Variflex reported the results for Q1 ended October 31, 2003. The Company reported a net loss for the quarter of $477,000 or ($0.10) per diluted share, on net sales of $12.1 million, compared to net income of $11,000, or ($0.00) per diluted share, on net sales of $12.6 million for the first quarter of the previous fiscal year.
The Company said revenue declined 4 percent from the comparable period a year ago as a result of a 29 percent decline in the action sport category and 34 percent in the protective product category. The declines in these categories were largely offset by an increase in revenue of 47 percent in the outdoor products category. While the outdoor products category continues to show revenue growth, margins for this category have been impacted by competitive pricing pressures and an increase in “direct” shipments from overseas suppliers, which typically carry lower margins.
“We foresee improving revenue in the action sport and protective product categories in the third and fourth fiscal quarters of this year, as we sell products utilizing the recently acquired “World Industries”(R) and “Shrek II”(R) licenses,” stated Jay Losi, Variflex's Chief Executive Officer. “We continue to be encouraged by our overall product development and sales efforts, as large customers continue to increase the number of our products they are carrying,” Losi added.
He noted that the Company continues to maintain a strong balance sheet with $18.3 million in cash and cash equivalents, $29.1 million in working capital, and minimum long term debt.
