Delaware
|
|
13-3115216
|
(State
or Other Jurisdiction of Incorporation or
Organization)
|
|
(I.R.S.
Employer Identification No.)
|
202
Pride Lane SW, Decatur, AL
|
|
35603
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
Title
of each class
|
Trading
Symbol(s)
|
Name of
each exchange on which registered
|
Common
Stock
|
LAKE
|
NASDAQ
|
Large
accelerated filer
|
Accelerated
filer ☒
|
Nonaccelerated
filer
|
Smaller
reporting company ☒
|
Emerging
growth company
|
|
Class
|
|
Outstanding at June 5, 2020
|
Common Stock, $0.01 par value per share
|
|
7,976,275 Shares
|
|
Page
|
3
|
|
|
|
3
|
|
|
|
5
|
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
|
|
|
9
|
|
|
|
10
|
|
|
|
28
|
|
|
|
34
|
|
|
|
34
|
|
|
|
PART
II - OTHER INFORMATION:
|
|
|
|
35
|
|
|
|
36
|
|
Three Months
Ended
April
30,
|
|
|
2020
|
2019
|
Net
sales
|
$45,582
|
$24,684
|
Cost of goods
sold
|
23,438
|
17,130
|
Gross
profit
|
22,144
|
7,554
|
Operating
expenses
|
9,774
|
7,869
|
Operating profit
(loss)
|
12,370
|
(315)
|
Other income
(expense), net
|
6
|
(27)
|
Interest
expense
|
(17)
|
(34)
|
Income (loss)
before taxes
|
12,359
|
(376)
|
Income tax
expense
|
3,725
|
89
|
Net income
(loss)
|
$8,634
|
$(465)
|
Net income (loss)
per common share:
|
|
|
Basic
|
$1.08
|
$(0.06)
|
Diluted
|
$1.07
|
$(0.06)
|
Weighted average
common shares outstanding:
|
|
|
Basic
|
7,972,423
|
8,013,840
|
Diluted
|
8,044,849
|
8,013,840
|
|
Three Months
Ended
April
30,
|
|
|
2020
|
2019
|
|
|
|
Net income
(loss)
|
$8,634
|
$(465)
|
Other comprehensive
loss:
|
|
|
Foreign currency
translation adjustments
|
(289)
|
(69)
|
Comprehensive
income (loss)
|
$8,345
|
$(534)
|
ASSETS
|
April
30,
|
January
31,
|
|
2020
|
2020
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$23,473
|
$14,606
|
Accounts
receivable, net of allowance for doubtful accounts of $647 and $497
at April 30, 2020 and January 31, 2020, respectively
|
25,074
|
17,702
|
Inventories
|
37,470
|
44,238
|
Prepaid VAT and
other taxes
|
1,516
|
1,228
|
Other current
assets
|
3,229
|
2,033
|
Total current
assets
|
90,762
|
79,807
|
Property and
equipment, net
|
9,847
|
10,113
|
Operating leases
right-of-use assets
|
2,246
|
2,244
|
Deferred tax
assets
|
3,625
|
5,939
|
Prepaid VAT and
other taxes
|
292
|
333
|
Other
assets
|
81
|
98
|
Goodwill
|
871
|
871
|
Total
assets
|
$107,724
|
$99,405
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$6,119
|
$7,204
|
Accrued
compensation and benefits
|
2,020
|
1,300
|
Other accrued
expenses
|
3,713
|
2,445
|
Current maturity of
long-term debt
|
-----
|
1,155
|
Short-term
borrowings
|
139
|
----
|
Current portion of
operating lease liabilities
|
925
|
835
|
Total current
liabilities
|
12,916
|
12,939
|
Long-term portion
of operating lease liabilities
|
1,268
|
1,414
|
Total
liabilities
|
14,184
|
14,353
|
Commitments and
contingencies
|
|
|
Stockholders’
equity
|
|
|
Preferred stock,
$0.01 par; authorized 1,500,000 shares (none issued)
|
-----
|
-----
|
Common stock, $0.01
par; authorized 20,000,000 shares Issued 8,485,517 and 8,481,665;
outstanding 7,976,275 and 7,972,423 at April 30, 2020 and January
31, 2020, respectively
|
85
|
85
|
Treasury stock, at
cost; 509,242 shares
|
(5,023)
|
(5,023)
|
Additional paid-in
capital
|
75,314
|
75,171
|
Retained
earnings
|
26,215
|
17,581
|
Accumulated other
comprehensive loss
|
(3,051)
|
(2,762)
|
Total stockholders'
equity
|
93,540
|
85,052
|
Total liabilities
and stockholders' equity
|
$107,724
|
$99,405
|
|
|
|
|
|
|
|
Accummulated
|
|
|
|
|
|
|
Additional
|
|
Other
|
|
|
Common
Stock
|
Treasury
Stock
|
Paid-in
|
Retained
|
Comprehensive
|
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Total
|
|
|
($000’s)
|
|
($000’s)
|
($000’s)
|
($000’s)
|
($000’s)
|
($000’s)
|
|
|
|
|
|
|
|
|
|
Balance,
January 31, 2019
|
8,475,929
|
$85
|
(462,089)
|
$(4,517)
|
$75,612
|
$14,300
|
$(2,252)
|
$83,228
|
|
|
|
|
|
|
|
|
|
Net
loss
|
-----
|
-----
|
-----
|
-----
|
-----
|
(465)
|
-----
|
(465)
|
Other comprehensive
loss
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
(69)
|
(69)
|
Stock-based
compensation:
|
|
|
|
|
|
|
|
|
Restricted Stock
Plan
|
-----
|
-----
|
-----
|
-----
|
201
|
-----
|
-----
|
201
|
Balance,
April 30, 2019
|
8,475,929
|
$85
|
(462,089)
|
$(4,517)
|
$75,813
|
$13,835
|
$(2,321)
|
$82,895
|
|
|
|
|
|
|
|
|
|
Balance,
January 31, 2020
|
8,481,665
|
$85
|
(509,242)
|
$(5,023)
|
$75,171
|
$17,581
|
$(2,762)
|
$85,052
|
Net
Income
|
-----
|
-----
|
-----
|
-----
|
-----
|
8,634
|
-----
|
8,634
|
Other comprehensive
loss
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
(289)
|
(289)
|
Stock-based
compensation:
|
|
|
|
|
|
|
|
|
Restricted stock
issued
|
3,852
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
-----
|
Restricted stock
plan
|
-----
|
-----
|
-----
|
-----
|
163
|
-----
|
-----
|
163
|
Return of shares in
lieu of payroll withholding
|
-----
|
-----
|
-----
|
-----
|
(20)
|
-----
|
-----
|
(20)
|
Balance,
April 30, 2020
|
8,485,517
|
$85
|
(509,242)
|
$(5,023)
|
$75,314
|
$26,215
|
$(3,051)
|
$93,540
|
|
Three Months
Ended
April
30,
|
|
|
2020
|
2019
|
Cash flows from
operating activities:
|
|
|
Net income
(loss)
|
$8,634
|
$(465)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities
|
|
|
Provision for
doubtful accounts
|
150
|
105
|
Deferred income
taxes
|
2,314
|
(158)
|
Depreciation and
amortization
|
453
|
383
|
Stock based and
restricted stock compensation
|
163
|
201
|
Loss on disposal of
property and equipment
|
7
|
-----
|
Non-cash operating
lease expense
|
214
|
251
|
(Increase) decrease
in operating assets
|
|
|
Accounts
receivable
|
(7,589)
|
1,144
|
Inventories
|
6,656
|
(4,414)
|
Prepaid VAT and
other taxes
|
(288)
|
127
|
Other current
assets
|
(1,199)
|
(247)
|
Increase in
operating liabilities
|
|
|
Accounts
payable
|
(1,008)
|
4,242
|
Accrued expenses
and other liabilities
|
2,017
|
596
|
Operating lease
liabilities
|
(271)
|
(251)
|
Net cash provided
by operating activities
|
10,253
|
1,514
|
Cash flows from
investing activities:
|
|
|
Purchases of
property and equipment
|
(194)
|
(168)
|
Cash flows from
financing activities:
|
|
|
Loan repayments,
short-term
|
(1,181)
|
-----
|
Loan borrowings,
short-term
|
158
|
-----
|
Loan repayments,
long-term
|
-----
|
(40)
|
UK borrowings under
line of credit facility, net
|
-----
|
156
|
Shares returned to
pay employee taxes under restricted stock program
|
(20)
|
-----
|
Net cash provided
by (used in) financing activities
|
(1,043)
|
116
|
Effect of exchange
rate changes on cash and cash equivalents
|
(149)
|
(11)
|
Net increase in
cash and cash equivalents
|
8,867
|
1,451
|
Cash and cash
equivalents at beginning of period
|
14,606
|
12,831
|
Cash and cash
equivalents at end of period
|
$23,473
|
$14,282
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash paid for
interest
|
$17
|
$34
|
Cash paid for
taxes
|
$861
|
$276
|
|
|
|
Noncash investing
and financing activities
|
|
|
Leased assets
obtained in exchange for operating lease liabilities
|
$215
|
$2,486
|
|
Three Months Ended
April 30,
(in millions of dollars)
|
|
|
2020
|
2019
|
External
Sales by region:
|
|
|
USA
|
$23.11
|
$12.87
|
Other
foreign
|
2.30
|
0.78
|
Europe
(UK)
|
3.01
|
2.39
|
Mexico
|
1.37
|
0.60
|
Asia
|
9.05
|
3.83
|
Canada
|
4.31
|
2.49
|
Latin
America
|
2.43
|
1.72
|
Consolidated
external sales
|
$45.58
|
$24.68
|
|
Three Months Ended
April 30,
(in millions of dollars)
|
|
|
2020
|
2019
|
External
Sales by product lines:
|
|
|
Disposables
|
$31.21
|
$12.36
|
Chemical
|
8.88
|
5.06
|
Fire
|
1.45
|
1.40
|
Gloves
|
0.78
|
0.75
|
High
Visability
|
1.35
|
2.12
|
High
Performance Wear
|
0.29
|
0.23
|
Wovens
|
1.62
|
2.76
|
Consolidated
external sales
|
$45.58
|
$24.68
|
|
April
30,
2020
|
January
31,
2020
|
|
|
|
Raw
materials
|
$16,417
|
$16,709
|
Work-in-process
|
959
|
670
|
Finished
goods
|
20,094
|
26,859
|
|
$37,470
|
$44,238
|
|
Classification
|
April
30,
2020
|
January
31,
2020
|
|
|
|
|
Assets
|
|
|
|
Operating lease
assets
|
Operating lease
right-of-use assets
|
$2,246
|
$2,244
|
|
|
|
|
Liabilities
|
|
|
|
Current
|
|
|
|
Operating
|
Current portion of
operating lease liabilities
|
$925
|
$835
|
Noncurrent
|
|
|
|
Operating
|
Long-term portion
of operating lease liabilities
|
1,268
|
1,414
|
Total Lease
Obligations
|
|
$2,193
|
$2,249
|
|
Classification
|
Three Months
Ended
April
30,
2020
|
Three Months
Ended
April
30,
2019
|
Operating lease
cost
|
Cost of goods
sold
|
$90
|
$145
|
|
Operating
expenses
|
$223
|
$119
|
Short-term lease
cost
|
|
$155
|
$36
|
For the 12
months ended April 30,
|
Operating
Leases
(a)
|
2021
|
$1,025
|
2022
|
769
|
2023
|
455
|
2024
|
22
|
2025
|
18
|
Thereafter
|
112
|
Total lease
payments
|
$2,401
|
Less:
Interest
|
(208)
|
Present value of
lease liability
|
$2,193
|
Weighted-average
remaining lease term (years)
|
April
30,
2020
|
January
31,
2020
|
Operating
leases
|
3.05
|
3.14
|
|
|
|
Weighted-average
discount rate
|
|
|
Operating
leases
|
6.40%
|
5.87%
|
Cash paid for
amounts included in the measurement of lease
liabilities:
|
Three Months
Ended
April
30,
2020
|
Three Months
Ended
April
30,
2019
|
Operating cash
flows from operating leases
|
$303
|
$264
|
Leased assets
obtained in exchange for new operating lease
liabilities
|
$215
|
$2,486
|
|
April
30,
2020
|
January
31,
2020
|
|
|
|
Prepaid
maintenance contracts
|
$203
|
$144
|
Prepaid
insurance
|
220
|
49
|
Prepaid
material and supplies
|
2,103
|
1,313
|
UK
factoring (due from HSBC)
|
367
|
113
|
Prepaid
other
|
336
|
414
|
|
$3,229
|
$2,033
|
|
April
30,
2020
|
January
31,
2020
|
|
|
|
Other employee
related costs, including employee benefits
|
$169
|
$199
|
Freight expenses
and material purchases
|
1,829
|
673
|
Professional
fees
|
264
|
279
|
Sales
commissions
|
150
|
234
|
Other vendor
accruals
|
442
|
718
|
Income tax
accrual
|
859
|
342
|
|
$3,713
|
$2,445
|
|
Short-Term
|
Long-Term
|
Current Maturity
of Long-Term
|
|||
|
April
30,
2020
|
January
31,
2020
|
April
30,
2020
|
January
31,
2020
|
April
30,
2020
|
January
31,
2020
|
U.S
|
$-----
|
$-----
|
$-----
|
$-----
|
$-----
|
$1,155
|
Argentina
|
139
|
-----
|
-----
|
-----
|
-----
|
------
|
Totals
|
$139
|
$-----
|
$-----
|
$-----
|
$-----
|
$1,155
|
|
Number of
shares awarded total
|
|||
|
Minimum
|
Target
|
Maximum
|
Cap
|
Employees
|
17,834
|
26,753
|
35,670
|
42,805
|
Non-Employee
Directors
|
7,168
|
10,752
|
14,336
|
17,204
|
Total
|
25,002
|
37,505
|
50,006
|
60,009
|
|
Value at grant
date
|
|||
|
Minimum
|
Target
|
Maximum
|
Cap
|
Employees
|
$248,800
|
$373,200
|
$497,600
|
$597,120
|
Non-Employee
Directors
|
100,000
|
150,000
|
200,000
|
240,000
|
Total
|
$348,800
|
$523,200
|
$697,600
|
$837,120
|
|
Number of
shares awarded total
|
||
|
Minimum
|
Target
|
Maximum
|
Employees
|
78,004
|
120,006
|
144,009
|
Non-Employee
Directors
|
27,664
|
42,560
|
51,072
|
Total
|
105,668
|
162,566
|
195,081
|
|
|
Value at grant
date
|
||
|
Minimum
|
Target
|
Maximum
|
Employees
|
$943,570
|
$1,451,600
|
$1,741,920
|
Non-Employee
Directors
|
338,000
|
520,000
|
624,000
|
Total
|
$1,281,570
|
$1,971,600
|
$2,365,920
|
|
Three Months
Ended April 30,
|
|
|
2020
|
2019
|
2017
Plan:
|
|
|
Restricted
Stock Program
|
$149,539
|
$201,829
|
Stock
Options
|
14,347
|
-----
|
|
$163,886
|
$201,829
|
Stock appreciation
rights
|
-----
|
(121)
|
Total stock-based
compensation
|
$163,886
|
$201,708
|
Total income tax
benefit recognized for stock-based compensation
arrangement
|
$34,416
|
$42,359
|
|
Performance-Based
|
Service-Based
|
Total
|
Weighted Average
Grant Date Fair Value
|
Outstanding at
January 31, 2020
|
109,234
|
9,930
|
119,164
|
$10.33
|
Awarded
|
69,591
|
6,326
|
75,917
|
$14.95
|
Vested
|
-----
|
-----
|
-----
|
-----
|
Forfeited
|
-----
|
-----
|
-----
|
-----
|
Outstanding at
April 30, 2020
|
178,825
|
16,256
|
195,081
|
$12.13
|
Shares issued
under 2017 Plan
|
Outstanding
Unvested Grants at Maximum at Beginning of
FY21
|
Granted
during
FY21
|
Becoming Vested
during
FY21
|
Forfeited
during
FY21
|
Outstanding
Unvested Grants at Maximum at End of
April
30,
FY21
|
Restricted stock
grants – employees
|
35,670
|
-----
|
-----
|
-----
|
35,670
|
Restricted stock
grants – non-employee directors
|
14,336
|
-----
|
-----
|
-----
|
14,336
|
Total
restricted stock
|
50,006
|
-----
|
-----
|
-----
|
50,006
|
|
|
|
|
|
|
Weighted average
grant date fair value
|
$13.95
|
$-----
|
$-----
|
$-----
|
$13.95
|
Stock
Options
|
Number of
Shares
|
Weighted Average
Exercise Price per Share
|
Weighted Average
Remaining Contractual Term (in years)
|
Aggregate
Intrinsic Value
|
Outstanding at
January 31, 2020
|
24,900
|
$11.17
|
9.53
|
$-----
|
Granted
|
-----
|
-----
|
-----
|
-----
|
Outstanding at
April 30, 2020
|
24,900
|
$11.17
|
9.29
|
-----
|
|
|
|
|
|
Exercisable at
April 30, 2020
|
-----
|
$-----
|
-----
|
$-----
|
|
Three Months
Ended
April
30,
|
|
|
(in $000s except
share and per share information)
|
|
|
2020
|
2019
|
Numerator:
|
|
|
Net income
(loss)
|
$8,634
|
$(465)
|
Denominator:
|
|
|
Denominator for
basic net income (loss) per share (weighted-average shares which
reflect shares in the treasury, 509,242 at April 30, 2020 and
462,089 for April 30, 2019)
|
7,972,423
|
8,013,840
|
Effect of dilutive
securities from restricted stock plan and from dilutive effect of
warrants
|
72,426
|
-----
|
Denominator for
diluted net income (loss) per share (adjusted weighted average
shares)
|
8,044,849
|
8,013,840
|
Basic net income
(loss) per share
|
$1.08
|
$(0.06)
|
Diluted net income
(loss) per share
|
$1.07
|
$(0.06)
|
Warrants and
restricted stock awards excluded from the computation of diluted
loss per share because the effect of inclusion would have been
anti-dilutive.
|
-----
|
196,340
|
|
Three Months
Ended
April
30,
|
|||
|
2020
|
2019
|
||
|
|
|
|
|
Domestic
|
$23.11
|
50.70%
|
$12.87
|
52.12%
|
International
|
$22.47
|
49.30%
|
11.81
|
47.88%
|
Total
|
$45.58
|
100.00%
|
$24.68
|
100.00%
|
|
Three Months
Ended
April
30,
(in millions of
dollars)
|
|
|
2020
|
2019
|
Net
Sales:
|
|
|
USA Operations
(including Corporate)
|
$24.13
|
$13.90
|
Other
foreign
|
3.04
|
1.36
|
Europe
(UK)
|
3.01
|
2.39
|
Mexico
|
1.82
|
0.90
|
Asia
|
20.02
|
13.18
|
Canada
|
4.31
|
2.50
|
Latin
America
|
2.54
|
1.74
|
Less intersegment
sales
|
(13.29)
|
(11.29)
|
Consolidated
sales
|
$45.58
|
$24.68
|
External
Sales:
|
|
|
USA Operations
(including Corporate)
|
$23.11
|
$12.87
|
Other
foreign
|
2.30
|
0.78
|
Europe
(UK)
|
3.01
|
2.39
|
Mexico
|
1.37
|
0.60
|
Asia
|
9.05
|
3.83
|
Canada
|
4.31
|
2.49
|
Latin
America
|
2.43
|
1.72
|
Consolidated
external sales
|
$45.58
|
$24.68
|
Intersegment
Sales:
|
|
|
USA Operations
(including Corporate)
|
$1.02
|
$1.03
|
Other
foreign
|
0.74
|
0.58
|
Mexico
|
0.45
|
0.30
|
Asia
|
10.97
|
9.35
|
Canada
|
-----
|
0.01
|
Latin
America
|
0.11
|
0.02
|
Consolidated
intersegment sales
|
$13.29
|
$11.29
|
|
Three Months
Ended
April
30,
(in millions of
dollars)
|
|
|
2020
|
2019
|
Operating Profit
(Loss):
|
|
|
USA Operations
(including Corporate)
|
$4.33
|
$(1.12)
|
Other
foreign
|
1.23
|
0.14
|
Europe
(UK)
|
0.46
|
0.01
|
Mexico
|
0.22
|
(0.18)
|
Asia
|
4.51
|
0.23
|
Canada
|
1.13
|
0.25
|
Latin
America
|
0.57
|
0.24
|
Less intersegment
profit
|
(0.08)
|
0.11
|
Consolidated
operating profit (loss)
|
$12.37
|
$(0.32)
|
Depreciation and
Amortization Expense:
|
|
|
USA
Operations(including Corporate)
|
$0.22
|
$0.21
|
Other
foreign
|
0.01
|
(0.01)
|
Mexico
|
0.04
|
0.04
|
Asia
|
0.18
|
0.14
|
Canada
|
0.02
|
-----
|
Latin
America
|
0.01
|
0.01
|
Less
intersegment
|
(0.03)
|
(0.01)
|
Consolidated
depreciation & amortization expense
|
$0.45
|
$0.38
|
Interest
Expense:
|
|
|
USA Operations
(including Corporate)
|
$0.01
|
$0.01
|
Latin
America
|
0.01
|
0.02
|
Consolidated
interest expense
|
$0.02
|
$0.03
|
Income Tax
Expense:
|
|
|
USA Operations
(including Corporate)
|
$2.28
|
$(0.13)
|
Other
foreign
|
0.01
|
-----
|
Europe
(UK)
|
0.08
|
-----
|
Asia
|
0.90
|
0.15
|
Canada
|
0.31
|
0.04
|
Latin
America
|
0.16
|
0.01
|
Less
intersegment
|
(0.01)
|
0.02
|
Consolidated income
tax expense
|
$3.73
|
$0.09
|
|
|
|
|
April
30,
2020
|
January
31,
2020
|
|
(in
millions of dollars)
|
|
Total Assets:
*
|
|
|
USA Operations
(including Corporate)
|
$84.26
|
$88.08
|
Other
foreign
|
2.60
|
1.61
|
Europe
(UK)
|
4.83
|
4.52
|
Mexico
|
5.45
|
5.00
|
Asia
|
46.80
|
44.30
|
Canada
|
6.38
|
6.09
|
Latin
America
|
6.27
|
5.77
|
Less
intersegment
|
(48.87)
|
(55.96)
|
Consolidated
assets
|
$107.72
|
$99.41
|
Total Assets Less
Intersegment:*
|
|
|
USA Operations
(including Corporate)
|
$47.42
|
$49.94
|
Other
foreign
|
4.59
|
3.33
|
Europe
(UK)
|
4.83
|
4.52
|
Mexico
|
5.58
|
5.16
|
Asia
|
32.83
|
24.73
|
Canada
|
6.37
|
6.07
|
Latin
America
|
6.10
|
5.66
|
Consolidated
assets
|
$107.72
|
$99.41
|
Property and
Equipment:
|
|
|
USA Operations
(including Corporate)
|
$3.17
|
$3.32
|
Other
foreign
|
0.18
|
0.15
|
Europe
(UK)
|
0.01
|
0.01
|
Mexico
|
2.13
|
2.17
|
Asia
|
3.11
|
3.19
|
Canada
|
1.14
|
1.15
|
Latin
America
|
0.03
|
0.04
|
Less
intersegment
|
0.08
|
0.08
|
Consolidated
long-lived assets
|
$9.85
|
$10.11
|
Capital
Expenditures:
|
|
|
USA Operations
(including Coprorate)
|
$0.06
|
$0.25
|
Other
foreign
|
0.02
|
0.01
|
Europe
(UK)
|
-----
|
0.01
|
Mexico
|
-----
|
0.17
|
Asia
|
0.11
|
0.58
|
Canada
|
-----
|
-----
|
Latin
America
|
-----
|
0.01
|
Consolidated
capital expenditure
|
$0.19
|
$1.03
|
Goodwill:
|
|
|
USA
Operations
|
$0.87
|
$0.87
|
Consolidated
goodwill
|
$0.87
|
$0.87
|
* Negative assets
reflect intersegment amounts eliminated in
consolidation
|
|
Three Months Ended
April 30,
(in millions of dollars)
|
|
|
2020
|
2019
|
External
Sales by geographic region:
|
|
|
USA
|
$23.11
|
$12.87
|
Other
foreign
|
2.30
|
0.78
|
Europe
(UK)
|
3.01
|
2.39
|
Mexico
|
1.37
|
0.60
|
Asia
|
9.05
|
3.83
|
Canada
|
4.31
|
2.49
|
Latin
America
|
2.43
|
1.72
|
Consolidated
external sales
|
$45.58
|
$24.68
|
|
Three Months Ended
April 30,
(in millions of dollars)
|
|
|
2020
|
2019
|
External
Sales by product lines:
|
|
|
Disposables
|
$31.21
|
$12.36
|
Chemical
|
8.88
|
5.06
|
Fire
|
1.45
|
1.40
|
Gloves
|
0.78
|
0.75
|
High
Visibility
|
1.35
|
2.12
|
High
Performance Wear
|
0.29
|
0.23
|
Wovens
|
1.62
|
2.76
|
Consolidated
external sales
|
$45.58
|
$24.68
|
31.1*
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) or
15(d)-14(a) under the Securities Exchange Act of 1934
|
31.2*
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) or
15(d)-14(a) under the Securities Exchange Act of 1934
|
32.1*
|
Certification
of Chief Executive Officer as adopted pursuant to 18 U.S.C. Section
1350 pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2*
|
Certification
of Principal Financial Officer as adopted pursuant to 18 U.S.C.
Section 1350 pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
101.INS
|
XBRL
instance Document
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document
|
101.CAL
|
XBRL
Taxonomy Extension Definitions Document
|
101.DEF
|
XBRL
Taxonomy Extension Labels Document
|
101.LAB
|
XBRL
Taxonomy Extension Labels Document
|
101.PRE
|
XBRL
Taxonomy Extension Presentations Document
|
|
LAKELAND INDUSTRIES, INC.
(Registrant)
|
|
|
|
|
Date:
June 9, 2020
|
/s/ Charles D. Roberson
|
|
Charles
D. Roberson,
Chief
Executive Officer, President and Secretary (Principal Executive
Officer and Authorized Signatory)
|
|
|
|
|
Date:
June 9, 2020
|
/s/ Allen E. Dillard
|
|
Allen
E. Dillard,
(Principal
Financial Officer and Authorized Signatory)
|
Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates and Assumptions | The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that events could occur during the upcoming year that could change such estimates. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, net | Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company recognizes losses when information available indicates that it is probable that a receivable has been impaired based on criteria noted below at the date of the unaudited condensed consolidated financial statements, and the amount of the loss can be reasonably estimated. Management considers the following factors when determining the collectability of specific customer accounts: Customer creditworthiness, past transaction history with the customers, current economic industry trends and changes in customer payment terms. Past due balances over 90 days and other less creditworthy accounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out basis) or net realized value. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Long-Lived Assets | The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The Company measures any potential impairment on a projected undiscounted cash flow method. Estimating future cash flows requires the Company’s management to make projections that can differ materially from actual results. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from the asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Substantially all the Company’s revenue is derived from product sales, which consist of sales of the Company’s personal protective wear products to distributors. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 90 days of the invoice date, and the contracts do not have significant financing components. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Shipping and handling costs associated with outbound freight are included in operating expenses, and for the month ended April 30, 2020 and 2019, aggregated approximately $1.6 million and $0.8 million, respectively. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue.
The transaction price includes estimates of variable consideration, related to rebates, allowances, and discounts that are reductions in revenue. All estimates are based on the Company's historical experience, anticipated performance, and the Company's best judgment at the time the estimate is made. Estimates for variable consideration are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. All the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as quantity times price per unit.
The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of reflective clothing, high-end chemical protective suits, firefighting and heat protective apparel, reusable woven garments and gloves and arm guards. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see table below). Net sales by geographic region and by product line are included below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the unaudited condensed consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets or liabilities on the Company’s unaudited condensed consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines that it may not be able to realize all or part of its deferred tax asset in the future, or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period of such determination.
The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interest and penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the unaudited condensed consolidated balance sheets. The Company does not have any uncertain tax positions at April 30, 2020 or January 31, 2020. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | The Company records the cost of stock-based compensation plans based on the fair value of the award on the grant date. For awards that contain a vesting provision, the cost is recognized over the requisite service period (generally the vesting period of the equity award) which approximates the performance period. For awards based on services already rendered, the cost is recognized immediately. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Operations and Foreign Currency Translation | The Company maintains manufacturing operations in Mexico, India, Argentina, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico. It also maintains sales and distribution entities located in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay and Mexico. The Company is vulnerable to currency risks in these countries. The functional currency for the United Kingdom subsidiary is the Euro; the trading company in China, the RMB; the Russian operation, the Russian Ruble, and the Kazakhstan operation the Kazakhstan Tenge. All other operations have the US dollar as its functional currency.
Pursuant to US GAAP, assets and liabilities of the Company’s foreign operations with functional currencies, other than the US dollar, are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the consolidated statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction (loss) gain included in net income (loss) for the three months ended April 30, 2020 and 2019, were approximately $(0.1) million and $0.1 million, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value.
The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect management’s own assumptions.
The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-term borrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments.
The Company believes that the fair values of its long-term debt approximates its carrying value based on the effective interest rate compared to the current market rate available to the Company.
|
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Net Income (loss) Per Share | Net Income (loss) per share are based on the weighted average number of common shares outstanding without consideration of common stock equivalents. Diluted income (loss) per share are based on the weighted average number of common shares and common stock equivalents. The diluted income (loss) per share calculation takes into account unvested restricted shares and the shares that may be issued upon exercise of stock options, reduced by shares that may be repurchased with the funds received from the exercise, based on the average price during the fiscal period. Potentially dilutive securities are excluded from the computation of diluted loss per share since their effect would be antidilutive.
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Reclassifications | Certain reclassifications have been made to the presentation of the segment data in the prior period consolidated financial statements to conform to the current period’s presentation. These reclassifications had no impact on the previously reported net loss.
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Accounting Pronouncements | The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
New Accounting Pronouncements Recently Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), which includes provisions, intended to simplify the test for goodwill impairment. The standard is effective for annual periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has adopted this guidance using prospective transition method, which had no material impact on its unaudited condensed consolidated financial statements and related disclosures.
New Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplying the Accounting for Income Taxes. The ASU removes certain exceptions for performing intra-period allocation and calculating income taxes in interim periods. It also simplifies the accounting for income taxes by requiring recognition of franchise tax partially based on income as an income-based tax, requiring reflection of enacted chages in tax laws in the interim period and making improvements for income taxes related to employee stock owernship plans. ASU 2019-12 is effective for fiscal years and interim periods within those years, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. The Company is currently evaluating the impact the standard will have on its consolidated financial statements.
No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.
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Other Current Assets (Tables) |
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Other current assets |
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Business |
3 Months Ended |
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Apr. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Lakeland Industries, Inc. and Subsidiaries (“Lakeland,” the “Company,” “we,” “our” or “us”), a Delaware corporation organized in April 1986, manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market. Our products are sold globally by our inhouse sales teams, our customer service group, and authorized independent sales representatives to a network of over 1,600 global safety and industrial supply distributors. Our authorized distributors supply end users, such as integrated oil, chemical/petrochemical, automobile, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories and the utilities industry. In addition, we supply federal, state and local governmental agencies and departments, such as fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally, we sell to a mixture of end users directly, and to industrial distributors depending on the particular country and market. In addition to the United States, sales are made to more than 50 foreign countries, the majority of which were into China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India and Southeast Asia.
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Stockholders' Equity (Details 4) $ / shares in Units, $ in Thousands |
3 Months Ended |
---|---|
Apr. 30, 2020
USD ($)
$ / shares
shares
| |
Stockholders' equity | |
Number of options outstanding, beginning | shares | 24,900 |
Number of options granted | shares | 0 |
Number of options outstanding, ending | shares | 24,900 |
Number of options exercisable | shares | 0 |
Weighted average exercise price outstanding, beginning | $ 11.17 |
Weighted average exercise price granted | .00 |
Weighted average exercise price outstanding, ending | 11.17 |
Weighted average exercise price exercisable | $ .00 |
Weighted average remaining contractual term outstanding (in years) | 9 years 3 months 14 days |
Aggregate intrinsic value outstanding, beginning | $ | $ 0 |
Aggregate intrinsic value granted | $ 0 |
Aggregate intrinsic value outstanding, ending | $ | $ 0 |
Aggregate intrinsic value exercisable | $ | $ 0 |
Leases (Details 2) - USD ($) $ in Thousands |
Apr. 30, 2020 |
Jan. 31, 2020 |
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Leases [Abstract] | ||
2021 | $ 1,025 | |
2022 | 769 | |
2023 | 455 | |
2024 | 22 | |
2025 | 18 | |
Thereafter | 112 | |
Total lease payments | 2,401 | |
Less: interest | (208) | |
Present value of lease liability | $ 2,193 | $ 2,249 |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2020 |
Apr. 30, 2019 |
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Accounting Policies [Abstract] | ||
Shipping and handling costs | $ 1,600 | $ 800 |
Foreign currency transaction losses | $ (100) | $ 100 |
Income Taxes |
3 Months Ended |
---|---|
Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Deferred Taxes and Valuation Allowance The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. The valuation allowance was $1.3 million at April 30, 2020 and January 31, 2020.
The federal net operating loss (“NOL”) carryforwards as of April 30, 2020 were approximately $6.6 million before tax effects. If not utilized, the NOL generated from the 1/31/2015 tax year will expire after 1/31/2035, and the NOL generated after 01/31/2018 will be carried forward indefintley.
The state net opering loss (“NOL”) carryforwards as of April 30, 2020 were approximately $22.6 million before tax effects. The state NOLs with carry forward limitations will begin to expire after 1/31/2025 and will continue to expire at various periods up until 1/31/2039 when they will be fully expired. The states have a larger spread because some only carryforward for 10 years and some allow 20 years. The Georgia NOLs generated after 1/31/2018 can be carried forward indefinitely.
Tax Reform On December 22, 2017, new federal tax reform legislation was enacted in the United States, resulting in significant changes from previous tax law. The 2017 Tax Cuts and Jobs Act (the Tax Act) reduced the federal corporate income tax rate to 21% from 35% effective January 1, 2018. The Tax Act requires us to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, re-measuring our US deferred tax assets as well as reassessing the net realizability of our deferred tax assets. The Company completed this re-measurement and reassessment in FY18. While the Tax Act provides for a modified territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The regulations were finalized as of June 14, 2019 and reassessment of the GILTI tax as it is currently written resulted in a charge to tax expense of $1.2 and $0.1 million for the three months ended April 30, 2020 and 2019, respectively. The Company intends to account for the GILTI tax in the period in which it is incurred. Though this non-cash expense (due to use of existing NOLs) has a materially negative impact on earnings, the Tax Act also changes the taxation of foreign earnings, and companies generally will not be subject to United States federal income taxes upon the receipt of dividends from foreign subsidiaries.
The BEAT provisions in the Tax Act pertain to companies with average annual gross receipts of $500 million for the prior 3-year period and eliminate the deduction of certain base-erosion payments made to related foreign corporations and impose a minimum tax if greater than regular tax. Based on current guidelines the Company does not expect the BEAT provision to have an impact on U.S. tax expense.
We previously considered substantially all of the earnings in our non-U.S. subsidiaries to be indefinitely reinvested outside the U.S. and, accordingly, recorded no deferred income taxes on such earnings. At this time, the applicable provisions of the Tax Act have been fully analyzed and our intention with respect to unremitted foreign earnings is to continue to indefinitely reinvest outside the U.S. those earnings needed for working capital or additional foreign investment. As stated above, GILTI is recognized in the period it is incurred and is not considered with regard to deferred income tax on unremitted earnings and profits. All international subsidiaries are impacted by GILTI calculation.
Income Tax Expense Income tax expenses consist of federal, state and foreign income taxes. Items impacting the effective rate are foreign income subject to US tax (including Tax Reform impacts), tax rates in foreign jurisdictions, US state income taxes, tax deductions for restricted stock vesting, company borrowing structures, and other permanent tax differences.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates and Assumptions The preparation of unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that events could occur during the upcoming year that could change such estimates.
Accounts Receivable, Net. Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company recognizes losses when information available indicates that it is probable that a receivable has been impaired based on criteria noted below at the date of the unaudited condensed consolidated financial statements, and the amount of the loss can be reasonably estimated. Management considers the following factors when determining the collectability of specific customer accounts: Customer creditworthiness, past transaction history with the customers, current economic industry trends and changes in customer payment terms. Past due balances over 90 days and other less creditworthy accounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Inventories Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out basis) or net realized value.
Impairment of Long-Lived Assets The Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable. The Company measures any potential impairment on a projected undiscounted cash flow method. Estimating future cash flows requires the Company’s management to make projections that can differ materially from actual results. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from the asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset.
Revenue Recognition Substantially all the Company’s revenue is derived from product sales, which consist of sales of the Company’s personal protective wear products to distributors. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 90 days of the invoice date, and the contracts do not have significant financing components. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Shipping and handling costs associated with outbound freight are included in operating expenses, and for the month ended April 30, 2020 and 2019, aggregated approximately $1.6 million and $0.8 million, respectively. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenue.
The transaction price includes estimates of variable consideration, related to rebates, allowances, and discounts that are reductions in revenue. All estimates are based on the Company's historical experience, anticipated performance, and the Company's best judgment at the time the estimate is made. Estimates for variable consideration are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. All the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as quantity times price per unit.
The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of reflective clothing, high-end chemical protective suits, firefighting and heat protective apparel, reusable woven garments and gloves and arm guards. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see table below). Net sales by geographic region and by product line are included below:
Income Taxes The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the unaudited condensed consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets or liabilities on the Company’s unaudited condensed consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines that it may not be able to realize all or part of its deferred tax asset in the future, or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period of such determination.
The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interest and penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liability in the unaudited condensed consolidated balance sheets. The Company does not have any uncertain tax positions at April 30, 2020 or January 31, 2020.
Stock-Based Compensation The Company records the cost of stock-based compensation plans based on the fair value of the award on the grant date. For awards that contain a vesting provision, the cost is recognized over the requisite service period (generally the vesting period of the equity award) which approximates the performance period. For awards based on services already rendered, the cost is recognized immediately.
Foreign Operations and Foreign Currency Translation The Company maintains manufacturing operations in Mexico, India, Argentina, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico. It also maintains sales and distribution entities located in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay and Mexico. The Company is vulnerable to currency risks in these countries. The functional currency for the United Kingdom subsidiary is the Euro; the trading company in China, the RMB; the Russian operation, the Russian Ruble, and the Kazakhstan operation the Kazakhstan Tenge. All other operations have the US dollar as its functional currency.
Pursuant to US GAAP, assets and liabilities of the Company’s foreign operations with functional currencies, other than the US dollar, are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the consolidated statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction (loss) gain included in net income (loss) for the three months ended April 30, 2020 and 2019, were approximately $(0.1) million and $0.1 million, respectively.
Fair Value of Financial Instruments US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value.
The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that reflect management’s own assumptions.
The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-term borrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments.
The Company believes that the fair values of its long-term debt approximates its carrying value based on the effective interest rate compared to the current market rate available to the Company.
Net Income (loss) Per Share Net Income (loss) per share are based on the weighted average number of common shares outstanding without consideration of common stock equivalents. Diluted income (loss) per share are based on the weighted average number of common shares and common stock equivalents. The diluted income (loss) per share calculation takes into account unvested restricted shares and the shares that may be issued upon exercise of stock options, reduced by shares that may be repurchased with the funds received from the exercise, based on the average price during the fiscal period. Potentially dilutive securities are excluded from the computation of diluted loss per share since their effect would be antidilutive.
Reclassifications Certain reclassifications have been made to the presentation of the segment data in the prior period consolidated financial statements to conform to the current period’s presentation. These reclassifications had no impact on the previously reported net loss.
Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
New Accounting Pronouncements Recently Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), which includes provisions, intended to simplify the test for goodwill impairment. The standard is effective for annual periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has adopted this guidance using prospective transition method, which had no material impact on its unaudited condensed consolidated financial statements and related disclosures.
New Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplying the Accounting for Income Taxes. The ASU removes certain exceptions for performing intra-period allocation and calculating income taxes in interim periods. It also simplifies the accounting for income taxes by requiring recognition of franchise tax partially based on income as an income-based tax, requiring reflection of enacted chages in tax laws in the interim period and making improvements for income taxes related to employee stock owernship plans. ASU 2019-12 is effective for fiscal years and interim periods within those years, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued. The Company is currently evaluating the impact the standard will have on its consolidated financial statements.
No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.
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Other Accrued Expenses |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities and Other Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Accrued Expenses | As of April 30, 2020 and January 31, 2020, the Company’s other accrued expenses were comprised of the following:
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Leases (Details 1) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2020 |
Apr. 30, 2019 |
|
Leases [Abstract] | ||
Operating lease cost, cost of goods sold | $ 90 | $ 145 |
Operating lease cost, operating expenses | 223 | 119 |
Short-term lease cost | $ 155 | $ 36 |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 30, 2020 |
Apr. 30, 2019 |
|
Net sales | $ 45,582 | $ 24,684 |
Disposables | ||
Net sales | 31,210 | 12,360 |
Chemical | ||
Net sales | 8,880 | 5,060 |
Fire | ||
Net sales | 1,450 | 1,400 |
Gloves | ||
Net sales | 780 | 750 |
Hi-Vis | ||
Net sales | 1,350 | 2,120 |
High Performance Wear | ||
Net sales | 290 | 230 |
Wovens | ||
Net sales | 1,620 | 2,760 |
USA | ||
Net sales | 23,110 | 12,870 |
Other Foreign | ||
Net sales | 2,300 | 780 |
Europe (UK) | ||
Net sales | 3,010 | 2,390 |
Mexico | ||
Net sales | 1,370 | 600 |
Asia | ||
Net sales | 9,050 | 3,830 |
Canada | ||
Net sales | 4,310 | 2,490 |
Latin America | ||
Net sales | $ 2,430 | $ 1,720 |
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