Q.E.P. Co., Inc. Reports Results for the Fiscal 2001 Third Quarter and Nine Months
Fiscal 2001 third-quarter net sales were $26.3 million compared with $28.2 million in the comparable prior-year quarter. This revenue decline was primarily attributable to the company's decision to exit the tackless carpet strip business and additional incentives provided to a major customer as described below. Tackless carpet strip sales contributed approximately $3.3 million to the company's revenues in last year's third quarter. If revenues in the fiscal 2000 third quarter attributable to the sales of tackless carpet strip and the additional incentive in fiscal 2001 are disregarded, then revenues for the fiscal 2001 third quarter would have increased 9.5% from the fiscal 2000 third quarter.
The company has recorded an approximate $2 million charge in the fiscal 2001 third quarter related to: the payment of incentive monies to one of the company's major customers; expenses associated with the relocation of the company's California distribution facility to Henderson, NV; and payments required to be made under severance agreements as a result of the downsizing of the company's operations in Holland. The company believes that it will realize long-term benefits from each of these charges, including increased market penetration and sales volume through the major customer to which the incentives were provided, rent reduction and tax savings in the Henderson, NV, facility, and payroll savings in Holland. Additional shipping, selling and interest costs and continuing losses in the company's International operations also negatively impacted financial performance in the fiscal 2001 third quarter.
Excluding the $2 million pre-tax special charge, net income for the fiscal 2001 third quarter was $440,000 compared with $775,000 for last year's third quarter and earnings per basic share were $0.13 compared with $0.23 last year. After the charge, the company incurred a net loss of $797,000 in the fiscal 2001 third quarter and a loss per basic share of $0.24.
For the nine months ended November 30, 2000, net sales were $86.0 million compared with the prior year's $84.5 million. Excluding the special charge, net income was unchanged from the prior year at $2.2 million. After the charge, the company's net income for the nine months was $1.0 million, and earnings per share were $0.29 compared with last year's $0.67.