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Q.E.P. Co., Inc., Reports Record Quarterly Sales for Its Fiscal 2009 Second Quarter BOCA RATON, Fla., Oct. 15, 2008 (GLOBE NEWSWIRE) -- Q.E.P.
Co., Inc. (NasdaqGM:QEPC - News) (the ``Company'') today filed a Form
10-Q with the SEC to announce its financial results for
the second quarter of its fiscal year ending on February
28, 2009. The Company reported record quarterly net sales of $61.0 million for the second quarter of fiscal 2009, an increase of $3.8 million from the $57.2 million reported in the same quarter of fiscal 2008. In addition, gross profit margin increased by 47 basis points from 28.3% in the second quarter of fiscal 2008 to 28.8% in the second quarter of fiscal 2009. Sales were $113.9 million for the first six months of fiscal 2009 with a gross profit margin of 29.5% compared to sales of $114.1 million with a gross profit margin of 28.7% for the first six months of fiscal 2008. Improved margins in both the second quarter and year to date of fiscal 2009 offset by increased operating costs and the second quarter fiscal 2008 realization of a one-time $0.6 million gain on the sale of businesses resulted in second quarter fiscal 2009 operating income of $2.0 million compared to $3.6 million for the second quarter of fiscal 2008 and year to date fiscal 2009 operating income of $4.5 million compared to $6.3 million for fiscal 2008. Net income for the second quarter of fiscal 2009 was $0.8 million ($0.23 per diluted share) compared to $0.1 million ($0.02 per diluted share) for the second quarter of fiscal 2008. The fiscal 2008 period includes a $1.4 million, non-tax deductible, expense related to the Company's settlement of its then outstanding put warrant liability. Year to date fiscal 2009 net income was $2.1 million ($0.59 per diluted share) compared to $0.9 million ($0.25 per diluted share) for the first six months of fiscal 2008.
Q.E.P. CO., Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
August 31, February 29,
2008 2008
--------- ---------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 990 $ 949
Accounts receivable, less allowance
for doubtful accounts of
$478 and $431 as of August 31, 2008
and February 29, 2008, respectively 38,996 32,543
Inventories 33,726 26,496
Prepaid expenses and other current
assets 1,987 2,505
Deferred income taxes 746 754
--------- ---------
Total current assets 76,445 63,247
Property and equipment, net 7,092 7,851
Deferred costs 3,008 --
Deferred income taxes 1,796 1,787
Goodwill 9,402 9,685
Other intangible assets, net 2,514 2,717
Other assets 324 339
--------- ---------
Total Assets $ 100,581 $ 85,626
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 22,131 $ 15,968
Accrued liabilities 10,816 11,690
Lines of credit 34,260 24,537
Current maturities of long term debt 1,346 1,977
--------- ---------
Total current liabilities 68,553 54,172
Notes payable 4,301 4,472
Other long term debt 250 250
Other long term liabilities 484 377
--------- ---------
Total Liabilities 73,588 59,271
Commitments and Contingencies -- --
SHAREHOLDERS' EQUITY
Preferred stock, 2,500,000 shares
authorized, $1.00 par value;336,660
shares issued and outstanding at
August 31, 2008 and February 29, 2008 337 337
Common stock; 20,000,000 shares
authorized, $.001 par value; 3,531,341
and 3,528,341 shares issued, and 3,410,026
and 3,433,363 shares outstanding at August
31, 2008 and February 29, 2008, respectively 3 3
Additional paid-in capital 10,226 10,154
Retained earnings 18,618 16,574
Treasury stock; 121,315 and 94,978
shares (held at cost) outstanding
at August 31, 2008 and February 29,
2008, respectively (908) (756)
Accumulated other comprehensive
income (loss) (1,283) 43
--------- ---------
Total Shareholders' Equity 26,993 26,355
--------- ---------
Total Liabilities and Shareholders'
Equity $ 100,581 $ 85,626
========= =========
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the Three Months For the Six Months
Ended August 31, Ended August 31,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Net sales $ 61,000 $ 57,162 $113,885 $114,125
Cost of goods sold 43,456 40,992 80,305 81,402
-------- -------- -------- --------
Gross profit 17,544 16,170 33,580 32,723
Operating costs and expenses:
Shipping 7,211 5,680 12,818 11,779
General and administrative 4,584 4,123 9,038 8,813
Selling and marketing 3,773 3,430 7,398 6,530
Other expense (income), net (33) (687) (145) (686)
-------- -------- -------- --------
Total operating costs
and expenses 15,535 12,546 29,109 26,436
-------- -------- -------- --------
Operating income 2,009 3,624 4,471 6,287
Change in put warrant
liability -- (1,400) -- (1,439)
Interest expense, net (578) (638) (1,033) (1,298)
-------- -------- -------- --------
Income before provision
for income taxes 1,431 1,586 3,438 3,550
Provision for income taxes 618 1,527 1,387 2,634
-------- -------- -------- --------
Net income $ 813 $ 59 $ 2,051 $ 916
======== ======== ======== ========
Net income per share:
Basic $ 0.24 $ 0.02 $ 0.60 $ 0.26
======== ======== ======== ========
Diluted $ 0.23 $ 0.02 $ 0.59 $ 0.25
======== ======== ======== ========
Weighted average number of
common shares outstanding
Basic 3,426 3,436 3,429 3,438
======== ======== ======== ========
Diluted 3,463 3,641 3,479 3,621
======== ======== ======== ========
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
For the Six Months
Ended August 31,
----------------------
2008 2007
--------- ---------
Cash flows from operating activities:
Net income $ 2,051 $ 916
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 922 1,055
Change in fair value of put warrant
liability -- 1,439
Bad debt expense 113 111
Gain on sale of businesses -- (605)
Stock-based compensation expense (37) 265
Deferred income taxes -- 1,734
Changes in assets and
liabilities:
Accounts receivable (7,655) (1,719)
Inventories (8,564) (2,959)
Prepaid expenses and other
current assets 458 1
Deferred costs and other assets (2,952) 23
Trade accounts payable and
accrued liabilities 6,208 2,137
--------- ---------
Net cash provided by (used in)
operating activities (9,456) 2,398
--------- ---------
Cash flows from investing activities:
Capital expenditures (360) (289)
Proceeds from sale
of businesses 335 3,053
--------- ---------
Net cash provided by (used in)
investing activities (25) 2,764
--------- ---------
Cash flows from financing activities:
Net borrowings under lines of credit 10,236 (1,520)
Borrowings of long-term debt 547 1,397
Repayments of long-term debt (1,054) (2,427)
Settlement of put warrant liability -- (2,300)
Purchase of treasury stock (154) (60)
Dividends (7) (12)
--------- ---------
Net cash provided by (used in)
financing activities 9,568 (4,922)
--------- ---------
Effect of exchange rate changes on cash (46) 13
--------- ---------
Net increase in cash 41 253
Cash and cash equivalents at beginning
of period 949 822
--------- ---------
Cash and cash equivalents at end of period $ 990 $ 1,075
========= =========
Contact: Q.E.P. Co., Inc.
Richard A. Brooke, Senior Vice President and Chief Financial
Officer
561-994-5550
Source: Q.E.P. Co., Inc.
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