K2 Inc. Reports Third Quarter 2005 and Re-Affirms Guidance for Fiscal Year 2005; Q3 2005 GAAP Diluted Earnings Per Share of $0.32 and Adjusted Diluted Earnings Per Share of $0.34

K2 Inc. (NYSE: KTO) today reported net sales for the third quarterended September 30, 2005 of $340.4 million versus $333.5 million inthe prior year. GAAP diluted earnings per share were $0.32 in thethird quarter of 2005 as compared to $0.26 for the third quarter of2004. Operating income in the third quarter of 2005 was $32.0 millionas compared to $27.6 million for the 2004 comparable period, and netincome for the 2005 third quarter was $16.7 million, as compared to$13.2 million for the third quarter of 2004.

Net sales for the nine month period ended September 30, 2005 were$960.1 million, an increase of 11.4% over the 2004 comparable period,and operating profit for the period was $50.4 million as compared to$59.5 million for the 2004 nine month period. Lower profitability inthe first nine months of 2005 as compared to 2004 is principallyattributable to lower paintball sales as discussed below and theacquisitions of Volkl, Marker and Marmot in the third quarter of 2004,as these product lines have higher levels of fixed expenses ascompared to K2's other business lines, and are seasonally slow from asales standpoint in the first and second quarters. GAAP dilutedearnings per share were $0.42 for the first nine months of 2005.Details on earnings per share calculations are provided in Table Abelow.

Richard Heckmann, Chairman and Chief Executive Officer, said, "Wegenerated strong results in the third quarter, with a 16% increase inoperating income and a 23% increase in GAAP diluted earnings per shareover the comparable 2004 period, despite the previously announced andcontinuing weakness in paintball. The biggest profit contributors inthe third quarter were K2, Volkl, and Marker winter products as weexperienced significant profit growth in those product lines due toour ongoing integration efforts and back-office efficiencies. Appareland Footwear continued their previous trend line of consistent growthin sales and operating income, and Marine and Outdoor and Team Sportssegments, despite a seasonally slow quarter, also generated strongresults. As we had previously forecast, S,G&A expenses remained flaton a percentage basis over 2004 levels. As we look forward to theremainder of the year, we are optimistic about the strength of ourbrands, but we continue to have concerns about consumer confidencegiven the uncertainties of higher fuel and energy costs, risinginterest rates, and general economic conditions."

Review of 2005 Third Quarter Sales and Profit Results

Sales Trends

K2's net sales in the third quarter of 2005 were $340.4 million ascompared to $333.5 million in the comparable 2004 period, whichreflects a sales increase of 2.1%. If the decline in the sale ofpaintball products is excluded from these results, K2's other productlines generated sales growth of 4.2% in the quarter.

Profit Trends

Gross profit as a percentage of net sales in the third quarter of2005 increased to 36.8%, as compared to 35.7% in the comparable 2004period. The improvement in the 2005 third quarter was attributable tohigher gross margins in the winter products component of Action Sportsand Marine and Outdoor segments.

Operating income as a percentage of net sales for the thirdquarter of 2005 was 9.4% compared to 8.3% in the comparable 2004period. Higher operating income was due to an expansion of grossmargins, and flat selling, general and administrative expenses of27.4% of net sales in the third quarter of 2005 as compared to 27.5%of net sales in the prior year's third quarter.

Third Quarter Segment Review

Due to the acquisitions of Ex Officio and Marmot in the 2004second and third quarters, respectively, K2 formed an Apparel andFootwear segment in the 2004 third quarter that also includes EarthProducts. Earth Products was formerly included in the Action Sportssegment.

Marine and Outdoor

Shakespeare(R) fishing tackle and monofilament, and Stearns(R)marine and outdoor products generated net sales of $79.1 million inthe third quarter of 2005, an increase of 16.0% from the comparablequarter in 2004. Sales increases were driven by growth in Pfleuger(R)reels, Shakespeare(R) kits and combos, antennas, Hodgman(R) waders(acquired in second quarter 2005), Mad Dog(R) ATV accessories, andcontinued growth in floatation products.

Team Sports

In a seasonally slow quarter, Rawlings, Worth, and K2 LicensedProducts had total net sales of $45.8 million in the 2005 thirdquarter, an increase of 14.2% from the comparable quarter in 2004. Theimprovement was due to increases in most major product categories,with particular strength in the sales of high performance aluminum andMiken(R) composite softball bats.

Action Sports

Net sales of skis, snowboards, in-line skates, bikes, snowshoesand paintball products totaled $163.2 million in the third quarter of2005 as compared to $180.1 million in the 2004 third quarter. K2(R)branded alpine ski products generated significant growth in thequarter, which was offset by declines in paintball products aspreviously disclosed and sales of snowboards as well as a reduction inbike sales resulting from K2's decision to license this business inthe third quarter of 2005. Sales of Volkl branded ski products weredown in the third quarter of 2005 versus 2004 due to softness in thepremium end of the market.

Apparel and Footwear

Earth Products, Ex Officio and Marmot had net sales of $52.3million in the third quarter of 2005, an increase of 16.0% over the2004 period. The increase was driven by significant growth in Adio(R)technical skate footwear and Marmot(R) technical apparel andouterwear.

The segment information presented below is for the three monthsended September 30:
Sales to Operating
Unaffiliated Profit
Customers (Loss)
--------------- -------------
2005 2004 2005 2004
------- ------- ------ ------
(in millions)

Marine and Outdoor $79.1 $68.2 $8.5 $6.7
Team Sports 45.8 40.1 (4.9) (5.2)
Action Sports 163.2 180.1 25.0 23.2
Apparel and Footwear 52.3 45.1 6.4 6.1
------- ------- ------ ------
Total segment data $340.4 $333.5 35.0 30.8
======= ======= ------ ------

Corporate expenses, net (2.4) (2.8)

Interest expense (7.5) (7.3)
------ ------

Income before provision for income taxes $25.1 $20.7
====== ======

Balance Sheet

At September 30, 2005, accounts receivable was $343.2 million ascompared to $334.7 million at September 30, 2004 primarily due tosales growth. Inventories at September 30, 2005 increased to $372.8million from $307.1 million at September 30, 2004 due to sales growthand higher inventories at Stearns and Rawlings for new product lines.

K2's total debt increased to $437.9 million at September 30, 2005from $383.2 million at September 30, 2004. The increase in debt fromSeptember 30, 2004 is primarily the result of sales growth and higherinventories at Stearns and Rawlings.

Common stock outstanding increased to 46.9 million shares issuedand outstanding at September 30, 2005 from 46.6 million shares issuedand outstanding at September 30, 2004.

Cash Flow

At the end of the of the third quarter of 2005, debt, net of cash,was $420.4 million and the twelve month trailing EBITDA (as definedbelow) was $108.7 million, for a ratio of net debt to EBITDA of 3.9times.

See Table B below for a reconciliation of U.S. generally acceptedaccounting principles ("GAAP") to EBITDA.

Sarbanes-Oxley Act of 2002

Section 404 of the Sarbanes-Oxley Act of 2002 requires K2 toprovide management's annual report on its assessment of theeffectiveness of its internal control over financial reporting and, inconnection with such assessment, an attestation report from itsindependent registered public accountant, Ernst & Young LLP. In orderto comply with the requirements of Section 404, K2 incurred totalexpenses of approximately $2.5 million in 2004, and projects totalexpenses of approximately $3.1 million in 2005.

Pro Forma Adjusted Presentation

K2 Inc. is providing actual results and forecast guidance on afinancial basis in accordance with GAAP, and on a pro forma adjustedbasis ("Pro Forma Adjusted") that excludes the impact of certainnon-cash expenses including: amortization of purchased intangiblesresulting from K2's acquisition activities; amortization expenseassociated with the increase in fair market values of the inventoriesof acquired companies; amortization of capitalized debt costs incurredin connection with K2's credit facilities; and non-cash stock-basedcompensation expense. In addition, the Pro Forma Adjusted resultsreflect the pro forma results of the acquisitions of Volkl, Marker andMarmot as if they were acquired on January 1, 2004, the pro formaimpact of additional interest expense resulting from K2's issuance of$200 million of senior notes used for these acquisitions as if thenotes were issued on January 1, 2004 and the pro forma impact ofadditional shares of common stock resulting from the acquisitions andK2's equity offering in July 2004 as if the acquisitions and theequity offering were completed on January 1, 2004. See Table B belowfor a further explanation of the "Pro Forma Adjusted" presentation.

On June 30, 2004, K2 acquired Marmot, a premium manufacturer oftechnical performance apparel, and on July 7, 2004 acquired Volkl andMarker, premium manufacturers of alpine skis, bindings and snowboards.Due to the seasonality of their product lines, Volkl, Marker, andMarmot normally incur losses in the first and second quarters, and areprofitable in the last two quarters of the year. As detailed in TableB, Pro Forma Adjusted diluted earnings per share for the three andnine months ended September 30, 2004 equals $0.28 and $0.42,respectively, assuming the acquisitions of Volkl, Marker and Marmotwere completed on January 1, 2004. These results do not purport to beindicative of what would have occurred had the acquisitions been madeas of those dates, or of results which may occur in the future. Theseadjustments also do not include the results of operations of certainother acquisitions completed by K2 after the 2004 second quarterbecause the effects of such acquisitions were not material on eitheran individual basis or in the aggregate to K2's consolidated resultsof operations.

K2's management believes the Pro Forma Adjusted financial measuresfor 2004 and 2005, although not indicative of future performance, areuseful for comparison against K2's historical and future operations.

Outlook for 2005

For fiscal year 2005, K2 forecasts GAAP diluted earnings per sharein the range of $0.66 to $0.68 and Adjusted diluted earnings per sharein the range of $0.75 to $0.77, in each case based on assumed fullydiluted shares outstanding of 55.2 million. For the same period, K2forecasts GAAP basic earnings per share in the range of $0.70 to $0.73and Adjusted basic earnings per share in the range of $0.81 to $0.84,in each case based on assumed basic shares outstanding of 46.2million.

For the fourth quarter of 2005, K2 forecasts GAAP diluted earningsper share in the range of $0.23 to $0.25.

Table C provides a reconciliation of GAAP operating income toAdjusted operating income and GAAP net income to Adjusted net incomefor the forecast twelve months ended December 31, 2005.

Investor Conference Call

K2's regular quarterly earnings conference call is scheduled tobegin at 1:30 p.m. Pacific Daylight Time (USA), on Wednesday, October19, 2005. K2 plans to do a live broadcast of the conference call overthe Internet. Investors can listen to the live webcast atwww.k2inc.net and www.fulldisclosure.com. For those who are notavailable for the live broadcast, the call will be archived onwww.fulldisclosure.com.

About K2 Inc.

K2 Inc. is a premier, branded consumer products company with aportfolio of leading brands including Shakespeare(R), Pflueger(R) andStearns(R) in the Marine and Outdoor segment; Rawlings(R), Worth(R),and K2 Licensed Products(R) in the Team Sports segment; K2(R),Volkl(R), Marker(R), Ride(R) and Brass Eagle(R) in the Action Sportssegment; and, Adio(R), Marmot(R) and Ex Officio(R) in the Apparel andFootwear segment. K2's diversified mix of products is used primarilyin team and individual sports activities such as fishing, watersportsactivities, baseball, softball, alpine skiing, snowboarding andin-line skating. Among K2's other branded products are Hodgman(R)waders, Miken(R) softball bats, Tubbs(R) and Atlas(R) snowshoes, JT(R)and Worr Games(R) paintball products, Planet Earth(R) apparel, Hawk(R)skateboard shoes, and Sospenders(R) personal flotation devices.

Adio(R), Atlas(R), Brass Eagle(R), Ex Officio(R), Hawk(R)skateboard shoes, Hodgman(R), JT(R), K2(R), Marker(R), Marmot(R),Pflueger(R), Planet Earth(R), Rawlings(R), Ride(R), Shakespeare(R),Sospenders(R), Stearns(R), Tubbs(R), Volkl(R), Worth(R) and WorrGames(R), are trademarks or registered trademarks of K2 Inc. or itssubsidiaries in the United States or other countries.

Safe Harbor Statement

This news release includes forward-looking statements. K2 cautionsthat these statements are qualified by important factors that couldcause actual results to differ materially from those in theforward-looking statements, including but not limited to K2's abilityto successfully execute its acquisition plans and growth strategy,integration of acquired businesses, weather conditions, consumerspending, continued success of manufacturing in China, global economicconditions, product demand, financial market performance, and otherrisks described in K2's most recent annual report on Form 10-K,previous quarterly reports on Form 10-Q, and current reports on Form8-K, each as filed with the Securities and Exchange Commission. K2cautions that the foregoing list of important factors is notexclusive, any forward-looking statements included in this newsrelease is made as of the date of this news release, and K2 does notundertake to update any forward-looking statement.
K2 INC.
STATEMENTS OF INCOME
(unaudited)
(thousands except for per share figures)

THIRD QUARTER NINE MONTHS
ended September 30 ended September 30
-------------------- --------------------
2005 2004 2005 2004
--------- --------- --------- ---------

Net sales $340,352 $333,460 $960,068 $861,811
Cost of products sold 215,225 214,274 632,364 578,627
--------- --------- --------- ---------
Gross profit 125,127 119,186 327,704 283,184

Selling expenses 57,305 56,736 170,522 140,349
General and administrative
expenses 35,809 34,877 106,812 83,295
--------- --------- --------- ---------
Operating income 32,013 27,573 50,370 59,540

Interest expense 7,519 7,299 22,057 13,811
Other income, net (583) (426) (2,421) (604)
--------- --------- --------- ---------
Income before provision
for income taxes 25,077 20,700 30,734 46,333

Provision for income taxes 8,337 7,502 10,217 16,217
--------- --------- --------- ---------
Net income $16,740 $13,198 $20,517 $30,116
========= ========= ========= =========

Basic earnings per share:
Net income 0.36 0.28 0.44 0.78
========= ========= ========= =========

Diluted earnings per share:
Net income $0.32 $0.26 $0.42 $ 0.69
========= ========= ========= =========

Shares:
Basic 46,326 46,472 46,240 38,753
Diluted 55,190 55,148 55,224 47,503


K2 INC.
SELECTED BALANCE SHEET INFORMATION
(unaudited)
(in thousands)

As of September 30
2005 2004
--------- ---------
Cash $17,458 $37,196
Accounts receivable, net 343,188 334,650
Inventories, net 372,803 307,140
Total current assets 773,310 736,994
Accounts payable 84,102 95,300
Total debt 437,904 383,172

Shareholders' equity $691,555 $666,336


K2 INC.
SELECTED CASH FLOWS INFORMATION
(unaudited)
(thousands)

Nine Months
Ended September 30
------------------
2005 2004
------------------
Operating Activities
Net Income $20,517 $30,116
Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation and amortization 26,900 19,879
Deferred taxes 8,731 13,343
Changes in operating assets and liabilities (50,075) (46,066)
-------- ---------
Net cash provided by operating activities 6,073 17,272

Investing Activities
Property, plant & equipment expenditures, net (27,001) (23,861)
Purchases of businesses, net of cash acquired (17,184) (113,467)
Other items, net 7,469 (1,474)
-------- ---------
Net cash used in investing activities (36,716) (138,802)

Financing Activities
Net borrowings under long-term debt 23,309 55,593
Net decrease in short-term bank loans (1,316) (15,956)
Net proceeds from equity issuance - 93,740
Exercise of stock options 475 4,093
-------- ---------
Net cash provided by financing activities 22,468 137,470
-------- ---------

Net increase (decrease) in cash and cash equivalents (8,175) 15,940

Cash and cash equivalents at beginning of year 25,633 21,256
-------- ---------
Cash and cash equivalents at end of period $17,458 $37,196
======== =========


TABLE A
-------

K2 Inc. Reconciliation of Diluted Shares and Earnings Per Share
(unaudited)
(in thousands, except for per share amounts)

Nine
Quarter Months
Ended Ended
September 30,
2005
-----------------

Period ended September 30, 2005 - basic shares (a) 46,326 46,240

Assumed conversion of subordinated convertible
debentures 7,803 7,803

Dilutive impact of stock options, restricted stock
awards, warrants and shares in escrow 1,061 1,181
-------- --------

Period ended September 30, 2005 - diluted shares (b) 55,190 55,224
======== ========

Net income for the period ended September 30, 2005
(c) 16,740 20,517

Add: Interest component on assumed conversion of
subordinated debentures, net of taxes 928 2,784
-------- --------

Net income, adjusted for the period ended September
30, 2005 (d) $17,668 $23,301
======== ========

Period ended September 30, 2005 - basic earnings per
share (c)/(a) $0.36 $0.44
======== ========

Period ended September 30, 2005 - diluted earnings
per share (d)/(b) $0.32 $0.42
======== ========


TABLE B
-------

K2 Inc.
Reconciliation of GAAP Actual Results to Pro Forma Adjusted Results
(in thousands, except for per share amounts)
(unaudited)

Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2005 2004 2005 2004
--------- --------- --------- ---------

Net Sales Reconciliation:
-------------------------
GAAP Net Sales (a) $340,352 $333,460 $960,068 $861,811

Add: Net sales (for the
periods prior to the date of
acquisition) relating to
significant acquisitions made
by K2 during 2004 (b) - - - 58,050
--------- --------- --------- ---------

Pro Forma Net Sales $340,352 $333,460 $960,068 $919,861
========= ========= ========= =========

Operating Income
Reconciliation:
----------------

GAAP Operating Income (a) $32,013 $27,573 $50,370 $59,540

Add: Operating loss (for the
periods prior to the date of
acquisition) relating to
significant acquisitions made
by K2 during 2004 (b) - - - (15,433)
Amortization of acquired
intangibles and amortization
of increase in fair value
of inventories of acquired
companies (c) 1,162 1,765 3,252 5,306
Non-cash stock compensation
expense (d) 258 - 619 -
--------- --------- --------- ---------

Pro Forma Adjusted Operating
Income $33,433 $29,338 $54,241 $49,413
========= ========= ========= =========

Net Income Reconciliation:
--------------------------

GAAP Net Income (a) $16,740 $13,198 $20,517 $30,116

Add: Net loss (for the periods
prior to the date of
acquisition) relating to
significant acquisitions made
by K2 during 2004 (b) - - - (11,972)
Amortization of acquired
intangibles and amortization
of increase in fair value of
inventories of acquired
companies, net of taxes (c) 776 1,126 2,171 3,449
Non-cash stock compensation
expense, net of taxes (d) 172 - 413 -
Amortization of capitalized
debt costs, net of taxes (e) 417 397 1,251 1,204
Less: Additional interest
expense from issuance of
senior notes in July 2004,
net of taxes (f) - - - (2,716)
--------- --------- --------- ---------

Pro Forma Adjusted Net Income $18,105 $14,722 $24,352 $20,081
========= ========= ========= =========

GAAP Basic Shares Outstanding 46,326 46,472 46,240 38,753
Pro Forma Basic Shares
Outstanding (g) 46,326 46,472 46,240 46,128

GAAP Diluted Shares
Outstanding 55,190 55,148 55,224 47,503
Pro Forma Diluted Shares
Outstanding (g) 55,190 55,148 55,224 54,877

GAAP Basic EPS $0.36 $0.28 $0.44 $0.78
Pro Forma Adjusted Basic EPS $0.39 $0.32 $0.53 $0.44

GAAP Diluted EPS $0.32 $0.26 $0.42 $0.69
Pro Forma Adjusted Diluted EPS $0.34 $0.28 $0.49 $0.42

Calculation of EBITDA (h):
--------------------------

GAAP Operating Income (a) $32,013 $27,573 $50,370 $59,540
Depreciation and Amortization 9,256 7,323 25,645 21,090
--------- --------- --------- ---------
EBITDA $41,269 $34,896 $76,015 $80,630
========= ========= ========= =========

Twelve months ended
Calculation of EBITDA (h): September September
-------------------------- 30, 30,
2005 2004
--------- ---------

GAAP Operating Income (a) $71,850 $64,989
Depreciation and Amortization 36,837 29,809
--------- ---------
EBITDA $108,687 $94,798
========= =========

See accompanying footnotes and related information for Table B below.


TABLE C
-------

K2 Inc.
Reconciliation of Forecast GAAP to Forecast Adjusted Results
(in thousands, except for per share amounts)

Forecast
Twelve Months
Ended
December 31, 2005
-----------------------
Low High
----------- -----------

Net Sales $1,290,000 $1,315,000

Operating Income Reconciliation:
GAAP Operating Income (a) $75,500 $77,500

Add: Amortization of acquired intangibles and
amortization of
increase in fair value of inventories of
acquired companies (b) 4,290 4,290
Non-cash stock compensation expense (c) 872 872
----------- -----------
Adjusted Operating Income $80,662 $82,662
=========== ===========


Net Income Reconciliation:
GAAP Net Income (a) $32,500 $33,835

Add: Amortization of acquired intangibles and
amortization of
increase in fair value of inventories of
acquired companies (b) 2,864 2,864
Non-cash stock compensation expense (c) 582 582
Amortization of capitalized debt costs (d) 1,674 1,674
----------- -----------
Adjusted Net Income $37,620 $38,955
=========== ===========


GAAP and Adjusted Basic Shares Outstanding 46,270 46,270

GAAP and Adjusted Diluted Shares Outstanding 55,218 55,218

GAAP Basic EPS $0.70 $0.73
GAAP Diluted EPS $0.66 $0.68

Adjusted Basic EPS $0.81 $0.84
Adjusted Diluted EPS $0.75 $0.77

See accompanying footnotes and related information for Table C below.

FOOTNOTES AND RELATED INFORMATION FOR TABLE B

Explanation of adjustments:

(in thousands)

(a) Amounts represent K2's results of operations for the periodspresented in accordance with U.S. generally accepted accountingprinciples.

(b) Adjustment reflects the additional unaudited results ofoperations prior to the acquisition by K2 as if each significantacquisition completed by K2 on or after June 30, 2004 was included inK2's results for the quarter and nine months ended September 30, 2004.For purposes of this calculation K2's significant acquisitions during2004 consisted of: Marmot acquired on June 30, 2004; and Volkl andMarker acquired on July 7, 2004.

(c) Adjustment represents the non-cash amortization expenseassociated with acquired intangible assets and the non-cashamortization expense associated with the increase to fair market valueof acquired inventories, resulting from K2's acquisition activities.

(d) Adjustment represents the non-cash compensation expenseresulting from restricted stock awards and modifications to stockoption awards.

(e) Adjustment represents non-cash amortization expense ofcapitalized debt costs associated with K2's revolving credit facility,convertible subordinated debentures and senior notes. Thesecapitalized costs are amortized over the term of the related debt.

(f) Adjustment reflects the increase in interest expense for theperiod as if the $200,000 in senior notes were issued on January 1,2004 and outstanding for the entire nine month period ended September30, 2004. The senior notes were issued on July 1, 2004 in connectionwith the acquisitions of Volkl, Marker and Marmot.

(g) Pro Forma basic and diluted shares outstanding reflects theincrease to GAAP basic and diluted shares as if the shares of K2common stock issued in connection with the acquisitions of Volkl,Marker and Marmot and the public offering of K2 common stock wereissued on January 1, 2004.

(h) Earnings before interest, taxes, depreciation, andamortization ("EBITDA") included in this press release is a non-GAAPfinancial measure which represents net income excluding the effects ofinterest, income taxes, depreciation, and amortization. EBITDA, asdefined above, may not be similar to EBITDA measures used by othercompanies and is not a measurement under GAAP. We believe that EBITDAprovides useful information to investors about K2's performancebecause it eliminates the effects of period-to-period changes in costsassociated with capital investments that are not directly attributableto the underlying performance of K2's business operations. Managementuses EBITDA in evaluating the overall performance of K2's businessoperations.

Intangible Assets and Goodwill

K2 is monitoring the softness in consumer demand for paintballproducts within its Action Sports segment and has determined thatcurrently there are no indicators of impairment with respect tocertain indefinite and finite-lived intangibles. In the event consumerdemand continues to remain soft for paintball products, K2 may berequired to record an impairment charge in future periods related toindefinite and finite-lived intangibles within the Action Sportssegment.

Use of Pro Forma Adjusted Financial Information

(in thousands, except for per share figures)

To supplement the results presented in accordance with U.S.generally accepted accounting principles (GAAP), for the three andnine months ended September 30, 2004 and 2005, K2 also used Pro FormaAdjusted measures of operating income, net income and earnings pershare, which are adjusted from the GAAP-based results to include theresults of operations of significant acquisitions and related costsprior to their date of acquisition and to exclude certain non-cashcosts and expenses. These adjustments are not in accordance with, oran alternative for, GAAP. These adjustments are provided to enhance anoverall understanding of K2's financial performance for the three andnine months ended September 30, 2004 and 2005 and are indicatorsmanagement uses for planning and forecasting future periods.

Pro Forma adjustments include the unaudited financial resultsgiving effect to the acquisition by K2 of Volkl, Marker and Marmot asif the acquisitions were completed on January 1, 2004, the first dayof the first period for which pro forma financial information ispresented. The adjustments to reflect the financial results of Volkl,Marker and Marmot do not purport to be indicative of what would haveoccurred had the acquisitions been made as of those dates, or ofresults which may occur in the future. Adjustments to include theresults of operations of other additional acquisitions completed by K2after the 2004 second quarter have not been made because the effectsof these additional acquisitions were not material on either anindividual basis or in the aggregate to K2's consolidated results ofoperations.

In 2004, K2 included an adjustment to reflect additional interestexpense as if the $200,000 in senior notes K2 issued in connectionwith the acquisitions of Volkl, Marker and Marmot were issued onJanuary 1, 2004, and adjustments to reflect the issuance of additionalshares of common stock for the acquisitions and K2's July 2004 equityoffering as if they were completed on January 1, 2004.

In 2004 and 2005, the excluded items include certain non-cashcosts and expenses associated with K2's acquisition activities as wellas non-cash stock-based compensation expense associated withrestricted stock awards because K2 management does not believe thesenon-cash expenses are indicative of K2's core business. Even thoughsuch items have recurred in the past and may recur in future periods,they are driven by events such as acquisitions that are not directlyrelated to K2's ongoing core business operations. K2 will continue toexclude such items in its Pro Forma Adjusted results. These financialmeasures are not to be considered in isolation from, or as asubstitute for, financial results prepared in accordance with GAAP.

K2's management believes the Pro Forma Adjusted financial measuresfor 2004 and 2005, although not indicative of future performance, areuseful for comparison against K2's historical and future operations.

FOOTNOTES AND RELATED INFORMATION FOR TABLE C

Explanation of adjustments:

(a) Amounts represent K2's forecast operating income and netincome for the periods presented in accordance with U.S. generallyaccepted accounting principles.

(b) Adjustment represents the forecast non-cash amortizationexpense of acquired intangible assets resulting from K2's acquisitionactivities, and the forecast non-cash amortization expense associatedwith the increase to fair market value of acquired inventoriesresulting from K2's acquisition activities during 2004 and 2005.

(c) Adjustment represents the forecast non-cash compensationexpense resulting from restricted stock awards and modifications tostock option awards.

(d) Adjustment represents the forecast non-cash amortizationexpense of capitalized debt costs associated with K2's revolvingcredit facility, convertible subordinated debentures and senior notes.These capitalized costs are amortized over the term of the relateddebt.

See "Use of Pro Forma Adjusted Financial Information" in Footnotesand Related Information for Table B for the 2005 financialinformation.