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K2's Purchase of Ride Will Build Snowboard Line

July 27, 1999|RYAN CORMIER | TIMES STAFF WRITER

K2 Inc.'s plan to purchase snowboard maker Ride Inc. for $14.3 million would help solidify the Los Angeles-based company as a leading manufacturer of snowboards, expanding its market share as the sport's popularity continues to grow.

The deal for Preston, Wash.-based Ride, which includes $5 million in long-term debt, follows K2's acquisition in March of Morrow Snowboards Inc. for an undisclosed amount.

"K2 has now picked off two of the stronger brands in the industry," said Merrill Lynch analyst Hayley Kissel. "This should ultimately help them."

The deal, announced Friday, would allow Los Angeles-based K2 to double its sales in the $400-million snowboard industry. Last year, Ride had $45 million in revenue. K2, whose products range from in-line skates to mountain bikes to skis, posted revenue of about $600 million, $55 million of it from snowboards.

"It puts our snowboard business in a solid No. 2 position behind Burton [Snowboards of Vermont] and helps round out our distribution," said John Rangel, K2's senior vice president of finance. "We are very anxious to build off what Ride has created."

K2's stock has declined 68% since its high of $32.50 in August 1997. On Monday, shares closed at $10.19, down 31 cents on the New York Stock Exchange.

Paul Hill, president of Wind n' Wave, a leading U.S. seller of snowboards based in West Los Angeles, said the Ride brand name has gained popularity in recent years after a slump.

"Ride was real popular since its inception in 1992 but then started to taper off," he said. "In 1997 they started coming back and now have more appeal than K2 for . . . the performance-oriented rider."

Separately, K2 said second-quarter income from continuing operations fell 4% to $7.1 million, or 43 cents a share, compared with $7.4 million, or 45 cents, a year ago. Sales edged up to $158.3 million from $156.6 million.

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