CARLSBAD, Calif. -- K2 Inc. (NYSE:KTO):

--Third quarter 2004 sales of $333.5 million and diluted earnings per share of $0.26, exceeding previous guidance estimates of sales of $320 million and diluted earnings per share of $0.25.

--2004 nine month sales of $861.8 million and diluted earnings per share of $0.69, as compared to sales of $524.8 million and diluted earnings per share of $0.38 in the comparable 2003 period.

K2 Inc. (NYSE:KTO) today reported sales for the third quarter ended September 30, 2004 of $333.5 million, an increase of 99% from $168.0 million in the prior year, and diluted earnings per share were $0.26. Operating income in the third quarter of 2004 was $27.6 million, a 256% increase from the 2003 comparable period, and net income of $13.2 million, a 293% increase from the third quarter of 2003.

Sales for the nine month period ended September 30, 2004 were $861.8 million, an increase of 64% over the 2003 comparable period, and diluted earnings per share of $0.69. Operating income for the first nine months of 2004 was $59.5 million, a 124% increase over the 2003 comparable period, and net income was $30.1 million, a 225% increase over the first nine months of 2003. Details on earnings per share calculations are provided in Table A below.

Richard Heckmann, Chairman and Chief Executive Officer, said, "The third quarter marked another strong period for K2 and its portfolio of leading brands. We generated organic sales growth net of acquisitions of nearly 12% in the quarter, driven principally by growth in our winter products brands. Additionally, our trend of improved profitability continued as reflected in higher margins and net income. We are moving swiftly to integrate recent acquisitions, and the combination of our scalable infrastructure, leading brands and strong balance sheet position us well for future growth."

Review of 2004 Third Quarter and Nine Month Sales and Profit Results

Comparable Sales Trends

K2 sales in the third quarter of 2004 were $187.3 million excluding the impact of the Atlas, Tubbs, Brass Eagle, K2 Licensing & Promotions, Ex Officio, Marmot, and Volkl and Marker acquisitions which closed after the third quarter of 2003, and the Worth acquisition which closed at the end of the 2003 third quarter. K2 sales in the third quarter of 2003 were $168.0 million, which reflects a sales increase of 11.5% on a comparable basis, despite a decline in sales of in-line skates of $4.2 million from the 2003 third quarter. Sales of products other than in-line skates for the 2004 third quarter increased 14.6% compared to the 2003 same period.

Profit Trends

Gross profit in the third quarter of 2004 increased to 35.7% of sales, as compared to 32.7% in the comparable 2003 period. Gross profit in the nine months ended September 30, 2004 increased to 32.9% of sales, as compared to 30.9% in the comparable 2003 period. Gross profit as a percentage of sales in the 2004 third quarter benefited from higher margins from the Action Sports and Apparel and Footwear segments.

Operating income as a percentage of sales for the third quarter of 2004 increased to 8.3% compared to 4.6% in the comparable 2003 period. Operating income increased to 6.9% of sales in the nine months ended September 30, 2004 from 5.1% in the comparable 2003 period. Selling, general and administrative expenses were 27.5% of sales in the third quarter of 2004 compared to 28.1% of sales in the prior year. For the nine months ended September 30, 2004, selling, general and administrative expenses were essentially flat at 26.0% of sales compared to 25.8% in the prior year period.

Third Quarter Division Review

Due to the acquisitions of Ex Officio and Marmot in the second and third quarters, respectively, of 2004, K2 has formed a new apparel and footwear reporting segment that also includes Earth Products.

Marine and Outdoor

Shakespeare fishing tackle and monofilament, and Stearns marine and outdoor products, generated sales of $68.2 million in the third quarter of 2004, up 10.5% from the comparable quarter in 2003. Sales increases were driven by growth in Pflueger(R) reels, marine antennas and waders and the addition of All-Star(R) rods and ATV accessory product lines in the current period.

Team Sports

Rawlings, Worth, and K2 Licensing & Promotions had total sales of $40.1 million in the 2004 third quarter, up 65.7% from the 2003 period. Growth was driven by the acquisition of Worth in September 2003 and K2 Licensing & Promotions in January 2004.

Action Sports

Sales of skis, snowboards, in-line skates, bikes and paintball products totaled $180.1 million in the third quarter of 2004, an increase of 152.6% over the 2003 period. Growth was driven by double digit increases in skis and snowboards, and by acquisitions made in the fourth quarter of 2003 consisting of Atlas(R) and Tubbs(R) snowshoes, and Brass Eagle(R) paintball products and the acquisitions of Volkl and Marker at the beginning of the third quarter of 2004.