Lakeland Industries
Annual Report 2016

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KLAKELAND INDUSTRIES INC - LAKEFiled: April 26, 2017 (period: January 31, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K (Mark one) xANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2017 OR oTRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File Number: 0-15535LAKELAND INDUSTRIES, INC.(Exact Name of Registrant as Specified in its Charter) Delaware 13-3115216(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, NY 11779(Address of Principal Executive Offices) (Zip Code) (Registrant's telephone number, including area code) (631) 981-9700Securities registered pursuant to Section 12(b) of the Act:Common Stock $0.01 Par Value(Title of Class)Name of Exchange on which registered – NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act:Not Applicable Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ¨ No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.Yes ¨ No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filingrequirements for the past 90 days.Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this Chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer or a smaller reporting company. Seethe definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨Nonaccelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act)Yes ¨ No x As of July 31, 2016, the aggregate market value of the registrant’s common stock held by nonaffiliates of the registrant was $67,625,403 based on theclosing price of the common stock as reported on the National Association of Securities Dealers Automated Quotation System National Market System. Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Class Outstanding at April 24, 2017Common Stock, $0.01 par value per share 7,263,774 Shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A of the Security Exchange Act of 1934 are incorporated byreference into Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K. Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. LAKELAND INDUSTRIES, INC.INDEX TO ANNUAL REPORT ON FORM 10-K PART 1: Item 1Business1Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments19Item 2.Properties19Item 3.Legal Proceedings21Item 4.Mine Safety Disclosures21PART II: Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities22Item 6.Selected Financial Data23Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations24Item 7A.Quantitative and Qualitative Disclosures about Market Risk32Item 8.Financial Statements and Supplementary Data34Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure70Item 9A.Controls and Procedures71Item 9B.Other Information72PART III: Item 10.Directors, Executive Officers and Corporate Governance72Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters72PART IV: Item 15.Exhibits and Financial Statement Schedules74 iSource: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. This Annual Report on Form 10-K contains forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private SecuritiesLitigation Reform Act of 1995. Forward-looking statements involve risks, uncertainties and assumptions as described from time to time in registrationstatements, annual reports and other periodic reports and filings of the Company filed with the Securities and Exchange Commission. All statements, otherthan statements of historical facts, which address the Company’s expectations of sources of capital or which express the Company’s expectation for thefuture with respect to financial performance or operating strategies, can be identified as forward-looking statements. As a result, there can be no assurancethat the Company’s future results will not be materially different from those described herein as “believed,” “anticipated,” “estimated” or “expected,”“may,” “will” or “should” or other similar words which reflect the current views of the Company with respect to future events. We caution readers thatthese forward-looking statements speak only as of the date hereof. The Company hereby expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any such statements to reflect any change in the Company’s expectations or any change in events, conditions orcircumstances on which such statement is based. PART I Lakeland Industries, Inc. (the “Company” or “Lakeland,” “we,” “our,” or “us”) was incorporated in the State of Delaware in 1986. Our executive office islocated at 3555 Veterans Memorial Hwy, Suite C, Ronkonkoma, New York 11779, and our telephone number is (631) 981-9700. Our website is located atwww.lakeland.com. Information contained on our website is not part of this report. ITEM 1. BUSINESS Overview We manufacture and sell a comprehensive line of safety garments and accessories for the industrial and public protective clothing market. Our products aresold by our in-house customer service group, our regional sales managers and independent sales representatives to a network of over 1,200 North Americansafety and mill supply distributors. These distributors in turn supply end user industrial customers, such as integrated oil, chemical/petrochemical, utilities,automobile, steel, glass, construction, smelting, munition plants, janitorial, pharmaceutical, mortuaries and high technology electronics manufacturers, aswell as scientific and medical laboratories. In addition, we supply federal, state and local governmental agencies and departments, such as fire and lawenforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control. Internationally,sales are to a mixture of end users directly and to industrial distributors depending on the particular country market. Sales are made to more than 40 foreigncountries but are primarily in China, European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Colombia, Mexico, Ecuador and SoutheastAsia. In FY17 we had net sales of $86.2 million and $99.6 million in FY16. For purposes of this Form 10-K, FY refers to a fiscal year ended January 31; forexample, FY17 refers to the fiscal year ended January 31, 2017. FY17 was a year remarkable for its lack of big emergency events such as the previous two years, with the Ebola epidemic in Africa and the massiveremediation effort following the bird flu outbreak in the United States of America (“US”), both of which had major impacts on Lakeland’s revenue and profitin the prior fiscal years. Nor were there as many oil or chemical spills as historically occur. The price of oil recovered significantly from its bottom, but notenough to spur the sort of exploration and development as was the case during the fracking boom, as little occurred outside of the Permian basin whereplentiful existing wells and infrastructure enable lower production costs. Accordingly, sales of protective garments to be utilized in the oil and gas marketswere adversely affected. Our results of operations for FY17 must be considered in view of the absence of the aforementioned. So some of these key driverswere absent. For most of the year, economic growth and investment were tepid as industrial production declined in the US due to the strength of the dollar and job lossesin the Energy sector, in China where the growth rate continued to decrease, and in Europe where chaotic immigration, terrorism, and Brexit dominated theheadlines and growth was virtually at zero. Compounding this, the US presidential election between candidates with essentially opposite views on criticalissues like taxes, regulation, immigration, and trade policy caused even more uncertainty for manufacturers and distributors who were already beingconservative in their commitments to inventories and investment. This in turn limited growth opportunities while leading to more aggressive pricing from thecompetition which had to be met. Fortunately, however, significant cost-cutting was proactively taken in the US in the first quarter of FY17 - as managementbelieved at the time that it would likely be a flat revenue growth year- and this provided a cushion that protected margins. 1 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management believes a sense that the new US administration will be good for business has begun to take hold among our customers, and while too early tobe conclusive, we believe we are beginning to see more conviction in their ordering patterns. For these reasons management is optimistic that organic growthwill be stronger in FY18. However, the Company recognizes the need to grow faster than what just organic growth from existing product lines and market segments will contribute, soit has accelerated product development, is pressing ahead aggressively with the rollout of new products, is proceeding with the addition of field personnel toincrease sales in our target industrial sectors, and is entering new sectors where we see opportunity. Additionally, a major strategic companywide objective to accelerate growth throughout the company is to push additional products and sales tools that aresuccessful in the key US and China markets to the other international operations, which have traditionally carried smaller lines. To facilitate this, theCompany is also aggressively hiring more sales people world-wide as well as upgrading marketing. The idea is to better leverage product and marketingassets Companywide, thereby promoting more consistent product line offerings and global branding. As always, the cornerstone of the Company’s strategy is the belief that owning and operating its own factories for the bulk of production is a key advantagein terms of control of costs, quality, delivery times, and a unique ability to rapidly respond to emergency situations by being able to scale up almostinstantly, compared to the competition that relies almost exclusively on contractors. Industry Overview The industrial work clothing market includes our limited use/disposable protective or safety clothing, our high-end chemical protective suits, our firefightingand heat protective apparel, gloves and our reusable woven garments. The industrial protective safety clothing market in the United States has evolved over the past 47 years as a result of governmental regulations andrequirements and commercial product development. In 1970, Congress enacted the Occupational Safety and Health Act, or OSHA, which requires employersto supply protective clothing in certain work environments. Certain states have also enacted worker safety laws that further supplement OSHA standards andrequirements. The advent of OSHA coincided with the development of light disposable fabrics, such as SMS (a three layered nonwoven) and Polypropylene which, for thefirst time, allowed for the economical production of lightweight, disposable protective clothing. The attraction of disposable garments grew in the late 1970sas a result of increases in labor and material costs of producing cloth garments and the promulgation of federal, state and local safety regulations. Also, inorder to comply with World Trade Organization (“WTO”) entry requirements, foreign countries are beginning to adopt and imitate OSHA regulations,American National Standards Institute (“ANSI”) and Committee European de Normalization (“CE”) standards. Thus, these developing international marketsare growing much more rapidly than the US markets. International and Domestic Standards Standards development, within both the US and global markets, continues to challenge manufacturers as the pace of change and adoption of new standardsincrease. Complex and changing international standards play to Lakeland’s strengths when compared to most multinationals or smaller manufacturers.Lakeland currently sits on boards and/or works closely with groups involved in writing many international standards such as the American Society forTesting and Materials International (“ASTM”), the National Fire Protection Association (“NFPA”), International Safety Equipment Association (“ISEA”) inthe US; the European Committee for Standardization (“CEN”) and the International Organization for Standardization (“ISO”) in Europe; the China NationalStandards Board (“GB”) in China; and the Standards Australia and Standards New Zealand (“ASNZ”) in Australia and New Zealand. Globally, not only are the standards continuing to change at a rapid pace, but the focus of standards activity is shifting. In response to increasing use ofcertification processes as a technical barrier to trade, standards writing bodies in the US and Europe are aggressively pursuing standards for conformityassessment that shore up known weaknesses in the certification processes and set minimum levels of conformity assessment. Examples of such standardsinclude the recent issue by CEN of a new Personal Protective Equipment (“PPE”) Regulation and the publication of ANSI/ISEA 125, “American NationalStandard on Conformity Assessment”. The result is an increasingly dynamic standards environment where not only are the standards changing, but theminimum requirements for conformity with the certification process itself are changing. 2 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. A number of developing nations are now becoming active in their own standards development based on existing international standards. However, webelieve that the primary goal of their standards writing activity is not focused on worker protection (that is provided for by the use of international standards),rather they are attempting to establish their own certification criteria that will protect their domestic markets or favor specific regional suppliers. This presentsa new challenge in that now not only are we faced with multiple test methods and standards, but we have the potential for multiple certification processes.While this adds to product development and sales expenses, the additional cost is only incremental. The real challenge is in navigating the certificationprocess itself. Lakeland, by virtue of its international manufacturing and sales operations, is in a unique position to capitalize on this complex dynamic. The international standards environment remains volatile. Canada has adopted its own version of International Standards Organization (“ISO”) ISO 16602and EN/ISO 13982 for disposable and chemical protective clothing, CEN is currently in the process of revising its suite of standards and a number ofcountries continue efforts to bring their own national standards into harmony with ISO standards. While standards harmonization is laudable, it is failing tomake the standards landscape easier to navigate globally. Harmonization of standards and test methods does not necessarily translate into harmonization ofcertification, and therein lies the problem. Europe with its new PPE Regulation, along with NFPA and ASTM Standards, has clearly defined processes forindependent, third-party certification. Unfortunately, ISO Standards have no equivalent to the European PPE Regulation and do not contain certificationprocess requirements within the standards themselves as do NFPA and ASTM Standards. Furthermore, countries seeking to comply with General Agreementon Tariffs and Trade (“GATT”) provisions against “Technical Barriers to Trade” that select ISO Standards as their national standards have no guidance as tothe certification process itself. Many of the countries are unwilling to accept certifications or test data from laboratories or notifying bodies that do not haveoperations within the boundaries of their own countries. As a result, more and more countries are developing their own certification protocols requiring use ofdomestic test houses and labs. The result of this movement is that while standards are being harmonized, the industry is not realizing the benefits of thisharmonization in terms of testing and certification, cost reduction, or simplicity in labeling. While the World Trade Organization (“WTO”) and ISO havebeen successful in removing national standards as technical barriers to trade, the national certification requirements have replaced standards as an equallyformidable barrier to trade. We believe that Lakeland’s global footprint provides us with a sustainable advantage in selling PPE within this increasinglycomplex global market. Business Strategy Key elements of our strategy include: ·Increase International Sales Opportunities. In the past, we aggressively increased 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, Chileand Buenos Aires, Argentina and in FY11, we opened sales offices in Russia, India and Kazakhstan. The Company acquired Qualytextil (lateridentified herein as Lakeland Brazil), a Brazilian manufacturer, in FY09, with the intent of penetrating this market but due to extreme challengestransferred the shares of this subsidiary to an officer of that company on July 31, 2015 and no long maintain operations in Brazil. While thechallenges in Brazil resulted in our decision to exit Brazil, we continue to believe in this strategy of aggressively penetrating international markets.Aiding our focus is the fact that many countries have adopted legislation similar to the 1970 US OSHA in order to facilitate their entry into theWTO which has, as a requisite for entry, worker safety laws (like OSHA), social security, environmental and tax laws similar to that of the USA andEurope. These new worker safety laws have driven the demand for our products in these growing economies. ·Improve Marketing in Existing Markets. We believe significant growth opportunities are available to us through the better positioning, marketingand enhanced cross-selling of our reusable woven protective clothing, glove and arm guards, reflective clothing, high-end chemical suit productlines and our limited use/disposable lines as a bundled offering. This allows our customers one-stop shopping using combined freight shipments. ·Continued Emphasis on Customer Service. We continue to offer a high level of customer service to distinguish our products and to create customerloyalty. We offer well-trained and experienced sales and support personnel, on-time delivery and accommodation of custom and rush orders. Wealso seek to advertise our Lakeland branded trade names and trademarks. 3 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ·Introduce New Products; Focus on Energy Sector. We continued our history of product development and innovation by introducing newproprietary products across all our product lines. Our innovations have included Micromax® disposable protective clothing line, our ChemMax®line of chemical protective clothing, several patented glove designs, superior quality innovative products protecting against electrical hazards, andindustry-leading fire suit designs. We own 17 patents on fabrics and production machinery, with two foreign applications in process, and continueto work on developing fabrics that could potentially lead us into new markets and channels. In North America, our growth strategy is to focus onkey target sectors where we have advantages, and to increase our involvement at the end user level by adding sales personnel and enhancing ourmarketing and product training tools to make it easier for the sales teams of our distributors to be successful promoting our products. Though theEnergy sector has been down and exploration and field development is greatly reduced, low oil prices are giving refineries the opportunity to gooff line after several years of high prices and running at full capacity and perform long-deferred maintenance. It is worth noting that the decline inoil prices has not affected demand in the downstream (refining and distribution) portion of the oil business, which is where 80% of our sector salesoccur. The Company continues to experience demand growth in the utility industry- both electric and gas- for our Reflective clothing division. Thereflective division is already a steadily growing area for Lakeland, as we add new fire resistant (“FR”), static dissipative and arc flash protectiongarments, and OSHA enforces broader requirements for their use, we expect to see continued growth. The recent investment in a stronger sales teamin Mexico is beginning to pay off with sales growth as the impact of low oil prices on the gas industry is offset by strong growth in manufacturing,particularly noticeable in the number of new automobile factories located in that country. We believe that as this growth continues and as andwhen oil prices recover, Mexico will become a very important region for the Company, building on our competitive advantage of localmanufacturing, provided that NAFTA and trade issues do no cause disruptions. We have recently integrated the US, Canadian, and Mexican salesteams into one coordinated unit, a strategic recognition that the three countries are increasingly part of a great North American market with inter-related industries and companies throughout, and our sales teams are sharing opportunities with each other. We have experienced situations inwhich we could not break through with a company in one country, but the team in another country was able to get in and make a conversion to ourproducts. Then, after successful use of our products in that one country, the doors open to us in the other. We continue to pursue conversions to ourproducts from DuPont product end users, based on our overall performance and prices. We believe the inevitable disruptions to DuPontsurrounding its proposed mega merger with Dow Chemical, followed by planned spin offs over the next several years, gives us additional openingsfor which we are gearing up to take advantage. Our marketing is being significantly upgraded in terms of resources applied, more and bettercollateral materials, and increasingly effective use of social media. An example of this is an on-going Fire Division campaign driven by Lakelandsponsorships of several top-ranked participants in the “Combat Challenge” (an international skills and fitness competition) that netted significantnumbers of followers, who as a result expressed interest in our gear. Similar campaigns are being planned for other product lines, including tosupport the adoption of an exclusive new proprietary technology that we believe may have a significant impact on how end users select chemicalsuits and suppliers. ·Decrease Manufacturing Expenses by Moving Production to International Facilities. We continued to identify opportunities to take advantage ofour low cost production capabilities in China and Mexico. Beginning in 1995, we successfully moved the labor-intensive sewing operation for ourlimited use/disposable protective clothing lines to facilities in Mexico and China. Beginning January 1, 2005, pursuant to the United States WorldTrade Organization Treaty with China and the 1995 North American Free Trade Agreement (“NAFTA”), the reduction in quota requirements andtariffs imposed by the US and Canada on textile goods, such as our reusable woven garments, have made it more cost effective to move productionfor some of these product lines to our assembly facilities in China and Mexico. Additionally, ·We continue to press our raw material and component suppliers for price reductions and better payment terms.·We are sourcing more raw materials and components from our China based operations as opposed to sourcing from Europe and NorthAmerica.·We are re-engineering many products to reduce the amount of raw materials used and reduce the direct labor required. 4 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our Competitive Strengths Our competitive strengths include: ·Industry Reputation. We devote significant resources to creating customer loyalty and brand integrity by accommodating custom and rush ordersand focusing on on-time delivery. Additionally, our ISO 9001 and 9002 certified facilities manufacture high-quality products. As a result of thesefactors, we believe that we have an excellent reputation in the industry. ·International Manufacturing Capabilities. We have operated our own manufacturing facilities in Mexico since 1995 and in China since 1996. Ourfacilities in China in FY17 totaled 177,316 sq. ft. of manufacturing, warehousing and administrative space, and our facility in Mexico totaled74,000 sq. ft. of manufacturing, warehousing and administrative space. Our facilities and capabilities in China and Mexico allow access to a lessexpensive labor pool than is available in the US and permits us to purchase certain raw materials at a lower cost than are available domestically. ·International Sales Offices. We have sales offices around the world to service various major markets, including offices in Toronto, Canada; Hull,UK; Beijing, Weifang, Chongqing and Shanghai, China; Australia; Southeast Asia; Santiago, Chile; Buenos Aires, Argentina; Jerez, Mexico;Moscow, Russia; and Ust-Kamenogorsk, Kazakhstan. ·Comprehensive Inventory. We have a large product offering with numerous specifications, such as size, styles and pockets, and maintain a largeinventory of each in order to satisfy customer orders in a timely manner. Many of our customers traditionally make purchases of industrial protectivegear with expectations of immediate delivery. We believe our ability to provide timely service for these customers enhances our reputation in theindustry and positions us strongly for repeat business, particularly in our limited use/disposable protective clothing lines. ·Manufacturing Flexibility. By locating labor-intensive manufacturing processes, such as sewing, in Mexico and China, and by utilizing sewingsubcontractors, we have the ability to increase production without substantial additional capital expenditures. Our manufacturing systems allow usflexibility for unexpected production surges and alternative capacity in the event any of our independent contractors become unavailable. Products The following table summarizes our principal product lines, the raw materials used to manufacture them, their applications and end markets: Product Line Raw Material Protection Against End MarketLimited use/disposable protectiveclothing · Laminates of Polyethylene,Spunlaced Polyester, SMS,Polypropylene, and CompanyMicromax®, Micromax NS,Micromax and HBF,ChemMax® 1, ChemMax® 2,Pyrolon®, and numerous othernon-woven fabrics · Contaminants, irritants, metals,chemicals, fertilizers,pesticides, acids, asbestos,PCBs, lead, dioxin and manyother hazardous chemicals· Viruses and bacteria (AIDS,streptococcus, SARS, Bird fluand hepatitis) · Integrated oil· Chemical industries· Public utilities· Automotive and pharmaceuticalindustries· Government (terrorist response)· Laboratories· JanitorialHigh-end chemical protectivesuits · ChemMax® 3 and 4· Interceptor®· Pyrolon® CRFR· Other Lakeland patented co-polymer laminates · Chemical spills· Toxic chemicals used in manyvaried manufacturingprocesses· Terrorist attacks, biological andchemical warfare (sarin,anthrax and ricin) · Integrated oil, chemical andnuclear industries· Hazardous material teams· Fire departments (hazmat)· Government (first responders) 5 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Product Line Raw Material Protection Against End MarketFirefighting and heat protectiveapparel · Nomex®· Aluminized Nomex®· Aluminized PBI/ Kevlar®· PBI Matrix and Gemini· Millenia XT®· Basofil®· Advance· Advance Ultra· Fyrban · Fire, burns and excessive heat · Municipal, corporate andvolunteer fire departments· Wildland fire fighting· Hot equipment maintenancepersonnel and industrial firedepartments· Oil well fires· Airport crash rescueReusable woven garments · Staticsorb carbon thread withpolyester· Cotton polyester blends· Cotton· Polyester· Tencate® FR cottons· Nomex®/FR Aramids· Nylon· Indura® Ultrasoft/FR cotton· Stedfast BB · Protects manufactured productsfrom human contamination orstatic electrical charge· Bacteria, viruses and bloodborne pathogens· Protection from Flash fires · General industrial applications· Household uses· Clean room environments· Emergency medical ambulanceservices· Chemical and oil refining· Medical and laboratory facilitiesHigh Visibility Clothing · Polyester mesh· Solid polyester· FR polyester mesh· FR solid polyester· Modacrylic· Modacrylic antistatic· FR cotton· Nomex· FR trim · Lack of visibility· Heat, flame, sparks· Arc flash· Static buildup, explosiveatmospheres· Fire, heat explosions · Highway· Construction· Maintenance· Transportation· Airports· Police· Fire, EMS· Electric, coal and gas utilities· Extrication· Confined space rescueGloves and Sleeves · Kevlar® yarns· Kevlar® wrapped steel coreyarns· Spectra® yarns· High Performance Polyethyleneyarns (“HPPE”)· Composite engineered yarns· Nitrile, latex, natural rubber,neoprene, polyurethanecompounds and mixturesthereof · Cuts, lacerations, heat,hazardous chemicals anddermatological irritants · Integrated oil· Automotive, glass and metalfabrication industries· Chemical plants· Food processing· Electronic industries 6 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Limited Use/Disposable Protective Clothing We manufacture a complete line of limited use/disposable protective garments, including coveralls, laboratory coats, shirts, pants, hoods, aprons, sleeves, armguards, caps and smocks. Limited use garments can also be coated or laminated to increase splash protection against harmful inorganic acids, bases and otherhazardous liquid and dry chemicals. Limited use garments are made from several nonwoven fabrics, including our premium lines, our own trademarkedfabrics, such as Pyrolon® Plus 2, XT, Micromax®, Micromax NS, Safegard®, Zonegard®, ChemMax® 1 and 2 and TomTex®, which are made of spunlacedpolyester, polypropylene, laminates, microporous films and derivatives. We incorporate many seaming, heat sealing and taping techniques depending on thelevel of protection needed in the end use application. Typical users of these garments include integrated oil/petrochemical refineries, chemical plants and related installations, automotive manufacturers,pharmaceutical companies, construction companies, coal, gas and oil power generation utilities and telephone utility companies, laboratories, mortuaries andgovernmental entities. Numerous smaller industries use these garments for specific safety applications unique to their businesses. Additional applicationsinclude protection from viruses and bacteria, such as AIDS, streptococcus, SARS and hepatitis, at international hospitals, clinics and emergency rescue sitesand use in clean room environments to prevent human contamination in the manufacturing processes. Our limited use/disposable protective clothing products range in unit price from $0.19 for shoe covers to approximately $6.00-$14.00 for a light dutyChemMax® 1 serged or sealed seam laminated hood and booted coverall. Our largest selling item, a standard white Micromax NS ANSI standard or CEstandard coverall, sells for approximately $2.00 to $3.75 per garment. By comparison, similar reusable cloth coveralls range in price from $35.00 to $90.00,exclusive of laundering, maintenance and shrinkage expenses. We warehouse and sell our limited use/disposable garments primarily at our Alabama and China manufacturing facilities and secondarily from warehouses inHull, United Kingdom; Toronto, Canada; Buenos Aires, Argentina; Santiago, Chile; Moscow, Russia; Ust-Kamenogorsk, Kazakhstan; Houston, Texas, andLas Vegas, Nevada. The fabric is cut and sewn into required patterns at our two Chinese and one Mexican plant and shipped to all our sales points around theworld. Our assembly facilities in China and Mexico cut, sew and package the finished garments and return them primarily to our Alabama plant, normallywithin 1 to 10 weeks, for immediate shipment to our North American customers. In FY17 and FY16, there was no independent sewing contractor that accounts for more than 10% of our production of the limited use disposable garments orany of our other divisions. We believe that we can obtain adequate alternative production capacity in a normal situation should any of our independentcontractors become unavailable. High-End Chemical Protective Suits We manufacture and sell heavy duty protective chemical suits and protective apparel from our proprietary CRFR, ChemMax® 3, 4, Interceptor and otherfabrics. These suits are worn by individuals on hazardous material teams and within general industry to provide protection from powerful, highlyconcentrated and hazardous or potentially lethal chemical and biological toxins, such as toxic wastes at Superfund sites, toxic chemical spills or biologicaldischarges, chemical or biological warfare weapons (such as sarin, anthrax or ricin and mustard gas) and chemicals and petro-chemicals present during thecleaning of refineries and nuclear facilities and protection from infectious disease agents such as Ebola. Our line of chemical protective clothing ranges inprice from about $22 to $1,300 per garment. The chemical suits can be used in conjunction with a fire protective shell that we manufacture to protect the userfrom both chemical and flash fire hazards. We have also introduced two patented garments approved by the National Fire Protection Agency (NFPA) forvarying levels of protection: ·Interceptor®, two multilayer films laminated on either side of durable nonwoven substrate. This garment provides a broad spectrum chemical barrierto gases, vapors and liquids. This garment is of an encapsulating design and is available in CE Type 1 certified configurations.·ChemMax® 4 is a multilayer barrier film laminated to a durable nonwoven substrate. This garment is a broad spectrum chemical barrier, but itsgreatest advantage is that the material is strong enough to hold an airtight zipper and to withstand reuse. As a result, it provides a low cost option forencapsulating garments and is durable enough for multiple reuse provided the garment is not exposed to chemical hazards. It is available in CE type4 and 3 certified garments. 7 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The addition of Interceptor and ChemMax® 4 to our product line provides Lakeland with, we believe, the most complete and cost-effective line of chemicalprotective garments available on the market today. Garments are certified to NFPA standards where applicable in the Americas, and versions of all of thesegarments are also CE certified for European and Pan Asian markets. We manufacture higher end chemical protective clothing with taped seams at our facilities in Mexico and China with light manufacturing in Alabama. Usingfabrics, such as ChemMax® 1, ChemMax® 2, ChemMax® 3, ChemMax® 4 and Interceptor, we design, cut, sew and seal these materials to meet customerpurchase orders. Firefighting and Heat Protective Apparel We manufacture an extensive line of UL/NFPA-certified structured firefighter protective apparel for domestic and foreign fire departments, available both instandard stock form and custom configurations. We offer basic firefighter turnout/bunker gear in the Attack (A10) and Battalion (B1) styles. Introduced in 2013 are the Battalion (“B2”) style with advancedergonomic features and the Stealth style, with innovative features new to the fire industry. We also manufacture each of the above styles in our UL/NFPA-certified Proximity line for Aircraft Rescue Fire Fighting (“ARFF”) with aluminized shells. We manufacture full lines of Fire service extrication suits in FR cotton, UL/NFPA-certified Wild land firefighting apparel in multiple fabrics and AluminizedKiln entry/Approach suits to protect industrial workers from extreme heat. We manufacture fire suits at our facilities in China, Mexico and Alabama. Our fire suits range in price from about $800 for standard fire department turnoutgear to $2,000 for custom gear. Our Lakeland Fire® brand of firefighting apparel continues to benefit from ongoing research and development investment, aswe seek to address the ergonomic needs of stressful occupations. Reusable Woven Garments We manufacture and market a line of reusable and washable woven garments that complement our firefighting and heat protective apparel offerings andprovide alternatives to our limited use/disposable protective clothing lines and give us access to the much larger woven industrial and health care-relatedmarkets. Cloth reusable garments are favored by customers for certain uses or applications because of familiarity with and acceptance of these fabrics andwoven cloth’s heavier weight, durability, longevity and comfort. These products allow us to supply and satisfy a wider range of safety and customer needs. Our product lines include the following: ·Electrostatic dissipative apparel used by electric and gas utilities.·Flame resistant Nomex®/FR and FR Cotton coveralls/pants/jackets used in petrochemical and refining operations.·Cotton and Polycotton coveralls, lab coats, pants and shirts. Our reusable woven garments range in price from $30 to $200 per garment. We manufacture woven cloth garments at our facilities in China, Mexico andArgentina. We are continuing to relocate highly repetitive sewing processes for our high volume, standard product lines, such as woven protective coverallsand fire retardant coveralls, to our facilities in China and Mexico where lower fabric and labor costs allow increased profit margins. High Visibility Clothing Lakeland Reflective manufactures and markets a comprehensive line of reflective apparel meeting the American National Standards Institute (ANSI)requirements. The line includes vests, T-shirts, sweatshirts, jackets, coats, raingear, jumpsuits, hats and gloves. Fabrics available, including solid and mesh fluorescent, polyester, both standard and FR treated, Modacrylic materials, which meet ASTM 1560 Test methodfor standard 70 Electric Arc Protection, are part of our offering. The breathable Modacrylic fabric, that we introduced last year, has fabric that has a strongappeal in states where very hot weather affects utility workers working outside during spring and summer (heat prostration). 8 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our High Vis Polyurethane FR/ARC rated rainwear is light in weight, soft, flexible and provides a breathable, cooler garment. This product is intended for theGas and Electrical Utility markets. The Lakeland ARC TECH FR/PU garment exceeds all of the required ASTM ARC and Flash fire ratings for the largeElectric and Gas Utility market. Our domestic vest production occurs in our facilities in Mexico and China with light manufacturing in Alabama and is focused on custom vest requirements.Many corporations and agencies, such as State Departments of Transportation, develop custom specifications which they feel are more efficient in meetingtheir specific needs versus an off-the-shelf product. We also can import a significant amount of product from China and Mexico to meet the demand for itemsin high volume commodity markets. In addition to ANSI Reflective items, Lakeland Hi-Visibility manufactures Nomex and FR cotton garments which have reflective trim as a part of their designcriteria. These garments typically are used in rescue operations, such as those encountered with a vehicular crash. Garments in this group are not as pricesensitive as those in the reflective categories. Consequently, they are made in our facilities in Mexico and China with light manufacturing in Alabamafacility where we can react to customized needs and offer quicker customer response. Garments in this group can range in price from $200 to $350. Gloves and Sleeves We manufacture and sell specially designed glove and sleeve protective products made from Kevlar®, a cut and heat resistant fiber produced by DuPont,Spectra®, a cut resistant fiber made by Honeywell and our proprietary patented engineered yarns. We are one of only nine companies licensed in NorthAmerica to sell 100% Kevlar® gloves, which are high strength, lightweight, flexible and durable. Kevlar® gloves offer a better overall level of protection andlower worker injury rate, and are more cost effective than traditional leather, canvas or coated work gloves. Kevlar® gloves, which can withstand temperaturesof up to 400°F and are cut resistant enough to allow workers to safely handle sharp or jagged unfinished sheet metal, are used primarily in the automotive,glass and metal fabrication industries. Our higher end string knit gloves range in price from about $40 to $170 for a dozen pair. We manufacture these stringknit gloves primarily at our Mexican facility, enabling lower production and labor costs. We have received patents for our Despro® and Despro® Plus products on manufacturing processes that provide greater cut and abrasion hand protection tothe areas of a glove where it wears out prematurely in various applications. For example, the areas of the thumb crotch and index fingers are made heavierthan the balance of the glove, providing increased wear protection and longer glove life, reducing overall glove costs. This proprietary manufacturingprocess allows us, we believe, to produce our gloves more economically and provide a greater value to our end user. Quality All of our manufacturing facilities are ISO 9001 or 9002 certified. ISO standards are internationally recognized quality manufacturing standards establishedby the International Organization for Standardization based in Geneva, Switzerland. To obtain our ISO registration, our factories were independently auditedto test our compliance with the applicable standards. In order to maintain registration, our factories receive regular announced inspections by an independentcertification organization. While ISO certification is advantageous in retaining CE certification of products, we believe that the ISO 9001 and ISO 9002certifications make us more competitive in the marketplace, as customers increasingly recognize the standard as an indication of product quality. As we are increasingly sourcing fabrics internationally, we installed a quality control laboratory at our China facility. This laboratory is critical for ensuringthat our incoming raw materials meet our quality requirements, and we continue to add new capabilities to this facility to further guarantee product qualityand to aid in new product development. We have also added a new test lab in Decatur, Alabama. This lab was completed in FY16 and will be the primary facility to pre-test all NFPA certifiedgarments. This lab includes an industrial washer and dryer, home washer and dryer, shower tester, Martindale abrasion tester, Crestron microscope, flamecabinet, and convection oven. This lab will ensure that garments submitted to Underwriter’s Laboratories (“UL”) for certification are assured to passcertification, thus reducing overall certification costs. 9 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Marketing and Sales Domestically, we employ a field sales force in order to better support customers and enhance marketing. We further leverage our in-house sales team with 60independent sales representatives. These employees and representatives call on over 1,000 industrial safety and fire service distributors nationwide topromote and sell our products. Distributors buy our products for resale and typically maintain inventory at the local level in order to assure quick responsetimes and the ability to serve their customers properly. Our sales employees and independent representatives have consistent communication with end usersand decision makers at the distribution level, thereby allowing us valuable feedback on market perception of our products, as well as information about newdevelopments in our industry. As a key competitive and marketing advantage, we manufacture nearly all the garments we sell in our own factories for better control of costs, quality anddelivery. Our competitors rely largely on contractors, which is a major selling point in our favor, as customers are more comfortable dealing with the actualmanufacturer. We seek to maximize the efficiency of our established distribution network through direct promotion of our products at the end user level. We advertiseprimarily through trade publications, and our promotional activities include sales brochures, emails and our website. We exhibit at both regional andnational trade shows, such as the National Safety Congress, the American Industrial Hygiene Association (AIHA), the American Society of Safety Engineers(ASSE), the CIOSH, the COS+H and the A+A show in Dusseldorf, Germany. Product line expansion to higher value products is progressing in all global markets and is contributing to increased brand recognition, sales growth andprofitability. We believe that future international growth is still sustainable in the coming year, based on our current estimates of market penetration, theintroduction of higher value products and the opportunity to open new markets in which we do not yet have a presence. Lakeland has salespeople in 18 countries outside of the US and product sales in more than 40 countries. Internationally, our sustainable market advantagescontinue to be our knowledge of global standards, the diversity of our product offering and the fact that we manufacture our own products. This provides ourcustomers with high level product selection, quality, delivery and customer service. There are no customers who accounted for 10% of sales or more in FY17and in FY16. Suppliers and Materials Our largest supplier was Precision Fabric Group from whom we purchased 13% and 9.5% of our total purchases in FY17 and FY16. We do not have long-term,formal trademark use agreements with any other suppliers of nonwoven fabric raw materials used by us in the production of our limited use/disposableprotective clothing product lines. Materials, such as polypropylene, polyethylene, polyvinyl chloride, spunlaced polyester, melt blown polypropylene andtheir derivatives and laminates, are available from 30 or more major mills. FR fabrics are also available from a number of both domestic and internationalmills. The accessories used in the production of our disposable garments, such as thread, boxes, snaps and elastics, are obtained from unaffiliated suppliers.We have not experienced difficulty in obtaining our requirements for these commodity component items. We have not experienced difficulty in obtaining materials, including cotton, polyester and nylon, used in the production of reusable nonwovens andcommodity gloves. We obtain Honeywell Spectra® yarn, used in our super cut-resistant Dextra Guard gloves, and Kevlar®, used in the production of ourspecialty safety gloves, from independent mills that purchase the fibers from DuPont. Materials used in our fire and heat protective suits include glass fabric, aluminized glass, Nomex®, aluminized Nomex®, Kevlar®, aluminized Kevlar® andpolybenzimidazole, as well as combinations utilizing neoprene coatings. Traditional chemical protective suits are made of Viton®, butyl rubber andpolyvinyl chloride, all of which are available from multiple sources. Advanced chemical protective suits are made from our proprietary ChemMax® 1, 2, 3, 4and Interceptor®. We have not experienced difficulty obtaining any of these materials. Competition Our business is highly competitive due to large competitors who have monopolistic positions in the fabrics that are standards in the industry in disposableand high-end chemical suits. We believe that the barriers to entry in the reusable garments and gloves industries are relatively low. We face competition insome of our other product markets from large established companies that have greater financial, research and development, sales and technical resources.Where larger competitors, such as DuPont, Kimberly Clark, Ansell Edmont and Honeywell offer products that are directly competitive with our products,particularly as part of an established line of products, there can be no assurance that we can successfully compete for sales and customers. Larger competitorsoutside of our Disposable and Chemical Suit Lines also may be able to benefit from economies of scale and technological innovation and may introduce newproducts that compete with our products. 10 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Seasonality Our operations have historically been moderately seasonal, with higher sales generally occurring in March, April and May when scheduled maintenance onnuclear, coal, oil and gas fired utilities, chemical, petrochemical and smelting facilities, and other heavy industrial manufacturing plants occurs, primarilydue to moderate spring temperatures and low Energy demands. Sales decline during the warmer summer vacation months and gradually increase from LaborDay through February with slight declines during holidays, such as Christmas. As a result of this seasonality in our sales, we have historically experienced acorresponding seasonality in our working capital, specifically inventories, with peak inventories occurring between December and May, coinciding with leadtimes required to accommodate the spring maintenance schedules. We believe that by sustaining higher levels of inventory, we gain a competitive advantagein the marketplace. Certain of our large customers seek sole sourcing to avoid sourcing their requirements from multiple vendors whose prices, delivery timesand quality standards differ. In recent years, due to increased demand by first responders for our chemical suits and fire gear, our historical seasonal pattern has shifted. Governmentaldisbursements are dependent upon budgetary processes and grant administration processes that do not follow our traditional seasonal sales patterns. Due tothe size and timing of these governmental orders, our net sales, results of operations, working capital requirements and cash flows can vary between differentreporting periods. As a result, we expect to experience increased variability in net sales, net income, working capital requirements and cash flows on aquarterly basis. Patents and Trademarks We own 17 patents and have four patents in the application and approval process with the US Patent and Trademark Office. We own 31 Trademarks and have22 Trademarks in the application and approval process. Intellectual property rights that apply to our various products include patents, trade secrets,trademarks and, to a lesser extent, copyrights. We maintain an active program to protect our technology by ensuring respect for our intellectual propertyrights. Employees As of January 31, 2017, we had 993 full-time employees, 904, or 91%, of who were employed in our international facilities, and 89, or 9%, of who wereemployed in our domestic facilities. An aggregate of approximately 850 of international employees are members of unions in their respective countries. Weare not currently a party to any collective bargaining agreements or any other contracts with these unions. We believe our employee relations to be excellent. Environmental Matters We are subject to various foreign, federal, state and local environmental protection, chemical control, and health and safety laws and regulations, and weincur costs to comply with those laws. We own and lease real property, and certain environmental laws hold current or previous owners or operators ofbusinesses and real property responsible for contamination on or originating from property, even if they did not know of or were not responsible for thecontamination. The presence of hazardous substances on any of our properties or the failure to meet environmental regulatory requirements could affect ourability to use or to sell the property or to use the property as collateral for borrowing, and could result in substantial remediation or compliance costs. Although we have not in the past had any material costs or damages associated with environmental claims or compliance, and we do not currently anticipateany such costs or damages, we cannot guarantee that we will not incur material costs or damages in the future as a result of the discovery of new facts orconditions, acquisition of new properties, the release of hazardous substances, a change in interpretation of existing environmental laws or the adoption ofnew environmental laws. 11 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Executive Officers of the Registrant The following is a list of the names and ages of all of our executive officers indicating all positions and offices they hold with us as of April 21, 2017. Name Age PositionChristopher J. Ryan 65 Chief Executive Officer, President, Secretary and DirectorTeri W. Hunt 55 Chief Financial OfficerCharles D. Roberson 54 Senior Vice President International SalesDaniel L. Edwards 50 Senior Vice President Sales for North America Christopher J. Ryan has served as our Chief Executive Officer and President since November 2003, Secretary since April 1991, and a director since May1986. Mr. Ryan was our Executive Vice President - Finance from May 1986 until becoming our President in November 2003. Mr. Ryan also worked as aCorporate Finance Partner at Furman Selz Mager Dietz & Birney, Senior Vice President-Corporate Finance at Laidlaw Adams & Peck, Inc., Managing-Corporate Finance Director of Brean Murray Foster Securities, Inc. and Senior Vice President-Corporate Finance of Rodman & Renshaw, respectively, from1983 to 1991. Mr. Ryan has served as a Director of Lessing, Inc., a privately held restaurant chain based in New York, from 1995 to 2008. Mr. Ryan receivedhis BA from Stanford University, his MBA from Columbia Business School and his J.D. from Vanderbilt Law School. Teri W. Hunt has served as our Chief Financial Officer since November 2015 after serving as the Acting Chief Financial Officer of the Company sinceJuly 2015. Ms. Hunt has also served as the Company’s Vice President of Finance since November 2010, before which time she served as Corporate Controllerfrom November 2007 to November 2010. Prior to joining Lakeland Ms. Hunt served in multiple operational and financial management positions includingCorporate Controller for a privately held yarn manufacturer, TNS Mills. Charles D. Roberson has served as our Senior Vice President International Sales since March 2009. Mr. Roberson joined our Company in 2004 asTechnical Marketing Manager and later served as International Sales Manager. Prior to joining our Company, Mr. Roberson was employed by PrecisionFabrics Group, Inc. as a Market Manager from 1995 to 2001 and as a Nonwovens Manufacturing Manager from 1991 to 1995. He began his career as amanufacturing manager for Burlington Industries, Inc. in its Menswear Division from 1985 to 1991. Daniel L. Edwards has been our Senior Vice President Sales for North America since March 2017 after most recently serving as our Vice President ofUSA Sales since March 2013. Mr. Edwards has been employed by us in various capacities since joining Lakeland in 2005, including as our NationalAccounts Manager and Eastern Regional Sales Manager. Prior to joining our Company, Mr. Edwards was a Senior Market Manager at Precision FabricsGroup, Inc., where he began his career in 1990 and held various roles at that company in manufacturing, technical and quality management. Item 1A. Risk FactorsRISK FACTORS You should carefully consider the following risks before investing in our common stock. These are not the only risks that we may face. If any of the eventsreferred to below actually occur, our business, financial condition, liquidity and results of operations could suffer. In that case, the trading price of ourcommon stock could decline, and you may lose all or part of your investment. You should also refer to the other information in this Form 10-K and in thedocuments we incorporate by reference into this Form 10-K, including our consolidated financial statements and the related notes. While as a smaller reporting company disclosure of risk factors is not required, the Company is voluntarily including such disclosures. 12 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Risks Related to Our Business and Industry and Other Matters We are subject to risk as a result of our international manufacturing operations.Because most of our products are manufactured at our facilities located in China and Mexico, our operations are subject to risk inherent in doing businessinternationally. Such risks include the adverse effects on operations from corruption, war, international terrorism, civil disturbances, political instability,government activities such as border taxes and renegotiation of treaties, deprivation of contract and property rights and currency valuation changes. Since 1978, the Chinese government has been reforming its economic and political systems, and we expect this to continue. Although we believe thatthese reforms have had a positive effect on the economic development of China and have improved our ability to successfully operate our facilities inChina, we cannot assure you that these reforms will continue or that the Chinese government will not take actions that impair our operations or assets inChina. In addition, periods of international unrest may impede our ability to manufacture goods in other countries and could have a material adverseeffect on our business and results of operations. Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates.Most of our assembly arrangements with our foreign-based subsidiaries or third-party suppliers require payment to be made in US dollars or Euros. Anydecrease in the value of the US dollar or the Euro in relation to foreign currencies could increase the cost of the services provided to us upon contractexpirations or supply renegotiations. There can be no assurance that we will be able to increase product prices to offset any such cost increases, and anyfailure to do so could have a material adverse effect on our business, financial condition and results of operations. We are also exposed to foreign currency exchange rate risks as a result of our sales to customers in foreign countries in the amount of $39.6 million inFY17. Our sales in these countries are usually denominated in the local currency. If the value of the US dollar increases relative to these local currencies,and we are unable to raise our prices proportionally, then our profit margins could decrease because of the exchange rate change. We are exposed to changes in foreign currency exchange rates as a result of our purchases and sales in other countries. To manage the volatility relating toforeign currency exchange rates, we seek to limit, to the extent possible, our non-US dollar denominated purchases and sales. In connection with our operations in China, we purchase a significant amount of products from outside of the United States. However, our purchases inChina are primarily made in the Chinese RenminBi. (“RMB”), the value of which had been largely pegged to the US dollar for the last decade. However,the Chinese RMB has been decoupled from the US dollar and allowed to float by the Chinese government and, therefore, we have been exposed toadditional foreign exchange rate risk on our Chinese raw material and component purchases. Our primary risk from foreign currency exchange rate changes is presently related to non-US dollar denominated sales in Canada, Europe, and China and,to a smaller extent, in South American countries and in Russia. Our sales to customers in Canada are denominated in Canadian dollars, in Europe in Eurosand British pounds, and in China in RMB, Euros and US dollars. If the value of the US dollar increases relative to the Canadian dollar, the Pound, theEuro, or the RMB then our net sales could decrease as our products would be more expensive to these international customers because of changes in rateof exchange. We manage the foreign currency risk through the use of rolling 90-day forward contracts against the Canadian dollar and Euro and throughcash flow hedges in the US against the RMB and the Euro. We do not hedge other currencies at this time. In the event that non-US dollar denominatedinternational purchases and sales grow, exposure to volatility in exchange rates could have a material adverse impact on our financial results. 13 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Our results of operations may vary widely from quarter to quarter.Our quarterly results of operations have varied and are expected to continue to vary in the future. These fluctuations may be caused by many factors,including: ·Currency volatility;·Global crisis, such as the Ebola outbreak or oil spills;·Our expansion of international operations;·Competitive pricing pressures;·Seasonal buying patterns resulting from the cyclical nature of the business of some of our customers;·Changes in the mix of products and services sold;·The timing of introductions and enhancements of products by us or our competitors;·Market acceptance of new products;·Technological changes in fabrics or production equipment used to make our products;·Changes in the mix of domestic and international sales;·Personnel changes; and·General industry and economic conditions. These variations could negatively impact our stock price. Some of our sales are to foreign buyers, which exposes us to additional risks.We derived approximately 46% of our net sales from customers located in foreign countries in FY17. We intend to seek to increase the amount of foreignsales we make in the future. The additional risks of foreign sales include: ·Potential adverse fluctuations in foreign currency exchange rates;·Higher credit risks;·Restrictive trade policies of foreign governments;·Currency hyperinflation and weak banking institutions;·Changing economic conditions in local markets;·Political and economic instability in foreign markets; and·Changes in leadership of foreign governments. Some or all of these risks may negatively impact our results of operations and financial condition. We deal in countries where corruption is an obstacle.We must comply with American laws such as the Foreign Corrupt Practices Act (FCPA) and Sarbanes-Oxley and also with anticorruption legislation in theU.K. Some of our competitors and customers in foreign jurisdictions may not adhere to such legislation. As a result, we believe that we lose sales ordersdue to our strict adherence to such regulations. We are exposed to tax expense risks.We are exposed to tax rate risk with respect to our deferred tax asset. Should the effective tax rate decrease as a result of US tax regulatory changes therecould be a significant one-time noncash charge to earnings in order to adjust our deferred tax asset. Though this one-time adjustment might be material,the Company would be in a favorable tax position going forward. The Company claimed a worthless stock deduction in connection with our exit from Brazil which has generated a tax benefit of approximately US $9.5million. While, along with our tax advisors, we believe that this deduction is valid, there can be no assurance that the IRS will not challenge it and, ifchallenged, there is no assurance that the Company will prevail. 14 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Covenants in our credit facilities may restrict our financial and operating flexibility.As a result of the refinancing on June 28, 2013 and as amended on March 31, 2015 and June 3, 2015, we currently have a $15 million revolving creditfacility, expiring June 2017. Our credit facility requires, and any future credit facilities may also require, among others that we comply with specifiedfinancial covenants relating to fixed charge coverage, minimum consolidated earnings before interest, taxes, depreciation and amortization, andmaximum capital expenditures. Our ability to satisfy these financial covenants can be affected by events beyond our control, and we cannot guaranteethat we will meet the requirements of these covenants. These restrictive covenants could affect our financial and operational flexibility or impede ourability to operate or expand our business, including a limitation on annual investments and advances we can make to foreign subsidiaries. Default underour credit facilities would allow the lenders to declare all amounts outstanding to be immediately due and payable. Our lenders have a security interest insubstantially all of our assets to secure the debt under our current credit facilities, and it is likely that our future lenders will have security interests in ourassets. If our lenders declare amounts outstanding under any credit facility to be due, the lenders could proceed against our assets. Any event of default,therefore, could have a material adverse effect on our business. Because we do not have long-term commitments from many of our customers, we must estimate customer demand, and errors in our estimates couldnegatively impact our inventory levels and net sales.Our sales are generally made on the basis of individual purchase orders, which may later be modified or canceled by the customer, rather than on long-term commitments. We have historically been required to place firm orders for fabrics and components with our suppliers prior to receiving an order forour products, based on our forecasts of customer demands. Our sales process requires us to make multiple demand forecast assumptions, each of whichmay introduce error into our estimates, causing excess inventory to accrue or a lack of manufacturing capacity when needed. If we overestimate customerdemand, we may allocate resources to manufacturing products that we may not be able to sell when we expect to or not at all. As a result, we would haveexcess inventory, which would negatively impact our financial results. Conversely, if we underestimate customer demand or if insufficient manufacturingcapacity is available, we would lose sales opportunities, lose market share and damage our customer relationships. On occasion, we have been unable toadequately respond to delivery dates required by our customers because of the lead time needed for us to obtain required materials or to send fabrics toour assembly facilities in China and Mexico. We must recruit and retain skilled employees, including our senior management, to succeed in our business. We may need additional funds, and if we are unable to obtain these funds, we may not be able to expand or operate our business as planned.Our operations require significant amounts of cash, and we may be required to seek additional capital, whether from sales of equity or by borrowingmoney, to fund acquisitions for the future growth and development of our business or to fund our operations and inventory, particularly in the event of amarket downturn. A number of factors could affect our ability to access future debt or equity financing, including: ·Our financial condition, strength and credit rating;·The financial markets’ confidence in our management team and financial reporting;·General economic conditions and the conditions in the homeland security and Energy sectors; and·Capital markets conditions. Even if available, additional financing may be more costly than our current facility and may have adverse consequences. If additional funds are raisedthrough the incurrence of debt, we will incur increased debt servicing costs and may become subject to additional restrictive financial and othercovenants. We can give no assurance as to the terms or availability of additional capital. Although management believes it currently has sufficientcapital, if we do need additional capital in the future and are unsuccessful, it could reduce our net sales and materially adversely impact our earningcapability and financial position. If we fail to maintain proper and effective internal controls or are unable to remediate a material weakness in our internal controls, our ability to produceaccurate and timely financial statements could be impaired, and investors’ views of us could be harmed.Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statementson a timely basis involves substantial effort that needs to be reevaluated frequently. Our internal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generallyaccepted accounting principles. We have documented and tested our internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, which requires annual management assessment of the effectiveness of our internal control over financialreporting. 15 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of January 31, 2017. In making this assessment,management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission in 2013 (COSO). Based upon an evaluation performed, our management concluded that our disclosure controls and procedureswere effective as of January 31, 2017 as discussed in Item 9AControls and Procedures. Since the Company qualifies as a smaller reporting company, an attestation report of management’s assessment of internal control by our independentauditors is not required. We face competition from other companies, a number of which have substantially greater resources than we do.Three of our competitors, DuPont, Honeywell and Kimberly Clark, have substantially greater financial, marketing and sales resources than we do. Inaddition, we believe that the barriers to entry in the disposable and reusable garments and gloves markets are relatively low. We cannot assure you thatour present competitors or competitors that choose to enter the marketplace in the future will not exert significant competitive pressures. Suchcompetition could have a material adverse effect on our net sales and results of operations. Our operations are substantially dependent upon key personnel.Our performance is substantially dependent on the continued services and performance of our senior management and certain other key personnel,including Christopher J. Ryan, our Chief Executive Officer, President and Secretary, Teri Hunt, our Chief Financial Officer, Charles D. Roberson, our Sr.VP International Sales and Daniel L. Edwards, our Sr. VP Sales for North America. The loss of services of any of our executive officers or other keyemployees could have a material adverse effect on our business, financial condition and results of operations. In addition, any future expansion of ourbusiness will depend on our ability to identify, attract, hire, train, retain and motivate other highly skilled managerial, marketing, customer service andmanufacturing personnel, and our inability to do so could have a material adverse effect on our business, financial condition and results of operations. Technological change could negatively affect sales of our products and our performance.The rapid development of fabric technology continually affects our apparel applications and may directly impact the performance of our products. Wecannot assure you that we will successfully maintain or improve the effectiveness of our existing products, nor can we assure you that we will successfullyidentify new opportunities or continue to have the needed financial resources to develop new fabric or apparel manufacturing techniques in a timely orcost-effective manner. In addition, products manufactured by others may render our products obsolete or noncompetitive. If any of these events occur, ourbusiness, prospects, financial condition and operating results will be materially and adversely affected. A significant reduction in government funding for preparations for terrorist incidents could adversely affect our net sales.As a general matter, a significant portion of our sales growth to our distributors is dependent upon resale by those distributors to customers that are fundedin large part by federal, state and local government funding. Specifically, depending on the year, approximately 10% of our high-end chemical suit salesare dependent on government funding. Congress passed the 2001 Assistance to Firefighters Grant Program and the Bioterrorism Preparedness andResponse Act of 2002. Both of these Acts provide for funding to fire and police departments and medical and emergency personnel to respond to terroristincidents. Appropriations for these Acts by the federal government could be reduced or eliminated altogether. Any such reduction or elimination offederal funding, or any reductions in state or local funding, could cause sales of our products purchased by fire and police departments and medical andemergency personnel to decline. We may be exposed to continuing and other liabilities arising from our former Brazilian operations.During the fiscal year ended January 31, 2016 the Company formally executed its exit from Brazil, but we may continue to be exposed to certainliabilities arising in connection with the prior operations of Lakeland Brazil. The Company understands that under the laws of Brazil, a concept offraudulent bankruptcy exists, which may hold a parent company liable for the liabilities of a former Brazilian subsidiary in the event some level of fraudor misconduct is shown during the period that the parent company owned the subsidiary. While the Company believes that there has been no such fraudor misconduct relating to operations of and their exit from Brazil, there can be no assurance that the courts of Brazil will not make such a finding. The riskof exposure to the Company continues to diminish as the former subsidiary continues to operate, as the risk of a finding of fraudulent bankruptcy lessensand pre-sale liabilities are paid off. Should the former subsidiary stay in operations for a period of two years, the Company believes the risk of a finding offraudulent bankruptcy is eliminated. 16 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We may be subject to product liability claims, and insurance coverage could be inadequate or unavailable to cover these claims.We manufacture products used for protection from hazardous or potentially lethal substances, such as chemical and biological toxins, fire, viruses andbacteria. The products that we manufacture are typically used in applications and situations that involve high levels of risk of personal injury. Failure touse our products for their intended purposes, failure to use our products properly or the malfunction of our products could result in serious bodily injuryor death of the user. In such cases, we may be subject to product liability claims arising from the design, manufacture or sale of our products. If theseclaims are decided against us, and we are found to be liable, we may be required to pay substantial damages, and our insurance costs may increasesignificantly as a result. We cannot assure you that our insurance coverage would be sufficient to cover the payment of any potential claim. In addition,we cannot assure you that this or any other insurance coverage will continue to be available or, if available, that we will be able to obtain it at areasonable cost. Any material uninsured loss could have a material adverse effect on our financial condition, results of operations and cash flows. Environmental laws and regulations may subject us to significant liabilities.Our US operations, including our manufacturing facilities, are subject to federal, state and local environmental laws and regulations relating to thedischarge, storage, treatment, handling, disposal and remediation of certain materials, substances and wastes. Any violation of any of those laws andregulations could cause us to incur substantial liability to the Environmental Protection Agency, the state environmental agencies in any affected state orto any individuals affected by any such violation. If hazardous substances are released from or located on any of our properties, we could incur substantialcosts and damages. Any such liability could have a material adverse effect on our financial condition and results of operations. Our directors and executive officers have the ability to exert significant influence on our Company and on matters subject to a vote of our stockholders.As of January 31, 2017, our directors and executive officers beneficially owned or could vote approximately 7.8% of the outstanding shares of ourcommon stock. As a result of their ownership of common stock and their positions in our Company, our directors and executive officers are able to exertsignificant influence on our Company and on matters submitted to a vote by our stockholders. In particular, as of January 31, 2017, Christopher J. Ryan,our chief executive officer, president and secretary and a director, beneficially owned or votes approximately 5.8% of our common stock. The ownershipinterests of our directors and executive officers, including Mr. Ryan, could have the effect of delaying or preventing a change of control of our Companythat may be favored by our stockholders generally. Provisions in our restated certificate of incorporation and by-laws and Delaware law could make a merger, tender offer or proxy contest difficult.Our restated certificate of incorporation contains classified board provisions, authorized preferred stock that could be utilized to implement various“poison pill” defenses and a stockholder authorized, but as yet unused, Employee Stock Ownership Plan (“ESOP”), all of which may have the effect ofdiscouraging a takeover of Lakeland, which is not approved by our board of directors. Further, we are subject to the antitakeover provisions of Section203 of the Delaware General Corporation Law, which prohibit us from engaging in a “business combination” with an “interested stockholder” for a periodof three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in theprescribed manner. Acquisitions could be unsuccessful.In the future, subject to capital constraints, we may seek to acquire selected safety products lines or safety-related businesses which will complement ourexisting products. Our ability to acquire these businesses is dependent upon many factors, including our management’s relationship with the owners ofthese businesses, many of which are small and closely held by individual stockholders. In addition, we will be competing for acquisition and expansionopportunities with other companies, many of which have greater name recognition, marketing support and financial resources than us, which may result infewer acquisition opportunities for us, as well as higher acquisition prices. There can be no assurance that we will be able to identify, pursue or acquireany targeted business and, if acquired, there can be no assurance that we will be able to profitably manage additional businesses or successfully integrateacquired business into our Company without substantial costs, delays and other operational or financial problems. 17 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. If we proceed with additional acquisitions for cash, we may use a substantial portion of our available line of credit (if available) in order to consummateany such acquisition. We may also seek to finance any such acquisition through debt or equity financings, and there can be no assurance that suchfinancings will be available on acceptable terms or at all. If consideration for an acquisition consists of equity securities, the stock held by our investorscould be diluted. If we borrow funds in order to finance an acquisition, we may not be able to obtain such funds on terms that are favorable to us. Inaddition, such indebtedness may limit our ability to operate our business as we currently intend because of restrictions placed on us under the terms of theindebtedness and because we may be required to dedicate a substantial portion of our cash flow to payments on the debt instead of to our operations,which may place us at a competitive disadvantage. Acquisitions involve a number of special risks in addition to those mentioned above, including the diversion of management’s attention to theassimilation of the operations and personnel of the acquired companies, the potential loss of key employees of acquired companies, potential exposure tounknown liabilities, adverse effects on our reported operating results and the amortization or write-down of acquired intangible assets. We cannot assureyou that any acquisition by us will or will not occur, that if an acquisition does occur that it will not materially and adversely affect our results ofoperations or that any such acquisition will be successful in enhancing our business. To the extent that we are unable to manage growth efficiently andeffectively or are unable to attract and retain additional qualified management personnel, our business, financial condition and results of operations couldbe materially and adversely affected. Cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputationand results of operations.Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our information technology (“IT”) systemsto sophisticated and targeted measures known as advanced persistent threats. While we employ comprehensive measures to prevent, detect, address andmitigate these threats (including access controls, data encryption, vulnerability assessments, management training, continuous monitoring of our ITnetworks and systems and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, couldpotentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own orthat of third parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include reputationaldamage, litigation with third parties, diminution in the value of our investment in research, development and engineering, and increased cybersecurityprotection and remediation costs, which in turn could adversely affect our competitiveness and results of operations. Risks Relating to Our Common Stock The market price of our common stock may fluctuate widely.The market price of our common stock could be subject to significant fluctuations in response to quarter-to-quarter variations in our operating results,announcements of new products or services by us or our competitors and other events or factors. For example, a shortfall in net sales or net income, or anincrease in losses, from levels expected by securities analysts or investors, could have an immediate and significant adverse effect on the market price ofour common stock. Volume fluctuations that have particularly affected the market prices of many micro and small capitalization companies have oftenbeen unrelated or disproportionate to the operating performance of these companies. These fluctuations, as well as general economic and marketconditions, may adversely affect the market price for our common stock. Our common stock is an equity interest and therefore subordinated to our indebtedness.Payments of the principal and interest under the notes issued under the loan agreements entered into in connection with our senior financing are securedby liens on, and security interests in, substantially all of our and our subsidiaries’ present and after-acquired assets. In the event of our liquidation,dissolution or winding up, our common stock would rank below all debt and creditor claims against us. As a result, holders of our common stock will notbe entitled to receive any payment or other distribution of assets upon our liquidation, dissolution or winding up until after all of our obligations to ourdebt holders and creditors have been satisfied. We are precluded from paying and do not anticipate paying any dividends to our common stockholders in the near future.We are prohibited from declaring or paying any dividends to our common stockholders without the prior consent of our senior and junior lenders. Further,we have not paid dividends on our common stock since August 2006 and we do not anticipate, if permitted, paying any dividends in the foreseeablefuture. Instead, we plan to retain any earnings to maintain and expand our existing operations. 18 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 1B: UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES We believe that our owned and leased facilities are suitable for the operations we conduct in each of them. Each manufacturing facility is well maintainedand capable of supporting higher levels of production. The table below sets forth certain information about our principal facilities. Address Annual RentLeaseExpirationPrincipal Activity Lakeland Industries, Inc.· 202 Pride Lane; and· 3420 Valley Avenue; and· 201 Pride Lane SWDecatur, AL 35603OwnedN/AAdministrationManufacturingWarehouseSales Porto Rico Street, Lots 16/17/18Granjas Rurais, SalvadorOwnedN/ALand and buildingheld for sale Lakeland Protective Real Estate59 Bury CourtBrantford, ON N3S 0A9 - CanadaOwnedN/ASales Warehouse Industrias Lakeland S.A. de C.V.Carretera a Santa Rita, Calle Tomas Urbina #1Jerez de Garcia, Salinas, Zacatecas, MexicoOwnedN/A AdministrationManufacturingWarehouseSales Industrias Lakeland S.A. de C.V.Carretera a Santa Rita, Calle Tomas Urbina #1Jerez de Garcia, Salinas, Zacatecas, MexicoOwnedN/A Land Only Weifang Lakeland Safety Products Co., Ltd. Plant #1No. 61 South Huaan Road, AnQui City, Shandong Province, PRC 262100Owned(1)N/AAdministrationManufacturingWarehouseSales Lakeland Industries, Inc. (Headquarters)3555 Veterans Memorial Highway, Suite CRonkonkoma, NY 11779$52,3505/31/2018AdministrationSales Lakeland Industries, Inc.1701 4th Avenue SEDecatur, AL 35603$24,000Month to monthWarehouse Total Warehouse, Inc.3030 North Lamb Blvd, Ste 103Las Vegas, NV 89115By caseAnnual – auto renewWarehouse Lakeland Industries, Inc.7121 North Loope EastHouston, Texas 77028$63,0002/10/2019Warehouse 19 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AddressAnnual RentLeaseExpirationPrincipal Activity Lakeland Argentina, SRLCuba 4870 San MartinProvincia deBuenos Aires, Argentina$1,80011/30/2018AdministrationManufacturing*WarehouseSales Lakeland Industries Chile LimitadoRoman Spech 3283, Comunica Quinta Normal, Santago, Chile$61,0001/31/2020AdministrationWarehouseSales Lakeland (Beijing) Safety Products Co., Ltd.Unit 503, Building B, Sinolight PlazaNo. 4 Wangjing Qiyang Road, Chaoyang DistrictBeijing 100102 PRC$42,1005/31/2017Sales Lakeland (Beijing) Safety Products Co., Ltd.Unit 502, Building B, Sinolight PlazaNo. 4 Wangjing Qiyang Road, Chaoyang DistrictBeijing 100102 PRC$20,0005/31/2017Sales Lakeland (Beijing) Safety Products Co., Ltd.Intersection of Beichen Dao and Tiedong Rd,Beichen District, Tianjin, PRC$27,5001/19/2018Warehouse Lakeland (Beijing) Safety Products Co., Ltd.Unit 1104, Number 570 Shengxia RoadZhangjing Science and Technology Park DistrictShanghai City, PRC$34,00008/31/2017AdministrationSales Lakeland (Beijing) Safety Products Co., Ltd.No. 5 Zhuqin Road, Zhuqiao TownPudong New Area, Shanghai, PRC$35,60004/30/2021Warehouse Weifang Lakeland Safety Products Co., LtdDasen Logistic Company, Shuangfeng Road,Anqui City, Shandong Province, PRC 262100$18,20012/14/2017Warehouse Lakeland Glove and Safety Apparel Private, Ltd.Plots 50, Noida Special Economic ZoneNew Delhi, India$1,90011/13/2028WarehouseSales Lakeland Glove and Safety Apparel Private, Ltd.Plots 81, Noida Special Economic ZoneNew Delhi, India$3,50002/01/2024WarehouseSales 20 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. AddressAnnual RentLease ExpirationPrincipal Activity Lakeland Glove and Safety Apparel Private, Ltd.Plot B-42, Sector 2Noida, District-Gautam Budh Nagar, India$15,6008/16/2017Sales Art Prom, LLCVarashilova Street 5/1, Ust-Kamnogorsk, Kazakhstan, 070002$1,1009/1/2017Manufacturing* WarehouseSales RussIndProtection, Ltd.201, vlad. 4B, str.1, 38km, MKADMoscow, Russia 117574$10,50012/31/2017WarehouseSales Lakeland Industries Europe Ltd.Unit 9/10 Park 2, Main RoadNew Port, East Yorkshire HU15 2RPUnited KingdomApproximately$120,000(varies withexchange rates)March 2023 (with8-year reviewperiod from4/2011WarehouseSales (1) We own the buildings in which we conduct the majority of our manufacturing operations in China and lease the land underlying the buildingsfrom the Chinese government. We have 30 years remaining under the leases with respect to the AnQui City facilities.* A small amount of manufacturing is done locally, but most sales are made in other Lakeland facilities. Our facilities in Alabama, Mexico, China, India, and Argentina contain equipment used for the design, development, manufacture and sale of ourproducts. Our operations in Canada, United Kingdom, Chile, Hong Kong, Russia, and Kazakhstan are primarily sales and warehousing operationsreceiving goods for resale from our manufacturing facilities around the world. We had $2.09 million and $2.20 million of net property and equipmentlocated in the US; $2.05 million and $2.37 million in China; $2.05 million and $2.11 million in Mexico as of January 31, 2017 and 2016, respectively. ITEM 3. LEGAL PROCEEDINGS From time to time, we are a party to litigation arising in the ordinary course of our business. We are not currently a party to any litigation or other legalproceedings that we believe could reasonably be expected to have a material adverse effect on our results of operations, financial condition or cash flows.See Note 14 related to legal matters in respect of our former subsidiary in Brazil and its relation to the Company. ITEM 4. MINE SAFETY DISCLOSURES N/A 21 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART II ITEM 5.MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES Our common stock is currently traded on the Nasdaq Global Market under the symbol “LAKE.” The following table sets forth for the periods indicated thehigh and low closing sales prices for our common stock as reported by the Nasdaq National Market. Price Range of Common Stock High Low Fiscal 2017 First Quarter $13.75 $8.69 Second Quarter 10.14 8.11 Third Quarter 10.62 9.36 Fourth Quarter 11.50 9.70 Fiscal 2016 First Quarter $10.43 $7.83 Second Quarter 12.74 8.81 Third Quarter 15.34 8.66 Fourth Quarter 14.96 10.86 HoldersHolders of our Common Stock, approximately 37 of record, are entitled to one (1) vote for each share held on all matters submitted to a vote of thestockholders. No cumulative voting with respect to the election of directors is permitted by our Articles of Incorporation. The Common Stock is notentitled to preemptive rights and is not subject to conversion or redemption. Upon our liquidation, dissolution or winding-up, the assets legally availablefor distribution to stockholders are distributable ratably among the holders of the Common Stock after payment of liquidation preferences, if any, on anyoutstanding stock that may be issued in the future having prior rights on such distributions and payment of other claims of creditors. Each share ofCommon Stock outstanding as of the date of this Annual Report is validly issued, fully paid and nonassessable. Dividend PolicyIn the past, we have declared dividends in stock to our stockholders. We may pay stock dividends in future years at the discretion of our board of directorsand consent of our lenders. We have never paid any cash dividends on our common stock, and we currently intend to retain any future earnings for use in our business. The paymentand rate of future cash or stock dividends, if any, or stock repurchase programs are subject to the discretion of our board of directors and will depend uponour earnings, financial condition, capital or contractual restrictions under our credit facilities and other factors. In addition, the payment of cash dividendsis restricted by the terms of our current senior loan agreement. Stock Repurchase ProgramOn July 19, 2016, the Company's board of directors approved a stock repurchase program under which the Company may repurchase up to $2,500,000 ofits outstanding common stock. The Company has not repurchased any stock under this program as of the date of this filing. Registration StatementOn March 24, 2017, the Company filed a shelf registration statement on Form S-3 which was declared effective by the SEC on April 11, 2017. The shelfregistration statement permits the Company to sell, from time to time, up to an aggregate of $30.0 million of various securities, including shares ofcommon stock, shares of preferred stock, debt securities, warrants to purchase common stock, preferred stock, debt securities, and/or units, rights topurchase common stock, preferred stock, debt securities, warrants and/or units, units of two or more of the foregoing, or any combination of suchsecurities, not to exceed one-third of the Company's public float in any 12-month period. To date, no securities have been issued pursuant to theregistration statement. 22 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data as of and for our FY17, FY16, FY15, FY14 and FY13 has been derived from our audited consolidatedfinancial statements. You should read the information set forth below in conjunction with our “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and our consolidated financial statements and related notes included in this Form 10-K. While as a smaller reporting company disclosure of Selected Financial Data is not required, the Company is voluntarily including such disclosures. Summary of OperationsYear Ended January 31, (in thousands, except share and per share data) 2017 2016 2015* 2014* 2013* Income Statement Data: Net sales from continuing operations $86,183 $99,646 $93,419 $84,173 $78,260 Operating profit from continuing operations 6,847 11,812 6,691 4,053 579 Arbitration judgment in Brazil — — — — (7,874)Income (loss) from continuing operations beforeincome taxes 6,273 10,907 2,898 2,679 (8,538)Income tax expense (benefit) 2,380 3,117 (8,188) (2,851) 4,127 Net income (loss) from continuing operations 3,893 7,790 11,086 5,530 (12,665)Net loss on discontinued operations net of tax — (3,936) (2,687) (5,650) (13,624) Earnings (loss) per share from continuing operations -basic $0.54 $1.09 $1.78 $0.97 $(2.39) Earnings (loss) per share from continuing operations –diluted $0.53 $1.07 $1.75 $0.96 $(2.39)Weighted average common shares outstanding Basic 7,257,553 7,171,965 6,214,303 5,689,230 5,290,332 Diluted 7,327,248 7,254,340 6,325,525 5,771,226 5,290,332 Balance Sheet Data: Current assets $60,086 $62,117 $68,635 $65,481 $60,605 Total assets 84,554 88,260 93,208 80,483 80,051 Current liabilities 12,325 19,958 26,222 26,835 27,761 Long-term liabilities 722 786 3,730 9,171 8,801 Stockholders’ equity 71,507 67,516 63,256 44,477 43,489 * Restated for discontinued operations 23 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis ofFinancial Condition and Results of Operations You should read the following summary together with the more detailed business information and consolidated financial statements and related notesthat appear elsewhere in this Form 10-K and in the documents that we incorporate by reference into this Form 10-K. This document may contain certain“forward-looking” information within the meaning of the Private Securities Litigation Reform Act of 1995. This information involves risks anduncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Overview In FY17, operating profit decreased in the US before corporate expenses from $11.4 million in FY16 to $8.1 million in FY17 and decreased in China from$4.7 million in FY16 to $4.1 million in FY17. This is largely due to the significant sales in FY16 of Lakeland branded products due to both the Ebola andbird flu crises in such fiscal year FY16, with no such sales in FY17. Consolidated operating income for continuing operations was $6.9 in FY17 comparedto $11.8 million in FY16. The personal protective equipment market continues to grow worldwide as developing countries increasingly adopt the protection standards of NorthAmerica and Europe, and standards in the more developed countries become more stringent and cover more types of workers. Management believesLakeland is uniquely positioned to take advantage of these trends with its presence in many major and high growth potential markets worldwide.However, management also understands that significant investment in these markets is required for the Company to realize its goals for growth in revenueand income as our many markets continue to evolve and attract more competition. In order to promote future improvements in operating income, cash availability, and business outlook, the Company has more recently made multipleinvestments in operations and organization that had been deferred during the past few challenging years. Additional personnel in sales and marketinghave been hired worldwide in order to increase penetration in existing markets and pursue new sales channels. New equipment has been purchased toincrease manufacturing capacity and efficiency as well as to replace older equipment. New accounting and operations software is being installed toimprove processes, planning, and access to sales, financial, and manufacturing data. New technologies in fabrics and manufacturing are being explored.Management believes the Company’s ability to compete for the global opportunities in its industry are being enhanced. We manufacture and sell a comprehensive line of safety garments and accessories for the industrial and public protective clothing market. Our productsare sold by our in-house customer service group, our regional sales managers and independent sales representatives to a network of over 1,000 NorthAmerican safety and mill supply distributors. These distributors in turn supply end user industrial customers, such as integrated oil,chemical/petrochemical, utilities, automobile, steel, glass, construction, smelting, munition plants, janitorial, pharmaceutical, mortuaries and hightechnology electronics manufacturers, as well as scientific and medical laboratories. In addition, we supply federal, state and local governmental agenciesand departments, such as fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and theCenters for Disease Control. Internationally, sales are to a mixture of end users directly and to industrial distributors depending on the particular countrymarket. Sales are made to more than 40 foreign countries but are primarily in China, European Economic Community (“EEC”), Canada, Chile, Argentina,Russia, Colombia, Mexico, Ecuador, Australia and Southeast Asia. We have operated facilities in Mexico since 1995 and in China since 1996. Beginning in 1995, we moved the labor intensive sewing operation for ourlimited use/disposable protective clothing lines to these facilities. Our facilities and capabilities in China and Mexico allow access to a less expensivelabor pool than is available in the United States of America and permit us to purchase certain raw materials at a lower cost than they are availabledomestically. As we have increasingly moved production of our products to our facilities in Mexico and China, we have seen improvements in the profitmargins for these products. Our net sales from continuing operations attributable to customers outside the United States of America were $39.6 millionand $43.1 million for the years ended January 31, 2017 and 2016, respectively. 24 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. We anticipate R&D expenses to be $500,000 in FY18 compared to $463,000 in FY17, as some of our R&D will involve equipment purchases, as well asmaterial costs. We are gradually increasing our R&D efforts as business performance permits. Critical Accounting Policies and EstimatesOur discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have beenprepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financialstatements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect thereported amounts of assets, liabilities, net sales and expenses and disclosure of contingent assets and liabilities. We base our estimates on the pastexperience and on various other assumptions that we believe to be reasonable under the circumstances, and we periodically evaluate these estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidatedfinancial statements. Revenue Recognition. The Company derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of high-end chemical protective suits, firefighting and heat protective apparel, gloves and arm guards and reusable woven garments. Sales are recognized whengoods are shipped, at which time title and the risk of loss pass to the customer. Sales are reduced for sales returns and allowances. Payment terms aregenerally net 30 days for United States sales and net 90 days for international sales. Substantially, all the Company’s sales are made through distributors. There are no significant differences across product lines or customers in differentgeographical areas in the manner in which the Company’s sales are made. Lakeland offers a growth rebate to certain distributors each year on a calendar-year basis. Sales are tracked on a monthly basis, and accruals are based onsales growth over the prior year. The growth rebate accrual is adjusted either up or down on a monthly basis as a reduction (increase) to revenue and anincrease (reduction) to the accrual based on monthly sales trends as compared with prior year. Based on volume and products purchased, distributors canearn anywhere from 1% to 6% rebates in the form of either a quarterly or annual credit to their account, depending on the specific agreement. Inestimating the accrual needed, management tracks sales growth over the prior year. Our sales are generally final; however, requests for return of goods can be made and must be received within 90 days from invoice date. No returns will beaccepted without a written authorization. Return products may be subject to a restocking charge and must be shipped freight prepaid. Any special made-to-order items are not returnable. Customer returns have historically been insignificant. Customer pricing is subject to change on a 30-day notice; exceptions based on meeting competitors’ pricing are considered on a case-by-case basis.Revenue is recorded net of taxes collected from customers. The related taxes that are remitted to governmental authorities, with the collected taxesrecorded as current liabilities until remitted to the relevant government authority. For larger orders, except in its Lakeland Fire product line, the Company absorbs the cost of shipping and handling. For those customers who are billed thecost of shipping and handling fees, such amounts are included in net sales. Shipping and handling costs associated with outbound freight are included inoperating expenses and aggregated approximately $2.0 and $2.5 million in FY17 and FY16, respectively. Accounts Receivable, Net. Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances fordoubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company recognizes losses wheninformation available indicates that it is probable that a receivable has been impaired based on criteria noted above at the date of the consolidatedfinancial statements, and the amount of the loss can be reasonably estimated. Management considers the following factors when determining thecollectability of specific customer accounts: Customer creditworthiness, past transaction history with the customers, current economic industry trends andchanges in customer payment terms. Past due balances over 90 days and other less creditworthy accounts are reviewed individually for collectability. Ifthe financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances wouldbe required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit toa valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to thevaluation allowance and a credit to accounts receivable. 25 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Inventories, net. Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out basis) ormarket. Provision is made for slow-moving, obsolete or unusable inventory. Goodwill. Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individuallyidentified and separately recognized. Goodwill is evaluated for impairment at least annually; however, this evaluation may be performed more frequentlywhen events or changes in circumstances indicate the carrying amount may not be recoverable. Factors that the Company considers important that couldidentify a potential impairment include: significant changes in the overall business strategy and significant negative industry or economic trends.Management assesses whether it is more likely than not that goodwill is impaired and, if necessary, compares the fair value of the entity acquired to thecarrying value. Fair value is generally determined by management either based on estimating future discounted cash flows for the reporting unit or byestimating a sales price for the reporting unit based on multiple of earnings. These estimates require the Company's management to make projections thatcan differ from actual results Impairment of Long-Lived Assets. The Company evaluates the carrying value of long-lived assets to be held and used when events or changes incircumstances indicate the carrying value may not be recoverable. The Company measures any potential impairment on a projected undiscounted cashflow method. Estimating future cash flows requires the Company’s management to make projections that can differ materially from actual results. Thecarrying 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. As of January 31, 2017and January 31, 2016, no impairment was recorded. 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 consolidatedfinancial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments fortax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assetsor liabilities on the Company’s consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recoveredfrom 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 apreviously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period ofsuch determination. The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interestand penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liabilityin the consolidated balance sheets. Foreign Operations and Foreign Currency Translation. The Company maintains manufacturing operations in Mexico, India, Argentina and the People’sRepublic of China and can access independent contractors in Mexico, Argentina and China. It also maintains sales and distribution entities located inIndia, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan and Mexico. The Company is vulnerable to currency risks in these countries. Thefunctional currency for the United Kingdom subsidiary is the Euro; the trading company in China, the RMB; the Canadian Real Estate subsidiary, theCanadian dollar; and the Russian operation, the Russian Ruble and the Kazakhstan operation the Kazakhstan Tenge. All other operations have the USdollar 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 theexchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translationadjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated ataverage translation rates for the periods, therefore amounts reported on the consolidated statement of cash flows will not necessarily agree with changes inthe corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactionsdenominated in a currency other than the functional currency are included in the results of operations as incurred. 26 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Fair Value of Financial Instruments. US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing afair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value. The following is abrief 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 similarassets 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. Foreign currency forward and hedge contracts are recorded in the consolidated balance sheets at their fair value as of the balance sheet dates based oncurrent market rates. The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-termborrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fairvalue 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 thecurrent market rate available to the Company. Significant Balance Sheet Fluctuation January 31, 2017, as Compared to January 31, 2016 Balance Sheet Accounts. Cash increased by $3.3 million in FY17 as the Company minimized capital expenditures in the current year in anticipation of a newenterprise resource planning (“ERP”) project in FY18. Inventory net of reserves decreased $5.3 million as the Company continued to focus on improvementsin planning and working through existing stock of core product in response to low volume. The Company experienced a decrease in borrowings under therevolving credit facility of $4.6 million and repaid short term debt in China and Argentina in the amount of $3.1 million as the Company actively managedinventory levels. Year Ended January 31, 2017, Compared to the Year Ended January 31, 2016 Results of OperationsThe following table sets forth our historical results of continuing operations for the years and three-months ended January 31, 2017 and 2016, as a percentageof our net sales from operations. For the Year For the Three Months Ended January 31, Audited Ended January 31, Unaudited 2017 2016 2017 2016 Net sales 100.0% 100.0% 100.0% 100.0%Cost of goods sold 63.3% 63.5% 61.8% 70.6%Gross profit 36.7% 36.5% 38.2% 29.4%Operating expenses 28.8% 24.6% 29.7% 30.9%Operating profit (loss) 7.9% 11.9% 8.5% (1.5)%Other income, net 0.1% (0.2)% 0.8% (0.1)%Interest expense (0.7)% (0.8)% (0.5)% (1.0)%Income (loss) before tax 7.3% 10.9% 8.8% (2.6)%Income tax expense (benefit) 2.8% 3.1% 4.1% (2.2)%Net income (loss) 4.5% 7.8% 4.7% (0.4)% For purposes of the Management’s Discussion, the reference to “Q” shall mean “Quarter.” Thus “Q4” means the fourth quarter of the applicable fiscalyear. 27 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net Sales. Net sales from continuing operations decreased to $86.2 million for the year ended January 31, 2017 compared to $99.6 million for the yearended January 31, 2016, a decrease of 13.5%. Overall sales volume was reduced due to global softness in the industrial sector partially resulting from acontinuing downturn in the oil and gas industry as well as currency volatility in China, Canada, Mexico and the UK in which we conduct business. As aresult of a stronger US dollar in relation to these other currencies, these foreign revenues are reported on a reduced basis. Sales in the USA decreased $9.8million or 15.8% due primarily to a continued soft market in the industrial sector for FY17 and as compared to the previous year which included sales intothe bird flu pandemic. USA sales of disposables decreased by $5.4 million and chemical sales decreased $6.1 million reflecting the softness in the USindustrial sector. Wovens and fire protection sales combined increased $1.0 million or 13.1% mostly due to a large intercompany sale to Argentina whileglove sales decreased $0.3 million. Reflective sales increased $0.9 million or 12.6% primarily due to an increase in sales in our rainwear product line.Sales in China and to the Asia Pacific Rim were down $9.7 million or 19.2% as intercompany demand decreased and that region experienced moderatedevaluation against the USD and general sluggishness in the economy. Canada sales increased by $1.2 million or 20.0% as that country experiencedwildfires, saw a concerted effort begin for asbestos remediation, and experienced an oil and gas turnaround – all requiring protective wear. UK salesdecreased by $5.6 million or 38.3% mostly due to significant Ebola related sales is FY16 with no such sales in FY17, uncertainty in the economy as aresult of Brexit and continuing currency challenges. Russia and Kazakhstan sales combined had a modest decrease of $0.1 million or 5.9%. Latin Americasales increased $0.5 million or 8.8% due to a large sale from Argentina into Ecuador which was offset in part by a depressed commodities market, whichcurtails agriculture and mining production, and a poor economic environment in Brazil. Gross Profit. Gross profit from continuing operations decreased $4.7 million, or 12.9%, to $31.6 million for the year ended January 31, 2017, from $36.3million for the year ended January 31, 2016. Gross profit as a percentage of net sales slightly increased from 36.5% for the year ended January 31, 2016 to36.7% for the year ended January 31, 2017. Major factors driving gross margins were: ·Disposables gross margins increased 4.9 percentage points in spite of low volume as the Company continues to contain cost and maximizeproduction efficiency.·Chemical gross margin decreased by 17.0 percentage points primarily due to the very high volume and high margins associated with theCompany’s response to the Ebola crisis and bird flu in FY16, severance payments of $0.1 million associated with a reduction in force in the USAto move production to our more cost effective facilities in Mexico and China during Q1FY17, and weak sales volume.·Fire protection gross margin increased 3.5 percentage points due to product mix and included severance payments in excess of $0.1 millionassociated with a reduction in force in the USA to move production to our more cost effective facility in Mexico while wovens gross marginsremained level.·Reflective gross margins decreased 0.7 percentage points as a result of product mix and severance payments of $0.1 million associated with areduction in force in the USA to move production to our Mexico and China facilities.·UK gross margins decreased 5.4 percentage points as a result of weak sales volume, uncertainty in the marketplace resulting from the Brexit, andas compared to FY16 where the Company’s sales related to the Ebola crisis had very high margins.·Chile’s gross margin increased 3.5 percentage points as a result of product mix and Argentina’s gross margin increased 24.7 percentage pointsprimarily as a result of a large sale into Ecuador and in spite of otherwise very weak sales volume and a challenging economic environmentwhere there is excess supply.·Canada’s gross margins increased 5.6 percentage points as a result of strong sales volume resulting from wildfires, asbestos remediation and astronger oil and gas industry – all requiring protective wear - as well as product mix and in spite of currency challenges. Operating Expense. Operating expenses of continuing operations increased 1.1% from $24.5 million for the year ended January 31, 2016 to $24.8 million forthe year ended January 31, 2017. Operating expenses as a percentage of net sales was 28.8% for the year ended January 31, 2017 up from 24.6% for the yearended January 31, 2016. The main factors for the mild increase in operating expenses are a $0.4 million increase in sales salaries resulting from additions toexisting sales staff in the US, Australia and China, $0.2 million increase in professional fees, and a $0.4 million increase to depreciation in the normal courseof business and due to a change the management estimate of the fair market value of assets held for sale and offset by a $0.3 million decrease in bad debtexpense due to collection efforts and a $0.3 million decrease in equity compensation due to the change in performance level of the Company’s 2015 stockplan from maximum to baseline. 28 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Operating Profit. Operating profit from continuing operations decreased to a profit of $6.8 million for the year ended January 31, 2017, from $11.8million for the year ended January 31, 2016, mainly as a result of weak sales as compared to very strong sales related to the Company’s response to Ebolaand to the bird flu crises in the year ended January 31, 2016. Operating margins were 7.9% for the year ended January 31, 2017, compared to 11.9% forthe year ended January 31, 2016. Interest Expense. Interest expenses from continuing operations decreased to $0.6 million for the year ended January 31, 2017 from $0.8 million for theyear ended January 31, 2016 as the Company reduced borrowings in the year. Income Tax Expense. Income tax expense consists of federal, state and foreign income taxes. Income tax expense from continuing operations was $2.4million for the year ended January 31, 2017, as compared to an income tax expense of $3.1 million for the year ended January 31, 2016, primarily as aresult of greater profitability in the U.S. and the U.K. in FY16. Net Income. Net income from continuing operations decreased to $3.9 million for the year ended January 31, 2017 from $7.8 million for the year endedJanuary 31, 2016. The results for the year ended January 31, 2017 are primarily due to lower sales volume than in the prior fiscal year. Fourth Quarter Results Factors affecting Q4 FY17 results of continuing operations included: ·We continue to see cost increases in our Chinese manufacturing operations with labor source availability a concern.·Experienced volatility in currencies in Argentina, the UK, Mexico and China.·Low volume worldwide due to economic factors including an industrial production decline in the US due to the strength of the dollar and job lossesin the Energy sector, and continuing decline in the growth rate in China and a near zero growth rate in Europe.·Gross profit in Q4 FY17 was 38.2% this year vs. 29.4% in Q4 FY16, mainly resulting from a reduction in force in the USA taken in Q1 FY17 and thecorresponding movement of production to our more efficient operations in China and Mexico, cost containment measures, the maximization ofmanufacturing efficiency, and very low volume in the US in Q4 FY16. Liquidity and Capital Resources As of January 31, 2017, we had cash and cash equivalents of approximately $10.4 million and working capital of $47.8 million. Cash and cashequivalents increased $3.3 million and working capital increased $5.6 million from January 31, 2016 as the Company minimized capital expendituresand managed inventory levels. International cash management is affected by local requirements and movements of cash across borders can be sloweddown significantly. Of the Company’s total cash and cash equivalents of $10.4 million as of January 31, 2017, cash held in the UK of $0.1 million, cash held in India of $0.1million and cash held in Canada of $0.6 million would not be subject to additional tax as foreign income has already been subject to US tax. Cash in allother foreign countries of $8.2 million would incur US tax less any foreign tax credits if the cash was repatriated. In the event that the Companyrepatriated cash from China, of the $7.7 million balance at January 31, 2017 there would be an additional 10% withholding tax incurred in that country.The Company has strategically employed a dividend plan subject to declaration and certain approvals in which its Canadian subsidiary sends dividendsto the US in the amount of 100% of the previous year’s earnings, the UK subsidiary sends dividends to the US in the amount of 50% of the previous year’searnings, and the Weifang China subsidiary sends dividends to the US in declared amounts of the previous year’s earnings. Dividends were not declaredfor our China subsidiary in FY17 as management evaluates the possible impact of regulatory changes in the US tax code. 29 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net cash provided by operating activities of $11.5 million for the year ended January 31, 2017 was primarily due to net income of $3.9 million, a decreasein inventories of $5.5 million, an increase in accounts payable of $0.6 million, an increase in stock-based compensation of $0.3 million, depreciation andamortization of $1.2 million and a decrease in accounts receivable of $0.9 million offset by an increase in other current assets of $0.6 million mostly dueto an increase of miscellaneous receivables resulting from an increase in advanced payments to suppliers and an increase to prepaid expenses due to thetiming of supplier payments, an increase in prepaid VAT taxes and other current assets of $0.2 million primarily associated with foreign VAT taxesreceivable and a decrease in accrued expenses and other liabilities of $0.5 million due to timing of payments to suppliers. Net cash used in investingactivities of $0.4 million reflect minor purchases in property and equipment and net cash used in financing activities was $7.7 million in the year endedJanuary 31, 2017, due to a $4.6 million decrease in borrowings under the Company’s revolving credit facility and the $3.2 million net payment of ourloans in China and Argentina. We currently have one senior credit facility: $15 million revolving credit facility which commenced June 28, 2013, of which we had $4.9 million ofborrowings outstanding as of January 31, 2017, expiring on June 30, 2017, at a current per annum rate of 4.25%. Maximum availability in excess ofamount outstanding at January 31, 2017 was $10.1 million. Our current credit facility requires, and any future credit facilities may also require, that wecomply with specified financial covenants relating to earnings before interest, taxes, depreciation and amortization and others relating to fixed chargecoverage ratio and limits on capital expenditures and investments in foreign subsidiaries. Our ability to satisfy these financial covenants can be affectedby events beyond our control, and we cannot guarantee that we will meet the requirements of these covenants. These restrictive covenants could affect ourfinancial and operational flexibility or impede our ability to operate or expand our business. Default under our credit facilities would allow the lenders todeclare all amounts outstanding to be immediately due and payable. Our lenders, including AloStar Bank of Commerce and Development Bank ofCanada, have a security interest in substantially all of our US and Canadian assets and pledges of 65% of the equity of the Company’s foreignsubsidiaries, other than Canada which is 100%. If our lenders declare amounts outstanding under any credit facility to be due, the lenders could proceedagainst our assets. Any event of default, therefore, could have a material adverse effect on our business. We believe that our current availability under oursenior credit facility, coupled with our anticipated operating cash and cash management strategy, is sufficient to cover our liquidity needs for the next 12months. In addition, we anticipate having a new credit facility in place by June 2017. Stock Repurchase Program. On July 19, 2016, the Company’s board of directors approved a stock repurchase program under which the Company mayrepurchase up to $2,500,000 of its outstanding common stock. The Company has not repurchased any stock under this program as of the date of thisfiling.Capital Expenditures. Our capital expenditures through Q4 FY17 of $0.4 million principally relate to additions to equipment in China andmanufacturing equipment, computer system and leasehold improvements in the USA. We anticipate FY18 capital expenditures to be approximately $1.0million as there is a new ERP project scheduled. Recent Accounting PronouncementsThe Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accountingstandards that are issued. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”(“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goodsor services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in US GAAP when it becomes effective and permits theuse of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timingand uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the EffectiveDate” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effectivefor annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will beeffective for the Company’s fiscal year beginning February 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, “Principal versus AgentConsiderations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerationsin the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability andunderstandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and PracticalExpedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and othersimilar taxes. In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contractswith Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significanteffect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementationand provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the sameeffective date as the new revenue standard. The Company plans to adopt Topic 606 in the first quarter of its fiscal 2019 using the retrospective transitionmethod, and is currently evaluating the impact of its pending adoption of Topic 606 will have on its consolidated financial statements. Whileno significant impact is expected upon adoption of the new guidance, the Company will not be able to make that determination until the time of adoptionbased upon outstanding contracts at that time. 30 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In July 2015, the FASB issued ASU No. 2015-11, an amendment to Topic 330 for simplifying the measurement of inventory. The update requires thatinventory be measured at the lower of cost and net realizable value where net realizable value is the estimated selling prices in the ordinary course ofbusiness, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measuredusing LIFO or the retail inventory method. The amendment is intended to provide clarification on the measurement and disclosure of inventory in Topic330 and not intended for those clarifications to result in any changes in practice. The ASU is effective for interim and annual periods beginning afterDecember 15, 2016. Early application is permitted for all entities and should be applied prospectively. Management does not believe the adoption of thisASU would have a material impact on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes howdeferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred taxliabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets andliabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments areeffective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Duringthe quarter ended October 31, 2016, the Company early applied this ASU and retrospectively applied it to the prior period presented. The adoption ofASU 2015-17 had no impact on the Company’s results of operations and cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assetsand Financial Liabilities, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-usefulinformation. The update requires equity investments (except those accounted for under the equity method or those that result in consolidation of theinvestee) to be measured at fair value with changes in fair value recognized in net income. It eliminated the requirement for public entities to disclose themethod(s) and significant assumptions used to estimate the fair value that is require to be disclosed for financial instruments measured at amortized coston the balance sheet. For public entities, the ASU is effective for the fiscal years beginning after December 15, 2017, including interim periods withinthose fiscal years. Management does not believe the adoption of this ASU would have a material impact on the Company’s consolidated financialstatements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in thisASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for allentities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with anoption to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financialstatements but has not determined the effects that the adoption of the pronouncement may have on its consolidated financial statements. 31 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In March 2016, the FASB Issued ASU No. 2016-09, Compensation–Stock Compensation (Topic 718), Improvements to Employee Share-Based PaymentAccounting. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlyadoption is permitted for an entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments shouldbe reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendmentsin the same period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements but management doesnot believe the adoption of the pronouncement will have a material impact on its consolidated financial statements. In May 2016, the FASB issued ASU No. 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815); Rescission of SECGuidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, whichis rescinding certain SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil andGas, effective upon adoption of Topic 606. Management does not expect the adoption of the ASU to have any impact on its consolidated financialstatements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, toaddress diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provideguidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon DebtInstruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3)Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from theSettlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from EquityMethod Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the PredominancePrinciple. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within thosefiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transitionmethod to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issueswould be applied prospectively as of the earliest date practicable. Management does not believe the adoption of this ASU would have a material impacton the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business in an effort to clarify thedefinition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for asacquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periodswithin those fiscal years. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidatedfinancial statements. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment to simplifythe accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires a hypothetical purchaseprice allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed thecarrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to performa qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill for allreporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount for goodwill at reporting units withzero or negative carrying amounts. This guidance is effective in 2020, but early adoption is permitted for any impairment tests performed after January 1,2017. The Company is currently evaluating the impact that this guidance will have on the Company’s consolidated financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency RiskWhile as a smaller reporting company, disclosure of market risk is not required, the Company is voluntarily including such disclosures. We are exposed to changes in foreign currency exchange rates as a result of our purchases and sales in other countries. To manage the volatility relating toforeign currency exchange rates, we seek to limit, to the extent possible, our non-US dollar denominated purchases and sales. 32 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In connection with our operations in China, we purchase a significant amount of products from outside of the United States. However, our purchases inChina are primarily made in Chinese RMB, the value of which had been largely pegged to the US dollar for the last decade. However, the Chinese RMBhas been decoupled from the US Dollar and allowed to float by the Chinese government and, therefore, we have been exposed to additional foreignexchange rate risk on our Chinese raw material and component purchases. Our primary risk from foreign currency exchange rate changes is presently related to non-US dollar denominated sales in Canada, Europe and in SouthAmerican countries. Our sales to customers in Canada are denominated in Canadian dollars and in Europe in Euros and British pounds. If the value of theUS dollar increases relative to the Canadian dollar, the Pound or the Euro, then our net sales could decrease as our products would be more expensive tothese international customers because of changes in rate of exchange. Our sales from China are denominated in the Chinese RMB and US dollars. Wemanage the foreign currency risk through the use of rolling 90-day forward contracts against the Canadian dollar and the Euro and through longer termcash flow hedges in the US against the Euro. We do not hedge other currencies at this time. In the event that a non-US dollar denominated internationalpurchases and sales grow, exposure to volatility in exchange rates could have a material adverse impact on our financial results. The only significantunhedged foreign exchange exposure we have is the Argentine peso. Other unhedged currency exposure is not significant. If the Argentina exchange ratevaried either way by +/- 10%, it would not be significant so long as prices could be raised to account for more expensive garments. Interest Rate RiskWe are exposed to interest rate risk with respect to our credit facilities, which have variable interest rates based upon the London Interbank Offered Rate.At January 31, 2017, we had $4.9 million in borrowings outstanding under our senior credit facility. If the interest rate applicable to this variable rate debtrose 1% in the year ended January 31, 2017, our interest expense would have increased only 0.25% due to the floor of 4.25%. If the effective interest raterose 0.25 percentage point over 4.25%, it would increase interest expense by an insignificant amount. Tax RisksWe are exposed to tax rate risk with respect to our deferred tax asset. Should the effective tax rate decrease as a result of tax reform there could be asignificant one-time noncash charge to earnings in order to adjust our deferred tax asset. Though this one-time adjustment might be material, theCompany would be in a favorable tax position going forward. The Company claimed a worthless stock deduction in connection with our exit from Brazil which has generated a tax benefit of approximately US $9.5million. While, along with our tax advisors, we believe that this deduction is valid, there can be no assurance that the IRS will not challenge it and, ifchallenged, there is no assurance that the Company will prevail. Risks Associated with Discontinued Foreign Operations.During the fiscal year ended January 31, 2016 the Company formally executed its exit from Brazil, but we may continue to be exposed to certainliabilities arising in connection with the prior operations of Lakeland Brazil. These risks include but are not limited to pre-existing VAT claims in theamount of $0.5 million excluding interest, penalties and fees and outstanding labor claims totaling $0.2 million as of and at the year ended January 31,2017. The Company understands that under the laws of Brazil, a concept of fraudulent bankruptcy exists, which may hold a parent company liable for theliabilities of a former Brazilian subsidiary in the event some level of fraud or misconduct is shown during the period that the parent company owned thesubsidiary. While the Company believes that there has been no such fraud or misconduct relating to operations of and their exit from Brazil, there can beno assurance that the courts of Brazil will not make such a finding. The risk of exposure to the Company continues to diminish as the former subsidiarycontinues to operate, as the risk of a finding of fraudulent bankruptcy lessens and pre-sale liabilities are paid off. Should the former subsidiary stay inoperations for a period of two years, the Company believes the risk of a finding of fraudulent bankruptcy is eliminated. 33 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page No.Reports of Independent Registered Public Accounting Firms35-38Consolidated Statements of Operations for the Years Ended January 31, 2017 and 201639Consolidated Statements of Comprehensive Income for the Years Ended January 31, 2017 and 201640Consolidated Balance Sheets as of January 31, 2017 and 201641Consolidated Statements of Stockholders' Equity for the Years Ended January 31, 2017 and 201642Consolidated Statements of Cash Flows for the Years Ended January 31, 2017 and 201643Notes to Consolidated Financial Statements44-69 All schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financialstatements or notes thereto. 34 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders ofLakeland Industries, Inc. We have audited the accompanying consolidated balance sheet of Lakeland Industries, Inc. and Subsidiaries (collectively, the “Company”) as of January 31,2017, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year then ended. TheCompany’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationof internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of theCompany as of January 31, 2017, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accountingprinciples generally accepted in the United States of America. /s/ Friedman LLP New York, New YorkApril 26, 2017 35 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Report of Independent Registered Public Accounting Firm To the Board of Directors andStockholders of Lakeland Industries, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheet of Lakeland Industries, Inc. and Subsidiaries (the “Company”) as of January 31, 2016, andthe related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the year then ended. These consolidatedfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financialstatements based on our audit. For the year ended January 31, 2016, we did not audit the financial statements of Weifang Lakeland Safety Products Co. Ltd.and Lakeland (Beijing) Safety Products Co., Ltd., wholly owned subsidiaries, which statements reflect total assets of approximately $15,376,000 and totalrevenues of approximately $12,154,000 constituting 17% and 12%, respectively, of the related consolidated totals in 2016. Those statements were auditedby other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for Weifang Lakeland SafetyProducts Co., Ltd., and Lakeland (Beijing) Safety Products Co., Ltd. is based solely on the reports of the other auditors. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thatour audit provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all materialrespects, the consolidated financial position of the Company as of January 31, 2016, and the consolidated results of its operations and its cash flows for theyear then ended, in conformity with U.S. generally accepted accounting principles /s/ Mazars USA LLP (formerly WeiserMazars LLP) New York, New YorkApril 21, 2016 36 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders ofWeifang Lakeland Safety Products Co Ltd, China We have audited the accompanying balance sheet of Weifang Lakeland Safety Products Co Ltd, China as of 31 January 2016, and the related statement ofoperations, shareholder’s equity and cash flows for the year then ended. Weifang Lakeland Safety Products Co., Ltd.’s management is responsible for thesefinancial statements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controlover financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis forour opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Weifang Lakeland Safety ProductsCo., Ltd. as of January 31, 2016, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally acceptedaccounting principles. /s/ Shanghai MAZARS Certified Public AccountantsShanghai MAZARS Certified Public AccountantsShanghai, ChinaApril 18, 2016 37 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofLakeland (Beijing) Safety Products Co., Ltd., China, We have audited the accompanying balance sheet of Lakeland (Beijing) Safety Products Co., Ltd., China as of 31 January 2016, and the related statement ofoperations, shareholder’s equity and cash flows for the year then ended. Lakeland (Beijing) Safety Products Co., Ltd.’s management is responsible for thesefinancial statements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controlover financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis forour opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lakeland (Beijing) Safety ProductsCo., Ltd. as of January 31, 2016, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally acceptedaccounting principles. /s/ Shanghai MAZARS Certified Public AccountantsShanghai MAZARS Certified Public AccountantsShanghai, ChinaApril 18, 2016 38 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF OPERATIONSFor the Years Ended January 31, 2017 and 2016 Years Ended January 31, In ($000’s) except share information 2017 2016 Net sales from continuing operations $86,183 $99,646 Cost of goods sold from continuing operations 54,546 63,313 Gross profit from continuing operations 31,637 36,333 Operating expenses from continuing operations 24,790 24,521 Operating profit from continuing operations 6,847 11,812 Other income (loss), net from continuing operations 46 (120)Interest expense from continuing operations (620) (785)Income before taxes from continuing operations 6,273 10,907 Income tax expense from continuing operations 2,380 3,117 Net income from continuing operations 3,893 7,790 Noncash reclassification of Other Comprehensive Income to Statement of Operations (no impact on stockholders’equity) — (1,286)Loss from operations from discontinued operations — (3,538)Loss from disposal of discontinued operations — (515)Loss before taxes for discontinued operations — (5,339)Income tax benefit from discontinued operations — (1,403)Net loss from discontinued operations — $(3,936)Net income $3,893 $3,854 Net income (loss) per common share – Basic: Income from continuing operations $0.54 $1.09 Loss from discontinued operations — $(0.55)Net income $0.54 $0.54 Net income (loss) per common share – Diluted: Income from continuing operations $0.53 $1.07 Loss from discontinued operations — $(0.54)Net income $0.53 $0.53 Weighted average common shares outstanding: Basic 7,257,553 7,171,965 Diluted 7,327,248 7,254,340 The accompanying notes are an integral part of these consolidated financial statements. 39 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the Years Ended January 31, 2017 and 2016 Years Ended January 31 ($000)’s 2017 2016 Net income $3,893 $3,854 Other comprehensive income (loss): Cash flow hedges 52 (159)Foreign currency translation adjustments (250) (597)Brazil noncash reclassification of other comprehensive Income to Statement of Operations (transfer of LakelandBrazil shares) — 1,286 Other comprehensive income (loss) (198) 530 Comprehensive income $3,695 $4,384 The accompanying notes are an integral part of these consolidated financial statements. 40 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. LAKELAND INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSJanuary 31, 2017 and 2016 January 31, January 31, 2017 2016 ($000’s) ASSETS Current assets Cash and cash equivalents $10,365 $7,022 Accounts receivable, net of allowance for doubtful accounts of $417 and $593 at January 31, 2017 and 2016,respectively 10,704 11,476 Inventories, net of allowance of $2,305 and $2,566 at January 31, 2017 and 2016, respectively 35,535 40,841 Prepaid VAT tax 1,361 1,143 Other current assets 2,121 1,635 Total current assets 60,086 62,117 Property and equipment, net 8,527 9,268 Assets held for sale 901 1,101 Deferred income tax 13,515 14,338 Prepaid VAT and other taxes 478 377 Other assets 176 188 Goodwill 871 871 Total assets $84,554 $88,260 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $4,928 $4,254 Accrued compensation and benefits 1,311 1,157 Other accrued expenses 1,018 1,813 Current maturity of long-term debt 50 50 Short-term borrowings 153 3,226 Borrowings under revolving credit facility 4,865 9,458 Total current liabilities 12,325 19,958 Long-term portion of debt 716 691 VAT taxes payable 6 95 Total liabilities 13,047 20,744 Commitments and contingencies Stockholders’ equity Preferred stock, $0.01 par; authorized 1,500,000 shares (none issued) ----- ----- Common stock, $.01 par; authorized 10,000,000 shares, Issued 7,620,215 and 7,610,603; outstanding 7,263,774and 7,254,162 at January 31, 2017 and 2016, respectively 76 76 Treasury stock, at cost; 356,441 shares at January 31, 2017 and 2016, respectively (3,352) (3,352)Additional paid-in capital 64,764 64,468 Retained earnings 12,401 8,508 Accumulated other comprehensive loss (2,382) (2,184)Total stockholders' equity 71,507 67,516 Total liabilities and stockholders' equity $84,554 $88,260 The accompanying notes are an integral part of these consolidated financial statements. 41 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYFor the Years Ended January 31, 2017 and 2016 Common Stock Treasury Stock AdditionalPaid-in Retained AccumulatedOtherComprehensive Shares Amount Shares Amount Capital Earnings Loss Total ($000’s) ($000’s) ($000’s) ($000’s) ($000’s) ($000’s) Balance, January 31, 2015 7,414,037 $74 (356,441) $(3,352) $64,594 $4,654 $(2,714) $63,256 Net income — — — — — 3,854 — 3,854 Other comprehensive income — — — — — — 530 530 Stock-based compensation: Director Stock Options Exercised 6,130 — — — 40 — — 40 Restricted stock issued 190,436 2 — — (2) — — — Restricted Stock Plan — — — — 586 — — 586 Return of shares in lieu of payroll taxwithholding — — — — (750) — — (750)Balance, January 31, 2016 7,610,603 $76 (356,441) $(3,352) $64,468 $8,508 $(2,184) $67,516 Net income — — — — — 3,893 — 3,893 Other comprehensive loss — — — — — — (198) (198)Stock-based compensation: Director Stock Options Exercised 5,000 — — — 41 — — 41 Restricted stock issued 4,612 — — — — — — — Restricted Stock Plan — — — — 276 — — 276 Return of shares in lieu of payroll taxwithholding — — — — (21) — — (21)Balance, January 31, 2017 7,620,215 $76 (356,441) $(3,352) $64,764 $12,401 $(2,382) $71,507 The accompanying notes are an integral part of these consolidated financial statements. 42 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended January 31, 2017 and 2016 January 31, 2017 2016 (000’s) Cash flows from operating activities: Net income $3,893 $3,854 Adjustments to reconcile net income to net cash provided by (used in) operating activities Provision for (recovery of) inventory obsolescence (261) 113 Provision for (recovery of) doubtful accounts (176) 145 Reserve against note receivable from former Brazilian subsidiary for doubtful collectability — 2,286 Deferred income taxes 734 (57)Depreciation and amortization 1,194 986 Stock based and restricted stock compensation 276 586 Loss on disposal of property and equipment 138 19 Interest expense resulting from Arbitration Award — (111)Impairment write-down on assets held for sale 200 — Non-cash reclassification of other comprehensive income to statement of operations due to the disposal ofBrazil — 1,286 (Increase) decrease in operating assets: Accounts receivable 896 1,443 Inventories 5,494 (4,239)Prepaid VAT taxes (218) 574 Other current assets (629) 321 Increase (decrease) in operating liabilities: Accounts payable 585 (3,306)Accrued expenses and other liabilities (504) 250 Net cash used by the sale of Brazil — (1,147)Accrued expenses for disposal of Brazil (129) 238 Arbitration award in Brazil — (3,759)Net cash provided by (used in) operating activities 11,493 (518)Cash flows from investing activities: Proceeds from sale of property — 451 Note receivable from former Brazilian subsidiary for doubtful collectability — (2,286)Purchases of property and equipment (413) (840)Net cash used in investing activities (413) (2,675)Cash flows from financing activities: Net borrowings (repayments) under revolving credit facility (4,593) 3,816 Loan repayments, short-term (4,529) (2,125)Loan borrowings, short-term 1,329 3,226 Loan repayments, long-term (25) (23)UK borrowings (repayments) under line of credit facility, net 134 (478)Proceeds from exercise of stock options 41 40 Shares returned to pay employee taxes under restricted stock program (21) (750)Net cash (used in) provided by financing activities: (7,664) 3,706 Effect of exchange rate changes on cash and cash equivalents (73) (200)Net increase in cash and cash equivalents 3,343 313 Cash and cash equivalents at beginning of year 7,022 6,709 Cash and cash equivalents at end of year $10,365 $7,022 Cash paid for interest $620 $784 Cash paid for taxes $1,599 $1,826 The accompanying notes are an integral part of these consolidated financial statements. 43 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 1.BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BusinessLakeland Industries, Inc. and Subsidiaries (“Lakeland,” the “Company,” “we,” “our” or “us”), a Delaware corporation organized in April 1986,manufactures and sells a comprehensive line of safety garments and accessories for the industrial protective clothing market. For purposes of these financial statements, FY refers to a fiscal year ended January 31; thus, FY17 refers to the fiscal year ended January 31, 2017. Basis of PresentationThe Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“USGAAP”). The following is a description of the Company’s significant accounting policies. Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significantintercompany accounts and transactions have been eliminated. Use of Estimates and AssumptionsThe preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet date, and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that events could occurduring the upcoming year that could change such estimates. Cash and Cash EquivalentsThe Company considers highly liquid temporary cash investments with original maturities of three months or less to be cash equivalents. Cashequivalents consist of money market funds. The cost of cash equivalents approximates fair value. Cash and cash equivalents were approximately$10,365,000 at January 31, 2017 and $7,022,000 at January 31, 2016. Accounts Receivable, netTrade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts forestimated losses resulting from the inability of its customers to make required payments. The Company recognizes losses when information availableindicates that it is probable that a receivable has been impaired based on criteria noted above at the date of the consolidated financial statements, and theamount of the loss can be reasonably estimated. Management considers the following factors when determining the collectability of specific customeraccounts: Customer creditworthiness, past transaction history with the customers, current economic industry trends, 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 theCompany’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based onmanagement’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 anda credit to accounts receivable. 44 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Inventories, netInventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out basis) or market. Provision ismade for slow-moving, obsolete or unusable inventory. Property and EquipmentProperty and equipment is stated at cost. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets tooperations over their estimated service lives on a straight-line basis. Leasehold improvements and leasehold costs are amortized over the term of the leaseor service lives of the improvements, whichever is shorter. The costs of additions and improvements which substantially extend the useful life of aparticular asset are capitalized. Repair and maintenance costs are charged to expense. When assets are sold or otherwise disposed of, the cost and relatedaccumulated depreciation or amortization are removed from the account, and the gain or loss on disposition is reflected in operating income. GoodwillGoodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified andseparately recognized. Goodwill is evaluated for impairment at least annually; however, this evaluation may be performed more frequently when events orchanges in circumstances indicate the carrying amount may not be recoverable. Factors that the Company considers important that could identify apotential impairment include: significant changes in the overall business strategy and significant negative industry or economic trends. Managementassesses whether it is more likely than not that goodwill is impaired and, if necessary, compares the fair value of the entity acquired to the carrying value.Fair value is generally determined by management either based on estimating future discounted cash flows for the reporting unit or by estimating a salesprice for the reporting unit based on multiple of earnings. These estimates require the Company's management to make projections that can differ fromactual results. Impairment of Long-Lived AssetsThe Company evaluates the carrying value of long-lived assets to be held and used when events or changes in circumstances indicate the carrying valuemay not be recoverable. The Company measures any potential impairment on a projected undiscounted cash flow method. Estimating future cash flowsrequires the Company’s management to make projections that can differ materially from actual results. The carrying value of a long-lived asset isconsidered impaired when the total projected undiscounted cash flows from the asset is less than its carrying value. In that event, a loss is recognizedbased on the amount by which the carrying value exceeds the fair value of the long-lived asset. As of January 31, 2017 and January 31, 2016, noimpairment was recorded. Self-Insured Liabilities We have a self-insurance program for certain employee health benefits. The cost of such benefits is recognized as expense based on claims filed in eachreporting period and an estimate of claims incurred but not reported during such period. Our estimate of claims incurred but not reported is based uponhistorical trends. If more claims are made than were estimated or if the costs of actual claims increase beyond what was anticipated, reserves recorded maynot be sufficient, and additional accruals may be required in future periods. We maintain separate insurance to cover the excess liability over set singleclaim amounts and aggregate annual claim amounts. Revenue RecognitionThe Company derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of high-end chemical protectivesuits, firefighting and heat protective apparel, gloves and arm guards and reusable woven garments. Sales are recognized when goods are shipped, atwhich time title and the risk of loss pass to the customer. Sales are reduced for sales returns and allowances. Payment terms are generally net 30 days forUnited States sales and net 90 days for international sales. Substantially, all of the Company's sales are made through distributors. There are no significant differences across product lines or customers in differentgeographical areas in the manner in which the Company's sales are made. 45 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Lakeland offers a growth rebate to certain distributors each year on a calendar-year basis. Sales are traced on a monthly basis, and accruals are based onsales growth over the prior year. The growth rebate accrual is adjusted either up or down on a monthly basis as a reduction (increase) to revenue and anincrease (reduction) to the accrual based on monthly sales trends as compared with prior year. Based on volume and products purchased, distributors canearn anywhere from 1% to 6% in rebates in the form of either a quarterly or annual credit to their account, depending on the specific agreement. Inestimating the accrual needed, management tracks sales growth over the prior year. Our sales are generally final; however, requests for return of goods can be made and must be received within 90 days from invoice date. No returns will beaccepted without a written authorization. Return products may be subject to a restocking charge and must be shipped freight prepaid. Any special made-to-order items are not returnable. Customer returns have historically been insignificant. Customer pricing is subject to change on a 30-day notice; exceptions based on meeting competitors' pricing are considered on a case-by-case basis.Revenue is recorded net of taxes collected from customers. The related taxes that are remitted to governmental authorities, with the collected taxesrecorded as current liabilities until remitted to the relevant government authority. For larger orders, except in its Lakeland Fire product line, the Company absorbs the cost of shipping and handling. For those customers who are billed thecost of shipping and handling fees, such amounts are included in net sales. Shipping and handling costs associated with the outbound freight are includedin operating expenses and aggregated approximately $2.0 million in FY17 and $2.5 million in FY16. Advertising CostsAdvertising costs are expensed as incurred and included in operating expenses on the consolidated statement of operations. Advertising and co-op costsamounted to $342,000 and $326,000 in FY17 and FY16, respectively, net of a co-op advertising allowance received from a supplier. Stock-Based CompensationThe 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 vestingprovision, the cost is recognized over the requisite service period (generally the vesting period of the equity award) which approximates the performanceperiod. For awards based on services already rendered, the cost is recognized immediately. Research and Development CostsResearch and development costs include labor, equipment and materials costs and are expensed as incurred and included in operating expenses. Researchand development expenses aggregated were approximately $463,000 and $165,000 in FY17 and FY16, respectively. Income TaxesThe Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the consolidated financialstatements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax andfinancial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets orliabilities on the Company’s consolidated balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recoveredfrom 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 apreviously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period ofsuch determination. 46 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 The Company recognizes tax positions that meet a “more likely than not” minimum recognition threshold. If necessary, the Company recognizes interestand penalties associated with tax matters as part of the income tax provision and would include accrued interest and penalties with the related tax liabilityin the consolidated balance sheets. Foreign Operations and Foreign Currency TranslationThe Company maintains manufacturing operations in Mexico, India, Argentina and the People’s Republic of China and can access independentcontractors in Mexico, Argentina and China. It also maintains sales and distribution entities located in India, Canada, the U.K., Chile, China, Argentina,Russia, Kazakhstan and Mexico. The Company is vulnerable to currency risks in these countries. The functional currency for the United Kingdomsubsidiary is the Euro; the trading company in China, the RMB; the Canadian Real Estate subsidiary, the Canadian dollar; the Russian operation, theRussian 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 theexchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translationadjustments are reported in accumulated other comprehensive loss, a separate component of stockholders’ equity. Cash flows are also translated ataverage translation rates for the periods, therefore, amounts reported on the consolidated statement of cash flows will not necessarily agree with changesin the corresponding balances on the consolidated balance sheet. Transaction gains and losses that arise from exchange rate fluctuations on transactionsdenominated in a currency other than the functional currency are included in the results of operations as incurred. Fair Value of Financial InstrumentsUS GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which iscategorized 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 similarassets 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. Foreign currency forward and hedge contracts are recorded in the consolidated balance sheets at their fair value as of the balance sheet dates based oncurrent market rates as further discussed in Note 11. The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-termborrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fairvalue 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 thecurrent market rate available to the Company. Earnings Per ShareBasic earnings per share are based on the weighted average number of common shares outstanding without consideration of common stock equivalents.Diluted earnings per share are based on the weighted average number of common shares and common stock equivalents. The diluted earnings per sharecalculation takes into account unvested restricted shares and the shares that may be issued upon exercise of stock options, reduced by shares that may berepurchased with the funds received from the exercise, based on the average price during the fiscal year. 47 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 ReclassificationsCertain reclassifications have been made to the prior year’s consolidated balance sheet to conform to the current year presentation. These reclassificationshave no effect on the accompanying consolidated financial statements. Recent Accounting PronouncementsThe Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accountingstandards that are issued. In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”(“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goodsor services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in US GAAP when it becomes effective and permits theuse of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timingand uncertainty of revenue and cash flows arising from customer contracts. In August 2015, the FASB issued ASU No. 2015-14, “Deferral of the EffectiveDate” (“ASU 2015-14”), which defers the effective date for ASU 2014-09 by one year. For public entities, the guidance in ASU 2014-09 will be effectivefor annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it will beeffective for the Company’s fiscal year beginning February 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, “Principal versus AgentConsiderations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerationsin the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability andunderstandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and PracticalExpedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and othersimilar taxes. In December 2016, the FASB further issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contractswith Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significanteffect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementationand provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the sameeffective date as the new revenue standard. The Company plans to adopt Topic 606 in the first quarter of its fiscal 2019 using the retrospective transitionmethod, and is currently evaluating the impact of its pending adoption of Topic 606 will have on its consolidated financial statements. Whileno significant impact is expected upon adoption of the new guidance, the Company will not be able to make that determination until the time of adoptionbased upon outstanding contracts at that time. In July 2015, the FASB issued ASU No. 2015-11, an amendment to Topic 330 for simplifying the measurement of inventory. The update requires thatinventory be measured at the lower of cost and net realizable value where net realizable value is the estimated selling prices in the ordinary course ofbusiness, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measuredusing LIFO or the retail inventory method. The amendment is intended to provide clarification on the measurement and disclosure of inventory in Topic330 and not intended for those clarifications to result in any changes in practice. The ASU is effective for interim and annual periods beginning afterDecember 15, 2016. Early application is permitted for all entities and should be applied prospectively. Management does not believe the adoption of thisASU would have a material impact on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes howdeferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred taxliabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets andliabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments areeffective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Duringthe quarter ended October 31, 2016, the Company early applied this ASU and retrospectively applied it to the prior period presented. The adoption ofASU 2015-17 had no impact on the Company’s results of operations and cash flows. 48 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assetsand Financial Liabilities, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-usefulinformation. The update requires equity investments (except those accounted for under the equity method or those that result in consolidation of theinvestee) to be measured at fair value with changes in fair value recognized in net income. It eliminated the requirement for public entities to disclose themethod(s) and significant assumptions used to estimate the fair value that is require to be disclosed for financial instruments measured at amortized coston the balance sheet. For public entities, the ASU is effective for the fiscal years beginning after December 15, 2017, including interim periods withinthose fiscal years. Management does not believe the adoption of this ASU would have a material impact on the Company’s consolidated financialstatements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The amendments in thisASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early application is permitted for allentities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial application, with anoption to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its consolidated financialstatements but has not determined the effects that the adoption of the pronouncement may have on its consolidated financial statements. In March 2016, the FASB Issued ASU No. 2016-09, Compensation–Stock Compensation (Topic 718), Improvements to Employee Share-Based PaymentAccounting. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlyadoption is permitted for an entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments shouldbe reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendmentsin the same period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements but management doesnot believe the adoption of the pronouncement will have a material impact on its consolidated financial statements. In May 2016, the FASB issued ASU No. 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815); Rescission of SECGuidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting, whichis rescinding certain SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil andGas, effective upon adoption of Topic 606. Management does not expect the adoption of the ASU to have any impact on its consolidated financialstatements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, toaddress diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provideguidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon DebtInstruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3)Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from theSettlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from EquityMethod Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the PredominancePrinciple. The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within thosefiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transitionmethod to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issueswould be applied prospectively as of the earliest date practicable. Management does not believe the adoption of this ASU would have a material impacton the Company’s consolidated financial statements. 49 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business in an effort to clarify thedefinition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for asacquisitions (or disposals) of assets or businesses. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periodswithin those fiscal years. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidatedfinancial statements. In January 2017, the FASB issued ASU 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment to simplifythe accounting for goodwill impairment. The guidance removes the second step of the goodwill impairment test, which requires a hypothetical purchaseprice allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed thecarrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to performa qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill for allreporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units withzero or negative carrying amounts. This guidance is effective in 2020, but early adoption is permitted for any impairment tests performed after January 1,2017. The Company is currently evaluating the impact that this guidance will have on the Company’s consolidated financial statements. 2.INVENTORIES, NET Inventories, net consist of the following (in $000s): January 31, 2017 January 31, 2016 Raw materials $14,312 $15,435 Work-in-process 1,233 784 Finished goods 19,990 24,622 $35,535 $40,841 50 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 3.PROPERTY AND EQUIPMENT, NET Property and equipment from continuing operations consists of the following: Useful Life in Years January 31, 2017 January 31, 2016 (000’s) (000’s) Machinery and equipment 3-10 $6,442 $7,535 Furniture and fixtures 3-10 306 522 Leasehold improvements Lease term 1,207 1,084 Land and building (China) 20-30 1,764 1,764 Land and building (Canada) 30 1,864 1,745 Land and buildings (USA) 30 3,417 3,382 Land and buildings (Mexico) 30 2,070 2,070 17,070 18,102 Less accumulated depreciation and amortization (8,805) (8,850)Assets held for sale 901 1,101 Construction-in-progress 262 16 $9,428 $10,369 Depreciation and amortization expense from continuing operations for FY17 and FY16 amounted to $1,096,943 and $884,863 respectively. The estimated cost to complete construction-in-progress at January 31, 2017 is $800,000. During FY17, conditions in the Brazilian economy caused management to believe that the Company’s assets held for sale in that country should beanalyzed for impairment. The analysis resulted in an impairment write-down of $0.2 million for assets that have been identified as held-for-sale by theCompany. The write-down is included in operating expenses in the Company’s FY17 consolidated statement of operations. The estimated fair value ofthe assets written down in FY17, consisting primarily of buildings and land was approximately $0.9 million. In determining fair value the Company reliedupon third party appraisals. Of the original approximately $1.1 million, the estimated fair value of assets held for sale at January 31, 2017 isapproximately $0.9 million. 4.GOODWILL On August 1, 2005, the Company purchased Mifflin Valley, Inc., a Pennsylvania manufacturer, the operations of which now comprise the Company’sReflective division. This acquisition resulted in the recording of $0.9 million in goodwill in FY06. The Company believes that there was no impairmentof goodwill for the years ended January 31, 2017 and 2016. This goodwill is included in the US segment for reporting purposes. 51 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 5.LONG-TERM DEBT Revolving Credit Facility On June 28, 2013, as amended on March 31, 2015 and June 3, 2015, Lakeland Industries, Inc. and its wholly owned Canadian subsidiary, LakelandProtective Wear Inc. (collectively the “Borrowers”), entered into a Loan and Security Agreement (the “Senior Loan Agreement”) with AloStar BusinessCredit, a division of AloStar Bank of Commerce (the “Senior Lender”). The Senior Loan Agreement provides the Borrowers with a $15 million revolvingline of credit (the “Senior Credit Facility”), at a variable interest rate based on LIBOR, with a first priority lien on substantially all of the United States andCanada assets of the Company, except for its Mexican plant and the Canadian warehouse. After these amendments the maturity date of the Senior CreditFacility is now June 28, 2017 and the minimum interest rate floor is 4.25% per annum. The Senior Lender has approved required aspects of thetransactions relating to the Brazil operations as such transactions are further described in Note 13 hereto. The Company is negotiating a replacement facility as of April 26, 2017. The following is a summary of the material terms of the Senior Credit Facility: $15 million Senior Credit Facility·Borrowing pursuant to a revolving credit facility subject to a borrowing base calculated as the sum of:o85% of eligible accounts receivable as definedoThe lesser of 60% of eligible inventory as defined or 85% of net orderly liquidation value of inventoryoIn transit inventory in bound to the US up to a cap of $1,000,000oReceivables and inventory held by the Canadian operating subsidiary to be included, up to a cap of $2.0 million of availability ·There was $4.9 million and $9.5 million outstanding under the Senior Credit Facility on January 31, 2017 and 2016, respectively. ·There was $10.1 million and $5.5 million available for further borrowings under the Senior Credit Facility on January 31, 2017 and 2016,respectively. ·CollateraloA perfected first security lien on all of the Borrower’s United States and Canadian assets, other than its Mexican plant and the CanadianwarehouseoPledge of 65% of Lakeland Industries, Inc. stock in all foreign subsidiaries other than 100% pledge of stock of its Canadian subsidiaries ·CollectionoAll customers of Borrowers must remit to a lockbox controlled by Senior Lender or into a blocked account with all collection proceedsapplied against the outstanding loan balance. ·Prepayment penalties of 1%. ·Interest RateoRate equal to LIBOR rate plus 325 basis points, subject to Floor rate of 4.25%oRate at January 31, 2017 of 4.25% per annum 52 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 ·Financial CovenantsoBorrowers are subject to certain covenants from the Closing Date, as defined in the Senior Loan Agreement, until the commitmenttermination date and full payment of the obligations to Senior Lender, Lakeland Industries, Inc. (the parent company), together with itssubsidiaries on a consolidated basis, excluding its Brazilian subsidiary (which has since been transferred), is required to comply with thefollowing additional covenants:·Fixed Charge Coverage Ratio. At the end of each fiscal quarter of Borrowers, Borrowers shall maintain a Fixed Charge CoverageRatio of not less than 1.1 to 1.00 for the twelve month period then ending.·Minimum Quarterly Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). Borrowers shall achieve, on arolling four quarter basis excluding the operations of the Borrower’s then Brazilian subsidiary, EBITDA of not less than $4.1million.·Capital Expenditures. Borrowers shall not during any fiscal year make capital expenditures in an amount exceeding $1 million inthe aggregate.·Other CovenantsoStandard financial reporting requirements as definedoLimitation on total net investment in foreign subsidiaries of a maximum of $1.0 million per annum Borrowings in UKOn December 31, 2014, the Company and Lakeland Industries Europe, Ltd, (“Lakeland UK”), a wholly owned subsidiary of the Company, amended theterms of its existing line of credit facility with HSBC Bank to provide for (i) a one-year extension of the maturity date of the existing financing facility toDecember 19, 2016, (ii) an increase in the facility limit from £1,250,000 (approximately USD $1.9 million, based on exchange rates at time of closing) to£1,500,000 (approximately USD $2.3 million, based on exchange rates at time of closing), and (iii) a decrease in the annual interest rate margin from3.46% to 3.0%. In addition, pursuant to a letter agreement dated December 5, 2014, the Company agreed that £400,000 (approximately USD $0.6 million,based on exchange rates at time of closing) of the note payable by the UK subsidiary to the Company shall be subordinated in priority of payment to thesubsidiary’s obligations to HSBC under the financing facility. The balance under this loan outstanding at January 31, 2017 and January 31, 2016 wasUSD $0.1 million and USD $0, respectively, and is included in short-term borrowings on the consolidated balance sheet. On December 31, 2016,Lakeland UK entered into an extension of the maturity date of its existing financing facility with HSBC Invoice Finance (UK) Ltd. to December 19, 2017.Other than the extension of the maturity date and a small reduction of the service charge from 0.9% to 0.85%, all other terms of the facility remain thesame. Canada LoansIn September 2013, the Company refinanced its loan with the Development Bank of Canada (“BDC”) for a principal amount of approximately $1.1million in both Canadian dollars and USD (based on exchange rates at time of closing). Such loan is for a term of 240 months at an interest rate of 6.45%per annum with fixed monthly payments of approximately USD $6,048 (CAD $8,169) including principal and interest. It is collateralized by a mortgageon the Company's warehouse in Brantford, Ontario. The amount outstanding at January 31, 2017 is CAD $1,002,000 which is included as USD $716,000in long term borrowings on the accompanying consolidated balance sheet, net of current maturities of USD $50,000. The amount outstanding at January31, 2016 was USD $691,000 (CAD $1.0 million) in long term borrowings, net of current maturities of USD $50,000. 53 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 China LoansOn March 28, 2016, Weifang Lakeland Safety Products Co., Ltd., (“WF”), the Company’s Chinese subsidiary and Chinese Rural Credit Cooperative Bank(“CRCCB”) completed an agreement for WF to obtain a line of credit for financing in the amount of USD $1.3 million, with interest at 120% of thebenchmark rate supplied by CRCCB (which is currently 4.6% per annum), with the line of credit having a term of one year. The effective per annuminterest rate was 5.35%. The loan was collateralized by inventory owned by WF. The line of credit was paid in full prior to January 31, 2017. On December 1, 2015, WF and CRCCB entered into an agreement for WF to obtain a line of credit for financing in the amount of RMB 6.0 million(approximately USD $0.9 million), with interest at 120% of the benchmark rate supplied by CRCCB (which is currently 4.6% per annum), and with theline of credit having a term of one year. The effective per annum interest rate was 5.52%. The loan was collateralized by inventory owned by WF. The lineof credit was paid in full prior to January 31, 2017. At January 31, 2016, the line of credit was RMB 6.0 million (approximately USD $0.9 million). On October 10, 2015, WF and Bank of China Anqiu Branch entered into an agreement for WF to obtain a line of credit for financing in the amount RMB5.0 million (approximately USD $0.8 million). The effective per annum interest rate was 7%, with the line of credit having a term of one year. The loanwas collateralized by inventory owned by WF. The line of credit was paid in full prior to January 31, 2017. At January 31, 2016, the line of credit wasRMB 5.0 million (approximately USD $0.8 million). On September 21, 2015, WF and CRCCB entered into an agreement for WF to obtain a line of credit for financing in the amount RMB 8.0 million(approximately USD $1.3 million). The effective per annum interest rate was 5.52%, with the line of credit having a term of one year. The loan wascollateralized by inventory owned by WF. The line of credit was paid in full prior to January 31, 2017. At January 31, 2016, the line of credit was RMB8.0 million (approximately USD $1.3 million). Argentina LoanIn April 2015, Lakeland Argentina S.R.L. (“Lakeland Argentina”), the Company’s Argentina subsidiary was granted a $300,000 line of creditdenominated in Argentine pesos, pursuant to a standby letter of credit granted by the parent company. The line of credit outstanding of $0.2 million atJanuary 31, 2016 was the total of five separate loans which were paid in full during the course of normal operations and prior to January 31, 2017, exceptfor the $38,000 noted below. The following three loans were made under the $300,000 facility stated above: On December 2, 2015, Lakeland Argentina and Banco Santander Rio S.A (“Santander”) entered into an agreement for Lakeland Argentina to obtain a loanin the amount of ARS 559,906 (approximately USD $50,000, based on exchange rates at time of closing); such loan is for a term of 18 months at aninterest rate of 42% per annum. The amount outstanding at January 31, 2017 is ARS 138,333 (approximately USD $9,000) which is included as short-termborrowings on the consolidated balance sheet. At January 31, 2016, the line of credit was ARS 522,000 (approximately USD $38,000). On March 30, 2016, Lakeland Argentina and Banco de la Nación Argentina (“BNA”) entered into an agreement for Lakeland Argentina to obtain a loanin the amount of ARS 830,000 (approximately USD $56,000, based on exchange rates at time of closing); such loan is for a term of 18 months at aninterest rate of 27% per annum. The loan was paid in full prior to January 31, 2017. 54 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Below is a table to summarize the debt amounts above (in 000’s): Short-Term Long-term Current Maturity ofLong-term Revolving CreditFacility 1/31/2017 1/31/2016 1/31/2017 1/31/2016 1/31/2017 1/31/2016 1/31/2017 1/31/2016 Argentina $27 $248 $- $- $- $- $- $- Canada - - 716 691 50 50 - - China - 2,978 - - - - - - UK 126 - - - - - - - USA - - - - - - 4,865 9,458 TOTALS $153 $3,226 $716 $691 $50 $50 $4,865 $9,458 Five-year Debt Payout ScheduleThis schedule reflects the liabilities as of January 31, 2017, and does not reflect any subsequent event: Total 1 Year or less 2 Years 3 Years 4 Years 5 Years After 5 Years Revolving credit facility $4,865,094 $4,865,094 $- $- $- $- $- Borrowings in Canada 766,455 50,000 28,034 29,896 31,883 34,000 592,642 Borrowings in UK 126,189 126,189 - - - - - Borrowings in Argentina 26,585 26,585 - - - - - Total $5,784,323 $5,067,868 $28,034 $29,896 $31,883 $34,000 $592,642 6.CONCENTRATION OF RISK Credit Risk Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents, and tradereceivables. Concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising theCompany’s customer base and their dispersion across geographic areas principally within the United States. The Company routinely addresses thefinancial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not requirecustomers to post collateral. The Company’s foreign financial depositories are Bank of America; China Construction Bank; Bank of China; China Industrial and Commercial Bank;HSBC; Rural Credit Cooperative of Shandong; Postal Savings Bank of China; Punjab National Bank; HSBC in India, Argentina and UK; Raymond Jamesin Argentina; TD Canada Trust; Banco Itaú S.A., Banco Credito Inversione in Chile; Banco Mercantil Del Norte SA in Mexico; ZAO KB CitibankMoscow in Russia, and JSC Bank Centercredit in Kazakhstan. The Company monitors its financial depositories by their credit rating which varies bycountry. In addition, cash balances in banks in the United States of America are insured by the Federal Deposit Insurance Corporation subject to certainlimitations. There is approximately $1.4 million total included in the U.S. bank accounts and approximately $9.0 million total in foreign bank accountsas of January 31, 2017. 55 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Major Customer No customer accounted for more than 10% of net sales during FY17 and FY16, respectively. Major Supplier Our largest supplier, Precision Fabrics Group, accounted for 13% and 9.5% of total purchases in FY17 and FY16. There were no other vendors over 10%for either FY17 or FY16. 7.STOCKHOLDERS’ EQUITY AND STOCK OPTIONS The 2012 and 2015 Plans At the Annual Meeting of Stockholders held on July 8, 2015, the Company’s stockholders approved the Lakeland Industries, Inc. 2015 Stock Plan (the“2015 Plan”). The executive officers and all other employees and directors of the Company and its subsidiaries are eligible to participate in the 2015Plan. The 2015 Plan is currently administered by the compensation committee of the Company’s Board of Directors (“Committee”), except that withrespect to all non-employee director awards, the Committee shall be deemed to include the full Board. The 2015 Plan authorizes the issuance of awards ofrestricted stock, restricted stock units, performance shares, performance units and other stock-based awards. The 2015 Plan also permits the grant of awardsthat qualify for “performance-based compensation” within the meaning of Section 162(m) of the US Internal Revenue Code. The aggregate number ofshares of the Company’s common stock that may be issued under the 2015 Plan may not exceed 100,000 shares. Awards covering no more than 20,000shares of common stock may be awarded to any plan participant in any one calendar year. Under the 2015 Plan, as of January 31, 2017, the Companygranted awards for up to an aggregate of 99,270 restricted shares assuming maximum award levels are achieved. The 2015 Plan, which terminates in July 2017, is the successor to the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). The Company’s 2012 Planauthorized the issuance of up to a maximum of 310,000 shares of the Company’s common stock to employees and directors of the Company and itssubsidiaries in the form of restricted stock, restricted stock units, performance shares, performance units and other share-based awards. Under the 2012Plan, as of January 31, 2017, the Company issued 293,166 fully vested shares of common stock and 721 restricted shares which will continue to vestaccording to the terms of the 2012 Plan. Under the 2012 Plan and the 2015 Plan, the Company generally awards eligible employees and directors with either performance-based or time-basedrestricted shares. Performance-based restricted shares are awarded at either baseline (target), maximum or zero amounts. The number of restricted sharessubject to any award is not tied to a formula or comparable company target ranges, but rather is determined at the discretion of the Committee at the endof the applicable performance period, which is two years under the 2015 Plan and had been three years under the 2012 Plan. The Company recognizesexpense related to performance-based restricted share awards over the requisite performance period using the straight-line attribution method based on themost probable outcome (baseline, maximum or zero) at the end of the performance period and the price of the Company’s common stock price at the dateof grant. In addition to the performance-based awards, the Company also grants time-based vesting awards which vest either two or three years after date ofissuance, subject to continuous employment and certain other conditions. As of January 31, 2017, unrecognized stock-based compensation expense related to share-based stock awards totaled $206 pursuant to the 2012 Plan and$472,913 pursuant to the 2015 Plan, before income taxes, based on the maximum performance award level. Such unrecognized stock-based compensationexpense related to restricted stock awards totaled $206 for the 2012 Plan and $197,283 for the 2015 Plan at the baseline performance level. During FY17,the Company changed the estimated performance award level of the 2012 and 2015 stock plans from maximum to baseline. As of January 31, 2017, thecost of these non-vested awards is expected to be recognized over a weighted-average period of three years for the 2012 Plan and two years for the 2015Plan. 56 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 The Company recognized total stock-based compensation costs of $276,000 and $585,987 for the year ended January 31, 2017 and 2016, respectively, ofwhich $(9,354) and $332,691 result from the 2012 Plan, and $285,354 and $253,296 result from the 2015 Plan. These amounts are reflected in operatingexpenses. The total income tax benefit recognized for stock-based compensation arrangements was $99,360 and $210,955 for the year ended January 31,2017 and 2016, respectively. Shares under 2015 and 2012Stock Plan OutstandingUnvested Grantsat Maximum atBeginning ofFY17 GrantedduringFY17 BecomingVested duringFY17 ForfeitedduringFY17 OutstandingUnvestedGrants atMaximum atEnd ofFY17 Restricted stock grants – employees 72,999 — — 5,380 67,619 Matching award program 3,000 — 3,000 — — Bonus in stock - employees 2,500 — — 2,500 — Retainer in stock - directors 30,764 5,221 3,613 — 32,372 Total restricted stock plans 109,263 5,221 6,613 7,880 99,991 Weighted average grant date fair value $9.93 $10.19 $6.68 $9.68 $10.18 Other Compensation Plans/ProgramsThe Company previously awarded stock-based options to non-employee directors under its Non-employee Directors’ Option Plan (the “Directors’ Plan”)which expired on December 31, 2012. All stock option awards granted under the Directors’ Plan were fully vested at January 31, 2017. During the yearended January 31, 2017 there have been no forfeitures and 5,000 shares exercised at an exercise price of $8.28 per share, and there were no optionsoutstanding. The Company utilized a matching award program pursuant to the 2012 Restricted Stock Plan to which all employees were entitled to receive one share ofrestricted stock for each two shares of the Company’s common stock purchased on the open market. Such restricted shares were subject to a one yearvesting period. The valuation was based on the stock price at the grant date and is amortized to expense over the vesting period, which approximates theperformance period. Pursuant to the Company’s director restrictive stock program, all directors are eligible to elect to receive any director fees in shares of restricted stock.Such restricted shares are subject to a two year vesting period. The valuation is based on the stock price at the grant date and is amortized to expense overthe two year period, which approximates the performance period. Since the director is giving up cash for unvested shares, the amount of shares awarded is133% of the cash amount based on the grant date stock price. Stock Repurchase ProgramOn July 19, 2016, the Company’s board of directors approved a stock repurchase program under which the Company may repurchase up to $2,500,000 ofits outstanding common stock. The Company has not repurchased any stock under this program as of the date of this filing. 57 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Warrants In October 2014, the Company issued a five-year warrant that is immediately exercisable to purchase up to 55,500 shares of the Company’s commonstock at an exercise price of $11.00 per share. As of January 31, 2017 and 2016, the warrant to purchase up to 55,500 shares remains outstanding. 8.INCOME TAXES The provision for income taxes is based on the following pretax income (loss): Domestic and Foreign Pretax Income (Loss) FY17 FY16 Domestic $1,833,377 $6,139,543 Foreign 4,439,270 (572,168) Total $6,272,647 $5,567,375 Income Tax Expense (Benefit) FY17 FY16 Current: Federal $(49,191) $225,180 State and other taxes 29,283 (40,555)Foreign 1,576,775 1,553,589 Deferred: Domestic $822,954 $156,448 Valuation allowance-deferred tax asset — (181,338)Foreign — — Total $2,379,821 $1,713,324 The following is a reconciliation of the effective income tax rate to the Federal statutory rate: 2017 2016 Statutory rate 34.00% 34.00%State Income Taxes, Net of Federal Tax Benefit 0.59 1.77 Adjustment to Deferred — 8.86 Foreign Dividend and Subpart F Income 2.15 10.93 Brazil Worthless Stock Deduction — (14.21)Argentina Flow Through Loss (0.38) (1.76)Permanent Differences 0.46 (8.78)Valuation Allowance-Deferred Tax Asset — (3.26)Other 1.12 3.22 Effective Rate 37.94% 30.77% 58 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2016 and 2015 The tax effects of temporary differences which give rise to deferred tax assets at January 31, 2017 and 2016 are summarized as follows: 2017 2016 Deferred tax assets: Inventories $1,122,234 $1,266,718 US tax loss carryforwards, including work opportunity credit* 8,612,947 9,335,575 Accounts receivable and accrued rebates 265,745 238,261 Accrued compensation and other 108,987 266,272 India reserves - US deduction 73,697 75,053 Equity based compensation 286,278 201,925 Foreign tax credit carry-forward 3,698,351 3,388,051 State and local carry-forwards 791,180 899,824 Argentina timing difference 51,113 116,194 Depreciation and other 80,468 103,372 Amortization (239,715) (217,811)Allowance for Note Receivable - Brazil 833,705 834,510 Deferred tax asset 15,684,990 16,507,944 Less valuation allowance 2,170,309 2,170,309 Net deferred tax asset - USA $13,514,681 $14,337,635 *The federal net operating loss (“NOL”) that is left after FY17 will expire after 1/31/2034 (20 years from the generated dateof 1/31/2014). The credits will begin to expire after 1/31/2020 (10 years from the 1st carryover year generated date of1/31/2010) and will fully expire after 1/31/2025. The state NOLs will begin to expire after 1/31/2025 and will continue to expire at various periods up until 1/31/2035 whenthey will be fully expired. The states have a larger spread because some only carryforward for 15 years and some allow 20years. The Company early adopted ASU No. 2015-17 and reclassed the current portion of the deferred taxes totaling approximately$1,555,000 to non-current as of January 31, 2016. Income Tax AuditsThe Company is subject to US federal income tax, as well as income tax in multiple US state and local jurisdictions and a number of foreign jurisdictions.Returns for the years since FY2014 are still open based on statutes of limitation only. Chinese tax authorities have performed limited reviews on all Chinese subsidiaries as of tax years 2008 through 2015 with no significant issues noted andwe believe our tax positions are reasonably stated as of January 31, 2017. Weifang Meiyang Products Co., Ltd. (“Meiyang”), one of our Chineseoperations, was changed to a trading company from a manufacturing company in Q1 FY16 and all direct workers and equipment were transferred fromMeiyang to Weifang Lakeland Safety Products Co., Ltd., (“WF”), another entity of our Chinese operation thereby reducing our tax exposure. Lakeland Protective Wear, Inc., our Canadian subsidiary, is subject to Canadian federal income tax, as well as income tax in the Province of Ontario.Income tax returns for the 2013 fiscal year and subsequent years are still within the normal reassessment period and open to examination by taxauthorities. In connection with the exit from Brazil (see Note 13), the Company claimed a worthless stock deduction which generated a tax benefit of approximatelyUSD $9.5 million, net of a USD $2.2 million valuation allowance. While the Company and its tax advisors believe that this deduction is valid, there canbe no assurance that the IRS will not challenge it and, if challenged, there is no assurance that the Company will prevail. 59 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2016 and 2015 Except in Canada, and as set forth in the next paragraph, it is our practice and intention to reinvest the earnings of our non-US subsidiaries in theiroperations. As of January 31, 2017, the Company had not made a provision for US or additional foreign withholding taxes on approximately $24.7million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent induration ($22.3 million at January 31, 2016). Generally, such amounts become subject to US taxation upon remittance of dividends and under certainother circumstances. If these earnings were repatriated to the US, the deferred tax liability associated with these temporary differences would beapproximately $3.1 million at January 31, 2017. The Company’s Board of Directors has instituted a plan subject to declaration and approval each year to elect to pay annual dividends to the Companyfrom a portion of Weifang’s future profits, a portion of Meiyang’s future profits and a portion of the UK’s future profits starting in FY15 and from a portionof Beijing’s future profits starting in FY18. All other retained earnings are expected to be reinvested indefinitely. Change in Valuation AllowanceWe record net deferred tax assets to the extent we believe these assets will more likely than not be realized. The valuation allowance was $2.2 million forboth of the years ended January 31, 2017 and 2016. Income Tax ExpenseIncome tax expenses consist of federal, state and foreign income taxes. The statutory rate is the US rate. Reconciling items to the effective rate are foreigndividend income, Argentina income, and other permanent tax differences. 9.EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for “income from continuing operations” and “discontinuedoperations” at January 31, 2017 and 2016, as follows: Years Ended January 31, (000’s except shareinformation) 2017 2016 Numerator Net income from continuing operations $3,893 $7,790 Net loss from discontinued operations — (3,936)Net income $3,893 $3,854 Denominator Denominator for basic earnings per share (weighted-average shares which reflect 356,441shares in the treasury) 7,257,553 7,171,965 Effect of dilutive securities from restricted stock plan and from dilutive effect of stockoptions 69,695 82,375 Denominator for diluted earnings per share (adjusted weighted average shares) 7,327,248 7,254,340 Basic earnings per share from continuing operations $0.54 $1.09 Basic loss per share from discontinued operations — ($0.55)Basic earnings per share $0.54 $0.54 Diluted earnings per share from continuing operations $0.53 $1.07 Diluted loss per share from discontinued operations — ($0.54)Diluted earnings per share $0.53 $0.53 60 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 10. BENEFIT PLANS Defined Contribution PlanPursuant to the terms of the Company’s 401(k) plan, substantially all US employees over 21 years of age with a minimum period of service are eligible toparticipate. The 401(k) plan is administered by the Company and provides for voluntary employee contributions ranging from 1% to 15% of theemployee’s compensation. Beginning in January 2016 the Company changed to a Safe Harbor tiered matching plan equal to 100% of the first 1% ofeligible participant’s compensation contributed to the Plan and 50% of the next 5% of eligible participant’s compensation contributed to the Plan(maximum Company match 3.5% of salary) and totaled approximately $193,000 and $120,000 in the years ended January 31, 2017 and January 31,2016, respectively. 11. DERIVATIVE INSTRUMENTS AND FOREIGN CURRENCY EXPOSURE The Company is exposed to foreign currency risk. Management has commenced a derivative instrument program to partially offset this risk by purchasingforward contracts to sell the Canadian Dollar and the Euro other than the cash flow hedge discussed below. Such contracts are largely timed to expire withthe last day of the fiscal quarter, with a new contract purchased on the first day of the following quarter, to match the operating cycle of the Company. Wedesignated the forward contracts as derivatives but not as hedging instruments, with loss and gain recognized in current earnings. The Company accounts for its foreign exchange derivative instruments by recognizing all derivatives as either assets or liabilities at fair value, which mayresult in additional volatility in current period earnings or other comprehensive income, depending whether the instrument was designated as a cash flowhedge, as a result of recording recognized and unrecognized gains and losses from changes in the fair value of derivative instruments. We have two types of derivatives to manage the risk of foreign currency fluctuations. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreigncurrencies. Those forward contract derivatives, not designated as hedging instruments, are generally settled quarterly. Gain and loss on those forwardcontracts are included in current earnings. There were no outstanding forward contracts at January 31, 2017 or 2016. We also enter into cash flow hedge contracts with financial institutions to manage our currency exposure on future cash payments denominated in foreigncurrencies. The effective portion of gain or loss on cash flow hedge is reported as a component of accumulated other comprehensive loss. The notionalamount of these contracts was $1.5 million and $1.0 million at January 31, 2017 and 2016, respectively. The corresponding unrealized income or loss isrecorded in the consolidated statements of comprehensive income. The corresponding liability amounted to $25,826 and $(26,252) at January 31, 2017and 2016, respectively. 12. RELATED PARTIES AND TRANSACTIONS The Company paid approximately $236,000 in FY16 to a printing company owned in part, at that time, by managers of the Company. On October 28,2015 those managers of the Company resigned from the board of directors of the printing company, so that those are now independent parties. 61 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 13. THE COMPANY’S EXIT FROM BRAZIL On March 9, 2015, Lakeland Brazil, S.A. changed its legal form to a Limitada and changed its name to Lake Brasil Industria E Comercio de Roupas EEquipamentos de Protecao Individual LTDA (“Lakeland Brazil”). Transfer of Shares AgreementOn July 31, 2015 (the “Closing Date”), Lakeland and Lakeland Brazil, completed a conditional closing of a Shares Transfer Agreement (the “SharesTransfer Agreement”) with Zap Comércio de Brindes Corporativos Ltda (“Transferee”), a company owned by an existing Lakeland Brazil manager,entered into on June 19, 2015. Pursuant to the Shares Transfer Agreement, the Transferee has acquired all of the shares of Lakeland Brazil owned by theCompany. Pursuant to the Shares Transfer Agreement, Transferee paid R$1.00 to the Company and assumed all liabilities and obligations of LakelandBrazil, whether arising prior to, on or after the Closing Date. In order to help enable Lakeland Brazil to have sufficient funds to continue to operate for aperiod of at least two years following the Closing Date, the Company provided funding to Lakeland Brazil in the aggregate amount of USD $1,130,000,in cash, in the form of a capital raise, on or prior to the Closing Date, and agreed to provide an additional R$582,000 (approximately USD $188,000) (the“Additional Amount”), in the form of a capital raise, to be utilized by Lakeland Brazil to pay off certain specified liabilities and other potentialcontingent liabilities. Pursuant to the Shares Transfer Agreement, the Company paid R$992,000 (approximately USD $320,000) in cash, on July 1, 2015and issued a non-interest bearing promissory note for the payment to be due for the Additional Amount (R$582,000) (approximately USD $188,000) onthe Closing Date which was paid to Lakeland Brazil in two (2) installments of (i) R$288,300 (approximately USD $82,000) which was paid on August 1,2015, and (ii) R$294,500 (approximately USD $84,000) on September 1, 2015. The closing of this agreement was subject to Brazilian governmentapproval of the shares transfer, which was received in October 2015 (The “Final Closing Date”). The Company understands that under the laws of Brazil, a concept of fraudulent bankruptcy exists, which may hold a parent company liable for theliabilities of its Brazilian subsidiary in the event some level of fraud or misconduct is shown during the period that the parent company owned thesubsidiary. While the Company believes that there has been no such fraud or misconduct relating to the proposed transfer of stock of Lakeland Brazil andthe transactions contemplated by the Shares Transfer Agreement, as evidenced by the Company’s funding support for continuing operations of LakelandBrazil, there can be no assurance that the courts of Brazil will not make such a finding nonetheless. The risk of exposure to the Company continues to diminish as the Transferee continues to operate Lakeland Brazil, as the risk of a finding of fraudulentbankruptcy lessens and pre-sale liabilities are paid off. Should the Transferee operate Lakeland Brazil for a period of two years, the Company believes therisk of a finding of fraudulent bankruptcy is eliminated. The Company believes that the loan transaction with its former Brazilian subsidiary resulting in asubstantial reduction of the VAT tax liability, as described below in this Note, significantly reduced such potential liability. In addition, as discussedbelow in this Note, the potential labor claims liability has substantially diminished. The Shares Transfer Agreement, which is governed by United Stateslaw, contains customary representations, warranties and covenants of the parties for a transaction of this type. The Company and Transferee have agreed toindemnify each other from and against certain liabilities, subject to certain exceptions. Under the Shares Transfer Agreement, the Company will be subjectto certain non-solicitation provisions for a period of two years following the Closing Date. 62 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 The following tables summarize the results of the Brazil business included in the statements of operations for the fiscal year ended January 31, 2016. TheCompany did not recognize any income (loss) from discontinued operations during the fiscal year ended January 31, 2017. 2016 (in 000’s) Net sales from discontinuing operations $869 Gross profit from discontinuing operations 164 Operating expenses from discontinuing operations 763 Operating loss from discontinuing operations (599)Interest expense from discontinuing operations 256 Other expense from discontinuing operations 2,683 Loss from operation of discontinuing operations (includes a $0.1 million taxbenefit from Q1) (3,538)Non-cash reclassification of Other Comprehensive Income to Statement ofOperations (no impact on stockholders’ equity) (1,286)Loss from disposal of discontinued operations (515)Loss before taxes for discontinued operations (5,339)Income tax benefit from discontinued operations (1,403)Net loss from discontinued operations $(3,936) Settlement Agreement – Arbitration DebtOn June 18, 2015, Lakeland and its then wholly owned subsidiary Lakeland Brazil (together with Lakeland, the “Brazil Co”), entered into an Amendment(the “Amendment”) to a Settlement Agreement, dated as of September 11, 2012 (the “Settlement Agreement”), with two former officers (the “formerofficers”) of Lakeland Brazil. As part of the original Settlement Agreement, the parties resolved all alleged outstanding claims against Lakeland Brazilarising from an arbitration proceeding in Brazil involving Lakeland Brazil and the former officers of Lakeland Brazil for an aggregate amount ofapproximately USD $8.5 million payable by Lakeland Brazil to the former officers over a period of six (6) years. As of the June 18, 2015 settlement date,there was a balance of USD $3.75 million (the “Outstanding Amount”) owed under the Settlement Agreement, which Outstanding Amount was to be paidby the Company in quarterly installments of USD $250,000 through December 31, 2018. Pursuant to the Amendment, the former officers agreed to fully and finally settle the Outstanding Amount owed by the Company for an aggregate lumpsum payment of USD $3.41 million, resulting in a gain of USD $224,000 after allowing for imputed interest on the original Settlement Agreement. Withinfive days of receipt of such payment, the former officers provided to Lakeland Brazil the documents needed to have their lien securing payment of theOutstanding Amount removed on certain real estate owned by Lakeland Brazil and such lien was removed. The Amendment also contains a generalrelease of claims by the former officers in favor of the Company and its past or present officers, directors, and other affiliates. The Company’s seniorlender, AloStar Bank of Commerce, has consented to the transactions in the Amendment. 63 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Loan Agreement with Transferee of Brazil OperationsThe Company had entered into a loan agreement (the “Loan Agreement”) on December 11, 2015 with Qualytextil for the amount of R$8,584,012(approximately USD $2.29 million) for the purpose of providing funds necessary for Qualytextil to settle its largest outstanding VAT claim with the Stateof Bahia. The Company determined that a reserve against the collection of this loan in full was prudent and recorded this charge in the fiscal year endedJanuary 31, 2016. VAT Tax Issues in BrazilValue Added Tax (“VAT”) in Brazil is charged at the state level. We commenced operations in Brazil in May 2008 through an acquisition of Qualytextil,S.A., which subsequently became Lake Brasil Indústria e Comércio de Roupas e Equipamentos de Proteção Individual Ltda. (referred to in this Form 10-Kas “Lakeland Brazil”). An audit performed on the VAT for the 2007-2009 period was completed by the State of Bahia (state of domicile for the Lakelandoperations in Brazil). In October 2010, the Company received four claims for 2007-2009 from the State of Bahia, the largest of which was for taxes ofR$6.2 million (USD $2.3 million) and interest, penalties and fees of R$8.3 million (USD $3.1 million), for a total of R$14.6 million (USD $5.4 million). This large VAT claim was settled in the fiscal year ended January 31, 2016 using funds from the loan described above. Of other claims, our attorneyinformed us that three claims totaling R$1.3 million (USD $0.5 million) excluding interest, penalties and fees of R$2.7 million (USD $0.9 million) werelikely to be successfully defended based on state auditor misunderstanding. Labor Claims in BrazilThe Company may continue to be exposed to certain liabilities arising in connection with lawsuits pending in the labor courts in Brazil in whichplaintiffs were seeking, as at July 31, 2015, a total of nearly USD $8,000,000 in damages from the Company’s then Brazilian subsidiary (Lakeland Brazil).The Company believes many of these labor court claims are without merit and the amount of damages being sought is significantly higher than anydamages which may have been incurred. Pursuant to the Shares Transfer Agreement, the Company is required to fully fund amounts owed by LakelandBrazil in connection with the then existing labor claims and to pay amounts potentially owed for future labor claims up to an aggregate amount of$375,000 plus 60% of the excess of such amount until the earlier of (i) the date all labor claims against Lakeland Brazil deriving from events prior to thesale are settled, (ii) by our mutual agreement with Lakeland Brazil or (iii) on the two (2) year anniversary of closing of the sale. With respect to continuingclaims, $167,000 is being sought, of which management estimates the aggregate liability will be less than that amount. 14. COMMITMENTS AND CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which willonly be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingentliabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pendingagainst the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legalproceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been or is probable of being incurred and the amount of the liabilitycan be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentiallymaterial loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability,together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would bedisclosed. We comply with American laws such as the Foreign Corrupt Practices Act (FCPA) and Sarbanes-Oxley, and also with anti-corruption legislation in theUK. 64 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Employment ContractsThe Company has employment contracts expiring through fiscal year ending January 31, 2019, with four principal officers. Pursuant to such contracts, theCompany is committed to aggregate annual base remuneration of $1,120,000, $544,750 and $268,750 for FY17, FY18 and FY19, respectively. LeasesTotal rental costs under all operating leases are summarized as follows: Gross rental Year ended January 31, 2017 $540,193 2016 $503,089 Minimum annual rental commitments for the remaining term of the Company’s noncancelable operating leases relating to manufacturing facilities, officespace and equipment rentals at January 31, 2017, including lease renewals subsequent to year end, are summarized as follows: Year ending January 31, 2018 $471,694 2019 338,020 2020 171,026 2021 107,286 2022 80,586 and thereafter 89,902 Total $1,258,514 Labor contingencies in BrazilLakeland Brazil, the Company’s former subsidiary, is currently named in numerous labor proceedings in Brazilian courts and, due to certain liabilityassumption provisions specified in the Shares Transfer Agreement, the Company recorded a liability totaling $238,000 in the fiscal year ended January31, 2016 to reflect this contingency. The accrual on the balance sheet at January 31, 2017 is $0.1 million and the Company believes these claims will besettled for less than this amount. Should the former subsidiary stay in operations for a period of two years from the Closing Date, the Company believesthe risk will be eliminated. See Note 13 for a further description of the Shares Transfer Agreement. General litigation contingenciesThe Company is involved in various litigation proceedings arising during the normal course of business which, in the opinion of the management of theCompany, will not have a material effect on the Company’s financial position, results of operations or cash flows; however, there can be no assurance asto the ultimate outcome of these matters. As of January 31, 2017, to the best of the Company’s knowledge, there were no outstanding claims or litigation,except for the labor contingencies in Brazil described above. 65 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 15. SEGMENT REPORTING Domestic and international sales from continuing operations are as follows in millions of dollars: Years Ended January 31, 2017 2016 Domestic $46.54 54.00% $56.54 56.74%International $39.64 46.00% $43.11 43.26%Total $86.18 100.00% $99.65 100.00% We manage our operations by evaluating each of our geographic locations. Our US operations include a facility in Alabama (primarily the distribution tocustomers of the bulk of our products and the light manufacturing of our chemical, wovens, reflective, and fire products). The Company also maintainsone manufacturing company in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable,reflective, fire and chemical suit production) and a small manufacturing facility in India. Our China facilities produce the majority of the Company’sproducts and China generates a significant portion of the Company’s international revenues. We evaluate the performance of these entities based onoperating profit, which is defined as income before income taxes, interest expense and other income and expenses. 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 years noted therein: Years Ended January 31, 2017(in millions of dollars) 2016(in millions of dollars) Net Sales from continuing operations: USA $50.46 $60.33 Other foreign 15.17 13.32 Europe (UK) 8.97 14.53 Mexico 3.27 3.65 China 40.64 50.32 Corporate 1.76 1.71 Less intersegment sales (34.09) (44.21)Consolidated sales $86.18 $99.65 External Sales from continuing operations: USA $46.54 $56.54 Other foreign 14.20 12.85 Europe (UK) 8.97 14.52 Mexico 1.66 1.61 China 14.81 14.13 Consolidated external sales $86.18 $99.65 Intersegment Sales from continuing operations: USA $3.92 $3.79 Other foreign 0.97 0.47 Europe (UK) — 0.01 Mexico 1.61 2.04 China 25.83 36.19 Corporate 1.76 1.71 Consolidated intersegment sales $34.09 $44.21 66 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Year Ended January 31 2017 (in millions of dollars) 2016 (in millions of dollars) Operating Profit (Loss) from continuing operations: USA $8.09 $11.38 Other foreign 1.55 (0.12)Europe (UK) 0.34 2.65 Mexico (0.02) 0.04 China 4.09 4.69 Corporate (7.35) (6.65)Less intersegment profit 0.15 (0.18)Consolidated operating profit (loss) $6.85 $11.81 Depreciation and Amortization Expense from continuing operations: USA $0.15 $0.15 Other foreign 0.15 0.06 Europe (UK) — 0.02 Mexico 0.12 0.12 China 0.25 0.38 Corporate 0.57 0.43 Less intersegment (0.05) (0.17)Consolidated depreciation and amortization expense $1.19 $0.99 Interest Expense from continuing operations: Other foreign $0.10 $0.13 Europe (UK) 0.01 0.02 China 0.12 0.14 Corporate 0.39 0.50 Consolidated interest expense $0.62 $0.79 Income Tax Expense (Benefit) from continuing operations: USA (shown in Corporate) — — Other foreign $0.23 $0.21 Europe (UK) 0.14 0.49 Mexico 0.08 (0.21)China 1.11 1.11 Corporate 0.80 1.56 Less intersegment 0.02 (0.04)Consolidated income tax expense (benefit) $2.38 $3.12 67 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 Year Ended January 31 2017 2016 (in millions of dollars) (in millions of dollars) Total Assets: * USA $56.34 $48.18 Other foreign 18.16 17.55 Europe (UK) 3.61 5.05 Mexico 3.99 4.25 China 30.54 29.92 India (1.36) (1.35)Corporate 26.00 37.18 Less intersegment (52.73) (52.52)Consolidated assets $84.55 $88.26 Total Assets Less Intersegment:* USA $30.94 $33.63 Other foreign 10.17 9.91 Europe (UK) 3.58 5.03 Mexico 4.07 4.23 China 18.44 17.63 India 0.43 0.44 Corporate 16.92 17.39 Consolidated assets $84.55 $88.26 Property and Equipment (excluding assets held for sale at $0.9 million): USA $2.09 $2.20 Other foreign 1.55 1.57 Europe (UK) 0.03 0.06 Mexico 2.05 2.11 China 2.05 2.37 India 0.03 0.03 Corporate 0.75 1.00 Less intersegment (0.02) (0.07)Consolidated long-lived assets $8.53 $9.27 Capital Expenditures: USA $0.04 $0.06 Other foreign 0.01 0.08 Europe (UK) — — Mexico 0.05 0.04 China 0.06 0.16 India 0.02 — Corporate 0.23 0.50 Consolidated capital expenditure $0.41 $0.84 Goodwill: USA $0.87 $0.87 Consolidated goodwill $0.87 $0.87 * Negative assets reflect intersegment amounts eliminated in consolidation 68 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Lakeland Industries, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2017 and 2016 16. UNAUDITED QUARTERLY RESULTS OF OPERATIONS (In thousands, except for per share amounts): 1/31/2017 10/31/2016 7/31/2016 4/30/2016 Net sales from continuing operations $20,302 $23,243 $22,269 $20,369 Gross profit from continuing operations $7,752 $8,519 $8,590 $6,776 Earnings (loss) from continuing operations $1,989 $2,248 $2,631 $(21)Net income from continuing operations $946 $1,513 $1,431 $3 Basic net earnings per share – continuing operations $0.13 $0.21 $0.20 $0.00 Diluted net earnings per share – continuing operations $0.13 $0.21 $0.20 $0.00 1/31/2016 10/31/2015 7/31/2015 4/30/2015 Net sales from continuing operations $20,473 $24,888 $29,465 $24,819 Gross profit from continuing operations $6,010 $9,248 $11,795 $9,279 Earnings (loss) from continuing operations $(300) $3,192 $5,700 $3,220 Net income (loss) from continuing operations $(78) $2,120 $3,588 $2,160 Basic net earnings (loss) per share – continuing operations $(0.01) $0.29 $0.50 $0.31 Diluted net earnings (loss) per share – continuing operations $(0.01) $0.29 $0.50 $0.30 17. SUBSEQUENT EVENT On March 24, 2017, the Company filed a shelf registration statement on Form S-3 which was declared effective by the SEC on April 11, 2017. The shelfregistration statement permits the Company to sell, from time to time, up to an aggregate of $30.0 million of various securities, including shares ofcommon stock, shares of preferred stock, debt securities, warrants to purchase common stock, preferred stock, debt securities, and/or units, rights topurchase common stock, preferred stock, debt securities, warrants and/or units, units of two or more of the foregoing, or any combination of suchsecurities, not to exceed one-third of the Company's public float in any 12-month period. To date, no securities have been issued pursuant to theregistration statement. 69 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE United StatesAs reported in the Company’s Current Report on Form 8-K filed on July 19, 2016, we engaged Friedman LLP (“Friedman”) as our independent registeredpublic accountants on July 14, 2016. On the same date, the Company dismissed Mazars USA LLP (formerly WeiserMazars LLP) (“Mazars USA”) as itsindependent registered public accountants, effective immediately. This change of independent registered public accountants was approved by our AuditCommittee. The audit reports of Mazars USA on the Company’s consolidated financial statements as of and for the fiscal years ended January 31, 2016 and 2015 didnot contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles,however, the audit reports make reference to other auditors in both years. During the two most recent fiscal years ended January 31, 2016 and 2015, andduring the subsequent interim period preceding such dismissal, there were no disagreements with Mazars USA on any matter of accounting principles orpractices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Mazars USA, wouldhave caused it to make reference to the subject matter of the disagreements in connection with its audit reports for such years. In addition, during that timethere were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K. The Company has provided Mazars USA with a copy of the foregoing disclosures and has requested that Mazars USA furnish the Company with a letteraddressed to the Securities and Exchange Commission (“SEC”) stating whether or not it agrees with the statements made herein, each as required by SECrules, and, if not, stating the respects in which it does not agree. A copy of Mazars USA’s letter to the SEC is filed as Exhibit 16.1 to the Current Report onForm 8-K filed on July 19, 2016. Also on July 14, 2016, the Company dismissed Shanghai Mazars Certified Public Accountants (“Shanghai Mazars”), the independent registered publicaccounting firm for the Company’s China subsidiaries, Lakeland (Beijing) Safety Products Co., Ltd. (“Lakeland Beijing”) and Weifang Lakeland SafetyProducts Co Ltd. (“Weifang Lakeland”). The decision was approved by the Audit Committee of the Company’s Board of Directors. The audit reports of Shanghai Mazars on each of Lakeland Beijing’s and Weifang Lakeland’s financial statements as of and for the fiscal years endedJanuary 31, 2016 and 2015 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, auditscope, or accounting principles. During the two most recent fiscal years ended January 31, 2016 and 2015, and during the subsequent interim periodpreceding such dismissal, there were no disagreements with Shanghai Mazars on any matter of accounting principles or practices, financial statementdisclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Shanghai Mazars, would have caused it to makereference to the subject matter of the disagreements in connection with its audit reports on the financial statements for such years. In addition, during thattime there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K. 70 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The Company has provided Shanghai Mazars with a copy of the foregoing disclosures and has requested that Shanghai Mazars furnish the Company witha letter addressed to the SEC stating whether or not it agrees with the statements made herein, each as required by SEC rules, and, if not, stating therespects in which it does not agree. A copy of Shanghai Mazar’s letter to the SEC is filed as Exhibit 16.2 to this Current Report on Form 8-K. (b) Engagement of New Independent Registered Public Accounting Firm Effective as of July 14, 2016, the Audit Committee of the Company’s Board of Directors engaged Friedman LLP (“Friedman”) as the new independentregistered public accountants of the Company and subsidiaries, including Lakeland Beijing and Weifang Lakeland. During the two most recent fiscal years and through the interim period preceding the engagement of Friedman, neither the Company, nor anyone on itsbehalf, consulted with Friedman regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; orthe type of audit opinion that might be rendered on any of the Company’s, Lakeland Beijing’s or Weifang Lakeland’s financial statements, in connectionwith which either a written report or oral advice was provided to the Company that Friedman concluded was an important factor considered by theCompany in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either subject of a “disagreement”(as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as described in Item 304(a)(1)(v) of Regulation S-K). ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and ProceduresWe conducted an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and ChiefFinancial Officer, of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”) as of January 31, 2017. There are inherent limitations to the effectiveness of anysystem of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based ontheir evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as ofJanuary 31, 2017. Management’s Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with US GAAP. Due to inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. 71 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of January 31, 2017. In making this assessment,management used the criteria established in Internal Control-Integrated Framework issued by the 2013 Committee of Sponsoring Organizations of theTreadway Commission (COSO). Based upon an evaluation performed, our management concluded that as of January 31, 2017 our internal control overfinancial reporting was effective. Changes in Internal Control over Financial ReportingThere have been no changes that occurred during Lakeland's fourth quarter of fiscal 2017 which materially affected, or are reasonably likely to materiallyaffect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None PART III The information required by Part III: Item 10, Directors, Executive Officers and Corporate Governance; Item 11, Executive Compensation; Item 13,Certain Relationships and Related Transactions and Director Independence; and Item 14, Principal Accountant Fees and Services is included in andincorporated by reference to Lakeland’s definitive proxy statement in connection with its Annual Meeting of Stockholders scheduled to be held in June2017, to be filed with the Securities and Exchange Commission within 120 days following the end of Lakeland’s fiscal year ended January 31, 2017.Information relating to the executive officers of the Registrant appears under Item 1 of this report. ITEM 10. Directors, Executive Officers and Corporate Governance. The information required in response to this Item is included in and incorporated by reference to Lakeland’s definitive proxy statement in connectionwith its Annual Meeting of Stockholders scheduled to be held in June 2017. Our Board of Directors has adopted a Code of Ethics which is posted on the Company’s website at www.lakeland.com under the headings InvestorRelations-Financial Information-Code of Ethics Policy 2015. We intend to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding anamendment to, or a waiver from, the provision of our Code of Ethics by posting such information on our website within four business days of the date ofsuch amendment or waiver. In the case of a waiver, the nature of the waiver, the name of the person to whom the waiver was granted and the date of thewaiver will also be disclosed. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters The information regarding security ownership of certain beneficial owners and management that is required to be included pursuant to this Item 12 isincluded in and incorporated by reference to Lakeland’s definitive proxy statement in connection with its Annual Meeting of Stockholders scheduled tobe held in July 2017. 72 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Equity Compensation Plans The following sets forth information relating to Lakeland’s equity compensation plans as of January 31, 2017: 2012 and 2015 Equity Plan: Number of securities to beissued upon exercise ofoutstanding options,warrants and rights (1)(a) Weighted-averageexercise price per share ofoutstanding options,warrants and rights (1)(b) Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a))(c) Equity Compensation plans approved by security holders Restricted stock grants - employees 67,619 $10.19 730 Matching award program — — — Bonus in stock program - employees — — — Retainer in stock program - directors 32,372 $10.17 — Total Restricted Stock Plans 99,991 $10.18 730 Equity compensation plans not approved by security holders Nonemployee Directors’ Option Plan(2) — — — Total 99,991 730 (1)At maximum levels(2)A description of this now expired plan is contained in Note 7. 73 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a.(1) Financial Statements - Covered by Report of Independent Registered Public Accounting Firm (A)Consolidated Statements of Operations for the years ended January 31, 2017 and 2016 (B)Consolidated Statements of Comprehensive Income for the years ended January 31, 2017 and 2016 (C)Consolidated Balance Sheets at January 31, 2017 and 2016 (D)Consolidated Statements of Stockholders’ Equity for the years ended January 31, 2017 and 2016 (E)Consolidated Statements of Cash Flows for the years ended January 31, 2017 and 2016 (F)Notes to Consolidated Financial Statements (2)Financial Statement Schedule –All schedules are omitted because they are not applicable, not required or the required information isincluded in a consolidated financial statement or notes hereto. (3)Exhibits – See (b) below b.Exhibits Exhibit No. Description 3.1 Restated Certificate of Incorporation of Lakeland Industries, Inc., as amended (incorporated by reference to Exhibit 3.2 of LakelandIndustries, Inc.’s Form 10-Q filed December 7, 2011). 3.2 Amended and Restated Bylaws of Lakeland Industries Inc., (incorporated by reference to Exhibit 3.1 of Lakeland Industries, Inc.’sForm 8-K filed December 14, 2016). 4.1 2012 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 of Lakeland Industries, Inc. Registration Statement on Form S-8filed September 13, 2012). 4.2 2015 Stock Plan (incorporated by reference to Exhibit 4.1 of Lakeland Industries, Inc. Registration Statement on Form S-8 filed July24, 2015). 4.3 Form of Registration Rights Agreement, dated October 24, 2014, by and among Lakeland Industries, Inc. and the several purchaserssignatory thereto (incorporated by reference to Exhibit 4.1 of Lakeland Industries, Inc.’s Form 8-K filed October 24, 2014). 10.1 Employment Agreement, dated April 16, 2010, between Lakeland Industries, Inc. and Christopher J. Ryan (incorporated by referenceto Exhibit 10.5 of Lakeland Industries, Inc. Form 10-K for the fiscal year ended January 31, 2010, filed April 16, 2010). 10.2 Lakeland Industries, Inc. Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Lakeland Industries, Inc.Form 8-K filed June 29, 2012). 10.3 Lease Agreement, dated April 4, 2011, between Wallingfen Park Limited, as lessor, and Lakeland Industries, Inc., as lessee(incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc. Form 10-Q for fiscal quarter ended April 30, 2015). 10.4 Agreement for the Purchase of Debts, dated January 29, 2013 between HSBC Invoice Finance (UK) Limited and Lakeland IndustriesEurope Limited (incorporated by reference to Exhibit 10.1 to Lakeland Industries, Inc. Form 8-K filed February 25, 2013). 10.5 Fixed Charge on Non-vesting Debts and Floating Charge, dated January 29, 2013 between HSBC Invoice Finance (UK) Limited andLakeland Industries Europe Limited (incorporated by reference to Exhibit 10.2 to Lakeland Industries, Inc. Form 8-K filed February25, 2013). 74 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit No. Description 10.6 Standard Terms & Conditions for the debt provided by between HSBC Invoice Finance (UK) Limited and Lakeland Industries EuropeLimited (incorporated by reference to Exhibit 10.3 to Lakeland Industries, Inc. Form 8-K filed February 25, 2013). 10.7 Loan and Security Agreement, dated June 28, 2013, by and among Lakeland Industries, Inc. and Lakeland Protective Wear Inc., asborrowers, and Alostar Bank of Commerce (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-K filedJuly 1, 2013). 10.8 Amended and Restated Revolver Note, dated June 28, 2013, issued by Lakeland Industries, Inc. and Lakeland Protective Wear Inc., asborrowers, to Alostar Bank of Commerce (incorporated by reference to Exhibit 10.2 of Lakeland Industries, Inc.’s Form 8-K filed July1, 2013). 10.9 Loan and Security Agreement, dated June 28, 2013, by and among Lakeland Industries, Inc. and Lakeland Protective Wear Inc., asborrowers, and LKL Investments, LLC (incorporated by reference to Exhibit 10.3 of Lakeland Industries, Inc.’s Form 8-K filed July 1,2013). 10.10 Letter of Offer, effective as of September 27, 2013, between Lakeland Protective Real Estate Inc. and Business Development Bank ofCanada (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-K filed October 1, 2013). 10.11 General Security Agreement, effective as of September 27, 2013, between Lakeland Protective Real Estate Inc. and BusinessDevelopment Bank of Canada (incorporated by reference to Exhibit 10.2 of Lakeland Industries, Inc.’s Form 8-K filed October 1,2013). 10.12 Employment Agreement, dated March 1, 2014, between Lakeland Industries, Inc. and Stephen M. Bachelder (incorporated byreference to Exhibit 10.27 of Lakeland Industries, Inc. Form 10-K filed April 28, 2014). 10.13 Securities Purchase Agreement, dated October 24, 2014, by and among Lakeland Industries, Inc. and the several purchasers signatorythereto (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-K filed October 24, 2014). 10.14 Warrant to Purchase Common Stock, dated as of October 29, 2014, issued by Lakeland Industries, Inc. to Craig-Hallum CapitalPartners LLC (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-K filed October 30, 2014). 10.15 Amendment to Agreement for Purchase of Debts, dated effectively as of December 3, 2014 between HSBC Invoice Finance (UK)Limited and Lakeland Industries Europe Limited (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-Kfiled December 8, 2014). 10.16 Letter Agreement, dated December 5, 2014, between Lakeland Industries, Inc. and HSBC Invoice Finance (UK) Ltd. (incorporated byreference to Exhibit 10.2 of Lakeland Industries, Inc.’s Form 8-K filed December 8, 2014). 10.17 First Amendment, dated as of March 31, 2015, to Loan and Security Agreement, dated as of June 28, 2013, by and among LakelandIndustries, Inc. and Lakeland Protective Wear Inc., as borrowers, and Alostar Bank of Commerce (incorporated by reference to Exhibit10.1 of Lakeland Industries, Inc. Form 8-K filed April 2, 2015). 10.18 Lease Agreement, dated May 15, 2015, between J & L Property Investors, LLC, as Landlord and Lakeland Industries, Inc., as tenant(incorporated by reference to Exhibit 10.2 of Lakeland Industries, Inc. Form 10-Q for fiscal quarter ended April 30, 2015). 10.19 Lease Agreement, dated February 10, 2016, between Safety Pro, LLC, as lessor and Lakeland Industries, Inc. as lessee (incorporatedby reference to Exhibit 10.55 of Lakeland Industries, Inc. Form 10-K filed April 21, 2016). 75 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit No. Description 10.22 Shares Transfer Agreement, dated as of June 19, 2015, by and among Lakeland Industries, Inc., Brasil Industria E Comercio de RoupasE Equipamentos de Protecao Individual Ltda, Zap Comércio de Brindes Corporativos Ltda and Jack Nemer (incorporated byreference to Exhibit 10.1 of Lakeland Industries, Inc. Form 8-K filed June 25, 2015). 10.23 On July 8, 2015, the stockholders of Lakeland Industries, Inc. approved the Lakeland Industries, Inc. 2015 Stock Plan (incorporatedby reference to Exhibit 4.1 of Lakeland Industries, Inc. Form 8-K filed July 8, 2015). 10.24 Employment Agreement, dated August 26, 2015, between Lakeland Industries, Inc. and Charles D. Roberson (incorporated byreference to Exhibit 10.2 of Lakeland Industries, Inc. Form 8-K filed August 31, 2015). 10.25 Employment Agreement, dated November 10, 2015, between Lakeland Industries, Inc. and Teri W. Hunt (incorporated by reference toExhibit 10.1 of Lakeland Industries, Inc. Form 8-K filed November 12, 2015). 10.26* Employment Agreement dated, April 22, 2017, between Lakeland Industries, Inc. and Daniel Edwards. 10.27 Third Amendment, dated as of December 11, 2015, to Loan and Security Agreement, dated as of June 28, 2013, by and amongLakeland Industries, Inc. and Lakeland Protective Wear Inc., as borrowers, and Alostar Bank of Commerce (incorporated by referenceto Exhibit 10.2 of Lakeland Industries, Inc. Form 8-K filed December 17, 2015). 10.28 Amendment to Agreement for Purchase of Debts, dated effectively as of December 31, 2015 between Lakeland Industries Europe Ltd.and HSBC Invoice Finance (UK) Limited (incorporated by reference to Exhibit 10.1 of Lakeland Industries, Inc.’s Form 8-K filedDecember 8, 2014). 14.1 Lakeland Industries, Inc. Code of Ethics, as amended on June 19, 2015 (incorporated by reference to Exhibit 14.1 of LakelandIndustries, Inc. Form 10-K filed April 21, 2016). 21 Subsidiaries of Lakeland Industries, Inc. (wholly owned) and jurisdictions of incorporation: Lakeland Protective Wear, Inc.Ontario Lakeland Protective Real EstateOntario Laidlaw, Adams & Peck, Inc. and SubsidiaryDelaware (Weifang Meiyang Protective Products Co., Ltd.) Weifang Lakeland Safety Products Co., Ltd.An Qiu City, Shandong Industrias Lakeland S.A. de C.V.Zacatecas, Mexico Lakeland Gloves and Safety Apparel Private Ltd.New Delhi, India Lakeland Industries Europe Ltd.Cardiff, UK Weifang Meiyang Protective Products Co., LtdAn Qiu City, Shandong Lakeland (Beijing) Safety Products, Co., Ltd.Beijing & Shanghai China Lakeland Chile, LLCSantiago, Chile Lakeland Argentina, SRLBuenos Aires, Argentina Art Prom, LLCUst-Kamenogorsk, Kazakhstan RussIndProtection, Ltd.Moscow, Russia Lakeland (Hong Kong) Trading Co., Ltd. Hong Kong Indian & Pan Pacific Sales LimitedHong Kong 76 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit No. Description 23.1* Consent of Mazars USA LLP (formerly WeiserMazars LLP), Independent Registered Public Accounting Firm 23.2* Consent of Mazars Auditores Independentes, Independent Registered Public Accounting Firm 23.3* Consent of Shanghai Mazars Certified Public Accountants, Independent Registered Public Accounting Firm 23.4* Consent of Shanghai Mazars Certified Public Accountants, 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-OxleyAct of 2002 31.2* Certification of Teri W. Hunt, 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 USC. Section 1350, asAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Teri W. Hunt, Chief Financial Officer, pursuant to Section 18 USC. Section 1350, as Adopted Pursuant to Section 906of the Sarbanes-Oxley Act of 2002 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculations Document 101.DEF* XBRL Taxonomy Extension Definitions Document 101.LAB* XBRL Taxonomy Extension Labels Document101.PRE* XBRL Taxonomy Extension Presentations Document * Filed herewith 77 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. _________________SIGNATURES_________________ Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Dated: April 26, 2017 LAKELAND INDUSTRIES, INC. By:/ s / Christopher J. Ryan Christopher J. Ryan, Chief Executive Officer and President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated: Name Title Date /s/ A. John Kreft Chairman of the Board April 26, 2017A. John Kreft /s/ Christopher J. Ryan Chief Executive Officer, President, April 26, 2017Christopher J. Ryan Secretary and Director (Principal Executive Officer) /s/ Teri W. Hunt Chief Financial Officer April 26, 2017Teri W. Hunt (Principal Financial and Accounting Officer) /s/ Stephen M. Bachelder Director April 26, 2017Stephen M. Bachelder /s/ Thomas McAteer Director April 26, 2017Thomas McAteer /s/ James Jenkins Director April 26, 2017James Jenkins 78 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit 10.26 Mr. Daniel Edwards6794 Meadow View DriveSummerfield, NC 27358 Dear Mr. Edwards: The purpose of this letter is to confirm your continuing employment with Lakeland Industries, Inc. on the following terms and conditions: 1. THE PARTIES This is an Agreement between Daniel Edwards, residing at 6794 Meadow View Drive, Summerfield, NC 27358 (hereinafter referred to as "you"), andLakeland Industries, Inc., a Delaware corporation, with a principal place of business located at 3555 Veterans Memorial Hwy, Suite C, Ronkonkoma, NY11779-7410 (hereinafter the "Company"). 2. TERM The term of the Agreement shall be for a period from April 22, 2017 through and including October 31, 2018. 3. CAPACITY You shall be employed in the capacity of Senior Vice President Sales for North American Sales, of Lakeland Industries, Inc. with such responsibilities asmay be determined from time to time by the Company. You agree to devote your full time and attention and best efforts to the faithful and diligent performance of your duties to the Company and shall serveand further the best interests and enhance the reputation of the Company to the best of your ability. Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 4. COMPENSATION As full compensation for your services, you shall receive the following from the Company: (a)A base annual salary of $165,000 payable bi-weekly (the "Base Salary"), and (b)If applicable, the current incentive compensation plan (the "Incentive Compensation") that is appropriate to your position, subject tochange from time to time at the discretion of the Company. Monthly incentive compensation shall not be less than $3283. The value ofany benefits as per (d) below, or discretionary bonuses or plans listed in (c) below shall not be included in said amount. (c)Participation, if and when eligible, in any of the Company’s pension plans, profit sharing plans, medical and disability plans, restrictivestock or appreciation rights plans, and/or stock option plans when any such plans are or become effective; and (d)Such benefits as are provided from time to time by the Company to its officers and employees; provided however that your annual vacationshall be for a period of 3 weeks; and (e)Reimbursement for any dues and expenses incurred by you that are necessary and proper in the conduct of the Company's business; and (f)As appropriate to your position, an automobile allowance in the amount of $550 per month, subject to on-going review and discretion ofthe Company; and (g)Participation in the Company’s 2015 Restricted Stock Plan. 5. ANNUAL BONUS During the Term, in addition to Base Salary, you have the opportunity to earn an Annual Bonus under an incentive compensation plan as determined bythe Compensation Committee of the Board of Directors of the Company (the “Board”). In May of each year during the Term commencing in 2016, youmay be awarded an Annual Bonus of between 80% and 120% of your target bonus amount of $35,000, subject to adjustment by the CompensationCommittee from time to time (the “Target Bonus Amount”). Such Annual Bonus shall be calculated based upon the Company’s actual earnings per share(“EPS”) as compared to an EPS target amount (the “FY EPS Target”), EPS threshold amount (the “FY EPS Threshold”) or EPS maximum amount (the “FYEPS Maximum”) for such year set by the Board of Directors with input from you; provided, however, the Compensation Committee shall have finaldecision-making authority. More particularly, (i) 80% of the Target Bonus Amount will be awarded to you as an Annual Bonus if the Company’s actualEPS equals or exceeds the FY EPS Threshold but is less than the FY EPS Target, (ii) 100% of the Target Bonus Amount will be awarded to you as anAnnual Bonus if the Company’s actual EPS equals or exceeds the FY EPS Target but is less than the FY EPS Maximum, and (iii) 120% of the TargetBonus Amount will be awarded to you as an Annual Bonus if the Company’s actual EPS equals or exceeds the FY EPS Maximum. Payment of the AnnualBonus, if any, due you, shall be made in accordance with the Company’s normal payroll procedures, but no later than June 18 following the year forwhich the Annual Bonus was earned. The Annual Bonus will be calculated each May during the Term. Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 6. NON-COMPETITION/SOLICITATION/CONFIDENTIALITY During your employment with the Company and for one year thereafter, (if you are receiving your normal compensation from the Company under Section7 (a), (e) or (f)) you shall not, either directly or indirectly, as an agent, employee, partner, stockholder, director, investor or otherwise, engage in anybusiness in competition with the business of the Company within the Company's market area(s). You shall also abide by the Code of Ethics Agreementand other Corporate Governance Rules. You shall disclose prior to the execution of this Agreement (or later on as the case may be) all businessrelationships you presently have or contemplate entering into or enter into in the future that might affect your responsibilities or loyalties to theCompany. During your employment with the Company and for one year thereafter, you shall not, directly or indirectly, hire, offer to hire or otherwise solicit theemployment or services of, any employee of the Company on behalf of yourself or any other person, firm or entity. Except as may be required to perform your duties on behalf of the Company, you agree that during your employment with the Company and for a periodof one year thereafter, you shall not, directly or indirectly, solicit, service, or accept business from, on your own behalf or on behalf of any other person,firm or entity, any customers or potential customers of the Company with whom you had contact during your employment or about whom you acquiredconfidential information during your employment. Except as required in your duties to the Company, you shall not at any time during or after your employment, directly or indirectly, use or disclose anyconfidential or proprietary information relating to the Company or its business or customers which is disclosed to you or known by you as a consequenceof or through your employment by the Company and which is not otherwise generally obtainable by the public at large. In the event that any of the provisions in this Section 6 shall ever be adjudicated to exceed limitations permitted by applicable law, you agree that suchprovisions shall be modified and enforced to the maximum extent permitted under applicable law. Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 7. TERMINATION You or the Company may terminate your employment prior to the end of the Term upon written notice to the other party in accordance with the followingprovisions: (a)Voluntary Termination. You may terminate your employment voluntarily at any time during the Term by providing the Company with 60 daysprior written notice. If you do so, except for Good Reason (as defined below), you shall be entitled to receive from the Company your (i) accruedand unpaid Base Salary through the date of termination (which shall be on the date that is 30 days after the date on which you give notice ofresignation to the Company), (ii) any Annual Bonus earned for the year completed prior to the year of termination but not yet paid, and (iii) anyother employee benefits generally paid by the Company up to the date of termination (collectively (i), (ii), and (iii), the "Accrued Obligations"). Ifthe Company fails to notify you that it will not renew this contract 180 days before July 31, 2018, it shall pay (i) through (iii) above for 180 daysafter its notice of non-renewal of this contract. (b)Death. This Agreement shall automatically terminate on the date of your death without further obligation to you other than for payment by theCompany to your estate or designated beneficiaries, as designated in writing to the Company, of (i) the Accrued Obligations through the last dayof the month in which your death occurs and (ii) a pro-rata portion of the Annual Bonus, if any, for the year of termination up to and including thedate of death which shall be determined in good faith by the Compensation Committee of the Board. Your estate or beneficiaries, as applicable,shall also be entitled to all other benefits generally paid by the Company on an employee's death. (c)Disability. This Agreement and your employment shall terminate without any further obligation to you if you become "totally disabled" (asdefined below) other than for payment by the Company of (i) the Accrued Obligations though the last day of the month in which you aredeemed to be totally disabled and (ii) a pro-rata portion of the Annual Bonus, if any, for the year of termination up to and including the date youare deemed to be totally disabled as determined in good faith by the Compensation Committee of the Board.. You shall be deemed to be "totally disabled" in you are unable, for any reason, to perform any of your duties and obligations to the Company,with or without a reasonable accommodation, for a period of 90 consecutive days or for periods aggregating 120 days in any period of 180consecutive days. (d)Cause. The Company may terminate your employment at any time for "Cause" (as defined below) and this Agreement shall terminateimmediately with no further obligations to you other than the Company shall pay you, within thirty days of such termination, the AccruedObligations up to the date of such termination for Cause. Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (e)Termination by the Company Without Cause or by you for Good Reason. If, during the Term, the Company terminates your employmentwithout Cause or you terminate your employment for Good Reason (as defined below), in either such case, other than within 24 months after aChange in Control (which is covered by Subsection (f) below), you shall be entitled to receive from the Company, subject to your continuedcompliance with the restrictive covenants contained in Section 6 hereof and your execution and non-revocation of a release of claimssubstantially in the form attached hereto as Annex A, (i) the Accrued Obligations payable within 15 days after the date of termination, (or, in thecase of the prior year’s Annual Bonus, at such time such bonus is payable pursuant hereto), (ii) an additional 12 months of your then current BaseSalary and Incentive Compensation payable in equal monthly installments beginning with the first payroll date after the date on which therelease of claims becomes effective and can no longer be revoked, and (iii) a pro rata portion of the Annual Bonus, if any, for the year oftermination up to and including the date of termination which shall be determined in good faith by the Compensation Committee of the Boardand paid at such time as such bonus is payable pursuant hereto.. (f)Termination by the Company Without Cause or by you for Good Reason within 24 Months After a Change in Control If, during the Term, theCompany terminates your employment without Cause or you terminate your employment for Good Reason, in either such case, within 24 monthsafter a Change in Control (as defined below), you shall be entitled to receive from the Company, subject to your continued compliance with therestrictive covenants contained in Section 6 hereof and your execution and non-revocation of a release of claims substantially in the formattached hereto as Annex A, (i) the Accrued Obligations payable within fifteen days after termination, (or, in the case of the prior year’s AnnualBonus, at such time such bonus is payable pursuant hereto), (ii) a lump sum amount equal to 24 months of Base Salary in effect as of the date oftermination of employment or the year immediately prior to the Change in Control, whichever is higher. The severance payments under sub-paragraphs (ii) and (iii) hereof shall be paid with the first payroll date after the date on which the release of claims becomes effective and can nolonger be revoked. (g)Notwithstanding the foregoing, if your severance payments payable hereunder constitute nonqualified deferred compensation subject to 409Aof the Internal Revenue Code of 1986, as amended (the "Code"), and the period in which you must execute the release begins in one calendaryear and ends in another, the severance payments will be made in the later calendar year. (h)For purposes of this Agreement: Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (i) "Cause" shall mean termination based upon: (A) your failure to substantially perform your material duties and responsibilities with theCompany, after a written demand for such performance is delivered to you by the Company, which identifies the manner in which you have notperformed your duties or responsibilities and a cure period of 60 days, (ii) your commission of an act of fraud, theft, misappropriation, dishonestyor embezzlement, (iii) your conviction for a felony or pleading nolo contendere to a felony, (iv) your willful and continuing failure or refusal tocarry out, or comply with, in any material respect any reasonable directive of the President or the Board consistent with the terms of thisAgreement, or (v) your material breach of any provision of this Agreement. (ii) "Good Reason" shall mean the occurrence of any of the following events without your prior written consent: (A)the failure of the Company to pay your Base Salary or Annual Bonus when due and if earned, other than an inadvertentadministrative error or failure, within 10 days of receipt of notice by you, (B)a material diminution in your authority or responsibilities from those described herein, (C)any material breach of this Agreement by the Company, or (D)a failure of the Company to have any successor assume in writing the obligations under this Agreement. (ii) "Change in Control" shall mean the occurrence of any of the following events during the Term: (A)any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issuedthereunder, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes morethan 500% of the total fair market value and total voting power of the stock of the Company; provided, however, that for purposesof this subsection (A), the following acquisitions shall not be deemed to result in a Change in Control: (1)any acquisition directlyfrom the Company, (2) any acquisition by the Company or an affiliate of the Company, or (3) any acquisition by (x) any employeebenefit plan (or related trust) intended to be qualified under Section 40l(a) of the Code or (y) any trust established in connectionwith any broad-based employee benefit plan sponsored or maintained, in each case, by the Company or any corporation controlledby the Company (collectively (1), (2) and (3), the "Exempt Acquisitions"); Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (B)any person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issuedthereunder, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition) ownership ofstock of the Company possessing 30% or more of the total voting power of the Company's stock; provided, however, that none ofthe Exempt Acquisitions shall constitute a Change in Control. (C)individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at leasta majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whoseelection, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directorsthen comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, butexcluding, as a member of the Incumbent Board, any such individual whose initial assumption of office occurs as a result ofeither an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under theSecurities Exchange Act of 1934, as amended (the "Exchange Act")) or other actual or threatened solicitation of proxies orconsents by or on behalf of an individual, entity or group (a "Person" within the meaning of the Exchange Act) other than theBoard; or (D)a person, or more than one person acting as a group within the meaning of Code Section 409A and the regulations issuedthereunder (other than a subsidiary or an affiliate of the Company), acquires (or has acquired during the 12-month period endingon the date of the most recent acquisition) assets of the Company that have a total gross fair market value equal to or more than50% of the total gross fair market value of all assets of the Company immediately before such acquisition(s). Notwithstanding the foregoing, a Change in Control shall not include any event, circumstance or transaction that results from an action of anyPerson, entity or group which includes, is affiliated with or is wholly or partly controlled by one or more executive officers of the Company and inwhich you participate directly or actively (other than a renegotiation of your employment arrangements or in your capacity as an employee of theCompany or any successor entity thereto or to the business of the Company). Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 8. NOTICES Any notices required to be given under this Agreement shall, unless otherwise agreed to by you and the Company, be in writing and by certified mail,return receipt requested and mailed to the Company, at its headquarters at 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, NY 11779-7410, orto you, at your home address at 6794 Meadow View Drive, Summerfield, NC 27358. 9. ASSIGNMENT AND SUCCESSORS The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors of the Company.This Agreement may not be assigned by the Company unless the assignee or successor (as the case may be) expressly assumes the Company’s obligationshereunder in writing. In the event of a successor to the Company or the assignment of the Agreement, the term "Company" as used herein shall include anysuch successor or assignee. 10. WAIVER OR MODIFICATION No waiver or modification in whole or in part of this Agreement or any term or condition hereof shall be effective against any party unless in writing andduly signed by the party sought to be bound. Any waiver of any breach of any provision hereof or right or power by any party on one occasion shall notbe construed as a waiver of or a bar to the exercise of such right or power on any other occasion or as a waiver of any subsequent breach. 11. SEPARABILITY Any provision of this Agreement which is unenforceable or invalid in any respect in any jurisdiction shall be ineffective in such jurisdiction to the extentthat it is unenforceable or invalid without effecting the remaining provisions hereof, which shall continue in full force and effect. The unenforceability orinvalidity of any provision of the Agreement in one jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 12. GOVERNING LAW AND ARBITRATION This Agreement shall be interpreted and construed in accordance with the laws of the State of New York without regard to its choice of law principles. Anydispute, controversy or claim of any kind arising under, in connection with, or relating to this Agreement or your employment with the Company shall beresolved exclusively by binding arbitration. Such arbitration shall be conducted in New York City in accordance with the rules of the AmericanArbitration Association ("AAA") then in effect. The costs of the arbitration (fees to the AAA and for the arbitrator(s)) shall be shared equally by the parties,subject to apportionment or shifting in the arbitration award. In addition, the prevailing party in arbitration shall be entitled to reimbursement by the otherparty for its reasonable attorney's fees incurred. Judgment may be entered on the arbitration award in any court of competent jurisdiction. Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 13. HEADINGS The headings contained in this Agreement are for convenience only and shall not effect, restrict or modify the interpretation of this Agreement. AGREED AND ACCEPTED: By:/s/ Daniel Edwards Daniel Edwards Senior Vice President Sales for North America Date: April 26, 2017 By:/s/ Christopher J. Ryan By:/s/ Thomas McAteer Christopher J. Ryan Thomas McAteer, President and CEO Compensation Committee Chairman Date: April 26, 2017 Date: April 26, 2017 Lakeland Industries, Inc. 3555 Veterans Memorial Highway, Suite C, Ronkonkoma, New York 11779 Phone: (631) 981-9700; Fax: (631) 981-9751Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ANNEX A General Release IN CONSIDERATION OF good and valuable consideration, the receipt of which is hereby acknowledged, and in consideration of the terms andconditions contained in the Employment Agreement, effective as of November 1, 2015 (the "Agreement"), by and between Daniel Edwards (the"Executive") and Lakeland Industries, Inc. (the "Company"), the Executive on behalf of himself and his heirs, executors, administrators, assigns, attorneys,successors, and assigns, knowingly and voluntarily, hereby waives, remits, releases and forever discharges the Company and its past present and futuresubsidiaries, divisions, affiliates and parents, and their respective current and former officers, directors, stockholders, employees, agents, attorneys, lenders,and/or owners, and their respective successors, and assigns and any other person or entity claimed to be jointly or severally liable with the Company or anyof the aforementioned persons or entities, both individually and in their business capacities, and their employee benefit plans and programs and theiradministrators and fiduciaries (the “Released Parties”) of and from any and all manner of actions and causes of action, suits, debts, dues, accounts, bonds,covenants, contracts, agreements, judgments, charges, claims, complaints, damages, demands, and obligations of any other nature whatsoever, past orpresent known and unknown ("Losses") which the Executive and his heirs, executors, administrators, and assigns have, had, or may hereafter have, againstthe Released Parties or any of them arising out of or by reason of any cause, matter, or thing whatsoever from the beginning of the world to the date hereof,relating to the Executive's employment by the Company and the cessation thereof, and any and all matters arising under any federal, state, or local statute,rule, or regulation. or principle of contract law or common law relating to the Executive's employment by the Company and the cessation thereof,including but not limited to, the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. §§ 2601 et seq., Title VII of the Civil Rights Act of 1964,as amended, 42 U.S.C. §§ 2000 et seq., the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §§ 621 et seq. (the "ADEA''), theAmericans with Disabilities Act of 1990, as amended, 42 U.S.C. §§ 12101 et seq., the Worker Adjustment and Retraining Notification Act of 1988, asamended, 29 U.S.C. §§2101 et seq., the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq., the New York State andNew York City Human Rights Laws, the New York Labor Laws, and any other equivalent or similar federal, state, or local statute; and any claim for orobligation to pay for attorneys’ fees, cost, fees, or other expenses; provided, however, that the Executive does not release or discharge the Released Partiesfrom (i) any rights to any payments, benefits or reimbursements due to the Executive under the Agreement; or (ii) any rights to any vested benefits due tothe Executive under any employee benefit plans sponsored or maintained by the Company. It is understood that nothing in this general release is to beconstrued as an admission on behalf of the Released Parties of any wrongdoing with respect to the Executive, any such wrongdoing being expresslydenied. Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Included in this general release are any and all claims for future damages allegedly arising from the alleged continuation of the effect of any pastaction, omission or event. Notwithstanding the foregoing, Executive shall retain the right, if any to claim unemployment insurance with respect to thetermination of his employment. The Executive represents and warrants that he fully understands the terms of this General Release, that he has been encouraged to seek, and hassought, the benefit of advice of legal counsel, and that he knowingly and voluntarily, of his own free will, without any duress, being fully informed, andafter due deliberation, accepts its terms and signs below as his own free act. Except as otherwise provided herein, the Executive understands that as a resultof executing this General Release, he will not have the right to assert that the Company or any other of the Released Parties unlawfully terminated hisemployment or violated any of his rights in connection with his employment or otherwise. The Executive further represents and warrants that he has not filed, and will not initiate, or cause to be initiated on his behalf any complaint,charge, claim, or proceeding against any of the Released Parties before any federal, state, or local agency, court, or other body relating to any claimsbarred or released in this General Release thereof, and will not voluntarily participate in such a proceeding. However, nothing in this General Releaseshall preclude or prevent the Executive from filing a claim, which challenges the validity of this General Release solely with respect to the Executive'swaiver of any Losses arising under the ADEA. The Executive shall not accept any relief obtained on his behalf by any government agency, private party,class, or otherwise with respect to any claims covered by this General Release. The Executive may take twenty-one (21) days to consider whether to execute this General Release. Upon the Executive's execution of thisgeneral release, the Executive will have seven (7) days after such execution in which he may revoke such execution. In the event of revocation, theExecutive must present written notice of such revocation to the office of the Company. If seven (7) days pass without receipt of such notice of revocation,this General Release shall become binding and effective on the eighth (8th) day after the execution hereof (the "Effective Date"). Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. INTENDING TO BE LEGALLY BOUND, I hereby set my hand below: Daniel Edwards Dated: STATE OF NEW YORK )) s/s:COUNTY OF _______ ) On the ___ day of _________, 2017, before me personally came Daniel Edwards, to me known, and known to me to be the individual described in,and who executed the foregoing General Release, and duly acknowledged to me that he executed the same. ____________________________Notary Public Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of Lakeland Industries, Inc. for the fiscal year ended January 31,2017, of our report dated April 26, 2017 on the consolidated financial statements of Lakeland Industries, Inc. and Subsidiaries as of January 31, 2017 and forthe year then ended, into the Company’s Registration Statements on Form S-8 (No. 333-144870, No. 333-176733, No. 333-183882 and No. 333-205836) andForm S-3 (No. 333-216943 and No. 333-200422). /s/ Friedman LLP New York, New York April 26, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of Lakeland Industries, Inc. for the fiscal year ended January 31,2017, of our report dated April 21, 2016 on the consolidated financial statements of Lakeland Industries, Inc. and Subsidiaries as of January 31, 2016 and forthe year then ended, into the Company’s Registration Statements on Form S-8 (No. 333-144870, No. 333-176733, No. 333-183882 and No. 333-205836) andForm S-3 (No. 333-216943 and No. 333-200422). /s/ Mazars USA LLP (formerly WeiserMazars LLP) New York, New York April 25, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 23.3 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of Lakeland Industries, Inc. for the fiscal year ended January 31,2017, of our report dated April 18, 2016 relating to our audit of the financial statements of Weifang Lakeland Safety Products Co., Ltd. for the year endedJanuary 31, 2016, into the Company’s Registration Statements on Form S-8 (No. 333-144870, No. 333-176733, No. 333-183882 and No. 333-205836) andForm S-3 (No. 333-216943 and No. 333-200422). /s/ Shanghai Mazars Certified Public Accountants Shanghai Mazars Certified Public Accountants Shanghai, China April 24, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 23.4 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of Lakeland Industries, Inc. for the fiscal year ended January 31,2017, of our report dated April 18, 2016 relating to our audit of the financial statements of Lakeland (Beijing) Safety Products Co., Ltd. for the year endedJanuary 31, 2016, into the Company’s Registration Statements on Form S-8 (No. 333-144870, No. 333-176733, No. 333-183882 and No. 333-205836) andForm S-3 (No. 333-216943 and No. 333-200422). /s/ Shanghai Mazars Certified Public Accountants Shanghai Mazars Certified Public Accountants Shanghai, China April 24, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.1 CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Christopher J. Ryan, certify that: 1)I have reviewed this report on Form 10-K of Lakeland Industries, Inc. (the “registrant”); 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3)Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, thefinancial 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 inExchange 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 withinthose entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrols over financial reporting. Date: April 26, 2017 By:/s/ Christopher J. Ryan Chief Executive Officer, President and Secretary Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.2 CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Teri W. Hunt, certify that: 1)I have reviewed this report on Form 10-K of Lakeland Industries, Inc. (the “registrant”); 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3)Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, thefinancial 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 inExchange 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 withinthose entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and 5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrols over financial reporting. Date: April 26, 2017 By:/s/ Teri W. Hunt Chief Financial Officer Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICERPursuant to 18 USC. § 1350, As Adopted Pursuant to§ 906 of the Sarbanes-Oxley Act of 2002 In connection with the filing with the Securities and Exchange Commission of the Annual Report of Lakeland Industries, Inc. (the “Company”) on Form 10-Kfor the year ended January 31, 2017 (the “Report”), I, Christopher J. Ryan, Chief Executive Officer, President and Secretary of the Company, certify, pursuantto 18 USC. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Christopher J. Ryan Christopher J. Ryan Chief Executive Officer, President and Secretary April 26, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICERPursuant to 18 USC. § 1350, As Adopted Pursuant to§ 906 of the Sarbanes-Oxley Act of 2002 In connection with the filing with the Securities and Exchange Commission of the Annual Report of Lakeland Industries, Inc. (the “Company”) on Form 10-Kfor the year ended January 31, 2017 (the “Report”), I, Teri W. Hunt, Chief Financial Officer of the Company, certify, pursuant to 18 USC. § 1350, as adoptedpursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Teri W. Hunt Teri W. Hunt Chief Financial Officer April 26, 2017 Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: LAKELAND INDUSTRIES INC, 10-K, April 26, 2017Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

Continue reading text version or see original annual report in PDF format above