MNC 8-K Monaco Coach Corporation Reports

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

FOR MORE INFORMATION CONTACT:

Mike Duncan - Investor Relations

Monaco Coach Corporation

(541) 686-8011

http://www.monaco-online.com/

MONACO COACH CORPORATION REPORTS

SECOND QUARTER 2003 RESULTS

COBURG, Oregon, July 24, 2003 — Monaco Coach Corporation (NYSE: MNC) today reported revenue and earnings for its second quarter ended June 28, 2003. Second quarter earnings per share were 2 cents, on second quarter revenue of $268.4 million. Net income for the second quarter was $582 thousand. Operating income for the second quarter was $1.5 million. Second quarter unit sales of Monaco Coach Corporation products were 2,260 units. Second quarter motorhome sales totaled 1,708 units and second quarter towable recreational vehicles totaled 552 units.

For the six months ended June 28, 2003, earnings per share were 17 cents on revenue of $541.9 million. Net income for the six months ended June 28, 2003 was $4.9 million. Operating income for the six months ended June 28, 2003 was $9.5 million. Unit sales of Monaco Coach Corporation products for the six months ended June 28, 2003 totaled 4,566 units. Six-month motorhome sales totaled 3,345 units and six-month towable recreational vehicles totaled 1,221 units.

According to Monaco Coach Corporation Chairman and Chief Executive Officer Kay Toolson, “We met several key goals for the second quarter. Foremost was the approximate $20 million reduction in our finished goods inventory. However, in order to realize this inventory reduction, we offered wholesale and retail sales incentives that pressured our margins and earnings. Weighed against the business considerations and financial cost associated with carrying a high finished goods inventory, second quarter earnings pressure was expected as we focus on improving our balance sheet.”

Monaco Coach Corporation President John Nepute added, “Our 2004 models have been very well accepted by dealers and consumers. It has not been necessary to offer sales promotions on 2004 models. However, we are continuing to offer some retail sales incentives on 2003 models that remain on dealers’ lots. The successful introduction of our 2004 models, along with gradually strengthening retail sales, have contributed to steady improvement to our order backlog.”

Monaco Coach Corporation Vice President and Chief Financial Officer Marty Daley stated, “We continue to balance demand with production rates and finished goods inventory, and we expect

third quarter revenue to be similar to the second quarter. Based on our current production rates, we should be able to further reduce finished goods inventory in the third quarter. As a result of lower run rates and continuing retail promotions, we expect third quarter gross margins in the 10.5% to 11% range, and third quarter sales, general, and administrative expenses in the 8.75% to 9.25% range.

Headquartered in Coburg, Oregon, with additional manufacturing facilities in Indiana, Monaco Coach Corporation is one of the nation’s leading manufacturers of recreational vehicles. The company offers customers luxury recreational vehicle models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names.

The statements above regarding the Company’s 2004 model introductions, its ability to make further inventory reductions, and its third quarter 2003 expectations for sales revenue, gross margin, and sales, general, and administrative expenses are forward-looking statements based on current information and expectations and involve a number of risks and uncertainties. A number of factors could cause actual results to differ materially from these statements, including slower than anticipated sales of new and existing products, a general slowdown in the economy, new product introductions by competitors, or the loss of dealers or a deterioration in the relationships with dealers. Please refer to the Company’s SEC reports, including but not limited to the most recent Form 10-Q, the annual report on Form 10-K for 2002, and the 2002 Annual Report to Shareholders for additional factors. These filings can be accessed over the Internet at http:www.sec.gov.

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MONACO COACH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited: dollars in thousands)

	December 28, 2002		June 28, 2003
ASSETS
Current assets:
Trade receivables, net	$	116,647	$	104,790
Inventories	175,609		161,176
Resort lot inventory	26,883		22,622
Prepaid expenses	3,612		3,527
Deferred income taxes	33,379		32,468
Total current assets	356,130		324,583
Property, plant and equipment, net	135,350		143,052
Debt issuance costs net of accumulated amortization of $389, and $566, respectively	683		806
Goodwill, net of accumulated amortization of $5,320 and $5,320, respectively	55,254		55,254
Total assets	$	547,417	$	523,695
LIABILITIES
Current liabilities:
Book overdraft	$	3,518	$	9,486
Line of credit	51,413		41,785
Current portion of long-term note payable	21,667		21,667
Accounts payable	78,055		67,396
Product liability reserve	21,322		21,491
Product warranty reserve	31,745		29,329
Income taxes payable	4,536		0
Accrued expenses and other liabilities	29,633		28,545
Total current liabilities	241,889		219,699
Long-term note payable	30,333		21,667
Deferred income taxes	14,568		15,815
	286,790		257,181
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par, 1,934,783 shares authorized, no shares outstanding
Common stock, $.01 par value; 50,000,000 shares authorized, 28,871,144 and 29,051,281 issued and outstanding, respectively	289		291
Additional paid-in capital	51,501		52,478
Retained earnings	208,837		213,745
Total stockholders’ equity	260,627		266,514
Total liabilities and stockholders’ equity	$	547,417	$	523,695

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MONACO COACH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited: dollars in thousands, except share and per share data)

	Quarter Ended						Six-Months Ended
	June 29, 2002			June 28, 2003			June 29, 2002			June 28, 2003
Net sales	$	313,742		$	268,361		$	607,342		$	541,935
Cost of sales	272,513			241,108			528,368			481,076
Gross profit	41,229			27,253			78,974			60,859
Selling, general and administrative expenses	22,505			25,744			43,671			51,393
Operating income	18,724			1,509			35,303			9,466
Other income, net	2			232			43			438
Interest expense	(669		)	(779		)	(1,367		)	(1,791		)
Income before income taxes	18,057			962			33,979			8,113
Provision for income taxes	7,087			380			13,336			3,205
Net income	$	10,970		$	582		$	20,643		$	4,908
Earnings per common share:
Basic	$	.38		$	.02		$	.72		$	.17
Diluted	$	.37		$	.02		$	.70		$	.17
Weighted average common shares outstanding:
Basic	28,807,792			29,027,603			28,760,396			28,992,255
Diluted	29,660,847			29,469,777			29,642,792			29,405,286

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MONACO COACH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited: dollars in thousands)

	Six-Months Ended
	June 29, 2002			June 28, 2003
Increase (Decrease) in Cash:
Cash flows from operating activities:
Net income	$	20,643		$	4,908
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Loss on sale of assets	0			287
Depreciation and amortization	4,010			4,677
Deferred income taxes	4,030			2,158
Changes in working capital accounts:
Trade receivables, net	(39,301		)	11,857
Inventories	(24,105		)	14,433
Resort lot inventory				4,261
Prepaid expenses	(2,992		)	80
Accounts payable	21,198			(10,659		)
Product liability reserve	568			169
Product warranty reserve	2,081			(2,416		)
Income taxes payable	6,317			(4,536		)
Accrued expenses and other liabilities	6,304			(1,088		)
Net cash provided (used) by operating activities	(1,247		)	24,131
Cash flows from investing activities:
Additions to property, plant and equipment	(6,797		)	(14,272		)
Proceeds from sale of assets	13			1,789
Issuance of notes receivable	(13		)	0
Net cash used in investing activities	(6,797		)	(12,483		)
Cash flows from financing activities:
Book overdraft	10,869			5,968
(Payments) borrowings on lines of credit, net	1,000			(9,628		)
Payments on long-term notes payable	(5,000		)	(8,666		)
Debt issuance costs				(301		)
Issuance of common stock	1,175			979
Net cash provided (used) by financing activities	8,044			(11,648		)
Net change in cash	0			0
Cash at beginning of period	0			0
Cash at end of period	$	0		$	0

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