ZNDT Zindart Limited ADS (MM)

Please replace the release with the following corrected version due to multiple revisions to net loss from continuing operations figures in the first graph. The corrected release reads: ZINDART FIRST QUARTER RESULTS: CORGI REVENUES GROW 12% OVER FIRST QUARTER OF PRIOR YEAR; COMPANY MOVES TO REDUCE OVERHEAD EXPENSES Zindart Limited (Nasdaq:ZNDT) today announced results of operations for the first quarter of fiscal year 2006, ended June 30, 2005. Revenues from continuing operations for the quarter were $10.4 million, compared to $9.2 million for the same quarter in the previous year. Net loss from continuing operations for the quarter ended June 30, 2005 was $1.5 million, or $0.15 per share, compared to a loss of $1.9 million, or $0.20 per share, in the same quarter of the previous year. Net loss from discontinued operations was $0.19 million for the quarter ended June 30, 2005, compared to $0.04 million for the quarter ended June 30, 2004. Peter Gardiner, Chairman and CEO, Zindart, stated, "We are initiating several new strategic efforts to lower variable costs through industrial engineering efforts, implementing various efforts to reduce fixed costs through restructuring and shifting our customer strategy to focus on fewer, larger customers. Zindart is also evaluating how we can bring more of Corgi's die-cast production in-house in an effort to capture significant gross profits currently lost to third-party manufacturers." Gardiner continued: "Zindart's supply chain management initiatives, implemented in both its manufacturing and Corgi divisions, are already beginning to generate results. We are seeing improved inventory turnover. We have also set up a new, state-of-the-art warehousing and distribution center at Corgi's European headquarters in Leicester, England, and the manufacturing division has hired a supply chain management professional to drive key inventory management and operations planning initiatives." Corgi's first quarter operating results were in line with management's expectations for the division. The net loss margin has improved to 10 percent, compared to 15 percent in the first quarter of the prior year. Stronger results are anticipated by the fourth quarter, when many of the division's strategies are expected to come to fruition, Gardiner said. During the summer, Corgi released a line of 12 high quality, replica Batman(R) vehicles in coordination with Warner Bros.' promotional activities for its blockbuster movie, "Batman Begins." These products did well at retail and Corgi continues to sell a wide range of Batman related products. In addition, Corgi is developing several line extensions for Streakerz(TM), a popular line of micro racing cars that speed around their own miniature track at high speeds; and a new infant product, Go Go Rollers, intended to serve as a baby's first set of toy cars. Zindart recently released its proxy statement to its shareholders, which included a proposed special resolution to change the name of the listed entity to "Corgi International Limited." The resolution is scheduled to be voted on at Zindart's annual general meeting scheduled for Sept. 27, 2005. "We are now in a place where we have completed the necessary changes in the company's organization structure to allow this exciting name change," Gardiner said. "We believe this will spur additional trading activity." About Zindart Zindart's current divisions include Corgi Classics Limited and Zindart Manufacturing. Corgi Classics Limited develops and markets high-quality lines of die-cast collectible products sold through retail channels in Europe, Canada, Mexico, the United States and elsewhere. Zindart Manufacturing provides both product design and high quality turnkey manufacturing for multi-national companies requiring rapid, high-volume production of intricate die-cast and plastic promotional items, collectibles and gift items. Founded in 1978, Zindart is based in Hong Kong with offices in the United States and the United Kingdom. Zindart has a website at www.zindart.com. Collectors can find more information at www.corgiclassics.com or by calling 1-800-800 CORGI. Because the Zindart Board of Directors is exploring a sale of the Zindart Manufacturing division and the sale of Zindart's Hua Yang Printing division in May 2004, revenues for both quarters ended June 30, 2004 and 2005 reported above reflect only the results of Zindart's Corgi and Corporate operating divisions. Operating results of Zindart Manufacturing division and Hua Yang Printing have been reclassified in Zindart's financial statements and reported as losses from discontinued operations for both quarters ended June 30, 2004 and 2005. Certain statements in this release are forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, in addition to those discussed above and without limitation, changes in market demand for Zindart's products, changes in economic conditions, dependence on certain customers and other risks described in the company's annual report on Form 20-F for the fiscal year ended March 31, 2005. The company undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances. -0- *T ZINDART LIMITED AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) (Unaudited) (Unaudited) As of June As of As of June 30, March 31, 30, 2005 2005 2004 ASSETS Current assets: Cash and cash equivalents $ 4,769 $ 7,012 $ 12,686 Available-for-sale investments 6 25 184 Trade accounts receivable, net 5,408 6,579 15,286 Other assets 10,652 10,666 23,782 Assets of discontinued operations 31,911 29,243 -- ----------- ------- ----------- Total current assets 52,746 53,525 51,938 Property, plant, and equipment, net 7,117 7,933 21,560 Other long term assets 1,851 1,874 2,656 Goodwill 35,312 35,312 35,726 ----------- ------- ----------- Total assets $ 97,026 $98,644 $ 111,880 =========== ======= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 2,636 $ 3,876 $ 13,414 Trade accounts payable 3,593 4,450 12,987 Other current liabilities 3,675 3,264 15,005 Liabilities of discontinued operations 26,444 23,073 -- ----------- ------- ----------- Total current liabilities 36,348 34,663 41,406 Long-term liabilities -- 235 1,076 ----------- ------- ----------- Total liabilities 36,348 34,898 42,482 ----------- ------- ----------- Minority interests 673 693 1,816 ----------- ------- ----------- Stockholders' equity: Common stock 623 623 602 Additional paid-in capital 40,229 40,229 39,473 Retained earnings 17,940 19,590 25,784 Accumulated other comprehensive income 1,213 2,611 1,723 ----------- ------- ----------- Total stockholders' equity 60,005 63,053 67,582 ----------- ------- ----------- Total liabilities and stockholders' equity $ 97,026 $98,644 $ 111,880 =========== ======= =========== ZINDART LIMITED AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except share data) Three months ended June 30, (Unaudited) (Unaudited) 2005 2004 ----------- ----------- Net sales $ 10,433 $ 9,173 Cost of goods sold (6,704) (5,645) ----------- ----------- Gross profit 3,729 3,528 Selling, general, and administrative expenses (5,800) (5,736) ----------- ----------- Operating loss (2,071) (2,208) Other income (expense): Interest income 30 13 Interest expense (193) (191) Other income 600 138 ----------- ----------- Loss before income taxes and minority interests (1,634) (2,248) Income tax benefit 169 394 ----------- ----------- Loss from continuing operations (1,465) (1,854) Loss from discontinued operations (185) (39) Gain on disposal of discontinued operations -- 984 ----------- ----------- Net loss (1,650) (909) =========== =========== Loss per common share: Basic: Loss from continuing operations $ (0.15) $ (0.20) (loss) Income from discontinued operations (0.02) 0.10 ----------- ----------- Net loss $ (0.17) $ (0.10) =========== =========== Diluted: Loss from continuing operations $ (0.15) $ (0.20) (loss) Income from discontinued operations (0.02) 0.10 ----------- ----------- Net loss $ (0.17) $ (0.10) =========== =========== Weighted average number of common shares outstanding: Basic 9,636,943 9,201,783 =========== =========== Diluted 9,636,943 9,201,783 =========== =========== *T