K-Swiss Inc.'s total worldwide revenues decreased 10.7% in the third
quarter ended Sept. 30, to $95.8 million from $107.2 million a year
ago. Domestic revenues decreased 29.0% to $36.9 million and
international revenues increased 6.6% to $58.9 million. The company
reported virtually break even results in the period but warned that
fourth quarter results would show a loss ranging from 10 cents to 35
cents a share.

The net loss of $100,000, or 0 cents per share in the third
quarter compared with net earnings of $12.8 million or 36 cents a
share, in the prior-year period.
Net earnings for the nine months were $33.4 million, or 95 cents
per share, down from $38.5 milllion, or $1.08, a year ago. Earnings for
the nine-month 2008 period include a pre-tax gain of $30,000,000, or 52
cents per diluted share (after tax), related to the settlement of
litigation. Total worldwide revenues for the first nine months of 2008
decreased 14.6% to $283.9 million from $332.3 million. Domestic
revenues decreased 31.9% to $114.5 million in the first nine months,
while international revenues increased 3.2% to $169.4 million.
The company acquired Palladium SAS on July 1, 2008. Included in
the latest quarter were Palladium’s international net sales of
$9,948,000 and net earnings of $940,000 (net of minority interest).

Futures Orders

Worldwide futures orders with start ship dates from October 2008
through March 2009 were $102.8 million at Sept. 30, 2008, compared with
$145 million at September 30, 2007. Domestic futures orders decreased
34.9% to $37 million at Sept. 30, 2008, from $56.8 million the previous
year. International futures orders decreased 25.4% to $65.9 million at
Sept. 30, 2008, from $88.2 million the previous year.

Earnings Guidance

K-Swiss also issued guidance for the fourth quarter of 2008 and
full-year 2008. The company expects revenues for the fourth quarter of
2008 to be approximately $45 to $60 million and the loss per diluted
share to be in the range of 10 cents to 35 cents a share. The company
expects full-year revenues to be approximately $329 to $344 million and
expects to report full-year earnings per diluted share of approximately
60 cents to 85 cents.

The company's estimates for the fourth quarter of 2008 and full-year
2008 reflect a significant decline in domestic revenues; substantial
investments in product development and marketing for the K-Swiss brand;
slow down of international operations; and continued investment in the
Royal Elastics brand. The estimates are based upon the following
assumptions: gross margins will be approximately 42.0%; SG&A will
not rise above $35 million for the fourth quarter of 2008 and $151
million for the full-year 2008; customer order cancellations will be
moderate; and the company's growth initiatives with respect to Royal
Elastics will not exceed a net loss of 8 cents per diluted share for
the full year.

Steven Nichols, chairman and president, stated, “The positive impact
from the July 2008 acquisition of Palladium was evident in the
higher-than-expected revenues and less-than-expected loss for the
quarter. Excluding Palladium, our financial results and backlog confirm
the deteriorating global outlook for K-Swiss in 2008 and 2009. We are
making headway in interesting areas with our branding initiatives and
product development, but the uncertainty caused by the credit markets
disruption and likely recession present substantial challenges.
However, our balance sheet remains sound.”

Stock Repurchase Program

The company did not purchase shares of Class A Common Stock during
the third quarter of 2008. At Sept. 30, 2008, there remains
authorization to repurchase 3,911,289 shares under the company's
existing stock repurchase program. Since August 1996, K-Swiss has
purchased a total of 25.5 million shares of Class A Common Stock for a
total expenditure of $166.8 million.