Reconditioned Systems, Inc.                                                                             News Release

444 West Fairmont

Tempe, Arizona 85282                                                                                       Contact:  Investor Relations

(480) 968-1772 (Telephone)

(480) 894-1907 (Fax)

 

“RSI announces Third Quarter Results”

Tempe, Arizona, February 4, 2002                                  NASDAQ Small Cap Issue Symbol:  RESY

 

Dear Fellow Shareholders:

 

I regret to report that Reconditioned Systems, Inc. (“RSI”) has just completed its worst quarter since I joined the company in late 1995, primarily as a result of reduced sales.  For the quarter ending December 31, 2001, RSI lost $496 thousand on sales of $1.5 million; for the nine months, RSI lost $450 thousand on sales of $6.4 million.  These sales are down 59% from last year’s December quarter and down 43% from last year’s comparable nine months.

 

I take full responsibility for not anticipating the dramatic decline in sales for the Company, which was even worse than the industry as a whole.  Fortunately, we had only forecasted flat sales for this fiscal year and had already focused on reducing expenses to enhance profitability.  In this past quarter, we have cut personnel, salaries, and expenses in order to operate at our reduced sales rate, which we expect to continue until at least June of 2002.  We have set new sales quotas, which if not met, will result in further layoffs.  I greatly regret the hardships that these actions impose on our employees, but we must restructure our company for a recessionary economy.

 

Despite the cutbacks we have made, we decided to open a satellite sales office in the Los Angeles area.  Ron Ziegler, a successful former CEO of Business Outlet, Inc., a Herman Miller refurbisher in Reading, Pennsylvania, heads this office.  He brings many years of industry sales and marketing experience; we look forward to his contributions to the Company.  The store is located at 15060 Ventura Boulevard, Suite 150, Sherman Oaks, CA, phone 818-461-0450.

 

We are still hopeful for an economic recovery and a turnaround in sales for the second half of 2002.  Meanwhile, we are taking the difficult steps to reduce expenses.  We remain financially strong; our tangible book value as of December 31, 2001 was $2.97, with over $1.3 million in cash and no long-term debt!  We believe that the platform for growth is built during the lean times.  Our solid balance sheet should enable us to weather this recession and enable us to capitalize on our expansion plans when the economy turns.  As always, we welcome your comments and suggestions.

 

 

Scott W. Ryan

Chairman of the Board

Reconditioned Systems, Inc.

New Release

February 4, 2002

Page -2-

 

 

Summary Statement of Operations
	For The Three Months Ended		For the Nine Months Ended
	December 31, 2000 (Unaudited)	December 31, 2000 (Unaudited)	December 31, 2001 (Unaudited)	December 31, 2000 (Unaudited)
Sales	$1,536,958	$3,767,538	$6,351,425	$11,175,532
Lawsuit & legal disputes	$35,404	$0	$76,530	$0
Severance charges	$42,708	$0	$42,708	$0
Net income (loss) before provision for income taxes	$(495,600)	$345,428	$(450,343)	$985,605
Net income (loss)	$(495,600)	$259,296	$(450,343)	$702,128
Basic earnings (loss) per share	$(0.42)	$0.21	$(0.38)	$0.55
Basic weighted average number of common shares outstanding	1,191,972	1,227,440	1,181,435	1,282,755
Diluted earnings (loss) per common and equivalent share	$(0.42)	$0.19	$(0.38)	$0.49
Diluted weighted average number of common and equivalent shares outstanding	1,191,972	1,362,707	1,181,435	1,418,550

 

 

Summary Balance Sheet as of
	December 31, 2001 (Unaudited)	December 31, 2000 (Unaudited)		December 31, 2001 (Unaudited)	December 31, 2000 (Unaudited)
Assets			Liabilities and Equity
Cash	$1,369,431	$1,736,617	Accounts payable	$265,998	$577,078
Accounts receivable	569,950	1,455,976	Customer deposits	88,404	89,528
Short-term investment	150,000	0	Other current liabilities	217,582	370,405
Inventory	1,368,017	1,217,922	Common stock	4,805,410	4,588,746
Property & equipment	342,748	264,754	Retained earnings/ (Accumulated deficit)	(396,495)	82,562
Other assets	311,755	416,364	Treasury stock	(868,998)	(616,686)
Total	$4,111,901	$5,091,633	Total	$4,111,901	$5,091,633

 

                                                                                Report on Form 10-QSB  

The Company’s quarterly report on Form 10-QSB is available at our website, www.resy.net under Investor Relations.