McRae Industries, Inc. Reports Earnings for Second Quarter of Fiscal 2004 MOUNT GILEAD, N.C., March 16 /PRNewswire-FirstCall/ -- McRae Industries, Inc. (Amex: MRIA; MRIB) reported consolidated net revenues for the second quarter of fiscal 2004 of $19,427,000 as compared to $17,611,000 for the second quarter of fiscal 2003. Net loss for the second quarter of fiscal 2004 amounted to $14,000, or less than $.01 per share, as compared to net earnings of $372,000, or $.14 per share, for the same period of fiscal 2003. The 10% increase in consolidated net revenues for the second quarter of fiscal 2004 as compared to the second quarter of fiscal 2003 was primarily the result of increased military boot requirements for the U.S. Government (the "Government") and slight market improvement for bar code products. The increase in military boot and bar code sales was partially offset by reduced demand for western and work boots. The decline in consolidated net earnings for the second quarter of fiscal 2004 was the result of higher military boot manufacturing costs, lower selling prices for military boots, and increased research and development costs. In addition, the second quarter of fiscal 2003 net earnings included a $314,000 gain from the sale of ourmotel property. Consolidated net revenues for the first six months of fiscal 2004 amounted to $40,823,000 as compared to $37,408,000 for the first six months of fiscal 2003. This increase in net revenues was primarily attributable to higher military boot requirements by the Government that was partially offset by lower sales of western and work boots and lower selling prices for military boots. Consolidated net earnings fell from $911,000 for the first six months of fiscal 2003 to $548,000 for the first six months of fiscal 2004. This decrease in net earnings was primarily attributable to lower profit margins resulting from higher military boot manufacturing costs and lower military boot selling prices, increased research and development costs, and higher administrative costs for health insurance, professional fees and bad debt write-offs. As noted above, the gain on the sale of the motel property recorded in the second quarter of fiscal 2003 also accounted for $314,000 of the decline in net earnings. McRae Industries, Inc. Condensed and Consolidated Statements of Income Second Quarter of Fiscal 2004 For the Six Months Ended January 31, 2004and February 1, 2003 and (In thousands, except share and per share data) Three Months Ended Six Months Ended January 31, February 1, January 31, February 1, 2004 2003 2004 2003 Net revenues $19,427 $17,611 $40,823 $37,408 Earnings before income taxes $(22) $601 $840 $1,481 Income taxes provision (benefit) $(5) $232 $297 $574 Minority shareholder's interest $(3) $(3) $(5) $(4) Net earnings $(14) $372 $548 $911 Net earnings per common share $.00 $.14 $.20 $.33 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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