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Today's news...5/13/05

MAY 13, 2005 -- Pacific Sunwear Sales Up 14%; EPS Up 21%

Pacific Sunwear's 1Q05 net profit increased 17.6% to $17.6 million. EPS increased 21.1% to 23¢ compared to 19¢ in 1Q04. Total sales were $280.0 million, an increase of 14.1%. Same-store sales increased 3.0%. In contrast to previous reports, the company did not detail comp-store results by BU.

"I am pleased with our first quarter results," commented Seth Johnson, CEO. "We achieved a strong earnings increase through tight management of our inventory and expenses. This quarter we also passed the 1,000-store milestone with the opening of 23 net new stores."

The company's board of directors has authorized the company to repurchase up to an additional $100 million of common stock in the open market from time to time as market conditions warrant. During FY04, under repurchase authorizations of $125 million, the company repurchased an aggregate of 5,264,200 shares at an average price of $20.80, for approximately $109.5 million. The company has approximately $15.5 million remaining under its previous stock repurchase program.

The Sportsman's Guide Plans Secondary Offering

The Sportsman's Guide has filed a registration statement with the SEC for a proposed public offering of 2,500,000 shares of its common stock. The number of shares of common stock that will be outstanding after the offering is based on 7,119,105 shares outstanding as of March 31 and excludes: 997,460 shares of common stock that are issuable on exercise of employee stock options that were outstanding as of March 31 at a weighted average exercise price of $8.36 per share; and 159,494 shares of common stock that are reserved for future grants of stock options.

The company intends to use the net proceeds from this offering to repay a $5.0 million term loan incurred in connection with the acquisition of The Golf Warehouse (the term loan matures on September 30, 2007 and currently bears interest at the lender's prime rate less 0.15 percentage points or a rate equal to LIBOR plus 2.5 percentage points), acquire or develop new businesses and provide working capital.

The company plans to grant the underwriters of the offering an option to purchase up to 375,000 additional shares to cover over-allotments. RBC Capital Markets and Roth Capital Partners are acting as managing underwriters of the proposed offering, with RBC Capital Markets acting as the sole bookrunner.

Yakima Sells WaterMark; Clark Promoted To CEO

Yakima, known for its vehicle racks for boats, bikes, and wintersports gear, and a full line of cargo boxes, began its first day as Yakima Products, based in Beaverton, OR. The renaming is the result of the holding company that owns Yakima (Arcapita) selling the WaterMark boat division to Confluence Holdings Corp. Though Yakima will now focus its energies completely on the Yakima business, the company will use the existing Watermark trade name through a transition period ending August 31, 2005 to facilitate the handoff of essential business functions to Confluence. Jim Clark, formerly CEO of WaterMark, will assume the title of CEO of Yakima Products, effective immediately.

Yakima recently hired three executives who bring more than 50 years of industry and design experience to the company: Amy Buckalter, SVP/global sales and marketing, Steve Rodden, VP/product development, and Chris Bogue, director of sales for the western region. Veteran sales director Doug Ragan will continue to manage sales in the eastern region. Yakima also recently hired two other senior executives in finance and human resources, which rounds out the leadership team.

A judge has ruled that Sears Holdings can evict Footstar leased shoe departments in 30 Kmarts that are being rebranded to Sears Essentials. Footstar will continue to operate in Kmart doors.

Former Nike president and advisor to President Kennedy Dick Donohue may be disbarred. This follows allegations that he and two other lawyers set up a sting to discredit a judge overseeing a billion-dollar lawsuit over a supermarket chain. The former president of the Massachusetts Bar Association denies the charge.


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Holding companies
Sporting goods industry
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RBC Capital Markets
Yakima Products
Footstar Inc.
Golf Warehouse

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Seth Johnson
Jim Clark
Steve Rodden
Doug Ragan

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