McRae Industries, Inc. Announces Completion of Review of Financial Statements for the Fiscal Year Ended July 31, 2004 and Earnin
December 23 2004 - 4:22PM
PR Newswire (US)
McRae Industries, Inc. Announces Completion of Review of Financial
Statements for the Fiscal Year Ended July 31, 2004 and Earnings
Report for the First Quarter of Fiscal 2005 Ended October 30, 2004
MOUNT GILEAD, N.C., Dec. 23 /PRNewswire-FirstCall/ -- McRae
Industries, Inc. (Amex: MRIA; MRIB) announced today that it had
completed its review of its financial statements for the fiscal
year ended July 31, 2004 and had amended its Annual Report on Form
10-K for the fiscal year ended July 31, 2004 previously filed with
the Securities and Exchange Commission to restate its fiscal 2004
financial statements. The company previously announced that it was
conducting a review of its previously reported financial statements
for the fiscal year ended July 31, 2004 as a result of clerical
errors in the calculation of inventory discovered by management at
the company's military boot unit, that the company's previously
reported financial statements for the fiscal year ended July 31,
2004 should no longer be relied upon pending the outcome of the
review and that following the completion of the review the company
would amend its Annual Report on Form 10-K for the fiscal year
ended July 31, 2004 to restate its previously reported fiscal 2004
financial statements. Consistent with the preliminary review
results announced by the company on December 20, 2004, the
company's completed review indicates that its inventory was
overstated and the related cost of revenues was understated by
approximately $929,000 for the fiscal year ended July 31, 2004. As
a result, the company's net earnings from continuing operations
were approximately $3,206,000 for the fiscal year ended July 31,
2004, as opposed to net earnings from continuing operations of
$3,740,000 as previously reported in the company's Form 10-K filed
on October 29, 2004. The company further announced that it had
filed its Form 10-Q for the first quarter of fiscal 2005 which had
been delayed pending completion of the review of its financial
statements for the fiscal year ended July 31, 2004 and the filing
of the Form 10-K/A to restate the Company's previously reported
fiscal 2004 financial statements. The company reported consolidated
net revenues from continuing operations for the first quarter of
fiscal 2005 of $20,434,000, an increase of 27.5% over consolidated
net revenues from continuing operations of $16,023,000 reported for
the first quarter of fiscal 2004. Consolidated net earnings from
continuing operations for the first quarter of 2005 amounted to
$807,000, or $.29 per share, compared to consolidated net earnings
from continuing operations of $823,000, or $.29 per share for the
first quarter of fiscal 2004. On September 9, 2004, the company
entered into a definitive agreement under which it sold
substantially all the assets of its McRae Office Solutions, Inc.
subsidiary to Connected Office Products, Inc. (COPI). COPI is a
subsidiary of TOPAC U.S.A., Inc., which is headquartered in Irvine,
California, and operates a network of wholly owned subsidiaries
involved in the sales, service, and distribution of office
products. Under the terms of the Asset Purchase Agreement, COPI
purchased substantially all of the assets of McRae Office
Solutions, Inc. for $11,000,000 subject to adjustment based on the
net book value of the acquired assets as of August 28, 2004. Based
on the company's post-closing calculation of the net book value of
the acquired assets, the company expects an approximately $206,000
reduction in the purchase price. The purchaser is in the process of
reviewing the calculation of this adjustment and it is subject to
change depending on the parties' final agreement on the amount of
the adjustment. Based in part on the company's current estimate of
the purchase price adjustment, net earnings from discontinued
operations for the first quarter of fiscal 2005 amounted to
$1,906,000, or $.69 per share, as compared to a net loss from
discontinued operations for the first quarter of fiscal 2004 of
$261,000, or $.09 per share. Consolidated net revenues from
continuing operations for the first quarter of fiscal 2005 totaled
$20.4 million as compared to $16.0 million for the first quarter of
fiscal 2004. This increase in net revenues was primarily
attributable to the continued high demand for military combat boots
for the U.S. Government and improved sales in the bar code and
western and work boot business. Consolidated gross profit from
continuing operations for fiscal 2005 increased to $4.6 million
over the $4.0 million reported in fiscal 2004. This growth in gross
profit was primarily the result of higher net revenues and higher
margins on imported western and work boots. Selling, general and
administrative expenses from continuing operations increased from
$2.4 million for the first quarter of fiscal 2004 to $3.1 million
for the first quarter of fiscal 2005 primarily as a result of
higher sales commissions, group health insurance costs, and
professional fees associated primarily with compliance costs
incurred to assess and improve the company's internal control over
financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002 and related SEC rules. DATASOURCE: McRae
Industries, Inc. CONTACT: D. Gary McRae of McRae Industries, Inc.,
+1-910-439-6147 Web site: http://www.mcraeindustries.com/
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