A possible realistic explanation for sale of the Ditto line.
According to page 23 of the 1998 annual report, sales of the Ditto
line have been declining rather dramatically since 1996, especially
from 1997 to 1998.
Ditto Sales (x1000):
1996 - 127,563
1997 - 119,320
1998 - 81,074
Further, the decline in the "product profit margin" was, apparently
even worse.
Ditto Product Profit Margin (x1000):
1996 - 17,148
1997 - 1,852
1998 - (14,309)
There is a rather lengthy explanation for exactly what "product profit
margin" means directly below these numbers in the report. Apparently,
they "carve out" these numbers in a certain way that exposes the true
profit/loss picture (product profit margin) for each line after
certain other expenses are removed from the equation.
Bottom line....when looking at it this way, they barely made a profit
on the Ditto line in 1997, followed by a substantial loss in 1998.
Therefore, retaining the Ditto line would only have resulted in an
ever increasing drag in overall financial performance going forward.
Dave
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