K2 Inc., for fiscal year 2005, forecasts GAAP diluted earnings per share in the range of 66 cents to 68 cents, versus previous forecast of 77 cents to 81 cents, and Adjusted diluted earnings per share in the range of 75 cents to 77 cents, versus previous forecast of 87 cents to 91 cents.
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, said, “We 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, we 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, our operating income from paintball was in excess of $8.5 million, which is approximately $0.10 per share, but in our updated forecast for 2005, we 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. We are restructuring the costs in our 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, our 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 our other core businesses including winter products, apparel and footwear, team sports and marine and outdoor, which continue to perform in accordance with our plan.”
Table A
K2 Inc.
Reconciliation of Forecast GAAP to Forecast Adjusted Results
(in thousands, except for per share amounts)
Forecast
Twelve Months
Ended
December 31, 2005
-----------------
Low High
--- ----
Net Sales $ 1,290,000 $ 1,315,000
---------
Operating Income Reconciliation:
--------------------------------
GAAP Operating Income(a) $ 75,500 $ 77,500
Add: Amortization of acquired intangibles
and amortization of increase in fair
value of inventories of acquired
companies(b) 4,290 4,290
Non-cash stock compensation expense(c) 872 872
------------ -----------
Adjusted Operating Income $ 80,662 $ 82,662
============ ===========
Net Income Reconciliation:
--------------------------
GAAP Net Income(a) $ 32,500 $ 33,835
Add: Amortization of acquired intangibles
and amortization of increase in fair
value of inventories of acquired
companies, net of taxes(b) 2,864 2,864
Non-cash stock compensation expense,
net of taxes(c) 582 582
Amortization of capitalized debt
costs, net of taxes(d) 1,674 1,674
------------ -----------
Adjusted Net Income $ 37,620 $ 38,955
============ ===========
GAAP and Adjusted Basic Shares Outstanding 46,270 46,270
GAAP and Adjusted Diluted Shares
Outstanding 55,218 55,218
GAAP Basic EPS $ 0.70 $ 0.73
GAAP Diluted EPS $ 0.66 $ 0.68
Adjusted Basic EPS $ 0.81 $ 0.84
Adjusted Diluted EPS $ 0.75 $ 0.77
