BOCA RATON, Fla., Jan. 22, 2009 (GLOBE NEWSWIRE) -- Q.E.P. Co., Inc. (Nasdaq:QEPC) (the "Company") today filed a Form 10-Q with the SEC to announce its financial results for the third quarter of its fiscal year ending on February 28, 2009.
The Company reported quarterly net sales of $48.6 million for the third quarter of fiscal 2009, a decrease of $6.0 million from the $54.6 million reported in the same quarter of fiscal 2008. In addition, gross profit margin decreased from 28.8% in the third quarter of fiscal 2008 to 24.1% in the third quarter of fiscal 2009.
Net sales were $162.5 million for the first nine months of fiscal 2009 with a gross profit margin of 27.9% compared to net sales of $168.7 million with a gross profit margin of 28.7% for the first nine months of fiscal 2008.
In the third quarter of fiscal 2009, principally due to the decline in its market valuation, the Company recorded a $7.9 million non-cash goodwill impairment charge. The non-cash goodwill impairment charge, along with lower sales and gross profit margin, resulted in third quarter fiscal 2009 operating loss of $8.4 million compared to operating income of $2.0 million for the third quarter of fiscal 2008 and year to date fiscal 2009 operating loss of $3.9 million compared to operating income of $8.2 million for fiscal 2008.
Net loss for the third quarter of fiscal 2009 was $8.4 million ($2.48 per diluted share) compared to net income of $0.8 million ($0.22 per diluted share) for the third quarter of fiscal 2008. In all periods presented, a significant portion of the goodwill impairment charge and the change in the put warrant liability are non-deductible for tax purposes.
Year to date fiscal 2009 net loss was $6.3 million ($1.86 per diluted share) compared to net income of $1.7 million ($0.47 per diluted share) for the first nine months of fiscal 2008.
Excluding the non-cash charge for impairment, change in the put warrant liability and other non-recurring items, the Company reported quarterly adjusted net loss of $0.9 million ($0.28 per diluted share) for the third quarter of fiscal 2009, compared to adjusted net income of $1.1 million ($0.31 per diluted share) for the third quarter of fiscal 2008. Excluding those same items for the nine months ended November 30, 2008, the Company reported adjusted net income of $1.1 million ($0.32 per diluted share) compared to adjusted net income of $3.1 million ($0.85 per diluted share) for the nine months ended November 30, 2007.
As of November 30, 2008, the Company had breached certain financial covenants under the domestic credit facility and, accordingly, was in default under that credit facility and under certain other international and domestic facilities. As a result, on January 22, 2009, the Company entered into a Forbearance Agreement through March 16, 2009 applicable to the Company's domestic credit facility. There can be no assurance that the Company will be in compliance with the terms of its credit facilities upon the termination of the Forbearance Agreement, or able to either amend its credit facilities, obtain continued forbearance or additional financing on terms acceptable to the Company, or that such financing will be available at all.
Lewis Gould commented, "It is important to note that despite the state of the global economy, the core values of QEP and relationships we have remain strong. Our customer partners, banking partners, and vendor partners are all dealing with the same macroeconomic forces that QEP is. When the economy eventually stabilizes, we believe we will be well poised for the inevitable market upswing. In the meantime, we are undertaking steps necessary to return to profitability."
Certain statements in this press release are forward-looking statements, which are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are made only as of the date of this report and are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in the forward-looking statements and from historical results of operations. Among the risks and uncertainties that could cause such a difference are our assumptions relating to the continuing availability of financing and the affects of other business or economic circumstances. A more detailed discussion of risks attendant to the forward-looking statements included in this press release are set forth in the "Forward-Looking Statements" sections of our Annual Report on Form 10-K for the year ended February 29, 2008 filed with the SEC and in our Quarterly Report on Form 10-Q for the quarter ended November 30, 2008 filed with the SEC.
Q.E.P. CO., Inc.
