UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended April 1, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission File Number 0-23161
Tropical Sportswear Int'l Corporation
(Exact name of registrant as specified in its charter)
Florida 59-3424305
------------------------------- ------------------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.
4902 W. Waters Avenue Tampa, FL 33634-1302
--------------------- --------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 249-4900
---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report.)
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 1934 during
the preceding 12 months (or for such shorter period the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
[X] Yes [ ] No
As of May 8, 2000 there were 7,625,841 shares of the registrant's Common Stock
outstanding.
<PAGE>
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
FORM 10-Q
TABLE OF CONTENTS
<CAPTION>
PART I Financial Information Page No.
--------
<S> <C> <C>
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Item 3 Quantitative and Qualitative Disclosures about Market Risk 13
PART II Other Information
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 15
Item 6 Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<CAPTION>
Thirteen Thirteen Twenty-six Twenty-six
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
April 1, April 3, April 1, April 3,
2000 1999 2000 1999
------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
Net sales $ 124,201 $ 110,709 $ 225,876 $ 204,895
Cost of goods sold 87,068 79,196 159,141 146,086
Gross profit 37,133 31,513 66,735 58,809
------------------ ------------------ ------------------- ------------------
Selling, general and administrative
expenses 23,437 19,900 43,457 38,342
Severance cost charge -- -- 1,006 --
------------------ ------------------ ------------------- ------------------
Operating income 13,696 11,613 22,272 20,467
Other expense:
Interest expense, net 4,306 4,755 8,588 9,328
Other, net 562 518 933 1,077
------------------ ------------------ ------------------- ------------------
4,868 5,273 9,521 10,405
Income before income taxes 8,828 6,340 12,751 10,062
Provision for income taxes 3,601 2,339 5,176 3,730
------------------ ------------------ ------------------- ------------------
Net income 5,227 4,001 7,575 6,332
Foreign currency translations (428) (298) (735) (219)
------------------ ------------------ ------------------- ------------------
Comprehensive income $ 4,799 $ 3,703 $ 6,840 $ 6,113
================== ================== =================== ==================
Net income per common share:
Basic $0.69 $0.53 $0.99 $0.83
================== ================== =================== ==================
Diluted $0.68 $0.51 $0.99 $0.80
================== ================== =================== ==================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
April 1, October 2,
2000 1999
----------------- -----------------
ASSETS (unaudited) (audited)
<S> <C> <C>
Current Assets:
Cash $ 1,484 $ 1,607
Accounts receivable 94,433 76,225
Inventories 75,802 72,181
Deferred income taxes 10,732 10,732
Prepaid expenses and other current assets 6,104 14,328
----------------- -----------------
Total current assets 188,555 175,073
Property and equipment, net 44,072 42,185
Intangible assets, including trademarks and goodwill, net 54,371 55,335
Other assets 15,747 16,729
----------------- -----------------
Total assets $ 302,745 $ 289,322
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 63,451 $ 52,841
Current portion of long-term debt and capital leases 2,113 2,191
----------------- -----------------
Total current liabilities 65,564 55,032
Long-term debt and capital leases 164,679 168,703
Deferred income taxes 2,860 2,860
Other non-current liabilities 2,900 2,904
----------------- -----------------
Total liabilities 236,003 229,499
Shareholders' Equity:
Preferred stock - -
Common stock 76 76
Additional paid in capital 17,614 17,535
Accumulated other comprehensive income (loss) (304) 431
Retained earnings 49,356 41,781
----------------- -----------------
Total shareholders' equity 66,742 59,823
----------------- -----------------
Total liabilities and shareholders' equity $ 302,745 $ 289,322
================= =================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<CAPTION>
Twenty six Twenty six
Weeks Ended Weeks Ended
April 1, April 3,
2000 1999
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 7,575 $6,332
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,577 4,656
Deferred income taxes and other (3) 2,726
Changes in operating assets and liabilities:
Accounts receivable (17,909) (16,065)
Inventories (3,621) (3,727)
Prepaid expenses and other current assets 8,879 309
Accounts payable and accrued expenses 10,606 (4,919)
---------------- -----------------
Net cash provided by (used in) operating activities 10,104 (10,688)
---------------- -----------------
INVESTING ACTIVITIES
Capital expenditures (5,700) (6,845)
Other, net 83 2,421
---------------- -----------------
Net cash used in investing activities (5,617) (4,424)
---------------- -----------------
Financing activities:
Net change in long-term debt and capital leases (4,102) 14,921
Other, net (508) (111)
---------------- -----------------
Net cash provided by (used in) financing activities (4,610) 14,810
---------------- -----------------
Net decrease in cash (123) (302)
Cash at beginning of period 1,607 2,097
----------------- -----------------
Cash at end of period $1,484 $1,795
================= =================
See accompanying notes.
</TABLE>
<PAGE>
TROPICAL SPORTSWEAR INT'L CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
April 1, 2000 and October 2, 1999
(In thousands, except share and per share amounts)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Tropical Sportswear Int'l Corporation (the "Company") includes the accounts of
Tropical Sportswear Int'l Corporation and its subsidiaries. These financial
statements have been prepared in accordance with the instructions for Form 10-Q
and, therefore, do not include all information and footnotes required by
generally accepted accounting principles. The unaudited condensed consolidated
financial statements should be read in conjunction with the audited financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended October 2, 1999. Certain amounts in the prior year have
been reclassified to conform with the current year presentation. In the opinion
of management, the unaudited condensed consolidated financial statements contain
all necessary adjustments (which include only normal, recurring adjustments) for
a fair presentation of the interim periods presented. Operating results for the
twenty-six weeks ended April 1, 2000 are not necessarily indicative of results
that may be expected for the entire fiscal year ending September 30, 2000.
2. INVENTORIES
<TABLE>
Inventories consist of the following:
<CAPTION>
April 1, October 2,
2000 1999
---------------- ------------------
<S> <C> <C>
Raw materials $8,110 $7,425
Work in process 18,646 15,445
Finished goods 49,046 49,311
---------------- ------------------
$75,802 $72,181
================ ==================
</TABLE>
3. DEBT AND CAPITAL LEASES
<TABLE>
Long-term debt and capital leases consist of the following:
<CAPTION>
April 1, October 2,
2000 1999
--------------- ------------------
<S> <C> <C>
Revolving credit line $ 46,066 $53,506
Real estate loan 14,905 10,691
Senior Subordinated Notes 100,000 100,000
Other 5,821 6,697
--------------- ------------------
166,792 170,894
Less current maturities 2,113 2,191
--------------- ------------------
$164,679 $168,703
=============== ==================
</TABLE>
The Company's revolving credit line (the "Facility") provides for borrowings of
up to $110 million, subject to certain borrowing base limitations. Borrowings
under the Facility bear variable rates of interest (9.1% at April 1, 2000) and
are secured by substantially all of the Company's domestic assets. The Facility
matures in June 2003. As of April 1, 2000, an additional $53.1 million was
available for borrowings under the Facility.
<PAGE>
4. EARNINGS PER SHARE
<TABLE>
Basic and diluted net income per share are computed as follows:
<CAPTION>
Thirteen Thirteen Twenty-six Twenty-six
Weeks ended Weeks ended Weeks ended Weeks ended
April 1, April 3, April 1, April 3,
2000 1999 2000 1999
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Numerator for basic net income per share:
Net income $5,227 $4,001 $7,575 $6,332
Denominator for basic net income
per share:
Weighted average shares of common
stock outstanding 7,624,431 7,611,296 7,622,769 7,609,742
Effect of dilutive stock options using
the treasury stock method 17,966 272,371 63,326 276,341
-------------- --------------- -------------- --------------
Denominator for diluted net income per
share 7,642,397 7,883,667 7,686,095 7,886,083
============== =============== ============== ==============
Net income per common share:
Basic $0.69 $0.53 $0.99 $0.83
============== =============== ============== ==============
Diluted $0.68 $0.51 $0.99 $0.80
============== =============== ============== ==============
</TABLE>
5. SUPPLEMENTAL COMBINING CONDENSED FINANCIAL STATEMENTS
The Company's Senior Subordinated Notes, due 2008 (the "Notes") are jointly and
severally guaranteed by the Company's domestic subsidiaries. The wholly-owned
foreign subsidiaries are not guarantors with respect to the Notes and do not
have any credit arrangements senior to the Notes except for their local
overdraft facility and capital lease obligations.
The following is the supplemental combining condensed statement of operations
for the thirteen weeks and twenty-six weeks ended April 1, 2000, and the
thirteen weeks and twenty-six weeks ended April 3, 1999, the supplemental
combining condensed balance sheet as of April 1, 2000 and October 2, 1999, and
the supplemental combining condensed statement of cash flows for the twenty-six
weeks ended April 1, 2000, and the twenty-six weeks ended April 3, 1999. The
only intercompany eliminations are the normal intercompany sales, borrowings and
investments in wholly-owned subsidiaries. Separate complete financial statements
of the guarantor subsidiaries are not presented because management believes that
they are not material to investors.
<TABLE>
<CAPTION>
Thirteen Weeks Ended April 1, 2000
-----------------------------------------------------------------------------
Non-Guarantor
Statement of Operations Parent Guarantor Subsidiaries
Only Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 56,450 $59,286 $ 9,532 $ (1,067) $ 124,201
Gross profit 14,835 19,146 3,152 37,133
Operating income 6,353 7,133 210 13,696
Interest, income taxes and other, net 2,687 5,632 (8) 158 8,469
Net income 3,666 1,501 218 (158) 5,227
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Thirteen Weeks Ended April 3, 1999
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 46,558 $ 55,717 $10,092 $(1,658) $110,709
Gross profit 11,778 16,468 3,267 - 31,513
Operating income 5,462 5,866 285 - 11,613
Interest, income taxes and other, net 2,540 4,957 127 (12) 7,612
Net income 2,922 909 158 12 4,001
</TABLE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended April 1, 2000
-----------------------------------------------------------------------------
Non-Guarantor
Statement of Operations Parent Guarantor Subsidiaries
Only Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 92,264 $ 115,105 $20,381 $ (1,874) $ 225,876
Gross profit 23,519 36,191 7,025 - 66,735
Operating income 7,387 13,824 1,061 - 22,272
Interest, income taxes and other, net 4,213 9,482 138 864 14,697
Net income 3,174 4,342 923 (864) 7,575
</TABLE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended April 3, 1999
-----------------------------------------------------------------------------
Non-
Statement of Operations Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $80,514 $106,201 $21,264 $(3,084) $204,895
Gross profit 19,854 32,485 6,470 - 58,809
Operating income 7,994 11,786 687 - 20,467
Interest, income taxes and other, net 3,981 7,998 338 1,818 14,135
Net income 4,013 3,788 349 (1,818) 6,332
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
As of April 1, 2000
------------------------------------------------------------------------------
Balance Sheet Parent Guarantor Non-Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ 149 $ 13 $ 1,322 $ - $ 1,484
Accounts receivable, net 48,174 40,632 5,870 (243) 94,433
Inventories 24,429 42,106 9,267 - 75,802
Other current assets 2,970 13,284 497 85 16,836
----------- ------------- ------------- ------------- --------------
Total current assets 75,722 96,035 16,956 (158) 188,555
Property, plant and equipment, net 26,461 10,940 6,671 - 44,072
Investment in subsidiaries and other assets 138,131 69,830 5,757 (143,600) 70,118
----------- ------------- ------------- ------------- -------------
Total assets $240,314 $176,805 $29,384 $(143,758) $302,745
=========== ============= ============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 20,446 $38,476 $ 4,687 $ (158) $ 63,451
Current portion of long-term debt and
capital leases 889 1,224 - - 2,113
----------- ------------- ------------- ------------- --------------
Total current liabilities 21,335 39,700 4,687 (158) 65,564
Long-term debt and noncurrent portion of
capital leases 160,322 4,357 - - 164,679
Other noncurrent liabilities 69 5,607 84 - 5,760
Stockholders' equity 58,588 127,141 24,613 (143,600) 66,742
----------- ------------- ------------- ------------- --------------
Total liabilities and stockholders'
equity $240,314 $176,805 $29,384 $(143,758) $302,745
=========== ============= ============= ============= ==============
</TABLE>
<TABLE>
<CAPTION>
As of October 2, 1999
------------------------------------------------------------------------------
Balance Sheet Parent Guarantor Non-Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash $ 90 $ 28 $ 1,489 $ - $ 1,607
Accounts receivable, net 28,502 42,736 6,295 (1,308) 76,225
Inventories 22,958 38,354 10,869 - 72,181
Other current assets 12,800 11,817 443 - 25,060
----------- ------------- ------------- ------------- --------------
Total current assets 64,350 92,935 19,096 (1,308) 175,073
Property, plant and equipment, net 22,762 12,782 6,641 - 42,185
Investment in subsidiaries and other assets 152,391 57,062 5,520 (142,909) 72,064
----------- ------------- ------------- ------------- --------------
Total assets $239,503 $162,779 $31,257 $(144,217) $289,322
=========== ============= ============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $20,886 $26,843 $6,420 $ (1,308) $ 52,841
Current portion of long-term debt and
capital leases 619 1,565 7 - 2,191
----------- ------------- ------------- ------------- --------------
Total current liabilities 21,505 28,408 6,427 (1,308) 55,032
Long-term debt and noncurrent portion of
capital leases 163,876 4,827 - - 168,703
Other noncurrent liabilities 69 5,664 31 - 5,764
Stockholders' equity 54,053 123,880 24,799 (142,909) 59,823
----------- ------------- ------------- ------------- --------------
Total liabilities and stockholders' $239,503 $162,779 $31,257 $(144,217) $289,322
equity =========== ============= ============= ============= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended April 1, 2000
------------------------------------------------------------------------------
Non-
Statement of Cash Flows Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ 8,281 $ 1,075 $ 748 $ - $ 10,104
Net cash used in investing activities (4,939) (280) (398) - (5,617)
Net cash used in financing activities (3,283) (810) (517) - (4,610)
Net increase (decrease) in cash 59 (15) (167) - (123)
Cash, beginning of period 90 28 1,489 - 1,607
Cash, end of period 149 13 1,322 - 1,484
</TABLE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended April 3, 1999
---------------------------------------------------------------------------
Non-
Statement of Cash Flows Parent Guarantor Guarantor
Only Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $(6,254) $ (2,361) $ 1,897 $(3,970) $(10,688)
Net cash provided by (used in) investing activities (4,738) 988 (43) (631) (4,424)
Net cash provided by (used in) financing activities 10,911 864 (1,566) 4,601 14,810
Net increase (decrease) in cash (81) (509) 288 - (302)
Cash, beginning of period 120 630 1,347 - 2,097
Cash, end of period 39 121 1,635 - 1,795
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The following table sets forth, for the periods indicated, selected items in the
Company's consolidated statements of income expressed as a percentage of net
sales:
<TABLE>
<CAPTION>
Thirteen Thirteen Twenty-six Twenty-six
Weeks ended Weeks ended Weeks ended Weeks ended
April 1, April 3, April 1, April 3,
2000 1999 2000 1999
-------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 70.1 71.5 70.5 71.3
-------------- --------------- ---------------- --------------
Gross profit 29.9 28.5 29.5 28.7
Selling, general and administrative 18.9 18.0 19.2 18.7
expenses
Severance cost charge - - 0.4 -
-------------- --------------- ---------------- --------------
Operating income 11.0 10.5 9.9 10.0
Interest expense, net 3.5 4.3 3.8 4.6
Other, net 0.4 0.5 0.4 0.5
-------------- --------------- ---------------- --------------
Income before income taxes 7.1 5.7 5.7 4.9
Provision for income taxes 2.9 2.1 2.3 1.8
--------------- ---------------- --------------
--------------
Net income 4.2% 3.6% 3.4% 3.1%
============== =============== ================ ==============
</TABLE>
Thirteen weeks ended April 1, 2000 compared to the thirteen weeks ended April 3,
1999
Net Sales. Net sales increased 12.2% to $124.2 million for the second
quarter of fiscal 2000 from $110.7 million in the comparable prior year quarter.
This increase was primarily due to an increase in units sold.
Gross Profit. Gross profit increased to $37.1 million, or 29.9% of net
sales for the second quarter of fiscal 2000, from $31.5 million, or 28.5% of net
sales, for the comparable prior year quarter. The dollar increase was primarily
due to the increase in sales volume, and to the change in the mix of products to
those yielding higher average selling prices. The increase in gross profit as a
percentage of net sales is primarily due to increased production efficiencies
and other cost saving measures.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $23.4 million, or 18.9% of net sales for
the second quarter of fiscal 2000, from $19.9 million, or 18.0% of net sales,
for the comparable prior year quarter. The dollar increase was primarily due to
an increase in overall volume. The increase in selling, general and
administrative expenses as a percent of net sales was due to a combination of
increased spending in the areas of merchandising and product development, as
well as higher incentive based compensation accruals.
Interest Expense. Interest expense decreased to $4.3 million for the
second quarter of fiscal 2000, from $4.8 million for the comparable prior year
quarter. The decrease was primarily due to lower average outstanding borrowings
under the Company's credit facility.
Income Taxes. The Company's effective income tax rate for the second
quarter of fiscal 2000 was 40.8% compared to 36.9% in the comparable prior year
quarter. These rates are based on the Company's expected effective annual tax
rate and were lower last year due to the anticipated annual pretax income at the
time and the relative impact of non-deductible goodwill amortization expense.
Net Income. As a result of the above factors, net income increased to
$5.2 million for the second quarter of fiscal 2000 from $4.0 million in the
comparable prior year quarter.
Twenty-six weeks ended April 1, 2000 compared to the twenty- six weeks ended
April 3, 1999
Net Sales. Net sales increased 10.2% to $225.9 million for the
twenty-six weeks ended April 1, 2000 from $204.9 million in the comparable prior
year period. This increase was primarily due to an increase in units sold.
Gross Profit. Gross profit increased 13.5% to $66.7 million, or 29.5%
of net sales for the twenty-six weeks ended April 1, 2000, from $58.8 million,
or 28.7% of net sales, for the comparable prior year period. The dollar increase
was primarily due to the increase in sales volume, and to the change in mix of
products to those yielding higher average selling prices. The increase in gross
profit as a percentage of net sales is primarily due to increased production
efficiencies and other cost saving measures.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 13.3% to $43.5 million, or 19.2% of net sales,
for the twenty-six weeks ended April 1, 2000, from $38.3 million, or 18.7% of
net sales, for the comparable prior year period. The dollar increase was
primarily due to an increase in overall volume. The increase in selling, general
and administrative expenses as a percent of net sales was due to a combination
of increased spending in the areas of merchandising and product development, as
well as higher incentive based compensation accruals.
Severance Cost Charge. In the first quarter of fiscal 2000, the Company
recorded a pre-tax charge of $1.0 million for severance payments to the former
CEO of Farah/Savane who resigned as an officer and director of the Company
effective December 30, 1999.
Interest Expense. Interest expense decreased to $8.6 million for the
twenty-six weeks ended April 1, 2000, from $9.3 million for the comparable prior
year period. The decrease was primarily due to lower average outstanding
borrowings under the Company's credit facility.
Income Taxes. The Company's effective income tax rate for twenty-six
weeks ended April 1, 2000 was 40.6% compared to 37.1% in the comparable prior
year period. These rates are based on the Company's expected effective annual
tax rate and were lower last year due to the anticipated annual pretax income at
the time and the relative impact of non-deductible goodwill amortization
expense.
Net Income. As a result of the above factors, net income increased
19.6% to $7.6 million for the twenty-six weeks ended April 1, 2000 from $6.3
million for the comparable prior year period.
Liquidity and Capital Resources
The Company's revolving credit line (the "Facility") provides for borrowings of
up to $110 million, subject to certain borrowing base limitations. Borrowings
under the Facility bear variable rates of interest (9.1% at April 1, 2000) and
are secured by substantially all of the Company's domestic assets. The Facility
matures in June 2003. As of April 1, 2000, an additional $53.1 was available for
borrowings under the Facility. During the second quarter of fiscal 2000, the
Company amended the terms of the Facility to adjust certain financial covenants.
During the twenty-six weeks ended April 1, 2000, the Company generated $10.1
million of cash from its operations. This was primarily the result of net income
of $7.6 million (which included noncash expenses of $4.6 million), a decrease in
prepaid expenses and other current assets of $8.9 million, and an increase in
accounts payable and accrued expenses of $10.6 million, offset in part, by a
$17.9 million increase in accounts receivable and a $3.6 million increase in
inventory.
Capital expenditures totaled $5.7 million for the twenty-six weeks ended April
1, 2000 and are expected to approximate $11.0 million for the entire fiscal
year. The expenditures expected for the remainder of the fiscal year primarily
relate to the upgrade or replacement of various equipment, and replacement of
the existing computer systems at the Company's Tampa, Florida location.
The Company believes that its existing working capital, borrowings available
under the Facility and internally generated funds provide sufficient resources
to support current business activities.
<PAGE>
Seasonality
Historically, the Company's business has been seasonal, with slightly higher
sales and income in the second and fourth fiscal quarters, just prior to and
during the two peak retail selling seasons for spring and fall merchandise. In
addition, certain of the Company's products, such as shorts and corduroy pants,
tend to be seasonal in nature. In the event such products represent a greater
percentage of the Company's sales in the future, the seasonality of the
Company's sales may be increased.
Factors Affecting the Company's Business and Prospects
This report contains forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. Management
cautions that these statements represent projections and estimates of future
performance and involve certain risks and uncertainties. The Company's actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors including, without limitation: a
continuation of the trend toward luxury fabrics which has supported the
Company's increase in selling prices; the continued commitment to the Company's
products by its major customers; the financial strength of the Company's major
customers; the ability of the Company to continue to use certain licensed
trademarks and tradenames, including John Henry(R), Bill Blass(R), and Van
Heusen(R); general economic conditions, including the price and availability of
raw materials and global manufacturing costs and restrictions; continued
improvements in operating efficiencies and cost savings such that the Company's
operating income margins continue to improve; increases in costs and potential
business disruption associated with the Company's implementation of its
Enterprise 2000 software systems; and other risk factors listed from time to
time in the Company's SEC reports and announcements. In addition, the estimated
financial results for any period do not necessarily indicate the results that
may be expected for any future period.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's market risk is primarily limited to fluctuations in interest rates
as it pertains to the Company's borrowings under the Facility and the
Construction Loan. There have been no material changes to the Item 7A disclosure
made in the Company's Annual Report on Form 10-K for the fiscal year ended
October 2, 1999.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of the Company held on Wednesday, February
2, 2000, the following matters were brought before and voted upon by the
shareholders:
1. A proposal to elect two directors to serve until the 2003 Annual
Meeting of Shareholders of the Company:
For Withhold Authority
William W. Compton 7,220,751 10,095
Jesus Alvarez-Morodo 7,220,601 10,245
The following members of the Board of Directors of the Company will
continue in office after the Annual Meeting:
Michael Kagan (term to expire in 2001)
Leon H. Reinhart (term to expire in 2001)
Charles J. Smith (term to expire in 2001)
Leslie J. Gillock (term to expire in 2002)
Donald H. Livingstone (term to expire in 2002)
Eloy S. Vallina-Laguera (term to expire in 2002)
2. A proposal to approve the Company's proposed 2000 Long Term Incentive
Plan:
For Against Abstain Broker Non-Votes
6,627,694 106,080 3,827 -0-
3. A proposal to ratify the selection of Ernst & Young LLP as the
Company's independent certified public accountants for the fiscal year
ending September 30, 2000.
For Against Abstain Broker Non-Votes
7,200,339 28,145 2,362 -0-
<PAGE>
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits to this report on Form 10-Q are listed on the
Exhibit Index, which immediately follows the signature page
hereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the thirteen week
period ended April 1, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TROPICAL SPORTSWEAR INT'L CORPORATION
(Registrant)
/s/ Michael Kagan
Michael Kagan
Executive Vice President,
and Chief Financial Officer
(in the dual capacity of duly authorized
officer and principal accounting officer)
May 8, 2000
<PAGE>
Index to Exhibits
Exhibit
Number Description
*2.1 Agreement and Plan of Merger dated May 1, 1998 among Tropical
Sportswear Int'l Corporation, Foxfire Acquisition Corp. and
Farah Incorporated (filed as Exhibit (c)(1) to Tropical
Sportswear Int'l Corporation's Schedule 14D-1 filed May 8,
1998).
*3.1 Amended and Restated Articles of Incorporation of Tropical
Sportswear Int'l Corporation (filed as Exhibit 3.1 to Tropical
Sportswear Int'l Corporation (filed as Exhibit (o)(1) to
Tropical Sportswear Int'l Corporation's Exhibit 3.1 to
Tropical Sportswear Int'l Corporation's Annual Report on Form
10-K filed January 4, 1999)).
*3.2 Amended and Restated By-Laws of Tropical Sportswear Int'l
Corporation (filed as Exhibit 3.2 to Tropical Sportswear
Int'l Corporation's Registration Statement on Form S-1 filed
August 15, 1997).
*4.1 Specimen Certificate for the Common Stock of Tropical
Sportswear Int'l Corporation (filed as Exhibit 4.1 to
Amendment No. 1 to Tropical Sportswear Int'l Corporation's
Registration Statement on Form S-1 filed October 2, 1997).
*4.2 Shareholders' Agreement dated as of September 29, 1997 among
Tropical Sportswear Int'l Corporation, William W. Compton,
the Compton Family Limited Partnership, Michael Kagan, the
Kagan Family Limited Partnership, Shakale Internacional, S.A.
and Accel, S.A. de C.V. (filed as Exhibit 4.2 to Amendment No.
1 to Tropical Sportswear Int'l Corporation's Registration
Statement on Form S-1 filed October 2, 1997).
*4.3 Exchange and Registration Rights Agreement dated as of June
24, 1998 between Tropical Sportswear Int'l Corporation and
Prudential Securities Incorporated (filed as Exhibit 4.3 to
Tropical Sportswear Int'l Corporation's Form S-4 filed August
20, 1998).
*4.4 Indenture dated as of June 24, 1998 among Tropical Sportswear
Int'l Corporation, the Subsidiary Guarantors named therein,
and SunTrust Bank, Atlanta, as trustee (filed as Exhibit 4.4
to Tropical Sportswear Int'l Corporation's Form S-4 filed
August 20, 1998).
*4.5 Shareholder Protection Rights Agreement, dated as of November
13, 1998, between Tropical Sportswear Int'l Corporation and
Firstar Bank Milwaukee, N.A. (which includes as Exhibit B
thereto the Form of Right Certificate) (filed as Exhibit 99.1
of Tropical Sportswear Int'l Corporation's Form 8-K dated
November 13, 1998).
10.1 Third Amendment to Loan Agreement with NationsBank N.A. dated
January 18, 2000 (filed herewith).
10.2 Eighth Amendment to Loan and Security Agreement with Fleet
Capital Corporation dated January 19, 2000 (filed herewith).
27.1 Financial Data Schedule (filed herewith).
* Incorporated by reference.
EXHIBIT 10.1
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered
into this 18th day of January, 2000, by and between TROPICAL SPORTSWEAR INT'L
CORPORATION, a Florida corporation ("Borrower"), in favor of BANK OF AMERICA,
N.A. d/b/a NATIONSBANK, N.A., a national banking association and successor to
NationsBank, N.A. ("Lender")
Recitals:
Borrower and Lender, are parties to a certain Loan Agreement dated May 28, 1999,
as amended by that certain First Amendment to Loan Agreement dated July 19, 1999
and Second Amendment to Loan Agreement dated November 12, 1999 (as at any time
amended, the "Loan Agreement"), pursuant to which Lender has made a certain Loan
to Borrower.
Borrower has requested that Lender amend the Consolidated Funded
Debt/Consolidated EBITDA Ratio covenant in section 4.12.2 and the Consolidated
Tangible Net Worth covenant in section 4.12.4 of the Loan Agreement.
Lender is willing to amend the Loan Agreement on the terms and conditions as
hereinafter set forth.
1. Definitions
All capitalized terms used in this Amendment, unless otherwise defined
herein, shall have the meaning ascribed to such terms in the Loan
Agreement.
2. Amendment to Loan Agreement
The Loan Agreement is hereby amended as follows:
By deleting Sections 4.12.2 and 4.12.4 of the Loan
Agreement in their entirety and by substituting the
following new Section 4.12.2 and Section 4.12.4 in lieu
thereof:
4.12.2 Consolidated Funded Debt/Consolidated Funded EBITDA Ratio.
Maintain, as of the end of each Fiscal Quarter, a Consolidated Funded
Debt/Consolidated EBITDA Ratio of not more than the ratio shown below
for the applicable period corresponding thereto:
Period Amount
------- --------
October 3, 1998 through October 2, 1999 4.50 to 1
January 3, 1999 through January 1, 2000 4.50 to 1
April 4, 1999 through April 1, 2000 5.00 to 1
July 4, 1999 through July 1, 2000 4.75 to 1
October 3, 1999 through September 30, 2000 4.25 to 1
Each Fiscal Quarter after September 30, 2000
(based upon the immediately preceding
4 Fiscal Quarters) 4.00 to 1
4.12.4 Consolidated Tangible Net Worth. Until the Credit Facility
Commitment Termination Date, maintain, as of the end of each Fiscal
Quarter, Consolidated Tangible Net Worth of not less than the amount
shown below for the period corresponding thereto:
Period Amount
-------- --------
Fiscal Quarter ending January 1, 2000 $101,500,000
Each Fiscal Quarter thereafter $101,500,000
plus $2,500,000 for each
additional Fiscal Quarter
after January 1, 2000.
3. Acknowledgements and Stipulations
Borrower acknowledges and stipulates that the Loan Agreement and the
other Loan Documents executed by such Borrower are legal, valid and
binding obligations of such Borrower that are enforceable against such
Borrower in accordance with the terms thereof; all of the obligations are
owing and payable without defense, offset or counterclaim (and to the
extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by the Borrower); the security
interests and liens granted by Borrower in favor of Lender are duly
perfected, first priority security interests and liens.
<PAGE>
4. Representations and Warrants
Borrower represents and warrants to Lender, to induce Lender to enter
into this Amendment that no Default or Event of Default exists on the
date hereof; the execution, delivery and performance of this Amendment
has been duly authorized by all requisite corporate action of the part of
such Borrower and this Amendment has been duly executed and delivered by
such Borrower; and all of the representations and warranties made by
Borrowers in the Loan Agreement are true and correct on and as of the
date hereof, except to the extent any representation or warranty
specifically relates to an earlier date.
5. Expenses of Lender
Borrower agrees to pay, on demand all costs and expenses incurred by
Lender in connection with the preparation, negotiation and execution of
this Amendment and any other Loan Documents executed pursuant hereto and
any and all amendments, modifications, and supplements thereto,
including, without limitation, the reasonable costs and fees of Lender's
legal counsel and any taxes or expenses associated with or incurred in
connection with any instrument or agreement referred to herein or
contemplated hereby.
6. Effectiveness Governing Law
This Amendment shall be effective upon acceptance by Lender in Tampa,
Florida (notice of which acceptance is hereby waived), whereupon the same
shall be governed by and construed in accordance with the internal laws
of the State of Florida.
7. Successors and Assigns
This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
8. No Novation, etc.
Except as otherwise expressly provided in this Amendment, nothing herein
shall be deemed to amend or modify any provision of the Loan Agreement or
any of the Other Loan Documents, each of which shall remain in full force
and effect. This Amendment is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
9. Counterparts: Telecopied Signatures
This Amendment may be executed in any number of counterparts and by
different parties to this Agreement on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an
original signature hereto.
10. Further Assurances
Borrower agrees to take such further actions as Lender shall reasonably
request from time to time in connection herewith to evidence or give
effect to the amendments set forth herein or any of the transactions
contemplated hereby.
11. Section Titles
Section titles and references used in this Amendment shall be without
substantive meaning or content of any kind whatsoever and are not a part
of the agreements among the parties hereto.
12. Release of Claims
To induce Lender to enter into this Amendment, Borrower hereby releases,
acquits and forever discharges Lender, and all officers, directors,
agents employees, successors and assigns of Lender, from any and all
liabilities, claims, demands, actions or causes or actions of any kind or
nature (if there by any), whether absolute or contingent, disputed or
undisputed, at law or in equity, or known or unknown, that such Borrower
now has or ever had against Lender arising under or in connection with
any of the Loan Documents or otherwise.
13. Waiver of Jury Trial
To the fullest extent permitted by applicable law, the parties hereto
each hereby waives the right to trial by jury in any action, suit,
counterclaim, or proceeding arising out of or related to this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal and delivered by their respective duly authorized officers
on the date first written above.
<PAGE>
BORROWER:
TROPICAL SPORTSWEAR INT'L CORPORATION
A Florida Corporation
By: /s/ N. Larry McPherson Attest: /s/ Regina M. Ifland
N. Larry McPherson Printed Name: Regina Ifland
Executive Vice President
CONSENT OF GUARANTORS: The undersigned Guarantors do hereby consent to this
Amendment:
APPAREL NETWORK CORPORATION, a
Florida Corporation
By: /s/ N. Larry McPherson Attest: /s/ Regina M. Ifland
N. Larry McPherson Printed Name: Regina Ifland
Executive Vice President
TROPICAL SPORTSWEAR COMPANY, INC.,
a Delaware corporation
By: /s/ N. Larry McPherson Attest: /s/ Regina M. Ifland
N. Larry McPherson Printed Name: Regina Ifland
Executive Vice President
SAVANE INTERNATIONAL CORP., a
Texas corporation
By: /s/ N. Larry McPherson Attest: /s/ Regina M. Ifland
N. Larry McPherson Printed Name: Regina Ifland
Executive Vice President
LENDER:
BANK OF AMERICA, N.A. d/b/a NATIONSBANK, N.A., a national banking
association
By: /s/ Richard M. Bartholomae Attest: /s/ Veronica Rohm
Richard M. Bartholomae Printed Name: Veronica Rohm
Vice President
Exhibit 10.2
EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS EIGHTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into this 19th day of January, 2000, by and among TROPICAL
SPORSTWEAR INT'L CORPORATION, a Florida corporation ("Tropical"), TROPICAL
SPORTSWEAR COMPANY, INC., a Delaware corporation ("TSCI"), SAVANE INTERNATIONAL
CORP., a Texas corporation (formerly known as Farah Incorporated) ("Savane"),
and APPAREL NETWORK CORPORATION, a Florida corporation ("Apparel") (Tropical,
TSCI, Savane and Apparel collectively referred to hereinafter as "Borrowers" and
individually as a "Borrower") each with its chief executive office and principal
place of business at 4902 West Waters Avenue, Tampa, Florida 33634-1302; the
various financial institutions listed on the signature pages hereof and their
respective successors and permitted assigns which become "Lenders" as provided
in the Loan Agreement (as defined below); and FLEET CAPITAL CORPORATION, a Rhode
Island corporation, in its capacity as collateral and administrative agent for
the Lenders (together with its successors in such capacity, "Agent") with an
office at 300 Galleria Parkway, N.W., Suite 800, Atlanta, Georgia 30339.
Recitals:
Borrowers, Agent and Lenders, are parties to a certain Loan and
Security Agreement dated June 10, 1998, as amended by that certain First
Amendment to Loan and Security Agreement dated July 9, 1998, that certain Second
Amendment to Loan and Security Agreement dated August 27, 1998, that certain
Third Amendment to Loan and Security Agreement dated December 31, 1998, that
certain Fourth Amendment to Loan and Security Agreement dated May 21, 1999, that
certain Fifth Amendment to Loan and Security Agreement dated July 16, 1999, that
certain Sixth Amendment to Loan and Security Agreement dated October 28, 1999,
and that certain Seventh Amendment to Loan and Security Agreement dated November
12, 1999 (as at any time amended, the "Loan Agreement"), pursuant to which
Lenders have made certain revolving credit loans and letter of credit
accommodations to Borrowers.
Borrowers have requested that Agent and Lenders amend the terms of the
Loan Agreement to modify the Tangible Net Worth covenant and Funded Debt to
EBITDA covenant. Agent and Lenders are willing to amend the Loan Agreement on
the terms and conditions as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions. All capitalized terms used in this
Amendment, unless otherwise defined herein, shall have the meaning ascribed to
such terms in the Loan Agreement.
2. Amendment to Loan Agreement. The Loan Agreement is
hereby amended as follows:
(a) By deleting Section 10.3.1 of the Loan Agreement
and by substituting the following new Section 10.3.1 in lieu thereof:
10.3.1. Consolidated Tangible Net Worth.
Maintain, as of the end of each Fiscal Quarter, Consolidated
Tangible Net Worth of not less than the amount shown below for
the period corresponding thereto:
Period Amount
---------- --------
Fiscal Quarter ending January 1, 2000 $101,500,000
Each Fiscal Quarter thereafter $101,500,000 plus
$2,500,000 for each
additional Fiscal
Quarter after January
1, 2000
<PAGE>
(b) By deleting Section 10.3.4 of the Loan Agreement and
by substituting the following new Section 10.3.4 in lieu thereof:
10.3.4. Consolidated Funded
Debt/Consolidated EBITDA. Maintain, as of the end of each
Fiscal Quarter, a ratio of Consolidated Funded Debt
/Consolidated EBITDA of not more than the ratio shown below
for the applicable period corresponding thereto:
Period Ratio
---------- ---------
Four Fiscal Quarters ending January 1, 2000 4.50 to 1.00
Four Fiscal Quarters ending April 1, 2000 5.00 to 1.00
Four Fiscal Quarters ending July 1, 2000 4.75 to 1.00
Four Fiscal Quarters ending
September 30, 2000 4.25 to 1.00
Each Fiscal Quarter after September 30, 2000 4.00 to 1.00
based upon the immediately preceding 4
Fiscal Quarters
3. Acknowledgments and Stipulations. Each Borrower acknowledges and
stipulates that the Loan Agreement and the other Loan Documents executed by such
Borrower are legal, valid and binding obligations of such Borrower that are
enforceable against such Borrower in accordance with the terms thereof; all of
the Obligations are owing and payable without defense, offset or counterclaim
(and to the extent there exists any such defense, offset or counterclaim on the
date hereof, the same is hereby waived by each Borrower); the security interests
and liens granted by each Borrower in favor of Agent are duly perfected, first
priority security interests and liens.
4. Representations and Warranties. Each Borrower represents and
warrants to Agent and Lenders, to induce Agent and Lenders to enter into this
Amendment, that no Default or Event of Default exists on the date hereof; the
execution, delivery and performance of this Amendment have been duly
authorized by all requisite corporate action on the part of such Borrower and
this Amendment has been duly executed and delivered by such Borrowers;
and all of the representations and warranties made by Borrowers in the Loan
Agreement are true and correct on and as of the date hereof, except to the
extent any representation or warranty specifically relates to an earlier date.
5. Amendment Fee; Expenses of Agent. In consideration of Agent's and
Lenders' willingness to enter into this agreement, Borrowers, jointly and
severally agree to pay Agent, for the pro-rata benefit of the Lenders, an
amendment fee in the amount of $35,000 on the date hereof. Borrowers jointly and
severally agree to pay, on demand, all costs and expenses incurred by Agent in
connection with the preparation, negotiation and execution of this Amendment and
any other Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including, without limitation, the
reasonable costs and fees of Agent's legal counsel and any taxes or expenses
associated with or incurred in connection with any instrument or agreement
referred to herein or contemplated hereby.
6. Effectiveness; Governing Law. This Amendment shall be effective upon
acceptance by Agent and Lenders in Atlanta, Georgia (notice of which acceptance
is hereby waived), whereupon the same shall be governed by and construed in
accordance with the internal laws of the State of Georgia.
7. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
8. No Novation, etc.. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement or any of the other Loan Documents, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.
9. Counterparts; Telecopied Signatures. This Amendment may be executed
in any number of counterparts and by different parties to this Agreement on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.
10. Further Assurances. Each Borrower agrees to take such further
actions as Agent and Lenders shall reasonably request from time to time in
connection herewith to evidence or give effect to the amendments set forth
herein or any of the transactions contemplated hereby.
<PAGE>
11. Section Titles. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto.
12. Release of Claims. To induce Agent and Lenders to enter into this
Amendment, each Borrower hereby release, acquits and forever discharges Agent
and Lenders, and all officers, directors, agents, employees, successors and
assigns of Agent and Lenders, from any and all liabilities, claims, demands,
actions or causes or actions of any kind or nature (if there be any), whether
absolute or contingent, disputed or undisputed, at law or in equity, or known or
unknown, that such Borrower now has or ever had against Agent and Lenders
arising under or in connection with any of the Loan Documents or otherwise.
13. Waiver of Jury Trial. To the fullest extent permitted by applicable
law, the parties hereto each hereby waives the right to trial by jury in any
action, suit, counterclaim or proceeding arising out of or related to this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
BORROWERS:
ATTEST: TROPICAL SPORTSWEAR INT'L CORPORATION
/s/ Regina M. Ifland By: /s/ N. Larry McPherson
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President
ATTEST: TROPICAL SPORTSWEAR COMPANY, INC.
/s/ Regina M. Ifland By: /s/ N. Larry McPherson
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President
ATTEST: SAVANE INTERNATIONAL CORP.
(f/k/a Farah Incorporated)
/s/ Regina M. Ifland By: /s/ N. Larry McPherson
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President
[Signatures continued on the following page]
<PAGE>
ATTEST: APPAREL NETWORK CORPORATION
/s/ Regina M. Ifland By: /s/ N. Larry McPherson
Assistant Secretary
[CORPORATE SEAL] Title: Executive Vice President
LENDERS:
FLEET CAPITAL CORPORATION
By: /s/ Elizabeth L. Waller
Title: Senior Vice President
BANC OF AMERICA COMMERCIAL CORPORATION
By: /s/ Andrea G. Jackson
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ John T. Trainor
Title: Vice President
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /s/ Pamela D. Petrick
Title: Vice President
AGENT:
FLEET CAPITAL CORPORATION,
as Agent
By: /s/ Elizabeth L. Waller
Title: Senior Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED APRIL 1, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-03-1999
<PERIOD-END> APR-01-2000
<CASH> 1,484
<SECURITIES> 0
<RECEIVABLES> 94,433
<ALLOWANCES> 3,181
<INVENTORY> 75,802
<CURRENT-ASSETS> 188,555
<PP&E> 44,072
<DEPRECIATION> 0
<TOTAL-ASSETS> 302,745
<CURRENT-LIABILITIES> 65,564
<BONDS> 164,679
0
0
<COMMON> 76
<OTHER-SE> 66,666
<TOTAL-LIABILITY-AND-EQUITY> 302,745
<SALES> 225,876
<TOTAL-REVENUES> 225,876
<CGS> 159,141
<TOTAL-COSTS> 159,141
<OTHER-EXPENSES> 44,463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,588
<INCOME-PRETAX> 12,751
<INCOME-TAX> 5,176
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,575
<EPS-BASIC> 0.99
<EPS-DILUTED> 0.99
</TABLE>
