Q.E.P. Co. has posted record quarterly earnings for its fiscal 2005 first quarter ended May 31.

For the quarter, net sales increased 24.2 percent to a quarterly record $43.1 million compared with $34.7 million for the same year-earlier period. Acquisitions accounted for approximately $3.5 million in sales in the 2005 first quarter and changes in foreign currency accounted for approximately $972,000 of the increase. The effect of foreign currency on net income was not material. Gross profit for the 2005 first quarter, which reflects a slight increase in the cost of certain raw materials, declined to 33.9 percent from last year's 34.9 percent.

Operating income for the quarter was approximately $2.2 million vs. operating income of approximately $1.4 million in last year's comparable period. Last year's results included $617,000 of expenses related to the early repayment of the company's $4.5 million subordinated debt. Excluding this charge in the first quarter of fiscal year 2004, operating income was approximately $2.1 million. Interest expense decreased by $416,000 from the prior year predominantly because of a $270,000 prepayment penalty related to the aforementioned repayment of subordinated debt that occurred during the 2004 fiscal first quarter.

Net income was $1.2 million, or 32 cents per diluted share, compared with $411,000, or 12 cents per diluted share, for the first quarter of the prior fiscal year. The total after-tax effect of the repayment of the subordinated debt and related costs during the first quarter of fiscal 2004 was $568,000, or 16 cents per share. Diluted net income per share, excluding unusual items, improved 14.3 percent to 32 cents vs. 28 cents in last fiscal year's first quarter.