Reconditioned Systems, Inc. News Release
2636 S. Wilson Street, Suite
105
Tempe, Arizona 85282 Contact: Investor Relations
(480) 968-1772 (Telephone)
(480) 894-1907 (Fax)
“RSI reports Fourth Quarter
2007 results”
Tempe, Arizona, May 11, 2007
Dear Fellow Shareholders:
I am pleased to report that Reconditioned Systems, Inc. (“RSI”) was profitable again this quarter. Although we had only budgeted for flat sales and earnings for this fiscal year ending March 31, 2007, we did not achieve our budget. Last year was the best in RSI’s history, and we knew it would be hard to repeat. I am extremely happy to report that both our Atlanta and our Tucson divisions were profitable for the year. This is the first year they have showed a profit since we opened them.
For the three months ending March 31 2007, RSI made pre-tax income of $350 thousand on sales of $5.1 million. This compares to a pre-tax profit of $545 thousand on sales of $5.4 million for the quarter ending March 31, 2006. We completed the consolidation of our Albuquerque manufacturing operations into our new facility in Tempe effective April 1, 2007; the associated costs, including severance charges, were expensed in March. Although these expenses hurt this quarter’s results, the consolidation will make a significant positive impact on our margins going forward, and I am excited about our prospects for the future.
I am also excited about Carl Grending becoming the Vice President of Sales for the company. Up to now, we have had no integrated sales strategy or focus. I am confident that Carl will develop a unified, professional sales team with improved sales result.
The economy is definitely slowing, especially housing. With little wage gains, high debt burdens and reduced mortgage refinancing, consumer spending should slow as well. Inflation is actually increasing which makes lower interest rates unlikely and places another strain on the economy. A recession or at least stagflation is more likely this year. Despite this, I am pleased with the changes we have made, and I am very optimistic about the next several years for RSI. We are budgeting for a modest increase in sales and earnings for this next fiscal year.
We have paid annual dividends for the last two years. This year the board again voted to pay an annual dividend of $0.25 on August 31, 2007, to shareholders of record on July 5, 2007. This is lower than last year and reflects the lower earnings. As in the past, any future dividends will depend on our performance and financial position.
/S/ Scott W. Ryan
Scott W. Ryan
Chairman of the Board
Reconditioned Systems, Inc.
May 11, 2007
Page -2-
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Summary Statement of Operations |
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|
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For The Three Months Ended |
For the Year Ended |
||
|
|
March 31, 2007(Unaudited) |
March 31, 2006(Unaudited) |
March 31, 2007(Unaudited) |
March 31, 2006(Unaudited) |
|
Sales |
$5,146,261 |
$5,422,725 |
$18,871,370 |
$20,671,040 |
|
Net income before provision for income taxes and
loss on investment |
$349,787 |
$545,093 |
$1,117,946 |
$1,585,287 |
|
Net income * |
$231,699 |
$314,200 |
$698,016 |
$1,066,155 |
|
Basic earnings per share * |
$0.19 |
$0.25 |
$0.56 |
$0.84 |
|
Basic weighted average number of common shares
outstanding |
1,219,918 |
1,246,657 |
1,240,865 |
1,261,981 |
|
Diluted earnings per common and equivalent share * |
$0.19 |
$0.25 |
$0.55 |
$0.84 |
|
Diluted weighted average number of common and
equivalent shares outstanding |
1,245,701 |
1,247,888 |
1,259,336 |
1,262,289 |
|
Summary Balance Sheet as
of |
|||||
|
|
March 31, 2007(Unaudited) |
March 31, 2006(Unaudited) |
|
March 31, 2007(Unaudited) |
March 31, 2006(Unaudited) |
|
Assets |
|
|
Liabilities
and Equity |
|
|
|
Cash |
$1,328,165 |
$2,438,832 |
Accounts payable |
$958,262 |
$1,120,568 |
|
Accounts receivable |
2,430,955 |
2,027,233 |
Customer deposits |
327,773 |
375,929 |
|
Inventory |
1,821,995 |
1,682,816 |
Accrued wages, commission and benefits |
777,618 |
849,261 |
|
Property & equipment |
836,646 |
698,288 |
Other current liabilities * |
85,189 |
175,945 |
|
Other assets |
345,911 |
208,277 |
Stockholders’ equity * |
4,614,830 |
4,533,743 |
|
Total |
$6,763,672 |
$7,055,446 |
Total |
$6,763,672 |
$7,055,446 |
* Income taxes have been estimated at 42% of pretax income and may be revised upon completion of the company’s tax returns.
Note: The
Company’s press releases are available on our website www.resy.net under Inventor Relations. Any shareholder who would like to sell
shares back to the Company should contact the Investor Relations Department at
800-280-5000.