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 Second Quarter 2008 results”

Tempe, Arizona, November 8, 2007                                                

 

Dear Fellow Shareholders:

 

I am pleased to report that Reconditioned Systems, Inc. (“RSI”) was profitable again this quarter, however, we are way behind our forecast for sales and profits for a number of reasons.  In wholesale, we have been dealing with severe competition from low cost new systems primarily from China.  In retail, we have had our top salespeople out for various reasons, and we have been slow to get all of our sales people trained on our new product lines that we have just started this year.  While these are understandable, I am still disappointed.  Having said all this, I am optimistic about the rest of this year.  We are back to full strength in all departments, and fully trained on our new systems.  I also believe that the new systems from China will become less competitive for several reasons, including currency and production problems resulting in service issues and delays.

 

For the three months ending September 30, 2007, RSI made net income of $6 thousand on sales of $3.6 million.  This compares to a pre-tax profit of $50 thousand on sales of $3.9 million for the quarter ending September 30, 2006.  This is the second quarter after the consolidation of our two manufacturing operations into our new facility in Tempe. While we did not achieve the margins I was expecting, I am confident that Carl Grending, our new vice president for sales, will develop a unified, professional sales team with improved sales result. 

 

The economy is still slowing, and it is unlikely to return to the growth of the past few years.  With little wage gains, high debt burdens and reduced mortgage refinancing, consumer spending should continue to slow as well.  Despite this, we expect a better second half of the year.

 

We have paid annual dividends for three years.  This year the board 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.

New Release

November 8, 2007

Page -2-

 

Summary Statement of Operations

 

For The Three Months Ended

For the Six Months Ended

 

September 30, 2007

(Unaudited)

September 30, 2006

(Unaudited)

September 30, 2007

(Unaudited)

September 30, 2006

(Unaudited)

Sales

$3,649,985

$3,937,899

$8,108,549

$8,964,328

Net income  before provision for income taxes

$27,788

$82,950

$288,058

$498,701

Net income

$5,764

$50,375

$161,409

$302,816

Basic earnings  per share

$0.005

$0.04

$0.14

$0.24

Basic weighted average number of common shares outstanding

 

1,167,167

 

1,247,839

 

1,166,833

 

1,247,339

Diluted earnings  per common and equivalent share

 

$0.005

 

$0.04

 

$0.14

 

$0.24

Diluted weighted average number of common and equivalent shares outstanding

 

1,175,557

 

1,265,982

 

1,183,920

 

1,256,981

 

 

Summary Balance Sheet as of

 

September 30, 2007

(Unaudited)

September 30, 2006

(Unaudited)

 

September 30, 2007

(Unaudited)

September 30, 2006

(Unaudited)

Assets

 

 

Liabilities and Equity

 

 

Cash

$1,776,691

$1,453,274

Accounts payable

$735,119

$849,228

Accounts receivable

1,199,282

1,314,573

Customer deposits

396,525

258,426

Inventory

1,972,700

2,265,168

Other liabilities

850,734

722,633

Property & equipment

757,320

856,875

Stockholders’ equity

4,466,181

4,431,228

Other assets

742,566

371,625

 

 

 

Total

$6,448,559

$6,261,515

Total

$6,448,559

$6,261,515

 

 

 

Note: The Company’s quarterly 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.