UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 25, 1995
-----------------
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: 1-8509
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NANTUCKET INDUSTRIES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-0962699
-------- ----------
(State of other jurisdiction of (IRS Employer Identification
of incorporation or organization No.)
105 Madison Avenue, New York, New York 10016
-------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(212)889-5656
-------------
(Registrant's telephone number, including area code)
_________________________________________________________________
(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 twelve months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past ninety
days. X YES NO
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant had filed all
documents and reports required to be filed by Sections 12,13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. YES NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. As of
December 22, 1995, the Registrant had outstanding 2,988,796 shares of
common stock.
<PAGE>
NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------------
QUARTERLY REPORT
----------------
QUARTER ENDED NOVEMBER 25, 1995
-------------------------------
I N D E X
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PAGE
----
Part I.- FINANCIAL INFORMATION
----------------------
Consolidated balance sheets 3
Consolidated statements of operations 4
Consolidated statements of cash flows 5
Notes to consolidated financial statements 6 - 9
Management's discussion and analysis of
financial condition and results of operations 10 - 12
Part II.- OTHER INFORMATION 13
-----------------
Signature 14
2
<PAGE>
<TABLE><CAPTION>
Nantucket Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
November 25, February 25,
1995 1995
---------------- -----------------
(unaudited) (1)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $25,778 $32,049
Accounts receivable, less allowance for
doubtful accounts of $204,000 and $194,000,
respectively 6,986,247 6,472,148
Inventories (Note 2) 11,422,194 10,984,196
Other current assets 466,094 760,054
------------- -------------
Total current assets 18,900,313 18,248,447
PROPERTY, PLANT AND EQUIPMENT - NET 3,570,763 3,766,871
OTHER ASSETS,NET 70,879 168,194
------------- -------------
$22,541,955 $22,183,512
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $1,155,000 $975,000
Accounts payable 1,581,154 2,405,989
Accrued salaries and employee benefits 360,015 811,882
Accrued unusual charge (Note 5) 465,000 465,000
Accrued expenses and other liabilities 376,619 358,267
Accrued royalties 319,662 399,546
Income taxes payable 45,194 2,640
------------- -------------
Total current liabilities 4,302,644 5,418,324
LONG-TERM DEBT 11,152,295 9,941,799
ACCRUED UNUSUAL CHARGE (Note 5) 789,114 1,058,330
NOTE PAYABLE TO RELATED PARTY (Note 5) 300,000
------------- -------------
16,244,053 16,718,453
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value; 500,000 shares authorized,
of which 5,000 shares have been designated as non-voting
convertible and are issued and outstanding 500 500
Common stock, $.10 par value; authorized
6,000,000 shares; issued 2,991,848 299,185 299,185
Additional paid-in capital 11,576,898 11,576,898
Accumulated deficit (5,538,232) (6,340,135)
-------------- --------------
6,338,351 5,536,448
Less 3,052 shares (10,552 at February 25, 1995) shares of
common stock held in treasury, at cost 40,449 71,389
------------- -------------
6,297,902 5,465,059
------------- -------------
$22,541,955 $22,183,512
============= =============
</TABLE>
(1) Derived from audited financial statements
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE><CAPTION>
Nantucket Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Thirty-nine Weeks Ended Thirteen Weeks Ended
------------------------------ ---------------------------
November 25, November 26, November 25, November 26,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $27,701,932 $28,713,098 $9,848,694 $10,995,726
Cost of sales 20,455,527 22,529,333 7,333,568 8,621,446
----------- ----------- ------------ -----------
Gross profit 7,246,405 6,183,765 2,515,126 2,374,280
Selling, general and
administrative expenses 5,746,473 5,764,594 1,974,761 2,042,738
Unusual charge (credit) (Note 5) (300,000) 1,252,400 (300,000)
------------- ------------ ------------ ----------
Operating profit (loss) 1,799,932 (833,229) 840,365 331,542
Interest expense 998,029 887,846 342,535 307,098
Net income (loss) 801,903 (1,721,075) 497,830 24,444
============ ============= ============ ==========
Net income (loss) per share $0.27 ($0.65) $0.17 $0.01
============ ============= ============ ==========
Weighted average common shares 2,983,576 2,663,103 2,986,159 2,978,796
outstanding ============ ============ =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Nantucket Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE><CAPTION>
Thirty-nine Weeks Ended
---------------------------------
November 25, November 26,
1995 1994
-------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $801,903 ($1,721,075)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Depreciation and amortization 271,908 238,676
Provision for doubtful accounts 90,000 60,000
Unusual charge (300,000) 1,252,400
Treasury stock issued in compliance with credit 30,190 -
agreement
Provision for obsolete and slow moving inventory 180,000 180,000
Decrease (increase) in assets
Accounts receivable (604,099) (3,512,180)
Refundable income taxes - 527,237
Inventories (617,998) (1,730,123)
Other current assets 293,960 37,032
(Decrease) increase in liabilities
Accounts payable (824,835) (1,226,856)
Accrued expenses and other liabilities (513,399) (1,260,963)
Income taxes payable 42,554 (7,544)
Accrued unusual charge (269,216) (627,136)
--------------- --------------
Net cash used in operating activities (1,419,032) (7,790,532)
--------------- --------------
Cash flows from investing activities
Additions to property, plant and equipment (75,800) (350,368)
Decrease in other assets 97,315 4,409
--------------- --------------
Net cash provided by (used in) investing 21,515 (345,959)
activities --------------- --------------
Cash flows from financing activities
Payments of previous line of credit agreement - (5,090,294)
Payments of long-term debt and capital lease obligations - (500,000)
Issuance of convertible preferred stock - 1,000,000
Net proceeds from sale of treasury stock 750 2,901,351
Borrowings under line of credit agreement, net 1,390,496 9,259,553
--------------- --------------
Net cash provided by financing activities 1,391,246 7,570,610
--------------- --------------
NET DECREASE IN CASH ($6,271) ($565,881)
Cash at beginning of period 32,049 595,918
--------------- --------------
Cash at end of period $25,778 $30,037
=============== ==============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the period:
Interest $920,411 $705,906
=============== ==============
Income taxes - $60,577
=============== ==============
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
NANTUCKET INDUSTRIES, INC.
--------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994
---------------------------------------------------------------
(unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of November 25, 1995 and the
consolidated statements of operations for the thirty-nine and thirteen
week periods and statements of cash flows for the thirty-nine weeks
ended November 25, 1995 and November 26, 1994 have been prepared by
the Company without audit. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) necessary
for a fair presentation of the financial position of the Company and
its subsidiaries at November 25, 1995 and the results of their
operations for the thirty-nine and thirteen week periods and cash
flows for the thirty-nine weeks ended November 25, 1995 and November
26, 1994 have been made on a consistent basis.
The consolidated balance sheet as of November 26, 1994 and the
consolidated statements of operations for the thirty-nine and thirteen
week periods and statements of cash flows for the thirty-nine weeks
ended November 26, 1994 have been restated and an amended Form 10-Q
filed with regards to the unusual charge discussed in Note 5 Unusual
Charge.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the consolidated financial statements and notes thereto included
in the Company's 1995 Annual Report on Form 10-K.
The results of operations for the periods presented are not
necessarily indicative of the operating results for the full year.
2. INVENTORIES
Inventories are summarized as follows:
November 25, February 25,
1995 1995
------------- --------------
Raw materials $ 1,564,510 $ 1,960,413
Work in process 6,984,183 5,594,387
Finished goods 2,873,501 3,429,396
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$ 11,422,194 $ 10,984,196
------------- ------------
6
<PAGE>
NANTUCKET INDUSTRIES, INC.
--------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994
---------------------------------------------------------------
(continued)
(unaudited)
3. INCOME TAXES
At November 25, 1995 the Company had a net deferred tax asset in
excess of $4,600,000 which is fully reserved until it can be utilized
to offset deferred tax liabilities or realized against taxable income.
In addition, the Company had a net operating loss carryforward for
book and tax purposes of approximately $12,000,000 and $9,000,000
respectively. Accordingly, no provision for income taxes has been
reflected in the accompanying financial statements.
4. STOCKHOLDERS' EQUITY
On March 22, 1994, the Company sold to its Management Group 5,000
shares of non-voting convertible preferred stock for $1,000,000.
These shares are convertible into 200,000 shares of common stock at
the rate of $5.00 per share. These shares provide for cumulative
dividends at a floating rate equal to the prime rate and approximate
$138,000 at November, 1995. Such dividends are convertible into
common stock at the rate of $5.00 per share. These preferred shares
are redeemable, at the option of the Company, on or after February 28,
1999 and have a liquidation preference of $200 per share.
On August 22, 1994, the Company sold 490,000 shares of its common
treasury stock to GUESS?, Inc. and certain of its affiliates at $6.00
per share. The treasury stock issued had an average cost of $6.52 per
share. Accordingly the difference between the net proceeds,
approximating $2,900,000 and the treasury share's cost of $3,196,000
was applied to the Company's Retained Earnings.
In connection with the Company's refinancing on March 22, 1994,
the Company entered into a $2,000,000 Term Loan Agreement with
Chemical Bank. Mandatory prepayments of $1,000,000 were made in the
prior fiscal year and, pursuant to the agreement, were applied to the
scheduled payments which were due December 15, 1994 and June 15, 1995.
Pursuant to the agreement, the Company issued to Chemical Bank 10,000
treasury common shares, 7,500 in the current fiscal year and 2,500 at
the end of the prior fiscal year, related to mandatory prepayments
which were not made. As described in Note 6, this agreement was
amended on December 15, 1995.
7
<PAGE>
NANTUCKET INDUSTRIES, INC.
--------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994
---------------------------------------------------------------
(continued)
(unaudited)
5. UNUSUAL CHARGE
In November, 1992, the Company acquired the Puerto Rico facility,
Phoenix Associates, Inc., pursuant to a stock purchase agreement. A
portion of the purchase price was debt payable to a related party, the
former owners of Phoenix, of which $300,000 was due February 2,
1998. In April, 1993, the Company discovered an inventory variance of
$1,700,000 principally attributable to unrecorded manufacturing and
material cost variances at the Puerto Rico facility incurred prior to
the Company's acquisition of this facility. In connection with the
acquisition of the Puerto Rico facility, the Company initiated an
action against the former owners of that facility as more fully
described in the Company's 1995 Annual Report on Form 10-K.
In the fourth quarter of fiscal 1994, the Company formulated
plans to close the Puerto Rico facility, discontinue a portion of its
women's innerwear business, reduce costs and streamline operations.
The Company provided, in fiscal 1994, for the costs associated with
these matters, including the write-off of unamortized goodwill in the
amount of $1,478,000, as an unusual charge. The closing of the Puerto
Rico facility required additional write-offs, reflected as an unusual
charge of $1,252,400 in the period ended November 26, 1994.
In March, 1994, the Company terminated the employment contracts
of its Chairman and Vice Chairman. In accordance with the underlying
agreement, they will be paid an aggregate of approximately $400,000
per year in severance, as well as certain other benefits, through
February 28, 1999. The present value of these payments, $1,915,000,
was accrued at February 26, 1994. Through November 25, 1995 $654,000
of this accrual has been paid; $391,000 through February, 1995 and
$263,000 in the current fiscal year through November 25, 1995.
In the third quarter of the current fiscal year, the Company
concluded that its counterclaims against the holder of the note
payable from a related party described above are in excess of the
$300,000 due and, in the opinion of legal counsel and management, the
likelihood of any payment of this note is remote. Accordingly the
Company has eliminated this payable and reflected such reduction as an
unusual charge in the accompanying financial statements.
8
<PAGE>
NANTUCKET INDUSTRIES, INC.
--------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994
---------------------------------------------------------------
(continued)
(unaudited)
6. CREDIT AGREEMENT AMENDMENT
Pursuant to the terms of the $2,000,000 Term Loan Agreement with Chemical
Bank, scheduled installments of $500,000 each were due on December 15, 1995
and March 15, 1996. As of December 15, 1995 the Company agreed to an amendment
providing for payments of $100,000 each on December 31, 1995 and January
31, 1996, with the remaining $800,000 to be paid in 15 equal installments
commencing March 31, 1996. As of November 25, 1995, the accompanying
financial statements reflect $320,000 as the non current portion of this
loan.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation
- --------------------
Sales
Net sales for the nine months ended November 25, 1995 decreased 3.5% from
prior year levels to $27,702,000. Most of this decline reflects the
elimination of unprofitable product lines. The sales decline in the
Company's core men's fashion underwear products for the nine months to date
was 2.6%.
A soft retail environment contributed to an overall 10% decrease in third
quarter sales levels, generally in the core mens' fashion underwear
products. Increases in the GUESS? intimate apperal products were offset by
decreases resulting from the elimination of unprofitable product lines.
The year to date and third quarter also reflect the impact of:
Increase (Decrease)
9 Months 3rd Quarter
---------- -----------
Elimination of unprofitable product lines ($1,713,000) ($298,000)
GUESS? product line increased sales $1,326,000 $186,000
Third quarter and nine months net sales were impacted favorably by the
introduction of the JC Penney Arizona line.
Gross Margin
Gross profit margins continued to improve from prior year levels as
follows:
9 Months 3rd Quarter
-------- -----------
Current fiscal year 26.2% 25.5%
Prior fiscal year 21.5% 21.6%
This is a result of the improved product mix from the increased sales of
the higher margin GUESS?
Innerwear line, the elimination of the unprofitable products, improved plant
efficiencies and lower cost product sources.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Selling, general and administrative expenses
Selling, general and administrative expenses for the third quarter declined
3% to $1,975,000 from the prior year level. For the nine months, there was
a slight decrease of $18,000. These changes are generally due to the
variable selling costs related to the changes in net sales. Selling,
general and administrative expenses for the third quarter of the current
fiscal year include a charge of $43,000 related to a minor franchise tax
adjustments of prior years. The nine months in the current fiscal year
have been reduced by a $102,000 recovery of an insurance claim which was
expensed in the fourth quarter of the prior fiscal year.
Unusual charge
Prior year results reflect an unusual charge of $1,252,400 related to
additional costs incurred with the shutdown of the Puerto Rico facility.
In November, 1992, the Company acquired the Puerto Rico facility, Phoenix
Associates, Inc., pursuant to a stock purchase agreement. A portion of
the purchase price was debt payable to a related party, the former owners
of Phoenix, of which $300,000 was due February 2, 1998. In April, 1993,
the Company discovered an inventory variance of $1,700,000 principally
attributable to unrecorded manufacturing and material cost variances at
the Puerto Rico facility incurred prior to the Company's acquisition of
this facility. In connection with the acquisition of the Puerto Rico
facility, the Company initiated an action against the former owners of that
facility as more fully described in the Company's 1995 Annual Report on
Form 10-K. In the third quarter of the current fiscal year, the Company
concluded that its counterclaims against the holder of the note payable
from a related party incurred in connection with the acquisition of the
Puerto Rico facility in November, 1992 are in excess of the $300,000 due.
In the opinion of legal counsel and management, the likelihood of any
payment of this note is remote. Accordingly the Company has eliminated this
payable and reflected such $300,000 reduction as an unusual credit in the
accompanying financial statements.
Interest expense
The increase in interest expense of $110,000 for the nine months is
primarily due to the higher prime rates in effect during fiscal year 1996.
The $36,000 increase in the third fiscal quarter reflects an increase in
levels of financing.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Liquidity and Capital Resources
- -------------------------------
In March, 1994 the Company was successful in refinancing its credit
agreements with (i) a three year $15,000,000 revolving credit facility,
including a $3,000,000 letter of credit facility, with Congress Financial,
(ii) a $2,000,000 Term Loan Agreement with Chemical Bank and (iii) an
additional $1,500,000 Term Loan with Congress replacing the Industrial
Revenue Bond financing of the Cartersville, Georgia manufacturing plant.
Additionally, the $1,000,000 investment in the Company by the Management
Group and the sale of 490,000 shares of common treasury stock to GUESS?,
Inc. and certain of its affiliates increased the Company's liquidity and
capital resources. The net proceeds of $2.9 million from the sales of
treasury shares was used to prepay $500,000 of bank debt and the balance
provided additional working capital resources.
Under the terms of the $2,000,000 Term Loan Agreement with Chemical Bank,
scheduled installments of $500,000 each were due on December 15, 1995 and
March 15, 1996. As of December 15, 1995 the Company agreed to an amendment
providing for payments of $100,000 each on December 31, 1995 and January
31, 1996, with the remaining $800,000 to be paid in 15 equal installments
commencing March 31, 1996. As of November 25, 1995, the accompanying
financial statements reflect $320,000 as the non current portion of this
loan.
The Company believes that the credit facility provides adequate financing
flexibility to fund its operations.
Working capital increased $1,768,000 from year-end levels to $14,598,000.
This increase reflects an increase in inventory levels caused by the lower
sales levels experienced in the overall retail environment, increase in
accounts receivables due to seasonal sales, and a $1.3 million reduction of
accounts payable and accrued liabilities. In addition, working capital was
increased by the $320,000 non current portion of the Chemical loan which
was previously classified as current.
The Company believes that the moderate rate of inflation over the past few
years has not had significant impact on sales or profitability.
12
<PAGE>
PART II
--------
Item 1. Legal Proceedings
- --------------------------
None
Item 2. Changes in Securities
- ------------------------------
None
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
Item 5. Other Information
- --------------------------
One December 15, 1995 the Company amended its Credit Agreement dated
March 21, 1994 with Chemical Bank. Pursuant to that amendment, the
required payments on the Company's term loan were extended from $500,000
due on each of December 15, 1995 and March 15, 1996 to $100,000 on each of
December 31, 1995 and January 31, 1996 and the $800,000 balance payable in
15 monthly installments commencing March 31, 1996.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(c) Exhibits
10(vv) First Amendment, dated as of December 15, 1995, Filed
to Amended and Restated Credit Agreement dated as of Herewith
March 21, 1994, among Nantucket Industries, Inc. and
subsidiaries and Chemical Bank.
(b) Reports on Form 8-K None
13
<PAGE>
SIGNATURE
---------
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.
NANTUCKET INDUSTRIES, INC.
(Registrant)
By:
s/Ronald S. Hoffman
--------------------
January 8, 1996 Ronald S. Hoffman,
Vice President - Finance
(Chief Accounting Officer)
14
Exhibit 10 (v)(v)
-----------------
FIRST AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
FIRST AMENDMENT, dated as of December 15, 1995 (the "Amendment"), to
---------
the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 21, 1994, among
NANTUCKET INDUSTRIES, INC., a Delaware corporation (the "Company"),
-------
NANTUCKET MILLS, INC., a Delaware corporation ("Nantucket Mills") and
---------------
NANTUCKET MANAGEMENT CORP., a New York corporation ("Nantucket Management,"
--------------------
and together with Nantucket Mills, the "Guarantors"), and CHEMICAL BANK, a
----------
New York banking corporation (the "Bank"):
----
W I T N E S S E T H:
WHEREAS, the Company, the Guarantors and the Bank are parties to
that certain Amended and Restated Credit Agreement, dated as of March 21,
1994 (as the same may be amended, modified or supplemented from time to
time, the "Credit Agreement"); and
----------------
WHEREAS, the Company and the Guarantors have requested that from
and after the Effective Date (as hereinafter defined) of this Amendment,
the Credit Agreement be amended subject to and upon the terms and
conditions set forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
As used herein, all terms that are defined in the Credit
Agreement shall have the same meanings herein.
Section 2.03 of the Credit Agreement is hereby amended by
deleting the amount "two (2%) percent" set forth therein and inserting in
lieu thereof the amount "three (3%) percent".
Section 2.04(a) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(a) Intentionally Omitted."
Section 2.04 of the Credit Agreement is hereby further
amended by deleting the amount "four (4%) percent" set forth in clauses
(b), (c) and (d) thereof and inserting each time in lieu thereof the
amount "five (5%) percent".
Section 2.04(b) of the Credit Agreement is hereby further
amended by deleting the parenthetical phrase "(other than the failure to
make a Mandatory Prepayment in whole or in part)" set forth therein and
inserting in lieu thereof the phrase ", including, without limitation, any
prepayment of the Loan required pursuant to Sections 2.06(e), (f), (g) or
(h),"
Section 2.04 of the Credit Agreement is hereby further
amended by inserting the following new clause (e) at the end thereof:
<PAGE>
"(e) In the event that any of the Obligations remain
unpaid and outstanding (i) on June 30, 1996, the
Company shall pay to the Bank, in immediately available
funds, a fee in the amount of $5,000 and (ii) on
December 31, 1996, the Company shall pay to the Bank,
in immediately available funds, a fee in the amount of
$10,000."
The definition of the term "Maturity Date" set forth in
Section 1.01 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"Maturity Date" shall mean May 31, 1997.
-------------
Section 2.05(a) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"Section 2.05. Repayment of Loan. (a) The Loan shall
-----------------
be payable as to principal, unless earlier accelerated
in accordance with the terms hereof, or prepaid
pursuant to Section 2.06, in installments (each a
"Scheduled Payment") payable on the dates and in the
-----------------
amounts set forth below:
Repayment Date Amount
-------------- ------
December 31, 1995 $100,000.00
January 31, 1996 $100,000.00
March 31, 1996 $ 53,333.33
April 30, 1996 $ 53,333.33
May 31, 1996 $ 53,333.33
June 30, 1996 $ 53,333.33
July 31, 1996 $ 53,333.33
August 31, 1996 $ 53,333.33
September 30, 1996 $ 53,333.33
October 31, 1996 $ 53,333.33
November 30, 1996 $ 53,333.33
December 31, 1996 $ 53,333.33
January 31, 1997 $ 53,333.33
February 28, 1997 $ 53,333.33
March 31, 1997 $ 53,333.33
April 30, 1997 $ 53,333.33
May 31, 1997 $ 53,333.38
Section 2.06(c) of the Credit Agreement is hereby amended by
inserting the parenthetical phrase "(other than as required pursuant to
clauses (e), (f), (g) and (h) below)" immediately following the phrase "All
prepayments of the Loan" set forth at the beginning thereof.
Section 2.06 of the Credit Agreement is hereby further
amended by inserting the following new clauses (e), (f), (g), (h) and (i)
at the end thereof:
2
<PAGE>
"(e) Refinancing of Congress Mortgage. Simultaneous
--------------------------------
with the refinancing, if any, of that certain Deed to
Secure Debt, Security Agreement and Assignment of
Leases and Rents, dated June 8, 1994 made by the
Company in favor of Congress (the "Congress Mortgage")
-----------------
encumbering the real property of the Company located in
Cartersville, Georgia, the Company shall prepay the
Loan in an amount equal to 50% of the proceeds of such
refinancing, net of (i) payments made by the Company to
Congress on account of the Term Loan B (as such term is
defined in the Congress Loan Agreement as in effect on
the Closing Date), (ii) non-recoverable costs paid in
connection therewith, including mortgage recording
taxes and (iii) the reasonable fees and expenses
incurred in connection with such refinancing.
(f) Equity Offerings. Upon receipt by the Company or
----------------
any of the Guarantors, the Company shall prepay the
Loan in an amount equal to 50% of the proceeds (net of
underwriting discounts, commissions and other
reasonable fees and expenses incurred in connection
therewith) of any public or private sale, disposition
or other offering of equity securities by the Company
or any of the Guarantors.
(g) Incurrence of Indebtedness. Upon receipt by the
--------------------------
Company or any of the Guarantors, the Company shall
prepay the Loan in an amount equal to (i) 75% of the
proceeds (net of underwriting discounts, commissions
and other reasonable fees and expenses incurred in
connection therewith) of any Subordinated Indebtedness
incurred after the date hereof that requires the
payment of current cash interest, (ii) 50% of the
proceeds (net of underwriting discounts, commissions
and other reasonable fees and expenses incurred in
connection therewith) of any Subordinated Indebtedness
incurred after the date hereof that requires the
accrual of interest or the payment of pay-in-kind
interest and (iii) 100% of the proceeds (net of
underwriting discounts, commissions and other
reasonable fees and expenses incurred in connection
therewith) of any other Indebtedness (including any
replacement or refinancing of Indebtedness under the
Congress Loan Agreement) incurred after the date
hereof, other than Indebtedness permitted pursuant to
Section 7.03(a), including any revolving loans
thereunder, (but not any replacement or refinancing of
such Indebtedness), Section 7.03(d) or Section 7.03(i),
or Indebtedness incurred in connection with the
refinancing of the Congress Mortgage.
(h) Excess Availability. On the last date of each
-------------------
fiscal quarter of the Company, commencing with the
fiscal quarter of the Company ending on or about
February 23, 1996, the Company shall (x) prepay the
Loan in an amount equal to 50% of the amount by which
the Company's Excess Availability (as such term is
defined in the Congress Loan Agreement as in effect on
the Closing Date but without giving effect to any
proceeds received by the Company in connection with any
of the transactions described in Section 2.06(e), (f)
and (g)) exceeds
3
<PAGE>
$500,000 for the immediately preceding fiscal quarter of the
Company as of the last date of such fiscal quarter and (y)
deliver to the Bank a certificate of the Chief Financial Officer
of the Company setting forth in detail reasonably satisfactory to
the Bank a calculation of such Excess Availability as of the last
date of such fiscal quarter.
(i) Application of Prepayments; Interest. All
------------------------------------
prepayments of the Loan required pursuant to clauses
(e), (f), (g) and (h) above shall be applied in the
inverse order of maturity and shall be accompanied by
accrued interest on the principal amount being prepaid
to the date of prepayment."
Section 7.03(e) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(e) Subordinated Indebtedness upon terms satisfactory to the
Bank and with the prior written consent of the Bank."
This Amendment shall become effective on the date (the
"Effective Date") on which (i) counterparts to this Amendment executed by
--------------
each of the parties hereto shall have been delivered to the Bank, (ii) the
Bank shall have received an amendment fee in the amount of $10,000 and
(iii) the Bank shall have received all outstanding accrued fees and
disbursements, including, without limitation, all outstanding fees and
disbursements of counsel to the Bank.
Except to the extent hereby amended, the Credit Agreement
and each of the Loan Documents remain in full force and effect and are
hereby ratified and affirmed.
The Company agrees that its obligations set forth in Section
10.3 of the Credit Agreement shall extend to the preparation, execution and
delivery of this Amendment, including the reasonable fees and disbursements
of counsel to the Bank.
This Amendment shall be limited precisely as written and
shall not be deemed (a) to be a consent granted pursuant to, or a waiver or
modification of, any other term or condition of the Credit Agreement or any
of the instruments or agreements referred to therein or (b) to prejudice
any right or rights which the Bank may now have or have in the future under
or in connection with the Credit Agreement or any of the instruments or
agreements referred to therein. Whenever the Credit Agreement is referred
to in the Credit Agreement, the Loan Documents or any of the instruments,
agreements or other documents or papers executed or delivered in connection
therewith, such reference shall be deemed to mean the Credit Agreement as
modified by this Amendment.
This Amendment may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which taken together shall constitute but one and the same instrument.
This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the day and the year first above written.
COMPANY: NANTUCKET INDUSTRIES, INC.
By:
Title:
GUARANTORS: NANTUCKET MILLS, INC.
By:
Title:
NANTUCKET MANAGEMENT CORP.
By:
Title:
BANK: CHEMICAL BANK
By:
Title:
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS INFORMATION EXTRACTED FROM THE STATEMENTS DATED
NOVEMBER 25, 1995 AS FILED IN FORM 10-Q FOR THE QUARTERLY PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-25-1995
<PERIOD-END> NOV-25-1995
<CASH> 25,778
<SECURITIES> 0
<RECEIVABLES> 7,190,247
<ALLOWANCES> 240,000
<INVENTORY> 11,422,194
<CURRENT-ASSETS> 18,900,313
<PP&E> 7,420,855
<DEPRECIATION> 3,850,092
<TOTAL-ASSETS> 22,541,955
<CURRENT-LIABILITIES> 4,302,644
<BONDS> 0
0
500
<COMMON> 299,185
<OTHER-SE> 5,998,217
<TOTAL-LIABILITY-AND-EQUITY> 22,541,955
<SALES> 27,701,932
<TOTAL-REVENUES> 27,701,932
<CGS> 20,455,527
<TOTAL-COSTS> 20,455,527
<OTHER-EXPENSES> 5,446,473
<LOSS-PROVISION> 90,000
<INTEREST-EXPENSE> 998,029
<INCOME-PRETAX> 801,903
<INCOME-TAX> 0
<INCOME-CONTINUING> 801,903
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 801,903
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
