SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.   20549

______________________________________________________________________________
FORM 8-K


CURRENT REPORT

______________________________________________________________________________

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.


August 5, 2003

DATE OF REPORT (Date of earliest event reported)


BRASS EAGLE INC.
(Exact name of registrant as specified in its charter)

DELAWARE

0-23385

71-0578572

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification Number)



1201 SE 30TH Street, Bentonville, Arkansas   72712
(Address of principal executive offices)    (zip code)


(479) 464-8700
(Registrant's telephone number, including area code)


BRASS EAGLE INC.


ITEM 12.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 5, 2003, Brass Eagle Inc. issued a press release announcing Second Quarter Sales and Earnings. A copy of the press release is attached hereto as Exhibit 99 (i).

This Current Report on Form 8-K is intended to be made solely under Item 12 of Form 8-K, and none of the filing of the press release as Exhibit 99(i), the listing of the press release in the exhibit index, or any other information contained or incorporated by reference in this current Report on Form 8-K shall render this to be a filing under any item under Form 8-K other than Item 12 thereof.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

BRASS EAGLE INC.

 

 

DATE:    August 6, 2003

BY:  /s/ J. R. Brian Hanna

 

        J. R. Brian Hanna

 

Vice President - Finance and Chief Financial Officer and Treasurer

 

(on behalf of the Registrant and as the

 

Registrant's principal Financial and Accounting Officer)

EXHIBIT INDEX

EXHIBIT NO.

EXHIBIT

 

 

99 (i)

Press Release dated August 5, 2003, issued by Registrant


Exhibit 99 (i)

BRASS EAGLE INC.

Company Contact:

J. R. Brian Hanna

 

Brass Eagle Inc.

 

Chief Financial Officer

 

(479) 464-6630

 

 

For Immediate Release

Brass Eagle Inc. Announces Second Quarter Sales and Earnings

Bentonville, AR, August 5, 2003 - Brass Eagle Inc. (Nasdaq: XTRM), the worldwide leader in the manufacturing, marketing and distribution of paintball products, today announced reported results for the 2nd quarter ending June 30, 2003.

Brass Eagle reported net sales for the second quarter decreased 7.9% to $24.6 million versus $26.7 million for the same period last year. For the three months ended June 30, 2003 the Company reported a profit of $632,000 or $0.08 per diluted share, compared to a profit of $2.37 million or $0.31 per diluted share for the corresponding period in 2002.

For the first half of the year, net sales decreased 18.8% to $38.0 million from $46.8 million for the same period in 2002. Net income for the first half of the year decreased to $406,000 or $0.05 per diluted share from $3.46 million or $0.46 per diluted share for the same period in 2002.

The Company identified continued tight inventory controls at major retailers as a key reason for the second quarter income shortfall. In addition, the Company incurred increased expenses of approximately $500,000 related to new computer software implementation.

Brass Eagle continues to expect fiscal year 2003 sales to range from $98 million to $105 million. The Company expects fiscal 2003 diluted earnings per share of approximately $1.00 after the above mentioned expenses.

Lynn Scott, Brass Eagle President and CEO stated, "The soft retail environment, which prompted reductions in major retailers' inventories, caused lower than expected first quarter sales results. Although second quarter income was below our internal expectations, we are very encouraged by the strong demand for our products at retail."

"We continue to believe the basic business of Brass Eagle is sound and we remain the leader in a growing market with strong demographic trends at our back. We will continue to focus on growing our core business while simultaneously looking to diversify into complementary markets."

Brass Eagle is unique in providing a full line of paintball markers and accessory products from beginner through competition level. The Company is the dominant supplier of products for this rapidly growing sport and markets its products under the Brass Eagle, Viewloader, and JT USA brands.

Certain statements in this press release (including statements containing the words "expect," "will," "believe," "continue," "anticipate," "could," "intend" and similar words) may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Brass Eagle, its industry or others to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from Brass Eagle's expectations include the following: (1) Intensifying competition, including specifically the intensification of price competition, the entry of new competitors and the introduction of new products by new and existing competitors; (2) Failure to obtain new customers or retain existing customers; (3) Inability to carry out marketing, sales or other business plans and strategies; (4) Loss of key executives; (5) General economic and business conditions which are less favorable than expected; and (6) Unanticipated changes in industry trends.

BRASS EAGLE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)

 

 

JUNE 30,

DECEMBER 31,

 

 

        2003        

        2002        

 

 

(unaudited)

Assets

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$                230

$                365

 

Accounts receivable - less allowance

 

 

 

for doubtful accounts of $508 in 2003

 

 

 

and $2,175 in 2002

25,035

27,215

 

Inventories

19,508

19,095

 

Prepaid expenses and other current assets

907

834

 

Deferred taxes

                1,987

               2,598

 

      Total current assets

47,667

50,107

Property, plant and equipment, net

 

15,912

15,949

Other assets

 

 

      Other assets

754

579

      Goodwill

              32,284

              32,284

 

 

$             96,617

$            98,919

 

 

===========

===========

Liabilities and stockholders' equity

 

 

Current liabilities

 

 

 

 

Revolving credit facility

$              3,800

$              4,300

 

Accounts payable

8,312

4,755

 

Accrued expenses

4,285

7,336

 

Current maturities of long-term debt

                5,801

               6,207

 

      Total current liabilities

22,198

22,598

Long-term debt, less current maturities

5,600

8,400

Deferred income taxes

2,634

2,638

Other liabilities

 

814

936

Stockholders' equity

 

 

 

 

Common stock, $.01 par value, 10,000,000 shares

 

 

 

  authorized, 7,705,434 issued and 7,487,454

 

 

 

  outstanding in 2003; 7,461,511 issued and

 

 

 

  7,303,261 outstanding in 2002

77

75

 

Additional paid-in capital

27,262

26,405

 

Accumulated other comprehensive loss

(83)

(321)

 

Retained earnings

39,391

38,985

 

Treasury stock 158,250 shares at cost 2002, 217,980   shares at cost 2003


              (1,276)


               (797)

 

 

              65,371

              64,347

 

 

$             96,617

$            98,919

 

 

===========

===========


BRASS EAGLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except share and per share data)

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

 

                JUNE 30,              

 

               JUNE 30,            

 

       2003       

      2002     

 

      2003      

     2002     

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

Net sales

$          24,627

$        26,694

 

$         38,039

$       46,824

Cost of sales

            16,706

         16,493

 

          24,965

        28,889

Gross profit

7,921

10,201

 

13,074

17,935

 

 

 

 

 

 

Operating expenses

             6,626

           6,070

 

          11,855

        11,719

Operating income

1,295

4,131

 

1,219

6,216

 

 

 

 

 

 

Minority interest

0

18

 

0

69

Interest income (expense)

             (278)

           (354)

 

            (567)

          (735)

 

             (278)

           (336)

 

            (567)

          (666)

Income before income taxes

1,017

3,795

 

652

5,550

 

 

 

 

 

 

Provision for income taxes

               385

           1,426

 

              246

          2,092

 

 

 

 

 

 

Net income

$              632

$         2,369

 

$            406

$        3,458

 

==========

=========

 

=========

========

Net income per share:

 

 

 

 

 

     Basic

$             0.09

$           0.33

 

$            0.06

$          0.48

     Diluted

0.08

0.31

 

0.05

0.46

 

 

 

 

 

 

Weighted average shares outstanding:

     Basic

7,344,004

7,150,744

 

7,325,835

7,149,674

     Diluted

7,578,356

7,541,281

 

7,580,530

7,536,606