Brass Eagle 4Q Net Down 55.3 Percent

Blaming the economy and Kmart Corp., Brass Eagle Inc. of Bentonville, a manufacturer of paintball guns and other extreme sports products, reported on Feb. 26 that net income for its fourth quarter dropped 55.3 percent.

Brass Eagle said net income for the quarter ended Dec. 31 was $1.9 million, or 25 cents per share, compared with $4.3 million, or 57 cents per share, for the fourth quarter in the previous year.

Brass Eagle said it incurred a one-time charge of about 9 cents per share related to its exposure to Kmart, which filed for bankruptcy on Jan. 22. That amounts to about $643,062 when multiplied by 7,145,123 shares outstanding. Brass Eagle warned investors about the charge through a press release on Feb. 5.

However, net sales increased 7.5 percent to $34.2 million from $31.8 million in the year-earlier quarter. Brass Eagle reported the sales number on Feb. 5 also.

For the fiscal year ended Dec. 31, net sales increased 5.9 percent to a record $91.9 million, compared with $86.8 million for the previous fiscal year.

Net income for the year was $3.9 million, or 52 cents per diluted share, compared to $8.7 million, or $1.15 per diluted share, for the year ended Dec. 31, 2000. Excluding the Kmart-related charge, Brass Eagle would have earned 61 cents per diluted share for the most recent fiscal year.

“Although we were disappointed with our bottom-line results, our ability to achieve record revenues in a year marked by economic uncertainty underscores the ongoing strength of our brand and validity of our strategy,” Lynn Scott, president and CEO of Brass Eagle, said in a press release. “Paintball continued to expand during the year, and we continued to further our leadership position in the industry through innovative product introductions, unique marketing initiatives and expanded distribution.”

For the 2002 fiscal year, the company expects sales to range from $96 million to $100 million and diluted earnings per share to range between 85 cents and 95 cents.

On Feb. 5, Brass Eagle said it had resumed shipping products to Kmart and is negotiating a new vendor agreement with the retailer. Brass Eagle said it foresees no future earnings problems because of its relationship with Kmart.