CMC Industries reports financial results.

CORINTH, Miss.--(BUSINESS WIRE)--May 25, 1995--CMC Industries Inc. (NASDAQ:CMCI) today announced that it would report a loss of $1.1 million, or 18 cents a share, for the third fiscal quarter ended April 30, 1995, compared to a net profit of $0.7 million, or 12 cents a share, a year earlier. The company's net sales for the quarter were $33.5 million, a 23 percent decline from sales of $43.5 million reported for the third quarter of fiscal 1994.

For the nine months ended April 30, 1995, the company reported net income of $0.4 million, or 7 cents per share, compared with a net profit of $3.2 million, or 58 cents per share, for the prior year's comparable period. Net sales during this period were $110.7 million compared with $128.1 million for the corresponding period of the prior year.

The company had previously announced on April 25, 1995 that it expected to report a loss for the quarter. In that announcement, the company also reported that it had experienced a decline in orders from its existing customer base and a shift in sales mix to lower margin products. The company's results in the quarter were also negatively affected by increases in expenses incurred to improve program management and customer service in an effort to increase sales and profitability in future periods. Furthermore, the company provided additional inventory reserves for end-of-life products during the quarter. Partially offsetting these negative factors was the recording of an income tax benefit related to prior year research and development credits.

CMCI also announced today that the company has restructured its senior management, and the board of directors has elected David S. Lee Chairman of the Board. Lee is a director and the largest shareholder of CMCI. Lee will oversee operations of the company, and Steve J. Fry will continue to assist with financial, investor relations and administrative matters. Lee will also assume the role of Acting President and will head an Executive Search Committee of The Board to fill the vacancy of President and Chief Executive Officer.

"We have restructured the company to provide for more autonomous management of our two subsidiaries, with Jack O'Rear serving as President of the Mississippi Operation and Karl Chang serving as President of the California Operation," stated Lee. "In the future, we will focus on achieving profitable growth at each location by targeting new business with small-to-medium size companies, particularly in Silicon Valley."

"Our operating results have suffered over the past year due to declining sales to a single large customer. Sales to this customer accounted for 43 percent of our total revenues in the third quarter of fiscal 1994, 24 percent of total revenues in the quarter just ended and is expected to fall below 10 percent in the future," continued Lee. "To reduce this risk, we are emphasizing customer diversification. We are beginning to see results from this strategy and, as previously announced, recently secured a contract to produce up to 100,000 telephones with credit card readers from a new customer that should generate approximately $5 million in annual revenues for the company. Also, we have just been awarded a contract to produce PCMCIA modem cards for another new customer that is expected to result in $15-$25 million of annual revenues for the company, with production scheduled to begin in the first quarter of the company's next fiscal year."

Headquartered in Corinth, Miss., CMCI is a leading provider of contract manufacturing services to original equipment manufacturers in the telecommunications, computer and electronics industries. The company has manufacturing operations in Corinth, Miss., and Milpitas, Calif.

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                           CMC Industries, Inc.
                  Condensed Consolidated Balance Sheets
                              (In thousands)

                                  April 30, 1995        July 31, 1994
                                    (Unaudited)              (A)
ASSETS
Current Assets
Cash and cash equivalents             $    19              $   286
Accounts receivable, net               24,844               21,631
Inventories                            26,582               29,149
Other current assets                      926                  336
  Total current assets                 52,371               51,402
Plant and equipment, net                6,806                7,201
Other assets                            7,830                7,823
                                     ---------            ---------
                                      $67,007              $66,426

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt                       $13,513              $ 9,864
Accounts payable and other
  current liabilities                  17,046               21,676
  Total current liabilities            30,559               31,540
Long-term liabilities                   8,014                6,903
  TOTAL LIABILITIES                    38,573               38,443
  TOTAL STOCKHOLDERS' EQUITY           28,434               27,983
                                     ---------            ---------
                                      $67,007              $66,426

Note (A):  Condensed from audited consolidated financial statements.

                         CMC Industries, Inc.
              Condensed Consolidated Statements of Income
                 (In thousands, except per share data)
                             (Unaudited)

                             Three months ended    Nine months ended
                                  April 30,            April 30,
                               1995      1994       1995       1994
Net sales                    $33,511   $43,514   $110,699   $128,130
Cost of sales                 33,945    40,441    104,549    117,556
Gross profit (loss)             (434)    3,073      6,150     10,574
Selling, general & administrative
 expenses                      2,000     1,487      5,316      4,472
Operating income (loss)       (2,434)    1,586        834      6,102
Interest expense                 453       402      1,222      1,002
Income (loss) before income
 taxes                        (2,887)    1,184       (388)     5,100
Provision (benefit) for income
 taxes                        (1,769)      451       (821)     1,932
Net income (loss)            $(1,118)  $   733   $    433   $  3,168
Net income (loss) per common
 share                       $ (0.18)  $  0.12   $   0.07   $   0.58
Average shares outstanding     6,258     6,316      6,255      5,475

CONTACT: CMC Industries Inc., Corinth

Lanny N. Lambert, 601/287-3771, Ext. 170