Decorator Industries Reports Results for Third Quarter 2006

PEMBROKE PINES, Fla., Nov. 14, 2006 -- Decorator Industries, Inc. (AMEX:DII) a supplier of interior furnishings for recreational vehicles ("RV"), manufactured housing ("MH") and the lodging industry, today announced results for the three and nine month periods ending September 30, 2006.

Third quarter 2006 net sales were $12,469,174 compared to $12,597,173 for the same period a year ago. Net sales for the first nine months of 2006 were $41,610,158 compared with $38,304,507 in 2005. Net loss for third quarter of 2006 was $186,881 or 6 cents per diluted share compared with net income of $347,052 or 12 cents per diluted share in last year's third quarter. Net income for the first nine months of fiscal 2006 was $673,771 or 22 cents per diluted share compared with $1,006,705 or 34 cents per diluted share for the same period a year ago.

Mr. Bassett, Chairman, stated:

"Sales to RV customers increased about 2% to $7,389,000 in the third quarter of 2006, compared with last years sales for the same period of $7,227,000. For the first nine months of 2006 our RV sales increased 15% to $24,766,000 compared with $21,579,000 for the same period a year ago. The RV industry reported a 5% decline in total shipments during the third quarter, with towable shipments decreasing by 4% and motor home shipments declining by 12%. Year to date industry shipments were up 8%, with towable shipments increasing 11.9% and motor home shipments decreasing 11.6%.

"Sales to our MH customers decreased about 15% to $2,260,000 in the third quarter of 2006, compared with last year's third quarter sales of $2,647,000. For the nine month period of 2006 our MH sales decreased about 2% to $7,610,000 compared with $7,775,000 for the same period a year ago. The Manufactured Housing Institute reported that industry shipments decreased about 18% for the third quarter of 2006, resulting in a year to date decrease of about 5%.

"Sales to Hospitality customers increased about 4% to $2,820,000 in the third quarter of 2006 from $2,723,000 in the third quarter a year ago. For the first nine months of 2006 Hospitality sales increased 3% to $9,234,000 from $8,951,000 in the first nine months of 2006.

"Although the decline in the net sales was about 1% in the third quarter, our net income was impacted negatively by a number of factors when compared to a year ago. Cost of goods sold increased by 5.7 percentage points, including an increase in our reserve for obsolescence of $382,000. The obsolescence increase, amounting to 3.1 percentage points, was unusually high and comprises materials that do not have ongoing placements in our customers' current programs. Excluding the increase in the obsolescence reserve, material costs increased by less than 1 percentage point and labor costs increased by 2.6 percentage points when compared to the third quarter of 2005. These increases were largely a function of the sales mix, increased costs of materials, and manufacturing inefficiencies. Also, general and administrative expenses increased by $132,000 during the quarter which included bad debt write-offs, expenditures for new marketing initiatives and costs associated with the Enterprise Resource Planning system.

"Our financial condition is very strong with stockholders' equity of $17,756,609. Long term debt was $1,716,610 or 8.8% of total capital. Working capital increased to $6,013,407 from $5,634,250 a year ago.

"Both the RV and MH original equipment manufacturers are currently operating at lower volumes when compared to a year ago. The weakness in motor home shipments which began in early 2005 has continued, and towable shipments have softened since August. Also the next couple of quarters will not include any purchases by the Federal Emergency Management Administration (FEMA) which provided a significant boost to trailer shipments by the RV manufacturers in both the fourth quarter of 2005 and the first quarter of 2006. Further, the MH industry has not shown any improvement and can be expected to reach a new low in shipments this year. Shipments for September 2006 declined over 28% from September 2005. The industry projects 'that the comparisons to 2005 shipments over the rest of the year will almost certainly be unfavorable through the end of this year, as more than 20,000 FEMA homes were shipped between September and December of 2005.'

"We are addressing those factors which contributed to our third quarter performance and expect to show improvement going forward. However, the market conditions cited above will significantly impact our results. We believe the long-term outlook for Decorator Industries is very positive. We are committed to increase our market share and to improve our productivity, the critical drivers of our past successes. We have the resources and the capabilities to achieve attractive returns for our stockholders, while remaining a financially strong, profitable and growing organization."

Decorator Industries, Inc., founded in 1953, designs, manufactures and sells interior furnishing products, principally draperies, curtains, shades, blinds, valance boards, bedspreads, comforters, pillows, cushions and trailer tents. Decorator is a leading supplier of such products to the manufactured housing and recreational vehicle markets and is a growing supplier to the lodging industry.