K2 marine equipment sales up 9.3 percent

CARLSBAD, Calif. – Sales of Stearns marine and outdoor products and Shakespeare fishing tackle and monofilament generated sales of $107.4 million in the second quarter of 2004, up 9.3 percent from the comparable quarter in 2003, net of divestitures, K2 Inc. reported in a press release yesterday.

The company said sales increases in its marine products were driven by strong growth in Pflueger reels, Ugly Stik combos, marine antennas, and children's flotation devices.

Overall, K2 reported sales for the second quarter ended June 30 of $251.0 million, an increase of 25.7 percent from $199.7 million in the prior year, and diluted earnings per share were $0.16 for the quarter. Operating income in the second quarter was $12.4 million, a 23.3-percent increase from the 2003 comparable period, and net income was $6.2 million, a 28.8-percent increase from the 2003 second quarter excluding the gain on divestitures in that quarter.

Sales for the six month period ended June 30 were $528.4 million, an increase of 48.1 percent over the 2003 comparable period, and operating income for the period was $32.0 million, a 69.6-percent increase over the 2003 six month period. Diluted earnings per share were $0.43 for the first six months of 2004.

"Through a debt and equity issue that was significantly oversubscribed, we raised $200 million in 10 year 7.375-percent notes, and $100 million in equity,” said Richard Heckmann, K2 chairman and CEO. “Equally as important, we generated organic sales growth of 9 percent of our products other than in-line skates, which declined quarter to quarter as previously forecasted. Additionally, we continued to see improvement in gross margins resulting from manufacturing efficiencies.

“We have a strong balance sheet that provides tremendous liquidity for future growth, and we look forward to an exciting third quarter that we expect will be driven by growth in our winter sports division."

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