Here's the 1st story on earnings . . .
Monday November 10, 8:03 am Eastern Time
Company Press Release
L. L. Knickerbocker Reports Third Quarter and Nine Months Results
LAKE FOREST, Calif.--(BUSINESS WIRE)--Nov. 10, 1997--The L. L. Knickerbocker Co., Inc. (NASDAQ:KNIC - news) today announced results of operations for the third quarter and nine months ended September 30, 1997.
Net sales for the third quarter and nine months ended September 30, 1997 increased 70.6 % to $14,112,000 and 139.6% to $45,162,000, respectively, when compared to net sales of $8,272,000 and $18,852,000 reported for the same periods in 1996.
The increase in net sales in both periods were primarily attributable to net sales generated by Georgetown Collection, Inc., which was acquired in the fourth quarter of 1996 and not included in the comparative base of September 30, 1996 sales.
Gross profit for the third quarter and nine months increased 107% to $7,464,000 and 157.8% to $22,897,000, respectively, when compared to $3,595,000 and $8,881,000 for the same periods in 1996. As a percentage of net sales, gross profit for the third quarter increased to 52.8% in 1997 from 43.4% in 1996, and for the nine months increased to 50.7% in 1997 from 47.1% in 1996.
The improvement in gross profit as a percentage of net sales was primarily attributable to the acquisition of Georgetown Collection, Inc. in the fourth quarter of 1996 which is not included in the comparative base for the current quarter.
Advertising expense for the third quarter and nine months of fiscal 1997 increased to $1,869,000 and $5,388,000, respectively, when compared to $594,000 and $1,058,000 for 1996 due primarily to the Company's expansion of its direct response business through its acquisition of Georgetown Collection.
Included in advertising expense are advertisement printing costs, catalog printing costs, media space in magazines, infomercial costs and advertisement development costs.
Total selling, general and administrative expenses increased to $6,139,000 and $19,194,000, respectively, for the third quarter and nine months in 1997, when compared to $3,278,000 and $6,808,000 for the same periods in 1996. The percentage of revenues represented by these expenses increased to 42.5% in 1997 from 36.1% in 1996. Of the increase for the nine months in selling, general and administrative expenses, $8,836,000 represents expenses of Georgetown Collection, which are not included in the 1996 comparative base for the current quarter.
The remaining increase relates primarily to higher costs in general and increased amortization expense related to acquisitions completed since the second quarter of 1996, and costs related to expansion of the Company's operations in southeast Asia. In addition, the Company incurs general and administrative expenses in connection with overseeing its investment in Pure Energy Corporation.
The Company had other income for both the third quarter and nine months of 1997 of $762,000 and $526,000, respectively, compared to $147,000 and $234,000 in 1996. The increase in other income for both periods relates primarily to net gains realized by Thailand-based subsidiaries in foreign currency exchanges as a result of international sales.
The increase in interest expense to $471,000 for the quarter and $3,997,000 for the nine months in 1997 resulted from a combination of bank lines of credit assumed in the acquisitions of subsidiaries completed in 1996 and two convertible debenture financings. The nine months interest expense charge includes noncash charges of $2,490,000 associated with conversion discounts and the accretion of the principal balance which resulted from the restructuring in February 1997 of the convertible debentures.
As a result of the foregoing factors, the Company incurred a net loss of $586,000, or $.03 per share, for the third quarter and $4,986,000, or $.28 per share, for the nine months in fiscal 1997. This compares to a net gain of $339,000, or $.02 per share, and $1,465,000, or $.09 per share, reported for the same periods in 1996.
''The first nine months of 1997 have represented a major period of growth and consolidation for The L. L. Knickerbocker Company,'' said Louis L. Knickerbocker, Chairman and CEO. ''For the first nine months of 1996, Krasner Group, Inc. had a loss of $3.5 million. For the first nine months of 1997, Krasner Group has income of $188,000, a turnaround of $3.7 million, with a gross profit margin increase of 34.6% in 1997, up 24.8% from 9.8% in 1996.
''For the first nine months of 1996, Georgetown Collection, Inc. had a loss of $2.5 million. Georgetown's nine month losses in 1997 improved to $1,700,000, a turnaround of $781,000. These results were accomplished with only 75% of the consolidation completed.
''1997 will represent our first full year of operations as a consolidated company, as evidenced by our growth in revenues from $18 million for the first nine months in 1996 to $45 million in 1997. Total assets at September 30 were $60 million, up from $46 million one year ago and $27 million at June 30, 1996.
''The fourth quarter is expected to put year end revenues over $85 million and show a profitable bottom line. The first year of consolidation is the hardest, and we're almost through it. Management joins me in thanking you for your patience and support during this critical period of growth and consolidation.''
Statement of Operations
Three Months Ended September 30
1997 1996
Sales, net of returns $14,112,000 $8,272,000
Cost of sales 6,648,000 4,677,000
Gross profit 7,464,000 3,595,000
Advertising expense 1,869,000 -
Selling, general and
administrative expense 6,139,000 3,278,000
Operating income (544,000) 316,000
Equity in loss of investee
companies 468,000 -
Other income (expense), net 762,000 147,000
Interest expense 471,000 50,000
Income (Loss) before provision
for income taxes (721,000) 413,000
Minority interest - -
Income tax (benefit) expense (135,000) 74,000
Net income (586,000) 339,000
Primary net income (loss)
per share $ (0.03) $ 0.02
Weighted average shares 18,408,572 17,236,195
Nine Months Ended September 30
1997 1996
Sales, net of returns $45,162,000 $18,852,000
Cost of sales 22,265,000 9,971,000
Gross Profit 22,897,000 8,881,000
Advertising expense 5,388,000 -
Selling, general and
administrative expense 19,194,000 6,808,000
Operating income (1,685,000) 2,073,000
Equity in loss of investee
companies 1,334,000 -
Other income (expense), net 526,000 234,000
Interest expense 3,997,000 50,000
Income (Loss) before provision
for income taxes (6,500,000) 2,257,000
Minority interest (219,000)
Income tax (benefit) expense (1,295,000) 793,000
Net income (4,986,000) 1,464,000
Earnings per share $ (0.28) $ 0.09
Weighted average shares 17,731,737 16,310,702
The L. L. Knickerbocker Co., Inc. markets a wide variety of branded collectibles, jewelry and accessories and consumer products. The Company's primary focus is to create and build Brands which can be marketed through a variety of channels, including national and international retail and direct response mail.
The Company has a 38.3% equity investment interest in Pure Energy Corporation, the exclusive worldwide licensee to an alternative fuel. Recently, the U. S. Patent Office issued a Notice of Allowance for claims covering the alternative fuel which is patent pending.
In addition, the Company has a substantial equity interest (approximately 31%) in Ontro, Inc. and Insta-Heat, Inc., involved in the development of containers which self-heat food and beverages. The Company recently entered into a joint venture with Arkenol Holdings, LLC to construct power plants and biorefineries in a number of Southeast Asian countries.
Visit The L. L. Knickerbocker Company web site at www.knickerbocker.com .
Note to Editors: This press release contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors.
The Company's actual results could differ materially from those projected in the forward-looking statements as a result of the factors described herein.
Dale . . . |
