This summary is based on the first quarter fiscal 2008 earnings call conducted by K-Swiss Inc. (KSWS: chart) on April 29, 2008.

Management:

Chairman of the Board and President: Steven Nichols
CFO: George Powlick

Key Investors Issues

- EPS were 20 cents per share compared to 51 cents per share last year.
- Profit fell 60% to $7.1 million from $18 million in the year-quarter quarter.
- Sales declined 16 % to $102.9 million from $122.6 million last year.

First Quarter Highlights

Revenues were towards the high end of range at $103 million, which represented 16% decrease from the prior year quarter and a 19% decrease in the volume of footwear sold.

- At-once business was 7.6%, which is inline with the 0% to 10% anticipated and compares with 10% a year ago.
- Earnings were up the lower end of projected 18 cents per share to 28 cents per share this year principally due to lower gross margin and forecast.

For the K-Swiss brands, the overall, the average wholesale price per pair increased to $28.65 compared with $27.63 in the prior year period.

- The volume of footwear was sold 3.3 million pairs compared with 4.2 million pairs in the first quarter of 2007.
- Overall gross profit margin as a percentage of revenues was 46.6% compared with 47% in the prior year period.
- SG&A measured as a percentage of revenues was 41.4% compared with 30.1% a year ago, which was lower than projected for the quarter.

- Operating margin was 5.2% compared with 16.9% from the prior-year period. Income tax rate was 2.4% due to geographic mix of sales and earnings.
- Balance sheet at March 31, 2008, remained strong with working capital reaching $356.3 million compared with $336.8 million a year ago.
- Accounts receivable were $53.5 million or 47 days outstanding compared with 44 days the previous year.
- Inventories were up 2% compared with March 31, 2007, and the company ended the quarter with approximately $274 million or $7.90 per share in cash on the balance sheet.

The slowdown in international business materialized and revenues were up 2%, yet backlog was down 3% at March 31st, 2008.

- Europe sales were down 1% with a 2% decrease in backlog. Europe accounted for 40% of worldwide revenues, up from 34% a year ago.
- Sales in the Asian region were up 31%, and the company posted 5% increase in backlog. Asia is the third largest region, accounting for 15% of worldwide revenues compared with 9% a year ago.

- The largest customer continues to be Foot Locker. Sales for the Foot Locker group were 9% of worldwide sales compared with 14% a year ago. Sales for Foot Locker were down 46%, and sales for all others were down 11%.
- Foot Locker represented approximately 8% of backlog compared with 15% a year ago, a 58% decrease in the total backlog, while the worldwide backlog with all other customers is down 20%.

- Royal Elastics operated at essentially breakeven on a per share basis for the quarter compared with a loss of 2 cents per share a year ago. The company expects that the investment in Royal Elastics will continue in 2008 with a net loss per share now expected to be approximately 6 cents per share.
- The company repurchased 149,456 shares of Class A common stock leaving the company with approximately 3.911 million shares in current authorization. The company continues to explore options for allocating capital to ensure the best long-term returns for shareholders. Stock repurchase represents one of these options.

The first quarter results were inline with expected and budgeted.

Worldwide revenues and backlog were down overall with domestic business experiencing considerable softness and the international business up in revenues and down in backlog.

- Performance was 19%, sports style 75% and other 6%.
- Performance revenues were up 30%, when compared with the prior year period. This category includes all genders of tennis, running, free running and training.
- Sports style revenues were down 25%, when compared with the prior year period. This category includes all genders of nonperformance footwear. The biggest seller in sports style was Classic was sold 264,000 pair was down 30% from the prior year period, Lozan II with 215,000 pair, and the Gowmet Low Canvas with 126,000 pair.

- Other revenues were up 12%, when compared with the prior year period. This category includes Apparel and Royal Elastics.
- New global brand positioning for K-Swiss was launched. This new multimedia campaign utilizes television print, outdoor, online and in-store and has a tag line ""Keep It Pure"". The campaign features Anna Kournikova, Tommy Haas, Alona Bondarenko, Chris Lieto, and also Sebastien Foucan.
- In March the company opened the first K-Swiss pop-up retail store in Santa Monica in the Promenade.

Second Quarter 2008 Outlook