Quality Products Announces Results For the Three and Nine Months Ended June 30, 2005.COLUMBUS, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. -- Quality Products, Inc. (Pink Sheets:QPDC QPDC Quad Programmable Down Converter QPDC Queensland Performance Datsun Club ), a manufacturer and distributor of aircraft ground support equipment ("Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. Jack") and hydraulic press hydraulic press Machine consisting of a cylinder fitted with a piston (see piston and cylinder) that uses liquid under pressure to exert a compressive force upon a stationary anvil or baseplate. The liquid is forced into the cylinder by a pump. machine tools ("Multipress"), reported fiscal 2005 third quarter and nine months operating results. For the quarter, income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $404,069, a decrease of $132,576 or 24.7% compared to $536,645 earned in the June June: see month. quarter of last year. Revenues were $2,447,971, an increase of $209,504 or 9.4% compared to $2,238,467 last year. Gross margins declined to 34.4% this year from 43.8% last year as wages and manufacturing overhead expenses increased. During the quarter S G & A expenses decreased to 17.4% of sales in fiscal 2005 from 19.3% in 2004, primarily resulting from general cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. . Basic EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. from continuing operations decreased to $0.12 from $0.16, and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS from continuing operations declined to $0.09 from $0.15. There were more than 833,333 additional potentially dilutive shares included in the 2005 calculation resulting from options associated with the Company's 2002 preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. issuance. These shares were considered anti-dilutive in the 2004 calculation and were not included. For the nine months, income from continuing operations was $1,375,447, an increase of $78,454 or 6.0% compared to $1,296,993 earned last year. Revenues were $7,692,678, an increase of $758,958 or 10.9% compared to $6,933,720 last year. Gross margins decreased to 35.8% this year from 37.0% last year primarily resulting from increases in raw materials, wages, and manufacturing overhead expenses. For the nine months S G & A expenses increased to 17.6% of sales from 17.3% in 2004, primarily resulting from salary and benefits increases, as well as increased advertising expenses and sales commissions, most of which occurred during the second fiscal quarter of this year. Basic EPS from continuing operations increased to $0.42 from $0.39 and diluted EPS from continuing operations decreased to $0.32 from $0.39. There were more than 833,333 additional potentially dilutive shares included in the 2005 calculation resulting from options associated with the Company's 2002 preferred stock issuance. These shares were considered anti-dilutive in the 2004 calculation and were not included. On August 5, the order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. for Multipress was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $495,000, down from approximately $847,000 last year. In our opinion, the machine tool industry remains in a position of weakness. We are unable to estimate the duration of this cycle. In contrast, the backlog for Columbus Jack was approximately $2.4 million, up from $2.0 million last year. The aircraft ground support industry appears steady and we anticipate no significant changes in the near-term near-term adj. Of, for, or involving a short period of time in the near future. . For the fourth fiscal quarter we expect revenues of approximately $2.2 million to $2.4 million and net income of approximately $230,000 to $300,000. This is a decrease from the fourth quarter of last year when we earned over $560,000 or $0.08 per fully diluted share on revenues of approximately $2.8 million. The June 30, 2005 balance sheet has more than $1.5 million of cash and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying compared to approximately $1.3 million of total liabilities. During the quarter we used excess cash to pay down over $448,000 of bank debt. Total notes payable (both current & long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. ) at June 30 were $175,456 with stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. reaching $6,072,776. As previously announced on June 29, the Company repurchased 206,050 shares of its' common stock at a price of $2.28 each. This transaction settled on July July: see month. 1 and is not reflected in the June 30 financial statements. Through August 5th the Company has repurchased 206,685 of the 250,000 shares authorized Shares authorized The maximum number of shares of stock of a company allowed in the articles of incorporation, which may be changed only by a shareholder vote. See: Issued and outstanding. shares authorized See authorized capital stock. by the Board. For more information on products and services please visit the Company's websites: www.columbusjack.com and www.multipress.com. This press release, other than the historical information, consists of "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " (as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995), which are identified by the use of words such as "believes", "expects", "projects", and similar expressions. While these statements reflect the Company's current beliefs and are based on assumptions that the Company believes are reasonable, they are subject to uncertainties and risks that could cause actual results to differ materially from anticipated results.
QUALITY PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 2005
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 808,653
Accounts receivable, less allowance for
doubtful accounts of $113,226 755,279
Inventories, less reserve of $292,512 2,915,615
Prepaid expenses and other current assets 125,551
------------
Total current assets 4,605,098
------------
Investments, available-for-sale 75,000
------------
PROPERTY AND EQUIPMENT, net 907,738
------------
GOODWILL, Less accumulated amortization of $19,174 1,821,535
------------
TOTAL ASSETS $ 7,409,371
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $ 10,456
Current portion of bank notes payable 21,000
Accounts payable 533,402
Accrued payroll and payroll related expenses 130,055
Other accrued expenses and current liabilities 391,911
Customer deposits 105,771
------------
Total current liabilities 1,192,595
------------
LONG-TERM DEBT, Net of current portion
Notes payable 12,000
Bank notes payable 132,000
------------
Total long term debt 144,000
TOTAL LIABILITIES 1,336,595
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Convertible preferred stock 1
Common stock 32
Additional paid-in capital 25,938,958
Accumulated deficit (19,866,215)
------------
Total stockholders' equity 6,072,776
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,409,371
============
QUALITY PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2005 AND 2004
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Three Months Nine Months
------------ -----------
2005 2004 2005 2004
---- ---- ---- ----
NET SALES $2,447,971 $2,238,467 $7,692,678 $6,933,720
COST OF GOODS SOLD 1,605,777 1,258,697 4,942,089 4,367,573
----------- ----------- ----------- -----------
GROSS PROFIT 842,194 979,770 2,750,589 2,566,147
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 426,653 432,506 1,355,022 1,199,759
---------- ----------- ----------- -----------
INCOME FROM OPERATIONS 415,541 547,264 1,395,567 1,366,388
OTHER INCOME (EXPENSE):
Interest expense (2,374) (14,441) (15,542) (68,060)
Interest income 5,370 2,905 14,387 4,023
Rental income -- 12,000 19,800 42,100
Unrealized gain on
derivative (non-hedged) -- 8,578 -- 8,578
(Loss) on asset disposal (4,248) -- (4,248) --
Miscellaneous other
income (expense) 6,937 -- 9,640 (8,697)
----------- ----------- ----------- -----------
Other income (expense),
net 5,685 9,042 24,037 (22,056)
----------- ----------- ----------- -----------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 421,226 556,306 1,419,604 1,344,332
PROVISION FOR
INCOME TAXES 17,157 19,661 44,157 47,339
----------- ----------- ----------- -----------
INCOME FROM CONTINUING
OPERATIONS 404,069 536,645 1,375,447 1,296,993
GAIN (LOSS) FROM
DISCONTINUED
OPERATIONS, NET OF TAX 92 (19,722) (23,488) (70,773)
NET INCOME $404,161 $516,923 $1,351,959 $1,226,220
=========== =========== =========== ===========
BASIC EARNINGS (LOSS)
PER SHARE:
Income from continuing
operations $.12 $.16 $.42 $.39
=========== =========== =========== ===========
(Loss) from
discontinued
operations $(.00) $(.00) $(.01) $(.02)
=========== =========== =========== ===========
DILUTED EARNINGS (LOSS)
PER SHARE:
Income from continuing
operations $.09 $.15 $.32 $.39
=========== =========== =========== ===========
(Loss) from
discontinued
operations $(.00) $(.00) $(.01) $(.02)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES:
Basic 3,158,475 3,158,497 3,158,470 3,156,745
Diluted 4,123,170 3,243,798 4,110,337 3,200,605
QUALITY PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 2005 AND 2004
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2005 2004
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $1,375,447 $ 1,296,993
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 137,575 110,333
Common stock issued as compensation -- 6,000
Provision for obsolete inventory 29,600 --
Provision for doubtful accounts 10,264 15,296
(Gain) Loss on sale of assets (3,372) --
(Gain) on change in fair value
of derivative -- (8,578)
Impairment of investment -- 9,459
Changes in operating assets and liabilities:
Accounts receivable 584,137 (242,584)
Inventories (815,685) (348,174)
Other assets 87,715 82,739
Accounts payable (218,825) 58,157
Accrued payroll (55,431) 22,509
Accrued Expenses 32,573 68,004
Customer deposits (181,778) 4,892
---------- -----------
Net cash provided by continuing operations 982,220 1,075,046
---------- -----------
Net cash (used) by discontinued operations (15,600) (76,273)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (132,912) (185,167)
Purchase of available-for-sale investment (75,000) --
Cash received from sale of asset 8,696 --
---------- -----------
Net cash used in investing activities (199,216) (185,167)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on non-related party long-term debt (604,770) (300,463)
Net Proceeds from Bank Notes payable -- 1,113,333
Payments on related party debt -- (1,143,000)
Capital Lease Payments (2,578) (3,317)
Common Stock Repurchased (2,004) --
Dividends paid to preferred stockholders (46,875) (46,875)
---------- -----------
Net cash used in financing activities (656,227) (380,322)
---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 111,177 433,284
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 697,476 415,209
---------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 808,653 $ 848,493
========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 15,242 $ 69,267
Cash paid for income taxes $ 60,089 $ 40,421
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