Coachmen Housing Group Profitable, RV Group Operations Improve, Despite Loss

MIDDLEBURY, Ind.--(Business Wire)--
Coachmen Industries, Inc. (NYSE: COA) today announced its
financial results for the second quarter ended June 30, 2008.

"Although we continued to implement substantial operational
improvements and cost saving projects, because of the unexpectedly
rapid and deep fall in the RV markets, Coachmen Industries Inc.
reported a $3.0 million loss for the quarter ending June 30, 2008. Our
Housing Group achieved another profitable quarter. However, the
tremendous strides in cost reductions accomplished by our RV Group
were insufficient to overcome the effects of extreme fuel prices and a
continuing credit crisis which has resulted in the lowest consumer
confidence in over 16 years," commented Richard M. Lavers, President
and Chief Executive Officer. "Our loss of $3 million for the quarter
is obviously not what we strove to achieve, but it does represent an
improvement in bottom line performance of $7.2 million or 71% from
2007 in the face of a 35% decrease in net sales. Through the first
half, we have reduced our loss to $1.6 million from $21.5 million in
2007, an improvement of 93%, which is commendable given what is
happening in both the housing and RV markets. Our operating expenses
are tracking at less than 55% of last year's level. These results
demonstrate that the actions we have taken are working, and will allow
us to weather this down cycle. Nevertheless, we must - and will - take
even further measures to bring our costs in line with the revenues
that are the reality of these market conditions."

Net Sales for the second quarter were $96.7 million compared to
$149.8 million reported for the same period in 2007. Gross profits for
the quarter improved to $6.9 million or 7.1% of revenues from $6.0
million, or 4.0% of revenues for second quarter of 2007. Operating
expenses decreased $7.6 million from last year to $9.2 million. At the
bottom line, the Company reported net loss of $3.0 million, or ($0.18)
per share, versus a net loss of $10.1 million, or ($0.64) per share in
the second quarter of 2007.

Sales for the six-month period ended June 30 were $218.0 million
versus $280.0 million reported for the same period last year. Gross
profits improved to $17.7 million or 8.1% of revenues from $7.4
million, or 2.6% of revenues in the first half of 2007. Operating
expenses decreased $10.3 million from last year to $18.1 million. At
the bottom line, the Company reported a net loss of $1.6 million or
($0.10) per share, versus a net loss of $20.6 million or ($1.31) per
share for the same period in 2007.

Recreation Vehicle Group

"While we turned in a loss for the quarter, we have made
significant progress in reducing our break even through cost
reductions, capacity utilization, consolidation, and radically
improved products ... both appeal and quality, however it simply is
not enough in light of the current and projected market conditions and
economic climate," said Michael R Terlep, President of Coachmen RV
Group. "And while a quarter over quarter improvement in bottom line
performance for the RV Group of 44.0% on 47.2% fewer sales
conclusively demonstrates the improvements we have made, we simply
must make further adjustments throughout our Company to navigate the
worst market conditions our Industry has seen in decades."

Housing Group

"The Housing Group's core business of single family homes was
again adversely affected by the dismal conditions in the nationwide
housing market," commented Housing Group President Rick Bedell.
"However, overall we are one of the very few housing businesses in the
country to not only continue, but to increase our profits. A
combination of our major project activities, improved gross margins
and reduced operating expenses, helped to generate a pre-tax profit of
$3.1 million compared with a pre-tax profit of $1.1 million for the
year-ago quarter," concluded Bedell.

Coachmen Industries will conduct a conference call to discuss the
financial results in this release at 10:00 a.m. (Eastern Time),
Thursday, July 24, 2008. Members of the news media, investors and the
general public are invited to access a live broadcast of the
conference call over the internet at www.earnings.com. The online
replay will be available at approximately 12:00 p.m. (Eastern Time)
and continue for 30 days.

Coachmen Industries, Inc. is one of America's leading
manufacturers of recreational vehicles, systems-built homes and
commercial buildings, with prominent subsidiaries in each industry.
The Company's well-known RV brand names include COACHMEN(R), GEORGIE
BOY(TM), SPORTSCOACH(R) and VIKING(R). Through ALL AMERICAN HOMES(R)
and MOD-U-KRAF(R), Coachmen is one of the nation's largest producers
of systems-built homes, and also a major builder of commercial
structures with its ALL AMERICAN BUILDING SYSTEMS(TM) products.
Coachmen Industries, Inc. is a publicly held company with stock listed
on the New York Stock Exchange (NYSE) under the ticker COA.

This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned not to place undue reliance on forward-looking
statements, which are inherently uncertain. Actual results may differ
materially from that projected or suggested due to certain risks and
uncertainties including, but not limited to, the potential
fluctuations in the Company's operating results, increased interest
rates the availability for floorplan financing for the Company's
recreational vehicle dealers and corresponding availability of cash to
Company, uncertainties and timing with respect to sales resulting from
recovery efforts in the Gulf Coast, uncertainties regarding the impact
on sales of the disclosed restructuring steps in both the recreational
vehicle and housing segments, the ability of the company to generate
taxable income in future years to utilize deferred tax assets and net
operating loss carry-forwards available for use, the impact of
performance on the valuation of intangible assets, the availability
and the price of gasoline, price volatility of raw materials used in
production, the Company's dependence on chassis and other suppliers,
the availability and cost of real estate for residential housing, the
supply of existing homes within the company's markets, the impact of
home values on housing demand, the impact of sub-prime lending on the
availability of credit for the broader housing market, the ability of
the Company to perform in new market segments where it has limited
experience, adverse weather conditions affecting home deliveries,
competition, government regulations, legislation governing the
relationships of the Company with its recreational vehicle dealers,
dependence on significant customers within certain product types,
consolidation of distribution channels in the recreational vehicle
industry, consumer confidence, uncertainties of matters in litigation,
current litigation relating to and Congressional inquiry surrounding
the Company's use of components containing formaldehyde in its
products, further developments in the war on terrorism and related
international crises, oil supplies, the addition or loss of our
dealers or builders, the introduction and marketing of competitive
products by others, including significant discounting by our
competitors and other risks identified in the Company's SEC filings.

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Coachmen Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Net sales $ 96,708 $149,763 $218,026 $280,006

Gross profit - $ 6,876 5,994 17,739 7,420
Gross profit - % 7.1% 4.0% 8.1% 2.6%

GS&A - $ 9,200 12,915 18,330 24,962
GS&A - % 9.5% 8.6% 8.4% 8.9%

Gain on sale of assets, net -
$ (39) (22) (247) (467)
Gain on sale of assets, net -
% (0.0)% (0.0)% (0.1)% (0.2)%

Goodwill impairment charge -
$ - 3,872 - 3,872
Goodwill impairment charge -
% 0.0% 2.6% 0.0% 1.4%

Total operating expenses - $ 9,161 16,765 18,083 28,367
Total operating expenses - % 9.5% 11.2% 8.3% 10.1%

Operating loss - $ (2,285) (10,771) (344) (20,947)
Operating loss - % (2.4)% (7.2)% (0.2)% (7.5)%

Outside interest expense 1,110 944 2,138 1,787
Outside investment income (260) (479) (554) (953)
Other income (172) (119) (292) (215)
-------- -------- -------- --------
Other expense 678 346 1,292 619

Pre-tax loss - $ (2,963) (11,117) (1,636) (21,566)
Pre-tax loss - % (3.1)% (7.4)% (0.8)% (7.7)%

Tax expense (credit) - (994) - (995)

Net loss $ (2,963) $(10,123) $ (1,636) $(20,571)

Loss per share - Basic &
Diluted $ (.18) $ (.64) $ (.10) $ (1.31)

Weighted average shares
outstanding:
Basic 15,774 15,726 15,762 15,722
Diluted 15,774 15,726 15,762 15,722
*T

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Coachmen Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)

June 30, December 31,
2008 2007
------------ -------------
Assets (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 2,279 $ 1,549
Accounts receivable 23,943 9,122
Inventories 80,983 79,268
Refundable income taxes 1,556 1,628
Prepaid expenses and other 7,796 7,623
Assets held for sale 5,021 -
------------ -------------
Total current assets 121,578 99,190

Property, plant and equipment, net 46,055 52,932
Goodwill 12,993 12,993
Cash value of life insurance, net of loans 26,469 33,936
Notes receivable 5,726 6,158
Other 2,177 2,459
------------ -------------
TOTAL ASSETS $ 214,998 $ 207,668
============ =============

Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Short-term borrowings & current portion
of LT debt $ 33,211 $ 20,925
Accounts payable, trade 19,356 15,042
Floor plan notes payable 3,390 4,116
Accrued income taxes 497 536
Accrued expenses and other liabilities 26,900 33,235
------------ -------------
Total current liabilities 83,354 73,854

Long-term debt 2,975 3,010
Postretirement deferred compensation
benefits 6,832 7,632
Deferred income taxes 1,990 1,990
Other 49 49
------------ -------------
Total liabilities 95,200 86,535

Total shareholders' equity 119,798 121,133
------------ -------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 214,998 $ 207,668
============ =============
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Coachmen Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

Six Months Ended
June 30,
------------------
2008 2007
-------- --------

Net loss $ (1,636) $(20,571)
Depreciation 2,688 3,011
Changes in current assets and liabilities (19,654) 16,828
-------- --------
Net cash used in operating activities (18,602) (732)

Net cash used in investing activities (2,270) (2,016)

Net borrowings (repayments) 21,525 4,208
Issuance (purchase) of stock 77 88
Dividends paid - (944)
-------- --------
Net cash provided by financing activities 21,602 3,352

Increase in cash and cash equivalents 730 604

Beginning of period 1,549 2,651
-------- --------

End of period $ 2,279 $ 3,255
======== ========
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Coachmen Industries, Inc. and Subsidiaries
Segment Data
(in thousands)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Net sales
Recreational vehicles $58,781 $111,227 $149,260 $215,379
Housing 37,927 38,536 68,766 64,627
-------- -------- -------- --------

Consolidated total $96,708 $149,763 $218,026 $280,006
======== ======== ======== ========

Gross profit
Recreational vehicles $ (251) $ (69) $ 4,942 $ (935)
Housing 7,127 6,063 12,798 8,356
Other reconciling items - - (1) (1)
-------- -------- -------- --------

Consolidated total $ 6,876 $ 5,994 $ 17,739 $ 7,420
======== ======== ======== ========

Gross profit percentage
Recreational vehicles (0.4)% (0.1)% 3.3% (0.4)%
Housing 18.8% 15.7% 18.6% 12.9%
-------- -------- -------- --------

Consolidated total 7.1% 4.0% 8.1% 2.6%
======== ======== ======== ========

Operating expenses
Recreational vehicles $ 6,738 $ 12,181 $ 13,023 $ 19,253
Housing 4,027 5,016 8,317 10,037
Other reconciling items (1,604) (432) (3,257) (923)
-------- -------- -------- --------

Consolidated total $ 9,161 $ 16,765 $ 18,083 $ 28,367
======== ======== ======== ========

Operating expenses percentage
Recreational vehicles 11.5% 11.0% 8.7% 8.9%
Housing 10.6% 13.0% 12.1% 15.5%
-------- -------- -------- --------

Consolidated total 9.5% 11.2% 8.3% 10.1%
======== ======== ======== ========

Operating income (loss)
Recreational vehicles $(6,989) $(12,250) $ (8,082) $(20,188)
Housing 3,100 1,047 4,481 (1,681)
Other reconciling items 1,604 432 3,257 922
-------- -------- -------- --------

Consolidated total $(2,285) $(10,771) $ (344) $(20,947)
======== ======== ======== ========

Pre-tax income (loss)
Recreational vehicles $(6,868) $(12,270) $ (7,924) $(20,315)
Housing 3,051 1,096 4,409 (1,581)
Other reconciling items 854 57 1,879 330
-------- -------- -------- --------

Consolidated total $(2,963) $(11,117) $ (1,636) $(21,566)
======== ======== ======== ========
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Coachmen Industries, Inc.
Thomas Gehl, Secretary and Director of Investor Relations
574-825-8776
or
Colleen Zuhl, Chief Financial Officer

Copyright Business Wire 2008