What changed in this filing

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Item 1. Financial Statements

2022-09-08 compared with 2022-06-09 · 106 added, 65 removed, 250 unchanged (41% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($000’s except for share and per share information)

Three Months Ended

Three Months Ended July 31,

Six Months Ended July 31,

Cost of goods sold

5 unchanged sentences

Income tax expense

Net income per common share:

Net income (loss)

Net income (loss) per common share:

Weighted average common shares outstanding:

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended July 31,

Six Months Ended July 31,

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments

Comprehensive income

Comprehensive income (loss)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 635 and $ 666 at April 30, 2022 and January 31, 2022, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 728 and $ 666 at July 31, 2022 and January 31, 2022, respectively

Prepaid VAT and other taxes

12 unchanged sentences

Total current liabilities

Deferred income taxes

Long-term portion of operating lease liabilities

5 unchanged sentences

Common stock, $ 0.01 par;

authorized 20,000,000 shares Issued 8,635,358 and 8,555,672 shares;

outstanding 7,670,636 and 7,615,967 shares at April 30, 2022 and January 31, 2022, respectively

authorized 20,000,000 shares Issued 8,650,580 and 8,555,672 ;

outstanding 7,514,725 and 7,615,967 at July 31, 2022 and January 31, 2022, respectively

Treasury stock, at cost;

964,722 and 939,705 shares at April 30, 2022 and January 31, 2022, respectively

1,135,855 and 939,705 shares at July 31, 2022 and January 31, 2022, respectively

Additional paid-in capital

11 unchanged sentences

Balance, January 31, 2021

Other comprehensive income

Other comprehensive loss

Stock-based compensation:

2 unchanged sentences

Return of shares in lieu of payroll withholding

Treasury stock purchased

Balance, July 31, 2021

Balance, April 30, 2021

Other comprehensive loss

Stock-based compensation:

Restricted stock issued

Restricted stock plan

Return of shares in lieu of payroll withholding

Treasury stock purchased

Balance, July 31, 2021

Balance, January 31, 2022

5 unchanged sentences

Treasury stock purchased

Balance, July 31, 2022

( 1,135,855 )

Balance, April 30, 2022

Other comprehensive loss

Stock-based compensation:

Restricted stock issued

Restricted stock plan

Return of shares in lieu of payroll withholding

Treasury stock purchased

Balance, July 31, 2022

( 1,135,855 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended July 31,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities

Provision for (recovery of) doubtful accounts

Adjustments to reconcile net income to net cash (used in) provided by operating activities

Provision for doubtful accounts

Deferred income taxes

1 unchanged sentence

Stock based and restricted stock compensation

Loss on disposal of property and equipment

Non-cash operating lease expense

(Gain) loss on disposal of property and equipment

Equity in loss of equity investment

6 unchanged sentences

Operating lease liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

17 unchanged sentences

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

Lakeland Industries, Inc.

14 unchanged sentences

thus for example, FY23 refers to the fiscal year ending January 31, 2023, (b) “Q” refers to quarter;

thus, for example, Q1 FY23 refers to the first quarter of the fiscal year ending January 31, 2023, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet and (d) “Statement of Income” refers to the unaudited condensed consolidated statement of income.

thus, for example, Q2 FY23 refers to the second quarter of the fiscal year ending January 31, 2023, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet, and (d) “Statement of Operations” refers to the unaudited condensed consolidated statement of operations.

On October 18, 2021, the Company entered into an Investment Agreement (the “Investment Agreement”) with Inova Design Solutions Ltd, a private limited company incorporated under the laws of England and Wales and headquartered in the United Kingdom, doing business as Bodytrak ® (“Bodytrak”), and the other parties thereto, pursuant to which Bodytrak agreed to issue and sell to the Company 508,905 cumulative convertible series A shares of Bodytrak (“Series A Shares”) in exchange for a payment by the Company of £2,000,000 ($ 2.8 million).

2 unchanged sentences

On April 28, 2022, the Company, under the terms of the Investment Agreement, acquired an additional 381,679 Series A Shares of Bodytrak for £1,500,000 ($ 1.9 million).

After completion of the additional investment, the Company owns 18.42 % of Bodytrak’s share capital.

After completion of the additional investment, the Company owns 18.42 % of Bodytrak’s total share capital.

The investment in Bodytrak is accounted for under the equity method given our board representation and the resulting ability to exercise significant influence.

3 unchanged sentences

Bodytrak’s solution is provided as a platform as a service (PaaS), delivering real-time data and cloud-based analytics, and hardware that includes a patented earpiece for physiological monitoring and audio communications.

For the quarter ended April 30, 2022, the Company recognized a loss of $ 27,000 as the Company’s share of Bodytrak’s net loss.

The loss is reflected in other income (expense), net in the consolidated statements of income.

Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out or moving average basis) or net realizable value.

For the three and six months ended July 31, 2022, the Company recognized a loss of $ 102,000 and $ 129,000 , respectively as the Company’s share of Bodytrak’s net loss.

The loss is reflected in other income (expense), net in the consolidated statements of operations.

Inventories consist of the following (in $000s):

April 30, 2022

January 31, 2022

Raw materials

15 unchanged sentences

Other than the changes described above, the terms and conditions of the Loan Agreement remain in full force and effect.

As of April 30, 2022, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility.

As of July 31, 2022, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility.

Borrowings in UK

There were no borrowings outstanding under the Company’s existing credit facility with HSBC Bank at April 30, 2022 and January 31, 2022.

Amounts due the Company, under the facility with HSBC Invoice Finance (UK) Ltd., of $ 1.5 million and $ 1.2 million as of April 30, 2022, and January 31, 2022, respectively, are included in other current assets on the accompanying consolidated balance sheets.

There were no borrowings outstanding under the Company’s existing credit facility with HSBC Bank at July 31, 2022 and January 31, 2022.

Amounts due to the Company, under the facility with HSBC Invoice Finance (UK) Ltd., of $ 0.8 million and $ 1.2 million as of July 31, 2022, and January 31, 2022, respectively, are included in other current assets on the accompanying consolidated balance sheets.

Concentration of Risk

19 unchanged sentences

There was approximately $ 4.2 million total included in the U.S.

bank accounts and approximately $ 41.8 million total in foreign bank accounts as of April 30, 2022, of which $ 50.2 million was uninsured.

bank accounts and approximately $ 37.0 million total in foreign bank accounts as of July 31, 2022, of which $ 40.5 million was uninsured.

Major Customer

No customer accounted for more than 10 % of net sales during the three months ended April 30, 2022 and 2021.

No customer accounted for more than 10 % of net sales during the three and six month periods ended July 31, 2022 and 2021.

Major Supplier

No vendor accounted for more than 10 % of purchases during the three months ended April 30, 2022 and 2021.

No vendor accounted for more than 10 % of purchases during the three and six month periods ended July 31, 2022 and 2021.

Stockholders’ Equity

7 unchanged sentences

The Amendment increases the number of shares of common stock, par value $ 0.01 per share, of the Company reserved for issuance under the Plan by 480,000 shares.

An aggregate of 840,000 shares of the Company’s common stock are authorized for issuance under the 2017 Plan, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events.

An aggregate of 840,000 shares of the Company’s common stock are authorized for issuance under the 2017 Plan, as amended subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events.

If any shares subject to an award are forfeited, expire, lapse or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, lapse or termination, again be available for issuance under the 2017 Plan.

The Company recognized total stock-based compensation costs, which are reflected in operating expenses (in $000’s):

Three Months Ended

Total equity programs

Total income tax expense recognized for equity programs

Three Months Ended July 31,

Six Months Ended July 31,

Total restricted stock and stock option programs

Total income tax expense recognized for stock-based compensation arrangements

Restricted Stock and Restricted Stock Units

Under the 2017 Plan, as described above, the Company awarded performance-based and service-based shares of restricted stock and restricted stock units to eligible employees and directors.

The following table summarizes the activity under the 2017 Plan for the three months ended April 30, 2022 and April 30, 2021.

This table reflects the amount of awards granted at the number of shares that would be vested if the Company were to achieve the maximum performance level under the December 2019, April 2020, June 2021 and April 2022 grants.

The following table summarizes the activity under the 2017 Plan for the six months ended July 31, 2022 and 2021.

Service-Based

Weighted Average Grant Date Fair Value

Outstanding at January 31, 2022

Outstanding at April 30, 2022

Outstanding at July 31, 2022

Service-Based

Weighted Average Grant Date Fair Value

Outstanding at January 31, 2021

Outstanding at April 30, 2021

Outstanding at July 31, 2021

The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and free cash flow for the April 2020 and June 2021 grants and revenue growth and EBITDA margin for the April 2022 grants.

1 unchanged sentence

The actual performance amount achieved is determined by the Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Committee.

The compensation cost is based on the fair value at the grant date, is recognized over the requisite performance/service period using the straight-line method, and is periodically adjusted for the probable number of shares to be awarded.

As of April 30, 2022, unrecognized stock-based compensation expense totaled $ 2.0 million pursuant to the 2017 Plan based on outstanding awards under the 2017 Plan.

The compensation cost is based on the fair value at the grant date, recognized over the requisite performance/service period using the straight-line method, and periodically adjusted for the probable number of shares to be awarded.

As of July 31, 2022, unrecognized stock-based compensation expense totaled $ 2.1 million pursuant to the 2017 Plan based on outstanding awards under the 2017 Plan.

This expense is expected to be recognized over approximately two years.

2 unchanged sentences

On July 6, 2021, the Board of Directors authorized an increase in the Company’s current stock repurchase program under which the Company may repurchase up to an additional $ 5 million of its outstanding common stock (the “Existing Share Repurchase Program”).

On April 7, 2022, the Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $ 5 million of its outstanding common stock (the “New Share Repurchase Program”).

The New Share Repurchase Program will become effective upon the completion of the Existing Share Repurchase Program, which has approximately $ 400,000 remaining for repurchases as of April 30, 2022.

The New Share Repurchase Program has no expiration date but may be terminated by the Board of Directors at any time.

Shares repurchased in Q1 FY23 totaled 25,017 shares at a cost of $ 0.4 million leaving approximately $ 5.4 million remaining under the stock repurchase programs at April 30, 2022.

The Company’s effective tax rate for the first quarter of FY23 was 20.2 %.

The Company recorded deferred tax benefits of $ 0.2 million related to accruals for China social taxes based on our evaluation of the deductibility of these items.

Excluding this discrete benefit the effective rate was 32.9 % which differs from the U.S.

Shares repurchased in Q2 FY23 totaled 171,133 shares at a cost of $ 2.7 million leaving approximately $ 2.7 million remaining under the stock repurchase programs at July 31, 2022.

The Company’s provision for income taxes for the three and six months ended July 31, 2022 and 2021 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company changed its permanent reinvestment assertions for its Chinese operations during the second quarter due to increased volatility of the Chinese yuan and an updated evaluation of investment strategies.

The Company recorded $ 2 million in withholding taxes for a planned repatriation.

Going forward, any adjustments to this provision will be reflected through current tax expense.

The Company's effective tax rate for the second quarter of FY23 was 149.9 %.

As noted above the Company recorded $ 2 million in withholding taxes due to a change in its’ permanent reinvestment assertion related to China.

Excluding this discrete expense, the effective rate was 35.0 % which differs from the U.S.

federal statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions and Global Intangible Low-Taxed Income (“GILTI”).

The Company’s effective tax rate for the first quarter of FY22 was 24.4 %, which differs from the U.S.

statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions and GILTI.

The Company's effective tax rate for the second quarter of FY22 was 26.9 % which differs from the U.S.

federal statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions and state income taxes.

The Company's effective tax rate for the six months ended July 31, 2022 was 91.8 %.

In addition to the $ 2 million discrete item above, in Q1 FY23, the Company recorded deferred tax benefits of $ 0.2 million related to accruals for China social taxes based on our evaluation of the deductibility of these items.

Excluding these discrete items, the effective rate was 34.1 % which differs from the U.S.

federal statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions and GILTI.

The Company's effective tax rate for the six months ended July 31, 2021 was 25.4 % which differs from the U.S.

federal statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions, state income taxes and the discrete item discussed above.

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 $ 3.4 million and $ 3.2 million at April 30, 2022 and January 31, 2022, respectively.

Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share as follows (in $000s except per share amounts):

Three Months Ended

Numerator - Net income

Denominator for basic net income per share (weighted-average shares which exclude shares in the treasury, 964,722 and 509,242 at April 30, 2022 and 2021, respectively

Effect of dilutive securities from equity plan

Denominator for diluted net income per share (adjusted weighted average shares)

Basic net income per share

Diluted net income per share

The valuation allowance was $ 3.7 million and $ 3.2 million at July 31, 2022 and January 31, 2022, respectively.

Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share as follows (in $000s except per share amounts):

Three Months Ended July 31,

Six Months Ended July 31,

Net income (loss)

Denominator for basic net income (loss) per share (weighted-average shares which exclude shares in the treasury, 1,135,855 and 736,696 at July 31, 2022 and 2021, respectively

Effect of dilutive securities from restricted stock plan

Denominator for diluted net income (loss) per share (adjusted weighted average shares)

Basic net income (loss) per share

Diluted net income (loss) per share

Contingencies

8 unchanged sentences

however, there can be no assurance as to the ultimate outcome of these matters.

As of April 30, 2022, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation.

As of July 31, 2022, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation.

Segment Reporting

We manage our operations by evaluating each of our geographic locations.

Our US operations include a facility in Alabama (primarily the distribution to customers of the bulk of our products and the light manufacturing of our chemical, wovens, reflective, and fire products).

Our US operations include a facility in Alabama (primarily the distribution to customers of the bulk of our products and the light manufacturing of our chemical, woven, reflective, and fire products).

The Company also maintains one manufacturing company in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable, reflective, fire and chemical suit production), a manufacturing facility in Vietnam (primarily disposable production) and a small manufacturing facility in India.

2 unchanged sentences

We have sales forces in the USA, Canada, Mexico, Europe, Latin America, India, Russia, Kazakhstan and China, which sell and distribute products shipped from the United States, Mexico, India or China.

The table below represents information about reported segments for the three month periods noted therein:

Three Months Ended

The table below represents information about reported segments for the three and six month periods noted therein:

Three Months Ended July 31,

Six Months Ended July 31,

(in millions of dollars)

USA Operations (including Corporate)

13 unchanged sentences

Consolidated intersegment sales

Three Months Ended

Three Months Ended July 31,

Six Months Ended July 31,

(in millions of dollars)

Operating Profit (Loss):

11 unchanged sentences

The table below presents external sales by product line:

Three Months Ended

Three Months Ended July 31,

(in millions of dollars)

Six Months Ended July 31,

(in millions of dollars)

External Sales by product lines:

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements