Q.E.P. Co., Inc., Reports Fiscal 2002 First-Quarter Financial Results.

Business Editors

BOCA RATON, Fla.--(BUSINESS WIRE)--July 12, 2001

Q.E.P. CO., INC. (Nasdaq:QEPC), today announced financial results for its fiscal 2002 first quarter ended May 31, 2001.

For the fiscal 2002 first quarter, net sales were $28.9 million, compared with $31.6 million for the corresponding quarter last year. After adjusting for the more than $3 million in prior-year revenue attributable to the sale of the Company's domestic tackless carpet strip business, revenue rose slightly versus the year-ago period. Gross profit margin improved 260 basis points during the quarter to 33.77 percent versus 31.17 percent. The Company experienced increased freight and selling costs versus last year due to higher domestic volume. Net income was $604,000, compared with $943,000 one year ago, and earnings per share were $0.18 versus last year's split-adjusted $0.28.

The Company will be hosting a conference call at 11:30 a.m. Eastern, on Thursday, July 12, 2001, to discuss today's press release and to answer questions. To participate in the conference call, please dial 1-800-553-0288 five to 10 minutes before the call is scheduled to begin.

Q.E.P. Co., Inc., is a leading manufacturer, marketer and distributor of a broad line of specialty tools and flooring-related products. Under brand names Q.E.P., Roberts, and O'Tool, Q.E.P. markets approximately 4,000 specialty tools and related products used primarily for the preparation and installation of ceramic tile, carpet, and marble. The Company sells its products to large home improvement retail centers, as well as traditional distribution outlets in 50 states and 49 countries worldwide.

-Financial Information Follows-

                  Q.E.P. CO., INC., AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME
           (In thousands, except per-share data; unaudited)

                                           Three Months Ended

                                         5/31/01          5/31/00
                                        --------         --------

Net sales                               $ 28,886         $ 31,606
Cost of goods sold                        19,131           21,756
                                        --------         --------
   Gross profit                         $  9,755         $  9,850
Costs and expenses
   Shipping                                2,509            2,374
   General and administrative              2,692            2,701
   Selling and marketing                   2,990            2,783
   Other (income) expense                    (52)              26
                                        --------         --------
   Operating income                     $  1,616         $  1,966
Interest expense                             640              443
                                        --------         --------
   Income before provision for
    income taxes                        $    976         $  1,523
Provision for income taxes                   372              580
                                        --------         --------
    NET INCOME                          $    604         $    943
                                        ========         ========
Basic and diluted net income
 per common share(a)                    $   0.18         $   0.28(a)
                                        ========         ========
Weighted average number of shares
 outstanding(a)                            3,381            3,384(a)
                                        ========         ========
(a) Adjusted to reflect stock split

                      CONSOLIDATED BALANCE SHEETS
                       (In thousands, unaudited)

                                      May 31, 2001   February 28, 2001
                                      ------------   -----------------
Assets
   Current assets                       $ 40,970         $ 40,293
   Property and equipment, net             6,869            7,155
   Other assets                           16,459           16,588
                                        --------         --------
Total Assets                            $ 64,298         $ 64,036
                                        ========         ========

Liabilities and Stockholders' Equity
   Current liabilities (including
    current portion of long-term
    debt)                               $ 30,944         $ 30,505
   Long-term debt and other
    liabilities                           10,088           11,418
   Warrant put liability                     650                0
   Stockholders' equity                   22,616           22,113
                                        --------         --------
Total Liabilities and
 Stockholders' Equity                   $ 64,298         $ 64,036
                                        ========         ========

This announcement contains forward-looking statements, which are made pursuant to the safe-harbor provisions of the Securities Litigation Reform Act of 1995. Statements as to what the Company "believes," "intends," "expects," or "anticipates" and other similar anticipatory expressions, are generally forward-looking and are made only as of the date of this report. Additionally, the report is 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 those relating to Q.E.P.'s ability to realize increased sales and profitability.