SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the fiscal quarterly period ended December 26, 1998
                                      ---------------------

                                       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 0-19873


                                BELL SPORTS CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                               36-3671789
-------------------------------                               ----------------
(State or other jurisdiction of                               (I.R.S. employer
incorporation or organization)                               identification no.)

6350 San Ignacio Avenue, San Jose, California                       95119
---------------------------------------------                     ---------
  (Address of principal executive offices)                        (Zip Code)

                                 (408) 574-3400
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                                       N/A
              ---------------------------------------------------
              Former     name, former address and former fiscal year, if changed
                         since last report.

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) Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ].

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the last practicable date.

Class                                         Date              Number of Shares
-----                                         ----              ----------------
Class A Common Stock, $.01 par value     January 26, 1999           800,971
Class B Common Stock, $.01 par value     January 26, 1999             none
Class C Common Stock, $.01 par value     January 26, 1999             none
<PAGE>
                                BELL SPORTS CORP.
                               INDEX TO FORM 10-Q

                                     PART I

                                                                          Page
                                                                         Number
                                                                         ------
Bell Sports Corp. and Subsidiaries Consolidated Balance Sheets
  as of December 26, 1998, and June 27, 1998                                3

Bell Sports Corp. and Subsidiaries Consolidated Statements of
  Operations for the six months and three months ended
  December 26, 1998, and December 27, 1997                                  4

Bell Sports Corp. and Subsidiaries Consolidated Statements of
  Cash Flows for the six months ended December 26, 1998, and
  December 27, 1997                                                         5

Notes to Consolidated Financial Statements                                6 - 11

Management's Discussion and Analysis of Financial Condition
  and Results of Operations                                              12 - 15

                                     PART II

Items 1 to 6                                                               16

Signatures                                                                 17

                                       2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                       BELL SPORTS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)

                                                        December 26,   June 27,
                                                           1998          1998
                                                           ----          ----
ASSETS                                                  (unaudited)
Current assets
 Cash and cash equivalents                               $   6,465    $  45,093
 Accounts receivable                                        51,492       63,472
 Inventories                                                46,303       39,679
 Deferred taxes and other current assets                    13,200       12,234
                                                         ---------    ---------
      Total current assets                                 117,460      160,478

Property, plant and equipment                               19,076       20,636
Goodwill                                                    53,359       54,292
Intangibles and other assets                                17,801       11,661
                                                         ---------    ---------
      Total assets                                       $ 207,696    $ 247,067
                                                         =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                        $   7,766    $   7,663
 Accrued compensation and employee benefits                  2,890        5,541
 Accrued expenses                                           17,318       16,158
 Notes payable and current maturities of
  long-term debt and capital lease obligations               6,045          679
                                                         ---------    ---------
      Total current liabilities                             34,019       30,041

Long-term debt                                             149,560       86,625
Capital lease obligations and other liabilities              4,261        2,142
                                                         ---------    ---------
      Total liabilities                                    187,840      118,808
                                                         ---------    ---------
Commitments and contingencies
Stockholders' equity
 Series A Preferred Stock; 6% cumulative, $.01 par
   value; authorized 1,500,000 shares, 970,873
   shares issued and outstanding at December 26, 1998       49,505           --
 Preferred stock; $.01 par value; authorized
   1,000,000 shares, none issued at June 27, 1998               --           --
 Class A Common Stock; $.01 par value; authorized
   900,000 shares; 800,971 shares issued and
   outstanding at December 26, 1998                              8           --
 Class B Common Stock; $.01 par value; authorized
   150,000 shares, none issued                                  --           --
 Class C Common Stock; $.01 par value; authorized
   50,000 shares, none issued                                   --           --
 Common Stock; $.01 par value; authorized 25,000,000
   shares; 14,410,508 shares issued and 13,915,436
   shares outstanding at June 27, 1998                          --          144
 Additional paid-in capital                                 (8,169)     143,905
 Accumulated other comprehensive income                     (1,663)      (1,111)
 Accumulated deficit                                       (19,825)      (9,461)
                                                         ---------    ---------
                                                            19,856      133,477
 Treasury stock, at cost, none at December 26, 1998,
   and 495 shares at June 27, 1998                              --       (5,218)
                                                         ---------    ---------
      Total stockholders' equity                            19,856      128,259
                                                         ---------    ---------

Total liabilities and stockholder's equity               $ 207,696    $ 247,067
                                                         =========    =========
        See accompanying notes to these consolidated financial statements

                                       3
<PAGE>
                       BELL SPORTS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (unaudited, in thousands)

<TABLE>
<CAPTION>
                                       Six Months Ended          Three Months Ended
                                  --------------------------  -------------------------
                                  December 26,  December 27,  December 26,  December27,
                                     1998          1997           1998         1997
                                     ----          ----           ----         ----
<S>                                <C>           <C>            <C>          <C>
Net sales                          $ 85,939      $ 86,222       $ 45,021     $ 42,590
Cost of sales                        57,876        59,459         30,502       29,304
                                   --------      --------       --------     --------

Gross profit                         28,063        26,763         14,519       13,286

Selling, general and
 administrative expenses             23,657        22,641         12,273       11,566
Amortization of goodwill
 and intangible assets                1,061         1,202            499          566
Transaction costs                    13,979            --          2,505           --
Disposal of product line
 adjustment                              --        (1,300)            --       (1,300)
Restructuring charges                    --         1,228             --        1,228
Net investment income                  (810)         (905)          (209)        (476)
Interest expense                      6,742         2,350          4,204        1,183
                                   --------      --------       --------     --------

(Loss) income before income taxes   (16,566)        1,547         (4,753)         519
Benefit (provision) for income
 taxes                                3,315          (588)         1,949         (197)
                                   --------      --------       --------     --------

(Loss) income before extraordinary
 items                              (13,251)          959         (2,804)         322
Extraordinary item:  Gain on early
 extinguishment of debt, net of
 taxes of $2,006                      2,887            --             --           --
                                   --------      --------       --------     --------

Net (loss) income                  $(10,364)     $    959       $ (2,804)    $    322
                                   ========      ========       ========     ========
</TABLE>


       See accompanying notes to these consolidated financial statements.

                                       4
<PAGE>
                       BELL SPORTS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (unaudited, in thousands)
<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                               ----------------------------
                                                               December 26,    December 27,
                                                                   1998           1997
                                                                   ----           ----
<S>                                                             <C>             <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) before extraordinary item                     $ (13,251)      $    959
 Adjustments to reconcile net income (loss) before
 extraordinary items to net cash provided by (used in)
 operating activities:
   Amortization of goodwill and intangibles                         1,061          1,199
   Depreciation                                                     2,825          2,785
   Loss on disposal of property, plant, and equipment               1,155            133
   Provision for doubtful accounts                                    377           (719)
   Provision for inventory obsolescence                             1,362          1,058
   Deferred income taxes                                             (459)            --
   Other                                                            1,593            254

 Changes in assets and liabilities:
   Accounts receivable                                             11,640         23,273
   Inventories                                                     (8,064)        (8,199)
   Other assets                                                      (830)         1,399
   Accounts payable                                                    48           (879)
   Other liabilities                                                 (847)        (6,100)
                                                                ---------       --------

    Net cash provided by (used in) operating activities            (3,390)        15,163
                                                                ---------       --------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
 Capital expenditures                                              (2,341)        (2,206)
 Proceeds from the sale of SportRack                                   --         13,427
                                                                ---------       --------

    Net cash provided by (used in) investing activities            (2,341)        11,221
                                                                ---------       --------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
 Proceeds from issuance of common stock                                --          1,001
 Proceeds from issuance of senior subordinated notes              110,000             --
 Expenditures related to issuance of senior subordinated notes     (4,700)            --
 Proceeds from issuance of senior discount notes                   15,000             --
 Proceeds from issuance of preferred stock                         44,555             --
 Repurchase of common stock                                      (142,350)            --
 Tender of subordinated debentures                                (57,681)            --
 Payments on notes payable, long-term debt and capital leases        (918)          (358)
 Net borrowings (payments) on line of credit agreement              5,404        (18,633)
 Expenditures related to issuance of line of credit                (1,381)            --
                                                                ---------       --------

    Net cash used in financing activities                         (32,071)       (17,990)
                                                                ---------       --------

Effect of exchange rate changes on cash                              (826)          (410)
                                                                ---------       --------

Net increase (decrease) in cash and cash equivalents              (38,628)         7,984

Cash and cash equivalents at beginning of period                   45,093         29,008
                                                                ---------       --------

Cash and cash equivalents at end of period                      $   6,465       $ 36,992
                                                                =========       ========
</TABLE>
        See accompanying notes to these consolidated financial statements

                                       5
<PAGE>
                       BELL SPORTS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Bell Sports Corp. and its wholly-owned subsidiaries (collectively, the "Company"
or "Bell") is the leading manufacturer and marketer of bicycle helmets worldwide
and a leading supplier of a broad line of bicycle accessories in North America.
The Company is also a leading supplier of auto racing helmets, a worldwide
supplier of bicycle accessories, and has recently begun marketing in-line
skating, snowboarding, snow skiing and water sport helmets.

On August 17, 1998, the Company consummated the Agreement and Plan of
Recapitalization and Merger with HB Acquisition Corporation, a Delaware
corporation ("HB Acquisition"), which provided for the merger of HB Acquisition
with and into Bell, with Bell continuing as the surviving corporation (the "Bell
Merger"). Additionally, the Company completed a tender offer (the "Tender
Offer") to purchase $62.5 million aggregate principal amount of its 4 1/4%
Convertible Subordinated Debentures due November 2000 (the "Debentures"). The
Company's wholly-owned subsidiary, Bell Sports, Inc., consummated the private
placement of $110.0 million of its 11% Series A Senior Subordinated Notes due
August 15, 2008 (the "Notes") and the Company completed the private placement of
$15.0 million of its 14% Senior Discount Notes due August 14, 2009 (the
"Discount Notes").

PRINCIPLES OF CONSOLIDATION AND ACCOUNTING PERIOD

The consolidated financial statements include the accounts of Bell Sports Corp.
and its wholly-owned subsidiaries. All material intercompany transactions and
balances have been eliminated in consolidation. The Company's fiscal year is
either a fifty-two or fifty-three week accounting period ending on the Saturday
that is nearest to the last day of June. The Company's fiscal second quarter in
both 1999 and 1998 had thirteen weeks.

UNAUDITED INFORMATION AND BASIS OF PRESENTATION

The consolidated balance sheet as of December 26, 1998 and statements of
operations and cash flows for all periods included in the accompanying financial
statements have not been audited. In the opinion of management these financial
statements include all normal and recurring adjustments necessary for a fair
presentation of such financial information. The results of operations for the
interim periods are not necessarily indicative of the results of operations to
be expected for the full year.

The financial information included herein has been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The interim financial
information and the notes thereto should be read in conjunction with the audited
financial statements for the fiscal years ended June 27, 1998, June 28, 1997 and
June 29, 1996 which are included in the Company's Annual Report on Form 10-K for
the fiscal year ended June 27, 1998.

ACCOUNTS RECEIVABLE

Accounts receivable at December 26, 1998 and June 27, 1998 are net of allowances
for doubtful accounts of $1.6 million and $1.7 million, respectively.

                                       6
<PAGE>
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 26, 1998 and June 27, 1998 are net of
accumulated depreciation of $23.2 million and $21.8 million, respectively.

MANAGEMENT'S ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

NOTE 2 - COMPREHENSIVE INCOME

Effective June 28, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income." This statement
establishes standards for reporting and display of comprehensive income and its
components. Comprehensive income is generally defined as all changes in equity
during a period except those resulting from investments by owners or
distributions to owners. For the Company, comprehensive income for all periods
presented consisted solely of net earnings and foreign currency translation
adjustments as follows (in thousands):
<TABLE>
<CAPTION>
                                    Six Months Ended            Three Months Ended
                              --------------------------   --------------------------
                              December 26,  December 27,   December 26,  December 27,
                                 1998          1997           1998          1997
                                 ----          ----           ----          ----
<S>                           <C>             <C>           <C>            <C>
Net income (loss)              $(10,364)       $ 959         $(2,804)       $ 322
Foreign currency translation
 adjustment, net of tax            (552)        (368)           (831)        (290)
                               --------        -----         -------        -----

Comprehensive income (loss)    $(10,916)       $ 591         $(3,635)       $  32
                               ========        =====         =======        =====
</TABLE>

NOTE 3 - INVENTORIES

Inventories consist of the following components (in thousands):

                                            December 26,        June 27,
                                               1998              1998
                                               ----              ----
          Raw materials                      $ 5,677           $ 3,539
          Work in process                      2,035             2,010
          Finished goods                      38,591            34,130
                                             -------           -------

               Total                         $46,303           $39,679
                                             =======           =======

NOTE 4 - PRODUCT LIABILITY AND CONTINGENCIES

PRODUCT LIABILITY

The Company is subject to various product liability claims and/or suits brought
against it for claims involving damages for personal injuries or deaths.
Allegedly, these injuries or deaths relate to the use by claimants of products
manufactured by the Company and, in certain cases, products manufactured by
others. The ultimate outcome of these existing claims and any potential future
claims cannot presently be determined. Management believes that existing product
liability claims/suits are defensible and that, based on the Company's past

                                       7
<PAGE>
experience and assessment of current claims, the aggregate of defense costs and
any uninsured losses will not have a material adverse impact on the Company's
liquidity or financial position.

The cost of product liability insurance fluctuated greatly in past years and the
Company opted to self-insure claims for certain periods. The Company has been
covered by product liability insurance since July 1, 1991. This insurance is
subject to a self-insured retention. There is no assurance that insurance
coverage will be available or economical in the future.

The Company sold its motorcycle helmet manufacturing business in June 1991 in a
transaction in which the purchaser assumed all responsibility for product
liability claims arising out of helmets manufactured prior to the date of
disposition and the Company agreed to use its in-house defense team to defend
these claims at the purchaser's expense. If the purchaser is for any reason
unable to pay the judgment, settlement amount or defense costs arising out of
this or any other claim, the Company could be held responsible for the payment
of such amounts or costs. The Company believes that the purchaser does not
currently have the financial resources to pay any significant judgment,
settlement amount, or defense costs arising out of this or any other claim.

In February 1996, a Toronto, Canada jury returned a verdict against the Company
based on injuries arising out of a 1986 motorcycle accident. The jury found that
the Company was 25% responsible for the injuries with the remaining 75% of the
fault assigned to the plaintiff and the other defendant. If the judgment is
upheld, the amount of the claim for which the Company would be responsible and
the legal fees and tax implications associated therewith are estimated to be
between $3.0 and $4.0 million (based on current exchange rates). This claim
arose during a period in which the Company was self-insured. The Company has
filed an appeal of the Canadian verdict.

In February 1998, a Wilkes-Barre, Pennsylvania jury returned a verdict against
the Company relating to injuries sustained in a 1993 motorcycle accident. The
judgment totaled $6.8 million, excluding any interest, fees or costs which may
be assessed. This claim arose during a period in which the Company was
self-insured. The Company has filed an appeal of the verdict.

In June 1998, a Wilmington, Delaware jury returned a verdict against the Company
relating to injuries sustained in a 1991 off-road motorcycle accident. The
judgment totaled $1.8 million, excluding any interest, fees or costs which may
be assessed. The claim is covered by insurance; however, the Company is
responsible for a $1.0 million self-insured retention. The Company has filed
post-trial motions to set aside the jury's verdict and to appeal any judgment
against the Company that might be entered in the action.

Based on management's extensive consultation with legal counsel prosecuting the
appeals and the Company's experience in pursuing reversals and settlements after
the entry of judgments against it, management currently believes that the
ultimate outcome of the pending judgments will not have a material adverse
affect on the financial condition of the Company. Accordingly, the Company has
only established reserves for estimated costs for the defense of these and other
known claims. The Company believes it will have adequate cash balances and
sources of capital available to satisfy such pending judgments. However, there
can be no assurance that the Company will be successful in appealing or pursuing
settlements of these judgments or that the ultimate outcome of the judgments
will not have a material adverse effect on the liquidity or financial condition
of the Company.

SHAREHOLDER LITIGATION

Following the announcement of the Bell Merger, three purported class action
lawsuits were filed in Delaware Chancery Court seeking preliminary and permanent
injunctive relief against the consummation of the Bell Merger or, alternatively,
the recovery of damages in the event the Bell Merger was consummated. The
complaints, which were filed by Jeffrey Kaplan, Jerry Krim and Cyrus Schwartz,
purported stockholders of the Company, named the Company, HB Acquisition, Chase
Capital Partners, CBCI and the Company's then current directors as defendants.
To the knowledge of the Company, none of the complaints has been served. The
complaints alleged, among other things, that the Bell Merger was unfair to the
Company's former public stockholders and that certain defendants who were
expected to exchange a portion of their shares of Common Stock, options to
purchase shares of Common Stock or other Common Stock-based awards held by them
for shares of common stock of HB Acquisition in connection with the Bell Merger

                                       8
<PAGE>
had a conflict of interest which caused them, and the Company's the current
directors, to breach their fiduciary duties to the Company's former
stockholders. The complaints seek rescission of the Bell Merger or rescissory
damages and an "accounting", in addition to attorney's fees and costs. The
lawsuit filed by Jeffrey Kaplan was subsequently withdrawn, without prejudice to
refile. The Company believes that the allegations contained in the remaining two
complaints are without merit and intends to vigorously defend such actions.

ENVIRONMENTAL LITIGATION

In May 1998, the Company received a De Minimis Notice Letter and Settlement
Offer from the United States Environmental Protection Agency ("USEPA") under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Sections 9601 ET SEQ. for the Operating Industries, Inc. Landfill
Superfund Site ("Oil Site") in Monterey Park, California. CERCLA imposes
liability for the costs of cleaning up, and certain damages resulting from,
releases and threatened releases of hazardous substances. Although courts have
interpreted CERCLA liability to be joint and several, where feasible, the
liability typically is allocated among the responsible parties according to a
volumetric or other standard. USEPA apparently has identified the Company as a
DE MINIMIS potentially responsible party based on several waste shipments the
Company allegedly sent to the site in the late 1970s and in 1980. USEPA's
settlement offer to the Company is in the range of $29,000 to $36,000. The
settlement would cover all past and expected future costs at the Oil Site, and,
with limited exceptions, provide the Company with covenants not to sue from the
United States and California, and contribution protection from private parties.
Accordingly, the Company does not expect this claim to have a material adverse
effect on the Company.

NOTE 5 - NOTES PAYABLE, LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

On August 17, 1998, the Company's wholly-owned subsidiary, Bell Sports, Inc.
issued Notes totaling $110.0 million, bearing interest at 11%. Interest on the
Notes is payable on February 15 and August 15 of each year. The Notes are
redeemable, in whole or in part, at the option of Bell Sports, Inc. at any time
on or after August 15, 2003, in cash, at specified redemption prices.

On August 17, 1998, the Company issued Discount Notes bearing interest at 14%
totaling $15.0 million in a private placement transaction. Interest on the
Discount Notes accrues on June 1 and December 1 of each year.

On August 17, 1998, the Company consummated the Tender Offer at a purchase price
of $905, plus accrued and unpaid interest from May 15, 1998 up to, but not
including, the date of payment for each $1,000 principal amount of the
Debentures. Accordingly, the Company realized an extraordinary gain, stated on
an after-tax basis and net of related fees and expenses, of $2.9 million. The
Debentures remaining outstanding of $23.8 million are redeemable at the
Company's option at any time on or after November 15, 1996, at specified
redemption prices.

In August 1998, the Company and its wholly-owned subsidiary, Bell Sports, Inc.
(the "Borrower") entered into a $60.0 million senior secured revolving credit
facility ("Credit Agreement").

The Credit Agreement is guaranteed by the Company and by certain of its
subsidiaries (collectively, the "Subsidiary Guarantors" and together with the
Company, the "Guarantors"). The Borrower's obligations under the Credit
Agreement are secured by (a) substantially all of the tangible and intangible
assets of the Borrower and each Guarantor, (b) the capital stock of the Borrower
and each Subsidiary Guarantor and (c) 65% of the capital stock of certain
foreign subsidiaries of the Company.

The Credit Agreement expires on August 17, 2003. The aggregate amount of
borrowings permitted under the Revolving Credit Facility is limited by a
borrowing base formula equal to a percentage of the eligible domestic accounts
receivable and inventory of the Borrower and the Subsidiary Guarantors plus an
amount allowed for the retirement of convertible debt. The Credit Agreement
provides for mandatory repayments from time to time to the extent the amount
outstanding thereunder exceeds the maximum amount permitted under the borrowing
base. Based on the provisions of the Credit Agreement, the Borrower could borrow
a maximum of $48.9 million as of December 26, 1998. As of December 26, 1998,
there were borrowings outstanding of $5.0 million under the Credit Agreement.

                                       9
<PAGE>
The Credit Agreement provides the Company with the option of borrowing based
either on the U.S. prime plus a margin or LIBOR plus a margin. Through February
1999, the margins are set at 0.50% for U.S. prime and 1.50% for LIBOR.
Thereafter, the margin for the U.S. prime can fluctuate between 0.0% and 1.0%,
and the margin for LIBOR loans can fluctuate between 1.0% and 2.0% based on the
Company's earnings and debt. Under the credit agreement, the Borrower is
required to pay a quarterly commitment fee on the unused portion of the facility
at a rate that ranges from 0.375% to 0.50% per annum, based on a pricing ratio.
Through February 1999, the quarterly commitment fee is fixed at 0.50% per annum.

The Credit Agreement contains certain financial covenants, including a maximum
leverage ratio, a minimum fixed charge coverage ratio and a minimum cash
interest coverage ratio. It also contains covenants which restrict the ability
of the Company to pay dividends, incur liens, issue certain types of debt or
equity, engage in mergers, acquisitions or asset sales, or to make capital
expenditures. At December 26, 1998, the Company was in compliance with all bank
covenants.

Long-term debt consists of the following (in thousands):

                                                  December 26,       June 27,
                                                     1998             1998
                                                     ----             ----
   11% Notes                                      $ 110,000         $     --
   4 1/4% Debentures                                 23,750           86,250
   14% Discount notes                                15,000               --
   Borrowings under line of credit                    5,000               --
   Notes collateralized by certain equipment
   due at various dates through December 2000
   and bearing interest at fixed rates ranging
   from 2.9% to 10.3%                                 1,186              936
                                                  ---------         --------
                                                    154,936           87,186
   Less: Current maturities                          (5,376)            (561)
                                                  ---------         --------

   Total long-term debt                           $ 149,560         $ 86,625
                                                  =========         ========

NOTE 6 - STOCKHOLDERS' EQUITY

PREFERRED STOCK

In connection with the Bell Merger, the Company issued Series A Preferred Stock,
par value $.01 (the "Series A Preferred Stock"). Each holder is entitled to
receive dividends on each share at the rate of six percent (6%) per annum
(computed on the basis of $50.99 per share), if, as and when declared by the
Board of Directors of the Company, subject to certain restrictions. Dividends on
the shares of Series A Preferred Stock are payable on June 30, September 30,
December 31, and March 31 of each year (a "Dividend Payment Date"), commencing
September 30, 1998. If, on any Dividend Payment Date, the holders of the Series
A Preferred Stock have not received the full dividends, then such dividends
shall accumulate, whether or not earned or declared, with additional dividends
thereon, compounded quarterly, at the dividend rate of six percent (6%) per
annum, for each succeeding full quarterly dividend period during which such
dividends remain unpaid.

STOCK OPTIONS

On August 17, 1998, the Company granted an option to purchase 20,511 shares of
Series A Preferred Stock at an exercise price of $36.15 per share and 16,921
shares of Class A Common Stock, $.01 par value at an exercise price of $.44 per
share (the "Options") to a member of management. The options are immediately
exercisable and must be exercised, if at all, on or before August 27, 2006.
Compensation expense of approximately $307,000 was recorded in selling, general
and administrative expenses during the first quarter of fiscal 1999 related to
the grant of the Options.

                                       10
<PAGE>
INVESTMENT AND INCENTIVE PLAN

In November 1998, the Board of Directors approved two investment plans (the
"Plans") to allow selected employees, directors, consultants and/or advisors the
opportunity to make an equity investment in the Company. Under the Plans, up to
15,000 shares of Series A Preferred Stock, 12,500 shares of Class A Common
Stock, 132,100 shares of Class B Common Stock and 50,000 shares of Class C
Common Stock can be purchased by participants. As of December 26, 1998, no
shares had been purchased under the Plans.

NOTE 7 - SUBSEQUENT EVENTS

During January, 1999, the Company approved and announced a plan to restructure
it Giro U.S. operations. Over the next twelve months, the Company will
consolidate Giro's Santa Cruz, California manufacturing and distribution
operations with Bell's Rantoul, Illinois Facility. At this time costs associated
with the restructuring including severance benefits, facility closing costs and
capital asset disposal cannot be reasonably estimated.

                                       11
<PAGE>
                                     ITEM 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Bell Sports is the leading manufacturer and marketer of bicycle helmets
worldwide and a leading supplier of a broad line of bicycle accessories in North
America. The Company is also a leading supplier of auto racing helmets, a
worldwide supplier of bicycle accessories, and has recently begun marketing
in-line skating, snowboarding, snow skiing and water sport helmets. The Company
has developed a reputation over its 44-year history for innovation, design,
quality and safety.

On August 17, 1998, the Company consummated the Agreement and Plan of
Recapitalization and Merger with HB Acquisition Corporation, a Delaware
corporation ("HB Acquisition"), which provided for the merger of HB Acquisition
with and into Bell, with Bell continuing as the surviving corporation (the "Bell
Merger"). Additionally, the Company completed a tender offer (the "Tender
Offer") to purchase $62.5 million aggregate principal amount of its 4 1/4%
Convertible Subordinated Debentures due November 2000 (the "Debentures"). The
Company's wholly-owned subsidiary, Bell Sports, Inc., consummated the private
placement of $110.0 million of its 11% Series A Senior Subordinated Notes due
August 15, 2008 (the "Notes") and the Company completed the private placement of
$15.0 million of its 14% Senior Discount Notes due August 14, 2009 (the
"Discount Notes").

RESULTS OF OPERATIONS

NET SALES. Net sales for the second quarter of fiscal 1999 increased 6% to $45.0
million from $42.6 million in the fiscal 1998 second quarter, due primarily to
strong bicycle helmet and accessories sales in the U.S. in both the mass
merchant and independent bicycle dealer channels. Year to date, net sales
remained flat as compared to the prior year, primarily as a result of lower
helmet and accessories sales in the first quarter of fiscal 1999, which were
recovered in the second quarter.

The product line sales mix for the six month and three month periods are as
follows:

                             Six Months Ended            Three Months Ended
                        --------------------------   ---------------------------
                        December 26,  December 27,   December 26,   December 27,
                           1998          1997           1998            1997
                           ----          ----           ----            ----
PRODUCT LINE SALES MIX:
  Bicycle accessories       53%           54%            50%             50%
  Bicycle helmets           45%           44%            48%             47%
  Auto Racing helmets        2%            2%             2%              3%

GROSS MARGIN. Gross margins for the second quarter of fiscal 1999 increased to
32% of net sales, from 31% in the fiscal 1998 second quarter. Year to date,
gross margins increased to 33% in fiscal 1999 from 31% in fiscal 1998. The
increases are due to the continued improvement in the Company's manufacturing
and distribution efficiency.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative costs,
as a percentage of net sales, remained steady at 27% for the second quarter of
both fiscal 1999 and 1998. Year to date, selling, general, and administrative
costs increased to 28% of net sales from 26% in fiscal 1998. The increase is due
primarily to additional marketing costs for new winter sports products, and a
one-time compensation charge related to the issuance of stock options.

As a result of the seasonality of the Company's business, sales are generally
higher in the second half of the fiscal year. Although some selling, general and
administrative expenses are variable with sales, such as distribution expenses
and commissions, most expenses are incurred evenly throughout the year.
Accordingly, the Company expects selling, general and administrative expenses
will decrease as a percentage of net sales during the third and fourth quarters
of fiscal 1999.

                                       12
<PAGE>
AMORTIZATION OF INTANGIBLES. Amortization of goodwill and intangible assets
decreased to $499,000 in the second quarter of fiscal 1999 compared to $566,000
for the comparable prior year period. Year to date, amortization of intangibles
decreased to $1.1 million in fiscal 1999 from $1.2 million in fiscal 1998. The
decrease is due to certain intangibles becoming fully amortized.

TRANSACTION COSTS. In the first quarter of fiscal 1999, the Company estimated
costs related to the Bell Merger at $11.5 million. In the second quarter of
fiscal 1999, the Company recorded an additional $2.5 million of costs related to
the merger.

GAIN ON DEBT TENDER. On August 17, 1998, the Company consummated the Tender
Offer at a purchase price of $905, plus accrued and unpaid interest from May 15,
1998 up to, but not including, the date of payment for each $1,000 principal
amount of Debentures. An extraordinary gain, stated on an after-tax basis and
net of related fees and expenses, of $2.9 million was recorded in connection
with the Tender Offer.

NET INVESTMENT INCOME AND INTEREST EXPENSE. Net investment income decreased to
$209,000 in the second quarter of fiscal 1999 compared to $476,000 in the second
quarter of fiscal 1998. Year to date net investment income decreased to $810,000
in fiscal 1999 from $905,000 in fiscal 1998. The decrease is due to lower cash
balances being invested resulting from the Bell Merger.

Interest expense increased to $4.2 million in the second quarter of fiscal 1999
from $1.2 million in the comparable prior year period. Year to date interest
expense increased to $6.7 million in fiscal 1999 from $2.4 million in fiscal
1998. The increase is due to the issuance of the Notes and Discount Notes,
partially offset by a $62.5 million reduction in debt resulting from the Tender
Offer.

INCOME TAXES. The effective tax rate was 41% for the second quarter of fiscal
1999 and 20% year to date for fiscal 1999. The effective tax rate was 38% for
both the second quarter of fiscal 1998 and the first six months of fiscal 1998.
The variance on the year to date rates is due to the non-deductibility of the
transaction costs. The Company anticipates the effective tax rate for the
remainder of fiscal 1999 to remain at 41%.

LIQUIDITY AND FINANCIAL RESOURCES

The Company has historically funded its operations, capital expenditures and
working capital requirements from internal cash flow from operations and
borrowings. The Company's working capital decreased to $83.4 million at December
26, 1998 from $130.4 million at June 27, 1998. The decrease is primarily
attributable to the use of cash in connection with the Bell Merger and the
Tender Offer coupled with the seasonal decrease in accounts receivable.

The Company's capital expenditures were $2.3 million for the first six months of
fiscal 1999. The Company estimates it will spend a total of approximately $5.1
million on capital expenditures in fiscal 1999 for product tooling and to
maintain and upgrade its facilities and equipment.

In August 1998, the Company and its wholly-owned subsidiary, Bell Sports, Inc.
entered into a $60.0 million senior secured revolving credit facility ("Credit
Agreement"). The Credit Agreement is guaranteed by the Company and by certain of
its subsidiaries (collectively, the "Subsidiary Guarantors" and together with
the Company, the "Guarantors"). The Borrower's obligations under the Credit
Agreement are secured by (a) substantially all of the tangible and intangible
assets of the Borrower and each Guarantor, (b) the capital stock of the Borrower
and each Subsidiary Guarantor and (c) 65% of the capital stock of certain
foreign subsidiaries of the Company.

The Credit Agreement also contains certain financial covenants, including a
maximum leverage ratio, a minimum fixed charge coverage ratio and a minimum cash
interest coverage ratio. It also contains covenants which restrict the ability
of the Company to pay dividends, incur liens, issue certain types of debt or
equity, engage in mergers, acquisitions or asset sales, or to make capital
expenditures. At December 26, 1998, the Company was in compliance with all bank
covenants.

                                       13
<PAGE>
The Credit Agreement expires in August 2003. As of December 26, 1998,
outstanding borrowings under the Credit Agreement totaled $5.0 million. Based on
the provisions of the Credit Agreement, the Company could have borrowed a
maximum of $48.8 million.

Management believes that cash flows from operations and borrowings available
under the Credit Agreement will provide adequate funds for the Company's
foreseeable working capital needs, planned capital expenditures, debt service
obligations and the ultimate outcome of pending product liability judgments. The
Company does not anticipate paying dividends on its Preferred or Common Stock in
the foreseeable future.

YEAR 2000 COMPLIANCE

The year 2000 problem, which is common to most corporations, concerns the
inability of information systems, including computer software programs as well
as other systems dependent on computerized information such as phones,
voicemail, security systems and elevators (collectively, "Non-IT Systems"), to
properly recognize and process date sensitive information related to the year
2000 and beyond. The Company believes that it will be able to achieve year 2000
compliance by the end of 1999 and does not currently anticipate any material
disruption of its operations as a result of any failure by the Company to be
year 2000 compliant. However, to the extent the Company is unable to achieve
year 2000 compliance, the Company's business and results of operations could be
materially affected. This could be caused by computer-related failures in a
number of areas including, but not limited to, the Company's financial systems,
manufacturing and warehouse management systems, phone system and electricity
supply.

The Company has performed a preliminary examination of its major software
applications to determine whether each system is prepared to accommodate the
year 2000. In fiscal 1998, through routine upgrades, the Company made the
computer software programs used at the Company's domestic facilities and at Bell
Sports Canada year 2000 compliant. These upgrades include, but are not limited
to, the manufacturing, financial, customer and vendor purchase order processing
and warehouse management systems. In fiscal 1999, the Company expects to further
upgrade these programs to a year 2000 level certified by the Company's outside
software vendors. The computer software programs of Giro, Giro Ireland, EuroBell
and Bell Sports Australia are currently year 2000 compliant.

All year 2000 efforts with respect to the Company and its subsidiaries' computer
software programs are being made through internal resources and through routine
software upgrades provided by the Company's software vendors. The Company has
not incurred significant separately identifiable costs related to year 2000
issues through December 26, 1998 and does not expect to incur significant
additional costs in order to make its computer software programs year 2000
compliant. The Company's internal resources consist of an information technology
support team comprised of approximately fifteen full-time employees, covering
both technical and application areas. The Company has not hired additional
employees, either full-time or contract, in order to address year 2000 issues
and expects all such issues will be adequately addressed by the existing team.

The Company employs certain manufacturing processes that utilize computer
controlled manufacturing equipment. The Company believes such equipment is year
2000 compliant but has not completed its testing of such equipment. Testing is
expected to be completed by March 1999. In the event the Company determines that
such equipment cannot readily be made year 2000 compliant, the Company believes
that it could revert to the manual processes previously employed or outsource
such work with minimal incremental manufacturing cost.

The Company's facilities staff currently is investigating the status of the
Company's Non-IT Systems with respect to year 2000 compliance. The Company
expects that its Non-IT Systems will be year 2000 compliant before the end of
1999. The Company is utilizing internal resources to address the year 2000
compliance of its Non-IT Systems and has not incurred significant separately
identifiable costs related to the year 2000 issues through December 26, 1998 and
does not expect to incur significant additional costs in order to upgrade its
Non-IT Systems to year 2000 compliance.

                                       14
<PAGE>
In addition to reviewing its internal systems, the Company has polled or is in
the process of polling its outside software and other vendors, customers and
freight carriers to determine whether they are year 2000 compliant and to
attempt to identify any potential issues. The Company's outside software vendors
have confirmed that they are year 2000 compliant, including the products
utilized by the Company. Based on the responses it has received from its
customers, the Company believes that its mass merchant customers will be year
2000 compliant before the end of 1999.

If the Company's customers and vendors do not achieve year 2000 compliance
before the end of 1999, the Company may experience a variety of problems which
may have a material adverse effect on the Company. Among other things, to the
extent the Company's customers are not year 2000 compliant by the end of 1999,
such customers may lose electronic data interchange capabilities at the
beginning of the year 2000. Where EDI communication would no longer be
available, the Company expects to utilize voice, facsimile and/or mail
communication in order to receive customer orders and process customer billings.
To the extent the Company's vendors are not year 2000 compliant by the end of
1999, such vendors may fail to deliver ordered materials and products to the
Company and may fail to bill the Company properly and promptly. Consequently,
the Company may not have the correct inventory to send to its customers and may
experience a shortage or surplus of inventory. Although the Company does not
currently have a plan for addressing these potential problems, with respect to
its vendors, the Company has alternative sources of supply.

INTRODUCTION OF THE EURO

The European Economic and Monetary Union and the introduction of a new currency
(the "Euro") began in Europe on January 1, 1999. The new currency enables the
European Union ("EU") to blend the economies of EU's member states into one
large market with unrestricted and unencumbered trade across borders. The change
of currencies in Europe may affect the Company's business operations in Europe
as well as having systems and accounting issues for the Company. The Company is
currently evaluating the impact of the Euro, if any, on the Company's financial
position, results of operation and cash flows.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131") was issued. SFAS 131 revises information
regarding the reporting of operating segments. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. SFAS 131 will be adopted by the Company at the end of fiscal 1999.

In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133") was issued. SFAS 133 establishes a new model for
accounting for derivatives and hedging activities and supercedes and amends a
number of existing standards. SFAS 133 is required to be adopted by the Company
at the beginning of fiscal 2000. Upon initial application, all derivatives are
required to be recognized in the statement of financial position as either
assets or liabilities and measured at fair value. In addition, all hedging
relationships must be reassessed and documented pursuant to the provisions of
SFAS 133. The adoption of SFAS 133 is not expected to have a significant impact
on the financial results of the Company.

Certain matters contained herein are forward-looking statements that are based
on management's beliefs as well as on assumptions made by and information
currently available to management. When used herein, the words "expect,"
"anticipate," "intend," "plan," "believe," "estimate," and similar expressions
are intended to identify such forward-looking statements. Such statements
involve known and unknown risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. These
include, but are not limited to: economic and market conditions, competitive
activities or other business conditions, dependence on key customers,
fluctuations in sales, profitability or working capital, weather conditions,
currency fluctuations, and results of pending litigation.

                                       15
<PAGE>
                                BELL SPORTS CORP.
                                     PART II

ITEM 1  LEGAL PROCEEDINGS
        None

ITEM 2  CHANGES IN SECURITIES
        None

ITEM 3  DEFAULTS UPON SENIOR SECURITIES
        None

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
        None

ITEM 5  OTHER INFORMATION
        None

ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibit Index                       Page  18
        (b)  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.

                                       Date: February 2, 1999
                                            -----------------

                                       BELL SPORTS CORP.


/s/ Robert E. Collins      Vice President, Chief Financial Officer and Treasurer
------------------------   (Principal financial and accounting officer)
    Robert E. Collins



                                       17
<PAGE>
                                BELL SPORTS CORP.
                                INDEX TO EXHIBITS


   Exhibit
   Number                        Description
   ------                        -----------

    10.1*    Bell Sports Corp. Investment and Incentive Plan, dated
             December 21, 1998

    10.2*    Bell Sports Corp. Class C Investment and Incentive Plan, dated
             December 21, 1998

    27*      Financial Data Schedule

----------

* Filed herewith


                                       18