posted
Oh, this one brings back memories....the CEO is Sal Bando, former 3B for the Brewers/A's, and former GM of the Brewers (know you know why they sucked since 1982), and John McGlocklin is a former sniper for the Milwaukee Bucks before the three point shot. They also do or did have an investment firm named, shockingly, Bando-McGloclin Capital....actually this is now the same company, minus the fiance end and add the dolls!
Troubled Middleton Doll dumping its lending business By DORIS HAJEWSKI dhajewski*journalsentinel.com Posted: June 3, 2004 Trying to keep its doors open, money-losing Middleton Doll Co. is getting out of the lending business, cutting dividend payments and moving production to China.
Middleton Doll
Photo/FILE Middleton Doll Co., maker of the doll in blue and yellow, is losing business to competitors such as Adora, maker of the doll in pink, which manufactures products in China at a lower cost. Middleton is now shifting production to China, as well as getting out of the lending business.
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"It's a disaster," chief executive George R. Schonath said in an interview, summing up his company's financial plight.
The moves are necessary as Middleton faces a 2008 deadline to redeem $16.9 million in preferred stock, Schonath said. The Pewaukee-based company's stock market value was $7.5 million at the close of U.S. markets Thursday.
Exiting the lending business is an odd outcome for a company that started as Bando McGlocklin Capital Corp. The financial services firm made money by lending to small businesses and leasing buildings it owned. The firm became a doll-maker in 1993 when a loan to Lee Middleton Doll Co. went bad and Bando McGlocklin acquired the Ohio business out of bankruptcy.
"After starting the company as Bando McGlocklin Capital Corp. in 1980, and issuing the preferred shares, we didn't expect that to redeem it (the stock), we'd have to go out of business," Schonath said.
The company will phase out its lending business over the next four years and will shift doll manufacturing from its Ohio plant to China.
In the past year, both sides of the company declined. Middleton reported a net loss of $720,936, or 19 cents a share, in the first quarter, compared with net income of $481,245, or 13 cents, in the year-earlier period.
Revenue from the financial services business has been declining because the company has made fewer loans as the cost to borrow money increased.
The doll business is losing money as competitorsmake products in China at a lower cost. To respond, Middleton cut prices last year by 35%, while maintaining production in Belpre, Ohio. The Belpre plant will close this week, putting 35 employees out of work. A factory store there which is a big tourist draw will remain open.
Schonath explained the company's position to about 50 shareholders at a 90-minute annual meeting Thursday afternoon at the Milwaukee Athletic Club.
The meeting was a cross between family powwow and cocktail party. Shareholders who invested years ago in a real estate investment trust company are trying to figure out how they've ended up with a money-losing doll business.
Holding wine glasses, and munching on cheese and crackers, some suggested the company keep the financial part of the business.
By the end of the session, Schonath said he would consider the possibility of asking preferred shareholders to extend their holdings beyond the 2008 redemption date.
Schonath said he expected the doll business to return to profitability with the end to U.S. manufacturing. Once the company becomes profitable, it might be possible to find a buyer.
"We, more than anybody, hope we can stand up here in a couple of years and say we are selling the doll company for $10 a share," said vice president Jon McGlocklin, a former Milwaukee Bucks star and one of the founders of the company.
Middleton's shares fell 3 cents to $2.02 Thursday. They have dropped 47% in the past three months.
The company will sell properties and use proceeds from existing loans to pay debt and the preferred shareholders. The decrease in earning assets will reduce taxable income available for common stock dividends over the next four years, the company said. That requires Middleton's board to change the common stock dividend to a yearly payout rather than quarterly.
That may eliminate the possibility of any further dividend for the current fiscal year. Middleton has paid 20 cents a share in dividends this year.
"The decision to cut the dividend weighed heavily on the board," McGlocklin said.
The move to Chinese production comes at a time when Middleton has been involved in 10 patent infringement lawsuits against competitors who produce dolls in China. A trial in a suit against Seymour Mann Inc. is scheduled in July in U.S. District Court in Milwaukee. Most of the others were settled with agreements from defendants to stop certain practices, Schonath said.
In addition, Middleton announced Thursday an agreement with Saks Inc. to sell Lee Middleton Original Dolls at Newborn Nurseries in three department stores owned by the Birmingham, Ala.-based chain. Middleton developed a concept in which girls choose a doll from behind a nursery window and go through a make-believe adoption process.
-------------------- I may be wrong, but I don't think so.... Posts: 837 | From: Madison, WI | Registered: Sep 2005
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