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, 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 December 31, 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
12/31/97 12/31/96
____________ _____________
<S> <C> <C>
Net sales $ 37,711,000 $ 30,993,000
Cost of sales 28,894,000 23,911,000
____________ ____________
Gross margin on sales 8,817,000 7,082,000
Selling and administrative expenses 5,462,000 5,376,000
Interest on capitalized leases 27,000 25,000
Interest income (797,000) (695,000)
___________ ___________
Earnings before provision
for income taxes 4,125,000 2,376,000
Provision for income taxes 1,651,000 939,000
___________ ___________
Net earnings $ 2,474,000 $ 1,437,000
=========== ===========
Earnings per share data:
Earnings per share - Basic $ 0.49 $ 0.28
- Diluted $ 0.48 $ 0.28
Average common shares outstanding- Basic 5,070,000 5,070,000
- Diluted 5,122,000 5,070,000
Dividends paid per share $ 0.60 $ 0.40
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
12/31/97 9/30/97
____________ _____________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 9,929,000 $ 8,660,000
U.S. Government securities - short-term 19,793,000 16,223,000
Accounts receivable, less estimated
uncollectibles of $517,000 at
12/31/97 and $510,000 at 9/30/97 16,890,000 31,092,000
Inventories 37,754,000 33,731,000
Other current assets 4,251,000 4,308,000
Total current assets 88,617,000 94,014,000
U.S. Government Securities - long-term 19,334,000 19,853,000
Property, plant and equipment, less
accumulated depreciation and amortization 13,194,000 13,470,000
Other assets 5,218,000 5,049,000
TOTAL $ 126,363,000 $ 132,386,000
============ ============
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 4,616,000 $ 6,589,000
Accrued liabilities 13,462,000 16,434,000
Federal and state income taxes payable 2,379,000 2,454,000
Current portion of capitalized leases 130,000 130,000
Total current liabilities 20,587,000 25,607,000
Capitalized lease obligations, net of
current portion 2,281,000 2,807,000
Deferred income taxes 3,276,000 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; 5,069,892 issued at
12/31/97 and 9/30/97 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 91,863,000 92,430,000
Total shareholders' equity 100,219,000 100,786,000
TOTAL $ 126,363,000 $ 132,386,000
============ ============
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
12/31/97 12/31/96
____________ _____________
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 2,474,000 $ 1,437,000
Non cash items included in earnings:
Depreciation and amortization 703,000 857,000
Provision for losses on accounts receivable 5,000 11,000
Deferred income taxes 90,000 30,000
Changes in assets and liabilities:
U.S. Government Securities - short-term (1,576,000) 1,583,000
Accounts receivable 14,197,000 11,068,000
Inventories (4,023,000) (4,247,000)
Other current assets 57,000 215,000
Accounts payable (1,973,000) (1,107,000)
Accrued liabilities (2,972,000) (2,502,000)
Income taxes payable (75,000) (753,000)
Other assets (169,000) (395,000)
Net Cash Flows From Operating Activities 6,738,000 6,197,000
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 1,032,000 3,037,000
Purchase of U.S. Gov't securi-
ties - long-term (2,507,000) (14,872,000)
Additions to property plant and equipment (427,000) (323,000)
Proceeds from sales of property,
plant and equipment 0 50,000
Net Cash Flows From Investing Activities (1,902,000) (12,108,000)
Cash Flows From Financing Activities:
Payment of dividends (3,041,000) (2,028,000)
Repayment of capitalized lease obligations (526,000) (24,000)
Net Cash Flows From Financing Activities (3,567,000) (2,052,000)
Increase(Decrease) in Cash and Cash
Equivalents 1,269,000 (7,963,000)
Cash and Cash Equivalents At Beginning
of Period 8,660,000 20,587,000
Cash and Cash Equivalents At End of Period $ 9,929,000 $ 12,624,000
============ ============
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 27,000 $ 25,000
Income taxes 1,617,000 1,691,000
============ ============
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<PAGE> GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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 are calculated on the basis of the
weighted average number of common shares outstanding during the period, in
accordance with the provisions of the Statement of Financial Accounting
Standards No. 128 as follows:
1997 1996
---------------------------- ------------------------------
Income Share Per Share Income Share Per Share
Basic EPS $2,474,000 5,069,892 $0.49 $1,437,000 5,069,892 $0.28
========= ========
Effect of dilutive
options 51,771
-------------------- --------------------
$2,474,000 5,121,663 $0.48 $1,437,000 5,069,892 $0.28
============================= ==============================
3. Inventories consist of the following:
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<CAPTION>
12/31/97 09/30/97
____________ _____________
<S> <C> <C>
Raw Materials $ 6,845,000 $ 6,697,000
Work in process 7,846,000 6,921,000
Finished Goods 23,063,000 20,113,000
___________ ____________
$ 37,754,000 $ 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 this 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 December 31, 1997, working capital was $68,030,000, a decrease of
$377,000 from September 30, 1997, working capital of $68,407,000. The
decrease was due primarily to the special dividend of $0.40 per share paid
in December, 1997, offset by an increase in government securities maturing
in less than one year. Shareholders' equity at December 31, 1997 was
$100,219,000 or $19.77 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 Month Periods Ended December 31, 1997,and December 31, 1996.
Net sales for the three month period ended December 31, 1997, were
$37,711,000 compared to $30,993,000, for the same period last year. Net
earnings for the three month period this year were $2,474,000, equal to
$0.49 per share, compared to $1,437,000, or $0.28 per share, last year.
The increase in net sales for the quarter was primarily the result of an
increase in total units shipped.
Gross margin for the three months ended December 31, 1997, was $8,817,000,
or 23.4% of net sales, compared to $7,082,000, or 22.9% of net sales, for
the comparable period last year. The increase in gross margin was due
primarily to improvements in absorption of manufacturing expenses as a
result of volume increases.
Selling and administrative expenses for the three months ended
December 31, 1997, were $5,462,000, or 14.5% of net sales, as compared to
$5,376,000, or 17.4% of net sales, for the comparable period last year.
The slight dollar increase was a result of investments in internal
operating systems. The decrease in the percentage of net sales was the
result of the increased sales volume.
Interest income for the three months ended was $797,000, an increase from
$695,000 in the same period last year. The increase was the result of more
favorable rates of return and a higher level of investment.
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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, 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 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: February 12, 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-1-1997
<PERIOD-END> DEC-31-1997
<CASH> 9,929,000
<SECURITIES> 19,793,000
<RECEIVABLES> 17,407,000
<ALLOWANCES> 517,000
<INVENTORY> 37,754,000
<CURRENT-ASSETS> 88,617,000
<PP&E> 32,566,000
<DEPRECIATION> 19,372,000
<TOTAL-ASSETS> 126,363,000
<CURRENT-LIABILITIES> 20,587,000
<BONDS> 2,281,000
<COMMON> 2,535,000
0
0
<OTHER-SE> 97,684,000
<TOTAL-LIABILITY-AND-EQUITY> 126,363,000
<SALES> 37,711,000
<TOTAL-REVENUES> 37,711,000
<CGS> 28,894,000
<TOTAL-COSTS> 28,894,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,000
<INCOME-PRETAX> 4,125,000
<INCOME-TAX> 1,651,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,474,000
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.48
</TABLE>
