United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
{x} Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the Period Ended October 28, 1995
or
{ } Transaction Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number 1-85-78
McRae Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 56-0706710
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporated or organization)
402 North Main Street
Mt. Gilead, North Carolina 27306
(Address of principal executive offices) (Zip Code)
(910) 439-6147
(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 (or for such shorter periods that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Applicable Only to Issuers Involved in Bankruptcy Proceedings During the
Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes No
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, Sl Par Value--Class A 1,779,387 shares as of December 1,1995
Common Stock, $1 Par Value--Class B 952,013 shares as of December 1,1995
<PAGE>
INDEX
McRae Industries, Inc. and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page No.
Consolidated Balance Sheets - October 28, 1995 and
and July 29, 1995 3
Condensed Consolidated Statements of Operations - Three months
ended October 28, 1995 and October 29, 1994 4
Condensed Consolidated Statements of Cash Flows - Three months
ended October 28, 1995 and October 29, 1994 5
Notes to Quarterly Financial Statements - October 28, 1995 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 8
Item 1. Legal Information
Item 2. Changes In Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 9
<PAGE>
Part I. Financial Information
McRae Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
October 28, July 29,
1995 1995
Assets (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ 1,079,000 $ 628,000
Securities 1,940,000 3,244,000
Accounts and notes receivable,net 6,270,000 5,860,000
Inventories 7,574,000 7,273,000
Net investment in capitalized leases 934,000 944,000
Prepaid expenses and other current assets 336,000 352,000
Total current assets 18,133,000 18,301,000
Property, plant and equipment,net 4,658,000 4,541,000
Other assets:
Notes and accounts receivable,
related entities 2,331,000 2,287,000
Net investment in capitalized leases 1,728,000 1,690,000
Notes receivable 918,000 903,000
Real estate held for investment 459,000 426,000
Goodwill 698,000 708,000
Other 782,000 727,000
6,916,000 6,741,000
$29,707,000 $29,583,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,519,000 $ 1,897,000
Accrued employee benefits 1,413,000 1,301,000
Accrued payroll and payroll taxes 691,000 595,000
Deferred revenues 1,320,000 1,335,000
Due to related parties 40,000 55,000
Income taxes 514,000 353,000
Other 407,000 459,000
Total current liabilities $ 5,904,000 5,995,000
Minority Interest 956,000 919,000
Shareholders' Equity:
Common stock:
Class "A", $1 par; Authorized
5,000,000 shares; Issued and
outstanding, 1,779,197 and
1,778,573, shares; respectively 1,779,000 1,778,000
Class "B", $1 par, Authorized 2,500,000
shares; Issued and outstanding 952,013 952,000 953,000
and 952,637 shares, respectively (11,000)
Treasury Stock 676,000 676,000
Additional Paid-in Capital 19,451,000 19,262,000
Retained Earnings 22,847,000 22,669,000
$29,707,000 $29,583,000
Note - The balance sheet at July 29, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to quarterly financial statements.
<PAGE>
McRae Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations - (Unaudited)
Three Months Ended
October 28, October 29,
1995 1994
Net revenues $10,412,000 $9,776,000
Costs and expenses:
Cost of revenues 7,343,000 6,670,000
Selling,general and administrative 2,536,000 2,371,000
Other income, net (75,000) (90,000)
Total costs and expenses 9,804,000 8,951,000
Earnings before income taxes and minority interest 608,000 825,000
Provision for income taxes 229,000 321,000
Minority shareholder's interest
in earnings of subsidiary 35,000 37,000
Net earnings $ 344,000 $ 467,000
Net earnings per Common Share $ .13 $ .17
Weighted average number of Common
Shares Outstanding 2,731,507 2,731,210
See notes to quarterly financial statements.
<PAGE>
McRae Industries, Inc and Subsidiaries
Condensed Consolidated Statements of Cash Flows - (Unaudited)
Three Months Ended
October 28, October 29,
1995 1994
Net cash (used in) provided by operating activities ($348,000) $ 183,000
Cash flows from investing activities:
Proceeds from (purchase of) securities 1,304,000 (3,000)
Capital expenditures ( 270,000) (555,000)
Net (advances) payments of long term receivables ( 54,000) 32,000
Purchase of subsidary, net of cash acquired -0- (639,000)
Net cash provided by (used in) investing activities 980,000 (1,165,000)
Cash flows from financing activities:
Principal repayments of notes payable ( 15,000) ( 29,000)
Purchase of Treasure Stock ( 11,000) -0-
Dividends paid ( 155,000) ( 152,000)
Net cash used in financing activities ( 181,000) ( 181,000)
Net increase (decrease) in cash and cash equivalents 451,000 (1,163,000)
Cash and Cash Equivalents at Beginning of Period 628,000 6,542,000
Cash and Cash Equivalents at End of Period $1,079,000 $5,379,000
See notes to quarterly financial statements.
<PAGE>
McRae Industries, Inc. and Subsidiaries
Notes to Quarterly Financial Statements - (Unaudited)
October 28, 1995
Note A - Basis of Presentation
The accompanying unaudited consolidated 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
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 three months ended
October 28, 1995 are not necessarily indicative of the results that may be
expected for the year ended August 3,1996. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
McRae Industries, Inc. annual report on Form 10-K for the year ended July 29,
1995.
Certain reclassifications have been made to the prior year's financial
statements to conform with the current year's presentation.
Note B - Inventories
An actual valuation of inventory under the LIFO method can be made only at the
end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Because these are
subject to many forces beyond management's control, interim calculations, if
any, are subject to the final year-end LIFO inventory valuation.
The components of inventory consist of the following:
October 28, July 29,
1995 1995
Raw materials $ 1,139,000 $ 1,093,000
Work in process 321,000 444,000
Finished goods 6,114,000 5,736,000
$ 7,574,000 $ 7,273,000
Note C - Dividends Declared
On November 28, 1995 the Company declared a cash dividend of 8.75 cents per
share on its Class A Common Stock, payable to shareholders of record of
December 8, 1995, on December 29, 1995.
<PAGE>
McRae Industries, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Financial Condition
The financial condition of the Company continues to be strong as demonstrated by
the amount of cash, cash equivalents and securities at October 28, 1995 with
sufficient amounts of working capital to meet the future anticipated financing
needs of the Company. The Company's financing needs continue to be met by
internally generated funds which enabled the Company to pay dividends of
$155,000 and to fund capital expenditures of $270,000 during the first
quarter. The Company continues to have available an aggregate maximum of $3.75
million under its credit lines with various banks, all of which is available
as of October 28, 1995.
Cash, cash equivalents and securities are down approximately $850,000 since July
29, 1995. This decrease is caused primarily by the increases in other working
capital items, additions to fixed assets, and the payment of dividends. The
receivables in our Footwear unit increased approximately $650,000 because of
a Government slow down in payments during September and October 1995. McRae
Graphics' inventories continue to increase to meet the demand of its customers.
Results of Operations
Three Months Fiscal 1996 vs. Three Months Fiscal 1995
Consolidated revenues for the first quarter of fiscal 1996 exceeded last year's
first quarter by $600,000 or 7%. Compsee's and McRae Graphic's revenues were up
13% and 7%, respectively, while Footwear's revenues were down only $50,000 from
last year's first quarter. The decrease in the gross profit percentage for the
first quarter of 1996 was caused principally by decreases in Compsee and McRae
Graphics profit margins. Compsee's margins are decreasing because of increased
competitive pressures on selling prices while McRae Graphics' decrease is being
caused by increased service costs and decreases in gross profits for equipment
and supplies. Health care costs and losses from repossessions have also
increased over prior year's amounts.
<PAGE>
Part II. Other Information
McRae Industries, Inc. and Subsidiaries
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the three months ended October 28, 1995.
<PAGE>
McRae Industries, Inc. and Subsidiaries
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.
McRae Industries, Inc.
(Registrant)
Date: December 8, 1995 By: /s/ B. J. McRae
B. J. McRae
President
(Principal Executive Officer)
Date: December 8, 1995
By: /s/ David K. Helms
David K. Helms
Vice President-Finance
(Principal Financial Officer)
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