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, 1997
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 9, 1997 - 2,560,000 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, 1997 and
January 31, 1997 2
Condensed Consolidated Statements
of Income and Retained Earnings -
Three Months Ended April 30, 1997
and 1996 3
Condensed Consolidated Statements
of Cash Flows - Three Months Ended
April 30, 1997 and 1996 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, 1997.
The results of operations for the three month periods ended April 30, 1997
and 1996 are not necessarily indicative of the results to be expected for
the full year.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, January 31,
ASSETS 1997 1997
(unaudited)
Current Assets:
Cash $568,582 $504,940
Accounts receivable-trade,
net of allowance for
doubtful accounts of
$150,000 at April 30, 1997
and January 31, 1997 6,417,874 5,893,594
Inventories 9,246,636 9,894,156
Deferred income taxes 469,000 469,000
Other current assets 247,659 176,901
------- -------
Total current assets 16,949,751 16,938,591
Property and equipment,
net of accumulated
depreciation of $1,845,000
at April 30, 1997 and
$1,763,000
January 31, 1997 1,041,192 989,667
Excess of cost over the
fair value of net assets
acquired, net of accumulated
amortization of $203,000
at April 30, 1997 and $198,000
at January 31, 1997 342,120 347,116
Note receivable 138,575 140,298
Other assets 238,840 157,444
------- -------
$18,710,478 $18,573,116
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,554,481 $2,534,999
Current portion of long-
term liabilities 50,000 50,000
Accrued expenses and other
current liabilities 695,002 335,314
-------- ---------
Total current
liabilities 2,299,483 2,920,313
--------- ---------
Long-term liabilities 6,033,289 5,745,789
--------- ---------
Deferred income taxes 82,000 82,000
------ ------
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 4,288,980 3,818,288
--------- ---------
Total stockholders'
equity 10,295,706 9,825,014
---------- ---------
$18,710,478 $18,573,116
=========== ===========
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
THREE MONTHS ENDED
April 30,
1997 1996
Net Sales $12,013,629 $10,541,662
Cost of Goods Sold 9,707,638 8,441,875
--------- ---------
Gross Profit 2,305,991 2,099,787
Operating Expenses 1,450,409 1,308,772
--------- ---------
Income from Operations 855,582 791,015
Other Income/(expense), net 15,965 15,257
Interest Expense (100,855) (122,447)
--------- ---------
Income before income taxes 770,692 683,825
Provision for income taxes 300,000 266,000
------- -------
Net Income 470,692 417,825
Retained earnings at
beginning of period 3,818,288 2,754,992
--------- ---------
Retained earnings at
end of period $4,288,980 $3,172,817
========== ==========
Income per common and
common equivalent share $.18 $.16
==== ====
Number of common and common equivalent
shares outstanding 2,598,591 2,579,407
========= =========
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
April 30,
1997 1996
Cash Flows from Operating Activities:
Net Income $470,692 $417,825
Adjustments to reconcile net
income to net cash
used in operating activities:
Depreciation and amortization 86,648 79,119
Decrease (increase) in accounts
receivable (524,280) (62,300)
Decrease (increase) in
inventories 647,520 (666,147)
Decrease (increase) in other
current assets (70,758) 290,376
Decrease (increase) in other
assets (79,673) -
Increase (decrease) in accounts
payable, accrued expenses and
other current liabilities (620,830) (432,647)
--------- ---------
Net cash used in operating
activities (90,681) (373,774)
Cash Flows from Investing Activities -
Purchases of property
and equipment - net (120,677) (96,138)
Cash Flows from Financing Activities:
Net borrowings (reduction)under
line of credit agreement 275,000 252,500
------- -------
Net increase (decrease)
in cash 63,642 (217,412)
Cash at beginning of period 504,940 364,640
------- -------
Cash at end of period $568,582 $147,228
======== ========
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,
1997 1997
Raw materials $2,649,863 $2,669,254
Work in process 3,651,766 3,124,141
Finished goods 2,945,007 4,100,761
--------- ---------
$9,246,636 $9,894,156
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, 1997 and
1996 is based on the weighted average number of common shares outstanding
and common share equivalents.
C. Revolving Credit Facility:
At April 30, 1997, the balance outstanding under the Company's secured
revolving credit facility amounted to $5,675,000. The Company was in
compliance with all loan covenants at April 30, 1997. 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.
D. New Accounting Pronouncement:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share", which is
effective for financial statements for both interim and annual periods
ending after December 15, 1997. Early adoption of the new standard is not
permitted. The new standard eliminates primary and fully diluted earnings
per share and requires presentation of basic and diluted earnings per share
together with disclosure of how the per share amounts were computed
holders by the weighted-average common shares outstanding for the period.
Diluted earnings per share reflect the weighted-average common shares
outstanding, plus the potential dilutive effect of options which are
convertible to common shares. The effect of adopting this new standard
has not been determined.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three months ended April 30, 1997 compared to the three months ended
April 30, 1996:
Net sales for the quarter ended April 30, 1997 increased $1,472,000 or
14% to $12,014,000 from $10,542,000 reported for the corresponding period
of the prior year. Steadying of the customer base and increased unit
shipments of various protective garment products are the principle reasons
for the change. The Company believes that a decrease in unit shipments
negatively affecting sales during the first quarter of fiscal 1997 was
primarily attributable to the Federal Government's partial shut-down
between October 1995 and April 1996. This affected direct agency purchasing
and government contractors and subcontractors purchasing in the Company's
industry in the prior year period. This industry continues to be highly
competitive. Net sales increased 6.9% during the quarter ended April 30,
1997 as compared to the immediate preceding quarter, principally due to
volume.
However, gross profit as a percentage of net sales decreased to 19.2%
for the quarter ended April 30, 1997 from 19.9% reported for the
corresponding period of the prior year, principally due to some products
imported for sale during the current year quarter being sold at lower
margins. Gross profit margins increased by 4.5% during the quarter ended
April 30, 1997 from the immediate preceding quarter, principally due to
the increase in sales volume.
Operating expenses as a percentage of net sales decreased to 12.1% for
the quarter ended April 30, 1997 from 12.4% for the corresponding period
of the prior year, as sales increased by 14% and selling and general and
administrative expenses increased by only 10.8%.
Interest expense decreased as borrowing decreased during the current
year quarter.
As a result of the foregoing, net income increased to $471,000 for the
quarter ended April 30, 1997 from $418,000 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, 1997 balance sheet shows a strong current ratio
and working capital position and management believes that its positive
financial position, together with its 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, 1997
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 10, 1997 Raymond J. Smith
------------------
Raymond J. Smith
President and Chief
Executive Officer
Date: June 10, 1997 James M. McCormick,
-------------------
James M. McCormick
Vice President and
Treasurer(Principal
Accounting Officer)
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
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