EX-13 4 exhibit13.txt SELECTED FINANCIAL DATA (In thousands, except per share and share amounts)
For the Years Ended January 31, 2002 2001 2000 1999 1998 ---- ---- ---- ---- ---- INCOME STATEMENT DATA: Net sales $ 76,431 $ 76,108 $ 58,644 $ 54,655 $ 47,263 Gross profit 13,137 11,310 10,488 10,374 9,195 Operating expenses 9,549 8,619 7,191 6,451 6,157 Operating profit 3,589 2,691 3,297 3,923 3,038 Income before income taxes 2,816 1,485 2,509 3,222 2,590 Net income 1,970 1,123 1,748 2,080 1,600 Earnings per share - Basic $ .74 $ .42 $ .66 $ .79 $ .63 ========== ========== ========== ========== ========== Earnings per share - Diluted $ .73 $ .42 $ .65 $ .77 $ .61 ========== ========== ========== ========== ========== Weighted average common shares outstanding: Basic 2,663,600 2,645,446 2,653,950 2,642,170 2,558,541 Diluted 2,683,711 2,667,161 2,673,449 2,690,920 2,627,425 BALANCE SHEET DATA(at end of year): Working capital $ 16,766 $ 16,047 $ 15,909 $ 12,403 $ 18,903 Total assets 42,417 38,628 34,770 27,160 25,812 Current liabilities 22,778 20,052 16,551 12,915 5,007 Long-term liabilities 609 1,981 2,759 465 9,217 Stockholders' equity $ 18,727 $ 16,537 $ 15,405 $ 13,725 $ 11,518
1 AUTIONARY STATEMENTS -------------------------------------------------------------------------------- This report includes "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 headings "Business", "Properties", "Legal Proceedings", "Market for Registrant's Common Stock and Related Stockholder Matters", and "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, liquidity, capital resources and the Company's strategic alternatives, future capital needs, development and capital expenditures (including the amount and nature thereof), future net revenues, business strategies, competitive and supply relationships between the Company and its primary supplier, new products, government purchasing patterns and contracts and other plans and objectives of management of the Company for future operations and activities. We may use words such as "believe", "anticipate", "expect", "will", "intend", "estimate" and similar expressions to identify forward looking statements. 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 that 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. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -------------------------------------------------------------------------------- The following Management's Discussion and Analysis of Financial Condition and Results of Operations may include forward-looking statements with respect to the Company's future financial performance. These forward-looking statements are subject to various risks and uncertainties, including the factors described elsewhere in this Report, that could cause actual results to differ materially from historical results or those currently anticipated. Overview -------- The Company derives the majority of its revenues from the sale of its TyvekTM disposable limited/use garments and secondarily from the sales of its cut and heat resistant gloves, woven reusable garments, heat and fire protective clothing, and chemical suits all to safety and mill supply distributors. The Company generally recognizes revenues when it ships its product to its customers. Cost of goods sold includes all direct costs to manufacture the finished product, plus related costs associated with inland or ocean freight on incoming raw materials, customs duty and warehousing, and manufacturing overhead expenses. Selling expenses include all salaries for sales and marketing staffs together with other related expenses such as sales commissions, travel costs, trade shows, advertising and delivery expenses. General and administrative expenses include salaries for executives and administrative and MIS staff, together with related expenses such as travel costs, non-manufacturing facilities costs and consulting and professional fees. Result of Operations -------------------- The following table sets forth items in the Company's consolidated statement of operations as a percentage of revenues for the periods indicated. 2 Years Ended January 31, 2002 2001 2000 ---- ---- ---- Revenues 100.0% 100.0% 100.0% Cost of Goods Sold 82.8 85.1 82.1 Selling, general and administrative expenses 12.5 11.3 12.3 Depreciation and amortization expense .8 .9 1.0 Operating profit 4.7 3.5 5.6 Interest expense, net 1.1 1.6 1.4 Income tax expense 1.1 .48 1.3 Net income 2.6 1.5 3.0 EBITDA margin (1) 5.7 4.5 6.7 ------------- (1) EBITDA (earnings before interest, taxes, depreciation and amortization) margin represents EBITDA expressed as a percentage of revenues. Fiscal Year Ended January 31, 2002 Compared to Fiscal Year Ended January 31, 2001 -------------------------------------------------------------------------------- Net Sales.Net sales for the year ended January 31,2002 increased $323,000 or .42% to $76,431,000 from $76,108,000 for the year ended January 31, 2001. The small increase in sales was principally attributable to recessionary economic conditions, partially offset by a February 1, 2001 price increase in the Company's TyvekTM line of products. Gross Profit. Gross profit for the year ended January 31, 2002 increased by $1,827,000, or 16.2% to $13,137,000, or 17.2% of net sales, from $11,310,000, or 14.9% of net sales, for the year ended January 31, 2001. Gross profit as a percentage of sales increased by 2.3% due to increased selling prices, offset by an increase in the cost of raw materials (from a major supplier and competitor, DuPont) in February 2001, and a $150,000 reserve for a customs duty dispute related to the Company's Canadian subsidiary. It is anticipated that the reserve, set up in October 2001, will be adequate to cover future consulting charges and duty payments, if any. Operating Expenses. Operating expenses for the year ended January 31, 2002 increased by $929,000 or 10.8% to $9,548,000, or 12.5% of net sales, from $8,619,000, or 11.3% of net sales, for the year ended January 31, 2001. This increase was mainly due to higher freight costs, salaries and sales commissions, accrued bonus, insurance expense, and research and development expense. The Company paid $60,000 (during fiscal 2002) in consulting fees for representation to Canadian officials regarding the customs duty dispute mentioned above. Interest Expense. Interest expense for the year ended January 31, 2002 decreased by $366,000, or 29.5% to $882,000 from $1,248,000 for the year ended January 31, 2001. This decrease was principally due to a decrease in average borrowings under the Company's credit facility and to decreasing interest rates. Other Income, Net. Other income, net increased due to the receipt of $73,400 relating to the partial collection of an outstanding judgment. Income Tax Expense. The effective tax rate for the year ended January 31, 2002 and 2001 of 30 % and 24.4% respectively, deviates from the Federal statutory rate of 34%, mainly attributable to differing foreign tax rates and exemptions as well as to state income taxes. Net Income. As a result of the foregoing, net income for the year ended January 31, 2002, increased by $847,000 to $1,970,000 from $1,123,000 for the year ended January 31, 2001. 3 Fiscal Year Ended January 31, 2001 Compared to Fiscal Year Ended January 31, 2000 -------------------------------------------------------------------------------- Net Sales. Net sales for the year ended January 31, 2001 increased $17,464,000 or 29.8% to $76,108,000 from $58,644,000 for the year ended January 31, 2000. The increase in sales was principally attributable to the Company's ability to increase its production capacity, maintain adequate inventory levels, and to the withdrawal of a major competitor from the TyvekTM markets, in which the Company secured certain business. The Company initiated a sales price increase effective with the commencement of fiscal 2002, which stimulated sales during the last month of fiscal 2001. Gross Profit. Gross profit for the year ended January 31, 2001 increased by $822,000, or 7.8% to $11,310,000, or 14.9% of net sales, from $10,488,000, or 17.9% of net sales, for the year ended January 31, 2000. The gross profit percentage decreased as a result of an increase in the cost of raw materials (from a major supplier [and now competitor] in February 2000) without a corresponding increase in selling prices. This was partially offset by manufacturing efficiencies (due to the use of automated equipment) and to higher sales volume. Competition increased during the second half of the year ended January 31, 2001, most severely in the fourth quarter as the industry's newest competitor lowered prices to gain market share. In most cases, the Company was forced to meet the competition. The second half of fiscal 2001 was also negatively affected by the relocation of manufacturing from an independent contractor to the company's facility in Missouri. Operating Expenses. Operating expenses for the year ended January 31, 2001 increased by $1,428,000 or 19.9%, to $8,619,000, or 11.3% of net sales, from $7,191,000, or 12.3% of net sales, for the year ended January 31, 2000. The increase in operating expenses is principally as a result of higher cost of freight, sales commissions, travel and show participation and use of temporary help due to higher sales volume, and also to increased medical expense, research and development expense. Interest Expense. Interest expense for the year ended January 31, 2001 increased by $426,000, or 52% to $1,248,000 from $821,000 for the year ended January 31, 2000. Interest expense increase was principally due to higher interest costs reflecting an increase in average borrowings under the Company's credit facility and to increasing interest rates. Income Tax Expense. The effective tax rate for the year ended January 31, 2001 and 2000 of 24.4% and 30.3% respectively, deviates from the Federal statutory rate of 34%, mainly attributable to differing foreign tax rates and exemptions as well as to state income taxes. Net Income. As a result of the foregoing, net income for the year ended January 31, 2001 decreased by $625,000 to $1,123,000 from $1,748,000 for the year ended January 31, 2000. -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES Liquidity and Capital Resources. The Company's working capital is equal to $16,766,000 at January 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 used in operating activities was $970,000 for the year ended January 31, 2002 and was due primarily to an increase in inventories of $3,819,000 and a decrease in accounts payable of $1,731,000 and offset by an increase in accounts receivable of $1,174,000 and net income from operations of $1,970,000. Net cash provided by financing activities of $2,778,000 was primarily attributable to net borrowings during the year in connection with a term loan and revolving credit facility. The revolving credit facility permits the Company to borrow up to a maximum of $18 million. The revolving credit agreement expires on July 31, 2002, and has therefore been classified as a short-term liability in the accompanying balance sheet at January 31, 2002. Borrowings under the revolving credit facility amounted to approximately $15,953,000 at January 31, 2002. The maturity date on the five year $3 million term-loan agreement entered into in November 1999 has been accelerated to expire on March 31, 2003. The Company believes that cash flow from operations and the expected renewal of the revolving credit facility will be sufficient to meet its currently anticipated operating, capital expenditures and debt service requirements for at least the next 12 months. Foreign Currency Activity ------------------------- The Company's foreign exchange exposure is principally limited to the relationship of the U.S. Dollar to the Mexican Peso, Canadian Dollar and the Chinese RMB. 4 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk ----------- The Company is exposed to market risk, including changes in interest rates and currency exchange rates. To manage the volatility relating to these exposures, the Company seeks to limit, to the extent possible its non-U.S. dollar denominated purchases and sales. Foreign exchange risk occurs principally with regard to Canadian subsidiary sales. Foreign Exchange Risk Management -------------------------------- As a multinational corporation, the Company is exposed to changes in foreign exchange rates. As the Company's non-denominated U.S. dollar international sales grow, exposure to volatility in exchange rates could have an adverse impact on the Company's financial results. The Company's risk from exchange rate changes is presently related to non-dollar denominated sales in Canada. Interest Rate Risk ------------------ The Company is exposed to interest rate change market risk with respect to its credit facility with a financial institution which is priced based upon LIBOR or 30 day commercial paper interest rates. At January 31, 2002, $17,207,000 was outstanding under the term-loan and revolving credit facilities. Changes in the above described interest rates during fiscal 2002 will have a positive or negative effect on the Company's interest expense. Each 1% fluctuation in one or both of the above rates will increase or decrease interest expense for the Company by approximately $172,000. Each 1% fluctuation in interest rates earned would not increase or decrease interest income on these deposits by a significant amount. Unaudited Quarterly Results of Operations (In thousands, except for per share amounts):
Fiscal Year Ended January 31, 2002: 1/31/02 10/31/01 7/31/01 4/30/01 Net Sales $ 19,858 $ 19,206 $ 17,932 $ 19,435 Cost of Sales 16,335 16,202 14,719 16,038 -------- -------- -------- -------- Gross Profit $ 3,523 $ 3,004 $ 3,213 $ 3,397 ======== ======== ======== ======== Net Income $ 367 $ 384 $ 530 $ 689 ======== ======== ======== ======== Basic and Diluted income per common share: Basic $ 0.14 $ 0.14 $ 0.20 $ 0.26 ======== ======== ======== ======== Diluted $ 0.13 $ 0.14 $ 0.20 $ 0.26 ======== ======== ======== ======== Fiscal Year Ended January 31, 2001: 1/31/01 10/31/00 7/31/00 4/30/00 Net Sales $ 20,130 $ 15,762 $ 18,109 $ 22,107 Cost of Sales 17,802 13,353 14,890 18,753 -------- -------- -------- -------- Gross Profit $ 2,328 $ 2,409 $ 3,219 $ 3,354 ======== ======== ======== ======== Net Income (loss) $ (64) $ 150 $ 376 $ 661 ======== ======== ======== ======== Basic and Diluted income (loss) per common share: Basic $ (.03) $ 0.06 $ 0.14 $ 0.25 ======== ======== ======== ======== Diluted $ (.03) $ 0.06 $ 0.14 $ 0.25 ======== ======== ======== ========
5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Common Stock is listed on the Nasdaq National Market under the symbol "LAKE". The following table sets forth for the periods indicated the high and low sales prices for the Common Stock as reported by the Nasdaq National Market. The Company has a January 31, fiscal year end.
Price Range of Common Stock --------------- High Low ---- --- Fiscal 2002 First Quarter ended April 30, 2001. . . . . . . . . . . . . $ 5 $3.99 Second Quarter ended July 31, 2001 . . . . . . . . . . . . 6.95 3.937 Third Quarter ended October 31, 2001 . . . . . . . . . . . 13.74 5.75 Fourth Quarter ended January 31, 2002. . . . . . . . . . . 13.10 8.11 First Quarter Fiscal 2003 (through April 19, 2002) . . . . 10.45 8.55 Fiscal 2001 First Quarter ended April 30, 2000. . . . . . . . . . . . . $4.75 $3.75 Second Quarter ended July 31, 2000 . . . . . . . . . . . . 7.50 5.375 Third Quarter ended Oct. 31, 2000 . . . . . . . . . . . . . 6.50 4.75 Fourth Quarter ended January 31, 2001. . . . . . . . . . . 5.25 3.375
As of April 17, 2002, there were approximately 77 record holders of shares of Common Stock. There are believed to be in excess of 500 beneficial shareholders in addition to those of record, since over 1.0 million shares are held in "street" name by Cede & Co., a large financial clearing house. The Company, on March 5, 2002 announced that it plans to issue a 10% Stock Dividend payable to holders of record as at July 31, 2002. This policy may continue on an annual basis, subject to approval by the Company's Board of Directors. The Company feels that over time that this dividend will increase the share float and trading activity in the Company's stock. The Company intends to retain any future earnings, for the operation and expansion of its business. The payment and rate of future cash dividends, if any, will depend upon the Company's earnings, financial condition, capital requirements, contractual restrictions under its agreement with its institutional lender and other factors. 6 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Stockholders Lakeland Industries, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Lakeland Industries, Inc. and Subsidiaries (the "Company") as of January 31, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended January 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of January 31, 2002 and 2001, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended January 31, 2002, in conformity with accounting principles generally accepted in the United States of America. We have also audited Schedule II - Valuation and Qualifying Accounts for each of the three years in the period ended January 31, 2002. In our opinion, this schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information therein. GRANT THORNTON LLP Melville, New York April 15, 2002 7 Lakeland Industries, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
January 31, 2002 2001 ---- ---- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,760,635 $ 784,578 Accounts receivable, net of allowance for doubtful accounts of $221,000 at January 31, 2002 and 2001 9,600,738 10,858,288 Inventories 26,529,150 22,710,083 Prepaid income taxes 242,029 461,113 Deferred income taxes 888,000 624,000 Other current assets 524,274 660,777 ----------- ----------- Total current assets 39,544,826 36,098,839 PROPERTY AND EQUIPMENT, NET 2,218,459 1,978,070 OTHER ASSETS, NET 654,200 551,057 ----------- ----------- $42,417,485 $38,627,966 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 4,759,373 $ 6,490,447 Accrued compensation and benefits 782,168 418,320 Other accrued expenses 208,853 207,795 Current portion of long-term debt 17,028,032 12,935,416 ----------- ----------- Total current liabilities 22,778,426 20,051,978 LONG-TERM DEBT 179,104 1,499,207 PENSION LIABILITY 430,001 482,269 DEFERRED INCOME TAXES 303,000 58,000 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; 2,684,600 and 2,646,000 shares issued and outstanding at January 31, 2002 and 2001, respectively 26,846 26,460 Additional paid-in capital 6,360,741 6,140,221 Retained earnings 12,339,367 10,369,831 ----------- ----------- 18,726,954 16,536,512 ----------- ----------- $42,417,485 $38,627,966 =========== ===========
The accompanying notes are an integral part of these statements. 8 Lakeland Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME
Fiscal year ended January 31, 2002 2001 2000 ---- ---- ---- Net sales $ 76,431,245 $ 76,108,038 $ 58,644,181 Cost of goods sold 63,293,922 64,797,943 48,155,753 ------------ ------------ ------------ Gross profit 13,137,323 11,310,095 10,488,428 ------------ ------------ ------------ Operating expenses Selling and shipping 5,414,400 4,825,331 4,177,171 General and administrative 4,133,790 3,793,745 3,013,780 ------------ ------------ ------------ Total operating expenses 9,548,190 8,619,076 7,190,951 ------------ ------------ ------------ Operating profit 3,589,133 2,691,019 3,297,477 ------------ ------------ ------------ Other income(expense) Interest expense (881,948) (1,247,708) (821,333) Interest income 17,311 26,595 25,716 Other income - net 91,040 15,472 7,346 ------------ ------------ ------------ Total other expense (773,597) (1,205,641) (788,271) ------------ ------------ ------------ Income before income taxes 2,815,536 1,485,378 2,509,206 Income tax expense (846,000) (362,000) (761,000) ------------ ------------ ------------ NET INCOME $ 1,969,536 $ 1,123,378 $ 1,748,206 ============ ============ ============ Net income per common share Basic $ .74 $ .42 $ .66 ============ ============ ============ Diluted $ .73 $ .42 $ .65 ============ ============ ============ Weighted average common shares outstanding Basic 2,663,600 2,645,446 2,653,950 ============ ============ ============ Diluted 2,683,711 2,667,161 2,673,449 ============ ============ ============
The accompanying notes are an integral part of these statements. 9 Lakeland Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Fiscal years ended January 31, 2002, 2001 and 2000
Common stock ------------ Additional paid-in Retained Shares Amount capital earnings Total ------ ------ ------- -------- ----- Balance, January 31, 1999 2,660,500 $ 26,605 $ 6,199,656 $ 7,498,247 $ 13,724,508 Net income 1,748,206 1,748,206 Purchase and retirement of common stock (16,500) (165) (67,165) (67,330) --------- ------------ ------------ ------------ ------------ Balance, January 31, 2000 2,644,000 26,440 6,132,491 9,246,453 15,405,384 Net income 1,123,378 1,123,378 Exercise of stock options 2,000 20 7,730 7,750 --------- ------------ ------------ ------------ ------------ Balance, January 31, 2001 2,646,000 26,460 6,140,221 10,369,831 16,536,512 Net income 1,969,536 1,969,536 Exercise of stock options 38,600 386 125,864 126,250 Stock option income tax benefit 94,656 94,656 --------- ------------ ------------ ------------ ------------ Balance, January 31, 2002 2,684,600 $ 26,846 $ 6,360,741 $ 12,339,367 $ 18,726,954 ========= ============ ============ ============ ============
The accompanying notes are an integral part of this statement. 10 Lakeland Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal year ended January 31, 2002 2001 2000 ---- ---- ---- Cash flows from operating activities Net income $ 1,969,536 $ 1,123,378 $ 1,748,206 Adjustments to reconcile net income to net cash provided by (used in) operating activities Deferred income taxes (19,000) 40,000 (95,000) Depreciation and amortization 689,969 699,304 598,095 Provision for bad debts 83,965 30,176 20,700 Stock option income tax benefit 94,656 (Increase) decrease in operating assets Accounts receivable 1,173,585 (2,508,987) (1,656,836) Inventories (3,819,067) (242,688) (6,356,485) Prepaid income taxes and other current assets 355,587 (799,556) 159,533 Other assets (80,832) (187,882) (20,823) Increase (decrease) in operating liabilities Accounts payable (1,731,074) 2,247,573 2,787,684 Accrued expenses and other liabilities 312,638 11,073 (43,480) ----------- ----------- ----------- Net cash provided by (used in) operating activities (970,037) 412,391 (2,858,406) ----------- ----------- ----------- Cash flows from investing activities Purchases of property and equipment (831,919) (751,046) (1,049,124) ----------- ----------- ----------- Net cash used in investing activities (831,919) (751,046) (1,049,124) ----------- ----------- ----------- Cash flows from financing activities Net borrowings under credit agreements 2,772,513 464,942 3,241,818 Proceeds from exercise of stock options 126,250 7,750 Purchase and retirement of common stock (67,330) Deferred financing costs (120,750) (52,500) ----------- ----------- ----------- Net cash provided by financing activities 2,778,013 472,692 3,121,988 ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 976,057 134,037 (785,542) Cash and cash equivalents at beginning of year 784,578 650,541 1,436,083 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 1,760,635 $ 784,578 $ 650,541 =========== =========== ===========
The accompanying notes are an integral part of these statements 11 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS January 31, 2002, 2001 and 2000 NOTE A - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -------------------------------------------------------------------------------- 1. Business ----------- Lakeland Industries, Inc. and Subsidiaries (the "Company"), a Delaware corporation, organized in April 1982, is engaged primarily in the manufacture of personal safety protective work clothing. The principal market for the Company's products is in the United States. No customer accounted for more than 10% of net sales during the fiscal years ended January 31, 2002, 2001 and 2000. 2. Principles of Consolidation ------------------------------ The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Laidlaw, Adams & Peck, Inc. and Subsidiary (MeiYang Protective Products Co., Ltd. (a Chinese corporation)), Lakeland Protective Wear, Inc. (a Canadian corporation), Weifang Lakeland Safety Products Co. Ltd. (a Chinese corporation) and Lakeland de Mexico S.A. de C.V. (a Mexican corporation). All significant intercompany accounts and transactions have been eliminated. 3. Revenue Recognition ---------------------- Revenue is recognized when title passes to the customer upon shipment of goods. 4. Inventories -------------- Inventories are stated at the lower of cost or market. Cost is determined on the first-in, first-out method. 5. Property and Equipment ------------------------- Property and equipment are stated at cost. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, on a straight-line basis. Leasehold improvements and leasehold costs are amortized over the term of the lease or service lives of the improvements, whichever is shorter. The costs of additions and improvements which substantially extend the useful life of a particular asset are capitalized. Repair and maintenance costs are charged to expense. 6. Excess of Cost Over the Fair Value of Net Assets Acquired ------------------------------------------------------------ The excess of cost over the fair value of net assets acquired (goodwill) is amortized on a straight-line basis over a 30-year period. On an ongoing basis, management reviews the valuation and amortization of goodwill to determine possible impairment by considering current operating results and comparing the carrying value to the anticipated undiscounted future cash flows of the related assets. Included in other assets in the accompanying consolidated balance sheets is goodwill aggregating $249,000 and $269,000, net of accumulated amortization of $296,000 and $276,000 at January 31, 2002 and 2001, respectively. 7. Shipping and Handling Costs ------------------------------ The Company includes shipping and handling fees billed to customers in net sales. Shipping and handling costs associated with inbound freight are included in cost of sales. Shipping and handling costs associated with outbound freight are included in selling and shipping expenses and aggregated approximately $1,532,000, $1,381,000 and $1,182,000 in the fiscal years ended January 31, 2002, 2001 and 2000, respectively. 12 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE A(continued) ----------------- 8. Research and Development Costs --------------------------------- Research and development costs are expensed as incurred and included in general and administrative expenses. Research and development expenses aggregated approximately $378,000, $160,000 and $22,000 in the fiscal years ended January 31, 2002, 2001 and 2000, respectively. 9. Income Taxes --------------- Deferred income taxes are recognized for temporary differences between financial statement and income tax bases of assets and liabilities and loss carryforwards and tax credit carryforwards for which income tax benefits are expected to be realized in future years. A valuation allowance would be established to reduce deferred tax assets if it is more likely than not that all, or some portion of, such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. 10. 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 potential common shares for the years ended January 31, 2002, 2001 and 2000 were 20,111, 21,715, and 19,499, respectively, representing the dilutive effect of stock options. 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 fiscal year. Options to purchase 1,000, 5,000, and 3,000 shares of the Company's common stock have been excluded from the computation of diluted earnings per share in 2002, 2001 and 2000, respectively, as their inclusion would have been antidilutive. 11. Statement of Cash Flows --------------------------- The Company considers highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. Cash equivalents consist of money market funds. The market value of the cash equivalents approximates cost. Foreign denominated cash and cash equivalents were approximately $1,371,000 and $334,000 at January 31, 2002 and 2001, respectively. Supplemental cash flow information for the fiscal years ended January 31 is as follows: 2002 2001 2000 ---- ---- ---- Interest paid $881,934 $1,238,448 $783,664 Income taxes paid 606,700 688,412 693,456 12. Concentration of Credit Risk -------------------------------- Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of trade receivables. Concentration of credit risk with respect to these receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across geographic areas principally within the United States. The Company routinely addresses the financial strength of its customers and, as a consequence, believes that it's receivable credit risk exposure is limited. 13 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE A(continued) ----------------- 13. Foreign Operations and Foreign Currency Translation ------------------------------------------------------- The Company maintains manufacturing operations and uses independent contractors in Mexico and the People's Republic of China. It also maintains a sales and distribution entity located in Canada. The Company is vulnerable to currency risks in these countries. The monetary assets and liabilities of the Company's foreign operations are translated into U.S. dollars at current exchange rates, while nonmonetary items are translated at historical rates. Revenues and expenses are generally translated at average exchange rates for the year. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred and aggregated approximately $129,000, $107,000 and $60,000 for the fiscal years ended January 31, 2002, 2001 and 2000, respectively. 14. Use of Estimates -------------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at year-end and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates include the allowance for doubtful accounts and inventory reserves. It is reasonably possible that events could occur during the upcoming year that could change such estimates. 15.Reclassifications -------------------- Certain prior year amounts have been reclassified to conform with the 2002 presentation. 16. Effects of Recent Accounting Pronouncements ----------------------------------------------- On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." The new standards require that all business combinations initiated after June 30, 2001 be accounted for under the purchase method. In addition, all intangible assets acquired that are obtained through contractual or legal right, or are capable of being separately sold, transferred, licensed, rented or exchanged shall be recognized as an asset apart from goodwill. Goodwill and intangibles with indefinite lives will no longer be subject to amortization, but will be subject to at least an annual assessment for impairment by applying a fair value based test. The impact of adopting these statements is not expected to be material to the Company's financial position or results of operations. In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 clarifies accounting and reporting for assets held for sale, scheduled for abandonment or other disposal and recognition of impairment loss related to the carrying value of long-lived assets. The impact of adopting this statement is not expected to be material to the Company's financial position or results of operations. NOTE B - INVENTORIES -------------------- Inventories consist of the following at January 31: 2002 2001 ---- ---- Raw materials $ 6,248,990 $ 4,088,498 Work-in-process 3,997,470 6,467,779 Finished goods 16,282,690 12,153,806 ----------- ----------- $26,529,150 $22,710,083 =========== =========== 14 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE C - PROPERTY AND EQUIPMENT ------------------------------- Property and equipment consist of the following at January 31:
Useful life in years 2002 2001 -------- ---- ---- Machinery and equipment 3 - 10 $4,484,416 $4,701,148 Furniture and fixtures 3 - 10 175,016 261,737 Leasehold improvements Lease term 671,694 703,958 ------- ------- 5,331,126 5,666,843 Less accumulated depreciation and amortization (3,112,667) (3,688,773) ---------- ---------- $2,218,459 $1,978,070 ========== ==========
NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS -------------------------------------------- The Company's principal financial instrument consists of its outstanding revolving credit facility and term loan. The Company believes that the carrying amount of such debt approximates the fair value as the variable interest rates approximate the current prevailing interest rate. NOTE E - LONG-TERM DEBT ----------------------- Long-term debt consist of the following at January 31: 2002 2001 ---- ---- Revolving credit facility $15,953,432 $12,335,416 Term loan 1,253,704 2,099,207 ----------- ---------- 17,207,136 14,434,623 Less current portion 17,028,032 12,935,416 ----------- ---------- Long-term debt $ 179,104 $1,499,207 =========== ========== Revolving Credit Facility The Company's agreement with its lending institution, as amended, provides the Company with a revolving line of credit facility of $18 million. This credit facility, which is based on a percentage of eligible accounts receivable and inventory as defined, bears interest at LIBOR plus 2% (3.83% at January 31, 2002). The agreement was amended on March 9, 2001 to (i) extend the maturity date to October 31, 2001, (ii) modify the interest rate, and (iii) modify certain financial covenants. The agreement was amended on July 12, 2001 to (i) extend the maturity date to July 31, 2002, (ii) increase the amount available under the revolving line of credit from $14 million to a percentage of eligible accounts receivable and inventory as defined, up to a maximum of $18 million, (iii) modify the interest rate, and (iv) modify a certain financial covenant. The agreement was amended on December 31, 2001 to modify a certain financial covenant. The maximum amounts borrowed under the credit facility during the fiscal years ended January 31, 2002 and 2001 were $17,700,000 and $14,000,000, respectively, and the average interest rates during the periods were 5.93% and 8.1%, respectively. At January 31, 2002, the Company had approximately $2,047,000 in availability under the agreement. 15 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE E(continued) ----------------- Term Loan In November 1999, the Company entered into a $3,000,000, five-year term loan. On March 9, 2001, the Company accelerated the term loan to expire on March 31, 2003. The term loan is payable in monthly installments of $89,550, plus interest payable at the 30-day commercial paper rate plus 2.45% (4.18% at January 31, 2002). The credit facility and term loan are collateralized by substantially all 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 other certain ratios at all times. NOTE F - STOCKHOLDERS' EQUITY AND STOCK OPTIONS ----------------------------------------------- The Nonemployee Directors' Option Plan (the "Directors' Plan") provides for an automatic one-time grant of options to purchase 5,000 shares of common stock to each nonemployee director elected or appointed to the Board of Directors. Under the Directors' Plan, 60,000 shares of common stock have been authorized for issuance. Options are granted at not less than fair market value, become exercisable commencing six months from the date of grant and expire six years from the date of grant. In addition, all nonemployee directors re-elected to the Company's Board of Directors at any annual meeting of the stockholders will automatically be granted additional options to purchase 1,000 shares of common stock on each of such dates. In April 1997, the Company extended the term on 5,000 expiring options for an additional six years. The Company's 1986 Incentive and Nonstatutory Stock Option Plan (the "Plan") provides for the granting of incentive stock options and nonstatutory options. The Plan provides for the grant of options to key employees and independent sales representatives to purchase up to 400,000 shares of the Company's common stock, upon terms and conditions determined by a committee of the Board of Directors, which administers the plan. Options are granted at not less than fair market value (110 percent of fair market value as to incentive stock options granted to ten percent stockholders) and are exercisable over a period not to exceed ten years (five years as to incentive stock options granted to ten percent stockholders). The Company has adopted the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans and does not recognize compensation expense for its employee stock-based compensation plans. If the Company had elected to recognize compensation expense based upon the fair value at the date of grant for awards under these plans, consistent with the methodology prescribed by SFAS 123, the effect on the Company's net income and earnings per share as reported would be reduced for the years ended January 31, 2002 and 2001 to the pro forma amounts indicated below: 2002 2001 ---- ---- Net income As reported $1,969,536 $1,123,378 Pro forma 1,965,606 1,116,338 Basic earnings per common share As reported $.74 $.42 Pro forma .74 .42 Diluted earnings per common share As reported $.73 $.42 Pro forma .73 .42 16 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE F(continued) ----------------- The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions for the years ended January 31, 2002 and 2001: expected volatility of 57% and 55%, respectively; risk-free interest rate of 5.0% and 6.3%, respectively; expected dividend yield of 0.0%; and expected life of six years. No options were granted or vested during the year ended January 31, 2000. Additional information with respect to the Company's plans for the fiscal years ended January 31, 2002, 2001 and 2000 is summarized as follows:
2002 -------------------------------------------------- Directors' Plan Plan ----------------------- --------------------- Weighted- Weighted- Number average Number average of exercise of exercise shares price shares price ----------------------- --------------------- Shares under option Outstanding at beginning of year 8,000 $ 5.53 52,500 $ 3.06 Granted 1,000 6.69 Exercised (38,600) 3.27 ----- ------- Outstanding and exercisable at end of year 9,000 5.48 13,900 2.70 ===== ======= Weighted-average remaining contractual life of options outstanding 2.7 years 2.5 years Weighted-average fair value per shares of options granted during 2002 $ 6.69 2001 -------------------------------------------------- Directors' Plan Plan ---------------------- ---------------------- Weighted- Weighted- Number average Number average of exercise of exercise shares price shares price ---------------------- ---------------------- Shares under option Outstanding at beginning of year 8,000 $4.81 52,500 $3.06 Granted 2,000 5.94 Exercised (2,000) 3.88 ----- ------- Outstanding and exercisable at end of year 8,000 5.33 52,500 3.06 ===== ====== Weighted-average remaining contractual life of options outstanding 3.3 years 4 years Weighted-average fair value per shares of options granted during 2001 $5.94
17 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31,2002, 2001 and 2000 NOTE F(continued) -----------------
2000 ------------------------------------------------------- Directors' Plan Plan ------------------------ ----------------------- Weighted- Weighted- Number average Number average of exercise of exercise shares price shares price ------ ----- ------ ----- Shares under option Outstanding at beginning of year 8,000 $4.81 52,500 $3.06 ----- ----- ------ ----- Outstanding and exercisable at end of year 8,000 4.81 52,500 3.06 ===== ==== ====== ===== Weighted-average remaining contractual life of options outstanding 2.6 years 5 years
Summarized information about stock options outstanding under the two plans at January 31, 2002 is as follows: Options outstanding and exercisable ----------------------------------- Weighted- Number average Outstanding remaining Weighted- at contractual average Range of January life in exercise exercise prices 31, 2002 years price --------------- -------- ----- ----- $2.25 - 3.38 11,900 1.83 $ 2.50 3.39 - 5.13 7,000 2.93 3.96 5.14 - 6.69 3,000 4.83 6.19 10.75 1,000 2.50 10.75 $2.25 - 10.75 22,900 2.59 3.79 NOTE G - INCOME TAXES --------------------- The provision for income taxes is summarized as follows: Year ended January 31, ------------------------------------------------- 2002 2001 2000 ---- ---- ---- Current Federal $ 719,000 $ 189,000 $ 756,000 State 78,000 27,000 100,000 Foreign 68,000 106,000 --------- ------- ---------- 865,000 322,000 856,000 Deferred (19,000) 40,000 (95,000) --------- ------- ---------- $ 846,000 $ 362,000 $ 761,000 ========= ========= ========= 18 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE G(continued) ----------------- The following is a reconciliation of the effective income tax rate to the Federal statutory rate: Year ended January 31, -------------------------- 2002 2001 2000 ---- ---- ---- Statutory rate 34.0% 34.0% 34.0% State income taxes, net of Federal tax benefit 1.6 1.2 2.7 Nondeductible expenses .6 1.1 .8 Taxes on foreign income which differ from the statutory rate (5.6) (12.5) (2.4) Change in deferred assets (3.8) Other (.6) .6 (1.0) ---- ---- ---- Effective rate 30.0% 24.4% 30.3% ==== ==== ==== The tax effects of temporary differences which give rise to deferred tax assets at January 31, 2002 and 2001 are summarized as follows: January 31, --------------------- 2001 2002 -------- -------- Deferred tax assets Inventories $418,000 $391,000 Net operating loss carryforward - foreign subsidiary 106,000 29,000 Accounts receivable 84,000 84,000 Accrued compensation and other 280,000 120,000 -------- -------- Gross deferred tax assets 888,000 624,000 -------- -------- Deferred tax liabilities Depreciation and other 303,000 58,000 -------- -------- Gross deferred tax liabilities 303,000 58,000 -------- -------- Net deferred tax asset $585,000 $566,000 ======== ======== Net operating loss carryforwards of $177,000 attributable to its foreign subsidiary in Canada will expire in fiscal 2003 through 2009. Net operating loss carryforwards of $128,000 attributable to its foreign subsidiary in Mexico will expire in fiscal 2007. NOTE H - BENEFIT PLANS ---------------------- Defined Benefit Plan The Company has a frozen defined benefit pension plan that covers former employees of an acquired entity. The Company's funding policy is to contribute annually the recommended amount based on computations made by its consulting actuary. The following table sets forth the plan's funded status for the fiscal years ended January 31: 19 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE H(continued) ----------------- 2002 2001 Change in benefit obligation ---------------------------- Projected benefit obligation at beginning of year $ 991,162 $ 961,492 Interest cost 75,889 70,546 Actuarial (gain) loss (27,602) 874 Benefits paid (41,391) (41,750) ------- -------- Projected benefit obligation at end of year 998,058 991,162 ------- -------- Change in plan assets --------------------- Fair value of plan assets at beginning of year 508,893 502,849 Actual return on plan assets 89,707 46,194 Employer contributions 10,848 1,600 Benefits paid (41,391) (41,750) ------- -------- Fair value of plan assets at end of year 568,057 508,893 ------- -------- Funded status ------------- Pension liability $430,001 $482,269 ======== ========= The components of net periodic pension cost for the fiscal years ended January 31 are summarized as follows: 2002 2001 2000 ---- ---- ---- Service cost $ 1,613 Interest cost $75,889 $ 70,546 70,579 Actual return on plan assets (89,707) (46,194) (87,626) Net amortization and deferral 61,230 17,451 62,896 ------ ------ ------ Net periodic pension cost $47,412 $41,803 $47,462 ======= ======= ======= An assumed discount rate of 7.5% was used in determining the actuarial present value of benefit obligations for all periods presented. The expected long-term rate of return on plan assets was 8% for all periods presented. At January 31, 2002, approximately 60% of the plan's assets was held in mutual funds invested primarily in equity securities, 37% was invested in equity securities and debt instruments and 3% was invested in money market and other instruments. Defined Contribution Plan Pursuant to the terms of the Company's 401(k) plan, substantially all U.S. employees over 21 years of age with a minimum period of service are eligible to participate. The 401(k) plan is administered by the Company and provides for voluntary employee contributions ranging from 1% to 15% of the employee's compensation. The Company made discretionary contributions of $81,225, $83,947 and $57,642 in the fiscal years ended January 31, 2002, 2001 and 2000, respectively. NOTE I - MAJOR SUPPLIER ----------------------- The Company purchased approximately 81%, 77% and 74% of its raw materials from one supplier under licensing agreements for the fiscal years ended January 31, 2002, 2001 and 2000, respectively. 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. 20 Lakeland Industries, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued) January 31, 2002, 2001 and 2000 NOTE J - COMMITMENTS AND CONTINGENCIES -------------------------------------- 1. Employment Contracts The Company has employment contracts with four principal officers expiring through January 2004. Such contracts are automatically renewable for two-year terms unless 30 to 120 days' notice is given by either party. Pursuant to such contracts, the Company is committed to aggregate annual base remuneration of $747,500 and $397,500 for the fiscal years ended January 31, 2003 and 2004, respectively. 2. Leases The Company leases the majority of its premises under various operating leases expiring through fiscal 2005. The leases for the manufacturing facilities (located in Decatur, Alabama) are with two partnerships whose partners are principal officers and stockholders of the Company. One lease expires on August 31, 2004 and requires annual payments of approximately $365,000 plus certain operating expenses and the second lease expires on May 31, 2004 and requires annual payments of approximately $199,000 plus certain operating expenses. The Company also leases one customer service facility pursuant to a one-year lease which expires on March 31, 2002 (renewable at the Company's option for two additional one-year terms), from an officer of the Company. Monthly payments are $1,500. In addition, the Company has several operating leases for machinery and equipment. The Company has a one-year lease with a related partnership for a manufacturing facility in the People's Republic of China. The related lessor is a partnership in which the Company's directors, one officer and three employees hold partnership interests. In addition, during the fiscal year ended January 31, 2002, the Company obtained a 28% interest in this partnership. Rent paid under this agreement aggregated $14,433 for the fiscal year ended January 31, 2002. Total rental expense under all operating leases is summarized as follows: Total Rentals Gross sublease paid to rental rental related expense income parties ------- ------ ------- Year ended January 31, 2002 $858,429 $596,437 2001 890,818 $ 2,144 630,990 2000 833,274 10,578 545,136 Minimum annual rental commitments for the remaining term of the Company's noncancellable operating leases relating to manufacturing facilities, office space and equipment rentals at January 31, 2002 are summarized as follows: Year ended January 31, 2003 $730,136 2004 682,910 2005 333,796 ---------- $1,746,842 ========== Certain leases require additional payments based upon increases in property taxes and other expenses. 3. Litigation The Company is involved in various litigation arising during the normal course of business which, in the opinion of the management of the Company, will not have a material adverse effect on the Company's financial position or results of operations. 4. Self-insurance The Company maintains a self-insurance program for that portion of health care costs not covered by insurance. The Company is liable for claims up to defined limits. Self-insurance costs are based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred but not reported. 21
Directors: Officers: Transfer Agent: Raymond J. Smith, Chairman Raymond J. Smith, President Registrar and Transfer Company Christopher J. Ryan Christopher J. Ryan 10 Commerce Drive John J. Collins, Jr. Executive Vice President, Cranford, NJ 07016 Eric O. Hallman Secretary and General Counsel NASDAQ symbol: LAKE Walter J. Raleigh James M. McCormick Executive Offices: Vice President and Treasurer Harvey Pride, Jr. 711-2 Koehler Ave. Vice President, Manufacturing Ronkonkoma, NY 11779 (631) 981-9700 Auditors: Subsidiaries: Grant Thornton LLP Suite 3S01 Lakeland Protective Wear, Inc. One Huntington Quadrangle Lakeland de Mexico S.A. de C.V. Melville, NY 11747-4464 Laidlaw, Adams & Peck, Inc. Weifang Lakeland Safety Products, Co. Ltd.
Exhibits to Lakeland Industries, Inc.'s fiscal 2002 Form 10-K are available to shareholders for a fee equal to Lakeland's cost in furnishing such exhibits, on written request to the Secretary, Lakeland Industries, Inc., 711-2 Koehler Avenue, Ronkonkoma, New York 11779. ThermbarTM, Kut BusterTM, Grapolator Mock TwistTM, Safegard "76"TM, Body GardTM, Zone GardTM, RyTexTM, TomTexTM, DextraGardTM, ForcefieldTM, InterceptorTM, CheckmateTM, HeatexTM, PyrolonTM, Sterling HeightsTM, FyrepelTM, HighlandTM, ChemlandTM and UnilandTM are trademarks of Lakeland Industries, Inc. TyvekTM, VitonTM, BarricadeTM, NomexTM, KevlarTM, DelrinTM, TyChem SL, TK and BRTM and TeflonTM are registered trademarks of E.I.DuPont de Nemours and Company. SaranexTM is a registered trademark of Dow Chemical. SpectraTM is a registered trademark of Honeywell. 22