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)