Bell Sports Corp. Announces Fiscal 1999 Third Quarter Results.

SAN JOSE, Calif.--(BUSINESS WIRE)--May 10, 1999--

Bell Sports Corp. Monday announced the results for its fiscal 1999 third quarter ended March 27, 1999.

Net sales for the quarter increased 4% to $54.3 million from $52.3 million in the third quarter of fiscal 1998. The increase in sales is primarily attributable to strong U.S. mass merchant bicycle helmet and bicycle accessory sales. Gross margins for the quarter decreased to 32.1% of net sales from 34.8% of net sales in the prior year period.

Selling, general and administrative expenses decreased over one percentage point to 21.4% of net sales for the quarter from 22.7% of net sales for the third quarter of fiscal 1998. Operating income decreased to $5.8 million, or 10.7% of net sales compared to $6.3 million, or 12.1% of net sales, in the third quarter of fiscal 1998.

Interest expense for the quarter increased to $4.4 million from $1.2 million in the third quarter of fiscal 1998. The increased interest expense is attributable to an increase in the company's outstanding debt from the issuance of $125.0 million of new debt in August 1998, offset by the repurchase of $62.5 million aggregate principal amount of its Debentures due November 2000 during the first quarter of fiscal 1999.

Net income for the quarter was $188,000, which included one-time transaction charges of $703,000 related to the company's August 1998 recapitalization transaction, compared to net income of $3.2 million for the third quarter of fiscal 1998.

Year-to-date net sales were $140.2 million for the quarter compared to $138.6 million in the first nine-month period of fiscal 1998. Year-to-date gross margins remained stable at 32.4% of net sales as compared to 32.5% of net sales in the prior year period. Selling, general and administrative expenses for the nine-month period remained consistent at 24.9% of net sales.

Year-to-date operating income increased to $10.6 million, or 7.5% of net sales compared to $10.4 million, or 7.5% of net sales, in the first nine-month period of fiscal 1998. Interest expense increased to $11.2 million for the year-to-date period from $3.5 million in the prior year period.

Year-to-date net loss was $10.2 million, which included $13.1 million of one-time transaction costs related to the company's August 1998 recapitalization transaction offset by an extraordinary gain of $2.9 million associated with the company's repurchase of its Debentures due November 2000, compared to net income of $4.1 million in the comparable fiscal 1998 period.

Mary J. George, chief executive officer and president commented, "We are encouraged by the increase in sales and the reduction in selling, general and administrative costs during the third quarter.

"These increases were partially offset by a temporary increase in manufacturing expenses at our Santa Cruz, California manufacturing and distribution facility, relating to the Company's consolidation of its Santa Cruz manufacturing operations with its Rantoul facility.

"We are very pleased that this transition is going smoothly and is expected to be complete by the end of June, 1999, approximately six months ahead of schedule."

George continued: "The Company is also excited about potential cost savings associated with an international restructuring plan. By closing our Irish and Canadian manufacturing facilities, we will be making our Rantoul, Illinois plant the world's largest bicycle helmet manufacturing facility, and our helmet facility in Roche la Moliere, France the largest in Europe.

"This will enable the Company to focus on its core competencies - sales, marketing and shelf space management - while operating at a lower cost structure.

"Further, by mid-July this year, we will have created the largest and most advanced bicycle helmet research, design, and testing center in the world in our Santa Cruz, California facility, strengthening our commitment to be the leader in innovation in the bicycle market."

Richard S Willis, chief financial officer commented, "The restructuring plan to realign the international operations and complete the Santa Cruz, California transition will be recorded in the Company's fourth quarter. We are currently quantifying the costs associated with the restructurings and anticipate making an announcement in the forth quarter."

Certain matters in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

These include but are not limited to: expected sales, profitability, cash flow, seasonality, adverse weather conditions, market acceptance of new products, competitive actions, relationships with major retail customers, retail environment, economic conditions, currency fluctuations and other risks indicated in filings from time-to-time with the Securities and Exchange Commission.

The company is the leading manufacturer and marketer of bicycle helmets worldwide and a leading supplier of a broad line of bicycle accessories in North America. The company is also a leading supplier of auto racing helmets and a supplier of bicycle accessories worldwide. Recently, the company began marketing in-line skating, snowboarding, snow skiing and water sport helmets.

The company markets its helmets under the widely recognized Bell, Bell Pro and Giro brand names, and its bicycle accessories under such leading brands as Bell, Blackburn, Rhode Gear, VistaLite, Copper Canyon Cycling and Spoke-Hedz. -0-

                           BELL SPORTS CORP.
                         FINANCIAL HIGHLIGHTS
                       (unaudited, in thousands)


                            Nine Months Ended     Three Months Ended
                          March 27     March 28  March 27    March 28
RESULTS OF OPERATIONS:     1999          1998      1999        1998
Net sales                $140,245      $138,554   $54,306     $52,332
Cost of sales              94,749        93,591    36,873      34,132

Gross profit               45,496        44,963    17,433      18,200
                             32.4%         32.5%     32.1%       34.8%

Selling, general and
 administrative expenses   34,931        34,570    11,631      11,894
Foreign exchange
 (gain)/loss                1,905           (71)      (34)        (36)
Amortization of goodwill
 and intangible assets      1,589         1,735       528         533
Transaction costs          13,100             -       703           -
Gain on disposal of
 product line                   -        (1,300)        -           -
Restructuring charges           -         1,228         -           -
Net investment income        (936)       (1,381)     (126)       (476)
Interest expense           11,153         3,539     4,411       1,189

(Loss) income before
 income taxes             (16,246)        6,643       320       5,096
Benefit (provision) for
 income taxes               3,183        (2,524)     (132)     (1,936)

(Loss) income before
 extraordinary items      (13,063)        4,119       188       3,160
Extraordinary item: Gain
 on early extinguishment
 of debt, net of taxes of
 $2,006                     2,887             -         -           -

Net (loss) income        $(10,176)       $4,119      $188      $3,160


                          March 27      June 27
Condensed Balance Sheet:    1999          1998
Cash and cash equivalents  $9,181       $45,093
Accounts receivable        64,157        63,472
Inventories                47,626        39,679
Property, plant and
 equipment                 18,424        20,636
Goodwill                   52,894        54,292
Other assets               33,955        23,895
  Total assets           $226,237      $247,067

Accounts payable          $10,576        $7,663
Accrued expenses           17,062        21,699
Debt and capital leases   172,422        88,384
Other liabilities           3,152         1,062
Stockholders' equity       23,025       128,259
  Total liabilities and
   stockholders' equity  $226,237      $247,067