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In a release on May 6, the Company noted:
Fiscal 2009 Second Quarter Financial Results - Compared to Fiscal Second Quarter 2008:
- Net sales decreased 10 percent or $0.5 million, to $4.3 million in the 2009 Quarter.
- Gross profit increased 7 percent to $0.7 million in the 2009 Quarter due primarily to lower charges for obsolete inventory. Gross profit margin was 16 percent in the 2009 Quarter compared to 13 percent in the 2008 Quarter.
- Operating expenses of $1.4 million in the 2009 Quarter were 2 percent higher compared to the 2008 Quarter, primarily due to expenses for changes in personnel.
- Other income (primarily Interest income) of $68 thousand declined 65 percent due to lower interest rates on lower invested cash balances.
- Operating loss was $713 thousand, 2 percent less compared to $727 thousand in the 2008 Quarter.
- Net loss of $1.1 million in the 2009 Quarter included a non-cash charge of $0.5 million to establish a full valuation allowance in respect of the Company's deferred tax assets. Net loss of $0.4 million in the 2008 Quarter included a $0.2 million benefit from income tax.
- Loss per share was ($0.13) in the 2009 Quarter compared to ($0.05) in the 2008 Quarter.
Fiscal 2009 Six-Month Period Financial Results- Compared to six-month period ended March 31, 2008:
- Net sales were $9.6 million in the 2009 Period compared to $9.7 million in the 2008 Period.
- Gross profit of $1.6 million in the 2009 Period declined $0.1 million, or 7 percent, due primarily to higher costs of operating our Asian based procurement and quality control functions. Gross profit margin was 17 percent in the 2009 Period compared to 18 percent in the 2008 Period.
- Operating expenses of $2.7 million in the 2009 Period decreased $0.3 million, or 11 percent, primarily as a result of lower personnel costs, royalties and commissions, and professional fees.
- Other income (primarily Interest income) of $0.2 million in the 2009 Period declined $0.3 million, or 65 percent, due to lower interest rates on lower invested cash balances.
- Operating loss was $1.1 million, a 16 percent improvement compared to a $1.3 million loss in the 2008 Quarter.
- Net loss of $1.3 million in the 2009 Period was adversely affected a non-cash charge of $0.5 million to establish a full valuation allowance against our deferred tax assets. Net loss of $0.6 million in the 2008 Period included a $0.2 million benefit from income tax.
- Loss per share was ($0.16) in the 2009 Period compared to ($0.08) in the 2008 Period.
Douglas W. Sabra, Forward's Chief Executive Officer, noted, "In Q2, our business continued to be challenged by a very difficult economic environment in which we experienced lower demand from our largest customer and renewed pressures to reduce prices to our OEM customers in response to declining consumer demand and deteriorating economic conditions generally. Certain customers are approaching their cost reduction goals by requesting that we design and supply them with lower priced in-box solutions, which could further negatively affect revenues and margins. The degree and timing of the impact of these developments will depend on how quickly, and to what extent, those solutions are accepted and implemented by our customers and to what extent we are able to negotiate reasonable arrangements with our suppliers.
"In response to the poor economy and our customers' actions to reduce costs, we have acted aggressively to reduce costs to conserve cash, including ongoing reductions of personnel and other operating expenses. However, these actions alone will not return our company to profitability. We therefore remain focused on growing our sales by building long-term strategic OEM relationships beyond our traditional customer base while continuing to identify acquisition opportunities that will maximize shareholder return. In this regard, we continue to work closely with our financial advisor, vFinance, to identify and evaluate prospective targets for acquisition."
Sabra concluded, "Our financial position remains strong. We are confident in our ability to withstand this current economic environment, while positioning our company for success when conditions begin to improve. I look forward to updating you on our progress."
Forward Industries designs and distributes custom carrying case solutions primarily for cellular phones and home medical diagnostic equipment. The Company sells its products directly to original equipment manufacturers and also markets a line of Carry Solutions under the "Motorola" brand name.
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