FORM 10-Q - QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2002
----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission File Number: 0-15535
LAKELAND INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3115216
- ------------------------- -------------------------------------
(State of incorporation) (IRS Employer Identification Number)
711-2 Koehler Ave., Ronkonkoma, New York 11779
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(Address of principal executive offices)
(631) 981-9700
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(Registrant's telephone number, including area code)
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 that 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 latest practicable date:
Common Stock, $.01 par value, outstanding at December 13, 2002 - 2,966,357
shares.
LAKELAND INDUSTRIES, INC.
INDEX
FORM 10-Q
The following information of the Registrant and its subsidiaries is
submitted herewith:
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
Introduction ....................................................................................1
Condensed Consolidated Balance Sheets - October 31, 2002 and January 31, 2002.......................2
Condensed Consolidated Statements of Income - Three Months
and Nine Months Ended October 31, 2002 and 2001.....................................................3
Condensed Consolidated Statement of Stockholders' Equity
for the Nine Months Ended October 31, 2002..........................................................4
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended October 31, 2002 and 2001.....................................................................5
Notes to Condensed Consolidated Financial Statements................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............9
Item 4. Controls and Procedures............................................................................11
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K .................................................................11
Signatures ...................................................................................12
Certifications ................................................................................13-16
LAKELAND INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements:
Introduction
------------
CAUTIONARY STATEMENTS
This report may include "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are all statements other than
statements of historical fact included in this report, including, without
limitation, the statements under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position and liquidity, the Company's strategic
alternatives, future capital needs, development and capital expenditures
(including the amount and nature thereof), future net revenues, business
strategies, and other plans and objectives of management of the Company for
future operations and activities.
Forward-looking statements are based on certain assumptions and analyses
made by the Company in light of its experience and its perception of historical
trends, current conditions, expected future developments and other factors it
believes are appropriate under the circumstances. These statements are subject
to a number of assumptions, risks and uncertainties, and factors in the
Company's other filings with the Securities and Exchange Commission (the
"Commission"), general economic and business conditions, the business
opportunities that may be presented to and pursued by the Company, changes in
law or regulations and other factors, many of which are beyond the control of
the Company. Readers are cautioned that these statements are not guarantees of
future performance, and the actual results or developments may differ materially
from those projected in the forward-looking statements. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by these
cautionary statements.
1
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, January 31,
ASSETS 2002 2002
----------- -----------
(unaudited)
Current Assets:
Cash and cash equivalents......................................$ 1,990,167 $ 1,760,635
Accounts receivable, net of allowance for
and doubtful accounts of $320,000 and $221,000 at
October 31, 2002 and January 31, 2002, respectively ......... 9,001,292 9,600,738
Inventories ................................................... 25,495,486 26,529,150
Prepaid income taxes .......................................... -- 242,029
Deferred income taxes ......................................... 888,000 888,000
Other current assets .......................................... 519,752 524,274
----------- -----------
Total current assets................................. 37,894,697 39,544,826
Property and equipment, net of accumulated
depreciation of $3,560,000 at October 31, 2002
and $3,113,000 at January 31, 2002........................... 2,127,234 2,218,459
Construction in progress....................................... 644,657 --
Other assets................................................... 731,437 654,200
----------- -----------
$41,398,025 $42,417,485
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable............................................... $3,209,575 $4,759,373
Current portion of long-term liabilities....................... 15,351,752 17,028,032
Accrued expenses and other current liabilities................. 1,201,198 991,021
Due to Affiliate............................................... 168,099 --
----------- -----------
Total current liabilities................................. 19,930,624 22,778,426
Long-term liabilities ......................................... 467,501 609,105
Deferred income taxes ......................................... 303,000 303,000
------- -------
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $.01 par;
1,500,000 shares authorized; none issued
Common stock, $.01 par;
10,000,000 shares authorized;
2,966,357 and 2,684,600 shares issued and outstanding
at October 31, 2002 and January 31, 2002, respectively....... 29,663 26,846
Additional paid-in capital..................................... 8,753,951 6,360,741
Retained earnings.............................................. 11,913,286 12,339,367
----------- -----------
Total stockholders' equity................................ 20,696,900 18,726,954
----------- -----------
$41,398,025 $42,417,485
=========== ===========
See notes to condensed consolidated financial statements.
2
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
October 31, October 31,
2002 2001 2002 2001
Net Sales ................................................... $ 18,534,900 $ 19,205,554 $ 58,142,368 $ 56,572,147
Cost of Goods Sold .......................................... 15,083,441 16,201,359 46,873,895 46,958,134
------------ ------------ ------------ ------------
Gross Profit ................................................ 3,451,459 3,004,195 11,268,473 9,614,013
Operating Expenses .......................................... 2,445,343 2,127,275 7,880,146 6,708,113
------------ ------------ ------------ ------------
Operating Profit ............................................ 1,006,116 876,920 3,388,327 2,905,900
Other Income, net ........................................... 4,090 88,634 44,593 100,139
Interest Expense ............................................ (146,325) (201,369) (491,153) (698,862)
------------ ------------ ------------ ------------
Income before Income Taxes .................................. 863,881 764,185 2,941,767 2,307,177
Provision for Income Taxes .................................. 368,274 380,281 991,483 704,000
------------ ------------ ------------ ------------
Net Income .................................................. $ 495,607 $ 383,904 $ 1,950,284 $ 1,603,177
============ ============ ============ ============
Net Income per common share adjusted for the
1 for 10 Stock distribution to shareholders of
record on July 31, 2002:
Basic .................................................. $ .17 $ .13 $ .66 $ .55
============ ============ ============ ============
Diluted ................................................ $ .17 $ .13 $ .66 $ .54
============ ============ ============ ============
Weighted average common shares outstanding
adjusted for the 1 for 10 Stock distribution to
shareholders of record on July 31, 2002:
Basic .................................................. 2,966,357 2,943,857 2,963,597 2,922,260
============ ============ ============ ============
Diluted ................................................ 2,975,303 2,974,156 2,974,958 2,946,780
============ ============ ============ ============
See notes to condensed consolidated financial statements.
3
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
Nine months ended October 31, 2002
Additional
Common stock paid-in Retained
Shares Amount capital earnings Total
------ ------ ------- -------- -----
Balance, January 31, 2002 2,684,600 $26,846 $6,360,741 $12,339,367 $18,726,954
Net income 1,950,284 1,950,284
Exercise of stock options 7,350 73 19,589 19,662
10% Stock dividend 274,407 2,744 2,373,621 (2,376,365) --
--------- ------- ---------- ----------- -----------
Balance, October 31, 2002 2,966,357 $29,663 $8,753,951 $11,913,286 $20,696,900
========= ======= ========== =========== ===========
See notes to condensed consolidated financial statements.
4
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
October 31,
2002 2001
---- ----
Cash Flows from Operating Activities:
Net income $ 1,950,284 $ 1,603,177
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Provision for bad debts 245,042 79,576
Depreciation and amortization 447,430 450,820
(Increase) decrease in accounts receivable 354,404 437,218
(Increase) decrease in inventories 1,033,664 (823,049)
(Increase) decrease in prepaid income taxes and other current assets 246,551 400,291
(Increase) decrease in other assets (77,237) (329,064)
Increase (decrease) in accounts payable, accrued
expenses and other liabilities (1,134,022) (3,115,656)
---------- ----------
Net cash provided by (used in) operating
activities 3,066,116 (1,296,687)
---------- ----------
Cash Flows from Investing Activities:
Construction in progress (644,657) --
Purchases of property and equipment (356,205) (376,124)
---------- ----------
Net cash provided by (used in) investing activities (1,000,862) (376,124)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 19,662 126,250
Net borrowings (reductions) under loan agreements (1,049,432) 2,866,797
Repayments of term loan (805,952) (576,852)
---------- ----------
Net cash provided by (used in) financing activities (1,835,722) 2,416,195
---------- ----------
Net increase in cash 229,532 743,384
Cash and cash equivalents at beginning of period 1,760,635 784,578
---------- ----------
Cash and cash equivalents at end of period $ 1,990,167 $ 1,527,962
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest $ 491,153 $ 698,847
=========== ===========
Income taxes $ 460,000 $ 357,500
=========== ===========
Non-cash Financing Activity:
Issuance of Stock Dividend 2,376,365 --
5
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business
Lakeland Industries, Inc. and Subsidiaries (the "Company"), a Delaware
corporation is engaged primarily in the manufacture of personal safety
protective work clothing. The principal market for the Company's products
is the United States. No customer accounted for more than 10% of net sales
during the nine-month periods ended October 31, 2002 and 2001. Qing Dao
Maytung Healthcare Co., Ltd. is a real estate holding company that was
formed during the nine months ended October 31, 2002 for the purpose of
constructing a building in the People's Republic of China.
2. Basis of Presentation
The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect all
adjustments which are, in the opinion of management, necessary to present
fairly the consolidated financial information required therein. Certain
information and note disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP") have been condensed or omitted pursuant
to such rules and regulations. While the Company believes that the
disclosures are adequate to make the information presented not misleading,
it is suggested that these condensed consolidated financial statements be
read in conjunction with the consolidated financial statements and the
notes included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended January 31, 2002. The
results of operations for the three-month and nine-month periods ended
October 31, 2002 and 2001 are not necessarily indicative of the results to
be expected for the full year.
3. Principles of Consolidation
The accompanying condensed consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries, Laidlaw,
Adams & Peck, Inc., Lakeland Protective Wear, Inc. (a Canadian
corporation), Lakeland de Mexico S.A. de C.V. (a Mexican corporation),
Weifang Lakeland Safety Products, Co., Ltd. (a Chinese corporation) and
Qing Dao Maytung Healthcare Co., Ltd. (a Chinese corporation). All
significant intercompany accounts and transactions have been eliminated.
4. Inventories
Inventories consist of the following:
October 31, January 31,
2002 2002
---- ----
Raw materials........................................... $ 8,634,326 $ 6,248,990
Work-in-process......................................... 1,874,476 3,997,470
Finished goods.......................................... 14,986,684 16,282,690
----------- -----------
$25,495,486 $26,529,150
Inventories are stated at the lower of cost or market. Cost is determined on the
first-in, first-out method.
5. Stockholders Equity
(a) Stock Split
On June 24, 2002, the Company announced a 1-for-10 Stock Split in the form
of a 10% stock dividend to Shareholders of record on July 31, 2002 with a
distribution date of August 30, 2002. Share and per share amounts have been
restated to reflect the stock split for all periods presented.
(b) Earnings Per Share
Basic earnings per share are based on the weighted average number of common
shares outstanding without consideration of potential common shares. Diluted
earnings per share are based on the weighted average number of common and
potential common shares outstanding. The diluted earnings per share calculation
takes into account the shares that may be issued upon exercise of stock options,
reduced by the shares that may be repurchased with the funds received from the
exercise based on the average price during the period.
6
The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended Nine Months Ended
October 31, October 31,
2002 2001 2002 2001
---- ---- ---- ----
Numerator
Net income $ 495,607 $ 383,904 $1,950,284 $1,603,177
========= ========== ========== ==========
Denominator
Denominator for basic earnings per share
(weighted-average shares) 2,966,357 2,943,857 2,963,597 2,922,260
Effect of dilutive securities:
Stock options 8,946 30,299 11,361 24,520
--------- --------- --------- ---------
Denominator for diluted earnings per share
(adjusted weighted-average shares) and
assumed conversions 2,975,303 2,974,156 2,974,958 2,946,780
========= ========= ========= =========
Basic earnings per share $.17 $.13 $.66 $.55
========= ========= ========= =========
Diluted earnings per share $.17 $.13 $.66 $.54
========= ========= ========= =========
Excluded from the calculation of earnings per share are options to purchase
1,100 and 3,300 shares at October 31, 2002 and 2001, respectively, as their
inclusion would have been anti dilutive.
6. Credit Facility
At October 31, 2002, the balance outstanding under the Company's secured
$18 Million revolving credit facility amounted to $14,904,000. This facility,
which is based on a percentage of eligible accounts receivable and inventory, as
defined, expires on July 31, 2003. Borrowings under the facility bear interest
at a rate per annum equal to the one-month LIBOR rate plus 2%. At October 31,
2003, the balance outstanding under the Company's term loan is $447,752. The
term loan is payable in monthly installments of $89,500, plus interest payable
at the thirty day commercial paper rate plus 2.45% and expires on March 31,
2003. The credit facility and term loan are collateralized by substantially all
7
of the assets of the Company and guaranteed by certain of the Company's
subsidiaries. The credit facility and term loan contain financial covenants,
including, but not limited to, minimum levels of earnings and maintenance of
minimum tangible net worth and certain other ratios.
7. Major Supplier
The Company purchased approximately 74% of its raw materials from DuPont.
The Company has been purchasing such raw materials from DuPont for over twenty
years, and as one of its largest customers in Tyvek, considers its relationship
with this supplier to be excellent. The Company expects this relationship to
continue for the foreseeable future. If required, similar raw materials could be
purchased from other sources, although, the Company's competitive position in
the marketplace could be affected.
8. Effects of Recent Accounting Pronouncements
In April 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 145, "Rescission of FASB
Statements No. 4, 44, and 64 Amendment of FASB Statement No. 13, and Technical
Corrections". This statement eliminates the current requirement that gains and
losses on debt extinguishments must be classified as extraordinary items in the
income statement. Instead, such gains and losses will be classified as
extraordinary items only if they are deemed to be unusual and infrequent, in
accordance with the current GAAP criteria for extraordinary classification. In
addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring
that modifications of capital leases that result in reclassification as
operating leases be accounted for consistent with sale-leaseback accounting
rules. The statement also contains other nonsubstantive corrections to
authoritative accounting literature. The rescission of SFAS 4 is effective in
fiscal years beginning after May 15, 2002. The amendment and technical
corrections to SFAS 13 are effective for transactions occurring after May 15,
2002. All other provisions of SFAS 145 are effective for financial statements
issued on or after May 15, 2002. Management believes that the adoption of SFAS
No. 145 will not have a material impact on its financial position or results of
operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which addresses accounting for
restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issue Task Force Issue No. 94-3. SFAS No. 146
requires that the liability for costs associated with an exit or disposal
activity be recognized when the liability is incurred. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at fair
value. Accordingly, SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amount recognized. SFAS No. 146 is effective
for exit or disposal activities that are initiated after December 31, 2002.
Management believes that the adoption of SFAS No. 146 will not have a material
impact on its financial position or results of operations.
8
LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
Nine months ended October 31, 2002 compared to the nine months ended
October 31, 2001.
Net Sales. Net sales for the nine months ended October 31, 2002 increased
$1,570,000, (or 2.8%) to $58,142,000 from $56,572,000 reported for the nine
months ended October 31, 2001. The increase in sales was principally
attributable to improving economic conditions and to the Company's April 1, 2002
sales price increase. This industry continues to be highly competitive.
Gross Profit. Gross profit for the nine months ended October 31, 2002,
increased by $1,654,000, (or 17.2%)to $11,268,000 from $9,614,000 for the nine
months ended October 31, 2002. Gross profit as a percentage of net sales
increased to 19.4% for the nine months ended October 31, 2002 from 17.0%
reported for the prior year principally due to the increase in selling prices
and additionally by a decrease in labor and overhead costs. Commencing in March
2002 the company incurred an increase in the price of raw materials, (from
DuPont), which have an effect on margins for the remainder of this fiscal year.
Operating Expenses. Operating expenses for the nine months ended October
31, 2002 increased by $1,172,000, (or 17.5%) to $7,880,000, (or 13.6%) of net
sales from $6,708,000, (or 11.9%) of net sales for the nine months ended October
31, 2001. Operating expenses increased principally as a result of increased
freight costs, insurance costs, computer costs, bad debt expense, professional
fees, sales and use taxes, and commission expense.
Interest Expense. Interest expense decreased primarily due to lower
interest costs reflecting a decrease in average borrowings under the company's
credit facilities and decreasing interest rates.
Income Tax Expense. The effective tax rate for the nine months ended
October 31, 2002 and 2001 of 33.7% and 30.5%, respectively, deviates from the
Federal statutory rate of 34.0%, which is primarily attributable to differing
foreign tax rates and state income taxes.
Net Income. As a result of the foregoing, net income increased to
$1,950,000 for the nine months ended October 31, 2002, (or up 21.6%) from net
income of $1,603,000 for the nine months ended October 31, 2001.
Three months ended October 31, 2002 compared to the three months ended
October 31, 2001.
Net Sales. Net sales for three months ended October 31, 2002 decreased
$671,000, (or 3.6%) to $18,535,000 from $19,206,000 reported for the three
months ended October 31, 2001. The decrease in sales was principally
attributable to the prior year period sales benefiting from increased short term
demand for certain products due to the tragic events of September 11, 2001. This
industry continues to be highly competitive.
Gross Profit. Gross profit for the quarter ended October 31, 2002 increased
by $447,000, (or 14.9%) to $3,451,000 from $3,004,000 for the quarter ended
October 31, 2001. Gross profit as a percentage of net sales increased to 18.6%
for the three months ended October 31, 2001 from 15.6% reported for the prior
year, principally due to the increase in selling prices, and in addition by a
decrease in material usage and overhead costs. The Company incurred an increase
in the cost of raw materials, (from DuPont), which had a negative effect on
margins during the quarter.
Operating Expenses. Operating expenses for the quarter ended October 31,
2002 increased by $318,000, (or 15%)to $2,445,000, (or 13.2%) of net sales from
$2,127,000, (or 11.1%) of net sales for the quarter ended October 31, 2001.
Operating expenses increased principally as a result of increased sales
salaries, commissions, freight, travel, professional fees, and insurance.
Interest Expense. Interest expenses decreased primarily due to lower
interest costs reflecting a decrease in average borrowing under the Company's
credit facilities and decreasing interest rates.
9
Income Tax Expense. The effective tax rate for the three months ended
October 31, 2002 and 2001 of 42.6% and 49.8% respectively, deviates from the
Federal statutory rate of 34%, which is primarily attributable to a differing
mixture of foreign profits and tax rates and state and local income taxes, than
in the comparable quarter last year.
Net Income. As a result of the foregoing net income increased to $496,000
for the three months ended October 31, 2002, (or up 29.1%) from net income of
$384,000 for the three months ended October 31, 2001.
LIQUIDITY and CAPITAL RESOURCES
- -------------------------------
Liquidity and Capital Resources. The Company's working capital is equal to
$17,964,073 at October 31, 2002. The Company's primary sources of funds for
conducting its business activities have been from cash flow provided by
operations and borrowings under its credit facilities. The Company requires
liquidity and working capital primarily to fund increases in inventories and
accounts receivable associated with sales growth and, to a lesser extent, for
capital expenditures.
Net cash provided by operating activities was $3,066,116 for the nine
months ended October 31, 2002 and was due primarily to a decrease in inventories
of $1,033,664, net income of $1,950,284, offset by a decrease in accounts
payable of $1,134,022.
The Company used net cash in investing activities of $1,000,862 during the
nine months ended October 31, 2002 in connection with the purchase of equipment
of $356,205 and the construction of a building in the People's Republic of China
amounting to $644,657.
Net cash used in financing activities of $1,835,722 was primarily
attributable to reductions of $1,049,432 in connection with the revolving credit
facility, and repayments under the term loan of $805,952 during the nine months
ended October 31, 2002.
The revolving credit facility permits the Company to borrow up to a maximum
of $18 million. The revolving credit agreement expires on July 31, 2003 and has
therefore been classified as a short-term liability in the accompanying balance
sheet at October 31, 2002. Borrowings under the revolving credit facility
amounted to $14,904,000 at October 31, 2002. The $3 million term-loan agreement
entered into in November 1999 has an outstanding balance of $447,752 and expires
on March 31, 2003.
The Company believes that cash flow from operations and the revolving
credit facility, upon its anticipated renewal, will be sufficient to meet its
currently anticipated operating, capital expenditures and debt service
requirements for at least the next 12 months. Historically, the Company has been
able to renew its credit facility on acceptable terms, however there can be no
assurance that such financing will continue to be available.
Foreign Currency Activity. The Company's foreign exchange exposure is
principally limited to the relationship of the U.S. Dollar to the Mexican Peso,
the Chinese RMB and the Canadian Dollar.
Sarbanes-Oxley Act of 2002. In the summer of 2002, the Sarbanes-Oxley Act
(the Act) of 2002 was enacted into law. The goals of the Act are to increase
corporate responsibility, provide enhanced penalties for accounting and auditing
improprieties at publicly traded companies and protect investors by improving
the accuracy and reliability of corporate disclosures pursuant to the securities
laws. Among other mandates, the Act establishes new disclosure requirements and
corporate governance rules. While some of these mandates were made effective
when the Act was adopted, others require the SEC to take action before they will
become effective. The Company has taken steps to ensure that it complies with
the portions of the Act that are already in effect as well as to prepare for
those which will become effective in the future. The Company will continue to
monitor all developments in the securities laws, including those imposed by the
Act, and will comply with such regulations as mandated.
The Act will require the Company's Audit Committee to pre-approve all audit
and non-audit services performed by the Company's independent accountant.
Furthermore, the Company will be required to disclose in its periodic reports
the approval by the Audit Committee of non-audit services to be performed by its
independent accountant. The Company's Audit Committee has reviewed the nature of
all significant audit and non-audit services which are currently performed by
PricewaterhouseCoopers LLP (PwC), its independent accountant.
10
ITEM 4. Controls and Procedures
Pursuant to rules adopted by the SEC as directed by Section 302 of the
Sarbanes-Oxley Act of 2002, the Company has performed an evaluation of its
disclosure controls and procedures (as defined by Exchange Act Rules 13a-14)
within 90 days of the date of the filing of this report. Based on this
evaluation, the Company's Chief Executive Officer and Principal Accounting
Officer have concluded that these procedures are effective in ensuring that
information required to be disclosed by the Company is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. In addition, there have not been any significant changes in internal
controls or other factors that could significantly affect internal controls
subsequent to the date of the Company's most recent evaluation.
ITEM 6. Exhibits and Reports on Form 8-K:
a - 10(g) Employment Agreement between The Company and Raymond J. Smith
dated December 1,2002.
10(k) Employment Agreement between The Company and Christopher J. Ryan
dated November 29,2002.
10(r) Employment Agreement between The Company and James M. McCormick
dated December 1,2002
b -Reports on Form 8-K filed during the three month period ended October
31, 2002:
Change in Certifying Accountants filed October 21, 2002
Amendment #1 filed October 25, 2002
Change in Certifying Accountants filed October 31, 2002
11
----------------SIGNATURES----------------
Pursuant to the requirements of Section 13 or 15 (d) 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.
LAKELAND INDUSTRIES, INC.
---------------------------------------
(Registrant)
/s/Raymond J. Smith
Date: December 13, 2002 ---------------------------------------
Raymond J. Smith,
President and Chief Executive Officer
/s/Christopher J. Ryan
---------------------------------------
Date: December 13, 2002 Christopher J. Ryan
Executive Vice President, Secretary and
General Counsel
/s/James M. McCormick
Date: December 13, 2002 ---------------------------------------
James M. McCormick,
Vice President and Treasurer
(Principal Accounting Officer)
12
Certification of President and Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
And Securities and Exchange Commission Release 34-46427
I, Raymond J. Smith, the president and chief executive officer of Lakeland
Industries, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lakeland Industries,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made,not misleading with respect to the period covered by
the report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, result of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrar's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors, any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in registrant's internal
controls;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 13 ,2002 /s/Raymond J. Smith
---------------------------------------
Raymond J. Smith
President and Chief Executive Officer
13
Certification of Principal Accounting Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
And Securities and Exchange Commission Release 34-46427
I, James M. McCormick, the principal accounting officer of Lakeland Industries,
Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lakeland Industries,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, result of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrar's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors, any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in registrant's internal
controls;
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 13 ,2002 /s/James M. McCormick
---------------------------------------
James M. McCormick
Vice President, Treasurer and
Principal Accounting Officer
14
Certification of Executive Vice President, Secretary and General Counsel
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
And Securities and Exchange Commission Release 34-46427
I, Christopher J. Ryan, Executive Vice President, Secretary and General Counsel
of Lakeland Industries, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Lakeland Industries,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
the report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, result of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made know to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrar's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors, any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in registrant's internal
controls;
7. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: December 13 ,2002 /s/Christopher J. Ryan
---------------------------------------
Christopher J. Ryan
Executive Vice President, Secretary and
General Counsel
15
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002
In connection with the filing with the Securities and Exchange Commission of the
Quarterly Report of Lakeland Industries, Inc. (the "Company") on Form 10-Q for
the period ending October 31, 2002 (the "Report"), I Raymond J. Smith, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best
of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents in all
material respects, the financial condition and results of operations
of the Company.
/s/Raymond J. Smith
- -------------------
Raymond J. Smith
Chief Executive Officer
December 13 , 2002
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
Pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002
In connection with the filing with the Securities and Exchange Commission of the
Quarterly Report of Lakeland Industries, Inc. (the "Company") on Form 10-Q for
the period ending October 31, 2002 (the "Report"), I James M. McCormick,
Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. ss.
1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to
the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents in all
material respects, the financial condition and results of operations
of the Company.
/s/James M. McCormick
- ---------------------
James M. McCormick
Principal Accounting Officer
December 13, 2002
CERTIFICATION OF EXECUTIVE VICE PRESIDENT,
SECRETARY AND GENERAL COUNSEL
Pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to
ss. 906 of the Sarbanes-Oxley Act of 2002
In connection with the filing with the Securities and Exchange Commission of the
Quarterly Report of Lakeland Industries, Inc. (the "Company") on Form 10-Q for
the period ending October 31, 2002 (the "Report"), I Christopher J. Ryan
Executive Vice President, Secretary and General Counsel of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents in all
material respects, the financial condition and results of operations
of the Company.
/s/Christopher J. Ryan
- ----------------------
Christopher J. Ryan
Executive Vice President, Secretary
And General Counsel
December 13, 2002