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 27, 1997
                                      ------------------------------

                                       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.

Common Stock, $.01 par value         January 15, 1997         13,855,205
----------------------------         ----------------         ----------
Class                                Date                     Number of shares
<PAGE>
                                BELL SPORTS CORP.
                               INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
                                                 PART I


                                                                                                  Page
                                                                                                 Number
                                                                                                 ------
<S>                                                                                             <C>
Bell Sports Corp. and Subsidiaries Consolidated Balance Sheets
  as of December 27, 1997 and June 28, 1997                                                        3

Bell Sports Corp. and Subsidiaries Consolidated Statements of Operations
  for the six months and three months ended December 27, 1997 and
  December 28, 1996                                                                                4

Bell Sports Corp. and Subsidiaries Consolidated Condensed Statements of
Cash Flows for the six months ended December 27, 1997  
  and December 28, 1996                                                                            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
</TABLE>
                                       2
<PAGE>
PART 1.  Financial Information
Item 1.  Financial Statements

                       BELL SPORTS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                            December 27,            June 28,
                                                                                                1997                 1997
                                                                                          -----------------    ----------------
                                                                                            (unaudited)
<S>                                                                                       <C>                  <C>      
ASSETS
------
Current assets:
   Cash and cash equivalents                                                                  $  36,992            $  29,008
   Accounts receivable                                                                           47,750               75,915
   Inventories                                                                                   49,143               46,549
   Deferred taxes and other current assets                                                       14,586               16,048
                                                                                          -----------------    ----------------
         Total current assets                                                                   148,471              167,520

Property, plant and equipment                                                                    20,426               23,738
Goodwill                                                                                         55,220               56,471
Intangibles and other assets                                                                     18,361               21,025
                                                                                          -----------------    ----------------
         Total assets                                                                          $242,478             $268,754
                                                                                          =================    ================

LIABILITIES AND STOCKHOLDERS' EQUITY 
------------------------------------
Current liabilities:
   Accounts payable                                                                          $    9,083            $  11,299
   Accrued compensation and employee benefits                                                     3,665                3,998
   Accrued expenses                                                                              15,101               20,209
   Notes payable and current maturities of long-term debt and capital lease obligations           1,932                1,337
                                                                                          -----------------    ----------------
         Total current liabilities                                                               29,781               36,843

Long-term debt                                                                                   86,734              106,454
Capital lease obligations and other liabilities                                                   5,527                6,492
                                                                                          -----------------   -----------------
         Total liabilities                                                                      122,042              149,789
                                                                                          -----------------    ----------------
Commitments and contingencies

Stockholders' equity:
   Preferred stock; $.01 par value; authorized 1,000,000 shares, none issued 
   Common stock; $.01 par value; authorized 25,000,000 shares; issued and outstanding:
     14,347,521 and 13,852,449 shares at December 27, 1997, respectively, and
     14,248,114 and 13,753,042 shares at June 28, 1997, respectively                                143                  143
   Additional paid-in capital                                                                   143,366              142,486
   Cumulative foreign currency translation adjustments                                             (775)                (407)
   Accumulated deficit                                                                          (17,080)             (18,039)
                                                                                          -----------------    ----------------
                                                                                                125,654               124,183
   Treasury stock, at cost, 495,072 shares                                                       (5,218)              (5,218)
                                                                                          -----------------    ----------------
         Total stockholders' equity                                                             120,436              118,965
                                                                                          -----------------    ----------------
         Total liabilities and stockholders' equity                                            $242,478             $268,754
                                                                                          =================    ================
</TABLE>
       See accompanying notes to these consolidated financial statements.
                                       3
<PAGE>
                       BELL SPORTS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
                                                               Six Months Ended                         Three Months Ended
                                                     ------------------------------------    --------------------------------------

                                                       December 27,       December 28,          December 27,         December 28,
                                                           1997              1996                   1997                 1996
                                                     ---------------   ------------------    -----------------    -----------------
<S>                                                  <C>               <C>                   <C>                  <C>     
Net sales                                                $ 86,222           $118,691              $42,590              $56,623
Cost of sales                                              59,459             85,177               29,304               40,617
                                                     ---------------   ------------------    -----------------    -----------------

Gross profit                                               26,763             33,514               13,286               16,006

Selling, general and administrative expenses               22,641             29,926               11,566               14,647
Disposal of product line adjustment                        (1,300)                                 (1,300)
Amortization of goodwill and intangible assets              1,202              1,729                  566                  867
Restructuring charges                                       1,228              1,466                1,228                  108
Net investment income                                        (905)            (2,292)                (476)                (500)
Interest expense                                             2350              3,526                1,183                1,730
                                                     ---------------   ------------------    -----------------    -----------------

Income (loss) before income taxes                           1,547               (841)                 519                 (846)
Provision (benefit) for income taxes                          588               (369)                 197                 (371)
                                                     ---------------   ------------------    -----------------    -----------------

Net income (loss)                                        $    959           $   (472)             $   322              $  (475)
                                                     ===============   ==================    =================    =================

Basic EPS                                                $   0.07           $  (0.03)             $  0.02              $ (0.03)
                                                     ===============   =================     =================    =================

Diluted EPS                                              $   0.07           $  (0.03)             $  0.02              $ (0.03)
                                                     ===============   ==================    =================    =================
</TABLE>
       See accompanying notes to these consolidated financial statements.
                                       4
<PAGE>
                       BELL SPORTS CORP. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                            (unaudited, in thousands)
<TABLE>
<CAPTION>
                                                                                           Six Months Ended
                                                                               -----------------------------------------

                                                                                    December 27,         December 28, 
                                                                                      1997                   1996
                                                                               -------------------    ------------------
<S>                                                                            <C>                    <C>       
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
  Net cash provided by (used in) operating activities                                 $15,163             $  (7,353)
                                                                               -------------------    ------------------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
  Capital expenditures                                                                 (2,206)               (4,479)
  Net sales of marketable securities                                                                          8,105
  Acquisition of other businesses                                                                              (519)
  Proceeds from the sale of SportRack                                                  13,427
                                                                               -------------------    ------------------

     Net cash provided by investing activities                                         11,221                 3,107
                                                                               -------------------    ------------------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Proceeds from issuance of stock                                                       1,001
  Payments on notes payable, long-term debt and capital leases                           (358)                 (784)
  Net payments on line of credit agreement                                            (18,633)               10,186
                                                                               -------------------    ------------------

     Net cash provided by (used in) financing activities                              (17,990)                9,402
                                                                               -------------------    ------------------

Effect of exchange rate changes on cash                                                  (410)                  128
                                                                               -------------------    ------------------

Net increase in cash and cash equivalents                                               7,984                 5,284

Cash and cash equivalents at beginning of period                                       29,008                23,140
                                                                               -------------------    ------------------

Cash and cash equivalents at end of period                                            $36,992               $28,424
                                                                               ===================    ==================
</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

Bell Sports Corp. and its  wholly-owned  subsidiaries  (the "Company" or "Bell")
design, manufacture, market and distribute bicycle accessories,  bicycle helmets
and automotive racing helmets.

Consolidation
-------------

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.

Accounting Period
-----------------

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.

Unaudited Information and Basis of Presentation
-----------------------------------------------

The  consolidated  balance  sheet as of  December  27,  1997 and  statements  of
operations and condensed 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 28, 1997, June 29, 1996 and
July 1,  1995  which  are  included  in the  Company's  1997  Annual  Report  to
Stockholders.

Investment Income
-----------------

The  investment  income  reported for the first  quarter of fiscal 1997 includes
proceeds from the settlement of an  arbitration  case related to the handling of
certain marketable  securities by an outside investment advisor.  The settlement
proceeds,   net  of  related  expenses  and  expected  losses  to  sell  certain
securities, were $1.3 million.

Accounts Receivable
-------------------

Accounts receivable at December 27, 1997 and June 28, 1997 are net of allowances
for doubtful accounts of $2.4 million and $5.0 million, respectively.

Property, Plant and Equipment
-----------------------------

Property,  plant and equipment at December 27, 1997 and June 28, 1997 are net of
accumulated depreciation of $19.3 million and $17.1 million, respectively.
                                       6
<PAGE>
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.

Recent Accounting Pronouncements
--------------------------------

In February  1997,  SFAS No. 128,  "Earnings per Share" ("SFAS 128") was issued.
Under SFAS 128,  primary  earnings  per share is replaced by basic  earnings per
share and fully diluted  earnings per share is replaced by diluted  earnings per
share.

In June 1997, SFAS No. 130,  "Reporting  Comprehensive  Income" ("SFAS 130") was
issued. SFAS 130 establishes standards for the reporting of comprehensive income
and its  components in a full set of  general-purpose  financial  statements for
periods  beginning  after  December  15,  1997.  Reclassification  of  financial
statements for earlier periods for comparative purposes is required.

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.

The Company  adopted SFAS 128 in the second  quarter of fiscal 1998 and SFAS 130
and  SFAS 131 in  fiscal  1999 and does  not  expect  such  adoptions  to have a
material effect on the consolidated financial statements and footnotes.

NOTE 2 - INVENTORIES

Inventories consist of the following components (in thousands):

 
                                             December 27,          June 28,
                                                1997                 1997
                                           ---------------     ----------------

Raw materials                                  $  5,717              $  5,865
Work in process                                   2,396                 2,125
Finished goods                                   41,030                38,559
                                           ---------------     ----------------

     Total                                      $49,143               $46,549
                                           ===============     ================

                                       7
<PAGE>
NOTE 3 - 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
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.

On February 2, 1996,  a Toronto,  Canada jury  returned a verdict  against  Bell
based on injuries arising out of a 1986 motorcycle accident. The jury found that
Bell 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 Bell would be  responsible  and the legal fees
and tax implications  associated  therewith are estimated to be between $3.0 and
$4.0 million.

The Company has filed an appeal of the  Canadian  verdict.  Although the Company
cannot predict the outcome of an appeal, the Company currently has adequate cash
balances and sources of capital  available to satisfy the judgment if the appeal
is unsuccessful.  Accordingly,  the Company currently does not believe the claim
will have a material  adverse effect on liquidity or the financial  condition of
the Company.  Although the Company maintains product liability  insurance,  this
claim arose during a period in which the Company was  self-insured.  The Company
currently does not have a reserve for this judgment.

Environmental Litigation
------------------------

          In the  ordinary  course of its  business,  the Company is required to
dispose of certain waste at off-site locations.  During 1993, the Company became
aware of an investigation by the Illinois  Environmental  Protection Agency (the
"Illinois  Agency") of a waste disposal site, owned by a third party,  which was
previously  utilized  by the  Company.  As a result of that  investigation,  the
Illinois  Agency  informed the Company that certain of the  Company's  practices
with respect to the identification,  storage and disposal of hazardous waste and
related reporting requirements may not have complied with the applicable law. On
March 14, 1995,  the State of Illinois (the "State")  filed a complaint with the
Illinois  Pollution  Control Board (the  "Pollution  Control Board") against the
Company and the disposal site owner based on the same allegations. The complaint
sought penalties not exceeding  statutory  maximums and such other relief as the
Pollution  Control Board  determines to be appropriate.  The disposal site owner
filed a cross-claim  against the Company that seeks to have  penalties  assessed
against the Company and not against the disposal site owner.  Any penalties as a
result of the cross-claim  would be payable to the State. The Pollution  Control
Board approved a settlement  between the State and the Company pursuant to which
the Company  paid  $69,000 to the State and  disposed of certain  materials in a
container at the waste  disposal site at an authorized  disposal  facility.  The
cross-claim  by the  landfill  owner is still  pending,  and the  outcome of the
cross-claim cannot presently be determined.
                                       8
<PAGE>
Additionally,  the Illinois Agency has been  negotiating  with the disposal site
owner with respect to the procedures and actions necessary to close the disposal
site.  The extent  and  nature of any  actions  which may be taken  against  the
Company with respect to this matter cannot presently be determined.

NOTE 4 - NOTES PAYABLE, LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

The  Company  has a total of  approximately  $89.7  million  in  notes  payable,
long-term debt and capital lease  obligations  outstanding at December 27, 1997.
Of this  amount,  $86.25  million  relates  to the  outstanding  balance  on the
Company's 4-1/4%  convertible  subordinated  debentures.  Maturing  November 15,
2000, the  debentures are  convertible at any time prior to maturity into common
stock at a conversion  price of $54.06 per share.  Interest on the debentures is
payable semi-annually.  The debentures are redeemable at the Company's option at
any time on or after November 15, 1996, at specified redemption prices.

In April 1997, the Company  entered into a $60.0 million  multicurrency  secured
revolving line of credit ("Credit  Agreement").  The Credit  Agreement grants to
the syndicated bank group a security  interest in the U.S.  accounts  receivable
and  inventories  for the term of the facility.  The Credit  Agreement  requires
borrowings  outstanding  under the line of credit to be  maintained  below $15.0
million for a period of thirty  consecutive  days between July 1st and September
30th of each fiscal year.

Borrowings under the Credit Agreement were reduced  approximately  $20.0 million
during the fiscal 1998 first quarter  using the proceeds  received from the sale
of SportRack (see Note 7) and the  collection of  receivables,  including  those
related to the Service Cycle/Mongoose business. At December 27, 1997, there were
no outstanding borrowings under the Credit Agreement.

The Credit  Agreement  expires in December 1999 and is classified as a long-term
liability.  Based on the provisions of the Credit Agreement at December 27, 1997
the Company could borrow a maximum of $36.8 million.

The Credit  Agreement  provides the Company with several  interest rate options,
including U.S.  prime,  LIBOR plus a margin,  Canadian prime plus the applicable
LIBOR margin less 0.50%, Canadian banker's acceptance plus the LIBOR margin plus
0.125%,  and  short-term  fixed  rates  offered  by the  agent  bank in the loan
syndication.  The LIBOR  margin is currently  1.50% per annum,  but it can range
between 1.00% and 1.50%  depending on the  Company's  interest  coverage  ratio.
Under  the  Credit  Agreement,  the  Company  is  required  to  pay a  quarterly
commitment  fee on the unused portion of the facility at a rate that ranges from
0.20% to 0.30% per annum. At December 27, 1997, the quarterly commitment fee was
0.30% per annum.

The Credit Agreement contains certain financial covenants,  the most restrictive
of which are a minimum interest  coverage ratio, a maximum funded debt ratio and
a minimum  adjusted net worth amount.  It also contains  covenants that prohibit
the payment of cash  dividends  as well as restrict  the amount that the Company
can repurchase of its  subordinated  debt and common stock. At December 27, 1997
and June  28,  1997,  the  Company  was in  compliance  with  all of the  Credit
Agreement covenants.


NOTE 5 - COMMON STOCK

The Company granted its executive officers,  non-employee  directors and certain
other  employees  options to purchase  shares of the Company's  Common Stock. At
December  27,  1997,  options to purchase  approximately  2.3 million  shares of
Common Stock were outstanding.

On August 24, 1995, the Company announced a stock repurchase program authorizing
the repurchase of up to 10% of the  outstanding  shares of the Company's  Common
Stock from time to time in open  market or private  transactions.  The timing of
any  repurchase  and the price and number of shares  repurchased  will depend on
market  conditions  and other factors.  To date,  the Company has  repurchased a
total of 523,400  shares at an aggregate  purchase price of  approximately  $5.5
million,  of which 28,328  shares were utilized  under a Restricted  Stock Award
Program.  Shares  repurchased  may be  retired  or used  for  general  corporate
purposes.
                                       9
<PAGE>
NOTE 6 - EARNINGS PER SHARE

In February  1997 the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  Per
Share," which is effective for financial  statements for both interim and annual
periods ending after December 15, 1997. The new standard  eliminates primary and
fully dilutive earnings per share and requires presentation of basic and diluted
earnings per share with disclosures of the methods used to compute the per share
amounts.

Basic  earnings per share excludes  dilution and is computed by dividing  income
available  to  common  shareholders  by  the   weighted-average   common  shares
outstanding   for  the  period.   Diluted   earnings  per  share   reflects  the
weighted-average   common  shares  outstanding  plus  the  potential  effect  of
securities or contracts  which are convertible to common shares such as options,
warrants,  and  convertible  debt and  preferred  stock.  The  adoption  of this
standard is not expected to have a material  impact on earnings per share of the
Company.  In computing  Diluted  EPS, the average  stock price for the period is
used in  determining  the number of shares assumed to be purchased from exercise
of stock options  rather than the higher of the average or ending stock price as
used in the computation of fully diluted EPS.

The  following  is a  reconciliation  between  the  components  of the basic and
diluted net income (loss) per share calculations for the periods presented below
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                                               Six Months Ended:
                                              December 27, 1997                 December 28, 1996
                                        ----------------------------    -------------------------------
                                        Income    Shares  Per Share     Income    Shares     Per Share
                                                            Amount                             Amount
                                        ------  --------  ----------    -------  --------    ----------
<S>                                     <C>     <C>       <C>           <C>      <C>         <C>    
Basic income (loss) per share                                                   
     Net income (loss)                   $959    13,810       $0.07     $(472)    13,701       $(0.03)
                                                          ==========                         ==========
Effect of dilutive securities                                                   
     Stock options                                  331                               58
                                                                                
                                        ------  --------                -------  --------
Diluted net income (loss) per share                                             
   Net income (loss) plus assumed                                             
     exercises and conversions           $959    14,141       $0.07     $(472)    13,759       $(0.03)
                                        ======  ========  ==========    =======  ========    ==========
                                                                                
                                                                                
                                                             Three Months Ended:
                                              December 27, 1997                 December 28, 1996
                                        ----------------------------    -------------------------------
                                        Income   Shares   Per Share     Income    Shares     Per Share
                                                            Amount                             Amount
                                        ------  --------  ----------    -------  --------    ----------
Basic income (loss) per share                                                   
     Net income (loss)                   $322    13,851       $0.02     $(475)    13,701       $(0.03)
                                                          ==========                         ==========
Effect of dilutive securities                                                   
     Stock options                                  357                               64
                                                                                
                                        ------  --------                -------  --------
Diluted net income (loss) per share                                             
   Net income (loss) plus assumed                                             
     exercises and conversions           $322    14,208       $0.02     $(475)    13,765       $(0.03)
                                        ======  ========  ==========    =======  ========    ==========
</TABLE>

The 4-1/4% convertible subordinated debentures are excluded from the above table
since their effect would be antidilutive.
                                       10
<PAGE>
NOTE 7 - DISPOSITIONS

On July 2, 1997,  the Company  completed  the sale of  substantially  all of the
assets of SportRack,  which designs,  manufactures  and markets  automobile roof
rack  systems,  for  approximately  $13.5  million  to an  affiliate  of Advance
Accessory System Canada, Inc. There was no material gain or loss associated with
this transaction.


NOTE 8 - DISPOSAL OF PRODUCT LINE ADJUSTMENT

In April 1997, the Company disposed of the Service  Cycle/Mongoose  business but
retained the related accounts  receivables of approximately $19 million.  At the
date of the  disposition,  the  Company  recorded a reserve of $2.5  million for
uncollectible  receivables.   The  Company  has  collected  a  majority  of  the
receivables  and has determined a reserve of $1.2 million was more  appropriate.
Accordingly, the Company reversed $1.3 million from the uncollectible receivable
reserves during its fiscal 1998 second quarter.


NOTE 9 - RESTRUCTURING CHARGES

In November  1997,  the Company  formed and approved a plan to  restructure  its
European operations. In connection with this plan, the Company closed its Paris,
France sales and  marketing  office in  December,  1997 and  consolidated  these
functions  with its  Roche  La  Moliere,  France  facility.  The key  management
positions  of Giro  Ireland and  EuroBell  were also  consolidated.  Included in
fiscal 1998 second  quarter  pre-tax  income are $1.2  million of  restructuring
charges  related to this plan,  including  facility  closing costs and severance
benefits.
                                       11
<PAGE>
                                     Item 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL POSITION AND LIQUIDITY

The Company's  current ratio increased to 5.0 to 1 at December 27, 1997 from 4.5
to 1 at June 28, 1997. Cash and cash equivalents increased $8.0 million to $37.0
million at September 27, 1997 from $29.0 million at June 28, 1997.  The increase
in cash and cash equivalents is primarily due to strong receivables  collections
and the proceeds  received from the sale of the SportRack  business in July 1997
(the "Sale of  SportRack").  The  increase was  partially  offset by the Company
utilizing a portion of its cash position to reduce outstanding borrowings.

Accounts  receivable  at December  27,  1997  decreased  $28.2  million to $47.7
million from $75.9  million at June 28, 1997.  The decrease is  attributable  to
strong  collections  and a normal  seasonal net sales  decrease  from the fourth
quarter of fiscal  1997 to the first  half of fiscal  1998.  Approximately  $6.0
million in  receivables  were  collected  related to the Service  Cycle/Mongoose
business.  Although the Service Cycle/Mongoose  business was sold in April 1997,
the Company retained the receivables related to the business unit. An additional
$5.0 million decrease in receivables resulted from the Sale of SportRack.

Inventories  increased  $2.6  million to $49.1  million  at  December  27,  1997
compared to $46.5  million at June 28, 1997.  This increase is attributed to the
normal business cycle build-up of inventory in the first half of the fiscal year
to meet  anticipated  increased  sales  demands in the second half of the fiscal
year.  The  increase  was  partially  offset  by the  Sale of  SportRack,  which
accounted for approximately $4.2 million in inventory at June 28, 1997.

In April 1997, the Company entered into a $60.0 million  multicurrency,  secured
revolving line of credit ("Credit  Agreement").  The Credit  Agreement grants to
the syndicated bank group a security  interest in the U.S.  accounts  receivable
and  inventories  for the term of the facility.  The Credit  Agreement  requires
borrowings  outstanding  under the line of credit to be  maintained  below $15.0
million for a period of thirty  consecutive  days between July 1st and September
30th of each fiscal year.

Borrowings under the Credit Agreement were reduced  approximately  $20.0 million
during the fiscal 1998 first quarter  using the proceeds  received from the Sale
of SportRack and the collection of  receivables,  including those related to the
Service Cycle/Mongoose business. At December 27, 1997, there were no outstanding
borrowings under the Credit Agreement.

The Credit  Agreement  expires in December 1999 and is classified as a long-term
liability.  Based on the provisions of the Credit Agreement at December 27, 1997
the Company could borrow a maximum of $36.8 million.

The Credit  Agreement  provides the Company with several  interest rate options,
including U.S.  prime,  LIBOR plus a margin,  Canadian prime plus the applicable
LIBOR margin less 0.50%, Canadian banker's acceptance plus the LIBOR margin plus
0.125%,  and  short-term  fixed  rates  offered  by the  agent  bank in the loan
syndication.  The LIBOR  margin is currently  1.50% per annum,  but it can range
between 1.00% and 1.50%  depending on the  Company's  interest  coverage  ratio.
Under  the  Credit  Agreement,  the  Company  is  required  to  pay a  quarterly
commitment  fee on the unused portion of the facility at a rate that ranges from
0.20% to 0.30% per annum. At December 27, 1997, the quarterly commitment fee was
0.30% per annum.

The Credit Agreement contains certain financial covenants,  the most restrictive
of which are a minimum interest  coverage ratio, a maximum funded debt ratio and
a minimum  adjusted net worth amount.  It also contains  covenants that prohibit
the payment of cash  dividends  as well as restrict  the amount that the Company
can repurchase of its  subordinated  debt and common stock. At December 27, 1997
and June  28,  1997,  the  Company  was in  compliance  with  all of the  Credit
Agreement covenants.

Capital  expenditures  were $2.2 million for the first half of fiscal 1998.  The
Company expects to spend  approximately $5.0 million on capital  expenditures in
fiscal year 1998. The largest planned expenditures are for new product tooling.
                                       12
<PAGE>
The Company announced in September 1997 that it retained  Montgomery  Securities
as  its  financial  advisor  to  assist  the  Company  in  evaluating  strategic
alternatives  designed  to enhance  stockholder  value.  Such  alternatives  may
include,  but will not be limited  to, a merger,  sale,  joint  venture or other
business  combination,  repurchase of outstanding debt or equity securities,  or
continuing to pursue a corporate growth strategy. There can be no assurance that
a transaction will occur as a result of this evaluation.

The Company  believes its available  cash flows from  operations  and the Credit
Agreement  should be adequate to satisfy its  working  capital  requirements  in
fiscal 1998.  The Company  does not  anticipate  paying  dividends on its Common
Stock in the foreseeable future.

Certain matters  contained  herein are  forward-looking  statements that involve
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: seasonality,  adverse outcome from litigation,  competitive actions, loss of
significant  customers,  timing of major  customer  shipments,  adverse  weather
conditions, retail environment, economic conditions and currency fluctuations.


RESULTS OF OPERATIONS

The Company completed the sale of Service  Cycle/Mongoose on April 28, 1997 (the
"Sale of Service  Cycle/Mongoose"),  and the Sale of  SportRack on July 2, 1997.
Accordingly,  to enhance the  comparability  of the current  year and prior year
amounts,  certain  prior year amounts  (where noted below) have been adjusted to
exclude the activity of the Service Cycle/Mongoose and SportRack businesses.

         Net Sales.  Net sales  decreased  $14.0 million to $42.6 million during
the three  months ended  December  27, 1997 as compared to $56.6  million in the
same  period of  fiscal  1997 --  primarily  the  result of the Sale of  Service
Cycle/Mongoose  and the Sale of SportRack.  Net sales for the second  quarter of
fiscal 1998  increased by 9.8% when  compared to net sales of $38.8  million for
the  same  period  of  fiscal  1997  after  adjusting  for the  Sale of  Service
Cycle/Mongoose  and the Sale of  SportRack.  Sales to mass  merchants and to the
specialty  retail  channel for the quarter  increased 14% and 6%,  respectively,
strengthened by a 32% rise in overall sales to the  international  sector.  On a
year-to-date  basis net sales decreased 27% to $86.2 million from $118.7 million
in the previous year. After adjusting for the Sale of Service Cycle/Mongoose and
the Sale of SportRack,  net sales  year-to-date have increased 1% from the prior
year.  Year-to-date  sales to the specialty retail channel increased 7% from the
prior  year,  but were  offset by a 5% decrease  in mass  merchant  sales.  This
decrease was caused by an inventory  adjustment made by a mass merchant customer
in the first  quarter of fiscal  1998 to reduce  stock from a five week to three
week supply.


The product line sales mix,  excluding  the sales of the Service  Cycle/Mongoose
and  SportRack  businesses,  for the six month and three  month  periods  are as
follows:
<TABLE>
<CAPTION>
                                              Six months ended                Three months ended
                                 -----------------------------------  ---------------------------------

                                   December 27,       December 28,      December 27,     December 28, 
                                       1997              1996               1997            1996
                                 ----------------   ----------------  ---------------  ----------------

<S>                                      <C>                 <C>              <C>                <C>
Product Line Sales Mix:
     Bicycle accessories                 54%                 56%              50%                50%
     Bicycle helmets                     44%                 42%              47%                47%
     Auto Racing helmets                  2%                  2%               3%                 3%
</TABLE>
                                       13
<PAGE>
The Company  anticipates  lower net sales in fiscal 1998 than those  achieved in
fiscal  1997,  due to the  Sale  of  Service  Cycle/Mongoose  and  the  Sale  of
SportRack,  which combined  contributed $50.8 million to net sales during fiscal
1997.

Due to the mature nature of the U.S.  market for bicycle related  products,  the
Company expects overall modest sales growth in fiscal 1998.

         Gross Margin. Gross margins were 31% of net sales in the second quarter
and in the first half of fiscal 1998,  in comparison to 28% for the same periods
in the  prior  year.  The  increase  is  primarily  due to the  Sale of  Service
Cycle/Mongoose,  which  carried  lower  margins  than the  Company's  other core
businesses.  Gross margins, when adjusted for the Sale of Service Cycle/Mongoose
and the Sale of SportRack, were 31% of net sales in the second quarter and first
half of  fiscal  1997.  Year-to-date,  gross  margins  for  bicycle  accessories
increased  100 basis  points  due to lower  freight  and  product  costs.  These
increases  were offset by a decrease in helmet  margins caused by a mix shift of
sales  volumes to lower  price point  helmets.  The  Company  anticipates  gross
margins will remain in the low 30% range for the foreseeable future.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  costs  decreased  to 27% of net sales in the  second  quarter of
fiscal  1998,  as compared to 30% in the second  quarter of fiscal  1997,  after
adjusting for the Sale of Service Cycle/Mongoose and the Sale of SportRack.  The
year-to-date  adjusted selling,  general and  administrative  costs were 26% for
fiscal 1998, as compared to 28% for the prior year. The  improvement is a result
of the Company's  restructuring  activities and management's concerted effort to
reduce the  Company's  overall  cost  structure.  Actual  selling,  general  and
administrative  expenses were 26% of net sales, or $14.6 million, for the second
quarter of fiscal 1997, and 25% of net sales,  or $29.9  million,  for the first
half of fiscal 1997.

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  that  selling,  general  and  administrative
expenses  will  decrease  as a percent of net sales  during the third and fourth
quarters of fiscal 1998.

         Amortization  of  intangibles.  Amortization of goodwill and intangible
assets decreased to $566,000 in the second quarter and $1.2 million year-to-date
during fiscal 1998  compared to $867,000 in the second  quarter and $1.7 million
year-to-date during fiscal 1997. The decrease is a result of the Sale of Service
Cycle/Mongoose and the Sale of SportRack.

         Restructuring Charges. Restructuring charges of $1.2 million related to
the European  operations  impacted the second quarter  fiscal 1998 results.  The
Company closed its Paris,  France sales and marketing  office in December,  1997
and consolidated these functions with its Roche La Moliere, France facility. The
key management positions of Giro Ireland and EuroBell were also consolidated.

Restructuring  charges of $1.5 million related to the fiscal 1996 organizational
and office  consolidations  impacted  the  results  for the first half of fiscal
1997. These  consolidation  activities were  substantially  completed during the
second  quarter of fiscal 1997 and yielded an  estimated  $5.0 million in annual
cost savings.

         Disposal  of  Product  Line  Adjustment.  In April  1997,  the  Company
disposed  of the  Service  Cycle/Mongoose  business  but  retained  the  related
accounts   receivables  of  approximately  $19  million.  At  the  date  of  the
disposition,  the Company  recorded a reserve of $2.5 million for  uncollectible
receivables.  The Company has  collected a majority of the  receivables  and has
determined  a reserve of $1.2  million was more  appropriate.  Accordingly,  the
Company reversed $1.3 million from the uncollectible  receivable reserves during
its fiscal 1998 second quarter.
                                       14
<PAGE>
         Net investment  income and interest  expense.  Net investment income of
$476,000  for the  second  quarter  of  fiscal  1998 was  relatively  stable  in
comparison  to the $500,000 of net  investment  income  earned during the second
quarter of fiscal 1997.  Year-to-date,  however,  the net investment  income has
decreased  to  $905,000  in the first half of fiscal  1998,  as compared to $2.3
million in the first half of fiscal 1997.  The decrease is due to the settlement
of an arbitration case related to the handling of certain marketable  securities
by an  outside  investment  advisor.  The  settlement  proceeds,  net of related
expenses and expected  losses to sell  certain  securities,  of $1.3 million are
included in net investment income in the first quarter of fiscal 1997.  Interest
expense  decreased  over 30% to $1.2  million  for the second  quarter  and $2.3
million for the first half of fiscal  1998,  compared  to $1.7  million and $3.5
million  for the  comparable  prior year  periods,  due to lower  levels of debt
outstanding during fiscal 1998.

         Income taxes. The effective tax rate was 38% for the second quarter and
first  half of fiscal  1998,  and 44% for the second  quarter  and first half of
fiscal 1997.

         Net income and weighted average shares.  Net income for the fiscal 1998
second  quarter  was  $322,000  (or $0.02  per  share)  compared  to net loss of
$475,000  (or $0.03 per share) for the prior year  second  quarter.  For the six
month  period ended  December  27,  1997,  net income was $959,000 (or $0.07 per
share) compared to net loss of $472,000 (or $0.03 per share) for the same period
of the prior year.

The weighted  average number of shares  outstanding  for the three month and six
month  periods  ended  December 27, 1997 and December 28, 1996 were 13.8 million
and 13.7 million, respectively.
                                       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
                           (a)     The 1997  Annual Meeting  of  Stockholders of
                                   Bell Sports  Corp. was held November 19, 1997
                           (b)     Not required
                           (c)     The  following  matters  were voted  upon and
                                   approved at the meeting: 
                                   (i)  The re-election of Class  III  Directors
                                        to serve until the 2000 Annual  Meeting;
                                        nominees were Arnold L. Chavkin, Phillip
                                        D. Matthews and Christopher Wright
                                   (ii) The  appointment of Price  Waterhouse as
                                        the independent  public accountants  for
                                        the Company  for its fiscal  year ending
                                        June 27, 1998

                           Summary of proxies voted:
<TABLE>
<CAPTION>
                                                                                              Broker
                                                                                              ------
                                   Proposal                For        Against     Withheld    Non-votes
                                   --------             ----------    -------     --------    ---------
<S>                                                     <C>           <C>         <C>               <C>
                             (i)   Chavkin              11,297,709       ---      184,396           ---
                             (i)   Matthews             11,295,731       ---      186,374           ---
                             (i)   Wright               11,296,387       ---      185,718           ---
                             (ii)  Accountants          11,397,968    66,457       17,600            80


                           Total shares voted           11,482,106
                           Total shares unvoted          2,405,057
</TABLE>

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:    January 22, 1998


                                              BELL SPORTS CORP.




/s/  Linda K. Bounds          Senior Vice President and Chief Financial Officer
-------------------------              (Principal financial officer)
      Linda K. Bounds


/s/  John A. Williams         Vice President of Finance and Corporate Controller
-------------------------              (Principal accounting officer)
      John A. Williams                 
                                       17
<PAGE>
                                BELL SPORTS CORP.
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number           Description
---------------------------------------------------------------------------------------------------------
<S>              <C>                              
10.1*            Amendment to Severance Agreement dated December 8, 1997 between the Registrant,
                 Bell Sports, Inc. and Terry G. Lee

10.2*            Noncompetition Agreement dated December 8, 1997 between the Registrant, Bell
                 Sports, Inc. and Terry G. Lee

10.3*            Amendment to Severance Agreement dated December 8, 1997 between the Registrant,
                 Bell Sports, Inc. and Howard A. Kosick

10.4*            Memorandum of Understanding dated December 10, 1997 between Registrant, Bell
                 Sports, Inc. and Howard A. Kosick

10.5*            Amendment to Severance Agreement dated December 8, 1997 between the Registrant,
                 Bell Sports, Inc. and Robert Alan McCaughen

10.6*            Memorandum reference Employment Outline for Bill Bracy dated November 26, 1997

10.7*            Severance Agreement dated December 1, 1997 between the Registrant, Bell Sports,
                 Inc. and Bill Bracy

11*              Statement re: computation of per share earnings

27*              Financial Data Schedule
</TABLE>

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

* Filed herewith
                                       18