-----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, PhckqBekA6sydAFrSODSY2czbX6KLya0tDbT6+xXN+RFhh/aVmmumQyGJx3DNOPN v5SNyDnTos3ZMCEZ3ubp+A== 0001033525-00-000003.txt : 20000215 0001033525-00-000003.hdr.sgml : 20000215 ACCESSION NUMBER: 0001033525-00-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 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: 541881 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, 1999 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, 1999 Common Stock (no par value) 5,320,338 shares PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED 12/31/99 12/31/98 ____________ _____________ Net sales $53,345,000 $39,037,000 Cost of sales 41,947,000 28,924,000 ____________ ____________ Gross margin on sales 11,398,000 10,113,000 Selling and administrative expenses 6,596,000 5,726,000 Interest on capitalized leases 24,000 24,000 Interest income (664,000) (761,000) ___________ ___________ Earnings before provision for income taxes 5,442,000 5,124,000 Provision for income taxes 2,258,000 2,076,000 ___________ ___________ Net earnings $ 3,184,000 $ 3,048,000 =========== =========== Earnings per share data: Earnings per share - Basic $ 0.60 $ 0.59 - Diluted $ 0.59 $ 0.58 Average common shares outstanding - Basic 5,320,000 5,137,000 - Diluted 5,354,000 5,177,000 Dividends paid per share $ 1.05 $ 0.90
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
12/31/99 9/30/99 ____________ _____________ ASSETS Current Assets: Cash and cash equivalents $ 9,086,000 12,952,000 U.S. Government securities - short-term 5,905,000 0 Accounts receivable, less estimated uncollectibles of $512,000 at 12/31/99 and $512,000 at 9/30/99 29,575,000 59,381,000 Inventories 39,953,000 37,333,000 Other current assets 7,528,000 6,706,000 Total current assets 92,047,000 116,372,000 U.S. Government Securities - Long-term 38,721,000 25,435,000 Property, plant and equipment, less accumulated depreciation and amortization 14,469,000 15,393,000 Other assets 7,772,000 6,492,000 TOTAL $ 153,009,000 163,692,000 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,943,000 9,959,000 Accrued liabilities 18,985,000 22,495,000 Federal and state income taxes payable 4,460,000 6,496,000 Current portion of capitalized leases 20,000 20,000 Total current liabilities 30,408,000 38,970,000 Capitalized lease obligations, net of current portion 2,130,000 2,150,000 Deferred income taxes 2,285,000 2,445,000 Shareholders' Equity: Preferred stock ($10 par value) 500,000 shares authorized; none issued Common stock (no par value) 15,000,000 shares authorized; issued 5,320,338 at 12/31/99 and 5,305,737 at 9/30/99 2,660,000 2,653,000 Additional paid-in-capital 11,513,000 11,272,000 Unamortized value of restricted stock (3,712,000) (3,925,000) Retained earnings 107,725,000 110,127,000 Total shareholders' equity 118,186,000 120,127,000 TOTAL $ 153,009,000 163,692,000 ============ =============
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED 12/31/99 12/31/98 _____________ _____________ Cash Flows From Operating Activities: Net earnings $ 3,184,000 $ 3,048,000 Adjustments to reconcile to net cash provided by operating activities: Deferred compensation 213,000 0 Depreciation and amortization 1,116,000 914,000 Provision for losses on accounts receivable 0 0 Deferred income taxes (160,000) (150,000) Changes in assets and liabilities: U.S. Government securities - Short-term (6,062,000) 1,124,000 Accounts receivable 29,806,000 19,938,000 Inventories (2,620,000) (10,826,000) Other current assets (148,000) (261,000) Accounts payable (3,016,000) (2,527,000) Accrued liabilities (3,510,000) (4,033,000) Income taxes payable (2,036,000) (509,000) Other assets (1,954,000) (202,000) Net Cash provided by (used in) Operating 14,813,000 (6,516,000) Activities ____________ ____________ Cash Flows From Investing Activities: Sale of U.S. Gov't securities - Long-term 0 5,404,000 Purchase of U.S. Gov't securities - Long-term (13,129,000) (12,720,000) Additions to property, plant, and (192,000) (764,000) equipment Net Cash used for Investing Activities (13,321,000) (8,080,000) _____________ ____________ Cash Flows From Financing Activities: Payment of dividends (5,586,000) (4,625,000) Repayment of capitalized lease obligations (20,000) (27,000) Proceeds from exercised stock options 248,000 187,000 Net Cash used for Financing Activities (5,358,000) (4,465,000) Net increase (decrease)in Cash and Cash Equivalents (3,866,000) (6,029,000) Cash and Cash Equivalents At Beginning of Period 12,952,000 9,599,000 Cash and Cash Equivalents At End of Period $ 9,086,000 $ 3,570,000 ============ ============ Supplemental cash flow Disclosures Cash Paid During The Period For: Interest $ 24,000 $ 24,000 Income taxes 4,455,000 2,710,000 ============ ============
GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999 (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 are calculated on the basis of the weighted average number of common shares outstanding during the period in accordance with the provisions of the Statement of Financial Accounting Standards No. 128 as follows: 1999 1998 ----------------------------- ------------------------------- Income Shares Per Share Income Shares Per Share Basic EPS $ 3,184,000 5,320,338 $0.60 $3,048,000 5,136,731 $0.59 ========= ======== Effect of dilutive options 34,147 39,872 --------------------- ----------------------- $ 3,184,000 5,354,485 $0.59 $3,048,000 5,176,603 $0.58 =============================== ================================ 3. Inventories consist of the following:
12/31/99 09/30/99 ___________ ____________ Raw Materials $ 6,558,000 $ 6,997,000 Work in Process 9,281,000 6,932,000 Finished Goods 24,114,000 23,404,000 ___________ ____________ $39,953,000 $37,333,000 =========== ============
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, 1999, working capital was $61,639,000 a decrease of $15,763,000 from working capital at September 30, 1999, of $77,402,000. The decrease was due to the special dividend of $0.80 per share, in addition to the regular quarterly dividend of $0.25 per share, which were paid in December, 1999, as well as a seasonal decrease in accounts receivable. A substantial portion of the accounts receivable collected during the quarter was invested in long-term U.S. Government Securities which are not included in working capital. Shareholders' equity at December 31, 1999, was $118,186,000, or $22.01 book value per share, as compared to $120,127,000, or $22.64 book value per share, at September 30, 1999. RESULTS OF OPERATIONS Three Month Periods Ended December 31, 1999, and December 31, 1998. Net sales for the three month period ended December 31, 1999, were $53,345,000 compared to $39,037,000 for the same period in fiscal 1999. Net earnings for the three month period were $3,184,000, equal to $0.60 per share, compared to $3,048,000, or $0.59 per share, last year. The increase in net sales for the quarter was primarily a result of an increase in units shipped in the registrant's Infant and Toddler and Women's Divisions. Gross margin for the three months ended December 31, 1999, was $11,398,000, or 21.4% of net sales, compared to $10,113,000, or 25.9% of net sales, for the comparable period in fiscal 1999. The increase in gross margin in dollar terms was due primarily to the increased sales volume noted in the prior paragraph. The decrease in gross margin as a percentage of sales was due principally to changes in customer programs (product mix) and sales growth in lower margin business. Selling and administrative expenses for the three months ended December 31, 1999, were $6,596,000, or 12.4% of net sales, as compared to $5,726,000, or 14.7% of net sales, for the comparable period in last year. The increase in selling and administrative expenses was a result of continued investment in improving internal operating systems, a new distribution center, and increases in expenses related to volume. The decrease in selling and administrative expenses as a percentage of net sales was due to the increase in net sales. YEAR 2000 In response to concerns that certain time-sensitive computer programs written using only two digits to define a year might recognize a date using "00" as the year 1900 or some year other than year 2000 which could result in miscalculations and system failures, in 1996 the registrant established a Year 2000 plan according to a six step process. The process included (1) an inventory of all computer hardware, software, and communication systems plus critical non-IT systems, (2) risk assessment, (3) a research and strategy program, (4) remediation, (5) testing and certification, and (6) contingency planning. As a result of this process, the registrant updated many of its systems, and while the primary thrust behind the replacement of existing software with new systems was improved functionality, the impact of Y2k readiness issues accelerated implementation plans. Total costs were approximately $2,500,000 including capital outlays for the software, services, hardware, and communication components of the plans. The source of funds was current working capital. The registrant had no material problems related to the millennium date change on January 1, 2000, and does not anticipate that any Y2K issues will have any material adverse effect on its operations and financial condition. At this time, the registrant continues to believe that the most likely "worst-case" scenario involves potential disruptions in areas in which the registrant's operations must rely on third parties whose systems may not work properly at all times after January 1, 2000, including failures impacting on the registrant's Central American operations. While such failures could affect important operations of the registrant, either directly or indirectly, the registrant cannot at present estimate either the likelihood or the potential cost of such failures. 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 obligations with maturities of four years or less. PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. a. Exhibits Exhibit 10.1. Stock Agreement among Marita Lichtenstein, Marita Lichtenstein as Custodian for Samuel Lichtenstein, Seymour Lichtenstein, The Lichtenstein Foundation, Inc., and Garan, Incorporated. 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, 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 BY:Seymour Lichtenstein Seymour Lichtenstein Principal Executive Officer BY:William J. Wilson William J. Wilson Principal Financial Officer DATE: February 9, 2000 EX-10.1 2 STOCK AGREEMENT dated February 8, 2000, among Marita Lichtenstein, Marita Lichtenstein as Custodian for Samuel Lichtenstein, Seymour Lichtenstein, The Lichtenstein Foundation, Inc., and Garan, Incorporated. Section A Definitions and Construction A.1. Terms used in this Stock Agreement shall have the following meanings: Agreement shall mean this Stock Agreement. Bona Fide Offer shall mean a writing, which may be a letter of intent, setting forth all of the material terms of an offer made by an individual or entity who has performed due diligence, who has the financial, legal, and contractual capacity to perform the terms of such offer, and who is neither associated in any capacity with nor owned in whole or in part by the Seller to whom the offer is made. Business Day shall mean any day other than a Saturday, Sunday, or a day on which the banking institutions in New York, New York, are authorized or required to close. Closing shall mean the consummation of a sale and purchase of Shares owned by the Sellers pursuant to this Agreement. Commencement Date shall mean the earlier of (i) the date that SL becomes Disabled or (ii) the date SL dies. Commission shall mean the Securities and Exchange Commission or any Federal governmental agency that succeeds the Commission. Common Stock shall mean the shares of Company Common Stock, no par value, that are currently authorized by the Company's Articles of Incorporation and any shares thereof so authorized in the future, and any shares of capital stock into which such shares of Common Stock are reclassified, converted, or exchanged after the date of this Agreement. Company shall mean Garan, Incorporated, a Virginia corporation, with offices at 350 Fifth Avenue, New York, New York 10118. Disability shall mean the inability of SL to substantially carry out the duties customarily performed by him for the Company because of psychological, emotional, or physical reasons. Disabled shall mean a condition occurring after SL's Disability has continued for a period of 90 continuous days or for a period of 120 days not necessarily continuous in any 12 month period Foundation shall mean The Lichtenstein Foundation, Inc., a New York not-for-profit corporation, with an office at 350 Fifth Avenue, New York, New York 10118. ML shall mean Marita Lichtenstein, 791 Park Avenue, New York, New York 10021. ML as Custodian, shall mean ML as custodian for Samuel Lichtenstein, the minor child of ML and SL. Notice of Offer shall mean a notice by a Seller that she, he, or it has received a Bona Fide Offer to sell a specified number of Shares (the Offered Shares) that she, he, or it wishes to accept, which must be accompanied by a copy of the Bona Fide Offer. Offered Shares shall mean the number of Shares a Seller wishes to sell pursuant to the terms and conditions of a Bona Fide Offer. Offeror shall mean the person or entity who submits a Bona Fide Offer to a Seller. Put Notice shall mean a notice by the Sellers requiring the Company to purchase all of their Shares. Representative shall mean a trustee, executor, administrator, or personal representative and, with respect to a Disabled individual, her or his conservator, committee, guardian, or similar appointee. Seller or Sellers shall mean one or more of the Foundation, ML, ML as Custodian, and SL. SL shall mean Seymour Lichtenstein, 791 Park Avenue, New York, New York 10021. Shares shall mean, as to each Seller, all of the shares of Common Stock owned by such Seller on the Commencement Date and thereafter acquired by such Seller (whether by way of stock dividend, reorganization, bequest, gift, purchase, or otherwise) prior to the Termination Date. Termination Date shall mean the first to occur of (i) a Closing after which none of the Sellers own any Shares or (ii) the date which is 24 months after SL's death. A.2. Unless otherwise expressly provided: (i) when the defined meaning is intended, the term is initially capitalized and (ii) the defined meaning of any term in the singular or plural also shall include the plural or singular, as the case may be. Section B Background B.1. SL, the owner of 688,738 shares of Common Stock, is the Chief Executive Officer of the Company and may be deemed to be a "control person" of the Company as that term is defined by the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. B.2. ML, the wife of SL, owns 4,012 shares of Common Stock individually, and holds options currently exercisable to purchase 12,500 shares of Common Stock. B.3. ML as Custodian owns 100 shares of Common Stock. B.4. The Foundation, which SL may be deemed to control, owns 19,200 shares of Common Stock. B.5. The Company believes it is in its best interests to limit the distribution of the shares of Common Stock owned by the Foundation, ML, ML as Custodian, and SL in the event SL becomes Disabled or dies. THEREFORE, IT IS AGREED: Section I Right of First Refusal; Put 1.1. No Seller shall sell, assign, pledge, or otherwise dispose of or encumber any of her, his, or its Shares during the period from the Commencement Date to the Termination Date other than (a) to any entity that is directly or indirectly owned by such Seller and that has agreed in writing to be bound by the terms and conditions of this Agreement, (b) to the Company, (c) as a gift or bequest if the recipient has agreed in writing to be bound by the terms and conditions of this Agreement, or (d) in accordance with the terms and conditions of Section 1.2. Any attempt to transfer Shares in violation of the provisions of this Section I shall be void and of no force or effect. 1.2. If a Seller receives a Bona Fide Offer from a third party to purchase on or after the Commencement Date all or part of her, his, or its Shares which such Seller desires to accept, such Seller shall offer such Shares for sale to the Company at the same price and upon the same terms as set forth in the Bona Fide Offer by giving a Notice of Offer to the Company. The Notice of Offer shall constitute an offer by such Seller to sell the Offered Shares to the Company at the same price and upon the same terms and conditions as set forth in the Bona Fide Offer. Within 15 days from the receipt of the Notice of Offer, the Company shall deliver a notice to the Seller who sent the Notice of Offer indicating whether the Company accepts or rejects the offer to sell made by the Notice of Offer. If the Company accepts the offer to sell, the Notice of Offer and the Company's notice of acceptance shall constitute the binding agreement of the notifying Seller and the Company for the sale and purchase of the Offered Shares at the price and upon the terms and conditions stated in the Bona Fide Offer. If the Company gives a notice rejecting the offer to sell or fails to give notice within the 15 day period in response to the Notice of Offer, the notifying Seller shall be entitled under the terms of this Agreement, to sell, convey, and deliver the Offered Shares to the Offeror at the price and upon the terms and conditions stated in the Notice of Offer, but only if the sale and purchase of the Offered Shares is completed within a period of 45 days from the date of delivery of the Notice of Offer to the Company. In the event that ML or SL dies, her or his named Representative can give a Notice of Offer prior to an official appointment as such. 1.3. The Sellers collectively shall have the option for the period from the Commencement Date to the Termination Date to give a Put Notice to the Company to require the Company to acquire all of the Common Stock then owned by them. The price per Share of the Common Stock shall be equal to the average of the per share closing prices of the Common Stock on the American Stock Exchange (or if not them listed on the American Stock Exchange, on any other national securities exchange on which the Common Stock is listed, or if not so listed, as reported by NASDAQ, or if not so reported, as reported by any other national quotation system) for the 30 Business Days immediately preceding the Put Notice as reported by The Wall Street Journal. In the event that the Shares are not listed on a national securities exchange or NASDAQ (or any other national quotation system), the price per Share of the Common Stock shall be equal to the fair market value of the Common Stock as determined by the Company's Board of Directors based on information furnished by one or more independent market makers making a market in the Common Stock. The purchase price shall be payable in cash at the Closing. In the event that ML or SL dies, her or his named Representative can give a Put Notice prior to an official appointment as such. 1.4. Each Seller and the Company recognizes that money damages will be inadequate to compensate the Company or the Sellers for the injury it or they will suffer as the result of a breach by any Seller or the Company of the provisions of Sections 1.1, 1.2, and 1.3, and hereby expressly consents to specific performance as an appropriate remedy for the breach of any provision of such Sections. Section II Sale of Shares and Closings 2.1.A. The Closing of a purchase of Offered Shares pursuant to Section 1.2 which has been accepted by the Company shall be on the 30th day following the date of delivery of the Notice of Offer, or if such date is not a Business Day, on the first Business Day thereafter. 2.1.B. The Closing of a purchase pursuant to Section 1.3 shall be on the 15th day following the Put Notice or if such date is not a Business Day, on the first Business Day thereafter. 2.1.C. In the event that a Representative of a Seller must be appointed, the Closing referred to in Sections 2.1.A or 2.1.B shall be postponed until 7 Business Days after such appointment. 2.2. All Closings shall take place at the offices of the Company at 10:00 a.m., New York City time or such other date, time, or location as the Seller or Sellers and the Company otherwise agree. Section III Representations and Warranties of the Company 3.1. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Virginia and has all requisite corporate power and authority to own and operate its properties and to carry on its business as presently being conducted. 3.2. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to purchase the Shares in accordance with the terms of this Agreement, and to carry out and perform all of its other obligations under the terms of this Agreement. 3.3 This Agreement has been duly authorized, executed, and delivered by or on behalf of the Company and, assuming due execution and delivery of this Agreement by the Sellers, this Agreement constitutes the legal, valid, and binding obligation of the Company enforceable in accordance with its terms. 3.4. No consent, approval, or authorization of or qualification, designation, declaration, or filing with any governmental authority on the part of the Company is required in connection with the execution, delivery, and performance by the Company of this Agreement, the purchase by the Company of any of the Shares, or the consummation of any other transaction contemplated by this Agreement. 3.5. The Company is not in violation of any provision of its Articles of Incorporation or Bylaws, or of any loan agreement or other material agreement to which it is a party. The execution, delivery, and performance of this Agreement and the taking of action contemplated by this Agreement will not result in any violation of or be in conflict with or constitute a default under any of the foregoing or result in the creation of any mortgage, lien, charge, or encumbrance upon any of the properties or assets of the Company pursuant to any of the foregoing. Section IV Representations and Warranties of Each Seller Each of the Sellers, severally and not jointly, represents and warrants to the Company as follows: 4.1. Such Seller has all requisite power and authority and full legal capacity to execute and deliver this Agreement, to sell the Shares now owned by such Seller in accordance with the terms of this Agreement, and to carry out and perform all of her, his, or its other obligations under the terms of this Agreement. 4.2. This Agreement has been duly executed and delivered by such Seller, and assuming due authorization, execution, and delivery of this Agreement by the Company, this Agreement constitutes the valid and binding obligation of such Seller enforceable in accordance with its terms. 4.3. Such Seller is the beneficial owner of the number of Shares referred to in Section B. Such Shares are owned by such Seller free of all liens, claims, charges, and encumbrances, except for ML's options and SL's shares issued in accordance with the Company's 1999 Restricted Stock Plan. At the time of any transfer of any Shares to the Company pursuant to this Agreement, such Shares will be owned by such Seller free and clear of any liens, claims, charges, , or encumbrances. With respect to the Foundation, the execution and delivery of this Agreement by it has received, and the sale of its Shares pursuant to this Agreement will at the time of sale have received, all required approvals, including any Board of Directors approvals. None of the Sellers is a party to, or bound by, any agreement or other right or arrangement (a) that provides for the sale, transfer, or other disposition of any of her, his, or its Shares (other than this Agreement) or (b) under which the execution, delivery, and performance by her, him, or it of this Agreement would result in a material breach thereof or a material default thereunder or would create a lien, charge, or encumbrance on the Shares owned by her, him, or it. Section V Conditions to a Closing 5.1. Each Seller's obligations to sell and deliver the Shares owned by such Seller to be purchased by the Company at a Closing is subject to the fulfillment, to the Seller's reasonable satisfaction, before or at such Closing, of the following conditions, any of which may be waived in writing by such Seller: 5.1.A. The representations and warranties of the Company made or contained in this Agreement or otherwise made in writing by or on behalf of the Company in connection with the transactions contemplated by this Agreement shall be true and correct in all material respects at and as of the date of such Closing as if made on and as of such date, except as affected by the transactions contemplated by this Agreement. 5.1.B. The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it before or at such Closing. 5.1.C. The Company shall have delivered to such Seller a certificate dated the date of the Closing and executed by the President or a Vice President of the Company certifying that, after due inquiry in the case of matters not within his knowledge, the conditions specified in Sections 5.1.A and 5.1.B have been fulfilled. 5.2. The Company's obligation to purchase and pay for the Shares of any Seller to be acquired by the Company at a Closing is subject to the fulfillment, before or at such Closing, of the following conditions, any of which may be waived in writing by the Company: 5.2.A. The representations and warranties of a Seller made or contained in this Agreement or otherwise made in writing by such Seller in connection with the transactions contemplated by this Agreement shall be true and correct in all material respects at and as of the date of such Closing as if made on and as of such date, except as affected by the transactions contemplated by this Agreement. 5.2.B The Seller shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by her, him, or it before or at such Closing. 5.2.C. The Seller shall have delivered to the Company a certificate dated the date of the Closing and executed by such Seller certifying that the conditions specified in Sections 5.2.A and 5.2.B hereof have been fulfilled and that the Company will acquire good title to the Shares being acquired free and clear of any liens, claims, charges, or encumbrances. 5.2.D. In connection with a Closing resulting from a Put Notice, each of the Sellers shall have either exercised or forfeited all options, warrants, and other rights to acquire shares of the Common Stock held by such Seller, and, if so exercised, such shares of Common Stock shall have been issued to such Seller and included in the sale to the Company. 5.2.E. The Purchase of any of the Shares by the Company shall not, in the reasonable opinion of the Board of Directors of the Company upon advice of Virginia counsel, constitute a violation of Section 13.1-653 of the Virginia Stock Corporation Act. Section VI Miscellaneous 6.1.A. All agreements, representations, and warranties contained in this Agreement or made in writing by the Company or on behalf of the Company in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, any investigation at any time made by the Sellers or on their behalf, the sale and purchase of the Shares, and payment therefor. 6.1.B. All statements contained in any certificate or other instrument executed and delivered by the Company or its duly authorized officers pursuant to this Agreement in connection with the transactions contemplated by this Agreement shall be deemed representations by the Company under this Agreement. 6.1.C. All agreements, representations, and warranties contained in this Agreement or made in writing by any of the Sellers in connection with the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement, the sale and purchase of the Shares and payment therefor. 6.1.D. All statements contained in any certificate or other instrument executed and delivered by any Seller pursuant to this Agreement in connection with the transactions contemplated by this Agreement shall be deemed representations by such Seller under this Agreement. 6.2. All of the Shares shall bear either a legend reflecting the restrictions on transfer imposed by this Agreement or a stop order shall be placed on the Shares with the Company's transfer agent. 6.3. Any failure of a party hereto to insist upon strict performance by any other party of any of the terms of this Agreement shall not be deemed to be a waiver of any of the terms and conditions of this Agreement unless such party so acknowledges in writing and such party shall have the right thereafter to insist upon strict performance thereof by the other party. 6.4. This Agreement is to be governed by, and construed, interpreted, and enforced in accordance with the laws of the Commonwealth of Virginia without regard to the conflicts of laws provisions thereof. 6.5. This Agreement shall be binding upon and shall inure to the benefit of the Company and any entity which shall be merger, consolidation, purchase, or otherwise succeed to substantially all of the business of the Company, the Company's assigns permitted pursuant to the next sentence, and the Sellers and their respective distributees and Representatives. The Company may assign all or a portion of its right, title, and interests under this Agreement to any employee benefit plan in which the Company's employees participate (as a result of their position as the Company's employees), or to any other entity that undertakes and agrees in a writing reasonably satisfactory to the Sellers to be bound by the Company's obligations under this Agreement. Except as contemplated by Section I, the Sellers shall not have the right to assign any of their rights or obligations under this Agreement or transfer any of their Shares without the express written consent of the Company. 6.6. All notices , requests, instructions, or other documents required under this Agreement shall be deemed to have been given or made when personally delivered or when deposited with the U.S. Postal Service for delivery by registered or certified mail and addressed to or telecopied (providing that the teletransmission is confirmed by regular mail): To the Company: 350 Fifth Avenue New York, New York 10018 Attn: Mr. Jerald Kamiel, President Telecopier No.: 971-2254 To the Sellers: Mr. Seymour Lichtenstein 791 Park Avenue New York, New York 10021 Telecopier No.: _____________ A copy of all notices shall be sent to: Tannenbaum Dubin & Robinson, LLP 1140 Avenue of the Americas New York, New York 10036 Attn: Marvin S. Robinson, Esq. Telecopier No.: 212-302-2906 Hunton & Williams Riverfront Plaza, East Tower 951 East Byrd Street Richmond, VA 23219-4074 Attn: Allen C. Goolsby, Esq. Telecopier No.: 804-788-8218 Any party may from time to time give the others written notice of a change in the address to which notices are to be sent. 6.7. Inapplicability or unenforceability of any provision of this Agreement shall not impair the operation or validity of any other provision hereof. 6.8. This Agreement contains the entire agreement between the Sellers and the Company with respect to the subject matter of this Agreement and supercedes all prior agreements, arrangements, and understandings, written or oral, among the parties with respect to the subject matter of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above. GARAN, INCORPORATED By:_____________________________________ Jerald Kamiel, President ________________________________________ Seymour Lichtenstein ________________________________________ Marita Lichtenstein, individually and as Custodian for Samuel Lichtenstein THE LICHTENSTEIN FOUNDATION, INC. By:__________________________________ Seymour Lichtenstein, President EX-27 3
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-30-2000 OCT-1-1999 DEC-31-1999 9,086,000 5,905,000 30,087,000 512,000 39,953,000 92,047,000 39,441,000 24,972,000 153,009,000 30,408,000 2,130,000 2,660,000 0 0 115,526,000 153,009,000 53,345,000 53,345,000 41,947,000 41,947,000 0 0 24,000 5,442,000 2,258,000 0 0 0 0 3,184,000 0.60 0.59
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