Monday, July 16

K2 Leaves Vashon

By Press Release

K2 Inc. is a leading designer, manufacturer and marketer of brand- name sporting goods, recreational and industrial products. The company's sporting goods and recreational products include well-known names such as K2 and Olin alpine skis; K2, Ride and Morrow snowboards, boots and bindings; K2 in-line skates; Stearns sports equipment; Shakespeare fishing 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 industrial products include Shakespeare extruded monofilaments, marine antennas and composite light poles.

In 1999 and 2000, K2 moved a significant portion of its ski and all of its snowboard production to its factory in China. Now that it has achieved its targets for quality, cost and production from that move, the company said it is now prepared to move additional products to the Chinese plant to further benefit from the strategic advantage of manufacturing overseas.

As a result, K2 announced that it would move its remaining ski production to China and close its Vashon Island, Wash., ski manufacturing facility by the end of the third quarter. In addition, the company has also announced the shutdown of three other smaller facilities in Minnesota and Alabama, servicing its Stearns and Hilton operations, with most of the production also moving overseas.

These actions will result in the reduction of approximately 450 positions at those locations. In conjunction with the closures, K2 expects to record a pre-tax reserve in the third quarter of between $10 to $11 million, primarily related to the reduction of jobs and asset impairments on the facilities closed.

Based on the improved cost structure currently being experienced in the China factory, K2 estimates approximately $7 million in annualized pretax cost savings will be achieved.