SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended February 28, 1997
Commission File No. 1-5548
Penobscot Shoe Company
(Exact name of registrant as specified in its charter)
Maine
(State or other jurisdiction of incorporation or organization)
01-0139580
(IRS Employer identification no.)
450 North Main Street, Old Town Maine
(Address of principal executive offices)
04468
(Zip code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Registrant's telephone number, including area code: (207) 827-4431
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 _____
Common stock of 1,395,165 shares, $1 par value, was outstanding at
February 28, 1997
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<TABLE>
PENOBSCOT SHOE COMPANY
CONDENSED BALANCE SHEET
(In thousands)
<CAPTION>
February 28, 1997 November 29, 1996
(Unaudited) (Note (a))
<S> <C> <C>
CURRENT ASSETS:
Cash & Cash Equivalents $1,049 $ 548
Marketable Securities 3,319 3,299
Accounts receivable 3,393 3,319
Inventories (Note 2) 3,632 4,036
Other current assets 450 433
_______ _______
TOTAL CURRENT ASSETS $11,842 $11,635
PROPERTY AND EQUIPMENT, AT COST:
Buildings $1,417 $1,417
All Other 511 368
Less accumulated depreciation
and amortization 1,604 1,584
_______ _______
NET PROPERTY AND EQUIPMENT $324 $201
_______ _______
TOTAL ASSETS $12,166 $11,836
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $965 $502
Other current liabilities 529 741
_______ _______
TOTAL CURRENT LIABILITIES $1,494 $1,243
DEFERRED INCOME TAXES $ 99 $ 99
SHAREHOLDERS' EQUITY:
Common stock, $1 par value:
authorized 2,000,000 shares:
issued 1,533,042 $1,533 $1,533
Capital in excess of par value 1,109 1,109
Retained earnings 8,313 8,234
Add net unrealized gain on
available-for-sale securities
(Note (b)) 355 355
Less treasury stock at cost
137,877 shares; 737 737
NET SHAREHOLDERS' EQUITY _______ _______
(Note 3) $10,573 $10,494
TOTAL LIABILITIES AND SHARE- _______ _______
HOLDERS' EQUITY $12,166 $11,836
======= =======
<FN>
Note: (a) The balance sheet at November 29, 1996, has been derived from
the audited financial statements at that date.
(b) The Company adopted Statement of Accounting Standard No. 115
"Accounting for Certain Investments in Debt and Equity Securities"
effective November 26, 1994.
See notes to the condensed financial statements.
</TABLE>
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<TABLE>
PENOBSCOT SHOE COMPANY
STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
For the
Three Months Ended
February February
28, 1997 23, 1996
<S> <C> <C>
Net Sales $4,103 $4,225
Cost and operating expenses:
Cost of sales 2,773 2,840
Selling and administrative
expenses 1,146 1,150
_______ _______
Operating income 183 235
Other income 62 138
_______ _______
Income before income taxes 246 373
Income taxes 97 149
_______ _______
Net income $149 $224
======= =======
Per Common Share:
Net income $0.11 $0.15
Dividends 0.05 0.05
Average number of common shares
outstanding 1,395,165 1,482,117
<FN>
See notes to the condensed financial statements.
</TABLE>
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<TABLE>
PENOBSCOT SHOE COMPANY
STATEMENT OF CASH FLOWS
For Three Months Ended February 28, 1997 and February 23, 1996
(In thousands)
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating
activities:
Net cash provided (used) by
operating activities $ 713 $ (255)
Cash flows from investing
activities:
Proceeds from sale of assets 0 0
Capital expenditures (142) (10)
_______ _______
Net cash provided (used) by
investing activities (142) (10)
Cash flows from financing activities:
Dividends paid (70) (74)
Purchase of treasury stock 0 0
Net cash provided (used) by _______ _______
financing activities (70) (74)
Net increase (decrease) in _______ _______
cash and cash equivalents 501 (339)
Cash and cash equivalent at
beginning of period 548 1,301
Cash and cash equivalent at _______ _______
end of period $1,049 $ 962
======= =======
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $0 $0
Income taxes 193 119
</TABLE>
<PAGE>
PENOBSCOT SHOE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of February 28, 1997, the statements of
income for the first quarter ended February 28, 1997 and February 23, 1996,
and the condensed statements of cash flows for the three-month periods then
ended have been prepared by the Company, without audit. In the opinion of
management, all necessary adjustments, which include normal recurring
adjustments, have been made to present fairly the financial position, results
of operations, and cash flows at February 28, 1997 and for the other periods
presented. The results of operations for the period ended February 28, 1997
are not necessarily indicative of operating results for the full year.
2. INVENTORIES
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
2/28/97 11/29/96 2/23/96
<S> <C> <C> <C>
FIFO Cost:
finished shoes $3,840 $4,465 $3,809
shoes in process 0 0 40
raw materials 18 20 205
_______ _______ _______
$3,858 $4,485 $4,054
Excess of FIFO cost over
LIFO inventory value (227) (449) (765)
_______ _______ _______
$3,632 $4,036 $3,289
======= ======= =======
</TABLE>
The Company uses the LIFO method because it more realistically
reflects operating results by charging current costs against current
revenues.
3. SHAREHOLDERS' EQUITY
During the three months ended February 28, 1997, shareholders' equity
changed due to the net income of $149,000 and dividends declared of $70,000.
<PAGE>
PENOBSCOT SHOE COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS
Liquidity and Capital Resources:
At February 28, 1997, Penobscot Shoe Company had working capital of
approximately $10,348,000 versus approximately $10,392,000 at November
29, 1996, a decrease of $44,000. The ratio of current assets to current
liabilities at February 28, 1997, was 7.9 to 1, compared to 9.4 to 1, at
November 29, 1996.
The statement of cash flows for the three months ended February 28, 1997,
shows an increase of $501,000 in cash and cash equivalents since November
29, 1996. The Company's operations provided $713,000 since November 29,
1996, primarily due to seasonal fluctuations in inventory. The Company's
quarterly dividend amounted to a use of $70,000 during the period and
capital expenditures for equipment amounted to a further use of $142,000
during the period.
The decrease in the Company's inventory, as well as the increases in
accounts payable, accounts receivable and other current assets since
November 29, 1996, were the result of ordinary fluctuations. The increase
in property and equipment reflects the purchase of new data processing
equipment and the upgrading of existing equipment.
Management believes that Penobscot Shoe Company remains financially well
structured to consider a variety of financing options should the need arise and
will make choices depending on economic conditions at the time. Options
available include conversion of marketable securities held by the Company into
cash and cash equivalents. The Company also has an established line of credit
with a major bank available for direct borrowing at the prime rate should the
need arise.
Results of Operations:
Net sales for the quarter ended February 28, 1997, were $4,103,000,
down 3% from $4,225,000 last year. Net income for the current quarter was
$149,000, or $.11 per share, compared to $224,000, or $.15 per share, a year
ago. The current quarter's net income benefited from a LIFO gain of
approximately $116,000, or $.08 per share. There was no such gain during this
period a year ago. The current quarter's net income also benefited by $6,000,
or less than $.01 per share, from gains on the sales of securities. Such gains
contributed $48,000, or $.03 per share, to earnings a year ago.
The decrease in net sales in the first quarter was due in part to a poor
winter boot season compared to an unusually strong season a year ago.
Retailer requests for later delivery of Spring merchandise also adversely
affected net sales. This timing difference should be offset in the second
quarter.
Other income in the first quarter of 1997 was $62,000, pre-tax,
compared to $138,000 in the same quarter last year. Gains from the sale of
securities contributed $48,000, or $.03 per share to last years earnings. Such
gains in the current year amounted to only $6,000, or less than $.01 per share.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
last quarter of the period covered by this report.
<PAGE>
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 under-
signed thereunto duly authorized.
Penobscot Shoe Company
_________________________
(Registrant)
Date: March 31, 1997 Paul Hansen
_________________________
By: Paul Hansen
President and
Chief Executive Officer
Date: March 31, 1997 David L. Keane
_________________________
By: David L. Keane
Vice President/Finance and
Administration
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-28-1997
<PERIOD-END> FEB-28-1997
<CASH> 1,049
<SECURITIES> 3,319
<RECEIVABLES> 3,895
<ALLOWANCES> (502)
<INVENTORY> 3,632
<CURRENT-ASSETS> 11,842
<PP&E> 1,928
<DEPRECIATION> 1,604
<TOTAL-ASSETS> 12,166
<CURRENT-LIABILITIES> 1,494
<BONDS> 0
<COMMON> 1,533
0
0
<OTHER-SE> 9,422
<TOTAL-LIABILITY-AND-EQUITY> 12,166
<SALES> 4,103
<TOTAL-REVENUES> 4,103
<CGS> 2,773
<TOTAL-COSTS> 3,919
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (62)
<INCOME-PRETAX> 246
<INCOME-TAX> 97
<INCOME-CONTINUING> 149
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 149
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
