UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended April 30, 1996
OR
______ TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to _______________
Commission File Number: 0-15535
LAKELAND INDUSTRIES, INC.
(Exact name of Registrant as specified in it's charter)
Delaware 13-3115216
(State of incorporation) (IRS Employer Identification Number)
711-2 Koehler Avenue, Ronkonkoma, New York 11779
(Address of principal executive offices)
(516) 981-9700
(Registrant's telephone number, including area code)
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 that 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 latest practicable date:
Common Stock, $.01 par value, outstanding at June 7, 1996 - 2,550,000
shares.
LAKELAND INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-Q
The following information of the Registrant and its subsidiaries is
submitted herewith:
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
Introduction 1
Condensed Consolidated Balance Sheets - April 30, 1996 and
January 31, 1996 2
Condensed Consolidated Statements of Operations and Retained Earnings -
Three Months Ended April 30, 1996 and 1995 3
Condensed Consolidated Statements of Cash Flows - Three Months Ended
April 30, 1996
and 1995 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K None
Signatures 7
LAKELAND INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Introduction
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission and reflect all adjustments which are,
in the opinion of management, necessary to present fairly the consolidated
financial information required therein.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended January 31, 1996.
The results of operations for the three month periods ended April 30,
1996 and 1995 are not necessarily indicative of the results to be expected for
the full year.
<PAGE>
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30 January 31,
ASSETS 1996 1996
(unaudited)
Current Assets:
Cash $147,228 $364,640
Accounts receivable-trade, net of allowance for
doubtful accounts of $263,000 at April 30, 1996 and
January 31, 1996 5,042,275 4,979,975
Inventories 11,910,388 11,244,241
Deferred income taxes 432,000 432,000
Other current assets 200,400 490,776
Total current assets 17,732,291 17,511,632
Property and equipment, net of accumulated
depreciation of $1,520,000 at April 30, 1996
and $1,451,000 January 31, 1996 1,052,430 1,026,203
Excess of cost over the fair value of net assets acquired,
net of accumulated amortization
of $228,000 at April 30, 1996 and
$223,000 at January 31, 1996 362,107 367,104
Note receivable 145,266 147,921
Other assets 208,316 209,872
$19,500,410 $19,262,732
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $3,010,154 $3,465,557
Current portion of long-term liabilities 50,000 50,000
Accrued expenses and other current liabilities 401,275 378,524
Total current liabilities 3,461,429 3,894,076
Long-term liabilities 6,744,438 6,491,938
Deferred income taxes 115,000 115,000
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $.01 par; authorized
1,500,000 shares (none issued)
Common stock, $.01 par; authorized
10,000,000 shares; issued and outstanding
2,550,000 shares 25,500 25,500
Additional paid in capital 5,981,226 5,981,226
Retained earnings 3,172,817 2,754,992
Total stockholders' equity 9,179,543 8,761,718
$19,500,410 $19,262,732
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE MONTHS ENDED
April 30,
1996 1995
Net Sales $10,541,662 $10,660,593
Cost of Goods Sold 8,441,875 8,776,628
Gross Profit 2,099,787 1,883,965
Operating Expenses 1,308,772 1,378,002
Income from Operations 791,015 505,963
Other Income/(expense), net 15,257 22,534
Interest Expense (122,447) (113,460)
Income before income taxes 683,825 415,037
Provision for income taxes 266,000 165,000
Net Income 417,825 250,037
Retained earnings at beginning of period 2,754,992 2,168,370
Retained earnings at end of period $3,172,817 $2,418,407
Income per common and common equivalent share $.16 $.09
Number of common and common equivalent
shares outstanding 2,645,410 2,655,797
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
April 30,
1996 1995
Cash Flows from Operating Activities:
Net Income $417,825 $250,037
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 79,119 60,548
Decrease (increase) in accounts receivable (62,300) (995,924)
Decrease (increase) in inventories (666,147) (457,366)
Decrease (increase) in other current assets 290,376 (59,618)
Decrease (increase) in other assets - 5,600
Increase (decrease) in accounts payable, accrued
expenses and other current liabilities (432,647) 407,845
Net cash used in operating activities (373,774) (788,878)
Cash Flows from Investing Activities -
Purchases of property and equipment - net (96,138) (96,384)
Cash Flows from Financing Activities:
Net borrowings (reduction) under line of credit
agreement 252,500 961,429
Net increase (decrease) in cash (217,412) 76,167
Cash at beginning of period 364,640 119,919
Cash at end of period $147,228 $196,086
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Inventories:
Inventories consist of the following:
April 30, January 31,
1996 1996
Raw materials $2,704,795 $2,980,137
Work in process 4,121,249 3,225,272
Finished goods 5,084,344 5,038,832
$11,910,388 $11,244,241
Inventories are stated at the lower of cost or market. Cost is determined
generally on the first-in, first-out method.
B. Earnings Per Common and Common Equivalent Share:
Earnings per share for the three month periods ended April 30, 1996 and
1995 is based on the weighted average number of common shares outstanding and
common share equivalents.
C. Revolving Credit Facility:
At April 30, 1996, the balance outstanding under the Company's secured
revolving credit facility amounted to $6,340,000. The Company was in
compliance with all loan covenants at April 30, 1996. This facility is
collateralized by the Company's inventory and accounts receivable and expires
on July 31, 1998. Interest charges under this credit facility are
calculated on various optional formulas using the prime rate, LIBOR, bankers'
acceptance and letters of credit.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Three months ended April 30, 1996 compared to the three months ended April
30, 1995: Net sales for the quarter ended April 30, 1996 decreased
$119,000 or 1.1% to $10,542,000 from $10,661,000 reported for the
corresponding period of the prior year. Steadying of the customer base, a
price increase effective with orders received as of February 1, 1996 and
decreased unit shipments of various protective garment products are
the principle reasons for the slight change. The Company believes that the
decrease in unit shipments was primarily attributable to the Federal
Government's partial shut down between October 1995 and April 1996 which
affected direct agency purchasing and government
contractors and subcontractors purchasing in the Company's industry.
This industry continues to be highly competitive. Net Sales increased 5.2%,
during the quarter ended April 30, 1996 as compared to the immediate preceding
quarter, principally due to the price increase mentioned above.
However, gross profit as a percentage of net sales increased to 19.9% for
the quarter ended April 30, 1996 from 17.7% reported for the corresponding
period of the prior year, principally due to the utilization of inventory
purchased prior to the cost of material increasing at the commencement of the
new fiscal year, shipments to customers with the new price increase shipping
early in the quarter and the Company not having to meet competitive pricing
on it's most popular disposable products. Gross profit margins
increased during the quarter ended April 30, 1996 from 12.1% during the
immediate preceding quarter, principally due to the correction of
manufacturing difficulties that occurred in the previous quarter.
Operating expenses as a percentage of net sales decreased, to 12.4% for
the quarter ended April 30, 1996 from 12.9% for the corresponding period of
the prior year, as cost reduction programs continue and sales decreased,
slightly.
Interest expense increased as borrowing increased during the current
year quarter.
As a result of the foregoing, net income increased to $418,000 for the
quarter ended April 30, 1996 from $250,000 from the corresponding period of
the prior year.
LIQUIDITY and CAPITAL RESOURCES
Lakeland has historically met its cash requirements through funds generated
from operations and borrowings under a revolving credit facility. On August
30, 1995, the Company entered into a new $8 million facility with its Bank.
This facility matures on July 31, 1998. Interest charges under this credit
facility are calculated on various optional formulas using the prime rate,
LIBOR, banker's acceptances and letters of credit.
The Company's April 30, 1996 balance sheet shows a strong current ratio and
working capital position and management believes that its positive financial
position, together with this new credit agreement, will provide sufficient
funds for operating purposes for the next twelve months.
Item 6. Exhibits and Reports on Form 8-K:
a - None
b - No reports on Form 8-K were filed during the three month period
ended April 30, 1996
_________________SIGNATURES_________________
Pursuant to the requirements of Section 13 or 15 (d) 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.
LAKELAND INDUSTRIES, INC.
(Registrant)
Date: June 7, 1996 Raymond J. Smith
Raymond J. Smith,
President and Chief Executive Officer
Date: June 7, 1996 James M McCormick
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from [identify
specific financial statement[s]] and is qualified in its entirety by reference
to such financial statement[s].
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> APR-30-1996
<CASH> 147,228
<SECURITIES> 0
<RECEIVABLES> 5,042,275
<ALLOWANCES> 0
<INVENTORY> 11,910,388
<CURRENT-ASSETS> 17,951,695
<PP&E> 1,052,430
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,719,814
<CURRENT-LIABILITIES> 3,680,833
<BONDS> 0
0
0
<COMMON> 25,500
<OTHER-SE> 5,981,226
<TOTAL-LIABILITY-AND-EQUITY> 9,179,543
<SALES> 10,541,662
<TOTAL-REVENUES> 10,541,662
<CGS> 8,441,875
<TOTAL-COSTS> 8,441,875
<OTHER-EXPENSES> 1,308,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,447
<INCOME-PRETAX> 683,825
<INCOME-TAX> 266,000
<INCOME-CONTINUING> 417,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417,825
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
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