<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RIDDELL SPORTS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2890400
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
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RIDDELL SPORTS INC.
900 THIRD AVENUE
27TH FLOOR
NEW YORK, NEW YORK 10022
(212) 826-4300
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
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RIDDELL SPORTS INC.
1991 STOCK OPTION PLAN
RIDDELL SPORTS INC.
1997 STOCK OPTION PLAN
(Full title of the plans)
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LISA MARRONI
RIDDELL SPORTS INC.
900 THIRD AVENUE
27TH FLOOR
NEW YORK, NEW YORK 10022
(212) 826-4300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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AMOUNT OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE SHARES TO BE OFFER PRICE PER AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (2)(3) PRICE (2)(3) FEE (4)
==================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par
value $0.1 per share (the
"Common Stock") 75,000(1) (2) $206,250 $71.12(5)
==================================================================================================================
</TABLE>
(1) Represents shares proposed to be sold by a selling stockholder who
may be deemed an "affiliate" under Rule 404 of the Rules and
Regulations of the Securities Act of 1933, as amended, upon the
exercise of certain options to purchase the Company's Common Stock.
(2) The proposed maximum offering price per share and the proposed
maximum aggregate offering price were estimated pursuant to Rules
457(c) and (h) under the Securities Act of 1933, as amended (the
"Act"). The proposed maximum aggregate offering price equals the
aggregate offering price of 75,000 shares of Common Stock issuable
under the Company's 1991 Stock Option Plan pursuant to options having
an exercise price of $2.75 per share ($206,250).
(3) Estimated solely for the purpose of calculating the registration fee.
(4) The registration fee has been calculated pursuant to Section 6(b) of
the Act based on the proposed maximum aggregate offering price.
(5) Previously paid.
<PAGE>
REOFFER PROSPECTUS
RIDDELL SPORTS INC.
75,000 SHARES OF COMMON STOCK
This Reoffer Prospectus (the "Prospectus") is being used in
connection with the offering by Dan Cougill, a selling stockholder (the
"Stockholder") of Riddell Sports Inc. (the "Company"), who may be deemed an
"affiliate" of the Company (as such term is defined in Section 405 of the
General Rules and Regulations under the Securities Act of 1933, as amended
(the "Securities Act")), of shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company, which may be acquired by him and are
available to be resold by him pursuant to a Stock Option Agreement between the
Company and the Stockholder (the "Agreement").
The Stockholder may offer to sell the Common Stock covered by this
Prospectus from time to time in one or more transactions, at prices and upon
terms then obtainable in the NASDAQ National Market System ("NASDAQ NMS"), in
negotiated transactions, in a combination of any such methods of sale, or
otherwise.
The Company will not receive any of the proceeds from the sales of
the Common Stock. All expenses of registration incurred in connection with
this offering are being borne by the Company, but all brokerage commissions
and other expenses incurred by the individual Stockholder will be borne by the
Stockholder.
The Common Stock is listed on the NASDAQ-NMS under the trading symbol
"RIDL". On September 2, 1998, the last sale of price of the Common Stock, as
reported by NASDAQ-NMS, was $4.875 per share.
SEE "RISK FACTORS" BEGINNING OF PAGE 3 FOR A DISCUSSION OF CERTAIN
FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF
COMMON STOCK OFFERED HEREBY.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------
The date of this Reoffer Prospectus is September 4, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Public Reference Room 1024 of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661-2511; and New
York Regional Office, Seven World Trade Center Suite 1300, New York, New York
10048. Copies of such materials can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. Such reports, proxy and information
statements and other information may be found on the SEC's site address,
http://www.sec.gov. Reports, proxy statements and other information concerning
the Company can also be inspected and copied at the offices of the National
Association of Securities Dealers, National Market System, 1735 K Street NW,
Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement filed
by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the
information contained in the registration statement, and reference is hereby
made to the registration statement and to the exhibits relating thereto for
further information with respect to the Company and the securities offered
hereby. Any statement contained or incorporated by reference herein concerning
the provisions of any document is not necessarily complete, and in each
instance reference is made to the copy of such document filed as an exhibit to
the registration statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, including all amendments filed for the
purpose of updating or completing such reports, which have been filed by the
Company with the Commission pursuant to the Exchange Act, are hereby
incorporated by reference in this Prospectus:
(A) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 as amended by Form 10K-A dated April
28, 1998 and the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998 and June 30, 1998.
(B) The description of the Common Stock set forth in the
Company's Amended and Restated Articles of Incorporation and
First Amended and Restated By Laws (incorporated by
reference to the Company's Form 10-Q dated November 11, 1996
and the Company's Form 10-K for the year ended December 31,
1995, respectively).
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<PAGE>
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the respective dates of filing of such documents.
Any statement contained herein or in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified,
replaced, or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that
also is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to any person, including
any beneficial owner, to whom this Prospectus is delivered, on written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are incorporated by reference therein). Requests should be
directed to the attention by mail to Lisa Marroni, Esq., General Counsel,
Riddell Sports Inc., 900 Third Avenue, 27th Floor, New York, New York 10022,
or by telephone at (212) 826-4300.
RISK FACTORS
Prospective Holders of Common Stock should carefully consider the
specific factors set forth below, as well as the other information included in
this Prospectus before deciding to purchase any Common Stock.
SIGNIFICANT LEVERAGE AND INDEBTEDNESS SERVICE
The Company incurred substantial indebtedness in connection with its
acquisition of Varsity Spirit Corporation (the "Acquisition") in June, 1997.
As of June 30, 1998, the Company had total consolidated indebtedness of $144.5
million. Subject to the restrictions in the Company's debt agreements,
including its $35 million Credit Facility with NationsBank N.A. and NBD Bank
(the "Credit Facility") and the indenture (the "Indenture") governing the
Company's $115 million principal amount of 10.5% Senior Notes due 2007 (the
"Senior Notes"), the Company and its subsidiaries may incur additional
indebtedness from time to time to finance capital expenditures and
acquisitions and for other general corporate purposes.
The degree to which the Company is leveraged could have important
consequences to the holders of the Common Stock, including: (i) the possible
limitation in the future of the Company's ability to obtain additional
financing for working capital, capital expenditures, debt service requirements
or other purposes; (ii) a substantial portion of the Company's cash flow from
operations will be dedicated to the payment of the principal of and interest
on its indebtedness, thereby reducing funds available for operations; (iii)
certain of the Company's borrowings, primarily the borrowings under the Credit
Facility, will be at variable rates of interest which could cause the Company
to be vulnerable to increases in interest rates; and (iv) the Company may be
more vulnerable to economic downturns and be more limited in its ability to
withstand competitive pressures than its competitors that are not as highly
leveraged.
The Company's ability to make scheduled payments of the principal of,
or interest on, or
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to refinance, its indebtedness will depend on its future operating performance
and cash flow, which are subject to prevailing economic conditions, prevailing
interest rate levels, and financial, competitive, business and other factors,
many of which are beyond its control, as well as the availability of
borrowings under the Credit Facility or successor facilities and any
provisions of law which generally may restrict the Company's subsidiaries from
making distributions to the Company (such as laws restricting dividends to the
extent of adequate capital). However, the Company believes that its cash flow
from operations, together with amounts available under the Credit Facility,
will be adequate to meet its current cash requirements for working capital,
capital expenditures, interest payments and scheduled principal payments.
There can be no assurance, however, that the Company's business will continue
to generate cash flow at or above current levels or that its cash requirements
will not increase beyond current requirements in the event the Company enters
into definitive agreements relating to its licensing the Umbro(Registered)
trademark or for any other reason. If the Company is unable to generate
sufficient cash flow from operations in the future to service its indebtedness,
it may be required to refinance all or a portion of its existing indebtedness,
or to obtain additional financing or to dispose of material assets or
operations. The Credit Facility and the Indenture restrict the Company's ability
to sell assets and the use of proceeds therefrom. There can be no assurance that
any such refinancing or asset sales would be possible under the Company's debt
instruments existing at such time, that the proceeds which the Company could
realize from such refinancing or asset sales would be sufficient to meet the
Company's obligations then due or that any additional financing could be
obtained.
The Credit Facility and the Indenture contain numerous restrictive
covenants which limit the discretion of the management of the Company with
respect to certain business matters. These covenants place significant
restrictions on, among other things, the ability of the Company to incur
additional indebtedness, to create liens or other encumbrances, to pay
dividends or make other restricted payments, to make investments, loans and
guarantees and to sell or otherwise dispose of a substantial portion of assets
to, or merge or consolidate with, another entity. The Credit Facility also
contains a number of financial covenants that require the Company to meet
certain financial ratios and tests and provide that a Change of Control (as
defined in the Credit Facility) constitutes an event or default. A failure to
comply with the obligations contained in the Credit Facility or the Indenture,
if not cured or waived, could permit acceleration of the related indebtedness
and acceleration of indebtedness under other instruments that contain cross-
acceleration or cross-default provisions. In addition, the obligations of the
Company under the Credit Facility are secured by substantially all of the
assets of the Company. In the case of an event of default under the Credit
Facility, the lenders under the Credit Facility would be entitled to exercise
the remedies available to a secured lender under applicable law. If the
Company were obligated to repay all or a significant portion of its
indebtedness, there can be no assurance that the Company would have sufficient
cash to do so or that the Company could successfully refinance such
indebtedness. Other indebtedness of the Company that may be incurred in the
future may contain financial or other covenants more restrictive than those
applicable to the Credit Facility or the Senior Notes.
SEASONALITY AND QUARTERLY FLUCTUATIONS
The business and results of operations of both Riddell and Varsity
are highly seasonal and both follow a similar annual pattern. With respect to
Riddell, orders for football products and reconditioning services are
solicited over a sales cycle that begins in the fall of each year and
continues until the start of football play at the end of the following summer.
Delivery of products
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<PAGE>
and performance of reconditioning services are solicited over a sales cycle
that begins in the fall of each year and continues until the start of football
play at the end of the following summer. Delivery of products and performance
of reconditioning services reaches a low point during the football playing
season. These activities contribute most to profitability in the first through
third quarters of each calendar year. Varsity's cheerleader and dance team
camps are held exclusively in the summer months. Sales of Varsity's
cheerleader, dance team and booster club uniforms and accessories primarily
occur prior to the beginning of the school year. Accordingly, a substantial
portion of Varsity's annual revenues and all of its net income is generated in
the second and third quarters of each calendar year, respectively, while the
first and fourth quarters have historically resulted in net losses.
Riddell sells most of its competitive football products and
reconditioning services on dated payment terms with payments from customers
generally due the following July or September. Accordingly, trade receivables
increase throughout the year as sales are made on these dated payment terms.
The increase in trade receivables continues throughout an annual cycle until
reduced at the end of the cycle, generally in the following July to October
period, as the dated receivables become due. In order to finance the resulting
large receivable levels, Riddell requires a revolving line of credit. The
outstanding balance on the revolving line of credit generally follows the
receivable cycle described above, increasing as the level of receivables
increases until the mid summer of each year when collections of the dated
receivables are used to reduce the outstanding balance on the line. Varsity's
working capital needs have generally followed a similar pattern reaching their
peak at the end of the first calendar quarter and continuing through the
second quarter. This period follows Varsity's off-season period during which
it generates only nominal revenues while incurring expenditures in preparation
for its approaching peak season.
The Company expects that its new debt structure will impact the
seasonality of its working capital demands as the semi-annual interest
payments on the $115 million of 10.5% Senior Notes come due each January and
July.
SHARES ELIGIBLE FOR FUTURE SALE
On September 1, 1998 the Company had 9,134,404 shares outstanding and
has reserved for issuance 322,152 shares issuable upon exercise of warrants
granted to certain stockholders of the Company including the Stockholder and
1,395,011 shares issuable upon conversion of the Company's 4.1% convertible
Subordinated Note due 2004 (the "Convertible Note"). See, "The Offering" and
"Stockholder." The Company has filed registration statements registering
1,961,178 shares consisting of these shares and certain shares owned by
stockholders who have exercised registration rights. In addition, the Company
has reserved for issuance 2,146,100 shares issuable pursuant to employee stock
options granted under the Company's 1991 Stock Option Plan and 1997 Stock
Option Plan. Unless exercised by the holders, options granted under the
Company's 1991 Stock Option Plan to acquire 227,800 shares of Common Stock
which are "in the money" as of September 1, 1998 expire on or before February
1, 1999.
As of September 1, 1998, approximately 5,545,937 shares (53.4%) of
the Company's Common Stock is deemed beneficially owned by certain officers
and directors of the Company (determined in accordance with Rule 13d-13(d)(i)
of the Exchange Act) and, according to Rule 144(a)(3) of the Securities Act,
are "restricted securities" which can be sold only pursuant to an effective
registration statement or exemption from registration.
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<PAGE>
The effect, if any, that future market sales of shares of Common
Stock or the availability of shares for sale will have on the market price
prevailing from time to time cannot be predicted. Nevertheless, sales of
substantial additional amounts of Common Stock in the public market, or the
perception that such sales could occur, could adversely affect the prevailing
market price for the Common Stock.
DEPENDENCE ON THIRD-PARTY FOREIGN MANUFACTURING
A large portion of Riddell's merchandise is sold through retail
channels and certain protective athletic equipment, such as shoulder pads, are
currently manufactured to its specifications by independent manufacturers
located throughout the world. In particular, all of Riddell's mini-helmet
collectibles are manufactured in China. Riddell has no long term contracts
with its manufacturers and competes with other companies for production
capacity. Riddell's arrangements with its non-U.S. suppliers are subject to
the risks generally associated with doing business abroad, such as changes in
import duties, tariffs, foreign governmental regulations, political unrest,
foreign currency fluctuations, disruptions or delays in shipments, changes in
economic conditions in countries in which Riddell's manufacturing sources are
located and other factors. Additionally, manufacturing in foreign countries
adds weather and time risk largely associated with transoceanic shipping.
Riddell cannot predict the effect that such factors will have on its
manufacturers. If any such factors were to render the conduct of business in a
particular country undesirable or impractical, or if Riddell's current foreign
manufacturers were to cease doing business with Riddell for any reason,
Riddell's business and operating results could be severely impacted. Riddell
cannot predict whether additional United States quotas, duties, taxes or other
charges or restrictions will be imposed upon the importation of its products
in the future, or what effect any such actions would have on its business,
financial condition and results of operations.
PRODUCT LIABILITY CLAIMS; UNCERTAINTY OF INSURANCE COVERAGE; AND PERSONAL
INJURY CLAIMS
Given the nature of the products manufactured by the Company,
particularly its line of football helmets, Riddell has in the past and will
continue in the future to be subject to product liability claims. Currently,
certain subsidiaries are defendants in various product liability suits
relating to personal injuries allegedly related to the use of Riddell helmets
or helmets reconditioned by the Company. As of September 1, 1998, the Company
was a defendant in 5 product liability suits allegedly related to the use of
helmets manufactured. The ultimate outcome of these claims, or potential
future claims, and their effect on the Company's business, financial condition
and results of operations cannot presently be determined. The Company
estimates that the uninsured portion of future costs and expenses related to
these claims, and incurred but not reported claims, would amount to at least
$3.9 million at June 30, 1998 and, accordingly, a reserve in this amount is
included in the Consolidated Balance Sheet of the Company as of June 30, 1998
as part of accrued liabilities and other liabilities. These reserves are based
on estimates of losses and defense costs anticipated to result from such
claims from within a range of potential outcomes, based on available
information, including an analysis of historical data such as the rate of
occurrence and the settlement amounts of past cases. However, due to the
uncertainty involved with estimates, actual results have at times varied
substantially from earlier estimates and could do so in the future.
Accordingly, there can be no assurance that the ultimate costs of such claims
will fall within the established reserves.
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<PAGE>
The Company maintains product liability insurance under an
occurrence-based policy providing coverage against such claims currently
pending against the Company and future claims relating to injuries occurring
between December 1994 and January 2005 even if such claims are filed after the
end of the policy period. The insurance program provides certain basic and
excess coverages with combined aggregate coverage of over $40,000,000 subject
to the limitations described below. The basic insurance coverage under the
policy provides coverage of up to $2,250,000 per claim in excess of an
uninsured retention (deductible) of $750,000 per occurrence ("Basic
Coverage"). The Basic Coverage, which does not affect the availability of the
excess coverage described below, has an aggregate limit which is currently
$4,300,000, but the policy allows the Company to increase this maximum limit
to $7,700,000 at any time by prepaying the required premium, which counts at
120% of the amount paid toward the limit. The insurance program also provides
for additional coverage ("Excess Coverage") of up to $20,000,000 per
occurrence, in excess of the first $3,000,000 of each claim which is covered
by the Basic Coverage, to the extent available. Claims covered by the Excess
Coverage are subject to one of two separate $20,000,000 aggregate policy
limits, depending on the date of the related injury. The first $20,000,000
aggregate limit applies to claims for injuries occurring prior to January 31,
1998, and claims occurring after January 1998, are covered under the second
separate $20,000,000 aggregate limit.
There can be no assurance that such insurance coverage will remain
available after the coverage expires in 2005, that Riddell's insurer will
remain viable or that the insured amounts will be sufficient to cover all
future claims in excess of Riddell's uninsured retention. Furthermore, future
rate increases might make such insurance uneconomical for Riddell to maintain
after 2005.
Cheerleading is a vigorous athletic activity involving jumps,
tumbling, partner stunts and pyramids, with which there are associated risks
of personal injury. Varsity actively promotes safety among cheerleaders, dance
team participants and coaches and was a founding member of and is an active
participant in the American Association of Cheerleading Coaches and Advisors,
an industry trade group whose mission is to improve the quality of
cheerleading and to maintain established safety standards. From time to time,
Varsity is subject to personal injury claims arising from its cheerleader and
dance team camps and activities, and as of September 1, 1998 was subject to 5
such claims. Varsity believes it is adequately insured against such risks.
There can be no assurance, however, that one or more meritorious claims
against Varsity for serious personal injury would not have an adverse effect
upon the Company's business, financial condition and results of operations.
RISK OF LOSS OF MATERIAL LICENSE AND OTHER CONTRACTUAL RELATIONSHIPS
Riddell is currently a party to several license agreements as a
licensor and has retained an independent licensing agent to help expand its
licensing program. Approximately 1% of the Company's consolidated revenues for
the year ended December 31, 1997 on a pro forma basis after giving effect to
the Acquisition and refinancing of the Company's indebtedness in 1997 would
have resulted from its licensing activities. Royalties paid to the Company by
Kmart and Footstar Corp. for the use of the MacGregor trademark constituted
approximately 85% of licensing revenues for 1997 and constituted approximately
98% of the Company's licensing revenues from the MacGregor trademark rights
for 1997. Of such royalties paid to the Company approximately 40% were derived
with respect to athletic footwear and 40% with respect to apparel. Riddell's
license with Footstar Corporation (a division of Meldisco) grants Footstar the
rights to sell athletic
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footwear bearing the MacGregor trademark in Kmart stores through 2001, subject
to renewal at Footstar's option for an additional two year period if certain
conditions are satisfied. The Company recently entered into an amendment to
its existing license with Kmart extending Kmart's license to sell athletic
socks in Kmart stores through 2001 and terminating Kmart's license to sell
apparel and the other smaller product categories in Kmart stores as of June
30, 1998.
A material decline in the royalties from the MacGregor trademark
rights could have a material adverse effect on the Company's results of
operations. The unamortized cost of the related MacGregor trademark rights and
license agreements included in intangible assets at June 30, 1998 was
approximately $13.4 million. If there were a material decline in the revenues
from the MacGregor trademark, then the carrying amount of the MacGregor
trademark rights could be deemed to have been impaired. A write-down for such
impairment could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
the Company will successfully re-license the apparel and other smaller product
categories.
While Riddell believes its relationships with its other licensees and
licensors are good, there can be no assurance that such license agreements
will be renewed upon expiration or that the Company will be successful in
entering into new license agreements in the future.
In addition to the foregoing licensing agreements, the Company has
formed several strategic alliances to promote its business. Since April 1989
Riddell has had an exclusive promotional rights agreement with the NFL
pursuant to which the Riddell brand is the only name that can be displayed on
helmets used in NFL play. Riddell's agreement with the NFL expires in April
1999 and automatically extends for unlimited successive five-year periods
thereafter, provided that the quality of Riddell's helmets and shoulder pads
remain comparable to the best available technology as reasonably determined by
the NFL.
Since 1989, Varsity has organized and produced various national
cheerleading and dance team championships for exclusive broadcast on the ESPN,
Inc. ("ESPN") cable channel. Varsity's current agreement with ESPN expires
after the 1998 season. In 1996, Varsity entered into several agreements with
Walt Disney Attractions, Inc. ("Walt Disney Attractions") pursuant to which
its national cheerleading and dance team championships through 1999 will be
held at Walt Disney World(R) Resort in Florida. While the Company believes
that it will be successful in renewing or replacing the agreements with the
NFL, ESPN and Walt Disney Attractions in a manner which will continue to
promote the Company's products and services, there can be no assurance that it
will be successful in doing so or that it will be able to do so on
economically favorable terms. Although the Company believes that the failure
to renew any one of the agreements with the NFL, ESPN and Walt Disney
Attractions would not have a material effect on the Company, there can be no
assurance that the loss of all or any combination of such agreements would not
have a material adverse effect on the Company's business, financial condition
and results of operations.
COMPETITION AND MARKET SHARE DATA
In its Institutional athletic products business, Riddell competes
with several larger national companies, such as Rawlings Sporting Goods
Company, Inc., Diamond Sports Co., Wilson Sporting Goods Company, and in its
practicewear business, with national companies such as Champion Products, Inc.
and Russell Athletic, Inc. While none of such national competitors
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<PAGE>
manufactures football helmets, some of Riddell's competitors offer a broad
line of sports equipment and are significantly larger and have substantially
greater financial and other resources at their disposal than Riddell. Riddell
also competes with numerous smaller manufacturers and suppliers of sporting
goods, services and collectibles. In particular, the protective equipment
reconditioning and the sports collectibles industries are highly fragmented.
In late 1994, in response to Riddell's move to direct sales, Schutt Sports
Group ("Schutt"), Riddell's primary competitor in new football equipment,
canceled the designation of All American Sports Corporation's (Riddell's
reconditioning subsidiary) as an authorized reconditioner of AIR(TM) helmets
and refused to sell parts for their helmets to All American. This move has had
no measurable impact on Riddell's ability to recondition AIR helmets and no
significant effect on total reconditioning volume in 1996 or 1997. Although
Riddell will continue to source parts from outside suppliers that meet or
exceed Schutt's standards and to recertify all AIR helmets to NOCSAE standards
as it had before, Schutt's actions could have some limited impact on the
reconditioning volume of All American in future years.
Varsity is one of two major national companies that designs and
markets cheerleader, dance team and booster club uniforms and accessories and
is one of two major national operators of camps. While Varsity's only national
competitor is National Spirit Group Limited ("NSG"), it also competes with
other smaller national and regional competitors that serve the uniform and
accessories market or that operate cheerleader and dance team camps and
clinics. Competitive pressure could have a material adverse effect on the
Company's business, financial condition and results of operations.
The market share and other market data contained in this Prospectus
are based on independent industry publications and the good faith belief of
the Company's management. However, market share data cannot always be verified
with complete certainty due to the unavailability of raw data in certain
circumstances and the voluntary nature of the data gathering process, and
estimates may be incorrect, possibly to a material degree. In particular, the
Company is not aware of the availability of reliable statistics with respect
to the actual size of the high school football helmet market. Management's
estimates with respect to this market are based only on the limited data in
the public domain and the Company's participation in the football helmet
industry which contains only one major competitor, a private company that does
not reveal distribution information with respect to the high school market.
Management's estimates with respect to the collegiate market are based on the
Company's market share data with respect to NCAA teams. The Company is not
aware of the availability of reliable statistics on the dance studio market,
and management's estimates are based upon limited data in the public domain.
Accordingly, no assurance can be given as to the accuracy of management's
estimates. Prospective holders of Common Stock should not place undue emphasis
on the market share data contained in this Prospectus, as there can be no
assurance that such data are accurate in all material respects.
DEPENDENCE ON NEW PRODUCTS
The Company's future growth will be impacted by its ability to
identify and develop collectible and retail products which can be sold at
acceptable profit margins. There can be no assurance that the Company will be
successful in identifying and developing new collectible and retail products
that may be successfully marketed to consumers. A failure to identify and
develop
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new products for marketing through the retail and other channels would
adversely affect the Company's future performance.
REGULATION
At present, no national governing body regulates cheerleading and
dance team activities at the collegiate level. Although voluntary guidelines
relating to safety and sportsmanship have been issued by the NCAA and some of
the athletic conferences, to date cheerleading and dance teams generally are
free from rules and restrictions similar to those imposed on other competitive
athletics at the college level. However, if rules limiting off-season training
are applied to cheerleading and/or dance teams (similar to rules imposed by
the NCAA on other sports), it is likely that Varsity would be unable to offer
a significant number of its camps either because participants would be
prohibited from participating during the summer or because suitable sites
would not be available. Although the Company is not aware of any school
officially adopting these activities as a competitive sport, recognition of
cheerleading and/or dance teams as "sports" would increase the possibility
that these activities may become regulated. If Varsity were restricted from
providing its training programs to colleges and high schools, or if
cheerleaders and dance teams were restricted from training during the
off-season, such regulations would likely have a material adverse effect on
Varsity's business, financial condition and results of operations. However,
the Company currently does not believe that any regulation of collegiate
cheerleading or dance teams as a "sport" is forthcoming in the foreseeable
future, and in the event any rules are proposed to be adopted by athletic
associations, the Company expects to participate in the formulation of such
rules to the extent permissible.
At the high school level, some state athletic associations have
classified cheerleading as a sport and have in some cases imposed certain
restrictions on off-season practices and out-of-state travel to competitions.
However, in all cases to date, Varsity has been able to work with these state
athletic associations to designate acceptable times for the cheerleaders
within these states to attend camps. Varsity has also signed agreements with
several state associations to assist with sponsoring and execution of official
competitions with these states. To date, state regulations have not had a
material effect on Varsity's ability to conduct its normal business activities
within those states.
DEPENDENCE ON KEY PERSONNEL
The Company's executive officers and certain other key employees of
Riddell and Varsity have been primarily responsible for the development and
expansion of their respective businesses, and the loss of the services of one
or more of these individuals could have an adverse effect on the Company. The
Acquisition combined two separate management teams under the ownership of one
company. The Company's future success will be dependent in part upon its
continued ability to recruit, motivate and retain qualified personnel, as well
as the successful integration of the two management teams. There can be no
assurance that the Company will be successful in this regard. The Company has
employment and non-competition agreements with certain key personnel.
- 10 -
<PAGE>
RISKS RELATING TO BENEFITS OF THE ACQUISITION
Management expects certain economic benefits to result from the
Acquisition, including the introduction of new products and cross marketing of
products. There can be no assurance that following the Acquisition the Company
will be able to successfully introduce new products or programs or will
achieve the economic benefits that management expects. Realization of such
economic benefits from the Acquisition could also be affected by a number of
factors beyond the Company's control, such as general economic conditions,
increased operating costs, the response of the Company's customers or
competitors, difficulties in launching new products or entering new markets
and regulatory developments.
THE OFFERING
Securities offered.........................75,000 shares of Common Stock by the
Stockholders
Common Stock outstanding immediately
prior to the offering(1) ..................9,134,404 shares
Common Stock outstanding immediately
after the offering(1)(2)...................9,209,404 shares
Use of Proceeds............................The Company will receive no proceeds
from the sale of shares being offered
hereby.
NASDAQ-NMS symbol..........................RIDL
- ---------
(1) Excludes 2,146,100 shares issuable upon exercise of options granted
pursuant to the Company's 1991 Stock Option Plan and 1997 Stock Option Plan as
of September 1, 1998. Also excludes 1,395,011 shares of Common Stock issuable
upon conversion at $5.3673 (subject to certain adjustments) of the Convertible
Note. Also excludes 172,152 shares of Common Stock underlying a warrant
expiring October 29, 1999 granted to NBD Bank in October 1995 in consideration
for the extension of the maturity date of a $36,000,000 line of credit to the
Company. The exercise price of the warrant owned by NBD is $3.54 increasing to
$3.72 October 29, 1998. Also excludes a warrant to acquire 150,000 shares of
Common Stock owned by certain officers and/or directors of the Company (see,
"Stockholder").
(2) Assumes exercise of the option to acquire 75,000 shares of Common
Stock by the Stockholder.
THE COMPANY
GENERAL
The Company is the world's leading manufacturer and reconditioner of
football protective
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<PAGE>
equipment and is the nation's leading supplier of products and services to the
school spirit industry. The Company is a holding company that conducts its
business through two principal operating divisions: the Riddell Group Division
("Riddell") and the Varsity Group Division ("Varsity"). The Company believes
that the Riddell brand is one of the best known and recognizable in all of
sports. Management estimates that Riddell football equipment is worn by more
than 80% of all professional National Football League ("NFL") players, and by
more than 50% of all high school and collegiate players. In addition to the sale
of new protective athletic equipment, Riddell is the largest national
participant in the highly fragmented athletic equipment reconditioning industry.
Additionally, Riddell markets both full-size and miniature collectible helmets
and other collectible products and licenses its Riddell(Registered) and
MacGregor(Registered) trademarks for use on athletic footwear and apparel.
Varsity designs and markets innovative cheerleader and dance team uniforms and
accessories for sale to the school spirit industry. Varsity is also a leading
operator of high school and college cheerleader and dance team camps. Varsity
promotes its products and services, as well as the school spirit industry, by
organizing and producing various nationally televised cheerleading and dance
team championships and other special events. The Company believes that it has
one of the largest nationwide direct sales forces that focuses on the
extracurricular activities segment of the educational institutional market (the
"Institutional market").
The Company was incorporated in the State of Delaware in April 1988. The
executive offices of the Company are located at 900 Third Avenue, 27th Floor,
New York, New York 10022 and its telephone number is (212) 826-4300.
RIDDELL
Riddell is the world's leading manufacturer of high school, college and
professional football helmets, with market share estimated at over 50%. Riddell
also sells shoulder pads, including a line of premium pads under the
Power(Registered) name, as well as a line of accessory pads which include
thigh, hip, rib and knee pads.
Through its subsidiary, All American Sports Corporation ("All
American"), Riddell is the word's leading reconditioner of football helmets,
shoulder pads and other related equipment. Reconditioning typically involves
cleaning, sanitizing, buffing or painting, and recertifying helmets as
conforming to the National Operating Committee on Standards for Athletic
Equipment ("NOCSAE") standards. NOCSAE, a committee comprised of sports
equipment manufacturers, including Riddell, establishes industrywide standards
for protective athletic equipment. Riddell may also replace face guards,
interior pads and chin straps. In addition, Riddell reconditions shoulder
pads, as well as equipment for other sports, including baseball and lacrosse
helmets, catchers' masks and baseball gloves. Riddell believes its customer
relationships are strengthened by providing reconditioning services through
its Institutional market sales force to the same athletic coaches generally
responsible for athletic equipment purchases.
Riddell maintains a promotional rights agreement with the NFL's
licensing division (the "NFL Agreement") which requires the Riddell name to
appear on the front and on the chin straps of each Riddell helmet used in NFL
play. The NFL Agreement further requires all teams in the NFL to cover any
indicia of brand identification of other manufacturers which might otherwise
appear on helmets, face masks or chin straps not manufactured by Riddell but
used during league play. The recognition resulting from the frequent
appearance of the Riddell name on helmets in
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<PAGE>
televised football games as well as in photographs in newspapers and magazines
such as Sports Illustrated is viewed by management as important to its overall
sales, marketing and licensing efforts. The NFL Agreement, which originated in
1989, expires in April 1999 and automatically extends for unlimited successive
five-year periods thereafter, provided that the quality of Riddell's helmets
and shoulder pads remains comparable to the best available technology as
reasonably determined by the NFL.
To better capitalize on Riddell's premium brand name, in 1993, David
Mauer, the former President of Mattel U.S.A., became Riddell's Chief Executive
Officer and initiated a strategic repositioning of Riddell's business,
including assembling Riddell's current management team. In October 1994,
management implemented a significant change in its Institutional distribution
system by eliminating the network of independent team dealers which
historically sold Riddell's products to the Institutional market and began
selling athletic equipment directly to its Institutional customers. Riddell
implemented its strategy by utilizing the All American reconditioning sales
force that had previously been selling reconditioning services to its
Institutional customers. Management subsequently increased All American's
full-time sales force from 80 in 1994 to 115 in 1997. The change to direct
sales has (i) enabled Riddell to increase its sales and profitability, (ii)
facilitated the introduction and cross-selling of Riddell's
non-football-related products such as practicewear and baseball equipment,
(iii) improved control over the sales efforts to Institutions and (iv)
provided better access to detailed sales information for analysis.
In addition to repositioning its Institutional marketing effort,
management also refocused its retail collectible business. Riddell's retail
collectible business began with miniature and full size collectible football
helmets displaying NFL and college team logos. Management's strategy with
respect to the retail collectible market has been to (i) reduce production
costs, (ii) segregate products by distribution channels and (iii) accelerate
new product development.
VARSITY
Varsity is a leading provider of products and services to the school
spirit industry. Varsity designs and markets cheerleader, dance team and
booster club uniforms and accessories and is one of the nation's leading
operators of youth, junior high, high school and college cheerleader and dance
team camps, clinics and competitions. Varsity promotes its products and
services, as well as the school spirit industry, by organizing and producing
various nationally televised cheerleading and dance team championships and
other special events. Varsity's primary market includes participants at the
approximately 37,500 Institutions located throughout the United States.
Varsity's cheerleader and dance team fashion division maintains an
excellent reputation for quality, design and on time delivery of its products.
Such products, which bear the Varsity(Registered) label, include custom-made
cheerleader and dance team uniforms and accessories, including sweaters,
sweatshirts, jumpers, vests, skirts, warm-up suits, t-shirts, shorts, pompons,
socks, shoes, pins, jackets and gloves. By relying on independent
manufacturers to produce its uniforms, Varsity is able to minimize its fixed
costs and retain the flexibility necessary to adjust the manufacturing to its
highly seasonal production needs. Varsity provides its manufacturers with
patterns, fabrics, yarn and manufacturing specifications for its products.
Varsity also provides some cutting, knitting and lettering for the
manufacturers at its specialized production facility located at its Memphis
headquarters. Varsity considers itself an innovator in the design of uniforms
and campwear
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<PAGE>
garments and maintains an in-house design staff to maintain its leadership in
setting design trends.
Varsity's camp division commenced operations in 1975 with 20
cheerleading camps and 4,000 participants. Today, through its Universal
Cheerleaders Association ("UCA") division and United Spirit Association
("USA") subsidiary, Varsity is a leading operator of cheerleader and dance
camps in the U.S. Camp enrollment has increased every year since Varsity has
been in business, and totaled 206,000 participants in 1997. Camp sessions,
which are primarily held on college campuses in the summer, were conducted in
every state except Alaska as well as in Canada, Panama and Japan in 1997.
Participants in Varsity's 1997 summer camps included the cheerleading and/or
dance team squads of approximately 76% of the universities comprising the
Atlantic Coast, Big East, Big Ten, Big Twelve, Pacific 10 and Southeastern
collegiate athletic conferences. Varsity instructors are mostly college
cheerleaders who may have previously attended a Varsity camp, and management
believes that its training of many of the top college cheerleading squads
augments its recruiting of high school and junior high school camp
participants.
Varsity promotes its products and services through active and visible
association with the following championships and television specials: the
National College Cheerleading and Dance Team Championship(Registered)
(nationally televised for 12 consecutive years), the National High School
Cheerleading Championship(Registered) (17 consecutive years), the National
Dance Team Championship(Registered) (10 consecutive years) and the National All
Star Cheerleading Championship(Registered) (2 consecutive years). In addition
to promoting cheerleading and dance team activities, these championships,
television specials and other special events are a revenue source to Varsity
primarily during the first and fourth quarters. In 1997, approximately 28,000
persons, including cheerleaders and their families, participated in Varsity's
special events, such as championships and holiday parades in the U.S., London
and Paris.
In December, 1994, Varsity acquired Intropa International/U.S.A., Inc.
("Intropa"), a Varsity supplier since 1988. Intropa specializes in providing
international and domestic tours for special interest, performing, youth and
educational groups including Varsity's London and Paris trips.
Varsity recently implemented an expansion of its dance business and
began working with CS Designs, a prominent designer and manufacturer of
dancewear. Varsity expects to introduce an expanded line of dance uniforms and
costumes under the Varsity label to be sold by Varsity's in-house, nationwide
sales force to high school and college dance teams as well as a new line of
dance uniforms and costumes for dance studio participants to be marketed in
coordination with Co. Dance, its new venture. Co. Dance runs regional dance
conventions and competitions for students from private dance studios. Paula
Abdul is Artistic Director and a co-founder of Co. Dance and is scheduled to
host the national Co. Dance championship to be broadcast from Disney World on
ESPN in July 1998. In 1997 and the first half of 1998 Co. Dance conducted
fourteen weekend dance conventions in which dance instruction was provided by
dancers who have performed on Broadway, in music videos and in Hollywood.
Varsity plans to conduct three more Co. Dance sessions later in 1998.
Varsity's strategy has been to increase revenue and market share by (i)
expanding its school spirit product lines, (ii) strengthening its sales force,
(iii) increasing enrollment in its cheerleader and dance team camps as a
vehicle to increase participation in special events such as parades
- 14 -
<PAGE>
and bowl games and cross-sell products, such as uniforms and (iv) actively
promoting its business as well as the school spirit industry, primarily though
its national televised cheerleading and dance team championships. Since fiscal
1987, Varsity has significantly expanded the variety and selection of its
uniforms and accessories and increased its direct sales force to approximately
135 full-time professional sales representatives. Varsity believes it
currently has the largest nationwide full-time direct sales force in the
school spirit industry.
USE OF PROCEEDS
The Company will receive no proceeds from any sale of the shares being
offered hereby. The Company will bear all expenses of the offering, which are
expected to be approximately $5,000.
STOCKHOLDER
The Stockholder, Mr. Cougill, is the President of the Company's Riddell
Group Division and the President and Chief Operating Officer of its
subsidiary, Riddell, Inc. The Company granted the Stockholder an option to
acquire the 75,000 shares registered herein under the Company's 1991 Stock
Option Plan. The option expires February 1, 1999. The exercise price per share
of the Stockholder's option herein registered is $2.5625 per share.
The Stockholder is a member of group of stockholders who are deemed to
beneficially own in excess of 52.8% of the Company's Common Stock on September
1, 1998. The other member of the group are officers and/or directors of the
Company and consist of Messrs. Nederlander, McConnaughy, Toboroff, Mauer and
Webb and/or entities controlled by them. These stockholders have entered into
an agreement dated as of September 14, 1995 (the "Stockholders' Agreement")
pursuant to which they have agreed to vote the shares of stock owned by them
as Mr. Robert Nederlander, the Company's Chairman, votes and to vote in favor
of the election of Jeffrey Webb, the Company's Vice Chairman and the President
and Chief Operating Officer of its Varsity Group Division, and a designee of
Jeffrey Webb reasonably acceptable to the Board of Directors. The
Stockholders' Agreement expires on the earliest to occur of the death of Mr.
Nederlander, May 29, 2001 and, with respect to the shares so transferred, upon
the transfer of shares of Common Stock owned by them.
The following table sets forth information as of September 1, 1998
regarding the Stockholder and the shares of the Company's Common Stock that is
beneficially owned by them, all of which may be offered from time to time
pursuant to this Prospectus.
- 15 -
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Number of Shares Beneficially
Owned Prior to the Shares Being Owned After the
Stockholder Offering Sold Offering
----------- -------------------- ------------------ --------------------
Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Dan Cougill 105,177(1) 1.1% 75,000 30,177 0
c/o Riddell, Inc.
3670 No. Milwaukee Ave.
Chicago, IL 60641
</TABLE>
- ---------------------
(1) The 105,177 shares of Common Stock beneficially owned by Mr. Cougill are
subject to the Stockholders' Agreement. Furthermore, 95,000 of
these105,177 shares underlie options granted to the Stockholder under
the Company's 1991 Stock Option Plan that are exercisable currently or
within 60 days of September 1, 1998. Additionally, 475 shares underlie a
warrant which expires January 26,1999 The warrant was granted by the
Company originally in January 1994 together with other warrants
(collectively, the "Stockholders' Warrants) to acquire an aggregate of
150,000 shares of Company Common Stock to a limited partnership owned in
part by Messrs. Nederlander, Toboroff and McConnaughy, certain officers
and/or directors of the Company, in consideration for the extension of a
note in the amount of $1,870,500 issued by the partnership in favor of
the Company. Mr. Cougill purchased this warrant in September 1995. The
exercise price per share of the Stockholders' Warrants owned by these
Stockholders is $2.96, increasing to $3.11 on January 11, 1999.
Sales of a substantial number of shares of Common Stock of the Company
beneficially owned by the certain stockholders of the Company, including the
Stockholder, may have an adverse effect on the market price of the Company's
Common Stock. See "Risk Factors - Shares Eligible for Future Sale."
PLAN OF DISTRIBUTION
Any sale of the Common Stock by the Stockholder will be for
his own account. The Company will receive none of the proceeds from the sale
of the Common Stock.
The Common Stock offered hereby by the Stockholder may be
sold from time to time by the Stockholder, or by pledgees, donees, transferees
or other successors in interest. Such sales may be made in the NASDAQ National
Market System, in the over-the-counter market, or otherwise at prices and at
terms then prevailing or at prices related to the then current market price,
or in negotiated transactions. The Common Stock offered hereby by the
Stockholder may be sold in one or more of the following transactions: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
Common Stock offered hereby by the Stockholders as agent but may position and
resell a portion of the block as principal to facilitate the transaction; (b)
purchases by a broker or dealer as principal and resale by the broker or
dealer for its account pursuant to this Prospectus; and (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers.
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<PAGE>
In effecting sales, brokers or dealers engaged by the Stockholder may arrange
for other brokers or dealers to participate. Any broker or dealer to be
utilized by the Stockholder will be selected by such Stockholder. Brokers or
dealers will receive commissions or discounts from the Stockholder in amounts
to be negotiated immediately prior to the sales. These brokers or dealers and
any other participating brokers or dealers, as well as certain pledgees,
donees, transferees and other successors in interest, may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act in
connection with the sales. In addition, any securities covered by this
Prospectus that qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this Prospectus.
Upon the Company being notified by the Stockholder that any
material arrangement has been entered into with a broker-dealer for the sale
of Common Stock offered hereby by the Stockholder through a block trade,
special offering, or secondary distribution or a purchase by a broker or
dealer, a prospectus supplement will be filed, if required, pursuant to Rule
424(c) under the Securities Act, disclosing: (i) the name of each such
Stockholder and of the participating broker-dealer(s), (ii) the number of
shares of Common Stock involved, (iii) the price at which such shares of
Common Stock were sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information
set out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction.
In addition, to the extent otherwise required, the amount of
the shares of Common Stock offered by the Stockholder to be sold, purchase
prices, public offering prices, the names of any agents, dealers or
underwriters, and any applicable commissions or discounts with respect to a
particular offer will be set forth by the Company in a prospectus supplement
accompanying this Prospectus or, if appropriate, a post-effective amendment to
the Registration Statement.
The Stockholder reserves the sole right to accept and,
together with any agent of the Stockholder, to reject in whole or in part any
proposed purchase of the Common Stock offered hereby by the Stockholder. The
Stockholder will pay any sales commissions or other seller's compensation
applicable to such transactions.
The Stockholder and agents who execute orders on his behalf
may be deemed to be underwriters as that term is defined in Section 2(11) of
the Securities Act and a portion of any proceeds of sales and discounts,
commissions or other seller's compensation may be deemed to be underwriting
compensation for purposes of the Securities Act.
Offers and sales of shares of the Common Stock have not been
registered or qualified under the laws of any country, other than the United
States. To comply with certain states' securities laws, if applicable, the
shares of Common Stock offered by the Stockholder will be offered or sold in
such jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Stockholder's shares may not be offered or
sold unless they have been registered or qualified for sale in such states or
an exemption from registration or qualification is available and is complied
with.
The Stockholder and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, which provisions may limit the timing of
purchases and sales of any of the shares of Common Stock by
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<PAGE>
the Stockholder or any such other person, and may affect the marketability of
the Common Stock and the brokers' and dealers' ability to engage in
market-making activities with respect to the Common Stock.
The Company has agreed to indemnify the Stockholder and
certain other persons against certain liabilities including liabilities
arising under the Act arising out of any material misstatement or material
omission from the registration statement or prospectus relating hereto.
LEGAL MATTERS
Certain legal matters with respect to the validity of the
shares of Common Stock being registered will be passed upon for the Company by
Lisa Marroni, Esq., General Counsel and Vice President for the Company. Ms.
Marroni beneficially owns less than 1% of the Company's Common Stock through
options granted to her by the Company pursuant to the Company's 1991 Stock
Option Plan.
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1996 and 1997, and for the years ended December 31, 1995, 1996
and 1997 have been incorporated by reference herein in reliance upon the
report of Grant Thornton LLP, independent certified public accountants, and
upon the authority of said firm as experts in accounting and auditing.
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<PAGE>
====================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus and, if given or made, such
other information and representations must not be relied upon as having been
authorized by the Company. Except with respect to facts or events arising
after the date hereof which individually or in the aggregate, represent a
material change in the information set forth herein, neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstance,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained herein is
correct as of any time subsequent to its date. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is
unlawful.
----------
TABLE OF CONTENTS
Page
----
Available Information................................2
Incorporation of Certain Documents
by Reference.......................................2
Risk Factors.........................................3
The Offering.........................................11
The Company..........................................11
Use of Proceeds......................................15
Stockholder..........................................15
Plan of Distribution.................................16
Legal Matters........................................17
Experts..............................................18
- ---------------------------------------
- ---------------------------------------
75,000 SHARES
RIDDELL SPORTS INC.
COMMON STOCK
----------
PROSPECTUS
----------
SEPTEMBER 4, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee.................................$ 0
Printing and engraving...............................$ 0
NASDAQ listing fee...................................$ 0
Accountants' fees and expenses.......................$ 1,000
Legal fees and expenses..............................$ 2,000
Blue Sky Fees........................................$ 0
Miscellaneous Fees...................................$ 2,000
--------
Total......................................... $ 5,000
========
Item 15. Indemnification of Directors and Officers
The Indemnification of officers and directors of the Company is
governed by Section 145 of the Delaware General Corporation Law (the "DGCL")
and the Certificate of Incorporation (the "Certificate") and By-Laws of the
Company. Among other things, the DGCL permits indemnification of a director,
officer, employee or agent in civil, criminal, administrative or investigative
actions, suits or proceedings (other than an action by or in the right of the
corporation) to which such person is a party is threatened to be made a party
by reason of the fact of such relationship with the corporation or the fact
that such person is or was serving in a similar capacity with another entity
at the request of the corporation against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. No indemnification
may be made in any such suit to any person adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which the action was brought determines that, despite the
adjudication of liability, such person is under all circumstances, fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper. Under the DGCL, to the extent that a director, officer, employee or
agent is successful, on the merits or otherwise, in the defense of any action,
suit or proceeding or any claim, issue or matter therein (whether or not the
suit is brought by or in the right of the corporation), he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him. In all cases in which indemnification is permitted
(unless ordered by a court), it may be made by the corporation only as
authorized in the specific case upon a determination that the applicable
standard has been met by the party to be indemnified. The determination must
be made (a) by a majority vote of a quorum consisting of the directors who
were not parties to the action even though less than a quorum, or (b) if there
are no such directors, or such directors so direct, by independent legal
counsel in a written opinion, or (c) by the stockholders. The statute
authorizes the corporation to pay expenses incurred by an officer or director
in advance of a final disposition of a proceeding upon receipt of an
undertaking by or on behalf of the person to whom the advance will be made, to
repay the advances if it shall ultimately be determined that he was not
entitled to indemnification. The DGCL provides that indemnification and
advances of
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<PAGE>
expenses permitted thereunder are not to be exclusive of any rights to which
those seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise. The DGCL also authorizes the corporation to purchase and maintain
liability insurance on behalf of its directors, officers, employees and agents
regardless of whether the corporation would have the statutory power to
indemnify such person against the liabilities insured.
The Certificate and the By-Laws each provides that the directors,
officers and others shall be indemnified to the fullest extent authorized by
the DGCL, as in effect (or, to the extent indemnification is broadened, as it
may be amended), against any and all judgments, fines and amounts paid in
settling or otherwise disposing of threatened, pending or completed actions,
suits or proceedings, whether civil, criminal, administrative or investigative
and expenses incurred by such person in connection therewith. The By-Laws
further provide that, to the extent permitted by law, expenses so incurred by
any such person in defending a civil or criminal action or proceeding shall,
at his request, be paid by the Company in advance of the final disposition of
such action or proceeding. The Certificate also eliminates the personal
liability of directors to the fullest extent permitted by the DGCL, as amended
from time to time.
The By-Laws provide that the right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition shall not be exclusive of any other right which any person may
have or acquire under any state law, provision of the Certificate or By-Laws
or otherwise.
In addition to the indemnification as described below, the Company
is a party to employment agreements with each of Messrs. Nederlander, Toboroff
and Mauer (executive officers and directors of the Company) and Messrs.
Cougill (an executive officer of Riddell, Inc., a wholly owned subsidiary of
the Company) and Gleisner (President of All American Sports Corporation, a
wholly owned subsidiary of the Company) indemnifying such individual against
liability arising out of his actions or the performance of his duties within
the scope of his employment not taken in bad faith. In addition, the
employment agreements entered into by the Company and Messrs. Nederlander,
Toboroff and Mauer provide that the Company shall assume primary
responsibility for legal fees incurred by such person in any action as to
which such person is entitled to have his legal fees paid for by the Company,
and that the Company shall pay such fees directly to counsel rather than
reimburse such officer.
The Company maintains directors and officers liability and company
reimbursement insurance which among other things, (i) provides for payments on
behalf of its officers in their capacity as such and (ii) provides for payment
on behalf of the Company against such loss pursuant to statutory or common law
or pursuant to duly effective Certificate or By-Law provisions.
Item 16 List of Exhibits
The Exhibits to this Registration Statement are listed in the
Exhibit Index of this Registration Statement, which is incorporated herein by
reference.
Item 17 Undertakings
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<PAGE>
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
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<PAGE>
EXHIBIT INDEX
Exhibit
Nos. Description of Exhibit
- ---- ----------------------
4(a) Amended and Restated Articles of Incorporation (1)
4(b) First Amended and Restated By Laws (2)
5(a) Opinion of Lisa Marroni, Esq.
23(a) Consent of Grant Thornton, LLP. (3)
23(c) Consent of Lisa Marroni, Esq. (included in Exhibit 5(a))
24. Power of Attorney (included on signature page)
- -------------
(1) Incorporated by reference to Registrants's Form 10-Q dated November
11, 1996.
(2) Incorporated by reference to the Company's Form 10-K for the year
ended December 31, 1995.
(3) Filed herewith.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Post Effective Amendment #1 to Form S-8
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of New York, State of New
York, on the 3rd day of September, 1998.
RIDDELL SPORTS INC.
By:
----------------------
David M. Mauer
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints DAVID M. MAUER, DAVID GROELINGER and
LISA MARRONI, and each of them, as his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or any of them, or his substitutes,
may lawfully do or cause to b done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Robert Nederlander Chairman of the Board September 3, 1998
- --------------------------------------
Robert Nederlander
/s/ David M. Mauer Chief Executive Officer September 3, 1998
- --------------------------------------- and Director (Principal Executive
David M. Mauer Officer)
/s/ Jeffrey Webb Vice Chairman, President and September 3, 1998
- --------------------------------------- Chief Operating Officer, Varsity
Jeffrey Webb Group Division
/s/ Dan Cougill President and Chief Operating September 3, 1998
- --------------------------------------- Officer, Riddell Group Division
Dan Cougill
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
/s/ David Groelinger Executive Vice President, September 3, 1998
- --------------------------------------- Chief Financial Officer
David Groelinger (Principal Financial Officer)
/s/ Leonard Toboroff Vice President and Director September 3, 1998
- ---------------------------------------
Leonard Toboroff
/s/ Lawrence Simon Senior Vice President and Treasurer September 3, 1998
- --------------------------------------- (Principal Accounting Officer)
Lawrence Simon
/s/ Don R. Kornstein Director September 3, 1998
- ---------------------------------------
Don R. Kornstein
/s/ John McConnaughy Director September 3, 1998
- ---------------------------------------
John McConnaughy
Director September 3, 1998
- ---------------------------------------
Glenn "Bo" Schembechler
</TABLE>
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<PAGE>
Exhibit 5(a)
September 3, 1998
Securities Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Dear Sirs and Mesdames:
I am the General Counsel of Riddell Sports Inc., a Delaware
corporation (the "Company"), and I am rendering this opinion in connection
with the Registration Statement under the Securities Act of 1933 filed today
by the Company with the Securities and Exchange Commission on Form S-8 (the
"Registration Statement") with respect to the proposed sale by Dan Cougill,
one of the Company's shareholders and an officer, of an aggregate of 75,000
shares of the Company's common stock, $.01 par value (the "Common Stock")
pursuant to such Registration Statement (collectively, the "Shares").
In connection with the foregoing, I am of the opinion that:
1. The Company is validly incorporated, existing and in good standing
under the laws of the State of Delaware; and
2. The Shares will, when sold, be legally issued and outstanding, fully
paid and nonassessable.
I hereby authorize and consent to the use of this opinion as
Exhibit 5(a) to the Registration Statement.
Very truly yours,
Lisa J. Marroni
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<PAGE>
Exhibit 23(a)
CONSENT OF GRANT THORNTON LLP
The Board of Directors
Riddell Sports Inc.:
We have issued our reports dated February 21, 1998 accompanying the
consolidated financial statements and schedule included in the Annual Report
of Riddell Sports Inc. and Subsidiaries on Form 10-K for the year ended
December 31, 1997 which are incorporated by reference in the Registration
Statement of Riddell Sports Inc. and Subsidiaries on Form S-8. We consent to
the incorporation by reference in the Registration Statement of the
aforementioned reports and to the use of our name as it appears under the
caption, "Experts."
GRANT THORNTON LLP
Chicago, Illinois
September 3, 1998
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