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Sporting goods firm K2 Inc to schedule Q3 on Oct 19

11
Oct '05

Branded consumer products firm K2 Inc announced that for fiscal year 2005 it forecasts GAAP diluted earnings per share in the range of $0.66 to $0.68, versus previous forecast of $0.77 to $0.81, and Adjusted diluted earnings per share 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.

Richard Heckmann, Chairman and Chief Executive Officer informed that they continue to face a very difficult outlook in the paintball sector. Although softness in paintball has been a concern for us throughout the year as retailers have been reducing inventories, they were hopeful that this would result in a rebound in the later half of the year, which is traditionally paintball's high season.

In the third and fourth quarters of 2004, the operating income from paintball was in excess of $8.5 million, which is approximately $0.10 per share, but in the updated forecast for 2005, they 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.

They are restructuring the costs in the 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, the 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 the other core businesses including winter products, apparel and footwear, team sports and marine and outdoor, which continue to perform in accordance with the plan.

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