McRae Industries, Inc. Earnings Report For 2003 Fiscal Year Ended August 2, 2003
October 31 2003 - 4:30PM
PR Newswire (US)
McRae Industries, Inc. Earnings Report For 2003 Fiscal Year Ended
August 2, 2003 MOUNT GILEAD, N.C., Oct. 31 /PRNewswire-FirstCall/
-- McRae Industries, Inc. reported consolidated net revenues for
fiscal 2003 of $77,042,000 as compared to consolidated net revenues
of $74,531,000 for fiscal 2002. Net earnings for fiscal 2003 were
$2,477,000 or $.89 per share as compared to $2,585,000 or $.93 per
share for fiscal 2002. Consolidated net revenues for the fourth
quarter of fiscal 2003 were $21,190,000 as compared to $20,778,000
reported for the fourth quarter of fiscal 2002. Consolidated net
earnings amounted to $998,000 or $.36 per share for the fourth
quarter of fiscal 2003 as compared to a $854,000 or $.31 per share
for the fourth quarter of fiscal 2002. The 17% improvement in
operating performance for the fourth quarter of fiscal 2003 was
primarily attributable to the increased requirements for military
combat boots by the U.S. Government as a result of various
conflicts related to the war on terrorism. The other primary
business units partially offset this increase in operating
performance due to the decreased demand for western boots as a
result of the slow moving retail market, reduced office equipment
sales in county-wide educational systems, and a depressed bar code
market. Consolidated net revenues for fiscal 2003 totaled $77.0
million, an increase of 3.4% over $74.5 million for fiscal 2002.
This growth in consolidated net revenues was the result of
significantly higher requirements for military boots by the U.S.
Government and increased sales of our branded western boot
products. Lower net revenues in the bar code and office products
businesses partially offset the increases of the footwear
businesses resulting primarily from a depressed bar code market and
reduced office equipment sales to countywide educational systems.
Consolidated net earnings fell slightly from $2.6 million for
fiscal 2002 to $2.5 million for fiscal 2003. This decline in net
earnings was primarily the result of reduced gross profit margins
caused primarily by lower sales prices, higher per unit
manufacturing, changing product sales mixes, and depressed market
conditions. Selling, general and administrative expenses increased
approximately 2.5% for fiscal 2003 as a result of higher selling
expenses, advertising and marketing expenditures, group health
insurance costs, and professional fees. For fiscal 2003, we
operated under several extensions of our contract with the
Government dated April 15, 1997. The Government issued two
solicitations for future boot requirements to replace the original
contract that was set to expire on April 15, 2002. One solicitation
covered the three current direct molded sole (DMS) styles of
military combat boots, including the standard issue all-leather
combat boot that has historically accounted for the majority of the
Government's orders under the contract. The second solicitation
covered the newly adopted infantry combat boot, which incorporated
a waterproof membrane construction. This boot replaced the previous
all-leather boot as the Army's standard issue combat boot. We
submitted bids for both solicitations. On March 11, 2003, we were
advised that we did not win a contract to produce the new infantry
combat boot. On September 30, 2003, the Government notified us that
we had been awarded a new contract (the Contract) to produce direct
molded sole military combat boots. The Contract covers a base year
and two one-year option periods. The Contract base year provides
for a minimum boot requirement of 135,102 pair and a maximum boot
requirement of 544,778 pair with a minimum and maximum dollar value
of approximately $7.4 million and $30.1 million, respectively. The
first year option provides for a minimum and a maximum boot
requirement of 276,460 pair and 1,077,522 pair, respectively. The
second year option ranges from a minimum of 236,460 pair to a
maximum of 852,552 pair. Fiscal 2003 military boots sales to the
Government were $15.7 million. Therefore, if in the first year of
the Contract the Government were only to order the minimum number
of boots covered by the Contract, our fiscal 2004 military boot
sales would be significantly lower than fiscal 2003 sales. Based on
current order volume we expect the Government to order
significantly more than the minimum during the first year of the
Contract. 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 and Section 21E of the
Exchange Act. 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), loss of key
customers, acquisitions, supply interruptions, additional financing
requirements, loss of key management personnel, our ability to
successfully develop new products and services, our expectations
about future Government orders for military boots, and the effect
of general economic conditions in our markets. McRae Industries,
Inc. Condensed and Consolidated Statements of Income Fourth Quarter
of Fiscal 2003 For the Three and Twelve Months Ended August 2, 2003
and August 3, 2002 Three Months Ended Twelve Months Ended August 2,
August 3, August 2, August 3, 2003 2002 2003 2002 Net Revenues $
21,190,000 $20,778,000 $77,042,000 $74,531,000 Earnings before
income taxes $ 1,809,000 $ 1,457,000 $ 4,108,000 $ 4,267,000 Income
taxes provision $ 813,000 $ 607,000 $ 1,640,000 $ 1,693,000
Minority shareholder's interest $ (2,000) $ (4,000) $ (9,000) $
(11,000) Net earnings $ 998,000 $ 854,000 $ 2,477,000 $ 2,585,000
Net earnings per common share $ .36 $ .31 $ .89 $ .93 Weighted
average number of common shares outstanding 2,768,499 2,768,499
2,768,499 2,768,499 DATASOURCE: McRae Industries, Inc. CONTACT: D.
Gary McRae of McRae Industries, Inc., +1-910-439-6147
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