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, 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 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 5, 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 - October 31, 1996 and
January 31, 1996 2
Condensed Consolidated Statements of Earnings and Retained
Earnings - Three Months and Nine Months Ended October 31, 1996
and 1995 3
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended October 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
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, 1996.
The results of operations for the three month and nine month
periods ended October 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)
October 31, January 31,
ASSETS 1996 1996
Current Assets:
Cash $648,553 $364,640
Accounts receivable, net of allowance
for doubtful accounts of $144,000 at
October 31, 1996 and
$263,000 at January 31, 1996 5,006,850 4,979,975
Inventories 10,489,983 11,244,241
Deferred income taxes 432,000 432,000
Other current assets 279,988 490,776
------------------------
Total current assets 16,857,374 17,511,632
Property and equipment, net of
accumulated depreciation of
$1,677,000 at October 31, 1996 and
$1,451,000 at January 31, 1996 1,039,869 1,026,203
Excess of cost over fair value of net
assets acquired, net of accumulated
amortization of $239,000 at October 31,
1996 and $223,000 at January 31, 1996 352,113 367,104
Mortgage receivable 141,987 147,921
Other assets 209,565 209,872
--------------------
$18,600,908 $19,262,732
==========================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,448,585 $3,465,552
Current portion of long-term
liabilities 50,000 50,000
Accrued expenses and other current
liabilities 630,356 378,524
Total current liabilities 2,128,941 3,894,076
Long-term liabilities 6,841,938 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 3,508,303 2,754,992
-------------------------
Total stockholders' equity 9,515,029 8,761,718
-----------------------
$18,600,908 $19,262,732
=========================
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED
STATEMENTS OF EARNINGS AND RETAINED EARNINGS (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
October 31 October 31
1996 1995 1996 1995
Net Sales $9,884,564 $8,750,887 $30,555,478 $30,168,735
Cost of Goods Sold 8,154,953 7,048,797 24,972,890 25,106,808
-------------------------------------------
Gross Profit 1,729,611 1,702,090 5,582,588 5,061,927
Operating expenses 1,368,192 1,164,543 3,997,700 3,778,489
---------------------------------------------
Income from
Operations 361,419 537,547 1,584,888 1,283,438
Other Income/
Expense) 11,699 11,882 38,679 48,184
Interest Expense (135,330) (135,103) (390,256) (374,969)
-------------------------------------------
Income before
income taxes 237,788 414,326 1,233,311 956,653
Provision for
income taxes 92,000 156,000 480,000 370,000
Net Income 145,788 258,326 753,311 586,653
Retained Earnings
at Beginning of
Period 3,362,515 2,496,697 2,754,992 2,168,370
----------------------------------------------
Retained Earnings
at End of Period $3,508,303 $2,755,023 $3,508,303 $2,755,023
=============================================
Income per common and common
equivalent share: $.06 $.10 $.29 $.22
Number of common and common equivalent
shares outstanding 2,609,845 2,631,020 2,611,116 2,640,798
=============================================
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited)
NINE MONTHS ENDED
October 31,
1996 1995
Cash Flows from Operating Activities:
Net Income $753,311 $586,653
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 252,443 194,162
Decrease (increase) in
accounts receivable (26,875) 370,672
Decrease (increase)
in inventories 754,258 (2,444,648)
Decrease (increase) in
other current assets 210,788 (92,431)
Increase (decrease) in accounts payable, accrued
expenses and other current
liabilities (1,765,135) (936,009)
------------------------
Net cash provided (used in) by operating
activities 178,790 (2,321,601)
Cash Flows from Investing Activities:
Purchases of property
and equipment (252,578) (467,249)
Cash Flows from Financing Activities:
Proceeds from net borrowing under
line of credit agreement 357,701 2,839,127
------------------------------
Net increase in cash 283,913 50,277
Cash at beginning of period 364,640 119,919
---------------------------
Cash at end of period $648,553 $170,196
============================
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,
1996 1996
Raw materials $2,276,870 $2,980,137
Work in process 2,747,403 3,225,272
Finished goods 5,465,710 5,038,832
----------------------------
$10,489,983 $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 nine month periods ended October
31, 1996 and 1995 is based on the weighted average number of common shares
outstanding and common share equivalents.
C. Revolving Credit Facility:
At October 31, 1996, the balance outstanding under the Company's
$8,000,000 secured revolving credit facility amounted to $6,400,000. This
Facility 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
including 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, 1996 compared to the nine months ended
October 31, 1995.
Net sales for the nine month period ended October 31, 1996 increased
$386,000 or 1.3% to $30,555,000 from $30,169,000 reported for the nine
month period ended October 31, 1995. Increased selling prices at the
beginning of the fiscal year and an increase in 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 increased to 18.3% for the
nine month period ended October 31, 1996 from 16.8% reported for the
corresponding period of the prior year, principally due to the industry
wide increased selling prices and price stabilization.
Operating expenses as a percentage of net sales increased to 13.1% for
the nine month period ended October 31, 1996 from 12.5% for the
corresponding period of the prior year. Expenses were incurred in a plant
relocation and the prior year period included a decrease in pension and bad
debt expenses.
Interest expense increased as borrowings increased during the current
year nine month period.
As a result of the foregoing, operating results increased to a net
income of $753,000 for the nine month period ended October 31, 1996 from
net income of $587,000 for the nine month period ended October 31, 1995.
Three months ended October 31, 1996 compared to the three months ended
October 31, 1995.
Net sales for the three month period ended October 31, 1996 increased
$1,134,000 or 13% to $9,885,000 from $8,751,000 reported for the three
month period ended October 31, 1995. Increased selling prices and an
increase in 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 2.4%
during the quarter ended October 31, 1996 as compared to the immediate
preceding quarter. For the fourth consecutive year, the third quarter has
been the seasonally weakest of the fiscal year.
Gross profit as a percentage of net sales decreased to 17.5% for the
three month period ended October 31, 1996 from 19.5% reported for the
corresponding period of the prior year, due to the meeting of competitive
pricing on some products and sales during the quarter of certain disposable
products at lower margins.
Operating expenses as a percentage of net sales increased to 13.8% for
the three month period ended October 31, 1996 from 13.3% for the
corresponding period of the prior year. The expense of moving the Company's
Missouri facility to a new location was the primary reason for this
increase.
Interest expense remained steady, even as borrowings increased during the
current year three month period, due to lower market rates of interest.
As a result of the foregoing, operating results decreased to net income
of $146,000 for the three month period ended October 31, 1996 from net
income of $258,000 for the three month period ended October 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 acceptance and letters of credit. The
Company's October 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
October 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 December 6, 1996 Raymond J. Smith
------------------------
Raymond J. Smith,
President and Chief Executive Officer
Date: December 6, 1996 James M. McCormick
-------------------
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)