SOURCE: Action Products International, Inc.

November 14, 2007 13:52 ET

Action Products Reports Results for the Period Ended 9/30/07

Cost Containment Results in Bottom Line Improvement Despite Sales Climate

ORLANDO, FL--(Marketwire - November 14, 2007) - Action Products International, Inc. (NASDAQ: APII) today announced its results for the third quarter and nine months ended September 30, 2007.

Net sales of $1,684,900 in the 2007 third quarter contributed to a total net loss of $529,300, or 10 cents per share, as compared with a net loss of $229,800, or 4 cents per share, with net sales of $2,056,100 in the year ago third quarter. Net loss for the nine months ended September 30, 2007 improved to $1,328,400, or 25 cents per share, on net sales of $4,486,900 as compared with a net loss of $1,614,900, or 31 cents per share, on sales of $5,326,800 for the nine months ended September 30, 2006. The reduced loss was partly achieved by a reduction of Selling General & Administrative expenses which decreased by $154,500 to $1,084,000 for the three-month period ended September 30, 2007, from $1,238,500 for the three-month period ended September 30, 2006. The SG&A expense decreased by $1,052,200 to $3,217,200 for the nine-month period ended September 30, 2007 from $4,269,400 for the nine-month period ended September 30, 2006.

The decrease in SG&A expenses for the periods is due primarily to cost reduction initiatives implemented in the third quarter of 2006 in preparation for an anticipated revenue decline as management addressed recruiting and new product initiatives designed to bring the business to long range accelerated growth and profitability. As part of these initiatives we eliminated several staff positions resulting in cost savings of approximately $506,400 for the nine months ended September 30, 2007 as compared to the respective period in 2006. Another significant change was a reduction of $322,600 in bad debt expense for the nine months ended September 30, 2007. This resulted from disciplined, consistent policies in granting credit and pursuing payments from delinquent customers. Loss reported this quarter from liquidation of invested reserves offset operational improvements by approximately $90,000.

Year-to-date September operating cash usage for 2007 was $671,000 principally as a result of an investment in new inventories in anticipation of longer production lead cycles and increasing market penetration in 2008. In July 2007 we paid in full our mortgage on our company owned distribution center, held by Wachovia Bank.

"As this shows, we have been successfully bringing our expenses in line with revenue expectations for the near term. While as expected our sales continued to be below last year's comparable period, operating expenses for the quarter were reduced for the 90-day period (down 12.5%), and substantially lower (24.6%) for the nine months," notes Ronald Kaplan, the company's CEO and former Chief Financial Officer. "We have supported our operating management's decision to limit the amount of discounted sales to off-price retailers that tend to unfavorably impact our 2008 brand objectives. Because of this effort we expected sales to temporarily lag prior periods. We believe this strategy, followed by increased emphasis on sales at margin to our core customers and regional and national specialty retail chains, with whom our brand equity and gross profit objectives can be achieved, will ultimately improve our brand equity, sales revenue and profit margins. To further enhance these efforts, we are introducing several new products for the 2008 selling season, and are in the process of recruiting additional sales personnel to cover those parts of the retail marketplace representing the majority of our managed revenue decline.

"In our corporate development, we are qualifying many opportunities for rapid growth and improvements through acquisitions in the broader children's market, and we are currently pursuing those. Our navigation this year has been directed at making fundamental improvements in our current operating division, and achieving external growth through the acquisition of well performing synergistic assets in broader markets for consumer edutainment. We are on track on both objectives, which we believe will increase value for our shareholders."

The Company will hold a telephonic conference call with investors on Monday, November 19, 2007 at 4:00 pm EST. Participants can call (800) 379-3293 and access code: 658891 #. An automated system will answer and prompt parties to enter the access code, followed by the pound (#) sign. All callers will be prompted to record a personal entry announcement that will be announced upon entry to the conference.

About Action Products International, Inc.

Action Products International, Inc. (APII), based in Orlando, Fla., is a consumer products manufacturer, emphasizing branded educational and positive leisure products. Action Products consumer brands span activities, arts, crafts, juvenile products and toy categories. Its products are marketed and sold to retailers and consumers.

Visit the Company's Web site at www.apii.com.

Forward-Looking Statements

Any statements that are not historical facts contained in this release are forward-looking statements. It is possible that the assumptions made by management for purposes of such statements may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, the effect of economic conditions, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions, and other factors discussed from time to time in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.

Contact Information

  • Contact:
    Billie Anne Dinkel
    Public Relations Manager
    Action Products International, Inc.
    (407) 660-7221
    bdinkel@apii.com