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, 1999 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, 1999
Common Stock (no par value) 5,320,338 shares
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<TABLE>
PART I. - FINANCIAL INFORMATION
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
12/31/99 12/31/98
____________ _____________
<S> <C> <C>
Net sales $53,345,000 $39,037,000
Cost of sales 41,947,000 28,924,000
____________ ____________
Gross margin on sales 11,398,000 10,113,000
Selling and administrative expenses 6,596,000 5,726,000
Interest on capitalized leases 24,000 24,000
Interest income (664,000) (761,000)
___________ ___________
Earnings before provision
for income taxes 5,442,000 5,124,000
Provision for income taxes 2,258,000 2,076,000
___________ ___________
Net earnings $ 3,184,000 $ 3,048,000
=========== ===========
Earnings per share data:
Earnings per share - Basic $ 0.60 $ 0.59
- Diluted $ 0.59 $ 0.58
Average common shares outstanding - Basic 5,320,000 5,137,000
- Diluted 5,354,000 5,177,000
Dividends paid per share $ 1.05 $ 0.90
</TABLE>
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
12/31/99 9/30/99
____________ _____________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 9,086,000 12,952,000
U.S. Government securities - short-term 5,905,000 0
Accounts receivable, less estimated
uncollectibles of $512,000 at
12/31/99 and $512,000 at 9/30/99 29,575,000 59,381,000
Inventories 39,953,000 37,333,000
Other current assets 7,528,000 6,706,000
Total current assets 92,047,000 116,372,000
U.S. Government Securities - Long-term 38,721,000 25,435,000
Property, plant and equipment, less
accumulated depreciation and amortization 14,469,000 15,393,000
Other assets 7,772,000 6,492,000
TOTAL $ 153,009,000 163,692,000
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 6,943,000 9,959,000
Accrued liabilities 18,985,000 22,495,000
Federal and state income taxes payable 4,460,000 6,496,000
Current portion of capitalized leases 20,000 20,000
Total current liabilities 30,408,000 38,970,000
Capitalized lease obligations, net of
current portion 2,130,000 2,150,000
Deferred income taxes 2,285,000 2,445,000
Shareholders' Equity:
Preferred stock ($10 par value) 500,000
shares authorized; none issued
Common stock (no par value) 15,000,000
shares authorized; issued 5,320,338
at 12/31/99 and 5,305,737 at 9/30/99 2,660,000 2,653,000
Additional paid-in-capital 11,513,000 11,272,000
Unamortized value of restricted stock (3,712,000) (3,925,000)
Retained earnings 107,725,000 110,127,000
Total shareholders' equity 118,186,000 120,127,000
TOTAL $ 153,009,000 163,692,000
============ =============
</TABLE>
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<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
12/31/99 12/31/98
_____________ _____________
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 3,184,000 $ 3,048,000
Adjustments to reconcile to net cash
provided by operating activities:
Deferred compensation 213,000 0
Depreciation and amortization 1,116,000 914,000
Provision for losses on accounts
receivable 0 0
Deferred income taxes (160,000) (150,000)
Changes in assets and liabilities:
U.S. Government securities - Short-term (6,062,000) 1,124,000
Accounts receivable 29,806,000 19,938,000
Inventories (2,620,000) (10,826,000)
Other current assets (148,000) (261,000)
Accounts payable (3,016,000) (2,527,000)
Accrued liabilities (3,510,000) (4,033,000)
Income taxes payable (2,036,000) (509,000)
Other assets (1,954,000) (202,000)
Net Cash provided by (used in) Operating 14,813,000 (6,516,000)
Activities ____________ ____________
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - Long-term 0 5,404,000
Purchase of U.S. Gov't securities -
Long-term (13,129,000) (12,720,000)
Additions to property, plant, and (192,000) (764,000)
equipment
Net Cash used for Investing Activities (13,321,000) (8,080,000)
_____________ ____________
Cash Flows From Financing Activities:
Payment of dividends (5,586,000) (4,625,000)
Repayment of capitalized lease obligations (20,000) (27,000)
Proceeds from exercised stock options 248,000 187,000
Net Cash used for Financing Activities (5,358,000) (4,465,000)
Net increase (decrease)in Cash and Cash
Equivalents (3,866,000) (6,029,000)
Cash and Cash Equivalents At Beginning
of Period 12,952,000 9,599,000
Cash and Cash Equivalents At End of Period $ 9,086,000 $ 3,570,000
============ ============
Supplemental cash flow Disclosures
Cash Paid During The Period For:
Interest $ 24,000 $ 24,000
Income taxes 4,455,000 2,710,000
============ ============
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<PAGE> GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
(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:
1999 1998
----------------------------- -------------------------------
Income Shares Per Share Income Shares Per Share
Basic
EPS $ 3,184,000 5,320,338 $0.60 $3,048,000 5,136,731 $0.59
========= ========
Effect of
dilutive options 34,147 39,872
--------------------- -----------------------
$ 3,184,000 5,354,485 $0.59 $3,048,000 5,176,603 $0.58
=============================== ================================
3. Inventories consist of the following:
<TABLE>
<CAPTION>
12/31/99 09/30/99
___________ ____________
<S> <C> <C>
Raw Materials $ 6,558,000 $ 6,997,000
Work in Process 9,281,000 6,932,000
Finished Goods 24,114,000 23,404,000
___________ ____________
$39,953,000 $37,333,000
=========== ============
</TABLE>
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<PAGE>
<PAGE>
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 December 31, 1999, working capital was $61,639,000 a decrease of
$15,763,000 from working capital at September 30, 1999, of $77,402,000. The
decrease was due to the special dividend of $0.80 per share, in addition to
the regular quarterly dividend of $0.25 per share, which were paid in
December, 1999, as well as a seasonal decrease in accounts receivable. A
substantial portion of the accounts receivable collected during the quarter
was invested in long-term U.S. Government Securities which are not included
in working capital. Shareholders' equity at December 31, 1999, was
$118,186,000, or $22.01 book value per share, as compared to $120,127,000,
or $22.64 book value per share, at September 30, 1999.
RESULTS OF OPERATIONS
Three Month Periods Ended December 31, 1999, and December 31, 1998.
Net sales for the three month period ended December 31, 1999, were
$53,345,000 compared to $39,037,000 for the same period in fiscal 1999.
Net earnings for the three month period were $3,184,000, equal to $0.60 per
share, compared to $3,048,000, or $0.59 per share, last year. The increase
in net sales for the quarter was primarily a result of an increase in units
shipped in the registrant's Infant and Toddler and Women's Divisions.
Gross margin for the three months ended December 31, 1999, was $11,398,000,
or 21.4% of net sales, compared to $10,113,000, or 25.9% of net sales, for
the comparable period in fiscal 1999. The increase in gross margin in
dollar terms was due primarily to the increased sales volume noted in the
prior paragraph. The decrease in gross margin as a percentage of sales was
due principally to changes in customer programs (product mix) and sales
growth in lower margin business.
Selling and administrative expenses for the three months ended
December 31, 1999, were $6,596,000, or 12.4% of net sales, as compared to
$5,726,000, or 14.7% of net sales, for the comparable period in last year.
The increase in selling and administrative expenses was a result of
continued investment in improving internal operating systems, a new
distribution center, and increases in expenses related to volume. The
decrease in selling and administrative expenses as a percentage of net
sales was due to the increase in net sales.
YEAR 2000
In response to concerns that certain time-sensitive computer programs
written using only two digits to define a year might recognize a date using
"00" as the year 1900 or some year other than year 2000 which could result
in miscalculations and system failures, in 1996 the registrant established
a Year 2000 plan according to a six step process. The process included (1)
an inventory of all computer hardware, software, and communication systems
plus critical non-IT systems, (2) risk assessment, (3) a research and
strategy program, (4) remediation, (5) testing and certification, and (6)
contingency planning.
As a result of this process, the registrant updated many of its systems,
and while the primary thrust behind the replacement of existing software
with new systems was improved functionality, the impact of Y2k readiness
issues accelerated implementation plans. Total costs were approximately
$2,500,000 including capital outlays for the software, services, hardware,
and communication components of the plans. The source of funds was current
working capital.
The registrant had no material problems related to the millennium date
change on January 1, 2000, and does not anticipate that any Y2K issues will
have any material adverse effect on its operations and financial condition.
At this time, the registrant continues to believe that the most likely
"worst-case" scenario involves potential disruptions in areas in which the
registrant's operations must rely on third parties whose systems may not
work properly at all times after January 1, 2000, including failures
impacting on the registrant's Central American operations. While such
failures could affect important operations of the registrant, either
directly or indirectly, the registrant cannot at present estimate either
the likelihood or the potential cost of such failures.
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
The registrant does not believe it is exposed to market risks with respect
to any of its investments; the registrant does not utilize market rate
sensitive instruments for trading or other purposes. The registrant's
investments consist primarily of U.S. Government obligations with
maturities of four years or less.
<PAGE>
<PAGE>
PART II. - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit 10.1. Stock Agreement among Marita Lichtenstein,
Marita Lichtenstein as Custodian for Samuel Lichtenstein, Seymour
Lichtenstein, The Lichtenstein Foundation, Inc., and Garan, Incorporated.
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, 1999.
<PAGE>
<PAGE>
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 9, 2000
STOCK AGREEMENT dated February 8, 2000, among Marita Lichtenstein,
Marita Lichtenstein as Custodian for Samuel Lichtenstein, Seymour
Lichtenstein, The Lichtenstein Foundation, Inc., and Garan, Incorporated.
Section A
Definitions and Construction
A.1. Terms used in this Stock Agreement shall have the following
meanings:
Agreement shall mean this Stock Agreement.
Bona Fide Offer shall mean a writing, which may be a letter of intent,
setting forth all of the material terms of an offer made by an individual
or entity who has performed due diligence, who has the financial, legal,
and contractual capacity to perform the terms of such offer, and who is
neither associated in any capacity with nor owned in whole or in part by
the Seller to whom the offer is made.
Business Day shall mean any day other than a Saturday, Sunday, or a
day on which the banking institutions in New York, New York, are authorized
or required to close.
Closing shall mean the consummation of a sale and purchase of Shares
owned by the Sellers pursuant to this Agreement.
Commencement Date shall mean the earlier of (i) the date that SL
becomes Disabled or (ii) the date SL dies.
Commission shall mean the Securities and Exchange Commission or any
Federal governmental agency that succeeds the Commission.
Common Stock shall mean the shares of Company Common Stock, no par
value, that are currently authorized by the Company's Articles of
Incorporation and any shares thereof so authorized in the future, and any
shares of capital stock into which such shares of Common Stock are
reclassified, converted, or exchanged after the date of this Agreement.
Company shall mean Garan, Incorporated, a Virginia corporation, with
offices at 350 Fifth Avenue, New York, New York 10118.
Disability shall mean the inability of SL to substantially carry out
the duties customarily performed by him for the Company because of
psychological, emotional, or physical reasons.
Disabled shall mean a condition occurring after SL's Disability has
continued for a period of 90 continuous days or for a period of 120 days
not necessarily continuous in any 12 month period
Foundation shall mean The Lichtenstein Foundation, Inc., a New York
not-for-profit corporation, with an office at 350 Fifth Avenue, New York,
New York 10118.
ML shall mean Marita Lichtenstein, 791 Park Avenue, New York, New
York 10021.
ML as Custodian, shall mean ML as custodian for Samuel Lichtenstein,
the minor child of ML and SL.
Notice of Offer shall mean a notice by a Seller that she, he, or it
has received a Bona Fide Offer to sell a specified number of Shares (the
Offered Shares) that she, he, or it wishes to accept, which must be
accompanied by a copy of the Bona Fide Offer.
Offered Shares shall mean the number of Shares a Seller wishes to sell
pursuant to the terms and conditions of a Bona Fide Offer.
Offeror shall mean the person or entity who submits a Bona Fide Offer
to a Seller.
Put Notice shall mean a notice by the Sellers requiring the Company to
purchase all of their Shares.
Representative shall mean a trustee, executor, administrator, or
personal representative and, with respect to a Disabled individual, her or
his conservator, committee, guardian, or similar appointee.
Seller or Sellers shall mean one or more of the Foundation, ML, ML as
Custodian, and SL.
SL shall mean Seymour Lichtenstein, 791 Park Avenue, New York, New
York 10021.
Shares shall mean, as to each Seller, all of the shares of Common
Stock owned by such Seller on the Commencement Date and thereafter acquired
by such Seller (whether by way of stock dividend, reorganization, bequest,
gift, purchase, or otherwise) prior to the Termination Date.
Termination Date shall mean the first to occur of (i) a Closing after
which none of the Sellers own any Shares or (ii) the date which is 24
months after SL's death.
A.2. Unless otherwise expressly provided: (i) when the defined
meaning is intended, the term is initially capitalized and (ii) the defined
meaning of any term in the singular or plural also shall include the plural
or singular, as the case may be.
Section B
Background
B.1. SL, the owner of 688,738 shares of Common Stock, is the Chief
Executive Officer of the Company and may be deemed to be a "control person"
of the Company as that term is defined by the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
B.2. ML, the wife of SL, owns 4,012 shares of Common Stock
individually, and holds options currently exercisable to purchase 12,500
shares of Common Stock.
B.3. ML as Custodian owns 100 shares of Common Stock.
B.4. The Foundation, which SL may be deemed to control, owns 19,200
shares of Common Stock.
B.5. The Company believes it is in its best interests to limit the
distribution of the shares of Common Stock owned by the Foundation, ML, ML
as Custodian, and SL in the event SL becomes Disabled or dies.
THEREFORE, IT IS AGREED:
Section I
Right of First Refusal; Put
1.1. No Seller shall sell, assign, pledge, or otherwise dispose of or
encumber any of her, his, or its Shares during the period from the
Commencement Date to the Termination Date other than (a) to any entity that
is directly or indirectly owned by such Seller and that has agreed in
writing to be bound by the terms and conditions of this Agreement, (b) to
the Company, (c) as a gift or bequest if the recipient has agreed in
writing to be bound by the terms and conditions of this Agreement, or (d)
in accordance with the terms and conditions of Section 1.2. Any attempt to
transfer Shares in violation of the provisions of this Section I shall be
void and of no force or effect.
1.2. If a Seller receives a Bona Fide Offer from a third party to
purchase on or after the Commencement Date all or part of her, his, or its
Shares which such Seller desires to accept, such Seller shall offer such
Shares for sale to the Company at the same price and upon the same terms as
set forth in the Bona Fide Offer by giving a Notice of Offer to the
Company. The Notice of Offer shall constitute an offer by such Seller to
sell the Offered Shares to the Company at the same price and upon the same
terms and conditions as set forth in the Bona Fide Offer. Within 15 days
from the receipt of the Notice of Offer, the Company shall deliver a notice
to the Seller who sent the Notice of Offer indicating whether the Company
accepts or rejects the offer to sell made by the Notice of Offer. If the
Company accepts the offer to sell, the Notice of Offer and the Company's
notice of acceptance shall constitute the binding agreement of the
notifying Seller and the Company for the sale and purchase of the Offered
Shares at the price and upon the terms and conditions stated in the Bona
Fide Offer. If the Company gives a notice rejecting the offer to sell or
fails to give notice within the 15 day period in response to the Notice of
Offer, the notifying Seller shall be entitled under the terms of this
Agreement, to sell, convey, and deliver the Offered Shares to the Offeror
at the price and upon the terms and conditions stated in the Notice of
Offer, but only if the sale and purchase of the Offered Shares is completed
within a period of 45 days from the date of delivery of the Notice of Offer
to the Company. In the event that ML or SL dies, her or his named
Representative can give a Notice of Offer prior to an official appointment
as such.
1.3. The Sellers collectively shall have the option for the period
from the Commencement Date to the Termination Date to give a Put Notice to
the Company to require the Company to acquire all of the Common Stock then
owned by them. The price per Share of the Common Stock shall be equal to
the average of the per share closing prices of the Common Stock on the
American Stock Exchange (or if not them listed on the American Stock
Exchange, on any other national securities exchange on which the Common
Stock is listed, or if not so listed, as reported by NASDAQ, or if not so
reported, as reported by any other national quotation system) for the 30
Business Days immediately preceding the Put Notice as reported by The Wall
Street Journal. In the event that the Shares are not listed on a national
securities exchange or NASDAQ (or any other national quotation system), the
price per Share of the Common Stock shall be equal to the fair market value
of the Common Stock as determined by the Company's Board of Directors based
on information furnished by one or more independent market makers making a
market in the Common Stock. The purchase price shall be payable in cash at
the Closing. In the event that ML or SL dies, her or his named
Representative can give a Put Notice prior to an official appointment as
such.
1.4. Each Seller and the Company recognizes that money damages will be
inadequate to compensate the Company or the Sellers for the injury it or
they will suffer as the result of a breach by any Seller or the Company of
the provisions of Sections 1.1, 1.2, and 1.3, and hereby expressly consents
to specific performance as an appropriate remedy for the breach of any
provision of such Sections.
Section II
Sale of Shares and Closings
2.1.A. The Closing of a purchase of Offered Shares pursuant to
Section 1.2 which has been accepted by the Company shall be on the 30th day
following the date of delivery of the Notice of Offer, or if such date is
not a Business Day, on the first Business Day thereafter.
2.1.B. The Closing of a purchase pursuant to Section 1.3 shall be on
the 15th day following the Put Notice or if such date is not a Business
Day, on the first Business Day thereafter.
2.1.C. In the event that a Representative of a Seller must be
appointed, the Closing referred to in Sections 2.1.A or 2.1.B shall be
postponed until 7 Business Days after such appointment.
2.2. All Closings shall take place at the offices of the Company at
10:00 a.m., New York City time or such other date, time, or location as the
Seller or Sellers and the Company otherwise agree.
Section III
Representations and Warranties of the Company
3.1. The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Virginia and has all
requisite corporate power and authority to own and operate its properties
and to carry on its business as presently being conducted.
3.2. The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to purchase the Shares in accordance
with the terms of this Agreement, and to carry out and perform all of its
other obligations under the terms of this Agreement.
3.3 This Agreement has been duly authorized, executed, and delivered
by or on behalf of the Company and, assuming due execution and delivery of
this Agreement by the Sellers, this Agreement constitutes the legal, valid,
and binding obligation of the Company enforceable in accordance with its
terms.
3.4. No consent, approval, or authorization of or qualification,
designation, declaration, or filing with any governmental authority on the
part of the Company is required in connection with the execution, delivery,
and performance by the Company of this Agreement, the purchase by the
Company of any of the Shares, or the consummation of any other transaction
contemplated by this Agreement.
3.5. The Company is not in violation of any provision of its Articles
of Incorporation or Bylaws, or of any loan agreement or other material
agreement to which it is a party. The execution, delivery, and performance
of this Agreement and the taking of action contemplated by this Agreement
will not result in any violation of or be in conflict with or constitute a
default under any of the foregoing or result in the creation of any
mortgage, lien, charge, or encumbrance upon any of the properties or assets
of the Company pursuant to any of the foregoing.
Section IV
Representations and Warranties of Each Seller
Each of the Sellers, severally and not jointly, represents and
warrants to the Company as follows:
4.1. Such Seller has all requisite power and authority and full legal
capacity to execute and deliver this Agreement, to sell the Shares now
owned by such Seller in accordance with the terms of this Agreement, and to
carry out and perform all of her, his, or its other obligations under the
terms of this Agreement.
4.2. This Agreement has been duly executed and delivered by such
Seller, and assuming due authorization, execution, and delivery of this
Agreement by the Company, this Agreement constitutes the valid and binding
obligation of such Seller enforceable in accordance with its terms.
4.3. Such Seller is the beneficial owner of the number of Shares
referred to in Section B. Such Shares are owned by such Seller free of all
liens, claims, charges, and encumbrances, except for ML's options and SL's
shares issued in accordance with the Company's 1999 Restricted Stock Plan.
At the time of any transfer of any Shares to the Company pursuant to this
Agreement, such Shares will be owned by such Seller free and clear of any
liens, claims, charges, , or encumbrances. With respect to the Foundation,
the execution and delivery of this Agreement by it has received, and the
sale of its Shares pursuant to this Agreement will at the time of sale have
received, all required approvals, including any Board of Directors
approvals. None of the Sellers is a party to, or bound by, any agreement
or other right or arrangement (a) that provides for the sale, transfer, or
other disposition of any of her, his, or its Shares (other than this
Agreement) or (b) under which the execution, delivery, and performance by
her, him, or it of this Agreement would result in a material breach thereof
or a material default thereunder or would create a lien, charge, or
encumbrance on the Shares owned by her, him, or it.
Section V
Conditions to a Closing
5.1. Each Seller's obligations to sell and deliver the Shares owned by
such Seller to be purchased by the Company at a Closing is subject to the
fulfillment, to the Seller's reasonable satisfaction, before or at such
Closing, of the following conditions, any of which may be waived in writing
by such Seller:
5.1.A. The representations and warranties of the Company made or
contained in this Agreement or otherwise made in writing by or on behalf of
the Company in connection with the transactions contemplated by this
Agreement shall be true and correct in all material respects at and as of
the date of such Closing as if made on and as of such date, except as
affected by the transactions contemplated by this Agreement.
5.1.B. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by it before or at such Closing.
5.1.C. The Company shall have delivered to such Seller a
certificate dated the date of the Closing and executed by the President or
a Vice President of the Company certifying that, after due inquiry in the
case of matters not within his knowledge, the conditions specified in
Sections 5.1.A and 5.1.B have been fulfilled.
5.2. The Company's obligation to purchase and pay for the Shares of
any Seller to be acquired by the Company at a Closing is subject to the
fulfillment, before or at such Closing, of the following conditions, any of
which may be waived in writing by the Company:
5.2.A. The representations and warranties of a Seller made or
contained in this Agreement or otherwise made in writing by such Seller in
connection with the transactions contemplated by this Agreement shall be
true and correct in all material respects at and as of the date of such
Closing as if made on and as of such date, except as affected by the
transactions contemplated by this Agreement.
5.2.B The Seller shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by her, him, or it before or at such Closing.
5.2.C. The Seller shall have delivered to the Company a certificate
dated the date of the Closing and executed by such Seller certifying that
the conditions specified in Sections 5.2.A and 5.2.B hereof have been
fulfilled and that the Company will acquire good title to the Shares being
acquired free and clear of any liens, claims, charges, or encumbrances.
5.2.D. In connection with a Closing resulting from a Put Notice,
each of the Sellers shall have either exercised or forfeited all options,
warrants, and other rights to acquire shares of the Common Stock held by
such Seller, and, if so exercised, such shares of Common Stock shall have
been issued to such Seller and included in the sale to the Company.
5.2.E. The Purchase of any of the Shares by the Company shall not,
in the reasonable opinion of the Board of Directors of the Company upon
advice of Virginia counsel, constitute a violation of Section 13.1-653 of
the Virginia Stock Corporation Act.
Section VI
Miscellaneous
6.1.A. All agreements, representations, and warranties contained in
this Agreement or made in writing by the Company or on behalf of the
Company in connection with the transactions contemplated by this Agreement
shall survive the execution and delivery of this Agreement, any
investigation at any time made by the Sellers or on their behalf, the sale
and purchase of the Shares, and payment therefor.
6.1.B. All statements contained in any certificate or other
instrument executed and delivered by the Company or its duly authorized
officers pursuant to this Agreement in connection with the transactions
contemplated by this Agreement shall be deemed representations by the
Company under this Agreement.
6.1.C. All agreements, representations, and warranties contained in
this Agreement or made in writing by any of the Sellers in connection with
the transactions contemplated by this Agreement shall survive the execution
and delivery of this Agreement, the sale and purchase of the Shares and
payment therefor.
6.1.D. All statements contained in any certificate or other
instrument executed and delivered by any Seller pursuant to this Agreement
in connection with the transactions contemplated by this Agreement shall be
deemed representations by such Seller under this Agreement.
6.2. All of the Shares shall bear either a legend reflecting the
restrictions on transfer imposed by this Agreement or a stop order shall be
placed on the Shares with the Company's transfer agent.
6.3. Any failure of a party hereto to insist upon strict performance
by any other party of any of the terms of this Agreement shall not be
deemed to be a waiver of any of the terms and conditions of this Agreement
unless such party so acknowledges in writing and such party shall have the
right thereafter to insist upon strict performance thereof by the other
party.
6.4. This Agreement is to be governed by, and construed, interpreted,
and enforced in accordance with the laws of the Commonwealth of Virginia
without regard to the conflicts of laws provisions thereof.
6.5. This Agreement shall be binding upon and shall inure to the
benefit of the Company and any entity which shall be merger, consolidation,
purchase, or otherwise succeed to substantially all of the business of the
Company, the Company's assigns permitted pursuant to the next sentence, and
the Sellers and their respective distributees and Representatives. The
Company may assign all or a portion of its right, title, and interests
under this Agreement to any employee benefit plan in which the Company's
employees participate (as a result of their position as the Company's
employees), or to any other entity that undertakes and agrees in a writing
reasonably satisfactory to the Sellers to be bound by the Company's
obligations under this Agreement. Except as contemplated by Section I, the
Sellers shall not have the right to assign any of their rights or
obligations under this Agreement or transfer any of their Shares without
the express written consent of the Company.
6.6. All notices , requests, instructions, or other documents required
under this Agreement shall be deemed to have been given or made when
personally delivered or when deposited with the U.S. Postal Service for
delivery by registered or certified mail and addressed to or telecopied
(providing that the teletransmission is confirmed by regular mail):
To the Company: 350 Fifth Avenue
New York, New York 10018
Attn: Mr. Jerald Kamiel, President
Telecopier No.: 971-2254
To the Sellers: Mr. Seymour Lichtenstein
791 Park Avenue
New York, New York 10021
Telecopier No.: _____________
A copy of all notices shall be sent
to: Tannenbaum Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Telecopier No.: 212-302-2906
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
Attn: Allen C. Goolsby, Esq.
Telecopier No.: 804-788-8218
Any party may from time to time give the others written notice of a change
in the address to which notices are to be sent.
6.7. Inapplicability or unenforceability of any provision of this
Agreement shall not impair the operation or validity of any other provision
hereof.
6.8. This Agreement contains the entire agreement between the Sellers
and the Company with respect to the subject matter of this Agreement and
supercedes all prior agreements, arrangements, and understandings, written
or oral, among the parties with respect to the subject matter of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
GARAN, INCORPORATED
By:_____________________________________
Jerald Kamiel, President
________________________________________
Seymour Lichtenstein
________________________________________
Marita Lichtenstein, individually and as
Custodian for Samuel Lichtenstein
THE LICHTENSTEIN FOUNDATION, INC.
By:__________________________________
Seymour Lichtenstein, President
<TABLE> <S> <C>
<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-30-2000
<PERIOD-START> OCT-1-1999
<PERIOD-END> DEC-31-1999
<CASH> 9,086,000
<SECURITIES> 5,905,000
<RECEIVABLES> 30,087,000
<ALLOWANCES> 512,000
<INVENTORY> 39,953,000
<CURRENT-ASSETS> 92,047,000
<PP&E> 39,441,000
<DEPRECIATION> 24,972,000
<TOTAL-ASSETS> 153,009,000
<CURRENT-LIABILITIES> 30,408,000
<BONDS> 2,130,000
<COMMON> 2,660,000
0
0
<OTHER-SE> 115,526,000
<TOTAL-LIABILITY-AND-EQUITY> 153,009,000
<SALES> 53,345,000
<TOTAL-REVENUES> 53,345,000
<CGS> 41,947,000
<TOTAL-COSTS> 41,947,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,000
<INCOME-PRETAX> 5,442,000
<INCOME-TAX> 2,258,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,184,000
<EPS-BASIC> 0.60
<EPS-DILUTED> 0.59
</TABLE>
