| LOS ANGELES----July 21, 1997--K2 Inc. (NYSE:KTO) Monday reported another
record quarter. For the three months ended June 30, 1997, net income climbed
24 percent to an all-time high of $8.7 million, or 52 cents per share, from
$7 million, or 42 cents per share, a year ago. Sales, propelled by a 26 percent
increase in sporting goods and other recreational products, rose 20 percent
to a second quarter high of $171.5 million.
Sales and net income for the six months ended June 30 increased 14 percent,
to $343.1 million and 24 percent, to $14.5 million, respectively.
Commenting on the second quarter results, Richard M. Rodstein, president
and chief executive officer, said: "Earnings at all of our sporting goods
businesses that are seasonally important in the June quarter showed double-digit
growth.
"This broad based improvement was again led by higher worldwide shipments
of K2 softboot in-line skates. Sales of this innovative product line soared
85 percent over the year-ago period as the enthusiast continued to purchase
more high performance softboot skates in both the domestic and European markets.
"Also contributing to the improvement in sales and earnings were increased
shipments of K2's innovative shaped skis, which captured leading market shares
in the recently concluded ski season. Despite a tough comparison which included
a special one-time promotional program a year ago, worldwide shipments of
our Shakespeare fishing tackle business jumped 22 percent in this year's
quarter, the seasonally strongest period for Shakespeare's fishing tackle
products.
"Cost containment and a richer sales mix propelled our Stearns active water
sports business to double-digit earnings growth on a modest sales improvement.
Sales were mixed at our seasonally weak other sporting goods and recreational
products businesses -- full suspension mountain bikes and active apparel.
"Early last week, we extended the brand by introducing K2 Bike, a line of
full suspension mountain bikes replacing the ProFlex brand and employing
groundbreaking, proprietary Smart Shocks which incorporate piezoelectronics
technology, similar to that used in our K2 Four deep sidecut skis. As a result,
ProFlex bikes were shipped at closeout prices which negatively affected earnings.
"Despite a decline in second quarter shipments, our snowboard business has
experienced an increase in orders over the prior year, led by growing demand
for our step-in bindings and innovative boards."
Rodstein added: "Our industrial products group reported improved sales and
earnings at each of the three businesses comprising the group. Strong demand
for fiberglass poles and military antennas together with increased manufacturing
efficiencies produced sharply higher earnings at our Shakespeare Electronics
and Fiberglass business. Simplex and Monofilament benefited from moderately
higher sales."
K2 Inc. is a leading designer, manufacturer and marketer of brand name sporting
goods, recreational and industrial products. The company's sporting goods
and recreational products include well-known names such as K2 and Olin alpine
skis, K2 snowboards, K2 Exotech and K2 Endotech in-line skates, Stearns sports
equipment, Shakespeare fishing tackle, ProFlex and K2 mountain bikes, Dana
Design backpacks, K2 Outdoor backpacks and Hilton active apparel.
K2's industrial products include Thermo-ply residential insulative sheathing
and, under the Shakespeare brand, extruded monofilaments, marine antennas
and fiberglass light and power line poles.
K2 INC.
SUMMARY OF OPERATIONS
(unaudited)
(In thousands except for per share figures)
Second Quarter Six Months
ended June 30 ended June 30
1997 1996 1997 1996
Net Sales $ 171,522 $ 143,373 $ 343,063 $ 302,226
Cost of products
sold 120,376 102,157 245,536 219,627
Gross profit 51,146 41,216 97,527 82,599
Selling expenses 22,891 16,569 45,282 35,701
General and
administrative
expenses 12,926 12,428 26,196 25,502
Operating income 15,329 12,219 26,049 21,396
Interest expense 2,679 2,297 5,198 4,729
Other income, net 63 (335) (228) (632)
Income before
provision for
income taxes 12,587 10,257 21,079 17,299
Provision for income
taxes 3,900 3,280 6,530 5,535
Net income $ 8,687 $ 6,977 $ 14,549 $ 11,764
Per share data:
Net income $ 0.52 $ 0.42 $ 0.87 $ 0.70
Cash dividend $ 0.11 $ 0.11 $ 0.22 $ 0.22
Average shares
outstanding 16,703 16,742 16,714 16,731
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