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K-Swiss Reports Fourth Quarter Results

Additional Information about the Proposed Merger and Where to Find It

In connection with the proposed merger, K•Swiss plans to file with the Securities and Exchange Commission (the “SEC”) and furnish to its stockholders a proxy statement. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF K•SWISS INC. ARE URGED TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND RELATED MATTERS. Stockholders will be able to obtain free copies of the proxy statement and other documents filed with the SEC by K•Swiss through the website maintained by the SEC at, at the K•Swiss’ website at and from K•Swiss by directing a written request to K•Swiss, 31248 Oak Crest Drive, Westlake Village, CA 91361, Attention: Investor Relations.

K•Swiss and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of K•Swiss in connection with the proposed merger. Information about the interests of these executive officers and directors in the transaction described herein will be included in the proxy statement described above. Additional information regarding these directors and executive officers is also included in the Company’s Form 10-K, which is currently on file with the SEC. This document is available free of charge at the SEC’s website at and from K•Swiss by contacting Investor Relations at the address set forth above.

About K•Swiss

Founded more than forty years ago in Van Nuys, California, K•Swiss introduced the first all-leather tennis shoe, the K•Swiss “Classic” in 1966. Since its inception, K•Swiss has rooted itself in California Sport with an aim to be the most inspiring and innovative sports brand in the market. Today the Company offers performance and lifestyle footwear and apparel for several categories under its California Sports umbrella including Tennis Heritage, California Fit (Running, Triathlon and Fitness) and California Youth. K•Swiss also designs, develops and markets footwear under the Palladium brand. For more information about K•Swiss, visit

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 about the expected timing for closing of the merger. These statements are based on the current beliefs and expectations of K•Swiss’ management and are subject to known and unknown risks and uncertainties, including, but not limited to: (i) K•Swiss may be unable to obtain stockholder approval as required for the merger; (ii) conditions to the closing of the merger may not be satisfied or waived; (iii) the merger may involve unexpected costs, liabilities or delays; (iv) the outcome of any legal proceeding relating to the merger; (v) the ability and timing to obtain required regulatory approvals; (vi) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; and (vii) other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all. A complete description of these factors, as well as others which could affect the Company's business is set forth in the Company's periodic filings, including its Form 10-K for the year ended December 31, 2012, which is currently on file with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. K•Swiss undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
K•Swiss Inc. Consolidated Statements of Loss
(In thousands, except loss per share data)
Three Months Ended Year Ended
December 31, December 31,
2012 2011 2012 2011
Revenues $ 41,230 $ 50,163 $ 222,851 $ 268,357
Cost of goods sold   27,949     37,322     145,726     175,735  
Gross profit 13,281 12,841 77,125 92,622
Selling, general and administrative expenses 25,864 33,006 107,895 153,626
Impairment of goodwill   -     2,986     -     2,986  
Operating loss (12,583 ) (23,151 ) (30,770 ) (63,990 )
Other income - - - 3,000
Interest (expense)/income, net   (750 )   124     (812 )   219  
Loss before income taxes and discontinued operations (13,333 ) (23,027 ) (31,582 ) (60,771 )
Income tax expense   1,183     1,847     3,197     3,751  
Loss from continuing operations (14,516 ) (24,874 ) (34,779 ) (64,522 )
Loss from discontinued operations, less applicable income tax   -     (311 )   -     (5,949 )
Net loss $ (14,516 ) $ (25,185 ) $ (34,779 ) $ (70,471 )
Basic loss per share $ (0.41 ) $ (0.71 ) $ (0.98 ) $ (1.98 )
Diluted loss per share $ (0.41 ) $ (0.71 ) $ (0.98 ) $ (1.98 )
Weighted average number of shares outstanding
Basic 35,607 35,599 35,603 35,510
Diluted 35,607 35,599 35,603 35,510
K•Swiss Inc. Condensed Balance Sheets
(In thousands)
December 31,
2012 2011
Cash and cash equivalents $ 42,711 $ 28,701
Restricted cash and cash equivalents and restricted investments available for sale 200 22,602
Investments available for sale - 2,057
Accounts receivable, net 25,740 31,449
Inventories, net 69,343 90,380
Prepaid expenses and other current assets 2,934 4,927
Income taxes receivable   -     770  
Total current assets 140,928 180,886
Intangible assets 11,562 11,482
Deferred income taxes 2,308 2,914
Other   4,523     4,736  
Total other assets   18,393     19,132  
$ 176,723   $ 219,611  
Bank lines of credit $ 998 $ 9,716
Current portion of long-term debt 152 250
Current portion of long-term capital leases 103 -
Trade accounts payable 20,420 18,101
Accrued income taxes payable 246 372
Current portion of contingent purchase price 2,644 -
Accrued liabilities   11,640     13,500  
Total current liabilities 36,203 41,939
Long-term debt - 148
Long-term capital leases 190 -
Contingent purchase price - 3,739
Other liabilities   8,716     7,816  
Total other liabilities 8,906 11,703
STOCKHOLDERS' EQUITY   131,614     165,969  
$ 176,723   $ 219,611  

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