HARTLAND, Wis.–(BUSINESS WIRE)–The Middleton Doll Company (OTCBB:DOLL) today reported results for the third quarter and nine months ended September 30, 2007.
Third Quarter Highlights
“During the quarter, we sold our headquarters building, launched our fall catalog and redeemed a portion of the outstanding shares of our preferred stock,” said Salvatore L. Bando, president and chief executive officer of The Middleton Doll Company.
“In August, we commenced a tender offer to redeem up to 300,000 shares of preferred stock at a price of $14 per share. Shareholders tendered 38,827 shares of the preferred stock, which was redeemed in September. The company is required to redeem $9.39 million of preferred stock by July 1, 2008, to the extent we have the funds available for the redemption. In this regard, we are continuing to review various alternatives, which could include a financing transaction, a disposition of assets, recapitalization of the company or strategic business combination, to address all of our financial obligations, including the redemption of preferred stock,” said Bando.
“The positive results for the consumer products segment are largely due to the sale of our headquarters building in August 2007 for $4.2 million. The proceeds from the sale of the building were used to purchase inventory, fund operations and to partially redeem the outstanding preferred stock. Total company cash on-hand is $2.03 million, with $7.01 million in net inventory,” said Craig Bald, chief financial officer of The Middleton Doll Company.
“A major factor behind the losses we have experienced in the consumer products segment is the declining sales of our Middleton dolls. We have taken steps to reposition the company for improvement by launching our new Middleton NOW line of collector-quality contemporary play dolls, expanding our Artist Studio Collection with new dolls and new artists, and implementing new marketing strategies. We have increased our inventory in preparation for the fourth quarter holiday season sales, which will be critical to the future success of the company,” said Ken Werner, president of consumer products for The Middleton Doll Company.
“Our loan portfolio consists of three loans valued at $209,563, net of a $63,813 loan loss reserve. At this time, we have one remaining building for sale with a carrying value of approximately $1.39 million,” said Bald.
As stated previously, the proceeds from the sale of the financial services assets were used to pay-off all of the company’s existing debt, fund the operations of the consumer products segment and to partially redeem outstanding shares of the company’s preferred stock.
The Middleton Doll Company currently operates in two segments, consumer products and financial services. The company’s consumer products segment is comprised of Lee Middleton Original Dolls, Inc., a designer and marketer of lifelike collectible and play dolls, and License Products, Inc., which does business as FirsTime Manufactory, a designer and marketer of clocks and home décor products that are sold to major national retailers. The company’s financial services segment is comprised primarily of the remaining assets of the lending and real estate leasing business of its former subsidiary, Bando McGlocklin Small Business Lending Corporation, now owned by Lee Middleton Original Dolls. Beginning on January 4, 2006, the financial services segment began selling substantially all of its loans, loan participations and leased real estate properties. The company does not intend to continue in the financial services segment after the remaining financial services segment’s assets are sold.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the ability of the company to control or predict, could cause actual results to differ materially from those in its forward-looking statements. These factors include: the degree of success of the strategy to reduce expenses and to increase revenue in the consumer products segment; the declining demand for collectible dolls in the consumer products segment; our ability to provide the necessary cash to meet operating and working capital requirements beyond 2007; and the timing of sales and the selling prices of the remaining assets of the financial services segment.
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The Middleton Doll Company
Three months ended
Nine months ended
STATEMENTS OF OPERATIONS BY SEGMENT
|Cost of sales|
|Other expenses (income):|
|Gain on sale of property|
|Total other expenses|
|Net consumer products segment income (loss)|
|Net rental/interest income:|
Interest on loans
|Loss on early extinguishment of indebtedness|
|Total net rental/interest income|
|Gain on sale of leased properties|
|Total other income|
|Provision for impairment of leased property|
|Provision for loses on loans|
|Depreciation expense on leased properties|
|Other operating expenses|
|Income tax expense|
|Total other expenses|
|Net financial services segment income|
|Net income (loss):|
|Interest expense related to preferred shares|
Interest income on redemption of preferred stock, net of accrued interest and expenses
Net income (loss) applicable to common shareholders
|Basic income (loss) per common share|
|Diluted income (loss) per common share|
|Average shares outstanding – Basic|
|Average shares outstanding -Diluted|