SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20548
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 29, 1995
[ ] Transition report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from to
Commission File Number: 1-1594
CROWLEY, MILNER AND COMPANY
(Exact name of registrant as specified in its charter)
Michigan 38-0454910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2301 W Lafayette Boulevard, Detroit, Michigan 48216
(Address of principal executive offices)(Zip Code)
(313) 962-2400
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---- ----
The number of shares outstanding of Registrant's common stock, as of August
31, 1995, was 951,364.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CROWLEY, MILNER AND COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 29 JULY 30 JULY 29 JULY 30
1995 1994 1995 1994
----------- ----------- ----------- -----------
Net Sales $44,956,521 $47,426,855 $21,363,131 $21,795,963
Cost of merchandise
and services sold 31,920,644 32,426,350 14,417,182 14,164,350
----------- ----------- ----------- -----------
13,035,877 15,000,505 6,945,949 7,631,613
Operating, selling
general and admin-
istrative expenses 15,425,306 15,853,350 7,566,972 7,840,599
----------- ----------- ----------- -----------
(2,389,429) (852,845) (621,023) (208,986)
Other charges (credits):
Interest expense 816,039 783,413 427,562 416,077
Investment income (48,434) (30,410) (29,331) (19,817)
Other (155,858) (59,950) (112,250) (23,844)
----------- ----------- ----------- -----------
Loss before
income taxes (3,001,176) (1,545,898) (907,004) (581,402)
Income tax credit - - - -
----------- ----------- ----------- -----------
Net loss $(3,001,176) $(1,545,898) $ (907,004) $ (581,402)
=========== =========== =========== ===========
Net loss per share $(3.16) $(1.52) $ (.95) $ (.57)
====== ====== ====== ======
Dividends per share $ .00 $ .00 $ .00 $ .00
====== ====== ====== ======
Average number of
Common equivalent
shares outstanding for
earnings per share 951,364 1,018,300 951,364 1,018,300
=========== =========== =========== ===========
<PAGE>
CROWLEY, MILNER AND COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
JULY 29 JANUARY 28 JULY 30
1995 1995 1994
---------- ---------- ----------
ASSETS
Current assets
Cash and cash equivalents
(cash equivalents at
7/29/95-$338,090,
1/28/95-$213,678 and
7/30/94 - $337,225) $ 481,213 $ 38,724 $ 972,990
Accounts receivable(less:
allowances at 7/29/95-
$83,854, 1/28/95-$63,887
and 7/30/94-$166,414) 750,787 1,042,660 1,534,185
Inventories at FIFO cost 20,010,169 21,824,142 21,204,326
Reduction to LIFO cost (3,943,754) (3,830,672) (4,688,949)
----------- ----------- -----------
Inventories at LIFO cost 16,066,415 17,993,470 16,515,377
Other current assets 1,879,462 2,330,447 2,158,467
----------- ----------- -----------
Total current assets 19,177,877 21,405,301 21,181,019
Other assets 3,224,740 3,270,274 2,751,056
Property, plant and equipment 24,986,611 24,874,953 26,922,024
Less: Allowance for
depreciation and
amortization (14,968,339) (14,302,929) (15,964,780)
----------- ----------- -----------
10,018,272 10,572,024 10,957,244
----------- ----------- -----------
TOTAL ASSETS $32,420,889 $35,247,599 $34,889,319
=========== =========== ===========
<PAGE>
CROWLEY, MILNER AND COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
JULY 29 JANUARY 28 JULY 30
1995 1995 1994
---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable $ 4,126,343 $ 5,813,423 $ 4,517,400
Short term borrowings 7,554,728 3,906,517 7,394,737
Compensation and Amounts
withheld therefrom 638,461 717,015 686,948
Taxes other than income
taxes 1,686,693 2,113,053 1,539,259
Income taxes 37,043 37,043 37,043
Current maturities of long
term debt 485,000 485,000 450,000
Capital lease obligations
- current 183,507 190,509 258,547
----------- ----------- -----------
Total Current Liabilities 14,711,775 13,262,560 14,883,934
Long Term Liabilities
Long term debt 5,850,000 5,850,000 6,335,000
Capital lease obligations 3,837,951 3,916,137 4,021,397
Other 1,605,811 1,634,647 1,763,055
----------- ----------- -----------
11,293,762 11,400,784 12,119,452
Shareholders' Equity
Common Stock, authorized
4,000,000 shares,
outstanding 951,364
shares 951,364 1,048,300 1,018,300
Other Capital 1,140,659 2,211,450 2,241,450
Retained Earnings 4,323,329 7,324,505 4,626,183
----------- ----------- -----------
6,415,352 10,584,255 7,885,933
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $32,420,889 $35,247,599 $34,889,319
=========== =========== ===========
<PAGE>
CROWLEY, MILNER AND COMPANY
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
JULY 29 JULY 30
1995 1994
---------- ----------
OPERATING ACTIVITIES
Net Loss $(3,001,176) $(1,545,898)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 671,117 903,279
Amortization of restricted stock award 60,485
Changes in Operating Assets and Liabilities:
Decrease in net accounts receivable 291,873 583,140
Decrease in inventories 1,927,055 382,699
Decrease in prepaid expenses
and other assets 496,517 859,302
Decrease in accounts payable (1,687,080) (2,720,275)
Decrease in accrued compensation
and other liabilities (533,750) (385,091)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (1,774,959) (1,922,844)
INVESTMENT ACTIVITIES
Purchase of Properties (117,363) (125,434)
----------- -----------
NET CASH USED IN INVESTMENT ACTIVITIES (117,363) (125,434)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 52,810,509 53,758,631
Principal payments on revolving line
of credit (49,162,298) (51,137,510)
Principal payments on capital lease
obligations (85,188) (175,370)
Purchase of common stock and stock options (1,228,212) -
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,334,811 2,445,751
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 442,489 397,473
Cash and cash equivalents at beginning of
year 38,724 575,517
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 481,213 $ 972,990
=========== ===========
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
July 29, 1995
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
thirteen week period ended July 29, 1995 are not necessarily indicative of
the results that may be expected for the year ending February 3, 1996, due
to the seasonal nature of the retail department store business. For further
information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended
January 28, 1995.
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
For the second quarter ended July 29, 1995, a net loss of $907,004 was
recorded, compared with a net loss of $581,402 for the second quarter last
year. Net loss per share for the quarter was $0.95 compared with a net loss
per share of $0.57 for the same period last year. For the six months ended
July 29, 1995, the net loss was $3,001,176, compared with $1,545,898
recorded for the first six months last year. The net loss per share for the
six months ended July 29 1995 was $3.16 compared with a net loss of $1.52
per share last year.
Total and comparable store sales for the second quarter decreased 2.0% to
$21,363,131 from $21,795,963 for the same period last year. For the six
month period, net sales were $44,956,521, a decrease of 5.2% from the
$47,426,855 recorded last year.
Gross margins for the quarter declined $685,000, or 9.0%, when compared to
last year's second quarter. Margins, as a percent of sales, were 32.5% for
the second quarter compared with 35.0% for the same period last year. Year
to date margin dollars have decreased $1,964,000, or 13.1%, and as a percent
of sales are 29.0% compared with 31.6% for the same period last year.
Included in margins, and accounting for a majority of the margin decline for
the second quarter, was an additional inventory shrinkage accrual resulting
from a mid-year inventory the Company performed in July. The additional
accrual approximated $450,000, or $0.47 per share, in the second quarter
ended July 29, 1995 and was approximately $290,000, or $0.31 per share,
greater than last year's charge for the second quarter.
Operating expenses decreased $274,000, or 3.5%, for the second quarter.
Expenses as a percent of sales amounted to 35.4% in the quarter compared
with 36.0% for the second quarter last year. The expense categories that
contributed to the second quarter decrease were insurance, depreciation
charges, and equipment rental. Insurance costs decreased $50,000, or 20.2%,
for the second quarter while depreciation charges declined $113,000, or
25.4%. Equipment rental charges were down $61,000, or 55.7%, due to the
Company's mainframe computer becoming owned property at the expiration of
the lease in February 1995. Expenses for the six months ended July 29, 1995
have decreased $428,000. Operating expenses as a percent of sales, for the
six months, were 34.3% compared with 33.4% for the comparable period last
year. The higher expense ratio is the result of the lower sales.
Interest expense charges have increased for the second quarter and six month
periods ended July 29, 1995 due primarily to higher interest rates on the
Company's short term borrowings.
The increase in other income for the quarter was generated from a lease
termination settlement with a former tenant in the Company's corporate
office building.
Since the Company has fully exhausted all tax loss carrybacks and is in a
net operating loss carryforward position it was unable to tax effect the
losses in either year's second quarter and six month periods, thus pre-tax
and after-tax results are the same.
Financial Condition
Net cash used in operating activities declined slightly for the six months
ended July 29, 1995 when compared with the same period last year. Net cash
used in operating activities amounted to $1,775,000 compared to $1,923,000
last year. The decrease is primarily attributable to a reduction in
inventory and a corresponding smaller decrease in accounts payable for the
period.
Net cash used in investment activities declined slightly for the six months
ended July 29, 1995 due to a decrease in capital expenditures.
Net cash provided by financing activities declined slightly for the six
months ended July 29, 1995 compared to the same period last year due to a
wider variance between proceeds and payments on the revolving line of
credit, but offset by the previously announced repurchase of outstanding
stock and stock options from one of the Company's primary shareholders. The
borrowings outstanding on the Company's short term credit facility were
slightly higher at July 29, 1995 than at July 30, 1994.
Working capital was $4,466,000 at July 29, 1995 compared with $8,143,000 at
January 28, 1995 and $6,297,000 at July 30, 1994. The decrease in working
capital when compared with the second quarter of last year is primarily due
to a decrease in inventory levels and accounts receivable.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings in which the
Company is a party to which its assets are subject.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
For a discussion regarding the submission of matters to a vote
of shareholders at the Company's Annual Meeting on May 17,
1995, see the Company's Quarterly Report on Form 10-Q for the
quarterly period ended April 29, 1995 which is hereby
incorporated herein by reference.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
The Company filed a report on Form 8-K dated June 15, 1995,
pursuant to which, it reported the purchase of 96,936 shares of
Crowley's common stock from Schottenstein Professional Asset
Management Corporation for $436,212.00 ($4.50 per share) and
the surrender by Schottenstein Stores Corporation of its option
to purchase 198,000 shares of Crowley's common stock in
exchange for a $792,000 payment ($4.50 per share less the
exercise price of $0.50 per share).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWLEY, MILNER AND COMPANY
(Registrant)
DATE: September 7, 1995 By: /S/ Mark A. VandenBerg
Mark A. VandenBerg
Vice President-Finance and Chief
Financial Officer (principal
financial and chief accounting
officer) and a duly authorized
officer of the registrant
<TABLE> <S> <C>
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<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-END> JUL-29-1995
<CASH> 481,213
<SECURITIES> 0
<RECEIVABLES> 834,641
<ALLOWANCES> 83,854
<INVENTORY> 16,066,415
<CURRENT-ASSETS> 19,177,877
<PP&E> 24,986,611
<DEPRECIATION> 14,968,339
<TOTAL-ASSETS> 32,420,889
<CURRENT-LIABILITIES> 14,711,775
<BONDS> 5,850,000
<COMMON> 951,364
0
0
<OTHER-SE> 5,463,988
<TOTAL-LIABILITY-AND-EQUITY> 32,420,889
<SALES> 44,956,521
<TOTAL-REVENUES> 44,956,521
<CGS> 31,920,644
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 15,425,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 816,039
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