Quarterly Sales - $50.7 Million                        Net Income - $2.3 Million                   Cash From Operations - $3.2 Million 

BOCA RATON, Fla., June 12, 2009 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (Nasdaq:QEPC) (the "Company"), today announced its financial results for the first quarter of its fiscal year ending on February 28, 2010.

Fiscal 2010 First Quarter Results of Operations

The Company reported net sales of $50.7 million for the first quarter of fiscal 2010 -- a decrease of $2.2 million from the $52.9 million reported in the same quarter of fiscal 2009.

The change in net sales reflects modest improvements in the Company's U.S. and European operations offset by the more significant effects of the weakening U.S. dollar compared to the same quarter in fiscal 2009. Nonetheless, the softening of residential, commercial and construction markets that impacted the Company's operations in the latter half of the last fiscal year appears to have continued to restrain sales during the Company's fiscal 2010 first quarter.

The Company's gross margin increased to 30.6% for the first quarter of fiscal 2010 -- up from 30.3% in the first quarter of fiscal 2009 and up from 27.5% for the Company's 2009 fiscal year. The margin improvement generally reflects the moderating costs of raw materials in the U.S. offset by the negative impact of the weakening U.S. dollar on the Company's international operations. However, as a result of the decrease in net sales, gross profit for the first quarter of fiscal 2010 was $15.5 million, down $0.5 million from $16.0 million in the first quarter of fiscal 2009.

Operating expenses for first quarter of fiscal 2010 were $11.6 million or 22.9% of net sales, a decrease of $2.0 million and 2.8% of net sales from the $13.6 million or 25.7% of net sales reported in the same quarter of fiscal 2009. By comparison, operating expenses for the Company's 2009 fiscal year excluding the impairment loss on goodwill were 25.8% of net sales. As previously reported by the Company, in response to the weakening economic environment during the latter half of fiscal 2009, the Company took significant steps to reduce expenses and adjust its operating plans. Significant savings in operating expenses were realized during the first quarter of fiscal 2010 related to these measures. In addition, the weakening of the U.S. dollar made a positive contribution to a reduction in operating expenses of the Company's international operations.

The moderating economic climate, the working capital and expense control measures implemented, and to a lesser degree the weakening of the U.S. dollar combined to significantly increase the Company's net income for the first quarter of fiscal 2010 to $2.3 million ($0.64 per diluted share) from $1.2 million ($0.35 per diluted share) for the first quarter of fiscal 2009.

Cash provided by the Company's operations during the first quarter of fiscal 2010 was $3.2 million -- substantially all of which was used to reduce debt during the quarter. By comparison, during the first quarter of fiscal 2009 $1.8 million of cash was used in operations and was financed by additional borrowings. Working capital at the end of the Company's fiscal year 2010 first quarter was $9.7 million, an increase of $3.8 million from $5.9 million at the Company's fiscal 2009 year-end.

The Company reiterated that significant economic uncertainties remain in each of the markets in which it operates. Accordingly, it remains extremely difficult for the Company to project how the global economic environment will perform and the extent to which, or whether, the recently experienced improvements in the Company's results of operations will continue.

NASDAQ Listing and SEC Registration

On May 29, 2009, the Company announced that, consistent with other cash management and cost reduction measures implemented, it had decided to delist its common stock from the NASDAQ Global Market and deregister its common stock under the Securities Exchange Act of 1934.

The Company currently intends to file a Form 25, Notification of Removal from Listing and/or Registration under Section 12(b) of the Exchange Act, with the Securities and Exchange Commission and NASDAQ on June 24, 2009. Upon filing of the Form 25 or shortly thereafter, the Company anticipates that its common stock will be quoted in the over-the-counter market on the Pink Sheets, a centralized electronic quotation service for over-the-counter securities. The Company expects its common stock will continue to trade on the Pink Sheets, so long as market makers continue to make a market in the Company's common stock.

On the effective date of the NASDAQ delisting, expected to be on or before July 6, 2009, the Company intends to file a Form 15, Notice of Termination of Registration and Suspension of Duty to File, with the Securities and Exchange Commission to terminate its reporting obligations under the Exchange Act. When the Form 15 has been filed, the Company's obligation to file reports and other information under the Exchange Act, such as Forms 10-K, 10-Q and 8-K, will immediately be suspended, although the Company currently intends to continue reporting certain quarterly financial results, as well as its annual audited financial results, in press releases and on its website.

Q.E.P. Co., Inc., founded in 1979, is a leading worldwide manufacturer, marketer and distributor of a broad line of flooring tools and accessories for the home improvement market.