-----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, DdlngzwVIQ+jszRugw10Gon7i4XDKwE37OqgU8TNvj9Fnz6idUFNLzPJa4U1XJoV AT6HfXWhwfRn6/Rr5BxqPQ== 0000039917-98-000008.txt : 19980817 0000039917-98-000008.hdr.sgml : 19980817 ACCESSION NUMBER: 0000039917-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: AMEX 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: 98688525 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 June 30, 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 June 30, 1998 Common Stock (no par value) 5,128,719 shares PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED 6/30/98 6/30/97 ------------ ------------- Net sales $ 43,706,000 $ 29,568,000 Cost of sales 33,267,000 22,088,000 ------------- ------------- Gross margin on sales 10,439,000 7,480,000 Selling and administrative expenses 5,980,000 5,095,000 Interest on capitalized leases 27,000 35,000 Interest income (729,000) (705,000) ------------ ------------ Earnings before provision for income taxes 5,161,000 3,055,000 Provision for income taxes 2,090,000 1,222,000 ------------ ------------ Net earnings $ 3,071,000 $ 1,833,000 ============ ============ Earnings per share data: Earnings per share $ 0.60 $ 0.36 Diluted $ 0.60 $ 0.36 Average common shares outstanding 5,103,000 5,070,000 Diluted 5,137,000 5,070,000 Dividends paid per share $ 0.20 $ 0.20
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
NINE MONTHS ENDED 06/30/98 06/30/97 ------------- ------------- Net sales $122,515,000 $ 98,172,000 Cost of sales 93,358,000 74,457,000 ------------ ------------ Gross margin on sales 29,157,000 23,715,000 Selling and administrative expenses 17,074,000 16,068,000 Interest on capitalized leases 83,000 87,000 Interest income (2,343,000) (2,089,000) ------------ ------------ Earnings before provision for income taxes 14,343,000 9,649,000 Provision for income taxes 5,776,000 3,838,000 ------------ ------------ Net earnings $ 8,567,000 $ 5,811,000 ============ ============ Earnings per share data: Earnings per share $ 1.68 $ 1.14 Diluted $ 1.67 $ 1.14 Average common shares outstanding 5,103,000 5,070,000 Diluted 5,137,000 5,070,000 Dividends paid per share $ 1.00 $ 0.80
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
06/30/98 9/30/97 ------------ ------------ ASSETS Current Assets: Cash and cash equivalents $ 572,000 $ 8,660,000 U.S. Government securities - short-term 15,582,000 16,223,000 Accounts receivable, less estimated uncollectibles of $518,000 at 6/30/98 and $510,000 at 9/30/97 24,727,000 31,092,000 Inventories 49,067,000 33,731,000 Other current assets 3,917,000 4,308,000 ------------ ------------ Total current assets 93,865,000 94,014,000 U.S. Government Securities - long-term 21,109,00 19,853,000 Property, plant and equipment, less accumulated depreciation and amortization 13,410,000 13,470,000 Other assets 5,413,000 5,049,000 ------------ ----------- TOTAL $ 133,797,000 $ 132,386,000 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 5,912,000 $ 6,589,000 Accrued liabilities 15,534,000 16,434,000 Federal and state income taxes payable 1,805,000 2,454,000 Current portion of capitalized leases 130,000 130,000 ------------ ------------ Total current liabilities 23,381,000 25,607,000 ============ ============ Capitalized lease obligations, net of current portion 2,177,000 2,807,000 Deferred income taxes 2,976,000 3,186,000 ------------ ------------ Shareholders' Equity: Preferred stock ($10 par value) 500,000 shares authorized; none issued Common stock (no par value) 15,000,000 shares authorized; 5,128,719 issued at 6/30/98 and 5,069,892, at 9/30/97 2,564,000 2,535,000 Additional paid-in-capital 6,792,000 5,821,000 Retained earnings 95,907,000 92,430,000 ----------- ------------ Total shareholders' equity 105,263,000 100,786,000 ----------- ------------ TOTAL $ 133,797,000 $ 132,386,000 ============ ============
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED 06/30/98 06/30/97 ------------ ------------- Cash Flows From Operating Activities: Net earnings $ 8,567,000 $ 5,811,000 Adjustments to reconcile net cash Provided by Operating Actitivies: Depreciation and amortization 2,517,000 2,244,000 Provision for losses on accounts receivable 10,000 61,000 Deferred income taxes (210,000) (60,000) Changes in assets and liabilities: U.S. Government Securities - short-term 113,000 1,376,000 Accounts receivable 6,355,000 9,947,000 Inventories (15,336,000) (14,981,000) Other current assets 391,000 1,766,000 Accounts payable (677,000) 1,406,000 Accrued liabilities (900,000) 463,000 Income taxes payable (649,000) (909,000) Other assets (364,000) (570,000) ----------- ------------ Net Cash provided by Operating Activities (183,000) 6,554,000 ----------- ------------ Cash Flows From Investing Activities: Sale of U.S. Gov't securities - long-term 5,063,000 6,028,000 Purchase of U.S. Gov't securi- ties - long-term (5,791,000) (21,721,000) Additions to property plant and equipment (2,457,000) (821,000) Proceeds from sales of property, plant and equipment 0 135,000 ----------- ------------ Net Cash used for Investing Activities (3,185,000) (16,379,000) ----------- ------------ Cash Flows From Financing Activities: Payment of dividends (5,090,000) (4,056,000) Repayment of capitalized lease obligations (630,000) (124,000) Proceeds from exercised stock options 1,000,000 0 ------------ ------------ Net Cash used for Financing Activities (4,720,000) (4,180,000) ------------ ------------ Net decrease in Cash and Cash Equivalents (8,088,000) (14,005,000) Cash and Cash Equivalents At Beginning of Period 8,660,000 20,587,000 ----------- ------------ Cash and Cash Equivalents At End of Period $ 572,000 $ 6,582,000 =========== ============ Supplemental Disclosures Cash Paid During The Period For: Interest $ 83,000 $ 87,000 Income taxes 6,743,000 4,350,000 =========== ============
GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 (UNAUDITED) 1. In the opinion of management, all adjustments necessary to a fair statement of the results of operations have been reflected. 2. Earnings per share are calculated on the basis of the weighted average number of common shares outstanding during the period in accordance with the provisions of Statement of Financial Accounting Standards No. 128 as follows:
Nine Months Ended June 30, 1998 1997 ---------------------------------- --------------------------------- Income Shares Per Share Income Shares Per Share Basic EPS $8,567,000 5,103,000 $ 1.68 $ 5,811,000 5,070,000 $ 1.14 ========= ======== Effect of dilutive options 34,000 --------------------- ------------------------ Diluted EPS $8,567,000 5,137,000 $ 1.67 5,811,000 5,070,000 $ 1.14 ================================== =================================
3. Inventories consist of the following: 6/30/98 9/30/97 ------------ ------------- Raw Materials $ 7,633,000 $ 6,697,000 Work in process 7,352,000 6,921,000 Finished Goods 34,082,000 20,113,000 ----------- ------------ $ 49,067,000 $ 33,731,000 ============ =============
ITEM 2. GARAN, INCORPORATED AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements included in this 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 a significant customer 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 June 30, 1998, working capital was $70,484,000, an increase of $ 2,077,000 from September 30, 1997, working capital of $68,407,000. The increase was due primarily to a seasonal increase in inventory offset by decreases in accounts receivable and cash and cash equivalents. Shareholders' equity at June 30, 1998, was $105,263,000, or $20.52 book value per share, as compared to $100,786,000, or $19.88 book value per share, at September 30, 1997. RESULTS OF OPERATIONS Three and Nine Month Periods Ended June 30, 1998, and June 30, 1997. Net sales for the third quarter of fiscal 1998 were $43,706,000, compared to $29,568,000 for the same period last year. Net earnings for the third quarter were $3,071,000, equal to $0.60 per share, compared to $1,833,000, or $0.36 per share, last year. Net sales for the first nine months of fiscal 1998 were $122,515,000 compared to $98,172,000 last year. Net earnings for the nine month period were $8,567,000, equal to $1.68 per share, compared to $5,811,000, or $1.14 per share, last year. The increase in net sales for both periods was principally attributable to an increase in units sold. Gross margin for the three month period ended June 30, 1998, was $10,439,000, or 23.9% of net sales, compared to $7,480,000, or 25.3% of net sales, for the comparable period last year. Gross margin for the nine months ended June 30, 1998, was $29,157,000, or 23.8% of net sales, compared to $23,715,000, or 24.2% of net sales, for the comparable period last year. The increase in gross margin dollars was due to the increased sales volume. The slight reduction in the gross profit percentage was due to changes in the product mix. Selling and administrative expenses for the three months ended June 30, 1998, were $5,980,000, or 13.7% of net sales, as compared to $5,095,000, or 17.2% of net sales, for the comparable period last year. Selling and administrative expenses for the nine-months ended June 30, 1998, were $17,074,000, or 13.9% of net sales, as compared to $16,068,000, or 16.4% of net sales, for the comparable period last year. The increase in selling and administrative expenses was a result of increased volume related expenses and advertising costs. The decrease in selling and administrative expenses as a percentage of net sales resulted from the increased sales volume. YEAR 2000 The registrant's principal computer systems consist of (i) management information software ("MIS"), such as payroll, accounts receivable, and general ledger, (ii) electronic data interchange ("EDI") for order-taking, invoicing, and the like between the registrant and its major customers and suppliers, and (iii) systems involved in the registrant's manufacturing operations. The registrant has either purchased or plans to purchase new software to replace all of the components of its MIS systems which were not Year 2000 compliant, has purchased and is implementing new, Year 2000 compliant EDI software, and 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 registrant anticipates that all of its computer systems will be Year 2000 compliant by June 30, 1999. 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 /s/ SEYMOUR LICHTENSTEIN BY: ---------------------------- Seymour Lichtenstein Principal Executive Officer /s/ WILLIAM J. WILSON BY: ---------------------------- William J. Wilson Principal Financial Officer DATE: August 13, 1998 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 9-MOS SEP-30-1998 SEP-30-1998 APR-01-1998 OCT-01-1997 JUN-30-1998 JUN-30-1998 572,000 572,000 15,582,000 15,582,000 25,245,000 25,245,000 518,000 518,000 49,067,000 49,067,000 93,865,000 93,865,000 34,597,000 34,597,000 21,186,000 21,186,000 133,797,000 133,797,000 23,381,000 23,381,000 2,177,000 2,177,000 2,564,000 2,564,000 0 0 0 0 102,699,000 102,699,000 133,797,000 133,797,000 43,706,000 122,515,000 43,706,000 122,515,000 33,267,000 93,358,000 33,267,000 93,358,000 0 0 0 0 27,000 83,000 5,161,000 14,343,000 2,090,000 5,776,000 0 0 0 0 0 0 0 0 3,071,000 8,567,000 0.60 1.68 0.60 1.67
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