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, 1996 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, 1996
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
----------------
6/30/96 6/30/95
------------- -------------
<S> <C> <C>
Net sales $ 37,218,000 $ 33,040,000
Cost of sales 28,085,000 25,948,000
------------- -------------
Gross margin on sales 9,133,000 7,092,000
Selling and administrative expenses 6,265,000 5,429,000
Interest on capitalized leases 31,000 35,000
Interest income (580,000) (674,000)
------------- -------------
Earnings before provision
for income taxes 3,417,000 2,302,000
Provision for income taxes 1,350,000 898,000
------------- -------------
Net earnings $ 2,067,000 $ 1,404,000
============ =============
Earnings per share data:
Earnings per share $ 0.41 $ 0.28
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
---------------
6/30/96 6/30/95
------------- -------------
<S> <C> <C>
Net sales $ 97,124,000 $100,088,000
Cost of sales 75,542,000 79,004,000
------------- -------------
Gross margin on sales 21,582,000 21,084,000
Selling and administrative expenses 16,099,000 17,060,000
Interest on capitalized leases 90,000 104,000
Interest income (1,896,000) (1,946,000)
------------- -------------
Earnings before provision
for income taxes 7,289,000 5,866,000
Provision for income taxes 2,879,000 2,288,000
------------- -------------
Net earnings $ 4,410,000 $ 3,578,000
============= =============
Earnings per share data:
Earnings per share $ 0.87 $ 0.71
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.80 $ 0.80
</TABLE>
<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
6/30/96 9/30/95
-------------- --------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 2,790,000 $ 8,649,000
U.S. Government securities - short-term 10,476,000 20,424,000
Accounts receivable, less estimated
uncollectibles of $514,000 at 6/30/96
and 9/30/95 26,434,000 25,746,000
Inventories 41,603,000 29,454,000
Other current assets 6,634,000 4,412,000
-------------- --------------
Total current assets 87,937,000 88,685,000
U.S. Government Securities - long-term 12,015,000 12,015,000
Property, plant and equipment, less
accumulated depreciation and amortization 15,302,000 15,069,000
Other assets 4,146,000 4,662,000
-------------- --------------
TOTAL $ 119,400,000 $ 120,431,000
============== ==============
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 4,757,000 $ 6,851,000
Accrued liabilities 11,356,000 11,005,000
Federal and state income taxes payable 2,644,000 2,227,000
Current portion of capitalized leases 154,000 154,000
-------------- --------------
Total current liabilities 18,911,000 20,237,000
-------------- --------------
Capitalized lease obligations, net of
current portion 2,942,000 3,061,000
Deferred income taxes 2,878,000 2,818,000
-------------- --------------
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
6/30/96 and 9/30/95 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 86,313,000 85,959,000
-------------- --------------
Total shareholders' equity 94,669,000 94,315,000
-------------- --------------
TOTAL $ 119,400,000 $ 120,431,000
============== ==============
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
6/30/96 6/30/95
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 4,410,000 $ 3,578,000
Non cash items included in earnings:
Depreciation and amortization 2,630,000 2,681,000
Provision for losses on accounts receivable 23,000 93,000
Deferred income taxes 60,000 70,000
Changes in assets and liabilities:
U.S. Government Securities - short-term 9,948,000 (13,301,000)
Accounts receivable (711,000) 18,382,000
Inventories (12,149,000) (6,838,000)
Other current assets (2,222,000) 250,000
Accounts payable (2,094,000) (1,427,000)
Accrued liabilities 241,000 (2,050,000)
Income taxes payable 417,000 37,000
Other assets 516,000 (573,000)
-------------- --------------
Net Cash Flows From Operating Activities 1,069,000 902,000
-------------- --------------
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 0 3,000,000
Purchase of U.S. Gov't securities - long-term 0 (987,000)
Additions to property plant and equipment (3,035,000) (2,192,000)
Proceeds from sales of property,
plant and equipment 282,000 365,000
-------------- --------------
Net Cash Flows From Investing Activities (2,753,000) 186,000
-------------- --------------
Cash Flows From Financing Activities:
Payment of dividends (4,056,000) (4,056,000)
Repayment of capitalized lease obligations (119,000) (526,000)
-------------- --------------
Net Cash Flows From Financing Activities (4,175,000) (4,582,000)
-------------- --------------
Decrease in Cash and Cash Equivalents (5,859,000) (3,494,000)
Cash and Cash Equivalents At Beginning
of Period 8,649,000 7,664,000
-------------- --------------
Cash and Cash Equivalents At End of Period $ 2,790,000 $ 4,170,000
============== ==============
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 90,000 $ 104,000
Income taxes 3,432,000 1,597,000
============== ==============
</TABLE>
<PAGE>
GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(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>
6/30/96 09/30/95
------------- -------------
<S> <C> <C>
Raw Materials $ 5,809,000 $ 5,135,000
Work in process 9,580,000 9,374,000
Finished Goods 26,214,000 14,945,000
------------- -------------
$ 41,603,000 $ 29,454,000
============= =============
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<PAGE>
ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At June 30, 1996, working capital was $69,026,000, an increase of $578,000
from September 30, 1995, working capital of $68,448,000. Shareholders'
equity at June 30, 1996, was $94,669,000, or $18.67 book value per share, as
compared to $94,315,000, or $18.60 book value per share, at September 30,
1995. The increase in book value was a result of the net income for the
first nine months of fiscal 1996 offset by the payments of both the 1995
fiscal year-end special dividend and the 1996 regular quarterly dividends.
RESULTS OF OPERATIONS
Three and Nine Month Periods Ended June 30, 1996 and June 30, 1995
Net sales for the three month period ended June 30, 1996, were $37,218,000
compared to $33,040,000 for the same period last year. Net earnings for the
three month period were $2,067,000, equal to $0.41 per share, compared to
$1,404,000, or $0.28 per share, last year. The increase in net sales was
primarily the result of increased units shipped, particularly in our Disney
division. Net sales for the nine month period ended June 30, 1996, were
$97,124,000 compared to $100,088,000 last year. Net earnings for the nine
month period were $4,410,000, or $0.87 per share, as compared to $3,578,000,
or $0.71 per share, last year. The sales decrease was the result of
competitive conditions in the marketplace which caused a decline in overall
average unit selling prices. The increases in net earnings for both the
three and nine month periods were primarily the result of reduced selling
and administrative expenses and the increases in grosss margin.
Gross margin for the three months ended June 30, 1996, was $9,133,000, or
24.5% of net sales, compared to $7,092,000, or 21.5% of net sales, for the
comparable period last year. The increase in gross margin for the period
was primarily due to the sales increase in our Disney division, which
historically maintains a higher gross margin than our other divisions. (The
gross margin for the Disney division is higher than for other divisions, but
net sales for this division is subject to a royalty expense which is included
in selling and administrative expenses.) Gross margin for the nine months
ended June 30, 1996, was $21,582,000, or 22.2% of net sales, as compared to
$21,084,000, or 21.1% of net sales, for the comparable period last year. The
increase in gross margin as a percentage of sales was the result of improved
cost absorption relating to manufacturing expenses.
Selling and administrative expenses for the three months ended June 30, 1996,
were $6,265,000, or 16.8% of net sales, as compared to $5,429,000, or 16.4%
of net sales, for the comparable period last year. Selling and administrative
expenses for the nine months ended June 30, 1996, were $16,099,000, or 16.6%
of net sales, as compared to $17,060,000, or 17.0% of net sales, for the
comparable period last year. The selling and administrative expense increase
for the three month period was a result of increased royalty expenses
associated with icreased sales in our Disney division. Selling and
administrative expenses decreased on an overall basis for the nine month
period due to reductions in general overhead expenses.
<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, 1996.
<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 13, 1996
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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-30-1995 SEP-30-1995
<PERIOD-START> APR-1-1996 OCT-1-1995
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> 2,790,000 2,790,000
<SECURITIES> 10,476,000 10,476,000
<RECEIVABLES> 26,948,000 26,948,000
<ALLOWANCES> 514,000 514,000
<INVENTORY> 41,603,000 41,603,000
<CURRENT-ASSETS> 87,937,000 87,937,000
<PP&E> 35,571,000 35,571,000
<DEPRECIATION> 20,269,000 20,269,000
<TOTAL-ASSETS> 119,400,000 119,400,000
<CURRENT-LIABILITIES> 18,911,000 18,911,000
<BONDS> 2,942,000 2,942,000
<COMMON> 2,535,000 2,535,000
0 0
0 0
<OTHER-SE> 94,669,000 94,669,000
<TOTAL-LIABILITY-AND-EQUITY> 119,400,000 119,400,000
<SALES> 37,218,000 97,124,000
<TOTAL-REVENUES> 37,218,000 97,124,000
<CGS> 28,085,000 75,542,000
<TOTAL-COSTS> 28,085,000 75,542,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 31,000 90,000
<INCOME-PRETAX> 3,417,000 7,289,000
<INCOME-TAX> 1,350,000 2,879,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,067,000 4,410,000
<EPS-PRIMARY> 0.41 0.87
<EPS-DILUTED> 0 0
</TABLE>
