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 March 30, 1996.
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 1-6666
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 9, 1996, there were outstanding 14,746,234 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 Flows
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
<PAGE>
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
-----------------------------------
<S> <C> <C>
Net sales $ 99,193 $ 103,801
Cost of goods sold 76,612 81,334
--------------------------
Gross profit 22,581 22,467
Selling, general and
administrative expenses (21,961) (20,726)
Royalty income 1,128 1,753
Goodwill amortization (649) (641)
Division restructuring costs (Note 3) (161) --
Other income 18 60
--------- ---------
Income from operations
before interest and income taxes 956 2,913
Interest expense, net 3,847 4,571
----------------------------------------------------
Loss from operations before income taxes (2,891) (1,658)
Income taxes 22 41
-----------------------------------
Net loss $ (2,913) $ (1,699)
========= ================
Net loss per share $ (0.19) $ (0.11)
=================================== =========
Weighted average common stock and common
stock equivalents outstanding 15,041 15,008
===================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
March 30, December 30, April 1,
1996 1995 1995
(Unaudited) (*) (Unaudited)
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 1,385 $ 1,400 $ 1,907
Accounts receivable, net 30,166 35,290 31,032
Inventories (Note 2) 121,451 119,120 149,240
Prepaid expenses and
other current assets 5,008 5,016 5,472
-----------------------------------------------------------------------------------------------------
Total current assets 158,010 160,826 187,651
Property, plant and equipment, net 24,204 24,526 28,351
Other assets 70,708 70,368 70,806
---------------------------------------------------------------------------------------------------------------
Total assets $ 252,922 $ 255,720 $ 286,808
=====================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable $ 16,995 $ 14,422 $ 44,664
Accounts payable 28,357 26,755 34,459
Accrued liabilities 17,310 20,397 14,003
Net liabilities of discontinued
operations 145 311 339
Reserve for business restructuring (Note 3) 989 1,569 --
-------------------------------------------------------------------------------
Total current liabilities 63,796 63,454 93,465
Long term debt 110,015 110,040 109,908
Deferred liabilities 11,196 11,373 13,475
Shareholders' equity
Common stock 15,275 15,275 15,242
Additional paid-in capital 107,071 107,071 107,017
Deficit (50,737) (47,824) (50,025)
Excess of additional pension
liability over unrecognized
prior service cost (2,185) (2,185) (773)
Accumulated foreign currency
translation adjustment 105 130 113
Less - treasury stock, at cost (1,614) (1,614) (1,614)
---------- -------------------- ----------
Total shareholders' equity 67,915 70,853 69,960
-------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 252,922 $ 255,720 $ 286,808
======================================================================================================
</TABLE>
(*) Derived from the audited financial statements.
<PAGE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
Salant Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 30, April 1,
1996 1995
------------------------------
Cash Flows from Operating Activities:
<S> <C> <C>
Loss from operations $ (2,913) $ (1,699)
Adjustments to reconcile loss from
operations to net cash used
in operating activities:
Depreciation 1,132 1,290
Amortization of intangibles 649 641
Loss on disposal of fixed assets 82 --
Changes in operating assets and liabilities:
Accounts receivable 5,124 5,551
Inventories (2,331) (24,641)
Prepaid expenses and other current assets 8 (208)
Other assets (989) (103)
Accounts payable 1,602 5,866
Accrued liabilities and reserve for
business restructuring (3,667) (4,845)
Deferred liabilities (202) (4)
---------------------------------------------------------------------- ---------------------
Net cash used in operating activities (1,505) (18,152)
-------------------------------------------------------- ---------------------
Cash Flows from Investing Activities:
Capital expenditures (932) (2,206)
Proceeds from sale of assets 40 26
--------------------------------
Net cash used in investing activities (892) (2,180)
---------- ---------------------
Cash Flows from Financing Activities:
Net short-term borrowings 2,573 20,758
Exercise of stock options -- (7)
Other, net (25) --
---------- ---------------------
Net cash provided by financing activities 2,548 20,751
---------- ----------
Net cash provided by continuing operations 151 419
Cash used in discontinued operations (166) (477)
---------- ----------
Net decrease in cash and cash equivalents (15) (58)
Cash and cash equivalents - beginning of year 1,400 1,965
--------------------------------
Cash and cash equivalents - end of quarter $ 1,385 $ 1,907
================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 6,747 $ 7,516
================================
Income taxes $ 13 $ 106
================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
SALANT CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Amounts in Thousands of Dollars, Except Share Data)
(Unaudited)
Note 1. Basis of Presentation and Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements include
the accounts of Salant Corporation ("Salant") and subsidiaries (collectively,
the "Company").
The Company's principal business is the designing, manufacturing, importing and
marketing of apparel. The Company sells its products to retailers, including
department and specialty stores, national chains, major discounters and mass
volume retailers, throughout the United States.
The results of operations for the three months ended March 30, 1996 and April 1,
1995 are not necessarily indicative of a full year's operations. In the opinion
of management, the accompanying financial statements include all adjustments of
a normal recurring nature which are necessary to present fairly such financial
statements. Significant intercompany balances and transactions are eliminated in
consolidation.
Certain reclassifications were made to the 1995 unaudited Condensed Consolidated
Statement of Operations to conform with the 1996 presentation.
Loss per share is based on the weighted average number of common shares
(including, as of March 30, 1996 and April 1, 1995, 349,952 and 761,840 shares,
respectively, anticipated to be issued pursuant to the Company's plan of
reorganization). Loss per share does not include common stock equivalents,
inasmuch as their effect would have been anti-dilutive.
Note 2. Inventories
<TABLE>
<CAPTION>
March 30, December 30, April 1,
1996 1995 1995
<S> <C> <C> <C>
Finished goods $ 82,803 $ 72,850 $ 86,955
Work-in-Process 15,761 15,829 33,557
Raw materials and supplies 22,887 30,441 28,728
----------- --------------------------------------
$ 121,451 $ 119,120 $ 149,240
=================================== =========
</TABLE>
Note 3. Division Restructuring Costs
In the first quarter of 1996, the Company recorded a $161 restructuring
provision, which related to the closure of certain unprofitable retail factory
outlet stores.
<PAGE>
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 March 30, 1996 with the operating results for the three
months ended April 1,1995.
The following table sets forth certain financial data for the three months ended
March 30, 1996 and April 1, 1995:
<TABLE>
<CAPTION>
(dollars in millions)
Three months ended
March 30, April 1,
1996 1995
<S> <C> <C>
Net sales $ 99.2 $103.8
Gross profit $ 22.6 $ 22.5
Gross margin 22.8% 21.6%
Income from continuing operations
before interest and income taxes $ 1.0 $ 2.9
</TABLE>
First Quarter 1996 Compared to First Quarter 1995
For the first quarter of 1996, net sales amounted to $99.2 million,
a 4.4% decrease from net sales of $103.8 million in the first quarter
of 1995.
<TABLE>
<CAPTION>
(dollars in millions)
Net sales and percentage of total Percentage
for the three months ended Increase/
March 30, 1996 April 1, 1995 (Decrease)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Men's Apparel $87.2 87.8% $93.7 90.3% (7.0%)
Children's Sleepwear and Underwear 4.2 4.3% 3.4 3.2% 26.7%
Other Businesses (a) 7.8 7.9% 6.7 6.5% 16.2%
------------------- --------------------
Total $ 99.2 100% $103.8 100% (4.4%)
==================== ===================
</TABLE>
(a) Includes the Made in the Shade division (a women's junior sportswear
business) and the Stores division.
Sales of Men's Apparel decreased $6.5 million, or 7.0%. This decrease was
primarily attributable to (a) a decrease in sales of men's slacks of $4.1
million, or 25.9%, resulting from the planned reduction in sales of the Thomson
pant business during 1996, as disclosed in the 1995 Annual Report on Form 10-K,
(b) a decrease in the Company's dress shirt sales of $3.1 million, or 10.0%,
primarily as a result of the discontinuation of several dress shirt lines,
including Liberty of London, Nino Cerruti and Ron Chereskin, as also disclosed
in the 1995 Annual Report on Form 10-K, and (c) a decrease in sales of men's
sportswear of $1.9 million, or 7.1%. These decreases were offset by an increase
in the sales of men's jeans of $2.7 million, or 32.1%, resulting from a complete
quarter of sales of Canyon River Blues, an exclusive brand program for Sears,
Roebuck & Co., which was introduced in the latter part of the first quarter of
1995.
Sales of Children's Sleepwear and Underwear increased $0.8 million, or 26.7%.
This increase related to higher sales of licensed character products.
Sales of Other Businesses increased $1.1 million, or 16.2%. This increase
related primarily to an increase in sales by the Made in the Shade division.
Gross profit as a percentage of net sales increased to 22.8% ($22.6 million) in
the first quarter of 1996 from 21.6% of net sales ($22.5 million) in the
comparable 1995 quarter.
<TABLE>
<CAPTION>
(dollars in millions)
Gross profit and gross margin
for the three months ended
March 30, 1996 April 1, 1995
- ---------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
Men's Apparel $19.1 21.9% $19.2 20.5%
Children's Sleepwear and Underwear 0.9 21.1% 0.7 19.1%
Other Businesses (a) 2.6 33.0% 2.6 38.9%
------ --------
Total $ 22.6 22.8% $ 22.5 21.6%
=============== =============
</TABLE>
(a) Includes the Made in the Shade division (a women's junior sportswear
business) and the Stores division.
The increase in gross margin occurred principally in (a) men's apparel, as a
result of higher margins on neckwear, dress shirts and Canyon River Blues jeans,
and (b) children's sleepwear and underwear, as a result of an increase in
licensed character sales, which traditionally earn a higher gross margin. The
increase in gross margin over the first quarter of 1995 is due, in part, to the
discontinuation of certain lines of merchandise which yielded unsatisfactory
margins.
Selling, general and administrative expenses as a percentage of net sales
increased to 22.1% ($22.0 million), as compared to the first quarter of 1995,
when such expenses amounted to 20.0% of net sales ($20.7 million). The increase
in such expenses as a percentage of net sales was primarily attributable to
certain expenses associated with the installation of store fixtures for Perry
Ellis Sportswear and Canyon River Blues shops. These expenses commenced in the
second half of 1995. The non-cash portion of these store fixture expense
increases accounted for approximately 22% of the total increase in S,G&A
expense.
Royalty income for the first quarter of 1996 was $1.1 million, compared to $1.8
million in the first quarter of 1995. This decrease resulted primarily from (i)
lower sales by licensees in the fourth quarter of the prior year, which resulted
in a decrease in royalties received by the Company in the first quarter of the
current year, and (ii) the expiration of certain license agreements prior to the
first quarter of 1996.
The Company recorded a provision for restructuring of $161 thousand related to
the closure of certain unprofitable retail factory outlet stores. It is
anticipated that the Company will have additional charges in 1996 of (i) $250
thousand relating to these store closings and (ii) $1.5 to $2.0 million relating
to the planned closing in 1996 of a manufacturing facility in Thomson, Georgia,
as discussed in the 1995 Annual Report on Form 10-K.
For the first quarter of 1996, income from continuing operations before interest
and income taxes was $1.0 million, or 1.0% of net sales, as compared to $2.9
million, or 2.8% of net sales, in the 1995 first quarter. Income from continuing
operations as a percentage of net sales was lower in 1996 primarily as a result
of the net sales decrease and the increase in S, G & A expenses, partially
offset by the increased gross margin discussed above.
<TABLE>
<CAPTION>
(dollars in millions)
Income from operations before interest
and income taxes, and percentage of
net sales for the three months ended
March 30, 1996 April 1, 1995
- ---------------------------------------------------------------------- ------------------
<S> <C> <C> <C> <C>
Men's Apparel $ 4.4 5.0% $ 4.8 5.2%
Children's Sleepwear and Underwear (0.4) (10.6)% (0.6) (18.7)%
Other Businesses (a) (1.6) (20.0)% (1.2) (18.9)%
-------- -------------
2.4 2.4% 3.0 2.8%
Corporate expenses (2.2) (1.5)
Licensing division income, net 0.8 1.4
------- -------
Income from operations before
interest and income taxes $ 1.0 1.0% $ 2.9 2.8%
====== ==============
</TABLE>
(a) Includes the Made in the Shade division (a women's junior sportswear
business) and the Stores division.
Net interest expense for the first quarter of 1996 amounted to $3.8 million as
compared to $4.6 million in the prior year's first quarter. Lower borrowings
accounted for most of the decreased interest expense.
As a result of the above, the net loss for the 1996 first quarter was $2.9
million, or $0.19 per share, compared with a net loss of $1.7 million, or $0.11
per share, for the first quarter of 1995.
Earnings before interest, taxes, depreciation, amortization and restructuring
charges was $2.9 million in the first quarter of 1996, compared to $4.8 million
in the first quarter of 1995, a decrease of $1.9 million, or 40.2%. The Company
believes this information is helpful in understanding cash flow from operations
that is available for debt service, taxes and capital expenditures. This measure
is not contained in Generally Accepted Accounting Principles and is not a
substitute for operating income, net income or net cash flows from operating
activities.
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,
subject to an asset based borrowing formula (the "Maximum Credit"). On March 27,
1996, the Company and CIT executed the Seventh Amendment to the Credit Agreement
(the "Amendment"). The Amendment extends the term of the Credit Agreement to
March 31, 1997 and provides the Company with the ability to cease factoring at
September 20, 1996. The Amendment also increased the Maximum Credit to $135
million during certain periods of 1996, which was consistent with the maximum
credit provided in 1995. Interest on direct borrowings is charged monthly at an
annual rate of one percent in excess of the base rate of the Chase Manhattan
Corporation (the "Prime Rate", which was 8.25% at March 30, 1996). 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 March 30,
1996, direct borrowings and letters of credit outstanding under the Credit
Agreement were $17.0 million and $29.8 million, respectively, and the Company
had unused availability of $24.4 million. As of April 1, 1995, direct borrowings
and letters of credit outstanding under the Credit Agreement were $44.7 million
and $37.9 million, respectively, and the Company had unused availability of $7.3
million. The average interest rate on borrowings for the three months ended
March 30, 1996 and April 1, 1995 was 9.4%.
The Credit Agreement and the indenture governing the 10 1/2% Senior Secured
Notes due December 31, 1998 contain numerous financial and operating covenants,
including restrictions on incurring indebtedness and liens, making investments
in or purchasing the stock, or 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 March 30, 1996, the Company was in compliance with all
financial covenants as indicated below:
<TABLE>
<CAPTION>
Covenant March 30, 1996
Credit Agreement Covenants Level Actual Level
<S> <C> <C>
Working Capital $ 85.0 million $ 94.2 million
Stockholders' Equity $ 60.0 million $ 67.9 million
Maximum Loss $(15.0) million $ (2.4) million
</TABLE>
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 all periods through January 31, 1997.
The Company's cash used in operating activities was $1.5 million. This
represented a $16.6 million improvement over the first quarter of 1995 and was
primarily a result of inventory management improvements.
Cash used for investing activities in the first quarter of 1996 was $0.9
million, primarily related to capital expenditures.
Cash provided by financing activities in the first quarter of 1996 was $2.5
million, which represented short-term borrowings under the Credit Agreement.
This represents a substantial reduction from the $20.8 million of short-term
borrowings in the first quarter of 1995.
Capital expenditures in the first three months of 1996 were $0.9 million, as
compared to $2.2 million in the first three months of 1995. These expenditures
were funded primarily from short term borrowings. Capital expenditures for 1996
are anticipated to be approximately $7.7 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 and the funds available
under the Credit Agreement will be adequate to meet the financing requirements
it anticipates in the next twelve months. 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.
Factors that May Affect Future Results and Financial Condition.
The Company's future operating results and financial condition are dependent on
the Company's ability to successfully design, manufacture, import and market
apparel. Inherent in this process are many factors that the Company must
successfully manage in order to achieve favorable operating results and
financial condition including, without limitation, the following:
Competition. The apparel industry in the United States is highly competitive and
characterized by a relatively small number of multi-line manufacturers (such as
the Company) and a large number of specialty manufacturers. The Company faces
substantial competition in its markets from manufacturers in both categories.
Many of the Company's competitors have greater financial resources than the
Company.
Apparel Industry Cycles and other Economic Factors. The apparel industry
historically has been subject to substantial cyclical variation, with consumer
spending on apparel tending to decline during recessionary periods. A decline in
the general economy or uncertainties regarding future economic prospects may
affect consumer spending habits, which, in turn, could have a material adverse
effect on the Company's results of operations and its financial condition.
Retail Environment. Various retailers, including some of the Company's
customers, have experienced declines in revenue and profits in recent periods
and some have been forced to file for protection under the Bankruptcy Code. To
the extent that these financial difficulties continue, there can be no assurance
that the Company's financial condition and results of operations would not be
adversely affected.
Seasonality of Business and Fashion Risk. The Company's principal products are
organized into seasonal lines for resale at the retail level during the Spring,
Fall and Christmas Seasons. Typically, the Company's products are designed as
much as one year in advance and manufactured approximately one season in advance
of the related retail selling season. Accordingly, the success of the Company's
products is often dependent on the ability of the Company to successfully
anticipate the needs of the Company's retail customers and the tastes of the
ultimate consumer up to a year prior to the relevant selling season.
Substantial Level of Indebtedness. The Company had indebtedness of $127.0
million as of March 30, 1996. This level of indebtedness could adversely affect
the Company's operations because a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest and would,
therefore, not be available for other purposes. Further, this level of
indebtedness might inhibit the Company's ability to obtain financing in the
future for working capital needs, capital expenditures, acquisitions,
investments, general corporate purposes or other purposes.
Foreign Operations. The Company's foreign sourcing operations are subject to
various risks of doing business abroad, including currency fluctuations
(although the predominant currency used is the U.S. dollar), quotas and, in
certain parts of the world, political instability. Any substantial disruption of
its relationship with its foreign suppliers could adversely affect the Company's
operations. Some of the Company's imported merchandise is subject to United
States Customs duties. In addition, bilateral agreements between the major
exporting countries and the United States impose quotas which limit the amount
of certain categories of merchandise that may be imported into the United
States. Any material increase in duty levels, material decrease in quota levels
or material decrease in available quota allocation could adversely affect the
Company's operations.
Dependence on Contract Manufacturing. In 1995, the Company produced 64% of all
of its products (in units) through arrangements with independent contract
manufacturers. The use of such contractors and the resulting lack of direct
control could subject the Company to difficulty in obtaining timely delivery of
products of acceptable quality. In addition, as is customary in the industry,
the Company does not have any long-term contracts with its raw material
suppliers or product manufacturers. While the Company is not dependent on one
particular product manufacturer or raw material supplier, the loss of several
such product manufacturers and/or raw material suppliers in a given season could
have a material adverse effect on the Company's performance.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results and financial condition, past financial performance
should not be considered to be a reliable indicator of future performance, and
investors are cautioned not to use historical trends to anticipate results or
trends in the future. In addition, the Company's participation in the highly
competitive apparel industry often results in significant volatility of the
Company's common stock price.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
During the first quarter of 1996, the Company did not file any reports on Form
8-K.
Exhibits
Number Description
First Amendment to the Salant Corporation Retirement
Plan, dated as of January 31, 1996
10.36 First Amendment to the Salant Corporation
Long Term Savings and Investment Plan,
effective as of January 1, 1994
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 13, 1996 /s/ Richard P. Randall
-------------- ----------------------
Richard P. Randall
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
AMENDMENT NO. 1
TO
SALANT CORPORATION RETIREMENT PLAN
AS RESTATED DECEMBER 1, 1989
Salant Corporation hereby merges the Manhattan Industries, Inc.
Supplemental Retirement Plan into the Salant Corporation Retirement Plan (the
"Plan") effective as of January 31, 1996, and amends the Plan as follows:
1. Section 5.1 is amended to read in its entirety as follows
5.1 Accrued Benefit
Each Member shall accrue a monthly
benefit equal to 1/12 of the sum of (a)
and (b), reduced by (c), plus (d), if
applicable:
(a) the greatest of (i), (ii), (iii) and (iv):
(i) (A) 0.65% of his Average Final
Compensation not in excess of 140% of
his Covered Compensation plus 1.25% of
his Average Final Compensation in excess
of 140% of his Covered Compensation, if
any, multiplied by (B) his Period of
Benefit Accrual Service (not in excess
of 35 years); or
(ii) $96 multiplied by his Period of
Benefit Accrual Service after
November 30, 1988 and $60 multiplied
by his Period of Benefit Accrual
Service before December 1, 1988;
provided, however, that no more than
30 years of Benefit Accrual Service
shall be taken into account, and for
this purpose, those years of a
Member's Benefit Accrual Service
shall be applied that produce the
greatest Accrued Benefit; or
(iii) the sum of (A) and (B):
(A) the greater of an
amount determined under
Subsection (a)(i) or (a)
(ii) above based on his
Period of Benefit Accrual
Service after June 2, 1973;
and
(B) the Actuarial
Equivalent of his Profit
Sharing Plan
Company Amount, if any; or
(iv) the sum of (A) and (B):
(A) an amount determined
under Subsection (a)(i)
above based on his Period
of Benefit Accrual Service
after October 1, 1973; and
(B) the Actuarial
Equivalent of his Thomson
Company Plan
Company Amount, if any; and
(b) the Actuarial Equivalent of his
Profit Sharing Plan Member Amount or
Thomson Company Plan Member Amount,
if any;
(c) the Member's accrued benefit under the terminated Manhattan Industries Inc.
Employees' Benefit Plan (As Amended Effective February 1, 1984) or the
terminated Vera Companies Division Employees' Pension Plan or the terminated
Manhattan Accessories Division Employees' Pension Plan;
(d) the Member's accrued benefit under the
Manhattan Industries, Inc. Supplemental
Retirement Plan, which had been frozen as of
September 30, 1988 and merged into the Plan
as of February 29, 1996, if any, as set
forth in Appendix B.
2. The following new Subsection (f) is added at the end of Section 7.6:
(f) If a joint annuitant or a beneficiary is
other than a Member's Eligible Spouse, a
Member may not elect a Non-Qualified Joint
and Survivor Annuity form under Section 7.4
if the value of the Member's benefit under
such form of annuity would, after the
Member's attainment of age 70-1/2, be less
than that required by the incidental death
benefit requirements of Section 7.15(f) of
the Plan and section 401(a)(9)(G) of the
Code.
3. The following Appendix B is added at the end of the Plan:
<TABLE>
<CAPTION>
APPENDIX B
MANHATTAN INDUSTRIES, INC. SUPPLEMENTAL RETIREMENT PLAN
ACCRUED BENEFIT
Monthly Benefit
in Payment Status Monthly accrued
1. Name on January 31, 1996 2. Name Age 65 Benefit
<S> <C> <C> <C> <C>
Aronson, Herbert $ 388.95 Arrout, Mildred $ 31.82
Barbato, Grace $ 57.71 Campobello, Antionette $ 103.14
Baugh, Sina $ 21.92 Decuzzi, William $ 4.88
Boge, Saharaa $ 28.97 Deritter, Effie $ 29.36
Everhart, Elsie $ 8.19 Duffy, Edward $ 188.16
Falato, Nordina $ 7.03 Epstein, Manuel $ 76.55
Fernandez, Peter $ 76.06 Gershenfeld, Leo $ 124.57
Finley, Isabel $ 26.12 Henn, Thomas $ 28.70
Green, Ruth $ 46.45 Hovespian, Alice $ 17.02
Hone, Robert $ 187.30 Knissel, Lillian $ 25.26
Kallman, Donald $ 340.48 Mappen, Sidney $ 45.54
Karanik, Alexander $ 31.11 Natalino, Jacque $ 0.81
Klinke, Katherine $ 55.05 Rafferty, Joseph $ 125.92
Patterson, William $ 8.82 Ryan, William $ 21.95
Polcha, Agnes $ 13.02 Sansone, Yvone $ 0.94
Putziger, Stephen $ 264.45 Scott, Harold $ 46.31
Raskin, Charles $ 82.98 Shariff, Mohammed $ 2.70
Wade,Rosemary $ 95.28 Tanis, Mary $ 8.46
Winter, Elmer $ 109.92 Tirrito, Robert $ 57.79
Wagner, Ruth $ 3.97
</TABLE>
IN WITNESS WHEREOF, Salant Corporation, by its duly authorized
officers, with its corporate seal affixed, has caused this Amendment to be
executed this day of
, 1996.
SALANT CORPORATION
Attest:
By
FIRST AMENDMENT
TO
SALANT CORPORATION
LONG TERM SAVINGS AND INVESTMENT PLAN
(As Amended and Restated effective January 1, 1989)
Salant Corporation hereby amends the Salant Corporation Long
Term Savings and Investment Plan effective as of January 1, 1994 as follows:
1. The following new Section 1.7A is added to the Plan:
1.7A "Company Common Stock Fund" means an Investment
Fund, together with the earnings thereon, consisting of Common
Stock contributed by the Company or purchased by the Trustee
with cash contributions made by the Company. If so directed,
the Trustee shall regularly purchase, or cause to be
purchased, Common Stock from time to time in the open market
or by private purchase, including purchase from the Company of
authorized but unissued shares of such Common Stock or shares
of such Common Stock held as treasury stock. All purchases and
contributions from the Company shall be made at a price equal
to the closing price at which the Company's Common Stock was
traded as reported in the NYSE-Composite Transactions list
reported in the Wall Street Journal for the date of purchase
or contribution or if there were no trades on such date, at a
price equal to the mean between the "bid" and "asked" prices
for such date.
2. The following new Section 1.15A is added to the Plan:
1.15A "Investment Fund" means any fund that may be
made available for investment under the Plan, or all of such
funds.
3. The following new Section 1.20A is added to the Plan:
1.20A "Qualified Contribution" for any Plan Year
means a discretionary contribution made by the Company to
satisfy the requirements of Section 3.4 or 4.7 and that (a)
may be aggregated with other contributions in accordance with
section 3.7 or 4.8, (b) is nonforfeitable at all times, (c)
may not be distributed to a Member or beneficiary until the
earliest date provided for in Section 401(k)(2)(B) of the Code
(determined without regard to Subsection (i)(IV) of such
Section) and (d) complies with the requirements of Treasury
regulation Section 1.401(k)-1(b) (5).
4. The last sentence of section 3.4 is deleted.
5. Section 3.7 is amended to read in its entirety as follows:
3.7 (a) In the event the Company determines that the
deferrals elected by highly compensated Members might cause
the deferrals under the Plan to fail to meet the limitations
of the second sentence of Section 3.4 , the Committee may
reduce in an equitable manner, as it in its sole discretion
shall determine, the permissible percentages of Compensation
which may subsequently be deferred under the Plan by highly
compensated Members. Notwithstanding the foregoing, the
Committee shall not reduce the permissible Employee Matched
Contributions of any highly compensated Member if any other
highly compensated Member may make Employee Supplemental
Contributions.
(b) Salary reductions of highly compensated Members
may be maintained within the limit of the second sentence of
Section 3.4 by reducing the salary reductions of highly
compensated Members in order of the percentages of salary
deferred beginning with the highest of such percentages. The
amount by which a Member's salary reductions is so reduced,
adjusted for income or loss allocable thereto, and reduced,
but not below zero, by the amount of any distribution made or
to be made to the Member pursuant to Section 3.6 shall be
distributed to the Member no later than December 31 of the
Plan Year following the Plan Year for which such excess salary
reductions were contributed to the Plan on his behalf.
(c) The Committee may elect to make a Qualified
Contribution with respect to the Plan Year on behalf of any or
all Members. To the extent specified as a qualified
nonelective contribution (as defined in Treasury Regulation
1.401(k)-1(g)(13)(ii)), such Qualified Contribution shall be
treated as a Salary Deferral Contribution for purposes of
Section 3.4.
(d) The Committee, in its sole discretion, may elect
to use any combination of the methods described in this
Section 3.7 to satisfy the limitations of Section 3.4;
provided, however, that such combination of methods shall be
applied in a uniform and nondiscriminatory manner. 6. Section
4.8 is amended to read in its entirety as follows:
4.8 (a) Company Matching Contributions to accounts of
highly compensated Members may be maintained within the limit
of Section 4.7 by reducing such Company Matching Contributions
in order of such highly compensated Members' Company Matching
Contributions as a percentage beginning with the highest of
such percentages. Such reduction shall be made in proportion
to a Member's Company Matching Contributions allocated to his
account for the Plan Year to which the reduction relates. The
amount of such reduction in the Member's Company Matching
Contributions allocated to his account to the extent the
Member is vested in his Company Matching Contributions,
adjusted for income or loss allocable thereto, shall be
distributed to the Member no later than December 31 of the
Plan Year following the Plan Year for which such excess salary
reductions were contributed to the Plan. The amount of any
reduction in the Company Matching Contribution allocated to a
Member's account, to the extent that he is not yet vested in
his Company Matching Contributions, adjusted for income or
loss allocable thereto, shall be a forfeiture as of the
December 31 of the Plan Year following the Plan Year for which
the excess Company Matching Contribution was made. Any
forfeiture pursuant to this Section shall be applied to reduce
future Company Matching Contributions under the Plan.
(b) The Committee may elect to make a Qualified
Contribution with respect to the Plan Year on behalf of any or
all Members. To the extent specified as a qualified matching
contribution (as defined in Treasury Regulation
1.401(k)-1(g)(13)(i)), such Qualified Contribution shall be
treated as a Company Matching Contribution for purposes of
Section 4.7.
(c) The Committee, in its sole discretion, may elect
to use any combination of the methods described in this
Section 4.8 to satisfy the limitations of Section 4.7;
provided, however, that such combination of methods shall be
applied in a uniform and nondiscriminatory manner. 7. Section
5.2 is amended to read in its entirety as follows:
5.2 The Committee shall select the Investment Funds to
be made available for the investment of Salary Deferral
contributions and Company Matching Contributions. The
Committee may select additional or substitute Investment
Funds. The Trustee may keep any portion of the funds of the
Trust Fund in a money market fund or in short-term obligations
of the United States Government or agencies thereof or in
other types of short-term investments, including commercial
paper (other than obligations of the Company or affiliates),
as it may from time to time deem to be in the best interests
of the Plan or Trust Fund; provided, however, that cash
balances (including any interim investment thereof) shall not
be maintained in the Company Common Stock Fund except to the
extent that such balances are in anticipation of cash
distributions from the Company Common Stock Fund or are
maintained so as not to disrupt directed purchases of the
Trustee required by the Plan.
8. Section 5.4 is amended to read in its entirety as follows:
5.4 Elections for Investment. At the time an Employee
commences membership
under the Plan, he shall also elect in writing to the
Committee to have his Salary Deferral Contributions, if any,
invested in one or more of the Investment Funds other than the
Company Common Stock Fund. During the month of March 1992, or
thereafter at the time an Employee commences membership under
the Plan, an Employee shall also elect to have his Company
Matching Contributions, if any, invested in one or more of the
Investment Funds. At the time an Employee contributes an
Eligible Rollover Distribution to the Plan, he shall elect in
writing to invest such contribution in one or more of
Investment Funds other than the Company Common Stock Fund. In
no event shall a Member be permitted to elect to have a
percentage other than a whole-number multiple of 10% (25%
prior to January 1, 1994) of such contributions invested in
any one fund. Prior to April 1, 1992, all Company Matching
Contributions were invested in the Company Common Stock Fund
and could not be transferred to other funds except as provided
in subsection 5.5(d).
9. Section 5.5 is amended to read in its entirety as follows:
5.5 Change of Elections For Investment. Transfers between
Funds. Each
Member may, by filing a revised written election with the
Committee, make the following changes in his investment
elections:
(a) He may, not more than once in any calendar quarter,
as of any Valuation Date, file a revised investment election
applicable to his Salary Deferral Contributions and Company
Matching Contributions to be made for the month following such
election and thereafter, subject to the limitations contained
in Section 5.4.
(b) He may, not more than once in any calendar quarter,
as of any Valuation Date, elect to reallocate any portion of
his account that is invested in the Investment Funds other
than the Company Common Stock Fund among the Investment Funds
other than the Company Common Stock Fund by specifying what
percentage of the value of his account (other than the portion
of his account invested in the Company Common Stock Fund)
immediately after the reallocation will be held in each such
fund selected by him, provided that all such percentages so
specified shall be in whole-number multiples of 10% (25% prior
to January 1, 1994).
(c) Effective April 1, 1992, he may, not more than once
in any calendar quarter, as of any Valuation Date, elect to
transfer any portion of his account that is invested in the
Company Common Stock Fund to the other Investment Funds by
specifying what percentage of the amount to be transferred
will be held in each such fund selected by him, provided that
all such percentages so specified shall be in whole-number
multiples of 10%.
(d) Notwithstanding the foregoing, a Member who
terminates Service at or after age 60, and who is not
reemployed shall be entitled to make only one change of
investment election thereafter, which election shall be
limited to transferring his entire account to a money market
fund or a fixed-income fund.
All transfers under these paragraphs (b), (c) and (d)
shall be made as of the Valuation Date of the month in which
the Member files a revised written investment election with
the Committee.
10. The last sentence of Section 6.4 is amended to read in its
entirety as follows: Such amounts shall be repaid and restored
to the Investment Funds in accordance with the Plan's terms
and the portion allocable to a Member's contributions shall be
allocated in accordance with his most recent investment
election.
11.Subsection 8.1(a) is amended to read in its entirety as
follows:
(a)At the time specified in Section 8.2 and with respect to
a Member who was a
participant in the Denton Plan prior to January 1, 1992,
subject to Section 8.11, the vested portion of a Member's
account balance shall be distributed to him or in the event of
his death, and subject to Section 8.4(a), to his beneficiary
in a lump sum, provided, however, that a Member whose Service
is terminated (i) by early retirement at or after the
attainment of age 60 and the completion of at least 10 years
of Service as provided under the Salant Corporation Retirement
Plan, or (ii) after attainment of age 65 whether or not the
Member is eligible for retirement under said Retirement Plan,
or (iii) by reason of his total and permanent physical or
mental Disability as defined in Section 6.2, may elect
distribution in a lump sum or in annual installments as nearly
equal as practicable over a period of years specified by the
Member not to exceed twenty years. All lump sum distributions
made on account of termination of Service shall be in cash
except for distributions from the Company Common Stock Fund,
which shall be in Common Stock, with cash in lieu of
fractional shares, unless the Member requests in writing by
reasonable notice prior to such distribution that such
distribution shall be made solely in cash. A Member who elects
installment distributions must waive his right to receive a
distribution in Common Stock
Date: ____________________, 1995 SALANT CORPORATION
Attest: By: _____________________________
- -------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> MAR-30-1996
<CASH> 1385
<SECURITIES> 0
<RECEIVABLES> 42972
<ALLOWANCES> 12806
<INVENTORY> 121451
<CURRENT-ASSETS> 158010
<PP&E> 67315
<DEPRECIATION> 43111
<TOTAL-ASSETS> 252922
<CURRENT-LIABILITIES> 63796
<BONDS> 108251
0
0
<COMMON> 15275
<OTHER-SE> 52640
<TOTAL-LIABILITY-AND-EQUITY> 252922
<SALES> 99193
<TOTAL-REVENUES> 100321
<CGS> 76612
<TOTAL-COSTS> 21961
<OTHER-EXPENSES> (18)
<LOSS-PROVISION> 161
<INTEREST-EXPENSE> 3847
<INCOME-PRETAX> (2891)
<INCOME-TAX> 22
<INCOME-CONTINUING> (2913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2913)
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
