UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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 April 1, 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 0-2433
SALANT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3402444
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1114 Avenue of the Americas, New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)
221-7500
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 that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by section 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 X No
As of May 11, 1995 there were outstanding 14,480,092 shares of
the Common Stock of the registrant.<PAGE>
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Cash Flow
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
April 1, April 2,
1995 1994
<S> <C> <C>
Net sales $ 103,801 $ 89,858
Cost of goods sold 81,334 67,752
Gross profit 22,467 22,106
Selling, general and
administrative expenses (20,400) (18,981)
Royalty income,
net of related expenses 1,430 1,495
Goodwill amortization (641) (549)
Other income 57 520
Income from continuing operations
before interest and taxes 2,913 4,591
Interest expense, net 4,571 3,365
Income/(loss) from continuing
operations before income taxes (1,658) 1,226
Income taxes 41 66
Income/(loss) from continuing
operations (1,699) 1,160
Loss from discontinued operations - (76)
Net income/(loss) $(1,699) $1,084
Earnings/(loss) per share:
Income/(loss) per share from continuing
operations $ (0.11) $ 0.08
Loss per share from
discontinued operations - (0.01)
Net income/(loss) per share $ (0.11) $ 0.07
Weighted average common stock
and common stock equivalents
outstanding 15,008 15,137
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
April 1, April 2,
1995 December 31, 1994
(Unaudited) 1994 (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,907 $ 1,965 $ 4,383
Accounts receivable, net (Note 3) 31,032 36,583 23,419
Inventories (Note 4) 149,240 124,599 111,928
Prepaid expenses and
other current assets 5,472 5,264 3,471
Net assets of discontinued
operations - - 10,677
Total Current Assets 187,651 168,411 153,878
Property, Plant and Equipment,
net 28,351 27,460 26,892
Other Assets 70,806 71,345 67,541
Total Assets $ 286,808 $ 267,216 $ 248,311
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Loans payable (Note 3) $ 44,664 23,906 $ -
Accounts payable 34,459 28,593 24,680
Accrued liabiliies 14,003 18,848 13,431
Net liabilities of discontinued
operations (Note 2) 339 816 -
Current portion of long term
debt (Note 5) - - 3,600
Reserve for business restructuring - - 1,155
Total Current Liabilities 93,465 72,163 42,866
Long Term Debt 109,908 109,908 108,251
Deferred Liabilities 13,475 13,479 16,762
Shareholders' Equity
Common stock 15,242 15,242 15,212
Additional paid-in capital 107,017 107,017 106,976
Deficit (50,025) (48,326) (39,376)
Excess of additional pension
liability over unrecognized
prior service cost (773) (773) (986)
Accumulated foreign currency
translation adjustment 113 120 220
Less - treasury stock, at cost (1,614) (1,614) (1,614)
Total Shareholders' Equity 69,960 71,666 80,432
Total Liabilities and
Shareholders' Equity $ 286,808 $ 267,216 $248,311
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
April 1, April 2,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Income/(loss) from continuing operations $ (1,699) $ 1,084
Adjustments to reconcile income/(loss) from
continuing operations to net cash used
in operating activities:
Depreciation 1,290 1,277
Amortization of intangibles 641 549
Change in operating assets and liabilities:
Accounts receivable 5,551 1,199
Inventories (24,641) (8,343)
Prepaid expenses and other
current assets (208) 692
Other assets (103) 22
Accounts payable 5,866 2,956
Accrued liabilities and reserve for
business restructuring (4,845) (9,279)
Deferred liabilities (4) (4)
Net cash used in operating activities (18,152) (9,847)
Cash Flows from Investing Activities:
Capital expenditures (2,206) (835)
Proceeds from sale of assets 26 40
Net cash used in investing activities (2,180) (795)
Cash Flows from Financing Activities:
Net short-term borrowings 20,758 -
Exercise of stock options (7) 446
Net cash provided by financing activities 20,751 446
Net cash provided by/(used in)
continuing operations 419 (10,196)
Cash used in discontinued operations (477) (177)
Net decrease in cash and
cash equivalents (58) (10,373)
Cash and cash equivalents -
beginning of year 1,965 14,756
Cash and cash equivalents -
end of first quarter $1,907 $4,383
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 7,516 $ 6,436
Income taxes $ 106 $ 50
</TABLE>
See Notes to Condensed Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Thousands of Dollars)
(Unaudited)
Note 1. Basis of Presentation and Consolidation
The accompanying unaudited Condensed Consolidated Financial
Statements include the accounts of Salant Corporation ("Salant")
and subsidiaries. (As used herein, the "Company" includes Salant
and its subsidiaries but excludes Salant's Vera Scarf Division.)
In February 1995, Salant discontinued its Vera Scarf Division.
As further described in Note 2, the Condensed Consolidated
Financial Statements and the Notes thereto treat the Vera Scarf
Division as a discontinued operation, and, consistent with the
financial statements for 1994, the financial results of the
Vera Scarf Division are not included in the presentation of
income/(loss) from continuing operations. In addition, the net
assets and/or net liabilities of the discontinued operations
have been separately classified in the Condensed Consolidated
Balance Sheets.
The results of operations for the three months ended April 1,
1995 and April 2, 1994 are not necessarily indicative of a full
year's operations. In the opinion of management, the
accompanying financial statements include all adjustments which
are necessary to present fairly such financial statements.
Significant intercompany balances and transactions are
eliminated in consolidation.
Certain reclassifications were made to the 1994 unaudited
Condensed Consolidated Financial Statements to conform with the
1995 presentation.
Income/(loss) per share is based on the weighted average number
of common shares (including shares to be issued pursuant to the
Company's plan of reorganization) and common stock equivalents
outstanding, if applicable. Loss per share for the three months
ended April 1, 1995 did not include common stock equivalents, as
their effect would have been anti-dilutive.
Note 2. Discontinued Operations
In February 1995, the Company discontinued the Vera Scarf
Division, which imports and markets women's scarves. The loss
from operations of the Division in the prior year (for the three
months ended April 2, 1994) was $76.
Net sales of the Division were $916 and $1,488 for the three
months ended April 1, 1995 and April 2, 1994, respectively. The
net assets and/or net liabilities of the discontinued operations
have been reclassified on the balance sheets as net assets or
net liabilities of discontinued operations and consist
principally of accounts receivable, inventory and accrued losses
for the phase-out period.
<PAGE>
Note 3. Loans Payable and Factor Advances
The Company has entered into an agreement with a factor, whereby
it sells, without recourse, an interest in a defined pool of
eligible accounts receivable. The credit risk for such accounts
is thereby transferred to the factor. The amounts due from
factor have been offset against advances from the factor in the
accompanying balance sheets. The amounts which have been offset
amounted to $22,006 at April 1, 1995, $9,324 at December 31,
1994, and $24,326 at April 2, 1994.
<TABLE>
<CAPTION>
Note 4. Inventories
April 1, December 31, April 2,
1995 1994 1994
<S> <C> <C> <C>
Finished goods $ 86,955 $ 70,882 $ 71,731
Work-in-process 33,557 28,298 24,667
Raw materials and
supplies 28,728 25,419 15,530
$ 149,240 $ 124,599 $ 111,928
</TABLE>
Note 5. Current Portion of Long Term Debt
In May 1994, the Company purchased and retired $3,600 of its 10
1/2% Senior Secured Notes due December 31, 1998 (the "Secured
Notes") in an open market transaction at a price below the
principal amount thereof. Consequently, the purchased Secured
Notes have been classified as the current portion of long term
debt on the prior year's financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of the consolidated
results of operations and financial condition should be read in
conjunction with the accompanying unaudited Condensed
Consolidated Financial Statements and related Notes to provide
additional information concerning the financial activities and
condition of Salant Corporation ("Salant") and its subsidiary
companies (collectively, the "Company").
Results of Operations
The following discussion compares the operating results of the
Company for the three months ended April 1, 1995 with the
operating results for the three months ended April 2, 1994. In
February 1995, the Company discontinued its Vera Scarf Division.
The financial statements included in this report treat the Vera
Scarf Division as a discontinued operation, the effect of which
is to exclude the results of operations of the Vera Scarf
Division from the Company's results from continuing operations
for each fiscal period presented. See "Notes to the Condensed
Consolidated Financial Statements --- Note 2."
<TABLE>
<CAPTION>
(dollars in millions)
Three months ended
April 1, April 2,
1995 1994
<S> <C> <C>
Net sales $103.8 $89.9
Gross profit $22.5 $22.1
Gross margin percentage 21.6% 24.6%
EBITDA (a) $4.8 $6.4
</TABLE>
(a) Earnings before interest, taxes, depreciation and
amortization.
For the first quarter of 1995, net sales amounted to $103.8
million, a 15.5% increase over net sales of $89.9 million in the
comparable 1994 quarter. The increase was due to significant
sales increases in men's sportswear, jeans and slacks achieved
by the Company's Perry Ellis, Texas Apparel and Thomson
divisions as well as the JJ. Farmer Division which was acquired
in June 1994. These increases were partially offset by a
reduction in sales of women's junior denim products.
Notwithstanding the popularity of casualwear, which contributed
to a slight decrease in the overall dress shirt market in 1994,
the Company's dress shirt sales increased in the first quarter
of 1995, as compared to the first quarter of 1994. In June
1994, the Company signed a new license agreement for dress
shirts to be produced and sold under the GANT label.
Net sales by category and percent of total net sales for the
first quarter of 1995 as compared to the first quarter of 1994
was:
<TABLE>
<CAPTION>
(dollars in millions)
Three months ended
April 1, 1995 April 2, 1994
<S> <C> <C> <C> <C>
Dress Shirts and
Accessories (a) $ 42.0 40.4% $ 40.3 44.8%
Sportswear (b) 27.4 26.4% 18.0 20.1%
Bottoms (c) 24.3 23.5% 19.7 21.9%
Other (d) 10.1 9.7% 11.9 13.2%
Total $103.8 100% $ 89.9 100%
</TABLE>
(a) Includes the Fashion Shirt Group, the dress shirt portions
of the Manhattan Apparel Group and Perry Ellis Division and the
Salant Accessories Division.
(b) Includes the Sportswear portions of the Perry Ellis Division
and Manhattan Apparel Group and the JJ. Farmer Division.
(c) Includes the Thomson and Texas Apparel Divisions.
(d) Includes the Children's Apparel Group, Made in the Shade
Division and the Retail Stores Division.
Gross profit as a percentage of net sales decreased to 21.6%
($22.5 million) in the first quarter of 1995 from 24.6% of net
sales ($22.1 million) in the comparable 1994 quarter. The
reduction in gross profit as a percentage of net sales was
incurred primarily in men's dress shirts, neckwear and slacks
and in denim-based products. The cause of the reduction was (a)
continuing pressure on selling prices, which is expected to
continue, and (b) higher costs of manufacturing in our domestic
dress shirt facilities and our recently closed jeans laundry in
Texas. Based on recent improvements in our dress shirt
facilities as well as a new laundry facility currently under
construction in Mexico, we do not expect the higher
manufacturing costs to continue.
Selling, general and administrative expenses as a percentage of
net sales decreased to 19.7% ($20.4 million), as compared to the
first quarter of 1994, when such expenses amounted to 21.2% of
net sales ($19.0 million).
Other income for the first quarter of 1994 included a $500
thousand insurance reimbursement for legal fees and expenses
incurred in prior years.
For the first quarter of 1995, income from operations (before
net interest expense of $4.6 million) was $2.9 million, or 2.8%
of net sales. For the first quarter of 1994, income from
operations (before net interest expense of $3.4 million) was
$4.6 million, or 5.1% of net sales. Income from operations as a
percentage of net sales was lower in 1995 primarily as a result
of continuing gross margin pressures as indicated above.
Net interest expense for the first quarter of 1995 amounted to
$4.6 million as compared to $3.4 million in the prior year's
first quarter. The increase in interest expense was primarily
due to a higher average outstanding loan balance and increases
in the interest rate on the Company's working capital facility.
As a result of the above, the net loss for the 1995 first
quarter was $1.7 million, or $0.11 per share, compared with net
income of $1.1 million, or $0.07 per share, for the first
quarter of 1994. There were 15,007,632 weighted average common
shares outstanding in the first quarter of 1995, compared to
15,137,328 weighted average common shares and common share
equivalents outstanding in the first quarter of 1994.
Liquidity and Capital Resources
The Company is a party to a revolving credit, factoring and
security agreement, as amended, (the "Credit Agreement") with
The CIT Group/Commercial Services, Inc. ("CIT") to provide
seasonal working capital financing in the form of direct
borrowings and letters of credit, up to an aggregate of $135
million during certain periods of 1995 (subject to an asset
based borrowing formula). Interest on direct borrowings is
charged monthly at an annual rate of one percent in excess of
the prime rate of Chemical Bank (the "Prime Rate") (which prime
rate was 9.0% at April 1, 1995). As collateral for borrowings
under the Credit Agreement, Salant has granted to CIT a security
interest in substantially all of the assets of the Company. As
of April 1, 1995, direct borrowings and letters of credit
outstanding under the Agreement were $44.7 million and $37.9
million, respectively, and the Company had unused availability
of $7.3 million. As of April 2, 1994, there were no direct
borrowings, letters of credit outstanding under the Credit
Agreement were $35.9 million, and the unused availability
amounted to $26.9 million. The average interest rate on
borrowings for the three months ended April 1, 1995 and April 2,
1994 was 9.4% and 6.3%, respectively.
The Credit Agreement and the indenture governing the Secured
Notes contain numerous financial and operating covenants,
including restrictions on incurring indebtedness and liens,
making investments in or purchasing the stock of all or a
substantial part of the assets of another person, selling
property, making capital expenditures, and paying cash
dividends. In addition, under the Credit Agreement, the Company
is required (i) during the year, to maintain minimum levels of
working capital and stockholders' equity and to satisfy a
maximum cumulative net loss test and (ii) at year end, to
satisfy a ratio of total liabilities to stockholders' equity and
a fixed charge coverage ratio. At April 1, 1995, the Company
was in compliance with all financial covenants as indicated
below:
<TABLE>
<CAPTION>
Covenant April 1, 1995
Credit Agreement Covenants Level Actual Level
<S> <C>
<C>
Working Capital $ 85.0 million $ 94.2 million
Stockholders' Equity $ 65.0 million $ 70.0 million
Maximum Loss $ (10.0) million $ (1.6) million (a)
</TABLE>
(a) In accordance with the Credit Agreement, maximum loss
excludes any write-off of goodwill in the 1994 fiscal year.
The Company is also required to reduce its indebtedness
(excluding outstanding letters of credit) to $20 million or less
for fifteen consecutive days during each twelve month period
commencing February 1, 1994. The Company has complied with this
covenant for the period February 1, 1994 through January 31,
1995.
At the end of the first quarter of 1995, the Company's short
term borrowings were $20.8 million higher than such borrowings
at the end of 1994. The increase in borrowings was primarily
the result of an increase in inventories of $24.6 million to
provide for businesses entered into in 1994 and in anticipation
of higher sales in the second quarter of 1995, including the
initial shipments of the new Sears' Canyon River Blues program
for men and boys. Capital expenditures in the first quarter of
1995 were $2.2 million, related primarily to the creation of
Perry Ellis shops in department stores, additional showroom and
office space in New York City and a new jeans laundry facility
currently under construction in Mexico, as compared to $800
thousand in the first quarter of 1994. Capital expenditures for
1995 are anticipated to be approximately $6-7 million.
Salant's principal sources of liquidity, both on a short-term
and a long-term basis, are provided by operations and borrowings
under the Credit Agreement.
Based upon its analysis of its consolidated financial position,
its cash flow during the past twelve months, and its cash flow
anticipated from future operations, Salant believes that its
future cash flow, together with the funds available under the
Credit Agreement, will be adequate to meet its financing
requirements for the remainder of 1995. There can be no
assurance, however, that future developments and general
economic trends will not adversely affect the Company's
operations and, hence, its anticipated cash flow.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
During the first quarter of 1995, the Company filed one Form
8-K, dated March 2, 1995, reporting an amendment to the
Revolving Credit, Factoring and Security Agreement, dated
September 20, 1993, between The CIT Group/Commerical Services,
Inc. and Salant Corporation.
Exhibits
Number Description
10.27 Fourth Amendment to Credit Agreement, dated as of March 1,
1995, to the Revolving Credit, Factoring and Security Agreement,
dated as of September 20, 1993, as amended, between Salant
Corporation and The CIT Group/Commercial Services, Inc.
10.28 Letter Agreement, dated April 12, 1995, amending the
Employment Agreement, dated June 1, 1993, between Todd Kahn and
Salant Corporation.
27 Financial Data Schedule
<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.
SALANT CORPORATION
Date: May 12, 1995 /s/ Richard P. Randall
Richard P. Randall
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
FOURTH AMENDMENT TO CREDIT AGREEMENT
FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of March
1, 1995 (this "Amendment"), to the Revolving Credit, Factoring and
Security Agreement, dated as of September 20, 1993, as amended by
letter agreement Re: Amendment to Credit Agreement with respect to
the Mississippi Property, dated June 14, 1994 (the "First
Amendment") and by letter agreement Re: Amendment to Credit
Agreement with respect to Additional Guarantors, dated August 24,
1994 (the "Second Amendment") and by the Third Amendment to Credit
Agreement, dated as of February 25, 1995 (the "Third Amendment")
(as so amended, and as further amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), between THE
CIT GROUP/COMMERCIAL SERVICES, INC. ("Lender") and SALANT
CORPORATION ("Borrower").
W I T N E S S E T H :
WHEREAS, Lender and Borrower are parties to the Credit
Agreement;
WHEREAS, Lender and Borrower entered into the Third
Amendment;
WHEREAS, Lender and Borrower have agreed that the
Effective Date, as defined below, with respect to certain
modifications to the Credit Agreement as set forth in the Third
Amendment shall be delayed;
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby agree, effective as of the Effective Date, as
defined below, as follows:
1. Defined Terms. Initially capitalized terms used and
not otherwise defined herein shall have their respective meanings
as defined in the Credit Agreement.
2. Amendment of Sections 1.8, 1.58, 3.1(a)(i), 3.6(d)
and 3.6(i). Notwithstanding anything to the contrary contained
in paragraph 21 of the Third Amendment, the Effective Date solely
with respect to paragraphs 2, 5, 7, 11 and 12 (the "Factoring
Sections") shall be delayed until April 3, 1995, at which time the
Factoring Sections shall become effective.
3. Continuing Effect of Credit Agreement. This
Amendment shall not constitute a waiver or amendment of any
provision of the Credit Agreement not expressly referred to herein
and shall not be construed as a consent to any further or future
action on the part of Borrower that would require consent of
Lender. Except as expressly amended, the provisions of the Credit
Agreement and the Third Amendment are and shall remain in full
force and effect.
4. Counterparts. This Amendment may be executed in
counterparts, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
5. Governing Law. This Amendment shall be governed by,
and construed and interpreted in accordance with, the laws of the
state of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered in New York, New York
by their proper and duly authorized officers as of the day and year
first above written.
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By:
Title:
SALANT CORPORATION
By:
Title:
<PAGE>
CONSENT OF GUARANTORS
Each of the undersigned, CLANTEXPORT, INC., DENTON MILLS,
FROST BROS. ENTERPRISES, INC., SLT SOURCING, INC., VERA LICENSING,
INC., SALANT CANADA INC. and J.J. FARMER CLOTHING INC., each a
Guarantor under its respective Guarantee, each dated as of
September 20, 1993 (individually, its "Guarantee"), made in favor
of The CIT Group/Commercial Services, Inc. ("Lender") pursuant to
the Credit Agreement as defined in the Fourth Amendment to Credit
Agreement, dated as of March 1, 1995 between Lender and Salant
Corporation (the "Amendment"), to which this Consent is attached,
hereby consents to the Amendment and the matters contemplated
thereby, and hereby confirms and agrees that its Guarantee is, and
shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects except that, on or after the
effective date of the Amendment, each reference in its Guarantee to
"the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended by the Amendment.
IN WITNESS WHEREOF, each of the undersigned has caused
this Consent of Guarantors to be duly executed and delivered by its
authorized officer as of the 1st day of March, 1995.
CLANTEXPORT, INC. FROST BROS. ENTERPRISES, INC.
By: By:
Title: Title:
DENTON MILLS, INC. SLT SOURCING, INC.
By: By:
Title: Title:
VERA LICENSING, INC. SALANT CANADA, INC.
By: By:
Title: Title:
J.J. FARMER CLOTHING, INC.
By:
Title:
April 12, 1995
Todd Kahn
444 East 86 Street
New York, New York 10028
Dear Todd:
Reference is hereby made to the Employment Agreement, dated as of June 1, 1993,
between
yourself as the Employee and Salant Corporation.
We have mutually agreed to amend the Employment Agreement,
effective April 14, 1995, as
follows:
1. Section 3 of the Employment Agreement is hereby deleted
in its entirety and
substituted with the following therefore:
"Section 3. Term of Employment. For purposes of this
Agreement, the
term "Employment Period" shall mean the period commencing
April 14, 1995
and ending December 31, 1997. The Corporation agrees that if
it intends to
renew or extend the term of the Employment Period beyond December 31,
1997, it will so notify the Employee in writing on or
before July 1, 1997 and
will provide the Employee with the terms upon which the
Corporation proposes
such employment continuation."
2. Paragraph (a) of Section 4 is hereby deleted in its entirety an
d substituted with the
following therefore:
"(a) Salary. As annual salary for the services to be rendered
by the
Employee a salary at the rate of $165,000 per annum from
April 14, 1995 to
November 30, 1995; $200,000 per annum from December 1, 1995 to
November 30, 1996; and $225,000 per annum from December 1, 1996
through
December 31, 1997, payable in bi-weekly installments during the
Employment
Period."
3. The first sentence of Section 5 is hereby deleted in its entirety
and substituted with
the following therefore:
"In addition to the nonqualified stock options to purchase 20,000
shares of
common stock, par value $1.00 per share (the "Common Stock"), of the
Corporation granted to the Employee prior to April 13, 1995, the Corporation
shall grant to the Employee nonqualified stock options to purchase 15,000
shares of Common Stock of the Corporation pursuant to the Corporation's 1987
Stock Plan, 1988 Stock Plan and/or 1993 Stock Plan at such time as shares of
Common Stock become available."
4. Exhibit 1 of the Employment Agreement is hereby deleted in its entirety and
substituted with the following therefore:
"If the Corporation's operating income (before amortization of intangibles), as
shown on its audited financial statements for any Fiscal Year during the
Employment Period ("Actual Annual Operating Income"), is equal to or greater
than 90% and less than 100% of the amount of operating income (before
amortization of intangibles and after the reserve for contingencies)
provided for
in Salant's annual business plan for that Fiscal Year ("Planned Annual
Operating Income"), the Employee shall receive a cash bonus equal to 40% of
his Salary at the end of the applicable Fiscal Year ("Annual Salary").
If the Corporation's Actual Annual Operating Income is equal to 100% of
Planned Annual Operating Income, the Employee shall receive a cash bonus
equal to 50% of his Annual Salary. For example if the Corporation's Actual
Annual Operating Income is equal to 100% of its Planned Annual Operating
Income for the 1995 Fiscal Year, the Employee shall receive a cash bonus
equal to $100,000.
For each full five percentage points (after rounding to the nearest 1/100th of a
percent) by which the Corporation's Actual Annual Operating Income exceeds
100% of Planned Annual Operating Income, the Employee shall receive an
additional cash bonus equal to 5% of his Annual Salary.
Actual Annual Operating Income shall be calculated without giving effect to
unusual or nonrecurring items of income or expense."
.
Except as specifically set forth herein, the Employment Agreement
remains in full
force and effect and is hereby ratified, confirmed and approved.
The Employment
Agreement, as
modified by this letter, is the only agreement that governs the terms of your
employment
All other letters, agreements and memorandum are hereby null and void.
If the foregoing correctly sets forth our mutual agreement, please sign
and return to
me the three attached copies of this letter.
Very truly yours,
SALANT CORPORATION
By: ______________________________
Nicholas P. DiPaolo
Chairman of the Board,
President and CEO
Accepted and Agreed To:
By: _______________________________
Todd Kahn
Date: _____________________________
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> APR-01-1995
<CASH> 1,907
<SECURITIES> 0
<RECEIVABLES> 42,267
<ALLOWANCES> (11,235)
<INVENTORY> 149,240
<CURRENT-ASSETS> 187,651
<PP&E> 67,040
<DEPRECIATION> (38,689)
<TOTAL-ASSETS> 286,808
<CURRENT-LIABILITIES> 93,465
<BONDS> 0
<COMMON> 15,242
0
0
<OTHER-SE> 54,718
<TOTAL-LIABILITY-AND-EQUITY> 286,808
<SALES> 103,801
<TOTAL-REVENUES> 105,231
<CGS> 81,334
<TOTAL-COSTS> 101,734
<OTHER-EXPENSES> 584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,571
<INCOME-PRETAX> (1,658)
<INCOME-TAX> 41
<INCOME-CONTINUING> (1,699)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,699)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> 0
</TABLE>
