JARDEN SEES K2 BOOST Q4 SALES

15 Feb 2008     K2

Jarden Corporation saw net sales jump 38% for the fourth quarter to $1.47 billion compared to $1.06 billion for the same period in the previous year. The company saw a net loss for the quarter of $11.2 million, or 15 cents per share, compared to net income of $35.7 million, or $0.52 per diluted share, in the fourth quarter of 2006. On a non-GAAP basis, as adjusted net income was $68.7 million, or 89 cents per diluted share, an increase of 11% per diluted share, for the quarter ended December 31, 2007, compared to $54.8 million, or 80 cents per diluted share, for the quarter ended December 31, 2006.

Sales for the Outdoor Solutions segment saw net sales jump 330% for the quarter to $570.2 million, boosted by the inclusion of the K2 businesses acquired in August 2007. Sales for the year-ago quarter amounted to $132.6 million for the division. Earnings improved to $46.6 million from a loss of $2.7 million last year, but one-time costs associated with the acquisition expanded the operating loss to a loss of $21.5 million from a loss of $8.9 million for the year-ago period.

For the 2007 quarter, adjustments to net income consist of $46.5 million of manufacturer's profit in inventory charged to cost of sales which is the purchase accounting fair value adjustment to inventory associated with the K2 Inc. acquisition, $20.1 million of reorganization and acquisition-related integration costs, $30.8 million of non-cash stock-based compensation costs, $4.1 million of amortization of acquired intangible assets and $4.6 million of certain duplicative costs and inventory write-offs. Also, included in the adjustments to net income for the quarter ended December 31, 2007 is the tax provision adjustment of $26.2 million which reflects the normalization of the as adjusted results to the company's 36% effective tax rate.

For the 2006 quarter, adjustments to net income consist of $6.5 million of manufacturer's profit in inventory charged to cost of sales which is the purchase accounting fair value adjustment to inventory associated with the Pine Mountain acquisition, $14.3 million of reorganization and acquisition-related integration costs, $6.9 million of non-cash stock-based compensation costs, $1.7 million of amortization of acquired intangible assets and $1.0 million of certain duplicative costs associated with integration activities. Also, included in the adjustments to net income for the quarter ended December 31, 2006 is the tax provision adjustment of $11.3 million which reflects the adjustment of a tax cost associated with the legal reorganization of the Consumer solutions business and the normalization of the as adjusted results to the Company's 36.5% effective tax rate.

For the year ended December 31, 2007, net sales increased 21% to $4.7 billion compared to $3.8 billion for the same period in the previous year. Net income was $28.1 million, or 38 cents per diluted share for the year ended December 31, 2007, compared to $106.0 million or $1.59 per diluted share for the year ended December 31, 2006. On a non-GAAP basis, as adjusted net income was $211.6 million, or $2.88 per diluted share for the year ended December 31, 2007, an increase of 13% per diluted share, compared to approximately $169.3 million, or $2.55 per diluted share, for the year ended December 31, 2006. The Pine Mountain, Pure Fishing and K2 Inc. businesses have been included in the results of operations from their dates of acquisition in September 2006, April 2007 and August 2007, respectively.

Net sales for the Outdoor Solutions group increased 88.5% to $1.70 billion, once again boosted by the inclusion of the K2 businesses. Year-ago sales were $901.0 million. Earnings more than doubled for the division to $210.1 million from $84.3 million last year, but operating earnings declined 31.7% to $43.8 million from $64.1 million last year as a result of the integration expenses.

Martin E. Franklin, chairman and CEO commented; "2007 was another excellent year for Jarden, with record revenue, as adjusted EPS growth of over 10% and cash flow from operations up nearly 30% on a year over year basis. The year was filled with significant macro economic challenges, which ranged from continuing material cost inflation to nervous retailers reducing inventory levels in the face of actual or perceived consumer weakness. Our performance in this environment highlights the strength of our market leading brands and underscores the defensible nature of our core categories. Jarden's diversity, whether by geographic region or breadth of products and price points, continues to be a key driver in our successful strategy to mitigate risk and drive long term growth. Our global operating platform has enabled us to leverage our Fortune 500 size to maximize cost savings throughout the predominately niche markets we supply. As anticipated, the acquisition of K2 in August 2007 brought many opportunities to our Outdoor Solutions segment and should provide margin expansion and topline growth opportunities in 2008 and beyond."

Mr. Franklin continued; "We look forward to commenting in more detail on the operating outlook of our businesses in 2008 at our upcoming analyst and investor meeting on March 4, 2008. However, I can say now that despite the continuing macroeconomic challenges in 2008, we anticipate growing the topline organically and continuing to deliver a minimum of 10% as adjusted EPS growth, something we have done in each of the six years I have been Chairman and CEO of the Company. Tough economic times create the environment in which we can leverage our core operating expertise and meaningful brands to offer the consumer attractive options, whether in terms of value or functionality. We will continue to focus on, and make investments in, new and innovative products to leverage the return on our strong portfolio of brands. We look forward to continuing the momentum of another record breaking year of financial performance into the current year."