SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995 Commission File No 1-4506
GARAN, INCORPORATED
(Exact name of registrant as specified in its charter)
VIRGINIA 13-5665557
(State of Incorporation) (I.R.S. Employer Identification No.)
350 Fifth Avenue, New York, NY 10118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 563-2000
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 period than 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 close of the period covered by this
report.
Class Outstanding June 30, 1995
Common Stock (no par value) 5,069,892 shares
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PART I. - FINANCIAL INFORMATION
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
6/30/95 6/30/94
__________________ __________________
<S> <C> <C>
Net sales $ 33,040,000 $ 35,407,000
Cost of sales 25,948,000 27,705,000
____________ ____________
Gross margin on sales 7,092,000 7,702,000
Selling and administrative expenses 5,429,000 6,558,000
Interest on capitalized leases 35,000 37,000
Interest income (674,000) (342,000)
_____________ _____________
Earnings before provision
for income taxes 2,302,000 1,449,000
Provision for income taxes 898,000 565,000
____________ ____________
Net earnings $ 1,404,000 $ 884,000
Earnings per share data:
Earnings per share $ 0.28 $ 0.17
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.20 $ 0.20
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
6/30/95 6/30/94
__________________ __________________
<S> <C> <C>
Net sales $100,088,000 $117,640,000
Cost of sales 79,004,000 87,853,000
____________ ____________
Gross margin on sales 21,084,000 29,787,000
Selling and administrative expenses 17,060,000 20,207,000
Interest on capitalized leases 104,000 114,000
Interest income (1,946,000) (1,098,000)
_____________ _____________
Earnings before provision
for income taxes 5,866,000 10,564,000
Provision for income taxes 2,288,000 4,120,000
____________ ____________
Net earnings $ 3,578,000 $ 6,444,000
Earnings per share data:
Earnings per share $ 0.71 $ 1.27
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.80 $ 1.60
</TABLE>
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
6/30/95 9/30/94
_____________ _____________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,170,000 $ 7,664,000
U.S. Government securities - short-term 18,822,000 20,559,000
Accounts receivable, less estimated
uncollectibles of $514,000 at
6/30/95 and $507,000 at 9/30/94 21,232,000 39,707,000
Inventories 34,719,000 27,881,000
Other current assets 2,835,000 3,085,000
_____________ _____________
Total current assets 81,778,000 98,896,000
U.S. Government Securities - long-term 13,025,000 0
Property, plant and equipment, less
accumulated depreciation and amortization 14,910,000 15,544,000
Other assets 1,858,000 2,607,000
_____________ _____________
TOTAL $ 111,571,000 $ 117,047,000
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 5,119,000 $ 6,546,000
Accrued liabilities 6,379,000 9,531,000
Federal and state income taxes payable 850,000 813,000
Current portion of capitalized leases 143,000 151,000
_____________ _____________
Total current liabilities 12,491,000 17,041,000
_____________ _____________
Capitalized lease obligations, net of
current portion 3,102,000 3,620,000
_____________ _____________
Deferred income taxes 2,560,000 2,490,000
_____________ _____________
Shareholders' Equity:
Preferred stock ($10 par value) 500,000
shares authorized; none issued
Common stock (no par value) 15,000,000
shares authorized; 5,069,892 issued at
6/30/95 and 9/30/94 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 85,062,000 85,540,000
_____________ _____________
Total shareholders' equity 93,418,000 93,896,000
_____________ _____________
TOTAL $ 111,571,000 $ 117,047,000
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GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
6/30/95 6/30/94
_____________ _____________
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 3,578,000 $ 6,444,000
Non cash items included in earnings:
Depreciation and amortization 2,681,000 2,726,000
Provision for losses on accounts receivable 93,000 122,000
Deferred income taxes 70,000 (127,000)
Changes in assets and liabilities:
U.S. Government Securities - short-term (13,301,000) 0
Accounts receivable 18,382,000 15,357,000
Inventories (6,838,000) (8,773,000)
Other current assets 250,000 (1,127,000)
Accounts payable (1,427,000) 1,753,000
Accrued liabilities (3,372,000) (2,888,000)
Income taxes payable 37,000 (1,125,000)
Other assets 749,000 479,000
______________ ______________
Net Cash Flows From Operating Activities 902,000 12,841,000
______________ ______________
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 3,000,000 20,925,000
Purchase of U.S. Gov't securities - long-term (987,000) (20,645,000)
Additions to property plant and equipment (2,192,000) (2,287,000)
Proceeds from sales of property,
plant and equipment 365,000 72,000
______________ ______________
Net Cash Flows From Investing Activities 186,000 (1,935,000)
______________ ______________
Cash Flows From Financing Activities:
Payment of dividends (4,056,000) (8,112,000)
Repayment of capitalized lease obligations (526,000) (817,000)
______________ ______________
Net Cash Flows From Financing Activities (4,582,000) (8,929,000)
______________ ______________
Decrease in Cash and Cash Equivalents (3,494,000) 1,977,000
Cash and Cash Equivalents At Beginning
of Period 7,664,000 3,802,000
______________ ______________
Cash and Cash Equivalents At End of Period $ 4,170,000 $ 5,779,000
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 104,000 $ 114,000
Income taxes 1,597,000 6,037,000
</TABLE>
<PAGE>
GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
(UNAUDITED)
1. In the opinion of management, all adjustments necessary to a fair
statement of the results of operations have been reflected.
2. Earnings per share are calculated on the basis of the weighted average
number of common shares outstanding during the period.
3. Inventories consist of the following:
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<CAPTION>
6/30/95 09/30/94
____________ ____________
<S> <C> <C>
Raw Materials $ 6,285,000 $ 7,135,000
Work in process 9,508,000 10,735,000
Finished Goods 18,926,000 10,011,000
____________ ____________
$ 34,719,000 $ 27,881,000
</TABLE>
4. Effective October 1, 1994, the registrant adopted Statement of
Financial Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" (SFAS 115), which requires that the registrant's
investments be designated as trading (Current Assets) or held-to-maturity
(Non-Current Assets). Trading securities are reported at fair value, with
changes in fair value reported in earnings. Held-to-maturity debt securities
are reported at amortized cost. In accordance with SFAS 115, prior years'
financial statements have not been restated to reflect the change in accounting
method. There was no cumulative effect as a result of adopting SFAS 115.
<PAGE>
ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At June 30, 1995, working capital was $69,287,000, a decrease of
$12,568,000 from September 30, 1994. As noted in footnote 4, effective for
the 1995 fiscal year the registrant adopted Statement of Financial
Accounting Standards No. 115. SFAS 115 requires that investments
held to maturity be classified as long term. As such, $13,025,000 of
investments have been reclassified as long term and transferred from working
capital. In accordance with SFAS 115, prior years financial statements have
not been restated to reflect this change in accounting method. Shareholders'
equity at June 30, 1995, was $93,418,000, or $18.43 book value per share, as
compared to $93,896,000, or $18.52 book value per share, at September 30, 1994.
The decrease in book value resulted from the payment of the 1994 fiscal year
end special dividend and the 1995 regular quarterly dividends, offset by the
net income for the first nine months of fiscal 1995.
RESULTS OF OPERATIONS
Three and Nine Month Periods Ended June 30, 1995 and June 30, 1994
Net sales for the three month period ended June 30, 1995, were
$33,040,000, compared to $35,407,000 for the same period last year. Net
earnings for the three month period were $1,404,000, equal to $0.28 per
share, compared to $884,000, or $0.17 per share, last year.
Net sales for the nine month period ended June 30, 1995, were $100,088,000,
compared to $117,640,000 last year. Net earnings for the nine month period
were $3,578,000, or $0.71 per share, as compared to $6,444,000, or $1.27 per
share, last year.
Gross margin for the three months ended June 30, 1995, was $7,092,000, or
21.5% of net sales, compared to $7,702,000, or 21.8% of net sales, for
the comparable period last year. Gross margin for the nine months ended
June 30, 1995, was $21,084,000, or 21.1% of net sales, as compared to
$29,787,000, or 25.3% of net sales, for the comparable period last year.
The decreases in net sales and gross margin for the three and nine month
periods reflect reduced unit sales primarily in our sports licensing and Disney
divisions and slightly lower average unit selling prices resulting from
prevailing competitive conditions in the marketplace.
Interest income for the three and nine month periods increased $332,000 and
$848,000, respectively, as a result of increased investment and higher rates of
return.
Selling and administrative expenses for the three months ended
June 30, 1995, were $5,429,000, or 16.4% of net sales, as compared to
$6,558,000, or 18.5% of net sales, for the comparable period last year.
Selling and administrative expenses for the nine months ended June 30,
1995, were $17,060,000, or 17.0% of net sales, as compared to $20,207,000,
or 17.2% of net sales, for the comparable period last year. Selling and
administrative expenses declined for both the three and nine month periods
primarily as a result of reduced royalty and commission expenses associated
with reduced sales in our sports licensing and Disney divisions.
<PAGE>
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 have been filed on Form 8-K during the quarter
ended June 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
GARAN, INCORPORATED
BY:Seymour Lichtenstein
Seymour Lichtenstein
Principal Executive Officer
BY:William J. Wilson
William J. Wilson
Principal Financial Officer
DATE: August 10, 1995
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF EARNINGS AND BALANCE SHEETS OF GARAN, INCORPORATED
AND SUBSIDIARIES ANNEXED HERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000039917
<NAME> GARAN, INCORPORATED
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1994 SEP-30-1994
<PERIOD-START> APR-1-1995 OCT-1-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 4,170,000 4,170,000
<SECURITIES> 18,822,000 18,822,00
<RECEIVABLES> 21,232,000 21,232,000
<ALLOWANCES> 514,000 514,000
<INVENTORY> 34,719,000 34,719,000
<CURRENT-ASSETS> 81,778,000 81,778,000
<PP&E> 33,338,000 33,338,000
<DEPRECIATION> 18,428,000 18,428,000
<TOTAL-ASSETS> 111,571,000 111,571,000
<CURRENT-LIABILITIES> 12,491,000 12,491,000
<BONDS> 3,102,000 3,102,000
<COMMON> 2,535,000 2,535,000
0 0
0 0
<OTHER-SE> 90,883,000 90,883,000
<TOTAL-LIABILITY-AND-EQUITY> 111,571,000 111,571,000
<SALES> 33,040,000 100,088,000
<TOTAL-REVENUES> 33,040,000 100,088,000
<CGS> 25,948,000 79,004,000
<TOTAL-COSTS> 25,948,000 79,004,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 35,000 104,000
<INCOME-PRETAX> 2,302,000 5,866,000
<INCOME-TAX> 898,000 2,288,000
<INCOME-CONTINUING> 1,404,000 3,578,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,404,000 3,578,000
<EPS-PRIMARY> 0.28 0.71
<EPS-DILUTED> 0.28 0.71
</TABLE>
