K2 Inc. Reports First Quarter Results

LOS ANGELES–April 24, 2000–K2 Inc. (NYSE:KTO)today announced improved first quarter sales and earnings fromcontinuing operations, before the impact on per share results of theacquisition of Ride Inc.

First Quarter Comparisons

For the quarter ended March 31, 2000, K2 reported net sales fromcontinuing operations of $181.8 million, up 12 percent from $163.1million a year earlier. Income from continuing operations for thequarter increased 7 percent, to $3.3 million, from the prior year’s$3.1 million. On a per share basis, income from continuing operationswas impacted by the issuance of 1.5 million shares to acquire RideInc. last October.

For the first quarter this year, earnings per diluted share was$0.18 based on 18.0 million diluted shares outstanding, as comparedwith the year earlier period in which the company reported earningsper diluted share of $0.19 based on 16.6 million diluted shares.

Net income for the 2000 quarter, including discontinuedoperations, was $3.7 million, or $0.20 per diluted share, comparedwith net income of $3.3 million, or $0.20 per diluted share in theprior year’s first quarter.

The company’s operating income increased 23 percent, to $9.5million, or 5.2 percent of sales, up from $7.8 million, or 4.8 percentof sales in the year ago period. The company’s interest expenseincreased to $4.6 million, up from $3.3 million in the prior year.

Richard M. Rodstein, K2′s president and chief executive officer,noted that the company reported improved sales and operating incomeresulting from strong domestic fishing tackle and inline skate salesand higher margins due to previously announced cost reduction efforts.Partially offsetting these improved results were the seasonal loss ofRide, included in the current year’s quarter for the first time, andincreased interest expense from higher interest rates.

“Results for the first quarter of 2000 reflect strong growth insales and operating income of our sporting goods segment. The quarterbenefited from significant growth in inline skate and fishing tacklesales, during a seasonally important quarter. The Ride snowboardbusiness generated a seasonal first quarter loss and will alsonegatively impact the second quarter, since the third and fourthquarters are generally the heaviest shipping quarters.

“The improvements, together with resumed growth of our industrialsegment more than offset sales declines reported by our otherrecreational businesses,” Rodstein said. “As a percentage of sales,the increase in operating income reflects an improved gross profitpercentage, which has begun to benefit from our initiatives to reduceproduct costs.”

Improved Sporting Goods Results

K2′s sporting goods segment reported sales for the 2000 quarter of$139.3 million, up 15 percent from the $121.3 million reported a yearago.

“Sporting goods sales benefited from strong demand for its inlineskates and domestic fishing tackle products,” Rodstein said. “Thedouble-digit increase in shipments of inline skates reflected greaterworldwide demand for the company’s softboot skates, increasedpenetration into new European markets and worldwide growth of ourchildren’s softboot skate line.

“Shakespeare fishing tackle sales grew dramatically in thedomestic market, led by the popular Ugly Stik fishing rod series,packaged rods and reels and new product introductions such as our lineof outdoor furniture. Despite a mild winter season, snowboard productsales in the first quarter increased overall due to the Ride businessacquired last year.”

Rodstein added: “In a seasonally slow period, ski shipmentsdeclined for the quarter reflecting the mild winter weather in thedomestic market and K2′s lower domestic ski market share. We areencouraged, however, by the reception of our dealers to our new MODski technology and by the successful start-up of our ski production inChina.

“Sales of our Stearns productseclined in the first quarterreflecting a shift in the timing of product shipments to subsequentquarters as evidenced by our current orders for shipment in the secondquarter.”

Sales of skateboard shoes and apparel and corporate appareldeclined slightly to $9.3 million from $9.9 million.

Industrial Product Sales

Sales of K2′s industrial products group increased 4 percent to$33.2 million from $31.9 million a year ago. Higher demand formonofilament line used in the paper industry and improved sales ofspecialty resins and marine antennas accounted for the improvement.

Continued Improvement

Rodstein concluded: “We have continued to improve our sales andearnings through our focus on product innovation, product costreduction and consolidation of some of our operations. K2′s strongproduct innovation program and acquisitions have contributed to theoverall sales increase.

“While we are pleased with the early results of our cost reductionprogram, which has helped improve the operating profit margins for thequarter, most of the benefit of this program will not become apparentfor winter sports products until the seasonally strongest second halfof the year. This cost reduction program should help offset thepotential impact of the weak European currencies on the cost ofproducts purchased outside of Europe for sale within Europe.

“K2′s recent acquisitions of Ride and Morrow snowboards havepermitted us to consolidate operations in core categories. And ourfocus on balance sheet management was an important factor in improvingcash flow and reducing debt, partially softening the impact of higherinterest rates on the quarter.”

K2 is a leading designer, manufacturer and marketer of brand namesporting goods, recreational and industrial products. The company’ssporting goods and recreational products include well-known names suchas K2 and Olin alpine skis, K2, Ride and Morrow snowboards, boots andbindings, K2 inline skates, Stearns sports equipment, Shakespearefishing tackle, K2 bikes, and Dana Design backpacks.

K2′s other recreational products include Planet Earth apparel,Adio skateboard shoes and Hilton corporate casuals. K2′s industrialproducts include Shakespeare extruded monofilaments, marine antennasand fiberglass light poles.

This News Release includes forward-looking statements. The companycautions that these statements are qualified by important factors thatcould cause actual results to differ materially from those in theforward-looking statements, including but not limited to, economicconditions, foreign exchange fluctuations, higher interest rates,product demand, competitive pricing and products, weather conditions,seasonality, and other risks described in the Company’s Annual Reporton Form 10K filed with the Securities and Exchange Commission.

K2 INC.

SUMMARY OF OPERATIONS

(unaudited) (in thousands except for per share figures)

FIRST QUARTER

ended March 31

2000 1999

Net sales $ 181,812 $ 163,060Cost of products sold 130,752 118,749 Gross profit 51,060 44,311

Selling expenses 26,964 23,096General and administrative expenses 14,577 13,457 Operating income 9,519 7,758

Interest expense 4,566 3,297Other income, net (80) (100) Income before

provision for

income taxes 5,033 4,561

Provision for income taxes 1,711 1,458

Income from

continuing operations 3,322 3,103

Discontinued operations, net of taxes 416 149

Net income $ 3,738 $ 3,252

Basic earnings per share: Continuing operations $ 0.19 $ 0.19 Discontinued operations 0.02 0.01 Net income 0.21 0.20

Diluted earnings per share: Continuing operations $ 0.18 $ 0.19 Discontinued operations 0.02 0.01

Net income 0.20 0.20

Shares: (a) Basic 17,949 16,566 Diluted 17,992 16,566

Cash dividend $ — $ 0.11

(a) 2000 includes 1,482 shares issued in connection with the acquisition of Ride Inc. on Oct. 7, 1999.s, net of taxes 416 149

Net income $ 3,738 $ 3,252

Basic earnings per share: Continuing operations $ 0.19 $ 0.19 Discontinued operations 0.02 0.01 Net income 0.21 0.20

Diluted earnings per share: Continuing operations $ 0.18 $ 0.19 Discontinued operations 0.02 0.01

Net income 0.20 0.20

Shares: (a) Basic 17,949 16,566 Diluted 17,992 16,566

Cash dividend $ — $ 0.11

(a) 2000 includes 1,482 shares issued in connection with the acquisition of Ride Inc. on Oct. 7, 1999.