<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
[ X ] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the fiscal year ended December 31, 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 1-6575
BRAD RAGAN, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0756067
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
4404-G STUART ANDREW BOULEVARD, CHARLOTTE, NORTH CAROLINA 28217
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 704-521-2100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
- --------------------------------------------------------------------------------
COMMON STOCK ($1 PAR VALUE) AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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 .
---- -----
State the aggregate market value of the voting stock held by
non-affiliates of the registrant: Approximately $57,179,325 as of March 18,
1996.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 2,190,619 shares
of Common Stock ($1 Par Value) as of March 18, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the 1996 Annual Meeting of
Shareholders are incorporated by reference into Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Brad Ragan, Inc. (hereafter called the "Company" or the "Registrant,"
as appropriate for this report), is a 75%-owned subsidiary of The Goodyear Tire
& Rubber Company, Akron, Ohio ("Goodyear").
The business of the Company is the sale of new and retreaded tires,
home products and automotive services. It is functionally divided into two
industry segments: (a) commercial tire retreading and tire replacement
operations, which are generally referred to as commercial centers, and (b)
retail automotive service, new tires and home products operations.
The Company's commercial division generated 60.8% of consolidated
sales during 1995, 60.2% in 1994 and 58.6% in 1993. These commercial centers
serve both the off-the-road customers (mines, contractors and others) and
over-the- highway customers (trucking).
The Company's retail division operates primarily in the rural markets
of the southeastern United States, offering a broad line of Goodyear tires,
automotive service and home products.
For purposes of identifying revenues by division, the Company defines
each operating location as either commercial or retail. Financial information
for both of these segments is presented in Note 16 of Notes to Financial
Statements located elsewhere in this report.
COMMERCIAL
The number of the Company's commercial centers in operation at the end
of each of the last five years was as follows:
Centers in Operation
at December 31
-----------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
48 49 49 48 49
The Company's 49 commercial centers are located in 20 states. Eight
of the centers are capable of retreading all common sizes of off-the-road tires
used on earth-moving and other similar heavy equipment by the BAND-LUG(TM)
process, the BAND-LUG(TM) "Computer Cut Tread" process or the mold cure process.
Thirteen of the commercial centers (five of which have off-the-road retreading
capability) can retread over-the-highway truck tires. The remaining centers
are sales and service outlets. From its commercial centers, the Company
operates a fleet of approximately 250 one-ton or larger service trucks.
Purchases of over-the-highway and off-the-road tires are principally
from Goodyear and are controlled from the corporate office and from individual
locations. Other merchandise and supplies required in commercial centers are
ordered by the managers of individual locations.
The commercial division has two supporting units: a rubber mixing
plant in Radford,
2
<PAGE> 3
Virginia, and a mobile equipment service unit in Spruce Pine, North Carolina.
These units service the needs of the Company in addition to contributing
revenue from sales to Goodyear and other customers.
The Company serves commercial customers from its commercial centers
through its sales force calling on existing and potential customers as well as
through its service associates who drive the service trucks, ascertain the
customers' needs and requirements and furnish tires and services. These
service associates constitute an important link between the Company and its
customers. They are often able to generate significant on-the-job sales as
part of their customer service.
In 1995, the Company was not dependent upon any one customer or group
of customers for as much as 10.0% of the commercial division's revenue. The
Company does not have any material long-term contracts with its commercial
customers for specific quantities of products, because customer requirements
vary widely depending on the level of activity in the customer's operations.
Tires are supplied from inventory or to the customer's order on a very short
lead-time basis, and the Company, therefore, does not consider order backlog a
material element in its business.
The Company's commercial operations are divided into two major
categories: off-the-road ("OTR") and over-the-highway.
Off-the-Road ("OTR")
The Company provides a broad range of products and services to its OTR
customers. These include new tires, various types of retreading, tire repairs
and OTR tire service. Such services are an integral part of the mix of choices
available to customers and give the Company more opportunities to serve them.
The Company relies upon its internally developed retreading techniques
to provide value to the customer and return on investment in the OTR tire
replacement market.
Its BAND-LUG(TM) process involves the application of bands of uncured
natural rubber to the prepared surfaces of OTR tire casings and the attachment
of formed bars of rubber to the bands to form raised lugs. The tire is then
cured in a pressurized steam vessel capable of containing any size tire up to
and including the largest OTR tires commonly in use. Principal advantages of
the BAND-LUG(TM) process over conventional methods include (a) diversity of
tread depth, design and composition obtainable with a single extruder and steam
vessel, (b) faster curing and processing time because heat is applied equally
to the inside and outside of the tire and (c) because tires are cured in a
relaxed state and at lower temperatures, tire casings are subjected to less
stress and possible damage. Disadvantages of the process include (a)
appearance of tires, which does not as closely approximate that of new tires,
and (b) the fact that the process is labor intensive.
The Company has developed an extension of the BAND-LUG(TM) process
known as the BAND-LUG(TM) "Computer Cut Tread" method, which provides a greater
selection of tread designs, depths and sizes as well as an improved appearance.
It utilizes a computer controlled machine, which automatically cuts the tread
pattern in built up rubber that has been applied in bands onto the carcass.
The tread pattern is uniform in depth, width and configuration on each tire.
3
<PAGE> 4
Over-the-Highway
The over-the-highway tire market serviced by the Company consists of
truck tire replacement customers for both new and retreaded tires. Retreading
capability for truck tires exists in thirteen locations, all of which utilize a
precure retread process.
Most of the Company's commercial over-the-highway tire business is
concentrated in the "medium" commercial truck tire sizes. These tires are sold
to owners of small and large fleets for various applications including
linehaul, local delivery, mining and a variety of other commercial uses.
The Company's commercial centers also sell tires for smaller vehicles
including light-duty trucks and automobiles. These revenue sources represent
approximately 5.5% of the commercial division's sales.
RETAIL
The Company's retail stores are authorized dealers for Goodyear tires
and General Electric appliances. Forty-five of these outlets are located in
North Carolina, twenty-seven in South Carolina, sixteen in Tennessee, fourteen
in Georgia, ten in Alabama, four in Virginia and five in Mississippi. The
number of the Company's retail stores in operation at the end of each of the
last five years was as follows:
STORES IN OPERATION
at December 31
-----------------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
130 123 123 122 121
The selective closing, sale or consolidation of outlets is determined
through an evaluation of earnings, working capital return and operating cash
flow. The Company will continue to review marginal retail locations based on
these financial criteria along with the market potential of the area.
Market potential, competitive conditions and projected financial return
are criteria used in accessing opportunities for modernization, relocation or
new construction in both new and existing markets.
The typical retail store has approximately 7,500 square feet of space,
with individual stores ranging from 3,150 to 16,000 square feet. All are air
conditioned and well maintained. The retail stores in North Carolina and South
Carolina operate under the name "Carolina Tire Company," and the stores in
other states operate under the name "Brad Ragan Tire and Appliance." The name
is prominently displayed on the storefront. The stores also display the
Goodyear name and logo. No single store presently accounts for more than three
percent of total retail store sales.
Sales of new and retreaded tires account for approximately 25.9% of the
Company's retail sales. Approximately 45.5% is derived from sales of home
products, including refrigerators, air conditioners, ranges, freezers and
washer-dryers and from mowers, tillers, televisions and home entertainment
products. The balance of retail sales are generated from
4
<PAGE> 5
providing automotive service, including automobile brake and alignment services
and engine tune-ups.
Approximately 51% of the retail division's sales are made on credit
under installment sale security agreements between the Company and the
customer. The Company considers its installment credit polices to be an
important factor in the retail division sales strategy. Credit terms may be
extended up to 36 months, although 24 months is the maximum on most sales.
Down payments of at least 10% are encouraged but not required. The Company
operates a credit administration center in Charlotte, NC for the purpose of
establishing credit limits on individual accounts, approving new accounts and
initiating collection activities when accounts become past due. During 1995,
finance charge revenues amounted to $11,902,000 or approximately 11.3% of
retail division revenues. Property and life insurance is offered, but not
required, on installment credit sales.
The Company advertises in local newspapers and over local radio stations
through cooperative efforts with Goodyear, General Electric and others. The
Company also utilizes direct mailing efforts to promote retail sales.
The Company's Vice President and General Manager-Retail Division and his
staff, along with each individual store manager, plan and maintain purchasing
and inventory controls and product marketing. A 64,000 square foot retail
warehouse located in Salisbury, North Carolina, permits the Company to
consolidate the majority of its home product purchasing.
EMPLOYEE RELATIONS
The Company has approximately 1,680 employees. Approximately 830 of the
employees are engaged primarily in commercial operations, 810 employees are in
retail operations and 40 are engaged in other operations, primarily in
administrative and management capacities.
Approximately 62 employees are members of labor unions. The Company
considers that the relations between it and its employees are good.
COMPETITION AND REGULATION
In its commercial activities the Company competes primarily with the
major rubber companies and with regional and local independent companies that
sell new and retreaded tires.
The Company's retail stores are engaged in competition with chain stores
in certain markets and other local tire and appliance outlets. Accurate
figures with respect to the size of the markets served by the Company are not
readily available. Management believes that the Company is a minor factor in
the overall retail markets served, although it is frequently a significant
factor in the relatively small communities in which its stores are generally
located.
The Company has no formal established program whereby professional
employees are engaged full time on material research activities relating to the
development of new products or the improvement of existing products.
All of the Company's operations must meet extensive federal, state and
local regulatory standards, primarily in the areas of safety, health and
environmental pollution. In general, the Company has experienced no difficulty
in complying with these standards, and it believes that
5
<PAGE> 6
they have not had any material adverse effect on its sales or operations.
Additional governmental standards and regulations may be prescribed in the
future; however, the Company is unable to predict what effect, if any, such
standards and regulations will have on its sales or results of operations.
Management of the Company believes that the operation of its facilities and its
disposal of waste materials are in compliance with all applicable laws and
regulations, but compliance with future requirements regarding environmental
quality may necessitate capital outlays. It is not anticipated that any such
capital outlays would materially affect the earning power of the business or
cause material changes in the Company's business or intended business.
Various federal and state authorities have the power to adopt safety
regulations with respect to motor vehicles and the tires with which they are
equipped. Management believes that the Company is presently in compliance with
all published state and federal statutes and regulations (including those of
the United States Department of Transportation) relative to retreading of
tires. The Company cannot predict, however, what other laws and regulations
might be adopted in the future or what their effect on its business might be.
SUPPLIERS
Goodyear supplies a majority of the new tires sold by the Company, and
nearly all Company locations are franchised dealers of Goodyear. Goodyear
provides the Company with an open, unsecured short-term line of credit to fund
working capital requirements.
On December 31, 1995, the Company issued a one-year $5.5 million
promissory note to Goodyear that may be renewable on December 31, 1996,
depending on business conditions. The note represented an extension of a
previous inventory ledger balance financing arrangement dated November 30,
1989, with an outstanding balance due on December 31, 1995, of $5.5 million.
The note is interest-bearing at 120% of the prime rate as announced by
Citibank, N.A., New York, on the first day of each quarter during the term of
the note. According to the agreement, Goodyear will fully waive any interest
due under the note, provided the ratio of the Company's annual purchases of
off-the-road tires from Goodyear to the average outstanding balance of the note
equals or exceeds two and one half to one (2.5:1). Interest will be prorated
if the ratio is less than 2.5:1. In 1995, the ratio exceeded 2.5:1, and,
therefore, Goodyear imposed no interest charges related to this agreement.
The Company's rubber processing plant in Radford, Virginia, supplies
substantially all of the Company's rubber needs for the BAND-LUG(TM) and
BAND-LUG(TM) "Computer Cut Tread" processes and most of its needs for
conventional mold processes. With this plant, the Company can compound rubber
to meet the specialized needs of its customers and obtain better control over
inventories of rubber supplies and the quality of the rubber compounds it
uses. The plant currently operates on one shift.
With respect to appliance sales, stores operate under dealer
arrangements with General Electric and other suppliers. These arrangements may
be terminated on short notice by either party. General Electric Capital
provides financing for inventories of General Electric products.
In management's opinion, while the termination of any of these supply
arrangements would have some temporary impact upon the directly affected
portion of the Company's business, it would not adversely affect its overall
business for any significant period of time, inasmuch as alternative sources of
supply are believed to be readily available.
6
<PAGE> 7
The Company is not dependent upon any single outside source for any
other supplies or services used.
SEASONALITY
The second and third quarters normally produce stronger sales and
revenues for the Company. The retail division experiences increased sales of
home products and powered equipment, while the commercial division's sales of
off-the-road and farm tires are greater during the spring and summer months.
ITEM 2. PROPERTIES.
The following table summarizes the Company's present use of
properties:
<TABLE>
<CAPTION>
APPROXIMATE SQUARE FEET OF FLOOR SPACE
PRINCIPAL USE LEASED OWNED
------------- ------ -----
<S> <C> <C>
Commercial 674,854 227,942
Retail 915,824 96,690
Corporate 24,184 - 0 -
</TABLE>
At December 31, 1995 the Company operated 121 retail centers, 48
commercial centers, one commercial support facility, one retail warehouse and
one manufacturing plant in the United States as described in Item 1 hereof.
Three retail stores, five commercial centers, the support facility, the retail
warehouse and the manufacturing plant are Company-owned, and the balance are
rented under leases expiring at various dates through the year 2005. The
Company believes that the activities carried out in rented properties can be
readily transferred to other locations should the need to do so arise. In the
Company's opinion, all of its properties are in good condition,
well-maintained, suitable and adequate for the activities conducted by the
Company therein.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a defendant in two civil proceedings relating to
certain installment credit sales transactions:
(1) Ricks, et al. vs. Brad Ragan, Inc. et al., was filed in December, 1994
in the Circuit Court for Jefferson County, Alabama, on behalf of a purported
class consisting of all past and current installment account debtors of the
Company and other defendants in Alabama alleging that the Company and other
defendants violated the Alabama fraud and consumer protection laws by charging
the plaintiffs for non-filing insurance (in-lieu of making filings under the
Alabama Uniform Commercial Code) in connection with credit sales transactions.
The plaintiffs are seeking statutory damages, including cancellation of their
account agreements, unspecified punitive damages and other remedies. After
having been removed to Federal Court, on September 28, 1995, the case was
remanded to the Circuit Court for Jefferson County, Alabama.
7
<PAGE> 8
(2) Jordan, et al vs. Avco Financial, et al., was filed in April, 1995, in
the United States District Court for the Middle District of Georgia, Columbus
Division, against the Company and several other defendants on behalf of a
purported class of plaintiffs consisting of all persons nationwide who were
charged for non-filing insurance by the defendants. The complaint alleges that
the defendants, in the course of charging and collecting non-filing insurance
fees in respect of certain retail installment credit sales transactions
violated the federal Truth in Lending Act, the federal Racketeer Influenced and
Corrupt Organizations Act and that the defendants' activities also constituted
common law fraud, breach of contract and conversion. The plaintiffs are
seeking statutory remedies, unspecified compensatory and punitive damages and
attorneys' fees and costs. The case remains in the discovery phase for the
purpose of class certification.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the American Stock Exchange
under the symbol BRD. There were approximately 159 shareholders of record as
of March 18, 1996.
Information regarding stock prices during the past two years follows:
<TABLE>
<CAPTION>
Quarter Ended Stock Prices
------------- ------------
Low High
--- ----
<S> <C> <C>
March 31, 1994 27 $32
June 30, 1994 27 1/2 30 1/4
September 30, 1994 27 34
December 31, 1994 32 34
For Year 1994 27 34
March 31, 1995 $32 $35
June 30, 1995 31 34
September 30, 1995 30 34 1/2
December 31, 1995 32 1/2 35
For Year 1995 30 35
</TABLE>
The Company has not paid a cash dividend during the past two years.
ITEM 6. SELECTED FINANCIAL DATA.
See "Five Year Highlights" under Item 14 of this report.
8
<PAGE> 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
REVIEW OF 1995 RESULTS
Net sales for the year ended December 31, 1995, increased $2.9 million
or 1.3% to $236,975,000 compared to $234,037,000 for 1994. On a same location
basis, net sales were up for the commercial and retail divisions 1.1% and .1%,
respectively.
Miscellaneous income decreased $803,000 for 1995 compared to 1994
primarily due to lower finance charge income resulting from decreased consumer
credit sales and the discontinuance of certain charges in connection with
retail installment sales. It is anticipated that miscellaneous income will be
lower in future periods due in substantial part to a reduction in anticipated
net revenues derived from charges in respect of certain retail credit sales
transactions.
The gross margin rate decreased slightly to 30.0% for 1995 compared to
30.3% for 1994.
Selling, administrative and general expenses increased 1.2% during
1995 due to expense associated with increased sales. Such expenses remained
constant as a percentage of sales at 33.9% for both 1995 and 1994.
Interest expense increased $612,000 for 1995 compared to 1994 due to
higher short-term borrowing rates. The Company's average short-term borrowing
rate increased to 7.5% for 1995 compared to 5.86% for 1994.
The Company's effective income tax rate was 43.7% in 1995 as compared
to 15.0% in 1994. The 1994 provision for income taxes was reduced by
approximately $1.2 million (26% of pre-tax income) due primarily to a reduction
in the Company's deferred income tax asset valuation allowance. The Company
has net deferred income tax assets of approximately $4.8 million as of December
31, 1995. For further discussion refer to Note 14 of Notes to Financial
Statements included elsewhere in this report.
The Company recorded net income of $1,356,000 ($.62 per share) for the
year ended December 31, 1995, compared to $3,836,000 ($1.75 per share) for
1994. The earnings decrease is primarily attributed to the items discussed
above.
REVIEW OF 1994 RESULTS
Net sales for the year ended December 31, 1994, increased $6.8 million
or 3.0% to $234,037,000 compared to $227,204,000 for 1993. On a same location
basis, net sales for the commercial division increased 4.6%, while retail sales
declined .8%. Retail sales decreases can be attributed to lower sales of
seasonal home products.
Miscellaneous income decreased $525,000 primarily due to lower finance
charge income resulting from reduced consumer credit sales.
Favorable sales mix and lower cost resulted in an increased gross
margin of 30.3% for 1994 compared to 29.6% for 1993.
9
<PAGE> 10
Selling, administrative and general expenses increased $2.5 million in
1994 compared to 1993 due to expenses associated with increased sales. Such
expenses remained constant as a percentage of sales at 33.9% for both 1993 and
1994.
Interest expense increased $195,000 for 1994 compared to 1993 due to
higher short-term interest rates. The Company's average short-term borrowing
rate increased to 5.86% for 1994 compared to 4.72% for 1993.
The Company recorded net income of $3,836,000 ($1.75 per share) for
the year ended December 31, 1994, compared to $2,814,000 ($1.28 per share) for
1993. Net income for 1993 includes a one-time transition obligation charge of
$1,253,000 ($.57 per share) related to the adoption of Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS 112"), described in Note 5 of Notes to Financial Statements
included elsewhere in this report.
In accordance with the provisions of statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), the
1993 tax provision was fully offset through the recognition of a deferred tax
asset, while the 1994 tax provision was only partially offset as described in
Note 14 of Notes to Financial Statements included elsewhere in this report.
The Company's income before income taxes and effect of change in accounting
principle improved $444,000 compared to 1993 due to increased sales and
improved gross margins.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains an open, unsecured line of credit with The
Goodyear Tire & Rubber Company, its major shareholder, to fund working capital
requirements. The borrowing rate on the line of credit is based on the 30-day
LIBOR plus 1.5% as reported on the Reuter Money Service Monitor System
effective the first day of each calendar month. Although Goodyear retains the
right to require payment or discontinue additional advances on the line of
credit at its discretion, management believes that Goodyear will continue to
provide funding. The Company believes that Goodyear has the financial capacity
to fund any anticipated request by the Company to expand this line of credit.
At December 31, 1995, the level of this debt was $25,323,000, or $253,000 lower
than the December 31, 1994 level.
An outstanding note balance of $5,500,000 payable to Goodyear on
December 31, 1995, pursuant to an inventory ledger balance financing agreement,
was extended for one year and becomes due and payable on December 31, 1996.
For further discussion, refer to Note 2 of Notes to Financial Statements
included elsewhere in this report.
Working capital decreased .2% during 1995 to $41.9 million compared to
$42.0 million for 1994. Net cash provided by operating activities was $3.8
million in 1995. Cash provided by net income, before depreciation and
amortization, was $3.0 million. Additional cash was provided principally by a
reduction in receivables and an increase in accounts payable, partially offset
by an increase in inventories. Cash provided by operating activities was
reinvested principally in capital equipment with capital expenditures totalling
$3.7 million. Financing activities reflect a net decrease in the short-term
credit facility provided by Goodyear of approximately $.3 million.
10
<PAGE> 11
The Company is self-insured for substantial portions of liabilities
related to casualty losses, disability, workers' compensation and health care
benefits. Payments of $5.6 million were made during 1995 for this purpose
compared to $5.7 million in 1994. It is expected that cash flow generated from
operations will continue to be sufficient to fund these programs.
The Company is one of several defendants in two legal proceedings
related to certain fees charged in connection with installment credit sales
transactions. While it is not possible at this time to determine the extent,
if any, to which the Company may be liable or to reasonably estimate the amount
of any possible liability, in the event of an adverse final determination in
these cases, the Company's ability to meet its financing needs may be affected.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements of the Company appear under Item 14
of this report:
Page No.
Statements of Operations and Retained Earnings
Years ended December 31, 1995, 1994 and 1993 16
Statements of Financial Position -
December 31, 1995, and December 31, 1994 17
Statements of Cash Flow -
Years ended December 31, 1995, 1994 and 1993 18
Notes to Financial Statements 19
Schedule II - Valuation and Qualifying Accounts
and Reserves 25
Report of Independent Accountants 26
The supplementary financial information required by Item 8 of Form 10-K appears
under Item 14 of this report. All other schedules for which provision is made
in the applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable,
and, therefore, have been omitted.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
11
<PAGE> 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
BOARD OF DIRECTORS
The following persons are members of the Company's Board of Directors:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ----------------------------------
<S> <C>
Eugene R. Culler Executive Vice President of Goodyear
William P. Brophey Vice Chairman of the Board, President and
Chief Executive Officer of the Company
Ronald J. Carr Vice President - Finance and Chief
Financial Officer, Secretary and
Treasurer of the Company
Charles A. Bethel, Jr. Retired, Formerly Vice President
(Original Equipment Tire Sales)
of Goodyear
Richard D. Pearson Owner and manager of companies
involved in selling and
leasing heavy duty trucks and
other heavy equipment
Richard E. Sorensen Dean of the College of Business, Virginia
Polytechnic Institute and State
University
</TABLE>
Additional information regarding Directors required by Item 10 of Form
10-K appears in the Company's proxy statement for the 1996 Annual Meeting of
Shareholders under the captions "Election of Directors" and "Beneficial
Ownership of Common Stock" reference to which is hereby made, and the
information there is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth information regarding the present
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS AND OFFICES WITH THE COMPANY
------------ --------------------------------------
<S> <C>
Eugene R. Culler (57) Chairman of the Board
William P. Brophey (58) Vice Chairman of the Board,
President and Chief Executive Officer
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
NAME AND AGE POSITIONS AND OFFICES WITH THE COMPANY
------------ --------------------------------------
<S> <C>
Ronald J. Carr (51) Vice President - Finance and
Chief Financial Officer,
Secretary and Treasurer
James E. Owens (61) Vice President and General Manager -
Retail Division
Ronald P. Rumble (51) Vice President and General Manager -
Commercial Division
</TABLE>
There are no family relationships between any of the executive
officers or Directors.
Mr. Eugene R. Culler, Jr. has been employed by Goodyear for 35 years.
He has been Executive Vice President responsible for North American Tires since
April, 1995. Prior to that he was President and CEO of Goodyear's Canadian
subsidiary. He previously served as Chairman of the Board of Directors of the
Company from August, 1988 to October, 1991. He was most recently elected a
Director and Chairman of the Board of the Company on July 27, 1995.
Mr. Brophey has more than 35 years of service with the Company and
Goodyear. He held numerous field and corporate positions in wholesale, retail,
credit, sales and marketing before being promoted to General Marketing Manager,
Commercial Tire Products in 1984. Prior to that, he was Region Manager of
Goodyear's Great Lakes Region. He was elected President and Chief Executive
Officer of the Company effective October 1, 1988, and Vice Chairman of the
Board of Directors on March 10, 1994.
Mr. Carr joined the Company on May 1, 1992. He has been employed by
the Company and Goodyear for more than 25 years, most recently as Manager,
Financial Information for Goodyear's North American Tire Division (September,
1989 through April, 1992). Prior to that he held various positions in
Goodyear's General Products and Tire Divisions and at Motor Wheel Corporation,
a former Goodyear subsidiary. He was elected Vice President - Finance and
Chief Financial Officer, Secretary and Treasurer on May 1, 1992.
Mr. Owens has been employed by the Company and Goodyear for more than
40 years. Most recently, he was District Manager for Goodyear in Birmingham,
Alabama, for three years and District Manager in Atlanta, Georgia, for five
years. He was elected Vice President and General Manager-Retail Division on
February 8, 1988.
Mr. Rumble joined the Company on March 1, 1993. He has been employed
by the Company and Goodyear for more than 25 years, most recently as Marketing
Manager, Commercial Truck Tires for the Replacement Tire Division. Prior to
that, he held various positions in Goodyear's Replacement Tire, Original
Equipment and General Products Divisions. Effective March 1, 1993, he was
elected Vice President and General Manager - Commercial Division.
Officers serve for a term of one year or until their successors are
elected and qualify. The next meeting of the Board of Directors at which
officers will be elected is scheduled for May 23, 1996.
13
<PAGE> 14
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 of Form 10-K appears in the
Company's proxy statement for the 1996 Annual Meeting of Shareholders under the
caption "Executive Compensation," reference to which is hereby made, and the
information there is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 of Form 10-K appears in the
Company's proxy statement for the 1996 Annual Meeting of Shareholders under the
caption "Beneficial Ownership of Common Stock" reference to which is hereby
made, and the information there is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by Item 13 of Form 10-K appears in the
Company's proxy statement for the 1996 Annual Meeting of Shareholders under the
caption "Compensation Committee Interlocks and Insider Participation,"
reference to which is hereby made, and the information there is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The listing of financial statements and financial statement schedules
required by Item 14 of Form 10-K appears on page 11 under Item 8 of
this report. The listing of exhibits appears on the Exhibit Index.
(b) Reports on Form 8-K. None filed during the last quarter of the
fiscal year covered by this report.
(c) Exhibits Filed. See Exhibit Index.
(d) Financial Statement Schedules. See Schedule II, which follows Notes
to Financial Statements.
14
<PAGE> 15
<TABLE>
<CAPTION>
FIVE YEAR HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
BRAD RAGAN, INC.
AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA.
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1990
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES 1ST QTR $ 55,923 $ 52,417 $ 50,808 $ 48,687 $ 43,616
2ND 66,872 66,262 66,837 61,104 55,410
3RD 67,003 67,045 64,500 59,891 57,604
4TH 61,344 63,283 60,554 57,862 51,057
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 251,142 $249,007 $ 242,699 $ 227,544 $ 207,687
- ---------------------------------------------------------------------------------------------------------------------
COSTS OF PRODUCTS SOLD 1ST QTR $ 36,469 $ 33,767 $ 33,038 $ 31,203 $ 27,359
2ND 43,485 42,994 43,924 39,676 35,588
3RD 44,432 44,422 42,775 39,586 38,271
4TH 41,464 41,985 40,235 38,962 33,715
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 165,850 $163,168 $ 159,972 $ 149,427 $ 134,933
- ---------------------------------------------------------------------------------------------------------------------
SELLING, ADMINISTRATIVE AND 1ST QTR $ 18,976 $ 18,191 $ 17,672 $ 17,802 $ 17,554
GENERAL EXPENSES 2ND 20,257 20,169 19,901 19,759 18,637
3RD 20,441 20,210 19,581 19,183 19,132
4TH 20,723 20,885 19,828 19,355 20,470
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 80,397 $ 79,455 $ 76,982 $ 76,099 $ 75,793
- ---------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME 1ST QTR $ (129) $ 77 $ (333) $ (842) $ (2,051)
TAX AND EFFECT OF CHANGE IN 2ND 2,503 2,678 2,567 1,121 589
ACCOUNTING PRINCIPLE 3RD 1,477 1,914 1,723 661 (393)
4TH (1,441) (158) 110 (916) $ (3,638)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 2,410 $ 4,511 $ 4,067 $ 24 $ (5,493)
- ---------------------------------------------------------------------------------------------------------------------
PROVISION (BENEFIT) FOR 1ST QTR $ (55) $ 30 $ - $ - $ (772)
INCOME TAXES 2ND 1,031 323 - (592) 245
3RD 676 406 - (321) 242
4TH (598) (84) - $ - (51)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,054 $ 675 $ - $ (913) $ (336)
- ---------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EFFECT OF 1ST QTR $ (74) $ 47 $ (333) $ (842) $ (1,279)
CHANGE IN ACCOUNTING 2ND 1,472 2,355 2,567 1,713 344
PRINCIPLE 3RD 801 1,508 1,723 982 (635)
4TH (843) (74) 110 (916) (3,587)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,356 $3,836 $ 4,067 $ 937 $ (5,157)
- ---------------------------------------------------------------------------------------------------------------------
EFFECT OF CHANGE IN ACCOUNTING 1ST QTR $ - $ - $ 1,253 $ 909 $ -
PRINCIPLE 2ND - - - - -
3RD - - - - -
4TH - - - - -
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ - $ - $ 1,253 $ 909 $ -
- ---------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) 1ST QTR $ (74) $ 47 $ (1,586) $ (1,751) $ (1,279)
2ND 1,472 2,355 2,567 1,713 344
3RD 801 1,508 1,723 982 (635)
4TH (843) (74) 110 (916) (3,587)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,356 $3,836 $ 2,814 $ 28 $ (5,157)
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK: 1ST QTR (0.03) $ 0.02 $ (0.15) $ (0.39) $ (0.58)
INCOME (LOSS) BEFORE EFFECT 2ND 0.67 1.00 1.12 0.78 0.16
OF CHANGE IN ACCOUNTING 3RD 0.37 0.65 0.76 0.45 (0.29)
PRINCIPLE. (NOTE 1) 4TH (0.39) (0.03) 0.05 (0.42) (1.64)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 0.62 $ 1.75 $ 1.85 $ 0.42 $ (2.35)
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK: 1ST QTR $ - $ - $ (0.57) $ (0.41) $ -
EFFECT OF CHANGE IN ACCOUNTING 2ND - - - - -
PRINCIPLE. (NOTE 1) 3RD - - - - -
4TH - - - - -
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ - $ - $ (0.57) $ (0.41) $ -
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK: 1ST QTR $ (0.03) $ 0.02 $ (0.72) $ (0.80) $ (0.58)
NET INCOME (LOSS) (NOTE 1) 2ND 0.67 1.00 1.12 0.78 0.16
3RD 0.37 0.65 0.76 0.45 (0.29)
4TH (0.39) (0.03) 0.05 (0.42) (1.64)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL $ 0.62 $ 1.75 $ 1.28 $ 0.01 $ (2.35)
- ---------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER SHARE $ - $ - $ - $ - $ 0.12
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE COMMON SHARES OUTSTANDING 2,190,619 2,190,619 2,190,619 2,190,619 2,190,619
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 122,013 $ 118,823 $ 114,037 $ 109,933 $ 105,644
- ---------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT $ - $ 4 $ 17 $ 6,030 $ 12,044
- ---------------------------------------------------------------------------------------------------------------------
WORKING CAPITAL $ 41,942 $ 42,010 $ 40,231 $ 42,401 $ 48,090
- ---------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY $ 49,647 $ 48,291 $ 44,454 $ 41,640 $ 41,612
- ---------------------------------------------------------------------------------------------------------------------
BOOK VALUE PER SHARE $ 22.66 $ 22.04 $ 20.29 $ 19.01 $ 19.00
- ---------------------------------------------------------------------------------------------------------------------
THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 112 DURING THE 1993 FOURTH QUARTER, RETROACTIVE TO JANUARY 1,
1993. ACCORDINGLY, THE PREVIOUSLY REPORTED RESULTS OF THE FIRST QUARTER OF 1993 HAVE BEEN RESTATED. REFER TO NOTE 12 OF NOTES TO
FINANCIAL STATEMENTS INCLUDED IN THIS REPORT.
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
BRAD RAGAN, INC.
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA.
YEAR ENDED DECEMBER 31,
-----------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 236,975 $234,037 $227,204
MISCELLANEOUS INCOME 14,167 14,970 15,495
- ----------------------------------------------------------------------------------------------------------------
251,142 249,007 242,699
- ----------------------------------------------------------------------------------------------------------------
COST AND EXPENSES:
COST OF PRODUCTS SOLD 165,850 163,168 159,972
SELLING, ADMINISTRATIVE AND GENERAL
EXPENSES 80,397 79,455 76,982
INTEREST EXPENSE 2,485 1,873 1,678
- ----------------------------------------------------------------------------------------------------------------
248,732 244,496 238,632
- ----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES AND EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 2,410 4,511 4,067
- ----------------------------------------------------------------------------------------------------------------
PROVISION (BENEFIT) FOR INCOME TAXES 1,054 675 --
- ----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,356 3,836 4,067
- ----------------------------------------------------------------------------------------------------------------
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -- -- 1,253
- ----------------------------------------------------------------------------------------------------------------
NET INCOME 1,356 3,836 2,814
- ----------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS AT BEGINNING OF YEAR 36,929 33,093 30,279
- ----------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS AT END OF YEAR $ 38,285 $ 36,929 $ 33,093
- ----------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK:
INCOME (LOSS) BEFORE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ 0.62 $ 1.75 $ 1.85
EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE -- -- (.57)
NET INCOME (LOSS) 0.62 1.75 1.28
- ----------------------------------------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
STATEMENTS OF FINANCIAL POSITION
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
BRAD RAGAN, INC.
AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA.
- ----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1995 DECEMBER 31, 1994
ASSETS ----------------- -----------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 478 $ 240
ACCOUNTS RECEIVABLE, LESS UNEARNED INTEREST
INCOME OF $4,319 AND $4,457 AND ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $1,907 AND $1,637 68,235 71,061
INVENTORIES
MERCHANDISE 35,021 31,889
MATERIALS AND MANUFACTURING SUPPLIES 2,363 2,197
- ----------------------------------------------------------------------------------------------------------------
37,384 34,086
PREPAID EXPENSES 730 276
OTHER CURRENT ASSETS 2,581 2,208
- ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 109,408 107,871
OTHER ASSETS 3,029 3,211
PROPERTY, PLANT AND EQUIPMENT, NET 9,033 7,162
COST IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED, LESS
ACCUMULATED AMORTIZATION OF $887 AND $851 543 579
- ----------------------------------------------------------------------------------------------------------------
$ 122,013 $118,823
- ----------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
SHORT-TERM DEBT - MAJORITY SHAREHOLDER $ 25,323 $ 25,576
ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
TRADE 14,087 10,862
MAJORITY SHAREHOLDER 11,623 12,704
SALARIES, WAGES AND COMMISSIONS 7,327 7,231
TAXES, OTHER THAN INCOME 1,046 1,128
FEDERAL AND STATE TAXES ON INCOME -- 369
CURRENT PORTION OF DEFERRED REVENUE 2,499 2,315
NOTE PAYABLE - MAJORITY SHAREHOLDER 5,500 5,500
CURRENT PORTION OF OTHER LONG-TERM LIABILITIES 61 176
- ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 67,466 65,861
OTHER LONG-TERM LIABILITIES, LESS CURRENT PORTION 3,019 2,633
LONG-TERM DEFERRED REVENUE 1,881 2,038
CONTINGENCIES
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 38,285 36,929
- ----------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 49,647 48,291
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
$ 122,013 $118,823
- ----------------------------------------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOW
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
BRAD RAGAN, INC.
AMOUNTS IN THOUSANDS.
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 1,356 $ 3,836 $ 2,814
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH FROM OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,670 1,296 1,192
(GAIN) LOSS ON SALE OF PROPERTY, PLANT AND EQUIPMENT (223) (30) 103
DEFERRED TAX ASSET (291) (1,383) (1,951)
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -- -- 1,253
CHANGES IN OPERATING ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE 2,826 877 (5,338)
INVENTORY (3,298) (2,277) 1,814
PREPAID EXPENSES (454) (161) 550
ACCOUNTS PAYABLE 2,144 (721) 1,323
SALARIES, WAGES AND COMMISSIONS 97 173 (499)
TAXES, OTHER THAN INCOME TAX (82) 315 (12)
FEDERAL AND STATE TAXES ON INCOME (369) 203 (134)
DEFERRED REVENUE 27 70 469
OTHER 359 (231) (45)
--------- ------- -------
TOTAL ADJUSTMENTS 2,406 (1,869) (1,275)
--------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,762 1,967 1,539
--------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (3,689) (2,789) (1,073)
PROCEEDS FROM DISPOSALS OF PROPERTY, PLANT AND EQUIPMENT 421 138 125
--------- ------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (3,268) (2,651) (948)
--------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
LONG-TERM DEBT PAID (3) (15) (6,012)
NOTE PAYABLE - MAJORITY SHAREHOLDER -- -- (500)
OTHER LONG - TERM LIABILITIES - MAJORITY SHAREHOLDER -- -- (292)
SHORT-TERM DEBT - MAJORITY SHAREHOLDER (253) 792 5,637
--------- ------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (256) 777 (1,167)
--------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 238 93 (576)
BEGINNING CASH AND CASH EQUIVALENTS 240 147 723
--------- ------- -------
ENDING CASH AND CASH EQUIVALENTS $ 478 $ 240 $ 147
========= ======= =======
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
(Amounts in thousands except share and per share amounts)
BRAD RAGAN, INC.
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
Organization: The Company is a 75%-owned subsidiary of The Goodyear Tire &
Rubber Company ("Goodyear").
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand,
cash in banks and cash equivalents, which are highly liquid debt instruments
with maturities of less than 90 days.
Accrued Insurance Reserves: Substantial portions of liabilities related to
casualty losses, disability, workers' compensation and health care benefits are
self-insured. The expected cost of casualty and workers' compensation claims
is recognized at the time a claim is asserted and also includes an estimate of
incurred but not reported claims.
Earnings Per Share: Earnings per common share is computed by dividing net
income by the weighted average number of common and common equivalent shares
outstanding during each period. An option to acquire 650,000 shares of the
Company's common stock by Goodyear expired on November 10, 1994, and is
considered a common stock equivalent only in the periods that its inclusion,
using the treasury stock method, would have had a dilutive effect on earnings
per share.
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.
Accounts Receivable: Included in accounts receivable are amounts relating to
installment sales, which amounts are payable over periods in excess of one
year. In accordance with normal trade practice, these amounts are classified
as current assets. Gross profit on installment sales is recognized in the
year of sale, and interest income is recognized ratably over the life of the
contract.
Extended Warranty Contracts: The Company sells extended warranty contracts on
certain tires and home products. Under tire warranty contracts, the Company
provides certain services when the contract is sold. For contracts sold after
1990, the Company recognizes the portion of contract revenue attributable to
such services when the contract is sold and the services are performed; the
balance of the revenue is deferred and amortized using the straight-line method
over the life of the contracts. Revenues for all other extended warranty
contracts are deferred and amortized over the lives of the contracts.
Depreciation and Amortization: Depreciation is computed principally by the
straight-line method over the estimated useful life of each asset. Ranges of
the estimated lives used in computing depreciation and amortization are as
follows: buildings, 15 to 40 years; machinery and equipment, 3 to 10 years;
vehicles, 3 to 5 years; and leasehold improvements, over life of lease.
Amortization of Intangibles: Amortization of intangibles is computed using the
straight-line method over the estimated period benefited ranging from five to
forty years.
Location Start-Up Costs: Location start-up costs incurred during preoperation
periods are charged against current operations.
Income Taxes: The Company provides for income taxes currently payable and
records deferred income tax assets and liabilities based on the temporary
differences between financial reporting and income tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Deferred income tax assets are reduced,
if necessary, through a valuation allowance to the amount which management
believes is more likely than not to be realized.
Effect of recently issued accounting pronouncements: The Company will be
required to adopt Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," effective in the first quarter of 1996. SFAS 121
requires the recognition of impairment loss on long-lived assets, principally
property, plant and equipment and intangible assets, when facts and
circumstances indicate that impairment may exist. The Company does not believe
that adoption of SFAS 121 will have a material affect on the Company's
financial position or results of operations.
Pervasiveness of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 2: AFFILIATE TRANSACTIONS
- --------------------------------------------------------------------------------
Goodyear is the Company's principal supplier of new tires and is the Company's
majority shareholder. As one of Goodyear's largest dealers, the Company has a
continuing relationship with Goodyear that includes sales assistance,
cooperative advertising, training of
19
<PAGE> 20
employees, leasing of facilities and other matters. Purchases from Goodyear
were $63,811, $63,766 and 63,304 for the years ended December 31, 1995, 1994
and 1993, respectively. Sales to Goodyear were $9,167, $7,181 and $6,789 for
the years ended December 31, 1995, 1994 and 1993, respectively. The Company
also leases certain equipment and facilities from Goodyear. Rents paid
pursuant to such leases amounted to $1,439, $1,516 and $1,599 in 1995, 1994
and 1993, respectively.
On December 31, 1995, the Company issued a one-year $5.5 million promissory
note to Goodyear that may be renewable on December 31, 1996, depending upon
business conditions. The note represented an extension of a previous inventory
ledger balance financing arrangement dated November 30, 1989, with an
outstanding balance due on December 31, 1995, of $5.5 million. The note is
interest-bearing at 120% of the prime rate as announced by Citibank, N.A., New
York, NY, on the first day of each quarter during the term of the note.
Interest due under the note will be fully waived provided the ratio of the
Company's annual purchases of off-the-road tires from Goodyear to the average
outstanding balance of the note equals or exceeds two and one half to one
(2.5:1). Interest will be prorated if the ratio is less than 2.5:1. In 1995,
1994, and 1993 the ratio exceeded 2.5:1, and interest was fully waived.
On November 13, 1989, the Company entered into an option agreement granting
Goodyear the non-transferable right to purchase up to 650,000 additional shares
of the Company's Common Stock. Goodyear paid $162 to the Company for the
option rights. The exercise price per share was based on the higher of the
five-day average market price of the stock prior to the date of exercise or the
book value at the end of the previous fiscal quarter; but in no event higher
than $75.00 per share or lower than $25.00 per share. The option agreement
expired unexercised on November 10, 1994.
NOTE 3: MISCELLANEOUS INCOME
- --------------------------------------------------------------------------------
Miscellaneous income consisted of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Finance charge revenue $11,902 $12,919 $13,878
Delivery commissions 996 1,101 781
Interest on short-term investments 787 820 791
Other - net 482 130 45
------- ------- -------
$14,167 $14,970 $15,495
- -------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 4: ACCOUNTS RECEIVABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1995 1994
------- -------
<S> <C> <C>
Installment receivables $57,587 $60,147
Commercial receivables 15,078 15,495
All other 1,796 1,513
------- -------
74,461 77,155
Less: Unearned interest income 4,319 4,457
Allowance for doubtful accounts 1,907 1,637
------- -------
$68,235 $71,061
- ------------------------------------------------------------------------------------------------------
</TABLE>
Installment receivables are due from individuals who reside in markets served
by the Company's retail outlets. Commercial receivables are due from customers
primarily in the trucking and mining industries.
NOTE 5: INVENTORIES
- --------------------------------------------------------------------------------
Current cost exceeded the LIFO value of inventories by approximately $4,717 at
December 31, 1995, and $4,385 at December 31, 1994.
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1995 1994
------- -------
<S> <C> <C>
Land $ 585 $ 600
Buildings 4,244 4,776
Machinery and equipment 18,301 15,791
Vehicles 3,903 4,558
Leasehold improvements 3,285 3,090
------- -------
30,318 28,815
Less accumulated depreciation
and amortization 21,285 21,653
------- -------
$ 9,033 $ 7,162
- ------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
NOTE 7: LEASES
- --------------------------------------------------------------------------------
The Company uses leasing extensively for store facilities, vehicles and other
equipment. Certain facility leases have ordinary renewal options, generally
for five years at escalating rates based on the lessor's operating costs.
Total rental expense for all leases amounted to $9,756, $9,194 and $8,675 for
years ended December 31, 1995, 1994 and 1993, respectively.
At December 31, 1995, obligations to make future minimum rental payments for
all noncancellable operating leases were as follows: 1996 - $7,035; 1997 -
$5,607; 1998 - $4,246; 1999 - $2,538; 2000 - $1,255 and thereafter - $2,179.
NOTE 8: CREDIT ARRANGEMENTS
- --------------------------------------------------------------------------------
At December 31, 1995, the Company had an unsecured short-term line of credit
with Goodyear. The interest rate on the credit line is equal to the 30-day
LIBOR plus 1.5%. This rate is fixed for a 30-day period and is reset monthly.
The average month-end balance outstanding under credit line arrangements was
$31,721, $30,814, and $27,345 at an average interest rate, computed by dividing
interest expense on the credit lines by the weighted average borrowings
outstanding, of 7.5%, 5.86%, and 4.72% for the years ended December 31, 1995,
1994 and 1993, respectively. The maximum amount outstanding at any month-end
during these periods was $39,407 at July 31, 1995, $37,967 at October 31,
1994, and $36,482 at October 31, 1993. The interest rate was 7.47% at December
31, 1995, 7.56% at December 31, 1994, and 5.06% at December 31, 1993.
The Company made cash interest payments of $2,520, $1,806 and $1,747 in the
years ended December 31, 1995, 1994 and 1993, respectively.
NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS
- --------------------------------------------------------------------------------
Statement of Financial Accounting Standards No 107, "Disclosures about Fair
Value of Financial Instruments" defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties. At December 31, 1995, and 1994,
the carrying amounts of the Company's financial assets and financial
liabilities reported in the statement of financial position approximated their
fair value.
NOTE 10: RETIREMENT SAVINGS PLAN
- --------------------------------------------------------------------------------
Substantially all employees of the Company are covered by a salary deferral
thrift plan after a qualifying year of service. Company contributions to the
plan are based primarily on a matching percentage of employee deferrals and
amounted to $538 in 1995, $541 in 1994 and $537 in 1993.
NOTE 11: POSTRETIREMENT BENEFITS
- --------------------------------------------------------------------------------
The Company provides life insurance and health care benefits to certain of its
retired employees. Substantial portions of these insurance benefits are not
insured by a third party, but are paid by the Company. The Company recognizes
the cost of providing health care and other benefits to retirees over the term
of employee service.
- --------------------------------------------------------------------------------
Net periodic postretirement benefit cost for 1995, 1994 and 1993 includes the
following components:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost - benefit earned during the period $ 84 $ 96 $ 72
Interest cost on expected benefit obligation 122 114 103
Net amortization and deferrals -- 11 --
- ------------------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 206 $ 221 $ 175
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status and amounts recognized in the
Company's 1995, 1994 and 1993 Statements of Financial Position:
- --------------------------------------------------------------------------------
Actuarial present value of accumulated postretirement benefit obligation:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Retirees $ (409) $ (347) $ (456)
Vested active plan participants (586) (427) (322)
Other active plan participants (692) (602) (629)
- --------------------------------------------------------------------------------------------------------------
(1,687) (1,376) (1,407)
Plan assets -- -- --
Accumulated postretirement benefit obligation
in excess of plan assets (1,687) (1,376) (1,407)
Unrecognized net loss 253 114 303
Prior service cost not yet recognized in net
periodic postretirement benefit cost -- -- --
- --------------------------------------------------------------------------------------------------------------
Accrued and deferred postretirement benefit cost
recognized in the Statement of Financial Position $(1,434) $(1,262) $(1,104)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
An 8.5% annual rate of increase in the cost of health care benefits is assumed
in 1996. This rate gradually decreases to 5% in 2010 and remains at that level
thereafter. A 1.0% change in the assumption would have minimal impact on the
Company's accumulated postretirement benefit obligation, because, under the
terms of the plan, the retiree would assume the increased cost. The weighted
average discount rate used to determine the accumulated postretirement benefit
obligation was 7.75 for 1995, 8.5% for 1994, and 7.75% for 1993.
NOTE 12: POSTEMPLOYMENT BENEFITS
- --------------------------------------------------------------------------------
In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" ("SFAS 112"). SFAS 112 applies to benefits provided
by an employer to former or inactive employees after employment but before
retirement and requires that the costs of providing such benefits be accrued in
the period in which certain specific conditions are met. The Company adopted
SFAS 112 in the fourth quarter of 1993, retroactive to January 1, 1993.
Pursuant to the provisions of SFAS 112, the Company recognized the accumulated
postemployment benefit obligation at January 1, 1993, as a one-time charge of
$1,253 ($.57 per share) in the first quarter of 1993. This amount was recorded
as the effect of change in accounting principle.
NOTE 13: ADVERTISING
- --------------------------------------------------------------------------------
The Company expenses the production cost of advertising the first time the
advertising takes place, except for direct-response advertising, which is
capitalized and amortized over its expected period of future benefits.
Direct response advertising consists primarily of coupon books for the
Company's products and services. The capitalized costs of the advertising are
amortized over the period during which the coupons are valid.
At December 31, 1995, $86 of advertising was reported as assets. Advertising
expense was $3,076, $3,172, and $3,568 in 1995, 1994 and 1993, respectively.
NOTE 14: INCOME TAXES
- --------------------------------------------------------------------------------
Pretax income from continuing operations has been taxed by various domestic
federal and state authorities. Sales subject to foreign taxation are not
material.
The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Year Ended December 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current Tax Expense (Benefit)
- -----------------------------
Federal $1,085 $ 1,827 $ 1,756
State 259 230 300
------ ------- --------
Total current tax expense $1,344 $ 2,057 $ 2,056
- --------------------------------------------------------------------------------------------
Deferred Tax Expense (Benefit)
- ------------------------------
Federal $ (241) $(1,148) $(1,711)
State (49) (234) (345)
------- ------- ------
Total deferred tax expense (benefit) $ (290) $(1,382) $(2,056)
------- -------- -------
Total provision (benefit) $1,054 $ 675 $ --
- --------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
A reconciliation between the provision (benefit) for income taxes and the
amount of income tax computed by applying the statutory federal income tax
rate to pretax income from continuing operations is as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
------ -------- ------
<S> <C> <C> <C>
Computed tax provision (benefit) - Statutory rate $ 819 $ 1,534 $1,383
State income taxes 104 194 174
Non-deductible items 86 95 47
Change in valuation allowance -- (1,192) (979)
Tax effect of Adoption of FAS 112 -- -- (480)
Other - net 45 44 (145)
------ -------- ------
$1,054 $ 675 $ --
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The income tax payments, net of any refunds, were $2,166, $1,860 and $1,802 for
the years ended December 31, 1995, 1994 and 1993, respectively.
Upon applying the "more likely than not" asset realization criteria prescribed
in SFAS 109, the valuation allowance of $1,192 at December 31, 1993, was
reduced to zero as of December 31, 1994. Since that time there has been
sufficient positive evidence to support recognition of net deferred assets and
a valuation allowance has not been required. A net deferred tax asset of
$4,838 and $4,547 was recorded at December 31, 1995 and 1994, respectively. The
realization of the net deferred asset value is dependent upon the generation of
taxable income in future periods.
Deferred tax assets (liabilities) are comprised of the following at December 31,
<TABLE>
- --------------------------------------------------------------------------------------------------
<Caption
1995 1994
---- ----
<S> <C> <C>
Deferred Tax Assets
- -------------------
Bad debt reserve $ 730 $ 627
Accrued vacation pay 290 289
Insurance reserve - general liability 893 773
Insurance reserve - medical & dental 323 315
Deferred warranty revenue 1,677 1,667
SFAS 106 - Accrued postretirement cost other than pensions 549 483
SFAS 112 - Accrued postemployment benefits 463 480
Other - net 349 204
------ ------
Gross deferred tax assets $5,274 $4,838
------ ------
Deferred Tax Liabilities
- ------------------------
Depreciation $ (433) $ (227)
Other (3) (64)
------ ------
Gross deferred tax liabilities $ (436) $ (291)
------ ------
Net deferred tax assets $4,838 $4,547
- --------------------------------------------------------------------------------------------------
</TABLE>
NOTE 15: CONTINGENCIES
- --------------------------------------------------------------------------------
The Company is a defendant in two legal proceedings related to certain
installment credit sales transactions. These proceedings are both purported
class actions and include several defendants. These actions both allege that
the defendants, in charging certain fees in connection with financing
transactions in-lieu of making filings under the Uniform Commercial Code,
violated certain federal and state statutes and consumer protection laws. The
plaintiffs are seeking statutory damages, unspecified punitive damages and
other remedies. The Company is defending these actions, which are both in
preliminary discovery stages. It is not possible at this time to determine the
extent, if any, to which the Company may be liable or to reasonably estimate
the amount of any possible liability. In the event of an
23
<PAGE> 24
adverse final determination in these cases, the Company's financial position or
results of operations for the period in which such determination occurs could
be materially affected.
The Company is a defendant in a number of other legal actions generally
incidental to the normal course of business. It is management's opinion, after
consulting with legal counsel, that it is not reasonably possible that the
amount of loss, if any, that may ultimately arise upon the resolution of such
actions will have a material effect on the Company's financial position or
results of operations. However, in the event of an unanticipated adverse final
determination in respect of certain matters, the Company's financial position
or results of operations for the period in which such determination occurs,
could be materially affected.
The Company elected to purchase only catastrophe insurance and is partially
self-insured for casualty losses. Self insurance retentions for workers'
compensation are up to the statutory benefit for individual states, general
liability and automobile liability up to $3,000 and product liability up to
$7,000.
NOTE 16: BUSINESS SEGMENT INFORMATION
- --------------------------------------------------------------------------------
Brad Ragan, Inc.'s business is functionally divided into two segments,
commercial operations and retail operations. Commercial operations include the
sale of new tires and the manufacture and sale of retreaded off-the-road,
over-the-highway and farm and industrial tires. Retail stores distribute
tires, major brand appliances, consumer electronics and power equipment and
offer automotive repair services. Identifiable assets, depreciation expense and
capital expenditures by segment include both items directly identified with
those operations and an allocable share of jointly used assets. Intersegment
sales and transfers for each of the three years presented are immaterial and,
therefore, have not been separately reported.
<TABLE>
<CAPTION>
Commercial Retail
------------------------------ -----------------------------
Year Ended December 31 Year Ended December 31
------------------------------ -----------------------------
1995 1994 1993 1995 1994 1993
------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $144,018 $140,943 $133,182 $92,957 $93,094 $94,022
Miscellaneous income - net 1,259 979 715 12,756 13,816 14,722
Cost of products sold 106,728 103,562 98,034 59,122 59,606 61,938
Selling, administrative
and general expenses 36,591 35,823 33,157 43,571 43,385 43,604
Operating profit 1,958 2,537 2,706 3,020 3,919 3,202
Identifiable assets 46,827 43,515 36,238 75,185 75,308 77,799
Capital expenditures 2,075 1,889 679 1,545 900 394
Depreciation expense 978 730 673 564 414 368
- --------------------------------------------------------------------------------------------------------------
Corporate revenues, net $ 151 $ 175 $ 58
Corporate operating profit (loss) (83) (72) (163)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 25
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
BRAD RAGAN, INC.
Amounts in thousands.
<TABLE>
<CAPTION>
Additions
Balance at Beginning Charged to Costs Balance at End
Description of Period & Expenses Deductions of Period
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 1995 $1,637 $1,737 $1,467(A) $1,907
Year ended December 31, 1994 $1,672 $1,601 $1,636(A) $1,637
Year ended December 31, 1993 $1,425 $1,508 $1,261(A) $1,672
</TABLE>
(A) Uncollected accounts charged to allowance, less recoveries of accounts
previously written off.
25
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Brad Ragan, Inc.
In our opinion, the financial statements listed in the index appearing under
Item 8 present fairly, in all material respects, the financial position of Brad
Ragan, Inc. at December 31, 1995, and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
During 1993, the Company changed its method of accounting for postemployment
benefits, effective January 1, 1993, as described in Note 12 of Notes to
Financial Statements.
PRICE WATERHOUSE LLP
Charlotte, North Carolina
January 27, 1996
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 24, 1995
By: /s/ W. P. Brophey
------------------------------
W. P. Brophey
Vice Chairman of the Board,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME AND SIGNATURE POSITION(S) DATE
- ------------------ ----------- ----
<S> <C> <C>
/s/ EUGENE R. CULLER Chairman of the Board March 18, 1996
- -------------------------------
Eugene R. Culler
/s/ WILLIAM P. BROPHEY Vice Chairman of the Board, March 18, 1996
- ------------------------------- President and Chief Executive
WILLIAM P. BROPHEY Officer
/s/ RONALD J. CARR Vice President - Finance March 18, 1996
- ------------------------------- and Chief Financial Officer,
RONALD J. CARR Secretary, Treasurer and a
Director
/s/ CHARLES A. BETHEL, JR. Director March 18, 1996
- ------------------------------
CHARLES A. BETHEL, JR.
/s/ RICHARD D. PEARSON Director March 18, 1996
- ------------------------------
RICHARD D. PEARSON
/s/ RICHARD E. SORENSEN Director March 18, 1996
- ------------------------------
RICHARD E. SORENSEN
</TABLE>
27
<PAGE> 28
EXHIBIT INDEX
to
Annual Report on Form 10-K of Brad Ragan, Inc., for
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Restated articles of incorporation of Brad Ragan, Inc., as last amended May 25, 1988
(incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1988).
3.2 Bylaws of Brad Ragan, Inc., as last amended October 25, 1990 (incorporated by reference
to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
4.1 Form of Certificate of the Company's Common Stock ($1 par value) (incorporated by
reference to Exhibit 4(a) to the Company's Registration Statement on Form S-1,
Registration No. 2-38082).
10.1 Performance Recognition Plan of The Goodyear Tire & Rubber Company, effective January 1,
1995, which the Company has adopted for its officers (excluding the Chairman of the Board)
and other selected key employees. (Incorporated by reference to the exhibit of the same
number contained in the Company's Annual Report on Form 10-K for the year ended December
31, 1994)
10.2 The Goodyear Tire & Rubber Company Retirement Benefit Plan For Employees With Service
With Designated Subsidiaries, effective November 1, 1994, which the Company has adopted
for its officers (excluding the Chairman of the Board) and other selected key employees
is filed as a part of this report. (Incorporated by reference to the exhibit of the same
number contained in the Company's Annual Report on Form 10-K for the year ended December
31, 1994)
27 Financial Data Schedule (for SEC use only)
</TABLE>
28
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BRAD RAGAN, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 478
<SECURITIES> 0
<RECEIVABLES> 68,235
<ALLOWANCES> 1,907
<INVENTORY> 37,384
<CURRENT-ASSETS> 109,408
<PP&E> 9,033
<DEPRECIATION> 21,285
<TOTAL-ASSETS> 122,013
<CURRENT-LIABILITIES> 67,466
<BONDS> 0
0
0
<COMMON> 2,191
<OTHER-SE> 47,456
<TOTAL-LIABILITY-AND-EQUITY> 122,013
<SALES> 236,975
<TOTAL-REVENUES> 251,142
<CGS> 165,850
<TOTAL-COSTS> 246,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,737
<INTEREST-EXPENSE> 2,485
<INCOME-PRETAX> 2,410
<INCOME-TAX> 1,054
<INCOME-CONTINUING> 1,356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,356
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
