<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): OCTOBER 7, 1999
K2 INC.
(exact name of Registrant as specified in its charter)
DELAWARE 1-4290 95-2077125
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
4900 SOUTH EASTERN AVENUE, LOS ANGELES, CA 90040
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (323) 724-2800
N/A
(Former name or former address, if changed since last report)
<PAGE>
This Amendment No. 1 amends and supplements the Current Report on Form 8-K
filed by K2 Inc. (the "Company" or "Registrant") on October 22, 1999. Item 7
is hereby amended as follows to include the filing of financial statements
and pro forma financial information required by Item 7, which information was
not practicably available at the time of filing.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
The following financial statements of Ride, Inc. ("Ride") are
incorporated by reference and included herein:
(i) Audited Consolidated Balance Sheet as of June 30, 1998
and Audited Consolidated Statements of Operations and
Cash Flow for the fiscal periods ended December 31, 1997
and June 30, 1998, filed on the Company's Registration
Statement on Form S-4 (Registration No. 333-84791) on
August 9, 1999 and incorporated herein by reference.
(ii) Notes to Consolidated Financial Statements, filed on
pages 112 through 131 of the Company's Registration
Statement on Form S-4 (Registration No. 333-84791) on
August 9, 1999 and incorporated herein by reference.
(iii) Report of Independent Auditors, filed on page 107 of the
Company's Registration Statement on Form S-4
(Registration No. 333-84791) on August 9, 1999 and
incorporated herein by reference.
(iv) Audited Consolidated Balance Sheet and Audited
Consolidated Statements of Operations and Cash Flow as
of and for the fiscal year ended June 30, 1999, filed on
Ride's Annual Report on Form 10-K on September 28, 1999
and incorporated herein by reference.
(v) Notes to Consolidated Financial Statements, filed on pages
34 through 52 of Ride's Annual Report on Form 10-K on
September 28, 1999 and incorporated herein by reference.
(vi) Report of Independent Auditors, filed on page 25 on
Ride's Annual Report of Form 10-K on September 28, 1999
and incorporated herein by reference.
(b) Pro Forma Financial Information.
The following Pro Forma financial statements of the Company
and Ride, Inc. ("Ride") are incorporated by reference and
included herein:
(1) Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1998, filed on
page 94 of the Company's Registration Statement on Form S-4
(Registration No. 333-84791) on August 9, 1999 and
incorporated herein by reference.
The following unaudited Pro Forma financial statements of the
Company and Ride are included herein:
2
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Unaudited Pro Forma Financial Data
The following tables present summary historical information for the Company
and Ride derived from financial statements. The Company's merger with Ride
is accounted for using the purchase method of accounting and, accordingly the
assets acquired and liabilities assumed are recorded at their fair market
values as of the date of the acquisition, which do not differ significantly
from historical costs. The excess of the purchase price over the fair value
of the assets acquired and liabilities assumed is recorded as goodwill.
The unaudited pro forma combined condensed balance sheet as of September 30,
1999 gives effect to the merger of the Company and Ride as of that date. As
a result, it reflects the issuance of the Company shares of common stock in
exchange for shares of Ride common stock as discussed in the merger
agreement. The unaudited pro forma combined condensed income statement for
the nine months ended September 30, 1999 presents the results for the Company
and Ride as if the merger has occurred on January 1, 1999 and reflects the
issuance of shares of Company common stock in exchange for shares of Ride
common stock as discussed in the merger agreement.
This unaudited pro forma financial information presented is based on the
assumptions and adjustments described in the accompanying notes. The
unaudited pro forma statement of operations does not purport to represent
what the Company's results of operations actually would have been if the
events described above had occurred as of the dates indicated or what such
results would be for any future periods. In addition, the unaudited pro
forma combined condensed financial information does not reflect certain cost
savings potentially realizable through combining the operations of the
companies and implementing the Company's management practices.
3
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K2 INC. AND RIDE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------- PRO FORMA
K2 INC. RIDE, INC. ADJUSTMENTS COMBINED
------------ ------------ --------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 9,855 $ 332 $ 10,187
Accounts receivable, net 115,054 12,487 127,541
Inventories, net 116,190 9,636 175,826
Income taxes receivable 10,130 48 10,178
Prepaid expenses and other current assets 6,012 230 6,242
----------- ---------- -------------- -----------
Total current assets 307,241 22,732 329,973
Property, plant and equipment, net 71,624 3,316 74,940
Intangibles, principally goodwill, net 20,244 6,194 $ (6,194) (1) 38,774
18,530 (1)
Net assets of discontinued operations 25,092 25,092
Other Assets 6,253 2,235 8,488
----------- ---------- -------------- -----------
Total Assets $ 430,454 $ 34,476 $ 12,336 $ 477,266
----------- ---------- -------------- -----------
----------- ---------- -------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Bank loans $ 42,114 $ 15,758 $ 57,872
Accounts payable 21,212 9,036 30,248
Accrued payroll and related expenses 17,259 884 18,143
Other accruals 26,356 7,402 $ 800 (1) 34,558
Current portion of long-term debt 4,444 4,444
----------- ---------- -------------- -----------
Total current liabilities 111,385 33,081 800 145,266
Long-term debt 93,724 93,724
Deferred taxes 13,014 861 13,875
Shareholders' equity
Preferred stock 500 500 (1)
Common stock 17,191 44,128 (44,128) (1) 18,643
1,452 (1)
Additional paid-in capital 132,488 10,619 (1) 143,107
Retained earnings (deficit) 79,992 (43,931) 43,931 (1) 79,992
Employee Stock Ownership Plan and
stock option loans (1,976) (1,976)
Treasury shares (8,313) (8,313)
Accumulated other comprehensive income (loss) (7,051) (162) 162 (1) (7,051)
----------- ---------- -------------- -----------
Total shareholders' equity 212,331 535 11,536 224,401
Total liabilities and shareholders' equity $ 430,454 $ 34,476 $ 12,336 $ 477,266
----------- ---------- -------------- -----------
</TABLE>
See Notes to Pro Forma Financial Data
4
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K2 INC. AND RIDE, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------- PRO FORMA
K2 INC. RIDE, INC. ADJUSTMENTS COMBINED
-------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $461,235 $13,264 $474,499
Cost of products sold 325,098 9,976 335,074
-------- ------- -------- --------
Gross profit 136,137 3,288 139,425
Selling, general and administrative
expenses 107,320 7,803 $ 463 (2) 115,586
-------- ------- -------- --------
Operating income (loss) 28,817 (4,515) (463) 23,839
Interest expense 9,005 327 9,332
Other income, net (106) (106)
-------- ------- -------- --------
Income (loss) from continuing operations
before provision for income taxes 19,918 (4,842) (463) 14,613
Provision for income taxes 6,375 17 (1,701)(3) 4,691
-------- ------- -------- --------
Income (loss) from continuing operations $ 13,543 $(4,859) $ 1,238 $ 9,922
-------- ------- -------- --------
-------- ------- -------- --------
Pro forma income from continuing
operations
Basic $ 0.82 $ 0.55
Diluted $ 0.82 $ 0.55
Basic shares outstanding 16,559 1,452 (1) 18,011
Diluted shares outstanding 16,559 1,452 (1) 18,011
</TABLE>
See Notes to Pro Forma Financial Data
5
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NOTES TO PRO FORMA FINANCIAL DATA
The following adjustments were recorded in the pro forma financial statements:
(1) Reflects adjustments to assets and liabilities assumed based on their
estimated fair market values under the purchase method of accounting.
The allocation of the aggregate purchase cost below is preliminary. The
final allocation of the purchase cost and the resulting effect on net
income may differ significantly from the pro forma amounts included
herein.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1999
------------------
(in thousands)
<S> <C>
Purchase price $12,071
Merger related expenses 800
-------
Aggregate merger cost 12,871
Add: Fair market value estimate of net liabilities
assumed (excluding historical goodwill) 5,659
-------
Excess of net liabilities assumed over cost (i.e. goodwill) $18,530
-------
</TABLE>
The purchase price was based on an $8.3125 per share price of the Company's
common stock at the time of the merger. The number of shares issued was based
on a $10.00 per share price for the Company's common stock, which represents
the floor price used in calculating the exchange ratio.
The adjustment to shareholders' equity is based on the pro forma
capitalization of the Company as follows:
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1999
------------------
(IN THOUSANDS)
<S> <C>
Ride, Inc. common shares outstanding 14,321
Conversion of Ride, Inc. preferred stock common equivalent 200
-------
Pro Forma Ride, Inc. common shares 14,521
Conversion ratio 0.10
-------
Shares of K2 Inc. common stock 1,452
Multipled by: stock price at closing 8.3125
-------
Value of K2 Inc. stock to be issued $12,071
Less: Ride shareholders' equity 535
-------
Net adjustment to shareholders' equity $11,536
-------
</TABLE>
6
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(2) Pro forma amortization of goodwill compared to the amortization of
goodwill included in Ride's historical financial statements is summarized
as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1999
------------------
(IN THOUSANDS)
<S> <C>
Cost in excess of net liabilities assumed
of business acquired $ 18,530
Amortization period in months x 9/240
---------
695
Less: Amortization recorded by Ride, Inc. (232)
---------
Increase amortization $ 463
---------
---------
</TABLE>
The above is based on preliminary fair values of the assets acquired and
liabilities assumed. The final allocation of the purchase price, the
amortization in years and the resulting effect on net income may differ
significantly from the pro forma amounts indicated herein.
(3) For the nine months ended September 30, 1999, a pro forma income tax
benefit was recorded due to losses by Ride to the extent of U.S. tax
expense recorded by the Company.
(c) Exhibits
The following exhibits are filed with this report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ------------
<S> <C>
23(a) Consent of Ernst & Young LLP, Independent Auditors
23(b) Consent of Grant Thornton LLP, Independent
Certified Public Accountants
</TABLE>
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 23, 1999 K2 INC.
By: /s/ RICHARD M. RODSTEIN
---------------------------
Richard M. Rodstein
President and Chief Executive Officer
Date: December 23, 1999 K2 INC.
By: /s/ JOHN J. RANGEL
----------------------
John J. Rangel
Senior Vice President - Finance
8
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EXHIBIT 23(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Current Report (Form
8-K/A) of K2 Inc. of our report on the financial statements of Ride, Inc.
dated September 11, 1998, included in the Proxy Statement of Ride, Inc. that
is made a part of the Registration Statement (Form S-4) and Prospectus of K2
Inc. for the registration of 1,519,574 shares of its common stock filed with
the Securities and Exchange Commission on August 9, 1999.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 dated October 14, 1988 and Form S-8 dated December 28,
1994) pertaining to the 1988 Incentive Stock Option Plan and the 1994
Incentive Stock Option Plan of K2 Inc. of our report dated September 18, 1998
with respect to the consolidated financial statements of Ride, Inc.
incorporated by reference in the Current Report on Form 8-K/A dated
December 22, 1999.
/s/ Ernst & Young LLP
Seattle, Washington
December 22, 1999
<PAGE>
[LETTERHEAD OF GRANT THORNTON]
EXHIBIT 23(b)
CONSENT OF GRANT THORNTON LLP, INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Current Report (Form
8-K/A) of K2 Inc. of our report on the financial statements of Ride, Inc.
dated September 27, 1999, included in the Proxy Statement of Ride, Inc., that
is made a part of the Registration Statement (Form S-4) and Prospectus of K2
Inc. for the registration of 1,519,574 shares of its common stock filed with
the Securities and Exchange Commission on August 9, 1999.
GRANT THORNTON LLP
/s/ GRANT THORNTON LLP
Seattle, Washington
December 22, 1999
