PORTLAND, Ore., July 13, 2010 (GLOBE NEWSWIRE) -- Schmitt Industries, Inc. (Nasdaq:SMIT) today announced its operating results for the fourth quarter and fiscal year ended May 31, 2010. Sales for the three months ended May 31, 2010 increased $561,546, or 36.1%, to $2,118,341 compared to $1,556,795 for the same period last year. Net loss for the fourth quarter ended May 31, 2010 was $469,119, or $.16 per fully diluted share, compared to net loss of $1,812,530, or $.63 per fully diluted share, for the same period last year. For the fiscal year ended May 31, 2010, sales decreased $2,695,460, or 28.4%, to $6,805,748 compared to $9,501,208 for the prior year. Net loss for the fiscal year ended May 31, 2010 was $1,711,013, or $.59 per fully diluted share, compared to net loss of $2,153,524, or $.75 per fully diluted share, for the prior year. 

In the fourth quarter, sales in the SBS Balancer segment increased $325,664, or 28.8%, to $1,454,692 for the three months ended May 31, 2010 from $1,129,028 in the fourth quarter of Fiscal 2010.  Sales in the SMS Measurement segment increased $235,882, or 55.1%, to $663,649 in the fourth quarter of Fiscal 2010 from $427,767 in the fourth quarter of the prior year.  Sales of the Company's balancer and laser-based measurement products increased from prior periods due to increased demand in the fourth quarter of Fiscal 2010 as a result of slowly improving market conditions in the U.S. auto industry and the global manufacturing markets.

Gross margins for the fourth quarter and the year have improved as compared to the same periods in the prior year primarily due to lower increases in reserves for excess and obsolete inventory in the current quarter offset in part by a shift in the sales product mix to lower margin products. Operating expenses decreased during the current year primarily due to lower personnel costs and spending controls, lower stock-based compensation, lower commissions related to the decrease in sales and lower research and development costs.

"We are pleased to see our first increase in quarterly revenues in the last six quarters," commented Wayne A. Case, CEO of Schmitt Industries. "The weakness in orders began in December 2008 and largely tracked the plight of the U.S. and world industrial and manufacturing economies. Our markets remain volatile and our customers continue to tightly manage their capital expenditures. During the fourth quarter, we saw increases in both our SBS Balancer and SMS Measurement segments on a quarter over quarter as well as a sequential basis for the first time in almost two years. We are hopeful that this quarterly development signals the return to health of our markets."

Jim Fitzhenry, President of Schmitt Industries, added, "We have been diligently managing our operating expenses and carefully monitoring the health and stability of our markets. At the same time, we have been making the necessary investments in product development and sales and marketing activities. Our new SB-5500™ controller for the Balancer market has been released to the worldwide manufacturing market with very favorable feedback to date. We expect shipments of our Xact™ products to increase in the first quarter of Fiscal 2011. We are also seeing increased demand for our Acuity™ brand of distance measurement lasers and continuing interest in our Lasercheck™ surface measurement products, which is a product line we acquired during the second quarter of Fiscal 2010. We remain committed to returning the Company to profitability as soon as possible."

About Schmitt Industries

Schmitt Industries, Inc. designs, manufactures and markets computer controlled balancing equipment (the Balancer segment) primarily to the machine tool industry. Through its wholly owned subsidiary, Schmitt Measurement Systems, Inc., the Company designs, manufactures and markets precision laser measurement systems used in surface measurement applications and dimensional measurement applications and ultrasonic measurement products for remote monitoring of chemical storage tanks (the Measurement segment). The Company also sells and markets its products in Europe through its wholly owned subsidiary, Schmitt Europe Ltd. located in the United Kingdom.

FORWARD-LOOKING STATEMENTS

The statements in this release, including remarks by Wayne Case and Jim Fitzhenry regarding the impact of the global economy on the Company's sales and the level of the Company's future sales, the impact of the introduction of the Xact, Lasercheck and SB-5500 products and the expected contributions of these investments, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations, estimates and projections about the Company's business that are based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including but not limited, the uncertainties of the Company's new product introductions, the risks of increased competition and technological change in the Company's industry and other factors detailed in the Company's SEC filings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they were made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes to this document made by wire services or internet service providers.
SCHMITT INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
     
  May 31, 2010 May 31, 2009
ASSETS
Current assets    
 Cash and cash equivalents $3,545,986 $4,174,335
 Accounts receivable, net  1,144,420  1,110,850
 Inventories  3,645,303  3,866,971
 Prepaid expenses  192,167  171,178
 Income taxes receivable  21,570  330,134
   8,549,446  9,653,468
Property and equipment    
 Land   299,000  299,000
 Buildings and improvements  1,564,880  1,564,880
 Furniture, fixtures and equipment  1,059,496  1,037,346
 Vehicles  90,452  90,452
   3,013,828  2,991,678
 Less accumulated depreciation and amortization  (1,720,880)  (1,563,840)
   1,292,948  1,427,838
Other assets     
 Intangible assets, net  1,509,711  1,542,694
     
TOTAL ASSETS $11,352,105 $12,624,000
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities    
 Accounts payable $665,044 $335,609
 Accrued commissions  170,614  172,755
 Accrued payroll liabilities  231,390  228,887
 Other accrued liabilities  160,717  168,325
Total current liabilities   1,227,765  905,576
     
Long-term liabilities  3,591  --
     
Stockholders' equity    
 Common stock, no par value, 20,000,000 shares authorized,    
 2,894,802 and 2,870,160 shares issued and outstanding at     
 May 31, 2010 and May 31, 2009, respectively  9,739,391  9,545,678
 Accumulated other comprehensive loss  (264,004)  (183,629)
 Retained earnings  645,362  2,356,375
Total stockholders' equity  10,120,749  11,718,424
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,352,105 $12,624,000
 
SCHMITT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND YEARS ENDED MAY 31, 2010 AND 2009
(UNAUDITED)
         
  Year Ended May 31, Three Months Ended May 31,
  2010 2009 2010 2009
         
Net sales $6,805,748 $9,501,208 $2,118,341 $1,556,795
Cost of sales  3,763,756  5,361,088  1,363,120  1,284,306
Gross profit  3,041,992  4,140,120  755,221  272,489
         
Operating expenses:        
General, administration and sales  4,184,100  5,033,617  1,122,909  1,139,375
Research and development  584,582  1,019,440  112,669  247,676
Total operating expenses  4,768,682  6,053,057  1,235,578  1,387,051
         
Operating loss  (1,726,690)  (1,912,937)  (480,357)  (1,114,562)
         
Other income   31,107  49,682  12,866  14,467
         
Loss before income taxes  (1,695,583)  (1,863,255)  (467,491)  (1,100,095)
         
Provision for income taxes  15,430  290,269  1,628  712,435
         
Net loss  $(1,711,013)  $(2,153,524)  $(469,119)  $(1,812,530)
         
Net loss per common share:        
         
 Basic $(0.59) $(0.75)  $(0.16)  $(0.63)
         
Weighted average number of common shares, basic  2,886,633  2,870,160  2,894,802  2,870,160
         
 Diluted $(0.59) $(0.75)  $(0.16)  $(0.63)
         
Weighted average number of common shares, diluted  2,886,633  2,870,160  2,894,802  2,870,160
CONTACT:  Schmitt Industries, Inc.          Investor Relations          Linda M. Case          (503) 227-7908          www.schmitt-ind.com

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