The Hockey Company Posts 2002 Profit on 7.3% Sales Gain

The Hockey Company reported net sales in fiscal year 2002 ended December 31, 2002 grew by 7.3% to $212.7 million from $198.2 million in 2001. For the three months ended December 31st, 2002 net sales increased 11.0% or $6.1 million to $61.3 million.

Gross profit was $91.7 in 2002 compared to $79.7 million in 2001, an increase of 15.1%. Measured as a percentage of net sales, gross margin increased to 43.1% in 2002 from 40.2% in 2001. For the three months ended December 31st, 2002 gross profit grew by 14.9% to $24.6 million.

EBITDA, as defined below, increased by 51% to $29.6 million for 2002 compared to $19.6 million in 2001. The strong improvement reflected sales of higher margin new products as well as the benefits of the restructuring and outsourcing decisions taken in 2001.

Net income for the year ended December 31, 2002 was $4.3 million compared to a $10.5 million net loss for the year ended December 31, 2001. Extraordinary charges of $3.3 million and $1.1 million were recorded in 2002 and 2001 respectively, both related to the Company’s refinancing initiatives.

Income before extraordinary items for the year ended December 31, 2002 was $7.6 million, compared to a loss before extraordinary items of $9.4 million for the year ended December 31, 2001. In the three months ended December 31, 2002, income before extraordinary item was $3.6 million compared to a loss before extraordinary item of $2.9 million in 2001.

The Company also generated cash from operations in 2002 of $12.0 million compared to the prior year’s use of funds in operations of $9.1 million. The Company completed the year with a positive cash balance of $19.5 million.

In October 2002, the Company announced the closure of three of its manufacturing plants, two in Quebec and one in Ontario effective December 2002 in order to reduce excess capacity and achieve greater operating efficiencies. Accordingly, a reserve of approximately $2.1 million was set up for the expected cost of restructuring.

“I am very pleased with our progress in 2002.” said Matthew H. OToole, President and Chief Executive Officer of the Company, “We set out on a dual path of growing sales through product innovation as well as improving the efficiency of the operation through significant reductions in overhead. Both initiatives have contributed significantly to The Hockey Company’s turnaround.

“In 2002, we experienced tremendous success with the introduction of several new apparel products, our new Externo skate line and more recently with the launch of the Vector one-piece composite stick. Going forward, we will continue to focus our resources on the company’s Product Leadership strategy. We will continue to deliver the highest performance and value to the hockey athlete and the hockey fan. Management and all our employees are committed to delivering positive results to our shareholders and feel that 2003 will continue to demonstrate improved growth and profitability.”

                 Consolidated Statement of Operations

                                    For the  For the  For the For the
                                      Three   Twelve   Three   Twelve
                                     Months   Months  Months   Months
                                      ended   ended    ended   ended
                                    Dec. 31, Dec 31,  Dec 31, Dec 31,
                                      2001     2001    2002     2002
                                    ----------------------------------

Net sales                           $55,201 $198,187 $61,269 $212,693
Cost of goods sold before
 restructuring and unusual charges   33,749  117,296  35,050  119,390
Restructuring and unusual charges        11    1,198   1,617    1,617
                                    ----------------------------------
     Gross profit                    21,441   79,693  24,602   91,686
Selling, general and administrative
 expenses before restructuring and
 unusual charges                     17,090   61,768  17,714   64,303
Restructuring and unusual charges     1,680    4,495     496      496
Amortization of excess
 reorganization value and goodwill    1,087    4,390       -        -
                                    ----------------------------------
     Operating income                 1,584    9,040   6,392   26,887
Other expense, net                   (1,766)     538     (42)   1,311
Interest expense                      5,963   16,298   5,186   15,469
Foreign exchange loss (gain)         (1,488)  (1,803)    (86)      85
                                    ----------------------------------
Income (loss) before income taxes
 and
               extraordinary item    (1,125)  (5,993)  1,334   10,022
Income taxes (recovery)               1,771    3,375  (2,292)   2,450
                                    ----------------------------------
Income (loss) before extraordinary
 item                                (2,896)  (9,368)  3,626    7,572
Extraordinary item - Loss on early
 extinguishment
               of debt, net of
                income taxes              -    1,091       -    3,265
                                    ----------------------------------
Net income (loss)                   $(2,896)$(10,459) $3,626   $4.307