EASTON-BELL SPORTS, INC. - FORM 10-Q

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - EASTON-BELL SPORTS, INC.	c19873exv31w2.htm
EX-31.1 - EXHIBIT 31.1 - EASTON-BELL SPORTS, INC.	c19873exv31w1.htm
EX-32.1 - EXHIBIT 32.1 - EASTON-BELL SPORTS, INC.	c19873exv32w1.htm
EXCEL - IDEA: XBRL DOCUMENT - EASTON-BELL SPORTS, INC.	Financial_Report.xls

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


o		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2011


o		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: 333-123927

EASTON-BELL SPORTS, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-1636283
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

7855 Haskell Avenue, Suite 200
Van Nuys, California 91406
(Address of Principal Executive Offices)(Zip Code)

(818) 902-5800
(Registrant’s Telephone Number, Including Area Code)

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 o No þ.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.

As of August 16, 2011, 100 shares of Easton-Bell Sports, Inc. common stock were outstanding.

EXPLANATORY NOTE

The Company is a voluntary filer of reports required of companies with public securities under Sections 13 or 15(d) of the Securities Exchange Act of 1934.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

INDEX


	Page

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Consolidated Balance Sheets as of July 2, 2011 (unaudited) and January 1, 2011		3

Consolidated Statements of Operations and Comprehensive Income for the Fiscal Quarter and Two Fiscal Quarters Ended July 2, 2011 (unaudited) and July 3, 2010 (unaudited)		4

Consolidated Statements of Cash Flows for the Two Fiscal Quarters Ended July 2, 2011 (unaudited) and July 3, 2010 (unaudited)		5

Notes to Consolidated Financial Statements (unaudited)		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3. Quantitative and Qualitative Disclosures About Market Risk		36

Item 4. Controls and Procedures		37

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings		38

Item 1A. Risk Factors		38

Item 6. Exhibits		38

SIGNATURES		39

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)


	July 2,		January 1,
	2011		2011
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	16,174	$	24,024
Accounts receivable, net		242,491		216,166
Inventories, net		148,561		141,093
Prepaid expenses		4,584		7,080
Deferred taxes		15,983		16,254
Other current assets		10,495		8,483

Total current assets		438,288		413,100
Property, plant and equipment, net		50,134		49,736
Deferred financing fees, net		13,805		14,248
Intangible assets, net		274,146		279,047
Goodwill		206,928		206,928
Other assets		1,244		1,495

Total assets	$	984,545	$	964,554


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Revolving credit facility	$	58,000	$	38,893
Current portion of capital lease obligations		25		24
Accounts payable		70,328		73,148
Accrued expenses		58,057		58,452

Total current liabilities		186,410		170,517
Long-term debt, less current portion		346,413		346,168
Capital lease obligations, less current portion		65		78
Deferred taxes		49,367		49,379
Other noncurrent liabilities		19,134		20,774

Total liabilities		601,389		586,916

Stockholder’s equity:
Common stock: $0.01 par value, 100 shares authorized, 100 shares issued and outstanding at July 2, 2011 and January 1, 2011		—		—
Additional paid-in capital		361,584		360,223
Retained earnings		18,285		15,401
Accumulated other comprehensive income		3,287		2,014

Total stockholder’s equity		383,156		377,638

Total liabilities and stockholder’s equity	$	984,545	$	964,554

See accompanying notes to consolidated financial statements.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited and amounts in thousands)


	Fiscal Quarter Ended					Two Fiscal Quarters Ended
	July 2,		July 3,			July 2,		July 3,
	2011		2010			2011		2010
Net sales	$	211,913	$	202,757		$	415,311	$	396,861
Cost of sales		140,888		133,817			280,329		263,159

Gross profit		71,025		68,940			134,982		133,702
Selling, general and administrative expenses		52,018		45,577			102,386		95,287
Amortization of intangibles		2,348		3,251			4,901		6,586

Income from operations		16,659		20,112			27,695		31,829
Interest expense, net		11,101		11,162			22,094		22,674

Income before income taxes		5,558		8,950			5,601		9,155
Income tax expense		2,612		3,990			2,717		4,072

Net income		2,946		4,960			2,884		5,083
Other comprehensive income:
Foreign currency translation adjustment		319		(3,792	)		1,273		(2,514	)

Comprehensive income	$	3,265	$	1,168		$	4,157	$	2,569

See accompanying notes to consolidated financial statements.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and amounts in thousands)


	Two Fiscal Quarters Ended
	July 2,			July 3,
	2011			2010
Cash flows from operating activities:
Net income	$	2,884		$	5,083
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		14,067			14,473
Amortization of deferred financing fees and debt discount		1,701			1,723
Deferred financing fees written-off		120			—
Equity compensation expense		1,361			1,901
Deferred income taxes		259			1,448
Disposal of property, plant and equipment		—			6
Changes in operating assets and liabilities, net of effects from purchase of businesses:
Accounts receivable, net		(25,569	)		(20,810	)
Inventories, net		(6,891	)		7,434
Other current and noncurrent assets		735			2,376
Accounts payable		(2,915	)		425
Accrued expenses		(526	)		6,840
Other current and noncurrent liabilities		(1,640	)		325

Net cash (used in) provided by operating activities		(16,414	)		21,224

Cash flows from investing activities:
Purchase of property, plant and equipment		(9,431	)		(9,894	)
Purchase of businesses, net of cash acquired		—			(1,750	)

Net cash used in investing activities		(9,431	)		(11,644	)

Cash flows from financing activities:
Proceeds from revolving credit facility		43,778			7,000
Payments on revolving credit facility		(24,671	)		(13,000	)
Payments on capital lease obligations		(12	)		(12	)
Payment of debt issuance costs		(1,133	)		—

Net cash provided by (used in) financing activities		17,962			(6,012	)

Effect of exchange rate changes on cash and cash equivalents		33			(1,468	)
Net change in cash and cash equivalents		(7,850	)		2,100

Cash and cash equivalents, beginning of period		24,024			33,318

Cash and cash equivalents, end of period	$	16,174		$	35,418

See accompanying notes to consolidated financial statements.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited and amounts in thousands, except as specified)

1. Basis of Presentation

Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent. Unless otherwise indicated, all references in this Form 10-Q to Easton-Bell, we, us, our, and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively.

The accompanying unaudited consolidated financial statements included herein have been prepared by our Company in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and the rules and regulations of the Securities and Exchange Commission, or the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, normal recurring adjustments considered necessary for a fair presentation have been reflected in these consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with our Company’s audited financial statements and notes thereto included in our Company’s Annual Report on Form 10-K for the year ended January 1, 2011. Results for interim periods are not necessarily indicative of the results for the year.

Our Company’s fiscal quarters are 13-week periods ending on Saturdays. As a result, our Company’s second quarter of fiscal year 2011 ended on July 2, and the second quarter of fiscal year 2010 ended on July 3.

2. Goodwill and Other Intangible Assets

Acquired intangible assets are as follows:


	July 2, 2011					January 1, 2011
	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
	Amounts		Amortization			Amounts		Amortization
Amortized intangible assets:
Trademarks and tradenames	$	1,702	$	(1,702	)	$	1,702	$	(1,702	)
Customer relationships		59,180		(36,659	)		59,180		(35,166	)
Patents		60,345		(39,504	)		60,345		(36,275	)
Licensing and other		5,900		(5,900	)		5,900		(5,721	)

Total	$	127,127	$	(83,765	)	$	127,127	$	(78,864	)

Indefinite-lived intangible assets:
Trademarks and tradenames	$	230,784				$	230,784

Goodwill by segment is as follows:


	Team		Action
	Sports		Sports		Consolidated
Balance as of July 2, 2011	$	145,464	$	61,464	$	206,928

Goodwill and other indefinite-lived intangible assets are tested for impairment at each of our Company’s segments on an annual basis in December, and more often if indications of impairment exist as required under the Financial Accounting Standards Board or the FASB’s Accounting Standards Codification 350-20 Goodwill. The results of our Company’s analyses conducted in 2010 indicated that no impairment in the carrying amount of goodwill and other indefinite-lived intangible assets had occurred. During the first two fiscal quarters of 2011, there were no indicators of impairment to goodwill and intangible assets. There were no acquisitions and no material changes to goodwill during the first two fiscal quarters of 2011.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

3. Long-Term Debt

Long-term debt consisted of the following:


	July 2, 2011			January 1, 2011
9.750% Senior Secured Notes	$	350,000		$	350,000
Senior Secured Credit ABL Facility		58,000			38,893
Capital lease obligations		90			102

Total long-term debt		408,090			388,995
Less unamortized debt discount on senior secured notes		(3,587	)		(3,832	)
Less current maturities of long-term debt		(58,025	)		(38,917	)

Long-term debt, less current portion	$	346,478		$	346,246

9.750% Senior Secured Notes

In December 2009, in connection with the refinancing of our Company’s then-existing indebtedness, or the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes, due December 2016, or the Notes. Interest is payable on the Notes semi-annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a make-whole premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. Then we may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, our Company may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the Notes contains certain restrictions that limit our Company’s ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates and (9) transfer all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires us to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

Subject to certain exceptions, the indenture governing the Notes permits our Company and our restricted subsidiaries to incur additional indebtedness, including senior indebtedness and secured indebtedness. In addition, the indenture will not limit the amount of indebtedness that our direct or indirect parent entities, including EB Sports and RBG, may incur.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

The ABL Facility

Concurrently with the issuance of the Notes on December 3, 2009, our Company entered into a $250,000 senior secured asset-based revolving credit facility, subject to availability under each of a United States and Canadian borrowing base, under which the amount, subject to certain conditions, may be increased to allow borrowings of up to $300,000, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Guarantors (as defined therein), with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the other agents party thereto and the lenders party thereto, or the ABL Facility. The unused portion of the ABL Facility (subject to borrowing base availability) is to be drawn from time to time for general corporate purposes (including permitted acquisitions) and working capital needs. At July 2, 2011, we had $58,000 outstanding under the ABL facility and $162,134 in availability.

Certain of our Company’s wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition, our wholly-owned Canadian subsidiaries guarantee the obligations of the Canadian borrowings under the Canadian sub-facility of the ABL Facility. Furthermore, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to substantially all of our personal property as collateral for our obligations (and related guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts receivable, inventory, other personal property relating to such inventory and accounts receivable and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a first-priority basis. The obligations of our Canadian subsidiaries that are borrowers under the Canadian sub-facility of the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by substantially all of the assets of our wholly-owned Canadian subsidiaries and by our and our domestic subsidiaries’ assets on the same basis as borrowings under the ABL Facility. At July 2, 2011, we had a zero balance outstanding under the Canadian ABL facility.

On May 13, 2011, our Company entered into an Amendment and Restatement Agreement, or the Amendment, among our Company, the Canadian Borrowers (as defined therein), the subsidiary guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as collateral agent and administrative agent and the other agents party thereto, which amended the ABL Facility. The Amendment, among other things, reduced the interest rate applicable to loans made under the ABL Facility and amended certain covenants thereunder applicable to our Company and our subsidiaries. In addition, the Amendment extended the maturity date of loans under the ABL Facility from December 3, 2013 to May 13, 2016; provided that if the Credit and Guaranty Agreement, dated as of December 3, 2009 among EB Sports Corp., as borrower, RBG Holdings Corp., as guarantor, Wachovia Bank, N.A., as administrative agent and collateral agent and the lenders from time to time party thereto has not been repaid or refinanced prior to July 1, 2015 with a new credit agreement that meets certain criteria set forth in the ABL Facility, the loans under the ABL Facility will mature on July 1, 2015.

The interest rates per annum applicable to the loans under the ABL Facility, other than swingline loans and protective advances, equal an applicable margin percentage plus, at our option, (1) in the case of U.S. dollar denominated loans, a U.S. base rate or LIBOR, and (2) in the case of Canadian dollar denominated loans, a Canadian base rate or CDOR. Swingline loans and protective advances bear interest at the U.S. base rate for U.S. dollar denominated loans and the Canadian base rate for Canadian dollar denominated loans, in each case, plus an applicable margin (and plus an additional 2.0% in the case of protective advances). The applicable margin percentage for the ABL Facility, as amended by the Amendment, ranges between 1.5% and 2.5% for LIBOR or CDOR and 0.5% and 1.5% for the base rate, based upon our total leverage ratio as calculated under the ABL Facility. In addition to paying interest on outstanding principal under the ABL Facility, we are required to pay a commitment fee, in relation to the unutilized commitments, which ranges from 0.375% to 0.5% based upon our utilization of the ABL Facility (increasing when utilization is lower and decreasing when utilization is higher). We are also required to pay customary letter of credit fees.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

The ABL Facility requires that if excess gross availability is less than the greater of a specified percentage of the gross borrowing base and a specified dollar amount, we must comply with a minimum fixed charge coverage ratio test. In addition, the ABL Facility includes negative covenants that, subject to significant exceptions, limit our ability and the ability of our subsidiaries, to, among other things (1) incur additional debt, (2) create liens, (3) transfer all or substantially all of our assets or enter into merger or consolidation transactions, (4) change our business, (5) make investments, loans, advances, guarantees and acquisitions, (6) transfer or sell assets, (7) enter into sale and leaseback transactions, (8) enter into swap agreements, (9) enter into transactions with affiliates and (10) enter into agreements that restrict dividends from subsidiaries.

In connection with the Amendment, $120 of debt issuance costs that were associated with a former syndicate member that did not participate in the Amendment were written-off. We also incurred bank fees and other costs of $1,133, which have been recorded as debt issuance costs. We amortized $705 and $752 of debt issuance costs during the second fiscal quarters of 2011 and 2010, respectively. For the first two fiscal quarters of 2011 and 2010, we amortized $1,456 and $1,503 of debt issuance costs, respectively.

Other

Our Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee our obligations for the purchase of certain inventories and for potential claims exposure for insurance coverage. At July 2, 2011 and January 1, 2011, outstanding letters of credit issued under the revolving credit facilities both totaled $3,306. The amount of unused lines of credit at July 2, 2011 and January 1, 2011, were $162,134 and $162,902, respectively.

Cash payments for interest were $19,192 and $17,514 for the fiscal quarters ended July 2, 2011 and July 3, 2010, respectively. For the first two fiscal quarters of 2011 and 2010, cash payments for interest were $21,354 and $17,990, respectively.

4. Accrued Expenses

Accrued expenses consist of the following:


	July 2, 2011		January 1, 2011
Salaries, wages, commissions and bonuses	$	13,047	$	14,675
Advertising		4,847		5,410
Rebates		7,105		6,044
Warranty		1,897		2,434
Product liability — current portion		4,811		4,491
Royalties		310		1,830
Interest		3,085		3,689
Income taxes		3,183		1,192
Other		19,772		18,687

Total accrued expenses	$	58,057	$	58,452

5. Inventories

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

Inventories consisted of the following:


	July 2, 2011		January 1, 2011
Raw materials	$	20,243	$	19,310
Work-in-process		3,447		2,364
Finished goods		124,871		119,419

Inventories, net	$	148,561	$	141,093

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

6. Recent Accounting Pronouncements

In June 2011, the FASB issued a new standard which revises the manner in which entities present comprehensive income in their financial statements. The new standard removes the presentation options and requires entities to report components of comprehensive income in either (i) a continuous statement of comprehensive income or (ii) two separate but consecutive statements. The new standard does not change the items that must be reported in other comprehensive income and will be effective for fiscal years and interim periods within those years that begin after December 15, 2011. The adoption of the new standard will not have a material impact on our Company’s consolidated financial statements.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

7. Segment Reporting

Our Company has two reportable segments: Team Sports and Action Sports. Our Team Sports segment primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment consists primarily of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products. Following the acquisition of Easton, our Action Sports segment began to include Easton’s cycling business. Our Company evaluates segment performance primarily based on income from operations excluding equity compensation expense, management expenses, restructuring and other infrequent expenses, amortization of intangibles and corporate expenses. Our selling, general and administrative expenses, excluding corporate expenses, are charged to each segment based on where the expenses are incurred. Segment income from operations as presented by our Company may not be comparable to similarly titled measures used by other companies. As a result, the components of income from operations for one segment may not be comparable to another segment.

Segment results for the fiscal quarter and two fiscal quarters ended July 2, 2011 and July 3, 2010, respectively, are as follows:


	Team		Action
Fiscal Quarter Ended	Sports		Sports		Consolidated
July 2, 2011
Net sales	$	119,515	$	92,398	$	211,913
Income from operations		12,501		15,310		27,811
Depreciation		2,824		1,886		4,710
Capital expenditures		3,046		1,469		4,515
July 3, 2010
Net sales	$	109,166	$	93,591	$	202,757
Income from operations		18,999		12,850		31,849
Depreciation		2,553		1,733		4,286
Capital expenditures		2,587		2,734		5,321


	Team		Action
Two Fiscal Quarters Ended	Sports		Sports		Consolidated
July 2, 2011
Net sales	$	235,783	$	179,528	$	415,311
Income from operations		22,067		27,094		49,161
Depreciation		5,500		3,666		9,166
Capital expenditures		5,997		3,434		9,431
July 3, 2010
Net sales	$	228,599	$	168,262	$	396,861
Income from operations		36,606		18,787		55,393
Depreciation		4,596		3,291		7,887
Capital expenditures		4,699		5,195		9,894


	Team		Action
	Sports		Sports		Consolidated
Assets
As of July 2, 2011	$	624,565	$	359,980	$	984,545
As of January 1, 2011		599,980		364,574		964,554

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

A reconciliation from the segment information to the Consolidated Statements of Operations and Comprehensive Income is set forth below:


	Fiscal Quarter Ended						Two Fiscal Quarters Ended
	July 2, 2011			July 3, 2010			July 2, 2011			July 3, 2010
Segment income from operations	$	27,811		$	31,849		$	49,161		$	55,393
Equity compensation expense		(704	)		(741	)		(1,361	)		(1,901	)
Corporate expenses		(8,100	)		(7,745	)		(15,204	)		(15,077	)
Amortization of intangibles		(2,348	)		(3,251	)		(4,901	)		(6,586	)

Consolidated income from operations	$	16,659		$	20,112		$	27,695		$	31,829

8. Product Liability, Litigation and Other Contingencies

Product Liability

Our Company is subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured by our Company and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot be determined. Our management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis, which considers, among other factors, our previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from those estimates.

In the opinion of management, amounts accrued for exposures relating to product liability claims and other legal proceedings are adequate and, accordingly, the ultimate resolution of these matters is not expected to have a material adverse effect on our Company’s consolidated financial statements. As of July 2, 2011, our Company had no known probable but inestimable exposures relating to product liability or other legal proceedings that are expected to have a material adverse effect on our Company. We recently became aware of two complaints for damages filed against the National Football League and certain of our entities in the Superior Court of California by certain retired NFL players. We believe these complaints are without merit and we intend to vigorously defend against any legal actions brought against us. Given this preliminary stage, we are unable to predict outcomes, or reasonably estimate a range of possible loss, if any. There can be no assurance, however, that unanticipated events will not require our Company to increase the amount it has accrued for any matter or accrue for a matter that has not been previously accrued because it was not considered probable.

Our Company maintains product liability insurance coverage under various policies. These policies provide coverage against claims resulting from alleged injuries sustained during the respective policy periods, subject to policy terms and conditions. The primary portion of our product liability coverage is written under a policy expiring in January 2013 with a $2,000 limit per occurrence excess of a $1,000, $50 and $500 self-insured retention for helmets, soft goods and all other products, respectively. Our Company’s first layer excess policy is written under a liability policy with a limit of $25,000 excess of $3,000 expiring in January 2012. We also carry a second layer excess liability policy providing an additional limit of $15,000 excess of $28,000 expiring January 2012, for a total limit of $43,000.

Litigation and Other Contingencies

We are involved in various non-product liability claims and actions, including employment related matters as well as claims relating to potential infringement of intellectual property rights of others. In 2002, one of our competitors sued us in Canadian Federal Court alleging infringement of a hockey skate patent. In 2010, we received an unfavorable judgment against us in relation to such claim, which we have appealed. If the appeal is unsuccessful, the plaintiffs will enter a procedure in Canadian Federal Court to determine the monetary relief to be granted. Because the documents necessary to establish an accurate assessment of any potential liability have not been disclosed to us, it is not possible to accurately estimate any potential resulting liability at this time. However, management believes that this claim will not be material to our business or financial condition.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

9. Income Taxes

Our Company recorded income tax expense of $2,717 and $4,072 for the first two fiscal quarters ended July 2, 2011, and July 3, 2010, respectively. Our Company’s effective tax rate was 48.5% for the first two fiscal quarters of 2011, as compared to 44.5% for the first two fiscal quarters of 2010. For the fiscal quarter ended July 2, 2011, the difference between the effective rate and the statutory rate is primarily attributable to the permanent difference for equity compensation expense, state income taxes and the impact of enacted state tax law changes. For the fiscal quarter ended July 3, 2010, the difference between the effective rate and the statutory rate is primarily attributable to the permanent difference for equity compensation expense and state income taxes.

10. Derivative Instruments and Hedging Activity

Our Company accounts for all derivatives on the balance sheet as an asset or liability measured at fair value and changes in fair values are recognized in earnings unless specific hedge accounting criteria are met for cash flow or net investment hedges. If such hedge accounting criteria are met, the change is deferred in stockholder’s equity as a component of accumulated other comprehensive income. The deferred items are recognized in the period the derivative contract is settled. As of July 2, 2011, we had not designated any of our derivative instruments as hedges, and therefore, have recorded the changes in fair value in the Consolidated Statements of Operations and Comprehensive Income.

In 2008, our Company entered an interest rate swap agreement with Wachovia Bank, N.A. The interest rate swap had an initial fixed USD LIBOR of 2.921%, and was subsequently revised to a fixed USD LIBOR of 2.811% for the period commencing October 15, 2008, through April 14, 2010 and thereafter a fixed USD LIBOR of 2.921% until the expiration of the agreement on April 15, 2011. The swap agreement was not designated as a hedge, and therefore, was recorded at fair value at each balance sheet date, with the resulting changes in fair value charged or credited to interest expense in the accompanying Consolidated Statements of Operations and Comprehensive Income each period.

Our Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, our Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

The swap fair value was determined through the use of a model that considers various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 from a third party bank. As the interest swap expired on April 15, 2011, the fair value of the swap was zero at July 2, 2011 and a liability of $453 at January 1, 2011, and was recorded in the current portion of other liabilities in the accompanying Consolidated Balance Sheets with the corresponding charge to interest expense. During the second fiscal quarter of 2011, interest expense reflects $379 related to the swap and a credit of $48 related to the change in the fair value of the swap. During the first two fiscal quarters of 2011, interest expense reflected $796 related to the swap and a credit of $453 related to the change in the fair value of the swap.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Our Company has foreign currency exchange forward contracts in place to reduce our risk related to inventory purchases and foreign currency based accounts receivable. These contracts are not designated as hedges, and therefore, under current accounting standards are recorded at fair value at each balance sheet date, with the resulting change charged or credited to selling, general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Income.

The foreign currency exchange contracts in aggregated notional amounts in place to exchange United States Dollars at July 2, 2011 and January 1, 2011 were as follows:

July 2, 2011

January 1, 2011

Foreign

U.S. Dollars

Currency

U.S. Dollars

Currency

Foreign Currency Exchange Forward Contracts:

U.S. Dollars / Canadian Dollars

1,950

Cdn$

1,880

4,500

Cdn$

4,476

As of July 2, 2011 and January 1, 2011, the fair value of the foreign currency exchange forward contracts, using Level 2 inputs from a third party bank, represented a liability of approximately $121 and $93, respectively. Changes in the fair value of the foreign currency exchange contracts are reflected in selling, general and administrative expenses each period.

The assets and liabilities measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820 at July 2, 2011, were as follows:

Fair Value Measurements at Reporting Date Using

Quoted

Prices in

Active

Significant

Markets for

Other

Significant

Identical

Observable

Unobservable

Assets

Inputs

(Level 1)

(Level 2)

(Level 3)

Assets:

None

—

Liabilities:

Foreign currency exchange forward contracts

—

121

—

Fair Value of Financial Instruments

The carrying amounts reported in our Company’s Consolidated Balance Sheets for “Cash and cash equivalents,” “Accounts receivable, net” and “Accounts payable” approximates fair value because of the immediate or short-term maturity of these financial instruments. The fair value amount of long-term debt under our Company’s 9.75% Notes are based on quoted market prices for the same or similar issues on borrowing rates available to our Company for loans with similar terms and average maturities.

The estimated fair values of the Company’s long-term debt including accrued interest were as follows:


	July 2, 2011				January 1, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial liability:
9.75% Senior Secured Notes	$	349,446	$	388,908	$	349,201	$	387,158

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

11. Equity-Based Employee Compensation

On March 16, 2006, our Parent adopted the 2006 Equity Incentive Plan, or the Incentive Plan. Our Parent amended the Incentive Plan in December 2009 to allow for certain new grants. The Incentive Plan provides for the issuance of Class B Common Units of our Parent, or Units, which are intended to be profits interests. Such Units qualify as equity instruments of our Parent. The holders of these Units are entitled to share in the distribution of profits above a certain threshold, or the distribution threshold. For any particular such Unit, the distribution threshold is the fair value of a Class A Common Unit of our Parent on the date of grant. Our Parent has made grants of these Units pursuant to the Incentive Plan since its adoption. Generally, so long as the Unit holder is employed or remains a member of the board of managers of our Parent, these Units vest over time (generally a four-year period) or upon achievement of certain company performance goals. Subject to certain conditions, Units are also eligible to vest in the event of an initial public offering or change of control. In December 2009, our Parent issued new Class B Common Units and amended certain existing Class B Common Units, which, in each case, are eligible, subject to certain conditions, for additional distributions from our Parent in the event that certain company performance goals are met through 2012. In addition, in December 2009, our Parent agreed to amend and restate certain existing Class B Common Units to revise the distribution threshold of such Units to an amount commensurate with the then fair market value of a Class A Common Unit. As of July 2, 2011, there were 105,152,750.854 Units authorized for grant pursuant to the Incentive Plan.

Our Company uses the Black-Scholes Option Pricing Model to determine the fair value of the Units granted, similar to an equity Stock Appreciation Right or SAR. This model uses the simplified method and such factors as the market price of the underlying Units at date of issuance. No grants were issued during the second fiscal quarter of 2011.

Our Company records compensation expense using the fair value of the Units granted with time vesting over the vesting service period on a straight-line basis. Compensation expense for the performance based vesting Units is recognized when it becomes probable that the performance conditions will be met. As of July 2, 2011, we have not recognized any compensation expense for the performance based vesting Units as it is not probable that the performance conditions will be met.

Our Company recognized compensation expense, included in selling, general and administrative expenses for its Units during the fiscal quarter and first two fiscal quarters of 2011 and 2010 as follows:


	Fiscal Quarter Ended				Two Fiscal Quarters Ended
	July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Equity compensation expense	$	704	$	741	$	1,361	$	1,901

As of July 2, 2011, there was $18,386 of unrecognized compensation costs, net of actual and estimated forfeitures related to the Units. This was comprised of $3,924 related to time based vesting Units and $14,462 related to the performance based vesting Units. The unrecognized cost related to the time based vesting Units is expected to be amortized over a weighted average service period of approximately 2 years. The unrecognized cost related to the performance based vesting Units will be recognized when it becomes probable that the performance conditions will be met.

Our Company’s Unit activity under the Incentive Plan for the first two fiscal quarters of 2011 is as follows:


				Weighted Average
	Number of			Grant Date
	Units			Exercise Price
Outstanding at January 1, 2011		96,169,675		$	1.44
Granted		5,164,254		$	1.32

Outstanding at April 3, 2011		101,333,929		$	1.43
Forfeited		(4,384,115	)	$	1.32

Outstanding at July 2, 2011		96,949,814		$	1.43

Vested Units at July 2, 2011		35,588,335		$	1.60

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

12. Warranty Obligations

The Company records a product warranty obligation at the time of sale based on the Company’s historical experience. The Company estimates its warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product warranty return rates, replacement product costs or service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

The following is a reconciliation of the changes in our Company’s product warranty liability:


	2011			2010
Beginning of fiscal year	$	2,434		$	3,242
Warranty costs incurred during the period		(2,034	)		(1,953	)
Warranty expense recorded during the period		1,780			1,544

End of first fiscal quarter		2,180			2,833
Warranty costs incurred during the period		(1,257	)		(1,201	)
Warranty expense recorded during the period		974			1,133

End of second fiscal quarter	$	1,897		$	2,765

13. Related Party Transactions

Our Company, our Parent and certain of its other subsidiaries entered into management agreements with Fenway Partners, LLC and Fenway Partners Resources, Inc., each an affiliate of Fenway Partners Capital Fund II, L.P., in September 2004. Pursuant to these management agreements, as subsequently amended, Fenway Partners, LLC and Fenway Partners Resources, Inc. provide advisory services in connection with certain types of transactions and will be entitled to receive a fee equal to the greater of $1.0 million or 1.5% of the gross value of such transaction, plus reimbursement of fees and expenses incurred in connection with such transactions. The management agreements include customary indemnification provisions in favor of these entities and their affiliates and have initial terms of ten years.

In connection with the acquisition of Easton in 2006, Easton and various affiliates of James L. Easton (including Jas. D. Easton, Inc.) entered into various technology license and trademark license agreements with respect to certain intellectual property owned or licensed by Easton, including the Easton brand name. Pursuant to these agreements, Easton has granted each of Jas D. Easton, Inc., James L. Easton Foundation, Easton Development, Inc. and Easton Sports Development Foundation a name license for use of the Easton name solely as part of their respective company names. In addition, Easton has granted each of Easton Technical Products, Inc. and Hoyt Archery, Inc. a license to certain trademarks, including the Easton brand solely in connection with specific products or services, none of which are currently competitive with our Company’s products or services. Easton has also granted each of these entities a license to certain technology solely in connection with specific products and fields. Easton has also entered into a patent license agreement with Easton Technical Products, Inc., which grants it a license to exploit the inventions disclosed in the patent solely within specific fields. Lastly, Easton entered into a trademark license agreement with Easton Technical Products, Inc., which grants Easton a license to use certain trademarks solely in connection with specific products or services.

Our Company has entered into a right of first offer agreement with Jas. D. Easton, Inc. and Easton Technical Products, Inc. pursuant to which our Company is to receive the opportunity to purchase Easton Technical Products, Inc. prior to any third party buyer. The term of the right of first offer agreement extends until the earliest of (i) March 16, 2016, (ii) the date Easton Technical Products, Inc. no longer uses the name “Easton,” (iii) the effectiveness of any initial public offering by Easton Technical Products, Inc. and (iv) the consummation of any sale of such company or a controlling interest therein effectuated in accordance with the terms of the right of first offer agreement.

Affiliates of Jas. D. Easton, Inc. and James L. Easton own certain of the properties currently leased by Easton. For the second fiscal quarters of 2011 and 2010, rent payments pursuant to such affiliate leases were $297 and $288, respectively. For the first two fiscal quarters of 2011 and 2010, rent payments pursuant to such affiliate leases were $594 and $576, respectively.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

On October 1, 2004, Bell entered into a consulting agreement with Terry Lee, a member of the board of managers of our Parent and the board of directors of our Company. Pursuant to the terms of the consulting agreement, Mr. Lee agreed to provide us and our affiliates with certain consulting services relating to Bell. In exchange for his services, Mr. Lee is entitled to annual compensation of $100. The term of Mr. Lee’s consulting agreement is for one year and will automatically extend for additional one-year terms until our Company elects not to extend the agreement.

Effective August 2008, our Parent has agreed to compensate Richard Wenz, a member of the board of managers of our Parent and the board of directors of our Company, for his services as Chair of our Company’s Audit Committee. Mr. Wenz is paid an annual compensation of $50 for his services.

14. Supplemental Guarantor Condensed Financial Information

In December 2009, in connection with the Refinancing, we issued $350,000 of 9.750% Senior Secured Notes due 2016, or the Notes. The indenture governing the Notes contains certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, grant liens, sell assets and engage in certain other activities. The Notes are guaranteed by all of our domestic subsidiaries, or Guarantors. Each subsidiary guarantor is wholly owned and the guarantees are full and unconditional and joint and several. All other subsidiaries of our Company, or Non-Guarantors, do not guarantee the Notes.

The following condensed consolidating financial statements present the results of operations, financial position and cash flows of (i) Issuer, (ii) Guarantors, (iii) Non-Guarantors and (iv) Eliminations to arrive at the information for our Company on a consolidated basis at July 2, 2011 and for the second fiscal quarter of 2011, the first two fiscal quarters of 2011 and the respective comparable periods for fiscal 2010. Separate financial statements and other disclosures concerning the Guarantors are not presented because our management does not believe such information is material to investors. Therefore, each of the Guarantors is combined in the presentation below.

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Balance Sheet
July 2, 2011


			Guarantor		Non-Guarantor
	Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	4,334	$	3,501	$	8,339	$	—		$	16,174
Accounts receivable, net		—		209,429		33,062		—			242,491
Inventories, net		—		123,608		24,953		—			148,561
Prepaid expenses		1,158		2,331		1,095		—			4,584
Deferred taxes		—		15,983		—		—			15,983
Other current assets		—		7,946		2,549		—			10,495

Total current assets		5,492		362,798		69,998		—			438,288
Property, plant and equipment, net		22,673		26,437		1,024		—			50,134
Deferred financing fees, net		13,805		—		—		—			13,805
Investments and intercompany receivables		386,354		27,516		103,366		(517,236	)		—
Intangible assets, net		—		268,663		5,483		—			274,146
Goodwill		16,195		185,542		5,191		—			206,928
Other assets		—		1,102		142		—			1,244

Total assets	$	444,519	$	872,058	$	185,204	$	(517,236	)	$	984,545


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Revolving credit facility	$	58,000	$	—	$	—	$	—		$	58,000
Current portion of capital lease obligations		—		25		—		—			25
Accounts payable		—		62,453		7,875		—			70,328
Accrued expenses		8,691		43,318		6,048		—			58,057

Total current liabilities		66,691		105,796		13,923		—			186,410
Long-term debt, less current portion		346,413		—		—		—			346,413
Capital lease obligations, less current portion		—		65		—		—			65
Deferred taxes		—		49,367		—		—			49,367
Other noncurrent liabilities		—		11,701		7,433		—			19,134
Long-term intercompany payables		—		388,280		89,356		(477,636	)		—

Total liabilities		413,104		555,209		110,712		(477,636	)		601,389
Total stockholder’s equity		31,415		316,849		74,492		(39,600	)		383,156

Total liabilities and stockholder’s equity	$	444,519	$	872,058	$	185,204	$	(517,236	)	$	984,545

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Balance Sheet
January 1, 2011


			Guarantor		Non-Guarantor
	Issuer		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,981	$	7,049	$	14,994	$	—		$	24,024
Accounts receivable, net		—		189,750		26,416		—			216,166
Inventories, net		—		122,116		18,977		—			141,093
Prepaid expenses		1,306		4,907		867		—			7,080
Deferred taxes		—		16,254		—		—			16,254
Other current assets		—		7,504		979		—			8,483

Total current assets		3,287		347,580		62,233		—			413,100
Property, plant and equipment, net		21,235		27,776		725		—			49,736
Deferred financing fees, net		14,248		—		—		—			14,248
Investments and intercompany receivables		370,712		70,614		74,634		(515,960	)		—
Intangible assets, net		—		273,466		5,581		—			279,047
Goodwill		16,195		185,542		5,191		—			206,928
Other assets		—		1,355		140		—			1,495

Total assets	$	425,677	$	906,333	$	148,504	$	(515,960	)	$	964,554


LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Revolving credit facility	$	38,893	$	—	$	—	$	—		$	38,893
Current portion of capital lease obligations		—		24		—		—			24
Accounts payable		—		71,244		1,904		—			73,148
Accrued expenses		10,562		41,313		6,577		—			58,452

Total current liabilities		49,455		112,581		8,481		—			170,517
Long-term debt, less current portion		346,168		—		—		—			346,168
Capital lease obligations, less current portion		—		78		—		—			78
Deferred taxes		—		49,379		—		—			49,379
Other noncurrent liabilities		—		13,341		7,433		—			20,774
Long-term intercompany payables		—		417,140		60,496		(477,636	)		—

Total liabilities		395,623		592,519		76,410		(477,636	)		586,916
Total stockholder’s equity		30,054		313,814		72,094		(38,324	)		377,638

Total liabilities and stockholder’s equity	$	425,677	$	906,333	$	148,504	$	(515,960	)	$	964,554

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Statement of Income
Fiscal Quarter Ended July 2, 2011


						Non-
				Guarantor		Guarantor
	Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated
Net sales	$	—		$	205,473	$	27,362	$	(20,922	)	$	211,913
Cost of sales		—			137,453		24,357		(20,922	)		140,888

Gross profit		—			68,020		3,005		—			71,025
Selling, general and administrative expenses		10,293			39,373		2,352		—			52,018
Amortization of intangibles		—			2,348		—		—			2,348

(Loss) income from operations		(10,293	)		26,299		653		—			16,659
Interest expense, net		10,351			745		5		—			11,101
Share of net income of subsidiaries under equity method		23,590			609		—		(24,199	)		—

Income before income taxes		2,946			26,163		648		(24,199	)		5,558
Income tax expense		—			2,573		39		—			2,612

Net income	$	2,946		$	23,590	$	609	$	(24,199	)	$	2,946

Condensed Consolidating Statement of Income
Fiscal Quarter Ended July 3, 2010


						Non-
				Guarantor		Guarantor
	Issuer			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	183,584	$	28,605		$	(9,432	)	$	202,757
Cost of sales		—			120,700		22,549			(9,432	)		133,817

Gross profit		—			62,884		6,056			—			68,940
Selling, general and administrative expenses		10,029			34,249		1,299			—			45,577
Amortization of intangibles		—			3,251		—			—			3,251

(Loss) income from operations		(10,029	)		25,384		4,757			—			20,112
Interest expense, net		10,747			419		(4	)		—			11,162
Share of net income of subsidiaries under equity method		25,736			3,021		—			(28,757	)		—

Income before income taxes		4,960			27,986		4,761			(28,757	)		8,950
Income tax expense		—			2,250		1,740			—			3,990

Net income	$	4,960		$	25,736	$	3,021		$	(28,757	)	$	4,960

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Statement of Income
Two Fiscal Quarters Ended July 2, 2011


						Non-
				Guarantor		Guarantor
	Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated
Net sales	$	—		$	403,970	$	43,619	$	(32,278	)	$	415,311
Cost of sales		—			274,081		38,526		(32,278	)		280,329

Gross profit		—			129,889		5,093		—			134,982
Selling, general and administrative expenses		19,595			77,962		4,829		—			102,386
Amortization of intangibles		—			4,901		—		—			4,901

(Loss) income from operations		(19,595	)		47,026		264		—			27,695
Interest expense, net		21,122			967		5		—			22,094
Share of net income of subsidiaries under equity method		43,601			181		—		(43,782	)		—

Income before income taxes		2,884			46,240		259		(43,782	)		5,601
Income tax expense		—			2,639		78		—			2,717

Net income	$	2,884		$	43,601	$	181	$	(43,782	)	$	2,884

Condensed Consolidating Statement of Income
Two Fiscal Quarters Ended July 3, 2010


						Non-
				Guarantor		Guarantor
	Issuer			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	367,853	$	46,410		$	(17,402	)	$	396,861
Cost of sales		—			244,109		36,452			(17,402	)		263,159

Gross profit		—			123,744		9,958			—			133,702
Selling, general and administrative expenses		19,721			71,484		4,082			—			95,287
Amortization of intangibles		—			6,586		—			—			6,586

(Loss) income from operations		(19,721	)		45,674		5,876			—			31,829
Interest expense, net		22,170			507		(3	)		—			22,674
Share of net income of subsidiaries under equity method		46,974			4,083		—			(51,057	)		—

Income before income taxes		5,083			49,250		5,879			(51,057	)		9,155
Income tax expense		—			2,276		1,796			—			4,072

Net income	$	5,083		$	46,974	$	4,083		$	(51,057	)	$	5,083

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Statement of Cash Flows
Two Fiscal Quarters Ended July 2, 2011


				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	2,884		$	43,601		$	181		$	(43,782	)	$	2,884
Non-cash adjustments		(11,883	)		(15,748	)		1,357			43,782			17,508
Changes in operating assets and liabilities, net of effects from purchase of businesses		(1,723	)		(27,210	)		(7,873	)		—			(36,806	)

Net cash (used in) provided by operating activities		(10,722	)		643			(6,335	)		—			(16,414	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(4,899	)		(4,179	)		(353	)		—			(9,431	)

Net cash used in investing activities		(4,899	)		(4,179	)		(353	)		—			(9,431	)
Cash flows from financing activities:
Payments on capital lease obligations		—			(12	)		—			—			(12	)
Proceeds from revolving credit facility, net		19,107			—			—			—			19,107
Payment of debt issuance costs		(1,133	)		—			—			—			(1,133	)

Net cash provided by (used in) financing activities		17,974			(12	)		—			—			17,962
Effect of exchange rate changes on cash and cash equivalents		—			—			33			—			33

Increase (decrease) in cash and cash equivalents		2,353			(3,548	)		(6,655	)		—			(7,850	)
Cash and cash equivalents, beginning of period		1,981			7,049			14,994			—			24,024

Cash and cash equivalents, end of period	$	4,334		$	3,501		$	8,339		$	—		$	16,174

EASTON-BELL SPORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited and amounts in thousands, except as specified)

Condensed Consolidating Statement of Cash Flows
Two Fiscal Quarters Ended July 3, 2010


				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	5,083		$	46,974		$	4,083		$	(51,057	)	$	5,083
Non-cash adjustments		7,266			(45,927	)		7,155			51,057			19,551
Changes in operating assets and liabilities, net of effects from purchase of businesses		4,957			5,685			(14,052	)		—			(3,410	)

Net cash provided by (used in) operating activities		17,306			6,732			(2,814	)		—			21,224
Cash flows from investing activities:
Purchases of property, plant and equipment		(5,657	)		(4,009	)		(228	)		—			(9,894	)
Purchase of businesses, net of cash acquired		—			(1,750	)		—			—			(1,750	)

Net cash used in investing activities		(5,657	)		(5,759	)		(228	)		—			(11,644	)
Cash flows from financing activities:
Payments on capital lease obligations		—			(12	)		—			—			(12	)
Payments on revolving credit facility, net		(6,000	)		—			—			—			(6,000	)

Net cash used in financing activities		(6,000	)		(12	)		—			—			(6,012	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(1,468	)		—			(1,468	)

Increase (decrease) in cash and cash equivalents		5,649			961			(4,510	)		—			2,100
Cash and cash equivalents, beginning of period		9,347			10,229			13,742			—			33,318

Cash and cash equivalents, end of period	$	14,996		$	11,190		$	9,232		$	—		$	35,418


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the related notes, included elsewhere in this Form 10-Q.

Unless otherwise indicated, all references in this Form 10-Q to Easton-Bell, we, us, our, and the Company refer to Easton-Bell Sports, Inc. and its consolidated subsidiaries. References to Easton, Bell and Riddell refer to Easton Sports, Inc. and its consolidated subsidiaries, Bell Sports Corp. and its consolidated subsidiaries and Riddell Sports Group, Inc. and its consolidated subsidiaries, respectively. Easton-Bell Sports, Inc. is a wholly-owned subsidiary of RBG Holdings Corp., or RBG, which, in turn, is a wholly-owned subsidiary of EB Sports Corp., or EB Sports, of which 100% of the issued and outstanding voting common stock is owned by Easton-Bell Sports, LLC, the ultimate parent company, or our Parent.

FORWARD-LOOKING STATEMENTS AND INFORMATION

This quarterly report includes forward-looking statements. All statements other than statements of historical fact included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. The factors mentioned in our discussion in this quarterly report, as well as the risks outlined under “Risk Factors” in our 2010 Annual Report on Form 10-K, will be important in determining future results.

These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Investors should not place undue reliance on any of our forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations. Furthermore, any forward-looking statement speaks only as of the date on which it is made and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

OVERVIEW

We are a leading designer, developer and marketer of branded sports equipment, protective products and related accessories. We offer products that are used in baseball, softball, ice hockey, football, lacrosse and other team sports, and in various action sports, including cycling, snowsports, powersports and skateboarding. Sports enthusiasts at all levels, from recreational participants to professional athletes, choose our products for their innovative designs and advanced materials, which provide a performance or protective advantage. Throughout our history, our focus on research and development has enabled us to introduce attractive and innovative products, many of which have set new standards for performance in their respective sports. As a result, we are able to consistently enter new product categories and expand and improve our existing product lines.

We currently sell a broad range of products primarily under four well-known brands—Easton^® (baseball, softball, ice hockey and lacrosse equipment, apparel and cycling components), Bell^® (cycling and action sports helmets and accessories), Giro^® (cycling and snowsports helmets and accessories) and Riddell^® (football equipment and reconditioning services). Together, these brands represent the vast majority of our revenues. We believe that our brands are among the most recognized in the sporting goods industry as demonstrated by our leading market share in many of our core categories.

We sell our products through diverse channels of distribution including: (i) specialty retailers that cater to sports enthusiasts who typically seek premium products at the highest performance levels, (ii) national and regional full-line sporting goods retailers and distributors, (iii) institutional buyers such as educational institutions and athletic leagues and (iv) mass retailers that offer a focused selection of products at entry-level and mid-level price points. As a function of our flexible, low fixed-cost production model, we are able to leverage the expertise of our vendor partners in order to reduce the overhead and capital intensity generally associated with manufacturing.

We have two reportable segments: Team Sports and Action Sports. Our Team Sports segment primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. Our Action Sports segment primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing are net sales growth by segment, gross profit and selling, general and administrative expenses.

Net Sales

Net sales reflect our revenues from the sale of our products and services less returns, discounts and allowances. It also includes licensing income that we collect. Substantially all of Easton’s activity and all of Riddell’s activity is reflected in our Team Sports segment, which primarily consists of football, baseball, softball, ice hockey, lacrosse and other team sports products and reconditioning services related to certain of these products. All of Bell’s activity, including the Bell brand and the Giro brand and the Easton branded cycling products are reflected in our Action Sports segment, which primarily consists of helmets, equipment, components and accessories for cycling, snowsports and powersports and fitness related products.

Cost of Sales

Cost of sales includes the direct cost of purchased merchandise, inbound freight, factory operating costs (including depreciation), warranty costs, distribution and shipping expenses, including outbound freight. Cost of sales generally changes as we incur higher or lower costs from our vendors, experience better or worse productivity in our factories and increase or decrease inventory levels as certain fixed overhead is included in inventory. A shift in the composition of our net sales can also result in higher or lower cost of sales as our gross profit margins differ by product. We review our inventory levels on an ongoing basis to identify slow-moving materials and products and generally reserve for excess and obsolete inventory. If we misjudge the market for our products, we may be faced with significant excess inventory and need to allow for higher charges for excess and obsolete inventory. Such charges have reduced our gross profit in some prior periods and may have a material adverse impact depending on the amount of the charge.

Gross Profit

Gross profit is equal to our net sales minus our cost of sales. Gross profit margin measures gross profit as a percentage of our net sales. We state inventories at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead costs. Our gross profit may not be fully comparable to other sporting goods companies, as we include costs related to distribution and freight in cost of sales.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include all operating expenses not included in cost of sales, primarily, selling, marketing, administrative payroll, research and development, legal, product liability, insurance and non-manufacturing lease expense, as well as certain depreciation and amortization. Other than selling expenses, these expenses generally do not vary proportionally with net sales. As a result, SG&A expenses as a percentage of net sales are usually higher in the winter season than the summer season due to the seasonality of net sales.

Factors Affecting our Business

Outlook

Although other factors will likely impact us, including some we do not foresee, we believe our performance for 2011 may be affected by the following:

•

Economic Climate. The uncertain worldwide economic environment could cause the reported financial information not to be indicative of future operating results or of future financial condition. The current economic environment continues to affect our business in a number of direct and indirect ways including: reduced consumer demand for our products; tighter inventory management by retailers; reduced profit margins due to pricing pressures and an unfavorable sales mix due to a higher concentration of sales of mid to lower price point products; changes in currency exchange rates; lack of credit availability, particularly for specialty retailers; inflation; and business disruptions due to difficulties experienced by suppliers and customers.

•

Retail Market Conditions. As a result of the slowing worldwide economic conditions, the retail market for sports equipment has slowed and is extremely competitive, with strong pressure from retailers for lower prices. We have experienced the effect of consumers trading down price points and delaying certain discretionary purchases, which has resulted in retailers reluctance to place orders for inventory in advance of selling seasons. Further, institutional customers have reduced or deferred purchases due to budget constraints. These trends may continue to have a negative impact on our businesses. We continue to address the retail environment through our focus on innovation and product development and emphasis on multiple price points.

•

Operations and Manufacturing. We intend to continue to streamline distribution, logistics and manufacturing operations, bring uniform methodologies to inventory management, optimize transportation, improve manufacturing efficiencies and provide a high level of service to our customers. Over a several year period we have transitioned production of certain products from our facilities to third party vendors in Asia and other cost efficient sources of labor. However, as a result of our transition of the production of products from our own facilities to third party suppliers, we may become more vulnerable to higher levels of product defects, as well as increased sourced product costs, and our ability to mitigate such cost increases may be reduced.

•

Interest Expense and Debt Repayment. In 2009, in connection with the refinancing of our Company’s then-existing indebtedness, or the Refinancing, we entered into a $250.0 million senior secured asset-based revolving credit facility, subject to availability under each of a United States and Canadian borrowing base, which amount, subject to certain conditions, may be increased to allow borrowings of up to $300.0 million, together with certain of our subsidiaries as Canadian Borrowers (as defined therein) or Subsidiary Guarantors (as defined therein), with the lenders party thereto, or the ABL Facility. As of July 2, 2011, the outstanding principal balance under the ABL Facility was $58.0 million. In addition, we have $350.0 million of outstanding principal amount of our Senior Secured Notes due December 2016, or the Notes. Because our existing indebtedness requires that we use a substantial portion of our cash flows to service interest payments, the amount of available cash flows we will have for working capital, capital expenditures, acquisitions and other general corporate purposes could be limited.

•

Seasonality. Our business is subject to seasonal fluctuation. Sales of cycling products and accessories occur primarily during the warm weather months. Sales of baseball and softball products occur primarily in the late winter and early spring months in preparation for the spring baseball and softball season. Sales of football equipment and reconditioning services are driven primarily by football buying patterns, where orders begin at the end of the school football season (December) and run through to the start of the next season (August). Shipments of football products and performance of reconditioning services reach a low point during the football season. Sales of ice hockey equipment are driven by ice hockey buying patterns with orders shipping in late spring for fall play. Seasonal impacts are increasingly mitigated by the increase in snowsports and powersports sales which, to a certain extent, counter the cycling, baseball, softball and football seasons.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon the consolidated financial statements which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates estimates, including those related to reserves, intangible assets, income taxes and contingencies. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition. Sales of products are recognized when title passes and risks of ownership have been transferred to our customer, which usually is upon shipment. Title generally passes to the dealer or distributor upon shipment from our facilities and the risk of loss upon damage, theft or destruction of the product in transit is the responsibility of the dealer, distributor or third party carrier. Reconditioning revenue is recognized upon the completion of services. Allowances for sales returns, discounts and allowances, including volume-based customer incentives are estimated and recorded concurrent with the recognition of the sale. Royalty income, which is not material, is recorded when earned based upon contract terms with licensees which provide for royalties.

Accounts Receivable and Allowances. We review the financial condition and creditworthiness of potential customers prior to contracting for sales and record accounts receivable at their face value upon completion of the sale to our customers. We record an allowance for doubtful accounts based upon management’s estimate of the amount of uncollectible receivables. This estimate is based upon prior experience including historic losses as well as current economic conditions. The estimates can be affected by changes in the retail industry, customer credit issues and customer bankruptcies. Since we cannot predict future changes in the retail industry and financial stability of our customers, actual future losses from uncollectible accounts may differ from our estimates. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, a larger allowance might be required. In the event we determine that a smaller or larger allowance is appropriate, we would record a credit or a charge to selling, general and administrative expense in the period in which such a determination is made. Uncollectible receivables are written-off once management has determined that further collection efforts will not be successful. We generally do not require collateral from our customers.

Inventories. Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market and include material, labor and factory overhead. Provisions for excess and obsolete inventories are based on management’s assessment of slow-moving and obsolete inventory on a product-by-product basis. We record adjustments to our inventory for estimated obsolescence or a decrease in market value equal to the difference between the cost of the inventory and the estimated market value, based on market conditions. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual experience if future economic conditions, levels of consumer demand, customer inventory levels or competitive conditions differ from our expectations.

Long-lived and intangible assets. We follow the current accounting guidance relating to goodwill and trademarks, which have indefinite lives and are not amortized. The carrying values of all long-lived assets, excluding goodwill and indefinite lived intangibles, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable (such as a significant decline in sales, earnings or cash flows or material adverse changes in the business climate) in accordance with current accounting guidelines. An impairment loss is recognized when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized balance of the asset. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets with their associated carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss would be recognized to the extent that the carrying value exceeds the fair value. The estimate of future cash flows is based upon, among other things, certain assumptions about expected future operating performance. These estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, changes in general economic conditions, customer requirements and our business model.

For goodwill, on an annual basis or more frequently if certain conditions exist, the fair values of our reporting units are compared with their carrying values and an impairment loss is recognized if the carrying value exceeds fair value to the extent that the carrying value of goodwill exceeds its fair value. We generally base our measurement of the fair value of a reporting unit on the present value of future discounted cash flows. The discounted cash flows model indicates the fair value of each reporting unit based on the present value of the cash flows that we expect each reporting unit to generate in the future. Our significant estimates in the discounted cash flows model include our discount rate, long-term rate of growth and profitability of each reporting unit and working capital effects. The growth and profitability rates are based on our expectations for the markets in which we operate and cost increases that are reflective of anticipated inflation (deflation) adjusted for any anticipated future cost savings and our discount rate is based on our weighted average cost of capital. In our most recent impairment analysis, we used a weighted average long-term cash flow growth rate of 6.8%, and a discount rate of 10.0%. Our weighted average long-term growth rate reflects our expectation that our future cash flows will increase. The fair value of the reporting units could change significantly due to changes in estimates of future cash flows as a result of changing economic conditions, our business environment and as a result of changes in the discount rate used.

The Company’s goodwill impairment analysis performed as of January 1, 2011 indicated that none of the reporting units were at risk of failing the goodwill impairment test, and the fair values of each of the reporting units would have to decline at a minimum in excess of 5% depending on the specific reporting unit in order for the carrying value of a particular reporting unit to exceed the fair value. If reductions in estimated undiscounted or discounted cash flows occur in the future, and such reductions indicate that an impairment loss has occurred, an impairment loss will be recorded in the period that such a determination is made.

We amortize certain definite-lived acquired intangible assets on a straight-line basis over estimated useful lives of seven to nineteen years for patents, seven to twenty years for customer relationships, four to five years for licensing and other agreements and seven years for finite-lived trademarks and tradenames. Deferred financing costs are being amortized by the straight-line method over the term of the related debt, which does not vary significantly from an effective interest method.

Income Taxes. We follow the provisions of Accounting Standards Codification (ASC) Topic 740, “Income Taxes”. Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities (excluding non-deductible goodwill) using enacted tax rates in effect for the years in which the differences are expected to become recoverable or payable. A portion of our deferred tax assets relate to net operating loss carryforwards. The realization of these assets is based upon estimates of future taxable income. Changes in economic conditions and the business environment and our assumptions regarding realization of deferred tax assets can have a significant effect on income tax expense.

Product Liability Litigation Matters and Contingencies. We are subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured or reconditioned by us or our subsidiaries and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot currently be determined. We estimate the uninsured portion of probable future costs and expenses related to claims, as well as incurred but not reported claims and record an accrual in this amount on our consolidated balance sheets. These accruals are based on management’s best estimate of probable losses and defense costs anticipated to result from such claims, from within a range of potential outcomes, based on available information, including an analysis provided by an independent actuarial services firm, previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from these estimates.

Derivative Instruments and Hedging Activity. We enter into foreign currency exchange forward contracts to reduce our risk related to inventory purchases. These contracts are not designated as hedges, and therefore, they are recorded at fair value at each balance sheet date, with the resulting change charged or credited to selling, general and administrative, or SG&A, expenses in the Consolidated Statements of Operations and Comprehensive Income.

Warranty Liability. We record a warranty obligation at the time of sale based on our historical experience. We estimate our warranty obligation by reference to historical product warranty return rates, material usage and service delivery costs incurred in correcting the product. Should actual product warranty return rates, material usage or service delivery costs differ from the historical rates, revisions to the estimated warranty liability would be required.

Equity-Based Compensation. Effective January 1, 2006, we adopted accounting standards which requires us to expense Class B Common Units of our Parent, or Units, granted under our Parent’s Incentive Plan based upon the fair market value of the Units on the date of grant. We are amortizing the fair market value of Units granted over the vesting period of the Units and we are using the prospective method of adoption. For Units issued prior to January 1, 2006, we accounted for these Units using the intrinsic value method in accordance with previous accounting standards.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations and Comprehensive Income:


	Fiscal Quarter Ended
	July 2,		% of			July 3,		% of
	2011		Net Sales			2010		Net Sales
	(Dollars in millions)
Net sales	$	211.9		100.0	%	$	202.7		100.0	%
Cost of sales		140.9		66.5	%		133.8		66.0	%

Gross profit		71.0		33.5	%		68.9		34.0	%
Selling, general and administrative expenses		52.0		24.5	%		45.5		22.5	%
Amortization of intangibles		2.3		1.1	%		3.3		1.6	%

Income from operations	$	16.7		7.9	%	$	20.1		9.9	%


	Two Fiscal Quarters Ended
	July 2,		% of			July 3,		% of
	2011		Net Sales			2010		Net Sales
	(Dollars in millions)
Net sales	$	415.3		100.0	%	$	396.9		100.0	%
Cost of sales		280.3		67.5	%		263.2		66.3	%

Gross profit		135.0		32.5	%		133.7		33.7	%
Selling, general and administrative expenses		102.4		24.6	%		95.3		24.0	%
Amortization of intangibles		4.9		1.2	%		6.6		1.7	%

Income from operations	$	27.7		6.7	%	$	31.8		8.0	%

Net Sales

The following table sets forth for the periods indicated, net sales for each of our segments:


	Fiscal Quarter Ended										Two Fiscal Quarters Ended
	July 2,		July 3,		Change						July 2,		July 3,		Change
	2011		2010		$			%			2011		2010		$		%
	(Dollars in millions)										(Dollars in millions)
Team Sports	$	119.5	$	109.2	$	10.3			9.4	%	$	235.8	$	228.6	$	7.2		3.1	%
Action Sports		92.4		93.5		(1.1	)		(1.2	%)		179.5		168.3		11.2		6.7	%

	$	211.9	$	202.7	$	9.2			4.5	%	$	415.3	$	396.9	$	18.4		4.6	%

Net sales in Team Sports and Action Sports during the second quarter of 2011 were positively impacted by favorable foreign currency exchange rate movements of $0.8 million and $1.0 million, respectively. On a constant currency basis, net sales in Team Sports increased by $9.5 million, or 8.7%, and net sales in Action Sports decreased by $2.1 million, or 2.3%.

Team Sports net sales increased primarily as a result of:

•

growth in sales of football helmets due to continued market share gains;

•

increased sales of football equipment reconditioning services due to continued market share gains;

•

higher sales of baseball bats resulting from rule changes by governing bodies of certain baseball leagues; and

•

higher sales of ice hockey sticks;

partially offset by:

•

reduced revenue for ice hockey helmets due to close-out sales in preparation for a new model release; and

•

lower sales of ball gloves.

Action Sports net sales decreased primarily as a result of:

•

reduced demand for snow helmets in the European market due to high retail inventory levels; and

•

lower sales of cycling helmets and accessories in the mass channel;

partially offset by:

•

increased sales of cycling helmets to the specialty channel;

•

growth in sales of Easton branded cycling wheels and components in the aftermarket and to OEM customers;

•

the introduction of Giro branded cycling shoes; and

•

higher sales of powersports helmets to specialty dealers due to enhanced product offerings.

Net sales in Team Sports and Action Sports during the first two fiscal quarters of 2011 were positively impacted by favorable foreign currency exchange rate movements of $1.4 million and $1.6 million, respectively. On a constant currency basis, net sales in Team Sports increased by $5.8 million, or 2.5%, and net sales in Action Sports increased by $9.6 million, or 5.7%.

Team Sports net sales increased primarily as a result of:

•

growth in sales of football helmets due to continued market share gains;

•

increased sales of football equipment reconditioning services due to continued market share gains;

•

higher sales of baseball and softball batting helmets and apparel and baseball and ice hockey protective equipment; and

•

higher sales of ice hockey skates;

partially offset by:

•

the decision to transition sales of baseball and softball bats to later in the year to better coincide with the retail selling season;

•

reduced demand for ice hockey sticks due to retail inventory levels;

•

reduced revenue for ice hockey helmets due to close-out sales in preparation for a new model release;

•

reduced sales of ball gloves; and

•

the impact of the NFL lock-out on sales of collectible / replica football products.

Action Sports net sales increased as a result of:

•

higher sales of cycling helmets and accessories;

•

increased sales of powersports helmets to specialty dealers due to enhanced product offerings;

•

growth in Easton branded cycling wheels and components in the aftermarket and to OEM customers; and

•

the introduction of Giro branded cycling shoes;

partially offset by:

•

reduced demand for snow helmets in the European market due to retail inventory levels;

•

lower sales of licensed cycling helmets and accessories in the mass channel; and

•

reduced sales of auto racing helmets and accessories due to the decision to license the Bell brand to a third-party for these products.

Cost of Sales

The following table sets forth for the periods indicated, cost of sales for each of our segments:


	Fiscal Quarter Ended										Two Fiscal Quarters Ended
	July 2,		% of			July 3,		% of			July 2,		% of			July 3,		% of
	2011		Net Sales			2010		Net Sales			2011		Net Sales			2010		Net Sales
	(Dollars in millions)										(Dollars in millions)
Team Sports	$	77.7		65.0	%	$	67.5		61.8	%	$	156.1		66.2	%	$	142.8		62.5	%
Action Sports		63.2		68.4	%		66.3		70.9	%		124.2		69.2	%		120.4		71.5	%

	$	140.9		66.5	%	$	133.8		66.0	%	$	280.3		67.5	%	$	263.2		66.3	%

For the second fiscal quarter and first two fiscal quarters of 2011, the increase in Team Sports cost of sales as a percentage of net sales primarily relates to:

•

transitioning the sales of higher-margin baseball and softball bats to later in the year to better coincide with the retail selling season;

•

sales growth in lower margin youth football equipment;

•

higher transportation expenses due to the rise in fuel costs; and

•

close-out sales of ice hockey products at lower margins;

partially offset by:

•

favorable foreign currency exchange rates.

For the second fiscal quarter and first two fiscal quarters of 2011, the decrease in Action Sports cost of sales as a percentage of net sales primarily relates to:

•

lower expenses for excess and obsolete inventory write-offs;

•

reduced close-out sales;

•

increased sales of higher-margin cycling helmets; and

•

favorable foreign currency exchange rates.

Gross Profit

The following table sets forth for the periods indicated, gross profit for each of our segments:


	Fiscal Quarter Ended										Two Fiscal Quarters Ended
	July 2,		% of			July 3,		% of			July 2,		% of			July 3,		% of
	2011		Net Sales			2010		Net Sales			2011		Net Sales			2010		Net Sales
	(Dollars in millions)										(Dollars in millions)
Team Sports	$	41.8		35.0	%	$	41.7		38.2	%	$	79.7		33.8	%	$	85.8		37.5	%
Action Sports		29.2		31.6	%		27.2		29.1	%		55.3		30.8	%		47.9		28.5	%

	$	71.0		33.5	%	$	68.9		34.0	%	$	135.0		32.5	%	$	133.7		33.7	%

For the second fiscal quarter and first two fiscal quarters of 2011, the decrease in Team Sports gross margin primarily relates to:

•

transitioning the sales of higher-margin baseball and softball bats to later in the year to better coincide with the retail selling season;

•

sales growth in lower margin youth football equipment;

•

higher transportation expenses due to the rise in fuel costs; and

•

close-out sales of ice hockey products at lower margins;

partially offset by:

•

favorable foreign currency exchange rates.

For the second fiscal quarter and first two fiscal quarters of 2011, the increase in Action Sports gross margin primarily relates to:

•

lower expenses for excess and obsolete inventory write-offs;

•

reduced close-out sales;

•

increased sales of higher-margin cycling helmets; and

•

favorable foreign currency exchange rates.

Selling, General and Administrative Expenses

SG&A expenses increased $6.4 million or 14.1% for the second fiscal quarter of 2011, as compared to the second fiscal quarter of 2010. SG&A expenses increased $7.1 million or 7.5% for the first two fiscal quarters of 2011, as compared to the first two fiscal quarters of 2010. The increases for both periods relates primarily to:

•

increased variable costs to support the sales growth;

•

increased spending on marketing to enhance brand awareness;

•

higher spending on research and development to enhance product offerings;

•

increased depreciation expense related to capital expenditures for information technology and facilities improvements;

•

re-establishment of the 401(k) plan company match in 2011; and

•

2010 benefitting from a non-recurring credit related to a mark-to-market adjustment for foreign currency exchange forward contracts;

partially offset by:

•

lower equity compensation expense.

SG&A expenses for the first two fiscal quarters of 2011 also reflect increased compensation expense due to the first fiscal quarter of 2010 benefitting from temporary pay cuts.

Amortization of Intangibles

Amortization of intangibles was $2.3 million for the second fiscal quarter of 2011, as compared to $3.3 million for the second fiscal quarter of 2010. For the first two fiscal quarters of 2011, amortization of intangibles was $4.9 million, as compared to $6.6 million for the first two fiscal quarters of 2010. The decrease for both periods is due to certain intangible assets in the Team Sports segment becoming fully amortized in 2011.

Interest Expense

Interest expense decreased $0.1 million during the second fiscal quarter of 2011, as compared to the second fiscal quarter of 2010. For the first two fiscal quarters of 2011, interest expense decreased $0.6 million, as compared to the first two fiscal quarters of 2010. The decrease for both periods relates to a favorable adjustment to reflect the change in the fair value of the interest rate swap and a decrease in interest rates in 2011 for the revolving credit facility, partially offset by costs incurred related to the amendment to the ABL Facility.

Income Tax Expense

Income tax expense was $2.6 million and $4.0 million for the second fiscal quarters of 2011 and 2010, respectively. The effective tax rate was 47.0% for the second fiscal quarter of 2011, as compared to 44.6% for the second fiscal quarter of 2010. Income tax expense was $2.7 million and $4.1 million for the first two fiscal quarters of 2011 and 2010, respectively. The effective tax rate was 48.5% for the first two fiscal quarters of 2011, as compared to 44.5% for the first two fiscal quarters of 2010. For the second fiscal quarter and the first two fiscal quarters of 2011, the difference between the effective rate and the statutory rate is primarily attributable to the permanent difference for equity compensation expense, state income taxes and the impact of enacted state tax law changes. For the second fiscal quarter and the first two fiscal quarters of 2010, the difference between the effective rate and the statutory rate is primarily attributable to the permanent difference for equity compensation expense and state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Our financing requirements are subject to variations due to seasonal changes in working capital levels. Internally generated funds are supplemented when necessary from external sources, primarily from the ABL Facility (see Note 3 to the Consolidated Financial Statements hereinabove). The cash generated from operating activities, the issuance of the Notes offered on December 3, 2009, and the availability under the ABL Facility are our principal sources of liquidity. Each is described below. Based on our current level of operations and anticipated cost savings and operational improvements, we believe our cash flow from operations, available cash and available borrowings under the ABL Facility will be adequate to meet our liquidity needs for at least the next twelve months. We cannot guarantee that the business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under the ABL Facility in an amount sufficient to enable us to repay our indebtedness, including our Notes, or to fund our other liquidity needs. In addition, upon the occurrence of certain events, such as a change of control of our Company, we could be required to repay or refinance our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including the ABL Facility or our Notes, on commercially reasonable terms or at all.

Our ability to make payments to fund working capital, capital expenditures, debt service, strategic acquisitions, joint ventures and investments will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. Future indebtedness may impose various restrictions and covenants on us which could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

Our debt to capitalization ratio, which is total debt divided by the sum of total debt and stockholder’s equity, was 51.4% at July 2, 2011, as compared to 50.5% at January 1, 2011. The increase was primarily attributable to the increase in debt, partially offset by the increase in retained earnings and the positive effect of the foreign currency translation adjustment on stockholder’s equity.

From time to time, we review acquisition opportunities as well as changes in the capital markets. If we were to consummate a significant acquisition or elect to take advantage of favorable opportunities in the capital markets, we may supplement availability or revise the terms under the ABL Facility or complete public or private offerings of debt securities. If the capital markets present favorable opportunities to purchase our own debt, we may do so.

9.750% Senior Secured Notes

In December 2009, in connection with the Refinancing, we issued the Notes. Interest is payable on the Notes semi-annually on June 1 and December 1 of each year. We may redeem some or all of the Notes prior to December 1, 2012 at a price equal to 100.00% of the principal amount, plus accrued and unpaid interest and a “make-whole” premium. We may redeem all or any of the Notes on or after December 1, 2012 and prior to December 1, 2013 at 107.313% of the principal amount of the Notes, plus accrued and unpaid interest. We may redeem all or any of the Notes on or after December 1, 2013 and prior to December 1, 2014 at 104.875% of the principal amount of the Notes, plus accrued and unpaid interest. We may redeem all or any of the Notes on or after December 1, 2014 and prior to December 1, 2015 at 102.438% of the principal amount of the Notes, plus accrued and unpaid interest. At any time on or after December 1, 2015, we may redeem all or any of the Notes at 100.00% of the principal amount of the Notes, plus accrued and unpaid interest. In addition, during any twelve month period commencing on the issue date prior to December 1, 2012, we may redeem up to 10% of aggregate principal amount of the Notes at a price equal to 103.00% of their principal amount, plus accrued and unpaid interest. At any time prior to December 1, 2012, we may also redeem up to 35.00% of the aggregate principal amount of the Notes at a price equal to 109.750% of the principal amount of the Notes, plus accrued and unpaid interest, with the net cash proceeds of one or more equity offerings of our Company. We are not required to make mandatory redemption or sinking fund payments with respect to the Notes. However, the Notes will become due and payable on October 1, 2015 unless on or prior to August 28, 2015, the indebtedness of EB Sports under its senior secured credit agreement with Wachovia Bank, N.A. and the lenders party thereto, or the New Holdco Facility, has been either repaid or refinanced with indebtedness with a stated maturity that is at least 91 days after the maturity date of the Notes.

Among other provisions, the indenture governing the Notes contains certain restrictions that limits our ability to (1) incur, assume or guarantee additional debt, (2) pay dividends and make other restricted payments, (3) create liens, (4) use the proceeds from sales of assets and subsidiary stock, (5) enter into sale and leaseback transactions, (6) enter into agreements that restrict dividends from subsidiaries, (7) change our business, (8) enter into transactions with affiliates, and (9) transfer all or substantially all of our assets or enter into merger or consolidation transactions. The indenture governing the Notes also requires our Company to make an offer to repurchase the Notes at 101.00% of the principal amount following a change of control of our Company, and at 100.00% of the principal amount with the proceeds of certain sales of assets and subsidiary stock.

Subject to certain exceptions, the indenture governing the Notes permits us and our restricted subsidiaries to incur additional indebtedness, including senior indebtedness and secured indebtedness. In addition, the indenture will not limit the amount of indebtedness that our direct or indirect parent entities, including EB Sports and RBG may incur.

The ABL Facility

Certain of the Company’s wholly-owned domestic subsidiaries, and all subsidiaries that guarantee the Notes (currently only our wholly-owned domestic subsidiaries) guarantee all of our obligations (both United States and Canadian) under the ABL Facility. In addition, our wholly-owned Canadian subsidiaries guarantee the obligations of the Canadian borrowings under the Canadian sub-facility of the ABL Facility. Furthermore, we and our wholly-owned domestic subsidiaries, subject to certain exceptions, grant security with respect to substantially all of our personal property as collateral for our obligations (and related guarantees) under the ABL Facility, including a first-priority security interest in cash and cash equivalents, lockbox and deposit accounts, accounts receivable, inventory, other personal property relating to such inventory and accounts receivable and all proceeds therefrom and a second-priority security interest in substantially all of our equipment and all assets that secure the Notes on a first-priority basis. The obligations of our Canadian subsidiaries that are borrowers under the Canadian sub-facility of the ABL Facility are secured, subject to certain exceptions and permitted liens, on a first-priority lien basis, by substantially all of the assets of our wholly-owned Canadian subsidiaries and by our and our domestic subsidiaries’ assets on the same basis as borrowings under the ABL Facility. At July 2, 2011, we had a zero balance outstanding under the Canadian ABL facility.

Sources and Uses of Our Cash

Cash used in operating activities was $16.4 million for the first two fiscal quarters of 2011, as compared to $21.2 million of cash provided by operating activities during the first two fiscal quarters of 2010. The increase in cash used in operating activities primarily reflects (i) higher accounts receivable due to the increase in net sales and the timing of those sales and (ii) higher inventory from purchases made to support sales anticipated or scheduled in 2011, (iii) lower accounts payable and accrued expenses and (iv) lower current and noncurrent liabilities.

We had $251.9 million in working capital as of July 2, 2011, as compared to $242.6 million at January 1, 2011. The $9.3 million increase in working capital primarily results from the increase in accounts receivable and inventory, partially offset by the decrease in cash and cash equivalents and the increase in revolver borrowings.

Cash used in investing activities was $9.4 million for the first two fiscal quarters of 2011, as compared to $11.6 million used in the first two fiscal quarters of 2010. The primary reason for the difference is that the first two fiscal quarters of 2010 includes $1.8 million in cash payments for the purchase of businesses, while no businesses were purchased in 2011.

Cash provided by financing activities was $18.0 million for the first two fiscal quarters of 2011, as compared to $6.0 million of cash used in the first two fiscal quarters of 2010. The primary reason for the difference is that the first two fiscal quarters of 2011 reflect $19.1 million of net proceeds from borrowings on the ABL Facility, whereas the first two fiscal quarters of 2010 reflect $6.0 million of net payments on the ABL Facility. In addition, the first two fiscal quarters of 2011 reflect $1.1 million of debt issuance costs, paid in conjunction with the Amendment.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

Our net sales and expenses are predominantly denominated in United States dollars. In fiscal year 2010, approximately 85.2% of our net sales were in United States dollars, with substantially all of the remaining sales in Canadian dollars, British pounds, Euros and Taiwan dollars. In addition, we purchase a number of materials abroad, including finished goods and raw materials from third parties. A significant amount of these purchases were from vendors in Asia, the majority of which were located in mainland China. We may decide to increase our international sourcing in the future. As a result, we have exposure to currency exchange risks.

Most of what we purchase from Asia are finished goods rather than raw materials. Because we generally purchase these goods in United States dollars, changes in the value of the United States dollar can have an immediate effect on the cost of our purchases. If we are unable to increase our prices to a level sufficient to cover any increased costs, it could adversely affect our margins.

We enter into foreign currency exchange forward contracts to reduce the risks related to inventory purchases and foreign currency based accounts receivable denominated in foreign currencies. At July 2, 2011, there were foreign currency exchange forward contracts in effect for the purchase of United States $2.0 million aggregated notional amounts, or approximately Cdn $1.9 million. In the future, if we feel our foreign currency exposure has increased, we may consider entering into additional hedging transactions to help mitigate that risk.

Considering both the anticipated cash flows from firm purchase commitments and anticipated purchases for the next quarter and the foreign currency derivative instruments in place at July 2, 2011, a hypothetical 10% weakening of the United States dollar relative to other currencies would not have a material adverse effect on our expected third quarter 2011 earnings or cash flows. This analysis is dependent on actual purchases during the next quarter occurring within 90% of budgeted forecasts. In addition, the effect of the hypothetical change in exchange rates ignores the effect this movement may have on other variables, including competitive risk. If it were possible to quantify this competitive impact, the results could well be different than the sensitivity effects analysis described. In addition, it is unlikely currencies would uniformly strengthen or weaken relative to the United States dollar. In reality, some currencies may weaken while others may strengthen. Moreover, any movement of the United States dollar relative to other currencies and its impact on materials costs would likely be partially offset by the impact on net sales due to our sales internationally and the conversion of those international sales into United States dollars.

Interest Rate Risk

We are exposed to market risk from changes in interest rates that can affect our operating results and overall financial condition. As of July 2, 2011, the outstanding principal balance under the ABL Facility was $58.0 million. The interest rates on the ABL Facility are based on (1) the prime rate or LIBOR in the case of U.S. dollar denominated loans and (2) the prime rate or CDOR in the case of Canadian dollar denominated loans, in each case plus an applicable margin percentage. A hypothetical 10% increase from the current interest rate applicable to the ABL Facility balance of $58.0 million would have resulted in approximately a $0.1 million increase in interest expense for the quarter ended July 2, 2011.


Item 4.		Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of July 2, 2011, the end of the fiscal period covered by this quarterly report, we performed an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer each concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the period covered by this report that materially affected, or is reasonably likely to affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

We are subject to various product liability claims and/or suits brought against us for claims involving damages for personal injuries or deaths. Allegedly, these injuries or deaths relate to the use by claimants of products manufactured by us and, in certain cases, products manufactured by others. The ultimate outcome of these claims, or potential future claims, cannot be determined. Our management obtains an actuarial analysis and has established an accrual for probable losses based on this analysis, which considers, among other factors, our previous claims history and available information on alleged claims. However, due to the uncertainty involved with estimates, actual results could vary substantially from those estimates. In addition, we recently became aware of two complaints for damages filed against the National Football League and certain of our entities in the Superior Court of California by certain retired NFL players. We believe these complaints are without merit and we intend to vigorously defend against any legal actions brought against us. Given this preliminary stage, we are unable to predict outcomes, or reasonably estimate a range of possible loss, if any. We maintain primary and excess product liability insurance coverage for such claims under various policies.

We also are involved in various non-product liability claims and actions, including employment related matters as well as claims relating to potential infringement of intellectual property rights of others. In 2002, one of our competitors sued us in Canadian Federal Court alleging infringement of a hockey skate patent. In 2010, we received an unfavorable judgment against us in relation to such claim, which we have appealed. If the appeal is unsuccessful, the plaintiffs will enter a procedure in Canadian Federal Court to determine the monetary relief to be granted. Because the documents necessary to establish an accurate assessment of any potential liability have not been disclosed to us, it is not possible to accurately estimate any potential resulting liability at this time. However, management believes that this claim will not be material to our business or financial condition.


Item 1A.		Risk Factors

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended January 1, 2011. The materialization of any risks and uncertainties identified in Forward-Looking Statements contained in this report together with those previously disclosed in the Form 10-K or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements and Information” in this report.


Item 6.		Exhibits

(a)

The following exhibits are filed or incorporated by reference as part of this Form 10-Q. Each management contract or compensation plan required to be filed as an exhibit is identified by an asterisk (*):


Exhibit			The filings referenced for
Number		Description of Exhibit	incorporation by reference are:

	31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

	31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

	32.1	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		EASTON-BELL SPORTS, INC.
		Registrant

Dated: August 16, 2011		/s/ Paul E. Harrington Paul E. Harrington
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated: August 16, 2011		/s/ Mark A. Tripp Mark A. Tripp
		Chief Financial Officer
		(Principal Financial Officer)

EASTON-BELL SPORTS, INC. - FORM 10-Q - August 16, 2011

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