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

Mity-Lite, Inc.
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1301 West 400 North
Orem, UT 84057
(801) 224-0589
http://www.mitylite.com

UNION CITY, CA (May 29, 1997)/FOOLWIRE/ --- Mity-Lite, Inc. released their fourth quarter and fiscal 1996 results after the market close on May 21st. Net sales for the quarter were $4.6 million versus $3.9 million, representing an increase of 17%. Sales were fueled by two market segments mainly -- hospitality and education. Chair sales represented 9% of sales for the quarter versus 6.8% for the prior year fourth quarter. International sales represented 9.3% compared to 5.6% a year ago. Net sales for the year were a record $18.7 million versus $15.4 million representing an increase of 21%. Once again they saw strong sales in several market segments including hospitality, church, office products, and education. Chair sales increased 57.2% for the year and represented 6.9% of sales versus 5.3% for the previous year. International sales increased by 62.4% representing 7.4% of sales compared to 5.7% a year ago.

GROSS PROFIT MARGINS. They also saw strong improvement in their gross profit margins. Gross profit margins for the fourth quarter increased to 40.2% from 39.1% in the prior year fourth quarter. Annual gross profit margins grew to 41.5% versus 40.7%. The increase is due to two factors. First, they realized a higher average unit sales price on their table products, mainly driven by mix. Second, they have experienced some lower raw material costs in the plastics and wood materials. The higher gross margins have been partially offset by some setup costs related to the production of their new chair the MityHost and also setup costs related to a new adhesive process that they are using for their tables.

SELLING EXPENSES. Selling expenses for the quarter represented $722,000 versus $609,000 and as a percent of net sales increased slightly to 15.8% from 15.6% in the March 1996 quarter. The increase was due to increased international selling expenses and personnel costs related to the hiring of additional sales reps. Annual selling expenses increased to $3 million from $2.2 million and represented 15.9% of sales versus 14.3% of sales. The increases on an annual basis related to increased headcount, trade show, and international selling expenses.

GENERAL & ADMINISTRATIVE EXPENSES. G&A expenses increased to $180,000 for the quarter from $151,000 in Q4 last year. For the quarter, G&A expenses as a percent of net sales remained flat at 3.9%. For the year, G&A expenses were $865,000 compared to $707,000. As a percent of net sales for the year, they also remained flat at 4.6%. The increase in expenditures, in terms of dollars, is due to the costs related to personnel and also costs related to support the implementation of a new MIS system.

RESEARCH & DEVELOPMENT EXPENSES. R&D expenses decreased to $56,000 in the fourth quarter, compared to $116,000 last year. R&D expenses as a percent of net sales also decreased in the quarter to 1.2% from 3.0%. For the year, R&D expenses decreased to $375,000 compared to $511,000 in the previous year and also decreased as a percent of net sales to 2% from 3.3%. The decrease was related to one-time expenses incurred in the fourth quarter last year related to new products and also some lower personnel and R&D related legal expenses they have incurred this current year. The March 1996 year also included a $128,000 pre-tax charge related to their attempts to purchase Fixtures Manufacturing and Samsonite Furniture in two separate transactions. They pulled out of the Fixtures Manufacturing transaction when they couldn't support the valuations provided them and were outbid by Sunbeam Corporation for the assets of Samsonite when Samsonite was under bankruptcy protection.

OTHER INCOME/PROFIT. Other income increased in the quarter just ended to $97,000 from $65,000 and for the year to $339,000 from $219,000. The increase is mainly due to interest earned on their increasing excess cash reserves. They had a pre-tax profit for the current quarter of $981,000, representing their second-best pre-tax profit ever. This compares with last year's fourth quarter of $714,000 and represents an increase of 37%. For the year, pre-tax profit increased to $3.9 million from $2.9 million representing a 32% increase. Net income for the fourth quarter was $640,000 versus $539,000 for the fourth quarter last year. Earnings per share was $0.19 on 3.3 million shares versus $0.17 on 3.2 million shares a year ago. For the year, they reported earnings per share of $0.76 per share versus $0.60 per share for the previous year.

SUMMARY. For the year, sales increased 21%, pre-tax profit increased 32% (almost 21% of sales), and earnings per share grew 27%. They have been successful in delivering their minimum targets of a 20% sales growth and a 20% pre-tax profit.

BALANCE SHEET. They have a very strong balance sheet with working capital of over $9.4 million, most of which is in cash and cash equivalents of $7.6 million. That represents about $2.30 per share in cash. Year-to-date cash flows from operations were $2.7 million. Trade accounts receivable of $2.2 million continue to turn very rapidly. They have a 42 day collection period on average. The days outstanding last year were around 37 days. That was extraordinarily low. As they continue to analyze their receivables, they have about 6% in the "over 90 day" column. Their bad debt loss is extremely low. So they are still very confident on the collectability and the liquidity of those receivables. Last year, on an almost $19 million sales base, bad debt was less than $1,000 -- just to put how low bad debt is in perspective. Inventory levels are $700,000. They continue to turn their inventory at 16 times per year. Net fixed assets have increased slightly since the beginning of the year, about $300,000. That's representing miscellaneous investments in their manufacturing and sales operations. They have also added a new section to their balance sheet this time -- long-term assets. On March 31st they closed the transaction to acquire a 49.9% interest in Do Group. That total investment is around $1.9 million, showing up as a long-term asset on their balance sheet.

LIABILITIES. On the liability side, they have $1.3 million in current liabilities, most of which is trade payables. They have no bank debt. That leaves their shareholders equity at a very solid $12.9 million.

DEPRECIATION. Depreciation and amortization for last year was a little more than $400,000. This next year, as they look at their capital expenditure requirements, they are looking at about $500,000.

STRONG BALANCE SHEET. It is a very strong balance sheet, especially for companies in their industry. If you look at their return on equity last year, it was 19%. If you take out the cash they have on their balance sheet at March 31st and the cash they put into the Do Group out of the return on equity equation, their return on equity jumps from 19% to 66%.

SALES STILL STRONG. On the slightly negative side, total sales were only $18.7 million. But, the $300,000 they were short on last year, while maybe not statistically significant, really didn't go away. It just flipped from the fourth quarter into the first quarter of this year. Things are going gangbusters around there. They are running two shifts now. They are struggling to keep up with production. They have gone from 400 tables per day of production in February to where they are currently producing 700 tables per day. The numbers they are producing today are above their budget and, therefore, it is tempting to raise forecasts. However, they would guide analysts at this moment to stay with the forecast level. If things turn down in the future, it will be nice to have the high sales early on in the year to rely on. Having said that, however, it certainly speaks well of the coming year when they start the year with record sales. Starting the middle of March, their bookings have been extremely strong and they continue to outstrip the shipments Mity-Lite is making. Their manufacturing people are running themselves ragged, but what a delightful problem to have. They were successful in maintaining their earnings per share estimates and are really proud of being able to do that. They understand that analysts may be tempted to raise estimates, but they don't want to guide them to do that yet.

MANUFACTURING CAPACITY. They were asked what they can do with manufacturing if demand continues to increase. They responded that prior to going to two shifts they were producing 500 tables a day on a single shift. So, in going to the double shift, they have actually reduced the amount of tables per shift. There is plenty of capacity to go to more than 700 tables. In fact, with modifications that will invariably accompany higher volume levels, the factory will have much more capacity in it. Their production manager indicated in a management meeting that, given a year to tweak his system a little bit, he thinks he can be at 900 tables on a single shift. So, they don't see capacity issues as being more than short-term problems that accompany normal management of the business. They believe they have plenty of table capacity and plenty of opportunity to sell those tables.

PLANS FOR CASH. They were asked what they are going to do with the cash on the balance sheet next year. They responded that at this moment they look forward to the Do Group really adopting their business culture of productivity and turning the assets quickly. If they succeed in turning that business around, Mity-Lite will fully embrace the investment in the Do Group. They are not sure when that will occur, but it will be nice to have the cash available to take out all of their bank debt, to stimulate the return on Mity-Lite's investment in them. In addition to that, however, they continue to be very active in looking for appropriate businesses to buy that can enhance their earnings per share and accelerate their growth rate. In the last quarter, they have taken a pass on another one that won't show up in the financials because they didn't have enough invested in it. But, the point is that they are very active in looking for appropriate ways to enhance the use of their cash assets, to move those cash assets from the 3-4% returns that they are getting to where they can get the 66% return they are getting on their non-cash assets. They are active in that regard, but don't have anything they are willing to announce yet.

SALES PRODUCTIVITY UP. They have discovered a very interesting thing about their business -- they really have a whole lot more sales leads than they originally anticipated would be available in the entire system. The net result of that is that they have been able to seed table leads at an increasing rate into their sales system. That could create a backlog in the sales system, except that in February they underwent some intensive training in relation to sales productivity. Their sales productivity has jumped markedly in the last 3 months. The net result of that is that the same number of sales people are producing about 30% more in terms of processing of leads, turning those leads into quotes. That bodes very well for them as the future unfolds.

NEW HIRES IN SALES. Additionally, they have now hired their next round of people and will be at 32 full-time equivalents on the telephone making sales as of the first of June. In addition to that, they have put a new national accounts manager in place, plus the structure they put in place for managing the sales people which involved four team leaders in the past. The organization of the sales department has really increased and their ability to drive productivity in the sales department has increased markedly in the last quarter. So, everything about that whole equation really speaks well for the future.

CHAIRS. In relation to chairs, the sales of their MityHost chair are moving right along. That is the first really good solid chair that they are selling that they can speak very positively to. The chair is focused on the hospitality industry. Sales in the hospitality industry right now are moving along rapidly, not only for their business but also for other businesses in the hospitality service industry. That growth is carrying their new Host chair right along with it.

INTERNATIONAL SALES. International sales have reached a new high and are approaching $500,000 per quarter. They are headed to go even better as the year unfolds. That system for international sales is full of leads and full of things that are really cooking well. That segment of the business also speaks well for the future. There is one internationally related order they wanted to mention. Although this particular order was delivered to California, it is an order they received because of the international system. An international hotel chain -- Four Seasons -- has approved Mity-Lite as their table supplier. The first property Mity-Lite is delivering to is in California. The Four Seasons tables are a special table in that they have a padded top on them and that increases the revenue per table, but it also provides a new product offering with a more elegant touch and a more quiet sound to it for high-class dining settings.

UPDATE ON DO GROUP ACQUISITION. The work for Mity-Lite related to the Do Group acquisition has been unfolding. They are now 7 weeks into that process. They have been involved in two board meetings. In those board meetings they hold very careful operational meetings wherein they attempt to monitor sales progress, the development of the sales program, financial progress, the controls that are in place. They have set up a production management seminar for bringing representatives from the Do Group's factory in Indiana as well as their factory in Arkansas out to Mity-Lite where they can observe Mity-Lite's system for turning inventory, for making their assets productive, as well as their system for making their people as highly productive as possible. Mity-Lite sees the excitement building in the people at the Do Group as they see the possibilities for their business unfolding. The cash position is still strong, even with the Do Group investment. Mity-Lite continues to be very cash-flow positive, adding to their cash position each month.

GOALS FOR DO GROUP. In the future they will report through press releases on the progress in sales growth at the Do Group. They will report on the Do Group results and will report what would be a pro forma consolidated result. The one thing they have to do first is get the Do Group's reporting system capable of generating the numbers quickly and accurately and they are still working on that. But it is coming and they will disclose those as they have those results. They were asked about ROE potential at the Do Group and whether they thought it had the potential to match the ROE of the core business. They responded that 66% ROE is very hard to do and they won't commit to achieving that with the Do Group investment until they know more about the business. They did say that their minimum ROE target is 25% and they wouldn't have done the Do Group deal unless they thought they could at least hit that number. They are looking for some real big numbers and personally don't want to settle for less than 45-50% ROE on non-cash equity, but they think it is going to take the Do Group 12-24 months to get the fundamentals in place to begin driving their business like they need to. Mity-Lite has plans to drive sales growth at Do Group as well as plans for minimizing assets in the plant and beginning to get a much better return on assets from a plant standpoint (both human and physical assets). They also have financial controls in mind for making that work.

COMMENTARY ON RECENT STOCK PRICE MOVEMENT. They observed over the past few weeks that there once again has been a dip in their stock price. While that is discouraging to them, it is easy to explain when they look at the selling that has gone on. It is obvious to them from the daily reports they get that there has been at least one of their major investors who decided to liquidate their position and is probably doing that in a not-very-orderly manner. Hence, their counsel to investors is to stay with them for the long run because the reality is that the dip in the price of the stock doesn't reflect at all the performance of the company. The company is doing really well despite what is being created by some sell pressure in the market. As they go about their investor relations conference, they will be attending another Red Chip Review conference in New York the first part of June. The last time they attended one of those conferences, they saw increased "buy" pressure and that should counteract any "selling" pressure that has been going on, along with the news they are giving in the conference call about the condition of the company which they think is very positive.

COMPETITION. They were asked about competition. They responded that they have seen increasing responses from competitors. They are seeing Palmer Snyder who was one of the early plastic tables in the form of Bryan Table Company. They bought Bryan Table Company and moved it to Pennsylvania and are producing that table in Pennsylvania. They have invested a lot of money in marketing recently and are showing up increasingly in Mity-Lite's markets, although Mity-Lite continues to win the largest portion of the battles there. Howe Table Company is also marketing aggressively, but once again Mity-Lite wins more than their share of the battles. Virco is one that is a worry to them. Even though Virco has come out with a plastic table offering that is far less durable and from a product standpoint is not very competitive, from a sales standpoint they are a powerful organization. They are particularly strong in the K-12 education market. They have immense market penetration there where Mity-Lite doesn't have much market penetration. Their guess is that even though Virco is powerful, they will take market share in a market that Mity-Lite doesn't have anyway and it won't affect Mity-Lite particularly. But, Mity-Lite is always jealous when Virco starts building their position and would like to prevent them from doing that. Mity-Lite feels that if they can get in front of the customer and can make a head-on-head comparison, they will win every time against Virco. Just recently in the National Restaurant Association trade show, they also understand that their old competitor, Fixtures, have now released under their new ownership, a new lightweight table offering. It is not a plastic table. It is a cardboard, honeycombed offering. Mity-Lite has not seen the table, but it would be hard to imagine that the product has much durability either. Bottom line, they are seeing increased competition, but are continuing to win more than their share of the battles.

NEW LARGE ORDER. They wanted to end the call on a positive note by reporting that the day before the call, they received a purchase order which will rival their largest order ever -- from the Madison Wisconsin Convention Center totalling around $300,000 and representing 1,700-1,800 tables. They are very pleased that business like that continues to come to them as they work their opportunities. They are here for the long run and appreciate their long-term shareholders. They reiterated their commitment to continue to run the business to reward their shareholders.

* 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.