-----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, BSuGS79dlPPI9tHiHJNseLiLF9uhCoef/uaQTsLY4qBm9C1QrCcdb8MOJWoClezu 8LRGATk+s/uBUrMTuFsjEA== 0001033525-01-500006.txt : 20010223 0001033525-01-500006.hdr.sgml : 20010223 ACCESSION NUMBER: 0001033525-01-500006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010214 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: 1542370 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 r10q-120.txt FORM 10-Q 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, 2000 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, 2000 Common Stock (no par value) 5,081,337 shares PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) THREE MONTHS ENDED 12/31/00 12/31/99 ----------- ----------- Net sales $55,053,000 $53,345,000 Cost of sales 41,464,000 41,947,000 ____________ ____________ Gross margin on sales 13,589,000 11,398,000 Selling and administrative expenses 7,265,000 6,596,000 Interest on capitalized leases 29,000 24,000 Interest income (616,000) (664,000) ----------- ----------- Earnings before provision for income taxes 6,911,000 5,442,000 Provision for income taxes 2,834,000 2,258,000 ----------- ----------- Net earnings $ 4,077,000 $ 3,184,000 =========== =========== Earnings per share data: Earnings per share - Basic $ 0.80 $ 0.60 - Diluted $ 0.80 $ 0.59 Average common shares outstanding - Basic 5,078,000 5,320,000 - Diluted 5,098,000 5,354,000 Dividends paid per share $ 1.05 $ 1.05 GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) 12/31/00 9/30/00 ------------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 23,339,000 $ 14,580,000 U.S. Government securities - short-term 6,326,000 6,436,000 Accounts receivable, less estimated uncollectibles of $512,000 at 12/31/00 and $512,000 at 9/30/00 34,600,000 53,732,000 Inventories 50,863,000 47,757,000 Other current assets 7,040,000 6,475,000 ------------ ----------- Total current assets 122,168,000 128,980,000 U.S. Government Securities - Long-term 7,776,000 7,695,000 Property, plant and equipment, less accumulated depreciation and amortization 19,220,000 18,878,000 Other assets 7,636,000 8,039,000 ------------ ----------- TOTAL $ 156,800,000 $163,592,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 6,079,000 $ 10,417,000 Accrued liabilities 18,858,000 21,263,000 Federal and state income taxes payable 5,037,000 4,369,000 Current portion of capitalized leases 240,000 240,000 ------------ ----------- Total current liabilities 30,214,000 36,289,000 ------------ ----------- Capitalized lease obligations, net of current portion 1,910,000 1,910,000 ------------ ----------- Deferred income taxes 2,078,000 1,903,000 ------------ ----------- Shareholders' Equity: Preferred stock ($10 par value) 500,000 shares authorized; none issued Common stock (no par value) 15,000,000 shares authorized; issued 5,081,337 at 12/31/00 and 5,072,337 at 9/30/00 2,540,000 2,536,000 Additional paid-in-capital 6,476,000 6,327,000 Unamortized value of restricted stock (2,860,000) (3,073,000) Retained earnings 116,442,000 117,700,000 ------------ ------------ Total shareholders' equity 122,598,000 123,490,000 ------------ ------------ TOTAL $ 156,800,000 $163,592,000 ============ ============ GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED 12/31/00 12/31/99 _------------ ----------- Cash Flows From Operating Activities: Net earnings $ 4,077,000 $ 3,184,000 Adjustments to reconcile to net cash provided by operating activities: Deferred compensation 213,000 213,000 Depreciation and amortization 1,344,000 1,116,000 Deferred income taxes 175,000 (160,000) Changes in assets and liabilities: U.S. Government securities - Short-term 29,000 (6,062,000) Accounts receivable 19,132,000 29,806,000 Inventories (3,106,000) (2,620,000) Other current assets (565,000) (148,000) Accounts payable (4,338,000) (3,016,000) Accrued liabilities (2,405,000) (3,510,000) Income taxes payable 668,000 (2,036,000) Other assets 403,000 (1,954,000) ------------ ----------- Net Cash provided by Operating Activities 15,627,000 14,813,000 ------------ ----------- Cash Flows From Investing Activities: Purchase of U.S. Gov't securities - Long-term 0 (13,129,000) Additions to property, plant, and Equipment (1,686,000) (192,000) ------------ ----------- Net Cash used for Investing Activities (1,686,000) (13,321,000) ------------ ----------- Cash Flows From Financing Activities: Payment of dividends (5,335,000) (5,586,000) Repayment of capitalized lease obligations 0 (20,000) Proceeds from stock option exercises 153,000 248,000 ------------ ----------- Net Cash used for Financing Activities (5,182,000) (5,358,000) ------------ ----------- Net increase (decrease)in Cash and Cash Equivalents 8,759,000 (3,866,000) Cash and Cash Equivalents At Beginning of Period 14,580,000 12,952,000 ------------ ------------ Cash and Cash Equivalents At End of Period $ 23,339,000 $ 9,086,000 ============ ============ Supplemental cash flow Disclosures Cash Paid During The Period For: Interest $ 29,000 $ 24,000 Income taxes 1,989,000 4,455,000 ============ ============ GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2000 (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: 2000 1999 ----------------------------- ------------------------------- Income Shares Per Share Income Shares Per Share Basic EPS $ 4,077,000 5,078,337 $0.80 $3,184,000 5,320,338 $0.60 ========= ======== Effect of dilutive options 19,840 34,147 --------------------- ----------------------- $ 4,077,000 5,098,177 $0.80 $3,184,000 5,354,485 $0.59 =============================== ================================ 3. Inventories consist of the following: 12/31/00 09/30/00 ----------- ----------- Raw Materials $ 7,749,000 $ 8,338,000 Work in Process 8,939,000 8,817,000 Finished Goods 34,175,000 30,602,000 ----------- ----------- $50,863,000 $47,757,000 =========== =========== ITEM 2. GARAN, INCORPORATED AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve certain risks and uncertainties. Discussions containing such forward-looking statements may be found in the material set forth below as well as in this Report generally. Without limiting the foregoing, the words "believes," "anticipates," "plans," "excepts," and similar expressions are intended to identify forward-looking statements. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors including, but not limited to, uncertainties regarding continued market acceptance of the Company's products, competition, the Company's relationship with its principal customer, the consistent availability of raw materials, and risks associated with the Company's Central American operations, as well as those set forth under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000, which are incorporated by reference herein. These forward-looking statements are made as of the date of this Report, and the Company assumes no obligation to update such forward- looking statements or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements. RESULTS OF OPERATIONS Three-Month Periods Ended December 31, 2000, and December 31, 1999. Net sales for the three-month period ended December 31, 2000, were $55,053,000 compared to $53,345,000, for the same period in fiscal 2000. Net earnings for the three-month period were $4,077,000, equal to $0.80 per share, compared to $3,184,000, or $0.60 per share, last year. The increase in net sales for the quarter was due primarily to the increase in units shipped in the Company's Childrenswear Division (in its girls business). Gross margin for the three months ended December 31, 2000, was $13,589,000, or 24.7% of net sales, compared to $11,398,000, or 21.4% of net sales, for the comparable period in fiscal 2000. The gross margin for the three months ended December 31, 2000, is comparable to the Company's historical average gross margin. Gross margin as a percentage of net sales was lower in the first three months of fiscal 2000 than the Company's historical average due to product mix changes which increased the proportion of the Company's lower margin business during that quarter. Selling and administrative expenses for the three months ended December 31, 2000, were $7,265,000, or 13.2% of net sales, as compared to $6,596,000, or 12.4% of net sales, for the comparable period last year. The increase in selling and administrative expenses was due primarily to expenses relating to the expansion of manufacturing facilities in the Caribbean Basin and continued acceleration in the investment in and upgrading of computer systems. Interest income decreased for the three months ended December 31, 2000, to $616,000 from $664,000 for the comparable period last year as a result of lower levels of investment. FINANCIAL CONDITION At December 31, 2000, working capital was $91,954,000, a decrease of $737,000 from working capital at September 30, 2000, of $92,691,000. 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, both of which were paid in December, 2000, offset by seasonal decreases in the Company's accounts payable and accrued liabilities. Shareholders' equity at December 31, 2000, was $122,598,000, or $24.13 book value per share, as compared to $123,490,000, or $24.34 book value per share, at September 30, 2000. Accounts receivable were $34,600,000 at December 31, 2000, a decrease of $19,132,000 over accounts receivable at September 30, 2000. Because quarterly shipping patterns are uneven, December 31, 2000, accounts receivable should be compared to the balance of $29,575,000 at December 31, 1999, rather than the September 30, 2000, year-end balance. The increase in accounts receivable at December 31, 2000, as compared to the balance at December 30, 1999, resulted from a higher proportion of shipments being made during the last half of the quarter this year. Inventory increased to $50,863,000 at December 31, 2000, from $47,757,000 at September 30, 2000. Because quarterly shipping patterns are uneven, inventory at December 31, 2000, should be compared to inventory of $39,953,000 at December 31, 1999, rather than the September 30, 2000, year- end balance. The increase in inventory from December 31, 1999, to December 31, 2000, was primarily the result of a larger percentage of goods scheduled to be shipped in subsequent quarters being manufactured as compared to the prior period. YEAR 2000 The Company 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 Company continues to believe that the most likely "worst-case" scenario involves potential disruptions in areas in which the Company'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 Company's Central American operations. While such failures could affect important operations of the Company, either directly or indirectly, the Company cannot at present estimate either the likelihood or the potential cost of such failures. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK The Company does not believe it is exposed to market risks with respect to any of its investments; the Company does not utilize market rate sensitive instruments for trading or other purposes. The Company's investments consist primarily of U.S. Government securities with maturities of three years or less. PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. a. Exhibits None b. Reports on Form 8-K No reports have been filed on Form 8-K during the quarter ended December 31, 2000. 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 13, 2001 -----END PRIVACY-ENHANCED MESSAGE-----