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 March 31, 1998 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 March 31, 1998
Common Stock (no par value) 5,123,094 shares
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PART I. - FINANCIAL INFORMATION
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
3/31/98 3/31/97
____________ _____________
<S> <C> <C>
Net sales $ 41,098,000 $ 37,611,000
Cost of sales 31,197,000 28,458,000
____________ ____________
Gross margin on sales 9,901,000 9,153,000
Selling and administrative expenses 5,632,000 5,597,000
Interest on capitalized leases 29,000 27,000
Interest income (817,000) (689,000)
___________ ___________
Earnings before provision
for income taxes 5,057,000 4,218,000
Provision for income taxes 2,035,000 1,677,000
___________ ___________
Net earnings $ 3,022,000 $ 2,541,000
=========== ===========
Earnings per share data:
Earnings per share - Basic $ 0.59 $ 0.50
- Diluted $ 0.59 $ 0.50
Average common shares outstanding- Basic 5,090,000 5,070,000
- Diluted 5,129,000 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>
SIX MONTHS ENDED
3/31/98 3/31/97
____________ _____________
<S> <C> <C>
Net sales $ 78,809,000 $ 68,604,000
Cost of sales 60,091,000 52,369,000
____________ ____________
Gross margin on sales 18,718,000 16,235,000
Selling and administrative expenses 11,094,000 10,973,000
Interest on capitalized leases 56,000 52,000
Interest income (1,614,000) (1,384,000)
___________ ___________
Earnings before provision
for income taxes 9,182,000 6,594,000
Provision for income taxes 3,686,000 2,616,000
___________ ___________
Net earnings $ 5,496,000 $ 3,978,000
=========== ===========
Earnings per share data:
Earnings per share - Basic $ 1.08 $ 0.78
- Diluted $ 1.07 $ 0.78
Average common shares outstanding- Basic 5,090,000 5,070,000
- Diluted 5,129,000 5,070,000
Dividends paid per share $ 0.80 $ 0.60
</TABLE>
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
3/31/98 9/30/97
____________ _____________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,472,000 $ 8,660,000
U.S. Government securities - short-term 22,562,000 16,223,000
Accounts receivable, less estimated
uncollectibles of $518,000 at
3/31/98 and $510,000 at 9/30/97 21,386,000 31,092,000
Inventories 42,700,000 33,731,000
Other current assets 4,209,000 4,308,000
Total current assets 96,329,000 94,014,000
U.S. Government Securities - Long-term 18,131,000 19,853,000
Property, plant and equipment, less
accumulated depreciation and amortization 13,867,000 13,470,000
Other assets 4,895,000 5,049,000
TOTAL $ 133,222,000 $ 132,386,000
============ ============
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 8,079,000 $ 6,589,000
Accrued liabilities 14,724,000 16,434,000
Federal and state income taxes payable 1,838,000 2,454,000
Current portion of capitalized leases 130,000 130,000
Total current liabilities 24,771,000 25,607,000
Capitalized lease obligations, net of
current portion 2,203,000 2,807,000
Deferred income taxes 3,126,000 3,186,000
Shareholders' Equity:
Preferred stock ($10 par value) 500,000
shares authorized; none issued
Common stock (no par value) 15,000,000
shares authorized; issued 5,123,094
at 3/31/98 and 5,069,892 at 9/30/97 2,562,000 2,535,000
Additional paid-in-capital 6,698,000 5,821,000
Retained earnings 93,862,000 92,430,000
Total shareholders' equity 103,122,000 100,786,000
TOTAL $ 133,222,000 $ 132,386,000
============ ============
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
3/31/98 3/31/97
____________ _____________
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 5,496,000 $ 3,978,000
Non cash items included in earnings:
Depreciation and amortization 1,481,000 1,550,000
Provision for losses on accounts receivable 10,000 51,000
Deferred income taxes (60,000) 33,000
Changes in assets and liabilities:
U.S. Government Securities - Short-term (3,877,000) (2,297,000)
Accounts receivable 9,696,000 2,585,000
Inventories (8,969,000) (3,117,000)
Other current assets 99,000 771,000
Accounts payable 1,490,000 ( 265,000)
Accrued liabilities (1,710,000) ( 428,000)
Income taxes payable (616,000) ( 37,000)
Other assets 154,000 (561,000)
Net Cash Flows From Operating Activities 3,194,000 2,263,000
Cash Flows From Investing Activities: ____________ ____________
Sale of U.S. Gov't securities - Long-term 4,054,000 6,028,000
Purchase of U.S. Gov't securi-
ties - Long-term (4,794,000) (14,650,000)
Additions to property, plant, and equipment (1,878,000) (576,000)
Proceeds from sales of property,
plant, and equipment 0 11,000
Net Cash Flows From Investing Activities (2,618,000) ( 9,187,000)
____________ ______________
Cash Flows From Financing Activities:
Payment of dividends (4,064,000) (3,042,000)
Repayment of capitalized lease obligations (604,000) (44,000)
Proceeds from sale of common stock 904,000 0
Net Cash Flows From Financing Activities (3,764,000) (3,086,000)
Decrease in Cash and Cash
Equivalents (3,188,000) (10,010,000)
Cash and Cash Equivalents At Beginning
of Period 8,660,000 20,587,000
Cash and Cash Equivalents At End of Period $ 5,472,000 $ 10,577,000
============ ============
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 56,000 $ 52,000
Income taxes 4,470,000 2,680,000
============ ============
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<PAGE> GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
1. In the opinion of management, all adjustments necessary to a fair
statement of the results of operations have been reflected.
2. Basic and diluted earnings per share, which are calculated on the basis
of the weighted average number of common shares outstanding during the
period in accordance with the provisions of the Statements of Financial
Accounting Standards No. 128, are as follows:
1998 1997
---------------------------- ------------------------------
Income Shares Per Share Income Shares Per Share
Basic EPS $5,496,000 5,090,000 $1.08 $3,978,000 5,070,000 $0.78
========= ========
Effect of
dilutive options 39,000
-------------------- --------------------
$5,496,000 5,129,000 $1.07 $3,978,000 5,070,000 $0.78
============================= ==============================
3. Inventories consist of the following:
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<CAPTION>
3/31/98 09/30/97
____________ _____________
<S> <C> <C>
Raw Materials $ 7,579,000 $ 6,697,000
Work in Process 6,890,000 6,921,000
Finished Goods 28,231,000 20,113,000
___________ ____________
$42,700,000 $ 33,731,000
=========== ============
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ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this report
contain "forward-looking statements" based upon management's expectations
and beliefs concerning future events impacting the registrant. Actual
results of operations or financial condition may differ because of business
conditions in the apparel industry generally, competition, the addition or
loss of significant customers or personnel, the timing of orders placed by
the registrant's customers, and such other risk factors as may be
identified from time to time in the registrant's filings with the
Securities and Exchange Commission.
FINANCIAL CONDITION
At March 31, 1998, working capital was $71,558,000, an increase of
$3,151,000 from working capital at September 30, 1997 of $68,407,000. The
increase was due primarily to a decrease in accounts receivable and
government securities maturing in less than one year net of a seasonal
increase in inventory. Shareholders' equity at March 31, 1998, was
$103,122,000, or $20.13 book value per share, as compared to $100,786,000,
or $19.88 book value per share, at September 30, 1997.
RESULTS OF OPERATIONS
Three and Six Month Periods Ended March 31, 1998, and March 31, 1997.
Net sales for the second quarter of fiscal 1998 were $41,098,000, compared
to $37,611,000, for the same period in fiscal 1997. Net earnings for the
second quarter were $3,022,000, equal to $0.59 per share, compared to
$2,541,000, or $0.50 per share, in fiscal 1997. Net sales for the first
six months of fiscal 1998 were $78,809,000, compared to $68,604,000 in
fiscal 1997. Net earnings for the six month period were $5,496,000, equal
to $1.08 per share, compared to $3,978,000, or $0.78 per share, in fiscal
1997. The increase in net sales for both periods was primarily a result of
an increase in total units shipped.
Gross margin for the three months ended March 31, 1998, was $9,901,000,
or 24.1% of net sales, compared to $9,153,000, or 24.3% of net sales, for
the comparable period in fiscal 1997. Gross margin for the six months
ended March 31, 1998, was $18,718,000, or 23.8% of net sales, compared to
$16,235,000 or 23.7% of net sales, for the comparable period in fiscal
1997. The dollar increase in gross margin was due primarily to the
increased sales volume.
Selling and administrative expenses for the three months ended
March 31, 1998, were $5,632,000, or 13.7% of net sales, as compared to
$5,597,000, or 14.9% of net sales, for the comparable period in fiscal
1997. Selling and administrative expenses for the six months ended March
31, 1998, were $11,094,000, or 14.1% of net sales, as compared to
$10,973,000, or 16.0% of net sales, for the comparable period in fiscal
1997. Because the dollar value remained constant, the decrease in selling
and administrative expenses as a percentage of net sales was the result of
increased sales volume.
<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 March 31, 1998.
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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 its 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: May 13, 1998
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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 6-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1998
<PERIOD-START> JAN-1-1998 OCT-1-1997
<PERIOD-END> MAR-31-1998 MAR-31-1998
<CASH> 5,472,000 5,472,000
<SECURITIES> 22,562,000 22,562,000
<RECEIVABLES> 21,904,000 21,904,000
<ALLOWANCES> 518,000 518,000
<INVENTORY> 42,700,000 42,700,000
<CURRENT-ASSETS> 96,329,000 96,329,000
<PP&E> 34,017,000 34,017,000
<DEPRECIATION> 20,150,000 20,150,000
<TOTAL-ASSETS> 133,222,000 133,222,000
<CURRENT-LIABILITIES> 24,771,000 24,771,000
<BONDS> 2,203,000 2,203,000
<COMMON> 2,562,000 2,562,000
0 0
0 0
<OTHER-SE> 100,560,000 100,560,000
<TOTAL-LIABILITY-AND-EQUITY> 133,222,000 133,222,000
<SALES> 41,098,000 78,809,000
<TOTAL-REVENUES> 41,098,000 78,809,000
<CGS> 31,197,000 60,091,000
<TOTAL-COSTS> 31,197,000 60,091,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 29,000 56,000
<INCOME-PRETAX> 5,057,000 9,182,000
<INCOME-TAX> 2,035,000 3,686,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,022,000 5,496,000
<EPS-PRIMARY> .59 1.08
<EPS-DILUTED> .59 1.07
</TABLE>
