Earnings announcement:
Wednesday August 12, 5:36 pm Eastern Time
Company Press Release
SOURCE: L. L. Knickerbocker Co., Inc.
L. L. Knickerbocker Reports Second Quarter and Six Months Results
LAKE FOREST, Calif., Aug. 12 /PRNewswire/ -- The L. L. Knickerbocker Co., Inc. (Nasdaq: KNIC - news) announced today results of operations for the second quarter and six months ended June 30, 1998.
Revenues for the second quarter and six months of fiscal 1998 were $13,434,000 and $24,916,000, respectively, with gross profit of $6,946,000 and $13,572,000, as compared to revenues of $17,609,000 and $31,050,000 for the corresponding periods last year, with gross profit of $8,908,000 and $15,883,000. As a percentage of net sales, gross profit in 1998 for the quarter increased to 51.7% from 50.6%, and to 54.5% from 51.2% for the six months. Net loss for these periods was $2,538,000 ($.13 per share) and $2,299,000 ($0.12 per share), as compared to $561,000 ($.03 per share) and $4,400,000 ($.25 per share) for the same periods last year. Shares used in computing net loss per share were 19,126,757 and 19,038,910 for the three and six month periods ended June 30, 1998, compared to 17,867,818 and 17,379,133 in 1997.
''Results of operations for the first half of 1998, although down from 1997 on a comparative basis, are consistent with our expectations for this period,'' said Robert West, Chief Operating Officer. ''We debuted several new and successful lines at Toy Fair in February 1998 and not getting these lines to market until the Fall is consistent with the seasonality of our business. For the first time ever, we have substantial backlog in retail and consumer orders. Demand for our products is strong and our trend lines for the second half of 1998 show solid growth. Our trend lines take into consideration demand, product availability, heightened promotional efforts and competitive factors.
''Our goals have been clear since the Company instituted management changes in February. The Company set goals of slow growth and moderate sales increases in 1998 to return to the operating income and net income to which our shareholders have been accustomed prior to 1997. We are on course to meet our objectives and we must be judged on the year, not the first two quarters. We have a nice momentum working for us at the present time; strong demand, higher margins, and a continued focus on cost cutting.
''1999 is looking excellent for the Company. We are already planning product introductions and deliveries for the first quarter, as well as making plans to travel to the International Toy Fair in Nuremberg early in the year. It will be Knickerbocker's first involvement with that show and our plans are to launch products internationally next year aggressively, while also giving us the opportunity to build strategic alliances needed to market in Europe,'' concluded Mr. West.
Advertising expense for the three and six month periods increased when compared to last year, due primarily to expansion of the direct response advertising campaigns among a greater number of collectible brands in 1998, in addition to the expansion into retail distribution for the Company's products. General and administrative expenses decreased in the three and six month periods. Interest expense for the second quarter increased, due primarily to interest charges from the issuance of convertible debentures of $5,000,000 in September 1997 and $7,000,000 in June 1998. Included in interest expense for the quarter are noncash charges of $228,000, classified as interest expense. Loss from equity method investments were $262,000 and $815,000 for the three and six month periods, respectively, due primarily to the Company's 50% interest in Arkenol Asia and Pure Energy Corporation, both development-stage companies.
Statement of Operation
Three months ended June 30
1998 1997
Sales, net of returns $13,434,000 $17,609,000
Cost of sales 6,488,000 8,701,000
Gross profit 6,946,000 8,908,000
Advertising expense 2,611,000 1,942,000
Selling expense 1,483,000 1,489,000
General and
administrative expense 5,230,000 5,570,000
Operating loss (2,378,000) (92,000)
Loss on equity method
investments 262,000 571,000
Other income (expense),
net (163,000) (123,000)
Interest expense 702,000 433,000
Loss before minority
interest and income tax
benefit (3,505,000) (1,219,000)
Minority interest in loss
of subsidiary (141,000) (101,000)
Income tax benefit (826,000) (557,000)
Net loss (2,538,000) (561,000)
Net loss per share:
basic and diluted $(0.13) $(.03)
Shares used computing
net loss per share:
basic and diluted 19,126,757 17,867,818
Six months ended June 30,
1998 1997
Sales, net of returns $24,916,000 $31,050,000
Cost of sales 11,344,000 15,167,000
Gross Profit 13,572,000 15,883,000
Advertising expense 5,024,000 3,519,000
Selling expense 2,461,000 3,039,000
General and
administrative expense 10,023,000 10,466,000
Operating loss (3,936,000) (1,141,000)
Loss on equity method
investments 815,000 876,000
Other income (expense),
net 2,667,000 (236,000)
Interest expense 1,283,000 3,526,000
Loss before minority
interest and income
tax benefit (3,367,000) (5,779,000)
Minority interest in
loss of subsidiary (274,000) (219,000)
Income tax benefit (794,000) (1,160,000)
Net loss (2,299,000) (4,400,000)
Net loss per share:
basic and diluted $(0.12) $(0.25)
Shares used computing
net loss per share:
basic and diluted 19,038,910 17,379,133
For more information visit the Knickerbocker web site at www.knickerbocker.com.
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.
SOURCE: L. L. Knickerbocker Co., Inc.
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