K2 announced that net sales for the year ended Dec. 31, 2002, totaled $582.2 million compared with $589.5 million in 2001. Operating income increased dramatically to $27.3 million from $1.3 million a year earlier. Net income for the 2002 year grew to $12.1 million, or $0.67 per diluted share, from a net loss of $7.7 million, or $0.43 per share.
For the 2002 fourth quarter, the company announced net sales totaling $127.7 million, compared with $126.8 million in 4Q 2001. Operating income increased to $2.4 million from $346,000 a year earlier. Net income for the 2002 fourth quarter rose to $521,000, or $0.03 per diluted share, compared to a net loss of $2.5 million, or $0.14 per share, for the 4Q 2001.
The company attributed the dramatic turnaround results in the 2002 fourth quarter to the strong sell-through and market share penetration of K2 skis. The ski division realized a 54 percent increase in ski sales over 2001. The company's Shakespeare fishing tackle business also continued to post gains from an expanded product line, even during a seasonally slow quarter.
For the 2002 year, worldwide fishing tackle operating earnings grew by more than 30 percent over 2001. Operating earnings at Stearns grew by more than 80 percent for 2002 over the previous year, reflecting strong operating gains, which boosted gross margins. K2 also saw strong sales growth in its skateboard shoes under the Adio brand.
"We are now beginning to realize the tangible benefits from the restructuring and refocusing of the company, in particular the shift of manufacturing for skis, snowboards, fishing tackle and flotation devices to China," said Richard J. Heckmann, chairman and chief executive officer of K2.
The company also stated that improved cash flow from operations and inventory reductions resulted in a much improved balance sheet with debt-to-capital at year-end reduced to 29 percent from 43 percent a year earlier. Overall, the company announced it reduced debt by a remarkable $64 million along with a $4.7 million reduction in interest expense as a result.