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Rexhall Industries Announces Second Quarter Results

LANCASTER, Calif.--Aug. 1, 20034, 2003--Rexhall Industries, Inc. today reported its financial results for its second quarter ended June 30, 2003. Net revenues for the second quarter decreased 49% to $9,642,000 from $18,964,000 for the same period in 2002. Gross profit for the second quarter was $1,259,000 versus $2,354,000 last year, which is a 46% decrease. Net loss for the quarter was $282,000, or $0.05 per diluted share, compared to a net income of $264,000 or $0.04 per diluted share for the second quarter last year.

William J. Rex, President, Chairman and CEO, stated, "Sales dropped below industry levels as a result of Rexhall's strategy to identify the current market for recreational vehicles. In an effort to satisfy dealers on an individual basis, Rexhall created a niche market rather than focusing on what it now believes the vast majority of RV customers want. Though we are discouraged with our performance and another losing quarter, we believe there is a light at the end of the tunnel. We have a strategic plan to work through this. First we have converted approximately $2.5 million from cash to finished goods inventory, in an effort to flush through all current chassis and raw material not specific to our new T-Rex designed motorhomes. Our goal is to sell through all or most of our standard inventory in the 3rd quarter, which should, if we are successful, improve our cash position, give our dealers time to sell through their inventory, and allow us to focus on our new T-Rex Double & Wide(TM) in the 4th quarter. Though our dealers will still be able to order standard motorhomes, the initial excitement generated by our new design, both from customers and dealers, leads us to believe any customer looking to buy a motorhome with two or more slide rooms will prefer our new T-Rex Double & Wide(TM) offered from 26 foot gas Vision and American Clipper up to 40 foot diesels in RoseAir, along with both Aerbus and RexAir from 30 foot gas to 38 foot diesels."

REXHALL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                Three Months Ended
                                           June 30, 2003 June 30, 2002
                                           ------------- -------------
Net Revenues                                  $9,642,000  $18,964,000
Cost of Sales                                  8,383,000   16,610,000
                                              ----------  -----------
Gross Profit                                  $1,259,000  $ 2,354,000
Operating Expenses:
Selling, General, Administrative Expenses
 and Other Expenses                            1,725,000    1,913,000
                                              ----------  -----------
Income before Income Taxes                      (466,000)     441,000
Income Tax Expense/(Benefit)                    (184,000)     177,000
                                              ----------  -----------
Net Income/(Loss)                             $ (282,000) $   264,000
                                              ==========  ===========
Basic and Diluted Income/(Loss) - Per Share   $     (.05) $       .04
Weighted Average Shares Outstanding
  Basic and Diluted                            5,872,700    6,115,000
                                              ==========  ===========


REXHALL INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                           June 30, 2003 June 30, 2002
                                           ------------- -------------
ASSETS
CURRENT ASSETS
     Cash                                    $   458,000  $ 5,757,000
     Accounts Receivables, net                 2,654,000    2,251,000
     Income Tax Receivable                       536,000      360,000
     Inventories                              17,599,000   15,049,000
     Deferred Income Taxes                       933,000    1,003,000
     Other Current Assets                        154,000      139,000
     Current Assets of Discontinued
      Operations                                   -----      182,000
                                             -----------  -----------
TOTAL CURRENT ASSETS                         $22,334,000  $24,741,000
     Property and Equipment at Cost Net
      of Accumulated Depreciation              5,901,000    5,021,000
     Property Held for Sale                        -----        -----
     Other Assets                                152,000      152,000
     Non-Current Assets of Discontinued
      Operations                                   -----       37,000
                                             -----------  -----------
TOTAL ASSETS                                 $28,387,000  $29,951,000
                                             ===========  ===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts Payable                        $ 2,779,000  $ 1,622,000
     Chassis Vendor Line of Credit             1,685,000    3,381,000
     Notes Payable and Current Portion
      of Long-Term Debt                           62,000       36,000
     Accrued Warranty                            927,000      991,000
     Accrued Legal                               982,000    1,250,000
     Accrued dealer incentives                   569,000      638,000
     Other Accrued Liabilities                 1,435,000    1,750,000
     Accrued Compensation and Benefits           490,000      472,000
     Current Liabilities of Discontinued
      Operations                                   -----       20,000
                                             -----------  -----------
TOTAL CURRENT LIABILITIES                      8,929,000   10,160,000

     Long-Term Debt, less Current Portion        965,000      634,000
                                             -----------  -----------
TOTAL LIABILITIES                              9,894,000   10,794,000
                                             -----------  -----------
STOCKHOLDERS' EQUITY
     Preferred Stock - no par value,
         Authorized, 1,000,000 shares;
         no shares outstanding at June 30,
         2003 and December 31, 2002                -----        -----
     Common Stock - no par value,
         Authorized, 10,000,000 shares;
         issued and outstanding
         5,872,700 at June 30, 2003
         and 6,038,000 December 31, 2002       5,580,000    5,906,000
     Loan Receivable from Exercise of Options      -----        -----
     Retained Earnings                        12,913,000   13,251,000
                                             -----------  -----------
TOTAL STOCKHOLDERS' EQUITY                    18,493,000   19,157,000
                                             -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $28,387,000  $29,951,000
                                             ===========  ===========
BOOK VALUE PER SHARE                         $      3.15  $      3.17
                                             ===========  ===========

About Rexhall

Rexhall Industries, Inc. (www.rexhall.com) designs, manufactures and sells various models of Class A motorhomes used for leisure travel and outdoor activities. Rexhall's lines of Class A motorhomes are sold through dealer locations across the U.S., Canada and Europe and include RoseAir(TM), RexAir(R), Aerbus(TM), Vision(TM) and American Clipper(TM).

FORWARD-LOOKING STATEMENTS: Our statements of our intentions or expectations are "forward-looking statements" based on assumptions and on facts known to us today. For example, our expectations regarding our strategy to focus on conventional motorhomes for the third quarter and our new product line and the introduction and sales of our new T-Rex Double & Wide(TM) motorhomes during the fourth quarter are forward-looking statements. There can be no guarantee that we or our dealers will be able to sell through the inventory of conventional Class A motorhomes, that a market will exist for our new T-Rex Double & Wide(TM) motorhomes or that our new coaches will adequately respond to market trends or appeal to the mass market. Customers might delay or forgo purchasing of our conventional motorhomes in the third quarter or at all preferring to wait for the release of our T-Rex Double & Wide(TM) product line, because they prefer coaches of our competitors, because they fear increases in fuel prices or interest rates, because of general economic conditions or for other reasons. This would have a negative effect on our third quarter sales and could adversely affect our operating results and financial condition. Further, if a market does not develop for our new motorhomes or if we fail to receive sufficient orders for them, our sales may further decline and our business and operating results could be seriously harmed. Even if the market for our new T-Rex Double & Wide(TM) motorhomes does develop, it may not grow at an adequate pace. Moreover, we may not be able to predict precisely the time and expense required to overcome unexpected production problems and to ensure production within the time limits we expect, or the reliability and high quality of the coach at an acceptable cost. Increased costs and other difficulties associated with manufacturing these motorhomes such as our inability to obtain critical parts and components from suppliers timely or at all could have a negative impact on our sales during particular periods and on our future gross margins. Our business is seasonal and cyclical. Most of our competitors are substantially larger, and many of our suppliers and dealers have greater economic power, so that the volume and prices of both supplies and sales may be adversely affected by competitive action.

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