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McRae Industries, Inc. Reports Earnings for the First Quarter of Fiscal 2012

MOUNT GILEAD, N.C., Dec. 15, 2011 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MRINA and MRINB) reported consolidated net revenues for the first quarter of fiscal 2012 of $20,195,000 as compared to $19,740,000 for the first quarter of fiscal 2011. Net earnings for the first quarter of fiscal 2012 amounted to $1,379,000, or $.63 per diluted Class A common share as compared to net earnings of $1,281,000, or $.59 per diluted Class A common share, for the first quarter of fiscal 2011. 

FIRST QUARTER FISCAL 2012 COMPARED TO FIRST QUARTER FISCAL 2011

Consolidated net revenues totaled $20.2 million for the first quarter of fiscal 2012 as compared to $19.7 million for the first quarter of fiscal 2010. Sales related to our western/lifestyle boot products grew nearly 12.6%, up from $12.5 million for the first quarter of fiscal 2011 to $14.1 million for the first quarter of fiscal 2012, as demand for these products remained strong. Revenues from our work boot products fell approximately 14.2%, from $7.1 million for the first quarter of fiscal 2011 to $6.1 million for the first quarter of fiscal 2012, primarily the result of continued economic weakness in the construction industry and reduced military boot requirements for the U. S. Government. We believe that these market attributes will continue for the foreseeable future.  

Consolidated gross profit for the first quarter of fiscal 2012 amounted to approximately $6.4 million as compared to $6.2 million for the first quarter of fiscal 2011. The growth in gross profit was primarily attributable to the increase in net revenues.

Consolidated selling, general and administrative ("SG&A") expenses totaled approximately $4.2 million for the first quarter of fiscal 2012 as compared to $4.1 million for the first quarter of fiscal 2011. This slight increase in SG&A expenses resulted primarily from increased expenditures for sales related compensation, office and warehouse rentals and employee benefit costs that were partially offset by reduced expenditures for travel, sales promotion and administrative salaries.

As a result of the above, the consolidated operating profit for the first quarter of fiscal 2012 amounted to $2.2 million as compared to $2.1 million for the first quarter of fiscal 2011.

Financial Condition and Liquidity

Our financial condition remained strong at October 29, 2011 as cash and cash equivalents totaled $8.7 million as compared to $10.3 million at July 30, 2011. Our working capital amounted to $36.5 million at October 29, 2011 as compared to $32.8 million at July 30, 2011.

We currently have two lines of credit with a bank totaling $6.75 million, all of which was fully available at October 29, 2011. One credit line totaling $1.75 million (which is restricted to one hundred percent of the outstanding receivables due from the Government) expires in January 2012. The $5.0 million line of credit, which expires in March 2012, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.

We believe that our current cash and cash equivalents, cash generated from operations, and available credit lines will be sufficient to meet our capital requirements for the remainder of fiscal 2012.

Net cash used by operating activities for the first quarter of fiscal 2012 amounted to $1.3 million. Net earnings, as adjusted for depreciation, contributed approximately $1.5 million of cash. Accounts and notes receivable used approximately $4.2 million of cash as strong first quarter sales, primarily attributable to the western and work boot business, outpaced customer payments. Decreased inventory levels, primarily in our western/ work boot business, provided approximately $100,000 of cash.  The timing of payments for inventory purchases and    employee benefits provided approximately $900,000 of cash. The payment of accrued sales commissions used approximately $400,000 of cash. The timing of income tax payments provided approximately $851,000 of cash.

Net cash used by investing activities totaled approximately $60,000, primarily for manufacturing, office and computer equipment.

Net cash used in financing activities totaled $184,000, which was used for dividend payments.

FORWARD-LOOKING STATEMENTS

This press release includes certain forward-looking statements. Important factors that could cause actual results or events to differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements include: the effect of competitive products and pricing, risks unique to selling goods to the Government (including variation in the Government's requirements for our products and the Government's ability to terminate its contracts with vendors), changes in fashion cycles and trends in the western boot business, loss of key customers, acquisitions, supply interruptions, additional financing requirements, our expectations about future Government orders for military boots, loss of key management personnel, our ability to successfully develop new products and services, and the effect of general economic conditions in our markets.

McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

 

 

October 29, 2011

 

July 30, 2011

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$ 8,706

 

$ 10,274

Accounts and notes receivable, net

15,204

 

10,981

Inventories, net

18,506

 

18,611

Income tax receivable

0

 

631

Prepaid expenses and other current assets

307

 

176

Total current assets

42,723

 

40,673

 

 

 

 

Property and equipment, net

2,955

 

3,042

 

 

 

 

 

 

 

 

Other assets:

 

 

 

Real estate held for investment

3,650

 

3,650

   Amount due from split-dollar life insurance

2,288

 

2,288

Trademarks

2,824

 

2,824

Total other assets

8,762

 

8,762

 

 

 

 

           Total assets

$54,440

 

$52,477

 

 

McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

 

 

October 29, 2011

 

July 30, 2011

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

     Accounts payable

$ 3,299

 

$ 2,755

 

 

 

 

     Accrued employee benefits

1,182

 

851

 

 

 

 

     Accrued payroll and payroll taxes

724

 

1,087

 

 

 

 

     Accrued income tax

192

 

0

 

 

 

 

     Other accrued liabilities

819

 

755

 

 

 

 

          Total current liabilities

6,216

 

5,448

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

     Common Stock:

 

 

 

 

 

 

 

     Class A, $1 par; Authorized 5,000,000 shares; Issued

        and outstanding, 2,047,746 shares and 2,046,337 shares,               

        respectively

2,048

 

2,046

 

 

 

 

     Class B, $1 par; Authorized 2,500,000 shares; Issued

        and outstanding, 419,184 shares and 420,593 shares,             

        respectively

419

 

421

 

 

 

 

     Retained earnings

45,757

 

44,562

 

 

 

 

          Total shareholders' equity

48,224

 

47,029

 

 

 

 

               Total liabilities and shareholders' equity

$54,440

 

$52,477

 

 

 

 

 

 

 

 

 

McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(In thousands, except share and per share data)
(Unaudited)

 

 

Three Months Ended

 

October 29, 2011

 

October 30, 2010

 

 

 

 

Net revenues

$20,195

 

$19,740

   Cost of revenues

13,799

 

13,584

         Gross profit

6,396

 

6,156

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

   Selling, general and administrative expenses

4,178

 

4,062

 

 

 

 

   Other expense (income), net

(43)

 

(36)

 

 

 

 

   Interest expense

0

 

0

 

 

 

 

Total costs and expenses

4,135

 

4,026

 

 

 

 

Earnings before income taxes

2,261

 

2,130

 

 

 

 

Provision for income taxes

882

 

849

 

 

 

 

Net earnings

$1,379

 

$1,281

 

 

 

 

Earnings per common share:

 

 

 

     Basic earnings per share:

 

 

 

        Class A

$.76

 

$.71

        Class B

0

 

0

     Diluted earnings per share:

 

 

 

        Class A

.63

 

.59

        Class B

NA

 

NA

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

       Class A

2,047,460

 

2,055,690

       Class B

419,470

 

427,571

             Total

2,466,930

 

2,483,261


                                                          

 

McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 

 

 

Three Months Ended

 

October 29, 2011

 

October 30, 2010

 

 

 

 

Net cash used in by operating activities

$ (1,324)

 

$ (2,801)

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

     Proceeds from sales of assets

1

 

2

 

 

 

 

     Land improvements

0

 

(171)

 

 

 

 

     Capital expenditures

(61)

 

(48)

 

 

 

 

Net cash used in by investing activities

(60)

 

(217)

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

     Dividends paid

(184)

 

(185)

 

 

 

 

Net cash used in financing activities

(184)

 

(185)

 

 

 

 

Net decrease in cash and cash equivalents

(1,568)

 

(3,203)

 

 

 

 

Cash and cash equivalents at beginning of period

10,274

 

9,948

 

 

 

 

Cash and cash equivalents at end of period

$ 8,706

 

$ 6,745

 

SOURCE McRae Industries, Inc.



RELATED LINKS
http://www.mcraeindustries.com

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