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 October 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 its 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 December 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 -
October 31, 1995 and January 31, 1995 2
Condensed Consolidated Statements of
Operations and Retained Earnings - Three Months and Nine Months
Ended October 31, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended October 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 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 consolidated
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 nine month periods
ended October 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)
October 31, January 31,
ASSETS 1995 1995
Current Assets:
Cash $170,196 $119,919
Accounts receivables,
net of allowance for
doubtful accounts of $376,000
at October 31, 1995 and
January 31, 1995 4,038,199 4,408,871
Inventories 11,302,946 8,858,298
Deferred income taxes 455,000 455,000
Other current assets 252,982 160,551
------- -------
Total current assets 16,219,323 14,002,639
Property and equipment,
net of accumulated
depreciation of $1,380,000 at
October 31, 1995
and $1,208,000 at
January 31,1995 986,147 691,258
Excess of cost over fair
value of net
assets acquired, net of
accumulated amortization
of $217,000 at October 31, 1995 and
$195,000 at January 31, 1995 374,434 396,428
Mortgage receivable 149,970 154,437
Other assets 296,493 17,086
------- -------
$18,026,367 $15,561,848
=========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,069,811 $2,824,548
Current portion of long-term
liabilities 50,000 3,615,873
Accrued expenses and other
current liabilities 153,392 372,416
------- -------
Total current liabilities 2,273,203 6,812,837
--------- ---------
Long-term liabilities 6,858,415 440,915
--------- -------
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 2,755,023 2,168,370
--------- ---------
Total stockholders' equity 8,761,749 8,175,096
--------- ---------
$18,026,367 $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 NINE MONTHS ENDED
October 31 October 31
1995 1994 1995 1994
Net Sales $8,750,887 $8,159,035 $30,168,735 $26,199,088
Cost of Goods Sold 7,048,797 6,364,715 25,106,808 20,949,473
Gross Profit 1,702,090 1,794,320 5,061,927 5,249,615
Operating expenses 1,164,543 1,183,762 3,778,489 3,589,596
--------- --------- --------- ---------
Income from Operations 537,547 610,558 1,283,438 1,660,019
Other Income/(Expense) 11,882 3,316 48,184 18,728
Interest Expense (135,103) (82,917) (374,969) (203,880)
-------- -------- --------- ---------
Income before income
taxes 414,326 530,957 956,653 1,474,867
Provision for income
taxes 156,000 180,000 370,000 495,000
------- ------- ------- -------
Net Income 258,326 350,957 586,653 979,867
Retained Earnings at
Beginning of Period 2,496,697 1,375,802 2,168,370 746,892
--------- --------- --------- -------
Retained Earnings
at End of Period $2,755,023 $1,726,759 $2,755,023 $1,726,759
========== ========== ========== ==========
Income per common and common
equivalent share: $.10 $.13 $.22 $.37
==== ==== ==== ====
Number of common and common equivalent
shares outstanding 2,632,009 2,628,650 2,644,940 2,613,278
========= ========= ========= =========
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
October 31,
1995 1994
Cash Flows from Operating Activities:
Net Income $586,653 $979,867
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation and amortization 194,162 213,726
Deferred income taxes - (20,000)
Decrease (increase) in
accounts receivable 370,672 461,229
Decrease (increase) in
inventories (2,444,648) (1,905,638)
Decrease (increase) in
other current assets (92,431) (51,997)
Increase (decrease) in
accounts payable, accrued
expenses and other current
liabilities (936,009) 361,352
--------- -------
Net cash (used in) provided by operating
activities (2,321,601) 38,539
Cash Flows from Investing Activities:
Purchases of property
and equipment (467,249) (62,225)
Net proceeds from sale of
property - 26,602
--------- -------
(467,249) (35,623)
Cash Flows from Financing Activities:
Proceeds from net borrowing under
line of credit agreement 2,839,127 25,271
Net increase in cash 50,277 28,187
Cash at beginning of period 119,919 13,353
------- ------
Cash at end of period $170,196 $41,540
======== =======
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:
October 31, January 31,
1995 1995
Raw materials
$2,667,739 $3,097,052
Work in process
2,305,819 2,092,028
Finished goods
6,329,388 3,669,218
------------- -------
- -----
$11,302,946 $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 nine month periods ended October
31, 1995 and 1994 is based on the weighted average number of common shares
outstanding and common share equivalents.
C. Revolving Credit Facility:
At October 31, 1995, the balance outstanding under the Company's
$8,000,000 secured revolving credit facility amounted to $6,405,000. This
Agreement is collateralized by the Company's inventories and accounts
receivable, expires on July 31, 1998 and interest charges are calculated on
various optional formulas using the prime rate, LIBOR, banker's acceptance
and letters of credit. The facility contains restrictive covenants relating
to minimum tangible net worth, capital expenditures, current ratio and
interest coverage.
ITEM 2.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nine months ended October 31, 1995 compared to the nine months ended
October 31, 1994.
Net sales for the nine month period ended October 31, 1995 increased
$3,970,000 or 15.2% to $30,169,000 from $26,199,000 reported for the nine
month period ended October 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 16.8% for the
nine month period ended October 31, 1995 from 20% reported for the
corresponding period of the 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 12.5%
for the nine month period ended October 31, 1995 from 13.7% for the
corresponding period of the prior year, as sales continue to increase and
reduced pension expense.
Interest expense increased as borrowings increased during the current
year nine month period.
As a result of the foregoing, operating results decreased to a net income
of $587,000 for the nine month period ended October 31, 1995 from net
income of $980,000 for the nine month period ended October 31, 1994.
Three months ended October 31, 1995 compared to the three months ended
October 31, 1994.
Net sales for the three month period ended October 31, 1995 increased
$592,000 or 7.3% to $8,751,000 from $8,159,000 reported for the three month
period ended October 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 decreased 18.7% during the quarter ended October 31,
1995 as compared to the immediate preceding quarter. For the third
consecutive year, the third quarter has been the seasonally weakest of the
fiscal year.
Gross profit as a percentage of net sales decreased to 19.5% for the
three month period ended October 31, 1995 from 22.0% reported for the
corresponding period of the prior year, principally due to the 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 disposable and woven cloth products.
Operating expenses as a percentage of net sales decreased to 13.3%
for the three month period ended October 31, 1995 from 14.5% for the
corresponding period of the prior year, as sales continue to increase and
expenses decreased 1.6%.
Interest expense increased as borrowings increased during the current
year three month period.
As a result of the foregoing, operating results decreased to net income of
$258,000 for the three month period ended October 31, 1995 from net income
of $351,000 for the three month period ended October 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.
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 acceptance and letters of credit. The
Company's October 31, 1995 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 October 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: December 8, 1995
Raymond J. Smith
---------------------
Raymond J. Smith,
President and Chief Executive Officer
Date: December 8, 1995
James M. McCormick
-------------------------
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)