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, 1997 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, 1997
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
06/30/97 06/30/96
------------ -------------
<S> <C> <C>
Net sales $ 29,568,000 $ 37,218,000
Cost of sales 22,088,000 28,085,000
------------- -------------
Gross margin on sales 7,480,000 9,133,000
Selling and administrative expenses 5,095,000 6,265,000
Interest on capitalized leases 35,000 31,000
Interest income (705,000) (580,000)
------------ ------------
Earnings before provision
for income taxes 3,055,000 3,417,000
Provision for income taxes 1,222,000 1,350,000
------------ ------------
Net earnings $ 1,833,000 $ 2,067,000
============ ============
Earnings per share data:
Earnings per share $ 0.36 $ 0.41
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.20 $ 0.20
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GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
06/30/97 06/30/96
------------ -------------
<S> <C> <C>
Net sales $ 98,172,000 $ 97,124,000
Cost of sales 74,457,000 75,542,000
------------ ------------
Gross margin on sales 23,715,000 21,582,000
Selling and administrative expenses 16,068,000 16,099,000
Interest on capitalized leases 87,000 90,000
Interest income (2,089,000) (1,896,000)
------------ ------------
Earnings before provision
for income taxes 9,649,000 7,289,000
Provision for income taxes 3,838,000 2,879,000
------------ ------------
Net earnings $ 5,811,000 $ 4,410,000
============ ============
Earnings per share data:
Earnings per share $ 1.14 $ 0.87
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.80 $ 0.80
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GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
06/30/97 9/30/96
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 6,582,000 $ 20,587,000
U.S. Government securities - short-term 9,937,000 12,568,000
Accounts receivable, less estimated
uncollectibles of $510,000 at
06/30/97 and $514,000 at 9/30/96 16,033,000 26,041,000
Inventories 43,620,000 28,639,000
Other current assets 3,792,000 5,558,000
------------ ------------
Total current assets 79,964,000 93,393,000
U.S. Government Securities - long-term 23,951,000 7,003,000
Property, plant and equipment, less
accumulated depreciation and amortization 13,357,000 14,915,000
Other assets 4,806,000 4,236,000
------------ ------------
TOTAL $ 122,078,000 $ 119,547,000
============ ============
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<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 6,015,000 $ 4,609,000
Accrued liabilities 11,784,000 11,321,000
Federal and state income taxes payable 663,000 1,572,000
Current portion of capitalized leases 124,000 124,000
------------ ------------
Total current liabilities 18,586,000 17,626,000
============ ============
Capitalized lease obligations, net of
current portion 2,813,000 2,937,000
Deferred income taxes 2,783,000 2,843,000
------------ ------------
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
06/30/97 and 9/30/96 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 89,540,000 87,785,000
------------ ------------
Total shareholders' equity 97,896,000 96,141,000
------------ ------------
TOTAL $ 122,078,000 $ 119,547,000
============ ============
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GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
06/30/97 06/30/96
------------ -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 5,811,000 $ 4,410,000
Adjustments to reconcile net cash
Provided by Operating Actitivies:
Depreciation and amortization 2,244,000 2,630,000
Provision for losses on accounts receivable 61,000 23,000
Deferred income taxes (60,000) 60,000
Changes in assets and liabilities:
U.S. Government Securities - short-term 1,376,000 9,948,000
Accounts receivable 9,947,000 (711,000)
Inventories (14,981,000) (12,149,000)
Other current assets 1,766,000 (2,222,000)
Accounts payable 1,406,000 (2,094,000)
Accrued liabilities 463,000 241,000
Income taxes payable (909,000) 417,000
Other assets (570,000) 516,000
------------ ------------
Net Cash provided by Operating Activities 6,554,000 1,069,000
------------ ------------
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 6,028,000 0
Purchase of U.S. Gov't securi-
ties - long-term (21,721,000) 0
Additions to property plant and equipment (821,000) (3,035,000)
Proceeds from sales of property,
plant and equipment 135,000 282,000
------------ ------------
Net Cash used for Investing Activities (16,379,000) (2,753,000)
------------ ------------
Cash Flows From Financing Activities:
Payment of dividends (4,056,000) (4,056,000)
Repayment of capitalized lease obligations (124,000) (119,000)
------------ ------------
Net Cash used for Financing Activities (4,180,000) (4,175,000)
------------ ------------
Net decrease in Cash and Cash Equivalents (14,005,000) (5,859,000)
Cash and Cash Equivalents At Beginning
of Period 20,587,000 8,649,000
----------- -----------
Cash and Cash Equivalents At End of Period $ 6,582,000 $ 2,790,000
============ ============
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 87,000 $ 90,000
Income taxes 4,350,000 3,432,000
============ ============
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GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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>
06/30/97 09/30/96
------------ -------------
<S> <C> <C>
Raw Materials $ 6,955,000 $ 3,115,000
Work in process 7,375,000 6,837,000
Finished Goods 29,290,000 18,687,000
----------- ------------
$ 43,620,000 $ 28,639,000
=========== ============
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ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At June 30, 1997, working capital was $61,543,000, a decrease of $14,224,000
from September 30, 1996, working capital of $75,767,000. The decrease was
primarily a result of reinvesting short-term U.S. Government Securities into
higher-yielding long-term U.S. Government Securities, which are not included
in working capital. Shareholders' equity at June 30, 1997, was $97,896,000,
or $19.30 book value per share, as compared to $96,141,000, or $18.96 book
value per share, at September 30, 1996.
RESULTS OF OPERATIONS
Three and Nine Month Periods Ended June 30, 1997, and June 30, 1996.
Net sales for the third quarter of fiscal 1997 were $29,568,000 compared to
$37,218,000 for the same period last year. Net earnings for the third quarter
were $1,833,000, equal to $0.36 per share, compared to $2,067,000, or $0.41
per share, last year. The third quarter of fiscal 1996 included, approxi-
mately $9,500,000 in sales related to the Disney animated film "The Hunchback
of Notre Dame". This was non-recurring business and accounts for the decline
in sales in the current quarter from the comparable quarter last year.
Net sales for the first nine months of fiscal 1997 were $98,172,000 compared
to $97,124,000 for the same period last year. Net earnings for the nine month
period were $5,811,000, equal to $1.14 per share, compared to $4,410,000, or
$0.87 per share, for the same period last year.
Gross margin for the three month period ended June 30, 1997, was $7,480,000,
or 25.3% of net sales, compared to $9,133,000, or 24.5% of net sales, for the
comparable period last year. Gross margin for the nine months ended June 30,
1997, was $23,715,000, or 24.2% of net sales, compared to $21,582,000, or
22.2% of net sales, for the comparable period last year. The increase in
gross margin was due primarily to improvements in manufacturing efficiency and
absorption of overhead.
Selling and administrative expenses for the three months ended June 30, 1997,
were $5,095,000, or 17.2% of net sales, as compared to $6,265,000, or 16.8% of
net sales, for the comparable period last year. The selling and administra-
tive expenses dollar cost decrease for the three-month period occurred in
royalty expenses. Royalty expenses are variable and relate to sales volume of
sports and Disney licensed products. The non-recurring business decline in
sales related to Disney animated films accounted for the decline in royalty
expense for the three-month period. Selling and administrative expenses for
the nine-months ended June 30, 1997, were $16,068,000 or 16.4% of net sales,
as compared to $16,099,000, or 16.6% of net sales, for the comparable period
last year. Selling and administrative expenses for the nine-month period
ended June 30, 1997, were comparable to the same period last year as a
decrease in royalty expenses related to sports and Disney animated films
licenses was offset by an increase in our information system costs. These
increases are related to improvements to internal operating systems and
development and implementation of systems related customer service.
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ITEM 6. Exhibits and Reports on Form 8-K.
a. Exhibits
NONE
b. Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter
ended June 30, 1997.
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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, 1997
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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-30-1997 SEP-30-1997
<PERIOD-START> APR-01-1997 OCT-01-1996
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 6,582,000 6,582,000
<SECURITIES> 9,937,000 9,937,000
<RECEIVABLES> 16,543,000 16,543,000
<ALLOWANCES> 510,000 510,000
<INVENTORY> 43,620,000 43,620,000
<CURRENT-ASSETS> 79,964,000 79,964,000
<PP&E> 33,231,000 33,231,000
<DEPRECIATION> 19,874,000 19,874,000
<TOTAL-ASSETS> 122,078,000 122,078,000
<CURRENT-LIABILITIES> 18,586,000 18,586,000
<BONDS> 2,813,000 2,813,000
<COMMON> 2,535,000 2,535,000
0 0
0 0
<OTHER-SE> 95,361,000 95,361,000
<TOTAL-LIABILITY-AND-EQUITY> 122,078,000 122,078,000
<SALES> 29,568,000 98,172,000
<TOTAL-REVENUES> 29,568,000 98,172,000
<CGS> 22,088,000 74,457,000
<TOTAL-COSTS> 22,088,000 74,457,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 35,000 87,000
<INCOME-PRETAX> 3,055,000 9,649,000
<INCOME-TAX> 1,222,000 3,838,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,833,000 5,811,000
<EPS-PRIMARY> 0.36 1.14
<EPS-DILUTED> 0 0
</TABLE>
