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, 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 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 9,
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 -
July 31, 1996 and January 31, 1996 2
Condensed Consolidated Statements of
Operations and Retained Earnings -
Three Months and Six Months Ended
July 31, 1996 and 1995 3
Condensed Consolidated Statements of
Cash Flows - Six Months
Ended July 31, 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 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, 1996.
The results of operations for the three month and six month
periods ended July 31, 1996 and 1995 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 1996 1996
Current Assets:
Cash $316,390 $364,640
Accounts receivable-trade,
net of allowance for
doubtful accounts of
$263,000 at July 31, 1996
and January 31, 1996 4,757,208 4,979,975
Inventories 11,620,359 11,244,241
Deferred income taxes 432,000 432,000
Other current assets 362,235 490,776
--------- ---------
Total current assets 17,488,192 17,511,632
Property and equipment,
net of accumulated
depreciation of $1,596,000
at July 31, 1996 and
$1,451,000 at
January 31, 1996 1,019,338 1,026,203
Excess of cost over the
fair value of net assets
acquired, net of accumulated
amortization of $239,000
at July 31, 1996 and
$223,000 at
January 31, 1996 357,110 367,104
Mortgage receivable 143,643 147,921
Other assets 187,278 209,872
------- -------
$19,195,561 $19,262,732
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,459,972 $3,465,552
Current portion of
long-term liabilities 50,000 50,000
Accrued expenses and other
current liabilities 296,910 378,524
--------- ---------
Total current liabilities 2,806,882 3,894,076
--------- ---------
Long-term liabilities 6,904,438 6,491,938
--------- ---------
Deferred income taxes 115,000 115,000
--------- ---------
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 3,362,515 2,754,992
--------- ---------
Total stockholders'
equity 9,369,241 8,761,718
--------- ---------
$19,195,561 $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 SIX MONTHS ENDED
July 31, July 31,
1996 1995 1996 1995
Net Sales $10,129,252 $10,757,255 $20,670,914 $21,417,848
Cost of
Goods Sold 8,376,062 9,281,383 16,817,937 18,058,011
---------- --------- ---------- ----------
Gross Profit 1,753,190 1,475,872 3,852,977 3,359,837
Operating
expenses 1,320,736 1,235,944 2,629,508 2,613,946
---------- --------- --------- ---------
Income from
Operations 432,454 239,928 1,223,469 745,891
Other Income
/(Expense) 11,723 13,768 26,980 36,302
Interest
Expense (132,479) (126,406) (254,926) (239,866)
--------- --------- --------- --------
Income before
income taxes 11,698 127,290 995,523 542,327
Provision for
income taxes 122,000 49,000 388,000 214,000
-------- ------- ------- -------
Net Income 189,698 78,290 607,523 328,327
Retained Earnings
at Beginning
of Period 3,172,817 2,418,407 2,754,992 2,168,370
--------- --------- --------- ---------
Retained Earnings
at End
of Period $3,362,515 $2,496,697 $3,362,515 $2,496,697
========== =========== =========== ===========
Income per common
and common equivalent
share $.07 $.03 $.23 $.12
==== ==== ==== ====
Number of common
and common
equivalent shares
outstanding 2,611,205 2,631,009 2,613,334 2,633,450
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 1995
Cash Flows from Operating Activities:
Net Income $607,523 $328,327
Adjustments to reconcile net income
to net cash (used in)
provided by operating activities:
Depreciation and amortization 166,265 122,790
Decrease (increase) in
accounts receivable 222,767 (203,670)
Decrease (increase)
in inventories (376,118) (1,236,344)
Decrease (increase) in
other current assets 128,541 (157,015)
Decrease (increase) in
other assets 26,872 (31,529)
Increase (decrease) in
accounts payable, accrued
expenses and other
current liabilities (1,087,194) 882,629
----------- -------
Net cash (used in) provided
by operating activities (311,344) (294,812)
Cash Flows from Investing Activities:
Purchases of property and
equipment (149,406) (367,645)
Cash Flows from Financing Activities:
Net borrowings (reduction) under
line of credit agreement 412,500 711,541
------- -------
Net increase (decrease) in cash (48,250) 49,084
Cash at beginning of period 364,640 119,919
------- -------
Cash at end of period $316,390 $169,003
======== ========
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,
1996 1996
Raw materials $2,286,202 $2,980,137
Work in process 3,400,362 3,225,272
Finished goods 5,933,795 5,038,832
--------- ---------
$11,620,359 $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 and six month periods ended
July 31, 1996 and 1995 is based on the weighted average number
of common shares outstanding and common share equivalents.
C. Revolving Credit Facility:
At July 31, 1996, the balance outstanding under the Company's secured
revolving credit facility amounted to $6,475,000. The Company
was in compliance with all loan covenants at July 31, 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, banker's
acceptances and letters of credit.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
Six months ended July 31, 1996 compared to the six months ended July 31, 1995.
Net sales for the six month period ended July 31, 1996
decreased $747,000 or 3.5% to $20,671,000 from $21,418,000
reported for the six month period ended July 31, 1995.
Decreased unit shipments of various protective garment products
and a general slowdown in the industry are the principal
reasons for this downward movement in sales. This industry,
however, continues to be highly competitive.
Gross profit as a percentage of net sales increased to 18.6%
for the six month period ended July 31, 1996 from 15.7% reported
for the corresponding period of prior year, principally due to
increased selling prices (commencing with the new year) and not
having to meet competitive pricing on the most popular
disposable products.
Operating expenses as a percentage of net sales increased to
12.7% for the six month period ended July 31, 1996 from 12.2%
for the corresponding period of the prior year, as sales
decreased coupled with a decrease in the prior year period in
the allowance for doubtful accounts and pension expense.
Interest expense increased as aggregate borrowings increased
during the current year six month period.
As a result of the foregoing, operating results increased to
a net income of $608,000 for the six month period ended July
31, 1996 from net income of $328,000 for the six month period
ended July 31, 1995.
Three months ended July 31, 1996 compared to the three
months ended July 31, 1995.
Net sales for the three month period ended July 31, 1996
decreased $628,000 or 5.8% to $10,129,000 from $10,757,000
reported for the three month period ended July 31, 1995.
Decreased unit shipments of various protective garment products
is the principal reason for this downward movement in sales.
This industry, however, continues to be highly competitive. Net
sales decreased 3.9% during the quarter ended July 31, 1996 as
compared to the immediate preceding quarter.
Gross profit as a percentage of net sales increased to 17.3%
for the three month period ended July 31, 1996 from 13.7%
reported for the corresponding period of the prior year,
principally due to increased selling prices for the entire
quarter, not having to meet competitive pricing on the most
popular disposable products and the liquidation of certain non-
woven protective garment products and woven cloth products
affecting the prior year period.
Operating expenses as a percentage of net sales increased to
13.04% for the three month period ended July 31, 1996 from
11.5% for the corresponding period of the prior year, as sales
decreased coupled with a decrease in the prior year period in
the allowance for doubtful accounts and pension expense.
Interest expense increased as aggregate borrowings increased
during the current year three month period.
As a result of the foregoing, operating results increased to
net income of $190,000 for the three month period ended July
31, 1996 from net income of $78,000 for the three month period
ended July 31, 1995.
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 July 31, 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 July 31, 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: September 11, 1996 Raymond J. Smith
-----------------
Raymond J. Smith,
President and
Chief Executive Officer
Date: September 11, 1996 James M. McCormick
-------------------
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)