Zindart Reports Revenue Growth, Improvement in Balance Sheet for Q1 2005; Net Sales $22.2M Versus $19.7M a Year Ago; Net Tangible Assets Up to $31.9M.HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- Zindart Limited (Nasdaq:ZNDT) today reported results for the quarter ended June 30, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for Q1 fiscal year 2005 were $22.2 million, a $2.5 million (13 percent) improvement over Q1 fiscal year 2004 revenues of $19.7 million. Net losses for the quarter were $0.9 million, or $0.10 per basic share, a 22 percent improvement over the $1.2 million, or $0.13 per basic share loss for Q1 fiscal year 2004. Zindart also reported that the company's net tangible assets Net Tangible Assets Calculated as the total assets of a company, minus any intangible assets such as goodwill, patents and trademarks, less all liabilities and the par value of preferred stock. Also known as "net asset value" or "book value". (stockholder' equity less goodwill) have improved by $8.9 million due largely to the sale of the company's Hua Yang yang (yang) [Chinese] in Chinese philosophy, the active, positive, masculine principle that is complementary to yin; see yin, under principle. Printing Division in May 2004. As of June 30, 2004, net tangible assets were $31.9 million, up from $23.0 million on March 31, 2004, resulting from the conversion of goodwill that had been associated with the company's acquisition of the Hua Yang Printing Division into cash. This action also produced a positive current ratio and a dramatic improvement in the company's debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. . The year-on-year net sales growth was driven primarily by the Zindart Manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , reporting increased orders from both current and new customers and full plant utilization. Manufacturing division revenues grew 22 percent to $14.1 million in Q1 fiscal year 2005, compared to $11.6 million in the same period the previous year. As noted in the company's press release of July 6, 2004, the manufacturing division has been operating at full capacity during Q4, fiscal year 2004. Based on orders on-hand, the division is expected to continue achieving full plant utilization through the end of the calendar year. Peter Gardiner, Interim Chief Executive Officer (CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. ), Zindart, said the revamping of the unit's costs, delivery model and marketing, as previously reported, are now taking hold. Corgi corgi: see Cardigan Welsh corgi; Pembroke Welsh corgi. Classics, the company's die-cast collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. vehicle division, performed ahead of internal plan for the first quarter. "Zindart's progress represents a steady turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. , the result of a three-year overhaul of our operating structure, executive management and sales and marketing teams, in both divisions," Gardiner said. "Zindart Manufacturing is operating at full capacity. Corgi's new executive management team has made progress implementing a new, hard-hitting operating plan, from which we are already seeing results. Unnecessary costs have been slashed slash v. slashed, slash·ing, slash·es v.tr. 1. To cut or form by cutting with forceful sweeping strokes: slash a path through the underbrush. 2. , several new product introductions have been implemented and new price points have been established in both the specialty and mass markets." Zindart Manufacturing, which provides product design and high quality, turnkey See turnkey system. manufacturing for companies looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. large volume orders of die-cast and plastic items for retail customers, has had consistent growth over the last year, a result of increased orders from traditional clients and the diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of its product offering. A year ago, Zindart Manufacturing developed tooling and produced a line of home improvement products for market test by a new customer. This has resulted in a steady increase in volume of orders in an entirely new category of product. The company's miniature die-cast vehicle offerings now include radio-controlled cars A radio-controlled car (R/C car) is a powered model car driven from a distance using a radio control system. Inputs from joysticks (or a wheel and a trigger) on a transmitter are sent to the car's onboard receiver. , another new category for the division. Corgi has been making strides to reposition the brand for dramatic growth in mass markets as well as in collector lines, Gardiner said. The toy and collector vehicle division is also expecting strong sales from the division's new line of Batmobiles(TM). Warner Bros BROS Brothers BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) is expected to release a new Batman movie next summer. "George Volanakis, Corgi's new CEO, has set into motion an aggressive marketing and sales plan with the specialty trade retailers, that have historically sold the Corgi line, and is developing new products for the mass market," Gardiner said. "In fewer than five months, he has overcome the division's inertia inertia (ĭnûr`shə), in physics, the resistance of a body to any alteration in its state of motion, i.e., the resistance of a body at rest to being set in motion or of a body in motion to any change of speed or change in direction of , installing seasoned executives known to him from his previous positions and other major toy companies in both the UK and U.S., and attacking the decline in Corgi's core collectors business by introducing four new and highly creative product lines and adding incentives that have re-energized the sales force." "George has also moved to exploit existing products and tooling to produce lower-priced products for the mass market, generating sales for the first time in all five of the top mass market retailers in the U.S. The impact of these introductions will begin to show up in the third and fourth quarters," Gardiner said. In June, Corgi announced that the division plans to launch a new product line for girls. These products and the other new lines for retail sale will be on display at Toy Fair 2005 in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and other major toy shows around the world in the forthcoming year. Corgi has also announced that the division plans to build its relationship with its sister company, Zindart Manufacturing, moving more product to that entity for manufacture. Currently, Zindart Manufacturing produces 64 percent of the Corgi products. Corgi plans to place increasing amounts of its products with the manufacturing unit, resulting in smoother product development and maximizing corporate profitability, Gardiner said. Selling, general and administrative expenses have increased 17 percent over the same period in the prior year in relation to increases in revenues, as well as unusual expenses related to legal expenses associated with litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settled in May 2004, additional management restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). efforts completed in Q1 fiscal year 2005, and the impact of UK pound to the dollar exchange rate increases on these expenses. Management noted that these Q1 fiscal year 2005 unusual expenses totaled approximately $0.9 million. "We are in the final phase of the strategic path we set out in 2001, when we undertook turning three locally-focused companies into a unified global marketing company," Gardiner said. "Hua Yang has been built up and divested. Zindart Manufacturing is now operating at 100 percent. Globally-oriented management has been installed across the company. "We are now converting Corgi into an agile marketing company with reach beyond Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. . The financial operations of the company are being brought under one roof so we can obtain capital at an attractive cost and allocate To reserve a resource such as memory or disk. See memory allocation. it more efficiently. We are aiming to complete the final phase of our strategy by June 2005," Gardiner concluded. About Zindart Zindart Limited is a global manufacturer, supplying a wide range of plastic, die-cast and paper products, both under its own brands and for large consumer products companies. Zindart's operating divisions include Corgi Classics and Zindart Manufacturing. Corgi Classics Limited Corgi Cars was launched in 1956 as a new range of die cast toy model cars by Mettoy Playcraft LTD, the toy car company founded in 1936. These new toy cars were soon a huge hit because at the time they were the only toy cars on the market that included transparent plastic windows, produces a high quality line of die-cast replica Earlier document exchange software from Farallon Communications, Inc. that converted a Windows or Mac document into a proprietary viewing format. The viewer could be distributed separately or embedded within the document itself, turning it into a single-document viewer. items sold through retail channels in the United Kingdom and in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Zindart Manufacturing provides both product design and quality turnkey manufacturing for well-known multi-national companies that offer branded products requiring rapid, high-volume delivery. Founded in 1978, Zindart is based in Hong Kong with offices in the United States and the United Kingdom. Certain statements in this release are forward-looking, including statements regarding potential transactions involving Zindart's Corgi Classics subsidiary. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, in addition to those discussed above and without limitation, changes in market demand for Zindart's products, changes in economic conditions, dependence on certain customers and other risks described in the company's annual report on Form 20-F for the fiscal year ended March 31, 2004. The company undertakes no obligation to revise these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
ZINDART LIMITED AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share data)
For the period ended
June 30, 2004
YTD Prior Year
---------- ----------
Net sales $ 22,153 $ 19,674
Cost of goods sold (15,881) (13,683)
---------- ----------
Gross profit 6,272 5,991
Selling, general, and administrative expenses (7,929) (6,771)
---------- ----------
Operating loss (1,657) (780)
Other expense (114) (221)
---------- ----------
Loss before income taxes and minority
interests (1,771) (1,001)
Income tax benefit (expense) 389 (416)
---------- ----------
Loss before minority interests (1,382) (1,417)
Minority interests (46) (89)
---------- ----------
Loss from continuing operations (1,428) (1,506)
Gain on sale, net of loss (income) from
discontinued operations 519 341
---------- ----------
Net loss $ (909) (1,165)
========== ==========
Loss per common share
- Basic $ (0.10) $ (0.13)
========== ==========
- Diluted $ (0.10) $ (0.13)
========== ==========
Weighted average number of common shares
outstanding
- Basic 9,201,783 8,835,444
========== ==========
- Diluted 9,998,532 9,651,996
========== ==========
ZINDART LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
Assets As of June As of
30, 2004 March 31,
2004
---------- ----------
Current assets(a) $ 51,938 $ 70,859
Long-term assets 24,216 24,957
Goodwill(a) 35,726 35,726
---------- ----------
Total assets $ 111,880 $ 131,542
========== ==========
Liabilities and Stockholders' Equity
Current liabilities $ 41,406 $ 60,520
Long-term and other liabilities 1,076 1,062
Minority interests 1,816 1,770
Stockholders' equity 67,582 68,190
---------- ----------
Total liabilities and stockholders'
equity $ 111,880 $ 131,542
========== ==========
(a) At March 31, 2004, $9,508K of goodwill was included in current
assets under "assets of discontinued operations."
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