McRae Industries, Inc. Reports Earnings for Third Quarter of Fiscal 2005
June 14 2005 - 5:45PM
PR Newswire (US)
McRae Industries, Inc. Reports Earnings for Third Quarter of Fiscal
2005 MOUNT GILEAD, N.C., June 14 /PRNewswire-FirstCall/ -- McRae
Industries, Inc. (Amex: MRIA; MRIB) reported consolidated net
revenues from continuing operations for the third quarter of fiscal
2005 of $12,768,000, as compared to $17,585,000 for the third
quarter of fiscal 2004. Net earnings for the third quarter of
fiscal 2005 amounted to $124,000, or $.05 per share, as compared to
net earnings of $790,000, or $.28 per share, for the same period of
fiscal 2004. The 27.3% decrease in consolidated net revenues from
continuing operations was primarily due to reduced military boot
requirements for the U.S. Government (the "Government") as in the
first quarter of fiscal 2005 the Government moved from "surge"
levels to their normal contract levels. Currently we expect these
lower levels to continue through at least December 31, 2005. The
western and work boot business partially offset the decline in
military footwear as net revenues increased 17% on strong demand
for western and work products related to current fashion trends and
market consolidation. Consolidated net earnings from continuing
operations for the third quarter of fiscal 2005 amounted to
$143,000, as compared to $478,000 for the third quarter of fiscal
2004 primarily attributable to lower net revenues and higher
selling and administrative costs. Discontinued operations related
to our office products business contributed to the lower net
earnings as earnings fell from $312,000 for the third quarter
fiscal 2004 to a net loss of $19,000 for the third quarter of
fiscal 2005. Consolidated net revenues from continuing operations
for the first nine months of fiscal 2005 totaled $48.7 million as
compared to $48.5 million for the first nine months of fiscal 2004.
This increase in net revenues resulted primarily from the continued
strong demand for western and work boot products and slightly
improved performance of the bar code business. Net earnings for the
first nine months of fiscal 2005, which included $2,174,000 of
estimated gain, net of income tax expense, on the sale of the
office products business, amounted to $3,319,000, or $1.20 per
share, as compared to $1,338,000, or $.48 per share for the first
nine months of fiscal 2004. Net earnings from continuing operations
were $1.4 million for the first nine months of both fiscal 2005 and
2004. Net earnings from discontinued operations amounted to $1.9
million for the first nine months of fiscal 2005, as compared to a
net loss of $90,000 for the same period of fiscal 2004. In May
2005, the Company negotiated the terms of an asset purchase
agreement providing for the purchase by the Company of certain
trademarks and other assets from Texas Boot, Inc. Texas Boot is
currently operating as a debtor-in-possession in a case under
Chapter 11 of the United States Bankruptcy Code. Under the terms of
the asset purchase agreement, the Company would acquire Texas
Boot's trademarks (including the marks Laredo, J. Chisolm, Code
West and Performair), its outstanding accounts receivable and
certain inventory for approximately $1.175 million plus an amount
equal to 75% of the gross book value of the acquired accounts
receivable. The asset purchase is subject to higher and better
offers at auction, which, if competing bids are received, will be
conducted on June 23, 2005. The Bankruptcy Court will then consider
approval of the asset sale to the Company or the successful bidder
at the auction at a hearing scheduled for June 24, 2005. There is
no assurance that the asset purchase agreement will be approved or
that we will be successful in obtaining these assets. On June 10,
2005, our Board of Directors approved a 1-for-200 reverse stock
split, to be followed immediately by a 200-for-1 forward stock
split, of the outstanding shares of both classes of our common
stock (Class A and Class B). If the transaction is approved by the
Company's stockholders and implemented, the Company expects to have
fewer than 300 stockholders of record of each class of its common
stock, in which event the Company intends to have its shares
delisted from the American Stock Exchange and to deregister its
shares and cease to be a reporting company under the Securities
Exchange Act of 1934. Pursuant to the transaction, stockholders
holding fewer than 200 shares of the Company's common stock of a
particular class immediately before the transaction would have such
shares cancelled and converted into the right to receive from the
Company a cash payment of $14.25 for each such share owned before
the reverse stock split. Stockholders holding 200 or more shares of
the Company's common stock of a particular class immediately before
the transaction would continue to hold the same number of shares of
that class after completion of the transaction and would not
receive any cash payment for their shares of that class. The Board
of Directors created a Special Committee of non-employee,
independent directors to review the proposed transaction. The
Special Committee received an opinion from its financial advisor,
Oxford Advisors, LLC, that the cash consideration to be paid in the
proposed transaction is fair, from a financial point of view, to
the Company's stockholders. The proposed transaction is subject to
approval by the holders of a majority of the issued and outstanding
shares of each class of the Company's common stock. Stockholders
will be asked to approve the transaction at a special meeting of
stockholders, currently expected to be held in August 2005. Even if
the stockholders approve the transaction, the Board of Directors
reserves the right to defer or not to implement the transaction. In
addition to historical information, this Press Release includes
certain forward-looking statements as such term is defined in
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. 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 proposed reverse/forward stock split
transaction and subsequent termination of SEC registration are each
subject to various conditions and may not occur; 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), loss of key customers,
possible asset acquisitions and distributions, supply
interruptions, additional financing requirements, 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. Condensed and
Consolidated Statements of Income Third Quarter of Fiscal 2005 For
the Nine Months Ended April 30, 2005 and May 1, 2004 Three Months
Ended Nine Months Ended April 30, 2005 May 1, 2004 April 30, 2005
May 1, 2004 Net revenues from continuing operations $12,768 $17,585
$48,726 $48,504 Earnings from continuing operations before income
taxes 220 761 2,162 2,250 Income taxes provision 77 283 728 827
Minority shareholder's interest - - - (5) Net earnings from
continuing operations 143 478 1,434 1,428 Earnings (loss) from
discontinued operations, net of income tax (19) 312 1,885 (90) Net
earnings $124 $790 $3,319 $1,338 Net earnings (loss) per common
share: Continuing operations $ .06 $.17 $.52 $ .51 Discontinued
operations (.01) .11 .68 (.03) Net earnings per common share $ .05
$.28 $1.20 $ .48 Weighted average number of common shares
outstanding 2,768,499 2,768,499 2,768,499 2,768,499 DATASOURCE:
McRae Industries, Inc. CONTACT: Gary McRae, President of McRae
Industries, Inc., +1-910-439-6147 Web site:
http://www.mcraeindustries.com/
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