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Brass Eagle, Inc

K2
 
 
 

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BE plans aquisition with K2
Brass Eagle, Inc.

 
 







Bentonville, AR, October 22, 200

Brass Eagle Inc. (Nasdaq: XTRM) the worldwide leader in the manufacturing, marketing and distribution of paintball products today announced a Merger Agreement with K2 Inc. (NYSE: KTO) and reported results for the third quarter ending September 30, 2003.

Brass Eagle entered into an Agreement today to merge the Company with K2 Inc. of Carlsbad, California in an all stock transaction. The Agreement contemplates an exchange offer of K2 common shares for common shares of Brass Eagle followed by a merger. Brass Eagle Shareholders will receive 0.6036 shares of K2 common stock for each share of Brass Eagle common stock. The Board of Directors of Brass Eagle recommends that shareholders accept the offer, and tender their shares to K2. The merger may be finalized as soon as December, 2003. 

Lynn Scott, Brass Eagle President and CEO, stated “We are very enthused about the future, and believe that the merger with K2 presents significant opportunities for the Company. K2’s resources in marketing and brand building, manufacturing, and product development will help Brass Eagle achieve the long term goal of becoming a diversified action sports company, while remaining the number one supplier of paintball products to the market place.”

Brass Eagle also reported that net sales for the third quarter increased 12.3% to $24.6 million versus $21.9 million for the same period last year. Net income for the three months ended September 30, 2003 was $1.3 million compared to $1.5 million for the corresponding period in 2002. Earnings per diluted share were $0.18 compared to $0.21 in 2002.

For the first nine months of the year, net sales decreased 8.7% to $62.7 million from $68.7 million for the same period in 2002. Net income for the first nine months of the year was $1.7 million compared to $5.0 million last year. Diluted earnings per share decreased 65.7 % this year to $0.23 from $0.67 for the first nine months of 2002.

Brass Eagle is unique in providing a full line of paintball markers and accessory products from beginner through competition level. The Company is the dominant supplier of products for this rapidly growing sport.

Certain statements in this press release (including statements containing the words "expect," "will," "believe," "continue," “anticipate,” "could," "intend" and similar words) may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Brass Eagle, its industry or others to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from Brass Eagle's expectations include the following: (1) Intensifying competition, including specifically the intensification of price competition, the entry of new competitors and the introduction of new products by new and existing competitors; (2) Failure to obtain new customers or retain existing customers; (3) Inability to carry out marketing, sales or other business plans and strategies; (4) Loss of key executives; (5) General economic and business conditions which are less favorable than expected; and (6) Unanticipated changes in industry trends.

ADDITIONAL INFORMATION:
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any offer will only be made through a prospectus, which is part of a registration statement on Form S-4 to be filed with the SEC. by K2. K2 will also file with the SEC a Schedule TO and Brass Eagle will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the exchange offer. K2 and Brass Eagle expect to mail a prospectus of K2 and related exchange offer materials, as well as the Schedule 14D-9, to Brass Eagle stockholders. Brass Eagle stockholders are urged to carefully read these documents and the other documents relating to the exchange offer when they become available because these documents will contain important information relating to the offer. You may obtain a free copy of these documents after they have been filed with the SEC, and other annual, quarterly and special reports, proxy statements and other information filed with the SEC by K2 or Brass Eagle, at the SEC's website at http:www.sec.gov. A free copy of the exchange offer materials, when they become available, may also be obtained from K2 or Brass Eagle.

 


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