<PAGE> 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 0-19298
RIDDELL SPORTS INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2890400
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
900 Third Avenue, 27th Floor, New York, New York 10022
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (212) 826-4300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
none none
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [ x ] No [ ]
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
SECTION 16(a) DISCLOSURE
The Company believes, based solely on its review of the copies of the
Forms 3, 4 and 5 required to be filed with the Company pursuant to Section
16(a) of the Exchange Act by its officers, directors and beneficial owners of
over 10% of the Company's Common Stock ("insiders"), that during the fiscal
year ended December 31, 1997, all filing requirements applicable to its
insiders were complied with.
LIST OF DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the seven directors and the named executive
officers of the Company is set forth below as of April 21, 1998 and is based
upon the records of the Company and information furnished to it by the
directors and executive officers. See "Security Ownership of Certain Beneficial
Owners and Management" for information pertaining to the Common Stock owned by
the directors and named executive officers.
Positions Has Served as
Name Age with the Company Director since
- ------------------------- ---- ------------------------- ----------------
Directors:
Robert E. Nederlander (1) 65 Chairman of the Board April 1988
David M. Mauer (1) 49 Director, President and September 1993
Chief Executive Officer
Jeffrey G. Webb (1)(2) 47 Vice Chairman of the Board June 1997
of the Company, President
and Chief Operating Officer
of the Varsity Group Division
Leonard Toboroff (1) 65 Director and Vice President April 1988
Don R. Kornstein 46 Director April 1995
John McConnaughy, Jr.(1) 68 Director September 1989
Glenn E. "Bo" 68 Director September 1991
Schembechler
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Other Executive Officers:
Dan Cougill (1) 45 President and Chief -----
Operating Officer of
the Riddell Group Division
David Groelinger 47 Executive Vice President -----
and Chief Financial Officer
_______________
(1) Messrs. Nederlander, Mauer, Webb, Toboroff, McConnaughy and Cougill and
certain entities controlled by them, are parties to a Shareholders'
Agreement dated as of August 1995, as amended (the "Shareholders'
Agreement"). The Shareholders' Agreement generally requires the parties
thereto to vote the shares of Company Common Stock owned by them directly
and beneficially in the same manner as does Mr. Nederlander and for the
election of Mr. Webb and his designee as members of the Company's Board of
Directors during the term of Mr. Webb's Employment Agreement. See
"Employment Agreements and Change of Control Arrangements." In addition,
the Shareholders' Agreement generally provides that the voting
restrictions are terminated when a party transfers his shares. The
Shareholders' Agreement expires on the earlier of May 28, 2001 or upon Mr.
Nederlander's death.
(2) Pursuant to the Merger Agreement entered into in May, 1997 by the Company
and Varsity Spirit Corporation ("Varsity"), Mr. Webb has the right to
designate an additional director to serve on the Board.
Set forth below is additional biographical information regarding each
director and executive officer of the Company based on information supplied by
them.
Robert E. Nederlander. Mr. Nederlander has been Chairman of the Board of
the Company since April 1988 and was the Company's Chief Executive Officer from
April 1988 through April 1, 1993. From February until June 1992, Mr.
Nederlander was also the Company's interim President and Chief Operating
Officer. Mr. Nederlander has been President and a Director since November 1981
of the Nederlander Organization, Inc., owner and operator of one of the world's
largest chains of live theaters. He served as the Managing General Partner of
the New York Yankees from August 1990 until December 1991, and has been a
limited partner since 1973. Mr. Nederlander has been President since October
1985 of the Nederlander Television and Film Productions, Inc.; Chairman of the
Board since January 1988 of Mego Financial Corporation and Vice President of
the Board since February 1988 to early 1993 of Vacation Spa Resorts (an
affiliate of Mego Financial Corporation). Mr. Nederlander became a director of
Mego Mortgage Corporation in September 1996. Mr. Nederlander became Chairman of
the Board of Allis-Chalmers Corp. in May 1989; from 1993 through October 1996
he was Vice Chairman, and thereafter he remained solely a director. In 1995,
Mr. Nederlander became a director of HFS Incorporated. In October 1996 Mr.
Nederlander became a director of News Communications, Inc., a publisher of
community-oriented free circulation newspapers. Mr. Nederlander was a senior
partner in the law firm of Nederlander, Dodge and Rollins in Detroit, Michigan,
between 1960 and 1989.
David M. Mauer. Mr. Mauer became the Company's Chief Executive Officer on
April 1, 1993, succeeding Mr. Nederlander. Mr. Mauer was President of Mattel
U.S.A. from late 1990 through the beginning of 1993 and was President of Tonka
U.S.A. Toy Group from 1988 until 1990. In 1995, Mr. Mauer was elected a member
of the Board of Directors of The Topps Company, Inc.
Jeffrey G. Webb. Mr. Webb has been the Vice Chairman of the Board of the
Company and the President and Chief Operating Officer of the Varsity Group
Division since Varsity was acquired by the Company in
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June, 1997. Prior to the Varsity acquisition, Mr. Webb was Chairman of the
Board, President and Chief Executive Officer of Varsity Spirit Corporation
since its formation in 1974.
Leonard Toboroff. Mr. Toboroff has been Vice President of the Company
since April 1988. Since May 1989, Mr. Toboroff has been a Vice President and
Vice Chairman of the Board of Allis-Chalmers Corp. Mr. Toboroff has been a
practicing attorney since 1961 and from January 1, 1988 to December 31, 1990,
was counsel to Summit Solomon & Feldesman in New York City, which was counsel
to the Company from April 1988 through February 1993. He has been a Director
since August 1987 and was Chairman and Chief Executive Officer from December
1987 to May 1988 of Ameriscribe Corp. Mr. Toboroff was Chairman and Chief
Executive Officer from May through July 1982, and then was Vice Chairman from
July 1982 through September 1988 of American Bakeries Company. Mr. Toboroff
has been a director of Banner Aerospace, Inc., a supplier of aircraft parts,
since September 1992. He has been a director of Engex, Inc. and director of
Saratoga Springs Beverage Co. since 1993. In 1995 Mr. Toboroff became a
director of Xplor Corporation.
Don R. Kornstein. Mr. Kornstein has been a member of the Board of
Directors, Chief Executive Officer and President of Jackpot Enterprises, Inc.
since September 1994. Prior to this Mr. Kornstein was a Senior Managing
Director at Bear, Stearns & Co. Inc. for 17 years through September 1994.
John McConnaughy, Jr. Mr. McConnaughy has been Chairman and Chief
Executive Officer of JEMC Corp. since 1988. From 1969 to 1986, Mr. McConnaughy
served as Chairman and Chief Executive Officer of Peabody International Corp.
("Peabody"). From 1981 to 1992, he served as Chairman and Chief Executive
Officer of GEO International Corp. when it was spun off from Peabody in 1981.
Mr. McConnaughy is a Director of DeVlieg Bullard Inc., Mego Financial
Corporation, Transact International, Inc., Levcor International, Inc., Wave
Systems, Inc. and Adrien Arpel, Inc. GEO International Inc. filed a petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code in October
1993.
Glenn E. "Bo" Schembechler. Mr. Schembechler was President of the Detroit
Tigers from January 1990 through August 1992 and a member of the Tigers Board
of Directors from 1989 through 1990. He is also a Director of Midland Company.
From 1968 through 1989, Mr. Schembechler was head football coach of the
University of Michigan and served as its Athletic Director in 1988 and 1989.
Dan Cougill. Mr. Cougill was appointed President and Chief Operating
Officer of the Riddell Group Division in June, 1997. Mr. Cougill was President
and Chief Operating Officer of the Company from June 1995 until June 1997 and
has been President and Chief Operating Officer of its subsidiary, Riddell,
Inc., since February 1, 1994. Prior to his appointment, Mr. Cougill was
employed in various capacities by Wilson Sporting Goods since 1977 and was Vice
President of Wilson Sporting Goods and the General Manager of its Team Sports
Division prior to joining the Company.
David Groelinger. In March of 1996, Mr. David Groelinger was appointed
the Company's Chief Financial Officer, and in June 1996 its Executive Vice
President. From 1994 to 1995 he was a member of the Board of Directors,
Executive Vice President and Chief Financial Officer of Regency Holdings
(Cayman) Inc., which owned and operated a major international cruise line.
Prior to 1994 Mr. Groelinger served in various senior financial capacities
during twelve years at Chiquita Brands International, Inc. In 1990, he was
promoted to Vice President reporting to the Chiquita's President and Chief
Operating Officer. Regency Holdings (Cayman) Inc. filed a petition to
reorganize under Chapter 11 of the United States Bankruptcy Code in November
1995.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth the cash compensation paid to or accrued for
the Company's Chief Executive Officer and its five other most highly paid
executive officers in 1997 for services rendered in all capacities to the
Company and its subsidiaries during the fiscal years ended December 31, 1997,
1996 and 1995.
<TABLE>
<CAPTIONS>
Long Term
Compensation
Awards
Annual Compensation ------------
---------------------------------------------- Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options(2) Compensation(3)
- ------------------------------------- ------- ------------ ----------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Nederlander 1997 $189,511 $50,000 -- 7,500 --
Chairman of the Board 1996 180,656 -- -- 7,500 --
1995 173,355 -- -- 15,000 --
David M. Mauer 1997 $550,000 $60,000 -- 50,000 $4,750
Chief Executive Officer 1996 500,000 -- -- 50,000 4,620
1995 457,500 170,000 -- 50,000 4,620
Jeffrey G. Webb 1997 $200,914 (4) $133,380 (5) -- 397,760 (5) --
President and Chief Operating of
Varsity Group Division
Leonard Toboroff 1997 $189,511 $50,000 -- 7,500 $15,958
Vice President 1996 180,656 -- -- 7,500 13,614
1995 173,355 -- -- 15,000 11,647
Dan Cougill 1997 $259,231 -- -- 20,000 $4,750
President and Chief Operating 1996 230,000 -- -- 15,000 4,750
Officer of Riddell Group Division 1995 206,923 $60,000 -- 15,000 4,322
David Groelinger 1997 $195,977 $50,000 -- 20,000 $4,302
Chief Financial Officer and 1996 143,308 25,000 -- 65,000 --
Executive Vice President
</TABLE>
_________________________
(1) Perquisites and other personal benefits paid for the named executive
officers aggregated less than the lesser of $50,000 and 10% of the total
annual salary and bonus set forth in the columns entitled, "Salary" and
"Bonus" for each named executive officer and, accordingly, are omitted
from the table as permitted by the rules of the Commission.
(2) These options were issued under the Company's 1991 Stock Option Plan or
1997 Stock Option Plan.
(3) Represents the Company's contribution to its 401K Plan on behalf of the
employee, and in the case of Mr. Toboroff, includes the dollar value of
approximately $11,000, $9,000 and $7,000 of insurance premiums paid on
behalf of Mr. Toboroff for 1997, 1996 and 1995 respectively, under an
Indeterminate Premium One Year Term Life Policy pursuant to which he will
receive the cash surrender value.
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(4) Based on an annual salary of $375,000 pursuant to an employment agreement
between the Company and Mr. Webb effective in June 1997. See "Employment
Agreements and Change of Control Arrangements."
(5) Includes $98,800 representing an unrestricted stock award of 20,800 shares
valued at the quoted market value of $4.75 per share on the date of the
award and other amounts required to be paid pursuant to the employment
agreement between the Company and Mr. Webb. See "Employment Agreements
and Change of Control Arrangements." On December 31, 1997, the value of
the 20,800 shares was $104,000 (based on the $5.00 per share closing price
of the Company's Common Stock on such date).
STOCK OPTIONS GRANTED IN 1997
The following table sets forth information concerning individual grants of
stock options made during 1997 to each named executive officer listed below
pursuant to the Company's 1991 Stock Option Plan or 1997 Stock Option Plan.
<TABLE>
<CAPTIONS>
% of Total Potential Realizable
Number of Options Value at Assumed
Securities Granted to Exercise Annual Rates of Stock
Underlying Employees In Price Expiration Price Appreciation for
Name Options Granted Fiscal Year per Share Date Option Term (5)
- ----------------------- ----------------- ------------ ---------- ---------- --------------------------
5% 10%
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert Nederlander 7,500 (4) 1% $5.44 6/24/2007 $25,659 $65,025
David M. Mauer 50,000 (1) 5% $5.44 6/24/2007 $171,059 $433,498
Jeffrey Webb 347,760 (2) 32% $3.80 7/25/2007 $1,534,625 $2,794,477
50,000 (3) 5% $5.42 6/24/2007 $170,430 $431,904
Dan Cougill 20,000 (1) 2% $5.44 6/24/2007 $68,424 $173,399
David Groelinger 20,000 (1) 2% $5.44 6/24/2007 $68,424 $173,399
Leonard Toboroff 7,500 (4) 1% $5.44 6/24/2007 $25,659 $65,025
</TABLE>
(1) This option vests as to 25% of the underlying shares on each of the first,
second, third and fourth anniversaries of the date of grant. The option is
canceled upon a termination of employment for cause. In the event the
employee's employment is terminated by the Company, generally, other than
for cause, this stock option becomes fully exercisable for one year. The
option fully vests immediately upon a change in control.
(2) This option has been fully vested since the grant date. The option is
canceled upon a termination of employment for cause. In the event the
employee's employment is terminated by the Company, generally, other than
for cause, this option becomes fully exercisable for one year. The option
fully vests immediately upon a change in control. The exercise price of
this option was determined under the terms of an employment agreement
which the Company entered into with Mr. Web on May 5, 1997 in connection
with the Varsity acquisition which provided that the exercise price would
be determined based upon subsequent market activity within a specified
period and range. The $3.80 exercise price exceeded the market price of
the Company's Common Stock on May 5, 1997, the date of the employment
agreement, but was below the market price of $5.13 a share on July 25,
1997, the grant date of the option, resulting in an in-the-money value of
$460,782 on July 25, 1997.
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(3) This option vests as to one third of the underlying shares on each of the
first, second and third anniversaries of the grant date. The option is
canceled upon a termination of employment for cause. In the event the
employee's employment is terminated by the Company, generally, other than
for cause, the option becomes fully exercisable for one year. The option
fully vests immediately upon a change in control.
(4) Messrs. Nederlander and Toboroff were granted options together with the
other members of the Company's Board of Directors (other than Mr. Mauer
and Mr. Webb) in 1997 under the Company's 1991 Stock Option Plan. The
option is fully exercisable commencing June 24, 1998 through June 24,
2007. In the event the holders Board membership terminates, generally,
other than for cause, than option becomes fully exercisable for 90 days.
The option terminates if the holder's Board membership terminates for
cause.
(5) Based upon the per share market price on the date of grant and an annual
appreciation of such market price at the rate stated in the table through
the expiration date of such options. Gains, if any, are dependent upon
the actual performance of the Common Stock, as well as the continued
employment of the executive officers through the vesting period. The
potential realizable values indicated have not taken into account amounts
required to be paid as income tax under the Internal Revenue Code and any
applicable state laws.
STOCK OPTIONS HELD AT END OF 1997
The following table indicates the total number of exercisable and
unexercisable stock options held by each named executive officer listed below
on December 31, 1997. No options to purchase the Company's Common Stock were
exercised during 1997. On December 31, 1997, the last sale price of the Common
Stock on NASDAQ was $5.00 per share.
Number of Securities
Underlying Value of Unexercised
Unexercised Options at in-the-Money Options at
December 31, 1997 December 31, 1997
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ------------- ----------- -------------
Robert Nederlander 37,500 7,500 $82,500 --
David M. Mauer 302,500 147,500 $429,850 $87,150
Jeffrey Webb 347,760 50,000 $417,312 --
Dan Cougill 86,250 38,750 $197,578 $19,922
David Groelinger 16,250 68,750 $6,094 $18,281
Leonard Toboroff 37,500 7,500 $82,500 --
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
In June 1992, the Company entered into an employment agreement with each
of Messrs. Nederlander and Toboroff. Each agreement continues until terminated
by the Company, with termination effective three years after the Company
delivers notice of termination or, if earlier, until the death or disability of
the employee. The agreements are immediately terminable by the Company for
Cause (as defined therein). Bonuses are discretionary with the Board. Each
agreement provides a base salary of $162,500 which may be increased in the
discretion of the Board, provided that in any event each year the salaries are
increased at least by the percentage increase in the Consumer Price Index.
Each agreement provides that in the event the Company terminates the employee's
employment, generally, other than for Cause, the employee will receive his full
salary through the end of the term of his agreement and annual bonuses for the
remainder of the term equal to the average of the annual bonuses awarded to the
employee prior to termination.
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Each agreement acknowledges that the employee will devote time and provide
services to entities other than the Company.
In April 1993, the Company entered into an employment agreement with Mr.
Mauer. The agreement, as amended in 1994, provides an annual base salary in
such amount in excess of $400,000 as the Board of Directors may determine from
time to time. The agreement provides for years after 1993 that the Board of
Directors and Mr. Mauer establish target bonuses based upon measures to be
agreed upon before the beginning of each calendar year, and that Mr. Mauer's
bonus will be a percentage, not to exceed 100%, of his base salary based upon
the percent of the targets achieved. The agreement continues until terminated
by the Company, with termination effective three years after the Company
delivers notice of termination or, if earlier, until Mr. Mauer's death or
disability. The agreement is immediately terminable for Cause (as defined
therein). Mr. Mauer was granted an option for ten years to acquire 300,000
shares of the Company's Common Stock pursuant to the Agreement at an average
price of $3.63 per share. In the event Mr. Mauer's employment is terminated,
generally, other than for Cause, Mr. Mauer will receive his salary for a period
of three years plus a pro rata portion of the bonus earned through the date of
termination, and his options become fully exercisable for one year.
In addition, in connection with the acquisition of Varsity, the Company
entered into an employment agreement with Mr. Webb effective June 1997. Under
the provisions of such agreement Mr. Webb serves as Vice Chairman of the Board
of Directors of the Company as well as President and Chief Operating Officer of
the Varsity Group Division. Mr. Webb is entitled to a base salary of no less
than $375,000 per year and is eligible to participate in those bonus
arrangements which are made available to other senior officers of the Company
at a target level of 40% of his base salary. Pursuant to his employment
agreement, Mr. Webb received options to purchase 50,000 shares of Common Stock
of the Company with a per share exercise price of $5.44 and "special options"
to purchase an additional 347,760 shares at a per share exercise price of
$3.80. Upon termination of Mr. Webb's employment (i) by the Company without
Cause (as defined therein), (ii) by Mr. Webb with Good Reason (as defined
therein, including a material adverse alteration in his status or
responsibilities and relocation more than 50 miles from Memphis, Tennessee), or
(iii) following a Change in Control (as defined therein), Mr. Webb will receive
continued payments of base salary for the longer of the remainder of the term
and one year (two years in case of termination following a Change in Control),
as well as certain benefits. Mr. Webb is subject to a noncompetition covenant
generally for a period of two years following the termination of his employment
for any reason. Pursuant to his employment agreement, Mr. Webb agreed to
become a party to the Stockholders Agreement to which Messrs. Mauer,
Nederlander, Toboroff, McConnaughy and Cougill are parties.
The Company entered into an employment agreement with Mr. Cougill as of
February 1, 1994, providing for a $50,000 signing bonus, an annual salary of
$200,000 per annum and minimum bonus of $50,000 for 1994. Pursuant to the
Agreement, Mr. Cougill was granted an option for five years to purchase 75,000
shares of the Company's Common Stock at $2.56 per share. The employment
agreement also provides that in the event the Company terminates Mr. Cougill's
employment, generally, other than for Cause (as defined therein), Mr. Cougill
will receive his full salary for a period of one year plus the pro rata portion
of his bonus earned through the date of termination by the Company, and his
options become exercisable in full for one year. The Agreement is immediately
terminable for Cause and expires, unless renewed, in May 1999.
The Company entered into an employment agreement with Mr. Groelinger
effective March 1996 in connection with his joining the Company as Chief
Financial Officer. The agreement provides for an annual base salary of
$180,000 and a guaranteed minimum bonus for 1996 of $25,000. Thereafter,
bonuses will be a percentage of his salary, with a target of 40%. Pursuant to
the Agreement, Mr. Groelinger was granted a ten year option to purchase 65,000
shares of the Company's Common Stock at an exercise price of $4.63 per share.
The agreement is immediately terminable for Cause (as defined therein) and
expires, unless renewed, in March 2000. The agreement provides, generally,
that if Mr. Groelinger's employment is terminated other than for Cause he will
be paid no less than one year's salary (two years' salary in the event
termination arises in connection with a Change of Control (as defined therein)
plus a pro rata portion of his bonus through the date of termination and his
stock options become immediately exercisable for one year to the extent then
vested.
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<PAGE> 9
The stock options granted to Messrs. Mauer, Webb, Cougill and Groelinger
in connection with their employment become immediately exercisable in the event
a change of control of the Company occurs.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Mr. McConnaughy is a member of the Company's Board of Directors and its
Compensation and Audit Committees and a member of a group of stockholders who
may be deemed to beneficially own and exercise control over approximately 53%
of the Company's outstanding Common Stock and management as of April 22, 1998.
See "Security Ownership of Certain Beneficial Owners and Management".
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 22, 1998
pertaining to ownership of the Company's Common Stock by persons known to the
Company to own 5% or more of the Company's Common Stock and Common Stock owned
beneficially by each director and named executive officer of the Company and by
directors and named executive officers of the Company as a group.
In April 1998 MLC Partners Limited Partnership ("MLC") dissolved and made
a distribution of its assets including its entire interests in the Company's
Common Stock, to its partners. The partners of MLC were affiliates of Mr.
Robert Nederlander (Chairman of the Board) and Mr. John McConnaughy (a
director).
The information contained herein has been obtained from the Company's
records, or from information furnished directly by the individual or entity to
the Company or in Form 13D filings or Form 4 or Form 5 filings.
Shares Owned Percent/Shares
Beneficially Outstanding
------------------- ---------------
Robert E. Nederlander 5,348,687 (1) 52.6%
810 Seventh Avenue
New York, NY 10019
David M. Mauer 421,525 (2) 4.4%
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
Jeffrey G. Webb 1,130,687 (3) 11.9%
c/o Varsity Spirit Corporation
2525 Horizon Lake Drive
Memphis, TN 38133
Leonard Toboroff 1,342,003 (4) 14.6%
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
Don R. Kornstein 35,000 (5) *
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
John McConnaughy, Jr. 1,070,144 (6) 11.6%
c/o JEMC Corp.
1011 High Ridge Road
Stamford, CT 06905
Glenn E. "Bo" Schembechler 37,500 (5) *
1904 Boulder Drive
Ann Arbor, MI 48104
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Dan Cougill 96,427 (7) 1.0%
Riddell, Inc.
3670 N. Milwaukee Avenue
Chicago, IL 60641
David Groelinger 36,000 (8) *
Riddell Sports Inc.
900 Third Avenue/27th Fl.
New York, NY 10022
All officers and directors as 5,457,187 53.1%
a group (9 individuals)
Angelo, Gordon & Co., L.P. 1,395,000 (9) 13.3%
245 Park Avenue/26th Fl.
New York, NY 10167
____________________
* Less than 1%
(1) Of the 5,348,687 shares beneficially owned by Mr. Nederlander: (i)
1,287,901 shares are owned by Mr. Nederlander directly or through entities
controlled by him having dispositive power over these shares (87,239 of
these 1,287,901 shares underlie options granted under the Company's 1991
Stock Option Plan or Warrant (defined in Item 13 below) and are currently
exercisable; 646,037 of such 1,287,901shares are subject to a Voting Trust
(the "Voting Trust") expiring May 29, 2001pursuant to which Robert
Nederlander is voting trustee and has sole voting power (except to the
limited extend described in Note 6 below) and (ii) an additional 4,060,786
shares are beneficially owned by Mr. Nederlander as Voting Trustee under
the Voting Trust and pursuant to a shareholders agreement to which Mr.
Nederlander and certain other officers and directors of the Company and
their affiliates are parties (the"Shareholders Agreement"). Under Rule
13-d of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") Mr. Nederlander is deemed to beneficially own the shares of stock
subject to the Voting Trust and the Shareholders Agreement.
(2) 421,525 shares of Common Stock beneficially owned by Mr. Mauer are subject
to the Shareholders Agreement and 365,259 of these shares are issuable in
connection with options granted under the Company's 1991 Stock Option Plan
and the Warrant that are exercisable currently.
(3) The 1,130,687 shares of Common Stock beneficially owned by Mr. Webb are
subject to the Shareholders Agreement and 347,760 of these shares underlie
options granted under the Company's 1991 Stock Option Plan or 1997 Stock
Option Plan that are exercisable currently.
(4) The 1,342,003 shares of Common Stock beneficially owned by Mr. Toboroff
are subject to the Shareholders Agreement and 91,038 shares underlie
options granted under the Company's 1991 Stock Option Plan and the Warrant
that are currently exercisable.
(5) Represents shares underlying options granted under the Company's 1991
Stock Option Plan that are currently exercisable.
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(6) Of the 1,070,144 shares of Common Stock beneficially owned by Mr.
McConnaughy: (i) 484,530 are subject to the Voting Trust; (ii) 585,614 are
subject to the Shareholders Agreement and (iii) 80,989 shares underlie
options granted under the Company's 1991 Stock Option Plan and the Warrant
that are currently exercisable. Mr. McConnaughy has pledged his interest
in 989,155 shares of the Company's Common Stock to financial institutions
to secure loans. The Voting Trust provides that if Mr. McConnaughy
defaults on the loan pursuant to which the pledge was made, the voting
restrictions are removed from the pledged shares.
(7) The 96,427 shares of Common Stock beneficially owned by Mr. Cougill are
subject to the Shareholders Agreement and 86,725 of these shares underlie
options granted under the Company's 1991 Stock Option Plan and the Warrant
that are exercisable currently.
(8) Includes 32,500 shares underlying that portion of an option granted under
the Company's 1991 Stock Option Plan to acquire an aggregate of 65,000
shares that is currently exercisable.
(9) Based on a Schedule 13G filed February 13, 1997, Angelo, Gordon & Co.,
L.P. may be deemed to be the beneficial owner of 1,395,000 shares as a
result of voting and dispositive powers it holds with respect to
$1,000,000 principal amount of the Company's 4.10% Convertible
Subordinated Note due November 1, 2004 (the "Notes") convertible at
$5.3763 per share into 186,000 shares of the Company's Common Stock held
for its own account and $6,500,000 principal amount of Notes convertible
into 1,202,000 shares of Common Stock which it holds for the account of
private investment funds for which it acts a general partner and/or
investment advisor or investment manager.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Obligations to Certain Shareholders
In 1994 the Company granted a Warrant (the "Warrant") to a limited
partnership owned in part by Messrs. Nederlander, Toboroff and McConnaughy to
purchase 150,000 shares of its Common Stock in consideration for the extension
of a note in the amount of $2,000,000 issued by the partnership in favor of the
Company. In August 1995 certain of the original partners withdrew from the
partnership, and Messrs. Cougill, Mauer, McConnaughy, Nederlander and Toboroff
or entities controlled by them acquired their interests in the Warrant.
In June, 1997, the Company repaid a promissory note in the principal
amount of $439,000 owned by Messrs. Nederlander, Toboroff, McConnaughy and an
unaffiliated person. The note, which bore interest at 8% per annum, was issued
in April 1988 with a scheduled maturity date of April 1998. The note was
repaid when the Company entered into certain other financing transactions in
connection with the acquisition of Varsity.
The undersigned registrant hereby amends its Form 10-K for the Fiscal Year
Ended December 31, 1997 to include the information contained herein in response
to Part III of Form 10-K.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to Form 10K for 1997 to be signed on
its behalf by the undersigned, thereunto duly authorized on this 28th day of
April, 1998.
RIDDELL SPORTS INC.
By: LISA J. MARRONI
------------------------
Lisa J. Marroni
Vice President
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