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, 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 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, 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 - July 31, 1997
and January 31, 1997 2
Condensed Consolidated Statements of Income
and Retained Earnings - Three Months
and Six Months Ended July 31, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows -
Six Months Ended July 31, 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 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, 1997.
The results of operations for the three month and six month
periods ended July 31, 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
(unaudited)
July 31, January 31,
ASSETS 1997 1997
Current Assets:
Cash $273,314 $504,940
Accounts receivable-trade, net
of allowance for doubtful accounts
of $170,000 at July 31, 1997 and
$150,000 at January 31, 1997 5,878,265 5,893,594
Inventories 11,190,480 9,894,156
Deferred income taxes 469,000 469,000
Other current assets 249,497 176,901
---------- ---------
Total current assets 18,060,556 16,938,591
Property and equipment, net of
accumulated depreciation of
$1,939,000 at July 31, 1997
and $1,763,000 at January 31,
1997 1,182,753 989,667
Excess of cost over fair value of
net assets acquired, net of
accumulated amortization of
$208,000 at July 31, 1997 and
$198,000 at January 31, 1997 337,123 347,116
Mortgage receivable 136,817 140,298
Other assets 224,550 157,444
-------- --------
$19,941,799 $18,573,116
========================
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,638,658 $2,534,999
Current portion of long-term
liabilities 50,000 50,000
Accrued expenses and other current
liabilities 579,837 335,314
--------- -------
Total current liabilities 3,268,495 2,920,313
--------- ---------
Long-term liabilities 5,810,789 5,745,789
--------- ---------
Deferred income taxes 82,000 82,000
--------- ---------
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;
2,560,000 and 2,550,000 shares
issued and outstanding at
July 31, 1997 and January 31, 1997,
respectively 25,600 25,500
Additional paid in capital 5,995,501 5,981,226
Retained earnings 4,759,414 3,818,288
--------- ---------
Total stockholders' equity 10,780,515 9,825,014
---------- ---------
$19,941,799 $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 SIX MONTHS ENDED
July 31, July 31,
1997 1996 1997 1996
Net Sales $11,935,248 $10,129,252 $23,948,877 $20,670,914
Cost of
Goods Sold 9,405,193 8,376,062 19,112,831 16,817,937
---------------------------------------------------
Gross Profit 2,530,055 1,753,190 4,836,046 3,852,977
Operating
expenses 1,622,410 1,320,736 3,072,819 2,629,508
-------------------------------------------------
Income from
Operations 907,645 432,454 1,763,227 1,223,469
Other Income/
(Expense) 12,477 11,723 28,442 26,980
Interest
Expense (105,345) (132,479) (206,200) (254,926)
-------------------------------------------------
Income before
income taxes 814,777 311,698 1,585,469 995,523
Provision for
income taxes 344,343 122,000 644,343 388,000
------------------------------------------------
Net Income 470,434 189,698 941,126 607,523
Retained Earnings
at Beginning of
Period 4,288,980 3,172,817 3,818,288 2,754,992
------------------------------------------------
Retained Earnings
at End of
Period $4,759,414 $3,362,515 $4,759,414 $3,362,515
==================================================
Net income per
common share $.18 $.07 $.36 $.23
==================================================
Average number
of common shares
outstanding 2,626,013 2,611,205 2,615,683 2,613,334
=================================================
See notes to condensed consolidated financial statements.
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
July 31,
1997 1996
Cash Flows from Operating Activities:
Net Income $941,126 $607,523
Adjustments to reconcile
net income to net cash
used in operating
activities:
Depreciation and
amortization 166,274 166,265
Decrease (increase)
in accounts receivable 15,329 222,767
Decrease (increase)
in inventories (1,296,324) (376,118)
Decrease (increase)
in other current assets (72,596) 128,541
Decrease (increase)
in other assets (63,625) 26,872
Increase (decrease)
in accounts payable,
accrued expenses and
other current liabilities 363,182 (1,087,194)
-------- -----------
Net cash (used in)
provided by operating
activities 53,366 (311,344)
Cash Flows from Investing Activities:
Purchases of property
and equipment (349,367) (149,406)
Cash Flows from Financing Activities:
Proceeds from exercise
of options 14,375 -
Net borrowings
(reduction) under line
of credit agreement 50,000 412,500
-------------------------
Net decrease in cash (231,626) (48,250)
Cash at beginning
of period 504,940 364,640
-------------------------
Cash at end of period $273,314 $316,390
==========================
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,
1997 1997
Raw materials $2,560,956 $2,669,254
Work in process 4,509,432 3,124,141
Finished goods 4,120,092 4,100,761
-------------------------------
$11,190,480 $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 and six month periods ended July
31, 1997 and 1996 is based on the weighted average number of common
shares outstanding and common share equivalents.
C. Revolving Credit Facility:
At July 31, 1997, the balance outstanding under the Company's
secured revolving credit facility amounted to $5,450,000. The Company
was in compliance with all loan covenants at July 31, 1997. This
facility is collateralized by the Company's inventory and accounts
receivable and has been extended to expire on February 28, 1999.
Interest charges under this credit facility are calculated on various
optional formulas using the prime rate, LIBOR, banker's acceptances
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. Basic earnings per share exclude dilution
and are computed by dividing income available to common shareholders 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 SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
Six months ended July 31, 1997 compared to the six months ended
July 31, 1996.
Net sales for the six month period ended July 31, 1997 increased
$3,278,000 or 15.9% to $23,949,000 from $20,671,000 reported for the
six month period ended July 31, 1996. Increased unit shipments of
various protective garment products is the principal reason for this
upward movement in sales. This industry, however, continues to be
highly competitive.
Gross profit as a percentage of net sales increased to 20.2% for
the six month period ended July 31, 1997 from 18.6% reported for the
corresponding period of the prior year, principally due to increased
sales volume and not having to meet competitive pricing on the most
popular disposable products.
Operating expenses as a percentage of net sales remained constant
at 12.8% for the six month period ended July 31, 1997 from 12.7% for
the corresponding period of the prior year, as the increase in
operating expenses was consistent with the increase in sales.
Interest expense decreased as aggregate borrowings decreased during
the current year six month period.
As a result of the foregoing, operating results increased to a net
income of $941,000 for the six month period ended July 31, 1997 from
net income of $608,000 for the six month period ended July 31, 1996.
Three months ended July 31, 1997 compared to the three months
ended July 31, 1996.
Net sales for the three month period ended July 31, 1997 increased
$1,806,000 or 17.8% to $11,935,000 from $10,129,000 reported for the
three month period ended July 31, 1996. Increased unit shipments of
various protective garment products is the principal reason for this
upward movement in sales. This industry, however, continues to be
highly competitive. Net sales decreased .65% during the quarter ended
July 31, 1997 as compared to the immediate preceding quarter.
Gross profit as a percentage of net sales increased to 21.2% for
the three month period ended July 31, 1997 from 17.3% reported for the
corresponding period of the prior year, principally due to not having
to meet competitive pricing on the most popular disposable products and
market stabilization.
Operating expenses as a percentage of net sales increased modestly
to 13.59% for the three month period ended July 31, 1997 from 13.04%
for the corresponding period of the prior year, as operating expenses
increased in proportion to the volume increase.
Interest expense decreased as aggregate borrowings decreased during
the current year three month period.
As a result of the foregoing, operating results increased to a net
income of $470,000 for the three month period ended July 31, 1997 from
net income of $190,000 for the three month period ended July 31, 1996.
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 $8 million
facility with its Bank. This facility has been extended to mature on
February 28, 1999. 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, 1997
balance sheet shows a strong current ratio and working capital position
and management believes that its positive financial position, together
with this 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, 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: September 5, 1997 /s/
---------------------
Raymond J. Smith,
President and Chief Executive Officer
Date: September 5, 1997 /s/
-----------------------
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)