16941 KEEGAN AVENUE
[LOGO] CARSON, CA 90746
PHONE: (310) 884-2000
FAX: (310) 884-2013
FOR IMMEDIATE RELEASE CONTACTS: Stephen E. Billis,
Controller, or
Theodore J. Eischeid,
Chief Executive Officer
(310) 884-2000
EDUCATIONAL INSIGHTS REPORTS
FOURTH QUARTER AND YEAR-END RESULTS
Carson, CA -- March 5, 1999 -- Educational Insights, Inc. (NASDAQ:EDIN)
announced today that consolidated revenue was $12,354,000 for the quarter
ended December 31, 1998, compared to $12,722,000 for the same period one year
ago, a decrease of 2.9%. Consolidated revenue was $39,235,000 for the fiscal
year ended December 31, 1998 an increase of 2.1% or $793,000 compared to
$38,442,000 for the prior fiscal year.
The Company incurred a net loss of $1,679,000 or $0.24 per share -- diluted
for the quarter ended December 31, 1998 compared to net income of $547,000 or
$0.08 per share -- diluted for the same period in 1997. The net loss for the
year ended December 31, 1998 was $2,284,000 or $0.32 per share -- diluted
compared to net income of $65,000 or $0.01 per share -- diluted for 1997.
The Company stated that the decline in income was due primarily to a series
of charges against income in the quarter ended December 31, 1998. The
charges, totaling approximately $2,600,000 (before taxes), principally relate
to excess inventory and recent decisions to discontinue certain low volume
product lines as well as charges relating to certain organizational changes.
Included in the above are approximately $500,000 in charges relating to the
Big Talk project that was recently cancelled due to unresolved technical
problems and is being completely redesigned.
Gross profit as a percentage of sales decreased 7.9 percentage points to
42.3% in 1998 from 50.2% in 1997. This reduction was primarily due to the
write-off of certain inventory considered excess or obsolete and to an
increase in the proportion of lower margin sales in the Company's ExploraToy
division where sales increased by approximately 69%.
Combined operating expenses including sales and marketing, warehousing and
distribution, research and development and general and administrative expense
increased $879,000 to $19,944,000 for the year ended December 31, 1998 from
$19,065,000 for the year ended December 31, 1997. The increase in these
expenses was due primarily to an increase in research and development
expenses resulting from the charges relating to the aforementioned Big Talk
project as well as an increase in general and administrative expenses,
primarily compensation expenses, relating to severance costs associated with
the aforementioned organizational changes
and costs associated with the recruitment and employment of the Company's new
Chief Executive Officer.
Ted Eischeid, the Company's President and CEO stated "We are obviously in a
period of transition but we have already made a number of changes that I am
confident will enhance the Company's performance."
Educational Insights, Inc. designs, develops and markets a variety of
educational products, including electronic learning aids, electronic games,
activity books, science kits, board games and other materials for use in both
schools and homes. The Company's product line, including its most popular
product, GeoSafari, appeals to children as well as students ranging from
pre-kindergarten to adult and is designed to make learning fun.
Except for the historical information in this press release, the above
statements contain forward-looking statements that involve a number of risks
and uncertainties included, but not limited to, continued successful
development and acceptance of new products, dependence on off-shore contract
manufacturers, competitive factors, dependence on new distribution channels,
dependence on education funding by Federal, State and local governments,
dependence on key development and marketing personnel, general economic
conditions and the risk factors listed from time-to-time in the Company's
filings with the SEC.