-----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, VuvHEE/iMv3ryRdrZTl6EdwvH1OEBO8wTvJmlvV9FjREy3aJR2l9/CAqli3EBnKO /vmZow8XFyCYieYqYB2V6g== /in/edgar/work/20000814/0001104659-00-000474/0001104659-00-000474.txt : 20000921 0001104659-00-000474.hdr.sgml : 20000921 ACCESSION NUMBER: 0001104659-00-000474 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GARAN INC CENTRAL INDEX KEY: 0000039917 STANDARD INDUSTRIAL CLASSIFICATION: [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: 700060 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 0001.txt QUARTERLY REPORT 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, 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 June 30, 2000 Common Stock (no par value) 5,071,838 shares GARAN, INCORPORATED AND SUBSIDIARIES FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Page # Item 1. Consolidated Statements of Earnings Three Months Ended June 30, 2000 and 1999 4 Consolidated Statements of Earnings Nine Months Ended June 30, 2000 and 1999 5 Consolidated Balance Sheets June 30, 2000 and September 30, 1999 6 Consolidated Statements of Cash Flows Nine Months ended June 30, 2000 and 1999 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of operations 9 Item 3. Qualitative and Quantitative Disclosure about Market Risk 10 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) THREE MONTHS ENDED 6/30/00 6/30/99 ----------- ----------- Net sales $47,941,000 $45,836,000 Cost of sales 35,900,000 33,999,000 ----------- ----------- Gross margin on sales 12,041,000 11,837,000 Selling and administrative expenses 7,258,000 6,292,000 Interest on capitalized leases 29,000 21,000 Interest income (519,000) (707,000) ----------- ----------- Earnings before provision for income taxes 5,273,000 6,231,000 Provision for income taxes 2,188,000 2,555,000 ----------- ----------- Net earnings $ 3,085,000 $ 3,676,000 =========== =========== Earnings per share data: Earnings per share - Basic $ 0.60 $ .70 - Diluted $ 0.60 $ .69 Average common shares outstanding - Basic 5,264,000 5,178,000 - Diluted 5,280,000 5,218,000 Dividends paid per share $ 0.25 $ 0.25 GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) NINE MONTHS ENDED 6/30/00 6/30/99 ----------- ----------- Net sales $155,954,000 $143,529,000 Cost of sales 119,108,000 106,650,000 ----------- ----------- Gross margin on sales 36,846,000 36,879,000 Selling and administrative expenses 21,228,000 18,826,000 Interest on capitalized leases 75,000 67,000 Interest income (1,902,000) (2,085,000) ----------- ----------- Earnings before provision for income taxes 17,445,000 20,071,000 Provision for income taxes 7,239,000 8,161,000 ----------- ----------- Net earnings $10,206,000 $11,910,000 =========== =========== Earnings per share data: Earnings per share - Basic $ 1.94 $ 2.30 - Diluted $ 1.93 $ 2.28 Average common shares outstanding- Basic 5,264,000 5,178,000 - Diluted 5,280,000 5,218,000 Dividends paid per share $ 1.55 $ 1.40 GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) 06/30/00 9/30/99 ASSETS ------------- ------------ Current Assets: Cash and cash equivalents $ 1,744,000 $ 12,952,000 U.S. Government securities - short-term 0 0 Accounts receivable, less estimated uncollectibles of $512,000 at 6/30/00 and 9/30/99 38,991,000 59,381,000 Inventories 65,867,000 37,333,000 Other current assets 6,957,000 6,706,000 ----------- ----------- Total current assets 113,559,000 116,372,000 U.S. Government Securities - Long-term 20,638,000 25,435,000 Property, plant and equipment, less accumulated depreciation and amortization 15,193,000 15,393,000 Other assets 7,544,000 6,492,000 ------------ ------------ TOTAL $ 156,934,000 $ 163,692,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 11,891,000 $ 9,959,000 Accrued liabilities 20,870,000 22,495,000 Federal and state income taxes payable 2,021,000 6,496,000 Current portion of capitalized leases 20,000 20,000 ------------ ------------ Total current liabilities 34,802,000 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 5,071,838 at 6/30/00 and 5,305,737 at 9/30/99 2,536,000 2,653,000 Additional paid-in-capital 6,319,000 11,272,000 Unamortized value of restricted stock (3,286,000) (3,925,000) Retained earnings 112,148,000 110,127,000 ------------ ------------ Total shareholders' equity 117,717,000 120,127,000 ------------ ------------ TOTAL $ 156,934,000 $ 163,692,000 ============= ============= GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED 06/30/00 06/30/99 Cash Flows From Operating Activities: ------------- ------------ Net earnings $ 10,206,000 $ 11,910,000 Adjustments to reconcile to net cash provided by operating activities: Deferred compensation 639,000 142,000 Depreciation and amortization 3,678,000 2,952,000 Deferred income taxes (160,000) (310,000) Changes in assets and liabilities: U.S. Government securities - Short-term 0 5,597,000 Accounts receivable 20,390,000 12,831,000 Inventories (28,534,000) (25,719,000) Other current assets (251,000) 205,000 Accounts payable 1,932,000 2,920,000 Accrued liabilities (1,625,000) (27,000) Income taxes payable (4,475,000) (2,004,000) Other assets (1,052,000) (1,429,000) ------------ ------------ Net Cash Provided by Operating 748,000 7,068,000 Activities ------------ ------------ Cash Flows From Investing Activities: Sale of U.S. Gov't securities - Long-term 17,926,000 18,155,000 Purchase of U.S. Gov't securities - Long-term (13,129,000) (18,707,000) Additions to property, plant, and (3,478,000) (3,608,000) Equipment ------------ ------------ Net Cash provided by (used for) Investing Activities 1,319,000 (4,160,000) ------------ ------------ Cash Flows From Financing Activities: Payment of dividends (8,185,000) (7,238,000) Repayment of capitalized lease obligations (20,000) (137,000) Proceeds from exercised stock options 274,000 280,000 Repurchase of Common Stock (5,344,000) 0 ------------ ------------ Net Cash used for Financing Activities (13,275,000) (7,095,000) ------------ ------------ Net (decrease) increase in Cash and Cash Equivalents (11,208,000) (4,187,000) Cash and Cash Equivalents At Beginning of Period 12,952,000 9,599,000 ------------ ------------ Cash and Cash Equivalents At End of Period $ 1,744,000 $ 5,412,000 ============ ============ Supplemental cash flow Disclosures Cash Paid During The Period For: Interest $ 75,000 $ 67,000 Income taxes 11,660,000 10,400,000 ============ ============ GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 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 Statements of Financial Accounting Standards No. 128 as follows: 2000 1999 ------------------------------ ------------------------------- Income Shares Per Share Income Shares Per Share Basic EPS $10,206,000 5,264,000 $1.94 $11,910,000 5,178,000 $2.30 ========= ======== Effect of dilutive options 16,296 40,000 -------------------- ---------------------- $10,206,000 5,280,296 $1.93 $11,910,000 5,218,000 $2.28 ============================= =============================== 3. Inventories consist of the following: 06/30/00 09/30/99 ----------- ----------- Raw Materials $11,333,000 $ 6,997,000 Work in Process 11,126,000 6,932,000 Finished Goods 43,408,000 23,404,000 ----------- ----------- $65,867,000 $37,333,000 =========== =========== 4. Common Stock Repurchase On April 24, 2000, the registrant repurchased 250,000 shares of its Common Stock in a single block purchase from an institutional investor at the market price. 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 significant customers or personnel, availability of raw materials, 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. RESULTS OF OPERATIONS Three and Nine-Month Periods Ended June 30, 2000 and June 30, 1999 Net sales for the three-month period ended June 30, 2000, were $47,941,000, compared to $45,836,000, for the same period last year. Net sales for the first nine-months of fiscal 2000 were $155,954,000, compared to $143,529,000 for the same period last year. Net earnings for the three- month period were $3,085,000, equal to $0.60 per share, compared to $3,676,000, or $0.70 per share, last year. Net earnings for the nine-month period were $10,206,000, equal to $1.94 per share compared to $11,910,000, or $2.30 per share, last year. The increase in net sales for both periods was due primarily to the increase in units shipped in the registrant's Childrenswear Division offset in part by the ending of sales of the registrant's Women's Plus products. Gross margin for the three-months ended June 30, 2000, was $12,041,000, or 25.1% of net sales, compared to $11,837,000, or 25.8% of net sales, for the comparable period in fiscal 1999. Gross margin for the nine-months ended June 30, 2000, was $36,846,000, or 23.6% of net sales, compared to $36,879,000, or 25.7% of net sales, for the comparable period last year. The decrease in gross margin in both percentage of net sales and absolute dollars for both periods was due primarily to expenses related to the start- up of additional manufacturing facilities in El Salvador and Honduras and a domestic facility dedicated to the support of those operations and changes in customer programs (product mix). Selling and administrative expenses for the three-months ended June 30, 2000, were $7,258,000, or 15.1% of net sales as compared to $6,292,000, or 13.7% of net sales, for the comparable period last year. Selling and administrative expenses for the nine-months ended June 30, 2000, were $21,228,000, or 13.6% of net sales, as compared to $18,826,000, or 13.1% of net sales, for the comparable period last year. The increase in both periods in dollars and as a percentage of net sales primarily resulted from new Management Information Systems and data and voice communication systems. Additionally, the registrant started a distribution facility which is not yet fully operational. Interest income for the three-months ended June 30, 2000, decreased to $519,000 from $707,000 for the comparable period last year. Interest income for the nine-months ended June 30, 2000, was $1,902,000 as compared to $2,085,000 for the comparable period last year. The decrease in interest income for both periods was due primarily to a decline in the level of investments. FINANCIAL CONDITION At June 30, 2000, working capital was $78,757,000, an increase of $1,355,000 from September 30, 1999, working capital of $77,402,000. Shareholders' equity at September 30, 1999, was $120,127,000 or $22.64 book value per share, as compared to $117,717,000 or $23.21 book value per share, at June 30, 2000. The decrease in shareholders' equity was due primarily to the registrant's repurchase of 250,000 shares of its stock, which took place on April 24, 2000, in a single block purchase from an institutional investor at the market price. Accounts receivable were $38,991,000 at June 30, 2000, a decrease of $20,390,000 over the balance at September 30, 1999. Because the registrant's business is seasonal, the receivable balance should be compared to the balance of $29,732,000 at June 30, 1999, rather than the September 30, 1999 year-end balance. The increase in the receivable balance at June 30, 2000, as compared to the balance at June 30, 1999, was primarily due to a change in shipping schedules with increased shipping during the last month of the quarter. Inventory increased to $65,867,000 at June 30, 2000, from $37,333,000 at September 30, 1999. Because the registrant's business is seasonal, and certain programs are manufactured throughout the year but shipped primarily in the fourth quarter, the inventory should be compared to the inventory of $58,495,000 at June 30, 1999, rather than the September 30, 1999, year-end prior balance. The inventory increase from June 30, 1999, to June 30, 2000, was due to elevated inventory levels in both finished goods and raw materials as a result of higher production levels. YEAR 2000 The registrant has successfully updated its management information systems and in doing so dealt with its Year 2000 compliance issues. 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. However, no such failures have occurred, and 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. ITEM 3. 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 Exhibit 27. Financial Data Schedule b. Reports on Form 8-K No reports have been filed on Form 8-K during the quarter ended June 30, 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: /s/ Seymour Lichtenstein ----------------------------------- Seymour Lichtenstein Principal Executive Officer BY: /s/ William J. Wilson ---------------------------------- William J. Wilson Principal Financial Officer DATE: August 11, 2000 EX-27 2 0002.txt
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. 3-MOS 9-MOS SEP-30-2000 SEP-30-2000 JUN-30-2000 JUN-30-2000 1,744,000 1,744,000 0 0 39,503,000 39,503,000 512,000 512,000 65,867,000 65,867,000 113,559,000 113,559,000 42,693,000 42,693,000 27,500,000 27,500,000 156,934,000 156,934,000 34,802,000 34,802,000 2,130,000 2,130,000 0 0 0 0 2,536,000 2,536,000 115,181,000 115,181,000 156,934,000 156,934,000 47,941,000 155,954,000 47,941,000 155,954,000 35,900,000 119,108,000 35,900,000 119,108,000 7,258,000 21,228,000 0 0 29,000 75,000 5,273,000 17,445,000 2,188,000 7,239,000 3,085,000 10,206,000 0 0 0 0 0 0 3,085,000 10,206,000 0.60 1.94 0.60 1.93
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