OurPet's Releases Third Quarter Results

Business Wire, Dec 4, 2002

Business Editors

FAIRPORT HARBOR, Ohio--(BUSINESS WIRE)--Dec. 4, 2002

OurPet's Company (OTCBB:OPCO)

-- Demographics: increasing numbers of aging members of the "baby boom" generation are becoming "empty nesters". Pets fulfill human needs for companionship, love and security.

-- Wealth: the average dog-owning family spends $1,266 annually on their pets. Cat owners typically spend $930 per year. Bird owners spend $881.

-- Lengthening life spans: Like humans, pets are living longer lives. They face similar pathologies to those of aging humans, requiring additional treatments and care by owners.

-- Multiple ownership: 62 percent of U.S. households own a pet, and 47 percent of households own more than one. On average, dog owners own 1.7 canines, cat owners have 2.1 felines, and bird owners keep 2.7 avians.

-- Health benefits: Research has identified medical benefits that pet owners, especially older ones, enjoy, including lowered blood pressure and stress levels.

OurPet's Company (OTCBB:OPCO) today released results for its third quarter, ended September 30, 2002. OurPet's also announced that, based on strong initial interest in new products by a number of its customers, it anticipates solid sales growth in 2003. The company also announced that is has appointed William Kahl as Special Advisor to OurPet's Board of Directors.

Quarterly revenues of $1,312,249 declined 18 percent, compared to year-earlier period revenue of $1,600,248. Net income was a loss of $49,245, versus net income of $170,271 in the third quarter of 2001. EPS, which are net of preferred stock dividends, were $0.00, or breakeven, versus $0.01 in the year-earlier quarter. For the first nine months of 2002, revenues of $3,270,764 declined 15 percent versus $3,835,248 in the year-earlier nine-month period. Net income for the first nine months of 2002 was a loss of $322,929 versus net income of $16,475 in the first nine months of 2001. EPS, net of preferred stock dividends, was ($0.03) in the first nine months of 2002, versus ($0.01) in the year-earlier period.

The following table summarizes financial highlights of the release:

                            Q3 2002      Q3 2001   Change(%)
                          ----------   ----------  --------
Gross Revenue             $1,312,249   $1,600,248   (18.0)

Gross Profit                $344,820     $422,972   (18.5)

Net Income                  ($49,245)    $170,271     N/M

Earnings per Share(a)          $0.00        $0.01     N/M

(a) Basic loss per common share after preferred dividends

Dr. Steven Tsengas, founder, chairman and CEO of OurPet's, stated, "The challenging sales environment continued during the third quarter. While the pet products industry remains sluggish, we are pleased to report that customers have expressed strong interest in our new products. In particular, we already are noting demand for our new OurCat's Choice(TM) Premium Clumping cat litter product, an offering that will extend our product line considerably. According to the latest American Pet Product Manufacturers Association (APPMA) survey, annual sales in the United States for natural premium cat litters are $80-100 million. This item is another example of OurPet's commitment to introducing innovative, high-quality products. We anticipate that this item, along with several other pet consumable products, will contribute to sales growth in 2003."

Dr. Tsengas added, "While our gross profit margin percentage was in line with year-earlier levels, our operating margin declined considerably, in dollars and as a percentage of sales, versus year-earlier levels. This reflects our decision to invest in OurPet's sales and marketing capabilities by expanding the sales staff and also increasing promotional activities. While we are pleased with the early results of this strategy, we will monitor expense levels closely on an ongoing basis."

William Kahl, vice president, Corporate Development at Henkel Consumer Adhesives, Inc., has been named as a Special Advisor to OurPet's Board of Directors. Mr. Kahl provides strong background in consumer marketing and new product development. Mr. Kahl joined Manco, Inc. in 1986, following his graduation from John Carroll University. Since that time, Manco's sales expanded from $20 million to over $300 million annually. Manco, Inc. was acquired by Henkel Group GmbH several years ago.

OurPet's designs, produces and markets a broad line of innovative, high-quality pet products. The American Pet Products Manufacturers' Association (APPMA)(1) recent survey estimates the U.S. market for pet products at $32 billion, with a long-term annual growth rate of 8-15 percent. The APPMA estimates an American pet population of 68 million dogs, 73 million cats and 19 million birds. The following factors will continue to drive the growth of this market:

-- Demographics: increasing numbers of aging members of the "baby boom" generation are becoming "empty nesters". Pets fulfill human needs for companionship, love and security.

-- Wealth: the average dog-owning family spends $1,266 annually on their pets. Cat owners typically spend $930 per year. Bird owners spend $881.

-- Lengthening life spans: Like humans, pets are living longer lives. They face similar pathologies to those of aging humans, requiring additional treatments and care by owners.

-- Multiple ownership: 62 percent of U.S. households own a pet, and 47 percent of households own more than one. On average, dog owners own 1.7 canines, cat owners have 2.1 felines, and bird owners keep 2.7 avians.

-- Health benefits: Research has identified medical benefits that pet owners, especially older ones, enjoy, including lowered blood pressure and stress levels.