HOCKEY CO - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

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 0-19596
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THE HOCKEY COMPANY
(Exact Name of Registrant as Specified in Its Charter)

Delaware 13-36-32297
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

3500 Boulevard De Maisonneuve, Suite 800 H3Z 3C1
Montreal, Quebec, Canada (Zip Code)
(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (514) 932-1118

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
--------------------- --------------------------------
None None

Securities registered pursuant to Section 12(g) of the Act:

NONE

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

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

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes ____ No __X__

The common stock of the registrant is not publicly registered or traded and,
therefore, no market value of the common stock held by affiliates or
non-affiliates can be readily ascertained.

As of March 1, 2003, 7,040,523 shares of the registrant's common stock,
$.01 par value per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE.

None

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TABLE OF CONTENTS

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PART I

ITEM 1. BUSINESS

INDUSTRY OVERVIEW

The sporting goods industry serves a large and growing market which was
estimated to represent approximately $49.0 billion in the United States in 2002,
an increase of approximately 2.8% over 2001. Within the sporting goods industry,
we primarily compete in the hockey equipment and related apparel market. The
hockey equipment and related apparel market is seasonal in nature, with the
third and fourth quarters of the calendar year representing the largest volume
of sales. We estimate the size of this worldwide market to be $677 million in
sales in 2001. We are the leader in this market with an approximate market share
of 30%. Our principal competitor in this market is Bauer Nike Hockey Inc., a
subsidiary of Nike, Inc., with an estimated market share in 2001 of 19%. The
remaining market is highly fragmented.

SPORTING GOODS INDUSTRY TRENDS

BABY BOOMERS. Baby boomers currently represent approximately 28% of the
total U.S. population. Baby boomers are entering their peak earning years, have
high disposable income and high-level leisure time, therefore stimulating
expenditures in the sporting goods industry. It is estimated that the mature
market, ages 55 and older, will grow by approximately 40% between 2000 and 2010,
representing an opportunity for higher end products.

RECREATION AND EXERCISE. There is heightened awareness of the
importance of recreation and exercise in general for health benefits.
Consequently, this trend has contributed to increased consumer spending in the
sporting goods industry.

INTERNATIONAL MARKETS. According to Sporting Goods Intelligence, a
publication of the National Sporting Goods Association, the sporting goods
markets in the U.S., Europe and Japan in 2000 represented $45.5 billion, $33.6
billion and $18.0 billion, respectively, in retail volume. The Sporting Goods
Manufacturers' Association has projected that total industry sales in the U.S.
measured in wholesale dollars, including footwear, apparel and equipment, will
grow by 2.9% to a record $50.5 billion in 2003. This would mark the second year
of consistent growth despite otherwise difficult economic conditions. Industry
sales in the U.S. grew 2.8% in 2002 to approximately $49.0 billion and reversed
a negative trend from 2001 when sales declined by 2.3%.

HOCKEY EQUIPMENT AND APPAREL INDUSTRY TRENDS

PARTICIPATION IN HOCKEY. Few sports can match the growth hockey has
enjoyed in participation and fan attendance since 1990. Between 1990 and
2002, hockey participation and fan attendance in the United States grew by
approximately 250%. More recently, according to a survey conducted by the
National Sporting Goods Association ("NSGA"), ice hockey has been the
second-fastest growing sport in the United States. From 2000 to 2001, ice
hockey showed a 13.1% increase in participants to 2.2 million participants.

VISIBILITY OF THE NHL. NHL attendance has increased over 43% since 1993
to reach over 20 million in the 2001/2002 season. Television viewing in the
United States has also increased to reach an average of 2 million viewers per
broadcast during the 2001/2002 season on ABC up from the average of 1 million
viewers per broadcast for the 1993 season.

YOUNG, AFFLUENT AND EDUCATED FANS. When compared with the National
Football League, Major League Baseball, the National Basketball Association and
NASCAR, a higher percentage of these NHL fans: are in the 18-49 age group; have
household incomes of more than $50,000; have a bachelor's degree or higher
education; have internet access; and own a personal computer. Fans are key
drivers of hockey-related apparel and, to the extent that fans are also hockey
participants, there is an opportunity for a more frequent product replacement
cycle and a likelihood that consumers will trade up for higher priced equipment
and apparel.

2

MARKET CONSOLIDATION. Retailers are increasingly focused on reducing
the number of suppliers they deal with. This favours manufacturers with a broad
product offering and has resulted in a consolidation of manufacturers in the
hockey equipment and related apparel market in recent years. This trend is
expected to continue.

OUR COMPANY

The Hockey Company (the "Company") was incorporated in September 1991
and reorganized in April 1997.

On February 9, 1999, The Hockey Company filed an amendment to change
the name of the Company from SLM International Inc. to The Hockey Company.

As of December 31, 2002, the Company completed a reorganization of its
European subsidiaries whereby a Swedish holding company, named Nordic Hockey
Company AB, was formed. Nordic Hockey Company AB, pursuant to a series of share
transfers and contributions, became the direct parent company of each of Jofa
Holding AB and KHF Sports Oy. The reorganization was undertaken in order
principally to take advantage of secure beneficial tax treatment for
intercompany financing arrangements by having a Swedish company, rather than a
U.S. company, as the direct parent of each company.

We are the world's largest designer, manufacturer and marketer of
hockey equipment and related apparel. Our primary brands, CCM, JOFA and KOHO,
are among the most widely recognized brands in hockey and we estimate that we
have approximately a 30% share of the worldwide hockey equipment and related
apparel market. We also design, manufacture and market recreational skates and
other non-hockey products. We sell our products to a diverse customer base
consisting of specialty retailers, sporting goods shops, mass merchandisers and
international distributors. We manufacture in-house at six highly efficient
facilities, four of which are located in Canada and two in Europe. In addition,
where it makes business sense, we outsource the manufacturing of certain
products. We have distribution facilities located in North America, Finland and
Sweden. Our products are sold in approximately 45 countries. For the fiscal year
ended December 31, 2002, we generated revenue of $212.7 million and EBITDA of
$29.6 million, which includes unusual or non-recurring expenses of $2.5 million.

We offer a complete line of hockey equipment, related apparel,
recreational skates and other non-hockey products. In 2002, hockey equipment
represented approximately 66% of our sales (including 2% attributable to
recreational skates and 4% to non-hockey products) and hockey-related apparel
represented approximately 34% of our sales.

We have been a National Hockey League ("NHL") licensee since 1967. We
are currently the exclusive supplier of hockey jerseys to every NHL team and
on-ice official and have the exclusive worldwide right to market authentic and
replica NHL jerseys. In addition, commencing with the 2003/2004 hockey season,
we will also become the exclusive supplier of helmets, pants, gloves, shoulder,
shin and elbow protective equipment, jerseys and socks to all teams in the
Canadian Hockey League ("CHL"). An estimated 54% of current NHL players have
previously played in the CHL. We also have a very strong presence
internationally through sponsorship agreements with most of the major ice hockey
organizations in the world, including the International Ice Hockey Federation,
Ice Hockey Federation of Russia, Slovak Association of Ice Hockey and the
national teams of Finland, Sweden, Germany, Denmark, Norway and the Czech
Republic. Our products are the most widely used by NHL players, which we believe
highlights and reinforces the marketplace's view of the innovative nature and
high quality of our equipment and apparel. As of November 2002, approximately
99% of NHL players used at least one piece of our equipment. Furthermore, every
NHL player uses our apparel. Ten of the top 17 ranked goaltenders in the NHL (as
recently rated by The Hockey News) use our goalie equipment. We are the leading
provider of protective equipment and wood sticks to NHL players. We are also the
NHL's second largest provider of other equipment, including skates, goalie
catchers and composite shafts and blades for sticks. Approximately 100 NHL
players have already switched to our new Vector one-piece composite hockey stick
since its commercial launch in the Fall of 2002.

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HOCKEY EQUIPMENT. Our comprehensive line of ice and roller hockey
equipment includes skates, protective equipment, hockey sticks and
goaltender equipment. This line provides a wide range of choices for
players at all levels of competition. Our products are sold at various
price points and range from high performance products used by
professionals in the NHL and other professional hockey leagues, to
intermediate performance products used by players of all ages and
calibre and to entry-level products for the beginner.

HOCKEY-RELATED APPAREL. Our comprehensive line of hockey-related
athletic apparel includes licensed hockey jerseys, team uniforms and
socks, licensed and branded performance apparel, outerwear, headwear
and activewear. We are also the world's largest manufacturer of team
uniforms and socks worn by players in hockey leagues, camps, schools
and associations. Our licensed and branded activewear lines include
high quality fleece wear, pants, shirts, T-shirts, polo shirts,
turtlenecks, outerwear and headwear embroidered with the NHL and/or NHL
teams' logos, CHL and other league logos and team logos.

RECREATIONAL SKATES. In the Fall of 2002, we introduced our new Comfort
Series of recreational skates. This skate is designed for women and
girls who seek a product that is warmer, more comfortable and more
stylish than a traditional figure skate. This line of products fills a
gap in the market for customers who seek an alternative to the
traditional white skate. We believe that our new Comfort Series will
accelerate the product replacement cycle by encouraging traditional
skate users to migrate to our recreational line of skates. We also
introduced our Classic Series of recreational and figure skates in the
Fall of 2002. Our Comfort Series and the figure skates in our Classic
Series are endorsed by 2002 Olympic pairs figure skating gold
medallists, Jamie Sale and David Pelletier.

OTHER NON-HOCKEY PRODUCTS. In addition to our primary hockey-related
equipment and apparel and our recreational skates, we are the exclusive
distributor of Merrell footwear, a leading outdoor footwear brand, in
Finland and Sweden. We also design, manufacture and market other
non-hockey-related equipment, including alpine skiing and equestrian
helmets.

Please refer to the Consolidated Financial Statements and related notes
included in this Form 10-K for more information on our segments.

OUR COMPETITIVE STRENGTHS

LEADING WORLDWIDE BRANDS AND MARKET POSITION. We have many of the
world's most established and widely recognized hockey brands, including CCM,
JOFA and KOHO. The CCM brand has been in existence since 1899, JOFA since 1926
and KOHO since 1964. Each brand is focused on a specific segment of the market:
CCM is one of the industry's icon brands and embodies the tradition and history
of hockey; the JOFA brand represents precision engineered Swedish equipment and
appeals to the "technically savvy" hockey player; and KOHO is our "fast," "fun,"
"irreverent" brand, largely geared to the "free-wheeling" type of player, with
an emphasis on the youth market. We estimate the worldwide hockey equipment and
related apparel market at $677 million in sales in 2001. We estimate our share
of this market at 30%. Our closest competitor's market share is estimated at 19%
and we have been steadily increasing our market share. Our new CHL agreement
will help further our market share gain in the sector going forward. The
popularity of our brands and our products is reflected in our web site activity.
According to Alexa Internet, our web sites (WWW.CCMSPORTS.COM, WWW.KOHO.COM and
WWW.JOFA.COM) are the most visited hockey equipment and related apparel web
sites worldwide.

EXCLUSIVE NHL AND CHL RELATIONSHIPS AND OTHER RELATIONSHIPS. Pursuant
to our license agreement with National Hockey League Enterprises, LP ("NHL
Enterprises"), which expires on June 30, 2005, including an option year, we are
the exclusive supplier of hockey jerseys to every NHL team and have the
exclusive worldwide right to market authentic and replica NHL jerseys. Our
jerseys are worn by every player and on-ice official in the NHL. Since the
2000/2001 NHL season, the CCM logo appears above each player's name on every
"home" NHL jersey, while the KOHO logo appears above each player's name on every
"away" and "third" NHL jersey. We are also the exclusive supplier of "on-ice"
jerseys and pants for NHL officials under the JOFA brand name.

Pursuant to a new five-year agreement, commencing with the 2003/2004
hockey season, we will also become the exclusive supplier of helmets, pants,
gloves, shoulder, shin and elbow protective equipment, jerseys and

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socks to all teams in the CHL. In addition, we will become the
exclusive supplier of pants, helmets and jerseys to all "on-ice" officials in
the CHL and the preferred supplier for licensed apparel such as headwear and
t-shirts for all 56 CHL teams. The CHL is the premier junior hockey league in
the world with 56 teams and approximately 1,300 players. An estimated
54% of current NHL players have previously played in the CHL. Most of the
56 CHL teams are located in cities which do not currently have an NHL
franchise, thereby significantly extending the reach of our brands.

We have sponsorship agreements with most of the major hockey
organizations in the world, including: the International Ice Hockey Federation,
Ice Hockey Federation of Russia, Slovak Association of Ice Hockey, national
teams of Finland, Sweden, Germany, Denmark, Norway and the Czech Republic,
American Hockey League, U.S. Hockey League, USA Hockey, East Coast Hockey League
and the West Coast Hockey League. In addition, we are an official sponsor of the
Sky Rink Youth and Adult Hockey Program at the Chelsea Piers in New York City.

In our recreational skate category, our new Comfort Series of
recreational skates and our Classic Series of figure skates, introduced in the
Fall of 2002, are endorsed by 2002 Olympic pairs figure skating gold medallists
Jamie Sale and David Pelletier.

EXTENSIVE USE OF OUR PRODUCTS IN THE NHL. Our products are the most
widely used by NHL players, which we believe highlights and reinforces the
marketplace's view of the innovative nature and high quality of our equipment
and related apparel. As of November 2002, approximately 99% of NHL players used
at least one piece of our equipment and every NHL player used our apparel. In
addition, ten of the top 17 ranked goaltenders in the NHL (as recently ranked by
The Hockey News) use our goalie equipment. We are the leading provider of
protective equipment and wood sticks to NHL players. We are also the NHL's
second largest provider of other equipment, including skates and composite
shafts and blades for sticks. Approximately 100 NHL players have already
switched to our new Vector one-piece composite hockey stick since its commercial
launch in the Fall of 2002. To further develop and maintain our leading market
position for our equipment and our brands, we have endorsement agreements with
several high visibility players including, among others, Joe Thornton (CCM) of
the Boston Bruins, Daniel Sedin (JOFA) and Henrik Sedin (JOFA) of the Vancouver
Canucks, Patrick Roy (KOHO) of the Colorado Avalanche, Mark Recchi (CCM) of the
Philadelphia Flyers, Roberto Luongo (KOHO) of the Florida Panthers, Vincent
Lecavalier (JOFA) of the Tampa Bay Lightning, Martin Brodeur (CCM) of the New
Jersey Devils and Jason Allison (CCM) of the Los Angeles Kings.

WORLD LEADER IN PRODUCT INNOVATION. We are an industry leader in
product innovation, and have dedicated significant resources to ensure our
future technological leadership. The majority of our products are developed and
commercialized in our three research and development centres located in St-Jean,
Quebec, Tammela, Finland and Malung, Sweden. The majority of our products are
developed internally through our research efforts and continued feedback from
professional and recreational players, as well as from retail customers. We also
have strong relationships with key suppliers who assist in our development
efforts. In addition, we have developed a relationship with the University of
Windsor. This relationship supports our efforts to develop equipment performance
benchmarks, as well as new materials and equipment designs. As an example, this
relationship was instrumental in the development of our new Vector one-piece
composite hockey stick. In tests performed by the University, the Vector
one-piece composite hockey stick has proven to be the leading stick for puck
velocity and durability and provides its users with unique balance properties.
Approximately 100 NHL players have already switched to our new Vector one-piece
composite hockey stick since its commercial launch in the Fall of 2002. Other
product innovations recently introduced include our new PRO Tacks skate, our
JOFA protective equipment based on the Joint Discharge Principle ("JDP"), Hyper
X and Anatomic System Design ("ASD") systems and our Air-Knit jerseys.

FULL LINE OF HOCKEY EQUIPMENT AND RELATED APPAREL. We are the only
company that offers a full line of ice and roller hockey equipment, NHL licensed
jerseys and other related apparel. Our products are sold at various price points
and range from high performance products used by professionals in the NHL and
other professional leagues worldwide, to intermediate performance products used
by youth league players, to entry-level products for the beginner. Our
comprehensive lines of products allow us to cover the full spectrum of
consumers, diversify our revenue base and optimize production capacity at our
manufacturing facilities. Further, our full line of products enhances our
relationship with our customers, who are increasingly focused on dealing with
fewer suppliers.

5

COST-EFFICIENT MANUFACTURING PROCESSES. We continuously evaluate our
manufacturing processes and use in-house manufacturing where our proprietary
technologies and processes provide us with a competitive advantage. Through the
use of proprietary technologies and extensive automation, we believe we have
developed many of the industry's most advanced hockey equipment and related
apparel manufacturing processes. We believe that we operate the industry's most
advanced skate manufacturing facility in St-Jean, Quebec, the industry's most
automated hockey stick production facility in Cowansville, Quebec and the
industry's most efficient hockey apparel production facility in St-Hyacinthe,
Quebec.

For other product lines where we do not have a distinct competitive
manufacturing advantage, we outsource production to high quality facilities,
primarily in Asia, the Czech Republic and Mexico. Approximately 62% of our
product lines by sales are currently manufactured in-house while 38% is
outsourced. In order to maintain our leading market position and continue to be
a leader in product innovation, we will continue to make our business more
flexible and less capital intensive by outsourcing the manufacturing of our
products where it makes strategic and business sense. We believe that strategic
outsourcing of selected manufacturing processes may result in reduced costs, an
improved ability to balance our manufacturing capacity and shorten the time to
market for new products. In addition, as part of a cost reduction program
initiated in 2001, we will continue to evaluate and rationalize our cost
structure and evaluate and improve the efficiency and productivity of our
operations. In December 2002, we closed three manufacturing facilities. We
estimate that the cost savings in 2002 resulting from such facility
consolidation and head count reductions implemented in connection with our cost
reduction program would have been approximately $1.5 million if implemented at
the beginning of 2002.

EXTENSIVE MULTI-CHANNEL DISTRIBUTION RELATIONSHIPS. Our products are
sold internationally to more than 6,000 customers, consisting of specialty
retailers, sporting goods shops, mass merchandisers and international
distributors. In North America, we have sales offices in Montreal, Quebec and
Branford, Connecticut. Internationally, we have sales offices in Sweden, Finland
and Norway and distributors in over 40 countries in Europe and the Far East. Our
products are sold to certain large customers by our in-house sales force, while
an extensive network of approximately 70 independent sales representatives
services other accounts. We distribute our products from distribution centers in
Canada, the United States, Finland and Sweden. In 2002, we generated
approximately 42% of our revenue in the United States, approximately 32% in
Canada, approximately 12% in Sweden and approximately 14% in Finland and other
countries. In 2002, we were awarded the "Vendor of the Year" award for both the
U.S. and Canada by Play It Again Sports, one of our largest buying groups.

STRONG AND EXPERIENCED MANAGEMENT TEAM. We have a strong and
experienced management team at the corporate and operating levels. Our senior
management has an average of 16 years experience in the hockey and sporting
goods industry.

OUR GROWTH STRATEGY

Our objectives are to grow both revenues and operating margins by
accelerating the product replacement cycle through product innovation,
maintaining our overall market leadership position and becoming the undisputed
leader in each key segment of the global market for hockey equipment and related
apparel. Key elements of our growth strategy are as follows:

DRIVE GROWTH THROUGH PRODUCT INNOVATION

Since 1937, when we introduced the revolutionary Tackaberry (Tacks)
hockey skate, through the recent launch of our 850-gram PRO Tacks skate, we have
a long history of being a leader in bringing technological advancements and
equipment innovations to the hockey industry. We will continue to drive our
growth through continued product innovation, which we believe strengthens our
brands and creates a more rapid equipment replacement cycle. Our goal is to
replace and/or refresh our products every second year. By continually
introducing innovative products, we are able to compete primarily on technology
and brand rather than on price, resulting in higher margins and stronger brand
differentiation.

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Some of our recent product innovations include:

- NEW PRO TACKS SKATE. Built with cutting-edge lightweight materials
to maximize performance and comfort, plus a revolutionary
"integrated wedge" for superior protection and support, each new
PRO Tacks skate weighs only 850 grams (a full puck lighter than
our previous high performance skate). This represents a 15%
reduction in the weight of our Pro Tacks skates.

- VECTOR HOCKEY STICK. Made completely from high performance
composite materials, our new Vector one-piece stick increases puck
velocity and is more durable than comparable models, while
offering unique balance properties. Approximately 100 NHL players
have already switched to our new Vector one-piece composite hockey
stick since its commercial launch in the Fall of 2002.

- F-I-T SYSTEM TECHNOLOGY. Our top-end Tacks and Externo skate
models feature the F-I-T System thermo-forming process. Through a
special machine at the point-of-sale, the system applies heat and
pressure to key areas of the skate boot and thermo-forms the skate
to the player's foot allowing retailers to custom fit the skate
based on the player's size, weight and style of play.

- JOFA JDP, HYPER X AND ASD EQUIPMENT. In 2003, we introduced new
JOFA protective equipment based on advanced patented technologies,
including the Joint Discharge Principle (JDP), Hyper X and
Anatomic System Design (ASD), that aim to reduce injuries. This
and other innovations have resulted in approximately 99% of NHL
players wearing at least one piece of JOFA equipment. As of
November 2002, JOFA is the only protective gear that is licensed
to bear the NHL's "Center Ice" logo.

- JERSEYS. CCM and KOHO authentic series jerseys feature our
Air-Knit jersey material (patent pending), which is recognized for
its light weight and breathability. In 2003, we introduced a new
women's series of jerseys in order to capitalize on the fact that
approximately 40% of all NHL fans are female.

- SALE & PELLETIER RECREATIONAL SKATES. Introduced in the Fall of
2002, our new Comfort Series of recreational skates and our
Classic Series of figure skates are endorsed by 2002 Olympic pairs
figure skating gold medallists, Jamie Sale and David Pelletier.
Our Comfort Series is designed for women and girls who seek a
product that is warmer, more comfortable and more stylish than a
traditional figure skate product. Our Comfort Series skates
feature an endo-skeletal structure for comfort and support,
brushed suede/rhombic mesh for style and durability and padded
brushed velvet for added comfort and warmth.

EXPAND WITH NEW PRODUCT CATEGORIES

We continually seek new product categories that will allow us to
increase our current revenue base. Such initiatives include expanding into new
branded and licensed apparel markets. Examples include a CCM vintage apparel
line, women's replica jerseys, performance apparel and collectable mini-jerseys.
Under our New NHL License Agreement, we also have obtained the right to use NHL
league and team logos on certain ice hockey products which we believe will
provide additional sales opportunities. In addition, there are a number of
hockey-related accessory products that we believe we can successfully bring to
market. Finally, we plan to increase revenues through the licensing of our
brands for other products.

EXPAND INTERNATIONAL SALES

We believe that there exists untapped demand for our products in
international hockey markets, especially in the former Soviet Bloc countries and
in Central Europe. Consequently, we recently commenced a new distribution
relationship with a company in Russia. Russia alone has the potential to be the
third largest hockey market in the world and participation continues to
increase. Our sales of hockey sticks, CCM brand hockey skates and apparel are
increasing in Russia. Our gross sales in the former Soviet Bloc countries
increased from $1.2 million in 1998 to $6.0 million in 2002.

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PURSUE STRATEGIC ACQUISITIONS

We plan to supplement our internal growth with selected strategic
acquisitions that would complement our product offering, benefit from our strong
brands or leverage our broad and diverse distribution network. The Corporation
has no agreements regarding, nor has it entered into any formal negotiations
with respect to, any material acquisitions as of the date hereof.

OUR PRODUCTS

We manufacture and market a fully integrated line of hockey equipment
and related apparel. Our hockey equipment product lines include: ice hockey and
roller hockey skates, hockey sticks, protective body equipment and gloves,
helmets, pants and accessories, and goaltender equipment. Our hockey-related
apparel products include: NHL licensed hockey jerseys, team uniforms and socks,
and licensed and branded activewear. We also manufacture and market recreational
and non-hockey products, including recreational skates.

HOCKEY EQUIPMENT PRODUCT LINES

ICE HOCKEY AND ROLLER HOCKEY SKATES. We manufacture and market a wide
range of ice hockey skates primarily under the CCM brand name. The tradition of
CCM skates, first introduced to the market in 1905, is interwoven throughout the
history of ice hockey and the NHL and is led by two premium lines of skates; the
Tacks series and the Externo series. The two lines offer distinct product
features and are targeted at different market segments. They are both compatible
with CCM's F-I-T System technology. We manufacture all of our high end ice
hockey skates and outsource all of our entry level ice hockey, roller hockey and
figure skates. We focus on marketing premium roller hockey skates targeted at
high price points. In addition, we market six different models of figure skates
under the CCM and JOFA brands.

HOCKEY STICKS. We believe that we are the premier manufacturer of
hockey sticks and set the industry standards for quality, innovation and
performance. We market a wide range of hockey sticks incorporating various
materials, designs and performance characteristics. Our sticks are sold under
the CCM, JOFA and KOHO brands and the Titan and Canadien sub-brands. Led by the
technologically advanced Vector one-piece composite stick, our product line
ranges from high performance composite sticks, shafts and blades to entry-level
wood constructions.

PROTECTIVE BODY EQUIPMENT AND GLOVES. We market a variety of protective
body equipment, including shoulder pads, shin guards, elbow pads and gloves
under the CCM, JOFA and KOHO brands. CCM gloves and body protective equipment
are marketed under the Tacks sub-brand. JOFA is the only brand carrying the NHL
"Center Ice" logo. Its patented JDP, ASD and Hyper X technologies make it the
protective brand of choice for 99% of NHL players.

HELMETS. We market our helmets under the CCM and JOFA labels, which
have been two of the leading brands of helmets for over 30 years. More players
in the NHL wear our helmets than any other competitor's products. Our helmets
are certified by CSA International and the Hockey Equipment Certification
Council and prominently display the CCM and JOFA brand names.

PANTS AND ACCESSORIES. We market hockey pants under the CCM, JOFA and KOHO
labels. CCM branded pants also carry the Tacks sub-brand name. At the NHL level,
CCM pants are worn by more players than any other brand. In addition, we market
several accessories, such as carry bags and equipment for officials.

GOALTENDER EQUIPMENT. We produce a fully integrated line of goaltender
equipment. We market our goaltender facemasks, catch mitts and blockers, pants,
goaltender arm and body protectors and leg pads under the CCM and KOHO brands.
Both brands are supported by industry-renowned goalie equipment innovators:
Brian Heaton for CCM and Michel Lefebvre for KOHO, who help promote our products
and design new equipment. Ten of the top 17 ranked goaltenders in the NHL (as
recently rated by The Hockey News) use our goalie equipment.

8

HOCKEY-RELATED APPAREL PRODUCTS

LICENSED HOCKEY JERSEYS. We have supplied NHL teams with authentic jerseys for
over 35 years. Pursuant to our Current NHL License Agreement, we have the
exclusive right to provide authentic jerseys used by every team in the NHL and
have the exclusive right to market authentic and replica jerseys of all 30
teams. In addition to our Current NHL License Agreement, under our license
agreement with the NHLPA, we have the right to market these jerseys with the
names and numbers of NHL players. In addition to our Current NHL License
Agreement, we also maintain agreements to provide jerseys to professional teams
in other leagues. Beginning with the 2003/2004 season, we will become the
exclusive jersey supplier to all 56 CHL teams.

Although we generate revenue from the sale of authentic jerseys to the consumer
market, replica jersey sales into the consumer market account for an estimated
93% of our licensed jersey revenue. Replica jerseys are similar to authentic
jerseys and may also display team names and crests but incorporate different
fabrics and features than authentic jerseys. Our authentic jerseys incorporate
Pro-Weight Air-Knit and Ultrafil fabric, high quality crests, a fighting strap
and reinforced stitching on all seams and hems. Youth and adult replica jerseys
feature Mid-Weight Air-Knit fabric and child/toddler jerseys feature traditional
Suprafil fabric.

TEAM UNIFORMS AND SOCKS. We sell non-team identified team uniforms and socks
that are primarily used by organized leagues, amateur hockey associations and
schools. The majority of these jerseys are of replica quality and are sold
through retail channels. We also produce hockey socks for both professional and
recreational markets.

LICENSED AND BRANDED ACTIVEWEAR. We offer a high quality line of performance
apparel, outerwear, activewear, T-shirts and headwear bearing our brands, the
NHL and/or NHL teams' logos and other league and team logos. We market these
products pursuant to several license agreements with a variety of organizations,
including the NHL, major colleges and universities and USA Hockey. We outsource
the production of all of our activewear products.

RECREATIONAL SKATES. Our line of recreational skates includes traditional figure
skates and other recreational skates. Our new Comfort Series of recreational
skates, designed for women and girls who seek a product that is warmer, more
comfortable and more stylish than a traditional figure skate and our Classic
Series of recreational and figure skates were introduced in the Fall of 2002.
Our Comfort Series and the figure skates in our Classic Series are endorsed by
2002 Olympic pairs figure skating gold medallists, Jamie Sale and David
Pelletier.

OTHER NON-HOCKEY PRODUCTS

In addition to our primary hockey-related equipment and apparel and our
recreational skates, we also design, manufacture and market other equipment,
including alpine skiing and equestrian helmets. In addition, we are the
exclusive distributor of Merrell footwear, a leading outdoor footwear brand, in
Finland and Sweden.

OUR BRANDS

We conducted in-depth marketing studies to gain insight into customers'
preferences of our hockey brands and provide a basis for our multiple brand
strategy. Our market research has demonstrated that our three main brands, CCM,
JOFA and KOHO, maintain distinct brand identities in the marketplace and appeal
to different consumer segments. Our multiple brand strategy allows us to respond
to the needs of the whole market and target different market segments and price
points which would otherwise be difficult with a single brand strategy. We
differentiate each of our brands through their unique appearance and their
distinct performance and construction attributes. We position each of our brands
in the marketplace as follows:

CCM. CCM, established in 1899, is one of the industry's icon brands and
embodies the tradition and history of hockey. The CCM name represents a century
of tradition combined with state-of-the-art technology. CCM products are sold
across the full spectrum of the pricing range, covering all key retail price
points.

JOFA. The JOFA brand, established in 1926, represents precision
engineered Swedish equipment and appeals to the "technically savvy" hockey
player. JOFA products are sold at the mid to above premium point of the pricing
range.

9

KOHO. KOHO, established in 1964, is our "fast," "fun," "irreverent"
brand, largely geared to the "free-wheeling" type of player, with emphasis on
the youth market. The KOHO brand is likely to appeal to the consumer that
identifies with extreme sports, and is considered a "cool" and stylish brand.
KOHO products are primarily sold at the mid to low point of the pricing range.

Working with advertising agencies, we created individual slogans and
marketing campaigns for each of the CCM, JOFA and KOHO brands that embody these
brands' unique identities and key attributes. We have introduced the slogan
"when you're born to play" to reinforce CCM's attributes of tradition and
authenticity. Consistent with JOFA's attribute of precise Swedish engineering,
we have created the slogan "smart hockey." KOHO's slogan, "a whole new game,"
reinforces the brand's irreverent quality. Our advertising campaigns are
designed to clearly communicate the distinct image of each of our main brands.

SALES AND MARKETING

Our sales and marketing effort is based on a strategy internally
referred to as the "Power Triangle". At the cornerstone of this strategy is our
first goal to bring innovative products to market every year. Second, we provide
validation of our new products through use by NHL and other elite players.
Third, we use various media to promote and reinforce our brands and make our
products known to the consumer and to the trade.

ELITE ATHLETE USAGE. We believe that we have a unique market position
when it comes to validating our products through elite athlete usage. The strong
penetration of our products in the NHL, our Current NHL License Agreement, our
New NHL License Agreement and our other major alliances and sponsorship
agreements allow us to highlight the advanced performance features of our
products and provide a high level of exposure for our brands through elite
athletes. On March 7, 2003, CCM was awarded the NHL's "All-Star Player" trophy
for excellence in sports marketing. CCM won this award for its Externo Joe
Thornton campaign, based on its "Best Use of NHL Players" and "Best NHL Partner
Activation" using NHL athletes. We intend to leverage existing relationships and
enter into new agreements and alliances to continue to promote our products.

Some key elements of our elite athlete usage strategy include:

- EXCLUSIVE NHL LICENSE AGREEMENT. We are the exclusive supplier of
hockey jerseys to every NHL team and have the exclusive worldwide
right to market authentic and replica NHL jerseys. Our jerseys are
worn by every player and on-ice official in the NHL.

- NHL MARQUEE PLAYER ENDORSEMENT CONTRACTS. We have endorsement
agreements with approximately 20 NHL star players that allow us to
use their names and likeness for communication purposes and
require them to be available for personal appearances.

- NHL USAGE. Our products are the most widely used by NHL players.
As of November 2002, approximately 99% of NHL players used at
least one piece of our high performance equipment and every NHL
player used our apparel. We have 16 employees who are solely
dedicated to serving the needs of these players.

- EXCLUSIVE SUPPLIER TO THE CHL. Pursuant to a new five-year
agreement, commencing with the 2003/2004 hockey season, we will
also become the exclusive supplier of helmets, pants, gloves,
shoulder, shin and elbow protective equipment, jerseys and socks
to all teams in the CHL. The CHL is the premier junior hockey
league in the world and includes 56 teams, with a total of
approximately 1,300 players. An estimated 54% of current NHL
players previously played in the CHL. Most of the 56 teams in the
CHL are in cities which do not currently have a NHL franchise,
thereby significantly extending the reach of our brands.

- SPONSORSHIP AGREEMENTS. We have sponsorship agreements with most
major hockey organizations in the world, including: the
International Ice Hockey Federation, Ice Hockey Federation of
Russia, Slovak Association of Ice Hockey, national teams of
Finland, Sweden, Germany, Denmark, Norway and the Czech Republic,
the NHL, American Hockey League, U.S. Hockey League, USA Hockey,

10

East Coast Hockey League and the West Coast Hockey League. In
addition, we are an official sponsor of the Sky Rink Youth and
Adult Hockey Program at the Chelsea Piers in New York City.

- JAMIE SALE AND DAVID PELLETIER. In our recreational skate
category, we have recently entered into an endorsement agreement
with Canadian pairs figure skating gold medallists Jamie Sale and
David Pelletier to market and sell the new Comfort Series of
recreational skates and our Classic Series of figure skates. Our
Comfort Series is designed for women and girls who seek a product
that is warmer, more comfortable and more stylish than a
traditional figure skate.

To support the validation of our products through elite athlete usage
we use television, radio, internet and print advertising featuring our new
products and endorsed players to communicate our product innovation message and
increase consumer awareness of our brands. We also provide in-store advertising
materials, brochures and print materials to assist our retailers in the
communication of the features and benefits of our products to the consumer.

GLOBAL MARKETING. Our marketing effort is headed by our Vice President,
Global Marketing, who supervises a team of more than 15 employees and is also
responsible for endorsement contracts with elite athletes. We have two category
directors who are responsible for consumer research, product development,
research and development briefs, pricing strategy and overall sales program
development for our key product categories within our three primary brands. We
also have a global marketing manager who is responsible for overall creative
development, including television, print and radio ads, brand communication and
league sponsorships. Other key positions in marketing include: a marketing
services manager responsible for trade and sales shows, point-of-purchase
displays, logos and graphic designs; an e-commerce coordinator responsible for
our web sites; and a new business development manager, a recently created
position.

To link our marketing organization to our sales organization, we hold
monthly strategic business unit meetings. These meetings are attended by members
of each of our research and development, purchasing and logistics teams. These
sessions, chaired by the category directors, serve as a forum to discuss new
product developments, recent research findings, current product performance, and
overall sales program strategy and execution.

NORTH AMERICAN SALES. In Canada, our equipment sales organization is
comprised of a group of independent representatives that sell CCM branded
equipment and apparel and another group of independent representatives dedicated
to selling KOHO and JOFA equipment. In the U.S., independent representatives
carry all brands. Sales representatives are charged primarily with selling
equipment, products and jerseys to our smaller hockey specialty accounts.
Regional managers, in both Canada and the U.S., are charged with overseeing the
sales representative organization and also maintaining our larger accounts
across all brands.

In the U.S., our largest apparel market, we have a separate sales
force, comprised of a national sales manager, a key account manager and
independent representative organizations. Our apparel sales team possesses
extensive industry experience in athletic brand and licensed apparel. Our sales
representatives are responsible for selling apparel, including licensed jerseys
and licensed and branded activewear, to independent retailers, large sporting
goods and department stores in the U.S.

INTERNATIONAL SALES. In Sweden, Finland and Norway, we sell our
equipment and apparel directly to retailers and teams through our in-house sales
team in Scandinavia. Outside of those countries, we sell our products through
distributors located in over 40 countries in Europe, the Far East, South
America, Central America, Africa and Australia. These distributors, in turn,
sell our products to teams and retailers. All non-European sales activities are
controlled through our Senior Vice President, European Division.

CUSTOMERS AND DISTRIBUTION CHANNELS

We have a diversified and broad base of over 6,000 customers worldwide
and are not dependent on any single customer. Our customer base consists of
independently-owned hockey specialty retail stores, large sporting goods
retailers, department stores and other retailers. In 2002, we generated
approximately 42% of our revenue in

11

the United States, approximately 32% in Canada, approximately 12% in Sweden and
approximately 14% in Finland and other countries. In fiscal 2002, no customer
accounted for more than 10% of our sales. We sell our hockey-related apparel,
including jerseys and licensed and branded activewear, through the same channels
as our equipment products, in addition to generating revenue from sales to
"in-stadium" concession stores. Jerseys are sold mainly through specialty retail
and "in-stadium" concession stores. Our New NHL License Agreement provides us
with better access to "in-stadium" concession stores to market our licensed
jerseys and licensed and branded activewear. We believe "in-stadium" concession
stores who purchase authentic licensed jerseys from us will increase their
orders for our licensed and branded activewear products due to purchasing
efficiencies. We have established a separate U.S. sales force that markets our
hockey-related licensed and branded activewear. We expect this sales force to
generate sales from large retailers, department stores and other retailers.

NHL AGREEMENTS

EXCLUSIVE NHL RIGHTS. We have been an NHL licensee since 1967 and have
enjoyed an exclusive license to supply authentic, replica and practice game
jerseys used "on-ice" by all NHL teams since July 2000. Our NHL License
Agreement with NHL Enterprises, the marketing affiliate of the NHL, expires on
June 30, 2005, including an option year.

Our NHL License Agreement gives us the exclusive rights to manufacture
and market authentic, replica and practice game jerseys used "on-ice" by the 30
NHL teams, including all-star jerseys. Game jerseys are manufactured and
marketed under the CCM and KOHO brand names, while practice jerseys are
manufactured and marketed under the JOFA brand name. Pursuant to the NHL License
Agreement, our brand names appear above the player's name on the outside rear
neck on the jersey of all NHL players. These rights include the right to use the
names, logos, and other indicia of the NHL and the NHL member teams on an
exclusive basis in connection with the manufacture, supply and sale of
authentic, replica and practice jerseys of the 30 NHL teams. Pursuant to a
separate agreement with the NHLPA, we are entitled to market authentic and
replica game and practice jerseys identified with the names and numbers of NHL
players. We are also the exclusive supplier of "on-ice" jerseys and pants for
NHL officials under the JOFA brand name. Since the beginning of the 2000/2001
NHL season, the CCM logo appears above each player's name on every "home" NHL
jersey, the KOHO logo appears above each player's name on every "away" and
"third" NHL jersey and the JOFA label is on uniforms for all NHL officials.

The NHL License Agreement also grants us the exclusive right to market
T-shirts, workout wear, outerwear, polo shirts and activewear bearing NHL logos,
names and designs under the NHL's Center Ice trademark and the non-exclusive
right to use the NHL team logos on headwear.

The NHL's Center Ice apparel is worn exclusively by players and coaches
during practice and work-out and worn by the trainers of all NHL teams during
games. We market all of the foregoing products to North American and
Scandinavian retailers for resale, as well as to European and Asian
distributors. Pursuant to the NHL License Agreement, we are required to pay a
license fee and royalties to the NHL based on our net sales, with minimum
royalty amounts guaranteed to be paid by us each license year. In addition to
these costs, we have agreed to purchase a fixed dollar amount of marketing from
the NHL and from each of the NHL teams.

As part of the NHL License Agreement, we also have a license for the
exclusive use of the NHL's Center Ice trademark for our JOFA hockey equipment.
The premium products in the equipment line (helmets, sticks, gloves, pants,
shoulder, shin and elbow pads) are co-branded with the Center Ice trademark,
also referred to as "the official equipment worn by the NHL." The NHL reserves
this mark for products with overwhelming usage by NHL players. Other JOFA
products are co-branded with the NHL's shield trademark.

NHL ON-ICE EQUIPMENT LICENSE. Also as part of our agreements with the
NHL, our brands are permitted to appear on equipment used by NHL players
"on-ice" during NHL games. The extensive use of our products by NHL players
significantly promotes the high visibility of our brands among consumers. All of
our products prominently display their respective brand and sub-brand logos,
resulting in significant and cost-effective exposure in arenas, on television
and in newspapers, magazines and other printed media. Our market research
indicates that NHL use of a particular brand of equipment is among the key
factors in a consumer's purchase decision. Our products enjoy widespread usage
among NHL players without paid endorsement. We have endorsement agreements with
several high visibility players including, among others, Joe Thornton (CCM) of
the Boston Bruins, Daniel Sedin (JOFA)

12

and Henrik Sedin (JOFA) of the Vancouver Canucks, Patrick Roy (KOHO) of the
Colorado Avalanche, Mark Recchi (CCM) of the Philadelphia Flyers, Roberto Luongo
(KOHO) of the Florida Panthers, Vincent Lecavalier (JOFA) of the Tampa Bay
Lightning, Martin Brodeur (CCM) of the New Jersey Devils, and Jason Allison
(CCM) of the Los Angeles Kings.

MEDIA PROMOTION. In addition to our "on-ice" exposure, as part of our
agreements with the NHL, we purchase advertising during both locally and
nationally televised hockey games in Canada and the U.S. We also have camera
visible billboards promoting our products and brands in the majority of NHL
arenas. Reinforcing the television and billboard campaign are full-page color
advertisements placed in game programs, trade and consumer hockey publications
distributed throughout North America on a national and regional basis, such as
The Hockey News and Hockey Business News. Our web sites are the most visited
hockey equipment and related apparel web sites worldwide.

RESEARCH AND DEVELOPMENT

We are an industry leader in product innovation and have dedicated
significant resources to ensure our future technological leadership. Our
research and development team, which has 31 members, is divided into six groups,
with each group dedicated to one of the following categories: skates; head and
face; protective; goal; and sticks. External university research programs are
also used to help develop our performance insights. For example, we
co-developed, with the University of Windsor, a slap shot robot that allowed us
to measure the puck velocity generated by the Vector full composite stick in a
standardized manner compared to other sticks. The results generated by the slap
shot robot, illustrated in the diagram below, allowed us to demonstrate the
benefits of our new Vector one-piece composite stick, which was found to rank
ahead of our competitors in puck velocity and durability. This standardized
method of evaluation is an industry first. Our objective is to initiate
additional research activities in other product categories.

The objective of our research and development program is to maintain or
improve our leadership position in each of our key product categories. Our
product creation process is driven by the needs of the player with special
emphasis on the elite athlete. Our marketing and research and development teams
work together in order to develop and create innovative products. Firstly, our
marketing team gathers information from consumers and retailers by performing
both qualitative (through pro testing, definition of performance attributes,
focus groups and field visits) and quantitative (through retail tracking and
consumer tracking) research to determine what players need. Secondly, our
research and development team, using a combination of research approaches,
creates prototypes of our products, which are tested both in the laboratory and
in the field. Thirdly, based on the data obtained through laboratory and field
tests, the product is adjusted to ensure it meets the needs of the player in all
possible respects. Lastly, the product is taken to market.

The majority of our products are developed and commercialized in our
three research and development centres located in St-Jean, Quebec, Tammela,
Finland and Malung, Sweden. These facilities employ designers, engineers and
model makers and feature comprehensive testing equipment, woodworking, spray
painting, molding and sculpting capabilities and have creative services
departments which are responsible for packaging and catalogue design and
development.

Costs for new product research and development as well as changes to
existing products are expensed as incurred and totaled $2,259, $1,545 and $1,826
for the years ended December 31, 2000, 2001 and 2002 respectively.

MANUFACTURING

Our products are either manufactured in-house at our six facilities,
four of which are located in Canada and two of which are located in Europe, or
outsourced. Approximately 62% of our product lines by sales are currently
manufactured in-house while 38% are outsourced.

13

We continuously evaluate our manufacturing processes and use in-house
manufacturing where our proprietary technologies and processes provide us with a
competitive advantage. Through the use of proprietary technologies and extensive
automation, we believe we have developed many of the industry's most advanced
hockey equipment and related apparel manufacturing processes. We believe that we
operate the industry's most advanced skate manufacturing facility in St-Jean,
Quebec, the industry's most automated hockey stick production facility in
Cowansville, Quebec and the industry's most efficient hockey apparel production
facility in St-Hyacinthe, Quebec.

For other product lines, where we do not have a distinct competitive
manufacturing advantage, we outsource production to high quality facilities,
primarily in Asia, the Czech Republic and Mexico. In order to maintain our
leading market position and continue to be a leader in product innovation, we
will continue to make our business more flexible and less capital intensive by
outsourcing the manufacturing of our products where it makes strategic and
business sense. We believe that strategic outsourcing of selected manufacturing
processes may result in reduced costs, an improved ability to balance our
manufacturing capacity and shorten the time to market for new products. In
addition, as part of a cost reduction program initiated in 2001, we will
continue to evaluate and rationalize our cost structure and evaluate and improve
the efficiency and productivity of our operations. In December 2002, we closed
three manufacturing facilities. We estimate that the cost savings resulting from
such facility consolidation and head count reductions implemented in connection
with our cost reduction program would have been approximately $1.5 million if
implemented at the beginning of 2002.

We are a vertically integrated manufacturer of hockey jerseys and socks
and make extensive use of automation. In order to maintain our high quality
standards, we knit our own jersey fabric and hockey socks and cut and assemble
the components for our jerseys. In addition, we have developed sophisticated
sewing equipment that facilitates the labour-intensive finishing process of
jersey production. We have recently implemented several initiatives that have
dramatically increased throughput and the overall efficiency of our jersey
manufacturing lines. We have outsourced a small portion of our jersey production
to meet demand. For our activewear line, we source blank jackets, fleecewear and
other apparel from third parties and, in turn, have them embellished by other
third parties with team crests and logos and our brand names.

SUPPLIERS

We have a diverse network of suppliers of raw materials, equipment,
stationary, computers and finished products. No single supplier accounted for
more than 10% of our consolidated purchases during the year ended December 31,
2002.

COMPETITION

Our principal competitor in the hockey equipment market is Bauer Nike
Hockey Inc., a subsidiary of Nike, Inc. with an estimated market share in 2001
of 19%. In addition to Bauer Nike Hockey Inc., we compete with several smaller
companies that typically do not offer full product lines. Although we and Bauer
Nike Hockey Inc. together account for a significant portion of the worldwide
hockey equipment market, the remaining market is highly fragmented. We compete
on the basis of brand image, technology, quality and performance of our
products, method of distribution, price, style and intellectual property
protection.

We have exclusive license arrangements with the NHL and CHL (commencing
in the 2003/2004 CHL season) for licensed jerseys. In the team uniform and sock
market, our competitors include Bernard Athletic Knit & Enterprise Ltd., SP
Apparel Inc. and Kobe Sportswear Inc.. In the licensed and branded activewear
market, we compete with companies such as Nike, Inc., Lee Sport (a division of
VF Corporation), Majestic Athletic and New Era Cap Co., Inc.

14

INTELLECTUAL PROPERTY

We have a permanent Intellectual Property Committee that meets
approximately once every two months to discuss new products, patents that should
be applied for, patents which are pending, potential litigation and any
inventions submitted to us by third parties. Our Intellectual Property Committee
is composed of our Director of Legal Affairs, our Vice President, Equipment
Division, our Director of Research and Development, our Vice President, Global
Marketing, and one of our external intellectual property counsel.

Where management considers it beneficial, we seek protection under the
trademark, copyright and patent laws of those countries where our products are
produced or sold. As a result, we own a substantial number of patents and
trademarks, which we view as significant assets. As at December 31, 2002, we had
over 20 U.S., 14 Canadian and 5 international patents or pending applications
for patents covering over 20 inventions. As at January 31, 2003, we also had
over 350 trademark registrations and over 100 pending applications to register
trademarks in various countries. These registrations and applications cover
various trademarks owned and/or licensed by us, although primarily we seek to
register various trademarks in key markets where we conduct business. As at
December 31, 2002, we also had over 22, 20 and 14 industrial design
registrations in Canada, the United States and international markets
respectively.

We actively assess opportunities to license trademarks and copyright
works owned by third parties that we believe have lasting appeal with our
targeted customers, are consistent with our brand image, have the potential for
significant growth and are available at a reasonable price. Pursuant to our New
NHL License Agreement, we have an exclusive license to use the NHL trademark to
market authentic and replica NHL jerseys until 2014. See "The Business - NHL
Agreements".

PATENTS. We currently hold patents and industrial designs in multiple
countries. The patents encompass various product innovations and designs. Many
of our patents represent what have become industry standards in performance and
quality. Examples include the F-I-T System thermo-forming process that is
featured in our hockey skate line and Hyper X Joint Discharge Principle that are
featured in our protective equipment product line.

TRADEMARKS. We own a substantial number of trademarks including JOFA,
KOHO, Tacks, Heaton, Titan, Canadien and Externo. All of our trademarks are
owned by us except for the CCM trademarks which are owned by CCM Holdings (1983)
Inc., which in turn is 50% owned by us through our subsidiaries. The remaining
50% of CCM Holdings is owned by an unaffiliated Canadian bicycle company. We
have the exclusive and perpetual right to use the CCM trademark royalty free in
connection with skates, hockey equipment and hockey-related apparel.

EMPLOYEES

As of December 31, 2002, we employed 1,376 persons, of which 1,110 are employed
in Canada, 44 are employed in the United States and the balance are employed in
Europe. None of our employees in the United States are unionized, while 290 of
our employees at our St-Jean, Quebec facility, 93 of our employees at our
Malung, Sweden facility and 84 of our employees at our Tammela, Finland facility
are unionized. The collective bargaining agreement with the union in St-Jean
expired in December 2002 and negotiations for its renewal are currently
underway. We have agreed with the union to continue to operate under the prior
agreement. The collective bargaining agreements with the unions in Finland
expired in January and February 2003, respectively, and negotiations are
currently underway. We have no reason to believe that we will not reach
acceptable agreements in a timely manner. The collective bargaining agreement
with the union in Malung, Sweden expires in 2004. Our management believes that
our relations with these unions are positive. There have been no work stoppages,
strikes or lockouts at our St-Jean, Malung or Tammela sites in over 20 years.

15

ITEM 2. PROPERTIES

Our primary executive offices of our operations are located in
Montreal, Canada and we conduct our operations through 17 facilities(1): 2 in
the U.S., 7 in Canada, and 8 in Europe. We believe that our existing
manufacturing and distribution facilities have sufficient capacity to support
our business without the need for significant additional or upgraded equipment
or capital expenditures. The following table summarizes each of our principal
facilities for its operations.

(1) We also lease temporary space on a month to month basis in Georgia, Vermont
and Cowansville, Quebec, with an aggregate size of approximately 23,000 square
feet.
(2) A majority of the Fredrikstad facility is sublet to a third party.

INSURANCE

We maintain insurance policies covering risks typically encountered in
our business, including third party liability, product liability, customer
insolvency and damages to our information systems and other business assets. We
believe that we carry insurance in amounts and scope that are adequate for our
business. No material insurance claim is pending as of the date hereof.

16

ENVIRONMENT

In 1996, Maska U.S., Inc. ("Maska"), a subsidiary of the Corporation,
and the State of Vermont entered into a consent decree whereby Maska agreed to
remediate specified hazardous materials located on one of its properties.
Remediation efforts are now believed to be in the final stages. A charge of
$600,000 was recorded by us in 2002 to provide for the balance of costs to be
incurred. Any further charges or claims that might arise with respect to this
property are expected to be covered by insurance.

Our management is not aware of any other environmental problems with
respect to any of its operations or facilities.

ITEM 3. LEGAL PROCEEDINGS

Other than certain legal proceedings arising from the ordinary course
of business, which we believe will not have a material adverse effect, either
individually or collectively, on the financial position, results of operations
or cash flows, there is no other litigation pending or threatened against us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

17

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. PRICE RANGE OF COMMON STOCK

On April 11, 1997, the effective date of our Plan of Reorganization,
our old common stock ("Old Common Stock") was extinguished and the holders of
our Old Common Stock received a total of 300,000 five-year warrants to purchase
an aggregate of 300,000 shares of common stock at an exercise price of $16.92
per share (subject to adjustments for stock splits, stock dividends,
recapitalizations and similar transactions). Each holder of 67 shares of Old
Common Stock received one warrant to purchase, for cash, one share of common
stock, with no fractional warrants issued. Also on that date, we issued an
aggregate of 6,500,000 shares of common stock, $0.01 par value (as adjusted to
take account of fractional interests). The 300,000 five year warrants expired on
April 11, 2002. On April 3, 2002, warrants to purchase 539,974 shares of common
stock were exercised by the Caisse de depot et placement du Quebec ("Caisse").
Our common stock is quoted on the OTC Bulletin Board under the trade symbol
"THCX". The range of closing prices of the common stock is not provided, as
there has been a limited amount of trading activity in our common stock.

B. APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

The approximate number of record holders of our common stock as of
February 28, 2003 was 307. We did not pay dividends on our common stock and we
have no current plans to pay cash dividends in the foreseeable future. Effective
November 19, 1998, one of our U.S. subsidiaries, Maska U.S., Inc., as the
borrower, and the credit parties named therein entered into a credit agreement
with the lenders referred to therein and with General Electric Capital
Corporation, as Agent and Lender for a period of three years. Simultaneously,
one of our Canadian subsidiaries, Sport Maska Inc., as the borrower, and the
credit parties named therein entered into a credit agreement with the lenders
referred to therein and General Electric Capital Canada Inc., as Agent and
Lender for a period of three years. The credit agreements restrict, among other
things, the ability to pay cash dividends on the common and preferred stock. In
addition, on April 3, 2002, we completed a private offering of $125 million
aggregate principal amount of 11 1/4 Senior Secured Note Units due April 15,
2009, each such Unit consisting of $500 principal amount of 11 1/4% Senior
Secured Notes du April 15, 2009 of the Company and $500 principal amount of 11
1/4% Senior Secured Notes due April 15, 2009 of Sport Maska Inc. Unde the
indenture that governs these Units and Notes, the payment of dividends is
restricted.

Equity Compensation Information:

Options have been granted pursuant to employment agreements and on an
"ad hoc" basis.

18

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table contains selected consolidated historical financial
data derived from our audited consolidated financial statements for the five
fiscal years ended December 31, 1998, 1999, 2000, 2001 and 2002. This
selected financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and related notes contained elsewhere
in this Form 10-K. Certain amounts of the preceding years have been
reclassified to conform to the current year's presentation.

(1) Working capital, net, is defined as current assets excluding cash and cash
equivalents less current liabilities excluding short-term debt and the
current portion of long-term debt. Working capital is not a measure of
performance or financial condition under Generally Accepted Accounting
Principles, but it is presented because it is a widely accepted indicator
of a company's liquidity. It should be noted that companies calculate
working capital, net, differently and, therefore, working capital, net, as
presented for us may not be comparable to working capital, net, reported
by other companies.

(2) The 13.0% Pay-in-Kind preferred stock is subject to mandatory redemption
six months after the maturity of the Notes.

(3) EBITDA is defined as earnings (net income) before interest, income and
capital taxes and depreciation and amortization. EBITDA includes
restructuring charges and other unusual or non-recurring items, if any.
EBITDA is not a measure of performance or financial condition under
generally accepted accounting principles, but is presented because it is
frequently used by securities analysts and others in evaluating companies.
EBITDA should not be considered as an alternative to net income as an
indicator of our operating performance or as an alternative to cash flows
as a measure of liquidity. In addition, it should be noted that companies
calculate EBITDA differently and, therefore, EBITDA as presented for us
may not be comparable to EBITDA reported by other companies. EBITDA margin
is EBITDA divided by net sales. EBITDA is calculated as follows:

Under the terms of The Hockey Company's short and long-term debt
agreements, restructuring and other unusual or non-recurring items would be
added back to EBITDA.

(4) Restructuring and unusual charges of $2.5 million in 2002 includes $2.1
million of restructuring charges (see Restructuring Reserves) of which $1.6
million is recorded under cost of goods sold and $0.5 million in selling,
general and administrative expenses. The balance of $0.4 million is
recorded in the Other income (expense) line and includes primarily unusual
charges of $0.3 million related to an unsuccessful acquisition bid, and
$0.6 million related to an estimated environmental remediation for one of
our properties, partially offset by a foreign exchange gain of
$0.6 million which resulted from the translation of our US dollar
denominated long term debt, 50% of which is held by the Canadian
subsidiary, Sport Maska Inc.

20

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

BACKGROUND AND INTRODUCTION

We can trace our origins to September 1899, when the Canada Cycle and
Motor Company (CCM) was formed as a manufacturer of bicycles and motorcars. In
1905, CCM began marketing ice hockey skates for a sport barely 30 years old at
that time and, in 1937, acquired the Tackaberry (later Tacks) trade name. In
1983, CCM was amalgamated with Sport Maska Inc., a manufacturer of hockey
jerseys for the NHL since 1967. Prior to 1994, the Company consisted of the
hockey products business and the toy and fitness products business marketed
under the Buddy L name. While the Company was economically sound, the
subsidiaries that operated the toy and fitness products business were not
financially stable and filed for Chapter 11 bankruptcy protection in March 1995.
Although the Company continued to operate and service its trade debt on a timely
basis, it defaulted on its credit agreement as a result of the losses at the toy
and fitness products business. This ultimately resulted in the Company filing
for relief under Chapter 11 of the U.S. Bankruptcy Code in October 1995. WS
Acquisition LLC, an affiliate of Wellspring Capital Management LLC, acquired a
controlling interest in us in April 1997 as part of our emergence from
bankruptcy. In November 1998, we acquired Sports Holdings Corp., Europe's
largest manufacturer of ice, roller and street hockey equipment and their JOFA,
KOHO, Canadien, Heaton and Titan brands. As a result, we are now the world's
largest marketer, designer and manufacturer of hockey equipment and related
apparel.

The following discussion provides an assessment of our results of
continuing operations, financial condition and liquidity and capital resources,
and should be read in conjunction with our Consolidated Financial Statements and
Notes thereto included elsewhere herein. (All references to "Note(s)" refer to
the Notes to the Consolidated Financial Statements.) The information presented
below should be read in conjunction with the consolidated financial statements
included elsewhere in this Form 10-K.

RESULTS OF OPERATIONS

Our results of operations as a percentage of net sales for the
periods indicated were as follows:

21

(1) EBITDA is defined as earnings (net income) before interest, income and
capital taxes and depreciation and amortization. EBITDA includes restructuring
charges and other unusual or non-recurring items, if any. EBITDA is not a
measure of performance or financial condition under generally accepted
accounting principles, but is presented because it is frequently used by
securities analysts and others in evaluating companies. EBITDA should not be
considered as an alternative to net income as an indicator of our operating
performance or as an alternative to cash flows as a measure of liquidity. In
addition, it should be noted that companies calculate EBITDA differently and,
therefore, EBITDA as presented for us may not be comparable to EBITDA reported
by other companies. EBITDA margin is EBITDA divided by net sales. EBITDA is
calculated as follows:

Under the terms of The Hockey Company's short and long-term debt agreements,
restructuring and other unusual or non-recurring items would be added back to
EBITDA.

2002 COMPARED TO 2001

Net sales grew by 7.3% in 2002 to $212.7 million, from $198.2 million
in 2001. The increase is primarily due to higher sales volume of apparel, ice
skates and sticks. Apparel sales were strong with an increase of 13.1% ($8.2
million) over 2001. Much of this increase is a result of an improved supply
chain management process that allowed us to service our customers in a more
timely manner. Skate sales increased 4.3% ($2.0 million) over 2001, mainly
related to the new line of recreational skates as part of our endorsement
relationship with 2002 Olympic pairs figure skating gold medallists, Jamie Sale
and David Pelletier. Stick sales increased 9.3% ($2.7 million) over 2001, mainly
attributable to the strong demand for the Vector one-piece hockey stick.

Gross profit was $91.7 million in 2002 compared to $79.7 million in
2001, an increase of 15.1%. Measured as a percentage of net sales, gross margin
increased to 43.1% in 2002 from 40.2% in 2001. The increase is mainly due to the
consolidation and restructuring efforts from 2001 as well as reduction in costs
on both raw material and finished goods purchases from suppliers. The gross
profit before restructuring and unusual charge was $93.3 million in 2002
compared to $80.9 million in 2001.

Selling, general and administrative expenses before restructuring and
unusual charges decreased as a percentage of sales to 30.2% of 2002 sales, from
31.2% of total 2001 sales. In dollar terms, there was an increase to $64.3
million in 2002 from $61.8 million in 2001. This increase is mainly related to
the following factors: (i) the contractual increase of $1.3 million in
NHL-related expenses; (ii) an increase in selling and marketing variable
expenses of $0.7 million related to higher sales; and (iii) an increase in
research and development expenses of $0.3 million as the focus on product
development continued.

Operating income for the year ended December 31, 2002 was $26.9 million
compared to $9.0 million in the year ended December 31, 2001. No goodwill or
excess reorganizational value was amortized in 2002, whereas in 2001 an
amortization of $4.4 million was recorded. (See "Intangible Assets")

In 2002 a total restructuring charge of $2.1 million compared to $5.7
million in 2001 was recorded. ("See Restructuring Reserves").

Other expense consists primarily of $0.3 million related to an
unsuccessful acquisition bid and $0.6 million related to the estimated
environmental remediation costs for one property.

22

EBITDA, as defined above, increased by 51.0% to $29.6 million for 2002
compared to $19.6 million in 2001.

Interest expense including amortization of deferred financing costs
($1.4 million and $2.7 million in 2002 and 2001 respectively) decreased to $15.5
million in 2002 compared to $16.3 million in 2001.

Included in foreign exchange loss (gain) is a foreign exchange gain of
$0.6 million for the year ended December 31, 2002 which resulted from the
translation of our U.S. dollar denominated long term debt, 50% of which is held
by Sport Maska Inc.

Income before income taxes and extraordinary items was $10.0 million in
2002 versus a loss before income taxes and extraordinary item of $6.0 million
for 2001.

Income before extraordinary items for the year ended December 31, 2002
was $7.6 million, compared to a loss before extraordinary items of $9.4 million
for the year ended December 31, 2001.

Income before income taxes and extraordinary items was $10.0 million in
2002 versus a loss before income taxes and extraordinary item of $6.0 million
for 2001.

As a result of the extinguishment of the Caisse de depot et placement
du Quebec ("Caisse") loan, $3.3 million of deferred financing costs was
written-off, which is recorded as an extraordinary item. (See "Liquidity and
Capital Resources").

Net income for the year ended December 31, 2002 was $4.3 million
compared to a $10.5 million net loss for the year ended December 31, 2001.

Net income attributable to common stockholders for the year ended
December 31, 2002 was $1.8 million compared to a net loss of $12.8 million for
the corresponding period in 2001. The difference between the redemption value of
the preferred stock and the recorded amount is now being accreted over the term
of the Secured Notes (as described below) by a charge to retained earnings.

2001 COMPARED TO 2000

Net sales grew by 1.9% in 2001 to $198.2 million, from $194.5 million
in 2000. The increase is due to higher apparel sales offset by reduced hockey
equipment sales, primarily inline skates and sticks. Revenues from non-U.S.
operations were adversely affected by currency translation adjustments due to
the depreciation of their currencies against the U.S. dollar. Equipment sales
were most affected by the foreign exchange impact as they represent over 75% of
revenues from Canada, Sweden and Finland. Equipment sales were also negatively
affected in the first half of the year by the continued market saturation
resulting from an unusually high level of close-out goods liquidated by a
competitor in the fourth quarter of fiscal 2000.

Apparel sales were again strong with an increase of 18.1% ($9.7
million) over 2000, due to the exclusivity in the licensed jersey market and the
strong market acceptance of the new licensed and branded activewear line.

Despite the negative effect of the depreciation of the Swedish krona
(SEK) and Finnish markka (FIM), continued growth of the non-hockey product line
was experienced due to improved sales of Merrell footwear in Sweden and Finland.
Measured in the domestic currencies of those countries, sales of Merrell
footwear was up over 20% over last year.

Gross profit was $79.1 million in 2001 compared to $77.2 million in
2000, an increase of 2.4%. Measured as a percentage of net sales, gross margin
increased to 39.9% in 2001 from 39.7% in 2000. The increase is attributable to a
different mix of products sold in the periods as well as the implementation of
initiatives to reduce manufacturing expenses, offset by $1.2 million of
restructuring charges (see Restructuring Reserves) as well as the effect of
currency fluctuations. The gross profit before these restructuring charges was
40.5% in 2001.

23

Selling, general and administrative expenses before restructuring
charges decreased as a percentage of sales to 30.9% of 2001 sales, from 33.5% of
total 2000 sales. In dollar terms, there was a decrease to $61.1 million in 2001
from $65.1 million in 2000. This decrease is attributed to the significant
rationalization of operations and consolidation of facilities in 2001 (see
Restructuring Reserves), offset in part by the additional royalties paid to NHL
Enterprises, and additional NHL team marketing expenses related to having the
right to produce and market authentic team jerseys for all 30 NHL teams.

Operating income for the year ended December 31, 2001 was $9.0 million
compared to $7.7 million in the year ended December 31, 2000.

Other expense consists primarily of amortization of deferred financing
costs, offset in part by currency exchange gains.

EBITDA increased by 7.7% to $19.6 million for 2001 compared to $18.2
million 2000.

Interest expense was $13.6 million for 2001 and 2000.

Net loss before income taxes and extraordinary items was $6.0 million
in 2001 versus net loss before income taxes of $6.8 million for 2000.

As a result of the substantive modification to the terms of our
long-term debt in early 2001, $1.1 million of deferred financing costs, which is
recorded as an extraordinary item, was written off.

Net loss for the year ended December 31, 2001 was $10.5 million
compared to an $8.1 million loss for the year ended December 31, 2000.

24

INCOME TAXES

Our income tax provision is comprised of both United States and foreign
tax components. Due to changes in the relative contribution of income or loss by
country, differences in the effective tax rates between countries (principally
the U.S. and Canada) and permanent differences in effective tax rates between
income for financial statement purposes and tax purposes, the consolidated
effective tax rates may vary significantly from period to period. We and our
U.S. subsidiaries consolidate their income for U.S. federal income tax purposes.
However, gains and losses of certain subsidiaries may not be available to other
subsidiaries for tax purposes.

Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Based on our performance in 2002 and our projected future earnings and taxable
income, we have reversed the valuation allowance on the temporary differences
(other than net operating loss and investment tax credits) and recognized a
deferred tax asset as at December 31, 2002.

Fresh-start reporting requires us to report a provision in lieu of
income taxes when there is a taxable income and utilization of a
pre-reorganization net operating loss carry-forward. This requirement applies
despite the fact that our pre-reorganization net operating loss carry-forward
and other deferred tax assets would substantially reduce the related federal
income tax payable. The current and future year tax benefit related to the
carry-forward is recorded as a reduction of reorganization value in excess of
amounts allocable to identifiable assets until exhausted and then as a direct
increase to paid in capital. The amount of income tax provision that has been
used to reduce the reorganizational value in excess of amounts allocable to
identifiable assets is reflected as a provision in lieu of income taxes in our
Consolidated Statements of Operations.

25

LIQUIDITY AND CAPITAL RESOURCES

Our anticipated financing requirements for short-term working capital
requirements and long-term growth, future capital expenditures and debt service
are expected to be met through cash generated from our operations and borrowings
under our credit facilities. Effective November 19, 1998, one of our U.S.
subsidiaries, Maska U.S., Inc., as the borrower, and the credit parties named
therein entered into a credit agreement with the lenders referred to therein and
with General Electric Capital Corporation, as Agent and Lender for a period of
three years.Simultaneously, one of our Canadian subsidiaries, Sport Maska Inc.,
as the borrower, and the credit parties named therein entered into a credit
agreement with the lenders referred to therein and General Electric Capital
Canada Inc., as Agent and Lender for a period of three years (together with
General Electric Capital Corporation, "GECC"). The credit agreements are
collateralized by all accounts receivable, inventories and related assets of the
borrowers and our other North American subsidiaries, and are further
collateralized by a second lien on all of our and our North American
subsidiaries' other tangible and intangible assets. The credit agreements were
further extended and amended on October 17, 2002 for a period of three years in
connection with the issuance of the Units (as described below) to reflect the
repayment of the Caisse term loans and to maximize the amount of loans and
letters of credit under the two credit agreements to $35.0 million and $7.0
million, respectively. Under the terms of the Notes such indebtedness cannot
exceed $35.0 million and must be repaid in full at least once a year. There were
no borrowings outstanding under the credit agreements as at December 31, 2002
($27.8 million at December 31, 2001), excluding $5.3 million of letters of
credit outstanding. The peak borrowing in 2002 was $21.9 million.

As at December 31, 2002 borrowings under the U.S. credit agreement bear
interest at rates between U.S. prime plus 0.25% to 1.00% or LIBOR plus 1.50% to
2.50% depending on The Hockey Company's Operating Cash Flow Ratio, as defined in
the agreement. Borrowings under the Canadian credit agreement bear interest at
rates between the Canadian prime rate plus 0.50% to 1.25%, the U.S. prime rate
plus 0.25% to 1.00% and the Canadian Bankers' Acceptance rate or LIBOR plus
1.50% to 2.50% depending on The Hockey Company's Operating Cash Flow Ratio, as
defined in the agreement. In addition, we are charged a monthly commitment fee
at an annual rate of 1/4 to 3/8 of 1% on the unused portion of the revolving
credit facilities under the credit agreements and certain other fees.

The credit agreements contain customary negative and affirmative
covenants including those relating to capital expenditures, minimum interest
coverage and fixed charges coverage ratio. The credit agreements restrict, among
other things, the ability to pay cash dividends on the preferred and common
shares.

On November 19, 1998, in connection with the acquisition of Sports
Holdings Corp., we entered into a credit agreement with Caisse de depot et
placement du Quebec ("Caisse") to borrow Canadian $135.8 million for a period of
three years. The loan was further extended and amended into two facilities on
March 14, 2001 (Facility 1--Canadian $90 million due June 30, 2004 and Facility
2--Canadian $45.8 million due October 31, 2002). Each facility bore interest
equal to the Canadian prime rate plus 5% and Facility 2 bore additional interest
of 3.5% which was to be capitalized and repaid on the maturity of Facility 2. On
March 8, 2002 we acquired an option from the lender to extend the maturity of
Facility 2 plus capitalized interest to February 28, 2003. The amended credit
agreement was terminated in connection with the issuance of the Units (as
described below).

On April 3, 2002, we completed a private offering of $125 million
aggregate principal amount of 11 1/4% Senior Secured Not Units due April 15,
2009 (the "Units"), at a price of 98.806%, each such Unit consisting of $500
principal amount of 11 1/4% Senio Secured Notes due April 15, 2009 of the
Company and $500 principal amount of 11 1/4% Senior Secured Notes due April 15,
2009 of Spor Maska Inc., our wholly-owned subsidiary. An offer to exchange all
of the outstanding Units for 11 1/4% Senior Secured Note Units du 2009 (the
"Exchange Units"), which have been registered with the United States Securities
and Exchange Commission ("SEC") under the Securities Act of 1933, as amended,
pursuant to a registration statement on Form S-4 filed with the SEC on August
13, 2002, was completed on September 20, 2002. The terms of the Exchange Units
(and the underlying Exchange Notes) and those of the outstanding Units (and
underlying Notes) are identical, except that the transfer restrictions and
registration rights relating to the Units do not apply to the Exchange Units;
therefore, for purposes of this report on Form 10-K, any reference to "Unit"
refers to both Units and Exchange Units and any reference to "Note" refers to
both Notes and Exchange Notes.

26

The Notes are fully and unconditionally guaranteed by all of our
restricted subsidiaries, excluding the Finnish subsidiaries. The stock of the
first-tier Finnish subsidiary was pledged and the security interest in the
assets of our Swedish subsidiaries is limited to $15 million. Among the
financial covenants in the indenture, our ability to borrow under the revolving
credit facilities is restricted to a maximum of $35 million and the payments of
dividends or repurchases of stock are limited.

The proceeds of $123.5 million from the sale of the Units were used by
us (i) to repay all outstanding secured loans under the Amended and Restated
Credit Agreement with Caisse, dated March 14, 2001, (ii) to pay down secured
indebtedness under the U.S. and Canadian credit agreements with GECC, (iii) to
pay fees and expenses for the offering and (iv) for general corporate purposes.
The Amended and Restated Credit Agreement with Caisse and any documents related
thereto have been terminated and are of no further force and effect.

Jofa AB, our Swedish subsidiary, has entered into a credit agreement
with Nordea Bank in Sweden. The maximum amount of loans and letters of credit
that may be outstanding under the agreement is SEK 90 million (approximately
$10.4 million). The facility is collateralized by the assets of Jofa AB, bears
interest at a rate of STIBOR (currently 3.90 %) plus 0.90%, matures on December
31, 2003 and is renewable annually. Total borrowings as at December 31, 2001 and
2002 were nil (excluding $1.6 million of letter of credits outstanding). The
peak borrowing in 2002 was $6.1 million. Management believes that the credit
agreement can be renewed or refinanced upon maturity. If this agreement cannot
be renewed or financed with Nordea Bank, the Company will seek alternate sources
of financing to replace this agreement. In addition, Jofa AB entered into a
separate credit agreement with Nordea Bank in May, 2000 to borrow SEK 10
million, or approximately $1.2 million. The loan has a term of four years with
annual principal repayments of SEK 2.5 million, or approximately $0.3 million.
The loan is secured by a chattel mortgage on the assets of Jofa AB and bears an
interest rate of STIBOR plus 1.25%. The balance of this loan was SEK 4.23
million or approximately $0.5 million on December 31, 2002.

Effective July 10, 2001, KHF Finland Oy, our Finnish subsidiary,
entered into a credit agreement with Nordea Bank in Finland, replacing the
former credit facility for FIM 30 million (approximately $4.6 million) which was
terminated in 2001. The maximum amount of loans and letters of credit that may
be outstanding under the agreement is EUR 2.4 million (approximately $2.5
million). The facility is renewable annually and is collateralized by the assets
of KHF Finland Oy and bears interest at a rate of EURIBOR (2.924% at December
31, 2002) plus 0.9%. Total borrowings as at December 31, 2002 and December 31,
2001 were nil. There were no borrowings in 2002. Management believes that the
credit agreement will be renewed or refinanced upon maturity.

Cash provided by operating activities during the year ended December
31, 2002, was $12.0 million compared to $9.1 million used in 2001. Income before
extraordinary item was $7.6 million in 2002 compared to a loss before
extraordinary item of $9.4 million in 2001. EBITDA was $29.6 million for the
year ended December 31, 2002 compared to $19.6 million in 2001. Inventory
increased by $1.5 million from December 31, 2001 to December 31, 2002. Accounts
receivable were up $6.4 million from December 31, 2001, mainly related to strong
Q4 2002 sales. Accounts payable and accrued liabilities are higher due to the
accrual of the interest expense related to the issuance of the Units and
extended terms from our overseas suppliers on the purchase of inventory.

Cash used in investing activities during the year ended December 31,
2002, was $1.9 million compared to $1.1 million used in 2001, as we continue to
invest in developing the industry's most advanced hockey equipment manufacturing
processes.

Cash provided by financing activities during the year ended December
31, 2002, was $1.4 million compared to $14.4 million in 2001. The variance is
mainly due to the issuance of the Units of approximately $123.9 million and the
resulting repayment of the Caisse debt of $86.6 million, as well as the pay-down
of the entire GECC balances approximately $17.7 million outstanding at that
time.

During the year ended December 31, 2002, the foreign exchange
translation adjustment was a positive $4.2 million which was as a result of the
strenghthening Canadian dollar against the U.S. dollar. During the year ended
December 31, 2001 the foreign exchange translation adjustment was a negative
$0.7 million which was primarily a result of the weakening Canadian dollar
against the U.S. dollar.

27

We follow the customary practice in the sporting goods industry of
offering extended payment terms to creditworthy customers on qualified orders.
Our working capital requirements generally peak in the second and third quarters
as we build inventory and make shipments under these extended payment terms.

Certain of our subsidiaries lease office and warehouse facilities and
equipment under operating lease agreements. Certain of our subsidiaries have
also entered into agreements that call for royalty payments generally based on
net sales of certain products and product lines. Certain agreements require
guaranteed minimum payments over the royalty term. We also pay the NHL, CHL, and
certain professional players and teams an endorsement fee in exchange for the
promotion of our brands. Furthermore, we have repayment obligations on our
long-term debt. The following is a schedule of future minimum payments and
annual obligations under these commitments, as well as the repayment of our
Swedish loan and the Units in 2009:

2003 $ 16,975
2004 15,820
2005 7,165
2006 to 2008 2,525
2009 125,000
---------
$167,485
---------
---------

RESTRUCTURING RESERVES

In 2001, we initiated a plan to rationalize operations and consolidate
facilities. This rationalization involved the elimination of certain
redundancies, both in terms of personnel and operations as well as the
consolidation of facilities including the closure of the Mount Forest, Ontario
plant, and the Paris, France sales office, and the consolidation of North
American distribution into Canada. Approximately 380 employees were affected by
this decision, of which 240 were from the apparel segment. Accordingly, reserves
of approximately $5.7 million were set up for the expected cost of the
restructuring. Of this amount, approximately $4.3 million was to cover the cost
of severance packages to affected employees, with the remainder representing
other closure costs. Of these amounts, approximately $0.2 million remained
unpaid as at December 31, 2002.

In October 2002, we announced the closure of three of our North
American manufacturing facilities effective December 2002 in order to reduce
excess capacity and achieve greater operating efficiencies. Approximately 160
employees were affected by this decision, of which approximately 50 are from the
apparel segment. Accordingly, a reserve of approximately $2.1 million was set up
for the expected cost of restructuring, of which approximately $1.3 million is
to cover the cost of severance packages to affected employees, with the
remainder representing other closure costs. Of these costs, approximately $0.9
million remained unpaid as at December 31, 2002.

INTANGIBLE ASSETS AND EXCESS REORGANIZATIONAL VALUE

We have a significant amount of intangible assets on our balance sheet.
As at December 31, 2002, we had $65.3 million (2001 - $69.3 million)
representing 29.0% (2001 - 34.7%) of total assets. This goodwill is comprised of
two components. Upon the acquisition of Sports Holdings Corp., we recognized
$53.1 million of goodwill. This amount, being the difference between the
purchase price and the amount of tangible net assets acquired, represents the
value of the brands acquired. JOFA, KOHO, Canadien, Titan and Heaton are world
class hockey brands and management believes that there is a significant
long-term earnings potential to be realized from these brands. Accordingly, the
amortization of this goodwill was over 25 years until January 1, 2002 when we
adopted the new rules on goodwill and other intangible assets. Goodwill is no
longer amortized but is subject to an annual impairment test.

In connection with the reorganization in 1997 and fresh-start
accounting, we recognized $49.0 million of excess reorganization value, which is
another component of goodwill. This amount arose primarily as debt

28

forgiveness in the reorganization. It is included in goodwill because it
represents among other things the value of the CCM brand. Management believes
that significant long-term earnings potential exists and was amortizing the
excess reorganization value over 20 years until January 1, 2002 when we adopted
the new rules on goodwill and other intangible assets. Goodwill is no longer
amortized but is subject to an annual impairment test.

SIGNIFICANT ACCOUNTING POLICIES

In the application of accounting policies, management relies on the use
of assumptions and estimates and prudent judgment. Should actual events differ
substantially from these estimates or judgments then results may also materially
differ from those reported. Apart from the policies identified above other
significant policies include:

VALUATION OF ACCOUNTS RECEIVABLE. Approximately 48% of accounts
receivable are denominated in currencies other than the U.S. Dollar. The value
of these accounts is subject to gains and losses from exchange rate
fluctuations. Also in valuing these accounts management uses estimates as to
potential default rates. Should the default estimates change gains or losses
would occur. Management believes that it has adequate reserves in place.

VALUATION OF INVENTORY. The value of inventory is based partly on
management estimates regarding potential write-downs of excess or slow-moving
inventory and the estimated realizable value thereafter. Management believes
that the reserves in place for excess or slow moving inventory are adequate.

ENVIRONMENTAL PROVISION. Management has estimated the required
remediation cost for one of its properties and recorded it as an accrued
liability during the year. Actual results could differ from estimates.

PRODUCT WARRANTY. Management has estimated the costs that may be
incurred under its basic limited warranty and recorded a liability in the amount
of such costs at the time product revenue is recognized. Management periodically
assesses the adequacy of its recorded warranty liabilities and adjusts the
amounts as necessary.

INTANGIBLE ASSETS. The annual impairment test for goodwill and excess
reorganization value is based on the projected discounted cash flows method or
the EBITDA multiples approach which reflect management's assumptions and
estimates of future revenue growth rates, profit margins, selling, general and
administrative expenses, discount rates and multiples. Significant changes in
these assumptions could result in an impairment charge relating to goodwill and
excess reorganization value.

NEW ACCOUNTING PRONOUNCEMENTS

On April 30, 2002, the Financial Accounting Standards Board ("FASB")
issued Statements of Accounting Standards ("SFAS") No. 145, RESCISSION OF FASB
STATEMENTS No. 4, 44, and 64, AMENDMENT OF FASB STATEMENT No. 13, AND TECHNICAL
CORRECTIONS. SFAS No. 145 rescinds Statement 4, which required all gains and
losses from extinguishment of debt to be classified as an extraordinary item,
net of related income tax effect, if material in the aggregate. Due to the
rescission of SFAS No. 4, the criteria in Opinion 30 will now be used to
classify those gains and losses. The provisions of SFAS No. 145 related to the
rescission of SFAS No. 4 are effective for fiscal years beginning after May 15,
2002. Any gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet the criteria
for classification as an extraordinary item will be reclassified. The provisions
of SFAS No. 145 related to SFAS No. 13 are effective for transactions occurring
after May 15, 2002. All other provisions of this Statement shall be effective
for financial statements issued on or after May 15, 2002. We will adopt this
Statement on January 1, 2003 upon which the extraordinary item - loss on early
extinguishment of debt, and the related income taxes will be reclassified.

In July 2002, FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES, which addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3 "LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION
BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED
IN A RESTRUCTURING)". SFAS No.146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at the time when the
liability is incurred. SFAS No.146

29

eliminates the definition and requirement for recognition of exit costs at the
date of an entity's commitment to an exit plan in Issue 94-3. We will adopt SFAS
No.146 for exit and disposal activities initiated after December 31, 2002.

In November 2002, FASB issued Interpretation No. 45, GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
GUARANTEES OF INDEBTEDNESS OF OTHERS ("FIN 45") which requires certain
guarantees to be recorded at fair value and increases the disclosure
requirements for guarantees even if the likelihood of making any payments under
the guarantee is remote. The initial recognition and measurement provisions of
FIN 45 are applicable on a prospective basis to guarantees issued or modified
after December 31, 2002. We believe that the impact of the new rules will not
significantly affect our financial position and results of operations. The
increased disclosure requirements are effective for fiscal years ended after
December 15, 2002 and have been adopted by us and appropriate disclosures have
been made in our consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE. Statement 148 amends SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to provide alternative methods
of transition to SFAS No. 123's fair value method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure provisions of
SFAS No. 123 and APB Opinion No. 28, INTERIM FINANCIAL REPORTING to require
disclosure in the summary of significant accounting policies of the effects of
an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial
statements. While SFAS No. 148 does not amend SFAS No. 123 to require companies
to account for employee stock options using the fair value method, the
disclosure provisions of SFAS No. 148 are applicable to all companies with
stock-based employee compensation, regardless of whether they account for that
compensation using the fair value method of SFAS No. 123 or the intrinsic value
method of APB No. 25. The provision of SFAS 148 are applicable for fiscal years
ending after December 15, 2002 and we have adopted this statement in our
financial statements for the year ended December 31, 2002.

SEASONALITY AND SELECTED QUARTERLY DATA

Sales of hockey equipment products are generally highly seasonal and in
many instances are dependent on weather conditions. This seasonality causes our
financial results to vary from quarter to quarter, with sales and earnings
usually weakest in the first and second quarters. In addition, the nature of our
business requires that in anticipation of the peak selling season for our
products, we make relatively large investments in inventory. Relatively large
investments in receivables consequently exist during and after such season.

- -----------------------------------
* Loss per share before extraordinary item was $1.29 (basic and diluted) in
first quarter of 2001 and $0.40 (basic and diluted) in second quarter of 2002.

30

(1) EBITDA is defined as earnings (net income) before interest, income and
capital taxes and depreciation and amortization. EBITDA includes restructuring
charges and other unusual or non-recurring items, if any. EBITDA is not a
measure of performance or financial condition under generally accepted
accounting principles, but is presented because it is frequently used by
securities analysts and others in evaluating companies. EBITDA should not be
considered as an alternative to net income as an indicator of our operating
performance or as an alternative to cash flows as a measure of liquidity. In
addition, it should be noted that companies calculate EBITDA differently and,
therefore, EBITDA as presented for us may not be comparable to EBITDA reported
by other companies. EBITDA margin is EBITDA divided by net sales. EBITDA is
calculated as follows:

31

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We, in the normal course of doing business, are exposed to market risk
from changes in foreign currency exchange rates and interest rates. Our
principal currency exposures relate to the Canadian dollar and to certain
European currencies. Management's objective, regarding foreign currency risk, is
to protect cash flows resulting from sales, purchases and other costs from the
adverse impact of exchange rate movements.

Our European and Canadian subsidiaries each have operating credit
facilities denominated in their respective local currencies; these debt
facilities are hedged by the operating revenues generated in the local
currencies of the subsidiaries. Our long-term debt is denominated in U.S.
dollars but 50% is held by the Canadian operating company and it is exposed to
the exchange fluctuations in the United States dollar. As we hold either
long-term or operating debt facilities denominated in the currencies of our
European subsidiaries, our equity investment in those entities are hedged
against foreign currency fluctuations. We do not engage in speculative
derivative activities. We are exposed to changes in interest rates primarily as
a result of our operating credit facilities used to maintain liquidity and fund
capital expenditures. Management's objective, regarding interest rate risk, is
to limit the impact of interest rate changes on earnings and cash flows and to
reduce overall borrowing costs. To achieve these objectives, we maintain the
ability to borrow funds in different markets, thereby mitigating the effect of
large changes in any one market. Our operating credit facilities have variable
interest rates and thus a 1% variation in the interest rate on the average
borrowings for the year will cause approximately $0.1 million increase or
decrease in interest expense.

We are also exposed to foreign exchange fluctuations due to our
significant sales and costs in Canada, Sweden and Finland. If the average
exchange rate of the Canadian Dollar, Swedish Krona and Euro were to vary by 1%
versus the U.S. Dollar, the effect on sales for 2002 would have been $0.7
million, $0.3 million and $0.2 million, respectively. We also have operating
expenses in each of these currencies which would mitigate the impact of such
foreign exchange variation on cash flows from operations. Further, a 1%
variation in Canadian dollar versus the U.S. dollar would have an effect of
approximately $0.6 million on interest expense for the entire year given that
50% of the debt is held by the Canadian operating company.

32

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated financial statements of the Hockey Company are
included in Item 8:

The following Consolidated Financial Statement Schedule of the Hockey Company is
included in Item 8:

Schedule II Valuation and Qualifying Accounts for the years ended December 31,
2000, December 31, 2001 and December 31, 2002

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

33

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
THE HOCKEY COMPANY

We have audited the accompanying consolidated balance sheets of THE HOCKEY
COMPANY as of December 31, 2001 and 2002, and the related consolidated
statements of operations, stockholders' equity, comprehensive income (loss) and
cash flows for each of the three years in the period ended December 31, 2002.
Our audits also included the financial statement schedule listed in the Index.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Hockey Company
at December 31, 2001 and 2002, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
2002, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

Montreal, Canada, /S/ ERNST & YOUNG LLP
February 21, 2003 Chartered Accountants

34

THE HOCKEY COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF US$)

The accompanying notes form an integral part of the financial statements.

35

THE HOCKEY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

The accompanying notes form an integral part of the financial statements.

36

THE HOCKEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

The accompanying notes form an integral part of the financial statements.

37

THE HOCKEY COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31
(IN THOUSANDS OF US$)

The accompanying notes form an integral part of the financial statements.

38

THE HOCKEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
(IN THOUSANDS OF US$)

The accompanying notes form an integral part of the financial statements.

39

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

1. DESCRIPTION OF BUSINESS AND CHANGE OF CORPORATE NAME

The Hockey Company ("THC") was incorporated in September 1991 and
reorganized in April 1997.

On February 9, 1999, The Hockey Company filed an amendment to change
the name of the Company from SLM International Inc. to The Hockey Company.
The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, include the
accounts of THC and its wholly-owned subsidiaries (collectively, the
"Company"). The Company designs, develops, manufactures and markets a broad
range of sporting goods. The Company manufactures hockey and hockey related
products, including hockey uniforms, hockey sticks, protective equipment,
hockey, figure and inline skates as well as street hockey products, marketed
under the CCM-Registered Trademark-, KOHO-Registered Trademark-,
JOFA-Registered Trademark-,TITAN-Registered Trademark-, CANADIEN-TM- and
HEATON-Registered Trademark- brand names. The Company sells ucts worldwide to
a diverse customer base consisting of mass merchandisers, retailers,
wholesalers, sporting goods shops and international distributors. The Company
manufactures and distributes most of its products at facilities in North
America, Finland and Sweden and sources products internationally.
Approximately 34% of the Company's employees are unionized having four
collective agreements in three of its manufacturing facilities. As at
December 31, 2002, one of the Company's collective bargaining agreements
expired and is being renegotiated and another two collective bargaining
agreements expired in January and February 2003 and negotiations are
underway. The collective bargaining agreement with another union expires in
2004. The Company believes that the relations with these unions are positive.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION:

The preparation of financial statements in conformity with accounting
principles generally accepted 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.

Certain of the preceding years' figures have been reclassified to
conform to the presentation adopted in the current year.

B. PRINCIPLE OF CONSOLIDATION:

The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany transactions and
balances have been eliminated.

C. REVENUE RECOGNITION:

Revenue is recognized when products are shipped to customers.
Additionally, the Company follows the guidance of Accounting Principles Board
("APB") Opinion no. 29, "Accounting for non-monetary transactions." This APB
provides guidance on accounting for transactions that involve primarily an
exchange of non-monetary assets, liabilities or services. Revenues include
transactions which represent an exchange by the Company of hockey equipment and
related apparel for advertising. Revenues and expenses from these transactions
are recorded at the estimated fair value of the services or the goods delivered.
Revenue and expenses recognized from such transactions were $690 in 2000, $1,551
in 2001 and $1,725 in 2002.

D. FOREIGN CURRENCY TRANSLATION:

The balance sheets of our non-U.S. subsidiaries are translated into
U.S. dollars at the exchange rates in effect at the end of each year. Revenues,
expenses and cash flows are translated at weighted average rates of exchange.
Gains or losses resulting from foreign currency transactions are included in
earnings, while those

40

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

resulting from translation of financial statement balances are shown as a
separate component of stockholders' equity. The functional currencies of our
non-U.S. subsidiaries, which are primarily located in Canada, Finland and
Sweden, are the respective local currencies in each foreign country.

In addition, THC's monetary balance sheet items are translated at the
rates of exchange in effect at year-end and non-monetary items are translated at
historical exchange rates. Revenues and expenses are translated at the rates in
effect on the transaction dates or at the average rates of exchange for the
period. Translation gains or losses are included in the statement of operations.

The Company's investment in the Canadian subsidiary was effectively
hedged by the Canadian dollar denominated debt up to the investment in the
Canadian subsidiary until April 3, 2002 (See note 7b). For the year ended
December 31, 2002, approximately $7 was debited to accumulated other
comprehensive loss as a result of the hedge (2001-$2,000).

E. CONCENTRATION OF CREDIT RISK:

Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of temporary cash investments and
accounts receivable. The Company restricts its cash investments to temporary
investments in institutions with high credit standing and to short-term
securities backed by the full faith and credit of the United States and Canadian
and Provincial Governments. The Company sells its products principally to
retailers and distributors and, in accordance with industry practice, grants
extended payment terms to qualified customers. Concentration of accounts
receivable credit risk is mitigated due to the performance of credit reviews
that are considered in determining credit policies and allowances for doubtful
accounts. The Company provides allowances for expected sales returns, net of
related inventory cost recoveries, discounts, rebates and cooperative
advertising. The Company does not collateralize its receivables, except with
respect to its debt agreements as described in Note 7 in the Notes to
Consolidated Financial Statements. As at December 31, 2001 and 2002, no single
account receivable represented more than 10% of the Company's consolidated
accounts receivable and no single customer accounted for more than 10% of the
Company's consolidated net sales for each of the years in the three year period
ended December 31, 2002.

F. CASH EQUIVALENTS:

Cash equivalents consist of highly liquid short-term investments with
original maturities of three months or less. The Company invests excess funds in
bank term deposits, Canadian Government promissory notes and in U.S. Treasury
bills. At December 31, 2001 and 2002, the Company had cash equivalents of nil
and $10.7 million respectively.

G. INVENTORIES:

Inventories are stated at the lower of cost or net realizable value for
finished products and work in process, and replacement cost for raw materials
and supplies. Cost is determined using the first-in, first-out method. The
Company provides allowances for excess, obsolete and slow moving inventories.

H. RESEARCH & DEVELOPMENT EXPENSES:

Costs for new product research and development as well as changes to
existing products are expensed as incurred and totaled, $2,259, $1,545 and
$1,826 for the years ended December 31, 2000, 2001 and 2002 respectively.

41

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

I. PREPAID EXPENSES:

The Company expenses advertising and promotion costs incurred when the
advertising takes place. Royalty payments are deferred to the extent that the
related sales have not yet been recorded. Such costs are included in prepaid
expenses.

J. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment are stated at cost. Depreciation and
amortization are provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives using
principally the straight-line method of depreciation.

The estimated service lives of the respective assets are as follows:

YEARS
-------
Buildings and improvements .................................... 5 - 40
Machinery and equipment ....................................... 3 - 10
Tools, dies and molds ......................................... 3 - 5
Office furniture and equipment ................................ 3 - 10

Accelerated methods of depreciation are used for tax reporting purposes
where required. Significant additions or major improvements are capitalized,
while normal maintenance and repair costs are expensed. When assets are sold,
retired or otherwise disposed of, the applicable costs and accumulated
depreciation are removed from the accounts, and the resulting gain or loss is
recognized.

K. INCOME TAXES:

Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.
Income tax expense consists of both the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

The Company does not provide for withholding income taxes on the
undistributed earnings of its non-U.S. subsidiaries, since such earnings are not
expected to be remitted to the Company in the foreseeable future. The Company
has provided, in its U.S. tax provision, taxes on all of the unremitted earnings
of its non-U.S. subsidiaries to December 31, 2002.

Fresh-start reporting requires the Company to report a provision in
lieu of income taxes when there is a taxable income and utilization of a
pre-reorganization net operating loss carry-forward. This requirement applies
despite the fact that the Company's pre-reorganization net operating loss
carry-forward and other deferred tax assets would eliminate the related federal
income tax payable. The current and future year tax benefit related to the carry
forward is recorded as a reduction of reorganizational value in excess of
amounts allocable to identifiable assets until exhausted and then as a direct
increase to paid-in capital.

L. INTANGIBLE ASSETS:

Intangible assets are recorded at cost. These amounts include the
excess purchase price over fair values assigned ["goodwill"], reorganizational
value in excess of amounts allocable to identifiable assets ("excess

42

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

reorganizational value") (see Note 6) and deferred financing costs (amortized
over the life of the financing). Effective January 1, 2002 goodwill and excess
reorganization value are no longer amortized but are tested annually for
impairment. Discounted projected cash flows approach or multiples of net income
before interest, income and capital taxes and depreciation and amortization
approach is used to assess if there has been an impairment in the value of
goodwill and excess reorganization value

Excess reorganizational value is being reduced by the realization of
deferred tax assets.

M. IMPAIRMENT OF LONG-LIVED ASSETS:

When events or circumstances indicate the carrying value of a
long-lived asset may be impaired, the Company estimates the future undiscounted
cash flows to be derived from the asset to assess whether or not a potential
impairment exists. If the carrying value exceeds the estimate of future
undiscounted cash flows, the Company then calculates an impairment as the excess
of the carrying value of the asset over the estimate of its fair market value.

N. EARNINGS PER SHARE:

Basic earnings per share is calculated using the weighted average
number of shares of common stock outstanding during the year. Diluted earnings
per share is computed based on the average number of shares of common stock
assumed to be outstanding during each year. Common stock equivalents are
included when dilutive (see Notes 8, 14 and 15)

O. PENSION LIABILITY

The Company provides a defined-benefit pension plan covering its senior
executives. Pension benefits are based on age, years of service and compensation
rates. Pension expense was $267 and $607 in 2001 and 2002 respectively, and the
unfunded liability amounted to $687 and $818 at December 31, 2001 and 2002
respectively, $350 of which is included in deferred income taxes and other
long-term liabilities and the balance in accounts payable.

P. PRODUCT WARRANTY PROVISION

The Company offers warranty for some of its products. The specific
terms and conditions of those warranties vary depending upon the product sold
and country in which the Company does business. The Company estimates the costs
that may be incurred under its basic limited warranty and records a liability in
the amount of such costs at the time product revenue is recognized. The Company
periodically assesses the adequacy of its recorded warranty liabilities and
adjusts the amounts as necessary.

Changes in the Company's product liability reserve during the period are as
follows:

43

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

Q. ENVIRONMENTAL PROVISION

The Company has an obligation for environmental remediation on one
of its properties. Management's preliminary undiscounted estimate
of remediation cost in the amount of $600 has been recorded as an
accrued liability during 2002 (nil in 2001). Actual results could
differ from estimates.

3. ACCOUNTS RECEIVABLE

Net accounts receivable include:

Bad debt expense for the years ended December 31, 2000, 2001 and 2002
was $670, $1,381 and $1,553 respectively.

4. INVENTORIES

Inventories consist of:

Allowances for excess, obsolete and slow moving inventories were $2,568
and $3,284 at December 31, 2001 and 2002, respectively.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of:

Depreciation and amortization expense for the years ended December 31,
2000, 2001, and 2002, was $4,502, $4,311, and $3,620, respectively.

44

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

Included above are land and building in the amount of $411 held for
resale, (net of a write down of $211 in 2002), as a result of the Company's
restructuring in 2001 related to the apparel segment. Also included above are
land and buildings for resale in the amount of $768 in connection with the 2002
restructuring related to the equipment segment. The net carrying value of these
assets approximate fair value.

6a. INTANGIBLE AND EXCESS REORGANIZATION VALUE

Net intangible and excess reorganization value consist of:

Amortization of intangible and excess reorganization value for the
years ended December 31, 2000 and 2001 was $4,499, and $ 4,390 respectively (See
Note 18a). Accumulated amortization for goodwill and excess reorganizational
value for the years ended December 31, 2000, 2001 and 2002was $11,169,
$15,271and $15,724 respectively.

6b. OTHER ASSETS CONSIST OF:

Amortization expense for other assets for the year ended December 31,
2000, 2001 and 2002 was $2,070, $2,821 and $2,601, respectively.

Excess reorganizational value was reduced by $4,551 for the year ended
December 31, 2002 (2001 - $1,360) by the realization of deferred tax assets.

7. REVOLVING CREDIT FACILITIES AND LONG-TERM DEBT

A. REVOLVING CREDIT FACILITIES:

Revolving credit facilities consist of the following:

Effective November 19, 1998, two of the Company's U.S. subsidiaries,
Maska U.S., Inc. and SHC Hockey Inc., entered into a credit agreement (the "U.S.
Credit Agreement") with the lenders referred to therein and with General
Electric Capital Corporation, as Agent and Lender for a period of three years.
Simultaneously, two of the Company's Canadian subsidiaries, Sport Maska Inc. and
Tropsport Acquisitions Inc., entered into a credit agreement (the "Canadian
Credit Agreement") with the lenders referred to therein and with General
Electric Capital

45

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

Canada Inc., as Agent and Lender for a period of three years. The Credit
Agreements are collateralized by all accounts receivable, inventories and
related assets of the borrowers and the Company's other North American
subsidiaries and are further collateralized by a second lien on all of the
Company's and the Company's North American subsidiaries' other tangible and
intangible assets.

The credit agreements were further extended and, subsequent to the
issuance of the Units (See Note 7b), the U.S. Credit Agreement and the Canadian
Credit Agreement were amended on October 17, 2002 for a period of three years to
reflect the repayment of the Caisse term loan and to reduce the maximum amount
of loans and letters of credit available from an aggregate of $60,000 to $35,000
and $7,000 respectively. Under the term of the Units, these credit facilities
must be repaid in their entirety at least once each fiscal year. Each of the
Credit Agreements is subject to a minimum borrowing availability of $1,750 in
certain months. Total borrowings outstanding under the Credit Agreements at
December 31, 2001 and December 31, 2002 were $27,792 and nil, respectively
(excluding outstanding letters of credit of $5,317 (2001 - $4,287)). As at
December 31, 2002 borrowings under the U.S. Credit Agreement bear interest at
rates of either U.S. prime rate plus 0.25%-1.00% or LIBOR plus 1.50%-2.50%
depending on the Company's Operating Cash Flow Ratio, as defined in the
agreement. Borrowings under the Canadian Credit Agreement bear interest at rates
between the Canadian prime rate plus 0.50% to 1.25%, the U.S. prime rate plus
0.25% to 1.00% and the Canadian Bankers' Acceptance rate or LIBOR plus 1.50% to
2.50% depending on the Company's Operating Cash Flow Ratio, as defined in the
agreement. In addition, the borrowers are charged a monthly commitment fee at an
annual rate of up to 1/4 to 3/8 of 1% on the unused portion of the revolving
credit facilities under the Credit Agreements and certain other fees.

The Credit Agreements contain customary negative and affirmative
covenants including those relating to capital expenditures, minimum interest
coverage and fixed charges coverage ratio. The agreements restrict, among
others, the ability to pay cash dividends on the preferred and common shares.

Jofa AB, a Swedish subsidiary of the Company, has entered into a credit
agreement with Nordea Bank in Sweden. The maximum amount of loans and letters of
credit that may be outstanding under the agreement is SEK 90 million ($10.4
million). The facility is collateralized by the assets of Jofa AB, excluding
intellectual property, bears interest at a rate of STIBOR (currently 3.90 %)
plus 0.90%, matures on December 31, 2003 and is renewable annually. Total
borrowings as at December 31, 2001 and 2002 were nil (excluding outstanding
letter of credits of $1,640, 2001 - $1,445)). Management believes that the
credit agreement can be renewed or refinanced upon maturity. If this agreement
cannot be renewed or financed with Nordea Bank, the Company will seek alternate
sources of financing to replace this agreement.

Effective July 10, 2001, KHF Finland Oy (KHF), a Finnish subsidiary of
the Company, entered into a credit agreement with Nordea Bank in Finland,
replacing the former credit facility for FIM 30,000 ($4,600) which was
terminated during 2001. The maximum amount of loans and letters of credit that
may be outstanding under the agreement is EUR 2,400 ($2,500). The facility is
collateralized by the assets of KHF and bears interest at a rate of EURIBOR
(2.92% at December 31, 2002) plus 0.9% and is renewable annually. Total
borrowings as at December 31, 2001 and 2002 were nil. Management believes that
the credit agreement can be renewed or refinanced upon maturity.

The weighted average interest rate on short-term debt outstanding at
December 31, 2000, 2001 and 2002 was 8.49%, 6.96% and nil respectively.

46

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

B. LONG-TERM DEBT

Long-term debt at December 31 was as follows:

11 1/4% SENIOR SECURED NOTE UNITS

On April 3, 2002, the Company issued $125,000 11 1/4% Senior Secured
Note Units (the "Units") due April 15, 2009 at a price 98.806%, each Unit
consisting of $0.5 principal amount of 11 1/4% Senior Secured Notes of the
Company and $0.5 principal amount of 11 Senior Secured Note of Sport Maska Inc.,
a wholly owned subsidiary of the Company, through a private placement. The
effective interest rate on the Units is approximately 11.4%.

An offer to exchange all of the outstanding Units for 11 1/4% Senior
Secured Note Units due 2009 (the "Exchange Units"), whic have been registered
with the United States Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended, pursuant to a registration statement on Form
S-4 filed with the SEC on August 13, 2002, was completed on September 20, 2002.
The terms of the Exchange Units (and the underlying Exchange Notes) and those of
the outstanding Units (and underlying Notes) are identical, except that the
transfer restrictions and registration rights relating to the Units do not apply
to the Exchange Units; therefore, for purposes of this report on Form 10-K, any
reference to "Unit" refers to both Units and Exchange Units and any reference to
"Note" refers to both Notes and Exchange Notes. In connection with the issuance
of the Units, the Amended and Restated Credit Agreement with Caisse and any
documents related thereto have been terminated and are of no further force and
effect.

THC has fully and unconditionally guaranteed the Sport Maska Inc. Notes
on a senior secured basis. Sport Maska Inc. has fully and unconditionally
guaranteed the THC Notes. Also, certain subsidiaries of THC and Sport Maska
Inc., excluding the Finnish subsidiaries, have fully and unconditionally
guaranteed the Units on a senior secured basis. The Units and guarantees are
secured by substantially all the tangible and intangible assets of the Company,
excluding the Finnish subsidiaries, subject to the prior ranking claims by
lenders under the revolving credit facilities, and by a pledge of stock of the
first-tier Finnish subsidiary. The security interest in the assets of the
Company's Swedish subsidiaries (other than intellectual property) is limited to
$15,000.

The Units may be redeemed at any time after April 15, 2006 at the
following redemption prices (expressed as percentages of the principal amount
thereof) plus accrued and unpaid interest to the date of redemption, if redeemed
during the twelve-month period commencing on April 15 of the year set forth
below:

YEAR PERCENTAGE
---- ----------

2006 105.625%
2007 102.813%
2008 and thereafter 100.000%

47

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

In addition, up to one-third of the aggregate principal amount of the
Units may be redeemed with the net proceeds of certain public equity offerings
at any time until April, 15, 2005 at a redemption price of 111.25% of the
principal amount plus accrued and unpaid interest to the date of redemption. If
the Company undergoes a change of control, the Company and Sport Maska Inc. will
be required to jointly offer to purchase the Units from the holders at 101% of
principal amount plus accrued and unpaid interest to the date of repurchase.

The proceeds of $123,508 were used (i) to repay all outstanding secured
loans under the Amended and Restated Credit Agreement, dated March 14, 2001,
(ii) to repay a portion of the secured indebtedness under the U.S. and Canadian
Credit Agreements, (iii) to pay fees and expenses of the offering and (iv) for
general corporate purposes. Among other financial covenants, the indenture
governing the Notes restricts the Company's ability to borrow under its
revolving credit facilities to a maximum of $35,000 and limits payments of
dividends or repurchases of stock.

SECURED LOANS - CAISSE DE DEPOT ET PLACEMENT DU QUEBEC AND NORDEA BANK

On November 19,1998, in connection with its acquisition of Sports
Holdings Corp., the Company and Sport Maska Inc. entered into a Secured Loan
Agreement with the Caisse de depot et placement du Quebec ("Caisse") to borrow a
total of Canadian $135,800 for a period of three years. The loan was further
extended and amended into 2 facilities on March 14, 2001(Facility 1 - Canadian
$90 million due June 30, 2004 and Facility 2 - Canadian $45.8 million due
October 31, 2002). Each facility bore interest equal to the Canadian prime rate
plus 5%, and Facility 2 bore additional interest of 3.5% which was capitalized
and repaid on Facility 2 maturity. On March 8, 2002 the Company acquired an
option from the lender to extend the maturity of Facility 2 plus capitalized
interest [$634 as at December 31, 2001] to February 28, 2003. The loans were
repaid in full and the amended credit agreement was terminated in connection
with the issuance of the Notes (as described above).

In May 2000, Jofa AB, a subsidiary of the Company, entered into a loan
agreement with Nordea Bank in Sweden to borrow SEK 10,000 ($1,200). The loan is
for four years with annual principal repayments of SEK 2,500 ($288). The loan is
secured by a chattel mortgage on the assets of the subsidiary and bears an
interest rate of STIBOR plus 1.25%.

Based on the borrowing rates currently available to the Company for
bank loans and other financing with similar terms, the Company estimated that
the fair value of its short-term debt and long-term debt at December 31, 2001
and 2002 was equivalent to the carrying values in the financial statements.
These values represent a general approximation of possible value and may never
be realized.

Scheduled principal repayments of outstanding loan balances required as
of December 31, 2002 are as follows:

2003............................................................ $ 288
2004............................................................ 200
2005 to 2008.................................................... -
2009............................................................ 125,000
-------------
$125,488
-------------
-------------

8. COMMON STOCK, WARRANTS AND PREFERRED STOCK

The Company has authorized 20,000,0000 shares of common stock of which
of 7,040,523 are issued and outstanding.

48

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

Pursuant to the Warrant Agreement, dated as of March 14, 2001, between
the Company and Caisse, the Company issued a warrant to Caisse to purchase
539,974 shares of common stock, par value $0.01 per share, of the Company, at an
exercise price of $0.01 per share. Concurrent with the repayment of the Caisse
loan (see Note 7), Caisse exercised the warrant and purchased the Company's
common stock.

On April 11, 1997, in connection with a re-organization, THC's old
common stock was extinguished and the holders received a total of 300,000
five-year warrants to purchase an aggregate of 300,000 shares of common stock at
an exercise price of $16.92 per share. The warrants expired unexercised on April
11, 2002.

On November 19, 1998, the Company issued 100,000 shares of 13%
Pay-In-Kind redeemable preferred stock, $0.01 par value per share, cumulative
dividend together with warrants to purchase 159,127 common shares of the Company
at a purchase price of $0.01 per share, for cash consideration of $12,500 (par
value). The fair value of the warrants was determined to be $1,665 and has been
recorded in Stockholder's equity as common stock purchase warrants. The balance
of the proceeds, $10,835, has been recorded as 13% Pay-In-Kind preferred stock.
The difference between the redemption value of the preferred stock and the
recorded amount is being accreted over the term of the preferred stock to
October 19, 2009, by a charge to retained earnings.

Dividends, which are payable semi-annually from November 19, 1998, may
be paid in cash or in shares of the 13% Pay-In-Kind preferred stock, at the
Company's option. The preferred stock is non-voting. If the Company fails to
redeem the preferred stock on or before the mandatory redemption date and for a
sixty day period or more after being notified of its failure to redeem the
preferred stock, then the preferred stockholders, as a class of stockholders,
have the option to elect one director to our Board of Directors with the
provision that the preferred stockholders are to elect 28% of the Company's
directors. In connection with issuance of the Units (see Note 7), the holder
agreed to extend the redemption of the preferred stock to October 15, 2009, a
date six months beyond the maturity of the Units. At December 31, 2002 unpaid
dividends of $8,155 (December 31, 2001 -$5,779) have been accrued on the
preferred stock and are included as long-term liabilities. The preferred stock
is redeemable at the holders option. However, under the terms of the Company's
debt covenants, the preferred stock may not be redeemed while its debt is
outstanding.

The preferred stock must be redeemed by the Company upon a change of
control or by the mandatory redemption date.

9. RESTRUCTURING CHARGES

In 2001, we embarked on a plan to rationalize our operations and
consolidate our facilities. This rationalization involved the elimination of
certain redundancies, both in terms of personnel and operations as well as the
consolidation of facilities including the closure of its Mount Forest, Ontario
plant, and our Paris, France sales office, and the consolidation of North
American distribution into Canada. Accordingly, the Company set up reserves of
approximately $5.7 million for the expected cost of the restructuring. Of this
amount, approximately $4.3 million was to cover the cost of severance packages
to affected employees, with the remainder representing other closure costs. Of
these amounts, approximately $0.2 million remained unpaid as at December 31,
2002.

In October 2002, the Company decided to close three of its North
American manufacturing units effective December 2002 in order to reduce excess
capacity and achieve greater operating efficiencies. Approximately 160 employees
were affected by this decision, of which approximately 50 are from the apparel
segment. Accordingly, the Company set up a restructuring reserve of
approximately $2.1 million, of which approximately $1.3 million is to cover the
cost of severance packages to affected employees, with the remainder
representing other closure costs. Of these amounts, approximately $0.9 million
remains unpaid as at December 31, 2002.

49

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

10. RELATED PARTY TRANSACTIONS

In 2002, the Company was charged a management fee of $100 (2001 - $100,
2000 - $180) by Wellspring Capital Management LLC, the controlling shareholder,
which was unpaid at year end.

11. LEASES

Certain of our subsidiaries lease office and warehouse facilities and
equipment under operating lease agreements. Some lease agreements provide for
annual rent increases based upon certain factors including the Consumer Price
Index.

The following is a schedule of future minimum lease payments under
non-cancelable operating leases with initial terms in excess of one year at
December 31, 2002:

2003......................................................... $2,835
2004......................................................... 2,398
2005......................................................... 595
2006......................................................... 429
2007 and beyond.............................................. 951
-----------------
$7,208
-----------------
-----------------

Rental expense for the years ended December 31, 2000, 2001 and 2002 was
approximately $3,376, $3,068 and $2,750, respectively.

12. ROYALTIES AND ENDORSEMENTS

Certain of the Company's subsidiaries have entered into agreements that
call for royalty payments generally based on net sales of certain products and
product lines. Certain agreements require guaranteed minimum payments over the
royalty term. The Company also pays the NHL, certain professional players and
teams an endorsement fee in exchange for the promotion of the Company's brands.
The following is a schedule of the future minimum payment and annual obligations
under these contracts.

2003.......................................................... $13,852
2004.......................................................... 13,222
2005.......................................................... 6,570
2006.......................................................... 504
2007 and beyond............................................... 641
--------------
$34,789
--------------
--------------

Royalty and endorsement expenses for the years ended December 31, 2000,
2001 and 2002 were $10,461, $11,914 and $14,298 respectively

13. INCOME TAXES

The components of income taxes are:

50

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

The Company's effective income tax rate from continuing operations
differed from the federal statutory rate as follows:

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 2001 and
2002 are as follows:

51

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

Realization of deferred tax assets is dependent on future earnings,
the timing and amounts of which are uncertain.
Accordingly, the net operating loss and investment tax credit carry-forwards
portion of the deferred tax assets have been offset by a
valuation allowance in 2002 (net deferred tax assets were fully offset by a
valuation allowance in 2001). The valuation allowance decreased by $11,358
(2001- increased by $1,281) during the year.

Fresh-start reporting requires the Company to report a provision in
lieu of income taxes when there is a taxable income and utilization of a
pre-reorganization net operating loss carry-forward. This requirement applies
despite the fact that the Company's pre-reorganization net operating loss
carry-forward and other deferred tax assets would eliminate the related federal
income tax payable. The current and future year tax benefit related to the
carry-forward is recorded as a reduction of reorganizational value in excess of
amounts allocable to identifiable assets until exhausted and then as a direct
increase to paid in capital. The amount of income tax provision which has been
used to reduce the reorganizational value in excess of amounts allocable to
identifiable assets has been reflected as a provision in lieu of income taxes in
the Company's Consolidated Statements of Operations.

At December 31, 2002, the Company has net operating loss carry-forwards
related to U.S. operations for income tax purposes of approximately $ 37,700
($49,000 in 2001). The carry-forward balances begin to expire in 2010 and have
been fully reserved by a valuation allowance. Of this valuation allowance,
$14,100 would reduce intangible and other assets if reversed. The Company's
ability to use remaining loss carry-forwards is limited in use on an annual
basis as a result of a change in control of the Company on April 11, 1997 in
connection with the Reorganization Plan and its acquisition of SHC in 1998.

The Company has post-reorganization foreign tax credit carryover in the
amount of $12,500, which will begin to expire December 31, 2005.

There are no undistributed earnings from continuing operations of
subsidiaries outside the U.S., for which no provision for U.S. taxes has been
made.

14. EARNINGS PER SHARE

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

(a) Common equivalent shares include warrants and stock options issuable for
little or no cash consideration.

52

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

(b) Other warrants and stock options are considered in diluted earnings per
share when dilutive. The Company used the average book value of its common
stock in calculating the common equivalent shares as required by statement
of Financial Accounting Standards No. 128 due to the fact that the
Company's stock had extremely limited trading volume during the period.

(c) Options to purchase 1,322,222 and 1,272,222 shares of common stock were
outstanding at December 31, 2001 and 2002 respectively but were not
included in the computation of diluted earnings per share because the
options exercise price was greater than the average book value of the
common stock.

15. STOCK OPTIONS

In 2002, 65,000 additional stock options were granted at an exercise
price of $8.50 per share and 115,000 stock options were terminated.

In 2001, 440,000 additional stock options were granted at an exercise
price of $8.50 per share and 100,000 stock options were cancelled. In addition,
the Company approved the reduction of the exercise price per share of stock
options held by certain employees relating to 160,000 shares at prices of $10.00
to $14.00 to $8.50, of which 150,000 shares are subject to options held by
executive officers.

Prior to 2001, the Company granted stock options to purchase 982,222
shares of Common Stock in the Company at a weighted average exercise price of
$11.64 to certain key employees.

The exercise prices of the stock options were not less than the
estimated fair market value of the shares at the time the options were granted.
Generally, these stock options become exercisable over a five-year vesting
period and expire 10 years from the date of the grant. Options granted for the
Common Stock are as follows:

The following table summarizes information about stock options
outstanding at December 31, 2002.

(a) Average contractual life remaining in years.

The Company applies APB Opinion No. 25 and related Interpretations in
accounting for stock options. Accordingly, no compensation cost has been
recognized.

53

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

The following table illustrates the effect on net income and earnings
per share if the company had applied the fair value recognition provisions of
FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to stock-based
employee compensation. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2002: risk-free interest rates of 4.9%;
dividend yields of 0%; volatility factors of the expected market price of the
Company's common stock of 0; and a weighted-average expected life of the option
of 8.8 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (in thousands except for earnings per share
information):

The impact of SFAS 123 may not be representative of the effect on
income in the future years because options vest over several years and
additional option grants may be made each year.

16. CONTINGENCIES

The Company is currently undergoing an audit by the Canada Customs and
Revenue Agency for its 1996 to 2000 taxation years. It is not possible at this
time to determine the amount of the liability that may arise as a result of this
audit.

Other than certain legal proceedings arising from the ordinary course
of business, which we believe will not have a material adverse effect, either
individually or collectively, on the financial position, results of operations
or cash flows, there is no other litigation pending or threatened against us.

54

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

17. SEGMENT INFORMATION

REPORTABLE SEGMENTS

The Company has two reportable segments: Equipment and Apparel. The
Equipment segment derives its revenue from the sale of skates, including ice
hockey, roller hockey and figure skates, as well as protective hockey equipment
and sticks for both players and goaltenders. The Apparel segment derives its
revenue from the sale of hockey apparel, such as authentic and replica hockey
jerseys, as well as a high quality line of licensed and branded apparel,
baseball style caps and jackets.

MEASUREMENT OF SEGMENT PROFIT OR LOSS AND SEGMENT ASSETS

The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
performance based on gross profit. Segment assets include only inventory.

INFORMATION ABOUT SEGMENT PROFIT OR LOSS AND SEGMENT ASSETS

For the year ended and as at December 31, 2000:

For the year ended and as at December 31, 2001:

For the year ended and as at December 31, 2002:

55

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

RECONCILIATION OF SEGMENT PROFIT OR LOSS AND SEGMENT ASSETS FOR THE YEARS ENDED
DECEMBER 31:

GEOGRAPHIC INFORMATION (BASED ON CUSTOMER LOCATION)

18A. NEW ACCOUNTING PRONOUNCEMENTS ADOPTED

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, BUSINESS
COMBINATIONS, and No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. Under the new
rules, goodwill and intangible assets with indefinite lives are no longer
amortized but are subject to annual impairment tests using a two-step process.
The first step is to screen for potential impairment, while the second step
measures the amount of impairment, if any. Other intangible assets will continue
to be amortized over their estimated useful lives (See Note 1 (N)).

In August 2001, the FASB issued SFAS No. 144, IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS. Under the new rules, assets held for sale are recorded at the
lower of the assets' carrying amounts and fair values and would cease to be
depreciated. The Company adopted the Statement as of January 1, 2002, and no
significant transition adjustment resulted from its adoption.

56

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION - TRANSITION AND DISCLOSURE. Statement 148 amends SFAS
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to provide alternative methods
of transition to SFAS No. 123's fair value method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure provisions of
SFAS No. 123 and APB Opinion No. 28, INTERIM FINANCIAL REPORTING to required
disclosure in the summary of significant accounting policies of the effects of
an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial
statements. While SFAS No. 148 does not amend SFAS No. 123 to require companies
to account for employee stock options using the fair value method, the
disclosure provisions of SFAS No. 148 are applicable to all companies with
stock-based employee compensation, regardless of whether they account for that
compensation using the fair value method of SFAS No. 123 or the intrinsic value
method of APB No. 25. The provision of SFAS 148 are applicable for fiscal years
ending after December 15, 2002 and we have adopted this statement in our
financial statements for the year ended December 31, 2002

In November 2002, FASB issued Interpretation No. 45, GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
GUARANTEES OF INDEBTEDNESS OF OTHERS ["FIN 45"] which requires certain
guarantees to be recorded at fair value and increases the disclosure
requirements for guarantees even if the likelihood of making any payments is
under the guarantee in remote. The initial recognition and measurement provision
of FIN 45 are applicable on a prospective basis to guarantees issued or modified
after December 31, 2002. The increased disclosure requirements are effective for
fiscal years ending after December 15, 2002 and have been adopted by the Company
in the consolidated financial statements for the year ended December 31, 2002.

18b) NEW ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

On April 30, 2002, the FASB issued SFAS No. 145, RESCISSION OF FASB
STATEMENTS No. 4, 44, and 64, AMENDMENT OF FASB STATEMENT No. 13, AND TECHNICAL
CORRECTIONS. SFAS No. 145 rescinds Statement 4, which required all gains and
losses from extinguishment of debt to be classified as an extraordinary item,
net of related income tax effect, if material in the aggregate. Due to the
rescission of SFAS No. 4, the criteria in Opinion 30 will now be used to
classify those gains and losses. The provisions of SFAS No. 145 related to the
rescission of SFAS No. 4 are effective for fiscal years beginning after May 15,
2002. Any gain or loss on extinguishment of debt that was classified as an
extraordinary item in prior periods presented that does not meet the criteria
for classification as an extraordinary item will be reclassified. The provisions
of SFAS No. 145 related to SFAS No. 13 are effective for transactions occurring
after May 15, 2002. All other provisions of this Statement shall be effective
for financial statements issued on or after May 15, 2002. The Company will adopt
this Statement on January 1, 2003 upon which the extraordinary item - loss on
early extinguishment of debt, and the related income taxes will be reclassified.

In July 2002, FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED
WITH EXIT OR DISPOSAL ACTIVITIES, which addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
EITF Issue No. 94-3 "LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION
BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED
IN A RESTRUCTURING) ". SFAS No.146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at the time when the
liability is incurred. SFAS No.146 eliminates the definition and requirement for
recognition of exit costs at the date of an entity's commitment to an exit plan
in Issue 94-3. The Company will adopt SFAS No.146 for exit and disposal
activities initiated after December 31, 2002.

As mentioned in note 18a, the provision of FIN 45 relating to initial
recognition and measurement are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The Company will adopt these
provisions of FIN 45 for guarantees issued or modified after December 31, 2002
on January 1, 2003.

57

THE HOCKEY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF US$, EXCEPT SHARE DATA)

19. SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION

THC's and Sport Maska Inc.'s payment obligations under the Notes [See
Note 4b] are guaranteed by certain subsidiaries of THC's and Sport Maska Inc.'s
wholly-owned subsidiaries [the "Other Guarantors"], excluding the Finnish
subsidiaries, and a pledge of the first-tier Finnish subsidiary. Such guarantees
are full, unconditional and joint and several. The security interest in the
assets of the Company`s Swedish subsidiaries (other than intellectual property)
is limited to $15,000. Under the Company's revolving credit facilities, both
Sport Maska Inc. and Maska U.S., Inc. are restricted from paying dividends on
the common and preferred stock. The following supplemental financial information
sets forth, on an unconsolidated basis, balance sheets, statements of operations
and statements of cash flows information for THC, Sport Maska Inc., Other
Guarantors and for the Company's other subsidiaries [the "Non-Guarantor
Subsidiaries"] which have been included in the eliminations column. The
supplemental financial information reflects the investments of THC, Sport Maska
Inc. and the Other Guarantors in the Other Guarantor Subsidiaries and
Non-Guarantor Subsidiaries using the equity method of accounting. The
supplemental financial information also reflects pushdown of the Company's loan
with Caisse and its replacement with the Notes.

58

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

59

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

60

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

[1] Other expense, net for the Hockey Company and Other Guarantors includes
equity in net income (loss) of subsidiaries of $7,136 and $3,253, respectively,
offset by a dividend receivable of nil and $8,389, respectively.

61

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

[1] Other expense, net for the Hockey Company and Other Guarantors includes
equity in net income (loss) of subsidiaries of $(7,506) and $2,028,
respectively.

62

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

[1] Other expense, net for the Hockey Company and Other Guarantors includes
equity in net income (loss) of subsidiaries of $(5,264) and 1,767, respectively.

63

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

64

THE HOCKEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US$, except share data)

65

Schedule II

THE HOCKEY COMPANY
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 2000, 2001 AND 2002
(IN THOUSANDS, OF US$)

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

(A) Accounts written off as non-collectible, net of recoveries

(B) Deductions taken by customers.

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

None.

66

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(1) MEMBER OF COMPENSATION COMMITTEE

(2) MEMBER OF AUDIT COMMITTEE

GREG S. FELDMAN became a Director in July 1998 and Chairman of the
Board in November 2001. Mr. Feldman is co-founder and has been the Managing
Partner of Wellspring Capital Management LLC since its inception in January
1995. Wellspring is a New York based private equity firm. Mr. Feldman is a
director of six private companies controlled by Wellspring.

MATTHEW H. O'TOOLE was appointed President in January 2001, became a
Director in May 2001, and was named Chief Executive Officer, effective as of
September 2001. Mr. O'Toole is a 19-year veteran of the sporting goods industry
joining us in May 1999 as Senior Vice President, Sales and Marketing. Before
that he served one year as Vice President of Sales and Marketing for Teardrop
Golf Company. From 1994 to 1998, he served as Vice President of Sales for Tommy
Armour Golf Company (a subsidiary of US Industries).

ROBERT A. DESROSIERS became Vice President, Finance and
Administration, in May 2001, upon joining us, and Chief Financial Officer in
January 2002. Mr. Desrosiers is a Chartered Accountant and experienced finance
executive with over thirty years experience in both the public and private
sectors. For the 15 years prior to joining us, Mr. Desrosiers was Vice
President, Finance and Administration, at Bauer Nike Hockey Inc.

JOHNNY MARTINSSON became Senior Vice President, European Division, in
1998, upon joining us in connection with the acquisition of Sports Holdings
Corp. In 1997, Mr. Martinsson was appointed Senior Vice President - Europe for
Sports Holdings Corp. From 1988 until 1997 Mr. Martinsson was President of Jofa,
a division of Karhu Canada Hockey. Mr. Martinsson originally joined Jofa in 1970
as a product manager.

JOHN PAGOTTO became Vice President, Equipment Division, in July 2001,
upon joining us. Previously, Mr. Pagotto served one year as Vice President,
Brand Management, at Bauer Nike Hockey Inc. Mr. Pagotto has a 23-year career in
the hockey industry and, prior to joining Bauer Nike Hockey Inc., was Vice
President and General Manager of the Karhu Hockey Division, Sports Holdings
Corp.

MICHEL RAVACLEY became Vice President, Global Operations, in June 2002
upon joining us. Previously, Mr. Ravacley served four years as Vice President,
Supply Chain and ITS at ALDO Group and prior to joining

67

ALDO Group was Partner-in-Charge of KPMG Management Consulting where, among his
many responsibilities, he managed the reengineering and implementation of supply
chain processes and information systems.

LEN RHODES became Vice President, Global Marketing, in January 2001,
having joined us in September 1999 as Director of Marketing. Prior to that he
spent 11 years at Molson Breweries in various sales and marketing positions
eventually becoming a brand manager.

RAYMOND RICCIO became Vice President, Apparel Division, in February
2002, having joined us in August 1999. Mr. Riccio previously served with Starter
Corporation for 8 years, where his experience included National Account Manager,
Regional Sales Manager and National Sales Manager of Key Accounts.

PHIL BAKES became a Director in October 1999. Mr. Bakes is the Chairman
and Chief Executive Officer of FAR&WIDE Travel Corp., a leading value-added
travel tour operator, which he founded in 1997. Previously, Mr. Bakes was
president of Sojourn Enterprises, Inc., a Miami advisory and merchant banking
firm he founded in 1990.

MICHEL BARIL became a Director in September 2001, as a designee of
Caisse. Mr. Baril has been President and Chief Operating Officer of Bombardier
Recreational Products since February 2001. From May 2000 until February 2001, he
was Executive Vice-President of Bombardier Transportation, responsible for all
aspects of Bombardier Transportation operations worldwide. Between September
1998 and May 2000, he was Executive Vice-President, Operations, of Bombardier
Aerospace, overseeing all manufacturing and procurement activities for the
Canadair, de Havilland, Learjet and Shorts entities. From June 1996 until
September 1998, he was President of the Mass Transit Division, overseeing all of
the Transportation Group's activities in Canada and the United States.

PAUL M. CHUTE became a Director in April 1997. Since January 1995, Mr.
Chute has served as a Managing Director of Phoenix Investment Partners Ltd., an
investment advisor to its affiliate, Phoenix Life Insurance Company. He was a
Managing Director of Phoenix Life Insurance Company from January 1992 to
December 1994.

JASON B. FORTIN became a Director in January 1999. Mr. Fortin is a
principal of Wellspring and has been employed by them since March 1995. From
1992 until 1995, Mr. Fortin was in the corporate finance department of
Donaldson, Lufkin & Jenrette Securities Corporation.

JAMES C. PENDERGAST became a Director in April 1997. Since July 1993,
Mr. Pendergast has been a Managing Director of Alliance Corporate Finance Group
Inc., an investment advisor to its affiliate, The Equitable Life Assurance
Society of the United States. From July 1986 until July 1993, he was employed by
Equitable Capital Management Corp., a subsidiary of Equitable.

ROGER SAMSON became a Director in May 2001, as a designee of Caisse.
Mr. Samson has been an independent consultant since 1999 and serves on a number
of Boards of Directors. From 1997 to 1999 he was President of Sico Coatings, an
affiliate of Sico Inc., a paint manufacturer.

BOARD OF DIRECTORS

Our Board of Directors has responsibility for establishing broad
corporate policies and for overseeing our performance, although it is not
involved in day-to-day operations. Members of the Board are kept informed of our
business by various reports and documents sent on a regular basis as well as by
operating and financial reports presented at Board and various Committee
meetings. The Board of Directors held 8 meetings during 2002.

We currently have an audit committee and a compensation committee. None
of the members of the audit committee and the compensation committee are
employees of the Company or any of our subsidiaries. The mandates of these
committees are described below.

The audit committee is responsible for (i) reviewing and approving the
financial statements of the Corporation and related documents, and (ii)
reviewing and inquiring into matters affecting financial reporting, the
Corporation's system of internal accounting and financial controls and
procedures, independence of the external auditors, and the financial and
business risks or exposure of the Company. In addition, the audit committee is
responsible for recommending to the board the external auditors to be appointed
and their remuneration.

68

The compensation committee is responsible for reviewing the adequacy
and form of compensation of all executives and employees of the Corporation. It
is also responsible for reviewing recommendations for the appointment of persons
to senior executive positions, considering terms of employment, succession
planning and recommending to the board awards of stock options. The compensation
committee also approves all employee benefits, including vacation policy,
benefits plans and automobile allowances granted to officers and employees of
the Company.

Directors do not receive any compensation for services rendered in
their capacity as such; however, they do receive reimbursement of reasonable
out-of-pocket expenses in respect of attendance at meetings.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following Summary Compensation Table sets forth certain information
for the year ended December 31, 2002 concerning the cash and non-cash
compensation earned by or awarded to the Chief Executive Officer and our four
other most highly compensated executive officers as of December 31, 2002 and as
of the date hereof:

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

69

(1) Includes all other annual compensation not properly categorized as salary
or bonus. Certain perquisites that do not exceed 10% of the named
individuals' salary are excluded.

(2) Mr. Ravacley joined us in June 2002 and earned an annualized salary of
$142,000.

(3) Mr. Terreri ceased to be an executive officer of the Company on May 24,
2002. His annualized salary in 2002 would have been $203,855. The other
compensation includes $150,000 paid to Mr. Terreri with respect to stock
options owned by him in respect of which he had a guaranteed return and
$118,915 in termination pay. A balance of $135,903 in termination pay will
be paid to Mr. Terreri in 2003.

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

The following tables set forth certain information concerning the
granting of options to purchase shares of our common stock to each of our
executive officers named in the Summary Compensation Table above, as well as
certain information concerning the exercise and value of such stock options for
each of the individuals. Options generally become exercisable over periods of
five years and, subject to certain exceptions, expire no later than ten years
from the date of grant.

STOCK OPTIONS GRANTED IN 2002

The following table provides a summary of all options to purchase or
acquire securities of the Corporation or any of its subsidiaries made during the
most recently completed financial year to each of the Named Executive Officers.

OPTION GRANTS DURING 2002

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

(1) Based on an exchange rate of $1.00 = CDN$1.5702.

(2) The value of unexercised in-the-money options has not been determined due
to the extremely limited amount of trading activity in our common stock.

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OPTIONS EXERCISED IN 2002 AND VALUE OF OPTIONS AT DECEMBER 31, 2002 SHARES

The value of unexercised in-the-money options at year end has not been
determined due to the extremely limited amount of trading activity in our common
stock.

EMPLOYMENT CONTRACTS

Effective January 1, 2001, and further amended on September 26, 2001 to
reflect his position as Chief Executive Officer, we entered into an employment
agreement with Matthew H. O'Toole, as President and Chief Executive Officer. Mr.
O'Toole receives annual compensation of Canadian $437,000, subject to review
annually, and is eligible to receive a bonus calculated in accordance with a
formula based on our EBITDA up to 75% of then-current salary or, if 110% above
budgeted EBITDA is achieved, a larger percentage at the discretion of our board
of directors. Mr. O'Toole has also been granted stock options to purchase
175,000 shares of our common stock at an exercise price of $8.50 per share, of
which options to purchase 25,000 shares were repriced from $14.00 per share.
These options have a term of ten years and vest ratably over five years with all
options fully vested upon a change of control and ratably upon a termination of
Mr. O'Toole's employment without "cause". Additionally upon a change of control,
Mr. O'Toole is entitled to a "success fee" of two times then-current base salary
less the current cash value (per share less the exercise price per share
multiplied by the number of shares vested) of all vested stock options. Upon
notice of termination of employment by us, Mr. O'Toole will be entitled to
receive as severance one year's salary.

Effective May 22, 2001, we entered into an employment contract with
Robert A. Desrosiers, as Vice President, Finance and Administration. He was
named Chief Financial Officer effective January 2002, with no change in
employment terms. Mr. Desrosiers receives annual compensation of Canadian
$242,000, subject to annual review. Mr. Desrosiers is also eligible to
participate in our bonus plan up to a maximum of 40% of then current salary. Mr.
Desrosiers has been granted stock options to purchase 35,000 shares of our
common stock at an exercise price of $8.50 per share. These options have a term
of ten years, vest ratably over five years commencing on December 31, 2001 and
vest upon change in control and ratably upon a termination of Mr. Desrosiers'
employment without "cause". Upon notice of termination of employment by us, Mr.
Desrosiers will be entitled to receive as severance twelve months' salary and
benefits.

Effective January 1, 1999, as amended September 12, 2001, we entered
into an employment contract with Johnny Martinsson, as Senior Vice President,
European Division. He currently earns a base salary of SEK 1,000,000 per year,
subject to annual review. Mr. Martinsson is also eligible to participate in our
bonus plan up to a maximum of 40% of then current salary. Mr. Martinsson has
been granted stock options to purchase 35,000 shares of our common stock at an
exercise price of $8.50 per share, of which options to purchase 25, 000 shares
were repriced from $14.00 per share in 2001. These options have a term of ten
years, vest ratably over five years commencing on December 31, 1999 and vest
upon change in control and ratably upon a termination of Mr.

71

Martinsson's employment without "cause". Upon notice of termination of
employment by us, Mr. Martinsson will be entitled to receive as severance twelve
months' salary and benefits.

Effective July 16, 2001, we entered into an employment agreement with
John Pagotto, as Vice President, Equipment Division. Mr. Pagotto receives annual
compensation of Canadian $242,000, subject to annual review. Mr. Pagotto is also
eligible to participate in our bonus plan up to a maximum of 40% of then current
salary. Mr. Pagotto has been granted stock options to purchase 35,000 shares of
our common stock at an exercise price of $8.50 per share. These options have a
term of ten years, vest ratably over five years commencing on December 31, 2001
and vest upon change in control and ratably upon a termination of Mr. Pagotto's
employment without "cause". Upon notice of termination of employment by us, Mr.
Pagotto will be entitled to receive as severance twelve months' salary and
benefits.

Effective June 18, 2001, we entered into an employment agreement with
Len Rhodes, as Vice President, Global Marketing. Mr. Rhodes receives annual
compensation of Canadian $154,500, subject to annual review. Mr. Rhodes is also
eligible to participate in our bonus plan up to a maximum of 40% of then current
salary. Mr. Rhodes has been granted stock options to purchase 25,000 shares of
our common stock at an exercise price of $8.50 per share. These options have a
term of ten years, vest ratably over five years commencing on December 31, 2001
and vest upon change in control and ratably upon a termination of Mr. Rhodes'
employment without "cause". Upon notice of termination of employment by us, Mr.
Rhodes will be entitled to receive as severance twelve months' salary and
benefits.

Effective August 16, 1999, as amended February 28, 2001 to extend the
term to February 28, 2003 and as amended February 28, 2003 to extend the term to
February 28, 2005, we entered into an employment agreement with Raymond Riccio,
as Vice President, Apparel Division. The agreement may be renewed by us with 6
months' prior notice. Mr. Riccio receives annual compensation of $165,000,
subject to annual review. Mr. Riccio is also eligible to participate in our
bonus plan up to a maximum of 40% of then current salary. Mr. Riccio has been
granted stock options to purchase 25,000 shares of our common stock at an
exercise price of $8.50 per share. These options have a term of ten years, vest
rateably over five years and vest upon change in control and rateably upon a
termination of Mr. Riccio's employment without "cause". Upon notice of
termination of employment by us, Mr. Riccio will be entitled to receive as
severance twelve month's salary and benefits.

Effective June 10, 2002 we entered into an employment contract with
Michel Ravacley, as Vice President, Global Operations. Mr. Ravacley receives
annual compensation of Canadian $235,000, subject to annual review. Mr. Ravacley
is also eligible to participate in our bonus plan up to a maximum of 40% of then
current salary. Mr. Ravacley has been granted stock options to purchase 25,000
shares of our common stock at an exercise price of $8.50 per share. These
options have a term of ten years, vest ratably over five years commencing on
December 31, 2002 and vest upon a change of control and ratably upon a
termination of Mr. Ravacley's employment without "cause". Upon notice of
termination of employment by us, Mr. Ravacley will be entitled to receive as
severance six months' salary and benefits if within the first twelve months of
employment and twelve months' salary and benefits if thereafter.

Effective January 9, 1997, David Terreri was appointed Vice President,
Distribution and Customer Service of The Hockey Company. In 2002, his base
salary was $203,855 . Mr. Terreri was also eligible to participate in our bonus
plan up to a maximum of 40% of then current salary. Mr. Terreri was granted
stock options to purchase 50,000 shares of our common stock at an exercise price
of $8.50 per share, which were repriced from $10.00 per share. These options had
a term of ten years, vested rateably over five years and vested immediately upon
a change of control and rateably upon a termination of Mr. Terreri's employment
without "cause". As of May 24, 2002, the employment contract with Mr. Terreri
was terminated. Upon such termination, $150,000 was paid to Mr. Terreri with
respect to stock options owned by him in respect of which he had a guaranteed
return and $118,915 was paid in termination pay. A balance of $135,903 in
termination pay will be paid to Mr. Terreri in 2003.

72

DEFINED BENEFIT OR ACTUARIAL PLANS

Certain of our executive officers have entered into defined benefit
supplementary retirement agreements ("SERP"). The SERP benefit equals 2% of base
earnings at retirement in excess of $54,000 times years of service. These SERPs
are unfunded. During the year ended December 31, 2002, an expense of $607,000,
including past service of $473,000, was recorded by us. The balance of the
unfunded liability was $818,000 as at December 31, 2002.
The following table is a summary of the estimated annual benefits
payable upon retirement under the SERP(1):

- -------------------
(1) Pension amounts were calculated by converting base earnings into Canadian
dollars, applying the SERP formula, and reconverting the results into U.S.
dollars, based on a currency exchange rate of 1.5796.

Under the plan(s), the following Named Executive Officers have earned
the following number of credited years of service at December 31, 2002:

PLAN YEARS
-------------
Matthew H. O'Toole................................. 3.55
Robert A. Desrosiers............................... 1.61
John Pagotto....................................... 1.46
Raymond Riccio..................................... ---
Michel Ravacley.................................... 0.56
David Terreri...................................... 6.47

PERFORMANCE GRAPH

Normally, we would present a graph comparing the cumulative total
stockholder return on our common stock with that of the NASDAQ Composite Index
for U.S. companies and the Dow Jones Recreation Products Group that is comprised
of toy, entertainment, sporting goods, recreation and leisure product companies.
However, on April 11, 1997, as a result of our reorganization, all outstanding
shares of the Old Common Stock were converted into warrants to purchase shares
of our common stock. In addition, since April 11, 1997 there has been extremely
limited trading volume of our common stock. Therefore, a performance graph is
not presented as it would not be meaningful.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding beneficial
ownership of our common stock as of March 1, 2003, with respect to (a) each
person known to be the beneficial owner of more than 5% of the outstanding
shares of common stock, (b) our directors, (c) our executive officers and (d)
all of our executive officers and directors as a group. (Except as indicated in
the footnotes to the table, all such shares of common stock are owned with sole
voting power and investment power.)

- --------------
* Less than 1%

1. Beneficial ownership excludes 508,565 shares of our common stock that
have not yet been allocated pursuant to the reorganization plan in
connection with our bankruptcy. These shares will either be issued to
the holders of certain unsecured claims or issued to holders of our
outstanding shares of common stock.

2. The address of these owners is 620 Fifth Avenue, New York, New York
10020. WS Acquisition LLC's beneficial ownership includes 7,947 shares
indirectly owned through its affiliate, Wellspring Capital Management
LLC. Greg S. Feldman is the Managing Member of WS Acquisition LLC. Mr.
Feldman disclaims beneficial ownership of the 3,297,814 shares held by
WS Acquisition LLC. Jason Fortin's beneficial ownership excludes those
shares. Mr. Fortin is a principal of Wellspring Capital Management LLC,
an affiliate of WS Acquisition LLC.

74

3. The address of these owners is 1290 Avenue of the Americas, New York,
New York 10104. James C. Pendergast disclaims beneficial ownership of
the 1,253,684 shares owned by The Equitable Life Assurance Society of
the United States. Mr. Pendergast is a Managing Director of Alliance
Corporate Finance Group Inc., an affiliate of the Equitable Life
Assurance Society of the United States.

4. The address of this owner is 1839 South Ocean Blvd., Apt 1A, Delray
Beach, Florida, 33483. Gerald Wasserman's beneficial ownership consists
of 722,222 shares covered by options exercisable within 60 days of
March 1, 2003.

5. The address of these owners is 1 American Row, Hartford, Connecticut
06115. Phoenix Life Insurance Company's beneficial ownership includes
159,127 shares covered by warrants exercisable within 60 days of March
1, 2003. Paul M. Chute disclaims beneficial ownership of the 517,322
shares beneficially owned by Phoenix Life Insurance Company. Mr. Chute
is a Managing Director of Phoenix Investment Partners Ltd., an
affiliate of Phoenix Life Insurance Company.

6. The address of this owner is 2001 McGill College, 6th Floor, Montreal,
Quebec, Canada H3A 1G1.

7. The address of this owner is 720 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.

8. The address of this owner is 80 S.W. 8th Street, Miami, FL 33130-3047.

9. The address of this owner is c/o Bombardier, Produits Recreatifs, 1061,
rue Parent, St-Bruno, Quebec, Canada J3V 6P1.

10. The address of this owner is 14 Place le Marronnier, St. Lambert,
Quebec, Canada J45 1Z7.

11. The address of these owners is c/o The Hockey Company, 3500 Boulevard
de Maisonneuve, Montreal, Quebec, Canada H3Z 3C1, unless otherwise
indicated. Each of these owners' beneficial ownership consists entirely
of shares covered by options exercisable within 60 days of March 1,
2003.

12. Matthew H. O'Toole is also a director of The Hockey Company.

13. The address of this owner is c/o Jofa AB, S-782 22 Malung, Sweden. This
owner's beneficial ownership consists entirely of shares covered by
options exercisable within 60 days of March 1, 2003.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In 2000, 2001 and 2002, we were charged a management fee of $180,000,
$100,000 and $100,000,respectively by Wellspring Capital Management LLC, an
affiliate of the controlling stockholder.

ITEM 14. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of our disclosure controls and procedures (as such term is
defined in Rules 13a-14(c) 15d-14(c) under the Securities Exchange Act of 1934
as amended (the "Exchange Act") as of a date 90 days prior to the filing of this
annual report (the "Evaluation Date"). Based on such evaluation, those officers
have concluded that, as of the Evaluation Date, our disclosure and procedures
are reasonably effective in alerting management of the Company on a timely basis
to material information relating to our Company required to be included in our
reports filed or submitted under the Exchange Act.

(b) Changes in Internal Controls

Since the Evaluation Date, there have not been any significant changes
in our internal controls or in other factors that could significantly affect
such controls.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)Financial Statements required by Part II, Item 8 are included and indexed
in Part II, Item 8.

(a)(2)The financial statement schedules filed as part of this report include the
following:

SCHEDULE PAGE
-------- ----
II Valuation and Qualifying Accounts and Reserves 66

(a)(3)The following is a list of all Exhibits filed as part of this Report:

(b) Reports on Form 8-K.

None.

80

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 21st day of March,
2003.

THE HOCKEY COMPANY

By: /s/ Robert A. Desrosiers
------------------------
Name: Robert A. Desrosiers
Title: Chief Financial Officer and
Vice-President, Finance and Administration

Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated. Each person whose signature to this Form
10-K appears below hereby appoints Robert A. Desrosiers as his attorney-in-fact
to sign on his behalf individually and in the capacity stated below and to file
all amendments and post-effective amendments to this Form 10-K, and any and all
instruments or documents filed as part of or in connection with this Form 10-K
or the amendments thereto, and any such attorney-in-fact may make such changes
and additions in this Form 10-K as such attorney-in-fact may deem necessary or
appropriate.

81

CERTIFICATIONS*

I, Matthew O'Toole, certify that:

1. I have reviewed this annual report on Form 10-K of The Hockey Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 24, 2003
/s/ Matthew O'Toole
------------------------------------
Matthew O'Toole
Chief Executive Officer

82

CERTIFICATIONS*

I, Robert Desrosiers, certify that:

1. I have reviewed this annual report on Form 10-K of The Hockey Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 24, 2003
/s/ Robert Desrosiers
------------------------------------
Robert Desrosiers
Chief Financial Officer

83

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.

No annual report or proxy material has been or will be sent to security holders
of the registrant

84