The Orlando Sentinel from Orlando, Florida • Page 94

20 Orlando Sentinel Cover Story FEBRUARY 19-25, 2001 21 ft Hnii fc 1mi tads IP New in 2001 Action Products used last week's American International Toy Fair in New York to introduce several product lines, including these: Taking stock of toys Action Products International stock price per share With its stock price flagging, the -small educational toy maker hopes to pick up steam with its new line of Thomas arts and crafts toys. Action Products International Inc. Corporate headquarters: Orlando $5 Asof Feb. 19: 1 $1.63 I All aboard. Action Products International is hoping its Thomas Friends Creative Play Art Train will be the little engine that pulls the company back into shareholders' good graces.

Why Thomas? The venerable tank engine is a long-running hit with consumers. U.S. customers bought $260 million worth of Thomas products last year. Chairman, CEO: Ronald Kaplan President COO: Ronald Tuchman Earth Lore excavation adventure sets: Lets kids pretend to unearth dinosaur bones and ancient artifacts. Sales: $7.8 million, compared with $5.9 million in 1999 Profit: $95,300, compared with a $232,500 loss in 1999 1 I ii i i.t 1 1 i i 1 1 1 1 1 1 1 1 ii i ii 1 1 1 1 1 1 1 1 1 DJ A A SON DJ A ASO Kaplan 2000 19981999 SOURCE: Sentinel research 2001 DANA A.

FASANOOR1.ANIX) SENTINEL i- 3d Selling 'toys that teach' Sales Profitloss ClimbTron WalliGaton New version of API's best-selling window-climbing robot Other new versions include Vertibug and Brainizord. By TODD PACK OF THE SENTINEL STAFF Ron Kaplan's company makes toy rockets and robots, the kind you find at educational toy stores, but he said its future is riding on a really useful tank engine named Thomas. Action Products International Inc. of Orlando is coming out with arts and crafts toys based on "Thomas Friends," a line Kaplan said could help the company grow by getting its products in mainstream stores. Thomas isn't the company's only new product line.

Capitalizing on the success of its best-selling ClimbTron window-climbing robot, it's coming out with several new robots and has come up with a "back story" about how their planet was taken over by the evil Malevotron. It's also building on its Space Voyagers NASA-theme toys to include a trio of action figures, and it has acquired a Canadian toy company, Earth Lore that specializes in archaeology and paleontology play sets. But Thomas is quietly leading the way "Thomas is our wedge," said Kaplan, Action Products' chairman and chief executive officer. Stores that ordinarily wouldn't look at the company's catalog may be interested now because of the venerable tank engine, he said. Action Products introduced the Thomas toys last week at the 98th annual American International Toy Fair in New York.

It's too soon to tell whether the strategy is working it could take weeks for some retailers to complete $8 $800 nmffibns Tnn'nth0UMnfc 700 600 00 their orders but Kaplan said he's encouraged by buyers' reactions. "It's opened so many doors for us," he said. Kaplan, whose mother co-founded the company in 1977, was talking to a visitor at the company's Toy Fair booth when Pablo Savet-man, vice president of sales, asked to borrow a prototype of a crayon-and-chalk holder, called Thomas Friends Creative Play Art Train, to show buyers from Barnes Noble the nation's No. 1 bookseller. "Take the entire store," Kaplan said, refer-' ring to Action Products' toy-packed booth.

Later, he explained the company would try to sell the chain of nearly 600 book superstores on several of its lines, but "if we only do Thomas Friends, with 600 new doors, our shareholders will be happy." Its shareholders need something to cheer them up. The company's stock has plunged from its Space Voyagers: Heroic-looking astronaut action figures explore space and ethnic diversity the astronauts come in white male, black male and Hispanic female versions. into a real toy company in 1996, when Kaplan came aboard as chairman, CEO and president. Under his leadership, the company shed noncore product lines, such as silk-screen T-shirts and astronaut-style snacks, and in 1998 launched Space Voyagers, its line of NASA-theme merchandise. That same year, it acquired a three-year license to make educational toys, such as metal detectors, under the Discovery Channel brand.

The followingyear, it moved its executive offices from Ocala to a suite on the 21st floor of what is now the Bank of America building in downtown Orlando. Kaplan said the move to Orlando was made to help recruit employees and to place executives near a major airport. Action Products made its first acquisition last October, buying Earth Lore, issuing 105,000 restricted shares of common stock and assuming $300,000 in debt. But even with that deal, Action Products remains a small company. It has about 30 employees in the United States and Canada.

1996 1997 1998 1999 2000 19951997199819992000 SOURCE: Sentinel research DANA A. FASANOORI.ANIX) SENTINEL 1 --MJk When it deciaea wim up wun a une ot as tronaut action figures, it hired a comic book artist to design the dolls, then brought in a free-lancer to sculpt the prototypes. It will contract with an outside manufacturer to I 1 VI I "0MR1 R06ERTO GONZALEZORLANDO SENTINEL produce the figures, which are scheduled to go on sale this summer. This month, Kaplan took another step Toy heaven. Action Products hawks its toy line at a booth at last week's American International Toy Fair in New York.

The company isn't in the same league as Mattel, but it wants to become a major player in the educational toy market It's targeting big retailers such as Barnes Noble to carry its products. Logiblocs Spy Tech Set An electronic building-blocks set that lets children build voice recorders, alarms and a lie detector. to help the company grow. Me gave up his title of president and brought in Ronald Tuchman, a former Toys Us executive, as president and chief nneratine officer. three-year high of $6.44 a share in 1998 to a low of 88 cents a share in December.

Shares are down 13 percent this year, including a 7 percent drop last week to $1.63 a share, despite news that it made a profit of $95,300 on sales of $7.8 million in 2000. Action Products' sales were meager compared with giant Mattel Inc's $4.7 billion in revenue, but the local company's earnings were a big improvement from 1999, when it lost $232,500 on sales of $5.9 million. It blamed the year-earlier loss on product development and the continuation of a reorganization. Originally a distributor of other company's toys and novelties. Action Products began to evolve -r $180.1 million in large part on poor sales of Pokemon trading cards Thomas "never really goes out of style," said Alan Marcus, a vice president of public relations at upscale toy retailer FAO Schwara in New York.

Looking forward, Kaplan said, Action Products' goal is boasting sales and increasing shareholder value, "whether that's by being an actively traded stock or being acquired." But that doesn't mean the company is for sale, he said. The goal is becoming "valuable enough that people want to take you over, whether you want to sell or not," Kaplan said! Todd Pack can be reached at tpack(Wlandositineltoni or 407-420-5407. J' 'I ti. i' 1 'i L' I 'i I 1 i Llj ijy I "t'-X-' Tuchman, wno ivcu as cnairman and chief executive of Imaginarium, a chain of upscale educational toy stores, before joining Action Products' board in 1998, said, "One of the things going on this business is that you need to take these giant steps forward to create growth. "One of the obstacles to that is you can't be dumb," he said.

Kaplan said that why Action Products joined the roughly 40 companies licensed to produce Thomas Friends merchandise. U.S. consumers bought $260 million worth of Thomas merchandise last year, according to Gullane Entertainment, the U.K. company that owns the property. That's a tiny fraction of the $2.8 billion to $3 billion U.S.

shoppers spent on Pokemon games and merchandise. But while Pokemon's popularity is cooling Hasbro Inc. blamed a fourth-quarter loss of Construction Woodkits: Wooden model kits of animals and vehicles. TINA INEBEftGASM ilATfcl HRKS.S.