News
Forward Reports Fiscal 2008 Second Quarter Results
POMPANO BEACH, Fla.-(Business Wire)-May 2, 2008 - Forward Industries, Inc. (NASDAQ:FORD), a designer and distributor of custom carrying case solutions, today announced financial results for its second fiscal quarter ended March 31, 2008.
For the Fiscal 2008 second quarter, the Company posted revenue of $4.7 million, an operating loss of $727,000, and a net loss of $358,000, or ($0.05) per share, after interest and other income of $191,000. These results compare to revenue of $5.9 million, an operating loss of $290,000, and a net loss of $35,000 or $0.00 per share, including interest and other income of $248,000 in the Fiscal 2007 second quarter.
The Company attributed the decline in sales and operating profit to significantly lower demand for its cell phone products, sales of which decreased 85% to $0.3 million in the 2008 quarter from $1.9 million in the 2007 quarter. Sales of blood glucose monitoring kit cases increased 13% to $3.6 million in the 2008 quarter from $3.2 million in the 2007 quarter. Sales of other products also increased 13% to $0.9 million in the 2008 quarter, compared to $0.8 million in the 2007 quarter.
For the six months ended March 31, 2008, the Company posted revenue of $9.7 million, an operating loss of $1.3 million, and a net loss of $645,000, or ($0.08) per share, after interest and other income of $444,000. These results compare to revenue of $13.3 million, an operating loss of $79,000, and net income of $338,000, or $0.04 per diluted share, after interest and other income of $500,000 in the six months ended March 31, 2007. The six-month results were impacted by the factors stated above.
Douglas W. Sabra, Forward's Chief Executive Officer, commented, "This was a very difficult quarter for us and our operating results were adversely affected by the steep decline in sales of our cell phone products and the write-down of inventory associated with these products."
Mr. Sabra continued, "With respect to the other areas of our business, we are particularly pleased with the sales growth we achieved in other product lines. Our main challenge here will be to improve our operating margins in the face of extreme pricing pressure and rising costs of production in China while maintaining the high levels of quality demanded by our medical customers. Moreover, with the decline in cell phone product sales, we have increased our dependence on a few large customers further highlighting the need for us to move aggressively to diversify our customer base and product portfolio."
Mr. Sabra concluded, "Our financial position remains very strong. At March 31, 2008 we had $20.2 million in cash and cash equivalents, $23.4 million of working capital and no short or long-term debt For Fiscal 2008, we will aggressively focus on improving profitability while continuing to pursue longer-term strategic initiatives to expand our customer base and product offerings."
The tables below are derived from the Company's unaudited, condensed consolidated financial statements included in its Form 10-Q filed today with the Securities and Exchange Commission. Please refer to the Form 10-Q for complete financial statements and further information regarding the Company's results of operations and financial condition relating to the three and six-month periods ended March 31, 2008, as well as the Company's Form 10-K for the fiscal year ended September 30, 2007, for additional information.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors. Such risk factors include but are not limited to those discussed in Item 2, Part I, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Item 1A, Part II, "Risk Factors," included in our Quarterly Report on Form 10-Q filed today with the SEC, as well as in "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2007, which factors are incorporated herein by reference.
Such factors include, among others, the degree of our success in winning new business from our customers and against competing vendors; the high degree of our customer concentration and, therefore, the dependence of our revenues and results of operations on order flow from these OEM customers; the inability to satisfy quality control standards required by key OEM customers resulting in a loss of material business; the resulting susceptibility of our revenues and results of operation to significant change over short periods of time; changes affecting, or the loss of, one or more of our principal OEM customers; the dependence of such revenues of certain OEM customers on the continuing efforts of certain key sales personnel; the expiration of our license agreement with Motorola by its terms and the uncertainty as to whether such agreement will be renewed or extended on terms acceptable to us; and the potential to add materially to our inventory allowance and the effective management of inventory including in connection with our OEM customers' hub arrangements to which we are subject.
About Forward Industries
Forward Industries, Inc. 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. Forward's products can be viewed online at www.fwdinnovations.com and www.forwardindustries.com. -0- *T FORWARD INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (UNAUDITED) Three Months Ended Six Months Ended March 31, March 31, ——————————— ———————————— 2008 2007 2008 2007 ————— ————- ————— —————- Net sales $4,727,704 $5,875,768 $ 9,680,794 $13,310,190 Cost of goods sold 4,108,644 4,575,048 7,943,914 10,052,760 ————— ————- ————— —————- Gross profit 619,060 1,300,720 1,736,880 3,257,430 ————— ————- ————— —————- Operating expenses: Selling 695,487 926,127 1,475,192 1,777,038 General and administrative 650,622 664,136 1,585,546 1,559,250 ————— ————- ————— —————- Total operating expenses 1,346,109 1,590,263 3,060,738 3,336,288 ————— ————- ————— —————- (Loss) from operations (727,049) (289,543) (1,323,858) (78,858) ————— ————- ————— —————- Other income: Interest income 173,504 252,120 413,123 493,410 Other income (expense), net 17,375 (4,565) 30,872 6,168 ————— ————- ————— —————- Total other income 190,879 247,555 443,995 499,578 ————— ————- ————— —————- (Loss) income before (benefit) provision for income taxes (536,170) (41,988) (879,863) 420,720 (Benefit) provision for income taxes (178,047) (7,271) (234,676) 82,729 ————— ————- ————— —————- Net (loss) income ($358,123) ($34,717) ($645,187)$ 337,991 ========== ========= ========== =========== Net (loss) income per common and common equivalent share Basic ($0.05)$ 0.00 ($0.08)$ 0.04 ========== ========= ========== =========== Diluted ($0.05)$ 0.00 ($0.08)$ 0.04 ========== ========= ========== =========== Weighted average number of common and common equivalent shares outstanding Basic 7,872,606 7,861,438 7,863,975 7,861,438 ========== ========= ========== =========== Diluted 7,872,606 7,861,438 7,863,975 7,974,700 ========== ========= ========== =========== *T -0- *T FORWARD INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS March 31, September 30, 2008 2007 —————— ——————- Assets (Unaudited) —————————————————————— Current assets: Cash and cash equivalents $20,239,507 $20,267,791 Accounts receivable, net 3,539,101 4,135,117 Inventories, net 1,146,816 1,072,360 Prepaid expenses and other current assets 401,140 628,786 Deferred tax asset 263,170 279,741 —————— ——————- Total current assets 25,589,734 26,383,795 Property, plant, and equipment, net 146,714 160,644 Deferred tax asset 242,908 29,898 Other assets 57,181 57,538 —————— ——————- Total Assets $26,036,537 $26,631,875 ============ ============= Liabilities and shareholders' equity —————————————————————— Current liabilities: Accounts payable $ 1,946,106 $ 1,904,946 Accrued expenses and other current liabilities 222,531 303,185 —————— ——————- Total current liabilities 2,168,637 2,208,131 Commitments and contingencies Shareholders' equity: Preferred stock, par value $0.01 per share; 4,000,000 shares authorized; no shares issued — — Common stock, par value $0.01 per share; 40,000,000 shares authorized, 8,610,932 shares issued (including 706,410 and 633,493 held in treasury, respectively) 86,109 84,889 Capital in excess of par value 15,809,171 15,546,046 Treasury stock, 706,410 and 633,493 shares at cost (1,260,057) (1,085,057) Retained earnings 9,232,677 9,877,866 —————— ——————- Total shareholders' equity 23,867,900 24,423,744 —————— ——————- Total liabilities and shareholders' equity $26,036,537 $26,631,875 ============ ============= *T
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