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Outdoor financials: Sport Chalet initiates 4-for-1 stock split, plus Cannondale buys Sugoi, Quiksilver/Rossignol, Johnson Outdoors, Timberland, Saucony/Stride Rite, Outdoor Channel, Pearl Izumi, Wolverine, Sportsman's Guide, West Marine

Sport Chalet initiates 4-for-1 stock split and reports year-end results, Quiksilver readies for Rossignol acquisition, Quiksilver readies for Rossignol acquisition, Johnson Outdoors still taking heat from investment group, Timberland to close Puerto Rico factory, Potential Saucony parent Stride Rite Q2 profit down, Outdoor Channel makes stock offering, Pearl Izumi sale official, Wolverine declares quarterly dividend, Sportsman's Guide makes the grade, West Marine Q2 hit by bad weather

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Sport Chalet initiates 4-for-1 stock split, reports year-end results
In a move to transition control from its founder and principal stockholder to the company’s management, Sport Chalet (Nasdaq: SPCH) initiated a 4-for-1 stock split. The company said the shift will also increase the financial flexibility for the company and its shareholders.

The company said founder Norbert Olberz will transfer a portion of his ownership to CEO Craig Levra and CFO Howard Kaminsky. Olberz founded the company in 1959, and currently holds a 65.2 percent stake in the company with 4.4 million shares.

After the reverses split, Sport Chalet will establish two classes of common stock. Each share would be reclassified into a new share of class B common stock, and the company would issue a nontaxable stock dividend of seven shares of class A common stock for each outstanding class B common share.

The transaction will also allow the company to potentially issue additional common stock in the future for corporate purposes, including financing acquisitions and employee compensation.

In other news, Sport Chalet also announced its fourth-quarter and year-end financial results.

For its fiscal year ended March 31, 2005, Sport Chalet’s sales increased 17.0 percent, from $264.2 million last year to $309.1 million this year. The retailer said the increase was the result of opening five new stores this year and three last year, as well as a same-store sales increase of 5.7 percent. Net income increased 32.9 percent from $4.6 million, or $0.66 per diluted share last year, to $6.2 million, or $0.88 per diluted share this year.

For the fourth quarter, sales increased 14.1 percent, from $69.4 million last year to $79.2 million this year — also attributable to the new store openings and a same-store sales increase of 4.4 percent. Its net income shot up 118.8 percent, from $330,000, or $0.05 per diluted share, to $722,000, or $0.10 per diluted share, this year.

Shares rose 20 cents to close at $16.50 on the Nasdaq.

Cannondale buys Sugoi
On July 7, Cannondale Bicycle Corp. broke the news it would be acquiring Sugoi Performance Apparel, makers of performance apparel for cyclists, runners and triathletes out of Vancouver, Canada. Both companies are privately held and the terms of the agreement were not disclosed.

The acquisition significantly expands the growing apparel and accessories offering under the Cannondale umbrella, according to a statement released by the company. The acquisition strengthens its presence in the cycling and triathlon market in addition to adding Sugoi’s strong presence in the running segment. Cannondale said it will capitalize on the significant heritage and strong consumer base of both brands in order to offer distribution of all products on a global basis.

“This is a natural extension for us to join forces with a company that has a similarly rich culture and a heritage of proven innovation and performance,” said Matt Mannelly, president of Cannondale. “It is consistent with our mission of offering innovative products for consumers who want to improve their performance and enhance their athletic experience.”

Both companies come from humble beginnings — Sugoi started in a basement in 1987, while Cannondale started its run in a loft above a pickle factory in 1971. Since that time, Cannondale, headquartered in Bethel, Conn., has grown to include operations in Europe, Japan and Australia, and distributes worldwide. Sugoi has extensive distribution in North America, Europe and Asia.

Quiksilver readies for Rossignol acquisition
Quiksilver (NYSE: ZQK) has been busy preparing for the Rossignol Group to enter the fold at the end of July, reshuffling staff and offering $350 million aggregate principal amount of senior notes.

It announced the promotion of Marty Samuels, formerly president of Quiksilver Men’s, America, to president of Quiksilver Americas, and of Pierre Agnes, formerly managing director, Quiksilver Europe, as president of Quiksilver Europe. Samuels and Agnes will be responsible for overseeing all aspects of Quiksilver’s operations, finance, sales and marketing organizations in their respective territories. In these newly created positions, Samuels and Agnes join Clive Fitts, president of Quiksilver Asia Pacific, to form the senior global management team, which reports to Bernard Mariette, president of Quiksilver, Inc.

“Streamlining our management structure will give us several substantial benefits,” said Mariette. “Most importantly, it creates a tight group of like-minded managers who understand the global vision toward which we are working. This new structure will also enable our executive management team to focus more intently on the proper integration of the Rossignol Group into our corporate structure and on other global projects that will leverage each of our operating divisions to create synergy, economies of scale, and to maximize our opportunities for growth across the entire organization.”

Quiksilver also plans to offer institutional buyers $350 million aggregate principal amount of senior notes due in 2015 in a private placement. It said it intends to use the net proceeds of the offering along with borrowings under its credit facility to finance, in part, its acquisition of Rossignol and to repay certain outstanding debts.

Despite the optimism at the company, Prudential Equity Group cut Quiksilver to neutral weight from overweight and lowered its price target to $17 from $18. The broker said the acquisition of Rossignol will likely be dilutive to Quiksilver’s growth rate and operating margin. In addition, Prudential said that given the seasonality in the business and the added interest expense the company is taking on to finance the acquisition, it thinks the transaction may be dilutive to earnings per share in the first two quarters of fiscal 2006.

In other news, Quiksilver purchased the Canadian distributor of DC Shoes for approximately $7 million in cash. Under terms of the agreement, Quiksilver will acquire Centre Skateboard Distribution, Ltd., which holds the rights to distribute DC Shoes in Canada, as well as the various assets associated with that business. CSD Ltd. will also support its Quiksilver and Roxy operation in Canada.

Johnson Outdoors still taking heat from investment group
In another effort to force Johnson Outdoors’ hand, Dolphin Limited Partnership I, L.P. submitted a proxy proposal and will be commencing action to obtain books and records. Dolphin is a private investment partnership that holds 4 percent, or 330,000 shares, of the Class A common stock of Johnson Outdoors (Nasdaq: JOUT) — making it the fourth largest shareholder.

Dolphin has made two attempts to buy 1.5 million Class B common shares with little success. It made two separate offers of $21.10 per share and $21.75 per share, which were reportedly dismissed by Johnson Outdoors without explanation.

Dolphin is trying to rally other Johnson Outdoors shareholders and recently sent them a lengthy letter. Among the issues brought up by Donald Netter, Dolphin’s senior managing director, in the letter were: introducing a shareholder proposal at Johnson Outdoors’ annual meeting requesting the board to take steps necessary to provide for cumulative voting for the Class A common stock in accordance with Wisconsin law; pursuing a document request under Wisconsin law to assist it in determining whether the company’s board has and is effectively focused on generating shareholder value; and pressing for a meeting with the company’s chairwoman and chief executive officer to review the company’s direction and strategic priorities.

“Unfortunately, our efforts to obtain information and to obtain an audience with the CEO have been met with inexplicable resistance and delay,” Netter said in the letter, adding, “We do not believe that the board of directors of the company has earned or is entitled to our confidence or support.”

Dolphin said it intends to cast its votes for the cumulative voting proposal and to withhold its votes for Johnson Outdoors’ incumbent nominees for the Class A directors. It is urging all unaffiliated holders of the stock to do the same. If Dolphin’s plan works, the 54 percent of unaffiliated Class A shareholders would have the opportunity to elect a representative to the board.

Timberland to close Puerto Rico factory

In order to cut costs, Timberland (NYSE: TBL) is closing a factory in Isabela, Puerto Rico, and expanding work at a Dominican Republic-based facility.

He company said it will incur one-time, pre-tax restructuring costs of approximately $2.5 million in the third quarter of 2005, $3 million in the fourth quarter of 2005 and $0.5 million in the first quarter of 2006.

Timberland, which expects to layoff 316 workers — almost 6 percent of its workforce — forecasts the consolidation will achieve cost savings of about $4 million in 2006, and annual cost savings of about $5 million in subsequent years. It said it will assist the laid-off employees during a period of transition.

The factory will close at the end of 2005 when a tax benefit from its Puerto Rico operations, worth about $4 million a year, expires.

Potential Saucony parent Stride Rite Q2 profit down

Footwear maker Stride Rite Corp. — which is in the process of buying Saucony — said that profit slipped 1 percent in its second fiscal quarter as sales of its Keds and Tommy Hilfiger brands slumped. However, the company backed its year-end outlook for earnings growth of at least 5 percent.

For the second quarter, Stride Rite (NYSE: SRR) earned $11.8 million, down from $11.9 million a year ago. Per-share earnings rose to 32 cents from 30 cents because of a decrease in the number of outstanding shares, it said. Revenue slid 3 percent to $159.6 million from $165 million. The company said sales of the casual Keds brand fell 15 percent and sales of Tommy Hilfiger-branded shoes declined 14 percent compared with the second quarter of 2004. These declines were partly offset by a 17 percent jump in sales of the Sperry Top-Sider brand and a 12 percent increase in international revenue.

David Chamberlain, Stride Rite’s chairman and CEO, said the company’s brands posted “solid success” in premium department and specialty stores, though mid-tier retail sales were slower than expected. He attributed the drop to higher prices.

Stride Rite said it continues to expect year-end earnings to increase between 5 percent and 10 percent as sales grow between 3 percent and 5 percent.

In June, Stride Rite announced it would buy Saucony (NasdaqNM: SCNYB) for $170 million in cash in order to double international sales and enter into specialty markets. The deal is expected to close this summer and add to Stride Rite earnings in 2006, although at least one Saucony shareholder, Fairview Capital Investment Management LLC, has said it will vote against the merger. Fairview, which is based in San Francisco, holds about 2.6 percent of Saucony stock.

Outdoor Channel makes stock offering
Outdoor Channel Holdings (Nasdaq: OUTD) is offering 5.3 million shares of common stock for sell at $13.50 per share before underwriting discounts and commissions. Outdoor Channel Holdings is selling 3.5 million shares and existing stockholders are selling the other 1.8 million shares. The selling stockholders have also granted the underwriters a 30-day option to purchase 795,000 additional shares of stock to cover over-allotments, if any. Bear, Stearns & Co. is acting as the lead managing underwriter of the offering. The other managing underwriters are A.G. Edwards and Jefferies & Company, Inc. Coincidentally, Bear Stearns initiated coverage on the company, anointing it an “outperform” designation on July 8.

Pearl Izumi sale official
On July 8, Nautilus (NYSE: NLS) said that it has closed its previously announced acquisition of Pearl Izumi USA. The purchase price was $68.6 million plus $5.4 million of assumed debt. For more details on the sale, see SNEWS® story, June 20, 2005, “Nautilus calls Pearl Izumi acquisition ‘pure-play in fitness'”

Wolverine declares quarterly dividend
Directors of Wolverine World Wide (NYSE: WWW) have declared a quarterly cash dividend of $.065 per share of common stock. The dividend is payable on Nov. 1, 2005, to stockholders of record on Oct. 3, 2005. The dividend is equal to the last quarterly dividend and represents a $0.26 per share annual dividend.

Sportsman’s Guide makes the grade
The Sportsman’s Guide, Inc. (Nasdaq: SGDE) has been popping up on a lot of rankings lists. Recently, the Company was named to the new Russell Microcap Index when Russell Investment Group reconstituted its family of U.S. indexes at the end of June. It was named to BusinessWeek’s annual “Hot Growth” list of the nation’s 100 best small companies, ranking 49th, in late May. In April, the company ranked 76th on Internet Retailer’s Top 400 as measured by Internet sales. In addition, it ranked No. 4 in the “sporting goods” category when ranked by the same measure.

West Marine Q2 hit by bad weather
West Marine (Nasdaq:WMAR) reported that net sales rose 0.4 percent in the second quarter to $253.5 million from $252.6 million a year ago. Comparable store sales fell 3.5 percent from 4.6 percent last year because of poor weather in April and May, it said. Sales began to pick up in June as the weather improved. The retailer may have to cut its earnings per share forecast for 2005 by 15 cents per share if it does not see a rebound early in the third quarter, it said. Analysts, on average, said they expected second-quarter revenue of $263.1 million.

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