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 February 23, 1996
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 1,482,117 shares, $1 par value, was outstanding at
February 23, 1996
PENOBSCOT SHOE COMPANY
CONDENSED BALANCE SHEET
(In thousands)
February 23, 1996 November 24, 1995
(Unaudited) (Note (a))
CURRENT ASSETS:
Cash & Cash Equivalents $ 962 $1,301
Marketable Securities 3,273 3,271
Refundable income taxes - -
Accounts receivable 3,773 3,492
Inventories (Note 2) 3,289 3,054
Other current assets 382 341
_______ _______
TOTAL CURRENT ASSETS $11,678 $11,459
PROPERTY AND EQUIPMENT, AT COST:
Buildings $1,412 $1,413
All Other 1,627 1,617
Less accumulated depreciation
and amortization 2,687 2,660
_______ _______
NET PROPERTY AND EQUIPMENT $352 $369
_______ _______
TOTAL ASSETS $12,030 $11,828
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $824 $791
Other current liabilities 557 496
_______ _______
TOTAL CURRENT LIABILITIES $1,381 $1,287
DEFERRED INCOME TAXES $146 $146
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 7,817 7,667
Add net unrealized gain on
available-for-sale securities
(Note (b)) 313 356
Less treasury stock at cost
50,925 shares; 270 270
NET SHAREHOLDERS' EQUITY _______ _______
(Note 3) $10,502 $10,395
TOTAL LIABILITIES AND SHARE- _______ _______
HOLDERS' EQUITY $12,030 $11,828
======= =======
<FN>
Note: (a) The balance sheet at November 24, 1995, has been derived from
the audited financial statements at that date.
(b) The Company adopted Statement of Accounting Standard No. 115
"Accounting for Certain Investments in Debt and Equity Securities"
effective November 26, 1994.
See notes to the condensed financial statements.
PENOBSCOT SHOE COMPANY
STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
For the
Three Months Ended
February February
23, 1996 24, 1995
Net Sales $4,225 $3,120
Cost and operating expenses:
Cost of sales 2,840 2,066
Selling and administrative
expenses 1,150 1,085
_______ _______
Operating income (loss) 235 (32)
Other income 138 53
_______ _______
Income before income taxes 373 21
Income taxes 149 7
_______ _______
Net income $224 $ 14
======= =======
Per Common Share:
Net income $0.15 $0.01
Dividends 0.05 0.05
Average number of common shares
outstanding 1,482,117 1,482,117
<FN>
See notes to the condensed financial statements.
PENOBSCOT SHOE COMPANY
STATEMENT OF CASH FLOWS
For Three Months Ended February 23, 1996 and February 24, 1995
(In thousands)
1996 1995
Cash flows from operating
activities:
Net cash provided (used) by
operating activities $ (255) $1,181
Cash flows from investing
activities:
Proceeds from sale of assets 0 0
Capital expenditures (10) (3)
_______ _______
Net cash provided (used) by
investing activities (10) (3)
Cash flows from financing activities:
Dividends paid (74) (74)
Purchase of treasury stock 0 0
Net cash provided (used) by _______ _______
financing activities (74) (74)
Net increase (decrease) in _______ _______
cash and cash equivalents (339) 1,103
Cash and cash equivalent at
beginning of period 1,301 1,308
Cash and cash equivalent at _______ _______
end of period $ 962 $ 2,411
======= =======
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $0 $0
Income taxes 119 16
PENOBSCOT SHOE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of February 23, 1996, the statements of
income for the first quarter ended February 23, 1996 and February 24, 1995,
and the condensed statements of cash flows for the nine-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 February 23, 1996 and for the other periods
presented. The results of operations for the period ended February 23, 1996
are not necessarily indicative of operating results for the full year.
2. INVENTORIES
Inventories are summarized as follows (in thousands):
2/23/96 11/24/95 2/24/95
FIFO Cost:
finished shoes $3,809 $3,355 $3,345
shoes in process 40 22 32
raw materials 205 232 382
_______ _______ _______
$4,054 $3,609 $3,759
Excess of FIFO cost over
LIFO inventory value (765) (555) (980)
_______ _______ _______
$3,289 $3,054 $2,779
======= ======= =======
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 three months ended February 23, 1996, shareholders' equity
changed due to the net income of $224,000, dividends declared of $74,000 and a
decrease of $43,000 resulting from a decrease in the net unrealized gain on
available-for-sale securities held by the Company. Effective November 26,
1994, the Company adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities",
necessitating the inclusion of this net unrealized gain on the balance sheet.
PENOBSCOT SHOE COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS
Liquidity and Capital Resources:
At February 23, 1996, Penobscot Shoe Company had working capital of
approximately $10,297,000 versus approximately $10,172,000 at November
24, 1995, an increase of $125,000. The ratio of current assets to current
liabilities at February 23, 1996, was 8.5 to 1, compared to 8.9 to 1, at
November 24, 1995.
The statement of cash flows for the three months ended February 23, 1996,
shows a decrease of $339,000 in cash and cash equivalents since November
24, 1995. The Company's operations used $255,000 since November 24,
1995, primarily due to seasonal fluctuations in inventory. The Company's
quarterly dividend amounted to a use of $74,000 during the period and
capital expenditures for equipment amounted to a further use of $10,000
during the period.
The increases in the Company's inventory, accounts receivable, other
current assets and other current liabilities since November 24, 1995, were
the result of ordinary fluctuations.
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 should the
need arise.
Results of Operations:
Net sales for the first quarter ended February 23, 1996, were $4,225,000,
up 35% from $3,120,000 in the same quarter last year. Net income for the
current quarter was $224,000, or $.15 per share, compared to $14,000, or
$.01 per share, a year ago. The current quarter's net income benefited
from gains on the sales of securities which contributed $48,000, or $.03 per
share. The first quarter last year had no such gains.
The increase in net sales in the first quarter resulted from the
combination of a strong winter boot season and earlier shipments of some
spring merchandise. While the retail environment has recently shown some
improvement, the first quarter sales and profit increases should not
necessarily be considered indicative of future results.
Selling and administrative expenses were approximately 6% higher
than a year ago. This increase was the result of costs which are variable
on sales volume.
Other income in the first quarter of 1996 was $138,000, pre-tax,
compared to $53,000 in the same quarter last year. The current quarter
benefited from gains on the sales of securities which totalled $80,000,
pre-tax, while the first quarter of last year included no such gains.
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: April 4, 1996 Paul Hansen
_________________________
By: Paul Hansen
President and
Chief Executive Officer
Date: April 4, 1996 David L. Keane
_________________________
By: David L. Keane
Vice President/Finance and
Administration