USA: SMC Corporation Reports Second Quarter Results for 2000

By Press Release | 31 July 2000

Today SMC Corporation (Nasdaq: SMCC - news) released its results for the three month period and six month period ending June 30, 2000. For the three months ending June 30, 2000, SMC reported sales of $45.4 million and a net loss of $3.1 million. This compares to sales of $53.8 million and a net loss of $149,000 for the three month period ending June 30, 1999. For the six month period ended June 30, 2000, sales were $98.5 million and the Company incurred a net loss of $3.4 million. This compares to sales of $110.6 million and a net loss of $41,000 recorded for the six month period ended June 30, 1999.

"Some short-term losses were to be expected during the Company's shift to build-to-order from build-to-forecast. We decided mid-April that this decision was our best long-term course of action to reduce interest costs and to protect the Company in a fickle market," reported Mike Jacque, President and Chief Operating Officer. He continued, "As evidence of our progress, last year at this time the Company had about 165 past model spec units in stock available for sale to dealers, valued at approximately $23 million. This year the Company currently has 8 units, valued at about $1 million." The Company's cash flows are positive year to date, and Jacque reported that the Company has succeeded in reducing inventories by over $12.6 million this year and debt by $1.6 million. Although the retail market has been challenging this year, second quarter retail unit sales of all SMC products were up 4.3% over the corresponding period last year led by a 95% retail sales increase in Harney Coach Works products.

Significant costs were absorbed during the second quarter as the inventory of spec units were sold during a period of reduced production. Our 2001 products are debuting now and production levels are returning to normal levels. After demand for 2001 models is assessed, the Company will adjust its cost structure to those production demands without the interest expense associated with carrying large inventories.

In terms of product development, the Company has implemented significant changes in its 2001 models. At Safari, Trek and Serengeti models have undergone particularly substantial design changes, whereas all Safari products now include the Company's exclusive new VR2 tuned suspension in addition to new cabinets in Walnut and Frosted Maple among several other content changes. Beaver's Patriot models now have content comparable to top-line Marquis models from only a few years ago and the Monterey and Contessa models been substantially redesigned for 2001. At Harney Coach Works, solid Hickory cabinets have been added to the completely upgraded Renegade Classic models that now include double slides in addition to several upgrades to Riata products. The Company has invested heavily in these changes and "Kaizan" production methods that improve both quality and efficiency, and believes its products are positioned very competitively for the year 2001 and beyond.

SMC Corporation is one of the largest high line motor coach manufacturers in the United States. Headquartered in Bend, Oregon, the Company has six locations in Oregon. The Company offers customers luxury recreational vehicle models under the Solitaire, Marquis, Beaver, Safari, Trek and Harney Coach Works brand names. Information about SMC Corporation and its products can be found on the World Wide Web at www.smc-corporation.com.

Forward-Looking Statements: The statements in this report may be regarded as forward-looking statements. A number of factors could cause actual results to differ materially from these statements, including statements regarding the impact of future production levels, anticipated changes to the Company's cost structure, a general slowdown in the economy or the RV market specifically, or new products from competitors. Please also refer to the Company's SEC reports, including, but not limited to its Annual Report on Form 10-K for the year ended December 31, 1999.



$000's (except share and per share data)

Three Months Ended        Six Months Ended
7/03/99 6/30/00 7/03/99 6/30/00

Net Sales 53,794 45,425 110,616 98,477
Gross Profit 4,143 203 10,352 5,658
Income (Loss) from
Operations (123) (4,578) 280 (4,523)
(Loss) Before Taxes (248) (5,243) (69) (5,678)
(Benefit) for Taxes (99) (2,097) (28) (2,271)
Net (Loss) Income (149) (3,146) (41) (3,407)

Net (Loss) Income/share
basic (0.03) (0.54) (0.01) (0.59)

Net (Loss) Income/share
diluted (0.03) (0.54) (0.01) (0.59)

Weighted share
basic 5,845,000 5,780,000 5,868,000 5,780,000
Weighted shares
diluted 5,846,000 5,780,000 5,868,000 5,780,000



In Thousands

12/31/99                 6/30/00

Current 59,704 45,267
Property & Equipment 13,978 14,806
Other 1,987 1,885
Total Assets 75,669 61,958

Current 44,127 32,998
Long-term Debt 8,663 9,488
Total Liabilities 52,790 42,486

Shareholders' Equity 22,879 19,472

Total Liability & Equity 75,669 61,958