UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
                          Washington, D.C. 20549 
                                 Form 10-Q 
                                      
 
{x} Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
    Act of 1934 
 
For the Quarter Ended January 27, 1996 
 
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities        
   Exchange Act of 1934 
 
For the transition period from                     to                       
 
Commission file number 1-85-78 
 
                                 McRae Industries, Inc.                         
             (Exact name of registrant as specified in its charter) 
 
           Delaware                                  56-0706710                
(State or other jurisdiction of           (I.R.S. Employer Identification No.) 
 incorporated or organization) 
 
402 North Main Street 
Mt. Gilead, North Carolina                                   27306              
 (Address of principal                                    (Zip Code)            
  executive offices)  
                                   (910) 439-6147                               
              (Reqistrant's telephone number, including area code) 
 
                                   Not Applicable                               
         (Former name, address and fiscal year,if changed since last report) 
 
 
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 (or for such shorter periods that the registrant 
was required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days. Yes  X  No     
 
Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practical date. 
 
Common Stock, Sl Par Value--Class A 1,780,187 shares as of February 23, 1996 
Common Stock, $1 Par Value--Class B 951,213 shares as of February 23, 1996 
 
 
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Part I. Financial Information 
 
McRae Industries, Inc. and Subsidiaries  
 
Consolidated Balance Sheets 
Amounts in thousands, except share and per share data                           
                           
                                         January 27, 1996       July 29, 1995  
Assets                                     (Unaudited)               (Note)    
Current assets: 
 Cash and cash equivalents                    $  1,034               $   628 
 Securities                                      1,999                 3,244 
 Accounts and notes receivable,net               5,956                 5,860 
 Inventories                                     7,659                 7,273 
 Net investment in capitalized leases              927                   944 
 Prepaid expenses and other current assets         289                   352 
   Total current assets                         17,864                18,301 
Property, plant and equipment,net                4,633                 4,541 
Other assets: 
 Notes and accounts receivable,related entities  2,347                 2,287 
 Net investment in capitalized leases            1,848                 1,690 
 Notes receivable                                  865                   903 
 Real estate held for investment                   470                   426 
 Goodwill                                          688                   708 
 Other                                             901                   727 
                                                 7,119                 6,741 
                                               $29,616               $29,583 
Liabilities and Shareholders' Equity 
 
Current liabilities: 
 Accounts payable                             $  2,044               $ 1,897 
 Accrued employee benefits                       1,152                 1,301 
 Deferred revenues                               1,276                 1,335 
 Accrued payroll and payroll taxes                 521                   595 
 Income taxes                                      297                   353 
 Other                                             407                   514 
   Total current liabilities                     5,697                 5,995 
Minority Interest                                  786                   919 
Shareholders' Equity: 
 Common stock: 
  Class "A", $1 par; Authorized 5,000,000 
    shares; Issued and outstanding, 1,783,087 
    and 1,778,573, shares;respectively           1,783                 1,778 
  Class "B", $1 par, Authorized 2,500,000 
     shares; Issued and outstanding 948,313 
     and 952,637 shares, respectively              948                   953 
  Treasury Stock                                   (17) 
  Additional Paid-in Capital                       676                   676 
  Retained Earnings                             19,743                19,262 
                                                23,133                22,669 
                                               $29,616               $29,583 
      
Note - The balance sheet at July 29, 1995 has been derived from the audited 
financial statements at that date but does not include all of the information 
and footnotes required by generally accepted accounting principles for complete 
financial statements. 
 
See notes to quarterly financial statements. 
 
 
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McRae Industries, Inc. and Subsidiaries 
                                      
Condensed Consolidated Statements of Operations - (Unaudited) 
Amounts in thousands, except share and per share data 
                                                      
          
                                   Three Months Ended        Six Months Ended 
                                   Jan 27,    Jan 28,       Jan 27,    Jan 28,  
                                    1996       1995          1996       1995   
Net revenues                      $10,142    $10,041       $20,554     $19,817  
 Costs and expenses: 
  Cost of revenues                  6,935      6,754        14,278      13,384 
  Selling and administrative        2,582      2,458         5,118       4,869 
  Other income, net                  (125)      (114)         (200)       (204) 
Total costs and expenses            9,392      9,098        19,196      18,049  
Earnings before income taxes 
   and minority interest              750        943         1,358       1,768 
Provision for income taxes            287        377           516         698 
Minority shareholder's interest                     
  in earnings of subsidiary            14         33            49          70 
Net earninqs                       $  449      $ 533        $  793      $1,000 
 
Net earnings per Common Share      $  .16      $ .20        $  .29      $  .37  
 
Weighted average number of Common 
   Shares Outstanding           2,729,375  2,729,210     2,730,144   2,729,210 
 
See notes to quarterly financial statements. 
 
 
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McRae Industries, Inc and Subsidiaries 
 
Condensed Consolidated Statements of Cash Flows - (Unaudited) 
Amounts in thousands 
 
                                                          Six Months Ended      
                                                     January 27,    January 28, 
                                                         1996           1995    
 
Net cash provided by operating activities              $  197        $   815 
 
Cash flows from investing activities: 
  Proceeds from (purchase of) securities                1,245            (37)   
  Capital expenditures                                  ( 423)          (873) 
  Net (advances) payments of long term receivables      (  99)           (27) 
  Purchase of subsidiary,net of cash acquired             -0-           (601) 
  Purchase of minority interests                        ( 186)           -0- 
    Net cash provided by (used in)investing activities    537         (1,538) 
 
Cash flows from financing activities: 
  Principal repayments of notes payable                   -0-         (  444) 
  Purchase Treasury Stock                               (  17)           -0- 
  Dividends paid                                        ( 311)        (  290) 
    Net cash used in financing activities               ( 328)        (  734)  
Net increase (decrease) in cash and cash equivalents      406         (1,457) 
Cash and Cash Equivalents at Beginning of Period          628          6,542  
Cash and Cash Equivalents at End of Period             $1,034         $5,085  
 
See notes to quarterly financial statements. 
 
 
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McRae Industries, Inc. and Subsidiaries 
 
Notes to Quarterly Financial Statements - (Unaudited) 
 
January 27, 1996 
 
Note A - Basis of Presentation 
 
The accompanying unaudited consolidated financial statements have been prepared 
in accordance with generally accepted accounting principles for interim 
financial information and with the instructions to Form 10-Q and Article 10 
Regulation S-X. Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements. In the opinion of management, all adjustments (consisting 
of normal recurring accruals) considered necessary for a fair presentation have 
been included. Operating results for the three and six months ended January 27, 
1996 are not necessarily indicative of the results that may be expected for the 
year ended August 3, 1996. For further information, refer to the consolidated 
financial statements and footnotes thereto included in the McRae Industries, 
Inc. annual report on Form 10-K for the year ended July 29, 1995. 
 
Certain reclassifications have been made to the prior year's financial 
statements to conform with the current year's presentation. 
 
Note B - Inventories 
 
An actual valuation of inventory under the LIFO method can be made only at the 
end of each year based on the inventory levels and costs at that time. 
Accordingly, interim LIFO calculations must necessarily be based on management's
estimates of expected year-end inventory levels and costs. Because these are 
subject to many forces beyond management's control, interim calculations, if 
any, are subject to the final year-end LIFO inventory valuation. 
 
The components of inventory consist of the following (in thousands): 
 
 
                                      January 27,         July 29, 
                                        1996                1995     
 
Raw materials                         $ 1,190               $ 1,093 
Work in process                           371                   444 
Finished goods                          6,098                 5,736 
                                      $ 7,659               $ 7,273 
 
 
 
Note C - Dividends Declared 
 
On February 21, 1996, the Company declared a cash dividend of 8.75 cents per 
share on its Class A Common Stock, payable to shareholders of record of March 8,
1996 on March 29, 1996. 
 
 
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McRae Industries, Inc and Subsidiaries 
 
Management's Discussion and Analysis of Financial Condition and Results of 
Operations 
 
Financial Condition 
 
The financial condition of the Company continues to be strong as demonstrated by
the amount of cash, cash equivalents and securities at January 27, 1996 with 
sufficient amounts of working capital to meet the future anticipated financing 
needs of the Company. The Company's financing needs continue to be met by 
internally generated funds which enabled the Company to pay dividends of 
$311,000 and to fund capital expenditures of $423,000 during the first two\ 
quarters. The Company continues to have available an aggregate maximum of $3.75 
million under its credit lines with various banks, all of which is available as 
of January 27, 1996. 
 
Cash, cash equivalents and securities are down approximately $839,000 since July
29, 1995. This decrease is caused primarily by the increases in other working 
capital items, additions to fixed assets, and the payment of dividends. The 
receivables in our Footwear unit increased approximately $1,215,000 because of 
a Government slow down in payments. McRae Graphics' inventories continue to 
increase to meet the demands of its customers. 
 
 
Second Quarter Fiscal 1996 Compared to Second Quarter Fiscal 1995 
 
Consolidated revenues for the second quarter of 1996 increased $101,000 to 
$10,142,000 compared to $10,041,000 for the same quarter in 1995.  Footwear and 
McRae Graphics' revenues increased 18% and 4%, respectively, while Compsee's 
revenues decreased 11% during the second quarter of 1996 as compared to the 
second quarter of 1995. 
 
The gross profit percentage rate declined slightly to 32% compared to 33% for 
the second quarter of 1995 principally caused by the lower margins at Compsee 
and McRae Graphics.  Compsee's margins are decreasing because of increased 
competitive pressures on selling prices while McRae Graphics' decrease is being 
caused by increased service costs and decreases in gross profits for equipment 
and supplies. 
 
Selling and administrative expenses for the second quarter of 1996 increased 
$124,000 to $2,582,000 compared to the same quarter in 1995. 
 
The effective tax rate for the second quarter of 1996 was 38% as compared to 40%
for the second quarter of 1995. 
 
 
 
First Six Months Fiscal 1996 Compared to First Six Months Fiscal 1995 
 
Consolidated revenues for the first six months of fiscal 1996 exceeded last 
year's first six months by $737,000 or 4%. All three major operating units 
increased revenues over last year's first six months. The decrease in the gross 
profit percentage for the first six months of 1996 was caused principally by 
decreases in Compsee and McRae Graphics profit margins.  
 
 
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Part II. Other Information 
 
McRae Industries, Inc. and Subsidiaries 
 
Item 1. Legal Proceedings 
          None 
 
Item 2. Changes in Securities  
          None 
 
Item 3. Defaults upon Senior Securities 
          None 
 
Item 4. Submission of Matters to a Vote of Security Holders  
          None 
 
Item 5. Other Information 
          None 
 
Item 6. Exhibits and Reports on Form 8-K 
       (a) Exhibits 
            None 
       (b) Reports on Form 8-K 
            The Company did not file any reports on Form 8-K 
             during the six months ended January 27, 1996. 
 
 
<PAGE> 
 
 
                                      
McRae Industries, Inc. and Subsidiaries 
 
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 
undersigned thereunto duly authorized. 
 
 
                                                  McRae Industries, Inc. 
                                                  (Registrant) 
 
Date:  March 7, 1996                              By: /s/ B. J. McRae     
                                                  B.J. McRae 
                                                  President 
                                                  (Principal Executive Officer) 
Date:  March 7, 1996      
                                                  By: /s/ David K. Helms        
 
                                                  David K. Helms 
                                                  Vice President-Finance 
                                                  (Principal Financial Officer) 
 
 
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