<PAGE>
 
                      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        September 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    November 6, 1998           800,971 
Class B Common Stock, $.01 par value    November 6, 1998             none
Class C Common Stock, $.01 par value    November 6, 1998             none

                                       1
<PAGE>
 
                               BELL SPORTS CORP.
                              INDEX TO FORM 10-Q

                                    PART 1

<TABLE> 
<CAPTION> 
                                                                                           Page
                                                                                          Number
                                                                                          ------
<S>                                                                                       <C> 
Bell Sports Corp. and Subsidiaries Consolidated Balance Sheets                     
  as of September 26, 1998 and June 27, 1998                                                3

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

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

Notes to Consolidated Financial Statements                                                6 - 10

Management's Discussion and Analysis of
  Financial Condition and Results of Operations                                          11 - 14


                                    PART II

Items 1 to 6                                                                             15 - 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 and per share data)


<TABLE> 
<CAPTION> 
                                                                                          September 26,               June 27,
                                                                                              1998                     1998
                                                                                     ----------------------    ---------------------
                                                                                                       (unaudited)
<S>                                                                                  <C>                       <C> 
ASSETS
------
Current assets:
   Cash and cash equivalents                                                                      $13,593                  $45,093
   Accounts receivable                                                                             42,824                   63,472
   Inventories                                                                                     40,837                   39,679
   Deferred taxes and other current assets                                                         10,989                   12,234
                                                                                        -----------------        -----------------
         Total current assets                                                                     108,243                  160,478
                                                                                                                                  
Property, plant and equipment                                                                      19,370                   20,636
Goodwill                                                                                           53,824                   54,292
Intangibles and other assets                                                                       19,208                   11,661
                                                                                        -----------------        -----------------
         Total assets                                                                            $200,645                 $247,067
                                                                                        =================        =================
                                                                                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                              
------------------------------------                                                                                              
Current liabilities:                                                                                                              
   Accounts payable                                                                                $6,862                $   7,663
   Accrued compensation and employee benefits                                                       2,163                    5,541
   Accrued expenses                                                                                16,004                   16,158
   Notes payable and current maturities of long-term                                                                              
      debt and capital lease obligations                                                              478                      679
                                                                                        -----------------        -----------------
         Total current liabilities                                                                 25,507                   30,041
                                                                                                                                  
Long-term debt                                                                                    149,265                   86,625
Capital lease obligations and other liabilities                                                     2,692                    2,142
                                                                                         -----------------       ----------------- 
         Total liabilities                                                                        177,464                  118,808 
                                                                                        -----------------        ----------------- 
                                                                                                          
Commitments and contingencies                                                                                                     

Stockholders' equity:                                                                                                             
   Series A Preferred Stock; 6% cumulative, $.01 par value; authorized 1,500,000                   49,505 
     shares, 970,873 shares issued and outstanding at September 26, 1998                                                          
   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                             8
     shares issued and outstanding at September 26, 1998                                                                          
   Class B Common Stock; $.01 par value; authorized 150,000 share, none issued                                                    
   Class C Common Stock; $.01 par value; authorized 50,000 share, none issued                                                     
   Common stock; $.01 par value; authorized 25,000,000 shares; issued and                                                      144
     outstanding: 14,410,508 and 13,915,436 shares at June 27, 1448, respectively                                                 
   Additional paid-in capital                                                                      (8,479)                 143,905
   Accumulated other comprehensive income                                                            (832)                  (1,111)
   Accumulated deficit                                                                            (17,021)                  (9,461)
                                                                                        -----------------        -----------------
                                                                                                   23,181                  133,477
   Treasury stock, at cost, none at September 26, 1998 and                                                                         
       495,072 shares at June 27, 1998                                                                                      (5,218)
                                                                                        -----------------        -----------------
         Total stockholders' equity                                                                23,181                  128,259
                                                                                        -----------------        ------------------

         Total liabilities and stockholders' equity                                              $200,645                 $247,067 
                                                                                        =================        ==================
</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> 
                                                                                           Three Months Ended
                                                                              ---------------------------------------------

                                                                                September 26, 1998          September 27, 1997
                                                                              -----------------------     -----------------------
            <S>                                                               <C>                         <C> 
            Net sales                                                                       $40,918                     $43,632
            Cost of sales                                                                    27,374                      30,155
                                                                              -----------------------     -----------------------

            Gross profit                                                                     13,544                      13,477

            Selling, general and administrative expenses                                     11,384                      11,075
            Amortization of goodwill and intangible assets                                      562                         636
            Transaction costs                                                                11,474
            Net investment income                                                              (601)                       (429)
            Interest expense                                                                  2,538                       1,167
                                                                              -----------------------     -----------------------

            (Loss) income before income taxes                                               (11,813)                      1,028
            Benefit (provision) for income taxes                                              1,366                        (391)
                                                                              -----------------------     -----------------------

            (Loss) income before extraordinary items                                        (10,447)                        637
            Extraordinary item:
            Gain on early extinguishment of debt, net of                                      
                taxes of $2,006                                                               2,887
                                                                              -----------------------     -----------------------
            Net (loss) income                                                                (7,560)                        637
            Foreign currency translation adjustment,
              net of tax                                                                        279                         (78)
                                                                              -----------------------     -----------------------
            Comprehensive (loss) income                                                     $(7,281)                       $599
                                                                              =======================     =======================
</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> 
                                                                                             Three Months Ended
                                                                               --------------------------------------------------

                                                                                 September 26, 1998         September 27, 1997
                                                                               ------------------------    -----------------------
<S>                                                                            <C>                         <C> 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
  Net cash provided by operating activities                                                   $13,192                    $24,171
                                                                               ------------------------    -----------------------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
  Capital expenditures                                                                         (1,233)                    (1,041)
  Expenditures to acquire intangible assets                                                    (7,581)
  Proceeds from the sale of SportRack                                                                                     13,427
                                                                               ------------------------    -----------------------

     Net cash provided by (used in) investing activities                                       (8,814)                    12,386
                                                                               ------------------------    -----------------------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                                                                     667
  Proceeds from issuance of senior subordinated notes                                         110,000
  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                                                           (62,500)
  Payments on notes payable, long-term debt and capital leases                                   (136)                       (86)
  Net payments on line of credit agreement                                                       (248)                   (19,971)
                                                                               ------------------------    -----------------------

     Net cash used in financing activities                                                    (35,679)                   (19,390)
                                                                               ------------------------    -----------------------

Effect of exchange rate changes on cash                                                          (199)                         2
                                                                               ------------------------    -----------------------

Net increase (decrease) in cash and cash equivalents                                          (31,500)                    17,169

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

Cash and cash equivalents at end of period                                                    $13,593                    $46,177
                                                                               ========================    =======================
</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

Bell Sports Corp. and its wholly-owned subsidiaries including Euro Bell S.A.
(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 and a supplier of bicycle accessories worldwide. Recently, the
Company began 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").

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

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 first quarter in
1999 and 1998 had thirteen weeks.

UNAUDITED INFORMATION AND BASIS OF PRESENTATION
-----------------------------------------------
The consolidated balance sheet as of September 26, 1998 and statements of
operations and of 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 27, 1998, June 28, 1997 and
June 29, 1996 which are included in the Company's 1998 Annual Report on Form 10-
K.

ACCOUNTS RECEIVABLE
-------------------
Accounts receivable at September 26, 1998 and June 27, 1998 are net of
allowances for doubtful accounts of $1.5 million and $1.7 million, respectively.

PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment at September 26, 1998 and June 27, 1998 are net of
accumulated depreciation of $21.7 million and $21.8 million, respectively. 
Depreciation expense for the first quarter was $1.4 million in both fiscal 1999 
and fiscal 1998.

                                       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.

NOTE 3 - ACCOUNTING CHANGES

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. 

NOTE 4 - INVENTORIES

Inventories consist of the following 
components (in thousands):

                                       September 26,      June 27,
                                           1998             1998
                                       -------------   ----------------
Raw materials                           $ 4,771           $   3,539
Work in process                           2,215               2,010
Finished goods                           33,851              34,130
                                       -------------   ----------------
     Total                              $40,837           $  39,679
                                       =============   ================

NOTE 5 - COMMITMENTS 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.

                                       7
<PAGE>
 
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 post-trial motions to set aside the jury's
verdict, which were heard on August 6, 1998. If the motions are denied, the
Company intends to appeal the original judgment.

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 intends to
file 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
had a conflict of interest which caused them, and the Company's then 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.

                                       8
<PAGE>
 
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.

In another unrelated matter, the Company recently received a General Notice
Letter from USEPA under CERCLA for the Casmalia disposal site in Santa Barbara
County, California. USEPA apparently has identified the Company as a potentially
responsible party at the site. The Company has no further information at this
time about the basis for USEPA's assertion. Accordingly, it is not possible at
this time to evaluate the merits of the claim or to provide an estimate as to
potential exposure.

NOTE 6 - 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 in a private placement transaction.
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 totaling $15.0 million in
a private placement transaction. Interest on the Discount Notes is payable 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 $35.2 million as of September 26, 1998. As of September 26, 1998, 
there were no outstanding borrowings under the Credit Agreement.

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.

                                       9
<PAGE>
 
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 September 26, 1998, the Company was in compliance with or had
obtained waivers for all bank covenants.

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

                                                 September 26,      June 27,
                                                    1998              1998
                                               ---------------    ------------  
Notes                                             $110,000
Debentures                                          23,750           $86,250
Discount Notes                                      15,000
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%                 859               936
                                                  --------           -------
                                                   149,609            87,186
Less: Current maturities                              (344)             (561)
                                                  --------           -------
Total long-term debt                              $149,265           $86,625
                                                  ========           =======

NOTE 7 - 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 shall be 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 shall not have received the full dividends, then
such dividends shall cumulate, 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 shall remain unpaid.

STOCK OPTIONS
-------------
On August 17, 1998, the Company granted the 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 certain member of management. The options are
immediately exercisable and must be exercised 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.

NOTE 8 - DISPOSITIONS

In September 1998, the Company sold the assets of its domestic foam molding
facility in Rantoul, Illinois, and entered into a sublease with the purchaser.
In addition, the Company entered into an agreement with the purchaser pursuant
to which the purchaser has agreed to provide the Company with foam helmet liners
and certain related components. The Company recorded a charge in fiscal 1998 of
approximately $0.6 million in connection with the sale and related
reorganization of the Company's domestic foam molding facility. No material gain
or loss was recognized upon consummation of the sale in September 1998.


                                       10
<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. Bell Sports is also a leading supplier of auto racing helmets and a
supplier of bicycle accessories worldwide. 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 decreased 6% to $40.9 million in the fiscal first quarter
of fiscal 1999 from $43.6 million in the fiscal 1998 first quarter -- primarily
due to lower mass merchant bicycle helmet and accessories sales in the U.S. and
in Europe. The Company believes a portion of the decrease in sales during the
first quarter of fiscal 1999 was attributable to differences in the timing of
orders between periods.

For both the fiscal 1999 and fiscal 1998 first quarter, bicycle accessories,
bicycle helmets and auto racing helmets represented approximately 57%, 41% and
2%, respectively, of the Company's net sales.

GROSS MARGIN. Gross margins increased to 33% of net sales during the three-month
period ended September 26, 1998 from 31% of net sales in the comparable prior
year period. The increase is due to the continued improvement in the Company's
manufacturing and distribution efficiency.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative costs
increased to 28% of net sales, or $11.4 million, in the first quarter of fiscal
1999 compared to 25% of net sales, or $11.1 million in the first quarter of
fiscal 1998. Selling, general and administrative expenses increased as a 
percentage of net sales in the fiscal 1999 first quarter due to the inclusion of
costs associated with the introduction of the Company's fiscal 1999 snow ski and
snow board helmet lines and compensation expense 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.

AMORTIZATION OF INTANGIBLES. Amortization of goodwill and intangible assets
decreased to $562,000 in the Company's first quarter of fiscal 1999 compared to
$636,000 for the comparable prior year period.

TRANSACTION COSTS. Costs related to the Bell Merger totaled $11.5 million. The
Company completed the Bell Merger in August 1998 and does not expect to incur
any material additional costs related to the Bell Merger.

                                      11
<PAGE>

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. Accordingly, the Company realized an extraordinary gain,
stated on an after-tax basis and net of related fees and expenses, of $2.9
million.

NET INVESTMENT INCOME AND INTEREST EXPENSE. Net investment income increased to
$601,000 in the first three months of fiscal 1999 compared to $429,000 in the
first quarter of fiscal 1998 due to higher cash balances being invested at the
beginning of the fiscal period. The Company's cash balances decreased after the
Bell Merger.

Interest expense increased to $2.5 million in the first quarter of fiscal 1999
from $1.2 million in the comparable prior year period due to the issuance of
$125 million in debt during August 1998 partially offset by a $62.5 million
reduction in debt pursuant to the Tender Offer, also completed in August 1998.

INCOME TAXES. The effective tax rate was 9% for the first quarter of fiscal 1999
and 38% for the first quarter of fiscal 1998. The decrease is attributable to
the non-deductibility of Bell Merger costs. The Company anticipates the
effective tax rate for the remainder of fiscal 1999 will be 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 $82.7 million at
September 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 $1.2 million in the fiscal 1999 first
quarter compared to $1.0 million in the fiscal 1998 first quarter. The Company
estimates it will spend 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 grants to various financial institutions a
security interest in substantially all of the tangible and intangible assets of
the Company, as well as a portion of the capital stock 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 September 26, 1998, the Company was in compliance with or had
obtained waivers for all bank covenants.

The Credit Agreement expires in August 2003. As of September 26, 1998, there
were no outstanding borrowings under the Credit Agreement, however, based on the
provisions of the Credit Agreement, the Borrower could have borrowed a maximum
of $35.2 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.

                                      12
<PAGE>
 
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 failure of 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 and Bell Sports
Australia are currently year 2000 compliant. The computer software programs of
Giro Ireland are currently being upgraded to be year 2000 compliant by December
1998. The computer software programs of EuroBell are not currently year 2000
compliant but are expected to be converted to a year 2000 compliant system or
otherwise made year 2000 compliant before the end of 1999.

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 September 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 December 1998. 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 September 26, 1998
and does not expect to incur significant additional costs in order to upgrade
its Non-IT Systems to year 2000 compliance.

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. The 

                                       13
<PAGE>
 
Company believes based on the responses it has received from its customers 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") will begin 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 is required to 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 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: expected sales, profitability, cash flow, 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.

                                       14
<PAGE>

                               BELL SPORTS CORP.

                                    PART II


ITEM 1                Legal Proceedings
                      None

ITEM 2                Changes in Securities
                      (c)   Pursuant to the Agreement and Plan of
                            Recapitalization and Merger dated February 17, 1998
                            and amended April 8, 1998 by and between HB
                            Acquisition and the Company, the Company issued (i)
                            436,893 shares of Series A Preferred Stock of the
                            Company ("Company Preferred Stock") and 360,437
                            shares of Class A Common Stock ("Company Common
                            Stock") to each of Charlesbank Bell Sports Holdings,
                            Limited Partnership ("Charlesbank") and Brentwood
                            Associates Buyout Fund II, LP ("Brentwood") and (ii)
                            97,087 shares of Company Preferred Stock and
                            80,097 shares of Company Common Stock to CB Capital
                            Investors, L.P. ("CBCI") in exchange for an equal
                            number of shares of Series A Preferred Stock of HB
                            Acquisition ("HB Acquisition Preferred Stock") and
                            Common Stock of HB Acquisition ("HB Acquisition
                            Common Stock"). In connection with the Bell Merger,
                            the Company also issued to Mary George options to
                            purchase 20,511 shares of Company Preferred Stock
                            and 16,921 shares of Company Common Stock (the
                            "George Options") in exchange for options to
                            purchase 20,511 shares of HB Acquisition Preferred
                            Stock and 16,921 shares of HB Acquisition Common
                            Stock. The exercise price of the George Options is
                            $36.15 per share of Company Preferred Stock and $.44
                            per share of Company Common Stock. The final
                            exercise date of the George Options is August 27,
                            2006. Neither Company Preferred Stock nor Company
                            Common Stock is convertible into other equity
                            securities of the Company. The issuances of Company
                            Preferred Stock and Company Common Stock to
                            Charlesbank, Brentwood and CBCI as well as the
                            George Options were made pursuant to Rule 506 under
                            Regulation D of the Securities Act of 1933, as
                            amended.

ITEM 3                Defaults Upon Senior Securities
                      None

ITEM 4                Submission of Matters to a Vote of Security Holders
                      (a)   A Special Meeting of Stockholders of Bell Sports
                            Corp. was held on August 11, 1998
                      (b)   Not required
                      (c)   To approve and adopt the Agreement and Plan of
                            Recapitalization and Merger among Bell Sports Corp. 
                            and HB Acquisition Corporation

                      Summary of proxies voted:

                                                                    Broker
                          For          Against        Abstain      Non-Votes
                       10,053,064       09,438        33,007         0

                      Immediately subsequent to the consummation of the Bell
                      Merger, the stockholders of the Company, by action by
                      unanimous written consent in lieu of a meeting, adopted
                      resolutions 1) increasing the number of authorized shares
                      of the Company to 2,600,000, consisting of 1,500,000
                      shares of preferred stock and 1,100,000 shares of common
                      stock; 2) approving an amendment to the Company's
                      certificate of incorporation designating 900,000 shares of
                      Class A common stock, 150,000 shares of Class B common
                      stock and 50,000 shares of Class C common stock,
                      authorizing the filing of an amended and restated
                      certificate of incorporation (the "Amended and Restated
                      Certificate") to effect this amendment and approving and
                      adopting the Amended and Restated Certificate; 3)
                      converting all then-outstanding shares of common stock of
                      the Company to Class A common stock upon filing of the
                      Amended and Restated Certificate; 4) increasing to eight
                      the number of directors constituting the board of
                      directors of the company (the "Board") and electing
                      directors of the Company; 5) appointing a chairman of the
                      Board; 6) authorizing the Board to act on behalf of the
                      Company in its capacity as sole shareholder of Bell
                      Sports, Inc.; and 7) providing general authorization for
                      the officers of the Company to act on behalf of the
                      Company.

ITEM 5                Other Information
                      None

ITEM 6                Exhibits and Reports on Form 8-K

                      (a)   Exhibit Index                      Page  17

                      (b)   Current Report on Form 8-K dated August 10, 1998 (as
                            amended on August 12, 1998) Current Report on
                            Form 8-K dated August 17, 1998


                                       15
<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:    NOVEMBER 9, 1998
      -------------------

                               BELL SPORTS CORP.

/S/ ROBERT E. COLLINS     Vice President and Chief Financial Officer 
----------------------      
    Robert E. Collins     (Principal financial and accounting officer)


                                       16
<PAGE>
 
                               BELL SPORTS CORP.
                               INDEX TO EXHIBITS


EXHIBIT
NUMBER            DESCRIPTION
-------------------------------------------------------------------------------
10.1*              Manufacturing and Product Development Agreement between Bell
                   Sports, Inc. and Pactuco, Inc. dated September 22, 1998

10.2*              Bell Sports Corp. Series A Preferred Stock Option Agreement 
                   between the Registrant and Mary J. George dated August 17,
                   1998

10.3*              Bell Sports Corp. Class A Common Stock Option Agreement
                   between the Registrant and Mary J. George dated August 17,
                   1998

27*                Financial Data Schedule


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

* Filed herewith


                                       17