The Handleman Co. posted $2.4 million in net income, or 12 cents per diluted share, on sales of $346.9 million, in its fiscal second quarter ended Jan. 31. That is almost half the earnings of the same quarter last year, when its net income totaled $4.2 million, or 21 cents per diluted share, on $485 million in sales. The decline in sales was attributed to the termination of the ASDA account in the U.K. as well as slugging greeting card revenue.

The company pointed out that its increased its gross profit margin to 19% from 14.9% in the third quarter last year, while selling general and administrative expenses increased to 16.7% of revenue from 13.3% in the prior corresponding period.

For the nine-month period, this leaves the Troy Mich.-based rackjobber with a $31.2 million loss, or $1.54 per diluted share, on sales of $936.6 million. During the quarter, the company noted that, due to a reduction in inventory levels, it didn't have the required collateral assets to support the amount drawn down from its revolving credit facility. But it anticipated that by getting an amendment to its credit agreement, which allows it to borrow an additional $5.6 million.

The company's statement, however, did not make note of how much it owes to the bank providing the revolving credit facility, although the company's balance sheet shows other current liabilities at $31.3 million, and current debt at $90 million, with accounts payable at $145 million. Under asset, the company listed $32.4 million in cash, $117 million in inventory, and accounts receivables at $175 million.