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 December 31, 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 December 31, 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
12/31/95 12/31/94
__________________ __________________
<S> <C> <C>
Net sales $ 33,024,000 $ 38,668,000
Cost of sales 26,550,000 31,264,000
____________ ____________
Gross margin on sales 6,474,000 7,404,000
Selling and administrative expenses 4,883,000 6,050,000
Interest on capitalized leases 30,000 39,000
Interest income (658,000) (525,000)
_____________ _____________
Earnings before provision
for income taxes 2,219,000 1,840,000
Provision for income taxes 878,000 718,000
____________ ____________
Net earnings $ 1,341,000 $ 1,122,000
Earnings per share data:
Earnings per share $ 0.26 $ 0.22
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.40 $ 0.40
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<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
12/31/95 9/30/95
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 10,559,000 $ 8,649,000
U.S. Government securities - short-term 19,689,000 20,424,000
Accounts receivable, less estimated
uncollectibles of $514,000 at
12/31/95 and 9/30/95 16,586,000 25,746,000
Inventories 29,780,000 29,454,000
Other current assets 6,236,000 4,412,000
Total current assets 82,850,000 88,685,000
U.S. Government Securities - long-term 12,015,000 12,015,000
Property, plant and equipment, less
accumulated depreciation and amortization 14,784,000 15,069,000
Other assets 4,809,000 4,662,000
TOTAL $ 114,458,000 $ 120,431,000
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 3,859,000 $ 6,851,000
Accrued liabilities 8,664,000 11,005,000
Federal and state income taxes payable 2,277,000 2,227,000
Current portion of capitalized leases 154,000 154,000
Total current liabilities 14,954,000 20,237,000
Capitalized lease obligations, net of
current portion 3,038,000 3,061,000
Deferred income taxes 2,838,000 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
12/31/95 and 9/30/95 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 85,272,000 85,959,000
Total shareholders' equity 93,628,000 94,315,000
TOTAL $ 114,458,000 $ 120,431,000
</TABLE>
<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
12/31/95 12/31/94
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 1,341,000 $ 1,122,000
Non cash items included in earnings:
Depreciation and amortization 881,000 893,000
Provision for losses on accounts receivable 4,000 37,000
Deferred income taxes 20,000 190,000
Changes in assets and liabilities:
U.S. Government Securities - short-term 735,000 (14,557,000)
Accounts receivable 9,156,000 19,220,000
Inventories (326,000) 6,643,000
Other current assets (1,824,000 428,000
Accounts payable (2,992,000) (3,532,000)
Accrued liabilities (2,341,000) 2,717,000
Income taxes payable 50,000 (61,000)
Other assets (147,000) (125,000)
Net Cash Flows From Operating Activities 4,557,000 7,655,000
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 0 0
Purchase of U.S. Gov't securities - long-term 0 (1,012,000)
Additions to property plant and equipment (596,000) (772,000)
Proceeds from sales of property,
plant and equipment 0 47,000
Net Cash Flows From Investing Activities (596,000) (1,737,000)
Cash Flows From Financing Activities:
Payment of dividends (2,028,000) (2,028,000)
Repayment of capitalized lease obligations (23,000) (457,000)
Net Cash Flows From Financing Activities (2,051,000) (2,485,000)
Increase in Cash and Cash Equivalents 1,910,000 3,433,000
Cash and Cash Equivalents At Beginning
of Period 8,649,000 7,664,000
Cash and Cash Equivalents At End of Period $ 10,559,000 $ 11,097,000
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 30,000 $ 39,000
Income taxes 1,157,000 169,000
</TABLE>
<PAGE> GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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>
12/31/95 09/30/95
____________ ____________
<S> <C> <C>
Raw Materials $ 5,159,000 $ 5,135,000
Work in process 9,545,000 9,374,000
Finished Goods 15,076,000 14,945,000
____________ ____________
$ 29,780,000 $ 29,454,000
</TABLE>
<PAGE>
ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At December 31, 1995, working capital was $67,896,000, a decrease of
$552,000 from September 30, 1995. Shareholders' equity at December 31,
1995, was $93,628,000, or $18.46 book value per share, as compared to
$94,315,000, or $18.60 book value per share, at September 30, 1995. The
decrease in book value resulted from the payment in November, 1995, of the
1995 fiscal year end special dividend and the first fiscal 1996 regular
quarterly dividend.
RESULTS OF OPERATIONS
Three Month Periods Ended December 31, 1995, and December 31, 1994.
Net sales for the three month period ended December 31, 1995, were
$33,024,000, compared to $38,668,000 for the same period last year. Net
earnings for the three month period were $1,341,000, equal to $0.26 per
share, compared to $1,122,000, or $0.22 per share, last year.
Gross margin for the three months ended December 31, 1995, was $6,474,000,
or 19.6% of net sales, compared to $7,404,000, or 19.2% of net sales, for
the comparable period last year.
The decreases in net sales and gross margin for the three month period
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.
Selling and administrative expenses for the three months ended
December 31, 1995, were $4,883,000, or 14.8% of net sales, as compared to
$6,050,000, or 15.6% of net sales, for the comparable period last year.
Selling and administrative expenses declined primarily as a result of
reduced royalty and commission expenses associated with reduced sales in
our sports licensing and Disney divisions.
The decrease in selling and administrative expenses as a percentage of net
sales, coupled with the increase in the gross margin rate, resulted in the
increase in net earnings as a percentage of net sales to 4.1% for the three
month period ended December 31, 1995, as compared to 2.9% for the
comparable period last year.
<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 December 31, 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: February 14, 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,559,000
<SECURITIES> 19,689,000
<RECEIVABLES> 17,100,000
<ALLOWANCES> 514,000
<INVENTORY> 29,780,000
<CURRENT-ASSETS> 82,850,000
<PP&E> 33,410,000
<DEPRECIATION> 18,626,000
<TOTAL-ASSETS> 114,458,000
<CURRENT-LIABILITIES> 14,954,000
<BONDS> 3,038,000
<COMMON> 2,535,000
0
0
<OTHER-SE> 91,093,000
<TOTAL-LIABILITY-AND-EQUITY> 114,458,000
<SALES> 33,024,000
<TOTAL-REVENUES> 33,024,000
<CGS> 26,550,000
<TOTAL-COSTS> 26,550,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,000
<INCOME-PRETAX> 2,219,000
<INCOME-TAX> 878,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,341,000
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0
</TABLE>
