K2 Inc., lowers previous earnings per share estimates

CARLSBAD, Calif.– K2 Inc. has lowered its earnings per share estimates for fiscal year 2005, the company said in a release yesterday.

K2 forecast that for fiscal year 2005 GAAP diluted earnings per share will be in the range of $0.66 to $0.68, versus previous forecast of $0.77 to $0.81, and Adjusted diluted earnings per share would be in the range of $0.75 to $0.77, versus previous forecast of $0.87 to $0.91.

For the third quarter of 2005, K2 forecasts GAAP diluted earnings per share of approximately $0.32, and for the fourth quarter of 2005, K2 forecasts GAAP diluted earnings per share in the range of $0.23 to $0.25.

“We continue to face a very difficult outlook in the paintball sector,” said Richard Heckmann, chairman and CEO. “In the third and fourth quarters of 2004, our operating income from paintball was in excess of $8.5 million, which is approximately $0.10 per share, but in our updated forecast for 2005, we are now expecting little if any contribution from this business line.

“The majority of paintball products are sold through the mass distribution channels, and these consumers have been particularly hard hit by rising energy costs. We are restructuring the costs in our paintball business, which should allow a return to profitability in 2006 assuming that paintball sales stabilize at current levels. On a positive note, despite the downturn in paintball, our revised forecast for the third and fourth quarters of 2005 is well above actual results in the same period in 2004, demonstrating the continued strength of our other core businesses including winter products, apparel and footwear, team sports and marine and outdoor, which continue to perform in accordance with our plan.”

K2 will report third quarter financial results Oct. 19, and has scheduled its regular quarterly earnings conference call to begin at 1:30 p.m. Pacific Daylight Time. The company plans to do a live broadcast of the conference call over the Internet. Investors can listen to the live Webcast at www.k2inc.net and www.fulldisclosure.com. For those who are not available for the live broadcast, the call will be archived on www.fulldisclosure.com.

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