-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HdSmwb1w8BA3Irt5JEzmQLMNDZe6LikHweHJJn6fevkyizPLKTeu4LGtFHAu6vFb jpOwrPukL5bRkAViqtbzdg== 0000077326-98-000007.txt : 19980626 0000077326-98-000007.hdr.sgml : 19980626 ACCESSION NUMBER: 0000077326-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980529 FILED AS OF DATE: 19980625 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENOBSCOT SHOE CO CENTRAL INDEX KEY: 0000077326 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 010139580 STATE OF INCORPORATION: ME FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05548 FILM NUMBER: 98653654 BUSINESS ADDRESS: STREET 1: 450 NORTH MAIN ST CITY: OLD TOWN STATE: ME ZIP: 04468 BUSINESS PHONE: 2078274431 MAIL ADDRESS: STREET 1: PENOBSCOT SHOE CO STREET 2: P O BOX 545 CITY: OLD TOWN STATE: ME ZIP: 04468 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended May 29, 1998 Commission File No. 1-5548 Penobscot Shoe Company (Exact name of registrant as specified in its charter) Maine (State or other jurisdiction of incorporation or organization) 01-0139580 (IRS Employer identification no.) 450 North Main Street, Old Town Maine (Address of principal executive offices) 04468 (Zip code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Registrant's telephone number, including area code: (207) 827-4431 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, and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ Common stock of 1,374,991 shares, $1 par value, was outstanding at May 29, 1998. PENOBSCOT SHOE COMPANY CONDENSED BALANCE SHEET (In thousands)
May 29, 1998 November 28, 1997 (Unaudited) (Note (a)) CURRENT ASSETS: Cash & Cash Equivalents $ 1,097 $ 403 Marketable Securities 3,463 3,457 Accounts receivable 3,238 3,753 Inventories (Note 2) 4,043 4,283 Other current assets 478 382 _______ _______ TOTAL CURRENT ASSETS $12,319 $12,278 PROPERTY AND EQUIPMENT, AT COST: Buildings $ 1,437 $ 1,437 All Other 489 474 Less accumulated depreciation and amortization 1,671 1,618 _______ _______ NET PROPERTY AND EQUIPMENT $ 254 $ 293 _______ _______ TOTAL ASSETS $12,573 $12,571 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 1,086 $ 597 Notes payable 0 750 Other current liabilities 366 431 _______ _______ TOTAL CURRENT LIABILITIES $ 1,452 $ 1,778 DEFERRED INCOME TAXES $ 109 $ 109 SHAREHOLDERS' EQUITY: Common stock, $1 par value: authorized 2,000,000 shares: issued 1,533,042 $ 1,533 $ 1,533 Capital in excess of par value 1,109 1,109 Retained earnings 8,735 8,392 Add net unrealized gain on available-for-sale securities 495 449 Less treasury stock at cost 158,051 and 148,051 shares 859 799 NET SHAREHOLDERS' EQUITY _______ _______ (Note 3) $11,012 $10,684 TOTAL LIABILITIES AND SHARE- _______ _______ HOLDERS' EQUITY $12,573 $12,571 ======= ======= Note: (a) The balance sheet at November 27, 1998, has been derived from the audited financial statements at that date. See notes to the condensed financial statements.
PENOBSCOT SHOE COMPANY STATEMENT OF INCOME (In thousands, except per share amounts) (Unaudited)
For the For the Second Quarter Ended Six Months Ended May 29 May 30 May 29 May 30 1998 1997 1998 1997 Net Sales $4,236 $2,439 $9,020 $6,541 Cost and operating expenses: Cost of sales 2,933 1,594 6,106 4,367 Selling and administrative expenses 1,111 984 2,380 2,130 _______ _______ _______ _______ Operating income 192 (140) 534 44 Other income 27 45 265 107 _______ _______ _______ _______ Income before income taxes 219 (95) 799 151 Income taxes 86 (40) 319 57 _______ _______ _______ _______ Net income $ 133 $ (55) $ 481 $ 94 ======= ======= ======= ======= Earnings Per Share: Basic $0.10 $(0.04) $0.35 $0.07 Diluted $0.10 $(0.04) $0.35 $0.07 Cash dividends per share 0.05 0.05 0.10 0.10 Average number of common shares outstanding 1,374,991 1,388,864 1,375,433 1,391,989 See notes to the condensed financial statements.
PENOBSCOT SHOE COMPANY STATEMENT OF CASH FLOWS For Six Months Ended May 29, 1998 and May 30, 1997 (In thousands)
1998 1997 Cash flows from operating activities: Net cash provided by operating activities $ 905 $ 996 Cash flows from investing activities: Proceeds from sale of assets 0 0 Capital expenditures (14) (170) _______ _______ Net cash (used) by investing activities (14) (170) Cash flows from financing activities: Dividends paid (137) (139) Purchase of treasury stock (60) (44) Net cash (used) by _______ _______ financing activities (197) (183) Net increase in _______ _______ cash and cash equivalents 694 643 Cash and cash equivalent at beginning of period 403 548 Cash and cash equivalent at _______ _______ end of period $ 1,097 $ 1,191 ======= ======= Supplemental Disclosure of Cash Flow Information Cash paid during the period for: Interest $ 17 $ 0 Income taxes 535 384
PENOBSCOT SHOE COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. CONDENSED FINANCIAL STATEMENTS The condensed balance sheet as of May 29, 1998, the statements of income for the second quarter ended May 29, 1998 and May 30, 1997, and the condensed statements of cash flows for the six-month periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments, which include normal recurring adjustments, have been made to present fairly the financial position, results of operations, and cash flows at May 29, 1998 and for the other periods presented. The results of operations for the period ended May 29, 1998 are not necessarily indicative of operating results for the full year. 2. INVENTORIES Inventories are summarized as follows (in thousands):
5/29/98 11/28/97 5/30/97 FIFO Cost: finished shoes $4,315 $4,386 $4,156 raw materials 21 15 17 _______ _______ _______ $4,336 $4,401 $4,173 Excess of FIFO cost over LIFO inventory value (293) (117) (140) _______ _______ _______ $4,043 $4,283 $4,033 ======= ======= =======
The Company uses the LIFO method because it more realistically reflects operating results by charging current costs against current revenues. 3. SHAREHOLDERS' EQUITY During the six months ended May 29, 1998, shareholders' equity changed due to the net income of $481,000, dividends declared of $137,000, purchases of treasury stock of $60,000 and a $46,000 increase in the net unrealized gain an available-for-sale securities held by the Company. 4. EARNINGS PER SHARE The weighted average number of shares outstanding used to compute basic earnings per share were 1,374,991 and 1,388,864 for the quarter ended May 29, 1998 and May 30, 1997, respectively, and for computing diluted earnings per share were 1,386,011 and 1,400,930 for the same respective periods. For the six months year-to-date ended May 29, 1998 and May 30, 1997, the shares used to compute basic earnings per share were 1,375,433 and 1,391,989 and for diluted earnings per share were 1,385,562 and 1,404,561, respectively. Basic earnings per share are calculated based on the weighted average number of shares outstanding. Diluted earnings per share are calculated based on the same number of shares plus additional shares representing stock distributable under stock-based plans computed using the treasury stock method. The implememtation of Statement of Accounting Standards No. 128 "Earnings per Share" did not have a material impact on the financial statements. PENOBSCOT SHOE COMPANY MANAGEMENT DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS Forward Looking Statements: This report contains certain forward looking statements regarding the Company. The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and in that regard is cautioning the readers of this report that a number of important risk factors could affect the Company's actual results of operations and may cause changes in the Company's strategy with the result that the Company's operations and results may differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. These risk factors include, among others, general economic and market conditions, the rate of growth in the footwear market and consumer acceptance of the Company's product line, and the risk factors that are discussed from time-to-time in the Company's SEC reports, including, but not limited to, the report on Form 10-Q for the quarter ended May 29, 1998. Liquidity and Capital Resources: At May 29, 1998, Penobscot Shoe Company had working capital of approximately $10,868,000 versus approximately $10,499,000 at November 28, 1997, an increase of $369,000. 8.55.2 to 1, compared to 6.9 to 1, at November 28, 1997. The statement of cash flows for the six months ended May 29, 1998, shows an increase of $694,000 in cash and cash equivalents since November 28, 1997. The Company's operations provided $905,000 since November 28, 1997, including net income of $481,000 and ordinary fluctuations in various current asset and liability accounts. The fluctuations included an increase in accounts payable, and decreases in inventory and accounts receivable, all mainly as a result of timing. The Company's quarterly dividend amounted to a use of $137,000 during the period. The Company used $14,000 for purchases of capital equipment and used $60,000 to purchase treasury stock. Management believes that Penobscot Shoe Company remains financially well structured to consider a variety of financing options should the need arise and will make choices depending on economic conditions at the time. Options available include conversion of marketable securities held by the Company into cash and cash equivalents. The Company also has an established line of credit with a major bank available for direct borrowing at the prime rate minus 1.5% should the need arise. Results of Operations: Net sales for the second quarter ended May 29, 1998, were $4,236,000, up 74% from $2,439,000 last year. Net income for the current quarter $133,000, or $.10 per share, compared to the net loss of $55,000, or $.04 per share incurred in the second quarter last year. Net income in the second quarter last year benefited from a LIFO gain of approximately $41,000, or $.03 per share. The current year had no such LIFO gain. For the six-months year-to-date, net sales were $9,020,000, up 38% from $6,541,000 a year ago. Net income for the year-to-date period was $481,000, or $.35 per share, versus $94,000, or $.07 per share last year. In the first six months last year, net income included LIFO gains totaling approximately $157,000, or $.11 per share. The current year-to-date period did not benefit from any LIFO gain. For the six months year-to-date periods, gains from the sales of securities amounted to approximately $125,000, or $.09 per share in 1998, and $6,000, or less than $.01 per share in 1997. The increase in sales versus last year was due to the continued success of our Spring '98 line at retail. At-once orders for the collection are double those of the corresponding period in 1997. The sales growth was a result of volume and not due to an increase in average selling price. Currently, advance bookings of Fall '98 merchandise to be delivered in the second half of the year are slightly ahead of last year. Cost of sales was 69.2% in the second quarter compared to 65.4% in the same period last year, resulting in gross profit margins of 30.8% and 34.6% in the 1998 and 1997 quarters respectively. During the second quarter last year a LIFO liquidation gain of $69,000, pre-tax, benefited margins. Without that LIFO gain, the gross profit margin in the second quarter of 1997 would have been 31.8%. No LIFO gains have been realized in the current quarter. Selling and administrative costs in the second quarter were approximatley $127,000 higher that last year. Approximatley 66% of this increase was based on costs variable on sales volume. The balance of the higher costs reflects investment in new sales and marketing efforts. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K have been filed during the last quarter of the period covered by this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the under- signed thereunto duly authorized. Penobscot Shoe Company _________________________ (Registrant) Date: June 22, 1998 Paul Hansen _________________________ By: Paul Hansen President and Chief Executive Officer Date: June 22, 1998 David L. Keane _________________________ By: David L. Keane Vice President/Finance and Administration EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 1ST QTR 10-Q
5 1000 6-MOS NOV-27-1998 MAY-29-1998 1,097 3,463 3,744 (506) 4,043 12,319 1,925 1,671 12,573 1,452 0 1,533 0 0 9,589 12,573 9,020 9,020 6,106 8,486 (265) 0 17 799 319 481 0 0 0 481 .35 .35
-----END PRIVACY-ENHANCED MESSAGE-----