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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported): June 3, 1997
RIDDELL SPORTS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19298 22-2890400
(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
900 Third Avenue, New York, New York 10022
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 826-4300
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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Item 5. OTHER EVENTS
1. Registrant has entered into a Memorandum of Understanding to settle
the claims asserted against it and certain of its officers and
directors in several separate actions. The actions settled include,
among others, the two separate fraudulent transfer actions, BRUCE
LEVITT, BANKRUPTCY TRUSTEE FOR MACGREGOR SPORTING GOODS, INC., NOW
KNOWN AS M. HOLDINGS, INC., PAUL SWANSON, BANKRUPTCY TRUSTEE FOR MGS
ACQUISITION, INC. V. RIDDELL SPORTS INC. ET AL., NO. 95-2261 (BANKR.
D.N.J.) AND INNOVATIVE PROMOTIONS, INC. ET AL. V. RIDDELL SPORTS INC.
ET AL., IN RE MACGREGOR SPORTING GOODS, INC. (ADV. PROC NO. 94-2656
(RG)) as well as the counterclaims and other claims asserted against
it and two directors in the action commenced by the Company entitled,
RIDDELL SPORTS INC. V. FREDERIC H. BROOKS, (D.C., SD NY), 92 Civ. 7851
(JGK).
The proposed settlement, generally, releases the Company and its
affiliates from all claims in these actions and requires the Company
to pay an aggregate of approximately $2.1 million (with respect to
$1.4 million of which the Company has previously established a reserve
and $0.7 million of which the Company has previously escrowed and
expensed). Pursuant to the proposed settlement the Company will assign
royalties of up to $3 million, on a present value basis, over ten
years (the term is subject to adjustment in certain circumstances)
from its "Riddell" footwear license. The settlement agreement
contemplates that, subject to certain conditions, the Company will
enter into a new license agreement with its current footwear licensee.
The proposed settlement is conditioned upon, among other things,
receipt of certain consents and approvals, including approval of the
New Jersey bankruptcy court, and execution of a definitive settlement
agreement by the various parties. There are no assurances that all
requisite consents will be received or that the settlement will be
finalized.
b) Exhibits
Exhibit Index:
Description of Exhibits
-----------------------
99 Press Release dated June 4, 1997
concerning proposed settlement of
several litigations fraudulent
transfer cases and litigation
involving a former employee.
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 hereunto duly authorized.
RIDDELL SPORTS INC.
Dated: June 6, 1997
By : /s/LAWRENCE F. SIMON
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Lawrence F. Simon
Senior Vice President
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[RIDDELL LOGO]
RIDDELL SPORTS INC.
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900 THIRD AVENUE, 27TH FLOOR, NEW YORK, NEW YORK 10022 (212) 826-4300
FAX: (212) 826-5006
Contact: David Groleinger
Chief Financial Officer
RIDDELL ANNOUNCES MEMORANDUM OF UNDERSTANDING
TO SETTLE FRAUDULENT CONVEYANCE CASES
AND LITIGATION WITH FORMER EMPLOYEE
New York, N.Y., June 4, 1997 - - Riddell Sports Inc. (NASDAQ: RIDL) today
announced that it had entered into a Memorandum of Understanding for the
settlement of a number of separate legal actions. Pursuant to the proposed
settlement the bankruptcy trustees and others who have initiated certain
fraudulent transfer actions against the Company are releasing the Company from
liability. In addition to other things, the proposed settlement also releases
the Company from all claims and counterclaims in an action involving a former
employee.
The proposed settlement requires the Company to pay approximately $2.1 million,
consisting of $1.4 million for which the Company has previously established a
reserve and approximately $700,000 which the Company previously deposited into
escrow and expensed. The proposed settlement also requires the Company to
assign up to $3 million on a present value basis of royalties from the
Company's "Riddell" footwear licensee over a period of up to ten years (this
term is subject to certain adjustments). The Company does not anticipate that
the settlement will result in a charge to earnings, other than for legal costs
associated with the finalization of the settlement, as the initial payments are
approximately equal to reserves and escrows remaining from charges taken in
prior periods.
The proposed settlement is conditioned upon, among other things, receipt of
requisite court and other consents and approvals and execution of a definitive
settlement agreement by the various parties. There are no assurances that all
requisite consents will be received or that the settlement will be finalized.
The settlement agreement also contemplates that, subject to certain conditions,
the Company will enter into a new license agreement with its current "Riddell"
footwear licensee.
Commenting on these developments, Mr. Mauer, Riddell's CEO, stated, "These
litigations relate to events dating back as far as 1988, and I am pleased that
we have reached an agreement in principle which will put these issues behind us
and allows us to focus our management time on our business strategy."
Riddell Sports Inc. sells sporting goods products and services for football and
other sports. The Company is the world's leading manufacturer and
reconditioner of football helmets and shoulder pads. The Company sells its
sporting goods products (including mini- and full-size helmets made for display
purposes for collectors) under the Riddell(R) and Pro-Edge(R) brands and
provides reconditioning services under the Riddell/All-American name. The
Company also licenses the Riddell(R) and MacGregor(R) trademarks for use on
athletic footwear, leisure apparel and sports equipment.
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