Brass Eagle Announces Third Quarter and Nine Month Results; Earnings per Share Increase 53%; Company Retains McDonald Investments Inc. to Explore Strategic Initiatives.

ROGERS, Ark.--(BUSINESS WIRE)--Nov. 3, 1999--

Brass Eagle Inc. (Nasdaq: XTRM) the worldwide leader in the manufacturing, marketing and distribution of paintball products' today reported earnings for the third quarter and nine months ended September 30, 1999.

Net sales increased 11.9% to $15,141,000 for the third quarter ended September 30, 1999, versus $13,527,000 for the same period last year. Net income for the three months ended September 30, 1999 rose 52.9% to $1,972,000, compared to $1,290,000 in the third quarter of 1998 and fully diluted earnings per share increased 52.9% to $0.26, versus fully diluted earnings per share of $0.17 during the same period.

For the nine month period ended September 30, 1999, net sales increased 5.9% to $51,561,000 versus $48,682,000 for the same period last year. Net income for the first nine months of fiscal 1999 rose 36.9% to $7,034,000, compared to $5,139,000 in the first nine months of fiscal 1998 and fully diluted earnings per share increased 35.8% to $0.91, versus fully diluted earnings per share of $0.67 during the corresponding period a year ago.

Lynn Scott, President and CEO, commented, "Our results during the quarter, and in particular our 53% gain in earnings per share, are testament to our leadership position in the paintball market and the ongoing strength of our gross margins. While our business remains robust at most of our retail accounts and is improving considerably in others, we believe there are some inventory issues in the distribution channel resulting from a slowdown in the rate of growth in the overall industry. Consequently, we believe it is prudent to take a more conservative posture with regard to our top line growth for the remainder of this year and into fiscal 2000."

"Our strategy is to proactively manage the challenges within the overall paintball industry and preserve our position in the market, while we simultaneously diversify into complementary businesses," Mr. Scott continued. "First, we are actively working with merchandising managers at key accounts and expanding our distribution at traditional retailers. We also have a number of exciting new products slated for introduction in the fourth quarter and next year, which are key enhancements to our core offering of paintball products. Second, the opening of our new Challenge Park Xtreme which we also announced today, gives us an entree into other sports while providing a unique platform to test product, promote paintball and extreme sports in general, and further build our brand equity."

Mr. Scott concluded, "We firmly believe in the continued growth of the overall paintball industry and remain committed to increasing our market share both in the U.S. and abroad. Moreover, we will continue to aggressively pursue strategic initiatives which provide the Company with additional, long term growth vehicles."

Brass Eagle also announced that it has retained McDonald Investments Inc., to assist in this process and also advise it in the development and consideration of strategic and financial alternatives to enhance shareholder value.

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.

For more information, please call Chad Jacobs, Integrated Corporate Relations, Inc., at 203-222-9013 or send faxes to 203-222-9372

                           BRASS EAGLE INC.
                  CONDENSED STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                              THREE MONTHS ENDED     NINE MONTHS ENDED
                                  SEPTEMBER 30,         SEPTEMBER 30,
                              ------------------    ------------------
                                 1999       1998       1999       1998
                              -------    -------    -------    -------
NET SALES                     $15,141    $13,527    $51,561    $48,682
COST OF SALES                   9,092      8,870     30,370     31,319
                              -------    -------    -------    -------
GROSS PROFIT                    6,049      4,657     21,191     17,363

OPERATING EXPENSES              2,935      2,628     10,099      9,326
                              -------    -------    -------    -------
OPERATING INCOME                3,114      2,029     11,092      8,037

INTEREST INCOME / (EXPENSE)        41         69        161        300
                              -------    -------    -------    -------

INCOME BEFORE INCOME TAXES      3,155      2,098     11,253      8,337

PROVISION FOR INCOME TAXES      1,183        808      4,219      3,198
                              -------    -------    -------    -------

NET INCOME                    $ 1,972    $ 1,290    $ 7,034    $ 5,139
                              =======    =======    =======    =======

NET INCOME PER SHARE
BASIC                            0.27       0.18       0.97       0.71
DILUTED                          0.26       0.17       0.91       0.67

WEIGHTED AVERAGE SHARES
 OUTSTANDING
BASIC                       7,248,424  7,241,223  7,246,875  7,238,173
DILUTED                     7,679,867  7,661,870  7,696,337  7,676,460



                           BRASS EAGLE INC.
                       CONDENSED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                                           SEPTEMBER 30, DECEMBER 31,
                                                1999         1998
                                           ------------  -----------
                                            (unaudited)
ASSETS
CURRENT ASSETS
   CASH & INVESTMENTS                           $ 1,132      $ 6,836
   ACCOUNTS RECEIVABLE-LESS ALLOWANCE
    FOR DOUBTFUL ACCOUNTS OF $464 IN 1999
    AND $479 IN 1998                             17,844       18,271
   INVENTORIES                                   13,246        5,607
   PREPAID EXPENSES AND OTHER CURRENT ASSETS      2,586        2,829
                                                -------      -------
   TOTAL CURRENT ASSETS                          34,808       33,543
PROPERTY AND EQUIPMENT, NET                       8,949        5,337
OTHER ASSETS
   INTANGIBLE ASSETS, NET                         6,751        2,550
                                                -------      -------
                                                $50,508      $41,430
                                                =======      =======

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   ACCOUNTS PAYABLE                               4,577        2,772
   ACCRUED EXPENSES                               4,135        4,171
                                                -------      -------
   TOTAL CURRENT LIABILITIES                      8,712        6,943
DEFERRED INCOME TAXES                               405          213
   STOCKHOLDERS' EQUITY COMMON STOCK,
    $.01 PAR VALUE, 10,000,000 SHARES
    AUTHORIZED, ISSUED AND OUTSTANDING
    7,248,479 IN 1999, AND 7,241,951 IN 1998         72           72
   ADDITIONAL PAID-IN CAPITAL                    25,750       25,667
   RETAINED EARNINGS                             15,569        8,535
                                                -------      -------
                                                 41,391       34,274
                                                -------      -------
                                                $50,508      $41,430
                                                =======      =======