142 requires that an initial impairment
assessment be performed on all goodwill and indefinite lived intangible assets.
To complete this assessment, the Company will compare the fair value to the
current carrying value of goodwill. Fair values will be derived using cash flow
analysis. The assumptions used in this cash flow analysis will be consistent
with the Company's internal planning. Any impairment charge resulting from the
initial assessment will be recorded as a cumulative effect of an accounting
change. The Company will implement SFAS 142 as of the beginning of fiscal 2002.
The Company has not yet determined the impact of this statement on the carrying
value of its goodwill. The adoption of the new standard will benefit earnings
beginning in 2002 by approximately $1.9 million in reduced goodwill
amortization.

2.       DISPOSITION OF ASSETS

         On June 22, 2001, the Company completed the sale of its Riddell Group
Division to an acquisition affiliate of Lincolnshire Management, Inc.
("Lincolnshire"), a New York based, private-equity fund. The purchase price,
which was determined by an arms-length negotiation, was for approximately $61
million in cash, plus an adjustment of $6.5 million to cover seasonal funded
indebtedness incurred by the Riddell Group Division during 2001 for a total
purchase price of approximately $67.5 million.

         The sale was made pursuant to a stock purchase agreement dated April
27, 2001 between the Company and Lincolnshire. The Riddell Group Division
included: (i) all of the Company's team sports business, excluding Umbro branded
team soccer products, (ii) the Company's licensing segment, which allows
third-parties to market certain products using the Riddell and MacGregor
trademarks, and (iii) the Company's retail segment, including the New York
Executive Office, which managed the retail and licensing segments, and marketed
a line of sports collectibles and athletic equipment, principally to retailers
in the United States, and to a limited extent internationally. In conjunction
with the sale of the Riddell Group Division, the Company recognized a decline in
value in its net minority investment in a company who makes game uniforms on
behalf of the Riddell Group Division. The Company had previously accounted for
its investment in the game uniform company using the equity method of
accounting. As a result of the sale of the Riddell Group Division and the
write-down in the value of its minority investment in the game uniform company,
the Company recorded a loss on the sale of the Riddell Group Division of $20.5
million ($12.2 million after tax) in 2001.

         The net operating results of the Riddell Group Division are presented
as income from operations of discontinued businesses in the Consolidated
Statements of Operations. Revenues generated by the Riddell Group Division for
the years ended December 31, 2001, 2000 and 1999 were $42.4 million, $89.3
million and $81.6 million, respectively.

                                      F-9
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         In September 2001, the Company settled the litigation that it had
brought earlier in the year against Umbro Worldwide, Ltd. ("Umbro Worldwide")
involving the licensing agreement between the Company and Umbro Worldwide. The
license agreement allowed Varsity to sell Umbro branded soccer apparel,
equipment and footwear to soccer specialty stores and others in the team channel
of distribution, principally in the United States.

         In connection with the settlement and in exchange for a lump sum
payment of $5.5 million and Umbro Worldwide's agreement to make certain payments
to the Company in the future, including the purchase, at net realizable value,
of certain inventory from the Company, the Company has voluntarily agreed to
terminate its license effective November 30, 2001. As a result of the early
termination of the Umbro license, the Company has recognized a gain of
approximately $4.9 million ($2.9 million after tax) during 2001. The amount for
which the Company is to receive from the sale on inventory is currently in
dispute and will be resolved by a third party arbitrator. The final amount to be
received from the sale of Umbro inventory is not known at this time with the
final settlement ranging from a low of $2 million to high of $3.7 million.

         The net operating results of the Umbro Division are presented in income
from discontinued operations of discontinued businesses in the Consolidated
Statements of Operations. Revenues generated by the Umbro division for the years
ended December 31, 2001, 2000 and 1999 were $9.3 million, $9.4 million and $6.8
million, respectively.

3.       RECEIVABLES

         Accounts receivable include unbilled shipments of approximately
$610,000 and $349,000 at December 31, 2001 and 2000. It is the Company's policy
to record revenues when the related goods have been shipped. Unbilled shipments
represent receivables for shipments that have not yet been invoiced. These
amounts relate principally to partial shipments to customers, who are not
invoiced until their order is shipped in its entirety or customers with orders
containing other terms that require a deferral in the issuance of an invoice.
Management believes that substantially all of these unbilled receivables will be
invoiced within the current sales season.


4.       INVENTORIES:

         Inventories consist of the following:
                                               DECEMBER 31,
                                           -------------------
                                           2001           2000
                                          ------         ------
                                              (IN THOUSANDS)
                  Finished goods          $5,904         $5,355
                  Work-in-process            175            171
                  Raw materials            1,784          1,676
                                          ------         ------
                                          $7,863         $7,202
                                          ======         ======

                                      F-10
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.       PROPERTY AND EQUIPMENT:

         Property and equipment consist of the following:
                                                         DECEMBER 31,
                                                      2001        2000
                                                      ----        ----
                                                       (IN THOUSANDS)
                  Machinery and equipment           $ 6,157     $ 8,663
                  Furniture and fixtures              2,861       2,724
                  Leasehold improvements                298         539
                                                    -------     -------
                                                      9,316      11,926
                  Less accumulated depreciation       4,929       7,577
                                                    -------     -------
                                                    $ 4,387     $ 4,349
                                                    =======     =======

         Depreciation expense from continuing operations relating to all
property and equipment amounted to $2,051,000, $1,806,000 and $1,691,000 for the
years ended December 31, 2001, 2000, and 1999, respectively.

6.       INTANGIBLE ASSETS AND DEFERRED CHARGES:

         Intangible assets and deferred charges consist of the following:

                                         ESTIMATED
                                           LIVES            DECEMBER 31,
                                          IN YEARS       2001         2000
                                          --------   ----------    ---------
                                                           (IN THOUSANDS)
         Goodwill                         20 to 40      $76,191      $76,191
         Debt issue costs                  5 to 8         5,481        7,155
         Other                             2 to 5           360          120
                                                     ----------    ---------
                                                         82,032       83,466
         Less accumulated amortization                   12,643       10,851
                                                     ----------    ---------
                                                        $69,389      $72,615
                                                     ==========    =========

         Amortization expense relating to all intangible assets and deferred
charges amounted to $2,757,000, $2,763,000 and $2,733,000 for the years ended
December 31, 2001, 2000 and 1999, respectively.

7.       LONG-TERM DEBT:

Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                               2001             2000
                                                                             --------        --------
                                                                                    (IN THOUSANDS)
<S>                                                                          <C>             <C>
Outstanding balance under a credit facility expiring in 2002, the            $   --          $ 16,419
   facility was revised in 2001, terms further described below

Senior notes, 10.5%, due 2007, terms further described below                   74,285         115,000

Convertible subordinated note payable, interest at 4.1%, due 2002
   through 2007, terms further described below                                  7,500           7,500
                                                                             --------        --------
                                                                             $ 81,785        $138,919
                                                                             ========        ========
</TABLE>

                                      F-11
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The aggregate maturities of long-term debt are as follows:

                YEARS ENDING DECEMBER 31,             (IN THOUSANDS)
                       2002                                $   1,375
                       2003                                    2,375
                       2004                                    3,450
                       2005                                      100
                       2006                                      100
                       2007                                   74,385
                                                    ----------------
                                                             $81,785
                                                    ================

         In July 2001, the Company entered into a revised credit facility with
Bank of America, N.A. The revised credit facility replaced the Company's $48
million credit facility with Bank of America National Trust and Savings
Association. The revised credit facility consists of a line of credit in a
principal amount not to exceed $15 million during the period from January 15
through September 15. The credit facility expires on September 15, 2002. Draws
under the line of credit are limited to a percentage of the Company's eligible
receivables and inventory, as defined by the credit facility agreement. The
outstanding balance of the line accrues interest at a rate of prime plus 1%,
payable monthly. The credit facility also calls for an unused line fee equal to
an annual rate of 0.5% applied to the amount by which the lesser of $15 million
and the then maximum revolving amount exceeds the average daily balance of
outstanding borrowings under the line. The credit facility agreement contains
covenants which, among other things, require the Company to meet certain
financial ratio and net worth tests, restrict the level of additional
indebtedness the Company may incur, limit payments of dividends, restrict the
sale of assets and limit investments the Company may make. The credit facility
also requires repayment of the principal amount upon the occurrence of a change
in the control, as defined, of the Company. The Company has pledged essentially
all of its tangible assets as collateral for the credit facility.


         The 10.5% senior notes contain covenants that, among other things,
restrict the level of other indebtedness the Company may incur, the amounts of
investments it may make in other businesses, the sale of assets and use of
proceeds therefrom and the payment of dividends. The senior notes also restrict
payment of junior indebtedness prior to the maturity of the junior indebtedness.
The full face value of the senior notes is due on July 15, 2007. The interest on
the senior notes is payable semiannually on January 15 and July 15. The holders
of the senior notes have the right to require the senior notes to be redeemed at
101% of the principal amount in the event of a change of control (as defined in
the senior notes). The senior notes contain prepayment restrictions and have no
mandatory redemption provisions. The senior notes are guaranteed by all of the
Company's subsidiaries. Each of these subsidiaries is wholly owned subsidiary of
the Company and has fully and unconditionally guaranteed the senior notes on a
joint and several basis. The Company itself is a holding company with no assets
or operations other than those relating to its investments in its subsidiaries.
The separate financial statements of the guaranteeing subsidiaries are not
presented in this report because, considering the facts stated above, the
separate financial statements and other disclosures concerning the guaranteeing
subsidiaries are not deemed material to investors by management.

         According to the terms of the 10.5% Senior Notes Agreement, the use of
proceeds received from the sale of RGD and the early termination of the Umbro
license agreement, net of applicable expenses, is limited to the reduction of
existing senior indebtedness, reinvestment in the business and/or the
acquisitions of outside business interests. In the event that the Company has
not executed a reinvestment in the business and/or acquisition(s) of outside
business interests within two hundred and seventy days (270) after the receipt
of proceeds from the transaction, the Company is required, under the terms of
the 10.5% Senior Notes Agreement, to offer to repurchase the Senior Notes at
par.

                                      F-12
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         A portion of the proceeds received from the sale of RGD was used to
repay all of the then outstanding indebtedness, approximately $32.7 million, on
the revolving line of credit. The remaining cash proceeds, approximately $31.5
million, were used to redeem a face amount of approximately $40.7 million of the
10.5% Senior Notes in a series of transactions during 2001. As a result of these
transactions, the Company recognized an extraordinary gain of approximately $4.0
million, net of income taxes, commissions, expenses and debt issue costs.

         Net cash proceeds received from the Umbro settlement consist of the
$5.5 million upfront payment plus proceeds to be received from the sale of Umbro
related inventory to the licensor. The proceeds to be received from the sale of
the Umbro related inventory is presently in dispute and will be determined by a
third party arbitrator. Net cash proceeds to be realized from the Umbro
settlement currently ranges from $6.9 million to $8.6 million. (See Note 2 for
further discussion of the Umbro settlement.)

         The 4.1% convertible subordinated note is subordinated in right to
prior payment in full of senior indebtedness, which is generally defined in the
governing agreements to include debt under the senior notes and revolving line
of credit described above and any refinancing, renewal or replacement thereof as
well as certain other debt. The note limits the Company's ability to grant stock
options and requires repayment of 101% of the principal in the event of a change
in control (as defined). In conjunction with the sale of RGD, the Company and
the debtholder entered into a Note Exchange Agreement. Under the terms of the
Note Exchange Agreement, which was completed in August 2001, the Company
exchanged the existing convertible subordinated note for a new convertible
subordinated note having the same terms as the existing note with the following
exceptions; 1) the conversion price at which the note is convertible into shares
of Company common stock was reduced from $5.7363 per share to $4.42 per share;
2) the timing of principal repayments was changed as follows:

                DATE         EXISTING NOTE              NEW NOTE
         ----------------    -------------             ---------
         November 1, 2002    $1,875,000               $1,375,000
         November 1, 2003    $1,875,000               $2,375,000
         November 1, 2004    $3,750,000               $3,450,000
         November 1, 2005             -                 $100,000
         November 1, 2006             -                 $100,000
         November 1, 2007             -                 $100,000
                             ----------               ----------
                             $7,500,000               $7,500,000



8.       STOCKHOLDERS' EQUITY AND STOCK OPTION PLANS:

         STOCK OPTION PLANS: The 1991 Stock Option Plan, as amended, and the
1997 Stock Option Plan provide for the granting of options to key employees,
directors, advisors and independent consultants to the Company for the purchase
of up to an aggregate of 2,915,500 shares of the Company's common stock. Under
the 1991 Stock Option Plan, options for an aggregate of 1,415,500 shares may be
granted at an option price of no less than 85% of the market price of the
Company's common stock on the date of grant and may be exercisable between one
and ten years from the date of grant. Under the 1997 Stock Option Plan, options
or other stock-based awards may be granted for an aggregate of 1,500,000 shares.
The 1997 Stock Option Plan generally does not restrict the exercise price or
terms of grants. During fiscal 2001, the 1991 Stock Option Plan expired and as
such no further options may be granted from the 1991 Plan.

                                      F-13
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         During 2000 the Company issued 54,000 shares of its common stock to
certain employees for incentive compensation as a stock award under the terms of
the 1997 Stock Option Plan. These shares were recorded at a value of $169,000
based on quoted market values at the date of grant. The shares issued in 2000
were granted in satisfaction of accruals for compensation included in accrued
liabilities at December 31, 1999.

         Options granted through December 31, 2001 generally have been
designated as non-qualified stock options and have had option prices equal to
market values on the date of grant, except for options for 450,000 shares issued
in connection with the acquisition of Varsity Spirit Corporation in 1997 which
were in-the-money on the measurement date of the grant, have had terms of five
or ten years, and have had vesting periods of one or four years. Information
relating to stock option transactions over the past three years is summarized as
follows:

<TABLE>
<CAPTION>
                                                   OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                                             -------------------------------         ------------------------------
                                                                    WEIGHTED                               WEIGHTED
                                                                    AVERAGE                                AVERAGE
                                               NUMBER              PRICE PER           NUMBER             PRICE PER
                                             OUTSTANDING             SHARE           EXERCISABLE            SHARE
                                             -------------------------------         -----------          ---------
<S>                                           <C>                   <C>               <C>                  <C>
       Balance, January 1, 1999               2,252,525             $   4.36          1,362,106            $   3.81
         Granted                                364,000             $   3.27
         Exercised                               (5,000)            $   2.44
         Forfeited                              (64,000)            $   2.80
         Expired                               (101,500)            $   2.87
                                             ----------
       Balance, December 31, 1999             2,446,025             $   4.30          1,519,513            $   4.22
         Granted                                285,500             $   3.85
         Exercised                             (134,270)            $   2.02
         Forfeited                             (106,325)            $   5.19
         Expired                                 (8,480)            $   3.38
                                             ----------
       Balance, December 31, 2000             2,482,450             $   4.34          1,729,988            $   4.44
         Forfeited                             (351,575)            $   4.33
                                               --------
       Balance, December 31, 2001             2,130,875             $   4.34          1,882,063            $   4.38
                                             ==========
</TABLE>

     In conjunction with the sale of RGD during 2001, all employees of RGD who
held options to purchase shares of the Company received a termination payment of
$1 per option held. Such termination payment is included in the income (loss)
from operations of discontinued businesses in the Consolidated Statements of
Operations.

     Options forfeited in 1999 include options for 60,000 shares surrendered by
four members of the board of directors in exchange for a cash payment. Each of
the four directors received a payment of $16,875 in exchange for the surrender
of stock options granted to them in 1994 for 15,000 shares each, at an exercise
price of $2.625. The payment was computed based on the "in-the-money" value of
the options at the time of the payments.

     Further information about stock options outstanding at December 31, 2001 is
summarized as follows:

<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                               ----------------------------------------------       ------------------------
                                                   WEIGHTED         WEIGHTED                        WEIGHTED
                                                    AVERAGE          AVERAGE                         AVERAGE
            RANGE OF              NUMBER           REMAINING        PRICE PER         NUMBER        PRICE PER
         EXERCISE PRICES       OUTSTANDING      CONTRACTUAL LIFE      SHARE         EXERCISABLE       SHARE
         ---------------       -----------      ----------------     --------       -----------    ---------
         <S>                   <C>              <C>                  <C>            <C>            <C>
          $3.00 - $4.49          1,124,010      6.7 years            $3.59            991,010         $3.64
          $4.50 - $6.50          1,006,865      6.2 years            $5.18            891,052         $5.21
</TABLE>


                                      F-14
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         At December 31, 2001 there were 49,125 shares available for future
option grants.

         In accordance with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), Riddell
has elected to continue to account for stock-based compensation under the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). Under
APB 25, generally, no cost is recorded for stock options issued to employees,
unless the option price is below market at the time options are granted. The
following pro forma net income and earnings per share are presented for
informational purposes and have been computed using the fair value method of
accounting for stock-based compensation as set forth in SFAS 123:

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              -----------------------------------
                                                              2001            2000           1999
                                                              ----            ----           ----
                                                            (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                         <C>              <C>           <C>
         Pro forma net (loss)                               ($9,242)         ($294)        ($1,725)
         Pro forma net (loss) per share, basic              ($0.98)         ($0.03)         ($0.19)
         Pro forma net (loss) per share, diluted            ($0.98)         ($0.03)         ($0.19)
</TABLE>

         The pro forma results include expense related to the fair value of
stock options estimated at the date of grant using the Black-Scholes option
pricing model and the following weighted average assumptions for the years ended
December 31, 2000 and 1999, respectively: risk-free interest rates of 6.1% and
5.7%; expected volatility of 50%, expected option life of 7 years and no
dividend payments. The weighted average estimated fair value of options granted
during 2000 and 1999 was $2.29 and $1.92 per share, respectively. There were no
options granted during 2001.

         WARRANTS: During 1999 warrants held by one of the Company's lenders
expired. The warrant was for 172,152 shares of the Company's common stock at
$3.72 per share.


9.       COMMITMENTS:

         LEASES: The Company leases various facilities and equipment under
operating leases. Rent expense in continuing operations amounted to
approximately $2,110,000, $1,835,000 and $1,412,000 for the years ended December
31, 2001, 2000 and 1999, respectively.

         Future minimum rental payments for all non-cancelable lease agreements
for periods after December 31, 2001 are as follows:

              YEARS ENDING DECEMBER 31,                     (IN THOUSANDS)
                           2002                                 2,396
                           2003                                 2,201
                           2004                                 2,110
                           2005                                 2,065
                           2006                                 2,128
                           Later years                          9,665
                                                            ---------
              Total minimum payments required                $ 20,565
                                                            =========


         In conjunction with the termination of the Umbro license and resulting
sale of all Umbro related inventory, as further discussed in Note 2, the Company
abandoned a portion of its leased warehouse space for of

                                      F-15
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

a period of at least five (5) years. The Company has included a $570,000 charge
for the abandoned property in the income (loss) from operations of discontinued
businesses in the Consolidated Statements of Operations.

         EMPLOYEE BENEFITS: The Company maintains a defined contribution 401(k)
plan covering substantially all of its employees. Discretionary company
contributions to these plans are based on a percentage of employee contributions
and are funded and charged to expense as incurred. Expenses related to the plans
amounted to $70,000, $30,000 and $30,000 for the years ended December 31, 2001,
2000 and 1999, respectively.

10.      ACCRUED LIABILITIES AND CONTINGENCIES:

         Accrued liabilities consist of the following:

                                  DECEMBER 31,
                                      2001               2000
                                      ----               ----
                                                    (IN THOUSANDS)
Accrued interest                     $3,786            $5,677
Accrued compensation                  1,665               338
Accrued income taxes                    900               300
Accrued rent                          1,030              --
Other accrued liabilities               877               816
                                     ------            ------
       Total                         $8,258            $7,131
                                     ======            ======

         OTHER CONTINGENCIES AND LITIGATION MATTERS:

         In addition to the matters discussed in the preceding paragraphs, the
Company has certain other claims or potential claims against it that may arise
in the normal course of business, including without limitation, claims relating
to personal injury as well as employment related matters. Management believes
that the probable resolution of such matters will not materially affect the
financial position or results of operations of the Company.

11.      INCOME TAXES:

         Income taxes on income (loss), before extraordinary items, for the
years ended December 31, 2001, 2000 and 1999 is summarized below:

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                  -------------------------------------------
                                                  2001                2000               1999
                                                  ----                ----               ----
<S>                                            <C>                 <C>                 <C>
         Current tax expense:                                     (IN THOUSANDS)
                  Federal                      $    --             $   100             $  --
                  State                            900                  --                --
                                               -------             -------             -----
                                                   900                 100                --
                                               -------             -------             -----
              Deferred tax expense:
                  Federal                       (2,195)               (100)              905
                  State                           --                  --                  --
                                               -------             -------             -----
                                                (2,195)               (100)              905
                                               -------             -------             -----
                                               $(1,295)                $ _             $ 905
                                               =======             =======             =====
</TABLE>

         Income tax expense for 2001 consists of a current state income tax
provision of $900,000, offset by a deferred tax benefit of $2.2 million. The
2001 income tax expenses has been allocated to the income statement as follows:
1) $3.0 million income tax expense to continuing operations; 2) $1.5 million
benefit to income (loss) from operations of discontinued businesses; 3) $6.3
million benefit to loss on disposal of businesses; and 4) $3.5

                                      F-16
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

million expense to extraordinary gain. Income tax expense for 2000 consisted of
a provision for federal alternative minimum tax, with an offsetting deferred tax
benefit. Income tax expense for 1999 was $905,000, which reflects an adjustment
relating to the valuation of deferred taxes. There was no other current income
tax expense for the years ended December 31, 2000 and 1999 due to net operating
losses generated, or carried forward to, these periods. There was no other
deferred tax expense during the years ended December 31, 2000 and 1999 since
there was generally a full valuation allowance applied to net deferred tax
assets. Changes in the valuation allowance were a decrease of $156,000 for 2001,
$1,185,000 for 2000, a decrease of $354,000 (net of the increase of $905,000
relating to the adjustment described above) for 1999.

         Deferred tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and
liabilities. The significant components of deferred income tax assets and
liabilities at December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                                2001           2000
                                                                            -----------     -----------
<S>                                                                         <C>             <C>       <C>
         Deferred income tax assets:                                                   (IN THOUSANDS)
              Accrued expenses and reserves                                       $ 756         $ 2,589
              Inventory                                                             695           1,165
              Intangible assets and deductible goodwill                             808               -
              Net operating loss, and credit, carryforwards                       4,279           3,965
              Other                                                                 124             724
                                                                            -----------     -----------
                                                                                  6,662           8,443
              Valuation allowances                                               (4,279)         (1,667)
                                                                            -----------     -----------
              Total deferred income tax assets                                    2,383           6,776
                                                                            -----------     -----------
         Deferred income tax liabilities:
              Intangible assets and deductible goodwill                               -           6,166
              Property and equipment                                                188             370
              Prepaid expenses                                                        -             240
                                                                            -----------     -----------
              Total deferred income tax liabilities                                 188           6,776
                                                                            -----------     -----------
         Total net deferred income tax asset                                $     2,195     $       - 0-
                                                                            ============    =============
</TABLE>


         The net current and non-current components of the deferred income taxes
were recognized in the balance sheet at December 31, 2001 and 2000 as follows:

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,
                                                                                2001           2000
                                                                            -----------     -----------
                                                                                    (IN THOUSANDS)
<S>                                                                              <C>            <C>
         Net current deferred tax assets                                         $2,383         $ 2,270
         Net non-current deferred tax liabilities                                   188           2,270
                                                                            -----------     -----------
                                                                              $   2,195        $    - 0 -
                                                                            ===========     =============
</TABLE>


                                      F-17
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Reconciliation between the actual provision for income taxes and that
computed by applying the U.S. statutory rate to income (loss) before taxes are
as follows:

<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                                   2001           2000            1999
                                                                   ----           ----            ----
                                                                            (IN THOUSANDS)
<S>                                                            <C>               <C>               <C>
         Tax expense (benefit) at U.S. statutory rate          $  (3,364)        $  225            $104
         Differences resulting from:
              State income tax, net
                  Of federal tax benefit                             544             -               -
              Amortization not deductible
                for tax purposes                                     829            720             721
              Travel & entertainment expenses
                not deductible for tax purposes                      392            330             269
              Benefit of prior periods net operating
                losses not previously recognized resulting
                in decrease in valuation allowance                     -         (1,242)         (1,095)
              Valuation allowance adjustment                           -              -             905
              Other differences                                      304            (33)              1
                                                             -----------    ------------    -----------
         Income tax expense                                   $   (1,295)       $    -0-        $   905
                                                             ============   ============    ===========
</TABLE>


         At December 31, 2001, the Company had estimated net operating loss
carry forwards for federal income tax purposes of approximately $3.8 million
expiring between 2008 to 2014. The Company also has additional loss carry
forwards of approximately $8.8 million associated with the final purchase price
allocation of assets sold as a result of the sale of the Riddell Group Division.
The character of the $8.8 million of losses relative to the sale of the Riddell
Group Division, as either an operating or a capital loss, is currently in
dispute. This dispute may ultimately be resolved pursuant to an independent,
third-party dispute resolution mechanism that has already been agreed to by the
parties to the sale of the Riddell Group Division. While this loss carryforward
is available to reduce the payment of taxes that might otherwise be payable in
future years, the benefit of most of the net operating losses have been
recognized in the computation of income tax expense reflected in the Company's
consolidated financial statements in prior years. Benefits relating to the net
operating loss carryforwards have not yet been recognized in the computation of
income tax expense for financial reporting purposes and have been reserved for
as part of the deferred income tax asset valuation allowance. These unrecognized
carryforwards would be recognized through a reduction of income tax expense in
future periods upon the generation of an offsetting amount of taxable earnings.


12.      RELATED PARTY TRANSACTIONS:

         In 2000, the Company entered into a sublease for office space from an
entity controlled by a stockholder who is the Chairman of the Company's Board of
Directors, on substantially the same terms as the over lease. The sublease runs
through September 2009 and provides for annual fixed rent of $116,970 increasing
to an annualized rate of $137,826 at the end of the lease term and additional
rent based on a percentage of tax and operating expense escalation payments made
by the sub-lessor to its landlord. During 2001, as a result of the sale of RGD,
this space was sub-subleased to a third party for the remaining lease term.
Total payments to this entity for the year ended December 31, 2001 and 2000 were
approximately $90,000 and $330,000 which included rents as described above, the
Company's share of utilities and costs of leasehold improvements of
approximately $190,000 in 2000.

                                      F-18
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


13.      SUPPLEMENTAL CASH FLOW INFORMATION:

         Cash payments for interest were $15,333,000, $15,460,000 and
$14,600,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
The Company received an income tax refund of approximately $1.5 million during
2001. This refund related to a carryback of net operating losses of its Varsity
Spirit Corporation subsidiary for periods preceding the 1997 acquisition of
Varsity Spirit Corporation. Income tax payments, or refunds, were not
significant for 2000 or 1999.

         During 2000, the Company issued shares of its common stock valued at
$169,000 based on quoted market values a the time of grant, to certain employees
in satisfaction of accruals for compensation included in accrued liabilities at
December 31, 1999.


14.      FAIR VALUES OF FINANCIAL INSTRUMENTS:

         The Company's financial instruments include cash, accounts receivable,
accounts payable and long-term debt. The carrying values of cash, accounts
receivable and accounts payable approximate their fair values. The Company's
long-term debt includes the senior notes which at December 31, 2001 had a
carrying value of $74,285,000 and a fair value, based on quoted market values,
of $59,428,000. The Company's remaining long-term debt is not traded and has no
quoted market value, however management believes any difference between its
carrying value and fair value would not be material in relation to these
Consolidated Financial Statements.


15.      SEGMENT AND PRODUCT LINE INFORMATION:

         The Company has two reportable segments: uniforms and accessories and
camps and events.

         Uniforms and accessories: This segment primarily designs, markets and
manufactures cheerleader and dance team uniforms and accessories to colleges,
high schools, junior high schools and youth groups throughout the United States.
Products are marketed through the annual mailing of a full color catalog to
schools and school spirit advisors and through the Company's direct sales force.
This segment also includes a line of performance and recital dance apparel for
the studio dance market and merchandise sales by the Company's camps and events
segment.

         Camps and events: This segment operates cheerleader and dance team
camps and studio dance competitions and conventions throughout the United
States. This segment also includes cheerleading and dance team related special
events and specialized group tours for cheerleaders, bands, choirs, orchestras
and dance and theater groups.

         The Company's reportable segments are strategic business units that
differ and are managed separately because of the nature of their markets and
channels of distribution. The Company has determined these reportable segments
in accordance with the management approach specified in Statement of Financial
Accounting Standards (SFAS) No. 131, "Disclosure About Segments of an Enterprise
and Related Information." The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the basis for determination of the Company's reportable
segments.

         The following segment information represents results for the Company's
continuing operations and does not include activity of businesses discontinued
during 2001 (the Riddell Group and Umbro divisions).

                                      F-19
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                                    (IN THOUSANDS)
                                                                 YEARS ENDED DECEMBER 31,
                                                        2001              2000               1999
                                                  ---------------    ---------------    ---------------
<S>                                               <C>                <C>                <C>
NET REVENUES:
     Uniforms and accessories                           $88,131           $79,179            $69,155
     Camps and events                                    59,418            56,856             51,130
                                                    -----------        ----------         ----------
     Consolidated total                                $147,549          $136,035           $120,285
                                                    ===========        ==========         ==========

INCOME FROM OPERATIONS:
     Uniforms and accessories                           $11,952           $10,443             $8,965
     Camps and events                                     3,729             5,034              3,089
     Corporate and unallocated expenses                  (1,694)           (2,935)            (3,257)
                                                    ------------       ----------         ----------
     Consolidated total                                 $13,987           $12,542             $8,797
                                                    ===========        ==========         ==========

DEPRECIATION AND AMORTIZATION, EXCLUSIVE OF DEBT ISSUE COSTS:
     Uniforms and accessories                            $2,818            $2,620             $2,599
     Camps and events                                     1,065             1,050                982
     Corporate and unallocated                              164                36                  -
                                                    -----------        ----------         ----------
     Consolidated total                                  $4,047            $3,706             $3,581
                                                    ===========        ==========         ==========

CAPITAL EXPENDITURES:
     Uniforms and accessories                            $1,478            $1,470             $1,066
     Camps and events                                       611               472                318
     Corporate and unallocated                                -               364                -
                                                    -----------        -----------        ----------
     Consolidated total                                  $2,089            $2,306             $1,384
                                                    ===========        ==========         ==========

TOTAL ASSETS:
     Uniforms and accessories                           $81,238           $72,724            $74,930
     Camps and events                                    31,975            28,090             28,971
     Corporate and unallocated                            5,418             5,371              5,532
     Discontinued operations                                  -            87,632             84,903
                                                    -----------        ----------         ----------
     Consolidated total                                $118,631          $193,817           $194,336
                                                    ===========        ==========         ==========
</TABLE>


16.  SUMMARIZED QUARTERLY DATA (UNAUDITED):

<TABLE>
<CAPTION>

                                                                   FISCAL QUARTER
                                             ------------------------------------------------------
                                             FIRST       SECOND      THIRD       FOURTH       TOTAL
                                             -----       ------      -----       ------       -----
                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                        <C>          <C>         <C>         <C>         <C>
Year ended December 31, 2001:
     Net revenues                          $16,659      $54,011     $60,126     $16,753     $147,549
     Gross profit                            6,061       23,166      24,488       6,866       60,581
     Income (loss) from
        continuing operations               (6,484)       7,311       7,201      (7,397)         631
     Basic earnings (loss) per share        ($0.69)       $0.77       $0.76      ($0.78)       $0.07
     Diluted earnings (loss) per share      ($0.69)       $0.77       $0.76      ($0.78)       $0.09

Year ended December 31, 2000:
     Net revenues                          $14,665      $46,999     $57,650     $16,721     $136,035
     Gross profit                            5,114       19,466      23,800       6,308       54,688
</TABLE>


                                      F-20
<PAGE>

                      VARSITY BRANDS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<S>                                         <C>           <C>         <C>        <C>            <C>
     Income (loss) from
        continuing operations               (6,806)       4,687       7,637      (6,115)        (597)
     Basic earnings (loss) per share        ($0.73)       $0.50       $0.81      ($0.65)      ($0.06)
     Diluted earnings (loss) per share      ($0.73)       $0.44       $0.70      ($0.65)      ($0.06)
</TABLE>

         Earnings (loss) per share were computed independently for each of the
quarters presented. The sum of the quarters may not equal the total year amount,
due to the impact of computing average quarterly shares outstanding for each
period.

                                      F-21

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                   ON SCHEDULE



Board of Directors
Varsity Brands, Inc.


         In connection with our audit of the consolidated financial statements
of Varsity Brands, Inc. (formerly Riddell Sports Inc.) and Subsidiaries referred
to in our report dated February 20, 2002, which is included on page F-2 of this
Form 10-K, we have also audited Schedule II for each of the three years in the
period ended December 31, 2001. In our opinion, this schedule presents fairly,
in all material respects, the information required to be set forth therein.




                                                              GRANT THORNTON LLP


Chicago, Illinois
February 20, 2002

                                      S-1

<PAGE>

SCHEDULE II

                                        VARSITY BRANDS, INC. AND SUBSIDIARIES
                                          VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
              COL.  A                  COL.  B                  COL.  C              COL.  D         COL.  E
---------------------------------   -------------  -----------------------------  -------------  -------------
                                                             ADDITIONS
                                                         (1)        (2)
                                                     CHARGED TO  CHARGED TO
                                     BALANCE AT         COSTS       OTHER                        BALANCE AT
                                      BEGINNING          AND       ACCOUNTS-                       END OF
            DESCRIPTION               OF PERIOD       EXPENSES     DESCRIBE      DEDUCTIONS        PERIOD
---------------------------------   -------------  ------------- --------------  -----------      ---------
<S>                                 <C>            <C>            <C>             <C>              <C>
                                                                                       (a)
Year ended December 31, 1999
   Allowance for doubtful accounts       $485           $584            -               $69           $1,000

Year ended December 31, 2000
   Allowance for doubtful accounts     $1,000           $417            -            $1,017             $400

Year ended December 31, 2001
   Allowance for doubtful accounts       $400           $325            -              $296             $429
</TABLE>

-----------
Notes: (a) Deductions for the allowance for doubtful accounts consist
           of accounts written off net of recoveries.

                                      S-2