x
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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LAKELAND INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
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Delaware
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13-3115216
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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701 Koehler Ave., Suite 7, Ronkonkoma, NY
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11779
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer ¨
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Accelerated filer ¨
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Nonaccelerated filer ¨ (Do not check if a smaller reporting company)
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Smaller reporting company x
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Class
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Outstanding at April 5, 2011
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Common Stock, $0.01 par value per share
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5,217,577
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Document
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Parts Into Which Incorporated
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Annual Report to Stockholders for the Fiscal Year Ended January 31, 2011 (Annual Report)
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Parts [I, II and IV]
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Page
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PART 1: | |||
Cautionary Statement Regarding Forward-Looking Information
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Item 1
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Business
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4
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Overview
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4
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Industry Overview
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5
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International and Domestic Standards
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6
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Industry Consolidation
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6
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Business Strategy
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7
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Our Competitive Strengths
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9
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Products
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10
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Quality
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15
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Marketing and Sales
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15
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Research and Development
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15
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Suppliers and Materials
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16
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Internal Audit
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16
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Competition
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16
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Seasonality
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16
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Patents and Trademarks
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17
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Employees
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17
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Environmental Matters
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17
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Available Information
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17
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Item 1A
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Risk Factors
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17
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Item 1B
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Unresolved Staff Comments
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24
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Item 2
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Properties
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24
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Item 3
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Legal Proceedings
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27
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Item 4
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[Removed and Reserved]
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27
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PART II
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Item 5
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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27
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Item 6
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Selected Financial Data
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29
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Item 7
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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30
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Item 7A
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Quantitative and Qualitative Disclosures about Market Risk
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37
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Item 8
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Financial Statements and Supplementary Data
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38
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Item 9
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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64
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Item 9A
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Controls and Procedures
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64
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Item 9B
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Other Information
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65
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PART III
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Item 10
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Directors, Executive Officers and Corporate Governance
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65
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Item 11
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Executive Compensation
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67
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Item 12
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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67
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Item 13
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Certain Relationships and Related Transactions and Director Independence
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67
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Item 14
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Principal Accounting Fees and Services
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67
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PART IV
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Item 15
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Exhibits and Financial Statement Schedules
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68
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Signatures
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71
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Certification under Exchange Act Rules 13a – 14(b) and 15d – 14(b)
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72-74
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·
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economies of scale when selling to end users, either through the use of a direct sales force or independent representation groups;
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·
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broader product offerings that facilitate cross-selling and bundling opportunities;
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·
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the ability to employ dedicated protective apparel training and selling teams;
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·
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the ability to offer volume and growth incentives to safety distributors; and
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·
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access to international sales.
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·
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Increase International Sales Opportunities. We intend to aggressively increase our penetration of the international markets for our product lines. Starting in FY07 and through FY08, we opened sales offices in Beijing, Shanghai, Chongqing, Guangzhou and Weifang, China; Santiago, Chile and Buenos Aires, Argentina and in FY11, we opened sales offices in Russia, India and Kazakhstan. Additionally sales in our older United Kingdom operation were flat in FY2010 but increased 24.9% in 2011 and 18% in 2009, 34.6% in FY08 and 46.6% in 2007. We expect our newer operations in Chile, China and India to ramp up sales on a similar basis to our UK operations. We also acquired Qualytextil, a Brazilian manufacturer with FY08 sales of $10.0 million and revenue growth of $8.4 million for the nine months in FY09 in which we owned Qualytextil and a growth in the full year of FY10 of 18% (38.4% in Q4) and 2.4% in 2011. This strategy is driven by the fact that many Asian and South American countries have adopted legislation similar to the 1970 U.S. Occupational Health and Safety Act (OSHA) in order to facilitate their entry into the World Trade Organization (WTO) which has as a requisite for entry worker safety laws (like OSHA), social security, environmental and tax laws similar to that of the USA and Europe. These new worker safety laws have driven the demand for our products in these rapidly growing economies. The sales in Brazil in Q2 and Q3 of this year had no large bid sales, while Q4 this year and Q4 last year each had large bid sales. A better measure of sales growth in Brazil would be Q4 this year which increased 14.2% over Q4 last year and 45.8% over Q3 this year.
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·
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Acquisitions. We believe that the protective clothing market is fragmented and presents the opportunity to acquire businesses that offer comparable products or specialty products that we do not offer. We intend to consider acquisitions that afford us economies of scale, enhanced opportunity for cross-selling, expanded product offerings and an increased market presence. We acquired a facility in New Delhi, India in November 2006 where we are producing Nitrile gloves. We also acquired Mifflin Valley, Inc., a manufacturer of high visibility protective clothing in August 2005. We closed on our acquisition of Qualytextil, a Brazilian manufacturer of fire protective clothing in, May 2008. We continue to entertain other opportunities but with an eye to increase earnings.
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·
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Introduction of New Products. We continue our history of product development and innovation by introducing new proprietary products across all our product lines. Our innovations have included Micromax® disposable protective clothing line, our ChemMax® line of chemical protective clothing, our Despro® patented glove design, Microgard antimicrobial products for food service and our engineered composite glove products for high cut and abrasion protection, our Thermbar™ glove and sleeve products for heat protection, Grapolator™ sleeve lines for hand and arm cut protection and our Thermbar™ Mock Twist glove for hand and arm heat protection. We own 16 patents on fabrics and production machinery and have two additional patents in application. We will continue to dedicate resources to research and development.
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·
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Decrease Manufacturing Expenses by Moving Production to International Facilities. We have additional opportunities to take advantage of our low cost production capabilities in China, India, Mexico and Brazil. Beginning in 1995, we successfully moved the labor intensive sewing operation for our limited use/disposable protective clothing lines to facilities in Mexico and China. Beginning January 1, 2005, pursuant to the United States World Trade Organization Treaty with China and the North American Free Trade Agreement (“NAFTA”), the reduction in quota requirements and tariffs imposed by the U.S. and Canada on textiles goods, such as our reusable woven garments, have made it more cost effective to move production for some of these product lines to our assembly facilities in China and Mexico. We completed this process in FY08. As a result, we expect to see profit margin improvements for these product lines, which will allow us to compete more effectively as quota restrictions on China were removed as of January 1, 2009, and tariffs lowered. Additionally,
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1.
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We continue to press our raw material and component suppliers for price reductions and better payment terms.
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2.
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We are sourcing more raw materials and components from our China based operations as opposed to sourcing in Europe and North America.
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3.
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We are re-engineering many products so as to reduce the amount of raw materials used and reduce the direct labor in such products.
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·
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Improve Marketing in Existing Markets. We believe significant growth opportunities are available to us through the better positioning, marketing and enhanced cross-selling of our reusable woven protective clothing, glove and arm guards and high-end chemical suit product lines, along with our limited use/disposable lines as a bundled offering. This allows our customers one stop shopping using combined freight shipments.
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Increase Sales to the First Responder Market. Our high-end chemical protective suits meet all of the regulatory standards and requirements and are particularly well qualified to provide protection to first responders to chemical or biological attacks. For example, our products have been used for response to recent threats such as the 2001 anthrax letters, the 2003 SARS epidemic, the 2004 ricin letters and the 2006 Avian Flu. A portion of appropriations for the Fire Act of 2002 and the Bio Terrorism Act of 2002 with continuing funding through 2011 are available for purchase of products for first responders that we manufacture, and we continue to aggressively target the Homeland Security market.
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Emphasize Customer Service. We continue to offer a high level of customer service to distinguish our products and to create customer loyalty. We offer well-trained and experienced sales and support personnel, on-time delivery and accommodation of custom and rush orders. We also seek to advertise our DuPont branded tradenames.
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Industry Reputation. We devote significant resources to creating customer loyalty by accommodating custom and rush orders and focusing on on-time delivery. Additionally, our ISO 9001 and 9002 certified facilities manufacture high-quality products. As a result of these factors, we believe that we have an excellent reputation in the industry.
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·
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International Manufacturing Capabilities. We have operated our own manufacturing facilities in Mexico since 1995 and in China since 1996. Our four facilities in China total 454,000 sq. ft. of manufacturing, warehousing and administrative space while our facility in Mexico totals over 43,000 sq. ft. of manufacturing, warehousing and administrative space. Our facilities and capabilities in China and Mexico allow access to a less expensive labor pool than is available in the United States and permits us to purchase certain raw materials at a lower cost than they are available domestically.
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·
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India. In November 2006, we purchased three facilities comprising 47,408 square feet in New Delhi, India where we are producing nitrile gloves which are sold both domestically in India and internationally. We have continued to enter the North American and European markets in calendar 2010 with a newly designed line of gloves, after a complete redesign and rebuild of the India machinery and equipment during FY08 and FY09.
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·
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Brazil. In May 2008, we acquired Qualytextil, S.A., a Brazilian manufacturer of fire protective clothing which opens up the tariff protected Mercosur markets of Brazil, Argentina, Uruguay, Paraguay and soon, by membership, Venezuela, for not only Qualytextil’s fire protective products, but also many of the products we make in the USA, China and Mexico.
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·
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International Sales Offices. We have sales offices around the world to service various major markets, a greatly expanded Toronto, Canada facility that went on line in January 2008 for the Canadian market, an expanded Newport, United Kingdom office for the European Community that will go on line in late 2011 and new sales offices in Beijing, Weifang, Guangzhou, Chongqing and Shanghai, China covering China, Australia and Southeast Asia, and our recent additions in Santiago, Chile and Jerez, Mexico for the South American market. The Brazil acquisition in May 2008 provided the infrastructure for our strategy for South America. In FY10, we opened a sales office in Buenos Aires, Argentina as a spin off from our Chile operations.
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·
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Comprehensive Inventory. We have a large product offering with numerous specifications, such as size, styles and pockets, and maintain a large inventory of each in order to satisfy customer orders in a timely manner. Many of our customers traditionally make purchases of industrial protective gear with expectations of immediate delivery. We believe our ability to provide timely service for these customers enhances our reputation in the industry and positions us strongly for repeat business, particularly in our limited use/disposable protective clothing lines.
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·
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Manufacturing Flexibility. By locating labor-intensive manufacturing processes, such as sewing in Brazil, Mexico, China and India, and by utilizing sewing subcontractors, we have the ability to increase production without substantial additional capital expenditures. Our manufacturing systems allow us flexibility for unexpected production surges and alternative capacity in the event any of our independent contractors become unavailable.
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·
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Experienced Management Team. We have an experienced management team. Our executive officers, other than the CFO, average greater than 20 years of experience in the industrial protective clothing market. The knowledge, relationships and reputation of our management team helps us maintain and build our customer base.
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Product Line
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Raw Material
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Protection Against
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End Market
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Limited use/disposable protective clothing
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· Tyvek® and laminates of Polyethylene, Spunlaced Polyester, SMS, Polypropylene, and Company Micromax®, Micromax NS®, Micromax M3P and HBF, ChemMax 1, ChemMax 2, Pyrolon®, and numerous other non-woven fabrics
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· Contaminants, irritants, metals, chemicals, fertilizers, pesticides, acids, asbestos, PCBs, lead, dioxin and many other hazardous chemicals
· Viruses and bacteria (AIDS, streptococcus, SARS and hepatitis)
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· Integrated oil
· Chemical industries
· Public utilities
· Automotive and pharmaceutical industries
· Government (terrorist response)
· Laboratories
· Janitorial
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High-end chemical protective suits
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· TyChemâQC
· TyChem® SL
· TyChem® TK
· TyChem® F
· TyChem® BR
· ChemMax® 3 and 4
· Interceptor®
· Pyrolon® CRFR
· Other Lakeland patented co-polymer laminates
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· Chemical spills
· Toxic chemicals used in many varied manufacturing processes
· Terrorist attacks, biological and chemical warfare (sarin, anthrax and ricin)
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· Integrated oil, chemical and nuclear industries
· Hazardous material teams
· Fire departments (hazmat)
· Government (first responders)
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Fire fighting and heat protective apparel
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· Nomex®
· Aluminized Nomex®
· Aluminized PBI/ Kevlar®
· PBI Matrix and Gemini
· Millenia XT®
· Basofil®
· Advance
· Advance Ultra
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· Fire, burns and excessive heat
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· Municipal, corporate and volunteer fire departments
· Wildland fire fighting
· Hot equipment maintenance personnel and industrial fire departments
· Oil well fires
· Airport crash rescue
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Glove and Sleeve
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· Kevlar® yarns
· Kevlar® wrapped steel core yarns
· Spectra® yarns
· High Performance Polyethylene yarns (HPPE)
· Composite engineered yarns
· Nitrile, latex, natural rubber, neoprene, polyurethane compounds and mixtures thereof
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· Cuts, lacerations, heat, hazardous chemicals and dermatological irritants
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· Integrated oil
· Automotive, glass and metal fabrication industries
· Chemical plants
· Food processing
· Electronic industries
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Product Line
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Raw Material
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Protection Against
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End Market
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Reusable woven garments
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· Staticsorb carbon thread with polyester
· Cotton polyester blends
· Cotton
· Polyester
· Tencate® FR cottons
· Nomex®/FR Aramids
· Nylon
· Indura® Ultrasoft/FR cotton
· Stedfast “BB”
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· Protects manufactured products from human contamination or static electrical charge
· Bacteria, viruses and blood borne pathogens
· Protection from flash fires
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· General industrial applications
· Household uses
· Clean room environments
· Emergency medical ambulance services
· Chemical and oil refining
· Medical and laboratory facilities
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High Visibility Clothing
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· Reflective vests, jackets, coats, jumpsuits with reflective trim, “T”shirts, sweatshirts, raingear and 70E vest
· Polyester mesh
· Solid polyester
· FR polyester mesh
· FR solid polyester
· Modacrylic
· Modacrylic antistatic
§ FR cotton
§ Nomex
§ FR trims
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· Lack of visibility
· Heat, flame, sparks
· Arc flash
· Static buildup, explosive atmospheres
· Fire, heat explosions
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· Highway
· Construction
· Maintenance
· Transportation
· Airports
· Police
· Fire, EMS
· Electric, coal and gas utilities
· Extrication
· Confined space rescue
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·
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TyChem® TK a multilayer film laminated to a durable nonwoven substrate. This garment offers the broadest temperature range for limited use garments of -94°F to 194°F. This garment is an encapsulating design and is available in National Fire Protection Agency 1991-2005 revision certified versions and meets the requirements of the flash fire option.
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·
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ChemMax® 3 a multilayer film laminated to a durable spunbonded substrate. This is a nonencapsulating garment and meets the requirements of NFPA 1992, 2005 Revision. In addition to NFPA certified ensembles, we also manufacture garments from our proprietary ChemMax® 1, ChemMax® 2 and ChemMax® 3 fabrics that are compliant with CE types 2, 3 and 4 for the international markets.
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Kiln entry suit to protect kiln maintenance workers from extreme heat.
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Proximity suits to give protection in high heat areas where exposure to hot liquids, steam or hot vapors is possible.
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Approach suits to protect personnel engaged in maintenance, repair and operational tasks where temperatures do not exceed 200°F ambient, with a radiant heat exposure up to 2,000°F.
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Fire service station wear in multiple protective fabrics
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Fire service extrication suits in FR cotton
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Additional wildland firefighting apparel in multiple fabrics
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Flame resistant arc/flash protective suits in FR cotton
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Flame resistant shirts and pants in multiple protective fabrics
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Flame resistant jackets in FR cotton
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Electrostatic dissipative apparel used primarily in the pharmaceutical and automotive industries.
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Clean room apparel used in semiconductor manufacturing and pharmaceutical manufacturing to protect against human contamination.
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Flame resistant Nomex®/FR Cotton coveralls/pants/jackets used in chemical and petroleum plants and for wildland firefighting.
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Cotton and Polycotton coveralls, lab coats, pants and shirts.
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·
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Interruptions and delays in manufacturing and resulting cancellations of orders for our products;
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Increases in fabrics or component prices that we may not be able to pass on to our customers; and
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Our holding more inventory than normal because we cannot finish assembling our products until we have all of the components
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Potential adverse fluctuations in foreign currency exchange rates;
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Higher credit risks;
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Restrictive trade policies of foreign governments;
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Currency nullification and weak banking institutions;
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Changing economic conditions in local markets;
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Political and economic instability in foreign markets; and
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Changes in leadership of foreign governments.
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A $23.5 million revolving credit facility which commenced January 2010, of which we had $11.6 million of borrowings outstanding as of January 31, 2011, expiring January 2013.
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Our financial condition, strength and credit rating;
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The financial markets’ confidence in our management team and financial reporting;
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General economic conditions and the conditions in the homeland security sector; and
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Capital markets conditions.
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Our expansion of international operations;
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Competitive pricing pressures;
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Seasonal buying patterns resulting from the cyclical nature of the business of some of our customers;
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The size and timing of individual sales;
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Changes in the mix of products and services sold;
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The timing of introductions and enhancements of products by us or our competitors;
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Market acceptance of new products;
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Technological changes in fabrics or production equipment used to make our products;
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Changes in the mix of domestic and international sales;
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Personnel changes; and
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General industry and economic conditions.
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Address
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Estimated
Square
Feet
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Annual Rent
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Lease Expiration
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Principal Activity
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|||||
Lakeland Industries, Inc.
Headquarters
701-7 Koehler Avenue
Ronkonkoma, NY 11779
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6,250 |
Owned
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N/A |
Administration
Studio
Sales
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|||||
Lakeland Industries, Inc.
202 Pride Lane
Decatur, AL 35603
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91,788 |
Owned
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N/A |
Manufacturing Administration Engineering Warehousing
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|||||
Lakeland Industries, Inc.
3420 Valley Ave.
Decatur, AL 35603
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49,500 |
Owned
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N/A |
Warehousing Administration
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|||||
Lakeland Industries, Inc.
201 Pride Lane, SW
Decatur, AL 35603
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5,940 |
Owned
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N/A |
Sales
Administration
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|||||
Lakeland Protective Real Estate
59 Bury Court
Brantford, ON N3S 0A9
Canada
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22,092 |
Owned
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N/A |
Sales
Administration Warehousing
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Address
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Estimated
Square
Feet
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Annual Rent
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Lease Expiration
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Principal Activity
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||||||
Weifang Lakeland Safety Products Co., Ltd. Plant #1
Xiao Shi Village
AnQui City, Shandong Province
PRC 262100
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86,111 |
Owned(1)
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N/A |
Manufacturing Administration Engineering
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||||||
Qing Dao Lakeland Protective Products Co., Ltd
Yinghai Industrial Park
Jiaozhou, Shandong Province
PRC 266318
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122,429 |
Owned(1)
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N/A |
Manufacturing Administration Warehousing
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||||||
Lakeland Brazil, S.A.
Rua do Luxemburgo, 260, Lotes 82/83, Condomicion Industrial Presidente Vargas, Pirajá
Salvador, Bahia 41230-130
Brazil
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25,209 |
Owned
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N/A |
Manufacturing Administration Engineering Warehousing
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||||||
Lakeland Glove and Safety Apparel Private, Ltd.
Plots 81, 50 and 24
Noida Special Economic Zone
New Delhi, India
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33,831 |
Owned (2)
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N/A |
Manufacturing Warehouse
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||||||
Lakeland Industries, Inc.
1701 4th Avenue, SE
Decatur, AL 35603
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21,000 | $ | 24,000 |
06/31/11
6 month review
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Warehouse
Sales
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|||||
Lakeland Industries, Inc.
Woven Products Division
2401 SW Parkway
St. Joseph, MO 64503
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44,000 | $ | 96,000 |
07/31/12
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Manufacturing Administration Warehousing
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|||||
Lakeland Industries, Inc.
5 Dutch Court
Sinking Spring, PA 19608
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21,025 | $ | 86,202 |
10/14/13
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Manufacturing Warehouse
Sales
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|||||
Lakeland Mexico
Carretera a Santa Rita
Calle Tomas Urbina #1
Jerez de Garcia, Salinas, Zacatecas
Mexico
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43,000 | $ | 132,000 |
03/31/13
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Manufacturing Administration Warehousing
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|||||
Lakeland Industries Europe Ltd.
Unit 9/10 Park 2
Main Road
Newport, East Yorkshire
HU15 2RP
United Kingdom
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10,000 |
Approximately $81,000 (varies with exchange rates)
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Warehouse
Sales
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Address
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Estimated
Square
Feet
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Annual Rent
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Lease Expiration
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Principal Activity
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|||||||
Weifang Lakeland Safety Products Co., Ltd. Plant #2
Xiao Shi Village
AnQui City, Shandong Province
PRC 262100
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64,583 | $ | 80,000 |
08/01/12
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Manufacturing Administration
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||||||
Weifang Meiyang Protective Products Co., Ltd.
Xiao Shi Village
AnQui City, Shandong Province
PRC 262100
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11,296 | $ | 8,400 |
12/31/11
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Manufacturing
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||||||
Lakeland (Beijing) Safety Products Co., Ltd.
Unit C412, Building C, Yeqing Plaza
No. 9 Wangjing Beilu, Chaoyang District
Beijing 100102 PRC
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1,152 | $ | 17,988 |
06/30/11
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Sales
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||||||
Lakeland Brazil, S.A.
Curtume Street, 708 Warehouse 10 Lapa de Baixo, Sao Paulo, Brazil
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13,530 | $ | 124,699 |
10/31/13
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Distribution Center
Administration
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||||||
Lakeland Brazil, S.A.
Rui Barbosa Street, 2237-Store 09
Imbetiba, Macae, Rio de Janeiro, Brazil
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1,259 | $ | 17,766 |
03/01/12
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Store
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||||||
Lakeland Glove and Safety Apparel Private, Ltd.
Plot B-42, Sector 2
Noida, District-Gautam Budh Nagar
India
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2,100 | $ | 13,200 |
01/31/12
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Sales
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||||||
Lakeland Industries Inc., Agencia En Chile
Los Algarrobos nº 2228
Comuna de Santiago
Código Postal 8361401
Santiago, Chile
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542 | $ | 18,768 |
03/01/12
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Warehouse Sales
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||||||
Art Prom, LLC
Varashilova street 5/1,
Ust-Kamnogorsk, Kazakhstan, 070002
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54 | $ | 1,068 |
09/01/12
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Office
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||||||
Lakeland Argentina, SRL
Centro Industrial y Commercial Florida Oeste, Avda. Gral. Roca #4250
Pciade Buenos Aires, Argentina
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2,690 | $ | 34,500 |
08/18/12
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Office
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||||||
Lakeland (Hong Kong) Trading Co., Ltd.
Unit 503 5/fl Silvercord Tower 2
30 Canton Road, Tsimshatsui, HK
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N/A | N/A |
N/A
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Sales
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(1)
|
We own the buildings in which we conduct the majority of our manufacturing operations in China and lease the land underlying the buildings from the Chinese government. We have 35 years and 40 years remaining under the leases with respect to the AnQui City and Jiaozhou facilities, respectively.
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(2)
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The annual total leases for the underlying land on plots 24, 81 and 50 in India amounts to approximately $10,000 on the land leases expiring in 2024.
|
ITEM 5.
|
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Price Range of
Common Stock
|
||||||||
High
|
Low
|
|||||||
Fiscal 2012
|
||||||||
First Quarter (through April 5, 2011)
|
$ | 9.40 | $ | 7.93 | ||||
Fiscal 2011
|
||||||||
First Quarter
|
$ | 10.48 | $ | 7.65 | ||||
Second Quarter
|
11.80 | 8.80 | ||||||
Third Quarter
|
10.40 | 8.72 | ||||||
Fourth Quarter
|
9.99 | 8.24 | ||||||
Fiscal 2010
|
||||||||
First Quarter
|
$ | 8.66 | $ | 5.03 | ||||
Second Quarter
|
8.73 | 7.10 | ||||||
Third Quarter
|
9.17 | 7.32 | ||||||
Fourth Quarter
|
8.50 | 6.62 |
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights (1)
|
Weighted-average exercise
price per share of
outstanding options,
warrants and rights (1)
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (1)
|
|||||||||
Equity Compensation plans approved by security holders
|
||||||||||||
Restricted stock grants - employees
|
137,123 | $ | 0 | 96,462 | ||||||||
Restricted stock grants - directors
|
63,184 | $ | 0 | 12,496 | ||||||||
Matching award program
|
2,338 | $ | 0 | 56,959 | ||||||||
Bonus in stock program - employees
|
19,479 | $ | 0 | 35,175 | ||||||||
Retainer in stock program - directors
|
0 | $ | 0 | 20,704 | ||||||||
Total Restricted Stock Plans
|
222,124 | $ | 0 | 221,796 |
Year Ended January 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||
Net sales
|
$ | 101,236 | $ | 94,141 | $ | 102,268 | $ | 95,740 | $ | 100,171 | ||||||||||
Costs of goods sold
|
71,468 | 68,735 | 74,299 | 73,383 | 75,895 | |||||||||||||||
Gross profit
|
29,768 | 25,406 | 27,969 | 22,357 | 24,276 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Selling and shipping
|
11,855 | 10,480 | 10,931 | 9,291 | 9,473 | |||||||||||||||
General and administrative
|
14,459 | 12,468 | 10,766 | 8,082 | 8,081 | |||||||||||||||
Total operating expenses(2)
|
26,314 | 22,948 | 21,697 | 17,373 | 17,554 | |||||||||||||||
Operating profit
|
3,454 | 2,458 | 6,272 | 4,984 | 6,722 | |||||||||||||||
Other income (expense):
|
||||||||||||||||||||
Interest expense
|
(338 | ) | (1,111 | ) | (828 | ) | (330 | ) | (356 | ) | ||||||||||
Interest income
|
71 | (3 | ) | 125 | 66 | 20 | ||||||||||||||
Gain on pension plan liquidation
|
— | — | — | — | 353 | |||||||||||||||
Other income (expense)
|
(1,561 | ) | 92 | 494 | 145 | 191 | ||||||||||||||
Total other income (expense)
|
(1,828 | ) | (1,022 | ) | (209 | ) | (119 | ) | 208 | |||||||||||
Income before income taxes
|
1,626 | 1,436 | 6,063 | 4,865 | 6,930 | |||||||||||||||
Income tax expenses
|
654 | 406 | 1,514 | 1,574 | 1,826 | |||||||||||||||
Net income
|
$ | 972 | $ | 1,030 | $ | 4,549 | $ | 3,291 | $ | 5,104 | ||||||||||
Net income per common share (basic)(1)
|
$ | 0.18 | $ | 0.19 | $ | 0.84 | $ | 0.60 | $ | 0.92 | ||||||||||
Net income per common share (diluted)(1)
|
$ | 0.18 | $ | 0.19 | $ | 0.83 | $ | 0.59 | $ | 0.92 | ||||||||||
Weighted average common shares outstanding(1)
|
||||||||||||||||||||
Basic
|
5,440,364 | 5,426,784 | 5,435,829 | 5,522,751 | 5,520,881 | |||||||||||||||
Diluted
|
5,520,541 | 5,458,472 | 5,475,104 | 5,542,245 | 5,527,618 | |||||||||||||||
Balance Sheet Data (at period end):
|
||||||||||||||||||||
Current assets
|
$ | 73,743 | $ | 64,827 | $ | 78,363 | $ | 70,269 | $ | 62,114 | ||||||||||
Total assets
|
101,376 | 90,020 | 101,615 | 84,623 | 74,198 | |||||||||||||||
Current liabilities
|
10,718 | 15,921 | 7,452 | 4,997 | 4,326 | |||||||||||||||
Long-term liabilities
|
16,491 | 1,675 | 25,852 | 10,753 | 3,813 | |||||||||||||||
Stockholders’ equity
|
74,167 | 72,424 | 68,311 | 68,873 | 66,059 |
Year Ended January 31,
|
||||||||
2010
|
2011
|
|||||||
Net sales
|
100.0 | % | 100.0 | % | ||||
Cost of goods sold
|
73.0 | % | 70.6 | % | ||||
Gross profit
|
27.0 | % | 29.4 | % | ||||
Operating expenses
|
24.4 | % | 26.0 | % | ||||
Operating profit
|
2.6 | % | 3.4 | % | ||||
Interest expense and other income, net
|
1.1 | % | 1.8 | % | ||||
Income tax expense
|
0.4 | % | 0.6 | % | ||||
Net income
|
1.1 | % | 1.0 | % |
For the Year
Ended January 31,
|
For the Three
Months
Ended January 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross profit
|
29.4 | % | 27.0 | % | 31.6 | % | 30.2 | % | ||||||||
Operating expenses
|
26.0 | % | 24.4 | % | 25.6 | % | 24.7 | % | ||||||||
Operating profit
|
3.4 | % | 2.6 | % | 6.0 | % | 5.5 | % | ||||||||
Income before tax
|
1.6 | % | 1.5 | % | 5.8 | % | 5.2 | % | ||||||||
Net income
|
1.0 | % | 1.1 | % | 4.4 | % | 4.5 | % |
|
·
|
Changes in the mix of foreign vs. domestic. Foreign sales tend to have much higher margins than U.S. sales.
|
|
·
|
Disposables gross margin increased by 4.4 percentage points in FY11 compared with FY10. This increase was mainly due to changes in the product mix moving toward higher margin Lakeland branded products. Disposables margins in Q4 FY11 were increased by a year-end reversal of rebates accrued earlier in the year, due to many customers not meeting their year-end targets for rebates.
|
|
·
|
Brazil gross margin was 45.9% for FY11 this year compared with 45.7% last year.
|
|
·
|
Glove division improvement in volume resulting in a gross profit of $0.5 million.
|
|
·
|
Continued gross losses of $0.3 million from India in FY11.
|
|
·
|
Reflective margins were lower than the prior year mainly due to writeoffs taken for overstocks of a discontinued style.
|
|
·
|
Canada gross margin increased by 5.9 percentage points primarily from more favorable exchange rates and local competitive pricing climate.
|
|
·
|
UK and Europe margins decreased by 2.3 percentage points primarily from exchange rate differentials.
|
·
|
$0.5
|
million-while there was only a modest cost in the current year, there was an increase in foreign exchange costs resulting from large gains in the prior year not recurring.
|
||
·
|
0.5
|
million-increase in equity compensation resulting from the cumulative change in the performance level designated by the board of directors, which in turn resulted in a cumulative change for the 2009 Restricted Stock Plan.
|
||
·
|
0.5
|
million-increased sales salaries, partially resulting from severance pay for terminations and the hiring of additional sales personnel for the wovens division in the U.S. and personnel in the U.K., Latin America and China.
|
||
·
|
0.4
|
million-increased operating costs in China were the result of the large increase in direct international sales made by China, which are now allocated to SG&A costs, previously allocated to cost of goods sold.
|
||
·
|
0.4
|
million-freight out increased, mainly resulting from higher volume and use of air freight and more frequent partial shipments resulting from stock-out conditions prevailing during much of FY11.
|
||
·
|
0.3
|
million-sales commissions increased, mainly resulting from higher volume and revised commission rates.
|
||
·
|
0.2
|
million-professional fees increased resulting from the management terminations in Brazil.
|
||
·
|
0.2
|
million-increased advertising costs resulting from reductions in co-op advertising allowances received.
|
||
·
|
0.2
|
million-increase in amortization mainly as a result of banking fees.
|
||
·
|
0.2
|
million miscellaneous increases.
|
||
·
|
0.1
|
million increase in medical insurance resulting from higher costs prevailing and several employees with serious illnesses.
|
||
·
|
0.1
|
million increase in payroll taxes.
|
||
·
|
0.1
|
million increase in miscellaneous taxes.
|
||
·
|
(0.1)
|
million reduction in bad debt expenses.
|
||
·
|
(0.1)
|
million reduction in bank charges.
|
||
·
|
|
(0.1)
|
|
million reduction in R&D expenses.
|
Payments Due by Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3 Years
|
4-5
Years
|
After 5
Years
|
||||||||||||||||
Canada facility loan
|
$ | 1,692,511 | $ | 100,050 | $ | 200,100 | $ | 200,100 | $ | 1,192,261 | ||||||||||
Operating leases
|
922,050 | 51,456 | 813,594 | 57,000 | 0 | |||||||||||||||
Other liabilities
|
— | — | — | — | — | |||||||||||||||
Revolving credit facility
|
11,485,698 | 0 | 11,485,698 | 0 | 0 | |||||||||||||||
Total
|
$ | 14,100,259 | $ | 151,506 | $ | 12,499,392 | $ | 257,100 | $ | 1,192,261 |
Consolidated Financial Statements:
|
|
Page No.
|
|
Reports of Independent Registered Public Accounting Firm
|
39
|
Consolidated Balance Sheets - January 31, 2011 and 2010
|
40
|
Consolidated Statements of Income for the Years Ended January 31, 2011 and 2010
|
41
|
Consolidated Statements of Stockholders' Equity for the Years Ended January 31, 2011 and 2010
|
42
|
Consolidated Statements of Cash Flows for the Years Ended January 31, 2011 and 2010
|
43
|
Notes to Consolidated Financial Statements
|
44-63
|
Schedule II-Valuation and Qualifying Accounts
|
64
|
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 6,074,505 | $ | 5,093,380 | ||||
Accounts receivable, net of allowance for doubtful accounts of approximately $210,100 and $200,200 at January 31, 2011 and 2010, respectively
|
14,477,442 | 15,809,010 | ||||||
Inventories, net of reserves of approximately $1,495,000 and $868,000 at January 31, 2011 and 2010, respectively
|
45,917,775 | 38,575,890 | ||||||
Deferred income taxes
|
2,296,941 | 1,261,250 | ||||||
Prepaid income tax
|
1,814,691 | 1,731,628 | ||||||
Other current assets
|
2,338,585 | 2,355,506 | ||||||
Total current assets
|
72,919,939 | 64,826,664 | ||||||
Property and equipment, net
|
13,901,389 | 13,742,454 | ||||||
Intangibles and other assets, net
|
8,256,904 | 5,622,120 | ||||||
Goodwill
|
6,297,751 | 5,829,143 | ||||||
Total assets
|
$ | 101,375,983 | $ | 90,020,381 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 6,503,935 | $ | 3,882,730 | ||||
Accrued compensation and benefits
|
1,411,599 | 1,288,796 | ||||||
Other accrued expenses
|
2,701,918 | 1,138,303 | ||||||
Borrowings under revolving credit facility
|
— | 9,517,567 | ||||||
Current maturity of long-term debt
|
100,050 | 93,601 | ||||||
Total current liabilities
|
10,717,502 | 15,920,997 | ||||||
Borrowings under revolving credit facility
|
11,485,698 | — | ||||||
Construction loan payable, net of current maturity
|
1,592,461 | 1,583,419 | ||||||
VAT taxes payable long-term
|
3,309,811 | — | ||||||
Other liabilities
|
103,270 | 92,176 | ||||||
Total liabilities
|
27,208,742 | 17,596,592 | ||||||
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; 5,568,744 and 5,564,732 shares issued and outstanding at January 31, 2011 and 2010, respectively
|
55,687 | 55,647 | ||||||
Less treasury stock, at cost; 314,441 shares at January 31, 2011 and 125,322 shares at January 31, 2010
|
(3,012,920 | ) | (1,353,247 | ) | ||||
Additional paid-in capital
|
50,279,613 | 49,622,632 | ||||||
Retained earnings
|
26,193,049 | 25,221,050 | ||||||
Other comprehensive gain (loss)
|
651,812 | (1,122,293 | ) | |||||
Total stockholders' equity
|
74,167,241 | 72,423,789 | ||||||
Total liabilities and stockholders' equity
|
$ | 101,375,983 | $ | 90,020,381 |
2011
|
2010
|
|||||||
Net sales
|
$ | 101,236,325 | $ | 94,140,819 | ||||
Cost of goods sold
|
71,467,972 | 68,735,076 | ||||||
Gross profit
|
29,768,353 | 25,405,743 | ||||||
Operating expenses
|
||||||||
Selling and shipping
|
11,855,816 | 10,480,099 | ||||||
General and administrative
|
14,458,572 | 12,468,137 | ||||||
Total operating expenses
|
26,314,388 | 22,948,236 | ||||||
Operating profit
|
3,453,965 | 2,457,507 | ||||||
Other income (expense)
|
||||||||
Interest expense
|
(338,042 | ) | (1,111,456 | ) | ||||
Interest income
|
70,897 | (2,614 | ) | |||||
VAT tax charge-Brazil
|
(1,583,247 | ) | — | |||||
Other income
|
22,268 | 92,216 | ||||||
Total other income (expense)
|
(1,828,124 | ) | (1,021,854 | ) | ||||
Income before income taxes
|
1,625,841 | 1,435,653 | ||||||
Income tax expense
|
653,842 | 405,861 | ||||||
Net income
|
$ | 971,999 | $ | 1,029,792 | ||||
Net income per common share
|
||||||||
Basic
|
$ | 0.18 | $ | 0.19 | ||||
Diluted
|
$ | 0.18 | $ | 0.19 | ||||
Weighted average common shares outstanding
|
||||||||
Basic
|
5,440,364 | 5,426,784 | ||||||
Diluted
|
5,520,541 | 5,458,472 | ||||||
Net income
|
$ | 971,999 | $ | 1,029,792 | ||||
Translation adjustments:
|
||||||||
Canada
|
37,297 | 76,899 | ||||||
Brazil
|
1,606,447 | 2,475,387 | ||||||
Europe
|
31,062 | (110,238 | ) | |||||
China
|
88,163 | 80 | ||||||
Russia
|
11,136 | |||||||
Interest rate swap
|
— | 627,380 | ||||||
1,774,105 | 3,069,508 | |||||||
Total comprehensive income
|
$ | 2,746,104 | $ | 4,099,300 |
Common Stock
|
Treasury Stock
|
Additional
Paid-in
|
Retained
|
Other
Comprehensive
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Total
|
|||||||||||||||||||||||||
Balance, January 31, 2009
|
5,523,288 | $ | 55,233 | (107,317 | ) | $ | (1,255,459 | ) | $ | 49,511,896 | $ | 24,191,258 | $ | (4,191,801 | ) | $ | 68,311,127 | |||||||||||||||
Net income
|
— | — | — | — | — | 1,029,792 | — | 1,029,792 | ||||||||||||||||||||||||
Stock repurchase program
|
— | — | (18,005 | ) | (97,788 | ) | — | — | — | (97,788 | ) | |||||||||||||||||||||
Other comprehensive loss -
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Translation adjustments
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Canada
|
— | — | — | — | — | — | 76,899 | 76,899 | ||||||||||||||||||||||||
Qualytextil, S.A., Brazil
|
— | — | — | — | — | — | 2,475,387 | 2,475,387 | ||||||||||||||||||||||||
UK
|
— | — | — | — | — | — | (110,238 | ) | (110,238 | ) | ||||||||||||||||||||||
China
|
— | — | — | — | — | — | 80 | 80 | ||||||||||||||||||||||||
Interest rate swap
|
— | — | — | — | — | — | 627,380 | 627,380 | ||||||||||||||||||||||||
Stock based compensation
|
||||||||||||||||||||||||||||||||
Issuance of director stock options
|
— | — | — | — | 47,068 | — | — | 47,068 | ||||||||||||||||||||||||
Restricted stock plan
|
— | — | — | — | 169,640 | — | — | 169,640 | ||||||||||||||||||||||||
Director options granted at fair market value
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Director stock options exercised
|
3,267 | 33 | — | — | 23,529 | — | — | 23,562 | ||||||||||||||||||||||||
Shares issued from restricted stock plan
|
38,177 | 381 | — | — | — | — | — | 381 | ||||||||||||||||||||||||
Return of shares in lieu of payroll tax withholding
|
— | — | — | — | (111,000 | ) | — | — | (111,000 | ) | ||||||||||||||||||||||
Cash paid in lieu of issuing shares
|
— | — | — | — | (18,501 | ) | — | — | (18,501 | ) | ||||||||||||||||||||||
Balance, January 31, 2010
|
5,564,732 | 55,647 | (125,322 | ) | (1,353,247 | ) | 49,622,632 | 25,221,050 | (1,122,293 | ) | 72,423,789 | |||||||||||||||||||||
Net income
|
— | — | — | — | — | 971,999 | — | 971,999 | ||||||||||||||||||||||||
Stock repurchase program
|
— | — | (189,119 | ) | (1,659,673 | ) | — | — | — | (1,659,673 | ) | |||||||||||||||||||||
Other comprehensive loss -
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Translation adjustments
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Canada
|
— | — | — | — | — | — | 37,297 | 37,297 | ||||||||||||||||||||||||
Qualytextil, S.A., Brazil
|
— | — | — | — | — | — | 1,606,447 | 1,606,447 | ||||||||||||||||||||||||
UK
|
— | — | — | — | — | — | 31,062 | 31,062 | ||||||||||||||||||||||||
China
|
— | — | — | — | — | — | 88,163 | 88,163 | ||||||||||||||||||||||||
Russia
|
— | — | — | — | — | — | 11,136 | 11,136 | ||||||||||||||||||||||||
Interest rate swap
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Stock based compensation
|
— | — | — | — | 676,304 | — | — | 676,304 | ||||||||||||||||||||||||
Restricted stock plan
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Shares issued from restricted stock plan
|
4,012 | 40 | — | — | (40 | ) | — | — | — | |||||||||||||||||||||||
Return of shares in lieu of payroll tax withholding
|
— | — | — | — | (19,283 | ) | — | — | (19,283 | ) | ||||||||||||||||||||||
Balance, January 31, 2011
|
5,568,744 | $ | 55,687 | (314,441 | ) | $ | (3,012,920 | ) | $ | 50,279,613 | $ | 26,193,049 | $ | 651,812 | $ | 74,167,241 |
2011
|
2010
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
|
$ | 971,999 | $ | 1,029,792 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities
|
||||||||
Provision for inventory obsolescence
|
626,614 | 211,601 | ||||||
Provision for doubtful accounts
|
9,891 | 96,074 | ||||||
Deferred income taxes
|
(1,035,691 | ) | 1,316,981 | |||||
Depreciation and amortization
|
1,976,596 | 1,744,113 | ||||||
Stock based and restricted stock compensation
|
676,304 | 198,588 | ||||||
(Increase) decrease in operating assets:
|
||||||||
Accounts receivable
|
1,321,677 | (2,551,654 | ) | |||||
Inventories
|
(7,968,499 | ) | 18,286,537 | |||||
Prepaid income taxes and other current assets
|
(83,063 | ) | (1,731,628 | ) | ||||
Other assets
|
(1,640,264 | ) | 692,476 | |||||
Increase (decrease) in operating liabilities
|
||||||||
Accounts payable
|
2,621,205 | 28,840 | ||||||
Accrued expenses and other liabilities
|
1,686,418 | (644,011 | ) | |||||
Net cash provided by (used in) operating activities
|
(836,813 | ) | 18,677,709 | |||||
Cash flows from investing activities
|
||||||||
Acquisition of Qualytextil, S.A.
|
— | — | ||||||
Purchases of property and equipment
|
(1,698,500 | ) | (1,192,251 | ) | ||||
Net cash used in investing activities
|
(1,698,500 | ) | (1,192,251 | ) | ||||
Cash flows from financing activities
|
||||||||
Net borrowings (payments) under credit agreement
|
1,968,131 | (14,890,899 | ) | |||||
VAT taxes payable
|
3,309,811 | — | ||||||
Purchases of stock under stock repurchase program
|
(1,659,673 | ) | (97,788 | ) | ||||
Borrowing to fund Qualytextil acquisition
|
— | — | ||||||
Other liabilities
|
11,054 | 17,566 | ||||||
Net proceeds (repayment) construction loan
|
(93,601 | ) | (88,993 | ) | ||||
Proceeds from exercise of stock options
|
— | 23,562 | ||||||
Shares returned in lieu of taxes under restricted stock program
|
(19,284 | ) | (110,967 | ) | ||||
Net cash provided by (used in) financing activities
|
3,516,438 | (15,147,519 | ) | |||||
Net (decrease) increase in cash and cash equivalents
|
981,125 | 2,337,939 | ||||||
Cash and cash equivalents at beginning of year
|
5,093,380 | 2,755,441 | ||||||
Cash and cash equivalents at end of year
|
$ | 6,074,505 | $ | 5,093,380 |
Fiscal Years Ended January 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Domestic
|
$ | 60,281,000 | 59.5 | % | $ | 61,504,000 | 65.3 | % | ||||||||
International
|
40,955,000 | 40.5 | % | 32,637,000 | 34.7 | % | ||||||||||
Total
|
$ | 101,236,000 | 100.0 | % | $ | 94,141,000 | 100.0 | % |
2011
|
2010
|
|||||||
Interest paid
|
$ | 338,042 | $ | 1,111,456 | ||||
Income taxes paid
|
$ | 344,923 | $ | 625,204 |
2011
|
2010
|
|||||||
Raw materials
|
$ | 17,963,902 | $ | 18,727,993 | ||||
Work-in-process
|
3,233,882 | 2,444,693 | ||||||
Finished goods
|
24,719,991 | 17,403,204 | ||||||
$ | 45,917,775 | $ | 38,575,890 |
Useful life in years
|
2011
|
2010
|
|||||||
Machinery and equipment
|
10
|
$ | 9,967,020 | $ | 9,020,453 | ||||
Furniture and fixtures
|
10
|
566,714 | 494,464 | ||||||
Leasehold improvements
|
Lease term
|
1,510,666 | 1,731,669 | ||||||
Land and building (China)
|
20
|
2,412,115 | 2,412,115 | ||||||
Land, building and equipment (India)
|
7-39
|
4,208,513 | 4,129,205 | ||||||
Land and building (Canada)
|
30
|
2,434,302 | 2,277,397 | ||||||
Land and buildings (USA)
|
39
|
3,908,238 | 3,655,764 | ||||||
Land and building (Brazil)
|
5
|
1,179,010 | 662,157 | ||||||
26,186,578 | 24,383,224 | ||||||||
Less accumulated depreciation and amortization
|
(12,285,189 | ) | (10,640,770 | ) | |||||
$ | 13,901,389 | $ | 13,742,454 |
2011
|
2010
|
|||||||
Trademarks and tradenames, resulting from
|
||||||||
Qualytextil, S.A. acquisition, per appraisal
|
$ | 4,450,221 | $ | 3,972,157 | ||||
Appraised value of customer contracts acquired in Qualytextil, S.A. acquisition, amortized over estimated remaining life of 26 months from January 31, 2011, net of accumulated amortization of $220,816 at 2011 and $110,454 at 2010
|
250,778 | 335,148 | ||||||
Bank fees net of accumulated amortization of $0 at 2011 and $0 at 2010
|
64,651 | 71,761 | ||||||
Deferred taxes noncurrent mainly consisting of VAT taxes in Brazil
|
2,773,847 | 705,102 | ||||||
Security deposits
|
717,407 | 522,465 | ||||||
Other
|
— | 15,487 | ||||||
$ | 8,256,904 | $ | 5,622,120 |
Directors’ Plan
|
||||||||||||||||
Number of
shares
|
Weighted
average
exercise
price
|
Weighted
average
remaining
term (years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Shares under option
|
||||||||||||||||
Outstanding at beginning of year
|
24,300 | $ | 12.11 | 2.34 | ||||||||||||
Granted during FY11
|
0 | 0 | 0 | |||||||||||||
Cancelled during FY11
|
(12,100 | ) | 15.23 | |||||||||||||
Exercised during FY11
|
0 | 0 | ||||||||||||||
Outstanding and exercisable at end of year
|
12,200 | $ | 9.02 | 3.61 | $ | 17,030 | ||||||||||
Weighted-average fair value per share of options granted during:
|
||||||||||||||||
FY11
|
N/A | |||||||||||||||
FY10
|
$ | 5.88 | ||||||||||||||
Reserved for future issuance:
|
||||||||||||||||
Directors’ Plan
|
31,300 |
2011
|
2010
|
|||||||
Domestic
|
$ | 480,392 | $ | (1,208,641 | ) | |||
Foreign
|
1,145,449 | 2,644,294 | ||||||
Total
|
$ | 1,625,841 | $ | 1,435,653 |
2011
|
2010
|
|||||||
Current
|
||||||||
Federal
|
$ | 727,722 | $ | (1,228,449 | ) | |||
State
|
36,887 | (130,339 | ) | |||||
Foreign
|
924,925 | 447,668 | ||||||
1,689,534 | (911,120 | ) | ||||||
Deferred
|
(1,035,692 | ) | 1,316,981 | |||||
$ | 653,842 | $ | 405,861 |
2011
|
2010
|
|||||||
Statutory rate
|
34.0 | % | 34.0 | % | ||||
State income taxes, net of Federal tax benefit
|
1.5 | % | (6.0 | )% | ||||
Permanent differences
|
2.0 | % | — | |||||
FIN48 adjustment
|
— | — | ||||||
VAT tax charge with no tax benefit
|
33.1 | % | — | |||||
Foreign tax rate differential
|
*(34.9 | )% | (17.0 | )% | ||||
India tax credit valuation allowance
|
— | 16.2 | % | |||||
Restricted stock fair market value at vesting per tax compared with grant date per books
|
— | 6.2 | % | |||||
Various tax credits
|
— | (4.7 | )% | |||||
Other
|
4.5 | % | (0.4 | )% | ||||
Effective rate
|
40.2 | % | 28.3 | % |
2011
|
2010
|
|||||||
Deferred tax assets:
|
||||||||
Inventories
|
$ | 1,295,484 | $ | 902,809 | ||||
Accounts receivable
|
27,022 | 9,718 | ||||||
Accrued compensation and other
|
267,377 | 236,233 | ||||||
Depreciation
|
133,853 | 26,935 | ||||||
Stock based compensation
|
320,543 | 85,555 | ||||||
Foreign tax credit carryforward
|
124,543 | — | ||||||
State and local carryforwards
|
128,119 | — | ||||||
Deferred tax assets
|
$ | 2,296,941 | $ | 1,261,250 |
(R$ millions)
|
(US$ millions )
|
|||||||||
1)
|
Loss of “desenvolve”(a)
|
$ | 1.5 | $ | 0.8 | |||||
2)
|
Interest costs
|
0.4 | 0.2 | |||||||
3)
|
Legal fees
|
0.5 | 0.3 | |||||||
TOTAL
|
$ | 2.4 | $ | 1.3 |
(a)
|
“Desenvolve” is an incentive remaining from Brazil’s hyperinflationary days about 10 years ago. It is based on the net ICMS (VAT) tax payable. (QT pays ICMS to suppliers on raw materials, bills and collects ICMS from customers, takes credit for ICMS paid to suppliers and remits the difference. The net amount payable is payable 30% immediately and 70% for up to five years. The “desenvolve” is an incentive to pay the 70% quickly, like a cash discount. If the full amount is paid immediately, there is an 80% discount of the 70% (or 56% of the total).
|
|
·
|
If before judicial process - still administration proceeding - the Company would pay just the taxes with no penalty or interest. This would then be recouped via credits against future taxes on future imports. As before, the Company would lose desenvolve and interest.
|
|
·
|
If after judicial process commences - the amount of the judicial deposit previously remitted would be reclassified to the taxes at issue, and the excess submitted to cover fines and interest would be refunded to QT. As above, the taxes would be recouped via credits against future taxes on future imports but losing desenvolve and interest.
|
|
·
|
The desenvolve is scheduled to expire on February 2013 and will be partially phased out starting February 2011. Based on the anticipated timing of the next amnesty, there may be little amounts of lost desenvolve since it would largely expire on its own terms in any case.
|
Millions
|
||||||||
R$
|
US$
|
|||||||
Total to be paid not available for credit:
|
||||||||
Asserted claims
|
$ | 1.4 | $ | 0.8 | ||||
Unasserted claims
|
2.5 | 1.3 | ||||||
3.9 | 2.1 | |||||||
Escrow funds released
|
(1.0 | ) | (0.5 | ) | ||||
Charge to expense
|
$ | 2.9 | $ | 1.6 | ||||
Escrow funds available:
|
||||||||
Total escrow funds
|
$ | 2.8 | $ | 1.6 | ||||
Escrow released in May
|
(1.0 | ) | (0.5 | ) | ||||
Remaining funds in escrow
|
$ | 1.8 | $ | 1.1 |
(R$ millions)
|
US$ millions
|
|||||||||
Current assets
|
Prepaid taxes
|
$ | 0.6 | (a) | $ | 0.4 | ||||
Noncurrent assets
|
VAT taxes payable
|
$ | 3.5 | $ | 1.9 | |||||
Long-term liabilities
|
Taxes payable
|
$ | 6.0 | $ | 3.3 |
Gross rental
|
Rentals paid to related parties
|
|||||||
Year ended January 31,
|
||||||||
2011
|
$ | 640,127 | $ | 63,540 | ||||
2010
|
$ | 633,769 | $ | 127,080 |
Year ending January 31,
|
||||
2012
|
$ | 717,420 | ||
2013
|
601,436 | |||
2014
|
237,981 | |||
2015
|
114,000 |
Year ended January 31,
|
Canadian
|
USD
|
||||||
2012
|
$ | 100,200 | $ | 100,050 | ||||
2013
|
100,200 | 100,050 | ||||||
2014
|
100,200 | 100,050 | ||||||
2015
|
100,200 | 100,050 | ||||||
2016
|
100,200 | 100,050 | ||||||
and thereafter
|
1,194,050 | 1,192,261 |
2011
|
2010
|
|||||||
Net Sales:
|
||||||||
North America and other foreign
|
$ | 77,404,649 | $ | 75,274,796 | ||||
China
|
32,772,369 | 19,473,004 | ||||||
India
|
1,718,665 | 824,083 | ||||||
Brazil
|
13,495,006 | 13,173,777 | ||||||
Less intersegment sales
|
(24,154,364 | ) | (14,604,841 | ) | ||||
Consolidated sales
|
$ | 101,236,325 | $ | 94,140,819 | ||||
Operating Profit:
|
||||||||
North America and other foreign
|
$ | 415,434 | $ | 21,288 | ||||
China
|
4,218,791 | 2,578,057 | ||||||
India
|
(662,081 | ) | (852,335 | ) | ||||
Brazil
|
351,787 | 298,374 | ||||||
Less intersegment profit
|
(869,966 | ) | 412,123 | |||||
Consolidated operating profit
|
$ | 3,453,965 | $ | 2,457,507 | ||||
Identifiable Assets:
|
||||||||
North America and other foreign
|
$ | 54,390,868 | $ | 53,233,159 | ||||
China
|
18,917,133 | 14,133,006 | ||||||
India
|
4,470,389 | 3,875,781 | ||||||
Brazil
|
23,597,593 | 18,778,435 | ||||||
Consolidated assets
|
$ | 101,375,983 | $ | 90,020,381 | ||||
Depreciation:
|
||||||||
North America and other foreign
|
$ | 724,553 | $ | 790,555 | ||||
China
|
309,508 | 320,999 | ||||||
India
|
440,297 | 420,141 | ||||||
Brazil
|
239,044 | 167,580 | ||||||
Consolidated depreciation
|
$ | 1,713,402 | $ | 1,699,275 |
1/31/11
|
10/31/10
|
7/31/10
|
4/30/10
|
|||||||||||||
Net sales
|
$ | 25,029 | $ | 26,293 | $ | 24,551 | $ | 25,363 | ||||||||
Cost of sales
|
17,123 | 19,106 | 16,281 | 18,958 | ||||||||||||
Gross profit
|
7,906 | 7,187 | 8,270 | 6,405 | ||||||||||||
Net income (loss)
|
$ | 1,096 | $ | 649 | $ | 572 | $ | (1,346 | ) | |||||||
Basic and diluted income per common
|
||||||||||||||||
Share
|
||||||||||||||||
Basic
|
$ | 0.20 | $ | 0.12 | $ | 0.11 | $ | (0.25 | ) | |||||||
Diluted
|
$ | 0.20 | $ | 0.12 | $ | 0.10 | $ | (0.25 | ) | |||||||
1/31/10
|
10/31/09
|
7/31/09
|
4/30/09
|
|||||||||||||
Net sales
|
$ | 24,831 | $ | 22,285 | $ | 23,049 | $ | 23,976 | ||||||||
Cost of sales
|
17,329 | 16,629 | 16,812 | 17,965 | ||||||||||||
Gross profit
|
7,502 | 5,656 | 6,237 | 6,011 | ||||||||||||
Net income
|
$ | 1,115 | $ | (190 | ) | $ | 8 | $ | 97 | |||||||
Basic and diluted income per common
|
||||||||||||||||
Share
|
||||||||||||||||
Basic
|
$ | 0.20 | $ | (0.03 | ) | $ | 0.00 | $ | 0.02 | |||||||
Diluted
|
$ | 0.20 | $ | (0.03 | ) | $ | 0.00 | $ | 0.02 |
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
||||||||||||||||
Additions
|
||||||||||||||||||||
Balance at
Beginning
of period
|
Charge to
costs and
expenses
|
Charged
to other
accounts
|
Additions /
Deductions
|
Balance at
end of
period
|
||||||||||||||||
Year ended January 31, 2011
|
||||||||||||||||||||
Allowance for doubtful accounts (a)
|
$ | 200,200 | $ | 9,900 | $ | 210,100 | ||||||||||||||
Allowance for slow moving inventory
|
$ | 868,000 | $ | 627,000 | $ | 1,495,000 | ||||||||||||||
Year ended January 31, 2010
|
||||||||||||||||||||
Allowance for doubtful accounts (a)
|
$ | 104,500 | $ | 95,700 | $ | 200,200 | ||||||||||||||
Allowance for slow moving inventory
|
$ | 657,000 | $ | 211,000 | $ | 868,000 |
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Name
|
Age
|
Position
|
||
Stephen M. Bachelder
|
59
|
Chairman of the Board of Directors
|
||
Christopher J. Ryan
|
58
|
Chief Executive Officer, President, Secretary and Director
|
||
Gary Pokrassa
|
63
|
Chief Financial Officer
|
||
Paul C. Smith
|
43
|
Vice President
|
||
Gregory D. Pontes
|
49
|
Vice President-Manufacturing
|
||
Charles D. Roberson
|
49
|
Vice President-International Sales
|
||
John J. Collins
|
67
|
Director
|
||
Eric O. Hallman
|
66
|
Director
|
||
A. John Kreft
|
60
|
Director
|
||
Duane W. Albro
|
63
|
Director
|
||
Thomas McAteer
|
|
58
|
|
Director
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1.
|
Consolidated Financial Statements (see Page 39 of this report which includes an index to the consolidated financial statements)
|
Exhibit
|
Description
|
|
3.1
|
Restated Certificate of Incorporation of Lakeland Industries, Inc., as amended (incorporated by reference to Exhibit 3.1 of Lakeland Industries, Inc.’s Form 8-K, filed April 15, 2008)
|
|
3.2
|
Bylaws of Lakeland Industries Inc., as amended (incorporated by reference to Exhibit 3.2 of Lakeland Industries, Inc.’s Form 8-K, filed April 15, 2008)
|
|
10.1
|
Amendment dated February 1, 2007, to the original lease Agreement, dated August 1, 2001, between Southwest Parkway, Inc., as lessor, and Lakeland Industries, Inc., as lessee (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc. Form 10-K for FYE08, filed April 14, 2008)
|
|
10.2
|
Lakeland Industries, Inc. Stock Option Plan (incorporated by reference to Exhibit 10(n) of Lakeland’s Registration Statement on Form S-18 (File No. 33-7512 NY))
|
|
10.3
|
Employment Agreement, dated April 16, 2010, between Lakeland Industries, Inc. and Christopher J. Ryan (incorporated by reference to Exhibit 10.5 of Lakeland Industries, Inc. Form 10-K for FYE10, filed, April 16, 2010)
|
|
10.4
|
Employment Agreement, dated May 1, 2009, between Lakeland Industries, Inc. and Paul C. Smith (incorporated by reference to Exhibit 10.9 of Lakeland Industries, Inc. Form 10-K for FYE09 filed April 15, 2009)
|
|
10.5
|
Employment Agreement, dated January 31, 2010, between Lakeland Industries, Inc. and Gary Pokrassa,(incorporated by reference to Exhibit 10.10 of Lakeland Industries, Inc. Form 8-K filed January 15, 2010)
|
|
10.6
|
Asset Purchase Agreement, dated July 2005, between Lakeland Industries, Inc. and Mifflin Valley, Inc. and Lease Agreement and Employment Contract between Lakeland Industries, Inc. and Michael Gallen (incorporated by reference to Exhibit 10.15, 10.16 and 10.17 of Lakeland Industries, Inc.’s Quarterly Report on Form 10-Q filed September 7, 2005)
|
|
10.7
|
Lease Agreement, dated January 1, 2010, between Carlos Tornquist Bertrand, as lessor, and Lakeland Industries, Inc., as lessee for Lakeland Chile (incorporated by reference to Exhibit 10.13 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.8
|
|
Lease Agreement, dated 2006, between Michael Robert Kendall, June Jarvis and Barnett Waddingham Trustees Limited, as lessor, and Lakeland Industries, Inc., as lessee (incorporated by reference to Exhibit 10.22 of Lakeland Industries, Inc.’s 10-K for the year ended January 31, 2007)
|
10.9
|
Modification letter dated January 15, 2010 modifying the original Lease Agreement, dated November 10, 2008, between Mifflin Management, as Landlord, and Lakeland Industries, Inc., as Tenant, for the property at 312 Hendel Street, Shillington, PA (incorporated by reference to Exhibit 10.15 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.10
|
Lease Agreement dated September 1, 2009, between LIK 5 Ballow LLC, as lessor, and Lakeland Industries, Inc., as lessee for Art Prom, LLC in Kazakhstan (incorporated by reference to Exhibit 10.17 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.11
|
Lease Agreement Extension letter dated December 23, 2009, extending the original lease dated February 5, 2007, between Gotham Enterprises & Affiliates, LLC, as lesssor, and Lakeland Industries, Inc., as lessee for Industrias Lakeland S.A. de C.V in Mexico (incorporated by reference to Exhibit 10.18 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.12
|
Lease Agreement, dated August 19, 2009, between Acrilicos Palopoli S.A, as lessor, and Lakeland Argentina, SRL, as lessee (incorporated by reference to Exhibit 10.19 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.13
|
Lease Agreement, dated June 2, 2009, between Beijing Yeshi Enterprise Group Co., Ltd, as lessor, and Lakeland (Beijing) Safety Products Limited, as lessee (incorporated by reference to Exhibit 10.20 of Lakeland Industries, Inc. Form 10-K for FYE10, filed April 16, 2010)
|
|
10.14
|
Lease Agreement, dated October 14, 2010, between South Heidelberg Partners, LP, as lessor, and Lakeland Industries, Inc., as lessee for Lakeland High Visibility Clothing in Pennsylvania (filed herein)
|
|
10.15
|
Lease Agreement, dated December 28, 2010, between Land Services, LLC, as lessor, and Lakeland Industries, Inc., as lessee for Lakeland Industries, Inc. (filed herein)
|
|
10.16
|
Settlement Statement, dated June 30, 2010, between Harvey Pride, Jr. and Lakeland Industries, Inc. for the property location 201 Pride Lane, Decatur, Alabama (filed herein)
|
|
10.17
|
Management Agreement, effective July 1, 2011, between Lakeland Industries, Inc. and Miguel Antonio dos Guimarães Bastos (filed herein)
|
|
10.18
|
Wholesaler Agreement between E. I. du Pont de Nemours and Lakeland Industries, Inc. dated January 31, 2011 (filed herein)
|
|
14.1
|
Amendment dated February 13, 2009, to the Lakeland Industries, Inc. Code of Ethics (incorporated by reference to Exhibit 14.1 of Lakeland Industries, Inc. Form 10-K for FYE09 filed April 15, 2009)
|
|
21.1
|
Subsidiaries of Lakeland Industries, Inc. (wholly-owned):
Lakeland Protective Wear, Inc.
Lakeland Protective Real Estate
Industrias Lakeland S.A. de C.V.
Laidlaw, Adams & Peck, Inc. and Subsidiary (Weifang Meiyang Protective Products Co., Ltd.)
Weifang Lakeland Safety Products Co., Ltd.
QingDao Lakeland Protective Products Co., Ltd.
Lakeland Industries Europe Ltd.
Lakeland Glove and Safety Apparel Private Ltd.
Lakeland Industries, Inc. Agencia en Chile
Lakeland Brazil, S.A.
Lakeland Argentina, SRL
Art Prom, LLC
RussIndProtection, Ltd.
Lakeland (Beijing) Safety Products, Co., Ltd.
Lakeland (Hong Kong) Trading Co., Ltd.
|
23.1
|
Consent of Warren, Averett, Kimbrough & Marino, LLC, Independent Registered Public Accounting Firm
|
|
31.1
|
Certification of Christopher J. Ryan, Chief Executive Officer, President and Secretary, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Gary Pokrassa, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Christopher J. Ryan, Chief Executive Officer, President and Secretary, pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
|
Certification of Gary Pokrassa, Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Dated:
|
April 7, 2011
|
LAKELAND INDUSTRIES, INC.
|
||
By:
|
/ s / Christopher J. Ryan
|
|
Christopher J. Ryan,
|
||
Chief Executive Officer and President
|
Name
|
Title
|
Date
|
||
/s/ Stephen M. Bachelder
|
Chairman of the Board
|
April 7, 2011
|
||
Stephen M. Bachelder
|
||||
/s/ Christopher J. Ryan
|
Chief Executive Officer, President,
|
April 7, 2011
|
||
Christopher J. Ryan
|
Secretary and Director
|
|||
/s/ Gary Pokrassa
|
Chief Financial Officer
|
April 7, 2011
|
||
Gary Pokrassa
|
||||
/s/ Eric O. Hallman
|
Director
|
April 7, 2011
|
||
Eric O. Hallman
|
||||
/s/ John J. Collins, Jr.
|
Director
|
April 7, 2011
|
||
John J. Collins, Jr.
|
||||
/s/ John Kreft
|
Director
|
April 7, 2011
|
||
John Kreft
|
||||
/s/ Duane W. Albro
|
Director
|
April 7, 2011
|
||
Duane W. Albro
|
||||
/s/ Thomas McAteer
|
Director
|
April 7, 2011
|
||
Thomas McAteer
|
|
|
BETWEEN:
|
SOUTH HEIDELBERG ASSOCIATES
|
AND:
|
LAKELAND INDUSTRIES, INC.
|
FOR:
|
28,275 SQUARE FEET AT LOT 1C
|
I
|
Leased Premises
|
||
II
|
Term of Lease
|
||
III
|
Rent
|
||
IV
|
Security Deposit
|
||
V
|
Use of Premises
|
||
VI
|
Improvements by Lessor
|
||
VII
|
Signs
|
||
VIII
|
Alterations by Lessee
|
||
IX
|
Maintenance of Leased Premises
|
||
X
|
Maintenance of Common Areas
|
||
XI
|
Taxes and Other Impositions
|
||
XII
|
Utilities and Services
|
||
XIII
|
Insurance and Damage
|
||
XIV
|
Lessee’s Property
|
||
XV
|
Access to Lease Premises
|
||
XVI
|
Quiet Enjoyment
|
||
XVII
|
Subordination
|
||
XVIII
|
Default by Lessee
|
||
XIX
|
Default by Lessor
|
||
XX
|
Indemnity
|
||
XXI
|
No Waiver
|
||
XXII
|
Eminent Domain
|
||
XXIII
|
Consumer Price Index
|
||
XIV
|
Estoppel Certificate
|
||
XXV
|
Option to Renew
|
||
XXVI
|
Notices
|
||
XXVII
|
Surrender
|
||
XXVIII
|
Assignment and Subletting
|
||
XXIX
|
Relationship of Parties
|
||
XXX
|
Complete Agreement
|
||
XXXI
|
Severance
|
||
XXXII
|
Provisions Binding
|
||
XXXIII
|
Title Articles
|
||
XXXIV
|
Miscellaneous
|
||
Exhibit A
|
Leased Premises
|
||
Exhibit B
|
Lessor’s Improvements
|
||
Exhibit C
|
Sign Regulations
|
||
Exhibit D
|
Occupancy Check-Off Form
|
||
Exhibit E
|
|
Estimated Common Charges
|
MINIMUM
|
||||
PERIOD
|
MONTHLY RENT
|
|||
February 1, 2011 to January 31, 2012
|
$ | 7,183.54 | ||
February 1, 2012 to January 31, 2013
|
$ | 7,381.09 | ||
February 1, 2013 to January 31, 2014
|
$ | 7,584.07 |
|
(a)
|
If to Lessor:
|
Mr. Richard J. McDougall
|
|
McDougall Burkey Associates
|
|
506 Morgantown Road.
|
|
Reading, PA 19611
|
|
(b)
|
If to Lessee:
|
LESSOR: SOUTH HEIDELBERG PARTNERS, L.P.
|
||||
Dated:
|
April 14, 2010 |
By:
|
/s/ Rick B. Burkey |
Printed Name:
|
Rick B. Burkey |
Witness:
|
LESSEE: LAKELAND INDUSTRIES, INC.
|
||||
Dated:
|
April 14, 2010 |
By:
|
/s/ Paul C. Smith |
Printed Name:
|
Paul C. Smith |
Witness:
|
|
A.
|
"Premises" means that property generally described as 1701 4th Avenue SE Decatur, Alabama 35601, see Exhibit “A”.
|
|
(1)
|
"Commencement date" means January 1st, 2011.
|
|
C.
|
"Permitted use" means the operation of a warehouse facility. Any variation or deviation from the permitted use expressly set forth above shall be deemed an event in default of this Lease.
|
|
D.
|
"Monthly basic rental" means $2,000.00 per month.
|
|
(A)
|
Public liability insurance, including, but not limited to, insurance against assumed or contractual liability under this Lease, with respect to the premises, to afford protection with limits, for each occurrence of not less than One Million Dollars ($1,000,000.00), with respect to personal injury or death and Five Hundred Thousand ($500,000.00), with respect to property damage;
|
|
(A)
|
Comprehensive general liability insurance, including, but not limited to, contractor’s liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement, and contractor’s protective liability coverage, to afford protection with limits for each occurrence of not less than One Million Dollars ($1,000,000.00), with respect to personal injury or death, and Five Hundred Thousand Dollars ($500,000.00) with respect to property damage; and
|
|
(B)
|
Workmen’s compensation or similar insurance in forms and amounts required by law.
|
TENANT:
|
LANDLORD:
|
|||
By: |
/s/ Christopher J. Ryan
|
By: |
/s/ Jeff Parker
|
|
Lakeland Industries, Inc.
|
Land Services, L.L.C.
|
|||
Christopher J. Ryan, CEO
|
|
Jeff Parker, Managing Member
|
A. Settlement Statement
|
U.S. Department of Housing
|
OMB Approval No. 2502-0285
|
||||||||
and Urban Development
|
||||||||||
B. Type of Loan
|
1. FHA 2. RHS 3. Conv. Unins.
|
6. File Number
|
7. Loan Number
|
8. Mortgage Insurance Case Number
|
||||||
4. VA 5. Conv. Ins.
|
10-0728
|
||||||||
C. Note: This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agenet are shown. Items
|
|||||||||
marked "(p.o.c)" were paid outsie the closing; they are shown here for information purposes and are not included in the totals.
|
|||||||||
D. Name and Address of borrower
|
E. Name and Address of Seller
|
F. Name and Address of Lender
|
|||||||
Lakeland Industries, Inc.
|
Harvey Pride Jr.
|
||||||||
834 3rd Avenue
|
202 Pride Lane, SW
|
||||||||
New York, NY 10022
|
Decatur, AL 35603
|
||||||||
G. Property Location
|
H. Settlement Agent
|
||||||||
201 Pride Lane, SW
|
NOWLIN & ASSOCIATES, LLC
|
||||||||
Decatur, AL 35603
|
|||||||||
Place of Settlement
|
I. Settlement Date
|
||||||||
118 Moulton Street East 1st Floor
|
6/29/2010
|
||||||||
Decatur, AL 35601-2371
|
DD: 06/29/10
|
||||||||
J. SUMMARY OF BORROWER'S TRANSACTION:
|
K. SUMMARY OF SELLER'S TRANSACTION:
|
||||||||
100
|
GROSS AMOUNT DUE FROM BORROWER
|
400
|
GROSS AMOUNT DUE TO SELLER
|
||||||
101
|
Contract Sales price
|
250,000.00
|
401
|
Contract sales price
|
$250,000.00
|
||||
102
|
Personal property
|
402
|
Personal property
|
||||||
103
|
Settlement changes to borrower (line 1400)
|
2,317.00
|
403
|
||||||
104
|
404
|
||||||||
105
|
405
|
||||||||
Adjustments for items paid by seller in advance
|
Adjustments for items paid by seller in advance
|
||||||||
106
|
City/town taxes to
|
406
|
City/town taxes to
|
||||||
107
|
County taxes to
|
407
|
County taxes to
|
||||||
108
|
Assessments to
|
408
|
Assessments to
|
||||||
109
|
409
|
||||||||
110
|
410
|
||||||||
111
|
411
|
||||||||
112
|
412
|
||||||||
120
|
GROSS AMOUNT DUE FROM BORROWER
|
252,317.00
|
420
|
GROSS AMOUNT DUE TO SELLER
|
$250,000.00
|
||||
200
|
AMOUNTS PAID BY OR IN BEHALF OF BORROWER
|
500
|
REDUCTIONS IN AMOUNT TO SELLER
|
||||||
201
|
Deposit or earnest money
|
1,000.00
|
501
|
Excess Deposit (see instructions)
|
$1,000.00
|
||||
202
|
Principal amount of new loan(s)
|
502
|
Settlement charges to seller (line 1400)
|
$1,825.00
|
|||||
203
|
Existing loans(s) taken subject to
|
503
|
Existing loan(s) taken subject to
|
||||||
204
|
504
|
Payoff of first mortgage loan
|
$144,066.58
|
||||||
BBVA Compass
|
|||||||||
205
|
505
|
Payoff of second mortgage loan
|
|||||||
206
|
506
|
||||||||
207
|
507
|
||||||||
208
|
508
|
||||||||
209
|
509
|
||||||||
Adjustments for items unpaid by seller
|
Adjustments for items unpaid by seller
|
||||||||
210
|
City/town taxes to
|
510
|
City/town taxes to
|
||||||
211
|
County taxes to
|
511
|
County taxes to
|
||||||
212
|
Assessments to
|
512
|
Assessments to
|
||||||
213
|
Purchaser will pay 2010 Property Taxes
|
513
|
Purchaser will pay 2010 Property Taxes
|
||||||
214
|
514
|
||||||||
215
|
515
|
||||||||
216
|
516
|
||||||||
217
|
517
|
||||||||
218
|
518
|
||||||||
219
|
519
|
||||||||
220
|
TOTAL PAID BY / FOR BORROWER
|
1,000.00
|
520
|
TOTAL REDUCTION AMOUNT DUE SELLER
|
$146,891.58
|
||||
300
|
CASH AT SETTLEMENT FROM OR TO BORROWER
|
600
|
CASH AT SETTLEMENT TO OR FROM SELLER
|
||||||
301
|
Gross amount due from borrower (line 120)
|
252,317.00
|
601
|
Gross amount due to seller (line 420)
|
$250,000.00
|
||||
302
|
Less amounts paid by/for borrower (line 220)
|
1,000.00
|
602
|
Less reduction amount due to seller (line 502)
|
146891.58
|
||||
303
|
CASH FROM: BORROWER
|
251,317.00
|
603
|
CASH TO: SELLER
|
103108.42
|
06-25-2010 at 2:10 PM
|
form HUD-1 (3/86) ref Handbook 4305.2 |
L. SETTLEMENT CHARGES: File Number 10-0728
|
PAID FROM
BORROWER'S FUNDS AT SETTLEMENT |
PAID FROM SELLER'S FUNDS AT
SETTLEMENT |
|
700
|
TOTAL SALES/BROKER'S COMMISSION based on price $ @ =
|
||
Division of commission (line 700) as follows:
|
|||
701
|
$ to
|
||
702
|
$ to
|
||
703
|
Commission paid at Settlement
|
||
704
|
|||
800
|
ITEMS PAYABLE IN CONNECTION WITH LOAN P.O.C.
|
||
801
|
Loan Origination Fee %
|
||
802
|
Loan Discount %
|
||
803
|
Appraisal Fee to
|
||
804
|
Credit Report to
|
||
805
|
Lender's inspection Fee to
|
||
806
|
Tax Service Fee to
|
||
807
|
Underwriter Fee to
|
||
808
|
|||
809
|
Document Preparation
|
||
810
|
Courier Fee
|
||
811
|
|||
812
|
|||
813
|
|||
814
|
|||
815
|
|||
900
|
ITEMS REQUIRED BY LENDER TO BE PAID IN ADVANCE
|
||
901
|
Interest from to @$ /day
|
||
902
|
Mortage Insurance Premium to
|
||
93
|
Hazard Insurance Premium yrs. to
|
||
904
|
|||
905
|
|||
1000
|
RESERVES DEPOSITED WITH LENDER FOR
|
||
1001
|
Hazard Insurance mo. @$ /mo.
|
||
1002
|
Mortgage Insurance mo. @$ /mo.
|
||
1003
|
City property taxes mo. @$ /mo.
|
|
|
1004
|
County property taxes mo. @$ /mo.
|
||
1005
|
Annual Assessments mo. @$ /mo.
|
||
1006
|
Flood Insurance mo. @$ /mo.
|
||
1007
|
mo. @$ /mo.
|
|
|
1008
|
Aggregate Reserve for Hazard/Flood Ins. City/Count
|
||
1100
|
TITLE CHARGES
|
||
1101
|
Closing fee to
|
||
1102
|
Abstract or title search to
|
|
|
1103
|
Title Search to Real Estate Title Services, LLC
|
125.00
|
|
1104
|
Title insurance binder to
|
||
1105
|
Document Preparation to
|
||
1106
|
Notary fees to
|
||
1107
|
Attorney's fees to Nowlin & Associates, LLC
|
450.00
|
|
(inclues above item No:
|
|||
1108
|
Title insurance to CTIC/Nowline= & Associates, LLC
|
805.00
|
|
(inclues above item No: 1104
|
|||
1109
|
Lender's coverage
|
||
1110
|
Owner's coverage 250,000.00 - 805.00
|
||
1111
|
release Tracking and Search
|
||
1112
|
|||
1113
|
|||
1200
|
GOVERNMENT RECORDING AND TRANSFER CHARGES
|
||
1201
|
Recording fees Deed $ 12.00 :Mortgage $ : Releases $
|
12.00
|
|
1202
|
City/county/stamps Deed $ : Mortgage $
|
||
1203
|
state tax/stamps Deed $ 250.00 :Mortgage $
|
250.00
|
|
1204
|
|||
1205
|
|||
1300
|
ADDITIONAL SETTLEMENT CHARGES
|
||
1301
|
Survey Fee to N/A
|
||
1302
|
Termite inspection to N/A
|
||
1303
|
Appraisal Fee to: L.B. Wright & Son
|
1,250.00
|
1,250.00
|
1304
|
|||
1305
|
|||
1306
|
|||
1307
|
|||
1308
|
|||
1400
|
TOTAL SETTLEMENT CHARGES (enter on lines 103 and 502, Sections J and K)
|
2,317.00
|
1,825.00
|
Lakeland Industries, Inc.
|
||
By:
|
/s/ Christopher J. Ryan, CEO
|
|
By:
|
/s/ Harvey Pride, Jr.
|
|
Nowlin Associates, LLC
|
||
By:
|
/s/ H.M. Nowlin
|
06-25-2010 at 2:10 PM
|
form HUD-1 (3/86) ref Handbook 4305.2 |
(i)
|
faithfully and diligently act for the benefit and betterment of the Business;
|
(ii)
|
use his/her best efforts to act in the best interests of the Business; and
|
(iii)
|
keep the Company and Lakeland fully informed of all material activities carried out in the performance of the Business.
|
1.6
|
Officer hereby undertakes to comply with all reasonable Lakeland rules, directions and guidelines that Officer has been given notice in written form and to strive to complete all Lakeland financial targets, commands and other business goals regarding the Company and the Business that Officer has been informed in written form, including the Lakeland Business Ethics and Anti-Corrupt Practices Guide, and is not authorized to take any action out of the ordinary course of business of the Company, without having received prior written consent of Lakeland.
|
1.7
|
Officer hereby acknowledges and declares that the relationship undertaken hereby among Officer, the Company and Lakeland is implemented on a fiduciary basis, and there shall not exist any kind of labor relationship between Officer, Lakeland and/or the Company in any manner whatsoever.
|
2.1
|
In consideration for the management services of Officer, Officer shall receive a total annual remuneration in the amount of R$508,000.00 (five hundred and eight thousand Reais), to be paid in twelve (12) monthly installments of R$42,333.33 (forty-two thousand three hundred thirty three and 33/00 Reais) (“Remuneration”), payable on the 1st business day of the subsequent month.
|
2.1.1.
|
Each Party shall bear or pay all taxes attributed thereto by Law. In case any withholdings in the Remuneration need to be made prior to its payment, then the Remuneration shall be paid to Officer with such withholding amounts deducted.
|
|
2.1.2
|
Inflation adjustment – each year’s remuneration shall be adjusted by the previous year’s inflation based on the variation of IPC index as published by the IBGE (Instituto Brasileiro de Geografia e Estatística).
|
|
2.1.3
|
Bonus for successful resolution of the VAT tax case. A bonus of R$300,000 will be awarded upon the occurrence of the next amnesty period declared by the state of Bahia which will result in the judicial deposit being applied to the taxes, to be credited to future taxes to the extent allowable (estimated at 60%) with the balance refunded to the Company.
|
|
2.1.4
|
Bonus for successful settlement of the litigation against the import broker in Recife: 20% of such award estimated at R$1.5 million = R$300,000 anticipated bonus.
|
|
2.1.5
|
The bonuses set forth in Sections 2.1.3 and 2.1.4 above shall be payable and due by the Company at their respective triggering event, irrespective the term of this Agreement.
|
3.1
|
Officer shall be entitled to, after each year of action in the Business, counted as of the date hereof, take a 22 Business Days of vacation, which period shall be previously discussed with Lakeland, in order for Lakeland to be able to take the steps necessary to minimize any adverse effects on the course of the Business (“Vacation Period”).
|
|
3.1.1
|
During the times Officer exercises his Vacation Periods, he shall still be entitled to receive his total Remuneration due in that period.
|
4.1
|
Officers’ expenses related to trips made and other expenses incurred by Officer in order to properly exercise his/her management obligations undertaken herein, shall be reimbursed by the Company, according to the terms and conditions set forth in this Section IV (“Expenses”).
|
4.2
|
For purposes of Section 4.1 above, the Company shall reimburse any Expenses of the Officer related to transportation (such as plane tickets, taxis, gas), travel insurance (including medical insurance), meals, telecommunications and accommodations (such as hotels fees), and the Company may, at its sole discretion, reimburse other expenses made by Officer on his/her trips, provided that they are undertaken exclusively for purposes of the Company.
|
5.1
|
While this Agreement is in force, Officer shall not, in any way, act as officer, employee, consultant, service provider or in any other manner, in any other company or legal entity, in Brazil or abroad, except for the following positions held:
|
|
·
|
Director of Associacao Comercial da Bahia (Chamber of Commerce)
|
|
·
|
Shareholder/Officer of Laboratorio de Citopatologia Dra. Conceicao Queiroz
|
6.1
|
The Parties acknowledge and agree that: (i) the business contacts, joint ventures, Chinese, Mexican, Canadian, United Kingdom, EEC, South American, and all of Lakeland's other U.S. and all international suppliers, independent contractors, North American and international customers, international and domestic vendors, joint venture or non-joint venture contractors, patterns, know-how, trade secrets, marketing techniques and other aspects of the business of Lakeland are of value to Lakeland and will provide Lakeland with substantial competitive advantage in the operation of its business; (ii) the business of Lakeland is national and international in scope, and (iii) Lakeland is entitled to protect its goodwill and the consideration paid or to be paid under the Share Purchase Agreement executed on May 2nd, 2008, which payment is for this goodwill during and after the Term of this Agreement.
|
6.2
|
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Officer, Officer hereby agrees that it shall not, and it shall cause any of its enterprises, companies, corporations or subsidiaries thereof, joint ventures, proprietorships, blood relatives, spouses or in-laws, or other similar affiliates hereinafter referred to as ("affiliates") not to, in any manner, directly or indirectly: (i) at any time, divulge, transmit or otherwise disclose, or cause to be divulged, transmitted or otherwise disclosed, to any person or entity whatsoever, any confidential or proprietary information of Lakeland, including business contacts, customer lists, supplier lists, domestic and international vendors, suppliers, joint ventures and assembly contractors, technology know-how, trade secrets, marketing techniques, marketing plans and strategies, manufacturing methods, patterns, product development techniques or plans, patents, laminates, fabrics, contracts or other confidential or proprietary information of Lakeland (including such matters related to the business heretofore conducted by Lakeland and by the Company); (ii) at any time during the period from the date hereof through and including the seventh (7th) anniversary of any termination date of this Agreement hereof (the "Restrictive Period"), anywhere in or out of Brazil, or internationally render any services to or engage, participate, or have any interest or be involved in any capacity, whether as an owner, agent, stockholder, officer, director, manager, partner, joint venture, employee, consultant or otherwise, in any business enterprise which is, or shall at any time during the Restrictive Period be, engaged in any manner in the business of designing, developing, manufacturing, marketing, selling and/or distributing any Products (as defined below); (iii) directly or indirectly solicit, request, cause or induce any person who during the Restrictive Period or eighteen (18) months prior to the termination of this Agreement had been an employee of or consultant to Lakeland or the Company, to leave employment or terminate his/her relationship with Lakeland or the Company, or to employ, hire, engage or be associated with, or endeavor to entice away from Lakeland or the Company, any such person; and (iv) induce any customers, vendors, joint ventures or contract manufacturers of Lakeland or the Company, either domestically or internationally to discontinue doing business with Lakeland or the Company.
|
6.2.1
|
As used herein, the term "Products" means any and all goods and/or products of the type heretofore sold or to be sold during the Term of this Agreement by Lakeland or any of its subsidiaries, divisions or affiliates, including but not limited to the Products as listed or to be listed in Lakeland's product catalogs, pricing lists, or other literature and any functionally similar goods and/or products, already developed by or to be developed by Lakeland and shown in its catalogs, pricing lists or other literature or to be developed by Lakeland during the Term of this Agreement.
|
6.2.2
|
For purposes hereof, information shall not be deemed "confidential" or "proprietary" to the extent that it (i) is a matter of common knowledge or of public record, or within the public domain (other than as a result of any breach hereof by Officer); (ii) is generally known throughout the industry or was otherwise acquired from other legitimate sources; or (iii) is required to be disclosed by law or by order of any court or governmental authority.
|
6.3.
|
Nothing in this Agreement shall terminate or change any continuing obligation or provision set forth in the Share Purchase Agreement dated May 2008.
|
7.1
|
This Agreement shall be valid and in force from the date hereof and until December 31st, 2015 (“Term”), renewable upon agreement in writing by the Parties, and extended to December 31, 2016.
|
7.2
|
Upon termination of this Agreement, Officer shall immediately return any documents and materials he/she may have in his possession or any other documents or things made available or supplied under this Agreement and all copies thereof, upon request of Lakeland or the Company and he shall immediately cease to act on behalf of the Company, as well as to represent the Company before third-parties. Officer further agrees to execute any and all documents required to achieve such effect.
|
7.3
|
Notwithstanding the provisions above and herein, this Agreement may be freely and immediately terminated for cause by the Company, if so instructed by Lakeland, without any indemnification, compensation or remuneration to Officer, except for the payment of any outstanding Remuneration or reimbursement of expenses or fringe benefits, in case of either:
|
(i)
|
violation by Officer of the obligations undertaken in this Agreement;
|
(ii)
|
Officer becomes, according to Brazilian Law, when applicable, mentally or physically incapable to perform his duties, as set forth herein or upon death of Officer;
|
(iii)
|
violation by Officer of the Company’s or Business’ policies or rules, or willful misconduct by Officer or refusal to follow the lawful and reasonable directives of Lakeland;
|
(iv)
|
commission by Officer of any act, action, or omission attributed directly to Officer, which gives rise to termination with cause according to the Brazilian labor laws; and
|
(v)
|
commission of any act, action, or omission attributed directly to Officer, which constitutes a reason for dismissal or liability of executive officers, including any violation of applicable law or the Company’s Articles of Association, or the commission of any fraud, dishonesty or other unethical acts.
|
7.4
|
The Parties hereby agree that in the event of termination of this Agreement, the obligations of (i) the Officer under Section 6 above and (ii) of the Company under Sections 2.1.3 and 2.1.4 above shall survive.
|
7.5
|
Officer may terminate this Agreement for cause in case the Company is in breach of its obligation to pay the Remuneration in accordance with Section 2.1 above and fails to cure such breach within thirty (30) days of the receipt of written notice from Officer demanding that such breach to be cured.
|
7.6.
|
In case the Company terminates this Agreement with no cause, or Officer terminates this Agreement with cause Officer shall be entitled to receive the Remuneration (duly adjusted in accordance with Section 2.1.2 above) for the whole term of this Agreement. Such Remuneration shall be payable by the Company and due on the 30th day as of the date of termination of this Agreement.
|
7.6.1.
|
For the purposes of this Agreement, “termination of the Agreement with no cause by the Company” shall be considered the termination of this Agreement for any reason other than those state on Section 7.3 above.
|
8.1
|
Each of the Parties further agrees that, in the event of a breach of or a default by Officer of obligations set forth in Section 5, the Company shall be entitled to (i) specific performance to enjoin any breach, or the continuation of any breach, of the provisions of Section 5 and (ii) indemnification for damages arising from or connected with such breach.
|
9.1
|
All notices or communications between the Parties as resulting from this Agreement shall be sent in writing, by express international mail, fax or e-mail with acknowledgement of receipt, to the following addresses and addressees, and shall be deemed duly given upon receipt by the addressee, as proved by the sender:
|
10.1
|
It is acknowledged, understood and agreed that the restrictions contained in this Agreement are (a) made for good, valuable and adequate consideration received by Officer and (b) are reasonable and necessary, in terms of the time, geographic scope and nature of the restrictions, for the protection of Lakeland and the Company’s business and goodwill thereof. It is intended that said provisions be fully severable and that, in the event that any of the foregoing restrictions, or any portion of the foregoing restrictions, shall be deemed contrary to law, invalid or unenforceable in any respect by any court or tribunal of competent jurisdiction, then such restrictions shall be deemed to be amended, modified and reduced in scope and effect, as to duration, geographic area or in any other relevant respect, only to that extent necessary to render same valid and enforceable, and any other of the foregoing restrictions shall be unaffected and shall remain in full force and effect.
|
10.2
|
This Agreement shall be binding upon, and shall inure to the benefit of each of the Parties and their respective successors and assignees.
|
10.3
|
No modification or waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the party against whom it is sought to be enforced. No waiver at any time of any provision of this Agreement shall be deemed a waiver of any other provision of this Agreement at that time or a waiver of that or any other provision at any other time.
|
10.4
|
This Agreement, its rights and obligations hereunder may not be assigned or transferred in whole or in part to any party without the prior and express written authorization of the Company or Lakeland. Officer may not subcontract any of the managing powers, services and attributions given to Officer to any party without the prior and express written authorization of the Company and Lakeland.
|
10.5
|
The captions and paragraph headings used in this Agreement are for convenience only, and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.
|
10.6.
|
This Agreement constitutes the entire agreement between the Parties with subject to the matter contained herein, and supersedes all prior agreements or understandings, whether written or oral, between the parties with respect with the subject matter or this Agreement.
|
11.1
|
Any dispute arising between the Parties in connection with this Agreement, its interpretation, validity, performance, enforceability, breach or termination, shall be settled in an amicable way by the Parties by direct negotiations held in good faith for a term not exceeding 30 (thirty) calendar days. If, upon expiration of the 30-days period, the Parties have not reached an amicable settlement, the dispute must be submitted to the decision of an arbitration panel and shall be finally settled under the rules of Arbitration of the Chamber of Commerce Brasil-Canadá (“CCBC”) by 3 (three) arbitrators appointed in accordance with said rules. Language of the proceeding shall be English. Place of arbitration and the issuance of the award shall be the City of São Paulo, State of São Paulo, Brazil. The claims and disputes taken before the arbitration proceeds shall be governed by Brazilian law, which will also be applicable to solve any controversy regarding this arbitration Article. Notwithstanding the arbitration provisions above, the Parties hereto shall have the right to go to court in the County of São Paulo in order to (i) obtain injunctive relief or (ii) to enforce the submission of the other Party to the arbitration proceeding.
|
Miguel Antonio dos Guimarães Bastos
|
|
Lakeland Brazil, S.A.
|
|
By:
|
/s/ Miguel Antonio dos Guimarães Bastos
|
Name: Miguel Antonio dos Guimarães Bastos
|
|
Title: Diretor Presidente
|
|
Lakeland Brazil, S.A.
|
|
By:
|
/s/ Rodrigo Pougy
|
Name: Rodrigo Pougy
|
|
Title: Diretor Vice-Presidente de Vendas
|
|
Lakeland Industries, Inc.
|
|
By:
|
/s/ Gary A. Pokrassa
|
Name: Gary A. Pokrassa
|
|
Title: CFO
|
|
Lakeland Industries, Inc.
|
|
By:
|
/s/ Christopher J. Ryan
|
Name: Christopher J. Ryan
|
|
Title: CEO
|
1.
|
|
2.
|
|
|
Name:
|
Name:
|
|||
ID:
|
ID:
|
|||
CPF/MF:
|
CPF/MF:
|
Lakeland Industries, Inc.
|
|
By:
|
/s/ Gary A. Pokrassa
|
Name: Gary A. Pokrassa
|
|
Title: CFO
|
|
Lakeland Industries, Inc.
|
|
By:
|
/s/ Christopher J. Ryan
|
Name: Christopher J. Ryan
|
|
Title: CFO
|
1.01
|
DuPont hereby appoints and authorizes Wholesaler to sell and to solicit orders from distributors and other resellers for the products as specified in Schedule A attached hereto and made a part hereof and such other products as may be designated by DuPont in its sale discretion in writing from time to time (hereinafter referred to as "Products") in the territory of the United States of America, Canada and, with prior written approval from DuPont, other specific countries (hereinafter referred to as "Territory"). The objective of this Wholesaler Agreement is to grow sales of DuPont products by effectively serving distributors that access fragmented markets and new distributors that may not be able to purchase direct from DuPont ("Program").
|
1.02
|
This appointment is non-exclusive and DuPont reserves the right to sell directly to customers located in Territory including distributors and resellers located in the Territory or to appoint additional wholesalers if DuPont concludes that additional coverage is appropriate in order to fully develop the potential markets for the products. This appointment is solely for the sale of products to distributors and resellers and does not includes the sale of Products by Wholesaler directly to end users of any nature
|
1.03
|
If at any time during the term of this Agreement, one or more end-users of the Products own directly or indirectly a majority of the assets or equity of Wholesaler, then this Agreement shall automatically and immediately terminate.
|
1.04
|
DuPont reserves the right to sell directly to any account.
|
2.01
|
This Agreement is effective from January 1, 2011 ("Effective Date") through December 31, 2011, and from year to year thereafter, until terminated by either Party at any time for any reason, with or without cause, with sixty (60) days' prior written notice.
|
|
(a)
|
as specifically provided elsewhere in this Agreement;
|
|
(b)
|
by either Party at any time if the other Party commits any act of bankruptcy;
|
|
(c)
|
by either Party at any time without liability if that Party is exiting the business contemplated by this Agreement; or,
|
|
(d)
|
immediately by either Party in the event of a default or breach of this Agreement by the other Party, if such default or breach is not remedied within thirty (30) days of written notification of default or breach from the non-defaulting or non-breaching Party or if such default or breach is not reasonably subject to being remedied within such thirty (30) day period, if the breaching Party fails to commence the remedy of such default or breach within said thirty (30) day period and continue to diligently remedy the default or breach in a commercially reasonable manner.
|
2.02
|
Should Wholesaler's organization, ownership, operation, or business philosophy change in a manner which in DuPont's judgment conflicts with the business objectives set forth in this Agreement, DuPont reserves the right to terminate this Agreement effective upon at least sixty (60) days prior written notice to Wholesaler.
|
2.03
|
This Agreement shall first be executed by Wholesaler and shall be effective only when subsequently accepted and executed on behalf of DuPont by DuPont's authorized representatives,
|
2.04
|
In addition to DuPont's other rights to terminate this Agreement, DuPont shall have the additional rights to, at any time, by ninety (90) days written notice: 0) delete specified Products from the scope of the appointment, and/or (ii) limit the Territory of the appointment.
|
2.05
|
In the event of termination of this Agreement for any reason with or without cause the Parties agree that:
|
|
a.
|
neither Party shall be liable to the other Party for any termination compensation or payments of any kind including but not limited to investment, promotion or selling expense payments;
|
|
b.
|
no commissions or compensation on any sales of Product shall be payable to Wholesaler for Product sold in Territory;
|
|
C.
|
termination of this Agreement shall not relieve Wholesaler of its obligation of confidentiality under Article 12;
|
|
d.
|
Wholesaler shall return promptly to DuPont all the technical manuals, signs and other material or property of DuPont that may have been furnished to Wholesaler by DuPont, together with all copies or reproductions or parts thereof;
|
|
e.
|
except to the extent used by Wholesaler in connection with the sale of Products remaining in Wholesaler's inventory at termination, Wholesaler shall immediately discontinue permitted use of DuPont's trade name and trademarks and DuPont's trade name; provided, however, in no event shall Wholesaler be required to re-print or issue new catalogues in satisfaction of this obligation; and
|
|
f.
|
termination shall not affect any outstanding obligations of either Party to the other Party arising prior to such termination.
|
3.01
|
Wholesaler accepts this non-exclusive appointment and agrees, at its own expense, to use its best efforts to:
|
|
a.
|
promote, defend, advertise, develop and increase trade in Products in the Territory;
|
|
b.
|
maintain a minimum of thirty (30) days supply of inventory of Products or 10% of previous year's sales, whichever is higher, in proper storage conditions;
|
|
c.
|
provide DuPont a monthly inventory report of Products
|
|
d.
|
provide DuPont with a three-month rolling purchase forecast.
|
|
e.
|
forecast shall be provided in a format and level of detail as mutually agreed upon by DuPont and Wholesaler. Such agreement shall be reflected in a written communicated from the DuPont authorized representative to Wholesaler.
|
|
f.
|
achieve an annual purchase growth objective that is mutually agreed upon in writing and reviewed annually by both parties. The growth should be from new Product applications or the displacement of competitive material and not from share shifting among Wholesalers;
|
|
g.
|
commit to an annual joint market planning session for implementation;
|
|
h.
|
provide an adequate number of trained selling personnel and attend any annually required training;
|
|
i.
|
educate the trade in the use of Products as part of sales and marketing efforts for Products and, as necessary, to protect persons, property and the environment;
|
|
j.
|
meet sales and service standards as mutually agreed in writing by the Parties on a periodic basis;
|
|
k.
|
maintain accurate books and records;
|
|
I.
|
handle, store, and dispose of Products in such a manner as is necessary to protect persons, property and the environment and to educate its employees and customers in this regard;
|
|
m.
|
pay invoices within terms and maintain good credit;
|
|
n.
|
comply with DuPont policies and procedures for returns;
|
|
o.
|
adhere to terms of marketing, allowance programs or other incentives of a similar nature offered by DuPont to Wholesaler from time to time attached as Schedule B, Marketing and Growth Programs, attached to and made a part of this Agreement. DuPont may change the criteria and the terms and conditions of such programs at its sale discretion prior to any calendar year during the term of this Agreement and reflected in a revised Schedule B, Decisions by DuPont regarding Wholesaler performance and purchases under the program shall be final;
|
|
p.
|
furnish DuPont with reports reasonably requested by DuPont to keep DuPont informed of the market and competitive conditions and the position and progress of Wholesaler with the trade of the Products in the Territory and any information required as part of Schedule B; and
|
|
q.
|
furnish DuPont an initial report upon execution and reports on a minimum of a monthly basis thereafter containing point of sale data by state and grouped together by DuPont into geographic regions for internal commission purposes by units, product family and SKU of Products purchased from Wholesaler. Failure to provide such reports, within thirty (30) days after the end of each month, will result in forfeiture of discounts and other allowances under this Agreement and if not corrected, termination in accordance with Section 2.01 (f),
|
3.02
|
The provisions of this Article shall be deemed to be of the essence of this Agreement and any breach thereof by Wholesaler shall entitle Du Pont to immediately terminate or suspend this Agreement.
|
4.01
|
Wholesaler shall order from DuPont such quantities of Products as it needs to meet the requirements of the trade in its Territory and to satisfy the purchase standards established under Article 3 above, provided, however, that all such orders shall at all times be subject to acceptance by DuPont and DuPont shall have no liability because of its failure to accept any such order. Wholesaler shall use all commercially reasonable efforts to place orders in quantities as set forth on Schedule C. Orders are subject to DuPont policies and requirements for ordering quantities as communicated from time to time by DuPont to Wholesaler and documented in Schedule C. Modifications to such ordering requirements shall be made upon thirty (30) days written notice to Wholesaler.
|
4.02
|
Shipments will be made to Wholesaler's warehouse(s). DuPont may specify minimum quantities from time to time for any shipments.
|
4.03
|
Whenever DuPont, at Wholesaler's request, shall agree and make shipment directly to Wholesaler's customer and the acceptance thereof is refused by the customer Wholesaler shall reimburse DuPont for all transport, freight and all other expenses incurred in connection therewith; provided however, Wholesaler shall not be required to reimburse DuPont to the extent the refusal is caused by the fault of DuPont.
|
4.04
|
Products shall be returned freight prepaid only with prior permission of the DuPont's authorized representative. Returns must be in salable condition and in original packages upon receipt by DuPont. Returns must be in accordance with DuPont standard Return Policy as set forth in Schedule C.
|
5.01
|
DuPont's prices to Wholesaler for Products purchased hereunder shall be DuPont's prices in effect at the time of shipment.
|
5.02
|
Terms of payment shall be as set forth in Schedule C.
|
5.03
|
Minimum orders, freight terms, drop shipments policy shall be as set forth in Schedule C.
|
5.04
|
Terms of the direct ship program shall be as set forth in Schedule D.
|
5.05
|
Prices, discount, terms and conditions may be revised by DuPont at any time effective upon written notice to Wholesaler.
|
5.06
|
Wholesaler shall not be entitled to any commission on any sale made by DuPont directly to customers located in Territory or to domestic customers or others who may subsequently, directly or indirectly, ship Products into Territory.
|
6.01
|
This Agreement, and all Wholesaler orders, shall be subject to DuPont's standard Conditions of Sale in effect at the time of shipment, referenced in Schedule C.
|
6.02
|
In the event of any conflict between the terms and conditions of this Agreement and DuPont's Conditions of Sale, the terms and conditions of this Agreement shall prevail.
|
7.01
|
The relationship between the Parties established under this Agreement is solely that of buyer and seller. Nothing in this Agreement authorizes Wholesaler to assume or create any obligation or responsibility, expressed or implied, on behalf of or in the name of DuPont, or to bind DuPont or its affiliates in any manner whatsoever unless prior written permission is obtained from DuPont.
|
7.02
|
It is agreed that Wholesaler's activities and those of Wholesaler's employees or representatives are at all times under Wholesaler's exclusive direction and control, and that Wholesaler's relation to DuPont is solely that of an independent contractor.
|
8.01
|
DuPont undertakes to deliver material meeting DuPont's normal Product specifications, but is not responsible for results obtained by the use thereof either alone or in combination with other materials.
|
8.02
|
No guarantee or warranty, oral or written, expressed or implied, concerning the application or the results to be obtained with Products will be made by Wholesaler except with the express prior written authorization of DuPont in each specific case.
|
8.03
|
Wholesaler shall make no product performance claims that (i) are inconsistent with Product performance claims made by DuPont in its literature for such Products or (ii) DuPont has not approved in writing in advance.
|
8.04
|
DuPont is not responsible, or liable, for errors or omissions of Wholesaler.
|
9.01
|
The trademarks used on the Products are and shall be the exclusive property of DuPont, and Wholesaler shall not register or use any such trademark or name without prior written approval of DuPont and the owner.
|
9.02
|
Wholesaler shall use DuPont trademarks in accordance with good business and trademark practices and in complete compliance with DuPont's then-current DuPont Trademark Policy, as supplied and amended by DuPont from time to time. DuPont has the right to object to Wholesaler's use of the trademarks for any reason and Wholesaler agrees to immediately correct its usage, or cease usage, of the trademarks at DuPont's request.
|
9.03
|
Wholesaler shall: a) not use any trademark, mark, name or symbol which may be confusingly similar to Trademarks; b) not use Trademarks in any manner which could affect the validity of its registration or DuPont's exclusive ownership thereof; c) use, display, advertise, and promote the Trademarks in accordance with the Trademark Guidelines; d) not use, display advertise, or promote the Trademarks in conjunction with any other product or combination of products; e) discontinue immediately any use, display, advertising, or promotion of the Trademarks, or association with it, that directly or indirectly amounts to or includes a false or exaggerated or misleading claim regarding the quality of DuPont Products or the fabrication or installation thereof that may be deemed objectionable by DuPont; and f) not register or use any trademark or tradename of DuPont, its affiliates or subsidiaries, for the products described hereunder or articles made therefrom without Du Pont's prior written consent.
|
10.01
|
With regard to use and disclosure of Confidential Information and Confidential Samples received under this Agreement and the direct product thereof, the Parties agree to comply with the Export Control Regulations of the United States Department of Commerce and other United States Government Regulations and any other country as applicable, relating to the export and re-export of technical data and equipment and products directly produced by use of such information and samples.
|
11.01
|
Wholesaler agrees that the following policy shall be binding on Wholesaler with respect to actions taken by Wholesaler under this Agreement. Gifts, favors and entertainment may be given by Wholesaler to others only if such gifts, favors and entertainment meet all of the following criteria:
|
|
•
|
they are consistent with accepted business practices;
|
|
·
|
they are of sufficiently limited value, and in a form that will not be construed as a bribe or pay-off;
|
|
·
|
they are not in contravention of applicable law or generally accepted ethical standards; and,
|
|
•
|
public disclosure of the facts will not embarrass DuPont.
|
11.02
|
Secret commissions or other secret compensation to employees of DuPont, Wholesaler, or customers (or family members or associates) are forbidden.
|
11.03
|
Wholesaler hereby represents that, in its dealings in connection with Products, no action inconsistent with these statements and policy will be taken directly or indirectly by Wholesaler. Wholesaler further acknowledges and agrees that any such action will serve as grounds for immediate termination of this Agreement by DuPont.
|
12.01
|
DuPont may from time to time disclose information to Wholesaler that will be identified in writing as confidential. For a period of five (5) years from the date of disclosure Wholesaler shall not use or disclose such confidential information unless prior written consent is given by DuPont.
|
12.02
|
Wholesaler is responsible for the ultimate payment of all taxes, including stamp charges, licenses, duties and governmental exactions, by whatsoever name know which may be assessed or levied on or on account of the Products shipped hereunder to Wholesaler or to's customers.
|
12.03
|
If, at any time during the life of this Agreement, any condition shall arise which shall impede or restrict free transit of money or goods to or from the Territory, then deliveries hereunder may be suspended during the continuance of any such condition, or this Agreement may be terminated by either Party.
|
12.04
|
In the event any payment owed to DuPont hereunder is not paid by Wholesaler in accordance with payment terms and this Agreement, DuPont shall have the right to credit against such payment and any interest thereon any sums owed by DuPont to Wholesaler.
|
12.05
|
The cost of postage, telephone calls and other communications sent by Wholesaler shall be paid by Wholesaler and the cost of any such items sent by DuPont shall be paid by DuPont. The cost of samples, reimbursements, promotional activities, etc. undertaken by Wholesaler in connection with Products will be paid by Wholesaler unless otherwise agreed to by DuPont in writing in advance.
|
12.06
|
It is understood and agreed that DuPont has no right to provide any marketing instructions to Wholesaler, or to exercise any control over Wholesaler's method of operation of its business,
|
12.07
|
Nothing herein shall be construed to create a joint venture or enterprise between the Parties, nor shall any Party be considered to be the agent of the other Party.
|
12.08
|
Neither this Agreement nor any right or obligation herein shall be assignable or transferable in whole or in part by either Party without the prior written consent of the other Party.
|
12.09
|
The failure of either Party to insist upon the performance of any provision of this Agreement or to exercise any right or privilege thereunder shall not be construed as a waiver of any right arising under this Agreement and all provisions shall remain in full force and effect.
|
12.10
|
No liability shall result from delay in performance or non performance directly or indirectly caused by circumstances beyond the control of the Party affected, including, but not limited to, acts of God, fire, explosion, flood, war, act of or authorized by any Government, accident, equipment failure, failure of suppliers, labor dispute or shortage, or inability to obtain material, equipment and transportation. Quantities so affected shall be eliminated by DuPont from the Agreement without liability, but the Agreement shall remain otherwise unaffected. DuPont shall have no obligation to purchase supplies of fiber it would otherwise make to enable it to perform this Agreement.
|
12.11
|
This Agreement shall be construed in accordance with the laws of the State of Delaware without giving effect to choice of law or conflict principles of any jurisdiction. In the event of litigation, the Parties agree that the Courts of the State of Delaware shall have exclusive jurisdiction of any claim or action to be commenced by either Party against the other ariSing out of the performance, or relating to the subject of this Agreement. The Parties hereby consent to personal jurisdiction in the Courts of Delaware for purposes of any interpretation, enforcement or legal action concerning this Agreement. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
|
12.12
|
Wholesaler shall not appoint any representative or agent for the Products without the prior written consent of DuPont.
|
12.13
|
The Parties' legal obligations under this Agreement are to be determined from the precise and literal language of this Agreement and not from the imposition of state laws attempting to impose additional duties or other obligations that were not the express basis of the bargain at the time this Agreement was made.
|
12.14
|
NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH ANY CLAIM THAT ARISES OUT OF OR RELATES TO THIS AGREEMENT OR THE PARTIES CONDUCT HEREUNDER WHETHER OR NOT CAUSED BY OR RESULTING FROM THE NEGLIGENCE OF SUCH PARTY EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
|
12.15
|
The Parties are sophisticated businesses with legal counsel who have reviewed the terms of this Agreement and the Parties represent that they have fully read this Agreement, and understand and accept its terms.
|
To DuPont:
|
E. I. DuPont de Nemours and Company
|
DuPont Protection Technologies
|
|
Spruance Business Center
|
|
5401 Jefferson Davis Highway
|
|
Richmond, Virginia 23234
|
|
Attention: Dave Kee
|
|
Email: David.c.kee@usa.dupont.com
|
|
Phone: 804-383-3237
|
|
Fax: 804-383-2794
|
To Wholesaler:
|
Lakeland Industries, Inc.
|
701 Koehler Avenue, Suite 7
|
|
Ronkonkoma, NY 11779-7410
|
|
Attention: Christopher J. Ryan
|
|
Facsimile No.: 631-981-7851
|
|
Lakeland Industries, Inc.
|
|
202 Pride Lane SW
|
|
Decatur, AL 35603
|
|
Attention: Greg Pontes
|
|
Email: GDPontes@lakeland.com
|
|
Phone: 256-350-3873 x 226
|
|
Fax: 256-350-3842
|
|
Lakeland Industries, Inc.
|
|
3507 Clover Valley Drive
|
|
Kingwood, TX 77345
|
|
Attention: Kyle Kerbow
|
|
Email: klkerbow@lakeland.com
|
|
Phone: 281-360-5057
|
|
Fax: 281-360-5794
|
E.I. du Pont de Nemours and Company
|
Lakeland Industries, Inc.
|
|
By: /s/ William F. Weber
|
By: /s/ Christopher J. Ryan
|
|
Title: Vice President-DPT
|
Title: CEO
|
|
Date: 1/31/11
|
Date: 1/31/11
|
1% rebate
|
|
Growth of 10% - 14.9%:
|
2% rebate
|
3% rebate
|
|
Growth of 20% or above:
|
5% rebate
|
|
·
|
45 or 90 Day lead time from time of Order Confirmation to Delivery (Program availability subject to change based on supply or market conditions at time of order)
|
|
o
|
4% Discount off of Level A pricing for 45 Day offering
|
|
o
|
8% Discount off of Level A pricing for 90 Day offering
|
|
·
|
Minimum Order Qty's are required by order based on Volume loading specifications - Order qtys are calculated based on transportation load volume a loading tool provided by DuPont. The Tool will provide a maximum load volume and will calculate the order load based on customer input.
|
|
·
|
Freight Prepaid
|
|
·
|
Direct shipments are invoiced at time of US customs clearance (Clearance is normally executed through the closest port of entry available based on ocean route or land route setup by ship to location/Lead-time offering).
|
|
·
|
All sku's consistent with prior order patterns by Wholesaler, as of the effective date of this agreement, will be available for this program. Wholesaler cannot order additional sku's in this program without the prior review and approval by DuPont. DuPont reserves the right to limit expansion of sku's.
|
|
·
|
Country of origin and/or mode of transport can vary for both Direct ship lead-time options
|
|
·
|
Direct Shipment expediting request could reduce or forfeit program discounts
|
|
·
|
Product will be delivered as standard identified product - (Customer specific packaging, Labeling, put-up designations, handling request are not available through the program)
|
|
·
|
Final Destination routing must be confirmed prior to container program implementation and/or Delivery confirmation- Certain customer locations could be non accessible or non deliverable. (Carrier designations are not available through the direct ship program)
|
|
·
|
Direct shipments cannot be shipped direct to end user
|
|
·
|
20 cs minimum order per sku per container order
|
|
·
|
Direct shipment orders cannot be cancelled or changed once order has been confirmed - Order confirmation provided by CSR order cannot be changed or cancelled - Order is considered MTO product and is not available for return unless product meets quality return criteria.
|
|
·
|
All Direct shipments must be scheduled for receipt within 2 business days after initial inland carrier
|
|
·
|
delivery scheduling contact is made
|
|
·
|
Customer should provide direct shipment forecast by month and by lead time.
|
|
·
|
All Direct shipments floor stacked
|
|
·
|
2 hour live unloads are standard operating protocol. Additional time required could result in detention charges, all charges associated with detention or inland carrier is the Sold-to customers responsibility. A Bill-to contact phone number, name and address for detention charge billing is required. The billing will come directly from inland dray carrier.
|
|
·
|
When purchases of DuPont™ Tychem® are consolidated at the time of ordering, an additional 2% discount will be applied to the existing Direct Ship Program discount. This discount is being offered to partially offset the technical selling efforts required to effectively position TYCHEM in the market and to enable supply chain efficiencies at DuPont.
|
|
·
|
In order to achieve this 2% discount, the Direct Ship Program requirements outlined above must be adhered to and the shipments must be consolidated per direction provided by DuPont.
|
2.
|
Based on my knowledge, this report does not contain any untrue statements 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 this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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By: /s/ Christopher J. Ryan
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Chief Executive Officer, President and Secretary
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2.
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Based on my knowledge, this report does not contain any untrue statements 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 this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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/s/ Christopher J. Ryan
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Christopher J. Ryan
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Chief Executive Officer, President and Secretary
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/s/ Gary Pokrassa
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Gary Pokrassa
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Chief Financial Officer
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