For the fiscal 2004 third quarter, net sales reached a single quarter record high of $36.6 million compared with $32.4 million for the corresponding period last fiscal year-a 13.0 percent increase. For the nine months of fiscal 2004, net sales were up 9.1 percent to $105.8 million from $97 million during the same period last fiscal year. Included in foregoing sales is a favorable effect from the change in foreign exchange rates of $1.4 million and $3.7 million, respectively for the three- and nine-months ended November 30, 2003. Net income, however, for these periods was not materially affected.
For the three- and nine-month periods, the gross profit margin remained consistent with last year's results.
Operating income in the 2004 third quarter improved 27.9 percent to $2.1 million over the comparable period last year when the company earned approximately $1.6 million. For the fiscal 2004 nine months, operating income was negatively impacted by a $617,000 charge taken in the first quarter for the early repayment of $4.5 million of subordinated debt. Despite this charge, net operating income increased 5.1 percent to $5.5 million from fiscal 2003's $5.2 million.
Excluding the first quarter charge, operating income for fiscal 2004 would have been $6.1 million, an increase of 16.9 percent over the same period last year.
Interest expense in the 2004 third quarter decreased 48.5 percent to $264,000, compared with the prior-year period, as a result of the company's repayment of its subordinated debt facility and principal reduction in its senior debt. For the fiscal 2004 nine months, interest expense decreased 10.2 percent compared with the same nine-month period last year, notwithstanding a $270,000 prepayment penalty associated with the aforementioned repayment of the subordinated debt in the first quarter of the fiscal year.
The company's net income for the quarter was $1.1 million, or $0.30 per diluted share, compared with $664,000, or $0.20 per diluted share during the same quarter last year, an increase of 58.5 percent. For the fiscal 2004 nine-month period, the Company's net income was $2.4 million, or $0.70 per diluted share, compared with $2.2 million, or $0.64 per diluted share before the cumulative effect of a change in accounting principle for the comparable period last year. For fiscal 2003 nine-month period, after the $3.0 million cumulative effect of a change in accounting principle, relating to the impairment of goodwill that took effect in the first quarter of fiscal 2003, the Company reported a loss of $874,000, or $0.25 per diluted share. Excluding the prepayment of the subordinated debt, net income for the fiscal 2004 nine-month period improved 38.4 percent to $3 million, or $0.86 per diluted share, compared with last year's $2.2 million, or $0.64 per diluted share, excluding the cumulative effect of the change in accounting principle.
