Exhibit 99.1
The Middleton Doll Company Reports Third Quarter Results; Board of Directors
Declares Regular Quarterly Dividend
PEWAUKEE, Wis.--(BUSINESS WIRE)--Nov. 3, 2003--The Middleton Doll
Company (Nasdaq:DOLL) today reported a loss of $78,623 or $0.02 per
diluted share for the third quarter ended September 30, 2003, compared
to net income of $756,361 or $0.20 per diluted share for the same
period in 2002. The financial services subsidiary reported earnings of
$556,618 and the consumer products subsidiary reported a loss of
$635,241 for the third quarter of 2003.
For the first nine months of 2003, the company reported a loss of
$100,126 or $0.03 per diluted share, compared to net income of
$2,071,877 or $0.56 per diluted share for the first nine months of
2002. The financial services subsidiary reported a profit of
$1,878,071 and the consumer products subsidiary reported a loss of
$1,978,197 for the first nine months of 2003.
The company also announced that its Board of Directors has
declared a regular quarterly dividend of $0.10 per share, payable
November 15, 2003, to shareholders of record November 5, 2003. The
Middleton Doll Company pays out the earnings from its financial
services subsidiary as dividends in order to maintain its status as a
qualified real estate investment trust (REIT).
Commenting on the third quarter results, George R. Schonath,
president and chief executive officer of The Middleton Doll Company,
said, "The consumer products segment continued to be affected by the
soft economy and intense pricing pressure, especially in our Lee
Middleton Original Dolls subsidiary. In addition, Lee Middleton's
margins decreased during the third quarter as a result of actions
taken in June 2003 to reduce prices on its line of Artist Studio
Collection(TM) dolls. Unit sales, however have increased."
Schonath said the price reductions are designed to stimulate sales
and to offset the price competition of dolls produced in China. "We
are encouraged by the increases in unit sales in the four months since
we implemented the new pricing strategy. For example, for the period
from January through May 2003, unit sales of our Artist Studio
Collection dolls were down 50% from the same period in the prior year.
From June through September 2003, however, unit sales were up 36%
compared to the same period in 2002. We believe this indicates that
although our pricing strategy has had a short-term impact on
performance, it does have the potential to generate improvement over
the long term," he said.
"We are making good progress in pursuing legal actions to prevent
the sale of certain dolls manufactured in China that we believe
infringe on our copyrights and other intellectual property. To date,
we have obtained a preliminary injunction halting sales of one
allegedly infringing doll and a permanent injunction halting sales of
another. In a third case, we recently agreed to a settlement that will
also eliminate an allegedly infringing doll from the marketplace.
Although we are still concerned about the problem of
intellectual-property infringement, we are pleased with the results of
our enforcement program thus far," said Schonath.
"In addition to our copyright infringement efforts, we are also
continuing our focus on reducing our cost of business. Operating
expenses decreased $500,000 in the third quarter and nearly $900,000
for the first nine months of 2003, compared to the same periods a year
ago," said Schonath.
"This is a very challenging period for Lee Middleton and for the
collectible doll industry. We have taken significant actions to
address the copyright infringements and to reduce expenses. We believe
these actions will benefit us over the long term as we become a
stronger competitor and as the economy recovers," said Schonath.
The Middleton Doll Company 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, manufacturer and marketer of lifelike collectible and play
dolls, and License Products, Inc., a designer and marketer of clocks
and home decor products that are sold to major national retailers. The
company's financial services subsidiary is a real estate investment
trust (REIT).
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, plans,
objectives, future performance and business of the Company.
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. Significant risks and uncertainties include (i) the
continuing effect of adverse economic conditions and (ii) the effect
of increasing competition in the collectible doll market. Additional
information concerning the Company and its business, including factors
that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and Exchange
Commission.
The Middleton Doll Company news releases are available on-line 24
hours a day at: http://www.middletondollcompany.com
The Middleton Doll Company
(NASDAQ/NMS:DOLL)
(Unaudited)
STATEMENTS OF OPERATIONS BY SEGMENT
- -----------------------------------
Three months ended Nine months ended
------------------------- -------------------------
September 30, September 30,
------------- -------------
2003 2002 2003 2002
---- ---- ---- ----
Consumer Products:
Net sales $ 4,369,513 $ 5,335,018 $11,588,324 $15,851,315
Cost of sales 3,191,680 3,250,288 7,732,486 9,338,510
------------ ------------ ------------ ------------
Gross profit 1,177,833 2,084,730 3,855,838 6,512,805
Other expenses (income):
Operating
expenses 1,847,281 2,360,587 6,023,598 6,903,875
Interest/rental
expense to parent 221,394 130,358 659,160 431,449
Management fees
to parent 124,599 106,917 342,000 324,760
Other expense
(income) 695 37,187 (10,087) 98,441
Income tax expense
(benefit) (374,533) (281,215) (1,160,817) (481,253)
Minority interest
in earnings of
subsidiary (6,362) (2,603) (19,819) 72,329
------------ ------------ ------------ ------------
Total other
expenses 1,813,074 2,351,231 5,834,035 7,349,601
Net (loss) $ (635,241) $ (266,501) $(1,978,197) $ (836,796)
============ ============ ============ ============
Financial Services:
Net rental/interest income:
Interest on
loans $ 770,949 $ 1,143,667 $ 2,578,917 $ 3,803,063
Rental income 840,339 838,629 2,501,233 2,776,949
Interest/rental
income from
subsidiary 221,394 130,358 659,160 431,449
Interest expense (667,547) (920,525) (2,238,345) (2,924,174)
------------ ------------ ------------ ------------
Total net
rental/interest
income 1,165,135 1,192,129 3,500,965 4,087,287
Other income:
Other income 35,606 20,752 125,864 178,513
Management fees
from subsidiary 124,599 106,917 342,000 324,760
Gain on sale of
swap contract - 747,000 484,304 747,000
Gain on sale of
property 215,397 - 518,967 1,036,248
------------ ------------ ------------ ------------
Total other
income 375,602 874,669 1,471,135 2,286,521
Other expenses:
Depreciation
expense on leased
properties 195,970 199,328 582,974 627,279
Other operating
expenses 485,677 497,165 1,382,228 1,406,781
Income tax expense
(benefit) 76,196 (11,985) 183,695 352,791
------------ ------------ ------------ ------------
Total other
expenses 757,843 684,508 2,148,897 2,386,851
Preferred stock
dividends expense 226,276 359,428 945,132 1,078,284
------------ ------------ ------------ ------------
Net income $ 556,618 $ 1,022,862 $ 1,878,071 $ 2,908,673
============ ============ ============ ============
STATEMENTS OF OPERATIONS - COMBINED
- -----------------------------------
Net (loss) income:
Consumer
Products $ (635,241) $ (266,501) $(1,978,197) $ (836,796)
Financial Services 556,618 1,022,862 1,878,071 2,908,673
------------ ------------ ------------ ------------
Net income available
to common
shareholders $ (78,623) $ 756,361 $ (100,126) $ 2,071,877
(Loss) Earnings Per
Share - Basic $ (0.02) $ 0.20 $ (0.03) $ 0.56
(Loss) Earnings Per
Share - Diluted $ (0.02) $ 0.20 $ (0.03) $ 0.56
Average shares
outstanding -
Basic 3,727,589 3,727,589 3,727,589 3,727,589
Average shares
outstanding -
Diluted 3,743,389 3,727,589 3,734,733 3,727,589
CONTACT: The Middleton Doll Company
George R. Schonath, 262-523-4300