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Variflex Reports Loss of $1.8 Million on Slow Sales

October 14, 1997|BARBARA MURPHY

Variflex Inc. in Moorpark reported a net loss for the fiscal year ended July 31 of $1.8 million, or 30 cents per share, on net sales of $51.66 million, compared with net income of $564,000, or 9 cents per share, on net sales of $72.37 million for the previous year.

For the fourth quarter, the company reported a net loss of $896,000, or 15 cents per share, on net sales of $10.97 million, compared with a net loss a year earlier of $1.18 million, or 20 cents per share, on net sales of $12.86 million.

Variflex attributed the loss primarily to the in-line skate market, which has been under considerable pressure for the past two years.

Company officials said they recorded a loss in fiscal 1997 of about $500,000 on the inventory of static in-line skates, and they removed Variflex from the high-end skate market.

"There is no question that the past year has been the most challenging in Variflex's history," said Jay Losi, president and chief operating officer. "However, we believe that our strategy to meet those market challenges has been appropriate and presents the foundation to return the company to profitability."

There were several bright spots despite last year's losses, Losi said, most notably Variflex's snowboard unit.

"Sales of our Static and Barfoot snowboards . . . rose to 10,000 units, an increase of nearly 800% from a year ago," Losi said.

Variflex and Static skateboards showed sales increases of 14% and 12% respectively, to more than $8 million, Losi said.

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