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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarter ended March 31, 1995
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 1-6575
BRAD RAGAN, INC.
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(Exact name of registrant as specified in its charter)
North Carolina 56-0756067
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4404-G Stuart Andrew Blvd.
Charlotte, North Carolina 28217-9990
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(Address of principal executive offices) (Zip Code)
704-521-2100
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(Registrant's telephone number, including area code)
Not Applicable
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(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 period 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 .
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,190,619 shares of Common
Stock ($1 par value) at May 11, 1995.
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<CAPTION>
Part I - Financial Information
Item 1. Financial Statements
STATEMENTS OF FINANCIAL POSITION
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BRAD RAGAN, INC.
(Unaudited)
Amounts in thousands, except share and per share data.
March 31, 1995 December 31, 1994
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<S> <C> <C>
Assets
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Current Assets:
Cash $ 145 $ 240
Accounts receivable, less unearned interest income
of $4,459 and $4,457 and allowance for
doubtful accounts of $1,526 and $1,637 69,224 71,061
Inventories:
Merchandise 39,719 31,889
Materials and manufacturing supplies 2,695 2,197
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42,414 34,086
Prepaid expenses 476 276
Other current assets 2,208 2,208
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Total Current Assets 114,467 107,871
Other assets 3,394 3,211
Property, plant and equipment, net 7,104 7162
Cost in excess of net assets of businesses acquired, less
accumulated amortization of $860 and $851 570 579
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$125,535 $118,823
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Liabilities and Shareholders' Equity
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Current Liabilities:
Short-term debt - Majority Shareholder $ 26,732 $ 25,576
Accounts payable and accrued expenses:
Trade 14,425 10,862
Majority Shareholder 17,376 12,704
Salaries, wages and commissions 4,726 7,231
Taxes, other than income 1,356 1,128
Federal and state taxes on income - 369
Current portion of deferred revenue 2,295 2,315
Current portion of long-term debt - 4
Current portion of note payable - Majority Shareholder 5,500 5,500
Current portion of other long-term liabilities 172 172
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Total Current Liabilities 72,582 65,861
Other long-term liabilities, less current portion 2,672 2,633
Long-term deferred revenue 2,064 2,038
Shareholders' Equity:
Common stock, par value $1 per share:
Authorized 10,000,000 shares; issued 2,190,619 shares 2,191 2,191
Additional paid-in capital 9,171 9,171
Retained earnings 36,855 36,929
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Total Shareholders' Equity 48,217 48,291
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$125,535 $118,823
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</TABLE>
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<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
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BRAD RAGAN, INC.
(Unaudited)
Amounts in thousands, except per share data.
Three Months Ended
March 31,
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1995 1994
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Net sales $ 52,637 $ 49,551
Miscellaneous income - net 3,286 2,866
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55,923 52,417
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Cost and expenses:
Cost of products sold 36,469 33,767
Selling, administrative and general expenses 18,976 18,191
Interest expense 607 382
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56,052 52,340
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Income (loss) before income taxes (129) 77
Provision (benefit) for income taxes (55) 30
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Net income (loss) $ (74) $ 47
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Income (loss) per common share $ (0.03) $ 0.02
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Weighted average number of common shares outstanding $2,190,619 $2,190,619
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</TABLE>
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<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
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BRAD RAGAN, INC.
(Unaudited)
Amounts in thousands.
Three Months Ended
March 31,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (74) $ 47
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH FROM OPERATING ACTIVITIES:
Depreciation and amortization 402 295
(Gain) loss on sale of property, plant and equipment (13) 2
Changes in operating assets and liabilities:
Accounts receivable 1,837 2,934
Inventory (8,327) (7,809)
Prepaid expenses (200) (199)
Accounts payable 8,235 5,793
Salaries, wages and commissions (2,505) (1,801)
Taxes, other than income tax 228 225
Federal and state taxes on income (370) (167)
Deferred revenue 6 (35)
Other (149) (96)
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Total Adjustments (856) (858)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (930) (811)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (353) (478)
Proceeds from disposals of property, plant and equipment 36 105
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (317) (373)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt paid (3) (4)
Short-term debt - Majority Shareholder 1,155 1,716
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 1,152 $ 1,712
NET INCREASE (DECREASE) IN CASH (95) 528
BEGINNING CASH 240 147
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ENDING CASH $ 145 $ 675
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</TABLE>
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NOTES TO FINANCIAL STATEMENTS
BRAD RAGAN, INC.
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In management's opinion, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
NOTE B - INVENTORIES
Inventories are stated at the lower of cost or market, with cost determined
using the last-in, first-out (LIFO) method for substantially all inventories.
An actual valuation of inventory under the LIFO method is 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. Since these are subject to
many forces beyond management's control, interim results are subject to the
final year-end LIFO inventory valuation.
NOTE C - INCOME PER SHARE
Earnings (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common and dilutive common equivalent shares
outstanding during each period.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
First Quarter 1995 Compared To First Quarter 1994
Net sales increased $3.1 million or 6.2% to $52,637,000 for the first
quarter of 1995 compared to $49,551,000 for the same period of 1994. Sales
increases were realized in all product categories. On a same location basis,
net sales increased in the commercial and retail segments by 8.3% and 3.1%,
respectively.
Miscellaneous income increased $420,000 for the first quarter of 1995
primarily due to greater finance charge income from increased consumer credit
sales.
The gross margin rate decreased to 30.7% for the first quarter of 1995
from 31.9% for the same period of 1994 due to changes in sales mix and higher
merchandise acquisition cost.
Selling, administrative and general expenses increased $785,000 due to
expenses associated with increased sales. As a percentage of sales, such
expenses decreased to 36.1% for the first quarter of 1995 compared to 36.7% for
the 1994 first quarter.
Interest expense increased $225,000 for the first quarter of 1995
compared to the same period of 1994 due to higher short-term borrowing rates.
The Company's average short-term borrowing rate was 7.6% for the first quarter
of 1995 compared to 4.8% for the 1994 first quarter.
Historically, the first quarter does not represent a strong earnings
period for the Company. A net loss of $74,000 ($.03 per share) was recorded
for the first quarter of 1995 compared to net income of $47,000 ($.02 per
share) for the same period of 1994. The earnings reduction can be attributed
to lower gross margins and increased interest expense.
Financial Position
Lower accounts receivable balances from year-end 1994 levels reflect
the normal, seasonal trend for the Company. Inventory and related accounts
payable increases can be attributed to seasonal merchandise inventory
requirements to support the second quarter business levels.
Total debt was increased $1.2 million from the year-end 1994 amount in
order to fund working capital requirements. Short-term debt is originated
through the majority shareholder, The Goodyear Tire & Rubber Company, which
provides an open line of credit.
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COMPARATIVE SALES TABLE
(in 000's)
COMMERICAL SALES BY PRODUCT LINE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
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1995 1994 % VARIANCE
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<S> <C> <C> <C>
New Tires $14,653 $13,880 5.6%
Retreading 9,291 8,439 10.1%
Service 5,383 5,064 6.3%
Rubber Products 2,417 1,831 32.0%
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Total $31,744 $29,214 8.7%
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</TABLE>
RETAIL SALES BY PRODUCT LINE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
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1995 1994 % VARIANCE
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<S> <C> <C> <C>
Hard Goods $ 8,900 $ 8,566 3.9%
New Tires 5,482 5,479 0.1%
Retreading 119 116 2.6%
Service 6,392 6,176 3.5%
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Total $20,893 $20,337 2.7%
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</TABLE>
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. 27 - Financial Data Schedule dated March 31, 1995
(for SEC use only)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this report is filed.
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.
BRAD RAGAN, INC.
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(Registrant)
DATE: May 11, 1995 By: /s/ R. J. Carr
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R. J. Carr, Vice President - Finance
and Chief Financial Officer
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE BRAD RAGAN, INC. FOR THE QUARTER ENDED MARCH 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 145
<SECURITIES> 0
<RECEIVABLES> 69,224
<ALLOWANCES> 1,526
<INVENTORY> 42,414
<CURRENT-ASSETS> 114,467
<PP&E> 7,104
<DEPRECIATION> 21,563
<TOTAL-ASSETS> 125,535
<CURRENT-LIABILITIES> 72,582
<BONDS> 0
<COMMON> 2,191
0
0
<OTHER-SE> 46,026
<TOTAL-LIABILITY-AND-EQUITY> 125,535
<SALES> 52,637
<TOTAL-REVENUES> 55,923
<CGS> 36,469
<TOTAL-COSTS> 55,445
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 158
<INTEREST-EXPENSE> 607
<INCOME-PRETAX> (129)
<INCOME-TAX> (55)
<INCOME-CONTINUING> (74)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
