PR: K2 Inc. Reports Sales and Earnings for the First Quarter Ended March 31, 1999.


4/22/99

LOS ANGELES--April 21, 1999--K2 Inc. (NYSE:KTO) Wednesday reported income from continuing operations of $3.1 million, or 19 cents per diluted share, for the first quarter ended March 31, 1999, up from income from continuing operations of $2.7 million, or 16 cents per diluted share, a year ago.

Net income for the current quarter, including the discontinued operations, was $3.3 million, or 20 cents per diluted share, as compared with net income of $3.1 million, or 19 cents per diluted share, a year ago.

Sales from continuing operations for the quarter rose to $163.1 million from $151.0 million in the prior year.

Commenting on the first-quarter results, Richard M. Rodstein, president and chief executive officer, said: "The first-quarter results reflect the success of our strategy to utilize our portfolio of leading brands and products to drive growth. We continue to introduce innovative new products and leverage our distribution.

"Sales and operating margins of the sporting goods group increased 13 percent and 8 percent respectively. The strong performance of our in-line skates and the reduction in the operating loss of our bike group more than offset the expected weather-related softness in our winter sports business."

Rodstein continued: "In-line skate sales climbed 37 percent worldwide from the year-ago period. The demand for our skates improved both in the domestic market and in European markets, particularly Germany.

"The results reflect the strong acceptance of our product line, including our new children's skate, and the continuing worldwide market share growth of softboot in-line skates. We are pleased with the strong sell-through at retail of our skates."

Rodstein added: "Growth in sales of our new bike line and lower expenses led to the improvement of the bike group. As expected, the mild winter produced lower sales and a higher proportion of closeouts of our ski and snowboard products in the seasonally weak first quarter."

Rodstein said: "Shakespeare fishing tackle sales were led by continued growth of our expanded Ugly Stik line and many of our new packaged rods and reels. However, timing of certain shipments to our large customers resulted in overall sales that were flat with the prior year.

"Stearns sales were off slightly, reflecting a decline in our water ski vest and wetsuit business, which offset the growth from new products, such as our new waders. Sales of our other recreational products companies grew moderately on skateboard shoe gains.

"Our industrial product sales declined from reduced demand for paperweaving monofilament line which was only partially offset by an increase in cutting line and marine antenna sales. Expense reductions and manufacturing efficiencies, however, offset the volume impact to earnings."

Rodstein concluded: "While we continue to operate within a challenging worldwide sporting goods market, the sales momentum of our important worldwide skate and North American fishing tackle groups reflects the success of our product innovation programs. After a mild U.S. winter, preseason orders for our core winter sports products suggest that sales of these products will be off from the prior year.

"However, our snowboard group should benefit from the recent acquisition of the Morrow brand, our new accessory and outerwear lines and the new China-produced value-priced snowboards. Our goal is to continue to add new products and brands to our existing portfolio of strong brands. In addition, we have heightened our efforts to lower costs and expenses throughout the company."

K2 Inc. is a leading designer, manufacturer and marketer of brand-name sporting goods, other 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, boots and bindings; K2 in-line skates; Stearns sports equipment; Shakespeare fishing tackle; K2 bikes; Dana Design backpacks; and Hilton active apparel. K2's industrial products include Shakespeare extruded monofilaments, marine antennas and fiberglass light poles.

This news release contains forward-looking statements regarding sales and earnings; market trends regarding softboot in-line skates, fishing tackle, skis and snowboards; product acceptance and demand; success of new product innovations and introductions; market positioning; success of recent acquisitions; success of cost and expense reduction efforts; and overall market trends, which involve substantial risks and uncertainties. The company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, economic conditions, product demand, competitive pricing and products, weather, and other risks described in the company's Annual Report on Form 10K filing with the Securities and Exchange Commission.