<PAGE>
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 April 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 May 17,
1995, was 1,048,300.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CROWLEY, MILNER AND COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
APRIL 29 APRIL 30
1995 1994
Net Sales $23,593,390 $25,630,892
Cost of merchandise and services sold 17,503,462 18,262,000
----------- -----------
6,089,928 7,368,892
Operating, selling general and
administrative expenses 7,858,334 8,012,751
----------- -----------
(1,768,406) (643,859)
Other charges (credits):
Interest expense 388,477 367,336
Investment Income (19,103) (10,593)
Other (43,608) (36,106)
----------- ----------
Loss before income taxes (2,094,172) (964,496)
Income tax credit - -
----------- ----------
Net loss $(2,094,172) (964,496)
=========== ==========
Net loss per share $(2.00) $ (.91)
====== ======
Dividends per share $ .00 $ .00
====== ======
<PAGE>
CROWLEY, MILNER AND COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
APRIL 29 JANUARY 28 APRIL 30
1995 1995 1994
ASSETS
Current assets
Cash and cash equivalents
(cash equivalents at
4/29/95 $327,337,
1/28/95-$213,678 and
4/30/94 - $294,570) $ 88,198 $ 38,724 $ 311,848
Accounts receivable(less:
allowances at 4/29/95-
$73,887 1/28/95-$63,887
and 4/30/94-$196,016) 758,727 1,042,660 2,050,829
Inventories at FIFO cost 21,599,722 21,824,142 20,898,561
Reduction to LIFO cost (3,888,216) (3,830,672) (4,633,488)
---------- ---------- ----------
Inventories at LIFO cost 17,711,506 17,993,470 16,265,073
Other current assets 2,097,480 2,330,447 2,349,471
---------- ---------- ----------
Total current assets 20,655,911 21,405,301 20,977,221
Other assets 3,140,774 3,270,274 2,989,047
Property, plant and
equipment 26,623,947 24,874,953 26,827,838
Less: Allowance for
depreciation and
amortization 16,336,599 14,302,929 15,534,193
---------- ---------- ----------
10,287,348 10,572,024 11,293,645
---------- ---------- ----------
TOTAL ASSETS $34,084,033 $35,247,599 $35,259,913
========== ========== ==========
<PAGE>
CROWLEY, MILNER AND COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
(Continued)
APRIL 29 JANUARY 28 APRIL 30
1995 1995 1994
LIABILITIES AND SHAREHOLDER'S
EQUITY
Current Liabilities
Accounts Payable $ 5,500,097 $ 5,813,423 $ 5,892,935
Short Term Borrowings 5,496,399 3,906,517 5,712,198
Compensation and Amounts
withheld therefrom 743,931 717,015 661,989
Taxes other than income
taxes 1,751,517 2,113,053 1,554,421
Income Taxes 37,043 37,043 37,043
Current maturities of long
term debt 485,000 485,000 450,000
Capital Lease Obligations
- current 187,008 190,509 302,566
--------- --------- ---------
14,200,995 13,262,560 14,611,152
Long Term Liabilities
Long Term Debt 5,850,000 5,850,000 6,335,000
Capital Lease Obligations 3,877,044 3,916,137 4,064,027
Other 1,624,661 1,634,647 1,782,399
--------- --------- ---------
11,351,705 11,400,784 12,181,426
Shareholder's Equity
Common Stock, authorized
4,000,000 shares,
outstanding 1,048,300
shares 1,048,300 1,048,300 509,150
Other Capital 2,252,700 2,211,450 2,241,450
Retained Earnings 5,230,333 7,324,505 5,716,735
---------- --------- ---------
8,531,333 10,584,255 8,467,335
---------- ---------- ---------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $34,084,033 $35,247,599 $35,259,913
=========== =========== ===========
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CROWLEY, MILNER AND COMPANY
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
APRIL 29 APRIL 30
1995 1994
OPERATING ACTIVITIES
Net Loss $(2,094,172) $ (964,496)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and Amortization 388,078 462,774
Amortization of Restricted Stock Award 41,250 --
Changes in Operating Assets and
Liabilities:
Decrease in net accounts receivable 283,933 66,496
Decrease in inventories 281,964 633,003
Decrease in prepaid expenses
and other assets 362,467 437,175
Decrease in accounts payable (313,326) (1,344,740)
Decrease in accrued compensation
and other liabilities (344,606) (375,545)
--------- -----------
NET CASH USED IN OPERATING ACTIVITIES (1,444,412) (1,085,333)
INVESTMENT ACTIVITIES
Purchase of Properties (53,402) (31,248)
___________ ___________
NET CASH USED IN INVESTMENT ACTIVITIES (53,402) (31,248)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 27,399,248 27,572,994
Principal payments on revolving line
of credit (25,809,366) (26,634,412)
Principal payments on capital lease
obligations (42,594) (85,670)
____________ ____________
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,547,288 852,912
____________ ____________
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 49,474 (263,669)
Cash and cash equivalents at beginning of
year 38,724 575,517
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 88,198 $ 311,848
=========== ===========
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
April 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 April 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Net sales for the first quarter ended April 29, 1995 decreased 7.9%, to
$23,600,000 from $25,600,000, for the first quarter last year. A slowdown
in consumer spending and cool spring weather were the primary reasons for
the decrease in sales during the first quarter.
Gross margins decreased $1,279,000, or 17.4%, for the first quarter when
compared to last years first quarter. As a percent of sales, margins were
25.8% compared to last year's 28.8%. Increased markdowns needed to clear
out fall and winter clearance inventory, and the decrease in sales were the
contributing factors to the lower gross margins.
Operating expenses decreased $154,000, or 1.9%, in the quarter compared to
the comparable quarter last year. Operating expenses as a percent of sales
increased to 33.3% compared with 31.3% for the first quarter last year due
to the decrease in sales. The major components contributing to the lower
operating expenses were advertising related costs, down $23,000, or 3.3%,
supply costs, down $36,000, or 14.9%, depreciation charges, down $125,000,
or 26.9%, property taxes, down $35,000, or 11.8%, and equipment rental
charges, down $56,000, or 51.9%. The equipment rental charge decrease was
due to the Company's main frame computer becoming owned property at the
expiration of the lease in February, 1995. Payroll costs for the first
quarter increased $189,000, or 5.8%, representing the largest increase in
any expense category.
Interest expense charges increased $21,000, or 5.8%, due primarily to higher
interest rates during the first quarter of 1995 compared to last years first
quarter.
For the first quarter ended April 29, 1995, the Company recorded a net loss
of $2,094,000, or $2.00 per share, compared with a net loss of $964,000, or
$0.91 per share, for the first quarter ended April 30, 1994.
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 years first quarter, thus pre-tax and after-tax results are
the same.
Financial Condition
For the first quarter ended April 29, 1995, net cash used by operating
activities was $1,444,000, compared with cash used of $1,085,000 for the
quarter ended April 30, 1994. The decrease is due primarily to the increase
in the first quarter loss and lower depreciation charges.
Capital expenditures of $53,000 in the quarter ended April 29, 1995,
compared with $31,000 last year, accounted for the cash used in investment
activities. A decrease in payments on the Company's short term line of
credit during the first quarter, compared with last year's first quarter,
resulted in an increase in cash provided by financing activities.
The Company generated positive cash flow of $49,000 for the first quarter
compared with negative cash flow of $263,000 during last year's first
quarter.
The Company's working capital position has remained unchanged as of April
29, 1995 when compared to April 30, 1994 and is lower than January 28, 1995.
Working capital was $6,500,000 at April 29, 1995 compared with $6,400,000
and $8,100,000 at April 30, 1994 and January 28, 1995, respectively.
OTHER DEVELOPMENTS
On May 17, 1995 the Company announced it had reached an agreement with
Schottenstein Professional Asset Management Corporation and Schottenstein
Stores Corporation to repurchase their equity interests in the Company.
Specifically, the Schottenstein group has agreed to sell back to the Company
the 96,936 shares of Common Stock it presently owns at a price of $4.50 per
share, and to cancel and surrender its option to purchase 198,000 shares of
Common Stock in exchange for a payment of $4.00 per share ($4.50 less the
option exercise price of $0.50 per share). The total cost to the Company
to fund this repurchase will be $1,228,212, which will be provided by the
Company's existing credit facility with Congress Financial Corporation,
which has approved the repurchases.
Also, The Company recently extended the lease on it's Birmingham store
through January, 1997 at the current rental level. The lease was due to
expire in July, 1995. Additionally, Greyhound Lines Inc., a tenant in the
Company's corporate office building, recently notified the Company of its
intention to vacate the premises as of April 30, 1995. It is the Company's
plan to re-lease or sell that portion of the building.
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
On May 17, 1995, the Company's Annual Meeting of Shareholders was
held at the principal offices of the Company. Proxies for the Annual
Meeting were solicited pursuant to Regulation 14A of the Securities Exchange
Act of 1934, as amended, and there was no solicitation in opposition to
management's nominees for election to the Board of Directors and all such
nominees were elected. The matters voted on at the meeting (as more fully
described in the Proxy Statement, dated April 25, 1995), and the results of
the shareholder voting, were as follows:
1. Election of directors to hold office until Annual Meeting of
Shareholders in 1998:
For Withheld
Dennis P. Callahan 1,034,136 1,100
JoAnn S. Cousino 1,034,536 700
Alfred M. Entenman, Jr. 1,034,506 730
2. Appointment of Ernst & Young LLP as auditors for fiscal year
ending February 3, 1996:
For -- 975,154
Against -- 0
Abstain -- 280
Broker non-votes -- 59,802
3. To approve an amendment to the Crowley, Milner and Company 1992
Incentive Stock Plan (the "1992 Incentive Stock Plan") to increase the
number of shares of Common Stock authorized for issuance under the 1992
Incentive Stock Plan from 100,000 shares to 200,000 shares:
For -- 716,626
Against -- 40,770
Abstain -- 1,110
Broker non-votes -- 276,730
4. To approve the Crowley, Milner and Company 1995 Director Stock
Option Plan:
For -- 782,200
Against -- 33,178
Abstain -- 2,930
Broker non-votes -- 216,928
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
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 May 17, 1995 By /S/ Mark A. VandenBerg
Mark A. VandenBerg
Principal financial and chief
accounting officer and a duly
authorized officer of the
registrant
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-END> APR-29-1995
<CASH> 88,198
<SECURITIES> 0
<RECEIVABLES> 832,614
<ALLOWANCES> 73,887
<INVENTORY> 17,711,506
<CURRENT-ASSETS> 20,655,911
<PP&E> 26,623,947
<DEPRECIATION> 16,336,599
<TOTAL-ASSETS> 34,084,033
<CURRENT-LIABILITIES> 14,200,995
<BONDS> 5,850,000
<COMMON> 1,048,300
0
0
<OTHER-SE> 7,483,033
<TOTAL-LIABILITY-AND-EQUITY> 34,084,033
<SALES> 23,593,390
<TOTAL-REVENUES> 23,593,390
<CGS> 17,503,462
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,858,334
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 388,477
<INCOME-PRETAX> (2,094,172)
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,094,172)
<EPS-PRIMARY> (2.00)
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