Geiger Counters

So, we are holding Blades back, we're letting Tubes run, but Blades is chomping at the bit . And it'll be very interesting by 2011 will be Tubes, by microwave radiation detector 2012 Blades could over take it and wouldn't that be nice. So we've got kind of stuff going that we spent three years developing it, and had the guts to put our money where our mouth radiation detector watch is once we had the product done the way it was. So that's how we're looking at all of this stuff. And our biggest hope is as Tubes and Blades make our brand cool and relevant, that the basic product that K-Swiss has always been known for will become more viableso the Blades product can really start to drive your futures orders in the volume channel as we get into 2011 and into 2012?

Actually, initially Tubes was Monitor 4 embraced by the volume channel and I'm saying the top of the volume channel, people like Famous Footwear and JCPenney. They DX-1 had good success with Tubes, we had trouble fighting our way into the mall retailers with Tubes, the exception being Dick's. Dick's joined Tubes very early on, and we did a lot of work with them. And I think they're happy it's been successful, and future orders from Dick's are up dramatically for the following seasons and again it's Tubes and Tubes and Tubes.Okay great. And then I just wondered if you can touch a little bit on sourcing costs, that's something that everyone seems to be focused on Geiger Counters what you're seeing there. And if it means you're going to need to increase prices or if it's really not something that's going to materially impact where your pricing?

Geiger Counter

Great question. The one ringer in the whole machine that were discussing is sourcing and this is not a K-Swiss question, this is everything. Pricing on sourcing doesn't concern me because whatever it is it is. It's a level playing field and Nike, Reebok, Adidas,,s Puma, they Geiger Counter don't own any factories. They don't own any cattle herds, rubber plantations, they're all commodities and they have to buy it just like we have to buy it. If transportation are containers are up, it's even. And if we have to raise X, they have to raise X, so that doesn't change the playing field.The one thing though is there is disruptions there. K-Swiss basically made a 15 year bet and we put all our money into China, 15 years ago and for 15 years we had spectacular margins, spectacular deliveries, incredible quality, I mean everything worked. Now we're changing our bet, we're moving into Vietnam, we're moving into Thailand, we're moving into Indonesia . And we don't have all our eggs in the China basket anymore. We are experiencing --and Gas Mask it's not the price issue, delays of things coming out of China, they don't have sufficient labor allocated to making shoes. They must have a master plan that I don't understand, I still think there are an awful lot of people there that aren't making a lot of money.But I am a little bit uncomfortable with the flow of produced goods, and not K-Swiss uncomfortable, industry uncomfortable, it will not be the smooth sailing we've experienced for the last decade and a

so does that mean you take delivery a little bit earlier or you evolve how you flow merchandise?Well I don't know that anyone taking delivery earlier. We're making commitments early, which is a little dangerous, we used to get in order and then handed to the factory and then the exact right amount of days later it comes in.So now were sometimes placing orders on anticipation. On projections, we're doing things that are slightly more risky to try to ameliorate the problem of delays and lateness. And when you do that you take on other risks. Even with these earlier things, I mean we're hearing this from a lot of people and a lot of different areas of our industry.That there is an unreliable factor that you can't Inspector EXP just put your finger on. I would say that the one thing that I can predict that could happen bad to K-Swiss, especially in Q1 of next year, will be the shoes not showing up on time. And that's my biggest problem. We have dramatically increased our factory base, it will probably be well Prospector into Q2 until the additional factories that we've gotten involved in kick in and are producing smoothly. So a minor danger, there's a chance we will not deliver in Q1 every shoe we have in order for, for Q1. And that's a new development that we really haven't faced in years past. And it's not a K-Swiss issue, it's an industry issue.:Got it, okay that's really helpful. And then finally just wanted to mention or maybe have Inspector Digital you guys touch on FORM athletics and anything new that's happening there, and how you see that business the following?

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As we bought the Chick's stores and went through this conversion of content to Dick's sporting Goods stores, we really didn't do much with the stores. As the economy cratered the way that it did and we were really focused on liquidity, we didn't invest in the physical plant of the store. We're in the process of doing that now. Joe and his team are funning a remodeling program where we'll remodel five or six of those Chick's stores this year to make them look exactly like a Dick's Sporting Goods store, similar to what we did with the former Joe's stores wholesale Geiger Counters

in the Pacific Northwest.In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, Inspector EXP which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe Geiger Counters that the assumptions underlying the forward-looking statements are reasonable, discount Geiger Counters any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking Monitor 4 sale statements will be realized.