Lyle Jensen, GreenMan’s president and chief executive officer stated, Having successfully divested our tire recycling business for around $27.7 million in November, we enter fiscal 2009 with a strong balance sheet, significantly increased cash position and revitalized growth platform. We are focused on evaluating opportunities for our newly created GreenMan Renewable Fuels and Alternative Energy subsidiary. Our strategy is to focus on opportunities that offer shareholders long-term growth coupled with near term positive cash flow. A silver lining of this difficult economy is that attractive opportunities have availed themselves, particularly green-based technologies that convert recycled material and waste feedstock into bio-fuels, alternative energy, and recycled products.
Jensen continued, The Welch Products group saw double digit revenue growth for the quarter resulting in enhanced gross margins. While the economy has tightened school board budgets, we continue to see demand for our products given their ADA compliance and attractive total cost of ownership. We remain focused on creating alternative funding solutions and building relationships with state school boards as we head into 2009.
In September 2005, due to the magnitude of continued operating losses, our Board of Directors approved plans to divest the operations of our GreenMan of Georgia, Inc. subsidiary and dispose of its respective assets. Accordingly, we have classified all remaining liabilities associated with our Georgia entity and its results of operations as discontinued operations for all periods presented in this press release. On June 27, 2008, our Georgia subsidiary filed for liquidation under Chapter 7 of the federal bankruptcy laws in the Bankruptcy Court of the Middle District of Georgia. As a result of the bankruptcy proceedings we have relinquished control of our Georgia subsidiary to the Bankruptcy Court and therefore have de-consolidated substantially all remaining obligations from our financial statements as of September 30, 2008.
Our business changed substantially in November 2008, when we sold substantially all of the assets of our tire recycling operations. Because we operated our tire recycling assets during only a portion of the fiscal quarter covered by this release and the report on Form 10Q we have included all relevant information on this business segment but have classified their respective assets, liabilities and results of operations as discontinued operations for all periods presented in the accompanying consolidated financial statements.
Results of Operations
Three Months ended December 31, 2008 Compared to the Three Months ended December 31, 2007
Net sales from continuing operations for the three months ended December 31, 2008 increased $62,000 or 10 percent to $662,000 as compared to net sales of $600,000 for the quarter ended December 31, 2008. The increase is primarily attributable to increased playground tile and equipment sales of our Welch subsidiary.
Gross profit for the three months ended December 31, 2008 was $169,000 or 26 percent of net sales, compared to $112,000 or 19 percent of net sales for the three months ended December 31, 2007. The increase was primarily attributable to higher revenues and reduced overhead costs and headcount.
Selling, general and administrative expenses for the three months ended December 31, 2008 increased $439,000 to $1,177,000 as compared to $738,000 for the three months ended December 31, 2007. The increase was primarily attributable to an increase of $247,000 in professional expenses relating to business development initiatives and the November 2008 sale of our tire recycling operations, an increase of around $164,000 in wage and performance-based incentives.
Interest and financing expense for the three months ended December 31, 2008 increased $14,000 to $59,000, compared to $45,000 during the three months ended December 31, 2007 due to increased borrowings.
As a result of the foregoing, our loss from continuing operations after income taxes increased $387,000 to $1,077,000 for the three months ended December 31, 2008 as compared to $690,000 for the three months ended December 31, 2007.
During the three months ended December 31, 2008 the company recognized a gain on sale of discontinued operations net of income taxes ($5.5 million), of $14,347,000 associated with the sale of our tire recycling business in November 2008. The income from discontinued operations for the three months ended December 31, 2008 relates primarily to the net results of our tire recycling operations including around $391,000 of one-time gains associated with the termination of a long-term land and building lease agreement in Minnesota. In addition, during the quarter ended December 31, 2008, we recognized income from Georgia discontinued operations of around $144,000 including around $161,000 associated with the completion of a March 2008 settlement agreement with a former Georgia vendor. The income from discontinued operations for the three months ended December 31, 2007 relates to the net results of our tire recycling operations.
