BRYAN, Ohio, Aug. 30, 2005 (PRIMEZONE) -- The Ohio Art Company (Pink Sheets:OART) today announced operating results for the three and six months ended July 31, 2005.
Net sales, excluding discontinued operations, increased approximately 11% to $7,377,000 for the six months ended July 31, 2005 from $6,665,000 for the six months ended July 31, 2004. For the three-month period, net sales, excluding discontinued operations, increased approximately 28% to $4,420,000 for the quarter ended July 31, 2005 from $3,463,000 for the quarter ended July 31, 2004.
Worldwide shipments of Etch A Sketch(R) and Magna Doodle(TM) were primarily responsible for the increased sales in the second quarter. Profit margin generated by these shipments was adversely affected by low margin closeout sales of a slow moving toy, of which most of the impact was realized in the second quarter. Lower royalty income for the reporting period also contributed to the loss.
Year-to-date volume in the Diversified Products Division was comparable to the volume in the first six months of Fiscal 2005. The division posted a smaller loss from operations in the current year despite cost increases in several raw material categories, including oil, steel, and natural gas plus transportation costs, all of which contributed to a dampening effect on the division's operating results.
Net loss, after taxes and discontinued operations, for the six months ended July 31, 2005 amounted to $1,111,000, or $1.27 per share on 875,000 average shares outstanding versus a net loss of $2,475,000, or $2.83 per share on 876,000 average shares outstanding during the six months ended July 31, 2004.
For the quarter ended July 31, 2005, net loss after taxes and discontinued operations amounted to $1,192,000 or $1.36 per share, on 874,000 average shares outstanding, compared to a net loss of $1,100,000, or $1.26 per share on 876,000 average shares outstanding during the quarter ended July 31, 2004.
The company is stepping up its efforts to reduce overhead in order to offset external cost pressures and in response to the lost profit from the closed-out toy. These efforts are also necessary because the dominant toy retailers will not accept price increases on continuing staple toy products.
Established in 1908 and headquartered in Bryan, Ohio, The Ohio Art Company manufactures and markets the world famous Etch A Sketch(R) drawing toy, as well as a complete line of toys that enhance and provide development, creativity, and positive reinforcement. Product lines include "Making Creativity Fun" activity toys, such as Etch A Sketch(R), Magna Doodle(TM), and electronic drawing toys such as Etch A Sketch(R) Wired(TM). In addition, the Company's Diversified Products Division manufactures lithographed products for the photographic, food container, and specialty premium markets.
The forward-looking statements contained in this release are based upon various assumptions and certain risks and uncertainties could cause actual results to differ materially from those stated. For a discussion of factors that may affect actual results, investors should refer to the Company's most recent Form 10-K filed with the SEC. The Company assumes no obligation to update any forward-looking statements contained in this release.
THE OHIO ART COMPANY AND SUBSIDIARIES(a)
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(Thousands Except Per Share Data)
Six Months Ended Three Months Ended
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7/31/05 7/31/04 7/31/05 7/31/04
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Net Sales $ 7,377 $ 6,665 $ 4,420 $ 3,463
Loss Before Income Taxes (2,229) (2,438) (1,178) (1,009)
Benefit From Income Taxes 0 0 0 0
Net Loss Before
Discontinued Operations (2,229) (2,438) (1,178) (1,009)
Net Income (Loss) From
Discontinued Operations 1,118 37 (14) (91)
Net Loss After
Discontinued Operations (1,111) (2,475) (1,192) (1,100)
Net Loss Per Share Before
Discontinued Operations (2.55) (2.78) (1.35) (1.15)
Net Loss Per Share After
Discontinued Operations (1.27) (2.83) (1.36) (1.26)
Average Shares Outstanding 875 876 874 876
(a) Unaudited and subject to year-end adjustments.