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, July 31, 1995
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 Ave., 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 September 8, 1995 -
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 -
July 31, 1995 and January 31, 1995 2
Condensed Consolidated Statements of
Operations and Retained Earnings - Three Months
and Six Months Ended July 31, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flow
Ended July 31, 1995 and 1994 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 6
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 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, 1995.
The results of operations for the three month and six month periods
ended July 31, 1995 and 1994 are not necessarily indicative of the results
to be expected for the full year.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
July 31, January 31,
ASSETS 1995 1995
Current Assets:
Cash $169,003 $119,919
Accounts receivable-trade, net of
allowance for doubtful accounts of
$326,000 at July 31, 1995 and
$376,000 at January 31, 1995 4,612,541 4,408,871
Inventories 10,094,642 8,858,298
Deferred income taxes 455,000 455,000
Other current assets 317,566 160,551
Total current assets 15,648,752 14,002,639
Property and equipment, net of
accumulated depreciation of
$1,316,000 at July 31, 1995
and $1,208,000 at January 31,1995 950,775 691,258
Excess of cost over the fair value
of net assets acquired, net of
accumulated amortization
of $210,000 at July 31, 1995 and
$195,000 at January 31, 1995 381,766 396,428
Mortgage receivable 150,986 154,437
Other assets 352,066 317,086
$17,484,345 $15,561,848
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $3,816,579 $2,824,548
Current portion of long-term
liabilities 4,327,414 3,615,873
Accrued expenses and other
current liabilities 250,514 372,416
Total current liabilities 8,394,507 6,812,837
Long-term liabilities 453,415 440,915
Deferred income taxes 133,000 133,000
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $.01 par;
1,500,000 shares authorized; none issued
Common stock, $.01 par;
10,000,000 shares authorized;
2,550,000 shares issued and
outstanding 25,500 25,500
Capital in excess of par value 5,981,226 5,981,226
Retained earnings 2,496,697 2,168,370
Total stockholders' equity 8,503,423 8,175,096
$17,484,345 $15,561,848
=========== ===========
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
July 31, July 31,
1995 1994 1995 1994
Net Sales $10,757,255 $9,224,207 $21,417,84 $18,040,053
Cost of Goods Sold 9,281,383 7,442,449 18,058,011 14,584,758
Gross Profit 1,475,872 1,781,758 3,359,837 3,455,295
Operating expenses 1,235,944 1,203,434 2,613,946 2,405,834
Income from Operations 239,928 578,324 745,891 1,049,461
Other Income/(Expense) 13,768 7,298 36,302 15,412
Interest Expense (126,406) (63,032) (239,866) (120,963)
Income before income
taxes 127,290 522,590 542,327 943,910
Provision for income
taxes 49,000 180,000 214,000 315,000
Net Income 78,290 342,590 328,327 628,910
Retained Earnings at
Beginning of Period 2,418,407 1,033,212 2,168,370 746,892
Retained Earnings at
End of Period $2,496,697 $1,375,802 $2,496,697 $1,375,802
========== ========== ========== ==========
Income per common and
common equivalent
share $.03 $.13 $.12 $.24
Number of common and
common equivalent
shares outstanding 2,647,015 2,616,767 2,651,406 2,605,730
========= ========= ========= =========
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
July 31,
1995 1994
Cash Flows from Operating Activities:
Net Income $328,327 $628,910
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities:
Depreciation and amortization 122,790 139,484
Decrease (increase) in accounts
receivable (203,670) 401,960
Decrease (increase) in inventories (1,236,344) (1,008,154)
Increase in deferred income tax (20,000)
Decrease (increase) in other
current assets (157,015) 26,653
Decrease (increase) in other
asssets (31,529) -
Increase (decrease) in accounts
payable, accrued expenses
and other current liabilities 882,629 (15,617)
Net cash (used in) provided by
operating activities (294,812) 153,236
Cash Flows from Investing Activities:
Purchases of property and equipment (367,645) (41,074)
Cash Flows from Financing Activities:
Net borrowings (reduction) under
line of credit agreement 711,541 (114,953)
Net increase (decrease) in cash 49,084 (2,791)
Cash at beginning of period 119,919 13,353
Cash at end of period $169,003 $10,562
======== =======
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:
July 31, January 31,
1995 1995
Raw materials $3,252,850 $3,097,052
Work in process 2,926,136 2,092,028
Finished goods 3,915,656 3,669,218
$10,094,642 $8,858,298
========== ==========
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 and six month periods ended July
31, 1995 and 1994 is based on the weighted average number of common shares
outstanding and common share equivalents.
C. Revolving Credit Facility:
At July 31, 1995, the balance outstanding under the Company's
$5,000,000 secured revolving credit facility amounted to $4,277,414. This
facility bears interest at the bank's prime rate, plus 1.5%, is
collateralized by the Company's inventories and accounts receivable and
expires on September 22, 1995. On August 30, 1995 the Company entered into
an $8 million revolving credit agreement with its Bank. Such agreement
expires on July 31, 1998 and bears interest at the lower of the prime rate
or LIBOR, plus 200 points. The facility is collaterallized as the prior
facility was and contains restrictive covenants ralating to minimum tangible
net worth, capital expenditures, current ratio and interest coverage.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
Six months ended July 31, 1995 compared to the six months ended
July 31, 1994.
Net sales for the six month period ended July 31, 1995 increased
$3,378,000 or 18.7% to $21,418,000 from $18,040,000 reported for the six
month period ended July 31, 1994. Increased prices and unit shipments of
various protective garment products are the principal reasons for this
upward movement in sales. This industry, however, continues to be highly
competitive.
Gross profit as a percentage of net sales decreased to 15.7% for
the six month period ended July 31, 1995 from 19.2% reported for the
corresponding period of prior year, principally due to increased cost of
raw materials and the meeting of competitive pricing on the most popular
disposable products.
Operating expenses as a percentage of net sales decreased to 12.2%
for the six month period ended July 31, 1995 from 13.3% for the
corresponding period of the prior year, as sales continue to increase
coupled with a decrease in allowance for doubtful accounts and pension
expense.
Interest expense increased as both interest rates and aggregate
borrowings increased during the current year six month period.
As a result of the foregoing, operating results decreased to a net
income of $328,000 for the six month period ended July 31, 1995 from net
income of $629,000 for the six month period ended July 31, 1994.
Three months ended July 31, 1995 compared to the three months
ended July 31, 1994.
Net sales for the three month period ended July 31, 1995 increased
$1,533,000 or 16.6% to $10,757,000 from $9,224,000 reported for the three
month period ended July 31, 1994. Increased prices and unit shipments of
various protective garment products are the principal reasons for this
upward movement in sales. This industry, however, continues to be highly
competitive. Net sales remained steady during the quarter ended July 31,
1995 as compared to the immediate preceding quarter.
Gross profit as a percentage of net sales decreased to 13.7% for
the three month period ended July 31, 1995 from 19.3% reported for the
corresponding period of the prior year, principally due to increased cost
of raw materials for the entire quarter, the meeting of competitive pricing
on the most popular disposable products and the liquidation of certain non-
woven protective garment products and woven cloth products.
Operating expenses as a percentage of net sales decreased to 11.5%
for the three month period ended July 31, 1995 from 13% for the
corresponding period of the prior year, as sales continue to increase
coupled with a decrease in allowance for doubtful accounts and pension
expense.
Interest expense increased as both interest rates and aggregate
borrowings increased during the current year three month period.
As a result of the foregoing, operating results decreased to net
income of $78,000 for the three month period ended July 31, 1995 from net
income of $343,000 for the three month period ended July 31, 1994.
LIQUIDITY and CAPITAL RESOURCES
Lakeland has historically met its cash requirements through funds
generated from operations and borrowings under a revolving credit facility.
In September 1993, the Company entered into a $5 million, two-year, secured
revolving credit agreement with a bank. On August 30, 1995 the Company
entered into a new $8 million facility with its Bank. This facility matures
on July 31, 1998. Borrowings under this credit facility bear interest at a
rate per annum equal to the lower of the prime rate or LIBOR, plus 200
points. The Company's July 31, 1995 balance sheet shows strong current
ratios 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 - (10) - Revolving credit agreement dated August 30, 1995.
b - No reports on Form 8-K were filed during the three month
period ended July 31, 1995.
_________________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: September 12, 1995 Raymond J. Smith
Raymond J. Smith,
President and Chief Executive Officer
Date: September 12, 1995 James M. McComick
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)