In order to improve efficiency, K2 reorganized the paintball business to operate more in line with how the components of the Team Sports segment operates, with increased emphasis on the mass merchant and large sporting goods retailer distribution.
Apparel and Footwear
Earth Products, Ex Officio and Marmot had sales of $36.4 million in the first quarter of 2006, an increase of 10.6 percent over the 2005 period due to an increase in sales of skateboard shoes and Marmot and Ex Officio products.
The operating loss for the first quarter of 2006 was $1.8 million compared to an operating profit of $0.9 million in the first quarter of 2005. The decrease in profit was due to start up expenses associated with the opening of a new distribution center in Reno, Nevada, and integration expenses for combining design, development, and sourcing for several apparel brands.
Balance Sheet
At March 31, 2006, cash and accounts receivable decreased to $328.2 million as compared to $350.3 million at March 31, 2005. Inventories at March 31, 2006 increased to $358.7 million from $345.2 million at March 31, 2005, primarily as a result of the growth in new product lines.
K2's regular quarterly earnings conference call is scheduled to begin at 1:30 p.m. Pacific Daylight Time (USA), on Wednesday, April 26, 2006.
Colorado based K2 Inc is a premier, branded consumer products company with a portfolio of leading brands including Shakespeare, Pflueger and Stearns in the Marine and Outdoor segment; Rawlings, Worth, and K2 Licensing & Promotions in the Team Sports segment; K2, Volkl, Marker, Ride and Brass Eagle in the Action Sports segment; and, Adio, Marmot and Ex Officio in the Apparel and Footwear segment.
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