Phoenix Footwear Group, Inc. reported a profit of $310,000, or 4 cents a share, in the third quarter ended Oct. 3 compared to a net loss of $2.1 million for the third quarter of fiscal 2008.


The company reported a loss from continuing operations during the third quarter of $1.0 million, or 12 cents per share. Included in this loss is $303,000 in amortized financing exit fees, $180,000 of payroll related expenses for terminated employees and $115,000 of financial consulting and other fees. This loss compares to a loss from continuing operations of $1.3 million for the third quarter of fiscal 2008.


Net sales from continuing operations during the third quarter was $5.5 million, down 32% compared to net sales from continuing operations of $8.0 million during the third quarter of fiscal 2008.


Funded bank debt balance was $2.6 million at the close of the third quarter, which is a reduction of $5.4 million from the close of the second fiscal quarter of 2009.


CEO Rusty Hall said the closing of the company’s belt accessories business reduced bank debt by 68% and improved gross margin by 22 percentage points from the prior year’s quarter. Backlog improved by 65%.


The company also announced that on Oct. 15, 2009, the company and Wells Fargo Bank, National Association entered into a Third Amendment to Forbearance Agreement and Fourth Amendment to Credit and Security Agreement. Under the terms of this Amendment, the existing credit agreement and forbearance agreements were changed by, among other things, decreasing the inventory sublimit in the borrowing base to $2.3 million and providing for daily 1% decreases in the 46% advance rate on eligible inventory after Oct. 26, 2009 and extending the maturity date for the revolving line of credit and the expiration of the forbearance period to Nov. 30, 2009.


Likewise, on Oct. 9, Phoenix received a delisting notice from the NYSE indicating that as of its quarter ended July 4, 2009, the company failed to meet the continued listing standards of the NYSE Amex. The letter also stated that the company must submit a plan to the NYSE Amex by Nov. 9, 2009 addressing how it intends to regain compliance with this continued listing standards by April 11, 2011.