EX-99.1 CHARTER 2 ex99-1.htm EX-99.1 EX-99.1

701 Koehler Avenue, Suite 7 - Ronkonkoma, NY 11779
(631) 981-9700 - www.lakeland.com            

FOR IMMEDIATE RELEASE

Lakeland Industries Reports Q1 FY 2007 Net Income per Share of $0.29

RONKONKOMA, NY - June 8, 2006 -- Lakeland Industries, Inc. (NASDAQ: LAKE), today announced that net sales increased $1.5 million, or 5.9%, to $27.2 million for the three months ended April 30, 2006 from $25.7 million for the three months ended April 30, 2005. Gross profit increased $0.4 million, or 5.9%, to $6.5 million for the three months ended April 30, 2006 from $6.2 million for the three months ended April 30, 2005. Gross profit as a percentage of net sales was 24.0% both for the three months ended April 30, 2006 and for the three months ended April 30, 2005.

Operating profit decreased 14.9% to $2.2 million for the three months ended April 30, 2006 from $2.5 million for the three months ended April 30, 2005. Operating margins were 8.0% for the three months ended April 30, 2006 compared to 9.9% for the three months ended April 30, 2005.

Sales in Q1 were firm in February and March but were heavily impacted in April by DuPont’s introduction of new product sizing and patterns for their Tyvek garments. Therefore, DuPont heavily discounted and promoted their old garment inventory in a clearance sale in late March 2006.

This clearance sale filled supply lines leading to abnormally weak pricing and sales in April for Tyvek Protective Garments. Additionally, petrol-chemical refinery facilities have been running flat out given the current shortage of diesel oil and gasoline and the concomitant high prices paid to refineries that follow such shortages. Consequently, many have postponed their normal spring maintenance schedules where our disposable garments are used in large quantities.

Sales of chemical suits were slightly higher in February and March compared to same months sales last year, but weakened substantially in April and May due to a generally weak market, although margins on chemical suits were and remain strong.

Operating margins were also impacted negatively by Sales, General and Administrative expenses which increased significantly due to the company’s new ventures in India, Chile and Japan. However, Management feels these areas will contribute significantly to future growth later in FY07 and beyond. Also increasing SG&A expense in Q1 were Mifflin Valley’s operations (first acquired in Q3 of FY06). Mifflin runs at a higher gross margin with higher SG&A costs than the rest of the company’s operations.

The Company’s effective tax rate for Q1 FY07 was 30.8%. Losses in India, Chile and Japan for which no current tax benefit could be recognized, effectively raised our current global tax rates.

Net income decreased $0.25 million, or 14.7%, to $1.46 million for the three months ended April 30, 2006 from $1.71 million for the three months ended April 30, 2005. Earnings per share were $0.29 for the three months ended April 30, 2006 compared to $0.34 for the three months ended April 30, 2005.


On April 30, 2006, the Company’s balance sheet included total assets of $73.4 million, cash of $1.5 million, working capital of $58.9 million, bank debt of $4.8 million and stockholders’ equity of $62.3 million or $12.41 per share of book value.

Finished good inventories declined by $4,248,067 or 17.27% from their January 31, 2006 levels, however raw material purchasing continued at higher levels than normal in order to take advantage of discounts offered by suppliers. Thus raw materials increased by $2,619,114 or 14% since January 31, 2006. Such discounts should positively impact our fourth quarter earnings as these discounted raw materials roll through our international pipelines.

Our overall inventory position at January 31, 2006 declined by $1,061,986 for the first quarter ended April 30, 2006. One additional reason for our buildup in inventory was to protect us from possible supply-chain interruptions.

Lakeland will host a conference call at 4:30 PM (EST) on June 8, 2006 to discuss the Company's first quarter results. The call will be hosted by Christopher J. Ryan, Lakeland's President and CEO. Investors can listen to the call by dialing (800) 370-0898 (Domestic) or (973) 409-9260 (International) and use Pass Code 7498270 [NOTE: Pass Code has changed from previous announcement.]  For a replay of this call, dial 877-519-4471 (Domestic) or 973-341-3080 (International) and give the Pass Code of 6151539.

About Lakeland Industries, Inc.:
Lakeland is among one of the leading companies designing and manufacturing protective garments for industry, municipalities, and the burgeoning homeland security field. Lakeland Industries’ products have established and maintained their global reputation for overall quality. Indeed, our products have long been recognized as the field’s gold standard for quality - that essential, expected and deserved constituent of any protective wear.

For more information concerning Lakeland, please visit us at: www.lakeland.com

Contact:
         Lakeland Industries
Chris Ryan,
(631) 981-9700, CJRyan@lakeland.com
 
Gary Pokrassa,
(631) 981-9700, GAPokrassa@lakeland.com

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Forward-looking statements involve risks, uncertainties and assumptions as described from time to time in Press Releases and 8-K(s), registration statements, annual reports and other periodic reports and filings filed with the Securities and Exchange Commission or made by management. All statements, other than statements of historical facts, which address Lakeland’s expectations of sources or uses for capital or which express the Company’s expectation for the future with respect to financial performance or operating strategies can be identified as forward-looking statements. As a result, there can be no assurance that Lakeland’s future results will not be materially different from those described herein as “believed,” “projected”, “planned”, “intended”, “anticipated,” “estimated” or “expected,” which words reflect the current view of the Company with respect to future events. We caution readers that these forward-looking statements speak only as of the date hereof. The Company hereby expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Company’s expectations or any change in events conditions or circumstances on which such statement is based.

 

 
 
 

LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 
 
 
 
 Three Months Ended 
 
 
 April 30, 
     
2006
   
2005
 
               
Net sales
 
$
27,222
 
$
25,709
 
               
Cost of goods sold
   
20,689
   
19,542
 
               
Gross profit
   
6,533
   
6,167
 
               
Operating expenses
   
4,366
   
3,621
 
               
Operating profit
   
2,167
   
2,546
 
               
Other income, net
   
15
   
23
 
               
Interest expense
   
(71
)
 
(-
)
               
Income before income taxes
   
2,111
   
2,569
 
               
Provision for income taxes
   
649
   
856
 
               
Net income
 
$
1,462
 
$
1,713
 
               
Net income per common share*:
             
    Basic
 
$
0.29
 
$
0.34
 
    Diluted
 
$
0.29
 
$
0.34
 
               
Weighted average common
             
shares outstanding*:
             
    Basic
   
5,017,046
   
5,017,046
 
    Diluted
   
5,023,388
   
5,021,476
 
               
* Adjusted for the 10% stock dividend to shareholders of record on April 30, 2005
and reflects 1,280,750 shares offered to the public in June and July 2004.
 
 

 
 

LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
               
 
   
April 30, 
   
January 31,
 
     
2006
   
2006
 
               
ASSETS
             
               
Current assets:
             
Cash
 
$
1,508
 
$
1,532
 
Accounts receivable, net
   
15,750
   
14,221
 
Inventories
   
44,182
   
45,244
 
Deferred income taxes
   
917
   
917
 
Other current assets
   
2,360
   
1,805
 
  Total current assets
   
64,717
   
63,719
 
               
Property and equipment, net
   
7,649
   
7,755
 
Other assets
   
1,069
   
990
 
   
$
73,435
 
$
72,464
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
             
               
Current liabilities:
             
Accounts payable
 
$
4,417
 
$
2,537
 
Accrued expenses and other current liabilities
   
1,439
   
1,302
 
  Total current liabilities
   
5,856
   
3,839
 
               
Other long-term liabilities
   
474
   
470
 
Deferred income taxes
   
87
   
87
 
Borrowings under revolving credit facility
   
4,760
   
7,272
 
               
Commitments and contingencies
             
               
Stockholders' equity
             
Preferred stock, $0.01 par; authorized
             
  1,500,000 shares (none issued)
             
Common stock, $0.01 par; authorized
             
  10,000,000 shares; issued and outstanding
             
  5,017,046 shares at April 30, 2006
             
  and at January 31, 2006
   
50
   
50
 
Additional paid-in capital
   
42,431
   
42,431
 
Retained earnings
   
19,777
   
18,315
 
  Total stockholders' equity
   
62,258
   
60,796
 
   
$
73,435
 
$
72,464