FORM 10-Q
Securities and Exchange Commission
Washington D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: May 31, 1998
Commission file number: 0-21161
Q.E.P. CO., INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2983807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1081 HOLLAND DRIVE
BOCA RATON, FLORIDA 33487
(Address of principal executive offices)
(Zip code)
(561) 994-5550
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of July 11,1998: 2,654,894 shares of common stock, par value
$.001 per share.
<PAGE>
Q.E.P. CO., INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets (Unaudited)
May 31, 1998 and February 28, 1998......................3
Consolidated Statements of Income (Unaudited)
For the Three Months Ended May 31, 1998 and 1997........4
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended May 31, 1998 and 1997........5
Notes to Consolidated Financial Statements...........................6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................8
Item 3 - Qualitative and Quantitative Disclosures about
Market Risk................................................10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings..........................................11
Item 6 - Exhibits and Reports on Form 8-K...........................11
Signatures..........................................................13
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 31, 1998 AND FEBRUARY 28, 1998
(UNAUDITED)
MAY 31, FEBRUARY 28,
1998 1998
------------ ------------
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents ............................................. $ 290,245 $ 239,984
Accounts receivable, less allowance for doubtful accounts
of $480,000 as of May 31, 1998 and February 28, 1998 .......... 13,757,463 12,791,483
Notes receivable ...................................................... 689,272 688,272
Inventories ........................................................... 12,567,265 11,487,463
Prepaid expenses ...................................................... 1,392,972 1,365,027
Deferred income taxes ................................................. 676,000 1,029,038
------------ ------------
Total current assets .......................................... 29,373,217 27,601,267
PROPERTY AND EQUIPMENT, NET ................................................... 2,918,631 2,696,386
DEFERRED INCOME TAXES ......................................................... 1,125,845 1,125,845
INTANGIBLE ASSETS, NET ........................................................ 8,097,488 8,033,978
NOTES RECEIVABLE .............................................................. 2,322,824 2,567,271
OTHER ASSETS .................................................................. 860,996 1,001,141
------------ ------------
TOTAL ASSETS .................................................................. $ 44,699,001 $ 43,025,888
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Lines of credit and short term debt ................................... $ 5,290,014 $ 4,246,452
Current maturities of long term debt .................................. 1,142,857 1,142,319
Accounts payable ...................................................... 4,312,799 4,902,485
Accrued liabilities ................................................... 3,634,887 2,958,717
Deferred income taxes ................................................. 149,730 139,078
------------ ------------
Total current liabilities ..................................... 14,530,287 13,389,051
NOTES PAYABLE ................................................................. 6,552,787 6,788,219
SUBORDINATED LONG TERM DEBT ................................................... 6,683,171 6,611,098
DEFERRED INCOME TAXES ......................................................... 619,754 604,445
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, 2,500,000 shares authorized, $1.00 par value; 336,660
shares issued and outstanding at May 31, 1998 and
February 28, 1998 ............................................. 336,660 336,660
Common stock, 10,000,000 shares authorized, $.001 par value; 2,654,894
shares issued and outstanding at May 31, 1998 and
February 28, 1998 ............................................. 2,655 2,655
Additional paid-in capital ............................................ 8,746,876 8,746,876
Retained earnings ..................................................... 7,380,711 6,736,712
Cost of stock held in treasury ........................................ (57,900) (57,900)
Accumulated other comprehensive income ................................ (96,000) (131,928)
------------ ------------
$ 16,313,002 $ 15,633,075
============ ============
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .................................... $ 44,699,001 $ 43,025,888
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MAY 31, 1998 AND 1997
(UNAUDITED)
THREE MONTHS ENDED
------------------------------
MAY 31, 1998 MAY 31, 1997
------------ ------------
<S> <C> <C>
Net Sales ...................................... $ 24,201,144 $ 9,545,904
Cost of goods sold ............................. 17,042,339 5,889,520
------------ ------------
Gross profit ........................... 7,158,805 3,656,384
Costs and expenses
Shipping ............................... 1,724,836 740,254
General and administrative ............. 1,960,615 1,031,143
Selling and marketing .................. 1,966,459 1,066,884
Other expenses ......................... 14,500 2,763
------------ ------------
Operating income ....................... 1,492,395 815,340
Interest income ................................ 28,516 59,533
Interest expense ............................... (445,124) (14,412)
------------ ------------
Income before provision for income taxes 1,075,787 860,461
Provision for income taxes ..................... (429,287) (335,580)
------------ ------------
Net income ............................. $ 646,500 $ 524,881
============ ============
Basic and diluted earnings per common share .... $ 0.24 $ 0.20
============ ============
Weighted average number of shares outstanding .. 2,702,659 2,659,728
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
<TABLE>
<CAPTION>
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MAY 31, 1998 AND 1997
(UNAUDITED)
THREE MONTHS ENDED
------------------------------
MAY 31, 1998 MAY 31, 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................. $ 646,500 $ 524,881
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization ............... 292,280 13,156
Deferred income taxes ....................... 378,999 43,100
Stock option compensation ................... -- 13,000
Changes in assets and liabilities:
Accounts receivable ................. (965,980) 166,068
Notes receivable .................... 243,447 --
Inventories ......................... (1,079,802) (1,231,319)
Other current assets ................ (27,945) (333,123)
Other assets ........................ 140,145 (49,313)
Accounts payable and
accrued liabilities ............. 86,484 408,792
----------- -----------
Net cash provided by (used in)
operating activities ............ (285,872) (444,758)
----------- -----------
Cash flows from investing activities:
Capital expenditures ........................ (346,490) (220,872)
----------- -----------
Net cash used in investing activities (346,490) (220,872)
----------- -----------
Cash flow from financing activities:
Net borrowings under lines of credit 1,010,359 --
Repayments of debt .................. (289,308) (9,887)
Dividends ........................... (2,500) --
----------- -----------
Net cash provided by (used in)
financing activities ............ 718,551 (9,887)
----------- -----------
Translation adjustment .............................. (35,928) --
Net increase (decrease) in cash ..................... 50,261 (675,517)
Cash and cash equivalents at beginning of period .... 239,984 4,901,131
----------- -----------
Cash and cash equivalents at end of period .......... $ 290,245 $ 4,225,614
----------- -----------
Supplemental disclosure of cash flow information:
Interest Paid ....................... $ 182,429 $ --
----------- -----------
Income taxes paid ................... $ -- $ 228,613
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Q.E.P. CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. BASIS OF PRESENTATION
The accompanying financial statements for the interim periods are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the periods
presented. These financial statements should be read in conjunction with the
financial statements and notes thereto, together with Management's Discussion
and Analysis of Financial Condition and Results of Operations, contained in the
Annual Report on Form 10-K for the year ended February 28, 1998, of Q.E.P. Co.,
Inc. (the "Company") as filed with the Securities and Exchange Commission. The
February 28, 1998 balance sheets were derived from audited financial statements,
but does not include all disclosures required by generally accepted accounting
principles. The results of operations for the three months ended May 31, 1998
are not necessarily indicative of the results for the full fiscal year ending
February 28, 1999.
Note 2. ACQUISITIONS
On October 21, 1997, pursuant to a Stock Purchase Agreement dated as of
the same date between the Registrant and RCI Holdings, Inc., a Delaware
corporation (the "Seller"), the Registrant purchased (the "Roberts Acquisition")
all of the issued and outstanding stock of Roberts Consolidated Industries, Inc.
("Roberts"), a Delaware corporation and wholly owned subsidiary of the Seller.
Roberts is engaged in the manufacture and sale of carpet installation products,
including carpet adhesives and installation tools. Roberts operates three leased
manufacturing facilities: one in City of Industry, California; one in Mexico,
Missouri; and one in Bramalea, Ontario, Canada.
Additionally, effective December 31, 1997, the Company acquired all of
the issued and outstanding shares of Roberts Holland B.V. together with all
licenses and intellectual property.
The following unaudited pro forma consolidated results of operations of
the Company assume the acquisitions had occurred March 1, 1997.
THREE MONTHS ENDED
MAY 31, 1997
------------------
Sales....................................... $23,425,219
Net income.................................. $ 290,117
Net income per common share................. $ .11
6
<PAGE>
The unaudited pro forma results have been prepared for comparative
purposes only and include adjustments to show interest expense relating to new
debt and other general and administrative charges expected to occur as a result
of the acquisitions and to eliminate intercompany transactions. The results are
not necessarily indicative of what actually would have occurred if the
acquisitions had been in effect for the entire period presented.
Note 3. INVENTORIES
The major classes of inventories are as follows:
MAY 31, FEBRUARY 28,
1998 1998
----------- -----------
Raw materials and work-in-progress.......... $ 4,560,060 $ 3,896,608
Finished goods 8,007,205 7,590,855
----------- -----------
$12,567,265 $11,487,463
=========== ===========
Note 4. EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No.
128 - "Earnings Per Share" ("FAS 128") which requires the dual presentation of
basic and diluted earnings per share for the periods ending after December 15,
1997. Basic earnings per share is computed by dividing net income, after
deducting preferred stock dividends accumulated during the period, by the
weighted average number of shares of common stock outstanding during each
period. Diluted earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock equivalents and
other potentially dilutive securities outstanding during each period. In
accordance with the provisions of FAS 128, the Company has retroactively
restated earnings per share.
Note 5. COMPREHENSIVE INCOME
During the first quarter of fiscal 1999, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." This pronouncement sets forth requirements for disclosure of the
Company's comprehensive income and accumulated other comprehensive items. In
general, comprehensive income combines net income and "other comprehensive
items", which represent certain amounts that are reported as components of
shareholders' investment in the accompanying balance sheets, including foreign
currency translation adjustments. During the first quarter of fiscal 1999 and
fiscal 1998, the Company's comprehensive income totaled $682,428 and $524,881,
respectively.
Note 6. FUTURE EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131) was issued in June 1997. This statement changes the
way public companies report information about segments of their business in
their annual financial statements. This statement is effective for the Company's
fiscal year ending February 28, 1999. However, information is not to be
presented for interim financial statements in the first year of implementation.
Adoption of SFAS No. 131 is not expected to have a material effect on the
Company's financial statement disclosures.
Note 7. RECLASSIFICATIONS
Certain amounts in the 1997 presentation have been reclassified to
conform to the 1998 presentation.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Q.E.P. Co., Inc. ("the Company") manufactures, markets and distributes
a broad line of specialty tools and related products for the home improvement
market. The Company markets over 4,000 products primarily used for surface
preparation and installation of ceramic tile, carpet, marble, masonry, drywall
and paint. The Company's products are sold through home improvement retailers,
specialty distributors, original equipment manufacturers and chain or
independent hardware, tile, carpet and painting retailers for use by the
do-it-yourself consumer as well as the construction or remodeling professional.
Dollar figures set forth below are rounded to the nearest thousand.
This report on Form 10-Q contains forward-looking statements which are
made pursuant to the safe harbor provisions of the Securities Litigation Reform
Act of 1995 and which 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 which could cause such a difference are those relating to the
Company's dependence upon a limited number of customers for a substantial
portion of its sales, the Company's reliance upon suppliers and sales agents for
the purchase of finished products which are then resold by it, the Company's
dependence upon certain key personnel, its ability to manage its growth, the
successful integration of the Roberts Consolidated acquisition, and the risk of
economic and market factors affecting the Company or its customers.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, 1998 COMPARED TO THREE MONTHS ENDED MAY 31, 1997
Net sales for the three months ended May 31, 1998 (the "fiscal 1999
period") were approximately $24,201,000, compared to $9,546,000 for the three
months ended May 31, 1997 (the "fiscal 1998 period"), an increase of $14,655,000
or 153.5%. This increase was primarily the result of sales from the Company's
newly acquired subsidiaries, Roberts Consolidated Industries, Inc. ("Roberts
Consolidated") and Roberts Holland B.V. ("Roberts Holland") (collectively the
"fiscal 1998 acquisitions"). Although selling prices remained relatively stable,
there was an increase in the volume of sales to home center retailers and
independent distributors. This was due to an increase in market penetration by
these customers and new store openings by major home center chain customers.
Gross profit for the fiscal 1999 period was approximately $7,159,000,
compared to $3,656,000 for the fiscal 1998 period, an increase of $3,503,000 or
95.8%. As a percentage of net sales, gross profit decreased to 29.6% in the
fiscal 1999 period from 38.3% in the fiscal 1998 period. This decrease was a
result of the acquisition of Roberts Consolidated and Roberts Holland which have
historically had lower gross profit margins than the Company.
Shipping expenses for the fiscal 1999 period were approximately
$1,725,000, compared to $740,000 for the fiscal 1998 period, an increase of
$985,000 or 133.0%. As a percentage of net sales, these expenses decreased to
7.1% in the fiscal 1999 period from 7.8% in the fiscal 1998 period.
Approximately 91% of the increase in shipping expenses was the result of the
Company's fiscal 1998 acquisitions, and the balance was attributable to
increased sales volume. Shipping expenses as a percentage of sales decreased due
to freight costs as a percentage of sales being lower at the acquired companies.
General and administrative expenses for the fiscal 1999 period were
approximately $1,961,000, compared with $1,031,000 for the fiscal 1998 period,
an increase of $930,000 or 90.2%. As a percentage of net sales, these expenses
decreased to 8.1% in the fiscal 1999 period from 10.8% in the fiscal 1998 period
reflecting the leveraging of these costs over greater sales. The actual increase
in these expenses was predominantly the result of costs associated with the
addition of the personnel for Roberts Consolidated and Roberts Holland.
8
<PAGE>
Selling and marketing costs for the fiscal 1999 period were
approximately $1,966,000, compared to $1,067,000 for the fiscal 1998 period, an
increase of $899,000 or 84.3%. As a percentage of net sales, these expenses
decreased to 8.1% in the fiscal 1999 period from 11.2% in the fiscal 1998
period. The percentage decrease was a result of lower selling and marketing
costs as a percentage of sales at Roberts Consolidated. This was a result of the
small sales force maintained by Roberts Consolidated prior to the acquisition.
The increase in these expenses is attributable to the Company's fiscal 1998
acquisitions.
Interest income decreased $31,000 and interest expense increased
$431,000 during the fiscal 1999 period compared to the fiscal 1998 period.
Interest income was higher in the prior period because the Company invested its
excess cash which was primarily available prior to the acquisition of Roberts
Consolidated. Interest expense increased as a result of the increase in
borrowings associated with the acquisitions.
Provision for income taxes was approximately $429,000 in the fiscal
1999 period, compared to $336,000 in the fiscal 1998 period, an increase of
$93,000 or 27.7%. The effective tax rate was approximately 39.9% for the fiscal
1999 period compared to 39.0% for the fiscal 1998 period. The effective tax rate
is based upon the most recent effective tax rates available.
Net income for the fiscal 1999 period increased to $647,000 from
$525,000 in the fiscal 1998 period, an increase of $122,000 or 23.2%. Net income
as a percentage of net sales decreased to 2.7% in fiscal 1999 compared to 5.5%
in fiscal 1998, reflecting a lower gross profit margin, higher interest expenses
and lower interest income, offset by lower shipping, general and administrative,
and selling and marketing expenses as a percentage of sales as described above.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of May 31, 1998 increased from approximately
$14,212,000 at February 28,1998 to $14,843,000, an increase of $631,000,
primarily as a result of the Company's operations. Any cash in excess of
anticipated requirements is invested in commercial paper or overnight repurchase
agreements with a financial institution. The Company states the value of such
investments at market price and classifies them as cash equivalents on its
balance sheet.
Net cash used in operating activities during the three month period
ended May 31, 1998 was $286,000 compared to $445,000 for the comparable period
in fiscal 1998. The change in the use of cash by operating activities was
primarily due to an increase in accounts receivable, associated with the
increase in sales, and an increase in inventories. Net cash used in investing
activities was $346,000 compared to $221,000 for the comparable period in fiscal
1998, primarily due to the purchase of computer equipment.
Net cash provided by financing activities was $719,000 compared to
$10,000 used in financing activities in the comparable period in fiscal 1998 due
to increased borrowings predominantly under the Foreign Line of Credit (as
hereafter defined).
The Company has a revolving credit and term loan facility with one
financial institution. The revolving credit facility permits borrowings of up to
$10,000,000 against a fixed percentage of eligible accounts receivable and
inventory as defined. Interest is payable at LIBOR plus 1.25% (6.9% at May 31,
1998). The revolving credit agreement terminates July 25, 2000. The credit
facility is collateralized by receivables, inventories, equipment and certain
real property. Under the terms of the agreement, the Company is required to
maintain certain financial ratios and other financial conditions. The agreement
also prohibits the Company from incurring certain additional indebtedness,
limits certain investments, advances
9
<PAGE>
or loans and restricts substantial asset sales and capital expenditures. The
terms of the Company's bank credit facility also prohibits the payment of
dividends except with the lender's consent. The Company had $5,158,000 available
for future borrowings at May31,1998. In connection with the acquisition of
Roberts Consolidated, the Company issued $7,500,000 of subordinated debentures.
These debentures mature on April 1, 2001 and bear interest at 8%. They were
recorded at their fair value on the date of issuance in the amount of $6,515,000
and the discount will be amortized over the life of the debentures. The Company
also has a short term credit line with a European financial institution utilized
by Roberts Holland, which permits borrowings of up to $2,500,000 ("Foreign Line
of Credit"). The borrowings are collateralized by accounts receivable,
inventory, machinery and equipment and a standby letter of credit from the
Company's domestic financial institution.
The Company believes its existing cash balances, internally generated
funds from operations and its available bank lines of credit will provide the
liquidity necessary to satisfy the Company's working capital needs, including
the growth in inventory and accounts receivable balances, and to finance
anticipated capital expenditures for the foreseeable future.
MANAGEMENT INFORMATION SYSTEMS
The Company believes that advanced information processing is essential
to maintaining its competitive position. The Company participates in the
electronic data interchange program maintained by many of its larger customers,
including Home Depot, Lowe's, HomeBase and Hechinger/Builders Square. The
Company has upgraded its domestic management information systems during fiscal
1998, to ensure proper processing of transactions relating to the year 2000 and
beyond. The Company continues to evaluate appropriate courses of corrective
actions, including replacement of certain systems at its foreign locations. The
Company does not expect the costs associated with ensuring year 2000 compliance
to have a material effect on its financial position or results of operations.
All costs for corrective actions associated with year 2000 compliance will be
funded with cash flow generated from operations and expenses as incurred.
Although the Company believes that the information systems of its major
customers and vendors (insofar as they relate to the Company's business) comply
with year 2000 requirements, there can be no assurance that the year 2000 issue
will not affect the information systems of such customers and vendors as they
relate to the Company's business, or that any such impact on such customers' and
vendors' information systems would not have a material adverse effect on the
Company's business, financial condition or results of operations.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company or any of its property is subject.
Roberts Consolidated has been named as a defendant in CARGILL, INC. ET
AL. V. ABCO CONSTRUCTION ET AL., a lawsuit filed in the United States District
Court for the Southern District of Ohio Western Division on January 29, 1998.
The lawsuit, brought under CERCLA and related state environmental laws, alleges
that Roberts Consolidated and the other defendants disposed of hazardous
substances at a site located in Dayton, Ohio. The plaintiffs are seeking
monetary damages against the defendants, primarily in an amount equal to their
respective equitable share of the cost of the environmental clean up of the
site. Based on preliminary investigations, the Company believes that the entity
identified as Roberts Consolidated, named a defendant in this lawsuit, is
neither the same entity nor a predecessor to the entity acquired by the Company.
At this time, the Company is continuing to review the facts underlying this
lawsuit in order to conclusively determine if the Roberts Consolidated
subsidiary of the Company is a proper party thereto.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1.1 Stock Purchase Agreement dated October 21, 1997
between the Company and RCI Holdings, Inc. *
3.1 Certificate of Incorporation of the Company**
3.2 By-Laws of the Company ***
4.1 Specimen Common Stock Certificate **
4.1.1 Form of Warrant issued by the Company to the
representative of the underwriters of the Company's initial
public offering**
27 Financial Data Schedule (SEC use only)
* Incorporated by reference to Exhibit 2.1 filed with the
Company's Report on Form 8-K filed on November 3, 1997.
** Incorporated by reference to Exhibit of the same number filed with the
Company's Registration Statement on Form S-1 (Reg. No. 333-07477).
*** Incorporated by reference to Exhibit of the same number filed with
the Company's Annual Report on Form 10-K filed on May 28, 1997.
11
<PAGE>
**** Filed with the Company's Report on Form 8-K filed on November 3, 1997
(except that Exhibit 2.1.1 above was numbered 2.1 in the Form 8-K),
and incorporated herein by reference.
- ----------
(b) REPORTS ON FORM 8-K
There were no Current Reports on Form 8-K filed by the Company during
its fiscal quarter ended May 31, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Q.E.P. CO., INC.
Dated: July 14, 1998 By: /s/ Lewis Gould
------------------------------------
Lewis Gould, President,
Chief Executive Officer and Director
(Principal Executive Officer)
Dated: July 14, 1998 By: /s/ Marc P. Applebaum
------------------------------------
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ----------- --------
27 Financial Data Schedule *1
- --------
*1 Filed electronically pursuant to Item 401 of Regulation S-T.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 290,245
<SECURITIES> 0
<RECEIVABLES> 13,757,463
<ALLOWANCES> (480,000)
<INVENTORY> 12,567,265
<CURRENT-ASSETS> 29,373,217
<PP&E> 2,918,631
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,699,001
<CURRENT-LIABILITIES> 14,530,287
<BONDS> 0
0
336,660
<COMMON> 2,655
<OTHER-SE> 15,973,687
<TOTAL-LIABILITY-AND-EQUITY> 44,699,001
<SALES> 24,201,144
<TOTAL-REVENUES> 24,201,144
<CGS> 17,042,339
<TOTAL-COSTS> 5,666,410
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 416,608
<INCOME-PRETAX> 1,075,787
<INCOME-TAX> 429,287
<INCOME-CONTINUING> 646,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 646,500
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
