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Forward Reports Fiscal 2012 Third Quarter Results

SANTA MONICA, Calif., Aug. 20, 2012 (GLOBE NEWSWIRE) -- Forward Industries, Inc. (Nasdaq:FORD), a designer and distributor of custom carry and protective solutions, today announced financial results for its third fiscal quarter ended June 30, 2012.

Fiscal 2012 Third Quarter Financial Results – Compared to fiscal 2011 third quarter results:

  • Net sales increased $1.5 million, or 25%, to $7.7 million in the 2012 quarter due to higher sales of Diabetic Products, which increased $1.8 million. The increase in Diabetic Products sales was offset, in part, by a decrease in Other Products sales of $0.3 million.  
  • Gross profit decreased $0.7 million, or 48%, to $0.8 million in the 2012 quarter. As a percentage of sales, our gross profit declined to 10% in the 2012 quarter, compared to 23% in the 2011 quarter. This decrease was due to:
  • Nonrecurring costs related to; i) the restructure of our Asia-based sourcing and quality assurance operations, and ii) the remediation of certain quality issues for two major customers. These negatively impacted our gross margin by 9%.  
  • Introduction of new and replacement programs with lower gross margins that contributed significantly to overall product mix.  
  • Increases in costs of materials with respect to several large, long-standing programs, combined, in some cases, with customer price concessions.
  • Sales and marketing expenses decreased $0.4 million, or 58%, to $0.3 million in the 2012 quarter due primarily to lower personnel costs resulting from the restructure of our sales, marketing, and product development team; and to a lesser extent, lower travel and entertainment, advertising and promotion, and telecommunication costs.  
  • General and administrative expenses decreased $0.2 million, or 14%, to $1.1 million in the 2012 quarter primarily due to lower telecommunication, office, public and personnel costs, offset in part by higher professional fees.  
  • Net loss from continuing operations increased $0.2 million to $0.6 million, or ($0.08) per share, in the 2012 quarter compared to $0.4 million, or ($0.05) per share in the 2011 quarter due to decreased gross profit on a higher sales base, which was offset, in part, by lower sales and marketing expenses and general and administrative expenses.  
  • Net loss from discontinued operations was $2.7 million, or ($0.33) per share, in the 2012 quarter, compared to $0.3 million, or ($0.03) per share, in the 2011 quarter.

Fiscal 2012 Nine-Month Period Financial Results – Compared to six-month period ended June 30, 2011:

  • Net sales increased $2.9 million, or 17%, to $20 million in the 2012 period due primarily to higher sales of Diabetic Products, which increased $2.4 million, and to a lesser extent, higher sales of Other Products, which increased $0.5 million  
  • Gross profit decreased $0.9 million, or 23%, to $3.1 million in the 2012 period. As a percentage of sales, our gross profit declined to 15% in the 2012 period, compared to 23% in the 2011 period. This decrease was due to:
  • Nonrecurring costs related to; i) the restructure of our Asia-based sourcing and quality assurance operations, and ii) the remediation of certain quality issues for two major customers. These negatively impacted our gross margin by 5%.  
  • Introduction of new and replacement programs with gross margins lower gross margins that contributed significantly to overall product mix.  
  • Increases in costs of materials with respect to several large, long-standing programs, combined, in some cases, with customer price concessions.
  • Sales and marketing expenses decreased $0.7 million, or 43%, to $0.9 million in the 2012 period due primarily to lower personnel costs resulting from the restructure of our sales, marketing, and product development team, and to a lesser extent, lower advertising and promotion costs.  
  • General and administrative expenses increased $0.5 million, or 15%, to $3.8 million in the 2012 period primarily due to higher professional fees; higher personnel costs resulting from the restructuring and expansion of our finance and IT departments, as well as the hire of an executive officer; and occupancy costs.  
  • Net loss from continuing operations increased $0.8 million to $1.6 million, or ($0.20) per share, in the 2012 period, compared to $0.8 million, or ($0.10) per share in the 2011 period primarily due to decreased gross profit on a higher sales base, and to a lesser extent, higher general and administrative expenses, which were offset, in part, by lower sales and marketing expenses.  
  • Net loss from discontinued operations was $4.7 million, or ($0.58) per share, in the 2012 period, compared to $0.4 million, or ($0.05) per share in the 2011 period.

Robert Garrett Jr., Forward's Chief Executive Officer, commented: "Our decision to restructure our business and focus solely on our legacy OEM division was primarily driven by the longer than estimated path to bring our Retail division to profitability, coupled with the strong top-line growth and operating leverage achieved by our OEM business over the past two years.  

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