K2 Inc. reports increase in marine sales

CARLSBAD, Calif. – Stearns marine and outdoor products, along with Shakespeare fishing tackle and monofilament, generated net sales of $112.4 million in the first quarter of 2005 for K2 Inc., an increase of 14 percent from the comparable quarter in 2004, the company said in a recent release.

Those sales increases were driven by growth in children’s flotation devices, water-ski vests, reels, kits and combos and fish line and the addition of All-Star rods and ATV accessory product lines during the second quarter of 2004, the company reported.

Overall, K2 Inc., reported net sales for the first quarter ended March 31, of $318.3 million, an increase of 15 percent from $277.4 million in the prior year, as a result of material seasonal transactions completed in 2004, diluted earnings per share were $0.05 as compared to $0.27 for the first quarter of 2004. Operating income in the first quarter of 2005 was $10.0 million as compared to $19.5 million for the 2004 comparable period, and net income for the 2005 first quarter was $2.3 million, as compared to $10.7 million for the first quarter of 2004.

“Our results in the first quarter of 2005 exceeded our original guidance due to strength in both our Marine and Outdoor and Apparel and Footwear platforms,” Richard Heckmann, chairman and CEO said.

Although K2 is not providing a specific forecast at this time for the remaining quarters in 2005, from a seasonality standpoint, the second quarter is anticipated to be the smallest in terms of net sales and earnings per share, and the third quarter is forecast as the largest quarter followed by the fourth quarter, the company said.

K2 forecasts strong liquidity (cash and available capacity under K2’s revolving credit facility) in 2005, with total debt before acquisitions (if any) projected to decrease from current levels by the end of the second quarter.

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