-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P3Rpvc5I95oM1+7CM9oTcilpXcSDj5HTTvKp/9TA12Bj/HHLL5ssN8ASJIwV5DFq Ogjm5k3MlwjvEzt2XPzPUw== 0000039917-99-000002.txt : 19990217 0000039917-99-000002.hdr.sgml : 19990217 ACCESSION NUMBER: 0000039917-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GARAN INC CENTRAL INDEX KEY: 0000039917 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 135665557 STATE OF INCORPORATION: VA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04506 FILM NUMBER: 99540183 BUSINESS ADDRESS: STREET 1: 350 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10118 BUSINESS PHONE: 2125632000 MAIL ADDRESS: STREET 1: 350 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10118 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 31, 1998 Commission File No 1-4506 GARAN, INCORPORATED (Exact name of registrant as specified in its charter) VIRGINIA 13-5665557 (State of Incorporation) (I.R.S. Employer Identification No.) 350 Fifth Avenue, New York, NY 10118 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 563-2000 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 than 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 close of the period covered by this report. Class Outstanding December 31, 1998 Common Stock (no par value) 5,139,737 shares PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED 12/31/98 12/31/97 ____________ _____________ Net sales $ 39,037,000 $ 37,711,000 Cost of sales 28,924,000 28,894,000 ____________ ____________ Gross margin on sales 10,113,000 8,817,000 Selling and administrative expenses 5,726,000 5,462,000 Interest on capitalized leases 24,000 27,000 Interest income (761,000) (797,000) ___________ ___________ Earnings before provision for income taxes 5,124,000 4,125,000 Provision for income taxes 2,076,000 1,651,000 ___________ ___________ Net earnings $ 3,048,000 $ 2,474,000 =========== =========== Earnings per share data: Earnings per share - Basic $ 0.59 $ 0.49 - Diluted $ 0.58 $ 0.48 Average common shares outstanding- Basic 5,137,000 5,070,000 - Diluted 5,177,000 5,122,000 Dividends paid per share $ 0.90 $ 0.60
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
12/31/98 9/30/98 ____________ _____________ ASSETS Current Assets: Cash and cash equivalents $ 3,570,000 $ 9,599,000 U.S. Government securities - short-term 25,279,000 22,216,000 Accounts receivable, less estimated uncollectibles of $517,000 at 12/31/98 and 9/30/98 22,625,000 42,563,000 Inventories 43,602,000 32,776,000 Other current assets 5,223,000 4,962,000 Total current assets 100,299,000 112,116,000 U.S. Government Securities - Long-term 18,444,000 15,315,000 Property, plant and equipment, less accumulated depreciation and amortization 13,195,000 13,345,000 Other assets 5,599,000 5,397,000 TOTAL $ 137,537,000 $ 146,173,000 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,028,000 $ 8,555,000 Accrued liabilities 14,542,000 18,575,000 Federal and state income taxes payable 3,491,000 4,000,000 Current portion of capitalized leases 137,000 137,000 Total current liabilities 24,198,000 31,267,000 Capitalized lease obligations, net of current portion 2,143,000 2,170,000 Deferred income taxes 2,879,000 3,029,000 Shareholders' Equity: Preferred stock ($10 par value) 500,000 shares authorized; none issued Common stock (no par value) 15,000,000 shares authorized; issued 5,139,737 at 12/31/98 and 5,128,719 at 9/30/98 2,570,000 2,564,000 Additional paid-in-capital 6,973,000 6,792,000 Retained earnings 98,774,000 100,351,000 Total shareholders' equity 108,317,000 109,707,000 TOTAL $ 137,537,000 $ 146,173,000 ============= =============
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED 12/31/98 12/31/97 _____________ _____________ Cash Flows From Operating Activities: Net earnings $ 3,048,000 $ 2,474,000 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 914,000 703,000 Provision for losses on accounts 0 5,000 receivable Deferred income taxes (150,000) 90,000 Changes in assets and liabilities: U.S. Government Securities - Short-term 1,124,000 (1,576,000) Accounts receivable 19,938,000 14,197,000 Inventories (10,826,000) (4,023,000) Other current assets (261,000) 57,000 Accounts payable (2,527,000) (1,973,000) Accrued liabilities (4,033,000) (2,972,000) Income taxes payable (509,000) (75,000) Other assets (202,000) (169,000) Net Cash Flows Provided by Operating 6,516,000 6,738,000 Activities ____________ ____________ Cash Flows From Investing Activities: Sale of U.S. Gov't securities - Long-term 5,404,000 1,032,000 Purchase of U.S. Gov't securi- ties - Long-term (12,720,000) (2,507,000) Additions to property, plant, and (764,000) (427,0000) equipment Net Cash Flows From Investing Activities (8,080,000) (1,902,000) ____________ ____________ Cash Flows From Financing Activities: Payment of dividends (4,625,000) (3,041,000) Repayment of capitalized lease obligations (27,000) (526,000) Proceeds from exercised stock options 187,000 0 Net Cash Flows From Financing Activities (4,465,000) (3,567,000) Net increase (decrease)in Cash and Cash Equivalents (6,029,000) 1,269,000 Cash and Cash Equivalents At Beginning of Period 9,599,000 8,660,000 Cash and Cash Equivalents At End of Period $ 3,570,000 $ 9,929,000 ============ ============ Supplemental cash flow Disclosures Cash Paid During The Period For: Interest $ 24,000 $ 27,000 Income taxes 2,710,000 5,819,000 ============ ============
GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1998 (UNAUDITED) 1. In the opinion of management, all adjustments necessary to a fair statement of the results of operations have been reflected. 2. Basic and diluted earnings per share, which are calculated on the basis of the weighted average number of common shares outstanding during the period in accordance with the provisions of the Statements of Financial Accounting Standards No. 128, are as follows: 1998 1997 ----------------------------- ------------------------------- Income Shares Per Share Income Shares Per Share Basic EPS $3,048,000 5,136,731 $0.59 $2,474,000 5,069,892 $0.49 ========= ======== Effect of dilutive options 39,872 51,771 ------------------- ---------------------- $3,048,000 5,176,603 $0.58 $2,474,000 5,121,663 $0.48 ============================= =============================== 3. Inventories consist of the following:
12/31/98 09/30/98 ____________ _____________ Raw Materials $ 6,618,000 $ 7,305,000 Work in Process 9,133,000 5,560,000 Finished Goods 27,851,000 19,911,000 ___________ ____________ $43,602,000 $32,776,000 =========== ===========
ITEM 2. GARAN, INCORPORATED AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements included in Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report contain "forward-looking statements" based upon management's expectations and beliefs concerning future events impacting the registrant. Actual results of operations or financial condition may differ because of business conditions in the apparel industry generally, competition, the addition or loss of significant customers or personnel, the timing of orders placed by the registrant's customers, and such other risk factors as may be identified from time to time in the registrant's filings with the Securities and Exchange Commission. FINANCIAL CONDITION At December 31, 1998, working capital was $76,101,000 a decrease of $4,748,000 from working capital at September 30, 1998, of $80,849,000. Substantially all of the decrease was due to the special dividend of $0.70 per share, in addition to the regular quarterly dividend of $0.20 per share, which were paid in December, 1998. Shareholders' equity at December 31, 1998, was $108,317,000, or $21.07 book value per share, as compared to $109,707,000, or $21.39 book value per share, at September 30, 1998. RESULTS OF OPERATIONS Three Month Period Ended December 31, 1998. Net sales for the three month period ended December 31, 1998, were $39,037,000 compared to $37,711,000, for the same period in fiscal 1998. Net earnings for the three month period were $3,048,000, equal to $0.59 per share, compared to $2,474,000, or $0.49 per share, last year. The increase in net sales for the quarter was primarily a result of an increase in total units shipped. Gross margin for the three months ended December 31, 1998, was $10,113.000, or 25.9% of net sales, compared to $8,817,000, or 23.4% of net sales, for the comparable period in fiscal 1998. The increase in gross margin in dollar terms was due primarily to the increased sales volume and as a percentage of sales was due to improvements in operating efficiency. Selling and administrative expenses for the three months ended December 31, 1998, were $5,726,000, or 14.7% of net sales, as compared to $5,462,000, or 14.5% of net sales, for the comparable period in fiscal 1998. The increase in selling and administrative expenses was a result of continued investment in improving internal operating systems and increases in expenses related to volume. Year 2000 The Company's principal MIS computer systems consist of (1) accounting software, such as payroll, accounts receivable, and general ledger, (2) electronic data interchange ("EDI") for receiving orders, invoicing, and the like between the registrant and its major customers and suppliers, and (3) customer order management systems. In addition, the registrant uses computer systems in its manufacturing operations. The registrant has purchased software to replace all of the components of its MIS systems which were not Year 2000 compliant and is implementing the Year 2000 compliant EDI software for 1, 2 and 3 above. The registrant does not require any material change to its manufacturing systems for Year 2000 compliance. Although the registrant could incur operating problems if it were unable to receive orders from its customers through EDI if the customer is not EDI compliant, the registrant believes that its major customers either have completed or are in the process of completing Year 2000 compliance projects with respect to their EDI systems. The entire cost of the registrant's Year 2000 compliance program is not material to the registrant, and the Company anticipates that all of its MIS computer systems will be Year 2000 compliant by June 30, 1999. Qualitative and Quantitative Disclosure about Market Risk The registrant does not believe it is exposed to market risks with respect to any of its investments; the registrant does not utilize market rate sensitive instruments for trading or other purposes. The registrant's investments consist primarily of U.S. Government securities with maturities of four years of less. PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. a. Exhibits Exhibit 27. Financial Data Schedule b. Reports on Form 8-K No reports have been filed on Form 8-K during the quarter ended December 31, 1998. SIGNATURES Pursuant to the requirements 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. GARAN, INCORPORATED BY:Seymour Lichtenstein Seymour Lichtenstein Principal Executive Officer BY:William J. Wilson William J. Wilson Principal Financial Officer DATE: February 12, 1999 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF EARNINGS AND BALANCE SHEETS OF GARAN, INCORPORATED AND SUBSIDIARIES ANNEXED HERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000039917 GARAN, INCORPORATED 3-MOS SEP-30-1999 OCT-1-1998 DEC-31-1998 3,570,000 25,279,000 23,142,000 517,000 43,602,000 100,299,000 33,971,000 20,776,000 137,537,000 24,198,000 2,143,000 2,570,000 0 0 105,747,000 137,537,000 39,037,000 39,037,000 28,924,000 28,924,000 0 0 24,000 5,124,000 2,076,000 0 0 0 0 3,048,000 .59 .58
-----END PRIVACY-ENHANCED MESSAGE-----