FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (MF Debit)

Mity-Lite, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MITY)") else Response.Write("(NASDAQ: MITY)") end if %>
1301 West 400 North
Orem, UT 84057
(801) 224-0589

UNION CITY, Ca., November 4, 1996/FOOLWIRE/ --- Mity-Lite, Inc. reported their second quarter 1996 results last Tuesday. Net sales for the quarter were a record $4.9 million, compared with $4.0 million last year, a 24% increase. The company had a record pre-tax profit of $1,057,000 versus $724,000 for Q2 last year, representing an increase of 46%. Net income and EPS also increased significantly and earnings were $0.21 per share versus $0.14 per share last year, a 50% increase.

The strong sales were primarily related to increases in domestic and international table sales and also significant increases in their chair sales. Chair sales, in dollar terms, more than doubled and represented 8% of sales for the quarter compared to 4.3% for the same quarter last year. International sales also blossomed, increasing 87% and representing 11.2% of sales versus 7% of sales last year. The growth in the table sales was fueled by increases in the education, hospitality, recreation, and church market segments. They have seen some margin expansion on the tables as they have continued to increase their volume they have gotten some production efficiencies. They are looking at margins on their chairs of 20-25%, so they are lower.

Gross profit margins for the current quarter were basically flat over last year at 41.4% versus 40.8%. Selling expenses increased to $740,000 for the current quarter versus $571,000 last year. Selling expenses as a percentage of net sales also increased to 15% compared to 14.4% last year. However, the good news is that they have gotten over the initial surge in sales comps experienced in their first quarter this year when these comps represented close to 17.5% of net sales. That increase resulted from the hiring of 8 additional sales people at the beginning of the year and the implementation of a new sales incentive program. As these new sales people have begun to contribute more topline, their sales costs as a percentage of sales have come more in line with their internal targets. The schedule is to hire an incremental two salespeople in January. As their sales force has increased, they are experiencing some turnover in the sales department, although that turnover is still much lower than other industry averages. So they will replace ones they've lost, but then incrementally by January they will be up 2. By March they anticipate being up another 2. So they are on a schedule of hiring 2 sales people every 6-8 weeks as far as the ramp up on sales people goes.

General and administrative expenses increased only 14% to $231,000 in the current quarter from $202,000 in the previous year. The increase was mainly due to increased personnel related costs and certain reserves. G&A expenses as a percentage of net sales decreased to 4.7% from 5.1%. Research and development expenses remained relatively flat at $95,000 compared to $91,000 in last year's quarter and as a percentage of net sales they decreased slightly to 1.9% from 2.3%.

During last year's Q2, they incurred a one-time $95,000 charge related to the proposed acquisition of Fixtures Furniture. When the acquisition discussions were terminated in August of 1995, they wrote those comps off. Other income increased in the quarter to $77,000 from $58,000. The increase is due to interest earned on their excess cash reserves partially offset by a $10,000 loss incurred on the disposition of certain R&D and manufacturing assets.

BALANCE SHEET. As of September 30th, the company has working capital of over $10 million. Most of this is in cash and cash equivalents of $8.4 million. That represents $2.57 per share in cash. Their year-to-date cash flow from operations has totalled more than $1.3 million. Their trade accounts receivable continue to increase, but their collection period remains at a low 45 days. Inventory levels have also increased because of their increased sales and their turns are still 16 times per year. Net fixed assets have increased slightly since the beginning of the year to $1.5 million from $1.3 million, representing miscellaneous investments in their manufacturing and sales operations. On the liability side, they have $1.3 million in current liabilities, the majority of which are normal trade payables. They have no bank debt. That leaves them with a strong and very solid shareholders' equity at $11.5 million.

THE CHAIR EXPERIMENT. The company is back on target with their growth rate and meeting expectations. Their chair experiment that they began in earnest 6 months ago is drawing to its conclusion. They have not yet drawn the final picture as to what they will do with the results from the chair experiment, but they have learned some things. They learned that the chair sale was not what they anticipated it would be. That is, they anticipated that their loyal customer base would naturally gravitate to them and be willing, in return for the service that they give, to pay slightly higher prices for their chairs. That is just not the case. The reality is that the chair sale is a hard sale. It is a sale that requires every bit as much time and more time to compete with the other vendors in the market, particularly when customers are locked into certain design specifications that may be proprietary to other manufacturers or other distributors and where Mity-Lite doesn't have that significant of a product position that differentiates them from other common-type chairs. So it is kind of a commodity-type sale -- high selling costss, difficult for them to sell. That being said, their chair sale numbers are reaching to some significant numbers. They are selling at rates well in excess of $1 million per year. Therefore, they now need to ask themselves even though it isn't as good a business as the table business whether they want to continue to push it or do they want to attack a new strategy to grow the product line. The other good news is that their table sales have been so strong that they have kept Mity-Lite back on the growth path even without the kick from chairs that they anticipated they would have. As they draw to the close of the experiment, they have lots of data they need to process and then revamp or rejuvenate their strategic planning.

Q3 IS TYPICALLY SEASONALLY SOFTER. They also wanted to give one caution relating to the next quarter. Typically, they see a slowing in sales rates during their third fiscal quarter. On a year-over-year basis, they continue to have record sales come in during that quarter, but they anticipate that year-over-year, the third quarter once again will be a record quarter for them. However, it likely will not be the kind of growth quarter that shows sequential growth compared to the previous quarter. They think the year-over-year growth range they would be looking at now would be 15-20%.

AWARDS AND OTHER RECOGNITION. There has been a signficant increase in the stock price since the last conference call. They wanted to point out some things that are factors, although no one of them is nearly as dominant as the performance of the company. They list the performance of the company as the single reason for the recognition they are being rewarded with as they see the stock price increasing. Investor's Business Daily published a favorable article on the company. It was one where they didn't run the article by the company and there were some inaccuracies in the article, but nonetheless it generated a lot of publicity for them and on the days immediately following the publication of the article the share volumes were way up. Mity-Lite was also recently named again to the Forbes 200 Best Managed List as number 41 on that list. Locally, they received a major award from the Wasatch Crest Insurance Company for Safety in the Workplace. Mity-Lite was chosen as the #1 Company from a safety standpoint among the companies Wasatch insures. Next week Mity-Lite is being named the Provo-Orem Utah Chamber of Commerce's Business of the Year. They were named their local chapter of American Production and Inventory Control Society's Business of the Year. In the last two months they have been rewarded with a more significant institutional share following than they've had in the past.

OUTLOOK GOING FORWARD. Looking forward, they are very optimistic about the things that are going on in their business world. They see continued growth happening in their sales base. They see that they are well-controlled from a cost standpoint and so their margins are well protected. They do have, in this past year, a couple of competitors that have entered the high-price table market with them. However, as they go to battle with them, they find themselves winning a lot more than they lose, so they feel good about that. They are very pleased. They feel that the world is treating them well, their business is running well, their shareholders seem to be happy, and their stock price is performing well.

ACQUISITIONS. Most of the acquisitions they saw in the 1980s and early 1990s by other companies really didn't work out very well. That has put them in a position where they feel they need to be very cautious about acquisitions. Having said that, they also pointed to what people have referred to as failed acquisition attempts in the last year (which they wouldn't call failed, but say that they were acquisition attempts where once the details of the acquisition became evident, they were not interested in completing). They think it would be naive of others to assume they are not active in looking for appropriate acquisitions. They also think it would be naive of others to think that they are panicked into thinking they have to do an acquisition immediately or they are just not a good company. Both of those aren't true. They are looking, they judge their cash as a dear resource to them that needs to be employed more effectively. But they are not looking in any kind of a panic.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.